Minnesota Session Laws - 1992, Regular Session

  

                         Laws of Minnesota 1992 

                        CHAPTER 602-H.F.No. 2734 
           An act relating to agriculture; providing for 
          establishment of an agricultural improvement loan 
          program for grade B dairy producers; appropriating 
          money and authorizing the issuance of state bonds to 
          fund the program; changing provisions concerning 
          adulterated dairy products; exempting persons who sell 
          nuts from certain licensing requirements; adding a 
          member to a board; changing family farm security loan 
          payment provisions; establishing an over-order premium 
          milk price; requiring rules and a report; 
          appropriating money for agricultural information 
          centers; amending Minnesota Statutes 1990, sections 
          28A.15, subdivisions 7 and 8; 32.21; 41.56, 
          subdivision 3; 41.57, by adding subdivisions; 41B.02, 
          by adding a subdivision; 116J.9673, subdivisions 2 and 
          7; proposing coding for new law in Minnesota Statutes, 
          chapters 32A; and 41B; repealing 1992 S.F. No. 2728, 
          if enacted. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
    Section 1.  Minnesota Statutes 1990, section 28A.15, 
subdivision 7, is amended to read: 
    Subd. 7.  Persons whose principal business is not food 
handling but who sell only ice manufactured and prepackaged by 
another or such nonperishable items as bottled or canned soft 
drinks and, prepackaged confections or nuts at retail, or 
persons who for their own convenience or the convenience of 
their employees have available for rehydration and consumption 
on the premises such nonperishable items as dehydrated coffee, 
soup, hot chocolate or other dehydrated food or beverage. 
    Sec. 2.  Minnesota Statutes 1990, section 28A.15, 
subdivision 8, is amended to read: 
    Subd. 8.  A licensed pharmacy selling only food additives, 
food supplements, canned or prepackaged infant formulae, ice 
manufactured and packaged by another, or such nonperishable food 
items as bottled or canned soft drinks and prepackaged 
confections or nuts at retail. 
    Sec. 3.  Minnesota Statutes 1990, section 32.21, is amended 
to read: 
    32.21 [ADULTERATED MILK AND CREAM DAIRY PRODUCTS.] 
    Subdivision 1.  [PURCHASE AND SALE PROHIBITION.] A person 
may not sell or knowingly buy adulterated milk or cream dairy 
products.  
    Subd. 2.  [MANUFACTURE OF FOOD FOR HUMAN CONSUMPTION FROM 
ADULTERATED MILK OR CREAM PROHIBITED.] An article of food for 
human consumption may not be manufactured from adulterated milk 
or cream, except as provided in section 32.22 or the federal 
Food, Drug, and Cosmetic Act, United States Code, title 21, 
section 301 et seq., and related federal regulations. 
    Prior to processing milk, all bulk milk pickup tankers must 
be tested for the presence of beta lactum drug residues and for 
other residues as determined necessary by the commissioner.  
Test methods must be those approved by the Association of 
Analytical Chemists (AOAC) or under the AOAC C2 program.  Bulk 
milk tankers testing positive must be reported to the 
commissioner or the commissioner's agent within 24 hours.  This 
report must include how and where the milk was disposed of, the 
volume, the responsible producer, and the possible cause of the 
violative residue.  All milk sample residue results must be 
recorded and retained for examination by the commissioner or the 
commissioner's agent for six months by the receiving plant.  
Milk received from a producer in other than a bulk milk pickup 
tanker is also subject to this section. 
    Subd. 3.  [ADULTERATED MILK OR CREAM.] For purposes of this 
section and section 32.22, milk or cream is adulterated if it: 
    (1) milk is drawn in a filthy or unsanitary place; 
    (2) milk is drawn from unhealthy or diseased cows; 
    (3) milk is drawn from cows that are fed garbage or an 
unwholesome animal or vegetable substance; 
    (4) milk is drawn from cows within 15 days before calving, 
or five days after calving; 
    (5) milk or cream contains water in excess of that normally 
found in milk; 
    (6) contains a substance that is not a normal constituent 
of the milk or cream, as determined by laboratory procedures 
established by rule or except as allowed in this chapter; 
    (6) milk contains water in excess of that normally present 
in milk; or 
    (7) milk or cream contains antibiotics drug residues or 
other bacterial inhibitory chemical or biological substances in 
amounts above the actionable tolerances or safe levels 
established by rule or under section 32.415.  
    Subd. 4.  [PENALTIES.] (a) A person, other than a milk 
producer, who violates this section is guilty of a 
misdemeanor or subject to a civil penalty up to $1,000. 
    (b) A milk producer may not change milk plants within 30 
days, without permission of the commissioner, after receiving 
notification from the commissioner under paragraph (c) or (d) 
that the milk producer has violated this section. 
    (c) A milk producer who violates this section shall be 
subject to a civil penalty of $100.  The commissioner must 
notify the person violating this section by certified mail 
stating: 
    (1) the milk producer violating this section is on 
probation for one year after the date of violation; and 
    (2) the $100 civil penalty is suspended unless the milk 
producer violates this section during the probation period, 
including changing milk plants within 30 days after the 
violation. 
    (d) A milk producer who violates this section a second time 
within a 12-month period is subject to a $200 civil penalty.  
The commissioner must notify the milk producer violating this 
section stating: 
    (1) the milk producer is still on probation; 
    (2) the $200 civil penalty is suspended, unless the milk 
producer violates this section during the probation period, 
including changing milk plants within 30 days after the 
violation; and 
    (3) the consequences of a third violation. 
    (e) A milk producer who violates this section three or more 
times within a 12-month period is subject to a fine of $300.  
    (f) Penalties collected under this section shall be 
deposited in the milk inspection service account created in 
section 32.394, subdivision 9. subdivision 3, clause (1), (2), 
(3), (4), or (5), is subject to clauses (1) to (3) of this 
paragraph. 
    (1) Upon notification of the first violation in a 12-month 
period, the producer must meet with the dairy plant field 
service representative to initiate corrective action within 30 
days. 
    (2) Upon the second violation within a 12-month period, the 
producer is subject to a civil penalty of $300.  The 
commissioner shall notify the producer by certified mail stating 
the penalty is payable in 30 days, the consequences of failure 
to pay the penalty, and the consequences of future violations. 
    (3) Upon the third violation within a 12-month period, the 
producer is subject to an additional civil penalty of $300 and 
possible revocation of the producer's permit or certification.  
The commissioner shall notify the producer by certified mail 
that all civil penalties owed must be paid within 30 days and 
that the commissioner is initiating administrative procedures to 
revoke the producer's permit or certification to sell milk for 
at least 30 days. 
    (d) The producer's shipment of milk must be immediately 
suspended if the producer is identified as an individual source 
of milk containing residues in violation of subdivision 3, 
clause (6) or (7).  Shipment may resume only after subsequent 
milk has been sampled by the commissioner or the commissioner's 
agent and found to contain no residues above established 
tolerances or safe levels.  A milk producer who violates 
subdivision 3, clause (6) or (7), is subject to clauses (1) to 
(3) of this paragraph.  
    (1) For the first violation in a 12-month period, a 
producer shall not receive payment for any milk contaminated or 
the equivalent of at least the value of two days' milk 
production on that farm.  Milk purchased for use from the 
producer during the two-day penalty period will be assessed a 
civil penalty equal to the minimum value of that milk and is 
payable to the commissioner by the dairy plant or marketing 
organization who purchases the milk.  The producer remains 
eligible only for manufacturing grade until the producer 
completes the "Milk and Dairy Beef Residue Prevention Protocol" 
with a licensed veterinarian, displays the signed certificate in 
the milkhouse, and sends verification to the commissioner.  To 
maintain a permit or certification to market milk, this program 
must be completed within 30 days. 
    (2) For the second violation in a 12-month period, a 
producer shall not receive payment for any milk contaminated or 
the equivalent of at least the value of four days' milk 
production on that farm.  Milk purchased for use from the 
producer during the four-day penalty period will be assessed a 
civil penalty equal to the minimum value of that milk and is 
payable to the commissioner by the dairy plant or marketing 
organization who purchases the milk.  The producer remains 
eligible only for manufacturing grade until the producer reviews 
the "Milk and Dairy Beef Residue Prevention Protocol" with a 
licensed veterinarian, displays the updated certificate in the 
milkhouse, and sends verification to the commissioner.  To 
maintain a permit or certification to market milk, this program 
must be reviewed within 30 days. 
    (3) For the third violation in a 12-month period, a 
producer shall not receive payment for any milk contaminated or 
the equivalent of at least the value of four days' milk 
production on that farm.  Milk purchased for use from the 
producer during the four-day penalty period will be assessed a 
civil penalty equal to the minimum value of that milk and is 
payable to the commissioner by the dairy plant or marketing 
organization who purchases the milk.  The producer remains 
eligible only for manufacturing grade until the producer reviews 
the "Milk and Dairy Beef Residue Prevention Protocol" with a 
licensed veterinarian, displays the updated certificate in the 
milkhouse, and sends verification to the commissioner.  To 
maintain a permit or certification to market milk, this program 
must be reviewed within 30 days.  The commissioner shall also 
notify the producer by certified mail that the commissioner is 
initiating administrative procedures to revoke the producer's 
permit or certification to sell milk for a minimum of 30 days. 
    (e) A milk producer that has been certified as completing 
the "Milk and Dairy Beef Residue Prevention Protocol" within 12 
months of the first violation of subdivision 3, clause (7), need 
only review the cause of the violation with a field service 
representative within three days to maintain shipping status if 
all other requirements of this section are met. 
    (f) Civil penalties collected under this section must be 
deposited in the milk inspection services account established in 
this chapter. 
     Sec. 4.  [32A.071] [CLASS I MILK PRICE.] 
    Subdivision 1.  [PURPOSE.] It is the intent of the 
legislature that establishing an over-order premium milk price 
will benefit the incomes of all Minnesota dairy farmers and 
improve the economies in rural communities. 
    Subd. 2.  [MINIMUM CLASS I MILK PRICE.] The minimum price 
for class I milk as defined by the upper midwest federal milk 
marketing order, Code of Federal Regulations, title 7, part 
1068, for milk purchased in Minnesota for class I use shall be 
not less than $13.20 per hundredweight.  Any amount by which 
this price exceeds the class I price specified in the applicable 
milk marketing order shall be paid by processors of class I milk 
directly to their suppliers of grade A milk or to the agents of 
the suppliers.  Suppliers or agents shall pass the entire 
over-order premium payment on to the dairy producers. 
    Subd. 3.  [RULES.] The commissioner of agriculture shall 
adopt emergency and permanent rules to implement subdivision 2 
in a manner that minimizes disruption to existing trade 
practices and commercial transactions, including pooling of 
over-order premium payments among grade A milk producers.  
    Subd. 4.  [REPORT.] Not later than March 1 of 1993 and each 
year thereafter, the commissioner of agriculture shall report to 
the chairs of the senate agriculture and rural development 
committee and the house of representatives agriculture committee 
on the impacts and benefits to dairy farmers of the minimum 
class I milk price established under subdivision 2.  The report 
must also include a summary of processor and distributor 
information the commissioner has analyzed to determine 
compliance with sections 32A.01 to 32A.09. 
     Sec. 5.  Minnesota Statutes 1990, section 41.56, 
subdivision 3, is amended to read: 
    Subd. 3.  [DEFAULT, FILING CLAIM.] Within 90 days of a 
default on a guaranteed family farm security loan, the lender 
shall send notice to the participant stating that the 
commissioner must be notified if the default continues for 180 
days, and the consequences of that default.  The lender and the 
participant may agree to take any steps reasonable to assure the 
fulfillment of the loan obligation. 
    If a participant cannot meet scheduled loan payments 
because of unique or temporary circumstances and the participant 
proves sufficiently to the commissioner that the necessary cash 
flow can be generated in the future, the commissioner may use 
money in the special account in section 41.61, subdivision 1, to 
meet the participant's loan obligation for up to two consecutive 
years.  This money must be paid back within eight years with 
interest at an annual percentage rate four percent below the 
prevailing Federal Land Bank rate. 
    A contract for deed participant may enter into an agreement 
with the commissioner whereby the outstanding principal balance 
of the loan is reduced by a minimum of ten percent, the loan is 
reamortized for the years remaining, and the commissioner agrees 
that the state shall pay the lender 100 percent of the sum due 
and payable if a default occurs during the remaining term of the 
reamortized loan.  
     After 180 days from the initial default, if the participant 
has not made arrangements to meet the obligation, the lender 
shall file a claim with the commissioner, identifying the loan 
and the nature of the default, and assigning to the state all of 
the lender's security and interest in the loan in exchange for 
payment according to the terms of the family farm security loan 
guarantee.  In the case of a seller-sponsored loan, the seller 
may elect to pay the commissioner all sums owed the commissioner 
by the participant and retain title to the property in lieu of 
payment by the commissioner under the terms of the loan 
guarantee.  If the commissioner determines that the terms of the 
family farm security loan guarantee have been met, the 
commissioner shall authorize payment of state funds to the 
lender, and shall notify the defaulting party.  The state of 
Minnesota shall then succeed to the interest of the mortgagee or 
the vendor of the contract for deed.  Taxes shall be levied and 
paid on the land as though the owner were a natural person and 
not a political subdivision of the state.  The commissioner may, 
on behalf of the state, commence foreclosure or termination 
proceedings in the manner provided by law. 
    The commissioner may add any unpaid principal and interest 
payments on special assistance loans to the interest adjustment 
obligation balance provided for in section 41.57, subdivision 
2.  The commissioner and participant may agree to any other 
terms of repayment that are mutually satisfactory. 
    Sec. 6.  Minnesota Statutes 1990, section 41.57, is amended 
by adding a subdivision to read: 
    Subd. 2a.  [SETTLEMENTS BEFORE DUE DATE.] The commissioner 
may settle interest adjustment payment accounts of participants 
before the contractual due date.  These settlements may include 
receiving partial payments for outstanding obligations if the 
participant and cooperating lender agree to voluntarily withdraw 
from the program. 
    Sec. 7.  Minnesota Statutes 1990, section 41.57, is amended 
by adding a subdivision to read: 
    Subd. 2b.  [DISCOUNTING USING PRESENT VALUE.] The 
commissioner may settle interest adjustment payment accounts by 
discounting the obligation using a present value calculation.  
The interest rate used in this calculation must be three percent 
above the current Farm Credit Bank of St. Paul wholesale loan 
rate to the agricultural credit associations as certified each 
month by the commissioner. 
    Sec. 8.  Minnesota Statutes 1990, section 41B.02, is 
amended by adding a subdivision to read: 
    Subd. 19.  [AGRICULTURAL IMPROVEMENTS.] "Agricultural 
improvements" means improvements to a farm, including the 
purchase and construction or installation of improvements to 
land, buildings, and other permanent structures, including 
equipment incorporated in or permanently affixed to the land, 
buildings, or structures, which are useful for and intended to 
be used for the purpose of farming.  "Agricultural improvements" 
does not include equipment not affixed to real estate or 
improvements or additions to that equipment. 
    Sec. 9.  [41B.043] [AGRICULTURAL IMPROVEMENT LOAN PROGRAM.] 
    Subdivision 1.  [ESTABLISHMENT.] The authority may 
establish, adopt rules for, and implement an agricultural 
improvement loan program to finance agricultural improvements.  
Loans may be made to borrowers who meet the requirements of 
section 41B.03, subdivision 1, clauses (1) and (2), and who are 
actively engaged in farming.  In the first two years, all loans 
must be given to grade B dairy farmers for the purpose of 
enabling them to upgrade to grade A. 
    Subd. 2.  [SPECIFICATIONS.] No loan may exceed $20,000 or 
be made to refinance an existing debt.  Each loan must be 
secured by a mortgage on real property comprising all or part of 
the farm on which the improvements are made, and such other 
security as the authority may require. 
     Subd. 3.  [APPLICATION AND ORIGINATION FEE.] The authority 
may impose a reasonable nonrefundable application fee for each 
application and an origination fee for each loan issued under 
the agricultural improvement loan program.  The origination fee 
initially shall be set at 1.5 percent and the application fee at 
$50.  The authority may review the fees annually and make 
adjustments as necessary.  The fees must be deposited in the 
state treasury and credited to a special account.  Money in the 
account is appropriated to the commissioner for administrative 
expenses for the agricultural improvement loan program. 
    Subd. 4.  [INTEREST RATE.] The interest rate per annum on 
the agricultural improvement loan must be the rate of interest 
determined by the authority to be necessary to provide for the 
timely payment of principal and interest when due on bonds or 
other obligations of the authority issued under chapter 41B to 
provide financing for loans made under the agricultural 
improvement loan program, and to provide for reasonable and 
necessary costs of issuing, carrying, administering, and 
securing the bonds or notes and to pay the costs incurred and to 
be incurred by the authority in the implementation of the 
agricultural improvement loan program. 
     Sec. 10.  Minnesota Statutes 1990, section 116J.9673, 
subdivision 2, is amended to read: 
    Subd. 2.  [BOARD OF DIRECTORS.] The governor shall 
appoint six seven members to the authority's board of directors. 
The Six members shall be knowledgeable in international finance, 
exporting, or international law and one member shall represent a 
company specializing in agricultural trade. 
    The commissioner of the department of trade and economic 
development shall be chair of the board.  Membership, terms, 
compensation and removals are governed by section 15.0575. Board 
members shall perform their duties in a non-self-serving manner 
and in compliance with section 10A.07.  
    Sec. 11.  Minnesota Statutes 1990, section 116J.9673, 
subdivision 7, is amended to read: 
    Subd. 7.  [INSURANCE AND GUARANTEES.] The finance authority 
may provide insurance and guarantees to the following extent:  
    (1) The finance authority may not provide to any one person 
insurance or guarantees in excess of $250,000 for preexport 
transactions and $250,000 or for postexport transactions.  When 
insuring, coinsuring, or guaranteeing the postexport portion of 
transactions, the finance authority shall retain not more than 
ten percent of the commercial risk, or alternatively, the normal 
and standard deductible of the insurance policy.  
    (2) The policy of the finance authority is to provide 
insurance and guarantees for export credits that would otherwise 
not be made and that the chair and the board deem to represent a 
reasonable risk and have a sufficient likelihood of repayment.  
    (3) The finance authority shall contract with, among 
others, the Foreign Credit Insurance Association, the United 
States Export-Import Bank, and private insurers to secure 
insurance or reinsurance for country and commercial risks for 
the finance authority's insurance program.  The finance 
authority may purchase insurance policies using money from the 
finance authority's appropriations. 
    (4) Losses incurred by the finance authority that relate to 
its insurance or guarantee activities shall be solely borne by 
the finance authority to the extent of its capital and reserves. 
    Sec. 12.  [AGRICULTURAL IMPROVEMENT LOAN PROGRAM FUNDING.] 
    Subdivision 1.  [APPROPRIATION.] $5,000,000 is appropriated 
to the Minnesota rural finance authority from the rural finance 
authority security account to fund the agency's agricultural 
improvement loan program. 
    Subd. 2.  [BONDS.] The appropriation made under subdivision 
1 may be funded by the issuance of general obligation bonds as 
provided for in Minnesota Statutes, section 41B.19.  The 
$5,000,000 authorized in this subdivision is part of the 
$50,000,000 bond authorization provided for in section 41B.19, 
subdivision 1.  The bonds must be issued and sold in the manner, 
upon the terms, and with the effect prescribed by Minnesota 
Statutes, sections 16A.631 to 16A.675, and the Minnesota 
Constitution, article XI.  Bond maturity should be matched to 
the terms of the loans made under this program.  The legislature 
determines that the bonds are being issued to develop the 
state's agricultural resources by extending credit on real 
estate security. 
    Sec. 13.  [APPROPRIATION.] 
    $50,000 is appropriated from the general fund for 
agricultural information centers to be divided equally between 
the centers in Wadena and Detroit Lakes. 
    Sec. 14.  [REPEALER.] 
    1992 S.F. No. 2728, if enacted, is repealed. 
    Sec. 15.  [EFFECTIVE DATE.] 
    Section 3 is effective July 1, 1992.  Sections 5 to 9, 12 
and 13 are effective the day following final enactment.  Section 
4 is effective August 1, 1992, except that the rulemaking 
authority granted to the commissioner of agriculture is 
effective the day following final enactment. 
    Presented to the governor April 17, 1992 
    Signed by the governor April 29, 1992, 8:41 a.m.