84R15806 AJZ-F

By: Phillips H.B. No. 2504

Substitute the following for H.B. No. 2504:

By: Springer C.S.H.B. No. 2504

A BILL TO BE ENTITLED

AN ACT

relating to the operation and functions of the Texas Grain Producer Indemnity Board.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Section 41.102, Agriculture Code, is amended to read as follows:

Sec. 41.102. SUSPENSION OR REVOCATION OF LICENSE. In addition to other remedies provided by law, a violation of any provision of Subchapter B, C, D, E, or I [Subchapters B-E] of this chapter is grounds for suspension or revocation of any license or permit issued by the commissioner. The suspension or revocation shall be conducted in accordance with the procedures provided by law for suspension or revocation on the basis of other grounds.

SECTION 2. Section 41.201, Agriculture Code, is amended by adding Subdivisions (3-a) and (8) to read as follows:

(3-a) "Fund" means the grain producer indemnity fund.

(8) "Reinsurance" means an insurance product purchased by the board to reduce the financial risk and capital balance associated with the function of the board.

SECTION 3. Subchapter I, Chapter 41, Agriculture Code, is amended by adding Section 41.2035 to read as follows:

Sec. 41.2035. FUND. (a) The grain producer indemnity fund is a trust fund outside the state treasury to be held and administered by the board, without appropriation, for the payment of claims against a grain buyer who has experienced a financial failure.

(b) The board shall deposit assessments remitted under Section 41.206 in the fund.

(c) Interest or other income from investment of the fund shall be deposited to the credit of the fund.

(d) As a part of the annual budget proposal procedure described by Section 41.059, 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. The board shall post the minimum balance set under this subsection on the board's Internet website.

SECTION 4. The heading to Section 41.205, Agriculture Code, is amended to read as follows:

Sec. 41.205. POWERS AND DUTIES OF BOARD.

SECTION 5. Section 41.205, Agriculture Code, is amended by adding Subsection (f) to read as follows:

(f) The board may borrow money, with the approval of the commissioner, as necessary to implement this subchapter.

SECTION 6. Section 41.206(a), Agriculture Code, is amended to read as follows:

(a) Except as provided by this subsection, a grain buyer shall collect assessments in the manner prescribed for processors under Section 41.081. The assessment shall be collected at the first point of sale. Section 41.081(b) does not apply to the collection of assessments under this section.

SECTION 7. Sections 41.209(b) and (f), Agriculture Code, are amended to read as follows:

(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 85 [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.

(f) The board may deny a grain producer's claim in whole or in part:

(1) if the grain producer has failed to pay assessments [for the current growing season] 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.

SECTION 8. Section 41.210, Agriculture Code, is amended to read as follows:

Sec. 41.210. REIMBURSEMENT OF BOARD BY GRAIN BUYER; SUBROGATION OF RIGHTS; REINSURANCE. (a) If the board pays a claim against a grain buyer, the board is subrogated to the extent of the amount paid to a grain producer by the board 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.

(c) The board may purchase reinsurance policies to mitigate the board's financial risks.

SECTION 9. Section 41.211, Agriculture Code, is amended to read as follows:

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 orderly distribution of refunds;

(3) the management of the board's budget;

(4) the use of insurance and reinsurance products;

(5) [(3)] administration of the board's duties;

(6) [(4)] the statewide referendum conducted under Section 41.212;

(7) [(5)] the selection of agents, designees, or devices to carry out the intent of the board; and

(8) [(6)] guidelines for industry practices that do or do not qualify for indemnification by the board.

SECTION 10. Section 41.212(e), Agriculture Code, is amended to read as follows:

(e) A referendum is approved if a majority of votes cast are in favor of the referendum [meets the requirements of Section 41.031].

SECTION 11. Subchapter I, Chapter 41, Agriculture Code, is amended by adding Section 41.2145 to read as follows:

Sec. 41.2145. REFUND OF ASSESSMENTS. (a) A grain producer who has paid an assessment under Section 41.206 may be eligible for a refund from excess money in the indemnity fund as provided by this section.

(b) As a part of the annual budget proposal procedure described by Section 41.059, the board shall review the budget for the next year and the board's current financial status. Based on that review, the board shall determine whether funds are available in excess of the minimum fund balance to issue refunds to grain producers who paid an assessment under Section 41.206.

(c) The board shall adopt rules regarding the procedure for determining the amount of a grain producer's refund and the timing, method, and order of refund issuance.

SECTION 12. Subchapter I, Chapter 41, Agriculture Code, is amended by adding Section 41.216 to read as follows:

Sec. 41.216. ADMINISTRATIVE REVIEW. (a) The board by rule shall establish an administrative review process to informally review and resolve claims arising from an action of the board under this subchapter. The board shall adopt rules:

(1) designating which board actions are subject to review under this section; and

(2) outlining available remedial actions.

(b) A person may appeal an administrative review decision made by the board under Subsection (a) to the commissioner.

(c) A person may appeal a decision of the commissioner in the manner provided for a contested case under Chapter 2001, Government Code.

(d) This section does not waive this state's sovereign immunity.

SECTION 13. Section 41.214, Agriculture Code, is repealed.

SECTION 14. (a) The change in law made by this Act to Section 41.102, Agriculture Code, applies only to conduct that occurs on or after the effective date of this Act. Conduct that occurs before the effective date of this Act is governed by the law in effect on the date the conduct occurs, and the former law is continued in effect for that purpose.

(b) The repeal of Section 41.214, Agriculture Code, by this Act applies only to an application for a refund submitted on or after the effective date of this Act. An application for a refund submitted before the effective date of this Act is governed by the law in effect on the date the application was submitted, and the former law is continued in effect for that purpose.

SECTION 15. This Act takes effect immediately if it receives a vote of two-thirds of all the members elected to each house, as provided by Section 39, Article III, Texas Constitution. If this Act does not receive the vote necessary for immediate effect, this Act takes effect September 1, 2015.