PIERRE, S.D. (KELO) — A Gettysburg company that contracts with a grain marketer who’s been previously disciplined for violating state regulations won’t get a less-restrictive license to trade grain in South Dakota — at least not yet.
The state Public Utilities Commission on Tuesday denied the Class A license application from Banghart Properties. The commission also set a schedule for considering allegations that Banghart Properties violated conditions of its more-restrictive Class B grain-trading license.
A commission staff attorney on January 12, 2023, issued a cease and desist letter against Banghart Properties. The letter demanded that the company stop “any further operation as a grain buyer by making any additional grain purchases in South Dakota” because the $5 million limit on transactions by a Class B license holder allegedly had been exceeded. Grain trading licenses expire on June 30.
Company owner Jan Banghart contracts with two grain marketers. One is her son Jeremey Frost of Onida, who had been fined by the commission several years ago for operating as an unlicensed grain trader. Frost had been a grain marketer for CHS before going on his own; he had testified on April 27 that he understood he was supposed to follow state laws but he would put farmers first if necessary.
The commission’s vote Tuesday was 3-0 to deny the Class A license. Changing their minds might have resulted from Amanda Reiss, a staff attorney for the commission, filing a motion on Monday asking for additional testimony to be allowed, because evidence had recently surfaced that Banghart conducted a transaction in January after the cease and desist letter.
The transaction occurred between a producer with a Scranton, North Dakota address whose grain was in a bin on the South Dakota side of the border, near Ludlow, and the end buyer in Watertown. Banghart’s attorney, Robert Konrad, said it was a North Dakota transaction, and North Dakota grain tax was paid on the wheat, and didn’t count toward the South Dakota limit. Konrad however acknowledged that the grain went to a South Dakota buyer.
Commissioner Gary Hanson said that Banghart Properties appeared in many respects to qualify for a Class A license. “But what I find most troubling of the whole process is that Mister Frost stated he would continue to break the law to benefit the producer, and there’s alternatives to that, as has been explained,” Hanson said.
Hanson added that there would need to be conditions on a Class A license if one was granted at some later time, but in the meantime Banghart Properties needed to show that “laws are followed and not just skirted…I know that Jan has said she’ll keep an eye on it. We have to see first, to see whether it’s done properly or not.”
Hanson indicated that, in his mind, the door was still open to a Class A license, eventually. “And I don’t mean this to be a long duration. I can see this going through the first harvesting here, and seeing how well you do, and then frankly I would — if it’s clean, what you’ve been doing, if you’ve been following the law, then I would be supportive of a Class A.”
“Flat truthfulness” was the first reason that commissioner Chris Nelson cited for denying Banghart’s Class A application.
“When we had testimony under oath they were complying with the cease and desist, and then we find out after that fact that that was not the case, we had a real issue with truthfulness,” Nelson said. “And we can’t issue a license to a business that our regulators, our inspectors and our farmers can’t trust. That’s basic.”
Commission chair Kristie Fiegen said she had been willing to consider granting the Class A license with conditions, until the commission staff found the transaction that occurred after the cease and desist letter letter was issued. “At the end of the day, I have chosen that maybe that would not work, because honesty and truthfulness, accuracy of records matter, and that matters for our producers,” Fiegen said.
Frost addressed the commission during the public-comment period afterward.
Some of Frost’s remarks referred to three people in the back of the meeting room: Tim Luken, general manager for Oahe Grain Corporation; Kathy Zander, who lobbies for the South Dakota Agri-Business Association; and Brenda Forman, who lobbies for the South Dakota Association of Cooperatives.
Frost told the commissioners their decision came at “a very high cost to the producers” and said, “You guys failed to realize what this whole thing was about.”
Frost told the commissioners they had ignored information he had sent alleging that Cody Chambliss, who oversees the commission’s grain-warehouse inspections, hadn’t been doing his job. Frost, sounding just as bristly as he did on April 27, said that “big ag” has been “screwing the farmers” and that producers have been paid late “all the time” throughout the industry.
“I take pride in doing what’s right for farmers,” Frost said. He added, “Guys don’t want to do business with companies that are ripping them off all the time.”