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H0427...............................................by AGRICULTURAL AFFAIRS AGRICULTURE - WAREHOUSES - Amends existing law to revise definitions; to provide license requirements and conditions for public warehouses; and to require certain licenses for warehousemen who purchase agricultural commodities by credit-sale contracts. 01/25 House intro - 1st rdg - to printing 01/28 Rpt prt - to Agric Aff
]]]] LEGISLATURE OF THE STATE OF IDAHO ]]]] Fifty-ninth Legislature Second Regular Session - 2008IN THE HOUSE OF REPRESENTATIVES HOUSE BILL NO. 427 BY AGRICULTURAL AFFAIRS COMMITTEE 1 AN ACT 2 RELATING TO PUBLIC WAREHOUSES; AMENDING SECTION 69-202, IDAHO CODE, TO REVISE 3 DEFINITIONS AND TO DEFINE A TERM; AMENDING SECTION 69-203, IDAHO CODE, TO 4 PROVIDE LICENSE REQUIREMENTS FOR PUBLIC WAREHOUSES AND TO MAKE A TECHNICAL 5 CORRECTION; AMENDING SECTION 69-206, IDAHO CODE, TO REVISE CONDITIONS 6 RELATING TO THE ISSUANCE OR RENEWAL OF PUBLIC WAREHOUSE LICENSES; AMENDING 7 SECTION 69-249, IDAHO CODE, TO REQUIRE CERTAIN LICENSES FOR WAREHOUSEMEN 8 WHO PURCHASE AGRICULTURAL COMMODITIES BY CREDIT-SALE CONTRACTS; AND AMEND- 9 ING SECTIONS 69-208, 69-262 AND 69-506, IDAHO CODE, TO PROVIDE CORRECT 10 CODE CITATIONS. 11 Be It Enacted by the Legislature of the State of Idaho: 12 SECTION 1. That Section 69-202, Idaho Code, be, and the same is hereby 13 amended to read as follows: 14 69-202. DEFINITIONS. As used in this chapter: 15 (1) "Agricultural commodity" or "commodity" means any feeds, grain, 16 wheat, barley, oats, corn, rye, oilseeds, dry edible beans, peas, lentils and 17 other leguminous seedsand feeds(not including minerals or seed crops) or any 18 other commodity as determined by the director. 19 (2) "Commodity dealer" or "dealer" means any person who solicits, con- 20 tracts for, or obtains from an Idaho producer or producers, title, possession 21 or control of any agricultural commodity through his place of business located 22 in the state of Idaho or through his place of business located outside the 23 state of Idaho for the purposes of sale or resale or who buys, during a calen- 24 dar year, at leasttentwenty-five thousand dollars ($1025,000) worth of agri- 25 cultural commodities from an Idaho producer or producers of the commodities. 26 Commodity dealer or dealer shall not mean any person who purchases agricul- 27 tural commodities for his own use as seed or feed within his own operation. 28 (3) "Contract" means a written agreement between two (2) or more parties 29 for the sale of an agricultural commodity stipulating the terms and conditions 30 of performance of the parties and includes, but is not limited to, those con- 31 tracts commonly referred to as credit sales, deferred payment, delayed, pro- 32 duction, bailment or price later contracts. 33 (4) "Credit-sale contract" means a contract for the sale of an agricul- 34 tural commodity pursuant to which the sale price is to be paid at a date sub- 35 sequent to the delivery of the agricultural commodity to the buyer and 36 includes, but is not limited to, those contracts commonly referred to as 37 deferred payment contracts, deferred pricing contracts and price later con- 38 tracts. 39 (5) "Deliver" or "delivery" means the physical transfer of agricultural 40 commodity from one (1) party to another. 41 (56) "Department" means the Idaho state department of agriculture. 42 (67) "Depositor" means any person who deposits an agricultural commodity 43 in an Idaho state licensed warehouse for storage, handling, processing, recon- 2 1 ditioning or shipment, or who is the owner or legal holder of a negotiable 2 warehouse receipt, outstanding scale weight ticket, nonnegotiable warehouse 3 receipt or other evidence of such deposit, or any person whose agricultural 4 commodity has been sold to or is under control of a warehouseman for selling, 5 processing, reconditioning or handling whether or not such agricultural com- 6 modity is within the warehouse. 7 (78) "Director" means the director of the Idaho state department of agri- 8 culture. 9 (89) "Failure" means the date that one (1) or more of the following 10 events occurred, as determined by the director: 11 (a) An inability to financially satisfy claimants in accordance with this 12 chapter and the time limits provided for in it; 13 (b) A public declaration of insolvency; 14 (c) A revocation of license and the leaving of an outstanding indebted- 15 ness to a depositor or producer; 16 (d) A failure to redeliver any commodity to a depositor or to pay 17 depositors or producers for commodities purchased by a licensee or to pay 18 a producer for commodity delivered under the provisions of the contract in 19 the ordinary course of business; 20 (e) A failure to make application for license renewal within sixty (60) 21 days after the annual license renewal date; or 22 (f) A denial of the application for a license renewal. 23 (910) "Historical depositor" means any person who, in the normal course of 24 business operation has consistently made deposits in the same warehouse of 25 commodities produced on the same land. In addition, anyone purchasing or leas- 26 ing that particular land directly from the original depositor or receiving 27 that particular land by devise, descent, bequest or gift directly from the 28 historical depositor shall also be considered an historical depositor with 29 regard to the commodities produced on that land. 30 (101) "Person" means any individual, firm, association, corporation, part- 31 nership or limited liability company. 32 (112) "Producer" means the owner, tenant or operator of land in this state 33 who has an interest in the proceeds from the sale of agricultural commodities 34 produced on that land. Producer does not include growers who deposit their 35 commodity in a facility in which they have a financial or management interest, 36 except members of a cooperative marketing association qualified under chapter 37 26, title 22, Idaho Code. 38 (123) "Public warehouse" or "warehouse" or "warehouseman" means any eleva- 39 tor, mill, warehouse, subterminal commodity warehouse, public warehouse or 40 other structure or facility in which agricultural commodities are received for 41 storage, shipment, processing, reconditioning or handling. 42 (134) "Receipt" means a warehouse receipt. 43 (145) "Revocation" means the permanent removal of a warehouse license fol- 44 lowing a hearing on violations of this chapter by the hearing officer or 45 director. 46 (156) "Scale weight ticket" means a load slip or other evidence, other 47 than a receipt, given to a depositor by a warehouseman licensed under the pro- 48 visions of this chapter, upon initial delivery of the commodity to the ware- 49 house. 50 (167) "Seed crops" means any seed crop regulated by chapter 4, title 22, 51 Idaho Code. 52 (178) "Subterminal warehouse" means any warehouse at which an intermediate 53 function is performed in which agricultural commodities are customarily 54 received from dealers rather than producers and where the commodities are 55 accumulated prior to shipment. 3 1 (189) "Suspension" means the temporary removal of a warehouse license by 2 the department pending a hearing for violations of this chapter. Correction of 3 the violations prior to a hearing may result in the reinstatement of a license 4 without a hearing. 5 (1920) "Termination" means the expiration of a warehouse license due to 6 failure to meet minimum licensing requirements, failure to renew a warehouse 7 license or as requested by the licensee, unless a complaint has been filed 8 against the licensee alleging a violation of any provision of this chapter. 9 (201) "Transfer" means, unless otherwise defined by the parties in writ- 10 ing, the event when a producer or his agent delivers a commodity to a ware- 11 houseman, who then weighs the commodity, and gives the producer or his agent a 12 scale weight ticket or other written evidence of transfer. 13 (212) "Warehouse receipt" means every receipt, whether negotiable or non- 14 negotiable, issued by a warehouseman, except scale weight tickets. 15 (223) "Warehouseman" means a person operating or controlling a public 16 warehouse. 17 SECTION 2. That Section 69-203, Idaho Code, be, and the same is hereby 18 amended to read as follows: 19 69-203. LICENSE NECESSARY TO OPERATE PUBLIC WAREHOUSE. (1) Before a per- 20 son can lawfully operate a public warehouse in this state, he must procure a 21 license under this chapter; provided however, that the foregoing requirement 22 as to licenses is not applicable to any warehouse or warehouseman who is 23 licensed under an act of congress approved August 11, 1916 (39 Statutes at 24 Large44486) and acts amendatory thereof, commonly called the "United States 25 Warehouse Act," and who is licensed under chapter 5, title 69, Idaho Code. 26 (2) The type of license required shall be determined as follows: 27 (a) A class 1 license is required if the warehouseman acts as a public 28 warehouse and purchases agricultural commodities by credit-sale contract 29 or if the value of the agricultural commodities purchased by the ware- 30 houseman from producers during the previous twelve (12) month period 31 exceeds five hundred thousand dollars ($500,000), or if the value of the 32 agricultural commodities expected to be purchased by the warehouseman from 33 the producers during the succeeding twelve (12) month period will exceed 34 five hundred thousand dollars ($500,000). Any other warehouseman may elect 35 to be licensed as a class 1 public warehouse. 36 (b) A class 2 license is required if the warehouseman acts as a public 37 warehouse and if the value of the agricultural commodities purchased by 38 the warehouseman from producers during the previous twelve (12) month 39 period exceeds twenty-five thousand dollars ($25,000) and is less than 40 five hundred thousand dollars ($500,000), and if the value of the agricul- 41 tural commodities expected to be purchased by the warehouseman from the 42 producers during the succeeding twelve (12) month period will be more than 43 twenty-five thousand dollars ($25,000) but less than five hundred thousand 44 dollars ($500,000). A class 2 licensee whose purchases from producers 45 exceed five hundred thousand dollars ($500,000) in value during any twelve 46 (12) month period shall immediately apply for a class 1 license. If a 47 class 1 license is denied, the warehouseman shall immediately cease doing 48 business as a public warehouse. 49 SECTION 3. That Section 69-206, Idaho Code, be, and the same is hereby 50 amended to read as follows: 51 69-206. LICENSES TO WAREHOUSEMEN -- ISSUE -- RENEWAL -- CONDITIONS PRECE- 4 1 DENT. The department is authorized, upon application to it, to issue or renew 2 to any warehouseman a license for the conduct of a warehouse or warehouses in 3 accordance with this chapter and such rules as may be made hereunder, provid- 4 ing the following conditions are met: 5 (1) Each person, as a condition precedent to operating a warehouse in 6 this state, shall file and maintain satisfactory evidence with the director of 7 the existence of an effective policy of insurance issued by an insurance com- 8 pany authorized to do business in this state, insuring all agricultural com- 9 modities that may be stored or accepted for storage on the premises, including 10 commodities owned by the warehouseman, for which such license is sought for 11 the full market value of such agricultural commodities against loss by fire, 12 internal explosion, lightning or tornado; 13 (2) That each warehouse be found suitable for the proper storage of the 14 particular agricultural commodity or commodities for which a license is 15 requested; 16 (3) A license fee is submitted to the department as prescribed by section 17 69-211, Idaho Code; 18 (4) A current drawing of the warehouse which shows storage facilities and 19 the capacity calculations of the warehouse which indicates commodity and seed 20 crop storage areas, shall be approved by the department; 21 (5) A sufficient and valid bond is filed and maintained as required by 22 section 69-208, Idaho Code; 23 (6) The applicant shall submit to the department an audited or reviewed 24 financial statement prepared by an independent certified public accountant or 25 licensed public accountant showing that the licensee has and does maintain 26 current assets equal to or greater than current liabilities, a statement of 27 current assets and current liabilities, and a statement of net worth, all of 28 which shall be prepared in accordance with generally accepted accounting prin- 29 ciples. If a public warehouse does not maintain current assets equal to or 30 greater than current liabilities at the end of each business day, the ware- 31 houseman shall immediately contact the department and cease doing business as 32 a public warehouse; 33 (7)For a warehouseman license an applicant shall have and maintain a net34worth of at least fifty thousand dollars ($50,000) or maintain a bond in the35amount of two thousand dollars ($2,000) for each one thousand dollars ($1,000)36or fraction thereof of net worth financial requirement; however, a person37shall not be licensed as a warehouseman if the person has a net worth of less38than twenty-five thousand dollars ($25,000). A bond submitted for purposes of39this subsection shall be in addition to any bond otherwise required under the40provisions of this chapter;In order to receive and retain a public warehouse 41 license the following additional conditions must be satisfied: 42 (a) For a class 1 license a public warehouse shall have and maintain a 43 net worth of at least two hundred thousand dollars ($200,000). Provided 44 however, for those public warehouses licensed prior to July 1, 2007, that 45 were at the time of licensing required to maintain a net worth of at least 46 fifty thousand dollars ($50,000), that are continually licensed through 47 December 2010, their net worth requirement shall increase by fifty thou- 48 sand dollars ($50,000) per license year until the two hundred thousand 49 dollar ($200,000) net worth minimum is reached which shall be no later 50 than December 31, 2010. In the event a public warehouse licensed prior to 51 July 1, 2007, shall at any time prior to December 31, 2010, cease to be 52 licensed, and shall thereafter again apply for a class 1 license, they 53 shall be required to have and maintain a net worth of at least two hundred 54 thousand dollars ($200,000). A class 1 public warehouse shall have and 55 maintain, at all times, grain assets plus liquidity equal to or greater 5 1 than grain liabilities. Guidelines relating to grain assets, liquidity and 2 grain liabilities shall be promulgated by rule. If a public warehouse does 3 not maintain the minimum net worth at the end of each business day, the 4 warehouseman shall immediately contact the department and cease doing 5 business as a public warehouse. 6 (b) For a class 2 license a public warehouse shall have and maintain a 7 net worth of at least fifty thousand dollars ($50,000) or maintain a bond 8 in the amount of two thousand dollars ($2,000) for each one thousand dol- 9 lars ($1,000) or fraction thereof of net worth deficiency; however, a per- 10 son shall not be licensed as a class 2 public warehouse if the person has 11 a net worth of less than twenty-five thousand dollars ($25,000). A bond 12 submitted for purposes of this subsection shall be in addition to any bond 13 otherwise required under the provisions of this chapter. If a public ware- 14 house does not maintain the minimum net worth at the end of each business 15 day, the warehouseman shall immediately contact the department and cease 16 doing business as a public warehouse. 17 (8) The applicant has complied with and abided by all the terms of this 18 chapter and the rules prescribed hereunder; 19 (9) That all materials required for renewal of a license shall be 20 received by the department prior to the expiration date of the warehouse 21 license. A warehouse license which has expired may be reinstated by the 22 department upon receipt of all necessary licensing materials required by the 23 provisions of this chapter and a reinstatement fee in the amount of five hun- 24 dred dollars ($500), providing that this material is filed within thirty (30) 25 days from the date of expiration of the warehouse license. At the end of the 26 thirty (30) day reinstatement period, a warehouse license shall be terminated 27 by the department. All license applications completed and received after the 28 thirty (30) day reinstatement period shall be considered original applications 29 and after the five hundred dollar ($500) reinstatement fee has been remitted 30 to the department, license fees shall be assessed as original fees according 31 to section 69-211, Idaho Code. 32 SECTION 4. That Section 69-249, Idaho Code, be, and the same is hereby 33 amended to read as follows: 34 69-249. CREDIT-SALE CONTRACTS. (1) A warehouseman who purchases agricul- 35 tural commodities by credit-sale contracts shall have in effect a current 36 class 1 public warehouse license and maintain books, records and other docu- 37 ments as required by the department to establish compliance with the provi- 38 sions of this section. 39 (2) In addition to other information as may be required, a credit-sale 40 contract shall contain or provide, but not be limited to: 41 (a) The seller's name and address; 42 (b) The conditions of delivery; 43 (c) The amount, kind and class of agricultural commodities delivered; 44 (d) The price per unit or basis of value; 45 (e) The date payment is to be made; and 46 (f) Any enhancements to the value of the contract, which may include, but 47 are not limited to, transportation, premiums of any nature, or producer 48 provided services, must be listed separately and apart from the price per 49 unit of the commodity. 50 (3) Title to all agricultural commodities sold by credit-sale contract is 51 in the purchaser as of the time the contract is executed, unless the contract 52 provides otherwise. The contract must be signed by both parties and executed 53 in duplicate. One (1) copy shall be retained by the warehouseman and one (1) 6 1 copy shall be delivered to the seller. Upon revocation or termination of a 2 warehouseman's license, the payment date for all credit-sale contracts shall 3 be advanced to a date not later than thirty (30) days following the effective 4 date of the revocation or termination and the purchase price for all agricul- 5 tural commodities without a price shall be determined as of the effective date 6 of revocation or termination in accordance with all other provisions of the 7 contract. In the event claims are submitted to the commodity indemnity fund 8 following a declared failure, the value determination of contracts will be 9 controlled by the provisions of section 69-262, Idaho Code, and the rules pro- 10 mulgated pursuant to the provisions of this chapter. However, if the business 11 of the warehouseman is sold to another licensed warehouseman, credit-sale con- 12 tracts may be assigned to the purchaser of the business. 13 SECTION 5. That Section 69-208, Idaho Code, be, and the same is hereby 14 amended to read as follows: 15 69-208. BOND OF APPLICANT FOR LICENSE -- ADDITIONAL BOND -- ADDITIONAL 16 OBLIGATIONS -- CERTIFICATE OF DEPOSIT OR IRREVOCABLE LETTER OF CREDIT IN LIEU 17 OF BOND -- SINGLE BOND. Each warehouseman applying for a license to conduct a 18 warehouse in accordance with this chapter shall, as a condition to the grant- 19 ing thereof, execute and file with the department a good and sufficient bond 20 other than personal security. The bond shall be in favor of the commodity 21 indemnity fund to secure the faithful performance of his obligations as a 22 warehouseman under all the laws of the state, including obligations arising by 23 operation of the commodity indemnity fund program, and the rules prescribed 24 hereunder, and of such additional obligations as a warehouseman as may be 25 assumed by him under contracts with the respective depositors of agricultural 26 commodities in such warehouse. Said bond shall be in such form and amount, 27 shall have such surety or sureties, and shall contain such terms and condi- 28 tions as the department may prescribe to carry out the purposes of this chap- 29 ter. Whenever the department shall determine that a bond approved by it is, or 30 for any cause has become, insufficient, it shall require an additional bond or 31 bonds to be given by the warehouseman concerned, conforming with the require- 32 ments of this section, and unless the same be given within the time fixed by a 33 written demand therefor the license of such warehouseman shall be suspended or 34 revoked. 35 The bond shall be approved by the department and shall be conditioned upon 36 the faithful performance by the warehouseman of the duty to keep in the ware- 37 house for the depositor the agricultural commodity delivered and to deliver 38 the agricultural commodity to or for such depositors. The bond shall also be 39 conditioned upon the faithful performance by the warehouseman of any addi- 40 tional obligations involving marketing transactions with a depositor. 41 The warehouseman may give a single bond meeting the requirements as pro- 42 vided in this chapter and all warehouses operated by the warehouseman shall be 43 as one (1) warehouse for the purpose of compliance with the provisions of this 44 section. At the discretion of the director, any person required to submit a 45 bond to the department in accordance with this chapter, may give to the 46 department a certificate of deposit or an irrevocable letter of credit payable 47 to the commodity indemnity fund in lieu of the bond required herein. The prin- 48 cipal amount of the certificate of deposit or irrevocable letter of credit 49 shall be the same as that required for a surety bond pursuant to this chapter. 50 Accrued interest upon the certificate of deposit shall be payable to the pur- 51 chaser of the certificate. The irrevocable letter of credit or certificate of 52 deposit shall remain on file with the department until it is released, can- 53 celed or discharged by the director or until the director is notified ninety 7 1 (90) days in advance, by registered or certified mail, return receipt 2 requested, that the irrevocable letter of credit or certificate of deposit is 3 renewed, canceled or amended. Failure to notify the director may result in the 4 suspension or revocation of the bonded warehouse license. The provisions of 5 this chapter that apply to a bond required pursuant to this chapter apply to 6 each certificate of deposit or irrevocable letter of credit given in lieu of 7 such bond. 8 Under provisions of this chapter, an irrevocable letter of credit or cer- 9 tificate of deposit shall not be acceptable unless it is issued by a national 10 bank or federal thrift institution in Idaho or by a state-chartered bank or 11 thrift institution authorized to conduct business in Idaho and insured by the 12 federal deposit insurance corporation. 13 Any changes in the capacity of a warehouse or installation of any new 14 warehouses involving a change in the bond liability under the provisions of 15 this chapter shall be reported to the department prior to the operation 16 thereof. 17 If a warehouseman is licensed pursuant to chapter 51, title 22, Idaho 18 Code, that same warehouseman may obtain a single bond, certificate of deposit 19 or irrevocable letter of credit as surety for both chapter 2, title 69, Idaho 20 Code, and chapter 51, title 22, Idaho Code. If a single bond, certificate of 21 deposit or irrevocable letter of credit is written covering chapter 2, title 22 69, Idaho Code, and chapter 51, title 22, Idaho Code, the bond, certificate of 23 deposit or irrevocable letter of credit shall be made out in favor of the com- 24 modity indemnity fund and the seed indemnity fund. In the event a warehouseman 25 fails as defined in section 69-202(89), Idaho Code, and a single bond, certif- 26 icate of deposit or irrevocable letter of credit is written in favor of the 27 commodity indemnity fund and seed indemnity fund, the proceeds of the bond, 28 certificate of deposit or irrevocable letter of credit will be allocated based 29 on the dollar amount of the verified claims approved pursuant to chapter 2, 30 title 69, Idaho Code, and chapter 51, title 22, Idaho Code. 31 SECTION 6. That Section 69-262, Idaho Code, be, and the same is hereby 32 amended to read as follows: 33 69-262. PROOF OF CLAIMS -- PROCEDURE -- HEARING -- INSPECTION OF WARE- 34 HOUSE. In the event a warehouse or dealer fails, as defined in section 35 69-202(89), Idaho Code, the department shall process the claims of producers 36 who have paid or owe assessments as required by this chapter. Claims against a 37 failed warehouse or dealer shall include written evidence disclosing a storage 38 obligation or a sale or delivery of commodities. 39 (1) The department shall give notice and provide a reasonable time of not 40 less than thirty (30) days and not more than sixty (60) days to producers to 41 file their written verified claims, including any written evidence, with the 42 department. 43 (2) The department shall investigate each claim and shall notify each 44 claimant, the warehouseman or dealer, and the advisory committee of the 45 department's determination as to the validity and amount of each claimant's 46 claim. A claimant or warehouseman or dealer may request a hearing on the 47 department's determination within twenty (20) days of receipt of written noti- 48 fication and a hearing shall be held by the department pursuant to chapter 52, 49 title 67, Idaho Code. Upon determining the amount and validity of the claim, 50 the director shall pay to the claimant an amount equal to ninety percent (90%) 51 of the approved claim from the commodity indemnity fund. Prior to any payment 52 from the fund to a claimant, the claimant shall be required to subrogate and 53 assign his right to recover from any other source. The department may then pay 8 1 up to ninety percent (90%) of the approved claim to the claimant. The depart- 2 ment shall have a priority claim for that amount. The claimant shall be enti- 3 tled to seek recovery of the remaining ten percent (10%) which was not origi- 4 nally assigned to the department. For the purpose of determining the amount of 5 the producer's claim, the value of a producer's commodity shall be the lesser 6 of: (a) the value of the commodity on the date the director declared the ware- 7 house or dealer to have failed or to have failed to comply with the provisions 8 of this chapter or rules promulgated thereunder; (b) the contract price as 9 listed on a valid contract; or (c) the value of the commodity represented on 10 the contract on the date the contract was signed. The value shall be deter- 11 mined by a survey of the available market price reports or markets of similar 12 facilities within the same geographic location as the failed facility. 13 (3) The department may inspect and audit a failed warehouseman or 14 dealer. In the event of a shortage, the department shall determine each 15 producer's pro rata share of available commodities and the deficiency shall be 16 considered as a claim of the producer. Each type of commodity shall be treated 17 separately for the purpose of determining shortages. 18 (4) The director shall not approve or pay any claim made on the commodity 19 indemnity fund if the claim is based on losses resulting from the deposit, 20 sale or storage of commodities in an unlicensed warehouse or dealer. 21 (5) The fund shall not be liable for claims filed against a warehouse or 22 dealer in good standing who has voluntarily relinquished their license if such 23 claims are not filed with the department within six (6) months of the closing. 24 SECTION 7. That Section 69-506, Idaho Code, be, and the same is hereby 25 amended to read as follows: 26 69-506. BONDING REQUIREMENTS -- CANCELLATION -- IRREVOCABLE LETTER OF 27 CREDIT OR CERTIFICATE OF DEPOSIT IN LIEU OF BOND -- SINGLE BOND. Except as 28 provided in chapter 2, title 69, Idaho Code, an applicant for a license to 29 operate as a commodity dealer shall, before a license will be issued, file 30 with the department a bond in favor of the commodity indemnity fund with a 31 corporate surety approved by the department with the condition that the appli- 32 cant will pay the purchase price of any agricultural commodity to the seller. 33 The aggregate annual liability of the surety shall in no event exceed the sum 34 of the bond. 35 At the discretion of the director, any person required to submit a bond to 36 the department in accordance with this chapter, may give to the department a 37 certificate of deposit or irrevocable letter of credit payable to the commod- 38 ity indemnity fund in lieu of the bond required herein. The principal amount 39 of the certificate of deposit or irrevocable letter of credit shall be the 40 same as that required for a surety bond pursuant to this chapter. Accrued 41 interest upon the certificate of deposit shall be payable to the purchaser of 42 the certificate. The certificate of deposit or irrevocable letter of credit 43 shall remain on file with the department until it is released, canceled or 44 discharged by the director. The provisions of this chapter that apply to a 45 bond required pursuant to this chapter apply to each certificate of deposit or 46 irrevocable letter of credit given in lieu of such bond. The certificate of 47 deposit or irrevocable letter of credit shall remain on file with the depart- 48 ment until it is released, canceled, or discharged by the director, or until 49 the director is notified ninety (90) days in advance, by registered or certi- 50 fied mail, return receipt requested, that the certificate of deposit or irrev- 51 ocable letter of credit is renewed, canceled or amended. Failure to notify 52 the director may result in the suspension or revocation of the commodity 53 dealer's license. Under the provisions of this chapter, an irrevocable letter 9 1 of credit or certificate of deposit shall not be accepted unless it is issued 2 by a national bank or federal thrift institution in Idaho or by a state-char- 3 tered bank or thrift institution authorized to conduct business in Idaho and 4 insured by the federal deposit insurance corporation. A certificate of deposit 5 shall 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 to be furnished for each commodity dealer shall be 9 fixed at whichever of the following amounts is greater: 10 (1) The combined total indebtedness paid and owed to producers for agri- 11 cultural commodity and seed crop for the previous license year; or 12 (2) The indebtedness owed and estimated to be owed to producers for agri- 13 cultural commodity and seed crop for the current license year. 14 Subsequent to determining whichever of the preceding amounts is greater, 15 and based on that amount, the amount of bond shall be calculated as follows: 16 Gross Dollars: Amount of Bond: 17 $0 - $450,000 $20,000 bond or 6% of the gross 18 dollars, whichever is less 19 $450,001 - $1,000,000 $40,000 bond 20 $1,000,001 - $8,000,000 $100,000 bond 21 Over $8,000,000 $500,000 bond 22 In any case, the amount of the bond shall not be more than five hundred 23 thousand dollars ($500,000). A surety shall notify the commodity dealer and 24 the department by certified mail at least ninety (90) days prior to the can- 25 cellation of a bond issued under the provisions of this chapter. The liability 26 of the surety shall cover purchases made by the commodity dealer during the 27 time the bond is in force. A commodity dealer's bond filed with this depart- 28 ment shall be continuous until canceled by the surety upon ninety (90) days' 29 notice. The director reserves the right to waive the ninety (90) day cancella- 30 tion period. 31 If a commodity dealer is licensed pursuant to chapter 51, title 22, Idaho 32 Code, that same commodity dealer may obtain a single bond, certificate of 33 deposit or irrevocable letter of credit as a surety under chapter 5, title 69, 34 Idaho Code, and chapter 51, title 22, Idaho Code. If a single bond, certifi- 35 cate of deposit or irrevocable letter of credit is written covering chapter 5, 36 title 69, Idaho Code, and chapter 51, title 22, Idaho Code, the bond, certifi- 37 cate of deposit or irrevocable letter of credit shall be made out in favor of 38 the commodity indemnity fund and the seed indemnity fund. In the event a com- 39 modity dealer fails as defined in section 69-202(89), Idaho Code, and a single 40 bond, certificate of deposit or irrevocable letter of credit is written in 41 favor of the commodity indemnity fund and seed indemnity fund, the proceeds of 42 the bond, certificate of deposit or irrevocable letter of credit will be allo- 43 cated based on the dollar amount of the verified claims approved pursuant to 44 chapter 2, title 69, Idaho Code, and chapter 51, title 22, Idaho Code.
STATEMENT OF PURPOSE
RS 17313C2
This legislation amends Section 69-202(2) increasing the minimum
financial requirement to the definition of commodity dealer;
Section 69-202 adding a definition for “credit sales contract”;
Section 69-203(2) adds two classes of warehouse licenses;
Section 69-206(6) adds clarity to maintaining current ratios and
responsibility of warehouseman to report to ISDA if current
ratio is not maintained at greater than a 1:1 ratio; Section 69-
206(7) establishes the minimum financial requirement for Class I
and II Warehouse licenses.
FISCAL NOTE
No impact to the General Fund.
CONTACT
Name: Lee Stacey
Agency: Agriculture, Dept. of
Phone: 332-8670
STATEMENT OF PURPOSE/FISCAL NOTE H 427