Chapter 3. Equalization Pools of California Food And Agricultural Code >> Division 21. >> Part 3. >> Chapter 3.

The production and distribution of fluid milk and fluid cream is hereby declared to be a business affected with a public interest. The provisions of this chapter are enacted in the exercise of the police powers of this state for the purpose of protecting the health and welfare of the people of this state.

It is hereby declared that fluid milk and fluid cream are necessary articles of food for human consumption; that the production and maintenance of an adequate supply of healthful milk of proper chemical and physical content, free from contamination, is vital to public health and welfare, and that the production, transportation, processing, storage, distribution and sale of fluid milk and fluid cream in the State of California is an industry, in whole and in part, affecting public health and welfare; that unfair, unjust, destructive and demoralizing trade practices have appeared within this industry and these practices constitute a menace to the health and welfare of the inhabitants of this state by threatening the stability of this industry and by thereby endangering the assurance to the people of the State of California of the maintenance of an adequate supply of this necessary commodity; that it is a policy of this state to promote, foster and encourage the intelligent production and orderly marketing of commodities necessary to its citizens, including fluid milk and fluid cream, and to eliminate speculation, waste, improper marketing, unfair and destructive trade practices, and improper accounting for milk purchased from producers.

It is recognized by the Legislature that currently the powers conferred upon the director by Chapter 2 (commencing with Section 61801) are inadequate to enable the dairy industry to develop and maintain satisfactory marketing conditions and bring about and maintain a reasonable amount of stability and prosperity in the production of fluid milk and fluid cream; and that to accomplish these purposes, and particularly to insure to consumers within California an adequate and continuous supply of pure, fresh, and wholesome milk at fair and reasonable prices, including a reasonable estimate of the additional supply which is needed to provide for normal fluctuations in production and in consumer demand for those products, those powers must be supplemented by the powers conferred in this chapter upon the director to equalize gradually the distribution of class 1 usage among the producers of this state.

It is recognized by the Legislature that the provisions for equalization of usages among producers and entry of new producers contained in the Gonsalves Milk Pooling Act, as originally enacted, and the pooling plan adopted thereunder, tended to achieve the purposes of that act; however, the provisions for more rapid equalization and additional new entry would more rapidly and effectively achieve the purposes of this chapter. It is also recognized that some holders of pool quota and production base initially issued under the Gonsalves Milk Pooling Act have waited for several years for equalization, and that equalized producers have for a number of years not shared in any of the benefits of new quota created by new usage. It is further recognized that it is necessary to promote and to attempt to assure more rapid equalization of the holders of pool quota issued subsequent to the initial allocation of production bases and pool quota pursuant to this chapter, and to provide for a program for entry and for equalization of new producers. It is the purpose of the amendments to this chapter to provide a reasonable and equitable mechanism to permit more accelerated equalization, to equalize the holders of pool quota and production base initially issued under the Gonsalves Milk Pooling Act and who are not yet equalized, and to legislatively allocate in a fair and reasonable manner a share of new pool quota created by new usage to existing pool quota holders who are not equalized, to new producers, and to equalized pool quota holders who have not shared in the benefits of the growth of new usage since the original enactment of the Gonsalves Milk Pooling Act and the pooling plan thereunder.

In effectuating the purposes of this chapter, a production base and a pool quota shall be established for each producer pursuant to Section 62707. The establishing of these bases and their functions shall be as provided in the pooling plan formulated by the director pursuant to the provisions of this chapter.

The director is authorized to develop a proposed pooling plan and to designate the proposed areas in which the plan will be made effective. He shall appoint fluid milk producers, and representatives of producers, to be the members and alternate members of a formulation committee, reasonably representative of all producers and areas to be included in the proposed pooling plan, which committee shall advise and assist the director in the establishment of the proposed pooling plan area and in the formulation of the proposed pooling plan. The pooling plan shall include all areas covered by stabilization and marketing plans under Chapter 2 (commencing with Section 61801), except any relatively isolated region of the state may be excluded therefrom, if the director, after a public hearing, finds that the inclusion of the region is not practical or in conformity with the purposes of the pooling plan, or if he finds that the producers in the relatively isolated region do not desire to be a part of either their own or one of the pools.

After the director, with the advice and assistance of the formulation committee, has formulated the proposed plan, he shall hold one or more public hearings in each proposed pooling area to be affected by the proposed plan for the purposes of considering modification of the proposed boundaries and formulating the pooling plan which will best accomplish the purposes of this chapter. Notice of the public hearings shall be given to each producer, including each member of cooperative marketing associations, who ships fluid milk to a distributor and to each distributor who receives fluid milk from producers. The procedures for the giving of notice and the conducting of the hearings shall be the same as those provided in Chapter 2 (commencing with Section 61801) for public hearings on stabilization and marketing plans.

The pooling plan shall prescribe the pooling area to be covered by each pool. Any such pooling area shall mean and include a large sales and consuming center together with all intermediate and secondary cities, towns and rural areas, which depend upon and receive their fluid milk supplies from a common producing and supply area, and including the fluid milk producers who produce fluid milk for such sales and consuming area, and including the fluid milk processing plants which receive, process or distribute the fluid milk supplies for such an area. In establishing pool areas the director shall take into consideration the fact that some producers and processors may produce, or process and distribute, respectively, fluid milk for more than one pool area and therefore may qualify for inclusion and participation in more than one pool. Producers who so qualify for participation in more than one pool shall be permitted to do so on the basis of the proportions of their shipments of fluid milk to each pool area.

The formulation committee shall make recommendations to the secretary for inclusion in the pooling plan, and the secretary shall include in the pooling plan, all of the following:
  (a) The establishment of one or more pools throughout the state.
  (b) (1) The base period to be used in determining the production and class 1 usage bases of each producer directly affected by the pooling plan. The base period shall, at the producer's option, be his or her fluid milk production and usage in the pool area during the calendar year 1967 on an average daily basis or his or her production and usage in the pool area during the last six months of 1966 on an average daily basis.
  (2) As to a producer south and east of San Gorgonio Pass, his or her production base may, at his or her option, be four times his or her production in the months of December 1966, and January and February 1967.
  (3) If a producer, during any base period, had a valid contract with a distributor, or as a member of a cooperative association had an allocation, that provided that the distributor or cooperative association was required to accept a larger amount of fluid milk from the producer than the producer actually produced during the period, on proof satisfactory to the secretary of the contract or allocation, the producer may, at his or her option, have the amount specified in the contract or allocation established as his or her production base.
  (c) The establishment of a class 1 usage for each producer, which shall be the amount of his or her production of fluid milk accounted for as class 1, and any fluid milk sold for use as class 1 to a United States military installation but that was not accounted for as class 1.
  (d) The allocation to each producer within any pool of a pool quota, which, initially, shall be 110 percent of that producer's class 1 usage, as determined in subdivision (c).
  (e) (1) The determination of new class 1 usage and the allocation of pool quota based thereon in a manner consistent with effectuating the purposes of this chapter.
  (2) All producers who have not reached the equalization point shall share in the allocation of pool quota on the basis of a formula that gives substantial weight to each producer's production base, but that, at the same time, allocates a larger percentage to hardship cases and low class 1 usage producers.
  (3) The allocations shall be made on the basis of each individual producer, with each cooperative association considered as a single producer. The cooperative associations of producers shall reassign any new quota to their own members subject to Section 62710.
  (4) Annually, within no more than four months after August 31 of each year, the pool quota shall be adjusted by each component to reflect any additional pool quota. Any increase in pool quota shall be determined from the amount of new class 1 and class 2 solids not fat usage that developed during the preceding annual period which exceeded the previous highest identical annual period since the 1988-89 fiscal year. There shall be no downward adjustment of pool quota below the quota initially established pursuant to this chapter.
  (f) The establishment of production bases and pool quotas for new fluid milk producers who wish to enter the pooling plan after the effective date of the plan. The recommendations of the committee shall be reasonably equitable to both the new producers and to participating producers and consistent with effectuating the purposes of this chapter.
  (g) The transfer of production bases and pool quotas from one fluid milk producer to another under conditions so designed as to prevent abuses in the transfers and to avoid the development of excessive values for the bases and quotas.
  (h) Notwithstanding Section 62711, any provision which may be necessary to encourage the availability of market milk for those usages for that class 1 and class 2 milk is mandatory.
  (i) Any governmental agency that produces, processes, and consumes in its own facilities only its own production shall not be a pool plant. The plant shall operate outside the pool for accounting and settlement purposes unless the plant notifies the secretary of its election to participate in the pool. Any production of such a governmental agency that is transferred or diverted to a pool plant shall be classified for the purpose of settlement at the class 4a or class 4b price, whichever is lower.
  (j) Any and all other matters necessary and desirable to effectuate the provisions of this chapter. The recommendations of the formulation committee and the pooling plan may provide exceptions from the plan's general application for individual cases of hardship.

(a) The director, on July 1, 1978, shall issue new pool quota sufficient to bring all holders of production base and pool quota as of that date (excluding any production base and pool quota issued pursuant to subdivision (f) of Section 62707), to the equalization point both on the fat and the solids-not-fat components.
  (b) Subsequent to July 1, 1978, all allocations of new class 1 usage determined under subdivision (e) of Section 62707, shall be made as follows:
  (1) Forty percent to producers whose total production base and pool quota are below the equalization point, to be allocated according to provisions adopted by the director in the applicable pooling plan.
  (2) Forty percent to producers whose total production base and pool quota are equal to or above the equalization point, this allocation to each such producer to be in the same ratio to the total allocation under this subdivision as that producer's total holdings of quota bears to the total quota holdings of all equalized producers.
  (3) The remaining 20 percent shall be utilized for new producer allocations under subdivision (f) of Section 62707, according to the provisions in the then applicable pooling plan. The terms "total production and pool quota" and "total quota" shall for the purposes of this subdivision, include allocations of production base and pool quota issued pursuant to subdivision (f) of Section 62707.

A person eligible for, but not yet assigned, a production base or pool quota, or both, pursuant to Section 62707 shall not be eligible for such a production base or pool quota, or both, unless he applies for such a production base or pool quota, or both, prior to January 1, 1971.

If a portion of the pool quota of any producer is transferred, it shall carry with it the same quantity of production base, except that if the pool quota exceeds the production base, the pool quota shall carry with it a percentage of production base equal to the percentage of pool quota which is so transferred. In either case, the producer making a partial transfer of his pool quota shall lose a percentage of his production base equal to the percentage of his pool quota which is so transferred. If a producer transfers his entire production base to one person, his entire pool quota shall also be transferred to the recipient of the production base. If a producer transfers his entire pool quota, his entire production base shall also be transferred to the recipients of the pool quota in a percentage equal to the percentage of pool quota received by each. All transfers of production base and pool quota shall be recorded by the director in a manner consistent with the purposes of this chapter. Permanent records shall be maintained by the director of all transactions in either production base or pool quota. Any person who purchases or otherwise acquires a producer's business or a portion of a producer's business prior to the operative date of the pooling plan shall succeed to that same proportion of the producer's production base and pool quota.

In addition to the quota provided for under paragraph (3) of subdivision (b) of Section 62707.1, any quota returned to the director after April 30, 1981, shall be utilized for new producer allocations under subdivision (f) of Section 62707, according to the provisions in the then applicable pooling plan.

"Producer-handler" for purposes of this chapter is any person that is both a producer and a handler of fluid milk or fluid cream. For the purposes of this chapter, a producer-handler is a producer in any transaction which involves the delivery of bulk fluid milk or bulk fluid cream which was produced by him to a handler, or any nonprofit cooperative association of producers and is a handler in any transaction which involves the purchase by him of fluid milk or fluid cream, the pasteurization or packaging of fluid milk or fluid cream, or the sale or delivery of packaged fluid milk or packaged fluid cream to any person. A producer-handler, including partnerships or corporations with common ownership, where the ownership of the producing entity is substantially proportionate to the ownership of the handling entity, shall have the option, at the time of the adoption of the initial pooling plan under this chapter, to have a production base and pool quota established as a part of the pooling plan provided for in this chapter, or to elect to operate entirely outside of the pool for producer payment purposes. This option is available only in such cases where the producer-handler on January 1, 1968, exercised complete and exclusive control over the operation and management of a plant at which he processes milk received from his own milk production facilities, except for purchases in bulk or packaged fluid milk, fluid skim milk or fluid cream which do not exceed an annual average of 50 gallons per day or 5 percent of his total fluid milk sales, whichever is greater, and only in such case as the producer-handler had retail sales for its own account of not less than 66 2/3 percent of its total class 1 sales. Any producer-handler electing to be excluded from the pool may at any later time be admitted to the pool, but with only the production base and pool quota to which he would have originally been entitled or his average daily production and class 1 usage during the 12 months preceding his entry into the pool, whichever is less.

Any producer-handler who qualified and elected an exemption under Section 62708 and continued eligibility for such exemption by complying with the requirements of that section shall be entitled after January 1, 1978, to continue such exemption provided that such producer-handler maintains retail sales for his own account of not less than 50 percent of his total class 1 sales and his purchases do not exceed 25 percent of his total fluid milk sales, except that any purchases exceeding 5 percent of such sales shall be from pool sources. Any producer-handler qualifying for and electing an exemption under Section 62708, and maintaining such exemption under Section 62708 and this section, may, after January 1, 1978, elect during the 61-day period of August 1 through September 30 of any year to obtain a production base and pool quota under Section 62708 and enter the pool subject to the option provision of Section 62708.5.

(a) A producer-handler, for purposes of this chapter, shall also include, as a separate and distinct category of producer-handlers, any producer and any handler who purchases or handles fluid milk or fluid cream produced by this producer if all of the ownership of the handler and all of the ownership of the producer is owned by the same person or persons and their ownership in the producer or handler is at least 95 percent identical for each person with their ownership in the handler or producer. This ownership shall not exceed 10 individual persons or owners of equitable interest in a partnership, corporation, or other legally constituted business association.
  (b) The ownership required by this section may be through a partnership, corporation, or other legally constituted business association if the entities are owned by the same person or persons, and there is at least 95 percent identity of ownership for each person with their ownership in the handler or producer. For purposes of this section, a "person" or "persons" includes the spouse, or other persons of lineal consanguinity of the first or second degree or collateral consanguinity to the fourth degree, and their spouses, and includes an adopted child the same as a natural child and kindred of the half blood equally with those of the whole blood of the owner and ownerships by persons so related shall be considered single ownership by one person. For purposes of this section, property pledged or hypothecated in any manner to others shall be considered "owned" if equitable ownership with management and control remain with the producer-handler.
  (c) Ownership as provided in this section shall have existed at the time of the base period selected by the producer under Section 62707 and at all other times thereafter.
  (d) Any such producer-distributor may, until August 6, 1969, do either of the following:
  (1) Join and operate wholly within the pool.
  (2) Have its entire original production base and pool quota determined during the base period it selected as a producer pursuant to Section 62707, established as a part of the pooling plan, and, nevertheless elect to operate entirely outside of the pool to the extent authorized by this section.
  (e) Any producer-handler who qualifies under this section and elects to operate outside the pool, to the extent of the authority granted, shall have the right to make deductions, as follows, from its own class 1 sales, excluding sales to a handler, whether in bulk or packaged, before being required to account to the pool:
  (1) If it has not sold production base and pool quota subsequent to February 9, 1977, it may deduct its original quota, and quota purchased prior to March 1, 1995, plus a daily deduction of 150 pounds of milk fat and 375 pounds of solids not fat.
  (2) If it has sold production base and pool quota subsequent to February 9, 1977, it may only deduct its original pool quota, and quota purchased prior to March 1, 1995.
  (f) The deductions from class 1 sales authorized pursuant to this section may be made irrespective of the fact that the average class 1 usage in the pool for that month may be less than 100 percent of the pool quota in that pool.
  (g) Any production subject to this section from the producer-handler selecting this option shall not have the right to participate in the quota pool, irrespective of the fact that the producer-handler did not sell all of the quota as class 1, and will participate in either the base pool or the overbase pool depending upon whether the total production base of the producer is sufficient to cover the milk delivered in excess of the class 1 usage exempted hereunder, otherwise the production in excess of the exempt producer-handler's own class 1 sales, as defined in this section, shall be accounted for as overbase milk.
  (h) The fact that a producer-handler qualifies as to one of its milk production operations under this section does not prevent it from operating on an entirely separate nonqualifying basis (and, therefore, subject to pooling) at other milk production facilities, and with other nonqualifying persons at these other milk production facilities. A producer-handler can neither buy nor sell pool quota and transfer therewith the option granted under this section, but this shall not prevent him or her from purchasing or selling pool quota or production base as otherwise provided in this chapter.
  (i) If at any time ownership, as defined in this section, ceases, the producer-handler shall no longer be eligible for the options in this section, shall account to the pool as a separate handler, and shall be entitled to reentry into producer participation in the pool on the same basis as a producer-handler may under the last paragraph of Section 62708.

The production base and the pool quota for milk shipped through a cooperative association shall belong to the individual producer but shall be assigned to the custody and control of the cooperative association and the production base and pool quota may be transferred only in accordance with the articles of incorporation, bylaws, or marketing agreements of such association. The cooperative association shall continue to be treated as a single producer, both for producer payment purposes and for pool settlement purposes.

(a) Except as provided in subdivision (h) of Section 62707, each producer shall be paid the highest usage for that amount of his or her fluid milk production that is equal to his or her pool quota and shall be paid the next highest usage for the difference between his or her pool quota and his or her production base under the production pool designated pursuant to this chapter and the lowest usage for all milk produced in excess of his or her production base under the overproduction pool designated pursuant to this chapter.
  (b) In calculating the pool value, the volume of milk that has been classified as restricted use market milk shall be credited to the handler at the class 4a or class 4b price, whichever is lower.

(a) The secretary may require handlers, including cooperative associations acting as handlers, to make reports at any intervals and in any detail that he or she finds necessary for the operation of the pool. The secretary may impose and collect a civil penalty of one hundred dollars ($100) from any handler or cooperative association acting as a handler that does not file a report on the date specified by the secretary pursuant to this subdivision. Any funds collected pursuant to this subdivision shall be deposited in the Department of Food and Agriculture Fund and, upon appropriation by the Legislature, the funds may be expended for the purposes of this chapter.
  (b) For the purposes of enforcing this chapter, the secretary, through his or her duly authorized representatives and agents, shall have access to the records of every producer and handler. The secretary shall have at all times, free and unimpeded access to any building, yard, warehouse, store, manufacturing facility, or transportation facility in which any market milk or market milk product is produced, bought, sold, stored, bottled, handled, or manufactured. Any books, papers, records, documents, or reports made to, acquired by, prepared by, or maintained by the secretary pursuant to this chapter, which would disclose any information about finances, financial status, or worth, composition, market share, or business operations of any producer or handler, excluding information that solely reflects transfers of production base and pool quota among producers, is confidential and shall not be disclosed to any person other than the person from whom the information was received, except pursuant to the final order of a court with jurisdiction, or as necessary for the proper determination of any proceeding before the secretary.
  (c) In conjunction with the pools authorized by this chapter, the secretary may require handlers to make payments into a settlement fund for fluid milk received and the secretary may provide for the disbursement of moneys from the settlement fund in the course of administering the pools. Handlers who have a financial obligation to the pool resulting from the operation of the pooling plan shall pay the obligations to the pool manager each month as requested. All of these moneys shall be deposited in a bank or banks approved by the secretary, and shall be paid out by the pool manager to handlers who have pool credits resulting from the operation of the pooling plan. All financial operations of each pool shall be audited by the department at least once annually. The secretary may require handlers to make such deductions from amounts due to producers as he or she finds are necessary to establish a reserve fund to insure prompt payment to producers.
  (d) The secretary may employ a pool manager to operate each pool and may permit the pool manager to employ such other necessary personnel and incur such expenses incidental to the operation of the pool as the secretary finds are necessary. The pool manager shall effectuate the purposes of Section 62711 by designating the percentage of each price class (i.e., classes 1, 2, 3, 4a, and 4b) to be paid within each pool settlement classification (i.e., quota pool, production pool, and overproduction pool), and in so doing he or she shall allocate the highest usage available, first to the quota pool, next to the production pool, and last to the overproduction pool.
  (e) All pool quotas initially determined pursuant to Section 62707 shall be recognized and shall not in any way be diminished.

After the director has established pools, each distributor shall report to the director the total receipts from the producers that are shipping to the distributor and the class 1, class 2, class 3, class 4a, and class 4b usage of the distributor and any other information determined by the director as necessary to carry out the operation of the pool. The director shall have access to, and may enter during business hours, the premises of any distributor, handler, or producer, or any place where the books, papers, records, or documents pertaining to any transaction which relates to the acquisition or disposition of milk are kept. The director may inspect and copy these books, papers, records, or documents in any place within the state.

Any individual distributor purchasing milk from a producer shall continue to have the right to specify quality requirements that are more stringent than standards set by public regulatory or health authorities, and to specify these standards in a contract with the producer, provided that all contract quality requirements by the distributor are identical as to all producers under contract with that distributor. The distributor may reject milk for class 1 purposes if it fails to meet these specified standards, and may continue to reject such milk continuously until it again meets these standards. Any such rejected milk must be picked up separately from all other milk, and the contract shall give the producers the unqualified right to sell this rejected milk to others. In the event the rejected milk is not sold or used for class 1 purposes, the producer's pool quota shall be reduced by an amount equal to the amount of pool quota milk rejected during the period in which it is rejected. The producer's pool quota shall be restored to its full amount when all his production meets the specified standards. The quality standards specified shall be subject to review by the director, and the purported failure of a producer to meet these standards shall be subject to impartial laboratory tests or such other procedures as the director may find necessary to prevent abuse.

Following the required hearing, the director shall submit the pooling plan to producers concerned for their approval or disapproval in a statewide referendum. The approval or disapproval of individual producers voting in this referendum shall be kept confidential. Each producer shall have one vote and such vote shall be individually cast so that there will be no block voting. The director shall prepare a ballot. The ballot form shall be substantially as follows:

Ballot

Shall the proposed pooling plan be made effective?

Yes ____ No ____

In addition, the ballot shall include a statement of the voter's total production during the calendar month next preceding the month of the commencement of the referendum period, where and to whom such production was sold or otherwise disposed, and the producer's name and address. The director may reveal the names of producers whose votes have been received to both proponents and opponents of the plan. The referendum shall be set for a period of 60 days. The director may at his own discretion or upon a proper showing, extend the referendum for a period not to exceed 30 days.

If the director finds that producers on a statewide basis have assented in writing to the proposed pooling plan submitted to them for assent, the director shall place the proposed pooling plan into effect. The director shall find that producers have assented to the plan if he finds on a statewide basis that not less than 51 percent of the total number of eligible producers in the state shall have voted in the referendum and finds one of the following:
  (a) Sixty-five percent or more of the total number of eligible producers who voted in the referendum who produced 51 percent or more of the total amount of fluid milk produced in the state during the calendar month next preceding the month of the commencement of the referendum period by all producers who voted in the referendum approve the plan.
  (b) Fifty-one percent or more of the total number of eligible producers who voted in the referendum who produced 65 percent or more of the total amount of fluid milk produced in the state during the calendar month next preceding the month of the commencement of the referendum period by all producers who voted in the referendum, approve the plan. If the plan is not approved, the director may resubmit the plan, or submit a new plan, at any time after six months from the date the director announces the plan was not approved. The director may amend the plan, after notice and public hearing has been given in the same manner as is provided in Chapter 2 (commencing with Section 61801) for stabilization and marketing plans, if he finds that the amendment is necessary to effectuate the purposes of this chapter. After the hearing, the director, upon his own motion, may make nonsubstantive amendments to the plan. The director may make substantive amendments to the plan only if producers assent to the proposed amendments at a referendum conducted in the same manner and in the same number as provided for the referendum approving the pooling plan. The director may terminate the plan on a statewide basis after notice and public hearing has been given in the same manner as is provided in Chapter 2 (commencing with Section 61801) for stabilization and marketing plans, if he finds that the plan is no longer in conformity with the standards described in, or will not tend to effectuate the purposes of, this chapter. The hearing may be held upon the motion of the director, and shall be held upon receipt of a petition signed by producers representing not less than 25 percent of the total number of all producers and not less than 25 percent of the total production of all producers. The director shall submit the termination of the plan on a statewide basis in a referendum conducted in the same manner as provided for initial approval of the plan if, after notice and public hearing has been given in the same manner as is provided in Chapter 2 (commencing with Section 61801) for stabilization and marketing plans, he finds that a substantial question exists as to whether or not producers desire the plan to continue and shall submit the plan for termination upon receipt of a petition requesting termination signed by producers representing not less than 25 percent of the total number of all producers and not less than 25 percent of the total production of all producers. The plan shall be terminated if termination is favored by the same percentage of producers producing the same amount of fluid milk as required to initiate the plan.

The pools established shall be administered by the director. Each distributor shall deduct from moneys owed producers and pay to the director the amount necessary to cover the cost of administering the pool plan, but not to exceed two cents ($0.02) per hundredweight of fluid milk. The amount of such fee shall be paid to the director on or before the 30th day following the last day of the month in which such fluid milk or fluid cream was received. The director may fix such fee at a lesser amount and may adjust such fee from time to time. In the event any distributor fails to pay to the director the fee provided for in this section on or before the date specified in this section, the director may add to such unpaid fee an amount not exceeding 10 percent of such unpaid fee to defray the cost of enforcing the collection of such unpaid fee. The distributor shall not be entitled to pass this penalty on to the producer. All moneys received under the provisions of this section shall be deposited in the State Treasury to the credit of the Department of Agriculture Fund.

The director shall, from nominations submitted by producers, appoint a review board composed of no less than 12 members to advise him in the administration of the pool plan. The director shall appoint three members of the first board for a one-year term, three members for two-year terms, three members for three-year terms, and three members for four-year terms. Thereafter all appointments shall be for a term of four years and no member may be appointed to more than two four-year terms. The board members shall be producers and not more than three may be producer-managers of associations and not more than two shall be producer-handlers. The board members shall give proportionate representation to all areas of the state, with due regard to the relative production and usage of fluid milk in the various areas of the state. The director may appoint one additional member on the board, who shall be a public member. Each member of the review board shall be paid not less than twenty-five dollars ($25) or more than thirty-five dollars ($35) per day plus travel expenses, including expenses for lodging and meals, which are incurred in the attendance at board meetings or in conducting the business of the board; all per diem and expenses being subject to approval by the director. Upon the director's request, the board shall submit to the director the names of three or more natural persons, each of whom shall be a citizen and resident of this state and not a producer, shipper, or processor nor financially interested in any producer, shipper, or processor, for appointment by the director as a public member of the board. The director may appoint one of the nominees as the public member on the board. If all nominees are unsatisfactory to the director, the board shall continue to submit lists of nominees until the director has made a selection. Any vacancy in the office of the public member of the board shall be filled by appointment by the director from the nominee or nominees similarly qualified submitted by the board. The public member of the board shall represent the interests of the general public in all matters coming before the board and shall have the same voting and other rights and immunities as other members of the board.

It is hereby declared, as a matter of legislative determination, that producers appointed to the review board pursuant to Section 62719 are intended to represent and further the interest of a particular agricultural industry concerned, and that such representation and furtherance is intended to serve the public interest. Accordingly, the Legislature finds that, with respect to persons who are appointed to such board, the particular agricultural industry concerned is tantamount to, and constitutes, the public generally within the meaning of Section 87103 of the Government Code.

No pooling plan formulated pursuant to this chapter shall restrict the free movement of fluid milk and no pooling plan shall result in an unequal raw product cost between distributors in the same marketing areas.

No pooling plan shall control the production of fluid milk except insofar as may otherwise be specifically authorized in this chapter.

Pooling plans shall not apply to the production of goats milk or producer-handlers who produce and sell less than 500 gallons of fluid milk used for class 1 purposes per day unless they specifically request entry into the pool at the time of the adoption of the initial pooling plan for that area. Producers of certified milk or guaranteed raw milk shall have the option, at the time of the adoption of the initial pooling plan under this chapter, to be subject to the plan, and accordingly to have a production base and pool quota established for the producer, or to be excluded from the plan.
  (a) Any such producer of less than 500 gallons of fluid milk per day, or any such producer of certified milk, or any such producer of guaranteed raw milk, electing to be excluded from the plan, may at any later time be admitted to the pool, but with only the production base and pool quota to which he or she would have originally been entitled or his or her existing production and average daily class 1 usage during the 12 months preceding his or her entry into the pool, whichever is less.
  (b) Any producer claiming exemptions from the provision of any pooling plan by reason of the provisions of Section 62708, 62708.1, or this section, who loses his or her exemption by failure to meet the requirements for exemptions set forth in those sections shall automatically be deemed to have applied for and become a part of a producer pool on September 1st following any year ended August 31st during which the director determines he or she is no longer entitled to exemption, and his or her admittance into such a pool shall be on the basis of the production base and pool quota calculations as set forth in those sections.

Unless otherwise defined in this chapter, the definitions contained in Chapter 2 (commencing with Section 61801) govern the construction of this chapter. For the purposes of this chapter, the following definitions shall apply:
  (a) The terms "distributor" and "processor" shall have the same definition as the term "handler" contained in Section 61826.
  (b) "Equalization point" shall mean that point at which pool quota held is equal to 95 percent of production base held.
  (c) "Fluid cream" shall have the same definition as the term "market cream" contained in Section 61827.
  (d) "Fluid milk" shall have the same definition as the term "market milk" contained in Section 61828.
  (e) "Fluid skim milk" shall have the same definition as the term "market skim milk" contained in Section 61829.

This chapter does not modify the provisions of Chapter 1 (commencing with Section 61301) nor Chapter 2 (commencing with Section 61801) of this part, except as may be necessary to effect the purposes of this chapter. If necessary to effect the purposes of this chapter, the director, in establishing the minimum prices which shall be paid for fluid milk to producers, may establish minimum producer prices applicable at the producer's place of production.

The director is authorized to use money in the Department of Food and Agriculture Fund derived from assessments and fees collected pursuant to Chapter 2 (commencing with Section 61801), to the extent necessary to defray the expenses incident to the formulation and making effective the pooling plan pursuant to this chapter, if, as soon as sufficient money is available from fees collected pursuant to this chapter, the amount shall be repaid.

The director is the instrumentality of this state for the purpose of administering and enforcing the provisions of this chapter and to execute the legislative intent which is expressed in this chapter, and is hereby vested with the administrative authority which is described in this chapter. Notwithstanding other laws to the contrary, in the event a milk marketing order under the jurisdiction of the United States Department of Agriculture or other appropriate federal agency, is created by referendum or under the applicable laws and procedures relating thereto, in this state or in any geographical area within this state, the provisions of this chapter or any part thereof which is in conflict with such federal order, or which is unnecessary or is a duplication thereof, shall be suspended in the geographical area covered by and during the existence of such federal order. The director shall take such steps and procedures as are necessary to wind up and conclude the administration and enforcement of the provisions of this chapter, or any part thereof, prior to the suspension date.

It is the intent of the Legislature that the power conferred in this chapter shall be liberally construed. The provisions of this chapter or subsequent amendment are severable. If any section, subdivision, paragraph, sentence, clause, or phrase of this chapter should be declared or held unconstitutional or invalid for any reason, such unconstitutionality or invalidity shall not affect the validity of any other provision of this chapter. The Legislature hereby declares that it would have enacted each other such section, subdivision, paragraph, sentence, clause, or phrase of this chapter irrespective of the fact that one or more sections, subdivisions, paragraphs, sentences, clauses, or phrases has been declared unconstitutional or invalid. Provided further that any such finding of invalidity or unconstitutionality shall not invalidate, affect or impair pool quotas and production bases heretofore issued under the Gonsalves Milk Pooling Act or pooling plan promulgated thereunder.

The director shall terminate any pooling plan in effect in any marketing area without notice or hearing at any time that there ceases to be a stabilization and marketing plan in force and effect in such marketing area, establishing minimum prices to be paid to producers, unless minimum prices payable by distributors to producers for fluid milk in such marketing area are subject to a federal milk marketing agreement or order which is not in conflict with, or in duplication of, the pooling plan.

The director or his assistants, deputies, agents, or other employees, are authorized to travel out-of-state in order to carry out the purposes of this chapter.

Any violation of any provision of this chapter, or any regulations adopted pursuant to this chapter, shall be punishable, and shall have the same effect, as a violation of Chapter 2 (commencing with Section 61801).

This chapter shall be known as the Gonsalves Milk Pooling Act.