2002 Legislation
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HOUSE BILL NO. 522 – Seed indemnity fund

HOUSE BILL NO. 522

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H0522...............................................by AGRICULTURAL AFFAIRS
SEED INDEMNITY FUND - Adds to existing law to provide for a seed indemnity
fund; to provide for licenses; to provide for bonds and irrevocable letters
of credit; to provide for action by injured persons; to provide for fees;
to provide for receipts and scale weight tickets; to provide for
maintenance, examination and confidentiality of records; to provide for
prosecution; to provide for notice of noncompliance; to provide insurance
requirements; to provide for assessments; to provide for an advisory
committee; to provide for claims, hearings and payments from the fund; to
authorize an action for reimbursement; and to provide for the accrual of
causes of action.
                                                                        
01/31    House intro - 1st rdg - to printing
02/01    Rpt prt - to Agric Aff
02/21    Rpt out - rec d/p - to 2nd rdg
02/22    2nd rdg - to 3rd rdg
02/27    3rd rdg - PASSED - 66-0-4
      AYES -- Aikele, Barraclough, Barrett, Bedke, Bell, Bieter, Black,
      Block, Boe, Bolz, Bradford, Bruneel, Callister, Campbell, Clark,
      Collins, Crow, Cuddy, Deal, Denney, Ellis, Ellsworth, Eskridge,
      Field(13), Field(20), Gagner, Gould, Hadley, Hammond, Harwood,
      Henbest, Higgins, Hornbeck, Jaquet, Jones, Kellogg(Duncan), Kendell,
      Kunz, Lake, Langford, Loertscher, Martinez, McKague, Meyer,
      Montgomery, Moyle, Pearce, Pischner, Pomeroy, Raybould, Ridinger,
      Roberts, Robison, Sali, Shepherd, Smith(33), Smith(23), Smylie,
      Stevenson, Stone, Tilman, Trail, Wheeler, Wood, Young, Mr. Speaker
      NAYS -- None
      Absent and excused -- Mader, Mortensen, Schaefer, Sellman
    Floor Sponsor - Jones
    Title apvd - to Senate
02/28    Senate intro - 1st rdg - to Agric Aff
03/06    Rpt out - rec d/p - to 2nd rdg
03/07    2nd rdg - to 3rd rdg
03/13    3rd rdg - PASSED - 35-0-0
      AYES -- Andreason, Boatright, Branch(Bartlett), Brandt, Bunderson,
      Burtenshaw, Cameron, Darrington, Davis, Deide, Dunklin, Frasure,
      Geddes, Goedde, Hawkins, Hill, Ingram, Ipsen, Keough, King-Barrutia,
      Little, Lodge, Marley, Noh, Richardson, Risch, Sandy, Schroeder,
      Sims, Sorensen, Stegner, Stennett, Thorne, Wheeler, Williams
      NAYS -- None
      Absent and excused -- None
    Floor Sponsor - Little
    Title apvd - to House
03/14    To enrol
03/15    Rpt enrol - Sp signed
    Pres signed
03/15    To Governor
03/25    Governor signed
         Session Law Chapter 256
         Effective: 07/01/02

Bill Text


                                                                        
                                                                        
  ||||              LEGISLATURE OF THE STATE OF IDAHO             ||||
 Fifty-sixth Legislature                  Second Regular Session - 2002
                                                                        
                                                                        
                              IN THE HOUSE OF REPRESENTATIVES
                                                                        
                                     HOUSE BILL NO. 522
                                                                        
                             BY AGRICULTURAL AFFAIRS COMMITTEE
                                                                        
  1                                        AN ACT
  2    RELATING TO THE SEED INDEMNITY FUND; AMENDING TITLE 22,  IDAHO  CODE,  BY  THE
  3        ADDITION  OF  A  NEW  CHAPTER 51, TITLE 22, IDAHO CODE, TO PROVIDE A SHORT
  4        TITLE, TO DEFINE TERMS, TO PROVIDE FOR LICENSES, TO PROVIDE FOR BONDS  AND
  5        IRREVOCABLE LETTERS OF CREDIT, TO DESIGNATE AMOUNTS OF BOND AND TO PROVIDE
  6        FOR  NOTICE  OF  CANCELLATION  OF A BOND, TO PROVIDE FOR ACTION BY INJURED
  7        PERSONS, TO PROVIDE FOR FEES, TO PROVIDE FOR  RECEIPTS  AND  SCALE  WEIGHT
  8        TICKETS, TO PROVIDE FOR MAINTENANCE OF RECORDS AND EXAMINATION OF RECORDS,
  9        TO  PROVIDE FOR VIOLATIONS AND PENALTIES AND TO PROVIDE FOR THE DISCRETION
 10        OF THE DIRECTOR TO HANDLE CERTAIN VIOLATIONS ADMINISTRATIVELY, TO  PROVIDE
 11        FOR  SUSPENSION  OR  REVOCATION  OF  LICENSES, TO PROVIDE THAT PROSECUTORS
 12        SHALL HAVE CERTAIN DUTIES TO PROSECUTE REPORTED VIOLATIONS, TO PROVIDE FOR
 13        NOTICE OF NONCOMPLIANCE, TO PROVIDE CERTAIN REQUIREMENTS, TO  PROVIDE  FOR
 14        FAILURE  TO  COMPLY AND TO PROVIDE FOR REMEDIES OF THE DEPARTMENT OF AGRI-
 15        CULTURE, TO REQUIRE CERTAIN INSURANCE, TO PROVIDE AN  INSURANCE  CANCELLA-
 16        TION  PROCEDURE,  TO PROVIDE FOR SUSPENSION OF LICENSES AND TO PROVIDE FOR
 17        SELF-INSURANCE, TO PROVIDE FOR LICENSE REISSUANCE FOLLOWING REVOCATION, TO
 18        AUTHORIZE THE DEPARTMENT TO TAKE CERTAIN ACTION REGARDING SUSPECTED VIOLA-
 19        TIONS, TO PROVIDE FOR LICENSE DENIAL, TO PROHIBIT  PAYMENT  WITH  INSUFFI-
 20        CIENT FUNDS, TO PROVIDE FOR CONFIDENTIAL AND PROTECTED RECORDS, TO PROVIDE
 21        FOR  THE  SEED  INDEMNITY FUND, TO PROVIDE FOR ASSESSMENTS, TO PROVIDE FOR
 22        COLLECTION AND REMITTANCE OF ASSESSMENTS, TO PROVIDE  THAT  THE  PRINCIPAL
 23        AMOUNT  OF  ASSESSMENTS ARE HELD IN TRUST, TO PROVIDE FOR INTEREST EARNED,
 24        TO PROVIDE THAT A SEED BUYER'S FAILURE TO  COLLECT  OR  REMIT  ASSESSMENTS
 25        CONSTITUTES  A  VIOLATION  AND  TO  PROVIDE  FOR INTEREST AND PENALTIES ON
 26        UNPAID ASSESSMENTS, TO PROVIDE FOR FUNDING AND LIMITS OF THE FUND, TO PRO-
 27        VIDE FOR AN ADVISORY COMMITTEE, TO PROVIDE FOR PROOF OF CLAIMS, TO PROVIDE
 28        A CLAIMS PROCEDURE AND TO PROVIDE FOR HEARING, TO PROHIBIT CERTAIN  CLAIMS
 29        ON  THE  FUND,  TO REQUIRE A MINIMUM BALANCE IN THE FUND BEFORE CLAIMS ARE
 30        PAID AND TO PROVIDE FOR TERMINATION OF LIABILITY FOR  CERTAIN  CLAIMS,  TO
 31        PROVIDE  FOR  PAYMENT FROM THE FUND, TO PROVIDE THAT CERTAIN PAYMENTS FROM
 32        THE FUND CONSTITUTE A DEBT OF THE SEED BUYER OR THEIR SURETY, TO AUTHORIZE
 33        AN ACTION FOR REIMBURSEMENT, TO PROVIDE  FOR  THE  ACCRUAL  OF  CAUSES  OF
 34        ACTION AND TO AUTHORIZE RULEMAKING.
                                                                        
 35    Be It Enacted by the Legislature of the State of Idaho:
                                                                        
 36        SECTION  1.  That Title 22, Idaho Code, be, and the same is hereby amended
 37    by the addition thereto of a NEW CHAPTER, to be known and designated as  Chap-
 38    ter 51, Title 22, Idaho Code, and to read as follows:
                                                                        
                                           2
                                                                        
  1                                      CHAPTER 51
  2                               SEED INDEMNITY FUND LAW
                                                                        
  3        22-5101.  SHORT  TITLE OF ACT. This act shall be known as the "Seed Indem-
  4    nity Fund Law."
                                                                        
  5        22-5102.  DEFINITIONS. As used in this chapter:
  6        (1)  "Contract" means an agreement which may include, but is  not  limited
  7    to, those contracts commonly referred to as production, credit sale, bailment,
  8    deferred payment, deferred or price later contracts.
  9        (2)  "Delivery voucher" means a form, other than a receipt or scale weight
 10    ticket,  authorized  by  rules  of  the  department  evidencing  delivery of a
 11    producer's seed crop to a seed buyer.
 12        (3)  "Department" means the Idaho state department of agriculture.
 13        (4)  "Director" means the director of the Idaho state department of  agri-
 14    culture.
 15        (5)  "Failure" means the date that one (1) or more of the following events
 16    occurred, as determined by the director:
 17        (a)  An inability to financially satisfy producers;
 18        (b)  A declaration of insolvency;
 19        (c)  A  revocation of license and the leaving of an outstanding  indebted-
 20        ness to a producer;
 21        (d)  A failure to redeliver any seed crop stored for withdrawal or to  pay
 22        producers for seed crop pursuant to the terms of an agreement; or
 23        (e)  A denial of the application for a license renewal.
 24        (6)  "Person"  means any individual, firm, association, corporation, part-
 25    nership or limited liability company.
 26        (7)  "Producer" means the owner, tenant or operator of land in this  state
 27    who  has an interest in the proceeds from the sale of seed crops grown on that
 28    same land.  Producer does not include growers of seed crop who  deposit  their
 29    seed  crop  in  a  seed  facility in which they have a financial or management
 30    interest, except members of  a  cooperative  marketing  association  qualified
 31    under chapter 26, title 22, Idaho Code.
 32        (8)  "Production  summary" means records that include, but are not limited
 33    to, the kind and type of seed crop, producer name and  address,  location  and
 34    number  of  acres,  clean seed per acre, value per pound and, when applicable,
 35    the contract number and lot identity.
 36        (9)  "Receipt" means a warehouse receipt.
 37        (10) "Scale weight ticket" means a load slip, other than a receipt,  given
 38    to  a  producer  by  a  seed  buyer, for transfer of the seed crop to the seed
 39    buyer. Each scale weight ticket  shall  be  sequentially  numbered,  shall  be
 40    recorded in triplicate and shall set forth the following:
 41        (a)  Name and address of seed buyer;
 42        (b)  Date of weighing;
 43        (c)  Producer of seed crop weighed;
 44        (d)  Kind of seed crop weighed;
 45        (e)  Gross delivery weight;
 46        (f)  Tare;
 47        (g)  Net delivery weight; and
 48        (h)  Full signature of weigher or name of supervisor of scale.
 49        (11) "Seed  buyer"  means  any  person  having a commercial operation, its
 50    agents and employees, together with its elevators, mills, buildings, or  other
 51    structures  who  owes or has any financial obligation to the producer for seed
 52    crop grown by that producer and transferred to the seed buyer.
 53        (12) "Seed crops" means any seed crop regulated by chapter  4,  title  22,
                                                                        
                                           3
                                                                        
  1    Idaho Code.
  2        (13) "Seed facility" means:
  3        (a)  That  portion  of the commercial operation of a seed buyer where seed
  4        crop transferred to it from an unpaid producer is stored; or
  5        (b)  Where seed crop is stored for withdrawal.
  6        (14) "Stored for withdrawal" means the deposit of seed crop  with  a  seed
  7    facility by the producer for the subsequent withdrawal by that producer of the
  8    same seed crop or similar seed crop, as agreed to by the parties.
  9        (15) "Transfer" means, unless otherwise defined by the parties in writing,
 10    the  event  when  a producer or his agent delivers seed crop to the seed buyer
 11    who then gives the producer or his agent a scale weight  ticket,  receipt,  or
 12    other written evidence of transfer.
 13        (16) "Written evidence of transfer" means:
 14        (a)  A delivery voucher;
 15        (b)  A receipt; or
 16        (c)  A scale weight ticket.
                                                                        
 17        22-5103.  LICENSES.  (1)  Prior to beginning operation, a person intending
 18    to operate as a seed buyer shall first procure a license from the  department.
 19    Each  license issued pursuant to this chapter, shall be issued for a period of
 20    one (1) year and the license or legible copy thereof shall be prominently dis-
 21    played in each place of business.
 22        (2)  A seed facility endorsement showing the location of each seed  facil-
 23    ity in Idaho shall be attached to the seed buyer's license.
 24        (3)  The  department  is authorized to issue or renew a seed buyer license
 25    in accordance with this chapter, and the rules promulgated by  the  department
 26    providing each applicant meets the following conditions:
 27        (a)  Pay  an application fee of up to five hundred dollars ($500) pursuant
 28        to criteria established by rule, with the exception of those persons hold-
 29        ing a license issued pursuant to chapter 4, title 22, Idaho Code;
 30        (b)  Submit a completed application form provided by the department,  with
 31        required exhibits. The application shall include:
 32             (i)   The name of the applicant;
 33             (ii)  The  names  of the officers and directors if the applicant is a
 34             corporation or association;
 35             (iii) The names of the partners if the applicant is a partnership  or
 36             a limited liability company;
 37             (iv)  The location of the principal place of business;
 38             (v)   Information  relating  to  any judgment against the applicants;
 39             and
 40             (vi)  Any other reasonable information the department finds necessary
 41             to carry out the provisions and purposes of this chapter.
 42        (c)  Provide a sufficient and valid bond as required by this chapter;
 43        (d)  Provide a current, sufficient policy of insurance covering losses  as
 44        required by this chapter;
 45        (e)  Provide the location of its seed facilities in Idaho;
 46        (f)  Provide  a  written  schedule  of  conditioning,  bagging and testing
 47        charges; and
 48        (g)  Have on file a test report pursuant to sections  71-113  and  71-117,
 49        Idaho  Code,  from  the  Idaho  state  department of agriculture bureau of
 50        weights and measures showing approved  status  for  any  scales  used  for
 51        weighing received seed crops and any scales used for weighing clean weight
 52        of seed crops.
 53        (4)  All fees collected, pursuant to this chapter, for license application
 54    and renewal shall be deposited in the seed indemnity fund.
                                                                        
                                           4
                                                                        
  1        (5)  All  materials required for renewal of a license shall be received by
  2    the department prior to the expiration date of the current license. A  license
  3    which has expired may be reinstated by the department upon receipt of all nec-
  4    essary  licensing  materials  required by the provisions of this chapter and a
  5    reinstatement fee in an amount up to one thousand dollars ($1,000) pursuant to
  6    criteria established by rule, providing that this  material  is  filed  within
  7    thirty (30) days from the date of expiration of the current license.
  8        (6)  A delivery of seed crop between producers, none of whom are seed buy-
  9    ers, shall be exempt from the provisions of this chapter.
                                                                        
 10        22-5104.  BONDS  --  IRREVOCABLE  LETTERS OF CREDIT. Every person applying
 11    for a license shall execute and file with the department a good and sufficient
 12    bond issued by an insurer authorized to transact such insurance in this state.
 13    The bond shall be in favor of the seed indemnity fund to secure  the  faithful
 14    performance  of  the  applicant's  obligations under this chapter, and of such
 15    additional unpaid obligations assumed under agreements with producers of  seed
 16    crops  transferred  to  or deposited with the applicant. Said bond shall be in
 17    such form and amount, shall have such surety or sureties,  and  shall  contain
 18    such  terms  and  conditions  as the department may prescribe to carry out the
 19    purposes of this chapter. Whenever the department determines that a previously
 20    approved bond is insufficient, it may require an additional bond or bonds con-
 21    forming with the requirements of this chapter. Unless the additional  bond  is
 22    given  within  the time fixed by a written demand therefor, the license may be
 23    suspended or revoked.
 24        Seed buyers with common ownership  or  management,  operated  as  separate
 25    entities,  shall  have  individual bonds for each separate entity in an amount
 26    conforming to the provisions of this chapter.
 27        At the discretion of the director, any person required to submit a bond to
 28    the department may give to the department an irrevocable letter of credit pay-
 29    able to the seed indemnity fund in lieu of the bond required herein. The prin-
 30    cipal amount of the letter of credit shall be the same as that required for  a
 31    surety  bond  pursuant  to  this chapter. The letter of credit shall remain on
 32    file with the department until it is released, canceled or discharged  by  the
 33    director  or  until  the  director is notified ninety (90) days in advance, by
 34    registered or certified mail, return receipt requested,  that  the  letter  of
 35    credit  is  renewed,  canceled  or amended. Failure to notify the director may
 36    result in the suspension or revocation of the seed buyer license.  The  provi-
 37    sions  of  this  chapter  that  apply to a bond apply to each letter of credit
 38    given in lieu of such bond. Under the provisions of this chapter, an irrevoca-
 39    ble letter of credit shall not be accepted unless it is issued by  a  national
 40    bank  in  Idaho  or  by  an  Idaho state-chartered bank insured by the federal
 41    deposit insurance corporation.
                                                                        
 42        22-5105.  AMOUNT OF BOND -- NOTICE OF CANCELLATION. The amount of bond  to
 43    be  furnished  for each seed buyer will be fixed at a rate of six percent (6%)
 44    of the total seed buyer indebtedness paid or owed to producers for  seed  crop
 45    stored for withdrawal or transferred during the previous license year or esti-
 46    mated  current  calendar year seed crop indebtedness owed to producers, which-
 47    ever is greater.  In any case, the amount of the bond shall not be  less  than
 48    twenty-five thousand dollars ($25,000) and shall not be more than five hundred
 49    thousand    dollars ($500,000). This bond shall run concurrently with the seed
 50    buyer's license.  A ninety (90) day written notice, by registered or certified
 51    mail, return receipt requested, shall be given to the director by the  bonding
 52    company before it may amend or cancel any bond.
                                                                        
                                           5
                                                                        
  1        22-5106.  ACTION  BY  PERSONS INJURED. Any person injured by the breach of
  2    any financial obligation for which a bond or letter of credit is written under
  3    this chapter, must petition the director to make demand upon the  seed  buyer,
  4    the letter of credit, or on the bond to enforce payment of claims.
                                                                        
  5        22-5107.  FEES.  (1)  The department shall assess and collect a fee of one
  6    hundred dollars ($100) for each inspection of a licensee, which  is  done  for
  7    the purpose of amending a seed buyer license.
  8        (2)  The department may assess and collect a fee of two hundred fifty dol-
  9    lars  ($250)  per day or fraction thereof for maintaining each employee of the
 10    department at a seed buyer's location to oversee the correction of a violation
 11    of the provisions of this chapter or department rules.
                                                                        
 12        22-5108.  RECEIPTS -- SCALE WEIGHT TICKETS. Warehouse  receipts  or  scale
 13    weight tickets shall be issued by the seed buyer to the producer:
 14        (1)  At  the  time of deposit for storage for withdrawal of the seed crop;
 15    or
 16        (2)  At the time of transfer of the seed crop.
                                                                        
 17        22-5109.  MAINTENANCE OF RECORDS -- EXAMINATION  OF  RECORDS.    The  seed
 18    buyer shall maintain current and complete records at all times with respect to
 19    all  seed  crops  handled, deposited, shipped or merchandised by it, including
 20    seed crops owned by it. Such records shall include, but are  not  limited  to,
 21    records  showing  the  total  quantity  of  each  kind  and class of seed crop
 22    received and loaded out and the amount remaining on deposit at  the  close  of
 23    each business day.
 24        Records  required  by this section shall be legible and kept in a place of
 25    safety in this state for a period of five (5) years. If a person  operates  at
 26    more  than  one  (1) location, records of each location's transactions must be
 27    identifiable.
 28        The department is authorized to examine records to confirm the proper col-
 29    lection and remittance of seed indemnity fund assessments  and  payments.  The
 30    records  subject  to  examination  shall  include,  but  are  not  limited to,
 31    receipts, scale weight tickets, conditioning  records,  production  summaries,
 32    and payments to producers.
                                                                        
 33        22-5110.  VIOLATIONS  --  PENALTIES  --  DISCRETION  OF DIRECTOR TO HANDLE
 34    ADMINISTRATIVELY. (1) Any person who violates any provision of this chapter or
 35    the rules promulgated hereunder, or who  shall  impede,  obstruct,  hinder  or
 36    otherwise  prevent  or  attempt to prevent the director or his duly authorized
 37    representative in the performance of his duty in connection  with  the  provi-
 38    sions  of  this  chapter  shall  be guilty of a misdemeanor and be punished by
 39    imprisonment in a county jail not to exceed six (6) months, or by  a  fine  of
 40    not more than one thousand dollars ($1,000), or by both.
 41        (2)  Any  person operating as a seed buyer without a license or in any way
 42    representing, by actions or words, that they are so  licensed  when  they  are
 43    not,  or  any  person  who  shall  misrepresent,  forge, alter, counterfeit or
 44    falsely represent a license as required  by the  provisions  of  this  chapter
 45    shall  be  guilty of a felony and punished by imprisonment in the state prison
 46    for not more than ten (10) years, or by a fine of not more than  ten  thousand
 47    dollars ($10,000), or by both.
 48        (3)  Any  person  who shall issue, utter, or aid in the issuance or utter-
 49    ance or attempt to issue or utter a  false  or  fraudulent  receipt  or  scale
 50    weight  ticket  for  any seed crop shall be guilty of a felony and punished by
 51    imprisonment in the state prison for not more than ten (10)  years,  or  by  a
                                                                        
                                           6
                                                                        
  1    fine of not more than ten thousand dollars ($10,000), or by both.
  2        (4)  Any  person violating any provision of this chapter, or rules promul-
  3    gated under this chapter, may be assessed a civil penalty  by  the  department
  4    equal  to  the  loss for each offense or five hundred dollars ($500) a day for
  5    continuing violations. Persons against whom civil penalties are assessed shall
  6    be liable for the department's reasonable attorney's fees. Civil penalties may
  7    be assessed in conjunction with any other  department  administrative  action.
  8    Moneys  collected  for  violations  of this section or rules promulgated under
  9    this section shall be deposited in the state treasury and credited to the seed
 10    indemnity fund.
 11        (5)  Nothing in this chapter shall be construed as requiring the  director
 12    to  report  minor  violations for prosecution when he believes that the public
 13    interest will be best served by  suitable  warnings  or  other  administrative
 14    action.  The  director  shall  maintain  a record of any administrative action
 15    involving a seed buyer with that seed buyer's license file.
                                                                        
 16        22-5111.  SUSPENSION OR REVOCATION OF LICENSE.  Pursuant  to  chapter  52,
 17    title  67, Idaho Code, the department may suspend or revoke any license issued
 18    under the provisions of this chapter, for any violation of, or failure to com-
 19    ply with, any provision of this chapter or chapter 7, title  28,  Idaho  Code,
 20    including, but not limited to, sections 28-7-101 through 28-7-603, Idaho Code.
 21    Pending  investigation,  the department, whenever it deems necessary, may sus-
 22    pend a license temporarily without a hearing.
                                                                        
 23        22-5112. DUTY TO PROSECUTE. It shall  be  the  duty  of  each  prosecuting
 24    attorney to whom a violation is reported by the department, to cause appropri-
 25    ate  proceedings  to  be instituted and prosecuted without delay in a court of
 26    competent jurisdiction.
                                                                        
 27        22-5113.  NOTICE OF NONCOMPLIANCE -- REQUIREMENTS -- FAILURE TO COMPLY  --
 28    REMEDIES  OF DEPARTMENT.  (1) Whenever a seed buyer is not meeting its obliga-
 29    tions to producers, does not have the ability to pay producers, or refuses  to
 30    submit  records  and  papers  to  lawful inspection, the department shall give
 31    written notice to the seed buyer and direct the seed buyer to comply with  all
 32    or any of the following requirements:
 33        (a)  The  department  may  require additional security or the posting of a
 34        bond in an amount sufficient to satisfy any financial obligation  to  pro-
 35        ducers.  The  additional  security may exceed the maximum bonding require-
 36        ments of this chapter. Failure to timely post the additional bond or other
 37        security constitutes grounds for suspension or revocation  of  a  license.
 38        The  seed  buyer  may request a hearing regarding the decision to increase
 39        the amount of security required or  the  revocation  or  suspension  of  a
 40        license  and  may  appeal such decisions pursuant to chapter 52, title 67,
 41        Idaho Code.
 42        (b)  Submit to such inspection as the department may deem necessary.
 43        (2)  If the seed buyer fails to comply  with  the  terms  of  such  notice
 44    within  twenty-four  (24)  hours  from  the date of issuance of the notice, or
 45    within such further time as the department may allow, the department may peti-
 46    tion the district court in the county where the seed buyer's  principal  place
 47    of  business  is  located,  as shown by the license application, for an order,
 48    according to section 22-106, Idaho Code.
 49        (3)  The department may give written notice of  its  action  to  the  seed
 50    buyer's surety.
 51        (4)  The  department  may  require an audited or reviewed financial state-
 52    ment.
                                                                        
                                           7
                                                                        
  1        (5)  If at any time the department has evidence that  the  seed  buyer  is
  2    insolvent  or is unable to satisfy the claims of producers, the department may
  3    petition the district court for the appointment of a receiver  to  operate  or
  4    liquidate the business of the seed buyer.
  5        (6)  All court costs, attorney's fees, other professional fees, and neces-
  6    sary  expenses  incurred  by  the department in carrying out the provisions of
  7    this chapter may be recovered in any civil action brought by the department.
                                                                        
  8        22-5114.  INSURANCE -- CANCELLATION PROCEDURE -- SUSPENSION OF LICENSE  --
  9    SELF-INSURANCE. (1)  Every seed buyer who has a seed facility where seed crops
 10    are  stored  for withdrawal or transferred, shall maintain a "commercial prop-
 11    erty policy" of insurance, or its equivalent, issued by a company qualified to
 12    do business in the state in which the  facility  is  located.  The  amount  of
 13    insurance  shall  be  sufficient to cover the property loss of the insured and
 14    such additional amounts that are: (a) greater than or equal to the total  seed
 15    buyer indebtedness and the value of seed crop stored for withdrawal during the
 16    previous  license  year,  or  (b)  estimated  current  calendar year seed crop
 17    indebtedness to producers and the value of seed crop to be  stored  for  with-
 18    drawal.  The  department rules shall enumerate the perils to be covered by the
 19    policy.
 20        (2)  The insurance company issuing the  policy  of  insurance  shall  give
 21    ninety  (90) days' advance notice to the department by registered or certified
 22    mail, return receipt requested, of cancellation of the policy.
 23        (3)  When the insurance policy of a seed buyer is canceled, the department
 24    shall immediately suspend the license of the seed buyer,  and  the  suspension
 25    shall be in effect until satisfactory evidence exists that an effective policy
 26    of  insurance complying with the requirements of this chapter has been submit-
 27    ted to the department.
 28        (4) Seed buyers desiring to be self-insured shall apply to the  department
 29    for  authorization  to  self-insure.  Application  shall be made on forms pre-
 30    scribed by the department.
                                                                        
 31        22-5115.  LICENSE REISSUANCE FOLLOWING REVOCATION. A  seed  buyer  license
 32    shall  not  be  issued  to  any person whose license has been revoked within a
 33    period of three (3) years from the date of such revocation.  Upon  application
 34    for a license following revocation, the department shall hold a hearing within
 35    thirty  (30) days from receipt of the application to determine if such license
 36    shall be issued. A change in a person's business name shall not  absolve  that
 37    person of a prior revocation of his seed buyer license.
                                                                        
 38        22-5116.  DEPARTMENT'S AUTHORITY. The department may, whenever it has rea-
 39    son to believe the provisions of this chapter have been violated or upon veri-
 40    fied  complaint  of any person in writing, investigate the actions of any seed
 41    buyer, and if it finds cause to do so, file before the director,  a  complaint
 42    pursuant  to chapter 52, title 67, Idaho Code, against the seed buyer request-
 43    ing relief as authorized by this chapter. Notwithstanding  any  administrative
 44    processes, the director may apply to the appropriate court to enjoin the oper-
 45    ations of the seed buyer.
                                                                        
 46        22-5117.  LICENSE  DENIAL.  Any  seed buyer against whose bond a claim has
 47    been ordered collected or has actually been collected shall not be licensed by
 48    the department for a period of three (3) years from the date of such order  or
 49    collection. License denial may be waived if the person can show, to the satis-
 50    faction  of  the director, that full settlement of all claims against the bond
 51    have been made. Full settlement does not include seed indemnity  fund  settle-
                                                                        
                                           8
                                                                        
  1    ments.  A  change  in a person's business name shall not absolve any unsettled
  2    claim against that person's prior bond.
                                                                        
  3        22-5118.  PAYMENT WITH INSUFFICIENT FUNDS A VIOLATION. Any seed buyer that
  4    violates the provisions of section 18-3106, Idaho Code, in making  payment  to
  5    the  producer  for  any seed crop without sufficient funds in, or credit with,
  6    such bank or other depository, also violates the provisions of  this  chapter.
  7    The  word  "credit"  as used herein shall mean an arrangement or understanding
  8    with the bank or depository for such payment.
                                                                        
  9        22-5119.  CONFIDENTIAL AND PROTECTED  RECORDS.  Records  required  by  the
 10    department  to  validate the collection and remittance of assessments, includ-
 11    ing, but not limited to, production summaries, receiving records, conditioning
 12    reports, records relating to the payment of seed crops and seed indemnity fund
 13    reporting forms of a seed buyer, and financial records that  may  be  required
 14    pursuant  to  section  22-5113(4),  Idaho Code, shall be held confidential and
 15    will be protected as production records according to chapter 3, title 9, Idaho
 16    Code. These records shall not be subject  to  disclosure  unless  specifically
 17    authorized  in  writing by the licensee or as otherwise authorized pursuant to
 18    the provisions of chapter 3, title 9, Idaho Code.
                                                                        
 19        22-5120.  SEED INDEMNITY FUND. (1) There is hereby established, within the
 20    dedicated account, a fund to be known as the seed  indemnity  fund.  The  seed
 21    indemnity  fund  shall  consist of assessments remitted pursuant to the provi-
 22    sions of this chapter and any interest or earnings on the fund balance.
 23        (2)  All assessments shall be paid to the department and shall  be  depos-
 24    ited  in  the  seed  indemnity fund. Assessments shall be paid solely by or on
 25    behalf of producers who transfer or deposit for storage a  seed  crop  with  a
 26    seed  buyer.  The state treasurer shall be the custodian of the seed indemnity
 27    fund. Disbursements shall be authorized by the director. No  appropriation  is
 28    required for disbursements from this fund.
 29        (3)  The  seed  indemnity  fund shall be used exclusively for paying valid
 30    claims as authorized by this chapter and the necessary fees  and  expenses  of
 31    the  department  in  carrying out its responsibilities under this chapter.  If
 32    necessary a portion of the fund may be used to defray the cost  of  reinsuring
 33    the  fund  at  the discretion of the director. The state of Idaho shall not be
 34    liable for any claims presented against the fund.
                                                                        
 35        22-5121.  ASSESSMENTS. Every producer shall pay an assessment for  deposit
 36    in  the  seed  indemnity  fund according to the provisions of this chapter and
 37    rules promulgated by the department. A delivery  of  seed  crop  between  pro-
 38    ducers,  none  of whom are seed buyers, is exempt from the collection and pay-
 39    ment of assessments. Assessments  shall  be  collected  on  the  gross  dollar
 40    amount,  without  any deduction, owed to, or paid, or to be paid, on behalf of
 41    the producer of the seed crop.
 42        (1)  The initial rate of the assessment shall be five-tenths of  one  per-
 43    cent  (.5%).  Changes in the rate will be established by criteria in the rules
 44    of the department. However, the producer's annual assessment shall not  exceed
 45    five-tenths of one percent (.5%).
 46        (2)  If  seed  crop  is  stored  for  withdrawal, the assessment shall not
 47    exceed one-half cent (1/2) per pound, based on clean weight or, if not avail-
 48    able, estimated clean weight, per twelve (12) month period, payable at time of
 49    withdrawal.
                                                                        
 50        22-5122.  COLLECTION AND REMITTANCE OF  ASSESSMENTS  --  PRINCIPAL  AMOUNT
                                                                        
                                           9
                                                                        
  1    HELD  IN  TRUST  -- INTEREST EARNED -- FAILURE TO COLLECT OR REMIT ASSESSMENTS
  2    CONSTITUTES A VIOLATION -- INTEREST AND PENALTIES FOR UNPAID ASSESSMENTS.  (1)
  3    The  department  shall promulgate rules to provide a procedure for the collec-
  4    tion and remittance of the producer's assessments. Seed buyers  who  owe  pro-
  5    ducers  for  the transfer of seed crop or have stored for withdrawal seed crop
  6    shall be responsible for the collection of the producer's assessments and  the
  7    remittance of the assessments collected to the department.
  8        (2)  Seed  buyers  shall  remit  to  the  department assessments collected
  9    according to the provisions of this chapter. Payments will be  made  no  later
 10    than the twentieth  day of the month following the close of the calendar quar-
 11    ter  on a form prescribed by the department. There are four (4) calendar quar-
 12    ters in the year, beginning on the first day of the months of January,  April,
 13    July  and  October.  Assessment reports shall be submitted even though assess-
 14    ments for the period have not been collected. Failure to do so will result  in
 15    a penalty of one hundred dollars ($100).
 16        (3)  The  principal  amount of assessments paid by, or deducted from, pay-
 17    ments to producers by seed buyers, is held in trust  for  the  seed  indemnity
 18    fund  immediately  upon  collection  by seed buyers and is not property of the
 19    seed buyer.
 20        (4)  Interest earned on assessments prior to remittance to the  department
 21    belongs to the seed buyer.
 22        (5)  If  a seed buyer fails to collect or remit assessments as required it
 23    shall be considered a violation of the provisions of this  chapter  and  shall
 24    subject  the  seed  buyer to suspension or revocation of any license issued to
 25    the seed buyer under the provisions of this chapter.
 26        (6)  The department shall collect, on assessments unpaid within  the  time
 27    limits  specified  in  this chapter, interest at the rate of ten percent (10%)
 28    per annum until the assessments are remitted together with a penalty  of  five
 29    percent (5%) each month on the unpaid assessment due until the maximum penalty
 30    of twenty-five percent (25%) is reached.
                                                                        
 31        22-5123.  FUNDING  AND  LIMITS  OF  FUND.  The  maximum amount of the seed
 32    indemnity fund shall be maintained between ten million  dollars  ($10,000,000)
 33    and twelve million dollars ($12,000,000).
                                                                        
 34        22-5124.  ADVISORY  COMMITTEE.  (1)  There is hereby created a seed indem-
 35    nity fund advisory committee appointed by the director consisting of nine  (9)
 36    members  representing the diversity of the industry. Appointments shall be for
 37    up to three (3) year terms, each term ending on the same day of the same month
 38    as did the term preceding it. Any member appointed to fill a vacancy occurring
 39    prior to the expiration of the term for which  the  member's  predecessor  was
 40    appointed, shall hold office for the remainder of the predecessor's term.
 41        (2)  The  committee  shall  be  composed of seven (7) producers engaged in
 42    producing seed crops and two (2) seed buyers or seed buyer representatives.
 43        (3)  The terms of  the  appointees  will  be  staggered  and  the  initial
 44    appointments  shall  be three (3) producers and one (1) seed buyer for one (1)
 45    year terms, two (2) producers for two (2) year terms, and  two  (2)  producers
 46    and one (1) seed buyer for three (3) year terms.
 47        (4)  The committee shall meet annually at such place and time as it deter-
 48    mines  and may meet as often as necessary to discharge the duties imposed upon
 49    it. Each committee member shall be  compensated  in  accordance  with  section
 50    59-509(i), Idaho Code, for travel and subsistence expense. The expenses of the
 51    committee and its operation shall be paid from the seed indemnity fund.
 52        (5)  The  committee  shall  have the power and duty to advise the director
 53    concerning assessments, administration of the seed indemnity fund, and payment
                                                                        
                                           10
                                                                        
  1    of claims from the fund. Every two (2) years the  committee  will  review  the
  2    maximum limits of the fund and give advice to the director.
                                                                        
  3        22-5125.   PROOF OF CLAIMS -- PROCEDURE -- HEARING. After the director has
  4    declared  a failure, the department shall process the claims of producers hav-
  5    ing paid or owing assessments who: (a) produce written  evidence  of  transfer
  6    together  with  the  amounts  of their unpaid claims, and (b) have "stored for
  7    withdrawal" and provide written evidence of deposit.
  8        (1)  The department shall give written notice to and provide a  reasonable
  9    time  of  not less than thirty (30) days and not more than sixty (60) days for
 10    producers to file their written verified claims, including  any  written  evi-
 11    dence, with the department.
 12        (2)  The department shall investigate each claim and shall notify in writ-
 13    ing  each  claimant,  the  seed  buyer  and  the  advisory  committee  of  the
 14    department's  determination  as  to  the  validity and amount of each claim. A
 15    claimant or seed buyer may request a hearing on the department's determination
 16    within twenty (20) days of receipt of written notification of  the  determina-
 17    tion pursuant to chapter 52, title 67, Idaho Code. Upon determining the amount
 18    and  validity  of  the claim, the director shall pay to the claimant an amount
 19    equal to ninety percent (90%) of the approved claim from  the  seed  indemnity
 20    fund.  Prior to any payment from the fund to a claimant, the claimant shall be
 21    required to subrogate and assign to the department his right to  any  recovery
 22    from  any other source. The claimant shall be entitled to seek recovery of the
 23    remaining ten percent (10%), which was not assigned  to  the  department.  The
 24    procedure to determine the value of any claim will be established by rules.
 25        (3)  In  the  event  of  a shortage or inability to meet financial obliga-
 26    tions, the department shall determine each producer's pro rata share of avail-
 27    able seed crops and any deficiency shall be the claims of the producers.  Each
 28    type  of  seed crop shall be treated separately for the purpose of determining
 29    shortages.
 30        (4)  The director shall not approve or  pay  any  claim  based  on  losses
 31    resulting  from transactions with persons unlicensed pursuant to this chapter.
 32    The director shall not approve or pay any claim made  on  the  seed  indemnity
 33    fund  if  the claim is for the payment of interest, attorney's fees, ancillary
 34    costs, or punitive damages.
 35        (5)  If a producer's claim reveals that the assessment has not  been  paid
 36    or  collected,  and the claim is otherwise valid, the amount of the assessment
 37    shall be deducted from the claim payment.
                                                                        
 38        22-5126. FAILURE TO FILE -- LOSS OF CLAIM ON FUND. No claim shall be  paid
 39    from  the  fund to a producer who refuses or neglects to file a verified claim
 40    against a seed buyer:
 41        (1)  Within ninety (90) days from the date prescribed in  the  "notice  of
 42    failure,"  or within the time limits of section 22-5125(1), Idaho Code, which-
 43    ever is later; or
 44        (2)  If the claim is filed more than two (2) years from the date of trans-
 45    fer.
                                                                        
 46        22-5127.  MINIMUM BALANCE FOR  CLAIMS  --  TERMINATION  OF  LIABILITY.  No
 47    claims  of producers shall be paid when the balance in the seed indemnity fund
 48    is reduced to two hundred fifty thousand dollars ($250,000). If  the  director
 49    cannot  fully  pay producers' claims without exceeding the minimum balance, he
 50    shall pay claims pro rata until the seed indemnity  fund  contains  sufficient
 51    funds  to  pay  claims  in full. In no case shall the fund be liable for those
 52    claims not fully paid within three (3) years of submission of the claim.
                                                                        
                                           11
                                                                        
  1        22-5128.  PAYMENT FROM FUND -- DEBT OF SEED BUYER OR SURETY --  REIMBURSE-
  2    MENT  -- ACCRUAL OF CAUSE OF ACTION. Amounts paid from the seed indemnity fund
  3    in satisfaction of any approved claims shall constitute a debt and  obligation
  4    of the seed buyer against whom the claim was made and its surety. The director
  5    may  bring  suit  on  behalf of the seed indemnity fund and in the name of any
  6    claimant paid from the fund in district court of Ada county  to  recover  from
  7    the  seed  buyer  and  its surety the amount of the payment made from the seed
  8    indemnity fund, together with costs and attorney's fees incurred in  maintain-
  9    ing  the  suit. In the event the department initiates an action against a seed
 10    buyer or surety, the department's claim is deemed to accrue and relate back to
 11    the time that each producer who received a seed indemnity fund payment  incur-
 12    red  a  loss  with  the seed buyer. Any recovery for reimbursement of the fund
 13    shall bear interest at the statutory rate from the date of failure.
                                                                        
 14        22-5129.  RULES. The department may, from time to time, make such rules as
 15    it deems necessary for the efficient execution of the provisions of this chap-
 16    ter.

Statement of Purpose / Fiscal Impact


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                      STATEMENT OF PURPOSE

                             RS11756

Most seed crops produced by Idaho producers are grown under bailment 
contracts. The Commodity Indemnity Fund excludes some seed crops as 
well as all seeds raised under bailment contracts.

There are production facilities that deal only in contract seeds. 
In order to distinguish these operations from public warehouses 
they are considered seed buyers.  The proposed Seed Indemnity Fund 
Law requires licensing, bonding and insurance requirements.  This 
process is required to bring these seed buyers into the Idaho State 
Department of Agriculture system so the Seed Indemnity Fund can be 
created and administered.

The proposed Seed Indemnity Fund Law also creates the Seed 
Indemnity Fund.  This fund will be structured and operated similar 
to the existing Commodity Indemnity Fund to provide financial 
protection for Idaho growers in the event of a business failure of 
a seed production facility.  The Seed Indemnity Fund expands the 
seed crops not currently covered in the Commodity Dealer Law and 
includes seed crops raised under bailment contract.


	
                              FISCAL NOTE


The department of agriculture will not have a fiscal impact as a 
result of enacting the Seed Indemnity Fund Law. The administration 
of the Seed Indemnity Law will require one examiner position, a 
part time clerical position and miscellaneous expenses at a cost 
of approximately $120,000.00 per year. The Seed Indemnity Fund is 
self-supporting, all assessments, fees and recoveries are deposited 
into the Seed Indemnity Fund. The Seed Indemnity Fund Law enables 
the department of agriculture to recover all necessary fees and 
expenses from the fund in carrying out its responsibilities in 
administering the Seed Indemnity Fund.    

The fiscal impact on the seed industry is in obtaining a bond equal 
to 6% of the total annual seed buyer indebtedness, paid or owed to 
seed producers. The maximum bond amount is $500,000. There is no 
annual license fee required in this act if a seed buyer is licensed 
pursuant to title 22 chapter 4 "Pure Seed Act". License fees for 
seed buyers not licensed under title 22 chapter 4 "Pure Seed Act" 
are up to $500.00 per year. There is an unknown clerical fiscal 
impact for the seed industry for collecting and remitting the 
assessment to the department. Interest earned on assessments prior 
to remittance to the department belongs to the seed buyer and helps 
to offset the seed buyer's clerical cost.  

The majority of seed producers in Idaho are not covered by the 
"Commodity Indemnity Fund." The proposed "Seed Indemnity Fund" 
provides protection to these growers for 90% of their losses in 
the event of a business failure licensed under this act.  





	
CONTACT:  
Name: Representative Jones
Phone:(208)332-1137
Name: Department of Agriculture
Phone: (208)332-8500



STATEMENT OF PURPOSE/FISCAL NOTE	     H 522