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charge contained therein. Each sched- failed or refused to satisfy its legal obule of rates and charges filed shall be ligations under bonds issued under said designated by successive numbers. regulations. Each supplement and amendment to (b) Any packer, market agency, or such schedule shall be numbered and dealer required to maintain a surety shall designate the number of the bond under these regulations may elect schedule which it supplements to maintain, in whole or partial substiamends.

tution for such surety bond, a bond (b) Feed charges. When the schedule equivalent as provided below. The total in effect provides for feed charges to be amount of any such surety bond, equivbased on an average cost plus a speci- alent, or combination thereof, must be fied margin, the 10-day filing and no- the total amount of the surety bond tice provision contained in section otherwise required under these regula306(c) of the Act is waived. A schedule tions. Any such bond equivalent must of the current feed charges based on av- be in the form of: erage feed cost and showing the effec- (1) A trust fund agreement governing tive date shall be conspicuously posted funds actually deposited or invested in at the stockyard at all times. Changes fully negotiable obligations of the in feed charges may become effctive 2 United States or Federally-insured dedays after the change is posted at the posits or accounts in the name of and stockyard.

readily convertible to currency by a (c) Professional veterinary services. The trustee as provided in $201.32, or 10-day filing and notice provision con- (2) A trust agreement governing tained in section 306(a) of the Act is funds which may be drawn by a trustee waived for a schedule of charges for as provided in $201.32, under one or professional veterinary services. A more irrevocable, transferrable, standschedule of charges for professional by letters of credit, issued by a Federveterinary services rendered by a vet- ally-insured bank or institution and erinarian at a posted stockyard shall physically received and retained by be conspicuously posted at the stock- such trustee. yard at all times. The schedule of (c) The provisions of $8 201.27 through charges and any supplement or amend- 201.34 shall be applicable to the trust ment thereto may become effective 2 fund agreements, trust agreements and days after the schedule, supplement, or letters of credit authorized in paraamendment is posted at the stockyard. graph (b) of this section.

(d) Joint schedules. If the same sched- (d) Bonds, trust fund agreements, letule is to be observed by more than one ters of credit and trust agreements market agency operating at any one shall be filed on forms approved by the stockyard, one schedule will suffice for

Administrator. such market agencies. The names and business addresses of those market

(Approved by the Office of Management and

Budget under control number 0580_0015) agencies adhering to such schedule must appear on the schedule.

[56 FR 2128, Jan. 22, 1991, as amended at 61

FR 36279, July 10, 1996; 62 FR 11759, Mar. 13, (Approved by the Office of Management and

1997; 68 FR 75388, Dec. 31, 2003] Budget under control number 0580-0015) (7 U.S.C. 203, 204, 207, 217a, 222 and 228)

$ 201.28 Duplicates of bonds or equiva

lents to be filed with Regional Su[49 FR 33003, Aug. 20, 1984, as amended at 68

pervisors. FR 75388, Dec. 31, 2003]

Fully executed duplicates of bonds, GENERAL BONDING PROVISIONS

trust fund agreements, and trust agree

ments maintained under the regula8201.27 Underwriter; equivalent in tions in this part, and fully executed lieu of bonds; standard forms.

duplicates of all endorsements, amend(a) The surety on bonds maintained ments, riders, indemnity agreements, under the regulations in this part shall and other attachments thereto, and be a surety company which is currently photographically reproduced copies of approved by the United States Treas- any letter of credit or amendment ury Department for bonds executed to thereto, shall be filed with the Rethe United States; and which has not gional Supervisor for the region in

which the registrant, packer, or person applying for registration resides, or in the case of a corporation, where the corporation has its home office: Provided, that if such registrant, packer, or person does not engage in business in such area, the foregoing documents shall be filed with the Regional Supervisor for the region in which the place of business of the registrant or packer or person is located. (Approved by the Office of Management and Budget under control number 0580-0015) (56 FR 2128, Jan. 22, 1991, as amended at 68 FR 75388, Dec. 31, 2003)

another market agency shall be named as clearee in the bond filed and maintained by the market agency registered to provide clearing services. Each market agency selling livestock on a commission basis shall file and maintain its own bond.

(d) Every packer purchasing livestock, directly or through an affiliate or employee or a wholly-owned subsidiary, except those packers whose annual purchases do not exceed $500,000, shall file and maintain a reasonable bond. In the event a packer maintains a wholly-owned subsidiary or affiliate to conduct its livestock buying, the wholly-owned subsidiary or affiliate shall be registered as a packer buyer for its parent packer firm, and the required bond shall be maintained by the parent packer firm.

MARKET AGENCY, DEALER AND PACKER

BONDS

(7 U.S.C. 204, 228(a)) [48 FR 8806, Mar. 2, 1983]

as

$201.29 Market agencies, packers and

dealers required to file and main

tain bonds. (a) Every market agency, packer, and dealer, except as provided in paragraph (d) of this section, and except packer buyers registered as dealers to purchase livestock for slaughter only, shall execute and maintain a reasonable bond on forms approved by the Administrator containing the appropriate condition clauses, set forth in $201.31 of the regulations, applicable to the activity or activities in which the person or persons propose to engage, to secure the performance of obligations incurred by such market agency, packer, or dealer. No market agency, packer, or dealer required to maintain a bond shall conduct his operations unless there is on file and in effect a bond complying with the regulations in this part.

(b) Every market agency buying on a commission basis and every dealer buying for his own account or for the accounts of others shall file and maintain a bond. If a registrant operates as both a market agency buying on a commission basis and as a dealer, only one bond to cover both buying operations need be filed. Any person operating as a market agency selling on a commission basis and as a market agency buying on a commission basis or as a dealer shall file and maintain separate bonds to cover his selling and buying operations.

(c) Each market agency and dealer whose buying operations are cleared by

8 201.30 Amount of market agency,

dealer and packer bonds. (a) Market agency selling livestock on commission. To compute the required amount of bond coverage, divide the dollar value of livestock sold during the preceding business year, or the substantial part of that business year, in which the market agency did business, by the actual number of days on which livestock was sold. The divisor (the number of days on which livestock was sold) shall not exceed 130. The amount of bond coverage must be the next multiple of $5,000 above the amount so determined. When the computation exceeds $50,000, the amount of bond coverage need not exceed $50,000 plus 10 percent of the excess over $50,000, raised to the next $5,000 multiple. In no case shall the aamount of bond coverage for a market agency selling on commission be less than $10,000 or such higher amount as re red to comply with any State law.

(b) Market agency buying on commission or dealer. The amount of bond coyerage must be based on the average amount of livestock purchased by the dealer or market agency during a period equivalent to 2 business days. To compute the required amount of bond coverage, divide the total dollar value

of livestock purchased during the pre- business days. To compute the required ceding business year, or substantial amount of bond coverage, divide the part of that business year, in which the total dollar value of livestock purdealer or market agency or both did chased during the preceding business business, by one-half the number of year, or substantial part of that busidays on which business was conducted. ness year, in which the packer did busiThe number of days in any business ness, by one-half the number of days on year, for purposes of this regulation, which business was conducted. The shall not exceed 260. Therefore, the di- number of days in any business year, visor (one-half the number of days on for purposes of this regulation, shall which business was conducted) shall not exceed 260. Therefore, the divisor not exceed 130. The amount of the bond (one-half the number of days on which coverage must be the next multiple of business was conducted) shall not ex$5,000 above the amount so determined. ceed 130. The amount of the bond covWhen the computation exceeds $75,000, erage must be the next multiple of the amount of bond coverage need not $5,000 above the amount so determined. exceed $75,000 plus 10 percent of the ex- In no case shall the amount of bond cess over $75,000, raised to the next coverage for a packer be less than $5,000 multiple. In no case shall the $10,000. amount of bond coverage be less than (e) If a person applying for registra$10,000 or such higher amount as re- tion as a market agency or dealer has quired to comply with any State law. been engaged in the business of han

(c) Market agency acting as clearing dling livestock before the date of the agency. The amount of bond coverage application, the value of the livestock must be based on the average amount handled, if representative of future opof livestock purchased by all persons erations, must be used in computing for whom the market agency served as the required amount of bond coverage. a clearor during a period equivalent to If the applicant for registration is a 2 business days. To compute the re- successor in business to a registrant quired amount of bond coverage, divide formerly subject to these regulations, the total dollar value of livestock pur- the amount of bond coverage of the apchased by all persons for whom the plicant must be at least that amount market agency served as a clearor dur required of the prior registrant, unless ing the preceding business year, or sub- otherwise determined by the Adminisstantial part of that business year, in trator. If a packer becomes subject to which the market agency acting as these regulations, the value of liveclearing agency did business, by one- stock purchased, if representative of half the number of days on which busi- future operations, must be used in

was conducted. The number of computing the required amount of days in any business year, for purposes bond coverage. If a packer is a sucof this regulation, shall not exceed 260. cessor in business to a packer formerly Therefore, the divisor (one-half the subject to these regulations, the number of days on which business was amount of bond coverage of the succonducted) shall not exceed 130. The cessor must be at least that amount reamount of bond coverage must be the quired of the prior packer, unless othnext multiple of $5,000 above the erwise determined by the Adminisamount so determined. When the com- trator. putation exceeds $75,000, the amount of (f) Whenever the Administrator has bond coverage need not exceed $75,000 reason to believe that a bond is inadplus 10 percent of the excess over equate to secure the performance of $75,000, raised to the next $5,000 mul- the obligations of the market agency, tiple. In no case shall the amount of dealer or packer covered thereby, the bond coverage be less than $10,000 or

Administrator shall notify such person such higher amount as required to to adjust the bond to meet the requirecomply with any State law.

ments the Administrator determines to (d) Packer. The amount of bond cov- be reasonable. erage must be based on the average amount of livestock purchased by the

(7 U.S.C. 204, 228(a)) packer during a period equivalent to 2 (48 FR 8806, Mar. 2, 1983)

ness

8201.31 Conditions in market agency,

dealer and packer bonds. Each market agency, dealer and packer bond shall contain conditions applicable to the activity or activities in which the person or persons named as principal or clearees in the bond propose to engage, which conditions shall be as follows or in terms to provide equivalent protection:

(a) Condition Clause No. 1: When the principal sells livestock for the accounts of others. If the said principal shall pay when due to the person or persons entitled thereto the gross amount, less lawful charges, for which all livestock is sold for the accounts of others by said principal.

(b) Condition Clause No. 2: When the principal buys livestock for his own account or for the accounts of others. If the said principal shall pay when due to the person or persons entitled thereto the purchase price of all livestock purchased by said principal for his own account or for the accounts of others, and if the said principal shall sa keep and properly disburse all funds, if any, which come into his hands for the purpose of paying for livestock purchased for the accounts of others.

(c) Condition Clause No. 3: When the principal clears other registrants buying livestock and thus is responsible for the obligations of such other registrants. If the said principal, acting as a clearing agency responsible for the financial obligations of other registrants engaged in buying livestock, viz: (Insert here the names of such other registrants as they appear in the application for registration), or if such other registrants, shall (1) pay when due to the person or persons entitled thereto the purchase price of all livestock purchased by such other registrants for their own account or for the accounts of others; and (2) safely keep and properly disburse all funds coming into the hands of such principal or such other registrants for the purpose of paying for livestock purchased for the accounts of others.

(d) Condition Clause No. 4: When the principal buys livestock for his own account as a packer. If the said principal shall pay when due to the person or persons entitled thereto the purchase

price of all livestock purchased by said principal for his own account. [47 FR 32695, July 29, 1982] 8 201.32 Trustee in market agency,

dealer and packer bonds. Bonds may be in favor of a trustee who shall be a financially responsible, disinterested person satisfactory to the Administrator. State officials, secretaries or other officers of livestock exchanges or of similar trade associations, attorneys at law, banks and trust companies, or their officers, are deemed suitable trustees. If a trustee is not designated in the bond and action is taken to recover damages for breach of any condition thereof, the Administrator shall designate a person to act as trustee. In those states in which a State official is required by statute to act or has agreed to act as trustee, such official shall be designated by the Administrator as trustee when a designation by the Administrator becomes necessary. [41 FR 53774, Dec. 9, 1976) 8 201.33 Persons damaged may main.

tain suit; filing and notification of claims; time limitations; legal ex.

penses. Each bond and each bond equivalent filed pursuant to the regulations in this part shall contain provisions that:

(a) Any person damaged by failure of the principal to comply with any condition clause of the bond or bond equivalent may maintain suit to recover on the bond or bond equivalent even though such person is not a party named in the bond or bond equivalent;

(b) Any claim for recovery on the bond or bond equivalent must be filed in writing with either the surety, if any, or the trustee, if any, or the Administrator, and whichever of these parties receives such a claim shall notify the other such party or parties at the earliest practical date;

(c) The Administrator is authorized to designate a trustee pursuant to $201.32;

(d) The surety on the bond, or the trustee on the bond equivalent, as the case may be, shall not be liable to pay any claim if it is not filed in writing within 60 days from the date of the transaction on which the claim is ment will be terminated as of the effec. tive date of the replacement bond oi bond equivalent. (Approved by the Office of Management and Budget under control number 0580-0015) [47 FR 32695, July 29, 1982, as amended at 54 FR 26349, June 23, 1989; 61 FR 36279, July 10, 1996; 68 FR 75388, Dec. 31, 2003]

PROCEEDS OF SALE

based or if suit thereon is commenced less than 120 days or more than 547 days from the date of the transaction on which the claim is based;

(e) The proceeds of the bond or bond equivalent, as the case may be, shall not be used to pay fees, salaries, or expenses for legal representation of the surety or the principal. (56 FR 2128, Jan. 22, 1991) $201.34 Termination of market agen

cy, dealer and packer bonds. (a) Each bond shall contain a provision requiring that, prior to terminating such bond, at least 30 days notice in writing shall be given to the Administrator, Grain Inspection, Packers and Stockyards Administration (Packers and Stockyards Programs), U.S. Department of Agriculture, Washington, DC 20250, by the party terminating the bond. Such provision may state that in the event the surety named therein writes a replacement bond for the same principal, the 30-day notice requirement may be waived and the bond will be terminated as of the effective date of the replacement bond.

(b) Each bond filed by a market agency who clears other registrants who are named in the bond shall contain a provision requiring that, prior to terminating the bond coverage of any clearee named therein, at least 30 days notice in writing shall be given to the Administrator, Grain Inspection, Packers and Stockyards Administration (Packers and Stockyards Programs), U.S. Department of Agriculture, Washington, DC 20250, by the surety. Such written notice shall be in the form of a rider or endorsement to be attached to the bond of the clearing agency.

(c) Each trust fund agreement and trust agreement shall contain a provision requiring that, prior to terminating such agreement, at least 30 days notice in writing shall be given to the Administrator, Grain Inspection, Packers and Stockyards Administration, U.S. Department of Agriculture, Washington, DC 20250, by the party terminating the agreement. Such provision shall state that in the event the principal named therein files an acceptable bond or bond equivalent to replace the agreement, the 30-day notice requirement may be waived and the agree

$201.39 Payment to be made to con

signor or shipper by market agen

cies; exceptions. (a) No market agency shall, except as provided in paragraph (b) of this section, pay the net proceeds or any part thereof, arising from the sale of livestock consigned to it for sale, to any person other than the consignor or shipper of such livestock except upon an order from the Secretary or a court of competent jurisdiction, unless (1) such market agency has reason to believe that such person is the owner of the livestock, (2) such person holds a valid, unsatisfied mortgage or lien upon the particular livestock, or (3) such person holds a written order authorizing such payment executed by the owner at the time of or immediately following the consignment of such livestock: Provided, That this paragraph shall not apply to deductions made from sales proceeds for the purpose of financing promotion and research activities, including educational activities, relating to livestock, meat, and other products covered by the Act, carried out by producer-sponsored organizations.

(b) The net proceeds arising from the sale of livestock, the ownership of which has been questioned by a market agency duly authorized to inspect brands, marks, and other identifying characteristics of livestock may be paid in accordance with the directions of such brand inspection agency if the laws of the State from which such livestock originated or was shipped to market make provision for payment of the proceeds in the manner directed by the brand inspection agency and if the market agency to which the livestock was consigned, and the consignor or consignors concerned, are unable to establish the ownership of the livestock

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