1. (a) For the purpose of determining whether or not a handler has properly paid producers for milk purchased, all payments shall be applied first to bulk milk sales for all amounts due and payable on the date the payment is made, except in the following situations:

   1. (1) If the handler and producer have historically engaged in a pattern of allocating payments in a manner different from that described above, and that pattern is documented in writing, then payments may be allocated in accordance with that pattern, as long as the execution of the documentation by both parties is simultaneous with the beginning of the pattern of allocating payments; or,
   2. (2) If, simultaneously with payment, the handler delivers to the producer a written notice or remittance device which notifies the producer that the payment is for a specific invoice, delivery, commodity, expense, allowance or other charge.
2. (b) Payments by a handler to a producer for the purposes of any action by the Secretary associated with a surety bond or the Fund shall be credited first to interest and then to the remaining unpaid principal. Upon the payment of all outstanding interest, principal payments shall be applied first to the amount due for the oldest unpaid delivery, and then successively, in sequence, to the amounts due for the next oldest unpaid delivery.

Note: Authority cited: Sections 407 and 61891, Food and Agricultural Code. Reference: Sections 62185, 62190, 62501 and 62623, Food and Agricultural Code.

History

1. New section filed 10-6-2004; operative 11-5-2004 (Register 2004, No. 41).