A BILL TO BE ENTITLED
AN ACT to reestablish the north carolina milk commission.
The General Assembly of North Carolina enacts:
SECTION 1.  Article 28B of Chapter 106 of the General Statutes is reenacted as it existed immediately before its repeal and reads as rewritten:
"Article 28B
"Regulation of Production, Distribution, etc., of Milk and Cream.
"§ 106‑266.7.  Milk Commission continued; membership; chairman; compensation; quorum; cooperation of other agencies; official acts; meetings; principal office.
(a)	Establishment. – There is hereby reestablished a Milk Commission of the Department of Agriculture and Consumer Services.
(b)	Membership. – The Commission shall consist of 10 members as follows:
(1)	Three members appointed by the Governor, who shall be two public members and a person who operates a store or other establishment for the sale of fluid milk at retail for consumption off the premises.
(2)	Two members appointed by the General Assembly upon the recommendation of the President Pro Tempore of the Senate, who shall be a Grade A producer, who primarily markets with a cooperative plant and whose primary interest is operating a dairy farm, and a public member.
(3)	Two members appointed by the General Assembly upon the recommendation of the Speaker of the House of Representatives, who shall be a dairy processor‑distributor or an employee of a dairy processor‑distributor, who primarily operates a proprietary plant, and a public member.
(4)	Three members appointed by the Commissioner of Agriculture, who shall be a dairy processor‑distributor or an employee of a dairy processor‑distributor who primarily operates a cooperative plant and a Grade A producer who primarily markets with a proprietary plant and whose primary interest is operating a dairy farm, and a public member.
Appointments by the General Assembly shall be in accordance with G.S. 120‑121. The public members appointed pursuant to this subsection shall have no financial interest in, or be directly or indirectly involved in, the production, processing or distribution of milk or products derived therefrom.
(c)	Terms. – Appointments of Commission members shall be made for terms of four years, ending on June 30 of the appropriate year, as provided in this subsection. The following members shall be appointed to terms ending on June 30 of odd‑numbered years that follow by one year a year evenly divisible by four:
(1)	One public member and the operator of a store or other establishment for the sale of fluid milk at retail for consumption off the premises appointed by the Governor.
(2)	The public members appointed by the General Assembly.
(3)	The dairy processor‑distributor primarily operating a proprietary plant or the processor‑distributor's employee appointed by the Commissioner of Agriculture.
The remaining members shall be appointed to terms ending June 30 of odd‑numbered years that precede by one year a year evenly divisible by four. Members shall serve until either they are reappointed and requalified or their successors are appointed and qualified.
(d)	Removal, Vacancies. – Any member of the Milk Commission may be removed for physical or mental incapacity, or for misfeasance or nonfeasance. In cases of removal from the Commission, the removal must be initiated by the appointing authority for that member and subsequent appointments to fill such vacancies will be made in the normally prescribed manner for the remainder of the unexpired term by the appointing authority. If the office of the appointing authority is vacant, the successor to such office shall fill such vacancy. In case of death, resignation, disqualification, or other physical or mental incapacity which prevents a Commission member from performing his or her official duties prior to the expiration of his or her term of office, the successor shall be appointed as provided in this subsection to fill out the unexpired term. Vacancies in appointments made by the General Assembly shall be filled in accordance with G.S. 120‑122.
(e)	Chair. – At the first meeting of the Commission held on or after July 1 of each year, the Commission shall elect one of its members to serve as chairman through June 30 of the next following year.
(f)	Staff. – The Commission is hereby authorized and empowered to employ an administrator and such other personnel, including but not limited to, the services of any agency or agencies, either inside or outside the State, as may be deemed necessary in assembling information on costs and other factors needed to carry out the provisions of this Article.
(g)	Expenses. – Members of the Commission shall receive per diem and allowances as provided in G.S. 138‑5.
(h)	Compensation. – The compensation of the administrator shall be determined by the Office of State Human Resources.
(i)	Funding of Commission Operations. – All sums required for the operation of the Commission – salaries, per diem, and expenses – shall be paid out of special assessments collected from producers and distributors as set forth in G.S. 106‑266.11.
(j)	Quorum. – Six members of the Commission shall constitute a quorum.
(k)	Assistance From Other Agencies. – The Commission may call upon the Commissioner of Agriculture, the Director of Agricultural Research, the Director of the Agricultural Extension Service, or any other agency or department of the State for such information or services as such agency or department can provide, and such agency or department shall furnish such information or services, without additional compensation, as in its opinion is practicable.
(l)	Enforcement of Article. – The Commission shall, subject to the limitations of this Article and rules issued by the Commission, enforce the provisions of this Article; but no official act shall be taken, rule or regulation be promulgated, or official order be made or enforced, with respect to the provisions of this Article without the due approval of the Commission.
(m)	Meetings. – The Commission shall, by rule or otherwise, fix the time for holding regular meetings. The chairman, or any two members of the Commission, may at any time call a special meeting of the Commission. Such call shall designate the time and place of the meeting, and shall give not less than five days' written notice to each member by first‑class mail or electronic mail to the address designated for said member on the records of the Commission. Notice of special meeting shall be signed by the person or persons calling the meeting and shall give a brief description of the business to be considered at said meeting. Special meetings of the Commission may be held at any time or place, either within or without the State, with the unanimous consent of all members of the Commission.
(n)	Principal Office. – The principal office of the Commission shall be in the City of Raleigh, North Carolina, in office space assigned by the Department of Administration.
"§ 106‑266.8.  Powers of Commission.
(a)	General Powers. – The Commission is an instrumentality of the State of North Carolina, vested with the following powers:
(1)	To confer with the legally constituted authorities of other states and the United States, with a view of securing a uniformity of milk control, with respect to milk coming into the State and going out of the State in interstate commerce, with a view of accomplishing the purpose of this Article, and to enter into a compact or compacts for a uniform system of milk control.
(2)	To investigate all matters pertaining to the production, transportation, processing, storage, distribution, and sale of milk for consumption in the State of North Carolina.
(3)	To supervise and regulate the production, transportation, processing, storage, distribution, delivery and sale of milk for consumption in the State; provided that nothing in this Article shall be interpreted as giving the Commission any power to limit the quantity of milk that any producer can produce nor the power to prohibit or restrict the admission of new producers.
(4)	To classify milk on the basis of use or form; to adopt or approve base plans for allocating classes of milk and to provide for the pooling on a market‑wide or statewide plan the total utilization of licensed distributors, or may assign base and milk in order to obtain the highest utilization possible for producers and associations of producers supplying milk to the market; and the Commission may provide for an equalization payment in order that producer milk will  not be paid for in a lower class through the recombining of water and milk constituents.
(5)	To act as mediator or arbiter in any controversial issue that may arise among or between milk producers and distributors as between themselves, or that may arise between them as groups.
(6)	To cause examination into the business, books, and accounts of any milk producer, association of producers or milk distributors, their affiliates or subsidiaries; to issue subpoenas to milk producers, associations of producers, and milk distributors, and require them to produce their records, books, and accounts; to subpoena any other person from whom information is desired.
(7)	To take depositions of witnesses within or without the State. Any member of the Commission or any employee of the Commission, so designated, may administer oaths to witnesses and sign and issue subpoenas.
(8)	To make, adopt, and enforce all rules and orders necessary to carry out the purposes of this Article. Every rule and order of the Commission shall be made available on the Web site of the Commission. Compliance with this subdivision shall constitute due and sufficient notice to all persons affected by such rule, regulation or order. An order which applies only to a person or persons named therein shall be served on the person or persons affected. An order, herein required to be served, shall be served by personal delivery of a certified copy, or by mailing a certified copy in a sealed envelope, with postage prepaid, to each affected person, or in the case of a corporation, to any officer or agent of the corporation upon whom legal process may be served.
(b)	Specific Grants Do Not Impair or Qualify General Grants. – The operation and effect of any provision of this Article conferring a general power upon the Commission shall not be impaired or qualified by the granting to the Commission by this Article of a specific power or powers.
(c)	Hearing Prior to Regulating Market. – The Commission shall not exercise its power in any market until a public hearing has been held for such market, and the Commission determines that it will be to the public interest to exercise its power in such market. The Commission may, on its own motion, call such a hearing, and shall call such a hearing under the following circumstances:
(1)	Upon the written application of a producers' association organized under the laws of the State, supplying in the judgment of the Commission, a substantial proportion of the milk consumed in such market. If no such producers' organization exists on said market, the Commission shall call such hearing upon the written application of producers supplying a substantial proportion of the milk consumed in said market.
(2)	Upon the written application of distributors, distributing a substantial proportion of the milk consumed in such market.
A hearing required by this subsection may be held at the time and place and after such notice as the Commission may determine.
The Commission may withdraw the exercise of its powers from any market after a public hearing has been held for such market, and the Commission determines that it will be to the public interest to withdraw the exercise of its powers from such market.
	(d)	Power to Set Prices. – The Commission may set prices to be paid producers and associations of producers by distributors in any market or markets, and may also set different prices for different grades or classes of milk as provided in this subsection. Rules shall become effective when approved by the Commission. The Commission shall provide rules adopted to the Codifier of Rules within two working days of its adoption by the Commission.
(1)	The Commission, after investigation and public hearing and finding as a fact that it is in the public interest, may set the maximum and minimum wholesale and maximum retail prices to be charged for milk in any market area by any person subject to this section and may set different prices for different grades or classes of milk. The Commission may take into consideration the type of service rendered, the quantity delivered and the cost of the container.
(2)	Prices set under this subsection shall not become effective until 10 days after the mailing of notice of the action of the Commission. Prices set under subdivision (1) of this subsection shall remain in effect for at least 30 days and until the Commission finds it is in the public interest to remove said prices.
(3)	In determining the reasonableness of prices to be paid or charged in any market, the Commission shall be guided by the cost of production and distribution, including compliance with all sanitary regulations in force in such market or markets, necessary operating, processing, storage and delivery charges, the prices of other foods and other commodities, and the welfare of the general public. The Commission may adopt a formula incorporating such of these economic factors as well as other pertinent economic factors relevant to the production of milk which will determine automatically the prices to be paid producers or associations of producers by distributors in any market or markets, and then provide for the periodic automatic readjustment of such prices according to the result obtained by the use of this formula. Public hearings shall be held for adoption, or amendment of the formula itself, but shall not be required for price adjustments which are made based upon use of the formula.
(4)	In establishing producer prices for milk moving into other states, the Commission shall consider prevailing producer prices established by state or federal authority in such states.
(e)	Powers With Respect to Minimum Retail Price. – The Commission shall have no authority to establish a minimum retail price for milk, except upon a determination after a public hearing that the absence of a minimum retail price has caused or is about to cause a disruption in the North Carolina milk market or some segment of the market that is likely to depress the producer price or has caused or is likely to cause a substantial reduction in competition between processor‑distributors in an area, so as to adversely affect the public health and welfare that requires an adequate supply of milk at reasonable and fair prices. The Commission may issue emergency rules under Chapter 150B of the General Statutes to establish minimum retail prices prior to public hearing.
The Commission in establishing any minimum retail price shall impose a minimum retail price only for an area or political subdivision wherein the public interest as herein set forth justifies a minimum retail price being set and shall be guided by the same factors used in determining the reasonableness of prices as set forth in subdivision (d)(3) of this section. The Commission shall periodically review all outstanding minimum retail price orders to ensure that they do not remain in effect any longer than the public interest requires.
(f)	Uniform System of Accounting. – The Commission shall prepare and adopt a system of accounting designed to show, for each distributor of milk and milk products, under the supervision of the Commission, the total purchases by any distributor of each grade or class of milk; the total sales by each distributor and the revenue therefrom, for each grade or class of milk and the quantity thereof. Such accounting system shall be designed to show total purchases including the respective grades or classes of milk bought, as well as the total sales and the respective classes or grades of milk sold.
Each distributor of milk and milk products under the supervision of the Commission shall adopt and use the system of accounting adopted by the Milk Commission. The books and records of each distributor shall be open to inspection by the Commission or its agents during regular business hours and shall be audited by it at such regular intervals as shall be prescribed by the Commission.
It shall be unlawful for any distributor to pay for milk upon any such basis of grade or class lower than that upon which such milk is sold or used by the distributor. Nothing herein shall prevent the sale of a grade or class of milk by a distributor as milk of a lower grade or class. It shall be unlawful for any distributor to fail to use the system of accounting herein prescribed or refuse to allow the same to be inspected or audited.
(g)	Licensing Power. – The Commission may require all distributors in any market designated by the Commission to be licensed by the Commission for the purpose of carrying out the provisions of this Article. One who purchases milk from a licensed distributor for the purpose of retail sales shall not be required to be licensed hereunder. The Commission may decline to grant a license, or may suspend or revoke a license already granted upon due notice and after a hearing, whenever said applicant or licensee shall have violated the regulations adopted by the Commission or failed to comply with the requirements of this Article or upon any of the following grounds:
(1)	Where the distributor has failed to account and make payment for any milk purchased or received on consignment or otherwise from a producer or association of producers, or has, if a subdistributor, failed to account and make payment for any milk purchased or received on consignment or otherwise from a distributor; provided, however, that it be shown there was reasonable cause for any such failure to account and make payment, and that the accounting and payment can and will be made promptly, the Commission shall not suspend or revoke a license solely for such failure until a reasonable opportunity has been afforded to make such accounting and payment.
(2)	Where the applicant or distributor has made a general assignment for the benefit of creditors, or has been adjudged a bankrupt or there has been entered against the applicant or distributor a judgment upon which an execution remains wholly or partly unsatisfied, or where it is shown that the applicant or distributor has insufficient financial responsibility, personnel or equipment properly to conduct the milk business.
(3)	Where the applicant or distributor has engaged in a course of action such as to satisfy the Commission of an intent on his or her part to deceive or defraud customers, producers or consumers.
(4)	Where the applicant or distributor has failed to maintain  such records as are required by the rules and regulations of the Commission or has failed to furnish the statements or information required by the Commission under this Article 28B or has kept false records or furnished false statements with respect to such information.
(5)	Where the applicant or distributor has rejected, without reasonable cause, any milk purchased from a producer, or has refused to accept, without either reasonable cause or reasonable advance notice, milk delivered by or on behalf of a producer in ordinary continuance of a previous course of dealing, except when the contract has been lawfully terminated.
In any case where the Commission shall suspend a license, the Commission may, in its discretion, accept from the licensee an offer in compromise of not less than fifty dollars ($50.00) and not more than five thousand dollars ($5,000) as a penalty in lieu of such suspension, and thereupon rescind the suspension. All receipts from such penalties shall be paid by the Commission to to the State Treasurer and placed in the Civil Fines and Forfeitures Fund established pursuant to G.S. 115C‑457.1. The Commission may classify licenses, and may issue licenses to distributors to process or store or sell milk to a particular city or village or to a market or markets within the State of North Carolina.
(h)	Power of Entry. – Any member of the Commission, or any person designated for the purpose, shall have access to, and may enter at all reasonable hours, all places where milk is processed, stored, bottled or manufactured into food products. Any member of the Commission or designated employee shall have the power to inspect and copy books and records in any place within the State for the purpose of ascertaining facts to enable the Commission to administer this Article. The Commission may combine such information for any market or markets and make it public.
(i)	Power to Define Market Area. – The Commission may define after a public hearing a market area and define and fix limits of the milk shed or territorial area within which milk shall be produced to supply a market area: Producers, producer‑distributors or their successors now shipping milk to any market may continue to do so until they voluntarily discontinue shipping to the designated milk market.
(j)	Reports. – Each licensee shall from time to time, as required by the Commission, submit verified reports containing such information as the Commission may require.
"§ 106‑266.9.  Distributors to be licensed; prices and practices of distributors regulated.
No distributor in a market in which the provisions of this Article are in effect shall buy milk from producers, or others, for sale within the State, or sell or distribute milk within the State, unless such distributor is duly licensed under the provisions of this Article. It shall be unlawful for a distributor to buy from or sell milk to a distributor who is not licensed as required by this Article. It shall be unlawful for any distributor to deal in, or handle milk if such distributor has reason to believe that the milk has been previously dealt in, or handled, in violation of the terms and provisions of this Article. No distributor shall violate the prices as established by or filed with the Commission or offer any discounts or rebates without authority from the Commission; and the Commission may prohibit such practices as it may deem to be contrary to the welfare of the public and the dairy industry, such as the use of special prices or special inducements in any form or any unfair trade practices in order to vary from the established prices. The Commission may require each distributor to file with the Commission one complete schedule of the distributor's wholesale and retail prices for each marketing area and may require each distributor to charge the distributor's posted prices for all sales and to give 10 days' notice by certified mail to the Commission and every licensed distributor in each marketing area affected prior to the effective date of any changes in said posted prices. The requirements as to filing price schedules shall not apply to retail stores the principal business of which is selling other than dairy products and which do not maintain or control directly or indirectly a milk processing plant. The Commission may prohibit a distributor from selling or offering for sale milk in any market or county at prices less than the prices filed for the market or county in which such distributor's processing or bottling plant is located, except in such cases as such sales may be made at a lower price or prices in good faith to meet competition.
"§ 106‑266.10.  Licenses for distributors and subdistributors.
An application to the Commission for a license to operate as a distributor or subdistributor shall be made by mail or otherwise within 30 days after the provisions of this Article become effective in a market, and as to any distributor or subdistributor thereafter beginning business, before such distributor or subdistributor shall begin such business therein. The application shall be made on blanks furnished by the Commission for that purpose. Each distributor shall cooperate with the Commission in seeing to it that its subdistributors are informed concerning, and comply with, the provisions of this Article and the rules and regulations duly adopted by the Commission.
"§ 106‑266.11.  Annual budget of Commission; collection of monthly assessments.
The Commission shall prepare an annual budget and shall collect the sums of money required for this budget from the licensed distributors in markets where the provisions of this Article are in operation. The expenses of the Commission, including salaries and the per diem of such personnel as the Commission finds it necessary to employ to properly carry out its functions under this chapter shall be met by an assessment of not over five cents (5¢) per 100 pounds of milk and cream (converted to terms of milk) handled by distributors, and not over five cents (5¢) per 100 pounds of milk and cream (converted to terms of milk) sold by producers; these assessments to be the same per 100 pounds on producers and distributors. The exact amount of each monthly or semimonthly assessment shall be determined by the Commission as necessary to cover its expenses. All assessments shall be paid at the time the distributors pay the producers for the milk. All officers and employees of the Commission, who handle funds of the Commission or who sign or countersign checks upon such funds, shall severally give bond in such amount and with such sureties as shall be determined by the Commission. The cost of the bonds shall be paid by the Commission and the Commission shall determine the amount and sufficiency of the bonds.
"§ 106‑266.12.  Milk Commission Account; deductions by distributor from funds owed to producer.
The Milk Commission Fund is created in the Department as a special fund. Revenue in the fund does not revert at the end of the fiscal year, and interest and other investment income earned by the Fund accrues to it. The Fund shall be used for the payment of all expenses incurred by the Commission in administering and enforcing this Article. The Commission shall require a distributor to make such deductions from funds owed to a producer as authorized by the producer.
"§ 106‑266.13.  Injunctive relief.
In the event of violation of any provisions of this Article, or order promulgated under the provisions thereof, in addition to any other remedy, the Commission may apply to any court of record in the State of North Carolina for relief by injunction, if necessary, to protect the public interest without being compelled to allege or prove that any adequate remedy at law does not exist.
"§ 106‑266.14.  Penalties.
Any person violating any provisions of this Article, or order promulgated under the provisions thereof, or of any license issued by the Commission shall be guilty of a Class 1 misdemeanor, and each day during which such violation shall continue shall be deemed a separate violation. Prosecutions for violations of this Article shall be instituted by the Attorney General or otherwise, in any county or city of the State of North Carolina in which such violations occur.
"§ 106‑266.15.  Judicial review.
Judicial review of the following may be had under Chapter 150B of the General Statutes:
(1)	A rule, order, or regulation adopted by the Commission under this Article.
(2)	A decision of the Commission under this Article to deny, suspend, revoke, or refuse to transfer or reissue a license.
(3)	An order of the Commission under this Article to set or amend the price or terms upon which milk may be bought or sold.
"§ 106‑266.16.  Saving clause.
No provisions of this Article shall apply or be construed to apply to foreign or interstate commerce, except insofar as the same may be effective pursuant to the United States Constitution and to the laws of the United States enacted pursuant thereto.
"§ 106‑266.17.  Marketing agreements not to be deemed illegal or in restraint of trade; conflicting laws.
The making of marketing agreements between producers' cooperative marketing associations and distributors and producer‑distributors under the provisions of this Article shall not be deemed a combination in restraint of trade or an illegal monopoly, or an attempt to lessen competition or set prices arbitrarily nor shall the marketing contract or agreements between the association and the distributors and producer‑distributors, or any agreements authorized in this Article, be considered illegal or in restraint of trade. All laws and clauses of laws in conflict with the provisions of this Article are hereby repealed to the extent necessary for the full operation of this Article. No provisions of this Article shall be deemed in conflict with Articles 28 of Chapter 106 of the General Statutes. No provisions of this Article shall be deemed in conflict with the duty imposed upon the Secretary of the Department of Health and Human Services by G.S. 130A‑5 to make sanitary and health inquiries and investigations.
"§ 106‑266.18.  Limitations upon power of Commission.
Nothing in this Article shall be interpreted as giving the Commission any power to limit the quantity of milk that any producer can produce, nor the power to prohibit or restrict the admission of new producers, nor the power to restrict the marketing area of any producer, except as provided in G.S. 106‑266.8(3).
"§ 106‑266.19.  Sale below cost to injure or destroy competition prohibited.
The sale of milk by any distributor or producer‑distributor or retailer below cost for the purpose of injuring, harassing or destroying competition is hereby prohibited; and the offering for sale of milk by a retailer at below‑cost prices to induce the public to patronize the retailer's store, or what is commonly known in the trade as using milk as a "loss leader" is also hereby prohibited. However, milk may be sold below cost to meet competition if notice has been sent to the  Commission by registered or certified mail identifying the competitor  or competitors. At any hearing or trial on a complaint under this section, evidence of sale of milk by a distributor or subdistributor or retailer below cost shall constitute prima facie evidence of the violation or violations alleged, and the burden of rebutting the prima facie case thus made, by showing that the same was justified in that it was not, in fact, made below cost or that it was not for the purpose of injuring, harassing or destroying competition, or that it was sold below cost to meet competition after notice has been sent to the Commission by registered or certified mail identifying the competitor or competitors, or that it was not used as a "loss leader" or to induce the public to patronize the retailer's store, shall be upon the person charged with a violation of this section. As used herein the term "cost" for a distributor or producer‑distributor shall be construed to mean the price paid for Grade A or Class I milk in the area where such sale is made plus a reasonable allocation of processing and marketing expenses. For a retailer the term "cost" shall be construed to mean the wholesale invoice price paid for Grade A or Class I milk in the area where such sale is made, provided, however, in determining whether any sale has been made in violation of this section, the Commission shall consider all discounts, rebates, gratuities or any other matters which may have the effect of either directly or indirectly reducing the price paid by the retailer involved. The prima facie case of a violation of this section, made by proof of sale below cost, may be rebutted by proof of any of the following facts:
(1)	The merchandise was damaged, or
(2)	The milk was sold upon the final liquidation of a business, or
(3)	The milk was sold to an organized charity or to a relief agency, or
(4)	The milk was sold by an officer acting under the direction of any court."
SECTION 2.  Notwithstanding G.S. 106‑266.7, as reenacted and amended by this act, the following five members of the Commission shall serve initial terms expiring June 30, 2021, and thereafter those seats shall be filled in the manner described in G.S. 106‑266.7:
(1)	One public member and the operator of a store or other establishment for the sale of fluid milk at retail for consumption off the premises appointed by the Governor.
(2)	The public members appointed by the General Assembly.
(3)	The dairy processor‑distributor primarily operating a proprietary plant or the processor‑distributor's employee appointed by the Commissioner of Agriculture.
The remaining members of the Commission shall be appointed to initial terms expiring on June 30, 2023, and thereafter those seats shall be filled in the manner described in G.S. 106‑266.7.
SECTION 3.  Notwithstanding G.S. 150B‑21.1A(a), the North Carolina Milk Commission re‑created by this act may adopt emergency rules to carry out its powers and duties for which adoption of rules would otherwise be required under Article 2A of Chapter 150B of the General Statutes.
SECTION 4.  This act is effective when it becomes law.