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The following opinion is presented on-line for informational use only and does not replace the official version. (Mich Dept of Attorney General Web Site - www.ag.state.mi.us)



STATE OF MICHIGAN

FRANK J. KELLEY, ATTORNEY GENERAL


Opinion No. 6450

July 9, 1987

AGRICULTURAL MARKETING AND BARGAINING ACT:

Exemption of agricultural cooperatives

The Legislature has not provided for the exemption of agricultural cooperatives from the operative provisions of the Agricultural Marketing and Bargaining Act.

Honorable D.J. Jacobetti

State Representative

The Capitol

Lansing, Michigan 48913

You have requested my opinion on the question whether the Legislature has provided for the exemption of agricultural cooperatives from the Agricultural Marketing and Bargaining Act, 1972 PA 344, MCL 290.701 et seq; MSA 12.94(101) et seq.

As stated in its title, Act 344 permits producers of agricultural commodities to be represented by associations, provides for the accrediting of associations by an agricultural marketing and bargaining board, establishes obligations of handlers and associations, defines unfair practices, provides for arbitration, and prescribes penalties.

The Legislature has defined certain terms used in Act 344 in Sec. 2. Pertinent to your inquiry are the definitions of "association," "accredited association," "producer," and "handler":

"(a) 'Association means a cooperative association of producers or a division thereof, or federation of cooperative associations of producers engaged in the marketing, bargaining, shipping or processing functions of an agricultural commodity on behalf of its members who are producers of such agricultural commodity.

"(b) 'Accredited association' means an association accredited in accordance with this act.

"(e) 'Producer' means any person who produces or causes to be produced in any 1 marketing period within the previous 2 marketing periods, any agricultural commodity in quantity beyond his own family use and having a minimum value at first point of sale as determined by the board for that agricultural commodity, and who is able to, during the marketing period transfer to a handler or an association a merchantable title to the agricultural commodity or provide management, labor, machinery, facilities or any other production input, with the assumption of risk, for the production of the agricultural commodity under a written or oral contract.

"(g) 'Handler' means a person other than an association engaged in the business or practice of acquiring agricultural commodities from producers or associations for processing or sale; grading, packaging, handling, storing or processing agricultural commodities received from producers or associations; ...." (Emphasis added.)

Act 344, Sec. 13, empowers an accredited association to be the exclusive representative of all producers, members and nonmembers, in the bargaining unit for the purpose of bargaining with all handlers that purchase the agricultural commodity produced in the bargaining unit.

Act 344, Sec. 4, lists certain rights of producers and prohibits certain unfair practices by a "handler" or an "association." Section 4 states, in pertinent part:

"(1) Producers of agricultural commodities are free to join together voluntarily in associations as authorized by law without interference by handlers. A handler shall not engage nor permit an employee or agent to engage in any of the following practices, defined as unfair practices:

(a) To coerce a producer in the exercise of his right to join and belong to or to refrain from joining or belonging to an association or to refuse to deal with a producer because of the exercise of his right to join and belong to an association except as provided in section 15.

(b) To discriminate against a producer with respect to price, quantity, quality or other terms of purchase, acquisition or other handling of agricultural products because of his membership in or contract with an association.

(c) To coerce or intimidate a producer to breach, cancel or terminate a membership agreement or marketing contract with an association or a contract with a handler.

(d) To pay or loan money, give anything of value or offer any other inducement or reward to a producer for refusing or ceasing to belong to an association.

(e) To make or circulate unsubstantiated reports about the finances, management or activities of associations or handlers.

(f) To conspire, combine, agree or arrange with any other person to do or aid or abet the doing of any practice which is in violation of this act.

(g) To refuse to bargain with an accredited association with whom the handler has had prior dealings or with an accredited association whose producers in the bargaining units have had substantial dealing with the handler prior to the accreditation of the association.

(h) To negotiate with a producer included in the bargaining unit after an association is accredited.

"(2) An association shall not engage nor permit an employee or agent to engage in the following practices, defined as unfair practices:

(a) To enter into a contract which discriminates against a producer represented by an accredited association whether or not he is a member producer.

(b) To act in a manner contrary to the by-laws of the association.

(c) To refuse to bargain with a handler with whom the accredited association has had prior dealing or with whom its producers have had substantial dealing prior to the accreditation of the association.

(d) To coerce or intimidate a handler to breach, cancel or terminate a membership agreement or marketing contract with an association or a contract with a producer.

(e) To make or circulate unsubstantiated reports about the finances, management or activities of other associations or handlers.

(f) To conspire, combine, agree or arrange with any other person to do or aid or abet the doing of any practice which is in violation of this act."

A study of the legislative history of 1972 SB 1255 indicates that Sec. 4(2) was not included in the bill when it was passed by the Senate. 1972 Journal of Senate, 812, 885, 924. It was inserted by the House in SB 1225-House Substitute, 1972 Journal of House 4168, 4174, and enacted into law without further change. 1972 Journal of House, 3118, 3255. 1972 Journal of Senate, 2229.

Reading Act 344, Sec. 4(1) and (2), in light of the definitions of "association" and "accredited association" contained in Sec. 2, the intent of the Legislature is manifest that cooperative associations of producers are subject to the provisions of Sec. 4(2).

It is also necessary to consider Act 344, Sec. 7, to ascertain whether the Legislature has provided any exemptions for agricultural cooperatives therein. Act 344, Sec. 7, deals with the accrediting of an association by the Agricultural Marketing and Bargaining Board and provides, in pertinent part:

"An association shall be accredited upon determination by the board that the association meets all of the following:

"(a) The association meets the requirements of the Capper-Volstead act, 7 U.S.C. 291-2.

"(b) The association has submitted a copy of its bylaws which provide that: Each member of the association shall have 1 vote in all votes of the membership of the association; that officers or directors shall be elected by a majority of the members voting or by delegates representing a majority of the membership; and that all elections be by secret ballot.

"(c) The association has marketing and bargaining contracts for the current or next marketing period with more than 50% of the producers of an agricultural commodity who are in the bargaining unit and these contracts cover more than 50% of the quantity of that commodity produced by producers in the bargaining unit. The board may determine the quantity produced by the bargaining unit using information on production in prior marketing periods, current market information, and projections on production during the current market periods. The board shall exclude from that quantity any quantity of the agricultural commodity contracted by producers with producer owned and controlled processing cooperatives and any quantity produced by handlers. An association whose main purpose is bargaining but which processes a surplus into a form which is not the subject of bargaining is not a processing cooperative. The contracts with members shall specify the agricultural commodity and that the members have appointed the association as their exclusive agent in negotiations with handlers for prices and other terms of trade with respect to the sale and marketing of the agricultural commodity and obligate them to dispose of their production or holdings of the agricultural commodity through or at the direction of the association." (Emphasis added.)

A fair reading of the provisions of Act 344, Sec. 7(a), (b), and (c), reveals no exemption for agricultural cooperatives from the provisions of Act 344. Rather, these provisions list the steps for the accrediting of an association as the exclusive agent in negotiation with handlers for prices and other terms of the sale and marketing of the agricultural commodity within a bargaining unit. The Agricultural Marketing and Bargaining Board is to approve an association if it determines that the association (1) has marketing and bargaining contracts for the current or next marketing period with more than 50% of the producers of an agricultural commodity within the bargaining unit and (2) these contracts cover more than 50% of the quantity of the commodity produced by the producers in the bargaining unit. The latter determination, however, shall not include (1) any quantity of the agricultural commodity contracted by producers with producer-owned and controlled processing cooperatives, and (2) any quantity produced by handlers. By providing for these two exclusions, the Legislature was evincing an intent that the process for accrediting of an association relate to the quantity of the agricultural commodity produced by producers in a bargaining unit for sale to handlers.

It follows that the Legislature has not provided for the exemption of agricultural cooperatives from the provisions of the Agricultural Marketing and Bargaining Act.

It is noted that in Michigan Canners & Freezers Ass'n, Inc v Agricultural Marketing & Bargaining Bd (After Remand), 416 Mich 706, 712; 332 NW2d 134 (1982), the constitutionality of Act 344 was challenged on three grounds:

"1) The Michigan act conflicts with and is, therefore, pre-empted by the Federal Agricultural Fair Practices Act of 1967, 7 USC 2301 et seq ...;

"2) The Michigan act is facially unconstitutional because it exceeds the state's police power; and

"3) The Michigan act's provisions exceed the scope of its title in violation of the Michigan Constitution."

The court upheld the constitutionality of Act 344 in each respect. The United States Supreme Court reversed in 467 US 461; 104 S Ct 2518; 81 L Ed 2d 399 (1984), holding that, to the extent that provisions of Act 344 purport to accord accrediting associations within a bargaining unit exclusive authority for the sale of agricultural products, they are preempted by 7 USC 2303. In a unanimous opinion the Court expressly considered the terms of Act 344 which permit accredited associations to bind nonmember producers without their consent to the terms of certain marketing contracts (Act 344, Sec. 13), permit such associations to sell the products of nonmember producers according to terms established by the association (Act 344, Sec. 13), preclude nonmember producers from selling their produce themselves (Act 344, Sec. 4(1)(h), force nonmember producers to pay a service fee to the association (Act 344, Sec. 10(1)), and held them to be in conflict with and preempted by 7 USC 2303.

After Remand, the Michigan Supreme Court remanded the case to the Ingham County Circuit Court for consideration of the stipulation for entry of a final judgment and permanent injunction and entry of a final judgment. 422 Mich 862; 365 NW2d 760 (1985). The final judgment entered by the Ingham County Circuit Judge Thomas L. Brown, on July 22, 1985, in pertinent part, provides:

1. Act 344, Sec. 4(1)(h), MCL 290.704(1)(h); MSA 12.94(104)(1)(h), is unconstitutional and void as applied to non-member producers.

2. Act 344, Sec. 10(1), third sentence and fifth sentence, and Sec. 10(2), final sentence, MCL 290.710(1), third sentence and fifth sentence, and subsection (2), final sentence; MSA 12.94(110)(1), third sentence and fifth sentence, and subsection (2), final sentence, are unconstitutional and void as applied to non-member producers.

3. Act 344, Sec. 13(1), third sentence, MCL 290.713(1); MSA 12.94(113)(1), third sentence, is unconstitutional and void as applied to non-member producers.

4. Act 344, Sec. 15, first sentence, MCL 290.715, first sentence; MSA 12.94(115), first sentence, is unconstitutional and void as applied to non-member producers.

5. Non-member producers may deal with and make sales of producer to any handler without payment of fees to an accredited association.

While nonmember producers are not subject to the aforesaid provisions of 1972 PA 344 by virtue of the decision in Michigan Canners & Freezers Ass'n, Inc v Agricultural Marketing & Bargaining Bd, 467 US 461; 104 S Ct 2518; 81 L Ed 2d 399 (1984), agricultural cooperatives have not been exempted from 1972 PA 344.

It is my opinion, therefore, that the Legislature has not provided for the exemption of agricultural cooperatives from the operative provisions of the Agricultural Marketing and Bargaining Act, 1972 PA 344.

Frank J. Kelley

Attorney General


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