1 CHAPTER 1572 DEPARTMENT OF AGRICULTURE

CHAPTER1572

DEPARTMENTOFAGRICULTURE

AGRICULTURALCONTRACTS

1572.0010DEFINITIONS.

1572.0020MEDIATIONANDARBITRA TION.

1572.0030RECAPTUREOFLARGECAPITALINVESTMENT.

1572.0040PARENTCOMPANYLIABILITY .

1572.0045UNFAIRTRADEPRACTICES.

1572.0050DAIRYMARKETINGAGREEMENTS.

1572.0010DEFINITIONS.

Subpart1.Scope.Thedenitionsinthispartapplytoparts1572.0010to1572.0050.

Subp.2.Arbitration."Arbitration"meansaprocessbywhichthepartiestoadisputesubmittheir

differencestothejudgmentofanimpartialparty.Thearbitrator'sroleistoheartheparties'argumentsand

issueadecisionorgrantanaward,resolvingthedispute.

Subp.3.Commissioner."Commissioner"meansthecommissionerofagricultureoradesignee.

Subp.4.Contract."Contract"meansalegallyenforceableagreementbetweentwoormoreparties.

Contractincludesawrittencommoditycontractsignedbyallparties.Ifthepartieshavenotsignedawritten

commoditycontract,contractincludesaninvoice,purchaseorder,memorandum,orconrmationofsale

unlessthetermsofthedocumenthavebeenobjectedtobyapartytotheproposedagreementwithinten

daysofreceiptofthedocumentbytheobjectingparty.Contractdoesnotincludeagrainscaleticket.

Subp.5.Mediation."Mediation"meansaprocessbywhichpartiestoadisputejointlyexploreand

resolveallorapartoftheirdifferenceswiththeassistanceofaneutralperson.Themediator'sroleisto

assistthepartiesinresolvingthedispute.Themediatorhasnoauthoritytoimposeasettlement.

StatutoryAuthority:MSs17.945

History:15SR1924

PublishedElectronically:May13,2004

1572.0020MEDIATIONANDARBITRATION.

Subpart1.Procedure.Ifmediationorarbitrationservicesarerequested,thecommissionermay

referthepartiestooutsidemediationorarbitrationservicesorconducttheserviceswithinthedepartment

ofagriculture.Mediationandarbitrationactivitiesofthecommissionermustbeconductedaccordingto

theUniformArbitrationActinMinnesotaStatutes,sections572.08to572.30,andtheMinnesotaCivil

MediationActinMinnesotaStatutes,sections572.31to572.40.

Mediationorarbitrationservicesprovidedbythecommissionerunderthispartmustbeprovided

accordingtothetermsofthecontractbetweentheparties.Inaddition,thecommissionershallrequirethe

providersofanyoutsidemediationorarbitrationservicestowhichthecommissionerrefersthepartiesto

conductarbitrationormediationproceedingsaccordingtothetermsofthecontractbetweentheparties.

Subp.2.Limitations.Thecommissionermaynotacceptarequestundersubpart1ifthecontract

governingthedisputebetweenthepartiescontainsanarbitrationormediationclause,andif:

1572.0020AGRICULTURALCONTRACTS2

A.mediationorarbitrationprocedureshavestartedbeforeamediatororarbitratorwhohas

beenappointedinaccordancewiththecontractorwhootherwiseisagreeabletotheparties;or

B.whetherornotmediationorarbitrationhasstarted,thearbitrationormediationclauseor

termsadoptedunderitcontainsamechanismfordesignatingamediatororarbitratorthepartiesarelegally

obligatedtouseundertheUniformArbitrationActortheMinnesotaCivilMediationAct,whicheveris

appropriate.

Subp.3.Noreview.Thecommissionershallnotreviewdecisionsmadeunderamediationor

arbitrationproceedingbetweenacontractorandaproducer,orotherwiseprovideservicesundersubpart

1relativetoamatterthatwasdisputedinthearbitrationormediationproceedings.

Subp.4.Findings.Thendingsandorderofanarbitratorunderthispartareprimafacieevidence

ofthematterscontainedinthem.

Subp.5.Seed.Ifarbitrationisrequiredinacontractforseed,asdenedinMinnesotaStatutes,

section21.81,subdivisions3,8,and32,thearbitrationprocedureinitemsAtoCapplies.

A.Anoticeinthefollowingform,orequivalentlanguagemustbepartofaseedcontract:

"Arbitrationisrequiredasapreconditionofmaintainingcertainlegalactions,counterclaims,or

defensesagainstasellerofseedfordamagesforthefailureofseedforplantingtoproduceorperformas

representedbyaseedtagorlabel."

B.Thecommissionershallappointanarbitrationcouncilcomposedofvemembersandve

alternatemembers.Onememberandonealternatemustbeappointedupontherecommendationofeachof

thefollowing:

(1)thedeananddirectoroftheCollegeofAgriculture,UniversityofMinnesota;

(2)thedirectoroftheMinnesotaAgriculturalExperimentStation;

(3)thepresidentoftheMinnesotaCropImprovementAssociation;

(4)thepresidentofafarmorganizationdesignatedbythecommissioner;and

(5)thecommissioner.

Analternatemembermayserveonlyintheabsenceofthememberforwhomthepersonisanalternate.

Thecouncilshallselectachairandasecretaryfromitsmembership.Thechairshallconductmeetings

anddeliberationsofthecouncilanddirectallofitsotheractivities.Thesecretaryshallkeepaccuraterecords

ofallmeetingsanddeliberationsandperformotherdutiesforthecouncilasthechairmaydirect.

Thepurposeofthecouncilistoconductarbitrationasprovidedinthispart.Thecouncilmaybecalled

intosessionbyoratthedirectionofthecommissionerorupondirectionofitschairtoconsidermatters

referredtoitbythecommissionerorthechairinaccordancewiththispart.

C.Procedures:

(1)Abuyermayinvokearbitrationbylingasworncomplaintwiththecommissioner.

Thebuyershallserveacopyofthecomplaintuponthesellerbycertiedmail.Exceptincaseofseedthat

hasnotbeenplanted,theclaimsmustbeledwithinatimethatpermitseffectiveinspectionoftheplants

undereldconditions.

(2)Within15daysafterreceiptofacopyofthecomplaint,thesellershalllewiththe

commissionerananswertothecomplaintandserveacopyoftheansweruponthebuyerbycertiedmail.

3AGRICULTURALCONTRACTS1572.0030

(3)Thecommissionershallreferthecomplaintandanswertothecouncilfor

investigation,ndings,andrecommendations.

(4)Uponreferralofacomplaintforinvestigationthecouncilshallmakeapromptandfull

investigationofthematterscomplainedofandreportitsndingsandrecommendationstothecommissioner

within60daysofthereferraloralaterdateasthepartiesmaydetermine.

(5)Thereportofthecouncilmustincludendingsoffactandrecommendationsasto

costs,ifany.

(6)Inthecourseofitsinvestigation,thecounciloranyofitsmembersmayexaminethe

buyerandtheselleronallmattersthecouncilconsidersrelevant;maygrowtoproductionarepresentative

sampleoftheseedthroughthefacilitiesofthecommissioneroradesignateduniversityunderthe

commissioner'ssupervisionifconsiderednecessary;andmayholdinformalhearingsatatimeandplace

thecouncilchairmaydirectuponareasonablenoticetoallparties.

(7)Thecouncilmaydelegatealloranypartofaninvestigationtooneormoreofits

members.Anydelegatedinvestigationmustbesummarizedinwritingandconsideredbythecouncilinits

report.

(8)Afterthecouncilhasmadeitsreport,thecommissionershallpromptlytransmitthe

reportbycertiedmailtoalltheparties.

(9)Allexpensesofthearbitration,includingrequiredtravelandotherexpensesofthe

council,mustbeborneequallybytheparties,unlessthecouncil,intheaward,assessestheexpensesorany

partofthemagainstaspeciedpartyorparties.

Subp.6.Clauserequired.Contractmediationorarbitrationclausesarerequiredincontractssigned

byMinnesotaproducers.

Subp.7.Samplecopiesofcontracts.Acontractorusingawrittencommoditycontractmustsubmit

tothecommissionerasamplecopyofeachcontractofferedtoproducers.Schedulesofpricesandcharges

neednotbeincluded.Contractsamplesmustbesubmittedtothecommissionerandmadeavailableto

producersatleast30daysbeforethecontractcropsareplantedorthecontractlivestockisplacedinthe

producer'sfacility.

Subp.8.Effectivedate.MinnesotaStatutes,section17.91,appliesonlytocontractssignedafter

August1,1990.

StatutoryAuthority:MSs17.945

History:15SR1924

PublishedElectronically:May13,2004

1572.0030RECAPTUREOFLARGECAPITALINVESTMENT.

Subpart1.Provisionrequired;denitions.AproducermayrecoverdamagesunderMinnesota

Statutes,section17.92,subdivision1,clause(2),onlyiftheproducerhasawrittencontractualobligation

toprovideacapitalimprovementof$100,000ormore.

Ifacontractstatesinwritingthataproducermustmakealargecapitalinvestmentinorderto

fulllthecontract,thecontractmustcontainaprovisionallowingtheproducertorecoverthroughmutual

agreement,litigation,orotherlegalprocessaportionofthatinvestmentifthecontractisterminatedor

1572.0045AGRICULTURALCONTRACTS4

canceledprematurely."Termination"and"cancellation"donotincludeexpirationofthecontract."Large

capitalinvestment"meansacapitalinvestmentthatcosts$100,000ormoreandhasausefullifeofve

yearsormore.MinnesotaStatutes,section17.92,appliesonlytocontractsthataresignedafterAugust

1,1990.

ProducersreceivingnoticeunderMinnesotaStatutes,section17.92,subdivision2,arenoteligible

forrecaptureddamagesiftheproducerhascommittedamaterialbreachofthecontract.Thedamages

tobedeterminedunderMinnesotaStatutes,section17.92,subdivision1,donotincludepaymentforthe

reasonableusefullifeofanassetthatextendsbeyondthetermofthecontract.

Subp.2.Bondorletterofcredit.Acontractormayterminateacontractifthecontractorsecures

abondorirrevocableletterofcreditinasufcientamounttocovertheprobableclaimifthedamagesthe

producerisentitledtounderMinnesotaStatutes,section17.92,subdivision1,clause(2),havenotbeen

receivedwithin180daysafternoticeofintenttoterminatehasbeengiven.

Subp.3.Relationshiptoproductioncycle.Ifthe180-or90-daynoticeperiodsexpirebeforethe

endofaproductioncycle,thecontractwillnotterminateuntiltheendofthatproductioncycle.Acontractor

mayterminateacontractattheendofaproductioncyclethatoccursbeforetheendofthe180-or90-day

noticeperiodhasexpirediftheproduceragreestothetermination.

StatutoryAuthority:MSs17.945

History:15SR1924

PublishedElectronically:May13,2004

1572.0040PARENTCOMPANYLIABILITY.

Acorporation,partnership,soleproprietorship,orassociationthatthroughownershipofcapitalstock,

cumulativevotingrights,votingtrustagreements,oranyotherplan,agreement,ordevice,ownsmorethan

50percentofthecommonorpreferredstockentitledtovotefordirectorsofasubsidiarycorporationor

providesmorethan50percentofthemanagementorcontrolofasubsidiaryisliabletoasellerofagricultural

commoditiesforanyunpaidclaimorcontractperformanceclaimofthatsubsidiary.

StatutoryAuthority:MSs17.945

History:15SR1924

PublishedElectronically:May13,2004

1572.0045UNFAIRTRADEPRACTICES.

Subpart1.Prohibitedconduct.Unfairtradepracticesprohibitedunderparts1572.0010to

1572.0050includeconductprohibitedbyUnitedStatesCode,title7,sections499ato499s,thePerishable

AgriculturalCommoditiesAct,therulespromulgatedthereunder,CodeofFederalRegulations,title7,

part46,UnitedStatesCode,title7,section181etseq.,thePackersandStockyardsActandtherules

promulgatedthereunder,CodeofFederalRegulations,title7,part201,etseq.

Subp.2.Federalpreemption.Iffederalandstateregulationreidentical,federaljurisdictionand

enforcementcontrolunlessthefederalauthoritydecidesnottoenforcetheregulation.

5AGRICULTURALCONTRACTS1572.0050

StatutoryAuthority:MSs17.945

History:15SR1924

PublishedElectronically:May13,2004

1572.0050DAIRYMARKETINGAGREEMENTS.

Adairymarketingagreementmustcontainaclauseallowingeitherpartytogivetheotherparty30

dayspriorwrittennoticeofintenttoterminatetheagreement.

StatutoryAuthority:MSs17.945

History:15SR1924

PublishedElectronically:May13,2004