Senate File 339
SENATE FILE
BY KIBBIE, FRAISE, STEWART,
SENG, and CONNOLLY
Passed Senate, Date Passed House, Date
Vote: Ayes Nays Vote: Ayes Nays
Approved
A BILL FOR
1 An Act relating to agricultural contracts and providing
2 penalties.
3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
4 TLSB 2737XS 80
5 da/cl/14
PAG LIN
1 1 Section 1. Section 202.1, Code 2003, is amended by
1 2 striking the section and inserting in lieu thereof the
1 3 following:
1 4 202.1 DEFINITIONS.
1 5 1. "Agricultural contract" means a marketing contract or a
1 6 production contract.
1 7 2. "Commodity" means livestock, raw milk, eggs, wool, or a
1 8 crop.
1 9 3. "Contract producer" means a person who holds a legal
1 10 interest in a livestock facility or crop field and who
1 11 produces a commodity at the livestock facility or crop field
1 12 according to the terms of a production contract. "Contract
1 13 producer" does not include a commercial fertilizer or
1 14 pesticide applicator, a feed supplier, or a veterinarian, when
1 15 acting in such capacity.
1 16 4. "Contractor" means a person who owns a commodity that
1 17 is produced by a contract producer. A contractor includes an
1 18 association organized as a cooperative in which another
1 19 cooperative association organized under chapter 497, 498, 499,
1 20 or 501 is a member, if the association contracts with a member
1 21 which is a cooperative association organized under chapter
1 22 497, 498, 499, or 501, which contracts for the care and
1 23 feeding of livestock with a member of the cooperative who is
1 24 actively engaged in farming.
1 25 5. a. "Crop" means a plant used for food, animal feed,
1 26 seed, fiber, oil, fuel, pharmaceuticals, or nutriceuticals if
1 27 the plant is classified as a forage or cereal plant, including
1 28 but not limited to alfalfa, barley, buckwheat, corn, flax,
1 29 forage, millet, oats, popcorn, rye, sorghum, soybeans,
1 30 sunflowers, wheat, and grasses used for forage or silage.
1 31 b. "Crop" does not include trees or nuts or fruit grown on
1 32 trees; sod; shrubs; greenhouse plants; or plants or plant
1 33 parts produced for precommercial, experimental, or research
1 34 purposes.
1 35 6. "Crop field" means farmland where a crop is produced by
2 1 a producer who holds a legal interest in the farmland.
2 2 7. "Farmland" means agricultural land that is suitable for
2 3 use in farming as defined in section 9H.1.
2 4 8. "Livestock" means a domesticated animal belonging to
2 5 the bovine, porcine, ovine, caprine, equine, or avian species.
2 6 9. "Livestock facility" means an animal feeding operation
2 7 as defined in section 459.102, in which livestock or raw milk
2 8 is produced by a producer who holds a legal interest in the
2 9 animal feeding operation. "Livestock facility" includes a
2 10 confinement feeding operation as defined in section 459.102,
2 11 an open feedlot, or an area which is used for the raising of
2 12 crops or other vegetation and upon which livestock is fed for
2 13 slaughter or is allowed to graze or feed.
2 14 10. "Marketing contract" means an oral or written
2 15 agreement between a processor and a producer or contractor,
2 16 who is not also a processor, for the purchase of commodities
2 17 grown or raised by the producer in this state. A marketing
2 18 contract is executed when it is signed by each party or by a
2 19 person authorized to act on the party's behalf.
2 20 11. "Open feedlot" means an unroofed or partially roofed
2 21 animal feeding operation in which no crop, vegetation, or
2 22 forage growth or residue cover is maintained during the period
2 23 that animals are confined in the operation.
2 24 12. "Processor" means a person, which alone or in
2 25 conjunction with others, directly or indirectly controls the
2 26 manufacturing, processing, or preparation of goods from
2 27 commodities having a total annual wholesale value of ten
2 28 million dollars or more.
2 29 13. "Produce" means to do any of the following:
2 30 a. Provide for the housing, caring, and feeding of
2 31 livestock. If the livestock is dairy cattle, "production"
2 32 includes milking the dairy cattle and storing raw milk at the
2 33 livestock facility.
2 34 b. Provide for planting, raising, harvesting, and storing
2 35 a crop. "Produce" includes preparing the soil for planting
3 1 and nurturing the crop by the application of fertilizers or
3 2 soil conditioners as defined in section 200.3 or pesticides as
3 3 defined in section 206.2.
3 4 14. "Producer" means a person who produces commodities.
3 5 15. "Production contract" means an oral or written
3 6 agreement that provides for the production of a commodity and
3 7 for payment in an amount of ten thousand dollars or more by a
3 8 contractor. A production contract is executed when it is
3 9 signed by each party or by a person authorized to act on the
3 10 party's behalf. A production contract includes a production
3 11 contract that also includes terms meeting the definition of a
3 12 marketing contract.
3 13 Sec. 2. NEW SECTION. 202.2A CONTRACT PRODUCER RIGHTS.
3 14 1. A contract producer's rights shall include any one or
3 15 more of the following legal rights and protections:
3 16 a. RIGHT TO JOIN ASSOCIATION. A contract producer shall
3 17 have the right to join or belong to, or to refrain from
3 18 joining or belonging to, an association of contract producers.
3 19 b. RIGHT TO CONTRACT WITH OTHERS. A contract producer
3 20 shall have the right to enter into a membership agreement or
3 21 marketing contract with an association of contract producers,
3 22 a processor, or another contract producer. A contract
3 23 producer shall have the right to exercise contractual rights
3 24 under such a membership agreement or marketing contract,
3 25 provided, however, that such rights do not negate or interfere
3 26 with any obligation of exclusive delivery of commodities under
3 27 the agricultural contract.
3 28 c. RIGHT TO BE A WHISTLEBLOWER. A contract producer shall
3 29 have the right to lawfully provide statements or information
3 30 regarding alleged improper actions or violations of law by a
3 31 contractor or processor. This right does not include the
3 32 right to make statements or provide information if the
3 33 statements or information are determined to be libelous or
3 34 slanderous.
3 35 d. RIGHT TO USE CONTRACT PRODUCER LIEN. A contract
4 1 producer shall have the right to file, continue, terminate, or
4 2 enforce a lien under chapter 579A or 579B.
4 3 e. COMPENSATION INFORMATION. A contract producer shall
4 4 have the right to receive from the contractor upon request the
4 5 formula used to determine compensation paid to the contract
4 6 producer under a production contract, including, but not
4 7 limited to, feed conversion rates, feed analyses and
4 8 origination, seed variety, and yields used in calculating the
4 9 formula.
4 10 f. OBSERVATION OF WEIGHING. A contract producer or the
4 11 contract producer's designated representative shall have the
4 12 right to observe, by actual observation at the time of
4 13 weighing, the weights and measures used to determine the
4 14 contract producer's compensation under a production contract.
4 15 2. A contractor or processor shall not engage in or permit
4 16 any employee or agent to engage in the following practices in
4 17 connection with agricultural contracts:
4 18 a. RETALIATION. Take actions to coerce, intimidate,
4 19 disadvantage, retaliate against, or discriminate against any
4 20 contract producer because the contract producer exercises, or
4 21 attempts to exercise, any contract producer right, including
4 22 actions affecting the following:
4 23 (1) The execution, termination, extension, or renewal of
4 24 an agricultural contract.
4 25 (2) The treatment of a contract producer, which may
4 26 include providing discriminatory or less favorable terms in an
4 27 agricultural contract or interpreting terms of an existing
4 28 agricultural contract in a discriminatory or less favorable
4 29 manner. The terms may relate to the price paid for a
4 30 commodity, the quality or the quantity of a commodity
4 31 demanded, or financing.
4 32 (3) The imposition of a penalty, including the denial of a
4 33 reward. The reward or penalty may be in any form, including,
4 34 but not limited to, financial rewards or penalties. Financial
4 35 rewards or penalties may relate to loans, bonuses, or
5 1 inducements.
5 2 (4) Alter the quality, quantity, or delivery times of
5 3 appropriate contract inputs provided to the contract producer
5 4 including livestock, feed, veterinary services, vaccines,
5 5 seed, plants, fertilizer as defined in section 200.3, or
5 6 pesticides as defined in section 206.2.
5 7 b. FALSE INFORMATION TO THE CONTRACT PRODUCER. Provide
5 8 false information to the contract producer, which may include
5 9 false information relating to any of the following:
5 10 (1) Regarding the condition of the finances or the
5 11 management of the contractor or processor.
5 12 (2) The contract producer rights provided by this chapter
5 13 or other provisions of law.
5 14 (3) A contract producer with whom the contract producer
5 15 associates or an association of contract producers or an
5 16 agricultural organization with which the contract producer is
5 17 affiliated, including but not limited to the condition of the
5 18 finances or the management of the association of contract
5 19 producers or agricultural organization.
5 20 c. FALSE INFORMATION TO OTHERS. Provide false information
5 21 to the contract producer's associates or other persons
5 22 regarding the contract producer.
5 23 d. ADDITIONAL CAPITAL INVESTMENTS. Require a contract
5 24 producer to make new or additional major capital investments
5 25 in connection with a production contract which are beyond the
5 26 initial investment requirements of such production contract.
5 27 It shall not be a violation of this section if such new or
5 28 additional capital investments are offset by other
5 29 compensation or modifications to contract terms, in a manner
5 30 the contract producer agrees to in writing as constituting
5 31 acceptable and satisfactory consideration for the new capital
5 32 investment.
5 33 e. MEDIATION PROVISIONS. Execute an agricultural contract
5 34 without a mediation provision as required under section
5 35 202.3B.
6 1 Sec. 3. NEW SECTION. 202.3A CHOICE OF LAW, JURISDICTION,
6 2 AND VENUE.
6 3 Any condition, stipulation, or provision requiring the
6 4 application of the law of another state in lieu of this
6 5 chapter is void and unenforceable. A contractor or processor
6 6 executing an agricultural contract with a contract producer
6 7 who resides in this state is subject to personal jurisdiction
6 8 in this state. Venue is determined by the location of the
6 9 crop field or livestock facility where the commodity is
6 10 produced in accordance with the terms of an agricultural
6 11 contract.
6 12 Sec. 4. NEW SECTION. 202.3B MEDIATION AND ARBITRATION.
6 13 An agricultural contract must contain language providing
6 14 for resolution of disputes concerning the contract by
6 15 mediation or nonbinding arbitration.
6 16 An agricultural contract shall not contain language
6 17 providing for resolution of disputes concerning the contract
6 18 by binding arbitration. A contract providing for such
6 19 resolution is void and unenforceable except where it is agreed
6 20 to by the producer after the dispute has manifested and where
6 21 all parties to the contract agree to the person serving as the
6 22 arbitrator or arbitration panel.
6 23 Sec. 5. NEW SECTION. 202.3C WAIVERS.
6 24 Any provision of an agricultural contract which waives a
6 25 producer's right or obligation of a contractor or processor
6 26 established by this chapter is void and unenforceable. This
6 27 section does not affect other provisions of an agricultural
6 28 contract, including a related document, policy, or agreement
6 29 which can be given effect without the voided provision.
6 30 Sec. 6. NEW SECTION. 202.9 CIVIL PENALTIES AND
6 31 ENFORCEMENT.
6 32 1. A contract producer who suffers damages or whose rights
6 33 are violated because of a contractor's or processor's
6 34 violation of this chapter may obtain appropriate legal and
6 35 equitable relief, including punitive damages, in a suit at
7 1 common law pursuant to Iowa's rules of civil procedure. A
7 2 contractor who violates this chapter is liable to the contract
7 3 producer for treble damages.
7 4 a. In such a civil action against the contractor or
7 5 processor where the producer prevails, the court shall award
7 6 the producer court costs, reasonable attorney fees, and
7 7 reasonable litigation expenses.
7 8 b. In order to obtain injunctive relief, the contract
7 9 producer is not required to post a bond, prove the absence of
7 10 an adequate remedy at law, or show the existence of special
7 11 circumstances, unless the court for good cause otherwise
7 12 orders. The court may order any form of prohibitory or
7 13 mandatory relief that is appropriate under principles of
7 14 equity, including but not limited to issuing a temporary or
7 15 permanent restraining order.
7 16 c. If a contractor terminates or cancels a production
7 17 contract, the contract producer may recover damages including
7 18 but not limited to the remaining value of the contract and the
7 19 value of the remaining useful life of capital investments made
7 20 to fulfill the contract including land, structures, machinery,
7 21 or equipment to the extent that the capital investments exceed
7 22 the fair market value of the land, structures, machinery, or
7 23 equipment.
7 24 2. The attorney general may enforce a contract producer's
7 25 rights as identified in section 202.2A, subsection 1, against
7 26 a contractor, processor, or its employees or agents who take
7 27 actions to impede such rights. The attorney general may do
7 28 all of the following:
7 29 a. Bring an action in district court to impose and award
7 30 civil penalties under subsection 3.
7 31 b. Apply to the district court for an injunction to
7 32 restrain the contractor or processor from engaging in conduct
7 33 or practices in violation of a contract producer's right or to
7 34 require a contractor or processor to comply with provisions of
7 35 section 202.2A, subsection 1.
8 1 c. Apply to the district court for the issuance of a
8 2 subpoena to obtain an agricultural contract for purposes of
8 3 enforcing section 202.2A, subsection 1.
8 4 3. The district court may impose civil penalties against a
8 5 contractor or processor who engages in conduct or practices in
8 6 violation of a contract producer's rights as identified in
8 7 section 202.2A in an amount up to five thousand dollars per
8 8 day per violation. The amount of the civil penalties shall be
8 9 awarded to the contract producer whose rights were violated by
8 10 the contractor or processor.
8 11 Sec. 7. Section 202.2, Code 2003, is repealed.
8 12 EXPLANATION
8 13 This bill provides the relationship between persons who
8 14 enter into contracts for the production and marketing of
8 15 agricultural commodities. The bill applies to agricultural
8 16 producers and to contractors and processors who enter into a
8 17 contractual relationship with agricultural producers.
8 18 The bill provides for a number of contract producer rights,
8 19 including the right to join associations, contract with
8 20 others, provide statements regarding an alleged improper
8 21 action or violations of law by a contractor or processor, the
8 22 right to file and enforce a contract producer lien under Code
8 23 chapters 579A and 579B, to receive information regarding how
8 24 compensation is paid, and to observe the weighing and
8 25 measuring of commodities.
8 26 The bill prohibits a person from taking action to coerce,
8 27 intimidate, disadvantage, retaliate against, or discriminate
8 28 against any contract producer. The bill also prohibits a
8 29 person from providing false information to or about a contract
8 30 producer. It also prohibits a person from requiring that a
8 31 contract producer make new or additional major capital
8 32 investments in an operation.
8 33 The bill provides that any condition, stipulation, or
8 34 provision requiring the application of the law of another
8 35 state in lieu of this chapter is void and unenforceable.
9 1 The bill provides that an agricultural contract must
9 2 contain language providing for resolution of disputes. It
9 3 cannot contain language providing for binding arbitration, but
9 4 may provide for nonbinding arbitration or mediation.
9 5 The bill provides that an agricultural contract which
9 6 waives a producer right or obligation of a contractor or
9 7 processor is void and unenforceable.
9 8 The bill provides that a contract producer who suffers
9 9 damages or whose rights are violated because of a contractor's
9 10 or processor's violation of the bill may obtain appropriate
9 11 legal and equitable relief at common law pursuant to Iowa's
9 12 rules of civil procedure. A contractor who violates the
9 13 bill's provisions is liable to the contract producer for
9 14 treble damages and attorney fees.
9 15 The bill provides that the attorney general may enforce a
9 16 contract producer's right by bringing an action in district
9 17 court to impose and award civil penalties.
9 18 The bill repeals a provision referring to production
9 19 contracts executed by active and passive contractors.
9 20 LSB 2737XS 80
9 21 da/cl/14.1