AN ACT Relating to agricultural marketing; adding a new chapter to Title 15 RCW; prescribing penalties; providing an expiration date; and declaring an emergency.

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

NEW SECTION. Sec. 1. Agricultural products are produced by many individual farmers and ranchers located throughout the state. The efficient production and marketing of agricultural products by farmers and ranchers is of vital concern to the welfare and general economy of the state. It is the purpose of this chapter to establish standards of fair practices required of handlers and, with respect to certain agricultural commodities, to establish the mutual obligation of handlers and accredited associations of producers to bargain in good faith relative to the production or marketing of these agricultural commodities.

NEW SECTION. Sec. 2. Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.

(1) "Accredited association of producers" means an association of producers which is accredited by the director to be the exclusive negotiation agent for all producer members of the association within a negotiating unit.

(2) "Agricultural products" as used in this chapter means all farm products generally produced for sale on farms in this state.

(3) "Association of producers" means any association of producers of agricultural products engaged in marketing, bargaining, shipping, or processing as defined in section 15(a) of the federal agriculture marketing act of 1929 or in section 1 of 42 Stat. 388.

(4) "Director" means the director of the department of agriculture.

(5) "Handler" means a processor or a person engaged in the business or practice of:

(a) Acquiring agricultural products from producers or associations of producers for use by a processor;

(b) Processing agricultural products received from producers or associations of producers, provided that a cooperative association owned by producers shall not be a handler;

(c) Contracting or negotiating contracts or other arrangements, written or oral, with or on behalf of producers or associations of producers with respect to the production or marketing of any agricultural product for use by a processor;

(d) Acting as an agent or broker for a handler in the performance of any function or act specified in (a), (b), or (c) of this subsection.

(6) "Negotiating unit" means a negotiating unit approved by the director under section 3 of this act.

(7) "Person" means an individual, partnership, corporation, association, or any other entity.

(8) "Processor" means any person that purchases agricultural crops from a producer and cans, freezes, dries, dehydrates, cooks, presses, powders, or otherwise processes those crops in any manner for eventual resale. A person who solely cleans, sorts, grades, and packages a farm product for sale without altering the natural condition of the product is not a processor. A person processing any portion of a crop is a processor.

(9) "Producer" means a person engaged in the production of agricultural products as a farmer, planter, rancher, including a grower or farmer furnishing labor, production management, or facilities for growing or raising agricultural products. A producer who is also a handler shall be considered a handler under this chapter.

(10) "Qualified commodity" means agricultural products as defined herein.

(11) "To negotiate in good faith" means meeting at reasonable times and for reasonable periods of time to bargain in good faith with respect to the price, terms of sale, compensation for products produced under contract, or other terms relating to the production or sale of these products.

NEW SECTION. Sec. 3. (1) An association of producers may file an application with the director:

(a) Requesting accreditation to serve as the exclusive negotiating agent on behalf of its producer members who are within a proposed negotiating unit with respect to any qualified commodity;

(b) Describing geographical boundaries of the proposed negotiating unit;

(d) Specifying the number and location of the producers and the quantity of products represented by the association; and

(e) Supplying any other information required by the director.

(2) Within a reasonable time after receiving an application under subsection (1) of this section, the director shall approve or disapprove the application in accordance with this section.

(a) The director shall approve the application if the director determines that:

(i) The association is owned and controlled by producers under the charter documents or bylaws of the association;

(ii) The association has valid and binding contracts with its members empowering the association to sell or negotiate terms of sale of its members' products or to negotiate for compensation for products produced under contract by its members;

(iii) The association represents a sufficient number of producers or that its members produce a sufficient quantity of agricultural products to enable it to function as an effective agent for producers in bargaining with handlers. In making this finding, the director shall exclude any quantity of the agricultural products contracted by producers with producer-owned and controlled processing cooperatives and any quantity of these products produced by handlers.

(iv) One of the association's functions is to act as principal or agent for its members in negotiations with handlers for prices and other terms of trade with respect to the production, sale, and marketing of the products of its members, or for compensation for products produced by its members under contract; and

(v) Accreditation would not be contrary to the policies established in section 1 of this act.

(b) If the director does not approve the application under (a) of this subsection, then the association of producers may file an amended application with the director. The director, within a reasonable time, shall approve the amended application if it meets the requirements set out in (a) of this subsection.

NEW SECTION. Sec. 4. (1) It shall be unlawful for any handler to engage, or permit any employee or agent to engage, in the following practices:

(a) To coerce any producer in the exercise of his or her right to contract with, join, refrain from contracting with or joining, belong to an association of producers, or refuse to deal with any producer because of the exercise of that producer's right to contract with, join, or belong to an association;

(b) To discriminate against any producer with respect to price, quantity, quality, or other terms of purchase, acquisition, or other handling of agricultural products because of that producer's membership in or contract with an association of producers;

(c) To coerce or intimidate any producer to enter into, maintain, breach, cancel, or terminate a membership agreement or marketing contract with an association of producers or a contract with a handler;

(d) To pay or loan money, give anything of value, or offer any other inducement or reward to a producer for refusing or ceasing to belong to an association of producers;

(e) To make false reports about the finances, management, or activities of associations of producers or handlers;

(f) To refuse to negotiate in good faith with an association of producers accredited under section 3 of this act with respect to any qualified commodity;

(g) To offer more favorable terms on any qualified commodity to a producer or that producer's agent in a negotiating unit for which an association of producers has been accredited under section 3 of this act than offered to or through the association; or

(h) To conspire, agree, or arrange with any other person to do, aid, or abet any act made unlawful by this chapter.

(2) It shall be unlawful for any association of producers to engage, or permit any employee or agent to engage, in the following practices:

(a) Refuse to negotiate in good faith with a handler for any qualified commodity for which the association is accredited under section 3 of this act;

(b) Coerce or intimidate a handler to breach, cancel, or terminate a marketing contract with an association of producers or a member of an association;

(c) Make or circulate false reports about the finances, management, or activities of an association of producers or a handler;

(d) Coerce or intimidate a producer to breach, cancel, or terminate a membership agreement or marketing contract with an association of producers; or

(e) Conspire, agree, or arrange with any other person to do, aid, or abet any practice which is in violation of this chapter.

NEW SECTION. Sec. 5. If a producer executes a sales contract or other instrument that directs a handler to deduct dues, fees, or retains owed by that producer to an association of producers from the sale of commodities or production services, the handler shall deduct the amount of dues, fees, or retains and remit that amount to the association of producers upon payment by the handler under the contract.

NEW SECTION. Sec. 6. (1)(a) If an accredited association or handler is charged with violating section 4(1)(f) or (2)(a) of this act, the director shall issue and cause to be served upon the person charged, a complaint stating the charges. The complaint shall summon the named person to a hearing before the director not later than five days after the serving of the complaint.

(b) If an association or handler is charged with violating any provision of this chapter, the director shall investigate the charges. If, upon investigation, the director has reasonable cause to believe that the person charged has violated the provision, the director shall issue and cause to be served upon the person, a complaint stating the charges. The complaint shall summon the named person to a hearing before the director within ten days at the time and place therein fixed.

(2) No complaint may be issued based upon any act occurring more than six months before the filing of the charge with the director. Any such complaint may be amended by the director at the director's discretion at any time prior to the issuance of an order based thereon. Any person named in the complaint has the right to file an answer to the original or amended complaint and to appear in person or otherwise and present testimony and evidence at the place and time fixed in the complaint. At the discretion of the director, any other person may be allowed to intervene in the proceeding and to present testimony and other evidence. Upon a showing of relevance, the director may issue a subpoena to compel testimony or production of documents or other evidence from any person. If contested, the subpoena may be enforced by a superior court. Except as otherwise provided in this chapter, any such proceeding shall, so far as practicable, be conducted in accordance with the rules of evidence and civil procedure applicable in the superior courts of this state.

(3) If upon the preponderance of the evidence taken, the director is of the opinion that any person named in the complaint has engaged in or is engaging in any prohibited practice, the director shall make and enter findings of fact and shall issue and cause to be served on that person, an order requiring that person to cease and desist from the practice and to take affirmative action to further the policies of this chapter. The order may also require the person to make reports from time to time showing the extent of compliance with the order. If, upon the preponderance of the testimony and other evidence, the director determines that the person named in the complaint has not engaged in or is not engaging in any prohibited practice, the director shall make and enter findings of fact and an order dismissing the complaint.

(4) Any person aggrieved by a final order of the director under subsection (3) of this section, may obtain a review of the order in superior court by filing within thirty days from the date of the order, a written petition praying that the order of the director be modified or set aside. A copy of the petition shall be transmitted by the clerk of the court to the director. The aggrieved party shall file with the court, the record in the proceeding, which is certified by the director. The order and findings of the director shall be sustained if supported by substantial evidence when considered on record as a whole.

(5) Petitions filed under subsection (4) of this section shall be reviewed expeditiously and if possible, not later than ten days after the petitions are filed.

NEW SECTION. Sec. 7. (1) If required to carry out the objectives of this chapter, including the conduct of any investigations or hearing:

(a) The director shall require any person to:

(i) Establish and maintain records;

(ii) Make reports; and

(iii) Provide other information as may be reasonably required; and

(b) The director or the director's designee, upon presentation of credentials and a warrant or other order of a court as may be required by law:

(i) Shall have a right of entry to, upon, or through any premises in which records required to be maintained under (a) of this subsection are located; and

(ii) May at reasonable times have access to copy any records which any person is required to maintain or which relate to any matter under investigation or in question.

(2) Any records, reports, or information obtained under this section shall be available to the public except that upon a showing satisfactory to the director that the records, reports, or information would divulge confidential business information if made public, the director shall consider that record, report, or information or particular portion thereof confidential, except that the record, report, or information may be disclosed to other officers, employees, or authorized representatives of the state concerned with carrying out this chapter or when relevant in any proceeding under this chapter.

(3) In making inspections and investigations under this chapter, the director may require the attendance and testimony of witnesses and the production of evidence under oath.

NEW SECTION. Sec. 8. (1) As used in this chapter, "bargaining" is the mutual obligation of a handler and an accredited association of producers to meet at reasonable times and negotiate in good faith with respect to the price, terms of sale, compensation for commodities produced or sold, or both, under contract and other contract provisions relative to the commodities that such accredited association represents and the execution of a written contract incorporating any agreement reached if requested by either party. Such obligation on the part of any handler shall extend only to an accredited association that represents producers with whom such handler has had a prior course of dealing. Such obligation does not require either party to agree to a proposal or to make a concession.

(2) A handler shall be deemed to have had a prior course of dealing with a producer if such handler has purchased commodities produced by such producer in any two of the preceding four years, provided that the sale by a handler of his or her business shall not negate any prior course of dealing that producers have had with this business.

The director shall designate an annual negotiation and arbitration period, termed a contract settlement period herein, applicable to each crop for which an association of producers is accredited hereunder. Said contract settlement period shall cover a period not exceeding sixty consecutive days, ending immediately prior to the earliest date when the director determines such crop is normally advance contracted in the state. The director shall annually set a time and place for accredited associations of producers and each handler of crops for which the association is accredited to meet and commence bargaining for the terms of the contract for the coming crop year. If the parties do not reach an agreement after three consecutive weeks of bargaining, the director shall order the matter to arbitration as provided in section 9 of this act.

NEW SECTION. Sec. 9. (1) At any time prior to the commencement of required arbitration under this section, a handler and an accredited association may mutually agree to obtain or may unilaterally obtain the services of a mediator. Regardless of whether mediation is sought mutually or unilaterally, both parties shall participate in the mediation in good faith. For such mediation, the parties shall use mediators recommended by the director of agriculture. Voluntary mediation shall last for no more than seven days. Mediation may be extended by mutual agreement by the bargaining parties. Any matters remaining in dispute at the end of the specified mediation period shall be submitted to arbitration.

(2) The director shall provide for binding arbitration in the manner established by subsections (3) through (6) of this section if the negotiations between an accredited association of producers and any handler fails to produce agreement on all terms of the proposed contract. All bargaining shall cease by the date specified in rules established for each qualified commodity.

(3) After termination of negotiations and upon order of the director, each party shall, within five days, submit in writing to the director his or her final offer, consisting at a minimum, of the following:

(a) Identification of all items for a contract on which the parties agree, with a draft of that part of the contract setting forth this agreement;

(b) Identification of all items on which there is disagreement and each party's final offer, with a draft of that part of the contract setting forth such offer; and

(c) Any other material the party wishes to submit. The director shall immediately give copies of the written final offer to the arbitrator selected under subsection (4) of this section.

(4) Not later than five days after submission of the final offer, the director or the director's designee shall meet with the parties. The director or the director's designee shall present a list with the names of five proposed neutral arbitrators. Within three working days, the parties shall strike names alternately and the party entitled to strike the first name shall be chosen by lot. The one name remaining after each party has struck two names shall be the arbitrator.

(5) The powers of the arbitrator are as follows:

(a) The arbitrator may hold hearings, administer oaths, examine witnesses and documents, take testimony, receive evidence, and issue subpoenas to compel the attendance of witnesses.

(b) The arbitrator shall not engage in an effort to mediate or otherwise settle the dispute in any manner other than that prescribed in this section.

(c) Not later than ten days after appointment, the arbitrator shall choose the final offer of one party. The contractual language for that offer, submitted under subsection (3)(b) of this section, plus the language of subsection (3)(a) of this section shall be combined into a written proposed contract which shall be presented to the director and to the parties.

(6) The director shall direct that the contract presented to the parties under subsection (5) of this section be executed by the parties. The contract shall be binding on both parties.

(7) Any contract resolved by negotiation or by arbitration shall be valid until a date specified in the rules established for each qualified commodity.

(8) The reasonable costs and expenses of any arbitration shall be shared equally by the association involved and the handler.

NEW SECTION. Sec. 10. (1) A person injured in his or her business or property by reason of any violation of or conspiracy to violate section 4 of this act may sue in any superior court without respect to the amount in controversy, and shall recover damages sustained, including reasonable attorneys' fees and costs of bringing the suit. Any action to enforce any cause of action under this section shall be forever barred unless commenced not later than two years after the cause of action accrues.

(2) Any violation by a handler of the prohibitions of section 4(1) of this act or by an association of producers of section 4(2) of this act shall be deemed an unfair practice within the meaning of RCW 19.86.020 and 19.86.030 and subject the violator to all of the provisions of chapter 19.86 RCW as now or hereafter amended.

NEW SECTION. Sec. 11. (1) A person who violates section 4 of this act may be assessed a civil penalty by the director of not more than ten thousand dollars for each offense. No civil penalty may be assessed unless the person charged has been given notice and opportunity for a hearing on the charge. In determining the amount of the penalty, the director shall consider the size of the business of the person charged, the penalty's affect on the person's ability to continue in business, and the gravity of the violation. If the director is unable to collect the civil penalty, the director shall refer the collection to the attorney general who shall recover the amount by action in the appropriate superior court.

(2) A person who knowingly violates section 4 of this act, or who permits or authorizes any agent, officer, or employee to violate section 4 of this act, is guilty of a gross misdemeanor and shall, upon conviction, be fined not more than five thousand dollars or imprisoned for not more than one year, or both.

NEW SECTION. Sec. 12. The director may make such rules in accordance with chapter 34.05 RCW, and orders, as may be necessary to carry out this chapter.

NEW SECTION. Sec. 13. This chapter may be known and cited as the agricultural fair practices act.

NEW SECTION. Sec. 14. The provisions of this act terminate on July 1, 1993.

NEW SECTION. Sec. 15. 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.

NEW SECTION. Sec. 16. If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.

NEW SECTION. Sec. 17. Sections 1 through 14 of this act shall constitute a new chapter in Title 15 RCW.