AB230: Bill Text

AB230, s. 56 Section 56. 127.07 of the statutes is repealed and recreated to read:

AB230,25,14 127.07 Security requirements; warehouse keepers and grain dealers. (1) Warehouse keepers. A warehouse keeper that claims to be bonded or claims to have filed security for the benefit of depositors or that does not meet the financial standards under s. 127.065 (1) and that is not an exempt warehouse keeper shall file with the department, and maintain, security under this section.

AB230,25,16 (2) Grain dealers. All of the following grain dealers shall file with the department, and maintain, security under this section:

AB230,25,18 (a) Class A grain dealer that does not meet the financial standards under s. 127.067 (1).

AB230,25,21 (b) A Class B grain dealer that uses any deferred payment contract or deferred price contract to buy grain from producers and that does not meet the financial standards under s. 127.067 (1).

AB230,25,23 (c) A grain dealer that claims to be bonded or that claims to have filed security for the benefit of producers.

AB230,26,3 (3) Form of security. Security filed and maintained under sub. (1) or (2) shall comply with the standards promulgated by the department by rule and shall be in one of the following forms:

AB230,26,7 (a) A continuous surety bond that is subject to cancellation by the surety company only upon 90 days' written notice to the department. Notice of cancellation may not affect any liability incurred on the bond within 90 days after notice is served on the department.

AB230,26,8 (b) Cash or negotiable securities.

AB230,26,9 (c) Stocks, bonds or other marketable securities at current market value.

AB230,26,13 (d) An irrevocable bank letter of credit that is issued for an initial period of one year and is automatically renewed at the end of each period unless, at least 90 days before the scheduled renewal date, the issuing bank gives the department written notice that the letter of credit will not be renewed.

AB230,26,15 (e) Personal surety bonds or other 3rd party guarantees that are fully backed by security under par. (b) or (c).

AB230,26,19 (4) Amount of security; warehouse keepers. A warehouse keeper that is required to file and maintain security under sub. (1) shall file and maintain security in an amount that is at least 20% of the current market value of all grain that the warehouse keeper has in storage for depositors or $25,000, whichever is greater.

AB230,26,23 (5) Amount of security; grain dealers. (a) Except as provided under par. (b), a grain dealer that is required to file and maintain security under sub. (2) shall file and maintain security in an amount that is at least equal to the sum of the following, increased to the next highest $1,000:

AB230,27,3 1. The total amount that the grain dealer owed to producers under deferred payment contracts as of the last day of the previous month or as of another date specified by the department.

AB230,27,8 2. The estimated total amount that the grain dealer owed to producers under deferred price contracts as of the last day of the previous month or as of another date specified by the department. The grain dealer shall estimate the amount owed based on the pricing formulas in the contracts and the market prices for grain as of the last day of the previous month or as of the date specified by the department.

AB230,27,9 3. One of the following:

AB230,27,13 a. Before September 1, 1996, an amount equal to 20% of the dollar amount of the grain dealer's average monthly purchases from producers for the 3 months in which the grain dealer made the largest monthly purchases from producers during the preceding 12 months.

AB230,27,17 b. Beginning on September 1, 1996, an amount equal to 35% of the dollar amount of the grain dealer's average monthly purchases from producers for the 3 months in which the grain dealer made the largest monthly purchases from producers during the preceding 12 months.

AB230,27,25 (b) If a grain dealer has operated as a grain dealer for less than one year, the grain dealer shall file and maintain security in an amount specified by the department. The department shall specify an amount that is equal to the amount that the department projects to be the dollar amount of the grain dealer's monthly average grain purchases during the 3 months in which the grain dealer is likely to make the largest monthly purchases from producers during the following 12 months, multiplied by the percentage under par. (a) 3. or, beginning on September 1, 1996, under par. (a) 4.

AB230,28,2 (6) Demands for security. (a) The department may require a warehouse keeper or grain dealer to file security whenever one of the following occurs:

AB230,28,5 1. The warehouse keeper ceases to meet the financial standards under s. 127.065 (1) or the grain dealer ceases to meet the financial standards under s. 127.067 (1).

AB230,28,7 2. The department receives notice of cancellation of a surety bond, or notice of nonrenewal of a letter of credit, filed with the department as security.

AB230,28,10 3. Security filed with the department falls below the amount required under sub. (4) or (5) because of a depreciation in the value of the security or an increase in the amount of security required or for any other reason.

AB230,28,12 4. The warehouse keeper or grain dealer fails to provide information requested by the department that is relevant to a determination of security requirements.

AB230,28,18 (b) If the department requires a warehouse keeper or grain dealer to file security with the department under par. (a), the department shall issue a written demand for security to the warehouse keeper or grain dealer. The demand shall indicate why the security is required, the amount of security required, the basis on which the department determined the amount of security required and the deadline for filing security.

AB230,28,21 (c) If a warehouse keeper or grain dealer fails to file security by the deadline specified under par. (b), the department may summarily suspend the license of the warehouse keeper or grain dealer.

AB230,29,3 (d) If a warehouse keeper or grain dealer fails to file security by the deadline specified under par. (b), the warehouse keeper or grain dealer shall, within 5 days after the deadline, give notice of its failure to file security to all depositors or producers to whom the warehouse keeper or grain dealer is obligated under a grain storage contract or a grain purchase contract. If a warehouse keeper or grain dealer fails to notify depositors or producers under this paragraph, the department shall notify those producers or depositors by publishing a class 3 notice under ch. 985.

AB230,29,6 (7) Release of security. The department may, upon request, release security filed by a warehouse keeper or grain dealer under this section only if one of the following occurs:

AB230,29,11 (a) The warehouse keeper or grain dealer achieves and maintains compliance with the applicable financial standards under s. 127.065 (1) or 127.067 (1) as evidenced by 2 successive annual financial statements or one annual financial statement and a reviewed financial statement for the first quarter of the following fiscal year.

AB230,29,14 (b) The warehouse keeper or grain dealer demonstrates to the department's satisfaction that the amount of security on file exceeds the amount required under sub. (4) or (5).

AB230,29,16 (c) The warehouse keeper or grain dealer files alternative security of equal value.

AB230,29,19 (d) The warehouse keeper or grain dealer is no longer in business and demonstrates to the department's satisfaction that all obligations to producers or depositors have been satisfied in full.

AB230, s. 57 Section 57. 127.09 of the statutes is amended to read:

AB230,30,7 127.09 (title) Duties of a warehouse keeper. (1) Scale ticket or receipt. No warehouse keeper may receive grain from any depositor unless the warehouse keeper furnishes the depositor or the depositor's agent with a scale ticket, warehouse receipt or other written evidence of storage receipt or storage at the time the grain is received. The document storage receipt shall include the kind, quality and weight of grain received, and other terms and conditions under which the grain is received. Scale tickets and receipts for grain shall be considered storage receipts unless otherwise clearly designated. A warehouse keeper shall keep copies of all scale tickets and receipts for at least 6 years or for as long as the scale ticket or receipt remains outstanding, whichever is longer. A warehouse keeper shall make copies of all scale tickets and receipts available to the department for inspection and copying upon request.

AB230,30,14 (2) Weight; grade; quality. A warehouse keeper shall make accurate determinations of accurately determine the weight of grain through the use of using accurate weighing equipment. If determinations are made on the basis of a warehouse keeper determines the grade and or quality of grain, the warehouse keeper shall make accurate determinations of accurately determine the grade and or quality through the use of using accurate testing and grading and testing equipment.

AB230,30,18 (3) Maintain facilities. A warehouse keeper shall maintain equipment and facilities which that are adequate to protect grain from loss or abnormal deterioration while in storage and. A warehouse keeper is responsible for the care and safekeeping of stored grain while in storage.

AB230,30,21 (4) Maintain sufficient inventory. A warehouse keeper shall at all times maintain grain inventories sufficient in quantity and quality to meet all outstanding obligations for grain received from or held in storage for depositors.

AB230,31,2 (5) Records and accounts. A warehouse keeper shall maintain current, complete and accurate records and accounts, including daily position records, of all grain received into or withdrawn from the warehouse, including daily position records, which will. The records shall permit the ready determination of total grain on hand or in storage, and all obligations relating to grain received into or withdrawn from storage.

AB230, s. 58 Section 58. 127.10 (title), (1) and (2) of the statutes are amended to read:

AB230,31,13 127.10 (title) Duties of a grain dealers dealer. (1) Documentation. No grain dealer may purchase grain from or sell grain for any producer unless the grain dealer furnishes the producer or the producer's agent with written documentation evidencing the purchase or sales transaction at the time the grain is purchased or received for sale. Documentation shall include a record of the kind and weight of grain purchased or received for sale, the date of receipt by the grain dealer and, the price of the grain or the formula on which the price is to be based and other terms of purchase or sale. The A grain dealer shall furnish scale tickets or other appropriate receipts to the a producer or the producer's agent whenever immediately upon receiving grain is received from the producer or the producer's agent.

AB230,31,19 (2) Weight; grade; quality. A grain dealer shall make accurate determinations of accurately determine the weight of grain through the use of using accurate weighing equipment. If determinations are made on the basis of a grain dealer determines the grade and or quality of grain, the grain dealer shall make accurate determinations of accurately determine the grade and or quality through the use of using accurate testing and grading and testing equipment.

AB230, s. 59 Section 59. 127.10 (4) of the statutes is amended to read:

AB230,32,2 127.10 (4) Compliance with contracts. A grain dealer buying grain from or selling grain for producers shall make payment pay for the grain when payment is due under the terms of any the purchase or sale contract or agreement. A forged check, check drawn on an account with insufficient funds or other nonnegotiable check is not considered payment under the terms of any purchase or sale the contract or agreement.

AB230, s. 60 Section 60. 127.10 (5) of the statutes is renumbered 127.10 (5) (a) and amended to read:

AB230,32,13 127.10 (5) (a) A grain dealer who uses any deferred payment or deferred price contract shall be in writing. A grain dealer shall furnish the producer with a copy of the written contract at the time the contract is entered into or when the grain dealer obtains title to or takes control of the grain, whichever is earliest within 7 days after the grain dealer takes title to the grain covered by the contract. The contract shall state the price of the grain or, in the case of a deferred price contract, the formula on by which the price is to be based, terms of the purchase or sale and the date on which payment is to be made will be determined and the deadline by which the price will be determined.

AB230, s. 61 Section 61. 127.10 (5) (b) of the statutes is created to read:

AB230,32,18 127.10 (5) (b) A deferred payment contract or deferred price contract shall specify the date by which the grain dealer agrees to pay the producer in full. That date may not be more than 180 days after the day on which the contract price is established.

AB230, s. 62 Section 62. 127.10 (6) of the statutes is amended to read:

AB230,32,25 127.10 (6) (title) Permanent business location; business hours. (a) A Each Class A grain dealer and, Class B grain dealer and Class B2 grain dealer shall maintain a permanent business address at which the grain dealer may be readily contacted during business hours. A grain dealer shall provide written notice of the dealer's permanent business address shall be provided to every producer from whom the grain dealer buys grain or for whom the grain dealer sells grain.

AB230,33,10 (b) Any grain dealer under par. (a) who purchases grain under a deferred price contract shall have business hours that begin at 9:30 a.m. and that continue until 1:30 p.m. each week day. Each Class A grain dealer, Class B grain dealer and Class B2 grain dealer shall keep business hours at the grain dealer's permanent business address under par. (a). On each day that the Chicago Board of Trade is open, the grain dealer shall be open for business beginning at least one-half hour before the opening of the Chicago Board of Trade and continuing until at least one-half hour after the closing of the Chicago Board of Trade. The grain dealer's business hours that are required under this paragraph shall be prominently posted at the business location grain dealer's permanent business address under par. (a).

AB230, s. 63 Section 63. 127.105 of the statutes is amended to read:

AB230,33,18 127.105 Liability of warehouse keepers and grain dealers. (1) A warehouse keeper or grain dealer is liable to a producer or depositor if a subsidiary or affiliate of the warehouse keeper or grain dealer fails to pay the producer in full, in cash and according to the terms of the contract between the subsidiary or affiliate and the producer, amounts owed to the producer by the subsidiary or affiliate when due, or fails to return stored grain to the depositor upon demand, according to a contract for the storage, purchase or sale of grain.

AB230,33,25 (2) Any corporation or cooperative that owns, controls or acts as a warehouse keeper or grain dealer is liable to a producer or depositor if the warehouse keeper or grain dealer fails to pay in full, in cash and according to the terms of the contract between the warehouse keeper or grain dealer and the producer, amounts owed to the producer by the warehouse keeper or grain dealer the producer when due, or fails to return stored grain to the depositor upon demand, according to a contract for the storage, purchase or sale of grain.

AB230,34,6 (3) The department may commence an action in the circuit court for the county in which the warehouse keeper or grain dealer is located to enforce this section on behalf of producers or depositors to obtain payment of amounts owed under this section. The department may settle any claim of a producer or depositor under this section with the consent of the claimant and may decline to represent a claimant who does not agree to a settlement recommended by the department.

AB230, s. 64 Section 64. 127.11 (2) of the statutes is amended to read:

AB230,34,12 127.11 (2) False or misleading statement. No warehouse keeper or grain dealer may make any false or misleading statement in any application for a certificate of registration license or in any other statement or report that the warehouse keeper or grain dealer is required to be submitted submit to the department under this chapter.

AB230, s. 65 Section 65. 127.12 (2) of the statutes is amended to read:

AB230,34,22 127.12 (2) A grain dealer may, prior to purchasing grain from, or selling grain for, a producer or depositor, require as a condition to the purchase or sale that the buying grain from or selling grain for a producer or depositor require the producer to provide the grain dealer with a written statement which specifies the existence, nature and amount of that discloses any liens or security interests in the grain, the nature and amount of those liens or security interests and the identity of any lien or security interest holders. No producer or depositor may falsify any information provided to a grain dealer under this subsection, or fraudulently withhold information to obtain a sale of grain.

AB230, s. 66 Section 66. 127.13 (title) of the statutes is repealed and recreated to read:

AB230,34,24 127.13 (title) Inspection and investigation.

AB230, s. 67 Section 67. 127.13 (1) of the statutes is renumbered 127.13 (1) (a) and amended to read:

AB230,35,10 127.13 (1) (a) The department may investigate or inspect the operations of a warehouse keeper or grain dealer's operation at any time deemed necessary to determine qualifications for a certificate of registration, dealer to determine whether the warehouse keeper or grain dealer is in compliance with this chapter or rules promulgated under this chapter, the sufficiency of whether a warehouse keeper has sufficient grain on hand to meet obligations to depositors or the ability of the whether a grain dealer or warehouse keeper to make payment is able to pay for grain when payment is due.

AB230,35,14 (b) In connection with an investigation or inspection under par. (a), the department may require a grain dealer or warehouse keeper to file a sworn or audited statement of business operations and financial position, including a current daily position statement.

AB230, s. 68 Section 68. 127.13 (1) (c) of the statutes is created to read:

AB230,35,19 127.13 (1) (c) A warehouse keeper or grain dealer shall make available to the department, upon demand, documents and records that the warehouse keeper or grain dealer is required to keep under this chapter or rules promulgated under this chapter so that the department may inspect or copy the documents and records.

AB230, s. 69 Section 69. 127.13 (2) and (3) of the statutes are amended to read:

AB230,35,23 127.13 (2) Annual inspection of warehouses. The department shall annually inspect each warehouse in this state operated by a licensed warehouse keeper annually and may inspect such a warehouse at other times.

AB230,35,25 (3) (title) Periodic review of Class A grain dealers' records. The department shall periodically review the records of each Class A grain dealer in this state.

AB230, s. 70 Section 70. 127.14 of the statutes is repealed and recreated to read:

AB230,36,4 127.14 Claims by producers and depositors; default proceedings and payment of claims. (1) Filing claims. Any of the following may file a written claim with the department under this section:

AB230,36,6 (a) A producer who claims that a grain dealer has failed to pay the producer for grain when due.

AB230,36,8 (b) A depositor who claims that a warehouse keeper has failed to return stored grain upon demand.

AB230,36,16 (2) Initiating default proceedings. Upon receiving a written claim under sub. (1), or upon receiving other evidence that a warehouse keeper or grain dealer has defaulted on obligations to producers or depositors, the department may initiate a default proceeding under this section. To initiate a default proceeding, the department shall issue an order requiring all interested producers or depositors to file verified proofs of claim with the department before a specified date or be barred from participating in any recovery made by the department. The department shall publish notice of the order in all of the following ways:

AB230,36,19 (a) By posting a copy of the order in a prominent location at each place of business in this state operated by the warehouse keeper or grain dealer and on each truck operated by the warehouse keeper or grain dealer that can be readily located.

AB230,36,21 (b) By mailing a copy of the order to the warehouse keeper or grain dealer and to the warehouse keeper's or grain dealer's surety, if any.

AB230,36,24 (c) By publishing the contents of the order as a class 3 notice under ch. 985, with the last insertion of the notice not later than 30 days before the deadline for filing claims.

AB230,37,3 (d) By mailing a copy of the order, or equivalent notice, to those producers or depositors who are identified by the department and who appear to have unpaid claims against the warehouse keeper or grain dealer.

AB230,37,9 (3) Audit; proposed order. If the department initiates a default proceeding under this section, the department shall audit producer or depositor claims filed with the department and shall issue a proposed order allowing or disallowing claims. The department shall mail a copy of the proposed order to the warehouse keeper or grain dealer, to the warehouse keeper's or grain dealer's surety, if any, and to each producer or depositor who filed a timely claim in the proceeding.

AB230,37,12 (4) Untimely claims disallowed. (a) The department shall disallow a claim of a producer or depositor filed after the claim filing deadline specified under sub. (2) unless the department waives the claim filing deadline for good cause shown.

AB230,37,15 (b) The department shall disallow a claim for any payment that was due more than 60 days before the date on which the department first received a written claim under sub. (1).

AB230,37,19 (5) Notice and hearing. The department shall hold a public hearing on its proposed order under sub. (3). The department shall provide a notice of the hearing to each person to whom the department is required to provide a copy of its proposed order under sub. (3).

AB230,37,25 (6) Final order after hearing. (a) Before issuing a final decision and order in a default proceeding under this section, the department shall follow the procedures in s. 227.46, except that if after the hearing under sub. (5) there are no objections to the department's proposed order, the department may adopt the proposed order as the department's final decision and order without further notice or hearing.

AB230,38,3 (b) The department shall serve its final decision and order on each person to whom the department is required to provide a copy of its proposed order under sub. (3).

AB230,38,7 (7) Converting security to pay allowed claims. For the purpose of paying claims allowed under sub. (6), the department may convert any security that a warehouse keeper or grain dealer filed with the department and may apply the proceeds to pay the allowed claims.

AB230,38,12 (8) Obtaining payment of allowed claims. The department may demand and receive payment of claims allowed under sub. (6) on behalf of producers or depositors and may commence an action in court to recover those claims. The department may demand and receive grain, money or other assets in order to satisfy claims of producers or depositors.

AB230,38,18 (9) Paying allowed claims. The department may distribute any grain, money or other assets recovered by the department under sub. (7) or (8) to satisfy claims of producers or depositors allowed by the department under sub. (6). The department shall distribute recovered assets on a proportionate basis based on the amount of each allowed claim. If recovered assets exceed allowed claims, the department shall return the excess to the person who provided the assets.

AB230,39,2 (10) Priority of producer claims in insolvency proceedings and other creditor's actions. A producer's claim against a grain dealer for grain sold to that grain dealer is entitled to the same priority in a state insolvency proceeding or other creditor's action as is a claim for labor. This subsection does not affect or impair any other lien, security or priority held by the producer. Neither a final court judgment awarding a producer claim nor a department order allowing a claim under sub. (6) is a prerequisite to filing a producer claim in a state insolvency proceeding or other creditor's action or to the allowance of the priority under this subsection.

AB230, s. 71 Section 71. 127.15 of the statutes is amended to read: