For Immediate Release
September 28, 2001
Compact Commission Meets to Wind Up
The Northeast Dairy Compact Commission met today in Concord, New Hampshire to make provisions to wind up its affairs. Under the terms of the Northeast Interstate Dairy Compact in Article VIII §20, the Compact will no longer be in force with the expiration of Congressional Consent on September 30, 2001. §147(3) of the Agricultural Market Transition Act (7 U.S.C. §7256(3), as amended), granted Congressional Consent to the Compact, terminating on September 30, 2001.)
At the meeting in Concord, the Commission acted to transfer ownership of its administrative records and remaining assets and equipment to the Center for New England Dairy Compact Research. The Center is a not-for-profit corporation, incorporated in the state of Vermont. For purposes of winding up the affairs of the Commission, the transfer of assets is contingent on the Center paying the debts of the Commission and conducting a final annual audit of the Commission's accounts. The Center has as its corporate purposes research, dissemination and education on the economic and social impacts of the Northeast Interstate Dairy Compact.
Previously, in anticipation of the termination of its authority, the Commission paid out to dairy farmers last week the remaining funds in the Producer Settlement Fund. The Commission also finalized payments to farmers of the $3.2 million for the Supply Management Program.
"Because of the September 30, 2001 deadline, it was incumbent on the Commission to provide for an orderly windup of its affairs," said Dan Smith, Executive Director of the Compact Commission. "Conveying the assets and equipment to the private, non-profit Center for New England Dairy Compact Research provides for paying the debts of the Commission and an orderly final disposition of its assets. The Center can also serve to wind-up the Commission’s operation by providing final research and summation of the Compact’s operation and impact.”
Legal Background. The September 30 expiration of Congressional Consent does not terminate the Compact; it renders only the interstate agreement without force. The laws of the six New England states authorizing their entry in the Compact, subject to Congressional consent, remain in force as a matter of state law. Were the Congress again to consent to the Compact, the Compact Commission would again be reestablished.
Until such action by Congress, however, as of September 30, the Compact is without force, and the Commission's existence and authority to regulate milk prices are terminated. Termination of the Commission’s existence required some provision for payment of the Commission's debts and disposing of its assets. The Commission so provided with its action today.
The Commission’s final process is summarized in more detail in the attached Wind-up Report of the Executive Director.
Director’s Wind-up Report
Commission Special Meeting
September 28, 2001
I need to begin with what is most important today, and that is to recognize and honor the memory of the Commission’s former chair, Linda Smith Dyer, who passed away yesterday morning. Linda served with distinction, with unique good judgment and common sense, and with grace. I can only feel blessed to have known her and worked with her, and I will miss her terribly, both professionally and personally.
Linda’s passing also reminds us of the need to keep today’s events in their proper context given what has transpired over the past few weeks. I know I speak for all of the Commission and staff in saying that the victims and their families remain in our thoughts and hearts.
This is the first written report I have ever submitted to you. There are a number of issues to address, a number of questions to answer, and I thought it important to make a record of today’s final accounting.
To start with our legal status: Article VIII §20 of the Compact provides that the Compact enters into force when passed by at least three of the states and is granted the consent of Congress. With the expiration of Congressional Consent on September 30, 2001, therefore, the Compact is no longer in force. That is where we will be on Sunday.
This means that the authority for the Commission to
operate, including function of the price regulation, is terminated.
As we have been doing, and as we will do today, we need to formally
provide for cessation of the Compact’s operation, and for the winding up of
At the same time, the state laws still remain on the books after Sunday. Congress’ failure to act does not terminate the state laws. It is only their legal force that has expired. Accordingly, if Congress consents again to the Compact, it will again be back in force. The Commission could then again meet and quickly go back into business.
Final Accounting: As you are aware, we have closed the Producer Settlement Fund and paid out all reserve accounts as a final pool payment to farmers two weeks ago. The Price Announcement on your desks indicates that $655,000 was paid out, at just over 12 cents per hundredweight.
We have also made payment to qualified producers in accordance with the Supply Management Program. The copy of the letter sent to producers with their checks, on your desks, indicates that we paid out the $3.2 million in the fund to about 1600 farms, with each producer receiving $1,000 per farm and also about $1000, on average, for their production for the program year. The reaction to operation of this program has been universally positive. There is no doubt that the program has effectively begun the discussion on this critical and most difficult issue. We can only hope that we can continue what we’ve started, as we really have made a contribution, here.
There is one procedural problem that I hope we might be able to address, if the Compact is reauthorized. For a variety of reasons, some producers were not able to submit their applications on time. With sunset of the Compact, there was no way to provide a remedy for them. If the Compact is reauthorized, I hope we can find a way to revisit this problem with the current design of the program.
Finally, the Balance Sheet and Statement of Revenues indicates that we will close with about $280,000 remaining in administrative funds. As discussed in detail in the August budget report, the budget is in balance and this amount is precisely in line with the Regulations’ requirement for the cash reserve. The amount will allow for an orderly wind-up procedure, as intended, including payment of the final bills outstanding.
As part of the wind-up procedure, we will provide for a final audit, and we will provide you with copies when it is complete.
Organic Cow Judgment. As you are aware, the Court this week ruled in favor of the Commission in the suit for an exemption brought by The Organic Cow. The funds held in escrow and the outstanding amounts due constitute remaining assets of the Commission; the corresponding producer payment credit is a contingent debt. These must be accounted for in the Commission’s wind-up process.
Wind-up Program: The Committee on Administration will be putting a motion before you to provide for the formal wind-up of the Commission’s affairs. It is important for me to indicate here that the new legal entity which will wind-up the Commission’s affairs has been formed independent of the Commission, and will operate independently of the Commission after the Commission ceases to operate on Sunday; your job today is to decide only whether you are confident that the new entity, as it has been formed and will be described, will serve to wind-up up the Commission’s affairs in a responsible manner.
Thoughts for the Future. I take to heart Commissioner Briggs statement a couple of months ago that the Compact will never be defeated on its merits. I remain eternally optimistic, as I always have been with the Compact effort, that the substance of what we are trying to accomplish, and now with the proof of what we actually have accomplished, will prevail over base politics. I fully expect, in other words, that we will meet again.
Thank you for all your support, helpful input and leadership over the years. No matter what happens in the future, it has been an honor to have worked with all of you on the Compact.