By: Phillips, et al. (Senate Sponsor - Estes) H.B. No. 1840
(In the Senate - Received from the House May 6, 2011;
May 9, 2011, read first time and referred to Committee on
Agriculture and Rural Affairs; May 11, 2011, reported favorably by
the following vote: Yeas 4, Nays 0; May 11, 2011, sent to printer.)
A BILL TO BE ENTITLED
AN ACT
relating to the creation and functions of the Texas Grain Producer
Indemnity Board.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 41.001, Agriculture Code, is amended to
read as follows:
Sec. 41.001. POLICY. It is in the interest of the public
welfare of the State of Texas that the producers of any agricultural
commodity be permitted and encouraged to develop, carry out, and
participate in programs of research, disease and insect control,
predator control, education, indemnification, and promotion
designed to encourage the production, marketing, and use of the
agricultural commodity. The purpose of this chapter is to
authorize and prescribe the necessary procedures by which the
producers of an agricultural commodity grown in this state may
finance those programs. The programs may be devised to alleviate
any circumstance or condition that serves to impede the production,
marketing, or use of any agricultural commodity.
SECTION 2. Section 41.058(e), Agriculture Code, is amended
to read as follows:
(e) The board may act separately or in cooperation with any
person in developing, carrying out, and participating in programs
of research, disease and insect control, predator control,
education, indemnification, and promotion designed to encourage
the production, marketing, and use of the commodity on which the
assessment is levied.
SECTION 3. Chapter 41, Agriculture Code, is amended by
adding Subchapter I to read as follows:
SUBCHAPTER I. TEXAS GRAIN PRODUCER INDEMNITY BOARD
Sec. 41.201. DEFINITIONS. In this subchapter:
(1) "Board" means the Texas Grain Producer Indemnity
Board.
(2) "Claim initiation date" means the earliest date on
which a grain buyer:
(A) files for federal bankruptcy protection;
(B) becomes the subject of an involuntary
bankruptcy proceeding;
(C) is found to be insolvent by a court or a state
or federal licensing agency;
(D) is ordered by a court having jurisdiction to
pay a judgment to a grain producer; or
(E) loses its public warehouse license under:
(i) the United States Warehouse Act (7
U.S.C. Section 241 et seq.); or
(ii) Chapter 14.
(3) "Financial failure" means an event described by
Subdivision (2)(A), (B), (C), (D), or (E).
(4) "Grain" means corn, soybeans, wheat, and grain
sorghum.
(5) "Grain buyer" means a person who buys grain from a
grain producer or stores unsold grain for a grain producer. The
term includes:
(A) a purchaser;
(B) a warehouseman;
(C) a processor; or
(D) a commercial handler.
(6) "Grain producer" means a person, including the
owner of a farm on which grain is produced, or the owner's tenant or
sharecropper, engaged in the business of producing grain or causing
grain to be produced for commercial purposes.
Sec. 41.202. DECLARATION OF POLICY. (a) The legislature
intends for the board to indemnify grain producers for economic
hardships in the event that a grain buyer is unable to pay the grain
producer for the grain producer's grain.
(b) The board shall be the certified organization to
indemnify grain producers under this subchapter.
Sec. 41.203. CONFLICT WITH GENERAL COMMODITY LAW
PROVISIONS. To the extent that this subchapter conflicts with
other provisions of this chapter, this subchapter prevails.
Sec. 41.204. BOARD. (a) The board is composed of:
(1) one representative of each of the following
organizations or their successor organizations who is recommended
to the commissioner by the board of directors of the organization
and appointed by the commissioner:
(A) the Corn Producers Association of Texas;
(B) the Texas Wheat Producers Association;
(C) the Texas Grain Sorghum Association;
(D) the Texas Soybean Association; and
(E) the Texas Farm Bureau; and
(2) the following members, appointed by the
commissioner:
(A) one representative of either the Texas
Agricultural Cooperative Council, the Texas Grain & Feed
Association, or one of their successor organizations;
(B) one representative of the non-warehouse
grain-buying industry;
(C) one member with expertise in production
agriculture financing; and
(D) one attorney with expertise in bankruptcy and
grain contracts.
(b) Members of the board serve staggered terms of two years
each and may serve for a maximum of three terms.
(c) The directors described by Subsection (a)(1) shall
select a chair and vice chair from among those directors.
(d) A vacancy on the board, including a vacancy resulting
from the failure of a board member to fulfill the board member's
responsibilities, shall be filled in the manner provided by
Subsection (a). If a vacancy on the board is the result of an
organization described by Subsection (a) dissolving or failing to
fulfill its responsibilities under this subchapter, the
commissioner may fill the vacancy by appointing an individual from
the sector or industry represented by the organization.
Sec. 41.205. DUTIES OF BOARD. The board shall meet at least
once each year to:
(1) review expenses of the board, claims made to the
board by grain producers, and amounts paid on claims by the board;
(2) coordinate all matters relating to the board,
including the board's budget under Section 41.059, and the revenues
necessary to accomplish the purposes of the board;
(3) establish, maintain, or adjust the rate of
assessments collected under Section 41.206; and
(4) determine the most effective use of the board's
budget to provide protection to grain producers.
Sec. 41.206. COLLECTION OF ASSESSMENT. (a) Except as
provided by this subsection, a grain buyer shall collect
assessments in the manner prescribed for processors under Section
41.081. Section 41.081(b) does not apply to the collection of
assessments under this section.
(b) Except as provided by Subsection (c), not later than the
10th day of each quarter of the calendar year, the grain buyer shall
remit the amount collected during the preceding quarter to the
secretary-treasurer of the board for deposit with the bank selected
by the board under Section 41.060.
(c) The grain buyer may retain a portion of the assessment
in an amount determined by the board to cover the grain buyer's
administrative costs in collecting the assessment.
Sec. 41.207. ASSESSMENTS; APPLICABILITY OF OTHER LAW.
(a) An assessment levied on grain producers shall be applied by
the board to efforts relating to the indemnification of grain
producers in this state, including administrative costs of
conducting an assessment referendum.
(b) Assessments collected by the board are not state funds
and are not required to be deposited in the state treasury.
(c) Sections 41.082 and 41.083 do not apply to an assessment
collected under this subchapter.
Sec. 41.208. INITIATION OF CLAIM. (a) A grain producer who
has delivered grain to a grain buyer may initiate a claim with the
board as provided by board rule if:
(1) the grain buyer has suffered a financial failure
and:
(A) has failed to pay to a grain producer an
amount owed to the grain producer; or
(B) is unable to deliver to the grain producer
grain held by the grain buyer for the grain producer as a bailment;
and
(2) the grain producer provides to the board:
(A) written documentation showing that the grain
was delivered to the grain buyer; and
(B) a copy of the written contract for purchase
of the grain signed by the grain producer and the grain buyer and
showing:
(i) the agreed price for the grain;
(ii) the amount of grain purchased; and
(iii) any other relevant term required by
the board to establish facts related to the claim.
(b) A claim under this section must:
(1) be initiated not more than 60 days after the
applicable claim initiation date; and
(2) be for a loss of grain delivered to the grain buyer
not more than one year before the applicable claim initiation date.
Sec. 41.209. PAYMENT OF CLAIM. (a) After a claim is
initiated by a grain producer under Section 41.208, the board may
take any action necessary to:
(1) investigate the grain producer's claim; and
(2) determine the amount due to the grain producer
within the limit prescribed by Subsection (b) and subject to
Subsection (e).
(b) In determining the amount due to a grain producer under
Subsection (a) for a loss of grain, the board may award the grain
producer not more than 90 percent of:
(1) the value of the grain on the claim initiation
date, as determined by board rule, if the grain has not been sold;
or
(2) the contract price of the grain, if the grain has
been sold.
(c) Except as provided by Subsection (d), the board shall,
not later than the 30th day after the date the board makes a
determination under Subsection (a):
(1) pay to the grain producer the amount determined
under Subsection (a); or
(2) notify the grain producer that the grain
producer's claim is denied.
(d) If claims filed with the board that are due to grain
producers under this section exceed the amount of the board's
budget allocated for the payment of claims, the board shall pay each
grain producer on a prorated basis without regard to the order in
which claims are made or approved. The board shall pay the
remainder of the amount owed to each grain producer on a prorated
basis from future revenue as the revenue is collected.
(e) The board may deny a grain producer's claim in whole or
in part:
(1) if the grain producer has a history of failure to
pay assessments under Section 41.206;
(2) if the applicable grain buyer has a history of
failure to collect assessments as required by Section 41.206;
(3) if the documentation submitted by the grain
producer in support of the grain producer's claim is incomplete,
false, or fraudulent;
(4) to prevent the grain producer from recovering from
multiple payments an amount greater than the amount the grain
producer lost due to the financial failure of a grain buyer or to
the grain buyer's refusal, failure, or inability to deliver to the
grain producer grain held by the grain buyer as a bailment,
including:
(A) payments made by the board;
(B) payments made from a grain warehouse
operator's bond;
(C) payments ordered by a bankruptcy court; or
(D) a recovery under a state or federal crop
insurance policy or program; or
(5) if documentation submitted by the grain producer
demonstrates that deferred payment on sold grain was beyond normal
and customary practices.
(f) The board may adopt rules specifying the circumstances
under which a claim may be denied in whole or in part under
Subsection (e).
Sec. 41.210. REIMBURSEMENT OF BOARD BY GRAIN BUYER;
SUBROGATION OF RIGHTS. (a) If the board pays a claim against a
grain buyer, the board is subrogated to all rights of the grain
producer against:
(1) the grain buyer, to the extent of the amount paid
to a grain producer by the board; and
(2) any other entity from which the grain producer is
entitled to a payment for the loss giving rise to the grain
producer's claim under this subchapter.
(b) Funds recovered under this section shall be deposited
with the depository bank selected by the board under Section
41.060.
Sec. 41.211. RULES. Except as provided by Section 41.212,
the board may adopt rules as necessary to implement this
subchapter, including rules relating to:
(1) notice and collection of assessments;
(2) the management of the board's budget;
(3) administration of the board's duties;
(4) the statewide referendum conducted under Section
41.212;
(5) the selection of agents, designees, or devices to
carry out the intent of the board; and
(6) guidelines for industry practices that do or do
not qualify for indemnification by the board.
Sec. 41.212. REFERENDUM; BALLOTING. (a) The commissioner
shall conduct a referendum of grain producers to determine the
maximum amount that may be assessed to a grain producer under
Section 41.206.
(b) Only a grain producer who has sold grain to a grain buyer
in the 36 months preceding the date of the referendum is eligible to
vote in the referendum.
(c) An eligible grain producer may vote only once in a
referendum.
(d) Each grain producer's vote is entitled to equal weight
regardless of the grain producer's volume of production.
(e) A referendum is approved if a simple majority of votes
are cast in favor of the referendum.
(f) Individual voter information, including an individual's
vote in a referendum conducted under this section, is confidential
and not subject to disclosure under Chapter 552, Government Code.
(g) The board shall locate private sources, including the
organizations described by Section 41.204(a)(1), to pay all
expenses incurred in conducting a referendum.
(h) The commissioner shall adopt rules as necessary to
implement this section.
Sec. 41.213. NOTICE OF REFERENDUM. (a) The commissioner
shall give public notice of:
(1) the date, hours, and polling places for voting in
the referendum conducted under Section 41.212;
(2) the estimated amount of the assessment proposed to
be collected, as determined by the board, and the basis for which
the assessment will be collected; and
(3) a description of the manner in which the
assessment is to be collected and the proceeds administered and
used.
(b) The commissioner shall publish the notice under
Subsection (a) in one or more statewide or regional newspapers that
provide reasonable notice throughout the state. The notice shall
be published at least 60 days before the date of the referendum. In
addition, at least 60 days before the date of the referendum the
commissioner shall give direct written notice to the county agent
in each county of this state.
Sec. 41.214. REFUND OF ASSESSMENTS. (a) Except as provided
by Subsection (d), a grain producer who has paid an assessment under
Section 41.206 may obtain a refund of the amount paid by filing an
application for refund with the board.
(b) The application must:
(1) be in writing, on a form prescribed by the board
for that purpose; and
(2) be accompanied by:
(A) proof of payment of the assessment; and
(B) an affidavit stating that the grain producer
does not wish to participate in or be covered by the indemnification
established under this subchapter.
(c) A grain producer who receives a refund under this
section may not make a claim for indemnification under Section
41.208 for the grain for which the refund was received.
(d) If requests for refunds under this section exceed the
amount of the board's budget allocated for the payment of claims,
the board shall issue refunds to each grain producer on a prorated
basis without regard to the order in which requests for refunds are
made. The board shall pay the remainder of the amount owed to each
grain producer on a prorated basis from future revenue as the
revenue is collected.
Sec. 41.215. ANNUAL REPORT. (a) The board shall submit a
report to the commissioner annually that contains a summary of the
board's activities and a review of the board's effectiveness.
(b) The board shall post the report online on the board's
Internet website.
SECTION 4. (a) As soon as practicable on or after the
effective date of this Act, but not later than December 31, 2011,
the entities specified in Section 41.204, Agriculture Code, as
added by this Act, shall recommend and the commissioner of
agriculture shall appoint the members of the Texas Grain Producer
Indemnity Board in compliance with that section to serve terms that
begin January 1, 2012.
(b) The members of the board appointed under Subsection (a)
of this section shall draw lots to determine which initial terms of
four members expire January 1, 2013, and which initial terms of five
members expire January 1, 2014.
SECTION 5. This Act takes effect September 1, 2011.
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