Print Friendly 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
03/15 To Governor
03/25 Governor signed
Session Law Chapter 256
|||| 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:
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-
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,
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;
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.
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.
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;
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
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
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-
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
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-
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
50 22-5122. COLLECTION AND REMITTANCE OF ASSESSMENTS -- PRINCIPAL AMOUNT
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
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
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-
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.
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-
REPRINT REPRINT REPRINT REPRINT REPRINT
STATEMENT OF PURPOSE
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.
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.
Name: Representative Jones
Name: Department of Agriculture
STATEMENT OF PURPOSE/FISCAL NOTE H 522