82(R) SB 1232 - Introduced version

	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

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;

(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.

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.

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.

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

(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.

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;

(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.

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.

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.

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:

applicable penalty amounts are as follows:

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.

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.

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.