(a) Except as otherwise provided in this chapter, milk shipped by a producer to a handler who meets all of the following criteria shall be considered for coverage pursuant to this chapter:

(1) A valid contract between the producer and handler pursuant to Chapter 1 (commencing with Section 61310) or Chapter 2 (commencing with Section 61801) has been filed with the secretary before the date the milk was shipped, unless the shipment was made in the first five days after the contract was executed. Filing may be accomplished by providing the department electronic notification of the contract.

(2) The handler was licensed and bonded as required by Chapter 1 (commencing with Section 61301) or Chapter 2 (commencing with Section 61801) when the contract was filed with the secretary.

(3) The milk was produced within the state and delivered to a plant within the state.

(4) The secretary has not issued a prior notice that the shipments would not be covered by the fund.

(5) The shipment was not made under a custom processing arrangement with the producer retaining title.

(6) (A) The producer shipping the milk had a direct contract with the handler. Milk shipped to a handler under a contract held by intermediaries, brokers, or agents is not covered.

(B) In the case of a nonprofit cooperative association, only the milk of its members shipped under the contract is covered. Notwithstanding subparagraph (A), milk shipped by a nonprofit cooperative association to a handler under a contract held by another nonprofit cooperative association, as verified by the secretary, is covered.

(7) (A) The producer does not have a beneficial ownership interest in the handler to whom shipments were made.

(B) For purposes of this paragraph, the term “beneficial ownership interest” means the holding of any ownership share in the handler to whom shipments are made, or, if the handler is a publicly traded company, an ownership share of more than 1 percent.

(8) The producer is in compliance with this chapter.

(b) Milk shall not be excluded from coverage pursuant to this chapter due to its pooled or nonpooled status.

(Amended by Stats. 2019, Ch. 304, Sec. 33. (AB 590) Effective January 1, 2020.)