SB527: Bill Text

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:

SB527, s. 1 Section 1. 126.05 (2) of the statutes is amended to read:

SB527,6,3 126.05 (2) The department shall deposit into the fund all fees, surcharges, assessments, reimbursements, and proceeds of contingent financial backing that the department collects under this chapter. The department shall keep a record by contractor and industry, of all deposits into the fund. The department shall keep a record by industry of all payments from the fund.

SB527, s. 2 Section 2. 126.06 (1) (intro.) of the statutes is amended to read:

SB527,6,9 126.06 (1) Department to may acquire. (intro.) Using moneys appropriated under s. 20.115 (1) (v), the department shall may acquire contingent financial backing to secure payment under s. 126.72 (2) of claims against contributing contractors, as defined in s. 126.68 (1). The contingent financial backing may be in one or more of the following forms:

SB527, s. 3 Section 3. 126.06 (1) (c) and (d) of the statutes are created to read:

SB527,6,11 126.06 (1) (c) Trade credit insurance.

SB527,6,12 (d) Any other form that the department determines is appropriate.

SB527, s. 4 Section 4. 126.06 (2) (intro.) (except 126.06 (2) (title)) of the statutes is repealed.

SB527, s. 5 Section 5. 126.06 (2) (a) of the statutes is repealed and recreated to read:

SB527,6,20 126.06 (2) (a) Except as provided in par. (b), the department may determine the amount of any contingent financial backing that it obtains under sub. (1), up to the amount that, in the department's judgment, is sufficient to meet reasonably foreseeable needs under s. 126.72 (2). In making this determination, the department shall consider acquisition costs and repayment liabilities.

SB527, s. 6 Section 6. 126.08 of the statutes is repealed.

SB527, s. 7 Section 7. 126.11 (4) (intro.) and (a) of the statutes are amended to read:

SB527,7,2 126.11 (4) License fees and surcharges. (intro.) A grain dealer applying for an annual license under this section shall pay the following fees and surcharges, unless in the amounts that the department specifies a different fee or surcharge amount by rule:

SB527,7,3 (a) A nonrefundable basic license processing fee of $25.

SB527, s. 8 Section 8. 126.11 (4) (b) (intro.) of the statutes is renumbered 126.11 (4) (b) and amended to read:

SB527,7,8 126.11 (4) (b) The following license fees A supplementary license fee based on the volume of grain dealer's reported grain payments by the grain dealer under sub. (9) (a) (d), less any credit provided under sub. (6):.

SB527, s. 9 Section 9. 126.11 (4) (b) 1. to 3. of the statutes are repealed.

SB527, s. 10 Section 10. 126.11 (4) (c) to (g) of the statutes are amended to read:

SB527,7,12 126.11 (4) (c) A supplementary license fee of $45 for each truck, in excess of one truck, that the grain dealer uses to haul grain in this state.

SB527,7,14 (d) A license surcharge of $425 if the grain dealer files a financial statement under s. 126.13 (1) that is not an audited financial statement.

SB527,7,19 (e) A license surcharge of $500 if the department determines that, within 365 days before submitting the license application, the applicant operated as a grain dealer without a license in violation of sub. (1). The applicant shall also pay any license fees, license surcharges, and fund assessments that are still due for any license year in which the applicant violated sub. (1).

SB527,7,22 (f) A license surcharge of $100 if during the preceding 12 months the applicant failed to file an annual financial statement required under s. 126.13 (1) (b) by the deadline specified in s. 126.13 (1) (c).

SB527,7,25 (g) A license surcharge of $100 if a renewal applicant fails to renew a license by the license expiration date of August 31. This paragraph does not apply to a grain dealer who is exempt under sub. (2) and is voluntarily licensed.

SB527, s. 11 Section 11. 126.11 (6) of the statutes is amended to read:

SB527,8,8 126.11 (6) Fee credits. If the balance in the fund contributed by grain dealers exceeds $2,000,000 on June 30 May 31 of any license year, the department shall credit 50% of the excess amount against license fees charged under sub. (4) (b) to contributing grain dealers who file timely license renewal applications for the next license year. The department shall credit each contributing grain dealer on a prorated basis, in proportion to the total fees that the grain dealer paid under sub. (4) (b) for the 4 preceding license years as a contributing grain dealer.

SB527, s. 12 Section 12. 126.11 (9) (a) of the statutes is amended to read:

SB527,8,15 126.11 (9) (a) The total amount that the applicant paid, during the applicant's last completed fiscal year, for producer grain procured in this state , less the total amount reported under par. (e) 3., if any. If the applicant has not yet operated as a grain dealer in this state, the applicant shall estimate the amount that the applicant will pay during the applicant's first complete fiscal year for producer grain procured in this state, less the total amount reported under par. (e) 3., if any.

SB527, s. 13 Section 13. 126.11 (9) (d) and (e) of the statutes are created to read:

SB527,8,21 126.11 (9) (d) The total number of bushels of producer grain that the applicant procured in this state during the applicant's last completed fiscal year. If the applicant has not yet operated as a grain dealer in this state, the applicant shall estimate the total number of bushels of producer grain that the applicant will procure in this state during the applicant's first complete fiscal year.

SB527,8,24 (e) All of the following information related to each grain producer or producer agent that under s. 126.70 (1) (b) has permanently waived eligibility to file a default claim against the applicant:

SB527,9,2 1. A copy of the written waiver that the grain producer or producer agent filed under s. 126.70 (1) (c).

SB527,9,8 2. The total number of bushels of producer grain that the applicant procured in this state from that grain producer or producer agent during the applicant's last completed fiscal year. If the applicant has not yet operated as a grain dealer in this state, the applicant shall estimate the total number of bushels of producer grain that the applicant will procure in this state from that grain producer or producer agent during the applicant's first complete fiscal year.

SB527,9,14 3. The total amount that the applicant paid during the applicant's last completed fiscal year for producer grain that the applicant procured in this state from that grain producer or producer agent. If the applicant has not yet operated as a grain dealer in this state, the applicant shall estimate the total amount that the applicant will pay during the applicant's first complete fiscal year for producer grain that the applicant will procure in this state from that producer or producer agent.

SB527,9,16 4. The amount of payments under subd. 3. made under deferred payment contracts.

SB527, s. 14 Section 14. 126.13 (1) (a) (intro.) of the statutes is amended to read:

SB527,9,20 126.13 (1) (a) (intro.) A grain dealer shall file an annual financial statement with the department, before the department first licenses the grain dealer under s. 126.11, if the grain dealer's license application reports shows any of the following:

SB527, s. 15 Section 15. 126.13 (1) (a) 1. of the statutes is repealed and recreated to read:

SB527,9,23 126.13 (1) (a) 1. That the amount of grain reported under s. 126.11 (9) (d), less the total amount reported under s. 126.11 (9) (e) 2., if any, exceeds 200,000 bushels.

SB527, s. 16 Section 16. 126.13 (1) (b) (intro.) of the statutes is amended to read:

SB527,10,3 126.13 (1) (b) (intro.) A grain dealer licensed under s. 126.11 shall file an annual financial statement with the department during each license year if the grain dealer's license application for that year reports shows any of the following:

SB527, s. 17 Section 17. 126.13 (1) (b) 1. of the statutes is repealed and recreated to read:

SB527,10,8 126.13 (1) (b) 1. That the amount of grain reported under s. 126.11 (9) (d), less the total amount reported under s. 126.11 (9) (e) 2., if any, exceeds 200,000 bushels and the grain dealer is not a contributing grain dealer who procures grain in this state solely as a producer agent.

SB527, s. 18 Section 18. 126.13 (3) of the statutes is repealed and recreated to read:

SB527,10,15 126.13 (3) Reviewed or audited financial statement. A grain dealer filing a financial statement under sub. (1) or (2) may file either a reviewed financial statement or an audited financial statement, except that if the volume of grain reported by the grain dealer under s. 126.11 (9) (d), less the total volume reported by the grain dealer under s. 126.11 (9) (e) 2., if any, exceeds 2,500,000 bushels, the grain dealer shall file an audited financial statement.

SB527, s. 19 Section 19. 126.14 (2) (b) (intro.) of the statutes is amended to read:

SB527,10,18 126.14 (2) (b) (intro.) A grain dealer is disqualified from the fund, and required to pay cash on delivery for producer grain, if any of the following occurs:

SB527, s. 20 Section 20. 126.14 (2) (b) 2. of the statutes is amended to read:

SB527,10,23 126.14 (2) (b) 2. The department issues a written notice an order under s. 126.85 disqualifying the grain dealer for cause, including failure to pay fund assessments under s. 126.15 when due or failure to file a financial statement under s. 126.13 when due from the fund.

SB527, s. 21 Section 21. 126.14 (2) (b) 3. and 4. of the statutes are repealed.

SB527, s. 22 Section 22. 126.14 (4) and (5) of the statutes are created to read:

SB527,11,5 126.14 (4) Notice to producers. A grain dealer who is disqualified from the fund shall immediately give written notice of that disqualification to all grain producers and producer agents to whom the grain dealer has unpaid contract obligations for producer grain produced in this state. The department may by rule or order specify the form and content of the notice.

SB527,11,8 (5) Disqualified grain dealer to pay cash on delivery. A grain dealer who is disqualified from the fund shall pay cash on delivery for all producer grain procured in this state.

SB527, s. 23 Section 23. 126.15 (1) (c) of the statutes is amended to read:

SB527,11,15 126.15 (1) (c) The grain dealer's deferred payment assessment. The deferred payment assessment for a license year equals the grain dealer's deferred payment assessment rate under sub. (6) multiplied by the payment amount, if any, that the grain dealer reports under s. 126.11 (9) (b) in the grain dealer's license application for that license year, less any amount reported under s. 126.11 (9) (e) 4., multiplied by the grain dealer's deferred payment assessment rate under sub. (6).

SB527, s. 24 Section 24. 126.15 (6) of the statutes is amended to read:

SB527,11,20 126.15 (6) Deferred payment assessment rate. A grain dealer's deferred payment assessment rate is 0.0035, except that it is 0.002 for the grain dealer's 5th or higher consecutive full license year as a contributing grain dealer unless the department specifies a different rate by rule.

SB527, s. 25 Section 25. 126.16 (1) (b) (intro.) and 2. of the statutes are consolidated, renumbered 126.16 (1) (b) and amended to read:

SB527,12,6 126.16 (1) (b) A grain dealer who reports any deferred payment contract obligations under s. 126.11 (9) (c) or 126.13 (1) (d), other than deferred payment contract obligations to a grain producer or producer agent who permanently waived eligibility to file a default claim under s. 126.70 (1) (b) and (c), shall file security with the department, and maintain that security until the department releases it under sub. (8) (b), unless the grain dealer has positive equity and one of the following applies: 2. The the grain dealer's annual financial statement under s. 126.13 covers a fiscal year ending after January 1, 2006, and (1) shows a debt to equity ratio of not more than 4.0 to 1.0.

SB527, s. 26 Section 26. 126.16 (1) (b) 1. of the statutes is repealed.

SB527, s. 27 Section 27. 126.16 (1) (c) 2. (intro.) of the statutes is renumbered 126.16 (1) (c) 2. and amended to read:

SB527,12,15 126.16 (1) (c) 2. A grain dealer shall file security with the department, and maintain that security until the department releases it under sub. (8) (bm), if the grain dealer files an annual financial statement under s. 126.13 (1) that shows negative equity, a current ratio of less than 1.25 to 1.0, or a debt to equity ratio of more than 4.0 to 1.0 and the grain dealer's estimated default exposure is greater than the following amount: $20,000,000.

SB527, s. 28 Section 28. 126.16 (1) (c) 2. a. to c. of the statutes are repealed.

SB527, s. 29 Section 29. 126.16 (2) of the statutes is repealed.

SB527, s. 30 Section 30. 126.16 (3) (b) (intro.) and 3. of the statutes are consolidated, renumbered 126.16 (3) (b) and amended to read:

SB527,12,23 126.16 (3) (b) A grain dealer who is only required to file or maintain security only under sub. (1) (c) shall at all times maintain security equal to the grain dealer's estimated default exposure, as defined in sub. (1) (c) 1., less the following amount: 3. For a license year that begins on September 1, 2005, or later, $20,000,000.

SB527, s. 31 Section 31. 126.16 (3) (b) 1. and 2. of the statutes are repealed.

SB527, s. 32 Section 32. 126.16 (4) (e) of the statutes is repealed.

SB527, s. 33 Section 33. 126.16 (8) (c) of the statutes is repealed.