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H0308..................................................by AGRICULTURAL AFFAIRS
BONDED WAREHOUSES - Amends existing law relating to bonded warehouses to
provide for single bonds; to revise provisions relating to certificates of
deposit and irrevocable letters of credit given in lieu of bond; to revise
bonding requirements and bonding provisions for certain warehousemen; to
revise provisions relating to the amount of bond and damages to certain
injured producers; to authorize the Department of Agriculture to make copies
of certain books, records, papers and accounts of warehouses; and to revise
provisions relating to certain records.
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 - Kennedy
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 150
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. 308
BY AGRICULTURAL AFFAIRS COMMITTEE
1 AN ACT
2 RELATING TO THE BONDED WAREHOUSE LAW; AMENDING SECTION 69-208, IDAHO CODE, TO
3 PROVIDE FOR SINGLE BONDS, TO REVISE PROVISIONS RELATING TO CERTIFICATES OF
4 DEPOSIT AND IRREVOCABLE LETTERS OF CREDIT GIVEN IN LIEU OF BOND AND TO
5 REVISE BONDING REQUIREMENTS AND BONDING PROVISIONS FOR CERTAIN WAREHOUSE-
6 MEN; AMENDING SECTION 69-208A, IDAHO CODE, TO REVISE PROVISIONS RELATING
7 TO THE AMOUNT OF BOND AND TO MAKE A TECHNICAL CORRECTION; AMENDING SECTION
8 69-209, IDAHO CODE, TO REVISE PROVISIONS RELATING TO DAMAGES OF CERTAIN
9 INJURED PRODUCERS; AMENDING SECTION 69-230, IDAHO CODE, TO AUTHORIZE THE
10 DEPARTMENT OF AGRICULTURE TO MAKE COPIES OF CERTAIN BOOKS, RECORDS,
11 PAPERS, AND ACCOUNTS OF WAREHOUSES; AMENDING SECTION 69-250, IDAHO CODE,
12 TO REVISE PROVISIONS RELATING TO CERTAIN RECORDS; AND DECLARING AN EMER-
13 GENCY.
14 Be It Enacted by the Legislature of the State of Idaho:
15 SECTION 1. That Section 69-208, Idaho Code, be, and the same is hereby
16 amended to read as follows:
17 69-208. BOND OF APPLICANT FOR LICENSE -- ADDITIONAL BOND -- ADDITIONAL
18 OBLIGATIONS -- CERTIFICATE OF DEPOSIT OR IRREVOCABLE LETTER OF CREDIT IN LIEU
19 OF BOND -- SINGLE BOND. Each warehouseman applying for a license to conduct a
20 warehouse in accordance with this chapter shall, as a condition to the grant-
21 ing thereof, execute and file with the department a good and sufficient bond
22 other than personal security. The bond shall be in favor of the commodity
23 indemnity fund to secure the faithful performance of his obligations as a
24 warehouseman under all the laws of the state, including obligations arising by
25 operation of the commodity indemnity fund program, and the rules prescribed
26 hereunder, and of such additional obligations as a warehouseman as may be
27 assumed by him under contracts with the respective depositors of agricultural
28 commodities in such warehouse. Said bond shall be in such form and amount,
29 shall have such surety or sureties, and shall contain such terms and condi-
30 tions as the department may prescribe to carry out the purposes of this chap-
31 ter. Whenever the department shall determine that a bond approved by it is, or
32 for any cause has become, insufficient, it shall require an additional bond or
33 bonds to be given by the warehouseman concerned, conforming with the require-
34 ments of this section, and unless the same be given within the time fixed by a
35 written demand therefor the license of such warehouseman shall be suspended or
36 revoked.
37 The bond shall be approved by the department and shall be conditioned upon
38 the faithful performance by the warehouseman of the duty to keep in the ware-
39 house for the depositor the agricultural commodity delivered and to deliver
40 the agricultural commodity to or for such depositors. The bond shall also be
41 conditioned upon the faithful performance by the warehouseman of any addi-
42 tional obligations involving marketing transactions with a depositor.
43 The warehouseman may give a single bond meeting the requirements as pro-
2
1 vided in this chapter and all warehouses operated by the warehouseman shall be
2 as one (1) warehouse for the purpose of compliance with the provisions of this
3 section. At the discretion of the director, any person required to submit a
4 bond to the department in accordance with this chapter, may give to the
5 department a certificate of deposit or an irrevocable letter of credit payable
6 to the commodity indemnity fund in lieu of the bond required herein. The prin-
7 cipal amount of the certificate of deposit or irrevocable letter of credit
8 shall be the same as that required for a surety bond pursuant to this chap-
9 ter. Accrued interest upon the certificate of deposit shall be payable to the
10 purchaser of the certificate. The irrevocable letter of credit or certificate
11 of deposit shall remain on file with the department until it is released, can-
12 celed or discharged by the director or until the director is notified ninety
13 (90) days in advance, by registered or certified mail, return receipt
14 requested, that the irrevocable letter of credit or certificate of deposit is
15 renewed, canceled or amended. Failure to notify the director may result in the
16 suspension or revocation of the bonded warehouse license. The provisions of
17 this chapter that apply to a bond required pursuant to this chapter apply to
18 each certificate of deposit or irrevocable letter of credit given in lieu of
19 such bond.
20 Under provisions of this chapter, an irrevocable letter of credit or cer-
21 tificate of deposit shall not be acceptable unless it is issued by a national
22 bank or federal thrift institution in Idaho or by a state-chartered bank or
23 thrift institution authorized to conduct business in Idaho and insured by the
24 federal deposit insurance corporation.
25 Any changes in the capacity of a warehouse or installation of any new
26 warehouses involving a change in the bond liability under the provisions of
27 this chapter shall be reported to the department prior to the operation
28 thereof.
29 If a warehouseman is licensed pursuant to chapter 51, title 22, Idaho
30 Code, that same warehouseman may obtain a single bond, certificate of deposit
31 or irrevocable letter of credit as surety for both chapter 2, title 69, Idaho
32 Code, and chapter 51, title 22, Idaho Code. If a single bond, certificate of
33 deposit or irrevocable letter of credit is written covering chapter 2, title
34 69, Idaho Code, and chapter 51, title 22, Idaho Code, the bond, certificate of
35 deposit or irrevocable letter of credit shall be made out in favor of the com-
36 modity indemnity fund and the seed indemnity fund. In the event a warehouseman
37 fails as defined in section 69-202(8), Idaho Code, and a single bond, certifi-
38 cate of deposit or irrevocable letter of credit is written in favor of the
39 commodity indemnity fund and seed indemnity fund, the proceeds of the bond,
40 certificate of deposit or irrevocable letter of credit will be allocated based
41 on the dollar amount of the verified claims approved pursuant to chapter 2,
42 title 69, Idaho Code, and chapter 51, title 22, Idaho Code.
43 At the discretion of the director, any person required to submit a bond to
44 the department in accordance with this chapter, may at his option give to the
45 department a certificate of deposit or an irrevocable letter of credit payable
46 to the commodity indemnity fund in lieu of the bond required herein. The prin-
47 cipal amount of the certificate or letter of credit shall be the same as that
48 required for a surety bond pursuant to this chapter. Accrued interest upon the
49 certificate of deposit shall be payable to the purchaser of the certificate.
50 The letter of credit shall remain on file with the department until it is
51 released, canceled or discharged by the director or until the director is
52 notified ninety (90) days in advance, by registered or certified mail, return
53 receipt requested, that the letter of credit is renewed, canceled or amended.
54 Failure to notify the director may result in the suspension or revocation of
55 the bonded warehouse license. The provisions of this chapter that apply to a
3
1 bond required pursuant to this chapter apply to each certificate of deposit or
2 letter of credit given in lieu of such bond.
3 Under provisions of this chapter, an irrevocable letter of credit shall
4 not be acceptable unless it is issued by a national bank in Idaho or by an
5 Idaho state-chartered bank insured by the federal deposit insurance corpora-
6 tion.
7 SECTION 2. That Section 69-208A, Idaho Code, be, and the same is hereby
8 amended to read as follows:
9 69-208A. AMOUNT OF BOND -- CANCELLATION. The amount of bond to be fur-
10 nished for each warehouse shall be fixed at a rate of twenty cents (20) per
11 bushel of licensed capacity or six percent (6%) of whichever of the following
12 amounts is greater:
13 (1) Tthe combined total value of the agricultural commodities stored,
14 whichever is greater. In the event a variety of commodities are stored, the
15 bond rate may be calculated using either factor or a combination thereof
16 indebtedness paid and owed to producers for agricultural commodity and seed
17 crop stored for withdrawal or transferred during the previous license year; or
18 (2) The indebtedness owed and estimated to be owed to producers for agri-
19 cultural commodity and seed crop for the current license year.
20 Subsequent to determining whichever of the preceding amounts is greater,
21 and based on that amount, the amount of bond shall be calculated as follows:
22 Gross Dollars: Amount of Bond:
23 $0 - $450,000 $20,000 bond or 6% of the gross
24 dollars, whichever is less
25 $450,001 - $1,000,000 $40,000 bond
26 $1,000,001 - $8,000,000 $100,000 bond
27 Over $8,000,000 $500,000 bond
28 Any other bond that may be required shall be separate and in addition to
29 the bond listed here. In any case, the amount of the bond shall not be less
30 than twenty-five thousand dollars ($25,000) and shall not be more than five
31 hundred thousand dollars ($500,000). This bond shall run continuously with the
32 warehouse license until suspended, revoked or canceled by the bonding company.
33 A ninety (90) day written notice shall be given to the department by the bond-
34 ing company before any bond is suspended, revoked or canceled. The director
35 reserves the right to waive the ninety (90) day cancellation period.
36 SECTION 3. That Section 69-209, Idaho Code, be, and the same is hereby
37 amended to read as follows:
38 69-209. ACTION ON BOND, CERTIFICATE OF DEPOSIT OR IRREVOCABLE LETTER OF
39 CREDIT BY PRODUCERS INJURED. Any producer injured by the breach of any obliga-
40 tion for which a bond, certificate of deposit or irrevocable letter of credit
41 is written, under the provisions of section 69-208, Idaho Code, must petition
42 the director to make demand upon the warehouseman, certificate of deposit,
43 irrevocable letter of credit or bond. The director may thereupon make demand
44 upon the warehouseman and his surety for payment of such damages and in the
45 event such damages are not promptly paid the director may commence an action
46 on the bond to enforce payment of such damages. The liability of the bank on a
47 certificate of deposit or irrevocable letter of credit, and the surety upon
48 the bond required to be given by warehousemen as provided in section 69-208,
49 Idaho Code, for any one (1) annual licensing period shall be limited to the
4
1 amount specified in the bond, certificate of deposit, or irrevocable letter of
2 credit and in case of recoveries had by two (2) or more persons producers for
3 violation of the conditions of such bond this chapter in excess of the amount
4 of the bond, certificate of deposit, or irrevocable letter of credit, such
5 recovery shall be prorated and the total recovery against the surety for any
6 one (1) annual licensing period shall not exceed the amount of the bond, cer-
7 tificate of deposit, or irrevocable letter of credit. In the event the direc-
8 tor sues and obtains a judgment against the warehouseman and/or his surety or
9 bank for payment of such damages under this section chapter, he shall be enti-
10 tled to recover a reasonable attorney's fee.
11 SECTION 4. That Section 69-230, Idaho Code, be, and the same is hereby
12 amended to read as follows:
13 69-230. EXAMINATION OF BOOKS -- AUTHORIZATION TO COPY. The department is
14 authorized through officials, employees, or agents of the department desig-
15 nated by it, to examine and make copies of all books, records, papers, and
16 accounts of warehouses relating thereto, including those described in section
17 69-227, Idaho Code.
18 SECTION 5. That Section 69-250, Idaho Code, be, and the same is hereby
19 amended to read as follows:
20 69-250. CONFIDENTIAL AND PROTECTED RECORDS. All financial statements of
21 warehousemen Records required under the provisions of this chapter by the
22 department including, but not limited to, production summaries, receiving
23 records, conditioning reports, records relating to the payment of agricultural
24 commodities, commodity indemnity fund and seed indemnity fund reporting forms
25 of a warehouseman, and financial records that are required pursuant to section
26 69-206(6), Idaho Code, shall be subject to disclosure pursuant to the provi-
27 sions of held confidential and will be protected as production records accord-
28 ing to chapter 3, title 9, Idaho Code. Provided however, that a warehouseman
29 may provide written permission for disclosure of any of the warehouseman's
30 financial statements These records shall not be subject to disclosure unless
31 specifically authorized in writing by the licensee or as otherwise authorized
32 pursuant to the provisions of chapter 3, title 9, Idaho Code.
33 SECTION 6. An emergency existing therefor, which emergency is hereby
34 declared to exist, this act shall be in full force and effect on and after its
35 passage and approval.
STATEMENT OF PURPOSE
RS 13093
Amends the Bonded Warehouse 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 Bonded Warehouse law and the
Seed Indemnity Fund law. Authorizes the department of agriculture
to make copies of certain books, records, papers, and accounts of
warehouses. 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 warehouse license renewals are April
1 and seed buyer license renewals are July 1. Bonds run
concurrent with the license period.
FISCAL IMPACT
There will be no impact to the general fund. By eliminating the
double bonding requirement and establishing a new method of
calculating bonds, many warehouses will experience a reduction in
the amount of bond needed for the Bonded Warehouse law and Seed
Indemnity Fund law.
Contact
Name: Russ Dapsauski, ISDA, Warehouse Control Program
Phone: 208-332-8612
STATEMENT OF PURPOSE/FISCAL NOTE H 308