House File 108
HOUSE FILE
BY RAYHONS, LUKAN, and DOLECHECK
Passed House, Date Passed Senate, Date
Vote: Ayes Nays Vote: Ayes Nays
Approved
A BILL FOR
1 An Act establishing the assessment of fees and the creation of a
2 fund to support producers of corn and soybeans suffering
3 losses due to contamination of their crops and appropriating
4 moneys from the fund.
5 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
6 TLSB 1454HH 80
7 da/pj/5
PAG LIN
1 1 SUBCHAPTER 1
1 2 DEFINITIONS
1 3 Section 1. NEW SECTION. 175B.101 DEFINITIONS.
1 4 As used in this chapter, unless the context otherwise
1 5 requires:
1 6 1. "Commodity organization" means the Iowa soybean
1 7 promotion board established pursuant to section 185.3 or the
1 8 Iowa corn promotion board created in section 185C.3.
1 9 2. "Contamination" means the presence of a plant or plant
1 10 part that causes a producer a loss as provided in section
1 11 175B.403.
1 12 3. "Corn" means the same as defined in section 185C.1.
1 13 4. "Department" means the department of agriculture and
1 14 land stewardship.
1 15 5. "Excise tax" means the assessment of an excise tax
1 16 imposed on a producer and collected for the benefit of a
1 17 commodity organization as provided in section 185.21 or
1 18 185C.21.
1 19 6. "First purchaser" means any of the following:
1 20 a. A first purchaser as defined in section 185.1 who
1 21 purchases soybeans from a producer for the first time in the
1 22 same manner as provided in chapter 185.
1 23 b. A first purchaser as defined in section 185C.1 who
1 24 purchases corn from a producer for the first time in the same
1 25 manner as provided in chapter 185C.
1 26 7. "Grain" means corn or soybeans.
1 27 8. "Grain integrity indemnity board" or "indemnity board"
1 28 means the grain integrity indemnity board established pursuant
1 29 to section 175B.201.
1 30 9. "Grain integrity indemnity fund" or "indemnity fund"
1 31 means the grain integrity indemnity fund created in section
1 32 175B.402.
1 33 10. "Producer" means any of the following:
1 34 a. A producer as defined in section 185.1.
1 35 b. A producer as defined in section 185C.1.
2 1 11. "Record" means the same as defined in section 516E.1.
2 2 12. "Soybeans" means the same as defined in section 185.1.
2 3 SUBCHAPTER 2
2 4 ADMINISTRATION
2 5 Sec. 2. NEW SECTION. 175B.201 GRAIN INTEGRITY INDEMNITY
2 6 BOARD == ESTABLISHED; COMPOSITION.
2 7 The grain integrity indemnity board is established in the
2 8 department. The indemnity board is composed of all of the
2 9 following members:
2 10 1. The secretary of agriculture or a designee who shall
2 11 serve as chairperson.
2 12 2. The commissioner of insurance or a designee.
2 13 3. The treasurer of state or a designee.
2 14 4. Six representatives of the grain industry appointed by
2 15 the governor, subject to confirmation by the senate pursuant
2 16 to section 2.32. Appointments of members are subject to the
2 17 requirements of sections 69.16 and 69.16A. In addition, the
2 18 appointments shall be geographically balanced. The appointed
2 19 members shall serve three=year terms beginning and ending as
2 20 provided in section 69.19. However, the governor shall
2 21 appoint some initial members to serve for less than three
2 22 years to ensure members serve staggered terms. A member is
2 23 eligible for reappointment. A vacancy on the indemnity board
2 24 shall be filled for the unexpired portion of the regular term
2 25 in the same manner as regular appointments are made. Of the
2 26 six members, four shall represent producers and two shall
2 27 represent first purchasers.
2 28 a. Of the four members representing producers, two shall
2 29 represent corn producers and two shall represent soybean
2 30 producers. In order to qualify for appointment, a producer
2 31 must have derived a substantial portion of the person's
2 32 income, wages, or salary from selling grain on a premium basis
2 33 due to intrinsic characteristics of the use of identity
2 34 preserved methods or systems. At least one producer shall be
2 35 a member of the organic standards board created pursuant to
3 1 section 190C.2.
3 2 b. Of the two members representing first purchasers, one
3 3 shall represent first purchasers of corn and one shall
3 4 represent first purchasers of soybeans. Both members shall be
3 5 licensed as grain dealers under section 203.3 and warehouse
3 6 operators as provided in section 203C.6. In order to qualify
3 7 for appointment, a first purchaser must have experience in
3 8 purchasing grain on a premium basis due to its intrinsic
3 9 characteristics or the use of identity preserved production
3 10 methods or systems, and storing such grain.
3 11 Sec. 3. NEW SECTION. 175B.202 GRAIN INTEGRITY INDEMNITY
3 12 BOARD == TERMS, PROCEDURE, AND COMPENSATION.
3 13 1. The indemnity board shall meet on a regular basis and
3 14 at the call of the chairperson or upon the written request to
3 15 the chairperson of three or more members.
3 16 2. Appointed members are entitled to receive compensation
3 17 or reimbursement of expenses as provided in section 7E.6.
3 18 3. Five voting members constitute a quorum and the
3 19 affirmative vote of a majority of the voting members present
3 20 is necessary for any substantive action to be taken by the
3 21 indemnity board. The majority shall not include any member
3 22 who has a conflict of interest and a statement by a member
3 23 that the member has a conflict of interest is conclusive for
3 24 this purpose. A vacancy in the membership does not impair the
3 25 duties of the indemnity board.
3 26 Sec. 4. NEW SECTION. 175B.203 GRAIN INTEGRITY INDEMNITY
3 27 BOARD == POWERS AND DUTIES.
3 28 1. The grain integrity indemnity board, in consultation
3 29 with the department, shall administer this chapter. The
3 30 indemnity board shall do all of the following:
3 31 a. Provide for its organization and procedures, including
3 32 but not limited to procedures for determining claims as
3 33 provided in section 175B.404.
3 34 b. Establish and adjust the indemnity assessment and its
3 35 rate as provided in section 175B.302.
4 1 c. Provide for the administration of the grain integrity
4 2 indemnity fund as provided in subchapter 4, including but not
4 3 limited to the payment of claims from the indemnity fund and
4 4 the payment of administrative costs from the indemnity fund.
4 5 2. The indemnity board shall approve rules adopted by the
4 6 department as provided in section 175B.204 necessary to
4 7 administer its duties under this chapter.
4 8 Sec. 5. NEW SECTION. 175B.204 DEPARTMENT == POWERS AND
4 9 DUTIES.
4 10 1. The department shall perform the administrative
4 11 functions necessary for the operation of the indemnity board
4 12 and the management of the grain integrity indemnity fund as
4 13 provided in section 175B.302. The department shall act in a
4 14 manner necessary to minimize the risk of loss to the indemnity
4 15 fund while protecting interests of depositors and sellers of
4 16 grain.
4 17 2. Administrative costs approved by the indemnity board
4 18 shall be paid from the grain integrity indemnity fund. Prior
4 19 to July 1, the department shall determine the balance of
4 20 moneys available to administer this chapter for the next
4 21 fiscal year by calculating the ending balance of the indemnity
4 22 fund on June 30, and report the amount to the indemnity board
4 23 together with its estimate of the amount required by the
4 24 department to administer this chapter. Not more than three
4 25 percent of the ending balance of the indemnity fund as of June
4 26 30 shall be used to pay for administrative costs of the
4 27 department for the fiscal year beginning on the following July
4 28 1 and ending on June 30.
4 29 3. The department, upon approval by the indemnity board,
4 30 shall adopt all rules necessary for the administration of this
4 31 chapter.
4 32 Sec. 6. NEW SECTION. 175B.205 COOPERATION BY COMMODITY
4 33 ORGANIZATIONS.
4 34 The indemnity board and existing commodity organizations
4 35 and their affiliated associations shall cooperate with the
5 1 indemnity board and the department in administering this
5 2 chapter.
5 3 SUBCHAPTER 3
5 4 GRAIN INTEGRITY INDEMNITY ASSESSMENT
5 5 Sec. 7. NEW SECTION. 175B.301 GRAIN INTEGRITY INDEMNITY
5 6 ASSESSMENT == ESTABLISHMENT.
5 7 1. A grain integrity indemnity assessment is established
5 8 to be imposed and collected as provided in section 175B.302.
5 9 2. a. Except as provided in paragraph "b", the indemnity
5 10 assessment shall be imposed upon producers of the commodities
5 11 as provided in this section and collected by the first
5 12 purchasers of the commodities in the same manner as excise
5 13 taxes, regardless of whether an excise tax is actually being
5 14 collected pursuant to a referendum or whether the excise tax
5 15 has been suspended pursuant to a federal Act.
5 16 b. Notwithstanding procedures used for the collection of
5 17 excise taxes for the sale of grain to consumers or first
5 18 purchasers in other states, as provided in chapters 185 and
5 19 185C, the indemnity board may exempt these transactions, or
5 20 provide for other collection procedures including but not
5 21 limited to requiring payment directly by the producer or
5 22 executing agreements with first purchasers from outside this
5 23 state for the payment of the indemnity assessment.
5 24 c. An indemnity assessment shall not be imposed upon grain
5 25 that is produced outside this state.
5 26 Sec. 8. NEW SECTION. 175B.302 GRAIN INDEMNITY ASSESSMENT
5 27 == RATES.
5 28 1. The grain integrity indemnity assessment shall be
5 29 assessed as follows:
5 30 a. For soybeans that are subject to an excise tax levied
5 31 on producers and collected by first purchasers, as provided in
5 32 chapter 185, the indemnity assessment shall be collected by
5 33 the first purchasers at a rate of not more than one=quarter of
5 34 one percent of the net market price of the soybeans marketed
5 35 in this state and sold to a first purchaser, in the same
6 1 manner as provided in section 185.21.
6 2 b. For corn that is subject to an excise tax levied on
6 3 producers and collected by first purchasers, as provided in
6 4 chapter 185C, the indemnity assessment shall be collected by
6 5 the first purchasers at a rate of not more than one=quarter of
6 6 one cent per bushel upon corn marketed in this state and sold
6 7 to a first purchaser, in the same manner as provided in
6 8 section 185C.21.
6 9 2. An indemnity assessment is not refundable.
6 10 3. The indemnity board shall review annually the debits of
6 11 and credits to the indemnity fund and shall make any
6 12 adjustments in the rates of the indemnity assessment that are
6 13 necessary to maintain the indemnity fund within the limits
6 14 established under this section. Not later than the first day
6 15 of May of each year, the indemnity board shall determine the
6 16 proposed rate of the indemnity assessment based on the
6 17 expected volume of grain on which the indemnity assessment is
6 18 to be collected. The rates for the indemnity assessment shall
6 19 be established and adjusted by rule adopted by the department
6 20 that shall be effective on July 1 of each year. The rates
6 21 shall expire on the following June 30. Notwithstanding
6 22 section 17A.5, a rule adopted under this section to establish
6 23 rates for the indemnity assessment or increase the rates shall
6 24 not be effective immediately upon filing and shall not be made
6 25 retroactively applicable.
6 26 4. The indemnity board may charge interest on any amount
6 27 of an indemnity assessment that is delinquent. The rate of
6 28 interest shall not be more than the current rate published in
6 29 the Iowa administrative bulletin by the department of revenue
6 30 and finance pursuant to section 421.7. The interest amount
6 31 shall be computed from the date the indemnity assessment is
6 32 delinquent, unless the department designates a later date.
6 33 The interest amount shall accrue for each month in which there
6 34 is delinquency calculated as provided in section 421.7, and
6 35 counting each fraction of a month as an entire month. The
7 1 interest amount due shall become a part of the amount of the
7 2 indemnity assessment due.
7 3 5. The amount of an indemnity assessment, including any
7 4 delinquency penalty, shall constitute a debt due the state and
7 5 become the basis of a judgment against the first purchaser in
7 6 arrears.
7 7 Sec. 9. NEW SECTION. 175B.303 GRAIN INTEGRITY INDEMNITY
7 8 ASSESSMENT == SUSPENSION.
7 9 If, at the end of any three=month period, the assets of the
7 10 indemnity fund exceed twenty=five million dollars, less any
7 11 unencumbered balances or pending or unsettled claims, the
7 12 indemnity board shall suspend the grain integrity indemnity
7 13 assessment. The indemnity assessment shall not be due or
7 14 owing during the period of the suspension. The indemnity
7 15 board shall reinstate the indemnity assessment if the assets
7 16 of the indemnity fund, less any unencumbered balances or
7 17 pending or unsettled claims, are fifteen million dollars or
7 18 less.
7 19 Sec. 10. NEW SECTION. 175B.304 RECORDS.
7 20 1. A first purchaser shall provide records as required by
7 21 the indemnity board in order to notify producers of the grain
7 22 integrity indemnity assessment and account for revenues from
7 23 the indemnity assessment remitted to the treasurer of state
7 24 pursuant to section 175B.401.
7 25 2. The records shall include all of the following:
7 26 a. A receipt returned to the producer that includes the
7 27 rate for the indemnity assessment imposed and the total amount
7 28 of the indemnity assessment.
7 29 b. An invoice which shall be delivered to the indemnity
7 30 board within a period established by rules adopted by the
7 31 indemnity board in order to audit the amount of the indemnity
7 32 assessments owed, due, and collected. The invoice shall at
7 33 least include all of the following:
7 34 (1) The name and address of the producer.
7 35 (2) The name and address of the first purchaser.
8 1 (3) The type of grain subject to the indemnity assessment.
8 2 (4) The number of bushels of the grain purchased as
8 3 required in order to calculate the amount collected from the
8 4 indemnity assessment.
8 5 c. The date of the grain's delivery or purchase.
8 6 3. The first purchaser shall authenticate the invoice as
8 7 required by the indemnity board. The department may require
8 8 that the first purchaser submit a separate invoice for each
8 9 purchase.
8 10 4. The department may provide for different forms of
8 11 records based on the grain purchased or may use joint records,
8 12 including but not limited to invoices, for use by commodity
8 13 organizations and the department on single forms.
8 14 5. A first purchaser shall provide the indemnity board
8 15 with any information required by the indemnity board to
8 16 administer the provisions of this subchapter. For the purpose
8 17 of ascertaining the correctness of any information provided to
8 18 the indemnity board, the indemnity board may examine the first
8 19 purchaser's records.
8 20 SUBCHAPTER 4
8 21 GRAIN INTEGRITY INDEMNITY FUND == INDEMNIFICATION
8 22 Sec. 11. NEW SECTION. 175B.401 GRAIN INTEGRITY INDEMNITY
8 23 ASSESSMENTS == DEPOSIT IN THE GRAIN INTEGRITY INDEMNITY FUND.
8 24 1. A first purchaser shall remit amounts collected from
8 25 the grain integrity indemnity assessments to the treasurer of
8 26 state as required by the treasurer of state for deposit in the
8 27 indemnity fund.
8 28 2. The treasurer of state may require that indemnity
8 29 assessments be remitted in the same manner, at the same time,
8 30 and according to the same procedures as the excise taxes.
8 31 However, the indemnity assessments shall not be commingled
8 32 with any other moneys, including excise taxes.
8 33 Sec. 12. NEW SECTION. 175B.402 GRAIN INTEGRITY INDEMNITY
8 34 FUND.
8 35 1. A grain integrity indemnity fund is created in the
9 1 state treasury under the control of the indemnity board. The
9 2 indemnity fund is separate from the general fund of the state.
9 3 2. The fiscal year of the indemnity fund begins July 1.
9 4 The finances of the indemnity fund shall be calculated on an
9 5 accrual basis in accordance with generally accepted accounting
9 6 principles.
9 7 3. The indemnity fund is composed of moneys deposited into
9 8 the fund from moneys collected by the imposition of the grain
9 9 integrity indemnity assessment.
9 10 4. The moneys deposited in the indemnity fund are
9 11 appropriated to the indemnity board for the exclusive purpose
9 12 of satisfying claims as provided in this subchapter and
9 13 providing moneys for paying the department for costs related
9 14 to administering the provisions of this chapter. Moneys in
9 15 the indemnity fund shall not be subject to appropriation or
9 16 expenditure for any other purpose than provided in this
9 17 section.
9 18 5. The treasurer of state shall act as custodian of the
9 19 indemnity fund and disburse amounts contained in the indemnity
9 20 fund as directed by the indemnity board. The treasurer of
9 21 state may invest the moneys deposited in the indemnity fund.
9 22 Notwithstanding section 8.33, any unexpended balance in the
9 23 indemnity fund at the end of the fiscal year shall be retained
9 24 in the fund. Notwithstanding section 12C.7, subsection 2,
9 25 interest, earnings on investments, or time deposits of the
9 26 moneys in the indemnity fund shall be credited to the fund.
9 27 Sec. 13. NEW SECTION. 175B.403 CLAIMS AGAINST FUND ==
9 28 CONTAMINATION.
9 29 A producer may file a claim with the indemnity board for a
9 30 loss based on the diminution of value of the producer's grain
9 31 due to contamination. Contamination occurs when there is a
9 32 presence of a plant or plant part, including but not limited
9 33 to a crop's seed, on property in which the producer holds a
9 34 legal or equitable interest, if the plant or plant part was
9 35 intentionally or unintentionally transferred from a location
10 1 other than property in which the producer holds a legal or
10 2 equitable interest, and its presence alters the genetic
10 3 characteristics of a plant growing on the producer's property
10 4 or is commingled with grain stored on the producer's property.
10 5 Contamination includes but is not limited to the transfer of
10 6 seeds or the pollination of crops or other plants inhabiting
10 7 the producer's property.
10 8 Sec. 14. NEW SECTION. 175B.404 PROCEDURE FOR FILING AND
10 9 DETERMINATION OF CLAIMS.
10 10 1. A claim by a producer shall be filed in the manner
10 11 prescribed by the indemnity board.
10 12 2. The indemnity board shall determine a claim to be
10 13 eligible for payment from the indemnity fund if the board
10 14 finds all of the following:
10 15 a. The claim was timely filed according to procedures
10 16 required by the indemnity board. However, a claim shall not
10 17 be timely filed if the claim is filed later than twelve months
10 18 after a crop subject to the claim has been harvested.
10 19 b. The claimant qualifies as a producer.
10 20 c. The claim derives from a loss due to contamination of
10 21 the producer's grain.
10 22 d. The producer's loss was not due to the reckless
10 23 disregard of sound management practices required to prevent
10 24 contamination of the producer's crop or grain.
10 25 e. There is adequate documentation to establish the
10 26 existence of a claim and to determine the amount of the loss.
10 27 The indemnity board may require that the producer provide
10 28 invoices provided for the first purchaser.
10 29 3. The indemnity board shall determine the dollar value of
10 30 a claim incurred by a producer eligible to file a claim under
10 31 this section based on the producer's loss.
10 32 a. The value of the claim shall be the difference between
10 33 the grain's fair market price as if the contamination had not
10 34 occurred and the fair market price of the contaminated grain.
10 35 (1) The indemnity board shall determine the fair market
11 1 value for the grain as if the contamination had not occurred
11 2 based on the market price that grain of a similar type and
11 3 condition, and with the same intrinsic characteristics
11 4 received by sellers on the date that the producer sold the
11 5 grain to the first purchaser. However, if the producer
11 6 executed a contract for the sale of the grain prior to the
11 7 contamination, the indemnity board shall determine the fair
11 8 market value for the grain as if the contamination had not
11 9 occurred based on the contract price.
11 10 (2) The indemnity board shall presume that the fair market
11 11 price for the contaminated grain is the same price accepted by
11 12 the producer of the grain from the first purchaser who
11 13 purchased the grain with knowledge of the contamination.
11 14 b. A producer filing claims under this section shall be
11 15 bound by the value determined by the indemnity board. The
11 16 value of the loss is the outstanding balance on the validated
11 17 claim at the time of payment from the indemnity fund.
11 18 4. Upon a determination that a claim is eligible for
11 19 payment, the indemnity board shall provide for payment of
11 20 ninety percent of the loss, but not more than one hundred
11 21 fifty thousand dollars per claimant.
11 22 5. The indemnity board shall provide for notice to a
11 23 claimant of the indemnity board's determination of eligibility
11 24 and value of the producer's loss. The notice shall be
11 25 delivered by restricted certified mail. Within twenty days of
11 26 the delivery of the notice, the producer may request a hearing
11 27 for the review of either determination. The request shall be
11 28 made in the manner provided by the indemnity board. The
11 29 hearing and any further appeal shall be conducted as a
11 30 contested case subject to chapter 17A. A producer whose claim
11 31 has been refused by the indemnity board may appeal the refusal
11 32 to either the district court of Polk county or the district
11 33 court of the county in which the producer resides.
11 34 6. If at any time the indemnity board determines that
11 35 insufficient moneys are contained in the indemnity fund to
12 1 make payment of all claims, the indemnity board may order that
12 2 payment be deferred on specified claims. The indemnity board
12 3 shall hold those claims for payment until the indemnity board
12 4 determines that the indemnity fund again contains sufficient
12 5 moneys.
12 6 Sec. 15. NEW SECTION. 175B.405 SUBROGATION.
12 7 In the event of payment of a loss under section 175B.404,
12 8 the indemnity fund is subrogated to the extent of the amount
12 9 of any payments to all rights, powers, privileges, and
12 10 remedies of the producer against any person regarding the
12 11 loss. The producer shall render all necessary assistance to
12 12 aid the indemnity board in securing the rights granted in this
12 13 section. An action or claim initiated by a producer and
12 14 pending at the time of payment from the indemnity fund shall
12 15 not be compromised or settled without the consent of the
12 16 indemnity board.
12 17 Sec. 16. NEW SECTION. 175B.406 NO OBLIGATION OF STATE.
12 18 This chapter does not imply any guarantee or obligation on
12 19 the part of the state of Iowa, or any of its agencies,
12 20 employees, or officials, either elective or appointive, in
12 21 respect of any agreement or undertaking to which this chapter
12 22 relates.
12 23 Sec. 17. NEW SECTION. 185.22A COOPERATION WITH THE GRAIN
12 24 INTEGRITY INDEMNITY BOARD.
12 25 The board shall cooperate with the grain integrity
12 26 indemnity board as created in section 175B.201. The grain
12 27 integrity indemnity board in cooperation with the board may
12 28 require the use of joint records, including but not limited to
12 29 invoices as provided in sections 175B.304 and 185.22, on
12 30 single forms.
12 31 Sec. 18. NEW SECTION. 185C.22A COOPERATION WITH THE
12 32 GRAIN INTEGRITY INDEMNITY FUND BOARD.
12 33 The council shall cooperate with the grain integrity
12 34 indemnity board as created in section 175B.201. The grain
12 35 integrity indemnity board in cooperation with the council may
13 1 require the use of joint records, including but not limited to
13 2 invoices as provided in sections 175B.304 and 185C.22, on
13 3 single forms.
13 4 EXPLANATION
13 5 This bill provides for the indemnification of producers of
13 6 corn and soybeans from an indemnity fund supported from moneys
13 7 collected from assessments on the producers in the same manner
13 8 as excise taxes are assessed against producers for the benefit
13 9 of promotional activities by the Iowa soybean promotion board
13 10 and the Iowa corn promotion board. The fund is managed by a
13 11 grain integrity indemnity board created under the bill.
13 12 The bill establishes a grain integrity indemnity fund
13 13 composed of moneys from the indemnity assessments. The moneys
13 14 deposited in the indemnity fund are appropriated to the
13 15 indemnity board for the exclusive purpose of satisfying claims
13 16 by producers whose crops have been contaminated. A producer
13 17 may file a claim with the indemnity board for a loss based on
13 18 the diminution of value of the producer's corn or soybeans due
13 19 to contamination. Contamination occurs when there is a
13 20 presence of a plant or plant part, including but limited to a
13 21 crop's seed, on property in which the producer holds a legal
13 22 or equitable interest. The plant or plant part must have been
13 23 transferred from a location other than property in which the
13 24 producer holds a legal or equitable interest, and its presence
13 25 must alter the genetic characteristics of a plant growing on
13 26 the producer's property or is commingled with crops or grain
13 27 stored on the producer's property.
13 28 The indemnity board must make a determination of the
13 29 producer's loss based on criteria established in the bill.
13 30 Upon a determination that a claim is eligible for payment, the
13 31 indemnity board must provide for payment of 90 percent of the
13 32 loss, but not more than $150,000 per claimant.
13 33 LSB 1454HH 80
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