Agriculture & Markets - Milk Control - Prompt payment for milk purchases; security funds; bonding of milk dealers


Published: 2021-09-10

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§ 258-b. Prompt payment for milk purchases; security funds; bonding of
milk dealers. 1. Scope of coverage. (a) For purposes of this section, a
cooperative corporation or association of producers shall be deemed to
be a producer and not a dealer with respect to the milk of its producer
members under contract with such cooperative, and shall be deemed to be
a dealer with respect to milk purchased or received from non-member
producers.

(b) Notwithstanding any other provision of this section, sales or
other transfers of milk between cooperatives shall not be subject to
bond or assessment under the security provisions of this section.

(c) Any corporation or association of persons engaged in the
production of agricultural products which is operated for the mutual
benefit of its members and which qualifies as such under the provisions
of the Capper-Volstead Act shall be deemed to be a cooperative
corporation or association for purposes of this section.

(d) Upon an application of a dealer, and pursuant to regulations
promulgated to effectuate the provisions of this paragraph, a dealer
that purchases less than one hundred thousand pounds of milk per month
shall not be subject to bond or assessment under the security provisions
of this section when the commissioner waives such provisions.
Notwithstanding such waiver, a claim may be filed and pursued against
such a dealer as provided for in this section; and any claim that is
certified for payment by the commissioner shall be paid from funds
derived from license fees assessed upon milk dealers pursuant to section
two hundred fifty-eight-a of this article.

The defaulting dealer shall be liable for reimbursement to the
commissioner for the value of the claim in the same manner as if the
claim was paid out of the milk producers security fund as provided for
in paragraph (e) of subdivision five of this section.

2. Prompt payment for milk. (a) Every milk dealer shall: on or before
the last day of each month, or such date of payment as established by a
federal milk marketing order regulating the marketing of milk in the
state or a state milk marketing order promulgated pursuant to section
two hundred fifty-eight-m of this article, whichever is earlier, pay for
all milk received from producers during the first fifteen days of such
month based upon a price or formula as determined by the commissioner
and every such milk dealer shall, on or before the twentieth day of each
month, or such date of payment as established by a federal milk
marketing order regulating the marketing of milk in the state or a state
milk marketing order promulgated pursuant to section two hundred
fifty-eight-m of this article, whichever is earlier, pay the balance
owed producers for milk received during the preceding month.

(b) Notwithstanding any other provision of this section, the
commissioner may extend the time for payment from dealers with respect
to purchases from producers of non-grade A milk for up to one hundred
twenty days after the last day of the month in which the milk was
received, provided such producers have requested the extension in
writing in such manner as may be acceptable to the commissioner.

(c) Any producer who does not receive payment for milk sold or
delivered to a milk dealer, within the time prescribed in paragraph (a)
of this subdivision, shall promptly notify the commissioner of such
fact.

(d) All wholesale purchasers of milk buying from a licensed milk
dealer shall provide not less than seven days' notice to their milk
dealer supplier before changing suppliers. All wholesale purchasers
shall make payment in full to their milk dealer supplier or satisfy
their debts by an appropriate surety bond posted or other legal
instrument of payment provided, less any legal rebates, discounts, or
other credit earned, before changing suppliers. The provisions of this
paragraph shall apply only if the milk dealer has satisfied all
substantial pre-existing contractual agreements with the wholesale
purchaser prior to final delivery. For the purposes of this paragraph,
the definition of the term "wholesale purchaser of milk" shall not
include public institutions.

(e) The commissioner may, if he or she finds it is necessary,
promulgate after hearing additional rules and regulations prescribing
the period within which stores, restaurants, hotels, public institutions
and other wholesale purchasers of milk shall pay for milk purchased or
received from a licensed dealer. No milk dealer or cooperative shall
sell or deliver milk, except on a cash on delivery basis, to any
wholesale purchaser who has failed to make full payment within the
period prescribed in regulations promulgated by the commissioner
pursuant to this paragraph.

3. Payments to security funds. (a) Fund and filing of surety bonds.
Any milk dealer, except a cooperative, who has not filed a bond or other
security in full satisfaction of the requirements of subdivision six or
seven of this section and who buys, receives or otherwise handles milk
received from producers, shall, unless entitled to offsetting credits
under paragraph (b) of subdivision four of this section, pay monthly to
the commissioner during each fiscal year an amount up to one and
one-half tenths of one percent of a price per hundredweight of milk as
determined by the commissioner or the average statistical uniform price
per hundredweight of milk for the previous calendar year, as determined
and announced by the commissioner on or before the thirty-first day of
March of each year, on each hundredweight of all such milk purchased,
received or handled. Such payments by dealers shall be deposited in the
milk producers security fund established by subdivision four of this
section.

(b) Whenever the commissioner determines that the balance in the milk
producers security fund exceeds fifteen percent of the value of milk
purchases covered by the fund, the maximum rates established by
paragraph (a) of this subdivision shall be reduced from one and one-half
tenths of one percent to one-tenth of one percent.

(c) (1) In addition to making such payments for deposit in the milk
producers security fund, any such dealer shall file with the
commissioner a mandatory minimum surety bond, executed by a surety
company authorized to do business in this state and approved by the
commissioner, conditioned for the prompt payment of all amounts due to
producers for milk sold or consigned by them to such dealer during the
license year and all amounts due to the equalization or producer
settlement fund of any order promulgated by the commissioner pursuant to
section two hundred fifty-eight-m or two hundred fifty-eight-n of this
article or to the equalization or producer settlement fund of a federal
milk marketing order. The bond shall be twelve times the amount equal to
(i) the value of milk purchased or received from producers in the two
consecutive months during the preceding twelve months in which the
dealer purchased or received the highest aggregate value of milk divided
by the number of days in those two months and (ii) the amount owed in
the same two-month period to the equalization or producer settlement
fund, divided by the number of days in such months.

(2) Upon an application of a dealer and pursuant to regulations
promulgated to effectuate the provisions of this paragraph, the
commissioner shall examine the financial condition of the applicant and
may exempt the applicant from the provisions of this paragraph if the
commissioner finds that the granting of the application would not
materially affect security for producers or the viability of the milk
producers security fund; provided however, that for any applicant where
the amount calculated in subparagraph one of this paragraph multiplied
by forty-three is less than two hundred fifty thousand dollars, the
commissioner shall exempt such applicant from the provisions of this
paragraph unless the commissioner finds that the granting of the
application would materially affect security for producers. Rules and
regulations to effectuate the provisions of this subparagraph shall
specify the criteria to be used in reviewing the applicant's financial
condition, the viability of the milk producers security fund, and the
effect of the proposed exemption on the security afforded to producers
delivering milk to the applicant.

(d) The commissioner may require a milk dealer, in addition to making
payments to the producers security fund and filing such mandatory
minimum surety bond, to execute and file such further additional surety
bond or other security as he may deem acceptable and sufficient, at any
time the commissioner finds (1) that the milk dealer has insufficient
property located within this state upon which to levy, pursuant to
paragraph (e) of subdivision five of this section, in the event of a
default by a dealer making two monthly payments for forty days purchases
of milk, or (2) that the dealer's participation in the fund and filing
such mandatory minimum surety bond will not otherwise afford adequate
security to all producers protected by the fund.

4. Milk producers security fund. (a) There is hereby established in
the joint custody of the comptroller and the commissioner of taxation
and finance a fund to be designated as the milk producers security fund.
The commissioner shall deposit all monies received from milk dealers
pursuant to paragraph (a) of subdivision three hereof into the fund. The
funds so received and deposited in such milk producers security fund
shall not be deemed to be state funds. The comptroller shall be
empowered to invest such funds pursuant to section ninety-eight-a of the
state finance law consistent with the purposes of this section. The
commissioner is hereby authorized to draw upon such funds, in his or her
discretion, to purchase credit insurance for the benefit of the milk
producers security fund. The expense of administering the provisions of
the milk producers security fund and of administering subdivision one
hereof shall be paid from the fund to the commissioner on vouchers
certified by the commissioner with the approval and consent of the
director of the budget. Such payments from the fund shall not exceed two
and one-half percent of the total fund or one hundred thousand dollars
per annum, whichever is greater, provided that, upon approval of the
director of the budget, the actual costs incurred by the department in
carrying out its responsibilities with respect to such provisions of
this article may be assessed against any monies available to the fund
upon appropriation by the legislature. The commissioner shall make an
annual report of the receipts to and disbursements from the fund,
including the cost of administration of the fund, which report shall be
made available to each milk dealer and to any other person having an
interest in the fund. A copy of such report shall be forwarded to the
director of the division of the budget, the chairperson of the senate
finance committee and the chairperson of the assembly ways and means
committee.

(b) After the milk producers security fund shall have equaled twelve
million dollars or such greater or lesser amount, up to fifteen percent
of the value of milk purchases to be covered by the fund, calculated
upon the basis of the average value of the milk covered by the fund
during the preceding calendar year, as the commissioner may determine is
sufficient to protect the interests of producers, he or she shall
administer the fund in the manner prescribed herein. Periodically, but
at least twice each year, he or she may credit each milk dealer with an
amount which bears the same relationship to the total money in the fund
as that dealer's payments to the fund bear to the total payments to the
fund by all dealers. If the amount so credited to a milk dealer is
greater than that due from such milk dealer, the excess shall be paid or
credited to such milk dealer by the comptroller. No such credits or
payments shall be made unless the commissioner finds that the fund can
be maintained at a level which is sufficient to protect the interests of
producers. Any such credit to a milk dealer's account shall not be
considered as payments to the fund in computing further credits of such
nature.

(c) If a milk dealer participating in the security fund elects to
terminate his or her participation therein, he or she shall give notice
in writing to the commissioner six months prior to the expiration of the
license year and file a surety bond or other security on the first day
of the second month before the end of the license year. A milk dealer
may thereupon apply for the return of his or her pro rata share of the
monies in the security fund, less administrative costs, based upon his
or her payments to the fund. Upon being satisfied that the milk dealer
is not in default in any payments to producers or cooperatives and upon
renewal of the license, the commissioner shall authorize the comptroller
to pay to such milk dealer his or her pro rata share in up to six equal
monthly payments.

(d) If a milk dealer who participated in the milk producers security
fund ceases to do business as a milk dealer or sells or transfers his or
her business to another milk dealer, he or she may apply for the return
of his or her pro rata share or assign his or her interests to the
buying dealer with the approval of the commissioner.

(d-1) The commissioner shall employ every reasonable effort to
identify and locate all persons entitled to receive unclaimed pro rata
shares of former security fund participants. In addition, the
commissioner shall for a period of five years after identifying any
person's unclaimed share of one hundred dollars or more, or until the
amount due is claimed, whichever is sooner, publish such person's name
and notice of his entitlement in a newspaper of general circulation in
every county where the commissioner knows or has reason to believe such
person maintained a principal office. Notwithstanding any provision of
the abandoned property law, the pro rata shares of former security fund
participants which remain unclaimed for five years or more shall remain
in the producer security fund for use as set forth in this subdivision
and subdivision five of this section.

(e) Any milk dealer who first elects to participate in the milk
producers security fund shall make an initial payment to the fund, at
the rate most recently announced by the commissioner, pursuant to
subdivision three of this section, for milk purchased, received or
handled from producers during the six months immediately preceding the
date that notice of such election is given the commissioner, pursuant to
subdivision ten of this section. Upon the payment of the initial deposit
into the fund and filing of the mandatory minimum surety bond, as
required herein, a milk dealer electing to participate in the fund may
apply to the commissioner for termination or adjustment of an existing
bond or the return or adjustment of any existing alternative security
filed with the commissioner. If there have been no prior purchases,
receipts or handling of milk by the dealer, such initial payment and the
amount of such bond shall be based upon an estimate of the purchases,
receipts or handling of milk by such dealer for the first six months
following entry into the fund. After the first six months, the
commissioner may adjust such bond and initial deposit so that the amount
of the initial deposit and bond are based upon the actual deliveries.

5. Claims against mandatory minimum surety bond and milk producers
security fund. (a) If the commissioner has reason to believe that a
licensed milk dealer who is participating in the milk producers security
fund has defaulted in making payments for milk to producers, the
commissioner shall give reasonable notice to the producers believed to
be affected to file verified claims and may fix a reasonable time within
which such claims must be filed. Upon learning of such default, the
commissioner shall immediately examine the records of the defaulting
dealer and shall identify the amounts which are reasonably estimated to
be owed to producers. Within sixty days of the receipt of a claim by a
producer and on the basis of such estimates, the commissioner may
authorize the comptroller to pay any such producer up to seventy-five
percent of such estimate. In connection with such payment, the
commissioner may make provisions for the recovery for the benefit of the
fund of any payments made pursuant to this paragraph.

(b) No claims against the producers security fund shall be allowed
for: (1) sales of milk to dealers not licensed by the state of New
York, or (2) sales of milk by a producer to a milk dealer subsequent to
its failure to pay within the time periods prescribed in subdivision two
of this section, where the commissioner finds, after due notice and
opportunity of hearing, that such extension of credit, whether direct or
indirect, to such milk dealer by the producer did not constitute a
reasonable exercise of business judgment, or (3) the value of milk
produced on farms not located in New York state. Claims shall be limited
to: (1) the price the claimant was required to be paid pursuant to the
milk marketing order under which the milk was pooled, if the claimant
did not pool the milk, or (2) the value of the milk as determined by the
commissioner pursuant to provisions of the milk marketing order under
which the milk was pooled, if the claimant pooled the milk, or (3) such
other price as determined by the commissioner as appropriate for milk
not pooled under a milk marketing order, and in no event shall a claim
be allowed for deliveries of milk in excess of the amount owed for milk
sold or delivered within the first forty consecutive day period for
which payment was not received from a dealer. Claims filed by a market
administrator may be allowed for amounts owed by a dealer to a producer
settlement or equalization fund of an order promulgated under section
two hundred fifty-eight-m or two hundred fifty-eight-n of this article,
or to a producer settlement or equalization fund of a federal milk
marketing order under which the milk is pooled.

(c) The commissioner shall examine the claims so filed, determine
after hearing upon reasonable notice to the claimant and to the
defaulting dealer the amount due upon such claims, and certify the
amount due each claimant, provided, however, that no hearing shall be
required with respect to a claim in which the defaulting dealer does not
dispute liability and the claimant and defaulting dealer agree and
stipulate to the amount found by the department to be payable on said
claim. In determining the amount payable on any claim against a surety
bond or the milk producers security fund, the commissioner may allocate
any payments for milk made by a milk dealer to a claimant subsequent to
its failure to pay within the prescribed time period, to the earliest
debt owed such claimant by the milk dealer. Any amounts determined to be
payable on a claim will be chargeable first against the mandatory
minimum surety bond and any additional surety bond or other security
filed pursuant to subdivision three of this section. In the event the
amount of the mandatory minimum surety bond and any additional surety
bond are not sufficient to pay the amount owed the producers for the
deliveries of milk made in the first forty consecutive days for which
payment was not received from a dealer, a claim against the producer's
security fund may be allowed in an amount not to exceed the difference
between the amount recoverable on such bonds, and the amount owed for
milk delivered in such applicable period.

(d) The commissioner's determination certifying the amount due each
claimant shall be final unless the defaulting milk dealer or the
claimant shall institute a proceeding pursuant to article seventy-eight
of the civil practice law and rules within thirty days from the date of
personal service of a copy of the written determination upon the milk
dealer and producer affected thereby. If after the expiration of the
thirty day period the commissioner's determination has not been stayed
by the supreme court in a proceeding instituted to review it, the
commissioner shall bring an action on the bond or bonds and proceed to
obtain from any other security filed funds with which to pay the claims
and, to the extent that such funds are insufficient to pay the amount
due, direct the comptroller to pay the claimants from the moneys
available in the milk producers security fund. For the purposes of any
action brought on a bond, the commissioner's determination shall be
presumptive evidence of the facts stated therein.

(e) If any claim is paid from the milk producers security fund, the
defaulting dealer shall be liable to the commissioner for the benefit of
the fund for the amount of claims so paid. After service by first class
mail upon the defaulting dealer of the commissioner's certification of
payment of a claim from the fund for which the dealer has been found
liable to the claimant, the commissioner may issue a warrant under seal
of the department directed to the sheriff of any county of the state
commanding him to levy upon and sell the real and personal property of
the defaulting dealer, found within his county, for the payment of the
amount of such claim with interest and the cost of executing the
warrant, and to return such warrant to the commissioner and pay to him
the money collected by virtue thereof within sixty days after the
receipt of such warrant. The commissioner may file with the clerk of any
county a copy of such warrant, and thereupon the clerk shall enter in
the judgment docket, in the column for judgment debtors, the name of the
defaulting dealer designated in the warrant, and in appropriate columns
the amount of the dealer's liability to the commissioner for claims,
interest and costs, and the date when such copy is filed. Thereupon the
amount of such warrant so docketed shall become a lien, relating back to
and deemed perfected as of the date of the dealer's earliest default in
payment to producers as determined by the commissioner, upon and shall
bind the real and personal property and chattels real of the person
against whom it is issued in the same manner as a judgment duly docketed
in the office of such clerk. The said sheriff shall thereupon proceed
upon the same in all respects, with like effect, and in the same manner
prescribed by law in respect to executions issued against property upon
judgments of a court of record, and shall be entitled to the same fees
for his services in executing the warrant, to be collected in the same
manner. Upon such filing of a copy of a warrant, the commissioner shall
have the same remedies to enforce the dealer's liability as if he had
recovered judgment against the dealer for the amount of the warrant.

(f) In the event that the surety company who shall have executed a
bond for a milk dealer shall fail to make prompt payment of all amounts
due producers for milk sold or consigned by them to such milk dealer
during the license year and all amounts due to the equalization or
producer settlement fund of any order promulgated by the commissioner
pursuant to section two hundred fifty-eight-m or two hundred
fifty-eight-n of this article such surety company shall, in addition to
making such payment on the bond, pay interest at the rate provided for
in section 5-501 of the general obligations law on the amounts so owed
from the date of the claim together with reasonable attorneys' fees and
court costs.

6. Surety bonds. (a) Each milk dealer who buys, receives or otherwise
handles milk received from producers may execute and file with the
commissioner a surety bond in lieu of participation in the milk
producers security fund and the filing of a surety bond or bonds
pursuant to subdivision three of this section. The bond shall be
executed by a surety company authorized to do business in this state and
shall be approved by the commissioner. The bond shall be conditioned for
the prompt payment of all amounts due to producers for milk sold or
consigned by them to such milk dealer during the license year and all
amounts due to the equalization or producer settlement fund of any order
promulgated by the commissioner pursuant to section two hundred
fifty-eight-m or two hundred fifty-eight-n of this article or to the
equalization or producer settlement fund of a federal milk marketing
order. Additionally, the bond shall make provisions for an advance
payment pursuant to subdivision nine of this section.

(b) The bond shall be in an amount equal to (1) the value of milk
purchased or received from producers in the two consecutive months
during the preceding twelve months in which the dealer purchased or
received the highest aggregate value of milk, divided by the number of
days in those two months and multiplied by forty, and (2) the amount
owed in the same two-month period to the equalization or producer
settlement fund of a state or federal milk marketing order, divided by
the number of days in such months and multiplied by forty.

7. Alternative security. Each milk dealer buying milk from producers
may in lieu of filing a surety bond pursuant to subdivision three or six
of this section provide an equal amount of protection for the producers
from whom he or she purchases or receives milk by filing an irrevocable
letter or letters of credit for the account of the milk dealer
authorizing the commissioner to draw on a bank or trust company or banks
or trust companies authorized to do business in the state of New York.
Such letter or letters shall contain such terms and conditions as the
commissioner may require. Additionally, the irrevocable letter of credit
shall make provisions for an advance payment pursuant to subdivision
nine of this section.

8. Additional bond or alternative security. Whenever the commissioner
shall determine that the value of milk purchased or received from
producers by a dealer who is not participating in the producers security
fund has increased, or that such increase may reasonably be anticipated,
so that the total amount of security does not comply with the formula
set forth in subdivision six hereof, as applied to any consecutive two
month period during the current year, the commissioner shall require
such additional surety bond or securities in lieu thereof as will afford
producers the protection intended by this section.

9. Claims against bond or alternative security. Claims by producers
against a dealer who had filed a bond or alternative security shall be
processed by the commissioner in the same manner as is provided in
subdivision five hereof with respect to claims against the producers
security fund and such claims shall be subject to the same limitations.
Upon receiving a claim against a dealer who had filed a bond or
alternative security, the commissioner shall immediately examine the
records of the defaulting dealer and shall identify the amounts which
are reasonably estimated to be owed to producers. Within sixty days of
the receipt of a claim, and on the basis of such estimates, the
commissioner is authorized to pay any such producer up to fifty percent
of such estimate and proceed to obtain from such security the funds with
which to pay any advances on the claims. In connection with such
payment, the commissioner shall make provisions for the recovery of any
payments made pursuant to this subdivision. The commissioner's
determination certifying the amounts due claimants shall be subject to
judicial review in the same manner and subject to the same limitations.
In the case of a dealer who has filed alternative security, the
commissioner shall proceed to obtain from such security the funds with
which to pay the claims. If recovery upon the alternative security is
not sufficient to pay all claims, the amount recovered shall be divided
pro rata among claimants. In the case of a dealer who has filed a surety
bond, the commissioner may bring an action on the bond, and for the
purposes of such action his determination certifying the amounts due
shall be presumptive evidence of the facts therein stated. In the event
that recovery on such bond has not been made within sixty days of the
commissioner's certification of the amounts due producers covered by the
bond, the commissioner shall direct the comptroller to pay such amounts
to claimants from whatever monies are available in the milk producers
security fund. In the event that recovery against the bond has not been
made within one hundred eighty days of certification of the amounts due
claimants, each and every dealer having filed a bond pursuant to
subdivision six of this section shall pay monthly to the commissioner an
amount not to exceed one-half of one-tenth of one percent of the average
uniform price per hundredweight of milk for the previous calendar year,
as determined by the commissioner on or before the thirty-first day of
March of each year, on each hundredweight of such milk purchased,
received or handled. Such payments shall continue for such period of
time as the commissioner deems necessary in order to return to the fund,
no later than three years from the date of such payment therefrom, the
total amount paid as a result of the default of such dealer plus
interest, at the rate provided for in section 5-501 of the general
obligations law on the amount of such payment from the date of such
payment. In the event of a recovery on the bond after the commencement
of such payments, the commissioners shall authorize the comptroller to
pay to each dealer making such payments its pro rata share of the amount
by which the total of such payments exceeds the difference between the
amount received and the total amount paid to claimants.

10. Time for providing security. Surety bonds or securities, whether
filed in addition to or in lieu of participation in the fund, for the
license year shall be filed with the commissioner not later than the
first day of the second month before the beginning of each license year.
Whenever an additional surety bond or alternative security is required
to be filed, pursuant to paragraph (a) of subdivision three of this
section, such bond or alternative security shall be filed with the
commissioner within the time limits fixed by the commissioner. A milk
dealer who elects to participate in the security fund and file a bond or
bonds pursuant to subdivision three of this section, in lieu of filing a
surety bond or alternative security pursuant to subdivision six of this
section, shall notify the commissioner not later than three months prior
to the date on which such change is to be made, and shall file the bond
or bonds and make the initial payment, as required by paragraph (e) of
subdivision four of this section, not later than two months before such
change is to be made.

11. (a) Notice of failure to provide security. Whenever a milk dealer
fails to pay into the producers security fund or to file any surety bond
or alternative security, as provided pursuant to this section, within
the time or times fixed by this section or the commissioner's demand for
additional security, the commissioner shall publish in a newspaper or
newspapers having circulation in the area or areas in which the
producers whose milk is sold or delivered to such milk dealer reside, a
notice stating that he made such demand or request of said milk dealer;
that the milk dealer has failed to comply; that the commissioner does
not have on file such surety bond or alternative security as demanded,
or that he has not paid monies due the producers security fund as
required by him; and that adequate security to protect such producers
may not be available to them as provided in this section. In addition to
such published notice to producers, the commissioner shall send by
certified mail a copy of such notice to each producer delivering milk to
such milk dealer as he may be able to determine from records available
to him and such notice shall be addressed to such producer's last known
place of residence. In addition to providing such notice, the
commissioner shall issue a notice of hearing directing the licensee to
appear within twenty-four hours or such longer period as he may direct
and show cause why an order should not be entered revoking such dealer's
license or denying the renewal thereof for failure to provide required
security.

(b) Payments to farmers. (1) It is hereby determined and declared that
the assurance of prompt and full payment to dairy farmers is for the
benefit of all the people of the state, and is so directly related to
the public interest, the public health and general welfare that it is an
essential government function.

(2) The commissioner shall annually no later than November first,
assess the status of the milk producer security fund, the anticipated
payments from and receipts to the fund for the following fiscal year
and, in connection with such assessment, estimate the additional
amounts, if any, which may be needed by the fund to meet the fund's
objectives in assuring prompt and full payment to dairy farmers. The
commissioner shall transmit this information in a report to the governor
for his use in the preparation of the budget, and to the speaker of the
assembly and the president pro tempore of the senate for use in the
consideration of the budget for such fiscal year.

(3) In the event an appropriation is made for the purposes of this
paragraph and, thereafter, upon certification by the commissioner, with
approval of the director of the budget, that a further sum is required
by the milk producers security fund to meet its obligations and
accomplish the purposes of this section, the comptroller shall, within
the limits of such appropriation, draw a warrant for the payment to the
milk producers security fund of an amount up to the amount of such sum.
Such amount shall be a liability of the milk producers security fund and
shall be repaid to the general fund pursuant to a plan of repayment.
Prior to the institution of such a plan, a copy thereof shall be
forwarded to the chairman of the senate finance committee and the
chairman of the assembly ways and means committee, for use in the
consideration of the budget for such fiscal year.

(4) Whenever the comptroller draws a warrant for payment to the milk
producers security fund as provided in subparagraph three hereof, the
commissioner shall implement the plan of repayment by promulgating
through regulation after hearing an increase in the amount of assessment
imposed under subdivision three of this section to an amount not
exceeding two-tenths of one percent of the average uniform price for the
previous year.

15. Prohibitions and violations. It shall be unlawful for a milk
dealer to purchase or receive milk from producers or from other dealers
for resale or manufacture unless such dealer files a surety bond or
bonds as required pursuant to this section and makes prompt payment of
any assessment as required pursuant to this section. It shall also be
unlawful for a milk dealer to sell milk to another milk dealer, if he
has been notified by the commissioner that the buying dealer has failed
to make prompt payment to producers, to the producer settlement fund or
equalization fund or to the milk producers security fund, or if such
buying dealer has exceeded the credit period as provided pursuant to
subdivision two of this section and the sale was not made upon the basis
of cash on delivery.

In addition to penalties imposed by other provisions of this article a
violation of this section shall subject a milk dealer to a penalty in
the sum of one hundred dollars for each day that he is late in making
payment into the milk producers security fund the assessment required by
this section, for each day he sells milk to a milk dealer after being
notified by the commissioner of that milk dealer's failure to make any
required payment into the milk producers security fund, or for each day
a milk dealer sells milk to another milk dealer who has failed to make
payments for milk purchased as provided pursuant to subdivision two of
this section. Any person who buys or sells milk in violation of the
credit period provided in subdivision two of this section, shall be
liable for a civil penalty of one hundred dollars a day for each day of
violation.

16. Rules and regulations. The commissioner after due notice and
public hearing may promulgate rules and regulations to carry out the
provisions and intent of this section.