DATCP Docket No. 18-R-03 Draft Rule
Rules Clearinghouse No. July 10, 2018
OF THE WISCONSIN DEPARTMENT OF AGRICULTURE,
TRADE AND CONSUMER PROTECTION
The Wisconsin department of agriculture, trade and consumer protection proposes the following rule to amend ch. ATCP 99.235 (2) and (4) and ATCP 100.135 (10); and to repeal and recreate ch. ATCP 100.135 (1); and to create ch. ATCP 100.135 (1e) and (1m); relating to grain warehouse keepers and milk contractors.
Analysis Prepared by the Department
of Agriculture, Trade and Consumer Protection
This proposed rule modifies Wis. Admin. Code ch. ATCP 99 to align grain warehouse keeper assessment reduction and exemption thresholds with the statutory changes enacted under 2017 Wisconsin Act 155 (Act 155). Act 155 amended Wis. Stat. § 126.88 (1) (b) and repealed Wis. Stat. § 126.88 (1) (c), with the result that the Agricultural Producer Security Fund (Fund) balances for grain dealers and grain warehouse keepers, respectively, were combined into a new unitary balance with its own minimum and maximum balance requirements. This proposed rule also modifies Wis. Admin. Code ch. ATCP 100 to establish an annual assessment rate for milk contractors that both contribute to the Fund and enter into deferred payment contracts with producers to procure milk. Among other things, Act 155 allows milk contractors to enter into procurement contracts with producers that defer payment to producers for up to 120 days. Concomitantly, the Act requires that when a milk contractor avails of such deferred payment contracts, the milk contractor must pay a deferred payment assessment into the Fund. Act 155 requires the Department to establish a deferred payment assessment rate by administrative rule.
Statutory Authority: Wis. Stat. §§ 25.463, 93.07 (1), 126.46 (1), 126.81 (1) (a), and 126.88 (1)
Explanation of Statutory Authority
Wis. Stat. § 25.463 creates the Wisconsin Agricultural Producer Security Trust Fund. Wis. Stat. § 93.07 (1) directs the Department to make such regulations as are necessary for the discharge of all the powers and duties of the Department. Wis. Stat. § 126.46 (1) directs the Department to specify by rule annual fund assessments for milk contractors, including an assessment for deferred payment contracts under Wis. Stat. § 126.485. Wis. Stat. § 126.81 (1) (a) allows the Department to promulgate rules to interpret and implement Wis. Stat. ch. 126. Wis. Stat. § 126.88 (1) allows the Department to promulgate rules modifying assessments provided under Wis. Stat. § 126.30 (1). Wis. Stat. § 126.88 (1) (b) directs the Department to promulgate a rule modifying assessments to maintain a combined Fund balance attributable to grain dealers and grain warehouse keepers of at least $1,200,000, but not more than $7,000,000.
Related Statutes and Rules
Wis. Stat. § 15.137 (1) defines the membership of the Agricultural Producer Security Council (Council), which advises the Department on the Fund and other producer security matters.
Plain Language Analysis
The Agricultural Producer Security Fund (Fund) is a public trust administered by the Wisconsin Department of Agriculture, Trade and Consumer Protection (DATCP). Milk contractors, grain dealers, grain warehouse keepers, and vegetable contractors (collectively known as contractors) must purchase a license to obtain milk, grain, or vegetables from producers, and most contractors are required to contribute to the Fund annually. The Fund is used to settle claims by producers in the event that a contractor defaults on payment. Assessment contributions from each industry are accounted for separately and deposited into the overall Fund. Wis. Stat. ch. 126, establishes detailed assessment requirements, except that it requires DATCP to establish milk contractor assessments by rule. Wis. Stat. ch. 126, sets minimum and maximum Fund balances for each industry, as well as a minimum and maximum balance requirement for the overall Fund.
In March 2018, the Governor signed Act 155. This Act combined individual minimum and maximum Fund balance requirements for grain dealers and grain warehouse keepers. Prior to Act 155, individual minimums for grain dealers and grain warehouse keepers were set at $1 million and $200,000, respectively, and maximums were set at $6 million and $1 million, respectively. These balances were combined specifically to increase the overall stability of the Fund and guard against a modest grain warehouse keeper default having a catastrophic effect on that portion of the Fund. The new combined minimum is $1.2 million and the new combined maximum is $7 million. Current law requires DATCP to adjust assessment rates by rule to maintain Fund balances between the statutory thresholds.
A 2008 drafting error set the assessment exemption threshold at $3 million for both grain dealers and warehouse keepers. Notes from the rulemaking docket indicate that the warehouse keeper threshold should have been set at $500,000. Since the previous warehouse keeper Fund balance maximum was $1 million, an assessment exemption threshold of $3 million would never be realized.
ATCP 100 – Milk