Chapter 126

126.70(1)(a)1. 1. A grain producer or producer agent, as defined in s. 126.10 (13), who claims that a grain dealer has failed to pay, when due, for producer grain that the grain dealer procured in this state.

126.70(1)(a)2. 2. A depositor who is either a grain producer or a producer agent, as defined in s. 126.10 (13), and who claims that a grain warehouse keeper has failed to return stored grain or its equivalent upon demand.

126.70(1)(a)3. 3. A milk producer or producer agent, as defined in s. 126.40 (13), who claims that a milk contractor has failed to pay, when due, for producer milk procured in this state.

126.70(1)(a)4. 4. A vegetable producer or producer agent, as defined in s. 126.55 (12), who claims that a vegetable contractor has failed to make payment when due under a vegetable procurement contract.

126.70(1)(b) (b) A producer or producer agent may permanently waive eligibility to file a default claim against a grain dealer, milk contractor, or vegetable contractor if, at the time of the waiver, any of the following applies:

126.70(1)(b)1. 1. The producer or producer agent has a greater than 50 percent ownership interest in the grain dealer, milk contractor, or vegetable contractor.

126.70(1)(b)2. 2. Persons who collectively have a greater than 50 percent ownership interest in the producer or producer agent also collectively have a greater than 50 percent ownership interest in the grain dealer, milk contractor, or vegetable contractor.

126.70(1)(c) (c) A producer or producer agent shall file a waiver under par. (b) with the department in writing, on a form provided by the department. In the waiver, the producer or producer agent shall include documentation to show that the requirements in par. (b) are satisfied and that the individuals signing the waiver are authorized to do so on behalf of the producer or producer agent.

126.70(2) (2) Filing default claims. A claimant shall file a default claim under sub. (1) within 30 days after the claimant first learns of the default, subject to sub. (3). The claimant shall specify the nature and amount of the default. The department may investigate the alleged default and may require the claimant to provide supporting documentation.

126.70(3) (3) Initiating a recovery proceeding.

126.70(3)(a) (a) The department may initiate a recovery proceeding in response to one or more default claims under sub. (1). The department shall issue a written notice announcing the recovery proceeding. The department shall mail or deliver a copy of the notice to the contractor and each claimant in the proceeding.

126.70(3)(b) (b) If the department has reason to believe that other persons may have default claims under sub. (1) against the same contractor, the department may invite those persons to file their claims in the recovery proceeding. The department may publish the invitation in any of the following ways:

126.70(3)(b)1. 1. By posting it at the contractor’s place of business.

126.70(3)(b)2. 2. By publishing it as a class 3 notice under ch. 985.

126.70(3)(b)3. 3. By mailing or delivering it to prospective claimants known to the department.

126.70(3)(b)4. 4. By other means that the department considers appropriate.

126.70(3)(c) (c) In its invitation under par. (b), the department may specify a deadline date and a procedure for filing default claims. An invitation may indicate the amount of a prospective claimant’s apparent claim and may ask the prospective claimant to verify or correct that amount.

126.70(3)(d) (d) The department may initiate separate recovery proceedings for default claims that comply with sub. (2) but are filed after the deadline date under par. (c).

126.70(4) (4) Auditing and disallowing claims. The department shall audit each claim included in a recovery proceeding. The department shall disallow a claim if the department finds any of the following:

126.70(4)(a) (a) That the claim is false or not adequately documented.

126.70(4)(b) (b) That the claimant filed the claim more than 30 days after the claimant first learned of the contractor’s default, unless the department specifies a later claim-filing deadline under sub. (3) (c).

126.70(4)(c) (c) That the claimant, without any contractual obligation to do so, continued to deliver grain, milk, or vegetables to the defaulting contractor more than 10 days after the claimant first learned of the contractor’s default.

126.70(4)(d) (d) That the claimant failed to comply with claim-filing deadlines or procedures specified under sub. (3) (c).

126.70(4)(e) (e) That the person filing the claim is not an authorized claimant under sub. (1).

126.70(4)(f) (f) That the defaulting contractor paid the amount due by check, but the claimant failed to present the check for payment within 30 days of receipt.

126.70(4)(g) (g) That the claim relates to a payment that first became due, under a deferred payment contract for grain, more than 120 days after the grain was delivered to the defaulting grain dealer.

126.70(4)(gm) (gm) That the claim relates to a payment that first became due, under a deferred payment contract for milk, after the payment due date under s. 126.485 (4) (b).

126.70(4)(h) (h) That the claim relates to a payment that first became due, under a deferred payment contract for processing vegetables, after January 31 of any year for processing vegetables tendered or delivered to a vegetable contractor on or before December 31 of the preceding year.

126.70(4)(i) (i) That the claim relates to grain, milk, or vegetables that were never tendered to or received and accepted by the defaulting grain dealer, milk contractor, or vegetable contractor. This paragraph does not apply to unharvested acreage, as defined in s. 126.55 (17).

126.70(4)(j) (j) That the claimant has, under sub. (1) (b), permanently waived eligibility to file the claim.

126.70(4)(k) (k) That any of the following circumstances exists and causes the claim to be an unfair or unreasonable claim against the fund, regardless of whether the claimant has, under sub. (1) (b), waived the claim:

126.70(4)(k)1. 1. The claimant had a greater than 50 percent ownership interest in the defaulting contractor at the time of the default or at relevant times before the default.

126.70(4)(k)2. 2. Persons who collectively had a greater than 50 percent ownership interest in the claimant also had a greater than 50 percent ownership interest in the defaulting contractor at the time of the default or at relevant times before the default.

126.70(4)(k)3. 3. The claimant, or any of the claimant’s owners, officers, or managers, had substantial management control, at the time of the default or at relevant times before the default, over any of the defaulting contractor’s operations involved in the default.

126.70(4)(k)4. 4. The claimant, or any of the claimant’s owners, officers, or managers, conspired with the defaulting contractor, or any of the defaulting contractor’s owners, officers, or managers, to create a default and a resulting claim against the fund.

126.70(4)(k)5. 5. Other circumstances that the department specifies by rule.

126.70(4)(L) (L) That the claimant was eligible, at any time before filing a default claim under sub. (2), to file a claim against the defaulting contractor in a federal bankruptcy proceeding under 11 USC 101 et seq. initiated by a party other than the claimant, or a proceeding under ch. 128 initiated by a party other than the claimant, or both, and did not file a claim against the defaulting contractor in each proceeding in which the claimant was eligible to file a claim.

126.70(5) (5) Allowed claim amounts.

126.70(5)(a) (a) The department shall determine the amount of an allowed claim based on the contract between the parties. If the contract terms are unclear, the department may determine the allowed claim amount based on local market prices, applicable milk marketing order prices, customs in the trade, or other evidence that the department considers appropriate.

126.70(5)(b) (b) Notwithstanding par. (a), if the default involves a grain warehouse keeper’s failure to return stored grain to a depositor upon demand, the department shall calculate the value of the grain based on local market prices on the day on which the depositor made the demand.

126.70(5)(c) (c) The department shall subtract from the allowed claim amount any offsetting payments made by the contractor and any obligations for which the claimant is liable to the contractor.

126.70(6) (6) Proposed decision. After the department completes its audit under sub. (4), the department shall issue a proposed decision. The department shall mail or deliver a copy of the proposed decision to the contractor and each claimant. The department shall do all of the following in the proposed decision:

126.70(6)(a) (a) Specify proposed findings of fact, proposed conclusions of law, and a proposed order.

126.70(6)(b) (b) Allow or disallow each default claim and specify the amount of each allowed claim. The department may disallow part of a claim.

126.70(6)(c) (c) Specify, for each allowed claim, the amount that the department is authorized to pay under s. 126.71.

126.70(6)(d) (d) Specify the method, under s. 126.71, by which the department will pay the authorized amounts under par. (c).

126.70(6)(e) (e) Explain a claimant’s right under s. 126.87 (4) to seek court recovery of that portion of an allowed claim that is not paid by the department.

126.70(6)(f) (f) Specify a date by which the contractor or claimant may file written objections to the proposed decision.

126.70(6)(g) (g) Specify any further actions required of a claimant, including any further actions required to obtain payment under a trade credit insurance policy or other contingent financial backing under s. 126.06.

126.70(7) (7) Final decision if no objections. If no contractor or claimant files a timely written objection to the proposed decision under sub. (6), the department may issue the proposed decision as the department’s final decision in the recovery proceeding, without further notice or hearing. The department shall mail or deliver a copy of the final decision to the contractor and each claimant.

126.70(8) (8) Objections to proposed decision; notice, hearing, and final decision.

126.70(8)(a) (a) If a contractor or claimant files a timely written objection to the proposed decision under sub. (6), the department shall hold a public hearing on the objection. The department shall follow applicable contested case procedures under ch. 227. The department may hear all objections in a single proceeding. At the conclusion of the contested case proceeding, the department shall issue a final decision affirming or modifying the proposed decision under sub. (6).

126.70(8)(b) (b) The department may issue a final decision under sub. (7) related to default claims that are not affected by objections under par. (a), regardless of whether the department has completed the contested case proceeding under par. (a).

126.70 History History: 2001 a. 16; 2009 a. 296; 2017 a. 155.

126.71 126.71 Paying default claims.

126.71(1) (1) Claims against contributing contractor. Except as provided in sub. (2) or (3), the department shall pay from the appropriate sources under s. 126.72 the following default claim amounts:

126.71(1)(a) (a) For each default claim allowed under s. 126.70 against a grain dealer or milk contractor who was a contributing contractor when the default occurred:

126.71(1)(a)1. 1. Eighty percent of the first $60,000 allowed.

126.71(1)(a)2. 2. Seventy-five percent of any amount allowed in excess of $60,000.

126.71(1)(b) (b) For each default claim allowed under s. 126.70 against a grain warehouse keeper who was a contributing contractor when the default occurred, 100 percent of the first $100,000 allowed.

126.71(1)(c) (c) For each default claim allowed under s. 126.70 against a vegetable contractor who was a contributing contractor when the default occurred:

126.71(1)(c)1. 1. Ninety percent of the first $40,000 allowed.

126.71(1)(c)2. 2. Eighty-five percent of the next $40,000 allowed.

126.71(1)(c)3. 3. Eighty percent of the next $40,000 allowed.

126.71(1)(c)4. 4. Seventy-five percent of any amount allowed in excess of $120,000.

126.71(1m) (1m) When default occurs. For the purposes of this chapter, a default occurs on the date on which payment or delivery becomes overdue.

126.71(2) (2) Claims against contractor who has filed security. If the department allows default claims under s. 126.70 against a contractor who has security on file with the department, the department shall convert that security and use the proceeds as follows:

126.71(2)(a) (a) If the contractor was not a contributing contractor when the default occurred, the department shall use the security proceeds to pay the full amount of the allowed claims, except that, if the security is not adequate to pay the full amount of the allowed claims, the department shall pay claimants on a prorated basis in proportion to their allowed claims.

126.71(2)(b) (b) If the contractor was a contributing contractor when the default occurred, the department shall use the security proceeds to reimburse the sources under s. 126.72 from which the department makes any claim payment under sub. (1). If the security amount exceeds the amount payable under sub. (1) from the sources under s. 126.72, the department shall use the remaining security proceeds to pay the balance of the allowed claims. If the security amount is not adequate to pay the full remaining balance, the department shall pay claimants on a prorated basis in proportion to their allowed claims.

126.71(2)(c) (c) Notwithstanding par. (b), if the contractor was a contributing contractor when the default occurred, the department may, at its discretion, pay claims directly from security proceeds rather than from a fund source under s. 126.72. If the department acts under this paragraph, the department shall first pay claims in the amounts provided in sub. (1). If the security amount exceeds the amount payable under sub. (1) from the sources under s. 126.72, the department shall use the remaining security proceeds to pay the balance of the allowed claims. If the security amount is not adequate to pay the full remaining balance, the department shall pay claimants on a prorated basis in proportion to their allowed claims.

126.71(3) (3) Payment restrictions.

126.71(3)(a) (a) The department may not pay any portion of the following from any source identified in s. 126.72:

126.71(3)(a)4. 4. A default claim allowed against a contractor who was not a contributing contractor when the default occurred.

126.71(3)(a)5. 5. A default claim allowed against a vegetable contractor who is a processing potato buyer, as defined in s. 126.55 (10r), if the default claim is related to a default on an obligation that was outstanding when the processing potato buyer’s participation in the fund became effective under s. 126.595 (2).

126.71(3)(b) (b) The department may not pay any default claim under this chapter, except as provided in sub. (1) or (2).

126.71(3)(c) (c) If the total amount of default claims exceeds the amount available under s. 126.72, the department shall prorate the available amount among the eligible claimants in proportion to the amount of their allowed claims.

126.71(4) (4) Effect of payment. A claimant who accepts payment under sub. (1) or (2) releases his or her claim against the contractor to the extent of the payment. A payment under sub. (1) or (2) does not prevent a claimant from recovering the balance of an allowed claim directly from the contractor.

126.71 History History: 2001 a. 16; 2003 a. 38; 2005 a. 80; 2009 a. 296.

126.72 126.72 Claims against contributing contractor; payment sources.

126.72(1) (1) Producer security fund. From the appropriation under s. 20.115 (1) (w), the department shall make payments authorized under s. 126.71 (1), up to the deductible amount in sub. (3).

126.72(2) (2) Proceeds of contingent financial backing. The department, at the direction of the secretary of agriculture, trade and consumer protection, shall draw on the contingent financial backing acquired under s. 126.06 to make payments authorized under s. 126.71 (1), to the extent that those payments exceed the deductible amount in sub. (3). If the contingent financial backing is in the form of a trade credit insurance policy that appears to cover the authorized payments, the department shall file a claim against the policy.

126.72(3) (3) Deductible amount. The deductible amount, for purposes of subs. (1) and (2), is 60 percent of the cash balance in the agricultural producer security fund on the last day of the month preceding the month in which the default occurs.

126.72 History History: 2001 a. 16; 2003 a. 38; 2009 a. 296.

126.73 126.73 Reimbursing payments.

126.73(1) (1) Generally. Except as provided in sub. (2) or (3), the department may demand and collect from a contractor any claim amounts that the department pays under s. 126.72 (1) or under s. 126.72 (2) with the proceeds of contingent financial backing under s. 126.06 (1) because of the contractor’s default.

126.73(2) (2) Bond payments. A bond surety may demand and collect, from a contractor, any claim amounts that the bond surety pays to the department under s. 126.72 (2) because of the contractor’s default. The bond surety shall provide the department with a copy of each demand under this subsection.

126.73(3) (3) Trade credit insurance payments. If the department files a claim against a trade credit insurance policy under s. 126.72 (2) and obtains and uses proceeds from the insurance policy to make payments authorized under s. 126.72 (2), the trade credit insurer may demand and collect the amount of those payments from the defaulting contractor.

126.73(4) (4) Subrogation. The department is subrogated to the rights of a claimant who obtains a payment under s. 126.72 (1) or (2) in an amount equal to the payment, against the defaulting contractor and against any party that would otherwise be liable to the claimant for the amount of the default.

126.73 History History: 2001 a. 16; 2003 a. 38; 2009 a. 296; 2017 a. 155.