2001 Legislation
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HOUSE BILL NO. 272 – Production Contract Facilities

HOUSE BILL NO. 272

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H0272...............................................by AGRICULTURAL AFFAIRS
PRODUCTION CONTRACT FACILITIES - Adds to existing law relating to
warehouses to provide for production contract facilities; to require
licensure of certain facilities and to provide penalties for operating
without a license; to provide for inspection and classification of
warehouses; to provide for bonds or irrevocable letters of credit; to
provide for examination of stored commodities and seed crops; to provide
for fees; to provide for standards for agricultural commodities and seed
crops; to provide for records and reports; to provide for duties of
warehousemen; to provide for insurance; to provide for suspension of
licenses, reissuance of licenses and appeals; to provide an Indemnity Fund
Program; to provide for creation of the Indemnity Fund and for uses of the
fund; to provide for an advisory committee; to provide for hearings and
investigation of claims; to provide for inspection of failed facilities; to
provide for a minimum balance in the Crop Specific Indemnity Fund and or
payments from the fund; to provide for reimbursements to the fund; to
provide for claims against certain warehousemen, dealers or facilities; and
to provide for remedies and emergency funding.
                                                                        
02/15    House intro - 1st rdg - to printing
02/16    Rpt prt - to Agric Aff

Bill Text


                                                                        
                                                                        
  ||||              LEGISLATURE OF THE STATE OF IDAHO             ||||
 Fifty-sixth Legislature                  First Regular Session - 2001
                                                                        
                                                                        
                              IN THE HOUSE OF REPRESENTATIVES
                                                                        
                                     HOUSE BILL NO. 272
                                                                        
                             BY AGRICULTURAL AFFAIRS COMMITTEE
                                                                        
  1                                        AN ACT
  2    RELATING TO PRODUCTION CONTRACT FACILITIES; AMENDING TITLE 69, IDAHO CODE,  BY
  3        THE  ADDITION OF A NEW CHAPTER 6, TITLE 69, IDAHO CODE; TO PROVIDE A SHORT
  4        TITLE, TO DEFINE TERMS, TO REQUIRE THAT CERTAIN FACILITIES BE LICENSED, TO
  5        PROVIDE FOR PENALTIES FOR OPERATING WITHOUT LICENSES AND FOR  MISREPRESEN-
  6        TATION,  TO PROVIDE FOR INSPECTION AND CLASSIFICATION OF WAREHOUSES, STOR-
  7        AGE, WAREHOUSING, WEIGHING AND CERTIFICATION OF COMMODITIES AND TO PROVIDE
  8        FOR DUTIES OF  WAREHOUSEMEN,  TO  PROVIDE  FOR  ISSUANCE  AND  RENEWAL  OF
  9        LICENSES  TO  WAREHOUSEMEN,  PRODUCTION FACILITIES AND DEALERS, TO PROVIDE
 10        FOR TERMS OF LICENSES AND RENEWAL, TO REQUIRE CERTAIN BONDS FOR APPLICANTS
 11        FOR LICENSURE, TO PROVIDE ADDITIONAL OBLIGATIONS, TO PROVIDE FOR IRREVOCA-
 12        BLE LETTERS OF CREDIT IN LIEU OF BONDS, TO PROVIDE FOR  AMOUNTS  OF  BONDS
 13        AND  CANCELLATION OF BONDS, TO PROVIDE FOR ACTION ON BONDS BY INJURED PAR-
 14        TIES, TO PROVIDE FOR THE DESIGNATION OF A FACILITY AS A BONDED  PRODUCTION
 15        CONTRACT  FACILITY,  TO PROVIDE FOR FEES, TO PROVIDE FOR LICENSES TO WEIGH
 16        COMMODITIES FOR STORAGE, TO PROVIDE FOR THE EXAMINATION OF STORED COMMODI-
 17        TIES AND SEED CROPS BY CERTAIN STATE INSPECTORS AND INVESTIGATORS, TO PRO-
 18        VIDE FOR THE EMPLOYMENT OF PERSONNEL, TO PROVIDE A  RIGHT  TO  ASSESS  AND
 19        COLLECT  FEES,  TO  PROVIDE  FOR THE INSPECTION AND GRADING OF DISEASED OR
 20        INSECT INFESTED COMMODITIES AND SEED CROPS, TO PROVIDE  FOR  RECEIPTS  AND
 21        SCALE  WEIGHT  TICKETS,  TO PROVIDE STANDARDS FOR AGRICULTURAL COMMODITIES
 22        AND SEED CROPS, TO PROVIDE FOR RECORDS OF PRODUCTION  CONTRACT  FACILITIES
 23        AND  TO PROVIDE FOR THE CONDUCT OF A PRODUCTION CONTRACT FACILITY, TO PRO-
 24        VIDE FOR THE EXAMINATION OF CERTAIN COMMODITIES AND SEED CROPS AND RELATED
 25        RECORDS BY THE IDAHO STATE DEPARTMENT OF AGRICULTURE AND  TO  PROVIDE  FOR
 26        THE  PUBLICATION OF FINDINGS, TO PROVIDE FOR THE SUSPENSION AND REVOCATION
 27        OF LICENSES, TO PROVIDE FOR THE PUBLICATION OF REPORTS, TO PROVIDE FOR THE
 28        EXAMINATION OF CERTAIN BOOKS BY THE DEPARTMENT OF AGRICULTURE,  TO  AUTHO-
 29        RIZE  RULEMAKING  BY THE IDAHO STATE DEPARTMENT OF AGRICULTURE, TO PROVIDE
 30        FOR COOPERATION BETWEEN THE DEPARTMENT  OF  AGRICULTURE  AND  GOVERNMENTAL
 31        AGENCIES  AND  PRIVATE  ASSOCIATIONS, TO PROVIDE FOR VIOLATIONS OF LAW AND
 32        PENALTIES, TO PROVIDE FOR RENT OF QUARTERS AND EMPLOYMENT  OF  ASSISTANTS,
 33        TO PROVIDE FOR THE EFFECT OF PARTIAL INVALIDITY OF THE LAW, TO PROVIDE FOR
 34        NONCOMPLIANCE,  TO  PROVIDE  FOR  FAILURE OF A FACILITY AND TO PROVIDE FOR
 35        CERTAIN REMEDIES OF THE DEPARTMENT OF AGRICULTURE, TO PROVIDE FOR  CERTAIN
 36        FINANCIAL DIFFICULTIES AND TO REQUIRE CERTAIN ADDITIONAL BOND OR SECURITY,
 37        TO  PROVIDE  FOR  DUTIES  OF  WAREHOUSEMAN  AND  TO PROVIDE FOR CONTENT OF
 38        RECORDS, TO PROVIDE FOR CERTAIN DISCRETIONARY ACTION BY  THE  DIRECTOR  OF
 39        THE DEPARTMENT OF AGRICULTURE, TO PROVIDE FOR INSURANCE, TO PROVIDE A CAN-
 40        CELLATION  PROCEDURE AND TO PROVIDE FOR SUSPENSION OF LICENSES, TO PROVIDE
 41        FOR INJUNCTIONS, TO PROVIDE A DUTY TO PROSECUTE VIOLATIONS OF THE CHAPTER,
 42        TO PROVIDE FOR LICENSE REISSUANCE FOLLOWING  REVOCATION,  TO  PROVIDE  FOR
 43        CERTAIN  DIRECTOR  AUTHORITY, TO PROVIDE FOR APPEALS FROM DECISIONS OF THE
 44        DIRECTOR, TO PROVIDE FOR LICENSE DENIAL, TO PROVIDE THAT  THE  DRAWING  OF
 45        CERTAIN  INSUFFICIENT  CHECKS CONSTITUTES A VIOLATION, TO PROVIDE FOR CER-
 46        TAIN RECORDS, TO PROVIDE A SHORT TITLE FOR THE INDEMNITY FUND PROGRAM  AND
                                                                        
                                           2
                                                                        
  1        TO PROVIDE A START-UP PROCEDURE, TO PROVIDE FOR THE CREATION OF THE INDEM-
  2        NITY  FUND  AND  TO  PROVIDE  FOR CERTAIN USES OF THE FUND, TO PROVIDE FOR
  3        ASSESSMENTS, TO PROVIDE RATES AND  TO  PROVIDE  FOR  MINIMUM  AND  MAXIMUM
  4        ASSESSMENTS, TO PROVIDE FOR PAYMENTS OF ASSESSMENTS, TO PROVIDE FOR A MAX-
  5        IMUM  FUND BALANCE AND TO PROVIDE FOR CESSATION OF ASSESSMENTS, TO PROVIDE
  6        FOR AN ADVISORY COMMITTEE, TO PROVIDE FOR PROOF OF CLAIMS, TO PROVIDE  FOR
  7        HEARINGS,  TO  PROVIDE FOR THE INVESTIGATION OF CLAIMS, TO PROVIDE FOR THE
  8        INSPECTION, EXAMINATION AND AUDIT OF CERTAIN FAILED  FACILITIES,  TO  PRO-
  9        HIBIT APPROVAL AND PAYMENT OF CERTAIN CLAIMS AND TO PROVIDE FOR APPEALS OF
 10        CERTAIN  FINAL DECISIONS OF THE DEPARTMENT OF AGRICULTURE, TO PROVIDE THAT
 11        THE DIRECTOR OF THE DEPARTMENT OF AGRICULTURE SHALL BE RELIEVED OF RESPON-
 12        SIBILITY TO PAY CERTAIN PRODUCER CREDITOR CLAIMS, TO PROVIDE FOR A MINIMUM
 13        FUND BALANCE IN THE CROP SPECIFIC INDEMNITY FUND AND FOR CERTAIN  PAYMENTS
 14        FROM  THAT  FUND, TO PROVIDE THAT THE FUND SHALL NOT BE LIABLE FOR CERTAIN
 15        CLAIMS BEYOND A DESIGNATED PERIOD OF TIME, TO PROVIDE  FOR  PAYMENTS  FROM
 16        THE FUND, TO PROVIDE FOR CERTAIN REIMBURSEMENTS TO THE FUND AND TO PROVIDE
 17        FOR  ACCRUALS  OF  CERTAIN CAUSES OF ACTION, TO PROVIDE FOR CLAIMS AGAINST
 18        CERTAIN WAREHOUSEMEN, DEALERS OR FACILITIES AND TO PROVIDE THAT THE DIREC-
 19        TOR OF THE DEPARTMENT OF AGRICULTURE SHALL HAVE CERTAIN REMEDIES, TO  PRO-
 20        VIDE  FOR EMERGENCY FUNDING; TO DECLARE AN EMERGENCY, TO PROVIDE EFFECTIVE
 21        DATES AND TO PROVIDE FOR TRANSITION.
                                                                        
 22    Be It Enacted by the Legislature of the State of Idaho:
                                                                        
 23        SECTION 1.  That Title 69, Idaho Code, be, and the same is hereby  amended
 24    by  the addition thereto of a NEW CHAPTER, to be known and designated as Chap-
 25    ter 6, Title 69, Idaho Code, and to read as follows:
                                                                        
 26                                      CHAPTER 6
 27                          PRODUCTION CONTRACT FACILITIES LAW
                                                                        
 28        69-601.  SHORT TITLE. This  chapter  shall  be  known  and  cited  as  the
 29    "Production Contract Facilities Law."
                                                                        
 30        69-602.  DEFINITIONS. As used in this chapter:
 31        (1)  "Agricultural  commodity" means any grain, wheat, barley, oats, corn,
 32    rye, oilseeds, dry edible beans, peas, lentils  and  other  leguminous  seeds,
 33    except true seed crops, or any other commodity as determined by the director.
 34        (2)  "Bailee"  means  a person who receives personal property from another
 35    as a bailment.
 36        (3)  "Bailment" means a delivery of personal property by  one  (1)  person
 37    (the bailor) to another (the bailee) who holds the property for a certain pur-
 38    pose  under  an express or implied-in-fact contract.  Unlike a sale or gift of
 39    personal property, a bailment involves a  change  in  possession  but  not  in
 40    title.
 41        (4)  "Bailment  contract" means a contract between two (2) or more parties
 42    that creates a "bailor" and "bailee" relationship wherein the bailor transfers
 43    property (seed) to the bailee, but does not  transfer  title  along  with  the
 44    property.   For  the purposes of this chapter, the term "bailment contract" is
 45    interchangeable with the term "production contract."
 46        (5)  "Bailor" means a person who delivers personal property to another  as
 47    a bailment.
 48        (6)  "Commodity  dealer"  or  "dealer" means any person who solicits, con-
 49    tracts for, or obtains from an Idaho producer or producers, title,  possession
 50    or  control  of  any  agricultural commodity or seed crop through his place of
                                                                        
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  1    business located in the state of  Idaho  or  through  his  place  of  business
  2    located  outside  the state of Idaho for the purposes of sale or resale or who
  3    buys, during a calendar year, at least ten thousand dollars ($10,000) worth of
  4    agricultural commodities or seed crops from an Idaho producer or producers  of
  5    the commodities. Commodity dealer or dealer shall not mean any person who pur-
  6    chases agricultural commodities or  seed crops for his own use as seed or feed
  7    within their own operation.
  8        (7)  "Contract"  means  an agricultural contract as defined in chapter 50,
  9    title 22, Idaho Code, which may include, but is not  limited  to,  those  con-
 10    tracts  commonly  referred  to  as  credit  sales, bailment, deferred payment,
 11    delayed or price later contracts.
 12        (8)  "Deliver" or "delivery" means the physical transfer  of  agricultural
 13    commodity or seed crop from one (1) party to another.
 14        (9)  "Department" means the Idaho state department of agriculture.
 15        (10) "Depositor"  means  any person who deposits an agricultural commodity
 16    or seed crop in an Idaho state licensed warehouse or production  facility  for
 17    storage, handling, processing, reconditioning or shipment, or who is the owner
 18    or  legal  holder  of a negotiable warehouse receipt, outstanding scale weight
 19    ticket, nonnegotiable warehouse receipt or other evidence of such deposit,  or
 20    any  person  whose  agricultural commodity or seed crop has been sold to or is
 21    under control of a warehouseman for  selling,  processing,  reconditioning  or
 22    handling whether or not such agricultural commodity or seed crop is within the
 23    warehouse.
 24        (11) "Director"  means the director of the Idaho state department of agri-
 25    culture.
 26        (12) "Failure" means:
 27        (a)  An inability to financially satisfy claimants in accordance with this
 28        chapter and the time limits provided in it;
 29        (b)  A public declaration of insolvency;
 30        (c)  A revocation of license and the leaving of an  outstanding  indebted-
 31        ness to a depositor, producer or bailee;
 32        (d)  A  failure  to  redeliver  any  commodity  to  a  depositor or to pay
 33        depositors or producers for commodities purchased by a licensee or to  pay
 34        a  bailee  for commodity delivered under the provisions of the contract in
 35        the ordinary course of business;
 36        (e)  A failure to make application for license renewal within  sixty  (60)
 37        days after the annual license renewal date; or
 38        (f)  A denial of the application for a license renewal.
 39        (13) "Historical  depositor" means any person who, in the normal course of
 40    business operation has consistently made deposits in  the  same  warehouse  of
 41    commodities produced on the same land. In addition, anyone purchasing or leas-
 42    ing  that  particular  land  directly from the original depositor or receiving
 43    that particular land by devise, descent, bequest or  gift  directly  from  the
 44    historical  depositor  shall  also  be  considered a historical depositor with
 45    regard to the commodities produced on that land.
 46        (14) "Person" means any individual, firm, association, corporation,  part-
 47    nership or limited liability company.
 48        (15) "Producer"  means the owner, tenant or operator of land in this state
 49    who has an interest in and receives all or part of the proceeds from the  sale
 50    of his agricultural commodities or seed crops produced on that land or who has
 51    an interest in and receives all or part of the proceeds from the completion of
 52    a production contract.
 53        (16)  "Production   facility"   means   any   elevator,  mill,  warehouse,
 54    subterminal commodity warehouse, public warehouse or other structure or facil-
 55    ity in which agricultural commodities or seed crops are received, partially or
                                                                        
                                           4
                                                                        
  1    wholly, through the use of production contracts or bailment contracts.
  2        (17) "Public warehouse" or "warehouse" means  any  elevator,  mill,  ware-
  3    house, subterminal commodity warehouse, public warehouse or other structure or
  4    facility    in  which  agricultural commodities or seed crops are received for
  5    storage, shipment, processing, reconditioning, handling or that may conduct at
  6    least a portion of business through the use of production contracts  or  bail-
  7    ment contracts.
  8        (18) "Receipt" means a warehouse receipt.
  9        (19) "Revocation"  means the permanent removal of a warehouse license fol-
 10    lowing a hearing on violations of this  chapter  by  the  hearing  officer  or
 11    director.
 12        (20) "Scale weight ticket" means a load slip or other evidence, other than
 13    a  receipt,  given  to a depositor by a warehouseman licensed under the provi-
 14    sions of this chapter, upon initial delivery of the  commodity  to  the  ware-
 15    house.
 16        (21) "Seed  crops"  means  any true seed crop that may include, but not be
 17    limited to, dry edible bean seed, dry garden bean seed, alfalfa  seed,  clover
 18    seed,  forage  grass seed, ornamental grass seed, vegetable seed, flower seed,
 19    peas, lentils and other leguminous seeds or any other seed crop as  determined
 20    by the advisory committee.
 21        (22) "Subterminal  warehouse" means any warehouse at which an intermediate
 22    function is performed in which agricultural commodities or seed crops are cus-
 23    tomarily received from dealers rather than producers and where the commodities
 24    are accumulated prior to shipment.
 25        (23) "Suspension" means the temporary removal of a  warehouse  license  by
 26    the department pending a hearing for violations of this chapter. Correction of
 27    the violations prior to a hearing may result in the reinstatement of a license
 28    without a hearing.
 29        (24) "Termination"  means  the  expiration  of  a warehouse license due to
 30    failure to meet minimum licensing requirements, failure to renew  a  warehouse
 31    license  or  as  requested  by the licensee, unless a complaint has been filed
 32    against the licensee alleging a violation of any provision of this chapter.
 33        (25) "Warehouse receipt" means every receipt, whether negotiable  or  non-
 34    negotiable, issued by a warehouseman, except scale weight tickets.
 35        (26) "Warehouseman" means a person operating or controlling a public ware-
 36    house or a production facility.
                                                                        
 37        69-603.  LICENSE NECESSARY TO OPERATE PRODUCTION FACILITY. Before a person
 38    may  lawfully  enter into an operation involving bailment contracts or produc-
 39    tion contracts in this state, he must procure a license  under  this  chapter.
 40    Provided  however,  that  requirements for licensure are not applicable to any
 41    warehouse or warehouseman licensed under chapter 2, title 69, Idaho Code.
                                                                        
 42        69-604.  PENALTY FOR OPERATING WITHOUT A LICENSE -- MISREPRESENTATION. (1)
 43    Any person operating a public warehouse, production facility or  as  a  dealer
 44    without  a  license  or in any way representing, by actions or words, that the
 45    warehouse, production facility or dealer is so licensed when  such  warehouse,
 46    production  facility or dealer is not so licensed or any person who shall mis-
 47    represent, forge,  alter,  counterfeit  or  falsely  represent  a  license  as
 48    required  by  the  provisions  of this chapter shall be guilty of a felony and
 49    punished by imprisonment in the state prison for not more than ten (10) years,
 50    or by a fine of not more than ten thousand dollars ($10,000), or by both.
 51        (2)  Any person who shall issue, utter or aid in the issuance or utterance
 52    or attempt to issue or utter a false or fraudulent receipt for  any  commodity
 53    shall  be  guilty of a felony and punished by imprisonment in the state prison
                                                                        
                                           5
                                                                        
  1    for not more than ten (10) years, or by a fine of not more than  ten  thousand
  2    dollars ($10,000), or by both.
                                                                        
  3        69-605.  INSPECTION  AND  CLASSIFICATION OF WAREHOUSES, STORAGE, WAREHOUS-
  4    ING, WEIGHING AND CERTIFICATION OF COMMODITIES -- DUTIES OF WAREHOUSEMEN. Upon
  5    application by any person for  license  to  conduct  a  warehouse,  production
  6    facility  or to act as a dealer under this chapter, the Idaho state department
  7    of agriculture is authorized to investigate and determine  whether  the  ware-
  8    house, production facility, or dealer if said dealer maintains storage facili-
  9    ties,  for  which  licenses are applied, or have been previously issued, under
 10    this chapter, are suitable for the proper storage of agricultural  commodities
 11    or seed crops and the Idaho state department of agriculture is authorized with
 12    or without application, to wit:
 13        To  inspect any warehouse, production facility or dealer facility licensed
 14    under this chapter. The Idaho state department of  agriculture  shall  inspect
 15    every  warehouse  or  production facility licensed under this chapter at least
 16    once every calendar year; to investigate the storage, warehousing, classifying
 17    according to grade, and otherwise weighing and certifying of agricultural com-
 18    modities or seed crops therein conducted; to classify  warehouses,  production
 19    facilities  and  dealers, licensed or applying for license, in accordance with
 20    their capacity; and to prescribe, within the limitations of this chapter,  the
 21    duties  of  the warehousemen conducting warehouses licensed under this chapter
 22    with respect to their care of and responsibility for agricultural  commodities
 23    or seed crops.
                                                                        
 24        69-606.  LICENSES  TO  WAREHOUSEMEN,  PRODUCTION FACILITIES AND DEALERS --
 25    ISSUE -- RENEWAL -- CONDITIONS PRECEDENT. The Idaho state department of  agri-
 26    culture  is authorized, upon application to it, to issue or renew to any ware-
 27    houseman, production facility or dealer a license for the conduct of a  facil-
 28    ity  or operation in which production contracts or bailment contracts are used
 29    wholly or in part in accordance with this chapter and such  rules  as  may  be
 30    made hereunder, providing the following conditions are met:
 31        (1)  Each  person, as a condition precedent to operating a warehouse, pro-
 32    duction facility or as a dealer in this state, shall file and maintain  satis-
 33    factory  evidence  with the director of the Idaho state department of agricul-
 34    ture of the existence of an effective policy of insurance issued by an  insur-
 35    ance  company  authorized  to do business in this state, insuring all agricul-
 36    tural commodities or seed crops that may be stored or accepted for storage  on
 37    the  premises, including commodities owned by the warehouseman, for which such
 38    license is sought for the full market value of such  agricultural  commodities
 39    or  seed  crops against loss by fire, internal explosion, lightning or tornado
 40    or other casualty;
 41        (2)  That each warehouse be found suitable for the proper storage  of  the
 42    particular  agricultural  commodity or commodities or seed crop(s) for which a
 43    license is requested;
 44        (3)  A license fee is submitted to the department as prescribed by section
 45    69-612, Idaho Code;
 46        (4)  A current drawing of the warehouse which shows storage facilities and
 47    the capacity of the warehouse must be approved by the department;
 48        (5)  A sufficient and valid bond is filed and maintained  as  required  by
 49    section 69-609, Idaho Code;
 50        (6)  The  applicant  shall  submit  to the department an audited financial
 51    statement prepared by an independent certified public accountant showing  that
 52    the  licensee  has  and  does maintain current assets equal to or greater than
 53    current liabilities, a statement of current assets  and  current  liabilities,
                                                                        
                                           6
                                                                        
  1    and  a  statement  of  net worth, all of which shall be prepared in accordance
  2    with generally accepted accounting principles;
  3        (7)  License requirements -- Financial responsibility:
  4        (a) A person shall not engage in the business  of  a  production  contract
  5        facility  in  this  state  without having obtained a license issued by the
  6        department.
  7        (b)  The type of license required shall be determined as follows:
  8             (i)   A class 1 license is required if the production contract facil-
  9             ity has production contracts with a value equal to or  in  excess  of
 10             two  hundred fifty thousand dollars ($250,000), has paid on such con-
 11             tracts during the previous twelve (12) month period an  amount  equal
 12             to  or in excess of two hundred fifty thousand dollars ($250,000), or
 13             has a combination of contract value and payment during  the  previous
 14             twelve  (12)  month period equal to or in excess of two hundred fifty
 15             thousand dollars ($250,000). Any other production  contract  facility
 16             may elect to be licensed as a class 1 production contract facility;
 17             (ii)  A class 2 license is required if the production contract facil-
 18             ity  has  production contracts with a value in excess of twenty thou-
 19             sand dollars ($20,000) but less than two hundred fifty thousand  dol-
 20             lars  ($250,000),  has  paid  on  such  contracts during the previous
 21             twelve (12) month period an amount in excess of twenty thousand  dol-
 22             lars  ($20,000)  but  less  than  two  hundred fifty thousand dollars
 23             ($250,000), or has a combination of contract value and payment during
 24             the previous twelve (12) month period  in  an  amount  in  excess  of
 25             twenty  thousand  dollars  ($20,000)  but less than two hundred fifty
 26             thousand dollars ($250,000). A class 2 licensee  who  has  production
 27             contracts  with  a  value  equal to or in excess of two hundred fifty
 28             thousand dollars ($250,000) during any twelve (12)  month  period  or
 29             that  has  paid an amount, equal to or in excess of two hundred fifty
 30             thousand dollars ($250,000) during any twelve (12) month period shall
 31             immediately apply for a class 1 license. If  a  class  1  license  is
 32             denied,  the  person shall immediately cease doing business as a pro-
 33             duction contract facility.
 34        (c)  An application for a license to engage in business  as  a  production
 35        contract  facility  shall  be  filed with the department and shall be on a
 36        form prescribed by the department. A separate license is required for each
 37        location where records are maintained for transactions of  the  production
 38        contract facility.
 39        (d)  A license application shall include the following:
 40             (i)   The name of the applicant;
 41             (ii)  The  names  of the officers and directors if the applicant is a
 42             corporation;
 43             (iii) The names of the partners if the applicant is a partnership;
 44             (iv)  The location of the principal place of business; and
 45             (v)   Any other reasonable information the department finds necessary
 46             to carry out the provisions and purposes of this chapter.
 47        (e)  A license applicant shall further provide a sufficient and valid bond
 48        as specified in paragraph (g) of this subsection (7).
 49        (f)  A license applicant shall further provide a complete financial state-
 50        ment setting forth the applicant's assets, liabilities and net worth. This
 51        financial statement shall be prepared by an independent  certified  public
 52        accountant according to generally accepted accounting principles. The pro-
 53        duction  contract facility shall have and maintain current assets equal to
 54        or greater than current liabilities.
 55        (g)  In order to receive  and  retain  a  production  contract  facility's
                                                                        
                                           7
                                                                        
  1        license the following additional conditions must be satisfied:
  2             (i)   For a class 1 license a production contract facility shall have
  3             and maintain a net worth of at least fifty thousand dollars ($50,000)
  4             or maintain a bond in the amount of two thousand dollars ($2,000) for
  5             each  one  thousand dollars ($1,000) or fraction thereof of net worth
  6             deficiency. Provided however, a person shall not  be  licensed  as  a
  7             class 1 production contract facility if the person has a net worth of
  8             less  than  twenty-five  thousand dollars ($25,000). A bond submitted
  9             for purposes of this subsection shall be  in  addition  to  any  bond
 10             otherwise required under the provisions of this chapter;
 11             (ii)  For a class 2 license a production contract facility shall have
 12             and  maintain  a  net  worth of at least twenty-five thousand dollars
 13             ($25,000) or maintain a bond in the amount of  two  thousand  dollars
 14             ($2,000)  for  each one thousand dollars ($1,000) or fraction thereof
 15             of net worth deficiency; however, a person shall not be licensed as a
 16             class 2 production contract facility if the person has a net worth of
 17             less than fifteen thousand dollars ($15,000). A  bond  submitted  for
 18             purposes  of  this subsection shall be in addition to any bond other-
 19             wise required under the provisions of this chapter.
 20        (h)  The department may require  additional  information  or  verification
 21        regarding  the  financial  resources  of the applicant and the applicant's
 22        ability to pay production contracts.
 23        (8)  The applicant has complied with and abided by all the terms  of  this
 24    chapter and the rules prescribed hereunder;
 25        (9)  That  all  materials  required  for  renewal  of  a  license shall be
 26    received by the department prior to the expiration date of the production con-
 27    tract facility license. A  production  contract  facility  license  which  has
 28    expired  may  be  reinstated  by  the department upon receipt of all necessary
 29    licensing materials required by the provisions of this chapter and  a  penalty
 30    fee in the amount of five hundred dollars ($500), providing that this material
 31    is filed within thirty (30) days from the date of expiration of the production
 32    contract facility license. At the end of the thirty (30) day penalty period, a
 33    production  contract  facility  license shall be terminated by the department.
 34    All license applications completed and received after the thirty (30) day pen-
 35    alty period shall be considered original applications and license  fees  shall
 36    be assessed according to section 69-612, Idaho Code.
                                                                        
 37        69-607.  TERM  OF   LICENSE -- RENEWAL. Each license issued under sections
 38    69-606 and 69-613, Idaho Code, shall be issued for a period to  be  prescribed
 39    by rules by the Idaho state department of agriculture.
                                                                        
 40        69-608.  BOND  OF  APPLICANT  FOR LICENSE -- ADDITIONAL BOND -- ADDITIONAL
 41    OBLIGATIONS -- IRREVOCABLE LETTER OF CREDIT IN LIEU OF BOND. Each warehouseman
 42    applying for a license to conduct a facility in accordance with  this  chapter
 43    shall,  as  a  condition  to  the  granting thereof, execute and file with the
 44    department a good and sufficient bond other  than  personal  security  to  the
 45    state  to secure the faithful performance of his obligations as a warehouseman
 46    under all the laws of the state, including obligations arising by operation of
 47    the production contract indemnity fund program, and the rules prescribed here-
 48    under, and of such additional obligations as a warehouseman as may be  assumed
 49    by  him  under  contracts  with the respective producer/bailee of agricultural
 50    commodities or seed crops in such facility. Said bond shall be  in  such  form
 51    and  amount,  shall have such surety or sureties, and shall contain such terms
 52    and conditions as the department may prescribe to carry out  the  purposes  of
 53    this  chapter. Whenever the department shall determine that a bond approved by
                                                                        
                                           8
                                                                        
  1    it is, or for any cause has become,  insufficient, it shall require  an  addi-
  2    tional  bond  or  bonds  to be given by the warehouseman concerned, conforming
  3    with the requirements of this section, and unless the same be given within the
  4    time fixed by a written demand therefor the license of such warehouseman shall
  5    be suspended or revoked.
  6        The bond shall be approved by the department and shall be conditioned upon
  7    the faithful performance by the warehouseman of the duty to satisfy the finan-
  8    cial obligations of the production contracts  for  agricultural  commodity  or
  9    seed  crop  delivered  from such producers. The bond shall also be conditioned
 10    upon the faithful performance by the warehouseman of  any  additional  obliga-
 11    tions.
 12        The  warehouseman  may give a single bond meeting the requirements as pro-
 13    vided in this chapter and all facilities operated by the warehouseman shall be
 14    as one (1) facility for the purpose of compliance with the provisions of  this
 15    section.  Any  changes in financial obligations or the capacity of a warehouse
 16    or installation of any new warehouses involving a change in the bond liability
 17    under the provisions of this chapter shall be reported to the department prior
 18    to the acquiring of the additional obligations or operation thereof.
 19        At the discretion of the director, any person required to submit a bond to
 20    the department in accordance with this chapter, may at his option give to  the
 21    department  an irrevocable letter of credit payable to the director as trustee
 22    in lieu of the bond required herein. The principal amount  of  the  letter  of
 23    credit  shall  be the same as that required for a surety bond pursuant to this
 24    chapter. The letter of credit shall remain on file with the  department  until
 25    it  is  released, canceled or discharged by the director. The letter of credit
 26    shall remain in force so long as the director of the Idaho state department of
 27    agriculture is notified thirty (30) days in advance of the aforementioned doc-
 28    ument to be renewed, altered or amended. Failure to comply with such  require-
 29    ment  to notify shall result in the suspension of a warehouseman license.  The
 30    provisions of this chapter that apply to a  bond  required  pursuant  to  this
 31    chapter apply to each letter of credit given in lieu of such bond.
 32        Under  the  provisions  of  this  chapter, an irrevocable letter of credit
 33    shall not be acceptable unless it is issued by a national bank in Idaho or  by
 34    an  Idaho state chartered bank insured by the federal deposit insurance corpo-
 35    ration.
                                                                        
 36        69-609.  AMOUNT OF BOND -- CANCELLATION. The amount of  bond  to  be  fur-
 37    nished  for  each  production contract facility will be fixed at a rate of six
 38    percent (6%) of the total value of the agricultural  commodity  or  seed  crop
 39    reflected  on production contracts.  In any case, the amount of the bond shall
 40    not be less than twenty-five thousand dollars ($25,000) and shall not be  more
 41    than  five  hundred  thousand dollars ($500,000). This bond shall run continu-
 42    ously with a production contract facility license until suspended, revoked  or
 43    canceled  by  the  bonding  company. A ninety (90) day written notice shall be
 44    given to the department by the bonding company before any bond  is  suspended,
 45    revoked  or canceled. The director reserves the right to waive the ninety (90)
 46    day cancellation period.
                                                                        
 47        69-610.  ACTION ON BOND BY PERSONS INJURED.  Any  person  injured  by  the
 48    breach  of any obligation for which a bond is written, under the provisions of
 49    section 69-608, Idaho Code, shall be entitled to sue on the bond  in  his  own
 50    name  in  a court of competent jurisdiction to recover the damages he may have
 51    sustained by such breach, or may petition the director to fix  the  amount  of
 52    his  damages.  The  director shall thereupon make demand upon the warehouseman
 53    and his surety for payment of such damages and, in the event such damages  are
                                                                        
                                           9
                                                                        
  1    not  promptly  paid,  the  director  shall  commence  an action on the bond to
  2    enforce payment of such damages. The liability of the  surety  upon  the  bond
  3    required  to  be  given  by  warehousemen as provided in section 69-608, Idaho
  4    Code, for any one (1) annual licensing period shall be limited to  the  amount
  5    specified  in  the bond, and in case of recoveries had by two (2) or more per-
  6    sons for violation of the conditions of such bond in excess of the  amount  of
  7    the  bond,  such recovery shall be prorated and the total recovery against the
  8    surety for any one (1) annual licensing period shall not exceed the amount  of
  9    the  bond. Any person who sues and obtains a judgment against the warehouseman
 10    and/or his surety for payment of such damages  under  this  section  shall  be
 11    entitled to recover reasonable attorney's fees and costs.
                                                                        
 12        69-611.  DESIGNATION  OF  FACILITY AS BONDED PRODUCTION CONTRACT FACILITY.
 13    Upon the filing with and approval by the Idaho state department of agriculture
 14    of a bond, in compliance with this chapter, for the conduct  of  a  production
 15    contract  facility, such facility shall be designated as bonded hereunder; but
 16    no facility shall be designated as bonded under this chapter, and no  name  or
 17    description  conveying  the  impression  that  it is so bonded, shall be used,
 18    until a bond, such as provided for in section 69-608,  Idaho  Code,  has  been
 19    filed  with  and  approved  by  the  department of agriculture, nor unless the
 20    license issued under this chapter for the conduct  of  such  facility  remains
 21    unsuspended and unrevoked.
                                                                        
 22        69-612.  FEES  OF DEPARTMENT. (1) The department shall charge, assess, and
 23    cause to be collected an annual fee  for  each  facility  license  or  renewal
 24    thereof, according to the following schedule:
 25    For each original application:
 26        Annual Contract Value                                                 Rate
 27             $20,000 to $250,000...........................................$100.00
 28             $250,001 and over.............................................$200.00
 29    For each renewal application:
 30        Annual Contract Value                                                 Rate
 31             $20,000 to $250,000............................................$30.00
 32             $250,001 and over..............................................$60.00
 33        (2)  The  department  shall  assess  and  collect  a  fee of fifty dollars
 34    ($50.00) for each inspection of a facility or station which is  done  for  the
 35    purpose of amending a production contract facility license.
 36        (3)  The  department  shall  assess and collect a fee of one hundred fifty
 37    dollars ($150) per day or fraction thereof for maintaining an employee of  the
 38    department  at  a  facility  to  oversee the correction of a violation of this
 39    chapter.
 40        (4)  Upon approval by the department, a warehouseman may operate  two  (2)
 41    or more facilities under a single production contract facility license.
 42        (5)  All  fees  shall be deposited into the state treasury and credited to
 43    the general fund.
                                                                        
 44        69-613.  LICENSES  TO  WEIGH  COMMODITIES  FOR  STORAGE.  Every  warehouse
 45    licensed under this chapter shall have a weighmaster licensed pursuant to  the
 46    provisions of the weighmaster's licensing act; provided however, that if agri-
 47    cultural  commodities  or  seed crops are not received or delivered by a ware-
 48    house over scales, a weighmaster's license shall not be required.
                                                                        
 49        69-614.  PRIVILEGE OF EXAMINING COMMODITIES OR SEED  CROPS  STORED.  Every
 50    state  inspector  or  investigator  authorized by the director, shall have the
 51    right to examine at any reasonable time during  ordinary  business  hours  any
                                                                        
                                           10
                                                                        
  1    commodity  or  seed crop so stored, and all parts of such facilities, provided
  2    the facility or the agricultural commodities or seed crops stored  therein  is
  3    not  endangered  by  such  inspection;  and every warehouseman, his agents and
  4    employees shall furnish safe and reasonable access  and  facilities  for  such
  5    examination.
                                                                        
  6        69-615.  EMPLOYMENT OF PERSONNEL. The department of agriculture may employ
  7    such  inspectors,  investigators,  samplers and weighers as it may deem neces-
  8    sary.
                                                                        
  9        69-616.  RIGHT TO ASSESS AND COLLECT FEES. The department shall  have  the
 10    right  to  assess  and  collect such fees as may be necessary to carry out the
 11    provisions of this chapter.
                                                                        
 12        69-617.  INSPECTION AND GRADING OF DISEASED OR INSECT INFESTED COMMODITIES
 13    AND SEED CROPS. Any diseased or insect infested agricultural commodity or seed
 14    crop complained of by the department or any  person  having  interest  in  the
 15    facility  or  agricultural  commodities  or  seed  crops stored in a warehouse
 16    licensed under this chapter shall be inspected and graded by a  representative
 17    of  the  department of agriculture or a person duly licensed to grade the same
 18    under this chapter; and if such inspection or grading shows such  agricultural
 19    commodity  or  seed crop to be in such condition that its continued storing or
 20    retention would injure or damage the warehouse  or  other  commodities  stored
 21    therein  the  owner shall, by order of the director, forthwith remove and dis-
 22    pose of such agricultural commodity or seed crop as directed. If the owner  of
 23    such  commodity  is unknown to the inspector or warehouseman, the warehouseman
 24    shall proceed to remove or make disposition of such commodity in a manner that
 25    will tend to save and realize the values contained in such  commodity  by  the
 26    owner,  under  such rules as may be promulgated under this chapter or the uni-
 27    form commercial code.
                                                                        
 28        69-618.  RECEIPTS -- SCALE WEIGHT TICKETS. For all  agricultural  commodi-
 29    ties  or  seed crops delivered to a facility licensed under this chapter, non-
 30    negotiable warehouse receipts or scale weight tickets, shall be issued by  the
 31    warehouseman  conducting  the  same,  but no receipts or scale weight tickets,
 32    shall be issued except for agricultural commodities  or  seed  crops  actually
 33    delivered to the warehouse at the time of the issue thereof; provided however,
 34    nonnegotiable warehouse receipts or scale weight tickets need not be issued if
 35    all  production  contracts  for  which  the facility is licensed are excluding
 36    weights as a necessary element of said contract.
                                                                        
 37        69-619.  STANDARDS FOR AGRICULTURAL COMMODITIES AND SEED CROPS. The  Idaho
 38    state department of agriculture is authorized, from time to time, to establish
 39    and  promulgate standards for agricultural commodities and seed crops by which
 40    their quality or value may be judged or determined.
 41        So far as practicable such standards shall conform to the  official  stan-
 42    dards  of the United States or the state of Idaho, applicable to such agricul-
 43    tural commodities or seed crops as the same may from time to time be fixed and
 44    promulgated.
 45        No warehouseman in this state shall insert in any receipt  issued  by  him
 46    any language in anywise limiting or modifying his liabilities, or responsibil-
 47    ities, as imposed by the laws of this state.
                                                                        
 48        69-620.  RECORDS  OF FACILITIES -- CONDUCT OF FACILITIES. Every warehouse-
 49    man conducting a production contract facility licensed under the provisions of
                                                                        
                                           11
                                                                        
  1    this chapter shall keep in a place of safety complete and correct records  and
  2    shall  conduct  said  facility  in  all other respects in compliance with this
  3    chapter and the rules promulgated hereunder.
                                                                        
  4        69-621.  EXAMINATION OF COMMODITIES AND SEED CROPS -- RECORDS --  PUBLICA-
  5    TION  OF  FINDINGS. The Idaho state department of agriculture is authorized to
  6    cause examination to be made  of  any  agricultural  commodity  or  seed  crop
  7    received,  or  any  record  pertaining to commodities received therein, in any
  8    facility licensed under the provisions of this chapter. Whenever, after oppor-
  9    tunity for hearing is given to the warehouseman conducting such warehouse,  it
 10    is  determined  that  he  is not performing fully the duties imposed on him by
 11    this chapter and the rules promulgated hereunder, the department  may  publish
 12    its findings in a local daily or weekly newspaper in the area where the facil-
 13    ity is located.
                                                                        
 14        69-622.  SUSPENSION  OR  REVOCATION OF LICENSE. The Idaho state department
 15    of agriculture may, after opportunity for hearing has  been  afforded  to  the
 16    licensee  concerned,  suspend or revoke any license issued to any person under
 17    the provisions of this chapter, for any violation of or failure to comply with
 18    any provision of this chapter, chapter 7, title 28, Idaho Code  (uniform  com-
 19    mercial  code), or the rules promulgated hereunder or upon the ground that the
 20    licensee has used his license or allowed it to be used for any  improper  pur-
 21    pose.  Pending  investigation the department of agriculture, whenever it deems
 22    necessary, may suspend a license temporarily without hearing.
                                                                        
 23        69-623.  PUBLICATION OF REPORTS. The Idaho state department of agriculture
 24    from time to time may publish the results of any investigations made under the
 25    provisions of this chapter; and it may publish the names and addresses of per-
 26    sons licensed under this chapter and a list of all licenses  terminated  under
 27    this chapter and the causes therefor.
                                                                        
 28        69-624.  EXAMINATION  OF  BOOKS. The Idaho state department of agriculture
 29    is authorized through officials, employees or agents of the department  desig-
 30    nated  by it, to examine all books, records, papers and accounts of facilities
 31    relating thereto.
                                                                        
 32        69-625.  RULES. The Idaho state department of agriculture shall from  time
 33    to  time promulgate such rules as it may deem necessary for the efficient exe-
 34    cution of the provisions of this chapter.
                                                                        
 35        69-626.  COOPERATION WITH GOVERNMENTAL AGENCIES AND PRIVATE  ASSOCIATIONS.
 36    The  director  may  cooperate with and enter into agreements with governmental
 37    agencies of this state, other states, agencies of the federal government,  and
 38    private  associations in order to carry out the purpose and provisions of this
 39    chapter and the United States warehouse act (7 U.S.C. section 241,  et  seq.).
 40    Notwithstanding any other provisions of this chapter, such agreements may also
 41    relate to a joint program for licensing, bonding and inspecting stations. Such
 42    a program should be designed to avoid duplication of effort on the part of the
 43    licensing authority and requirements for operation, and promote more efficient
 44    enforcement of the provisions of this chapter and comparable provisions of the
 45    laws  of  the  states of Oregon, Washington, Montana, Wyoming, Utah and Nevada
 46    and the province of British Columbia, Canada.
                                                                        
 47        69-627.  VIOLATION OF LAW -- PENALTY. Any person who violates  any  provi-
 48    sion  of this chapter or the rules promulgated hereunder, or who shall impede,
                                                                        
                                           12
                                                                        
  1    obstruct, hinder or otherwise prevent or attempt to prevent  the  director  or
  2    his  duly  authorized representative in the performance of his duty in connec-
  3    tion with the provisions of this  chapter,  except  as  provided  in  sections
  4    69-604  and  69-641,  Idaho Code, shall be guilty of a misdemeanor and be pun-
  5    ished by imprisonment in a county jail not to exceed six (6) months, or  by  a
  6    fine of not more than one thousand dollars ($1,000), or by both.
                                                                        
  7        69-628.  RENT  OF  QUARTERS -- EMPLOYMENT OF ASSISTANTS. The department is
  8    authorized to rent quarters and to employ persons as it  may  deem  necessary,
  9    and it is authorized, in its discretion, to employ qualified persons not regu-
 10    larly in the service of the state for temporary assistance in carrying out the
 11    purposes of this chapter.
                                                                        
 12        69-629.  EFFECT  OF  PARTIAL  INVALIDITY  OF LAW. If any clause, sentence,
 13    paragraph, or part of this chapter shall, for any reason, be adjudged  by  any
 14    court of competent jurisdiction to be invalid, such judgment shall not affect,
 15    impair,  or  invalidate  the  remainder  thereof, but shall be confined in its
 16    operation to the clause, sentence, paragraph or part thereof directly involved
 17    in the controversy in which such judgment shall have been rendered.
                                                                        
 18        69-630.  NONCOMPLIANCE -- FAILURE -- REMEDIES OF DEPARTMENT. (1)  Whenever
 19    it appears, after any investigation, that a licensee does not have the ability
 20    to pay producers for contract obligations or when the licensee refuses to sub-
 21    mit  his  books, papers or property to lawful inspection, the department shall
 22    give notice to the licensee to  comply  with  all  or  any  of  the  following
 23    requirements:
 24        (a)  Give an additional bond as requested by the department; or
 25        (b)  Submit to such inspection as the department may deem necessary.
 26        (2)  If  the licensee fails to comply with the terms of such notice within
 27    twenty-four (24) hours from the date of issuance of the notice, or within such
 28    further time as the department may allow, not to exceed ten (10) working days,
 29    the department shall petition the district  court  in  the  county  where  the
 30    licensee's  principal  place  of  business is located, as shown by the license
 31    application, for an order:
 32        (a)  Authorizing the department to seize and take possession of any or all
 33        agricultural commodities or seed crops  in  the  warehouse  or  warehouses
 34        owned,  operated  or  controlled by the licensee, and of all books, papers
 35        and property of all kinds used in connection with the conduct or the oper-
 36        ation of the production contract  facility  business,  and  any  materials
 37        which pertain in any way to that business; and
 38        (b)  Enjoining  the  licensee  from interfering with the department in the
 39        discharge of its duties as required by the provisions of this section.
 40        (3)  Upon taking possession, the department shall give written  notice  of
 41    its action to the surety on the bond of the licensee and shall notify the pro-
 42    ducers  of  record,  as  shown by the licensee's records, of all nonnegotiable
 43    warehouse receipts, scale weight tickets or production  contracts  issued  for
 44    agricultural  commodities  or seed crops, to present their nonnegotiable ware-
 45    house receipt or other evidence of obligation for inspection or to account for
 46    the same. The department shall thereupon cause an audit  to  be  made  of  the
 47    affairs of such licensed facility.
 48        (4)  The  department  shall retain possession of the agricultural commodi-
 49    ties or seed crops in the warehouse or warehouses, and the books,  papers  and
 50    property of the licensee, until such time as the licensee or the surety on the
 51    bond shall have satisfied the claims of all holders of nonnegotiable warehouse
 52    receipts  or  other  evidence of obligation or, in case the obligations exceed
                                                                        
                                           13
                                                                        
  1    the amount of the bond, the surety on  the  bond  shall  have  satisfied  such
  2    claims  pro rata, or until such time as the department is ordered by the court
  3    to surrender possession.
  4        (5)  If during or after the audit provided for in this section, or at  any
  5    other  time  the  department has evidence that the licensee is insolvent or is
  6    unable to satisfy  the  claims  of  all  holders  of  nonnegotiable  warehouse
  7    receipts  or other evidence of production contract obligations, the department
  8    shall petition the district court for the appointment of a receiver to operate
  9    or liquidate the business of the licensee in accordance with the law.
 10        (6)  At any time within ten (10) days after the department  takes  posses-
 11    sion  of  any  agricultural commodities or seed crops, or the books, papers or
 12    property of any facility, the licensee may serve notice on the  department  to
 13    appear  in  the district court of the county in which the facility is located,
 14    at a time to be fixed by the court, and show cause why the  agricultural  com-
 15    modities  or  seed  crops,  books,  papers  and  other  property should not be
 16    restored to his possession.
 17        (7)  All necessary expenses incurred by the department in carrying out the
 18    provisions of this section may be recovered in a separate civil action brought
 19    by the department in district court or recovered at the same time and as  part
 20    of the receivership or seizure action filed under the provisions of this chap-
 21    ter.
 22        (8)  As a part of the expenses so incurred, the department or the receiver
 23    is authorized to include the cost of adequate liability insurance necessary to
 24    protect  the  department, its officers, and others engaged in carrying out the
 25    provisions of this section.
 26        (9)  The provisions and remedies of this section  are  not  limited  to  a
 27    warehouse shortage.
                                                                        
 28        69-631.  FINANCIAL  DIFFICULTIES  -- ADDITIONAL BOND OR SECURITY REQUIRED.
 29    The department shall, when it has reason to believe that a licensee  does  not
 30    have  the ability to pay producers for contract obligations, or when it deter-
 31    mines that the licensee does not have a sufficient net  worth  to  outstanding
 32    financial  obligations  ratio, require from the licensee the posting of a bond
 33    or other additional security in an amount to be prescribed by rule. The  addi-
 34    tional security may exceed the maximum amount set forth in this chapter. Fail-
 35    ure  of the licensee to timely post the additional bond or other security con-
 36    stitutes grounds for suspension or revocation of a license issued  under  this
 37    chapter. The licensee may request a hearing regarding the decision to increase
 38    the  amount  of security required or the revocation or suspension of a license
 39    pursuant to this section and may appeal such decisions pursuant to the  proce-
 40    dure set out in section 69-639, Idaho Code.
                                                                        
 41        69-632.  DUTIES OF WAREHOUSEMAN -- CONTENTS OF RECORDS. (1) The warehouse-
 42    man  shall  maintain current and complete records at all times with respect to
 43    all agricultural  commodities  or  seed  crops  handled,  stored,  shipped  or
 44    merchandised by him, including agricultural commodities or seed crops owned by
 45    him.  Such  records shall include, but are not limited to, records showing the
 46    total quantity of each kind and class of agricultural commodity or  seed  crop
 47    received  and  loaded  out and the amount remaining within the facility at the
 48    close of each business day.
 49        (2)  Every production contract facility creating production contracts  for
 50    any agricultural commodity or seed crop with a producer thereof shall promptly
 51    make  and  keep  for  five  (5)  years  an original of every executed contract
 52    including any amendments or notations made thereto.
                                                                        
                                           14
                                                                        
  1        69-633.  DIRECTOR'S DISCRETIONARY ACTION. Nothing in this chapter shall be
  2    construed to require the director or his authorized representative  to  report
  3    for prosecution or for the institution of civil action a violation of the pro-
  4    visions  of  this  chapter  when he believes that public interest will best be
  5    served by a suitable warning.
                                                                        
  6        69-634.  INSURANCE -- CANCELLATION PROCEDURE  --  SUSPENSION  OF  LICENSE.
  7    With  the existence of an effective policy of insurance as required by section
  8    69-606(1), Idaho Code, the insurance company involved  shall  be  required  to
  9    give  thirty (30) days' advance notice to the department by registered or cer-
 10    tified mail, return receipt requested, of cancellation of the policy.  In  the
 11    event  of  any  cancellation,  the  department shall immediately terminate the
 12    license of such person without a hearing, and  the  termination  shall  be  in
 13    effect  until satisfactory evidence of the existence of an effective policy of
 14    insurance complying with the requirements of this chapter has  been  submitted
 15    to the department.
                                                                        
 16        69-635.  INJUNCTION.  Any  violation  of the provisions of this chapter or
 17    the rules promulgated hereunder may be enjoined upon complaint by  the  direc-
 18    tor.
                                                                        
 19        69-636.  DUTY  TO  PROSECUTE.  It  shall  be  the duty of each prosecuting
 20    attorney to whom any violation is reported to cause appropriate proceedings to
 21    be instituted and prosecuted without delay in a court of  competent  jurisdic-
 22    tion.
                                                                        
 23        69-637.  LICENSE REISSUANCE FOLLOWING REVOCATION. A facility license shall
 24    not  be issued to any person whose license has been revoked within a period of
 25    three (3) years from the date of such revocation. Upon proper application  for
 26    a  license  following three (3) years from the date of revocation, the depart-
 27    ment shall hold a hearing within thirty (30) days from receipt of the applica-
 28    tion to determine if such license shall be issued. If, after the hearing,  the
 29    department  determines  that  it is in the best interest of the public, it may
 30    deny the issuance of a license  to  the  applicant.  Judicial  review  of  the
 31    department's  action may be sought. A change in a person's business name shall
 32    not absolve that person of a  prior  revocation  of  his  production  contract
 33    facility license.
                                                                        
 34        69-638.  DIRECTOR'S  AUTHORITY.  The  director  may,  upon his own motion,
 35    whenever he has reason to believe the provisions of  this  chapter  have  been
 36    violated, or upon verified complaint of any person in writing, investigate the
 37    actions of any warehouseman licensed under the provisions of this chapter, and
 38    if  he finds probable cause to do so, shall file a complaint against the ware-
 39    houseman which shall be set down for hearing before the director  upon  thirty
 40    (30)  days' notice served upon such license holder by personal service, regis-
 41    tered mail or facsimile.
 42        The director shall have the power to  administer  oaths,  certify  to  all
 43    official acts and shall have the power to subpoena any person in this state as
 44    a  witness;  to  compel  through  subpoena the production of books, papers and
 45    records; and to take the testimony of any person on  deposition  in  the  same
 46    manner  as prescribed by law in the procedure before the courts of this state.
 47    A subpoena issued by the director shall extend to all parts of the  state  and
 48    may be served by any person authorized to do so.
 49        All  powers  of the director herein enumerated in respect to administering
 50    oaths, power of subpoena and other powers  in  hearings  on  complaints  shall
                                                                        
                                           15
                                                                        
  1    likewise  be  applicable  to hearings held on applications for the issuance or
  2    renewal of a production contract facility license.
                                                                        
  3        69-639.  APPEALS FROM DECISION OF DIRECTOR. The director shall keep a com-
  4    plete transcript of all proceedings and  evidence  presented  in  any  hearing
  5    before him. The applicant, licensee or any complainant formally appearing in a
  6    hearing  before  the  director  for a license, or the holder of any production
  7    contract facility license suspended or revoked, or any  party  to  a  transfer
  8    application  may  appeal to the district court in accordance with the terms of
  9    chapter 52, title 67, Idaho Code.
                                                                        
 10        69-640.  LICENSE DENIAL. (1) Any person who has had a claim  collected  or
 11    ordered  to be collected against their production contract facility bond shall
 12    not be licensed by the department for a period of three  (3)  years  from  the
 13    date  of  such order or collection. License denial may be waived if the person
 14    can show to the satisfaction of the  director  that  full  settlement  of  all
 15    claims  against  the  bond has been made. A change in a person's business name
 16    shall not absolve any unsettled claim against that person's prior bond.
 17        (2)  The director shall, after a public hearing, have the right to deny or
 18    refuse to issue a license or renewal thereof to an applicant when it is deter-
 19    mined that public interest is best served by that denial or refusal.
 20        (3)  Upon refusal or denial pursuant to subsection (2) of this section, an
 21    applicant may reapply for a license or renewal after a period of  ninety  (90)
 22    days, at which time a new hearing will be held to review the application.
 23        (4)  The  applicant  shall  have  the  right  of appeal on any decision to
 24    refuse or deny a license under subsection (2) of this section to  a  court  of
 25    competent jurisdiction.
                                                                        
 26        69-641.  DRAWING  CHECKS  INSUFFICIENTLY  COVERED  A VIOLATION. Any person
 27    engaged in business as a production contract facility or agent, as defined  in
 28    this chapter, who shall make, draw, utter or deliver any check, draft or order
 29    for  the payment of money upon any bank or other depository, in payment to the
 30    producer of the contract price of any agricultural commodity or seed  crop  or
 31    any  part  thereof upon obtaining possession or control thereof, or in compli-
 32    ance with said contract when at the time of such making, drawing, uttering  or
 33    delivery  the maker or drawer does not have sufficient funds in or credit with
 34    such bank or other depository for the payment of such check, draft or order in
 35    full upon its presentation, shall violate the provisions of this chapter.  The
 36    word  "credit"  as used herein shall mean an arrangement or understanding with
 37    the bank or depository for the payment of such check, draft or order.
                                                                        
 38        69-642.  RECORDS. All financial statements and production records of ware-
 39    housemen required under  the provisions of this chapter shall  be  subject  to
 40    disclosure according to chapter 3, title 9, Idaho Code, except as follows:
 41        (1)  Upon written permission by the licensee;
 42        (2)  In  actions  or administrative proceedings commenced under the provi-
 43    sions of this chapter, or chapters 2 or 5, title 69, Idaho Code;
 44        (3)  When required by subpoena or court order; or
 45        (4)  Disclosure to law enforcement agencies in connection with the  inves-
 46    tigation or prosecution of criminal offenses.
                                                                        
 47        69-643.  SHORT  TITLE  -- CROP SPECIFIC INDEMNITY FUND PROGRAM -- START-UP
 48    PROCEDURE. The provisions of this section and sections 69-644 through  69-653,
 49    Idaho   Code,  constitute  the  "Crop  Specific  Indemnity  Fund  Program"  or
 50    "Program." The director shall notify each licensed warehouse, dealer and  pro-
                                                                        
                                           16
                                                                        
  1    duction contract facility of the effective date of the program provisions.
                                                                        
  2        69-644.  CREATION  OF  INDEMNITY  FUND -- USES. (1) There is hereby estab-
  3    lished within the dedicated fund a fund to  be  known  as  the  crop  specific
  4    indemnity  fund.  The  indemnity fund shall consist of assessments remitted by
  5    producers pursuant to the provisions of this chapter and any interest or earn-
  6    ings on the fund balance.
  7        (2)  All assessments shall be paid to the department and shall  be  depos-
  8    ited  in the indemnity fund. The state treasurer shall be the custodian of the
  9    indemnity fund. Disbursements shall be authorized by the  director  as  deter-
 10    mined  by  the  advisory committee. No appropriation is required for disburse-
 11    ments from this fund.
 12        (3)  The indemnity fund shall be used exclusively for purposes  of  paying
 13    claimants  pursuant to this chapter, and paying necessary expenses of adminis-
 14    tering the indemnity fund, provided however, that up to one-half (1/2) of  the
 15    interest  accumulated  by  the  fund  may be paid to the department and to the
 16    state treasurer to defray costs of administering the  indemnity  fund  program
 17    and  the  indemnity  fund. Up to one-half (1/2) of the interest accumulated by
 18    the fund and if necessary a portion of the fund may be used to defray the cost
 19    of reinsuring the fund at the discretion of the advisory committee. The  state
 20    of Idaho shall not be liable for any claims presented against the fund.
                                                                        
 21        69-645.  ASSESSMENT  --  RATE -- MINIMUM AND MAXIMUM ASSESSMENT. (1) Every
 22    producer shall pay an assessment to the department for deposit in  the  indem-
 23    nity fund according to the provisions of this chapter and rules promulgated by
 24    the department to implement the provisions of this chapter.
 25        (2)  Except  as  provided  in  this subsection, the rate of the assessment
 26    shall be established by rules promulgated by the  department.  The  producer's
 27    annual  assessment  shall  not  exceed  two-tenths of one percent (.2%) of the
 28    total value, as determined at the time of final settlement, of the  producer's
 29    contract(s).
                                                                        
 30        69-646.  PAYMENT  OF  ASSESSMENT.  The  department shall promulgate a rule
 31    establishing the assessment within sixty (60) days of the  activation  of  the
 32    program  pursuant  to section 69-643, Idaho Code. The department shall promul-
 33    gate rules to provide a procedure for the collection of the producer's assess-
 34    ment provided, that warehousemen commodity dealers and/or  production contract
 35    facilities shall be responsible for the collection of the  producer's  assess-
 36    ment payments and the transmission of same to the department.
                                                                        
 37        69-647.  MAXIMUM FUND BALANCE -- CESSATION OF ASSESSMENTS. The assessments
 38    imposed  pursuant  to section 69-645, Idaho Code, shall be imposed under rules
 39    promulgated by the department, until such time as the indemnity fund  balance,
 40    less any outstanding claims, reaches ten million dollars ($10,000,000). If the
 41    indemnity  fund balance, less any outstanding claims, exceeds ten million dol-
 42    lars ($10,000,000) on an assessment date, no assessment shall  be  imposed  by
 43    the  department, except as provided in section 69-646, Idaho Code. For the two
 44    (2) fiscal years immediately following the effective date of the  program,  an
 45    amount  not  exceeding one hundred thousand dollars ($100,000) per year may be
 46    paid to the department to defray costs of administering the indemnity program.
                                                                        
 47        69-648.  ADVISORY COMMITTEE -- TERMS -- COMPENSATION. (1) There is  hereby
 48    created  a  crop specific indemnity fund advisory committee consisting of nine
 49    (9) members to be appointed by the director. Appointments shall be  for  three
 50    (3)  year terms, each term ending on the same day of the same month as did the
                                                                        
                                           17
                                                                        
  1    term preceding it. Any member appointed to fill a vacancy occurring  prior  to
  2    the  expiration  of  the term for which the member's predecessor was appointed
  3    shall hold office for the remainder of the predecessor's term.
  4        (2)  The committee shall  be  composed  of  six  (6)  producers  primarily
  5    engaged  in producing crops under production contracts, and three (3) licensed
  6    production contract facility operators.
  7        (3)  The committee shall meet at such places and times as it shall  deter-
  8    mine  and  as often as necessary to discharge the duties imposed upon it; pro-
  9    vided, it shall meet not less than twice per year. Each committee member shall
 10    be compensated in accordance with section 59-509(g), Idaho  Code,  for  travel
 11    and subsistence expense. The expenses of the committee and its operation shall
 12    be paid from the crop specific indemnity fund.
 13        (4)  The  committee  shall  have the power and duty to advise the director
 14    concerning assessments, administration of the crop  specific  indemnity  fund,
 15    and payment of claims from the fund.
                                                                        
 16        69-649.  PROOF  OF  CLAIMS  -- PROCEDURE -- HEARING -- INSPECTION OF WARE-
 17    HOUSE. In the event a production contract facility fails, as defined  in  sec-
 18    tion  69-602(12),  Idaho Code, the department shall process the claims of pro-
 19    ducers producing written evidence of unsatisfied production contracts, for the
 20    crops listed in subsection (1) of this section,  for  damages  caused  by  the
 21    failure, in the following manner:
 22        (1)  Seed crops covered by this indemnity fund program are as follows: any
 23    true seed crop that may include, but not limited to, dry edible bean seed, dry
 24    garden  bean  seed,  alfalfa  seed, clover seed, forage grass seed, ornamental
 25    grass seed, vegetable seed, flower seed, peas, lentils  and  other  leguminous
 26    seeds or any other seed crops as determined by the advisory committee.
 27        (2)  The department shall give notice and provide a reasonable time of not
 28    less than thirty (30) days and not more than sixty (60) days to producers pos-
 29    sessing  written  evidence  of  unsatisfied production contracts to file their
 30    written verified claims with the department.
 31        (3)  The department may investigate each claim and determine  whether  the
 32    claimant's  commodities or seed crops are under a production contract and they
 33    are one (1) of the commodities or seed crops listed in subsection (1) of  this
 34    section.  The  department shall notify each claimant, the commodity warehouse-
 35    man, dealer or production facility, and  the  committee  of  the  department's
 36    determination as to the validity and amount of each claimant's claim. A claim-
 37    ant  or warehouseman or dealer or production facility may request a hearing on
 38    the department's determination within twenty (20) days of receipt  of  written
 39    notification and a hearing shall be held by the department pursuant to chapter
 40    52,  title  67,  Idaho  Code.  Upon determining the amount and validity of the
 41    claim, the director shall pay to the claimant an amount equal to  ninety  per-
 42    cent (90%) of the approved claim from the indemnity fund. Prior to any payment
 43    from  the  fund to a claimant, the claimant shall be required to subrogate and
 44    assign his right to recover from any other source. The department may then pay
 45    up to ninety percent (90%) of the approved claim to the claimant. The  depart-
 46    ment  shall have a priority claim for that amount. The claimant shall be enti-
 47    tled to seek recovery of the remaining ten percent (10%) which was not  origi-
 48    nally assigned to the department. For the purpose of determining the amount of
 49    the  producer's  claim, the stated price on the producer's unambiguous produc-
 50    tion contracts will be used.  If the price is not clearly stated the value  of
 51    a  producer's  crop  shall  be  the value of the crop on the date the director
 52    declared the warehouse, dealer or production facility to  have  failed  or  to
 53    have failed to comply with the provisions of this chapter or rules promulgated
 54    thereunder or the amount stated on a valid contract.
                                                                        
                                           18
                                                                        
  1        (4)  The  department  shall inspect, conduct an examination and/or audit a
  2    failed warehouseman, dealer  or  production  contract  facility  to  determine
  3    whether  the  warehouseman has in his possession sufficient quantities of com-
  4    modities, seed crops or assets to cover his storage and/or  financial  obliga-
  5    tions.  In the event of a shortage or inability to meet financial obligations,
  6    the department shall determine each producer's pro  rata  share  of  available
  7    commodities or seed crops and the deficiency shall be considered as a claim of
  8    the  producer. Each type of commodity or seed crop shall be treated separately
  9    for the purpose of determining shortages. The director may, at his discretion,
 10    halt the sale or movement of any commodity, product, crop or asset if a  fail-
 11    ure occurs.
 12        (5)  The director shall not approve or pay any claim made on the crop spe-
 13    cific  indemnity  fund if the claim is based on losses resulting from entering
 14    into a production contract with an unlicensed warehouse, dealer  or  facility.
 15    The  director  shall  not  approve  or pay any claim made on the crop specific
 16    indemnity fund if the claim is for the payment of interest,  attorney's  fees,
 17    ancillary costs or punitive damages.
 18        (6)  Any  appeal  of the final decision of the department made pursuant to
 19    chapter 52, title 67, Idaho Code, and made against the crop specific indemnity
 20    fund program by any producer, depositor  or  claimant,  will  fall  under  the
 21    jurisdiction of Idaho courts using Idaho law.
                                                                        
 22        69-650.  FAILURE TO FILE -- LOSS OF CLAIM ON FUND. If a producer creditor,
 23    after  notification, refuses or neglects to file in the office of the director
 24    his verified claim against a warehouseman, dealer or facility as requested  by
 25    the director within sixty (60) days from the date of the request, the director
 26    shall  thereupon  be relieved of responsibility for taking action with respect
 27    to such claim later asserted and no such claim shall be  paid  from  the  crop
 28    specific indemnity fund.
                                                                        
 29        69-651.  MINIMUM  BALANCE  --  SUBSEQUENT PAYMENTS. The minimum balance in
 30    the crop specific indemnity fund shall be one million dollars ($1,000,000). At
 31    no time shall the balance be allowed to fall below the  minimum  balance.  The
 32    director  may  pay claims, on a pro rata basis if necessary, until the minimum
 33    balance is reached. The director may pay claims, on a pro rata basis if neces-
 34    sary, until the minimum balance is reached. If the director cannot fully pay a
 35    claim before the minimum balance is reached, he shall, when the crop  specific
 36    indemnity fund contains sufficient funds, pay off the claim. Provided however,
 37    that  in  no  event  shall  the fund be liable for those claims not fully paid
 38    within the subsequent three (3) year period of time, whether  the  claims  are
 39    fully paid or not.
                                                                        
 40        69-652.  PAYMENT  FROM FUND -- DEBT OF WAREHOUSEMAN OR DEALER OR SURETY --
 41    REIMBURSEMENT -- ACCRUAL OF CAUSE OF ACTION. Amounts paid from the  crop  spe-
 42    cific  indemnity fund in satisfaction of any approved claim shall constitute a
 43    debt and obligation of the warehouseman, dealer, facility, or  surety  against
 44    whom  the  claim  was  made. The director may bring suit on behalf of the crop
 45    specific indemnity fund in the district court of Ada county  to  recover  from
 46    the  warehouseman,  dealer,  facility or surety the amount of the payment made
 47    from the crop specific indemnity fund, together with costs and attorney's fees
 48    incurred in maintaining the suit. In the event  the  department  initiates  an
 49    action  against  a  warehouseman, dealer, facility or surety, the department's
 50    claim is deemed to accrue and relate back to the time that each  producer  who
 51    received  a crop specific indemnity fund payment incurred a loss in the facil-
 52    ity.  In no event shall a crop specific indemnity fund payment be deemed to be
                                                                        
                                           19
                                                                        
  1    beyond the reimbursement from the warehouseman,  dealer,  facility  or  surety
  2    merely because the payment may have occurred after the facility closed.
                                                                        
  3        69-653.  CLAIM  AGAINST  WAREHOUSEMAN,  DEALER  OR  FACILITY -- DIRECTOR'S
  4    REMEDIES. The department may deny, suspend or revoke the license of any  ware-
  5    houseman, dealer or facility against whom a claim has been made, approved, and
  6    paid  from  the crop specific indemnity fund. Proceedings for the denial, sus-
  7    pension or revocation shall be subject to the provisions of chapter 52,  title
  8    67, Idaho Code.
                                                                        
  9        69-654.  EMERGENCY  FUNDING.  During the first three (3) years immediately
 10    following establishment of the crop specific indemnity fund, in the event of a
 11    failure prior to a period when the fund contains a sufficient balance to  sat-
 12    isfy  such  claims within the provisions of this chapter, the director has the
 13    authority to borrow funds as may be  required  to  satisfy  claims,  including
 14    administrative  costs,  from the commodity indemnity fund established pursuant
 15    to chapter 2, title 69, Idaho Code, or the state treasurer's office.  Provided
 16    however, that in no event shall the director borrow a  combined  total  amount
 17    exceeding  three million dollars ($3,000,000) from the designated funds.  Said
 18    funds are to be repaid on a mutually agreed upon payment schedule with  inter-
 19    est  charged at the prime rate as published in the western edition of the Wall
 20    Street Journal or successor publication, plus one percent (1%) from  the  date
 21    the loan is  made.
                                                                        
 22        SECTION  2.  An  emergency  existing  therefor,  which emergency is hereby
 23    declared to exist, Sections 69-601 through 69-642, Idaho Code, as set forth in
 24    Section 1 of this act, shall be in full force and effect on and after  May  1,
 25    2001.  To  effect a transition, Sections 69-643 through 69-654, Idaho Code, as
 26    set forth in Section 1 of this act, shall be in full force and effect  on  and
 27    after July 1, 2001.

Statement of Purpose / Fiscal Impact


                      STATEMENT OF PURPOSE
                            RS 11116
This bill adds a new chapter to the Idaho Warehouse Law to include
a type of warehouses that have not been licensed and inspected
recently.  There are warehouses that deal only in contract seeds. 
In order to distinguish these from public warehouses they are
production contract facilities. 
Many of the provisions of this chapter are exactly like the public
warehouse law in terms of licensing and inspection by the
Department of Agriculture.  This process is necessary in order to
bring these facilities into the departments system so that a second
grower indemnity fund can be created.
The second part of the bill creates a second grower indemnity
funds.  This fund will be structured and operate the same as the
existing indemnity fund to provide some protection for growers in
the case of a business failure of a production contract facility.
    FISCAL IMPACT
                                


The fiscal impact as a result of enacting the Production Contract
Facilities Law will be registration and renewal fee collection
totaling approximately $9,000 and $2,200, respectively. Up to two
(2) additional inspectors and one (1) additional auditor may be
required by the Department of Agriculture at a cost of
approximately $147,000.  This program will be operated in
conjunction with the Bonded Warehouse program and the Commodity
Dealer program, both of which also are anticipating addition
revenue from fee increases.  In addition, up to one-half of the
interest from the existing CIAP program and the newly created
indemnity fund can be used to support this staff increase.  Because
the fees from all three of these accounts go to the General Fund an
offsetting appropriation will be required. 




Contact
Name: Rep. Doug Jones 
Phone: 332-1137
Name: Dennis Doshier, Department of Agriculture


STATEMENT OF PURPOSE/FISCAL NOTE                 H 27