Senate File 318 - Introduced SENATE FILE 318 BY SCHULTZ A BILL FOR An Act requiring that frozen food locker plants maintain 1 evidence of financial responsibility. 2 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 3 TLSB 2456XS (4) 86 da/nh

S.F. 318 Section 1. Section 189A.2, Code 2015, is amended by adding 1 the following new subsections: 2 NEW SUBSECTION . 8A. “Financial institution” means a 3 bank or savings association authorized by the laws of the 4 United States, which is a member of the federal deposit 5 insurance corporation or the federal savings and loan insurance 6 corporation. 7 NEW SUBSECTION . 8B. “Frozen food locker plant” means an 8 establishment that includes all of the following: 9 a. Individual lockers in which the temperature is maintained 10 at zero degrees Fahrenheit or below and that are provided to 11 retail customers for the storage of meat food products or 12 poultry products on a rental basis. 13 b. A room reserved for cutting, preparing, wrapping, 14 and packaging meat, meat food products, poultry, or poultry 15 products. 16 Sec. 2. NEW SECTION . 189A.3A Evidence of financial 17 responsibility. 18 1. The department shall not issue a license to a person 19 who owns or operates a frozen food locker plant under section 20 189A.3 unless the person provides the department evidence of 21 financial responsibility in the form of a property insurance 22 policy, surety bond, or irrevocable letter of credit issued 23 by a financial institution. The evidence of financial 24 responsibility shall conform with, and be submitted to the 25 department according to, rules adopted by the department. 26 The department may accept a certification of the evidence of 27 financial responsibility pursuant to rules adopted by the 28 department. 29 2. The amount of the evidence of financial responsibility 30 shall be sufficient to pay the amount that the frozen food 31 locker plant would be legally obligated to pay for damages 32 caused to meat food products or poultry products customarily 33 kept by the locker plant due to a power outage of forty-eight 34 hours or more at the frozen food locker plant. However, the 35 -1- LSB 2456XS (4) 86 da/nh 1/ 2

S.F. 318 amount shall not be less than one hundred thousand dollars. 1 The evidence of financial responsibility shall be maintained 2 in not less than that amount at all times during the licensed 3 period. The department shall be notified ten days prior to 4 any reduction in the insurance policy or surety bond made at 5 the request of the frozen food locker plant or cancellation of 6 the property insurance policy by the insurer or surety bond 7 by the surety. The department shall be notified ninety days 8 prior to any reduction of the amount of the irrevocable letter 9 of credit made at the request of the frozen food locker plant 10 or the cancellation of the irrevocable letter of credit by the 11 financial institution. The total and aggregate liability of 12 the insurer, surety, or financial institution for all claims 13 shall be limited to the face of the insurance policy, surety 14 bond, or irrevocable letter of credit. 15 EXPLANATION 16 The inclusion of this explanation does not constitute agreement with 17 the explanation’s substance by the members of the general assembly. 18 This bill requires that a frozen food locker plant licensed 19 by the department of agriculture and land stewardship under 20 the “Meat and Poultry Inspection Act” (Code chapter 189A) 21 provide the department evidence of financial responsibility 22 in the form of a property insurance policy, surety bond, or 23 letter of credit issued by a financial institution, such as a 24 bank, for an amount determined by the department sufficient 25 to pay for damages caused to meat or poultry products due 26 to a power outage affecting the plant for 48 hours or more. 27 However, the bill provides that the amount cannot be less 28 than $100,000. The bill also provides that the evidence of 29 financial responsibility must be maintained at all times during 30 the licensed period, and that the department must be notified 31 of any reduction in coverage or a cancellation of the policy, 32 surety bond, or letter of credit. 33 -2- LSB 2456XS (4) 86 da/nh 2/ 2