SENATE BILL REPORT

ESHB 2000

BYHouse Committee on Agriculture & Rural Development (originally sponsored by Representatives Rayburn, Chandler and Baugher)

Establishing fair practice standards for produce handlers and associations.

House Committe on Agriculture & Rural Development

Senate Committee on Agriculture

Senate Hearing Date(s):March 24, 1989; March 31, 1989

Majority Report:  Do pass as amended.

      Signed by Senators Barr, Chairman; Bailey, Gaspard, Hansen, Madsen, Newhouse.

Senate Staff:Bob Lee (786-7404)

                  April 10, 1989

AS REPORTED BY COMMITTEE ON AGRICULTURE, MARCH 31, 1989

BACKGROUND:

The Federal Agricultural Fair Practices Act was passed by Congress in 1968.  The act makes it unlawful for a handler of agricultural products to coerce, intimidate or discriminate against a producer because of his membership with an association of producers.

Some states have enacted laws with regard to the relationship between processors and associations of producers which contain provisions which are in addition to those contained in the federal act.

SUMMARY:

An association of producers may file an application with the Director of Agriculture requesting accreditation as the exclusive negotiating agent for its members within a negotiating unit with respect to any farm product.  The director must approve an application if the director finds (among other requirements) that the association: is owned and controlled by producers; has binding contracts empowering the association to sell or negotiate the sale of its members' products; and represents a sufficient number of producers or quantity of product to function as an effective agent in bargaining with handlers.

The director must designate an annual negotiation and arbitration period of not more than 60 days for each crop for which an association of producers is accredited.  The director must also set a time and place for associations and handlers of crops to meet and bargain for terms of the contract for the coming crop year.  The bargaining required by a handler extends only to an association that represents producers with whom the handler has had a prior course of dealing.  None of the bargaining provisions apply to processors which only clean, sort, grade, and package farm products for sale without altering their natural condition.

If the parties have not reached an agreement after three consecutive weeks of bargaining, the director must order the matter into arbitration.  All bargaining must cease by a date specified by rule.  If mediation is requested by either party, both must engage in mediation in good faith.  Binding arbitration is required if the negotiations have failed to produce agreement on all terms of the proposed contract.  Not later than 10 days after appointment, the arbitrator must choose the final offer of one party.  The director shall direct that the contract be executed by the parties.

It is unlawful for a handler to: coerce a producer regarding the right to belong to or contract with an association; discriminate against any producer in price or other terms because of such a membership or contract; offer inducements to a producer for refusing or ceasing to belong to an association; make certain false reports regarding an association; refuse to negotiate in good faith with an accredited association; or engage in certain related activities.  It is unlawful for an association to: refuse to negotiate in good faith with a handler; coerce or intimidate a handler to terminate a contract with an association or a member of the association; make certain false reports regarding an association or a handler; or engage in certain related activities.  The director must hear certain complaints regarding alleged violations of these requirements.  The director must, based on the preponderance of the evidence taken, make findings of fact and may issue orders.  An order of the director may be appealed to superior court.

Any person injured by an action which is prohibited may sue to recover damages, reasonable attorneys' fees and costs within two years.  A person who violates a prohibition may be assessed a civil penalty by the director of not more than $10,000 and any person who knowingly violates a prohibition is guilty of a gross misdemeanor.  Violations are also deemed to be unfair practices under the Consumer Protection Act.

The director may require the establishment of certain records, reports, and other information.

The provisions of the bill expire on July 1, 1993.

Appropriation:    none

Revenue:    none

Fiscal Note:      requested March 1, 1989

Effective Date:The bill contains an emergency clause and takes effect immediately.

SUMMARY OF PROPOSED SENATE AMENDMENTS:

It is the purpose of this chapter to establish standards of fair practices for handlers and associations of producers and to establish the mutual obligation to negotiate relative to the production or marketing of agricultural commodities.

It is the intent of the Legislature that a workable process be developed to arrive at a fair price and other contract terms and that the director of Agriculture recognize this intent in developing rules and administering the act.

Agricultural products are limited to sweet corn and potatoes.  An advance contract is for crops that are contracted prior to becoming a growing crop.  Processor excludes those who deal solely with fresh products.

Negotiation meetings are to be at reasonable times and for reasonable periods of time.  They must commence at least 60 days before and conclude 30 days before normal planting.  A serious attempt to reach agreement by acknowledging or refuting with reason points brought by either party with respect to price or other contract terms is to be made.  Neither party is required to disclose proprietary business or financial records.

A process is established whereby an association of producers may request accreditation from the Department of Agriculture. The director shall approve the initial application or a renewal if certain requirements are met.  This includes representing a sufficient percentage of producers or sufficient percentage of products to enable it to function as an effective agent in negotiating with a given handler as defined in rules promulgated by the department.

At the discretion of the director or upon submission of a timely filed petition by an affected handler or association of producers, the association of producers may be required by the director to renew the application for accreditation.

Set forth is a list of activities that would be illegal for a handler, accredited association or its producer members to engage.

If any person is charged with violating this act, the director shall investigate the charges.  If the director has reasonable cause to believe that the person has violated the act, the director shall serve a complaint stating the charges.  The Administrative Procedure Act shall be followed for hearing such matters.

Any complaint must be issued within six months of its occurring.  The director may issue a cease and desist order.

The director is provided with authority to investigate, hold hearings and require persons to maintain records and make reports.  If a court order is obtained, the director may at reasonable times have access to records which are required to be maintained.  Records and information obtained shall be available to the public except upon a showing that they would divulge confidential business information.

Handlers, associations of producers or producers injured by reason of violation of the act may sue to recover damages sustained, and reasonable costs and attorney fees.

The director of Agriculture may assess a civil fine of up to $5,000 for violations of the act.  No person may be fined unless provided an opportunity for a hearing pursuant to the Administrative Procedure Act.  Criteria are included to guide the director in the amount of the fine.

Authority is provided for the director or an aggrieved party to bring an action to enjoin the violation of this chapter.

The director is to promulgate rules necessary to carry out this chapter.

The act shall be cited as the Marketing and Agricultural Fair Practices Act. 

The director shall establish an advisory committee of six producers and six handlers to study and report on all issues related to this chapter.

The bill contains an emergency clause and a severability clause.

Senate Committee - Testified: Bill Fritz, Food Process. Assn.; Jeri Thomas, attorney from DOA; Bruce Lee, Puregro Co/Agri Business Coalition (pro); Richard LaFramboise, Central Washington Farm Crops Assn. (pro); Jerry Heilig, Washington Potato Growers (pro)