Bill Summary for S 711 (2017-2018)

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Summary date: 

May 16 2018
S.L. 2018-113

Bill Information:

View NCGA Bill Details2017-2018 Session
Senate Bill 711 (Public) Filed Wednesday, May 16, 2018
Intro. by B. Jackson, Cook, Sanderson.

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Bill summary

Section 1

Enacts GS 106-496.1, setting out 11 defined terms applicable to Article 44 of GS Chapter 106 (Unfair Practices by Handlers of Fruits and Vegetables). Defines handler to mean any person in the business of buying, receiving, selling, exchanging, negotiating, processing for resale, or soliciting the sale, resale, exchange, or transfer of any fruits and vegetables purchased from a producer, received on consignment from a producer, or received to be handled on a net return basis from a producer (previously, defined in GS 106-496 as a person, firm, corporation or other legal entity or the entity's agent or employee who enters into a written contract for the purchase from or production by a producer of fruits and vegetables). Makes technical and conforming changes to GS 106-496, which authorizes the Board of Agriculture (Board) to adopt rules (was, rules and regulations) necessary to protect producers of fruits and vegetables against unfair trade practices of handlers.

Under current law, handlers of fruits and vegetables are required to obtain a written permit from the Commissioner of Agriculture (Commissioner) prior to contracting with a producer. Amends GS 106-497 to instead require a handler of fruits and vegetables acting within the scope of Article 44 of GS Chapter 106 to obtain an annual license issued by the Commissioner in order to engage in business.

Enacts GS 106-497.1, requiring every handler of fruits and vegetables to file an application for an annual license with the Commissioner. Authorizes the Board to adopt rules regarding the application form, filing, and fees. Limits the initial or renewal license fee to $500, and the administrative late fee to $250, which must be paid before issuance. Requires fees collected by the Commissioner to be used to defray the costs of administration of Article 44.

Enacts GS 106-497.2, authorizing the Commissioner to deny issuance or suspend or revoke a license if the Commissioner is satisfied the applicant or licensee meets any of the nine specified disqualifications, including (1) making false charges for handling or services rendered; (2) making any false statement(s) as to the condition, quality, or quantity of goods received or held for sale when the true condition, quality, or quantity could have been ascertained by reasonable inspection; or (3) providing false or misleading information in the license application.

Under current law, handlers must furnish a bond satisfactory to the Commissioner of no less than $10,000, which the Commissioner may increase or require a new bond as necessary, that is recoverable for damages suffered by a producer alleging any injury by fraud, deceit, willful injury, or breach of contract by the handler. Deletes the current language and instead provides the following. Requires applicants to make and deliver to the Commissioner a surety bond or a certificate of deposit before any license may be issued. Requires surety bonds to be executed by a surety corporation authorized to transact business in the State and approved by the Commissioner. Requires certificates of deposits to be approved by the Commissioner and issued by an institution properly insured by either the Federal Deposit Insurance Corporation or the Federal Savings Loan Insurance Corporation. Provides that the surety bond or certificate of deposit must be based on the maximum amount of gross business the applicant did in any month in the State during the preceding licensing year, or an estimate for the upcoming licensing year if the applicant did not engage in business as a handler in North Carolina during the preceding year. Provides a schedule for the amount required based on the maximum monthly gross business, ranging from a $25,000 bond or deposit required for up to $25,000 maximum monthly gross business to $250,000 bond or deposit required for $225,001 or more maximum monthly gross business.  Authorizes the Commissioner to require in writing an additional surety bond or certificate of deposit be given if the Commissioner determines that a previously approved bond or certificate becomes insufficient for any reason. Requires the handler’s license to immediately be revoked without notice or hearing if the additional bond or security deposit is not given within the time stated in the Commissioner’s demand, or if the bond or certificate is canceled.

Enacts GS 106-498.1, permitting any producer claiming to be injured by nonpayment, breach of contract, fraud, deceit, negligence, or other misconduct of a handler to sue the handler and the handler’s sureties in any court of competent jurisdiction to recover damages sustained by such conduct without any assignment thereof by the Department of State.

Enacts GS 106-498.2, allowing the Department of Agriculture (Department) to provide inspection services whenever fruits and vegetables are shipped to or received by a handler for handling, purchase, or sale, and the handler finds the produce to be spoiled, damaged, unmarketable, or in unsatisfactory condition. Provides that the Department can execute a certificate stating the day, time, place, and condition of the produce upon its inspection, and mail or deliver a copy of the certificate to both the handler and producer. Authorizes the Department to charge and collect fees in accordance with the US Department of Agriculture laws and rules, and the Department’s cooperative grading service agreement with the US Department of Agriculture.

Makes conforming changes to eliminate GS 106-499, which required the Commissioner’s approval of all contracts before a issuance of a permit.

Modifies and adds to GS 106-500, concerning additional powers of the Commissioner. Eliminates provisions authorizing the Commissioner to hold hearings and other related authorities such as administering oaths, taking testimony, and issuing subpoenas. Also eliminates the provision making any party disobeying any order or subpoena of the Commissioner guilty of contempt. Explicitly authorizes the Commissioner to suspend or revoke the licenses of a person disobeying the terms of Article 44 or of the rules adopted by the Board. Additionally, adds a new provision authorizing the Commissioner to apply to any court of competent jurisdiction to grant a temporary or permanent injunction, or both, upon hearing and for cause shown, restraining a person from violating or continuing to violate any of the provisions of Article 44 or any rule or regulation adopted pursuant to the Article. Specifies that the injunction is issued without bond. Further, authorizes the Commissioner or the Commissioner’s agents to examine the ledgers, books of accounts, memoranda, and other documents related to the transaction involved, at the place or places of business of the applicant or licensee, and take testimony under oath. Makes technical changes.

Makes technical changes to GS 106-501, which makes any violation of Article 44 a Class 1 misdemeanor.

Enacts GS 106-501.1, authorizing the Commissioner to assess a civil penalty of no more than $5,000 per violation, dependent on the degree and extent of the harm, against any person or business entity who violates any provision of the Article or any rules promulgated under the Article. Requires the clear proceeds of the civil penalties to be remitted to the Civil Penalty and Forfeiture Fund.

Enacts GS 106-501.2, enumerating six exceptions to the provisions of Article 44, including (1) farmers or groups of farmers in the sale of fruits and vegetables grown by themselves; (2) restaurants and retail establishments; (3) handlers who pay at the time of purchase with cash, or handlers who purchase less than $1,000 worth of produce from NC producers during the peak month of those purchases within the calendar year; and (4) fruits and vegetables grown under contract for seed purposes (current law more specifically excludes peanuts and corn grown under contract for seed purposes in GS 106-500(a)).

Enacts GS 106-501.3, clarifying that nothing in the Article relieves a surety company or financial institution from responsibility for payment on properly established complaints against handlers involved in a federal bankruptcy proceeding.

Effective January 1, 2019.

Section 2

Amends GS 106-24.1, establishing that all information generated by any federal agency received pursuant to GS Chapter 106 that is confidential under federal law must be held confidential by the Department and its employees, unless confidentiality is waived by the federal agency (previously, more specifically applied to information received pursuant to Article 1, Part 5, of GS Chapter 106 concerning cooperation between the Department, the US Department of Agriculture, and County Commissioners; also previously did not provide for agency waiver).