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H0307..................................................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.
02/27 House intro - 1st rdg - to printing
02/28 Rpt prt - to 2nd rdg
03/03 2nd rdg - to 3rd rdg
03/04 3rd rdg - PASSED - 67-0-3
AYES -- Andersen, Barraclough, Bauer, Bedke, Bell, Bieter, Black, Block,
Boe, Bolz, Bradford, Campbell, Cannon, Clark, Collins, Cuddy, Deal,
Denney, Douglas, Eberle, Edmunson, Ellsworth, Eskridge, Field(18),
Field(23), Gagner, Garrett, Harwood, Henbest, Jaquet, Jones, Kellogg,
Kulczyk, Lake, Langford, Langhorst, Martinez, McGeachin, McKague, Meyer,
Miller, Mitchell, Moyle, Naccarato, Nielsen, Raybould, Ridinger, Ring,
Ringo, Roberts, Robison, Rydalch, Sali, Sayler, Schaefer, Shepherd,
Shirley, Skippen, Smith(30), Smith(24), Smylie, Snodgrass, Stevenson,
Tilman, Trail, Wills, Mr. Speaker
NAYS -- None
Absent and excused -- Barrett, Crow, Wood
Floor Sponsor - Jones
Title apvd - to Senate
03/05 Senate intro - 1st rdg - to Agric Aff
03/14 Rpt out - rec d/p - to 2nd rdg
03/17 2nd rdg - to 3rd rdg
03/19 3rd rdg - PASSED - 33-0-2
AYES -- Andreason, Bailey, Bunderson, Burkett, Burtenshaw, Calabretta,
Cameron, Compton, Darrington, Gannon, Geddes, Goedde, Hill, Ingram,
Kennedy, Keough, Little, Lodge, Malepeai, Marley, McKenzie, McWilliams,
Noble, Noh, Pearce, Richardson, Schroeder, Sorensen, Stegner, Stennett,
Sweet, Werk, Williams
NAYS -- None
Absent and excused -- Brandt, Davis
Floor Sponsor - Gannon
Title apvd - to House
03/20 To enrol
03/21 Rpt enrol - Sp signed
03/24 Pres signed
03/25 To Governor
03/27 Governor signed
Session Law Chapter 149
Effective: 03/27/03
|||| LEGISLATURE OF THE STATE OF IDAHO ||||
Fifty-seventh Legislature First Regular Session - 2003
IN THE HOUSE OF REPRESENTATIVES
HOUSE BILL NO. 307
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 or federal thrift institution in Idaho or by a state-chartered
3 bank or thrift institution authorized to conduct business in Idaho and insured
4 by the federal deposit insurance corporation. A certificate of deposit shall
5 be submitted with an audited or reviewed financial statement prepared in
6 accordance with the rules of the department by an independent Idaho certified
7 public accountant or Idaho licensed public accountant.
8 The amount of bond for each class 1 license to be furnished for each com-
9 modity dealer shall be in the sum of twenty-five thousand dollars ($25,000).
10 The bond for each class 2 license shall be in the sum of fifteen thousand dol-
11 lars ($15,000) fixed at whichever of the following amounts is greater:
12 (1) The combined total indebtedness paid and owed to producers for agri-
13 cultural commodity and seed crop for the previous license year; or
14 (2) The indebtedness owed and estimated to be owed to producers for agri-
15 cultural commodity and seed crop for the current license year.
16 Subsequent to determining whichever of the preceding amounts is greater,
17 and based on that amount, the amount of bond shall be calculated as follows:
18 Gross Dollars: Amount of Bond:
19 $0 - $450,000 $20,000 bond or 6% of the gross
20 dollars, whichever is less
21 $450,001 - $1,000,000 $40,000 bond
22 $1,000,001 - $8,000,000 $100,000 bond
23 Over $8,000,000 $500,000 bond
24 In any case, the amount of the bond shall not be more than five hundred
25 thousand dollars ($500,000). A surety shall notify the commodity dealer and
26 the department by certified mail at least ninety (90) days prior to the can-
27 cellation of a bond issued under the provisions of this chapter. The liability
28 of the surety shall cover purchases made by the commodity dealer during the
29 time the bond is in force. A commodity dealer's bond filed with this depart-
30 ment shall be continuous until canceled by the surety upon ninety (90) days'
31 notice. The director reserves the right to waive the ninety (90) day cancella-
32 tion period.
33 If a commodity dealer is licensed pursuant to chapter 51, title 22, Idaho
34 Code, that same commodity dealer may obtain a single bond, certificate of
35 deposit or irrevocable letter of credit as a surety under chapter 5, title 69,
36 Idaho Code, and chapter 51, title 22, Idaho Code. If a single bond, certifi-
37 cate of deposit or irrevocable letter of credit is written covering chapter 5,
38 title 69, Idaho Code, and chapter 51, title 22, Idaho Code, the bond, certifi-
39 cate of deposit or irrevocable letter of credit shall be made out in favor of
40 the commodity indemnity fund and the seed indemnity fund. In the event a com-
41 modity dealer fails as defined in section 69-202(8), Idaho Code, and a single
42 bond, certificate of deposit or irrevocable letter of credit is written in
43 favor of the commodity indemnity fund and seed indemnity fund, the proceeds of
44 the bond, certificate of deposit or irrevocable letter of credit will be allo-
45 cated based on the dollar amount of the verified claims approved pursuant to
46 chapter 2, title 69, Idaho Code, and chapter 51, title 22, Idaho Code.
47 Any person required to submit a bond to the department in accordance with
48 this chapter, may at his option give to the department a certificate of
49 deposit payable to the commodity indemnity fund in lieu of the bond required
50 herein. The principal amount of the certificate shall be the same as that
51 required for a surety bond pursuant to this chapter. Accrued interest upon
52 the certificate of deposit shall be payable to the purchaser of the certifi-
53 cate. The certificate shall remain on file with the department until it is
3
1 released, canceled or discharged by the director. The provisions of this chap-
2 ter that apply to a bond required pursuant to this chapter apply to each cer-
3 tificate of deposit given in lieu of such bond. The certificate of deposit
4 shall remain on file with the department until it is released, canceled, or
5 discharged by the director, or until the director is notified ninety (90) days
6 in advance, by registered or certified mail, return receipt requested, that
7 the certificate of deposit is renewed, canceled or amended. Failure to notify
8 the director may result in the suspension or revocation of the commodity
9 dealer's license.
10 SECTION 2. That Section 69-511, Idaho Code, be, and the same is hereby
11 amended to read as follows:
12 69-511. INSPECTION OF PREMISES, BOOKS AND RECORDS -- AUTHORIZATION TO
13 COPY. The department may inspect the premises used by any commodity dealer in
14 the conduct of his business at any reasonable time. The department is autho-
15 rized through officials, employees, or agents of the department designated by
16 it, to examine all books, accounts, records and papers pertaining to any com-
17 modity or seed crop purchased, contracted for, or in the possession of, any
18 commodity dealer licensed under the provisions of this chapter. A commodity
19 dealer licensed in this state who does not have a place of business within the
20 state shall, upon the request of the director, make available and furnish to
21 the department at any reasonable time and place the department may set, all
22 books, accounts, records and papers relating to agricultural commodity trans-
23 actions within the state of Idaho. Where there is good cause to believe that a
24 person is doing business as a commodity dealer in the state of Idaho without a
25 license, the department may inspect the books, papers and records of the per-
26 son which pertain to agricultural commodity purchases. The department is
27 authorized to make copies of any documents or records relevant to compliance
28 with the provisions of this chapter.
29 SECTION 3. That Section 69-515, Idaho Code, be, and the same is hereby
30 amended to read as follows:
31 69-515. CONFIDENTIAL AND PROTECTED RECORDS. All financial statements of
32 commodity dealers Records required under the provisions of this chapter by the
33 department including, but not limited to, production summaries, receiving
34 records, conditioning reports, records relating to the payment of agricultural
35 commodities, commodity indemnity fund and seed indemnity fund reporting forms
36 of a commodity dealer, and financial records that are required pursuant to
37 sections 69-503(6) and 69-521, Idaho Code, shall be subject to disclosure held
38 confidential and will be protected as production records according to chapter
39 3, title 9, Idaho Code. Provided however, that a commodity dealer may provide
40 written permission for These records shall not be subject to disclosure of any
41 of the commodity dealer's financial statements unless specifically authorized
42 in writing by the licensee or as otherwise authorized pursuant to the provi-
43 sions of chapter 3, title 9, Idaho Code.
44 SECTION 4. That Section 69-522, Idaho Code, be, and the same is hereby
45 amended to read as follows:
46 69-522. ACTION ON BOND, CERTIFICATE OF DEPOSIT OR IRREVOCABLE LETTER OF
47 CREDIT BY PRODUCERS INJURED. Any producer injured by the breach of any obliga-
48 tion for which a bond, certificate of deposit or irrevocable letter of credit
49 is written, under the provisions of section 69-506, Idaho Code, must petition
4
1 the director to make demand upon the commodity dealer, certificate of deposit,
2 irrevocable letter of credit or bond. The director may thereupon make demand
3 upon the commodity dealer and his surety for payment of such damages and in
4 the event such damages are not promptly paid the director may commence an
5 action on the bond to enforce payment of such damages. The liability of the
6 surety upon the bond required to be given by the bank on a certificate of
7 deposit or irrevocable letter of credit, and the surety upon the bond required
8 to be given by a commodity dealer as provided by section 69-506, Idaho Code,
9 for any one (1) annual licensing period shall be limited to the amount speci-
10 fied in the bond, certificate of deposit, or irrevocable letter of credit and
11 in case of recoveries had by two (2) or more persons producers for violation
12 of the conditions of such bond this chapter in excess of the amount of the
13 bond, certificate of deposit, or irrevocable letter of credit, such recovery
14 shall be prorated and the total recovery as against the surety for any one (1)
15 annual licensing period shall not exceed the amount of the bond, certificate
16 of deposit, or irrevocable letter of credit. In the event the director sues
17 and obtains a judgment against the commodity dealer and/or his surety or bank
18 for payment of such damages under this section chapter, he shall be entitled
19 to recover a reasonable attorney's fee.
20 SECTION 5. An emergency existing therefor, which emergency is hereby
21 declared to exist, this act shall be in full force and effect on and after its
22 passage and approval.
STATEMENT OF PURPOSE
RS 13092
Amends the Commodity Dealer law to revise how bonds are
calculated. Bonds, certificates of deposit and letters of credit
will be a matrix based on indebtedness paid and owed to
producers. 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 the type of financial
institutions authorized to issue a letter of credit or
certificate of deposit. 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 indebtedness paid
and owed to producers. The bond calculation change will create a
more equitable business environment between warehouses, commodity
dealers and seed buyers as well as limit the exposure to the
commodity indemnity fund and the seed indemnity fund.
Contact
Name: Russ Dapsauski, ISDA, Warehouse Control Program
Phone: 208-332-8612
STATEMENT OF PURPOSE/FISCAL NOTE H 307