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PAG LIN 1 1 Section 1. Section 203.1, Code Supplement 2001, is amended 1 2 by adding the following new subsections: 1 3 NEW SUBSECTION. 7A. "Grain credit sale contract indemnity 1 4 fund" means the same as defined in section 203D.13. 1 5 NEW SUBSECTION. 8A. "Grain depositors and sellers 1 6 indemnity fund" means the grain depositors and sellers 1 7 indemnity fund created in section 203D.3. 1 8 NEW SUBSECTION. 8B. "Indemnity fund" means the same as 1 9 defined in section 203D.1. 1 10 Sec. 2. Section 203.1, subsection 2, Code Supplement 2001, 1 11 is amended to read as follows: 1 12 2."Credit-sale contract""Credit sale contract" means a 1 13 contract for the sale of grain pursuant to which the sale 1 14 price is to be paid more than thirty days after the delivery 1 15 of the grain to the buyer, or a contract which is titled as a 1 16credit-salecredit sale contract, including but not limited to 1 17 those contracts commonly referred to as deferred-payment 1 18 contracts, deferred-pricing contracts, and price-later 1 19 contracts. 1 20 Sec. 3. Section 203.1, subsection 6, paragraph c, Code 1 21 Supplement 2001, is amended to read as follows: 1 22 c. A substantial risk of loss tothe grain depositors and1 23sellersan indemnity fund caused by the possible insolvency of 1 24 the grain dealer based on a statistical model provided in 1 25 section 203.22. 1 26 Sec. 4. Section 203.2A, subsection 3, paragraph a, Code 1 27 2001, is amended to read as follows: 1 28 a. The person provides notice to the producer. The notice 1 29 shall be in the following form: 1 30 ATTENTION TO PRODUCERS: 1 31 THE PERSON PURCHASING THIS GRAIN IS NOT A LICENSED GRAIN 1 32 DEALER AND THIS IS NOT A COVERED TRANSACTION ELIGIBLE FOR 1 33 INDEMNIFICATION FROM THE GRAIN DEPOSITORS AND SELLERS 1 34 INDEMNITY FUND AS PROVIDED IN IOWA CODE SECTION 203D.3 OR THE 1 35 GRAIN CREDIT SALE CONTRACT INDEMNITY FUND AS PROVIDED IN IOWA 2 1 CODE SECTION 203D.13. 2 2 Sec. 5. Section 203.4, Code 2001, is amended to read as 2 3 follows: 2 4 203.4 PARTICIPATION IN INDEMNITY FUND REQUIRED. 2 5 A person licensed to operate as a grain dealer under this 2 6 chapter shallparticipate in andcomply with and participate 2 7 in all of the following: 2 8 1. Chapter 203D, subchapter 2, and grain depositors and 2 9 sellers indemnity fundprovided in chapter 203D. 2 10 2. Chapter 203D, subchapter 3, and the grain credit sale 2 11 contract indemnity fund, if the grain dealer purchases grain 2 12 by credit sale contract. 2 13 Sec. 6. Section 203.5, subsections 1 and 2, Code 2001, are 2 14 amended to read as follows: 2 15 1. The applicant has caused liability tothe Iowa grain2 16depositors and sellersan indemnity fund in regard to a 2 17 license issued under this chapter or chapter 203C, and the 2 18 liability has not been discharged, settled, or satisfied. 2 19 2. The applicant is owned or controlled by a person who 2 20 has caused liability tothean indemnity fund through 2 21 operations under a license issued under this chapter or 2 22 chapter 203C and the liability has not been discharged, 2 23 settled, or satisfied. 2 24 Sec. 7. Section 203.12, unnumbered paragraph 1, Code 2001, 2 25 is amended to read as follows: 2 26 Upon revocation, termination, or cancellation of a grain 2 27 dealer license, any claim for the purchase price of grain 2 28 against the grain dealer shall be made in writing and filed 2 29 with the grain dealer,andwith the issuer of a deficiency 2 30 bond or of an irrevocable letter of credit, and with the 2 31 department. The claim shall be made within one hundred twenty 2 32 days after revocation, termination, or cancellation.Failure2 33 A failure to makethisa timely claim relieves the issuer and 2 34 thegrain depositors and sellersappropriate indemnity fund 2 35provided in chapter 203Dof all obligations to the claimant. 3 1 Sec. 8. Section 203.12A, subsections 3 and 4, Code 3 2 Supplement 2001, are amended to read as follows: 3 3 3. The lien shall arise and terminate as follows: 3 4 a. For a covered transaction as provided in section 3 5 203D.6, at the time of surrender of warehouse receipts or 3 6 other written evidence of ownership as part of a grain sale 3 7 transaction or the time of delivery of the grain for sale, and 3 8 shall terminate when the liability of the grain dealer to the 3 9 seller has been discharged. The lien of all sellers under 3 10 this paragraph isherebyassigned to the Iowa grain indemnity 3 11 fund board, on behalf of the grain depositors and sellers 3 12 indemnity fund. 3 13 b. For a covered transaction as provided in section 3 14 203D.15, at the time that the credit sale contract is executed 3 15 and shall terminate when the liability of the grain dealer to 3 16 the credit sale contract seller has been discharged. The lien 3 17 of all sellers under this paragraph is assigned to the Iowa 3 18 grain indemnity fund board, on behalf of the grain credit sale 3 19 contract indemnity fund. 3 20 4. To perfect the lien, the Iowa grain indemnity fund 3 21 board must file a lien statement with the office of the 3 22 secretary of state. The lien statement shall disclose the 3 23 name of the grain dealer; the address of the dealer's 3 24 principal place of business; a description of identifiable 3 25 grain dealer assets; whether the identifiable grain dealer 3 26 assets arise under a covered transaction as provided in 3 27 section 203D.6 or 203D.15, if known; and the amount of the 3 28 lien. 3 29 a.TheFor a covered transaction as provided in section 3 30 203D.6, the lien statement is valid only if filed on or after 3 31 the date of suspension but not later than sixty days after the 3 32 incurrence date as provided in section 203D.6.The lien3 33statement shall disclose the name of the grain dealer, the3 34address of the dealer's principal place of business, a3 35description of identifiable grain dealer assets, and the4 1amount of the lien.The lien amount shall be the board's 4 2 estimate of the final cost of reimbursing the grain depositors 4 3 and sellers indemnity fund for the payment of claims against 4 4 the fund resulting from the breach of the grain dealer's 4 5 obligations. The board shall correct the amount not later 4 6 than one hundred eighty days following the incurrence date. A 4 7 court, upon petition by an affected person, may correct the 4 8 amount. The board shall have the burden of proving that the 4 9 amount is an accurate estimate. 4 10 b. For a covered transaction as provided in section 4 11 203D.15, the lien statement is valid only if filed on or after 4 12 the date of suspension but not later than sixty days after the 4 13 incurrence date as provided in section 203D.15. The lien 4 14 amount shall be the board's estimate of the final cost of 4 15 reimbursing the grain credit sale contract indemnity fund for 4 16 the payment of claims against the fund resulting from the 4 17 breach of the grain dealer's obligations. The board shall 4 18 correct the amount not later than one hundred eighty days 4 19 following the incurrence date. A court, upon petition by an 4 20 affected person, may correct the amount. The board shall have 4 21 the burden of proving that the amount is an accurate estimate. 4 22 Sec. 9. Section 203.15, subsection 9, Code 2001, is 4 23 amended to read as follows: 4 24 9. A licensed grain dealer who purchases grain bycredit-4 25salecredit sale contract shall obtain from the seller a 4 26 signed acknowledgment stating that the seller has received 4 27 notice as provided in this subsection. The acknowledgment 4 28 shall state that grain purchased bycredit-salecredit sale 4 29 contract is not protected by the grain depositors and sellers 4 30 indemnity fund but may be protected under the grain credit 4 31 sale contract indemnity fund as provided in chapter 203D. The 4 32 form for the acknowledgment shall be prescribed by the 4 33 department, and the licensed grain dealer and the seller shall 4 34 each be provided a copy. 4 35 Sec. 10. Section 203.16, subsection 3, Code Supplement 5 1 2001, is amended to read as follows: 5 2 3. Disclosure to the Iowa grain indemnity fund board in 5 3 regard tolicenseesa licensee whopresentpresents liability 5 4 tothean indemnity fund. 5 5 Sec. 11. Section 203.19, subsection 2, paragraph a, Code 5 6 2001, is amended to read as follows: 5 7 a. Filing with the department evidence of a bond or an 5 8 irrevocable letter of credit on file with a state or of 5 9 participation in a fund which has the same purposes as an 5 10 indemnity fund in a state with which Iowa has aco-operative5 11 cooperative agreement as provided for by this section. 5 12 Sec. 12. Section 203.22, Code 2001, is amended to read as 5 13 follows: 5 14 203.22 PRIORITIZATION OF INSPECTIONS OF GRAIN DEALERS. 5 15 The department shall develop a system to prioritize the 5 16 inspections of grain dealers provided in section 203.9. The 5 17 system of prioritization shall be computed each year based on 5 18 the risk of loss to thegrain depositors and sellersindemnity 5 19fundfunds caused by the possible insolvency of the grain 5 20 dealer. The department shall compute the risk by utilizing an 5 21 available statistical model to measure the financial condition 5 22 of grain dealers, and especially grain dealers who execute 5 23credit-salecredit sale contracts. Procedures for utilizing 5 24 the statistical model shall be adopted by department rules. 5 25 The statistical model shall be used to provide risk ratings. 5 26 A risk rating shall be used as a factor by the department to 5 27 prioritize its inspection schedule. The department may use a 5 28 risk rating produced by the statistical model as justification 5 29 to inspect the grain dealer at any time. A substantial risk 5 30 of loss tothe grain depositors and sellersan indemnity fund 5 31 caused by the possible insolvency of the grain dealer based on 5 32 the statistical model shall be good cause. 5 33 Sec. 13. Section 203C.1, Code 2001, is amended by adding 5 34 the following new subsections: 5 35 NEW SUBSECTION. 4A. "Credit sale contract purchased 6 1 grain" means grain, other than purchased grain, that is 6 2 purchased by a grain dealer pursuant to a credit sale 6 3 contract. 6 4 NEW SUBSECTION. 9A. "Grain credit sale contract indemnity 6 5 fund" means the grain credit sale contract indemnity fund 6 6 created in section 203D.13. 6 7 NEW SUBSECTION. 9B. "Grain depositors and sellers 6 8 indemnity fund" means the grain depositors and sellers 6 9 indemnity fund created in section 203D.3. 6 10 NEW SUBSECTION. 12A. "Indemnity fund" means the same as 6 11 defined in section 203D.1. 6 12 Sec. 14. Section 203C.1, subsection 7A, paragraph d, Code 6 13 2001, is amended to read as follows: 6 14 d. A high risk of loss tothe grain depositors and sellers6 15 an indemnity fund caused by the possible insolvency of the 6 16 warehouse operator based on a statistical model provided in 6 17 section 203C.40. 6 18 Sec. 15. Section 203C.4, subsection 2, Code 2001, is 6 19 amended to read as follows: 6 20 2. When appointed as receiver under this chapter the 6 21 department is authorized to give notice in the manner 6 22 specified by the court topersonsall of the following: 6 23 a. Persons holding warehouse receipts or other evidence of 6 24 deposit issued by the licensee. 6 25 b. Persons executing credit sale contracts with the 6 26 licensee. 6 27 The notice shall inform persons that they are required to 6 28 file their claims within one hundred twenty days after the 6 29 date of appointment.FailureA failure to timely file a claim 6 30 shall defeat the claim with respect to the issuer of a 6 31 deficiency bond or of an irrevocable letter of credit,grain6 32depositors and sellersan indemnity fundcreated in chapter6 33203D, and any commodities or proceeds from the sale of 6 34 commodities,except to the extent of any excess commodities or 6 35 proceeds of sale remaining after all timely claims are paid in 7 1 full. 7 2 Sec. 16. Section 203C.6, subsection 8, paragraphs a and b, 7 3 Code 2001, are amended to read as follows: 7 4 a. The applicant has caused liability tothe Iowa grain7 5depositors and sellersan indemnity fund through operations 7 6 under a license issued under this chapter or chapter 203, and 7 7 the liability has not been discharged, settled, or satisfied. 7 8 b. The applicant is owned or controlled by a person who 7 9 has caused liability tothean indemnity fund through 7 10 operations under a license issued under this chapter or 7 11 chapter 203, and the liability has not been discharged, 7 12 settled, or satisfied. 7 13 Sec. 17. Section 203C.12, Code 2001, is amended to read as 7 14 follows: 7 15 203C.12 PARTICIPATION IN FUND REQUIRED. 7 16 Aperson licensed to operate alicensed warehouseunder7 17this chapteroperator shallparticipate in andcomply with and 7 18 participate in the following: 7 19 1. Chapter 203D, subchapter 2, and the grain depositors 7 20 and sellers indemnity fundprovided in chapter 203D. 7 21 2. Chapter 203D, subchapter 3, and the grain credit sale 7 22 contract indemnity fund, if the licensed warehouse operator 7 23 stores grain subject to a credit sale contract. 7 24 Sec. 18. Section 203C.12A, subsections 3 and 4, Code 7 25 Supplement 2001, is amended to read as follows: 7 26 3. The lien shall arise and terminate as follows: 7 27 a. For a covered transaction as provided in section 7 28 203D.6, the lien shall arise at the commencement of the 7 29 storage obligation, and shall terminate when the liability of 7 30 the warehouse operator to the depositor has been discharged. 7 31 The lien of all depositors is hereby assigned to the Iowa 7 32 grain indemnity fund board, on behalf of the grain depositors 7 33 and sellers indemnity fund. 7 34 b. For a covered transaction as provided in section 7 35 203D.15, the lien shall arise at the commencement of the 8 1 storage obligation, and shall terminate when the liability of 8 2 the warehouse operator to the depositor has been discharged. 8 3 The lien of all depositors is hereby assigned to the Iowa 8 4 grain indemnity fund board, on behalf of the grain credit sale 8 5 contract indemnity fund. 8 6 4. To perfect the lien, the Iowa grain indemnity fund 8 7 board must file a lien statement with the office of the 8 8 secretary of state. The lien statement shall disclose the 8 9 name of the warehouse operator, the address of the warehouse 8 10 operator's principal place of business, a description of 8 11 identifiable warehouse operator assets, and the amount of the 8 12 lien. 8 13 a.TheFor a covered transaction as provided in section 8 14 203D.6, the lien statement is valid only if filed on or after 8 15 the date of suspension but not later than sixty days after the 8 16 incurrence date as provided in section 203D.6.The lien8 17statement shall disclose the name of the warehouse operator,8 18the address of the warehouse operator's principal place of8 19business, a description of identifiable warehouse operator8 20assets, and the amount of the lien.The lien amount shall be 8 21 the board's estimate of the final cost of reimbursing the 8 22 grain depositors and sellers indemnity fund for the payment of 8 23 claims made against the fund resulting from the breach of the 8 24 warehouse operator's obligations. The board shall correct the 8 25 amount not later than one hundred eighty days following the 8 26 incurrence date. A court, upon petition by an affected 8 27 person, may correct the amount. The board shall have the 8 28 burden of proving that the amount is an accurate estimate. 8 29 b. For a covered transaction as provided in section 8 30 203D.15, the lien statement is valid only if filed on or after 8 31 the date of suspension but not later than sixty days after the 8 32 incurrence date as provided in section 203D.15. The lien 8 33 amount shall be the board's estimate of the final cost of 8 34 reimbursing the grain credit sale contract indemnity fund for 8 35 the payment of claims made against the fund resulting from the 9 1 breach of the warehouse operator's obligations. The board 9 2 shall correct the amount not later than one hundred eighty 9 3 days following the incurrence date. A court, upon petition by 9 4 an affected person, may correct the amount. The board shall 9 5 have the burden of proving that the amount is an accurate 9 6 estimate. 9 7 Sec. 19. Section 203C.14, unnumbered paragraph 2, Code 9 8 2001, is amended to read as follows: 9 9 Upon revocation, termination, or cancellation of a 9 10 warehouse license, a claim against the warehouse operator 9 11 arising under this chapter shall be made in writing with the 9 12 warehouse operator, with the issuer of a bond on agricultural 9 13 products other than bulk grain and credit sale contract grain, 9 14 a deficiency bond, or an irrevocable letter of credit, and,9 15if. If the claim relates to bulk grain or credit sale 9 16 contract grain, the notice must be filed with the department 9 17 within one hundred twenty days after revocation, termination, 9 18 or cancellation.FailureA failure to make a timely claim 9 19 relieves the issuerand, if the claim relates to bulk grain,9 20the grain depositors and sellers indemnity fund provided in9 21chapter 203Dof all obligations to the claimant. A failure to 9 22 make a timely claim for bulk grain relieves the grain 9 23 depositors and sellers indemnity fund of all obligations to 9 24 the claimant. A failure to make a timely claim for credit 9 25 sale contract grain relieves the grain credit sale indemnity 9 26 fund of all obligations to the claimant. 9 27 PARAGRAPH DIVIDED. Upon revocation of a warehouse license, 9 28 the department shall cause notice of the revocation to be 9 29 published once each week for two consecutive weeks in a 9 30 newspaper of general circulation in each of the counties in 9 31 which the licensee maintains a business location and in a 9 32 newspaper of general circulation within the state. The notice 9 33 shall state the name and address of the warehouse operator and 9 34 the effective date of revocation. The notice shall also state 9 35 that any claims against the warehouse operatorshallmust be 10 1 made in writing and sent by ordinary mail to the warehouse 10 2 operator, to the issuer of a bond on agricultural products 10 3 other than bulk grain and credit sale contract grain, 10 4 deficiency bond, or an irrevocable letter of credit, and to. 10 5 The notice must also state that the claim must also be filed 10 6 with the department within one hundred twenty days after 10 7 revocation, and the. The notice shall state that the failure 10 8 to make a timely claim does not relieve the warehouse operator 10 9 from liability to the claimant. 10 10 PARAGRAPH DIVIDED. Thisparagraphsubsection does not 10 11 apply if a receiver is appointed as provided in this chapter 10 12 pursuant to a petitionwhichthat is filed by the department 10 13 prior to the expiration of one hundred twenty days after 10 14 revocation, termination, or cancellation of the license. 10 15 Sec. 20. Section 203C.24, subsection 3, Code Supplement 10 16 2001, is amended to read as follows: 10 17 3. Disclosure to the Iowa grain indemnity fund board in 10 18 regard to licensees who present liability tothean indemnity 10 19 fund. 10 20 Sec. 21. Section 203C.17, subsection 4, Code 2001, is 10 21 amended to read as follows: 10 22 4. All bulk grain whether open storage or having been 10 23 placed on warehouse receipt is covered bythe grain depositors10 24and sellersan indemnity fund created in chapter 203D. 10 25 Sec. 22. Section 203C.40, Code 2001, is amended to read as 10 26 follows: 10 27 203C.40 PRIORITIZATION OF INSPECTIONS OF WAREHOUSE 10 28 OPERATORS. 10 29 The department shall develop a system to prioritize the 10 30 inspections of warehouse operators provided in section 203C.2. 10 31 The system of prioritization shall be computed each year based 10 32 on the risk of loss tothe grain depositors and sellerseach 10 33 indemnity fund caused by the possible insolvency of the 10 34 warehouse operator. The department shall compute the risk by 10 35 utilizing an available statistical model to measure the 11 1 financial condition of warehouse operators. Procedures for 11 2 utilizing the statistical model shall be adopted by department 11 3 rules. The statistical model shall be used to provide risk 11 4 ratings. A risk rating shall be used as a factor by the 11 5 department to prioritize its inspection schedule. The 11 6 department may inspect a warehouse operator at any time based 11 7 on a risk of loss to the fund according to the risk rating. A 11 8 substantial risk of loss to the grain depositors and sellers 11 9 indemnity fund caused by the possible insolvency of the 11 10 warehouse operator based on the statistical model shall be 11 11 good cause. 11 12 SUBCHAPTER 1 11 13 GENERAL 11 14 Sec. 23. Section 203D.1, Code 2001, is amended by adding 11 15 the following new subsections: 11 16 NEW SUBSECTION. 1A. "Credit sale contract" means the same 11 17 as defined in section 203.1. 11 18 NEW SUBSECTION. 1B. "Credit sale contract purchased 11 19 grain" means grain, other than purchased grain, that is 11 20 purchased pursuant to a credit sale contract. 11 21 NEW SUBSECTION. 5A. "Indemnity fund" means the grain 11 22 depositors and sellers indemnity fund or the grain credit sale 11 23 contract indemnity fund. 11 24 NEW SUBSECTION. 7A. "Licensee" means a licensed grain 11 25 dealer or licensed warehouse operator. 11 26 NEW SUBSECTION. 8A. "Purchased grain" means grain that is 11 27 entered in the company-owned paid position as evidenced on the 11 28 grain dealer's daily position record. 11 29 Sec. 24. Section 203D.1, subsection 4, Code 2001, is 11 30 amended by striking the subsection. 11 31 Sec. 25. Section 203D.1, subsection 9, Code 2001, is 11 32 amended to read as follows: 11 33 9. "Seller" means a person who sells grainwhichthat the 11 34 person has produced or caused to be produced to a licensed 11 35 grain dealer,but excludesincluding but not limited to a 12 1 person whoexecutessells grain by executing a credit sale 12 2 contractas a seller. However, "seller" does not include a 12 3 person licensed as a grain dealer in any jurisdiction who 12 4 sells grain to a licensed grain dealer. 12 5 SUBCHAPTER 2 12 6 GRAIN DEPOSITORS AND SELLERS INDEMNITY FUND 12 7 Sec. 26. NEW SECTION. 203D.1A DEFINITION – FUND. 12 8 As used in this subchapter, "fund" means the grain 12 9 depositors and sellers indemnity fund created in section 12 10 203D.3. 12 11 Sec. 27. Section 203D.2, Code 2001, is amended to read as 12 12 follows: 12 13 203D.2PERSONS PARTICIPATING IN FUNDPARTICIPATION 12 14 REQUIRED. 12 15 All licensed grain dealers and licensed warehouse operators 12 16 shall participate in the grain depositors and sellers 12 17 indemnity fund and comply with the provisions of this 12 18 subchapter. 12 19 Sec. 28. Section 203D.3, subsection 1, Code 2001, is 12 20 amended to read as follows: 12 21 1. The grain depositors and sellers indemnity fund is 12 22 created in the state treasury as a separate account. The 12 23 general fund of the state is not liable for claims presented 12 24 against the grain depositors and sellers indemnity fund under 12 25 section 203D.6. The fund consists of a per-bushel fee on 12 26 purchased grain remitted by licensed grain dealers and 12 27 licensed warehouse operators; an annual fee charged to and 12 28 remitted by licensed grain dealers and licensed warehouse 12 29 operators; delinquency penalties; sums collected by the 12 30 department by legal action on behalf of the fund; and 12 31 interest, property, or securities acquired through the use of 12 32 moneys in the fund. The fiscal year of the fund begins July 12 33 1. Fiscal quarters of the fund begin July 1, October 1, 12 34 January 1, and April 1. The finances of the fund shall be 12 35 calculated on an accrual basis in accordance with generally 13 1 accepted accounting principles. The moneys collected under 13 2 this section and deposited in the fund shall be used 13 3 exclusively to indemnify depositors and sellers as provided in 13 4 section 203D.6 and to pay the administrative costs of this 13 5chaptersubchapter. 13 6 Sec. 29. Section 203D.3, subsection 2, unnumbered 13 7 paragraph 1, Code 2001, is amended to read as follows: 13 8 A per-bushel fee shall be assessed on all purchased grain. 13 9As used in this chapter, "purchased grain" means grain which13 10is entered in the company owned paid position as evidenced on13 11the grain dealer's daily position record.However, if the 13 12 grain dealer provides documentation regarding the transaction 13 13 satisfactory to the department, the following transactions 13 14 shall be excluded from the fee: 13 15 Sec. 30. Section 203D.3, subsection 6, Code 2001, is 13 16 amended to read as follows: 13 17 6. The administrative costs of thischaptersubchapter 13 18 shall be paid from the fund after approval of the costs by the 13 19 board. 13 20 Sec. 31. Section 203D.4, Code 2001, is amended to read as 13 21 follows: 13 22 203D.4 INDEMNITY FUND BOARD. 13 23 1. The Iowa grain indemnity fund board is established to 13 24 advise the department on matters relating to thefund13 25 indemnity funds and to perform the duties provided it in this 13 26 chapter. 13 27 a. The board is composed of the secretary of agriculture 13 28 or a designee who shall serve as president; the commissioner 13 29 of insurance or a designee who shall serve as secretary; the 13 30 state treasurer or a designee who shall serve as treasurer; 13 31 and four representatives of the grain industry appointed by 13 32 the governor, subject to confirmation by the senate, two of 13 33 whom shall be representatives of producers and who shall be 13 34 actively participating producers, and two of whom shall be 13 35 representatives of grain dealers and warehouse operators and 14 1 who shall be actively participating grain dealers and 14 2 warehouse operators, each of whom shall be selected from a 14 3 list of three nominations made by the secretary of 14 4 agriculture. The term of membership of the grain industry 14 5 representatives is three years, and the representatives are 14 6 eligible for reappointment. However, only actively 14 7 participating producers, and grain dealers and warehouse 14 8 operators are eligible for reappointment. The grain industry 14 9 representatives are entitled to a per diem as specified in 14 10 section 7E.6 for each day spent in the performance of the 14 11 duties of the board, plus actual expenses incurred in the 14 12 performance of those duties. 14 13 b. Four members of the board constitute a quorum, and the 14 14 affirmative vote of four members is necessary for any action 14 15 taken by the board, except that a lesser number may adjourn a 14 16 meeting. A vacancy in the membership of the board does not 14 17 impair the rights of a quorum to exercise all the rights and 14 18 perform all the duties of the board. 14 19 2. The duties of the board include all of the following: 14 20 a. The review and determination of claims, and the review 14 21 and approval of administrative costs of thefundindemnity 14 22 funds.To carry out these duties, the board has the power to14 23adopt14 24 b. The adoption of rules regarding its organization and 14 25 procedures, including but not limited to rules for determining 14 26 claims.Further, the board shall approve14 27 c. The approval of rules proposed by the department for 14 28 the administration oftheper-bushelfeefees prior to their 14 29 adoption by the department. The board may provide comment and 14 30 advice to the departmentin regard toregarding the 14 31 department's administration of chapters 203 and 203C where the 14 32 department's policies and rules may affect the exposure ofthe14 33 an indemnity fund to liability. However, the board shall not 14 34 become actively involved in a determination by the department 14 35 as to whether disciplinary action is to be taken against a 15 1 particular licensee. The board is not a forum for review or 15 2 appeal in regard to any particular action taken by the 15 3 department against a licensee. 15 4 3. The department through the grain warehouse bureau shall 15 5 perform the administrative functions necessary for the 15 6 operation of the board andtheeach indemnity fund. 15 7 a.AdministrativeThe department's costs incurred in 15 8 administering each indemnity fund approved by the board shall 15 9 be paid fromthethat fund. 15 10 b. The rules of the department shall contain the rules of 15 11 the board adopted for its organization and its procedures. 15 12 The department shall adopt rules for the administration ofthe15 13 per-bushelfeefees upon the board's approval of the rules 15 14 proposed by the department. 15 15 c. The secretary of agriculture, as president of the board15 16as well as head of the department of agriculture and land15 17stewardship,shall administer the department so as to minimize 15 18 the risk of loss to the fund while protecting interests of 15 19 depositors and sellers of grain. Policies and rules for the 15 20 administration of chapters 203 and 203C which, as determined 15 21 by the secretary of agriculture, may affect the exposure of 15 22 the fund, shall be presented to the board for comment prior to 15 23 their adoption by the department. 15 24 d. The department shall make reports to the board in 15 25 regard to licensee investigations which may result in 15 26 disciplinary action against a licensee and exposure of the 15 27 fund. The reports may be discussed by the board in closed 15 28 session pursuant to section 21.5, and are confidential. In 15 29 making the report, the department shall make available to the 15 30 board records of licensees which are otherwise confidential 15 31 under section 22.7, 203.16, or 203C.24. However, a 15 32 determination to take disciplinary action against a particular 15 33 licensee shall be made exclusively by the department. A 15 34 report to the board is not a prerequisite to disciplinary 15 35 action against a licensee. Review of any action against a 16 1 licensee, whether or not relating to the fund, shall be made 16 2 exclusively through the department. 16 3 Sec. 32. Section 203D.5, subsection 1, Code 2001, is 16 4 amended to read as follows: 16 5 1. The board shall review annually the debits of and 16 6 credits to the grain depositors and sellers indemnity fund 16 7 created in section 203D.3 and shall make any adjustments in 16 8 the per-bushel fee required under section 203D.3, subsection 16 9 2, and the dealer-warehouse fee required under section 203D.3, 16 10 subsection 3, that are necessary to maintain the fund within 16 11 the limits established under this section. Not later than the 16 12 first day of May of each year, the board shall determine the 16 13 proposed amount of the per-bushel fee based on the expected 16 14 volume of grain on which the fee is to be collected and that 16 15 is likely to be handled under thischaptersubchapter, and 16 16 shall also determine any adjustment to the dealer-warehouse 16 17 fee. The board shall make any changes in the previous year's 16 18 fees in accordance with chapter 17A. Changes in the fees 16 19 shall become effective on the following first day of July. 16 20 The per-bushel fee shall not exceed one-quarter cent per 16 21 bushel on all purchased grain as defined in section 203D.3. 16 22 Until the per-bushel fee is adjusted or waived as provided in 16 23 this section, the per-bushel fee is one-quarter cent on all 16 24 purchased grain. 16 25 SUBCHAPTER 3 16 26 THE GRAIN CREDIT SALE CONTRACT INDEMNITY FUND 16 27 Sec. 33. NEW SECTION. 203D.11 DEFINITION – FUND. 16 28 As used in this subchapter, "fund" means the grain credit 16 29 sale contract indemnity fund created in section 203D.13. 16 30 Sec. 34. NEW SECTION. 203D.12 PARTICIPATION REQUIRED. 16 31 A licensee shall participate in the grain credit sale 16 32 contract indemnity fund and comply with the provisions of this 16 33 subchapter if the licensee does any of the following: 16 34 1. Purchases grain under a credit sale contract as 16 35 provided in chapter 203. 17 1 2. Receives and stores grain that is purchased under a 17 2 credit sale contract as provided in chapter 203C. 17 3 Sec. 35. NEW SECTION. 203D.13 GRAIN CREDIT SALE CONTRACT 17 4 INDEMNITY FUND. 17 5 1. The grain credit sale contract indemnity fund is 17 6 created in the state treasury as a separate account. The 17 7 general fund of the state is not liable for claims presented 17 8 against the grain credit sale contract indemnity fund under 17 9 section 203D.15. The fund consists of a per-bushel fee on 17 10 grain remitted by licensed grain dealers purchasing grain by 17 11 credit sale contract and licensed warehouse operators 17 12 receiving and storing credit sale contract purchased grain; an 17 13 annual fee charged to and remitted by those licensed grain 17 14 dealers and licensed warehouse operators; delinquency 17 15 penalties; sums collected by the department by legal action on 17 16 behalf of the fund; and interest, property, or securities 17 17 acquired through the use of moneys in the fund. The fiscal 17 18 year of the fund begins July 1. Fiscal quarters of the fund 17 19 begin July 1, October 1, January 1, and April 1. The finances 17 20 of the fund shall be calculated on an accrual basis in 17 21 accordance with generally accepted accounting principles. The 17 22 moneys collected under this section and deposited in the fund 17 23 shall be used exclusively to indemnify depositors and sellers 17 24 as provided in section 203D.15 and to pay the administrative 17 25 costs of this chapter. 17 26 2. A per-bushel fee shall be assessed on all credit sale 17 27 contract purchased grain. However, if the grain dealer 17 28 provides documentation regarding the transaction satisfactory 17 29 to the department, the following transactions shall be 17 30 excluded from the fee: 17 31 a. Grain purchased from the United States government or 17 32 any of its subdivisions or agencies. 17 33 b. Grain purchased from a person licensed as a grain 17 34 dealer in any jurisdiction. 17 35 c. Grain purchased on or before twenty-nine days after the 18 1 date of delivery. 18 2 d. Grain deposited for purposes of storage, handling, or 18 3 shipment, where the grain dealer or grain warehouse operator 18 4 is not the owner or legal holder of the grain and is not 18 5 lawfully entitled to possession of the grain. 18 6 The grain dealer shall forward the per-bushel fee to the 18 7 department on a quarterly basis in the manner and using the 18 8 forms prescribed by the department. A licensee is delinquent 18 9 if the licensee fails to submit the full fee or quarterly 18 10 forms when due, or if upon examination, an underpayment of the 18 11 fee is found by the department. The grain dealer is subject 18 12 to a penalty of ten dollars for each day the grain dealer is 18 13 delinquent or an amount equal to the amount of the deficiency, 18 14 whichever is less. However, a licensee who fails to submit 18 15 the full fee or quarterly forms when due is subject to a 18 16 minimum payment of ten dollars. The department may establish 18 17 and apply a margin of error in determining whether a grain 18 18 dealer is delinquent. If the per-bushel fee and any penalty 18 19 due have not been received by the department within thirty 18 20 days after notice by the department, the grain dealer's 18 21 license shall be suspended. The per-bushel fee shall be 18 22 collected only once on each bushel of grain. 18 23 3. a. All licensed grain dealers and licensed warehouse 18 24 operators shall annually remit a fee to be deposited into the 18 25 fund which is determined as follows: 18 26 (1) For class 1 grain dealers, five hundred dollars. 18 27 (2) For class 2 grain dealers, two hundred fifty dollars. 18 28 (3) For warehouse operators or participating federally 18 29 licensed grain warehouses: 18 30 (a) For intended storage of bulk grain in any quantity 18 31 less than twenty thousand bushels, forty-two dollars plus 18 32 seven dollars for each two thousand bushels or fraction 18 33 thereof in excess of twelve thousand bushels. 18 34 (b) For intended storage of bulk grain in any quantity not 18 35 less than twenty thousand bushels and not more than fifty 19 1 thousand bushels, seventy dollars plus four and one-half 19 2 dollars for each three thousand bushels or fraction thereof in 19 3 excess of twenty thousand bushels. 19 4 (c) For intended storage of bulk grain in any quantity not 19 5 less than fifty thousand bushels and not more than seventy 19 6 thousand bushels, one hundred fifteen dollars plus four and 19 7 one-half dollars for each four thousand bushels or fraction 19 8 thereof in excess of fifty thousand bushels. 19 9 (d) For intended storage of bulk grain in any quantity not 19 10 less than seventy thousand bushels, one hundred thirty-seven 19 11 and one-half dollars plus two and three-quarters dollars for 19 12 each five thousand bushels or fraction thereof in excess of 19 13 seventy thousand bushels. 19 14 b. Payment of the required amount shall be made before the 19 15 grain dealer's or warehouse operator's license is renewed. 19 16 4. If a licensee amends its license during the fiscal year 19 17 for which an annual fee was paid, and the licensing entity 19 18 remains the same, the licensee is required to pay a further 19 19 fee only if the amendment changes the licensee's class from 19 20 class 2 to class 1. 19 21 5. All disbursements from the fund shall be paid by the 19 22 treasurer of state pursuant to vouchers authorized by the 19 23 department. 19 24 6. The administrative costs of this subchapter shall be 19 25 paid from the fund after approval of the costs by the board. 19 26 7. A grain dealer may choose to pass on the cost of a per- 19 27 bushel fee to the sellers by an itemized discount noted on the 19 28 settlement sheet. However, if the per-bushel fee is not in 19 29 effect, no grain dealer shall make such a discount on the 19 30 purchase of grain. A discount made nominally for the per- 19 31 bushel fee while the fee is not in effect is grounds for 19 32 license suspension and revocation under chapter 203. 19 33 Sec. 36. NEW SECTION. 203D.14 ADJUSTMENTS TO FEE. 19 34 1. The board shall review annually the debits of and 19 35 credits to the grain credit sale contract indemnity fund and 20 1 shall make any adjustments in the per-bushel fee and the 20 2 dealer-warehouse fee required under section 203D.13, that are 20 3 necessary to maintain the fund within the limits established 20 4 under this section. Not later than the first day of May of 20 5 each year, the board shall determine the proposed amount of 20 6 the per-bushel fee based on the expected volume of grain on 20 7 which the fee is to be collected and that is likely to be 20 8 handled under this subchapter, and shall also determine any 20 9 adjustment to the dealer-warehouse fee. The board shall make 20 10 any changes in the previous year's fees in accordance with 20 11 chapter 17A. Changes in the fees shall become effective on 20 12 the following first day of July. The per-bushel fee shall not 20 13 exceed one-quarter cent per bushel on all credit sale contract 20 14 purchased grain as defined in section 203D.1. Until the per- 20 15 bushel fee is adjusted or waived as provided in this section, 20 16 the per-bushel fee is one-quarter cent on all purchased credit 20 17 sale contract grain. 20 18 2. If, at the end of any three-month period, the assets of 20 19 the fund exceed six million dollars, less any encumbered 20 20 balances or pending or unsettled claims, the per-bushel fee 20 21 required under section 203D.13, subsection 2, and the dealer- 20 22 warehouse fee required under section 203D.13, subsection 3, 20 23 shall be waived and the fees are not assessable or owing. The 20 24 board shall reinstate the fees if the assets of the fund, less 20 25 any unencumbered balances or pending or unsettled claims, are 20 26 three million dollars or less. 20 27 Sec. 37. NEW SECTION. 203D.15 CLAIMS AGAINST FUND. 20 28 1. A depositor or seller may file a claim with the 20 29 department for indemnification of a loss from the grain credit 20 30 sale contract indemnity fund. A claim shall be filed in the 20 31 manner prescribed by the board. A claim shall not be filed 20 32 prior to the incurrence date, which is the earlier of the 20 33 following: 20 34 a. The revocation, termination, or cancellation of the 20 35 license of the grain dealer or warehouse operator. 21 1 b. The filing of a petition in bankruptcy by a grain 21 2 dealer or warehouse operator. 21 3 To be timely, a claim shall be filed within one hundred 21 4 twenty days of the incurrence date. 21 5 2. The department shall cause notice of the opening of the 21 6 claim period to be published once each week for two 21 7 consecutive weeks in a newspaper of general circulation in 21 8 each of the counties in which the licensee maintains a 21 9 business location and in a newspaper of general circulation 21 10 within the state. The notice shall state the name and address 21 11 of the licensee and the claim incurrence date. The notice 21 12 shall also state that any claims against the fund on account 21 13 of the licensee shall be sent by ordinary mail to the 21 14 department within one hundred twenty days after the incurrence 21 15 date, and that the failure to make a timely claim relieves the 21 16 fund from liability to the claimant. This notice may be 21 17 incorporated by the department with a notice required by 21 18 section 203.12 or 203C.14. 21 19 3. The board shall determine a claim to be eligible for 21 20 payment from the fund if the board finds all of the following: 21 21 a. That the claim was timely filed. 21 22 b. That the incurrence date was on or after the effective 21 23 date of this Act. 21 24 c. That the claimant qualifies as a depositor or seller. 21 25 d. That the claim derives from a covered transaction. For 21 26 purposes of this paragraph, a claim derives from a covered 21 27 transaction if the claimant is a seller who transferred title 21 28 to the grain to the grain dealer by credit sale contract 21 29 within six months of the incurrence date, or if the claimant 21 30 is a depositor who stored credit sale contract purchased grain 21 31 with the warehouse operator. 21 32 e. That there is adequate documentation to establish the 21 33 existence of a claim and to determine the amount of the loss. 21 34 4. a. The board shall determine the dollar value of a 21 35 claim incurred by a depositor holding a warehouse receipt or a 22 1 scale weight ticket for grain that the depositor delivered for 22 2 storage to the licensed warehouse operator. Whenever 22 3 possible, the value shall be calculated as determined in the 22 4 credit sale contract as if the grain were priced on the 22 5 incurrence date. If the board is unable to calculate a value 22 6 pursuant to the credit sale contract, the board shall 22 7 determine the value in the same manner as provided in 22 8 paragraph "b". 22 9 b. If the department has been appointed by the court as 22 10 receiver of the grain assets of the warehouse operator, the 22 11 value shall be presumed to be as stated in the plan of 22 12 disposition approved by the court. If the warehouse operator 22 13 has filed a petition in bankruptcy, the value shall be 22 14 presumed to be based upon the fair market price, free-on-board 22 15 from the site of the warehouse operator, being paid to 22 16 producers for grain by the grain terminal operator nearest the 22 17 warehouse operator on the date the petition was filed. If 22 18 there is neither a department receivership nor a bankruptcy 22 19 filing, the value shall be presumed to be based upon the fair 22 20 market price, free-on-board from the site of the warehouse 22 21 operator, being paid to producers for grain by the grain 22 22 terminal operator nearest the warehouse operator on the date 22 23 of license revocation or cancellation. If more than one date 22 24 applies to a claim, the board may choose between the two. 22 25 However, the board may accept an alternative valuation of a 22 26 claim upon a showing of just cause by the depositor or 22 27 department. All depositors filing claims under this section 22 28 shall be bound by the value determined by the board. The 22 29 value of the loss is the outstanding balance on the validated 22 30 claim at time of payment from the fund. 22 31 5. The board, through the department, shall provide for 22 32 notice to each depositor and seller upon its determination of 22 33 eligibility and value of loss. Within twenty days of the 22 34 notice, the depositor or seller may request a hearing for the 22 35 review of either determination. The request shall be made in 23 1 the manner provided by the board. The hearing and any further 23 2 appeal shall be conducted as a contested case subject to 23 3 chapter 17A. A depositor or seller whose claim has been 23 4 refused by the board may appeal the refusal to either the 23 5 district court of Polk county or the district court of the 23 6 county in which the depositor or seller resides. 23 7 6. Upon a determination that the claim is eligible for 23 8 payment, the board shall provide for payment of ninety percent 23 9 of the loss, as determined under subsection 4, but not more 23 10 than one hundred fifty thousand dollars per claimant. If at 23 11 any time the board determines that there are insufficient 23 12 funds to make payment of all claims, the board may order that 23 13 payment be deferred on specified claims. The department, upon 23 14 the board's instruction, shall hold those claims for payment 23 15 until the board determines that the fund again contains 23 16 sufficient assets. 23 17 7. In the event of payment of a loss under this section, 23 18 the fund is subrogated to the extent of the amount of any 23 19 payments to all rights, powers, privileges, and remedies of 23 20 the depositor or seller against any person regarding the loss. 23 21 The depositor or seller shall render all necessary assistance 23 22 to aid the department and the board in securing the rights 23 23 granted in this section. No action or claim initiated by a 23 24 depositor or seller and pending at the time of payment from 23 25 the fund shall be compromised or settled without the consent 23 26 of the board. 23 27 Sec. 38. DIRECTIONS TO CODE EDITOR. The Code editor is 23 28 directed to transfer sections 203D.4, 203D.5A, and 203D.7 to 23 29 new sections in subchapter 1 of this chapter and renumber 23 30 sections in the chapter as appropriate. 23 31 EXPLANATION 23 32 This bill provides for a grain credit sale contract 23 33 indemnity fund in order to indemnify agricultural producers 23 34 who sell grain under credit sale contract. 23 35 The term "credit sale contract" is defined to mean a 24 1 contract for the sale of grain pursuant to which the sale 24 2 price is to be paid more than 30 days after the delivery of 24 3 the grain to the buyer. It includes any contract that is 24 4 titled as a credit sale contract, and includes but is not 24 5 limited to those contracts commonly referred to as deferred- 24 6 payment contracts, deferred-pricing contracts, and price-later 24 7 contracts. 24 8 Generally, the bill's provisions are modeled upon 24 9 provisions in Code chapters 203 (regulating grain dealers), 24 10 203C (regulating warehouse operators), and 203D (establishing 24 11 the grain depositors and sellers indemnity fund and providing 24 12 for its administration by the department of agriculture and 24 13 land stewardship and the Iowa grain indemnity fund board). 24 14 The bill amends provisions in various Code sections within 24 15 these chapters in a manner that is consistent with the 24 16 provisions applying to the grain depositors and sellers 24 17 indemnity fund. In Code chapter 203, this includes provisions 24 18 providing for notice, requiring participation in the indemnity 24 19 funds, licensure, claims and notice of revocation, 24 20 departmental liens, disclosure, cooperative agreements, 24 21 confidentiality of records, and inspections. In Code chapter 24 22 203C, this includes provisions relating to good cause for 24 23 departmental action, the powers of the department acting as a 24 24 receiver, financial responsibility for licensees, 24 25 participation in the funds, departmental liens, claims and 24 26 notice for revocation, the confidentiality of records, and 24 27 inspections. 24 28 The remainder of the bill provides the mechanism for the 24 29 indemnification of sellers or depositors who have executed 24 30 credit sale contracts. For purposes of organization, the 24 31 provisions are created as a new subchapter within Code chapter 24 32 203D. The bill amends a number of provisions that provide for 24 33 duties of the department and board required to administer both 24 34 indemnity funds. 24 35 The bill provides that persons required to be licensed as 25 1 grain dealers or warehouse operators are required to comply 25 2 with the provisions of new subchapter 3 and the grain credit 25 3 sale contract indemnity fund, if the licensee purchases grain 25 4 under credit sale contract or receives and stores purchased 25 5 credit sale contract grain. 25 6 The bill establishes the fund as a separate account within 25 7 the state treasury. Moneys in the fund derive from a per- 25 8 bushel fee on grain remitted by licensed grain dealers 25 9 purchasing grain by credit sale contract and licensed 25 10 warehouse operators receiving and storing grain purchased by 25 11 credit sale contract; an annual fee charged to and remitted by 25 12 those licensed grain dealers and licensed warehouse operators; 25 13 delinquency penalties; sums collected by the department by 25 14 legal action on behalf of the fund; and interest, property, or 25 15 securities acquired through the use of moneys in the fund. 25 16 The bill authorizes the board to review annually the debits 25 17 of and credits to the fund and shall make any adjustments in 25 18 the per-bushel and the dealer-warehouse fee required. The 25 19 per-bushel fee cannot exceed $.025 per bushel on all purchased 25 20 credit sale contract grain. The bill provides that if at the 25 21 end of any three-month period, the assets of the fund exceed 25 22 $6 million, less any encumbered balances or pending or 25 23 unsettled claims, the per-bushel fee and the dealer-warehouse 25 24 fee is waived. The board must reinstate the fees if the 25 25 assets of the fund, less any unencumbered balances or pending 25 26 or unsettled claims, are $3 million or less. 25 27 The bill provides procedures for claims against the fund. 25 28 A depositor or seller must file a claim for indemnification as 25 29 required by the board based on the revocation, termination, or 25 30 cancellation of the license of the licensee or a filing of a 25 31 petition in bankruptcy. The bill provides for notice of the 25 32 opening of a claim period and notice to potential claimants. 25 33 The bill provides for a determination of eligibility and a 25 34 value of the loss. Upon a determination that the claim is 25 35 eligible for payment, the bill requires the board to provide 26 1 for payment of 90 percent of the loss, but not more than 26 2 $150,000 per claimant. If the board determines that there are 26 3 insufficient moneys to make payment of all claims, the board 26 4 may order that payment be deferred on specified claims. The 26 5 bill provides for the subrogation of the fund to other 26 6 liabilities incurred by a licensee. 26 7 The bill directs the Code editor to rearrange and renumber 26 8 sections in Code chapter 203D as is appropriate to enhance its 26 9 organization and readabilty. 26 10 Generally a licensee who violates a provision of the bill 26 11 is guilty of a simple misdemeanor. With respect to a 26 12 continuing violation, each day that the violation continues is 26 13 a separate offense. A simple misdemeanor is punishable by 26 14 confinement for no more than 30 days or a fine of at least $50 26 15 but not more than $500, or by both. 26 16 LSB 6012SS 79 26 17 da/sh/8.1
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