DATCP Docket No. 18-R-03 Final Rule
Rules Clearinghouse No. CR 18-061 January 10, 2020
PROPOSED ORDER
OF THE WISCONSIN DEPARTMENT OF AGRICULTURE,
TRADE AND CONSUMER PROTECTION
ADOPTING RULES
The Wisconsin department of agriculture, trade and consumer protection proposes the following rule to amend ch. ATCP 99.235 (2) and (4) and ATCP 100.135 (10); and to repeal and recreate ch. ATCP 100.135 (1); and to create ch. ATCP 100.135 (1e) and (1m); relating to grain warehouse keepers and milk contractors. _____________________________________________________________________________
Analysis Prepared by the Department
of Agriculture, Trade and Consumer Protection
This proposed rule modifies Wis. Admin. Code ch. ATCP 99 to align grain warehouse keeper assessment reduction and exemption thresholds with the statutory changes enacted under 2017 Wisconsin Act 155 (Act 155). Act 155 amended Wis. Stat. § 126.88 (1) (b) and repealed Wis. Stat. § 126.88 (1) (c), which resulted in combining Agricultural Producer Security Fund (Fund) balances for grain dealers and grain warehouse keepers and creating a new minimum and maximum. This proposed rule also modifies Wis. Admin. Code ch. ATCP 100 to establish an annual assessment rate for milk contractors that both contribute to the Fund and enter into deferred payment contracts with producers to procure milk. Among other things, Act 155 allows milk contractors to enter into contracts with producers to defer payment for up to 120 days and requires these milk contractors to pay a deferred payment assessment into the Fund. Act 155 requires the Department of Agriculture, Trade and Consumer Protection (DATCP) to establish a deferred payment assessment rate by administrative rule. Statutes Interpreted
Statutory Authority
Statutory Authority: Wis. Stat. §§ 25.463, 93.07 (1), 126.46 (1), 126.81 (1) (a), and 126.88 (1) Explanation of Statutory Authority
Wis. Stat. § 25.463 creates the Wisconsin Agricultural Producer Security Trust 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 DATCP. Wis. Stat. § 126.46 (1) directs DATCP to specify by rule annual fund assessments for milk contractors, including an assessment for deferred payment contracts under Wis. Stat. § 126.485. Wis. Stat. § 126.81 (1) (a) allows DATCP to promulgate rules to interpret and implement Wis. Stat. ch. 126. Wis. Stat. § 126.88 (1) allows DATCP to promulgate rules modifying assessments provided under Wis. Stat. § 126.30 (1). Wis. Stat. § 126.88 (1) (b) directs DATCP to promulgate a rule modifying assessments to maintain a combined Fund balance attributable to grain dealers and grain warehouse keepers of at least $1,200,000, but not more than $7,000,000. Related Statutes and Rules
Wis. Stat. § 15.137 (1) defines the membership of the Agricultural Producer Security Council (Council), which advises DATCP on the Fund and other producer security matters. Plain Language Analysis
Background
ATCP 99
The Fund is a public trust administered by 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 Act 155. This Act combined individual minimum and maximum Fund balance requirements for grain dealers and grain warehouse keepers. Prior to Act 155, individual minimums for grain dealers and grain warehouse keepers were set at $1 million and $200,000, respectively, and maximums were set at $6 million and $1 million, respectively. These balances were combined specifically to increase the overall stability of the Fund and guard against a modest grain warehouse keeper default having a catastrophic effect on that portion of the Fund. The new combined minimum is $1.2 million and the new combined maximum is $7 million. Current law requires DATCP to adjust assessment rates by rule to maintain Fund balances between the statutory thresholds.
A 2008 drafting error set the assessment exemption threshold at $3 million for both grain dealers and warehouse keepers. Notes from the rulemaking docket indicate that the warehouse keeper threshold should have been set at $500,000. Since the previous warehouse keeper Fund balance maximum was $1 million, an assessment exemption threshold of $3 million would never be realized.
ATCP 100 – Milk
Act 155 permits milk contractors and producers to enter into contracts to defer payments for up to 120 days. Act 155 further requires DATCP to promulgate rules, including emergency rules, to establish a deferred payment Fund assessment rate for these types of transactions.
Prior to Act 155, 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.
