SB-1132, As Passed House, March 18, 2010

SUBSTITUTE FOR

SENATE BILL NO. 1132

     A bill to amend 2001 PA 267, entitled

"Manufacturing milk law of 2001,"

by amending sections 110 and 125 (MCL 288.670 and 288.685), as

amended by 2008 PA 147, and by adding section 110b.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

     Sec. 110. (1) A person shall not do any of the following

without being licensed under this act or the grade A milk law of

2001:

     (a) Produce milk that is offered for sale.

     (b) Collect milk samples for regulatory purposes.

     (c) Operate a milk transportation company that owns or

operates a can milk truck.

     (d) Process, label, or sell milk or manufactured dairy

products, except that a person operating a retail food

establishment is exempt from licensure under this act if he or she

complies with section 111 and is licensed under the food law of

2000. This subdivision does not prevent the sale at wholesale or

retail at a retail food establishment licensed under the food law

of 2000 of milk or milk products that are packaged in final

consumer packages at a facility licensed under this act.

     (e) Wash milk tank trucks.

     (2) A person licensed under the grade A milk law of 2001 and

engaged in activities regulated under that act and activities

regulated under this act is exempt from licensure under this act.

     (3) A person licensed under the grade A milk law of 2001 or

this act shall comply with the requirements of this act, where

applicable, and is subject to the penalties set forth in this act,

where applicable.

     (4) The director may issue a temporary license or permit for

activities regulated under this act.

     (5) State agencies operating dairy facilities under a

memorandum of understanding with the department are not required to

be licensed or permitted, or to provide producer security under

this act, but are otherwise required to be in compliance with this

act.

     (6) An applicant for an initial manufacturing grade dairy farm

permit shall apply to the department on a form provided by the

department, pay the annual permit fee imposed under this section,

and complete education on drug residue avoidance control measures

acceptable to the director before receiving the permit.

     (7) An applicant for an initial license as a dairy plant shall

apply to the department on a form supplied by the department and

provide a statement containing the following:

     (a) The dairy plant's correct legal name and any name by which

the dairy plant is doing business. If the dairy plant is a person

not an individual, the name of each officer and director, and

partner, member, or owner owning in excess of 35% of equity or

stock.

     (b) The location of the dairy plant to which the statement

pertains and the name of the responsible person who may be

contacted at that location.

     (c) The anticipated value of greatest milk receipts the dairy

plant expects to receive during a consecutive 30-day period within

the licensing period.

     (d) A list of producers, including names, mailing addresses,

and department producer permit number, with whom the dairy plant

intends to do business except that not later than 90 days after

becoming licensed for the first time, the dairy plant shall send an

updated list to the department.

     (e) The name of the financial institution through which milk

checks are to be issued to producers.

     (f) The annual volume of raw milk each milk plant anticipates

receiving. The department may conduct an audit to verify the

accuracy of the annual volume of raw milk receipts reported and may

reassess the license fee accordingly. In the alternative, the

department may utilize an audit conducted by the United States

department of agriculture or any other audit acceptable to the

director.

     (8) A dairy plant shall annually renew a license issued under

this act by applying to the department at least 30 days prior to

the expiration of the existing license. The anniversary date of a

license for a dairy plant that is providing a financial statement

as a security device shall be 130 days after the close of the

licensee's fiscal year. The dairy plant shall apply for renewal of

a license on a form supplied by the department and provide a

statement containing the following:

     (a) The dairy plant's correct legal name and any name by which

the dairy plant is doing business. If the dairy plant is a person

not an individual, the name of each officer and director, and

partner, member, or owner owning in excess of 35% of equity or

stock.

     (b) The location of the dairy plant to which the statement

pertains and the name of the responsible person who may be

contacted at that location.

     (c) The greater of either the value of greatest milk receipts

that the dairy plant received within a consecutive 30-day period

during its last license year or the greatest milk receipts that the

dairy plant is anticipated to receive during a consecutive 30-day

period within the licensing period.

     (d) A complete list of producers, including names, mailing

addresses, and department producers permit number, with whom the

dairy plant is doing business.

     (e) The name of the financial institution through which milk

checks are issued to producers.

     (f) The annual volume of raw milk each milk plant anticipates

receiving. The department may conduct an audit to verify the

accuracy of the annual volume of raw milk receipts reported and may

reassess the license fee accordingly. In the alternative, the

department may utilize an audit conducted by the United States

department of agriculture or any other audit acceptable to the

director.

(9) Each dairy plant shall pay a $50.00 annual licensing or

permitting fee. License renewal for a dairy plant shall take place

on June 30 of each year unless otherwise specified in this act. A

dairy plant licensed under this act shall pay an annual license or

permit fee as follows:

     (a) Dairy plant with less than 6,000,000 pounds of anticipated

raw milk receipts per year, at a rate of $200.00 per year.

     (b) Dairy plant with greater than or equal to 6,000,000 pounds

of anticipated raw milk receipts per year, at a rate of $400.00 per

year.

     (10) Each receiving station or transfer station shall be

licensed or permitted either as part of a dairy plant or as a

stand-alone facility. Each stand-alone facility will be licensed or

permitted at a rate of $50.00 $200.00 per year. License renewal

shall take place on June 30 every year.

     (11) Each milk tank truck cleaning facility shall be licensed

or permitted under this act either as part of a dairy plant,

receiving station or transfer station, or as a stand-alone milk

tank truck cleaning facility, or under the grade A law of 2001. Any

milk tank truck cleaning facility that washes the milk contact

surfaces of milk tank trucks used to haul grade A milk shall be

licensed under the grade A law of 2001. Each stand-alone facility

will be licensed or permitted at a rate of $50.00 $200.00 per year.

License renewal shall take place on June 30 every year.

     (12) Each single service containers and closures manufacturer

shall be licensed or permitted under this act either as part of a

dairy plant or as a stand-alone manufacturer. Each stand-alone

facility will be licensed at a rate of $50.00 $200.00 per year.

License renewal shall take place on June 30 every year.

     (13) A person shall not pick up manufacturing grade milk in a

farm pickup milk tank from a farm bulk milk tank without a

hauler/sampler license issued by the department under the grade A

law of 2001. Each milk tank truck or can milk truck shall be

licensed or permitted under this act or as required under the grade

A milk law of 2001 at a rate of $10.00 $20.00 per year. License or

permit renewal shall take place on June 30 every year.

     (14) Each dairy farm producing manufacturing milk to be

offered for sale shall be licensed or permitted annually at either

of the following rates:

     (a) If the dairy farm does not maintain adequate industry

personnel, as determined by the director, who are approved to

conduct certified industry farm inspections, $30.00.

     (b) If the dairy farm maintains adequate industry personnel,

as determined by the director, who are approved to conduct

certified industry farm inspections, $15.00.

     (15) The fee described in subsection (14) shall be paid to the

department by June 30 every year.

     (16) A milk buyer shall pay the annual license or permit fee

on behalf of the dairy farms and may submit an invoice to the dairy

farms for reimbursement of the fee or may deduct the fee from the

dairy farms' milk check. A milk buyer shall complete a form

provided by the department that indicates the number of producers

for which it is responsible and shall include a list of the

producer names, addresses, and department permit numbers. The

department may conduct audits to verify fee payments.

     (17) The department may assess a plan review fee of $100.00 to

a potential dairy licensee or permittee, to be paid prior to an on-

site consultation. The plan review fee is not refundable and does

not apply toward any future license fees.

     (18) The department may assess a $150.00 fee on any licensee

or permittee requiring the performance of 2 or more consecutive

reinspections for compliance of items found in violation of this

act.

(19) (14) The director may issue a temporary license or permit

if the director determines that issuance of the license or permit

will not be detrimental to the protection of the public health,

safety, or welfare or will not cause an imminent threat of

financial loss to producers.

(20) (15) A political subdivision of the state shall not levy

special license fees or taxes on 1 or more of the persons or

businesses described in this section except for taxes or fees that

are generally levied on persons or businesses other than dairy

plants and dairy plant operators.

(21) (16) The director shall examine the books, records, and

accounts of a dairy plant if the dairy plant has not responded to

requests from the director regarding a security device described in

sections 117, 118, and 119. All examinations of books, records, and

accounts required under this subsection shall be made within this

state.

(22) (17) All applicants for a permit or license must complete

an application provided by the department and meet the minimum

requirements of this act or the grade A law of 2001, and rules

promulgated under this act.

(23) (18) Any fees, assessments, civil or administrative

fines, and money from any other source collected by the department

under this act shall be deposited into the dairy and food safety

fund created in section 4117 of the food law of 2000, MCL 289.4117.

(24) (19) The department may impose a late fee of $10.00 for a

renewal application for each business day the application is late.

The total late fee shall not exceed $100.00. The department shall

not issue or renew a license until any fees and fines have been

paid. A hearing is not required regarding the department’s refusal

to issue or renew a license under this subsection except as allowed

under the administrative procedures act of 1969, 1969 PA 306, MCL

24.201 to 24.328. The department may charge a convenience fee and

collect from the applicants any additional costs associated with

the method of fee payment for the license or permit fees described

in this section and section 110a, not to exceed the costs to the

department.

     Sec. 110b. (1) As used in this section, "pasteurized milk

ordinance" means that term as defined in section 6 of the grade A

milk law, MCL 288.476.

     (2) Each certified industry manufacturing farm inspector shall

pay a 3-year license fee of $150.00 for a license to conduct

certified industry manufacturing farm inspections. License renewal

shall take place on the expiration date of the 3-year

certification.

     (3) Certified industry manufacturing farm inspectors shall

comply with the requirements for certified industry inspections

specified in section 5 of the pasteurized milk ordinance and, in

addition, shall conduct both of the following:

     (a) A farm inspection of all producers having the first

routine count exceeding legal standards for bacteria or somatic

cells, or both.

     (b) One routine inspection per year of each producer, with a

copy of each required inspection forwarded to the local area dairy

inspector.

     (4) Certified industry manufacturing farm inspectors may

perform official inspections, but only with authorization by the

director.

     Sec. 125. (1) The director shall impose upon a producer who

violates this act by selling or offering for sale milk which has

been found positive for violative drug residues on a test performed

pursuant to sections 131 and 132 the following sanctions and

administrative fines and provide notice and the opportunity for an

administrative hearing:

     (a) The following in the case of a first violative drug

residue within a 12-month period:

     (i) The producer's milk shall not be offered for sale until a

subsequent sample of the producer's milk tests negative for

violative drug residues at an approved laboratory.

     (ii) The producer shall pay an administrative fine equal to the

lost value of the milk on the entire contaminated load and any

costs associated with the disposition of that load. The

administrative fine shall be paid directly to the milk buyer. The

producer shall pay an administrative fine of $50.00 to the

department upon the violative shipment, as determined by an

approved drug residue test. The milk buyer may pay the

administrative fine, if a like amount has been deducted from the

producer's milk check. If the producer's violative shipment caused

the partial or total loss of a load of milk, the producer shall pay

directly to the milk buyer an additional administrative fine equal

to the lost value of the contaminated load and any costs associated

with the disposition of that load. The department shall be provided

with written notification of the payment. Written notification

shall also be provided to the department of the date and location

of the disposal of the entire contaminated load. Where a producer

markets their own load of milk, the producer shall provide written

notification to the department of the date and location of the

disposal of the entire contaminated load. If the producer's

violative shipment did not cause partial or total loss of a load of

milk as determined by an approved drug residue test, the producer

shall pay an administrative fine of $50.00 to the department. The

milk buyer may pay the administrative fine, if a like amount has

been deducted from the producer's milk check.

     (b) The following in the case of a second violative drug

residue within a 12-month period:

     (i) The producer's milk shall not be offered for sale until a

subsequent sample of the producer's milk tests negative for

violative drug residues at an approved laboratory.

     (ii) The producer shall pay an administrative fine equal to the

lost value of the milk on the entire contaminated load and any

costs associated with the disposition of that load. The

administrative fine shall be paid directly to the milk buyer. The

producer shall pay an administrative fine of $200.00 to the

department upon the violative shipment, as determined by an

approved drug residue test. The milk buyer may pay the

administrative fine, if a like amount has been deducted from the

producer's milk check. If the producer's violative shipment caused

the partial or total loss of a load of milk, the producer shall pay

directly to the milk buyer an additional administrative fine equal

to the lost value of the contaminated load and any costs associated

with the disposition of that load. The department shall be provided

with written notification of the payment. Written notification

shall also be provided to the department of the date and location

of the disposal of the entire contaminated load. Where a producer

markets their own load of milk, the producer shall provide written

notification to the department of the date and location of the

disposal of the entire contaminated load. If the producer's

violative shipment did not cause partial or total loss of a load of

milk as determined by an approved drug residue test, the producer

shall pay an administrative fine of $200.00 to the department. The

milk buyer may pay the administrative fine, if a like amount has

been deducted from the producer's milk check.

     (iii) The producer will be required to test all milk prior to

shipment with a drug residue test acceptable to the director for a

minimum of 12 months and must retain records of these tests for a

minimum of 18 months.

     (iv) The producer will be required to maintain complete drug

treatment records for all lactating or near lactating dairy animals

for a minimum of 12 months and must shall retain records of these

treatments for a minimum of 18 months.

     (c) The following in the case of a third or any additional

violative drug residue within a 12-month period:

     (i) The producer's milk shall not be offered for sale until a

subsequent sample of the producer's milk tests negative for

violative drug residues at an approved laboratory.

     (ii) The producer shall pay an administrative fine equal to the

lost value of the milk on the entire contaminated load and any

costs associated with the disposition of that load. The

administrative fine shall be paid directly to the milk buyer. The

producer shall pay an administrative fine of $500.00 to the

department upon the violative shipment, as determined by an

approved drug residue test. The milk buyer may pay the

administrative fine, if a like amount has been deducted from the

producer's milk check. If the producer's violative shipment caused

the partial or total loss of a load of milk, the producer shall pay

directly to the milk buyer an additional administrative fine equal

to the lost value of the contaminated load and any costs associated

with the disposition of that load. The department shall be provided

with written notification of the payment. Written notification

shall also be provided to the department of the date and location

of the disposal of the entire contaminated load. Where a producer

markets its own load of milk, the producer shall provide written

notification to the department of the date and location of the

disposal of the entire contaminated load. If the producer's

violative shipment did not cause partial or total loss of a load of

milk as determined by an approved drug residue test, the producer

shall pay an administrative fine of $500.00 to the department. The

milk buyer may pay the administrative fine, if a like amount has

been deducted from the producer's milk check.

     (iii) The suspension of the producer's permit for a period not

to exceed 60 days after notice and the opportunity for an

administrative hearing before the department.

     (iv) The producer will be required to test all milk prior to

shipment with a drug residue test acceptable to the director for a

minimum of 12 months and must retain records of these tests for a

minimum of 18 months.

     (v) The producer will be required to maintain complete drug

treatment records for all lactating or near lactating dairy animals

for a minimum of 12 months and must retain records of these

treatments for a minimum of 18 months.

     (2) The director may accept verification, on forms acceptable

to the director, from the violative producer's milk marketing

cooperative or purchaser of milk as satisfying the penalty

requirements and may verify the information.

     (3) The disposal method and location of disposal for violative

drug residue milk on the milk tank truck shall be immediately

reported to the director, by the party making the disposal, on

forms provided by and acceptable to the director.

     (4) The director shall investigate the cause of the violative

drug residue and shall discuss drug residue avoidance control

measures with the violative producer.

     (5) Selling or offering for sale milk which has been found

violative for drug residues is determined by either of the

following criteria:

     (a) When milk is picked up from a milk producer by a milk tank

truck and not commingled with milk from other producers, the milk

becomes subject to possible drug residue penalties at the point the

milk tank truck leaves the farm with the milk.

     (b) When milk is picked up from a milk producer by a milk tank

truck and commingled with milk from other producers, it becomes

subject to possible drug residue penalties at the point of

commingling.

     (6) Section 124 applies to a producer who violates this act by

selling or offering for sale milk which tests positive for

violative drug residues on a test performed pursuant to sections

131 and 132 only under the following circumstances:

     (a) The producer fails to pay the administrative fine required

by subsection (1) in compliance with subsections (8) and (9).

     (b) The producer has been fined under subsection (1) within

the preceding 12-month period 3 or more times.

     (7) After notice and an opportunity for an administrative

hearing pursuant to the administrative procedures act of 1969, 1969

PA 306, MCL 24.201 to 24.328, the director may revoke or suspend a

license or permit issued under this act for any violation of this

act or a rule promulgated under this act. Except as otherwise

provided for under subsection (1), upon finding that a person

violated a provision of this act or rule promulgated under this

act, the director may impose an administrative fine of not more

than $1,000.00 and the actual costs of the investigation of the

violation.

     (8) The administrative fines imposed under subsection (1) or

(7) shall be paid to the department within 10 days after

notification of the violation and fine or within 10 days after

notification of adverse findings following a hearing or appeal, or

both. The administrative fines received by the department under

this section shall be deposited into the dairy and food safety fund

as provided for in section 110(18) 110(23).

     (9) Failure to pay a load contamination or any other

administrative fine imposed under this section within 120 days

without making acceptable arrangements for payment of the fine may

result in license revocation or permit suspension or court action,

following notice and the opportunity for an administrative hearing.

     (10) The director shall advise the attorney general of the

failure of any person to pay an administrative fine imposed under

this section. The attorney general shall bring an action in court

of competent jurisdiction to recover the fine.

     (11) A decision of the director under this section is subject

to judicial review as provided by law.

     (12) This section does not require the director to issue an

administrative fine or initiate court action for minor violations

of this act whenever the department believes that the public

interest will be adequately served under the circumstances by a

suitable written notice or warning.