California Food and Agricultural Code § 62521

For purposes of this chapter, the following terms have the following meanings: (a) (1) “Acceptable security” means a surety bond from an admitted insurer, deposits of government securities, a letter of credit, or other form of performance guarantee acceptable to the secretary and meeting the requirements as acceptable security pursuant to law. Any instrument used as acceptable security shall contain provisions the secretary may prescribe, shall have an effective life of no less than two years, shall name the secretary as the beneficiary of the instrument, shall be clean and irrevocable if the security is a letter of credit, shall provide that the secretary may draw upon it up to the total amount in the event of the handler’s payment default, and, except as otherwise provided in paragraph (3), shall be verified to the secretary as being in effect and complying with the provisions of this chapter at the end of every six-month interval following the date on which a handler originally posts the instrument. Except as provided in paragraphs (2) and (3), acceptable securities provided to the secretary shall not be released by the secretary unless the handler’s average monthly purchases, as determined annually by the secretary, fall below thirty million dollars ($30,000,000) or the fund cash, whichever is higher. Any interest accrued by the instrument shall be the property, and for the benefit, of the handler posting the instrument. (2) Subject to the provisions of this chapter, a handler who has posted an acceptable security shall have the right to replace that instrument with a new acceptable security meeting the requirements of this chapter at the end of every six-month interval following the date on which the handler originally posted the instrument. The secretary shall release the issuer of any acceptable security from all past, present, or future obligations secured by the acceptable security upon the secretary’s acceptance of replacement security meeting the requirements of this chapter and the secretary shall then provide written confirmation to the issuer of the original acceptable security that an acceptable replacement security had been provided. (3) Upon receipt of an affidavit confirming that the amount paid under an acceptable security posted pursuant to this chapter was equal to the total amount of that instrument, the secretary shall release the issuer of that acceptable security from all past, present, and future liability. Upon receipt of an affidavit confirming any other amount paid by an issuer under an acceptable security posted pursuant to this chapter, the secretary shall release the issuer of that security to the extent of the issuer’s payment. (b) “Board” means the Milk Producers Security Trust Fund Board. (c) “Eligible milk” means milk, whether pooled or nonpooled, that meets both of the following criteria for coverage by the fund, regardless of whether the milk meets other criteria necessary for coverage: (1) The criterion in paragraph (3) of subdivision (a) of Section 62580, relating to milk being produced and delivered within the state. (2) The criterion in paragraph (7) of subdivision (a) of Section 62580, relating to a producer not having a beneficial ownership interest in the handler to whom shipments are made. (d) (1) “Federal Milk Marketing Order” means the Federal Milk Marketing Order established by the final rule, effective October 17, 2018, published by the United States Department of Agriculture in Volume 83 of the Federal Register, beginning on page 26547, on Friday, June 8, 2018. (2) References in this chapter to a section of the Federal Milk Marketing Order are references to that section of Part 1051 (commencing with Section 1051.1) of Title 7 of the Code of Federal Regulations. (e) “Fund” means the Milk Producers Security Trust Fund created pursuant to Section 62506. (f) “Fund cash” means the combined value of the security charges collected pursuant to Section 6

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