Procedures

PURPOSE: In order to implement the remedies afforded the director by the Act and enable the director to obtain information necessary for enforcement of the Act, it is necessary to give the director the means necessary to gain price and cost information from processors, distributors and retailers of milk products. This rule is designed to enable the director to acquire that information. (1) Each processor, within thirty (30) days (January 9, 1976) of the effective date of these rules (December 10, 1975), shall provide the director with a list indicating the name and business address of each distributor of the milk products of the processor. Each person desiring to be licensed as a processor shall provide a list of distributors at the time application for a processor's license is made. Each processor shall notify the director, in writing, within forty-eight (48) hours of any addition to or deletion from the distributors handling the processor's milk products. (2) Every processor, distributor and nonprocessing retailer of milk products shall make and retain for twenty-four (24) months records showing all prices charged or offered by him/her for milk products in this state. If different prices are charged or offered in different communities or to different customers, separate records shall be kept which indicate all such price differentials. Records of any discount schedules shall be maintained, the records to include the effective dates of those schedules, the amounts of any discounts allowed and the terms of eligibility for the documents. (3) Each processor, distributor and nonprocessing retailer shall make and retain for twenty-four (24) months product cost information which enables the processor, distributor or nonprocessing retailer to determine the cost of any milk product by a reasonable rule, fairly allocating the price paid for raw materials and the cost of doing business among all products sold by the processor, distributor or nonprocessing retailer. Marginal cost analysis, that is, cost computation which allocates all overhead cost to some units of production and assigns only the actual cost of raw products, packaging and other marginal costs to subsequent units of production, is not acceptable under this rule. (4) Each processor and distributor shall make and retain for twenty-four (24) months records of transportation and delivery costs to all customers. These costs, at the option of the processor or distributor, may either be averaged among all purchasers of milk products or they may be fairly prorated among different purchasers so as to reflect additional cost or cost savings attributable to distance of delivery or volume of delivery. Marginal cost analysis, that is, cost computation which allocates all transportation or delivery cost to existing customers and only marginal cost to additional customers, is not acceptable under this rule. (5) The director of agriculture and agents shall be furnished, upon request in writing or in person, any record required to be kept in sections (2)–(4) of this rule. (A) Every processor, distributor and retailer shall furnish, by the end of the next business day after receipt of a request, records of any requested prices and discounts schedules in effect at the time of the request. All retailers shall furnish, within one (1) business day after receipt of a request, records showing the price they pay for any milk product at the time of the request. (B) Every processor, distributor and retailer shall furnish current cost information (other than the price paid by a retailer for milk products as provided in subsection (5)(A) of this rule) upon demand within seven (7) days of the date of request. (C) All processors, distributors and retailers shall furnish, within seven (7) days of the date of request, price or cost information concerning any period less than thirty (30) days prior to the date of request. (D) Any processor, distributor or retailer shall furnish, within fourteen (14) days after the date of the request, any price or cost information concerning a period more than thirty (30) days prior to the date the request was made. (6) Any processor, distributor or nonprocessing retailer who sells milk below cost in order to meet the equally lower price of competition shall furnish the director, in writing, the identity of the person whose offer s/he is meeting, the identity of the person(s) to whom the offer was made, the date at which the offer was made or at which it came to the attention of the processor, distributor or nonprocessing retailer seeking to match the offer and the terms of the offer as understood by the processor, distributor or nonprocessing retailer. Failure to deposit this report in the United States mail by the end of the next business day after the time the first sale below cost is made by a processor, distributor or nonprocessing retailer shall be considered prima facie evidence that no competitive offer was made and that the sale is an illegal sale below cost. (7) All information gathered by the director or his/her agents pursuant to sections (5) and (6) of this rule will be kept confidential and will not be made available to the public because that information generally will deal with pending investigations of possible violations of the Act. (8) On the first Monday in May of each year, the director shall conduct a hearing at the offices of the Department of Agriculture in Jefferson City, Missouri for the purposes of setting the amount of the license fee for manufacturing and processing plants and the amount of the licensing fee, if any, for distributors. (A) At least fourteen (14) days prior to the date of the hearing, all persons who are currently licensed to operate processing or manufacturing plants and all persons who anticipate applying for a license to operate a plant for the subsequent year, whether the plant is located inside or outside Missouri, shall file with the director the following information for the calendar year ending on December 31 of the preceding year for each plant: 1. Name; 2. Corporate headquarters; 3. Locations of plant; 4. Gross poundage of raw milk purchased; 5. Total pounds used to manufacture ice cream, cheese, dry milk and other products not included in the definition of milk products in 2 CSR 90-38.010(12). This figure does not have to be itemized as to products; 6. Pounds used to manufacture cottage cheese; 7. Pounds spoiled or wasted; 8. Pounds of milk products (as defined in 2 CSR 90-38.010(12)) sold in Missouri; 9. Pounds of milk products (as defined in 2 CSR 90-38.010(12)) sold outside Missouri, specified as to state of sale; and 10. The place of sale, as used in paragraphs (8)(A)8. and 9. of this rule shall be the place of ultimate retail sale and not necessarily the place where the licensee transfers title to the milk. (B) At least fourteen (14) days prior to the date of the hearing, all persons who are currently licensed as distributors and all persons who anticipate applying for licenses as distributors of milk products in the state shall file with the director the following information: 1. Name; 2. Name of company(ies) to be distributed for in the coming year; 3. Name of company(ies) distributed for in previous calendar year; and 4. Volume of poundage of milk products distributed in Missouri in previous year, itemized as to company. (C) On the date of the hearing the director of the Division of Weights and Measures of 6 the Department of Agriculture shall present to the director— 1. Information as to the financial needs and resources of the department applicable to enforcement of the Act; and 2. A summary of the information filed with the director pursuant to subsections (8)(A) and (B) of this rule. Any person may file additional information or make any statement at the hearing as to the truth, falseness or incompleteness of the information given the director by the director of the Division of Weights and Measures or by any other person pursuant to this rule. (D) On the date of the hearing, any person may bring any other matter concerning the enforcement of the Act to the attention of the director or may comment on any enforcement policy of the department. (E) At the conclusion of the hearing or within fourteen (14) days after the hearings, the director shall fix the amounts of the fees provided for in the act at levels as will produce not more than an amount necessary for proper enforcement of the Act. (9) On or before the tenth day of June of each year, every person who intends to operate a milk processing or manufacturing plant in this state or who intends to operate a milk processing or manufacturing plant outside this state, the products of which are sold in this state, shall file an application for a license with the director which shall include all information specified in subsection (8)(A) of this rule, and which shall include a check payable to the Department of Agriculture, state of Missouri, in an amount equal to the license fee for processors set by the director times the hundred-weight of milk products (as defined in 2 CSR 90-38.010(12)) sold in Missouri. The place of sale, for purposes of computing license fees, shall be the place of ultimate retail sale. (10) On or before the tenth day of June of each year, every person who intends to act as a distributor of milk products within this state or who intends to distribute milk products within this state shall file an application for a license which shall include all information specified in subsection (8)(B) of this rule, and which shall include a check payable to the Department of Agriculture, state of Missouri, in an amount equal to the license fee for distributors set by the director. (11) The director shall issue licenses to all persons filing satisfactory applications who are not eligible for licensing on July first of each year. Any person who has filed an application pursuant to section (9) or (10) of this rule who has not received a license on July first may continue to operate as if s/he had a license unless and until receiving notice that his/her application for a license had been denied following a hearing held in pursuant to section 416.490 of the Act. (12) The issuance of a license shall not waive the right of the director to subsequently suspend or revoke the license or to take appropriate actions to recover additional license fees owed the state. (13) The director may request information from any licensee or license applicant as is believed by the director to be necessary to determine the accuracy of any license application or the eligibility of any applicant to be licensed. (14) Any person at any time may request that one (1) or more of these sections be amended or revoked or that additional sections be promulgated. The director, at his/her discretion, may order hearings to be held with regard to any such requests. (15) Nothing in this rule should be construed to waive or alter any statutory provision or procedure provided in the Act, and the director retains the right to take such actions and conduct such investigations as are allowed by the Act. AUTHORITY: section 416.460, RSMo Supp. 1993.* This rule was previously filed as 2 CSR 40-3.030 Original rule filed Nov. 26, 1975, effective Dec. 10, 1975. Amended: Filed July 10, 1984, effective Oct. 11, 1984. *Original authority 1959, amended 1993. Foremost-McKesson, Inc. v. Davis, 488 SW2d 193 (Mo. banc 1972). Four (4) milk processors and distributors brought this action for declaratory judgement and injunction relief from Unfair Milk Sales Practices rule. Appellants have the burden to plead facts to show the invalidity of the rule. In view of the broad statutory authority granted the commissioner of agriculture, the rule must be regarded as prima facie reasonable. Only in a clear case will the courts interfere on the ground of unreasonableness. The burden is upon those challenging the rules to show that they bear no reasonable relationship to the legislative objective. Administrative rules should be reviewed in light of the evil they seek to cure and are not unreasonable merely because they are burdensome. They must be so at odds with fundamental principles as to be mere whim or caprice.