HOUSE BILL NO. 308

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H0308..................................................by AGRICULTURAL AFFAIRS
BONDED WAREHOUSES - Amends existing law relating to bonded warehouses to
provide for single bonds; to revise provisions relating to certificates of
deposit and irrevocable letters of credit given in lieu of bond; to revise
bonding requirements and bonding provisions for certain warehousemen; to
revise provisions relating to the amount of bond and damages to certain
injured producers; to authorize the Department of Agriculture to make copies
of certain books, records, papers and accounts of warehouses; and to revise
provisions relating to certain records.
                                                                        
02/27    House intro - 1st rdg - to printing
02/28    Rpt prt - to 2nd rdg
03/03    2nd rdg - to 3rd rdg
03/04    3rd rdg - PASSED - 67-0-3
      AYES -- Andersen, Barraclough, Bauer, Bedke, Bell, Bieter, Black, Block,
      Boe, Bolz, Bradford, Campbell, Cannon, Clark, Collins, Cuddy, Deal,
      Denney, Douglas, Eberle, Edmunson, Ellsworth, Eskridge, Field(18),
      Field(23), Gagner, Garrett, Harwood, Henbest, Jaquet, Jones, Kellogg,
      Kulczyk, Lake, Langford, Langhorst, Martinez, McGeachin, McKague, Meyer,
      Miller, Mitchell, Moyle, Naccarato, Nielsen, Raybould, Ridinger, Ring,
      Ringo, Roberts, Robison, Rydalch, Sali, Sayler, Schaefer, Shepherd,
      Shirley, Skippen, Smith(30), Smith(24), Smylie, Snodgrass, Stevenson,
      Tilman, Trail, Wills, Mr. Speaker
      NAYS -- None
      Absent and excused -- Barrett, Crow, Wood
    Floor Sponsor - Jones
    Title apvd - to Senate
03/05    Senate intro - 1st rdg - to Agric Aff
03/14    Rpt out - rec d/p - to 2nd rdg
03/17    2nd rdg - to 3rd rdg
03/19    3rd rdg - PASSED - 33-0-2
      AYES -- Andreason, Bailey, Bunderson, Burkett, Burtenshaw, Calabretta,
      Cameron, Compton, Darrington, Gannon, Geddes, Goedde, Hill, Ingram,
      Kennedy, Keough, Little, Lodge, Malepeai, Marley, McKenzie, McWilliams,
      Noble, Noh, Pearce, Richardson, Schroeder, Sorensen, Stegner, Stennett,
      Sweet, Werk, Williams
      NAYS -- None
      Absent and excused -- Brandt, Davis
    Floor Sponsor - Kennedy
    Title apvd - to House
03/20    To enrol
03/21    Rpt enrol - Sp signed
03/24    Pres signed
03/25    To Governor
03/27    Governor signed
         Session Law Chapter 150
         Effective: 03/27/03

Bill Text


                                                                        
                                                                        
  ||||              LEGISLATURE OF THE STATE OF IDAHO             ||||
 Fifty-seventh Legislature                 First Regular Session - 2003
                                                                        
                                                                        
                              IN THE HOUSE OF REPRESENTATIVES
                                                                        
                                     HOUSE BILL NO. 308
                                                                        
                             BY AGRICULTURAL AFFAIRS COMMITTEE
                                                                        
  1                                        AN ACT
  2    RELATING TO THE BONDED WAREHOUSE LAW; AMENDING SECTION 69-208, IDAHO CODE,  TO
  3        PROVIDE FOR SINGLE BONDS, TO REVISE PROVISIONS RELATING TO CERTIFICATES OF
  4        DEPOSIT  AND  IRREVOCABLE  LETTERS  OF CREDIT GIVEN IN LIEU OF BOND AND TO
  5        REVISE BONDING REQUIREMENTS AND BONDING PROVISIONS FOR CERTAIN  WAREHOUSE-
  6        MEN;  AMENDING  SECTION 69-208A, IDAHO CODE, TO REVISE PROVISIONS RELATING
  7        TO THE AMOUNT OF BOND AND TO MAKE A TECHNICAL CORRECTION; AMENDING SECTION
  8        69-209, IDAHO CODE, TO REVISE PROVISIONS RELATING TO  DAMAGES  OF  CERTAIN
  9        INJURED  PRODUCERS;  AMENDING SECTION 69-230, IDAHO CODE, TO AUTHORIZE THE
 10        DEPARTMENT OF AGRICULTURE  TO  MAKE  COPIES  OF  CERTAIN  BOOKS,  RECORDS,
 11        PAPERS,  AND  ACCOUNTS OF WAREHOUSES; AMENDING SECTION 69-250, IDAHO CODE,
 12        TO REVISE PROVISIONS RELATING TO CERTAIN RECORDS; AND DECLARING  AN  EMER-
 13        GENCY.
                                                                        
 14    Be It Enacted by the Legislature of the State of Idaho:
                                                                        
 15        SECTION  1.  That  Section  69-208, Idaho Code, be, and the same is hereby
 16    amended to read as follows:
                                                                        
 17        69-208.  BOND OF APPLICANT FOR LICENSE -- ADDITIONAL  BOND  --  ADDITIONAL
 18    OBLIGATIONS  -- CERTIFICATE OF DEPOSIT OR IRREVOCABLE LETTER OF CREDIT IN LIEU
 19    OF BOND -- SINGLE BOND. Each warehouseman applying for a license to conduct  a
 20    warehouse  in accordance with this chapter shall, as a condition to the grant-
 21    ing thereof, execute and file with the department a good and  sufficient  bond
 22    other  than  personal  security.  The  bond shall be in favor of the commodity
 23    indemnity fund to secure the faithful performance  of  his  obligations  as  a
 24    warehouseman under all the laws of the state, including obligations arising by
 25    operation  of  the  commodity indemnity fund program, and the rules prescribed
 26    hereunder, and of such additional obligations as  a  warehouseman  as  may  be
 27    assumed  by him under contracts with the respective depositors of agricultural
 28    commodities in such warehouse. Said bond shall be in  such  form  and  amount,
 29    shall  have  such  surety or sureties, and shall contain such terms and condi-
 30    tions as the department may prescribe to carry out the purposes of this  chap-
 31    ter. Whenever the department shall determine that a bond approved by it is, or
 32    for any cause has become, insufficient, it shall require an additional bond or
 33    bonds  to be given by the warehouseman concerned, conforming with the require-
 34    ments of this section, and unless the same be given within the time fixed by a
 35    written demand therefor the license of such warehouseman shall be suspended or
 36    revoked.
 37        The bond shall be approved by the department and shall be conditioned upon
 38    the faithful performance by the warehouseman of the duty to keep in the  ware-
 39    house  for  the  depositor the agricultural commodity delivered and to deliver
 40    the agricultural commodity to or for such depositors. The bond shall  also  be
 41    conditioned  upon  the  faithful  performance by the warehouseman of any addi-
 42    tional obligations involving marketing transactions with a depositor.
 43        The warehouseman may give a single bond meeting the requirements  as  pro-
                                                                        
                                           2
                                                                        
  1    vided in this chapter and all warehouses operated by the warehouseman shall be
  2    as one (1) warehouse for the purpose of compliance with the provisions of this
  3    section.  At  the  discretion of the director, any person required to submit a
  4    bond to the department in accordance  with  this  chapter,  may  give  to  the
  5    department a certificate of deposit or an irrevocable letter of credit payable
  6    to the commodity indemnity fund in lieu of the bond required herein. The prin-
  7    cipal  amount  of  the  certificate of deposit or irrevocable letter of credit
  8    shall be the same as that required  for a surety bond pursuant to  this  chap-
  9    ter.  Accrued interest upon the certificate of deposit shall be payable to the
 10    purchaser of the certificate. The irrevocable letter of credit or  certificate
 11    of deposit shall remain on file with the department until it is released, can-
 12    celed  or  discharged by the director or until the director is notified ninety
 13    (90) days  in  advance,  by  registered  or  certified  mail,  return  receipt
 14    requested,  that the irrevocable letter of credit or certificate of deposit is
 15    renewed, canceled or amended. Failure to notify the director may result in the
 16    suspension or revocation of the bonded warehouse license.  The  provisions  of
 17    this  chapter  that apply to a bond required pursuant to this chapter apply to
 18    each certificate of deposit or irrevocable letter of credit given in  lieu  of
 19    such bond.
 20        Under  provisions of this chapter, an irrevocable letter of credit or cer-
 21    tificate of deposit shall not be acceptable unless it is issued by a  national
 22    bank  or  federal  thrift institution in Idaho or by a state-chartered bank or
 23    thrift institution authorized to conduct business in Idaho and insured by  the
 24    federal deposit insurance corporation.
 25        Any  changes  in  the  capacity  of a warehouse or installation of any new
 26    warehouses involving a change in the bond liability under  the  provisions  of
 27    this  chapter  shall  be  reported  to  the  department prior to the operation
 28    thereof.
 29        If a warehouseman is licensed pursuant to  chapter  51,  title  22,  Idaho
 30    Code,  that same warehouseman may obtain a single bond, certificate of deposit
 31    or irrevocable letter of credit as surety for both chapter 2, title 69,  Idaho
 32    Code,  and  chapter 51, title 22, Idaho Code. If a single bond, certificate of
 33    deposit or irrevocable letter of credit is written covering chapter  2,  title
 34    69, Idaho Code, and chapter 51, title 22, Idaho Code, the bond, certificate of
 35    deposit or irrevocable letter of credit shall be made out in favor of the com-
 36    modity indemnity fund and the seed indemnity fund. In the event a warehouseman
 37    fails as defined in section 69-202(8), Idaho Code, and a single bond, certifi-
 38    cate  of  deposit  or  irrevocable letter of credit is written in favor of the
 39    commodity indemnity fund and seed indemnity fund, the proceeds  of  the  bond,
 40    certificate of deposit or irrevocable letter of credit will be allocated based
 41    on  the  dollar  amount of the verified claims approved pursuant to chapter 2,
 42    title 69, Idaho Code, and chapter 51, title 22, Idaho Code.
 43        At the discretion of the director, any person required to submit a bond to
 44    the department in accordance with this chapter, may at his option give to  the
 45    department a certificate of deposit or an irrevocable letter of credit payable
 46    to the commodity indemnity fund in lieu of the bond required herein. The prin-
 47    cipal  amount of the certificate or letter of credit shall be the same as that
 48    required for a surety bond pursuant to this chapter. Accrued interest upon the
 49    certificate of deposit shall be payable to the purchaser of  the  certificate.
 50    The  letter  of  credit  shall  remain on file with the department until it is
 51    released, canceled or discharged by the director  or  until  the  director  is
 52    notified  ninety (90) days in advance, by registered or certified mail, return
 53    receipt requested, that the letter of credit is renewed, canceled or  amended.
 54    Failure  to  notify the director may result in the suspension or revocation of
 55    the bonded warehouse license. The provisions of this chapter that apply  to  a
                                                                        
                                           3
                                                                        
  1    bond required pursuant to this chapter apply to each certificate of deposit or
  2    letter of credit given in lieu of such bond.
  3        Under  provisions  of  this chapter, an irrevocable letter of credit shall
  4    not be acceptable unless it is issued by a national bank in  Idaho  or  by  an
  5    Idaho  state-chartered  bank insured by the federal deposit insurance corpora-
  6    tion.
                                                                        
  7        SECTION 2.  That Section 69-208A, Idaho Code, be, and the same  is  hereby
  8    amended to read as follows:
                                                                        
  9        69-208A.  AMOUNT  OF  BOND  -- CANCELLATION. The amount of bond to be fur-
 10    nished for each warehouse shall be fixed at a rate of twenty cents  (20)  per
 11    bushel  of licensed capacity or six percent (6%) of whichever of the following
 12    amounts is greater:
 13        (1)  Tthe combined total value of  the  agricultural  commodities  stored,
 14    whichever  is  greater.  In the event a variety of commodities are stored, the
 15    bond rate may be calculated using  either  factor  or  a  combination  thereof
 16    indebtedness  paid  and  owed to producers for agricultural commodity and seed
 17    crop stored for withdrawal or transferred during the previous license year; or
 18        (2)  The indebtedness owed and estimated to be owed to producers for agri-
 19    cultural commodity and seed crop for the current license year.
 20        Subsequent to determining whichever of the preceding amounts  is  greater,
 21    and based on that amount, the amount of bond shall be calculated as follows:
                                                                        
 22    Gross Dollars:                     Amount of Bond:
 23    $0 - $450,000                      $20,000 bond or 6% of the gross
 24                                       dollars, whichever is less
 25    $450,001 - $1,000,000              $40,000 bond
 26    $1,000,001 - $8,000,000            $100,000 bond
 27    Over $8,000,000                    $500,000 bond
                                                                        
 28        Any  other  bond that may be required shall be separate and in addition to
 29    the bond listed here. In any case, the amount of the bond shall  not  be  less
 30    than  twenty-five  thousand  dollars ($25,000) and shall not be more than five
 31    hundred thousand dollars ($500,000). This bond shall run continuously with the
 32    warehouse license until suspended, revoked or canceled by the bonding company.
 33    A ninety (90) day written notice shall be given to the department by the bond-
 34    ing company before any bond is suspended, revoked or  canceled.  The  director
 35    reserves the right to waive the ninety (90) day cancellation period.
                                                                        
 36        SECTION  3.  That  Section  69-209, Idaho Code, be, and the same is hereby
 37    amended to read as follows:
                                                                        
 38        69-209.  ACTION ON BOND, CERTIFICATE OF DEPOSIT OR IRREVOCABLE  LETTER  OF
 39    CREDIT BY PRODUCERS INJURED. Any producer injured by the breach of any obliga-
 40    tion  for which a bond, certificate of deposit or irrevocable letter of credit
 41    is written, under the provisions of section 69-208, Idaho Code, must  petition
 42    the  director  to  make  demand upon the warehouseman, certificate of deposit,
 43    irrevocable letter of credit or bond. The director may thereupon  make  demand
 44    upon  the  warehouseman  and his surety for payment of such damages and in the
 45    event such damages are not promptly paid the director may commence  an  action
 46    on the bond to enforce payment of such damages. The liability of the bank on a
 47    certificate  of  deposit  or irrevocable letter of credit, and the surety upon
 48    the bond required to be given by warehousemen as provided in  section  69-208,
 49    Idaho  Code,  for  any one (1) annual licensing period shall be limited to the
                                                                        
                                           4
                                                                        
  1    amount specified in the bond, certificate of deposit, or irrevocable letter of
  2    credit and in case of recoveries had by two (2) or more persons producers  for
  3    violation  of the conditions of such bond this chapter in excess of the amount
  4    of the bond, certificate of deposit, or irrevocable  letter  of  credit,  such
  5    recovery  shall  be prorated and the total recovery against the surety for any
  6    one (1) annual licensing period shall not exceed the amount of the bond,  cer-
  7    tificate  of deposit, or irrevocable letter of credit. In the event the direc-
  8    tor sues and obtains a judgment against the warehouseman and/or his surety  or
  9    bank for payment of such damages under this section chapter, he shall be enti-
 10    tled to recover a reasonable attorney's fee.
                                                                        
 11        SECTION  4.  That  Section  69-230, Idaho Code, be, and the same is hereby
 12    amended to read as follows:
                                                                        
 13        69-230.  EXAMINATION OF BOOKS -- AUTHORIZATION TO COPY. The department  is
 14    authorized  through  officials,  employees, or agents of the department desig-
 15    nated by it, to examine and make copies of all  books,  records,  papers,  and
 16    accounts  of warehouses relating thereto, including those described in section
 17    69-227, Idaho Code.
                                                                        
 18        SECTION 5.  That Section 69-250, Idaho Code, be, and the  same  is  hereby
 19    amended to read as follows:
                                                                        
 20        69-250.  CONFIDENTIAL  AND  PROTECTED RECORDS. All financial statements of
 21    warehousemen Records required under the provisions  of  this  chapter  by  the
 22    department  including,  but  not  limited  to, production summaries, receiving
 23    records, conditioning reports, records relating to the payment of agricultural
 24    commodities, commodity indemnity fund and seed indemnity fund reporting  forms
 25    of a warehouseman, and financial records that are required pursuant to section
 26    69-206(6),  Idaho  Code, shall be subject to disclosure pursuant to the provi-
 27    sions of held confidential and will be protected as production records accord-
 28    ing to chapter 3, title 9, Idaho Code. Provided however, that  a  warehouseman
 29    may  provide  written  permission  for disclosure of any of the warehouseman's
 30    financial statements These records shall not be subject to  disclosure  unless
 31    specifically  authorized in writing by the licensee or as otherwise authorized
 32    pursuant to the provisions of chapter 3, title 9, Idaho Code.
                                                                        
 33        SECTION 6.  An emergency existing  therefor,  which  emergency  is  hereby
 34    declared to exist, this act shall be in full force and effect on and after its
 35    passage and approval.

Statement of Purpose / Fiscal Impact



                       STATEMENT OF PURPOSE
                             RS 13093
Amends the Bonded Warehouse law to revise how bonds are
calculated. Bonds, certificates of deposit and letters of credit
will be a matrix based on indebtedness paid and owed to
producers. Removes the minimum bond requirement. This amendment
allows for one bond to cover the Bonded Warehouse law and the
Seed Indemnity Fund law. Authorizes the department of agriculture
to make copies of certain books, records, papers, and accounts of
warehouses. Adds clarity to the type of financial institutions
authorized to issue a letter of credit or certificate of deposit. 
Adds clarity to nomenclature. 

An emergency exists because warehouse license renewals are April
1 and seed buyer license renewals are July 1. Bonds run
concurrent with the license period.

                          FISCAL IMPACT
There will be no impact to the general fund. By eliminating the
double bonding requirement and establishing a new method of
calculating bonds, many warehouses will experience a reduction in
the amount of bond needed for the Bonded Warehouse law and Seed
Indemnity Fund law. 


Contact
Name: Russ Dapsauski, ISDA, Warehouse Control Program 
Phone: 208-332-8612




STATEMENT OF PURPOSE/FISCAL NOTE       H 308