Ga. Comp. R. & Regs. R. 40-14-3-.05 - Cotton Warehouses. Electronic Warehouse Receipts

(1) Terms Defined. The following definitions shall apply with respect to this rule unless the context with which they are used dictates otherwise.

(a) Access. The ability when authorized, to read, change, and/or transfer warehouse receipt information retained in the central filing system (CFS).

(b) Central Filing System (CFS). An electronic computer system operated and maintained by an approved Provider where the information relating to warehouse receipts is recorded.

(c) Electronic Warehouse Receipt (EWR). An electronic file in the CFS that contains at the least information required to be included in a warehouse receipt by Rule 40-14-3-.02 (O.C.G.A. 10-4-20) regarding a bale of cotton and a holder.

(d) Holder. An individual or entity in possession, in fact or by a operation of law, of a receipt and, by extension, of the cotton represented thereby.

(e) Issue. EWRs are considered issued when a licensed warehouseman has transmitted all necessary information to an approved Provider, and when such information is entered into the Provider's CFS.

(f) Provider. An individual or entity that maintains EWRs in a CFS, meets the requirements of this part, and has a Provider Agreement with the Commissioner.

(g) Provider Agreement. An agreement entered into between the Commissioner and a Provider that delineates the Provider's responsibilities and defines the relationship between the Provider and the Georgia Department of Agriculture regarding the Provider's maintenance and security of EWRs in the CFS and other requirements of these Rules.

(h) User. An individual or entity that uses the Provider's CFS, not including the Georgia Department of Agriculture in its regulatory capacity.

(i) Consolidated Farm Service Agency (CFSA). A unit, formerly known as the Agricultural Stabilization and Conservation Service, administered by the Secretary of Agriculture of the U.S. Department of Agriculture, or any successor so administered.

(2) Electronic Warehouse Receipts.

(a) These Rules give a Georgia State licensed cotton warehouseman issuing warehouse receipts the option of issuing EWRs instead of paper warehouse receipts for the cotton stored in its facility. Any holder, upon demand, shall be given a paper receipt in lieu of an EWR. Warehousemen must initially issue EWRs in compliance with Rule (o) of this chapter, whereupon any depositor may accept EWRs or decline such acceptance and demand a paper receipt in lieu thereof. EWRs may only be created through a Provider who is approved by the Commissioner.

1. Electronic warehouse receipts (EWRs) for producer owned cotton shall initially be issued in the name and/or Holder identification (Holder ID) or personal identification number (PIN number) of the producer. O.C.G.A. 10-4-19(a) applies only to cotton producers as the initial depositor to the warehouse.

2. Clear and irrevocable title to cotton shall pass upon the transfer of the EWR. Prior to EWR title transfer the warehouseman shall obtain manual signature or electronic entry authorization from the producer for the transfer of his or her bale(s). Such transfer may be authorized by written agreement wherein the producer accepts the use of electronic signatures and has assigned the warehouseman and/or their ginner/agent power of attorney to conduct title transfer of cotton EWRs on his or her behalf. The required warehouse and provider records of EWR title transfers shall constitute compliance with respect to O.C.G.A. 10-4-19(a). A producer may terminate such EWR signature contract at any time by submitting to the warehouseman a written notice of termination provided that a previously authorized EWR title transfer of the cotton has not been negotiated by the producer's authorized agent.

3. A state licensed cotton warehouseman who transfers title or markets a producer's cotton without an authorized endorsement of that producer shall be liable to any party damaged by such transfer or sale.

(b) EWRs issued pursuant to this part establish the same rights and obligations with respect to a bale of cotton as a paper receipt. With the exception of the requirement that warehouse receipts be issued on paper, all other requirements applicable to paper warehouse receipts shall apply to EWRs unless otherwise specified. The person identified as the "holder" of an EWR shall be entitled to the same rights and privileges as the holder of a paper receipt.

(c) EWRs must be issued as single bale receipts.

(d) EWRs may only be issued through a Provider.

(e) Warehousemen must notify all holders of EWR's, at least 30 calendar days before changing Providers, unless otherwise required or allowed by the Commissioner.

(f) A non-negotiable paper receipt (confirmation) shall be promptly transmitted by Providers to storers (initial holders) containing the receipt numbers and other identifying data held by the Provider as EWRs.

(g) Licensed warehousemen may cancel EWRs only when they are the holder of such receipts.

(h) Licensed warehousemen, only as holder, may correct information on the EWR.

(i) Only the holder of the receipt may transfer the receipt to a new holder or place a lien thereon.

(j) A warehouse receipt may contain additional information; provided that such information does not interfere with the information required by Rule 40-14-3-.02 (O.C.G.A. 10-4-20).

(k) The identity of the holder must be included as additional information for every EWR.

(l) An EWR shall only designate one entity as a holder at any one time.

(m) An EWR shall not be issued for a bale of cotton if another receipt, paper or electronic, on such bale is outstanding. No two warehouse receipts may have the same receipt number.

(n) Prior to issuing EWRs, each warehouseman shall request and receive from the Georgia Department of Agriculture a range of consecutive warehouse receipt numbers which the warehouseman shall use for the EWRs it issues.

(o) If a warehouseman has a contract with a Provider, all warehouse receipts issued by the warehouseman shall initially be issued as EWRs.

(p) An EWR may only be issued to replace a paper receipt if the current holder of the warehouse receipt agrees.

(q) EWRs shall not be issued for defective cotton.

(r) Licensed warehousemen must inform the Commissioner of the identity of their approved Provider 60 calendar days in advance of issuing warehouse receipts through that Provider. The Commissioner may waive or modify this 60 day requirement for cause in individual cases.

(s) Rule 40-14-3-.04(7) shall be applicable to lost or destroyed EWRs.

(3) Provider requirements and standards for application.

(a) Financial requirements. All Providers to be approved under this part must meet the following requirements:

1. Have a net worth of at least $25,000;

2. Maintain two insurance policies; one for "errors and omissions" and another for "fraud and dishonesty". Each policy must have a minimum coverage of $2 million; and

3. At cost to the Provider, provide the Georgia Department of Agriculture with computer hardware, modems, software and training as required by the Commissioner suitable to read-only access and download EWR information and data from the Provider; and

4. Execute and file, as required by the Commissioner, a bond for the faithful performance of obligations under the Provider Agreement and for the proper handling of EWR records together with other requirements which will enable the Commissioner to enforce the provisions of the Uniform Commercial Code, Georgia law and these Rules.

(b) The Provider Agreement shall contain, but not be limited to, the following basic elements:

1. Records. The retention period for records.

2. Liability. The liability of the Provider.

3. Transfer of records. The requirements for transferring EWRs to another Provider.

4. Suspension and termination.

(i) The Commissioner may suspend or terminate a Provider's Agreement for cause at any time.

(ii) Hearings and appeals will be conducted in accordance with Chapter 13 of Title 50, the "Georgia Administrative Procedure Act."

(iii) Without specific written authority by the Commissioner, suspended or terminated Providers may not accept, transfer, or execute any other function pertaining to EWRs during the pendency of any appeal or subsequent to such appeal if the appeal is denied.

(iv) The Provider or the Commissioner may terminate the Provider Agreement without cause solely by giving the other party written notice 60 calendar days prior to the termination.

(v) Prior to termination of a Provider Agreement, the Provider must make arrangements for the transfer of the custody of the EWRs to another authorized Provider at no cost to holders or warehousemen. Should there be no assumption of the EWRs and CFS data maintained by the terminated Provider by another Provider with a valid Provider Agreement, the EWRs must be replaced by the warehousemen with paper receipts at the expense of the Provider.

5. Renewal. Each Provider Agreement will be automatically renewed annually on April 30th as long as the Provider complies with the terms contained in the Provider Agreement, the Rules of the Georgia Department of Agriculture and the State Warehouse Act (O.C.G.A. 10-4-1, et seq.).

6. Application form. Application for a Provider Agreement shall be made to the Commissioner upon forms prescribed and furnished by the Georgia Department of Agriculture.

(4) Audits.

(a) The Provider Agreement is governed by provisions of Georgia law. All disputes concerning the Provider Agreement, electronic warehouse receipts or rights thereto shall be within the jurisdiction of the State of Georgia.

(b) The Provider must submit to the Commissioner an annual audit level financial statement that meets the requirements of O.C.G.A. 10-4-10; and an electronic data processing audit. These audits shall encompass the Provider's fiscal year. The completed audits shall be submitted to the Commissioner no later than four calendar months following the end of the Provider's fiscal year. The electronic data processing audit shall result in an evaluation as to current computer operations, security, disaster recovery capabilities of the system, and other systems.

(c) The Provider will grant the Commissioner or his designees unlimited, free access at any time to all records under the Provider's control relating to activities conducted under these Rules and as specified in the Provider Agreement. Requested information and data shall be provided in a timely manner in a format or formats acceptable to the Commissioner.

(5) Provider-user relationship.

(a) Terminology in Provider contracts with users shall be the same as defined terminology contained in the Georgia State Warehouse Act.

(b) The Provider shall not discriminate among its users regarding use of and access to its CFS and must charge fees on an equal basis to all users for its services.

(c) The Provider must furnish the Commissioner with copies of its current schedule of fees and charges as they become effective. Such fees and charges shall be on an equal basis to all users for its services.

(d) Fees charged any user by the Provider must be in effect for a minimum period of one year.

(e) Providers must furnish the Commissioner and all users a 60 calendar day advance notice of their intent to change any fee.

(6) Security.

(a) Security must be in accordance with the standards set out in the Provider Agreement.

(b) Security copies of the system are to be maintained off-site. Both on-site and off site record security must be maintained.

(7) Powers of the Commissioner.

(a) In addition to all other authority and powers granted the Commissioner in the execution of the duties of the Department, as the same shall pertain to the regulation of EWRs for nonfederally licensed warehousemen in the State of Georgia, the Commissioner's authority and power herein shall in all respects correspond to that of the CFSA under the provisions of 7 C.F.R. part 735.

Notes

Ga. Comp. R. & Regs. R. 40-14-3-.05

O.C.G.A. Sec. 10-4-1, 10-4-19 et al.

Original Rule entitled "Cotton Warehouses. Electronic Warehouse Receipts" adopted. F. Oct. 19, 1995; eff. Nov. 8, 1995. Amended: F. Aug. 18, 1998; eff. Sept. 5, 1998.