Read the full stored bill text
House
File
508
-
Introduced
HOUSE
FILE
508
BY
COMMITTEE
ON
AGRICULTURE
(SUCCESSOR
TO
HSB
131)
A
BILL
FOR
An
Act
providing
for
the
marketing
of
grain
by
licensed
1
warehouse
operators
and
grain
dealers,
including
by
2
providing
for
indemnity
fees
and
the
indemnification
of
3
grain
depositors
and
sellers
for
losses
following
the
4
cessation
of
a
license
or
bankruptcy.
5
BE
IT
ENACTED
BY
THE
GENERAL
ASSEMBLY
OF
THE
STATE
OF
IOWA:
6
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508
Section
1.
Section
203.1,
subsection
3,
Code
2025,
is
1
amended
to
read
as
follows:
2
3.
“Credit-sale
contract”
means
a
contract
for
the
sale
of
3
grain
pursuant
to
which
the
sale
price
is
to
be
paid
more
than
4
thirty
days
after
the
delivery
of
the
grain
to
the
buyer,
or
a
5
contract
which
is
titled
as
a
credit-sale
contract,
including
6
but
not
limited
to
those
contracts
commonly
referred
to
as
7
deferred-payment
contracts,
contract
or
a
deferred-pricing
8
contracts,
and
price-later
contracts
contract
.
9
Sec.
2.
Section
203.1,
Code
2025,
is
amended
by
adding
the
10
following
new
subsections:
11
NEW
SUBSECTION
.
4A.
“Deferred-payment
contract”
means
a
12
contract
for
the
purchase
of
grain
if
all
of
the
following
13
apply:
14
a.
The
purchase
price
is
agreed
to
by
the
licensed
grain
15
dealer
and
the
seller
by
the
date
of
the
grain’s
delivery
as
16
provided
in
section
203.8.
17
b.
Under
the
terms
of
the
contract,
the
licensed
grain
18
dealer’s
payment
of
the
purchase
price
to
the
seller
may
be
19
made
on
a
date
later
than
the
last
date
for
scheduled
payments
20
made
by
the
licensed
grain
dealer
to
sellers
for
delivered
21
grain
according
to
the
licensed
grain
dealer’s
standard
22
business
operation.
23
NEW
SUBSECTION
.
4B.
“Deferred-pricing
contract”
means
a
24
contract
for
the
purchase
of
grain
if
all
of
the
following
25
apply:
26
a.
The
purchase
price
is
not
agreed
to
by
the
licensed
grain
27
dealer
and
the
seller
by
the
date
of
the
grain’s
delivery
as
28
provided
in
section
203.8.
29
b.
Under
the
terms
of
the
contract,
the
licensed
grain
30
dealer’s
payment
of
the
purchase
price
to
the
seller
may
be
31
made
on
a
date
later
than
the
last
date
for
scheduled
payments
32
made
by
the
licensed
grain
dealer
to
sellers
for
delivered
33
grain
according
to
the
licensed
grain
dealer’s
standard
34
business
operation.
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Sec.
3.
Section
203.8,
subsection
1,
Code
2025,
is
amended
1
to
read
as
follows:
2
1.
a.
A
grain
dealer
licensed
or
required
to
be
licensed
3
pursuant
to
section
203.3
shall
pay
the
purchase
price
to
the
4
seller
for
grain
upon
as
follows:
5
(1)
Upon
delivery
or
later
upon
demand
by
the
seller
,
6
but
.
If
the
seller
does
not
make
a
demand,
the
grain
dealer
7
shall
pay
the
purchase
price
not
later
than
thirty
days
after
8
delivery
by
the
seller
unless
in
last
date
for
scheduled
9
payments
made
by
the
licensed
grain
dealer
to
sellers
for
10
delivered
grain
according
to
the
grain
dealer’s
standard
11
business
operation.
12
(2)
In
accordance
with
the
terms
of
a
credit-sale
13
contract
that
satisfies
the
requirements
of
this
chapter
.
14
The
department
shall
adopt
rules
for
payment
by
check
and
15
electronic
funds
transfer.
16
b.
A
grain
dealer
licensed
or
required
to
be
licensed
17
pursuant
to
section
203.3
shall
not
hold
a
check
for
the
18
purchase
of
grain
more
than
five
days
after
the
grain
dealer
19
issues
a
check
to
the
seller.
After
that
date,
the
grain
20
dealer
shall
deliver
the
check
in
person
or
by
mail
to
the
21
seller’s
last
known
address.
The
department
shall
adopt
rules
22
pursuant
to
chapter
17A
for
a
grain
dealer’s
payment
by
check
23
and
electronic
funds
transfer.
24
Sec.
4.
Section
203.15,
subsection
4,
paragraph
c,
25
subparagraph
(1),
subparagraph
division
(b),
Code
2025,
is
26
amended
to
read
as
follows:
27
(b)
The
grain
dealer
files
a
bond
with
the
department
in
the
28
amount
of
one
two
hundred
fifty
thousand
dollars
payable
to
the
29
department.
30
Sec.
5.
Section
203.15,
subsection
6,
Code
2025,
is
amended
31
to
read
as
follows:
32
6.
A
grain
dealer
who
purchases
grain
by
credit-sale
33
contract
shall
obtain
from
the
seller
a
signed
acknowledgment
34
stating
that
the
seller
has
received
notice
that
grain
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purchased
by
credit-sale
contract
is
not
protected
by
the
1
grain
depositors
and
sellers
indemnity
fund.
The
form
for
the
2
acknowledgment
shall
be
prescribed
by
the
department,
and
the
3
licensed
grain
dealer
and
the
seller
shall
each
be
provided
a
4
copy.
A
contract’s
use
of
terms
defined
in
section
203.1
shall
5
not
determine
whether
a
contract
is
a
credit-sale
contract
or
a
6
type
of
credit-sale
contract.
7
Sec.
6.
Section
203D.1,
Code
2025,
is
amended
by
adding
the
8
following
new
subsections:
9
NEW
SUBSECTION
.
2A.
“Deferred-payment
contract”
means
the
10
same
as
defined
in
section
203.1.
11
NEW
SUBSECTION
.
2B.
“Deferred-pricing
contract”
means
the
12
same
as
defined
in
section
203.1.
13
NEW
SUBSECTION
.
8A.
“Indemnity
fees”
or
“fees”
means
a
14
participation
fee
and
per-bushel
fee
as
provided
in
sections
15
203D.3
and
203D.3A.
16
Sec.
7.
Section
203D.1,
subsections
14
and
16,
Code
2025,
17
are
amended
to
read
as
follows:
18
14.
a.
“Purchased
grain”
means
grain
any
of
the
following:
19
(1)
Grain
entered
in
the
company-owned
paid
position
as
20
evidenced
on
the
grain
dealer’s
daily
position
record.
21
(2)
Grain
purchased
under
a
deferred-pricing
contract.
22
b.
“Purchased
grain”
does
not
include
grain
that
is
subject
23
to
an
exempt
transaction
based
on
documentation
satisfactory
24
to
the
department
showing
that
the
grain
dealer
did
any
of
the
25
following:
26
(1)
Purchased
the
grain
from
the
United
States
government
or
27
any
of
its
subdivisions
or
agencies.
28
(2)
Purchased
the
grain
from
a
person
licensed
as
a
grain
29
dealer
in
any
jurisdiction.
30
(3)
Purchased
the
grain
under
a
credit-sale
31
deferred-payment
contract.
32
(4)
Entered
the
grain
in
the
company-owned
paid
position
as
33
a
cancellation
of
a
collateral
warehouse
receipt.
34
(5)
Entered
the
grain
in
the
company-owned
paid
position
as
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an
intra-company
location
transfer.
1
16.
a.
“Seller”
means
a
person
who
sells
grain
which
,
that
2
the
person
has
produced
or
caused
to
be
produced
,
to
a
licensed
3
grain
dealer
,
but
excludes
a
person
who
executes
a
credit-sale
4
contract
as
a
seller
as
provided
in
section
203.15
.
However,
5
“seller”
6
b.
“Seller”
does
not
include
any
of
the
following:
7
a.
(1)
A
person
licensed
as
a
grain
dealer
in
any
8
jurisdiction
who
sells
grain
to
a
licensed
grain
dealer.
9
b.
(2)
A
person
who
sells
grain
that
is
not
produced
in
10
this
state
unless
such
grain
is
delivered
to
a
licensed
grain
11
dealer
at
a
location
in
this
state
as
the
first
point
of
sale.
12
(3)
A
person
who
sells
grain
pursuant
to
a
deferred-payment
13
contract.
14
Sec.
8.
Section
203D.3,
subsection
4,
Code
2025,
is
amended
15
to
read
as
follows:
16
4.
The
moneys
collected
under
this
section
and
deposited
17
in
the
fund
shall
be
used
exclusively
to
indemnify
depositors
18
and
sellers
as
provided
in
section
203D.6
and
to
pay
the
19
administrative
costs
of
this
chapter
.
20
Sec.
9.
Section
203D.3A,
unnumbered
paragraph
1,
Code
2025,
21
is
amended
to
read
as
follows:
22
The
department
shall
collect
indemnity
fees
,
including
23
participation
fees
and
per-bushel
fees
as
provided
in
this
24
section
,
if
established
imposed
by
the
board
pursuant
to
25
section
203D.5
,
at
rates
determined
by
the
board
as
provided
26
in
that
section.
A
person
required
to
pay
a
fee
shall
use
27
licensee
shall
remit
indemnity
fees
and
forms
and
deliver
the
28
payment
to
the
department
as
required
by
the
department.
29
Sec.
10.
Section
203D.3A,
subsection
1,
paragraph
a,
30
subparagraph
(1),
Code
2025,
is
amended
to
read
as
follows:
31
(1)
In
calculating
the
amount
of
the
initial
participation
32
fee,
an
applicant
for
a
new
license
shall
be
deemed
a
licensee
33
paying
the
full
annual
amount
of
the
participation
fee
owing
on
34
the
licensee’s
first
anniversary
date
as
provided
in
paragraph
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“b”
.
The
department
must
be
satisfied
that
the
applicant
is
1
calculating
the
amount
due
in
good
faith
and
using
the
best
2
information
available.
3
(a)
For
a
licensed
grain
dealer,
the
anniversary
date
is
4
the
last
date
to
apply
for
the
renewal
of
the
grain
dealer’s
5
license
before
the
license
expires
as
provided
in
section
6
203.5.
7
(b)
For
a
licensed
warehouse
operator,
the
anniversary
date
8
is
the
last
date
to
apply
for
the
renewal
of
the
warehouse
9
operator’s
license
before
the
license
expires
as
provided
in
10
section
203C.37.
11
Sec.
11.
Section
203D.3A,
subsection
1,
paragraph
b,
Code
12
2025,
is
amended
to
read
as
follows:
13
b.
A
licensee
shall
pay
remit
a
participation
fee
in
one
14
installment
as
part
of
a
license
renewal
application
in
the
15
same
manner
provided
in
paragraph
“a”
.
However,
the
licensee
16
may
elect
to
remit
the
participation
fee
on
four
successive
17
installment
dates,
with
each
installment
date
occurring
on
in
18
the
month
succeeding
the
last
date
of
the
fund’s
assessment
19
quarter
as
provided
in
section
203D.3
,
on
December
15,
March
20
15,
June
15,
and
September
15
.
The
licensee
shall
pay
remit
21
twenty-five
percent
of
the
total
participation
fee
assessed
on
22
each
installment
date.
However,
nothing
in
this
subsection
23
prevents
a
licensee
from
paying
the
participation
fee
on
an
24
accelerated
basis.
A
licensee
shall
pay
the
first
installment
25
on
the
last
date
of
the
fund’s
assessment
quarter
immediately
26
following
the
licensee’s
anniversary
date.
27
(1)
For
a
licensed
grain
dealer,
the
anniversary
date
is
28
the
last
date
to
apply
for
the
renewal
of
the
grain
dealer’s
29
license
before
the
license
expires
as
provided
in
section
30
203.5
.
31
(2)
For
a
licensed
warehouse
operator,
the
anniversary
date
32
is
the
last
date
to
apply
for
the
renewal
of
the
warehouse
33
operator’s
license
before
the
license
expires
as
provided
in
34
section
203C.37
.
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Sec.
12.
Section
203D.3A,
subsection
2,
Code
2025,
is
1
amended
to
read
as
follows:
2
2.
a.
A
licensed
grain
dealer
shall
remit
a
per-bushel
fee
3
shall
be
assessed
on
all
purchased
grain.
4
b.
The
licensed
grain
dealer
shall
forward
remit
the
5
per-bushel
fee
to
the
department
on
a
quarterly
basis
in
the
6
manner
and
using
the
forms
a
form
prescribed
by
the
department.
7
The
licensed
grain
dealer
shall
remit
the
per-bushel
fee
8
and
form
on
four
successive
installment
dates,
with
each
9
installment
date
occurring
in
the
month
succeeding
the
last
10
assessment
quarter
as
provided
in
section
203D.3,
on
December
11
15,
March
15,
June
15,
and
September
15.
12
c.
A
licensee
licensed
grain
dealer
is
delinquent
if
the
13
licensee
grain
dealer
fails
to
submit
remit
the
full
quarterly
14
per-bushel
fee
or
quarterly
forms
and
form
when
due
or
if,
15
upon
examination,
an
underpayment
of
the
fee
is
found
by
the
16
department.
The
licensed
grain
dealer
is
subject
to
a
penalty
17
of
ten
dollars
for
each
day
the
licensed
grain
dealer
is
18
delinquent
or
an
amount
equal
to
the
amount
of
the
deficiency,
19
whichever
is
less.
However,
a
licensee
licensed
grain
dealer
20
who
fails
to
submit
remit
the
full
quarterly
per-bushel
fee
or
21
quarterly
forms
form
when
due
,
is
subject
to
a
minimum
payment
22
of
ten
dollars.
The
department
may
establish
and
apply
a
23
margin
of
error
in
determining
whether
a
licensed
grain
dealer
24
is
delinquent.
The
per-bushel
fee
shall
be
collected
only
once
25
on
each
bushel
of
grain.
26
c.
d.
The
per-bushel
fee
shall
not
be
collected
more
27
than
once
on
each
bushel
of
grain.
A
licensed
grain
dealer
28
may
choose
to
pass
on
the
cost
of
a
per-bushel
fee
to
the
29
sellers
by
an
itemized
discount
noted
on
the
settlement
sheet.
30
However,
if
the
per-bushel
fee
is
not
in
effect,
no
a
licensed
31
grain
dealer
shall
not
make
such
a
discount
on
the
purchase
of
32
grain.
A
discount
made
nominally
for
the
per-bushel
fee
while
33
the
per-bushel
fee
is
not
in
effect
is
grounds
for
a
license
34
suspension
or
revocation
under
chapter
203
.
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Sec.
13.
Section
203D.5,
subsection
1,
unnumbered
paragraph
1
1,
Code
2025,
is
amended
to
read
as
follows:
2
The
board
shall
annually
review
the
debits
of
and
credits
3
to
the
grain
depositors
and
sellers
indemnity
fund
created
4
in
section
203D.3
and
shall
determine
whether
to
impose
the
5
participation
fee
and
per-bushel
fee
as
provided
in
section
6
203D.3A
,
make
adjustments
to
the
indemnity
fees
effective
7
on
the
previous
September
1,
or
waive
the
indemnity
fees
as
8
necessary
to
comply
with
this
section
.
The
board
shall
make
9
the
determination
not
later
than
May
1
of
each
year.
The
10
board
shall
impose
the
indemnity
fees
or
adjust
the
indemnity
11
fees
effective
on
the
previous
September
1
in
accordance
with
12
chapter
17A
.
The
imposition
or
adjustment
of
the
indemnity
13
fees
shall
become
effective
as
follows:
14
Sec.
14.
Section
203D.5,
subsections
4
and
5,
Code
2025,
are
15
amended
to
read
as
follows:
16
4.
If
on
the
last
date
of
the
fund’s
assessment
year
as
17
provided
in
section
203D.3
the
assets
of
the
fund
exceed
eight
18
sixteen
million
dollars,
less
any
encumbered
balances
or
19
pending
or
unsettled
claims,
all
of
the
following
apply:
20
a.
The
participation
fee
as
provided
in
section
203D.3A
21
shall
be
waived
and
shall
not
be
assessable
or
owing
for
the
22
following
assessment
year
of
the
fund.
However,
the
licensee
23
shall
continue
to
pay
remit
any
owing
participation
fee
that
24
was
in
effect
on
the
prior
September
1.
25
b.
The
per-bushel
fee
as
provided
in
section
203D.3A
26
shall
be
waived
and
shall
not
be
assessable
or
owing
for
the
27
following
assessment
year
.
The
waiver
shall
also
apply
to
28
purchased
grain
that
is
unpriced
on
the
last
date
of
the
fund’s
29
assessment
year.
However,
the
licensed
grain
dealer
shall
30
remit
any
per-bushel
fee
that
is
owing
on
that
date.
31
5.
The
board
shall
reinstate
the
indemnity
fees
as
32
provided
in
this
section
if
the
assets
of
the
fund,
less
any
33
unencumbered
balances
or
pending
or
unsettled
claims,
are
three
34
eight
million
dollars
or
less.
35
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Sec.
15.
Section
203D.6,
subsection
1,
Code
2025,
is
amended
1
to
read
as
follows:
2
1.
Persons
who
may
file
claims.
A
depositor
or
seller
may
3
file
a
claim
with
the
department
for
indemnification
of
a
loss
4
from
the
grain
depositors
and
sellers
indemnity
fund.
A
claim
5
shall
be
filed
in
the
manner
prescribed
by
rules
adopted
by
the
6
board
department
.
7
Sec.
16.
Section
203D.6,
subsection
4,
paragraph
d,
Code
8
2025,
is
amended
to
read
as
follows:
9
d.
That
the
claim
derives
from
a
covered
transaction.
For
10
purposes
of
this
paragraph,
a
claim
derives
from
a
covered
11
transaction
if
the
claimant
is
a
any
of
the
following:
12
(1)
A
depositor
who
delivered
the
grain
to
a
licensed
13
warehouse
operator
within
six
months
of
the
incurrence
date
for
14
a
claim
period
as
provided
in
subsection
2.
15
(2)
A
seller
who
transferred
title
to
the
grain
to
a
16
licensed
grain
dealer
,
other
than
by
credit-sale
contract
a
17
deferred-payment
contract,
within
six
months
of
the
incurrence
18
date
for
a
claim
period
as
provided
in
subsection
2
,
or
if
the
19
claimant
is
a
depositor
who
delivered
the
grain
to
a
licensed
20
warehouse
operator
.
21
Sec.
17.
Section
203D.6,
subsections
5,
6,
and
8,
Code
2025,
22
are
amended
to
read
as
follows:
23
5.
Value
Dollar
value
of
loss
——
warehouse
depositor
claims.
24
a.
The
board
shall
determine
the
dollar
value
of
a
claim
25
loss
incurred
by
a
depositor
holding
a
warehouse
receipt
or
a
26
scale
weight
ticket
for
grain
that
the
depositor
delivered
for
27
storage
to
the
licensed
warehouse
operator.
28
b.
(1)
If
the
department
has
been
appointed
by
the
court
29
as
receiver
of
the
grain
assets
of
the
warehouse
operator,
30
the
dollar
value
of
a
loss
shall
be
presumed
to
be
as
stated
31
in
the
plan
of
disposition
approved
by
the
court.
If
the
32
warehouse
operator
has
filed
a
petition
in
bankruptcy,
the
33
dollar
value
of
a
loss
shall
be
presumed
to
be
based
upon
34
the
fair
market
price,
free-on-board
from
the
site
of
the
35
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warehouse
operator,
being
paid
to
producers
for
grain
by
the
1
grain
terminal
operator
nearest
the
warehouse
operator
on
the
2
date
the
petition
was
filed.
If
there
is
neither
a
department
3
receivership
nor
a
bankruptcy
filing,
the
dollar
value
of
4
a
loss
shall
be
presumed
to
be
based
upon
the
fair
market
5
price,
free-on-board
from
the
site
of
the
warehouse
operator,
6
being
paid
to
producers
for
grain
by
the
grain
terminal
7
operator
nearest
the
warehouse
operator
on
the
date
of
license
8
revocation
or
cancellation
incurrence
date
.
If
more
than
9
one
incurrence
date
applies
to
a
claim,
the
board
may
choose
10
between
the
two.
However,
the
board
may
accept
an
alternative
11
valuation
value
of
a
claim
loss
upon
a
showing
of
just
cause
by
12
the
depositor
or
department.
13
(2)
Notwithstanding
subparagraph
(1),
all
of
the
following
14
apply:
15
(a)
The
dollar
value
of
a
loss
for
corn
shall
not
exceed
the
16
dollar
value
for
a
loss
of
U.S.
No.
2
yellow
corn
according
to
17
grain
standards
adopted
by
the
federal
grain
inspection
service
18
of
the
United
States
department
of
agriculture.
19
(b)
The
dollar
value
of
a
loss
for
soybeans
shall
not
20
exceed
the
dollar
value
of
a
loss
for
U.S.
No.
2
yellow
21
soybeans
according
to
grain
standards
adopted
by
the
federal
22
grain
inspection
service
of
the
United
States
department
of
23
agriculture.
24
c.
All
depositors
filing
claims
under
this
section
shall
be
25
bound
by
the
dollar
value
loss
determined
by
the
board.
The
26
dollar
value
loss
of
the
loss
is
the
outstanding
balance
on
the
27
validated
claim
at
time
of
payment
from
the
fund.
28
6.
Value
Dollar
value
of
loss
——
grain
dealer
seller
claims.
29
a.
The
dollar
value
of
a
claim
loss
incurred
by
a
seller
who
30
has
sold
grain
or
delivered
grain
for
sale
or
exchange
and
who
31
is
a
creditor
of
the
licensed
grain
dealer
for
all
or
part
of
32
the
dollar
value
of
a
loss
of
the
grain
shall
be
based
on
the
33
amount
stated
on
the
obligation
on
the
date
of
the
sale.
34
b.
(1)
If
the
sold
grain
was
unpriced,
the
dollar
value
of
35
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a
claim
loss
shall
be
presumed
to
be
based
upon
the
fair
market
1
price,
free-on-board
from
the
site
of
the
grain
dealer,
being
2
paid
to
producers
for
grain
by
the
grain
terminal
operator
3
nearest
the
grain
dealer
on
the
incurrence
date
of
the
license
4
revocation
or
cancellation
or
the
filing
of
a
petition
in
5
bankruptcy
.
If
more
than
one
incurrence
date
applies
to
a
6
claim,
the
board
may
choose
between
the
two.
However,
the
7
board
may
accept
an
alternative
valuation
dollar
value
of
8
a
claim
loss
upon
a
showing
of
just
cause
by
the
seller
or
9
department.
10
(2)
Notwithstanding
subparagraph
(1),
all
of
the
following
11
apply:
12
(a)
The
dollar
value
of
a
loss
for
corn
shall
not
exceed
the
13
dollar
value
for
a
loss
of
U.S.
No.
2
yellow
corn
according
to
14
grain
standards
adopted
by
the
federal
grain
inspection
service
15
of
the
United
States
department
of
agriculture.
16
(b)
The
dollar
value
of
a
loss
for
soybeans
shall
not
17
exceed
the
dollar
value
of
a
loss
for
U.S.
No.
2
yellow
18
soybeans
according
to
grain
standards
adopted
by
the
federal
19
grain
inspection
service
of
the
United
States
department
of
20
agriculture.
21
c.
All
sellers
filing
claims
under
this
section
shall
be
22
bound
by
the
dollar
value
of
a
loss
determined
by
the
board.
23
The
dollar
value
of
the
loss
is
the
outstanding
balance
on
the
24
validated
claim
at
the
time
of
payment
from
the
fund.
25
8.
Payment
of
claims.
26
a.
Upon
a
determination
that
the
claim
is
eligible
for
27
payment
indemnification
,
the
board
shall
provide
for
payment
of
28
ninety
percent
of
pay
a
claimant
based
on
the
dollar
value
of
29
the
loss,
as
determined
by
the
board
for
a
depositor’s
claim
30
under
subsection
5
,
but
not
or
for
a
seller’s
claim
under
31
subsection
6.
The
board
shall
pay
the
claimant
according
to
32
the
following
schedule:
33
(1)
For
a
depositor,
the
board
shall
pay
ninety
percent
of
34
the
loss
but
not
more
than
three
hundred
thousand
dollars
per
35
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claimant
.
1
(2)
(a)
For
a
seller,
except
for
a
seller
who
sold
the
2
grain
under
credit-sale
contract,
the
board
shall
pay
ninety
3
percent
of
the
loss
but
not
more
than
three
hundred
thousand
4
dollars.
5
(b)
For
a
seller
who
sold
the
grain
pursuant
to
a
6
credit-sale
contract,
one
of
the
following:
7
(i)
If
the
grain
was
sold
pursuant
to
a
deferred-pricing
8
contract,
the
board
shall
pay
seventy
percent
of
the
loss
but
9
not
more
than
two
hundred
ten
thousand
dollars.
10
(ii)
If
the
grain
was
sold
pursuant
to
a
deferred-payment
11
contract,
the
board
shall
not
pay
any
percent
or
amount
of
the
12
loss.
13
b.
(1)
If
at
any
time
the
board
determines
that
there
14
are
insufficient
funds
moneys
in
the
fund
to
make
payment
of
15
indemnify
all
claims,
the
board
may
shall
order
that
payment
be
16
deferred
on
specified
claims
be
indemnified
according
to
the
17
following
order:
18
(a)
First
to
depositors
and
sellers
equally
as
determined
19
by
the
board,
except
for
sellers
who
sold
the
grain
pursuant
20
to
deferred-pricing
contracts
.
21
(b)
Second
to
sellers
who
sold
the
grain
pursuant
to
22
deferred-pricing
contracts.
23
(2)
The
board
may
establish
one
or
more
claim
24
indemnification
periods
based
on
the
amount
of
moneys
in
the
25
fund
and
the
amount
required
to
indemnify
all
eligible
claims.
26
The
department
,
upon
the
board’s
instruction,
shall
hold
those
27
unindemnified
claims
for
payment
until
the
board
determines
28
that
the
fund
again
contains
sufficient
assets
until
the
next
29
payment
period
or
payment
periods
as
moneys
in
the
fund
are
30
available
.
31
EXPLANATION
32
The
inclusion
of
this
explanation
does
not
constitute
agreement
with
33
the
explanation’s
substance
by
the
members
of
the
general
assembly.
34
BACKGROUND
——
GRAIN
DEALERS
AND
WAREHOUSE
OPERATORS.
This
35
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bill
amends
provisions
regulating
marketers
of
grain,
referred
1
to
as
grain
dealers
purchasing
grain
(Code
chapter
203),
and
2
grain
warehouse
operators
storing
grain
under
bailment
(Code
3
chapter
203C).
The
bill
also
provides
for
sellers
of
grain
to
4
licensed
grain
dealers,
and
depositors
storing
grain
with
a
5
licensed
grain
warehouse,
by
indemnifying
losses
resulting
from
6
the
sale
or
deposit
(Code
chapter
203D).
7
BACKGROUND
——
LICENSURE
REQUIREMENTS.
The
department
of
8
agriculture
and
land
stewardship
(DALS)
licenses
a
grain
dealer
9
purchasing
at
least
1,000
bushels
from
producers
of
that
grain
10
(sellers)
during
any
calendar
month
(Code
section
203.1).
DALS
11
licenses
a
warehouse
operator
in
the
business
of
operating
a
12
warehouse
for
the
storage
of
bushels
on
behalf
of
title
holders
13
(depositors)
(Code
section
203C.1).
Alternatively,
a
warehouse
14
operator
may
be
regulated
by
the
United
States
department
of
15
agriculture
under
the
United
States
Warehouse
Act
(7
U.S.C.
16
ch.
10).
A
state
license
application
must
be
accompanied
by
17
a
financial
statement
(Code
sections
203.3
and
203C.6).
A
18
grain
dealer
must
meet
certain
net
worth
requirements
to
be
19
issued
a
class
1
license
and
purchase
grain
by
credit-sale
20
contract.
Normally,
a
grain
dealer’s
financial
statement
21
must
be
accompanied
by
an
unqualified
opinion
based
upon
an
22
audit
performed
by
a
certified
public
accountant
licensed
in
23
this
state.
However,
DALS
may
accept
a
qualification
in
an
24
opinion
because
of
the
audit
procedures
used.
DALS
may
also
25
accept
a
review
by
a
certified
public
accountant
in
lieu
of
an
26
unqualified
opinion.
27
BACKGROUND
——
CREDIT-SALE
CONTRACTS.
A
credit-sale
28
contract
(also
referred
to
as
deferred-payment
contract,
29
deferred-pricing
contract,
or
price-later
contract)
involves
a
30
transaction
for
the
sale
of
grain
in
which
the
grain’s
producer
31
is
the
seller
and
the
licensed
grain
dealer
is
the
buyer.
The
32
purchase
price
is
to
be
paid
to
the
seller
by
the
licensed
33
grain
dealer
more
than
30
days
after
the
seller’s
delivery
of
34
the
grain
to
the
licensed
grain
dealer
or
a
person
designated
35
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17
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508
by
the
licensed
grain
dealer
(Code
sections
203.1
and
203.8).
1
Generally,
there
are
two
types
of
credit-sale
contracts,
a
2
deferred-pricing
contract
and
a
deferred-payment
contract.
3
In
both
cases,
the
seller’s
payment
amount
is
delayed
until
4
after
the
sale
(transfer
of
title)
and
delivery.
Under
a
5
deferred-pricing
contract,
the
payment
amount
is
unknown
at
6
the
time
of
sale
and
delivery,
with
the
expectation
that
the
7
seller
will
receive
a
higher
price
in
the
future.
Under
8
a
deferred-payment
contract,
the
purchase
price
has
been
9
determined
upon,
or
within
a
short
time
after,
the
grain’s
10
sale
and
delivery.
By
deferring
payment,
the
seller
elects
to
11
claim
income
from
the
sale
in
the
subsequent
tax
year
assuming
12
a
more
beneficial
tax
rate
will
apply
in
that
year
(e.g.,
13
expecting
a
reduction
in
farm
income).
In
order
to
purchase
14
grain
under
a
credit
sale
contract,
a
licensed
grain
dealer
15
must
comply
with
a
number
of
requirements,
including
a
number
16
of
financial
conditions
based
on
net
worth
or
a
deficiency
bond
17
or
irrevocable
letter
of
credit.
The
licensed
grain
dealer’s
18
last
financial
statement
must
be
accompanied
by
an
unqualified
19
opinion
by
a
certified
public
accountant
or
alternatively
the
20
licensed
grain
dealer
must
file
a
bond
with
DALS
in
the
amount
21
of
$100,000.
22
BACKGROUND
——
GRAIN
DEPOSITORS
AND
SELLERS
INDEMNITY
23
FUND.
A
seller
selling
grain
to
a
licensed
grain
dealer
or
a
24
depositor
depositing
grain
with
a
licensed
warehouse
operator
25
may
be
reimbursed
for
a
loss
incurred
by
the
failure
of
the
26
licensee
to
honor
a
contractual
obligation
regarding
the
27
transaction
(Code
section
203D.6).
A
payment
is
made
from
28
the
grain
depositors
and
sellers
indemnity
fund
(indemnity
29
fund)
upon
a
determination
that
the
claim
is
eligible
for
30
indemnification
by
the
Iowa
grain
indemnity
fund
board
31
(indemnity
board)
acting
in
cooperation
with
DALS.
To
be
32
timely,
a
claim
must
be
filed
within
a
claim
period.
The
claim
33
period
begins
on
either
of
two
incurrence
dates
and
ends
120
34
days
later.
An
incurrence
date
is
either
when
the
license
of
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the
grain
dealer
or
warehouse
operator’s
license
ceases
(is
1
revoked
or
voluntarily
canceled)
or
the
date
a
petition
is
2
filed
in
bankruptcy.
3
BACKGROUND
——
FEES.
In
addition
to
license
fees
deposited
4
into
the
general
fund
of
the
state
(Code
sections
203.6
and
5
203C.33),
each
licensee
may
be
required
to
remit
either
one
or
6
two
special
fees
(indemnity
fees)
deposited
in
the
indemnity
7
fund,
referred
to
as
a
participation
fee
and
per-bushel
fee.
8
The
licensed
grain
dealer’s
participation
fee
is
calculated
9
according
to
the
following
formula:
the
assessment
rate
of
not
10
more
than
$0.014
multiplied
by
all
bushels
of
purchased
grain
11
during
the
grain
dealer’s
prior
fiscal
year
with
a
minimum
12
of
$50
and
no
maximum
limit.
The
licensed
grain
dealer’s
13
per-bushel
fee
is
calculated
according
to
a
similar
formula:
14
the
assessment
rate
of
not
more
than
$0.25
multiplied
by
all
15
bushels
of
purchased
grain
for
the
grain
dealer’s
assessment
16
year
with
no
minimum
and
a
$500
maximum
limit.
The
qualifying
17
term
“purchased
grain”
equals
the
total
number
of
bushels
18
purchased
from
sellers
minus
a
number
of
exempt
bushels
19
purchased,
including
those
purchased
under
credit-sale
contract
20
(Code
section
203D.1).
Purchased
grain
is
reported
to
DALS
21
as
“paid
company-owned”
(Code
section
203D.1).
The
licensed
22
warehouse
operator’s
participation
fee
is
based
on
the
number
23
of
bushels
of
storage
capacity
of
the
warehouse
(Code
section
24
203D.5).
An
assessment
year
begins
September
1
and
ends
August
25
31
(Code
sections
203D.3
and
203D.5).
The
assessment
year
is
26
further
divided
into
four
three-month
assessment
quarters.
A
27
grain
dealer
or
warehouse
operator
may
remit
a
participation
28
fee
annually
(with
an
application
for
an
initial
license
or
the
29
renewal
of
a
license)
or
on
a
quarterly
basis.
A
grain
dealer
30
must
remit
a
per-bushel
fee
on
a
quarterly
basis
(Code
section
31
203D.3A).
32
BACKGROUND
——
INDEMNITY
BOARD
REVIEW
OF
INDEMNITY
FUND.
The
33
indemnity
board
must
annually
review
the
debits
of
and
credits
34
to
the
indemnity
fund
and
by
May
1
determine
whether
to
impose
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the
indemnity
fees,
make
adjustments
to
the
existing
indemnity
1
fees,
or
waive
the
existing
indemnity
fees
as
necessary
to
2
comply
with
two
triggers.
The
balance
in
the
indemnity
fund
3
triggers
the
indemnity
fees
waiver
or
reinstatement
(Code
4
section
203D.5).
When
the
balance
in
the
indemnity
fund
5
reaches
$8
million,
the
indemnity
fees
are
automatically
6
waived.
The
indemnity
fees
are
reinstated
by
the
indemnity
7
board
if
the
balance
in
the
fund
is
$3
million
or
less
(Code
8
section
203D.5).
The
triggered
waiver
or
reinstatement
is
9
effective
on
the
first
day
of
the
following
assessment
year
10
(September
1).
A
licensee
is
required
to
remit
the
outstanding
11
amount
of
the
waived
participation
fee
that
is
otherwise
owing
12
for
the
current
assessment
year.
However,
a
licensed
grain
13
dealer
is
no
longer
obligated
to
remit
the
outstanding
amount
14
of
the
per-bushel
fee
otherwise
owing
for
that
period,
unless
15
the
amount
is
delinquent
(Code
section
203D.5).
16
BACKGROUND
——
INDEMNITY
FUND
——
VALUE
OF
LOSS.
Generally,
17
a
loss
incurred
by
a
depositor
(holding
a
warehouse
receipt
18
or
scale
weight
ticket)
or
seller
who
is
a
party
to
a
sale
19
may
be
determined
using
several
methods
of
valuation.
For
20
a
depositor,
it
may
be
a
court
order
hearing
a
matter
in
21
receivership.
Otherwise,
the
loss
is
based
on
the
fair
market
22
price
paid
to
producer
sellers
at
a
nearby
terminal
on
an
23
incurrence
date.
For
a
seller,
it
may
be
the
sales
price
24
agreed
to
by
the
parties.
If
the
grain
has
not
yet
been
priced,
25
the
loss
is
again
based
on
the
fair
market
price
paid
at
the
26
terminal
on
one
of
those
incurrence
dates.
In
any
case,
from
27
the
determined
loss
is
deducted
any
amount
recovered
by
the
28
depositor
or
seller
through
other
legal
or
equitable
remedies,
29
including
the
liquidation
of
assets
(Code
section
203D.6).
30
BACKGROUND
——
INDEMNITY
FUND
——
PAYMENT
OF
CLAIMS.
A
31
claim
must
meet
eligibility
requirements,
including
that
it
32
is
timely
filed,
there
is
evidence
of
a
loss
incurred
by
a
33
claimant,
and
the
claim
derives
from
a
covered
transaction.
34
For
a
claimant
who
is
a
depositor,
a
covered
transaction
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requires
that
the
grain
must
have
been
delivered
to
a
licensed
1
warehouse
operator.
For
a
claimant
who
is
a
seller,
a
covered
2
transaction
requires
that
title
be
transferred
within
six
3
months
of
the
incurrence
date.
A
covered
transaction
excludes
4
sale
by
credit-sale
contract.
A
seller
or
depositor
is
5
entitled
to
be
reimbursed
90
percent
of
a
loss
but
not
more
6
than
$300,000.
7
BILL’S
PROVISIONS
——
CREDIT-SALE
CONTRACTS
——
LICENSED
GRAIN
8
DEALER’S
FINANCIAL
CONDITIONS.
The
bill
amends
financial
9
conditions
required
for
a
licensed
grain
dealer
holding
a
10
class
1
license
to
purchase
grain
by
credit-sale
contract.
11
Specifically,
a
licensed
grain
dealer
who
did
not
submit
a
12
financial
statement
accompanied
by
an
unqualified
opinion
must
13
file
a
bond
with
DALS
for
$250,000.
14
BILL’S
PROVISIONS
——
INDEMNITY
FEES
——
PAYMENT
SCHEDULE.
15
The
bill
provides
that
a
grain
dealer
or
warehouse
operator
16
may
pay
the
participation
fee
in
one
installment
as
part
of
17
the
license
renewal
or
on
four
successive
installment
dates
on
18
December
15,
March
15,
June
15,
and
September
15.
The
bill
19
provides
that
the
grain
dealer
must
pay
the
per-bushel
fee
on
20
the
same
installment
dates.
21
BILL’S
PROVISIONS
——
INDEMNITY
FEES
——
TRIGGERS.
The
bill
22
adjusts
both
triggers
waiving
or
reinstating
the
two
indemnity
23
fees.
The
bill
increases
from
$8
million
to
$16
million
the
24
balance
in
the
indemnity
fund
required
to
trigger
a
waiver
and
25
increases
from
$3
million
to
$8
million
the
balance
in
the
26
indemnity
fund
required
to
trigger
a
reinstatement.
27
BILL’S
PROVISIONS
——
INDEMNITY
FEES
IMPOSED
ON
CREDIT-SALE
28
CONTRACT
TRANSACTIONS.
The
bill
provides
that
grain
sold
by
29
deferred-pricing
contract
is
considered
purchased
grain
and
30
grain
sold
by
deferred-payment
contract
is
not.
Therefore,
a
31
licensed
grain
dealer
is
only
assessed
an
indemnity
fee
on
the
32
deferred-pricing
contract
grain.
33
BILL’S
PROVISIONS
——
INDEMNITY
FUND
——
DOLLAR
VALUE
OF
34
LOSS.
The
bill
provides
special
valuation
rules
for
losses
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involving
corn
or
soybeans.
The
dollar
value
of
a
loss
1
for
corn
cannot
exceed
the
dollar
value
for
a
loss
of
U.S.
2
No.
2
yellow
corn
according
to
grain
standards
adopted
by
3
the
federal
grain
inspection
service
of
the
United
States
4
department
of
agriculture.
The
dollar
value
of
a
loss
for
5
soybeans
cannot
exceed
the
dollar
value
of
a
loss
for
U.S.
No.
6
2
yellow
soybeans
according
to
grain
standards
adopted
by
that
7
same
agency.
A
dollar
loss
incurred
under
a
deferred-pricing
8
contract
is
presumed
the
same
as
any
other
loss
in
which
the
9
price
for
the
grain
has
not
been
determined
(e.g.,
determined
10
by
the
fair
market
price
at
the
nearest
terminal
on
the
11
incurrence
date).
12
BILL’S
PROVISIONS
——
INDEMNITY
FUND
——
PAYMENT
OF
CLAIMS.
13
The
bill
provides
that
the
sale
of
grain
by
deferred-pricing
14
contract
is
no
longer
excluded
from
the
meaning
of
a
covered
15
transaction
and
a
seller
may
therefore
claim
a
dollar
loss
16
resulting
from
the
grain
dealer’s
default.
The
bill
provides
17
for
the
payment
to
claimants
based
on
an
order
of
priority.
18
The
first
priority
is
provided
to
a
depositor
or
seller,
other
19
than
a
seller
who
sold
grain
by
credit-sale
contract.
The
20
payout
remains
the
same:
90
percent
of
the
loss
but
not
more
21
than
$300,000.
The
second
priority
is
provided
to
a
seller
22
who
sold
grain
pursuant
to
a
deferred-pricing
contract.
In
23
that
case,
the
payout
is
reduced
to
70
percent
of
the
loss
but
24
not
more
than
$210,000.
A
deferred-payment
contract
remains
25
ineligible
for
payment.
26
BILL’S
PROVISIONS
——
INDEMNITY
FUND
——
ORDER
OF
PAYMENTS.
27
The
board
may
determine
when
payments
are
to
be
made
28
depending
upon
moneys
in
the
indemnity
fund.
Payments
are
29
to
be
made
on
an
equal
basis
between
depositors
and
sellers
30
with
one
exception.
A
seller
whose
grain
was
sold
under
a
31
deferred-pricing
contract
is
indemnified
after
depositors
and
32
other
sellers.
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