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A BILL TO BE ENTITLED
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AN ACT
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relating to the creation of the grain producer indemnity fund. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Title 2, Agriculture Code, is amended by adding |
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Chapter 14B to read as follows: |
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CHAPTER 14B. GRAIN PRODUCER INDEMNITY FUND |
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Sec. 14B.001. DEFINITIONS. In this chapter: |
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(1) "Board" means the Grain Producer Indemnity Fund |
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Board. |
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(2) "Claim initiation date" means the earliest date on |
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which a grain buyer: |
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(A) files for federal bankruptcy protection; |
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(B) becomes the subject of an involuntary |
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bankruptcy proceeding; or |
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(C) fails to pay to a grain producer an amount |
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owed to the grain producer on or before: |
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(i) the date specified in a contract for the |
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purchase of grain; or |
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(ii) if the contract does not specify a |
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payment due date: |
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(a) the 10th day after the date of |
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purchase, if the purchase occurs after the grain is delivered; or |
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(b) the 10th day after the date of |
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delivery, if the purchase occurs before the grain is delivered. |
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(3) "Financial failure" means an event described by |
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Subdivision (2)(A), (B), or (C). |
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(4) "Fund" means the grain producer indemnity fund. |
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(5) "Grain" has the meaning assigned by Section |
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14.001. |
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(6) "Grain buyer" means a person who buys grain from a |
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grain producer or stores unsold grain for a grain producer. The |
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term includes: |
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(A) a grain merchant; |
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(B) a grain elevator; |
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(C) a livestock or poultry feeding operation; |
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(D) an ethanol plant; |
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(E) a biodiesel plant; or |
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(F) a seed company. |
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(7) "Grain producer" means a person, including the |
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owner of a farm on which grain is produced, or the owner's tenant or |
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sharecropper, engaged in the business of producing grain or causing |
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grain to be produced for commercial purposes. |
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Sec. 14B.002. FUND. (a) The grain producer indemnity fund |
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is a special trust fund with the comptroller administered by the |
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department, without appropriation, for the payment of claims |
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against a grain buyer who has experienced a financial failure. |
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(b) The department shall deposit assessments remitted under |
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Section 14B.009 in the fund. |
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(c) Interest or other income from investment of the fund |
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shall be deposited to the credit of the fund. |
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(d) The board shall set a minimum balance for the fund to be |
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held in reserve to pay for administrative costs in the event that |
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claims against the fund exceed the total balance of the fund. |
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(e) The department in conjunction with the board shall set |
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an annual administration fee to be paid to the department out of the |
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fund to compensate the department for the cost of administering the |
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fund and implementing the department's authority under this |
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chapter, including costs associated with investigation and |
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enforcement. |
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Sec. 14B.003. BOARD. (a) The board is composed of one |
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representative of each of the following organizations who is |
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recommended to the commissioner by the board of directors of the |
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organization and appointed by the commissioner: |
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(1) the Corn Producers Association of Texas; |
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(2) the Texas Wheat Producers Association; |
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(3) the Texas Grain Sorghum Association; |
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(4) the Texas Soybean Association; |
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(5) the Texas Farm Bureau; |
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(6) the Texas Agricultural Cooperative Council; and |
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(7) the Texas Grain & Feed Association. |
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(b) Members of the board may serve for a maximum of three |
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terms of two years each. |
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(c) The directors described by Subsections (a)(1)-(5) shall |
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select a chair and vice chair from among those directors. The chair |
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and vice chair serve as chair or vice chair for a term of one year |
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and may not serve as chair or vice chair for consecutive terms. |
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(d) A vacancy on the board, including a vacancy resulting |
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from the failure of a board member to fulfill the board member's |
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responsibilities, shall be filled in the manner provided by |
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Subsection (a). If a vacancy on the board is the result of an |
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organization described by Subsection (a) dissolving or failing to |
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fulfill its responsibilities under this chapter, the commissioner |
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may fill the vacancy by appointing an individual from the sector or |
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industry represented by the organization. |
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Sec. 14B.004. BOARD CONFLICT OF INTEREST. (a) An officer, |
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employee, or paid consultant of a Texas trade association in the |
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field of agriculture may not be a member of the board. |
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(b) A person who is the spouse of an officer, manager, or |
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paid consultant of a Texas trade association in the field of |
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agriculture may not be a member of the board. |
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(c) For the purposes of this section, a Texas trade |
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association is a nonprofit, cooperative, and voluntarily joined |
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association of business or professional competitors in this state |
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designed to assist its members and its industry or profession in |
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dealing with mutual business or professional problems and in |
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promoting their common interest. |
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(d) A person may not serve as a member of the board if the |
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person is required to register as a lobbyist under Chapter 305, |
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Government Code, because of the person's activities for |
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compensation on behalf of a profession related to the operation of |
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the board. |
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Sec. 14B.005. REMOVAL OF BOARD MEMBER. (a) It is a ground |
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for removal from the board if a member: |
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(1) violates a prohibition established by Section |
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14B.004; |
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(2) cannot because of illness or disability discharge |
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the member's duties for a substantial part of the term for which the |
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member is appointed; or |
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(3) is absent from more than half of the regularly |
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scheduled board meetings that the member is eligible to attend |
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during a calendar year unless the absence is excused by majority |
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vote of the board. |
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(b) The validity of an action of the board is not affected by |
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the fact that it is taken when a ground for removal of a board member |
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exists. |
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Sec. 14B.006. STANDARDS OF CONDUCT. The commissioner or |
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the commissioner's designee shall provide to members of the board, |
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as often as necessary, information regarding their qualification |
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for office under this chapter and their responsibilities under |
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applicable laws relating to standards of conduct for state |
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officers. |
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Sec. 14B.007. BOARD MEMBER TRAINING. (a) Before a member |
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of the board may assume the member's duties, the member must |
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complete at least one course of the training program established |
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under this section. |
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(b) A training program established under this section shall |
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provide information to the member regarding: |
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(1) the enabling legislation that created the board; |
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(2) the programs operated by the board; |
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(3) the role and functions of the board; |
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(4) the rules of the board; |
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(5) the current budget for funds the board |
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administers; |
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(6) the results of the most recent formal audit of the |
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board; |
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(7) the requirements of: |
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(A) Chapter 551, Government Code; |
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(B) Chapter 552, Government Code; and |
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(C) Chapter 2001, Government Code; |
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(8) the requirements of the conflict of interest laws |
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and other laws relating to public officials; and |
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(9) any applicable ethics policies adopted by the |
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department or the Texas Ethics Commission. |
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Sec. 14B.008. DUTIES OF BOARD. (a) The board, in |
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conjunction with the department, shall meet at least once each year |
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to: |
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(1) review claims made against the fund and amounts |
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paid on claims from the fund; |
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(2) coordinate all matters relating to the fund, |
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including the fund's budget and the revenues necessary to |
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accomplish the purposes of the fund; |
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(3) consider rules for adoption by the department |
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relating to the collection of assessments, the payment of claims |
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from the fund, and the administration of the fund; |
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(4) establish, maintain, or adjust the assessment |
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rate; and |
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(5) conduct adjudicative hearings on disputed claims |
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presented for payment from the fund. |
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(b) The board, in conjunction with the department, shall |
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establish a range of minimum and maximum fund balances that shall be |
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maintained at all times. The range of minimum and maximum fund |
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balances may be changed by a majority vote of the board. The board |
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may suspend or reenact the collection of assessments under Section |
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14B.009 in order to maintain a fund balance within the applicable |
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range of minimum and maximum established under this subsection. |
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Sec. 14B.009. COLLECTION OF ASSESSMENT. (a) At the first |
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point of sale of grain, a grain buyer shall collect an assessment in |
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an amount determined by the board that is a percentage of the |
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purchase price of the grain by deducting the appropriate amount |
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from the purchase price of the grain or from any funds advanced for |
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that purpose. |
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(b) Not later than the 10th day of each quarter of the |
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calendar year, the grain buyer shall remit the amount collected |
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under Subsection (a) during the preceding quarter to the department |
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for deposit into the fund, together with any documents, records, |
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and reports required by the department. |
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Sec. 14B.010. INITIATION OF CLAIM. (a) A grain producer |
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who has delivered grain to a grain buyer may initiate a claim |
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against the fund as provided by department rule if: |
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(1) the grain buyer: |
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(A) has suffered a financial failure and has |
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failed to pay to a grain producer an amount owed to the grain |
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producer on or before: |
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(i) the date specified in a contract for the |
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purchase of grain; or |
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(ii) if the contract does not specify a |
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payment due date: |
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(a) the 10th day after the date of |
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purchase, if the purchase occurs after the grain is delivered; or |
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(b) the 10th day after the date of |
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delivery, if the purchase occurs before the grain is delivered; or |
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(B) refuses, fails, or is unable to deliver to |
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the grain producer all or part of the grain held by the grain buyer |
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as a bailment; and |
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(2) the grain producer provides to the department: |
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(A) written documentation showing that the grain |
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was delivered to the grain buyer; and |
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(B) a copy of the written contract for purchase |
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of the grain signed by the grain buyer and showing: |
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(i) the agreed price for the grain; |
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(ii) the amount of grain purchased; and |
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(iii) any other term required by the |
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department. |
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(b) A claim under this section must: |
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(1) be initiated not more than 60 days after the |
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applicable claim initiation date; and |
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(2) be for a loss of grain delivered to the grain buyer |
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not more than one year before the applicable claim initiation date. |
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Sec. 14B.011. PAYMENT OF CLAIM. (a) After a claim is |
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initiated by a grain producer under Section 14B.010, the department |
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may take any action necessary to: |
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(1) investigate the grain producer's claim; and |
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(2) determine the amount due to the grain producer |
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within the limit prescribed by Subsection (b) and subject to |
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Subsection (f). |
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(b) In determining the amount due to a grain producer under |
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Subsection (a) for a loss of grain, the department may award the |
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grain producer not more than 90 percent of: |
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(1) the value of the grain on the claim initiation |
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date, as determined by department rule, if the grain has not been |
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sold; or |
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(2) the contract price of the grain, if the grain has |
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been sold. |
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(c) The department may not impose a maximum amount that a |
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grain producer may claim under this chapter. |
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(d) Except as provided by Subsection (e), the department |
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shall, not later than the 30th day after the date the department |
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makes a determination under Subsection (a): |
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(1) pay to the grain producer the amount determined |
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under Subsection (a); or |
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(2) notify the grain producer that the grain |
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producer's claim is denied. |
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(e) If claims against the fund that are due to grain |
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producers under this section exceed the balance of the fund, the |
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department shall pay each grain producer on a prorated basis |
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without regard to the order in which claims are made or approved. |
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The department shall pay the remainder of the amount owed to each |
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grain producer on a prorated basis from future fund revenue as the |
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revenue is collected. |
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(f) The department may deny a grain producer's claim in |
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whole or in part: |
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(1) if the grain producer has a history of failure to |
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pay assessments under Section 14B.009; |
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(2) if the applicable grain buyer has a history of |
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failure to remit assessments to the department as required by |
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Section 14B.009; |
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(3) if the documentation submitted by the grain |
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producer in support of the grain producer's claim is incomplete, |
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false, or fraudulent; or |
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(4) to prevent the grain producer from recovering from |
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multiple payments an amount greater than the amount the grain |
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producer lost due to the financial failure of a grain buyer or to |
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the grain buyer's refusal, failure, or inability to deliver to the |
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grain producer grain held by the grain buyer as a bailment, |
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including: |
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(A) payments made from the fund; |
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(B) payments made from a grain warehouse |
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operator's bond; |
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(C) payments ordered by a bankruptcy court; or |
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(D) a recovery under a state or federal crop |
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insurance policy or program. |
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(g) The department may adopt rules specifying the |
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circumstances under which a claim may be denied in whole or in part |
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under Subsection (f). |
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Sec. 14B.012. REIMBURSEMENT OF FUND BY GRAIN BUYER; |
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SUBROGATION OF RIGHTS. (a) If the department pays a claim against |
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a grain buyer, the grain buyer shall: |
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(1) reimburse the fund immediately or agree in writing |
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to reimburse the fund on a schedule determined by department rule; |
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and |
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(2) immediately pay the remaining amount due to the |
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grain producer that was not paid by the fund in a manner determined |
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by the department. |
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(b) In addition to the amount required to be paid under |
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Subsection (a), a grain buyer who makes a payment to a grain |
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producer or to the fund under this section shall pay interest at the |
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rate of eight percent per year. |
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(c) If the department pays a claim against a grain buyer, |
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the department is subrogated to all rights of the grain producer |
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against: |
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(1) the grain buyer, to the extent of the amount paid |
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to a grain producer from the fund; and |
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(2) any other entity from which the grain producer is |
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entitled to a payment for the loss giving rise to the grain |
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producer's claim under this chapter. |
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(d) Funds recovered under this section shall be deposited to |
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the credit of the fund. |
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Sec. 14B.013. RULES. The commissioner may adopt rules as |
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necessary to implement this chapter, including rules relating to: |
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(1) notice and collection of assessments; |
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(2) payment of claims from the fund; |
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(3) administration of the fund; and |
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(4) the statewide referendum conducted under Section |
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14B.017. |
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Sec. 14B.014. SUSPENSION OR REVOCATION OF LICENSE. In |
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addition to other remedies provided by law, a violation of any |
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provision of this chapter or a rule adopted under this chapter is |
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grounds for suspension or revocation of any license or permit |
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issued by the department. |
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Sec. 14B.015. CIVIL PENALTY; INJUNCTION. (a) A person who |
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violates this chapter or a rule adopted under this chapter is liable |
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to the state for a civil penalty not to exceed $10,000 for each |
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violation. Each day a violation continues may be considered a |
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separate violation for purposes of a civil penalty assessment. |
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(b) On request of the department, the attorney general or |
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the county attorney or district attorney of the county in which the |
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violation is alleged to have occurred shall file suit to collect the |
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penalty. |
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(c) A civil penalty collected under this section shall be |
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deposited into the fund. All civil penalties recovered in suits |
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first instituted by a local government or governments under this |
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section shall be equally divided between the fund and the local |
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government or governments with 50 percent of the recovery to be paid |
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to the fund and the other 50 percent equally to the local government |
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or governments first instituting the suit. |
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(d) The department is entitled to appropriate injunctive |
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relief to prevent or abate a violation of this chapter or a rule |
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adopted under this chapter. On request of the department, the |
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attorney general or the county or district attorney of the county in |
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which the alleged violation is threatened or is occurring shall |
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file suit for the injunctive relief. Venue is in any county in which |
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the alleged violation is threatened or is occurring. |
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Sec. 14B.016. DISTRIBUTION OF FINES. Notwithstanding a |
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provision to the contrary in the Code of Criminal Procedure, a fine |
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collected in relation to a violation of Chapter 31, Penal Code, in |
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connection with the collection or remittance of an assessment due |
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under this chapter shall be divided between the fund and the county |
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in which the prosecution occurs, with 50 percent of the recovery to |
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be paid to the fund and 50 percent to the county. |
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Sec. 14B.017. REFERENDUM; BALLOTING. (a) The commissioner |
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shall conduct a referendum of grain producers to determine: |
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(1) whether grain producers desire to establish the |
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fund; and |
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(2) if the creation of the fund is approved, the |
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maximum amount that may be assessed to a grain producer under |
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Section 14B.009. |
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(b) Only a grain producer who has sold grain to a grain buyer |
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in the 12 months preceding the date of the referendum is eligible to |
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vote in the referendum. |
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(c) An eligible grain producer may vote only once in a |
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referendum. |
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(d) Each grain producer's vote is entitled to equal weight |
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regardless of the grain producer's volume of production. |
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(e) A referendum is approved if a simple majority of votes |
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are cast in favor of the referendum. |
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(f) Individual voter information, including an individual's |
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vote in a referendum conducted under this section, is confidential |
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and not subject to disclosure under Chapter 552, Government Code. |
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(g) The board shall pay all expenses incurred in conducting |
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a referendum with funds collected from the grain industry. |
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(h) If a referendum under this section is not approved, the |
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commissioner may conduct another referendum. A referendum under |
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this subsection may not be held before the first anniversary of the |
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date on which the previous referendum on the same issue was held. |
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Sec. 14B.018. NOTICE OF REFERENDUM. (a) The commissioner |
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shall give public notice of: |
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(1) the date, hours, and polling places for voting in |
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the referendum conducted under Section 14B.017; |
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(2) the maximum amount and basis of the assessment |
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proposed to be collected; and |
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(3) a description of the manner in which the |
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assessment is to be collected and the proceeds administered and |
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used. |
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(b) The commissioner shall publish the notice under |
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Subsection (a) in one or more statewide or regional newspapers that |
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provide reasonable notice throughout the state. The notice shall |
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be published not less than once a week for three consecutive weeks, |
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beginning at least 60 days before the date of the referendum. In |
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addition, at least 60 days before the date of the referendum the |
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commissioner shall give direct written notice to the county agent |
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in each county of this state. |
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SECTION 2. Section 12.020(c), Agriculture Code, is amended |
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to read as follows: |
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(c) The provisions of law subject to this section and the |
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applicable penalty amounts are as follows: |
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Provision |
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Amount of Penalty |
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[Chapter 41
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not more than $5,000] |
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Chapters 13, 14A, 18, 19, 41, 46, 61, 94, 95, 101, 102, 103, 121, 125, 132, |
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Chapters 13, 14A, 18, 46, 61, 72, 73, 74, 76, 94, 95, 101, 102, 103, 121, 125, 132, |
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Chapters 13, 14A, 18, 46, 61, 94, 95, 101, 102, 103, 121, 125, 132, |
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and 134 |
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not more than $5,000 |
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[Subchapter B, Chapter 71
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[Chapter 76
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not more than $5,000] |
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Subchapters A, B, and C, Chapter 71 |
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[Chapters 72, 73, and 74] |
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not more than $5,000 |
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Chapters [Chapter] 14 and 14B |
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not more than $10,000 |
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Chapter 1951, Occupations Code |
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not more than $5,000 |
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Chapter 153, Natural Resources |
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Code |
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not more than $5,000. |
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SECTION 3. (a) As soon as practicable on or after the |
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effective date of this Act, but not later than December 31, 2011, |
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the entities specified in Section 14B.003, Agriculture Code, as |
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added by this Act, shall recommend and the commissioner of |
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agriculture shall appoint the members of the Grain Producer |
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Indemnity Fund Board in compliance with that section to serve terms |
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that begin January 1, 2012. |
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(b) The members of the board appointed under Subsection (a) |
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of this section shall draw lots to determine which initial terms of |
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three members expire January 1, 2013, and which initial terms of |
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four members expire January 1, 2014. |
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(c) The Department of Agriculture may not pay a claim |
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against the fund under Section 14B.011, Agriculture Code, as added |
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by this Act, until the fund balance reaches the minimum balance set |
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by the board under Section 14B.008, Agriculture Code, as added by |
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this Act. |
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SECTION 4. This Act takes effect September 1, 2011. |