PIERRE — State regulators decided Tuesday to seek receivership of a failed grain company and sell it to farmers, who then could make financial claims against a second company for millions of dollars the first company hasn’t paid them.
The South Dakota Public Utilities Commission decided to take that complex route Tuesday. The three commissioners voted unanimously that their agency’s lawyers should ask a state judge for permission to take over assets for H&I Grain of Hetland.
The actual target is CHS Hedging, a Minnesota-based company with grain elevators in some South Dakota communities.
CHS Hedging has an active lawsuit against Duane and JoAnne Steffensen, owners of H&I Grain, for $1.9 million.
They signed a personal guarantee for son Jared Steffensen to make grain trades through CHS.
Commissioner Chris Nelson proposed Tuesday to sell H&I Grain to the farmers, who are from Kingsbury, Clark, Beadle, Brookings, Lake and Minnehaha counties.
The commission lacks funds to pursue a legal claim, Nelson said, and would need money from the Legislature and the governor that he wasn’t confident would come.
Commissioner Gary Hanson and Chairwoman Kristie Fiegen praised Nelson for his creativity.
“This petition seeks justice for the citizens of South Dakota,” Hanson said. He added, “I believe strongly the commission does have jurisdiction over this matter.”
“You guys are South Dakota people,” Fiegen told farmers in the audience, her voice at its edge. “And the industry of agriculture is our No. 1 industry. You take risks every single day. And you trust, and you trust, and here there may have been some bad actors.”
She added, “It gives the power to the people that were affected in this very unfortunate situation.”
The commission ordered $400,075 of bond proceeds to be spread among some farmers April 12. The claims filed with the commission were $2,962,186.
Five days later, a state judge said H&I Grain still owed farmers $3,775,484 for corn and soybeans they delivered to the company.
Jesse Linebaugh, a lawyer representing CHS, warned that Great Western Bank would be at the front of the line for any cash.
Linebaugh said the farmers want the commission “to stand in the shoes of the bad guys” who perpetrated the crime.
“What happened here is absolutely tragic. We’re very sorry it happened. But we (CHS) had absolutely nothing to do with it,” Linebaugh said.
About 20 farmers sat throughout the room at the Capitol. Their attorney, Gary Schumacher of DeSmet, answered each of Linebaugh’s arguments.
“This is it. This is the last remedy the farmers have,” Schumacher said.