Bill 2959

                    Current Status

Bill Number:               2959
Ratification Number:       476
Act Number                 435
Introducing Body:          House
Subject:                   Administration of the South Carolina
                           Dealers and Handlers Guaranty Fund

(A435, R476, H2959)

AN ACT TO AMEND SECTIONS 46-41-210 THROUGH 46-41-230, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO DEFINITIONS USED IN THE DEALERS AND HANDLERS GUARANTY FUND, ASSESSMENT ON GRAIN, AND THE REQUIREMENT FOR THE STATE TREASURER TO ADMINISTER THE FUND, AND ESTABLISH THE PROPOSED AMOUNT AND CLAIMS RELATED TO THE FUND, SO AS TO REDEFINE THE TERM "FAIR MARKET VALUE" AND TO DEFINE THE TERM "DATE OF LOSS", TO REQUIRE THE COLLECTION BY THE GRAIN DEALER OF THE ASSESSMENT AT THE TIME OF SETTLEMENT WITH THE PRODUCER, TO DELETE A PROVISION ALLOWING AN ADDITIONAL ASSESSMENT ON GRAIN HELD FOR MORE THAN ONE YEAR, TO REQUIRE AN AUDIT OF THE GRAIN DEALER BEFORE A LOSS MAY BE PAID FROM THE FUND, TO PROVIDE THAT THE COLLECTION OF THE ASSESSMENT SHALL CEASE AT THE FOUR MILLION DOLLAR-LEVEL, TO INCREASE TO NINETY DAYS FROM SIXTY DAYS THE TIME ALLOWED FOR PRESENTING LOSS CLAIMS WHICH MAY NOT BE HIGHER THAN THE CONTRACT PRICE FOR EACH BUSHEL, TO REQUIRE A REQUEST FOR PAYMENT OF ONE HUNDRED PERCENT OF A LOSS TO CHANGE THE MINIMUM AMOUNT WHICH MUST BE RETAINED IN THE FUND FROM FIVE HUNDRED THOUSAND DOLLARS TO ONE HUNDRED THOUSAND DOLLARS, AND TO ALLOW THE RETENTION OF AN INDEPENDENT LAW FIRM TO COLLECT SUBROGATED LOSSES, AND TO DELETE THE PAYOUT SCHEDULE AND REQUIRE CLAIMS TO BE PAID ON A FIRST-COME, FIRST-SERVE BASIS.

Be it enacted by the General Assembly of the State of South Carolina:

Administration of the South Carolina Dealers and Handlers Guaranty Fund

SECTION 1. Sections 46-41-210 through 46-41-240 of the 1976 Code are amended to read:

"Section 46-41-210. As used in this article:

(1) 'Department' means the South Carolina Department of Agriculture.

(2) 'Fair market value' means the value based on the average market price being paid to producers on a specified date by the three licensed grain dealers nearest the grain dealer involved in the loss.

(3) 'Grain' means any feed grains or oil seeds, except cotton seeds.

(4) 'Grain dealer' means any person engaged in this State in buying, receiving, selling, exchanging, negotiating, processing for resale, or soliciting the sale, resale, exchange, or transfer of grain purchased from the producer or his agent or representative or received to be handled on a net return basis from the producer.

(5) 'Loss' means any monetary loss over and beyond the amount protected by the dealer's bond as a result of doing business with a dealer which includes, but is not limited to, bankruptcy, embezzlement, or fraud.

(6) 'Producer' means any producer of grain.

(7) 'Date of loss' means the date the grain dealer filed a petition for bankruptcy; or, if bankruptcy is not declared, the date a check was returned for insufficient funds, or the date otherwise determined by the department.

Section 46-41-220. An assessment of one cent a bushel must be imposed on all soybeans and one-half cent a bushel on all other grain delivered by producers to grain dealers licensed under this chapter other than grain for which a producer has received payment in currency or cashier's check on delivery, or received a state warehouse receipt issued in the producer's name or that of his designee. The grain dealer shall collect the assessment from the producer at the time of settlement with the producer. The assessment must be reported and remitted to the department by the grain dealer as of the month in which the grain was delivered to the grain dealer, except as provided by Section 46-41-240. The department shall remit the assessment to the State Treasurer to be credited to the fund.

Section 46-41-230. The State Treasurer shall administer the investment of the fund. The department shall administer the collection of assessments and investigate losses for which payment is requested. Unless the grain dealer who allegedly occasioned the loss has filed for bankruptcy or is audited pursuant to other judicial proceedings, the department, in conJunction with the State Auditor's Office, shall conduct a financial audit of the grain dealer to verify the loss before it may request payment from the fund. The fund must bear all expenses incurred in conducting the audit. After verification, the department shall request that payment for verified losses be made by the State Treasurer to the person incurring a loss. The fund must be established for the benefit of producers who have delivered grain to grain dealers licensed under this chapter and compensate producers for losses relative to grain delivered to a grain dealer licensed under this chapter, except losses covered by the grain dealer's surety bond. When the fund reaches four million dollars the assessment ceases. If the four million dollars is attained prior to the end of a harvest season, the assessment continues until the end of that season. The assessment must be reinstituted as necessary to maintain a balance of four million dollars in the fund. The first one hundred thousand dollars collected in assessment must be paid into the general fund of the State. Any of these funds not appropriated for the employment of additional auditors for the Warehouse and Dealers and Handlers Division of the Department of Agriculture must be returned to the fund. All income, interest, or otherwise, derived from this fund must be reinvested in the fund.

When a loss is incurred for grain which has been delivered to a grain dealer licensed under this chapter, the producer shall within ninety days present his claim, which must be under oath, to the department on a form supplied by the department. To verify his claim, the producer shall present any evidence of loss the department considers necessary. The price for each bushel of grain must be established on the day of the loss and must be for the fair market value on that day at the location of loss. The price for each bushel may not be higher than the contract price, if a price has been established. All persons filing claims under this section are bound by the value determined by the department.

The department within thirty days from verification of loss shall request payment of one hundred percent of the approved claim. At no time may the fund be reduced to less than one hundred thousand dollars.

If there is an insufficient amount of money in the fund to cover all claims, payments must be made on a pro rata basis up to one hundred percent of the total loss of each producer. If payment is not received in the amount of one hundred percent of total loss then additional amounts must be paid as funds become available until payment of one hundred percent of total loss is attained. Claims against the fund must be paid in the order in which they have been verified and approved.

Upon approval of his claim by the department, the producer shall subrogate his interest, if any, to the department in a cause of action against any and all parties. An independent law firm may be hired and paid by the fund for the purpose of collecting losses subrogated to the department. Payments start when the fund exceeds one hundred thousand dollars."

Time effective

SECTION 2. This act takes effect upon approval by the Governor.