§ 258-b. Prompt payment for milk purchases; security funds; bonding of milk dealers. 1. Scope of coverage. (a) For purposes of this section, a cooperative corporation or association of producers shall be deemed to be a producer and not a dealer with respect to the milk of its producer members under contract with such cooperative, and shall be deemed to be a dealer with respect to milk purchased or received from non-member producers.

(b) Notwithstanding any other provision of this section, sales or other transfers of milk between cooperatives shall not be subject to bond or assessment under the security provisions of this section.

(c) Any corporation or association of persons engaged in the production of agricultural products which is operated for the mutual benefit of its members and which qualifies as such under the provisions of the Capper-Volstead Act shall be deemed to be a cooperative corporation or association for purposes of this section.

(d) Upon an application of a dealer, and pursuant to regulations promulgated to effectuate the provisions of this paragraph, a dealer that purchases less than one hundred thousand pounds of milk per month shall not be subject to bond or assessment under the security provisions of this section when the commissioner waives such provisions. Notwithstanding such waiver, a claim may be filed and pursued against such a dealer as provided for in this section; and any claim that is certified for payment by the commissioner shall be paid from funds derived from license fees assessed upon milk dealers pursuant to section two hundred fifty-eight-a of this article.

The defaulting dealer shall be liable for reimbursement to the commissioner for the value of the claim in the same manner as if the claim was paid out of the milk producers security fund as provided for in paragraph (e) of subdivision five of this section.

2. Prompt payment for milk. (a) Every milk dealer shall: on or before the last day of each month, or such date of payment as established by a federal milk marketing order regulating the marketing of milk in the state or a state milk marketing order promulgated pursuant to section two hundred fifty-eight-m of this article, whichever is earlier, pay for all milk received from producers during the first fifteen days of such month based upon a price or formula as determined by the commissioner and every such milk dealer shall, on or before the twentieth day of each month, or such date of payment as established by a federal milk marketing order regulating the marketing of milk in the state or a state milk marketing order promulgated pursuant to section two hundred fifty-eight-m of this article, whichever is earlier, pay the balance owed producers for milk received during the preceding month.

(b) Notwithstanding any other provision of this section, the commissioner may extend the time for payment from dealers with respect to purchases from producers of non-grade A milk for up to one hundred twenty days after the last day of the month in which the milk was received, provided such producers have requested the extension in writing in such manner as may be acceptable to the commissioner.

(c) Any producer who does not receive payment for milk sold or delivered to a milk dealer, within the time prescribed in paragraph (a) of this subdivision, shall promptly notify the commissioner of such fact.

(d) All wholesale purchasers of milk buying from a licensed milk dealer shall provide not less than seven days' notice to their milk dealer supplier before changing suppliers. All wholesale purchasers shall make payment in full to their milk dealer supplier or satisfy their debts by an appropriate surety bond posted or other legal instrument of payment provided, less any legal rebates, discounts, or other credit earned, before changing suppliers. The provisions of this paragraph shall apply only if the milk dealer has satisfied all substantial pre-existing contractual agreements with the wholesale purchaser prior to final delivery. For the purposes of this paragraph, the definition of the term "wholesale purchaser of milk" shall not include public institutions.

(e) The commissioner may, if he or she finds it is necessary, promulgate after hearing additional rules and regulations prescribing the period within which stores, restaurants, hotels, public institutions and other wholesale purchasers of milk shall pay for milk purchased or received from a licensed dealer. No milk dealer or cooperative shall sell or deliver milk, except on a cash on delivery basis, to any wholesale purchaser who has failed to make full payment within the period prescribed in regulations promulgated by the commissioner pursuant to this paragraph.

3. Payments to security funds. (a) Fund and filing of surety bonds. Any milk dealer, except a cooperative, who has not filed a bond or other security in full satisfaction of the requirements of subdivision six or seven of this section and who buys, receives or otherwise handles milk received from producers, shall, unless entitled to offsetting credits under paragraph (b) of subdivision four of this section, pay monthly to the commissioner during each fiscal year an amount up to one and one-half tenths of one percent of a price per hundredweight of milk as determined by the commissioner or the average statistical uniform price per hundredweight of milk for the previous calendar year, as determined and announced by the commissioner on or before the thirty-first day of March of each year, on each hundredweight of all such milk purchased, received or handled. Such payments by dealers shall be deposited in the milk producers security fund established by subdivision four of this section.

(b) Whenever the commissioner determines that the balance in the milk producers security fund exceeds fifteen percent of the value of milk purchases covered by the fund, the maximum rates established by paragraph (a) of this subdivision shall be reduced from one and one-half tenths of one percent to one-tenth of one percent.

(c) (1) In addition to making such payments for deposit in the milk producers security fund, any such dealer shall file with the commissioner a mandatory minimum surety bond, executed by a surety company authorized to do business in this state and approved by the commissioner, conditioned for the prompt payment of all amounts due to producers for milk sold or consigned by them to such dealer during the license year and all amounts due to the equalization or producer settlement fund of any order promulgated by the commissioner pursuant to section two hundred fifty-eight-m or two hundred fifty-eight-n of this article or to the equalization or producer settlement fund of a federal milk marketing order. The bond shall be twelve times the amount equal to (i) the value of milk purchased or received from producers in the two consecutive months during the preceding twelve months in which the dealer purchased or received the highest aggregate value of milk divided by the number of days in those two months and (ii) the amount owed in the same two-month period to the equalization or producer settlement fund, divided by the number of days in such months.

(2) Upon an application of a dealer and pursuant to regulations promulgated to effectuate the provisions of this paragraph, the commissioner shall examine the financial condition of the applicant and may exempt the applicant from the provisions of this paragraph if the commissioner finds that the granting of the application would not materially affect security for producers or the viability of the milk producers security fund; provided however, that for any applicant where the amount calculated in subparagraph one of this paragraph multiplied by forty-three is less than two hundred fifty thousand dollars, the commissioner shall exempt such applicant from the provisions of this paragraph unless the commissioner finds that the granting of the application would materially affect security for producers. Rules and regulations to effectuate the provisions of this subparagraph shall specify the criteria to be used in reviewing the applicant's financial condition, the viability of the milk producers security fund, and the effect of the proposed exemption on the security afforded to producers delivering milk to the applicant.

(d) The commissioner may require a milk dealer, in addition to making payments to the producers security fund and filing such mandatory minimum surety bond, to execute and file such further additional surety bond or other security as he may deem acceptable and sufficient, at any time the commissioner finds (1) that the milk dealer has insufficient property located within this state upon which to levy, pursuant to paragraph (e) of subdivision five of this section, in the event of a default by a dealer making two monthly payments for forty days purchases of milk, or (2) that the dealer's participation in the fund and filing such mandatory minimum surety bond will not otherwise afford adequate security to all producers protected by the fund.

4. Milk producers security fund. (a) There is hereby established in the joint custody of the comptroller and the commissioner of taxation and finance a fund to be designated as the milk producers security fund. The commissioner shall deposit all monies received from milk dealers pursuant to paragraph (a) of subdivision three hereof into the fund. The funds so received and deposited in such milk producers security fund shall not be deemed to be state funds. The comptroller shall be empowered to invest such funds pursuant to § 98-a of the state finance law consistent with the purposes of this section. The commissioner is hereby authorized to draw upon such funds, in his or her discretion, to purchase credit insurance for the benefit of the milk producers security fund. The expense of administering the provisions of the milk producers security fund and of administering subdivision one hereof shall be paid from the fund to the commissioner on vouchers certified by the commissioner with the approval and consent of the director of the budget. Such payments from the fund shall not exceed two and one-half percent of the total fund or one hundred thousand dollars per annum, whichever is greater, provided that, upon approval of the director of the budget, the actual costs incurred by the department in carrying out its responsibilities with respect to such provisions of this article may be assessed against any monies available to the fund upon appropriation by the legislature. The commissioner shall make an annual report of the receipts to and disbursements from the fund, including the cost of administration of the fund, which report shall be made available to each milk dealer and to any other person having an interest in the fund. A copy of such report shall be forwarded to the director of the division of the budget, the chairperson of the senate finance committee and the chairperson of the assembly ways and means committee.

(b) After the milk producers security fund shall have equaled twelve million dollars or such greater or lesser amount, up to fifteen percent of the value of milk purchases to be covered by the fund, calculated upon the basis of the average value of the milk covered by the fund during the preceding calendar year, as the commissioner may determine is sufficient to protect the interests of producers, he or she shall administer the fund in the manner prescribed herein. Periodically, but at least twice each year, he or she may credit each milk dealer with an amount which bears the same relationship to the total money in the fund as that dealer's payments to the fund bear to the total payments to the fund by all dealers. If the amount so credited to a milk dealer is greater than that due from such milk dealer, the excess shall be paid or credited to such milk dealer by the comptroller. No such credits or payments shall be made unless the commissioner finds that the fund can be maintained at a level which is sufficient to protect the interests of producers. Any such credit to a milk dealer's account shall not be considered as payments to the fund in computing further credits of such nature.

(c) If a milk dealer participating in the security fund elects to terminate his or her participation therein, he or she shall give notice in writing to the commissioner six months prior to the expiration of the license year and file a surety bond or other security on the first day of the second month before the end of the license year. A milk dealer may thereupon apply for the return of his or her pro rata share of the monies in the security fund, less administrative costs, based upon his or her payments to the fund. Upon being satisfied that the milk dealer is not in default in any payments to producers or cooperatives and upon renewal of the license, the commissioner shall authorize the comptroller to pay to such milk dealer his or her pro rata share in up to six equal monthly payments.

(d) If a milk dealer who participated in the milk producers security fund ceases to do business as a milk dealer or sells or transfers his or her business to another milk dealer, he or she may apply for the return of his or her pro rata share or assign his or her interests to the buying dealer with the approval of the commissioner.

(d-1) The commissioner shall employ every reasonable effort to identify and locate all persons entitled to receive unclaimed pro rata shares of former security fund participants. In addition, the commissioner shall for a period of five years after identifying any person's unclaimed share of one hundred dollars or more, or until the amount due is claimed, whichever is sooner, publish such person's name and notice of his entitlement in a newspaper of general circulation in every county where the commissioner knows or has reason to believe such person maintained a principal office. Notwithstanding any provision of the abandoned property law, the pro rata shares of former security fund participants which remain unclaimed for five years or more shall remain in the producer security fund for use as set forth in this subdivision and subdivision five of this section.

(e) Any milk dealer who first elects to participate in the milk producers security fund shall make an initial payment to the fund, at the rate most recently announced by the commissioner, pursuant to subdivision three of this section, for milk purchased, received or handled from producers during the six months immediately preceding the date that notice of such election is given the commissioner, pursuant to subdivision ten of this section. Upon the payment of the initial deposit into the fund and filing of the mandatory minimum surety bond, as required herein, a milk dealer electing to participate in the fund may apply to the commissioner for termination or adjustment of an existing bond or the return or adjustment of any existing alternative security filed with the commissioner. If there have been no prior purchases, receipts or handling of milk by the dealer, such initial payment and the amount of such bond shall be based upon an estimate of the purchases, receipts or handling of milk by such dealer for the first six months following entry into the fund. After the first six months, the commissioner may adjust such bond and initial deposit so that the amount of the initial deposit and bond are based upon the actual deliveries.

5. Claims against mandatory minimum surety bond and milk producers security fund. (a) If the commissioner has reason to believe that a licensed milk dealer who is participating in the milk producers security fund has defaulted in making payments for milk to producers, the commissioner shall give reasonable notice to the producers believed to be affected to file verified claims and may fix a reasonable time within which such claims must be filed. Upon learning of such default, the commissioner shall immediately examine the records of the defaulting dealer and shall identify the amounts which are reasonably estimated to be owed to producers. Within sixty days of the receipt of a claim by a producer and on the basis of such estimates, the commissioner may authorize the comptroller to pay any such producer up to seventy-five percent of such estimate. In connection with such payment, the commissioner may make provisions for the recovery for the benefit of the fund of any payments made pursuant to this paragraph.

(b) No claims against the producers security fund shall be allowed for: (1) sales of milk to dealers not licensed by the state of New York, or (2) sales of milk by a producer to a milk dealer subsequent to its failure to pay within the time periods prescribed in subdivision two of this section, where the commissioner finds, after due notice and opportunity of hearing, that such extension of credit, whether direct or indirect, to such milk dealer by the producer did not constitute a reasonable exercise of business judgment, or (3) the value of milk produced on farms not located in New York state. Claims shall be limited to: (1) the price the claimant was required to be paid pursuant to the milk marketing order under which the milk was pooled, if the claimant did not pool the milk, or (2) the value of the milk as determined by the commissioner pursuant to provisions of the milk marketing order under which the milk was pooled, if the claimant pooled the milk, or (3) such other price as determined by the commissioner as appropriate for milk not pooled under a milk marketing order, and in no event shall a claim be allowed for deliveries of milk in excess of the amount owed for milk sold or delivered within the first forty consecutive day period for which payment was not received from a dealer. Claims filed by a market administrator may be allowed for amounts owed by a dealer to a producer settlement or equalization fund of an order promulgated under section two hundred fifty-eight-m or two hundred fifty-eight-n of this article, or to a producer settlement or equalization fund of a federal milk marketing order under which the milk is pooled.

(c) The commissioner shall examine the claims so filed, determine after hearing upon reasonable notice to the claimant and to the defaulting dealer the amount due upon such claims, and certify the amount due each claimant, provided, however, that no hearing shall be required with respect to a claim in which the defaulting dealer does not dispute liability and the claimant and defaulting dealer agree and stipulate to the amount found by the department to be payable on said claim. In determining the amount payable on any claim against a surety bond or the milk producers security fund, the commissioner may allocate any payments for milk made by a milk dealer to a claimant subsequent to its failure to pay within the prescribed time period, to the earliest debt owed such claimant by the milk dealer. Any amounts determined to be payable on a claim will be chargeable first against the mandatory minimum surety bond and any additional surety bond or other security filed pursuant to subdivision three of this section. In the event the amount of the mandatory minimum surety bond and any additional surety bond are not sufficient to pay the amount owed the producers for the deliveries of milk made in the first forty consecutive days for which payment was not received from a dealer, a claim against the producer's security fund may be allowed in an amount not to exceed the difference between the amount recoverable on such bonds, and the amount owed for milk delivered in such applicable period.

(d) The commissioner's determination certifying the amount due each claimant shall be final unless the defaulting milk dealer or the claimant shall institute a proceeding pursuant to Article 78 of the civil practice law and rules within thirty days from the date of personal service of a copy of the written determination upon the milk dealer and producer affected thereby. If after the expiration of the thirty day period the commissioner's determination has not been stayed by the supreme court in a proceeding instituted to review it, the commissioner shall bring an action on the bond or bonds and proceed to obtain from any other security filed funds with which to pay the claims and, to the extent that such funds are insufficient to pay the amount due, direct the comptroller to pay the claimants from the moneys available in the milk producers security fund. For the purposes of any action brought on a bond, the commissioner's determination shall be presumptive evidence of the facts stated therein.

(e) If any claim is paid from the milk producers security fund, the defaulting dealer shall be liable to the commissioner for the benefit of the fund for the amount of claims so paid. After service by first class mail upon the defaulting dealer of the commissioner's certification of payment of a claim from the fund for which the dealer has been found liable to the claimant, the commissioner may issue a warrant under seal of the department directed to the sheriff of any county of the state commanding him to levy upon and sell the real and personal property of the defaulting dealer, found within his county, for the payment of the amount of such claim with interest and the cost of executing the warrant, and to return such warrant to the commissioner and pay to him the money collected by virtue thereof within sixty days after the receipt of such warrant. The commissioner may file with the clerk of any county a copy of such warrant, and thereupon the clerk shall enter in the judgment docket, in the column for judgment debtors, the name of the defaulting dealer designated in the warrant, and in appropriate columns the amount of the dealer's liability to the commissioner for claims, interest and costs, and the date when such copy is filed. Thereupon the amount of such warrant so docketed shall become a lien, relating back to and deemed perfected as of the date of the dealer's earliest default in payment to producers as determined by the commissioner, upon and shall bind the real and personal property and chattels real of the person against whom it is issued in the same manner as a judgment duly docketed in the office of such clerk. The said sheriff shall thereupon proceed upon the same in all respects, with like effect, and in the same manner prescribed by law in respect to executions issued against property upon judgments of a court of record, and shall be entitled to the same fees for his services in executing the warrant, to be collected in the same manner. Upon such filing of a copy of a warrant, the commissioner shall have the same remedies to enforce the dealer's liability as if he had recovered judgment against the dealer for the amount of the warrant.

(f) In the event that the surety company who shall have executed a bond for a milk dealer shall fail to make prompt payment of all amounts due producers for milk sold or consigned by them to such milk dealer during the license year and all amounts due to the equalization or producer settlement fund of any order promulgated by the commissioner pursuant to section two hundred fifty-eight-m or two hundred fifty-eight-n of this article such surety company shall, in addition to making such payment on the bond, pay interest at the rate provided for in section 5-501 of the general obligations law on the amounts so owed from the date of the claim together with reasonable attorneys' fees and court costs.

6. Surety bonds. (a) Each milk dealer who buys, receives or otherwise handles milk received from producers may execute and file with the commissioner a surety bond in lieu of participation in the milk producers security fund and the filing of a surety bond or bonds pursuant to subdivision three of this section. The bond shall be executed by a surety company authorized to do business in this state and shall be approved by the commissioner. The bond shall be conditioned for the prompt payment of all amounts due to producers for milk sold or consigned by them to such milk dealer during the license year and all amounts due to the equalization or producer settlement fund of any order promulgated by the commissioner pursuant to section two hundred fifty-eight-m or two hundred fifty-eight-n of this article or to the equalization or producer settlement fund of a federal milk marketing order. Additionally, the bond shall make provisions for an advance payment pursuant to subdivision nine of this section.

(b) The bond shall be in an amount equal to (1) the value of milk purchased or received from producers in the two consecutive months during the preceding twelve months in which the dealer purchased or received the highest aggregate value of milk, divided by the number of days in those two months and multiplied by forty, and (2) the amount owed in the same two-month period to the equalization or producer settlement fund of a state or federal milk marketing order, divided by the number of days in such months and multiplied by forty.

7. Alternative security. Each milk dealer buying milk from producers may in lieu of filing a surety bond pursuant to subdivision three or six of this section provide an equal amount of protection for the producers from whom he or she purchases or receives milk by filing an irrevocable letter or letters of credit for the account of the milk dealer authorizing the commissioner to draw on a bank or trust company or banks or trust companies authorized to do business in the state of New York. Such letter or letters shall contain such terms and conditions as the commissioner may require. Additionally, the irrevocable letter of credit shall make provisions for an advance payment pursuant to subdivision nine of this section.

8. Additional bond or alternative security. Whenever the commissioner shall determine that the value of milk purchased or received from producers by a dealer who is not participating in the producers security fund has increased, or that such increase may reasonably be anticipated, so that the total amount of security does not comply with the formula set forth in subdivision six hereof, as applied to any consecutive two month period during the current year, the commissioner shall require such additional surety bond or securities in lieu thereof as will afford producers the protection intended by this section.

9. Claims against bond or alternative security. Claims by producers against a dealer who had filed a bond or alternative security shall be processed by the commissioner in the same manner as is provided in subdivision five hereof with respect to claims against the producers security fund and such claims shall be subject to the same limitations. Upon receiving a claim against a dealer who had filed a bond or alternative security, the commissioner shall immediately examine the records of the defaulting dealer and shall identify the amounts which are reasonably estimated to be owed to producers. Within sixty days of the receipt of a claim, and on the basis of such estimates, the commissioner is authorized to pay any such producer up to fifty percent of such estimate and proceed to obtain from such security the funds with which to pay any advances on the claims. In connection with such payment, the commissioner shall make provisions for the recovery of any payments made pursuant to this subdivision. The commissioner's determination certifying the amounts due claimants shall be subject to judicial review in the same manner and subject to the same limitations. In the case of a dealer who has filed alternative security, the commissioner shall proceed to obtain from such security the funds with which to pay the claims. If recovery upon the alternative security is not sufficient to pay all claims, the amount recovered shall be divided pro rata among claimants. In the case of a dealer who has filed a surety bond, the commissioner may bring an action on the bond, and for the purposes of such action his determination certifying the amounts due shall be presumptive evidence of the facts therein stated. In the event that recovery on such bond has not been made within sixty days of the commissioner's certification of the amounts due producers covered by the bond, the commissioner shall direct the comptroller to pay such amounts to claimants from whatever monies are available in the milk producers security fund. In the event that recovery against the bond has not been made within one hundred eighty days of certification of the amounts due claimants, each and every dealer having filed a bond pursuant to subdivision six of this section shall pay monthly to the commissioner an amount not to exceed one-half of one-tenth of one percent of the average uniform price per hundredweight of milk for the previous calendar year, as determined by the commissioner on or before the thirty-first day of March of each year, on each hundredweight of such milk purchased, received or handled. Such payments shall continue for such period of time as the commissioner deems necessary in order to return to the fund, no later than three years from the date of such payment therefrom, the total amount paid as a result of the default of such dealer plus interest, at the rate provided for in section 5-501 of the general obligations law on the amount of such payment from the date of such payment. In the event of a recovery on the bond after the commencement of such payments, the commissioners shall authorize the comptroller to pay to each dealer making such payments its pro rata share of the amount by which the total of such payments exceeds the difference between the amount received and the total amount paid to claimants.

10. Time for providing security. Surety bonds or securities, whether filed in addition to or in lieu of participation in the fund, for the license year shall be filed with the commissioner not later than the first day of the second month before the beginning of each license year. Whenever an additional surety bond or alternative security is required to be filed, pursuant to paragraph (a) of subdivision three of this section, such bond or alternative security shall be filed with the commissioner within the time limits fixed by the commissioner. A milk dealer who elects to participate in the security fund and file a bond or bonds pursuant to subdivision three of this section, in lieu of filing a surety bond or alternative security pursuant to subdivision six of this section, shall notify the commissioner not later than three months prior to the date on which such change is to be made, and shall file the bond or bonds and make the initial payment, as required by paragraph (e) of subdivision four of this section, not later than two months before such change is to be made.

11. (a) Notice of failure to provide security. Whenever a milk dealer fails to pay into the producers security fund or to file any surety bond or alternative security, as provided pursuant to this section, within the time or times fixed by this section or the commissioner's demand for additional security, the commissioner shall publish in a newspaper or newspapers having circulation in the area or areas in which the producers whose milk is sold or delivered to such milk dealer reside, a notice stating that he made such demand or request of said milk dealer; that the milk dealer has failed to comply; that the commissioner does not have on file such surety bond or alternative security as demanded, or that he has not paid monies due the producers security fund as required by him; and that adequate security to protect such producers may not be available to them as provided in this section. In addition to such published notice to producers, the commissioner shall send by certified mail a copy of such notice to each producer delivering milk to such milk dealer as he may be able to determine from records available to him and such notice shall be addressed to such producer's last known place of residence. In addition to providing such notice, the commissioner shall issue a notice of hearing directing the licensee to appear within twenty-four hours or such longer period as he may direct and show cause why an order should not be entered revoking such dealer's license or denying the renewal thereof for failure to provide required security.

(b) Payments to farmers. (1) It is hereby determined and declared that the assurance of prompt and full payment to dairy farmers is for the benefit of all the people of the state, and is so directly related to the public interest, the public health and general welfare that it is an essential government function.

(2) The commissioner shall annually no later than November first, assess the status of the milk producer security fund, the anticipated payments from and receipts to the fund for the following fiscal year and, in connection with such assessment, estimate the additional amounts, if any, which may be needed by the fund to meet the fund's objectives in assuring prompt and full payment to dairy farmers. The commissioner shall transmit this information in a report to the governor for his use in the preparation of the budget, and to the speaker of the assembly and the president pro tempore of the senate for use in the consideration of the budget for such fiscal year.

(3) In the event an appropriation is made for the purposes of this paragraph and, thereafter, upon certification by the commissioner, with approval of the director of the budget, that a further sum is required by the milk producers security fund to meet its obligations and accomplish the purposes of this section, the comptroller shall, within the limits of such appropriation, draw a warrant for the payment to the milk producers security fund of an amount up to the amount of such sum. Such amount shall be a liability of the milk producers security fund and shall be repaid to the general fund pursuant to a plan of repayment. Prior to the institution of such a plan, a copy thereof shall be forwarded to the chairman of the senate finance committee and the chairman of the assembly ways and means committee, for use in the consideration of the budget for such fiscal year.

(4) Whenever the comptroller draws a warrant for payment to the milk producers security fund as provided in subparagraph three hereof, the commissioner shall implement the plan of repayment by promulgating through regulation after hearing an increase in the amount of assessment imposed under subdivision three of this section to an amount not exceeding two-tenths of one percent of the average uniform price for the previous year.

15. Prohibitions and violations. It shall be unlawful for a milk dealer to purchase or receive milk from producers or from other dealers for resale or manufacture unless such dealer files a surety bond or bonds as required pursuant to this section and makes prompt payment of any assessment as required pursuant to this section. It shall also be unlawful for a milk dealer to sell milk to another milk dealer, if he has been notified by the commissioner that the buying dealer has failed to make prompt payment to producers, to the producer settlement fund or equalization fund or to the milk producers security fund, or if such buying dealer has exceeded the credit period as provided pursuant to subdivision two of this section and the sale was not made upon the basis of cash on delivery.

In addition to penalties imposed by other provisions of this article a violation of this section shall subject a milk dealer to a penalty in the sum of one hundred dollars for each day that he is late in making payment into the milk producers security fund the assessment required by this section, for each day he sells milk to a milk dealer after being notified by the commissioner of that milk dealer's failure to make any required payment into the milk producers security fund, or for each day a milk dealer sells milk to another milk dealer who has failed to make payments for milk purchased as provided pursuant to subdivision two of this section. Any person who buys or sells milk in violation of the credit period provided in subdivision two of this section, shall be liable for a civil penalty of one hundred dollars a day for each day of violation.

16. Rules and regulations. The commissioner after due notice and public hearing may promulgate rules and regulations to carry out the provisions and intent of this section.