House File 2538 - Introduced
HOUSE FILE
BY WHITAKER
(COMPANION TO LSB 5845SS
BY BOLKCOM)
Passed House, Date Passed Senate, Date
Vote: Ayes Nays Vote: Ayes Nays
Approved
A BILL FOR
1 An Act providing for the indemnification of organic producers for
2 contamination of organic crops.
3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
4 TLSB 5845HH 81
5 da/sh/8
PAG LIN
1 1 Section 1. Section 203D.1, Code 2005, is amended by adding
1 2 the following new subsections:
1 3 NEW SUBSECTION. 1A. "Contamination" means the presence of
1 4 a plant or plant part that causes a producer a loss as
1 5 provided in section 203D.6A.
1 6 NEW SUBSECTION. 1B. "Corn" means the same as defined in
1 7 section 185C.1.
1 8 NEW SUBSECTION. 3A. "First purchaser" means any of the
1 9 following:
1 10 a. A first purchaser as defined in section 185.1 who
1 11 purchases soybeans from an organic producer for the first time
1 12 in the same manner as provided in chapter 185.
1 13 b. A first purchaser as defined in section 185C.1 who
1 14 purchases corn from an organic producer for the first time in
1 15 the same manner as provided in chapter 185C.
1 16 NEW SUBSECTION. 8A. "Organic crop" means a crop including
1 17 but not limited to corn or soybeans that is certified or
1 18 otherwise qualifies as organic as provided in chapter 190C.
1 19 "Organic crop" includes the crop as planted, growing, and
1 20 harvested, and any grain obtained from harvesting that crop.
1 21 NEW SUBSECTION. 8B. "Organic producer" means a producer
1 22 as defined in section 190C.1 who produces an organic crop as
1 23 certified by the department pursuant to chapter 190C.
1 24 NEW SUBSECTION. 10. "Soybeans" means the same as defined
1 25 in section 185.1.
1 26 Sec. 2. Section 203D.1, subsection 8, Code 2005 is amended
1 27 to read as follows:
1 28 8. "Loss" means any of the following:
1 29 a. The amount of a claim held by a seller or depositor
1 30 against a grain dealer or warehouse operator which has not
1 31 been recovered through other legal and equitable remedies
1 32 including the liquidation of assets.
1 33 b. The amount of a claim held by an organic producer for
1 34 the contamination of the organic producer's organic crop,
1 35 including the grain obtained from the harvested organic crop
2 1 as provided in section 203D.6A.
2 2 Sec. 3. Section 203D.3, subsection 1, Code 2005, is
2 3 amended to read as follows:
2 4 1. The grain depositors and sellers indemnity fund is
2 5 created in the state treasury as a separate account.
2 6 a. The general fund of the state is not liable for claims
2 7 presented against the grain depositors and sellers indemnity
2 8 fund under section 203D.6 or 203D.6A.
2 9 b. The fund consists of a per=bushel fee on purchased
2 10 grain remitted by licensed grain dealers and licensed
2 11 warehouse operators; an annual fee charged to and remitted by
2 12 licensed grain dealers and licensed warehouse operators;
2 13 delinquency penalties; sums collected by the department by
2 14 legal action on behalf of the fund; and interest, property, or
2 15 securities acquired through the use of moneys in the fund.
2 16 c. The fiscal year of the fund begins July 1. Fiscal
2 17 quarters of the fund begin July 1, October 1, January 1, and
2 18 April 1. The finances of the fund shall be calculated on an
2 19 accrual basis in accordance with generally accepted accounting
2 20 principles.
2 21 d. The moneys collected under this section and deposited
2 22 in the fund shall be used exclusively to indemnify do all of
2 23 the following:
2 24 (1) Indemnify depositors and sellers as provided in
2 25 section 203D.6 and to pay.
2 26 (2) Indemnify organic producers as provided in section
2 27 203D.6A.
2 28 (3) Pay the administrative costs of this chapter.
2 29 Sec. 4. Section 203D.6, Code 2005, is amended by adding
2 30 the following new unnumbered paragraph 1 before subsection 1:
2 31 NEW UNNUMBERED PARAGRAPH. This section applies to a person
2 32 who is a depositor or seller for indemnification of a loss
2 33 from the grain depositors and sellers indemnity fund due to a
2 34 loss of grain by a grain dealer or warehouse operator.
2 35 Sec. 5. Section 203D.6, subsection 1, Code 2005, is
3 1 amended to read as follows:
3 2 1. PERSONS WHO MAY FILE CLAIMS == TIME OF FILING. A
3 3 depositor or seller may file a claim with the department for
3 4 indemnification of a loss from the grain depositors and
3 5 sellers indemnity fund. A claim shall be filed in the manner
3 6 prescribed by the board. A claim shall not be filed prior to
3 7 the incurrence date, which is the earlier of the following:
3 8 a. The revocation, termination, or cancellation of the
3 9 license of the grain dealer or warehouse operator.
3 10 b. The filing of a petition in bankruptcy by a grain
3 11 dealer or warehouse operator.
3 12 To be timely, a claim shall be filed within one hundred
3 13 twenty days of the incurrence date.
3 14 Sec. 6. NEW SECTION. 203D.6A CLAIMS AGAINST FUND ==
3 15 CONTAMINATION OF ORGANIC CROPS.
3 16 This section applies to a person who is an organic producer
3 17 for the indemnification of a loss due to the contamination of
3 18 an organic crop.
3 19 An organic producer may file a claim with the board
3 20 pursuant to section 203D.6B for a loss based on the diminution
3 21 of value of the organic producer's organic crop due to
3 22 contamination. Contamination occurs when there is a presence
3 23 of a plant or plant part, including but not limited to crop
3 24 pollen or crop seed, on property in which the organic producer
3 25 holds a legal or equitable interest, if the plant or plant
3 26 part was intentionally or unintentionally transferred from a
3 27 location other than property in which the organic producer
3 28 holds a legal or equitable interest, and its presence alters
3 29 the genetic characteristics of an organic crop on the organic
3 30 producer's property or is commingled with organic crops stored
3 31 on the organic producer's property. Contamination may result
3 32 from the transfer of seeds or the pollination of the organic
3 33 producer's organic crops or other plants inhabiting the
3 34 organic producer's property. For purposes of determining
3 35 eligibility for filing a claim under this section, it is not
4 1 relevant whether a contaminated crop meets the requirements of
4 2 chapter 190C.
4 3 Sec. 7. NEW SECTION. 203D.6B PROCEDURE FOR FILING AND
4 4 DETERMINATION OF CLAIMS.
4 5 1. A claim by an organic producer shall be filed in the
4 6 manner prescribed by the board.
4 7 2. The board shall determine a claim to be eligible for
4 8 payment from the fund if the board finds all of the following:
4 9 a. The claim was timely filed according to procedures
4 10 required by the board. However, a claim shall not be timely
4 11 filed if the claim is filed later than twelve months after the
4 12 organic crop subject to the claim has been harvested.
4 13 b. The claimant qualifies as an organic producer.
4 14 c. The claim derives from a loss due to contamination of
4 15 the organic producer's organic crop.
4 16 d. The organic producer's loss was not due to the reckless
4 17 disregard of sound management practices required to prevent
4 18 contamination of the organic producer's organic crop,
4 19 including requirements provided in chapter 190C.
4 20 e. There is adequate documentation to establish the
4 21 existence of a claim and to determine the amount of the loss.
4 22 The board may require that the organic producer provide
4 23 invoices provided by the first purchaser.
4 24 3. The board shall determine the dollar value of a claim
4 25 incurred by an organic producer eligible to file a claim under
4 26 this section based on the organic producer's loss.
4 27 a. The value of the claim shall be the difference between
4 28 the organic crop's fair market price or contract price if a
4 29 contract was executed prior to the contamination, whichever is
4 30 more, as if the contamination had not occurred and the fair
4 31 market price of the contaminated organic crop or contract
4 32 price if the price is discounted under the contract, whichever
4 33 is more.
4 34 (1) The board shall determine the fair market value for
4 35 the organic crop as if the contamination had not occurred
5 1 based on the market price received by organic producers for an
5 2 organic crop of a similar type and condition, and with the
5 3 same intrinsic characteristics, on the date that the organic
5 4 producer sold the organic crop.
5 5 (2) The board may presume that the fair market price for
5 6 the contaminated organic crop is the same price accepted by
5 7 the organic producer of the organic crop from the first
5 8 purchaser who purchased the organic crop with knowledge of the
5 9 contamination.
5 10 b. An organic producer filing a claim under this section
5 11 shall be bound by the value determined by the board. The
5 12 value of the loss is the outstanding balance on the validated
5 13 claim at the time of payment from the fund.
5 14 4. Upon a determination that a claim is eligible for
5 15 payment, the board shall provide for payment of ninety percent
5 16 of the loss, but not more than one hundred fifty thousand
5 17 dollars per claimant.
5 18 5. The board shall provide for notice to a claimant of the
5 19 indemnity board's determination of eligibility and value of
5 20 the organic producer's loss. The notice shall be delivered by
5 21 restricted certified mail. Within twenty days of the delivery
5 22 of the notice, the organic producer may request a hearing for
5 23 the review of either determination. The request shall be made
5 24 in the manner provided by the board. The hearing and any
5 25 further appeal shall be conducted as a contested case subject
5 26 to chapter 17A. An organic producer whose claim has been
5 27 refused by the board may appeal the refusal to either the
5 28 district court of Polk county or the district court of the
5 29 county in which the organic producer resides.
5 30 6. If at any time the board determines that insufficient
5 31 moneys are contained in the indemnity fund to make payment of
5 32 all claims, the board may order that payment be deferred on
5 33 specified claims. The board shall hold those claims for
5 34 payment until the board determines that the indemnity fund
5 35 again contains sufficient moneys.
6 1 Sec. 8. NEW SECTION. 203D.6C SUBROGATION.
6 2 In the event of payment of a loss under section 203D.6B,
6 3 the fund is subrogated to the extent of the amount of any
6 4 payments to all rights, powers, privileges, and remedies of
6 5 the organic producer against any person regarding the loss.
6 6 The organic producer shall render all necessary assistance to
6 7 aid the board in securing the rights granted in this section.
6 8 An action or claim initiated by an organic producer and
6 9 pending at the time of payment from the fund shall not be
6 10 compromised or settled without the consent of the board.
6 11 EXPLANATION
6 12 BACKGROUND. This bill amends Code chapter 203D, which
6 13 provides for the grain depositors and sellers indemnity fund.
6 14 The fund pays claims submitted by producers who act as sellers
6 15 of grain to grain dealers (licensed by the department of
6 16 agriculture and land stewardship under Code chapter 203) or as
6 17 depositors who store grain with grain warehouses (licensed by
6 18 the department under Code chapter 203C) for losses incurred
6 19 when the grain seller or warehouse operator fails to satisfy
6 20 an obligation such as making payment or keeping the grain.
6 21 The fund is supported by a number of sources, including a per=
6 22 bushel fee on purchased grain remitted by licensed grain
6 23 dealers and licensed warehouse operators and an annual fee
6 24 paid by licensed grain dealers and licensed warehouse
6 25 operators. The per=bushel fee and the annual fees are waived
6 26 if the assets of the fund which are not encumbered exceed $6
6 27 million. The fund is administered by the Iowa grain indemnity
6 28 fund board, which includes public officials, including the
6 29 secretary of agriculture and members of the grain industry.
6 30 PROVISIONS OF THE BILL. The bill provides for the
6 31 indemnification of an organic producer from the fund for a
6 32 loss suffered when an organic crop, including its grain, is
6 33 contaminated. Code chapter 190C regulates the certification
6 34 of agricultural products as organic, including crops which may
6 35 be advertised as organic under the national organic program
7 1 (NOP). The department of agriculture and land stewardship
7 2 maintains authority to provide for inspections and the
7 3 examination of agricultural products to ensure that they are
7 4 produced in accordance with NOP.
7 5 The bill provides for instances when contamination affects
7 6 an organic crop. Contamination occurs when there is a
7 7 presence of a plant or plant part, including but not limited
7 8 to pollen or seed, on the organic producer's property
7 9 originating from neighboring land, if its presence alters the
7 10 genetic characteristics of a plant growing on the producer's
7 11 property or is commingled with crops stored on the producer's
7 12 property (regardless of whether the crop may still be
7 13 considered organic). The board must make a determination of
7 14 the organic producer's loss based on criteria established in
7 15 the bill. The value of the loss is based on the diminution of
7 16 value of the organic producer's crop. Generally, the board
7 17 must compare the value of the contaminated organic crop and
7 18 the value of the organic crop if the contamination had not
7 19 occurred, which may include the value that the organic
7 20 producer would have received under a contract. Upon a
7 21 determination that a claim is eligible for payment, the board
7 22 must provide for payment of 90 percent of the loss, but not
7 23 more than $150,000 per claimant.
7 24 LSB 5845HH 81
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