Print Friendly 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
|||| 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
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
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
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
24 (11) "Director" means the director of the Idaho state department of agri-
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
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
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-
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
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,
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
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
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
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
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-
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-
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
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
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
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
6 69-615. EMPLOYMENT OF PERSONNEL. The department of agriculture may employ
7 such inspectors, investigators, samplers and weighers as it may deem neces-
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
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
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,
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
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
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-
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.
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-
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-
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
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-
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
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
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.
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
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
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.
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.
Name: Rep. Doug Jones
Name: Dennis Doshier, Department of Agriculture
STATEMENT OF PURPOSE/FISCAL NOTE H 27