[Congressional Record (Bound Edition), Volume 152 (2006), Part 3]
[House]
[Pages 4135-4141]
[From the U.S. Government Publishing Office, www.gpo.gov]




                   MILK REGULATORY EQUITY ACT OF 2005

  Mr. GOODLATTE. Mr. Speaker, I move to suspend the rules and pass the 
Senate bill (S. 2120) to ensure regulatory equity between and among all 
dairy farmers and handlers for sales of packaged fluid milk in 
federally regulated milk marketing areas and into certain non-federally 
regulated milk marketing areas from federally regulated areas, and for 
other purposes.
  The Clerk read as follows:

                                S. 2120

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Milk Regulatory Equity Act 
     of 2005''.

     SEC. 2. MILK REGULATORY EQUITY.

       (a) Minimum Milk Prices for Handlers; Exemption.--Section 
     8c(5) of the Agricultural Adjustment Act (7 U.S.C. 608c(5)), 
     reenacted with amendments by the Agricultural Marketing 
     Agreement Act of 1937, is amended by adding at the end the 
     following new subparagraphs:
       ``(M) Minimum milk prices for handlers.--
       ``(i) Application of minimum price requirements.--
     Notwithstanding any other provision of this section, a milk 
     handler described in clause (ii) shall be subject to all of 
     the minimum and uniform price requirements of a Federal milk 
     marketing order issued pursuant to this section applicable to 
     the county in which the plant of the handler is located, at 
     Federal order class prices, if the handler has packaged fluid 
     milk product route dispositions, or sales of packaged fluid 
     milk products to other plants, in a marketing area located in 
     a State that requires handlers to pay minimum prices for raw 
     milk purchases.
       ``(ii) Covered milk handlers.--Except as provided in clause 
     (iv), clause (i) applies to a handler of Class I milk 
     products (including a producer-handler or producer operating 
     as a handler) that--
       ``(I) operates a plant that is located within the 
     boundaries of a Federal order milk marketing area (as those 
     boundaries are in effect as of the date of the enactment of 
     this subparagraph);
       ``(II) has packaged fluid milk product route dispositions, 
     or sales of packaged fluid milk products to other plants, in 
     a milk marketing area located in a State that requires 
     handlers to pay minimum prices for raw milk purchases; and
       ``(III) is not otherwise obligated by a Federal milk 
     marketing order, or a regulated milk pricing plan operated by 
     a State, to pay minimum class prices for the raw milk that is 
     used for such dispositions or sales.
       ``(iii) Obligation to pay minimum class prices.--For 
     purposes of clause (ii)(III), the Secretary may not consider 
     a handler of Class I milk products to be obligated by a 
     Federal milk marketing order to pay minimum class prices for 
     raw milk unless the handler operates the plant as a fully 
     regulated fluid milk distributing plant under a Federal milk 
     marketing order.
       ``(iv) Certain handlers exempted.--Clause (i) does not 
     apply to--
       ``(I) a handler (otherwise described in clause (ii)) that 
     operates a nonpool plant (as defined in section 1000.8(e) of 
     title 7, Code of Federal Regulations, as in effect on the 
     date of the enactment of this subparagraph);
       ``(II) a producer-handler (otherwise described in clause 
     (ii)) for any month during which the producer-handler has 
     route dispositions, and sales to other plants, of packaged 
     fluid milk products equaling less than 3,000,000 pounds of 
     milk; or
       ``(III) a handler (otherwise described in clause (ii)) for 
     any month during which--
       ``(aa) less than 25 percent of the total quantity of fluid 
     milk products physically received at the plant of the handler 
     (excluding concentrated milk received from another plant by 
     agreement for other than Class I use) is disposed of as route 
     disposition or is transferred in the form of packaged fluid 
     milk products to other plants; or
       ``(bb) less than 25 percent in aggregate of the route 
     disposition or transfers are in a marketing area or areas 
     located in one or more States that require handlers to pay 
     minimum prices for raw milk purchases.
       ``(N) Exemption for certain milk handlers.--Notwithstanding 
     any other provision of this section, no handler with 
     distribution of Class I milk products in the marketing area 
     described in Order No. 131 shall be exempt during any month 
     from any minimum price requirement established by the 
     Secretary under this subsection if the total distribution of 
     Class I products during the preceding month of any such 
     handler's own farm production exceeds 3,000,000 pounds.''.
       (b) Exclusion of Nevada From Federal Milk Marketing 
     Orders.--Section 8c(11) of the Agriculture Adjustment Act (7 
     U.S.C. 608c(11)), reenacted with amendments by the 
     Agriculture Marketing Agreement Act of 1937, is amended--
       (1) in subparagraph (C), by striking the last sentence; and
       (2) by adding at the end the following new subparagraph:
       ``(D) In the case of milk and its products, no county or 
     other political subdivision of the State of Nevada shall be 
     within the marketing area definition of any order issued 
     under this section.''.
       (c) Records and Facility Requirements.--Notwithstanding any 
     other provision of this section, or the amendments made by 
     this section, a milk handler (including a producer-handler or 
     a producer operating as a handler) that is subject to 
     regulation under this section or an amendment made by this 
     section shall comply with the requirements of section 1000.27 
     of title 7, Code of Federal Regulations, or a successor 
     regulation, relating to handler responsibility for records or 
     facilities.
       (d) Effective Date and Implementation.--The amendments made 
     by this section take effect on the first day of the first 
     month beginning more than 15 days after the date of the 
     enactment of this Act. To accomplish the expedited 
     implementation of these amendments, effective on the date of 
     the enactment of this Act, the Secretary of Agriculture shall 
     include in the pool distributing plant provisions of each 
     Federal milk marketing order issued under subparagraph (B) of 
     section 8c(5) of the Agriculture Adjustment Act (7 U.S.C. 
     608c(5)), reenacted with amendments by the Agriculture 
     Marketing Agreement Act of 1937, a provision that a handler 
     described in subparagraph (M) of such section, as added by 
     subsection (a) of this section, will be fully regulated by 
     the order in which the handler's distributing plant is 
     located. These amendments shall not be subject to a 
     referendum under section 8c(19) of such Act (7 U.S.C. 
     608c(19)).

  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
Virginia (Mr. Goodlatte) and the gentleman from California (Mr. 
Cardoza) each will control 20 minutes.
  Mr. LEWIS of California. Mr. Speaker, I claim the time in opposition 
to the bill.
  The SPEAKER pro tempore. Under rule XV, the gentleman from California 
(Mr. Lewis) will control 20 minutes in opposition to the bill.
  The Chair recognizes the gentleman from Virginia.
  Mr. GOODLATTE. Mr. Speaker, I ask unanimous consent that the ranking 
member of the Committee on Agriculture, who I understand is on his way, 
and in his absence the gentleman from California (Mr. Cardoza), to have 
control of time for 10 minutes, and that they be permitted to yield 
blocks of that time.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Virginia?
  There was no objection.

[[Page 4136]]


  Mr. GOODLATTE. Mr. Speaker, I yield myself such time as I may 
consume.
  Mr. Speaker, I rise in support of S. 2120. My original interest in 
this legislation was to address a loophole created in the interface of 
the Federal Milk Market Order System with individual State milk 
marketing arrangements.
  Under the authority of the Agricultural Marketing Agreement Act of 
1993, the Secretary of Agriculture protects dairy producers from 
predatory pricing by setting a minimum price that must be paid by 
processors who distribute fluid milk within a Federal Milk Market Order 
Area.
  While a majority of the country is covered by one of 10 Federal 
orders, some States, California in particular, have enacted legislation 
which authorizes State agencies to regulate minimum milk price for 
intrastate sales.
  Herein lies the dilemma. Milk processed and distributed in the 
neighboring State of Arizona, which operates under a Federal order, is 
subject to the Federal minimum pricing regulations. However, milk 
processed in Arizona and then sold in California is exempt from the 
Federal existing regulations.
  And since the commercial product originates from outside the State, 
it is exempt from California State regulations. Because of this 
loophole, milk produced in Arizona and sold in California is not 
subject to any minimum pricing regulations. This creates an unfair 
advantage for out-of-state fluid milk processors.
  This situation was first brought to my attention by the gentleman 
from California (Mr. Nunes) and I agreed to help resolve this issue.
  The solution simply directs the Secretary to apply the minimum 
pricing regulations of the Federal order system to any covered milk 
handler if they sell a significant portion of their fluid milk 
production in States that have established minimum milk pricing 
regulations.
  Mr. Speaker, as all of our colleagues can attest, Federal dairy 
policy is among the most complicated and politicized of all of our 
programs. Indeed, the main reason that it has taken as long as it has 
to bring this bill to the full House for consideration is because often 
the simplest dairy bills tend to act as magnets and attract all kinds 
of unrelated pieces that are in many ways controversial.
  This legislation is no exception. While the original intent was to 
remedy a situation that has caused great concern to the California 
dairy industry, two additional provisions have been added to this 
legislation to address concerns elsewhere.
  Admittedly, I was reluctant to include these provisions; but after 
meeting with members of the dairy industry and hearing their near 
universal support, I decided to move forward with the legislation as 
drafted.
  The two provisions that were added simply exempt Clark County, Nevada 
from the existing Arizona-Las Vegas Milk Market Order and create a 3 
million pound-per-month cap on the exemption for producers who process 
and distribute their own milk within the Arizona-Las Vegas Order.
  Mr. Speaker, I am aware that some Members may have concerns about one 
or more of these provisions. As I indicated, I too had some 
reservations. But as I stated, there is near unanimous support within 
the dairy community, both the producers and the processors, for these 
changes. I therefore urge my colleagues to support this legislation.
  Mr. Speaker, I reserve the balance of my time.
  Mr. LEWIS of California. Mr. Speaker, I yield myself such time as I 
may consume.
  Mr. Speaker, far be it from me to rise and challenge the chairman of 
the authorizing committee regarding a dairy issue.
  He and I have talked about this on many occasions; and frankly, much 
of that which he suggests as a potential solution to the California-
Nevada-Arizona problem I am in total agreement with.
  My difficulty is that I have reviewed with great care all of those 
suspensions that are on the floor today. This is the controversial 
suspension. And indeed, rather than talking policy, I will talk policy 
all that my colleagues would like today, I would prefer to discuss the 
violation of procedure that is involved here.
  Under our rules, suspensions are to be addressing issues that are not 
controversial, that Members on both sides of the aisle are able to 
largely agree upon. There are minor exceptions to this. But in this 
case, we are talking about a violent exception.

                              {time}  1600

  It is clearly understood by people operating with this bill on both 
sides of the aisle that I have had very strong opposition and others 
have had opposition to this policy. And yet to have it come to the 
floor as a suspension with no notice whatsoever, I mean, I learned last 
Friday by accident that this bill was going to be on the floor.
  Frankly, I might be on a plane today, otherwise; and it is hardly the 
way to treat Members on either side of the aisle dealing with a 
fundamental question of procedure. So for that reason initially I have 
expressed my very strong opposition.
  Mr. Speaker, I reserve the balance of my time.
  Mr. GOODLATTE. Mr. Speaker, I yield myself 30 seconds. Just to 
respond to the gentleman, I certainly respect the gentleman's concerns. 
I too learned about the measure last Thursday or Friday, but this is 
very common with the scheduling of suspensions.
  As the gentleman is well aware, we have been discussing this issue, 
and it has been on the cusp of coming to the floor for a long, long 
time. We need to attempt to resolve these differences, and I think the 
consensus, on the part of many, is that we need to proceed with this 
debate today. I think that is the best way to get to the heart of what 
is going on here.
  Mr. Speaker, I reserve the balance of my time.


                Announcement by the Speaker Pro Tempore

  The SPEAKER pro tempore (Mr. Bradley of New Hampshire). Without 
objection, the gentleman from Minnesota (Mr. Peterson) will control the 
time previously allocated to the gentleman from California (Mr. 
Cardoza).
  There was no objection.
  Mr. PETERSON of Minnesota. Mr. Speaker, I yield myself such time as I 
may consume.
  Mr. Speaker, today I rise in support of the bill before us, and I 
would like to thank Chairman Goodlatte and the other members of the 
committee for their hard work and cooperation. I would also like to 
acknowledge the gentlemen from California, Mr. Nunes, Mr. Baca, Mr. 
Cardoza and Mr. Costa, who have worked diligently to bring this 
important issue to the attention of the House.
  Though this bill is not perfect, Mr. Speaker, it will begin to solve 
an imbalance in our regulatory structure. However, it ignores the fact 
that the real solution is for California to join the Federal Dairy 
System. Right now, one handler in Yuma, Arizona, is using a loophole in 
the current system to sell from a Federal milk market area into 
California and is not paying the minimum milk price that either 
institution has in place. This practice is disrupting the marketplace 
and undermining the goal of fairness that the regulatory system should 
encourage.
  Unfortunately, Mr. Speaker, this bill offers a piecemeal approach 
when dairy policy really needs a more comprehensive adjustment. The 
bill will begin to address the problem more immediately, but will leave 
more work to be done for a later time.
  Mr. Speaker, even as one part of this bill is written to ensure that 
the Yuma handler is on the same regulatory playing field as his 
competitors, the bill's second provision completely exempts Nevada 
processors from regulation. So one provision requires that similar 
rules apply to all handlers, while the other gives special status to 
handlers in Nevada.
  It may be that the exemption for Nevada will allow the Yuma handler 
to regain unregulated status that the bill is meant to take away. Keep 
in mind, Mr. Speaker, that the goal of this bill is to level the 
playing field between

[[Page 4137]]

producers and handlers, which is what I hope it will do despite the 
fact that it is not a particularly comprehensive solution.
  Without feedback from hearings and from the USDA regarding 
implementation of this bill, we cannot be sure that it will resolve the 
problem that is occurring now with the plant in Yuma, Arizona. Who is 
to say that the same issue will not arise elsewhere? Are we going to 
legislate milk price regulation every time a new milk processing plant 
opens? I hope not.
  Finally, I must reiterate that the entire problem addressed by this 
bill could be solved if California belonged to the Federal order 
system. We need our policy to recognize that no State, even California, 
is isolated from the dairy marketplace. Each day raw milk and processed 
dairy products cross the California border in both directions. Despite 
that fact, California has taken various actions to isolate itself; most 
notably, in 2003 the Supreme Court ruled unanimously against 
California's position that its system was protected from scrutiny under 
the commerce clause of the U.S. Constitution.
  California has attempted to stop the flow of raw milk from Nevada to 
California processors by requiring that the processors pay an extra fee 
into the California pool, a contribution that was not shared with 
producers supplying that milk.
  Mr. Speaker, that California even felt the need to tax incoming milk 
in that way is a sign that the system is becoming unsustainable.
  Although this bill before us today is needed and is not perfect, I 
just have to say that it does little to address the broader problems 
that arise from the two systems operating side by side. So I am here 
today to support this bill because it will give us a short-term 
solution to the problem. And I look forward to working with my 
colleagues as we move ahead, my colleagues in the dairy industry, to 
develop a more sensible plan for the long term.
  Mr. Speaker, I reserve the balance of my time.
  Mr. LEWIS of California. Mr. Speaker, I yield as much time as he may 
consume to the gentleman from Wisconsin (Mr. Obey).
  Mr. OBEY. Mr. Speaker, I thank the gentleman for yielding.
  Mr. Speaker, let me say that I find this discussion rather 
interesting today. We have a bill before us which essentially objects 
to a producer from Arizona, because he is doing to California what 
California has done to the rest of the country with respect to milk 
marketing orders for quite some time.
  It seems to me that if we are going to be dealing with this issue, we 
ought to be dealing with it generically, with all of its ramifications. 
I don't think this bill belongs on the suspension calendar. I think if 
we are going to take care of somebody's side problem, we ought to take 
care of other problems that are associated with the milk marketing 
order system as well.
  What this process reminds me of is something that happened a number 
of years ago when Mr. Gingrich was Speaker and Steve Gunderson, a 
Republican from Wisconsin, was chair of the Dairy Subcommittee. Steve 
had expected to be able, on the farm bill, to offer an amendment to the 
committee product dealing with milk marketing orders. He wasn't allowed 
to do that, even though he was the chairman of the subcommittee 
handling the bill,
  Instead, what happened is that there was an insider's fix between 
then-Speaker Gingrich and then-chairman of the Rules Committee, Mr. 
Solomon. They guaranteed that in return for their sweetheart deal, 
Gunderson wouldn't even be able to offer his amendment on the floor.
  We have seen all too much of that for the past years around here, and 
so I have no illusions about what is going to happen to this bill, but 
I for one want to object to the fact that it is on the suspension 
calendar. I want to object to the fact that if we are going to take 
care of this little discrete problem that we are not, in the process, 
taking care of the broader issues that confront us on the whole area of 
milk marketing order systems.
  Mr. LEWIS of California. Mr. Speaker, I reserve the balance of my 
time.
  Mr. GOODLATTE. Mr. Speaker, I yield myself 1 minute.
  Mr. Speaker, I want to take a moment to respond to the gentleman from 
Wisconsin regarding the concern that this legislation is targeting one 
or two individual producer handlers to the benefit of the rest of the 
dairy industry.
  We are here today to discuss how to keep the current Federal milk 
market order, something very important to the people of Wisconsin and 
other States, operating in a fair and equitable manner. I do not fault 
companies for their success. In fact, I applaud them for it.
  When one or two companies' success, however, is based on a gap in the 
regulatory system, I believe we have an obligation to respond. In this 
particular case, millions of pounds of unregulated milk flows in your 
State commerce in direct competition with regulated milk. This 
certainly has the potential to impact markets.
  I support this legislation because I believe that this milk should be 
treated the same way by the Federal Government that we treat milk that 
is in direct competition with it.
  This is not about punishing individuals. It is about ensuring a level 
playing field for competition.
  Mr. Speaker, I reserve the balance of my time.
  Mr. PETERSON of Minnesota. Mr. Speaker, I yield 2\1/2\ minutes to the 
gentleman from California (Mr. Cardoza).
  Mr. CARDOZA. Mr. Speaker, I rise today in full support of S. 2120, 
the Milk Regulatory Equity Act. For those familiar with dairy policy, 
there is never an easy fight in dairy policy, and this legislation is 
no different; it will be familiar.
  Throughout the years, there have been more obstacles thrown in the 
path of this worthy legislation than I can count. I am grateful to my 
friend and colleague, Devin Nunes, for his tireless leadership and 
pursuit of correcting this problem. I also want to thank Senator 
Feinstein and the chairman and ranking member of the House Agriculture 
Committee for their support in moving this legislation forward.
  Our dairy industry is extremely regulated and for good reason. Dairy 
products are both highly perishable and critical to the dietary 
requirements of Americans. Without a formal process for pricing, 
pooling and processing, the entire chain of production from producers 
through consumers is at risk. Dairy policy works because all players, 
including processors, producers, co-ops, distributors and buyers adhere 
to the same rules. Rules and regulations keep the dairy markets stable 
and allow orderly distribution of high-quality milk, cheese and butter 
products.
  This bill will close a dangerous loophole that allows a few large 
producer handlers to escape all these carefully crafted Federal and 
State regulatory requirements. It would require those operations 
physically located in a Federal order, but shipping entirely into a 
State order, to comply with the regulations governing dairy policy in 
the order where their plant is located.
  Do these individuals who are exploiting this loophole want to 
maintain it? Absolutely. However, due to the unique characteristics of 
a commodity like dairy, it cannot be allowed to continue. The 
foundation of this legislation is that all dairy organizations should 
be governed by the same rules. One group should not have an unfair 
competitive advantage over another.
  The Milk Regulatory Equity Act ensures production and price of milk 
is fair and equitable. This is an extremely important bill for my home 
State of California, but also for the entire country. History has shown 
that things that happen first in California then spread east.
  This loophole has the opportunity to affect every milk marketing 
order across the country. Let us stop it now before that happens. This 
is a good bill and one that deserves our support.
  Mr. LEWIS of California. Mr. Speaker, I yield myself as much time as 
I may consume.
  Mr. Speaker, I will speak just for a moment, for the gentleman from 
California (Mr. Cardoza) talked about a loophole. The loophole that he 
is talking about really is a part of an existing law. But if there is a 
loophole, it is

[[Page 4138]]

handled by a regulation that has been handled by the Department 
recently.
  That very regulation is currently being challenged in the courts, and 
people are attempting to codify that regulation in order to bypass my 
constituents' opportunity in the courts. They were due to appear in 
court tomorrow to defend their interest, and this bill is on the floor 
today, making it not just a very controversial issue, but violating our 
very fundamental process.
  Mr. Speaker, I would urge the House to be very reserved about using 
the suspension process in this fashion.
  Mr. Speaker, I reserve the balance of my time.
  Mr. GOODLATTE. Mr. Speaker, I yield 1 minute to the gentlewoman from 
Ohio (Mrs. Schmidt).
  Mrs. SCHMIDT. Mr. Speaker, I rise in support of S. 2120, the Milk 
Regulatory Equity Act, which would amend an outdated regulatory 
exemption within the Federal milk marketing order. I commend Chairman 
Goodlatte and the gentleman from California (Mr. Nunes), the author of 
the bill, for their work in moving this legislation forward.
  Years ago, the United States Department of Agriculture exempted small 
producer handler dairy farmers from regulation because they owned and 
milked their own cows and sold their own products directly to local 
consumers. Today, some of these unregulated producer handlers collect 
U.S. Government subsidies and have grown to be among the largest dairy 
processors in the country with significant market shares.
  This is an unfair advantage, and this exemption can adversely affect 
the prices other farmers receive. Consumers also suffer as unregulated 
producer handlers eliminate competition. This bill eliminates the 
loophole that allows now large producer handler operations to be 
unregulated and requires equal application of the law. It still allows 
family producer handlers to be exempted if their product is less than 3 
million pounds per month.
  I urge my colleagues to support this bill.
  Mr. PETERSON of Minnesota. Mr. Speaker, I yield 2 minutes to the 
distinguished gentleman from California (Mr. Costa).
  Mr. COSTA. Mr. Speaker, I rise today in strong support of S. 2120 and 
ask for your support of this bill. I too want to thank Chairman 
Goodlatte and Congressman Nunes and Congressman Cardoza for their 
efforts on this important piece of legislation that eventually, I 
think, will lead to an important part where we need to focus on 
comprehensive dairy policy as we look toward the 2007 farm bill.
  But I rise to speak very simply about something that is complicated, 
that, as most of you know, is dairy policy.

                              {time}  1615

  Your support of this bill does not require the detailed knowledge of 
the myriad pacts that govern the dairy industry and demand a historical 
analysis of what is going on throughout the country and individual 
States.
  S. 2120, though, is about fairness. Is it fair today in California 
some of the world's most productive dairymen and women are being 
undercut by a legal loophole between the Federal and State dairy 
programs that permits some dairies to skirt all the rules?
  Is it fair that by exporting these programs, some dairies avoid all 
regulations, enabling them to sell to retailers at well below well-
regulated dairies?
  Is it fair that this bill, which has passed the United States Senate 
with unanimous consent with overwhelming, obviously bipartisan support, 
has had to wait 3 years to be considered by the House?
  Is it fair that one of the few dairies in this country that opposes 
this legislation claims he is simply using the free market system, 
while accepting nearly $1 million a year in Federal dairy support 
payments?
  No, it is not fair. Your support of S. 2120 will bring fairness back 
to dairy farms. If we are going to ultimately craft an even-handed 
dairy policy throughout the country, and we have competition abroad, we 
need to first take this first step.
  I urge you to support S. 2120.
  Mr. LEWIS of California. Mr. Speaker, I yield myself 1 minute.
  Mr. Speaker, responding directly to my colleague from California's 
point, indeed it has been suggested that we are dealing with dairy 
policy in a major way here on the floor. If that is the case, clearly 
we should not be handling that very policy by way of a suspension 
matter. It is a fundamental violation of that process.
  This bill has had a number of years for possible consideration in the 
authorizing committee; and, yet, the authorizing committee has never 
held a hearing on this subject, the subject of the Senate bill that is 
before us today.
  I would suggest to us that our authorizers need to, in a fundamental 
way, look at national dairy policy and not let California continue to 
take such advantage of the country, as my colleague, the gentleman from 
Wisconsin (Mr. Obey), suggested. In this case, we have California 
divided against itself, the central valley against my district.
  I must tell you, a long time ago, I tried not to have to deal with 
dairy policy because of problems in the past, but I can tell you also 
you can never quite satisfy dairy people in California because any kind 
of competition is a problem.
  Mr. Speaker, I reserve the balance of my time.
  Mr. GOODLATTE. Mr. Speaker, I am pleased to yield 2\1/2\ minutes to 
the gentleman from Minnesota (Mr. Gutknecht), the chairman of the Dairy 
Subcommittee of the Agriculture Committee.
  Mr. GUTKNECHT. Mr. Speaker, this has been a very interesting debate; 
and if you want to get into hot water, just start debating dairy 
policy. It not only gets very complicated very fast, but it gets very 
heated.
  This is not a new issue. This has been percolating around this 
Capitol now for at least 2\1/2\ years. I was first made aware of it by 
the gentleman from California (Mr. Nunes) and others on a trip to 
California. I have learned more about this issue than I think I really 
ever wanted to know; and, frankly, I think most Members of the House do 
not really want to know too much about this.
  Our colleague from Ohio, I think, said it well. This is really an 
example of where the laws were originally designed to protect small 
producer-handlers, and here we have a large producer-handler who has 
found this, and I do not want to get into a fight here over the term 
``loophole,'' but he has found this opportunity and he is exploiting 
this opportunity.
  Now, we have said repeatedly to our colleagues in California, this 
essentially is a California issue, why do you not work it out. I think 
there was a good-faith effort on both sides of this argument to try and 
do that; but, unfortunately, they failed.
  This is a very complicated issue, but I think all of the speakers who 
have preceded me have said it well, that we have a responsibility to 
have a Federal milk system that is fair to everybody. What we have 
right now is one particular producer who is trying to use the best of 
both worlds, who is situated right on the border; and, frankly, I think 
we have a responsibility to close that loophole.
  Let me point out that this is not an issue, while generally milk 
issues divide geographically, they divide between the people who 
produce the milk, the dairy farmers and the processors, this is one 
where virtually everyone in the dairy industry, from all corners of the 
United States, whether they are dairy farmers large or small, whether 
they are processors large or small, or whether they are in the 
marketing side or the manufacturing side, almost universally they 
support this legislation.
  So with all due respect to our distinguished colleague and chairman 
of the Appropriations Committee, I think this is an idea that has 
percolated for a very long time. It is time for the House to take 
action. I strongly support the bill, and I hope my colleagues will join 
me in supporting it as well and pass it here today on the House floor.

[[Page 4139]]

  Mr. Speaker, as Chairman of the Subcommittee with jurisdiction over 
dairy programs and policies, I want to express my support for this 
legislation and reiterate the comments made by the Chairman of the 
Agriculture Committee.
  As he said, the federal milk marketing order system has served the 
dairy industry well. But we have this situation where a processor from 
outside California can undermine the market there by under pricing the 
regulated competition.
  Mr. Nunes and a number of others have worked to address this, and the 
legislation before us today would direct USDA to apply the minimum 
pricing regulations of the federal order system to milk processed in a 
federal order area and distributed into states that have a statewide 
system.
  While we're aware that some Members have concerns with this 
legislation, it's important to point out that it has the strong support 
from nearly the entire dairy industry, both producers and processors.
  Again, as Chairman of the Dairy Subcommittee, I encourage my 
colleagues to join me in supporting this legislation.
  Mr. LEWIS of California. Mr. Speaker, I yield myself such time as I 
might consume.
  Mr. Speaker, it is pretty apparent for those who have been listening 
that this is not a simple matter. I mean, dealing with national dairy 
policy by way of a suspension bill, with the presumption this is a very 
simple, noncontroversial item, at best, distorts the process.
  Let me share with my colleagues that there is a regulation in place 
that covers the problems that have been raised here on the floor. The 
department has recently done that. That regulation is being challenged 
in court, and it is supposed to be heard tomorrow. So the opponents are 
choosing to bring the bill up today to undermine that opportunity for a 
family business to have an opportunity to expand their business.
  I would suggest to my colleagues perhaps we should be supporting 
small producer-handlers across the country who would wish to expand 
their business, and those who have not chosen to follow that line, if 
it is so profitable, why do they not follow that line themselves? They, 
too, could become producer-handlers.
  Mr. Speaker, I reserve the balance of my time.
  Mr. GOODLATTE. Mr. Speaker, I have just one speaker remaining, and I 
believe we have the right to close.
  Mr. PETERSON of Minnesota. Mr. Speaker, I do not think we have any 
additional speakers, and so I yield back the balance of my time.
  Mr. LEWIS of California. Mr. Speaker, I have no additional speakers, 
and I yield back the balance of my time.
  Mr. GOODLATTE. Mr. Speaker, I yield the remaining balance of my time 
to the gentleman from California (Mr. Nunes).
  Mr. NUNES. Mr. Speaker, I want to thank the chairman of the Ag 
Committee, Bob Goodlatte, and Ranking Member Peterson for this ongoing 
3-year debate.
  I find it interesting when we come to Washington, you learn that 
people like to use politics instead of policy. If you notice, the 
opposition to this bill, they did not talk or discuss the policy of 
this matter. They talked about the politics of it.
  So since they went down that road, I would like to say that this bill 
is not controversial. This bill has been debated for 3 years. The 
Senate passed it unanimously. The Senate authorizers have said that 
this needs to get done. The House authorizing committee, we have the 
chairman of the Dairy Subcommittee who recognizes this needs to be 
done.
  The opposition to this bill, who is a good friend of mine, but this 
has unanimous support across California, unanimous. Every dairy farmer 
in the State of California has sent letters to their Congressman, and 
every dairy industry, not only the dairy farmers, this is not just 
about dairy farmers, this is dairy processors. This is grocery stores, 
and it is not only California. It is across the entire country. This 
has national implications to let producer-handlers game the system. 
This is about gaming the system.
  So it is not confusing. It is not controversial, and if you look at 
the fact that they talk about a constituent being in California in a 
lawsuit that is being brought forth, that is simply not true. The 
lawsuit has been brought forth in Texas, and the person claims to be a 
constituent of Texas.
  Mr. LEWIS of California. Mr. Speaker, will the gentleman yield?
  Mr. NUNES. I yield to the gentleman from California.
  Mr. LEWIS of California. Mr. Speaker, the gentleman involved is a 
constituent of mine. I can take you to his farm anytime you like, in 
California.
  Mr. NUNES. Mr. Speaker, all I am saying is the court case you cited 
is filed in a Texas court, and he claims to be a resident of Texas.
  Mr. LEWIS of California. One of his major farms is in my district, 
and all the farmers around him in California are supporting his 
position.
  Mr. NUNES. Well, I thank the chairman for that, but I do have to say 
that we have a differing opinion here, and I can provide the chairman 
with letters, if he would like, at a later date.
  But with that, I want to thank, again, the House leadership and the 
ranking member and especially Chairman Goodlatte for bringing this 
forward, and I hope that the House will pass Senate bill 2120 as 
quickly as possible.
  Mr. COLE of Oklahoma. Mr. Speaker, I rise today in opposition of S. 
2120. Although I acknowledge there is merit to the original intent of 
this bill, I am unable to ignore the harm it may cause for the small 
business dairy industry in light of recent developments. As this 
industry is an integral economic contributor to my district, and indeed 
Oklahoma as a whole, it would be negligent of me to endorse this bill 
and rely on good luck to protect my constituents.
  Mr. Speaker, the dairy industry is complex and there are many 
legitimate competing interests. With this in mind, I commend my 
colleagues in both bodies of Congress who diligently worked to build a 
rare consensus while crafting this bill. I have no doubt in my mind 
that the original intent of this bill was narrow in scope, focused on 
regulating aspects of the milk industry in certain western states. In 
addition, I have no doubt that the crafters of this bill believed they 
were protecting smaller dairy farmers, processors, and producer-
handlers outside of those states from falling under similar regulations 
in the future.
  However, Mr. Speaker, the U.S. Department of Agriculture acted before 
Congress, issuing a final rule on February 24, 2006, establishing 
similar regulations as would be established by S. 2120. I must admit 
Mr. Speaker, this begs the question: Why is it necessary for Congress 
to now duplicate what has already been legitimately addressed by the 
USDA? I fear the only outcome may be to codify this regulation, thereby 
inherently suggesting that Congress will endorse similar such 
regulations in the future. This is a precedent which I can not support. 
I believe in our government's regulatory process Mr. Speaker, and as 
such, I believe there is no longer any need for Congress to act upon 
this particular issue. Had the USDA not taken this action, I also have 
no doubt I would have felt much more comfortable with this bill.
  Mr. Speaker, S. 2120, although originally well-intentioned and 
carefully crafted to insulate dairy farmers, processors, and producer-
handlers outside of these particular western states from unintended 
consequences, has been outdated by the regulatory actions of the USDA. 
Should Congress pass S. 2120, it may only serve to set a dangerous 
precedent which could severely harm an important part of America's 
dairy industry in the future.
  Mr. BACA. Mr. Speaker, I rise today in support of S. 2120, The Milk 
Regulatory Equity Act of 2005.
  Mr. Speaker, this bill comes before us today with the full support of 
the leadership of the House Agriculture Committee and the nearly 
unanimous support of the entire dairy industry.
  As Ranking Member of the Department Operations, Oversight, Dairy, 
Nutrition and Forestry Subcommittee of the House Agriculture Committee, 
I can speak to how rare it is for a bill to achieve such wide consensus 
and agreement among government officials and industry representatives.
  This bill is good legislation that will close an unintended loophole 
created by past federal regulations. While most states determine their 
milk prices based on their Federal Milk Market Order Area, certain 
states have enacted legislation which authorizes state agencies to 
determine milk prices for intrastate milk sales. This then allows some 
out of state milk processors to be completely exempt from any minimum 
price regulations and creates an unfair market advantage. S. 2120 will 
fix this problem and place all milk processors on a level playing 
field.

[[Page 4140]]

  Dairy operators in the Inland Empire of California, including Chino 
and Ontario--in or near my district--are being hurt by this loophole. 
Hard-working farmers all across America are facing the same situation, 
and we owe it to them to provide regulatory action that will help all 
dairy processors.
  I want to commend Chairman Goodlatte and Ranking Member Peterson of 
the full Committee for their excellent work on this legislation.
  I also want to thank Chairman Gutknecht of our Subcommittee for his 
leadership on this matter.
  I urge my colleagues to vote in favor of this bill and continue the 
federal government's tradition of offering American consumers 
consistently priced high quality milk.
  Mr. UDALL of Colorado. Mr. Speaker, I rise in opposition to S. 2120, 
the Milk Regulatory Equity Act.
  I think there well may be a need for Congress to consider legislation 
dealing with Federal Milk Marketing Orders (FMMOs). But the subject is 
too important to be handled the way this bill has been.
  The suspension calendar is supposed to be reserved for bills that the 
relevant committees have reviewed and that are not controversial, which 
is why debate is limited and no amendments are allowed.
  However, there has been no hearing on this bill and it has never been 
approved by any Committee--in either the House or Senate--so there has 
been no opportunity to consider the testimony of anyone who might be 
affected, including at least one Colorado company that has told me of 
their objections to the bill as it now stands.
  Before we make a change in Federal dairy policy that has been in 
place for 70 years I think it is appropriate to hear all sides of the 
debate. Because that has not happened, I cannot support the bill.
  I urge all Members to join me in voting no today, so that the bill 
can receive a more careful evaluation and so that possible revisions 
can be considered in the Agriculture Committee.
  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

[[Page 4141]]

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.
  The SPEAKER pro tempore (Mr. Culberson). The question is on the 
motion offered by the gentleman from Virginia (Mr. Goodlatte) that the 
House suspend the rules and pass the Senate bill, S. 2120.
  The question was taken.
  The SPEAKER pro tempore. In the opinion of the Chair, two-thirds of 
those present have voted in the affirmative.
  Mr. LEWIS of California. Mr. Speaker, on that I demand the yeas and 
nays.
  The yeas and nays were ordered.
  The SPEAKER pro tempore. Pursuant to clause 8 of rule XX and the 
Chair's prior announcement, further proceedings on this question will 
be postponed.

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