Section 291-8-003 - GRAIN DEALERS003.01Licensing Requirements: All grain dealers doing business in Nebraska are required to procure and maintain a license from the Commission.
003.02License Application Requirements: 003.02AForm: All applications for a grain dealer license shall be submitted on the form prescribed by the Commission, incorporated herein at the end of the chapter and labeled as Attachment 14 (new form).003.02BDetermining Volume of Business for New Applicant: A new applicant may obtain a license on the basis of an estimate of the volume of business the applicant expects to do during the term of the license for which the application is made. When a first year applicant obtains a license on the basis of an estimate of its purchases for the year, and the licensee, in fact, buys an amount of grain equal to or more than the initial estimate, the licensee shall revise the estimate and immediately furnish sufficient additional security to cover the additional projected purchases.003.02CBackground Check: All applications for a grain dealer license shall include the primary party. Such primary party shall be subject to fingerprinting and a check of his or her criminal history record information maintained by the Federal Bureau of Investigation through the Nebraska State Patrol: (1) If the applicant is not an individual, the chief executive officer, president, or general manager; or (2) if the applicant is an individual, the individual. If the primary party has been subject to a check of his or her criminal history record information pursuant to this section on a prior application, he or she is not subject to another such check upon a subsequent application. If a primary party has been subject to a check of his or her criminal history record information pursuant to another law, the Commission may waive such requirement. A primary party shall furnish to the Nebraska State Patrol a full set of fingerprints to enable a criminal background investigation to be conducted. The primary party (1) may be fingerprinted at a Nebraska State Patrol office, or (2) may request a fingerprint card from the Commission. If a primary party is fingerprinted at a county sheriff's office or a local police department, the primary party shall send the completed fingerprint card to the Nebraska State Patrol, c/o/ Criminal Records & Identification, P.O. Box 94907, Lincoln, Nebraska, 68509-4907. The primary party shall request that the Nebraska State Patrol submit the fingerprints to the Federal Bureau of Investigation for a national criminal history record check. The primary party shall pay the actual cost, if any, of the fingerprinting and check of his or her criminal history record information. The primary party shall authorize release of the national criminal history record check to the Commission. The criminal history record information check shall be completed within ninety days after the date the application for a license is received in the Commission's office, and if not, the application shall be returned to the applicant. The Commission shall deny a dealer license to any applicant whose primary party has been convicted of a felony financial crime.003.02DApplication Fee: All applications for license will include a fee as set by Neb. Rev. Stat. Section 75-903. Any application fees paid will be non-refundable should the applicant withdraw the application or be unable to meet all licensing requirements within one (1) year from the date of application. 003.02ETerm of License: A grain dealer license shall expire at midnight on the following March 31, June 30, September 30, or December 31.003.03Financial Requirements: Each grain dealer or applicant shall submit a reviewed or audited fiscal year-end financial statement prepared by an independent certified public accounting firm. If licensing as an individual, the financial statement shall be prepared in accordance with Other Comprehensive Basis of Accountancy for a personal financial statement, using historical cost and accrual basis of accounting. If licensing as a partnership, corporation, or limited liability company, the financial statement must be prepared in accordance with generally accepted accounting principles . If an applicant for a grain dealer license is a wholly owned subsidiary of a parent company and such a financial statement is not prepared for the subsidiary, the parent company shall submit its reviewed or audited fiscal year-end financial statement and shall execute an unconditional guarantee agreement as prescribed by the Commission. The financial statement shall include, but is not limited to, the following:
003.03A Statement of income (Profit and Loss)003.03C Statement of cash flows003.03D Statement of proprietor's capital or retained earnings.003.03E The volume and dollar value of grain dealer purchases the licensee made in Nebraska during the fiscal year. If the volume and dollar value of the grain purchases is not reported, the grain dealer shall file the maximum grain dealer security as required by the Grain Dealer Act.003.03F This section applies to all licensees who hold both a warehouse and dealer license. The volume and dollar value of transactions in which direct delivery grain is exchanged for a post-direct delivery storage position and the post-direct delivery storage position is not created by an in-store transfer on the same date as the delivery of the direct delivery grain. 003.03F1 The value shall be calculated as set forth in Section 003.04A1.003.03F2 The statement shall specifically show: 003.03F2a The total volume and dollar value of the direct delivery grain exchanged for a post-direct delivery storage position,003.03F2b The total volume and dollar value of the direct delivery grain exchanged for a post-direct delivery storage position created by an in-store transfer on the same date as the delivery of the direct delivery grain, and003.03F2c The net volume and dollar value of the direct delivery grain exchanged for a post-direct delivery storage position that will be used for calculation of the grain dealer security as set forth in Section 3.04.003.03G The accounting firm's certification, assurances, opinions, and comments and the notes with respect to the financial statement. 003.03HNet Worth: Each grain dealer or applicant shall demonstrate and maintain a minimum allowable net worth of $10,000 to obtain and maintain a license.003.03IWorking Capital: Each grain dealer or applicant shall demonstrate and maintain a working capital ratio (current liabilities to allowable current assets) of not less than 1 to 1. Applicants or licensees who fail to meet this requirement shall provide additional data sufficient to satisfy the Commission that additional operating capital can be obtained to meet the requirement.003.03J For purposes of determining whether an applicant or grain dealer meets financial requirements, the following shall apply unless waived by the Commission. In addition to those listed in this section, items may be disallowed, in whole or in part, depending upon the individual circumstances of the grain dealer or applicant:003.03J1Physical Assets003.03J1a Personal assets, including but . not limited to residences, household items, recreational items, restricted retirement accounts and vehicles, are disallowed, net of debt on each asset.003.03J1b Other assets that are not itemized are disallowed.003.03J1c Appraised valuations of assets not substantiated by a satisfactory appraisal are disallowed. An applicant or licensee may submit a valuation of assets by competent appraisal to the Commission for inclusion in computing net worth. If a valuation of assets is submitted and satisfies Commission requirements, no more than seventy percent (70%) of appraised value over book value of the assets may be used in determining compliance with net worth requirements. Acceptance of an appraisal is subject to the following: 003.03J1c(1) The appraisal must be prepared by an independent certified appraiser.003.03J1c(2) The appraisal must be prepared on market, income, and cost approaches.003.03J1c(3) A one to one working capital ratio must be maintained.003.03J1c(4) Appraisals will only be allowed for three (3) years following the date of the appraisal. 003.03J2Receivables: 003.03J2a Accounts or notes receivables due from related parties, affiliates, or employees are disallowed.003.03J2b Accounts receivables due after one year are disallowed.003.03J2c Accounts or notes receivable under litigation are disallowed.003.03J2d Unsecured notes receivables are disallowed.003.03J2e Other receivables that are not itemized are disallowed. 003.03J3Other: 003.03J3a Prepaid expenses that are not itemized" are disallowed.003.03J3b Prepaid taxes are disallowed.003.03J3c Prepaid loan fees are" disallowed.003.03J3d Returned checks are disallowed.003.03J3e Organization costs are disallowed.003.03J3f Stock subscriptions are disallowed.003.03J3g Intangible assets including but not limited to goodwill are disallowed.003.03J3h Refundable and deferred income taxes are disallowed.003.03KFiling: Each grain dealer shall file a financial statement within ninety (90) calendar days following the close of the licensee's fiscal year, except that, the Commission may grant, upon request and reasonable cause shown, one filing extension of thirty (30) calendar days.003.04Grain Dealer Security Requirements: A grain dealer applicant shall file security which may be a bond issued by a corporate surety company and payable to the Commission, an irrevocable letter of credit, or a certificate of deposit, subject to approval of the Commission for the benefit of any producer doing business with the grain dealer who files a valid claim arising from a sale to the grain dealer. The security shall be furnished on the condition that the licensee will pay for any grain purchased upon demand, not later than fifteen (15) days after taking possession of the grain purchased. The liability of the surety shall cover purchases made by the grain dealer during the time the bond is in force.
003.04AAmount: The security shall be in the amount of the greater of $35,000 or seven percent (7%) of grain purchases and exchanges by the applicant, in the preceding license year or as reported in the fiscal year end financial statement, not to exceed $300,000. For purposes of calculating the security, grain purchases and exchanges do not include in-store purchases by a warehouse, or grain that passes title at the time of delivery. 003.04A1 Amounts used in the calculation of the security shall include the net volume and dollar value of the direct delivery grain exchanged for a post-direct delivery storage position valued on the date delivery is made.003.04A2 Amounts used in the calculation of the security shall not include any transactions in which direct delivery grain is exchanged for a post-direct delivery storage position and the post-direct delivery storage position is created by an in-store transfer on the same date as the delivery of the direct delivery grain.003.04BTypes of Security: 003.04B1Surety Bond: The surety bond shall be issued by a company authorized to conduct business in Nebraska, on a form prescribed by the Commission, incorporated herein at the end of the chapter and labeled as Attachment 15. Changes to a bond must be on a form prescribed by the Commission, incorporated herein at the end of the chapter and labeled as Attachment 16.003.04B2Certificate of Deposit: A grain dealer may deliver certificates of deposit to the Commission in an amount equal to the security required. Upon the deposit of a qualified certificate of deposit with the Commission, the certificate of deposit will be transferred to a financial institution for safe keeping. Any certificate of deposit furnished in lieu of a surety bond shall not be part of the assets of the grain dealer and will have the same legal significance as a surety bond. Each certificate of deposit shall be: A) Issued by a financial institution which is insured by the Federal Deposit Insurance Corporation (FDIC);B) In an amount not to exceed the amount for which the account may be insured at the issuing institution; and,C) Payable to the Nebraska Public Service Commission with interest to be paid to the beneficiary.003.04B3Irrevocable Letter of Credit: A grain dealer may deliver an irrevocable letter of credit or letters of credit to the Commission in an amount equal to or greater than the security required. Each irrevocable letter of credit shall be: A) Issued by a financial institution which is insured by the Federal Deposit Insurance Corporation (FDIC) or issued by farm credit institutions chartered by the Farm Credit Administration;B) Issued for a period at least three (3) months longer than the expiration date of the underlying license;C) Payable to the Nebraska Public Service Commission up to the security liability of the grain dealer; and,D) Issued on a form prescribed by the Commission, incorporated herein at the end of the chapter and labeled as Attachment 17.003.04CCombination of Security Types: If two or more allowable security types are filed with the Commission to satisfy the security requirement, claims against the security will be paid using a pro rata share of each security filing, up to the limit of liability of each filing.003.04D Release or Reduction of Security: 003.04D1Release: No security shall be released until ninety (90) days have elapsed from the cancellation, revocation, or expiration of the license, unless the grain dealer files another type or types of security as replacement.003.04D2Reduction: The Commission may, at its discretion, reduce a security filing as long as the security filing is not reduced below the requirements stated in Subsection 003.04A.003.04E The grain dealer security shall provide security for direct delivery grain until any post-direct delivery storage position is created for a period not to exceed fifteen (15) days after the date of the last shipment of the contract.003.04F No seller shall have recourse to the grain dealer's security unless the seller: 003.04F1 Demands payment from the grain dealer within fifteen (15) days after the date of the last shipment of any contract;003.04F2 Negotiates any negotiable instrument issued as payment for grain by the grain dealer within fifteen (15) days after its issuance; and003.04F3 Notifies the Commission within fifteen (15) days after any apparent loss to be covered under the terms of the grain dealer's security.003.05 Records Requirements Each grain dealer shall maintain, at its place of business, accounts of each transaction conducted under its license. The records shall be subject to inspection by the Commission and must include, but are not limited to, the following:
003.05AReceipts: Each grain dealer, upon taking possession of grain from a seller, shall issue a writing, in the form of a receipt, contract, bill of lading or other written communication(s) to the seller, or its agent, that includes, but is not necessarily limited to, the following: 003.05A1 The date the grain dealer or its agent took possession of the seller's grain.003.05A2 The name and address of the buyer.003.05A3 The name of the seller.003.05A4 The name of the agent of the buyer.003.05A5 The kind of grain delivered to the buyer.003.05A6 The approximate quantity of grain delivered to the buyer.003.05A7 The following warning shall be printed on the receipt in eight point type or larger: "WARNING TO SELLER: You will have no recourse to the grain dealer's security posted with the Nebraska Public Service Commission (NPSC) unless you are a Nebraska producer and you:
(1) demand payment from the grain dealer within fifteen (15) days after the date of the last shipment of any contract;(2) negotiate any negotiable instrument issued as payment for your grain by the grain dealer within fifteen (15) days after its issuance; and,(3) notify the NPSC, PO Box 94927, Lincoln, NE 68509-4927, within fifteen (15) days after an apparent loss. The grain dealer's security shall provide security for direct delivery grain until a post-direct delivery storage position is created for a period not to exceed fifteen (15) days after date of the last shipment of grain. Direct delivery of grain may affect the eligibility of the grain for participation in federal price support programs." Nebraska Law defines a producer as the owner, tenant, or operator of land in this state who has an interest in and receives all or part of the proceeds from the . sale of grain produced on that land.
003.05A8 All receipts, contracts, bills of lading or other written communications shall be pre-numbered and copies shall be maintained in numeric order. 003.05B Checks issued as payment for grain.003.05C Contracts issued for grain purchases in Nebraska.003.05DRetention: Each grain dealer shall, unless otherwise authorized by the Commission, maintain the required records for not less than five (5)year(s).003.06 Storage Prohibited No grain dealer may store grain for any person unless licensed under the Grain Warehouse Act or US Warehouse Act.
003.07 Complaint Proceedings In the event of a notification of an apparent loss under Neb. Rev. Stat. Section 75-905 (1996) or if the Grain Warehouse Director or other Commission personnel have reasonable cause to believe that a grain dealer has violated the statutes or rules of the Commission, the Director or other Commission personnel will:
003.08A File a complaint before the Commission against the grain dealer setting forth the alleged violation.003.08B Obtain a hearing date on the complaint.003.08C Notify the grain dealer and its security provider of the complaint and hearing date on the complaint.003.08Suspension or Revocation of License: 003.09A Suspension: If the Commission determines that the public good requires it, it may, upon the filing of a complaint and without hearing, temporarily suspend a grain dealer license pending the determination of the complaint.003.09BRevocation: The Commission will hold a hearing on any complaint filed against a grain dealer by Commission personnel according to the Rules of Commission Procedure. If the Commission finds that the allegations of the complaint are true, it may revoke the defendant's grain dealer license. Further notice and hearing may be ordered to determine whether there are claims against the defendant's security. If any valid claim is determined to exist, the Commission may require the security to be forfeited in whole or in part to satisfy the claims. If the security is insufficient to pay all of the valid claims, the Commission may distribute the security pro rata among the valid claimants.003.09Civil Penalty: Any person who violates the grain dealer act may be assessed a civil penalty by the commission for one or more, but is not limited to the following violations:
A) Failure to timely file renewal application.B) Failure to timely complete application process.C) Failure to timely file financial statement.D) Failure to timely file security replacement or extension.E) Failure to maintain accurate, complete or current records.F) Failure to make payment on demand.G) Failure to maintain Commission financial requirements.H) Failure to issue grain dealer receipt to seller.003.10 Civil Penalty (Repealed)291 Neb. Admin. Code, ch. 8, § 003