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PAG LIN
1 1 Section 1. Section 456A.36, subsection 1, paragraph c,
1 2 Code 1995, is amended to read as follows:
1 3 c. "Timber buyer" means a person engaged in the business
1 4 of buying timber from the timber growers for sawing into
1 5 lumber, for processing or for resale, but does not include a
1 6 person who occasionally purchases timber for sawing or
1 7 processing for the person's own use and not for resale.
1 8 "Timber buyer" includes a person who contracts with a timber
1 9 grower on a shared-profit basis to harvest timber from the
1 10 timber grower's land.
1 11 Sec. 2. Section 456A.36, subsection 2, unnumbered
1 12 paragraph 2, Code 1995, is amended by striking the unnumbered
1 13 paragraph and inserting in lieu thereof the following:
1 14 The principal amount of the bond shall be ten percent of
1 15 the total amount paid to timber growers during the preceding
1 16 year, plus ten percent of the total amount due or delinquent
1 17 and unpaid to timber growers at the end of the preceding year,
1 18 and ten percent of the market value of growers' shares of
1 19 timber harvested during the previous year. However, the total
1 20 amount of the bond shall be not less than three thousand
1 21 dollars and not more than fifteen thousand dollars.
1 22 Sec. 3. EFFECTIVE DATE. This Act takes effect January 1,
1 23 1997.
1 24 EXPLANATION
1 25 This bill amends the definition of a timber buyer to
1 26 include a person who contracts to harvest timber on shares.
1 27 The bill also revises the formula for determining the amount
1 28 of the surety bond which a timber buyer must file with the
1 29 natural resource commission based on the preceding year's
1 30 business. The minimum bond is raised from $500 to $3,000 and
1 31 the maximum bond is raised from $10,000 to $15,000.
1 32 This bill takes effect January 1, 1997.
1 33 BACKGROUND STATEMENT
1 34 SUBMITTED BY THE AGENCY
1 35 The current minimum bond of $500 for timber buyers is too
2 1 low, particularly in view of the expense of obtaining a
2 2 judgment on the bond and the current value of timber. A
2 3 $3,000 bond is much more realistic. The maximum bond
2 4 requirement is also increased to reflect the increased value
2 5 of timber in today's markets. The amount of the bond should
2 6 not be based only on the amounts actually paid to timber
2 7 growers during the preceding year. The amounts owed but not
2 8 paid for timber are also relevant in determining the amount of
2 9 the bond.
2 10 The definition of timber buyer is not broad enough to cover
2 11 persons who contract to cut timber on shares. In these
2 12 situations, a person cuts and hauls the trees to a mill or
2 13 other market. The mill or other market pays the grower
2 14 directly for their share with the balance being paid to the
2 15 person who cut the trees. Since this person is not actually
2 16 purchasing the timber from the grower, the person is not
2 17 required to file a bond under current law. There have been
2 18 some cases where timber has been diverted to other markets
2 19 without the knowledge of the grower which resulted in the
2 20 grower not receiving full value for that timber.
2 21 LSB 3361DP 76
2 22 tj/sc/14
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