76
th Legislative Session _ 2001
1136ta
On the printed bill, delete everything after the enacting clause and insert:
"
Section 1. Terms used in this Act mean:
(1) "Active contractor," a person who owns a commodity produced by a contract producer
according to a production contract;
(2) "Agricultural contract," a marketing or a production contract;
(3) "Capital investment," an investment in a structure, such as a building or manure storage
structure, or machinery or equipment with a useful life exceeding one year and associated
with the production of a commodity;
(4) "Commodity," livestock, raw milk, or a crop;
(5) "Contract crop field," farmland on which a crop is produced according to a production
contract;
(6) "Contract livestock facility," an animal feeding operation that produces livestock or raw
milk according to a production contract. The term includes a confinement feeding
operation, an open feedlot, land on which crops or other vegetation is grown and used to
graze or feed livestock, or land used to feed livestock for slaughter;
(7) "Contract operation," a contract livestock facility or a contract crop field;
(8) "Contract producer," a producer who holds a legal interest in a contract operation and who
produces a commodity under a production contract;
(9) "Contractor," a person who is an active contractor or a passive contractor;
(10) "Crop," a plant used for food, animal feed, fiber, oil, pharmaceuticals, netriceuticals, or
seed, including alfalfa, barley, buckwheat, corn, flax, forage, millet, oats, popcorn, rye,
sorghum, soybeans, sunflowers, tobacco, wheat, and grasses used for forage or silage;
(11) "Livestock," beef cattle, dairy cattle, poultry, sheep, or swine;
(12) "Marketing contract," a written agreement between a processor and a producer for the
purchase of commodities grown or raised by the producer in this state. A marketing
contract is executed when it is signed or orally agreed to by each party or by a person
authorized to act on the party's behalf;
(13) "Passive contractor," a person who furnishes management services to a contract producer
and who does not own a commodity that is produced by the contract producer according
to a production contract;
(14) "Processor," a person engaged in the business of manufacturing goods from commodities,
including by slaughtering or processing livestock, processing raw milk or crops. The term
does not include custom exempt plants as defined in
§
39-5-6(4);
(15) "Produce," to provide feed or services relating to the care and feeding of livestock,
including milking dairy cattle and storing raw milk. The term also means planting, raising,
harvesting, and storing a crop, including preparing the soil for planting and nurturing the
crop by the application of fertilizers, soil conditioners, or pesticides;
(16) "Producer," a person who produces a commodity. The term does not include a commercial
fertilizer or pesticide applicator, feed supplier, veterinarian, grain warehouse, or custom
harvester if acting in such capacity;
(17) "Production contract," a written agreement that provides for the production of a
commodity or the provision of management services relating to the production of a
commodity by a contract producer. A production contract is executed if it is signed by
each party to the contract or by a person authorized to act on the party's behalf. Production
contracts include all contracts where the production contract is executed by an active
contractor and a contract producer, the production contract is executed by an active
contractor and a passive contractor for the provision of management services to the
contract producer, or the production contract is executed by a passive contractor and a
contract producer where the passive contractor provides management services to the
contract producer.
Section 2. Execution of an agricultural contract imposes an obligation of good faith, as defined
in
§
57A-1-201(19), on all parties with respect to the contract's performance and enforcement.
Section 3. Agricultural contracts executed or amended after the effective date of this Act shall
be accompanied by a clear written disclosure statement setting forth the nature of the material risks,
described below, faced by the producer upon entry into the contract. The disclosure statement shall
meet the readability requirements of section 5 of this Act and shall disclose the following:
(1) In the case of production contracts, the producer's right to review as provided in section
6 of this Act;
(2) Contract duration;
(3) Contract termination;
(4) Renegotiation standards;
(5) Responsibility for environmental damage;
(6) Factors to be used in determining payment; and
(7) Responsibility for obtaining and complying with local, state, federal permits.
Section 4. An agricultural contract executed or amended after the effective date of this Act shall
contain a cover sheet as the first page or pages of text. The cover sheet shall contain:
(1) A brief statement that the document is a legal contract between the parties;
(2) The following statement: "READ YOUR CONTRACT CAREFULLY. This cover sheet
provides only a brief summary of your contract. This is not the contract and only the terms
of the actual contract are legally binding. The contract itself sets forth, in detail, the rights
and obligations of both you and the contractor or processor. IT IS THEREFORE
IMPORTANT THAT YOU READ YOUR CONTRACT CAREFULLY";
(3) The disclosure statement required by section 3 of this Act; and
(4) An index of the major provisions of the contract and the pages on which they are found,
including all of the following:
(a) The names of all parties to the contract.;
(b) The definition sections of the contract;
(c) The provisions governing termination, cancellation, renewal, and amendment of
the contract by either party;
(d) The duties or obligations of each party; and
(e) Any provisions subject to change in the contract.
Section 5. An agricultural contract executed or amended after the effective date of this Act shall
be in legible type with a typeface of at least ten-point modern type, appropriately divided and
captioned by its various sections, and written in clear and coherent language using simple sentence
structure, clear definitions, and words and grammar understandable by a person of average
intelligence, education, and experience within the industry. A contract shall avoid esoteric legal
terms and minimize references to other sections or provisions. The following terms may be used in
an agricultural contract:
(1) Legally required terms, including particular words, phrases, provisions, or forms of
agreement specifically required, recommended, or endorsed by a state or federal statute,
rule, or regulation;
(2) Customarily used terms, including technical terms used to describe the services or
property that are the subject of the contract, if the terms are customarily used by producers
in the ordinary course of business in connection with the services or property being
described.
Section 6. A contract producer may cancel a production contract by mailing a written
cancellation notice to the contractor within three business days after the contract is executed, or by
the cancellation deadline if specified in the contract, whichever is later. The contract producer's right
to cancel, the method by which the contract producer may cancel, and the deadline for canceling the
production contract shall be clearly disclosed in every production contract.
Section 7. Any provision of an agricultural contract executed or amended after the effective date
of this Act that imposes confidentiality on information other than trade secrets contained in the
agricultural contract, is void. Such a provision is void whether it is express or implied; oral or
written; required or conditional; or contained in the agricultural contract, another agricultural
contract, or in a related document, policy, or agreement. Other provisions of an agricultural contract
or a related document, policy, or agreement that can be given effect without the voided provision are
not affected. This section does not require a party to an agricultural contract to divulge information
about the contract to another person.
Section 8. A contract producer has a lien for the amount owed by an active contractor pursuant
to the terms of the production contract.
Section 9. If the production contract is for livestock, the lien established pursuant to section 8
of this Act applies as follows:
(1) If the livestock is not sold or slaughtered by the contractor, the lien is on the livestock;
(2) If the livestock is sold by the contractor, the lien is on sale proceeds;
(3) If the livestock is slaughtered by the contractor, the lien is on any property of the
contractor that may be subject to a security interest as provided in
§
57A-9-102.
Section 10. If the production contract is for raw milk, the lien established pursuant to section 8
of this Act applies as follows:
(1) If the raw milk is not sold or processed by the contractor, the lien is on the raw milk;
(2) If the raw milk is sold by the contractor, the lien is on sale proceeds;
(3) If the raw milk is processed by the contractor, the lien is on any property of the contractor
that may be subject to a security interest as provided in
§
57A-9-102.
Section 11. A lien on livestock or raw milk under this Act is created at the time the livestock first
arrives at the contract facility and continues for one year after the livestock leaves the contract
facility.
Section 12. If the production contract is for crops, the lien established pursuant to section 8 of
this Act applies as follows:
(1) If the crop is not sold or processed by the contractor, the lien is on the crop;
(2) If the crop is sold by the contractor, the lien is on cash sale proceeds.;
(3) If the crop is processed by the contractor, the lien is on any property of the contractor that
may be subject to a security interest as provided in
§
57A-9-102.;
(4) A lien on a crop is created at the time the crop is first planted and continues for one year
after the crop, or grain from the crop, is no longer under the custody or control of the
contract producer.
Section 13. In order to preserve a lien created pursuant to section 8 if this Act, a contract
producer shall file a lien statement with the secretary of state on a form prescribed by the secretary
of state. A lien statement covering the production of livestock or raw milk, must be filed within
forty-five days after the livestock first arrives at the contract livestock facility. A lien statement
covering crops must be filed within forty-five days after the crop is first planted. The secretary of
state may charge a fee in accordance with the provisions of
§
57A-9-525 for filing the statement. The
secretary of state may adopt rules pursuant to chapter 1-26 for the filing and release of lien
statements, fees, and electronic filings.
Section 14. The lien statement filed pursuant to section 13 of this Act shall include:
(1) The name and address of the contract producer;
(2) The name of the active contractor whose commodity is produced pursuant to the
production contract; and
(3) The location of the contract operation, by county and township.
Section 15. A lien statement filed pursuant to section 13 of this Act shall be released by the
contract producer upon payment of the amount owed pursuant to the production contract. A release
shall be filed with the secretary of state, on a form prescribed by the secretary, within thirty days after
payment.
Section 16. A contract producer may foreclose a lien created under section 8 of this Act in the
manner provided for the foreclosure of secured transactions in chapter 57A-9.
Section 17. A lien created pursuant to this Act has priority over all other liens and encumbrances
if filed within forty-five days after the livestock first arrives at the contract facility or within forty-
five days after the crop is first planted.
Section 18. Sections 19 to 22, inclusive, of this Act only apply to a production contract executed
by a contract producer and a contractor, if the contract producer must make capital investments of
one hundred thousand dollars or more. The amount of the capital investment is determined by
aggregating the investment requirements provided in all production contracts in which the contract
producer and the contractor are parties. The value of the capital investments is the total dollar
amount spent by the contract producer in satisfying the investment requirements.
Section 19. Except as provided in section 21 of this Act, a contractor may not terminate or cancel
a production contract until providing the contract producer written notice at least ninety days before
the effective date of the termination or cancellation, and the contract producer has been reimbursed
for damages incurred due to the termination or cancellation. Damages shall be based on the value
of the remaining useful life of the structures, machinery, or equipment involved.
Section 20. Except as provided in section 21 of this Act, a contractor may not terminate or cancel
a production contract that has been materially breached by a contract producer until the contractor
has provided written notice of termination or cancellation at least forty-five days before its effective
date, which contains the alleged causes constituting the breach, and the contract producer has failed
to remedy each breach within thirty days following receipt of the notice. An effort by a contract
producer to remedy an alleged breach may not be construed as an admission of a breach in a civil
cause of action.
Section 21. A contractor may terminate or cancel a production contract without notice or remedy
as required in sections 19 and 20 of this Act if the basis for the termination or cancellation is
voluntary abandonment of the contractual relationship by the contract producer by a failure of a
contract producer to perform the obligations of a production contract, or the conviction of a contract
producer of fraud or theft committed against the contractor.
Section 22. If a contractor terminates or cancels a production contract other than provided in
sections 19 to 21, inclusive, of this Act, the contractor shall pay the contract producer the value of
the remaining useful life of the structures, machinery, or equipment involved.
Section 23. For purposes of this Act, the term, contract input, means a commodity or an organic
or synthetic substance or compound used to produce a commodity, including livestock or plants,
agricultural seeds, semen or eggs for breeding livestock, and fertilizer or pesticide.
Section 24. For purposes of this Act, the term, producer right, means one of the following legal
rights and protections:
(1) The right of a producer to join or belong to, or to refrain from joining or belonging to, an
association of producers;
(2) The right of a producer to enter into a membership agreement or marketing contract with
an association of producers, a processor, or another producer, and the right of the producer
to exercise contractual rights under such a membership agreement or marketing contract;
(3) The right of a producer to lawfully provide statements or information, including
statements or information to the United States Secretary of Agriculture or to a law
enforcement agency, regarding alleged improper actions or violations of law by a
contractor or processor. This right does not include the right to make libelous or
slanderous statements;
(4) The right of a contract producer to file, terminate, or enforce a lien as provided by
sections 8 to 17, inclusive, of this Act;
(5) The right of a contract producer to have production contracts reviewed by financial
professionals, by legal counsel, and as provided by section 6 of this Act;
(6) The right of a producer to disclose the terms of agricultural contracts as provided by
section 7 of this Act; and
(7) The right of a producer to exercise other protections afforded by this Act or other laws,
rules, or regulations.
Section 25. No contractor or processor may knowingly engage, or permit any employee or agent
to engage, in any of the following actions to coerce, intimidate, disadvantage, retaliate against, or
discriminate against any producer because the producer exercises, or attempts to exercise, any
producer right. Such actions include:
(1) The execution, termination, extension, or renewal of an agricultural contract;
(2) Treatment of a producer that includes placing discriminatory or preferential terms in an
agricultural contract or interpreting terms of an existing agricultural contract in a
discriminatory or preferential manner. For purposes of this section, terms includes the
price paid for a commodity, the quality or the quantity of a commodity demanded,
financing, or investment requirements;
(3) The grant or denial of a reward or imposition of a penalty, including financial rewards or
penalties such as loans, bonuses, or inducements;
(4) The alteration of the quality, quantity, or delivery times of contract inputs provided to a
producer;
Section 26. No contractor or processor may knowingly do, or permit any employee or agent to
do, any of the following:
(1) Provide false information to the producer, including that related to the character, financial
condition, or management practices of a producer with whom the producer associates, or
an association of producers, or an agricultural organization with which the producer is
affiliated, or producer rights provide by this Act or other provisions of law;
(2) Refuse to provide to a contract producer statistical information and data used to determine
the compensation paid under a production contract, including feed conversion rates, feed
analyses, or origination and breeder history;
(3) Refuse to allow a contract producer or a designated representative to observe at the time
of weighing, the weights and measures used to determine the contract producer's
compensation under a production contract;
(4) Use a contract producer's performance, also known as "tournament compensation" to
determine the compensation due another contract producer under a production contract,
or to use that performance as the basis of the termination, cancellation, or renewal of a
production contract;
(5) Require a contract producer to make new or additional capital investments in connection
with, or to retain, continue, or renew, a production contract. It is not be a violation of this
section if such new or additional capital investments are partially paid for by the
contractor, or are offset by other compensation or modifications to the original contract
agreed to in writing as consideration for the new capital investment;
(6) Execute an agricultural contract in violation of the disclosure of risks and readability
requirements of sections 3 to 5, inclusive, of this Act;
(7) Execute an agricultural contract that includes a confidentiality provision in violation of
section 7 of this Act;
(8) Execute an agricultural contract without a mediation provision as required under
section 29 of this Act;
(9) Execute an agricultural contract that includes a waiver of any producer right or any
obligation of a contractor or processor established under this Act;
(10) Execute an agricultural contract requiring the application of the law of another state.
Section 27. Any provision of an agricultural contract that waives a producer right or a contractor
or processor obligation established by this Act is void and unenforceable. No such provision affects
other provisions of an agricultural contract, related document, policy, or agreement, that can be given
effect without the voided provision.
Section 28. Any condition, stipulation, or provision of an agricultural contract requiring the
application of the law of another state is void and unenforceable.
Section 29. An agricultural contract shall contain language providing for resolution of disputes
by mediation.
Section 30. A contractor or processor committing an unfair practice under sections 23 to 26,
inclusive, of this Act is subject to a civil penalty of up to ten thousand dollars per violation.
Section 31. A producer who suffers damages because of a contractor's or processor's violation
of this Act may obtain appropriate legal and equitable relief, including damages, pursuant to the rules
of civil procedure. The court may award the prevailing producer reasonable attorney fees and other
litigation expenses. A producer is not required to post a bond, prove the absence of an adequate
remedy at law, or show the existence of special circumstances, to obtain temporary or permanent
injunctive relief unless the court for good cause otherwise orders.
Section 32. In addition to the remedies provided in this Act, a court reviewing an agricultural
contract may change the terms of the contract or limit a provision to avoid an unfair result if the
court finds:
(1) A material provision of the contract violates sections 3 to 5, inclusive, of this Act;
(2) The violation caused the producer to be substantially confused about any of the rights,
obligations, or remedies of the contract; and
(3) The violation has caused or is likely to cause financial detriment to the producer.
If the court reforms or limits a provision of an agricultural contract, the court shall also make
orders necessary to avoid unjust enrichment. Bringing a claim for relief under this section does not
entitle a producer to withhold performance of an otherwise valid contractual obligation. No relief
may be granted under this section unless the claim is brought before the obligations of the contract
have been fully performed.
Section 33. In a proceeding in which civil penalties are claimed from a party for a violation of
sections 3 to 5, inclusive, of this Act, it is a defense to the claim that the party made a good faith and
reasonable effort to comply.
Section 34. Notwithstanding section 31 of this Act, a party who has made a good faith and
reasonable effort to comply may not be assessed attorney's fees for violations of sections 3 to 5,
inclusive, of this Act.
Section 35. Violation of sections 3 to 5, inclusive, of this Act is not a defense to a claim arising
from a producer's breach of an agricultural contract. A producer may recover actual damages caused
by a violation of sections 3 to 5, inclusive, of this Act only if the violation caused the producer to
not understand the rights, obligations, or remedies of the contract.
Section 36. A claim that an agricultural contract violates sections 3 to 5, inclusive, of this Act
must be raised within six years of the date the contract is executed by the producer.
Section 37. In addition to using other appropriate remedies, the attorney general may enforce the
provisions of this Act, through injunctive action to restrain a contractor or processor from engaging
in conduct or practices in violation of this Act, or to require a contractor or processor to comply with
a provision of this Act. To accomplish the objectives and to carry out the provisions of this Act, the
attorney general issue a subpoena to any contractor or processor to obtain an agricultural contract.
Any person failing to comply with such subpoena may be certified to circuit court, for enforcement
by order. Noncompliance with a judicial order shall be treated the same as a contempt of the court.
Section 38. The attorney general or state's attorney may also bring an action in circuit court for
recovery of civil penalties provided in section 30 of this Act.
Section 39. This Act does not apply to:
(1) Agricultural contracts based on a sharecropping arrangement or agreement;
(2) Agricultural contracts in which all parties executing the contract are producers;
(3) Any contract involving forward contracting of livestock or grain entered into with any
packer, dairy, milk or milk products processor, public grain warehouse, grain dealer, or
grain or livestock exchange or other commodity exchange ;
(4) Any contract involving a grain processing cooperative that is exempt under section 521
of the federal Internal Revenue Code as amended to January 1, 2001."
Moved by: Kloucek
Second by: Hargens
Action: Was not acted on.
MOTION:
SUBSTITUTE MOTION TO TABLE AMENDMENT
Moved by: Duenwald
Second by: Rhoden
Action: Prevailed by roll call vote.(9-4-0-0)
Voting Yes: Fryslie, Hanson (Gary), Holbeck, Jensen, Pitts, Rhoden, Van Gerpen, Lintz,
Duenwald
Voting No: Bradford, Hargens, Kloucek, Sigdestad
MOTION:
SUBSTITUTE MOTION AMEND HB 1136
1136tb
On the printed bill, delete everything after the enacting clause and insert:
"
Section 1. Terms used in this Act mean:
(1) "Active contractor," a person who owns a commodity produced by a contract producer
according to a production contract;
(2) "Agricultural contract," a marketing or a production contract;
(3) "Capital investment," an investment in a structure, such as a building or manure storage
structure, or machinery or equipment with a useful life exceeding one year and associated
with the production of a commodity;
(4) "Commodity," livestock, raw milk, or a crop;
(5) "Contract crop field," farmland on which a crop is produced according to a production
contract;
(6) "Contract livestock facility," an animal feeding operation that produces livestock or raw
milk according to a production contract. The term includes a confinement feeding
operation, an open feedlot, land on which crops or other vegetation is grown and used to
graze or feed livestock, or land used to feed livestock for slaughter;
(7) "Contract operation," a contract livestock facility or a contract crop field;
(8) "Contract producer," a producer who holds a legal interest in a contract operation and who
produces a commodity under a production contract;
(9) "Contractor," a person who is an active contractor or a passive contractor;
(10) "Crop," a plant used for food, animal feed, fiber, oil, pharmaceuticals, netriceuticals, or
seed, including alfalfa, barley, buckwheat, corn, flax, forage, millet, oats, popcorn, rye,
sorghum, soybeans, sunflowers, tobacco, wheat, and grasses used for forage or silage;
(11) "Livestock," beef cattle, dairy cattle, poultry, sheep, or swine;
(12) "Marketing contract," a written agreement between a processor and a producer for the
purchase of commodities grown or raised by the producer in this state. A marketing
contract is executed when it is signed or orally agreed to by each party or by a person
authorized to act on the party's behalf;
(13) "Passive contractor," a person who furnishes management services to a contract producer
and who does not own a commodity that is produced by the contract producer according
to a production contract;
(14) "Processor," a person engaged in the business of manufacturing goods from commodities,
including by slaughtering or processing livestock, processing raw milk or crops. The term
does not include custom exempt plants as defined in
§
39-5-6(4);
(15) "Produce," to provide feed or services relating to the care and feeding of livestock,
including milking dairy cattle and storing raw milk. The term also means planting, raising,
harvesting, and storing a crop, including preparing the soil for planting and nurturing the
crop by the application of fertilizers, soil conditioners, or pesticides;
(16) "Producer," a person who produces a commodity. The term does not include a commercial
fertilizer or pesticide applicator, feed supplier, veterinarian, grain warehouse, or custom
harvester if acting in such capacity;
(17) "Production contract," a written agreement that provides for the production of a
commodity or the provision of management services relating to the production of a
commodity by a contract producer. A production contract is executed if it is signed by
each party to the contract or by a person authorized to act on the party's behalf. Production
contracts include all contracts where the production contract is executed by an active
contractor and a contract producer, the production contract is executed by an active
contractor and a passive contractor for the provision of management services to the
contract producer, or the production contract is executed by a passive contractor and a
contract producer where the passive contractor provides management services to the
contract producer.
Section 2. Execution of an agricultural contract imposes an obligation of good faith, as defined
in
§
57A-1-201(19), on all parties with respect to the contract's performance and enforcement.
Section 3. Agricultural contracts executed or amended after the effective date of this Act shall
be accompanied by a clear written disclosure statement setting forth the nature of the material risks,
described below, faced by the producer upon entry into the contract. The disclosure statement shall
meet the readability requirements of section 5 of this Act and shall disclose the following:
(1) In the case of production contracts, the producer's right to review as provided in section
6 of this Act;
(2) Contract duration;
(3) Contract termination;
(4) Renegotiation standards;
(5) Responsibility for environmental damage;
(6) Factors to be used in determining payment; and
(7) Responsibility for obtaining and complying with local, state, federal permits.
Section 4. An agricultural contract executed or amended after the effective date of this Act shall
contain a cover sheet as the first page or pages of text. The cover sheet shall contain:
(1) A brief statement that the document is a legal contract between the parties;
(2) The following statement: "READ YOUR CONTRACT CAREFULLY. This cover sheet
provides only a brief summary of your contract. This is not the contract and only the terms
of the actual contract are legally binding. The contract itself sets forth, in detail, the rights
and obligations of both you and the contractor or processor. IT IS THEREFORE
IMPORTANT THAT YOU READ YOUR CONTRACT CAREFULLY";
(3) The disclosure statement required by section 3 of this Act; and
(4) An index of the major provisions of the contract and the pages on which they are found,
including all of the following:
(a) The names of all parties to the contract.;
(b) The definition sections of the contract;
(c) The provisions governing termination, cancellation, renewal, and amendment of
the contract by either party;
(d) The duties or obligations of each party; and
(e) Any provisions subject to change in the contract.
Section 5. An agricultural contract executed or amended after the effective date of this Act shall
be in legible type with a typeface of at least ten-point modern type, appropriately divided and
captioned by its various sections, and written in clear and coherent language using simple sentence
structure, clear definitions, and words and grammar understandable by a person of average
intelligence, education, and experience within the industry. A contract shall avoid esoteric legal
terms and minimize references to other sections or provisions. The following terms may be used in
an agricultural contract:
(1) Legally required terms, including particular words, phrases, provisions, or forms of
agreement specifically required, recommended, or endorsed by a state or federal statute,
rule, or regulation;
(2) Customarily used terms, including technical terms used to describe the services or
property that are the subject of the contract, if the terms are customarily used by producers
in the ordinary course of business in connection with the services or property being
described.
Section 6. A contract producer may cancel a production contract by mailing a written
cancellation notice to the contractor within three business days after the contract is executed, or by
the cancellation deadline if specified in the contract, whichever is later. The contract producer's right
to cancel, the method by which the contract producer may cancel, and the deadline for canceling the
production contract shall be clearly disclosed in every production contract.
Section 7. Any provision of an agricultural contract executed or amended after the effective date
of this Act that imposes confidentiality on information other than trade secrets contained in the
agricultural contract, is void. Such a provision is void whether it is express or implied; oral or
written; required or conditional; or contained in the agricultural contract, another agricultural
contract, or in a related document, policy, or agreement. Other provisions of an agricultural contract
or a related document, policy, or agreement that can be given effect without the voided provision are
not affected. This section does not require a party to an agricultural contract to divulge information
about the contract to another person.
Section 8. Sections 9 to 12, inclusive, of this Act only apply to a production contract executed
by a contract producer and a contractor, if the contract producer must make capital investments of
one hundred thousand dollars or more. The amount of the capital investment is determined by
aggregating the investment requirements provided in all production contracts in which the contract
producer and the contractor are parties. The value of the capital investments is the total dollar
amount spent by the contract producer in satisfying the investment requirements.
Section 9. Except as provided in section 11 of this Act, a contractor may not terminate or cancel
a production contract until providing the contract producer written notice at least ninety days before
the effective date of the termination or cancellation, and the contract producer has been reimbursed
for damages incurred due to the termination or cancellation. Damages shall be based on the value
of the remaining useful life of the structures, machinery, or equipment involved.
Section 10. Except as provided in section 11 of this Act, a contractor may not terminate or cancel
a production contract that has been materially breached by a contract producer until the contractor
has provided written notice of termination or cancellation at least forty-five days before its effective
date, which contains the alleged causes constituting the breach, and the contract producer has failed
to remedy each breach within thirty days following receipt of the notice. An effort by a contract
producer to remedy an alleged breach may not be construed as an admission of a breach in a civil
cause of action.
Section 11. A contractor may terminate or cancel a production contract without notice or remedy
as required in sections 9 and 10 of this Act if the basis for the termination or cancellation is voluntary
abandonment of the contractual relationship by the contract producer by a failure of a contract
producer to perform the obligations of a production contract, or the conviction of a contract producer
of fraud or theft committed against the contractor.
Section 12. If a contractor terminates or cancels a production contract other than provided in
sections 9 to 11, inclusive, of this Act, the contractor shall pay the contract producer the value of the
remaining useful life of the structures, machinery, or equipment involved.
Section 13. For purposes of this Act, the term, contract input, means a commodity or an organic
or synthetic substance or compound used to produce a commodity, including livestock or plants,
agricultural seeds, semen or eggs for breeding livestock, and fertilizer or pesticide.
Section 14. For purposes of this Act, the term, producer right, means one of the following legal
rights and protections:
(1) The right of a producer to join or belong to, or to refrain from joining or belonging to, an
association of producers;
(2) The right of a producer to enter into a membership agreement or marketing contract with
an association of producers, a processor, or another producer, and the right of the producer
to exercise contractual rights under such a membership agreement or marketing contract;
(3) The right of a producer to lawfully provide statements or information, including
statements or information to the United States Secretary of Agriculture or to a law
enforcement agency, regarding alleged improper actions or violations of law by a
contractor or processor. This right does not include the right to make libelous or
slanderous statements;
(4) The right of a contract producer to have production contracts reviewed by financial
professionals, by legal counsel, and as provided by section 6 of this Act;
(5) The right of a producer to disclose the terms of agricultural contracts as provided by
section 7 of this Act; and
(6) The right of a producer to exercise other protections afforded by this Act or other laws,
rules, or regulations.
Section 15. No contractor or processor may knowingly engage or permit any employee or agent
to engage in any of the following actions to coerce, intimidate, disadvantage, retaliate against, or
discriminate against any producer because the producer exercises, or attempts to exercise, any
producer right. Such actions include:
(1) The execution, termination, extension, or renewal of an agricultural contract;
(2) Treatment of a producer that includes placing discriminatory or preferential terms in an
agricultural contract or interpreting terms of an existing agricultural contract in a
discriminatory or preferential manner. For purposes of this section, terms includes the
price paid for a commodity, the quality or the quantity of a commodity demanded,
financing, or investment requirements;
(3) The grant or denial of a reward or imposition of a penalty, including financial rewards or
penalties such as loans, bonuses, or inducements;
(4) The alteration of the quality, quantity, or delivery times of contract inputs provided to a
producer;
Section 16. No contractor or processor may knowingly do, or permit any employee or agent to
do, any of the following:
(1) Provide false information to the producer, including that related to the character, financial
condition, or management practices of a producer with whom the producer associates, or
an association of producers, or an agricultural organization with which the producer is
affiliated, or producer rights provide by this Act or other provisions of law;
(2) Refuse to provide to a contract producer statistical information and data used to determine
the compensation paid under a production contract, including feed conversion rates, feed
analyses, or origination and breeder history;
(3) Refuse to allow a contract producer or a designated representative to observe at the time
of weighing, the weights and measures used to determine the contract producer's
compensation under a production contract;
(4) Use a contract producer's performance, also known as "tournament compensation" to
determine the compensation due another contract producer under a production contract,
or to use that performance as the basis of the termination, cancellation, or renewal of a
production contract;
(5) Require a contract producer to make new or additional capital investments in connection
with, or to retain, continue, or renew, a production contract. It is not be a violation of this
section if such new or additional capital investments are partially paid for by the
contractor, or are offset by other compensation or modifications to the original contract
agreed to in writing as consideration for the new capital investment;
(6) Execute an agricultural contract in violation of the disclosure of risks and readability
requirements of sections 3 to 5, inclusive, of this Act;
(7) Execute an agricultural contract that includes a confidentiality provision in violation of
section 7 of this Act;
(8) Execute an agricultural contract without a mediation provision as required under
section 19 of this Act;
(9) Execute an agricultural contract that includes a waiver of any producer right or any
obligation of a contractor or processor established under this Act;
(10) Execute an agricultural contract requiring the application of the law of another state.
Section 17. Any provision of an agricultural contract that waives a producer right or a contractor
or processor obligation established by this Act is void and unenforceable. No such provision affects
other provisions of an agricultural contract, related document, policy, or agreement, that can be given
effect without the voided provision.
Section 18. Any condition, stipulation, or provision of an agricultural contract requiring the
application of the law of another state is void and unenforceable.
Section 19. An agricultural contract shall contain language providing for resolution of disputes
by mediation.
Section 20. A contractor or processor committing an unfair practice under sections 13 to 16,
inclusive, of this Act is subject to a civil penalty of up to ten thousand dollars per violation.
Section 21. A producer who suffers damages because of a contractor's or processor's violation
of this Act may obtain appropriate legal and equitable relief, including damages, pursuant to the rules
of civil procedure. The court may award the prevailing producer reasonable attorney fees and other
litigation expenses. A producer is not required to post a bond, prove the absence of an adequate
remedy at law, or show the existence of special circumstances, to obtain temporary or permanent
injunctive relief unless the court for good cause otherwise orders.
Section 22. In addition to the remedies provided in this Act, a court reviewing an agricultural
contract may change the terms of the contract or limit a provision to avoid an unfair result if the
court finds:
(1) A material provision of the contract violates sections 3 to 5, inclusive, of this Act;
(2) The violation caused the producer to be substantially confused about any of the rights,
obligations, or remedies of the contract; and
(3) The violation has caused or is likely to cause financial detriment to the producer.
If the court reforms or limits a provision of an agricultural contract, the court shall also make
orders necessary to avoid unjust enrichment. Bringing a claim for relief under this section does not
entitle a producer to withhold performance of an otherwise valid contractual obligation. No relief
may be granted under this section unless the claim is brought before the obligations of the contract
have been fully performed.
Section 23. In a proceeding in which civil penalties are claimed from a party for a violation of
sections 3 to 5, inclusive, of this Act, it is a defense to the claim that the party made a good faith and
reasonable effort to comply.
Section 24. Notwithstanding section 21 of this Act, a party who has made a good faith and
reasonable effort to comply may not be assessed attorney's fees for violations of sections 3 to 5,
inclusive, of this Act.
Section 25. Violation of sections 3 to 5, inclusive, of this Act is not a defense to a claim arising
from a producer's breach of an agricultural contract. A producer may recover actual damages caused
by a violation of sections 3 to 5, inclusive, of this Act only if the violation caused the producer to
not understand the rights, obligations, or remedies of the contract.
Section 26. A claim that an agricultural contract violates sections 3 to 5, inclusive, of this Act
must be raised within six years of the date the contract is executed by the producer.
Section 27. In addition to using other appropriate remedies, the attorney general may enforce the
provisions of this Act, through injunctive action to restrain a contractor or processor from engaging
in conduct or practices in violation of this Act, or to require a contractor or processor to comply with
a provision of this Act. To accomplish the objectives and to carry out the provisions of this Act, the
attorney general issue a subpoena to any contractor or processor to obtain an agricultural contract.
Any person failing to comply with such subpoena may be certified to circuit court, for enforcement
by order. Noncompliance with a judicial order shall be treated the same as a contempt of the court.
Section 28. The attorney general or state's attorney may also bring an action in circuit court for
recovery of civil penalties provided in section 20 of this Act.
Section 29. This Act does not apply to:
(1) Agricultural contracts based on a sharecropping arrangement or agreement;
(2) Agricultural contracts in which all parties executing the contract are producers;
(3) Any contract involving forward contracting of livestock or grain entered into with any
packer, dairy, milk or milk products processor, public grain warehouse, grain dealer, or
grain or livestock exchange or other commodity exchange;
(4) Any contract involving a grain processing cooperative that is exempt under section 521
of the federal Internal Revenue Code as amended to January 1, 2001."
1019fb
On page
1,
line 15 of the printed bill,
delete everything after "
dollars.
"
and insert "
A seed dealer's
permit may be issued without fee when all lots of seed are furnished to him by seedsman or seed
producer with
".
On page
2
,
delete line
1
.
On page
2
,
overstrike line
2
.
On page
2
,
line 3,
delete "
the seed
dealers
permit as part of their application.
"
and insert "
the
seed dealers permit as part of their application.
".
On page
2
,
line 17,
delete "
January
"
and insert "
February
".
On page
2
,
line 17,
delete "
following the year of the date of issue
"
.
On page
3
,
delete lines
8 to 18
, inclusive.
On page
3
,
line 21,
delete "
twenty-five
"
and insert "
eleven
".
On page
4
,
line 1,
delete "
annual
biennial
"
and insert "annual".
On page
4
,
line 2,
delete "
one dollar
two dollars
"
and insert "one dollar".
On page
9
,
line 19,
overstrike "
to nonlicensees
"
.
On page
10
,
overstrike line
5
.
On page
10
,
line 6,
overstrike "
from the inspection fee.
"
.
On page
16
,
line 1,
after "
nurseryman
"
insert "
, operating as a resident nurseryman or dealer,
".
On page
16
,
line 2,
overstrike "
:
"
and insert "
one hundred fifty dollars plus four dollars for each
acre over one acre of inspected plants. A conservation district that plants less than thirty acres of
nursery stock in a year may obtain a certificate of inspection at the reduced fee of one hundred
dollars.
".
On page
16
,
delete lines
3 to 6
, inclusive, and insert:
"
(1) Resident nurseryman: thirty dollars plus thirty cents for each acre of growing field;
(2) Special nurseryman: ten dollars;
(3) Dealer: thirty dollars; and
".
On page
16
,
line 12,
delete "
two hundred
"
and insert "
one hundred fifty
".
On page
16
,
line 20,
delete "
two hundred
"
and insert "
one hundred fifty
".
On page
16
,
line 20,
delete "
thirty
cents
"
and insert "
thirty cents
two
".
On page
16
,
line 21,
delete "
thirty
cents
"
and insert "
thirty cents
two
".
On page
19
,
after line 18, insert
"
Section 36. That
§
38-18-27
be amended to read as follows:
38-18-27.
Any person may request to enter into a compliance agreement with the secretary or that
the secretary make additional inspections of bees, bee equipment, or honey houses. The person
requesting the agreement
or the
shall pay a fee of fifty dollars per compliance agreement. If an
inspection
is conducted, the person requesting the inspection
shall pay the secretary any extra
expense incidental to such inspection plus mileage and per diem for inspectors' expenses.
Section 37. That
§
38-19-12
be amended to read as follows:
38-19-12.
Each licensed distributor of commercial fertilizer shall file with the secretary of
agriculture on forms furnished by the secretary an annual statement for the period ending December
thirty-first setting forth the number of net tons of each grade of commercial fertilizer distributed in
this state during the reporting period. The report is due on or before the thirtieth of January following
the close of the reporting period and on the basis of
his
the
statement each licensed distributor of
commercial fertilizer shall pay the inspection fee at the rate
stated in
pursuant to
§
38-19-10.
If more
than one person is involved in the distribution of a commercial fertilizer, the distributor who imports,
manufactures, or produces the commercial fertilizer is responsible for the inspection fee on products
produced or brought into this state. The distributor shall separately list the inspection fee on the
invoice to the licensee. The last licensee shall retain the invoices showing proof of inspection fees
paid for three years and shall pay the inspection fee on commercial fertilizer brought into this state
or produced before July 1, 2001, unless the distributor has reported and paid the fees.
If the tonnage
report is not filed and the payment of inspection fee is not made within thirty days after the end of
the period, a collection fee amounting to ten percent (minimum ten dollars) of the amount shall be
assessed against the licensee and the amount of fees due constitutes a debt and becomes the basis of
a judgment against the licensee. The secretary may verify the records on which statements of tonnage
are based and each licensed distributor of commercial fertilizer shall grant the secretary permission
to verify the records on
his
the licensee's
application for license and on each tonnage report.
If more
than one licensee is involved in a commercial fertilizer distribution chain, the last licensee who
distributes commercial fertilizer to a nonlicensee is responsible for filing the tonnage report and
paying the inspection fee.
The secretary may
, at his discretion,
revoke or refuse to renew the license
of any licensee failing to comply with this section. No information furnished under this section may
be disclosed by the secretary
or his agents
or anyone having access to tonnage reports if the
disclosure will in any way divulge any part of the operations of a licensee.
Section 38. That
§
38-24B-14
be amended to read as follows:
38-24B-14.
A certificate issued pursuant to the provisions of this chapter is in effect for a period
not to exceed
one year
two years
and expires on December thirty-first
of the year
following the date
of issue.
".
Moved by: Hanson (Gary)
Second by: Holbeck
Action: Prevailed by voice vote.
MOTION:
DO PASS HB 1019 AS AMENDED
Moved by: Rhoden
Second by: Sigdestad
Action: Prevailed by roll call vote.(12-0-1-0)
Voting Yes: Bradford, Fryslie, Hanson (Gary), Hargens, Holbeck, Jensen, Pitts, Rhoden,
Sigdestad, Van Gerpen, Lintz, Duenwald
Excused: Kloucek
HB 1020: revise certain dairy inspection fees.
Presented By: Larry Gabriel, Secretary of Agriculture (handout 3)
Proponents: Greg Moes, self, Goodwin, President of Dairymen's Association
MOTION:
AMEND HB 1020
1020tb
On page
1 of the printed bill,
delete lines
3 to 9
, inclusive, and insert:
"
Section
1.
That
§
40-32-25
be amended to read as follows:
40-32-25.
A milk plant or marketing organization of milk, milk products, sheep milk
,
or goat
milk that processes or markets Manufacturing Grade or Grade A milk shall pay an inspection service
fee for each dairy farm. The inspection fee shall be
twenty-five
fifty
dollars per Grade A or
twelve
dollars and fifty cents
twenty-five dollars
per Manufacturing Grade dairy farm and be paid
semiannually by July first and January first to the secretary.
In addition, the secretary may
promulgate rules pursuant to chapter 1-26 to impose a semiannual fee on all milk produced, which
may not exceed one cent per hundredweight and which shall by paid by July first and January first
to the secretary.
".