093_HB0264ham001

 










                                     LRB093 06232 BDD 11637 a

 1                    AMENDMENT TO HOUSE BILL 0264

 2    AMENDMENT NO. ____.  Amend House Bill 264  by  replacing  the
 3    title with the following:

 4        "AN ACT concerning agriculture."; and

 5    by  replacing  everything  after the enacting clause with the
 6    following:

 7        "Section 1.  Short title.  This Act may be cited  as  the
 8    Agricultural Production Contract Code.

 9        Section 5.  Definitions.  As used in this Act, unless the
10    context otherwise requires:
11        "Capital  investment" means a purchase or lease of any of
12    the following:
13             (1)  A structure used for  producing  or  storing  a
14        commodity  required  to be provided by the producer under
15        the terms of the production contract if the structure has
16        a useful life in excess of 3 years.  This  includes,  but
17        is  not  limited  to,  swine  farrowing  buildings, grain
18        storage facilities, and manure storage structures.
19             (2)  Machinery or equipment  used  for  producing  a
20        commodity  required  to be provided by the producer under
 
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 1        the terms of the production contract if the machinery has
 2        a useful life in excess of 3 years.  This  includes,  but
 3        is  not  limited  to, trucks, tractors, combines, wagons,
 4        augers, and planters.
 5        "Commodity"   means   livestock,   raw   milk,    fruits,
 6    vegetables, or a crop.
 7        "Contract  input"  means  a  commodity  or  an organic or
 8    synthetic substance or compound that is  used  to  produce  a
 9    commodity,  including  but not limited to, livestock, plants,
10    agricultural seeds, semen or  eggs  for  breeding  livestock,
11    fertilizer, pesticides, or petroleum products.
12        "Contractor"  means  a  person  who  offers, provides, or
13    enters into a production contract with  a  producer  for  the
14    production of commodities in this State by the producer.
15        "Crop"  means  a plant used for food, animal feed, fiber,
16    oil, pharmaceuticals,  nutriceuticals,  industrial  uses,  or
17    seed,   including   but  not  limited  to,  alfalfa,  barley,
18    buckwheat, canola, corn, flax, forage, fruits, millet,  oats,
19    popcorn,   rye,   sorghum,   soybeans,  sunflowers,  tobacco,
20    vegetables, wheat, and grasses used for forage or silage.
21        "Livestock" includes, but is not limited to, beef cattle,
22    dairy cattle, poultry, sheep, or swine.
23        "Person" means an individual or entity, including but not
24    limited  to,  a  sole  proprietorship,   a   partnership,   a
25    corporation,   a   cooperative,  an  association,  a  limited
26    liability company, an estate, or a trust.
27        "Produce" means to do any of the following:
28             (1)  Provide feed or services relating to  the  care
29        and  feeding  of  livestock.  If  the  livestock is dairy
30        cattle, then "produce" includes milking the dairy  cattle
31        and storing raw milk.
32             (2)  Provide   for  planting,  raising,  harvesting,
33        identity preserving, or storing a crop.
34        "Produce" includes preparing the soil  for  planting  and
 
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 1    also for nurturing the crop by the application of fertilizers
 2    or  soil  conditioners,  including those substances regulated
 3    under the Illinois Fertilizer Act of 1961, or  pesticides  as
 4    defined in the Illinois Pesticide Act.
 5        "Producer" means a person who has been offered or who has
 6    entered  into  a contract to produce a commodity.  "Producer"
 7    does not include a fertilizer or pesticide applicator, a feed
 8    supplier, or a veterinarian, when acting in that capacity.
 9        "Production contract" means:  (1)  Any  written  document
10    offered to or executed by a producer, under the provisions of
11    which  (i)  the  producer  would sell to a contractor, or the
12    contractor's designee, an identified commodity or commodities
13    and (ii) the contractor has, or  exercises  some  control  or
14    direction  over,  the  production process; or (2) any written
15    agreement offered to or executed  by  a  producer  under  the
16    provisions  of which the producer would produce, care for, or
17    raise a commodity or commodities not owned by  the  producer,
18    using  land,  equipment, or facilities owned or leased by the
19    producer, in exchange for  payment.   For  purposes  of  this
20    definition,  control or direction over the production process
21    includes  (i)  the  contractor's   designation   of   special
22    commodity   characteristics,   such   as   those  present  in
23    value-enhanced grains, or specific genetics in  livestock  or
24    (ii) the contractor's designation of a production input, such
25    as  a seed variety, to be used by the producer to fulfill the
26    production contract.

27        Section 10.  Limited applicability.  This Act  shall  not
28    apply  to a production contract under the provisions of which
29    the commodity is to be  delivered  by  the  producer  to  the
30    contractor  or the contractor's designee within 30 days after
31    the date of the production agreement.

32        Section 20.  Readability of production contracts.
 
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 1        (a)  A production contract must comply with  all  of  the
 2    following:
 3             (1)    It must be in a typeface at least as large as
 4        10-point modern, one-point leaded.
 5             (2)  It must be divided and captioned by its various
 6        sections, have an index of the major  provisions  of  the
 7        production  contract  and  the  pages  on  which they are
 8        found, and use commonly-used  and  understood  words  and
 9        terms,  but  may  include  technical  or  industry  terms
10        customarily  used  and  understood  by  producers  in the
11        ordinary course of business.
12             (3)  It must limit references to other  sections  or
13        provisions  and,  when  incorporating  a document, have a
14        copy of the document attached.
15             (4)  It  must   have   a   Flesch   scale   analysis
16        readability score of at least 50.
17        (b)  A  contractor  may  include a provision in the index
18    required by Section 25 that  the  production  contract  being
19    offered   meets  the  requirements  of  this  Section  as  to
20    readability.

21        Section 25.  Index.  An index of the  major  portions  of
22    the  contract  and  the pages on which they are found must be
23    included with each production contract offered to a  producer
24    that  exceeds  2  pages  in  length.   The index must contain
25    references for any of the following that are included in  the
26    contract:
27             (1)  The names of the parties to the contract.
28             (2)  The definition sections of the contract.
29             (3)  The provisions governing cancellation, renewal,
30        or amendment of the contract by either party.
31             (4)  The    sections   outlining   the   duties   or
32        obligations of each party.
33             (5)  The compensation information.
 
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 1             (6)  Any  provisions  subject  to  change   in   the
 2        contract.
 3             (7)  Any  special  provisions relative to production
 4        guidelines.

 5        Section  30.   Confidentiality  clauses.   A   production
 6    contract   may   include  a  confidentiality  provision,  but
 7    communications with  any  of   the  following  shall  not  be
 8    considered  a breach of any such provision:  (i) a producer's
 9    spouse; (ii) a producer's parents, siblings, and children  of
10    the   age   of   majority  if  these  persons  are  partners,
11    shareholders,  officers,  or  directors  of  the   producer's
12    agricultural  operations;  (iii) accountants; (iv) attorneys;
13    (v)  bankers;  (vi)  financial   institutions;   (vii)   farm
14    managers;  (viii)  trusts or trust beneficiaries; or (ix) the
15    partners,  officers,   or   directors   of   the   producer's
16    agricultural   operations.   When  communicating  with  these
17    persons, the producer must request each person to  treat  the
18    information as privileged and confidential.

19        Section   35.    Special  provisions.   If  a  production
20    contract  requires  any  special   production   or   handling
21    guidelines required by the producer, these provisions must be
22    fully  explained  in the contract.  These provisions include,
23    but are not limited to, disease protocols for  livestock  and
24    segregation or identity preservation for grain.

25        Section 40.  Termination or alteration of contracts.
26        (a)  A  contractor  may  not provide, offer, or execute a
27    production   contract   that   allows   the   contractor   to
28    unilaterally  terminate   the   contract   unless   (i)   the
29    termination  is  the  result of a legitimate force majeure as
30    applied to the contractor or (ii)  the  producer  breaches  a
31    material  term  of  the  contract or voluntarily abandons the
 
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 1    contractual relationship.
 2        (b)  A contractor may not alter the quality, quantity, or
 3    delivery times of contract inputs provided to  the  producer,
 4    unless agreed to by the producer.
 5        (c)  Any  cancellation  or  termination  provisions  must
 6    include  specific  causes for the cancellation or termination
 7    and any circumstances  under  which  the  commodity  produced
 8    under  the contract might be rejected in whole or part by the
 9    contractor.
10             (d)  Any circumstances in which the compensation  to
11    be  paid  by  a producer may be discounted or increased shall
12    include specific causes to be clearly and concisely stated.

13        Section 45.   Investment requirements.
14        (a)  This Section applies  to  all  production  contracts
15    that have capital investment requirements.
16        (b)  Except  as  provided in subsection (c), a contractor
17    shall not take action to terminate  or  cancel  a  production
18    contract until the contractor has done the following:
19             (1)  Provided  the  producer  with written notice of
20        the intention to terminate or cancel  at  least  60  days
21        before   the   effective   date  of  the  termination  or
22        cancellation.
23             (2)  Reimbursed the contract producer for the  value
24        of  the  remaining  useful life of the capital investment
25        items.  In calculating  this  reimbursement  amount,  the
26        contractor  may  take into account the producer's ability
27        to  use  the  capital  investments  in   other   business
28        enterprises of the producer and the opportunity to recoup
29        the cost of the capital improvements by sale or lease.
30        (c)  Exceptions.   A contractor may terminate or cancel a
31    production contract without remedy as required in  subsection
32    (b)  if  the basis for the termination or cancellation is any
33    of the following:
 
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 1             (1)  A  voluntary  abandonment  of  the  contractual
 2        relationship by the producer.  A complete  failure  of  a
 3        producer's  performance under a production contract shall
 4        be deemed to be abandonment.
 5             (2)  Failure of the producer to  meet  the  specific
 6        provisions  of  the contract and failure to remedy his or
 7        her default.
 8             (3)  The conviction of a producer of an  offense  of
 9        fraud or theft committed against the contractor.

10        Section   50.    Enforcement;  offenses;  remedies.   The
11    Attorney General is primarily responsible for enforcing  this
12    Act.
13        A person who violates Section 20, 25, 30, or 35 commits a
14    business offense under the Code of Civil Procedure.
15        A  producer  may  recover his or her actual damages for a
16    contractor's violation of Section 40 or 45 of this Act.

17        Section 55.  Statute of  limitations.   A  claim  that  a
18    production  contract violates this Act must be filed within 4
19    years  after  the  date  on  which  the  party  alleging  the
20    violation knew or should have known of the existence  of  the
21    violation.

22        Section  60.   Conflict with the Uniform Commercial Code.
23    To the extent that any provision of this Act  conflicts  with
24    or   is  inconsistent  with  any  provision  of  the  Uniform
25    Commercial Code, the provision of this Act shall control.

26        Section 90.  The Uniform Commercial Code  is  amended  by
27    adding Section 1-104b as follows:

28        (810 ILCS 5/104b new)
29        Sec. 1-104b.  Agriculture Production Contract Code.  This
 
                            -8-      LRB093 06232 BDD 11637 a
 1    Act   is   subject  to  the  provisions  of  the  Agriculture
 2    Production Contract Code.

 3        Section 99.  Effective date.  This Act  takes  effect  on
 4    January 1, 2005.".