Federal Grain Storage Insurance Act of 1983

for grain, who resides in a State and who is entitled to possession or payment for the grain represented by such ticket, receipt, or other document;

(6) the term "grain" means barley, corn, cotton, dry edible beans, flaxseed, grain sorghum, oats, rice, rye, soybeans, sunflower seeds, wheat, and any other commodity which is commonly classified as a grain and traded at, or stored in, a warehouse;

(7) the term "warehouse" has the same meaning given to such term under section 2 of the United States Warehouse Act (7 U.S.C. 242);

(8) the term "Secretary" means the Secretary of Agriculture; and

(9) the term "State" means a State, the District of Columbia, the Commonwealth of Puerto Rico, Guam, American Samoa, the Virgin Islands, the Northern Mariana Islands, and the Trust Territory of the Pacific.

CREATION OF CORPORATION

SEC. 3. There is hereby established within the Department a corporation to be known as the Federal Grain Storage Insurance Corporation. The office of the Corporation shall be located in the District of Columbia.

MANAGEMENT OF CORPORATION

SEC. 4. (a)(1) The management of the Corporation shall be vested in a Board of Directors, subject to the general supervision of the Secretary.

(2) The Board shall consist of—

(A) the Manager of the Corporation;

(B) the Under Secretary or Assistant Secretary of Agriculture responsible for the Federal grain storage insurance program;

(C) the Under Secretary or Assistant Secretary of Agriculture responsible for the farm credit programs of the Department;

(D) two persons from private life who are experienced in the grain storage business;

(E) eight persons from private life who are actively engaged in farming;

(F) one person to represent the interests of private lenders who make a substantial portion of their loans for agricultural purposes and to represent the interests of the Farm Credit System, as defined in section 1.2 of the Farm Credit Act of 1971 (12 U.S.C. 2002); and

(G) one person who is experienced as a trustee in warehouse bankruptcies. (3) Members of the Board described in clauses (D) through (G) of paragraph (2) shall be appointed by, and hold office at the pleasure of, the Secretary. The Secretary shall not be a member of the Board. In order to insure that diverse agricultural interests in the United States are at all times represented on the Board, persons appointed under paragraph (2)(E) shall be appointed from different geographic areas of the United States.

(b)(1) Any vacancy in the Board shall not affect its powers, but shall be filled in the same manner in which the original appointment was made.

(2) Eight members shall constitute a quorum for the transaction of the business of the Board.

(c)(1) Members of the Board who are employed in the Department shall receive no additional compensation for their services as Directors, but may be paid necessary traveling and subsistence expenses when engaged in business of the Corporation outside of the District of Columbia.

(2) Members of the Board who are not employed by the Federal Government shall be paid such compensation for their services as Directors as the Secretary shall determine, but such compensation may not exceed—

(A) the daily equivalent of the rate prescribed for grade GS-18 under section 5332 of title 5, United States Code, when actually employed; and

(B) actual necessary traveling and subsistence expenses, or a per diem allowance in lieu of subsistence expenses, as authorized by section 5703 of title 5, United States Code, for persons in Government service employed intermittently, when on the business of the Corporation away from their homes or regular places of business.

(d) The Manager of the Corporation shall be its chief executive officer and shall have such power and authority as may be conferred upon him by the Board. The Manager shall be appointed by, and hold office at the pleasure of, the Secretary.

POWERS

SEC. 5. (a) The Corporation

(1) shall establish and administer a Federal grain storage insurance program in accordance with this Act;

(2) shall investigate and report to the Secretary on violations of this Act;

(3) shall recommend to the Secretary, from time to time, amendments for the improvement of this Act;

(4) may use the resources, personnel, and facilities of the Agricultural Stabilization and Conservation Service of the Department;

(5) may cooperate with State officials charged with the enforcement of State statutes governing warehouses;

(6) shall have succession in its corporate name;

(7) may adopt, alter, and use a corporate seal, which shall be judicially noticed;

(8) may purchase or lease and hold such real and personal property as it considers necessary or convenient in the transaction of its business and may dispose of such property held by it upon such terms as it considers appropriate; (9) may sue and be sued in its corporate name and intervene in any court in any suit, action, or proceeding in which it has an interest, except that no attachment, injunction, garnishment, or other similar process, mesne or final, shall be issued against the Corporation or its property;

(10) may adopt, amend, and repeal bylaws, rules, and regulations governing the manner in which its business may be conducted and may exercise and enjoy the powers granted to it by law;

(11) may use the United States mails in the same manner as the other executive agencies of the Government;

(12) shall assemble data for the purpose of establishing actuarially sound premiums for insurance on grain stored in certified warehouses;

(13) shall determine the character and necessity for its expenditures under this Act and the manner in which they shall be incurred, allowed, and paid, without regard to any other laws governing the expenditure of public funds, and such determinations shall be final and conclusive upon all other officers of the Government;

(14) may enter into and carry out contracts or agreements necessary in the conduct of its business, as determined by the Board, except that the Corporation may not enter into or carry out contracts or agreements to provide insurance under this Act; and

(15) shall have such powers as may be necessary or appropriate for the exercise of the powers specifically conferred upon the Corporation by this Act and all such incidental powers as are customary in corporations generally. (b) The district courts of the United States, including the courts of bankruptcy and the district courts of the District of Columbia and of any territory or possession, shall have exclusive original jurisdiction, without regard to the amount in controversy, of all suits brought by or against the Corporation. Any suit against the Corporation shall be brought in the District of Columbia, or in the district wherein the plaintiff resides or is engaged in business.

(c) State and local laws or rules shall not apply to contracts or agreements of the Corporation or the parties thereto to the extent that such contracts or agreements provide that such laws or rules shall not apply, or to the extent that such laws or rules are inconsistent with such contracts or agreements.

PERSONNEL

SEC. 6. (a) Except as provided in subsection (b), the Secretary shall

(1) appoint, pursuant to the provisions of title 5, United States Code, governing appointments in the competitive service, such officers and employees as may be necessary for the transaction of the business of the Corporation;

(2) fix their compensation in accordance with chapter 51, and subchapter III of chapter 53, of title 5, United States Code;

(3) define their authority and duties; and

(4) delegate to them such of the powers vested in the Corporation as the Secretary determines appropriate.

(b) Personnel paid by the hour, day, or month when actually employed may be appointed and their compensation fixed without regard to the provisions, chapter, and subchapter described in subsection (a).

MONEYS OF THE CORPORATION

SEC. 7. (a)(1) To carry out this Act, the Corporation is authorized to issue to the Secretary of the Treasury notes or other obligations in an aggregate amount of not

to exceed $250,000,000, in such forms and denominations, bearing such maturities, and subject to such terms and conditions, as may be prescribed by the Secretary of the Treasury. Such notes or other obligations shall bear interest at a rate determined by the Secretary of the Treasury, taking into consideration the current average market yield on outstanding marketable obligations of the United States of comparable maturities during the month preceding the issuance of the notes or other obligations.

(2) The Secretary of the Treasury shall purchase any notes and other obligations issued under this subsection. To purchase such notes and obligations, the Secretary of the Treasury is authorized to use as a public debt transaction the proceeds from the sale of any securities issued under the Second Liberty Bond Act (31 U.S.C. 752 et seq.). The purposes for which securities may be issued under such Act are extended to include any purchase of such notes and obligations. The Secretary of the Treasury may at any time sell any of the notes or other obligations acquired by him under this subsection. All redemptions, purchases, and sales by the Secretary of the Treasury of such notes or other obligations shall be treated as public debt transactions of the United States.

(b) All money of the Corporation not otherwise used may be

(1) deposited with the Treasury of the United States or, with the approval of the Secretary of the Treasury, in any Federal Reserve or other bank, subject to withdrawal by the Corporation at any time; or

(2) with the approval of the Secretary of the Treasury, invested in obligations of the United States, a State, or a political subdivision of a State or in obligations guaranteed as to principal and interest by the United States.

(c) The Corporation shall at all times maintain complete and accurate books of account and shall file with the Secretary such reports concerning the business of the Corporation as the Secretary may require.

(d) The Corporation, including its franchise, capital, reserves, surplus, income, and property, shall be exempt from all taxation now or hereafter imposed by the United States, a State, or a county, municipality, or local taxing authority.

GRAIN STORAGE INSURANCE FUND

SEC. 8. (a) There shall be established in the Treasury of the United States a Grain Storage Insurance Fund which shall be available, up to an amount determined by the Corporation, without fiscal year limitation

(1) to pay such insurance claims as may arise under this Act;

(2) to repay any notes or obligations issued under section 7(a); and

(3) to pay such administrative expenses as may arise in carrying out the program established by this Act.

(b) The Grain Storage Insurance Fund shall be credited with such amounts as may be borrowed or collected pursuant to sections 7(a), 9(h), and 11(b).

INSURANCE BENEFITS

SEC. 9. (a) The Corporation shall insure a depositor who has grain stored in a certified warehouse against a loss of such grain sustained by such depositor as a result of such warehouse becoming insolvent, as defined in section 101(26) of title 11, United States Code.

(b)(1) The amount of grain that may be insured under this Act in the case of any depositor is the amount of grain stored by the depositor in certified warehouses and to which the depositor has title or a right to payment.

(2) The amount of grain to which a depositor has title or a right to payment may be proved by a scale ticket, a warehouse receipt, or other original source document issued by the warehouse for the grain.

(c) Grain shall be insured under this Act at the average fair market value of the grain (as determined by the Corporation) for the ninety days preceding the insolvency of the certified warehouse in which the grain was stored.

(d) The Corporation shall determine the date of insolvency of a certified warehouse in which grain was stored.

(e) The amount of insurance payable under this Act in the case of any depositor shall be an amount equal to the product obtained by multiplying the amount of grain which is insured under this Act and stored in the certified warehouse which became insolvent by the fair market value of the grain, less

(1) any amounts for which settlement has been made;

(2) any expenses for the handling, processing, or disposition of grain which were incurred by the certified warehouse in which the grain was stored and which were authorized by the depositor; and

(3) any unpaid liens against the grain.

(f) The Corporation may require a depositor to file such proof for a claim of loss for grain insured under this Act as the Corporation considers appropriate. If the Corporation is not satisfied that a claim is valid, it may refuse to pay the claim until a final determination of the claim is made by a court of competent jurisdiction.

(g) The Corporation shall pay a claim for a grain loss insured under this Act as soon as possible after the date of insolvency of the certified warehouse in which the grain was stored but in no event shall payment be made later than ninety days after such date or the date of any final determination made by a court of competent jurisdiction, whichever is later.

(h) Upon payment to a depositor for a loss of grain insured under this Act, the Corporation shall be subrogated, to the extent of the payment, to all rights of the depositor against the warehouse in which such grain was stored and against any person providing insurance or a bond for the loss of such grain.

(i) Insurance benefits payable under this Act shall not be liable to attachment, levy, garnishment, or any other legal or equitable process, or to deduction on account of the indebtedness of the insured or his estate to the United States, before payment is made to the insured, except claims of the United States or the Corporation arising under this Act.

(j) This Act shall not be construed to bar any right of recovery—

(1) by a depositor against a warehouse for any fraud or criminal or tortious act committed by such warehouse; or

(2) by a State, warehouse, or depositor against a person providing insurance or a bond for grain losses.

CERTIFICATION OF WAREHOUSES

SEC. 10. (a) A warehouse which is licensed under the United States Warehouse Act (7 U.S.C. 241 et seq.) is a certified warehouse under this Act.

(b)(1) The Corporation shall grant certification under this Act to a warehouse, other than a warehouse described in subsection (a), which—

(A) submits to the Corporation an application which contains such information and is in such form as the Corporation prescribes; and

(B) meets the eligibility qualifications established for the licensing of warehouses under

(i) the United States Warehouse Act (7 U.S.C. 241 et seq.); or

(ii) a State statute which imposes qualifications for the licensing of warehouses which the Corporation determines are at least equal to the qualifications established under such Act.

(2) The Corporation shall terminate the certification of a warehouse, other than a warehouse described in subsection (a), if—

(A) such warehouse requests the termination of such certification; or

(B) the Corporation determines, after notice and opportunity for a hearing, that such warehouse does not meet the eligibility qualifications described in paragraph (1)(B).

(c) The Corporation may cause examinations to be made of a warehouse which applies for certification or is certified under subsection (a) or (b), including the facilities, grain stocks, books, records, papers, and accounts of such warehouse.

(d) Grain stored in a warehouse which is certified under subsection (a) or (b) and which ceases to be so certified shall continue to be insured under this Act for a period of sixty days after the date on which the certification ceases.

ASSESSMENT OF DEPOSITORS

SEC. 11. (a) A certified warehouse shall levy upon a depositor, in a manner prescribed by the Corporation, an assessment based on the amount of grain deposited by such depositor in such warehouse at the time such deposit is made.

(b) A certified warehouse shall remit to the Corporation, in a manner prescribed by the Corporation, assessments made by it pursuant to subsection (a).

REGULATIONS

SEC. 12. The Board shall, after consultation with the Secretary, the Administrator of the Agricultural Stabilization and Conservation Service, and the Chairman of the

Commodity Futures Trading Commission, prescribe such regulations as may be necessary to carry out this Act.

CRIMINAL PENALTIES

SEC. 13. (a) Whoever, being an officer, agent, or employee of or connected in any capacity with the Corporation, and whoever, being a receiver of the Corporation, or agent or employee of the receiver, embezzles, abstracts, purloins, or willfully misapplies any moneys, funds, credits, securities or other things of value belonging to the Corporation, or pledged or otherwise entrusted to its care, shall be fined not less than $10,000 nor more than $20,000 or imprisoned not less than three years nor more than fifteen years, or both.

(b) Whoever, with intent to defraud, knowingly conceals, removes, disposes of, or converts to his own use or to that of another, any property mortgaged or pledged to, or held by the Corporation or a depositor shall be fined not less than $10,000 nor more than $20,000 or imprisoned not less than three years nor more than fifteen years, or both.

(c) Whoever, being an officer, agent, or employee of or connected in any capacity with the Corporation, with intent to defraud the Corporation or any other company, body politic or corporate, or any individual, or to deceive any officer, auditor, examiner, or agent of the Corporation or of any department or agency of the United States, makes any false entry in any book, report, or statement of or to the Corporation, or without being duly authorized, draws any order or bill of exchange, makes any acceptance, or issues, puts forth or assigns any note, debenture, bond, or other obligation, or draft, bill of exchange, mortgage, judgment, or decree, or, with intent to defraud the United States or any agency thereof, or the Corporation participates or shares in or receives directly or indirectly any money, profit, property, or benefits through any transaction, loan, commission, contract, or any other act of the Corporation, shall be fined not less than $10,000 nor more than $20,000 or imprisoned not less than three years nor more than fifteen years, or both.

(d) Whoever knowingly makes any false statement or report, or willfully overvalues any property or security, for the purpose of influencing in any way the action of the Corporation shall be fined not less than $10,000 nor more than $20,000 or imprisoned not less than three years nor more than fifteen years, or both.

(e) Whoever, being an officer, agent, or employee of or connected in any capacity with the Corporation or a certified warehouse speculates in any grain insured under this Act, or in contracts relating thereto, or in the stock or membership interests of any association or corporation engaged in handling, processing, or disposing of any such grain shall be fined not less than $10,000 nor more than $20,000 or imprisoned not less than three years nor more than fifteen years, or both.

EFFECTIVE DATE

SEC. 14. (a)(1) Within sixty days of the date of enactment of this Act, the Secretary shall conduct a referendum of farmers engaged in the production of grain to determine whether such farmers are in favor of or opposed to the Federal grain storage insurance program established under this Act. The Secretary shall determine the qualifications grain producers must meet in order to participate in the referendum. (2) If such program is approved by 50 or more per centum of eligible producers voting in the referendum conducted pursuant to paragraph (1)—

(A) such program shall become effective upon the date of such approval;

(B) the Secretary shall appoint the members of the Board pursuant to section 4(a) within ninety days of the date of such approval;

(D) the Corporation shall reimburse the Secretary, from the Grain Storage Insurance Fund, established pursuant to section 8, for any expenses incurred by the Secretary in conducting the referendum, except for expenses relating to the salaries of employees of the Department.

(3) If such program is not approved by 50 or more per centum of eligible producers voting in the referendum conducted pursuant to paragraph (1), such program shall not become effective.

(b)(1) If such program becomes effective pursuant to subsection (a) and subsequently 25 or more per centum of depositors petition the Secretary to terminate such program, the Secretary shall conduct a referendum of depositors to determine whether such depositors favor termination of the program.

UNIVERSITY OF MICHIGAN

3 9015 03176 2258

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Federal Grain Storage Insurance Act of 1983: Hearing Before the Committee on ...