An Act concerning grain storage; relating to public warehouseman's license; waiver;
amending K.S.A. 1997 Supp. 34-228 and repealing the existing section.
Be it enacted by the Legislature of the State of Kansas:

Section 1. K.S.A. 1997 Supp. 34-228 is hereby amended to read as
follows: 34-228. (a) Any person desiring to engage in business as a public
warehouseman in this state shall, before the transaction of any such busi-
ness, make written application to the secretary for a license for each sep-
arate warehouse (or, if the applicant owns more than one warehouse at
one point, all of such warehouses may be incorporated in one application),
at which the person desires to engage in such business. The application
for a license shall be on a form designated by the secretary and shall
contain the individual name and address of each person interested as
principal in the business (and, if the business is operated or to be operated
by a corporation, setting forth the names of the president and secretary),
and such further information as the secretary may require.

(b) (1) Every application for a public warehouse license shall be ac-
companied by a current financial statement. The statement shall include
such information as required by the secretary to administer and enforce
the public warehouse laws of this state, including, but not limited to a
current balance sheet, statement of income (, including profit and loss),
statement of retained earnings and statement of changes in financial po-
sition. The applicant shall certify under oath that the statement as pre-
pared accurately reflects the financial condition of the applicant as of the
date specified and presents fairly the results of operations of the appli-
cant's public warehouse business for the period specified. The financial
statement shall be prepared in accordance with generally accepted ac-
counting principles and shall be accompanied by: (A) A report of audit
or review conducted by an independent certified public accountant or an
independent public accountant in accordance with standards established
by the American institute of certified public accountants and the account-
ant's certifications, assurances, opinions, comments and notes with re-
spect to the statement; or (B) a compilation report of the financial state-
ment, prepared by a grain commission firm or management firm which
is authorized pursuant to rules and regulations of the federal commodity
credit corporation to provide compilation reports of financial statements
of warehousemen.

(2) Except as otherwise provided, the secretary, upon request of an
applicant, may grant a waiver of the requirements of this subsection for
a period of not more than 30 days if the applicant furnishes evidence of
good and substantial reasons for the waiver. The secretary may extend
such waiver beyond 30 days for grain stored in an alternative location
other than a location identified in the public warehouse license, if the
secretary determines that the owner of the grain would suffer substantial
hardship to require the grain to be stored at a location identified in the
license. The secretary may determine what constitutes substantial hard-
ship and what length of time the grain may be stored at such alternative

(c) (1) Every applicant for a license to operate one or more public
warehouses and every person licensed to operate one or more warehouses
shall at all times maintain total net worth liable for the payment of any
indebtedness arising from the conduct of the warehouse or warehouses
equal to at least $.25 per bushel of the storage capacity of the warehouse
or warehouses except: (A) No person shall be granted a license or shall
continue to be licensed unless the person has a net worth of at least
$25,000; and (B) any deficiency in net worth required above the $25,000
minimum may be supplied by an increase in the amount of the applicant's
or licensee's bond as provided by K.S.A. 34-229 and amendments thereto.

(2) In determining total net worth: (A) Credit may be given for in-
surable property such as buildings, machinery, equipment and merchan-
dise inventory only to the extent that the property is protected by insur-
ance against loss or damage by fire; and (B) capital stock, as such, shall
not be considered a liability.

(d) No license shall be issued to a person or entity not previously
licensed in this state and making application for an original license who,
in this state or any other jurisdiction, within the 10 years immediately
prior to the date of the application of the person or entity for a license,
has been convicted of or has pleaded guilty or nolo contendere to any
crime which would constitute:

(1) Embezzlement;

(2) any felony defined in any statute contained in article 37 of chapter
21 of the Kansas Statutes Annotated and amendments thereto;

(3) unauthorized delivery of stored goods;

(4) any felony defined in any statute contained in chapter 34 of the
Kansas Statutes Annotated and amendments thereto; or

(5) a violation of the United States warehouse act (7 U.S.C. 241 et

(e) The secretary may investigate any applicant making application
for an original license for the purpose of determining if such person would
be qualified to receive such license under the provisions of this section.

(f) (1) Every application for a public warehouse license shall be ac-
companied by a license fee which shall be determined and fixed by the
secretary by rules and regulations. The license fee shall not be more than
the applicable amount shown in the following fee schedule plus not more
than $500 for each functional unit:

Capacity in Bushels
Not more
1 to 100,000 $500
100,001 to 150,000 525
150,001 to 250,000 550
250,001 to 300,000 600
300,001 to 350,000 625
350,001 to 400,000 650
400,001 to 450,000 700
450,001 to 500,000 725
500,001 to 600,000 775
600,001 to 700,000 800
700,001 to 800,000 850
800,001 to 900,000 875
900,001 to 1,000,000 900
1,000,001 to 1,750,000 1,225
1,750,001 to 2,500,000 1,400
2,500,001 to 5,000,000 1,750
5,000,001 to 7,500,000 2,100
7,500,001 to 10,000,000 2,375
10,000,001 to 12,500,000 2,600
12,500,001 to 15,000,000 2,800
15,000,001 to 17,500,000 3,000
17,500,001 to 20,000,000 3,225
For each 2,500,000 bushels or fraction over 20,000,000 bushels 350
(2) Whenever a licensed warehouseman purchases or acquires addi-
tional facilities, the warehouseman, if otherwise qualified, may acquire a
license for the remainder of an unexpired license period by paying to the
secretary a license fee computed as follows: If the unexpired license pe-
riod is nine months or more, the annual fee; if the unexpired license
period is more than six months and less than nine months, 75% of the
annual fee; if the unexpired license period is more than three months and
not more than six months, 50% of the annual fee; and if the unexpired
license period is three months or less than three months, 25% of the
annual fee.

(3) In addition to any other applicable fee, the secretary shall charge
and collect a fee each time a public warehouse license is amended in an
amount of not more than $300 which shall be determined and fixed by
the secretary by rules and regulations.

(4) Nothing in this subsection shall be construed to authorize a refund
for any unused portion of an issued license.

(g) The secretary shall examine each warehouse operated by a li-
censed public warehouseman at least once in each 12-month period. The
licensed public warehouseman may request additional examinations of
any warehouse operated by the warehouseman. The cost of additional
examinations when requested by the warehouseman shall be charged to
the warehouseman requesting the examination. The cost of each addi-
tional examination requested by a warehouseman shall be an amount
determined therefor in accordance with an hourly rate fixed by the sec-
retary of not more than $50 per hour, subject to a minimum charge of
four hours for the examination, plus amounts for subsistence expense at
the rate fixed under K.S.A. 75-3207a and amendments thereto and for
mileage expense in accordance with the schedule of charges established
under K.S.A. 75-4607 and amendments thereto. The secretary, at the
secretary's discretion, may make additional examinations of a warehouse
and if a discrepancy is found on that examination, or if one was found on
the last previous examination, the cost of the examination shall be paid
by the warehouseman.

(h) When the secretary authorizes a grain handling facility to be phys-
ically monitored, pursuant to of subsection (a)(3) of K.S.A. 34-102, and
amendments thereto, the cost and expenses of the monitoring shall be
paid by the owner of the facility at the same rates fixed in subsection (g).

(i) As used in this section, ``functional unit'' means a public warehouse
which has the capacity to store, weigh in and weigh out grain. Any outlying
storage facility which is not a functional unit shall have its storage capacity
included as part of the combined capacity of the warehouseman's nearest
functional unit.

Sec. 2. K.S.A. 1997 Supp. 34-228 is hereby repealed.

Sec. 3. This act shall take effect and be in force from and after its
publication in the statute book.

Approved March 27, 1998