WA-402 Licensing Agreement for Grain and Rice Warehouse Operato

UNITED STATES DEPARTMENT OF AGRICULTURE
Farm Service Agency

WA-402
LICENSING AGREEMENT
FOR
GRAIN and RICE WAREHOUSE
OPERATORS

WA-402

U. S. DEPARTMENT OF AGRICULTURE
Farm Service Agency
United States Warehouse Act

(12-01-07)

License Number

Form Approved - OMB No. 0560-0120

Effective Date

LICENSING AGREEMENT FOR GRAIN and RICE WAREHOUSE OPERATORS
Section
A. Definitions............................................................................................................................................ 1
B.

Qualifications....................................................................................................................................... 5
1. Good Business Reputation .............................................................................................................. 5
2. Facilities......................................................................................................................................... 5
3. Personnel........................................................................................................................................ 6

C.

Financials............................................................................................................................................. 6
1. Financial Requirements................................................................................................................... 6
2. Financial Reporting ........................................................................................................................ 7
3. Accepting Other Financial Statements............................................................................................. 7
4. Special Cases –Assets .................................................................................................................... 8

D.

Financial Assurance............................................................................................................................. 8
1. Computation................................................................................................................................... 8
2. Acceptable Forms........................................................................................................................... 8

E.

Duties of the Warehouse Operator...................................................................................................... 9
1. General........................................................................................................................................... 9
2. Warehousing .................................................................................................................................. 10
3. Facilities......................................................................................................................................... 11
4. Facility Security ............................................................................................................................. 12
5. Fair Treatment ................................................................................................................................ 12
6. Insurance........................................................................................................................................ 12
7. Business Hours ............................................................................................................................... 13
8. System of Records .......................................................................................................................... 13
9. Reports........................................................................................................................................... 14
10. Records .......................................................................................................................................... 15
11. Public Tariff and Schedule of Charges ............................................................................................ 15
12. Grades and Grain Quality Inspections ............................................................................................. 16
13. Scales and Weighing....................................................................................................................... 16
14. Prompt Delivery ............................................................................................................................. 16
15. Identity-Preserved and Conjoint-Storage Grain................................................................................ 17
16. Storage Obligations ........................................................................................................................ 18
17. Containerized Grain Storage ........................................................................................................... 18
18. Delivery of Commingled Grain ....................................................................................................... 18
19. Loading Out Without Weighing ...................................................................................................... 18
20. Out-of-Condition and Damaged Grain............................................................................................. 19
21. Inspections and Examinations of Warehouse ................................................................................... 19
22. Transferring Grain .......................................................................................................................... 20

F.

Warehouse Receipts............................................................................................................................. 21
1. General........................................................................................................................................... 21
A. Issuance................................................................................................................................... 21
B. Persons Authorized to Sign Warehouse Receipts ...................................................................... 22
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Table of Contents (Continues)
C. Return of Warehouse Receipts Prior to Delivery................................................................. .22
D. Balance Warehouse Receipts...............................................................................................23
2.

Paper Warehouse Receipts......................................................................................................... .23
A. Content ............................................................................................................................. .23
B. Copies of Paper Warehouse Receipts................................................................................. .25
C. Printing of Negotiable and Non-Negotiable Paper Warehouse Receipts.............................. .25
D. Details on the Printing of Paper Warehouse Receipts ......................................................... .25
E. Lost or Destroyed Paper Warehouse Receipts .................................................................... .25
F. Canceled and Voided Paper Warehouse Receipts............................................................... .26

3.

Electronic Warehouse Receipts (EWR) ........................................................................................... .26
A. General ............................................................................................................................. .26
B. Rights and Obligations ...................................................................................................... .27
C. EWR Data Requirements................................................................................................... .27

G. Service Licenses ................................................................................................................................... .29
1. Warehouse Operator’
s Responsibility.............................................................................................. .29
2. Applicant’
s Responsibility .............................................................................................................. .29
3. Duties of Licensed Sampler, Weigher, Inspector and/or Grader ....................................................... .30
4. Service license forms or formats ..................................................................................................... .30
H. Inspection and Weight Certificates ..................................................................................................... .30
1. Inspection and Grade Certificates.................................................................................................... .30
2. Weight Certificates ......................................................................................................................... .31
3. Weight, Inspection and/or Grade Certificates................................................................................... .32
I.

Determining Quality............................................................................................................................ .32
1 Official Grain Standards of the United States .................................................................................. .32
2 Standards of Kind, Class and Grade for Other Grain........................................................................ .32

J.

Grain Grading Appeals ....................................................................................................................... .32
1. Ability to Appeal ............................................................................................................................ .32
2 Appeal Procedure ........................................................................................................................... .33
3. Request for Appeal ......................................................................................................................... .33
4. Appeal Samples.............................................................................................................................. .33
5. Owner Not Compelled to Store Grain.............................................................................................. .34

K. Temporary and Emergency Licensing ................................................................................................ .34
L.

Warehouses Regular for Delivery in Terminal and Futures Contract Markets ................................ .35

M. Dispute Resolution and Arbitration .................................................................................................... .36
N.

Temporary Suspension ........................................................................................................................ .36

O. Unjust Enrichment .............................................................................................................................. .37
P.

Unearned Storage ................................................................................................................................ .38

Q. Fines and Penalties .............................................................................................................................. .38
R.

Warehouse Operator Failures and Defaults –Remedies .................................................................... .38
1. DACO May Initiate Suspension, Revocation and Liquidation .......................................................... .38
2. Suspension, Revocation and Liquidation In Accordance With 7 CFR Part 735................................. .38
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Table of Contents (Continues)

3.
4.
5.
6.
S.

The Warehouse Operator May Request Cancellation and Liquidation .............................................. 38
DACO May Seize, Liquidate and Recover ...................................................................................... 38
Order of Claims.............................................................................................................................. 39
Bankruptcy..................................................................................................................................... 39

Fees

................................................................................................................................................. 39

Signature Page ................................................................................................................................................. 41

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Licensing Agreement for Grain and Rice Warehouse Operators
As a condition of initial licensing and continued licensing under the United States Warehouse Act (USWA),
administered by the Deputy Administrator for Commodity Operations (DACO) of the U.S. Department of
Agriculture (USDA) Farm Service Agency (FSA), the Warehouse Operator agrees to the terms and conditions set
forth in this Agreement and the regulations found at 7 CFR Part 735 and the statute found at 7 U.S.C. § 241 et seq.
No person may represent themselves as licensed under the USWA unless holding an un-suspended or un-revoked
license under the USWA.
Any person engaged in business as a Warehouse Operator, but not licensed under the USWA, is barred from
participation in or benefit from any USWA activity or its claimants from any of the USWA protections or coverage.
The USWA, regulations located at 7 CFR Part 735, this Agreement and its addenda prevail to the extent that the
USWA, the regulations located at 7 CFR 735, this Agreement and its addenda conflict with the laws, regulations or
practices of the various states, localities or municipalities.
The following are included by reference:
United States Warehouse Act (7 U.S.C. § 241 et seq).
Public Law 106-472 “
The Grain and Warehouse Improvement Act of 2000”(the Act).
Agricultural Marketing Act (AMA) of 1946 (7 U.S.C. § 1621-1627), as amended.
Commodity Exchange Act (7 U.S.C. § 1-22), as amended.
Official U.S. Grain Standards Act (7 U.S.C. § 71-87).
Provider Agreement to Electronically File and Maintain Warehouse Receipts and United States Warehouse Act
Documents (FSA form WA-460) and its applicable addenda and appendices.
Inspecting Grain: Practical Procedures for Grain Handlers and other training materials issued by the USDA’
s
Grain Inspection, Packers and Stockyards Administration [Federal Grain Inspection Service] (GIPSA-FGIS).
Section A - Definitions
Bin. A bin, tank, interstice or other container in a warehouse or other space as approved by DACO in which
bulk grain may be stored.
Board of Trade. A designated futures contract market authorized under the Commodity Futures
Modernization Act of 2000.
Business Day. A calendar day, excluding Saturdays, Sundays, or legal holidays observed by the Chicago Board
of Trade.
Central Filing System (CFS). An electronic system operated and maintained by a provider, as a disinterested
third party, authorized by DACO where information relating to warehouse receipts, USWA documents and
other electronic documents is recorded and maintained in a confidential and secure fashion independent of any
outside influence or bias in action or appearance.

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Certificate. A USWA document that bears specific assurances under the USWA or warrants a person to
operate or perform in a certain manner and sets forth specific responsibilities, rights, and privileges granted to
the person under the USWA.
Collateral Warehouse Receipts. Negotiable warehouse receipts issued by Warehouse Operators to themselves
that enable them to pledge unencumbered company-owned grain stored within their licensed warehouse space
as loan security or collateral.
Commingled. The storage or handling of bulk grain under any circumstance other than identity-preserved or
conjoint-grain storage, including all depositor and company-owned grain transferred or delivered to a thirdparty warehouse operator for storage or handling.
Company-Owned Grain. Grain for which title has passed to the Warehouse Operator.
Composite Sample. The combining and splitting of a depositor’
s representative grain sample drawn from
multiple conveyances to determine the aggregate quality of a specific lot.
Conjoint Storage. A storage obligation for grain created by warehouse receipts issued in common to multiple
depositors that identify and denote specific binning methods that results in the segregated storage and handling
of such grain with like characteristics apart and separate from all other grain. The actual commingled conjointstored grain deposited jointly in the warehouse by multiple depositors, and no others, shall be delivered to those
persons holding title to such grain.
Contracts. A legally binding agreement between the producer/depositor/owner and the Warehouse Operator
that establishes certain specific, legal obligations between the parties.
Control of the Warehouse. The Warehouse Operator's ultimate responsibility for the operation and integrity
of the warehouse storage facility by ownership, lease or operating agreement.
Conveyance. The individual transportation unit, truck, railroad car, unit train, barge, vessel or other such unit
as determined by DACO used in receiving or shipping grain.
Crop Year. The subsequent 12-month period following a crop’
s harvest.
Current Assets. Assets, including cash, reasonably expected to be realized in cash or sold or consumed during
the normal operating cycle of the business, or within one year if the operating cycle is shorter than one year.
Current Liabilities. Those financial obligations that are expected to be satisfied during the normal operating
cycle of the business, or within one year if the operating cycle is shorter than one year.
Depositor. Person depositing grain in a USWA warehouse for storage and who maintains title to the grain.
Direct Shipments. Grain delivered for the account of the Warehouse Operator at a location other than the
Warehouse Operator’
s USWA-licensed warehouse facility.
Dockage. Grain and non-grain material removed from the original sample as defined by the Official U.S. Grain
Standards.

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Electronic Document. A document that is generated, sent, received or stored by electronic, optical or similar
means, including, but not limited to, electronic data interchange, advanced communication methods, electronic
mail, telegram, telex or telecopy.
Electronic Warehouse Receipt (EWR). A warehouse receipt authorized by DACO to be electronically issued
or transmitted under the USWA.
EWR Provider. A designated representative of the Secretary of Agriculture that is authorized by DACO to
establish and maintain a database and a system referred to as a CFS.
Examiner. The employee designated by DACO for the purpose of examining warehouses or for any other
activities authorized under the USWA.
Field Warehouse Agreement. A third-party financing and operational lease agreement whereby a USWA
Warehouse Operator relinquishes partial or full control of their USWA licensed facility to a field warehouse
company and its disinterested local third-party custodian who may issue non-USWA warehouse receipts,
covering commingled commodities, as financing collateral for the benefit of specific client(s).
Financial Assurance. The surety bond or other financial obligation authorized by DACO that is a condition of
receiving a license or authorization under the USWA.
Force Majeure. Severe weather conditions, fire, explosion, flood, earthquake, nuclear incident, nuclear
reaction, nuclear radiation, radioactive contamination, insurrection, riot, strike, labor dispute, acts of terrorism,
acts of civil or military authority, non-availability of transportation, or any other cause beyond the control of the
Warehouse Operator or provider that renders performance impossible, as determined by DACO.
Foreign Material. Grain and non-grain material remaining in the sample after removal of dockage as defined
by the Official U.S. Grain Standards.
Futures Contract Market. Any grain market designated as a futures contract market under authority of the
Commodity Exchange Act, as amended.
Grain. All products commonly classed as grain, such as wheat, corn, oats, barley, rye, flaxseed, rice, sunflower
seeds, soybeans, emmer, sorghum, safflower seed, triticale, millet, other oilseeds, pulses (other than dry edible
beans) and such other products as are ordinarily stored in grain warehouses, subject to the disapproval of
DACO.
Grain Bank. Grain belonging to others intended to be returned to the depositor or lawful owner for use.
Holder. A person who has possession, in fact or by operation of law, of a paper or electronic warehouse
receipt, USWA electronic document or any electronic document.
Identity Preserved. The practice of storing and handling grain separate from all other grain, so the actual grain
deposited in the warehouse, and no other, may be delivered to the person holding title to such grain.
Lawful Owner. The person who has title to the grain.
Licensed Sampler, Weigher, Inspector and/or Grader. A person licensed under the USWA to sample,
weigh, inspect and/or grade grain and certifies the grade and/or weight of grain stored at a grain warehouse
licensed under the USWA.
Load Out. Removing grain from the Warehouse Operator’
s licensed warehouse space.

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Lot. The quantity and quality of single or multiple deliveries of grain received into a warehouse for which one
inspection and weight certificate is issued by a licensed sampler and weigher, and/or inspector and grader, at a
warehouse licensed under the USWA.
Negotiable Warehouse Receipt. A written or electronic instrument capable of being transferred by delivery or
endorsement when the depositor or holder takes the instrument for value, in good faith, without notice of
conflicting claims or defenses.
Net Weight. The weight of grain after foreign material, pick, dockage and excess moisture weight have been
deducted.
Net Worth. The balance amount after financial liabilities are subtracted from allowable assets. In determining
allowable assets, credit may be given for appraisal of real property, less improvements, and for the appraisal of
insurable property, such as buildings, machinery, equipment and merchandise inventory, only to the extent that
such property is protected by insurance against loss or damage by fire, lightning and other risk. Such insurance
must be in the form of lawful insurance policies issued by insurance companies authorized to conduct such
business and subject to service of process in the State in which the warehouse is located. DACO will determine
what assets are allowable and under what conditions appraisals may be used.
Non-Negotiable Warehouse Receipt. A written or electronic document that cannot be transferred by
endorsement or delivery to another holder or party.
Non-Storage Grain. Grain received temporarily into a warehouse for conditioning, transferring or assembling
for immediate shipment, or specific lots of grain moving through a warehouse for current marketing or other
use, against which no warehouse receipts are issued and no storage charges assessed. Examples include, but are
not limited to, custom drying of grain, cleaning of seed, etc.
Open-Storage Grain. Grain obligations to others that are not warehouse receipted or company-owned.
Person. Individuals, as well as, corporations, companies, associations, firms, partnerships, societies, and joint
stock companies, a State or a political subdivision of a State.
Pick. Any material other than pulses, together with undeveloped, shriveled, discolored, damaged, split and/or
small pieces of pulses, which are picked by hand or eliminated by mechanical means from the lot. The pick
shall be calculated as a percentage based on the total weight of the pulses including the material to be
eliminated.
Quality and Quantity. The legal, operational, managerial and financial liability of the Warehouse Operator for
any grain obligation(s), including company-owned grain, handled or stored by the Warehouse Operator.
Schedule of Charges. The public tariff or uniform rate or amount charged by the Warehouse Operator for
specific services offered or rendered under the USWA.
Schedule of Fees. Those fees charged and assessed by FSA for licensing or services furnished under the
USWA to help defray the costs of administering the USWA.
Screenings. The portion of cereal grains, oilseeds or legume seed crop refuse remaining after cleaning that
contains variable proportions of damaged, cracked and small whole kernels, weed seeds, forage residue, chaff,
dirt, dust and/or other foreign materials.
Signature. The hand-inscribed original, facsimile, digital, electronic or any other form of authentication
approved by DACO.

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Split Sample. A portion of the retained representative sample derived from grain delivered for, or into, storage
in accordance with authorized grain-evaluation procedures. If an appeal of the original inspection result is
requested, the split sample is to be provided to the official inspection agency conducting the appeal inspection
for independent evaluation.
Storage Grain. All grain received into, deposited in or delivered out of the warehouse that is not classified as
non-storage.
Transferring of Grain. When, under certain circumstances, the Warehouse Operator transfers or forwards
grain by physical movement or by other DACO-approved transfer to another warehouse operator for continued
storage.
Unreceipted Obligations. Grain deposited in the warehouse for which no warehouse receipt is outstanding,
including, but not limited to, open-storage grain; unsettled obligations; unobligated company-owned; and grain
bank.
USWA Weight, Inspection and/or Grade Certificate. The source document that establishes the weight
and/or grade obligation of each specific grain lot accepted for storage in, or loaded out, of the Warehouse
Operator’
s licensed warehouse space.
Warehouse Capacity. The maximum quantity of grain that the warehouse can accommodate when stored in a
manner customary to the warehouse and within the limits of the amount of financial assurance that the
Warehouse Operator provides, as determined by DACO.
Warehouse Operator. A person licensed under the USWA who has operational control of a grain warehouse.
Warehouse Receipt. A paper or electronic receipt, either negotiable or non-negotiable, issued by or on behalf
of the Warehouse Operator that evidences title to grain received for storage by the Warehouse Operator in
USWA-licensed space.
Warehousing Activities and Practices. Any legal, operational, managerial or financial duty that the
Warehouse Operator has regarding grain handled or stored at the USWA warehouse.
Section B - Qualifications
In general, Warehouse Operators under the USWA must (each of the following applies):
1.

Be a responsible person, with a good business reputation, who are in the business of public
warehousing and have knowledge of, and experience in, generally accepted warehousing and handling
practices for grain, and generally are competent and willing to conduct such a warehouse in accordance
with the USWA.

2.

Have facilities that:
A. are physically and operationally suitable for the proper storage of grain and that specifically:
(1) are of sound construction and in good repair;
(2) have adequate equipment, installed and maintained in good working order, for the movement
of grain into, out of and within the warehouse;
(3) have adequate ventilation, installed and maintained in good working order, for the proper
storage and preservation of grain quality;

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(4) have adequate lighting;
(5) are free from materials and substances that may adversely affect the quality of stored grain;
(6) have a safe work environment; and
(7) ensure adequate security and protection of stored or handled grain from tampering or
adulteration.
B. allow for the accurate and efficient weighing, sampling, inspection and grading of the grain in
store, and
C. are within the control, extending to the immediate surrounding property, upon which the
Warehouse Operator’
s facility is located.
3.

Have personnel or contractors who:
A. have knowledge and experience in sampling, weighing, inspecting and/or grading of grain;
B. are licensed under the USWA to sample, weigh, inspect and/or grade grain;
C. have integrity, good judgment and proven performance; and
D. are sufficiently knowledgeable to assist FSA warehouse examiners with inspections and
examinations.

Section C - Financials
1.

Financial Requirements.
The Warehouse Operator agrees:
A. to have and maintain (each of the following):
(1) total net worth of at least the amount obtained by multiplying $0.25 by the warehouse capacity in
bushels; however, no person may be licensed or remain licensed as a Warehouse Operator unless
that person has an allowable net worth of at least $200,000. (Any deficiency in net worth above
the $200,000 minimum may be supplied by an increase in the amount of the financial assurance);
and
(2) total allowable current assets equal to or exceeding total current liabilities or evidence acceptable
to DACO that funds will be and will remain available to meet current obligations.
B. to have adequate insurance for the claimed value of any asset or property claimed as an asset or value
on their financial statement; and
C. that, if operating multiple warehouses under one license, the maximum capacity of all licensed
warehouses, as determined by DACO, will be the capacity considered in determining whether the
Warehouse Operator meets the net worth requirements.

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2.

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Financial Reporting.
The Warehouse Operator agrees:
A. to provide annually to DACO, within 90 calendar days of the fiscal year end, or more frequently if
required, current financial statements from the Warehouse Operator’
s records prepared according to
generally accepted accounting principles.
B. that the required financial statements will include, but not be limited to (each of the following):
(1)
(2)
(3)
(4)
(5)

a balance sheet;
a statement of income (profit and loss);
a statement of retained earnings;
a statement of cash flows; and
notes to the financial statement.

C. that authorized representatives for the Warehouse Operator will certify under penalty of perjury that
the statements, as prepared, accurately reflect the financial condition of the licensed warehouse as of
the date designated, and fairly represent the results of operations for the period designated.
D. that they will have the required financial statements reviewed or audited by a certified public
accountant or an independent public accountant, as approved by DACO. Reviews and audits by
independent certified public accountants and independent public accountants are to be made in
accordance with standards established by the American Institute of Certified Public Accountants. The
accountant's certification, assurances, opinion, comments and notes on this statement must be
furnished, along with the financial statements. The notes of the financial statements are to include a
detailed list of company-owned inventories, including unpaid grain.
E. that reviews and audits without a physical measurement of inventory and its resultant qualified opinion
may subject the Warehouse Operator to an inventory measurement by USDA personnel and the
assessment of fees to compensate USDA for the cost of conducting such measurement.
F. that if any financial statement is restated, recalculated or republished, the Warehouse Operator shall
notify DACO immediately.
3.

Accepting Other Financial Statements.
The Warehouse Operator may meet the financial and reporting requirements of Section C, Paragraphs 1
and 2, subject to DACO approval, with (any of the following):
A. consolidated financial statements of parent companies that separately identify the financial position of
the Warehouse Operator as a subsidiary; or
B. guaranty agreements from multiple parent companies submitted on behalf of wholly-owned
subsidiaries if all parent companies submit financial statements which meet the requirements of
Paragraphs 1 and 2 of Section C; or
C. guaranty agreements accompanied by audit-level financial statements meeting the requirements of
Paragraphs 1 and 2 of Section C of an entity or entities with substantial interest in the Warehouse
Operator.

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4.

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Special Cases - Assets.
A. subject to such terms and conditions as DACO may prescribe and for the purposes of determining
allowable net assets, appraisals of the value of fixed assets in excess of the book value claimed in the
financial statement submitted by the Warehouse Operator to conform to the requirements may be
allowed if each of the following conditions are met:
(1) the assessment is prepared by independent certified appraisers and according to established
appraisal criteria acceptable to DACO; and
(2) the assets are fully insured against casualty loss. The Warehouse Operator must provide written
notice to DACO not less than 30 calendar days before the insurer(s) intends to cancel insurance
coverage.
B. all grain purchased in-store or at another warehouse location can only be shown as an asset to the limit
of the verifiable equity paid, adjusted for current market value, as determined by DACO.

Section D - Financial Assurance
1.

Computation
The Warehouse Operator agrees to furnish (each of the following):
A. financial assurance computed at the rate of $0.20 per bushel for the first million bushels of USWAlicensed warehouse capacity, as determined by DACO, $0.15 per bushel for the second million bushels
of grain capacity and $0.10 per bushel in excess of two million bushels of grain capacity, up to a
maximum of $500,000 for each State in which licenses are held;
B. additional financial assurance, if necessary, as determined by DACO, by adding to the amount of
financial assurance an amount equal to any deficiency in net worth in excess of the $200,000 minimum
requirement;
C. additional financial assurance, if DACO finds that conditions exist which warrant requiring additional
financial assurance; and
D. financial assurance, at the Warehouse Operator’
s option, meeting the requirements of the USWA and
regulations promulgated thereunder, to cover all of the Warehouse Operator’
s warehouses licensed in
the same State (or in multiple States in cases where a single license covers warehouse capacity in
multiple states; e.g., by facility or facilities under a master code).

2.

Acceptable Forms
The Warehouse Operator may offer as financial assurance any of the following:
A. a Warehouse Operator’
s surety bond, or
B. a deposit with DACO of U.S. bonds, U.S. Treasury notes or other public debt obligations of the United
States or obligations that are unconditionally guaranteed as to both interest and principal by the United
States, subject to each of the following restrictions:
(1) the obligation deposited will NOT be considered a part of the Warehouse Operator's assets;

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(2) any deficiency in allowable net worth exceeding the $200,000 minimum may be offset by the
Warehouse Operator furnishing an acceptable financial assurance for the difference. The deposit
may be replaced or continued in the required amount from year-to-year;
(3) the deposit will not be released until one year after cancellation or revocation of the license that it
supports, or until after satisfaction of any claim against the deposit, whichever is later or approved
by DACO; or
C. a letter of credit issued to DACO, on a form approved by DACO, to which each of the following
apply:
(1) issued for a period of one year, provided that:
(a) the issuer of the letter of credit provides 120-day notification in the event the letter of credit
will not be renewed; and
(b) USDA shall provide written notice that it will draw upon the letter of credit in full 10 days
prior to its cancellation date if replacement financial assurance is not provided. These funds
will be held until such time as all obligations are settled or replacement is provided.
(2) is irrevocable, issued by a commercial bank, payable to DACO, FSA by sight draft and insured by
the Federal Deposit Insurance Corporation or by an institution in good standing regulated by the
Farm Credit Administration;
(3) its supporting funds on deposit are NOT considered an asset of the company; and
D. other forms of financial assurance as may be deemed acceptable by DACO.
Section E - Duties of the Warehouse Operator
1.

In general:
The Warehouse Operator agrees, unless prevented from doing so by force majeure, to (each of the
following):
A. exercise at all times, such care in regard to grain in custody as a reasonably careful owner would
exercise under the same circumstances and conditions;
B. not differentiate among depositors or lawful owners regarding use of and access to services, except
that available storage space may be allocated;
C. provide all necessary assistance in the execution of inspections and examinations by FSA warehouse
examiners;
D. maintain, at all times, legal and operational control of all licensed storage space;
E. apply for licensing all warehouse space or facilities controlled by the Warehouse Operator at a specific
location, unless that space or those facilities are physically separated and specifically exempted from
the license by DACO;
F. apply for an amendment to their license when adding or deleting bins, locations or other space that
alters the licensed storage capacity;

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G. post for public access at all locations, copies of certificates of licensing, current tariff and any special
rules;
H. report immediately the occurrence of a fire, disaster or loss, and the extent of damage, to DACO;

2.

I.

update inventory and insurance records upon receiving or shipping grain and transmit the updated
information to the Warehouse Operator’
s insurer in accordance with the insurer’
s reporting
requirements; and

J.

ensure that contracts involving the application of producer open-storage or credit-sale grain are
executed by both parties within 30 days of final application of the grain against the contract and fully
reflect the terms of settlement.

Warehousing
The Warehouse Operator agrees, unless prevented from doing so by force majeure, to (each of the
following):
A. accept for storage only storable grain;
B. accept all storage and non-storage grain and, at the request of the depositor or lawful owner, deliver
out (other than in the case of specially-binned grain) all storage and non-storage grain in accordance
with the weight and grade of that grain as determined by a person duly licensed to sample, weigh,
inspect and/or grade that grain and to certificate the weight and grade of that grain under the USWA
and the regulations, (Disputes are addressed in Section J –Grain Grading Appeals);
C. accept and deliver out of storage grain in accordance with the factors determined as the result of an
appeal of the original inspection results;
D. ensure all grain accepted for storage is stored in the Warehouse Operator’
s licensed warehouse space;
E. issue a USWA Weight, Inspection and/or Grade Certificate for each individual conveyance that
delivers grain received for storage or that is loaded out of the Warehouse Operator’
s licensed
warehouse space;
F. deliver stored grain without unnecessary delay and in a commercially reasonable manner;
G. not deliver infested or adulterated grain as defined under the official U.S. Grain Standards; USDAGIPSA, Food and Drug Administration or Environmental Protection Agency regulations; or other
Federal laws or standards;
H. not load or deliver grain in a conveyance that places the quality or quantity of the grain at risk;
I.

not redeliver, ship or remove any warehouse receipted grain from licensed storage space based on
written or oral orders from the current holder or other lawful person without the Warehouse Operator
first being made the final holder of the EWR or having physical possession of the paper warehouse
receipt or other document of release for such grain;

J.

resolve any claim for noncompliance with the shipping of grain or any other dispute in a U.S. district
court of competent jurisdiction or through mutually agreed upon arbitration procedures. The
arbitration procedures will be nondiscriminatory and provide equal access and protection relating to
the shipping of grain;

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K. maintain sufficient inventory of grain in licensed storage space that reflects the quality and quantity
represented by outstanding storage obligations (including warehouse-receipted and unreceipted grain)
and, in the event the quality of stored grain becomes out of balance with quality represented by
outstanding storage obligations, to effect the necessary corrective actions to regain a balanced position
for quality and quantity;
L. issue a warehouse receipt upon acceptance for storage of any lot of identity-preserved or conjointstorage grain in accordance with Section F, Warehouse Receipts;
M. attach, upon acceptance for storage of any lot of bagged grain, a durable tag or stencil in a manner that
readily makes possible the identification of the lot at all times. Such tags or stencil must show:
(1)
(2)
(3)
(4)
(5)
(6)
(7)

lot number;
warehouse receipt number issued for such grain, if warehouse receipt is requested;
number of bags in the lot, if applicable;
kind and class of grain;
quality factors, if determined;
gross weight of the screened grain when it entered storage; and
date the grain entered storage.

(Note: The tags on bagged grain must be visible and readily accessible enabling an accurate count.)
O. assure that the physical warehouse inventory record balances exactly and equals the total outstanding
warehouse receipt and storage liability obligation records (including company-owned) at the close of
each business day and before the start of the next business day.
P. not issue a warehouse receipt for any grain product or byproduct which would meet the definition of
“
screenings”
;
Q. exercise due care with respect to non-storage grain while in the Warehouse Operator’
s custody.
3.

Facilities
The Warehouse Operator agrees, unless prevented from doing so by force majeure, to (each of the
following):
A. maintain the warehouse(s) in sound physical condition consistent with good warehousing practices;
B. keep the warehouse and the property on which it is located reasonably clean and safe at all times;
(Note: FSA shall notify the Occupational Safety and Health Administration if examiners encounter
grain dust accumulations or other safety-related issues that may violate OSHA safety standards.)
C. securely affix clearly discernible numbers to identify bulk grain bins and compartments licensed under
the USWA for storing bagged grain. The series of designated numbers must be pre-approved by
DACO. Bulk grain bins must be numbered so as to be easily identified at the openings on top and also
on or near the outlet valves underneath. Compartments must be numbered in such a manner that
clearly shows the space covered by each number.

WA-402 (12-01-07)
4.

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Facility Security
The Warehouse Operator agrees to (each of the following):
A.

conduct a facility vulnerability assessment and establish written security procedures that address grain
handled and stored under this Agreement with regard to (each of the following):
(1) general security of the USWA-licensed physical structures and property on which the licensed
warehouse is located;
(2) shipping and receiving procedures to ensure that grain is not subject to tampering;
(3) action to be taken in the event of a national emergency; and
(4) contact information for local emergency responders and law enforcement authorities.

B. have a written facility security plan that includes measures which address the vulnerabilities found
during the risk assessment and that protect the grain handled and stored under this License.
5.

Fair Treatment
A. The Warehouse Operator agrees to deal in a fair and reasonable manner with persons storing or
seeking to store grain if (each of the conditions is met):
(1) the grain is of the kind, type and quality customarily stored or handled in the geographic area;
(2) the grain has been tendered to the warehouse in a suitable condition for warehousing; and
(3) the grain is tendered in a manner consistent with the ordinary and usual course of business.
B. The Warehouse Operator may enter into agreements with depositors or lawful owners to allocate
available warehouse storage space.

6.

Insurance
A. Requirements.
The Warehouse Operator agrees to (each of the following):
(1) secure, in their own name, insurance on stored grain against loss or damage by sprinkler
malfunction, fire, lightning, windstorm, cyclone, tornado or inherent explosion and other special
peril risks under forms of policies which automatically attach for the full replacement value of
stored grain, as soon as such grain is placed in their legal custody and continue such insurance in
effect so long as the grain remains in their legal custody. Arrangements between the Warehouse
Operator and insurers concerning indemnification of waivers of deductibles are acceptable as long
as an insurer covers any loss fully or the Warehouse Operator indemnifies deductibles with a letter
of credit, additional bonding or other financial assurance in favor of USDA. DACO may accept
consolidated blanket insurance policies of parent companies that separately identify the insurance
coverage of the Warehouse Operator as a subsidiary and include the full replacement value of
stored grain;
(2) keep a general insurance account showing the policy number, issuing company, amount binding,
exclusions, limits of liability and expiration dates of all insurance policies and in each instance
show the property covered by such policies. These insurance policies may be issued by one or
more insurance companies;
(3) submit such reports to underwriters as may be required under the terms of such policies;

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(4) submit copies of such reports to DACO, as required;
(5) include in the rules and schedule of charges (tariff) the conditions under which stored grain will
be insured against loss or damage by sprinkler malfunction, fire, lightning, windstorm, cyclone,
tornado or inherent explosion and other special peril risks; and
(6) provide DACO with written notice not less than 30 calendar days before the insurer(s) intends to
cancel property and/or stock (inventory) coverage,
7.

Business Hours
The Warehouse Operator agrees to (each of the following):
A. be open for the purpose of receiving grain for storage and delivering grain out of storage and for
settlement purposes each business day for a period of not less than six hours between the hours of 8
a.m. and 6 p.m., except as provided in Section 7.C.;
B. post business hours at a conspicuous, publicly accessible location at the licensed warehouse, including
the grain receiving area; and
C. post notice, in the event that the warehouse is not open during the hours specified in Section 7.A., the
estimated period during which the warehouse is to be closed and the address and telephone number of
the Warehouse Operator.

8.

System of Records
The Warehouse Operator agrees to (each of the following):
A. develop and maintain a system of records, approved by DACO, on site, unless otherwise provided for
in this Agreement’
s Addenda. These records shall include an accurate and concise Master Daily
Position Record (DPR) by each kind of grain and supporting Supplemental DPRs based on USWA
Weight, Inspection and/or Grade Certificates as the initiating source document that shows the total
quantity and quality of each kind; class; subclass; and grade, special grade, specialty traits or use, of
grain stored and handled in USWA-licensed space showing each of the following categories on a daily
basis:
(1)

total grain (as shown in the record of physical inventory) received into the warehouse;

(2)

total grain loaded out of the warehouse;

(3)

total adjustments to grain in the warehouse;

(4)

total grain remaining in the warehouse at the close of each business day;

(5)

total grain obligations transferred to another warehouse;

(6)

total grain represented by negotiable and non-negotiable warehouse receipts issued and
canceled, and the remaining outstanding balance;

(7)

total increase, decrease and outstanding un-receipted grain obligations, including grain bank and
open-storage grain belonging to others;

(8)

total unpaid (unsettled) grain owned by the Warehouse Operator for which warehouse receipts
have not been issued;

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(9)

(10)

Page 14 of 41

total paid and unpaid (unsettled) grain owned by the Warehouse Operator for which warehouse
receipts have not been issued; and
total grain obligations.

Note: Before proceeding to the next day's DPR, the Warehouse Operator is to accurately update the
current day's DPR with all applicable changes that occurred that date by closing and preventing
subsequent changes to those data. Any corrections to that data must be made and shown as an
adjustment on the date that the error is found and corrected. DPR Items (1), (2) and (3) must equal
Item (4); Item (5) stands alone; Items (4) and (5) must equal Item (10); Items (6), (7) and (9) must
equal Item (10); and Item (8) stands alone.
B. maintain a record of corrections and adjustments made to the DPR. This record may be included as
footnotes in the DPR or a separate record may be maintained. The footnotes shall reference the date,
the document used to make the adjustment, the nature of the adjustment and the reason for the
adjustment. (Note: Upward adjustments to the DPR are not permitted, except when verified by
emptying the warehouse or a complete verifiable weigh-up, or as authorized by DACO. Under normal
circumstances and conditions, grain does not increase in volume while in storage. Excesses of
measured inventory over obligations are to be explained and not arbitrarily adjusted.).
C. maintain a separate set of records for each depositor showing the kind, class (and the subclass white
club wheat), grade or specialty and quantity of grain deposited or redelivered.
D. maintain records of direct-shipment and transferred grain. In the case of direct-shipment grain, such
records shall include the inspection and/or weight certificates from the receiving warehouse(s). If
direct-shipment grain is being substituted for storage grain, the storage grain must be shown on the
DPR as a storage obligation. If direct-shipment grain is being substituted as sold or contracted grain,
such grain must be shown in the Warehouse Operator’
s records as a monetary obligation. If the grain
is transferred or forwarded and the Warehouse Operator is maintaining ownership, the grain shall be
shown on the DPR as a storage obligation and shall comply with the requirements for transferring of
grain.
E. maintain a detailed accounting system of all money received and disbursed;
F. maintain records accurately and concisely reflecting daily business activity, including weekend
activity;
G. retain these records for a period of six years after December 31 of the year in which they were created,
and for such longer period as may be necessary for the purposes of any litigation which the Warehouse
Operator knows to be pending or as may be required by DACO in particular cases to carry out the
purposes of the USWA; and
H. maintain similar records and information for any non-storage grain handled through the warehouse.
Records required with respect to non-storage grain must be retained, as a part of the records of the
warehouse, for a period of one year after December 31 of the year in which the lot of non-storage grain
is delivered from the warehouse.
9.

Reports
The Warehouse Operator agrees to (each of the following):
A. make reports concerning the condition, contents, operation and business of the warehouse available
upon request by DACO on forms prescribed and furnished for that purpose by FSA, and

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B. keep on file an exact copy of each report submitted as a part of the records of the warehouse for a
period of six years after December 31 of the year in which submitted or longer, if required by DACO.
10. Records
The Warehouse Operator agrees to (each of the following):
A. back up and maintain an off-site copy of electronic records daily;
B. provide, unless an alternative is approved by DACO, at least a fireproof safe, a fireproof vault or a
fire-resistant compartment in which to keep, when not in actual use, all records, books and papers
pertaining to the licensed warehouse, including current warehouse receipt books, and copies of issued
and canceled warehouse receipts;
C. retain each canceled warehouse receipt for a period of six years after December 31 of the year in
which the warehouse receipt is canceled and for such longer period as may be necessary for the
purposes of any litigation which the Warehouse Operator knows to be pending or as may be required
by DACO in particular cases to carry out the purposes of the USWA;
D. retain a copy of each weight and grade certificate for a period of six years after December 31 of the
year in which created; and
E. arrange for purposes of an audit, canceled paper or electronic warehouse receipts, contracts and
inspection and/or weight certificates in a sequential numerical order or as otherwise may be directed by
DACO.
11. Public Tariff and Schedule of Charges
The Warehouse Operator must (do each of the following):
A. not impose unreasonable or exorbitant charges for services rendered;
B. file with DACO, a copy of the public tariff rules and schedule of charges to be assessed depositors
before a license to operate a warehouse is granted under the USWA;
C. post conspicuously at a publicly accessible location where the depositor may access it at the
warehouse, including the grain weighing area, a copy of the public tariff, including current rules and
schedule of charges;
D. file with DACO a new public tariff rule statement or schedule of charges before making any change to
such rules or schedule of charges. No increase in charges or rates shown in such schedule will apply to
grain in storage at the time the changes become effective for a period of one (1) year from the date
such grain was deposited; and
E. include in the rules and schedule of charges the conditions under which the grain will be insured
against loss or damage by sprinkler malfunction, fire, lightning, windstorm, cyclone, tornado or
inherent explosion and other special peril risks.

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The Warehouse Operator may (do any of the following):
F. demand payment of all accrued charges at the close of each crop year or other mutually agreed-upon
date. If, upon demand, the owner of the grain refuses to pay such charges at the end of a season, action
may be taken to enforce collection of such charges as permitted by the laws of the State in which the
warehouse is located; or
G. demand payment of all accrued charges associated with the storage of grain prior to delivering such
grain to the depositor to satisfy the warehouse operator’
s lien; or
H. enter into mutually agreed upon special agreements with depositors that may include service rates and
rules differing from the public tariff rules and schedule of charges. Such special arrangements shall be
submitted by the Warehouse Operator to DACO prior to execution, and are subject to approval by
DACO.
12. Grades and Grain Quality Inspections
The Warehouse Operator agrees to (each of the following):
A. equip the warehouse with grading and quality-evaluation equipment necessary to determine the kind,
grade and quality of each class, subclass and specialty grain received, handled or accepted for storage;
and
B. ensure that all grading and quality-evaluation equipment is inspected and certified annually by an
applicable regulatory or independent authority. Testing or quality-evaluation equipment whose
performance is rejected and not certified shall not thereafter be used to ascertain the grade or quality of
grain for the purposes of the USWA license, until such rejection is withdrawn by the applicable
regulatory or independent authority.
13. Scales and Weighing
The Warehouse Operator agrees to (each of the following):
A. equip the warehouse with scales appropriate for the kind of grain being stored, and have them
arranged in a manner that all grain, whether for storage or non-storage purposes, can be weighed in and
out of the warehouse;
B.

have scales inspected and certified annually by an applicable regulatory or independent authority.
Scales whose performance is rejected and not certified shall not thereafter be used in ascertaining the
weight of grain for the purposes of the USWA license, until such rejection is withdrawn by the
applicable regulatory or independent authority; and

C. apply for licensing at all facilities controlled by the warehouse operator at a specific location, among
which grain may be transferred without weighing, unless those facilities are specifically exempted by
DACO.
14. Prompt Delivery
In the absence of force majeure or a lawful excuse, the Warehouse Operator shall, as commercially
reasonable and without unnecessary delay, deliver the grain stored or handled in the warehouse on a
demand made by (either of the following):
A. the holder of the warehouse receipt; or

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B. the lawful owner of the grain, if no warehouse receipt has been issued.
15. Identity-Preserved and Conjoint-Storage Grain
A. The Warehouse Operator may elect not to accept and store identity-preserved or conjoint-storage
grain.
B. If electing to accept and store such grain in bagged or bulk form, the Warehouse Operator agrees to
(each of the following):
(1) clearly identify and mark each bag or container, bin or tank containing such grain;
(2) maintain records that clearly show the depositor of such grain, the quality characteristics and
internal storage location of each lot deposited and stored in the warehouse;
(3) obtain, at the time of deposit, an agreement with the depositor on the amount of shrinkage or
quality deterioration to be allowed while such grain is in storage; and
(4) issue warehouse receipts showing the characteristics, special binning and any special provisions;
(a) warehouse receipts issued for such grain expire no later than 12 months from the date of
issuance, at which time the grain is to be returned to open storage reflecting shrinkage or
quality changes or a new warehouse receipt is to be issued reflecting shrinkage or quality
changes; and
(b) shrinkage will be determined in accordance with the agreement obtained in Paragraph
15.B.(3).
C. For identity-preserved grain:
(1) Except as may be required by law or the regulations in this part, the Warehouse Operator shall not
remove or transfer any such grain for storage from the licensed warehouse or a part thereof to
another bin without first obtaining and canceling the warehouse receipt(s), and issuing new
warehouse receipt(s) for such grain following its transfer.
(2) The Warehouse Operator must deliver to the depositor or lawful owner the actual grain deposited
and stored in the warehouse. The conditions for delivery are (each of the following):

D.

(a)

proper presentation of title for any identity-preserved grain; and

(b)

payment of all accrued charges associated with the storage and handling of such grain if
requested by the Warehouse Operator.

For conjoint-storage grain:
(1) Except as may be required by law or the regulations in this part, the Warehouse Operator shall not
remove or transfer any grain for storage from the licensed warehouse or a part thereof to another
bin without first obtaining and canceling the warehouse receipt(s), and issuing new warehouse
receipt(s) for such grain following its transfer.

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(2) The Warehouse Operator shall deliver to the depositor(s) or lawful owner(s), upon demand, the
actual commingled grain deposited and stored jointly in the warehouse. The conditions for
delivery are (each of the following):
(a) proper presentation of title for any conjoint-stored grain; and
(b) payment of all accrued charges associated with the storage and handling of such grain if
requested by the Warehouse Operator.
E. The Warehouse Operator is not obligated to guarantee the quality and quantity of such grain, but shall
guarantee the delivery of the actual grain, unless otherwise stated within the applicable public tariff or
special storage agreement entered into with the depositor.
16. Storage Obligations
The Warehouse Operator, while authorized to commingle grain in store, is liable for the care and redelivery
of grain stored in licensed space to each depositor or lawful owner to the same extent and under the same
circumstances as if the grain was separately stored. The Warehouse Operator, as a bailee for hire, is free to
store grain in any manner that enables it to be delivered in a condition that meets or exceeds the quality and
quantity represented on the warehouse receipt or original USWA Weight and/or Grade Certificate.
17. Containerized Grain Storage
The Warehouse Operator agrees to keep binned grain stored in an orderly manner to permit easy access to
all lots and to facilitate inspecting, sampling, counting and identification of each lot.
18. Delivery of Commingled Grain
The Warehouse Operator must deliver to the depositor or lawful owner, upon demand, grain of the kind,
quantity, numerical grade and class as obligated or better, as determined by a licensed weigher and
inspector/grader. The conditions for delivery are (each of the following):
A. proper presentation of documents of title;
B. payment of all accrued charges associated with the storage of grain if requested by the Warehouse
Operator; and
C. basis of grades and weights determined by a licensed inspector/grader and weigher.
19. Loading Out Without Weighing
The Warehouse Operator may load out without weighing (either of the following):
A. identity-preserved or conjoint-storage grain if the owner has agreed to assume all shortages, provided
that the outstanding warehouse receipts covering the grain have been surrendered to the Warehouse
Operator for cancellation; or
B. commingled bulk grain, at the request of the owner. However, any interim USWA weight certificate
issued by the shipping Warehouse Operator must clearly show the weight as an estimate and must be
posted to the DPR as activity occurs. Destination weights are to be obtained and adjustments posted to
the DPR as soon as available.

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20. Out-of-Condition and Damaged Grain
A. The Warehouse Operator may refuse to accept grain offered for storage if its condition is such that it
will adversely affect the condition of grain customarily stored in the warehouse.
B. When grain is discovered to be going out of condition and the Warehouse Operator is unable to
condition the grain or stop the deterioration, the Warehouse Operator agrees to (each of the following):
(1) immediately notify the owner(s) and DACO.
(a) Such notification shall include:
(i)
the warehouse location in which the grain is stored;
(ii) the quantity, kind, class and grade of the grain at the time notification occurred;
(iii) the actual condition of the grain, as nearly as can be ascertained;
(iv) the reason for the current condition, if known;
(v)
the warehouse receipt information, if a warehouse receipt has been issued; and
(vi) a statement that the grain will be delivered upon the presentation of the warehouse
receipt and payment of charges.
(2) Follow instructions received from DACO;
(3) Maintain as a warehouse record copies of all notices and correspondence; and
(4) Submit to and reimburse the cost of a verification examination, if one is necessary.
21. Inspections and Examinations of Warehouse
The Warehouse Operator agrees to (each of the following):
A. permit USDA-authorized personnel to enter and inspect or examine any licensed warehouse on any
business day during normal or posted business hours;
B. provide access to the examiner to the extent reasonable to determine the quantity and quality of grain
stored in the licensed warehouse;
C. provide the USDA-authorized warehouse examiner with notice of any safety or other company policies
pertaining to the physical facility and grounds subject to examination or inspection;
D. provide access to such books, records, papers, accounts and their contents pursuant to the examination
of a licensed warehouse;
E. furnish USDA-authorized representative(s) with the assistance necessary to conduct an inspection or
examination;
F. provide safe and functioning equipment (i.e., ladders, catwalks, lifts or elevators) required to conduct a
warehouse examination. Further, the Warehouse Operator shall provide advance notice to DACO of
any special requirements or equipment required to perform an examination at the licensed warehouse.
An examination will be stopped –and an exception report prepared for removal of the facility from
licensed space –if unsafe equipment prevents a licensed warehouse examination from being conducted
or completed; and

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G. provide notice, at the time of the examination, of any fumigation of bins in progress or where the
fumigant is currently active, and to provide conspicuous written notification affixed to the fumigated
storage structure of the date and type of fumigant used.
22. Transferring Grain
A. The Warehouse Operator may, under certain circumstances, transfer or forward grain by physical
movement or other DACO-approved method to a receiving warehouse. For the purposes of this
paragraph, a receiving warehouse is (any of the following):
(1) an active USWA-licensed grain warehouse;
(2) a public grain warehouse currently licensed by a State licensing authority that has financial,
bonding and examination requirements for the benefit of all depositors; or
(3) a public grain warehouse holding a Commodity Credit Corporation (CCC)-approved storage
agreement in a State without a regulatory licensing program for public grain warehouses.
B. The transferring Warehouse Operator agrees to (do each of the following):
(1) Provide written notification immediately to DACO –by FAX or e-mail –upon becoming aware
that the grain obligations at a specific storing warehouse exceed the licensed or insured capacity of
that warehouse, as well as the name and location of the receiving warehouse; and
(2) if physically moving or transferring grain to a receiving warehouse (do each of the following):
(a) ensure that the public tariff’
s rules and schedule of charges includes language that allows the
Warehouse Operator to transfer grain according to conditions prescribed by DACO;
(b) obtain written permission from DACO, by FAX or e-mail, in advance of movement or
approved transfer of warehouse-receipted grain;
(c) obtain permission in advance from CCC if grain to be transferred is owned by CCC;
(d) obtain from the receiving warehouse a non-negotiable warehouse receipt or certified deposit
affidavit or notarized deposit letter stating, “
Held in Trust for Depositors of “
name of
transferring warehouse,”as legal depositor, for all transferred grain;
(e) not accept transferred grain from another warehouse while grain of the same kind and class is
in a transferred position;
(f) retain or increase financial assurance encompassing the warehouse capacity and the
transferred grain, as specified in Section C. 1. A. of this Agreement;
(g) post transferred grain positions to the DPR, as specified in Section E, Paragraph 8 of this
Agreement;
(h) retain a storage obligation to the depositor or lawful owner for grain originally deposited in
the warehouse and, unless otherwise specified in Item (i) below, be prepared to redeliver the
grain deposited upon demand of the depositor or lawful owner at the place where the grain
was first deposited for storage; and

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(i) provide an opportunity for the depositor or lawful owner to make final settlement and take
delivery of the storage obligation at the place where the grain was first deposited for storage
unless, with the consent of both the transferring (shipping) Warehouse Operator and the
receiving Warehouse Operator, the depositor or lawful owner elects to take delivery at the
warehouse to which the grain was transferred.
C. Non-Negotiable warehouse receipts received under 22 B.(2)(d) above:
(1) must have conspicuously printed or stamped across the face of the paper receipt the words “
Not
Negotiable”or be issued as a “
Non-Negotiable”electronic warehouse receipt;
(2) are not valid for collateral purposes;
(3) are retained by the transferring (shipping) Warehouse Operator to be presented for use by DACO
in lieu of an on-site inventory of the receiving warehouse; and
(4) will be subject to the general requirements for warehouse receipts in their recording and retention.
D. For grain transferred to a warehouse in a State that does not allow or recognize the issuance of nonnegotiable warehouse receipts, obtain from the receiving Warehouse Operator a certified deposit
affidavit or notarized deposit letter specifying the kind, class, numerical grade, specialty and quantity
of the grain received.
E. NOTE: The transferring (shipping) Warehouse Operator shall execute a legal binding operational
contract with the receiving warehouse operator that specifies that the receiving warehouse operator will
(each of the following):
(1) not exceed the licensed or approved capacity of their warehouse,
(2) not further move, transfer or in any way offset the grain transferred to it to another warehouse
(asset kiting or daisy-wheel transfers) and retains a storage obligation to the depositors of the
transferring (shipping) Warehouse Operator,
(3) fully insure the transferred grain, and
(4) promptly issue a non-negotiable warehouse receipt or certified deposit affidavit or notarized
deposit letter for the transferred grain stating on the document that such grain is, “
Held in Trust for
Depositors of the (name) transferring warehouse”
, as the legal depositor and return the warehouse
receipt or certified deposit affidavit or notarized deposit letter promptly to the transferring
(shipping) Warehouse Operator.
F. The grain covered by non-negotiable warehouse receipts, certified deposit affidavits and notarized
deposit letters are held in trust solely for the benefit of the shipping warehouse and its depositors or
lawful owners whose grain was transferred individually or collectively and for which they retain title.
Section F - Warehouse Receipts
1.

General
A. Issuance - The Warehouse Operator agrees to (each of the following):
(1) issue warehouse receipts for any grain received or stored in a warehouse if requested by a
depositor or lawful owner;

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(2) maintain a sufficient quantity and quality of grain as represented on the warehouse receipt;
(3) issue collateral warehouse receipts listing only the Warehouse Operator as depositor and endorsed
by the financial institution receiving the warehouse receipt, (ENDORSEMENT REQUIRED);
(4) retain a copy of the weight certificate, inspection certificate, or inspection and weight certificate
representing the grain prior to issuing any warehouse receipt to a depositor under the USWA. The
Warehouse Operator’
s records must identify the certificate(s) used as the basis for issuing the
warehouse receipt and be retained for a period of six years after December 31 of the year in which
issued. Certificates filed in the office of an independent inspection or weighing agency or with a
Board of Trade, or a U. S. Registrar must also meet this requirement;
(5) replace lost or destroyed warehouse receipts in accordance with 7 CFR Part 735;
(6) not issue a warehouse receipt when another warehouse receipt is outstanding that represents the
same specific identity-preserved, conjoint-storage or commingled lot of grain;
(7) not issue two warehouse receipts having the same warehouse receipt number; and
(8) have plainly and conspicuously embodied within the written or printed terms of non-negotiable
warehouse receipts that such a warehouse receipt is not negotiable.
B. Persons Authorized to Sign Warehouse Receipts
The Warehouse Operator must (do each of the following):
(1) file with DACO the name and genuine, facsimile or electronic signature of the person(s)
authorized to sign warehouse receipts on behalf of the Warehouse Operator;
(2) promptly notify DACO of any changes or additions to the names of persons authorized to sign
warehouse receipts on behalf of the Warehouse Operator, and file the genuine, facsimile or
electronic signature(s) of such person(s);
(3) be bound by the signatures of persons authorized to sign warehouse receipts, the same as if the
Warehouse Operator personally signed the warehouse receipt; and
(4) agree and verify that all filed signatures legally bind the Warehouse Operator.
C. Return of Warehouse Receipts Prior to Delivery
The Warehouse Operator agrees to deliver grain (under each of the following situations):
(1) for which they have issued a negotiable warehouse receipt only after the warehouse receipt has
been returned to the Warehouse Operator and canceled; and
(2) for which they have issued a non-negotiable warehouse receipt only after the warehouse receipt
has been returned to the Warehouse Operator and canceled or, alternatively, the Warehouse
Operator has obtained from the holder or agent a written order to deliver the grain. Under this
alterative method, a Warehouse Operator may deliver up to 90% (ninety percent) of the quantity
represented by the warehouse receipt. The warehouse receipt must be surrendered before the final
10% (ten percent) of the quantity can be delivered.

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D. Balance Warehouse Receipts
The Warehouse Operator, upon request of the holder, may issue a warehouse receipt for previously
warehouse-receipted grain, the warehouse receipt for which has been canceled. The balance
warehouse receipt must reference the number and issuance date of the original warehouse receipt.
2.

Paper Warehouse Receipts
A. Content
(1) Every paper warehouse receipt, whether negotiable or non-negotiable, issued for grain stored in a
USWA warehouse, in addition to complying with the requirements of Section 11 of the Act, must
embody within its written or printed terms, (each of the following):
(a) the name of the Warehouse Operator and the designation, if any, of the warehouse facility;
(b) the location of the warehouse in which the grain is stored;
(c) the Warehouse Operator’
s license number;
(d) the CCC storage agreement code number, if applicable;
(e) the issuance date of the warehouse receipt;
(f) the consecutive number of the warehouse receipt;
(g) the name of the depositor;
(h) a statement as to whether the grain received is to be delivered to the holder, to a specified
person or their order;
(i) prepaid warehouse charges, if applicable;
(j) a description of the grain received, including the quantity, kind, class, grade and the standard
or description in accordance with which such classification has been made;
(i) The grade stated in a warehouse receipt must be the weighted average of the numeric
grades as determined by the inspector and as indicated on the applicable inspection
certificate(s); however, if an appeal of the grade determination has been requested and
obtained, the grade stated on such warehouse receipt shall be the final appeal grade; and
(ii) Except in the case of identity-preserved or conjoint-storage grain, if, at the request of the
depositor, the Warehouse Operator issues a warehouse receipt omitting the statement of
grade, such warehouse receipt shall have clearly and conspicuously stamped or written on
the face thereof, or included as part of the paper warehouse receipt, the following
statement: “
Not graded at the request of the depositor.”
(k) dockage, foreign material or pick, if applicable;
(l) a statement that the warehouse receipt is issued subject to the USWA, the regulations, and this
Agreement and its rules;

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(m) a statement of the amount of advances, if made, and of liabilities incurred regarding
warehouse storage, handling and other charges claimed by the Warehouse Operator; however,
if the precise amount of such advances made or of such liabilities incurred is unknown to the
Warehouse Operator (or to the agent who issues it) at the time the warehouse receipt is issued,
it is sufficient to include a statement that advances have been made or liabilities incurred, as
well as their purpose;
(n) if issued showing the Warehouse Operator as owner, either solely or jointly in common with
others, the fact of such ownership;
(o) such other terms and conditions within the limitations of the USWA and this Agreement, as
may be required by the Secretary of Agriculture or DACO;
(p) a statement of the Warehouse Operator’
s business organization type (i.e. private propriety,
incorporated, partnership, LLC, etc.) and the name of the State whose laws govern that
organization (i.e. “
a Texas corporation”
);
(q) in the event the relationship existing between the Warehouse Operator and any depositor is
not that of a strictly disinterested custodianship, a statement setting forth the actual
relationship;
(r) a statement, conspicuously placed, that the grain is insured by the Warehouse Operator
against loss or damage by sprinkler malfunction, fire, lightning, windstorm, cyclone, tornado,
inherent explosion or other special peril risks;
(s) net weight of the grain;
(t) if the grain represented by the warehouse receipt is identity-preserved or conjoint-stored
product, the words “
identity preserved”or “
conjoint storage”and the specific bin(s) or
warehouse location of such grain;
(u) the words “
Negotiable”or “
Non-Negotiable,”as appropriate to the nature of the warehouse
receipt, clearly and conspicuously printed or stamped thereon. Every negotiable warehouse
receipt issued must, in addition to conforming to the requirements of this subparagraph,
embody within its written or printed terms, a form of endorsement that may be used by the
depositor or authorized agent, for showing the current ownership of the grain and applicable
charges, mortgages or other encumbrances on the grain represented by the warehouse receipt;
(v) the signature of the Warehouse Operator, which may be made by the authorized agent; and
(w) other information as may be required by DACO.
(2) If the Warehouse Operator issues a warehouse receipt under the USWA omitting any information
not required to be stated, for which a blank space is provided in the form of the warehouse receipt,
a line shall be drawn through such space to show that such omission has been made purposely or
“
ILB”entered in the blank data field to indicate it has been “
intentionally left blank”
; and
(3) A warehouse receipt may contain additional information, provided it does not contradict, conceal
or interfere with any required information or terms.

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B. Copies of Paper Warehouse Receipts
The Warehouse Operator agrees to make at least one file copy of each warehouse receipt and, except
for skeleton and microfilm copies, clearly and conspicuously print or stamp on the face of such
warehouse receipt the words “
Copy –Not Negotiable”
.
C. Printing of Negotiable and Non-Negotiable Paper Warehouse Receipts
The Warehouse Operator agrees to issue only paper warehouse receipts that are printed (each of the
following apply):
(1) in a form prescribed by DACO;
(2) by a printer with which DACO has an agreement and bond for such printing; and
(3) on distinctive paper tinted in a manner specified in DACO’
s agreement with the printer.
D. Details on the Printing of Paper Warehouse Receipts
The Warehouse Operator agrees that they will (each of the following apply):
(1) order warehouse receipts on a form provided or method authorized by DACO;
(2) proofread each order and warehouse receipts received from the printer for errors and omissions;
and
(3) pay the printer in a timely manner.
E. Lost or Destroyed Paper Warehouse Receipts
(1) The Warehouse Operator may issue a new replacement warehouse receipt, subject to the same
terms and conditions and bearing on its face the number and the date of the original warehouse
receipt.
(2) Before issuing a replacement warehouse receipt, the Warehouse Operator must require the holder
or other person applying therefore to make and file with the Warehouse Operator (each of the
following):
(a) an affidavit showing (each of the following):
(i) that the holder is lawfully entitled to possess the original warehouse receipt;
(ii) that the holder has not negotiated or assigned the original warehouse receipt;
(iii) how the original warehouse receipt was lost or destroyed; and
(iv) if lost, that diligent efforts were made to find the warehouse receipt, without success.
(b) an assurance, in the form of a bond or personal guarantee, equal to an amount double the
value of the grain represented by the lost or destroyed paper warehouse receipt. This
assurance shall be in a form approved by DACO and conditioned to indemnify the Warehouse
Operator against any loss sustained as a result of issuing a replacement warehouse receipt.
The assurance may be (either of the following):

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(i) a bond issued by a surety company. Such company must be authorized to do business
and be subject to administration of process in a suit on the bond in the State in which the
warehouse is located, unless a variance is granted by DACO; or
(ii) a personal guarantee, made by at least 2 individuals who are residents of the State and
each of whom owns real property therein having a value, in excess of all exemptions and
encumbrances, equal to the amount of the bond.
F. Canceled and Voided Paper Warehouse Receipts:
(1) The Warehouse Operator agrees to make available all canceled and voided original warehouse
receipts for auditing, as requested by DACO.
(2) All canceled warehouse receipts shall be defaced with the word “
CANCELED”written in large,
bold lettering and shall reflect the date canceled and instrument of cancellation (i.e. check number,
contract number, return to storage, etc). The date of cancellation shall not precede the date shown
on the original or replacement warehouse receipt that is in the possession of the Warehouse
Operator.
(3) Voided original warehouse receipts must be defaced with the word “
VOIDED”written in large,
bold lettering.
3.

Electronic Warehouse Receipts (EWRs)
A. General - The Warehouse Operator, when choosing the option to issue EWRs instead of paper
warehouse receipts for grain stored in the warehouse, agrees to (each of the following):
(1) issue EWRs only through a provider approved by DACO;
(2) inform DACO of the identity of the Provider at least 60 calendar days before issuing EWRs
through that Provider. DACO may waive or modify this 60-day requirement as set forth under 7
CFR Part 735;
(3) request and receive from DACO, prior to issuing any EWRs, a range of consecutive warehouse
receipt numbers, which the Warehouse Operator shall use consecutively when issuing EWRs;
(4) cancel EWRs only when the Warehouse Operator is the holder of the EWR(s);
(5) correct information on the EWR in accordance with the applicable Provider Agreement;
(6) receive written approval from DACO at least 30 calendar days before changing Providers. Upon
receiving notification of such approval, the Warehouse Operator may request that the current
Provider transfer the EWR data from its CFS to the CFS of the new approved Provider selected by
the Warehouse Operator. The Warehouse Operator shall instruct the new Provider to notify
through its CFS all holders of outstanding EWRs of the identity of the new Provider at least 30
calendar days before changing Providers, unless otherwise authorized by DACO. The Warehouse
Operator shall pay all charges, including transfer charges, due the current Provider before
transferring EWRs to the new Provider. The Warehouse Operator may change Providers only
once a year, unless otherwise authorized by DACO;
(7) not ship grain represented by an EWR until it is canceled in the EWR Provider’
s CFS; and

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(8) update inventory and insurance records upon receiving or shipping grain, and transmit the
updated information to the EWR Provider.
B. Rights and Obligations
The Warehouse Operator shall ensure that an issued EWR establishes the same rights and obligations
with respect to grain as a paper warehouse receipt and that (each of the following applies):
(1) the person identified as the “
holder”of a EWR will be entitled to the same rights and privileges as
the holder of a paper warehouse receipt;
(2) only the current “
holder”of the EWR may transfer the EWR to a new “
holder”
;
(3) the identity of the “
holder”shall be included as required information for every EWR;
(4) only one person or entity shall be designated as an EWR “
holder”at any one time;
(5) an EWR may only be issued to replace an existing outstanding paper warehouse receipt if
requested by the current “
holder”of the paper warehouse receipt, and shall be issued only after the
relevant paper warehouse receipt is surrendered and canceled;
(6) an EWR “
holder”has the option to authorize any other user of a Provider to act on the “
holder’
s”
behalf with respect to activities engaged in with the Provider. Such authorization shall be in
writing, and be acknowledged and retained by the Provider; and
(7) only the current EWR “
holder”may request a paper warehouse receipt in lieu of an EWR with
respect to an agricultural product.
C. EWR Data Requirements
(1) Every EWR, whether negotiable or non-negotiable, issued for grain stored in a USWA warehouse,
in addition to complying with the requirements of Section 11 of the Act and Section F, subsections
1 and 2 of this Agreement, shall embody each of the following within its terms:
(a) the name of the Warehouse Operator and the designation, if any, of the warehouse facility;
(b) the location of the warehouse in which the grain is stored;
(c) the Warehouse Operator’
s license type and license number ("US" –designating the EWR as
being issued by the USWA licensee –is to precede the EWR receipt number);
(d) the CCC storage agreement code number, if applicable;
(e) the issuance date of the EWR;
(f) the consecutive number of the EWR;
(g) the name of the current “
holder”of the EWR;
(h) the name of the previous “
holder”from which the EWR was received (if applicable);
(i) cancellation date (if the EWR has been canceled);

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(j) warehouse location where the EWR was issued (city and state);
(k) a statement whether the grain received will be delivered to the holder, to a specified person or
to their order;
(l) dockage, foreign material or pick, as appropriate;
(m) the rate of storage charges;
(n) prepaid storage charges, if applicable;
(o) a description of the grain received, including the quantity, kind, class, grade and the standard
or description in accordance with which such classification has been made;
(i) The grade stated on the EWR must be the weighted average of the numeric grades as
determined by the inspector and as indicated on the applicable inspection certificate(s);
however, if an appeal of the grade determination has been requested and obtained, the
grade stated on such EWR shall be the final appeal grade; and
(ii) Except in the case of identity-preserved and conjoint-storage grain, if, at the request of
the depositor, the Warehouse Operator issues an EWR omitting the statement of grade,
such EWR shall state clearly and conspicuously the following statement: “
Not graded on
request of the depositor.”
(p) a statement that the warehouse receipt is issued subject to the USWA, the regulations and this
Agreement and its terms and conditions;
(q) a statement of the amount of advances, if made, and of liabilities incurred regarding
warehouse storage, handling and other charges claimed by the Warehouse Operator; however,
if the precise amount of such advances made or of such liabilities incurred is unknown to the
Warehouse Operator (or to the agent who issues it) at the time the EWR is issued, it is
sufficient to include a statement that advances have been made or liabilities incurred, as well
as their purpose;
(r) if issued showing the Warehouse Operator as owner, either solely or jointly in common with
others, the fact of such ownership;
(s) such other terms and conditions within the limitations of the USWA and this Agreement as
may be required by DACO or the Secretary of Agriculture;
(t) a statement of the Warehouse Operator’
s business organization type (i.e. private propriety,
incorporated, partnership, LLC, etc.) and the name of the State whose laws govern that
organization (i.e. “
a Texas corporation”
);
(u) in the event the relationship existing between the Warehouse Operator and any depositor is
not that of a strictly disinterested custodianship, a statement setting forth the actual
relationship;
(v) a statement, conspicuously placed, that the grain is insured by the Warehouse Operator
against loss or damage by sprinkler malfunction, fire, lightning, windstorm, cyclone, tornado,
inherent explosion or other special peril risks;
(w) net weight of the grain;

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(x) if the grain represented by the EWR is identity-preserved or conjoint-stored product, the
words “
identity preserved”or “
conjoint”grain storage and the specific bin(s) or warehouse
location of such grain;
(y) the terms “
Non-Negotiable”or “
Negotiable,”as appropriate to the nature of the warehouse
receipt;
(z) name of the person whose electronic signature is authorized for the EWR; and
(zz) paper warehouse receipt number (if applicable).
Section G - Service Licenses
No person will in any way represent themselves as a sampler, weigher, inspector or grader licensed under the
USWA unless such person holds an unsuspended and unrevoked license issued under the USWA. DACO
reserves the right to suspend or revoke any service license for due cause.
1.

Warehouse Operator’
s Responsibility
The Warehouse Operator is responsible for (each of the following):
A. having at least one person licensed to perform sampling, inspection, grading and/or weighing of grain
at the warehouse;
B. notifying the Kansas City Commodity Office (KCCO) (either of these);
(1) when a person discontinues to provide service at the specific warehouse they serve; or
(2) when a person no longer is employed by the Warehouse Operator; and
C. posting conspicuously, at a publicly accessible location at the warehouse, including the grain
receiving area, a copy of their certificate of license for each person performing the service(s) at that
location.

2.

Applicant’
s Responsibility
The Applicant to obtain a service license under the USWA:
A. must make application for a license to sample, weigh, inspect and/or grade grain to DACO on forms
furnished by FSA. Each application shall (each of the following apply):
(1) be signed by the applicant;
(2) be certified by a statement from the Warehouse Operator that the applicant is competent and
authorized to perform the duties of a licensed sampler, weigher, inspector and/or grader;
(a) If the applicant is seeking an inspection license, the Warehouse Operator shall certify that
such applicant can correctly sample, inspect and grade grain in accordance with the official
U.S. Grain Standards or, in the absence of such standards, in accordance with standards
accepted by DACO;
(b) If the applicant is seeking a weighers license, the Warehouse Operator shall certify that such
applicant can correctly weigh grain; and

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(3) furnish such additional information as requested by DACO.
B. may be required to submit to an examination or test to demonstrate his or her ability to properly
sample, weigh, inspect and/or grade grain; and
C. make available for inspection copies of the Warehouse Operator’
s standards for sampling, inspection
and grading, as well as the equipment used or to be used to perform such duties.
3.

Duties of the Licensed Sampler, Weigher, Inspector and/or Grader
Each sampler, weigher, inspector and/or grader licensed under the USWA whose license remains in effect
must (do each of the following as applicable):
A. perform the requested services for which licensed when given grain to sample, weigh, inspect and/or
grade under conditions that permit proper sampling, weighing, inspecting and/or grading, without
discrimination, as soon as practicable and upon reasonable terms;
B. issue a certificate of grade for any grain only if the inspection and grading is based upon a correct and
representative sample of the grain;
C. make accessible to the depositor at the location of the licensed warehouse, a copy of the inspection
certificate issued by the licensed sampler, weigher, inspector and/or grader as soon as possible after
grading any grain, and not later than the close of business on the next business day following the
performance of such duties, unless requested otherwise by the depositor;
D. permit any USDA-authorized person to inspect or examine, on any business day during the usual and
customary hours of business, the books, papers, records and accounts relating to the performance of
their duties under the USWA, and to assist any such USDA-authorized person in the inspection or
examination into the performance of the duties of such sampler, weigher, inspector and/or grader under
the USWA;
E. file and retain for a period of one year each paper or electronic inspection or weight certificate issued,
and make such certificates accessible, upon request to interested parties at the warehouse location
where the grain is stored; and
F. in addition to meeting the requirements in A through E of this paragraph, the licensee shall be subject
to suspension or revocation under conditions described in Section R - Warehouse Operator Failures,
Defaults –Remedies, as determined by DACO.

4.

Service licenses will be issued in a form or format determined by DACO.

Section H - Inspection and Weight Certificates
Inspection and weight certificates may be in paper or electronic format issued and maintained in accordance
with the EWR and USWA Documents Provider Agreement. Proof copies of formats must be approved in
advance by KCCO.
1.

Inspection and Grade Certificates
A. Each inspection certificate issued under the USWA shall be on a form approved by DACO and shall
include the following information within its terms:
(1) the caption “
United States Warehouse Act, Grain Inspection Certificate”
;

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(2) whether it is an original, a duplicate or other copy, and that it is Not Negotiable;
(3) the name and location of the warehouse in which the grain is stored, transferred or is to be stored;
(4) whether the inspection represents grain moving into or out of the warehouse;
(5) the date the certificate is issued;
(6) the consecutive number of the certificate;
(7) the quantity of grain represented by the certificate;
(8) the kind and class of grain represented by the certificate;
(9) the amount of foreign material, dockage or pick, if applicable;
(10) the grade of the grain, as determined by such duly licensed inspector and/or grader, in accordance
with the official U.S. Grain Standards and, in the case of grain for which no official standards of
the United States are in effect, the standards or description in accordance with which such grain is
graded;
(11) a statement that the certificate is issued by an inspector and/or grader licensed under the USWA
and the regulations thereunder; and
(12) the signature of the licensed inspector and/or grader who inspected and graded the grain;
B. In addition to the provisions of paragraph A, the inspection certificate may include any other matter
consistent with the USWA or its regulations, if pre-approved by DACO.
C. In lieu of an inspection certificate in the form prescribed in Subsection A (above) of this section, an
official certificate issued pursuant to the Agricultural Marketing Act of 1946, as amended, on grain
stored or to be stored in a warehouse licensed under the USWA will be acceptable for purposes of the
USWA and its regulations.
2.

Weight Certificates
A. Each weight certificate issued under the USWA shall be on a form approved by DACO and shall
include the following information within its terms:
(1) the caption “
United States Warehouse Act, Grain Weight Certificate”
;
(2) whether it is an original, a duplicate or other copy, and that it is Not Negotiable;
(3) the name and location of the warehouse in which the grain is stored or to be stored;
(4) a statement indicating whether the grain is weighed into or out of the warehouse;
(5) the date the certificate is issued;
(6) the consecutive number of the certificate;
(7) the weight of grain represented by the certificate;

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(8) a statement that the certificate is issued by a weigher licensed under the USWA and the
regulations thereunder; and
(9) the signature of the licensed weigher.
B. In addition to the provisions of Paragraph A (above) of this section, the weight certificate may include
any other matter consistent with the USWA or its regulations in this part, if pre-approved by DACO;
C. In lieu of a weight certificate in the form prescribed in Paragraph A (above) of this section, an official
weight certificate issued pursuant to the Agricultural Marketing Act of 1946, as amended, on grain
stored or to be stored in a warehouse licensed under the USWA will be acceptable for purposes of the
USWA and its regulations.
3.

Weight, Inspection and/or Grade Certificates
The kind, class, grade and weight of any grain, ascertained by a sampler, weigher, inspector and/or grader
licensed under the USWA, may be stated on a certificate in compliance with the combined requirements of
Paragraphs 1 and 2 of this Section, provided the form of the certificate is pre-approved for this purpose by
DACO.

Section I - Determining Quality
1.

Official Grain Standards of the United States
The Official U.S. Grain Standards are hereby adopted as the official grain standards for the purposes of the
USWA and the regulations thereunder.

2.

Standards of Kind, Class and Grade for Other Grain
Until Official U.S. Grain Standards are established for the kind, class and grade of grain to be inspected,
the grade of the grain will be stated, subject to the acceptance by DACO (any of the following):
A. in accordance with the standards, if any, established by the State in which the warehouse is located; or
B. in the absence of any State standards, in accordance with the standards, if any, adopted by the local
board of trade, chamber of commerce or by the grain trade generally in the locality in which the
warehouse is located; or
C. in the absence of the standards mentioned in paragraphs A and B of this subsection, in accordance with
any standards accepted for the purpose by DACO.

Section J -Grain Grading Appeals
1.

Ability to Appeal
A. No person licensed under the USWA will, directly or indirectly, deter, prevent, or attempt to deter or
prevent any party from requesting an appeal of the results of an inspection of grain.
B. No rule, regulation, bylaw or custom of any market, board of trade, chamber of commerce, exchange,
inspection department or similar organization, nor any contract, agreement or understanding, will be
grounds for refusing to determine an appeal.

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2.

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Appeal Procedure
The depositor or holder of the warehouse receipt or the Warehouse Operator may request an appeal of the
grade of grain stored, to be stored or transferred into a warehouse. If the original inspection and/or grade
certificate was issued by an inspector licensed under or authorized by the Agricultural Marketing Act of
1946, as amended, the appeal, including the amount of fees, will be governed by the regulations issued
under that authority; otherwise, the appeal, including fees, will be governed by this Agreement.

3.

Request for Appeal
A. The Warehouse Operator agrees to make available to a depositor or holder of a warehouse receipt a
split sample representative of grain delivered for storage, in accordance with authorized grainevaluation procedures, before the identity of the representative sample of grain has been lost, provided
a written request is received from the depositor or holder by no later than the close of business on the
first business day after being furnished the results of the original inspection.
B. If an appeal is requested by the Warehouse Operator, notice must be given promptly to the owner of
the grain. Oral notice may be made, if followed by written notice within two (2) business days.
C. A representative sample must be retained for third-party evaluation. The identity of that sample is not
to be compromised until the appeal inspection results are determined.
D. If the identity of the grain is preserved and if the parties are unable to agree on such a sample, a sample
drawn by a duly licensed sampler, inspector and/or grader in the presence of the interested parties shall
be deemed binding. In no case is the sample to weigh less than 2,000 grams.

4.

Appeal Samples
A. For grain graded under the official U.S. Grain Standards, the appeal sample is to be secured and
delivered to an office charged with providing official grain inspection service under the Agricultural
Marketing Act of 1946, as amended. At this point, procedures used to determine the grade of the grain
will be as set forth in regulations issued under the Agricultural Marketing Act of 1946, as amended, as
is applicable. The sample is to be accompanied by (each of the following):
(1) a copy of the written request for appeal;
(2) the original grain inspection certificate upon which the appeal is based; and
(3) an agreement to pay the costs of such inspection, as prescribed by the Agricultural Marketing Act
of 1946, as amended.
B. For grain not graded under official U.S. Grain Standards because such standards have not been
established, the party requesting the appeal is to apply directly to DACO for consideration. DACO’
s
determination shall be binding on all interested parties.
C. The sample of the grain subject to the appeal shall be submitted for inspection as soon as possible. The
certificate representing the appeal inspection result will supersede the original inspection certificate.
The original or a copy of the appeal inspection certificate is to be sent to the party requesting the
appeal, with copies distributed to the depositor or holder of the warehouse receipt, the Warehouse
Operator, and the licensed sampler and inspector executing the original certificate.

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5.

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Owner Not Compelled to Store Grain
Nothing in this Agreement requires the owner or agent of grain to store such grain with the Warehouse
Operator after the appeal inspection. But if the grain is stored, it shall be accepted for and delivered out of
storage in accordance with the final grade determined through such appeal, and is subject to the warehouse
operator’
s lawful tariff for storage, handling and other charges.

K - Temporary and Emergency Licensing
1.

The Warehouse Operator may, under certain conditions, license temporary and emergency space for
commodities deemed storable by DACO.

2.

The Warehouse Operator agrees to (each of the following):
A. provide written reasonable justification that a need for temporary and emergency storage exists in the
local area including the exact location, kind of commodity and quantity requested;
B. receive authorization before using the temporary and emergency space;
C. operate the temporary and emergency space in conjunction with their USWA licensed warehouse;
D. meet all security, net worth, financial assurance and insurance requirements as required in Section C,
D and E of this Agreement;
E. provide access to the temporary and emergency space for examination purposes;
F. maintain separate inventory records of each commodity stored in temporary and emergency space, as
well as accounting for such commodities in their DPR; and
G. provide written notification when all the commodities stored in temporary and emergency space are in
the USWA licensed warehouse.

3

For temporary storage, the Warehouse Operator agrees to (each of the following):
A.
B.
C.
D.
E.

4.

use asphalt, concrete or other DACO-approved base materials;
use rigid self-supporting sidewalls;
provide adequate aeration;
provide an acceptable covering or tarp, as determined by DACO;
move commodities into their USWA licensed warehouse by:
(1) March 31 following initial licensing for rice and soybeans;
(2) July 1 following initial licensing for wheat, corn, grain sorghum and other feed grains; and
(3) Other dates, as established by DACO, for other commodities;

For emergency storage, the Warehouse Operator agrees to move commodities into their USWA licensed
warehouse by:
A. March 31 following initial licensing for wheat, corn, grain sorghum and other feed grains; and
B. Other dates, as established by DACO, for other commodities.

5.

If the Warehouse Operator chooses to continue using the temporary and emergency storage space for
company-owned commodities after the respective final date, the Warehouse Operator agrees to (each of the
following):
A. remove that quantity of the commodity from the DPR;
B. not use the commodity to cover the storage or warehouse receipted obligations of the warehouse; and
C. not allow that quantity of the commodity to be included in any USWA warehouse examination.

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6.

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The licensing of temporary and emergency storage space does not relieve the Warehouse Operator of their
obligations under the USWA. The Warehouse Operator is responsible throughout the authorized period for
the quantity and quality of commodities stored in temporary and emergency storage space to the same
extent as their liability for licensed warehouse storage space. All commodities stored in temporary and
emergency storage space are considered a part of the Warehouse Operator’
s commingled inventory.

Section L –Warehouses Regular for Delivery in Terminal and Futures Contract Markets
For purposes of this Section, terminal and futures contract markets are any grain market designated as a futures
contract market under authority of the Commodity Exchange Act, as amended, (7 U.S.C. § 1-27f).
Warehouse Operators whose licensed facilities are regular for delivery under the rules and regulations of an
exchange or board of trade (i.e., warehouses whose warehouse receipts are accepted for delivery in satisfaction
of futures contracts) agree, when applicable, to (each of the following apply):
1.

maintain financial assurance, in addition to the requirements of sections C and D of this Agreement, in the
maximum amount required of non-licensed Warehouse Operators by the exchange, board of trade or other
agency within the terminal or futures market.

2.

permit, with DACO approval, duly authorized person(s) of any exchange or board of trade in such a
market to accompany USWA examiners to USWA-licensed warehouses regular for delivery to observe an
official examination of the warehouse or to participate in such an examination under the supervision and
direction of the USWA examiner in charge. This (These) person(s) are to be granted access to the
Warehouse Operator’
s business records for warehouse receipts, fire insurance, and grade and weight
certificates that are required to be issued pursuant to this Agreement. In lieu of such examination, DACO
will furnish, at the exchange or board’
s option, a summarized statement of DACO’
s findings.

3.

register all warehouse receipts with the duly authorized registrar and report changes in ownership to the
registrar.

4.

when grain represented by warehouse receipts deliverable in satisfaction of futures contracts in such a
market is discovered to be going out of condition and the Warehouse Operator is unable to condition the
grain or stop the deterioration, the Warehouse Operator agrees to (each of the following apply):
A. immediately notify the registrar and DACO;
Such notification shall include:
(1) the warehouse location in which the grain is stored;
(2) the quantity, kind, class and grade of the grain at the time notification occurred;
(3) the actual condition of the grain, as nearly as can be ascertained;
(4) the reason for the current condition, if known; and
(5) a statement that the grain will be redelivered upon the presentation of the warehouse receipt and
payment of charges.
B. follow instructions received from DACO; and

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C. maintain a warehouse record copy of all notices and correspondence.
5.

The Warehouse Operator may:
A. hold such grain for the owner’
s account, if the owner fails to remove such grain, with any loss of
quality designated for the owner’
s account.
B. fulfill contracts with other stocks under the Warehouse Operator’
s control subject to the USWA, the
regulations and this Agreement.

6.

Warehouse Operators licensed under the USWA operating in such terminal and futures markets and issuing
warehouse receipts deliverable in satisfaction of futures contracts shall assure DACO that the following
conditions exist in order to participate in such a market:
A. Any employee operating in a market, who weighs grain into or out of a USWA-licensed warehouse,
shall be licensed under the USWA to weigh grain.
B. Any appointed registrar of warehouse receipts in such a market shall not be a USWA-licensed
Warehouse Operator or their employee, nor a depositor of grain in a warehouse licensed under the
USWA in such a market.

Section M –Dispute Resolution and Arbitration
1.

A person may initiate legal action in any district court of the United States concerning a claim for
noncompliance or an unresolved dispute with respect to activities authorized under the USWA.

2.

Any claim for noncompliance or an unresolved dispute between the Warehouse Operator or USWA
Provider and another party with respect to activities authorized under the USWA may be resolved by the
parties through mutually-agreed upon arbitration procedures.

3.

In no case will DACO provide assistance or representation to parties involved in a court or arbitration
proceeding arising with respect to activities authorized under the USWA and the regulations thereunder.

Section N –Temporary Suspension
DACO may temporarily suspend the USWA license of the Warehouse Operator, prior to an opportunity for a
hearing.
1.

The grounds for temporary suspension imposed by DACO include, but are not limited to:
A. Violations of, or failure to perform the duties specified, under the USWA, the regulations thereunder
and/or this Agreement;
B. Failure to maintain control of the warehouse;
C. Indication or commission of a fraudulent act;
D. Incapacity or incompetence of the Warehouse Operator;
E. Participation in a field warehousing agreement not approved by DACO;
F. Failure to make timely settlement and payment to depositors;
G. Any action by the Warehouse Operator that may place depositor obligations at risk;

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H. Failure to provide a safe work environment or noncompliance with safety regulations promulgated by
the Occupational Safety and Health Administration of the U.S. Department of Labor;

2.

I.

Failure to ensure adequate security or protection of stored or handled grain from tampering or
adulteration; and

J.

Failure to pay fees required under this Agreement.

Upon temporary suspension, the Warehouse Operator will:
A. Not create further depositor obligations without approval of DACO, specifically:
(1) no USWA inspection and/or weight certificates are to be issued;
(2) no warehouse receipts are to be issued; and
(3) licenses to sample, weigh, inspect and/or grade grain shall be temporarily suspended.
B. Not remove or deliver from inventory any stored grain without prior approval of DACO.
C. Take corrective action within the time frame specified in the temporary suspension.
D. Not represent themselves as licensed in good standing or perform the functions of a licensed USWA
Warehouse Operator.
E. Be notified:
(1) by mail, email, phone or fax of the suspension;
(2) of the reason for the suspension;
(4) of the fact of an on-going review of the situation;
(5) of the time period for expected compliance;
(6) whether public notice will be made of a temporary suspension and of subsequent revocation of the
USWA license;
(7) that revocation of the USWA license may be anticipated for noncompliance; and
(8) that progression from temporary suspension to revocation may be appealed as presented in Section
R, Warehouse Operator Failures and Defaults –Remedies.

Section O - Unjust Enrichment
Upon a finding by DACO that the Warehouse Operator received profits from the sale and replacement of grain
not owned by the Warehouse Operator, the Warehouse Operator shall, when instructed by DACO, pay to the
general group of depositors a pro-rata share of those profits attributed to the amount of depositor-owned grain in
store. The amount of profit will be determined by first-in, first-out inventory method. The profit will be
calculated by comparing the price at which the grain was sold versus the price of the replacement grain. Any
losses resulting from the sale and replacement of depositor-owned grain shall be for the account and the
responsibility of the Warehouse Operator, and are not to be offset against profits paid to the general group of
depositors.

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Section P - Unearned Storage
Upon a finding by DACO that the Warehouse Operator received storage charges from depositors during any
period that the warehouse operator’
s inventory was less than the Warehouse Operator’
s total warehousereceipted and non-warehouse-receipted storage obligations, the Warehouse Operator shall, when instructed by
DACO, reimburse storage charges to depositors on a pro-rated basis for the period that the shortage existed.
Section Q - Fines and Penalties
Warehouse Operators and their employees are subject to the provisions of criminal and civil fraud statutes that
apply to making a false certification or statement, illegal conversion or removal of stored grain from USWAlicensed space, fraudulent adjustments or correction and concealment of operational or financial condition.
Such violations may be punishable by imprisonment, fines and other penalties, including, but not limited to, the
following: 18 U.S.C. §§ 286, 287, 371, 641, 651, 1001 and 1014; and 31 U.S.C. § 3729.
Section R - Warehouse Operator Failures and Defaults - Remedies
1.

DACO may initiate suspension and revocation of the Warehouse Operator's license and liquidation of grain
storage:
A. In the event of (any of the following):
(1) failure to (do any of the following):
(a) perform services required under this Agreement;
(b) maintain minimum financial requirements;
(c) provide proper financial statements; or
(d) maintain control of the warehouse,
(2) commission of a fraudulent act.

2.

Suspension, revocation and liquidation shall be conducted in accordance with the adverse-determination
rules in 7 CFR Part 735, which provide for a hearing before DACO.

3.

The Warehouse Operator may request revocation of their license and, if appropriate, liquidation of
obligations, in which case the USWA license will be revoked and liquidation accomplished, if appropriate.

4.

Upon a finding of failure or Warehouse Operator’
s request or commission of a fraud, DACO may (take any
of these actions):
A. Seize and take possession of (any of the following):
(1) the control of the warehouse facility(ies), office(s), merchandising, hedge accounts, bank accounts
and/or grain inventories involved;
(2) any grain controlled by the Warehouse Operator in any manner;
(3) all books, papers and property used in the operation of the warehouse;
(3) monetary or bartered proceeds of any unauthorized grain sale;
(4) any involved authorized or unauthorized conveyance and its contents; and/or
(5) any grain in transit.

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B. Liquidate the grain contained within the warehouse and use the proceeds to satisfy valid grain claims
as determined by DACO;
C. Recover from the Warehouse Operator necessary expenses incurred by DACO as a result of these
seizure and liquidation procedures; and
D. Exercise a claim on the letter of credit or other financial assurances executed in the name of USDA, if
applicable.
5.

Should a liquidation become necessary, the following is the order of distribution of available liquidated
funds:
A. warehouse-receipted and validated-unreceipted storage obligation claims for:
(1) grain segregated in storage because of special characteristics may be joined with the other grain
in-store; and
(2) claims for grain belonging to the Warehouse Operator, or in which the Warehouse Operator has
financial ownership/interest, will be subordinate to all other claims.
B. disputed storage-obligation claims; and
C. lien-holder claims for warehouse charges and warehouse-owned claims.

6.

If a “
Bankruptcy”occurs, certain terms and conditions of this Agreement may be subject to the authority
of a Federal Bankruptcy Court’
s jurisdiction regarding the disbursement of liquidated inventory proceeds
and associated expenses and charges.

Section S - Fees
1.

FSA is authorized to collect fees to cover the administration of the USWA-licensed warehouse activities.
The schedule of fees is set by DACO.
Warehouse Operators shall pay:
A. Annual Fees. Fees are determined by computing capacity by location (as defined by DACO) and
applying the Annual Schedule of Fees (see Fee Schedule on USWA Forms Web Page). Annual Fees
are invoiced and paid prior to license issuance and annually thereafter. Fee changes will be published
in the Federal Register.
B. Licensing Action Fees. Such fees are invoiced and payable for the following and are paid in advance
of service.
(1) Original and amendment licensing actions; and
(2) Issuing licenses to sample, weigh, inspect and/or grade grain.
C. Fees for Additional, Special Warehouse Examination Services.
(1) Reinstatement warehouse examination fees for suspended licenses are invoiced at the examination
fee rate.

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(2) Examinations requested by Warehouse Operators. These fees are invoiced at an hourly rate as
determined by DACO.
Such additional examination fees are determined by computing original or additional warehouse
capacity at original and amendment examinations and for special examinations. Examination fees
are estimated and deposited in advance of DACO scheduling an examination.
2.

Fees paid in excess of actual fees owed will be refunded to the Warehouse Operator.

3.

All fees collected under this Agreement will be credited to the account that incurs the costs of
administering the warehousing activities and are available without further appropriation and without regard
to fiscal year limitations. A schedule of fees showing the fees described in this section are detailed in a
Federal Register notice.

4.

Fees remaining unpaid will subject the Warehouse Operator to suspension or revocation of their license
upon notification by DACO.

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This Agreement completes the requirements for licensing of USWA Master Code
USWA Code

For:
Warehouse Operator Licensee Headquarters Location

At:
Licensed Location (s)

And is effective this

Day of
day

month

year

Warehouse Licensee

By:
Signature of Authorized Individual

Date (MM-DD-YYYY)

Business Telephone No. with Area
Code
Accepted for Farm Service Agency:
Signature

Please sign this form and return it to:
Kansas City Commodity Office
Warehouse License and Examination Division
Mail Stop 9148
Post Office Box 419205
Kansas City, Missouri 64141-6205
NOTE:

The following statement is made in accordance with the Privacy Act of 1974 (5 U.S.C. 552a) and the Paperwork Reduction Act of 1995, as
amended. The authority for requesting the following information is the regulations at 7 CFR Part 735. The information will be used to
complete the terms of a license and contract between the Warehouse Operator and the Deputy Administrator for Commodity Operations.
Furnishing the requested information is voluntary and no penalty will be imposed for failure to respond. However, a response is required in
order to be considered for a warehouse license (7 U.S.C. 242). This information will not be disclosed outside of the U.S. Department of
Agriculture except as required for law to the Department of Justice and to the Department of Treasury. This information may be provided
to other agencies, IRS, Department of Justice or other State and Federal law enforcement agencies and in response to a court magistrate
or administrative tribunal. The provisions of criminal and civil fraud statutes, including 18 U.S.C. 286, 287, 371, 641, 651, 1001; 1014 and
31 U.S.C. 3729, may be applicable to the information provided.
According to the Paperwork Reduction Act of 1995, an agency may not conduct or sponsor and a person is not required to respond to a
collection of information unless it displays a valid OMB control number. The valid OMB control number for this information collection is
0560-0120. The time required to complete this information collection is estimated to average 30 minutes per response, including the time
for reviewing instructions, searching existing data sources, gathering and maintaining the data needed and completing and reviewing the
collection of information. RETURN THIS COMPLETED FORM TO THE KANSAS CITY COMMODITY OFFICE, POST OFFICE BOX
419205, Mail Stop 9148, KANSAS CITY, MO 64141-6205.

The U.S. Department of Agriculture (USDA) prohibits discrimination in all its programs and activities on the basis of race, color, national origin, age,
disability, and where applicable, sex, marital status, familial status, parental status, religion, sexual orientation, genetic information, political beliefs,
reprisal, or because all or part of an individual's income is derived from any public assistance program. (Not all prohibited bases apply to all programs.)
Persons with disabilities who require alternative means for communication of program information (Braille, large print, audiotape, etc.) should contact
USDA's TARGET Center at (202) 720-2600 (voice and TDD). To file a complaint of discrimination, write to USDA, Director, Office of Civil Rights, 1400
Independence Avenue, S.W., Washington, D.C. 20250-9410, or call (800) 795-3272 (voice) or (202) 720-6382 (TDD). USDA is an equal opportunity
provider and employer.