S-1624

AN ACT Relating to regulation of commission merchants; amending RCW 20.01.210 and 20.01.420; adding new sections to chapter 20.01 RCW; prescribing penalties; and declaring an emergency.

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

Sec. 1. RCW 20.01.210 and 1986 c 178 s 9 are each amended to read as follows:

(1) Before the license is issued to any commission merchant or dealer, or both, the applicant shall execute and deliver to the director a surety bond executed by the applicant as principal and by a surety company qualified and authorized to do business in this state as surety. Said bond shall be to the state for the benefit of qualified consignors of agricultural products in this state. All such sureties on a bond, as provided herein, shall be released and discharged from all liability to the state accruing on such bond by giving notice to the principal and the director by certified mail. Upon receipt of such notice the director shall notify the surety and the principal of the effective date of termination which shall be thirty days from the receipt of such notice by the director, but this shall not relieve, release, or discharge the surety from any liability already accrued or which shall accrue before the expiration period provided for above.

(2) The bond for a commission merchant or dealer in hay, straw or turf, forage or vegetable seed shall be not less than fifteen thousand dollars. The actual amount of such bond shall be determined by dividing the annual dollar volume of the licensee's net proceeds or net payments due consignors by twelve and increasing that amount to the next multiple of five thousand dollars, except that the bond amount for dollar volume arising from proprietary seed bailment contracts shall be computed as provided in subsection (4) of this section. Such bond for a new commission merchant or dealer in hay, straw or turf, forage or vegetable seed shall be subject to increase at any time during the licensee's first year of operation based on the average of business volume for any three months. Except as provided in subsection (3) of this section, the bond shall be not less than ((~~three~~)) ten thousand dollars for any other dealer.

(3) The bond for a commission merchant or dealer in livestock shall be not less than ten thousand dollars. The actual amount of such bond shall be determined in accordance with the formula set forth in the packers and stockyard act of 1921 (7 U.S.C. 181), except that a commission merchant or dealer in livestock shall increase his bond by five thousand dollars for each agent he has endorsed under RCW 20.01.090.

(4) The bond for a commission merchant handling agricultural products other than livestock, hay, straw or turf, forage or vegetable seed shall not be less than ((~~seven~~)) ten thousand ((~~five hundred~~)) dollars. The bond for a dealer handling agricultural products other than livestock, hay, straw or turf, forage or vegetable seed shall not be less than ((~~three~~)) ten thousand dollars. The actual amount of such bond shall be determined by dividing the annual dollar volume of the licensee's net proceeds or net payments due consignors by fifty-two and increasing that amount to the next multiple of two thousand dollars. However, bonds above twenty-six thousand dollars shall be increased to the next multiple of five thousand dollars.

(5) When the annual dollar volume of any commission merchant or dealer reaches two million six hundred thousand dollars, the amount of the bond required above this level shall be on a basis of ten percent of the amount arrived at by applying the appropriate formula.

Sec. 2. RCW 20.01.420 and 1959 c 139 s 42 are each amended to read as follows:

When requested by ((~~his~~)) a consignor, a commission merchant shall, before the close of the next business day following the sale of any agricultural products consigned to ((~~him~~)) the commission merchant, transmit or deliver to the owner or consignor of the agricultural products a true written report of such sale, showing the amount sold, and the selling price. The commission merchant shall maintain records of all accounts receivable and shall make those records available at any time to the consignor or to the director.

NEW SECTION. Sec. 3. It is unlawful for a licensee to discriminate against any person because of an action taken pursuant to this chapter, including, but not limited to, the filing of a complaint or bond claim.

NEW SECTION. Sec. 4. If it has been determined after an investigation that a licensee has committed a violation of this chapter, the director may levy a civil penalty against the licensee. The director may establish, by rule, a schedule of penalties for violations of this chapter, but the level of penalties may not exceed one thousand dollars for a first offense, ten thousand dollars for a second offense, or twenty-five thousand dollars for a third or subsequent offense. A licensee shall be given the opportunity for an administrative hearing, as provided under chapter 34.05 RCW, upon request before any penalty is made final. All fines shall be paid to the director and shall be used solely for the purpose of carrying out the provisions of this chapter and rules adopted hereunder.

NEW SECTION. Sec. 5. Each commission merchant shall establish a custodial account for consignor's proceeds. All funds derived from the sale of agricultural products handled by a commission merchant on behalf of any other person shall be deposited in that account. The account shall be drawn on only for the payment of net proceeds to consignors or to other persons the commission merchant knows are entitled to such proceeds, and for the payment of the amounts due the commission merchant for the commission merchant's commission, filed and posted charges, and repayment of any advances. Commission merchants shall maintain accounts and records that will at all times disclose the names of the consignors and the amounts due and payable to each from the funds in the custodial account derived from the consignor's return. Commission merchants shall maintain the required custodial accounts in a manner that will expedite examination by the director and will reflect compliance with the requirements of this section.

NEW SECTION. Sec. 6. Sections 3 through 5 of this act are each added to chapter 20.01 RCW.

NEW SECTION. Sec. 7. This act is necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and shall take effect immediately.