CHAPTER 203D
GRAIN DEPOSITORS AND SELLERS INDEMNIFICATION

Referred to in §159.6, 189.16, 190.1, 203.4, 203.12, 203C.4, 203C.12, 203C.14, 203C.17, 554.7204, 669.14

This chapter not enacted as a part of this title;

transferred from chapter 543A in Code 1993

  
     
203D.1  Definitions.
  As used in this chapter, unless the context otherwise requires:
  1.  “Board” means the Iowa grain indemnity fund board created in section 203D.4.
  2.  “Credit-sale contract” means the same as defined in section 203.1.
  3.  “Department” means the department of agriculture and land stewardship.
  4.  “Depositor” means a person who deposits grain in a licensed warehouse for storage, handling, or shipment, or who is the owner or legal holder of an outstanding warehouse receipt issued by a licensed warehouse, or who is lawfully entitled to possession of the grain.
  5.  “First point of sale” means the initial transfer of title to grain from a person who has produced the grain or caused the grain to be produced to the first purchaser of the grain for consideration, conditional or otherwise, in any manner or by any means.
  6.  “Fund” means the grain depositors and sellers indemnity fund created in section 203D.3.
  7.  “Grain” means the same as defined in section 203.1.
  8.  “Grain dealer” means the same as defined in section 203.1.
  9.  “Licensed grain dealer” means a person who has obtained a license to engage in the business of a grain dealer pursuant to section 203.3.
  10.  “Licensed warehouse” means the same as defined in section 203C.1.
  11.  “Licensed warehouse operator” means the same as in section 203C.1.
  12.  “Licensee” means a licensed grain dealer or licensed warehouse operator.
  13.  “Loss” means the amount of a claim held by a seller or depositor against a grain dealer or warehouse operator which has not been recovered through other legal and equitable remedies including the liquidation of assets.
  14.  a.  “Purchased grain” means grain entered in the company-owned paid position as evidenced on the grain dealer’s daily position record.
  b.  “Purchased grain” does not include grain that is subject to an exempt transaction based on documentation satisfactory to the department showing that the grain dealer did any of the following:
  (1)  Purchased the grain from the United States government or any of its subdivisions or agencies.
  (2)  Purchased the grain from a person licensed as a grain dealer in any jurisdiction.
  (3)  Purchased the grain under a credit-sale contract.
  (4)  Entered the grain in the company-owned paid position as a cancellation of a collateral warehouse receipt.
  (5)  Entered the grain in the company-owned paid position as an intra-company location transfer.
  15.  “Scale weight ticket” means the same as defined in section 203C.1.
  16.  “Seller” means a person who sells grain which the person has produced or caused to be produced to a licensed grain dealer, but excludes a person who executes a credit-sale contract as a seller as provided in section 203.15. However, “seller” does not include any of the following:
  a.  A person licensed as a grain dealer in any jurisdiction who sells grain to a licensed grain dealer.
  b.  A person who sells grain that is not produced in this state unless such grain is delivered to a licensed grain dealer at a location in this state as the first point of sale.
  17.  “Warehouse operator” means the same as defined in section 203C.1.
86 Acts, ch 1152, §31
C87, §543A.1
87 Acts, ch 147, §8 – 10; 89 Acts, ch 143, §901, 902
C93, §203D.1
2008 Acts, ch 1083, §13, 14; 2009 Acts, ch 41, §81; 2009 Acts, ch 133, §78; 2010 Acts, ch 1082, §5; 2011 Acts, ch 34, §39; 2012 Acts, ch 1095, §118; 2015 Acts, ch 103, §12; 2023 Acts, ch 154, §14, 19

     
203D.2  Persons participating in fund.
  All licensed grain dealers and licensed warehouse operators shall participate in the fund.
86 Acts, ch 1152, §32
C87, §543A.2
87 Acts, ch 147, §11
C93, §203D.2

     
203D.3  Grain depositors and sellers indemnity fund.
  1.  The grain depositors and sellers indemnity fund is created in the state treasury as a separate account. The general fund of the state is not liable for claims presented against the fund under section 203D.6.
  2.  The fund consists of all of the following:
  a.  Participation fees paid to the department by licensed grain dealers and persons applying to be issued a grain dealer’s license as provided in section 203D.3A.
  b.  Participation fees paid to the department by licensed warehouse operators and persons applying to be issued a warehouse operator’s license as provided in section 203D.3A.
  c.  Per-bushel fees paid to the department by licensed grain dealers as provided in section 203D.3A.
  d.  Delinquency penalties.
  e.  Amounts collected by the state pursuant to legal action on behalf of the fund.
  f.  Interest, earnings on investments, property, or securities acquired through the use of moneys in the fund.
  3.  The assessment year of the fund begins September 1 and ends on August 31. Assessment quarters of the fund begin September 1, December 1, March 1, and June 1. The finances of the fund shall be calculated on an accrual basis in accordance with generally accepted accounting principles.
  4.  The moneys collected under this section and deposited in the fund shall be used exclusively to indemnify depositors and sellers as provided in section 203D.6 and to pay the administrative costs of this chapter.
  5.  All disbursements from the fund shall be paid by the treasurer of state pursuant to vouchers authorized by the department.
  6.  The administrative costs of this chapter shall be paid from the fund after approval of the costs by the board.
86 Acts, ch 1152, §33
C87, §543A.3
87 Acts, ch 147, §12 – 15; 88 Acts, ch 1148, §3; 89 Acts, ch 143, §903 – 905
C93, §203D.3
2008 Acts, ch 1083, §15; 2009 Acts, ch 133, §79; 2010 Acts, ch 1082, §6, 7; 2023 Acts, ch 154, §15, 19
Referred to in §203.2A, 203D.1, 203D.3A, 203D.5

     
203D.3A  Fees.
  The department shall collect fees as provided in this section, if established by the board pursuant to section 203D.5, at rates determined by the board as provided in that section. A person required to pay a fee shall use forms and deliver the payment to the department as required by the department.
  1.  a.  A person who applies for the issuance of a new license as a grain dealer pursuant to section 203.5 or a warehouse operator pursuant to sections 203C.7 and 203C.33 shall pay the department an initial participation fee as part of the application.
  (1)  In calculating the amount of the initial participation fee, an applicant for a license shall be deemed a licensee paying the full amount of the participation fee owing on the licensee’s first anniversary date as provided in paragraph “b”. The department must be satisfied that the applicant is calculating the amount due in good faith and using the best information available.
  (2)  If the department issues the license, the licensee shall recalculate the participation fee when making a payment on the licensee’s first installment date as provided in paragraph “b”. The licensee may notify the department of any overpayment and shall notify the department of any underpayment by the licensee’s first installment date in a manner and according to procedures required by the department. The department shall refund any overpayment to the licensee and the licensee shall pay any additional amount resulting from an underpayment.
  b.  A licensee shall pay a participation fee on four successive installment dates, with each installment date occurring on the last date of the fund’s assessment quarter as provided in section 203D.3. The licensee shall pay twenty-five percent of the total participation fee assessed on each installment date. However, nothing in this subsection prevents a licensee from paying the participation fee on an accelerated basis. A licensee shall pay the first installment on the last date of the fund’s assessment quarter immediately following the licensee’s anniversary date.
  (1)  For a licensed grain dealer, the anniversary date is the last date to apply for the renewal of the grain dealer’s license before the license expires as provided in section 203.5.
  (2)  For a licensed warehouse operator, the anniversary date is the last date to apply for the renewal of the warehouse operator’s license before the license expires as provided in section 203C.37.
  c.  A licensee is delinquent if the licensee fails to submit the payment when due or if, upon examination, an underpayment of the fee is found by the department.
  d.  A licensee shall not pass on the cost of a participation fee to sellers. The department may suspend or revoke the license of a grain dealer for passing on the cost, as provided in chapter 203.
  2.  a.  A per-bushel fee shall be assessed on all purchased grain. 
  b.  The grain dealer shall forward the per-bushel fee to the department on a quarterly basis in the manner and using the forms prescribed by the department. A licensee is delinquent if the licensee fails to submit the full fee or quarterly forms when due or if, upon examination, an underpayment of the fee is found by the department. The grain dealer is subject to a penalty of ten dollars for each day the grain dealer is delinquent or an amount equal to the amount of the deficiency, whichever is less. However, a licensee who fails to submit the full fee or quarterly forms when due, is subject to a minimum payment of ten dollars. The department may establish and apply a margin of error in determining whether a grain dealer is delinquent. The per-bushel fee shall be collected only once on each bushel of grain. 
  c.  A grain dealer may choose to pass on the cost of a per-bushel fee to the sellers by an itemized discount noted on the settlement sheet. However, if the per-bushel fee is not in effect, no grain dealer shall make such a discount on the purchase of grain. A discount made nominally for the per-bushel fee while the fee is not in effect is grounds for license suspension or revocation under chapter 203.
2010 Acts, ch 1082, §8; 2015 Acts, ch 103, §13; 2023 Acts, ch 154, §16, 19
Referred to in §203.5, 203C.37, 203D.3, 203D.5

     
203D.4  Indemnity fund board.
  1.  The Iowa grain indemnity fund board is established to advise the department on matters relating to the fund and to perform the duties provided it in this chapter. The board is composed of the secretary of agriculture or a designee who shall serve as president; the state treasurer or a designee who shall serve as treasurer; a representative of the banking industry appointed by the governor, who shall be selected from a list of three nominations made by the secretary of agriculture; and four representatives of the grain industry appointed by the governor, subject to confirmation by the senate, two of whom shall be representatives of producers and who shall be actively participating producers, and two of whom shall be representatives of licensed grain dealers and licensed warehouse operators and who shall be actively participating licensed grain dealers and licensed warehouse operators, each of whom shall be selected from a list of three nominations made by the secretary of agriculture. The term of membership of the banking industry representative and the grain industry representatives is three years, and the representatives are eligible for reappointment. However, of the grain industry representatives, only actively participating producers, and grain dealers and warehouse operators are eligible for reappointment. The banking industry representative and the grain industry representatives are entitled to a per diem as specified in section 7E.6 for each day spent in the performance of the duties of the board, plus actual expenses incurred in the performance of those duties. Four members of the board constitute a quorum, and the affirmative vote of four members is necessary for any action taken by the board, except that a lesser number may adjourn a meeting. A vacancy in the membership of the board does not impair the rights of a quorum to exercise all the rights and perform all the duties of the board.
  2.  The duties of the board include the review and determination of claims, and the review and approval of administrative costs of the fund. To carry out these duties, the board has the power to adopt rules regarding its organization and procedures for determining claims. Further, the board shall approve rules proposed by the department for the administration of the per-bushel fee prior to their adoption by the department. The board may provide comment and advice to the department in regard to the department’s administration of chapters 203 and 203C where the department’s policies and rules may affect the exposure of the fund to liability. However, the board shall not become actively involved in a determination by the department as to whether disciplinary action is to be taken against a particular licensee. The board is not a forum for review or appeal in regard to any particular action taken by the department against a licensee.
  3.  The department through the grain warehouse bureau shall perform the administrative functions necessary for the operation of the board and the fund. Administrative costs approved by the board shall be paid from the fund. The rules of the department shall contain the rules of the board adopted for its organization and its procedures. The department shall adopt rules for the administration of the per-bushel fee upon the board’s approval of the rules proposed by the department. The secretary of agriculture, as president of the board as well as head of the department of agriculture and land stewardship, shall administer the department so as to minimize the risk of loss to the fund while protecting interests of depositors and sellers of grain. Policies and rules for the administration of chapters 203 and 203C which, as determined by the secretary of agriculture, may affect the exposure of the fund, shall be presented to the board for comment prior to their adoption by the department. The department shall make reports to the board in regard to licensee investigations which may result in disciplinary action against a licensee and exposure of the fund. The reports may be discussed by the board in closed session pursuant to section 21.5, and are confidential. In making the report, the department shall make available to the board records of licensees which are otherwise confidential under section 22.7, 203.16, or 203C.24. However, a determination to take disciplinary action against a particular licensee shall be made exclusively by the department. A report to the board is not a prerequisite to disciplinary action against a licensee. Review of any action against a licensee, whether or not relating to the fund, shall be made exclusively through the department.
86 Acts, ch 1152, §34
C87, §543A.4
87 Acts, ch 147, §16; 89 Acts, ch 143, §906; 90 Acts, ch 1256, §49
C93, §203D.4
2008 Acts, ch 1083, §16; 2010 Acts, ch 1121, §2
Referred to in §203D.1
Confirmation, see §2.32 

  
     
203D.5   Fees — imposition, adjustment, or waiver.
  1.  The board shall annually review the debits of and credits to the grain depositors and sellers indemnity fund created in section 203D.3 and shall determine whether to impose the participation fee and per-bushel fee as provided in section 203D.3A, make adjustments to the fees effective on the previous September 1, or waive the fees as necessary to comply with this section. The board shall make the determination not later than May 1 of each year. The board shall impose the fees or adjust the fees effective on the previous September 1 in accordance with chapter 17A. The imposition or adjustment of the fees shall become effective as follows:
  a.  For the participation fee, on the following September 1. However, the licensee shall continue to pay the participation fee at the rate in effect on the prior September 1, until the licensee has paid the amount owing.
  b.  For a per-bushel fee, on the following September 1.
  2.  a.  Except as provided in paragraph “b”, the rate of a participation fee owed by a licensee shall be calculated as follows:
  (1)  For a licensed grain dealer, not more than fourteen thousandths of a cent per bushel assessed on all purchased grain during the grain dealer’s last fiscal year at each location at which records are maintained for transactions of the grain dealer, as determined according to information submitted by the grain dealer to the department for the issuance or renewal of a license as provided in section 203.5.
  (2)  For a licensed warehouse operator, not more than fourteen thousandths of a cent per bushel of bulk grain storage capacity for each warehouse licensed pursuant to section 203C.8 or five hundred dollars, whichever is less. The participation fee shall be determined using information provided to the department by the warehouse operator applying for the issuance or renewal of a license as provided in sections 203C.7 and 203C.37.
  b.  A licensee shall pay a participation fee of at least fifty dollars.
  3.  The rate of the per-bushel fee shall not exceed one-quarter cent per bushel assessed on all purchased grain. 
  4.  If on the last date of the fund’s assessment year as provided in section 203D.3 the assets of the fund exceed eight million dollars, less any encumbered balances or pending or unsettled claims, all of the following apply:
  a.  The participation fee shall be waived and shall not be assessable or owing for the following assessment year of the fund. However, the licensee shall continue to pay any owing participation fee that was in effect on the prior September 1.
  b.  The per-bushel fee shall be waived and shall not be assessable or owing.
  5.  The board shall reinstate the fees as provided in this section if the assets of the fund, less any unencumbered balances or pending or unsettled claims, are three million dollars or less.
86 Acts, ch 1152, §35
C87, §543A.5
87 Acts, ch 147, §17; 88 Acts, ch 1148, §4; 89 Acts, ch 143, §907
C93, §203D.5
2009 Acts, ch 17, §1, 6; 2009 Acts, ch 133, §229; 2010 Acts, ch 1082, §9; 2015 Acts, ch 103, §14, 15; 2023 Acts, ch 154, §17 – 19
Referred to in §203D.3A

     
203D.5A  Lien on licensee’s assets.
  The board may enforce a lien attached to assets held by a licensee under chapter 203 or 203C. The lien shall be perfected and enforced pursuant to section 203.12A or 203C.12A.
92 Acts, ch 1239, §78

  
     
203D.6  Claims against fund.
  1.  Persons who may file claims.  A depositor or seller may file a claim with the department for indemnification of a loss from the grain depositors and sellers indemnity fund. A claim shall be filed in the manner prescribed by the board.
  2.  Time of filing claim.
  a.  As used in this subsection, an incurrence date is when either of the following occurs:
  (1)  The cessation of the license of the grain dealer as described in section 203.10 or warehouse operator as described in section 203C.10.
  (2)  The filing of a petition in bankruptcy by a licensed grain dealer or licensed warehouse operator.
  b.  To be timely, a claim must be filed within a claim period beginning on either incurrence date and ending one hundred twenty days after that incurrence date, regardless of whether a previous claim period has expired.
  3.  Notice.  The department shall cause notice of the opening of the claim period to be published once each week for two consecutive weeks in a newspaper of general circulation in each of the counties in which the licensee maintains a business location and in a newspaper of general circulation within the state. The notice shall state the name and address of the licensee and the claim incurrence date. The notice shall also state that any claims against the fund on account of the licensee shall be sent by ordinary mail to the department within one hundred twenty days after the incurrence date, and that the failure to make a timely claim relieves the fund from liability to the claimant. This notice may be incorporated by the department with a notice required by section 203.12 or 203C.14.
  4.  Determination of eligible claims.  The board shall determine a claim to be eligible for payment from the fund if the board finds all of the following:
  a.  That the claim was timely filed.
  b.  That the incurrence date was on or after May 15, 1986.
  c.  That the claimant qualifies as a depositor or seller.
  d.  That the claim derives from a covered transaction. For purposes of this paragraph, a claim derives from a covered transaction if the claimant is a seller who transferred title to the grain to a licensed grain dealer other than by credit-sale contract within six months of the incurrence date for a claim period as provided in subsection 2, or if the claimant is a depositor who delivered the grain to a licensed warehouse operator.
  e.  That there is adequate documentation to establish the existence of a claim and to determine the amount of the loss.
  f.  A claim has not been paid for the same loss.
  5.  Value of loss — warehouse claims.  The board shall determine the dollar value of a claim incurred by a depositor holding a warehouse receipt or a scale weight ticket for grain that the depositor delivered for storage to the licensed warehouse operator. If the department has been appointed by the court as receiver of the grain assets of the warehouse operator, the value shall be presumed to be as stated in the plan of disposition approved by the court. If the warehouse operator has filed a petition in bankruptcy, the value shall be presumed to be based upon the fair market price, free-on-board from the site of the warehouse operator, being paid to producers for grain by the grain terminal operator nearest the warehouse operator on the date the petition was filed. If there is neither a department receivership nor a bankruptcy filing, the value shall be presumed to be based upon the fair market price, free-on-board from the site of the warehouse operator, being paid to producers for grain by the grain terminal operator nearest the warehouse operator on the date of license revocation or cancellation. If more than one date applies to a claim, the board may choose between the two. However, the board may accept an alternative valuation of a claim upon a showing of just cause by the depositor or department. All depositors filing claims under this section shall be bound by the value determined by the board. The value of the loss is the outstanding balance on the validated claim at time of payment from the fund.
  6.  Value of loss — grain dealer claims.  The dollar value of a claim incurred by a seller who has sold grain or delivered grain for sale or exchange and who is a creditor of the licensed grain dealer for all or part of the value of the grain shall be based on the amount stated on the obligation on the date of the sale. If the sold grain was unpriced, the value of a claim shall be presumed to be based upon the fair market price, free-on-board from the site of the grain dealer, being paid to producers for grain by the grain terminal operator nearest the grain dealer on the date of the license revocation or cancellation or the filing of a petition in bankruptcy. If more than one date applies to a claim, the board may choose between the two. However, the board may accept an alternative valuation of a claim upon a showing of just cause by the seller or department. All sellers filing claims under this section shall be bound by the value determined by the board. The value of the loss is the outstanding balance on the validated claim at the time of payment from the fund.
  7.  Procedure — appeal.  The board, through the department, shall provide for notice to each depositor and seller upon its determination of eligibility and value of loss. Within twenty days of the notice, the depositor or seller may request a hearing for the review of either determination. The request shall be made in the manner provided by the board. The hearing and any further appeal shall be conducted as a contested case subject to chapter 17A. A depositor or seller whose claim has been refused by the board may appeal the refusal to either the district court of Polk county or the district court of the county in which the depositor or seller resides.
  8.  Payment of claims.  Upon a determination that the claim is eligible for payment, the board shall provide for payment of ninety percent of the loss, as determined under subsection 5, but not more than three hundred thousand dollars per claimant. If at any time the board determines that there are insufficient funds to make payment of all claims, the board may order that payment be deferred on specified claims. The department, upon the board’s instruction, shall hold those claims for payment until the board determines that the fund again contains sufficient assets.
  9.  Subrogation of fund.  In the event of payment of a loss under this section, the fund is subrogated to the extent of the amount of any payments to all rights, powers, privileges, and remedies of the depositor or seller against any person regarding the loss. The depositor or seller shall render all necessary assistance to aid the department and the board in securing the rights granted in this section. No action or claim initiated by a depositor or seller and pending at the time of payment from the fund shall be compromised or settled without the consent of the board.
  10.  Time limitation on claims.
  a.  A claim shall expire if five years after the board determines that the claim is eligible, the claimant has failed to do any of the following:
  (1)  Provide for the fund’s subrogation or has failed to render all necessary assistance to aid the department and the board in securing the department’s rights of subrogation as required in this section.
  (2)  Failed to provide necessary documentation or information required by the board in order to process the claim.
  b.  The fund shall not be liable for the payment of an expired claim.
86 Acts, ch 1152, §36
C87, §543A.6
87 Acts, ch 147, §18, 19; 89 Acts, ch 143, §908
C93, §203D.6
2008 Acts, ch 1083, §17 – 19; 2009 Acts, ch 17, §2 – 6; 2012 Acts, ch 1095, §119
Referred to in §203.12A, 203C.12A, 203D.3

     
203D.7  No obligation of state.
  This chapter does not imply any guarantee or obligation on the part of the state of Iowa, or any of its agencies, employees, or officials, either elective or appointive, in respect of any agreement or undertaking to which this chapter relates.
86 Acts, ch 1152, §37
C87, §543A.7
C93, §203D.7