STATE OF SOUTH DAKOTA
OFFICE OF
THE ATTORNEY GENERAL
December 12, 1975
Mr. Robert N. Duxbury, Secretary
Department of Agriculture
Anderson Building
Pierre, South Dakota 57501
OFFICIAL OPINION NO. 75-195
Tonnage inspection fee on commercial feeds
Dear Secretary Duxbury:
You have requested an official opinion from this office based on the following factual situation:
The 1975 Legislature authorized the Department of Agriculture an auditor for purposes of auditing feed and fertilizer inspection fees paid by industry to the state. The auditor in his audits finds that the feed industry is not paying inspection fees on customer formula feeds which they mix, and more specifically, they are not paying the inspection fee on those ingredients which the customer furnishes as ingredients to the feeds.
Based on the above factual situation you ask:
Is industry responsible for the inspection fee in SDCL 39-14-41 on customer formula feeds and, if so, specifically, is industry responsible for the inspection fee on customer formula feeds when the farmer furnishes any or part of the ingredients?
Relevant statutes in regard to your question are:
39-14-43 - An inspection fee at the rate of sixteen cents per ton shall be paid on commercial feeds distributed in this state by the person who distributes the commercial feed to the consumer subject to the following:
(1) No fee shall be paid on a commercial feed if the payment has been made by a previous distributor.
(2) No fee shall be paid on customer-formula feeds if the inspection fee is paid on the commercial feeds which are used as ingredients therein.
(3) No fee shall be paid on commercial feeds which are used as ingredients for the manufacture of commercial feeds which are registered. I f the fee has already been paid, credit shall be given for such payment.
(4) In the case of commercial feed which is distributed in the state only in packages of ten pounds or less, an annual fee of twenty-five dollars shall be paid in lieu of the inspection fee specified above.
(5) The minimum inspection fee shall be five dollars per quarter.
39-14-39 provides in part:
(4) The term "commercial feed" means all material except unmixed seed, whole or processed, when not adulterated within the meaning of §§ 39-14-46 to 39-14-52, inclusive which are distributed for use as feed or for mixing in feed. Provided, that the secretary of agriculture by regulation may exempt from this definition, or from specific provisions of this chapter, commodities such as hay, straw, stover, silage, cobs, husks, hulls, and individual chemical compound, or substances when such commodities, compounds or substances are not inter-mixed or mixed with other materials and are not adultered within the meaning of §§ 39-14-46 to 39-14-52, inclusive.
(8) The term "customer-formula feed" means commercial feed which consists of a mixture of commercial feeds and/or feed ingredients each batch of which is manufactured according to the specific instructions of the final purchaser.
SDCL 39-14-41 provides:
No person shall distribute in this state a commercial feed, except a customer-formula feed, which has not been registered pursuant to the provisions of this section. The application for registration shall be submitted in the manner prescribed by the secretary of agriculture. Upon approval by the secretary the registration shall be issued to the applicant. All registrations expire on the thirty-first day of December of each year.
In view of the provisions of SDCL 39-14-43, it appears that if the inspection fee has been paid on the commercial feeds which are used as ingredients in the customer-formula feed, no further inspection fee is to be charged. If, however, the commercial feeds used as ingredients in the customer-formula feeds have not been inspected and the fee has not been paid, it appears that the inspection fee is required.
The specific question you ask focuses on the inspection fee for customer-formula feeds when a farmer furnishes any or part of the ingredients. Pursuant to the definition of commercial feed in SDCL 39-14-39(4), "farmer furnished ingredients" are not being distributed for use as feed or for mixing in feed. Consequently, it is my opinion that the industry is not responsible for the inspection fee on any portion of customer-formula feeds, the ingredients of which are furnished by the farmer.
If the farmer does not furnish any part of the ingredients for customer-formula feed, but purchases it all from the industry, SDCL 39-14-43(2) would still prohibit the collection of an inspection fee if the inspection fee has been paid on the commercial feeds which were used as ingredients therein. If such inspection fee has not been paid, then, in my judgment, the sixteen cent per ton fee provided for in SDCL 39-14-43 would be properly required.
Respectfully submitted,
William Janklow
Attorney General
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