The meeting was called to order by Chair Mike Wiers at 10:26 a.m.

Shirley Ferris introduced Richard H. Allen of New England Dairies, Inc. who will be joining the Connecticut delegation to the Compact Commission. Mr. Allen is the Vice President of Sales at New England Dairies.

New York dairy farmer Ken Dibbell addressed the Commision and handed out a statement. (Attachment 1) Mr. Dibbell requested that the Commission set a new Over-order price and commented on the merits of the supply management proposal put forth by the Massachusetts delegation to the Compact. He discussed mailbox prices vs. the costs of production, as well as the number of farms that have gone out of business across the country over the past year. Shirley Ferris noted that the information on page two of Mr. Dibbell's handout had incorrect information. She stated that Connecticut farm numbers had not decreased by 9%. They had decreased only 1%.

Members of the public introduced themselves at the request of the Chair.

Harold Howrigan made a motion to accept the minutes of the October 7, 1998 regular session Commission meeting as presented. Motion was seconded by Deb Erb, passed by unanimous vote of the six State delegation.

There were no communications to report.

Hearing panel members -- Mae Schmidle, Deb Erb and General Counsel Dixie Henry recused themselves. Ken Becker said that financial statements which included Income to Expenditures, the Year to Date Budget and the Balance Sheet as of September 30, 1998, had been provided to Commission members prior to the meeting. (Attachment 2) Mr. Becker said the Commission had received a petition from a number of processors concerning the administrative assessment. A hearing panel is currently deliberating on that issue. Charlie Arbing asked if funds from the administrative assessment would be used by the Executive Director to cover travel expenses related to a meeting in North Carolina concerning the reauthorization of the Compact. Mr. Becker explained that other funds are also included in the funds that are available to the Commission -- such as interest income and an appropriation from the State of Maine -- and that his role at the North Carolina meeting fell within the approved duties of the Commission. Mr. Arbing asked whether the amount of the administrative assessment each month was appropriate since the Commission was beginning to establish a reserve of funds. Mr. Becker said the Committee on Regulations would be reviewing that issue. He said the Commission still has some bank loans to pay that it needs the reserve for, but it is possible that the assessment could be adjusted. Mike Wiers said the Committee on Administration has discussed the issue as well, but noted that possible future legal costs had to be taken into consideration in any discussion about adjusting the assessment.

Chair:

Mike Wiers said he didn't have anything specific to report as Chair. He reiterated that a hearing panel had been appointed concerning the petition on the administrative assessment and is moving along in the process, and that a second hearing panel will be appointed on a second petition by the processors.

Executive Director:

Mr. Becker said the Sullivan and Powers auditing firm was in the Commission office for three days in October reviewing the accounting systems and practices of the Commission for an audit of fiscal year 1997. The firm is in the process of writing up the audit report and expects to have it available to the Commission staff the week of November 23. The Audit Committee would then review the report and make its recommendation. Audited financials should be available to the Commission by the December meeting.

Mr. Becker said lead researchers at the University of Vermont and the University of Massachusetts are drafting a written report on the market impact studies they conducted for the Commission. The report is due in to the Commission staff the week of November 23. Mr. Becker said Doug Morris would be assisting him in reviewing the reports and providing comments back to the researchers.

Mr. Becker said the judge presiding over the New York Dairy Foods case in U.S. District Court in Boston ruled in favor of the Commission in early November. The processors involved have paid into an escrow account since the beginning of the case. The money will remain in escrow until it is determined whether the processors will appeal.

Mr. Becker said he gave an update concerning the Northeast Dairy Compact Commission's activities to the Dairy Practices Council at the Council's Annual Meeting in Harrisburg, PA in early November.

Mr. Becker gave a report on the recent pool and milk prices. The September Class I price for Zone 1 was $18.01. For October it was $18.23. Therefore, there was no Compact Over-order price paid out in those months. The reported Class 1 price for November is $18.34 and the reported price for December is $19.28, so there will not be a Compact Over-order price for those months either. Concerning the pool volumes for October, Mr. Becker said October's Class I volume of milk was the highest since the inception of the Compact at 271,500,000 pounds. The total producer milk was 529,000,000 pounds in September and 544,000,000 in October.

Mr. Becker said the staff has compiled an updated set of bylaws that contains all of the recent amendments approved by the Commission. (Attachment 3)

Bobby Starr asked how much money is currently being held in escrow as a result of the lawsuit brought by the NY processors, as well as how the money would be distributed once the judicial process is completed. Regulations Administrator Carmen Ross said that, including the money that is being held in escrow for The Organic Cow, there was a total of $1,843,000 in the court-ordered escrow. In addition, $43,480 is being held in escrow for the administrative assessment. Mr. Ross said that $1.6 million of the escrowed funds would be returned to dairy farmers. In response to a question by Mr. Cook, Mr. Ross said that some of the farmers who may receive the escrowed monies might be farmers who have never received a Compact payment before. Bobby Starr said that while a great deal has been made over the amount of money the Commission paid to the CCC, the amount of money that has been held in escrow due to court actions (and which was, therefore, not available to farmers) is actually a greater amount.

Committee on Administration:

Mike Wiers said the Committee is recommending the Commission approve payment on two bills. The first is for $15,040.71 for the University of Vermont (which includes payment to the University of Massachusetts) for the work conducted on a retail study for the Commission. With the payment of this bill, a total of $21,691.79 would be paid towards the budgeted cost of $52,000 for the market impact studies. The Committee also recommended the payment of $12,006.72 to the Market Administrator for the August pool and audits completed.

Mr. Wiers said the Committee is also recommending approval of a lease for a new Commission office. Ken Becker said the Commission has been sub-leasing its current office space from Dan Smith. Mr. Smith has decided not to renew his lease and Mr. Becker felt it was appropriate to look elsewhere for space. This is due to the fact that the landlord was not willing to make any changes to the building, the location is on the third floor and not handicapped accessible, and one employee has a medical condition that causes this to be a concern. In addition, there is no available parking and there are concerns over whether the building meets fire code. The new location is on the first floor and has ample parking. Mr. Becker said that landlord is willing to sign a one year lease for $1200 per month. The new landlord would also be willing to lock in the price for another three years if the Compact is extended. Mr. Wiers said the Committee felt the rental cost for the new site was reasonable considering the health and safety issues with the current site.

Mr. Wiers said the Committee is recommending that the Commission equalize contributions to the Simplified Employee Pension (SEP) plan through the end of the year. Mr. Becker said the Commission had adopted as a policy a cap of 18% for retirement and health insurance benefits. Up through the end of July, the Commission had paid 15% to employees for retirement payments and paid 3% to staff in lieu of health insurance. In August, a health insurance program was provided to the staff that cost more than the remaining 3%. At that time, the Commission expected to reduce the amount of the SEP contribution in order to stay within the 18% cap. However, during the audit, accountants noted that the Commission had already paid the SEP benefit at a certain rate earlier in the year to past employees, as well as to the current employees. Therefore, the Commission could not change the SEP rate because according to IRS rules all employees who work for the Commission during a calendar year have to receive the same percentage. Mr. Becker said the accountant recommended equalizing the SEP payment through the end of the current year and waiting until the end of next year to make next year's SEP payment. This would allow the Commission to assess how much was paid towards health insurance costs, and set the SEP rate accordingly.

Nominations Committee:

Shirley Ferris said the Committee would make a recommendation after lunch.

Audit Committee:

Tom Doak said the auditors should have a final report within a week or two. Committee members will have a conference call to discuss the report and make a final report to the Commission at the next meeting.

Bylaws Committee:

The Committee had nothing to report.

Committee on Regulations and Rulemaking:

Bobby Starr said the Committee would make a recommendation later in the meeting.

Producer Referendum Results:

Mae Schmidle said 99.2% of the verified ballots cast in the producer referendum were in favor of the amendment to the price regulation, therefore, the referendum passed. The certification of results (Attachment 4) was provided to Commission members. Mr. Becker said the rule concerning diversions and transfers of milk would be published in the Federal Register shortly and would take effect on January 1, 1999.

Executive Session:

Ron Newman made a motion to enter into Executive Session to consider personnel issues. The motion was seconded by Millicent Rooney and passed by unanimous vote of the six State delegations. Commission members involved with the Hearing Panel recused themselves from the discussion. General Counsel Dixie Henry recused herself prior to a vote on any expenditures. (The commission entered into Executive Session at 11:15am and returned to Regular Session at 12:04pm.)

Mary K. Kassler made a motion to pay Dan Smith $2,133 for insurance stipend for the period of January 1, 1997 through May 1, 1998 and refer back to the Committee on Administration to seek legal advice concerning vacation and holiday pay. Motion was seconded by Millicent Rooney, passed by unanimous vote of the six State delegations.

Following lunch, the Commission heard the reports from two committees that had been postponed until later in the meeting:

Shirley Ferris said the Committee is recommending the following slate of officers for consideration: Chair, Mae Schmidle; Vice Chair, Ron Newman; Secretary, Debora Erb; Treasurer, Harold Howrigan; Member, Mary K. Kassler; and Member, Thomas Doak. All of the nominees have agreed to serve.

Committee on Regulations and Rulemaking:

Bobby Starr said the Committee is recommending that the Commission initiate a rulemaking proceeding to seek comment on several issues. The first issue would be supply management. The second issue would be organic milk. The final issue to be considered would be the administrative assessment that is levied against fluid milk processors. While the administrative assessment was not brought to the Commission as part of a request to amend the Compact regulation, the Committee felt it was an issue that needed to be addressed in a timely manner.

Committee on Regulations and Rulemaking re Subjects and Issues -- Consideration of Initiation of Rulemaking:

Mr. Starr made a motion on behalf of the Committee on Regulations and Rulemaking to initiate a Subject and Issues Rulemaking and seek comment on the following issues:

Discussion then followed concerning the timeframe for holding public hearings as part of the rulemaking process. Mr. Healy stressed the urgency of moving in a timely manner on these issues and the importance of helping small farms. The motion was then passed by unanimous vote of the six State delegations.

Mr. Starr made a motion to hold a hearing on the issues of supply management and the administrative assessment on December 11, 1998 and to hold the monthly Commission meeting and a hearing on the issue or organic milk on December 16, 1998. The motion was seconded by Fred Hardy, passed by unanimous vote of the six State delegations. The December 11th public hearing would be held at the Holiday Inn in Boxborough, MA. A hearing on the administrative assessment would begin at 9:00am which would be followed by a hearing on supply management and income distribution starting at 1:00pm. The December 16 public hearing on organic milk would be held at the Tuck Library Building in Concord, NH, beginning at 9:00am.

Mike Wiers said the Committee is recommending payment on two bills. General Counsel Dixie Henry and Commission members involved with the Hearing Panel recused themselves. The Committee on Administration recommended that the Commission approve payment of the Federal Milk Market Administrator's invoice. Harold Howrigan made a motion to approve payment of the Market Administrator's invoice of $12,006.72 for the August 1998 pool and completed audits. The motion was seconded by Aaron Briggs, passed by unanimous vote of the six State delegations.

The Committee recommended that the Commission also approve payment of an invoice from the University of Vermont for $15,040.71 towards the costs of the Market Impact Study. Mr. Becker said researchers are drafting a report that will be provided to the Commission shortly for review and comment. A final report will be issued in January. Harold Howrigan made a motion to approve payment of the University of Vermont invoice of $15,040.71 for a portion of the costs of the Market Impact Study. Motion was seconded by Bobby Starr, passed by unanimous vote of the six State delegations.

Mr. Wiers said the Committee recommended that the Commission approve a one-year lease agreement for the rental of a first-floor office space in a new location in Montpelier, Vermont. The lease would run until December 31, 1999. Andy Dykstra made a motion to approve a one-year lease for a location on Barre Street in Montpelier, Vermont to house the Compact Commission Office. Motion seconded by Mary K. Kassler, passed by unanimous vote of the six State delegations.

The Committee recommended that the Commission approve the S.E.P. (Simplified Employee Pension) plan change discussed earlier which would result in the equalization of the SEP plan contribution through the end of the year (an additional expense of approximately $4,500 over the budgeted amount for employee benefits). Bobby Starr made a motion to equalize the S.E.P. contributions through the end of the year. Motion seconded by Aaron Briggs, passed by unanimous vote of the six State delegations. Commission and staff members who had recused themselves returned.

Final Decision on HEP-98-010 (in re Petition of Turner's Dairy, Inc.):

Mae Schmidle made a motion to enter into Executive Session to consider a final decision on HEP-98-010 (in re Petition of Turner's Dairy, Inc.) Motion seconded by Jacques Couture, passed by unanimous vote of the six State delegations. Ken Becker and Gordon Cook recused themselves from the discussion.

Commission returned to Regular Session. John Smith made a motion that having reviewed the facts and the law in the matter of the handler's exemption petition by Turner's Dairy HEP-98-010, the Commission should deny the petition. Motion seconded by Andy Dykstra, passed by unanimous vote of the six State delegations.

Mike Wiers said the Commission meetings for the upcoming three months would be as follows: December 16, January 13, and February 17.

The meeting adjourned at 2:54pm.

Respectfully submitted,

Mary K. Kassler

Secretary