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Statutes > Texas > Agriculture-code > Title-2-department-of-agriculture > Chapter-14-regulation-of-public-grain-warehouse-operators

AGRICULTURE CODE

TITLE 2. DEPARTMENT OF AGRICULTURE

CHAPTER 14. REGULATION OF PUBLIC GRAIN WAREHOUSE OPERATORS

SUBCHAPTER A. DEFINITIONS

Sec. 14.001. DEFINITIONS. (a) In this chapter:

(1) "Depositor" means a person who:

(A) delivers grain to a public grain warehouse for storing of

the grain for hire, handling of the grain for hire, or shipping

of the grain for hire;

(B) is the owner or legal holder of an outstanding receipt for

grain stored in the public grain warehouse issuing the receipt;

or

(C) is lawfully entitled to possession of grain stored in a

public grain warehouse.

(2) "Grain" means wheat, grain sorghum, corn, oats, barley, rye,

soybeans, or any other grain, peas, or beans for which federal

grain standards are established.

(3) "Open storage grain" means grain that:

(A) is received for storage by a public grain warehouse located

in this state;

(B) is not covered by a negotiable warehouse receipt; and

(C) is not owned by the lessee, owner, or operator of the

warehouse in which it is stored.

(4) "Public grain warehouse" means a building, bin, or similar

structure located in this state and used for:

(A) the storing of grain for hire, shipping of grain for hire,

or handling of grain for hire; or

(B) the purchasing and selling of grain, including grain on

which payment is deferred.

(5) "Receipt" means a negotiable Texas grain warehouse receipt

issued by a warehouse operator licensed under this chapter.

(6) "License" includes a renewal of or an amendment to a

license.

(7) "Scale weight ticket" means a load slip other than a receipt

given to a depositor or other person by a warehouse operator

licensed under this chapter on:

(A) initial delivery of the grain to the warehouse; or

(B) weighing of the grain on the grain warehouse operator's

scale, regardless of the destination of the grain.

(8) "Receipted grain" means grain that is stored in a public

grain warehouse and for which a Texas grain warehouse receipt has

been issued and has not been canceled.

(9) "Warehouse operator" means a person engaged in the business

of operating a public grain warehouse.

(b) For purposes of this chapter, the term "public grain

warehouse" as defined by Subsection (a)(4) does not include

railcars, trucks, boats, or other vehicles when used to transport

grain.

(c) For purposes of this chapter, in those sections that require

the warehouse operator to cooperate with or provide information

to the department or issue documents or deliver grain to

customers of the warehouse operator and in those sections that

require notice to be provided to the warehouse operator by the

department, the term "warehouse operator" includes all employees,

agents, or other persons authorized by the warehouse operator to

issue receipts or scale weight tickets or sign contracts or other

agreements.

Acts 1981, 67th Leg., p. 1046, ch. 388, Sec. 1, eff. Sept. 1,

1981. Amended by Acts 2001, 77th Leg., ch. 1124, Sec. 1, eff.

Sept. 1, 2001.

SUBCHAPTER B. GENERAL PROVISIONS

Sec. 14.011. LIMITATION OF CHAPTER. This chapter does not apply

to:

(1) a public grain warehouse covered by a license for the

operation of a public grain warehouse issued by the United States

Department of Agriculture or other federal agency;

(2) an individual producer-owner who does not receive from

others grain for storage or handling for hire;

(3) a person whose business is manufacturing grain or selling

manufactured grain and who receives all grain with the intent to

manufacture the grain or sell manufactured grain; or

(4) a person who receives grain with the intent of using the

grain for planting seed or for feeding livestock on the premises

where the grain is received.

Acts 1981, 67th Leg., p. 1046, ch. 388, Sec. 1, eff. Sept. 1,

1981. Renumbered from Sec. 14.002 and amended by Acts 2001, 77th

Leg., ch. 1124, Sec. 1, eff. Sept. 1, 2001.

Sec. 14.012. BUSINESS INFORMATION. (a) The following

information, prepared by the department in the course of its

regulatory authority under this chapter or required to be

submitted to the department in accordance with the department's

administration of this chapter, is confidential and not subject

to public disclosure:

(1) inspection or investigation reports containing information

regarding grain inventory; and

(2) financial information provided to the department to

establish net worth for purposes of licensing.

(b) Notwithstanding Subsection (a), inspection reports

containing information regarding grain inventory of a warehouse

operator or financial information of a warehouse operator

provided to the department to establish net worth may be:

(1) entered into evidence without sealing and made public in:

(A) an administrative proceeding commenced by the department

against a warehouse operator;

(B) a civil or criminal proceeding commenced by a county

attorney, a district attorney, or the attorney general, either

independently or on behalf of the department, against a warehouse

operator; or

(C) a civil proceeding commenced by the warehouse operator

against the department;

(2) provided to the issuer of a warehouse operator's bond or

letter of credit for the purpose of establishing a claim on the

warehouse operator's bond or letter of credit;

(3) disclosed to the public after:

(A) revocation of a warehouse operator's license;

(B) a voluntary closeout of all of the license holder's

facilities in this state;

(C) a petition for bankruptcy has been filed; or

(D) a receiver is appointed for the warehouse operator's assets;

or

(4) disclosed to any federal agency or any agency of another

state conducting a compliance inspection or criminal or civil

investigation involving the handling, storing, shipping, selling,

purchasing, or receipt of grain.

Amended by Acts 2001, 77th Leg., ch. 1124, Sec. 1, eff. Sept. 1,

2001.

Sec. 14.013. RIGHT TO INTERVENE AND NOTIFICATION OF DEPARTMENT.

(a) The department may intervene in a suit for receivership,

garnishment, bankruptcy, or any other legal action affecting the

assets of a warehouse operator licensed under this chapter or the

grain assets of a depositor in a warehouse operated under a

license issued by the department, including, to assert the rights

of depositors not joined in the suit, a suit brought against a

bond or surety under Section 14.065.

(b) Any person who files a suit for receivership, garnishment,

or bankruptcy or who commences any other legal action affecting

the assets of a warehouse operator licensed under this chapter or

the grain assets of a depositor in a warehouse operated under a

license issued by the department, including a suit against a bond

or surety under Section 14.065, must give notice to the

department of the suit or legal action.

(c) Notice under this section must be in writing and delivered

to the department by certified mail, registered mail, or

commercial delivery service not later than the 20th day after the

date on which the suit or legal action is commenced.

(d) The judgment in an action described by Subsection (a) is

voidable if the notice required by this section is not provided.

(e) The court in which a suit or other legal action described by

Subsection (a) is commenced may impose appropriate sanctions

against a party who fails to provide the notice required by this

section.

Amended by Acts 2001, 77th Leg., ch. 1124, Sec. 1, eff. Sept. 1,

2001.

Sec. 14.014. RECEIVERSHIP AFFECTING WAREHOUSE ASSETS. (a) A

person appointed receiver for the assets of a warehouse operator

licensed under this chapter is not required to obtain a license

from the department if the person:

(1) is bonded and insured as described by Subsection (b); and

(2) after being appointed, does not:

(A) receive additional grain for storing for hire, handling for

hire, or shipping for hire; or

(B) purchase grain for resale.

(b) A person appointed receiver shall maintain:

(1) a bond in the same amount required for a licensed warehouse

operator; and

(2) casualty insurance in the same amount and type as required

for a licensed warehouse operator.

(c) A person appointed receiver shall file proof of proper

bonding and verification of insurance with the department on or

before the date the person is appointed to act as receiver.

Amended by Acts 2001, 77th Leg., ch. 1124, Sec. 1, eff. Sept. 1,

2001.

Sec. 14.015. POWERS AND DUTIES OF DEPARTMENT. The department

shall administer this chapter and may:

(1) investigate the storing, shipping, and handling of grain and

complaints relating to these activities through the inspection

of:

(A) any public grain warehouse;

(B) the grain stored in any warehouse; or

(C) all property and records pertaining to a warehouse;

(2) determine whether a warehouse for which a license has been

issued or applied for is suitable for properly storing, shipping,

or handling grain that is stored in or expected to be stored in

the warehouse;

(3) include field seed within the definition given to "grain" by

Section 14.001;

(4) require that a warehouse operator keep records or submit

reports the department determines are necessary in the

administration of this chapter;

(5) require a warehouse operator or depositor to terminate

storing, shipping, and handling agreements within a time

specified by the department:

(A) on closeout or revocation of the warehouse operator's

license;

(B) if grain has been abandoned by the warehouse operator or a

depositor and the warehouse operator or depositor cannot be

located after diligent effort; or

(C) on issuance of an injunction ordering an unlicensed

warehouse operator to cease operations;

(6) prescribe forms, including the form of receipts, bonds, or

applications for licenses;

(7) for purposes of determining compliance with this chapter or

amounts due to a depositor in an action taken by the department

against a surety or surety instrument under this chapter,

determine a warehouse operator's specific obligations to a

depositor, including:

(A) the type, quantity, or quality of open storage or receipted

grain due a depositor;

(B) the payment owed a depositor if a shortage or variance

exists in the type, quantity, or quality of a depositor's open

storage or receipted grain;

(C) the time and manner of delivery of grain due a depositor;

and

(D) whether a warehouse operator has failed to deliver a

depositor's open storage or receipted grain within a reasonable

time;

(8) by written order require a warehouse operator to deliver

grain of a particular type, quantity, and quality to a depositor

at a particular time and in a particular manner based on the

department's determination that the required delivery of grain is

due the depositor;

(9) classify grain by category, including open storage,

receipted, identity-preserved, company-owned, and abandoned

grain, and adopt rules regarding the storage, shipping, or

handling of classified grain, including recordkeeping and

accounting requirements;

(10) seize the records of a warehouse operator, including any

electronic records or the equipment or media on which the records

are stored, during a period of suspension of a warehouse

operator's license;

(11) seal or post as sealed, or both seal and post as sealed,

the warehouse of a warehouse operator:

(A) whose license has been suspended or revoked;

(B) whose license has expired; or

(C) who is unlicensed;

(12) seal or post as sealed, or both seal and post as sealed, a

warehouse that is found to be unsafe for inspection or unsuitable

for the storage of grain;

(13) during reasonable hours and to determine compliance with

this chapter, enter any facility where the department reasonably

believes grain is being handled, stored, shipped, purchased, or

sold to examine:

(A) the facility's storage, shipping, handling, and financial

records;

(B) grain; and

(C) physical structures;

(14) determine the suitability of a warehouse for storing,

shipping, or handling grain or for adequate and safe inspection

and, if found unsuitable for any of those purposes, order

corrective action;

(15) require the warehouse operator to notify the department

regarding:

(A) the handling of commodities that may pose a hazard to

humans, animals, the grain of other depositors in the warehouse

operator's warehouse, or the grain industry;

(B) existing hazards to inspection, including recent or ongoing

fumigations of warehouse facilities and unsafe or inoperable

warehouse equipment or structures; or

(C) any change in ownership, management, or legal or financial

status of a warehouse licensed under this chapter;

(16) require by rule that sales, purchase, or brokerage

agreements between a warehouse operator and a producer be in

writing and contain written terms or provisions the department

considers appropriate to protect producers, depositors, and

warehouse operators and to ensure the department's ability to

carry out its regulatory functions under this chapter;

(17) regulate a warehouse operator's temporary storage of grain

in a non-warehouse location or facility;

(18) require segregation of grain requiring identity

preservation;

(19) enter into cooperative agreements with agencies of the

federal government or other states to carry out the purposes of

this chapter;

(20) recover the unused warehouse receipts of a warehouse

operator:

(A) during any period of probation or suspension of the

warehouse operator's license;

(B) on revocation or voluntary surrender of the warehouse

operator's license; or

(C) during any period in which the warehouse operator is not

licensed, including after a failure to timely renew the license;

(21) order corrective action or impose any reasonable condition

of probation necessary to accomplish the regulatory goals

authorized by this chapter; and

(22) adopt rules necessary to carry out the provisions of this

chapter.

Acts 1981, 67th Leg., p. 1047, ch. 388, Sec. 1, eff. Sept. 1,

1981. Amended by Acts 1993, 73rd Leg., ch. 553, Sec. 1, eff.

Sept. 1, 1993; Acts 1995, 74th Leg., ch. 419, Sec. 3.06, eff.

Sept. 1, 1995. Renumbered from Sec. 14.003 and amended by Acts

2001, 77th Leg., ch. 1124, Sec. 1, eff. Sept. 1, 2001.

SUBCHAPTER C. LICENSING

Sec. 14.021. LICENSE REQUIRED. A person may not operate a

public grain warehouse without first obtaining from the

department a license in the person's name covering the warehouse.

Acts 1981, 67th Leg., p. 1047, ch. 388, Sec. 1, eff. Sept. 1,

1981. Renumbered from Sec. 14.004 and amended by Acts 2001, 77th

Leg., ch. 1124, Sec. 1, eff. Sept. 1, 2001.

Sec. 14.022. LICENSING OF MULTIPLE WAREHOUSES. (a) In this

section:

(1) "Combination" means a group of two or more public grain

warehouses or facilities operated under a single set of complete

records. For purposes of this chapter, a combination is treated

as if it were a single public grain warehouse.

(2) "Facility" means two or more public grain warehouses located

in close proximity on the same general location. For purposes of

this chapter, and except when part of a combination, a facility

is treated as if it were a single public grain warehouse.

(b) A warehouse operator may operate all public grain warehouses

or facilities within an area no larger than 60 miles in diameter

as a combination if a single license covering the combination is

obtained from the department and:

(1) a single recordkeeping system covering only warehouses

within the combination is maintained by the warehouse operator;

(2) a single, unique set of sequentially numbered receipts

containing all information required by department rule and

bearing the name of the license holder and a unique combination

name, but not bearing individual warehouse or facility names, is

used for the combination;

(3) for each scale operated by the warehouse operator, the

warehouse operator issues and maintains a single, unique set of

sequentially numbered scale weight tickets containing all

information required by department rule and bearing the name of

the license holder and a unique name identifying the facility

where the scale is located;

(4) a single daily position report covering all storage

obligations of the combination and only the combination,

including company-owned grain, and containing all information

required by department rule is maintained;

(5) all original warehouse operator records, except for scale

weight tickets, relating to transactions or storage obligations

involving the combination are maintained at a single location and

separate from all other businesses and separately licensed

warehouse operations of the warehouse operator; and

(6) except as provided by department rule, a single unique bond

or bond substitute is used to cover the combination.

(c) Except as permitted while operating a combination, a

warehouse operator may not combine or intermingle assets, storage

obligations, liabilities of any kind, records or record entries,

contractual obligations, other transactions of any kind, or any

other business or operating information from different warehouses

or businesses owned, managed, or operated by the warehouse

operator. Each licensed combination or individually licensed

facility shall be operated as a separate entity under a single,

unique name and, except as provided by department rule, shall be

covered by a single, separate bond or bond substitute.

Amended by Acts 2001, 77th Leg., ch. 1124, Sec. 1, eff. Sept. 1,

2001.

Sec. 14.023. LICENSING PROCEDURE. (a) The department may

issue, renew, or amend a license following a determination that:

(1) the applicant has filed an acceptable bond, a financial

statement in a form prescribed by the department, and proof of

casualty insurance required by this chapter;

(2) the warehouse is suitable for storage of grain and

inspection by department personnel;

(3) the applicant has complied with this chapter and rules

adopted under this chapter; and

(4) the applicant has met the net worth or deficiency bond

requirements of Section 14.031(e).

(b) An applicant must file a separate application for each

license, renewal, or amendment and shall accompany each

application for a license or renewal with an annual license fee,

as provided by department rule. The department shall prescribe

the information to be contained in the application. A person who

fails to submit a renewal fee on or before the expiration date of

the license must pay, in addition to the renewal fee, the late

fee provided by Section 12.024.

(c) If an applicant for a license previously operated a grain

warehouse in this state or another state and that warehouse

ceased to operate while the applicant was the operator, the

applicant must submit with the application evidence acceptable to

the department that all debts from the previous operation

evidenced by receipts have been satisfied. The department may not

issue a license to an applicant who the department determines has

not satisfied all such debts from a previous operation.

Acts 1981, 67th Leg., p. 1047, ch. 388, Sec. 1, eff. Sept. 1,

1981. Amended by Acts 1983, 68th Leg., p. 4283, ch. 682, Sec. 2,

eff. Sept. 1, 1983; Acts 1987, 70th Leg., ch. 50, Sec. 3, eff.

April 30, 1987; Acts 1989, 71st Leg., ch. 230, Sec. 32, eff.

Sept. 1, 1989; Acts 1991, 72nd Leg., 1st C.S., ch. 5, Sec. 9.05,

eff. Sept. 1, 1991; Acts 1995, 74th Leg., ch. 419, Sec. 2.11,

eff. Sept. 1, 1995. Renumbered from Sec. 14.005 and amended by

Acts 2001, 77th Leg., ch. 1124, Sec. 1, eff. Sept. 1, 2001.

Sec. 14.024. REQUIREMENT FOR INCREASING CAPACITY. A warehouse

operator may not use any increased warehouse capacity without

first obtaining written approval from the department.

Acts 1981, 67th Leg., p. 1048, ch. 388, Sec. 1, eff. Sept. 1,

1981. Renumbered from Sec. 14.007 and amended by Acts 2001, 77th

Leg., ch. 1124, Sec. 1, eff. Sept. 1, 2001.

SUBCHAPTER D. BONDING

Sec. 14.031. BOND. (a) In accordance with this section, each

applicant for a license shall file or have on file a bond with

the department.

(b) The bond must:

(1) be payable to the State of Texas;

(2) be executed by the applicant as principal;

(3) be issued by a corporate surety licensed to do business as

surety in the State of Texas; and

(4) be in a form and contain terms and conditions prescribed by

the department.

(c) The bond must be conditioned on faithful performance of:

(1) each obligation of a warehouse operator as to receipted

grain and open storage grain under this chapter and rules adopted

under this chapter, from the effective date of the bond until the

license is revoked or the bond is canceled, whichever occurs

first, whether or not the warehouse remains licensed; and

(2) except for a contract for the purchase of grain or to act as

broker for the grain, each obligation of a warehouse operator

under any contract with a depositor that exists on the effective

date of the bond or is assumed after the effective date of the

bond and before the license is revoked or the bond is canceled,

whichever occurs first and whether or not the warehouse remains

licensed.

(d) The bond must be in an amount of not less than $20,000 and

be based on six cents per bushel of storage capacity.

(e) If the actual net worth of an applicant equals less than 25

cents per bushel of storage capacity, the applicant shall file a

deficiency bond in an amount equal to the difference between the

actual net worth and an amount determined by multiplying 25 cents

times each bushel of storage capacity in the applicant's

warehouse. A deficiency bond is in addition to the bond required

of an applicant by this section.

(f) Except as provided by department rule, the applicant must

give a single bond meeting the requirements of this section to

cover warehouses licensed as a single facility or combination. A

single bond may not be used to cover more than one individually

licensed facility, more than one combination, or one or more

individually licensed facilities and one or more combinations.

(g) The liability of the surety of a bond required by this

chapter is limited to the face amount of the bond and does not

accumulate for each successive license period during which the

bond is in force.

(h) Subject to the approval of the department, a warehouse

operator may deposit the following with the department, for the

term of the license plus two years, in lieu of a bond required by

this section:

(1) cash;

(2) an irrevocable letter of credit, payable to the State of

Texas; or

(3) a certificate of deposit from a federally insured bank or

savings and loan institution authorized to do business in this

state, assigned to the State of Texas.

(i) The cash, letter of credit, or certificate of deposit under

Subsection (h) must be in the same amount or have a value in the

same amount as required for the warehouse bond.

(j) Any interest or income earned on an assigned certificate of

deposit accrues to the owner of the certificate during the time

of the assignment.

Acts 1981, 67th Leg., p. 1048, ch. 388, Sec. 1, eff. Sept. 1,

1981. Amended by Acts 1987, 70th Leg., ch. 50, Sec. 2, eff. April

30, 1987. Renumbered from Sec. 14.009 and amended by Acts 2001,

77th Leg., ch. 1124, Sec. 1, eff. Sept. 1, 2001.

Sec. 14.032. ADDITIONAL BOND. (a) If the department determines

that an approved bond is insufficient, the department shall

require the warehouse operator to give additional bond.

(b) If a license has been suspended or revoked or has expired,

the department may require a bond from the warehouse operator to

protect depositors of grain for as long as any receipts or open

storage accounts remain outstanding.

Acts 1981, 67th Leg., p. 1049, ch. 388, Sec. 1, eff. Sept. 1,

1981. Renumbered from Sec. 14.012 and amended by Acts 2001, 77th

Leg., ch. 1124, Sec. 1, eff. Sept. 1, 2001.

Sec. 14.033. BOND CANCELLATION. (a) A warehouse operator may

not cancel a bond approved by the department unless the

department first gives written approval of a substitute bond.

(b) The surety may cancel a bond by sending notice of intent to

cancel by registered or certified mail to the department.

Cancellation of a bond may not be effective before the 91st day

following the day on which the surety mails notice of intent to

cancel. On receipt of notice of cancellation of a bond, the

department shall promptly notify the warehouse operator involved.

Liability under the bond ceases to accrue on the effective date

of cancellation. Notwithstanding cancellation under this section,

the department or a depositor may collect under the bond for any

claim that arose during the period during which the bond was in

effect, provided that the claim is filed within the applicable

limitations period established under Section 14.065.

(c) The surety shall send a copy of the notice required by this

section to any government agency requesting it.

(d) Notwithstanding any other provision of this chapter, a

public grain warehouse license is automatically suspended if the

warehouse operator fails to file a new bond before the

cancellation of a bond is effective.

(e) The suspension of a license under this section continues as

long as the warehouse operator fails to maintain the bond

required by this chapter.

Acts 1981, 67th Leg., p. 1050, ch. 388, Sec. 1, eff. Sept. 1,

1981. Renumbered from Sec. 14.013 and amended by Acts 2001, 77th

Leg., ch. 1124, Sec. 1, eff. Sept. 1, 2001.

Sec. 14.034. CANCELLATION OF LETTER OF CREDIT. (a) A warehouse

operator may not cancel a letter of credit approved by the

department in lieu of a bond unless the department gives written

approval of a substitute bond or letter of credit.

(b) The issuer of the letter of credit may cancel a letter of

credit by sending notice of intent to cancel by registered or

certified mail to the department. Cancellation of a letter of

credit may not take effect before the 91st day after the date the

issuer mails notice of intent to cancel. On receipt of notice of

cancellation of a letter of credit, the department shall promptly

notify the warehouse operator involved. Liability under the

letter of credit ceases to accrue on the effective date of

cancellation. Notwithstanding cancellation under this subsection

or other law to the contrary, the department or a depositor may

collect under the letter of credit for any claim that arose

during the period during which the letter of credit was in

effect, provided that the claim is filed within the applicable

limitations period established under Section 14.065.

(c) The issuer of a letter of credit shall send a copy of the

notice required by this section to any government agency

requesting the copy. Notwithstanding any other provision of this

chapter, a public grain warehouse license is automatically

suspended if the warehouse operator fails to file a new bond or

letter of credit before the cancellation of a letter of credit is

effective.

(d) The suspension of a license under this section continues as

long as the warehouse operator fails to maintain the bond or

letter of credit required by this chapter.

Amended by Acts 2001, 77th Leg., ch. 1124, Sec. 1, eff. Sept. 1,

2001.

Sec. 14.035. CANCELLATION OF CERTIFICATE OF DEPOSIT OR CASH.

(a) A warehouse operator may not repossess a certificate of

deposit or cash approved by and deposited with the department in

lieu of a bond unless:

(1) the department gives written approval of a substitute bond

or letter of credit; and

(2) at least two years have passed after the expiration of the

last licensing period during which the certificate of deposit or

cash was deposited with the department in lieu of a bond.

(b) Notwithstanding any other provision of this chapter, the

department may not release a certificate of deposit or cash

deposited with the department while a claim filed within the

applicable limitations period established under Section 14.065 is

pending before the department or a court.

(c) A warehouse operator may, on written request to the

department, recover cash or a certificate of deposit from the

department before the expiration of the two-year period specified

in Subsection (a)(2) if:

(1) the department performs a closeout inspection;

(2) the department determines on the best available evidence

that no outstanding obligations exist at the time of the closeout

inspection;

(3) the warehouse operator submits with the written request a

bond:

(A) in an amount equal to six cents per bushel for 50 percent of

the total storage capacity of the facility or combination covered

by the cash or certificate of deposit the warehouse operator is

attempting to recover; and

(B) covering any failure of obligation that may have occurred

during all licensing periods covered by the cash or certificate

of deposit the warehouse operator is attempting to recover; and

(4) at least 30 days have passed since the closeout inspection.

(d) A claim against the bond required by Subsection (c) must be

filed with the department or in a court of competent jurisdiction

not later than the second anniversary of the date of the closeout

inspection.

Added by Acts 2001, 77th Leg., ch. 1124, Sec. 1, eff. Sept. 1,

2001.

SUBCHAPTER E. INSURANCE

Sec. 14.041. CASUALTY INSURANCE. (a) Except as provided by

Subsections (c) and (d), an applicant for a license must file or

have on file with the department a certificate of insurance

evidencing that:

(1) the applicant has an effective policy of insurance issued by

an insurance company authorized to do business in this state or,

with the approval of the department, by an eligible surplus lines

insurer that meets the requirements of Chapter 981, Insurance

Code, and rules adopted by the commissioner of insurance under

that chapter; and

(2) the policy insures, in the name of the applicant, all

depositor grain that is or may be in the public grain warehouse

for its full market value against loss by or due to water or

other fluid resulting from an insured peril, excluding flood and

other rising waters resulting from natural causes, malicious

mischief, vandalism, smoke, fire, internal explosion, lightning,

hail, windstorm, hurricane, or tornado.

(b) If water or other fluid resulting from an insured peril,

excluding flood and other rising waters resulting from natural

causes, malicious mischief, vandalism, smoke, fire, internal

explosion, lightning, hail, windstorm, hurricane, or tornado

destroys or damages grain in a public grain warehouse, the

warehouse operator shall, on demand by the depositor and

presentation of a receipt or other evidence of ownership, make

settlement with the depositor of the grain. The amount of the

settlement shall be the average price paid for grain of the same

grade and quality on the date of the loss at the location of the

warehouse, minus the warehouse operator's charges and advances.

If a settlement is not made before the 31st day following the

date of demand, the depositor is entitled to seek recovery from

the insurance company.

(c) An applicant is not required to file a certificate of

insurance if the applicant certifies in writing, at or before the

time the certificate of insurance is due, that all grain within

the warehouse at the time the license is to be effective is or

will be owned by the applicant free of any lien. The applicant

shall file the required certificate of insurance on or before the

first day any grain not owned by the applicant free of any lien

is stored for hire, handled for hire, or shipped for hire.

(d) An applicant for a license shall insure depositor grain for

its full market value against loss by or due to fire or windstorm

if the grain is in temporary or emergency storage. The

certificate required under Subsection (a) must evidence that the

applicant has an effective policy of insurance under this

subsection before the applicant may store depositor grain in

temporary or emergency storage.

Renumbered from Sec. 14.011 and amended by Acts 2001, 77th Leg.,

ch. 1124, Sec. 1, eff. Sept. 1, 2001; Acts 2003, 78th Leg., ch.

196, Sec. 2, eff. Sept. 1, 2003; Acts 2003, 78th Leg., ch. 1276,

Sec. 10A.505, eff. Sept. 1, 2003.

Sec. 14.042. INSURANCE CANCELLATION. (a) A warehouse operator

may not cancel an insurance policy approved by the department

unless the department gives written approval of a substitute

policy.

(b) The insurer may cancel an insurance policy by sending notice

of intent to cancel by registered or certified mail to the

department. Cancellation of an insurance policy is not effective

before the 31st day following the date the insurer mails notice

of intent to cancel. On receipt of notice of cancellation of an

insurance policy, the department shall promptly notify the

warehouse operator involved.

(c) The insurer shall send a copy of the notice required by this

section to any government agency requesting the copy.

(d) Notwithstanding any other provision of this chapter, a

public grain warehouse license is automatically suspended if the

warehouse operator fails to file a new certificate of insurance

before the cancellation of an insurance policy is effective or

fails to provide a certification of ownership under Section

14.041(c).

(e) The suspension of a license under this section continues as

long as the warehouse operator fails to maintain the insurance

required by this chapter.

Added by Acts 2001, 77th Leg., ch. 1124, Sec. 1, eff. Sept. 1,

2001.

Sec. 14.043. ADDITIONAL INSURANCE. (a) If the department

determines that an approved insurance policy is insufficient, the

department shall require the warehouse operator to obtain

additional insurance.

(b) If a license has been suspended or revoked or has expired,

the department may require continued insurance coverage by the

warehouse operator to protect depositors of grain for as long as

any receipts or open storage accounts remain outstanding.

(c) The warehouse operator shall obtain the additional insurance

required by this section and provide verification of the

additional insurance within a time specified by the department,

and the additional insurance shall be maintained or continued as

necessary to meet the requirements of this chapter.

Added by Acts 2001, 77th Leg., ch. 1124, Sec. 1, eff. Sept. 1,

2001.

SUBCHAPTER F. WAREHOUSE OPERATOR OBLIGATIONS

Sec. 14.051. POSTING OF LICENSE. Each warehouse operator shall

immediately on receipt of a license post the original in a

conspicuous place at the primary recordkeeping location for the

individually licensed facility or combination. A copy of the

license must be conspicuously posted at each facility where grain

is stored for hire, handled for hire, or shipped for hire.

Renumbered from Sec. 14.008 and amended by Acts 2001, 77th Leg.,

ch. 1124, Sec. 1, eff. Sept. 1, 2001.

Sec. 14.052. WAREHOUSE OPERATOR OBLIGATIONS. (a) The

obligations of a warehouse operator include the obligation to:

(1) deliver grain to a person holding a receipt for grain stored

in the warehouse; and

(2) maintain the quantity and quality of all grain not owned by

the warehouse operator, including open storage grain.

(b) Except as otherwise provided by this chapter or by

department rule, the obligation of a warehouse operator to

deliver grain to a person holding a receipt for grain stored in

the public grain warehouse is controlled by Section 7.403,

Business & Commerce Code.

(c) If a warehouse operator accepts for storage, shipping,

handling, purchase, or sale any grain that is nonfungible or for

which identity must be preserved, the warehouse operator shall

safeguard the grain from intermingling with grain that would

impair or destroy the identity-preserved or nonfungible nature of

the grain. Nothing in this section requires the warehouse

operator to accept grain that is nonfungible or that requires

identity preservation.

(d) The warehouse operator remains liable for the quality and

quantity of grain deposited at the warehouse and for any other

obligations established under this chapter for any period during

which the warehouse has been sealed or during any period of

probation, suspension, or revocation imposed under this chapter

or for grain abandoned by the warehouse operator unless:

(1) the warehouse operator makes a written request to the

department for access to the warehouse;

(2) the request adequately describes why access is necessary to

meet the warehouse operator's obligations under this chapter;

(3) the request adequately describes what type of access is

necessary to meet the warehouse operator's obligations under this

chapter;

(4) the request for access is reasonable;

(5) allowing access would not impair the department's ability to

preserve evidence, warehouse operator records, or depositor grain

assets; and

(6) the request is denied by the department or the department

imposes unreasonable restrictions that prevent the operator from

meeting the obligations described in the request.

(e) The department is entitled, on behalf of depositors, to

recover from the warehouse operator's bond the cost of damages

suffered by depositors as a result of sealing the warehouse or as

a result of the warehouse operator abandoning the warehouse and

the grain contained in the warehouse.

Acts 1981, 67th Leg., p. 1052, ch. 388, Sec. 1, eff. Sept. 1,

1981; Acts 1993, 73rd Leg., ch. 553, Sec. 2, eff. Sept. 1, 1993.

Renumbered from Sec. 14.0091, 14.021 and amended by Acts 2001,

77th Leg., ch. 1124, Sec. 1, eff. Sept. 1, 2001.

Sec. 14.053. RECEIPT FORMS. (a) A warehouse operator shall use

one set of serially numbered and sequentially issued receipts for

all warehouses operated under a single license. In addition to a

unique serial number, each receipt form must contain all of the

information prescribed by department rule. If further provided by

department rule, the warehouse operator shall request the receipt

forms from the printer on a form approved, prescribed, or

furnished by the department.

(b) The warehouse operator shall provide the department with an

exemplar of the receipt forms and an affidavit from the printer

showing the number of receipts printed and their serial numbers

before issuing any receipt from the printed set. The exemplar and

affidavit required by this subsection shall be provided each time

a new set of receipts is printed.

(c) The warehouse operator may use an electronic receipt system

if the provider of the electronic receipt system has been

approved by the department or by the United States Department of

Agriculture or any other federal agency that issues a license for

the operation of a public grain warehouse.

(d) The department may require a warehouse operator to provide a

bond to cover any loss resulting from unlawful use of a receipt.

The department shall determine the form and the amount of the

bond, but the amount may not exceed $5,000.

Renumbered from Sec. 14.020 and amended by Acts 2001, 77th Leg.,

ch. 1124, Sec. 1, eff. Sept. 1, 2001.

Sec. 14.054. ISSUANCE OF SCALE WEIGHT TICKET OR RECEIPT. (a)

On receiving grain, a warehouse operator shall issue to the

person delivering the grain a serially numbered scale weight

ticket in a form approved by the department.

(b) On application of a depositor, the warehouse operator shall

issue to the depositor a Texas grain warehouse receipt, which

must be:

(1) in a form prescribed by the department; and

(2) in conformity with Chapter 7, Business & Commerce Code.

(c) A Texas grain warehouse receipt issued under this subchapter

is subject to the provisions of Chapter 7, Business &

Commerce Code.

(d) A Texas grain warehouse receipt is a negotiable document of

title. A scale weight ticket is not a negotiable document of

title.

(e) Except as provided by Section 14.055 for duplicate receipts,

a warehouse operator may not issue two scale weight tickets or

two receipts bearing the same number during any calendar year.

(f) Unless previously canceled in accordance with the provisions

of Chapter 7, Business & Commerce Code, a Texas grain

warehouse receipt issued under this chapter expires 10 years

after the date of issuance.

Renumbered from Sec. 14.017 and amended by Acts 2001, 77th Leg.,

ch. 1124, Sec. 1, eff. Sept. 1, 2001.

Sec. 14.055. DUPLICATE RECEIPTS. (a) Except as otherwise

provided by this section, if a receipt issued under this chapter

is outstanding, another receipt covering all or part of the grain

covered by the initial receipt may not be issued by the warehouse

operator or any other person. If a receipt is lost, stolen, or

destroyed, the owner is entitled to a new receipt as a duplicate

or substitute for the missing receipt. The duplicate or

substitute receipt has the same legal effect as the original

receipt and must:

(1) state that it is in lieu of the original receipt; and

(2) bear the number and date of the original receipt.

(b) Before issuing a duplicate receipt, the warehouse operator

shall require from the owner an indemnity bond of double the

market value of the grain covered by the missing receipt. The

bond must be in a form and with a surety prescribed by the

department to fully protect all rights under the missing receipt.

(c) A warehouse operator may not obtain, purchase, or become a

surety on a bond for a lost, stolen, or destroyed receipt.

(d) A court may not order delivery of grain covered by a lost,

stolen, or destroyed receipt without requiring the bond provided

by this section.

Renumbered from Sec. 14.019 and amended by Acts 2001, 77th Leg.,

ch. 1124, Sec. 1, eff. Sept. 1, 2001.

Sec. 14.056. RECEIPT FOR GRAIN OWNED BY WAREHOUSE OPERATOR. A

warehouse operator may issue a receipt for grain that is owned by

the warehouse operator, in whole or part, and located in the

warehouse operator's warehouse. The negotiation, transfer, sale,

or pledge of that receipt may not be defeated because of its

ownership.

Renumbered from Sec. 14.018 and amended by Acts 2001, 77th Leg.,

ch. 1124, Sec. 1, eff. Sept. 1, 2001.

Sec. 14.057. RECORDS. (a) Every warehouse operator shall keep

in a safe place complete and correct records and accounts

pertaining to the public grain warehouse, including records and

accounts of:

(1) grain received and withdrawn from the warehouse;

(2) unissued receipts in the warehouse operator's possession;

(3) receipts and scale weight tickets issued by the warehouse

operator; and

(4) receipts returned to and canceled by the warehouse operator.

(b) The warehouse operator shall retain the records required by

this section for the period of time prescribed by the department.

The warehouse operator shall retain copies of receipts or other

documents evidencing ownership of grain or liability of a

warehouse operator as long as the documents are outstanding. If

the documents are canceled, the warehouse operator shall retain

the documents or receipts for a period of not less than two years

from the date of cancellation.

(c) The warehouse operator shall:

(1) clearly mark all canceled receipts "canceled" and mark on

the face of each receipt the date of the cancellation;

(2) keep records and accounts required by this section separate

from the records and accounts of other businesses;

(3) issue in numerical order all scale weight tickets and

receipts; and

(4) keep in numerical order copies of the scale weight tickets

and receipts issued by the warehouse operator.

(d) In records kept under this section, grain may be designated

as company-owned grain only if:

(1) the grain has been paid for and is wholly owned by the

warehouse operator; or

(2) the ownership of the grain has been transferred to the

warehouse operator under a written contract of purchase.

(e) The warehouse operator shall report to the department on

forms furnished by the department the following information on

scale weight tickets used in the warehouse operator's business:

(1) the number of scale weight tickets printed;

(2) the serial numbers of the scale weight tickets printed; and

(3) the printer of the scale weight tickets.

(f) The warehouse operator shall make any records required by

this section or department rule accessible and available for

inspection by the department at any reasonable time.

Renumbered from Sec. 14.022 and amended by Acts 2001, 77th Leg.,

ch. 1124, Sec. 1, eff. Sept. 1, 2001.

Sec. 14.058. POSTING OF STORAGE RATES OR TARIFFS. (a) A public

grain warehouse licensed under this chapter shall post a copy of

all storage rates and tariffs charged by the warehouse operator

at the main warehouse office and at each warehouse facility

operating under the license.

(b) The warehouse operator shall post any change to the posted

storage rates or tariffs not later than the third day before the

day on which the change is to take effect.

(c) Department inspectors shall check compliance with this

section during inspections of a public grain warehouse under this

chapter.

Renumbered from Sec. 14.036 and amended by Acts 2001, 77th Leg.,

ch. 1124, Sec. 1, eff. Sept. 1, 2001.

Sec. 14.059. INSPECTIONS; FEE. (a) On request by the

department, a warehouse operator shall report to the department

on the condition, operation, and business of each public grain

warehouse that the warehouse operator operates and all grain

stored in those warehouses.

(b) The department shall inspect each public grain warehouse at

least once annually and may make additional inspections as the

department considers necessary. A warehouse operator may request

that the department make additional inspections.

(c) The department shall collect from the warehouse operator

whose public grain warehouse is inspected an inspection fee for

an annual inspection or an inspection requested by the warehouse

operator, but may not collect an inspection fee for other

inspections unless the inspection is conducted:

(1) under the terms of an agreed or ordered suspension or

probation;

(2) in response to a complaint that the warehouse operator has

not complied with the duties and obligations provided for by this

chapter and the complaint is determined by the department to be

valid;

(3) as a follow-up inspection to:

(A) determine whether a shortage of grain discovered by the

department has been corrected;

(B) obtain records not immediately available at the location

designated as the recordkeeping location in department records or

to which access was refused during a previous inspection;

(C) ensure that recordkeeping discrepancies discovered during a

previous inspection have been corrected; or

(D) monitor a suspension or probation under this chapter; or

(4) to monitor termination of arrangements for storing,

shipping, or handling of grain under this chapter.

(d) The department by rule shall set the inspection fee.

Amended by Acts 1995, 74th Leg., ch. 419, Sec. 2.12, eff. Sept.

1, 1995. Renumbered from Sec. 14.014 and amended by Acts 2001,

77th Leg., ch. 1124, Sec. 1, eff. Sept. 1, 2001.

SUBCHAPTER G. REMEDIES AND CLAIMS

Sec. 14.061. WAREHOUSE RECEIPT AS PRIMA FACIE EVIDENCE. In an

action involving a warehouse operator that is brought under this

chapter, a warehouse receipt constitutes prima facie evidence of

the truth of the facts stated in the receipt.

Renumbered from Sec. 14.0261 and amended by Acts 2001, 77th Leg.,

ch. 1124, Sec. 1, eff. Sept. 1, 2001.

Sec. 14.062. INVALID RECEIPTS. Notwithstanding any other

provision of this code or the Business & Commerce Code, a

receipt for grain is void as to any person who receives the

receipt with knowledge that the grain purported to be covered by

the receipt was not, at the time the receipt was issued, actually

stored in the warehouse of the warehouse operator issuing the

receipt.

Added by Acts 2001, 77th Leg., ch. 1124, Sec. 1, eff. Sept. 1,

2001.

Sec. 14.063. TERMINATION OF STORAGE. (a) A warehouse operator

desiring to terminate the storage of grain in the warehouse

operator's warehouse, including grain that is abandoned or is

unclaimed prior to the sale of a warehouse, shall do so in

accordance with Sections 7.206 and 7.210, Business & Commerce

Code, except that the warehouse operator is not required to hold

the balance of the proceeds of a sale, but may transfer the

balance to the comptroller, who shall treat the money in the same

manner as an escheated bank account.

(b) A purchaser in good faith of grain sold under Section 7.210,

Business & Commerce Code, takes the grain free of any rights

of the holder of the receipt, but the receipt is evidence of

entitlement to the escheated funds deposited with the comptroller

under Subsection (a).

Amended by Acts 1997, 75th Leg., ch. 1423, Sec. 2.01, eff. Sept.

1, 1997. Renumbered from Sec. 14.023 and amended by Acts 2001,

77th Leg., ch. 1124, Sec. 1, eff. Sept. 1, 2001.

Sec. 14.064. CERTAIN LOADOUT FEES PROHIBITED. (a) A warehouse

operator may not charge a fee for loading out grain if the

loadout was the result of the misconduct of the warehouse

operator.

(b) Misconduct under this section includes:

(1) violation of this chapter as established by final,

unappealable order of the commissioner;

(2) conviction of a crime, including a plea of nolo contendere,

described as an offense under this chapter; and

(3) conviction of a crime, including a plea of nolo contendere,

described as an offense under the Penal Code and involving any

type of fraud or theft related to the storing, shipping,

handling, sale, or purchase of grain or the sale or purchase of

grain handling, shipping, or storage equipment or warehouse

structures or other assets.

(c) A loadout fee collected during a period of suspension of a

warehouse operator's license by the department, after revocation

of a warehouse operator's license, or during a period in which

criminal charges are pending against a warehouse operator, shall

be placed in an escrow account by the warehouse operator until:

(1) the department's suspension is lifted;

(2) the prosecutor ceases to pursue criminal charges;

(3) the indictment or information is dismissed by a court; or

(4) the warehouse operator is acquitted.

(d) If misconduct is finally determined to have occurred as

provided by Subsection (b), the loadout fees placed in escrow

shall be returned to the person originally paying those fees. The

loadout fees placed in escrow shall be returned to the warehouse

operator if the warehouse operator is found not to have committed

misconduct by acquittal, by the dismissal of the criminal

charges, or by final order of the commissioner.

Added by Acts 2001, 77th Leg., ch. 1124, Sec. 1, eff. Sept. 1,

2001.

Sec. 14.065. RECOVERY ON BOND; LIABILITY OF WAREHOUSE OPERATOR.

(a) If no action on the bond or cash, certificate of deposit, or

letter of credit deposited in lieu of a bond of a warehouse

operator is begun before the 31st day after the date of a written

demand to the department, a depositor has a right of action on

the bond or cash, certificate of deposit, or letter of credit

deposited in lieu of a bond for recovery of damages suffered by

the depositor as a result of the failure of the warehouse

operator to comply with any condition of the bond, or if cash, a

certificate of deposit, or a letter of credit is deposited in

lieu of a bond, failure to comply with any obligation of the

warehouse operator under this chapter that would have been

covered by a bond.

(b) Recovery on a bond shall be prorated if claims exceed

liability on a bond, but a depositor suing on a bond is not

required to join other depositors in a suit. The burden of

establishing proration is on the surety as a matter of defense or

is on the department as intervenor on behalf of other depositors.

(c) A warehouse operator is liable for damages for loss of or

injury to grain caused by the warehouse operator's failure to

exercise the care that a reasonably prudent person would exercise

in regard to the grain under similar circumstances, but, unless

otherwise agreed, a warehouse operator is not liable for damages

to grain that could not have been avoided through the exercise of

that care.

(d) A person who files an action on a bond under this section

must serve notice of the suit on the department in the same

manner and within the same period as for the defendant or surety

who issued the bond.

(e) On authentication by the department, the court shall accept

into evidence as a public record any report prepared by the

department under this chapter that describes potential bond

claims by other depositors, regardless of whether any of those

depositors are joined in the suit.

(f) A person is prohibited from filing a claim on an invalid

receipt.

(g) An action under this section must be brought not later than

the second anniversary of the date of expiration of the public

grain warehouse license in effect at the time the claim arose.

(h) The department by rule may set a limitations period for

filing claims with the department on a bond filed with the

department or cash, a certificate of deposit, or a letter of

credit deposited with the department in lieu of a bond.

Renumbered from Sec. 14.010 and amended by Acts 2001, 77th Leg.,

ch. 1124, Sec. 1, eff. Sept. 1, 2001.

Sec. 14.066. APPEAL OF DEPARTMENT ACTION BY WAREHOUSE OPERATOR.

(a) A department action or order affecting a warehouse operator

under this chapter, other than by rulemaking, assessment of an

administrative penalty, or imposition of a license sanction,

including a suspension under Section 14.083(c), is appealable in

accordance with this section.

(b) Not later than the 10th day after the date the department

takes an action or issues an order described by Subsection (a),

the warehouse operator may serve notice on the department to

appear in a district court of Travis County or the district court

of the county in which the public grain warehouse is located. The

court shall fix the time of the hearing not less than 3 days or

more than 20 days after the date of service of the notice.

(c) The burden is on the warehouse operator to show by a

preponderance of the evidence that the action taken or order

issued by the department was not authorized under this chapter

or, if authorized, was an abuse of the department's discretion.

Added by Acts 2001, 77th Leg., ch. 1124, Sec. 1, eff. Sept. 1,

2001.

SUBCHAPTER H. OFFENSES

Sec. 14.071. GENERAL PENALTY. (a) A person commits an offense

if the person violates a provision of this chapter for which an

offense is not expressly provided.

(b) An offense under this section is a Class B misdemeanor.

Renumbered from Sec. 14.027 and amended by Acts 2001, 77th Leg.,

ch. 1124, Sec. 1, eff. Sept. 1, 2001.

Sec. 14.072. PENALTY FOR OPERATING WITHOUT A LICENSE. (a) A

person commits an offense if the person:

(1) transacts any public grain warehouse business without first

obtaining a license required by this chapter; or

(2) continues to transact public grain warehouse business after

a license has been revoked or suspended, or the license holder

has been placed on probation, except as permitted under Section

14.084.

(b) An offense under this section is a felony of the third

degree.

(c) A person commits a separate offense for each day business

prohibited by this section is carried on.

Renumbered from Sec. 14.028 and amended by Acts 2001, 77th Leg.,

ch. 1124, Sec. 1, eff. Sept. 1, 2001.

Sec. 14.073. PENALTY FOR FRAUD. (a) A person commits an

offense if the person:

(1) issues or aids in issuing a receipt or scale weight ticket

knowing that the grain covered by the receipt or scale weight

ticket has not been actually received at the grain warehouse;

(2) issues or aids in issuing a duplicate or additional

negotiable receipt for grain knowing that a former negotiable

receipt for the same grain or any part of the grain is

outstanding except as permitted by Section 14.055; or

(3) fraudulently and without proper authority represents,

forges, alters, counterfeits, or simulates any license, scale

weight ticket, or receipt provided for by this chapter.

(b) An offense under this section is a felony of the second

degree.

Renumbered from Sec. 14.029 and amended by Acts 2001, 77th Leg.,

ch. 1124, Sec. 1, eff. Sept. 1, 2001.

Sec. 14.074. PENALTY FOR UNLAWFUL DELIVERY. (a) A person

commits an offense if the person:

(1) delivers grain out of a public grain warehouse knowing that

a negotiable receipt for the grain is outstanding and without

possessing that receipt; or

(2) delivers grain out of a public grain warehouse:

(A) knowing that a nonnegotiable receipt or scale weight ticket

is outstanding;

(B) without the prior approval of the person lawfully entitled

to delivery; and

(C) without the delivery being shown on the appropriate records

of the warehouse operator.

(b) It is an affirmative defense to prosecution under this

section that the person's action is:

(1) a sale or other disposition of grain in lawful enforcement

of a warehouse operator's lien;

(2) a warehouse operator's lawful termination of a storing,

shipping, or handling agreement;

(3) a delivery to the person lawfully entitled to delivery;

(4) a delivery authorized by prior approval of the person

lawfully entitled to delivery and the delivery is shown on the

appropriate records of the warehouse operator;

(5) necessary to prevent destruction of the grain;

(6) taken under the order of a state or federal court; or

(7) permitted by a rule of the department necessary to carry out

this chapter.

(c) An offense under this section is a felony of the second

degree.

Renumbered from Sec. 14.030 and amended by Acts 2001, 77th Leg.,

ch. 1124, Sec. 1, eff. Sept. 1, 2001.

Sec. 14.075. PENALTY FOR FRAUDULENTLY ISSUING A SCALE WEIGHT

TICKET OR RECEIPT. (a) A person commits an offense if the

person fraudulently issues or aids in fraudulently issuing a

receipt or scale weight ticket knowing that it contains a false

statement.

(b) An offense under this section is a felony of the second

degree.

Renumbered from Sec. 14.031 and amended by Acts 2001, 77th Leg.,

ch. 1124, Sec. 1, eff. Sept. 1, 2001.

Sec. 14.076. PENALTY FOR CHANGING A RECEIPT OR SCALE WEIGHT

TICKET AFTER ISSUANCE. (a) A person commits an offense if the

person changes a receipt or scale weight ticket after its

issuance.

(b) It is a defense to prosecution under this section that the

change on the receipt or scale weight ticket is a notation by the

warehouse operator for partial delivery or corrections made by

the warehouse operator to reflect accuracy of accounts.

(c) An offense under this section is a felony of the second

degree.

Renumbered from Sec. 14.032 and amended by Acts 2001, 77th Leg.,

ch. 1124, Sec. 1, eff. Sept. 1, 2001.

Sec. 14.077. PENALTY FOR DEPOSITING GRAIN WITHOUT TITLE. (a) A

person commits an offense if the person:

(1) deposits grain without having title to the grain or deposits

grain on which there is a lien or mortgage;

(2) receives for the grain a negotiable receipt; and

(3) negotiates the receipt for value with intent to deceive and

without disclosing the person's lack of title or the existence of

a lien or mortgage on the grain.

(b) An offense under this section is a felony of the second

degree.

Renumbered from Sec. 14.033 and amended by Acts 2001, 77th Leg.,

ch. 1124, Sec. 1, eff. Sept. 1, 2001.

Sec. 14.078. PENALTY FOR STEALING GRAIN OR

State Codes and Statutes

Statutes > Texas > Agriculture-code > Title-2-department-of-agriculture > Chapter-14-regulation-of-public-grain-warehouse-operators

AGRICULTURE CODE

TITLE 2. DEPARTMENT OF AGRICULTURE

CHAPTER 14. REGULATION OF PUBLIC GRAIN WAREHOUSE OPERATORS

SUBCHAPTER A. DEFINITIONS

Sec. 14.001. DEFINITIONS. (a) In this chapter:

(1) "Depositor" means a person who:

(A) delivers grain to a public grain warehouse for storing of

the grain for hire, handling of the grain for hire, or shipping

of the grain for hire;

(B) is the owner or legal holder of an outstanding receipt for

grain stored in the public grain warehouse issuing the receipt;

or

(C) is lawfully entitled to possession of grain stored in a

public grain warehouse.

(2) "Grain" means wheat, grain sorghum, corn, oats, barley, rye,

soybeans, or any other grain, peas, or beans for which federal

grain standards are established.

(3) "Open storage grain" means grain that:

(A) is received for storage by a public grain warehouse located

in this state;

(B) is not covered by a negotiable warehouse receipt; and

(C) is not owned by the lessee, owner, or operator of the

warehouse in which it is stored.

(4) "Public grain warehouse" means a building, bin, or similar

structure located in this state and used for:

(A) the storing of grain for hire, shipping of grain for hire,

or handling of grain for hire; or

(B) the purchasing and selling of grain, including grain on

which payment is deferred.

(5) "Receipt" means a negotiable Texas grain warehouse receipt

issued by a warehouse operator licensed under this chapter.

(6) "License" includes a renewal of or an amendment to a

license.

(7) "Scale weight ticket" means a load slip other than a receipt

given to a depositor or other person by a warehouse operator

licensed under this chapter on:

(A) initial delivery of the grain to the warehouse; or

(B) weighing of the grain on the grain warehouse operator's

scale, regardless of the destination of the grain.

(8) "Receipted grain" means grain that is stored in a public

grain warehouse and for which a Texas grain warehouse receipt has

been issued and has not been canceled.

(9) "Warehouse operator" means a person engaged in the business

of operating a public grain warehouse.

(b) For purposes of this chapter, the term "public grain

warehouse" as defined by Subsection (a)(4) does not include

railcars, trucks, boats, or other vehicles when used to transport

grain.

(c) For purposes of this chapter, in those sections that require

the warehouse operator to cooperate with or provide information

to the department or issue documents or deliver grain to

customers of the warehouse operator and in those sections that

require notice to be provided to the warehouse operator by the

department, the term "warehouse operator" includes all employees,

agents, or other persons authorized by the warehouse operator to

issue receipts or scale weight tickets or sign contracts or other

agreements.

Acts 1981, 67th Leg., p. 1046, ch. 388, Sec. 1, eff. Sept. 1,

1981. Amended by Acts 2001, 77th Leg., ch. 1124, Sec. 1, eff.

Sept. 1, 2001.

SUBCHAPTER B. GENERAL PROVISIONS

Sec. 14.011. LIMITATION OF CHAPTER. This chapter does not apply

to:

(1) a public grain warehouse covered by a license for the

operation of a public grain warehouse issued by the United States

Department of Agriculture or other federal agency;

(2) an individual producer-owner who does not receive from

others grain for storage or handling for hire;

(3) a person whose business is manufacturing grain or selling

manufactured grain and who receives all grain with the intent to

manufacture the grain or sell manufactured grain; or

(4) a person who receives grain with the intent of using the

grain for planting seed or for feeding livestock on the premises

where the grain is received.

Acts 1981, 67th Leg., p. 1046, ch. 388, Sec. 1, eff. Sept. 1,

1981. Renumbered from Sec. 14.002 and amended by Acts 2001, 77th

Leg., ch. 1124, Sec. 1, eff. Sept. 1, 2001.

Sec. 14.012. BUSINESS INFORMATION. (a) The following

information, prepared by the department in the course of its

regulatory authority under this chapter or required to be

submitted to the department in accordance with the department's

administration of this chapter, is confidential and not subject

to public disclosure:

(1) inspection or investigation reports containing information

regarding grain inventory; and

(2) financial information provided to the department to

establish net worth for purposes of licensing.

(b) Notwithstanding Subsection (a), inspection reports

containing information regarding grain inventory of a warehouse

operator or financial information of a warehouse operator

provided to the department to establish net worth may be:

(1) entered into evidence without sealing and made public in:

(A) an administrative proceeding commenced by the department

against a warehouse operator;

(B) a civil or criminal proceeding commenced by a county

attorney, a district attorney, or the attorney general, either

independently or on behalf of the department, against a warehouse

operator; or

(C) a civil proceeding commenced by the warehouse operator

against the department;

(2) provided to the issuer of a warehouse operator's bond or

letter of credit for the purpose of establishing a claim on the

warehouse operator's bond or letter of credit;

(3) disclosed to the public after:

(A) revocation of a warehouse operator's license;

(B) a voluntary closeout of all of the license holder's

facilities in this state;

(C) a petition for bankruptcy has been filed; or

(D) a receiver is appointed for the warehouse operator's assets;

or

(4) disclosed to any federal agency or any agency of another

state conducting a compliance inspection or criminal or civil

investigation involving the handling, storing, shipping, selling,

purchasing, or receipt of grain.

Amended by Acts 2001, 77th Leg., ch. 1124, Sec. 1, eff. Sept. 1,

2001.

Sec. 14.013. RIGHT TO INTERVENE AND NOTIFICATION OF DEPARTMENT.

(a) The department may intervene in a suit for receivership,

garnishment, bankruptcy, or any other legal action affecting the

assets of a warehouse operator licensed under this chapter or the

grain assets of a depositor in a warehouse operated under a

license issued by the department, including, to assert the rights

of depositors not joined in the suit, a suit brought against a

bond or surety under Section 14.065.

(b) Any person who files a suit for receivership, garnishment,

or bankruptcy or who commences any other legal action affecting

the assets of a warehouse operator licensed under this chapter or

the grain assets of a depositor in a warehouse operated under a

license issued by the department, including a suit against a bond

or surety under Section 14.065, must give notice to the

department of the suit or legal action.

(c) Notice under this section must be in writing and delivered

to the department by certified mail, registered mail, or

commercial delivery service not later than the 20th day after the

date on which the suit or legal action is commenced.

(d) The judgment in an action described by Subsection (a) is

voidable if the notice required by this section is not provided.

(e) The court in which a suit or other legal action described by

Subsection (a) is commenced may impose appropriate sanctions

against a party who fails to provide the notice required by this

section.

Amended by Acts 2001, 77th Leg., ch. 1124, Sec. 1, eff. Sept. 1,

2001.

Sec. 14.014. RECEIVERSHIP AFFECTING WAREHOUSE ASSETS. (a) A

person appointed receiver for the assets of a warehouse operator

licensed under this chapter is not required to obtain a license

from the department if the person:

(1) is bonded and insured as described by Subsection (b); and

(2) after being appointed, does not:

(A) receive additional grain for storing for hire, handling for

hire, or shipping for hire; or

(B) purchase grain for resale.

(b) A person appointed receiver shall maintain:

(1) a bond in the same amount required for a licensed warehouse

operator; and

(2) casualty insurance in the same amount and type as required

for a licensed warehouse operator.

(c) A person appointed receiver shall file proof of proper

bonding and verification of insurance with the department on or

before the date the person is appointed to act as receiver.

Amended by Acts 2001, 77th Leg., ch. 1124, Sec. 1, eff. Sept. 1,

2001.

Sec. 14.015. POWERS AND DUTIES OF DEPARTMENT. The department

shall administer this chapter and may:

(1) investigate the storing, shipping, and handling of grain and

complaints relating to these activities through the inspection

of:

(A) any public grain warehouse;

(B) the grain stored in any warehouse; or

(C) all property and records pertaining to a warehouse;

(2) determine whether a warehouse for which a license has been

issued or applied for is suitable for properly storing, shipping,

or handling grain that is stored in or expected to be stored in

the warehouse;

(3) include field seed within the definition given to "grain" by

Section 14.001;

(4) require that a warehouse operator keep records or submit

reports the department determines are necessary in the

administration of this chapter;

(5) require a warehouse operator or depositor to terminate

storing, shipping, and handling agreements within a time

specified by the department:

(A) on closeout or revocation of the warehouse operator's

license;

(B) if grain has been abandoned by the warehouse operator or a

depositor and the warehouse operator or depositor cannot be

located after diligent effort; or

(C) on issuance of an injunction ordering an unlicensed

warehouse operator to cease operations;

(6) prescribe forms, including the form of receipts, bonds, or

applications for licenses;

(7) for purposes of determining compliance with this chapter or

amounts due to a depositor in an action taken by the department

against a surety or surety instrument under this chapter,

determine a warehouse operator's specific obligations to a

depositor, including:

(A) the type, quantity, or quality of open storage or receipted

grain due a depositor;

(B) the payment owed a depositor if a shortage or variance

exists in the type, quantity, or quality of a depositor's open

storage or receipted grain;

(C) the time and manner of delivery of grain due a depositor;

and

(D) whether a warehouse operator has failed to deliver a

depositor's open storage or receipted grain within a reasonable

time;

(8) by written order require a warehouse operator to deliver

grain of a particular type, quantity, and quality to a depositor

at a particular time and in a particular manner based on the

department's determination that the required delivery of grain is

due the depositor;

(9) classify grain by category, including open storage,

receipted, identity-preserved, company-owned, and abandoned

grain, and adopt rules regarding the storage, shipping, or

handling of classified grain, including recordkeeping and

accounting requirements;

(10) seize the records of a warehouse operator, including any

electronic records or the equipment or media on which the records

are stored, during a period of suspension of a warehouse

operator's license;

(11) seal or post as sealed, or both seal and post as sealed,

the warehouse of a warehouse operator:

(A) whose license has been suspended or revoked;

(B) whose license has expired; or

(C) who is unlicensed;

(12) seal or post as sealed, or both seal and post as sealed, a

warehouse that is found to be unsafe for inspection or unsuitable

for the storage of grain;

(13) during reasonable hours and to determine compliance with

this chapter, enter any facility where the department reasonably

believes grain is being handled, stored, shipped, purchased, or

sold to examine:

(A) the facility's storage, shipping, handling, and financial

records;

(B) grain; and

(C) physical structures;

(14) determine the suitability of a warehouse for storing,

shipping, or handling grain or for adequate and safe inspection

and, if found unsuitable for any of those purposes, order

corrective action;

(15) require the warehouse operator to notify the department

regarding:

(A) the handling of commodities that may pose a hazard to

humans, animals, the grain of other depositors in the warehouse

operator's warehouse, or the grain industry;

(B) existing hazards to inspection, including recent or ongoing

fumigations of warehouse facilities and unsafe or inoperable

warehouse equipment or structures; or

(C) any change in ownership, management, or legal or financial

status of a warehouse licensed under this chapter;

(16) require by rule that sales, purchase, or brokerage

agreements between a warehouse operator and a producer be in

writing and contain written terms or provisions the department

considers appropriate to protect producers, depositors, and

warehouse operators and to ensure the department's ability to

carry out its regulatory functions under this chapter;

(17) regulate a warehouse operator's temporary storage of grain

in a non-warehouse location or facility;

(18) require segregation of grain requiring identity

preservation;

(19) enter into cooperative agreements with agencies of the

federal government or other states to carry out the purposes of

this chapter;

(20) recover the unused warehouse receipts of a warehouse

operator:

(A) during any period of probation or suspension of the

warehouse operator's license;

(B) on revocation or voluntary surrender of the warehouse

operator's license; or

(C) during any period in which the warehouse operator is not

licensed, including after a failure to timely renew the license;

(21) order corrective action or impose any reasonable condition

of probation necessary to accomplish the regulatory goals

authorized by this chapter; and

(22) adopt rules necessary to carry out the provisions of this

chapter.

Acts 1981, 67th Leg., p. 1047, ch. 388, Sec. 1, eff. Sept. 1,

1981. Amended by Acts 1993, 73rd Leg., ch. 553, Sec. 1, eff.

Sept. 1, 1993; Acts 1995, 74th Leg., ch. 419, Sec. 3.06, eff.

Sept. 1, 1995. Renumbered from Sec. 14.003 and amended by Acts

2001, 77th Leg., ch. 1124, Sec. 1, eff. Sept. 1, 2001.

SUBCHAPTER C. LICENSING

Sec. 14.021. LICENSE REQUIRED. A person may not operate a

public grain warehouse without first obtaining from the

department a license in the person's name covering the warehouse.

Acts 1981, 67th Leg., p. 1047, ch. 388, Sec. 1, eff. Sept. 1,

1981. Renumbered from Sec. 14.004 and amended by Acts 2001, 77th

Leg., ch. 1124, Sec. 1, eff. Sept. 1, 2001.

Sec. 14.022. LICENSING OF MULTIPLE WAREHOUSES. (a) In this

section:

(1) "Combination" means a group of two or more public grain

warehouses or facilities operated under a single set of complete

records. For purposes of this chapter, a combination is treated

as if it were a single public grain warehouse.

(2) "Facility" means two or more public grain warehouses located

in close proximity on the same general location. For purposes of

this chapter, and except when part of a combination, a facility

is treated as if it were a single public grain warehouse.

(b) A warehouse operator may operate all public grain warehouses

or facilities within an area no larger than 60 miles in diameter

as a combination if a single license covering the combination is

obtained from the department and:

(1) a single recordkeeping system covering only warehouses

within the combination is maintained by the warehouse operator;

(2) a single, unique set of sequentially numbered receipts

containing all information required by department rule and

bearing the name of the license holder and a unique combination

name, but not bearing individual warehouse or facility names, is

used for the combination;

(3) for each scale operated by the warehouse operator, the

warehouse operator issues and maintains a single, unique set of

sequentially numbered scale weight tickets containing all

information required by department rule and bearing the name of

the license holder and a unique name identifying the facility

where the scale is located;

(4) a single daily position report covering all storage

obligations of the combination and only the combination,

including company-owned grain, and containing all information

required by department rule is maintained;

(5) all original warehouse operator records, except for scale

weight tickets, relating to transactions or storage obligations

involving the combination are maintained at a single location and

separate from all other businesses and separately licensed

warehouse operations of the warehouse operator; and

(6) except as provided by department rule, a single unique bond

or bond substitute is used to cover the combination.

(c) Except as permitted while operating a combination, a

warehouse operator may not combine or intermingle assets, storage

obligations, liabilities of any kind, records or record entries,

contractual obligations, other transactions of any kind, or any

other business or operating information from different warehouses

or businesses owned, managed, or operated by the warehouse

operator. Each licensed combination or individually licensed

facility shall be operated as a separate entity under a single,

unique name and, except as provided by department rule, shall be

covered by a single, separate bond or bond substitute.

Amended by Acts 2001, 77th Leg., ch. 1124, Sec. 1, eff. Sept. 1,

2001.

Sec. 14.023. LICENSING PROCEDURE. (a) The department may

issue, renew, or amend a license following a determination that:

(1) the applicant has filed an acceptable bond, a financial

statement in a form prescribed by the department, and proof of

casualty insurance required by this chapter;

(2) the warehouse is suitable for storage of grain and

inspection by department personnel;

(3) the applicant has complied with this chapter and rules

adopted under this chapter; and

(4) the applicant has met the net worth or deficiency bond

requirements of Section 14.031(e).

(b) An applicant must file a separate application for each

license, renewal, or amendment and shall accompany each

application for a license or renewal with an annual license fee,

as provided by department rule. The department shall prescribe

the information to be contained in the application. A person who

fails to submit a renewal fee on or before the expiration date of

the license must pay, in addition to the renewal fee, the late

fee provided by Section 12.024.

(c) If an applicant for a license previously operated a grain

warehouse in this state or another state and that warehouse

ceased to operate while the applicant was the operator, the

applicant must submit with the application evidence acceptable to

the department that all debts from the previous operation

evidenced by receipts have been satisfied. The department may not

issue a license to an applicant who the department determines has

not satisfied all such debts from a previous operation.

Acts 1981, 67th Leg., p. 1047, ch. 388, Sec. 1, eff. Sept. 1,

1981. Amended by Acts 1983, 68th Leg., p. 4283, ch. 682, Sec. 2,

eff. Sept. 1, 1983; Acts 1987, 70th Leg., ch. 50, Sec. 3, eff.

April 30, 1987; Acts 1989, 71st Leg., ch. 230, Sec. 32, eff.

Sept. 1, 1989; Acts 1991, 72nd Leg., 1st C.S., ch. 5, Sec. 9.05,

eff. Sept. 1, 1991; Acts 1995, 74th Leg., ch. 419, Sec. 2.11,

eff. Sept. 1, 1995. Renumbered from Sec. 14.005 and amended by

Acts 2001, 77th Leg., ch. 1124, Sec. 1, eff. Sept. 1, 2001.

Sec. 14.024. REQUIREMENT FOR INCREASING CAPACITY. A warehouse

operator may not use any increased warehouse capacity without

first obtaining written approval from the department.

Acts 1981, 67th Leg., p. 1048, ch. 388, Sec. 1, eff. Sept. 1,

1981. Renumbered from Sec. 14.007 and amended by Acts 2001, 77th

Leg., ch. 1124, Sec. 1, eff. Sept. 1, 2001.

SUBCHAPTER D. BONDING

Sec. 14.031. BOND. (a) In accordance with this section, each

applicant for a license shall file or have on file a bond with

the department.

(b) The bond must:

(1) be payable to the State of Texas;

(2) be executed by the applicant as principal;

(3) be issued by a corporate surety licensed to do business as

surety in the State of Texas; and

(4) be in a form and contain terms and conditions prescribed by

the department.

(c) The bond must be conditioned on faithful performance of:

(1) each obligation of a warehouse operator as to receipted

grain and open storage grain under this chapter and rules adopted

under this chapter, from the effective date of the bond until the

license is revoked or the bond is canceled, whichever occurs

first, whether or not the warehouse remains licensed; and

(2) except for a contract for the purchase of grain or to act as

broker for the grain, each obligation of a warehouse operator

under any contract with a depositor that exists on the effective

date of the bond or is assumed after the effective date of the

bond and before the license is revoked or the bond is canceled,

whichever occurs first and whether or not the warehouse remains

licensed.

(d) The bond must be in an amount of not less than $20,000 and

be based on six cents per bushel of storage capacity.

(e) If the actual net worth of an applicant equals less than 25

cents per bushel of storage capacity, the applicant shall file a

deficiency bond in an amount equal to the difference between the

actual net worth and an amount determined by multiplying 25 cents

times each bushel of storage capacity in the applicant's

warehouse. A deficiency bond is in addition to the bond required

of an applicant by this section.

(f) Except as provided by department rule, the applicant must

give a single bond meeting the requirements of this section to

cover warehouses licensed as a single facility or combination. A

single bond may not be used to cover more than one individually

licensed facility, more than one combination, or one or more

individually licensed facilities and one or more combinations.

(g) The liability of the surety of a bond required by this

chapter is limited to the face amount of the bond and does not

accumulate for each successive license period during which the

bond is in force.

(h) Subject to the approval of the department, a warehouse

operator may deposit the following with the department, for the

term of the license plus two years, in lieu of a bond required by

this section:

(1) cash;

(2) an irrevocable letter of credit, payable to the State of

Texas; or

(3) a certificate of deposit from a federally insured bank or

savings and loan institution authorized to do business in this

state, assigned to the State of Texas.

(i) The cash, letter of credit, or certificate of deposit under

Subsection (h) must be in the same amount or have a value in the

same amount as required for the warehouse bond.

(j) Any interest or income earned on an assigned certificate of

deposit accrues to the owner of the certificate during the time

of the assignment.

Acts 1981, 67th Leg., p. 1048, ch. 388, Sec. 1, eff. Sept. 1,

1981. Amended by Acts 1987, 70th Leg., ch. 50, Sec. 2, eff. April

30, 1987. Renumbered from Sec. 14.009 and amended by Acts 2001,

77th Leg., ch. 1124, Sec. 1, eff. Sept. 1, 2001.

Sec. 14.032. ADDITIONAL BOND. (a) If the department determines

that an approved bond is insufficient, the department shall

require the warehouse operator to give additional bond.

(b) If a license has been suspended or revoked or has expired,

the department may require a bond from the warehouse operator to

protect depositors of grain for as long as any receipts or open

storage accounts remain outstanding.

Acts 1981, 67th Leg., p. 1049, ch. 388, Sec. 1, eff. Sept. 1,

1981. Renumbered from Sec. 14.012 and amended by Acts 2001, 77th

Leg., ch. 1124, Sec. 1, eff. Sept. 1, 2001.

Sec. 14.033. BOND CANCELLATION. (a) A warehouse operator may

not cancel a bond approved by the department unless the

department first gives written approval of a substitute bond.

(b) The surety may cancel a bond by sending notice of intent to

cancel by registered or certified mail to the department.

Cancellation of a bond may not be effective before the 91st day

following the day on which the surety mails notice of intent to

cancel. On receipt of notice of cancellation of a bond, the

department shall promptly notify the warehouse operator involved.

Liability under the bond ceases to accrue on the effective date

of cancellation. Notwithstanding cancellation under this section,

the department or a depositor may collect under the bond for any

claim that arose during the period during which the bond was in

effect, provided that the claim is filed within the applicable

limitations period established under Section 14.065.

(c) The surety shall send a copy of the notice required by this

section to any government agency requesting it.

(d) Notwithstanding any other provision of this chapter, a

public grain warehouse license is automatically suspended if the

warehouse operator fails to file a new bond before the

cancellation of a bond is effective.

(e) The suspension of a license under this section continues as

long as the warehouse operator fails to maintain the bond

required by this chapter.

Acts 1981, 67th Leg., p. 1050, ch. 388, Sec. 1, eff. Sept. 1,

1981. Renumbered from Sec. 14.013 and amended by Acts 2001, 77th

Leg., ch. 1124, Sec. 1, eff. Sept. 1, 2001.

Sec. 14.034. CANCELLATION OF LETTER OF CREDIT. (a) A warehouse

operator may not cancel a letter of credit approved by the

department in lieu of a bond unless the department gives written

approval of a substitute bond or letter of credit.

(b) The issuer of the letter of credit may cancel a letter of

credit by sending notice of intent to cancel by registered or

certified mail to the department. Cancellation of a letter of

credit may not take effect before the 91st day after the date the

issuer mails notice of intent to cancel. On receipt of notice of

cancellation of a letter of credit, the department shall promptly

notify the warehouse operator involved. Liability under the

letter of credit ceases to accrue on the effective date of

cancellation. Notwithstanding cancellation under this subsection

or other law to the contrary, the department or a depositor may

collect under the letter of credit for any claim that arose

during the period during which the letter of credit was in

effect, provided that the claim is filed within the applicable

limitations period established under Section 14.065.

(c) The issuer of a letter of credit shall send a copy of the

notice required by this section to any government agency

requesting the copy. Notwithstanding any other provision of this

chapter, a public grain warehouse license is automatically

suspended if the warehouse operator fails to file a new bond or

letter of credit before the cancellation of a letter of credit is

effective.

(d) The suspension of a license under this section continues as

long as the warehouse operator fails to maintain the bond or

letter of credit required by this chapter.

Amended by Acts 2001, 77th Leg., ch. 1124, Sec. 1, eff. Sept. 1,

2001.

Sec. 14.035. CANCELLATION OF CERTIFICATE OF DEPOSIT OR CASH.

(a) A warehouse operator may not repossess a certificate of

deposit or cash approved by and deposited with the department in

lieu of a bond unless:

(1) the department gives written approval of a substitute bond

or letter of credit; and

(2) at least two years have passed after the expiration of the

last licensing period during which the certificate of deposit or

cash was deposited with the department in lieu of a bond.

(b) Notwithstanding any other provision of this chapter, the

department may not release a certificate of deposit or cash

deposited with the department while a claim filed within the

applicable limitations period established under Section 14.065 is

pending before the department or a court.

(c) A warehouse operator may, on written request to the

department, recover cash or a certificate of deposit from the

department before the expiration of the two-year period specified

in Subsection (a)(2) if:

(1) the department performs a closeout inspection;

(2) the department determines on the best available evidence

that no outstanding obligations exist at the time of the closeout

inspection;

(3) the warehouse operator submits with the written request a

bond:

(A) in an amount equal to six cents per bushel for 50 percent of

the total storage capacity of the facility or combination covered

by the cash or certificate of deposit the warehouse operator is

attempting to recover; and

(B) covering any failure of obligation that may have occurred

during all licensing periods covered by the cash or certificate

of deposit the warehouse operator is attempting to recover; and

(4) at least 30 days have passed since the closeout inspection.

(d) A claim against the bond required by Subsection (c) must be

filed with the department or in a court of competent jurisdiction

not later than the second anniversary of the date of the closeout

inspection.

Added by Acts 2001, 77th Leg., ch. 1124, Sec. 1, eff. Sept. 1,

2001.

SUBCHAPTER E. INSURANCE

Sec. 14.041. CASUALTY INSURANCE. (a) Except as provided by

Subsections (c) and (d), an applicant for a license must file or

have on file with the department a certificate of insurance

evidencing that:

(1) the applicant has an effective policy of insurance issued by

an insurance company authorized to do business in this state or,

with the approval of the department, by an eligible surplus lines

insurer that meets the requirements of Chapter 981, Insurance

Code, and rules adopted by the commissioner of insurance under

that chapter; and

(2) the policy insures, in the name of the applicant, all

depositor grain that is or may be in the public grain warehouse

for its full market value against loss by or due to water or

other fluid resulting from an insured peril, excluding flood and

other rising waters resulting from natural causes, malicious

mischief, vandalism, smoke, fire, internal explosion, lightning,

hail, windstorm, hurricane, or tornado.

(b) If water or other fluid resulting from an insured peril,

excluding flood and other rising waters resulting from natural

causes, malicious mischief, vandalism, smoke, fire, internal

explosion, lightning, hail, windstorm, hurricane, or tornado

destroys or damages grain in a public grain warehouse, the

warehouse operator shall, on demand by the depositor and

presentation of a receipt or other evidence of ownership, make

settlement with the depositor of the grain. The amount of the

settlement shall be the average price paid for grain of the same

grade and quality on the date of the loss at the location of the

warehouse, minus the warehouse operator's charges and advances.

If a settlement is not made before the 31st day following the

date of demand, the depositor is entitled to seek recovery from

the insurance company.

(c) An applicant is not required to file a certificate of

insurance if the applicant certifies in writing, at or before the

time the certificate of insurance is due, that all grain within

the warehouse at the time the license is to be effective is or

will be owned by the applicant free of any lien. The applicant

shall file the required certificate of insurance on or before the

first day any grain not owned by the applicant free of any lien

is stored for hire, handled for hire, or shipped for hire.

(d) An applicant for a license shall insure depositor grain for

its full market value against loss by or due to fire or windstorm

if the grain is in temporary or emergency storage. The

certificate required under Subsection (a) must evidence that the

applicant has an effective policy of insurance under this

subsection before the applicant may store depositor grain in

temporary or emergency storage.

Renumbered from Sec. 14.011 and amended by Acts 2001, 77th Leg.,

ch. 1124, Sec. 1, eff. Sept. 1, 2001; Acts 2003, 78th Leg., ch.

196, Sec. 2, eff. Sept. 1, 2003; Acts 2003, 78th Leg., ch. 1276,

Sec. 10A.505, eff. Sept. 1, 2003.

Sec. 14.042. INSURANCE CANCELLATION. (a) A warehouse operator

may not cancel an insurance policy approved by the department

unless the department gives written approval of a substitute

policy.

(b) The insurer may cancel an insurance policy by sending notice

of intent to cancel by registered or certified mail to the

department. Cancellation of an insurance policy is not effective

before the 31st day following the date the insurer mails notice

of intent to cancel. On receipt of notice of cancellation of an

insurance policy, the department shall promptly notify the

warehouse operator involved.

(c) The insurer shall send a copy of the notice required by this

section to any government agency requesting the copy.

(d) Notwithstanding any other provision of this chapter, a

public grain warehouse license is automatically suspended if the

warehouse operator fails to file a new certificate of insurance

before the cancellation of an insurance policy is effective or

fails to provide a certification of ownership under Section

14.041(c).

(e) The suspension of a license under this section continues as

long as the warehouse operator fails to maintain the insurance

required by this chapter.

Added by Acts 2001, 77th Leg., ch. 1124, Sec. 1, eff. Sept. 1,

2001.

Sec. 14.043. ADDITIONAL INSURANCE. (a) If the department

determines that an approved insurance policy is insufficient, the

department shall require the warehouse operator to obtain

additional insurance.

(b) If a license has been suspended or revoked or has expired,

the department may require continued insurance coverage by the

warehouse operator to protect depositors of grain for as long as

any receipts or open storage accounts remain outstanding.

(c) The warehouse operator shall obtain the additional insurance

required by this section and provide verification of the

additional insurance within a time specified by the department,

and the additional insurance shall be maintained or continued as

necessary to meet the requirements of this chapter.

Added by Acts 2001, 77th Leg., ch. 1124, Sec. 1, eff. Sept. 1,

2001.

SUBCHAPTER F. WAREHOUSE OPERATOR OBLIGATIONS

Sec. 14.051. POSTING OF LICENSE. Each warehouse operator shall

immediately on receipt of a license post the original in a

conspicuous place at the primary recordkeeping location for the

individually licensed facility or combination. A copy of the

license must be conspicuously posted at each facility where grain

is stored for hire, handled for hire, or shipped for hire.

Renumbered from Sec. 14.008 and amended by Acts 2001, 77th Leg.,

ch. 1124, Sec. 1, eff. Sept. 1, 2001.

Sec. 14.052. WAREHOUSE OPERATOR OBLIGATIONS. (a) The

obligations of a warehouse operator include the obligation to:

(1) deliver grain to a person holding a receipt for grain stored

in the warehouse; and

(2) maintain the quantity and quality of all grain not owned by

the warehouse operator, including open storage grain.

(b) Except as otherwise provided by this chapter or by

department rule, the obligation of a warehouse operator to

deliver grain to a person holding a receipt for grain stored in

the public grain warehouse is controlled by Section 7.403,

Business & Commerce Code.

(c) If a warehouse operator accepts for storage, shipping,

handling, purchase, or sale any grain that is nonfungible or for

which identity must be preserved, the warehouse operator shall

safeguard the grain from intermingling with grain that would

impair or destroy the identity-preserved or nonfungible nature of

the grain. Nothing in this section requires the warehouse

operator to accept grain that is nonfungible or that requires

identity preservation.

(d) The warehouse operator remains liable for the quality and

quantity of grain deposited at the warehouse and for any other

obligations established under this chapter for any period during

which the warehouse has been sealed or during any period of

probation, suspension, or revocation imposed under this chapter

or for grain abandoned by the warehouse operator unless:

(1) the warehouse operator makes a written request to the

department for access to the warehouse;

(2) the request adequately describes why access is necessary to

meet the warehouse operator's obligations under this chapter;

(3) the request adequately describes what type of access is

necessary to meet the warehouse operator's obligations under this

chapter;

(4) the request for access is reasonable;

(5) allowing access would not impair the department's ability to

preserve evidence, warehouse operator records, or depositor grain

assets; and

(6) the request is denied by the department or the department

imposes unreasonable restrictions that prevent the operator from

meeting the obligations described in the request.

(e) The department is entitled, on behalf of depositors, to

recover from the warehouse operator's bond the cost of damages

suffered by depositors as a result of sealing the warehouse or as

a result of the warehouse operator abandoning the warehouse and

the grain contained in the warehouse.

Acts 1981, 67th Leg., p. 1052, ch. 388, Sec. 1, eff. Sept. 1,

1981; Acts 1993, 73rd Leg., ch. 553, Sec. 2, eff. Sept. 1, 1993.

Renumbered from Sec. 14.0091, 14.021 and amended by Acts 2001,

77th Leg., ch. 1124, Sec. 1, eff. Sept. 1, 2001.

Sec. 14.053. RECEIPT FORMS. (a) A warehouse operator shall use

one set of serially numbered and sequentially issued receipts for

all warehouses operated under a single license. In addition to a

unique serial number, each receipt form must contain all of the

information prescribed by department rule. If further provided by

department rule, the warehouse operator shall request the receipt

forms from the printer on a form approved, prescribed, or

furnished by the department.

(b) The warehouse operator shall provide the department with an

exemplar of the receipt forms and an affidavit from the printer

showing the number of receipts printed and their serial numbers

before issuing any receipt from the printed set. The exemplar and

affidavit required by this subsection shall be provided each time

a new set of receipts is printed.

(c) The warehouse operator may use an electronic receipt system

if the provider of the electronic receipt system has been

approved by the department or by the United States Department of

Agriculture or any other federal agency that issues a license for

the operation of a public grain warehouse.

(d) The department may require a warehouse operator to provide a

bond to cover any loss resulting from unlawful use of a receipt.

The department shall determine the form and the amount of the

bond, but the amount may not exceed $5,000.

Renumbered from Sec. 14.020 and amended by Acts 2001, 77th Leg.,

ch. 1124, Sec. 1, eff. Sept. 1, 2001.

Sec. 14.054. ISSUANCE OF SCALE WEIGHT TICKET OR RECEIPT. (a)

On receiving grain, a warehouse operator shall issue to the

person delivering the grain a serially numbered scale weight

ticket in a form approved by the department.

(b) On application of a depositor, the warehouse operator shall

issue to the depositor a Texas grain warehouse receipt, which

must be:

(1) in a form prescribed by the department; and

(2) in conformity with Chapter 7, Business & Commerce Code.

(c) A Texas grain warehouse receipt issued under this subchapter

is subject to the provisions of Chapter 7, Business &

Commerce Code.

(d) A Texas grain warehouse receipt is a negotiable document of

title. A scale weight ticket is not a negotiable document of

title.

(e) Except as provided by Section 14.055 for duplicate receipts,

a warehouse operator may not issue two scale weight tickets or

two receipts bearing the same number during any calendar year.

(f) Unless previously canceled in accordance with the provisions

of Chapter 7, Business & Commerce Code, a Texas grain

warehouse receipt issued under this chapter expires 10 years

after the date of issuance.

Renumbered from Sec. 14.017 and amended by Acts 2001, 77th Leg.,

ch. 1124, Sec. 1, eff. Sept. 1, 2001.

Sec. 14.055. DUPLICATE RECEIPTS. (a) Except as otherwise

provided by this section, if a receipt issued under this chapter

is outstanding, another receipt covering all or part of the grain

covered by the initial receipt may not be issued by the warehouse

operator or any other person. If a receipt is lost, stolen, or

destroyed, the owner is entitled to a new receipt as a duplicate

or substitute for the missing receipt. The duplicate or

substitute receipt has the same legal effect as the original

receipt and must:

(1) state that it is in lieu of the original receipt; and

(2) bear the number and date of the original receipt.

(b) Before issuing a duplicate receipt, the warehouse operator

shall require from the owner an indemnity bond of double the

market value of the grain covered by the missing receipt. The

bond must be in a form and with a surety prescribed by the

department to fully protect all rights under the missing receipt.

(c) A warehouse operator may not obtain, purchase, or become a

surety on a bond for a lost, stolen, or destroyed receipt.

(d) A court may not order delivery of grain covered by a lost,

stolen, or destroyed receipt without requiring the bond provided

by this section.

Renumbered from Sec. 14.019 and amended by Acts 2001, 77th Leg.,

ch. 1124, Sec. 1, eff. Sept. 1, 2001.

Sec. 14.056. RECEIPT FOR GRAIN OWNED BY WAREHOUSE OPERATOR. A

warehouse operator may issue a receipt for grain that is owned by

the warehouse operator, in whole or part, and located in the

warehouse operator's warehouse. The negotiation, transfer, sale,

or pledge of that receipt may not be defeated because of its

ownership.

Renumbered from Sec. 14.018 and amended by Acts 2001, 77th Leg.,

ch. 1124, Sec. 1, eff. Sept. 1, 2001.

Sec. 14.057. RECORDS. (a) Every warehouse operator shall keep

in a safe place complete and correct records and accounts

pertaining to the public grain warehouse, including records and

accounts of:

(1) grain received and withdrawn from the warehouse;

(2) unissued receipts in the warehouse operator's possession;

(3) receipts and scale weight tickets issued by the warehouse

operator; and

(4) receipts returned to and canceled by the warehouse operator.

(b) The warehouse operator shall retain the records required by

this section for the period of time prescribed by the department.

The warehouse operator shall retain copies of receipts or other

documents evidencing ownership of grain or liability of a

warehouse operator as long as the documents are outstanding. If

the documents are canceled, the warehouse operator shall retain

the documents or receipts for a period of not less than two years

from the date of cancellation.

(c) The warehouse operator shall:

(1) clearly mark all canceled receipts "canceled" and mark on

the face of each receipt the date of the cancellation;

(2) keep records and accounts required by this section separate

from the records and accounts of other businesses;

(3) issue in numerical order all scale weight tickets and

receipts; and

(4) keep in numerical order copies of the scale weight tickets

and receipts issued by the warehouse operator.

(d) In records kept under this section, grain may be designated

as company-owned grain only if:

(1) the grain has been paid for and is wholly owned by the

warehouse operator; or

(2) the ownership of the grain has been transferred to the

warehouse operator under a written contract of purchase.

(e) The warehouse operator shall report to the department on

forms furnished by the department the following information on

scale weight tickets used in the warehouse operator's business:

(1) the number of scale weight tickets printed;

(2) the serial numbers of the scale weight tickets printed; and

(3) the printer of the scale weight tickets.

(f) The warehouse operator shall make any records required by

this section or department rule accessible and available for

inspection by the department at any reasonable time.

Renumbered from Sec. 14.022 and amended by Acts 2001, 77th Leg.,

ch. 1124, Sec. 1, eff. Sept. 1, 2001.

Sec. 14.058. POSTING OF STORAGE RATES OR TARIFFS. (a) A public

grain warehouse licensed under this chapter shall post a copy of

all storage rates and tariffs charged by the warehouse operator

at the main warehouse office and at each warehouse facility

operating under the license.

(b) The warehouse operator shall post any change to the posted

storage rates or tariffs not later than the third day before the

day on which the change is to take effect.

(c) Department inspectors shall check compliance with this

section during inspections of a public grain warehouse under this

chapter.

Renumbered from Sec. 14.036 and amended by Acts 2001, 77th Leg.,

ch. 1124, Sec. 1, eff. Sept. 1, 2001.

Sec. 14.059. INSPECTIONS; FEE. (a) On request by the

department, a warehouse operator shall report to the department

on the condition, operation, and business of each public grain

warehouse that the warehouse operator operates and all grain

stored in those warehouses.

(b) The department shall inspect each public grain warehouse at

least once annually and may make additional inspections as the

department considers necessary. A warehouse operator may request

that the department make additional inspections.

(c) The department shall collect from the warehouse operator

whose public grain warehouse is inspected an inspection fee for

an annual inspection or an inspection requested by the warehouse

operator, but may not collect an inspection fee for other

inspections unless the inspection is conducted:

(1) under the terms of an agreed or ordered suspension or

probation;

(2) in response to a complaint that the warehouse operator has

not complied with the duties and obligations provided for by this

chapter and the complaint is determined by the department to be

valid;

(3) as a follow-up inspection to:

(A) determine whether a shortage of grain discovered by the

department has been corrected;

(B) obtain records not immediately available at the location

designated as the recordkeeping location in department records or

to which access was refused during a previous inspection;

(C) ensure that recordkeeping discrepancies discovered during a

previous inspection have been corrected; or

(D) monitor a suspension or probation under this chapter; or

(4) to monitor termination of arrangements for storing,

shipping, or handling of grain under this chapter.

(d) The department by rule shall set the inspection fee.

Amended by Acts 1995, 74th Leg., ch. 419, Sec. 2.12, eff. Sept.

1, 1995. Renumbered from Sec. 14.014 and amended by Acts 2001,

77th Leg., ch. 1124, Sec. 1, eff. Sept. 1, 2001.

SUBCHAPTER G. REMEDIES AND CLAIMS

Sec. 14.061. WAREHOUSE RECEIPT AS PRIMA FACIE EVIDENCE. In an

action involving a warehouse operator that is brought under this

chapter, a warehouse receipt constitutes prima facie evidence of

the truth of the facts stated in the receipt.

Renumbered from Sec. 14.0261 and amended by Acts 2001, 77th Leg.,

ch. 1124, Sec. 1, eff. Sept. 1, 2001.

Sec. 14.062. INVALID RECEIPTS. Notwithstanding any other

provision of this code or the Business & Commerce Code, a

receipt for grain is void as to any person who receives the

receipt with knowledge that the grain purported to be covered by

the receipt was not, at the time the receipt was issued, actually

stored in the warehouse of the warehouse operator issuing the

receipt.

Added by Acts 2001, 77th Leg., ch. 1124, Sec. 1, eff. Sept. 1,

2001.

Sec. 14.063. TERMINATION OF STORAGE. (a) A warehouse operator

desiring to terminate the storage of grain in the warehouse

operator's warehouse, including grain that is abandoned or is

unclaimed prior to the sale of a warehouse, shall do so in

accordance with Sections 7.206 and 7.210, Business & Commerce

Code, except that the warehouse operator is not required to hold

the balance of the proceeds of a sale, but may transfer the

balance to the comptroller, who shall treat the money in the same

manner as an escheated bank account.

(b) A purchaser in good faith of grain sold under Section 7.210,

Business & Commerce Code, takes the grain free of any rights

of the holder of the receipt, but the receipt is evidence of

entitlement to the escheated funds deposited with the comptroller

under Subsection (a).

Amended by Acts 1997, 75th Leg., ch. 1423, Sec. 2.01, eff. Sept.

1, 1997. Renumbered from Sec. 14.023 and amended by Acts 2001,

77th Leg., ch. 1124, Sec. 1, eff. Sept. 1, 2001.

Sec. 14.064. CERTAIN LOADOUT FEES PROHIBITED. (a) A warehouse

operator may not charge a fee for loading out grain if the

loadout was the result of the misconduct of the warehouse

operator.

(b) Misconduct under this section includes:

(1) violation of this chapter as established by final,

unappealable order of the commissioner;

(2) conviction of a crime, including a plea of nolo contendere,

described as an offense under this chapter; and

(3) conviction of a crime, including a plea of nolo contendere,

described as an offense under the Penal Code and involving any

type of fraud or theft related to the storing, shipping,

handling, sale, or purchase of grain or the sale or purchase of

grain handling, shipping, or storage equipment or warehouse

structures or other assets.

(c) A loadout fee collected during a period of suspension of a

warehouse operator's license by the department, after revocation

of a warehouse operator's license, or during a period in which

criminal charges are pending against a warehouse operator, shall

be placed in an escrow account by the warehouse operator until:

(1) the department's suspension is lifted;

(2) the prosecutor ceases to pursue criminal charges;

(3) the indictment or information is dismissed by a court; or

(4) the warehouse operator is acquitted.

(d) If misconduct is finally determined to have occurred as

provided by Subsection (b), the loadout fees placed in escrow

shall be returned to the person originally paying those fees. The

loadout fees placed in escrow shall be returned to the warehouse

operator if the warehouse operator is found not to have committed

misconduct by acquittal, by the dismissal of the criminal

charges, or by final order of the commissioner.

Added by Acts 2001, 77th Leg., ch. 1124, Sec. 1, eff. Sept. 1,

2001.

Sec. 14.065. RECOVERY ON BOND; LIABILITY OF WAREHOUSE OPERATOR.

(a) If no action on the bond or cash, certificate of deposit, or

letter of credit deposited in lieu of a bond of a warehouse

operator is begun before the 31st day after the date of a written

demand to the department, a depositor has a right of action on

the bond or cash, certificate of deposit, or letter of credit

deposited in lieu of a bond for recovery of damages suffered by

the depositor as a result of the failure of the warehouse

operator to comply with any condition of the bond, or if cash, a

certificate of deposit, or a letter of credit is deposited in

lieu of a bond, failure to comply with any obligation of the

warehouse operator under this chapter that would have been

covered by a bond.

(b) Recovery on a bond shall be prorated if claims exceed

liability on a bond, but a depositor suing on a bond is not

required to join other depositors in a suit. The burden of

establishing proration is on the surety as a matter of defense or

is on the department as intervenor on behalf of other depositors.

(c) A warehouse operator is liable for damages for loss of or

injury to grain caused by the warehouse operator's failure to

exercise the care that a reasonably prudent person would exercise

in regard to the grain under similar circumstances, but, unless

otherwise agreed, a warehouse operator is not liable for damages

to grain that could not have been avoided through the exercise of

that care.

(d) A person who files an action on a bond under this section

must serve notice of the suit on the department in the same

manner and within the same period as for the defendant or surety

who issued the bond.

(e) On authentication by the department, the court shall accept

into evidence as a public record any report prepared by the

department under this chapter that describes potential bond

claims by other depositors, regardless of whether any of those

depositors are joined in the suit.

(f) A person is prohibited from filing a claim on an invalid

receipt.

(g) An action under this section must be brought not later than

the second anniversary of the date of expiration of the public

grain warehouse license in effect at the time the claim arose.

(h) The department by rule may set a limitations period for

filing claims with the department on a bond filed with the

department or cash, a certificate of deposit, or a letter of

credit deposited with the department in lieu of a bond.

Renumbered from Sec. 14.010 and amended by Acts 2001, 77th Leg.,

ch. 1124, Sec. 1, eff. Sept. 1, 2001.

Sec. 14.066. APPEAL OF DEPARTMENT ACTION BY WAREHOUSE OPERATOR.

(a) A department action or order affecting a warehouse operator

under this chapter, other than by rulemaking, assessment of an

administrative penalty, or imposition of a license sanction,

including a suspension under Section 14.083(c), is appealable in

accordance with this section.

(b) Not later than the 10th day after the date the department

takes an action or issues an order described by Subsection (a),

the warehouse operator may serve notice on the department to

appear in a district court of Travis County or the district court

of the county in which the public grain warehouse is located. The

court shall fix the time of the hearing not less than 3 days or

more than 20 days after the date of service of the notice.

(c) The burden is on the warehouse operator to show by a

preponderance of the evidence that the action taken or order

issued by the department was not authorized under this chapter

or, if authorized, was an abuse of the department's discretion.

Added by Acts 2001, 77th Leg., ch. 1124, Sec. 1, eff. Sept. 1,

2001.

SUBCHAPTER H. OFFENSES

Sec. 14.071. GENERAL PENALTY. (a) A person commits an offense

if the person violates a provision of this chapter for which an

offense is not expressly provided.

(b) An offense under this section is a Class B misdemeanor.

Renumbered from Sec. 14.027 and amended by Acts 2001, 77th Leg.,

ch. 1124, Sec. 1, eff. Sept. 1, 2001.

Sec. 14.072. PENALTY FOR OPERATING WITHOUT A LICENSE. (a) A

person commits an offense if the person:

(1) transacts any public grain warehouse business without first

obtaining a license required by this chapter; or

(2) continues to transact public grain warehouse business after

a license has been revoked or suspended, or the license holder

has been placed on probation, except as permitted under Section

14.084.

(b) An offense under this section is a felony of the third

degree.

(c) A person commits a separate offense for each day business

prohibited by this section is carried on.

Renumbered from Sec. 14.028 and amended by Acts 2001, 77th Leg.,

ch. 1124, Sec. 1, eff. Sept. 1, 2001.

Sec. 14.073. PENALTY FOR FRAUD. (a) A person commits an

offense if the person:

(1) issues or aids in issuing a receipt or scale weight ticket

knowing that the grain covered by the receipt or scale weight

ticket has not been actually received at the grain warehouse;

(2) issues or aids in issuing a duplicate or additional

negotiable receipt for grain knowing that a former negotiable

receipt for the same grain or any part of the grain is

outstanding except as permitted by Section 14.055; or

(3) fraudulently and without proper authority represents,

forges, alters, counterfeits, or simulates any license, scale

weight ticket, or receipt provided for by this chapter.

(b) An offense under this section is a felony of the second

degree.

Renumbered from Sec. 14.029 and amended by Acts 2001, 77th Leg.,

ch. 1124, Sec. 1, eff. Sept. 1, 2001.

Sec. 14.074. PENALTY FOR UNLAWFUL DELIVERY. (a) A person

commits an offense if the person:

(1) delivers grain out of a public grain warehouse knowing that

a negotiable receipt for the grain is outstanding and without

possessing that receipt; or

(2) delivers grain out of a public grain warehouse:

(A) knowing that a nonnegotiable receipt or scale weight ticket

is outstanding;

(B) without the prior approval of the person lawfully entitled

to delivery; and

(C) without the delivery being shown on the appropriate records

of the warehouse operator.

(b) It is an affirmative defense to prosecution under this

section that the person's action is:

(1) a sale or other disposition of grain in lawful enforcement

of a warehouse operator's lien;

(2) a warehouse operator's lawful termination of a storing,

shipping, or handling agreement;

(3) a delivery to the person lawfully entitled to delivery;

(4) a delivery authorized by prior approval of the person

lawfully entitled to delivery and the delivery is shown on the

appropriate records of the warehouse operator;

(5) necessary to prevent destruction of the grain;

(6) taken under the order of a state or federal court; or

(7) permitted by a rule of the department necessary to carry out

this chapter.

(c) An offense under this section is a felony of the second

degree.

Renumbered from Sec. 14.030 and amended by Acts 2001, 77th Leg.,

ch. 1124, Sec. 1, eff. Sept. 1, 2001.

Sec. 14.075. PENALTY FOR FRAUDULENTLY ISSUING A SCALE WEIGHT

TICKET OR RECEIPT. (a) A person commits an offense if the

person fraudulently issues or aids in fraudulently issuing a

receipt or scale weight ticket knowing that it contains a false

statement.

(b) An offense under this section is a felony of the second

degree.

Renumbered from Sec. 14.031 and amended by Acts 2001, 77th Leg.,

ch. 1124, Sec. 1, eff. Sept. 1, 2001.

Sec. 14.076. PENALTY FOR CHANGING A RECEIPT OR SCALE WEIGHT

TICKET AFTER ISSUANCE. (a) A person commits an offense if the

person changes a receipt or scale weight ticket after its

issuance.

(b) It is a defense to prosecution under this section that the

change on the receipt or scale weight ticket is a notation by the

warehouse operator for partial delivery or corrections made by

the warehouse operator to reflect accuracy of accounts.

(c) An offense under this section is a felony of the second

degree.

Renumbered from Sec. 14.032 and amended by Acts 2001, 77th Leg.,

ch. 1124, Sec. 1, eff. Sept. 1, 2001.

Sec. 14.077. PENALTY FOR DEPOSITING GRAIN WITHOUT TITLE. (a) A

person commits an offense if the person:

(1) deposits grain without having title to the grain or deposits

grain on which there is a lien or mortgage;

(2) receives for the grain a negotiable receipt; and

(3) negotiates the receipt for value with intent to deceive and

without disclosing the person's lack of title or the existence of

a lien or mortgage on the grain.

(b) An offense under this section is a felony of the second

degree.

Renumbered from Sec. 14.033 and amended by Acts 2001, 77th Leg.,

ch. 1124, Sec. 1, eff. Sept. 1, 2001.

Sec. 14.078. PENALTY FOR STEALING GRAIN OR


State Codes and Statutes

State Codes and Statutes

Statutes > Texas > Agriculture-code > Title-2-department-of-agriculture > Chapter-14-regulation-of-public-grain-warehouse-operators

AGRICULTURE CODE

TITLE 2. DEPARTMENT OF AGRICULTURE

CHAPTER 14. REGULATION OF PUBLIC GRAIN WAREHOUSE OPERATORS

SUBCHAPTER A. DEFINITIONS

Sec. 14.001. DEFINITIONS. (a) In this chapter:

(1) "Depositor" means a person who:

(A) delivers grain to a public grain warehouse for storing of

the grain for hire, handling of the grain for hire, or shipping

of the grain for hire;

(B) is the owner or legal holder of an outstanding receipt for

grain stored in the public grain warehouse issuing the receipt;

or

(C) is lawfully entitled to possession of grain stored in a

public grain warehouse.

(2) "Grain" means wheat, grain sorghum, corn, oats, barley, rye,

soybeans, or any other grain, peas, or beans for which federal

grain standards are established.

(3) "Open storage grain" means grain that:

(A) is received for storage by a public grain warehouse located

in this state;

(B) is not covered by a negotiable warehouse receipt; and

(C) is not owned by the lessee, owner, or operator of the

warehouse in which it is stored.

(4) "Public grain warehouse" means a building, bin, or similar

structure located in this state and used for:

(A) the storing of grain for hire, shipping of grain for hire,

or handling of grain for hire; or

(B) the purchasing and selling of grain, including grain on

which payment is deferred.

(5) "Receipt" means a negotiable Texas grain warehouse receipt

issued by a warehouse operator licensed under this chapter.

(6) "License" includes a renewal of or an amendment to a

license.

(7) "Scale weight ticket" means a load slip other than a receipt

given to a depositor or other person by a warehouse operator

licensed under this chapter on:

(A) initial delivery of the grain to the warehouse; or

(B) weighing of the grain on the grain warehouse operator's

scale, regardless of the destination of the grain.

(8) "Receipted grain" means grain that is stored in a public

grain warehouse and for which a Texas grain warehouse receipt has

been issued and has not been canceled.

(9) "Warehouse operator" means a person engaged in the business

of operating a public grain warehouse.

(b) For purposes of this chapter, the term "public grain

warehouse" as defined by Subsection (a)(4) does not include

railcars, trucks, boats, or other vehicles when used to transport

grain.

(c) For purposes of this chapter, in those sections that require

the warehouse operator to cooperate with or provide information

to the department or issue documents or deliver grain to

customers of the warehouse operator and in those sections that

require notice to be provided to the warehouse operator by the

department, the term "warehouse operator" includes all employees,

agents, or other persons authorized by the warehouse operator to

issue receipts or scale weight tickets or sign contracts or other

agreements.

Acts 1981, 67th Leg., p. 1046, ch. 388, Sec. 1, eff. Sept. 1,

1981. Amended by Acts 2001, 77th Leg., ch. 1124, Sec. 1, eff.

Sept. 1, 2001.

SUBCHAPTER B. GENERAL PROVISIONS

Sec. 14.011. LIMITATION OF CHAPTER. This chapter does not apply

to:

(1) a public grain warehouse covered by a license for the

operation of a public grain warehouse issued by the United States

Department of Agriculture or other federal agency;

(2) an individual producer-owner who does not receive from

others grain for storage or handling for hire;

(3) a person whose business is manufacturing grain or selling

manufactured grain and who receives all grain with the intent to

manufacture the grain or sell manufactured grain; or

(4) a person who receives grain with the intent of using the

grain for planting seed or for feeding livestock on the premises

where the grain is received.

Acts 1981, 67th Leg., p. 1046, ch. 388, Sec. 1, eff. Sept. 1,

1981. Renumbered from Sec. 14.002 and amended by Acts 2001, 77th

Leg., ch. 1124, Sec. 1, eff. Sept. 1, 2001.

Sec. 14.012. BUSINESS INFORMATION. (a) The following

information, prepared by the department in the course of its

regulatory authority under this chapter or required to be

submitted to the department in accordance with the department's

administration of this chapter, is confidential and not subject

to public disclosure:

(1) inspection or investigation reports containing information

regarding grain inventory; and

(2) financial information provided to the department to

establish net worth for purposes of licensing.

(b) Notwithstanding Subsection (a), inspection reports

containing information regarding grain inventory of a warehouse

operator or financial information of a warehouse operator

provided to the department to establish net worth may be:

(1) entered into evidence without sealing and made public in:

(A) an administrative proceeding commenced by the department

against a warehouse operator;

(B) a civil or criminal proceeding commenced by a county

attorney, a district attorney, or the attorney general, either

independently or on behalf of the department, against a warehouse

operator; or

(C) a civil proceeding commenced by the warehouse operator

against the department;

(2) provided to the issuer of a warehouse operator's bond or

letter of credit for the purpose of establishing a claim on the

warehouse operator's bond or letter of credit;

(3) disclosed to the public after:

(A) revocation of a warehouse operator's license;

(B) a voluntary closeout of all of the license holder's

facilities in this state;

(C) a petition for bankruptcy has been filed; or

(D) a receiver is appointed for the warehouse operator's assets;

or

(4) disclosed to any federal agency or any agency of another

state conducting a compliance inspection or criminal or civil

investigation involving the handling, storing, shipping, selling,

purchasing, or receipt of grain.

Amended by Acts 2001, 77th Leg., ch. 1124, Sec. 1, eff. Sept. 1,

2001.

Sec. 14.013. RIGHT TO INTERVENE AND NOTIFICATION OF DEPARTMENT.

(a) The department may intervene in a suit for receivership,

garnishment, bankruptcy, or any other legal action affecting the

assets of a warehouse operator licensed under this chapter or the

grain assets of a depositor in a warehouse operated under a

license issued by the department, including, to assert the rights

of depositors not joined in the suit, a suit brought against a

bond or surety under Section 14.065.

(b) Any person who files a suit for receivership, garnishment,

or bankruptcy or who commences any other legal action affecting

the assets of a warehouse operator licensed under this chapter or

the grain assets of a depositor in a warehouse operated under a

license issued by the department, including a suit against a bond

or surety under Section 14.065, must give notice to the

department of the suit or legal action.

(c) Notice under this section must be in writing and delivered

to the department by certified mail, registered mail, or

commercial delivery service not later than the 20th day after the

date on which the suit or legal action is commenced.

(d) The judgment in an action described by Subsection (a) is

voidable if the notice required by this section is not provided.

(e) The court in which a suit or other legal action described by

Subsection (a) is commenced may impose appropriate sanctions

against a party who fails to provide the notice required by this

section.

Amended by Acts 2001, 77th Leg., ch. 1124, Sec. 1, eff. Sept. 1,

2001.

Sec. 14.014. RECEIVERSHIP AFFECTING WAREHOUSE ASSETS. (a) A

person appointed receiver for the assets of a warehouse operator

licensed under this chapter is not required to obtain a license

from the department if the person:

(1) is bonded and insured as described by Subsection (b); and

(2) after being appointed, does not:

(A) receive additional grain for storing for hire, handling for

hire, or shipping for hire; or

(B) purchase grain for resale.

(b) A person appointed receiver shall maintain:

(1) a bond in the same amount required for a licensed warehouse

operator; and

(2) casualty insurance in the same amount and type as required

for a licensed warehouse operator.

(c) A person appointed receiver shall file proof of proper

bonding and verification of insurance with the department on or

before the date the person is appointed to act as receiver.

Amended by Acts 2001, 77th Leg., ch. 1124, Sec. 1, eff. Sept. 1,

2001.

Sec. 14.015. POWERS AND DUTIES OF DEPARTMENT. The department

shall administer this chapter and may:

(1) investigate the storing, shipping, and handling of grain and

complaints relating to these activities through the inspection

of:

(A) any public grain warehouse;

(B) the grain stored in any warehouse; or

(C) all property and records pertaining to a warehouse;

(2) determine whether a warehouse for which a license has been

issued or applied for is suitable for properly storing, shipping,

or handling grain that is stored in or expected to be stored in

the warehouse;

(3) include field seed within the definition given to "grain" by

Section 14.001;

(4) require that a warehouse operator keep records or submit

reports the department determines are necessary in the

administration of this chapter;

(5) require a warehouse operator or depositor to terminate

storing, shipping, and handling agreements within a time

specified by the department:

(A) on closeout or revocation of the warehouse operator's

license;

(B) if grain has been abandoned by the warehouse operator or a

depositor and the warehouse operator or depositor cannot be

located after diligent effort; or

(C) on issuance of an injunction ordering an unlicensed

warehouse operator to cease operations;

(6) prescribe forms, including the form of receipts, bonds, or

applications for licenses;

(7) for purposes of determining compliance with this chapter or

amounts due to a depositor in an action taken by the department

against a surety or surety instrument under this chapter,

determine a warehouse operator's specific obligations to a

depositor, including:

(A) the type, quantity, or quality of open storage or receipted

grain due a depositor;

(B) the payment owed a depositor if a shortage or variance

exists in the type, quantity, or quality of a depositor's open

storage or receipted grain;

(C) the time and manner of delivery of grain due a depositor;

and

(D) whether a warehouse operator has failed to deliver a

depositor's open storage or receipted grain within a reasonable

time;

(8) by written order require a warehouse operator to deliver

grain of a particular type, quantity, and quality to a depositor

at a particular time and in a particular manner based on the

department's determination that the required delivery of grain is

due the depositor;

(9) classify grain by category, including open storage,

receipted, identity-preserved, company-owned, and abandoned

grain, and adopt rules regarding the storage, shipping, or

handling of classified grain, including recordkeeping and

accounting requirements;

(10) seize the records of a warehouse operator, including any

electronic records or the equipment or media on which the records

are stored, during a period of suspension of a warehouse

operator's license;

(11) seal or post as sealed, or both seal and post as sealed,

the warehouse of a warehouse operator:

(A) whose license has been suspended or revoked;

(B) whose license has expired; or

(C) who is unlicensed;

(12) seal or post as sealed, or both seal and post as sealed, a

warehouse that is found to be unsafe for inspection or unsuitable

for the storage of grain;

(13) during reasonable hours and to determine compliance with

this chapter, enter any facility where the department reasonably

believes grain is being handled, stored, shipped, purchased, or

sold to examine:

(A) the facility's storage, shipping, handling, and financial

records;

(B) grain; and

(C) physical structures;

(14) determine the suitability of a warehouse for storing,

shipping, or handling grain or for adequate and safe inspection

and, if found unsuitable for any of those purposes, order

corrective action;

(15) require the warehouse operator to notify the department

regarding:

(A) the handling of commodities that may pose a hazard to

humans, animals, the grain of other depositors in the warehouse

operator's warehouse, or the grain industry;

(B) existing hazards to inspection, including recent or ongoing

fumigations of warehouse facilities and unsafe or inoperable

warehouse equipment or structures; or

(C) any change in ownership, management, or legal or financial

status of a warehouse licensed under this chapter;

(16) require by rule that sales, purchase, or brokerage

agreements between a warehouse operator and a producer be in

writing and contain written terms or provisions the department

considers appropriate to protect producers, depositors, and

warehouse operators and to ensure the department's ability to

carry out its regulatory functions under this chapter;

(17) regulate a warehouse operator's temporary storage of grain

in a non-warehouse location or facility;

(18) require segregation of grain requiring identity

preservation;

(19) enter into cooperative agreements with agencies of the

federal government or other states to carry out the purposes of

this chapter;

(20) recover the unused warehouse receipts of a warehouse

operator:

(A) during any period of probation or suspension of the

warehouse operator's license;

(B) on revocation or voluntary surrender of the warehouse

operator's license; or

(C) during any period in which the warehouse operator is not

licensed, including after a failure to timely renew the license;

(21) order corrective action or impose any reasonable condition

of probation necessary to accomplish the regulatory goals

authorized by this chapter; and

(22) adopt rules necessary to carry out the provisions of this

chapter.

Acts 1981, 67th Leg., p. 1047, ch. 388, Sec. 1, eff. Sept. 1,

1981. Amended by Acts 1993, 73rd Leg., ch. 553, Sec. 1, eff.

Sept. 1, 1993; Acts 1995, 74th Leg., ch. 419, Sec. 3.06, eff.

Sept. 1, 1995. Renumbered from Sec. 14.003 and amended by Acts

2001, 77th Leg., ch. 1124, Sec. 1, eff. Sept. 1, 2001.

SUBCHAPTER C. LICENSING

Sec. 14.021. LICENSE REQUIRED. A person may not operate a

public grain warehouse without first obtaining from the

department a license in the person's name covering the warehouse.

Acts 1981, 67th Leg., p. 1047, ch. 388, Sec. 1, eff. Sept. 1,

1981. Renumbered from Sec. 14.004 and amended by Acts 2001, 77th

Leg., ch. 1124, Sec. 1, eff. Sept. 1, 2001.

Sec. 14.022. LICENSING OF MULTIPLE WAREHOUSES. (a) In this

section:

(1) "Combination" means a group of two or more public grain

warehouses or facilities operated under a single set of complete

records. For purposes of this chapter, a combination is treated

as if it were a single public grain warehouse.

(2) "Facility" means two or more public grain warehouses located

in close proximity on the same general location. For purposes of

this chapter, and except when part of a combination, a facility

is treated as if it were a single public grain warehouse.

(b) A warehouse operator may operate all public grain warehouses

or facilities within an area no larger than 60 miles in diameter

as a combination if a single license covering the combination is

obtained from the department and:

(1) a single recordkeeping system covering only warehouses

within the combination is maintained by the warehouse operator;

(2) a single, unique set of sequentially numbered receipts

containing all information required by department rule and

bearing the name of the license holder and a unique combination

name, but not bearing individual warehouse or facility names, is

used for the combination;

(3) for each scale operated by the warehouse operator, the

warehouse operator issues and maintains a single, unique set of

sequentially numbered scale weight tickets containing all

information required by department rule and bearing the name of

the license holder and a unique name identifying the facility

where the scale is located;

(4) a single daily position report covering all storage

obligations of the combination and only the combination,

including company-owned grain, and containing all information

required by department rule is maintained;

(5) all original warehouse operator records, except for scale

weight tickets, relating to transactions or storage obligations

involving the combination are maintained at a single location and

separate from all other businesses and separately licensed

warehouse operations of the warehouse operator; and

(6) except as provided by department rule, a single unique bond

or bond substitute is used to cover the combination.

(c) Except as permitted while operating a combination, a

warehouse operator may not combine or intermingle assets, storage

obligations, liabilities of any kind, records or record entries,

contractual obligations, other transactions of any kind, or any

other business or operating information from different warehouses

or businesses owned, managed, or operated by the warehouse

operator. Each licensed combination or individually licensed

facility shall be operated as a separate entity under a single,

unique name and, except as provided by department rule, shall be

covered by a single, separate bond or bond substitute.

Amended by Acts 2001, 77th Leg., ch. 1124, Sec. 1, eff. Sept. 1,

2001.

Sec. 14.023. LICENSING PROCEDURE. (a) The department may

issue, renew, or amend a license following a determination that:

(1) the applicant has filed an acceptable bond, a financial

statement in a form prescribed by the department, and proof of

casualty insurance required by this chapter;

(2) the warehouse is suitable for storage of grain and

inspection by department personnel;

(3) the applicant has complied with this chapter and rules

adopted under this chapter; and

(4) the applicant has met the net worth or deficiency bond

requirements of Section 14.031(e).

(b) An applicant must file a separate application for each

license, renewal, or amendment and shall accompany each

application for a license or renewal with an annual license fee,

as provided by department rule. The department shall prescribe

the information to be contained in the application. A person who

fails to submit a renewal fee on or before the expiration date of

the license must pay, in addition to the renewal fee, the late

fee provided by Section 12.024.

(c) If an applicant for a license previously operated a grain

warehouse in this state or another state and that warehouse

ceased to operate while the applicant was the operator, the

applicant must submit with the application evidence acceptable to

the department that all debts from the previous operation

evidenced by receipts have been satisfied. The department may not

issue a license to an applicant who the department determines has

not satisfied all such debts from a previous operation.

Acts 1981, 67th Leg., p. 1047, ch. 388, Sec. 1, eff. Sept. 1,

1981. Amended by Acts 1983, 68th Leg., p. 4283, ch. 682, Sec. 2,

eff. Sept. 1, 1983; Acts 1987, 70th Leg., ch. 50, Sec. 3, eff.

April 30, 1987; Acts 1989, 71st Leg., ch. 230, Sec. 32, eff.

Sept. 1, 1989; Acts 1991, 72nd Leg., 1st C.S., ch. 5, Sec. 9.05,

eff. Sept. 1, 1991; Acts 1995, 74th Leg., ch. 419, Sec. 2.11,

eff. Sept. 1, 1995. Renumbered from Sec. 14.005 and amended by

Acts 2001, 77th Leg., ch. 1124, Sec. 1, eff. Sept. 1, 2001.

Sec. 14.024. REQUIREMENT FOR INCREASING CAPACITY. A warehouse

operator may not use any increased warehouse capacity without

first obtaining written approval from the department.

Acts 1981, 67th Leg., p. 1048, ch. 388, Sec. 1, eff. Sept. 1,

1981. Renumbered from Sec. 14.007 and amended by Acts 2001, 77th

Leg., ch. 1124, Sec. 1, eff. Sept. 1, 2001.

SUBCHAPTER D. BONDING

Sec. 14.031. BOND. (a) In accordance with this section, each

applicant for a license shall file or have on file a bond with

the department.

(b) The bond must:

(1) be payable to the State of Texas;

(2) be executed by the applicant as principal;

(3) be issued by a corporate surety licensed to do business as

surety in the State of Texas; and

(4) be in a form and contain terms and conditions prescribed by

the department.

(c) The bond must be conditioned on faithful performance of:

(1) each obligation of a warehouse operator as to receipted

grain and open storage grain under this chapter and rules adopted

under this chapter, from the effective date of the bond until the

license is revoked or the bond is canceled, whichever occurs

first, whether or not the warehouse remains licensed; and

(2) except for a contract for the purchase of grain or to act as

broker for the grain, each obligation of a warehouse operator

under any contract with a depositor that exists on the effective

date of the bond or is assumed after the effective date of the

bond and before the license is revoked or the bond is canceled,

whichever occurs first and whether or not the warehouse remains

licensed.

(d) The bond must be in an amount of not less than $20,000 and

be based on six cents per bushel of storage capacity.

(e) If the actual net worth of an applicant equals less than 25

cents per bushel of storage capacity, the applicant shall file a

deficiency bond in an amount equal to the difference between the

actual net worth and an amount determined by multiplying 25 cents

times each bushel of storage capacity in the applicant's

warehouse. A deficiency bond is in addition to the bond required

of an applicant by this section.

(f) Except as provided by department rule, the applicant must

give a single bond meeting the requirements of this section to

cover warehouses licensed as a single facility or combination. A

single bond may not be used to cover more than one individually

licensed facility, more than one combination, or one or more

individually licensed facilities and one or more combinations.

(g) The liability of the surety of a bond required by this

chapter is limited to the face amount of the bond and does not

accumulate for each successive license period during which the

bond is in force.

(h) Subject to the approval of the department, a warehouse

operator may deposit the following with the department, for the

term of the license plus two years, in lieu of a bond required by

this section:

(1) cash;

(2) an irrevocable letter of credit, payable to the State of

Texas; or

(3) a certificate of deposit from a federally insured bank or

savings and loan institution authorized to do business in this

state, assigned to the State of Texas.

(i) The cash, letter of credit, or certificate of deposit under

Subsection (h) must be in the same amount or have a value in the

same amount as required for the warehouse bond.

(j) Any interest or income earned on an assigned certificate of

deposit accrues to the owner of the certificate during the time

of the assignment.

Acts 1981, 67th Leg., p. 1048, ch. 388, Sec. 1, eff. Sept. 1,

1981. Amended by Acts 1987, 70th Leg., ch. 50, Sec. 2, eff. April

30, 1987. Renumbered from Sec. 14.009 and amended by Acts 2001,

77th Leg., ch. 1124, Sec. 1, eff. Sept. 1, 2001.

Sec. 14.032. ADDITIONAL BOND. (a) If the department determines

that an approved bond is insufficient, the department shall

require the warehouse operator to give additional bond.

(b) If a license has been suspended or revoked or has expired,

the department may require a bond from the warehouse operator to

protect depositors of grain for as long as any receipts or open

storage accounts remain outstanding.

Acts 1981, 67th Leg., p. 1049, ch. 388, Sec. 1, eff. Sept. 1,

1981. Renumbered from Sec. 14.012 and amended by Acts 2001, 77th

Leg., ch. 1124, Sec. 1, eff. Sept. 1, 2001.

Sec. 14.033. BOND CANCELLATION. (a) A warehouse operator may

not cancel a bond approved by the department unless the

department first gives written approval of a substitute bond.

(b) The surety may cancel a bond by sending notice of intent to

cancel by registered or certified mail to the department.

Cancellation of a bond may not be effective before the 91st day

following the day on which the surety mails notice of intent to

cancel. On receipt of notice of cancellation of a bond, the

department shall promptly notify the warehouse operator involved.

Liability under the bond ceases to accrue on the effective date

of cancellation. Notwithstanding cancellation under this section,

the department or a depositor may collect under the bond for any

claim that arose during the period during which the bond was in

effect, provided that the claim is filed within the applicable

limitations period established under Section 14.065.

(c) The surety shall send a copy of the notice required by this

section to any government agency requesting it.

(d) Notwithstanding any other provision of this chapter, a

public grain warehouse license is automatically suspended if the

warehouse operator fails to file a new bond before the

cancellation of a bond is effective.

(e) The suspension of a license under this section continues as

long as the warehouse operator fails to maintain the bond

required by this chapter.

Acts 1981, 67th Leg., p. 1050, ch. 388, Sec. 1, eff. Sept. 1,

1981. Renumbered from Sec. 14.013 and amended by Acts 2001, 77th

Leg., ch. 1124, Sec. 1, eff. Sept. 1, 2001.

Sec. 14.034. CANCELLATION OF LETTER OF CREDIT. (a) A warehouse

operator may not cancel a letter of credit approved by the

department in lieu of a bond unless the department gives written

approval of a substitute bond or letter of credit.

(b) The issuer of the letter of credit may cancel a letter of

credit by sending notice of intent to cancel by registered or

certified mail to the department. Cancellation of a letter of

credit may not take effect before the 91st day after the date the

issuer mails notice of intent to cancel. On receipt of notice of

cancellation of a letter of credit, the department shall promptly

notify the warehouse operator involved. Liability under the

letter of credit ceases to accrue on the effective date of

cancellation. Notwithstanding cancellation under this subsection

or other law to the contrary, the department or a depositor may

collect under the letter of credit for any claim that arose

during the period during which the letter of credit was in

effect, provided that the claim is filed within the applicable

limitations period established under Section 14.065.

(c) The issuer of a letter of credit shall send a copy of the

notice required by this section to any government agency

requesting the copy. Notwithstanding any other provision of this

chapter, a public grain warehouse license is automatically

suspended if the warehouse operator fails to file a new bond or

letter of credit before the cancellation of a letter of credit is

effective.

(d) The suspension of a license under this section continues as

long as the warehouse operator fails to maintain the bond or

letter of credit required by this chapter.

Amended by Acts 2001, 77th Leg., ch. 1124, Sec. 1, eff. Sept. 1,

2001.

Sec. 14.035. CANCELLATION OF CERTIFICATE OF DEPOSIT OR CASH.

(a) A warehouse operator may not repossess a certificate of

deposit or cash approved by and deposited with the department in

lieu of a bond unless:

(1) the department gives written approval of a substitute bond

or letter of credit; and

(2) at least two years have passed after the expiration of the

last licensing period during which the certificate of deposit or

cash was deposited with the department in lieu of a bond.

(b) Notwithstanding any other provision of this chapter, the

department may not release a certificate of deposit or cash

deposited with the department while a claim filed within the

applicable limitations period established under Section 14.065 is

pending before the department or a court.

(c) A warehouse operator may, on written request to the

department, recover cash or a certificate of deposit from the

department before the expiration of the two-year period specified

in Subsection (a)(2) if:

(1) the department performs a closeout inspection;

(2) the department determines on the best available evidence

that no outstanding obligations exist at the time of the closeout

inspection;

(3) the warehouse operator submits with the written request a

bond:

(A) in an amount equal to six cents per bushel for 50 percent of

the total storage capacity of the facility or combination covered

by the cash or certificate of deposit the warehouse operator is

attempting to recover; and

(B) covering any failure of obligation that may have occurred

during all licensing periods covered by the cash or certificate

of deposit the warehouse operator is attempting to recover; and

(4) at least 30 days have passed since the closeout inspection.

(d) A claim against the bond required by Subsection (c) must be

filed with the department or in a court of competent jurisdiction

not later than the second anniversary of the date of the closeout

inspection.

Added by Acts 2001, 77th Leg., ch. 1124, Sec. 1, eff. Sept. 1,

2001.

SUBCHAPTER E. INSURANCE

Sec. 14.041. CASUALTY INSURANCE. (a) Except as provided by

Subsections (c) and (d), an applicant for a license must file or

have on file with the department a certificate of insurance

evidencing that:

(1) the applicant has an effective policy of insurance issued by

an insurance company authorized to do business in this state or,

with the approval of the department, by an eligible surplus lines

insurer that meets the requirements of Chapter 981, Insurance

Code, and rules adopted by the commissioner of insurance under

that chapter; and

(2) the policy insures, in the name of the applicant, all

depositor grain that is or may be in the public grain warehouse

for its full market value against loss by or due to water or

other fluid resulting from an insured peril, excluding flood and

other rising waters resulting from natural causes, malicious

mischief, vandalism, smoke, fire, internal explosion, lightning,

hail, windstorm, hurricane, or tornado.

(b) If water or other fluid resulting from an insured peril,

excluding flood and other rising waters resulting from natural

causes, malicious mischief, vandalism, smoke, fire, internal

explosion, lightning, hail, windstorm, hurricane, or tornado

destroys or damages grain in a public grain warehouse, the

warehouse operator shall, on demand by the depositor and

presentation of a receipt or other evidence of ownership, make

settlement with the depositor of the grain. The amount of the

settlement shall be the average price paid for grain of the same

grade and quality on the date of the loss at the location of the

warehouse, minus the warehouse operator's charges and advances.

If a settlement is not made before the 31st day following the

date of demand, the depositor is entitled to seek recovery from

the insurance company.

(c) An applicant is not required to file a certificate of

insurance if the applicant certifies in writing, at or before the

time the certificate of insurance is due, that all grain within

the warehouse at the time the license is to be effective is or

will be owned by the applicant free of any lien. The applicant

shall file the required certificate of insurance on or before the

first day any grain not owned by the applicant free of any lien

is stored for hire, handled for hire, or shipped for hire.

(d) An applicant for a license shall insure depositor grain for

its full market value against loss by or due to fire or windstorm

if the grain is in temporary or emergency storage. The

certificate required under Subsection (a) must evidence that the

applicant has an effective policy of insurance under this

subsection before the applicant may store depositor grain in

temporary or emergency storage.

Renumbered from Sec. 14.011 and amended by Acts 2001, 77th Leg.,

ch. 1124, Sec. 1, eff. Sept. 1, 2001; Acts 2003, 78th Leg., ch.

196, Sec. 2, eff. Sept. 1, 2003; Acts 2003, 78th Leg., ch. 1276,

Sec. 10A.505, eff. Sept. 1, 2003.

Sec. 14.042. INSURANCE CANCELLATION. (a) A warehouse operator

may not cancel an insurance policy approved by the department

unless the department gives written approval of a substitute

policy.

(b) The insurer may cancel an insurance policy by sending notice

of intent to cancel by registered or certified mail to the

department. Cancellation of an insurance policy is not effective

before the 31st day following the date the insurer mails notice

of intent to cancel. On receipt of notice of cancellation of an

insurance policy, the department shall promptly notify the

warehouse operator involved.

(c) The insurer shall send a copy of the notice required by this

section to any government agency requesting the copy.

(d) Notwithstanding any other provision of this chapter, a

public grain warehouse license is automatically suspended if the

warehouse operator fails to file a new certificate of insurance

before the cancellation of an insurance policy is effective or

fails to provide a certification of ownership under Section

14.041(c).

(e) The suspension of a license under this section continues as

long as the warehouse operator fails to maintain the insurance

required by this chapter.

Added by Acts 2001, 77th Leg., ch. 1124, Sec. 1, eff. Sept. 1,

2001.

Sec. 14.043. ADDITIONAL INSURANCE. (a) If the department

determines that an approved insurance policy is insufficient, the

department shall require the warehouse operator to obtain

additional insurance.

(b) If a license has been suspended or revoked or has expired,

the department may require continued insurance coverage by the

warehouse operator to protect depositors of grain for as long as

any receipts or open storage accounts remain outstanding.

(c) The warehouse operator shall obtain the additional insurance

required by this section and provide verification of the

additional insurance within a time specified by the department,

and the additional insurance shall be maintained or continued as

necessary to meet the requirements of this chapter.

Added by Acts 2001, 77th Leg., ch. 1124, Sec. 1, eff. Sept. 1,

2001.

SUBCHAPTER F. WAREHOUSE OPERATOR OBLIGATIONS

Sec. 14.051. POSTING OF LICENSE. Each warehouse operator shall

immediately on receipt of a license post the original in a

conspicuous place at the primary recordkeeping location for the

individually licensed facility or combination. A copy of the

license must be conspicuously posted at each facility where grain

is stored for hire, handled for hire, or shipped for hire.

Renumbered from Sec. 14.008 and amended by Acts 2001, 77th Leg.,

ch. 1124, Sec. 1, eff. Sept. 1, 2001.

Sec. 14.052. WAREHOUSE OPERATOR OBLIGATIONS. (a) The

obligations of a warehouse operator include the obligation to:

(1) deliver grain to a person holding a receipt for grain stored

in the warehouse; and

(2) maintain the quantity and quality of all grain not owned by

the warehouse operator, including open storage grain.

(b) Except as otherwise provided by this chapter or by

department rule, the obligation of a warehouse operator to

deliver grain to a person holding a receipt for grain stored in

the public grain warehouse is controlled by Section 7.403,

Business & Commerce Code.

(c) If a warehouse operator accepts for storage, shipping,

handling, purchase, or sale any grain that is nonfungible or for

which identity must be preserved, the warehouse operator shall

safeguard the grain from intermingling with grain that would

impair or destroy the identity-preserved or nonfungible nature of

the grain. Nothing in this section requires the warehouse

operator to accept grain that is nonfungible or that requires

identity preservation.

(d) The warehouse operator remains liable for the quality and

quantity of grain deposited at the warehouse and for any other

obligations established under this chapter for any period during

which the warehouse has been sealed or during any period of

probation, suspension, or revocation imposed under this chapter

or for grain abandoned by the warehouse operator unless:

(1) the warehouse operator makes a written request to the

department for access to the warehouse;

(2) the request adequately describes why access is necessary to

meet the warehouse operator's obligations under this chapter;

(3) the request adequately describes what type of access is

necessary to meet the warehouse operator's obligations under this

chapter;

(4) the request for access is reasonable;

(5) allowing access would not impair the department's ability to

preserve evidence, warehouse operator records, or depositor grain

assets; and

(6) the request is denied by the department or the department

imposes unreasonable restrictions that prevent the operator from

meeting the obligations described in the request.

(e) The department is entitled, on behalf of depositors, to

recover from the warehouse operator's bond the cost of damages

suffered by depositors as a result of sealing the warehouse or as

a result of the warehouse operator abandoning the warehouse and

the grain contained in the warehouse.

Acts 1981, 67th Leg., p. 1052, ch. 388, Sec. 1, eff. Sept. 1,

1981; Acts 1993, 73rd Leg., ch. 553, Sec. 2, eff. Sept. 1, 1993.

Renumbered from Sec. 14.0091, 14.021 and amended by Acts 2001,

77th Leg., ch. 1124, Sec. 1, eff. Sept. 1, 2001.

Sec. 14.053. RECEIPT FORMS. (a) A warehouse operator shall use

one set of serially numbered and sequentially issued receipts for

all warehouses operated under a single license. In addition to a

unique serial number, each receipt form must contain all of the

information prescribed by department rule. If further provided by

department rule, the warehouse operator shall request the receipt

forms from the printer on a form approved, prescribed, or

furnished by the department.

(b) The warehouse operator shall provide the department with an

exemplar of the receipt forms and an affidavit from the printer

showing the number of receipts printed and their serial numbers

before issuing any receipt from the printed set. The exemplar and

affidavit required by this subsection shall be provided each time

a new set of receipts is printed.

(c) The warehouse operator may use an electronic receipt system

if the provider of the electronic receipt system has been

approved by the department or by the United States Department of

Agriculture or any other federal agency that issues a license for

the operation of a public grain warehouse.

(d) The department may require a warehouse operator to provide a

bond to cover any loss resulting from unlawful use of a receipt.

The department shall determine the form and the amount of the

bond, but the amount may not exceed $5,000.

Renumbered from Sec. 14.020 and amended by Acts 2001, 77th Leg.,

ch. 1124, Sec. 1, eff. Sept. 1, 2001.

Sec. 14.054. ISSUANCE OF SCALE WEIGHT TICKET OR RECEIPT. (a)

On receiving grain, a warehouse operator shall issue to the

person delivering the grain a serially numbered scale weight

ticket in a form approved by the department.

(b) On application of a depositor, the warehouse operator shall

issue to the depositor a Texas grain warehouse receipt, which

must be:

(1) in a form prescribed by the department; and

(2) in conformity with Chapter 7, Business & Commerce Code.

(c) A Texas grain warehouse receipt issued under this subchapter

is subject to the provisions of Chapter 7, Business &

Commerce Code.

(d) A Texas grain warehouse receipt is a negotiable document of

title. A scale weight ticket is not a negotiable document of

title.

(e) Except as provided by Section 14.055 for duplicate receipts,

a warehouse operator may not issue two scale weight tickets or

two receipts bearing the same number during any calendar year.

(f) Unless previously canceled in accordance with the provisions

of Chapter 7, Business & Commerce Code, a Texas grain

warehouse receipt issued under this chapter expires 10 years

after the date of issuance.

Renumbered from Sec. 14.017 and amended by Acts 2001, 77th Leg.,

ch. 1124, Sec. 1, eff. Sept. 1, 2001.

Sec. 14.055. DUPLICATE RECEIPTS. (a) Except as otherwise

provided by this section, if a receipt issued under this chapter

is outstanding, another receipt covering all or part of the grain

covered by the initial receipt may not be issued by the warehouse

operator or any other person. If a receipt is lost, stolen, or

destroyed, the owner is entitled to a new receipt as a duplicate

or substitute for the missing receipt. The duplicate or

substitute receipt has the same legal effect as the original

receipt and must:

(1) state that it is in lieu of the original receipt; and

(2) bear the number and date of the original receipt.

(b) Before issuing a duplicate receipt, the warehouse operator

shall require from the owner an indemnity bond of double the

market value of the grain covered by the missing receipt. The

bond must be in a form and with a surety prescribed by the

department to fully protect all rights under the missing receipt.

(c) A warehouse operator may not obtain, purchase, or become a

surety on a bond for a lost, stolen, or destroyed receipt.

(d) A court may not order delivery of grain covered by a lost,

stolen, or destroyed receipt without requiring the bond provided

by this section.

Renumbered from Sec. 14.019 and amended by Acts 2001, 77th Leg.,

ch. 1124, Sec. 1, eff. Sept. 1, 2001.

Sec. 14.056. RECEIPT FOR GRAIN OWNED BY WAREHOUSE OPERATOR. A

warehouse operator may issue a receipt for grain that is owned by

the warehouse operator, in whole or part, and located in the

warehouse operator's warehouse. The negotiation, transfer, sale,

or pledge of that receipt may not be defeated because of its

ownership.

Renumbered from Sec. 14.018 and amended by Acts 2001, 77th Leg.,

ch. 1124, Sec. 1, eff. Sept. 1, 2001.

Sec. 14.057. RECORDS. (a) Every warehouse operator shall keep

in a safe place complete and correct records and accounts

pertaining to the public grain warehouse, including records and

accounts of:

(1) grain received and withdrawn from the warehouse;

(2) unissued receipts in the warehouse operator's possession;

(3) receipts and scale weight tickets issued by the warehouse

operator; and

(4) receipts returned to and canceled by the warehouse operator.

(b) The warehouse operator shall retain the records required by

this section for the period of time prescribed by the department.

The warehouse operator shall retain copies of receipts or other

documents evidencing ownership of grain or liability of a

warehouse operator as long as the documents are outstanding. If

the documents are canceled, the warehouse operator shall retain

the documents or receipts for a period of not less than two years

from the date of cancellation.

(c) The warehouse operator shall:

(1) clearly mark all canceled receipts "canceled" and mark on

the face of each receipt the date of the cancellation;

(2) keep records and accounts required by this section separate

from the records and accounts of other businesses;

(3) issue in numerical order all scale weight tickets and

receipts; and

(4) keep in numerical order copies of the scale weight tickets

and receipts issued by the warehouse operator.

(d) In records kept under this section, grain may be designated

as company-owned grain only if:

(1) the grain has been paid for and is wholly owned by the

warehouse operator; or

(2) the ownership of the grain has been transferred to the

warehouse operator under a written contract of purchase.

(e) The warehouse operator shall report to the department on

forms furnished by the department the following information on

scale weight tickets used in the warehouse operator's business:

(1) the number of scale weight tickets printed;

(2) the serial numbers of the scale weight tickets printed; and

(3) the printer of the scale weight tickets.

(f) The warehouse operator shall make any records required by

this section or department rule accessible and available for

inspection by the department at any reasonable time.

Renumbered from Sec. 14.022 and amended by Acts 2001, 77th Leg.,

ch. 1124, Sec. 1, eff. Sept. 1, 2001.

Sec. 14.058. POSTING OF STORAGE RATES OR TARIFFS. (a) A public

grain warehouse licensed under this chapter shall post a copy of

all storage rates and tariffs charged by the warehouse operator

at the main warehouse office and at each warehouse facility

operating under the license.

(b) The warehouse operator shall post any change to the posted

storage rates or tariffs not later than the third day before the

day on which the change is to take effect.

(c) Department inspectors shall check compliance with this

section during inspections of a public grain warehouse under this

chapter.

Renumbered from Sec. 14.036 and amended by Acts 2001, 77th Leg.,

ch. 1124, Sec. 1, eff. Sept. 1, 2001.

Sec. 14.059. INSPECTIONS; FEE. (a) On request by the

department, a warehouse operator shall report to the department

on the condition, operation, and business of each public grain

warehouse that the warehouse operator operates and all grain

stored in those warehouses.

(b) The department shall inspect each public grain warehouse at

least once annually and may make additional inspections as the

department considers necessary. A warehouse operator may request

that the department make additional inspections.

(c) The department shall collect from the warehouse operator

whose public grain warehouse is inspected an inspection fee for

an annual inspection or an inspection requested by the warehouse

operator, but may not collect an inspection fee for other

inspections unless the inspection is conducted:

(1) under the terms of an agreed or ordered suspension or

probation;

(2) in response to a complaint that the warehouse operator has

not complied with the duties and obligations provided for by this

chapter and the complaint is determined by the department to be

valid;

(3) as a follow-up inspection to:

(A) determine whether a shortage of grain discovered by the

department has been corrected;

(B) obtain records not immediately available at the location

designated as the recordkeeping location in department records or

to which access was refused during a previous inspection;

(C) ensure that recordkeeping discrepancies discovered during a

previous inspection have been corrected; or

(D) monitor a suspension or probation under this chapter; or

(4) to monitor termination of arrangements for storing,

shipping, or handling of grain under this chapter.

(d) The department by rule shall set the inspection fee.

Amended by Acts 1995, 74th Leg., ch. 419, Sec. 2.12, eff. Sept.

1, 1995. Renumbered from Sec. 14.014 and amended by Acts 2001,

77th Leg., ch. 1124, Sec. 1, eff. Sept. 1, 2001.

SUBCHAPTER G. REMEDIES AND CLAIMS

Sec. 14.061. WAREHOUSE RECEIPT AS PRIMA FACIE EVIDENCE. In an

action involving a warehouse operator that is brought under this

chapter, a warehouse receipt constitutes prima facie evidence of

the truth of the facts stated in the receipt.

Renumbered from Sec. 14.0261 and amended by Acts 2001, 77th Leg.,

ch. 1124, Sec. 1, eff. Sept. 1, 2001.

Sec. 14.062. INVALID RECEIPTS. Notwithstanding any other

provision of this code or the Business & Commerce Code, a

receipt for grain is void as to any person who receives the

receipt with knowledge that the grain purported to be covered by

the receipt was not, at the time the receipt was issued, actually

stored in the warehouse of the warehouse operator issuing the

receipt.

Added by Acts 2001, 77th Leg., ch. 1124, Sec. 1, eff. Sept. 1,

2001.

Sec. 14.063. TERMINATION OF STORAGE. (a) A warehouse operator

desiring to terminate the storage of grain in the warehouse

operator's warehouse, including grain that is abandoned or is

unclaimed prior to the sale of a warehouse, shall do so in

accordance with Sections 7.206 and 7.210, Business & Commerce

Code, except that the warehouse operator is not required to hold

the balance of the proceeds of a sale, but may transfer the

balance to the comptroller, who shall treat the money in the same

manner as an escheated bank account.

(b) A purchaser in good faith of grain sold under Section 7.210,

Business & Commerce Code, takes the grain free of any rights

of the holder of the receipt, but the receipt is evidence of

entitlement to the escheated funds deposited with the comptroller

under Subsection (a).

Amended by Acts 1997, 75th Leg., ch. 1423, Sec. 2.01, eff. Sept.

1, 1997. Renumbered from Sec. 14.023 and amended by Acts 2001,

77th Leg., ch. 1124, Sec. 1, eff. Sept. 1, 2001.

Sec. 14.064. CERTAIN LOADOUT FEES PROHIBITED. (a) A warehouse

operator may not charge a fee for loading out grain if the

loadout was the result of the misconduct of the warehouse

operator.

(b) Misconduct under this section includes:

(1) violation of this chapter as established by final,

unappealable order of the commissioner;

(2) conviction of a crime, including a plea of nolo contendere,

described as an offense under this chapter; and

(3) conviction of a crime, including a plea of nolo contendere,

described as an offense under the Penal Code and involving any

type of fraud or theft related to the storing, shipping,

handling, sale, or purchase of grain or the sale or purchase of

grain handling, shipping, or storage equipment or warehouse

structures or other assets.

(c) A loadout fee collected during a period of suspension of a

warehouse operator's license by the department, after revocation

of a warehouse operator's license, or during a period in which

criminal charges are pending against a warehouse operator, shall

be placed in an escrow account by the warehouse operator until:

(1) the department's suspension is lifted;

(2) the prosecutor ceases to pursue criminal charges;

(3) the indictment or information is dismissed by a court; or

(4) the warehouse operator is acquitted.

(d) If misconduct is finally determined to have occurred as

provided by Subsection (b), the loadout fees placed in escrow

shall be returned to the person originally paying those fees. The

loadout fees placed in escrow shall be returned to the warehouse

operator if the warehouse operator is found not to have committed

misconduct by acquittal, by the dismissal of the criminal

charges, or by final order of the commissioner.

Added by Acts 2001, 77th Leg., ch. 1124, Sec. 1, eff. Sept. 1,

2001.

Sec. 14.065. RECOVERY ON BOND; LIABILITY OF WAREHOUSE OPERATOR.

(a) If no action on the bond or cash, certificate of deposit, or

letter of credit deposited in lieu of a bond of a warehouse

operator is begun before the 31st day after the date of a written

demand to the department, a depositor has a right of action on

the bond or cash, certificate of deposit, or letter of credit

deposited in lieu of a bond for recovery of damages suffered by

the depositor as a result of the failure of the warehouse

operator to comply with any condition of the bond, or if cash, a

certificate of deposit, or a letter of credit is deposited in

lieu of a bond, failure to comply with any obligation of the

warehouse operator under this chapter that would have been

covered by a bond.

(b) Recovery on a bond shall be prorated if claims exceed

liability on a bond, but a depositor suing on a bond is not

required to join other depositors in a suit. The burden of

establishing proration is on the surety as a matter of defense or

is on the department as intervenor on behalf of other depositors.

(c) A warehouse operator is liable for damages for loss of or

injury to grain caused by the warehouse operator's failure to

exercise the care that a reasonably prudent person would exercise

in regard to the grain under similar circumstances, but, unless

otherwise agreed, a warehouse operator is not liable for damages

to grain that could not have been avoided through the exercise of

that care.

(d) A person who files an action on a bond under this section

must serve notice of the suit on the department in the same

manner and within the same period as for the defendant or surety

who issued the bond.

(e) On authentication by the department, the court shall accept

into evidence as a public record any report prepared by the

department under this chapter that describes potential bond

claims by other depositors, regardless of whether any of those

depositors are joined in the suit.

(f) A person is prohibited from filing a claim on an invalid

receipt.

(g) An action under this section must be brought not later than

the second anniversary of the date of expiration of the public

grain warehouse license in effect at the time the claim arose.

(h) The department by rule may set a limitations period for

filing claims with the department on a bond filed with the

department or cash, a certificate of deposit, or a letter of

credit deposited with the department in lieu of a bond.

Renumbered from Sec. 14.010 and amended by Acts 2001, 77th Leg.,

ch. 1124, Sec. 1, eff. Sept. 1, 2001.

Sec. 14.066. APPEAL OF DEPARTMENT ACTION BY WAREHOUSE OPERATOR.

(a) A department action or order affecting a warehouse operator

under this chapter, other than by rulemaking, assessment of an

administrative penalty, or imposition of a license sanction,

including a suspension under Section 14.083(c), is appealable in

accordance with this section.

(b) Not later than the 10th day after the date the department

takes an action or issues an order described by Subsection (a),

the warehouse operator may serve notice on the department to

appear in a district court of Travis County or the district court

of the county in which the public grain warehouse is located. The

court shall fix the time of the hearing not less than 3 days or

more than 20 days after the date of service of the notice.

(c) The burden is on the warehouse operator to show by a

preponderance of the evidence that the action taken or order

issued by the department was not authorized under this chapter

or, if authorized, was an abuse of the department's discretion.

Added by Acts 2001, 77th Leg., ch. 1124, Sec. 1, eff. Sept. 1,

2001.

SUBCHAPTER H. OFFENSES

Sec. 14.071. GENERAL PENALTY. (a) A person commits an offense

if the person violates a provision of this chapter for which an

offense is not expressly provided.

(b) An offense under this section is a Class B misdemeanor.

Renumbered from Sec. 14.027 and amended by Acts 2001, 77th Leg.,

ch. 1124, Sec. 1, eff. Sept. 1, 2001.

Sec. 14.072. PENALTY FOR OPERATING WITHOUT A LICENSE. (a) A

person commits an offense if the person:

(1) transacts any public grain warehouse business without first

obtaining a license required by this chapter; or

(2) continues to transact public grain warehouse business after

a license has been revoked or suspended, or the license holder

has been placed on probation, except as permitted under Section

14.084.

(b) An offense under this section is a felony of the third

degree.

(c) A person commits a separate offense for each day business

prohibited by this section is carried on.

Renumbered from Sec. 14.028 and amended by Acts 2001, 77th Leg.,

ch. 1124, Sec. 1, eff. Sept. 1, 2001.

Sec. 14.073. PENALTY FOR FRAUD. (a) A person commits an

offense if the person:

(1) issues or aids in issuing a receipt or scale weight ticket

knowing that the grain covered by the receipt or scale weight

ticket has not been actually received at the grain warehouse;

(2) issues or aids in issuing a duplicate or additional

negotiable receipt for grain knowing that a former negotiable

receipt for the same grain or any part of the grain is

outstanding except as permitted by Section 14.055; or

(3) fraudulently and without proper authority represents,

forges, alters, counterfeits, or simulates any license, scale

weight ticket, or receipt provided for by this chapter.

(b) An offense under this section is a felony of the second

degree.

Renumbered from Sec. 14.029 and amended by Acts 2001, 77th Leg.,

ch. 1124, Sec. 1, eff. Sept. 1, 2001.

Sec. 14.074. PENALTY FOR UNLAWFUL DELIVERY. (a) A person

commits an offense if the person:

(1) delivers grain out of a public grain warehouse knowing that

a negotiable receipt for the grain is outstanding and without

possessing that receipt; or

(2) delivers grain out of a public grain warehouse:

(A) knowing that a nonnegotiable receipt or scale weight ticket

is outstanding;

(B) without the prior approval of the person lawfully entitled

to delivery; and

(C) without the delivery being shown on the appropriate records

of the warehouse operator.

(b) It is an affirmative defense to prosecution under this

section that the person's action is:

(1) a sale or other disposition of grain in lawful enforcement

of a warehouse operator's lien;

(2) a warehouse operator's lawful termination of a storing,

shipping, or handling agreement;

(3) a delivery to the person lawfully entitled to delivery;

(4) a delivery authorized by prior approval of the person

lawfully entitled to delivery and the delivery is shown on the

appropriate records of the warehouse operator;

(5) necessary to prevent destruction of the grain;

(6) taken under the order of a state or federal court; or

(7) permitted by a rule of the department necessary to carry out

this chapter.

(c) An offense under this section is a felony of the second

degree.

Renumbered from Sec. 14.030 and amended by Acts 2001, 77th Leg.,

ch. 1124, Sec. 1, eff. Sept. 1, 2001.

Sec. 14.075. PENALTY FOR FRAUDULENTLY ISSUING A SCALE WEIGHT

TICKET OR RECEIPT. (a) A person commits an offense if the

person fraudulently issues or aids in fraudulently issuing a

receipt or scale weight ticket knowing that it contains a false

statement.

(b) An offense under this section is a felony of the second

degree.

Renumbered from Sec. 14.031 and amended by Acts 2001, 77th Leg.,

ch. 1124, Sec. 1, eff. Sept. 1, 2001.

Sec. 14.076. PENALTY FOR CHANGING A RECEIPT OR SCALE WEIGHT

TICKET AFTER ISSUANCE. (a) A person commits an offense if the

person changes a receipt or scale weight ticket after its

issuance.

(b) It is a defense to prosecution under this section that the

change on the receipt or scale weight ticket is a notation by the

warehouse operator for partial delivery or corrections made by

the warehouse operator to reflect accuracy of accounts.

(c) An offense under this section is a felony of the second

degree.

Renumbered from Sec. 14.032 and amended by Acts 2001, 77th Leg.,

ch. 1124, Sec. 1, eff. Sept. 1, 2001.

Sec. 14.077. PENALTY FOR DEPOSITING GRAIN WITHOUT TITLE. (a) A

person commits an offense if the person:

(1) deposits grain without having title to the grain or deposits

grain on which there is a lien or mortgage;

(2) receives for the grain a negotiable receipt; and

(3) negotiates the receipt for value with intent to deceive and

without disclosing the person's lack of title or the existence of

a lien or mortgage on the grain.

(b) An offense under this section is a felony of the second

degree.

Renumbered from Sec. 14.033 and amended by Acts 2001, 77th Leg.,

ch. 1124, Sec. 1, eff. Sept. 1, 2001.

Sec. 14.078. PENALTY FOR STEALING GRAIN OR