LRB-3287/1
RCT:wlj:ph
2009 - 2010 LEGISLATURE
February 9, 2010 - Introduced by Representatives Vruwink, Jorgensen,
Garthwaite, Smith, Hraychuck, Danou, Tauchen, Ripp, Dexter, Molepske Jr.

and A. Ott, cosponsored by Senators Vinehout, Miller, Taylor and Harsdorf.
Referred to Committee on Agriculture.
AB717,3,2 1An Act to repeal 126.06 (2) (intro.) (except 126.06 (2) (title)), 126.08, 126.11 (4)
2(b) 1. to 3., 126.14 (2) (b) 3. and 4., 126.16 (1) (b) 1., 126.16 (1) (c) 2. a. to c., 126.16
3(2), 126.16 (3) (b) 1. and 2., 126.16 (4) (e), 126.16 (8) (c), 126.17 (3) (a) 1. and 2.,
4126.31 (1) (b) 2. a. to c., 126.31 (2), 126.31 (3) (b) 1. and 2., 126.31 (4) (e), 126.31
5(8) (b), 126.32 (5) (a) 1. and 2., 126.45 (3) (c), 126.46 (1) (a) and (b), 126.46 (2)
6to (5), 126.47 (2), 126.47 (3) (a) 3., 126.47 (3) (b) 1. and 2., 126.47 (4) (e), 126.47
7(7) (b), 126.59 (2) (c) 1. to 4., 126.60 (1) (c), 126.61 (1) (bm), 126.61 (2), 126.61
8(3) (a) 2., 126.61 (3) (b) 1. and 2., 126.61 (4) (e), 126.61 (7) (b), 126.61 (7) (c),
9126.62 (2) (a) and (b), 126.71 (1) (d) and (e), 126.71 (3) (a) 1. to 3., 126.81 (3) and
10126.86 (1) (g); to renumber 126.81 (intro.) and (1) and 126.81 (4); to renumber
11and amend
126.11 (4) (b) (intro.), 126.16 (1) (c) 2. (intro.), 126.17 (3) (a) (intro.),
12126.19 (4), 126.31 (1) (b) 2. (intro.), 126.32 (5) (a) (intro.), 126.40 (1), 126.41 (6)
13(b), 126.45 (3) (b), 126.46 (1) (intro.), 126.46 (5m) (a), 126.59 (2) (c) (intro.),
14126.62 (2) (intro.), 126.70 (1), 126.81 (2) and 126.88; to consolidate, renumber

1and amend
126.16 (1) (b) (intro.) and 2., 126.16 (3) (b) (intro.) and 3., 126.31
2(3) (b) (intro.) and 3., 126.47 (3) (b) (intro.) and 3., 126.61 (3) (a) (intro.) and 1.
3and 126.61 (3) (b) (intro.) and 3.; to amend 126.05 (2), 126.06 (1) (intro.), 126.11
4(4) (intro.) and (a), 126.11 (4) (c) to (g), 126.11 (6), 126.11 (9) (a), 126.13 (1) (a)
5(intro.), 126.13 (1) (b) (intro.), 126.14 (2) (b) (intro.), 126.14 (2) (b) 2., 126.15 (1)
6(c), 126.15 (6), 126.20 (4) (intro.) and (a), 126.26 (3) (intro.) and (a), 126.26 (3)
7(c) to (f), 126.26 (3m), 126.26 (5), 126.34 (5) (intro.) and (a), 126.41 (3) (intro.)
8and (a), 126.41 (6) (a), 126.42 (6), 126.44 (1) (a), 126.44 (1) (c) 1., 126.45 (3) (a),
9126.45 (4) (a), 126.46 (5m) (intro.), 126.46 (5m) (b), 126.47 (1) (a) 1., 126.47 (3)
10(a) (intro.), 126.47 (7) (a) 1. and 2., 126.50 (intro.), 126.56 (4), 126.56 (4m),
11126.58 (1) (a) and (b), 126.60 (1) (a) and (b), 126.60 (5m) (intro.) and (a), 126.61
12(1) (a) 1., 126.61 (7) (a) (intro.), 126.61 (7) (a) 1., 126.61 (7) (bm), 126.64 (intro.),
13126.70 (4) (title), 126.71 (1) (a) (intro.), 126.72 (2), 126.73 (1), 126.85 (1) and
14126.86 (3) (a); to repeal and recreate 126.06 (2) (a), 126.13 (1) (a) 1., 126.13
15(1) (b) 1., 126.13 (3), 126.26 (3) (b), 126.28 (3), 126.41 (9), 126.44 (5), 126.47 (1)
16(b), 126.47 (3) (a) 1. and 2., 126.56 (12), 126.58 (3), 126.61 (1) (b), 126.63 (4) (c)
17and 126.86 (1) (f); and to create 126.06 (1) (c) and (d), 126.11 (9) (d) and (e),
18126.14 (4) and (5), 126.19 (4) (b), 126.20 (4) (g), 126.34 (5) (g), 126.40 (1) (a) and
19(b), 126.41 (6) (b) (intro.), 126.41 (6) (b) 2., 126.41 (6) (bg), 126.41 (6) (br), 126.45
20(3) (b) 2., 126.45 (5), 126.46 (5m) (a) 1. and 2., 126.50 (6), 126.56 (9) (am), 126.56
21(9) (i), 126.59 (4), 126.64 (7), 126.70 (1) (b) and (c), 126.70 (4) (f) to (k), 126.70
22(6) (g), 126.73 (3), 126.81 (1) (c), 126.81 (2m), 126.85 (2) (h) and (i) and 126.88
23(2) of the statutes; relating to: the agricultural producer security program,

1providing an exemption from emergency rule procedures, and granting
2rule-making authority.
Analysis by the Legislative Reference Bureau
This bill makes changes in the agricultural producer security program, which
is administered by the Department of Agriculture, Trade and Consumer Protection
(DATCP). The program is designed to minimize the risk that milk contractors, grain
dealers, grain warehouse keepers, and vegetable contractors (collectively referred to
as contractors) will default on their financial obligations to dairy, grain, and
vegetable farmers (producers) and to reimburse producers for a portion of the losses
they incur when contractors do default. A milk contractor is a person who buys milk
from producers. A grain dealer is a person who buys grain from producers. A grain
warehouse keeper is a person who operates a warehouse for the storage of grain that
belongs to others. A vegetable contractor is a person who buys vegetables from
producers for use in food processing.
Contingent financial backing
Current law requires certain contractors to contribute to the agricultural
producer security fund (fund). If a contributing contractor defaults on its financial
obligations to producers, DATCP makes payments to producers from the fund, up to
a maximum deductible amount per default. Current law requires DATCP to obtain
"contingent financial backing" to supplement the fund in case of a large default. The
contingent financial backing may be in the form of a surety bond or a contract to
provide a cash loan to the fund whenever DATCP requests a loan.
Under this bill, DATCP may, but is not required to, obtain contingent financial
backing for the fund. The bill also authorizes DATCP to obtain contingent financial
backing in the form of trade credit insurance or in any other form that DATCP
determines is appropriate.
Fund assessments
Current law specifies the amounts of contractor fund assessments, but
authorizes DATCP to change the amounts by rule. DATCP has changed the amounts
of fund assessments for milk contractors, and this bill eliminates the statutory
amounts of those assessments.
Current law requires DATCP to modify the amounts of fund assessments as
necessary to keep the overall balance in the fund, and the balance attributable to
each type of contractor, within specified limits. This bill authorizes DATCP to use
emergency rule-making procedures, without making the finding of emergency that
is ordinarily required, to modify fund assessments when the amount in the fund falls
below one of the specified minimums. Such a rule may remain in effect for up to 24
months.

Financial statements
Current law requires a contractor above a specified size threshold to file an
annual financial statement with DATCP. The financial statement must be a
reviewed statement or, for larger contractors, an audited statement.
This bill increases some of the thresholds above which contractors must file
financial statements and above which contractors must file audited financial
statements. This bill also changes the basis for determining whether a grain dealer
or milk contractor must file an annual financial statement from the value of grain
or milk procured to the volume of grain or milk procured.
License fees
Current law requires contractors to pay license fees in amounts specified in the
statutes unless DATCP specifies a different amount by rule. DATCP has specified
different amounts by rule for grain dealers, grain warehouse keepers, and vegetable
contractors, and this bill eliminates the statutory amounts for those fees. Under
current law, license fees for grain dealers are based on the value of grain procured.
Under this bill, license fees for grain dealers are based on the volume of grain
procured.
Disqualification from fund participation
Under current law, a contractor may be disqualified from participating in the
fund in specified situations. If a contractor who is disqualified defaults on payments
to producers, no payments may be made from the fund to compensate producers for
the losses resulting from the default. Current law authorizes DATCP to issue an
order requiring a contractor to remedy a violation of the agricultural producer
security law.
This bill authorizes DATCP to disqualify a contractor from participation in the
fund pending compliance with an order requiring the contractor to remedy a
violation of the agricultural producer security law. The bill also requires a contractor
who is disqualified from the fund to notify producers of the disqualification.
Related entities and default claims
Under this bill, a producer who owns a majority interest in a contractor or who
is under common ownership with a contractor may waive eligibility to obtain
payment from the fund if the contractor ever defaults. If a producer waives
eligibility, the amount of the contractor's obligations to the producer is subtracted in
determining the contractor's fund contribution and financial statement filing
requirements.
The bill also requires DATCP to disallow a claim for payment from the fund, by
a producer who did not waive eligibility, when a contractor defaults on payment to
the producer if DATCP determines that allowing the claim would be unfair or
unreasonable because the producer owns a majority interest in the contractor or is
under common ownership with the contractor or because the producer had
substantial management control over any of the defaulting contractor's operations
involved in the default.

Other default claims disallowed
This bill disallows a default claim if a defaulting contractor paid a producer by
check but the producer failed to cash the check within 30 days.
Current law authorizes grain dealers and vegetable contractors to enter into
deferred payment contracts with producers under certain conditions. A deferred
payment contract is a contract under which payment is delayed for some time after
the producer delivers the grain or vegetables under the contract.
Under the bill, a producer who enters into a deferred payment contract with a
grain dealer may not recover from the fund in case of a default by the grain dealer
if the payment under the contract became due more than 120 days after the producer
delivered the grain to the grain dealer. Also, under the bill, a producer who enters
into a deferred payment contract with a vegetable contractor may not recover from
the fund in case of a default by the vegetable contractor if payment became due after
January 31 of the year after the year in which the producer delivered the vegetables.
Milk contractor security requirements
Current law requires certain milk contractors to file security with DATCP to
secure payment of milk payroll obligations to producers. The determination of
whether security must be filed is based in part on the milk contractor's highest
amount of unpaid milk payroll obligations since the beginning of the contractor's last
fiscal year.
Under this bill, a milk contractor may choose to have the determination of
whether the contractor must file security based on the highest amount of the
contractor's unpaid milk payroll obligations during the last 12 months or on the
highest amount of milk payroll obligations incurred by the contractor in any month
during the last 12 months. The bill makes related changes in the calculation of the
amount of security that a milk contractor must file and in milk contractor reporting
requirements.
Interfering with DATCP
This bill prohibits a contractor from assaulting, threatening, intimidating, or
otherwise interfering with an officer, employee, or agent of DATCP in the
performance of his or her duties.
For further information see the state fiscal estimate, which will be printed as
an appendix to this bill.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
AB717, s. 1 1Section 1. 126.05 (2) of the statutes is amended to read:
AB717,6,32 126.05 (2) The department shall deposit into the fund all fees, surcharges,
3assessments, reimbursements, and proceeds of contingent financial backing that the

1department collects under this chapter. The department shall keep a record by
2contractor and industry, of all deposits into the fund. The department shall keep a
3record by industry of all payments from the fund
.
AB717, s. 2 4Section 2. 126.06 (1) (intro.) of the statutes is amended to read:
AB717,6,95 126.06 (1) Department to may acquire. (intro.) Using moneys appropriated
6under s. 20.115 (1) (v), the department shall may acquire contingent financial
7backing to secure payment under s. 126.72 (2) of claims against contributing
8contractors, as defined in s. 126.68 (1). The contingent financial backing may be in
9one or more of the following forms:
AB717, s. 3 10Section 3. 126.06 (1) (c) and (d) of the statutes are created to read:
AB717,6,1111 126.06 (1) (c) Trade credit insurance.
AB717,6,1212 (d) Any other form that the department determines is appropriate.
AB717, s. 4 13Section 4. 126.06 (2) (intro.) (except 126.06 (2) (title)) of the statutes is
14repealed.
AB717, s. 5 15Section 5. 126.06 (2) (a) of the statutes is repealed and recreated to read:
AB717,6,2016 126.06 (2) (a) Except as provided in par. (b), the department may determine the
17amount of any contingent financial backing that it obtains under sub. (1), up to the
18amount that, in the department's judgment, is sufficient to meet reasonably
19foreseeable needs under s. 126.72 (2). In making this determination, the department
20shall consider acquisition costs and repayment liabilities.
AB717, s. 6 21Section 6. 126.08 of the statutes is repealed.
AB717, s. 7 22Section 7. 126.11 (4) (intro.) and (a) of the statutes are amended to read:
AB717,7,223 126.11 (4) License fees and surcharges. (intro.) A grain dealer applying for
24an annual license under this section shall pay the following fees and surcharges,

1unless
in the amounts that the department specifies a different fee or surcharge
2amount
by rule:
AB717,7,33 (a) A nonrefundable basic license processing fee of $25.
AB717, s. 8 4Section 8. 126.11 (4) (b) (intro.) of the statutes is renumbered 126.11 (4) (b) and
5amended to read:
AB717,7,86 126.11 (4) (b) The following license fees A supplementary license fee based on
7the volume of grain dealer's reported grain payments by the grain dealer under sub.
8(9) (a) (d), less any credit provided under sub. (6):.
AB717, s. 9 9Section 9. 126.11 (4) (b) 1. to 3. of the statutes are repealed.
AB717, s. 10 10Section 10. 126.11 (4) (c) to (g) of the statutes are amended to read:
AB717,7,1211 126.11 (4) (c) A supplementary license fee of $45 for each truck, in excess of one
12truck, that the grain dealer uses to haul grain in this state.
AB717,7,1413 (d) A license surcharge of $425 if the grain dealer files a financial statement
14under s. 126.13 (1) that is not an audited financial statement.
AB717,7,1915 (e) A license surcharge of $500 if the department determines that, within 365
16days before submitting the license application, the applicant operated as a grain
17dealer without a license in violation of sub. (1). The applicant shall also pay any
18license fees, license surcharges, and fund assessments that are still due for any
19license year in which the applicant violated sub. (1).
AB717,7,2220 (f) A license surcharge of $100 if during the preceding 12 months the applicant
21failed to file an annual financial statement required under s. 126.13 (1) (b) by the
22deadline specified in s. 126.13 (1) (c).
AB717,7,2523 (g) A license surcharge of $100 if a renewal applicant fails to renew a license
24by the license expiration date of August 31. This paragraph does not apply to a grain
25dealer who is exempt under sub. (2) and is voluntarily licensed.
AB717, s. 11
1Section 11. 126.11 (6) of the statutes is amended to read:
AB717,8,82 126.11 (6) Fee credits. If the balance in the fund contributed by grain dealers
3exceeds $2,000,000 on June 30 May 31 of any license year, the department shall
4credit 50% of the excess amount against license fees charged under sub. (4) (b) to
5contributing grain dealers who file timely license renewal applications for the next
6license year. The department shall credit each contributing grain dealer on a
7prorated basis, in proportion to the total fees that the grain dealer paid under sub.
8(4) (b) for the 4 preceding license years as a contributing grain dealer.
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