CT: Shirley Ferris, Robert Jacquier, Mae Schmidle, Richard Allen.

MA: Gordon Cook, Jay Healy, Mary K. Kassler, Sam Shields.

ME: Linda Smith Dyer, Fred Hardy, Colon Durrell.

NH: Douglas Morris, Debora Erb, Powell Cabot.

RI: Al Bettencourt Jr., Aaron Briggs, Ron Newman, Peter Petrone.

VT: Jacques Couture, Andy Dykstra, Harold Howrigan, Millicent Rooney, Robert Starr.

Leon Graves, Commissioner Vermont Department of Agriculture, Foods and Markets.

Kenneth Becker, Executive Director; Dixie Henry, General Counsel; Carmen Ross, Regulations Administrator; David Ferch, Public Information Director; Patricia Lammott, Temporary Office Assistant.

Chair Linda Smith Dyer called the meeting to order at 10:08 a.m. on Wednesday, Jan. 5, 2000.

I. Public Participation:

Ken Dibbell, a farmer from New York distributed material with economic information. He said that supply control in the western states needs to be implemented. He also said Class 1 milk should be treated separately from the rest of the milk and that all farmers should be paid based on the pooled class 1 milk.

II. Introduction of Guests:

Carl Peterson of Agri-Mark; Gail Christensen, a farmer from New York; Ray Christensen of the New York State Department of Agriculture and Markets; Robert Smith of Co-Bank; Gabe Moquin of the Connecticut State Department of Agriculture; Stephen Watous of Allied Fed. Co-ops; Bob Wellington of Agri-Mark; Lou Spychalski of the Massachusetts Food and Nutrition Services; Martha Kierstead of the New Hampshire Farm Bureau; Pat Green of New England Country Folks; Eric Rasmussen, the Northeast Milk Market Administrator; Chuck Nicholson, University of Vermont.

III. Consideration and approval of minutes of the Dec. 1, 1999 meeting:

Ron Newman noted that on page 4 of the Dec. 1, 1999 minutes motion 12/1-2 should indicate that Rhode Island did not abstain from the vote, rather Rhode Island did not cast a vote due to a tie within the delegation.

Moved the minutes (of Dec. 1, 1999) as corrected be adopted

IV. Consideration of communications:

Ken Becker said the Commission received a letter from the Commodity Credit Corp. (CCC) informing the Commission of upcoming hearings on determining the mechanism for calculating the obligation under condition 5 attached to the Compact.

Ken Becker also said a letter was sent to former Executive Director Dan Smith congratulating him for the work he did crafting the Compact legislation and its subsequent success in a court challenge, New York State Dairy Foods et al v. Northeast Dairy Compact Commission.

Ken Becker also shared a Christmas card from Sen. James Jeffords (R-VT) to the Commission.

V. Financial and Budget report: Months ending October and November 1999:

Mary Kassler noted the October financial report was compiled by the accounting firm and included in the information provided to the Commissioners. The November report has yet to be checked by the auditing firm but the review indicates the Commission is in sound financial shape.

VI. Reports:

A. Chair's Report:

Mae Schmidle, as out-going chair, reminded the Commissioners that their contributions to the 1999 annual report are due and should be sent to the Commission staff.

Linda Dyer said the Committee on Administration discussed a number of items, to be reported in more detail later.

Linda Dyer also reported that she visited the Commission offices in Montpelier.

B. Executive Director's Report:

Ken Becker said he attended the Independent Dairymen's Association annual meeting. Sally Beach, general manager of that organization and a strong supporter of the Northeast Dairy Compact (NDC), is leaving her position.

Ken Becker also said he met with Larry Forcier, dean of the University of Vermont, and Art Woolf, an economics professor, to discuss publications by Art Woolf questioning the value of the farm economy to the State of Vermont generally and the Northeast Dairy Compact specifically.

Ken Becker said that he and David Ferch attended a meeting in Raleigh, NC, sponsored by the North Carolina Department of Agriculture and the North Carolina Farm Bureau in mid-December to discuss legislative strategy in 2000.

Ken Becker also briefed the Commissioners on the result of the decision by the First Circuit Court of Appeals in Boston regarding New York State Dairy Foods Association et al v. the Northeast Dairy Compact Commission et al.

Harold Howrigan congratulated Dixie Henry on her role in this case.

Ken Becker said the staff has been working on the Organic Cow remand case and the FY2000 budget. Other items mentioned include development of the 1999 annual report, the meeting of the Committee on Regulations and Rulemaking in Concord, NH the previous week; the class 1 federal price drop of $4.77 and the consequent Compact over-order obligation of $2.21 and producer price payment of 90cents to 95cents/cwt to be paid in January. It is anticipated that class 1 prices will drop more in January, resulting in an over-order obligation of $2.79 and a producer price payment in excess of $1/cwt.

Staff is comparing bank service charges and fees to see if any savings can be achieved.

Bobby Starr said the Commission should be mindful of positive relationships developed with the current bank and other banks in Vermont.

Debora Erb asked if the fees account for the high budget item, to which Ken Becker said yes.

C. Committee on Finance Report:

Mary Kassler said a FY2000 budget has been prepared and will be presented later in the meeting. The budget addresses the renewal of the lease for office space and janitorial services. The Committee also reviewed the October and November financial reports.

D. Committee on Administration:

Linda Dyer said the incoming and outgoing committees on Administration met the previous night and discussed the timing of the Commission monthly meetings.

Linda Dyer also said the committee discussed whether a member of a committee can appoint a substitute to act in her or his behalf. It was determined that this was allowable providing the anticipated absence and substitution be announced so that preparations can be made.

Linda Dyer said the committee discussed the issue of networking with people in other regions outside of the Northeast and the Southeast with the intent of educating people on the benefits of the Compact. An ad hoc network committee was created to investigate this issue. The ad hoc Networking Committee consists of Mae Schmidle, Harold Howrigan, Aaron Briggs, and Shirley Ferris.

E. Audit Committee:

Harold Howrigan said the committee has decided to continue to use the current auditing firm for the 1999 audit.

F. Bylaws Committee:

Debora Erb said the Bylaws Committee has not met since the prior meeting.

G. Committee on Regulations and Rulemaking:

Bobby Starr said the committee met the previous week and will bring forward for Commission consideration a list of technical corrections designed to bring the Compact into compliance with recent changes in the Federal Milk Market Order.

The committee also discussed the refund/assessment supply management program.

H. (new) Committee of the whole:

A plaque was presented to Mae Schmidle in recognition of her service in the role of Chairman of the Northeast Dairy Compact Commission.

Ron Newman presented a red pen to Mae Schmidle from the Rhode Island delegation in appreciation of her service.

VII. Old Business:

A. Deliberative meeting, continued from Dec. 1, 1999, to consider whether to implement an assessment/refund supply management program.

Bobby Starr said the committee would meet during lunch and asked that this item be moved further down on the agenda.

VIII. New Business:

A. Committee on Finance Recommendations:

Mary Kassler recommended the FY 2000 budget presented to the Commissioners. The budget is based on actual numbers for previous years and projections for the coming year. The budget maintains three months of operating reserves to ensure a sound cash balance. The budget also includes a line item of $100,000 to repay out of 1999 surplus funds the State of Maine for half of a loan issued to the Commission in 1997 and 1998. The loan was issued without conditions, consequently no interest was allocated for the repayment. The second half of the loan would be paid out of the 2000 surplus.

Andy Dykstra commented that this sum was not a donation, as was made by the State of Vermont.

Robert Jacquier said that the six New England states, including Maine, issued appropriations for reauthorization efforts. This $200,000 was different in that it was made to the Commission for Compact operations.

Moved that the Compact repay $100,000 of the $200,000 of the Maine loan, from the year 1999 surplus.

Mary Kassler continued: there is a line item in the budget for litigation that combines the previous year's litigation line item with that of a consulting attorney for flexibility. Although there is no litigation foreseen in the immediate future, having a litigation line item is a precautionary measure and based on past experience.

The budget also provides for staffing provisions, although no specific action is recommended and it will be up to the Committee on Administration to determine if and when these provisions are implemented.

Al Bettencourt asked if the budget allows for any flexibility in the composition of the staff.

Mary Kassler said the budget allows for various contingencies but specific decisions will come before the Commission.

Robert Jacquier said he did not see in the proposed budget any staff expense increases.

Linda Dyer said the Finance Committee met in the morning and discussed pay raises for the general counsel and the public information director. Also, the position of administrative assistant is currently being filled by a temporary employee who could be hired full time. These changes are built into the budget but the Committee on Administration has not approved these changes as of yet.

Bobby Starr said that if there were going to be changes, they should be enacted at the time the budget was adopted, rather than after the funding was approved.

Andy Dykstra asked if current staffing is sufficient.

Ken Becker said that based on experience, the current staff is capable of handling the work.

Jacques Couture pointed out that the proposed raises are actually cost-of-living increases on the order of 3.9 percent annually, prorated to time in position.

Linda Dyer said that this is part of the convoluted approach created by the Commission processes. And though it might make more sense for the Committee on Administration to decide whether to issues raises first, Linda Dyer said she thought it was important to start 2000 with a working budget and urged the Commissioners to adopt the budget as presented.

Moved that the proposed budget for FY2000 be accepted as presented.

2. October financial report:

Moved that the financial reports for October as compiled by Fothergill, Segale and Valley be accepted for file and audit.

3. Market Administrator's Invoice:

Moved that the invoice for $11,316 from the Northeast Milk Market Administrator be paid.

4. Lease agreement:

Moved that the Compact Commission approve a one-year renewal of the lease agreement for current office space.

5. Resolution allowing permitting certain individuals to sign bank documents:

Mary Kassler said that as a result of the change in officers, new authorization must be issued for execution of bank documents.

Moved that the Commission adopt the resolution for signatures regarding opening and maintaining the banking account.

(Additional agenda item: Audit Committee)

Moved that the Commission retain the firm of Sullivan & Powers to perform the Fiscal Year 1999 Audit.

E. (Agenda item out of sequence) Committee on Regulations and Rulemaking Recommendations:

Bobby Starr said the change in the Federal Milk Market Order included technical changes that affect the operation of the Compact, such as performance dates for filing and payments and definitions. Any alteration of the Compact regulations would require a public hearing and public comment period. The public hearing should take place on Feb. 2, 2000, immediately prior to the next Commission meeting with the public comment period following.

Gordon Cook asked about the new definition for producer/handlers and whether that will have a substantive impact.

Eric Rasmussen explained that the changes are more liberal, allowing producer/handlers to remain exempt from the Compact regulation if they purchase up to 150,000 pounds of milk per month. The old Milk Market Order exempted producer/handlers who purchased up to 2 percent of their volume. The current Compact regulation exempts producer/handlers who purchase up to 300 quarts per day from outside producers. The proposed change is to exempt producer/handlers from the Compact regulations if the purchase less than 150,000 per month.

Bobby Starr said there are eight specific technical corrections proposed.

Carmen Ross said two changes are not prompted by the new Milk Market Order. The first is to define the grandfather clause by changing the definition from the immediately prior December, year specified, to read every December since 1996. The other change is to apply the 1 percent per month over-due fee to all delinquent accounts and have those fees paid into the administrative assessment fund.

Other changes include moving the due-date for payments to the first Monday after a holiday when the due date falls on a holiday. Also, egg nog, previously defined as a manufactured product, is now considered to be class 1 product.

Moved that technical corrections (to bring the Compact regulations into compliance with the new milk market order) go to rule making, the hearing to be held at our February meeting a comment period following.

F. Next meeting date:

Moved that the next (Northeast Dairy Compact Commission) meeting be held on Feb. 2, 2000 (at the Centennial Inn, Concord, N.H.)

Moved that the Commission begin regular monthly meetings at 10:30 a.m. to allow committees to meet prior to the Commission meeting.

IX. Opportunities for individual state comments:

Jay Healy said New Hampshire Commissioner of Agriculture is hosting a meeting on Feb. 2, 2000 with US Undersecretary of Agriculture Gus Schumacher in Nashua.

Bobby Starr said he was invited by a farm group to go to Wisconsin in February to discuss the Compact.

Leon Graves said the State Ratification Committee agreed to spend up to $10,000 to create a short video describing the Northeast Dairy Compact. An editorial committee is being created to guide development of the video and one or two Commissioners should participate.

Leon Graves also said the executive committee of the ratification committee will meet in Washington, DC in late January to discuss strategy for Compact expansion.

Also, Gov. Dean of Vermont proposed $50,000 in his budget proposal to support Compact expansion efforts and Leon Graves urged Commissioners from the other states to ask their governors to do likewise during the upcoming legislative session.

Ken Dibbell referred to the CCC obligation and the profitability of dairy in retail outlets.

Chuck Nicholson, associate professor of community development and applied economics at the University of Vermont, delivered a presentation based on the market impact study commissioned by the Commission.

VIII. E. Committee on Regulations and Rulemaking Recommendations continued:

Bobby Starr said that although the committee had met, the members had not achieved a proposal to meet the requirements of condition 9f of the Compact. Consequently, the committee will meet again and bring forth a proposal at the next Commission meeting.

Gordon Cook asked if further public hearings would be necessary. To which Ken Becker said no.

Jay Healy said the Commission has been discussing supply management for two years and should take action.

Ken Becker said that the circumstances of the past year has made it difficult to approach the matter in a reasonable fashion but those circumstances have changed for the better.

Andy Dykstra said that as a farmer, he needs to know what the Commission is going to do so that he can plan accordingly. Andy Dykstra also said he would disagree with making another payment to the CCC.

Ken Becker said the obligation to the CCC is a different requirement under the Compact from condition 9f, though they are related issues.

Jay Healy said that though technically they may be separate issues, politically they are closely related. As such, supply management needs to be addressed.

Dixie Henry said the committee is trying to develop a plan that identifies the specific provision the plan would have, so that it will be implemented and run effectively.

Shirley Ferris asked if the farmers would support a plan, to which Bobby Starr said it is important to get the Co-ops on board.

Moved that agenda item 7A (deliberative meeting on assessment/refund supply management program) be continued to the Feb. 2, 2000, Commission meeting.

VIII. B. Committee on Administration recommendations:

Linda Dyer asked the Bylaws Committee to review the proposed personnel manual for possible conflicts with the bylaws.

VIII. C. Standing committees for 2000:

Linda Dyer said the Committee on Administration is determined by the bylaws. She suggested the Finance Committee be composed of the same people with the changes reflecting the new treasurer and secretary.

Moved that the composition of the Finance Committee remain the same with the change of chair, Treasurer Powell Cabot, and Mary Kassler as representative from the Massachusetts delegation.

X. Executive Session:

Moved that the Compact go into executive session to discuss personnel matters and possible litigation.

The Commission was in executive session from 3:15 to 4 p.m.

Meeting Adjourned at 4 p.m.

Respectfully submitted,

Mary K. Kassler, Secretary