82R7803 TRH-D
By: Estes S.B. No. 1232
A BILL TO BE ENTITLED
AN ACT
relating to the creation of the grain producer indemnity fund.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Title 2, Agriculture Code, is amended by adding
Chapter 14B to read as follows:
CHAPTER 14B. GRAIN PRODUCER INDEMNITY FUND
Sec. 14B.001. DEFINITIONS. In this chapter:
(1) "Board" means the Grain Producer Indemnity Fund
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; or
(C) fails to pay to a grain producer an amount
owed to the grain producer on or before:
(i) the date specified in a contract for the
purchase of grain; or
(ii) if the contract does not specify a
payment due date:
(a) the 10th day after the date of
purchase, if the purchase occurs after the grain is delivered; or
(b) the 10th day after the date of
delivery, if the purchase occurs before the grain is delivered.
(3) "Financial failure" means an event described by
Subdivision (2)(A), (B), or (C).
(4) "Fund" means the grain producer indemnity fund.
(5) "Grain" has the meaning assigned by Section
14.001.
(6) "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 grain merchant;
(B) a grain elevator;
(C) a livestock or poultry feeding operation;
(D) an ethanol plant;
(E) a biodiesel plant; or
(F) a seed company.
(7) "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. 14B.002. FUND. (a) The grain producer indemnity fund
is a special trust fund with the comptroller administered by the
department, without appropriation, for the payment of claims
against a grain buyer who has experienced a financial failure.
(b) The department shall deposit assessments remitted under
Section 14B.009 in the fund.
(c) Interest or other income from investment of the fund
shall be deposited to the credit of the fund.
(d) The board shall set a minimum balance for the fund to be
held in reserve to pay for administrative costs in the event that
claims against the fund exceed the total balance of the fund.
(e) The department in conjunction with the board shall set
an annual administration fee to be paid to the department out of the
fund to compensate the department for the cost of administering the
fund and implementing the department's authority under this
chapter, including costs associated with investigation and
enforcement.
Sec. 14B.003. BOARD. (a) The board is composed of one
representative of each of the following organizations who is
recommended to the commissioner by the board of directors of the
organization and appointed by the commissioner:
(1) the Corn Producers Association of Texas;
(2) the Texas Wheat Producers Association;
(3) the Texas Grain Sorghum Association;
(4) the Texas Soybean Association;
(5) the Texas Farm Bureau;
(6) the Texas Agricultural Cooperative Council; and
(7) the Texas Grain & Feed Association.
(b) Members of the board may serve for a maximum of three
terms of two years each.
(c) The directors described by Subsections (a)(1)-(5) shall
select a chair and vice chair from among those directors. The chair
and vice chair serve as chair or vice chair for a term of one year
and may not serve as chair or vice chair for consecutive terms.
(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 chapter, the commissioner
may fill the vacancy by appointing an individual from the sector or
industry represented by the organization.
Sec. 14B.004. BOARD CONFLICT OF INTEREST. (a) An officer,
employee, or paid consultant of a Texas trade association in the
field of agriculture may not be a member of the board.
(b) A person who is the spouse of an officer, manager, or
paid consultant of a Texas trade association in the field of
agriculture may not be a member of the board.
(c) For the purposes of this section, a Texas trade
association is a nonprofit, cooperative, and voluntarily joined
association of business or professional competitors in this state
designed to assist its members and its industry or profession in
dealing with mutual business or professional problems and in
promoting their common interest.
(d) A person may not serve as a member of the board if the
person is required to register as a lobbyist under Chapter 305,
Government Code, because of the person's activities for
compensation on behalf of a profession related to the operation of
the board.
Sec. 14B.005. REMOVAL OF BOARD MEMBER. (a) It is a ground
for removal from the board if a member:
(1) violates a prohibition established by Section
14B.004;
(2) cannot because of illness or disability discharge
the member's duties for a substantial part of the term for which the
member is appointed; or
(3) is absent from more than half of the regularly
scheduled board meetings that the member is eligible to attend
during a calendar year unless the absence is excused by majority
vote of the board.
(b) The validity of an action of the board is not affected by
the fact that it is taken when a ground for removal of a board member
exists.
Sec. 14B.006. STANDARDS OF CONDUCT. The commissioner or
the commissioner's designee shall provide to members of the board,
as often as necessary, information regarding their qualification
for office under this chapter and their responsibilities under
applicable laws relating to standards of conduct for state
officers.
Sec. 14B.007. BOARD MEMBER TRAINING. (a) Before a member
of the board may assume the member's duties, the member must
complete at least one course of the training program established
under this section.
(b) A training program established under this section shall
provide information to the member regarding:
(1) the enabling legislation that created the board;
(2) the programs operated by the board;
(3) the role and functions of the board;
(4) the rules of the board;
(5) the current budget for funds the board
administers;
(6) the results of the most recent formal audit of the
board;
(7) the requirements of:
(A) Chapter 551, Government Code;
(B) Chapter 552, Government Code; and
(C) Chapter 2001, Government Code;
(8) the requirements of the conflict of interest laws
and other laws relating to public officials; and
(9) any applicable ethics policies adopted by the
department or the Texas Ethics Commission.
Sec. 14B.008. DUTIES OF BOARD. (a) The board, in
conjunction with the department, shall meet at least once each year
to:
(1) review claims made against the fund and amounts
paid on claims from the fund;
(2) coordinate all matters relating to the fund,
including the fund's budget and the revenues necessary to
accomplish the purposes of the fund;
(3) consider rules for adoption by the department
relating to the collection of assessments, the payment of claims
from the fund, and the administration of the fund;
(4) establish, maintain, or adjust the assessment
rate; and
(5) conduct adjudicative hearings on disputed claims
presented for payment from the fund.
(b) The board, in conjunction with the department, shall
establish a range of minimum and maximum fund balances that shall be
maintained at all times. The range of minimum and maximum fund
balances may be changed by a majority vote of the board. The board
may suspend or reenact the collection of assessments under Section
14B.009 in order to maintain a fund balance within the applicable
range of minimum and maximum established under this subsection.
Sec. 14B.009. COLLECTION OF ASSESSMENT. (a) At the first
point of sale of grain, a grain buyer shall collect an assessment in
an amount determined by the board that is a percentage of the
purchase price of the grain by deducting the appropriate amount
from the purchase price of the grain or from any funds advanced for
that purpose.
(b) Not later than the 10th day of each quarter of the
calendar year, the grain buyer shall remit the amount collected
under Subsection (a) during the preceding quarter to the department
for deposit into the fund, together with any documents, records,
and reports required by the department.
Sec. 14B.010. INITIATION OF CLAIM. (a) A grain producer
who has delivered grain to a grain buyer may initiate a claim
against the fund as provided by department rule if:
(1) the grain buyer:
(A) has suffered a financial failure and has
failed to pay to a grain producer an amount owed to the grain
producer on or before:
(i) the date specified in a contract for the
purchase of grain; or
(ii) if the contract does not specify a
payment due date:
(a) the 10th day after the date of
purchase, if the purchase occurs after the grain is delivered; or
(b) the 10th day after the date of
delivery, if the purchase occurs before the grain is delivered; or
(B) refuses, fails, or is unable to deliver to
the grain producer all or part of the grain held by the grain buyer
as a bailment; and
(2) the grain producer provides to the department:
(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 buyer and showing:
(i) the agreed price for the grain;
(ii) the amount of grain purchased; and
(iii) any other term required by the
department.
(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. 14B.011. PAYMENT OF CLAIM. (a) After a claim is
initiated by a grain producer under Section 14B.010, the department
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 (f).
(b) In determining the amount due to a grain producer under
Subsection (a) for a loss of grain, the department 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 department rule, if the grain has not been
sold; or
(2) the contract price of the grain, if the grain has
been sold.
(c) The department may not impose a maximum amount that a
grain producer may claim under this chapter.
(d) Except as provided by Subsection (e), the department
shall, not later than the 30th day after the date the department
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.
(e) If claims against the fund that are due to grain
producers under this section exceed the balance of the fund, the
department shall pay each grain producer on a prorated basis
without regard to the order in which claims are made or approved.
The department shall pay the remainder of the amount owed to each
grain producer on a prorated basis from future fund revenue as the
revenue is collected.
(f) The department 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 14B.009;
(2) if the applicable grain buyer has a history of
failure to remit assessments to the department as required by
Section 14B.009;
(3) if the documentation submitted by the grain
producer in support of the grain producer's claim is incomplete,
false, or fraudulent; or
(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 from the fund;
(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.
(g) The department may adopt rules specifying the
circumstances under which a claim may be denied in whole or in part
under Subsection (f).
Sec. 14B.012. REIMBURSEMENT OF FUND BY GRAIN BUYER;
SUBROGATION OF RIGHTS. (a) If the department pays a claim against
a grain buyer, the grain buyer shall:
(1) reimburse the fund immediately or agree in writing
to reimburse the fund on a schedule determined by department rule;
and
(2) immediately pay the remaining amount due to the
grain producer that was not paid by the fund in a manner determined
by the department.
(b) In addition to the amount required to be paid under
Subsection (a), a grain buyer who makes a payment to a grain
producer or to the fund under this section shall pay interest at the
rate of eight percent per year.
(c) If the department pays a claim against a grain buyer,
the department 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 from the fund; 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 chapter.
(d) Funds recovered under this section shall be deposited to
the credit of the fund.
Sec. 14B.013. RULES. The commissioner may adopt rules as
necessary to implement this chapter, including rules relating to:
(1) notice and collection of assessments;
(2) payment of claims from the fund;
(3) administration of the fund; and
(4) the statewide referendum conducted under Section
14B.017.
Sec. 14B.014. SUSPENSION OR REVOCATION OF LICENSE. In
addition to other remedies provided by law, a violation of any
provision of this chapter or a rule adopted under this chapter is
grounds for suspension or revocation of any license or permit
issued by the department.
Sec. 14B.015. CIVIL PENALTY; INJUNCTION. (a) A person who
violates this chapter or a rule adopted under this chapter is liable
to the state for a civil penalty not to exceed $10,000 for each
violation. Each day a violation continues may be considered a
separate violation for purposes of a civil penalty assessment.
(b) On request of the department, the attorney general or
the county attorney or district attorney of the county in which the
violation is alleged to have occurred shall file suit to collect the
penalty.
(c) A civil penalty collected under this section shall be
deposited into the fund. All civil penalties recovered in suits
first instituted by a local government or governments under this
section shall be equally divided between the fund and the local
government or governments with 50 percent of the recovery to be paid
to the fund and the other 50 percent equally to the local government
or governments first instituting the suit.
(d) The department is entitled to appropriate injunctive
relief to prevent or abate a violation of this chapter or a rule
adopted under this chapter. On request of the department, the
attorney general or the county or district attorney of the county in
which the alleged violation is threatened or is occurring shall
file suit for the injunctive relief. Venue is in any county in which
the alleged violation is threatened or is occurring.
Sec. 14B.016. DISTRIBUTION OF FINES. Notwithstanding a
provision to the contrary in the Code of Criminal Procedure, a fine
collected in relation to a violation of Chapter 31, Penal Code, in
connection with the collection or remittance of an assessment due
under this chapter shall be divided between the fund and the county
in which the prosecution occurs, with 50 percent of the recovery to
be paid to the fund and 50 percent to the county.
Sec. 14B.017. REFERENDUM; BALLOTING. (a) The commissioner
shall conduct a referendum of grain producers to determine:
(1) whether grain producers desire to establish the
fund; and
(2) if the creation of the fund is approved, the
maximum amount that may be assessed to a grain producer under
Section 14B.009.
(b) Only a grain producer who has sold grain to a grain buyer
in the 12 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 pay all expenses incurred in conducting
a referendum with funds collected from the grain industry.
(h) If a referendum under this section is not approved, the
commissioner may conduct another referendum. A referendum under
this subsection may not be held before the first anniversary of the
date on which the previous referendum on the same issue was held.
Sec. 14B.018. 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 14B.017;
(2) the maximum amount and basis of the assessment
proposed to 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 not less than once a week for three consecutive weeks,
beginning 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.
SECTION 2. Section 12.020(c), Agriculture Code, is amended
to read as follows:
(c) The provisions of law subject to this section and the
applicable penalty amounts are as follows:
Provision Amount of Penalty Provision Amount of Penalty
Provision Amount of Penalty
[Chapter 41 not more than $5,000] [Chapter 41 not more than $5,000]
[Chapter 41 not more than $5,000]
Chapters 13, 14A, 18, 19, 41, 46, 61, 94, 95, 101, 102, 103, 121, 125, 132, Chapters 13, 14A, 18, 19, 41, 46, 61, 94, 95, 101, 102, 103, 121, 125, 132,
Chapters 13, 14A, 18, 19, 41, 46, 61, 94, 95, 101, 102, 103, 121, 125, 132,
Chapters 13, 14A, 18, 46, 61, 72, 73, 74, 76, 94, 95, 101, 102, 103, 121, 125, 132, Chapters 13, 14A, 18, 46, 61, 72, 73, 74, 76, 94, 95, 101, 102, 103, 121, 125, 132,
Chapters 13, 14A, 18, 46, 61, 72, 73, 74, 76, 94, 95, 101, 102, 103, 121, 125, 132,
Chapters 13, 14A, 18, 46, 61, 94, 95, 101, 102, 103, 121, 125, 132, Chapters 13, 14A, 18, 46, 61, 94, 95, 101, 102, 103, 121, 125, 132,
Chapters 13, 14A, 18, 46, 61, 94, 95, 101, 102, 103, 121, 125, 132,
and 134 not more than $5,000 and 134 not more than $5,000
and 134 not more than $5,000
[Subchapter B, Chapter 71 [Subchapter B, Chapter 71
[Subchapter B, Chapter 71
[Chapter 19 [Chapter 19
[Chapter 19
[Chapter 76 not more than $5,000] [Chapter 76 not more than $5,000]
[Chapter 76 not more than $5,000]
Subchapters A, B, and C, Chapter 71 Subchapters A, B, and C, Chapter 71
Subchapters A, B, and C, Chapter 71
[Chapters 72, 73, and 74] not more than $5,000 [Chapters 72, 73, and 74] not more than $5,000
[Chapters 72, 73, and 74] not more than $5,000
Chapters [Chapter] 14 and 14B not more than $10,000 Chapters [Chapter] 14 and 14B not more than $10,000
Chapters [Chapter] 14 and 14B not more than $10,000
Chapter 1951, Occupations Code not more than $5,000 Chapter 1951, Occupations Code not more than $5,000
Chapter 1951, Occupations Code not more than $5,000
Chapter 153, Natural Resources Chapter 153, Natural Resources
Chapter 153, Natural Resources
Code not more than $5,000. Code not more than $5,000.
Code not more than $5,000.
SECTION 3. (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 14B.003, Agriculture Code, as
added by this Act, shall recommend and the commissioner of
agriculture shall appoint the members of the Grain Producer
Indemnity Fund 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
three members expire January 1, 2013, and which initial terms of
four members expire January 1, 2014.
(c) The Department of Agriculture may not pay a claim
against the fund under Section 14B.011, Agriculture Code, as added
by this Act, until the fund balance reaches the minimum balance set
by the board under Section 14B.008, Agriculture Code, as added by
this Act.
SECTION 4. This Act takes effect September 1, 2011.
Provision Amount of Penalty
[Chapter 41 not more than $5,000]
Chapters 13, 14A, 18, 19, 41, 46, 61, 94, 95, 101, 102, 103, 121, 125, 132,
Chapters 13, 14A, 18, 46, 61, 72, 73, 74, 76, 94, 95, 101, 102, 103, 121, 125, 132,
Chapters 13, 14A, 18, 46, 61, 94, 95, 101, 102, 103, 121, 125, 132,
and 134 not more than $5,000
[Subchapter B, Chapter 71
[Chapter 19
[Chapter 76 not more than $5,000]
Subchapters A, B, and C, Chapter 71
[Chapters 72, 73, and 74] not more than $5,000
Chapters [Chapter] 14 and 14B not more than $10,000
Chapter 1951, Occupations Code not more than $5,000
Chapter 153, Natural Resources
Code not more than $5,000.