South Carolina General Assembly
109th Session, 1991-1992

Bill 4420

Indicates Matter Stricken
Indicates New Matter

                    Current Status

Introducing Body:               House
Bill Number:                    4420
Primary Sponsor:                G. Brown
Committee Number:               01
Type of Legislation:            GB
Subject:                        Cotton, agricultural product;
Residing Body:                  Senate
Computer Document Number:       CYY/18694.SD
Introduced Date:                Feb 13, 1992
Date of Last Amendment:         Apr 23, 1992
Last History Body:              Senate
Last History Date:              Apr 28, 1992
Last History Type:              Introduced, read first time,
                                referred to Committee
Scope of Legislation:           Statewide
All Sponsors:                   G. Brown
Type of Legislation:            General Bill


 Bill  Body    Date          Action Description              CMN
 ----  ------  ------------  ------------------------------  ---
 4420  Senate  Apr 28, 1992  Introduced, read first time,    01
                             referred to Committee
 4420  House   Apr 24, 1992  Read third time, sent to
 4420  House   Apr 23, 1992  Amended, read second time,
                             unanimous consent for third
                             reading on next Legislative
 4420  House   Apr 22, 1992  Debate adjourned until
                             Thursday, April 23, 1992
 4420  House   Apr 21, 1992  Debate adjourned until
                             Wednesday, April 22, 1992
 4420  House   Apr 15, 1992  Debate adjourned until
                             Tuesday, April 21, 1992
 4420  House   Apr 08, 1992  Debate adjourned until
                             Tuesday, April 14, 1992
 4420  House   Mar 26, 1992  Debate adjourned until
                             Wednesday, April 8, 1992
 4420  House   Mar 18, 1992  Committee Report: Favorable     20
 4420  House   Feb 13, 1992  Introduced, read first time,    20
                             referred to Committee

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(Text matches printed bills. Document has been reformatted to meet World Wide Web specifications.)


April 23, 1992

H. 4420

Introduced by REPS. G. Brown, Baxley, Riser, Bennett, Kennedy, Council, McLeod and McKay

S. Printed 4/23/92--H.

Read the first time February 13, 1992.



Amend Title To Conform

Be it enacted by the General Assembly of the State of South Carolina:

SECTION 1. Chapter 41 of Title 46 of the 1976 Code is amended by adding:

"Article 3

South Carolina Cotton Dealers and

Handlers Guaranty Fund

Section 46-41-300. There is created within the State Treasury a fund to be known as the `South Carolina Cotton Dealers and Handlers Guaranty Fund'.

Section 46-41-310. As used in this article:

(1) `Department' means the South Carolina Department of Agriculture.

(2) `Fair market value' means the value based on the average market price being paid to producers on a specified date by the three licensed cotton dealers nearest the cotton dealer involved in the loss.

(3) `Cotton' means cotton fiber or cotton seed.

(4) `Cotton dealer' means any person engaged in this State in buying, receiving, selling, exchanging, negotiating, processing for resale, or soliciting the sale, resale, exchange, or transfer of cotton purchased from the producer or his agent or representative or received to be handled on a net return basis from the producer. A ginner is included.

(5) `Loss' means any monetary loss over and beyond the amount protected by the dealer's bond as a result of doing business with a dealer which includes, but is not limited to, bankruptcy, embezzlement, or fraud.

(6) `Producer' means any producer of cotton.

(7) `Date of loss' means the date the cotton dealer filed a petition for bankruptcy, or, if bankruptcy is not declared, the date a check was returned for insufficient funds, or the date otherwise determined by the department.

Section 46-41-320. An assessment of fifty cents a bale must be imposed on all cotton bales delivered by producers to cotton dealers licensed under this chapter other than cotton for which a producer has received payment in currency or cashier's check on delivery, or received a state warehouse receipt issued in the producer's name or that of his designee. The cotton dealer shall collect the assessment from the producer at the time of settlement with the producer. The assessment must be reported and remitted to the department by the cotton dealer as of the month in which the cotton was delivered to the cotton dealer, except as provided by Section 46-41-340. The department shall remit the assessment to the State Treasurer to be credited to the fund.

Section 46-41-330. The State Treasurer shall administer the investment of the fund. The department shall administer the collection of assessments and investigate losses for which payment is requested. Unless the cotton dealer who allegedly occasioned the loss has filed for bankruptcy or is audited pursuant to judicial proceedings, the department, in conjunction with the State Auditor's Office, shall conduct a financial audit of the cotton dealer to verify the loss before it may request payment from the fund. The fund must bear all expenses incurred in conducting the audit. After verification, the department shall request that payment for verified losses be made by the State Treasurer to the person incurring a loss. The fund must be established for the benefit of producers who have delivered cotton to cotton dealers licensed under this chapter and compensate producers for losses relative to cotton delivered to a cotton dealer licensed under this chapter, except losses covered by the cotton dealer's surety bond. When the fund reaches four million dollars the assessment ceases. If the four million dollars is attained prior to the end of a harvest season, the assessment continues until the end of that season. The assessment must be reinstituted as necessary to maintain a balance of four million dollars in the fund. The first one hundred thousand dollars collected in assessment must be paid into the general fund of the State. Any of these funds not appropriated for the employment of additional auditors for the Warehouse and Dealers and Handlers Division of the Department of Agriculture must be returned to the fund. All income, interest, or otherwise, derived from this fund must be reinvested in the fund.

When a loss is incurred for cotton which has been delivered to a cotton dealer licensed under this chapter, the producer shall within ninety days present his claim, which must be under oath, to the department on a form supplied by the department. To verify his claim, the producer shall present any evidence of loss the department considers necessary. The price for each bale of cotton must be established on the day of the loss and must be for the fair market value on that day at the location of loss. The price for each bushel may not be higher than the contract price, if a price has been established. All persons filing claims under this section are bound by the value determined by the department.

The department within thirty days from verification of loss shall request payment of one hundred percent of the approved claim. At no time may the fund be reduced to less than one hundred thousand dollars.

If there is an insufficient amount of money in the fund to cover all claims, payments must be made on a pro rata basis up to one hundred percent of the total loss of each producer. If payment is not received in the amount of one hundred percent of total loss then additional amounts must be paid as funds become available until payment of one hundred percent of total loss is attained. Claims against the fund must be paid in the order in which they have been verified and approved.

Upon approval of his claim by the department, the producer shall subrogate his interest, if any, to the department in a cause of action against any and all parties. An independent law firm may be hired and paid by the fund for the purpose of collecting losses subrogated to the department. Payments start when the fund exceeds one hundred thousand dollars.

Section 46-41-340. (A) The cotton dealer shall remit assessments and file with the Department a report of such assessments on cotton received by him by the fifteenth day of each calendar month following any calendar month in which the cotton dealer has received quantities of cotton subject to assessments totaling fifty dollars or more. If the cotton dealer has received quantities of cotton subject to assessments totaling less than fifty dollars in any calendar month, the assessments may be reported and remitted with the following month's return. All assessments must be remitted at least once every three months.

(B) In case any person subject to this section fails to make a report and remittance when required, the department shall determine the amount of the assessment according to its best judgement and information and the amount is deemed prima facie correct, and the person who failed to make the report shall, within ten days after notice of the amount of the assessment is mailed to him, pay the assessment, together with a penalty of ten percent, or dispute the assessment and request a hearing to determine its amount and the penalty to be imposed. No payment must be made until the department enters its order determining the amount of the payment but the payment must be made within ten days' notice of the order. On failure to remit payment within ten days of the receipt of notice of the order, the department may suspend the dealer's license under the provisions of Section 46-41-130.

Section 46-41-350. Notwithstanding any other provision of this chapter, any producer may elect not to participate in the fund for any calendar year by applying for an exemption with the South Carolina Department of Agriculture as provided in this section.

The election consists of a written, notarized application upon a form designed and provided by the Department of Agriculture. The application must be filed with the department before April first of the year for which the exemption is desired.

Upon filing of the application, the department must issue the applicant an exemption certificate specifying the producer, commodity exempted, and period of exemption. The certificate, when presented to the cotton dealer upon delivery of the cotton, entitles the specified producer to an exemption from the dealer's and handler's assessment on the specified commodity.

When an exemption is granted under this section, the cotton dealer must retain a copy of the exemption certificate for a period of not less than two years. Any producer who elects not to participate in the fund is not eligible to be reimbursed for any loss for the commodity exempted for that calendar year."

SECTION 2. Notwithstanding any other provision of law, before the provisions of Article 3, Chapter 41, Title 46 of the 1976 Code shall take effect or be implemented, the Department of Agriculture shall conduct a referendum by mail among the State's cotton growers asking them whether they are in favor of, or opposed to, the creation of the "South Carolina Cotton Dealers and Handlers Guaranty Fund" as provided for in Article 3, Chapter 41, Title 46. The department shall tabulate and publish the results of the referendum, and the provisions of Article 3, Chapter 41, Title 46 shall take effect only if a majority of those voting in the referendum vote in favor of the establishment of the fund.

SECTION 3. Except as otherwise specifically provided in this act, this act takes effect upon approval by the Governor.