S.F. 310 Section 1. Section 159.6, subsection 7, Code 2017, is 1 amended to read as follows: 2 7. Regulation and inspection of foods, drugs, and other 3 articles, as provided in Title V, subtitle 4 , but chapter 205 4 of that subtitle shall be enforced as provided in that chapter. 5 Except as expressly authorized in subtitle 4, the department 6 shall not regulate any of the following: 7 a. The production, processing, labeling, or marketing of 8 milk, if the milk is produced by a person operating a dairy 9 farm in compliance with section 192.145. 10 b. The manufacturing, labeling, or marketing of a milk 11 product or dairy product, if the milk product or dairy 12 product is manufactured by a person operating a dairy farm in 13 compliance with section 192.145. 14 Sec. 2. Section 191.2, subsection 5, unnumbered paragraph 15 1, Code 2017, is amended to read as follows: 16 All Except as provided in subsection 5A, bottles, 17 containers, and packages enclosing milk or milk products shall 18 be conspicuously labeled or marked with the following : 19 Sec. 3. Section 191.2, Code 2017, is amended by adding the 20 following new subsection: 21 NEW SUBSECTION . 5A. A person who operates a dairy farm as 22 provided in chapter 192 and who sells milk or a milk product 23 to an individual in compliance with section 192.145 is not 24 required to label or mark a container which contains the milk 25 or milk product. 26 Sec. 4. NEW SECTION . 191.9A Exception for on-farm sale of 27 dairy products. 28 A person who operates a dairy farm as provided in chapter 192 29 and who sells a dairy product to an individual in compliance 30 with section 192.145 is not required to label or mark a 31 container which contains the dairy product. 32 Sec. 5. Section 192.103, Code 2017, is amended to read as 33 follows: 34 192.103 Sale of grade “A” milk to final consumer —— 35 -1- LSB 1149XS (8) 87 da/nh 1/ 5

S.F. 310 impoundment of adulterated or misbranded milk. 1 1. Only grade “A” pasteurized milk and milk products 2 shall be sold to the final consumer, or to restaurants, soda 3 fountains, grocery stores, or similar establishments ; , except 4 in as follows: 5 a. In an emergency, the sale of pasteurized milk and milk 6 products which have not been graded, or the grade of which is 7 unknown, may be authorized by the secretary, in which case, 8 such products shall be labeled “ungraded”. 9 b. A person who operates a dairy farm may sell milk or 10 a milk product to an individual in compliance with section 11 192.145. 12 2. No person shall within the state produce, provide, sell, 13 offer, or expose for sale, or have in possession with intent 14 to sell, any milk or milk product which is adulterated or 15 misbranded; except, in an emergency, the sale of pasteurized 16 milk and milk products which have not been graded, or the grade 17 of which is unknown, may be authorized by the secretary, in 18 which case such products shall be labeled “ungraded”. 19 3. Any adulterated or misbranded milk or milk product 20 may be impounded by the secretary or authorized municipal 21 corporation and disposed of in accordance with applicable laws 22 or regulations. 23 Sec. 6. NEW SECTION . 192.144 Definitions. 24 As used in this chapter, unless the context otherwise 25 requires: 26 1. “Dairy product” means a product, other than a milk 27 product, in which milk is the principal ingredient at any 28 temperature and in either a manufactured or unmanufactured 29 state. To the extent that it is not classified as a milk 30 product, a dairy product includes but is not limited to butter, 31 cheese, cream, cottage cheese, ricotta cheese, kefir, or ice 32 cream. 33 2. “Manufacture” means to convert or condition personal 34 property by changing the form, composition, quality, or 35 -2- LSB 1149XS (8) 87 da/nh 2/ 5

S.F. 310 character of a product, and includes activities associated with 1 a creamery or cheese factory. 2 Sec. 7. NEW SECTION . 192.145 On-farm production, 3 processing, manufacturing, and marketing. 4 1. A person who operates a dairy farm may do any of the 5 following: 6 a. Produce milk at the dairy farm or process the milk at the 7 dairy farm, if the person does not sell the milk. Nothing in 8 this paragraph prevents the person from disposing of the milk 9 without receiving compensation. 10 b. Produce milk at the dairy farm or process the milk at 11 the dairy farm, if the person sells the milk to an individual, 12 regardless of whether the milk is unpasteurized or ungraded. 13 The milk must be sold to the individual on a retail basis and 14 not for resale. The person may deliver the milk or cause the 15 milk to be delivered to a location specified by the individual. 16 An individual who receives the milk shall not resell it. 17 2. A person who operates a dairy farm may manufacture a 18 milk product or dairy product at the dairy farm by using milk 19 produced at the dairy farm, if any of the following apply: 20 a. The person does not sell the milk product or dairy 21 product. Nothing in this paragraph prevents the person 22 from disposing of the milk product or dairy product without 23 receiving compensation. 24 b. The person sells the milk product or dairy product to 25 an individual, regardless of whether the milk product or dairy 26 product is unpasteurized or ungraded. The milk product or 27 dairy product must be sold to the individual on a retail basis 28 and not for resale. The person may deliver the product or 29 cause the product to be delivered to a location specified by 30 the individual. An individual who receives the milk product or 31 dairy product shall not resell it. 32 3. A person who operates a dairy farm shall not be otherwise 33 subject to regulation by the department for actions taken in 34 compliance with this section. Such regulation includes but 35 -3- LSB 1149XS (8) 87 da/nh 3/ 5

S.F. 310 is not limited to labeling requirements under chapter 19l or 1 licensing, permitting, or inspection requirements under this 2 chapter or chapter 194. 3 Sec. 8. NEW SECTION . 194.22 On-farm production, processing, 4 manufacturing, and marketing —— exception. 5 This chapter does not apply to any of the following: 6 1. The production, processing, labeling, or marketing of 7 milk, if the milk is produced by a person operating a dairy 8 farm in compliance with section 192.145. 9 2. The manufacturing, labeling, or marketing of a milk 10 product or dairy product, if the milk product or dairy 11 product is manufactured by a person operating a dairy farm in 12 compliance with section 192.145. 13 EXPLANATION 14 The inclusion of this explanation does not constitute agreement with 15 the explanation’s substance by the members of the general assembly. 16 BILL’S PROVISIONS. This bill provides that a person who 17 operates a dairy farm (operator) may produce and dispose of 18 the milk produced on the dairy farm, process such milk, or 19 manufacture a milk product or dairy product (product) from such 20 milk without state regulation under certain circumstances. 21 Generally, a “milk product” includes items such as cream, sour 22 cream, eggnog, or buttermilk for which temperature is an issue, 23 but may not include other dairy items such as butter or cheese. 24 The bill defines a “dairy product” as a manufactured item other 25 than a milk product in which milk is the principal ingredient. 26 The operator may sell the milk or product, regardless of 27 whether the milk or product is unpasteurized or ungraded, so 28 long as it is sold to an individual on a retail basis and not 29 for resale. The operator may also deliver the milk or product 30 to a location specified by the individual. A person purchasing 31 the milk or product is prohibited from reselling the milk or 32 product. The operator is also not subject to state regulations 33 governing the production, processing, labeling, or marketing 34 of milk or the manufacturing, labeling, or marketing of a milk 35 -4- LSB 1149XS (8) 87 da/nh 4/ 5

S.F. 310 product to the extent that the operator is acting in compliance 1 with the bill’s provisions. 2 BACKGROUND. Dairy production and the manufacture of milk 3 and dairy products are governed under federal and state law 4 including by the United States food and drug administration 5 (FDA) under 21 C.F.R. pt. 1240 and the department of 6 agriculture and land stewardship (DALS) under Code title V, 7 subtitle 4. Specifically, DALS regulates and enforces a 8 number of statutory provisions governing the production of 9 products, including the labeling of milk and milk products 10 (Code chapter 191), the production and marketing of milk and 11 products manufactured from milk (Code chapter 192), and the 12 grading of milk (Code chapter 194). This includes a number of 13 departmental rules (21 IAC, chs. 68-71). DALS also regulates 14 standards for dairy products (Code section 190.2 and 21 IAC ch. 15 71). DALS has adopted by reference the “Grade ‘A’ Pasteurized 16 Milk Ordinance”, a body of comprehensive regulations published 17 by the national conference on interstate milk shipments and the 18 FDA (Code section 192.102). Under state law, all milk must 19 be sold on the basis of grade (Code section 194.10) and only 20 grade “A” pasteurized milk and milk products can be sold to the 21 final consumer (Code section 192.103). Grade “B” milk may be 22 sold for manufacturing purposes (21 IAC 68.2). All dairy farms 23 selling grade “A” or grade “B” milk must be issued a permit (21 24 IAC 68.2) and are subject to inspection (21 IAC 68.12). 25 PENALTY. A person who violates the bill’s provisions is 26 guilty of a simple misdemeanor (Code section 189.21). A simple 27 misdemeanor is punishable by confinement for no more than 30 28 days or a fine of at least $65 but not more than $625 or by 29 both. 30 -5- LSB 1149XS (8) 87 da/nh 5/ 5