Iowa Admin. Code r. 21-90.9 - Bonds and irrevocable letters of credit

Bonds filed with the bureau shall be on forms prescribed by the bureau. Irrevocable letters of credit filed with the bureau shall be on the form prescribed by the bureau. Bonds and irrevocable letters of credit shall be written so as to provide funds to protect depositors having storage in the warehouse as described in the particular license issued to a warehouse operator

(1) Agricultural products other than hulk grain. The amount of bond or irrevocable letter of credit to be filed in connection with the storage of agricultural and farm consumable products other than bulk grain shall be determined in accordance with the provisions of Iowa Code section 203C.I3. When the net worth of a licensee is less than that required by Iowa Code section 203C.I3, the licensee may increase the bond or file an irrevocable letter of credit with the bureau to cover the net worth deficiency as provided by Iowa Code section 203C.I3.

(2) Inadequate net worth -storage of hulk grain. When the net worth of a licensee authorized to store bulk grain is less than that required by Iowa Code section 203 C. 6, the licensee may file a bond or an irrevocable letter of credit with the bureau to cover the net worth deficiency as provided by Iowa Code section 203C.6.

(3) Bond or irrevocahle letters of credit as department may require. In addition to the minimum amount as provided by Iowa Code section 203 C. 13 and in addition to an amount to cover the net worth deficiency as provided by Iowa Code section 203 C. 6, the bureau chief may require a bond or an irrevocable letter of credit to be filed in an amount determined by the department for any of the following reasons:

a. Quality deficiency in stored grain;

b. Quantity deficiency in stored grain;

c. Use of temporary storage facilities or emergency storage by licensee; or

d. Documented evidence of the excessive use of lost warehouse receipt release forms by the licensee.

(4) Minimum amount of indemnification. The amount of bond, additional bond, or irrevocable letter of credit prescribed under subrule 90.9(1), 90.9(2) or 90.9(3) is the minimum amount that shall be accepted by the bureau. A bond or irrevocable letter of credit in a higher amount may be filed if the warehouse operator deems it advisable in the operation of the warehouse business.

(5) Quality and quantity deficiency honds. Quality and quantity deficiency bonds shall be for a minimum of 45 days.

(6) Replacement hondor irrevocahle letter of credit. The bureau shall send a written notice and information and forms for filing the required replacement bond or irrevocable letter of credit, unless the bond or irrevocable letter of credit is no longer necessary. If the licensee has not filed a replacement bond or irrevocable letter of credit with the bureau within 60 days of receipt of the notice of cancellation, the department shall automatically suspend the warehouse operator license and cause the licensed warehouse to be inspected by the bureau. If the department does not receive a replacement bond or irrevocable letter of credit from the licensee within 30 days of the suspension of the license, the department shall automatically revoke the warehouse operator license and Cornmence an examination of the licensee. When the licensee's failure to file a replacement bond or irrevocable letter of credit causes revocation of the warehouse operator license, the bureau chief shall give notice of such revocation to each holder of an outstanding warehouse receipt and all persons known to have grain retained in open storage.

(7) Cancellation ofhond or irrevocahle letter of credit. The issuer shall send the cancellation notice to the bureau by certified mail. The notice shall be in accordance with the provisions of the bond or irrevocable letter of credit. The time period for notice of cancellation stated in the bond or irrevocable letter of credit Cornmences on the date when the bureau receives the notice. The bureau shall send written acknowledgment of the cancellation of the bond or irrevocable letter of credit to the issuer and the principal.

This rule is intended to implement Iowa Code sections 203C.6, 203C.11, 203C.12 and 203C.13.

Notes

Iowa Admin. Code r. 21-90.9