Senate File 608 - Introduced SENATE FILE 608 BY COMMITTEE ON WAYS AND MEANS (SUCCESSOR TO SSB 1131) A BILL FOR An Act regulating the marketing of grain, by providing for 1 fees paid by grain dealers and warehouse operators into 2 the grain depositors and sellers indemnity fund, and the 3 payment of claims to reimburse sellers and depositors for 4 losses covered by the fund, and including effective date and 5 applicability provisions. 6 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 7 TLSB 2711SV (2) 91 da/ns

S.F. 608 DIVISION I 1 CLAIMS AGAINST GRAIN DEPOSITORS AND SELLERS INDEMNITY FUND 2 Section 1. Section 203.12, subsection 1, Code 2025, is 3 amended to read as follows: 4 1. Upon the cessation of a grain dealer license by 5 revocation, cancellation, or expiration, any claim for the 6 purchase price of grain against the grain dealer shall be made 7 in writing and filed with the grain dealer and with the issuer 8 of a deficiency bond or of an irrevocable letter of credit 9 and with the department within one hundred twenty days after 10 the date of the cessation. A failure to make this timely 11 claim relieves the issuer and the grain depositors and sellers 12 indemnity fund provided in chapter 203D section 203D.6 or 13 203D.6A of all obligations to the claimant. 14 Sec. 2. Section 203.15, subsection 6, Code 2025, is amended 15 by striking the subsection. 16 Sec. 3. Section 203C.14, subsection 2, paragraph a, Code 17 2025, is amended to read as follows: 18 a. Upon the cessation of a warehouse operator’s license due 19 to revocation, cancellation, or expiration, a claim against the 20 warehouse operator arising under this chapter shall be made in 21 writing with the warehouse operator, with the issuer of a bond 22 on agricultural products other than bulk grain, a deficiency 23 bond, or an irrevocable letter of credit, and, if the claim 24 relates to bulk grain, with the department. The claim must 25 be made within one hundred twenty days after the cessation 26 of the license. The failure to make a timely claim relieves 27 the issuer and, if the claim relates to bulk grain, the grain 28 depositors and sellers indemnity fund provided in chapter 203D 29 section 203D.6 or 203D.6A of all obligations to the claimant. 30 Sec. 4. Section 203D.1, Code 2025, is amended by adding the 31 following new subsections: 32 NEW SUBSECTION . 8A. “Indemnity fees” or “fees” means a 33 participation fee and per-bushel fee as provided in sections 34 203D.3 and 203D.3A. 35 -1- LSB 2711SV (2) 91 da/ns 1/ 17

S.F. 608 NEW SUBSECTION . 14A. “Repayment loss” means the amount 1 of a repayment claim held by a seller for purchased grain 2 that the seller had paid back or is required to pay back to 3 a grain dealer’s bankruptcy estate, pursuant to an order 4 issued, judgment entered, or settlement agreement approved by a 5 bankruptcy court, and which amount has not been subsequently 6 recovered through other legal or equitable remedies including 7 the liquidation of the grain dealer’s assets. 8 Sec. 5. Section 203D.1, subsection 14, Code 2025, is amended 9 to read as follows: 10 14. a. “Purchased grain” means grain any of the following: 11 (1) Grain entered in the company-owned paid position as 12 evidenced on the grain dealer’s daily position record. 13 (2) Grain purchased under credit-sale contract. 14 b. “Purchased grain” does not include grain that is subject 15 to an exempt transaction based on documentation satisfactory 16 to the department showing that the grain dealer did any of the 17 following: 18 (1) Purchased the grain from the United States government or 19 any of its subdivisions or agencies. 20 (2) Purchased the grain from a person licensed as a grain 21 dealer in any jurisdiction. 22 (3) Purchased the grain under a credit-sale contract. 23 (4) (3) Entered the grain in the company-owned paid 24 position as a cancellation of a collateral warehouse receipt. 25 (5) (4) Entered the grain in the company-owned paid 26 position as an intra-company location transfer. 27 Sec. 6. Section 203D.1, subsection 16, Code 2025, is amended 28 to read as follows: 29 16. a. “Seller” means a person who sells grain which the 30 person has produced or caused to be produced to a licensed 31 grain dealer , but excludes a person who executes a credit-sale 32 contract as a seller as provided in section 203.15 . However, 33 “seller” 34 b. “Seller” does not include any of the following: 35 -2- LSB 2711SV (2) 91 da/ns 2/ 17

S.F. 608 a. (1) A person licensed as a grain dealer in any 1 jurisdiction who sells grain to a licensed grain dealer. 2 b. (2) A person who sells grain that is not produced in 3 this state unless such grain is delivered to a licensed grain 4 dealer at a location in this state as the first point of sale. 5 Sec. 7. Section 203D.3, subsections 1 and 4, Code 2025, are 6 amended to read as follows: 7 1. The grain depositors and sellers indemnity fund is 8 created in the state treasury as a separate account. The 9 general fund of the state is not liable for claims presented 10 against the fund under section 203D.6 or 203D.6A . 11 4. The moneys collected under this section and deposited in 12 the fund shall be used exclusively to indemnify depositors and 13 sellers as provided in section 203D.6 or 203D.6A and to pay the 14 administrative costs of this chapter . 15 Sec. 8. Section 203D.3A, unnumbered paragraph 1, Code 2025, 16 is amended to read as follows: 17 The department shall collect indemnity fees , including 18 participation fees and per-bushel fees as provided in this 19 section , if established imposed by the board pursuant to 20 section 203D.5 , at rates determined by the board as provided 21 in that section. A person required to pay a fee shall use 22 licensee shall remit indemnity fees and forms and deliver the 23 payment to the department as required by the department. 24 Sec. 9. Section 203D.3A, subsection 1, paragraph a, 25 subparagraph (1), Code 2025, is amended to read as follows: 26 (1) In calculating the amount of the initial participation 27 fee, an applicant for a new license shall be deemed a licensee 28 paying remitting the full annual amount of the participation 29 fee owing on the licensee’s first anniversary date as provided 30 in paragraph “b” . The department must be satisfied that the 31 applicant is calculating the amount due in good faith and using 32 the best information available. 33 (a) For a licensed grain dealer, the anniversary date is 34 the last date to apply for the renewal of the grain dealer’s 35 -3- LSB 2711SV (2) 91 da/ns 3/ 17

S.F. 608 license before the license expires as provided in section 1 203.5. 2 (b) For a licensed warehouse operator, the anniversary date 3 is the last date to apply for the renewal of the warehouse 4 operator’s license before the license expires as provided in 5 section 203C.37. 6 Sec. 10. Section 203D.3A, subsection 1, paragraph b, Code 7 2025, is amended to read as follows: 8 b. A licensee shall pay remit a participation fee in 9 one installment as part of a license renewal application 10 in the same manner provided in paragraph “a” . However, the 11 licensee may elect to remit the participation fee on four 12 successive installment dates, with each installment date 13 occurring on determined by the department not later than in the 14 month succeeding each of the last date of the fund’s latest 15 assessment quarter quarters as provided in section 203D.3 . 16 The licensee shall pay remit twenty-five percent of the total 17 participation fee assessed on each installment date. However, 18 nothing in this subsection prevents a licensee from paying 19 the participation fee on an accelerated basis. A licensee 20 shall pay the first installment on the last date of the 21 fund’s assessment quarter immediately following the licensee’s 22 anniversary date. 23 (1) For a licensed grain dealer, the anniversary date is 24 the last date to apply for the renewal of the grain dealer’s 25 license before the license expires as provided in section 26 203.5 . 27 (2) For a licensed warehouse operator, the anniversary date 28 is the last date to apply for the renewal of the warehouse 29 operator’s license before the license expires as provided in 30 section 203C.37 . 31 Sec. 11. Section 203D.3A, subsection 2, Code 2025, is 32 amended to read as follows: 33 2. a. A licensed grain dealer shall remit a per-bushel fee 34 shall be assessed on all purchased grain. 35 -4- LSB 2711SV (2) 91 da/ns 4/ 17

S.F. 608 b. The licensed grain dealer shall forward remit the 1 per-bushel fee to the department on a quarterly basis in the 2 manner and using the forms a form prescribed by the department. 3 The licensed grain dealer shall remit the per-bushel fee 4 and form on four successive installment dates, with each 5 installment date determined by the department not later than 6 in the month succeeding each of the fund’s latest assessment 7 quarters as provided in section 203D.3. 8 c. A licensee licensed grain dealer is delinquent if the 9 licensee grain dealer fails to submit remit the full quarterly 10 per-bushel fee or quarterly forms and form when due or if, 11 upon examination, an underpayment of the fee is found by the 12 department. The licensed grain dealer is subject to a penalty 13 of ten dollars for each day the licensed grain dealer is 14 delinquent or an amount equal to the amount of the deficiency, 15 whichever is less. However, a licensee licensed grain dealer 16 who fails to submit remit the full quarterly per-bushel fee or 17 quarterly forms form when due , is subject to a minimum payment 18 of ten dollars. The department may establish and apply a 19 margin of error in determining whether a licensed grain dealer 20 is delinquent. The per-bushel fee shall be collected only once 21 on each bushel of grain. 22 c. d. The per-bushel fee shall not be collected more 23 than once on each bushel of grain. A licensed grain dealer 24 may choose to pass on the cost of a per-bushel fee to the 25 sellers by an itemized discount noted on the settlement sheet. 26 However, if the per-bushel fee is not in effect, no a licensed 27 grain dealer shall not make such a discount on the purchase of 28 grain. A discount made nominally for the per-bushel fee while 29 the per-bushel fee is not in effect is grounds for a license 30 suspension or revocation under chapter 203 . 31 Sec. 12. Section 203D.5, subsection 1, Code 2025, is amended 32 to read as follows: 33 1. The board shall annually review the debits of and credits 34 to the grain depositors and sellers indemnity fund created 35 -5- LSB 2711SV (2) 91 da/ns 5/ 17

S.F. 608 in section 203D.3 and shall determine whether to impose the 1 participation fee and per-bushel fee indemnity fees as provided 2 in section 203D.3A , make adjustments to the indemnity fees 3 effective on the previous September 1 in effect , or waive the 4 indemnity fees in effect as necessary to comply with this 5 section . The board shall make the determination not later 6 than May 1 of each year. The board shall impose the indemnity 7 fees or adjust the indemnity fees effective on the previous 8 September 1 in effect in accordance with chapter 17A . The 9 imposition or adjustment of the indemnity fees shall become 10 effective as follows: 11 a. For the participation fee, on the first day of the fund’s 12 following September 1 assessment year . However, the licensee 13 shall continue to pay the any owing participation fee at the 14 rate in effect on the prior September 1 first day of the fund’s 15 current assessment year , until the licensee has paid the amount 16 owing. 17 b. For a per-bushel fee, on the following September 1 first 18 day of the fund’s assessment year . 19 Sec. 13. Section 203D.5, subsections 4 and 5, Code 2025, are 20 amended to read as follows: 21 4. If on the last date of the fund’s assessment year as 22 provided in section 203D.3 the assets of the fund exceed eight 23 twelve million dollars, less any encumbered balances or pending 24 or unsettled claims, all of the following apply: 25 a. The participation fee shall be waived and shall not be 26 assessable or owing for the fund’s following assessment year 27 of the fund . However, the licensee shall continue to pay 28 any owing participation fee that was in effect on the prior 29 September 1 first day of the fund’s current assessment year . 30 b. The per-bushel fee shall be waived and shall not be 31 assessable or owing. 32 5. The board shall reinstate the indemnity fees as 33 provided in this section if the assets of the fund, less any 34 unencumbered balances or pending or unsettled claims, are three 35 -6- LSB 2711SV (2) 91 da/ns 6/ 17

S.F. 608 five million dollars or less. 1 Sec. 14. Section 203D.6, subsection 4, paragraph d, Code 2 2025, is amended to read as follows: 3 d. That the claim derives from a covered transaction. For 4 purposes of this paragraph, a claim derives from a covered 5 transaction if the claimant is a seller who transferred 6 title to the grain to a licensed grain dealer other than by 7 credit-sale contract within six months of the incurrence date 8 for a claim period as provided in subsection 2 , or if the 9 claimant is a depositor who delivered the grain to a licensed 10 warehouse operator. 11 Sec. 15. Section 203D.6, subsection 8, Code 2025, is amended 12 to read as follows: 13 8. Payment of claims. Upon a determination that the claim 14 is eligible for payment, the board shall provide for payment of 15 ninety percent of the loss, as determined under subsection 5 , 16 but not more than three hundred thousand dollars per claimant. 17 If at any time the board determines that there are insufficient 18 funds moneys to make payment payments of all claims under this 19 section and all repayment claims under section 203D.6A , the 20 board may order that payment payments be deferred on specified 21 claims. The department, upon the board’s instruction, shall 22 hold those claims for payment deferred payments until the board 23 determines that the fund again contains there are sufficient 24 assets moneys in the fund to make payments on all those claims . 25 Sec. 16. NEW SECTION . 203D.6A Repayment claims against 26 fund. 27 1. A separate indemnity claim process is established to 28 provide for the indemnification of a repayment loss incurred by 29 a seller against a grain dealer who is a debtor in bankruptcy 30 under the protections provided in Tit. 11 of the United States 31 Code. 32 a. A repayment claim shall be filed with the department in 33 the manner prescribed by the department. 34 b. A seller may file an eligible claim for a loss under 35 -7- LSB 2711SV (2) 91 da/ns 7/ 17

S.F. 608 section 203D.6 and an eligible repayment claim for a repayment 1 loss under this section. 2 2. To be timely, a seller must file a repayment claim with 3 the department not later than sixty days after the repayment 4 loss is finalized by a bankruptcy court, whether by an order 5 issued, judgment entered, or settlement agreement approved. 6 3. The department may provide notice of the repayment claim 7 process to a seller that may become or has become subject to 8 an order issued, judgment entered, or settlement agreement 9 approved by a bankruptcy court that requires the seller to 10 pay back amounts previously received for grain purchased by a 11 licensed grain dealer, in the bankruptcy of the grain dealer. 12 If the department chooses to provide a notice to the seller, it 13 shall have discretion to determine any reasonable method and 14 manner of providing such notice. A failure by the department 15 to provide a notice or a failure by a seller to receive a notice 16 under this subsection, does not relieve the seller of the 17 requirement to timely file a repayment claim. 18 4. The board shall determine that a repayment claim is 19 eligible for payment from the fund if the board finds all of 20 the following: 21 a. The repayment claim was timely filed. 22 b. The repayment claimant qualifies as a seller. 23 c. The repayment claim derives from a covered transaction. 24 For purposes of this paragraph, a claim derives from a covered 25 transaction if the claimant is a seller who transferred title 26 to the grain to a licensed grain dealer within six months of 27 the incurrence date as provided in section 203D.6, subsection 28 2. 29 d. The seller submits adequate proof to establish the 30 repayment claim and the amount of the repayment loss. 31 e. A claim has not been paid for the same repayment loss. 32 5. A seller is not entitled to indemnify a claim for a 33 repayment loss if the repayment loss is incurred as a result of 34 a fraudulent transfer or conveyance by the seller. 35 -8- LSB 2711SV (2) 91 da/ns 8/ 17

S.F. 608 6. The dollar value of a repayment claim is the amount a 1 seller is required to pay back that was previously received for 2 the grain as a result of an order issued, judgment entered, 3 or settlement agreement approved by a bankruptcy court and 4 which has not been recovered through other legal or equitable 5 remedies including the liquidation of assets. 6 7. The department acting on behalf of the board shall 7 deliver a notice to a seller filing a claim under this section. 8 The notice must include the board’s determination of the 9 seller’s eligibility and the value of the seller’s repayment 10 loss. Within twenty days of delivering the notice, the seller 11 may request a hearing for the review of either determination. 12 The request shall be made in the manner provided by the 13 board. The hearing and any further appeal shall be conducted 14 as a contested case subject to chapter 17A. A seller whose 15 repayment claim has been refused by the board may appeal the 16 refusal to either the district court of Polk county or the 17 district court of the county in which the seller resides. 18 8. Upon a determination that the claim is eligible for 19 indemnification, the board shall provide for payment of ninety 20 percent of the repayment loss, as determined by the board, 21 but not more than three hundred thousand dollars counting 22 the dollar value losses paid to the same grain dealer during 23 the claim period as provided in section 203D.6. If at any 24 time the board determines that there are insufficient moneys 25 in the fund to make payment of all claims under section 26 203D.6 and this section, the board may order that payment be 27 deferred on specified claims. The department, upon the board’s 28 instruction, shall hold the claims for deferred payment until 29 the board determines that the fund again contains sufficient 30 assets. 31 9. In the event of the payment of a repayment loss under 32 this section, the fund is subrogated to the extent of the 33 amount of any payments to all rights, powers, privileges, 34 and remedies of the seller against any person regarding 35 -9- LSB 2711SV (2) 91 da/ns 9/ 17

S.F. 608 the repayment loss. The seller shall render all necessary 1 assistance to the department and the board in securing the 2 rights granted in this section. No action or claim initiated 3 by a seller and pending at the time of payment from the fund 4 shall be compromised or settled without the consent of the 5 board. 6 10. a. A repayment claim shall expire if five years after 7 the board determines that the repayment claim is eligible, and 8 the claimant has failed to do any of the following: 9 (1) Provide for the fund’s subrogation or render all 10 necessary assistance to the department and the board in 11 securing the department’s rights of subrogation as required in 12 this section. 13 (2) Provide necessary documentation or information required 14 by the board in order to process the repayment claim. 15 b. The fund is not liable for the payment of an expired 16 repayment claim. 17 Sec. 17. EMERGENCY RULES. The department of agriculture 18 and land stewardship shall adopt emergency rules under section 19 17A.4, subsection 3, and section 17A.5, subsection 2, paragraph 20 “b”, to implement the provisions of this division of this 21 Act within thirty business days of the effective date of 22 this section of this Act and shall submit such rules to the 23 administrative rules coordinator and the administrative code 24 editor pursuant to section 17A.5, subsection 1, within the same 25 period. The rules shall be effective immediately upon filing 26 unless a later date is specified in the rules. Any rules 27 adopted in accordance with this section shall also be published 28 as a notice of intended action as provided in section 17A.4. 29 Sec. 18. ASSESSMENT OF INDEMNITY FEES. A grain dealer 30 licensed under chapter 203 who is a party to a credit-sale 31 contract shall owe any indemnity fees assessed on grain 32 purchased under the credit-sale contract beginning on September 33 1 of the first assessment quarter pursuant to section 203D.3A. 34 Sec. 19. EFFECTIVE DATE. The following, being deemed of 35 -10- LSB 2711SV (2) 91 da/ns 10/ 17

S.F. 608 immediate importance, takes effect upon enactment: 1 The section of this division of this Act requiring the 2 department of agriculture and land stewardship to adopt 3 emergency rules. 4 Sec. 20. APPLICABILITY. 5 1. The process established in section 203D.6A, as enacted 6 by this Act, providing for the indemnification of a repayment 7 claim applies to a seller who incurs a repayment loss against 8 a grain dealer, if the grain dealer is a debtor in bankruptcy 9 under the protections provided in Tit. 11 of the United States 10 Code on or after October 24, 2022. 11 2. For a repayment loss incurred prior to July 1, 2025, the 12 end of the claim period in section 203D.6A, subsection 2, as 13 enacted by this Act, is August 29, 2025. 14 DIVISION II 15 ASSESSMENT YEAR 16 Sec. 21. Section 203D.3, subsection 3, Code 2025, is amended 17 to read as follows: 18 3. The assessment year of the fund begins September is the 19 same as the state fiscal year beginning on July 1 and ends 20 ending on August 31 June 30 . Assessment quarters of the fund 21 begin September on July 1, December October 1, March January 1, 22 and June April 1. The finances of the fund shall be calculated 23 on an accrual basis in accordance with generally accepted 24 accounting principles. 25 Sec. 22. CONTINGENT EFFECTIVE DATE. 26 1. This division of this Act takes effect on the publication 27 date of the issue of the Iowa administrative bulletin that 28 includes a notice by the secretary of agriculture stating 29 that the indemnity fees paid by grain dealers and warehouse 30 operators have been waived as provided in section 203D.5. 31 2. The department of agriculture and land stewardship shall 32 send a copy of the notice to the Code editor at least two 33 weeks prior to the publication date of the Iowa administrative 34 bulletin as described in subsection l. 35 -11- LSB 2711SV (2) 91 da/ns 11/ 17

S.F. 608 EXPLANATION 1 The inclusion of this explanation does not constitute agreement with 2 the explanation’s substance by the members of the general assembly. 3 BACKGROUND —— GRAIN DEALERS AND WAREHOUSE OPERATORS. This 4 bill amends provisions regulating marketers of grain, referred 5 to as grain dealers purchasing grain (Code chapter 203), and 6 warehouse operators storing grain under bailment (Code chapter 7 203C), administered by the department of agriculture and land 8 stewardship (DALS). 9 DIVISION I BACKGROUND —— GRAIN DEPOSITORS AND SELLERS 10 INDEMNITY FUND. A person selling grain to a licensed grain 11 dealer (seller) or a person depositing grain with a licensed 12 warehouse operator (depositor) may be reimbursed for a loss 13 incurred by the failure of the licensee to honor a contractual 14 obligation regarding the transaction (Code section 203D.6). A 15 payment is made from the grain depositors and sellers indemnity 16 fund (indemnity fund) upon a determination that the claim is 17 eligible for payment by the Iowa grain indemnity fund board 18 (indemnity board) acting in cooperation with DALS. 19 DIVISION I BACKGROUND —— FEES. In addition to license fees 20 deposited into the general fund of the state (Code sections 21 203.6 and 203C.33), each licensee may be required to pay 22 either one or two special fees (indemnity fees) to support 23 the indemnity fund, referred to as a participation fee and 24 per-bushel fee. The licensed grain dealer’s participation 25 fee is calculated according to the following formula: the 26 assessment rate of not more than $0.014 multiplied by all 27 bushels of purchased grain during the grain dealer’s prior 28 fiscal year with a minimum of $50 and no maximum limit. The 29 licensed grain dealer’s per-bushel fee is calculated according 30 to a similar formula: the assessment rate of not more than 31 $0.25 multiplied by all bushels of purchased grain for the 32 grain dealer’s assessment year with no minimum and a $500 33 maximum limit. The qualifying term “purchased grain” equals 34 the total number of bushels purchased from sellers minus a 35 -12- LSB 2711SV (2) 91 da/ns 12/ 17

S.F. 608 number of exempt bushel purchases, including those purchased 1 under credit-sale contract (Code section 203D.1). Purchased 2 grain is reported to DALS as “paid company-owned” (Code section 3 203D.1). The licensed warehouse operator’s participation 4 fee is $0.014 multiplied by the number of bushels of storage 5 capacity of the warehouse (Code section 203D.5). 6 DIVISION I BACKGROUND —— INDEMNITY BOARD REVIEW OF INDEMNITY 7 FUND. The indemnity board must annually review the debits 8 of and credits to the indemnity fund and by May 1 determine 9 whether the balance triggers a waiver or reinstatement (Code 10 section 203D.5). The triggered waiver or reinstatement is 11 effective on the first day of the following assessment year 12 (September 1). If a waiver is triggered on the last day of an 13 assessment year, a licensee is subject to pay the outstanding 14 amount of the participation fee that is otherwise owing for 15 the current assessment year. However, a licensed grain dealer 16 is no longer obligated to pay the outstanding amount of the 17 per-bushel fee otherwise owing for that period, unless the 18 amount is delinquent (Code section 203D.5). The board must 19 reinstate the indemnity fees if assets in the fund are $3 20 million or less. 21 DIVISION I BACKGROUND —— CREDIT-SALE CONTRACTS. A 22 credit-sale contract (also referred to as deferred-payment 23 contract, deferred-pricing contract, or price-later contract) 24 involves a transaction for the sale of grain in which the 25 sales price is to be paid to the seller by the licensed grain 26 dealer more than 30 days after the delivery of the grain to 27 the licensed grain dealer (Code section 203.1). The delayed 28 price arrangement may be made on the basis of an expectation 29 of higher price or deferred tax liability. For regulations 30 regarding the use of credit-sale contracts by licensees, see 31 Code sections 203.3, 203.8, 203.15, 203.17, and 203C.17. 32 DIVISION I BACKGROUND —— PAYMENT OF CLAIMS. A claim by a 33 seller or depositor (claimant) for the reimbursement of a loss 34 from the indemnity fund begins on the incurrence date which is 35 -13- LSB 2711SV (2) 91 da/ns 13/ 17

S.F. 608 when the grain dealer’s or warehouse operator’s state license 1 ceases or when the grain dealer or warehouse operator files 2 a petition in bankruptcy, as elected by the claimant (Code 3 section 203D.6). The claim must meet eligibility requirements, 4 meaning that it is timely filed, there is evidence of a loss 5 incurred by a claimant, and the claim derives from a covered 6 transaction. For a claimant who is a seller, a covered 7 transaction requires that title be transferred with six months 8 of the incurrence date. A covered transaction excludes sale by 9 credit-sale contract. The value of a loss incurred by a seller 10 is based on the grain’s sales price. If the sold grain was 11 unpriced, the value of a claim is presumed to be based upon the 12 price paid on the incurrence date at the nearest terminal. For 13 a claimant who is a depositor, a covered transaction requires 14 that the grain must have been delivered to a licensed warehouse 15 operator. Generally, the value of the depositor’s claim is 16 based on the grain’s fair market value. A seller or depositor 17 is entitled to be reimbursed 90 percent of a loss but not more 18 than $300,000. 19 DIVISION I PROVISIONS —— INDEMNITY FEES TRIGGERS. The 20 division adjusts both triggers waiving or reinstating the two 21 indemnity fees. The division increases from $8 million to $12 22 million the balance in the indemnity fund required to trigger a 23 waiver and increases from $3 million to $5 million the balance 24 in the indemnity fund required to trigger a reinstatement. 25 DIVISION I PROVISIONS —— INDEMNIFICATION OF LOSSES 26 (REPAYMENT CLAIMS). The division allows a seller to file a 27 special repayment claim against the indemnity fund as a result 28 of the grain dealer’s bankruptcy. The special repayment 29 process allows such a seller to recover the amount of the grain 30 dealer payment that the seller was forced to repay to the 31 grain dealer’s bankruptcy estate. To be timely, a seller must 32 file a repayment claim with DALS not later than 60 days after 33 the repayment loss is finalized by a bankruptcy court. DALS 34 may provide notice of the repayment claim process to a seller 35 -14- LSB 2711SV (2) 91 da/ns 14/ 17

S.F. 608 who may file a repayment claim. If DALS chooses to provide 1 a notice to the seller, DALS has discretion to determine a 2 reasonable method and manner of providing such notice. The 3 indemnity board must determine that a repayment claim is 4 eligible for payment from the indemnity fund, including whether 5 the repayment claim derives from a covered transaction. DALS 6 is required to deliver notice to a seller filing a repayment 7 claim regarding the indemnity board’s determination in the same 8 manner as for an ordinary loss. Like an ordinary loss, the 9 seller is entitled to receive 90 percent of a loss but not more 10 than $300,000, a deferral of payments based on insufficient 11 moneys in the indemnity fund, subrogation, and a five-year 12 expiration period. 13 DIVISION I PROVISIONS —— INDEMNITY FUND (FEES AND 14 REIMBURSEMENT BASED ON CREDIT-SALE CONTRACT TRANSACTIONS). 15 The division provides that grain sold by credit-sale contract 16 is considered purchased grain. Therefore, a licensed grain 17 dealer is assessed a participation fee and per-bushel fee and 18 a licensed warehouse operator is assessed a participation 19 fee. The division also provides that the sale of grain by 20 credit-sale contract is no longer excluded from the meaning 21 of a covered transaction. A seller may therefore claim a 22 loss resulting from the grain dealer’s breach of this type 23 of contract. Generally, the amount of the loss equals the 24 sales price after deducting any amount received or otherwise 25 recovered through other legal and equitable remedies including 26 the liquidation of assets (Code section 203D.1). In the case 27 of a claim filed for a loss resulting from a credit-sale 28 contract for which no price was established, the valuation 29 would be determined in the manner described for unpriced grain. 30 The division does not modify special regulations that apply to 31 a licensee’s use of a credit-sale contract. 32 DIVISION I PROVISIONS —— INDEMNITY FEES (PAYMENT DATES). 33 The bill provides that a licensee may remit the participation 34 fee in one installment as part of the license renewal or four 35 -15- LSB 2711SV (2) 91 da/ns 15/ 17

S.F. 608 successive installments not later than in the month following 1 the end of the fund’s assessment quarter. The bill provides 2 that the grain dealer pays the per-bushel fee on the same 3 installment dates. 4 DIVISION I PROVISIONS —— EMERGENCY RULES. DALS is 5 authorized to adopt rules on an emergency basis necessary 6 to administer the division’s provisions. When a statute 7 authorizes emergency rulemaking, an agency may adopt a rule 8 immediately without going through the periods of the rulemaking 9 process known as regulatory analysis (Code section 17A.4A) 10 and notice of intended action (Code section 17A.4(3)). The 11 division requires that such emergency rulemaking be “double 12 barreled”. Under that process, when an agency files an 13 emergency rule, it also files the same rule as a notice 14 of intended action that will follow the regular rulemaking 15 process. Normally, a rule cannot be effective prior to 35 days 16 after its filing with the administrative rules coordinator 17 and publication in the Iowa administrative bulletin. Under 18 emergency rulemaking, a rule can be made effective on the 19 date of filing and acceptance by the administrative rules 20 coordinator or any subsequent date, as specified by the agency 21 in the filing (Code section 17A.5(2)(b)(1)). This provision of 22 the bill takes effect upon enactment. 23 DIVISION I PROVISIONS —— ASSESSMENT OF FEES (CREDIT-SALE 24 CONTRACT). A grain dealer who is a party to a credit-sale 25 contract owing an indemnity fee assessed on grain purchased by 26 credit-sale contract is imposed on September 1 of the first 27 assessment quarter. 28 DIVISION I PROVISIONS —— APPLICABILITY. The bill provides 29 that the new process for the repayment of claims applies to a 30 seller who incurs a repayment loss against a grain dealer who 31 is a debtor in bankruptcy on or after October 24, 2022. The 32 bill also provides that for a repayment loss incurred prior to 33 July 1, 2025, the claim period ends on August 29, 2025. 34 DIVISION II BACKGROUND —— FUND’S ASSESSMENT YEAR. Prior 35 -16- LSB 2711SV (2) 91 da/ns 16/ 17

S.F. 608 to 2023, the fund’s assessment year began on July 1 and ended 1 on June 30, which corresponded to the state fiscal year, with 2 assessment quarters beginning July 1, October 1, January 1, and 3 April 1. In 2023 Iowa Acts, chapter 154, the assessment year 4 was changed to September 1, and the assessment quarters begin 5 on September 1, December 1, March 1, and June 1. 6 DIVISION II PROVISIONS —— FUND’S ASSESSMENT YEAR. The 7 division restores the former assessment year and quarters. 8 However, the division takes effect on the publication date of 9 the issue of the Iowa administrative bulletin stating that the 10 current indemnity fees have been waived. 11 -17- LSB 2711SV (2) 91 da/ns 17/ 17