N.Y. Agriculture & Markets Law § 258-m: Orders fixing prices for milk and marketing agreements

§ 258-m. Orders fixing prices for milk and marketing agreements. 1.

Upon the petition of a producers' bargaining agency of the production

area supplying a marketing area, such agency representing at least

thirty-five per centum of the producers of milk therein, alleging the

existence of conditions so affecting the orderly marketing of milk in

such area that public interest requires regulation of prices of milk in

such area and equalization of the burden of surplus milk and expense of

handling it, and sharing the benefits of the fluid market in order that

the public policy declared in section two hundred fifty-eight-k of this

chapter shall be effective, and upon the written request of the

petitioner, the commissioner shall set, without a hearing, an interim

price for class I fluid milk, and may set an interim price for class II

and/or III milk. In determining such interim price, the commissioner

shall take into consideration, among other factors: (a) the prices being

paid to producers; (b) the costs of production to producers; (c) any

changes in the ratio of index of prices received for milk to index of

prices paid by dairy farmers; (d) the level of prices paid to producers

in adjoining markets; and (e) the interests of the general public. Such

interim price shall be set within five days of such written request and

to the extent practicable apply to any milk purchased on or after the

first day of the month following such determination. Such interim price

shall be in effect until the final determination regarding the petition

is made pursuant to the provisions of this article and is enforceable

and effectuated, provided however, such interim price shall be in effect

for no longer than one hundred eighty consecutive calendar days. During

such time when the interim price is in effect, the commissioner shall

provide for and enforce a mechanism for compensatory payments and have

the authority to establish and administer an equalization pool

throughout the entire state or any part thereof. Such interim price

shall be reviewable by a person aggrieved in a proceeding pursuant to

article seventy-eight of the civil practice law and rules. The

effectiveness or enforcement of such interim price regulation shall not

be restrained, stayed, or enjoined pendente lite. In addition, it shall

be the duty of the commissioner to call a public hearing for the

consideration of said petition and to give notice thereof by advertising

such call in such newspaper or newspapers of general circulation in such

marketing area as the commissioner deems advisable. Such notice shall

specify a time and a place within the marketing area at which the

hearing will be held and at which the applicants and other persons,

including producers, distributors and consumers and associations

thereof, may be heard. In not more than fifteen days upon receiving the

petition the commissioner shall set the hearing date in accordance with

the above provisions. Such hearing shall commence in not less than

fifteen days but not more than twenty days of the notice specifying the

date and time of the hearing. Such hearing shall conclude within fifteen

days of commencement, provided however, if the commissioner determines

in writing that the hearing has been conducted with due diligence but an

extension is necessary to accord due process, he or she may extend the

hearing for a period not to exceed ten days. If after such hearing the

commissioner shall find, upon the record of the proceeding that

conditions referred to in section two hundred fifty-eight-k of this

chapter exist so affecting the orderly marketing of milk in such area,

that public interest requires that the public policy declared in section

two hundred fifty-eight-k of this chapter shall be effective and that it

is necessary that prices for milk to producers and associations of

producers be fixed by the commissioner, as expressed by section two

hundred fifty-eight-k of this chapter, and that it is favored by at

least sixty-six and two-thirds per centum of the producers of milk

produced in the production area for said marketing area voting,

individually or through cooperatives, in the referendum, the

commissioner may by order fix and determine for such marketing area fair

and equitable minimum prices to be paid to producers. The determination

of the commissioner as to whether or not by order to fix and determine

minimum prices shall be made within forty days after such hearing,

effective on the first day of the month following the determination. If

the commissioner determines not to fix and determine minimum prices, he

shall state his reasons in writing and transmit same to the petitioner,

the governor, the temporary president of the senate and the speaker of

the assembly. Such price fixing order or orders shall be rescinded

effective at the end of the current month after a public hearing

whenever the commissioner shall find either that such conditions have

ceased to exist or that such termination is favored by at least

thirty-five per centum of the producers of milk handled within such

market. For purposes of this subdivision, unless otherwise specified,

days shall mean business days.

2. The commissioner may, from time to time upon like petition, during

the existence of such conditions revise the prices so fixed, after

holding a hearing thereon. Whenever as herein provided a producers'

bargaining agency of a production area supplying a marketing area shall

file a petition and/or amended petition praying for any relief provided

in this article, it shall be lawful for a distributors' agency of such

marketing area to file a petition and/or amended petition providing for

the consideration of issues therein raised relative to the petition

and/or amended petition of the producers' bargaining agency, or to an

existing milk marketing order. Upon receipt of any such petition of a

producers' bargaining agency for any such marketing area, the

commissioner shall mail a copy thereof to the secretary of the

distributors' bargaining agency for such marketing area, if any, which

meets the qualifications set forth in the last sentence of this

paragraph. If such distributors' bargaining agency files either a

petition or an amended petition with the commissioner or notifies the

commissioner that no such petition will be filed, the commissioner may

proceed to give notice of hearing as provided in subdivision one of this

section; otherwise the commissioner shall defer the giving of such

notice of hearing for a period of ten days after such distributors'

bargaining agency has received from the commissioner a copy of the

petition and/or amended petition of the producers' bargaining agency.

The commissioner shall mail a copy of the distributors' bargaining

agency petition to the secretary of the producers' bargaining agency and

shall give such notice of such petition by publication or otherwise as

the commissioner deems advisable. Evidence upon the proposals set forth

in both the producers' and distributors' bargaining agency petitions

shall be received at the same hearing. The commissioner shall not be

required to furnish a copy of any petition of a producers' bargaining

agency to a distributors' bargaining agency nor shall such distributors'

bargaining agency be entitled to file a petition and to be heard as

herein provided unless within the calendar year preceding the filing

with the commissioner of the producers' bargaining agency petition such

distributors' bargaining agency shall have filed with the commissioner a

list of its distributor members and the names and addresses of its

officers and unless such distributors' bargaining agency represents not

less than sixty per centum of the quantity of milk distributed in such

marketing area, exclusive of that distributed by cooperative

corporations, as determined by the reports submitted to the commissioner

during the preceding license year.

The provisions of this subdivision relative to distributors'

bargaining agency petitions shall not apply to any milk marketing area

or order, jointly administered by the commissioner and any officer or

agency of the United States or of any other state.

3. Before fixing any prices pursuant to the provisions of the two

preceding paragraphs, the commissioner shall investigate what are

reasonable costs and charges for producing, hauling, handling,

processing and/or other services performed in respect of milk and what

prices for milk in the market or markets affected by such prices and

under varying conditions will be most in the public interest. The

commissioner shall take into consideration the balance between

production and consumption of milk, the cost of production and

distribution, including compliance with all sanitary regulations in

force in the market or markets affected, the cost of feeding stuffs used

in the production of milk, the supply of milk in such market and the

purchasing power and welfare of the public. The commissioner shall fix

prices to producers on the basis of the use thereof in the various

classes, grades and forms. Any prices fixed or approved by the

commissioner shall be deemed to be prima facie reasonable.

4. In determining the approval or request for an order as herein

provided or the termination thereof on the part of producers the

commissioner shall consider the approval, request or favor in respect

thereto by any bona fide cooperative association of producers engaged in

marketing milk within such marketing area as the approval, request or

favor either of making an order or of termination thereof of the

producers who are under contract with such cooperative association of

producers.

The commissioner shall appoint a referendum advisory committee to

assist and advise him in the conduct of the referendum. Such committee

shall review referendum procedures and the tabulation of results, and

shall advise the commissioner of its findings. A record of the

committee's advice, recommendations and findings shall be kept and made

available to any person upon request. The final certification of the

referendum results shall be made by the commissioner. The committee

shall consist of three members. One member shall be appointed from at

least three nominations of producers submitted by the producers

bargaining agency, one shall be an independent producer, and one shall

be appointed from at least three nominations of producers submitted by

any general farm organization. The members of the committee shall not

receive a salary but shall be entitled to actual and reasonable expenses

in the performance of their duties.

5. Marketing agreements. It shall be lawful for a producers'

bargaining agency of the production area supplying a marketing area and

a distributors' bargaining agency for such marketing area to enter into

marketing agreements as to the prices to be paid by distributors to

producers for milk sold or otherwise utilized in said marketing area, as

to rules and regulations covering the method of determining the

proportion of the product of the entire dairy herd of a producer which

shall be accepted and paid for pursuant to such price or prices, as to

reasonable trade practices affecting the relations between producers and

distributors in such market. Such agreement may also contain provisions

for a committee to administer the provisions of said marketing

agreement. No agreement, however, shall be effective until a copy

thereof signed by all persons parties thereto shall have been filed with

the commissioner.

If the commissioner shall have reason to believe that any such

marketing agreement results in a monopoly or restraint of trade to such

an extent that the price of milk is unduly enhanced by reason thereof,

he shall serve upon the parties to such agreement a complaint stating

his charge in that respect, to which complaint shall be attached or

contained therein a notice of hearing specifying a date and place, not

less than thirty days after the service thereof, requiring the parties

to such marketing agreement to show cause why an order should not be

made directing them to cease and desist from such monopolization or

restraint of trade. The parties so complained of may at the time and

place so fixed show cause why such order should not be entered. The

evidence given at such a hearing shall be taken under such rules and

regulations as the commissioner shall prescribe, reduced to writing and

made a part of the record therein. If upon such hearing the commissioner

shall be of the opinion that such marketing agreement results in

monopoly or restraint of trade to such an extent that the price of milk

in the marketing area affected by such agreement is unduly enhanced, he

shall issue and cause to be served upon the parties to said agreement an

order reciting the facts found by him and directing them to cease and

desist from such undue enhancement of prices. If such order is not

obeyed by the parties to such agreement, the commissioner shall file

with the attorney-general a certified copy of the order, evidence of

such disobedience and all of the records in the proceeding, and the

attorney-general may apply to the supreme court for an order or decree

affirming, modifying or setting aside such order or for making such

other order or decree as the court may deem equitable in the premises.

Upon application of the parties to said marketing agreement and after

a hearing, as provided in subdivision one of this section, the

commissioner may by order make the provisions of said marketing

agreement, relative to prices to producers and other provisions thereof,

effective as to all producers, distributors and handlers in said market

notwithstanding that they may not have approved of said agreement if he

shall find that the terms and conditions of said agreement are fair,

equitable and in public interest, that the agreement has been fairly

entered into without fraud, that public interest so requires, in order

to effectuate the declaration of policy contained in section two hundred

fifty-eight-k of this chapter, that the proportion of the producers and

distributors who have executed such agreement or shall have approved

same upon the hearing is equal to that required for an order under

subdivision one of this section, and further provided that the

commissioner shall determine that the prices set forth in said marketing

agreement are reasonable and proper prices, as required by this section

for prices fixed by an order of the commissioner. Any order so issued

shall terminate effective on the last day of the current month, and in

the same manner and upon the same request after a hearing, as provided

for the termination of an order in subdivision one of this section.

6. If approved by sixty-six and two-thirds per centum of the producers

affected voting individually or through their cooperative in the

referendum, any order or marketing agreement fixing the price to

producers under either subdivision one or subdivision five of this

section for market or markets, may provide for an equalization of prices

to all producers of the production area of the market affected so that

each producer or co-operative association shall receive the same base

price for all milk delivered subject to reasonable differentials for

quality and location and for services. Any such order may contain

provisions requiring from persons who bring milk or cream into the

marketing area regulated by such order payments on all such milk or

cream whenever such persons are not otherwise regulated by the order.

In order to effect such equalization of prices to producers the

commissioner shall require a monthly report from each dealer receiving

milk from producers for such market showing the disposition of all milk

handled by the reporting dealer in such market and shall thereafter

require payment by each dealer, to a trust company designated as a

fiscal agent by the commissioner, of any amount by which the sum

otherwise due by such dealer to its producers in accordance with the

prices fixed by such order exceeds the equalized base price as

determined by the commissioner from such reports, which amounts so paid

to said fiscal agent, the commissioner shall direct it to pay to those

dealers whose reports show that the base prices they will pay their

producers in accordance with such order are less than the equalized base

price as so determined by the commissioner, for repayment in turn by

such dealers to their producers so as to bring all lower rates of

payment up to the equalized base price. Such payments to said fiscal

agents shall not be deemed to be state funds. Such equalization shall

include milk of all grades and produced by all breeds of cows, and may

include milk, approved by a board or boards of health having

jurisdiction in a marketing area designated in an order under this

section, which was produced by a dealer.

The provisions of this subdivision shall not become operative as to

the New York state metropolitan market production area, however, until

pursuant to federal or state statutes, or by action of authorities duly

constituted and authorized thereunder, prices to producers are so

equalized and made effective throughout all the production area of the

New York state metropolitan market area.

7. After the commissioner shall have fixed prices in any area or

approved prices in a marketing agreement to be charged or paid for milk

in any form included in the definition of milk as used in this article

whether by class, grade or use, it shall be unlawful for a milk dealer

to buy or offer to buy milk at any price less than such price or prices

as shall be applicable to the particular transaction, and no method or

device shall be lawful whereby milk is bought or sold or offered to be

bought or sold at a price less than such price, or prices, as shall be

applicable to the particular transaction, whether by a discount or

rebate, or free service, or advertising allowance, or a combined price

for such milk together with another commodity or commodities, or service

or services, which is less than the aggregate of the prices for the milk

and the price or prices for such other commodity or commodities, or

service or services, when sold or offered for sale separately or

otherwise.

8. It is the intent of the legislature that the instant, whenever that

may be, that the handling within the state by a milk dealer of milk

produced outside of the state becomes a subject of regulation by the

state, in the exercise of its police powers, the restrictions set forth

in this article respecting such milk so produced shall apply and the

powers conferred by this article shall attach.

9. No marketing agreement or order shall prevent a cooperative

association from blending as heretofore the proceeds of all sales and

distributing to its producers the resultant blended price subject to

deductions and differentials as provided by its contracts with its

producers, but no such cooperative association shall sell milk at prices

lower than the prices fixed by the commissioner in an order for the

markets affected.

10. Any marketing agreement or order of the commissioner may provide

for necessary deductions from payments to producers to cover the cost of

administering such marketing agreement or order, including the cost of

auditing milk dealers' classifications, and the cost of other services

to producers. The funds so derived from such deductions shall be

deposited in an account within the miscellaneous special revenue fund

and shall not be deemed to be state funds. The commissioner may, in his

or her discretion, appoint an administrator and such assistant

administrators as in his or her opinion may be necessary to administer

the terms of any agreement or order, and the persons so appointed shall

be deemed to occupy positions confidential to the commissioner and may

be appointed without competitive examination. All other persons employed

by the commissioner in the administration of such a marketing agreement

or order shall be selected in accordance with the civil service law and

rules.

11. Any marketing agreement or order of the commissioner may provide

(a) for payments to cooperative associations of producers in cases where

the commissioner finds that such associations are actually rendering

marketing services to producers under contract with them, which services

enure to the benefit of all producers in the market or to the benefit of

the market as a whole and may include the conduct and maintenance,

jointly with other cooperative associations, of plans or campaigns, by

advertisement or otherwise, including participation in similar regional

or national plans or campaigns, to promote the increased consumption of

milk and milk products, to acquaint the public with the dietary

advantages of milk and milk products and with the economy in the diet,

and to command, for milk and dairy products, consumer attention

consistent with their importance and value, or that such associations

are rendering services in the control and disposition of surplus for the

benefit of the market; (b) for payment to milk dealers or to cooperative

associations of producers which operate milk receiving stations or

manufacturing plants for services rendered by them, in the stabilizing

of the supply of fluid milk and cream within the market at times either

of surplus or of shortage of milk; and (c) for adjustments in payments

to producers to effect a more favorable seasonal balance as between the

production and consumption of milk. Such adjustments may be made in the

form of deductions and additions to the fund to equalize prices of milk

to producers, or by apportioning among producers the total value of all

milk subject to equalization on the basis of their marketings of milk

during a representative period of time. Any such deductions from the

fund to equalize prices shall not be deemed to be state funds. Such

moneys shall be held in reserve and used solely for additions to the

fund to equalize prices, in such manner as the order may provide. The

commissioner shall make no provision for adjustment in payments under

this section with respect to a state milk marketing order, except on the

petition of a producers' bargaining agency of a production area

supplying a marketing area and after a public hearing and subsequent

producer approval as required by this section.

12. "Distributor" as used in this and the preceding section means a

milk dealer as defined in this article who delivers milk to stores

and/or consumers within the marketing area, from a milk depot or milk

plant owned and/or operated by such dealer.