The statement of scope for this emergency rule, SS 046-18, was approved by the Governor on May 1, 2018, published in Register No. 749A1 on May 7, 2018, and approved by the Department of Agriculture, Trade and Consumer Protection Board on May 24, 2018.
This emergency rule was approved by the Governor on July 17, 2018.
DATCP Docket No. 18-R-04
July 19, 2018
WISCONSIN DEPARTMENT OF AGRICULTURE,
TRADE AND CONSUMER PROTECTION
Analysis Prepared by the Department
of Agriculture, Trade and Consumer Protection
This emergency rule modifies EmR1803 and Wis. Admin. Code ch. ATCP 100 to establish an annual assessment rate for milk contractors entering into deferred payment contracts, as required by 2017 Wisconsin Act 155.
Statutory Authority: Wis. Stat. §§ 25.463, 93.07 (1), and 126.81 (2m) (b).
Explanation of Statutory Authority
Wis. Stat. § 25.463 creates the Wisconsin Agricultural Producer Security Fund. Wis. Stat. § 93.07 (1) directs DATCP to make such regulations as are necessary for the discharge of all the powers and duties of the department. Wis. Stat. § 126.46 (1) states that milk producers shall pay an annual assessment, including an assessment for deferred payment contracts, in an amount specified by department rule. Section 76 of 2017 Wisconsin Act 155 directs DATCP to promulgate these rules as emergency rules until the permanent rules become effective and waives the otherwise applicable requirement that DATCP provide a finding of emergency.
Plain Language Analysis
The Agricultural Producer Security Fund (Fund) is a public trust administered by the Wisconsin Department of Agriculture, Trade and Consumer Protection (DATCP). Milk contractors, grain dealers, grain warehouse keepers, and vegetable contractors (collectively known as contractors) must purchase a license to obtain milk, grain, or vegetables from producers, and most contractors are required to contribute to the Fund annually. The Fund is used to settle claims by producers in the event that a contractor defaults on payment. Assessment contributions from each industry are accounted for separately and deposited into the overall Fund. Wis. Stat. ch. 126, establishes detailed assessment requirements, except that it requires DATCP to establish milk contractor assessments by rule. Wis. Stat. ch. 126, sets minimum and maximum Fund balances for each industry, as well as a minimum and maximum balance requirement for the overall Fund. In March 2018, the Governor signed 2017 Wisconsin Act 155 (Act) into law. This Act permits milk contractors and producers to enter into contracts to defer payments for up to 120 days. The Act also requires DATCP to promulgate rules to establish a Fund assessment rate for milk contractors that enter into deferred payment contracts with milk producers. The Act further requires DATCP to promulgate these rules as an emergency rule until a permanent rule takes effect.
Prior to the Act, milk producers were required to be paid on the 4th and the 19th of every month. Allowing producer payments to be deferred for up to 120 days exposes the Fund to larger default payouts in the event a contractor fails to pay the producer. The deferred payment assessment is intended to cover this additional risk.
This emergency rule will establish a milk contractor deferred payment assessment rate of 0.0035. This rate will be applied to the total deferred amount that a milk contractor pays to a milk producer or producer agent. The rule also slightly modifies EmR 1803 by including deferred payments and fulfills the emergency rule requirement of the Act.
The proposed emergency rule establishes an effective date of August 1, 2018. This date is necessary because DATCP expects producers will begin deferring payments as early as September 4, 2018. An emergency rule effective date of August 1, 2018 will allow both milk contractors and producers to know the assessment amount prior to any payments being withheld.
As the milk industry begins paying deferred payment assessments, the proposed rule will increase revenue into the Fund. The amount of increased revenue is unknown and will depend on the amount of milk paid for under deferred payment contracts.