[Code of Federal Regulations]
[Title 9, Volume 2]
[Revised as of January 1, 2003]
From the U.S. Government Printing Office via GPO Access
[CITE: 9CFR205.208]

[Page 69-70]
 
                  TITLE 9--ANIMALS AND ANIMAL PRODUCTS
 
  CHAPTER II--GRAIN INSPECTION, PACKERS AND STOCKYARDS ADMINISTRATION 
       (PACKERS AND STOCKYARDS PROGRAMS),DEPARTMENT OF AGRICULTURE
 
PART 205--CLEAR TITLE--PROTECTION FOR PURCHASERS OF FARM PRODUCTS--Table of Contents
 
Sec. 205.208  Distribution of portions of master list--registration--information to non-registrants on request.

    (a) The provisions in the Section regarding registration of ``buyers 
of farm products, commission merchants, and selling agents,'' 
``regular'' distribution of ``portions'' of the master list, furnishing 
of ``oral confirmation * * * on request,'' and the effect of all this, 
that is, subsections (c)(2) (D), (E) and (F), (e) (2) and (3), and 
(g)(2) (C) and (D), must be read together.
    (b) The Section does not require such persons to register. Not 
registering with a particular system operator has the effect, under 
subsections (e)(2) and (g)(2)(C), of making such persons, whether they 
are inside or outside the State covered by that system, subject to 
security interests shown on that system's master list whether or not 
such persons know about them, so that such persons for their own 
protection will need to query the system operator about any seller 
``engaged in farming operations,'' of a farm product produced in the 
State covered by that system, with whom they deal.
    (c) The effect of registration by such persons with a particular 
system is to get them on the list for regular distribution of portions 
of that system's master list, the portions to be determined by the 
registration. They are subject only to security interests shown on the 
portions which they receive, and are not subject to such interests as 
are shown on the master list but not shown on portions which they 
receive. Also, if a particular security interest is shown on the master 
list, but has been placed on it since the last regular distribution of 
portions of that list to registrants, registrants would not be subject 
to that security interest. These conclusions are based on the provisions 
in subsections (e)(3)(A) and (g)(2)(D)(i) that such persons are subject 
to a security interest only if they receive ``written notice * * * that 
specifies both the seller and the farm product.''
    (d) A question arises as to the length of time for which a 
registration is effective, and whether a registrant, wishing to change 
registration as to county or product, can amend an existing registration 
or must file a new one. This is discretionary with the State since the 
Section is silent about it.
    (e) A question arises whether persons can register to receive only 
portions of the list for products in which they do not deal, and thus 
not be subject to security interests in products in which they deal 
because they are registrants but do not receive written notice of them. 
For example, can cattle dealers register to receive portions of the 
master list only for oranges, and thus take cattle free and clear of 
security interests shown on the master list, but as to which they do not 
receive written notice 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

[[Page 70]]

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.
    (g) 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.
    (l) 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.