SB599: Bill Text

2017 - 2018 LEGISLATURE

2017 Senate BILL 599

November 30, 2017 - Introduced by Senators Marklein and Olsen, cosponsored by Representatives Ripp, Ballweg, E. Brooks, R. Brooks, Horlacher, Kulp, Krug, Nerison, Tauchen, Tittl, Tusler and VanderMeer. Referred to Committee on Agriculture, Small Business and Tourism.

SB599,2,6 An Act to repeal 126.01 (20) (a), 126.11 (3) (f), 126.41 (2) (f), 126.44 (1) (c), 126.46 (5m) (a) 1., 126.46 (5m) (a) 2., 126.47 (3) (a) 1., 126.47 (3) (a) 2., 126.56 (3) (f) and 126.88 (1) (c); to renumber 126.41 (9) (a), 126.41 (9) (b) and 126.47 (1) (b) 2.; to renumber and amend 126.41 (9) (intro.), 126.44 (1) (a), 126.44 (1) (b), 126.46 (5m) (a) (intro.), 126.47 (1) (b) 1. (intro.), 126.47 (1) (b) 1. a., 126.47 (1) (b) 1. b., 126.47 (3) (a) (intro.) and 126.48 (3); to consolidate, renumber and amend 126.01 (20) (intro.) and (b); to amend 126.11 (6), 126.11 (9) (intro.), 126.13 (1) (a) 2., 126.13 (1) (b) 2., 126.13 (1) (d), 126.13 (4m), 126.16 (1) (b), 126.16 (1) (c) 1. b., 126.16 (3) (a) (intro.), 126.16 (3) (a) 2., 126.16 (3) (b), 126.26 (5), 126.28 (4m), 126.41 (6) (intro.), 126.44 (1) (d), 126.44 (3), 126.44 (6m), 126.46 (1), 126.47 (3) (b), 126.47 (7) (a) (intro.), 126.47 (7) (am), 126.48 (1), 126.48 (2), 126.56 (9) (intro.), 126.58 (4m) and 126.88 (1) (b); and to create 126.13 (1) (e), 126.16 (3) (am), 126.16 (3) (c), 126.40 (6m), 126.40 (7e) (a) (intro.), 126.40 (7e) (b), 126.41 (6) (ag), 126.41 (6) (ar), 126.41 (6) (br) 4., 126.44 (1) (a) 1., 126.44 (1) (a) 2., 126.44 (1) (b) 1., 126.44 (1) (b) 2., 126.44 (1) (e), 126.47 (1) (ae), 126.47 (3) (ae), 126.47 (3) (c), 126.47 (5m) (title), 126.47 (5m) (a), 126.47 (5m) (b) (intro.), 126.47 (7) (ae), 126.485, 126.56 (2) (c), 126.70 (4) (gm), 126.70 (4) (L) and 126.73 (4) of the statutes; relating to: various changes to the Agricultural Producer Security Program, providing an exemption from emergency rule procedures, and granting rule-making authority.

Analysis by the Legislative Reference Bureau

This bill makes changes to the Agricultural Producer Security Program, which is administered by the Department of Agriculture, Trade and Consumer Protection. The program is designed to minimize the risk that certain persons who buy vegetables from producers for processing, who buy milk or grain, or who store grain in a warehouse (contractors) will default on their financial obligations to vegetable, dairy, or grain producers. Under the program, contractors are required to be licensed by DATCP, and most contractors must pay into the agricultural producer security fund. If a contractor defaults, the fund reimburses a producer for a portion of the losses that the producer incurs as a result of the default.

Small vegetable processor exemption

Except for restaurants, other retail food establishments, and certain federally licensed persons, current law requires a person who procures vegetables grown for use in food processing from a vegetable producer, or the producer's agent, to satisfy certain requirements including payment of fees and assessments, holding a license granted by DATCP, and filing annual financial statements. The bill exempts a person who procures vegetables that are grown for use in food processing from a vegetable producer, or the producer's agent, from those requirements if the person spends less than $15,000 per year on procuring vegetables.

Milk deferred payment contracts

The bill allows a person who buys milk from a milk producer to enter into a contract to pay the producer for that milk up to approximately five months after the person receives the milk. Under the bill, a deferred payment contract for milk must be in writing, contain certain notices, and meet certain other requirements. Current law requires that a person who buys milk from a milk producer make certain portions of the payment for that milk by the 4th and the 19th days of the next month. The bill also requires DATCP to promulgate rules that establish an additional license assessment that a milk producer must pay for entering into a deferred payment contract, and requires a person who buys milk under a deferred payment contract to file and maintain security with DATCP, in certain situations, until it is eligible to be released.

Grain dealer and grain warehouse keeper fund balances

The bill also combines the agricultural producer security fund balance attributable to grain dealers and the fund balance attributable to grain warehouse keepers into a single fund balance attributable to both. Current law establishes a threshold for each fund balance attributable to a particular type of contractor, at which DATCP is required to reduce certain fees paid by contractors who have contributed to the fund by a portion of the amount that the fund balance exceeds the threshold. The bill adds together the threshold for the fund balance attributable to grain dealers and the threshold for the fund balance attributable to grain warehouse keepers to create a single threshold for certain fee reductions for both grain dealers and grain warehouse keepers. Under the bill, however, if the fund balance attributable to both grain dealers and grain warehouse keepers exceeds the threshold established by the bill, grain warehouse keepers are not eligible to receive a reduction in their inspection fee until January 1, 2023.

Grain dealer deferred payment purchases

The bill also exempts the purchases that a grain dealer makes under a deferred payment contract from being counted in the requirements that are used to determine whether a grain dealer must file annual statements or file and maintain security with DATCP, if the producer who sells the grain under the deferred payment contract permanently waives its ability to receive a payment from the agricultural producer security fund after a default by that grain dealer. Under current law, such purchases are included in determining whether a grain dealer must file annual financial statements or file and maintain security, in certain situations, with DATCP.

Payments to producers due to a default

The bill also requires DATCP to disallow a claim by a producer for compensation from an agricultural producer security fund for a default if the producer does not file a claim against the defaulting party in each federal bankruptcy proceeding or state insolvency proceeding, initiated by another party, in which the producer is eligible to file a claim. The bill also grants DATCP subrogation rights to recover from a defaulting party, or any other party that is liable to a producer, the amount of any payment made by an agricultural producer security fund to a producer as a result of a default.

Other provisions

The bill also modifies the amount of security that a grain dealer or milk contractor is required to maintain in certain other situations besides when purchases are made under a deferred payment contract. Also, the bill eliminates the current law requirement that a sworn and notarized statement accompany a license application and certain financial reports that must be filed with DATCP.

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:

SB599,1 Section 1. 126.01 (20) (intro.) and (b) of the statutes are consolidated, renumbered 126.01 (20) and amended to read:

SB599,4,6 126.01 (20) “Reviewed financial statement" means a contractor's financial statement, other than an audited financial statement, if all of the following apply: (b) The financial statement that is reviewed by an independent certified public accountant licensed or certified under ch. 442.

SB599,2 Section 2. 126.01 (20) (a) of the statutes is repealed.

SB599,3 Section 3. 126.11 (3) (f) of the statutes is repealed.

SB599,4 Section 4. 126.11 (6) of the statutes is amended to read:

SB599,4,17 126.11 (6) Fee credits. If the combined balance in the fund contributed by grain dealers and grain warehouse keepers, as defined in s. 126.25 (9), exceeds $2,000,000 $2,300,000 on May 31 of any license year, the department shall credit 50 percent 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.

SB599,5 Section 5. 126.11 (9) (intro.) of the statutes is amended to read:

SB599,5,2 126.11 (9) Sworn and notarized Applicant statement. (intro.) As part of a license application under sub. (3), an applicant shall provide a sworn and notarized statement, signed by the applicant or an officer of the applicant, that reports all of the following:

SB599,6 Section 6. 126.13 (1) (a) 2. of the statutes is amended to read:

SB599,5,6 126.13 (1) (a) 2. Any deferred payment contract obligations under s. 126.11 (9) (c) to a grain producer or producer agent that has not, under s. 126.70 (1) (b), permanently waived eligibility to file a default claim against the grain dealer.

SB599,7 Section 7. 126.13 (1) (b) 2. of the statutes is amended to read:

SB599,5,10 126.13 (1) (b) 2. Any deferred payment contract obligations under s. 126.11 (9) (c) to a grain producer or producer agent that has not, under s. 126.70 (1) (b), permanently waived eligibility to file a default claim against the grain dealer.

SB599,8 Section 8. 126.13 (1) (d) of the statutes is amended to read:

SB599,5,15 126.13 (1) (d) A Except as provided under par. (e), a grain dealer licensed under s. 126.11 may not incur any obligations under deferred payment contracts for grain procured in this state unless the contractor first notifies the department and files an annual financial statement with the department.

SB599,9 Section 9. 126.13 (1) (e) of the statutes is created to read:

SB599,5,21 126.13 (1) (e) A grain dealer licensed under s. 126.11 is not required to notify the department or file an annual financial statement with the department under par. (d) for an obligation incurred under a deferred payment contract, for grain procured in this state, with a grain producer or producer agent that has, under s. 126.70 (1) (b), permanently waived eligibility to file a default claim against the grain dealer.

SB599,10 Section 10. 126.13 (4m) of the statutes is amended to read:

SB599,6,3 126.13 (4m) Interim financial statement. The department may, at any time, require a grain dealer licensed under s. 126.11 to file an interim financial statement with the department. The grain dealer shall provide, with the interim financial statement, the grain dealer's sworn and notarized statement that the financial statement is correct. An interim financial statement need not be a reviewed financial statement or an audited financial statement.

SB599,11 Section 11. 126.16 (1) (b) of the statutes is amended to read:

SB599,6,12 126.16 (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 the grain dealer's annual financial statement under s. 126.13 (1) shows that the grain dealer has positive equity and a debt to equity ratio of not more than 4.0 to 1.0.

SB599,12 Section 12. 126.16 (1) (c) 1. b. of the statutes is amended to read:

SB599,6,19 126.16 (1) (c) 1. b. The grain dealer's highest total, at any time during the preceding 12 months, of unpaid obligations for producer grain procured in this state under deferred payment contracts, excluding any unpaid obligations under a deferred payment contract, for grain procured in this state, with a grain producer or producer agent that has, under s. 126.70 (1) (b), permanently waived eligibility to file a default claim against the grain dealer.

SB599,13 Section 13. 126.16 (3) (a) (intro.) of the statutes is amended to read:

SB599,6,23 126.16 (3) (a) (intro.) Except as provided in par. (b), a A grain dealer who is required to file or maintain security under this section sub. (1) (a) shall at all times maintain security that is at least equal to the sum of the following:

SB599,14 Section 14. 126.16 (3) (a) 2. of the statutes is amended to read:

SB599,7,6 126.16 (3) (a) 2. The grain dealer's highest total, at any time during the preceding 12 months, of unpaid obligations for producer grain procured in this state under deferred payment contracts, excluding any unpaid obligation under a deferred payment contract, for grain procured in this state, with a grain producer or producer agent that has, under s. 126.70 (1) (b), permanently waived eligibility to file a default claim against the grain dealer.

SB599,15 Section 15. 126.16 (3) (am) of the statutes is created to read:

SB599,7,15 126.16 (3) (am) A grain dealer who is required to file or maintain security under sub. (1) (b) shall at all times maintain security that is at least equal to the grain dealer's highest total, at any time during the preceding 12 months, of unpaid obligations for producer grain procured in this state under deferred payment contracts, excluding any unpaid obligation under a deferred payment contract, for grain procured in this state, with a grain producer or producer agent that has, under s. 126.70 (1) (b), permanently waived eligibility to file a default claim against the grain dealer.

SB599,16 Section 16. 126.16 (3) (b) of the statutes is amended to read:

SB599,7,19 126.16 (3) (b) A grain dealer who is required to file or maintain security only under sub. (1) (c) 2. shall at all times maintain security at least equal to the grain dealer's estimated default exposure, as defined in sub. (1) (c) 1., less $20,000,000.

SB599,17 Section 17. 126.16 (3) (c) of the statutes is created to read:

SB599,7,24 126.16 (3) (c) If more than one of pars. (a) to (b) applies to a grain dealer, the grain dealer shall at all times maintain security at least equal to the greatest amount of security that the grain dealer is required to maintain under any one of pars. (a) to (b).

SB599,18 Section 18. 126.26 (5) of the statutes is amended to read:

SB599,8,9 126.26 (5) Fee credit. If Beginning on January 1, 2023, if the combined fund balance contributed by grain warehouse keepers and grain dealers, as defined in s. 126.10 (9), exceeds $300,000 $2,300,000 on May 31 of any license year, the department shall credit 12.5 percent of the excess amount against grain warehouse inspection fees charged under sub. (3) (b) to contributing grain warehouse keepers who file timely license renewal applications for the next license year. The department shall credit each contributing grain warehouse keeper on a prorated basis, in proportion to the total inspection fees that the warehouse keeper has paid under sub. (3) (b) for the 4 preceding license years.

SB599,19 Section 19. 126.28 (4m) of the statutes is amended to read:

SB599,8,17 126.28 (4m) Interim financial statement. The department may, at any time, require a grain warehouse keeper licensed under s. 126.26 (1) to file an interim financial statement with the department. The grain warehouse keeper shall provide, with the interim financial statement, the warehouse keeper's sworn and notarized statement that the financial statement is correct. An interim financial statement need not be a reviewed financial statement or an audited financial statement.

SB599,20 Section 20. 126.40 (6m) of the statutes is created to read:

SB599,8,21 126.40 (6m) “Deferred payment contract” means a contract for the procurement of producer milk under which all of the following apply to a milk contractor's payment:

SB599,9,2 (a) For producer milk received during the first 15 days of the preceding month, the milk contractor's payment is due after the 4th day of the month, based on an estimated price that is at least 80 percent of the class III price published by the regional federal milk market administrator for the month preceding the month in which the milk is received, or 80 percent of the contract price, whichever is greater.

SB599,9,4 (b) For producer milk received during the preceding month, the balance of the milk contractor's payment is due after the 19th day of the month.

SB599,21 Section 21. 126.40 (7e) (a) (intro.) of the statutes is created to read:

SB599,9,6 126.40 (7e) (a) (intro.) Seventy-five percent of the following:

SB599,22 Section 22. 126.40 (7e) (b) of the statutes is created to read:

SB599,9,13 126.40 (7e) (b) The milk contractor's highest total, at any time during the 12 preceding months, of unpaid obligations for producer milk procured in this state under a deferred payment contract, excluding any unpaid obligations under a deferred payment contract, for milk procured in this state, with a milk producer or producer agent that has, under s. 126.70 (1) (b), permanently waived eligibility to file a default claim against the milk contractor.

SB599,23 Section 23. 126.41 (2) (f) of the statutes is repealed.

SB599,24 Section 24. 126.41 (6) (intro.) of the statutes is amended to read:

SB599,9,19 126.41 (6) Sworn and notarized Applicant statement. (intro.) As part of a license application under sub. (2), an applicant shall provide a sworn and notarized statement, signed by the applicant or an authorized officer of the applicant, that reports all of the following information:

SB599,25 Section 25. 126.41 (6) (ag) of the statutes is created to read:

SB599,9,22 126.41 (6) (ag) The amount of payments under par. (a) made under deferred payment contracts.

SB599,26 Section 26. 126.41 (6) (ar) of the statutes is created to read:

SB599,10,3 126.41 (6) (ar) Whether the applicant has had any obligations under deferred payment contracts, for milk procured in this state, at any time since the beginning of the applicant's last completed fiscal year.

SB599,27 Section 27. 126.41 (6) (br) 4. of the statutes is created to read:

SB599,10,6 126.41 (6) (br) 4. The amount of payments under subd. 3. made under deferred payment contracts.

SB599,28 Section 28. 126.41 (9) (intro.) of the statutes is renumbered 126.47 (5m) (intro.) and amended to read:

SB599,10,11 126.47 (5m) (intro.) A milk contractor who files and maintains is required to file or maintain security under s. 126.47 this section shall provide a monthly report to the department containing either all of the following:

SB599,29 Section 29. 126.41 (9) (a) of the statutes is renumbered 126.47 (5m) (b) 1.

SB599,30 Section 30. 126.41 (9) (b) of the statutes is renumbered 126.47 (5m) (b) 2.

SB599,31 Section 31. 126.44 (1) (a) of the statutes is renumbered 126.44 (1) (a) (intro.) and amended to read:

SB599,10,20 126.44 (1) (a) (intro.) A milk contractor shall file an annual financial statement with the department, before the department first licenses the milk contractor under s. 126.41 (1), unless the milk contractor reports no more than 150,000 hundredweight of milk under s. 126.41 (6) (bg). if the milk contractor's license application shows any of the following:

SB599,32 Section 32. 126.44 (1) (a) 1. of the statutes is created to read: