CHAPTER 251

(SB 44)

Grain buyer and dealer licensing and regulation modified.

         FOR AN ACT ENTITLED, An Act to  revise certain provisions regarding the licensing and regulation of grain dealers and buyers.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF SOUTH DAKOTA:

     Section 1.  That § 49-45-1 be amended to read as follows:

     49-45-1.   Before transacting the business of a grain dealer buyer in this state, a person shall obtain a grain dealer buyer license from the commission. A violation of this section is a Class 2 Class 1 misdemeanor. Each purchase of grain without a license is a separate offense.

     Operation as a grain dealer buyer without a license may be enjoined upon complaint of the commission. In addition, the commission may assess a civil fine against an unlicensed grain dealer buyer in the amount of one hundred thousand dollars for each purchase of grain up to a maximum fine of five twenty thousand dollars.

     Section 2.  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, 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 and for which a grain warehouse receipt has not been issued or grain purchased to feed livestock ;

             (3)      "Grain dealer," any person who buys grain for the purpose of resale. However, nothing in this chapter applies to the isolated or occasional resale of grain by a person who does not hold himself or herself out as engaging in the business of reselling grain or to a person who purchases grain for the person's own use or consumption. The word, use, or the word, consumption, as used in this subdivision, does not mean the sale of the grain at retail or wholesale 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 or occasional resale of grain by a person 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;

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             (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.

     Section 3.  That § 49-45-3 be amended to read as follows:

     49-45-3.   Every Each license issued pursuant to § 49-45-1 expires on the next June thirtieth following the issuance of the license. The Public Utilities Commission commission may at any time for cause shown revoke or suspend any grain dealer buyer license. However, such the grain dealer buyer has the right of appeal from such decisions as provided by chapter 1-26 for the review of final decisions of the commission.

     Section 4.  That § 49-45-6 be amended to read as follows:

     49-45-6.   The Public Utilities Commission commission shall supervise the business of grain dealers buyers in this state and administer the laws relating thereto. The commission may promulgate rules, pursuant to chapter 1-26 , concerning:

             (1)      The form of a grain dealer's buyer's bond and application and the information required to be included for licensing;

             (2)      Requirements for posting grain dealer's buyer's licenses;

             (3)      Requirements and procedures for obtaining, placing, and returning grain dealer buyer decals and replacement decals;

             (4)      Notice requirements to sellers who enter into voluntary credit sale agreements; and

             (5)      Requirements for filing financial statements with the commission and the financial standards by which the statements are approved when considering whether to license a grain dealer buyer; and

             (6)    Requirements for grain buyers to provide information to sellers regarding the statutes and rules relating to grain buyers .

     Section 5.  That § 49-45-7 be amended to read as follows:

     49-45-7.   An application for a grain dealer 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. 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.

     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 6.  That chapter 49-45 be amended by adding thereto a NEW SECTION to read as follows:

     An applicant may apply for a Class A grain buyer's license or a Class B grain buyer's license. No grain buyer with a Class B grain buyer's license may purchase grain in excess of ten million dollars for the annual licensed period or enter into voluntary credit sale contracts. The commission shall require an applicant for a Class A grain buyer's license to submit a more detailed review of its financial condition than an applicant for a Class B grain buyer's license.

     Section 7.  That § 49-45-9 be amended to read as follows:

     49-45-9.   Before any grain dealer 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 dealer 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 dealer buyer . The bond is for the specific purpose of protecting persons selling grain to the grain dealer buyer . However, the bond may not benefit any person entering into a voluntary credit sale with a grain dealer buyer . Any person who does business as a grain dealer buyer without a bond is guilty of a Class 2 Class 1 misdemeanor. Each day a person conducts the business of a grain dealer buyer without a bond is a separate offense.

     The minimum bond required to obtain a grain dealer license is fifty thousand dollars. 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 B grain buyer's license is:

Dollar Amount of Grain Purchased	Bond Requirement
<$2,000,000	$50,000
$2,000,001 - $10,000,000	$75,000

     If the commission finds, after an opportunity for notice and hearing, that the bond filed by a grain dealer, pursuant to this section, is inadequate because of circumstances peculiar to that grain dealer, the amount of that bond may be increased to such amount as the commission determines. In addition, the The grain dealer buyer may stipulate to a higher bond amount requested by the commission.

     Section 8.  That chapter 49-45 be amended by adding thereto a NEW SECTION to read as follows:

     If the commission determines, because a corporate surety company becomes insolvent or ceases to write grain buyer bonds in this state, that a bond in the sum required by §  49-45-9 cannot be executed, the commission may, by rule promulgated pursuant to chapter 1-26, authorize the filing of other financial documents in lieu of a corporate surety bond.

     Section 9.  That § 49-45-10 be amended to read as follows:

     49-45-10.   A grain dealer buyer shall pay the purchase price to the owner or his 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.

     Section 10.  That chapter 49-45 be amended by adding thereto a NEW SECTION to read as follows:

     Upon receiving grain, a grain buyer shall issue to the seller an original uniform scale ticket or comparable receipt for each load of grain received. Tickets or receipts shall be numbered consecutively and a copy of each ticket or receipt shall be retained for six years.

     Section 11.  That § 49-45-11 be amended to read as follows:

     49-45-11.   All voluntary credit sales of grain entered into by a grain dealer buyer shall be in writing. The Public Utilities Commission commission may, by rule rules promulgated pursuant to chapter 1-26, prescribe the form and content of such writings. If a grain buyer's license is terminated or not renewed, the grain buyer shall pay for grain subject to a voluntary credit sale within ten days after the license expiration date.

     Section 12.  That § 49-45-13 be amended to read as follows:

     49-45-13.   The Public Utilities Commission commission shall cause the business facilities of every grain dealer buyer, whether licensed or unlicensed, to be inspected at such times as it the commission considers necessary , by one or more members of the commission or by one of its agents or employees, who . The inspector shall report in writing to the commission the result of such the examination. The commission or its agents or employees inspector may at any time during ordinary business hours enter any office structure, vehicle, or enclosure in which the books and or accounts of any grain dealer buyer are kept, and may examine all the books or accounts relating to the transactions of such the grain dealer buyer either within or without the

state. The commission may, in all matters arising under this chapter, exercise the power of subpoena and examine witnesses in accordance with chapter 1-26.

     Section 13.  That chapter 49-45 be amended by adding thereto a NEW SECTION to read as follows:

     Upon completing an inspection, an inspector may issue a memorandum of adjustments. The commission may assess a civil fine in the amount of two hundred dollars for failure to comply with the memorandum of adjustments within thirty days. After thirty days, each day that the memorandum goes uncorrected may be considered a separate offense.

     Section 14.  That § 49-45-14 be amended to read as follows:

     49-45-14.   Every grain dealer buyer licensed as such in this state shall, at such times as the Public Utilities Commission 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 when if the figures requested are for not less than four grain dealers buyers . The commission may also call for, from time to time, and require that a grain dealer shall buyer provide , any other information regarding the business of the grain dealer buyer . A violation of this section is a Class 2 Class 1 misdemeanor.

     Section 15.  That § 49-45-16 be amended to read as follows:

     49-45-16.   If any 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 dealer buyer , whether licensed or unlicensed, refuses, neglects , or is unable, upon proper demand, to redeem any scale ticket issued by him the grain buyer , through redelivery or cash payment , or if any ;

             (2)    The grain dealer buyer refuses, neglects , or is unable to provide the requisite a bond to procure a grain dealer's license, the commission shall in an amount required by the commission; or

     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. If the commission determines it is necessary, the commission may apply to the circuit court in the county in which the grain dealer buyer operates for that court to appoint a receiver. The receiver shall have has such powers and duties as the court , from time to time, may direct.

     Section 16.  That § 49-45-17 be amended to read as follows:

     49-45-17.   Any person injured by the breach of any obligation of a grain dealer buyer , for the performance of which a bond has been given under any of the provisions of this chapter, may

sue on such bond in his the person's own name in any court of competent jurisdiction to recover any damages he the person may have sustained by reason of such breach.

     Section 17.  That § 49-45-18 be amended to read as follows:

     49-45-18.   If the commission becomes aware of any act by any grain dealer buyer as described in § 49-45-16, or has knowledge of any act of insolvency, including, but not limited to, the filing of a petition in bankruptcy naming the grain dealer as debtor, the commission shall may :

             (1)      Take immediate possession of the grain dealer's facility, and undertake Undertake an immediate audit and verify the names and addresses of all outstanding scale ticket holders as revealed by the audit, and audit and certify the quantity and class or classes of grain therein;

             (2)      Immediately notify the surety named in the grain dealer buyer bond, if any, held by such grain dealer buyer .

     Section 18.  That § 49-45-19 be amended to read as follows:

     49-45-19.   Upon revocation, termination, or cancellation of a grain dealer buyer license, any claim against the grain dealer buyer arising under this chapter shall be made in writing with the commission, grain dealer buyer and surety on the grain dealer buyer bond within six months after receiving notice of revocation, termination, or cancellation. Failure to make a timely claim shall relieve the surety of all obligations to the claimant. However, this section may not be construed to reduce the aggregate liability of the surety to other claimants below the face amount of the bond then in effect. Upon revocation of a grain dealer buyer license, the commission shall cause notice of such the revocation to be published once each week for two consecutive weeks in a newspaper of general circulation in each of the counties in which the licensee maintains a business location and in a newspaper of general circulation within the state and shall cause notice of such the revocation to be sent by certified mail to all scale ticket holders named in the audit prepared pursuant to § 49-45-18. The notice shall state the name and address of the grain dealer buyer , the effective date of revocation, and the name and address of the surety on the grain dealer buyer bond. The notice shall also state that any claims against the grain dealer buyer shall be made in writing and sent by ordinary mail to the commission, the grain dealer buyer and the surety on the grain dealer buyer bond within six months after receiving notice of revocation. The provisions of this section do not apply if a receiver is appointed as provided in § 49-45-16 before the expiration of six months after receiving notice of revocation, termination, or cancellation of the license.

     Section 19.  That § 49-45-20 be repealed.

     Section 20.  That chapter 49-45 be amended by adding thereto a NEW SECTION to read as follows:

     A grain buyer with a Class A license shall keep all company owned grain in the grain buyer's possession insured at current market value of the grain against loss by fire, windstorm, and extended coverage risks. The grain buyer shall furnish the commission with proof of the insurance when the grain buyer applies for a license. A violation of this section is a Class 1

misdemeanor.

     Section 21.  That chapter 49-45 be amended by adding thereto a NEW SECTION to read as follows:

     A grain buyer shall keep all records of grain purchased and all contracts issued and canceled in a safe place. The records shall be kept current and open for inspection by the commission. Each record shall be retained for a period of six years.

     Section 22.  That chapter 49-45 be amended by adding thereto a NEW SECTION to read as follows:

     A grain buyer shall notify the commission, within twenty-four hours, if the facility of a facility-based grain buyer is destroyed or substantially damaged.

     Section 23.  That § 49-45-21 be amended to read as follows:

     49-45-21.   The commission may contract with the Wheat Commission pursuant to § 38-10- 41, with the South Dakota Oilseeds Council pursuant to § 38-27-19, the Soybean Research and Promotion Council pursuant to § 38-29-14, the South Dakota Corn Utilization Council pursuant to § 38-32-24, and the South Dakota Pulse Crop Council pursuant to § 38-34-21. Under the terms of any such contract, the commission may inspect the records of licensed grain dealers buyers to determine compliance with assessment and checkoff requirements imposed by chapters 38-10, 38-27, 38-29, and 38-32 and the provisions of chapter 38-34.

     Section 24.  That § 49-43-34 be repealed.

     Signed March 12, 2008

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