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Published August 02, 2012, 04:55 PM

N.D. PSC grants Legumex license

The North Dakota Public Service Commission on Aug. 1 granted Legumex Walker Sunflower LLC its requests for grain handling licenses on old Anderson Seed Co. locations in Durbin and Selz, N.D.

By: Mikkel Pates, Agweek

BISMARCK, N.D. — The North Dakota Public Service Commission on Aug. 1 granted Legumex Walker Sunflower LLC its requests for grain handling licenses on old Anderson Seed Co. locations in Durbin and Selz, N.D. The PSC will fight, however, to get $1.6 million it thinks is owed to farmers because of a state grain lien law.

Anderson Seed, a sunflower processor, based in Mentor, Minn., stopped buying grain in February and legally was declared insolvent on April 9. Many assets of Anderson Seed and all of St. Hilaire (Minn.) Seed, a dry edible bean company, in February were sold to Legumex Walker of Seattle, Wash., whose parent company is in Winnipeg, Man.

Anderson Seed had North Dakota warehouse licenses that expired July 31 at Durbin and Selz, making the discontinuance issue moot, the PSC decided. Legumex Walker purchased most assets of Anderson Seed in North Dakota and Minnesota, and has a pending attempt to purchase the company’s Redfield, S.D., plant. Durbin has a 305,000-bushel grain storage site and Selz can hold 347,000 bushels.

At its meeting Aug. 1, the North Dakota PSC asked Jon Jensen, based in Grand Forks, N.D., the agency’s temporary special assistant North Dakota Attorney General, to oppose Legumex Walker Sunflower LLC’s assertion in the insolvency case. Legumex is asserting that its purchases of seed inventories at Anderson Seed facilities in North Dakota were in the “ordinary course of business.”

The PSC has received claims from farmers totaling about $2.7 million. That includes $2.1 million in cash claims and $760,000 in credit sales. The agency hasn’t yet evaluated whether the figures are accurate or which state they belong in, says Illona Jeffcoat-Sacco, the PSC’s regular counsel. She says the agency is still sorting out claims from the bond and from an indemnity fund in North Dakota that pays out only on price-later contract claims.

Jensen told commissioners he’d file a motion within two weeks with Cass County District Judge Wickham Corwin in Fargo, N.D. He said it seems clear Anderson Seed was “in the process of liquidating all of its inventory,” when selling the grain. He added that it appears Legumex Walker is “hoping to avoid the statutory producer liens that North Dakota law provides.”

Jensen noted the PSC has separately reached an agreement with Legumex in which the company will pay nearly $1.6 million to farmers if Corwin decides against its claim. In urging Jensen to fight the Legumex Walker claim, PSC Commissioner Kevin Cramer suggested lawyer fees for the motion effort be paid from the $1.6 million.

Complications

Jensen said there may be complications surrounding who gets paid because Anderson Seed’s business was not only in North Dakota, but also in Minnesota and South Dakota. A court may need to decide whether North Dakota could recover the funds only for farmers in that state, or whether the funds would be pooled for distribution to the other two states as well, he said. Cramer suggested Jensen’s legal costs on that issue be recovered from the amount received from the motion.

“At least initially, it appears all or a majority of the seed that Legumex purchased, which they would be then providing compensation for, was held in North Dakota facilities,” Jensen said. It gets tricky because some of the seed was delivered from out-of-state producers, he added. Former PSC Commissioner Tony Clark in early May told Agweek that Legumex Walker had made some transactions on Jan. 13 with a final value of $480,000.

Commissioner Bonny Fetch, an administrative law judge, said the Anderson Seed issue is a “hot item” among counterparts. She said Minnesota and South Dakota counterparts characterized the case as looming and large.

“In South Dakota, it’s a pot ready to boil over,” Fetch said. She didn’t know what actions South Dakota will pursue, but her informal talks with an official from that state indicate legal action may be coming. “I think they are maybe still waiting to see what we’re going to be doing,” she said.

South Dakotans have lost an estimated $2.6 million, according to the South Dakota Public Utilities Commission, which has given farmers up until Sept. 18 to file claims against a $100,000 bond.

In other pending cases involving other failed North Dakota grain elevators, the PSC has:

•Renewed the grain buying license for Falkirk (N.D.) Farmers Elevator. The elevator still has some dry bean inventory at Falkirk, but the license is discontinued for the company’s Hazen, N.D., facility. No other license applications have been submitted from anyone else at Falkirk. Cash claimants have been paid, the PSC said, but the agency has not been notified of the status of credit sales contracts.

•Filed briefs in the Grabanski Grain, Grafton, N.D., federal bankruptcy case. After the briefs, due Aug. 3, the bankruptcy judge will decide the status of unpaid claims. The PSC is recommending paying out the cash claims at 100 percent, as they represent a smaller amount than the bond. Unpaid credit sales contracts could be covered at 80 percent by a state indemnity fund.

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