WA-406 Licensing Agreement for Dry Edible Beans

United States Department of Agriculture

Farm Service Agency

Form WA-406,

Licensing Agreement for Dry

Edible Beans

WA-406 U.S. DEPARTMENT OF AGRICULTURE Form Approved - OMB No. 0560-0120

(04-01-02) Farm Service Agency

United States Warehouse Act

License Number

 

Effective Date

 

LICENSING AGREEMENT FOR DRY EDIBLE BEANS

Contents Page

I. Definitions 1

II. Financials 1

A. Financial Requirements 1

B. Financial Reporting 2

C. Accepting Other Financial Statements 2

D. Special Cases – Assets and Liabilities 3

E. Financial Special Conditions - Public Debt Obligations 3

III. Financial Assurance 3

A. Financial Assurance Requirements – Computation 3

B. Financial Assurance – Acceptable Forms 4

IV. Duties of Warehouse Operator 4

A. General 4

B. Insurance 5

C. Records to be kept in a Safe Place 5

D. Scales and Bin Numbers 6

E. Warehouse Charges 6

F. Business Hours 6

G. System of Accounts 7

H. Excess Storage and Transferring Beans 7

I. Reports Required 9

J. Inspections, Examinations of Warehouse 9

K. Loading Out Without Weighing 9

L. Storage of Identity Preserved Beans 9

M. Containerized Beans Storage 10

N. Delivery of Fungible Beans 10

O. Storage Obligations 10

P. Out of Condition and Damaged Beans 10

Q. Reconditioning Beans 10

R. Warehouse Receipts 10

V. Paper Warehouse Receipts 11

A. Issuance 11

B. Form 12

C. Persons Authorized to Sign Warehouse Receipts 12

D. Copies of Warehouse Receipts 13

E. Printing of Warehouse Receipts 13

F. Return of Warehouse Receipts Prior to Delivery 13

G. Balance Warehouse Receipts 13

H. Lost or Destroyed Warehouse Receipts 13

Table of Contents (Continued)

Contents Page

VI. Service Licenses 14

A. The Applicant 14

B. Examination of Applicant 14

C. Inspection Certificate 15

D. Weight Certificates 15

E. Grade and Weight Certificate 15

F. Duties of Inspector and Weigher 1

VII. Bean Grading 16

VIII.Bean Grade Appeals 16

A. Appeal Procedure 16

B. Ability to Appeal 16

C. Owner Not Compelled to Store Beans 17

IX. Fees 17

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Licensing Agreement for Dry Edible Beans

As a condition of licensing under the United States Warehouse Act (the Act), administered by the Farm Service Agency (FSA), United States Department of Agriculture (USDA), the warehouse operator agrees to the conditions set forth in this agreement and the regulations found at 7 CFR 735:

I. Definitions

Bin. A bin, tank, interstice, or other container in a warehouse in which bulk beans may be stored.

Current assets. Assets, including cash, that are 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 which 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.

Dockage. Dockage in beans as defined by the United States Standards for Beans.

Beans. Dry edible beans used for human consumption.

Licensed inspector and/or weigher. A person licensed under the Act to inspect and/or weigh beans and certificate the condition, grade and/or weight of beans stored at a bean warehouse licensed under the Act.

Net Worth. When liabilities are subtracted from allowable assets, it is the balance amount. 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 do such business and subject to service of process in the State in which the warehouse is located. The FSA will determine what assets are allowable and under what conditions appraisals may be used.

Pick. Any material other than beans, together with undeveloped, shriveled, discolored, damaged, split and small pieces of beans that are picked by hand or eliminated by mechanical means from the lot. The pick is expressed in terms of percentages of the whole weight of the beans including the material to be eliminated.

II. Financials

A. Financial Requirements

1. The warehouse operator agrees to have and maintain:

1. Total net worth of at least the amount obtained by multiplying $0.40 by the warehouse capacity in hundredweight; however, no person may be licensed or remain licensed as a warehouse operator unless that person has allowable net worth of at least $10,000.00 (Any deficiency in net worth above the $10,000.00 minimum may be supplied by an increase in the amount of the financial assurance).

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2. Total allowable current assets equal to or exceeding total current liabilities or evidence acceptable to FSA that funds will be and remain available to meet current obligations.

2. If a warehouse operator is licensed or is applying for licenses to operate two or more warehouses, the maximum capacity of all licensed warehouses, as determined by FSA, will be the capacity considered in determining whether the warehouse operator meets the net worth requirements.

B. Financial Reporting

2. 1. The warehouse operator agrees to provide annually, within 90 calendar days of the fiscal year end, or

more frequently if required, to FSA, financial statements from the warehouse operator’s records

prepared according to generally accepted accounting principles. The FSA may grant one 30 calendar

day extension to provide a financial statement.

2. These financial statements must include but not be limited to:

1. Balance sheet,

2. Statement of income (profit and loss),

3. Statement of retained earnings, and

4. Statement of cash flows.

3. An authorized representative for the warehouse operator must certify under penalty of perjury that the statements, as prepared, accurately reflect the financial condition of the warehouse operator as of the date designated and fairly represent the results of operations for the period designated.

4. The warehouse operator must have the financial statements required audited or reviewed by a certified public accountant or an independent public accountant. Audits and reviews by independent certified public accountants and independent public accountants must 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 FSA may also require an on‑site examination and an audit by an authorized officer or agent of the USDA and request other pertinent information.

C. Accepting Other Financial Statements

3. 1. Financial statements of a parent company which separately identify the financial position of the

warehouse operator as a wholly owned subsidiary and which meet the basic requirements of financial

statements, may be accepted by in lieu of the warehouse operator meeting such requirements.

2. Guaranty agreements from a parent company submitted on behalf of a wholly owned subsidiary may be accepted by FSA as meeting the basic requirements of financial statements if the parent company submits a financial statement which meets the financial requirements and financial reporting requirements.

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D. Special Cases – Assets and Liabilities

1. Subject to such terms and conditions as FSA may prescribe and for the purposes of determining allowable assets and liabilities, appraisals of the value of fixed assets in excess of the book value claimed in the financial statement submitted by a warehouse operator to conform with the requirements may be allowed if:

a. Prepared by independent appraisers acceptable to FSA, and

b. The assets are fully insured against casualty loss.

2. All beans purchased from and remaining in-store at another warehouse must be fully paid for and a warehouse receipt issued in the name of the purchasing warehouse operator for such quantity and quality as the warehouse operator’s records or assets may state.

5. Financial Special Conditions – Public Debt Obligations

The warehouse operator agrees that if they file a bond in the form of either a deposit of public debt obligations of the United States or other obligations which are unconditionally guaranteed as to both interest and principal by the United States:

1. The obligation deposited will NOT be considered a part of the warehouse operator's assets.

2. A deficiency in total allowable net worth as computed may be offset by the licensed warehouse operator furnishing acceptable financial assurance for the difference.

3. The deposit may be replaced or continued in the required amount from year to year.

4. The deposit will not be released until one year after cancellation or revocation of the license that it

supports or until satisfaction of any claim against the deposit, whichever is later.

III. Financial Assurance

4. A. Financial Assurance Requirements – Computation

The warehouse operator agrees:

1. To furnish financial assurance computed at the rate of $0.40 per hundred weight for the storage capacity of the warehouse accommodates when stored in the manner customary to the warehouse as determined by FSA, but not less than $20,000.00 nor more than $200,000.00.

2. When applying for licenses to operate two or more warehouses in the same State, or multiple states, and at the warehouse operator’s election, they may provide financial assurance meeting the requirements of the Act and the regulations to cover all these warehouses within the multiple states and the maximum of $200,000.00 of financial assurance will apply for each State covered.

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3. In case of a deficiency in net worth above the $20,000.00 minimum required, to add to the amount of financial assurance determined in accordance with paragraph (1) of this section an amount equal to that deficiency. If a letter of credit is used for the amount of the deficiency, it must be issued for a period of not less than two years to coincide with the period of any deposit of obligations. Any letter of credit must be clean, irrevocable, issued by a commercial bank payable to Deputy Administrator (DACO) by sight draft and insured as a deposit by the Federal Deposit Insurance Corporation or an institution in good standing regulated by the Farm Credit Administration. The deposit will not be considered an asset of the company.

4. If FSA finds that conditions exist which warrant requiring additional financial assurance, to add to the

amount of financial assurance a further amount to meet such conditions.

B. Financial Assurance – Acceptable Forms

The warehouse operator may offer as financial assurance any of the following:

1. A warehouse operator’s bond, or

2. In the form of a deposit with FSA, United States bonds, United States 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, or

3. In the form of a letter of credit issued to DACO for a period of not less than two years to coincide with the period of any deposit of obligations, or

4. In the form of a certificate of participation in and coverage by an indemnity or insurance fund as approved by FSA, established and maintained by a State, backed by the full faith and credit of the applicable State, and which guarantees depositors of the licensed warehouse full indemnification for the breach of any obligation of the licensed warehouse operator under the terms of the Act and regulations, or

5. Other forms of financial assurance as may be prescribed in the applicable licensing agreement and related addenda deemed acceptable by FSA.

IV. Duties of Warehouse Operator

A. General

The warehouse operator agrees to:

1. At all times exercise such care in regard to beans in custody as a reasonably careful owner would exercise under the same circumstances and conditions.

2. To not differentiate among depositors regarding use of and access to services, except that available storage space may be allocated.

3. Accept all storage and non-storage beans and, at the request of the depositor, deliver out all storage and non-storage beans, other than specially-binned beans, in accordance with the grades of that beans as determined by a person duly licensed to inspect that beans and to certificate the grade and the weight of that beans under the Act and the regulations; or

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4. If an appeal from the determination of an inspector has been taken, that beans will be accepted for and delivered out of storage in accordance with the grades as finally determined in the appeal.

5. Keep the warehouse reasonably clean at all times and free from detritus, rubbish, or accumulations of materials that will create a hazard or interfere with the handling of beans and provide a safe environment in and around the warehouse and will provide all necessary assistance in the execution of inspections and examinations by representatives of FSA.

5. Maintain sufficient inventory of beans in licensed storage with respect to quality and quantity as

evidenced by the outstanding storage obligations (warehouse receipted and not warehouse receipted)

and, in case the grades of stored beans should get out of balance with grades represented by

outstanding storage obligations, to effect the necessary corrective actions to regain the quality and quantity equity.

B. Insurance

1. Requirements

The warehouse operator agrees to:

1. Secure, in their own name, insurance on stored beans against loss or damage by fire, lightning, and other risk under forms of policies which automatically attach for the full replacement value of stored beans, as soon as such beans is placed in their legal custody, and continue such insurance in effect so long as the beans remains in their legal custody. The warehouse operator also agrees to keep a general insurance account showing the policy number, issuing company, amount binding, and expiration dates of all insurance policies and in each instance show the property covered by such policies. This insurance will be lawful policies issued by one or more insurance companies. The warehouse operator must submit such reports to underwriters as may be required under the terms of such policies, and submit copies of such reports to FSA as required.

2. Show, in the tariff to be posted at all delivery points, the conditions under which the beans will be insured against loss or damage by fire, lightning, and other risk.

3. Require that the warehouse operator’s insurance company give 30 calendar days advance notice to FSA of intent to cancel the stock (inventory) coverage.

3. Records to be kept in a Safe Place

The warehouse operator agrees to:

1. Provide a fireproof safe, a fireproof vault, or a fireproof compartment in which to keep, when not in use, all records, books, and papers pertaining to the licensed warehouse, including a current warehouse receipt book, copies of warehouse receipts issued, and canceled warehouse receipts, except that, with the written consent of FSA, upon a showing by the warehouse operator that it is not practicable to provide such fireproof safe, vault, or compartment, may keep such records, books, and papers in some other place of safety, approved by FSA.

2. Retain each canceled 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 FSA in particular cases to carry out the purposes of the Act.

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3. Arrange canceled warehouse receipts in numerical order and otherwise in such manner as may be directed, for purposes of audit, by authorized officers or agents of the USDA and FSA.

3. Scales and Bin Numbers

The warehouse operator agrees to:

1. Be equipped with suitable scales in good order, and so arranged that all beans, whether for storage or for non-storage purposes, can be weighed in and out of the warehouse. The scales in any warehouse must be subject to examination by authorized officers or agents of FSA and to disapproval by FSA. If disapproved, any weighing apparatus must not thereafter be used in ascertaining the weight of beans for the purposes of this Act, until such disapproval is withdrawn.

2. Cause both bulk beans bins and compartments for sacked beans of all warehouses licensed under the Act to be identified by means of clearly discernible numbers securely affixed. The series of numbers to be used must be approved by FSA. Bulk beans 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 as clearly showing the space covered by each number.

3. Apply for licensing at all facilities controlled by them at a specific location, among which beans may be transferred without weighing, unless those facilities are specifically exempted by FSA. The warehouse operator must not select, randomly, the bins to be licensed unless specifically exempted by FSA.

3. Warehouse Charges

The warehouse operator must:

1. Not make any unreasonable or exorbitant charge for services rendered.

2. Before a license to conduct a warehouse is granted under the Act, file, with FSA, a copy of their rules and a schedule of charges to be assessed depositors.

3. Before making any change in such rules or schedule of charges, file with FSA a new rule statement or schedule of charges.

4. Post conspicuously where the depositor may access it at all delivery points, a copy of the current rules and schedule of charges.

3. Business Hours

The warehouse operator agrees to:

1. Be open for the purpose of receiving beans for storage and delivering beans out of storage and for settlement purposes every normal business day for a period of not less than six hours between the hours of 8 a.m. and 6 p.m. The warehouse operator must post their business hours at the public entrance to the office and to their licensed warehouse.

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2. In case the warehouse is not to be kept open as required, state, in the posted notice, the period during which the warehouse is to be closed and the name, the address, and telephone number of the person who will be authorized to receive and deliver beans stored in the warehouse.

G. System of Accounts

The warehouse operator agrees to:

1. Have and maintain a system of accounts approved for the purpose by FSA. This system of accounts must include an accurate and concise daily position record showing, as activity occurs, for each bag or lot of beans on a daily basis:

a. Total beans unloaded into the warehouse,

5. b. Total beans loaded out of the warehouse,

c. Total bean adjustments,

4. Total beans remaining in the warehouse at the close of each business day,

5. Total bean obligations transferred to another warehouse,

6. Total negotiable and non-negotiable warehouse receipts issued, canceled, and balance

outstanding,

g. Total increase, decrease, and outstanding un-receipted obligations belonging to others,

8. Total beans owned by the warehouse operator for which warehouse receipts have not been issued, and

9. Total bean obligations.

2. Maintain a separate set of records for each depositor showing the depositor, the total quantity, the number of bags in each lot, the grade if known, the location in the warehouse, the mark or stencil identification of identity-preserved beans, the date received and delivered out of storage deposited or redelivered which must include a detailed record of all money received and disbursed and, if applicable, all insurance policies taken out and canceled on request of each depositor. These records will be maintained accurately and concisely as activity occurs. The warehouse operator must 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 FSA in particular cases to carry out the purposes of the Act.

3. Maintain similar records and information for any non-storage beans handled through the warehouse. Records required with respect to non-storage beans 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 beans is delivered from the warehouse.

H. Excess Storage and Transferring Beans

The warehouse operator agrees that:

1. If at any time beans stored in the warehouse exceeds the capacity for which the warehouse is licensed, the warehouse operator will immediately notify FSA of the fact and the location of excess storage

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2. If they desire to transfer stored beans to another warehouse (receiving), the warehouse operator may do so either by physical movement of the stored beans or by other methods accepted as standard industry practice subject to the following terms and conditions:

a. The transferring (shipping) warehouse operator's accepted rules or schedule of charges must contain notice that the warehouse operator may transfer beans according to conditions prescribed by FSA

b. The warehouse operator must request permission in writing to FSA.

6. c. For purposes of transferring beans, a receiving warehouse means a warehouse operated by a

warehouse operator who holds an unsuspended, unrevoked beans license under the Act, or a

warehouse operated by a warehouse operator who holds an effective warehouse license for the

public storage of beans issued by a State that has financial, bonding and examination requirements

for the benefit of all depositors or, in the case of warehouses operating in a State without licensing

authorities, warehouses with approved Uniform Beans and Rice Storage Agreements with the

Commodity Credit Corporation (CCC).

d. Non‑negotiable warehouse receipts must be obtained promptly by the shipping warehouse operator from the receiving warehouse operator for all warehouse receipted or open storage transferred beans. Such warehouse receipts must have printed or stamped in large bold or outline letters diagonally across the face and covering the face from corner to corner the words ``NOT NEGOTIABLE''. In the case of beans shipped to a warehouse in a State that doesn’t allow issuance of non-negotiable warehouse receipts, the receiving warehouse operator will issue an affidavit specifying the kind, grade and quantity of the beans received from the shipping warehouse operator. These receipts and affidavits are not valid for collateral purposes. They must be retained by the shipping warehouse operator to be presented to and used by authorized officers and agents of the USDA, and FSA lieu of an on‑site inventory. The beans covered by these warehouse receipts and affidavits is not the property of either the receiving or shipping warehouse operator but held in trust by both solely for the benefit of the depositors whose bailed beans was transferred individually or collectively and which the depositor or the depositor's transferee retains title.

e. The shipping warehouse operator’s financial assurance amount must be increased to consider the addition of the transferred beans to the licensed capacity of the warehouse with the net worth requirements based on the total of the licensed capacity and the transferred beans. The receiving warehouse operator must not incur storage obligations that exceed the licensed or approved capacity of their warehouse.

f. The shipping warehouse operator retains storage obligation to the owners of all beans deposited in the warehouse for storage, whether transferred or retained, and is, except as otherwise agreed upon under paragraph (g), required to redeliver the beans upon demand to the depositor or the depositor's transferee at the warehouse where the beans was first deposited for storage.

g. The owner of beans deposited for storage at the warehouse must make settlement and take delivery at the warehouse where the beans was first deposited for storage, unless the owner of the beans, with the consent of both the shipping warehouse operator and the receiving warehouse operator, elects to take delivery at the warehouse to which beans was transferred.

h. Nothing in this agreement will in any way diminish the right of the owner of the beans to receive on delivery, or the obligation of the warehouse operator of a licensed warehouse from which the product is transferred, to deliver to the owner, beans in the quantity, and of the kind, quality and grade, called for by the warehouse receipts or other evidence of storage.

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i. Recording and retention of non‑negotiable warehouse receipts received as a result of transferring beans under this section will be subject to the requirements for warehouse receipts.

j. A receiving warehouse operator must not transfer or offset to another warehouse, in any manner, their obligation to the shipping warehouse operator.

9. Reports Required

The warehouse operator agrees to:

1. When requested by FSA, make such reports, on forms prescribed and furnished for the purpose by FSA, concerning the condition, contents, operation, and business of the warehouse.

2. Keep on file, as a part of the records of the warehouse, for a period of three years after December 31 of the year in which submitted, an exact copy of each report submitted.

9. Inspections, Examinations of Warehouse

The warehouse operator agrees to permit any officer or agent of the USDA, authorized by FSA, to enter and inspect or examine on any business day during the usual hours of business, any warehouse for which they hold a license, the office, the books, records, papers, and accounts relating, and the contents thereof and will furnish that officer or agent the assistance necessary to enable making any inspection or examination.

9. Loading Out Without Weighing

The warehouse operator may:

1. Load out identity-preserved beans without weighing for which the owner has agreed to assume all shortages, provided that the warehouse receipts covering this beans have been surrendered to the warehouse operator.

2. At the request of the owner, load out fungible beans without weighing. Destination weights are to be obtained and posted as soon as possible. Any interim weight certificate issued by the shipping warehouse operator must clearly show the weight as an estimate.

L. Storage of Identity Preserved Beans

1. The warehouse operator may elect not to accept and store identity preserved beans.

2. If electing to accept and store bulk identity-preserved beans, the warehouse operator agrees to:

a. Clearly mark with identification each bag or container.

b. Maintain records that clearly show the location of all identity-preserved beans stored in the

warehouse.

c. Sacked beans or bulk beans to be specially binned must have an identification tag or stencil on

7. bags to make readily identifiable the lot number, the number of the warehouse receipt issued, the

number of sacks in the lot, the variety or type of bean, the grade, if determined, and their net

weight and date entering storage.

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M. Containerized Beans Storage

The warehouse operator agrees to keep containerized beans stored in an orderly manner so as to permit easy access to all lots and to facilitate inspecting, sampling, counting and identification of each lot.

14. Delivery of Fungible Beans

The warehouse operator must:

1. Upon proper presentation of a warehouse receipt for any beans, other than identity‑preserved beans, and, if requested by the warehouse operator, payment of all accrued charges associated with the storage of the beans, deliver to the depositor or lawful holder of the warehouse receipt beans of the grade and quantity named in that warehouse receipt; or

2. Upon proper presentation of a warehouse receipt for any identity-preserved beans and, if requested by the warehouse operator, payment of all accrued charges associated with the storage of the beans, deliver to the person lawfully entitled thereto, the identical beans stored in the warehouse.

O. Storage Obligations

The warehouse operator, while authorized to commingle beans in store, is liable to each depositor for the care and delivery of beans stored as if the beans were separately stored. The warehouse operator is free to store in any manner that results in their ability to produce beans, as a bailee for hire, that meets or exceed the quantity and quality specifications of the warehouse receipt or the original delivery receipt (scale ticket).

16. Out of Condition and Damaged Beans

The warehouse operator may refuse to accept beans offered for storage if its condition is such that it will affect the condition of existing beans in the warehouse unless the warehouse operator chooses to separately bin and condition the beans.

16. Reconditioning Beans

The warehouse operator agrees to:

1. Immediately notify the owners and FSA when beans in store are going out of condition and where the warehouse operator is unable to condition the beans and stop the deterioration , and

2. Follow instructions received.

8. R. Warehouse Receipts

1. The warehouse operator when choosing the option to issue Electronic Warehouse Receipts (EWRs) instead of paper warehouse receipts for the agricultural product(s) stored in their warehouse agrees to:

a. Only issue EWRs through a provider whom FSA has approved.

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b. Receive written authorization from FSA at least 30 calendar days before changing providers. Upon authorization a warehouse operator may request their current provider to transfer their EWR data from its Central Filing System (CFS) to the CFS of the approved provider whom they select. Warehouse operators must notify all holders of EWRs by inclusion in the CFS at least 30 calendar days before changing providers, unless otherwise required or allowed by FSA. Warehouse operators may only change providers once a year.

3. Cancel EWRs only when they are the holder of the receipt(s).

4. Correct information on the EWR only with written notification to the provider.

5. Before issuing EWRs, request and receive from FSA a range of consecutive warehouse receipt numbers which the warehouse operator will use consecutively for issuing their EWRs.

6. Issue warehouse receipts initially as EWRs.

7. Inform FSA of the identity of their provider 60 calendar days in advance of issuing EWRs through that provider. The FSA may waive or modify this 60 calendar day requirement as set forth under §735.2(b).

2. The warehouse operator will ensure that an issued EWR establishes the same rights and obligations with respect to an agricultural product as a paper warehouse receipt, and possess the following attributes that:

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 must be included as additional information for every EWR.

4. An EWR will only designate one entity as a holder at any one time.

5. An EWR will not be issued for a specific identity preserved or a commingled agricultural product lot if another receipt, whether paper or electronic, representing the same specific identity preserved or commingled lot of agricultural product is outstanding. No two warehouse receipts issued by a warehouse operator may have the same receipt number or represent the same agricultural product lot.

6. An EWR may only be issued to replace a paper receipt if requested by the current holder of the paper warehouse receipt.

7. Allows a ‘holder’ the option to authorize any other user of a provider to act on their behalf with respect to their activities with their provider. This authorization must be in writing, acknowledged, and retained by the provider.

8. Provisions of §735.300(c) will be applicable to lost or destroyed EWRs.

9. Only the current EWR holder may request a paper warehouse receipt in lieu of a EWR with respect to an agricultural product.

V. Paper Warehouse Receipts

A. Issuance

The warehouse operator agrees to:

1. Issue warehouse receipts for any beans stored in a warehouse at the request of a depositor.

2. Prior to issuing any warehouse receipt under the Act, obtain a copy of the original weight certificate, original inspection certificate or original inspection and weight certificate representing the beans. The warehouse operator’s records must identify the certificate (s) used as the basis for issuing the receipt and retained for a period of three 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 U. S. Registrar meet this requirement.

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B. Form

1. Every warehouse receipt, whether negotiable or non-negotiable, issued for beans stored in a licensed warehouse must, in addition to complying with the requirements of section 11 of the Act, embody within its written or printed terms the following:

1. The name of the warehouse operator and the designation, if any, of the warehouse.

2. The warehouse operator’s license number.

3. The Commodity Credit Corporation (CCC) contract code number, if any.

4. A statement whether the warehouse operator is incorporated or unincorporated, and if incorporated, under what laws.

e. 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.

f. A statement conspicuously placed, whether or not the beans is insured, and, if insured, to what extent, by the warehouse operator against loss by fire, lightning, or other risk.

g. The net weight including dockage or pick of the beans.

h. In the case of beans the identity of which is to be preserved, its identification or location in accordance with the regulations.

i. The words "Not Negotiable," or "Negotiable," according to the nature of the receipt, clearly and conspicuously printed or stamped thereon.

j. A blank space designated for the purpose in which the condition of the beans shall be stated.

k. A blank space designated for the purpose in which the variety of the beans shall be stated.

12. A statement indicating the amount of shrinkage and/or pickage agreed upon between the depositor and the warehouse operator, in the case of nonidentity preserved beans.

2. Every negotiable warehouse receipt issued must, in addition to conforming with the requirements of paragraph (a), embody within its written or printed terms, a form of endorsement which may be used by the depositor, or their authorized agent, for showing the ownership of, and liens, mortgages, or other encumbrances on the beans covered by the receipt.

3. The grade stated in a warehouse receipt must be stated as determined by the inspector who last inspected and graded the beans or, if an appeal has been taken, the grade will be stated on such receipt in accordance with the grade as finally determined in such appeal.

4. If the warehouse operator issues a warehouse receipt omitting the statement of grade on request of the depositor, such receipt will have clearly and conspicuously stamped or written in the space provided for the statement of grade the words "Not graded on request of depositor."

5. If the warehouse operator issues a warehouse receipt under the Act omitting any information not required to be stated, for which a blank space is provided in the form of the receipt, a line will be drawn through such space to show that such omission has been made purposely.

C. Persons Authorized to Sign Warehouse Receipts

The warehouse operator must file with FSA, the name and genuine signature of each person authorized to sign warehouse receipts for the warehouse operator, promptly notify FSA of any changes as to persons authorized to sign, file the signatures of such persons, and will be bound by such signatures the same as if the warehouse operator, had personally signed the receipt.

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D. Copies of Warehouse Receipts

The warehouse operator agrees that at least one copy of all warehouse receipts must be made and, except skeleton and microfilm copies, have clearly and conspicuously printed or stamped on the face the words “Copy – Not Negotiable”.

E. Printing of Warehouse Receipts

The warehouse operator agrees to issue only warehouse receipts that:

1. Are in a form prescribed by FSA.

9. 2. Are on distinctive paper or card stock specified by FSA.

3. Printed by a printer with whom FSA has an agreement and bond for such printing.

10. 4. On paper and/or card stock tinted with ink in the manner prescribed by the agreement.

F. Return of Warehouse Receipts Prior to Delivery

The warehouse operator agrees to:

1. Not deliver any beans for which they have issued a negotiable receipt until the receipt has been returned to the warehouse operator and canceled; and

2. Not deliver beans for which they have issued a non‑negotiable receipt until such receipt has been returned, or they have obtained from the holder or agent, a written order and a receipt upon delivery of 90% (ninety percent) of the quantity.

G. Balance Warehouse Receipts

The warehouse operator, upon request of the holder, may issue a warehouse receipt for previously warehouse-receipted beans, the receipt for which has been canceled. The balance warehouse receipt must show the number and issuance date of the original warehouse receipt.

H. Lost or Destroyed Warehouse Receipts

11. 1. The warehouse operator may issue a new warehouse receipt subject to the same terms and

conditions, and bearing on its face the number and the date of the original receipt when presented

with the case of a lost or destroyed warehouse receipt.

2. Before issuing a replacement warehouse receipt, the warehouse operator must require the holder or other person applying therefor to make and file with the warehouse operator:

a. An affidavit showing that the holder is lawfully entitled to the possession of the original warehouse receipt; that the holder has not negotiated or assigned it; how the original receipt was lost or destroyed; and, if lost, that diligent effort has been made to find the warehouse receipt without success.

WA-406 (Proposal 1) Page 14 of 20

b. A bond in an amount double the value, at the time the bond is given, of the agricultural product represented by the lost or destroyed warehouse receipt. This bond will be in a form approved for the purpose by FSA and will be conditioned to indemnify the warehouse operator against any loss sustained by reason of the issuance of this warehouse receipt. The bond will have as surety a surety company which is authorized to do business, and is 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 FSA.

3. Auditing Canceled Warehouse Receipts

The warehouse operator agrees to forward canceled receipts for auditing, as requested, to FSA.

VI. Service Licenses

A. The applicant for service licensing under the Act:

1. Must make application for license to inspect and/or weigh beans to FSA on forms furnished by

FSA. Each application must:

a. Be signed by the applicant.

b. Contain or be accompanied by a statement from the warehouse that the applicant is acceptable to such warehouse operator.

c. If seeking inspection licensing, certification that the applicant can correctly inspect beans in

accordance with the official standards of the United States, or in the absence of such

standards, in accordance with any standards approved by FSA.

d. If seeking weighing licensing, certification that the applicant can correctly weigh beans.

e. Furnish such additional information as requested by FSA.

B. Examination of Applicant

As a service license applicant, submit to an examination or test to show ability to properly inspect, grade and/or weigh beans, as the case may be, and also make available for inspection copies of the standards of inspection and grading and the weighing apparatus as the case may be, used or to be used.

C. Inspection Certificate

1. Each inspection certificate issued under the Act by an inspector must be in a form approved by FSA, and include the following information within its terms:

a. The caption "United States Warehouse Act, Bean Inspection Certificate”.

12. b. Whether it is an original, a duplicate, or other copy, and that it is not negotiable.

c. The name and location of the warehouse in which the beans are or are to be stored.

d. A statement showing whether the inspection covers beans moving into or out of the

warehouse.

e. The date of the certificate.

f. The consecutive number of the certificate.

g. The approximate quantity of beans covered by the certificate.

h. The kind of beans covered by the certificate.

i. Any identification mark or number on identity-preserved bean lots.

WA-406 (Proposal 1) Page 15 of 20

j. The grade, dockage, or pick and condition of the beans, as determined by such duly licensed

inspector, in accordance with the United States Standards for Beans.

k. A blank space for general remarks upon the condition of the beans, if necessary.

l. The location of the beans at the time of inspection.

13. m. A statement that the certificate is issued by an inspector licensed under the Act and the

14. regulations thereunder.

14. The signature of the inspector who inspected and graded the beans.

2. In addition to the provisions of paragraph 1, the inspection certificate may include any other matter consistent with the Act or the regulations, provided the authorization of the FSA is first secured.

D. Weight Certificates

1. Each weight certificate issued under the Act by an inspector must be in a form approved for the purpose by FSA, and include the following information within its terms:

a. The caption "United States Warehouse Act, Bean Weight Certificate".

15. b. 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 beans are or are to be stored.

4. Whether the beans is weighed into or out of the warehouse.

5. The date of the certificate.

6. The consecutive number of the certificate.

7. The net weight of the beans.

8. The location of the beans at time of weighing.

9. The identification number or mark of each lot of beans, the identity of which is or is to be preserved.

10. A statement that the certificate is issued by a weigher licensed under USWA and the regulations thereunder.

11. The signature of the weigher.

2. In addition to the provisions of paragraph 1, the weight certificate may include any other matter consistent with the Act or the regulations in this part provided the authorization of FSA is first secured.

E. Grade and Weight Certificate

The grade and weight of any beans, ascertained by an inspector and a weigher, may be stated on a certificate meeting the combined requirements of subsections C and D; provided, the form of the certificate is approved for the purpose by FSA.

F. Duties of Inspector and Weigher

Each inspector and weigher whose license remains in effect must:

1. When given beans to inspect, grade and/or weigh under conditions which permit proper inspection

and weighing, without discrimination, as soon as practicable and upon reasonable terms, perform

the requested services for which licensed.

2. Issue a certificate of grade for any beans only if the inspection and grading thereof is based upon a

16. correct and representative sample of the beans.

WA-406 (Proposal 1) Page 16 of 20

3. As soon as possible after grading any beans and not later than the close of business on the next

following business day, make accessible to the parties interested in a transaction in which the

beans is involved at the location of the license, a copy of the inspection certificate issued by the

licensed inspector.

4. Keep the license to inspect, grade and/or weigh conspicuously posted at the place where those

duties are performed or as directed by FSA.

5. Permit any authorized officer or agent of the USDA or FSA or their designee to inspect or

examine, on any business day during the usual hours of business, their books, papers, records, and

accounts relating to the performance of their duties under the Act and, with the consent of the

warehouse operator concerned, assist any such officer or agent in the inspection or examination as

far as it relates to the performance of the duties of such inspector or weigher under the Act.

6. Keep for a period of one year, in a place accessible to interested parties, a copy of each certificate

issued and file the certificate with the warehouse in which the beans covered by the certificates is

stored.

VII. Bean Grading

United States Bean Standards

The United States Standards for Beans, [34 FR 7863, May 17, 1969, effective November 10, 1997], are hereby adopted as the official bean standards for the purposes of the Act and the regulations.

VIII. Bean Grade Appeals

A. Appeal Procedure

The depositor, holder of the warehouse receipt or the warehouse operator may make an appeal as to the grade of a lot of beans stored or to be stored in a warehouse.

1. If a question arises as to whether the kind, grade or other class, or condition of beans was

correctly stated in a receipt or inspection certificate issued under the Act or the regulations in this part, the warehouse operator concerned or any person financially interested in the beans involved may, after reasonable notice to the other party, submit the question to FSA, who may appoint a committee to make a determination.

2. The decision of the committee shall be final unless FSA directs a review of the question.

3. Immediately upon making its decision, the committee shall issue a certificate embodying its

findings to the appellants and to the licensee or licensees involved.

4. If the decision of the committee be that the kind, grade or other class or condition of any identifiable lot was not correctly stated, a new receipt or certificate embodying therein the statement of kind, grade or other class or condition in accordance with the findings of the committee.

5. All necessary and reasonable expenses of such determination shall be borne by the losing party, unless FSA decides that the expense shall be prorated between the parties.

B. Ability to Appeal

18. 1. No person licensed under the Act, will, directly or indirectly by any means whatsoever, deter

or prevent or attempt to deter or prevent any party from taking an appeal.

2. 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 any appeal.

WA-406 (Proposal 1) Page 17 of 20

C. Owner Not Compelled to Store Beans

Nothing in this agreement will require the owner or agent to store such beans with the warehouse operator after the appeal inspection, but if the beans is stored it will be accepted for and delivered out of storage in accordance with the grade as finally determined in such appeal.

IX. Fees

The Office of the Secretary [delegated to the Deputy Administrator, Commodity Operations] is authorized, by the enabling legislation, to collect fees to cover the administration of the activity. The rates of fees are set by DACO. All fees collected under this agreement will be credited to the account that incurs the costs of administering the activity and are available without further appropriation and without regard to fiscal year concerns. A schedule showing the current fees or any annual fee changes will be provided as an addendum to the licensing agreement.

The fees for dry edible bean warehouses are detailed in the attached addendum.

WA-406 (Proposal 1) Page 1 of 20

This agreement forms a part of the license, number			 			for
			License Number
 						at
Warehouse Operator
 				and is effective	 			.
Licensed Location					Date
 
Warehouse Operator
By  
Date
Farm Service Agency

The U.S. Department of Agriculture (USDA) prohibits discrimination in all its programs and activities on the basis of race, color, national origin, gender, religion, age, disability, political beliefs, sexual orientation, and martial or family status. (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 USDA, Office of Civil Rights, Room 326-W, Whitten Building, 1400 Independence Avenue, S.W. , Washington, D.C. 20250-9410 or call (202) 720-5964 (voice or TDD). USDA is an equal opportunity provider and employer.

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 735. The information will be used to complete the terms of a license and contract between the warehouse operator and the Deputy Administrator, 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, KANSAS CITY, MO 64141-6205.