B-155375, FEB. 19, 1965

B-155375, FEB. 19, 1965

TO THE HONORABLE SECRETARY OF AGRICULTURE:

BY LETTER OF JANUARY 26, 1965, THE UNDER SECRETARY OF AGRICULTURE, CHARLES S. MURPHY, ASKED OUR OPINION WITH REGARD TO THE ELIGIBILITY OF CERTAIN DAIRY FARMERS FOR MILK INDEMNITY PAYMENTS AUTHORIZED BY SECTION 331 (A) OF THE ECONOMIC OPPORTUNITY ACT OF 1964, APPROVED AUGUST 20, 1964, 78 STAT. 525.

IT IS EXPLAINED THAT THE BROOKLAWN CREAMERY COMPANY OF DELTA, UTAH, PURCHASED MILK FROM FARMERS FOR USE IN THE MANUFACTURE OF CHEESE. TESTING THE CHEESE MANUFACTURED BY THIS CREAMERY, THE FOOD AND DRUG ADMINISTRATION, DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE, FOUND THE CHEESE TO BE CONTAMINATED WITH THE PESTICIDES DIELDRIN OR HEPTACHLOR. BECAUSE OF THIS FINDING, THE CREAMERY NOTIFIED ALL OF ITS SUPPLIERS THAT THEIR MILK WOULD NO LONGER BE ACCEPTED BY THE CREAMERY, AND IT TEMPORARILY SUSPENDED PRODUCTION. THE STATE OF UTAH SUBSEQUENTLY TESTED THE MILK PRODUCED BY EACH OF THE CREAMERY'S SUPPLIERS AND FOUND THAT THE MILK OF SOME SUPPLIERS WAS CONTAMINATED BY PESTICIDES WHILE THE MILK OF OTHERS WAS FREE OF CONTAMINATION. FOLLOWING THESE TESTS, THE CREAMERY RESUMED PURCHASING THE UNCONTAMINATED MILK.

UNDER THESE CIRCUMSTANCES, THE UNDER SECRETARY ASKS OUR VIEWS AS TO WHETHER THE PRODUCERS WHOSE MILK WAS FOUND TO BE FREE OF CONTAMINATION ARE ELIGIBLE FOR INDEMNITY PAYMENTS FOR THE PERIOD IN WHICH THEIR MILK WAS HELD OFF THE MARKET.

SECTION 331 (A) OF THE ECONOMIC OPPORTUNITY ACT OF 1964 PROVIDES THAT---

"THE SECRETARY OF AGRICULTURE IS AUTHORIZED TO MAKE INDEMNITY PAYMENTS, AT A FAIR MARKET VALUE, TO DAIRY FARMERS WHO HAVE BEEN DIRECTED SINCE JANUARY 1, 1964, TO REMOVE THEIR MILK FROM COMMERCIAL MARKETS BECAUSE IT CONTAINED RESIDUES OF CHEMICALS REGISTERED AND APPROVED FOR USE BY THE FEDERAL GOVERNMENT AT THE TIME OF SUCH USE. SUCH INDEMNITY PAYMENTS SHALL CONTINUE TO EACH DAIRY FARMER UNTIL HE HAS BEEN REINSTATED AND IS AGAIN ALLOWED TO DISPOSE OF HIS MILK ON COMMERCIAL MARKETS.'

THOSE FARMERS ELIGIBLE FOR PAYMENTS THEREUNDER ARE DEFINED IN 7 CFR 162 (H) AS FOLLOWS:

"/H) "ELIGIBLE FARMER" MEANS A PERSON WHO PRODUCES MILK WHICH IS REMOVED FROM THE COMMERCIAL MARKET ANY TIME FROM JANUARY 1, 1964, TO JANUARY 31, 1965, PURSUANT TO DIRECTION OF A PUBLIC AGENCY OR A MILK HANDLER BECAUSE OF DETECTION OF PESTICIDE RESIDUE IN SUCH MILK BY TESTS MADE BY A PUBLIC AGENCY OR UNDER A MILK TESTING PROGRAM DEEMED ADEQUATE FOR THE PURPOSE BY A PUBLIC NCY.'

IN VIEW OF THE ABOVE STATUTORY AND REGULATORY PROVISIONS WE AGREE THAT THOSE PRODUCERS WHOSE MILK WAS CONTAMINATED AND WHO OTHERWISE QUALIFIED UNDER THE PROGRAM, ARE ELIGIBLE FOR INDEMNITY PAYMENTS. HOWEVER, AND AS INDICATED BY THE UNDER SECRETARY, A LITERAL APPLICATION OF THE TERMS OF THE STATUTE AND THE RELATED REGULATIONS WOULD APPEAR TO MAKE THE PRODUCERS OF THE UNCONTAMINATED MILK INELIGIBLE FOR INDEMNITY PAYMENTS BECAUSE THEIR MILK WAS REMOVED FROM THE MARKET ONLY BY REASON OF THE FACT THAT IT HAD BEEN COMMINGLED WITH OTHER MILK THAT WAS CONTAMINATED. TO DENY PAYMENT OF INDEMNITY TO THE PRODUCERS OF THE UNCONTAMINATED MILK UNDER THESE CIRCUMSTANCES WOULD BE TO DISCRIMINATE IN FAVOR OF PRODUCERS WHOSE MILK WAS CONTAMINATED, A RESULT NOT FORESEEN BY THE CONGRESS AND, CONSIDERING THAT THE LEGISLATION IS REMEDIAL IN NATURE, CLEARLY NOT INTENDED BY IT. FURTHERMORE, AS POINTED OUT BY THE UNDER SECRETARY, WHILE THE MILK OF THE PRODUCERS HERE INVOLVED WAS FREE OF CHEMICAL RESIDUE AT THE TIME OF ITS PRODUCTION ON THE FARM, THE MILK SUBSEQUENTLY BECAME CONTAMINATED WHEN IT WAS COMMINGLED WITH RESIDUE-BEARING MILK OF OTHER PRODUCERS DURING NORMAL MANUFACTURING PROCESSES. AS A CONSEQUENCE, THE MILK OF ALL SUPPLIERS WAS NECESSARILY REMOVED FROM THE MARKET UNTIL THE IDENTITY OF THE PRODUCERS OF THE CONTAMINATED MILK COULD BE DETERMINED.

ACCORDINGLY, SINCE INDEMNITY PAYMENTS MADE UNDER THESE CIRCUMSTANCES TO PRODUCERS OF MILK THAT ORIGINALLY WAS FREE OF PESTICIDE RESIDUE ARE NOT PROHIBITED BY THE STATUTE OR THE REGULATIONS AND WOULD BE CONSISTENT WITH THE PURPOSE OF THE LEGISLATION, YOU ARE ADVISED THAT WE WOULD NOT QUESTION SUCH PAYMENTS IN OUR AUDIT, IF OTHERWISE PROPER UNDER THE PROGRAM.