Bill Text: MI SB0888 | 2011-2012 | 96th Legislature | Engrossed
Bill Title: Occupations; agriculture; administration of farm produce insurance program; authorize collection of fee from producers for state enforcement costs and revise fund investment requirements. Amends title & secs. 3, 7, 8, 9, 11, 13, 15 & 21 of 2003 PA 198 (MCL 285.313 et seq.) & adds sec. 10.
Spectrum: Partisan Bill (Republican 2-0)
Status: (Passed) 2012-05-31 - Assigned Pa 0149'12 With Immediate Effect [SB0888 Detail]
Download: Michigan-2011-SB0888-Engrossed.html
SB-0888, As Passed Senate, March 15, 2012
SUBSTITUTE FOR
SENATE BILL NO. 888
A bill to amend 2003 PA 198, entitled
"Farm produce insurance act,"
by amending the title and sections 3, 7, 8, 9, 11, 13, 15, and 21
(MCL 285.313, 285.317, 285.318, 285.319, 285.321, 285.323, 285.325,
and 285.331), the title and sections 3, 7, 9, 15, and 21 as amended
by 2010 PA 300 and section 13 as amended by 2008 PA 140, and by
adding section 10.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
TITLE
An act to provide insurance to farm produce producers against
losses from the failure of grain dealers; to establish a farm
produce insurance authority; to prescribe the powers and duties of
the authority and its board; to establish a farm produce insurance
fund; to provide for assessments on certain producers of farm
products; to impose a fee for regulation of grain dealers and
enforcement activities; to prescribe certain powers and duties of
certain state agencies and officers; to authorize the promulgation
of rules; and to repeal acts and parts of acts.
Sec. 3. As used in this act:
(a) "Acknowledgment form" means that term as defined in
section 2 of the grain dealers act, MCL 285.62.
(b) "Administrative expenses" means the costs described in
section 9(2).
(c) "Administrative premium" means the amount of money charged
to and collected from a producer under section 10.
(d) (c)
"Authority" means the
farm produce insurance authority
created in section 5.
(e) (d)
"Board" means the board
of directors of the authority
described in section 7.
(f) (e)
"Claimant" means a
producer who makes a claim for
reimbursement from the fund under section 15.
(g) (f)
"Cooperative association"
means that term as defined
in 12 USC 1141j.
(h) (g)
"Department" means the
department of agriculture and
rural development.
(i) (h)
"Depositor" means that
term as defined in section 2 of
the grain dealers act, MCL 285.62.
(j) (i)
"Director" means the
director of the department or his
or her designee.
(k) (j)
"Facility" means that
term as defined in section 2 of
the grain dealers act, MCL 285.62.
(l) (k)
"Failure" of a licensee
or grain dealer means that term
as defined in section 2 of the grain dealers act, MCL 285.62.
(m) (l) "Farm
produce" means that term as defined in section 2
of the grain dealers act, MCL 285.62.
(n) (m)
"Farm produce insurance
program" or "program" means
the program for reimbursement of claims described in this act.
(o) (n)
"Financial institution"
means that term as defined in
section 2 of the grain dealers act, MCL 285.62.
(p) (o)
"Financial loss" means
the loss to a producer who is
not paid in full for farm produce that the producer sold to a grain
dealer and delivered under the terms of the sales contract, after
deducting any outstanding charges against the farm produce.
(q) (p)
"Fund" means the farm
produce insurance fund created
in section 9.
(r) (q)
"Grain dealer" means that
term as defined in section 2
of the grain dealers act, MCL 285.62.
(s) (r)
"Grain dealers act" means
the grain dealers act, 1939
PA 141, MCL 285.61 to 285.88.
(t) (s)
"Licensee" means that
term as defined in section 2 of
the grain dealers act, MCL 285.62.
(u) (t)
"Net proceeds" means the sale
price of farm produce,
less usual and customary charges and costs of sale of the farm
produce.
(v) (u)
"Person" means an
individual, corporation, limited
liability company, partnership, association, cooperative
association or other cooperative organization, or other legal
entity.
(w) (v)
"Price later agreement"
means that term as defined in
section 2 of the grain dealers act, MCL 285.62.
(x) (w)
"Producer" means a person
that owns, rents, leases, or
operates a farm on land and who has an interest in and receives all
or any part of the proceeds from the sale and delivery in Michigan
of farm produce produced from the land to a grain dealer licensed
under the grain dealers act.
(y) (x)
"Producer premium" means
the amount of money charged
to and collected from a producer under section 11.
(z) (y)
"Producer security
activities" means any action by the
director under section 22 of the grain dealers act, MCL 285.82, to
administer or enforce that act.
(aa) (z)
"Sale"
means transfer of title.
(bb) (aa)
"Storage loss" means a
loss to a depositor resulting
from the failure of a licensee that has not fully satisfied its
storage obligation to the depositor, net of any outstanding charges
against the farm produce.
(cc) (bb)
"Valid claim" means a
claim arising from a failure
of a licensee that occurs after the effective date of this act, is
found valid by the department, and is approved by the board, less
all credits and offsets associated with farm produce delivered and
sold in this state by a producer to the licensee or to a location
in this state designated in advance of the delivery.
(dd) (cc)
"Warehouse receipt" means
that term as defined in
section 2 of the grain dealers act, MCL 285.62.
Sec. 7. (1) A board of directors shall govern and administer
the
authority. The board shall consist of the following 9 10
members:
(a) The director, or his or her designee, is a nonvoting
member and the chairperson and secretary of the board. This member
shall not receive per diem or other compensation or reimbursement
for expenses for serving on the board.
(b) One nonvoting member appointed by the governor with the
advice and consent of the senate, from recommendations received
from the largest Michigan organization representing the interests
of licensees in Michigan, as determined by the director.
(c) Three voting members appointed by the governor with the
advice and consent of the senate for staggered terms, from
recommendations received from the largest Michigan organization
representing general farm interests in Michigan, as determined by
the director. Only a producer is eligible for appointment under
this subdivision. For the first board, the governor shall appoint 1
voting member appointed under this subdivision for a term of 1
year, 1 voting member for a term of 2 years, and 1 voting member
for a term of 3 years.
(d) One voting member appointed by the governor with the
advice and consent of the senate, from recommendations received
from the largest Michigan organization exclusively representing the
interests of corn producers in Michigan, as determined by the
director. Only a producer is eligible for appointment under this
subdivision.
(e) One voting member appointed by the governor with the
advice and consent of the senate, from recommendations received
from the largest Michigan organization exclusively representing the
interests of soybean producers in Michigan, as determined by the
director. Only a producer is eligible for appointment under this
subdivision.
(f) One voting member appointed by the governor with the
consent and advice of the senate, from recommendations received
from the largest Michigan organization exclusively representing dry
bean producers in Michigan, as determined by the director. Only a
producer is eligible for appointment under this subdivision.
(g) One voting member appointed by the governor with the
advice and consent of the senate, from recommendations received
from the largest Michigan organization representing the interests
of agricultural lenders in Michigan, as determined by the director.
(h) One voting member appointed by the governor with the
consent and advice of the senate, from recommendations received
from the largest Michigan organization exclusively representing
wheat producers in Michigan, as determined by the director. Only a
producer is eligible for appointment under this subdivision. For
the first appointment under this subdivision, the governor shall
appoint the voting member for a term of 2 years.
(2) Except as provided in subsection (1)(b) and (c) for the
first board, and except as provided in subsection (1)(h), each
member of the board appointed by the governor shall serve for a 3-
year term and may be reappointed for 1 or more additional terms.
The governor may remove a member appointed by the governor from the
board for good cause.
(3) The governor shall fill a vacancy on the board for an
unexpired term for the remainder of the term and in the same manner
as an original appointment. A vacancy does not impair the right of
a quorum to exercise all the rights and perform all the duties of
the board.
(4)
Four Five voting members constitute a quorum. The
affirmative
vote of 4 5 or more voting members is necessary for an
action of the board other than adjournment of a meeting of the
board. An adjournment of a meeting of the board requires a vote of
a majority of voting members present at the meeting and voting.
(5) The board shall hold an annual meeting and at least 1
additional meeting each calendar year. The secretary of the board
shall provide written notice of each meeting to the members of the
board at least 5 days before the meeting.
(6) A member of the board may waive any notice required by
this section, before or after the date and time stated in the
notice, in writing and delivered, mailed, or electronically
transmitted to the authority for inclusion in the minutes or filing
with the records of the authority.
(7) A board member's attendance at a meeting waives any
objection to any of the following:
(a) No notice or a defective notice of a meeting, unless the
member at the beginning of the meeting objects to holding the
meeting or transacting business at the meeting.
(b) Consideration of any particular matter at a meeting that
is not within the purpose or purposes described in the notice,
unless the member objects to considering the matter when it is
presented.
(8) The board shall do all of the following:
(a) Elect from among its members a vice-chairperson and
treasurer.
(b) Create forms, and establish policies and procedures to
implement this act.
(c) Establish the amount of the producer premium under section
11 .
(d)
Collect and collect and deposit all producer premiums
authorized
under this act into the fund.
(d) Establish the amount of the administrative premium under
section 10; collect and deposit all administrative premiums into
the fund; and enter into a memorandum of understanding with the
director that provides for reimbursement of the director for
producer security activities from the proceeds of the
administrative premiums.
(e) Take any legal action it considers necessary to compel a
failed licensee to repay the fund for any payment made from the
fund to a claimant for a valid claim against that licensee.
(f) Take any legal action it considers necessary to compel a
claimant to participate in any legal proceeding in relation to the
claim or the failure of a licensee.
(g) Within 5 business days of receiving notice of failure of a
licensee, publish notice of the failure in a manner described in
the grain dealers act.
(h) Request the services of the department or arrange for
legal services through the department of attorney general if the
board considered it necessary in the execution of its duties.
(i) Procure insurance against any loss in connection with its
operations, in amounts and from insurers as determined by the
board.
(j) Borrow money from a bank, an insurance company, an
investment company, or any other person, and pay or include in the
loan any financing charges or interest, consultant, advisory, or
legal fees, and other expenses the board determines are appropriate
in connection with the loan. Any loan contract must provide for a
term of not more than 40 years, allow prepayment without penalty,
and plainly state that the loan is not a debt of this state but the
sole obligation of the authority, payable solely from the fund or
from any appropriation from this state made to the authority for
repayment of the loan.
(k) Employ personnel as required in the judgment of the board
and fix and pay compensation from money available to the authority
from the administrative expenses account described in section 9(2).
(l) Make, execute, and carry out any contract, agreement, or
other instrument or document with a governmental department or
other person it determines is necessary or convenient to accomplish
the purposes of this act.
(m) If requested by the director and approved by the board,
make payment from the fund to compensate a claimant for a valid
claim.
(9) The board may do any of the following:
(a) Establish policies and procedures in connection with the
performance of the functions and duties of the authority.
(b) Adopt a policy establishing a code of ethics for its
employees and board members, consistent with 1973 PA 196, MCL
15.341 to 15.348.
(c) Accept gifts, devises, bequests, grants, loans,
appropriations, revenue sharing, other financing and assistance,
and any other aid from any source and deposit them in the fund and
agree to and comply with any conditions attached to them.
(d)
Enter into a memorandum of understanding with the director
that
provides for reimbursement of the director for producer
security
activities from the fund.
(10) A voting member may receive per diem compensation and
mileage reimbursement for attending meetings of the board or while
engaged in the performance of his or her duties on behalf of the
authority, in amounts established by the board, and may receive
reimbursement for other expenses approved by the board. The amounts
established by the board shall not exceed the maximum commission of
agriculture rates for per diem compensation and mileage
reimbursement. A voting member shall not receive any other
compensation for serving on the board or for services performed for
the authority.
(11) The department shall inspect the books and records of a
licensee during normal business hours to verify whether the
licensee is complying with the provisions of this act.
(12) A licensee shall make its books and records available to
the department for the inspections and verifications described in
sections 10(6) and 11(5). Financial information submitted to the
department or the authority by a licensee for purposes of this
subsection and sections 10(6) and 11(5) is confidential and is not
subject to the disclosure requirements of the freedom of
information act, 1976 PA 442, MCL 15.231 to 15.246, except that
disclosure of financial information may be made in any of the
following circumstances:
(a) With the written consent of the licensee.
(b) Pursuant to a court proceeding.
(c) The disclosure is made to the director or an agent or
employee of the department.
(d) The disclosure is made to an agent or employee of a state
or the federal government authorized by law to see or review the
information.
(e) The information is disclosed in the form of an information
summary or profile, or as part of a statistical study that includes
data on more than 1 grain dealer, that does not identify the grain
dealer to which any specific information applies.
Sec. 8. (1) The board shall conduct its business at public
meetings held in compliance with the open meetings act, 1976 PA
267, MCL 15.261 to 15.275, and shall give public notice of a time,
date, and place of any meeting in the manner required by that act.
(2)
Subject to section 11(6), 7(12), any information submitted
to the board by any person that is not related to the amount of a
claim is confidential and is not subject to the disclosure
requirements of the freedom of information act, 1976 PA 442, MCL
15.231 to 15.246, except that disclosure of that information may be
made in any of the following circumstances:
(a) With the written consent of the person that submitted the
information.
(b) Pursuant to a court proceeding.
(c) The disclosure is made to the director or an agent or
employee of the department.
(d) The disclosure is made to an agent or employee of a state
or the federal government authorized by law to see or review the
information.
(e) The information is disclosed in the form of an information
summary or profile, or as part of a statistical study that includes
data on more than 1 person, that does not identify the person to
whom any specific information applies.
(f) The information sought relates solely to the amount of 1
or more claims paid from the fund.
Sec. 9. (1) The farm produce insurance fund is established
under the direction and control of the board. The fund shall
consist of administrative premiums, producer premiums, money from
any
other source, and interest and earnings from any other source.
fund investments. The board shall direct payments from the fund
only for the following purposes:
(a) Payment of valid claims under section 15.
(b) Payment of administrative premiums and producer premium
refunds under section 13.
(c) Payment of administrative expenses under subsection (2).
(d) Payment of legal fees and legal expenses under subsection
(3).
(e) Reimbursement of the director for producer security
activities.
(2) The board shall allocate money from the fund to a separate
administrative expenses account to pay administrative expenses and
to reimburse the director for producer security expenses. This
allocation
shall not exceed $250,000.00 $500,000.000
in any fiscal
year. Administrative expenses under this subsection include the
actual cost of processing refunds of administrative premiums and
producer premiums, enforcement, record keeping, ordinary management
and investment fees connected with the operation of the fund,
verification cost under section 11(5), and any other expenses
approved by the board. Administrative expenses do not include legal
fees and legal expenses described in subsection (3).
(3) For legal services requested by the board, the board shall
pay for any legal services and legal expenses required by the
authority, board, or fund from money in the fund. Legal services
and expenses described in this subsection are not administrative
expenses and shall not be paid from the administrative expenses
account.
(4) All of the following apply to the investment of any money
in the fund that the board determines is not needed to meet the
immediate cash needs of the fund:
(a)
The treasurer of the board shall act
as is the investment
officer
of the fund and shall invest or direct a financial
institution
to invest the money in the fund that is not currently
needed
to meet the obligations of the fund. The treasurer of the
board
and shall invest or direct the investment of the money in the
fund
only in the manner permitted in
section 1 of 1943 PA 20, MCL
129.91.
Interest and earnings shall be credited to the fund.a
manner that complies with this subsection.
(b) The money shall only be invested through a bank trust
department or a professional investment advisor registered with the
securities and exchange commission under the investment advisors
act of 1940, 15 USC 80b-1 to 80b-21, as determined by the board.
(c) The money may only be invested in any of the following, as
determined by the board:
(i) United States government bonds, United States treasury
notes, or obligations issued by United States government agencies
or United States government-sponsored enterprises.
(ii) Deposit accounts in or certificates of deposit issued by a
financial institution if all of the following are met:
(A) Deposits in the financial institution are insured by an
agency of the United States government.
(B) The principal office of the financial institution is
located in the United States.
(C) Except as provided in sub-subparagraph (D), the amount
held in any 1 account does not exceed the federally insured amount
for that financial institution's accounts.
(D) The amount held in any 1 account in a state or nationally
chartered bank does not exceed $500,000.00.
(iii) Corporate bonds and municipal bonds, if all of the
following are met:
(A) The total investment in corporate and municipal bonds, and
in common and preferred stocks under subparagraph (iv), does not
exceed 45% of the amount of the fund.
(B) The bonds are rated investment grade or better by at least
1 nationally recognized rating service.
(C) The amount invested in bonds of any 1 corporation or
municipality does not exceed more than 5% of the amount of the
fund.
(iv) Common or preferred stock, or a mutual fund or bank-pooled
fund that invests in common or preferred stocks, if all of the
following are met:
(A) The total investment under this subparagraph does not
exceed 11.25% of the amount of the fund.
(B) The common or preferred stock in which the fund invests,
or the stock held by the mutual fund or bank-pooled fund in which
the fund invests, is stock in a publicly owned company that trades
on a United States regulated exchange.
(d) The money shall not be invested in a mutual fund, unless
the mutual fund is 1 of the following:
(i) A mutual fund described in subdivision (c)(iv).
(ii) A money market mutual fund, if all of the following are
met:
(A) The investment is money the board determines is needed to
meet short-term obligations of the fund.
(B) The money is invested for not more than 180 days.
(C) The money market mutual fund is subject to rule 2a-7 of
the securities and exchange commission, 17 CFR 270.2a-7.
(D) The money market mutual fund invests only in obligations
that are rated in the highest rating classification established by
at least 2 standard rating services, or in obligations issued by
government agencies, obligations issued by government-sponsored
enterprises, or government bills, bonds, or notes.
(5) The board shall ensure that the bank trust department or
professional investment advisor described in subsection (4)(a)
completes a compliance review of the investment portfolio on a
quarterly basis and provides a copy of the investment review to the
fund and department within 30 days after the end of each quarter.
(6) The board shall ensure that the audit required under
section 17 includes a certification from the certified public
accountant concerning whether the fund complied with the
requirements of subsection (4) in the audit period. If an audit
does not include this certification, the director by order may
restrict or eliminate the board's authority to invest in corporate
or municipal bonds or common or preferred stocks under subsection
(4).
(7) (5)
The fund shall operate on a fiscal
year established by
the board.
(8) As used in subsection (4), "financial institution" means a
state or nationally chartered bank or a state or federally
chartered savings and loan association, savings bank, or credit
union.
Sec. 10. (1) Except as otherwise provided in this section,
each producer shall pay to the authority an administrative premium
in an amount determined by the board under subsection (2). When the
farm produce is sold to a licensee, the licensee shall deduct the
administrative premium from the proceeds of sale and pay the
premium to the authority on behalf of the producer as provided in
subsection (4).
(2) For any calendar year beginning in 2013, the board may
establish an administrative premium described in subsection (1).
All of the following apply to the amount of an administrative
premium established by the board for a calendar year.
(a) The amount of a producer's premium shall be calculated as
a percentage of the net proceeds from all farm produce sold by the
producer to a licensee in this state.
(b) The amount of the premium shall reflect the board's
determination of the amount of money that is necessary to reimburse
the director for producer security activities.
(c) The board shall consider past and projected costs over a
2-year period in establishing the amount of the premium.
(3) An administrative premium imposed under this section is in
addition to any other fees or assessments required by law.
(4) When purchasing farm produce from a producer, a licensee
or its agent or representative shall deduct the administrative
premium described in subsection (1) from the proceeds of sale and
notify the producer of the amount of the deduction in writing. The
licensee shall forward the administrative premium to the authority
for deposit into the fund on behalf of the producer within 30 days
of the close of each calendar quarter.
(5) If the board establishes, adjusts, or eliminates an
administrative premium under subsection (2) for a calendar year,
the board shall notify the department in writing of that action at
least 120 days before January 1 of that calendar year, and the
department by first-class mail shall notify each licensee of the
requirements of subsection (4) at least 90 days before January 1 of
that calendar year.
(6) A licensee shall clearly indicate in its books and records
the individual administrative premiums collected by the licensee
under subsection (4) and retain those books and records for at
least 3 years. A licensee shall make the portion of the books and
records of the licensee reflecting the administrative premiums
collected available for inspection by the director during regular
business hours. The department shall take steps reasonably
necessary to verify the accuracy of the portion of the licensee's
books and records that reflect the administrative premiums
collected.
Sec. 11. (1) Except as provided in this section, beginning
January 1, 2005, each producer shall pay to the authority a
producer premium of not more than 0.2% of the net proceeds from all
farm produce sold by the producer to a licensee in this state. If
the farm produce is sold to a licensee, the licensee shall deduct
the producer premium from the proceeds of sale and pay the premium
to the authority on behalf of the producer as provided in
subsection (3).
(2) A producer premium imposed under this section is in
addition to any other fees or assessments required by law.
(3) Beginning January 1, 2005, when purchasing farm produce
from a producer, a licensee or its agent or representative shall
deduct the producer premium described in subsection (1) from the
proceeds of sale and notify the producer of the amount of the
deduction in writing. The licensee shall forward the producer
premium to the authority for deposit into the fund on behalf of the
producer within 30 days of the close of each quarter of the fiscal
year.
(4) Until the authority has received $5,000,000.00 in producer
premiums under this act from licensees, a licensee that forwards
producer premiums it has collected to the authority within the time
period
described in this subsection (3)
may retain 0.1% of the
producer premiums collected.
(4)
Before January 1, 2005, the department by first-class mail
shall
notify each licensee of the requirements of subsection (3).
(5) A licensee shall clearly indicate in its books and records
the individual producer premiums collected by the licensee under
subsection (3) and retain those books and records for at least 3
years. A licensee shall make the portion of the books and records
of the licensee reflecting the producer premiums collected
available for inspection by the director during regular business
hours. The department shall take steps reasonably necessary to
verify the accuracy of the portion of the licensee's books and
records that reflect the producer premiums collected. The board
shall reimburse the department for the costs related to the
verification from the fund as an administrative expense under
section 9(2).
(6)
The director shall require that a licensee make its books
and
records available to the department for the inspection or
verification
described in subsection (5). Financial information
submitted
to the department or the authority by a licensee for
purposes
of this subsection and subsection (5) is confidential and
is
not subject to the disclosure requirements of the freedom of
information
act, 1976 PA 442, MCL 15.231 to 15.246, except that
disclosure
of financial information may be made in any of the
following
circumstances:
(a)
With the written consent of the licensee.
(b)
Pursuant to a court proceeding.
(c)
The disclosure is made to the director or an agent or
employee
of the department.
(d)
The disclosure is made to an agent or employee of a state
or
the federal government authorized by law to see or review the
information.
(e)
The information is disclosed in the form of an information
summary
or profile, or as part of a statistical study that includes
data
on more than 1 grain dealer, that does not identify the grain
dealer
to whom any specific information applies.
(6) (7)
At each annual meeting, the board
shall certify the
amount of money in the fund at the end of the preceding fiscal
year. A producer shall continue to pay and a licensee shall
continue to collect producer premiums until the board certifies
that the fund, excluding the proceeds of administrative premiums
assessed under section 10, contained more than $5,000,000.00 at the
end of the preceding fiscal year. In any fiscal year where the
board has certified that the fund, excluding the proceeds of
administrative premiums assessed under section 10, contained more
than $5,000,000.00 at the end of the preceding fiscal year, a
producer is not required to pay and a licensee is not required to
collect producer premiums until 1 of the following occurs:
(a) The board certifies that the fund contained less than
$3,000,000.00 at the end of the preceding fiscal year. In any year
where the board has certified that the fund contained less than
$3,000,000.00 at the end of the preceding fiscal year, the
obligation of each producer to pay and each licensee to collect
producer premiums is reinstated.
(b) The obligation of each producer to pay and each licensee
to collect producer premiums is reinstated in any fiscal year in
which all of the following are met:
(i) The board certifies that the fund contained at least
$3,000,000.00 at the end of the preceding fiscal year.
(ii) The board is aware of a failure of a licensee.
(iii) As determined by the board, the amount required to satisfy
valid claims equals or exceeds the amount of money in the fund.
Sec. 13. (1) Subject to subsection (7), a producer that has
paid,
either directly or collected by a licensee, a an
administrative premium or producer premium may receive a refund of
the
that administrative premium
or producer premium from the fund
by submitting a written demand for refund to the board, delivered
personally or by first-class mail within 12 months after the
producer paid the administrative premium or producer premium, or
within a longer period granted by the board if it determines that
good cause for an extension exists.
(2) A producer shall submit a demand for refund of an
administrative premium or producer premium under subsection (1) on
a demand for refund form developed by the board. The board shall
make the form available to a licensee, producer, or member of the
public upon request.
(3)
If a producer is entitled to a refund of a an
administrative premium or producer premium under this section, the
board shall pay the refund within 60 days of its receipt of the
demand for refund.
(4) If administrative premiums or producer premiums were
assessed in the immediately preceding calendar year, the board
shall by January 31 send a notice to each producer who requested a
refund
of a an administrative
premium or producer premium in any
previous calendar year. The notice must inform the producer of the
deadline for and method of submitting a demand for refund to the
board under subsections (1) and (2) and the method for reentering
the program under subsection (5).
(5)
A producer that receives a refund of a an administrative
premium or producer premium under subsection (1) is not entitled to
participation in the program or to receive any payment under this
act unless it reenters the farm produce insurance program by
meeting all of the following conditions:
(a) The producer submits a request for reentry into the farm
produce insurance program to the board. The producer shall submit
the request in the form required by the board and shall deliver the
request to the board by hand or by certified mail, return receipt
requested.
(b) The board reviews the producer's request for reentry and
approves the request.
(c) The producer pays into the fund all previous
administrative premiums and producer premiums refunded to the
producer, and interest on the refunds as determined by the board.
(6) A producer that reenters the farm produce insurance
program under subsection (5) is eligible for reimbursement of
claims under the program for any failure that occurs at least 90
days after reentry.
(7)
A producer is not eligible for a refund of a an
administrative premium or producer premium under this section if
the producer has received reimbursement from the fund for a valid
claim within the preceding 36 months.
Sec. 15. (1) Subject to subsection (2), a producer that
satisfies any of the following conditions is eligible to make a
claim for reimbursement from the fund under this section:
(a) The producer possesses written evidence of ownership of
farm produce that discloses a storage obligation of a licensee that
has failed, including, but not limited to, a warehouse receipt,
acknowledgment form, or settlement sheet.
(b) The producer has surrendered warehouse receipts as part of
a sale of farm produce to a licensee that failed not more than 21
days after the surrender of the warehouse receipts and the producer
surrendering the warehouse receipts was not fully paid for the farm
produce.
(c) The producer possesses written evidence of the delivery
and sale of farm produce or transfer of price later farm produce to
a failed licensee, including, but not limited to, an acknowledgment
form, settlement sheet, price later agreement, or similar farm
produce delivery contract, but the grain dealer did not pay the
producer in full for the farm produce.
(2) A producer is not eligible for reimbursement from the fund
for a claim submitted under this section if any of the following
apply:
(a) The producer previously requested a refund from the fund
under section 13 and the producer did not previously reenter the
program under section 13(5).
(b) The claim relates to delivery of farm produce to a
licensee that is a cooperative association, under the terms of an
agreement between the producer and the licensee that allocated
delivery rights and obligations proportionate to a capital
investment of the producer in the licensee.
(c) At the time the claim is submitted, excluding patronage
interests, the producer is the owner of at least 5% of the voting
shares, other than publicly traded shares, membership interests,
partnership interests, or other ownership interests of the licensee
whose failure is the basis of the claim. As used in this
subdivision, "patronage interests" means shares or membership,
partnership, or other ownership interests in a licensee that is a
cooperative association that are allocated and distributed to the
producer in proportion to that producer's patronage of the
cooperative association.
(d) At the time the claim is submitted, the producer is the
owner of at least 5% of the voting shares, other than publicly
traded shares, membership interests, partnership interests, or
other ownership interests of the parent corporation of the licensee
whose failure is the basis of the claim.
(e) Title to the farm produce that is the subject of the claim
was transferred by the producer more than 2 years before the date
the claim is submitted.
(f) If notice of the failure of the licensee was published in
a newspaper of general circulation in each county in which a
facility of the licensee was located, the claim is submitted more
than 1 year after that publication.
(3) If the department finds a claim made under subsection (1)
is valid and the board approves of the valid claim, the board shall
within 90 days of the board's approval pay the claimant the amount
described in subsection (4) or (5) from the fund as compensation
for the claim. The 90-day time period for payment may be extended
if the board and claimant agree in a writing that describes the
payment terms and schedule.
(4) A claimant that incurs a storage loss due to the failure
of a licensee is entitled to payment under subsection (3) in an
amount equal to 100% of the storage loss, less any administrative
premium or producer premium that would have been due on the sale of
the farm produce. The department shall determine the gross amount
of the storage loss based upon local market prices on the date of
failure. The department may consider any evidence submitted by the
failed licensee or any claimants concerning the actual charges
associated with stored farm produce.
(5) A claimant that incurs a financial loss due to the failure
of a licensee is entitled to payment under subsection (3) in an
amount equal to 90% of the financial loss. For farm produce that is
sold in a transaction subject to the grain dealers act, the
department shall determine the amount of the financial loss based
on the value of the farm produce less any outstanding charges
against the farm produce. If the farm produce has not been priced,
the department shall establish the amount of the financial loss
using the local market on the date of failure less any usual and
customary charges associated with the sale of farm produce.
(6) The board may require a claimant paid under this section
for a valid claim to subrogate to the board or authority all the
claimant's rights to collect on any bond issued under the grain
dealers act or the United States warehouse act, 7 USC 241 to 256,
and the claimant's rights to any other compensation arising from
the failure of the licensee. If required to subrogate under this
subsection, the claimant shall assign the claimant's interest in
any judgment concerning the failure to the board or authority.
(7) The board shall deny the payment of a valid claim under
this section if the board determines any of the following are met:
(a) The claimant as payee fails to present for payment a
negotiable instrument issued as payment for farm produce within 90
days after the date the negotiable instrument is tendered to the
claimant as payment for farm produce purchased by the licensee.
(b) The claimant has engaged in marketing or management
practices that have contributed to the claimant's loss. The
authority may consider whether the marketing or management
practices are generally accepted marketing or management practices
in this state in making its determination.
(c) The claimant has intentionally committed a fraud or
violated this act in connection with the claim.
(d) The claimant did not take reasonable actions to mitigate
farm produce losses.
(8) If the department determines that a failure of a licensee
has occurred, the board shall do all of the following:
(a) Determine the valid claims against the licensee and the
amount of the valid claims.
(b) Authorize payment of money from the fund when necessary to
pay claimants for valid claims as provided in this section.
(c) Deposit into the fund any proceeds of the remaining farm
produce assets of a failed licensee to repay the fund for money
paid to claimants, subject to any priority lien right a holder of a
mortgage, security interest, or other encumbrance may possess under
any applicable law. The board shall not deposit into the fund an
amount in excess of the sum of the principal amount of valid claims
paid to claimants, plus interest for the period from the date a
claimant was paid for a valid claim to the date that the remaining
farm produce assets were received by the board under this
subsection, at a per annum rate equal to the auction rate of 91-day
discount treasury bills on the date the claimant was paid.
(d) If the amount in the fund and any amount the board borrows
under subsection (9)(b) are insufficient to pay all valid claims,
pay the amount available for payment proportionately among the
valid claims approved by the board and pay the prorated amount to
those claimants.
(9) If the department determines that a failure of a licensee
has occurred, the board may do any of the following:
(a) Pursue any subrogation rights obtained from claimants
under subsection (6).
(b) If the fund has insufficient money to pay the valid
claims, borrow money as authorized under section 7(8)(j) for the
payment of valid claims.
Sec. 21. (1) In addition to any other penalty or remedy
provided by law, a person that knowingly or intentionally commits
any of the following is guilty of a misdemeanor punishable by a
fine of not more than $5,000.00 for each offense:
(a) Refusing or failing to collect any administrative premiums
or producer premiums as required under this act.
(b) Refusing or failing to pay to the authority any
administrative premiums or producer premiums collected under this
act.
(c) Making a false statement, representation, or
certification, or knowingly failing to make a required statement,
representation, or certification, in a record, report, or other
document the person files with the director, department, board, or
authority, or that the person is required to file with the
director, department, board, or authority, under this act.
(d) Resisting, preventing, impeding, or interfering with the
director, agents or employees of the department, the board, or
agents or employees of the authority or board in the performance of
their duties under this act.
(2) In addition to the criminal penalty described in
subsection (1), the court in an enforcement action for a violation
described in subsection (1)(a) or (b) shall order the grain dealer
to pay to the fund any administrative premiums or producer premiums
collected by the grain dealer that it owes to the fund and may
order the grain dealer to pay interest on the amount the grain
dealer owes to the fund.
(3) If the board prevails in an action against a licensee to
recover administrative premiums or producer premiums collected by
or on behalf of the licensee and not forwarded to the fund in
violation of section 10(4) or 11(3), the court may award to the
board all costs and expenses in bringing the action, including, but
not limited to, reasonable attorney fees, court costs, and audit
expenses.
