(Note: 27)

(Approved January 8, 2004)

AN ACT

To add a paragraph to subsection

(e) of Section 16 of Act No. 34 of June 11, 1957, known as the "Act to Regulate the Milk Industry", as amended, to establish the obligation to publish any determination that entails changes in the fixing of the maximum price to be paid for each quart of milk in a newspaper of general circulation.

STATEMENT OF MOTIVES

As provided in Act No. 34, of June 11, 1957, as amended, known as the "Act to Regulate the Milk Industry", the Administrator of the Office for the Regulation of the Milk Industry (ORIL, Spanish acronym) has the obligation of fixing the maximum prices to be paid for each quart of milk.

According to said Act, it is the responsibility of the ORIL Administrator to establish prices that are fair and reasonable that guarantee a pure and fresh milk market without unfavorably affecting production nor the production and supply sources. To this end, all cost factors involved in the production, processing and sterilizing of milk, must be considered including, but without limitation to, the cost of manpower, feed, transportation and distribution of milk and milk products. Likewise, the supply and demand for the main product and its by-products, the purchasing power of the community according to income and general business activity indexes, and other market conditions and economic factors that may affect the supply, demand or the value of milk or of its by-products must take into consideration.

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Through Act No. 27 of August 7, 1990, the "Milk Industry Act" was amended, establishing that at least once a year, as of the month of August, the ORIL Administrator shall review the price of milk and make the needed adjustments thereto, according to the raise or drop in the processing costs and operational expenses at all levels. Furthermore, perform exhaustive economic studies must be perform at least every four (4) years, to revise and maintain the price of fresh milk within a reasonable and equitable margin for the different sectors of the industry, to wit, the producers, processors, distributors of the product and the consumers in general.

Pursuant to the above, ORIL held Public Hearings on August 31, 2001 to review the price of milk and, as a result of such procedure, ORIL Administrator issued an Administrative Order and Resolution on January 30, 2002, establishing that in order to comply with the profit margin of processing plants, it was necessary to raise the price of milk by 1 cent at the consumer level, and to prevent that such increase would directly reflect on the different milk distribution on the consumer level, it was decided to re-structure the present price for fresh milk, in such a way that the Puerto Rican consumer would have different options to obtain this vital product at different prices, according to the container.

In this manner, with this restructuring, the consumer will pay as follows:

It was decided that in addition to conventional containers, other convenience containers (plastic), should be included, which because of an additional cost for processing, sealing, presentation and labeling, caused a change in its price at the consumer level. Said additional options are:

Plastic quart $1.13

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This last container, the 28 ounce plastic bottle, caused a negative public reaction because consumers deemed that they were paying more for a smaller amount of milk.

Said public controversy brought about the filing of House Resolution 2552 directing the Committee on Consumer Affairs to conduct an investigation on the alleged practice of selling milk in a 28 ounce bottle at the same price as a 32 ounce carton of milk and the possibility of granting broader powers to the Department of Consumer Affairs to intervene in similar situations which affect the consumer, related to the milk industry.

After the corresponding investigation was made, the Committee on Consumer Affairs determined the following:

1. That the public annoyance and the controversy over the alleged practice of selling milk in a 28 ounce bottle at the same price as milk in a 32 ounce carton arises from the consumer's lack of information on about the options that thus has at the time of purchasing fresh milk.
2. That, pursuant to the Resolution of January 30, 2002, issued by the ORIL Administrator, the public consumer has the alternative of choosing a convenience container or the conventional container, for which he/she pay practically the same or less money than what was paid before the re-structuring of the price and sale of milk.
3. That to protect consumers, the Resolution of January 30, 2002, issued by the ORIL Administrator, directs the processors to also provide a quart in a carton container in those commercial establishments where milk is sold in quarts or in 28 ounce plastic bottles, so that the consumer has all alternatives available. It is also established that if the carton quarts are not available, the consumer shall pay for milk in a plastic

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(convenience) container as follows: Plastic quart, $1.00, 28 ounce plastic bottle, .88 cents, instead of $1.13 and 1.00 when both alternatives are offered.

Pursuant to the results of the investigation performed, this Legislature deems it is necessary to amend Act No. 34 of June 11, 1957, known as "Act to Regulate the Milk Industry", so that, in harmony with the notice to public on the procedure of public hearings to review the price of milk, any determination that entails changes in the fixing of the maximum price to be paid for each quarter of milk, shall also be published in a newspaper of general circulation.

BE IT ENACTED BY THE LEGISLATURE OF PUERTO RICO:

Section 1.- A paragraph is hereby added to subsection

(e) of Section 16 of Act No. 34, of June 11, 1957, as amended, to read as follows: "Rules

(a) $\ldots$

(b) $\ldots$

(c) $\ldots$

(d) $\ldots$

(e) $\ldots$ Any determination by the Administrator, which pursuant to this subsection introduces changes in the price of milk, shall be published in a newspaper of general circulation in the Commonwealth of Puerto Rico for three (3) consecutive publications from the date that the corresponding Administrative Order or Resolution is issued.

(f) ..."

Section 2.- This Act shall take effect immediately after its approval.

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CERTIFICATION

I hereby certify to the Secretary of State that the following Act No. 27 (H.B. 3991) of the $6^{ ext {th }}$ Session of the $14^{ ext {th }}$ Legislature of Puerto Rico:

AN ACT to add a paragraph to subsection

(e) of Section 16 of Act No. 34, of June 11, 1957, known as the "Act to Regulate the Milk Industry", as amended, to establish the obligation to announce, in a newspaper of general circulation, any determination that brings about changes in the setting of maximum prices to be paid for each quart of milk, has been translated from Spanish to English and that the English version is correct.

In San Juan, Puerto Rico, today $10^{ ext {th }}$ of May of 2005.

Luis E. Fusté-Lacourt Director