Bair

*656 MEMORANDUM *

Sugar beet growers in Washington state (“Growers”) sued the Pacific Northwest Sugar Company (“PNSC”), a sugar processor, for money owed on sugar beets they sold to the PNSC. The Growers also sued the Commodity Credit Corporation (“CCC”), an agency of the United States Department of Agriculture, seeking a declaration that their liens are superior to those of the CCC. The district court granted the CCC’s motion for summary judgment. The Growers appeal, arguing that the CCC’s liens are not superior to their liens and that the CCC failed to obtain adequate assurances from the PNSC that the PNSC would pay certain amounts to the Growers. For the reasons stated below, we affirm the district court’s judgment. The parties are familiar with the facts of this case and we refer to them only as necessary in this disposition.

1. Superiority of Liens

As a preliminary matter, we note that this case is governed by federal law, not state law, because the lien priority of a federal lending program is at issue. See United States v. Kimbell Foods, Inc., 440 U.S. 715, 726 , 99 S.Ct. 1448 , 59 L.Ed.2d 711 (1979).

This case requires us to interpret 7 U.S.C. § 7284 (d) and determine…

dissenting.

I respectfully dissent. In enacting 7 U.S.C. § 7284 (d) Congress intended to give priority to those security interests that the CCC properly perfected. Here the CCC failed to follow its own regulations in the administration of the loans it made to PNSC, as well as congressional enactments intended to protect sugar growers. Were it not for these failures, the CCC would not have made the loans at issue. No “security interest” in the sugar at issue was created for the purposes of 7 U.S.C. § 7284 (d), and the CCC cannot now use that provision to remedy its own deficiencies.

The authority of the CCC to make loans to entities like PNSC is not absolute. In the first instance, Congress has set forth certain requirements that must be met when the CCC makes loans to sugar processors. See, e.g., 7 U.S.C. § 7272 (e)(2) (2000). In addition, and perhaps more importantly in this case, Congress has given the CCC (through the Secretary of Agriculture) the authority to set further requirements in the administration of these loans. 7 U.S.C. § 7281 (d) (2000). Under this authority, the CCC has issued regulations which set eligibility requirements for sugar processors seeking loans and…