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South Dakota Hutterite co-op asks for exception to grain-dealing rules; PUC buys time

Julie Dvorak, an attorney representing the South Dakota Hutterian Co-operative, based in Aberdeen, South Dakota, told a meeting of the Public Utilities Commission on Tuesday, Aug. 30, 2022, that the rules requiring reports from a certified public accountant would come at a significant cost and be a detriment to the co-op’s members, not a benefit.

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The South Dakota Public Utilities Commission granted a delay in reporting requirements for the South Dakota Hutterian Co-operative.
Mikkel Pates / Agweek file photo
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PIERRE, S.D. — A Hutterite ag co-op that drew attention from state regulators for dealing grain without a license is asking for an exemption to the rules as it tries to come into compliance.

In a complaint filed in July, the South Dakota Public Utilities Commission outlined how the South Dakota Hutterian Co-operative, with members from the state’s Hutterite colonies, was selling soybeans without a license.

The co-op has since applied for a license, but has asked that it not have to comply with state regulations on financial reporting for grain dealers.

Julie Dvorak, an attorney representing the co-op based in Aberdeen, South Dakota, told a meeting of the Public Utilities Commission on Tuesday, Aug. 30, that the rules requiring reports from a certified public accountant would come at a significant cost and be a detriment to the co-op’s members, not a benefit.

She said other co-ops usually have another entity, such as a lender or board of directors, requiring the same kind of reporting asked for by the PUC. But in the case of the Hutterite colonies, it would be an added expense.

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Because of the unique nature of the co-op, open only to Hutterites, a Christian faith that does not believe in individual possession of property, Dvorak said the reporting requirements are unnecessary.

“Never has there been a time when a producer has not been paid,” Dvorak said.

She said the co-op has a bookkeeper, though not a CPA, in place and also uses the Eide Bailly accounting firm for tax reporting. She added that the co-op has a bond in place and that staff from the PUC would be welcome to review the books.

Staff from the PUC asked for a 90-day temporary exemption to help the co-op get past the busy harvest season before requiring them to comply.

Commission Chairman Chris Nelson expressed concern that granting a permanent exemption would open the door to other requests for exemptions.

“You are obviously asking for something special,” Nelson said.

In response to a question from Nelson, Cody Chambliss, the grain warehouse manager for the PUC, said, “I don’t believe there is another entity that we license that is in the same situation.”

Ultimately, Nelson made a motion to delay the reporting requirements until July 1, 2023. That would be the date when grain licenses are up for renewal and would give PUC staff more time to further investigate the unique nature of the co-op and potential ramifications of granting a long-term exemption. The three-member commission approved the motion unanimously.

Reach Jeff Beach at jbeach@agweek.com or call 701-451-5651 (work) or 859-420-1177.
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