View Daily Data Tracking History
View Bill Text
View Statement of Purpose / Fiscal Impact
H0154..................................................by AGRICULTURAL AFFAIRS
COMMODITY DEALERS - Amends existing law dealing with commodity dealers to
provide for irrevocable letters of credit in lieu of bond; to revise
provisions relating to certificates of deposit and irrevocable letters of
credit given in lieu of bond; to revise provisions relating to the amount of
bond; to revise bonding requirements and bonding provisions for certain
commodity dealers; to authorize the Department of Agriculture to make certain
copies; to revise provisions relating to certain records; and to revise
provisions relating to damages for certain injured producers.
02/05 House intro - 1st rdg - to printing
02/06 Rpt prt - to Agric Aff
|||| LEGISLATURE OF THE STATE OF IDAHO ||||
Fifty-seventh Legislature First Regular Session - 2003
IN THE HOUSE OF REPRESENTATIVES
HOUSE BILL NO. 154
BY AGRICULTURAL AFFAIRS COMMITTEE
1 AN ACT
2 RELATING TO THE COMMODITY DEALER LAW; AMENDING SECTION 69-506, IDAHO CODE, TO
3 PROVIDE FOR IRREVOCABLE LETTERS OF CREDIT IN LIEU OF BOND, TO PROVIDE FOR
4 SINGLE BONDS, TO REVISE PROVISIONS RELATING TO CERTIFICATES OF DEPOSIT AND
5 IRREVOCABLE LETTERS OF CREDIT GIVEN IN LIEU OF BOND, TO REVISE PROVISIONS
6 RELATING TO THE AMOUNT OF BOND AND TO REVISE BONDING REQUIREMENTS AND
7 BONDING PROVISIONS FOR CERTAIN COMMODITY DEALERS; AMENDING SECTION 69-511,
8 IDAHO CODE, TO AUTHORIZE THE DEPARTMENT OF AGRICULTURE TO MAKE CERTAIN
9 COPIES; AMENDING SECTION 69-515, IDAHO CODE, TO REVISE PROVISIONS RELATING
10 TO CERTAIN RECORDS; AMENDING SECTION 69-522, IDAHO CODE, TO REVISE PROVI-
11 SIONS RELATING TO DAMAGES OF CERTAIN INJURED PRODUCERS; AND DECLARING AN
12 EMERGENCY.
13 Be It Enacted by the Legislature of the State of Idaho:
14 SECTION 1. That Section 69-506, Idaho Code, be, and the same is hereby
15 amended to read as follows:
16 69-506. BONDING REQUIREMENTS -- CANCELLATION -- IRREVOCABLE LETTER OF
17 CREDIT OR CERTIFICATE OF DEPOSIT IN LIEU OF BOND -- SINGLE BOND. Except as
18 provided in chapter 2, title 69, Idaho Code, an applicant for a license to
19 operate as a commodity dealer shall, before a license will be issued, file
20 with the department a bond in favor of the commodity indemnity fund with a
21 corporate surety approved by the department with the condition that the appli-
22 cant will pay the purchase price of any agricultural commodity to the seller.
23 The aggregate annual liability of the surety shall in no event exceed the sum
24 of the bond.
25 At the discretion of the director, any person required to submit a bond to
26 the department in accordance with this chapter, may give to the department a
27 certificate of deposit or irrevocable letter of credit payable to the commod-
28 ity indemnity fund in lieu of the bond required herein. The principal amount
29 of the certificate of deposit or irrevocable letter of credit shall be the
30 same as that required for a surety bond pursuant to this chapter. Accrued
31 interest upon the certificate of deposit shall be payable to the purchaser of
32 the certificate. The certificate of deposit or irrevocable letter of credit
33 shall remain on file with the department until it is released, canceled or
34 discharged by the director. The provisions of this chapter that apply to a
35 bond required pursuant to this chapter apply to each certificate of deposit or
36 irrevocable letter of credit given in lieu of such bond. The certificate of
37 deposit or irrevocable letter of credit shall remain on file with the depart-
38 ment until it is released, canceled, or discharged by the director, or until
39 the director is notified ninety (90) days in advance, by registered or certi-
40 fied mail, return receipt requested, that the certificate of deposit or irrev-
41 ocable letter of credit is renewed, canceled or amended. Failure to notify the
42 director may result in the suspension or revocation of the commodity dealer's
43 license. Under the provisions of this chapter, an irrevocable letter of credit
2
1 or certificate of deposit shall not be accepted unless it is issued by a
2 national bank in Idaho or by an Idaho state-chartered bank insured by the fed-
3 eral deposit insurance corporation. A certificate of deposit shall be submit-
4 ted with an audited or reviewed financial statement prepared in accordance
5 with the rules of the department by an independent Idaho certified public
6 accountant or Idaho licensed public accountant.
7 The amount of bond for each class 1 license shall be in the sum of twenty-
8 five thousand dollars ($25,000). The bond for each class 2 license shall be in
9 the sum of fifteen thousand dollars ($15,000) fixed at six percent (6%) of
10 whichever of the following amounts is greater:
11 (1) The combined total indebtedness paid and owed to producers for the
12 previous year's commodity in which the commodity dealer held title, posses-
13 sion, or control prior to payment to the producer or which was the subject of
14 a credit sales contract; or
15 (2) The indebtedness owed and estimated to be owed to producers for agri-
16 cultural commodity or seed crop for the current license year.
17 In any case, the amount of the bond shall not be more than five hundred
18 thousand dollars ($500,000). A surety shall notify the commodity dealer and
19 the department by certified mail at least ninety (90) days prior to the can-
20 cellation of a bond issued under the provisions of this chapter. The liability
21 of the surety shall cover purchases made by the commodity dealer during the
22 time the bond is in force. A commodity dealer's bond filed with this depart-
23 ment shall be continuous until canceled by the surety upon ninety (90) days'
24 notice. The director reserves the right to waive the ninety (90) day cancella-
25 tion period.
26 If a commodity dealer is licensed pursuant to chapter 51, title 22, Idaho
27 Code, that same commodity dealer may obtain a single bond, certificate of
28 deposit or irrevocable letter of credit as a surety under chapter 5, title 69,
29 Idaho Code, and chapter 51, title 22, Idaho Code. If a single bond, certifi-
30 cate of deposit or irrevocable letter of credit is written covering chapter 5,
31 title 69, Idaho Code, and chapter 51, title 22, Idaho Code, the bond, certifi-
32 cate of deposit or irrevocable letter of credit shall be made out in favor of
33 the commodity indemnity fund and the seed indemnity fund. In the event a com-
34 modity dealer fails as defined in section 69-202(8), Idaho Code, and a single
35 bond, certificate of deposit or irrevocable letter of credit is written in
36 favor of the commodity indemnity fund and seed indemnity fund, the proceeds of
37 the bond, certificate of deposit or irrevocable letter of credit will be allo-
38 cated based on the dollar amount of the verified claims approved pursuant to
39 chapter 2, title 69, Idaho Code, and chapter 51, title 22, Idaho Code.
40 Any person required to submit a bond to the department in accordance with
41 this chapter, may at his option give to the department a certificate of
42 deposit payable to the commodity indemnity fund in lieu of the bond required
43 herein. The principal amount of the certificate shall be the same as that
44 required for a surety bond pursuant to this chapter. Accrued interest upon
45 the certificate of deposit shall be payable to the purchaser of the certifi-
46 cate. The certificate shall remain on file with the department until it is
47 released, canceled or discharged by the director. The provisions of this chap-
48 ter that apply to a bond required pursuant to this chapter apply to each cer-
49 tificate of deposit given in lieu of such bond. The certificate of deposit
50 shall remain on file with the department until it is released, canceled, or
51 discharged by the director, or until the director is notified ninety (90) days
52 in advance, by registered or certified mail, return receipt requested, that
53 the certificate of deposit is renewed, canceled or amended. Failure to notify
54 the director may result in the suspension or revocation of the commodity
55 dealer's license.
3
1 SECTION 2. That Section 69-511, Idaho Code, be, and the same is hereby
2 amended to read as follows:
3 69-511. INSPECTION OF PREMISES, BOOKS AND RECORDS -- AUTHORIZATION TO
4 COPY. The department may inspect the premises used by any commodity dealer in
5 the conduct of his business at any reasonable time. The department is autho-
6 rized through officials, employees, or agents of the department designated by
7 it, to examine all books, accounts, records and papers pertaining to any com-
8 modity or seed crop purchased, contracted for, or in the possession of, any
9 commodity dealer licensed under the provisions of this chapter. A commodity
10 dealer licensed in this state who does not have a place of business within the
11 state shall, upon the request of the director, make available and furnish to
12 the department at any reasonable time and place the department may set, all
13 books, accounts, records and papers relating to agricultural commodity trans-
14 actions within the state of Idaho. Where there is good cause to believe that a
15 person is doing business as a commodity dealer in the state of Idaho without a
16 license, the department may inspect the books, papers and records of the per-
17 son which pertain to agricultural commodity purchases. The department is
18 authorized to make copies of any documents or records relevant to compliance
19 with the provisions of this chapter.
20 SECTION 3. That Section 69-515, Idaho Code, be, and the same is hereby
21 amended to read as follows:
22 69-515. CONFIDENTIAL AND PROTECTED RECORDS. All financial statements of
23 commodity dealers Records required under the provisions of this chapter by the
24 department including, but not limited to, production summaries, receiving
25 records, conditioning reports, records relating to the payment of agricultural
26 commodities, commodity indemnity fund and seed indemnity fund reporting forms
27 of a commodity dealer, and financial records that are required pursuant to
28 sections 69-503(6) and 69-521, Idaho Code, shall be subject to disclosure held
29 confidential and will be protected as production records according to chapter
30 3, title 9, Idaho Code. Provided however, that a commodity dealer may provide
31 written permission for These records shall not be subject to disclosure of any
32 of the commodity dealer's financial statements unless specifically authorized
33 in writing by the licensee or as otherwise authorized pursuant to the provi-
34 sions of chapter 3, title 9, Idaho Code.
35 SECTION 4. That Section 69-522, Idaho Code, be, and the same is hereby
36 amended to read as follows:
37 69-522. ACTION ON BOND, CERTIFICATE OF DEPOSIT OR IRREVOCABLE LETTER OF
38 CREDIT BY PRODUCERS INJURED. Any producer injured by the breach of any obliga-
39 tion for which a bond, certificate of deposit or irrevocable letter of credit
40 is written, under the provisions of section 69-506, Idaho Code, must petition
41 the director to make demand upon the commodity dealer, certificate of deposit,
42 irrevocable letter of credit or bond. The director may thereupon make demand
43 upon the commodity dealer and his surety for payment of such damages and in
44 the event such damages are not promptly paid the director may commence an
45 action on the bond to enforce payment of such damages. The liability of the
46 surety upon the bond required to be given by the bank on a certificate of
47 deposit or irrevocable letter of credit, and the surety upon the bond required
48 to be given by a commodity dealer as provided by section 69-506, Idaho Code,
49 for any one (1) annual licensing period shall be limited to the amount speci-
50 fied in the bond, certificate of deposit, or irrevocable letter of credit and
4
1 in case of recoveries had by two (2) or more persons producers for violation
2 of the conditions of such bond this chapter in excess of the amount of the
3 bond, certificate of deposit, or irrevocable letter of credit, such recovery
4 shall be prorated and the total recovery as against the surety for any one (1)
5 annual licensing period shall not exceed the amount of the bond, certificate
6 of deposit, or irrevocable letter of credit. In the event the director sues
7 and obtains a judgment against the commodity dealer and/or his surety or bank
8 for payment of such damages under this section chapter, he shall be entitled
9 to recover a reasonable attorney's fee.
10 SECTION 5. An emergency existing therefor, which emergency is hereby
11 declared to exist, this act shall be in full force and effect on and after its
12 passage and approval.
STATEMENT OF PURPOSE
RS 12819
Amends the Commodity Dealer law to revise how bonds are
calculated. Bonds, certificates of deposit and letters of credit
will be calculated at 6% of indebtedness paid and owed or
estimated to be paid and owed to producers, whichever is greater.
Removes the minimum bond requirement. This amendment allows for
one bond to cover the Commodity Dealer law and the Seed Indemnity
Fund Law. Authorizes the department of agriculture to make
copies of certain books, records, papers, and accounts of
commodity dealers. Adds clarity to nomenclature.
An emergency exists because some commodity dealers are
acting as seed buyers, which also requires a bond, and the seed
buyer license renewals are on July 1. Bonds run concurrent with
the license period.
FISCAL IMPACT
There will be no impact to the general fund. Any fiscal impact
to commodity dealers will vary depending on the size of the
operation. The bond calculation change will create a more
equitable business environment between warehouses, commodity
dealers and seed buyers as will as limit the exposure to the
commodity indemnity fund and the seed indemnity fund.
Contact
Name: Russ Dapsauski, Department of Agriculture
Phone: 332-8612
STATEMENT OF PURPOSE/FISCAL NOTE H 154