H.F. 2596 DIVISION I 1 GRAIN DEALERS 2 Section 1. Section 203.3, subsection 4, paragraph b, Code 3 2026, is amended to read as follows: 4 b. (1) The grain dealer shall submit to the department , 5 as required by the department, a financial statement that is 6 accompanied by an unqualified opinion based upon an audit 7 performed by a certified public accountant licensed in this 8 state. 9 (2) Notwithstanding subparagraph (1), if a grain dealer 10 does not purchase grain by credit-sale contract, the department 11 may accept any of the following: 12 (a) A qualification in an opinion based on an audit that 13 is unavoidable by any audit procedure that is permitted under 14 generally accepted accounting principles. An opinion that 15 is qualified because of a limited audit procedure or because 16 the scope of an audit is limited shall not be accepted by the 17 department. 18 (b) A financial statement that is accompanied by the 19 report of a certified public accountant licensed in this 20 state. The report must be based upon a review performed by the 21 certified public accountant. The report shall be in lieu of an 22 unqualified opinion based on an audit. However, at any time, 23 upon good cause, the department may require the grain dealer to 24 submit to the department a subsequent financial statement that 25 is accompanied by the report. 26 (3) The department shall not require that a grain dealer to 27 submit to the department more than one such unqualified opinion 28 based on an audit per year. 29 (4) A grain dealer shall submit one or more financial 30 statements to the department in addition to the financial 31 statement accompanied by an unqualified opinion based on 32 an audit as required in this paragraph if the department 33 determines that it is necessary to verify the grain dealer’s 34 financial status or compliance with this section . 35 -1- LSB 5919HV (1) 91 da/js 1/ 10

H.F. 2596 Sec. 2. Section 203.3, subsection 5, paragraph b, Code 2026, 1 is amended to read as follows: 2 b. (1) The grain dealer shall submit to the department , 3 as required by the department, a financial statement that is 4 accompanied by an unqualified opinion based upon an audit 5 performed by a certified public accountant licensed in this 6 state. 7 (2) Notwithstanding subparagraph (1), the department may 8 accept any of the following: 9 (a) A qualification in an opinion based on an audit that 10 is unavoidable by any audit procedure that is permitted under 11 generally accepted accounting principles. An opinion that 12 is qualified because of a limited audit procedure or because 13 the scope of an audit is limited shall not be accepted by the 14 department. 15 (b) A financial statement that is accompanied by the 16 report of a certified public accountant licensed in this 17 state. The report must be based upon a review performed by the 18 certified public accountant. The report shall be in lieu of an 19 unqualified opinion based on an audit. However, at any time, 20 upon good cause, the department may require the grain dealer to 21 submit to the department a subsequent financial statement that 22 is accompanied by the report. 23 (3) The department shall not require that a grain dealer to 24 submit to the department more than one such unqualified opinion 25 based on an audit per year. 26 (4) A grain dealer shall submit one or more financial 27 statements to the department in addition to the financial 28 statement accompanied by an unqualified opinion based on an 29 audit required in this paragraph if the department determines 30 that it is necessary to verify the grain dealer’s financial 31 status or compliance with this section . 32 Sec. 3. Section 203.8, subsection 2, paragraph a, Code 2026, 33 is amended to read as follows: 34 a. (1) “Delivery” Subject to subparagraph (2), “delivery” 35 -2- LSB 5919HV (1) 91 da/js 2/ 10

H.F. 2596 means the transfer of title to and possession of grain by a 1 seller to a grain dealer or to another person in accordance 2 with the terms of an agreement of by the seller and the grain 3 dealer. 4 (2) Unless title to grain was previously transferred 5 pursuant to an ordinary cash-sale contract, title to grain sold 6 by credit-sale contract is deemed to have transferred to the 7 grain dealer when all of the following occurs: 8 (a) The credit-sale contract is signed by both the grain 9 dealer and the seller. 10 (b) The grain dealer has possession of the grain or another 11 person has possession of the grain in accordance with the terms 12 of the credit-sale contract. 13 Sec. 4. Section 203.12, subsection 1, Code 2026, is amended 14 to read as follows: 15 1. Upon the cessation of a grain dealer license by 16 revocation, cancellation, or expiration pursuant to section 17 203.10 or upon the filing of a petition in bankruptcy by a 18 grain dealer , any claim for the purchase price of grain against 19 the grain dealer shall be made in writing and filed with the 20 grain dealer and with the issuer of a deficiency bond or of an 21 irrevocable letter of credit and with the department within 22 one hundred twenty days after the date of the cessation or the 23 filing of a petition in bankruptcy, whichever occurs earlier . 24 A failure to make this timely claim relieves the issuer and the 25 grain depositors and sellers indemnity fund provided in chapter 26 203D of all obligations to the claimant. 27 Sec. 5. Section 203.12A, subsection 5, Code 2026, is amended 28 to read as follows: 29 5. The Iowa grain indemnity fund board, upon written demand 30 of the grain dealer, shall file a termination statement with 31 the secretary of state, if after one hundred eighty days from 32 the date that the lien is perfected the grain dealer’s license 33 has not ceased by revocation, cancellation, or expiration 34 pursuant to section 203C.10 . Upon filing the termination 35 -3- LSB 5919HV (1) 91 da/js 3/ 10

H.F. 2596 statement, the lien becomes unperfected. The board shall 1 also deliver a copy of the termination statement to the grain 2 dealer. 3 DIVISION II 4 GRAIN OPERATORS 5 Sec. 6. Section 203C.6, subsection 4, paragraph b, Code 6 2026, is amended to read as follows: 7 b. (1) The warehouse operator shall submit to the 8 department , as required by the department, a financial 9 statement that is accompanied by an unqualified opinion based 10 upon an audit performed by a certified public accountant 11 licensed in this state. 12 (2) Notwithstanding subparagraph (1), the department may 13 accept any of the following: 14 (a) A qualification in an opinion based on an audit that 15 is unavoidable by any audit procedure that is permitted under 16 generally accepted accounting principles. An opinion that 17 is qualified because of a limited audit procedure or because 18 the scope of an audit is limited shall not be accepted by the 19 department. 20 (b) A financial statement that is accompanied by the 21 report of a certified public accountant licensed in this 22 state. The report must be based upon a review performed by 23 the certified public accountant. The report shall be in lieu 24 of an unqualified opinion based on an audit. However, at any 25 time, upon good cause, the department may require the warehouse 26 operator to submit to the department a subsequent financial 27 statement that is accompanied by the report. 28 (3) The department shall not require that a warehouse 29 operator to submit to the department more than one such 30 unqualified opinion based on an audit per year. 31 (4) A warehouse operator shall submit one or more financial 32 statements to the department in addition to the financial 33 statement accompanied by an unqualified opinion based on 34 an audit as required in this paragraph if the department 35 -4- LSB 5919HV (1) 91 da/js 4/ 10

H.F. 2596 determines that it is necessary to verify the warehouse 1 operator’s financial status or compliance with this section . 2 Sec. 7. Section 203C.6, subsection 5, paragraph b, Code 3 2026, is amended to read as follows: 4 b. (1) The warehouse operator shall submit to the 5 department , as required by the department, a financial 6 statement that is accompanied by an unqualified opinion based 7 upon an audit performed by a certified public accountant 8 licensed in this state. 9 (2) Notwithstanding subparagraph (1), the department may 10 accept any of the following: 11 (a) A qualification in an opinion based on an audit that 12 is unavoidable by any audit procedure that is permitted under 13 generally accepted accounting principles. An opinion that 14 is qualified because of a limited audit procedure or because 15 the scope of an audit is limited shall not be accepted by the 16 department. 17 (b) A financial statement that is accompanied by the 18 report of a certified public accountant licensed in this 19 state. The report must be based upon a review performed by 20 the certified public accountant. The report shall be in lieu 21 of an unqualified opinion based on an audit. However, at any 22 time, upon good cause, the department may require the warehouse 23 operator to submit to the department a subsequent financial 24 statement that is accompanied by the report. 25 (3) The department shall not require that a warehouse 26 operator to submit more than one such unqualified opinion based 27 on an audit per year. 28 (4) A warehouse operator shall submit one or more financial 29 statements to the department in addition to the financial 30 statement accompanied by an unqualified opinion based on 31 an audit as required in this paragraph if the department 32 determines that it is necessary to verify the warehouse 33 operator’s financial status or compliance with this section . 34 Sec. 8. Section 203C.12A, subsection 5, Code 2026, is 35 -5- LSB 5919HV (1) 91 da/js 5/ 10

H.F. 2596 amended to read as follows: 1 5. The Iowa grain indemnity fund board shall upon written 2 demand of the warehouse operator file a termination statement 3 with the secretary of state, if after one hundred eighty 4 days from the date that the lien is perfected the warehouse 5 operator’s license has not ceased by revocation, cancellation, 6 or expiration pursuant to section 203C.10 . Upon filing the 7 termination statement, the lien becomes unperfected. The board 8 shall also deliver a copy of the termination statement to the 9 warehouse operator. 10 Sec. 9. Section 203C.14, subsection 2, paragraphs a and c, 11 Code 2026, are amended to read as follows: 12 a. Upon the cessation of a warehouse operator’s license due 13 to revocation, cancellation, or expiration pursuant to section 14 203C.10 or upon the filing of a petition in bankruptcy by a 15 warehouse operator , a claim against the warehouse operator 16 arising under this chapter shall be made in writing with the 17 warehouse operator, with the issuer of a bond on agricultural 18 products other than bulk grain, a deficiency bond, or an 19 irrevocable letter of credit, and, if the claim relates to bulk 20 grain, with the department. The claim must be made within one 21 hundred twenty days after the cessation of the license or the 22 filing of a petition in bankruptcy, whichever occurs earlier . 23 The failure to make a timely claim relieves the issuer and, 24 if the claim relates to bulk grain, the grain depositors 25 and sellers indemnity fund provided in chapter 203D of all 26 obligations to the claimant. 27 c. This subsection does not apply if a receiver is appointed 28 as provided in this chapter pursuant to a petition which that 29 is filed by the department prior to the expiration of one 30 hundred twenty days after cessation of a warehouse operator’s 31 license pursuant to section 203C.10 . 32 Sec. 10. Section 203C.18, subsection 3, Code 2026, is 33 amended to read as follows: 34 3. A form for a warehouse receipt shall only be printed by 35 -6- LSB 5919HV (1) 91 da/js 6/ 10

H.F. 2596 a person approved by the department. A form for a warehouse 1 receipt shall be printed in accordance with specifications set 2 forth by the department. A warehouse operator shall surrender 3 to the department all forms for warehouse receipts that are 4 unused at the time that the warehouse operator’s license 5 is suspended or ceases due to revocation, cancellation, or 6 expiration pursuant to section 203C.10 . The warehouse operator 7 shall surrender the warehouse receipts in a manner required by 8 the department. 9 DIVISION III 10 GRAIN DEPOSITORS AND SELLERS INDEMNIFICATION 11 Sec. 11. Section 203D.3A, subsection 2, Code 2026, is 12 amended by adding the following new paragraph: 13 NEW PARAGRAPH . e. (1) If the per-bushel fee is passed 14 on to a seller, the per-bushel fee shall occur at the time of 15 payment. 16 (2) As used in subparagraph (1), “payment” means the same as 17 defined in section 203.8. 18 Sec. 12. Section 203D.6, subsection 8, paragraph a, Code 19 2026, is amended to read as follows: 20 a. Upon a determination by the board that an eligible 21 claim satisfies the requirements in subsection 4 , the board 22 shall indemnify the claimant as a depositor under subsection 23 5 , and a seller under subsection 6 . Upon a determination by 24 the board that an eligible repayment claim was filed by that 25 seller under section 203D.6A derives from the same covered 26 transaction during the claim period, and the repayment loss 27 incurred for that claim , the board shall indemnify the claimant 28 as a seller subject to the requirements of this section and 29 section 203D.6A . 30 Sec. 13. Section 203D.6A, subsection 2, Code 2026, is 31 amended to read as follows: 32 2. To be timely, a seller must file a repayment claim with 33 the department not later than sixty days after the amount 34 of the seller’s loss is finalized by a bankruptcy court, 35 -7- LSB 5919HV (1) 91 da/js 7/ 10

H.F. 2596 whether by an order issued, judgment entered, or settlement 1 agreement approved. However, if a seller’s loss is based upon 2 a bankruptcy court’s default judgment, to be timely, the seller 3 must file a repayment claim with the department not later than 4 sixty days after the bankruptcy court’s default judgment is 5 entered or a subsequent settlement agreement is approved and 6 entered, whichever is later. 7 EXPLANATION 8 The inclusion of this explanation does not constitute agreement with 9 the explanation’s substance by the members of the general assembly. 10 BACKGROUND. The department of agriculture and land 11 stewardship (DALS) regulates grain marketing transactions under 12 three interrelated Code chapters. The first two Code chapters 13 regulate grain marketers, including Code chapter 203 providing 14 for the regulation of a grain dealer purchasing grain from 15 a seller and Code chapter 203C providing for the regulation 16 of a warehouse operator storing grain for a depositor. Code 17 chapter 203D establishes the grain depositors and sellers 18 indemnity fund (indemnity fund) created to indemnify a seller 19 or depositor against a financial loss due to the management of 20 the grain by the grain dealer or warehouse operator. 21 Under Code chapter 203, in a cash sale transaction, a grain 22 dealer must pay the seller the purchase price for grain upon 23 the grain’s delivery or upon demand for payment by the seller 24 (Code section 203.8). Delivery occurs when title to and 25 possession of the grain is transferred to the grain dealer or 26 another person in accordance with the terms of the contract 27 (Code section 203.8). One special type of sale is the use 28 of a credit-sale contract in which a grain dealer enters a 29 contract with a seller for the sale of grain and delivery of 30 the grain has occurred but payment has not been made either 31 because the price has not been agreed to (a deferred-pricing 32 contract) or the price has been agreed to but payment is to 33 be made more than 30 days later (a deferred-payment contract) 34 (Code section 203.15). Under both Code chapters 203 and 35 -8- LSB 5919HV (1) 91 da/js 8/ 10

H.F. 2596 203C, DALS regulates a grain dealer and warehouse operator by 1 issuing a license and conducting inspections of their business 2 operations. A grain dealer or warehouse operator must be 3 issued either a class 1 or class 2 license based on the size 4 of the business operation with a class 1 license requiring 5 higher net worth requirements (Code sections 203.3 and 203C.6). 6 However, a class 1 license is required for a grain dealer who 7 enters into a credit-sale contract regardless of the size of 8 the grain dealer’s operation. A class 1 or class 2 licensee 9 must annually submit to DALS a financial statement accompanied 10 by an unqualified opinion based upon an audit performed by a 11 certified public accountant (CPA) licensed in this state. In 12 2025, the general assembly enacted 2025 Iowa Acts, chapter 105 13 (2025 Act), which eliminated provisions that allowed a licensed 14 grain dealer or licensed grain warehouse operator to submit a 15 financial statement accompanied by a report of a state-licensed 16 CPA based upon a review in lieu of an unqualified opinion. The 17 2025 Act allowed the indemnity fund to cover a loss arising 18 from a deferred-payment contract (Code sections 203D.6 and 19 203D.6A). The 2025 Act also provided a separate process for 20 a seller to be indemnified for a loss resulting from the 21 seller having received from the grain dealer an amount from 22 the purchased grain that the seller was required to later pay 23 back to the grain dealer’s bankruptcy estate (Code section 24 203D.6A). A license of a grain dealer or warehouse operator 25 may cease due to any one of three causes, including revocation 26 by DALS, cancellation by the grain dealer, or the expiration 27 of the license by operation of law. All of these causes are 28 covered under Code sections 203.10 and 203C.10. Upon any of 29 these causes, a seller may claim the purchase price for the 30 sold grain, which may trigger a claim for a loss under the 31 indemnity fund. 32 BILL’S PROVISIONS. Division I of this bill amends Code 33 section 203.8 by providing that unless title to grain was 34 previously transferred pursuant to an ordinary cash sale 35 -9- LSB 5919HV (1) 91 da/js 9/ 10

H.F. 2596 contract, title to grain sold by credit-sale contract is deemed 1 to have transferred to the grain dealer upon two conditions: 2 (1) the credit-sale contract is signed by both the grain dealer 3 and the seller and (2) the grain dealer or another person has 4 possession of the grain in accordance with the terms of the 5 credit-sale contract. 6 Divisions I and II of the bill amend Code sections 203.3 7 and 203C.6A by allowing a grain dealer (except a grain dealer 8 entering into a credit-sale contract) or a warehouse operator 9 to again submit a financial statement accompanied by a report 10 of a state-licensed CPA based upon a review in lieu of an 11 unqualified opinion. Divisions I and II of the bill provide 12 that a claim for a loss incurred by a seller or depositor may 13 be triggered by the filing of a bankruptcy petition by a grain 14 dealer or warehouse operator. The bill also amends a number 15 of provisions that refer to the revocation, cancellation, 16 or expiration of the license by instead referring to either 17 Code section 203.10 or 203C.10, which describe those types of 18 actions. 19 Division III of the bill amends Code section 203D.6 by 20 providing for the indemnification of a seller for grain 21 purchased by a grain dealer that the seller was required to 22 pay back later in bankruptcy. The claim may proceed upon 23 a determination that an eligible repayment claim was filed 24 with DALS by the seller as required by statute. Finally, 25 division III amends Code section 203D.6A by providing for the 26 timeliness of a repayment claim in the case of a bankruptcy 27 court’s default judgment. In that case, the seller must file 28 a claim not later than 60 days after the court’s judgment or a 29 settlement agreement is approved, whichever is later. 30 -10- LSB 5919HV (1) 91 da/js 10/ 10