PIERRE, S.D. (KELO) — State regulators voted unanimously Wednesday for their lawyers to seek a temporary order in circuit court prohibiting grain transactions in South Dakota by Jeremey Frost of Onida and a business he runs, until the question is resolved whether he needs a state grain-buyer’s license.
His lawyer, Rob Konrad, told the state Public Utilities Commission they didn’t oppose the attempt to get the court order. Konrad said the position could change after he sees the wording.
PUC lawyer Amanda Reiss said she and other commission staff became aware that Frost through some of his other businesses also conducted grain transactions that fall outside of commission jurisdiction.
Reiss said Frost and his company, Fearless Grain Marketing, were warned numerous times that a grain-buyer’s license was needed. She said recent advertising suggests they continued to seek purchases.
Frost and Fearless Grain Marketing are accused of violating a state law that requires grain buyers to be licensed by the commission and a state law that sets timelines for when farmers must be paid for grain.
His attorney said Frost filled out an application for a grain-buyer’s license but hasn’t been able to get the state-required bond to complete it. His attorney said a hunch is the first bonding company hesitated because Frost has been sued in federal court in Tennessee by an agricultural company.
At the witness table, Konrad stood to answer questions from commissioners while his client sat. Konrad said he isn’t aware of any grain producer who’s been financially hurt or took a loss as a result of Frost’s activities. Konrad said Frost intends to pay any pending obligations and read a list of names of prominent Onida-area producers who Konrad said support Frost.
Konrad said the lack of a license was more of a compliance issue than a matter of putting any farmers at financial risk.
The commission’s attorney said the “main purpose” of the complaint was protecting farmers. “There’s a lot of large transactions,” Reiss said. The goal is preventing a larger problem, she said.
Konrad said he’s discussed compliance with Frost and others in Fearless Grain Marketing’s office and advised them against further transactions while the licensing matter is unresolved. He said Frost has been “actively looking” for another bonding company.
“All I can say is, compliance matters in South Dakota,” commissioner Kristie Fiegen said.
Attorneys for the two sides said several times they want the matter resolved “amicably.” Commission chairman Chris Nelson called for allowing the commission’s lawyers to pursue the court injunction.
“Obviously we don’t want to come to brass knuckles on it. If we have to, we will,” Nelson warned.
After the commission voted 3-0 to seek the court order, three people from the grain industry spoke to the commission.
One was Tim Luken, general manager of Oahe Grain Corporation of Onida. He said grain elevators are required to follow state laws and regulations and the same should be true for all in the grain industry. He asked whether there had been any recent South Dakota legislation on what he called “roving grain buyers.”
Commissioner Nelson said there hadn’t been. Nelson emphasized grain buyers need to be licensed whether they are roving or brick and mortar.
Kathy Zander, executive director for South Dakota Grain and Feed Association, said “middle men” in the grain business need to be regulated by state laws, too. Zander said North Dakota has a roving grain-buyer law that could work in South Dakota.
Brenda Forman, executive director for South Dakota Association of Cooperatives, encouraged the commission to look at regulating grain brokers. “We do have issues we need to address,” she said.
Forman noted that cooperatives have to be Financially transparent to their members.
Chairman Nelson asked whether Forman and Zander would be willing to draft legislation for the commission to consider. They agreed.