AN ACT Relating to an agricultural cooperative commission; adding a new chapter to Title 15 RCW; and prescribing penalties.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1. This chapter may be known and cited as the Washington state agricultural cooperative commission act.

NEW SECTION. Sec. 2. As used in this chapter, the following terms have the meanings indicated unless the context clearly requires otherwise.

(1) "Agricultural product" means any type of agricultural, horticultural, viticultural, floricultural, vegetable, or animal product, except timber or timber products, within its natural or processed state.

(2) "Commission" means the agricultural cooperative commission formed under this chapter.

(3) "Department" means the department of agriculture of the state of Washington.

(4) "Director" means the director of agriculture of the state of Washington or any qualified person designated by the director to act for him or her concerning matters arising under this chapter.

(5) "Agricultural cooperative" means a corporation or other association, that is not a federal corporation, which is organized and operated on a cooperative basis, the principal place of business of which is located in the state of Washington, whose primary function is making collective sales to, marketing agricultural products for, providing services to, or advancing the interests of, producers. For purposes of this subsection, "producer" means any person engaged in the business of growing or producing any agricultural product, whether as the owner thereof, or for others who hold the title thereto.

(6) "Commissioner" means a person elected or appointed to the commission pursuant to section 8 or 9 of this act.

(7) "Director's list" or "list" means the list of agricultural cooperatives prepared by the director pursuant to section 5 of this act.

(8) "Active category" means a category of agricultural cooperatives established by the director pursuant to section 6 of this act which becomes an active category as described in section 7 of this act.

(9) "Inactive category" means a category of agricultural cooperatives that is not an active category.

(10) "Active agricultural cooperative" means all agricultural cooperatives assigned to an active category as defined in subsection (8) of this section.

NEW SECTION. Sec. 3. Because of the importance of the business of agricultural cooperatives to the economy of this state, it is in the public interest to foster agricultural cooperatives, and it is recognized that a means of fostering agricultural cooperatives is to educate their directors, officers, and employees as to the function and operation of the businesses of which they are an integral part.

The legislature declares that the purpose of this chapter is to promote the general welfare of the state by enabling agricultural cooperatives, through the commission created hereunder, to provide themselves, their directors, officers, and employees with educational and technical assistance, in such areas as finance, business, communications, community development, consulting, insurance, legal, management, training, transportation, and other related areas which are conducive to the effective operation of their cooperative businesses in general.

NEW SECTION. Sec. 4. Agricultural cooperatives may petition the director at any time for the creation of the agricultural commission. Petitions shall be signed by representatives of at least three agricultural cooperatives, shall designate an attorney-in-fact for the purpose of this section, and shall refer to this chapter. A one hundred dollar nonrefundable fee payable to the state treasurer shall accompany the petition. Once a petition has been submitted hereunder, however, no other petition may be accepted by the director unless and until the petition currently on file with the director is rejected for failure to comply with this chapter.

Upon receipt of a petition, the director shall prepare an estimate for the cost of processing the petition, which estimate shall include, among other things, the cost of assembling the list of agricultural cooperatives, the cost of notifying the agricultural cooperatives, and the cost of preparing the cost estimate itself, and in addition, shall indicate the costs attributable to these particular taxes. Within ninety days following receipt of the petition, the director shall submit the cost estimate to the petitioners' attorney-in-fact.

Petitioners are required to remit to the director within thirty days after receipt of the cost estimate the portion of the cost estimate attributable to the cost of its preparation, less the one hundred dollar nonrefundable fee which will be credited to this amount. In addition, the petitioners may remit the remaining portion of the cost estimate to the director within said period. Upon petitioners' failure to submit the entire cost estimate within such period, the director shall have no further obligation to take action on the petition and it shall be rejected.

If the commission is formed hereunder, the petitioners shall be reimbursed for the total costs remitted from funds received by the commission as they become available.

NEW SECTION. Sec. 5. Upon receipt of the petition to form the commission and a sum equal to the estimated costs calculated pursuant to section 4 of this act, the director shall make a list of all agricultural cooperatives, which is as accurate and complete as is reasonably possible. The names of all agricultural cooperatives the identity of which is ascertainable by reference to resources practicably available to the director, and the names of agricultural cooperatives which have submitted reports to the director pursuant to the notices described below, shall be placed on the director's list. In addition, if an agricultural cooperative requests that its name be placed on the list at any time, the director shall request that the agricultural cooperative submit a report as described below, and within ten days of receipt thereof, shall place the name of the agricultural cooperative on the director's list.

The director shall publish notices as described below to agricultural cooperatives in such magazines, newspapers, newsletters or other periodicals, and for such periods of time, as the director may reasonably believe will reach the attention of agricultural cooperatives and, at substantially the same time, shall mail notices to all agricultural cooperatives on the director's list at the time of mailing.

Such notices shall require all agricultural cooperatives to file with the director a report showing the cooperative's name, mailing address, type of business conducted, accompanied by its most recent annual report to its members, along with any other information reasonably required by the director to administer this chapter. In addition, the director may obtain such information from third party sources as is reasonably necessary.

All published notices shall state that reports are due within twenty days from the last date of publication of the notice, and all mailed notices shall state that reports are due within thirty days from the date of mailing of such notice, although such reports shall be accepted by the director if received thereafter.

The director shall keep such list at all times as current as possible, placing the names of agricultural cooperatives submitting reports on his list within ten days of their receipt, and may require additional information from agricultural cooperatives at various times in accordance with rules prescribed by the director.

NEW SECTION. Sec. 6. Within thirty days after the last date of publication of the notice, or the date of mailing the notices, whichever occurs later, but no earlier than twenty days after such date, the director shall establish no less than five, and no greater than ten, categories of agricultural cooperatives. This categorization shall be based, as far as is practicable, on the type of agricultural product marketed by the agricultural cooperative and the type of services provided such cooperative, and shall take into consideration, where practicable, the different geographic areas of the state in which the agricultural cooperatives are located. Thereafter, the director shall assign each agricultural cooperative on the director's list to one of the designated categories.

The number and type of categories can be changed by the director from time to time, as can the assignation of agricultural cooperatives to the designated categories, in accordance with the above described criteria, provided that an agricultural cooperative cannot be designated to an inactive category, and provided further that no such change shall have the effect of reducing the term of an existing commissioner.

NEW SECTION. Sec. 7. Within twenty days after establishing categories of agricultural cooperatives pursuant to section 6 of this act, the director shall mail secret ballots to all agricultural cooperatives assigned to such categories. Such ballots shall inquire as to whether the commission shall be formed, shall indicate the date by which such ballots must be received by the director, which date shall be thirty days from the date of mailing the ballot, and shall state that such ballots to be valid must be addressed to the director and postmarked no later than said date. In addition, the ballots shall describe the manner in which the commission shall be formed, as described below, and shall notify their recipient that at the recipient's request, the director shall provide it with a copy of this chapter.

The commission shall be formed if at least one category shall become an active category. A category shall become active if at least sixty-five percent by number and at least fifty-one percent by average yearly gross sales of those agricultural cooperatives assigned to the category submitting ballots in accordance with the rules described above shall assent to the formation of the commission.

If a category fails to become an active category, any three agricultural cooperatives in the same inactive category thereafter may petition the director, at intervals of no less than nine months, to mail secret ballots as described above to all agricultural cooperatives which are assigned to the category of the petitioning agricultural cooperatives, and the category shall become active if the requisite number of votes are received as described in this section.

NEW SECTION. Sec. 8. The director shall determine the number of commissioners to be elected from each active category, which number shall be not less than one commissioner per category. The total number of elected commissioners shall be no less than three, but no greater than ten. The director shall make this determination on the basis of equity and adequate representation, considering, among other factors, the number of agricultural cooperatives in each category, the extent of their combined average yearly gross sales, and the geographic areas in which they are located.

The number of commissioners may be varied from time to time, in accordance with the criteria and minimum and maximum limitations set forth in this section, but no such change may have the effect of reducing the term of an existing commissioner.

NEW SECTION. Sec. 9. Commissioners shall be elected from each active category as follows:

(1) Not less than ninety days nor more than one hundred twenty days prior to the expiration of an existing commissioner's term, or in the case of a commissioner's position being filled for the first time, not less than sixty days nor more than ninety days prior to the election of the commissioner, the director shall mail nomination forms to every agricultural cooperative assigned to the category from which the commissioner is being elected. The nomination form shall provide spaces for the name of the person being nominated, the names of at least five agricultural cooperatives nominating the nominees, and the signatures of one officer of each such cooperative, and shall attest that the nominee meets the qualifications for a commissioner to serve on the commission, and that the nominee will be willing to serve if elected. The nomination form shall, in addition, indicate the requisite qualifications for elected commissioners described in section 11 of this act.

(2) Not less than thirty days nor more than forty-five days following the mailing of the nomination forms described in subsection (1) of this section, secret ballots shall be mailed to all agricultural cooperatives on the director's list in the category for which a commissioner is being elected, which ballot shall provide the names of those persons nominated for commissioner status pursuant to subsection (1) of this section, and shall indicate the date by which such ballots must be received, which date shall be thirty days from the date of mailing the ballot, and shall state that such ballots to be valid must be addressed to the director postmarked no later than such date.

(3) Whenever agricultural cooperatives fail to file any nominating petitions within the requisite period of time, the director shall nominate three qualified persons and place their names on the secret mail ballot as nominees, provided that any qualified person may be elected by a write-in ballot, even though the person's name was not placed in nomination for such election.

(4) If more than one commissioner is being elected to one active category, the nomination and secret ballot forms may provide for the nomination and election of such multiple commissioners.

(5) Commissioners shall be elected by a majority of votes cast by the agricultural cooperatives in his category, each agricultural cooperative being entitled to one vote. If a nominee does not receive a majority of the votes on the first ballot, a run-off election shall be held by mail in a similar manner between the two candidates for the position who received the largest number of votes.

NEW SECTION. Sec. 10. In addition to the commissioners elected as provided in section 9 of this act, one commissioner shall be appointed by the director, which appointee may be the director, and one commissioner shall be appointed by the dean of the college of agriculture and home economics of Washington State University, which appointee may be the dean.

NEW SECTION. Sec. 11. Elected commissioners shall be directors, officers, or employees of an active agricultural cooperative which has been assigned to the category being represented by the commissioner. Elected and appointed commissioners shall be residents of the state and shall be over the age of twenty-five. The qualifications of commissioners set forth in this section must continue during their terms of office. Failure of any of these qualifications automatically disqualifies the person from continuing to hold office.

NEW SECTION. Sec. 12. Any commissioner may also be a member or officer of an association which has the same objective as the commission. The commission may also contract with such association for services necessary to carry out any purposes authorized under this chapter.

NEW SECTION. Sec. 13. Of the initial commissioners, one-third shall serve for three years, one-third shall serve for two years, and one-third shall serve for one year, as nearly as may be practicable. The director shall designate before the election or appointment which commissioners will serve these staggered terms upon such basis as the director finds to be fair and equitable. Thereafter, all terms shall be for three years.

NEW SECTION. Sec. 14. (1) If an elected position becomes vacant because of failure to qualify, resignation, disqualification, removal, death, or any other reason, the position shall be filled for its unexpired term by the affirmative vote of at least fifty percent of the remaining commissioners.

(2) If an appointed commissioner's position becomes vacant for reasons other than expiration of the term of office, the position shall be filled for the balance of the unexpired term in the same manner as the original appointment.

NEW SECTION. Sec. 15. A commissioner may be removed by the director for malfeasance, misfeasance, or neglect of duty, after written notice of the charges and an opportunity to be publicly heard.

NEW SECTION. Sec. 16. Commissioners shall receive compensation in the amount of twenty dollars for each day spent in attendance at or in traveling to and from meetings of the commission, or on special assignment for the commission, together with travel expenses, in accordance with RCW 43.03.050 and 43.03.060.

NEW SECTION. Sec. 17. (1) The commission shall meet as soon as practicable after formation for the purpose of organizing. Thereafter, the commission shall meet at least once every four months at such time and place as shall be fixed by resolution of the commission.

(2) The commission shall hold an annual meeting for the presentation of an annual report and proposed budget. The commission shall notify all agricultural cooperatives with reports on file of the time and place of the annual meeting by mail at least thirty days prior to the meeting.

(3) The commission shall establish, by resolution, the time, place, and manner of calling special meetings. Reasonable notice of such meetings shall be given to each commissioner and to the public.

(4) Fifty percent of the commissioners shall constitute a quorum. Any action taken by the commission shall require the majority vote of the commissioners present.

(5) The procedure followed by the commission shall be governed in all applicable respects by chapter 34.04 RCW.

(6) The commission shall, by resolution, establish and maintain an office where books, records and minutes shall be kept.

(7) All meetings of the commission shall be conducted in accordance with the open public meetings act, chapter 42.30 RCW.

NEW SECTION. Sec. 18. The commission shall have the following powers and duties:

(1) To elect a chairman and such other officers as it finds necessary.

(2) To adopt, amend, and repeal rules reasonably necessary for the administration and operation of the commission and the enforcement of its duties under this chapter.

(3) To employ and discharge, at its discretion, such administrators and additional personnel, attorneys, teaching and research agencies, educators, speakers and consultants and other persons and firms that it may deem appropriate, and may pay compensation to the same.

(4) To acquire personal property and lease office space and other necessary real property and transfer and convey the same.

(5) To institute and maintain in its own name all legal actions, including actions by injunction, mandatory injunction, or civil recovery, or proceedings before administrative tribunals or other governmental authorities necessary to carry out this chapter.

(6) To keep accurate records of all its receipts and disbursements, which records shall be open to inspection and audit by the regular agencies of the state.

(7) To apply for and receive grants from public or private entities to further the purposes of the commission.

(8) To borrow money and incur indebtedness.

(9) To make necessary disbursements and routine operating expenses.

(10) To inform the public of the nature and purpose of the commission.

(11) To set standards of kind, quality and content for technical assistance programs funded by the commission.

(12) To collect assessments under this chapter.

(13) To cooperate with and enter into agreements with other governmental agencies, whether of this state, other states, or agencies of the federal government, and with private associations, in order to carry out the purposes and to administer this chapter.

(14) Such other powers as are necessary to carry out the purposes of and to administer this chapter.

The commission shall expressly not have the power, however, to provide educational and technical assistance, or to directly benefit, persons or entities other than active agricultural cooperatives, their directors, officers or employees, except as expressly provided otherwise in this chapter, provided that programs or services may be provided to inactive agricultural cooperatives, their directors, officers or employees if adequate compensation is remitted to the commission by such persons or entities.

NEW SECTION. Sec. 19. The director may assess all active agricultural cooperatives to the extent funds are reasonably necessary to carry out the purposes of, and to administer this chapter, according to an equitable formula determined by the commission. The total amount of money assessed from all active agricultural cooperatives per annum shall not exceed .0002 times the gross annual sales of all active agricultural cooperatives, and shall not exceed five thousand dollars per annum for each active agricultural cooperative assessed.

The equitable assessment formula determined by the commissioner may take into account disparities among the agricultural cooperatives assessed, including consideration as to whether they are marketing, supply or service cooperatives. Such adjustments may utilize sliding scales based on increments of gross business volume, a relation to net savings, a relation to total membership equity, a relation to number of directors and employees an agricultural cooperative may have, and like considerations.

A credit against assessments shall be allowed for the actual costs of technical programs conducted by any consultant, association, or person employed by an agricultural cooperative, provided they comply with standards of quality and appropriateness set by the commission, and provided further that proper evidence of such costs is provided.

NEW SECTION. Sec. 20. If it appears from an investigation by the commission that the revenue from the assessments levied hereunder is inadequate to accomplish the purposes of this chapter, the commission shall adopt a resolution setting forth the necessities of the commission, the extent and probable cost of the required education and technical assistant programs, and the cost of the administration of this chapter, and probable revenue from the assessment to be levied. It shall thereupon increase the assessment formula and assessment ceilings to such extent as shall be determined by the commission to be necessary for such purposes. An increase shall become effective sixty days after such resolution is adopted, provided, however, that no increase in such assessment shall become effective unless the same shall be first referred by the commission to a referendum mail ballot by the active agricultural cooperatives, conducted under the supervision of the director, and be approved by at least sixty-five percent by number and at least fifty-one percent by yearly average gross sales, of those active agricultural cooperatives properly submitting a ballot.

NEW SECTION. Sec. 21. Money collected by the commission under this chapter shall be used by the commission only for the administration and purposes of this chapter. Upon the termination of the commission, any money remaining with the commission and not required to defray expenses or pay obligations incurred by the commission, shall be returned to agricultural cooperatives in proportion to the assessments paid by them in the two-year period preceding the date of termination.

NEW SECTION. Sec. 22. The commission shall establish a fund outside of the state treasury into which shall be deposited all money received under this chapter. The fund shall be maintained in a public depository.

NEW SECTION. Sec. 23. If any agricultural cooperative fails to pay the full amount of any assessment, or other sum, and fails to provide evidence of an equivalent credit due on or before the due date, the commission may add to the unpaid assessment or sum any amount not exceeding twelve percent of the amount due. The commission may collect delinquent assessments by civil action.

NEW SECTION. Sec. 24. Upon request of the director, the commission shall reimburse the department for expenses and costs incurred under this chapter. These expenses shall not exceed the proportionate share of the overhead expenses of the department attributable to its duties under this chapter.

NEW SECTION. Sec. 25. The active category status of any active category shall terminate at the end of any calendar year if the director finds that fifty-one percent of the agricultural cooperatives in such category by number and fifty-one percent of said agricultural cooperatives by gross average yearly sales, favor termination. The director shall make this determination whenever twenty percent by number or twenty percent by gross average yearly sales of such agricultural cooperatives in such category petition the director for termination. The director shall make the determination by conducting a referendum to the agricultural cooperatives in such category on his list.

The commission shall terminate if no categories remain in active category status. The commission may be reinstated, however, if the procedures described in this chapter for forming the commission, including the submission of a petition, the mailing of secret ballots, etc., are complied with.

NEW SECTION. Sec. 26. Any person who violates any provision of this chapter or any rule adopted under this chapter is subject to a civil penalty in an amount not to exceed five hundred dollars for each violation.

NEW SECTION. Sec. 27. The remedies provided in this chapter are in addition to and not in limitation of any other remedies provided by law.

NEW SECTION. Sec. 28. If any provision of this chapter or its application to any person or circumstance is held invalid, the remainder of the chapter or the application of the provision to other persons or circumstances is not affected.

NEW SECTION. Sec. 29. This chapter shall be liberally construed.

NEW SECTION. Sec. 30. Sections 1 through 29 of this act shall constitute a new chapter in Title 15 RCW.