S.F. 486 Section 1. Section 554.9102, subsection 4, Code 2021, is 1 amended to read as follows: 2 4. Federal Food Security Act. 3 a. For purposes of the Federal Food Security Act, 7 U.S.C. 4 §1631, written notice shall be considered to be received by the 5 person to whom it was delivered if the notice is delivered in 6 hand to the person, or mailed by certified or registered mail 7 with the proper postage and properly addressed to the person to 8 whom it was sent. The refusal of a person to whom a notice is 9 so mailed to accept delivery of the notice shall be considered 10 receipt. 11 b. This subsection is repealed on the date that this Act is 12 implemented as provided in this Act. 13 Sec. 2. NEW SECTION . 554C.1 Definitions. 14 As used in this chapter, unless the context otherwise 15 requires: 16 1. “Buyer” means any of the following: 17 a. A person who, in the ordinary course of business, buys 18 farm products from a person engaged in farming operations who 19 is in the business of selling farm products. 20 b. A commission merchant. 21 c. A selling agent. 22 2. “Central filing system” means a system for filing 23 effective financing statements, and statements amending, 24 continuing, or terminating effective financing statements, 25 established under section 554C.4. 26 3. “Commission merchant” means a person engaged in the 27 business of receiving any farm product for sale, on commission, 28 or for or on behalf of another person. 29 4. “Crop year” means the calendar year in which a crop is or 30 will be harvested, animals are born or acquired, or poultry or 31 eggs are or will be sold. 32 5. “Effective financing statement” means a financing 33 statement required to be filed as part of the central filing 34 system as provided in section 554C.6. 35 -1- LSB 1771SV (2) 89 da/ns 1/ 12

S.F. 486 6. “Secretary” means the secretary of state. 1 7. “Security interest” means an interest in farm products 2 that secures payment or performance of an obligation in the 3 same manner as provided in chapter 554. 4 8. “Selling agent” means a person, other than a commission 5 merchant, who is engaged in the business of negotiating the 6 sale and purchase of a farm product on behalf of a person 7 engaged in farming operations. 8 9. “Signature” means a symbol used to sign, execute, or 9 otherwise adopt a record or a process used to encrypt or 10 similarly process a record, in whole or in part, with the 11 present intent of authenticating the record for purposes of 12 identifying the person adopting or accepting the record. 13 Sec. 3. NEW SECTION . 554C.2 Special definitions. 14 To every extent consistent with the application of federal 15 law, unless the context otherwise requires: 16 1. “Agricultural lien” means the same as defined in section 17 554.9102. 18 2. “Approved unique identifier” means a number, combination 19 of numbers and letters, or other identifier selected by the 20 secretary using a selection system or method approved by the 21 United States secretary of agriculture. 22 3. “Debtor” means a debtor as defined in section 554.9102 23 who has an interest other than a security interest or lien in a 24 farm product, or any other person who owns a farm product and 25 subjects the farm product to a security interest whether or not 26 that person owes a debt to the secured party. 27 4. “Farm products” means the same as defined in section 28 554.9102. 29 5. “Farming operation” means the same as defined in section 30 554.9102. 31 6. “Secured party” means a secured party as defined in 32 section 554.9102 in whose favor a security interest in farm 33 products is created. 34 7. “Security interest” means an interest in farm products 35 -2- LSB 1771SV (2) 89 da/ns 2/ 12

S.F. 486 that secures payment or performance of an obligation in the 1 same manner as provided in chapter 554. 2 Sec. 4. NEW SECTION . 554C.3 Chapter consistent with uniform 3 commercial code. 4 This chapter shall be interpreted in conjunction with 5 chapter 554, and terms and phrases used in this chapter shall, 6 to every extent practicable, be interpreted consistently with 7 chapter 554, article 9. 8 Sec. 5. NEW SECTION . 554C.4 Central filing system —— 9 establishment and certification. 10 1. The secretary shall establish and administer a central 11 filing system, which shall provide for the electronic filing 12 and examining of effective financing statements and statements 13 amending, continuing, or terminating effective financing 14 statements on a statewide basis. 15 2. The central filing system shall be designed to allow 16 persons to file and examine effective financing statements 17 using the internet. The secretary may provide for the 18 filing and examining of statements amending, continuing, or 19 terminating effective financing statements in a paper format. 20 3. The central financing system must comply with the 21 requirements set forth in 7 U.S.C. §1631, and must be certified 22 by the United States secretary of agriculture prior to the date 23 that this Act is implemented. 24 Sec. 6. NEW SECTION . 554C.5 Filing requirements. 25 1. The secretary shall provide for filing effective 26 financing statements, and statements amending, continuing, or 27 terminating effective financing statements, as provided in 28 this section. The secretary shall prescribe all forms to be 29 used for filing. The presentation of a statement for filing 30 by a secured party and the acceptance of the statement by the 31 secretary constitutes filing under this section. 32 2. An effective financing statement is valid if the 33 statement substantially complies with the requirements of this 34 section and section 554C.6 even though it contains minor errors 35 -3- LSB 1771SV (2) 89 da/ns 3/ 12

S.F. 486 that are not seriously misleading. 1 3. An effective financing statement must be an original or 2 reproduced copy which is signed by the secured party and the 3 debtor. If filed electronically, the debtor is not required to 4 sign the effective financing statement. The statement must be 5 filed with the secretary by the secured party. The secretary 6 shall record the date and hour of the filing of the effective 7 financing statement. 8 4. An effective financing statement must contain all of the 9 following: 10 a. The name and address of the secured party. 11 b. The name and address of the debtor. 12 c. The approved unique identifier of the debtor. 13 d. A description of the farm products subject to the 14 security interest, the county in Iowa where the farm products 15 are produced or will be produced, the crop year unless every 16 crop of the farm product in question for the duration of 17 the effective financing statement is to be subject to the 18 particular security interest, and further details of the 19 farm products subject to the security interest if needed to 20 distinguish it from other quantities of farm products owned by 21 the same person or persons but not subject to the particular 22 security interest. 23 e. Information that the secretary requires to comply with 7 24 U.S.C. §1631 or to administer this section. 25 5. The effective financing statement may cover more than one 26 farm product located in more than one county. 27 6. A continuation statement shall be signed by the secured 28 party, identify the original effective financing statement by 29 file number, and state that the original financing statement 30 is still effective. 31 Sec. 7. NEW SECTION . 554C.6 Effectiveness. 32 1. An effective financing statement shall remain effective 33 for a period of five years from the date of filing, subject to 34 extensions for additional periods of five years each by filing 35 -4- LSB 1771SV (2) 89 da/ns 4/ 12

S.F. 486 or refiling a continuation statement within six months before 1 the expiration of the five-year period. 2 2. Upon timely filing of a continuation statement, the 3 effectiveness of the original financing statement shall be 4 continued for five years after the last date to which the prior 5 filing was effective, whereupon it shall lapse unless another 6 continuation statement is filed prior to the lapse. Succeeding 7 continuation statements may be filed in the same manner to 8 continue the effectiveness of the original effective financing 9 statement. 10 3. The effective financing statement shall be amended in 11 writing to reflect a material change within three months of the 12 material change. The amendment shall be signed and filed as 13 required for an original effective financing statement. If the 14 statement is filed electronically, the signature of the debtor 15 shall not be required. 16 4. a. The effective financing statement lapses upon the 17 expiration of the effective period of the effective financing 18 statement or is terminated upon the filing of a statement 19 signed by the secured party that the effective financing 20 statement is terminated. 21 b. If the effective financing statement has not lapsed or is 22 not terminated and there are no outstanding secured obligations 23 and no commitments to make advances, incur obligations, or 24 otherwise give value, the debtor may notify the secured party 25 in writing to terminate the effective financing statement. 26 c. Until the debtor instructs the secured party in writing 27 to terminate the effective financing statement, the secured 28 party has no obligation to terminate the effective financing 29 statement. 30 d. Within thirty days after receipt by the secured party 31 of the statement from the debtor to terminate the effective 32 financing statement, the secured party shall file with the 33 secretary a termination statement with respect to the effective 34 financing statement. 35 -5- LSB 1771SV (2) 89 da/ns 5/ 12

S.F. 486 Sec. 8. NEW SECTION . 554C.7 Master list —— organization 1 and contents. 2 1. The secretary shall compile the effective financing 3 statements into a master list. 4 2. The master list shall be organized according to farm 5 products. The master list shall contain information required 6 to be contained in effective financing statements filed with 7 the secretary. The secretary shall arrange the master list for 8 each farm product as follows: 9 a. In alphabetical order according to the last name of the 10 individual debtors or, in the case of debtors doing business 11 other than as individuals, the first word in the name of such 12 debtors. 13 b. In numerical order according to the approved unique 14 identifier numbers of the debtors. 15 c. Geographically by county. 16 d. By crop year. 17 3. The master list shall include information regarding 18 buyers who register with the secretary on forms prescribed by 19 the secretary as provided in this section. 20 4. The secretary shall maintain a list of all buyers of farm 21 products who register with the secretary. A buyer registering 22 with the secretary shall complete forms requiring all of the 23 following information, as prescribed by the secretary: 24 a. The name and address of the buyer. 25 b. The interest of the buyer in receiving the list. 26 c. The farm products in which the buyer has an interest. 27 Sec. 9. NEW SECTION . 554C.8 Master list —— distribution and 28 inquiries. 29 1. The secretary shall distribute to each registered buyer a 30 copy in written, printed, or electronic form of those portions 31 of the master list relating to farm products in which the buyer 32 has registered an interest. The secretary may provide for the 33 distribution of the master list or portions of the list on any 34 other medium requested by a registered buyer. If a registered 35 -6- LSB 1771SV (2) 89 da/ns 6/ 12

S.F. 486 buyer so requests, the information provided to the buyer may 1 be limited to a county or group of counties where the farm 2 products are produced or to a crop year or crop years or to a 3 combination of those identifiers. 4 2. Distribution is subject to all of the following: 5 a. The distribution shall be by first class or electronic 6 mail. 7 b. The secretary shall adopt rules pursuant to chapter 17A 8 establishing the dates upon which the quarterly distributions 9 will be made, the dates after which a filing of an effective 10 financing statement will not be reflected on the next quarterly 11 distribution of lists, and the dates by which a buyer must 12 complete a registration to receive the next quarterly list. 13 3. The secretary shall remove information pertaining to 14 lapsed and terminated effective financing statements from the 15 master list prior to preparation of the lists required to be 16 distributed. 17 4. Upon written notice to the secretary by a registered 18 buyer requesting termination of the distribution of the 19 list to the registered buyer, the secretary shall terminate 20 distribution of the list to the registered buyer. 21 5. Oral and written inquiries by a buyer not registered 22 pursuant to section 554C.7 may be made to the secretary during 23 hours determined by the secretary. 24 a. The secretary may provide for a computerized system 25 for inquiry and confirmation which may be used in lieu of the 26 inquiry and confirmation system otherwise provided for in this 27 section. 28 b. Written confirmation of the information provided orally 29 in response to the inquiry shall be delivered by first class 30 mail or electronic mail to the buyer, at an address provided 31 by the buyer, by the secretary not later than the second 32 regular business day following the day on which the inquiry was 33 received. 34 6. In order to verify the existence or nonexistence of a 35 -7- LSB 1771SV (2) 89 da/ns 7/ 12

S.F. 486 security interest, a buyer may request a seller to disclose the 1 seller’s unique identifier number. 2 Sec. 10. NEW SECTION . 554C.9 Perfection —— creation of 3 superior interests. 4 1. If a buyer fails to register with the secretary prior 5 to the purchase of farm products, the buyer takes subject 6 to a security interest in the farm products only if the 7 secured party has filed an effective financing statement that 8 covers the farm products being sold, and the buyer could have 9 discovered the existence of the effective financing statement 10 prior to the purchase by accessing the database containing 11 effective financing statements filed electronically with the 12 secretary. 13 2. If the buyer registers with the secretary prior to the 14 purchase of the farm products, the buyer takes subject to a 15 security interest in the farm products only if the secured 16 party has filed an effective financing statement that covers 17 the farm products being sold, and the buyer does not secure 18 a waiver or release of the security interest as specified in 19 the effective financing statement from the secured party. 20 If a buyer in the ordinary course of business buying farm 21 products covered by the central filing system as provided in 22 section 554C.4 tenders to the seller the total purchase price 23 by means of a check or any other form of payment payable to 24 such seller and each security interest holder of the seller 25 identified in the central filing system for such products and 26 if such security interest holder authorizes the negotiation 27 of such check or other form of payment, such authorization or 28 endorsement and payment thereof shall constitute a waiver or 29 release of the security interest specified to the extent of 30 the amount of the instrument. Such waiver or release of the 31 security interest shall not serve to establish or alter in any 32 way security interest or lien priorities under Iowa law. 33 Sec. 11. NEW SECTION . 554C.10 Fees. 34 1. The secretary shall establish fees for initially filing 35 -8- LSB 1771SV (2) 89 da/ns 8/ 12

S.F. 486 an effective financing statement, or a statement amending, 1 continuing, or terminating an effective financing statement. 2 The fees shall not be more than provided for filing financing 3 statements as provided in section 554.9525. 4 2. The secretary may charge a buyer a fee for registering to 5 receive a master list or for receiving responses to inquiries 6 which are accessed in a printed format. The secretary shall 7 not charge a buyer a fee for registering to receive a master 8 list or for responding to buyer inquiries, including by 9 examining or printing effective financing statements, and 10 statements amending, continuing, or terminating effective 11 financing statements which are accessed in an electronic 12 format. 13 3. All moneys received by the secretary under this section 14 shall be handled in the same manner as repayment receipts, as 15 defined in section 8.2, and shall be used by the secretary 16 exclusively for the administration of this chapter. 17 Sec. 12. NEW SECTION . 554C.11 Rules. 18 The secretary shall adopt rules pursuant to chapter 17A 19 necessary or desirable to administer this chapter. 20 Sec. 13. CONTINGENT IMPLEMENTATION. 21 1. Except as provided in subsection 2, the provisions of 22 this Act shall only be implemented, including administered and 23 enforced, on the first business day that occurs ninety calendar 24 days after federal certification of the central filing system 25 as provided in this Act pursuant to 7 U.S.C. §1631. 26 2. The secretary of state shall adopt rules pursuant to 27 section 554C.11 necessary or desirable to implement, including 28 administer and enforce, the provisions of this Act to be 29 effective on the implementation date of this Act. 30 a. To the extent that the secretary of state determines it 31 necessary to obtain federal certification of the central filing 32 system as provided in this Act pursuant to 7 U.S.C. §1631, the 33 secretary of state may adopt rules providing for a waiver or 34 modification of a provision of this Act, or may supplement a 35 -9- LSB 1771SV (2) 89 da/ns 9/ 12

S.F. 486 provision of this Act. 1 b. A rule adopted pursuant to paragraph “a” shall be 2 rescinded by its own terms not later than July 1 of the 3 legislative session succeeding implementation of this Act. 4 Prior to that legislative session, the secretary of state shall 5 propose legislation to the general assembly necessary to comply 6 with the certification requirements of 7 U.S.C. §1631. 7 3. Upon federal certification of the central filing system 8 as provided in this Act pursuant to 7 U.S.C. §1631, the 9 secretary of state shall provide notice of the implementation 10 date in three consecutive issues of the Iowa administrative 11 bulletin prior to the implementation date. The secretary 12 of state shall forward a copy of the notice to the Iowa 13 Code editor prior to its first publication. Until the 14 implementation date of this Act, persons shall take subject to 15 or free of a security interest in the same manner and according 16 to the same procedures applicable immediately prior to the 17 implementation date of this Act. 18 Sec. 14. EFFECTIVE DATES. 19 1. Except as provided in subsection 2, this Act takes effect 20 July 1, 2022. 21 2. The section of this Act providing for the contingent 22 implementation of this Act takes effect upon enactment. 23 EXPLANATION 24 The inclusion of this explanation does not constitute agreement with 25 the explanation’s substance by the members of the general assembly. 26 CENTRALIZED FILING SYSTEM. This bill creates a centralized, 27 statewide filing system (system) for security interests in 28 farm products to notify buyers of farm products subject to an 29 attached security interest. Farm products include goods other 30 than standing timber produced as part of a farming operation 31 and includes crops, aquatic goods, livestock, supplies used 32 or produced on the farming operation, or products of crops or 33 livestock in an unmanufactured form (Code section 554.9102). 34 The system must be certified by the United States department 35 -10- LSB 1771SV (2) 89 da/ns 10/ 12

S.F. 486 of agriculture. The bill allows a person who has a secured 1 interest attached to farm products to complete and file a 2 document referred to as an effective financing statement 3 or a statement amending, continuing, or terminating the 4 effective financing statement, with the secretary of state. 5 The secretary must compile information contained in the 6 effective financing statements into a master list organized 7 according to farm products which the secretary must regularly 8 distribute to buyers of farm products registered with the 9 secretary. The secretary may also respond to verbal or 10 written inquiries by buyers including unregistered buyers and 11 deliver a written confirmation to inquiring buyers regarding 12 whether a farm product is subject to a security interest. If 13 a buyer registers with the secretary prior to the purchase 14 of farm products, the registered buyer takes subject to the 15 security interest only if the secured party has filed an 16 effective financing statement that covers the farm products 17 being sold, unless the registered buyer secures a release of 18 the security interest. If a buyer fails to register with the 19 secretary, the buyer takes subject to the security interest 20 only if the secured party has filed an effective financing 21 statement that covers the farm products, and the buyer could 22 have discovered the existence of the effective financing 23 statement by conducting an inquiry and receiving a response and 24 confirmation. The bill authorizes the secretary to establish 25 fees for secured parties filing effective financing statements 26 and buyers registering with the secretary. The secretary must 27 adopt rules as necessary to implement, administer, and enforce 28 the provisions of the system. The system becomes effective on 29 the first business day occurring 90 days after certification by 30 the United States department of agriculture and publication of 31 three successive notices in the Iowa administrative bulletin. 32 EFFECTIVE DATES. The bill takes effect July 1, 2022, except 33 for the provision relating to contingent implementation which 34 takes effect upon enactment. 35 -11- LSB 1771SV (2) 89 da/ns 11/ 12

S.F. 486 BACKGROUND. Article 9 of the UCC provides an exception for 1 buyers in the ordinary course of business who generally take 2 free of a security interest created by the seller even in cases 3 in which the security interest has been perfected and the buyer 4 is aware of its existence (Code section 554.9320). However, 5 notwithstanding this exception, a buyer who purchases a farm 6 product from a person engaged in farming operations may not 7 take free of a security interest. The federal Food Security 8 Act of 1985, in relevant part (7 U.S.C. §1631), preempts the 9 state’s article 9 requirements by providing that a buyer in 10 the ordinary course of business, a commission merchant, or a 11 selling agent (all classified under the term “buyer”) may buy 12 farm products without being subject to a security interest 13 created by the seller but only if the buyer does not have 14 actual or constructive notice of that security interest. The 15 federal law allows states to elect between two notification 16 options: (1) Iowa’s current law requiring the secured party to 17 deliver direct notice to potential buyers of a secured party’s 18 interest in the farm products within one year prior to sale, 19 or (2) the system described in the bill. In either case, the 20 federal law does not supersede article 9 requirements that 21 establish priorities among creditors. 22 -12- LSB 1771SV (2) 89 da/ns 12/ 12