To establish a counter-cyclical income support program for dairy producers.

To establish a counter-cyclical income support program for dairy producers.

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 `Family Dairy Farmer Preservation Act of 2003'.

SEC. 2. NATIONAL COUNTER-CYCLICAL INCOME SUPPORT PROGRAM FOR DAIRY PRODUCERS.

(a) INCOME SUPPORT FOR ELIGIBLE PRODUCERS- During the period beginning on the date of the enactment of this Act and ending on September 30, 2011, the Secretary shall carry out a program to support the income of eligible producers of milk.

(b) DEFINITIONS- In this section:

(1) The term `Board' means a Regional Dairy Board established under subsection (e).

(2) The terms `Class I milk', `Class II milk', `Class III milk', and `Class IV milk' mean milk (including components of milk) classified as Class I, II, III, or IV milk, respectively, under an order.

(3) The term `Class I mover' means the greater of--

(A) the Advanced Class III milk price (as determined under section 1000.50(q)(4)(i) of title 7, Code of Federal Regulations (or a successor regulation)); and

(B) the Advanced Class IV milk price (as determined under section 1000.50(q)(4)(ii) of title 7, Code of Federal Regulations (or a successor regulation)).

(4) The term `covered processor' means a milk plant located in a participating State or a milk plant that, while not located in a participating State, distributes Class I milk products in a participating State.

(5) The term `District' means a Regional Dairy District established under subsection (d).

(6) The term `eligible producer' means an individual or entity that directly or indirectly has an interest in the production of milk in a participating State.

(7) The term `eligible production' means the lesser of--

(A) the quantity of milk produced by an eligible producer during a month; or

(B) 500,000 pounds per month.

(8) The term `marketing area' means a marketing area subject to an order.

(9) The term `order' means an order issued under section 8c of the Agricultural Adjustment Act (7 U.S.C. 608c), reenacted with amendments by the Agricultural Marketing Agreement Act of 1937, or a comparable State order, as determined by the Secretary.

(10) The term `participating State' means a State covered by subsection (c).

(11) The term `Secretary' means the Secretary of Agriculture.

(12) The term `State' means each of the 48 contiguous States of the United States.

(13) The term `Trust Fund' means the National Dairy Producers Trust Fund.

(c) PARTICIPATING STATES-

(1) SPECIFIED STATES- The following States are participating States for purposes of the program authorized by this section: Alabama, Arkansas, Connecticut, Delaware, Georgia, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Mississippi, Missouri, New Hampshire, New Jersey, New York, North Carolina, Oklahoma, Pennsylvania, Rhode Island, South Carolina, Tennessee, Vermont, Virginia, and West Virginia.

(2) OTHER STATES- The Governor of a State not specified in paragraph (1) may designate the State as a participating State by providing notice to the Secretary in the manner prescribed by the Secretary.

(3) WITHDRAWAL- To withdraw a State from participation in the program, the Governor of the State (with the concurrence of the legislature of the State) shall provide written notice to the Secretary of the withdrawal of the State.

(4) EFFECTIVE DATE OF WITHDRAWAL- The withdrawal of a State from participation in the program takes effect--

(A) in the case of written notice provided during the 180-day period beginning on the date of the enactment of this Act, on the date on which the notice is provided to the Secretary under paragraph (3); and

(B) in the case of written notice provided after such period, on the date that is one year after the date on which the notice is provided to the Secretary under paragraph (3).

(5) EFFECT OF PARTICIPATION ON ELIGIBILITY FOR OTHER DAIRY PROGRAMS- Eligible producers operating in a participating State may not receive payments under section 1502 of the Farm Security and Rural Investment Act of 2002 (7 U.S.C. 7982), notwithstanding any contract entered into under subsection (b) of such section before the date of the enactment of this Act. Payments made under such a contract before such date shall not be recovered, but no further payments shall be made under the contract.

(d) REGIONAL DAIRY DISTRICTS- The Secretary shall establish five Regional Dairy Districts that are composed of the following participating States:

(1) NORTHEAST DISTRICT- A Northeast District consisting of the States of Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Ohio, Pennsylvania, Rhode Island, and Vermont.

(2) SOUTHERN DISTRICT- A Southern District consisting of the States of Alabama, Arkansas, Florida, Georgia, Kansas, Kentucky, Louisiana, Mississippi, Missouri, Nebraska, New Mexico, North Carolina, Oklahoma, South Carolina, Texas, Tennessee, Virginia, and West Virginia.

(3) UPPER MIDWEST DISTRICT- An Upper Midwest District consisting of the States of Illinois, Indiana, Iowa, Michigan, Minnesota, North Dakota, South Dakota, and Wisconsin.

(4) INTERMOUNTAIN DISTRICT- An Intermountain District consisting of the States of Arizona, Colorado, Idaho, Montana, Nevada, Utah, and Wyoming.

(5) PACIFIC DISTRICT- A Pacific District consisting of the States of California, Oregon, and Washington.

(e) REGIONAL DAIRY BOARDS-

(1) IN GENERAL- Each District shall be administered by a Regional Dairy Board.

(2) COMPOSITION- The Board of a District shall be composed of not less than two, and not more than three, members from each participating State in the District, appointed by the Secretary from nominations submitted by the Governor of the State.

(3) NOMINATIONS- The Governor of a participating State shall nominate at least five residents of the State to serve on the Board, of which--

(A) at least one nominee shall be an eligible producer at the time of nomination; and

(B) at least one nominee shall be a consumer representative.

(f) NATIONAL DAIRY PRODUCERS TRUST FUND-

(1) ESTABLISHMENT AND FUNDING- There is established in the Treasury of the United States a trust fund to be known as the National Dairy Producers Trust Fund, which shall consist of--

(A) the payments received by the Secretary and deposited in the Trust Fund under subsection (g); and

(B) the payments made by the Secretary to the Trust Fund under subsection (h).

(2) EXPENDITURES- Amounts in the Trust Fund shall be available to the Secretary, to the extent provided for in advance in an appropriations Act, to carry out this section.

(g) PAYMENTS FROM COVERED PROCESSORS TO TRUST FUND-

(1) PAYMENTS REQUIRED- During any month for which the Class I mover is less than $14.25, each covered processor that purchases Class I milk during the month that will be sold in a participating State shall pay to the Secretary for deposit in the Trust Fund an amount obtained by multiplying--

(A) the difference between $14.25 per hundredweight and the Class I mover; by

(B) the quantity of Class I milk purchased from eligible producers during the month.

(2) COMPENSATORY PAYMENTS- The Secretary shall promulgate regulations requiring persons who sell Class I milk into a participating State to make compensatory payments into the Trust Fund with respect to all such milk to the extent necessary to equalize the cost of milk purchased by persons subject to paragraph (1). In no case may a compensatory payment be required on Class I milk on which a payment has been made under paragraph (1).

(h) COUNTER-CYCLICAL PAYMENTS FROM SECRETARY TO TRUST FUND- If the average price for Class III milk during a month is less than $13.25 per hundredweight, the Secretary shall use the funds, facilities, and authorities of the Commodity Credit Corporation (in such amounts as may be necessary) to make a payment each month to the Trust Fund in an amount determined by multiplying--

(1) 25 percent of the difference between $13.25 per hundredweight and the weighted average of the price received by producers in each participating State for Class III milk during the month, as determined by the Secretary; by

(2) the quantity of eligible production of Class II, Class III, and Class IV milk produced in the various participating States during the month, as determined by the Secretary.

(i) COMPENSATION FROM TRUST FUND FOR ADMINISTRATIVE AND INCREASED FOOD ASSISTANCE COSTS- The Secretary shall use amounts in the Trust Fund to provide compensation--

(1) to the Secretary for administrative costs incurred by the Secretary and Boards in carrying out this section;

(2) to the Secretary to cover the increased cost of any milk and milk products provided under any food assistance program administered by the Secretary that results from carrying out this section; and

(3) to each State for the increased costs incurred by the State of any milk or milk products provided under the Special Supplemental Nutrition Program for Women, Infants, and Children established by section 17 of the Child Nutrition Act of 1966 (42 U.S.C. 1786) that results from carrying out this section

(j) PAYMENTS FROM TRUST FUND TO BOARDS-

(1) IN GENERAL- The Secretary shall use any amounts in the Trust Fund that remain after providing the compensation required under subsection (i) to make monthly payments to Boards.

(2) AMOUNT- The amount of a payment made to a Board of a District for a month under paragraph (1) shall bear the same ratio to payments made to all Boards for the month as the eligible production in the District during the month bears to eligible production sold in all Districts.

(k) PAYMENTS BY BOARDS TO PRODUCERS-

(1) IN GENERAL- With the approval of the Secretary, a Board of a District shall use payments received under subsection (j) to make payments to eligible producers for eligible production of milk that is produced in a participating State in the District.

(2) LIMITATION- An eligible producer may not receive payments under this subsection on production in excess of 500,000 pounds of milk per month

(3) SUPPLY MANAGEMENT- In carrying out paragraph (1), a Board of a District may--

(A) use a portion of the payments described in paragraph (1) to provide bonuses or other incentives to eligible producers for eligible production to manage the supply of milk produced in the District; and

(B) request the Secretary to review a proposed action under subparagraph (A).

(4) REIMBURSEMENT OF COMMODITY CREDIT CORPORATION-

(A) IN GENERAL- If the Secretary determines that the Commodity Credit Corporation has incurred additional costs in a fiscal year to carry out section 1501 of the Farm Security and Rural Investment Act of 2002 (7 U.S.C. 7981) as a result of overproduction of milk in a District due solely to the operation of this section in that District, the Secretary shall require the Board of that District to reimburse the Commodity Credit Corporation for the additional costs. The amount of any reimbursement by a Board under this subparagraph is limited to the amount that would otherwise be available to the Board to make payments to producers under subsection (j).

(B) BOARD ASSESSMENT- The Board of the District may impose an assessment on producers within participating States in the District to compensate the Commodity Credit Corporation for the additional costs.