§ 1002.77 - Cooperative payments for marketwide services.

Payments shall be made to qualified cooperatives or to federations under the conditions, in the manner, and at the rates set forth in this section.

(a) Definitions. As used in this section the following terms shall have the following meanings:

(1) Cooperative means a cooperative association of producers which is duly incorporated under the cooperative corporation laws of a state; is qualified under the Capper-Volstead Act (7 U.S.C. 291 et seq.); has all its activities under the control of its members; and has full authority in the sale of its members’ milk.

(2) Federation means a federation of cooperatives which is duly incorporated under the laws of a State.

(3) Federated cooperatives means a cooperative which is a member of a federation and on whose membership the federation is an applicant for or receives payments under paragraph (f)(2) of this section.

(4) Affiliated cooperatives means a cooperative upon whose entire membership another cooperative, by mutual consent, is an applicant for or receives payments under paragraph (f)(2) of this section.

(5) Member producer means, when used with respect to a cooperative or federation which is an applicant for or is receiving payments, is a producer as defined in § 1002.6 who has met the following conditions:

(i) He is a member of the cooperative or one of its affiliated cooperatives, or in the case of a federation, he is a member of one of its federated cooperatives from whom the cooperative, affiliated cooperative, or federated cooperative is receiving at least 1 cent per hundredweight of milk delivered by him: Provided, That the cooperative of which he is a member is meeting the requirements of this part applicable to it;

(ii) He has been a producer, or his farm, as defined in § 1002.10, had been the farm of a producer for at least a prior 12-month period; and

(iii) He has not for a prior 12-month period been a member producer of another cooperative or federation: Provided, That in the case of membership transfers resulting from mergers of designated organizations, or from affiliation, federation or merger of cooperatives not previously meeting the definition of paragraph (a)(3) or (a)(4) of this section, this paragraph shall not apply.

(6) Marketwide services means services performed by cooperatives or federations, as defined herein, which benefit all producers in the marketing of their milk under this order; such services are not limited to those specified in paragraphs (e)(1) through (6) of this section and may include services directly or indirectly related to the order.

(b) Designated cooperatives and federations. A cooperative or federation may submit an application to the market administrator for payments under the provisions of this section or for modification of the basis of a previous designation. In accordance with the requirements of the rules and regulations issued by the market administrator such application shall include a written description of the applicant's program for the performance of marketwide services, including evidence that adequate facilities and personnel will be maintained by it so as to enable it to perform the marketwide services; and the application shall contain a statement by the applicant that it will perform the required marketwide services for which it is applying for payments: Provided, That in the case of an application for modification of the basis for a previous designation the market administrator may waive the requirement for submission of the written description of the programs. The application shall set forth all necessary data so as to enable the market administrator to determine whether it meets the designation requirements with respect to the payments for which the application is submitted. An application shall be approved by the market administrator only if he determines that:

(1) In the case of a cooperative;

(i) It has as member producers not less than 15 percent of all producers, as defined in § 1002.6;

(ii) It has contracts with each of its affiliated cooperatives under which the cooperatives agree to continue as affiliated cooperatives for at least 1 year, and such contracts cover or will be renewed for a yearly period for every subsequent year for which member producers of the affiliated cooperative are to be included within its membership for cooperative payment purposes;

(iii) It receives from each of its affiliated cooperatives not less than 1 cent per hundredweight of milk delivered by member producers of such cooperatives; and

(iv) If the application is also for an additional payment under paragraph (f)(3) of this section, the cooperative or its affiliated cooperatives operate marketing facilities, i.e., pool plants and pool bulk tank units, at which is received at least 25 percentum, by weight, of all milk delivered by its member producers; and, in addition, the cooperative or its affiliated cooperatives control processing facilities capable of handling at least 10 percentum, by weight, of all milk marketed by its member producers: Provided, That such processing facilities must be capable of handling not less than 1 million pounds of milk daily: Provided further, That the cooperative must be willing to accept nonmember milk on a temporary basis under the generally prevailing conditions for acceptance of milk from its own members.

(2) In the case of a federation:

(i) It has contracts with each of its federated cooperatives under which the cooperatives agree to remain in the federation for at least 1 year, and such contracts cover or will be renewed for a yearly period for every subsequent year for which the federated cooperatives are to be included within the membership of the federation for cooperative payment purposes;

(ii) It has as member producers not less than 15 percent of all producers, as defined in § 1002.6;

(iii) It receives from each of its federated cooperatives not less than 1 cent per hundredweight of milk delivered by member producers of such cooperative;

(iv) If the application is also for an additional payment under paragraph (f)(4) of this section, the federation or its federated cooperatives operate marketing facilities, i.e., pool plant(s) and pool bulk tank unit(s), at which is received at least 25 percentum, by weight, of the milk marketed by its member producers; and, in addition, the federation or its federated cooperatives control processing facilities capable of handling at least 10 percentum, by weight, of all milk marketed by its member producers: Provided, That such processing facilities must be capable of handling not less than 1 million pounds of milk daily: Provided further, That the federation must be willing to accept nonmember milk on a temporary basis under the generally prevailing conditions for such acceptance of milk from its own members.

(3) The applicant cooperative or federation demonstrates that it has the ability to perform the marketwide services for which application is made, and that such services will be performed.

(4) The applicant cooperative or the federated cooperatives of an applicant federation are in no way precluded from arranging for the utilization of milk under their respective control so as to yield the highest available net return to all producers without displacing an equivalent quantity of other producer milk in the preferred classification.

(c) Notice of designation or denial; effective date. Upon determination by the market administrator that a cooperative or a federation shall be designated to receive payment for performance of the marketwide services, he shall transmit such determination to the applicant cooperative or federation and publicly announce the issuance of the determination. The determination shall be effective with respect to milk delivered on and after the first day of the month following issuance of the determination. If, after consideration of an application for payments for marketwide services, the market administrator determines that the cooperative or federation is not qualified to receive such payments he shall promptly notify the applicant and specifically set forth in such notice his reasons for denial of the application.

(d) Requirements for continued designation. From time to time and in accordance with the rules and regulations which may be issued by the market administrator, each designated cooperative or federation must demonstrate to the market administrator that it continues to meet the designation requirements for the payments and is fully performing the marketwide services for which it is being paid.

(e) Marketwide services. Each cooperative or federation shall perform the marketwide services enumerated in this paragraph. Such services shall include:

(1) Analyzing milk marketing problems and their solutions, conducting market research and maintaining current information as to all market developments, preparing and assembling statistical data relative to prices and marketing conditions, and making an economic analysis of all such data;

(2) determining the need for the formulation of amendments to the order and proposing such amendments or requesting other appropriate action by the Secretary or the market administrator in the light of changing conditions;

(3) participating in proceedings with respect to amendments to the order, including the preparation and presentation of evidence at public hearings, the submission of appropriate briefs and exceptions, and also participating, by voting or otherwise, in the referenda relative to amendments;

(4) participating in the meetings called by the market administrator, such as meetings with respect to rules and regulations issued under the order, including activities such as the preparation and presentation of data at such meetings and briefs for submission thereafter;

(5) conducting a comprehensive education program among producers—i.e., members and nonmembers of cooperatives—and keeping such producers well informed for participation in the activities under the regulatory order and, as a part of such program, issuing publications that contain relevant data and information about the order and its operation, and the distribution of such publications to members and, on the same subscription basis, to nonmembers who request it, and holding meetings at which members and nonmembers may attend;

(6) in the case of a cooperative or federation which receives an additional payment under paragraph (f)(3) or (4) of this section, operating marketing facilities, or having affiliated cooperatives or federated cooperatives that operate marketing facilities, i.e., pool plant(s) and pool bulk tank unit(s), at which is received at least 25 percentum, by weight, of milk marketed by its member producers; and in addition, controls, or having affiliated cooperatives or federated cooperatives that control processing facilities capable of handling at least 10 percentum, by weight, of the milk marketed by its member producers: Provided, That such processing facilities must be capable of handling at least one million pounds of milk daily: Provided further, That the cooperative or federation must be willing to accept nonmember milk on a temporary basis under the generally prevailing conditions for such acceptance of milk of its own members; and

(7) performing such other services as are needed to maintain satisfactory marketing conditions and promote market stability.

(f) Rate, computation, time, and method of payment. (1) Subject to the provisions of paragraph (g) of this section, the market administrator, on or before the 20th day of each month, shall make payment out of the producer-settlement fund, or issue equivalent credit therefore, to each cooperative or federation which is designated for such payments for marketwide services. The payments to a cooperative or federation shall be based upon the milk reported by cooperative or proprietary handlers to have been received during the preceding month from its member producers, subject to adjustment upon verification by the market administrator.

(2) Such payment or credit shall be at the rate of 3 cents per hundredweight of milk in accordance with paragraph (f)(1) of this section.

(3) Any cooperative that operates marketing facilities or whose affiliated cooperatives operate marketing facilities, i.e., pool plant(s) and pool bulk tank unit(s), at which is received at least 25 percentum, by weight, of the milk marketed by its member producers, and, in addition, controls, or has affiliated cooperatives that control, processing facilities capable of handling, at least 10 percentum, by weight, of the milk marketed by its member producers but not less than one million pounds of milk daily shall receive a payment in addition to that provided for in paragraph (f)(2) of this section of one cent per hundredweight of all milk marketed by member producers in accordance with paragraph (f)(1) of this section.

(4) Any federation that operates marketing facilities, or whose federated cooperatives operate marketing facilities, i.e., pool plant(s) and pool bulk tank unit(s), at which is received at least 25 percentum, by weight, of the milk marketed by its member producers, and, in addition, controls, or whose federated cooperatives control, processing facilities capable of handling at least 10 percentum of the milk marketed by its member producers but not less than 1 million pounds daily, shall receive a payment, in addition to the payment provided for in paragraph (f)(2) of this section, of 1 cent per hundredweight of all milk marketed by member producers in accordance with paragraph (f)(1) of this section.

(5) If an individually designated cooperative is affiliated with a federation, the cooperative payment shall be made to such cooperative unless its contract with the federation specified in writing that the federation is to receive the payments. Any such contract must authorize the federation to receive the payments for at least 1 year, and such agreement must cover or be renewed for a yearly period for every subsequent year for which the federation is to receive the payments.

(g) Cancellation of designation. (1) The market administrator shall issue an order wholly or partly canceling the designation of a previously designated cooperative or federation for payments authorized pursuant to this section and such payments shall not thereafter be made to it if he determines that:

(i) The cooperative or federation no longer complies with the requirements of this part: Provided, That if one of its affiliated or federated cooperatives has failed to comply with the requirements of this part applicable to it or has failed, promptly after demand by the market administrator, to arrange for the utilization of milk under its control so as to yield the highest available net return to all producers without displacing an equivalent quantity of other producer milk in the preferred classification, the cooperative or federation shall be disqualified only to the extent that its qualification for payments or the amount of its payment are based upon the membership, milk, or operations of such noncomplying affiliated or federated cooperatives.

(ii) The cooperative or federation has failed to make reports or furnish records pursuant to this section or pursuant to rules and regulations issued by the market administrator; or

(iii) In the case of the cooperative, it has failed, promptly after demand by the market administrator, to arrange for the utilization of milk under its control so as to yield the highest available net return to all producers without displacing an equivalent quantity of other producer milk in the preferred classification.

(2) An order of the market administrator wholly or partly canceling the designation of a cooperative or federation shall not be issued until after the cooperative or federation has had opportunity for hearing thereon following not less than 15 days’ notice to it specifying the reasons for the proposed cancellation. If the cooperative or federation fails to file a written request for hearing with the market administrator within such period of 15 days, the market administrator may issue an order of cancellation without further notice: But if within such period a request for hearing is filed, the market administrator shall promptly proceed to hold such hearing pursuant to rules and regulations issued by him under paragraph (i) of this section.

(3) A cancellation order issued by the market administrator shall set forth the findings and conclusions on the basis of which it is issued.

(h) Appeals—(1) From denials of application. Any cooperative or federation whose application for designation has been denied by the market administrator may, within 30 days after notice of such denial, file with the Secretary a written petition for review. But the failure to file such petition shall not bar the cooperative or federation from again applying to the market administrator for designation.

(2) From cancellation orders. A cancellation order by the market administrator shall become final 30 days after its service on the cooperative or federation unless within such 30-day period the cooperative or federation files a written petition with the Secretary for review thereof. If such petition for review is filed, payments for which the cooperative or federation has been canceled by the order shall be held in reserve by the market administrator pending ruling of the Secretary, after which the sums so held in reserve shall either be returned to the producer-settlement fund or paid over to the cooperative or federation depending on the Secretary's ruling on the petition. If such petition for review is not filed, any payments which otherwise would be made within the 30-day period following issuance of the cancellation order shall be held in reserve until such order becomes final and shall then be returned to the producer-settlement fund.

(3) Record on appeal. If an appeal is taken under paragraph (h) (1) or (2) of this section, the market administrator shall promptly certify to the Secretary the ruling or order appealed from and the evidence upon which it was issued: Provided, That if a hearing was held the complete record thereof, including the applications, petitions, and all exhibits or other documentary material submitted in evidence shall be the record so certified. Such certified material shall constitute the sole record upon which the appeal shall be decided by the Secretary.

(i) Regulations. The market administrator is authorized to issue regulations and amendments thereto to effectuate the provisions of this section and to facilitate and implement the administration of its provisions. Such regulations shall be issued in accordance with the following procedure:

(1) All proposed rules and regulations and amendments thereto shall be the subject of a meeting called by the market administrator, at which all interested persons shall have opportunity to be heard. Not less than 5 days prior to the meeting, notice thereof and of the proposed regulations or amendments shall be mailed to qualified cooperatives and federations. A stenographic record shall be made at such meetings which shall be public information and be available for inspection at the office of the market administrator.

(2) A period of at least 5 days after the meeting shall be allowed for the filing of briefs.

(3) All regulations and amendments thereto issued by the market administrator pursuant to this section must be submitted in tentative form to the Secretary for approval, shall not be effective without such approval. The regulations or amendments in tentative form shall be forwarded also to cooperatives and federations designated under this section and to other persons upon request in writing. The Secretary shall either approve the regulations or amendments thereto submitted by the market administrator or direct the market administrator to reconsider the tentative rules or amendments. In the event the market administrator is directed to give reconsideration to the matter, the market administrator shall either issue revised tentative regulations or amendments or call another meeting pursuant to this section for additional consideration of the rules or amendments.

(j) Reports and records. Each designated cooperative or federation shall, in accordance with rules and regulations issued by the market administrator:

(1) After submission to the market administrator for verification, make a public report of its performance of marketwide services pursuant to this section, including data on its receipts and expenditure of cooperative payments funds and a description of the marketwide services performed. The report shall contain a certification by the market administrator that the report is, to the best of his knowledge, accurate and in accordance with the rules and regulations which he has established.

(2) Submit an annual report to the market administrator which shall include:

(i) A concise report of its performance of marketwide services and allocations of expenditures to such performance for the previous year; and

(ii) An outline of its proposed program and budget for performance of marketwide services for the coming year.

(3) Make such additional reports to the market administrator as may be requested by him for the administration of the provisions of this section.

(4) Maintain and make available to the market administrator or his representative such records as will enable the market administrator to verify such reports.

(k) Notices, demands, orders, etc. All notices, demands, orders, or other papers required by this section to be given to or served upon a cooperative or federation shall be deemed to have been given or served as of the time when mailed to the last known secretary of the cooperative or federation at his last known address.