2012 North Dakota Century Code Title 4 Agriculture Chapter 4-18.1 Milk Marketing Board
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CHAPTER 4-18.1
MILK MARKETING BOARD
4-18.1-01. Declaration of policy relating to milk.
It is hereby declared:
1. That milk is a necessary article of food for human consumption.
2. That the production and maintenance of an adequate supply of healthful milk of proper
chemical and physical content, free from contamination, is vital to the public health and
welfare.
3. That the production, transportation, processing, storage, distribution, and sale of milk,
in the state of North Dakota, is an industry affecting the public health and interest.
4. That unfair, unjust, destructive, and demoralizing trade practices have been and are
now being carried on in the production, transportation, processing, storage,
distribution, and sale of milk, milk products, and frozen dairy products, which trade
practices constitute a constant menace to the health and welfare of the inhabitants of
this state and tend to undermine the sanitary regulations and standards of content and
purity of milk.
5. That health regulations alone are insufficient to prevent disturbances in the industry
and to safeguard the consuming public from further inadequacy of a supply of this
necessary commodity.
6. That it is the policy of this state to promote, foster, and encourage the intelligent
production and orderly marketing of milk and cream, to eliminate speculation and
waste, and to make the distribution thereof between the producer and consumer as
direct as can be efficiently and economically done, and to stabilize the marketing of
such commodities.
7. That investigations have revealed and experience has shown, that due to the nature of
milk and the conditions surrounding the production and marketing of milk, and due to
the vital importance of milk to the health and well-being of the citizens of this state, it is
necessary to invoke the police powers of the state to provide a constant supervision
and regulation of the milk industry of the state to prevent the occurrence and
recurrence of those unfair, unjust, destructive, demoralizing, and chaotic conditions
and trade practices within the industry, which have in the past affected the industry and
which constantly threaten to be revived within the industry and to disrupt or destroy an
adequate supply of pure and wholesome milk to the consuming public and to the
citizens of this state.
8. That milk is a perishable commodity, which is easily contaminated with harmful
bacteria, which cannot be stored for any great length of time, which must be produced
and distributed fresh daily, and the supply of which cannot be regulated from day to
day, but, due to natural and seasonal conditions, must be produced on a constantly
uniform and even basis.
9. That the demand for this perishable commodity fluctuates from day to day and from
time to time making it necessary that dairy farmers, processors, and distributors
produce and carry on hand a surplus of milk in order to guarantee and ensure to the
consuming public an adequate supply at all times, which surplus must of necessity be
converted into byproducts of milk at great expense and at times at a loss to the dairy
farmer, processor, and distributor.
10. That this surplus of milk, though necessary and unavoidable, unless regulated, tends
to undermine and destroy the milk industry, which causes producers to relax their
diligence in complying with the provisions of the health authorities and oftentimes to
produce milk of an inferior and unsanitary quality.
11. That investigation and experience have further shown that, due to the nature of milk
and the conditions surrounding its production and marketing, unless dairy farmers,
processors, distributors, and others engaged in the marketing of milk are guaranteed
and ensured a reasonable profit on milk, both the supply and quality of milk are
affected to the detriment of, and against the best interest of the citizens of this state
whose health and well-being are thereby vitally affected.
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That, where no supervision and regulation is provided for the orderly and profitable
marketing of milk, past experience has shown that the credit status of dairy farmers,
processors, and distributors of milk is adversely affected to a serious degree, thereby
entailing loss and hardship upon all within the community with whom these dairy
farmers, processors, and distributors carry on business relations.
That, due to the nature of milk and the conditions surrounding its production and
distribution, the natural law of supply and demand has been found inadequate to
protect the industry in this and other states, and in the public interest it is necessary to
provide state supervision and regulation of the milk industry in this state.
4-18.1-02. Purpose.
The purpose of this chapter is to protect and promote public welfare and to eliminate unfair
and demoralizing trade practices in the milk industry. It is enacted in the exercise of the police
powers of the state.
4-18.1-03. Definitions.
As used in this chapter, unless the context otherwise requires:
1. "Adjudicatory matter" means any proceeding which results in a "decision".
2. "Board" means the state agency created by this chapter, to be known as the North
Dakota milk marketing board.
3. "Bulk milk" means milk which is purchased by a processor from a person other than a
dairy farmer and which is purchased in a container other than the one in which the milk
will be resold to a retailer or to a consumer.
4. "Dairy farmer" means any person who produces grade A raw milk for sale to a
processor.
5. "Dairy farmer-processor" means a person who is both a dairy farmer and a processor
and who purchases no raw milk from other dairy farmers. For the purposes of this
chapter, a dairy farmer-processor is a dairy farmer in any sale of raw milk produced by
that person to a processor, and is a processor in any processing, manufacturing, or
sale of milk products or frozen dairy products or in any receipt of bulk milk from a
source other than that person's own production.
6. "Dealer" means any processor or distributor.
7. "Decision" means the whole or any part of the final disposition (whether affirmative,
negative, injunctive, or declaratory in form) by the board in any matter other than a
rulemaking matter. The term "decision" includes the final disposition of any matter
involving the issuance, denial, suspension, or revocation of a license. The term also
includes any ruling by the board concerning the applicability of one or more provisions
of a stabilization plan to a particular person, but does not include a ruling concerning
the validity of any such provision.
8. "Distributor" means a person, other than a processor, who sells to consumers on one
or more retail (home delivery) routes or to retailers, or to both. If such person also
operates one or more retail establishments at which milk products or frozen dairy
products are sold to consumers, such person does not, thereby, lose that person's
classification as a distributor.
9. "Distributor price" means the price at which any milk product or frozen dairy product,
not intended for resale at a fixed location owned by a distributor, is purchased by a
distributor.
10. "Frozen dairy product" means any of the following:
a. Ice cream, fruit ice cream, nut ice cream, frozen malt ice cream (frosted malt ice
cream), frozen custard, French ice cream, ice milk, mellorine, olarine, sherine,
fruit sherbets, fruit sherbines, the mix from which any such product is made, and
those frozen products which contain milk solids not fat, or butterfat, and which are
commonly referred to in the dairy industry as "novelties".
b. Any frozen product (except baked goods) containing either milk solids not fat,
butterfat, or a milk derivative and which is found by the board to require regulation
in order to effectuate the purposes of this chapter.
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"Licensee" means any person who holds a license from the board which has neither
been suspended nor revoked.
"Marketing area" means that geographical portion of the state of North Dakota within
which minimum or maximum prices established by the board shall be uniform.
"Milk" means the lacteal secretion of a cow or cows (including such secretions when
raw, cooled, pasteurized, standardized, homogenized, recombined, or concentrated)
which meets applicable grade A requirements.
"Milk product" means any of the following:
a. Raw milk, regular or creamline milk, standardized milk, whole pasteurized milk,
special milk, homogenized milk, fortified milk, plain or creamed buttermilk, cottage
cheese, creamed cottage cheese, flavored milk, flavored skim milk, sour cream,
half and half, whipping cream, whipped cream, skim milk, low fat milk, fluid
cream, concentrated milk, yogurt, and eggnog.
b. Any product which contains milk solids not fat, butterfat, or a milk derivative, and
which is manufactured in the semblance of one of the products listed in
subdivision a, and which is found by the board to require regulation in order to
effectuate the purposes of this chapter.
c. The term "milk products" does not include butter, cheese (other than cottage
cheese or cream cottage cheese), nonfat dry milk, skim condensed milk, whole
condensed milk, whole dry milk, dried cream, evaporated milk, sweetened
condensed milk, or baked goods.
"Person" means any individual, partnership, corporation, limited liability company,
cooperative corporation or association, governmental agency, or other business entity.
"Processor" means a person who processes or manufactures milk products or frozen
dairy products, or a person who purchases raw milk from a grade A dairy farmer for
resale to a person who processes or manufactures milk products or frozen dairy
products, or a person who purchases bulk milk from anyone for resale to a person who
processes or manufactures milk products or frozen dairy products. The term
"processor" does not include a person who purchases ice cream mix, ice milk mix, or
other frozen dairy products mix and whose processing activities are limited to
converting such mix into a frozen dairy product, more than half the sales of which are
then made by such person to consumers at retail on the premises where such
processing activities take place.
"Regulation" means any statement by the board of general applicability and future
effect that implements, interprets, carries into effect, or makes more specific, the
provisions of this chapter. However, the term does not include any such statement
which is properly a part of a stabilization plan, nor does it include any such statement
that deals with matters of practice or procedure.
"Retail price" means the price at which any milk product or frozen dairy product is
purchased by any person who makes such purchase for purposes other than resale.
"Retailer" means any person who is engaged in transferring title to milk products or
frozen dairy products to consumers at one or more fixed places of business (retail
establishments) located in this state.
"Rule of practice" means any statement by the board of general applicability and future
effect prescribing matters relating to procedure and practice.
"Rulemaking matter" means any proceeding which results in the adoption,
amendment, or repeal of rules of practice, regulations, or of any stabilization plan.
"Stabilization plan" means any plan of general applicability and future effect which
contains the minimum or maximum prices, or both, that the board is authorized to
establish and such ancillary requirements as are necessary and appropriate in order to
make such minimums and maximums effective and meaningful. A stabilization plan
may be of general applicability although effective within only one marketing area and
although some provision of such plan is of immediate concern to only one person,
provided the form of the stabilization plan (and of each of its provisions) is general so
that others who may qualify in the future will fall within the provisions of such
stabilization plan.
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"Wholesale price" means the price at which any milk product or frozen dairy product is
purchased by a retailer.
4-18.1-04. Milk marketing board.
1. There is created a milk marketing board to consist of five members appointed by the
governor. The board consists of one individual who is a dairy farmer selling to a
processor, who must be selected by the governor from two names submitted to the
governor by the North Dakota milk producers association; one individual who is a
processor, who must be selected by the governor from two names submitted to the
governor by the North Dakota dairy industries association; one individual who is a
retailer, who must be selected by the governor from two names submitted to the
governor by the North Dakota association of food retailers; and two individuals must
be selected by the governor who are consumers, and who are not otherwise engaged
in the milk business. An appointee may not have held elective or appointive public
office during the period of two years immediately preceding appointment and may not
hold any other public office, either elective or appointive, during the term of office as a
member of the board. Not more than three members of the board may, at the time of
the appointment or thereafter during their respective terms of office, reside on the
same side of a continuous line following the eastern boundaries of Bottineau,
McHenry, Wells, Kidder, Logan, and McIntosh Counties.
2. The members of the board must be appointed within thirty days after passage and
approval of this chapter. The term of office of one member expires on July 1, 1968; the
term of office of one member expires on July 1, 1969; the term of office of one member
expires on July 1, 1970; the term of office of one member expires on July 1, 1971; the
term of office of one member expires on July 1, 1972; and each succeeding member
holds office for a term of five years and until a successor has been appointed and
qualified. Any vacancy must be filled by appointment by the governor.
3. Three members of the board constitute a quorum for the regular transaction of
business. The board shall choose one of its members as the chairman, who shall hold
office as a chairman for one year; provided, election as chairman does not interfere
with the member's right to vote on all matters before the board.
4. The board shall determine the amount of compensation payable to each member of
the board. The amount payable may not exceed one hundred thirty-five dollars per day
plus reimbursement for expenses as provided by law for state officers while attending
meetings or performing duties directed by the board. A member's per diem payments
may not exceed fifteen hundred dollars in any one year.
5. Each member of the board shall give bond conditioned for the faithful performance of
the member's duties. The board shall employ a director who serves under the direction
and at the pleasure of the board and whose qualifications, duties, and compensation
must be determined by the board. The director shall serve as financial officer of the
board and is authorized to accept money paid to the board in accordance with this
chapter.
6. The board shall employ, in addition to the director, such assistants and employees,
permanent and temporary, as may be necessary to carry out the duties and
responsibilities of the board under this chapter. The board shall determine the
qualifications, duties, and compensation of such employees. The board may employ a
licensed attorney of the state of North Dakota as its legal counsel, who shall serve on
a full-time or a part-time basis, and the board may obtain the services of such
additional attorneys as it deems necessary. The board may also contract for auditing,
economic research, and other technical services, whenever it determines that such
services are needed.
7. All expenditures under this chapter must be paid from the receipts under this chapter.
Meetings of the board must be held at least every sixty days at the call of the chairman
or a majority of the board.
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4-18.1-05. General powers of the board.
1. The board is hereby declared to be the instrumentality of the state of North Dakota for
the purpose of administering the provisions of this chapter and of executing the
legislative intent herein expressed. The board is hereby delegated the power to
supervise, investigate, and regulate every segment of the state's dairy industry.
However, nothing contained in this chapter may be construed to limit, decrease, or
amend in any respect the authority of the North Dakota department of agriculture,
county boards of health, or municipal health officials, with respect to matters of health
and sanitation; and nothing contained in this chapter may be construed as giving the
board any authority to regulate the sale of raw milk that is not grade A.
2. The board may act as mediator or arbitrator in connection with any controversy or
issue among or between dairy farmers, processors, distributors, retailers, or
consumers if such controversy or issue pertains to the production, transportation,
processing, storage, distribution, or sale of milk products or frozen dairy products.
3. The operation and effect of any provision of this chapter, conferring a general power
upon the board, do not impair or limit any specific power or powers granted to the
board by this chapter or by some other constitutional or statutory provisions.
4-18.1-06. Marketing areas.
The board shall designate such marketing areas which, together, must embrace all the
geographical territory of the state. The board may, from time to time, increase or decrease the
number of marketing areas, divide or combine one or more marketing areas, or alter the
boundaries of such areas.
In establishing, as well as in changing the boundaries of, such marketing areas, the board
shall take into consideration the various conditions affecting the production, distribution, and
sale of milk products and frozen dairy products in such areas, the need for establishing area
boundaries in a manner which will facilitate cooperation between the board and federal
authorities engaged in regulating prices paid by processors for raw milk, and all other factors
necessary to effectuate the purposes and policies of this chapter. Minimum or maximum prices
established by the board pursuant to this chapter may vary from one marketing area to another.
4-18.1-07. Stabilization plans.
1. The board shall establish for each marketing area the uniform minimum prices to be
paid by processors to dairy farmers for raw milk.
Each stabilization plan issued by the board must provide the means for
determining which such plan is applicable to the raw milk purchases of a processor
engaged in selling milk products in two or more marketing areas; and the applicability
of any such plan to raw milk purchased by a processor from a particular dairy farmer
may in no way be dependent upon the location of the seller's dairy farm nor upon the
location at which title passes.
In establishing or changing minimum prices to be paid by processors to dairy
farmers for raw milk in each marketing area, the board shall take into consideration the
following factors applicable to such area: the available supply of raw milk, the
adequacy of the reserve supply of raw milk available to processors, the balance
between production and consumption, the cost of dairy feed, farm wage rates, and
such other factors as will effectuate the purposes and policies of this chapter. All such
minimum prices must be those which will be beneficial to the public interest, protect
the dairy farmers, and ensure an adequate supply of pure and wholesome milk to the
inhabitants of the state.
Any stabilization plan issued by the board may provide for a classified pricing
system predicated upon utilization, and may provide for a marketwide pooling
arrangement, or a handler pooling arrangement, all as defined in the Agricultural
Marketing Agreement Act of 1937 (as amended) [7 U.S.C. 601 et seq.].
Any stabilization plan issued by the board for a marketing area, some portion of
which is included within the marketing area of a federal milk marketing order, may
require licensed processors subject to both the state stabilization plan and to the
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federal milk marketing order to pay minimum raw milk class prices which exceed the
minimum raw milk class prices established by such federal order and may require
such processors to pay all of the difference between the federal and state minimums
direct to dairy farmers on a handler pool basis.
Any stabilization plan issued by the board may contain a formula to be used in
computing minimum prices payable to dairy farmers. Such formula may be utilized by
the board to bring about such automatic changes in minimum dairy farmer prices as
are justified on the basis of changes in production costs, supply conditions, and in the
other factors to be considered by the board in establishing such minimum prices.
Any stabilization plan may also contain provisions establishing the prices payable
by a processor for raw milk purchased from sources other than dairy farmers and may
contain such other provisions as are necessary and appropriate in order to ensure that
prices paid for butterfat and milk solids not fat (whether in the form of raw milk or
otherwise) must be uniform for all processors whose raw milk purchases are regulated
by the same stabilization plan.
If the board issues a stabilization plan containing a marketwide pooling
arrangement, it may require that raw milk produced by dairy farmer-processors be
included in such pooling arrangement.
Any stabilization plan may provide for price adjustments based upon the butterfat
content of the raw milk, location where received, location of plant to which a portion of
the raw milk purchased is transferred or diverted by the processor from the plant
where such raw milk is normally utilized, and other such factors for which price
adjustments are provided in the Agricultural Marketing Agreement Act of 1937, as
amended.
For each marketing area, the board shall establish minimum prices for each of the
following classifications of sales:
a. Sales of milk products by processors or distributors to retailers. Such minimum
price for each item is applicable regardless of the location at which the retailer
accepts delivery.
b. Sales of milk products by any person to consumers.
For any marketing area, the board may establish the minimum prices for each of the
following classifications of sales:
a. Sales of milk products by processors to distributors.
b. Sales of frozen dairy products by a processor, distributor, or retailer to any
person.
c. Sales of milk products by a processor to another processor or by a distributor to
another distributor.
d. Sales of milk products or frozen dairy products not otherwise provided for in
subsections 2 and 3.
For any marketing area, the board may establish the maximum prices for which milk
products are sold by a processor, a distributor, or a retailer to any person. However, in
doing so the board shall take into account all of the economic factors which apply to
the establishment of minimum prices for stabilization plans which factors are set out in
subdivisions a, b, c, and d of subsection 6.
The stabilization plan for any marketing area may include a provision authorizing
processors and distributors to give quantity discounts to retailers in connection with
sales of milk products and frozen dairy products. In order to ensure the availability of a
sufficient variety of brands to consumers purchasing from retailers having sufficient
display space, and in order to avoid injury to small independent processors and
distributors, the board shall, if quantity discounts are authorized, establish for each
eligible retailer a quantity discount rate for purchases of milk products and a quantity
discount rate for purchases of frozen dairy products, which discount rates must be
based upon such retailer's total purchases of milk products from all suppliers and upon
such retailer's total purchases of frozen dairy products from all suppliers. All
processors and distributors delivering milk products and frozen dairy products to such
retailer are authorized to give quantity discounts in accordance with such rates
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regardless of the quantities of such products actually purchased by such retailer from
each individual processor or distributor. The schedules of quantity discount rates
established by the board must be based upon a graduated scale of discounts
proportionate to purchases made by retailers during a base period (one month, one
quarter, six months, or one year) to be designated by the board.
When a retailer operates two or more separate places of business, the board
shall base the quantity discount rate for each place of business upon the quantity of
milk products or frozen dairy products purchased for resale at that place of business
alone.
The minimum and maximum prices (other than dairy farmer prices) established by the
board, as well as the other provisions included in a stabilization plan, must be those
which will tend to maintain in the business of processing and distributing milk products
and frozen dairy products such reasonably efficient processors, distributors, and
retailers as are necessary to ensure to consumers an adequate and continuous supply
of high-quality milk products and frozen dairy products at fair and reasonable prices;
will tend to foster and encourage stability in the dairy industry and orderly and efficient
marketing of milk products and frozen dairy products; will tend to prevent unfair trade
practices, unfair methods of competition, conditions of monopoly or combinations in
restraint of trade; and will enable the dairy industry to maintain the highest quality.
In establishing minimum prices (other than dairy farmer prices) for a marketing
area, the board shall take into consideration all of the following economic factors that
are operative in such marketing area:
a. The prevailing raw milk prices in the marketing area regardless of whether such
prices are state established, federally established, or negotiated.
b. All reasonably necessary costs of processing and distribution incurred by
representative processors, distributors, and retailers, including a reasonable
return upon necessary investment.
c. Quantities of milk products and frozen dairy products consumed in such area.
d. All other economic factors which substantially and directly affect market supply
and demand for milk products and frozen dairy products in such area.
In exercising the authority contained in subsection 3, the board may establish
minimum prices for some items in a category without the necessity for establishing
minimum prices for the other items in such category and may establish one type of
minimum price without establishing the other types of minimum prices applicable to a
product. For example, the board may establish minimum prices for minimum standard
ice cream, but may refrain from establishing minimum prices for ice cream which
exceeds minimum standards; the board may establish minimum prices for half-gallons
and gallons of ice cream, but may refrain from establishing minimum prices for ice
cream packaged in containers of other sizes; and the board may establish minimum
wholesale prices for frozen dairy products without establishing minimum retail prices
for such products.
In lieu of establishing minimum wholesale prices for one or more frozen dairy products
items, the board may require dealers to file with the board the uniform wholesale price
at which each such item will be sold by each such dealer within each marketing area.
If the board elects to require such price filings, the board:
a. Shall prescribe the manner in which and the date on which initial price filings
must be made.
b. Shall prescribe the procedure to be followed by dealers in amending and
supplementing their initial price filings. The board's authority in this connection
includes the power to prescribe how much time shall elapse between the filing of
any supplemental price or any amended price and the date on which such filing
becomes effective, provided that the board may not prohibit dealers from meeting
lawful competition without delay in connection with the sale of any such frozen
dairy product, but may require the dealer to file an amended price for the purpose
of meeting competition before actually meeting such competition.
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Shall permit a dealer desiring to meet the lower prices of a competitor to do so in
such portions of the marketing area as are specified in such dealer's amended
price filing.
d. May require that the wholesale prices filed by a processor for a marketing area
are automatically applicable to sales by distributors of that processor's products
within such area.
e. May prescribe such other requirements relative to price filing as will tend to
effectuate the purposes of this chapter.
The minimum and maximum prices established by the board for products other than
raw milk may reflect packaging cost differences; and minimum and maximum prices
for home-delivered products may vary from minimum and maximum prices applicable
to products sold to consumers by retailers.
The board shall take appropriate steps to ensure that changes in minimum dairy
farmer prices are accompanied by simultaneous changes in the other minimum and
maximum prices as established by the board.
4-18.1-08. Licenses.
1. It is unlawful for a dairy farmer to sell milk without being licensed as a "dairy farmer" by
the board if such milk is purchased by a processor who is required by this chapter to
be licensed and who processes such milk at a plant located in the state of North
Dakota. This provision is equally applicable to dairy farmers whose dairy farms are
located outside the state of North Dakota as to dairy farmers whose dairy farms are
located in the state.
2. It is unlawful for a processor to buy milk or to sell milk products or frozen dairy
products without being licensed as a "processor" by the board if such processor:
a. Operates a processing plant located within the state of North Dakota;
b. Sells milk products or frozen dairy products to a retailer for resale at a retail
establishment that is located in North Dakota regardless of whether such
processor's plant is located inside or outside the state of North Dakota and
regardless of whether such retailer takes title to or possession of such products
inside or outside the state of North Dakota; or
c. Sells milk products or frozen dairy products to a distributor for resale to North
Dakota consumers on home delivery or for resale to a retail establishment that is
required by this chapter to have a "retailer" license.
3. It is unlawful for a distributor to sell milk products or frozen dairy products without
being licensed as a "distributor" by the board if such distributor sells milk products or
frozen dairy products to North Dakota consumers on one or more retail (home
delivery) routes or to a retailer for resale at a retail establishment that is required by
this chapter to have a "retailer" license.
4. It is unlawful for a retailer to purchase or transfer title to milk products or frozen dairy
products without being licensed as a "retailer" by the board. It is unlawful for a dairy
farmer, a processor, or a distributor to transfer title to milk products or frozen dairy
products to consumers at a fixed place of business located within this state without
obtaining for each such place of business a "retailer" license issued by the board.
5. The licensing of persons engaged in supplying milk products or frozen dairy products
to consumers through the use of vending machines must be in accordance with
requirements prescribed by the board.
6. No charge may be made by the board for any license. All licenses hereafter issued by
the board remain in effect unless and until:
a. There is a change of ownership or of location;
b. The license is suspended or revoked; or
c. The business is discontinued or is inactive for a period of more than thirty days.
7. A license is required for each separate place of business.
8. No processor or distributor may be licensed by the board without first having obtained
a license from the North Dakota department of agriculture. No dairy farmer may be
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licensed without furnishing proof of proper inspection by the department of agriculture
or the state department of health as provided by law.
A dairy farmer-processor shall obtain a dairy farmer license and a processor license
from the board.
All licenses issued by the board prior to April 1, 1969, expire automatically on April 1,
1969.
The board may decline to issue a "processor" license or a "distributor" license to an
applicant for any such license if the board finds that persons licensed by the board
prior to receipt of the application in question are supplying an adequate variety and
quantity of high-quality milk products and frozen dairy products to the state's retailers
and consumers, that deliveries are being made with sufficient regularity and frequency,
and that the issuance of additional licenses of the type sought:
a. Will result in an excess of processing plant capacity;
b. Will tend to increase to unsatisfactory levels the average unit processing or
average unit distribution costs for persons already licensed by the board; or
c. Will otherwise tend to prevent achievement of the objectives of this chapter.
Schools, hospitals, state institutions, and charitable institutions may obtain "retailer"
licenses from the board regardless of whether they fall within the definition of "retailer"
set forth hereinabove.
4-18.1-09. License applications.
Applications for licenses must be made on forms prepared and furnished by the board. The
board shall require the license applicant to set out in the application such facts concerning the
applicant and the nature of the business that the applicant proposes to conduct as the board
deems necessary for the administration of this chapter. The board shall also require applicants
for processor and distributor licenses to state in the application that such applicant will make no
sales of milk products or frozen dairy products to persons required by this chapter to be licensed
unless such persons have obtained the license required by this chapter.
Similarly, the board shall require applicants for distributor and retailer licenses to state in the
application that the applicant will make no purchases of milk products or frozen dairy products
from persons not licensed by the board.
The board shall require applicants for processor or distributor licenses to state in the
application that each such applicant will sell such milk products or frozen dairy products as are
customarily handled by such person to any retailer who desires to purchase any of such
products from such dealer and who has a place of business in any community in which such
dealer processes, distributes, or sells milk products or frozen dairy products; and each such
applicant shall also be required to state in the application that the applicant will offer to any such
retailer the same frequency of delivery and the same in-store services as are customary in such
community, and that the applicant will provide home-delivery services to any consumer residing
in such community upon request.
4-18.1-10. Prohibited acts.
1. No licensee may buy or sell any milk product or any frozen dairy product at less than
the applicable minimum price established by the board nor more than the applicable
maximum price established by the board.
2. If price filing is required by the board, no dealer may sell, and no retailer may
purchase, a frozen dairy product at a price which varies from the filed price which is in
effect on the date of such sale.
3. No licensee may take any action which is contrary to commitments made by such
licensee in the license application filed with the board.
4. It is unlawful for any licensee to use or attempt to use any method, device, or
transaction intended to accomplish, or having the effect of accomplishing, the sale or
attempted sale or the purchase or attempted purchase of milk products or frozen dairy
products at less than the minimum prices established by the board pursuant to this
chapter, or which is designed to circumvent the price requirements of the board, or
which has the effect of substantially undermining the effectiveness of such pricing
Page No. 9
5.
6.
requirements, whether such method, device, or transaction applies directly to the milk
product or frozen dairy product sold or purchased, or is used in connection with the
sale or handling of any other product, commodity, article, or service.
The following arrangement, now in effect among a limited number of licensees in this
state, is found to be discriminatory, unfair, and disruptive and is hereby prohibited: The
purchasing by a distributor of milk products or frozen dairy products at prices which
are less than minimum wholesale prices when such products are resold to consumers
at a fixed place of business owned by such distributor. This subsection may not be
interpreted as prohibiting an arrangement in which a distributor purchases at
wholesale prices those milk products or frozen dairy products that are to be resold at a
fixed place of business owned by such distributor and purchases at distributor prices
all of the other milk products and frozen dairy products that are to be resold by such
distributor.
No retailer may sell or offer to sell any milk products or frozen dairy products of one
brand at a price which is different from the price charged by such retailer for an equal
quantity of a product which is of the same type, quality, or grade, but of a different
brand, unless such price differential is equal to the difference in the prices paid by the
retailer for the products in question.
4-18.1-11. Authority of the board to regulate disruptive trade practices.
In order to implement subsection 4 of section 4-18.1-10, the board shall by regulation
prohibit or regulate each of the following practices, which said practices are listed herein solely
for the purpose of illustrating the broad scope of the board's authority under the said subsection.
Such listing is not intended to be an exclusive enumeration of those practices, methods,
devices, schemes, arrangements, and activities which the board is authorized to prohibit or
regulate:
1. The giving of discounts, rebates, or allowances in connection with the sale of milk
products or frozen dairy products unless such discounts, rebates, or allowances are
authorized by the board in accordance with subsection 5 of section 4-18.1-07.
2. The furnishing by a dealer of free equipment or services to a retailer. This provision
may not be interpreted as authorizing the board to prohibit the stocking by a dealer of
the dairy case or frozen products cabinet of a retailer nor the stamping on each milk
product or frozen dairy product by the dealer of the retail price at which the retailer
desires to sell any such product.
3. The giving of advertising or display allowances.
4. The giving of a free milk product or a free frozen dairy product to a customer.
5. The making or renewal of loans, or the giving of financial assistance in any other form,
by a dealer to a retailer.
6. The furnishing of signs by a dealer to a retailer.
7. Selling, offering to sell, or advertising any milk product or frozen dairy product in
combination with any other product or service.
8. Selling, offering to sell, or advertising any product or service at a price which is
available only to purchasers of a milk product or a frozen dairy product.
9. The giving of gifts by dealers to retailers.
10. The selling, leasing, renting, or lending of equipment by a dealer to a retailer. In
connection with the sale of equipment by a dealer to a retailer, the board may
prescribe the minimum markup based upon the seller's invoice cost or depreciated
value in the case of used equipment. This subsection may not be interpreted as
authorizing the board to prohibit the sale of equipment by dealers to retailers, but the
board may prescribe a minimum markup based upon the seller's invoice cost (or
depreciated value in the case of used equipment).
11. The requiring of deposits where milk products or frozen dairy products are purchased
in returnable containers and the giving of allowances or credits in connection with the
return of such containers.
12. Payments by dealers to franchisors, wholesale grocers, or any other person closely
connected with a retailer for central billing, customer solicitation, or other services if
Page No. 10
the purpose or effect of such payment is to induce the recipient of any such payment
to influence or attempt to influence the decision of one or more retailers relative to the
brands of milk products or frozen dairy products to be purchased and resold by such
retailer or relative to the amount of space to be allocated to any brand of milk products
or frozen dairy products.
4-18.1-12. Assessments by the board - Continuing appropriation.
In order to obtain funds for the administration and enforcement of the provisions of this
chapter, the board shall levy an assessment upon all licensed processors of not more than
twelve cents per hundredweight [45.36 kilograms] after June 30, 1995, and before July 1, 1997,
on milk or milk equivalents used for the manufacture of milk products and frozen dairy products
processed by such processors. The board shall levy an assessment of not more than thirteen
cents per hundredweight [45.36 kilograms] after June 30, 1997, and before July 1, 1999, and
not more than fourteen cents per hundredweight [45.36 kilograms] after June 30, 1999.
However, this assessment is not applicable to milk products or frozen dairy products sold in
other states.
This assessment must be paid quarterly on or before the fifteenth of July, October, January,
and April of each year. Each such payment must be equal to the assessment due in connection
with milk products and frozen dairy products processed during the calendar quarter which ends
on the last day of the preceding month.
All such assessments must be deposited by the board in the state treasury in a special
revolving fund to be known as the "milk marketing fund". All expenses incurred in connection
with the enforcement and administration of this chapter, including the salaries of employees and
assistants must be paid out of the said "milk marketing fund". All money in the milk marketing
fund is appropriated on a continuing basis to the board for carrying out the purposes of this
chapter. Regular audits of the board's accounts must be conducted in accordance with chapter
54-10.
4-18.1-13. Construction.
This chapter does not prohibit the issuing of trading stamps by retailers in connection with
the sale of milk products or frozen dairy products except in those instances where a retailer
offers trading stamp bonuses to purchasers of milk products or frozen dairy products.
The authority of the board to regulate milk products or frozen dairy products moving in
interstate commerce must be construed to be as great as, but not to exceed, the limits imposed
by the Constitution of the United States.
4-18.1-14. Entry, inspection, and investigation.
Authorized representatives of the board have access to, and may enter at all reasonable
hours, all places of business operated by licensees where raw milk, milk products, or frozen
dairy products are produced, stored, processed, manufactured, or sold, or where the licensee
maintains books, papers, accounts, records, or other documents related to such activities. The
board may subpoena, and any of its authorized representatives may inspect and make copies
of, any of such books, papers, records, accounts, or documents and audit the same, all for the
purpose of determining whether or not the provisions of this chapter and of any rules and
stabilization plans issued by the board are being complied with.
The board may subpoena, and any of its authorized representatives may inspect, audit, and
make copies of, relevant books, papers, records, accounts, or other documents of persons
doing business with licensees.
Any information gained by the board or its representatives through such entry, inspection, or
investigation must be treated as confidential by the board and its representatives and must be
used only for the administration of this chapter; provided, that such persons may divulge such
information when called upon to testify in any duly noticed proceeding before the board or in any
court proceeding wherein the board is a party or to the agriculture commissioner or the dairy
commissioner for the purpose of determining whether a licensee's financial condition is such as
to reasonably assure prompt payment to the dairy farmers from whom milk or cream is
Page No. 11
purchased. Nothing contained in this chapter prevents the use of any information procured by
the board or its representatives in the compiling and dissemination of general statistical data,
containing information procured from a number of licensees, and compiled in such manner as
not to reveal individual information for any licensee. Any person who divulges confidential
information in violation of this section to any person, other than members and employees of the
board, is guilty of a class A misdemeanor.
The board may also subpoena and take the testimony under oath of persons believed by
the board to have information needed by it in administering and enforcing this chapter.
4-18.1-15. Records and reports.
1. The board shall require licensees to maintain such records as the board deems
necessary to effectuate the provisions of this chapter. The board may, by regulation,
specify what records must be maintained by each type of licensee. The board shall
require licensees to maintain, among other records, the following:
a. A record of all raw milk received or purchased by the licensee, showing the
names and addresses of the dairy farmers and others from whom such raw milk
was purchased, the quantity, price paid, butterfat test, and any deductions made.
b. A record of all milk products and frozen dairy products sold or used, classified as
to grade, use, location, market outlet, size and type of container, the composition
of said product in terms of butterfat and solids, the quantity sold, and the prices
received therefor. Such records must also show the quantity of each milk product
or frozen dairy product manufactured by a licensee, together with the composition
of such product, the quantity sold, and the prices received therefor.
2. The board may require licensees to maintain, among other records, the following:
a. A record of the shrinkage, wastage, or loss of raw milk and butterfat, and of skim
milk and butterfat destroyed or used for special purposes such as livestock feed.
b. A record of the inventory of raw milk, other milk products, and frozen dairy
products on hand at the end of a designated accounting period.
c. A record of all items of expense incurred by the licensee in procuring raw milk
and other ingredients, and in processing, manufacturing, storing, distributing, and
selling milk products and frozen dairy products, including overhead and general
and administrative costs, and all other items of cost incurred by each licensee in
the conduct of its business. A licensee may not be required to reveal that
licensee's profit or loss. Such records must be of a nature to permit the board to
make statistical studies as it may deem necessary for the proper exercise of its
authority under this chapter.
3. Records required to be kept by licensees must be preserved by the licensee for a
period of not less than three years.
4-18.1-16. Cooperation with other governmental agencies.
The board may, in compliance with section 4-18.1-18, cooperate with stabilization agencies
in other states and with the secretary of agriculture of the United States in the manner provided
in the Agricultural Marketing Agreement Act of 1937, as amended [7 U.S.C. 610(i)].
4-18.1-17. Remedies.
1. The board may refuse to license or may suspend or revoke the license of any person,
except a dairy farmer, who violates any provision of this chapter, any provision of a
stabilization plan issued by the board, or any rule issued by the board. In lieu of a
suspension or revocation the board may assess a civil penalty not to exceed five
hundred dollars per day for each violation or continuing violation, and may collect such
civil penalty by a civil proceeding in any appropriate court. Any moneys received by the
board as the result of an election by a licensee to pay a penalty in lieu of a license
suspension must be placed in the milk marketing fund. Such penalties must be
construed as civil and not criminal in nature.
Page No. 12
2.
The board or its authorized agent may institute such action at law or in equity as may
appear necessary to enforce compliance with any provision of this chapter or to
enforce compliance with any stabilization plan or regulation of the board or to obtain a
judicial interpretation of any of the foregoing; and, in addition to any other remedy, the
board, upon approval by a majority of its members, may apply to the district court for
relief by injunction, mandamus, or any other appropriate remedy in equity. In such
actions the board is not required to give or post bond in any action to which it is a party
whether upon appeal or otherwise. All legal actions may be brought by or against the
board in the name of the North Dakota milk marketing board, a state agency.
4-18.1-18. Adjudicatory functions of the board.
1. Within thirty days after receipt by the board of an application for license, the board
shall either issue the license or notify the applicant of the date on which a hearing will
be held for the purpose of receiving evidence relative to the eligibility of the applicant
for the license sought. Such hearings should be held on a date which is not less than
twenty days after the date on which such notice is given, unless the hearing is fixed for
an earlier date by mutual agreement of the board and the applicant. Within a
reasonable time after the close of such a hearing, the board shall notify the applicant
of its decision in the matter. The board may deny the issuance of a license if it finds
that the applicant has violated this chapter or a regulation or stabilization plan
promulgated by the board.
2. Whenever the director has reason to believe that a licensee has violated this chapter
or any rule or stabilization plan issued by the board, the director may file a complaint
against such licensee with the board and shall serve a copy of the complaint on the
licensee in which the director shall set forth the nature of the alleged violation. The
board after a hearing and after finding that the licensee has violated any provisions of
this chapter, a provision of a stabilization plan or a rule issued by the board may
suspend or revoke the licensee's license.
3. The proceedings authorized or required by subsections 1 and 2 must be in strict
conformity with chapter 28-32, any rules adopted under chapter 28-32, and any other
rules of administrative practice or procedure adopted by the board.
4-18.1-19. Judicial review of adjudicatory action by the board.
Judicial review of any decision rendered by the board in any proceedings authorized or
required by section 4-18.1-18 must be in accordance with sections 28-32-42 through 28-32-49.
4-18.1-20. Rulemaking functions of the board.
1. The rules of practice, regulations, and stabilization plans issued by the board are
declared to be "rules" as that word is defined in chapter 28-32. The requirements of
sections 28-32-02 through 28-32-20 are applicable to any board proceeding which
results in the adoption, amendment, or repeal of any rule of practice, regulation, or
stabilization plan.
2. The board may, at any time, on its own motion, initiate a proceeding in connection with
the adoption, amendment, or repeal of rules of practice, regulations, or stabilization
plans. In addition, any person desiring to initiate such a proceeding shall file with the
board a written petition which must state clearly and concisely the substance or nature
of the action requested and the reasons which prompted the request. Upon receipt of
such petition, the board shall, within thirty days thereafter, deny the petition in writing
or schedule the matter for public hearing pursuant to the requirements of this section.
3. Prior to the adoption, amendment, or repeal of any rule of practice, regulation, or
stabilization plan, the board shall:
a. Give at least ten days' notice of its intended action. The notice must include a
statement of either the terms or substance of the intended action or a description
of the subjects and issues involved and the time when, the place where, and the
manner in which interested persons may make presentations in connection
Page No. 13
4.
5.
6.
therewith. The notice must be mailed to all persons who have made timely
requests for advance notice of any such proceeding, and notice must also be
given by publication in accordance with the requirements set forth in the board's
rules of practice.
b. Afford all interested persons reasonable opportunity to submit data, views, or
arguments, orally or in writing. In any proceeding involving regulations or
stabilization plans, opportunity for oral presentation (a public hearing) must be
granted. The board shall consider fully all such written and oral submissions.
The board may designate a hearing officer to conduct any public hearing required by
this section.
The record of each rulemaking proceeding, including the transcript of any public
hearing held as a part thereof, must be filed in the principal office of the board. Such
record must be available at all times for inspection by any interested person.
Any rule of practice, regulation, or stabilization plan adopted by the board, or the
amendment or repeal thereof, is effective on the date on which notice of such action is
given by the board, or such later date as may be specified in the notice. Notice of any
such action must be given by the board to all persons who have made timely requests
for such a notice, and all persons who entered an appearance at the public hearing.
4-18.1-21. Judicial review of rulemaking action by the board.
1. The validity or applicability of any action taken by the board in its rulemaking capacity
may be determined in a suit for declaratory judgment in the district court.
2. Any such suit must be filed within thirty days after the date on which the action by the
board becomes effective pursuant to section 28-32-42.
3. The court shall declare the board action invalid if the court finds that the action in
question violates constitutional provisions or exceeds the statutory authority of the
board or was adopted without substantial compliance with rulemaking procedures. The
board must be made a party to the suit.
4. No stay of a board stabilization plan or regulation properly adopted may be granted
prior to final determination of any such matter by the court having jurisdiction thereof.
4-18.1-22. Local advisory boards.
Whenever a public hearing is scheduled by the board in any marketing area for the purpose
of establishing prices, the board may, at least ten days prior to the date set for such hearing,
appoint a local advisory board, the function of which is to assist and advise the board in matters
pertaining to the production and marketing of milk in said marketing area. If a local advisory
board is appointed, the local advisory board shall consist of two producers, two processors, and
two retailers who are actively engaged in milk production, processing, and marketing in the
area. Such local advisory board shall meet with the board at the call of the board before, during,
or after such public hearing to establish prices. The members of such local advisory board shall
receive twenty-five dollars per diem for each day actually spent in the performance of such
duties, plus mileage and expenses in an amount equal to that received by state officers. In no
event may there be more than three meetings or conferences between the board and such local
advisory board and in all events such local advisory board shall cease to exist when the board
promulgates its stabilization plan established prices following the public hearing heretofore
mentioned.
4-18.1-23. Referendum on continuance of program - Petitions - Contents.
Whenever a petition is presented to the agriculture commissioner containing at least
twenty-five percent of the total grade A dairy farmers in North Dakota covered by the provisions
of this chapter, with the signature of at least one such dairy farmer in each of twenty-seven
different counties, the agriculture commissioner shall conduct a referendum by secret ballot by
mail, in accordance with rules established by the agriculture commissioner, and shall report the
results of the referendum to the next legislative assembly that meets thereafter.
Page No. 14
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