§ 258-B — Prompt payment for milk purchases; security funds; bonding of milk dealers

§ 258-b. Prompt payment for milk purchases; security funds; bonding of\nmilk dealers. 1. Scope of coverage. (a) For purposes of this section, a\ncooperative corporation or association of producers shall be deemed to\nbe a producer and not a dealer with respect to the milk of its producer\nmembers under contract with such cooperative, and shall be deemed to be\na dealer with respect to milk purchased or received from non-member\nproducers.\n (b) Notwithstanding any other provision of this section, sales or\nother transfers of milk between cooperatives shall not be subject to\nbond or assessment under the security provisions of this section.\n (c) Any corporation or association of persons engaged in the\nproduction of agricultural products which is operated for the mutual\nbenefit of its members and which qualifies as such under the provisions\nof the Capper-Volstead Act shall be deemed to be a cooperative\ncorporation or association for purposes of this section.\n (d) Upon an application of a dealer, and pursuant to regulations\npromulgated to effectuate the provisions of this paragraph, a dealer\nthat purchases less than one hundred thousand pounds of milk per month\nshall not be subject to bond or assessment under the security provisions\nof this section when the commissioner waives such provisions.\nNotwithstanding such waiver, a claim may be filed and pursued against\nsuch a dealer as provided for in this section; and any claim that is\ncertified for payment by the commissioner shall be paid from funds\nderived from license fees assessed upon milk dealers pursuant to section\ntwo hundred fifty-eight-a of this article.\n The defaulting dealer shall be liable for reimbursement to the\ncommissioner for the value of the claim in the same manner as if the\nclaim was paid out of the milk producers security fund as provided for\nin paragraph (e) of subdivision five of this section.\n 2. Prompt payment for milk. (a) Every milk dealer shall: on or before\nthe last day of each month, or such date of payment as established by a\nfederal milk marketing order regulating the marketing of milk in the\nstate or a state milk marketing order promulgated pursuant to section\ntwo hundred fifty-eight-m of this article, whichever is earlier, pay for\nall milk received from producers during the first fifteen days of such\nmonth based upon a price or formula as determined by the commissioner\nand every such milk dealer shall, on or before the twentieth day of each\nmonth, or such date of payment as established by a federal milk\nmarketing order regulating the marketing of milk in the state or a state\nmilk marketing order promulgated pursuant to section two hundred\nfifty-eight-m of this article, whichever is earlier, pay the balance\nowed producers for milk received during the preceding month.\n (b) Notwithstanding any other provision of this section, the\ncommissioner may extend the time for payment from dealers with respect\nto purchases from producers of non-grade A milk for up to one hundred\ntwenty days after the last day of the month in which the milk was\nreceived, provided such producers have requested the extension in\nwriting in such manner as may be acceptable to the commissioner.\n (c) Any producer who does not receive payment for milk sold or\ndelivered to a milk dealer, within the time prescribed in paragraph (a)\nof this subdivision, shall promptly notify the commissioner of such\nfact.\n (d) All wholesale purchasers of milk buying from a licensed milk\ndealer shall provide not less than seven days' notice to their milk\ndealer supplier before changing suppliers. All wholesale purchasers\nshall make payment in full to their milk dealer supplier or satisfy\ntheir debts by an appropriate surety bond posted or other legal\ninstrument of payment provided, less any legal rebates, discounts, or\nother credit earned, before changing suppliers. The provisions of this\nparagraph shall apply only if the milk dealer has satisfied all\nsubstantial pre-existing contractual agreements with the wholesale\npurchaser prior to final delivery. For the purposes of this paragraph,\nthe definition of the term "wholesale purchaser of milk" shall not\ninclude public institutions.\n (e) The commissioner may, if he or she finds it is necessary,\npromulgate after hearing additional rules and regulations prescribing\nthe period within which stores, restaurants, hotels, public institutions\nand other wholesale purchasers of milk shall pay for milk purchased or\nreceived from a licensed dealer. No milk dealer or cooperative shall\nsell or deliver milk, except on a cash on delivery basis, to any\nwholesale purchaser who has failed to make full payment within the\nperiod prescribed in regulations promulgated by the commissioner\npursuant to this paragraph.\n 3. Payments to security funds. (a) Fund and filing of surety bonds.\nAny milk dealer, except a cooperative, who has not filed a bond or other\nsecurity in full satisfaction of the requirements of subdivision six or\nseven of this section and who buys, receives or otherwise handles milk\nreceived from producers, shall, unless entitled to offsetting credits\nunder paragraph (b) of subdivision four of this section, pay monthly to\nthe commissioner during each fiscal year an amount up to one and\none-half tenths of one percent of a price per hundredweight of milk as\ndetermined by the commissioner or the average statistical uniform price\nper hundredweight of milk for the previous calendar year, as determined\nand announced by the commissioner on or before the thirty-first day of\nMarch of each year, on each hundredweight of all such milk purchased,\nreceived or handled. Such payments by dealers shall be deposited in the\nmilk producers security fund established by subdivision four of this\nsection.\n (b) Whenever the commissioner determines that the balance in the milk\nproducers security fund exceeds fifteen percent of the value of milk\npurchases covered by the fund, the maximum rates established by\nparagraph (a) of this subdivision shall be reduced from one and one-half\ntenths of one percent to one-tenth of one percent.\n (c) (1) In addition to making such payments for deposit in the milk\nproducers security fund, any such dealer shall file with the\ncommissioner a mandatory minimum surety bond, executed by a surety\ncompany authorized to do business in this state and approved by the\ncommissioner, conditioned for the prompt payment of all amounts due to\nproducers for milk sold or consigned by them to such dealer during the\nlicense year and all amounts due to the equalization or producer\nsettlement fund of any order promulgated by the commissioner pursuant to\nsection two hundred fifty-eight-m or two hundred fifty-eight-n of this\narticle or to the equalization or producer settlement fund of a federal\nmilk marketing order. The bond shall be twelve times the amount equal to\n(i) the value of milk purchased or received from producers in the two\nconsecutive months during the preceding twelve months in which the\ndealer purchased or received the highest aggregate value of milk divided\nby the number of days in those two months and (ii) the amount owed in\nthe same two-month period to the equalization or producer settlement\nfund, divided by the number of days in such months.\n (2) Upon an application of a dealer and pursuant to regulations\npromulgated to effectuate the provisions of this paragraph, the\ncommissioner shall examine the financial condition of the applicant and\nmay exempt the applicant from the provisions of this paragraph if the\ncommissioner finds that the granting of the application would not\nmaterially affect security for producers or the viability of the milk\nproducers security fund; provided however, that for any applicant where\nthe amount calculated in subparagraph one of this paragraph multiplied\nby forty-three is less than two hundred fifty thousand dollars, the\ncommissioner shall exempt such applicant from the provisions of this\nparagraph unless the commissioner finds that the granting of the\napplication would materially affect security for producers. Rules and\nregulations to effectuate the provisions of this subparagraph shall\nspecify the criteria to be used in reviewing the applicant's financial\ncondition, the viability of the milk producers security fund, and the\neffect of the proposed exemption on the security afforded to producers\ndelivering milk to the applicant.\n (d) The commissioner may require a milk dealer, in addition to making\npayments to the producers security fund and filing such mandatory\nminimum surety bond, to execute and file such further additional surety\nbond or other security as he may deem acceptable and sufficient, at any\ntime the commissioner finds (1) that the milk dealer has insufficient\nproperty located within this state upon which to levy, pursuant to\nparagraph (e) of subdivision five of this section, in the event of a\ndefault by a dealer making two monthly payments for forty days purchases\nof milk, or (2) that the dealer's participation in the fund and filing\nsuch mandatory minimum surety bond will not otherwise afford adequate\nsecurity to all producers protected by the fund.\n 4. Milk producers security fund. (a) There is hereby established in\nthe joint custody of the comptroller and the commissioner of taxation\nand finance a fund to be designated as the milk producers security fund.\nThe commissioner shall deposit all monies received from milk dealers\npursuant to paragraph (a) of subdivision three hereof into the fund. The\nfunds so received and deposited in such milk producers security fund\nshall not be deemed to be state funds. The comptroller shall be\nempowered to invest such funds pursuant to section ninety-eight-a of the\nstate finance law consistent with the purposes of this section. The\ncommissioner is hereby authorized to draw upon such funds, in his or her\ndiscretion, to purchase credit insurance for the benefit of the milk\nproducers security fund. The expense of administering the provisions of\nthe milk producers security fund and of administering subdivision one\nhereof shall be paid from the fund to the commissioner on vouchers\ncertified by the commissioner with the approval and consent of the\ndirector of the budget. Such payments from the fund shall not exceed two\nand one-half percent of the total fund or one hundred thousand dollars\nper annum, whichever is greater, provided that, upon approval of the\ndirector of the budget, the actual costs incurred by the department in\ncarrying out its responsibilities with respect to such provisions of\nthis article may be assessed against any monies available to the fund\nupon appropriation by the legislature. The commissioner shall make an\nannual report of the receipts to and disbursements from the fund,\nincluding the cost of administration of the fund, which report shall be\nmade available to each milk dealer and to any other person having an\ninterest in the fund. A copy of such report shall be forwarded to the\ndirector of the division of the budget, the chairperson of the senate\nfinance committee and the chairperson of the assembly ways and means\ncommittee.\n (b) After the milk producers security fund shall have equaled twelve\nmillion dollars or such greater or lesser amount, up to fifteen percent\nof the value of milk purchases to be covered by the fund, calculated\nupon the basis of the average value of the milk covered by the fund\nduring the preceding calendar year, as the commissioner may determine is\nsufficient to protect the interests of producers, he or she shall\nadminister the fund in the manner prescribed herein. Periodically, but\nat least twice each year, he or she may credit each milk dealer with an\namount which bears the same relationship to the total money in the fund\nas that dealer's payments to the fund bear to the total payments to the\nfund by all dealers. If the amount so credited to a milk dealer is\ngreater than that due from such milk dealer, the excess shall be paid or\ncredited to such milk dealer by the comptroller. No such credits or\npayments shall be made unless the commissioner finds that the fund can\nbe maintained at a level which is sufficient to protect the interests of\nproducers. Any such credit to a milk dealer's account shall not be\nconsidered as payments to the fund in computing further credits of such\nnature.\n (c) If a milk dealer participating in the security fund elects to\nterminate his or her participation therein, he or she shall give notice\nin writing to the commissioner six months prior to the expiration of the\nlicense year and file a surety bond or other security on the first day\nof the second month before the end of the license year. A milk dealer\nmay thereupon apply for the return of his or her pro rata share of the\nmonies in the security fund, less administrative costs, based upon his\nor her payments to the fund. Upon being satisfied that the milk dealer\nis not in default in any payments to producers or cooperatives and upon\nrenewal of the license, the commissioner shall authorize the comptroller\nto pay to such milk dealer his or her pro rata share in up to six equal\nmonthly payments.\n (d) If a milk dealer who participated in the milk producers security\nfund ceases to do business as a milk dealer or sells or transfers his or\nher business to another milk dealer, he or she may apply for the return\nof his or her pro rata share or assign his or her interests to the\nbuying dealer with the approval of the commissioner.\n (d-1) The commissioner shall employ every reasonable effort to\nidentify and locate all persons entitled to receive unclaimed pro rata\nshares of former security fund participants. In addition, the\ncommissioner shall for a period of five years after identifying any\nperson's unclaimed share of one hundred dollars or more, or until the\namount due is claimed, whichever is sooner, publish such person's name\nand notice of his entitlement in a newspaper of general circulation in\nevery county where the commissioner knows or has reason to believe such\nperson maintained a principal office. Notwithstanding any provision of\nthe abandoned property law, the pro rata shares of former security fund\nparticipants which remain unclaimed for five years or more shall remain\nin the producer security fund for use as set forth in this subdivision\nand subdivision five of this section.\n (e) Any milk dealer who first elects to participate in the milk\nproducers security fund shall make an initial payment to the fund, at\nthe rate most recently announced by the commissioner, pursuant to\nsubdivision three of this section, for milk purchased, received or\nhandled from producers during the six months immediately preceding the\ndate that notice of such election is given the commissioner, pursuant to\nsubdivision ten of this section. Upon the payment of the initial deposit\ninto the fund and filing of the mandatory minimum surety bond, as\nrequired herein, a milk dealer electing to participate in the fund may\napply to the commissioner for termination or adjustment of an existing\nbond or the return or adjustment of any existing alternative security\nfiled with the commissioner. If there have been no prior purchases,\nreceipts or handling of milk by the dealer, such initial payment and the\namount of such bond shall be based upon an estimate of the purchases,\nreceipts or handling of milk by such dealer for the first six months\nfollowing entry into the fund. After the first six months, the\ncommissioner may adjust such bond and initial deposit so that the amount\nof the initial deposit and bond are based upon the actual deliveries.\n 5. Claims against mandatory minimum surety bond and milk producers\nsecurity fund. (a) If the commissioner has reason to believe that a\nlicensed milk dealer who is participating in the milk producers security\nfund has defaulted in making payments for milk to producers, the\ncommissioner shall give reasonable notice to the producers believed to\nbe affected to file verified claims and may fix a reasonable time within\nwhich such claims must be filed. Upon learning of such default, the\ncommissioner shall immediately examine the records of the defaulting\ndealer and shall identify the amounts which are reasonably estimated to\nbe owed to producers. Within sixty days of the receipt of a claim by a\nproducer and on the basis of such estimates, the commissioner may\nauthorize the comptroller to pay any such producer up to seventy-five\npercent of such estimate. In connection with such payment, the\ncommissioner may make provisions for the recovery for the benefit of the\nfund of any payments made pursuant to this paragraph.\n (b) No claims against the producers security fund shall be allowed\nfor: (1) sales of milk to dealers not licensed by the state of New\nYork, or (2) sales of milk by a producer to a milk dealer subsequent to\nits failure to pay within the time periods prescribed in subdivision two\nof this section, where the commissioner finds, after due notice and\nopportunity of hearing, that such extension of credit, whether direct or\nindirect, to such milk dealer by the producer did not constitute a\nreasonable exercise of business judgment, or (3) the value of milk\nproduced on farms not located in New York state. Claims shall be limited\nto: (1) the price the claimant was required to be paid pursuant to the\nmilk marketing order under which the milk was pooled, if the claimant\ndid not pool the milk, or (2) the value of the milk as determined by the\ncommissioner pursuant to provisions of the milk marketing order under\nwhich the milk was pooled, if the claimant pooled the milk, or (3) such\nother price as determined by the commissioner as appropriate for milk\nnot pooled under a milk marketing order, and in no event shall a claim\nbe allowed for deliveries of milk in excess of the amount owed for milk\nsold or delivered within the first forty consecutive day period for\nwhich payment was not received from a dealer. Claims filed by a market\nadministrator may be allowed for amounts owed by a dealer to a producer\nsettlement or equalization fund of an order promulgated under section\ntwo hundred fifty-eight-m or two hundred fifty-eight-n of this article,\nor to a producer settlement or equalization fund of a federal milk\nmarketing order under which the milk is pooled.\n (c) The commissioner shall examine the claims so filed, determine\nafter hearing upon reasonable notice to the claimant and to the\ndefaulting dealer the amount due upon such claims, and certify the\namount due each claimant, provided, however, that no hearing shall be\nrequired with respect to a claim in which the defaulting dealer does not\ndispute liability and the claimant and defaulting dealer agree and\nstipulate to the amount found by the department to be payable on said\nclaim. In determining the amount payable on any claim against a surety\nbond or the milk producers security fund, the commissioner may allocate\nany payments for milk made by a milk dealer to a claimant subsequent to\nits failure to pay within the prescribed time period, to the earliest\ndebt owed such claimant by the milk dealer. Any amounts determined to be\npayable on a claim will be chargeable first against the mandatory\nminimum surety bond and any additional surety bond or other security\nfiled pursuant to subdivision three of this section. In the event the\namount of the mandatory minimum surety bond and any additional surety\nbond are not sufficient to pay the amount owed the producers for the\ndeliveries of milk made in the first forty consecutive days for which\npayment was not received from a dealer, a claim against the producer's\nsecurity fund may be allowed in an amount not to exceed the difference\nbetween the amount recoverable on such bonds, and the amount owed for\nmilk delivered in such applicable period.\n (d) The commissioner's determination certifying the amount due each\nclaimant shall be final unless the defaulting milk dealer or the\nclaimant shall institute a proceeding pursuant to article seventy-eight\nof the civil practice law and rules within thirty days from the date of\npersonal service of a copy of the written determination upon the milk\ndealer and producer affected thereby. If after the expiration of the\nthirty day period the commissioner's determination has not been stayed\nby the supreme court in a proceeding instituted to review it, the\ncommissioner shall bring an action on the bond or bonds and proceed to\nobtain from any other security filed funds with which to pay the claims\nand, to the extent that such funds are insufficient to pay the amount\ndue, direct the comptroller to pay the claimants from the moneys\navailable in the milk producers security fund. For the purposes of any\naction brought on a bond, the commissioner's determination shall be\npresumptive evidence of the facts stated therein.\n (e) If any claim is paid from the milk producers security fund, the\ndefaulting dealer shall be liable to the commissioner for the benefit of\nthe fund for the amount of claims so paid. After service by first class\nmail upon the defaulting dealer of the commissioner's certification of\npayment of a claim from the fund for which the dealer has been found\nliable to the claimant, the commissioner may issue a warrant under seal\nof the department directed to the sheriff of any county of the state\ncommanding him to levy upon and sell the real and personal property of\nthe defaulting dealer, found within his county, for the payment of the\namount of such claim with interest and the cost of executing the\nwarrant, and to return such warrant to the commissioner and pay to him\nthe money collected by virtue thereof within sixty days after the\nreceipt of such warrant. The commissioner may file with the clerk of any\ncounty a copy of such warrant, and thereupon the clerk shall enter in\nthe judgment docket, in the column for judgment debtors, the name of the\ndefaulting dealer designated in the warrant, and in appropriate columns\nthe amount of the dealer's liability to the commissioner for claims,\ninterest and costs, and the date when such copy is filed. Thereupon the\namount of such warrant so docketed shall become a lien, relating back to\nand deemed perfected as of the date of the dealer's earliest default in\npayment to producers as determined by the commissioner, upon and shall\nbind the real and personal property and chattels real of the person\nagainst whom it is issued in the same manner as a judgment duly docketed\nin the office of such clerk. The said sheriff shall thereupon proceed\nupon the same in all respects, with like effect, and in the same manner\nprescribed by law in respect to executions issued against property upon\njudgments of a court of record, and shall be entitled to the same fees\nfor his services in executing the warrant, to be collected in the same\nmanner. Upon such filing of a copy of a warrant, the commissioner shall\nhave the same remedies to enforce the dealer's liability as if he had\nrecovered judgment against the dealer for the amount of the warrant.\n (f) In the event that the surety company who shall have executed a\nbond for a milk dealer shall fail to make prompt payment of all amounts\ndue producers for milk sold or consigned by them to such milk dealer\nduring the license year and all amounts due to the equalization or\nproducer settlement fund of any order promulgated by the commissioner\npursuant to section two hundred fifty-eight-m or two hundred\nfifty-eight-n of this article such surety company shall, in addition to\nmaking such payment on the bond, pay interest at the rate provided for\nin section 5-501 of the general obligations law on the amounts so owed\nfrom the date of the claim together with reasonable attorneys' fees and\ncourt costs.\n 6. Surety bonds. (a) Each milk dealer who buys, receives or otherwise\nhandles milk received from producers may execute and file with the\ncommissioner a surety bond in lieu of participation in the milk\nproducers security fund and the filing of a surety bond or bonds\npursuant to subdivision three of this section. The bond shall be\nexecuted by a surety company authorized to do business in this state and\nshall be approved by the commissioner. The bond shall be conditioned for\nthe prompt payment of all amounts due to producers for milk sold or\nconsigned by them to such milk dealer during the license year and all\namounts due to the equalization or producer settlement fund of any order\npromulgated by the commissioner pursuant to section two hundred\nfifty-eight-m or two hundred fifty-eight-n of this article or to the\nequalization or producer settlement fund of a federal milk marketing\norder. Additionally, the bond shall make provisions for an advance\npayment pursuant to subdivision nine of this section.\n (b) The bond shall be in an amount equal to (1) the value of milk\npurchased or received from producers in the two consecutive months\nduring the preceding twelve months in which the dealer purchased or\nreceived the highest aggregate value of milk, divided by the number of\ndays in those two months and multiplied by forty, and (2) the amount\nowed in the same two-month period to the equalization or producer\nsettlement fund of a state or federal milk marketing order, divided by\nthe number of days in such months and multiplied by forty.\n 7. Alternative security. Each milk dealer buying milk from producers\nmay in lieu of filing a surety bond pursuant to subdivision three or six\nof this section provide an equal amount of protection for the producers\nfrom whom he or she purchases or receives milk by filing an irrevocable\nletter or letters of credit for the account of the milk dealer\nauthorizing the commissioner to draw on a bank or trust company or banks\nor trust companies authorized to do business in the state of New York.\nSuch letter or letters shall contain such terms and conditions as the\ncommissioner may require. Additionally, the irrevocable letter of credit\nshall make provisions for an advance payment pursuant to subdivision\nnine of this section.\n 8. Additional bond or alternative security. Whenever the commissioner\nshall determine that the value of milk purchased or received from\nproducers by a dealer who is not participating in the producers security\nfund has increased, or that such increase may reasonably be anticipated,\nso that the total amount of security does not comply with the formula\nset forth in subdivision six hereof, as applied to any consecutive two\nmonth period during the current year, the commissioner shall require\nsuch additional surety bond or securities in lieu thereof as will afford\nproducers the protection intended by this section.\n 9. Claims against bond or alternative security. Claims by producers\nagainst a dealer who had filed a bond or alternative security shall be\nprocessed by the commissioner in the same manner as is provided in\nsubdivision five hereof with respect to claims against the producers\nsecurity fund and such claims shall be subject to the same limitations.\nUpon receiving a claim against a dealer who had filed a bond or\nalternative security, the commissioner shall immediately examine the\nrecords of the defaulting dealer and shall identify the amounts which\nare reasonably estimated to be owed to producers. Within sixty days of\nthe receipt of a claim, and on the basis of such estimates, the\ncommissioner is authorized to pay any such producer up to fifty percent\nof such estimate and proceed to obtain from such security the funds with\nwhich to pay any advances on the claims. In connection with such\npayment, the commissioner shall make provisions for the recovery of any\npayments made pursuant to this subdivision. The commissioner's\ndetermination certifying the amounts due claimants shall be subject to\njudicial review in the same manner and subject to the same limitations.\nIn the case of a dealer who has filed alternative security, the\ncommissioner shall proceed to obtain from such security the funds with\nwhich to pay the claims. If recovery upon the alternative security is\nnot sufficient to pay all claims, the amount recovered shall be divided\npro rata among claimants. In the case of a dealer who has filed a surety\nbond, the commissioner may bring an action on the bond, and for the\npurposes of such action his determination certifying the amounts due\nshall be presumptive evidence of the facts therein stated. In the event\nthat recovery on such bond has not been made within sixty days of the\ncommissioner's certification of the amounts due producers covered by the\nbond, the commissioner shall direct the comptroller to pay such amounts\nto claimants from whatever monies are available in the milk producers\nsecurity fund. In the event that recovery against the bond has not been\nmade within one hundred eighty days of certification of the amounts due\nclaimants, each and every dealer having filed a bond pursuant to\nsubdivision six of this section shall pay monthly to the commissioner an\namount not to exceed one-half of one-tenth of one percent of the average\nuniform price per hundredweight of milk for the previous calendar year,\nas determined by the commissioner on or before the thirty-first day of\nMarch of each year, on each hundredweight of such milk purchased,\nreceived or handled. Such payments shall continue for such period of\ntime as the commissioner deems necessary in order to return to the fund,\nno later than three years from the date of such payment therefrom, the\ntotal amount paid as a result of the default of such dealer plus\ninterest, at the rate provided for in section 5-501 of the general\nobligations law on the amount of such payment from the date of such\npayment. In the event of a recovery on the bond after the commencement\nof such payments, the commissioners shall authorize the comptroller to\npay to each dealer making such payments its pro rata share of the amount\nby which the total of such payments exceeds the difference between the\namount received and the total amount paid to claimants.\n 10. Time for providing security. Surety bonds or securities, whether\nfiled in addition to or in lieu of participation in the fund, for the\nlicense year shall be filed with the commissioner not later than the\nfirst day of the second month before the beginning of each license year.\nWhenever an additional surety bond or alternative security is required\nto be filed, pursuant to paragraph (a) of subdivision three of this\nsection, such bond or alternative security shall be filed with the\ncommissioner within the time limits fixed by the commissioner. A milk\ndealer who elects to participate in the security fund and file a bond or\nbonds pursuant to subdivision three of this section, in lieu of filing a\nsurety bond or alternative security pursuant to subdivision six of this\nsection, shall notify the commissioner not later than three months prior\nto the date on which such change is to be made, and shall file the bond\nor bonds and make the initial payment, as required by paragraph (e) of\nsubdivision four of this section, not later than two months before such\nchange is to be made.\n 11. (a) Notice of failure to provide security. Whenever a milk dealer\nfails to pay into the producers security fund or to file any surety bond\nor alternative security, as provided pursuant to this section, within\nthe time or times fixed by this section or the commissioner's demand for\nadditional security, the commissioner shall publish in a newspaper or\nnewspapers having circulation in the area or areas in which the\nproducers whose milk is sold or delivered to such milk dealer reside, a\nnotice stating that he made such demand or request of said milk dealer;\nthat the milk dealer has failed to comply; that the commissioner does\nnot have on file such surety bond or alternative security as demanded,\nor that he has not paid monies due the producers security fund as\nrequired by him; and that adequate security to protect such producers\nmay not be available to them as provided in this section. In addition to\nsuch published notice to producers, the commissioner shall send by\ncertified mail a copy of such notice to each producer delivering milk to\nsuch milk dealer as he may be able to determine from records available\nto him and such notice shall be addressed to such producer's last known\nplace of residence. In addition to providing such notice, the\ncommissioner shall issue a notice of hearing directing the licensee to\nappear within twenty-four hours or such longer period as he may direct\nand show cause why an order should not be entered revoking such dealer's\nlicense or denying the renewal thereof for failure to provide required\nsecurity.\n (b) Payments to farmers. (1) It is hereby determined and declared that\nthe assurance of prompt and full payment to dairy farmers is for the\nbenefit of all the people of the state, and is so directly related to\nthe public interest, the public health and general welfare that it is an\nessential government function.\n (2) The commissioner shall annually no later than November first,\nassess the status of the milk producer security fund, the anticipated\npayments from and receipts to the fund for the following fiscal year\nand, in connection with such assessment, estimate the additional\namounts, if any, which may be needed by the fund to meet the fund's\nobjectives in assuring prompt and full payment to dairy farmers. The\ncommissioner shall transmit this information in a report to the governor\nfor his use in the preparation of the budget, and to the speaker of the\nassembly and the president pro tempore of the senate for use in the\nconsideration of the budget for such fiscal year.\n (3) In the event an appropriation is made for the purposes of this\nparagraph and, thereafter, upon certification by the commissioner, with\napproval of the director of the budget, that a further sum is required\nby the milk producers security fund to meet its obligations and\naccomplish the purposes of this section, the comptroller shall, within\nthe limits of such appropriation, draw a warrant for the payment to the\nmilk producers security fund of an amount up to the amount of such sum.\nSuch amount shall be a liability of the milk producers security fund and\nshall be repaid to the general fund pursuant to a plan of repayment.\nPrior to the institution of such a plan, a copy thereof shall be\nforwarded to the chairman of the senate finance committee and the\nchairman of the assembly ways and means committee, for use in the\nconsideration of the budget for such fiscal year.\n (4) Whenever the comptroller draws a warrant for payment to the milk\nproducers security fund as provided in subparagraph three hereof, the\ncommissioner shall implement the plan of repayment by promulgating\nthrough regulation after hearing an increase in the amount of assessment\nimposed under subdivision three of this section to an amount not\nexceeding two-tenths of one percent of the average uniform price for the\nprevious year.\n 15. Prohibitions and violations. It shall be unlawful for a milk\ndealer to purchase or receive milk from producers or from other dealers\nfor resale or manufacture unless such dealer files a surety bond or\nbonds as required pursuant to this section and makes prompt payment of\nany assessment as required pursuant to this section. It shall also be\nunlawful for a milk dealer to sell milk to another milk dealer, if he\nhas been notified by the commissioner that the buying dealer has failed\nto make prompt payment to producers, to the producer settlement fund or\nequalization fund or to the milk producers security fund, or if such\nbuying dealer has exceeded the credit period as provided pursuant to\nsubdivision two of this section and the sale was not made upon the basis\nof cash on delivery.\n In addition to penalties imposed by other provisions of this article a\nviolation of this section shall subject a milk dealer to a penalty in\nthe sum of one hundred dollars for each day that he is late in making\npayment into the milk producers security fund the assessment required by\nthis section, for each day he sells milk to a milk dealer after being\nnotified by the commissioner of that milk dealer's failure to make any\nrequired payment into the milk producers security fund, or for each day\na milk dealer sells milk to another milk dealer who has failed to make\npayments for milk purchased as provided pursuant to subdivision two of\nthis section. Any person who buys or sells milk in violation of the\ncredit period provided in subdivision two of this section, shall be\nliable for a civil penalty of one hundred dollars a day for each day of\nviolation.\n 16. Rules and regulations. The commissioner after due notice and\npublic hearing may promulgate rules and regulations to carry out the\nprovisions and intent of this section.\n