Article 4. Financing Plan of California Food And Agricultural Code >> Division 21. >> Part 3. >> Chapter 2.5. >> Article 4.

(a) The security charges provided for in Section 62561 shall be collected until January 1, 2007. Unless otherwise permitted by this section, the secretary shall thereafter discontinue collection of the security charges. The fund shall consist of the security charges collected, the value of any alternative financial instrument, and acceptable securities provided by handlers pursuant to subdivision (c).
  (b) If, after January 1, 2007, payment of producer claims reduces the fund cash below thirty million dollars ($30,000,000), the secretary may resume collecting security charges in order that the fund cash is thereafter maintained at thirty million dollars ($30,000,000). Security charges necessary to return the fund cash to thirty million dollars ($30,000,000) shall, subject to subdivision (c), be collected from all handlers making purchases of milk, including handlers who have posted acceptable securities pursuant to subdivision (c).
  (c) If, in any month, 110 percent of any handler's average monthly milk purchases, computed over the preceding 12 months, unless the increase in value of milk purchases is the result of substantial business expansion or the result of a merger or acquisition, in which case the 12-month computation requirement does not apply, exceeds the fund cash as of the end of that month, or thirty million dollars ($30,000,000) whichever is higher, the secretary shall require that handler to provide acceptable securities within 10 working days in an amount equal to the difference between the fund cash or thirty million dollars ($30,000,000) whichever is higher, and 110 percent of that handler's average monthly milk purchases. When handlers have provided acceptable securities covering the difference, the secretary shall not collect security charges from those handlers for the portion of their average monthly milk purchases covered by acceptable securities. Shipments to handlers failing to provide acceptable securities within 10 working days of notice by the secretary of the obligation to post acceptable securities, as required by this subdivision, shall be listed by the secretary as ineligible for coverage under the fund pursuant to Section 62586.
  (d) The secretary shall calculate the value of milk handlers' average monthly milk purchases at least once each year for those handlers whose previous average monthly milk purchases exceed twenty million dollars ($20,000,000). If, as a result of any such calculation, the secretary determines that a handler must provide additional acceptable securities to satisfy the requirements of subdivision (c), that handler shall provide additional acceptable securities within 10 working days of notice by the secretary.
  (e) In the event a handler fails to comply with subdivision (d):
  (1) In addition to paying all other amounts required by this chapter, including any security charges then in effect under subdivision (a) of Section 62561, that handler shall pay an enhanced security charge on all purchased milk to be computed as follows:
  (A) (i) One and seven-tenths mills per pound ($0.0017) for class 1 fat.
  (ii) Nine-tenths mills per pound ($0.0009) for class 1 solids-not-fat.
  (iii) One-tenth mill per pound ($0.0001) for class 1 fluid.
  (B) (i) Three and two-tenths mills per pound ($0.0032) for classes 2, 3, 4a, and 4b fat.
  (ii) One and three-tenths mills per pound ($0.0013) for classes 2, 3, 4a, and 4b solids-not-fat.
  (2) A handler shall be liable for the enhanced security charges required by this section until the handler provides the required additional acceptable securities to the secretary. Notwithstanding Section 62521 and subdivision (b) of this section, enhanced security charges paid pursuant to this paragraph shall be deposited into the trust fund and become part of the fund cash.
  (f) If a handler fails to timely provide acceptable securities, or additional acceptable securities, as required by this section, the secretary shall promptly give notice of that fact to all producers who have a contract on file with the secretary, all cooperative associations, and other interested parties. A handler failing to post acceptable securities may also be subject to revocation, suspension, or nonrenewal or placement of conditions upon the milk handler's license pursuant to Sections 62146, 62149, and 62151.
  (g) In consultation with the Milk Producers Security Trust Fund Advisory Board, the secretary may consider and use alternative financial instruments, in addition to, or in lieu of, using security charges to meet the financial security requirements of this section.

(a) The following security charges shall be in effect for any period for which the secretary has implemented collections under this chapter:
  (1) (A) One and seven-tenths mills per pound ($0.0017) for class 1 fat.
  (B) Nine-tenths mills per pound ($0.0009) for class 1 solids-not-fat.
  (C) One-tenth mill per pound ($0.0001) for class 1 fluid.
  (2) (A) Three and two-tenths mills per pound ($0.0032) for classes 2, 3, 4a, and 4b fat.
  (B) One and three-tenths mills per pound ($0.0013) for classes 2, 3, 4a, and 4b solids-not-fat.
  (b) The secretary shall add the security charges to the prices established for all classes of milk in accordance with Chapter 2 (commencing with Section 61801). The secretary is only authorized by this article to collect security charges on covered milk.

Any increase in classified prices due to Section 62561 shall be considered as part of the minimum prices required to be paid to producers under other provisions of this code. No other provisions of this chapter modify the minimum payment requirements contained in Chapter 1 (commencing with Section 61301) and Chapter 2 (commencing with Section 61801).

Any handler subject to any pooling plan in effect under Chapter 3 (commencing with Section 62700) shall continue to be obligated for the minimum prices provided for in the stabilization and marketing plans on the pooled usage of the handler. However, any part of the minimum prices that is attributable to the security charges established pursuant to Section 62561 shall be deducted before producer prices are determined under the pooling plan. Any handler subject to the pooling plan that receives milk that is not included in the calculation of producer prices determined under the pooling plan shall be obligated to pay the security charges established pursuant to Section 62561 for any portion of that milk that is assigned to class 1, class 2, class 3, class 4a, and class 4b usage. The amount of any handler's obligation attributable to the security charges established pursuant to Section 62561 shall be remitted by the secretary to the fund by the end of the month following the month the pool calculations were completed.

Any handler receiving milk not subject to any pooling plan in effect pursuant to Chapter 3 (commencing with Section 62700) shall be obligated to remit to the secretary any security charges in effect pursuant to Section 62561 for class 1, class 2, class 3, class 4a, and class 4b products produced from the milk and may deduct the security charges from the minimum prices required to be paid to producers.

Any producer-handler who has milk production that is exempt pursuant to Section 62708, 62708.1, 62708.5, or 62722 from the pooling plan in effect pursuant to Chapter 3 (commencing with Section 62700) shall be exempt from any security charges established pursuant to this article for that exempt production.

Security charges may be collected by the director through direct payment or through pool accounting procedures established by the director pursuant to Chapter 3 (commencing with Section 62700).

The director may add a penalty of 10 percent to amounts which are not paid when due.

If any handler or producer-handler does not provide the information necessary to determine the amount due, when required, the director shall estimate the amount due from the records of the department or from any other source of information which is available.

The director may take all appropriate action against any person to recover any unpaid amounts. In any action, a declaration by the director which states the amount required to be paid, including penalty, is prima facie evidence of the delinquency. The presumption established by this section is a presumption affecting the burden of proof.

Any money which is collected by the director pursuant to this chapter shall be deposited in a bank or other depository which is approved by the director. Funds which are so collected are exempt from Sections 11270 and 11272 of the Government Code and shall be deposited and disbursed only to pay for milk produced and delivered within this state, which has not been otherwise paid for, including pool equalization fund obligations, attorney's fees and other costs incurred in litigation involving the fund, expenses generated by the auditing requirement imposed by Section 62570, expenses generated by the use of alternative financial instruments pursuant to Section 62560, and for the costs set forth in Section 62573. The expenditure of those funds is exempt from Section 925.6 of the Government Code. Nothing in this section prevents the director from using the increment received from investment, reinvestment, or deposit of money specified in Section 62573, in the manner provided by Section 62574.

All fund activities shall be subject to an audit at least once every two years by an auditing firm recommended by the board and selected by the director. A copy of the audit shall be delivered to the director within 30 days after completion.

Notwithstanding Section 13340 of the Government Code, any money which is collected by the director pursuant to this chapter is hereby continuously appropriated to the director to carry out only those purposes provided for in Section 62569. The appropriation which is made in this section is exempt from Section 16304 of the Government Code.

Any money which is deposited pursuant to Section 62569, which the director determines is available for investment, may be invested or reinvested by the Treasurer in any of the securities described in Article 1 (commencing with Section 16430) of Chapter 3 of Part 2 of Division 4 of Title 2 of the Government Code, or placed in a depository as provided in Chapter 4 (commencing with Section 16500) of that part, and handled in the same manner as money in the State Treasury. For these purposes, the money may also be combined with funds determined by the director to be available for investment pursuant to Section 58939.

Any increment which is received from investment, reinvestment, or deposit of money pursuant to Section 62572 shall be deposited to the credit of the fund. The Treasurer may deduct from this remittance an amount equal to the reasonable costs incurred in carrying out Section 62572 and this section or may bill the director for the costs, and the director shall pay the costs from money collected pursuant to this chapter. Nothing in this section prevents the director from using the increment in a manner provided by Section 62574.

Immediately following the payment to the fund of the increment provided in Section 62573, if the secretary determines that there is a fund surplus, the secretary may, after consultation with the Trust Fund Board, transfer an amount equal to the increment referenced in the section to an account administered by the Dairy Marketing Branch of the department to be used to reduce the producer and handler assessments that would otherwise be imposed pursuant to Article 14 (commencing with Section 62211) of Chapter 2. One-half of the increment so transferred shall be used to reduce the obligation of producers and one-half shall be used to reduce the obligation of handlers pursuant to that article.