WSR 05-06-112

PROPOSED RULES

DEPARTMENT OF AGRICULTURE


[ Filed March 2, 2005, 11:19 a.m. ]

Original Notice.

Preproposal statement of inquiry was filed as WSR 04-23-095.

Title of Rule and Other Identifying Information: Chapter 16-623 WAC, Commission Merchant Act -- Licensing fees, proof of payment, cargo manifests and registration of acreage commitments, this proposal amends chapter 16-623 WAC by (1) increasing the license fees for commission merchants, dealers, brokers, cash buyers, and agents; (2) clarifying selected portions of chapter 20.01 RCW related to licensing requirements; and (3) rewriting the entire chapter to increase its clarity and readability.

Hearing Location(s): Washington State Department of Agriculture, 21 North 1st Avenue, Conference Room 238, Yakima, WA 98902, on April 6, 2005, at 1:00 p.m.

Date of Intended Adoption: April 20, 2005.

Submit Written Comments to: Henri Gonzales, P.O. Box 42560, Olympia, WA 98504-2560, e-mail hgonzales@agr.wa.gov, fax (360) 902-2094, by April 6, 2005.

Assistance for Persons with Disabilities: Contact Henri Gonzales by March 30, 2005, TTY (360) 902-1996.

Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: This proposal amends chapter 16-623 WAC by (1) increasing the license fees for commission merchants, dealers, brokers, cash buyers, and agents in excess of the fiscal growth factor. (During the 2003 legislative session, the Washington state legislature authorized the Washington State Department of Agriculture to increase fees in excess of the OFM fiscal growth factor in order to ensure that fees charged for services covered the full cost of operating department programs (see chapter 25, Laws of 2003 1st sp.s. (ESSB 5404)); (2) clarifying selected portions of chapter 20.01 RCW related to licensing requirements; and (3) rewriting the entire chapter to increase its clarity and readability.

Reasons Supporting Proposal: The commission merchant program enforces the Commission Merchants Act, licenses commission merchants, dealers, brokers, cash buyers, and investigates complaints. The program's revenue is almost solely derived from license fees, which have not been changed since 1995. This increase in licensing fees would enable the program to cover the costs associated with operating the program.

Statutory Authority for Adoption: Chapter 25, Laws of 2003 1st sp.s. (ESSB 5404), chapters 20.01 and 34.05 RCW.

Statute Being Implemented: Chapter 20.01 RCW.

Rule is not necessitated by federal law, federal or state court decision.

Name of Proponent: Washington State Department of Agriculture, governmental.

Name of Agency Personnel Responsible for Drafting, Implementation and Enforcement: Jerry Buendel, 1111 Washington Street, Olympia, WA 98504-2560, (360) 902-1856.

No small business economic impact statement has been prepared under chapter 19.85 RCW. RCW 19.85.030 (1)(a) requires an agency to prepare a small business economic impact statement (SBEIS) for proposed rules that impose a more than minor cost on businesses in an industry. The department mailed an economic impact survey to each of the six hundred and twenty commission merchants, dealers, brokers, cash buyers, and agents licensed by the department. One hundred and sixty-one licensees responded (26%) to the survey. The total cost of compliance reported by these respondents was $10,455.00.

RCW 19.85.040(1) requires that an agency determine whether the proposed rule will have a disproportionate impact on small businesses by comparing the cost of compliance for small business with the cost of compliance for the 10% of businesses that are the largest businesses required to comply. The statute suggests that an agency's cost analysis be based upon one or more of the following methods:

(a) Cost per employee;

(b) Cost per hour of labor; or

(c) Cost per one hundred dollars of sales.

Due to the nature of the industry, the department has used the "one hundred dollars of sales" method and has found that the average cost imposed on small businesses is zero and the average cost imposed on the 10% of the largest businesses in the industry that are required to comply is also zero. Therefore, the department has concluded that the proposed increase in licensing fees does not impose a "more than minor" cost on the regulated community and there is no disproportionate impact on small business. Consequently, a formal SBEIS is not required.

A cost-benefit analysis is not required under RCW 34.05.328. The Washington State Department of Agriculture is not a listed agency under RCW 34.05.328 (5)(a)(i).

March 2, 2005

Mary A. Martin Toohey

Assistant Director

OTS-7824.2


AMENDATORY SECTION(Amending WSR 00-22-071, filed 10/30/00, effective 11/30/00)

WAC 16-623-001   What is the purpose((.)) of this chapter?   The ((department of agriculture has written)) purpose of this chapter is to implement ((or)) and clarify selected portions of chapter 20.01 RCW. This ((administrative rule)) chapter addresses four topics.

(1) Licensing fees and requirements for commission merchants, dealers, brokers, cash buyers or agents.

(2) Recordkeeping and proof of payment requirements for licensees.

(3) Cargo manifests ((of cargo)) and shipping documents that accompany hay and straw during transportation.

(4) Rules governing the registration of processor acreage commitments made ((by processors)) to producers of annual crops.

[Statutory Authority: RCW 20.01.040, [20.01.]125, [20.01.]370, [20.01.]380, [20.01.]410, [20.01.]510. 00-22-071, 16-623-001, filed 10/30/00, effective 11/30/00.]


NEW SECTION
WAC 16-623-005   What definitions are important to this chapter?   In addition to the definitions listed in RCW 20.01.010, the following definitions are important to understanding this chapter:

"Department" means the Washington state department of agriculture.

"Director" means the director of the Washington state department of agriculture or their designee.

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AMENDATORY SECTION(Amending WSR 00-22-071, filed 10/30/00, effective 11/30/00)

WAC 16-623-010   ((License fees, expirations, renewals and late renewal penalties.)) What requirements apply to licenses for commission merchants, dealers, brokers, cash buyers and agents?   (1) The following table summarizes the license fee ((to act as a)) requirements for commission merchants, dealers, brokers, cash buyers, or agents ((is)):


((LICENSE CLASS FEE
Commission merchant $357
Dealer $357
Limited dealer $198
Broker $249
Cash buyer $ 79
Agent $ 28
Additional licenses (see subsection (2) of this section) $ 25))

License Class License Fee Annual Expiration Date Annual Renewal Date Penalty Amount for Not Renewing Before January 1
Commission merchant $450.00 December 31 Before January 1 A late renewal penalty of twenty-five percent of the total fees
Dealer $450.00 December 31 Before January 1 A late renewal penalty of twenty-five percent of the total fees
Limited dealer $250.00 December 31 Before January 1 A late renewal penalty of twenty-five percent of the total fees
Broker $300.00 December 31 Before January 1 A late renewal penalty of twenty-five percent of the total fees
Cash buyer $100.00 December 31 Before January 1 A late renewal penalty of twenty-five percent of the total fees
Agent $50.00 December 31 Before January 1 A late renewal penalty of twenty-five percent of the total fees
Additional license per class $25.00 December 31 Before January 1 A late renewal penalty of twenty-five percent of the total fees

(2) A licensee can be licensed in more than one class for an additional fee of twenty-five dollars per class. The principal license must be in the class requiring the greatest fee and all requirements must be met for each class in which a license is being requested.

(3) All ((licenses expire December 31st of each year)) fees and penalties must be paid before the department issues a license.

(4) ((License renewals must be renewed before January 1st of each year.)) Applications for licenses are considered incomplete unless an effective bond or other acceptable form of security is also filed with the director.

(5) ((Licenses not renewed by January 1st will be assessed a penalty of twenty-five percent of the total fees. Fees and penalties must be paid before the licenses will be issued.)) Licenses may be obtained by contacting the department's commission merchants program at 360-902-1854 or e-mail at: commerch@agr.wa.gov. Application forms, bond forms, and forms for securities in lieu of a surety bond are available on the department's website at: http://www.agr.wa.gov/Inspection/CommissionMerchants/default.htm.

[Statutory Authority: RCW 20.01.040, [20.01.]125, [20.01.]370, [20.01.]380, [20.01.]410, [20.01.]510. 00-22-071, 16-623-010, filed 10/30/00, effective 11/30/00.]


NEW SECTION
WAC 16-623-015   What securities are acceptable in lieu of a surety bond?   An applicant or licensee may file an assignment of savings or irrevocable letter of credit with the director in lieu of a surety bond. These instruments are subject to the same requirements and provisions as bonds stated in RCW 20.01.210, 20.01.211, and 20.01.212.

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AMENDATORY SECTION(Amending WSR 00-22-071, filed 10/30/00, effective 11/30/00)

WAC 16-623-020   What are the recordkeeping ((and proof of payment.)) requirements for commission merchants, dealers and cash buyers?   (((1))) Every commission merchant, dealer, and cash buyer ((taking)) who takes possession of or ((purchasing)) purchases agricultural products must ((make and)) keep ((for three years)) accurate records ((showing the following:

(a) The name and address of the consignor.

(b) The date received.

(c) The quality and quantity delivered by the consignor and where applicable the dockage, tare, grade, size, net weight or quantity.

(d) An itemized statement of the charges to be paid by the consignor, dealer or cash buyer to be paid by the consignor in connection with the sale.

(e) These records must be made available to the director and the consignor or their authorized representatives.

(2) In addition to subsection (1) of this section, the commission merchant's records must include:

(a) An accounting of all sales, including dates, terms of sales, quality and quantity of agricultural products sold and proof of payments received on behalf of the consignor.

(b) The terms of payment to the producer.

(c) The names and addresses of all purchasers if the commission merchant has any financial interest in the business of the purchaser or if the purchaser has any financial interest in the business of the commission merchant. The business interest may be direct or indirect such as holders of the other's corporate stock, as a copartner or as a lender or borrower of money. The interest must be noted in the records following the name of the purchaser.

(d) A lot number or identifying mark for each consignment which will appear on all sales tags and other records showing the price for which the agricultural products actually sold.

(e) If there is a pooling arrangement, the consignor must have agreed in writing to the pooling arrangement before the commission merchant may handle the agricultural product.

(f) In cases where a pooling arrangement is in place, the requirements of subsections (1)(c) and (d) and (2)(b) and (d) of this section apply.

(g) Keep and make available to the director or consignor or their representative claims filed by the commission merchant against any person for overcharges or damages resulting from the injury or deterioration of agricultural products.

(3) In addition to subsection (1) of this section, dealers and cash buyers must include:

(a) Terms of the sale.

(b) Name and address of the purchaser. The name and address of the purchaser may be deleted from the record furnished to the consignor.

(4) Commission merchants will furnish consignors with proof of payment. Proof of payment will be a listing of payments received by the commission merchant on behalf of any consignor whether through an individual accounting or pool arrangement)). The recordkeeping requirements for:

(1) Commission merchants are specified in RCW 20.01.370;

(2) Dealers and cash buyers are specified in RCW 20.01.380; and

(3) Brokers are specified in RCW 20.01.400.

[Statutory Authority: RCW 20.01.040, [20.01.]125, [20.01.]370, [20.01.]380, [20.01.]410, [20.01.]510. 00-22-071, 16-623-020, filed 10/30/00, effective 11/30/00.]


AMENDATORY SECTION(Amending WSR 00-22-071, filed 10/30/00, effective 11/30/00)

WAC 16-623-030   Is a cargo manifest ((of cargo for)) required for transporting hay and straw(( -- Forms and exceptions.))?   (1) All commission merchants, dealers, their employees or licensed agents ((transporting hay or straw on equipment owned or under their control)) must have a copy of the cargo manifest ((of cargo)) with each load when transporting hay or straw on equipment owned or under their control.

(2) ((The manifest must be on a form prescribed by the director. The form is available from the department. Exceptions to the manifest form are outlined in subsections (3) and (4) of this section. The form, as a minimum, will state the following:

(a) Purchaser's name and address.

(b) Hauler's name and address.

(c) Business or person the products were received from and their address.

(d) The commodity, unit count, unit price, total price, total weight, tare weight and weight of the commodity.

(e) Terms of the settlement.

(f) Date.

(3) Any common carrier transporting hay or straw for a commission merchant or dealer may use shipping documents required by the Washington public utilities and transportation commission, or interstate commerce commission.

(4) Any common carriers, commission merchants, dealers, their employees or licensed agents transporting hay or straw may use other shipping documents that have been reviewed and authorized by the department of agriculture. The alternate shipping documents must be authorized by the department prior to their use.)) Any common carrier transporting hay or straw for a commission merchant or dealer may use shipping documents required by either the Washington public utilities and transportation commission or interstate commerce commission instead of the department form described in subsection (5) of this section.

(3) Any common carriers, commission merchants, dealers, their employees or licensed agents transporting hay or straw may use shipping documents other than the department form described in subsection (5) of this section if they have been reviewed and authorized by the department before their use.

(4) Unless the exceptions in subsections (2) and (3) of this section apply, the manifest must be on a form prescribed by the director which is available from the department.

(5) At a minimum, the form requires the following information:

(a) Purchaser's name and address;

(b) Hauler's name and address;

(c) Business or person the products were received from and their address;

(d) The commodity, unit count, unit price, total price, total weight, tare weight and weight of the commodity;

(e) Terms of the settlement;

(f) Date;

(g) Signature of the licensee or their agent; and

(h) Signature of the consignor or their authorized representative.

[Statutory Authority: RCW 20.01.040, [20.01.]125, [20.01.]370, [20.01.]380, [20.01.]410, [20.01.]510. 00-22-071, 16-623-030, filed 10/30/00, effective 11/30/00.]


AMENDATORY SECTION(Amending WSR 00-22-071, filed 10/30/00, effective 11/30/00)

WAC 16-623-040   How must a processor's plant capacity ((reporting.)) be reported?   ((When reporting plant capacity as provided for under)) (1) According to RCW 20.01.510, a processor must report the daily total capacity in tons, cases or other legal and customary measure for:

(a) Each crop ((for)); and

(b) All plants that process any Washington agricultural product.

(2) For each processing plant reported, the report must include the:

(a) Name((,));

(b) Site address((,));

(c) Business address; and

(d) Name of the person(s) who may receive legal service ((for each processing plant reported)).

[Statutory Authority: RCW 20.01.040, [20.01.]125, [20.01.]370, [20.01.]380, [20.01.]410, [20.01.]510. 00-22-071, 16-623-040, filed 10/30/00, effective 11/30/00.]


AMENDATORY SECTION(Amending WSR 00-22-071, filed 10/30/00, effective 11/30/00)

WAC 16-623-050   What notification requirements apply to grower-processor ((notification of)) commitments ((by processor(s).))?   (1) ((Any)) (a) Within ten days after a commitment with a processor is made, a grower ((may)) must notify the director that ((he has)) they have an oral commitment ((with a processor)) for a specified amount of product ((within ten days after the commitment was made)).

(b) The grower's notification ((will)) to the director must be in writing and sent by certified mail to the Washington State Department of Agriculture, c/o the Commission Merchants Program, P.O. Box 42591, Olympia, Washington 98504-2591.

(2) ((When the director receives the notification, he shall notify the processor within five days)) Once the grower's notification is received, the director has five days to notify the processor by certified mail.

(3) Regardless of whether or not the processor confirms the director's notice, the processor ((will)) must simultaneously notify the director and ((the)) grower, by certified mail, within ten days ((by certified mail)) of receipt of the director's notice ((whether or not he confirms the notice)).

(4) The processor may accept all, none, or any portion of the acreage and/or tonnage stated in the notice.

(5) Once the oral commitment is confirmed for all or for a portion of the acreage and/or tonnage, the processor is committed to receive the acreage or tonnage specified.

(6) If the contract is ((that)) the processor's standard contract and the terms of the contract, price or other conditions later offered to the grower are unacceptable to the grower, then the agreement is not binding upon the processor.

[Statutory Authority: RCW 20.01.040, [20.01.]125, [20.01.]370, [20.01.]380, [20.01.]410, [20.01.]510. 00-22-071, 16-623-050, filed 10/30/00, effective 11/30/00.]


AMENDATORY SECTION(Amending WSR 00-22-071, filed 10/30/00, effective 11/30/00)

WAC 16-623-060   ((Basis for establishing)) How are contract volumes((.)) established?   ((In)) For contracts ((for the purchase of)) purchasing the production of a specific number of acres, the:

(1) Amount contracted for will be based on the crop yield for the comparable area for the most recent five-year average((. The)); and

(2) Crop yield will be determined by using data from the USDA's National Agricultural Statistics Service.

[Statutory Authority: RCW 20.01.040, [20.01.]125, [20.01.]370, [20.01.]380, [20.01.]410, [20.01.]510. 00-22-071, 16-623-060, filed 10/30/00, effective 11/30/00.]

Washington State Code Reviser's Office