State of South Dakota
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EIGHTY-EIGHTH SESSION
LEGISLATIVE ASSEMBLY, 2013
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923U0211
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HOUSE BILL NO. 1017
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Introduced by: The Committee on Agriculture and Natural Resources at the request of the
Public Utilities Commission
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FOR AN ACT ENTITLED, An Act to establish and revise certain provisions, bond amounts,
fees, and penalties related to the regulation of grain warehouses and grain buyers.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF SOUTH DAKOTA:
Section 1. That § 49-43-5.1 be amended to read as follows:
49-43-5.1. The application for a license to operate as a public grain warehouse made
pursuant to §
49-42-5.1 49-43-4.2 shall be in writing, in a form prescribed by the commission,
and shall set forth the name, principal office or place of business, location of each warehouse
if more than one warehouse is operated in separate municipalities or locations, capacity of each
warehouse and the individual name of each owner or principal in the management of the
warehouse. If the warehouse is owned or managed by a corporation, the name of the president,
secretary
, and treasurer of the corporation shall be stated. The application shall also state that
the applicant is seeking a public grain warehouse license
and shall contain financial information
depicting the financial condition of the business at the time of the application. The application
shall contain the affirmation statement set forth in § 22-29-9.1. The application shall be signed
by the owner, managing partner, or chief executive officer of the applicant and shall be
notarized.
If a warehouseman has more than one public grain warehouse in the same municipality, only
one license is required for all the public grain warehouses.
Section 2. That § 49-43-5.2 be amended to read as follows:
49-43-5.2. The application for a license to operate as a public grain warehouse shall be
accompanied by a fee of two hundred fifty seventy-five dollars for each municipality or location
at which the warehouse operator receives or stores grain for hire.
Section 3. That § 49-43-5.6 be amended to read as follows:
49-43-5.6. The commission may immediately suspend the license of a warehouse operator
and the warehouse operator shall surrender the license to the commission if:
(1) The warehouse operator, whether licensed or unlicensed, refuses, neglects, or is
unable, upon proper demand, to redeem any warehouse receipt or scale ticket for
grain in open storage or in grain bank issued by the warehouse operator, through
redelivery or cash payment;
(2) The warehouse operator refuses, neglects, or is unable to provide a bond in an
amount required by the commission; or
(3) The commission has knowledge of any act of insolvency, including the filing of a
petition in bankruptcy naming the warehouse as debtor; or
(4) The warehouse operator refuses to submit to an inspection or cooperate with the
lawful requests of a commission inspector, including requests for access to and
copies of the books and records of the warehouse.
Within fifteen days the warehouse operator may request a hearing pursuant to chapter 1-26
to determine if the license should be revoked. If no request is made within fifteen days, the
commission shall revoke the license. If the commission determines it is necessary, the
commission may apply to the circuit court in the county in which the warehouse operator
operates for that court to appoint a receiver. The receiver shall have has such powers and duties
as the court may direct.
Section 4. That § 49-43-9 be amended to read as follows:
49-43-9. The operator of each public grain warehouse shall, on or before the tenth day of
each month and at such additional times as the commission requires, furnish the commission
on forms prepared by the commission, reports showing the facts and information required by
the commission. The reports are not for public inspection, but the commission may, upon
request, furnish the total of the figures shown on the reports if the figures requested are for not
less than four public grain warehouses. Nothing in this section prohibits the commission from
providing the reports to state or federal governmental agencies who may not release information
on individual reports to the public. The commission may also require that a warehouse operator
provide any other documents and information regarding the business of the warehouse. None
of the documents and information obtained through the licensing and inspection processes are
subject to public inspection. A violation of this section by an operator is a Class 1 misdemeanor.
Section 5. That § 49-43-41 be amended to read as follows:
49-43-41. Any public grain warehouse operator in the state who refuses access to the
warehouse's books and accounts or hinders and delays the commission or any of its employees
or agents in examining the books and accounts, may be punished by a civil fine not exceeding
two thousand dollars. In addition, the commission may revoke the license of the public
warehouse.
Section 6. That chapter 49-43 be amended by adding thereto a NEW SECTION to read as
follows:
If an applicant for a warehouse license that is a wholly owned subsidiary of a parent
company submits the financial statements of the parent company, the parent company furnishing
the financial statements is responsible for all the financial obligations incurred by the licensed
entity related to the purchase and storage of grain, including any voluntary credit sale contract.
Section 7. That chapter 49-43 be amended by adding thereto a NEW SECTION to read as
follows:
If at any time during the licensing period a grain warehouse operator becomes aware that the
grain warehouse is not in compliance with each financial standard, as set forth in the
commission's rules, the grain warehouse operator shall immediately notify the commission of
the grain warehouse's financial condition. When notification occurs, the commission shall
immediately conduct an examination to determine if any grounds for suspension pursuant to
§ 49-43-5.6 have occurred. A willful violation of this section that results in a financial loss to
a grain depositor is a Class 6 felony. A willful violation that does not result in a financial loss
to a grain depositor is a Class 1 misdemeanor.
In addition, the commission may assess a civil fine against an out of compliance grain
warehouse in an amount not to exceed one thousand dollars for each day the grain warehouse
has been out of compliance up to a maximum of twenty thousand dollars.
Section 8. That chapter 49-43 be amended by adding thereto a NEW SECTION to read as
follows:
The owner, manager, or chief executive officer of a grain warehouse, or any other person
in a managerial position, who is responsible for any violation of this chapter by a grain
warehouse is subject to any criminal penalty that applies to a grain warehouse under the
provisions of this chapter.
Section 9. That § 49-45-1.1 be amended to read as follows:
49-45-1.1. Terms used in this chapter mean:
(1) "Commission," the Public Utilities Commission;
(2) "Grain," grain, grain sorghums, beans, pulse crops, and oil seeds. However, the term
does not include grain that has been cleaned, processed, and specifically identified
for an intended use of planting for reproduction or grain purchased to feed livestock;
(3) "Grain buyer," any person who purchases grain for the purpose of reselling the
unprocessed grain or who purchases three hundred thousand dollars worth or more
of grain directly from producers in a calendar year. However, nothing in this chapter
applies to the isolated resale of grain by a producer who does not hold himself or
herself out as engaging in the business of reselling grain;
(4) "Person," any natural person, firm, corporation, company, limited liability company,
partnership, association, joint stock company or the lessee, trustee, or receiver
appointed by any court for any one of the foregoing;
(5) "Voluntary credit sale," a sale of grain or seeds pursuant to which the sale price is to
be paid more than thirty days after the delivery or release of the grain for sale,
including those contracts commonly referred to as deferred-payment contracts,
deferred-pricing contracts and price-later contracts; and
(6) "Producer," a person engaged in the business of grain production.
Section 10. That § 49-45-7 be amended to read as follows:
49-45-7. An application for a grain buyer license shall be filed with the commission and
shall be in a form prescribed by the commission. The application shall set forth the name of each
owner or principal in the management of the business
and shall contain financial information
depicting the financial condition of the business at the time of application. If the applicant is a
corporation, the application shall include the name of the president, secretary, and treasurer of
the corporation. The application shall also include the location of the principal office or place
of business and any additional places of business of the applicant and the number of tractors,
truck tractors, or straight trucks that will be used in the transportation of grain purchased under
this chapter. The application shall contain the affirmation statement set forth in § 22-29-9.1. The
application shall be signed by the owner, managing partner, or chief executive officer of the
applicant and shall be notarized.
Upon receipt of an application and sufficient bond as required by § 49-45-9, the commission
may grant the license applied for or may, for good cause shown and after notice and an
opportunity for hearing, deny the issuance of the license.
Section 11. That § 49-45-8 be amended to read as follows:
49-45-8. The application for a grain buyer license shall be accompanied by a fee of two
hundred fifty seventy-five dollars for each municipality or location at which the grain buyer
receives grain. If the grain buyer making application for a license also holds a license to operate
a public grain warehouse or is, at the same time, making application to operate a public grain
warehouse under chapter 49-43, the fee imposed by this section is waived.
Section 12. That § 49-45-9 be amended to read as follows:
49-45-9. Before any grain buyer license is issued by the commission, the applicant shall file
with the commission a bond conditioned to secure the faithful performance of the applicant's
obligations as a grain buyer and full and unreserved compliance with the laws of this state and
the rules of the commission, relating to the purchase of grain by the grain buyer. The bond is for
the specific purpose of protecting persons selling grain to the grain buyer. However, the bond
may not benefit any person entering into a voluntary credit sale with a grain buyer. Any person
who does business as a grain buyer without a bond is guilty of a Class 1 misdemeanor. Each day
a person conducts the business of a grain buyer without a bond is a separate offense.
The amount of the bond for a Class A or Class B grain buyer's license shall be based on a
rolling average of the dollar amount of grain purchased by the applicant in South Dakota during
the last three calendar years. For a new grain buyer, the first year's bond shall be based on
projected purchases. For a grain buyer with less than three years experience as a grain buyer, the
bond shall be based on the average actual purchases made by the grain buyer in all of its
previous years as a grain buyer. The bond applies to all grain purchases for all of the grain
buyer's business locations.
The amount of the bond for a Class A grain buyer's license is:
Dollar Amount of Grain Purchased
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Bond Requirement
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Less than $2,000,001
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$50,000
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$2,000,001--$10,000,000
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$100,000
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$10,000,001--$25,000,000
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$200,000
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$25,000,001--$60,000,000
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$350,000
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$60,000,001--$100,000,000
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$500,000
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$2,000,001--$5,000,000
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$100,000
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$5,000,001--$10,000,000
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$150,000
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$10,000,001--$20,000,000
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$200,000
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$20,000,001--$30,000,000
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$250,000
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$30,000,001--$40,000,000
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$300,000
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$40,000,001--$55,000,000
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$350,000
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$55,000,001--$70,000,000
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$400,000
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$70,000,001--$85,000,000
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$450,000
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$85,000,001--$100,000,000
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$500,000
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Bond requirements are increased twenty-five thousand dollars for each additional ten million
dollars in purchases above one hundred million dollars.
The amount of the bond for a Class B grain buyer's license is:
Dollar Amount of Grain Purchased
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Bond Requirement
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Less than $2,000,001
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$50,000
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$2,000,001--$10,000,000 $5,000,000
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$100,000
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$5,000,001--$10,000,000
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$150,000
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The grain buyer may stipulate to a higher bond amount requested by the commission or may
post additional security in another form.
Section 13. That § 49-45-10 be amended to read as follows:
49-45-10. A grain buyer shall pay the purchase price to the owner or the owner's agent for
grain upon delivery or demand of the owner or agent unless payment is to be made in
accordance with the terms of a voluntary credit sale which complies with the requirements of
this chapter and rules promulgated thereto.
Full payment of any cash purchase shall be made by
the grain buyer within thirty days of final delivery.
Section 14. That § 49-45-12 be repealed.
49-45-12. A grain buyer shall procure a decal from the commission to be permanently
attached and displayed on each truck tractor or straight truck licensed to operate on public roads
within this state. The fee for each decal is fifteen dollars, which shall be purchased annually and
which expires on June thirtieth. A violation of this section is a Class 2 misdemeanor.
Section 15. That § 49-45-14 be amended to read as follows:
49-45-14. Every grain buyer licensed in this state shall, at such times as the commission
requires, furnish the commission on forms prepared by the commission, reports showing the
facts and information required by the commission. The reports are not for public inspection, but
the commission may, upon request, furnish the total of the figures shown on such reports if the
figures requested are for not less than four grain buyers. The commission may also require that
a grain buyer provide any other
documents and information regarding the business of the grain
buyer. None of the documents and information obtained through the licensing and inspection
processes are subject to public inspection. A violation of this section is a Class 1 misdemeanor.
Section 16. That § 49-45-16 be amended to read as follows:
49-45-16. The commission may immediately suspend the license of a grain buyer and the
grain buyer shall surrender the license to the commission if:
(1) The grain buyer refuses, neglects, or is unable, upon proper demand, to redeem any
scale ticket issued by the grain buyer, through redelivery or cash payment;
(2) The grain buyer refuses, neglects, or is unable to provide a bond in an amount
required by the commission; or
(3) The commission has knowledge of any act of insolvency, including the filing of a
petition in bankruptcy naming the grain buyer as debtor; or
(4) The grain buyer refuses to submit to an inspection or cooperate with the lawful
requests of a commission inspector, including requests for access to and copies of the
books and records of the grain buyer.
Within fifteen days the grain buyer may request a hearing pursuant to chapter 1-26 to
determine if the license should be revoked. If no request is made within fifteen days, the
commission shall revoke the license.
Section 17. That chapter 49-45 be amended by adding thereto a NEW SECTION to read as
follows:
If at any time during the licensing period a grain buyer becomes aware that the grain buyer
is not in compliance with each financial standard, as set forth in the commission's rules, the
grain buyer shall immediately notify the commission of the grain buyer's financial condition.
When notification occurs, the commission shall immediately conduct an examination to
determine if any grounds for suspension pursuant to § 49-45-16 have occurred. A willful
violation of this section that results in a financial loss to a grain supplier is a Class 6 felony. A
willful violation that does not result in a financial loss to a grain supplier is a Class 1
misdemeanor.
In addition, the commission may assess a civil fine against an out of compliance grain buyer
in an amount not to exceed one thousand dollars for each day the grain buyer has been out of
compliance up to a maximum of twenty thousand dollars.
Section 18. That chapter 49-45 be amended by adding thereto a NEW SECTION to read as
follows:
A grain buyer, whether licensed or unlicensed, who purchases grain within the state shall
have the ability to provide all of the books, accounts, and electronic records relating to the
transactions of the grain buyer, either within or without the state, upon request or within five
working days of the request. Any requested materials shall be provided to the inspector at a
licensed location within the state or at the offices of the commission. A willful violation of this
section is a Class 1 misdemeanor.
In addition, the commission may assess a civil fine in an amount not to exceed one thousand
dollars for each day requested materials are withheld up to a maximum of twenty thousand
dollars.
Section 19. That chapter 49-45 be amended by adding thereto a NEW SECTION to read as
follows:
The owner, manager, or chief executive officer of a grain buyer, or any other person in a
managerial position, who is responsible for any violation of this chapter by a grain buyer is
subject to any criminal penalty that applies to a grain buyer under the provisions of this chapter.
Section 20. That chapter 49-45 be amended by adding thereto a NEW SECTION to read as
follows:
If an applicant for a grain buyer license that is a wholly owned subsidiary of a parent
company submits the financial statements of the parent company, the parent company furnishing
the financial statements is responsible for all the financial obligations incurred by the licensed
entity related to the purchase and storage of grain, including any voluntary credit sale contract.