Article 5. Milk Producers Security Trust Fund Coverage of California Food And Agricultural Code >> Division 21. >> Part 3. >> Chapter 2.5. >> Article 5.

Except as otherwise provided in this chapter, milk shipped by a producer to a handler which meets the following criteria shall be considered for coverage pursuant to this chapter:
  (a) Milk shipment was made after December 31, 1986.
  (b) A valid contract between the producer and handler pursuant to Chapter 1 (commencing with Section 61310) or Chapter 2 (commencing with Section 61801) has been filed with the director prior to the date the milk was shipped, unless the shipment was made in the first five days after the contract was executed. This requirement shall not apply to all shipments made prior to the effective date of this chapter.
  (c) The handler was licensed and bonded as required by Chapter 1 (commencing with Section 61301) or Chapter 2 (commencing with Section 61801) when the contract was filed with the director.
  (d) The milk was produced within the state and delivered to a plant within the state.
  (e) The director has not issued a prior notice that the shipments would not be covered by the fund.
  (f) The shipment was not made under a custom processing arrangement with the producer retaining title.
  (g) The producer or cooperative shipping the milk had a direct contract with the handler. In the case of a cooperative, only the milk of its members shipped under the contract is covered. Milk shipped to a handler under a contract held by intermediaries, brokers, or agents is not covered.
  (h) The producer does not have a beneficial ownership interest in the handler to whom shipments were made.
  (i) The producer is in compliance with this chapter, Chapter 1 (commencing with Section 61301), Chapter 2 (commencing with Section 61801), and Chapter 3 (commencing with Section 62700).

Any producer entity, including a nonprofit cooperative that severs a disqualifying beneficial-ownership interest in a handler to which it supplies bulk milk, shall not have trust fund coverage for future milk shipments to that handler for a period of 12 months after notice is given to the secretary of termination of the beneficial ownership interest unless a waiver is granted subject to Section 62587.

Only shipments which occur during the first 35 days from the date of the earliest shipment for which a producer has not been paid are eligible.

If future shipments to a handler are not eligible for coverage under this chapter in the event of a default, the secretary shall notify all producers who have a contract on file with the secretary, all cooperative associations, and other interested parties. Future shipments will not be eligible when any of the following events occur:
  (a) The handler fails to maintain a valid license or bond as required under Chapter 1 (commencing with Section 61301) or Chapter 2 (commencing with Section 61801).
  (b) The handler has failed to pay producers as required under Chapter 1 (commencing with Section 61301) or Chapter 2 (commencing with Section 61801).
  (c) The handler has failed to pay the amount due the pool equalization fund provided for in Chapter 3 (commencing with Section 62700).
  (d) The handler fails to submit, when requested by the secretary, executed contracts that establish the relationship between affected parties.

If, on the date of the notice issued pursuant to Section 62582, a producer has a contract with the handler which is on file with the secretary, and that producer has received payment from a handler whose milk purchases have been declared ineligible, shipments by that producer which occur more than five days from the date of the notice of ineligibility issued by the secretary will not be considered in determining any claim the producer may make against the fund, unless the secretary reestablishes eligibility for future shipments to be covered by the fund.

If, on the date of the notice issued pursuant to Section 62582, a producer does not have a contract with the handler which is on file with the secretary, shipments by that producer which occur more than five days from the date of the notice of ineligibility issued by the secretary will not be considered in determining any claim the producer may make against the fund, unless the secretary reestablishes eligibility for future shipments to be covered by the fund.

If the director issues a notice pursuant to Section 62582, the director may again qualify shipments to the handler if any of the following occur:
  (a) The handler has corrected the deficiency upon which the notice was originally issued and has done all of the following:
  (1) Paid all amounts owed to producers, including interest, provided for in Chapter 1 (commencing with Section 61301) or Chapter 2 (commencing with Section 61801). Producers are not entitled to receive interest on amounts for which they have been paid by the fund after the date of payment by the fund.
  (2) Reimbursed the fund for any payments made by the fund due to a default by the handler plus interest at the rate of 12 percent per annum from the date of payment by the fund.
  (3) Paid any amount owed to the pool equalization fund.
  (4) Paid any assessments, penalties, or other amounts owed under federal, state, or local laws.
  (b) Four years have elapsed since the date of the default in payment.

The director shall periodically publish a list of all handlers to whom shipments are not eligible for coverage under the fund.

The director may waive any of the provisions of this article if, after consultation with the board, the director finds that a hardship would be imposed on persons subject to this chapter which is not consistent with the intent of this chapter.