CHAPTER 82 SENATE BILL No. 501 (Amended by Chapter 159) An Act enacting the agricultural and specialty chemical remediation act; establishing a
linked deposit loan program to pay certain costs related to remediation of certain releases
of certain chemicals; establishing a program to reimburse certain costs related to re-
mediation of certain releases of certain chemicals; creating the Kansas agricultural re-
mediation board; imposing certain environmental assessments; amending K.S.A. 75-4209
and 75-4237 and repealing the existing sections.
Be it enacted by the Legislature of the State of Kansas:

New Section 1. Sections 1 through 14, and amendments thereto,
may be cited as the agricultural and specialty chemical remediation act.

New Sec. 2. As used in sections 1 through 14, and amendments
thereto:

(a) ``Agricultural or specialty chemical'' means any pesticide, fertil-
izer, plant amendment or soil amendment but does not include nitrate
and related nitrogen from a natural source.

(b) ``Board'' means the Kansas agricultural remediation board created
by section 9, and amendments thereto.

(c) ``Corrective action'' means action in response to release of an ag-
ricultural or specialty chemical that poses a threat to human health or the
environment.

(d) ``Eligible corrective action costs'' means reasonable and necessary
costs of corrective action, as determined in accordance with rules and
regulations adopted by the board.

(e) ``Eligible lending institution'' means:

(1) A bank, as defined in K.S.A. 75-4201, and amendments thereto,
that agrees to participate in the remediation linked deposit program and
is eligible to be a depository of state funds; or

(2) an institution of the farm credit system organized under the fed-
eral farm credit act of 1971 (12 U.S.C. 2001), as amended, that agrees to
participate in the remediation linked deposit program and provides se-
curities acceptable to the pooled money investment board pursuant to
article 42 of chapter 75 of the Kansas Statutes Annotated, and amend-
ments thereto.

(f) ``Eligible person'' means:

(1) A responsible party or an owner of real property, but does not
include the state, any state agency, any political subdivision of the state,
the federal government or any agency of the federal government; or

(2) a person who: (A) Is involved in a transaction relating to real
property; (B) is not a responsible party or owner of the real property; and
(C) voluntarily takes corrective action on the property in response to a
request or order for corrective action from the department of health and
environment.

(g) ``Fund'' means the Kansas agricultural remediation fund estab-
lished by section 11, and amendments thereto.

(h) ``Linked deposit'' means an investment account placed by the di-
rector of investments under the provisions of article 42 of chapter 75 of
the Kansas Statutes Annotated with an eligible lending institution for the
purpose of the remediation linked deposit loan program.

(i) ``Release'' means any spill, leak, emission, discharge, escape or
disposal of an agricultural or speciality chemical into the soils or waters
of the state.

(j) ``Remediation linked deposit loan package'' means the forms pro-
vided by the state treasurer for the purpose of applying for a remediation
linked deposit.

(k) ``Remediation linked deposit loan program'' means the program
provided for by sections 3 through 7, and amendments thereto.

(l) ``Remediation reimbursement program'' means the program pro-
vided for by sections 9 through 13, and amendments thereto.

(m) ``Site'' means all land and water areas, including air space, and
all plants, animals, structures, buildings, contrivances and machinery,
whether fixed or mobile, including anything used for transportation,
within a one-half mile radius of a release.

REMEDIATION LINKED DEPOSIT LOAN PROGRAM New Sec. 3. (a) There is hereby established the remediation linked
deposit loan program, which shall be administered by the state treasurer.
The program shall be for the purpose of providing loans to eligible per-
sons to pay the costs of corrective action approved by the department of
health and environment or taken in accordance with requests or orders
issued by the department of health and environment. Such loans shall be
made only for projects approved by the board.

(b) The state treasurer may adopt rules and regulations to administer
and implement the remediation linked deposit loan program.

(c) On or before February 1 of each year, the state treasurer shall
submit to the governor, the senate standing committee on energy and
natural resources and the house of representatives standing committee
on environment an annual report on the activities of the remediation
linked deposit loan program.

New Sec. 4. (a) The state treasurer is hereby authorized to dissem-
inate information and provide remediation linked deposit loan packages
to lending institutions eligible for participation in the remediation linked
deposit loan program.

(b) The remediation linked deposit loan package shall be completed
by the eligible person applying for the loan before the package is for-
warded to the lending institution for consideration.

(c) (1) An eligible lending institution that agrees to receive a reme-
diation linked deposit shall accept and review applications for remediation
linked deposit loans from eligible persons. The lending institution shall
apply all usual lending standards to determine the credit worthiness of
eligible persons applying for remediation linked deposit loans. The total
amount of linked deposit loans for any one site shall not exceed $300,000.
The total amount of linked deposits pursuant to sections 1 through 14,
and amendments thereto, shall not exceed $5,000,000 at any one time.

(2) Only one remediation linked deposit loan shall be made and be
outstanding at any one time to any eligible person.

(3) No remediation linked deposit loan shall be amortized for a period
of more than 10 years.

(d) An eligible person applying for a remediation linked deposit loan
shall certify on the loan application that the loan will be used exclusively
for the purpose of paying costs of corrective action approved by the de-
partment of health and environment or taken in accordance with requests
or orders issued by the department of health and environment.

(e) The eligible lending institution may approve or reject a remedi-
ation linked deposit loan package based on the lending institution's eval-
uation of the applicant included in the package, the amount of the indi-
vidual loan in the package and other appropriate considerations.

(f) The eligible lending institution shall forward to the state treasurer
an approved remediation linked deposit loan package, in the form and
manner prescribed and approved by the state treasurer. The package shall
include information regarding the amount of the loan requested by the
applicant and such other information as the state treasurer requires, in-
cluding a certification by the applicant that the applicant is an eligible
person.

New Sec. 5. (a) If sufficient moneys are not available for a remedi-
ation linked deposit, applications may be considered in the order received
when moneys are once again available, subject to a review by the lending
institution.

(b) Upon acceptance, the state treasurer shall certify to the director
of investments the amount required for a remediation linked deposit loan
package and the director of investments shall place a remediation linked
deposit in the amount certified by the state treasurer with the eligible
lending institution at an interest rate which is 2% below the market rate,
as determined under K.S.A. 75-4237, and amendments thereto, and
which shall be recalculated on the first business day of each calendar year
using the market rate then in effect. When necessary, the state treasurer
may request the director of investments to place such remediation linked
deposit prior to acceptance of a remediation linked deposit loan package.

(c) The eligible lending institution shall enter into a remediation
linked deposit agreement with the state treasurer. Such agreement shall
include requirements necessary to implement the purposes of the re-
mediation linked deposit loan program. Such requirements shall include
an agreement by the eligible lending institution to lend an amount equal
to the remediation linked deposit to eligible persons at an interest rate
that is not more than 2% above the market rate, as determined under
K.S.A. 75-4237, and amendments thereto, and which shall be recalculated
on the first business day of each calendar year using the market rate then
in effect. The agreement shall include provisions for the remediation
linked deposit to be placed for a maturity considered appropriate in co-
ordination with the underlying remediation linked deposit loan. The
agreement shall include provisions for the reduction of the remediation
linked deposit in an amount equal to any payment of loan principal by
the eligible person.

New Sec. 6. Upon the placement of a remediation linked deposit
with an eligible lending institution, the institution shall make the loan to
each approved eligible person listed in the remediation linked deposit
loan package in accordance with the remediation linked deposit agree-
ment between the institution and the state treasurer. The loan shall be
at a rate as provided in section 5, and amendments thereto. A certification
of compliance with this section in the form and manner as prescribed by
the state treasurer shall be required of the eligible lending institution.

New Sec. 7. Neither the state nor the state treasurer shall be liable
to any eligible lending institution in any manner for payment of the prin-
cipal or interest on a remediation linked deposit loan pursuant to sections
1 through 14, and amendments thereto. Any delay in payments or default
on the part of an eligible person does not in any manner affect the re-
mediation linked deposit agreement between the eligible lending insti-
tution and the state treasurer.

REMEDIATION REIMBURSEMENT PROGRAM New Sec. 8. (a) There is hereby established the remediation reim-
bursement program. The program shall be for the purpose of providing
reimbursement to eligible persons for the costs of corrective action ap-
proved by the department of health and environment or taken in accord-
ance with requests or orders issued by the department of health and
environment.

(b) The amount of reimbursement that an eligible person may receive
from the fund shall be limited as follows:

(1) For an eligible person who is required to pay any assessment
imposed pursuant to section 13, and amendments thereto, reimburse-
ment per site shall not exceed an amount equal to: (A) 90% of total eligible
corrective action costs greater than $1,000 and less than or equal to
$100,000; plus (B) 80% of total eligible corrective action costs greater
than $100,000 and less than or equal to $200,000.

(2) For an eligible person who is not required to pay any assessment
imposed pursuant to section 13, and amendments thereto, reimburse-
ment per release shall not exceed an amount equal to 100% of total eli-
gible corrective action costs greater than $1,000 and less than or equal to
$10,000.

New Sec. 9. (a) There is hereby created the Kansas agricultural re-
mediation board. The board shall consist of five members appointed by
the governor. Of the five members, one shall be a representative of ag-
ricultural retailers, one shall be a representative of agricultural producers,
one shall be a representative of agricultural processors, one shall be a
representative of specialty chemical distributors or retailers and one shall
be a representative of agricultural and specialty chemical registrants. Not
more than three voting members shall be members of the same political
party. One representative of the Kansas department of agriculture and
one representative of the Kansas department of health and environment
shall serve as members of the board ex officio.

(b) Members appointed by the governor shall be subject to confir-
mation by the senate as provided by K.S.A. 75-4315b, and amendments
thereto. Except as provided by K.S.A. 1999 Supp. 46-2601, and amend-
ments thereto, no person appointed to the board, whose appointment is
subject to confirmation shall exercise any power, duty or function as a
member of the board until confirmed by the senate. The term of office
of each member of the board shall be four years, except the initial ap-
pointments to the board shall be as follows: Two members shall be ap-
pointed for terms of two years, two members shall be appointed for terms
of three years and one member shall be appointed for a term of four
years. The governor shall designate the term of office for each member
appointed to the first board. Each member shall serve until a successor
is appointed and confirmed. Whenever a vacancy occurs in the member-
ship of the board prior to the expiration of a term of office, the governor
shall appoint a qualified successor to fill the unexpired term.

(c) The governor shall designate the chairperson and vice-chairper-
son of the board from the members of such board.

(d) Meetings shall be held as determined by the board.

(e) Members of the board attending meetings of the board, or at-
tending a subcommittee meeting thereof authorized by the board, shall
be paid compensation, subsistence allowances, mileage and other ex-
penses as provided in K.S.A. 75-3223, and amendments thereto.

New Sec. 10. The board shall have the following powers, duties and
functions:

(a) Administer the fund and the remediation reimbursement pro-
gram.

(b) Subject to sections 1 through 14, and amendments thereto, adopt
rules and regulations concerning the terms and conditions of any reim-
bursements from the fund.

(c) Adopt rules and regulations establishing, for purposes of the re-
mediation linked deposit loan program and the remediation reimburse-
ment program, criteria for classification and prioritization of properties
where contamination was caused by a release of agricultural or specialty
chemicals, or both. Classification and prioritization may account for the
criteria contained in Kansas department of health and environment's vol-
untary clean up and property redevelopment program and state cooper-
ator program.

(d) Establish operating standards and procedures which shall include,
but not be limited to, the following:

(1) With respect to the remediation linked deposit loan program, pro-
visions governing board approval of projects for which applications for
loans may be made;

(2) with respect to the remediation reimbursement program, provi-
sions governing application procedures, determination of eligible correc-
tive action costs, determination of ineligible corrective costs and reim-
bursement or payment of eligible corrective action costs; and

(3) with respect to both programs, provisions governing conflicts of
interest, appeals procedures, review and priority determinations and en-
forcement of the provisions of sections 1 through 14, and amendments
thereto.

(e) Appoint or contract for qualified administrative services subject
to the limitation that expenditures from the fund for the administrative
expenses of the board and the programs established by sections 1 through
14, and amendments thereto, shall not exceed $150,000 in any fiscal year.

(f) Annually provide an independent audit of the fund.

(g) On or before February 1 of each year, submit to the governor,
the senate standing committee on energy and natural resources and the
house standing committee on environment an annual report of the activ-
ities and reimbursements for which money from the fund has been ex-
pended during the previous fiscal year, including a copy of the independ-
ent audit.

New Sec. 11. (a) There is hereby created in the state treasury the
Kansas agricultural remediation fund.

(b) All expenditures from the Kansas agricultural remediation fund
shall be made in accordance with appropriation acts upon warrants of the
director of accounts and reports issued pursuant to vouchers approved
by the chairperson of the board or by a person or persons designated by
the chairperson.

(c) On or before the 10th of each month, the director of accounts
and reports shall transfer from the state general fund to the Kansas ag-
ricultural remediation fund interest earnings based on:

(1) The average daily balance of moneys in the Kansas agricultural
remediation fund for the preceding month; and

(2) the net earnings rate of the pooled money investment portfolio
for the preceding month.

New Sec. 12. (a) Whenever on April 1 of any year the unobligated
principal balance of the fund equals or exceeds $5,000,000, the assess-
ments imposed by section 13, and amendments thereto, shall not be lev-
ied on or after the next July 1. Whenever on April 1 of any year thereafter
the unobligated principal balance of the fund equals $1,500,000 or less,
the assessments imposed by section 13, and amendments thereto, shall
again be levied on and after the next July 1.

(b) The director of accounts and reports, not later than April 5 of
each year, shall notify the board of the amount of the unobligated balance
of the fund on April 1 of such year. Upon receipt of the notice, the board
shall notify the secretary of agriculture who shall notify fee payers under
section 13, and amendments thereto, if the levy of assessments under that
section will terminate or recommence on the following July 1.

New Sec. 13. (a) Subject to the provisions of section 12, and amend-
ments thereto, there is hereby imposed environmental assessments as
follows:

(1) An annual assessment of $100 to be paid by each custom blender
required to be licensed pursuant to K.S.A. 2-1201a, and amendments
thereto. Such assessment shall be paid to the secretary of agriculture by
the custom blender at the time and in the manner provided by law for
payment of the custom blender's license fee.

(2) An annual assessment of $20 for each commercial fertilizer re-
quired to be registered pursuant to K.S.A. 2-1202, and amendments
thereto. Such assessment shall be paid to the secretary of agriculture by
the applicant for registration at the time and in the manner provided by
law for payment of the registration fee for the commercial fertilizer.

(3) An annual assessment of $60 for each agricultural chemical re-
quired to be registered pursuant to K.S.A. 2-2204, and amendments
thereto, other than an agricultural chemical classified as an antimicrobial
pesticide, as defined by 7 U.S.C. § 136(mm). Such assessment shall be
paid to the secretary of agriculture by the applicant for registration at the
time and in the manner provided by law for payment of the registration
fee for the agricultural chemical.

(4) An annual assessment of $80 to be paid by each pesticide dealer
required to be registered pursuant to K.S.A. 2-2469, and amendments
thereto. Such assessment shall be paid to the secretary of agriculture by
the pesticide dealer at the time and in the manner provided by law for
payment of the dealer's registration fee.

(5) An annual assessment of $.0005 per bushel of storage capacity of
each public warehouse required to be licensed pursuant to K.S.A. 34-228,
and amendments thereto, or pursuant to the federal warehouse act. Such
assessment shall be paid to the secretary of agriculture by the applicant
for licensure at the time and in the manner provided by law for payment
of the warehouse license fee.

(6) An annual assessment of $.0005 per bushel of storage capacity of
each public warehouse in this state that is licensed pursuant to the United
States warehouse act. Such assessment shall be paid to the secretary of
agriculture by the licensee on or before August 31 of each year. The
secretary of agriculture may adopt rules and regulations establishing pro-
cedures for payment and collection of such assessment.

(b) The secretary of agriculture shall remit to the state treasurer all
moneys collected by the secretary from assessments paid pursuant to this
section. The state treasurer shall deposit the entire amount of the remit-
tance in the state treasury and credit it to the fund.

New Sec. 14. On July 1, 2010, the remediation linked deposit loan
program, the remediation reimbursement program and the fund are
hereby abolished.

Sec. 15. K.S.A. 75-4209 is hereby amended to read as follows: 75-
4209. (a) The director of investments may invest and reinvest state mon-
eys eligible for investment which are not invested in accordance with
K.S.A. 75-4237, and amendments thereto, in the following investments:

(1) Direct obligations of, or obligations that are insured as to principal
and interest by, the United States of America or any agency thereof and
obligations and securities of the United States sponsored enterprises
which under federal law may be accepted as security for public funds, on
and after the effective date of this act moneys available for investment
under this subsection shall not be invested in mortgage-backed securities
of such enterprises and of the government national mortgage association,
except that any such mortgage-backed securities held prior to the effec-
tive date of this act may be held to maturity;

(2) repurchase agreements with a bank or a primary government se-
curities dealer which reports to the market reports division of the federal
reserve bank of New York for direct obligations of, or obligations that are
insured as to principal and interest by, the United States government or
any agency thereof and obligations and securities of United States gov-
ernment sponsored enterprises which under federal law may be accepted
as security for public funds;

(3) commercial paper that does not exceed 270 days to maturity and
which has received one of the two highest commercial paper credit ratings
by a nationally recognized investment rating firm.

(b) When moneys are available for deposit or investments, the direc-
tor of investments may invest in SKILL act projects and bonds pursuant
to K.S.A. 1999 Supp. 74-8920, and amendments thereto, and in state
agency bonds and bond projects.

(c) When moneys are available for deposits or investments, the di-
rector of investments may invest in preferred stock of Kansas venture
capital, inc., under terms and conditions prescribed by K.S.A. 74-8203,
and amendments thereto, but such investments shall not in the aggregate
exceed a total amount of $10,000,000.

(d) When moneys are available for deposits or investments, the di-
rector of investments may invest in loans pursuant to legislative mandates,
except that not more than the lesser of 10% or $80,000,000 of the state
moneys shall be invested.

(e) Interest on investment accounts in banks is to be paid at maturity,
but not less than annually.

(f) Investments made by the director of investments under the pro-
visions of this section shall be made with judgment and care, under cir-
cumstances then prevailing, which persons of prudence, discretion and
intelligence exercise in the management of their own affairs, not for spec-
ulation, but for investment, considering the probable safety of their capital
as well as the probable income to be derived.

(g) Investments under subsection (a) or (b) ~~of this section~~ or under
K.S.A. 75-4237, and amendments thereto, shall be for a period not to
exceed four years, except that linked deposits authorized under the pro-
visions of sections 3 through 7, and amendments thereto, shall not exceed
a period of 10 years.

(h) Investments in securities under paragraph (1) of subsection (a)
shall be limited to securities which do not have any more interest rate
risk than do direct United States government obligations of similar ma-
turities. For purposes of this subsection, ``interest rate risk'' means market
value changes due to changes in current interest rates.

(i) The director of investments shall not invest state moneys eligible
for investment under subsection (a), in the municipal investment pool
fund, created under K.S.A. 1999 Supp. 12-1677a, and amendments
thereto.

(j) The director of investments shall not invest moneys in the pooled
money investment portfolio in derivatives. As used in this subsection,
``derivatives'' means a financial contract whose value depends on the value
of an underlying asset or index of asset values.

(k) Moneys and investments in the pooled money investment port-
folio shall be invested and reinvested by the director of investments in
accordance with investment policies developed, approved, published and
updated on an annual basis by the board. Such investment policies shall
include at a minimum guidelines which identify credit standards, eligible
instruments, allowable maturity ranges, methods for valuing the portfolio,
calculating earnings and yields and limits on portfolio concentration for
each type of investment. Any changes in such investment policies shall
be approved by the pooled money investment board. Such investment
policies may specify the contents of reports, methods of crediting funds
and accounts and other operating procedures.

(l) The board shall adopt rules and regulations to establish an overall
percentage limitation on the investment of moneys in investments au-
thorized under paragraph (3) of subsection (a), and within such author-
ized investment, the board shall establish a percentage limitation on the
investment in any single business entity.

Sec. 16. K.S.A. 75-4237 is hereby amended to read as follows: 75-
4237. (a) The director of investments shall accept requests from banks
interested in obtaining investment accounts of state moneys. Such re-
quests may be submitted any business day and shall specify the dollar
amount, maturity or maturity range and interest rate. Except as provided
in subsection (c), if the interest rate bid by the bank is at or greater than
the market rate determined by the director of investments in accordance
with subsection (b), the director of investments is authorized to award
the investment account to the bidding bank at the market rate. Awards
of investment accounts pursuant to this section shall be subject to in-
vestment policies of the pooled money investment board. When multiple
bids are received and are in excess of the amount available for investment
that day for any maturity, awards shall be made available in ascending
order from smallest to largest dollar amount bid, subject to investment
policies of the board.

(b) The market rate shall be determined each business day by the
director of investments, in accordance with any procedures established
by the pooled money investment board. Subject to any policies of the
board, the market rate shall reflect the highest rate at which state moneys
can be invested on the open market in investments authorized by sub-
section (a) of K.S.A. 75-4209, and amendments thereto, for equivalent
maturities.

(c) Notwithstanding the provisions of this section, linked deposits
made pursuant to the provisions of sections 3 through 7, and amendments
thereto, shall be at an interest rate which is 2% less than the market rate
determined under this section and which shall be recalculated on the first
business day of each calendar year using the market rate then in effect.

Sec. 17. K.S.A. 75-4209 and 75-4237 are hereby repealed.
Sec. 18. This act shall take effect and be in force from and after its
publication in the statute book.

Approved April 11, 2000.
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