Grain indemnity account.

WORKING DRAFT
2006
STATE OF
WYOMING
06LSO-0033

HOUSE BILL
NO.
HB0040

Grain indemnity account.

Sponsored by:
Joint Agriculture,
Public

Lands
and Water Resources Interim Committee

A BILL

for

AN ACT relating to
agriculture; creating the grain indemnity account; providing for assessments; establishing penalties; providing for hearing procedures and inspections; providing for claims and payment;
requiring bonds for warehousemen in certain cases;
providing for an appropriation;
and providing for an effective date.

Be It Enacted by the Legislature of the State of
Wyoming
:

Section 1.

W.S. 11
‑
48
‑
101 through 11
‑
48
‑
11
9
are created to read:

CHAPTER 48
GRAIN INDEMNITY PROGRAM

11
‑
48
‑
101.

S
h
ort title.

This chapter is known and may be cited as the "Wyoming Grain Indemnity Account Program".

11
‑
48
‑
102
.

Definitions
.

(a)

As used in this chapter:

(i)

"Account" means the
Wyoming
grain indemnity account;

(ii)

"Advisory committee" means the members
designated pursuant to W.S. 11
‑
48
‑
10
4
(
a
)
;

(i
ii
)

"Cash sale" means payment to the
depositor
by the warehouse
man
contemporaneously with the transfer of grain to the warehouse;

(
i
v)

"Credit s
ale contract
"
means a
written
agreement
describing the
transfer
of
a specific quantity of grain
by the depositor
to the warehouse with
the
price or payment to
be made by the warehouseman to
the
deposito
r at a later date or on the occurrence of a specific event expressed in the agreement;

(v
)

"
Open storage
"
means the deposit of grain by the
deposito
r for a period of time with the subsequent disposition of the same grain or a
n equal or like value and quantity
if agreed to by the parties;

(
vi)

"Terminal l
ocation
"
means locations that have
uniform grain and rice storage agreement

ap
proved
w
eights and
o
ffic
ial grain inspections available;

(
vi
i)

"Warehouse failure" mean
s the insolvency of a warehouse.

11
‑
48
‑
10
3
.

Creation of grain indemnity account; exemption; uses.

(a)

There is created an account to be known as the grain indemnity account which shall consist of assessments remitted by
depositor
s pursuant to the provisions of this chapter
, fees paid to the account by warehouses as set forth in this chapter
and any interest or earnings on the grain indemnity account balance.

(b)

All assessments
and fees
shall be paid to the department and shall be deposited i
n the grain indemnity account.

(c)

The grain indemnity account and accruing interest shall be used exclusively for purposes of paying claimants pursuant to this chapter
.

(d)

The state of
Wyoming
shall not be liable for any claims presented against the grain indemnity account.

11
‑
48
‑
104.

Advisory committee; members; duties; meetings; compensation; terms and vacancies.

(
a
)

A grain indemnity
account
advisory committee shall be created, consisting of
:

(i)

T
he
d
irector of the
Wyoming

d
epartment of
a
griculture or his designee, who shall serve
as chairman;

(ii)

T
he
Wyoming

s
tate
t
reasurer or his designee
;

(iii)

T
hree
(3) act
ive
Wyoming

depositors
selected by the board of agriculture
;

(iv)

T
wo
(2)
active
Wyoming
licensed warehousemen selected by the
b
oard of
a
griculture.

(
b
)

The members of the
advisory
committee shall be
reimbursed for mileage and per diem

in the same manner and amount
a
s
state employee
s
.

(
c
)

The duties of th
e

advisory committee shall include:

(i)

T
o review and approve
all
substantiated
claims, including the amount of loss and payment of the claims
;

(ii)

T
o
review and approv
e
administrative costs of the
account;

(iii)

T
o
review the fees and rates of assessment
and recommend any changes to the director
.

(
d
)

The
advisory
committee shall meet at least
once
annually
, with one (1) meeting

being
between July 1 and August 15
and
as often as they deem necessary to perform the
ir

duties
.

(e)

The advisory committee
shall be paid
by
the
department
for expenses that are incurred while
performing
their duties.

(
f
)

The
advisory
committee me
mbers
shall serve for a three
(3)
year term with the
initial terms being determined by the board of agriculture as follows:

(i)

The depositors shall serve one (1), two

(2) and three (3) year terms;

(ii)

The warehousemen shall serve two (2) and three (3) year terms
.

(
g
)

In the event of a position vacancy, whoever is selected to fill the vacancy shall only finish the term
f
or which the vacancy occurred.

(h)

No member may serve more then two
(2)
consecutive terms.

(
j
)

In the event a member of the
advisory
committee is involved in any warehouse failure,
his term
shall
be
suspended and
he
shall be replaced by another person who is not involved in an
y current or pending warehouse failure
.

11
‑
48
‑
10
5
.

Assessment; rate
s
;
exceptions
.

(
a
)

Grain shall be assessed
as follows:

(i)

Only once, at
the
time of the
first point of sale;

(ii)

An amount n
ot
to
exceed one-half percent (0.5%) of the total gross dollar amount due to the depositor, regardless of market price
;

(i
ii
)

Grain sold under credit

sale contracts shall be assessed when the warehouse
man makes payment to the depositor;

(
i
v
)

A w
arehouse
man
that store
s
and sell
s
grain for
a
depositor at
a
terminal location shall
collect the
assessment when the warehouse
man makes payment to the depositor;

(
v
)

Grain pledged as collateral on a loan shall be assessed at the time the loan is
determined to be in default
. The amount of asse
ssment shall be the greater of:

(A)

T
he value of the grain at the time the loan was made
;
or

(B)

T
he amount
of collateral
th
e
grain is
pledged
for.

(b)

Grain shall not be assessed when:

(
i
)

Grain
is
sold from
depositor
to
depositor
;

(
ii
)

Grain
is
sold between licensed grain warehouse
men
;

(iii)

Grain is sold for cash to someone other than a warehouseman.

(
c
)

An annual amount n
ot
to
exceed one-half percent (0.5%) of the total

bonding amount
for each
licensed warehouse

shall be paid
annually
in conjunction with
the warehouse
licensing requirements
.

(
d
)

No warehouse
man
shall be allowed to renew a warehouse
license until all fees and assessments are remitted
to the department
.

11
‑
48
‑
10
6
.

Collection and remittance of assessment;
bailment;
interest earned; violation
s
; penalties.

(a)

Any warehouseman who owes
depositors
for the sale

of
grain
shall be responsible for the collection of the
depositor
's assessments and the remittance of the assessments collected to the department.

(b)

Payments shall be made no later than the twentieth day of the month following the close of the calendar quarter on a form prescribed by the department. The four (4) calendar quarters in the year shall begin on the first day of the months of Jan
uary, April, July and October.

(c)

A
ny warehouse
man who
does not remit the stated fees or assessments shall
be
subject to an immediate
audit and may have
hi
s
license suspended.

(
d
)

Every w
arehouse
m
a
n
shall submi
t an assessment report even if
no assessment
is required to be

submitte
d.

(
e
)

Every w
arehousem
a
n shall post the current rate of assessment as determined by the
d
irector.

(
f
)

Every warehouseman shall collect and immediately hold in trust t
he amount of assessments paid by or deducted from payments to
depositor
s. This principal amount is a bailment and shall not be the
property of the warehouseman.

(
g
)

Failure
by the warehouseman
to submit an assessment report shall result in a fine of
one hundred twenty-five dollars (
$125.
00).
Each day the
warehouseman does not submit the
report s
hall be
a separate offense.

(
h
)

Failure
by the warehouseman
to submit all collected assessments shall result in a fine of not more than
five hundred dollars (
$500.
00).
Each day th
e
warehouseman does not submit any
assessment
shall be a
separate offense
.

(
j
)

Failure
by the warehouseman
to collect assessments shall result in a fine of not more than
five hundred dollars (
$500.
00).
Every
transaction
for which
th
e warehouseman
failed
to collect an assessment
s
hall be
a separate offense.

11
‑
48
‑
10
7
.

A
ccount
limits
.

(a)

Once attained, t
he minimum balance in the
account shall be five
hundred thousand dollars ($5
0
0,000.00).
N
o
payment shall be made out of
the
account that would reduce the
balance below

the minimum balance.

(b)

The
optimum
balance in the account shall be maintained between
six million dollars ($6
,000,000.00) and
eight
million dollars ($
8
,000,000.00).

(c)

Assessments and fees shall be collected quarterly until such time as the
a
ccount has reached
the maximum level
of eight million dollars ($8,000,000
.00
)
,
at which
time the department shall notify all
depositors and warehouse
men

t
o

stop remitting all assessments and fees
, until further notice from the department
.

(
d
)

If at any time the amount in the account is reduced to less than six million dollars ($6,000,000
.00
)
,

the department shall notify all depositors and warehousemen that
all assessments and fees shall again be remitted beginning at the
start
of the next calendar quarter.

11
‑
48
‑
10
8
.

B
ond
s; penalty, proc
edure
; hearing.

(a)

The department may, when it has reason to believe a warehouseman does not have the ability to pay
depositor
s for
grain
purchased or when it determines the warehouseman does not have a sufficient net worth to outstanding financial obligations ratio, require the warehouseman t
o
post a bond or other additional security in an amount to be prescribed by rule.

(b)

Failure of the warehouseman to timely post the
required
bond or other security
shall
constitute grounds for suspension or revocation of
the warehouseman's or warehouse
license.

(c)

The warehouseman may request a hearing regarding the decision to increase the amount of security required or the revocation or suspension of a license pursuant to this section and may appeal the decision pursuant to the Wyoming Administrative Procedure Act.

11
‑
48
‑
10
9
.

Proof of claim;
notice;
procedure; hearing; inspection
; denial of claim
.

(a)

In the event a warehouse fails, the department shall

give all depositors the opportunity to produce proof of ownership of grain stored in the failed warehouse or proof of contract with the warehouse
.
Any c
laim against a failed warehouse shall include written evidence disclosing a storage obligation or a sale or delivery of
grain
.

(
b
)

The department shall make every effort to
provide notice to
all depositors
that
may be affected by the
warehouse
failure by:

(i)

Sending a certified return receipt
notice to all known depositors at their last known address;

(ii)

P
osting
a
public notice
of the warehouse
failure in a newspaper of
general
circulation in the county
where th
e
failed
warehouse
is located
;

(iii)

P
osting
a
public notice
of the warehouse
failure in a newspaper of
general
circulation in the county
where any associated
warehouse
is located.

(
c
)

Any depositor with a claim shall file his written verified claim

including any written evidence,
with t
he department
.

(d)

Any claim
shall be received by the department within ninety (90) days of the latest notice date of any notice provided under subsection (b) of this section.
Any claim
received by the department after this date shall be denied.

(
e
)

The
advisory committee
shall investigate each claim and shall notify each claimant and the warehouseman of the
advisory committee
's determination as to the validity a
nd amount of each claim.

(
f
)

A claimant or warehouseman may request a hearing on the
advisory committee
's determination within twenty (20) days of receipt of written notification and a hearing shall be held by the department
within thirty (30
)
days of receiving the request
.

(
g
)

In the event of a
grain
shortage, the department shall determine each
depositor
's pro rata share of available
grain
and the deficiency shall be considered as a claim of the
depositor
. Each type of grain shall be treated separately for the purpose of determining shortages.

(
h
)

The
advisory committee
shall not approve or pay any claim made on the account if the claim is based on losses resulting from the deposit, sale or storage of
grain
in an unlicensed warehouse.

11
‑
48
‑
1
1
0.

Claim p
ayment
s
;
limitations
.

(
a
)

Any warehouse failure that occurs prior to the account initially reaching two million dollars ($2,000,000.00) shall not be eligible for a claim or any reimbursement.

(
b
)

In the event claims against the
a
ccount would reduce the total amount of the account to less than five hundred thousand dollars ($500,000
.00
), all
approved
claims shall be prorated and paid to the fullest amount until the minimum account balance is reached.

All claims that are prorated shall be paid in full
when the account contains sufficient funds to do so.

(
c
)

Claims shall be paid to the fullest extent of the account according to the following:

(i)

A d
epositor
with
a claim against an unpaid cash sale shall be
paid an amount not to exceed ninety-five percent (
95%
)
of
the unpaid portion of the sale;

(ii)

A d
epositor
with
a claim against
a
state of
Wyoming
negotiable warehouse receipt shall be paid
an amount not to exceed ninety percent (
90%
)
of the value of the grain receipted
;

(iii)

A d
epositor
with
a claim against
a priced contract
shall be paid
an amount not
to
exceed eighty-five percent (
85%
)
of the unpaid value of the contract
,
includ
ing any deferred payment contracts;

(iv)

A d
epositor
with
a claim against
an
open storage account shall be paid
an amount not
to
exceed seventy-five percent (
75%
)
of the determined value of the grain
,
includ
ing
all no
nnegotiable warehouse receipts;

(v)

A d
epositor
with
a claim against
a
credit sales contract
shall be paid an amount not
to
exceed sixty
‑
five percent (
65%
)
of th
e determined value of the grain;

(vi)

A
ll other claims relating to grain interests shall be paid
an amount not to exceed fifty percent

(
50%
)
of any unpaid value and shall be paid
only
after all other
claims
have been satisfied.

(
d
)

T
o calculate
a
claim, t
he
advisory committee
shall use the following
:

(i)

A c
laim against
an
open storage
account
obligation shall be the market price at the time of the warehouse failure
;

(ii)

A c
laim against
a
priced contract shall be the price stated wi
thin a valid depositor contract;

(iii)

A c
laim on
a c
redit
s
ales contract shall be the market price of the grain at the time the contract was entered into or the market price of the grain at the time of the warehouse failure, whichever is less
;

(iv)

A claim against unpaid cash sales shall be the price agreed upon between the depositor and the warehouseman or the market price of the grain at the time of the warehouse failure, whichever is less.

(
e
)

Payment

for any approved claim
shall be made
as soon as possible
after
reconciliation
of all approved claims
.

11
‑
48
‑
111.

Action
against
warehouseman
.

(
a
)

Amounts paid from the account in satisfaction of any approved claim shall constitute a debt and obligation of the warehouseman or surety against whom the claim was made. The director may bring
a civil
suit on behalf of the account in the district court of the county in
which the warehouse is located
to recover from the warehouseman or surety the amount of the payment made from the account, together with costs and attorney's fees incurred in maintaining the
civil suit.

(b)

In the event the department initiates an action against a warehouseman or surety the department's claim s
hall
accrue and relate back to the time each
depositor
receiving an
account payment incurred a loss in the
warehouse
.

11
‑
48
‑
11
2
.

Claim against warehouseman; remedies.

The department may deny, suspend or revoke the license of any warehouseman against whom a claim has been made, approved and paid from the grain indemnity account. Proceedings for the denial, suspension or revocation shall be subject to the Wyoming Administrative Procedure Act.

11
‑
48
‑
11
3
.

Director’s
d
iscretion
.

Nothing in this chapter shall be construed to require the director or his authorized representatives to
file a
civil
suit for
a violation of this chapter when he believes
the
public interest
is
best served by a suitable warning.

11
‑
48
‑
11
4
.

Warehouse failure; s
eizure
; l
iquidation
; temporary employment; associated warehouses; notice; investigation
.

(a)

Upon failure of a licensed warehouse the department shall have all powers as
t
rustee for the benefit of claimants as established under this chapter
,
incl
uding but not limited
to the following:

(i)

To s
eize or otherwise gain control or possession of grain assets, equity assets and any other princip
a
l assets directly related to the
failed
warehouse
or any associated warehouse;

(ii)

To l
iquidate any assets as
necessary
to pay all claims and expenses and to reimburse the
a
ccount
for any loss;

(iii)

T
o
contract with or employ temporarily as many persons as deemed necessary to comply with the enforcement of this
ch
a
p
t
er with a
ny costs
so
incurred
to
be paid from the account.

(
b
)

Any warehouse operat
ing
under
a separate
warehouse license but under the same corporate umbrella
as
a failed warehouse shall
be considered an associated warehouse and shall
also be
considered
to have failed.

(
c
)

Immediately upon the f
ailure of a warehouse the d
epartment shall:

(i)

Post notice at all location
s
of the failed warehouse
and any associated warehouse

stating the warehouse has experienced a failure
and
the license has been suspended
;

(ii)

Immediately take physical control and possession of the failed warehouse
, including
but not limited to, offices and grain storage facilities,
grain
stored in
the warehouse
, books, records, electronic equipment and any other property necessary or desirable to liquidate grain
and equity
assets
;

(iii)

Give public notice and notify all potential claimants by certified mail of the warehouse’s failure and the proce
dur
es necessary to file
a
claim
;

(iv)

Perform an
investigation
of the failed warehouse.

(
d
)

If a
t any time
it appears that the costs of seizing or liquidating any assets relating to the fai
led warehouse or
the warehouseman
equals or exceeds the expected recovery to the
a
ccount the department may elect not
to
pursue
seizure or
liquidation.

11
‑
48
‑
11
5
.

Preemption
.

The department shall have
the position of a secured creditor subject to prior secured rights
to all
warehouse
assets, ahead of all other interests after a warehouse failure
.
The department shall not be liable for any interests o
ther than its own at any time.

11
‑
48
‑
11
6
.

Cancellation; bonds and insurance
.

Every w
arehouse
man shall immediately inform the d
epartment of any cancellation of the warehouseman’s bond or of the
warehouse
insurance.

11
‑
48
‑
11
7
.

Notice of closure
.

(a)

Any licensed warehouse
man
seek
ing to cease his
operations shall inform
the
following

by certified mail, return receipt requested, at least
sixty (
60
)
days prior to the final day of business:

(i)

All holders of warehouse receipts
,
negotiable and nonn
egotiable
;

(ii)

All persons having grain in open storage at the warehouse
;

(iii)

All persons having unpaid or deferred priced contracts
;

(iv)

All persons with credit sales contracts
;

(v)

The
department.

(b)

All grain stored or receipted shall either be transferred to a separate licensed warehouse, at the cost of the transferring warehouse, or sold depending on the depositor
'
s wishes. The depositor may leave his grain in the warehouse,
provided
a written agreement, signed and dated by the depositor, buyer and seller is placed in his file.

All unpaid
priced
contracts shall be
settled
.
All credit sales contracts shall be priced and settled or rescinded with the depositor receiving title to the grain.

(
c
)

The account shall not be liable for claims filed against a warehouse in good standing who has voluntarily relinquished its license if the claims are not filed with the department within six (6) months of the closing of the
warehouse.

11
‑
48
‑
11
8
.

Deposits as bailment
.

Whenever any grain
is
de
livered to a licensed warehouse
and the receipt issued provides for the return of a like amount of the like kind, grade and class
of grain
to the
receipt
holder,
the
delivery shall be a bailment and not a sale of the
grain
. In no case shall
the
grain be liable to seizure upon process of any court in an action against
the
warehouseman
, except
an
action by the legal holder of the receipt to enforce the terms of
the receipt
.
I
n the event of a warehouse failure,
the grain
shall be applied exclusively to the redemption of
any
outstanding receipts covering
the grain
stored
w
ith
the warehouseman
. The grain on hand in any warehouse shall be applied to the redemption and satisfaction of receipts issued pursuant to the warehouse license.

11
‑
48
‑
11
9
.

Limited
a
pplication
.

(a)

The provisions of this chapter shall not apply to any warehouse covered by a license issued under the United States
W
arehouse Act.

(b)

Any
warehouseman

licensed under the United States Warehouse Act may voluntarily participate in the
a
ccount
and
shall be subject to all provisions of this chapter.

Section 2.

There is appropriated from the general fund to the
d
epartment of
a
griculture twenty thousand dollars ($20,000.00)
for the
biennium
to
pay the costs of administer
ing the grain indemnity account, including
reimbursement f
or
members of the advisory committee.

Section 3.

This act is repealed effective June 30, 2012.

Section
4
.

This act is effective July 1, 200
6
.

(END)

1
HB0040