AN ACT Relating to agricultural assistance; amending RCW 62A.9-501 and 61.30.030; adding a new section to chapter 6.04 RCW; adding a new section to chapter 61.12 RCW; and adding a new chapter to Title 7 RCW.

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

NEW SECTION. Sec. 1. The legislature finds that the agricultural sector of the state's economy is under severe financial stress due to low farm commodity prices, continuing high interest rates, and reduced net farm income. It is the declared purpose of this chapter to establish an emergency program which will serve and promote the public welfare of the state of Washington by assuring the viability of farm operations, preventing erosion of the tax base in rural areas, reducing foreclosures on farm property, and enhancing the financial stability of the agricultural industry.

NEW SECTION. Sec. 2. As used in this chapter, unless the context indicates otherwise, the following definitions apply:

(1) "Agricultural production" means the production of livestock, poultry, field crops, fruit, or other animal and vegetable matter for food or fiber.

(2) "Agricultural property" means:

(a) Real property that is principally used for agricultural production; and

(b) Personal property that is part of an agricultural production operation, including equipment, or used as security to finance such an operation.

(3) "College board" means the state board for community college education.

(4) "College" means the community college offering a program of financial consulting in closest proximity to the distressed farmer who applies for assistance under section 8 of this act.

(5) "Farmer" means a person who owns or operates a farm or ranch primarily for the purpose of agricultural production.

(6) "Mediator" means a person who has been trained under section 5 of this act in mediation and negotiation techniques, to serve as a negotiator between a farmer and a creditor as authorized under section 8 of this act.

(7) "Financial consultant" means a person who is or has been involved in production agriculture and who has been trained under section 5 of this act in financial planning and peer counseling.

(8) "Mediation process" means the agricultural assistance and consultation program provided for in section 3 of this act.

(9) "Creditor" means:

(a) The holder of a mortgage on agricultural property;

(b) A vendor of a contract for deed of agricultural property;

(d) A judgment creditor with a judgment against a debtor engaged in agricultural production; or

(e) A person who extends credit without perfected security interest to a farmer for the purchase of goods or services used in agricultural production.

NEW SECTION. Sec. 3. (1) The state board for community college education through the community college system shall establish an agricultural assistance and consultation program to aid financially distressed farmers in this state.

(2) The college board shall take reasonable measures to inform agricultural lenders and borrowers of this program.

(3) The college shall submit a mediation process, to be established at that college, to the college board for approval. As part of the mediation process, the college shall make available to farmers the following types of assistance:

(a) Financial consulting, farm management consulting, and voluntary debt mediation as provided for in section 8 of this act; and

(b) Referral services for mental health assistance and support counseling.

NEW SECTION. Sec. 4. For the purpose of establishing the program, the college may:

(1) Utilize the services of:

(a) A network of trained peer counselors who can directly assist financially distressed farmers;

(b) The cooperative extension service and the college of agriculture at Washington State University;

(d) Legal service corporations, the University of Washington law school, or private law firms;

(e) Community service organizations;

(f) Private business;

(g) Professional associations;

(h) Regional mental health corporations;

(i) Volunteer organizations; and

(j) Any other person or entity.

(2) Contract for services with qualified personnel, including peer counselors, farm management specialists, accountants, attorneys, and mental health professionals, to provide the assistance required under section 3 of this act.

NEW SECTION. Sec. 5. For the purpose of administering the program, the college board shall:

(1) Provide training for financial consultants and mediators who are to provide services under this chapter; and

(2) Compile a directory of services available through the program.

NEW SECTION. Sec. 6. The college board may accept monetary or in-kind contributions, gifts, and grants provided to support the program.

NEW SECTION. Sec. 7. The college board may establish reasonable fees to defray the cost of providing financial consulting services under this chapter. The college board shall apply to the United States secretary of agriculture for a matching grant for this program under Title V, subtitle A of the agricultural credit act of 1987.

NEW SECTION. Sec. 8. (1) A farmer who is in danger of foreclosure on agricultural property may apply for entrance into the mediation process by filing an application with the college on a form prescribed by the college board.

(2) A farmer who participates in the mediation process shall authorize the release to the college of any information held by a creditor.

(3) Upon receipt of a properly completed application into the mediation process, the college may assign the farmer to a financial consultant. If this action relieves the financially distressed situation, mediation shall not be sought.

(4) If, upon completion of the financial consulting program, mediation is desired and recommended by the financial consultant, the college shall direct a mediator to meet with the farmer and creditor to assist in mediation. For purposes of this section, a financial consultant may also act as mediator if trained under section 5 of this act.

(5) Subject to the provisions of subsection (6) of this section, the college shall immediately terminate an attempt at mediation if at any time it finds that a creditor does not agree to participate in mediation.

(6) If mediation involves more than one creditor and any one creditor does not agree to participate in mediation, the college shall terminate mediation only insofar as it relates to that creditor.

NEW SECTION. Sec. 9. (1) If an agreement is reached between the farmer and a creditor, the mediator shall draft a written mediation agreement to be signed by the farmer and the creditor.

(2) A farmer and any creditor who are parties to a mediation agreement:

(a) Are bound by the terms of the agreement;

(b) May enforce the mediation agreement as a legal contract; and

NEW SECTION. Sec. 10. If a mediation agreement cannot be reached, the mediator shall recommend to the college board that the mediation be concluded and mediation terminated.

NEW SECTION. Sec. 11. (1) All materials, data, and information received by the college with respect to any request filed under section 8 of this act are confidential and are not subject to examination or disclosure as public information.

(2) No official, employee, or agent of the college may knowingly disclose any materials, data, or information concerning a mediation request without the consent of the farmer and the creditor.

NEW SECTION. Sec. 12. Meetings between a farmer and any creditor conducted by a mediator are confidential and are not subject to the provisions of the open meeting law.

NEW SECTION. Sec. 13. All parties who voluntarily enter into the mediation process as described in this chapter shall waive their right to take civil action against the state of Washington and the designated financial consultant and mediator and thereby release the state and the designated financial consultant and mediator from civil liability for actions occurring within the scope of the mediation process.

NEW SECTION. Sec. 14. A new section is added to chapter 6.04 RCW to read as follows:

Execution shall not be permitted on agricultural property, as defined in section 2 of this act, if the debtor and creditor are participating in mediation in compliance with the process established in chapter 7.-- RCW (sections 1 through 13 of this act).

NEW SECTION. Sec. 15. A new section is added to chapter 61.12 RCW to read as follows:

Foreclosure shall not be permitted on agricultural property, as defined in section 2 of this act, if the debtor and creditor are participating in mediation in compliance with the process established in chapter 7.-- RCW (sections 1 through 13 of this act).

Sec. 16. Section 9-501, chapter 157, Laws of 1965 ex. sess. as amended by section 34, chapter 41, Laws of 1981 and RCW 62A.9-501 are each amended to read as follows:

(1) When a debtor is in default under a security agreement, a secured party has the rights and remedies provided in this Part and except as limited by subsection (3) those provided in the security agreement. He may reduce his claim to judgment, foreclose or otherwise enforce the security interest by any available judicial procedure. If the collateral is agricultural property, as defined in section 2 of this 1988 act, remedies available to a secured party shall not be permitted if the debtor and secured party are participating in mediation in compliance with the process established in chapter 7.-- RCW (sections 1 through 13 of this 1988 act). If the collateral is documents the secured party may proceed either as to the documents or as to the goods covered thereby. A secured party in possession has the rights, remedies and duties provided in RCW 62A.9-207. The rights and remedies referred to in this subsection are cumulative.

Notwithstanding any other provision of this Code, in the case of a purchase money security interest in consumer goods taken or retained by the seller of such collateral to secure all or part of its price, the debtor shall not be liable for any deficiency after the secured party has disposed of such collateral under RCW 62A.9-504 or has retained such collateral in satisfaction of the debt under subsection (2) of RCW 62A.9-505.

(2) After default, the debtor has the rights and remedies provided in this Part, those provided in the security agreement and those provided in RCW 62A.9-207.

(3) To the extent that they give rights to the debtor and impose duties on the secured party, the rules stated in the subsections referred to below may not be waived or varied except as provided with respect to compulsory disposition of collateral (subsection (3) of RCW 62A.9-504 and RCW 62A.9-505) and with respect to redemption of collateral (RCW 62A.9-506) but the parties may by agreement determine the standards by which the fulfillment of these rights and duties is to be measured if such standards are not manifestly unreasonable:

(a) subsection (2) of RCW 62A.9-502 and subsection (2) of RCW 62A.9-504 insofar as they require accounting for surplus proceeds of collateral;

(b) subsection (3) of RCW 62A.9-504 and subsection (1) of RCW 62A.9-505 which deal with disposition of collateral;

(d) RCW 62A.9-506 which deals with redemption of collateral; and

(e) subsection (1) of RCW 62A.9-507 which deals with the secured party's liability for failure to comply with this Part.

(4) If the security agreement covers both real and personal property, the secured party may proceed under this Part as to the personal property or he may proceed as to both the real and the personal property in accordance with his rights and remedies in respect of the real property in which case the provisions of this Part do not apply.

(5) When a secured party has reduced his claim to judgment the lien of any levy which may be made upon his collateral by virtue of any execution based upon the judgment shall relate back to the date of the perfection of the security interest in such collateral. A judicial sale, pursuant to such execution, is a foreclosure of the security interest by judicial procedure within the meaning of this section, and the secured party may purchase at the sale and thereafter hold the collateral free of any other requirements of this Article.

Sec. 17. Section 3, chapter 237, Laws of 1985 and RCW 61.30.030 are each amended to read as follows:

It shall be a condition to forfeiture of a real estate contract that:

(1) The contract being forfeited, or a memorandum thereof, is recorded in each county in which any of the property is located;

(2) A breach has occurred in one or more of the purchaser's obligations under the contract and the contract provides that as a result of such breach the seller is entitled to forfeit the contract; ((~~and~~))

(3) Except for petitions for the appointment of a receiver, no action is pending on a claim made by the seller against the purchaser on any obligation secured by the contract; and

(4) Where agricultural property, as defined in section 2 of this 1988 act, is the subject of forfeiture, the process established in chapter 7.-- RCW (sections 1 through 13 of this 1988 act) has been complied with.

NEW SECTION. Sec. 18. Sections 1 through 13 of this act shall constitute a new chapter in Title 7 RCW.