(1) (a) Before any license is issued to any commodity handler, the applicant shall file with the commissioner a bond executed by the applicant as principal and by a surety company qualified and authorized to do business in this state as a surety or an irrevocable letter of credit meeting the requirements of section 11-35-101.5, in the sum of not less than ten thousand dollars nor more than one million dollars, at the discretion of the commissioner.

(b) The bond or irrevocable letter of credit must be conditioned upon compliance with this article 36 and upon the faithful and honest handling of commodities in accordance with this article 36 and must cover any inspection fees due the department of agriculture by the commodity handler and all costs and reasonable attorney fees incident to any suit upon the bond or irrevocable letter of credit. The bond or irrevocable letter of credit must be to the department of agriculture in favor of every producer or owner and, in the instance of a bond, must remain in full force and effect until cancelled by the surety upon thirty days' prior written notice to the commissioner.

(c)

(I) Any producer or owner within the state of Colorado claiming to be injured by the fraud, deceit, or willful negligence of, or failure to comply with this article 36 by, any commodity handler may request the department, as beneficiary, to demand payment on the irrevocable letter of credit or surety bond to recover the damages caused by the fraud, deceit, willful negligence, or failure to comply with this article 36.

(II) The surety on the bond or the issuer of the letter of credit is not liable to pay any claim pursuant to any action brought under this article 36 if the action is not commenced within one hundred eighty days after the date of the transaction, as that term is defined in section 35-36-116 (13), on which the claim is based, or the date of the loss, whichever is later.

(d) When any action is commenced on said bond or irrevocable letter of credit, the commissioner may require the filing of a new bond or irrevocable letter of credit, and the commodity handler's failure to file the new bond or irrevocable letter of credit within ten days after the commencement of said action constitutes grounds for the suspension or revocation of his or her license.

(e) Any person licensed pursuant to article 37 of this title 35 may apply for a license as a commodity handler and shall not be subject to the license fee required by section 35-36-105. The bond or irrevocable letter of credit required by section 35-37-106 shall also apply to the person's activities as a commodity handler and shall be subject to the provisions of this section and section 35-36-116.

(2) Whenever the commissioner determines that a previously approved bond or irrevocable letter of credit is or for any cause has become insufficient, the commissioner may require an additional bond or irrevocable letter of credit or other evidence of financial responsibility to be given by a commodity handler to conform to the requirements of this article 36 or any rule promulgated pursuant to the provisions of this article 36. The commodity handler's failure to comply with the commissioner's requirement within thirty days after written demand therefor constitutes grounds for the suspension or revocation of his or her license.