Chapter 126

126.60(4)(a)5. 5. Divide the amount determined under subd. 4. by 2.5.

126.60(4)(a)6. 6. Raise the amount determined under subd. 5. to the 7th power.

126.60(4)(a)7. 7. Add the amount determined under subd. 3. to the amount determined under subd. 6.

126.60(4)(a)8. 8. Add one to the amount determined under subd. 7.

126.60(4)(b) (b) If the vegetable contractor has filed an annual financial statement under s. 126.58 and that financial statement shows a debt to equity ratio of greater than 4.0 to 1.0 but less than 6.0 to 1.0, the vegetable contractor’s debt to equity ratio assessment rate equals the debt to equity ratio assessment factor in sub. (5) (b) multiplied by the following amount:

126.60(4)(b)1. 1. Subtract 4 from the debt to equity ratio.

126.60(4)(b)2. 2. Divide the amount determined under subd. 1. by 4.

126.60(4)(b)3. 3. Raise the amount determined under subd. 2. to the 3rd power.

126.60(4)(b)4. 4. Subtract 1.85 from the debt to equity ratio.

126.60(4)(b)5. 5. Divide the amount determined under subd. 4. by 2.5.

126.60(4)(b)6. 6. Raise the amount determined under subd. 5. to the 7th power.

126.60(4)(b)7. 7. Add the amount determined under subd. 3. to the amount determined under subd. 6.

126.60(4)(b)8. 8. Add one to the amount determined under subd. 7.

126.60(4)(c) (c) If the vegetable contractor has filed an annual financial statement under s. 126.58 and that financial statement shows negative equity or a debt to equity ratio of at least 6.0 to 1.0, the vegetable contractor’s debt to equity ratio assessment rate equals the debt to equity ratio assessment factor in sub. (5) (b) multiplied by 35.859145.

126.60(4)(d) (d) If the vegetable contractor has not filed an annual financial statement under s. 126.58, the vegetable contractor’s debt to equity ratio assessment rate equals the debt to equity ratio assessment factor in sub. (5) (b) multiplied by 1.34793.

126.60(5) (5) Debt to equity ratio assessment factor.

126.60(5)(a) (a) A vegetable contractor’s debt to equity ratio assessment factor under sub. (4) (a) is 0.000135, except as follows:

126.60(5)(a)1. 1. For the vegetable contractor’s 4th and 5th consecutive full license years as a contributing vegetable contractor, the vegetable contractor’s debt to equity ratio assessment factor is 0.00008.

126.60(5)(a)2. 2. For the vegetable contractor’s 6th or higher consecutive full license year as a contributing vegetable contractor, the vegetable contractor’s debt to equity ratio assessment factor is zero.

126.60(5)(b) (b) A vegetable contractor’s debt to equity ratio assessment factor under sub. (4) (b) to (d) is 0.000203, except as follows:

126.60(5)(b)1. 1. For the vegetable contractor’s 4th and 5th consecutive full license years as a contributing vegetable contractor, the vegetable contractor’s debt to equity ratio assessment factor is 0.00016.

126.60(5)(b)2. 2. For the vegetable contractor’s 6th or higher consecutive full license year as a contributing vegetable contractor, the vegetable contractor’s debt to equity ratio assessment factor is 0.0001.

126.60(5m) (5m) Reduced assessment for certain vegetable contractors filing security. If a vegetable contractor files security under s. 126.61 (1) (b), the vegetable contractor’s assessment is the amount determined under sub. (1) reduced by an amount determined as follows:

126.60(5m)(a) (a) Divide the amount of security that the vegetable contractor is required to file as determined under s. 126.61 (3) (b) by the amount of the vegetable contractor’s estimated default exposure, as defined in s. 126.61 (1) (b) 1.

126.60(5m)(b) (b) Multiply the amount of the assessment determined under sub. (1) by the amount determined under par. (a).

126.60(6) (6) Quarterly installments.

126.60(6)(a) (a) A contributing vegetable contractor shall pay the vegetable contractor’s annual fund assessment in equal quarterly installments that are due as follows:

126.60(6)(a)1. 1. The first installment is due on March 1 of the license year.

126.60(6)(a)2. 2. The 2nd installment is due on June 1 of the license year.

126.60(6)(a)3. 3. The 3rd installment is due on September 1 of the license year.

126.60(6)(a)4. 4. The 4th installment is due on December 1 of the license year.

126.60(6)(b) (b) A contributing vegetable contractor may prepay any of the quarterly installments under par. (a).

126.60(6)(c) (c) A contributing vegetable contractor who applies for an annual license after the beginning of a license year shall pay the full annual fund assessment required under this section. The vegetable contractor shall pay, with the first quarterly installment that becomes due after the day on which the department issues the license, all of that year’s quarterly installments that were due before that day.

126.60(6)(d) (d) A contributing vegetable contractor who fails to pay the full amount of any quarterly installment when due shall pay, in addition to that installment, a late payment penalty of $50 or 10 percent of the overdue installment amount, whichever is greater.

126.60(7) (7) Notice of annual assessment and quarterly installments. When the department issues an annual license to a contributing vegetable contractor, the department shall notify the vegetable contractor of all of the following:

126.60(7)(a) (a) The amount of the vegetable contractor’s annual fund assessment under this section.

126.60(7)(b) (b) The amount of each required quarterly installment under sub. (6) and the date by which the vegetable contractor must pay each installment.

126.60(7)(c) (c) The penalty that applies under sub. (6) (d) if the vegetable contractor fails to pay any quarterly installment when due.

126.60 History History: 2001 a. 16; 2003 a. 38, 326; 2009 a. 296.

126.61 126.61 Vegetable contractors; security.

126.61(1) (1) Security required.

126.61(1)(a) (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):

126.61(1)(a)1. 1. The vegetable contractor reports more than $500,000 in annual contract obligations under s. 126.56 (9) (am).

126.61(1)(a)2. 2. The vegetable contractor files a financial statement under s. 126.58 (1) and that financial statement shows negative equity.

126.61(1)(b) (b)

126.61(1)(b)1. 1. In this paragraph, “estimated default exposure” means 75 percent of the highest amount of unpaid contract obligations, reported by a vegetable contractor under s. 126.56 (9) (b) or (12) that the vegetable contractor had at any time during the last 12 months.

126.61(1)(b)2. 2. Except as provided in par. (c), a vegetable contractor shall file security with the department, and shall maintain that security until the department releases it under sub. (7) (bm), if at any time all of the following apply:

126.61(1)(b)2.a. a. The vegetable contractor’s latest annual financial statement under s. 126.58 (1) 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.

126.61(1)(b)2.b. b. The vegetable contractor’s estimated default exposure exceeds $20,000,000.

126.61(1)(c) (c) A vegetable contractor is not required to file security under this subsection if any of the following applies:

126.61(1)(c)1. 1. The vegetable contractor pays cash on delivery under all vegetable procurement contracts.

126.61(1)(c)2. 2. The vegetable contractor is a producer-owned cooperative or unincorporated cooperative association that procures processing vegetables only from its producer members.

126.61(1)(c)3. 3. The vegetable contractor is a processing potato buyer who has elected not to participate in the fund in accordance with s. 126.595 (1).

126.61(3) (3) Amount of security.

126.61(3)(a) (a) Except as provided in par. (b), 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 75 percent of the amount of unpaid contract obligations last reported under s. 126.56 (9) (b) or (12), except that this amount is not required of a contributing vegetable contractor.

126.61(3)(b) (b) A vegetable contractor who is required to file or maintain security only under sub. (1) (b) shall at all times maintain security equal to the vegetable contractor’s estimated default exposure, as defined in sub. (1) (b) 1., less $20,000,000.

126.61(4) (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:

126.61(4)(a) (a) Currency.

126.61(4)(b) (b) A commercial surety bond if all of the following apply:

126.61(4)(b)1. 1. The surety bond is made payable to the department for the benefit of vegetable producers and producer agents.

126.61(4)(b)2. 2. The surety bond is issued by a person authorized to operate a surety business in this state.

126.61(4)(b)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.

126.61(4)(b)4. 4. The surety bond is issued in a form, and subject to any terms and conditions, that the department considers appropriate.

126.61(4)(c) (c) A certificate of deposit or money market certificate, if all of the following apply:

126.61(4)(c)1. 1. The certificate is issued or endorsed to the department for the benefit of vegetable producers and producer agents.

126.61(4)(c)2. 2. The certificate may not be canceled or redeemed without the department’s written permission.

126.61(4)(c)3. 3. No person may transfer or withdraw funds represented by the certificate without the department’s written permission.

126.61(4)(c)4. 4. The certificate renews automatically without any action by the department.

126.61(4)(c)5. 5. The certificate is issued in a form, and subject to any terms and conditions, that the department considers appropriate.

126.61(4)(d) (d) An irrevocable bank letter of credit if all of the following apply:

126.61(4)(d)1. 1. The letter of credit is payable to the department for the benefit of vegetable producers and producer agents.

126.61(4)(d)2. 2. The letter of credit is issued on bank letterhead.

126.61(4)(d)3. 3. The letter of credit is issued for an initial period of at least one year.

126.61(4)(d)4. 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.

126.61(4)(d)5. 5. The letter of credit is issued in a form, and subject to any terms and conditions, that the department considers appropriate.

126.61(5) (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.

126.61(6) (6) Additional security.

126.61(6)(a) (a) The department may, at any time, demand additional security from a vegetable contractor if any of the following applies:

126.61(6)(a)1. 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.

126.61(6)(a)2. 2. The vegetable contractor fails to provide required information that is relevant to a determination of security requirements.

126.61(6)(b) (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.

126.61(6)(c) (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.

126.61(6)(d) (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.

126.61(6)(e) (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:

126.61(6)(e)1. 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.

126.61(6)(e)2. 2. Suspend or revoke the vegetable contractor’s license.

126.61(7) (7) Releasing security.

126.61(7)(a) (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:

126.61(7)(a)1. 1. The vegetable contractor reports less than $500,000 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).