21.0032.03000
Sixty-seventh
Legislative Assembly HOUSE BILL NO. 1026
of North Dakota
Introduced by
Legislative Management
(Agriculture and Transportation Committee)
1 A BILL for an Act to create and enact a new section to chapter 60-02, and two new sections to
2 chapter 60-02.1 of the North Dakota Century Code, relating to financial criteria for grain buyer,
3 grain broker, grain processor, and warehousemen licenses, and licensing and bonding for grain
4 brokers and grain processors; to amend and reenact sections 60-02-01, 60-02-07, 60-02-09,
5 60-02-11, 60-02-12, 60-02-19.1, 60-02-24, 60-02.1-01, 60-02.1-07, 60-02.1-08, 60-02.1-10,
6 60-02.1-11, 60-02.1-13, 60-02.1-14, 60-02.1-15, 60-02.1-17, 60-02.1-19, 60-02.1-21,
7 60-02.1-23, 60-02.1-29, 60-02.1-32, 60-02.1-41, subsection 2 of section 60-04-01, and section
8 60-10-16 of the North Dakota Century Code, relating to definitions of grain brokers and
9 processors, the duties and powers of the commissioner, confidentiality records, scale ticket
10 contents, credit-sale contracts, reports, annual licenses, fees, and bonds for grain buyers, grain
11 brokers, grain processors, and warehousemen; to repeal sections 60-02.1-06, 60-02.1-07.1,
12 60-02.1-26, 60-02.1-27, and 60-10-15; and to provide a penalty.
13 BE IT ENACTED BY THE LEGISLATIVE ASSEMBLY OF NORTH DAKOTA:
14 SECTION 1. AMENDMENT. Section 60-02-01 of the North Dakota Century Code is
15 amended and reenacted as follows:
16 60-02-01. Definitions.
17 In this chapter, unless the context or subject matter otherwise requires:
18 1. "Commissioner" means the agriculture commissioner.
19 2. "Credit-sale contract" means a written contract for the sale of grain pursuant to which
20 the sale price is to be paid or may be paid more than thirty days after the delivery or
21 release of the grain for sale and which contains the notice provided in subsection 7 of
22 section 60-02-19.1. If a part of the sale price of a contract for the sale of grain is to be
23 paid or may be paid more than thirty days after the delivery or release of the grain for
24 sale, only such part of the contract is a credit-sale contract.
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1 3. "Deferred-payment contract" means a credit-sale contract for which the amount owed
2 for the sale of grain has been established, but the payment is postponed until a later
3 date.
4 4. "Grain" means wheat, durum, oats, rye, barley, buckwheat, flaxseed, speltz, safflower,
5 sunflower seeds, tame mustard, peas, beans, soybeans, corn, clover, millet, alfalfa,
6 and any other commercially grown grain or grass seed. "Grain" as defined in this
7 chapter shall not include grain or grass seeds owned by or in the possession of the
8 warehouseman thatwhich have been cleaned, processed, and specifically identified for
9 an intended use of planting for reproduction and for which a warehouse receipt has
10 not been issued.
11 4.5. "Noncredit-sale contract" means a contract for the sale of grain other than a credit-sale
12 contract.
13 5.6. "Public warehouse" means any elevator, mill, warehouse, subterminal, grain
14 warehouse, terminal warehouse, or other structure or facility not licensed under the
15 United States Warehouse Act [7 U.S.C. 241-273] in which grain is received for storing,
16 buying, selling, shipping, or processing for compensation. Provided, however, that
17 nothing in this chapter shall be construed to require a processor to receive, store, or
18 purchase any lot or kind of grain at said facility.
19 6.7. "Public warehouseman" means the person operating a public warehouse that is
20 located or doing business within this state, whether or not such owner or operator
21 resides within this state. The term does not include a person whothat is permitted to
22 sell seed under chapter 4.1-53, if that person does not store grain for the public and
23 buys grain only for processing and subsequent resale as seed, or an authorized dealer
24 or agent of a seed company holding a permit in accordance with section 4.1-53-38.
25 7.8. "Receipts" means grain warehouse receipts, scale tickets, checks, or other
26 memoranda given by a public warehouseman for, or as evidence of, the receipt,
27 storage, or sale of grain except when such memoranda was received as a result of a
28 credit-sale contract.
29 8.9. "Receiving station" means any facility other than an individually licensed warehouse
30 that is used by a licensed public warehouseman to receive and temporarily store grain
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1 prior to transferring the grain to the warehouseman's primary licensed warehouse
2 location or delivering it directly to market.
3 SECTION 2. AMENDMENT. Section 60-02-07 of the North Dakota Century Code is
4 amended and reenacted as follows:
5 60-02-07. Public warehouse license - Fee - Financial statement.
6 A license must be obtained from the commissioner for each public warehouse in operation
7 in this state.
8 1. a. All licenses issued under this section must be for a period of two yearsone year
9 and terminate on the thirty-first day of July in the year of expiration.
10 b. (1) Notwithstanding the provisions of subdivision a, the commissioner shall
11 license a warehouse annually, for the first six years of the warehouse's
12 operation.
13 (2) An initial annual license application that becomes effective on or after June
14 first does not expire until July thirty-first of the following calendar year.
15 2. NoA license may not describe more than one public warehouse nor grant permission
16 to operate any public warehouse other than the one described.
17 3. a. The annual license fee for a public warehouse is:
18 (1) Four hundred dollars for a warehouse having a maximum capacity of two
19 hundred thousand bushels [7047.8 cubic meters]that purchased up to one
20 million dollars worth of grain during the previous licensing period, or intends
21 to purchase up to one million dollars worth of grain during the first year of
22 operation;
23 (2) FiveEight hundred fifty dollars for a warehouse having a capacity ofthat
24 purchased more than two hundred thousand bushels [7047.8 cubic
25 meters]one million dollars worth of grain but not more than five hundred
26 thousand bushels [17619.54 cubic meters]ten million dollars worth of grain
27 during the previous licensing period, or intends to purchase more than one
28 million dollars worth of grain but not more than ten million dollars worth of
29 grain during the first year of operation; and
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1 (3) SixOne thousand two hundred fifty dollars for a warehouse having a
2 capacity of more than five hundred thousand bushels [17619.54 cubic
3 meters].
4 b. The biennial license fee for a public warehouse is:
5 (1) Seven hundred dollars for a warehouse having a maximum capacity of two
6 hundred thousand bushels [7047.8 cubic meters];
7 (2) One thousand dollars for a warehouse having a capacity of more than two
8 hundred thousand bushels [7047.8 cubic meters] but not more than five
9 hundred thousand bushels [17619.54 cubic meters]; and
10 (3) One thousand two hundred dollars for a warehouse having a capacity of
11 more than five hundred thousand bushels [17619.54 cubic meters]that
12 purchased more than ten million dollars worth of grain during the previous
13 licensing period, or intends to purchase more than ten million dollars worth
14 of grain during the first year of operation.
15 c.b. An application for an annual license renewal that is received after July fifteenth
16 must include an additional one hundred dollar fee per warehouse. An application
17 for a biennial license renewal that is received after July fifteenth must include an
18 additional two hundred dollar fee per warehouse.
19 4. If a public warehouseman operates two or more warehouses in the same city or
20 siding, in conjunction with each other and with the same working force, and keeps one
21 set of books and records for all such warehouses, and issues one series of scale
22 tickets, warehouse receipts, checks, and credit-sale contracts for the grain stored and
23 purchased therein, only one license is required for the operation of all such
24 warehouses. When two or more warehouses are operated under one license, the
25 license fee is based upon the combined bushel capacity ofvalue of the grain
26 purchased by the warehouses during the previous licensing period.
27 5. If required to obtain United States department of agriculture approval of the
28 commissioner's warehouse inspection program, the commissioner may require the
29 applicant submit a current financial statement prepared in accordance with generally
30 accepted accounting principles. A financial statement furnished under this subsection
31 is a confidential trade secret and is not a public record.
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1 SECTION 3. A new section to chapter 60-02 of the North Dakota Century Code is created
2 and enacted as follows:
3 Public warehouse license - Financial criteria to be met.
4 1. To be eligible to receive an annual license under section 60-02-07, an applicant shall
5 submit current financial documentation to the commissioner verifying the applicant has
6 satisfactory net worth and working capital, as determined by the commissioner.
7 2. A licensed public warehouseman or an applicant for initial licensure shall report
8 balance sheets and income statements to the commissioner annually at the time of
9 application for initial licensure or license renewal if the applicant purchased up to ten
10 million dollars worth of grain during the previous licensing period, or intends to
11 purchase up to ten million dollars worth of grain during the first year of operation.
12 3. As a condition of licensure under section 60-02-07, an applicant shall provide to the
13 commissioner, upon request, any financial record or bank verification release the
14 commissioner deems relevant for the purpose of verifying the financial information of
15 an applicant pursuant to the requirements of this section.
16 4. As a condition of licensure under section 60-02-07, an applicant must:
17 a. Pass a criminal background check;
18 b. Have a satisfactory credit score, as determined by the commissioner; and
19 c. Be a responsible person with a good business reputation, as determined by the
20 commissioner, who:
21 (1) Is in the public warehouse business;
22 (2) Has knowledge of, and experience with, generally accepted grain
23 warehousing and handling practices;
24 (3) Is competent and willing to operate a public warehouse in accordance with
25 state and federal regulations; and
26 (4) Has not committed fraud or a criminal offense indicating a lack of business
27 integrity or honesty that undermines the person's responsibility as a
28 warehouse operator.
29 SECTION 4. AMENDMENT. Section 60-02-09 of the North Dakota Century Code is
30 amended and reenacted as follows:
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1 60-02-09. Bond filed by public warehouseman.
2 1. Before any license is effective for any public warehouseman under this chapter, the
3 applicant for the license shall file a bond with the commissioner which must:
4 1. a. Be in a sum not less than fiveone hundred thousand dollars for any one
5 warehouse.
6 2. b. Be continuous, unless the corporate surety by certified mail notifies the licensee
7 and the commissioner the surety bond will be canceled ninety days after receipt
8 of the notice of cancellation.
9 3. c. Run to the state of North Dakota for the benefit of all persons storing or selling
10 grain in that warehouse.
11 4. d. Be conditioned:
12 a. (1) For the faithful performance of the licensee's duties as a public
13 warehouseman.
14 b. (2) For compliance with the provisions of law and the rules of the commissioner
15 relating to the storage and purchase of grain by such warehouseman.
16 5. e. Specify the location of each public warehouse intended to be covered by such
17 bond.
18 6. f. Be for the specific purpose of:
19 a. (1) Protecting the holders of outstanding receipts.
20 b. (2) Covering the costs incurred by the commissioner in the administration of
21 chapter 60-04 in the event of the licensee's insolvency.
22 7. g. Not accrue to the benefit of any person entering into a credit-sale contract with a
23 public warehouseman.
24 8.2. The aggregate liability of the surety under a bond does not accumulate for each
25 successive annual license renewal period during which the bond is in force but, for
26 losses during any annual license renewal period, is limited in the aggregate to the
27 bond amount stated or changed by appropriate endorsement or rider.
28 3. The commissioner shall set the amount of the bond and may require an increase in
29 the amount of any bond, from time to time, as the commissioner deems necessary to
30 accomplish the purposes of this section. The amount of the bond must be:
31 a. Based on the dollar value of the grain purchased; and
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1 b. Calculated using the value of the amount of grain intended to be purchased by a
2 new licensee during the first year of operation, or the three-year rolling annual
3 average of the value of grain purchased at the time of license renewal.
4 4. The surety on the bond must be a corporate surety company, approved by the
5 commissioner, and authorized to do business within the state. The commissioner may
6 accept cash, a negotiable instrument, or a bond executed by personal sureties in lieu
7 of a surety bond if, in the commissioner's judgment, the cash, negotiable instrument,
8 or personal surety bond properly will protect the holders of outstanding receipts. One
9 bond only may be given for any line of elevators, mills, or warehouses, owned,
10 controlled, or operated by one individual, firm, corporation, or limited liability company,
11 and the bond must be construed to cover the elevators, mills, or warehouses, as a
12 whole and not a specific amount for each.
13 SECTION 5. AMENDMENT. Section 60-02-11 of the North Dakota Century Code is
14 amended and reenacted as follows:
15 60-02-11. Scale ticket - Contents - Conversion.
16 1. a. Every public warehouseman, upon receiving grain into the warehouse, shall
17 issue a uniform scale ticket for each load of grain received. The scale tickets
18 must be numbered consecutively, and one copy of each ticket must be retained
19 and remain as a permanent record. The original ticket must be delivered to the
20 person from whomwhich the grain is received, upon receipt of each load of grain.
21 b. All scale tickets must be converted into cash, noncredit-sale contracts, credit-sale
22 contracts, or warehouse receipts, within forty-fivethirty days after the grain is
23 delivered to the warehouse, unless:
24 (1) The person to whom the scale ticket is issued signs a form waiving all rights
25 to trust benefits under section 60-04-03.1;
26 (2) The form identifies by number each scale ticket to which the waiver applies;
27 and
28 (3) The form is signed by the warehouseman.
29 c. The commissioner shall prepare the waiver form required by subdivision b and
30 make the form available to each warehouse.
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