[Congressional Record Volume 152, Number 41 (Tuesday, April 4, 2006)]
[Extensions of Remarks]
[Page E497]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

[[Page E497]]


                   MILK REGULATORY EQUITY ACT OF 2005

                                 ______
                                 

                               speech of

                            HON. DEVIN NUNES

                             of california

                    in the house of representatives

                        Tuesday, March 28, 2006

  Mr. NUNES. Mr. Speaker, I rise today in support of the Milk 
Regulatory Equity Act, S. 2120. This important legislation was first 
introduced in 2003 and has been subjected to extensive review both 
inside and outside of Congress. I am satisfied that every effort has 
been made to craft a measure that is fair and have personally 
participated in efforts over the past three years to make certain that 
this legislation does exactly what we say it will do. We have worked 
collaboratively with every corner of the U.S. dairy industry and have 
formed a coalition that is unprecedented in this sector of the economy. 
Indeed, processors and dairy farmers from throughout the country, each 
with significantly varying local and regional interests, have come 
together to share with us the urgent need to address this issue. I am 
pleased that we are responding and would like to thank Chairman 
Goodlatte and Ranking Member Peterson and their staff for their hard 
work.
  S. 2120 is about fairness, Mr. Speaker. The bill responds to 
fundamental questions of regulatory equity that only Congress can 
address. The questions are simple. Should producer-handlers in Arizona 
be exempted from our Nation's regulatory system with no regard for 
their impact on our system of pooling and pricing, as established by 
Congress? Should producer-handlers be permitted to continue to operate 
free of regulation, while collecting Federal subsidies and benefiting 
from Farm Bill programs? Should a State regulatory system, such as 
California, be subjected to unregulated shipments of dairy from States 
participating in the Federal milk marking orders? Clearly, and with a 
strong bipartisan statement, Congress must say no. We must support 
passage of S. 2120.
  Mr. Speaker, I understand that anyone in business who has found a 
lucrative regulatory loophole would be inclined to fight for it. 
However, we in Congress need to look at the bigger picture. Those 
special interests that have resisted this legislation are doing so 
because they are gaming the system. They owe their success to the very 
program they claim to loath. Their ability to operate under 
preferential treatment in a highly regulated industry, while taking 
government subsidies, is not free market capitalism.
  It may be asked, ``How are we achieving fairness in this bill?'' Mr. 
Speaker, we have worked diligently to find a solution that recognizes 
the realities of our dairy programs today. In Arizona, we establish a 
three million pound per month cap on producer-handlers. This will allow 
small mom and pop businesses to operate as they have since the 1930s. 
However, it will regulate large dairy operations that have been found 
to have an impact on our system of pooling and pricing. We also address 
those handlers that are escaping regulation by means of locating their 
facilities in federally regulated regions, while doing business 
exclusively in State regulated regions. This activity seriously 
undermines both the Federal and State regulatory systems, by diverting 
revenue away from the pool and disadvantaging regulated businesses.
  Mr. Speaker, State and Federal milk marketing orders have existed 
side-by-side since Congress first enacted the Federal milk marketing 
orders in the 1930s. They promote a stable and affordable fluid milk 
supply and were intended to regulate the industry equitably. However, 
the discovery of an intra-order loophole has encouraged the growth of 
unregulated handlers in the marketplace. We need our Federal and State 
regulatory systems to interact in a seamless way, so that farmers and 
processors are not disadvantaged or discriminated against by our laws. 
Under S. 2120, Congress will allow the regulation of processors 
exploiting the intra-order loophole. They will be regulated based on 
the rules of the Federal milk marketing order where their plant is 
physically located. This won't place them at a disadvantage, it will 
restore equity to our dairy program.
  Mr. Speaker, we have 70 years of history reflecting Congressional 
intent for unregulated handlers to become regulated when they begin to 
have an impact on the regulated market.
  It has been suggested by opponents that S. 2120 ``targets'' an 
individual or individuals. Nothing could be further from the truth. We 
are merely closing regulatory loopholes that can be exploited by 
anyone. We are thus dealing with a general situation as stated by the 
Gentleman from Virginia and Chairman of the Agriculture Committee.
  Congress has been advised by the Department of Agriculture that there 
may be and indeed likely is, at least one other business entity that 
going forward could, based upon present business practices, find itself 
subject to these provisions. And that is the point. The loopholes that 
presently exist can be exploited by anyone. By closing the loopholes, 
we address the situations at hand and prevent their use by those who 
could (and likely would) exploit these loopholes in the future.
  It must also be emphasized that the provisions of S. 2120 are 
entirely consistent with the legislative history dealing with producer-
handlers and the need to monitor their potential negative impact on 
fair competition in the markets in which they operate.
  When the predecessor to the Agricultural Marketing Agreement Act (the 
Agricultural Adjustment Act) was passed in 1935, a Manager of the bill 
on the House floor stated that the United States Department of 
Agriculture had the power and the duty to regulate producers who were 
also handlers when they were large enough to disrupt the 
competitiveness of the market in which they operated.
  Then, in 1965, after losing three lawsuits in which they made the 
same arguments they make against S. 2120, producer-handlers sought an 
amendment on the House floor to the 1965 Farm Bill which would have 
granted them a limited regulatory exemption from the Agricultural 
Marketing Agreement Act. That amendment was defeated. The Managers' 
Report explicitly states that producer-handlers who are large enough to 
disrupt the markets in which they operate can be regulated.
  Mr. Speaker, as I have said before, the Milk Regulatory Equity act is 
about fairness. It's about equitable application of our laws. The hard 
working dairy farmers in Arizona have witnessed a steady decline in 
their pool since unregulated handlers began to flourish. They deserve 
to be treated fairly by their government and should never be placed in 
a situation where government regulations unintentionally disadvantage 
them in the marketplace. Regulated processors in Arizona are no less 
efficient or innovative than their unregulated competitors. They are 
simply unable to compete with businesses that don't have to play by the 
rules. This situation is wrong and must be resolved by Congress.

  Without changes to the law to close existing loopholes, California 
dairy farmers are equally disadvantaged and so are our State's 
processors. When unregulated milk is shipped into the California 
marketplace from the Federal milk marketing orders, the impact is not 
just felt on dairy farms and in processing plants but in the homes of 
the families whose livelihoods depend on this industry.
  Mr. Speaker, it is highly offensive to me that California's losses, 
including dairy industry jobs, are not based on our competition's 
superior product quality or innovative practices. These losses are 
because loopholes in Federal law are allowing unregulated handlers to 
game the system. Let me be clear: unregulated handlers are not 
promoting market competition. They are driving out competition. They 
owe their success to the dairy programs and to the advantage they have 
found in loopholes. Some of them collect large subsidies from the 
Federal Government, take full advantage of Farm Bill programs and then 
demand to be treated differently than the rest of the dairy industry.
  No Mr. Speaker, we cannot allow this to continue. This issue is all 
about fairness. It's about resolving the current practice of unequal 
application of the law. I hear about the challenges my dairy farmers 
face every time I go home and I know first hand how frustrated and 
disappointed farmers and processors are with the current situation. 
They are looking to us to close these loopholes and restore free market 
principles and fair regulation to the dairy industry.
  Congress must pass this legislation today and I ask for your support.




                          ____________________