Current StatusView additional legislative information at the LPITS web site.Bill Number: 106 Ratification Number: 123 Act Number 82 Introducing Body: Senate Subject: Regulation of the milk and milk products industry
(A82, R123, S106)
AN ACT TO AMEND ARTICLE 1 OF CHAPTER 33 OF TITLE 39, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO THE REGULATION OF THE MILK AND MILK PRODUCTS INDUSTRY, SO AS TO PROVIDE FOR THE SUPERVISION AND CONTROL OF THE PRODUCTION, PROCESSING, DISTRIBUTION, MARKETING AND SALE OF MILK; AND TO REPEAL ARTICLES 3, 6, 7, AND 9 OF CHAPTER 33 OF TITLE 39 RELATING TO THE STATE DAIRY COMMISSION, ITS CREATION, MEMBERSHIP, ORGANIZATION, POWERS AND DUTIES, ITS REGULATION OF DISTRIBUTORS, STORES AND PRICES, ITS REGULATION OF IMPORTATION OF MILK AND MILK PRODUCTS AND THE STABILIZATION OF THE DAIRY INDUSTRY.
Whereas, milk is a primary and necessary food for citizens of the State and it is in the public interest that there shall be constantly available a uniform and adequate supply of wholesome milk for the public; and
Whereas, it has been demonstrated by a sufficient period of experience that the marketing of milk is subject to a great deal of fluctuation in price, oftentimes artificially depressed to unreasonably low levels as a result of destructive, dangerous and demoralizing trade practices in an effort by those engaging in such practices to obtain or extend market dominance by injury to competition and destruction of competitors; and
Whereas, it has been shown that health regulations and sanitary rules alone are insufficient to safeguard and protect the public from future inadequate supplies of this necessary commodity and it is therefore necessary to encourage production by the best-known methods and ensure stable, orderly marketing conditions which may permit and encourage farmers to commit the substantial long-term capital investment required to provide a constant, adequate supply of wholesome milk; and
Whereas, the General Assembly finds that economic control and regulation of the production, marketing and sale of milk exists in every state in the United States and that such controls and regulations to which substantially all milk marketed in this country is subjected is being exercised by either the state or federal governments; and
Whereas, the marketing of milk continues to be a matter affected with the public interest because of its nature and susceptibility to unfair trade practices which tend to eliminate competition; and
Whereas, selling milk below cost does lessen and destroy competition and restrains this segment of trade and tends to create a monopoly in the milk business; and
Whereas, South Carolina cannot stand as an island and it is the concensus of the General Assembly that such controls and regulations in South Carolina should be exercised by the state government in order to avoid the alternative of federal controls of the milk industry of this State; and
Whereas, the General Assembly in the past has found and declared, and now reaffirms, that the milk industry is a business affected with the public interest and the facts set forth in this preamble (and the preambles to Act 1165 of 1966 and Act 1131 of 1968, which are expressly incorporated herein by reference and specifically reaffirmed), are declared to be matters of legislative findings and determinations; and
Whereas, in order to protect the well-being of the people of the State and promote the public health and public welfare, the production, processing, distribution, marketing and sale of milk should be supervised and controlled in the exercise of the police power of the State in the manner hereinafter provided. Now, therefore,
Be it enacted by the General Assembly of the State of South Carolina:
Supervision and control of milk products industry
SECTION 1. Article 1 of Chapter 33 of Title 39 of the 1976 Code is amended to read:
"Article 1
Section 39-33-10. As used in this article, unless otherwise stated or the context of the subject matter clearly indicates otherwise, the words and terms enumerated below are defined as follows:
'Person'-any individual, partnership, corporation, association or other business entity;
'Commission'-the State Dairy Commission;
'Director'-the director of the commission;
'Distributor'-any of the following persons wherever located or operating, whether within or without the State of South Carolina, doing business and engaged in receiving, producing, processing, manufacturing, subdistributing, distributing, marketing or handling in any manner any of the products covered by this article and offering such products for sale in this State:
A person, irrespective of whether such person is a producer, except a distributor who sells less than one hundred gallons of fluid milk products per day which are produced on his own farm:
a. who receives, processes, manufactures and packages any products covered by this article for human consumption,
b. who offers for sale any products covered by this article at wholesale or retail,
c. who operates a store or other establishment from which any products covered by this article are offered for sale at retail;
'Producer'- any person, irrespective of whether such person is also a distributor or member of a producer association who produces milk for sale as fluid milk in the State;
'Market'- any county or group of counties within this State, including the State as a whole.
'Producer Association or Association of Producers'- Any cooperative association of producers incorporated and existing under the cooperative laws of South Carolina or any such association incorporated and existing under similar laws of another state, which is authorized to do business in South Carolina and which the commission determines to have full authority for the sales of milk and dairy products of its members.
'Zone I'- the counties of Abbeville, Anderson, Cherokee, Greenville, Greenwood, Laurens, McCormick, Newberry, Oconee, Pickens, Spartanburg and Union;
'Zone II'- the counties of Aiken, Chester, Edgefield, Fairfield, Kershaw, Lancaster, Lee, Lexington, Richland, Saluda, Sumter and York;
'Zone III'- the counties of Allendale, Bamberg, Barnwell, Beaufort, Berkeley, Calhoun, Charleston, Chesterfield, Clarendon, Colleton, Darlington, Dillon, Dorchester, Florence, Georgetown, Hampton, Horry, Jasper, Marlboro, Marion, Orangeburg and Williamsburg;
'Store'-any establishment which purchases or otherwise acquires in processed and packaged form any of the products covered by this article for use or resale for human consumption;
'Licensee'- any person required to obtain a license by this article and any person who is a de facto licensee under this article;
'Milk'- the clean lacteal secretion obtained by the complete milking of one or more healthy cows, including milk that is cooled, pasteurized, standardized or otherwise processed with a view of selling it as fluid milk, cream, skimmed milk, cultured milk or as any other fluid milk product;
'Subsidiary'- any person over whom a distributor or an affiliate of a distributor has, or several distributors collectively have, either directly or indirectly, actual or legal control, whether by stock ownership or in any other manner;
'Affiliate'-any person or subsidiary thereof who has, either directly or indirectly, actual or legal control over a distributor, whether by stock ownership or otherwise;
'Books and records'- any books, records, accounts, invoices, contracts, financial statements, memoranda, documents, papers, correspondence or other data pertaining to the business of any person;
'Costs'- money paid or financial obligations incurred by a person in the production, manufacture or acquisition of any products covered by this article and the amount of money paid or financial obligations incurred in the processing, packaging, distributing, marketing, advertising and selling, including all administrative and overhead costs, of such products;
'Doing business'- the engaging in or the transacting of any activity in this State for the purpose of financial profit or gain;
'Price'- money furnished or to be furnished by a purchaser of milk or milk products.
Section 39-33-20. The products covered by this article are all grade A milk and milk products defined pursuant to Section 44-1-140. Such products shall include grade A raw milk for pasteurization, reconstituted milk derived by recombining dry milk solids, evaporated or condensed milk with water, which is processed with a view of selling it as a fluid milk product and all grade A milk products from whatever source derived which shall include, but not be limited to, pasteurized, homogenized, flavored and cultured milk, skim milk, lowfat milk, creamy buttermilk and cultured milk products.
Section 39-33-30. There is created the State Dairy Commission which shall be governed by a board of eleven members.
Ten members shall be appointed by the Governor and the Commissioner of Agriculture shall serve as an ex officio member without voting privileges.
(a) Five of the members, from the State at large, shall be public members who are not directly or indirectly involved in the production or distribution of milk and who represent consumers.
(b) One, from the State at large, shall be engaged primarily in the operation of a retail food store.
(c) One, from the State at large, shall be engaged primarily in the processing and distribution of milk.
(d) Three shall be grade A milk producers who are not directly involved in the distribution of milk. The three producer members, one from each of the three zones defined by this article, shall reside in the zone which they represent but not more than one of such producers selling milk to the same company shall be eligible to serve on the commission. The fact that a producer is a member of a cooperative shall not prevent such person from serving as a producer member of the commission. The commission shall call a public meeting of the producers living in any zone prior to the expiration of the term of the producer member from such zone. At such meetings each group shall nominate, for its respective representation on the commission, two producers for each vacancy which may need to be filled. Each producing farm shall have one vote. The names of the nominees shall be forwarded to the Governor by the commission and he shall appoint one producer from the nominees submitted for each vacancy.
The term of each appointive member shall be for three years and until his successor is appointed and qualified and members shall be limited to two consecutive terms. Any vacancy on the commission shall be filled by appointment of the Governor in the manner of the original appointment for the unexpired term.
The commission shall elect a chairman and vice chairman from among the appointive members. Six members, two of whom shall represent the consumer, shall constitute a quorum. The members shall be paid per diem as provided by law for members of state boards, committees and commissions in the performance of their official duties, plus the actual expense of travel required by the commission. The commission shall appoint a director, prescribe his duties and may remove him at its pleasure. The director may hire, prescribe the duties of and discharge employees, subject to the approval of the commission.
The principal offices of the commission shall be in the city of Columbia in space provided by the State.
Section 39-33-40. The commission shall prepare an annual budget and shall collect from licensed distributors, in the form of a monthly assessment on each hundred pounds of milk handled or sold in this State, the sum of money required for this budget. One-half of any such assessment due on milk received from producers or any association of producers shall be deducted by the distributor from funds owed to a producer or an association of producers.
All receipts from assessments collected under this article shall be paid by the commission to the State Treasurer and shall be placed by him in a general fund to the credit of an account to be known as the 'Dairy Commission Account' and such an amount as may be necessary, and no more, is appropriated out of this account for the payment of all expenses incurred by the commission in administering and enforcing this article.
Section 39-33-50. The commission shall supervise and regulate the purchase, distribution, disposal, marketing, consignment and sale of all milk as hereinafter provided. Nothing in this article shall be construed to extend or to limit the authority of the Department of Health and Environmental Control relating to milk or milk products within this State as provided by item (3) of Section 44-1-140.
The commission shall establish, supervise and regulate:
(1) A uniform classified milk purchasing plan based upon the sales, utilization and disposition of all milk received from producers and other sources by each individual distributor or a uniform classified milk purchasing plan based upon the total market-wide sales, utilization and disposition of all milk received from producers and other sources by all distributors in any market.
(2) A statewide uniform production incentive plan for the establishment of producers' milk bases which shall most effectively encourage more even year-round production of milk in order to provide a constant and adequate supply of fresh, wholesome milk for the inhabitants of this State and such producers' bases shall be used by distributors to allocate to producers milk disposed of in each class.
The commission may receive and disburse any funds necessary to effectuate the operation of a market-wide milk purchasing plan. Any funds received by the commission pursuant to the operation of a market-wide purchasing plan shall be paid by the commission to the State Treasurer and shall be deposited to an account known as the 'Producer Settlement Fund'.
Section 39-33-60. The commission shall establish and fix minimum prices paid by distributors to producers or associations of producers in any market in the State for various classes of milk as defined by regulations of the commission. In determining such prices, the commission shall take into consideration all pertinent economic factors relevant to the cost of producing milk in the State, including the average of all ordinary and necessary costs and expenses incurred by a representative number of Grade A milk producers in the production of milk and the proper alignment of prices paid to producers for milk in this State with such prices paid in adjoining states and nationally. The commission may adopt an economic formula which incorporates such economic and price alignment factors to determine the prices to be paid producers and associations of producers by distributors and then provide for periodic adjustment of such prices in accordance with the results obtained by the use of the formula. Prior to a price change, the commission shall make available to the public a written explanation of factors necessitating a change in the producer price of Class I milk, as determined by the use of the formula.
Public hearings shall be held for the adoption of or amendment to the formula. The commission may call such a hearing on its own motion and shall call such a hearing, upon the written application of any person representing not less than twenty-five individuals affected by a change in the producer price of Class 1 milk as determined by the use of the formula, to consider adjustments in the formula.
Clemson University shall annually update pertinent economic factors relevant to the cost of producing milk in the State and report its findings to the commission. The commission, upon receipt of the report, shall hold a public hearing to review the report issued by Clemson University and any other factors affecting the cost of producing milk, and make adjustments in the formula, if any are necessary, to reflect relevant economic trends.
Section 39-33-70. In addition to hearings required in Section 39-33-60, the commission may hold hearings to investigate any matters affecting the state dairy industry. The commission shall have the authority under this section to issue subpoenas, take depositions of witnesses and grant immunity from prosecution for violation of terms under the statutes for giving testimony or furnishing records in the course of an investigation.
The commission may apply to the court of common pleas for orders requiring compliance by persons failing or refusing to comply with the provisions of this article.
Section 39-33-80. The commission shall require all licensees to maintain records pertaining to the acquisition, processing, marketing and sale of milk, and to file verified reports containing such information within the time and in the manner as may be prescribed by the commission. Records required to be kept by the licensees shall be preserved for a period of three years.
The commission shall have access to all books and records required by this section and employees of the commission may enter all places of business during regular working hours for the purpose of inspecting, auditing, or copying such records.
Upon written request, the commission shall make available to any person information obtained by the commission and used in the determination of any prices established by the commission pursuant to this article; provided, however, except for the proper enforcement of this article, any information pertaining to a person or business obtained by the commission from reports, audits or investigations, or otherwise, shall not be made public in a form enabling identification of any particular person or business.
Any person violating the provisions of this section shall be deemed guilty of a misdemeanor and upon conviction shall be punished by a fine of not more than one thousand dollars or imprisoned for not more than sixty days.
Section 39-33-90. A distributor shall not engage, either directly or indirectly, in doing business in any market until he has applied for and obtained a license from the commission. A store shall not be required to make application for a license, but shall be deemed to be a de facto licensee as herein required. The commission may classify licensees and may issue licenses to distributors to produce, receive, process, manufacture, or sell any of the products covered by this article in any particular market.
The commission may decline to grant a license or may suspend or revoke a license already granted upon due notice and after a hearing before the commission whenever the applicant or licensee has violated regulations issued by the commission, health and sanitation regulations issued by the Department of Health and Environmental Control, or any provisions of this article.
The commission may, in lieu of license suspensions, invoke a penalty of not less than fifty dollars or more than five thousand dollars. All receipts from such penalties shall be paid by the commission to the State Treasurer for deposits in the same manner as assessments.
Section 39-33-100. Any person violating any provision of this article, except as otherwise herein provided, or regulations or orders promulgated pursuant thereto or of any license issued by the commission shall be deemed guilty of a misdemeanor and upon conviction shall be punished by a fine of not less than twenty-five dollars nor more than two hundred dollars or by imprisonment for not more than thirty days, and each day during which such violation shall continue shall be deemed a separate violation.
Section 39-33-110. Solicitation by or collusion or joint participation between or among any producer, association of producers, manufacturer, distributor or store, or any representative, to violate any of the provisions of this article and regulations or orders issued pursuant thereto, or the use of any misrepresentation, threat, intimidation or boycott to effectuate the commission of such violations, shall make all persons participating therein subject to the same penalties as for actual violations.
Section 39-33-120. The commission shall promulgate regulations to carry out the provisions of this article."
Members of Dairy Commission to continue to serve
SECTION 2. The members of the State Dairy Commission serving on the effective date of this act shall continue to serve until the expiration of their terms and until their successors are appointed and qualify and may exercise powers and duties consistent with the provisions of Article 1, Chapter 33 of Title 39 of the 1976 Code, as contained in this act.
Repeal
SECTION 3. Articles 3, 5, 7 and 9 of Chapter 33, Title 39 of the 1976 Code are repealed.
Time effective
Section 4. This act shall take effect upon approval by the Governor.