LEGISLATIVE BULLETIN –  May 7, 2003

PREPARING TO COMPLY WITH NEW LAWS

            Most new laws take effect August 1 after a legislative session.  Those having to do with the budget take effect on July 1.  Some bills have emergency clauses which put them into effect right after the Governor signs them.  All those described below are effective August 1 unless noted, but depending on your situation, you may need to take some steps well before that in order to be in compliance on August 1.  More information will be sent and/or published in the Grainmen’s Mirror magazine. 

HB 1157 deals with condominium storage and more.  Elevators with physically connected condo space should note what this bill says about licensing that space.  The bill says, in part:  “Unless an entire warehouse facility is used for nonpublic purposes, all physically connected portions of the facility must be licensed in accordance with this chapter. The warehouseman shall issue receipt memoranda for all grain received. Facilities that are physically connected to the licensed warehouse may be sold under a condominium arrangement or leased to other entities for nonpublic use and sales and lease agreements must be based on the capacity of the bins involved and not on the number of bushels held in the space. The licensee shall provide contents insurance and bond coverage for the space.”  This bill also allows a new warehouse or grain buyer license to start in June of July and run through August 31 of the following year – up to 14 months.  Beware of the teeth in this bill for procrastinators.  Warehouse and grain buyer license apps not returned by July 15 for the August 1 renewal will be assessed an extra $100 fee.  Other changes affect insolvency proceedings.

HB 1197 establishes the credit sale contract indemnity fund.  Collection of the 0.2% assessment on net value begins August 2 on credit sale contracts written on or after August 2.  “Credit-sale contract" means a written contract for the sale of grain pursuant to which the sale price is to be paid or may be paid more than thirty days after the delivery or release of the grain for sale.  Common forms are deferred payment, installment sales, delaying pricing, NPE.  The Association is at this moment working with the Public Service Commission to be sure the collection and remittance processes are as simple as possible.  It might be wise to discourage the writing of credit sale contracts on August 1, 2003 to avoid any confusion in case of an insolvency.

HB 1372:  If you block a railroad crossing for more than 10 minutes while vehicles are waiting to get through you need to get a written agreement with the governmental entity with jurisdiction over that street or roadway.  The agreement must provide for notification of emergency personnel. 

HB 1486 deals with the Wheat Commission checkoff.  There is no change for grain elevators.  The checkoff remains at one cent per bushel and there is no indication from the Wheat Commission that its remittance procedures will change.

SB 2358 deals with railroad leases, liability and indemnification.  New law in North Dakota Century Code 49-16-01.1 applies to “a lease, license, or other agreement for the use or occupancy of railroad right of way, or other adjoining property, between a railroad or its representative and a state or federal licensed public grain warehouse or potato warehouse”.  It sets a limit for the commercial general liability insurance that a railroad can require of such a warehouse to not more than two million dollars for occurrence and not more than four million dollars for multiple occurrences coverage for bodily injury, death, and property damage.  The railroad may require an endorsement naming the railroad as an additional insured. The railroad may require an endorsement under the Federal Employers Liability Act (FELA) if the warehouse engages in the business of transporting goods from the warehouse by means of the railroad in an annual volume in excess of 250 loaded railroad cars.  The railroad may require pollution legal liability insurance up to one million dollars, unless the lessee agrees to a greater amount, to cover liabilities arising from hazardous substances or bulk storage of petroleum products brought on the property, or released on or near the property, or violations of the environmental laws. 

Another section of the bill deals with PSC involvement in settling differences between railroads and lessees on their leases.  An amendment to 60-06-15 extends the protection of the Chapter to sales of existing leaseholds, rather than just leases.  New language states that the value of a leaseholder’s improvements may not be considered in determining a reasonable lease rate or selling price. 

The railroads didn’t want any of this.  They want no controls or limits on the insurance they can require from you to cover their negligence.  Threats of increasing lease prices and/or canceling leases were made.  Some legislators warned railroads that jerking people around could make matters worse for them in the future.  The liability sections don’t take effect until August 1, and so there is no justification for railroads refusing to complete transactions because of this bill.  Only new leases or agreements, or written amendments to present leases and agreements, effective August 1 or later are touched by the liability provisions in this bill.  Any grain elevator that feels it is being taken advantage of in these matter should contact the Grain Dealers office.  Problems should be documented.  Involvement by legal counsel may be necessary.  There will be an interim legislative study of these issues and any abuses should surely be brought to that committee’s attention. 

You can get a copy of any of these bills at www.state.nd.us/lr.  Go to Legislative Assembly, 58^th on the right; then to Legislation: 2003 on the left; then to Bills and Resolutions on the right; scroll down to House Bills starting with the digit 1 or Senate Bills starting with the digit 2; then to Senate Bills or House Bills again; then click on the last 9-digit LC number for each bill number.  That will be the ENROLLMENT number.  There are usually some amendments and engrossed versions in the list also.  You can look at them if you’d like, but the ENROLLMENT version is the final law.  You need Acrobat Reader to open and read the bills.  If you don’t have that on your computer you can go to www.ndgda.org, Convention information, and download it from there. 

The special session is not expected to deal with any topics directly dealing with grain elevators.