AUTHORITY: Implementing and authorized by Section 40.23 of the Civil Administrative Code of Illinois [20 ILCS 205/40.23]; implementing Section 16 of the Illinois Feeder Swine Dealer Licensing Act [225 ILCS 620/16]; implementing and authorized by Sections 15, 16 and 16.1 of the Illinois Livestock Dealer Licensing Act [225 ILCS 645/15, 16 and 16.1]; implementing Sections 4 and 4.1 of the Slaughter Livestock Buyers Act [225 ILCS 655/4 and 4.1]; implementing Section 14 of the Slaughter Livestock Buyers Act [225 ILCS 655/14]; implementing Section 3 of the Livestock Auction Market Law [225 ILCS 640/3]; implementing and authorized by Section 8 of the Illinois Pesticide Act [415 ILCS 60/8]; implementing and authorized by Section 16 of the Personal Property Storage Act [240 ILCS 10/16].

SOURCE: Rules and Regulations Relating to the Civil Administrative Code, filed December 16, 1975, effective December 27, 1975; amended October 18, 1977, effective October 28, 1977; codified at 5 Ill. Reg. 10433; amended at 8 Ill. Reg. 516, effective January 1, 1984; amended at 10 Ill. Reg. 4206, effective February 21, 1986; amended at 22 Ill. Reg. 11698, effective June 25, 1998.

SUBPART A: PROCEDURE FOR THE COLLECTION, CONTROL AND DISTRIBUTION OF SURETY BONDS RECEIVED BY THE DIRECTOR OF THE ILLINOIS DEPARTMENT OF AGRICULTURE ACTING AS TRUSTEE ON BEHALF OF THE CLAIMANTS

 

Section 3.10  Bonding

 

Pursuant to the Acts listed in Section 40.23 of the Civil Administrative Code of Illinois [20 ILCS 205/40.23] and the rules promulgated for the administration of such Acts, certain license holders or registrants are required to post a Surety Bond being a commercial Surety Bond or pledge other security for the purpose of providing a fund to satisfy certain specific creditors in the event of a failure. The Surety Bond shall be executed on forms supplied by the Department. Every bond shall be signed by the licensee/registrant in the same manner as the application for license/registration, acknowledged before a notary public, and if the application is a corporation, the corporate seal shall be affixed thereto.

 

(Source:  Amended at 22 Ill. Reg. 11698, effective June 25, 1998)

 

Section 3.20  Investigation by Trustee

 

a)         When there is a failure of a licensee/registrant for which a Surety Bond has been posted, the Trustee shall conduct an investigation to accumulate claims and documents as may be available to support claims against the Surety Bond. At the same time as public notice is given in the newspaper, the Trustee shall give notice by certified or registered mail to the Surety posting the bond of the possibility that claims may be forthcoming against the bond.  Within the first two weeks of its investigation, the Department of Agriculture shall place at least 3 notices in a newspaper in the business' licensed location informing persons with claims to submit them to the Department.

 

b)         When a failure occurs, the Department of Agriculture shall give a written order of suspension in accordance with the provisions of the licensing/registration Act.

 

(Source:  Amended at 22 Ill. Reg. 11698, effective June 25, 1998)

 

Section 3.30  Valid Claims

 

a)         Claims to be valid against a Surety Bond held by the Trustee shall be defined as bona fide obligations covered by enabling statute and/or Section 40.23 of the Civil Administrative Code of Illinois which are filed by claimants within the statute of claims limitation as established by the enabling statute, if one prevails, or the Mechanics Lien Act [770 ILCS 60], or 30 days from the date the business is closed, whichever is less.

 

b)         The closing date of a business shall be the date the business failed.

 

c)         All claims determined as being valid claims by the Illinois Department of Agriculture shall be considered as valid claims for the purposes of filing a claim against the surety bond pledged.

 

(Source:  Amended at 22 Ill. Reg. 11698, effective June 25, 1998)

 

Section 3.40  Hearing to Verify Claimants and Claim Amounts

 

The Trustee shall give at least a 10-day notice by registered or certified mail to the Surety posting the bond, the licensee/registrant, as well as to all known claimants, advising them of the date, time and place of the administrative hearing.  A hearing to receive claims not previously submitted to the Trustee and to verify claimants and their amount shall be held by the Trustee in accordance with Section 3.60 of this Part.  Notice of the date, time and place of the hearing shall be published in the official state newspaper and once in a newspaper in the business' licensed location. In the event that the surety fails to object to any of the valid claims (8 Ill. Adm. Code 1.114), the surety shall pay within 35 days from the date of the hearing officer's decision, to the Director of the Illinois Department of Agriculture, as Trustee, the amount of the surety bond ordered to be paid to the Director of the Illinois Department of Agriculture, as Trustee, for the purpose of paying the valid claims. When requested, the Trustee will provide a breakdown on how the trust account was distributed.  The final administrative decision (see 8 Ill. Adm. Code 1.77(f) and 1.124) shall be subject to judicial review in accordance with the Administrative Review Law [735 ILCS 5/Art. III].

 

(Source:  Amended at 22 Ill. Reg. 11698, effective June 25, 1998)

 

Section 3.50  Trust Accounts

 

The Department of Agriculture shall establish and deposit funds received from a liquidated bond into an interest-bearing trust account in a federally insured financial institution until payment to claimants is made. The funds in a trust account shall be paid to claimants with valid claims by check written by the Department.  An accounting of the funds which are deposited in the trust account shall be maintained by the Department on a separate accounting record for each trust account, identifiable as to the source of such funds, and any accrued interest shall be prorated among the identified funds in amounts equal to the same percentage as each identified fund is to the total of the trust account.  Accrued interest from funds in a trust account shall be available for payment of valid claims.  In determining the type of account in which to deposit bond proceeds, the Department shall consider interest rates, the anticipated period of time before payment to claimants with valid claims will be made, maturity dates, and any other factors which could affect the maximization of funds for the benefit of claimants.  Reports shall be made to the Comptroller of funds held in such accounts in accordance with Section 16 of the State Comptroller Act [15 ILCS 405/16].

 

(Source:  Amended at 22 Ill. Reg. 11698, effective June 25, 1998)

 

Section 3.60  Administrative Hearings

 

Administrative hearings held by the Department are governed by the procedures established in the Illinois Administrative Procedure Act [5 ILCS 100] and the Department's Administrative Rules (8 Ill. Adm. Code 1) which pertain to administrative proceedings, contested cases, petitions and availability of Department of Agriculture files for public disclosure.  All decisions and actions of the Department of Agriculture are subject to the Illinois Administrative Procedure Act and the Department's Administrative Rules.

 

(Source:  Amended at 22 Ill. Reg. 11698, effective June 25, 1998)

 

Section 3.70  Cancellation of Surety Bond

 

Persons having Surety Bonds filed with the Department of Agriculture shall use the following procedure in regard to cancellation of Surety Bonds:

 

a)         Notice of cancellation shall be sent by certified or registered mail or written notification delivered personally to the Director of the Department of Agriculture, State Fairgrounds, P.O. Box 19281, Springfield, Illinois 62794-9281. A copy of the notice of cancellation shall be delivered to the principal on the same day as notice is delivered to the Director.

 

b)         Notice shall contain the Surety Bond number, amount of surety, and the name of principal.

 

c)         The date of the notice of cancellation and the effective date of the termination of the bond shall be set as follows:

 

1)         The date of notice of cancellation shall be the date the notice is received by the Department of Agriculture.

 

2)         The effective date of termination of the bond can be no sooner than the date of notice plus the required notice period as established in the licensing act.  The notice of cancellation shall not affect the liability accrued or which may accrue under such bond before the effective date of termination.

 

(Source:  Amended at 22 Ill. Reg. 11698, effective June 25, 1998)

SUBPART B: PROCEDURE FOR THE COLLECTION, CONTROL AND DISTRIBUTION OF COLLATERAL FILED IN LIEU OF A SURETY BOND WITH THE DIRECTOR OF THE ILLINOIS DEPARTMENT OF AGRICULTURE ACTING ON BEHALF OF CLAIMANTS

 

Section 3.80  Investigation by Trustee

 

a)         When there is a failure of licensee/registrant for which collateral acceptable to the Department has been pledged, the Trustee shall conduct an investigation to accumulate claims and documents as may be available to support claims against the collateral. Within the first two weeks of its investigation, the Department of Agriculture shall place at least 3 notices in a newspaper in the business' licensed location informing persons with claims to submit them to the Department.

 

b)         When a failure occurs, the Department of Agriculture shall give a written order of suspension in accordance with the provisions of the licensing/registration act.

 

(Source:  Amended at 22 Ill. Reg. 11698, effective June 25, 1998)

 

Section 3.90  Collateral

 

a)         Pursuant to the Acts listed in Section 40.23 of the Civil Administrative Code of Illinois and rules promulgated for the administration of such Acts, certain license holders or registrants are required to post a surety bond or are permitted to pledge collateral acceptable to the Department for the purpose of providing a fund to satisfy certain specific creditors in the event of a failure.

 

b)         Collateral shall be made payable to the Illinois Department of Agriculture, Director, as Trustee.  The collateral shall be kept in the custody of the Director.  Only Certificates of Deposit issued by financial institutions that are members of the Federal Deposit Insurance Corporation or the Federal Savings and Loan Insurance Corporation will be accepted by the Department as collateral security. Letters of Credit shall be in accordance with Article V of the Uniform Commercial Code [810 ILCS 5/Art. V].  Notice of request for cancellation and return of the collateral shall be sent by the licensee/registrant by certified mail to the Director, Illinois Department of Agriculture, P.O. Box 19281, Springfield, Illinois  62794-9281.  The notice shall contain the name and address of the principal, the amount of the collateral and reason for requesting the return of the collateral.

 

c)         In the event the amount of the collateral is changed, the licensee/registrant shall submit new collateral acceptable to the Department.  The date the new collateral is to be effective shall be set by the Department and any liability accruing under the prior collateral will be transferred to the new collateral.  The effective date of the new collateral shall be set whereby there is no lapse of time that claimants are not protected by pledged security.  The Department will release the original collateral upon receipt of the new collateral.

 

d)         The financial institution shall pay directly to the purchaser that amount of interest that will enable the Certificate of Deposit to be withdrawn at full face value at any time.  In the event the business fails, the Trustee shall liquidate the Certificate of Deposit and any interest accrued will be paid to the Trustee.  When the Trustee liquidates the Certificate of Deposit, the financial institution will be notified in writing of such action by certified or registered mail or by personal demand by an authorized representative of the Department.

 

e)         In the event of a failure of any licensee or registrant and where the Department's investigation reveals claims against the collateral, the Department of Agriculture shall liquidate the collateral to the extent necessary to satisfy claimants.  The Department shall establish and deposit funds received from a liquidated collateral into an interest-bearing trust account in a federally insured financial institution until payment to claimants is made.  The funds in a trust account shall be paid to claimants with valid claims by check written by the Department.  An accounting of the funds which are deposited in the trust account shall be maintained by the Department on a separate accounting record for each trust account, identifiable as to the source of such funds, and any accrued interest shall be prorated among the identified funds in amounts equal to the same percentage as each identified fund is to the total trust account. Accrued interest from funds in a trust account shall be available for payment of valid claims.  In determining the type of account in which to deposit trust funds, the Department shall consider interest rates, the anticipated period of time before payment to claimants with valid claims will be made, maturity dates and any other factors which could affect the maximization of funds for the benefit of claimants.  Reports shall be made to the Comptroller of funds held in such accounts in accordance with the State Comptroller Act.  When requested, the Trustee will provide a breakdown of how the trust account was distributed.

 

f)         In the event of a failure of a licensee/registrant and where the Department's investigation reveals no valid claims against the collateral, the procedure as set forth in Section 3.140 shall be followed.

 

(Source:  Amended at 22 Ill. Reg. 11698, effective June 25, 1998)

 

Section 3.100  Valid Claims

 

a)         Claims to be valid against collateral held by the Trustee shall be defined as bona fide obligations covered by enabling statute and/or Section 40.23 of the Civil Administrative Code of Illinois which are filed by claimants or which are disclosed by the Illinois Department of Agriculture. Any claim to be a valid claim against collateral must be filed with the Department or disclosed by the Illinois Department of Agriculture within the statute of claims limitation as established by the enabling statute, if one prevails, or the Mechanics Lien Act [770 ILCS 60] or 30 days from the date the business is closed, whichever is less.  The closing date of a business shall be the date the business failed.

 

b)         All claims determined as being valid claims by the Illinois Department of Agriculture shall be considered as valid claims for the purposes of filing a claim against the collateral.

 

(Source:  Amended at 22 Ill. Reg. 11698, effective June 25, 1998)

 

Section 3.110  Hearing to Verify Claimants and Claim Amounts

 

The Trustee shall give at least a 10-day notice by registered or certified mail to the licensee/registrant posting the collateral, as well as to all known claimants advising them of the date, time and place of an administrative hearing.  A hearing to receive claims not previously submitted to the Trustee and to verify claimants and their amount shall be held by the Trustee in accordance with 8 Ill. Adm. Code 3.60.  Notice of the date, time and place of the hearing shall be published in the official State newspaper and once in a newspaper in the business' licensed location.  The administrative law judge, in his/her findings, shall order that all, any portion or none of the collateral be used by the Trustee for the payment of valid claims.

 

(Source:  Amended at 22 Ill. Reg. 11698, effective June 25, 1998)

 

Section 3.120  Dispute of Claims by Licensee/Registrant

 

In the event that the licensee/registrant fails to object to any of the valid claims (8 Ill. Adm. Code 1.315), the Trustee shall distribute the trust funds in accordance with 8 Ill. Adm. Code 3.130. The final administrative decision (see 8 Ill. Adm. Code 1.77(f) and 1.124) shall be subject to judicial review in accordance with the Administrative Review Law [735 ILCS 5/Art. III].

 

(Source:  Amended at 22 Ill. Reg. 11698, effective June 25, 1998)

 

Section 3.130  Release of Payment to Claimants

 

No portion of the collateral shall be paid to claimants by the Director of the Illinois Department of Agriculture, as Trustee, until such time as 30 days have passed after a final administrative order without appeal or action on a rehearing before the administrative law judge (8 Ill. Adm. Code 1.114). After a final administrative determination and payment to the claimants with valid claims is made, the Director of the Illinois Department of Agriculture shall return the net balance, if any, to the person pledging the collateral.

 

(Source:  Amended at 22 Ill. Reg. 11698, effective June 25, 1998)

 

Section 3.140  Return of Collateral When There Is No Business Failure

 

If a business ceases operation, the collateral shall be released to the licensee registrant at the conclusion of the time period for filing claims (see 8 Ill. Adm. Code 3.100), provided an investigation by the Department of Agriculture reveals that no apparent statutory liability arose during the period of time the business was operating.  Notification that the business has ceased and request for the release of the collateral shall be delivered in writing to the Department at its Springfield office by the licensee/registrant.  Within the first two weeks of its investigation, the Department shall place at least 3 notices in a newspaper in the business' licensed location informing persons with claims to submit them.

 

(Source:  Amended at 22 Ill. Reg. 11698, effective June 25, 1998)

SUBPART C: PROCEDURE FOR THE COLLECTION, CONTROL AND DISTRIBUTION OF GRAIN AND OTHER ASSETS RECEIVED BY THE DIRECTOR OF THE ILLINOIS DEPARTMENT OF AGRICULTURE ACTING AS TRUSTEE ON BEHALF OF THE CLAIMANTS

 

Section 3.180  Investigation and Audit by Trustee (Repealed)

 

(Source:  Repealed at 22 Ill. Reg. 11698, effective June 25, 1998)

 

Section 3.190  Valid Claims (Repealed)

 

(Source:  Repealed at 22 Ill. Reg. 11698, effective June 25, 1998)

 

Section 3.200  Hearing to Verify Claimants and Claim Amounts (Repealed)

 

(Source:  Repealed at 22 Ill. Reg. 11698, effective June 25, 1998)

 

Section 3.210  Dispute of Claims by Licensee/Registrant (Repealed)

 

(Source:  Repealed at 22 Ill. Reg. 11698, effective June 25, 1998)

 

Section 3.220  Release of Assets to Claimants (Repealed)

 

(Source:  Repealed at 22 Ill. Reg. 11698, effective June 25, 1998)

 

Section 3.230  Disposition of Assets; Trust Accounts (Repealed)

 

(Source:  Repealed at 22 Ill. Reg. 11698, effective June 25, 1998)