2001 Legislation
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HOUSE BILL NO. 274 – Commodity dealers, licensure

HOUSE BILL NO. 274

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H0274...............................................by AGRICULTURAL AFFAIRS
COMMODITY DEALERS - Amends and adds to existing law to provide for licenses
for commodity dealers that purchase seed crops; to increase the penalty fee
for licensees with expired licenses; to provide bonding requirements; to
provide for irrevocable letters of credit in lieu of bonds; to provide for
suspension or revocation of licenses; to provide an exception for written
agreements altering time for payment; to require annual inspections; to
provide for purchase of seed crops by credit sale contracts; to provide for
title to seed crops; to provide for production records; to provide
violations; to provide for participation of producers covered by this
chapter in the Bonded Warehouse Commodity Indemnity Fund program; and to
provide for notice to licensed warehouses and dealers of the effective date
of the program.
                                                                        
02/15    House intro - 1st rdg - to printing
02/16    Rpt prt - to Agric Aff
03/02    Rpt out - to Gen Ord
03/20    Ret'd 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. 274
                                                                        
                             BY AGRICULTURAL AFFAIRS COMMITTEE
                                                                        
  1                                        AN ACT
  2    RELATING TO COMMODITY DEALER LAW; AMENDING  SECTION  69-502,  IDAHO  CODE,  TO
  3        REVISE  DEFINITIONS;  AMENDING  SECTION 69-503, IDAHO CODE, TO PROVIDE FOR
  4        LICENSES FOR COMMODITY DEALERS THAT PURCHASE SEED CROPS, TO STRIKE A  REF-
  5        ERENCE  TO A LICENSED PUBLIC ACCOUNTANT AND TO MAKE TECHNICAL CORRECTIONS;
  6        AMENDING SECTION 69-504, IDAHO CODE,  TO  INCREASE  THE  PENALTY  FEE  FOR
  7        LICENSEES WITH CERTAIN EXPIRED LICENSES AND TO MAKE TECHNICAL CORRECTIONS;
  8        AMENDING  SECTION  69-506,  IDAHO CODE, TO STRIKE REFERENCE TO ANNUITY, TO
  9        PROVIDE BONDING REQUIREMENTS FOR COMMODITY DEALERS IN SEED CROPS, TO  PRO-
 10        VIDE FOR IRREVOCABLE LETTERS OF CREDIT IN LIEU OF BOND AND TO MAKE A TECH-
 11        NICAL  CORRECTION;  AMENDING CHAPTER 5, TITLE 69, IDAHO CODE, BY THE ADDI-
 12        TION OF A NEW SECTION 69-506A, IDAHO CODE, TO PROVIDE THAT THE  DEPARTMENT
 13        OF  AGRICULTURE  SHALL  REQUIRE  LICENSEES, UNABLE TO PAY PRODUCERS DUE TO
 14        FINANCIAL DIFFICULTY, TO POST CERTAIN SECURITY,  TO  AUTHORIZE  RULEMAKING
 15        AND  TO PROVIDE FOR SUSPENSION OR REVOCATION OF LICENSES; AMENDING SECTION
 16        69-508, IDAHO CODE, TO INCREASE FEES, TO STRIKE REFERENCE  TO  A  SEPARATE
 17        FUND,  TO  PROVIDE  THAT DEPOSITED MONEYS SHALL BE CREDITED TO THE GENERAL
 18        ACCOUNT, TO STRIKE REFERENCE TO CERTAIN USES OF THE MONEYS BY THE DIRECTOR
 19        OF THE DEPARTMENT OF AGRICULTURE  AND  TO  MAKE  A  TECHNICAL  CORRECTION;
 20        AMENDING SECTION 69-510, IDAHO CODE, TO PROVIDE FOR A WAREHOUSE PAYMENT OF
 21        PURCHASE  PRICE  FOR  SEED  CROPS  AND TO PROVIDE AN EXCEPTION FOR WRITTEN
 22        AGREEMENTS ALTERING TIME FOR PAYMENT; AMENDING SECTION 69-511, IDAHO CODE,
 23        TO REQUIRE YEARLY INSPECTION BY THE DEPARTMENT OF AGRICULTURE OF COMMODITY
 24        DEALERS PREMISES AND TO PROVIDE FOR THE INSPECTION  OF  RECORDS  REGARDING
 25        CERTAIN  SEED CROPS; AMENDING SECTION 69-512, IDAHO CODE, TO STRIKE A REF-
 26        ERENCE TO CREDIT SALE, TO PROVIDE A CODE REFERENCE, TO PROVIDE  REFERENCES
 27        TO SEED CROP; AMENDING SECTION 69-514, IDAHO CODE, TO PROVIDE FOR THE PUR-
 28        CHASE  OF SEED CROPS BY CONTRACT, TO STRIKE A REFERENCE TO CREDIT SALE, TO
 29        PROVIDE FOR TITLE TO SEED CROPS AND TO PROVIDE  FOR  PAYMENT  OF  PURCHASE
 30        PRICE  FOR SEED CROPS; AMENDING SECTION 69-515, IDAHO CODE, TO PROVIDE FOR
 31        PRODUCTION RECORDS; AMENDING SECTION 69-516, IDAHO CODE, TO STRIKE  REFER-
 32        ENCE  TO REGULATIONS AND TO STRIKE REFERENCE TO CREDIT SALE; AMENDING SEC-
 33        TION 69-517, IDAHO CODE, TO PROVIDE FOR SERVICE ON LICENSE HOLDER BY  FAC-
 34        SIMILE;  AMENDING  SECTION  69-520, IDAHO CODE, TO PROVIDE A VIOLATION FOR
 35        CERTAIN PAYMENTS BY WAREHOUSES TO PRODUCERS OF SEED  CROPS  MADE  UPON  AN
 36        ACCOUNT  WITH  INSUFFICIENT FUNDS; AMENDING SECTION 69-521, IDAHO CODE, TO
 37        STRIKE A REFERENCE TO REVIEWED FINANCIAL STATEMENTS AND TO STRIKE A REFER-
 38        ENCE TO LICENSED PUBLIC ACCOUNTANT; AMENDING SECTION 69-523,  IDAHO  CODE,
 39        TO  PROVIDE  CORRECT  TERMINOLOGY; AMENDING SECTION 69-524, IDAHO CODE, TO
 40        STRIKE A REFERENCE TO REGULATIONS; AMENDING SECTION 69-526, IDAHO CODE, TO
 41        MAKE A TECHNICAL CORRECTION; AMENDING CHAPTER 5, TITLE 69, IDAHO CODE,  BY
 42        THE  ADDITION OF A NEW SECTION 69-527, IDAHO CODE, TO PROVIDE FOR THE PAR-
 43        TICIPATION OF PRODUCERS COVERED BY THE PROVISIONS OF THIS CHAPTER  IN  THE
 44        BONDED WAREHOUSE COMMODITY INDEMNITY FUND PROGRAM, TO PROVIDE FOR APPLICA-
 45        TION  OF  CERTAIN  PROVISIONS  AND TO PROVIDE FOR NOTICE TO LICENSED WARE-
 46        HOUSES AND DEALERS OF THE EFFECTIVE DATE OF THE PROGRAM.
                                                                        
                                           2
                                                                        
  1    Be It Enacted by the Legislature of the State of Idaho:
                                                                        
  2        SECTION 1.  That Section 69-502, Idaho Code, be, and the  same  is  hereby
  3    amended to read as follows:
                                                                        
  4        69-502.  DEFINITIONS.  As used in this chapter, except as otherwise speci-
  5    fied:
  6        (1)  "Agricultural commodity" means any grain, dry  peas,  wheat,  barley,
  7    oats,  corn,  rye,  oilseeds,  dry  edible  beans,  peas,  lentils  and  other
  8    leguminous  or other small seeds, except true seed crops, or any other commod-
  9    ity as determined by the director.
 10        (2)  "Bailee" means a person who receives personal property  from  another
 11    as a bailment.
 12        (3)  "Bailment"  means  a  delivery of personal property by one (1) person
 13    (the bailor) to another (the bailee) who holds the property for a certain pur-
 14    pose under an express or implied-in-fact contract. Unlike a sale  or  gift  of
 15    personal  property,  a  bailment  involves  a  change in possession but not in
 16    title.
 17        (4)  "Bailment contract" means a contract between two (2) or more  parties
 18    that creates a "bailor" and "bailee" relationship wherein the bailor transfers
 19    property  (seed)  to  the  bailee,  but does not transfer title along with the
 20    property. For the purposes of this chapter, the term  "bailment  contract"  is
 21    interchangeable with the term "production contract."
 22        (5)  "Bailor"  means a person who delivers personal property to another as
 23    a bailment.
 24        (6)  "Commodity dealer or dealer" means any person who solicits, contracts
 25    for, or negotiates the consignment or purchase, or obtains from an Idaho  pro-
 26    ducer  or producers, title, possession, or control of any agricultural commod-
 27    ity or seed crop through his place of business located in the state  of  Idaho
 28    or  through  his  place of business located outside the state of Idaho for the
 29    purpose of sale or resale or who buys, during any calendar year, at least  ten
 30    thousand  dollars  ($10,000)  worth  of agricultural commodities or seed crops
 31    from an Idaho producer or producers of the commodities or seed crops.  Commod-
 32    ity dealer or dealer shall not mean any person who purchases agricultural com-
 33    modities  or  seed crops for his own use as seed or feed within his own opera-
 34    tion.
 35        (3)  "Credit-sale contract" means a contract for the sale of  an  agricul-
 36    tural  commodity pursuant to which the sale price is to be paid at a date sub-
 37    sequent to the delivery  of  the  agricultural  commodity  to  the  buyer  and
 38    includes,  but  is  not  limited  to,  those contracts commonly referred to as
 39    deferred payment contracts, deferred pricing contracts  and  price-later  con-
 40    tracts.
 41        (7)  "Contract"  means  an agricultural contract as defined in chapter 50,
 42    title 22, Idaho Code, which may include, but is not  limited  to,  those  con-
 43    tracts  commonly  referred  to  as  credit  sales, bailment, deferred payment,
 44    delayed or price-later contracts.
 45        (8)  "Deliver or delivery" means the  physical  transfer  of  agricultural
 46    commodity or seed crop from one (1) party to another.
 47        (49)  "Department"  means  the  department  of agriculture of the state of
 48    Idaho.
 49        (510) "Director" means the director of the Idaho state department of agri-
 50    culture.
 51        (611) "Person" means any individual, firm,  association,  partnership,  or
 52    corporation or limited liability company.
 53        (712) "Producer" means the owner, tenant or operator of land in this state
                                                                        
                                           3
                                                                        
  1    who  has  an interest in and receives all or part of the proceeds from the his
  2    sale of agricultural commodities or seed crops produced on that land.
  3        (13) "Production  facility"   means   any   elevator,   mill,   warehouse,
  4    subterminal commodity warehouse, public warehouse or other structure or facil-
  5    ity in which agricultural commodities or seed crops are received, partially or
  6    wholly, through the use of production contracts or bailment contracts.
  7        (814) "Public warehouse or warehouse" means any elevator, mill, warehouse,
  8    subterminal commodity warehouse, public warehouse or other structure or facil-
  9    ity  in which agricultural commodities or seed crops are received for storage,
 10    shipment, processing, reconditioning or handling.
 11        (15) "Revocation" means  the  permanent  removal  of  a  commodity  dealer
 12    license following a hearing on violations of the provisions of this chapter by
 13    the hearing officer or director.
 14        (16) "Seed  crops"  means  any true seed crop that may include, but not be
 15    limited to, dry edible bean seed, dry garden bean seed, alfalfa  seed,  clover
 16    seed,  forage  grass seed, ornamental grass seed, vegetable seed, flower seed,
 17    peas, lentils and other leguminous seeds or any other seed crop as  determined
 18    by the director.
 19        (917) "Suspension"  means  the  temporary  removal  of  a commodity dealer
 20    license by the department pending a hearing for violations of  the  provisions
 21    of this chapter. Correction of the violations prior to a hearing may result in
 22    the reinstatement of a license without a hearing.
 23        (10)  "Revocation"  means  the  permanent  removal  of  a commodity dealer
 24    license following a hearing on violations of the provisions of this chapter by
 25    the hearing officer or director.
 26        (118)  "Termination" means the expiration of a  commodity  dealer  license
 27    due to failure to meet minimum licensing requirements, failure to renew a com-
 28    modity  dealer  license or as requested by the licensee according to the terms
 29    of section 69-504 (4), Idaho Code.
                                                                        
 30        SECTION 2.  That Section 69-503, Idaho Code, be, and the  same  is  hereby
 31    amended to read as follows:
                                                                        
 32        69-503.  LICENSE  REQUIREMENTS  --  FINANCIAL RESPONSIBILITY. (1) A person
 33    shall not engage in the business of a commodity dealer in this  state  without
 34    having obtained a license issued by the department.
 35        (2)  The type of license required shall be determined as follows:
 36        (a)  A class 1 license is required if the commodity dealer purchases agri-
 37        cultural commodities or seed crops by credit-sale contract or if the value
 38        of  the  agricultural commodities or seed crops purchased by the commodity
 39        dealer from producers during the previous twelve (12) month period exceeds
 40        two hundred and fifty thousand dollars ($250,000), or if the value of  the
 41        agricultural  commodities  or  seed  crops expected to be purchased by the
 42        commodity dealer from the producers  during  the  succeeding  twelve  (12)
 43        month   period   will  exceed  two  hundred  and  fifty  thousand  dollars
 44        ($250,000). Any other commodity dealer may elect to be licensed as a class
 45        1 commodity dealer.
 46        (b)  A class 2 license is required for any commodity dealer if  the  value
 47        of  the  agricultural commodities or seed crops purchased by the commodity
 48        dealer from producers during the previous twelve (12) month period exceeds
 49        ten thousand dollars ($10,000) and is less  than  two  hundred  and  fifty
 50        thousand dollars ($250,000), and if the value of the agricultural commodi-
 51        ties  or  seed crops expected to be purchased by the commodity dealer from
 52        producers during the succeeding twelve (12) month period will be more than
 53        ten thousand dollars ($10,000) but less than two hundred and  fifty  thou-
                                                                        
                                           4
                                                                        
  1        sand dollars ($250,000). A class 2 licensee whose purchases from producers
  2        exceed  two  hundred and fifty thousand dollars ($250,000) in value during
  3        any twelve (12) month  period  shall  immediately  apply  for  a  class  1
  4        license.  If  a  class  1  license is denied, the person shall immediately
  5        cease doing business as a commodity dealer.
  6        (3)  An application for a license to engage in  business  as  a  commodity
  7    dealer shall be filed with the department and shall be on a form prescribed by
  8    the  department.  A  separate  license  is required for each location at which
  9    records are maintained for transactions of the commodity dealer.
 10        (4)  A license application shall include the following:
 11        (a)  The name of the applicant;
 12        (b)  The names of the officers and directors if the applicant is a  corpo-
 13        ration;
 14        (c)  The names of the partners if the applicant is a partnership;
 15        (d)  The location of the principal place of business; and
 16        (e)  Any  other  reasonable  information the department finds necessary to
 17        carry out the provisions and purposes of this chapter.
 18        (5)  A license applicant shall further provide a sufficient and valid bond
 19    as specified in section 69-506, Idaho Code.
 20        (6)  A license applicant shall further provide a complete financial state-
 21    ment setting forth the applicant's assets, liabilities  and  net  worth.  This
 22    financial  statement  shall  be  prepared  by  an independent certified public
 23    accountant or a licensed public accountant  according  to  generally  accepted
 24    accounting  principles.  The  commodity dealer shall have and maintain current
 25    assets equal to or greater than current liabilities. Assets shall be shown  at
 26    original  cost  less depreciation. Upon written request filed with the depart-
 27    ment, the director may allow asset valuations in accordance with  a  competent
 28    appraisal.
 29        (7)  In  order to receive and retain a commodity dealer's license the fol-
 30    lowing additional conditions must be satisfied:
 31        (a)  For a class 1 license a commodity dealer shall have  and  maintain  a
 32        net  worth of at least fifty thousand dollars ($50,000) or maintain a bond
 33        in the amount of two thousand dollars ($2,000) for each one thousand  dol-
 34        lars ($1,000) or fraction thereof of net worth deficiency; however, a per-
 35        son  shall not be licensed as a class 1 commodity dealer if the person has
 36        a net worth of less than twenty-five thousand dollars  ($25,000).  A  bond
 37        submitted for purposes of this subsection shall be in addition to any bond
 38        otherwise required under the provisions of this chapter.
 39        (b)  For  a  class  2 license a commodity dealer shall have and maintain a
 40        net worth of at least twenty-five thousand dollars ($25,000) or maintain a
 41        bond in the amount of two thousand dollars ($2,000) for each one  thousand
 42        dollars  ($1,000)  or fraction thereof of net worth deficiency; however, a
 43        person shall not be licensed as a class 2 commodity dealer if  the  person
 44        has  a  net worth of less than ten thousand dollars ($10,000). A bond sub-
 45        mitted for purposes of this subsection shall be in addition  to  any  bond
 46        otherwise required under the provisions of this chapter.
 47        (8)  The  department  may  require  additional information or verification
 48    regarding the financial resources of the applicant and the applicant's ability
 49    to pay producers for agricultural commodities or  seed  crops  purchased  from
 50    them.
                                                                        
 51    SECTION  3.  That  Section  69-504,  Idaho  Code,  be,  and the same is hereby
 52    amended to read as follows:
                                                                        
 53        69-504.  LICENSE ISSUANCE -- RENEWAL --  EXPIRATION.  (1)  The  department
                                                                        
                                           5
                                                                        
  1    shall  issue  a  license when the applicant has filed the application and com-
  2    plied with the terms and conditions of the provisions of this chapter and  the
  3    rules  and regulations of the department. The license shall expire on December
  4    31 of each year.
  5        (2)  A commodity dealer's license may be renewed  annually  by  submitting
  6    all  necessary licensing materials required by the provisions of this chapter.
  7    This material shall be received by the department before December 31  of  each
  8    year.
  9        (3)  A  commodity  dealer's license which has expired may be reinstated by
 10    the department upon receipt of all necessary licensing materials  required  by
 11    the  provisions  of this chapter and a penalty fee in the amount of fifty five
 12    hundred dollars ($50.00); providing, that this material is filed within thirty
 13    (30) days from the date of expiration of the commodity  dealer's  license.  At
 14    the  end  of  the thirty (30) day penalty period, a commodity dealer's license
 15    shall terminate. All license applications received after the thirty  (30)  day
 16    penalty  period  shall  be  considered  original applications and license fees
 17    shall be assessed according to section 69-508(1), Idaho Code.
 18        (4)  A license may terminate upon request of the licensee  unless  a  com-
 19    plaint  has been filed against the licensee alleging a violation of any provi-
 20    sion of this chapter. A commodity dealer's license is not transferable between
 21    legal entities.
 22        (5)  If an applicant has had a license revoked  under  the  provisions  of
 23    chapters  2  or  5,  title  69, Idaho Code, or the United States warehouse act
 24    within the past three (3) years or been convicted of a violation of the provi-
 25    sions of chapters 2 or 5, title 69, Idaho Code, or the United States warehouse
 26    act within the past three (3) years,  the  department  may  deny  a  commodity
 27    dealer's license to the applicant.
 28        (6)  Any  partnership with a partner or any corporation which has an offi-
 29    cer, director or majority stockholder owning at least  ten  per  cent  percent
 30    (10%)  of  issued  stock who has had a license revoked under the provisions of
 31    chapters 2 or 5, title 69, Idaho Code, or  the  United  States  warehouse  act
 32    within  the previous three (3) years or has been convicted of a felony involv-
 33    ing violations of the provisions of chapters 2 or 5, title 69, Idaho Code,  or
 34    the United States warehouse act, may be denied a commodity dealer's license by
 35    the department.
                                                                        
                                                                        
 36        SECTION  4.  That  Section  69-506, Idaho Code, be, and the same is hereby
 37    amended to read as follows:
                                                                        
 38        69-506.  BONDING REQUIREMENTS -- CANCELLATION -- CERTIFICATE OF DEPOSIT OR
 39    ANNUITY IRREVOCABLE LETTER OF CREDIT IN LIEU OF BOND. Except  as  provided  in
 40    chapter  2,  title  69, Idaho Code, an applicant for a license to operate as a
 41    commodity dealer shall, before a license will be issued, file with the depart-
 42    ment a bond payable to the state of Idaho with a corporate surety approved  by
 43    the  department  with  the  condition that the applicant will pay the purchase
 44    price of any agricultural commodity or seed crop to the seller. The  aggregate
 45    annual liability of the surety shall in no event exceed the sum of the bond.
 46        The bond for each class 1 license shall be in the sum of twenty-five thou-
 47    sand  dollars ($25,000). The bond for each class 2 license shall be in the sum
 48    of fifteen thousand dollars ($15,000). A surety  shall  notify  the  commodity
 49    dealer  and the department by certified mail at least sixty (60) days prior to
 50    the cancellation of a bond issued under the provisions of  this  chapter.  The
 51    liability  of  the  surety shall cover purchases made by the commodity  dealer
 52    during the time the bond is in force. A commodity  dealer's  bond  filed  with
                                                                        
                                           6
                                                                        
  1    this  department  shall  be  continuous until cancelled canceled by the surety
  2    upon sixty (60) days' notice. The director reserves the  right  to  waive  the
  3    sixty (60) day cancellation period.
  4        Any  person required to submit a bond to the department in accordance with
  5    this chapter, may at his option  give  to  the  department  a  certificate  of
  6    deposit  or annuity an irrevocable letter of credit payable to the director as
  7    trustee in lieu of the bond required herein. The principal amount of the  cer-
  8    tificate  or annuity letter of credit shall be the same as that required for a
  9    surety bond pursuant to this chapter.  Accrued interest upon  the  certificate
 10    of deposit or annuity shall be payable to the purchaser of the certificate. or
 11    annuity. The certificate or annuity letter of credit shall remain on file with
 12    the  department  until it is released, cancelled canceled or discharged by the
 13    director. The certificate or letter of credit shall remain in force so long as
 14    the director of the Idaho state department of agriculture is  notified  thirty
 15    (30)  days  in  advance  of  such time the aforementioned document is renewed,
 16    altered or amended. Failure to comply with  such  requirement  to  notify  may
 17    result  in  the suspension of a warehouseman or dealer license. The provisions
 18    of this chapter that apply to a bond required pursuant to this  chapter  apply
 19    to  each  certificate  of deposit or annuity letter of credit given in lieu of
 20    such bond.
 21        Under the provisions of this chapter, an  annuity  irrevocable  letter  of
 22    credit  shall not be accepted by the department acceptable unless it is issued
 23    by an insurance company, national bank in Idaho or other financial institution
 24    found acceptable by the director and shall have a cash value equal to the bond
 25    requirement less any penalty for early withdrawal by an Idaho state  chartered
 26    bank insured by the federal deposit insurance corporation.
                                                                        
 27        SECTION  5.  That  Chapter  5,  Title  69, Idaho Code, be, and the same is
 28    hereby amended by the addition thereto of a NEW SECTION, to be known and  des-
 29    ignated as Section 69-506A, Idaho Code, and to read as follows:
                                                                        
 30        69-506A.  FINANCIAL  DIFFICULTIES -- ADDITIONAL BOND OR SECURITY REQUIRED.
 31    The department shall, when it has reason to believe that a licensee  does  not
 32    have the ability to pay producers for commodities purchased, or when it deter-
 33    mines  that  the  licensee does not have a sufficient net worth to outstanding
 34    financial obligations ratio, require the licensee to  post  a  bond  or  other
 35    additional  security  in  an  amount  to be prescribed by rule. The additional
 36    security may exceed the maximum amount set forth in this chapter.  Failure  of
 37    the  licensee to timely post the additional bond or other security constitutes
 38    grounds for suspension or revocation of a license issued under  this  chapter.
 39    The  licensee  may  request  a  hearing regarding the decision to increase the
 40    amount of security required or the revocation or suspension of a license  pur-
 41    suant  to this section and may appeal such decisions pursuant to the procedure
 42    set out in section 69-518, Idaho Code.
                                                                        
 43        SECTION 6.  That Section 69-508, Idaho Code, be, and the  same  is  hereby
 44    amended to read as follows:
                                                                        
 45        69-508.  LICENSE  FEES.  (1)  The  department  shall assess and collect an
 46    annual fee for each  commodity  dealer  license  on  an  original  application
 47    according to the following schedule:
 48        (a)  For  a  class 1 license the fee shall be two three hundred sixty dol-
 49        lars ($20360).
 50        (b)  For a class 2 license the fee shall be  one  hundred  eighty  dollars
 51        ($1080).
                                                                        
                                           7
                                                                        
  1        (2)  The department shall assess and collect an annual fee for the renewal
  2    of each commodity dealer license according to the following schedule:
  3        (a)  For  a  class  1 license the renewal fee shall be forty sixty dollars
  4        ($460.00).
  5        (b)  For a class 2 license the renewal fee shall be twenty  forty  dollars
  6        ($240.00).
  7        (3)  All  license  fees,  assessments and moneys collected by the director
  8    under the provisions of this chapter shall be placed in  a  separate  fund  in
  9    deposited  into  the state treasury to be used by the director for the purpose
 10    of inspection, administration and enforcement of the provisions of this  chap-
 11    ter and credited to the general account.
                                                                        
 12        SECTION  7.  That  Section  69-510, Idaho Code, be, and the same is hereby
 13    amended to read as follows:
                                                                        
 14        69-510.  PAYMENT OF PURCHASE PRICE. A person required to be licensed as  a
 15    commodity  dealer  under the provisions of this chapter shall pay the purchase
 16    price to the owner or his agent for agricultural  commodities  or  seed  crops
 17    upon  delivery or demand by the owner or agent, but not later than thirty (30)
 18    days after delivery by the owner or agent, unless otherwise agreed to  by  the
 19    parties, in writing. As used in this section, "delivery" means the transfer of
 20    title to and possession of agricultural commodities or seed crops by the owner
 21    or  agent  to the commodity dealer or to another person in accordance with the
 22    agreement of the owner or agent and the commodity dealer. As used in this sec-
 23    tion, "payment" means the actual payment or tender of payment by the commodity
 24    dealer to the owner or agent of the agreed purchase price.
                                                                        
 25        SECTION 8.  That Section 69-511, Idaho Code, be, and the  same  is  hereby
 26    amended to read as follows:
                                                                        
 27        69-511.  INSPECTION  OF  PREMISES,  BOOKS  AND RECORDS. The department may
 28    shall inspect the premises used by any commodity dealer in the conduct of  his
 29    business  at  least once every calendar year and at any other reasonable time.
 30    The books, accounts, records and papers of every such commodity  dealer  which
 31    pertain  to  agricultural  commodity or seed crop purchasesd or received shall
 32    have bills of lading or other documents covering the agricultural  commodities
 33    or seed crops in his possession, and shall present them to any law enforcement
 34    officer  or  to  a person designated as a law enforcement officer. A commodity
 35    dealer licensed in this state who does not have a place of business within the
 36    state shall, upon the request of the director, make available and  furnish  to
 37    the  department  at  any reasonable time and place the department may set, all
 38    books, accounts, records and papers relating to agricultural commodity or seed
 39    crop transactions within the state of Idaho. Where  there  is  good  cause  to
 40    believe  that a person is doing business as a commodity dealer in the state of
 41    Idaho without a license, the department may  inspect  the  books,  papers  and
 42    records  of  the  person  which pertain to agricultural commodity purchases or
 43    seed crop transactions.
                                                                        
 44        SECTION 9.  That Section 69-512, Idaho Code, be, and the  same  is  hereby
 45    amended to read as follows:
                                                                        
 46        69-512.  PENALTIES.  (1) Any person who engages in business as a commodity
 47    dealer without obtaining a license or who  refuses  to  permit  inspection  of
 48    licensed premises, books, accounts, records or other documents required by the
 49    provisions  of this chapter or who uses a scale ticket or credit-sale contract
                                                                        
                                           8
                                                                        
  1    that fails to satisfy the requirements of the provisions of this  chapter  and
  2    chapter  50, title 22, Idaho Code, shall be guilty of a felony and be punished
  3    by imprisonment for not more than ten (10) years, or by a  fine  of  not  more
  4    than ten thousand dollars ($10,000), or both.
  5        (2)  Any  person  who  knowingly submits false information to or who know-
  6    ingly withholds information from  the  department  when  such  information  is
  7    required  to  be  submitted  or  maintained pursuant to the provisions of this
  8    chapter shall be guilty of a felony and be punished by  imprisonment  for  not
  9    more  than  ten (10) years, or by a fine of not more than ten thousand dollars
 10    ($10,000), or both.
 11        (3)  Any person who shall misrepresent,  forge,  alter  or  counterfeit  a
 12    license  required by the provisions of this chapter, or who shall issue, utter
 13    or aid in the issuance or utterance or attempt to issue or utter  a  false  or
 14    fraudulent  receipt for any commodity or seed crop shall be guilty of a felony
 15    and be punished by imprisonment for not more than ten (10) years, or by a fine
 16    of not more than ten thousand dollars ($10,000), or both.
 17        (4)  Any violation of the provisions of this chapter except as provided in
 18    subsections (1), (2) or (3) of this section or  section  69-520,  Idaho  Code,
 19    shall be a misdemeanor and punishable by imprisonment in a county jail for not
 20    more  than  six (6) months, or by a fine of not more than one thousand dollars
 21    ($1,000), or by both.
                                                                        
 22        SECTION 10.  That Section 69-514, Idaho Code, be, and the same  is  hereby
 23    amended to read as follows:
                                                                        
 24        69-514.  CREDIT-SALE CONTRACTS. (1) A commodity dealer who purchases agri-
 25    cultural  commodities  or  seed  crops by credit-sale contracts shall maintain
 26    books, records and other documents as required by the department to  establish
 27    compliance with the provisions of this section.
 28        (2)  In  addition  to  other information as may be required, a credit-sale
 29    contract shall contain or make provision for all of the following:
 30        (a)  The seller's name and address;
 31        (b)  The conditions of delivery;
 32        (c)  The amount and kind of agricultural commodities or seed crops  deliv-
 33        ered;
 34        (d)  The price per unit or basis of value; and
 35        (e)  The date payment is to be made.
 36        (3)  Title  to  all  agricultural commodities or seed crops sold by a con-
 37    tract is in the purchasing dealer as of  the  time  the  contract  is  signed,
 38    unless  the  contract  provides  otherwise. The contract must be signed by all
 39    parties and executed in duplicate. One (1) copy shall be retained by the  com-
 40    modity  dealer and one (1) copy shall be delivered to the seller. Upon revoca-
 41    tion or termination of a commodity dealer's license, the payment date for  all
 42    credit-sale  contracts  shall be advanced to a date not later than thirty (30)
 43    days following the effective date of the revocation  or  termination  and  the
 44    purchase  price for all agricultural commodities or seed crops without a price
 45    shall be determined as of the effective date of revocation or  termination  in
 46    accordance with all other provisions of the contract. However, if the business
 47    of  the commodity dealer is sold to another licensed commodity dealer, credit-
 48    sale contracts may be assigned to the purchaser of the business.
                                                                        
 49        SECTION 11.  That Section 69-515, Idaho Code, be, and the same  is  hereby
 50    amended to read as follows:
                                                                        
 51        69-515.  RECORDS.  All financial statements and production records of com-
                                                                        
                                           9
                                                                        
  1    modity dealers required under the provisions of this chapter shall be  subject
  2    to disclosure according to chapter 3, title 9, Idaho Code, except as follows:
  3        (a)  Upon written permission by the licensee;
  4        (b)  In  actions  or administrative proceedings commenced under the provi-
  5        sions of this chapter or chapter 2, title 69, Idaho Code;
  6        (c)  When required by subpoena or court order; or
  7        (d)  Disclosure to law enforcement agencies in connection with the  inves-
  8        tigation or prosecution of criminal offenses.
                                                                        
  9        SECTION  12.  That  Section 69-516, Idaho Code, be, and the same is hereby
 10    amended to read as follows:
                                                                        
 11        69-516.  STANDARDIZATION OF RECORDS  AND  DOCUMENTS.  The  department  may
 12    adopt  rules  and regulations specifying the form and content of scale tickets
 13    and credit-sale contracts.
                                                                        
 14        SECTION 13.  That Section 69-517, Idaho Code, be, and the same  is  hereby
 15    amended to read as follows:
                                                                        
 16        69-517.  DIRECTOR'S  AUTHORITY.  The  director  may,  upon his own motion,
 17    whenever he has reason to believe the provisions of  this  chapter  have  been
 18    violated, or upon verified complaint of any person in writing, investigate the
 19    actions of any commodity dealer licensed under the provisions of this chapter,
 20    and  if  he finds probable cause to do so, shall file a complaint against said
 21    commodity dealer which shall be set down for hearing before the director  upon
 22    thirty  (30)  days'  notice served upon such license holder either by personal
 23    service, registered mail or telegram facsimile prior to such hearing.
 24        The director shall have the power to  administer  oaths,  certify  to  all
 25    official acts and shall have the power to subpoena any person in this state as
 26    a  witness,  to  compel  through  subpoena the production of books, papers and
 27    records, and to take the testimony of any person on  deposition  in  the  same
 28    manner  as  is  prescribed  by  law in the procedure before the courts of this
 29    state. A subpoena issued by the director shall extend  to  all  parts  of  the
 30    state and may be served by any person authorized to do so.
 31        All  powers  of the director herein enumerated in respect to administering
 32    oaths, power of subpoena, and other enumerated  powers  in  hearings  on  com-
 33    plaints  shall likewise be applicable to hearings held on applications for the
 34    issuance or renewal of a commodity dealer license.
 35        Nothing in this chapter shall be construed to require the director or  his
 36    authorized  representative  to  report  for prosecution or to institute civil,
 37    criminal or administrative action against a commodity dealer for  a  violation
 38    of  the  provisions of this chapter when he believes that public interest will
 39    best be served by a suitable warning.
                                                                        
 40        SECTION 14.  That Section 69-520, Idaho Code, be, and the same  is  hereby
 41    amended to read as follows:
                                                                        
 42        69-520.  DRAWING  CHECKS  INSUFFICIENTLY  COVERED  A VIOLATION. Any person
 43    engaged in business as a commodity dealer, as defined  in  this  chapter,  who
 44    shall  make,  draw, utter or deliver any check, draft or order for the payment
 45    of money upon any bank, or other depository in payment to the seller  producer
 46    of  the  purchase or contract price of any agricultural commodity or seed crop
 47    or any part thereof upon obtaining possession or control thereof, or  in  com-
 48    pliance with a contract, when at the time of such making, drawing, uttering or
 49    delivery  the  maker or drawer has not sufficient funds in or credit with such
                                                                        
                                           10
                                                                        
  1    bank or other depository for the payment of such check, draft or order in full
  2    upon its presentation, shall be in violation of the provisions of  this  chap-
  3    ter. The word "credit" as used herein shall mean an arrangement or understand-
  4    ing with the bank or depository for the payment of such check, draft or order.
                                                                        
  5        SECTION  15.  That  Section 69-521, Idaho Code, be, and the same is hereby
  6    amended to read as follows:
                                                                        
  7        69-521.  FINANCIAL STATEMENTS. In order to  obtain  a  commodity  dealer's
  8    license, the applicant shall submit an audited or reviewed financial statement
  9    prepared  by  an  independent  certified  public accountant or licensed public
 10    accountant, a statement of current assets and current liabilities and a state-
 11    ment of net worth, all of which shall be prepared in accordance with generally
 12    accepted accounting principles. This statement must  have  been  prepared  not
 13    more  than ninety (90) days prior to the date of application and shall conform
 14    to the applicable requirements of this chapter as to annual  financial  state-
 15    ments.
 16        Once licensed, every licensee shall annually prepare a financial statement
 17    either  at  the  close of business, December 31, or at the end of their fiscal
 18    year and file the statement with the department not  later  than  ninety  (90)
 19    days  thereafter. These statements shall be prepared in conformity with gener-
 20    ally accepted accounting principles and shall include, but not be limited  to,
 21    a  reviewed  financial  statement  prepared by an independent certified public
 22    accountant, a statement of current  assets  and  current  liabilities,  and  a
 23    statement of net worth.
                                                                        
 24        SECTION  16.  That  Section 69-523, Idaho Code, be, and the same is hereby
 25    amended to read as follows:
                                                                        
 26        69-523.  PUBLICATION OF REPORTS. The Idaho state department of agriculture
 27    may publish the results of any investigations made  under  the  provisions  of
 28    this chapter and may publish the names and addresses of persons licensed under
 29    this  chapter and a list of all licenses terminated under this chapter and the
 30    causes therefor.
                                                                        
 31        SECTION 17.  That Section 69-524, Idaho Code, be, and the same  is  hereby
 32    amended to read as follows:
                                                                        
 33        69-524.  RULES.  AND REGULATIONS. The department of agriculture shall make
 34    such rules and regulations as it may deem necessary for the  efficient  execu-
 35    tion of the provisions of this chapter.
                                                                        
 36        SECTION  18.  That  Section 69-526, Idaho Code, be, and the same is hereby
 37    amended to read as follows:
                                                                        
 38        69-526.  COOPERATION WITH GOVERNMENTAL AGENCIES AND PRIVATE  ASSOCIATIONS.
 39    The  director  may  cooperate with and enter into agreements with governmental
 40    agencies of this state, other states, agencies of the federal government,  and
 41    private  associations in order to carry out the purpose and provisions of this
 42    chapter and the United States warehouse act (7 U.S.C.A. section 241, et seq.).
 43    Notwithstanding any other provisions of this chapter, such agreements may also
 44    relate to a joint program for licensing, bonding and inspecting stations. Such
 45    a program should be designed to avoid duplication of effort on the part of the
 46    licensing authority and requirements for operation, and promote more efficient
 47    enforcement of the provisions of this chapter and comparable provisions of the
                                                                        
                                           11
                                                                        
  1    laws of the states of Oregon, Washington, Montana, Wyoming, Utah,  and  Nevada
  2    and the province of British Columbia, Canada.
                                                                        
  3        SECTION  19.  That  Chapter  5,  Title 69, Idaho Code, be, and the same is
  4    hereby amended by the addition thereto of a NEW SECTION, to be known and  des-
  5    ignated as Section 69-527, Idaho Code, and to read as follows:
                                                                        
  6        69-527.  PARTICIPATION  IN COMMODITY INDEMNITY FUND PROGRAM -- APPLICATION
  7    OF PROVISIONS. Commencing on July 1, 2001, each producer covered  pursuant  to
  8    the  provisions  of  this chapter shall participate in the commodity indemnity
  9    fund program, established pursuant to the provisions of chapter 2,  title  69,
 10    Idaho  Code.  All provisions regarding the indemnity fund program as set forth
 11    in chapter 2, title 69, Idaho Code, including but not limited to, assessments,
 12    payment of assessments, cessation of assessments,  procedures  for  proofs  of
 13    claim, hearing and payments from the account shall apply to each producer cov-
 14    ered  pursuant  to  the  provisions of this chapter. The director shall notify
 15    each licensed warehouse and dealer of the effective date of the program provi-
 16    sions.

Statement of Purpose / Fiscal Impact


                      STATEMENT OF PURPOSE
                            RS 11119
This bill is one of several that have been recommended by the
Governors task force on Family Farm Security. This bill updates
and clarifies the commodity dealer section of the code. The bill
strengthens the licensing procedures and raises the license fee
schedule. This will give the Department of Agriculture more money
and more ability to regulate commodity dealers. Additionally, the
bill clarifies that commodity dealers must collect for the
commodity indemnity account and that growers will be covered by
the indemnity account in the case of a dealer failure.

                         FISCAL IMPACT
                                
The fiscal impact to the Commodity Dealer program will be $1,520, 
increase due to a renewal fee increase.  At this time the Department
does not project any additional workload from this increase, but this
will more nearly cover the cost of operating this program.  The 
program's funds have been moved from dedicated to General Fund.


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


        

STATEMENT OF PURPOSE/FISCAL NOTE                     H 27