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H0155..................................................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.
02/05 House intro - 1st rdg - to printing
02/06 Rpt prt - to Agric Aff
02/19 Rpt out - rec d/p - to 2nd rdg
02/20 2nd rdg - to 3rd rdg
02/27 Ret'd to Agric Aff
|||| LEGISLATURE OF THE STATE OF IDAHO ||||
Fifty-seventh Legislature First Regular Session - 2003
IN THE HOUSE OF REPRESENTATIVES
HOUSE BILL NO. 155
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 in Idaho or by an Idaho state-chartered bank insured by the federal
27 deposit insurance corporation.
28 If a seed buyer is also licensed pursuant to either chapter 2 or 5, title
29 69, Idaho Code, that seed buyer may obtain a single bond, certificate of
30 deposit or irrevocable letter of credit as surety for both chapter 51, title
31 22, Idaho Code, and chapter 2 or 5, title 69, 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 seed
34 buyer fails as defined in section 22-5102(5), Idaho Code, and a single bond,
35 certificate of deposit or irrevocable letter of credit is written in favor of
36 the commodity indemnity fund and seed indemnity fund, the proceeds of the
37 bond, certificate of deposit or irrevocable letter of credit will be allocated
38 based on the dollar amount of the verified claims approved pursuant to chapter
39 51, title 22, Idaho Code, and chapter 2, title 69, Idaho Code.
40 SECTION 2. That Section 22-5105, Idaho Code, be, and the same is hereby
41 amended to read as follows:
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 whichever of the following amounts is greater:
45 (1) Tthe combined total seed buyer indebtedness paid or and owed to pro-
46 ducers for seed crop stored for withdrawal or transferred during the previous
47 license year; or
48 (2) The estimated current calendar year seed crop indebtedness owed and
49 estimated to be owed to producers, whichever is greater for seed crop for the
50 current license year.
51 In any case, the amount of the bond shall not be less than twenty-five
52 thousand dollars ($25,000) and shall not be more than five hundred thousand
53 dollars ($500,000). This bond shall run concurrently with the seed buyer's
3
1 license. A ninety (90) day written notice, by registered or certified mail,
2 return receipt requested, shall be given to the director by the bonding com-
3 pany before it may amend or cancel any bond.
4 SECTION 3. That Section 22-5106, Idaho Code, be, and the same is hereby
5 amended to read as follows:
6 22-5106. ACTION BY PERSONS PRODUCER INJURED. Any person producer injured
7 by the breach of any financial obligation for which a bond, or irrevocable
8 letter of credit or certificate of deposit is written under this chapter, must
9 petition the director to make demand upon the seed buyer, the certificate of
10 deposit, irrevocable letter of credit, or on the bond to enforce payment of
11 claims.
12 SECTION 4. That Section 22-5109, Idaho Code, be, and the same is hereby
13 amended to read as follows:
14 22-5109. MAINTENANCE OF RECORDS -- EXAMINATION OF RECORDS -- AUTHORIZA-
15 TION TO COPY. The seed buyer shall maintain current and complete records at
16 all times with respect to all seed crops handled, deposited, shipped or
17 merchandised by it, including seed crops owned by it. Such records shall
18 include, but are not limited to, records showing the total quantity of each
19 kind and class of seed crop received and loaded out and the amount remaining
20 on deposit at the close of each business day.
21 Records required by this section shall be legible and kept in a place of
22 safety in this state for a period of five (5) years. If a person operates at
23 more than one (1) location, records of each location's transactions must be
24 identifiable.
25 The department is authorized to examine records to confirm the proper col-
26 lection and remittance of seed indemnity fund assessments and payments. The
27 records subject to examination shall include, but are not limited to,
28 receipts, scale weight tickets, conditioning records, production summaries,
29 and payments to producers. The department is authorized to make copies of any
30 documents or records relevant to compliance with the provisions of this chap-
31 ter.
32 SECTION 5. An emergency existing therefor, which emergency is hereby
33 declared to exist, this act shall be in full force and effect on and after its
34 passage and approval.
STATEMENT OF PURPOSE
RS 12820
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 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.
Contact
Name: Russ Dapsauski, Department of Agriculture
Phone: 332-8612
STATEMENT OF PURPOSE/FISCAL NOTE H 155