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$ 205.204 Filing “notice" of EFS.

(a) If an EFS is filed somewhere other than with the system operator, and if notice of it is filed with the system operator, such notice could be electronic filing, telephoned information, or any other form of notice which gives the system operator the information needed for the master list. Such notice need not be signed. Note that the Section does not contain any requirement for such notice except the one in subsection (c)(4)(B) that an EFS must be filed somewhere pursuant to State law as discussed above.

(b) Countermeasures against falsifications, errors or omissions in such notices or in the handling of them by the system operator, such as requirements that the notices be on paper and signed, with copies date-stamped and returned to the persons filing them, however advisable they might be from other standpoints, are discretionary with the State and not required by the Section.

8 205.205 Fees.

The Section provides at subsection (c)(4)(H) for a fee for filing an EFS. The fee can be set in any manner provided by the law of the State in which such EFS is filed. The basis for this is that (C)(4)(H) provides for the fee to be set by the “Secretary of State" but (c)(11) defines the latter term to include "designee of the State.” The fee structure is discretionary with the State.

Artichokes, asparagus, beans lima, beans

snap, beets, Brussels sprouts, broccoli, cabbage, carrots, cauliflower, celery, corn sweet, cucumbers, eggplant, escarole, garlic, lettuce, onions, peas green, peppers, spinach, tomatoes, other truck crops (sys

tem must specify by name) Melons (system must specify by name) Grapefruit, lemons, limes, oranges, tangelos,

tangerines, other citrus fruits (system

must specify by name) Apples, apricots, avocados, bananas, cher

ries, coffee, dates, figs, grapes (& raisins), nectarines, olives, papayas, peaches, pears, persimmons, pineapples, plums (& prunes), pomegranates, other noncitrus fruits (sys

tem must specify by name) Berries (system must specify by name) Tree nuts (system must specify by name) Bees wax, honey, maple syrup, sugar beets, sugar cane, other sugar crops (system must

specify by name) Grass seeds, legume seeds, other seed crops

(system must specify by name) Hops, mint, popcorn, other miscellaneous

crops (system must specify by name) Greenhouse & nursery products produced on

farms (system must specify by name) Mushrooms, trees, other forest products (sys

tem must specify by name) Chickens, ducks, eggs, geese, turkeys, other

poultry or poultry products (system must

specify by name) Cattle & calves, goats, horses, hogs, mules,

sheep & lambs, other livestock (system

must specify by name) Milk, other dairy products produced on

farms (system must specify by name) Wool, mohair, other miscellaneous livestock

products produced on farms (system must

specify by name) Fish, shellfish Other farm products (system must specify by name).

(b) Note the definition of the term “farm product" at subsection (c)(5), and the Conference Report on Pub. L. 99-198, No. 99 447, December 17, 1985, at page 486.

(c) A State may establish a system for specified products and not for all. A State establishing a system for specified products and not for all will be deemed to be "a State that has established a central filing system” as to the specified products, and will be deemed not to be such a State as to other products. 8 205.207 “Amount" and "reasonable

description of the property." (a) The "amount” of farm products and “reasonable description of the property including county or parish,"

8 205.206 Farm products.

(a) The master list must be organized by farm product as required by subsection (c)(2), and the farm product must be identified on an EFS as required by subsection (c)(4)(D)(iv). The following is a list of such farm products. Rice, rye, wheat, other food grains (system

must specify by name) Barley, corn, hay, oats, sorghum grain, other

feed crops (system must specify by name) Cotton Tobacco Flaxseed, peanuts, soybeans, sunflower

seeds, other oil crops (system must specify

by name) Dry beans, dry peas, potatoes, sweet pota

toes, taro, other vegetables (system must specify by name)

on an EFS and on the master list under the effect, under subsections (e)(2) and subsections (c)(4)(D)(iv) and (2)(C)(iii), (g)(2)(C), of making such persons, need not be shown on every EFS and whether they are inside or outside the master list entry.

State covered by that system, subject (b) Any EFS and master list entry to security interests shown on that will identify a product. If they do not system's master list whether or not show an amount, this constitutes a rep- such persons know about them, so that resentation that all of such product such persons for their own protection owned by the person in question is sub- will need to query the system operator ject to the security interest in ques- about any seller "engaged in farming tion.

operations,” of a farm product pro(c) Any EFS and master list entry duced in the State covered by that syswill identify each county or parish in tem, with whom they deal. the same State where the product is or (c) The effect of registration by such is to be produced. If they do not show persons with a particular system is to any further identification of the loca- get them on the list for regular distion of the product, this constitutes a tribution of portions of that system's representation that all such product master list, the portions to be deterproduced in each such county or par- mined by the registration. They are ish, owned by such person, is subject to subject only to security interests the security interest.

shown on the portions which they re(d) The need to supply additional in- ceive, and are not subject to such information arises only where some of terests as are shown on the master list that product owned by that person is but not shown on portions which they subject to the security interest and receive. Also, if a particular security some is not.

interest is shown on the master list, (e) The additional information about but has been placed on it since the last amount and property must be suffi- regular distribution of portions of that cient to enable a reader of the informa- list to registrants, registrants would tion to identify what product owned by not be subject to that security interthat person is subject, as distinguished est. These conclusions are based on the from what of the same product owned provisions in subsections (e)(3)(A) and by the same person is not subject. The (g)(2)(D)(i) that such persons are subprecision needed, in the description of ject to a security interest only if they the amount and location, would vary receive “written notice

that from case to case.

specifies both the seller and the farm (f) The basis for this is the purpose of product." the entire exercise, to make informa- (d) A question arises as to the length tion available as necessary to enable of time for which a registration is efan identification of what product is fective, and whether a registrant, wishsubject to a security interest as distin- ing to change registration as to county guished from what is not.

or product, can amend an existing reg

istration or must file a new one. This is $ 205.208 Distribution of portions of discretionary with the State since the

master list-registration-informa- Section is silent about it. tion to non-registrants on request.

(e) A question arises whether persons (a) The provisions in the Section re- can register to receive only portions of garding registration of "buyers of farm the list for products in which they do products, commission merchants, and not deal, and thus not be subject to seselling agents," "regular" distribution curity interests in products in which of "portions of the master list, fur- they deal because they are registrants nishing of “oral confirmation * * * but do not receive written notice of request," and the effect of all this, that them. For example, can cattle dealers is, subsections (c)(2) (D), (E) and (F), (e) register to receive portions of the mas(2) and (3), and (g)(2) (C) and (D), must ter list only for oranges, and thus take be read together.

cattle free and clear of security inter(b) The Section does not require such ests shown on the master list, but as to persons to register. Not registering which they do not receive written nowith a particular system operator has tice because they have not registered

* * *


to receive the portion for cattle? Registrants will be deemed to be registered only as to those portions of the master list for which they register, and will be deemed to have failed to register as to those portions for which they do not register.

(f) The Section requires "regular" distribution, to registrants, of portions of the master list as amended from time to time by the filing of EFS's and amendments to EFS's. The requirement that the distribution be “regular” necessarily refers to an interval specified in advance. The interval may vary according to product and region. The frequency of such distribution must be a consideration in review for certification since distribution must be timely to serve its purpose. While subsection (c)(2)(E) (providing that distribution be made "regularly as prescribed by the State”) gives each State discretion to choose the interval between distributions, whatever interval a State chooses will inevitably make possible some transactions in which security interests are filed in the system but registrants are not subject to them.

(8) Legislative history of the Section shows that buyers, commission merchants, and selling agents are not intended to be liable for errors or other inaccuracies generated by the system. See Nov. 22, 1985 Cong. Rec., Senate, pg. S16300, and Dec. 18, 1985 Cong. Rec., House, pg. H12523.

(h) In furnishing to non-registrants "oral confirmation within 24 hours of any (EFS) on request followed by written confirmation,” by a system operator pursuant to subsection (c)(2)(F), any failure in use of a telephone caused by a “busy signal” could not be the basis of liability of the system operator. The basis for this is that subsection (c)(2)(F) does not mention telephones. Also, while it mentions furnishing information orally, it does not contain any provision as to how queries are to be received, that is, orally, in writing, or otherwise.

(i) Of course it is to be expected that telephones would be used in most cases, but use of them is not required by the legislation and is discretionary with the State.

(j) In the matter of receiving queries and giving oral replies to them, subsection (c)(2)(F) will be complied with if a system operator maintains an office and staff where a query can be received on business days and during business hours such as are regular in the State, and where an oral reply will be available on the regular business day following the day on which the query is received, at or before the time of day when it was received.

(k) Written confirmation is required, by subsection (c)(2)(F), to be given to any non-registered buyer, commission merchant, or selling agent.

(1) Such a written confirmation pursuant to subsection (c)(2)(F) does not alter the liability of the non-registrant querying the system and receiving information about a security interest recorded in it. The basis of this, as above, is that non-registrants are subject to security interests recorded in a system whether or not they know about them, and must query the system for their own protection.

(m) The Section does not specify when or how the written confirmation must be furnished, but provides only that it must follow the oral information. Thus the time and method of furnishing written confirmation is discretionary with the State.

$ 205.209 Amendment or continuation

of EFS. (a) The "material change,” required by subsection (c)(4)(E) to be reflected in an amendment to an EFS and master list entry, is whatever change would render the master list entry no longer informative as to what is subject to the security interest in question. That will vary from case to case. The basis for this is the purpose for which the information is supplied, that is, to make information available, to a buyer, commission merchant, or selling agent who proposes to enter into a transaction in a product, whether it is subject to a security interest. The requirement to amend arises when the information already made available no longer serves the purpose and other information is needed in order to do so.

make buyers, commission merchants and selling agents not registered with that system subject to the security interest in that product whether or not they know about it, even if they are outside that State. Subsections (e)(3) and (g)(2)(D) make persons registered with that system subject if they receive written notice of it even if they are outside that State. All of these provisions apply only where an EFS is filed in the system for the State in which the product is produced. They do not apply to a filing in another system.

(c) What constitutes “receipt” of notice is determined by the law of the State in which the intended recipient of notice resides. This is based on subsection (f) which follows provisions for notice to buyers, and (g)(3) which follows provisions for notice to commission merchants and selling agents. Each of those provisions uses the word “buyer" but it means “intended recipient of notice.”

(b) Where an owner of a product makes a change, such as planting a different crop or purchasing different animals from what was represented, without informing the secured party, so that the master list entry is rendered not informative, but the EFS and master list are not amended through no fault of the secured party, the Section is silent as to the consequences. However, see the legislative history cited in 8 205.208(f).

(c) The amendment must be filed in the same manner as the original filing. Note the requirement of section (c)(4)(E). The amendment may be filed electronically provided a State allows electronic filing of financing statements without the signature of the debtor under applicable State law under provisions of the Uniform Commercial Code. An electronically filed amendment need not be signed. However, if an original or reproduced paper document is filed, the amendment must be signed by the secured party and the debtor, and be filed by the secured party.

(d) An effective financing statement remains effective for a period of 5 years from the date of filing and may be continued in increments of 5-year periods beyond the initial 5-year filing period by refiling an effective financing statement or by filing a continuation statement within 6 months before expiration of the effective financing statement. A continuation statement may be filed electronically or as a paper document, and need not contain the signature of the debtor. (51 FR 29451, Aug. 18, 1986, as amended at 61 FR 54728, Oct. 22, 1996; 63 FR 66721, Dec. 3, 1998] 8 205.210 Effect of EFS outside State in

which filed. (a) A question arises whether, if an EFS is filed in one State, a notice of it can be filed in another State and shown on the master list for the second State. There is nothing in the section to prevent this, but it would serve no purpose.

(b) The Section provides only for filing an EFS, covering a given product, in the system for the State in which it is produced. Upon such filing in such system, subsections (e)(2) and (g)(2)(C)

$ 205.211 Applicability of court deci

sions under the UCC. (a) Court decisions under the Uniform Commercial Code (UCC), about the scope of the "farm products" exception in Section 9_307(1) thereof, and interpreting the terms therein, particularly “person engaged in farming operations” which is not defined in the Section, are applicable to an extent in interpreting the section. The basis of this is the legislative intent of the Section to pre-empt State laws reflecting that "farm products” exception, as shown in the House Committee Report on Pub. L. 99-198, No. 99-271, Part 1, September 13, 1985, at pages 108 et seq.

(b) That UCC Section 9–307(1) reads as follows:

(1) A buyer in ordinary course of business (subsection (9) of Section 1-201) other than a person buying farm products from a person engaged in farming operations takes free of a security interest created by his seller even though the security interest is perfected and even though the buyer knows of its existence. (emphasis added)

$ 205.212 "Buyer in ordinary course of

business” and “security interest." The terms “buyer in ordinary course of business” and “security interest” are defined in subsections (c) (1) and (7). There are differences between those definitions and the UCC definitions of the same terms. In interpreting those differences, the following would be pertinent:

(a) The legislative intent discussed above in $ 205.211, to pre-empt State laws reflecting the "farm products' exception; and

(b) The legislative intent shown in subsections (a) and (b) that certain persons take free and clear of certain interests of a "secured lender" "when the seller fails to repay the lender," unless such persons have information about such interests made available to them as provided in the Section.

EFS's as defined in the legislation, and although it reflects security interests on items other than farm products. However, subsections (e) (2) and (3), and (g)(2) (C) and (D), will apply only as to entries reflecting farm products and supported by EFS's as defined in the Section, and it must be possible to distinguish the entries to which these provisions apply from the other entries.

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$ 205.214 Litigation as to whether a

system is operating in compliance

with the Section. (a) The requirements for a system in subsection (c) are written as the definition of the term "central filing system,” so that failure of a system to meet any such requirement, either at the time of its establishment or later, will mean that it is not a "central filing system” as defined.

(b) The issue whether a system, after certification, is operating in compliance, thus whether it is a "central filing system” as defined, could be litigated and ruled on in a case involving only private parties, such as a lender and a buyer of a farm product. The only immediate effect of a finding in such a case, that a system is not a "central filing system” as defined, would be that the rights of the secured party in the case would be as if the State had no system. However, others would be in doubt as to whether they could safely rely on the same system.


$ 205.213 Obligations subject—"person

indebted" "debtor." (a) A debt need not exist at the time of filing of an EFS. The basis for this is that subsection (c)(4) does not require the EFS, and subsection (c)(2)(C) does not require the master list, to show any amount of debt.

(b) The Section does not provide for the transaction in which one person subjects a product to a security interest for another's debt. However the terms “person indebted” and “debtor" in the Section refer to the person who owns a product and subjects it to a security interest, whether or not that person owes a debt to the secured party. The basis for this is the purpose for which the information is supplied. Any buyer of a farm product, commission merchant, selling agent querying a master list or system operator about a prospective seller of a farm product is interested in whether that seller has subjected that product to a security interest, not in whether the debt is owed by that seller or by another.

(c) Security interests existing prior to establishment of a system can be filed in such a system and reflected in the master list if documents are in existence or are created which meet the requirements of subsection (c)(4) besides filing, if such documents are filed wherever State law requires, and if the system operator receives the information about them needed for the master list.

(d) A system can be in compliance with the Section, although it reflects security interests not supported by



206.1 Definitions.
206.2 Swine contract library.
206.3 Monthly report.

AUTHORITY: Sec. 941, Pub. L. 106-78, 113 Stat. 1135; 7 CFR 2.22 and 2.81.

SOURCE: 68 FR 47826, Aug. 11, 2003, unless otherwise noted.

$ 206.1 Definitions.

TH definitions in this section apply to the regulations in this part. The definitions in this section do not apply to other regulations issued under the Packers and Stockyards Act (P&S Act) or to the P&S Act as a whole.

Accrual account. (Synonymous with "ledger," as defined in this section.) An

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