August 23, 1985
Mr. Ben Handcock
Executive Director
South Dakota Wheat Commission
Department of Agriculture
Box 549
Pierre, South Dakota 57501
OFFICIAL OPINION NO. 85-36
Wheat Commission Check-off
Dear Mr. Handcock:
You have requested an official opinion from this office based upon the following factual situation:
FACTS:
Many wheat farmers who live in the southwestern part of South Dakota market their wheat at Nebraska elevators. In the past these elevators have collected the South Dakota check-off monies and remitted their quarterly checks to the South Dakota Wheat Commission. This year Nebraska passed legislation requiring all wheat sold within Nebraska boundaries be subject to the Nebraska collection and those elevators involved (primarily seven elevators in northwestern Nebraska with check-off collections totalling $12,594.46 in the last 12-month period) could no longer collect South Dakota's check-off. Nebraska does not have a refund clause as South Dakota does. South Dakota has a reciprocity agreement with North Dakota and Minnesota for check-off collections.
Based upon the above facts, you have asked the following questions:
QUESTIONS:
(1) Is South Dakota's assessment due when wheat is produced in South Dakota and sold in other states?
(2) Does the Wheat Commission have the authority to require out-of-state purchasers to collect South Dakota's assessment?
(3) Can the Wheat Commission require out-of-state purchasers of South Dakota wheat to provide documentation as to the amount of South Dakota wheat they have purchased?
(4) Can the Wheat Commission require out-of-state purchasers of South Dakota wheat to provide names of South Dakota growers who sold wheat to them?
(5) Can Nebraska legally collect its assessment on wheat produced in South Dakota and marketed in Nebraska?
There are two statutes affecting my response to your questions:
SDCL 38-10-22, which states:
There is hereby assessed a promotional fee of five mills per bushel upon all wheat harvested in the state of South Dakota and sold through commercial channels. After January 1, 1986, the promotional fee shall be seven and one- half mills per bushel. The fee is assessed and imposed on the grower at the time of sale or delivery, and shall be collected and remitted by the first purchaser to the wheat commission. Under the provisions of this chapter, no wheat is subject to the fee more than once.
and SDCL 38-10-24:
The fee, provided for by the provision of § 38-10-22, shall be deducted, as provided by this chapter, whether such wheat is stored or sold in this or any other state; provided, however, that if agreements have not been made with dealers outside of the state for collecting the fee herein provided for, that the grower shall remit said fee to the department of agriculture on all wheat so sold by him outside the state.
The Wheat Commission has adopted rules regarding the assessment of the fee upon wheat sold out-of-state; see ARSD Chapter 12:13:03. ARSD 12:13:03:01 and : 02 require that the grower, unless the out-of-state purchaser has executed a fee agreement as provided in SDCL 38-10-24 and ARSD 12:13:03:03, maintain sufficient records and file the fee report and fee that is required on wheat sold out-of-state.
IN RE QUESTION NO. 1:
The answer to your question is YES. The wheat promotional fee is, by SDCL 38-10-22, assessed and imposed on the grower at the time of sale or delivery of wheat. The assessment is due at such sale regardless of whether the sale is instate or out-of-state. The assessment is imposed upon the grower, not the purchaser.
IN RE QUESTION NO. 2:
SDCL 38-10-24 and ARSD Chapter 12:13:03 allows the grower and the out-of- state purchaser to agree that the South Dakota wheat promotional fee will be collected by the out-of-state purchaser. This agreement is actually a contract between the grower and the out-of-state purchaser and simply is a method of handling the grower's obligation to pay the promotional fee to the Wheat Commission.
The answer to your question therefore is NO: the Wheat Commission cannot require out-of-state purchasers to collect South Dakota's assessment; however, SDCL 38-10-24 and ARSD Chapter 12:13:03 establish a procedure whereby the grower, who is obligated to pay the wheat promotional fee to the Wheat Commission, can make an agreement with an out-of-state purchaser such that the purchaser collects the assessment for the grower and remits that fee to the Wheat Commission.
IN RE QUESTION NO. 3:
ARSD 12:13:03:03 requires that the agreement between an out-of-state purchaser and a grower be upon forms supplied by the Commission. These forms require the purchaser to collect the fee and provide a fee report. The 'fee report' is established in ARSD 12:13:02:03, which delineates the information which is required on the fee report form. Thus, the out-of-state purchaser is required to remit certain information with regard to his purchase of South Dakota wheat. If the documentation you refer to in your question is the documentation discussed in your fee report, the out-of-state purchaser, by executing the fee agreement with the grower, must provide that information to the Wheat Commission. The Wheat Commission does have authority to amend its regulations to require additional information should it so desire.
IN RE QUESTION NO. 4:
The Wheat Commission does not have authority to require out-of-state purchasers of wheat to provide the names of growers from whom they purchased wheat. If an agreement has been executed between a grower and an out-of-state purchaser, the fee report will provide this information.
IN RE QUESTION NO. 5:
I decline to render an opinion regarding the constitutionality of Nebraska's statute which imposes a wheat assessment fee upon all wheat marketed within the state of Nebraska.
Respectfully submitted,
Mark V. Meierhenry
Attorney General
