§3409. Security and provisional stock insurance required as a condition of license, time of filing; amount of security; approval; notice of cancellation; changes in licensed capacity; failure to maintain security and insurance in full force and effect

            A. Prior to issuance of the license, an applicant for a warehouse, grain dealer, or cotton merchant license shall furnish to and file with the commission security and provisional stock insurance as a condition for issuance of the license.

            B. The security shall be for the faithful performance of all duties and obligations of the prospective licensee, and for compliance with this Chapter and the rules and regulations adopted by the commission pursuant to this Chapter.

            C. The security required by this Chapter shall be in favor of the commission and shall be in the form of one of the following:

            (1) A surety bond, issued by a bonding or surety company authorized to do business in this state.

            (2) A certificate of deposit from a financial institution whose deposits are insured by an agency of the federal government.

            (3) An irrevocable letter of credit from a financial institution whose deposits are insured by an agency of the federal government.

            (4) Participation in the Self-Insurance Fund in accordance with and as provided by R.S. 3:3412.

            (5) Any other security determined to be adequate by the commission.

            D. The security required by this Chapter for warehouse licenses shall conform to the following:

            (1) The security provided by the applicant for a warehouse license shall cover the same facilities covered by the warehouse license.

            (2) The amount of the security shall be determined by the total licensed capacity of the facilities to be covered by the security, as follows:

            (a) Twenty cents per bushel for the first million bushels of licensed capacity.

            (b) Fifteen cents per bushel for the second million bushels of licensed capacity.

            (c) Ten cents per bushel for all bushels over two million bushels of licensed capacity.

            (3) Whenever the licensed warehouse capacity changes, the amount of the security shall be amended to conform to the current licensed capacity of the facility or facilities covered by the security.

            (4) In any case, the net amount of the security shall not be less than twenty-five thousand dollars and not more than five hundred thousand dollars.

            E. The security provided by an applicant for a license as a grain dealer or cotton merchant shall be in the amount of fifty thousand dollars.

            F. The security furnished by an applicant shall be approved by the commission prior to the issuance of the license.

            G. Each form of security shall provide for ninety days written notice to the commission prior to cancellation.

            H.(1) The commission shall be the sole owner of the security and shall be the sole party entitled to sue upon, recover, or enforce the security. Any other person or party, including, without limitation, any licensee, person, producer, cotton farmer or agent, or creditor who has a claim against a licensee, shall have no ownership or other interest in the security and shall have no right to sue upon, recover, or enforce the security, except pursuant to the commission's administrative procedures.

            (2) The security furnished by each licensee shall be for the exclusive use and benefit of any person, producer, or cotton farmer or agent that has a claim against that licensee pursuant to the provisions of this Chapter and as determined by the commission pursuant to its administrative procedures.

            (3) Any claim on the security by a person against a warehouse licensee, a producer against a grain dealer licensee, or a cotton farmer or agent against a cotton merchant licensee shall be submitted to the commission pursuant to its administrative procedures and, after being determined by the commission to be a valid claim under this Chapter, shall be paid from the commission's recovery on the security.

            (4) Should the claim against the licensee not be satisfied in full through the commission's administrative procedures the claimant shall retain all other rights possessed under the law without prejudice.

            (5) Notwithstanding any other provision of law to the contrary, when paying any claim on the security under this Chapter, the commission shall make payments jointly payable to the claimant and to all other secured parties and lienholders that, ten days before the payment date, hold a security interest in or a lien on the crops, farm products, or agricultural commodities, perfected by the filing of a financing statement that:

            (a) Identified those crops, farm products, or agricultural commodities as collateral.

            (b) Was indexed under that producer's name as debtor.

            (c) Was filed in the office designated for filing a financing statement against the producer covering that collateral.

            I. The commission shall require every licensee to maintain a sufficient amount of provisional stock insurance issued by an insurance company authorized to do business in this state to provide adequate protection against fire and other disasters, for the full market value of all agricultural commodities physically in the possession of the licensee, which insurance shall provide for thirty days written notice to the commission prior to cancellation.

            J.(1) The security and provisional stock insurance shall be:

            (a) Kept in full force and effect as a condition of continuing licensure.

            (b) Open for public inspection by the commission.

            (2) The licensee shall pay all fees and expenses involved in providing the security and provisional stock insurance.

            K. The commission may suspend or revoke the license of any licensee who fails to maintain the required security and insurance in full force and effect.

            Added by Acts 1982, No. 563, §1, eff. Jan. 1, 1983; Acts 2003, No. 172, §1, eff. July 1, 2003; Acts 2009, No. 24, §1, eff. June 12, 2009; Acts 2010, No. 767, §2, eff. June 30, 2010; Acts 2012, No. 145, §1, eff. May 14, 2012; Acts 2015, No. 430, §1; Acts 2016, No. 12, §1.