HF 3743

as introduced - 89th Legislature (2015 - 2016) Posted on 03/31/2016 12:31pm

A bill for an act
relating to agriculture; increasing bond amounts for certain grain buyers;
modifying grain buyer requirements; requiring a report; amending Minnesota
Statutes 2014, sections 223.17, subdivision 4; 223.175.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2014, section 223.17, subdivision 4, is amended to read:

Subd. 4.

Bond.

(a) Before a grain buyer's license is issued, the applicant for
the license must file with the commissioner a bond in a penal sum prescribed by the
commissioner but not less than the following amounts:

(1) deleted text begin $10,000 deleted text end new text begin $20,000 new text end for grain buyers whose gross annual purchases are $100,000 or
less;

(2) deleted text begin $20,000 deleted text end new text begin $40,000 new text end for grain buyers whose gross annual purchases are more than
$100,000 but not more than $750,000;

(3) deleted text begin $30,000 deleted text end new text begin $60,000 new text end for grain buyers whose gross annual purchases are more than
$750,000 but not more than $1,500,000;

(4) deleted text begin $40,000 deleted text end new text begin $80,000 new text end for grain buyers whose gross annual purchases are more than
$1,500,000 but not more than $3,000,000;

(5) deleted text begin $50,000 deleted text end new text begin $100,000 new text end for grain buyers whose gross annual purchases are more than
$3,000,000 but not more than $6,000,000;

(6) deleted text begin $70,000 deleted text end new text begin $150,000 new text end for grain buyers whose gross annual purchases are more than
$6,000,000 but not more than $12,000,000;

(7) deleted text begin $125,000 deleted text end new text begin $200,000 new text end for grain buyers whose gross annual purchases are more than
$12,000,000 but not more than $24,000,000; and

(8) deleted text begin $150,000 deleted text end new text begin $250,000 new text end for grain buyers whose gross annual purchases exceed
$24,000,000.

(b) A grain buyer who has filed a bond with the commissioner prior to July 1, deleted text begin 2004 deleted text end new text begin
2016 new text end , is not required to increase the amount of the bond to comply with this section until
July 1, deleted text begin 2005 deleted text end new text begin 2017 new text end . The commissioner may postpone an increase in the amount of the bond
until July 1, deleted text begin 2006 deleted text end new text begin 2018 new text end , if a licensee demonstrates that the increase will impose undue
financial hardship on the licensee, and that producers will not be harmed as a result of
the postponement. The commissioner may impose other restrictions on a licensee whose
bond increase has been postponed. The amount of the bond shall be based on the most
recent gross annual grain purchase report of the grain buyer.

(c) A first-time applicant for a grain buyer's license shall file a deleted text begin $50,000 deleted text end new text begin $75,000 new text end
bond with the commissioner. This bond shall remain in effect for the first year of the
license. Thereafter, the licensee shall comply with the applicable bonding requirements
contained in paragraph (a), clauses (1) to (8).

deleted text begin (d) In lieu of the bond required by this subdivision the applicant may deposit with
the commissioner of management and budget cash, a certified check, a cashier's check,
a postal, bank, or express money order, assignable bonds or notes of the United States,
or an assignment of a bank savings account or investment certificate or an irrevocable
bank letter of credit as defined in section 336.5-102, in the same amount as would be
required for a bond.
deleted text end

deleted text begin (e) deleted text end new text begin (d) new text end Bonds must be continuous until canceled. To cancel a bond, a surety must
provide 90 days' written notice of the bond's termination date to the licensee and the
commissioner.

new text begin (e) At each licensed location, the licensee must post in a conspicuous location
the current dollar amount of the bond the licensee filed with the commissioner under
paragraph (a). This notice also must inform grain sellers which transactions are or are
not covered by the bond.
new text end

Sec. 2.

Minnesota Statutes 2014, section 223.175, is amended to read:

223.175 WRITTEN VOLUNTARY EXTENSION OF CREDIT CONTRACTS;
FORM.

A written confirmation required under section 223.177, subdivision 2, and a
written voluntary extension of credit contract must include those items prescribed by the
commissioner by rule. A contract shall include a statement of the legal and financial
responsibilities of grain buyers and sellers established in this chapter new text begin as well as contact
information for at least two insurance companies or agents that sell policies intended to
protect grain sellers who enter into voluntary extension of credit contracts new text end . A contract
shall also new text begin prominently new text end include the following statement in not less than deleted text begin ten deleted text end new text begin 14 new text end point,
all capital type, framed in a box with space provided for the seller's signature: "THIS
CONTRACT CONSTITUTES A VOLUNTARY EXTENSION OF CREDIT. new text begin UNLIKE
A SALE BY CASH OR CHECK, new text end THIS CONTRACT IS NOT COVERED BY ANY
GRAIN BUYER'S BOND. new text begin THE SELLER ACKNOWLEDGES THAT INSURANCE
MAY BE PURCHASED THROUGH A THIRD PARTY. INSURANCE MAY PROTECT
THE SELLER IF THE BUYER IS UNABLE TO PAY IN THE MANNER SPECIFIED
IN THIS CONTRACT. THIS CONTRACT INCLUDES THE NAMES AND PHONE
NUMBERS OF THIRD PARTIES THAT OFFER THIS TYPE OF INSURANCE. THE
SELLER SHOULD REQUEST A QUOTE FROM SEVERAL INSURERS BEFORE
PURCHASING A POLICY. new text end " If a written contract is provided at the time the grain is
delivered to the grain buyer, the seller shall sign the contract in the space provided beneath
the statement. A transaction that does not meet the provisions of a voluntary extension
of credit, including the issuance and signing of a voluntary extension of credit contract,
is a cash sale.

Sec. 3. new text begin REPORT REQUIRED.
new text end

new text begin By January 15, 2017, the commissioner of agriculture must report recommendations
to the legislative committees with jurisdiction over agriculture policy and finance
regarding opportunities to improve:
new text end

new text begin (1) financial oversight of licensed grain buyers, utilizing to the greatest extent
practicable technology and coordination with relevant entities in order to minimize the
burden on licensees and the commissioner; and
new text end

new text begin (2) the methods used by the commissioner, private bond companies, and others to
monitor and evaluate the financial solvency of licensed grain buyers for the protection of
the state's agricultural producers.
new text end