House Study Bill 572 - Introduced HOUSE FILE _____ BY (PROPOSED COMMITTEE ON AGRICULTURE BILL BY CHAIRPERSON SEXTON) A BILL FOR An Act providing for certain fees deposited in the grain 1 depositors and sellers indemnity fund, making penalties 2 applicable, and including effective date provisions. 3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 4 TLSB 5865YC (3) 90 da/ns

H.F. _____ Section 1. Section 203D.5, subsections 4 and 5, Code 2024, 1 are amended to read as follows: 2 4. If on the last date of the fund’s assessment year as 3 provided in section 203D.3 the assets of the fund exceed eight 4 sixteen million dollars, less any encumbered balances or 5 pending or unsettled claims, all of the following apply: 6 a. The participation fee shall be waived and shall not be 7 assessable or owing for the following assessment year of the 8 fund. However, the licensee shall continue to pay any owing 9 participation fee that was in effect on the prior September 1. 10 b. The per-bushel fee shall be waived and shall not be 11 assessable or owing. 12 5. The board shall reinstate the fees as provided in this 13 section if the assets of the fund, less any unencumbered 14 balances or pending or unsettled claims, are three eight 15 million dollars or less. 16 Sec. 2. EFFECTIVE DATE. This Act, being deemed of immediate 17 importance, takes effect upon enactment. 18 EXPLANATION 19 The inclusion of this explanation does not constitute agreement with 20 the explanation’s substance by the members of the general assembly. 21 BILL’S PROVISIONS. This bill amends provisions in Code 22 chapter 203D that provide for two associated fees (indemnity 23 fees) deposited into the grain depositors and sellers indemnity 24 fund (indemnity fund) administered by the department of 25 agriculture and land stewardship (DALS) and the Iowa grain 26 indemnity fund board (indemnity board). The Code chapter 27 provides for the regulation of two types of persons doing 28 business in the grain marketing industry and licensed by DALS 29 (licensees) who are required to pay one or both indemnity fees: 30 (1) a warehouse operator licensed under Code chapter 203C who 31 stores grain in a state-licensed warehouse under a bailment 32 contract in which the bailor (depositor) holds title to the 33 grain under warehouse receipt or similar document, and (2) a 34 grain dealer licensed under Code chapter 203 who purchases 35 -1- LSB 5865YC (3) 90 da/ns 1/ 3

H.F. _____ grain from a seller transferring title under one of a number 1 of different types of sales contracts (see Code chapter 554, 2 Articles 2 and 7). The indemnity fees are subject to two 3 triggers: the first trigger waives existing indemnity fees 4 and the second trigger reinstates those fees that were waived. 5 The waiver or reinstatement is triggered by the balance in 6 the indemnity fund. The bill adjusts both triggers by (1) 7 increasing from $8 million to $16 million the balance required 8 to trigger the waiver and (2) increasing from $3 million to $8 9 million the balance required to trigger the reinstatement. 10 BACKGROUND. A depositor or seller may claim up to 90 percent 11 of a loss payable from the indemnity fund based on the failure 12 of a licensee to honor an obligation under a bailment or sales 13 contract (e.g., a failure to comply with instructions regarding 14 the deposited grain or a failure to pay the sales price) (Code 15 section 203D.6). The two indemnity fees used to support the 16 indemnity fund include (1) a participation fee imposed on 17 both licensees and (2) a per-bushel fee imposed only on grain 18 dealers. For a warehouse operator, the participation fee 19 is based on bulk warehouse capacity and for a grain dealer, 20 the participation fee and the per-bushel fee are based on 21 the number of bushels of grain purchased (“purchased grain 22 entered into the company-owned paid position”) during the grain 23 dealer’s last fiscal year (coinciding with the grain dealer’s 24 license period), and subject to a number of exceptions, such 25 as grain purchased from the United State government (Code 26 sections 203D.1, 203D.3A, and 203D.5). A warehouse operator’s 27 participation fee rate is 0.014 cents per bushel of bulk grain 28 storage capacity, or $500, whichever is less, with a minimum 29 of $50. A grain dealer’s participation fee rate is 0.014 30 cents per bushel with a minimum of $50, and the per-bushel 31 fee rate is 0.25 cents per bushel on all such purchased 32 grain. Indemnity fees are collected quarterly during the 33 assessment year: September 1, December 1, March 1, and June 34 1 (Code section 203D.3). The indemnity board must annually 35 -2- LSB 5865YC (3) 90 da/ns 2/ 3

H.F. _____ review the debits of and credits to the indemnity fund and 1 by May 1 determine whether the balance triggers a waiver or 2 reinstatement (Code section 203D.5). If there is a trigger, 3 the waiver or reinstatement is effective on the first day of 4 the following assessment year (September 1). If a waiver 5 is triggered, a licensee is subject to pay the outstanding 6 amount of the participation fee that is otherwise owing for 7 the current assessment year. However, the grain dealer is 8 no longer obligated to pay the outstanding amount of the 9 per-bushel fee otherwise owing for that period, unless the 10 amount is delinquent (Code section 203D.5). 11 APPLICABLE CIVIL PENALTIES. A licensee who fails to pay 12 an indemnity fee as required is subject to a civil penalty of 13 not more than $1,500, with each day that a violation continues 14 constituting a separate offense (Code section 203C.36A). 15 EFFECTIVE DATE. The bill takes effect upon enactment. 16 -3- LSB 5865YC (3) 90 da/ns 3/ 3