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Published January 25, 2013, 10:25 AM

SD PUC’s grain reforms find broad support

The proposals are designed to protect farmers when companies become insolvent and were prompted by the Anderson Seed debacle.

By: Bob Mercer , Forum News Service

PIERRE, S.D. — Lobbyists for grain elevators, agricultural cooperatives and South Dakota Farmers Union gave their support Thursday to reforms sought by the state Public Utilities Commission for grain-buying and grain-warehouse regulations.

PUC chairman Chris Nelson said the proposed changes are intended to better protect grain producers and result from lessons learned last year from the insolvency of Anderson Seed at Redfield. The state House of Representatives is scheduled to debate the PUC reforms Monday afternoon.

If it becomes law, the legislation would take effect April 1, rather than the standard July 1. That would allow the changes to be applied for the 2013 crop seasons, but it also means the legislation will need two-thirds majorities for passage in the House and the Senate.

Nelson asked for the earlier implementation. “I think it’s a good amendment,” Rep. Charlie Hoffman, R-Eureka, said. He is chairman of the House Agriculture and Natural Resources committee, whose members held a hearing on the bill Thursday. They recommended its passage 13-0.

No one testified against the legislation. Nelson said it attempts to fix problems that kept the PUC from knowing more about Anderson Seed’s financial condition.

For example, a business would be required to present its current financial information as of the time of a license application, rather than its most recent audited information. In Anderson’s case, the information was nine months old, Nelson said.

A new concept in the legislation would require a business to notify the PUC immediately if its financial condition turns negative, so the PUC can evaluate whether the problem is temporary or requires stronger action from the agency.

Criminal penalties would be attached to the self-reporting requirement.

Other proposed changes:

•Pulse crops would be added to the commodities covered by PUC regulation.

•Bond amounts would be expanded and more closely aligned to the financial activities of a business.

•There would be a new 30-day requirement for settling accounts in instances when a seller has waived the 48-hour payment requirement that is already law, such as when multiple truck shipments are delivered over a period of days.

The Anderson insolvency was a major issue for the two Democratic candidates for the PUC last year, Matt McGovern and Nick Nemec, in their election campaigns. Republican commissioners Kristie Fiegen and Nelson both won.

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