Statement of Scope
Department of Agriculture, Trade and Consumer Protection (DATCP)
Wis. Admin. Code ch. ATCP 100 (Existing)
1. Finding/nature of emergency:
2017 Wisconsin Act 155 (Act 155) directs the Wisconsin Department of Agriculture, Trade and Consumer Protection (DATCP) to promulgate rules establishing annual assessment rate for milk contractors entering into deferred payment contracts. Furthermore, Act 155 directs DATCP to promulgate these rules as emergency rules until the permanent rules become effective. Notwithstanding Wis. Stat. § 227.24 (1) (a) and (3), Act 155 exempts DATCP from the requirement to provide evidence that promulgating this rule is necessary for the preservation of the public peace, health, safety, or welfare and exempts DATCP from the requirement to provide a finding of emergency.
This emergency rule is necessary because on April 28, 2018 (30 days after Act 155 was published on March 29, 2018), milk contractors and producers may begin entering into deferred payment contracts, which permit milk contractors to defer payments to producers for up to 120 days. Deferred payment assessment rates must be established prior to the date by which a deferred payment becomes due. Because most deferred payment contracts will not have a payment date earlier than January 1 of any calendar year, an emergency rule that establishes a deferred payment assessment rate with an effective date of no later than August 1, 2018, is necessary so that producers and contractors will know the assessment rate before they are likely to begin deferring payments.
2. Description of the objective of the rule:
This proposed rule, dictated by Ch. 126, Stats., would establish a temporary assessment rate to be applied to amounts that a milk contractor pays to a milk producer or producer agent under a deferred payment contract to arrive at a deferred payment assessment amount. The assessment amount shall equal the total amount owed under the contract before the assessment is deducted, multiplied by the deferred payment assessment rate established by this rule. The milk contractor shall deduct the deferred payment assessment from the amount that a milk contractor pays to a milk producer or producer agent under a deferred payment contract.
The purpose of the deferred payment assessment, which is ultimately paid into the Agricultural Producer Security Fund (Fund), is to cover the increased default exposure caused by allowing milk contractors to wait for up to 120 days after taking title to producer milk before paying producers.
3. Description of existing policies relevant to the rule and of new policies proposed to be included in the rule and an analysis of policy alternatives; the history, background and justification for the proposed rule:
History and background.
The Agricultural Producer Security Fund, established by Wis. Stat. § 25.463, is a public trust administered by DATCP. Most milk contractors, grain dealers, grain warehouse keepers, and vegetable contractors (collectively known as contractors) that are licensed by DATCP to obtain grain, milk, or vegetables from producers are required to pay assessments into the Fund annually. Monies in the Fund are used to settle claims by producers in the event that a contractor defaults on a payment. Assessment contributions from each industry are accounted for separately and then deposited into the overall Fund. Wis. Stat. § 126.88 (1) sets minimum and maximum balances for each industry, as well as a minimum and maximum balance requirement for the overall Fund. Wis. Stat. Ch. 126 establishes detailed assessment requirements, except that it requires DATCP to establish milk contractor assessments by rule. The legislation creating 2017 Wisconsin Act 155 was supported by the Agricultural Producer Security Council, an advisory group of industry members defined in Wis. Stat. § 15.137 (1).
Justification for proposed rule.
Act 155, signed by the Governor on March 28, 2018, allows milk contractors to enter into contracts with producers to defer payment for up to 120 days. The Act requires the provision of financial statements, and, in some instances, individual security, to cover the additional risk arising under such deferred payment contracts. As the Fund could ultimately be responsible for defaults under this type of contract, the Act also creates milk contractor deferred payment assessments and requires DATCP to establish a milk contractor deferred payment assessment rate by emergency rule that may remain in effect for up to 24 months while permanent rules are being developed.
There are no alternatives. Act 155 requires DATCP to promulgate rulemaking to establish annual assessment rate for milk contractors entering into deferred payment contracts.
4. Statutory authority for the rule (including the statutory citation and language):
Wis. Stat. § 25.463 creates the Wisconsin Agricultural Producer Security Trust Fund. Wis. Stat. § 93.07 (1) directs DATCP 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 DATCP to establish by rule annual fund assessments for milk contractors. Wis. Stat. § 126.81 (1) (a) allows DATCP to promulgate rules to interpret and implement Wis. Stat. ch. 126. Wis. Stat. § 126.81 (2m) requires DATCP to promulgate rules that specify fund assessments under s. 126.46(1), Stats.
5. Estimate of the amount of time that state employees will spend to develop the rule and of other resources necessary to develop the rule:
DATCP estimates that it will use approximately 0.10 FTE staff to develop this rule, which includes time required for the investigation and analysis, financial assistance criteria, rule drafting, preparing related documents, and communicating with affected persons and groups. DATCP will use existing staff to develop this rule.
6. Description of all entities that may be impacted by the rule: