Amendment AA1-ASA1-SB55

SB55-ASA1-AA1,931,11 126.61 Vegetable contractors; security. (1) Security required. (a) Except as provided in par. (c), a vegetable contractor shall file security with the department, and maintain that security until the department releases it under sub. (7), if all of the following apply when the department first licenses the vegetable contractor under s. 126.56 (1):

SB55-ASA1-AA1,931,13 1. The vegetable contractor reports more than $1,000,000 in annual contract obligations under s. 126.56 (9) (a).

SB55-ASA1-AA1,931,15 2. The vegetable contractor files a financial statement under s. 126.58 (1) and that financial statement shows negative equity.

SB55-ASA1-AA1,931,22 (b) Except as provided in par. (c), a vegetable contractor shall file security with the department to cover the full amount of the unpaid deferred contract obligations last reported under s. 126.56 (9) (e) or (12) (b), and maintain that security until it is released under sub. (7), unless the vegetable contractor files an annual financial statement under s. 126.58 and that financial statement shows positive equity, a current ratio of at least 1.25 to 1.0, and a debt to equity ratio of not more than 4.0 to 1.0.

SB55-ASA1-AA1,931,24 (c) A vegetable contractor is not required to file security under par. (a) or (b) if any of the following applies:

SB55-ASA1-AA1,932,2 1. The vegetable contractor pays cash on delivery under all vegetable procurement contracts.

SB55-ASA1-AA1,932,4 2. The vegetable contractor is a producer-owned cooperative that procures processing vegetables only from its producer members.

SB55-ASA1-AA1,932,7 (2) Security continued. A vegetable contractor who filed security under s. 100.03, 1999 stats., before February 1, 2002, shall maintain that security until the department releases it under sub. (7).

SB55-ASA1-AA1,932,10 (3) Amount of security. A vegetable contractor who is required to file or maintain security under this section shall, at all times, maintain security that is at least equal to the sum of the following:

SB55-ASA1-AA1,932,13 (a) Seventy-five percent of the amount last reported under s. 126.56 (9) (b) or (12) (a), except that this amount is not required of a contributing vegetable contractor after May 1, 2002.

SB55-ASA1-AA1,932,14 (b) The amount required under sub. (1) (b), if any.

SB55-ASA1-AA1,932,17 (4) Form of security. The department shall review, and determine whether to approve, security filed under this section. The department may approve only the following types of security:

SB55-ASA1-AA1,932,18 (a) Currency.

SB55-ASA1-AA1,932,19 (b) A commercial surety bond if all of the following apply:

SB55-ASA1-AA1,932,21 1. The surety bond is made payable to the department for the benefit of vegetable producers and producer agents.

SB55-ASA1-AA1,932,23 2. The surety bond is issued by a person authorized to operate a surety business in this state.

SB55-ASA1-AA1,933,3 3. The surety bond is issued as a continuous term bond that may be canceled only with the department's written agreement, or upon 90 days' prior written notice served on the department in person or by certified mail.

SB55-ASA1-AA1,933,5 4. The surety bond is issued in a form, and subject to any terms and conditions, that the department considers appropriate.

SB55-ASA1-AA1,933,7 (c) A certificate of deposit or money market certificate, if all of the following apply:

SB55-ASA1-AA1,933,9 1. The certificate is issued or endorsed to the department for the benefit of vegetable producers and producer agents.

SB55-ASA1-AA1,933,11 2. The certificate may not be canceled or redeemed without the department's written permission.

SB55-ASA1-AA1,933,13 3. No person may transfer or withdraw funds represented by the certificate without the department's written permission.

SB55-ASA1-AA1,933,14 4. The certificate renews automatically without any action by the department.

SB55-ASA1-AA1,933,16 5. The certificate is issued in a form, and subject to any terms and conditions, that the department considers appropriate.

SB55-ASA1-AA1,933,17 (d) An irrevocable bank letter of credit if all of the following apply:

SB55-ASA1-AA1,933,19 1. The letter of credit is payable to the department for the benefit of vegetable producers and producer agents.

SB55-ASA1-AA1,933,20 2. The letter of credit is issued on bank letterhead.

SB55-ASA1-AA1,933,21 3. The letter of credit is issued for an initial period of at least one year.

SB55-ASA1-AA1,933,24 4. The letter of credit renews automatically unless, at least 90 days before the scheduled renewal date, the issuing bank gives the department written notice, in person or by certified mail, that the letter of credit will not be renewed.

SB55-ASA1-AA1,934,2 5. The letter of credit is issued in a form, and subject to any terms and conditions, that the department considers appropriate.

SB55-ASA1-AA1,934,5 (e) Security filed with the department under s. 100.03, 1999 stats., before February 1, 2002, except that on January 1, 2003, the department shall withdraw its approval of any security that is not approvable under pars. (a) to (d).

SB55-ASA1-AA1,934,8 (5) Department custody of security. The department shall hold, in its custody, all security filed and maintained under this section. The department shall hold the security for the benefit of vegetable producers and producer agents.

SB55-ASA1-AA1,934,10 (6) Additional security. (a) The department may, at any time, demand additional security from a vegetable contractor if any of the following applies:

SB55-ASA1-AA1,934,14 1. The vegetable contractor's existing security falls below the amount required under sub. (3) for any reason, including a depreciation in the value of the security filed with the department, increased obligations to vegetable producers or producer agents, or the cancellation of any security filed with the department.

SB55-ASA1-AA1,934,16 2. The vegetable contractor fails to provide required information that is relevant to a determination of security requirements.

SB55-ASA1-AA1,934,21 (b) The department shall issue a demand under par. (a) in writing. The department shall indicate why additional security is required, the amount of security required, and the deadline date for filing security. The department may not specify a deadline for filing security that is more than 30 days after the date on which the department issues its demand for security.

SB55-ASA1-AA1,934,24 (c) A vegetable contractor may request a hearing, under ch. 227, on a security demand under par. (b). A request for hearing does not automatically stay a security demand.

SB55-ASA1-AA1,935,9 (d) If a vegetable contractor fails to comply with the department's security demand under this subsection, the vegetable contractor shall give written notice of that fact to all vegetable producers and producer agents from whom the vegetable contractor procures processing vegetables. If the vegetable contractor fails to give accurate notice under this paragraph within 5 days after the security filing deadline under par. (b) has passed, the department shall promptly notify vegetable producers and producer agents by publishing a class 3 notice under ch. 985. The department may also give individual notice to vegetable producers or producer agents of whom the department is aware.

SB55-ASA1-AA1,935,11 (e) If a vegetable contractor fails to comply with the department's demand for security under this subsection, the department may do any of the following:

SB55-ASA1-AA1,935,15 1. Issue a summary order under s. 126.85 (2) that prohibits the vegetable contractor from procuring processing vegetables from vegetable producers or producer agents, or requires the vegetable contractor to pay cash on delivery under all vegetable procurement contracts.

SB55-ASA1-AA1,935,16 2. Suspend or revoke the vegetable contractor's license.

SB55-ASA1-AA1,935,20 (7) Releasing security. (a) The department may release security filed under sub. (1) (a), except for any amount of security that the vegetable contractor is required to file because sub. (1) (b) applies to the vegetable contractor, if any of the following applies:

SB55-ASA1-AA1,935,25 1. The vegetable contractor reports less than $1,000,000 in annual contract obligations under s. 126.56 (9) (a) for at least 2 consecutive years and the vegetable contractor pays the quarterly fund assessment that would have been required of the vegetable contractor if the vegetable contractor had been a contributing vegetable contractor on the most recent quarterly installment date under s. 126.60 (6).

SB55-ASA1-AA1,936,5 2. The vegetable contractor's annual financial statement under s. 126.58 shows positive equity for at least 2 consecutive years and the vegetable contractor pays the quarterly fund assessment that would have been required of the vegetable contractor if the vegetable contractor had been a contributing vegetable contractor on the most recent quarterly installment date under s. 126.60 (6).

SB55-ASA1-AA1,936,8 (b) The department may release security filed under sub. (1) (b), except for any amount of security that the vegetable contractor is required to file because sub. (1) (a) applies to the vegetable contractor, if any of the following applies:

SB55-ASA1-AA1,936,10 1. The vegetable contractor has no unpaid obligations under deferred payment contracts, and will not use deferred payment contracts in the current license year.

SB55-ASA1-AA1,936,13 2. The vegetable contractor files 2 consecutive annual financial statements under s. 126.58 that show a current ratio of at least 1.25 to 1.0, positive equity, and a debt to equity ratio of not more than 4.0 to 1.0.

SB55-ASA1-AA1,936,15 (c) On May 1, 2002, the department may release security maintained under sub. (2), unless the vegetable contractor is required to file security under sub. (1).

SB55-ASA1-AA1,936,17 (d) The department may release security to the extent that the security exceeds the amount required under sub. (3).

SB55-ASA1-AA1,936,19 (e) The department may release security if the vegetable contractor files alternative security, of equivalent value, that the department approves.

SB55-ASA1-AA1,936,21 (f) The department shall release security if the vegetable contractor has gone out of business and paid all contract obligations in full.

SB55-ASA1-AA1,936,23 126.62 Vegetable contractors; records. (1) Records required. A vegetable contractor shall keep all of the following:

SB55-ASA1-AA1,936,24 (a) Copies of all written vegetable procurement contracts.

SB55-ASA1-AA1,937,2 (b) A current record of all vegetable contract obligations, payments, and unpaid balances.

SB55-ASA1-AA1,937,4 (2) Records retention. A vegetable contractor shall keep all of the following records for at least 6 years from the date of their creation:

SB55-ASA1-AA1,937,5 1. Records required under sub. (1).

SB55-ASA1-AA1,937,7 2. Records that the vegetable contractor was required to keep, under s. 100.03, 1999 stats., and department rules, before February 1, 2002.

SB55-ASA1-AA1,937,10 (3) Records inspection. A vegetable contractor shall make records required under this section available to the department for inspection and copying upon request.

SB55-ASA1-AA1,937,14 126.63 Vegetable contractors; business practices. (1) Vegetable grading and tare. (a) A vegetable contractor shall grade vegetables according to the following standards if the vegetable grade may affect the amount received by the vegetable producer:

SB55-ASA1-AA1,937,15 1. Standard grading procedures that the department establishes by rule.

SB55-ASA1-AA1,937,17 2. Uniform grade standards that the department establishes by rule, unless the vegetable procurement contract clearly specifies alternative grade standards.

SB55-ASA1-AA1,937,20 (b) If a vegetable contractor makes any deduction for tare, the vegetable contractor shall determine tare according to procedures that the department establishes by rule.

SB55-ASA1-AA1,937,23 (c) The department shall establish grade standards for vegetables that conform to grade standards adopted by the federal department of agriculture under 7 USC 1621 to 1632.

SB55-ASA1-AA1,938,2 (2) Prohibited deductions. No vegetable purchaser may deduct, from the amount payable under a vegetable procurement contract, an amount designated for the payment of any vegetable contractor license fee, surcharge, or fund assessment under this subchapter.

SB55-ASA1-AA1,938,6 (3) Timely payment. A vegetable contractor shall pay a vegetable producer or producer agent according to the vegetable procurement contract. The vegetable contractor shall make the following payments by the following dates, unless the contract specifies a different payment date in writing:

SB55-ASA1-AA1,938,9 (a) The 15th day of the month immediately following the month in which the vegetable contractor harvests or accepts delivery of processing vegetables, the full amount owed under the contract for those vegetables.

SB55-ASA1-AA1,938,13 (b) The 15th day of the month immediately following the month in which the vegetable contractor rejects or fails to harvest processing vegetables tendered under the vegetable procurement contract, the full amount owed under the contract for those vegetables.

SB55-ASA1-AA1,938,16 (4) Annual payment deadline. (a) Except as provided in par. (b) or (c), a vegetable contractor shall pay all outstanding obligations to vegetable producers by January 31 of each license year.

SB55-ASA1-AA1,938,20 (b) For processing vegetables tendered or delivered in January of any license year, a vegetable contractor shall pay the full amount owed under the vegetable procurement contract by February 15 or by the 30th day after the date of delivery, whichever date is later.

SB55-ASA1-AA1,938,24 (c) A vegetable contractor may pay outstanding producer obligations in accordance with a deferred payment contract that complies with sub. (5) and specifies a payment date after January 31 for processing vegetables delivered on or before December 31.

SB55-ASA1-AA1,939,5 (5) Deferred payment contract. (a) Before a vegetable contractor offers a deferred payment contract to any vegetable producer, the vegetable contractor shall put the deferred payment contract to a vote of vegetable producers, as provided in par. (b), obtain the approval of a majority of the voting vegetable producers, and comply with par. (c).

SB55-ASA1-AA1,939,13 (b) To put a deferred payment contract to a vote of vegetable producers, the vegetable contractor shall give written notice to all vegetable producers in this state from whom the vegetable contractor procured the same type of processing vegetables during the preceding license year. In the notice, the vegetable contractor shall include a copy of the proposed contract, shall announce a meeting at which the vegetable producers will be asked to vote on the proposed contract, and shall include a mail ballot by which a vegetable producer may vote without attending the meeting. The vegetable contractor shall conduct the voting by secret ballot.

SB55-ASA1-AA1,939,15 (c) To comply with this paragraph, a vegetable contractor shall file all of the following with the department:

SB55-ASA1-AA1,939,17 1. A sworn statement certifying that the contract was approved in a vote of vegetable producers under this subsection.

SB55-ASA1-AA1,939,18 2. Any additional security required under s. 126.61 (3).

SB55-ASA1-AA1,939,20 (6) Cash on delivery. A vegetable contractor shall pay cash on delivery under all vegetable procurement contracts if any of the following applies:

SB55-ASA1-AA1,939,23 (a) The vegetable contractor stated, in the vegetable contractor's last annual statement under s. 126.56 (9) (g), that the vegetable contractor would pay cash on delivery.

SB55-ASA1-AA1,940,3 (b) The department disqualifies the vegetable contractor, under s. 126.59 (2) (c), or requires the vegetable contractor to pay cash on delivery under s. 126.61 (6) (e).

SB55-ASA1-AA1,940,5 126.64 Vegetable contractors; prohibited practices. No vegetable contractor may do any of the following:

SB55-ASA1-AA1,940,7 (1) Misrepresent the weight, grade, or quality of processing vegetables under a vegetable procurement contract.

SB55-ASA1-AA1,940,9 (2) Falsify any record or account, or conspire with any other person to falsify a record or account.

SB55-ASA1-AA1,940,10 (3) Make any false or misleading representation to the department.

SB55-ASA1-AA1,940,13 (4) If the vegetable contractor is licensed under s. 126.56, engage in any activity that is inconsistent with representations made in the vegetable contractor's annual license application.

SB55-ASA1-AA1,940,15 (5) Make any false or misleading representation to a vegetable producer or producer agent related to matters regulated under this chapter.

SB55-ASA1-AA1,940,17 (6) Fail to file the full amount of security required under s. 126.61 (6) by the date that the department specifies.

SB55-ASA1-AA1,940,19 SUBCHAPTER VII RECOVERY PROCEEDINGS

SB55-ASA1-AA1,940,20 126.68 Definitions. In this subchapter:

SB55-ASA1-AA1,940,21 (1) "Contributing contractor" means any of the following:

SB55-ASA1-AA1,940,22 (a) A contributing grain dealer, as defined in s. 126.10 (3).