2003 Legislation
Print Friendly

HOUSE BILL NO. 309 – Seed buyers, bond requirements

HOUSE BILL NO. 309

View Daily Data Tracking History

View Bill Text

View Statement of Purpose / Fiscal Impact



Text to be added within a bill has been marked with Bold and
Underline. Text to be removed has been marked with
Strikethrough and Italic. How these codes are actually displayed will
vary based on the browser software you are using.

This sentence is marked with bold and underline to show added text.

This sentence is marked with strikethrough and italic, indicating
text to be removed.

Daily Data Tracking History



H0309..................................................by AGRICULTURAL AFFAIRS
SEED BUYERS - Amends existing law relating to the seed indemnity fund to
provide for certificates of deposit in lieu of bond; to revise provisions
relating to letters of credit given in lieu of bond; to revise bonding
requirements and bonding provisions for certain seed buyers; to revise
provisions relating to the amount of bond; to provide for action by certain
injured producers; to revise provisions for actions based on breaches of
certain financial obligations; and to authorize the Department of Agriculture
to copy certain documents and 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 - 66-0-4
      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,
      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, Kulczyk, 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 - Noble
    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 151
         Effective: 03/27/03

Bill Text


                                                                        
                                                                        
  ||||              LEGISLATURE OF THE STATE OF IDAHO             ||||
 Fifty-seventh Legislature                 First Regular Session - 2003
                                                                        
                                                                        
                              IN THE HOUSE OF REPRESENTATIVES
                                                                        
                                     HOUSE BILL NO. 309
                                                                        
                             BY AGRICULTURAL AFFAIRS COMMITTEE
                                                                        
  1                                        AN ACT
  2    RELATING TO THE SEED INDEMNITY FUND LAW; AMENDING SECTION 22-5104, IDAHO CODE,
  3        TO PROVIDE FOR CERTIFICATES OF DEPOSIT AND SINGLE BONDS, TO STRIKE  PROVI-
  4        SIONS  RELATING  TO CERTAIN SEED BUYERS OPERATING AS SEPARATE ENTITIES, TO
  5        PROVIDE FOR CERTIFICATES OF DEPOSIT IN LIEU OF BOND AND TO  REVISE  PROVI-
  6        SIONS  RELATING  TO  LETTERS OF CREDIT GIVEN IN LIEU OF BOND AND TO REVISE
  7        BONDING REQUIREMENTS AND  BONDING  PROVISIONS  FOR  CERTAIN  SEED  BUYERS;
  8        AMENDING SECTION 22-5105, IDAHO CODE, TO REVISE PROVISIONS RELATING TO THE
  9        AMOUNT  OF  BOND  AND  TO  MAKE  TECHNICAL  CORRECTIONS;  AMENDING SECTION
 10        22-5106, IDAHO CODE, TO PROVIDE FOR ACTION BY  CERTAIN  INJURED  PRODUCERS
 11        AND  TO  REVISE PROVISIONS FOR ACTIONS BASED ON BREACHES OF CERTAIN FINAN-
 12        CIAL OBLIGATIONS; AMENDING SECTION 22-5109, IDAHO CODE, TO  AUTHORIZE  THE
 13        DEPARTMENT  OF  AGRICULTURE  TO  COPY  CERTAIN  DOCUMENTS AND RECORDS; AND
 14        DECLARING AN EMERGENCY.
                                                                        
 15    Be It Enacted by the Legislature of the State of Idaho:
                                                                        
 16        SECTION 1.  That Section 22-5104, Idaho Code, be, and the same  is  hereby
 17    amended to read as follows:
                                                                        
 18        22-5104.  BONDS  --  IRREVOCABLE  LETTERS  OF  CREDIT  --  CERTIFICATES OF
 19    DEPOSIT -- SINGLE BOND. Every person applying for a license shall execute  and
 20    file  with  the  department  a  good  and sufficient bond issued by an insurer
 21    authorized to transact such insurance in this state.  The  bond  shall  be  in
 22    favor  of  the  seed  indemnity fund to secure the faithful performance of the
 23    applicant's obligations under this chapter,  and  of  such  additional  unpaid
 24    obligations  assumed under agreements with producers of seed crops transferred
 25    to or deposited with the applicant. Said  bond  shall  be  in  such  form  and
 26    amount,  shall  have such surety or sureties, and shall contain such terms and
 27    conditions as the department may prescribe to carry out the purposes  of  this
 28    chapter. Whenever the department determines that a previously approved bond is
 29    insufficient,  it  may require an additional bond or bonds conforming with the
 30    requirements of this chapter. Unless the additional bond is given  within  the
 31    time  fixed  by  a  written  demand  therefor, the license may be suspended or
 32    revoked.
 33        Seed buyers with common ownership  or  management,  operated  as  separate
 34    entities,  shall  have  individual bonds for each separate entity in an amount
 35    conforming to the provisions of this chapter.
 36        At the discretion of the director, any person required to submit a bond to
 37    the department may give to the department an irrevocable letter of credit pay-
 38    able to the seed indemnity fund in lieu of the bond required herein. The prin-
 39    cipal amount of the letter of credit shall be the same as that required for  a
 40    surety  bond  pursuant  to  this chapter. The letter of credit shall remain on
 41    file with the department until it is released, canceled or discharged  by  the
 42    director  or  until  the  director is notified ninety (90) days in advance, by
 43    registered or certified mail, return receipt requested,  that  the  letter  of
                                                                        
                                           2
                                                                        
  1    credit  is  renewed,  canceled  or amended. Failure to notify the director may
  2    result in the suspension or revocation of the seed buyer license.  The  provi-
  3    sions  of  this  chapter  that  apply to a bond apply to each letter of credit
  4    given in lieu of such bond. Under the provisions of this chapter, an irrevoca-
  5    ble letter of credit shall not be accepted unless it is issued by  a  national
  6    bank  in  Idaho  or  by  an  Idaho state-chartered bank insured by the federal
  7    deposit insurance corporation.
  8        At the discretion of the director, any person required to submit a bond to
  9    the department may give to the department an irrevocable letter of  credit  or
 10    certificate  of deposit payable to the seed indemnity fund in lieu of the bond
 11    required herein. A certificate of deposit shall be submitted with  an  audited
 12    or  reviewed  financial statement prepared in accordance with the rules of the
 13    department by an  independent  Idaho  certified  public  accountant  or  Idaho
 14    licensed  public  accountant.  The principal amount of the letter of credit or
 15    certificate of deposit shall be the same as that required for  a  surety  bond
 16    pursuant to this chapter. The letter of credit or certificate of deposit shall
 17    remain  on  file  with  the  department until it is released, canceled or dis-
 18    charged by the director or until the director is notified ninety (90) days  in
 19    advance,  by  registered or certified mail, return receipt requested, that the
 20    letter of credit or certificate of deposit is renewed,  canceled  or  amended.
 21    Failure  to  notify the director may result in the suspension or revocation of
 22    the seed buyer license. The provisions of this chapter that apply  to  a  bond
 23    apply to each letter of credit or certificate of deposit given in lieu of such
 24    bond. Under the provisions of this chapter, an irrevocable letter of credit or
 25    certificate of deposit shall not be accepted unless it is issued by a national
 26    bank  or  federal  thrift institution in Idaho or by a state-chartered bank or
 27    thrift institution authorized to conduct business in Idaho and insured by  the
 28    federal deposit insurance corporation.
 29        If  a seed buyer is also licensed pursuant to either chapter 2 or 5, title
 30    69, Idaho Code, that seed buyer may  obtain  a  single  bond,  certificate  of
 31    deposit  or  irrevocable letter of credit as surety for both chapter 51, title
 32    22, Idaho Code, and chapter 2 or 5, title 69, Idaho Code. The  bond,  certifi-
 33    cate  of deposit or irrevocable letter of credit shall be made out in favor of
 34    the commodity indemnity fund and the seed indemnity fund. In the event a  seed
 35    buyer  fails  as defined in section 22-5102(5), Idaho Code, and a single bond,
 36    certificate of deposit or irrevocable letter of credit is written in favor  of
 37    the  commodity  indemnity  fund  and  seed indemnity fund, the proceeds of the
 38    bond, certificate of deposit or irrevocable letter of credit will be allocated
 39    based on the dollar amount of the verified claims approved pursuant to chapter
 40    51, title 22, Idaho Code, and chapter 2, title 69, Idaho Code.
                                                                        
 41        SECTION 2.  That Section 22-5105, Idaho Code, be, and the same  is  hereby
 42    amended to read as follows:
                                                                        
 43        22-5105.  AMOUNT  OF BOND -- NOTICE OF CANCELLATION. The amount of bond to
 44    be furnished for each seed buyer will be fixed at a rate of six  percent  (6%)
 45    of whichever of the following amounts is greater:
 46        (1)  Tthe  combined total seed buyer indebtedness paid or and owed to pro-
 47    ducers for seed crop stored for withdrawal or transferred during the  previous
 48    license year; or
 49        (2)  The  estimated  current calendar year seed crop indebtedness owed and
 50    estimated to be owed to producers, whichever is greater for seed crop for  the
 51    current license year.
 52        Subsequent  to  determining whichever of the preceding amounts is greater,
 53    and based on that amount, the amount of bond shall be calculated as follows:
                                                                        
                                           3
                                                                        
  1    Gross Dollars:                     Amount of Bond:
  2    $0 - $450,000                      $20,000 bond or 6% of the gross
  3                                       dollars, whichever is less
  4    $450,001 - $1,000,000              $40,000 bond
  5    $1,000,001 - $8,000,000            $100,000 bond
  6    Over $8,000,000                    $500,000 bond
                                                                        
  7        In any case, the amount of the bond shall not  be  less  than  twenty-five
  8    thousand  dollars  ($25,000)  and shall not be more than five hundred thousand
  9    dollars ($500,000). This bond shall run concurrently  with  the  seed  buyer's
 10    license.  A  ninety  (90) day written notice, by registered or certified mail,
 11    return receipt requested, shall be given to the director by the  bonding  com-
 12    pany before it may amend or cancel any bond.
                                                                        
 13        SECTION  3.  That  Section 22-5106, Idaho Code, be, and the same is hereby
 14    amended to read as follows:
                                                                        
 15        22-5106.  ACTION BY PERSONS PRODUCER INJURED. Any person producer  injured
 16    by  the  breach  of  any financial obligation for which a bond, or irrevocable
 17    letter of credit or certificate of deposit is written under this chapter, must
 18    petition the director to make demand upon the seed buyer, the  certificate  of
 19    deposit,  irrevocable  letter  of credit, or on the bond to enforce payment of
 20    claims.
                                                                        
 21        SECTION 4.  That Section 22-5109, Idaho Code, be, and the same  is  hereby
 22    amended to read as follows:
                                                                        
 23        22-5109.  MAINTENANCE  OF  RECORDS -- EXAMINATION OF RECORDS -- AUTHORIZA-
 24    TION TO COPY. The seed buyer shall maintain current and  complete  records  at
 25    all  times  with  respect  to  all  seed  crops handled, deposited, shipped or
 26    merchandised by it, including seed crops  owned  by  it.  Such  records  shall
 27    include,  but  are  not limited to, records showing the total quantity of each
 28    kind and class of seed crop received and loaded out and the  amount  remaining
 29    on deposit at the close of each business day.
 30        Records  required  by this section shall be legible and kept in a place of
 31    safety in this state for a period of five (5) years. If a person  operates  at
 32    more  than  one  (1) location, records of each location's transactions must be
 33    identifiable.
 34        The department is authorized to examine records to confirm the proper col-
 35    lection and remittance of seed indemnity fund assessments  and  payments.  The
 36    records  subject  to  examination  shall  include,  but  are  not  limited to,
 37    receipts, scale weight tickets, conditioning  records,  production  summaries,
 38    and  payments to producers. The department is authorized to make copies of any
 39    documents or records relevant to compliance with the provisions of this  chap-
 40    ter.
                                                                        
 41        SECTION  5.  An  emergency  existing  therefor,  which emergency is hereby
 42    declared to exist, this act shall be in full force and effect on and after its
 43    passage and approval.

Statement of Purpose / Fiscal Impact



                       STATEMENT OF PURPOSE
                             RS 13094
Amends the Seed Indemnity Fund 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. Amends the Seed Indemnity Fund law to allow for one
bond to cover the Seed Indemnity Fund law and the Bonded
Warehouse law or Commodity Dealer law. Allows for a certificate
of deposit in lieu of a bond. Authorizes the department of
agriculture to make copies of certain books, records, papers, and
accounts of seed buyers. 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 seed buyer license renewals are July
1 and warehouse license renewals are April 1. Bond runs
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 seed buyers 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 309