Introduced Version




HOUSE BILL No. 1230

_____


DIGEST OF INTRODUCED BILL



Citations Affected: IC 26-3-7; IC 26-4.

Synopsis: Grain buyers and grain indemnity program. Makes certain changes in the grain buyers and warehouse licensing and bonding law, including the following: (1) Eliminates an exception under which a person who buys less than 50,000 bushels of grain annually or who buys grain for the sole purpose of feeding the person's own livestock or poultry and derives a major portion of the person's income from selling that livestock or poultry is not subject to the requirements of the law for grain buyers. (2) Authorizes the director of the grain buyers and warehouse licensing agency (agency) to require a grain buyer offering deferred pricing, delayed payments, or contracts linked to the commodity futures or commodity options market in connection with a grain purchase to document the agreement in writing not more than 21 days after delivery. (3) Eliminates an exception under which a person is not required to be licensed if the person does not operate a facility used to store grain for hire, purchases less than 50,000 bushels of grain per year or uses all grain purchased for the production of the person's own livestock or poultry, and does not purchase grain by offering deferred pricing, delayed payment, or contracts that are linked to the commodity futures or commodity options market. (4) Provides that a depositor who does not present a claim at the hearing held by the director of the agency concerning a possible shortage may bring a claim to the agency within 15 days after the conclusion of the hearing. Makes certain changes in the grain indemnity program law, including the following: (1) Alters the definitions of the terms "claimant", "deferred pricing", "failure", and "grain buyer". (2) Provides that, in determining the amount of compensation to which a claimant who
(Continued next page)

Effective: July 1, 2010.



Pearson, Friend, Grubb, Knollman


    January 11, 2010, read first time and referred to Committee on Agriculture and Rural Development.


Digest Continued

incurred a financial loss due to the failure of a grain buyer is entitled, the compensable part of the claimant's loss is to be reduced by all credits and offsets and any producer premium that should have been due on the sale of the grain. Repeals provisions: (1) defining a "valid claim"; (2) concerning a grain buyer's registration with the board of the grain indemnity corporation; (3) authorizing inspection of the books and records of a registered grain buyer to confirm compliance with the law; (4) excluding a producer from protection under the grain indemnity program under certain circumstances; and (5) providing that the claim of a claimant who incurred a storage loss due to the failure of a warehouse operator is valid only if brought within one year after publication of notice of the grain buyer's failure.


Introduced

Second Regular Session 116th General Assembly (2010)


PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana Constitution) is being amended, the text of the existing provision will appear in this style type, additions will appear in this style type, and deletions will appear in this style type.
Additions: Whenever a new statutory provision is being enacted (or a new constitutional provision adopted), the text of the new provision will appear in this style type. Also, the word NEW will appear in that style type in the introductory clause of each SECTION that adds a new provision to the Indiana Code or the Indiana Constitution.
Conflict reconciliation: Text in a statute in this style type or this style type reconciles conflicts between statutes enacted by the 2009 Regular and Special Sessions of the General Assembly.

HOUSE BILL No. 1230


    A BILL FOR AN ACT to amend the Indiana Code concerning agriculture and animals.

Be it enacted by the General Assembly of the State of Indiana:

SOURCE: IC 26-3-7-2; (10)IN1230.1.1. -->     SECTION 1. IC 26-3-7-2, AS AMENDED BY P.L.64-2009, SECTION 1, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2010]: Sec. 2. The following definitions apply throughout this chapter:
        (1) "Agency" refers to the Indiana grain buyers and warehouse licensing agency established under section 1 of this chapter.
        (2) "Anniversary date" means the date that is ninety (90) calendar days after the fiscal year end of a business licensed under this chapter.
        (3) "Bin" means a bin, tank, interstice, or other container in a warehouse in which bulk grain may be stored.
        (4) "Buyer-warehouse" means a person that operates both as a warehouse licensed under this chapter and as a grain buyer.
        (5) "Claimant" means a person that is unable to secure satisfaction within the twelve (12) months following delivery of the

financial obligations due from a licensee under this chapter for grain that has been delivered to the licensee for sale or for storage under a bailment.
        (6) "Deferred pricing" or "price later" means a purchase by a buyer in which title to the grain passes to the buyer and the price to be paid to the seller is not determined:
            (A) at the time the grain is received by the buyer; or
            (B) within ten (10) less than twenty-one (21) days of receipt. after delivery.
         (7) "Delayed payment" means a purchase by a buyer in which title to the grain passes to the buyer at a determined price and payment to the seller is not made in less than twenty-one (21) days after delivery.
        (7) (8) "Depositor" means any of the following:
            (A) A person that delivers grain to a licensee under this chapter for storage or sale.
            (B) A person that:
                (i) owns or is the legal holder of a ticket or receipt issued by a licensee for grain received by the licensee; and
                (ii) is the creditor of the issuing licensee for the value of the grain received in return for the ticket or receipt.
            (C) A licensee that stores grain that the licensee owns solely, jointly, or in common with others in a warehouse owned or controlled by the licensee or another licensee.
        (8) (9) "Designated representative" means the person or persons designated by the director to act instead of the director in assisting in the administration of this chapter.
        (9) (10) "Director" means the director of the Indiana grain buyers and warehouse licensing agency appointed under section 1 of this chapter.
        (10) (11) "Facility" means a location or one (1) of several locations in Indiana that are operated as a warehouse or by a grain buyer.
        (11) (12) "Failure" "Failed" or "failure" means any of the following:
            (A) The inability of a licensee to financially satisfy fully all obligations due to claimants.
            (B) Public declaration of a licensee's insolvency.
            (C) Revocation or suspension of a licensee's license, if the licensee has outstanding indebtedness owed to claimants.
            (D) Nonpayment of a licensee's debts in the ordinary course of business, if there is not a good faith dispute.

            (E) Voluntary surrender of a licensee's license, if the licensee has outstanding indebtedness to claimants.
             (F) Involuntary or voluntary bankruptcy of a licensee.
        (12) (13) "Grain" means corn for all uses, popcorn, wheat, oats, barley, rye, sorghum, soybeans, oil seeds, other agricultural commodities as approved by the agency, and seed as defined in this section. The term does not include canning crops for processing, sweet corn, or flint corn.
        (13) (14) "Grain assets" means any of the following:
            (A) All grain owned or stored by a licensee, including grain that:
                (i) is in transit following shipment by a licensee; and
                (ii) has not been paid for.
            (B) All proceeds, due or to become due, from the sale of a licensee's grain.
            (C) Equity, less any secured financing directly associated with the equity, in hedging or speculative margin accounts of a licensee held by a commodity or security exchange, or a dealer representing a commodity or security exchange, and any money due the licensee from transactions on the exchange, less any secured financing directly associated with the money due the licensee from the transactions on the exchange.
            (D) Any other unencumbered funds, property, or equity in funds or property, wherever located, that can be directly traced to the sale of grain by a licensee. However, funds, property, or equity in funds or property may not be considered encumbered unless:
                (i) the encumbrance results from valuable consideration paid to the licensee in good faith by a secured party; and
                (ii) the encumbrance did not result from the licensee posting the funds, property, or equity in funds or property as additional collateral for an antecedent debt.
            (E) Any other unencumbered funds, property, or equity in assets of the licensee.
        (14) (15) "Grain bank grain" means grain owned by a depositor for use in the formulation of feed and stored by the warehouse to be returned to the depositor on demand.
        (15) (16) "Grain buyer" means a person who is engaged in the business of buying grain from producers. The term does not include a buyer of grain who:
            (A) buys less than fifty thousand (50,000) bushels of grain annually;
            (B) buys grain for the sole purpose of feeding the person's own livestock or poultry and derives a major portion of the person's income from selling that livestock or poultry; or
            (C) does not offer storage, deferred pricing, delayed payment, or contracts or other instruments that are linked to the commodity futures or commodity options market.
        (16) (17) "Grain standards act" means the United States Grain Standards Act, approved August 11, 1916 (39 Stat. 482; 7 U.S.C. 71-87 as amended).
        (17) (18) "License" means a license issued under this chapter.
        (18) (19) "Official grain standards of the United States" means the standards of quality or condition for grain, fixed and established by the secretary of agriculture under the grain standards act.
        (19) (20) "Person" means an individual, partnership, corporation, association, or other form of business enterprise.
        (20) (21) "Receipt" means a warehouse receipt issued by a warehouse licensed under this chapter.
        (21) (22) "Seed", notwithstanding IC 15-15-1, means grain set apart to be used primarily for the purpose of producing new plants.
        (22) (23) "Ticket" means a scale weight ticket, a load slip, or other evidence, other than a receipt, given to a depositor upon initial delivery of grain to a facility.
        (23) (24) "Warehouse act" means the United States Warehouse Act, approved August 11, 1916 (39 Stat. 486; 7 U.S.C. 241-273 as amended).
        (24) (25) "Warehouse" means any building or other protected enclosure in one (1) general location licensed or required to be licensed under this chapter in which grain is or may be:
            (A) stored for hire;
            (B) used for grain bank storage; or
            (C) used to store company owned grain;
        and the building or other protected enclosure is operated under one (1) ownership and run from a single office.
        (25) (26) "Warehouse operator" means a person that operates a facility or group of facilities in which grain is or may be stored for hire or which is used for grain bank storage and which is operated under one (1) ownership and run from a single office.
SOURCE: IC 26-3-7-3; (10)IN1230.1.2. -->     SECTION 2. IC 26-3-7-3 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2010]: Sec. 3. (a) The director may do the following:
        (1) Require any reports that are necessary to administer this

chapter.
        (2) Administer oaths, issue subpoenas, compel the attendance and testimony of witnesses, and compel the production of records in connection with any investigation or hearing under this chapter.
        (3) Prescribe all forms within the provisions of this chapter.
        (4) Establish grain standards in accordance with the grain standards act and federal regulations promulgated under that act that must be used by warehouses.
        (5) Investigate the activities required by this chapter including the storage, shipping, marketing, and handling of grain and complaints with respect to the storage, shipping, marketing, and handling of grain.
        (6) Inspect a facility, the grain stored in a facility, and all property and records pertaining to a facility. All inspections of an applicant or licensee under this chapter must take into consideration the proprietary nature of an applicant's or licensee's commercial information. The director may adopt rules under IC 4-22-2 regarding inspections permitted under this chapter, and the rules must take into consideration the proprietary nature of an applicant's or a licensee's commercial information. This chapter does not authorize the inspection of an applicant's or licensee's trade secret or intellectual property information.
        (7) Determine whether a facility for which a license has been applied for or has been issued is suitable for the proper storage, shipping, and handling of the grain that is stored, shipped, or handled, or is expected to be stored, shipped, or handled.
        (8) Require a licensee to terminate storage, shipping, marketing, and handling agreements upon revocation of the person's license.
        (9) Attend and preside over any investigation or hearing allowed or required under this chapter.
        (10) Impose sanctions for violations of this article.
        (11) Require a grain buyer and all persons purchasing grain to show evidence of training or licensing on the risks associated with grain marketing practices only if a grain buyer engages in a risk factor higher than a standard defined by the director. This training or licensing may include requiring the grain buyer or person purchasing grain to do any of the following:
            (A) Provide the agency with proof of registry with the commodity futures trading commission (CFTC) as a commodity trading adviser, a futures commission merchant, an introducing broker, or an associated person.
            (B) Demonstrate passage of the series 3 examination

administered by the National Association of Security Dealers.
            (C) Annually attend six (6) hours of continuing education, approved by the director, focusing on the risks to a grain buyer and seller that are associated with grain marketing practices and the communication of risks to the producer. Additionally, as part of continuing education, require a grain buyer, and all persons purchasing grain for a grain buyer, to pass a test, approved and administered by the director, that reasonably measures the grain buyer's understanding of the risks to grain buyers and sellers associated with producer marketing strategies.
        (12) Require all contracts executed after June 30, 1997, for the purchase of grain from producers, except a flat price contract or a contract for the production of seed, to include the following notice immediately above the place on the contract where the seller of the grain must sign:
            "NOTICE - SELLER IS CAUTIONED THAT CONTRACTING FOR THE SALE AND DELIVERY OF GRAIN INVOLVES RISKS. THESE RISKS MAY INCLUDE FUTURE PAYMENTS BY YOU TO MAINTAIN THIS CONTRACT, A LOWER SALES PRICE, AND OTHER RISKS NOT SPECIFIED.
            COVERAGE UNDER THE INDIANA GRAIN INDEMNITY PROGRAM IS LIMITED TO 100% OF A LOSS FOR STORED GRAIN AND 80% OF A LOSS FOR OTHER COVERED CONTRACTS.
            BE SURE YOU UNDERSTAND THE NATURE OF THIS CONTRACT AND THE ASSOCIATED RISKS."
        (13) Require all contracts executed after January 1, 2000, for the production of seed to include the following notice, in conspicuous letters, immediately above the place on the contract or an addendum where the seller of the seed must sign:
            "NOTICE - IF THE TERMS OF THIS CONTRACT STATE THAT THE CONTRACTOR RETAINS OWNERSHIP OF THE SEED AND ITS PRODUCTS, YOU MAY NOT BE ELIGIBLE FOR PARTICIPATION IN THE INDIANA GRAIN INDEMNITY PROGRAM. TO BE ELIGIBLE TO PARTICIPATE IN THE INDIANA GRAIN INDEMNITY PROGRAM, FARMERS MUST OWN AND SELL GRAIN OR SEED. BE SURE YOU UNDERSTAND THE NATURE OF THIS CONTRACT AND THE ASSOCIATED RISKS."
        (14) At any time, order an unannounced audit for compliance with

this article.
        (15) Adopt rules under IC 4-22-2 to carry out the purposes and intent of this chapter.
         (16) Require all grain buyers offering deferred pricing, delayed payments, or contracts linked to the commodity futures or commodity options market in connection with a grain purchase to document the agreement in writing not more than twenty-one (21) days after delivery.
    (b) The director shall do the following:
        (1) Establish standards to ensure that a grain buyer has a suitable financial position to conduct a business as a grain buyer.
        (2) Require a person who conducts business as a grain buyer to first be licensed by the agency.
        (3) Require any person engaged in the business of advising producers on grain marketing for hire to:
            (A) register with the agency; and
            (B) provide the agency with proof of registry with the commodity futures trading commission (CFTC) as a commodity trading advisor, a futures commission merchant, an introducing broker, or an associated person.
    (c) The director may designate an employee to act for the director in the administration of this chapter. A designee may not:
        (1) act in matters that require a public hearing or the temporary suspension of a license;
        (2) adopt rules; or
        (3) act as the ultimate authority in the administration of this chapter.
    (d) The director may determine whether geographically separate facilities constitute a single warehouse or grain buyer and in making the determination may consider the following:
        (1) The number of facilities involved.
        (2) Whether full weighing equipment is present at the geographically separate facilities.
        (3) The method of bookkeeping employed by the separate facilities.
        (4) The hours of operation of the separate facilities.
        (5) The personnel employed at the separate facilities.
        (6) Other factors the director deems relevant.

SOURCE: IC 26-3-7-6; (10)IN1230.1.3. -->     SECTION 3. IC 26-3-7-6, AS AMENDED BY P.L.64-2009, SECTION 4, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2010]: Sec. 6. (a) The agency may shall issue the following licenses:
        (1) A grain bank license may be issued to a person that:
            (A) stores only grain bank grain;
            (B) has a storage capacity of not more than fifty thousand (50,000) bushels of grain; and
            (C) purchases less than fifty thousand (50,000) bushels of grain per year.
        (2) A warehouse license may be issued to a person that:
            (A) stores grain for hire; and
            (B) purchases less than fifty thousand (50,000) bushels of grain per year.
        (3) A grain buyer license may be issued to a person that:
            (A) purchases annually at least fifty thousand (50,000) bushels of grain that are not for the sole purpose of feeding the person's own livestock or poultry;
            (B) does not store grain for hire; chooses to obtain a grain buyer's license; and
            (C) offers deferred pricing, delayed payments, or contracts linked to the commodity futures or commodity options market in connection with grain purchases.
        (4) A buyer-warehouse license may be issued to a person that operates both as a warehouse and as a grain buyer.
    (b) An applicant shall file with the director a separate application for each license or amendment of a license at the times, on the forms, and containing the information that the director prescribes.
    (c) An initial application for a license must be accompanied by a license fee as follows:
        (1) For a grain bank or for a warehouse or buyer-warehouse with a storage capacity of less than two hundred fifty thousand (250,000) bushels, two hundred fifty dollars ($250) for the first facility and fifty dollars ($50) for each additional facility.
        (2) For a warehouse or a buyer-warehouse with a storage capacity of at least two hundred fifty thousand (250,000) bushels but less than one million (1,000,000) bushels, five hundred dollars ($500) for the first facility and fifty dollars ($50) for each additional facility.
        (3) For a warehouse or a buyer-warehouse with a storage capacity of at least one million (1,000,000) bushels but less than ten million (10,000,000) bushels, seven hundred fifty dollars ($750) for the first facility and fifty dollars ($50) for each additional facility.
        (4) For a warehouse or buyer-warehouse with a storage capacity greater than ten million (10,000,000) bushels, one thousand

dollars ($1,000) for the first facility and fifty dollars ($50) for each additional facility.
        (5) For a grain buyer, including a grain buyer that is also licensed as a warehouse under the warehouse act, five hundred dollars ($500) for the first facility and fifty dollars ($50) for each additional facility.
The director may prorate the initial application fee for a license that is issued at least thirty (30) days after the anniversary date of the licensee's business.
    (d) Before the anniversary date of the license, the licensee shall pay an annual fee in an amount equal to the amount required under subsection (c). The director may prorate the annual application fee for a license that is modified at least thirty (30) days after the anniversary date of the licensee's license.
    (e) A licensee or an applicant for an initial license must have a minimum current asset to current liability ratio of one to one (1:1) or better.
    (f) An applicant for an initial license shall submit with the person's application a review level financial statement or better financial statement that reflects the applicant's financial situation on a date not more than fifteen (15) months before the date on which the application is submitted. A financial statement submitted under this section must:
        (1) be prepared by an independent accountant certified under IC 25-2.1;
        (2) comply with generally accepted accounting principles; and
        (3) contain:
            (A) an income statement;
            (B) a balance sheet;
            (C) a statement of cash flow;
            (D) a statement of retained earnings;
            (E) the preparer's notes; and
            (F) other information the agency may require.
The director may adopt rules under IC 4-22-2 to allow the agency to accept other substantial supporting documents instead of those listed to determine the financial solvency of the applicant if the director determines that providing the listed documents creates a financial or other hardship on the applicant or licensee.
    (g) An application for a license implies a consent to be inspected.
    (h) A person that:
        (1) does not operate a facility used to store grain for hire;
        (2) purchases:
            (A) less than fifty thousand (50,000) bushels of grain per year;

or
            (B) only grain used for the production of the person's own livestock or poultry; and
        (3) does not purchase grain by:
            (A) offering deferred pricing;
            (B) offering delayed payment; or
            (C) offering other contracts;
        that are linked to the commodity futures or commodity options market;
is not required to be licensed.
    (i) (h) Fees collected under this section shall be deposited in the grain buyers and warehouse licensing agency license fee fund established by section 6.3 of this chapter.

SOURCE: IC 26-3-7-16.5; (10)IN1230.1.4. -->     SECTION 4. IC 26-3-7-16.5 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2010]: Sec. 16.5. (a) Upon learning of the possibility that a shortage exists, either as a result of an inspection or a report or complaint from a depositor, the agency, based on an on-premise inspection, shall make a preliminary determination as to whether a shortage exists. If a shortage is not discovered, the agency shall treat the audit as it would any other audit.
    (b) If it is determined that a shortage may exist, the director or the director's designated representative shall hold a hearing as soon as possible to confirm the existence of a shortage as indicated by the licensee's books and records and the grain on hand. Only the licensee, the surety company named on the licensee's bond, the issuer of the irrevocable letter of credit, and any grain depositor who has made a claim or complaint to the agency in conjunction with the shortage shall be considered as interested parties for the purposes of that hearing, and each shall be given notice of the hearing. At the hearing, the director or the director's designated representative shall determine whether there appears to be a reasonable probability that a shortage exists. If it is determined that a reasonable probability exists and that the bond or letter of credit proceeds or the cash deposit should be distributed, a preliminary determination shall be entered to the effect that the licensee has failed to meet its obligations under this chapter or the rules adopted under this chapter. At the hearing, the director or the director's designated representative may order that all proceeds from grain sales are to be held in the form in which they are received and to be kept separate from all other funds held by the licensee. The order may also provide for informal conferences between agency representatives and persons who have or who appear to have grain deposited with the licensee. The surety company shall be permitted to participate in those

conferences.
    (c) In the event that the director determines that the bond or letter of credit proceeds or cash deposit is to be distributed, the agency shall hold a hearing on claims. Notice shall be given to the surety company named on the licensee's bond, the issuer of the irrevocable letter of credit, and to all persons shown by the licensee's books and records to have interests in grain deposited with the licensee. If the agency has actual knowledge of any other depositor or person claiming rights in the grain deposited with the licensee, the bond, the irrevocable letter of credit, or the cash deposit, notice shall also be provided to that person. In addition, public notice shall be provided in newspapers of general circulation that serve the counties in which licensed facilities are located, and notices shall be posted on the licensed premises. At the hearing on claims, the director may accept as evidence of claims the report of agency representatives who in informal conferences with depositors have concluded that a claim is directly and precisely supported by the licensee's books and records. When there is disagreement between the claims of a depositor and the licensee's books and records, the director or the director's designated representative shall hear oral claims and receive written evidence of claims in order to determine the validity of the claim.
     (d) Any depositor who does not present a claim at the hearing may bring the claim to the agency within fifteen (15) days after the conclusion of the hearing.
    (d) (e) Following the hearing on claims, the director shall make a determination as to the total proven storage obligation of the claimants and the loss sustained by each depositor who has proven a claim. Depositors found to have proven their claims shall be proven claimants. In arriving at that loss, in accordance with section 19 of this chapter, the director shall apply all grain on hand or its identifiable proceeds to meet the licensee's obligations to grain depositors of grain of that type. Initial determinations of loss shall be made on the amount of grain on hand, or identifiable proceeds, and shall reduce the amount to which a depositor may have a proven claim. With respect to the remaining unfulfilled obligations, the director shall, for the sole purpose of establishing each depositor's claim under this chapter, establish a date upon which the loss is discovered, shall price the grain as of that date, shall treat all outstanding grain storage obligations not covered by grain on hand or identifiable proceeds as being sold as of that date, and shall determine the extent of each depositor's loss as being the actual loss sustained as of that date. Grain of a specific type on the premises of a licensee must first be applied to meet the licensee's

storage obligations with respect to that type of grain. If there is insufficient grain of a specific type on hand to meet all storage obligations with respect to that type of grain, the grain that is present shall be prorated in accordance with the procedures described in this section and section 16.8 of this chapter.
    (e) (f) Upon the failure of the agency to begin an audit, which would serve as the basis for a preliminary administrative determination, within forty-five (45) days of the agency's receipt of a written claim by a depositor, a depositor shall have a right of action upon the bond, letter of credit, or cash deposit. A depositor bringing a civil action need not join other depositors. If the agency has undertaken an audit within the forty-five (45) day period, the exclusive remedy for recovery against the bond, letter of credit, or cash deposit shall be through the recovery procedure prescribed by this section.
    (f) (g) When the proven claims exceed the amount of the bond, letter of credit, or cash deposit, recoveries of proven claimants shall be prorated in the same manner as priorities are prorated under section 16.8 of this chapter.
    (g) (h) The proceedings and hearings under this section may be undertaken without regard to, in combination with, or in addition to those undertaken in accordance with section 17.1 of this chapter.
    (h) (i) The findings of the director shall be final, conclusive, and binding on all parties.
    (i) (j) The director may adopt rules under IC 4-22-2 to determine how the agency may distribute the interest that may accrue from funds held by the agency for the payment of claims.
    (j) (k) A claim of a licensee for stored grain may not be honored until the proven claims of all other claimants arising from the purchase, storage, and handling of the grain have been paid in full.

SOURCE: IC 26-3-7-16.8; (10)IN1230.1.5. -->     SECTION 5. IC 26-3-7-16.8 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2010]: Sec. 16.8. (a) A lien against all grain assets of a licensee or a person who is required to be licensed under this chapter attaches in favor of the following:
        (1) A lender or other claimant that has a receipt for grain owned or stored by the licensee.
        (2) A claimant that has a ticket or written evidence, other than a receipt, of a storage obligation of the licensee.
        (3) A claimant that surrendered a receipt as part of a grain sales transaction if:
            (A) the claimant was not fully paid for the grain sold; and
            (B) the licensee failed less than twenty-one (21) days after the surrender of the receipt.
        (4) A claimant that has other written evidence of a sale to the licensee of grain for which the claimant has not been fully paid.
    (b) A lien under this section attaches and is effective at the earliest of the following:
        (1) the delivery of the grain for sale, storage, or under a bailment;
        (2) the commencement of the storage obligation; or
        (3) the advancement of funds by a lender.
    (c) A lien under this section terminates when the licensee discharges the claim.
    (d) If a licensee fails, has failed, the lien that attaches under this section is assigned to the agency by operation of this section. If a failed licensee is liquidated, a lien under this section continues to attach as a claim against the assets or proceeds of the assets of the licensee that are received or liquidated by the agency.
    (e) Except as provided in subsection (g), if a licensee fails, has failed, the power to enforce the lien on the licensee's grain assets transfers by operation of this section to the director and rests exclusively with the director who shall allocate and prorate the proceeds of the grain assets as provided in subsections (f) and (h).
    (f) The priority of a lien that attaches under this section is not determined by the date on which the claim arose. If a licensee fails, has failed, the director shall enforce lien claims and allocate grain assets and the proceeds of grain assets of the licensee in the following order of priority:
        (1) First priority is assigned to the following:
            (A) A lender or other claimant that has a receipt for grain owned or stored by the licensee.
            (B) A claimant that has a ticket or written evidence, other than a receipt, of a storage obligation of the licensee.
            (C) A claimant that surrendered a receipt as part of a grain sales transaction if:
                (i) the claimant was not fully paid for the grain sold; and
                (ii) the licensee failed less than twenty-one (21) days after the surrender of the receipt.
        If there are insufficient grain assets to satisfy all first priority claims, first priority claimants shall share pro rata in the assets.
        (2) Second priority is assigned to all claimants who have written evidence of the sale of grain, such as a ticket, a deferred pricing agreement, or similar grain delivery contract, and who completed delivery less than thirty (30) days before the licensee's failure. Claimants under this subdivision share pro rata in the remaining assets if all claimants under subdivision (1) have been paid but

insufficient assets remain to fully satisfy all claimants under this subdivision.
        (3) Third priority is assigned to all other claimants that have written evidence of the sale of grain to the failed licensee. Claimants under this subdivision share pro rata in the distribution of the remaining grain assets.
    (g) If a claimant under this section brings an action to recover grain assets that are subject to a lien under this section and the agency does not join the action, the director shall, upon request of the claimant, assign the lien to the claimant in order to allow the claimant to pursue the claim to the extent that the action does not delay the resolution of the matter by the agency, the prompt liquidation of the assets, or the ultimate distribution of assets to all claimants.
    (h) If:
        (1) a claimant engaged in farming operations granted to one (1) or more secured parties one (1) or more security interests in the grain related to the claimant's claim under this section; and
        (2) one (1) or more secured parties described in subdivision (1) have given to:
            (A) the licensee prior written notice of the security interest under IC 26-1-9.1-320(a)(1) or IC 26-1-9-307(1)(a) before its repeal; and
            (B) the director prior written notice of the security interest with respect to the grain described in subdivision (1) sufficient to give the director a reasonable opportunity to cause the issuance of a joint check under this subsection;
the director shall pay the claimant described in subdivision (1) the portion of the proceeds of grain assets under subsection (e) to which the claimant is entitled under this section by issuance of a check payable jointly to the order of the claimant and any secured party described in subdivision (1) who has given the notices described in subdivision (2). If only one (1) secured party described in subdivision (1) is a payee, the rights of the secured party in the check shall be to the extent of the indebtedness of the claimant to the secured party. If two (2) or more secured parties described in subdivision (1) are payees, the nature, extent, and priority of their respective rights in the check are determined in the same manner as the nature, extent, and priority of their respective security interest under IC 26-1-9.1.

SOURCE: IC 26-4-1-5; (10)IN1230.1.6. -->     SECTION 6. IC 26-4-1-5 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2010]: Sec. 5. "Claimant" means a producer that:
         (1) is a participant in the grain indemnity program; and satisfies

any of the following conditions:
        (1) Possesses written evidence of ownership of grain, including, but not limited to:
            (A) warehouse receipts;
            (B) scale tickets;
            (C) settlement sheets; and
            (D) ledger cards;
        that disclose a storage obligation of a licensed warehouseman that has failed.
        (2) Has surrendered warehouse receipts as part of a sale of grain with a licensed warehouseman who failed not more than twenty-one (21) days after the surrender of the receipts and the person surrendering the warehouse receipts was not fully paid for the grain.
        (3) Possesses written evidence of the delivery and sale of grain or transfer of deferred pricing grain to a failed Indiana grain buyer or licensed warehouseman, including, but not limited to:
            (A) scale tickets;
            (B) settlement sheets;
            (C) deferred pricing contracts;
            (D) basis contracts; or
            (E) similar grain delivery contracts;
        but did not get fully paid for the sale or transfer.
         (2) possesses a claim resulting from a failure of a licensed grain buyer or warehouse; and
        (3) has a claim that has been adjudicated by the agency under IC 26-3-7-16.5.

SOURCE: IC 26-4-1-8; (10)IN1230.1.7. -->     SECTION 7. IC 26-4-1-8 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2010]: Sec. 8. "Deferred pricing" means a purchase by a buyer where title to the grain passes to the buyer, in which the actual dollar price to be paid to the seller is not to be determined at the time the grain is received by the buyer or within ten (10) less than twenty-one (21) days of that receipt.
SOURCE: IC 26-4-1-10; (10)IN1230.1.8. -->     SECTION 8. IC 26-4-1-10 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2010]: Sec. 10. "Failed" or "failure" means any of the following:
        (1) An inability to of a licensee to financially satisfy fully all obligations due a claimant. in accordance with applicable statutes or rules and the time limits provided in the statutes or rules.
        (2) A public declaration of a licensee's insolvency.
        (3) A failure to pay claimants The nonpayment of a licensee's debts in the ordinary course of business where a bona fide dispute

does not exist between a grain buyer and a customer. if there is not a good faith dispute.
         (4) Revocation of suspension of a licensee's license, if the licensee has outstanding indebtedness owed to claimants.
        (5) Voluntary surrender of a licensee's license, if the licensee has outstanding indebtedness to claimants.
        (6) Involuntary or voluntary bankruptcy of a licensee.

SOURCE: IC 26-4-1-13; (10)IN1230.1.9. -->     SECTION 9. IC 26-4-1-13, AS AMENDED BY P.L.1-2006, SECTION 484, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2010]: Sec. 13. "Grain" means corn for all uses, popcorn, wheat, oats, rye, soybeans, barley, sorghum, oil seeds, other agricultural commodities as approved by the agency, and seed (as defined in IC 26-3-7-2(21)). IC 26-3-7-2(22)). The term does not include canning crops for processing, sweet corn, or flint corn.
SOURCE: IC 26-4-1-14; (10)IN1230.1.10. -->     SECTION 10. IC 26-4-1-14 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2010]: Sec. 14. (a) "Grain buyer" means a person licensed under IC 26-3-7 who is engaged in Indiana in the business of buying grain from producers.
    (b) The term does not include a buyer of grain who buys less than fifty thousand (50,000) bushels of grain annually for the buyer's own use as seed or feed.
SOURCE: IC 26-4-1-20; (10)IN1230.1.11. -->     SECTION 11. IC 26-4-1-20 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2010]: Sec. 20. "Storage loss" means a loss to a storage depositor resulting from a failed warehouseman warehouse operator not fully satisfying the warehouseman's warehouse operator's storage obligation to the depositor, net of any outstanding charges against the grain.
SOURCE: IC 26-4-1-24; (10)IN1230.1.12. -->     SECTION 12. IC 26-4-1-24 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2010]: Sec. 24. "Warehouseman" "Warehouse operator" means a person engaged in the business of operating a warehouse for storing, shipping, or handling grain for hire that holds a valid warehouseman's warehouse operator license under IC 26-3-7 or the United States Warehouse Act.
SOURCE: IC 26-4-4-1; (10)IN1230.1.13. -->     SECTION 13. IC 26-4-4-1 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2010]: Sec. 1. (a) The Indiana grain indemnity fund is established for the purpose of providing money to pay producers for losses incurred due to the failure of a grain buyer or warehouseman. warehouse operator licensed under IC 26-3-7. The fund shall be administered by the board of the corporation.
    (b) The fund shall operate on a fiscal year of July 1 to June 30.
SOURCE: IC 26-4-4-5; (10)IN1230.1.14. -->     SECTION 14. IC 26-4-4-5 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2010]: Sec. 5. Before July 1, 1996,

the The agency shall notify each grain buyer registered licensed under IC 26-4-2 IC 26-3-7 that producer premiums described in section 4 of this chapter shall be deducted from the purchase price of the grain on and after the date specified in the notice. The notice must be sent by first class mail.

SOURCE: IC 26-4-6-1; (10)IN1230.1.15. -->     SECTION 15. IC 26-4-6-1 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2010]: Sec. 1. (a) Except as provided in section 2 of this chapter, the money in the fund:
        (1) is not available for any purpose other than the payment of valid claims approved by the board or refunds to producers who do not want to participate in the fund; and
        (2) may not be transferred to any other fund.
    (b) The limiting and nontransferability provision of subsection (a) is declared to be nonseverable from the whole of this article. If subsection (a) is held to be invalid, repealed, or substantially amended, this article shall immediately become invalid and the money remaining in the fund shall be distributed to participants in the fund in a manner that is proportional to the amount of producer premiums each producer paid to the fund.
SOURCE: IC 26-4-6-3; (10)IN1230.1.16. -->     SECTION 16. IC 26-4-6-3 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2010]: Sec. 3. (a) Except as provided in subsection (b), within ninety (90) days of the board's approval of a valid claim, the board shall compensate from the fund, in an amount described in section 4 of this chapter and in the manner described in subsection (c), a claimant who has incurred a financial loss or storage loss due to a failure of a grain buyer or warehouseman. warehouse operator licensed under IC 26-3-7.
    (b) The time for payment may be extended if the board and claimant mutually agree and put the terms of the payment in writing.
    (c) If:
        (1) a claimant engaged in farming operations granted to one (1) or more secured parties one (1) or more security interests in the grain related to the claimant's claim under this section; and
        (2) one (1) or more secured parties described in subdivision (1) have given to:
            (A) the licensee prior written notice of the security interest under IC 26-1-9.1-320(a)(1) or IC 26-1-9-307(1)(a) before its repeal; and
            (B) the board prior written notice of the security interest with respect to the grain described in subdivision (1) sufficient to give the board a reasonable opportunity to cause the issuance of a joint check under this subsection;
the board may compensate the claimant described in subdivision (1) in the amount to which the claimant is entitled under section 4 of this chapter by causing the issuance of a check payable jointly to the order of the claimant and any secured party described in subdivision (1) who has given the notices described in subdivision (2). If only one (1) secured party described in subdivision (1) is a payee, the rights of the secured party in the check shall be to the extent of the indebtedness of the claimant to the secured party. If two (2) or more secured parties described in subdivision (1) are payees, the nature, extent, and priority of their respective rights in the check are determined in the same manner as the nature, extent, and priority of their respective security interest under IC 26-1-9.1.
SOURCE: IC 26-4-6-4; (10)IN1230.1.17. -->     SECTION 17. IC 26-4-6-4 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2010]: Sec. 4. (a) A claimant who has incurred a storage loss due to the failure of a warehouseman warehouse operator licensed under IC 26-3-7 is entitled to be compensated by the board from the fund for one hundred percent (100%) of the storage loss incurred less all credits and offsets and any producer premium that would have been due on the sale of the grain. The gross amount of the storage loss shall be as determined by the agency for warehouses licensed under IC 26-3-7 or by the United States Department of Agriculture for warehouses licensed under the United States Warehouse Act. The warehouseman warehouse operator and claimants may submit to the agency evidence related to outstanding charges against stored grain. If the evidence is submitted, the agency shall determine the storage loss payable by the board.
    (b) A claimant who has incurred a financial loss due to the failure of a grain buyer is entitled to be compensated by the board from the fund for eighty percent (80%) of the loss incurred less all credits and offsets and any producer premium that should have been due on the sale of the grain. The agency shall determine the loss incurred in the following manner:
        (1) For grain that has been priced, the loss shall be the value of the priced grain less any outstanding charges against the grain.
        (2) For grain sold to a grain buyer who is also a warehouseman warehouse operator and that has not been priced, the loss shall be established using the price determined for the storage obligations.
        (3) For grain sold to a grain buyer who is not a warehouseman warehouse operator and that has not been priced, the loss shall be established using a price determined by the agency using the same procedures used by the agency to determine the price at the

warehouse.

SOURCE: IC 26-4-6-6; (10)IN1230.1.18. -->     SECTION 18. IC 26-4-6-6 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2010]: Sec. 6. A claimant compensated under this chapter may be required to subrogate to the board or corporation all the claimant's rights to collect on a bond issued under IC 26-3-7 or the United States Warehouse Act and all the claimant's rights to any other compensation arising from the failure of the grain buyer or warehouseman. warehouse operator. If so required, the claimant shall assign all the claimant's rights, title, and interest in any judgment concerning the failure to the board or corporation.
SOURCE: IC 26-4-6-8; (10)IN1230.1.19. -->     SECTION 19. IC 26-4-6-8 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2010]: Sec. 8. After the agency has determined that a grain buyer or warehouse has defaulted payment or failed, the board shall have the following duties:
        (1) Determine the valid claims and the amount of such claims to be paid to claimants for financial losses that were incurred due to the failure of a grain buyer or warehouseman. warehouse operator.
        (2) Authorize payment of money from the fund when necessary for the purpose of compensating claimants in accordance with the provisions of this chapter.
        (3) Collect money through subrogated claims against bonds filed under IC 26-3-7 in the place of claimants who collected for a loss incurred due to a warehouse or grain buyer failure.
        (4) Borrow money as authorized under IC 26-4-3-9 if the fund has insufficient money to cover valid approved claims.
        (5) Deposit into the fund any remaining grain assets of a failed grain buyer or warehouseman warehouse operator for the purpose of repayment to the fund the money used to pay claimants, subject to any priority lien right a holder of a mortgage, security interest, or other encumbrance may possess under any other applicable law. Any repayment into the fund may not exceed the principal amount paid to claimants plus interest at the rate paid on ninety (90) day United States Treasury bills.
        (6) If the amount in the fund is insufficient to pay all valid approved claims in accordance with this chapter and the board is unable to borrow funds for whatever reason, grant priority of payment of authorize payment of all the approved claims in the order the claims were approved as valid by the board. on a pro rata basis.
SOURCE: IC 26-4-7-2; (10)IN1230.1.20. -->     SECTION 20. IC 26-4-7-2 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2010]: Sec. 2. This article does not

limit the authority of the director of the agency to take disciplinary action against a grain buyer or warehouseman warehouse operator licensed under IC 26-3-7 for a violation of IC 26-3-7, this article, or the rules of the agency.

SOURCE: IC 26-4-7-3; (10)IN1230.1.21. -->     SECTION 21. IC 26-4-7-3 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2010]: Sec. 3. The repayment in full of all obligations to the fund by a grain buyer or warehouseman warehouse operator does not nullify or modify the effect of any other disciplinary proceeding brought under IC 26-3-7 or this article.
    SECTION 22. THE FOLLOWING ARE REPEALED [EFFECTIVE JULY 1, 2010]: IC 26-4-1-22 ; IC 26-4-2-1; IC 26-4-2-2; IC 26-4-2-3; IC 26-4-2-4; IC 26-4-2-5; IC 26-4-5-3; IC 26-4-6-5.