YOUR KBA Agricultural Law Section
July 2022
Your Partner in the Profession
KDA Seeks Changes to Kansas Grain Warehouse Law Grain warehouses play a critical function in the operation of the Kansas farm economy. In this edition of the Ag Law Section’s newsletter, we take a look at some newly proposed regulations impacting Kansas grain warehouses. — Mike Fielding, Chair
The Kansas Department of Agriculture is proposing new regulations and amendments to some existing regulations for the administration of the Kansas Grain Warehouse Law, K.S.A. 34-101, et seq. Broadly speaking, the proposed changes will promote efficiency by reflecting current grain warehouse industry practices and will also provide protections to producers who utilize public grain warehouses. In developing these proposed regulations, KDA worked closely with several stakeholder groups, including the Kansas Grain and Feed Association and the Kansas Cooperative Council. One proposed regulation, K.A.R. 4-25-19, which aims to provide clear parameters for essential industry practices as well as protect Kansas producers, sets out requirements for public warehouses that hold grain in conditional or emergency storage. Conditional storage space is storage that is not part of a public warehouse’s licensed storage space but is nonetheless a physical structure that provides for adequate grain storage, such as a bin or a bunker. Emergency storage space is also not part of a public warehouse’s licensed storage space but either does not consist of any physical structure or is a structure that would not be deemed adequate to be part of a warehouse’s licensed storage. Examples of emergency storage spaces include “ground piles” or structures that lack adequate bases, side walls, or aeration.
regulations to allow certain records to be signed and maintained electronically. These changes will promote good use of resources and will allow business to be conducted more efficiently for both public warehouses and other parties to their transactions. Another new proposed regulation, K.A.R. 4-25-22, is intended to ensure that public warehouse facilities are safe for examination. Proposed regulation K.A.R. 4-25-23 provides that a public warehouseman who is found during an examination to have violated the Kansas Grain Warehouse Law is to be given 15 days to report to KDA how the warehouseman has corrected or plans to correct the violation. This regulation will formalize a process that KDA has used historically and will provide public warehousemen who have committed minor violations with ample time to correct them without facing harsher administrative action.
Both conditional and emergency storage spaces are essential to the operation of public grain warehouses, particularly during times of high-volume intake such as harvest. This proposed regulation will ensure that these important types of storage are legally recognized and uniformly utilized. It also will benefit producers by implementing requirements designed to ensure that the quality of grain stored in conditional or emergency storage is maintained, such as establishing dates by which grain must be moved out of conditional or emergency storage into licensed storage and providing that emergency storage is not permitted for soybeans or other dry edible beans.
KDA is also proposing, in K.A.R. 4-25-16, to increase annual public warehouseman’s license fees. This change is proposed because KDA will soon be unable to maintain a state-administered grain warehouse program, which previously has been entirely fee-funded, if license fees are not increased. During the development of the proposed regulations, stakeholders expressed a willingness to pay increased state license fees rather than transition to a federal licensing scheme administered by the U.S. Department of Agriculture, citing the certainty of the state licensing scheme and the customer service they have historically received from KDA. This proposed regulation will implement only about 50% of the originally contemplated license fee increase because the Kansas Legislature provided additional funding for the program late in the 2022 session.
K.A.R. 4-25-20 is a proposed new regulation that seeks to protect the financial interests of producers whose grain is stored in a public warehouse by requiring that a public warehouse’s daily position report not reflect significantly more grain than the warehouse physically possesses. Additional proposed regulatory provisions intended to implement modern grain warehouse industry practices include a regulation pertaining to unpaid grain contracts and updates to several existing
Accordingly, these proposed regulatory changes will allow Kansas public warehousemen to maintain the benefits of KDA licensure at the lowest feasible cost. The changes will also officially sanction many already widely utilized practices and provide clarity and certainty as to the regulation of those practices while promoting efficiency within the public grain warehouse industry. Finally, they will provide important protections for Kansas producers who rely on public grain warehouses.