November 9, 2006, Introduced by Senator BARCIA and referred to the Committee on Agriculture, Forestry and Tourism.
A bill to amend 2003 PA 198, entitled
"Farm produce insurance act,"
by amending sections 3, 13, and 15 (MCL 285.313, 285.323, and
285.325).
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
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) "Authority" means the farm produce insurance authority
created in section 5.
(d) "Board" means the board of directors of the authority
described in section 7.
(e) "Claimant" means a producer who makes a claim for
reimbursement from the fund under section 15.
(f) "Department" means the department of agriculture.
(g) "Depositor" means that term as defined in section 2 of the
grain dealers act, MCL 285.62.
(h) "Director" means the director of the department or his or
her designee.
(i) "Failure" of a licensee or grain dealer means that term as
defined in section 2 of the grain dealers act, MCL 285.62.
(j) "Farm produce" means that term as defined in section 2 of
the grain dealers act, MCL 285.62.
(k) "Farm produce insurance program" or "program" means the
program for reimbursement of claims described in this act.
(l) "Financial institution" means that term as defined in
section 2 of the grain dealers act, MCL 285.62.
(m) "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.
(n) "Fund" means the farm produce insurance fund created in
section 9.
(o) "Grain dealer" means that term as defined in section 2 of
the grain dealers act, MCL 285.62.
(p) "Grain dealers act" means the grain dealers act, 1939 PA
141, MCL 285.61 to 285.88.
(q) "Licensee" means that term as defined in section 2 of the
grain dealers act, MCL 285.62.
(r) "Net proceeds" means the sale price of farm produce, less
usual and customary charges and costs of sale of the farm produce.
(s)
"Participant" means a producer that has contributed to
the
fund and never requested a refund from the fund or a producer
who has reentered the program under section 13(5).
(t) "Person" means an individual, corporation, limited
liability company, partnership, association, cooperative
organization, or other legal entity.
(u) "Price later agreement" means that term as defined in
section 2 of the grain dealers act, MCL 285.62.
(v) "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 in Michigan of farm
produce produced from the land to a grain dealer licensed under the
grain dealers act.
(w) "Producer premium" means the amount of money charged to
and collected from a producer under section 11.
(x) "Sale" means transfer of title.
(y) "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.
(z) "Valid claim" means a claim arising from a failure of a
licensee
that occurs after the effective date of this act
November 10, 2003, is found valid by the department, and is
approved by the board, less all credits and offsets associated with
farm produce sold in this state by a producer to the licensee.
(aa) "Warehouse receipt" means that term as defined in section
2 of the grain dealers act, MCL 285.62.
Sec. 13. (1) Subject to subsection (7), a producer that has
paid, either directly or collected by a licensee, a producer
premium may receive a refund of the 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 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 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 producer
premium under this section, the board shall pay the refund within
60 days of its receipt of the demand for refund.
(4) If 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 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 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 producer
premiums refunded to the producer, and interest on the refunds as
determined by the board.
(6) Beginning
90 days after the reentry, a A
producer that
reenters the farm produce insurance program under subsection (5) is
eligible for reimbursement of claims under the program for failures
that occur at least 90 days after reentry.
(7) A producer is not eligible for a refund of a 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) A producer that meets both of the following may
submit a claim for reimbursement from the fund under this section:
(a) The producer is a participant at the time the producer
submits the claim.
(b) The producer satisfies 1 of the following conditions:
(i) 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.
(ii) 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.
(iii) 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) 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 (3) or (4) 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.
(3) A claimant that incurs a storage loss due to the failure
of a licensee is entitled to payment under subsection (2) in an
amount equal to 100% of the storage loss, less any 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.
(4) A claimant that incurs a financial loss due to the failure
of a licensee is entitled to payment under subsection (2) 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.
(5)
A claim under subsection (2) of this section is valid
only if it is made within 1 year after notice of the failure of the
licensee is published in a newspaper of general circulation in each
county in which a facility of the licensee is located.
(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 273,
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 practices that have
substantially
contributed to the claimant's loss. The authority
may consider whether the marketing practices are generally accepted
marketing 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.
(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.