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H.B. 17

This document includes House Floor Amendments incorporated into the bill on Tue, Feb 11, 2003 at 12:24 PM by kholt. --> This document includes Senate 2nd Reading Floor Amendments incorporated into the bill on Wed, Feb 19, 2003 at 2:52 PM by rday. -->              1     





Sponsor: Craig W. Buttars

             6      Eli H. Anderson
             7      Glenn A. DonnelsonJames R. Gowans
Darin G. PetersonPeggy Wallace              8      This act modifies the Agricultural Products Dealer's Act by increasing the h [ floor and ] h
             9      ceiling on the amount of the surety bond or other security agreement required before a
             10      license is issued to a dealer. The act allows the commissioner of the Department of
             11      Agriculture and Food to increase original bond requirements for a dealer's license if the
             12      original bond is inadequate. The act gives the commissioner the authority to call a bond
             13      if renewal is not made. The act requires the filing of annual reports by dealers with the
             14      department h [ and disallows a packer buyer to be double licensed or double bonded ] h .
             15      This act affects sections of Utah Code Annotated 1953 as follows:
             16      AMENDS:
             17          4-7-8, as last amended by Chapter 79, Laws of Utah 1996
             18          4-7-9, as last amended by Chapter 25, Laws of Utah 1990
             19           h [ 4-7-14, as last amended by Chapter 41, Laws of Utah 1995 ] h
             20      Be it enacted by the Legislature of the state of Utah:
             21          Section 1. Section 4-7-8 is amended to read:
             22           4-7-8. Applicant for dealer's license to post security -- Increase in amount of
             23      security posted -- Action on security authorized -- Duties of commissioner -- Option to
             24      require posting new security if action filed -- Effect of failure to post new security --
             25      Commissioner's authority to call bond if not renewed.
             26          (1) (a) Before a license is issued to a dealer, the applicant must post a corporate surety
             27      bond, irrevocable letter of credit, trust fund agreement, or any other security agreement

             28      considered reasonable in an amount not less than h [ [ ] $10,000 [ ] ] [ $20,000 ] h nor more than
             28a      [$100,000]
             29      $200,000, as determined by the commissioner or as required by the Packers and Stockyards
             30      Act, 1921, 7 U.S.C. Section 181 et seq.
             31          (b) Any bond shall be written by a surety licensed under the laws of Utah and name the
             32      state, as obligee, for the use and benefit of producers.
             33          (c) The bond or other security posted shall be conditioned upon:
             34          [(a)] (i) the faithful performance of contracts and the faithful accounting for and
             35      handling of any product of agriculture consigned to the dealer;
             36          [(b)] (ii) the performance of the obligations imposed under this chapter; and
             37          [(c)] (iii) the payment of court costs and attorney's fees to the prevailing party incident
             38      to any suit upon the bond or other security posted.
             39          (2) (a) The commissioner may require a dealer who is issued a license to increase the
             40      amount of the bond or other security posted under Subsection (1)(a) if the commissioner
             41      determines the bond or other security posted is inadequate to secure performance of the dealer's
             42      obligations.
             43          (b) The commissioner shall notify the Packers and Stockyards Administration of an
             44      increase made under Subsection (2)(a).
             45          (c) The commissioner may suspend a dealer's license for failure to comply with
             46      Subsection (2)(a) within ten days after notice is given to the dealer.
             47          [(2)] (3) A consignor claiming damages, as a result of fraud, deceit, or willful
             48      negligence by a dealer or as a result of the dealer's failure to comply with this chapter, may
             49      bring an action upon the bond or other security posted for damages against both the principal
             50      and surety.
             51          [(3)] (4) (a) If it is reported to the department by a consignor that a dealer has failed to
             52      pay in a timely manner for any product of agriculture received for sale, the commissioner shall:
             53          (i) ascertain the name and address of each consignor who is a creditor of the dealer;
             54      and
             55          (ii) request a verified written statement setting forth the amount claimed due from the
             56      dealer.
             57          (b) Upon receipt of the verified statements, the commissioner shall bring an action

             58      upon the bond or other security posted on behalf of the consignors who claim amounts due

             59      from the dealer.
             60          [(4)] (5) (a) If an action is filed upon the bond or other security posted, the
             61      commissioner may require the filing of new security.
             62          (b) Immediately upon recovery in the action, the commissioner shall require the dealer
             63      to file a new bond or other security.
             64          (c) Failure, in either case, to file the bond or other security within ten days after
             65      demand is cause for suspension of the license until a new bond or other security is filed.
             66          (d) If the bond or other security posted under this section is not renewed within ten
             67      days of its expiration date, unless the commissioner states in writing that this is unnecessary,
             68      the commissioner S [ shall ] MAY s obtain S , AFTER A HEARING, s the full amount of the bond or
             68a      other security before it expires.
             69          Section 2. Section 4-7-9 is amended to read:
             70           4-7-9. Dealers -- Records mandated -- Records subject to inspection.
             71          (1) [Each] A dealer who receives any product of agriculture for sale shall promptly
             72      record:
             73          (a) the name and address of the consignor;
             74          (b) the date received;
             75          (c) the condition and quantity upon arrival;
             76          (d) the date of sale for account of the producer-consignor;
             77          (e) the sale price;
             78          (f) an itemized statement of the charges to be paid by the producer-consignor;
             79          (g) the lot number or other means used for identification of the product;
             80          (h) the nature and amount of any claims the dealer has against third persons for
             81      overcharges or damages; and
             82          (i) if the dealer has a direct or indirect financial interest in the business of the
             83      purchaser, or, if the purchaser has a similar financial interest in the business of the dealer, the
             84      name and address of the purchaser.
             85          (2) (a) The records required by this section shall be retained for a period of one year
             86      following the date of consignment and shall be available during business hours for inspection
             87      by the department.
             88          (b) A consignor involved in a consignment subject to inquiry may inspect relevant
             89      records.

             90          (3) (a) A dealer shall file an annual report of the records required under Subsection (1)
             91      with the department on a form prescribed and furnished by it.
             92          (b) The dealer shall file the report by April 15 following the end of a calendar year, or
             93      if the records are kept on a fiscal year basis, by 90 days after the close of the fiscal year.
             94          (c) The commissioner may, for good cause shown or by the commissioner's own
             95      motion, grant an extension to the filing deadline under Subsection (3)(b).
             96          (d) For purposes of this Subsection (3), "dealer" does not include a packer buyer
             97      registered to purchase livestock for slaughter only.
             98          (e) The department shall accept reports as required by the Packers and Stockyards
             99      Administration for livestock under the Packers and Stockyards Act, 9 C.F.R. Sec. 201.97.
             100          (f) The reports required under this Subsection (3) may be subject to audit and establish
             101      the basis for bond adequacy.
             102           h [ Section 3. Section 4-7-14 is amended to read:
             103          4-7-14. Prohibited acts.
             104          (1) A person licensed under this chapter may not:
             105          (a) make false charges incident to the sale, handling, or storage of products of
             106      agriculture;
             107          (b) wilfully fail to comply with the requirements of Section 4-7-9 or 4-7-10 ;
             108          (c) fail to file a schedule of commissions and charges;
             109          (d) reconsign products of agriculture without the consent of the producer-consignor for
             110      the purpose of charging more than one commission;
             111          (e) make any false statement to the detriment of the producer regarding current market
             112      conditions for products of agriculture or about the condition or quantity of the products
             113      consigned for the account of the producer;
             114          (f) engage in fraud or misrepresentation in the procurement or attempted procurement
             115      of a license; or
             116          (g) act as a dealer or agent and, with intent to defraud, make, draw, utter, or deliver any
             117      check, draft, or order for the payment of money from any bank or other depository to the owner
             118      for the purchase price of any farm products or any part thereof, when at the time of the making,
             119      drawing, uttering, or delivery the maker or drawer does not have sufficient funds in or credit
             120      with the bank or other depository for the payment of the check, draft, or order in full upon its
] h

h [ presentation.
             122          (2) (a) The making, drawing, uttering, or delivery of a check, draft, or order in the
             123      circumstances specified in this section shall be evidence of an intent to defraud.
             124          (b) As used in [this section] Subsection (1)(g), "credit" means an arrangement or
             125      understanding with the bank or depository for the payment of the check, draft, or order.
             126          (3) (a) A packer buyer, registered with the department to purchase livestock for
             127      slaughter only, or livestock fed with intent to slaughter, may not hold any other license or bond
             128      regarding the purchase of livestock.
             129          (b) (i) For purposes of this Subsection (3), a packer buyer is considered a salaried
             130      employee of a packer and can purchase only on orders for that packer.
             131          (ii) The packer buyer may not purchase livestock for slaughter or livestock fed with
             132      intent for slaughter for any other person while in the employ of the packer.
             133          (c) If a packer buyer chooses to purchase livestock other than as prescribed by this
             134      Subsection (3), the individual shall:
             135          (i) terminate employment with the packer; and
             136          (ii) obtain a license as a dealer under this chapter.
] h

Legislative Review Note
    as of 11-20-02 4:25 PM

A limited legal review of this legislation raises no obvious constitutional or statutory concerns.

Office of Legislative Research and General Counsel

Interim Committee Note
    as of 12-12-02 3:35 PM

The Natural Resources, Agriculture, and Environment Interim Committee recommended this

Mixed Membership Committee Note
    as of 12-12-02 3:35 PM

The Agricultural Sustainability Task Force recommended this bill.
    Membership:        12 legislators    9 non-legislators
    Legislative Vote:    8 voting for    0 voting against    4 absent

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