TITLE 4.AGRICULTURE

Part 1. TEXAS DEPARTMENT OF AGRICULTURE

Chapter 3. BOLL WEEVIL ERADICATION PROGRAM

Subchapter G. TRANSFER OR ADDITION OF AREAS FROM ONE ERADICATION ZONE TO ANOTHER ZONE

4 TAC §3.302, §3.303

The Texas Department of Agriculture (the department) proposes new §3.302 and §3.303, concerning modification of boll weevil eradication zones. The new sections are proposed to transfer areas from one boll weevil eradication zone to another zone created under Chapter 74, Subchapter D.

New §3.302, upon the request of cotton producers in Armstrong County, and upon recommendation of the Texas Boll Weevil Eradication Foundation's Board of Director's and technical advisory, proposes the transfer of a portion of Armstrong County from the Northern High Plains Boll Weevil Eradication Zone to the Northern Rolling Plains Boll Weevil Eradication Zone. New §3.303, upon the request of cotton producers in Randall County, and also upon the request of cotton producers in Armstrong County, and upon recommendation of the Texas Boll Weevil Eradication Foundation's Board of Director's and technical advisory, proposed the transfer of a portion of Randall County from the Northern High Plains Boll Weevil Eradication Zone to the Northwest Plains Boll Weevil Eradication Zone. The transfers are proposed in accordance with the Texas Agriculture Code, §74.108(b), and order to ensure that contiguous cotton-growing areas with similar biological characteristics are treated within one zone.

Matt Brockman, special assistant for producer relations, has determined that for the first five-year period the section is in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the section.

Mr. Brockman also has determined that for each year of the first five years the section is in effect the public benefit anticipated as a result of enforcing the sections will be the ability to address cotton growers' desires to have efficient, responsive eradication zones to facilitate boll weevil eradication in Texas. There will be no effect on small businesses. The anticipated economic cost to persons who will be required to comply with the new sections, as proposed, is not determinable at this time. If the proposed transfer is adopted, cotton growers in those portions of Armstrong and Randall County proposed to be transferred to another eradication zone will be assessed annually to cover costs of an eradication program in the transferred area. The costs to individual growers will depend on voter approval of the proposed transfer and assessment and the amount of the assessment established for the zone into which the area is being transferred.

Comments on the proposal may be submitted to Matt Brockman, Special Assistant for Producer Relations, P. O. Box 12847, Austin, Texas 78711, and must be received no later than 30 days from the date of the publication of this proposal in the Texas Register .

The new sections are proposed under the Texas Agriculture Code, §74.108(b), which provides the commissioner of agriculture with the authority, by rule, to add an area to an eradication zone or transfer an area or county from one statutory zone to another.

The codes affected by the proposal are the Texas Agriculture Code, Chapter 74.

§3.302.Armstrong County.

All of the following area located in Armstrong County shall be transferred from the statutorily designated Northern High Plains Boll Weevil Eradication Zone described at the Texas Agriculture Code, §74.1021(a) to the Northern Rolling Plains Boll Weevil Eradication Zone designated at §3.112 of this title (relating to Northern Rolling Plains Boll Weevil Eradication Zone): that part of Armstrong County that lies east and north of a line running along FM 294 from the Carson County line to State Highway 287; then running due south to Mulberry Creek; then running east along Mulberry Creek to the Donley County line.

§3.303.Randall County.

(a)

All of the following area located in Randall County shall be transferred from the statutorily designated Northern High Plains Boll Weevil Eradication Zone described at the Texas Agriculture Code, §74.1021(a) to the Northwest Plains Boll Weevil Eradication Zone designated at §3.113 of this title (relating to Northwest Plains Boll Weevil Eradication Zone): that part of Randall County that lies north and west of a line running along Highway 60 from the Deaf Smith County line east to Interstate 37; then running north along Interstate Highway 27 to the Potter County line.

(b)

The transfer of the area of Randall County described in subsection (a) of this section from the Northern High Plains Zone to the Northwest Plains Zone shall be effective upon the passage of a grower referendum in that area approving the transfer.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on January 31, 2000.

TRD-200000684

Dolores Alvarado Hibbs

Deputy General Counsel

Texas Department of Agriculture

Earliest possible date of adoption: March 12, 2000

For further information, please call: (512) 463-4075


Subchapter J. ORGANIC COTTON RULES

4 TAC §§3.600 - 3.609

The Texas Department of Agriculture (the department) proposes new Chapter 3, Subchapter J, §§3.600-3.609, concerning organic cotton regulations. The new sections are proposed to establish requirements and procedures for the growing of organic cotton in active boll weevil eradication zones, in accordance with the Texas Agriculture Code, §74.125. There are approximately 10,000 acres of organic cotton grown in active eradication zones in Texas. These acres cannot be treated with chemicals used to control boll weevil populations. The proposed new sections are designed to allow organic cotton to be grown in active boll weevil eradication zones under conditions where the effectiveness of the eradication effort will not be jeopardized.

New §§3.600 and 3.601 provide a statement of authority and purpose for the subchapter and provide definitions to be used in the subchapter. New §3.602 provides that the decision to plant certified or transitional cotton in an active eradication zone is up to the grower producing the crop. New §3.603 provides requirements for communication between organic growers, the department and the Texas Boll Weevil Eradication Foundation. New §3.604 provides for protection of organic certification and indemnification to growers when an organic crop or field is inadvertently treated or exposed through drift to products not allowed for treatment on an organic crop. New §3.605 establishes requirements and procedures for setting and monitoring boll weevil trap count trigger levels. This section also provides for a review of fields that surpass the established trigger level by a technical review committee which will recommend to the Commissioner of Agriculture what eradication activity may be necessary, including destruction of the cotton crop, if warranted. New §3.606 provides procedures for notice and requests for extensions in the event a grower is notified that destruction of a cotton crop is necessary. This section also provides for the grower to choose conventional treatment of a crop in lieu of destruction. New §3.607 provides eligibility requirements for a grower to receive indemnification from the foundation. New §3.608 provides procedures for calculating indemnification to growers. New §3.609 provides for payment of the established zone assessment by organic cotton growers.

Matt Brockman, special assistant for producer relations has determined that for the first five-year period the new sections are in effect, there will be no fiscal implications for state or local government as a result of enforcing or administering the sections. Costs of administering and enforcing the sections, including the cost of indemnification and crop destruction, should those be required, will be borne by the Texas Boll Weevil Eradication Foundation, Inc. using other than state funds.

Mr. Brockman also has determined that for each year of the first five years the sections are in effect the public benefit anticipated as a result of enforcing the sections will be having established procedures and requirements regarding the growing of organic crops in active boll weevil eradication zones. Considering that the boll weevil costs cotton growers millions of dollars in damages and lost revenues each year, eradication of the boll weevil will allow both traditional and organic cotton growers to become more efficient and competitive, thus providing an indirect benefit to consumers, and having a more viable cotton industry due to the eradication of the boll weevil will help sustain the economy of many parts of rural Texas. There may be an effect on organic cotton growers who operate as micro- businesses or small businesses and to individual growers who are required to comply with the rule as proposed. The indemnification provisions of the new sections are intended to reasonably compensate organic cotton growers who, in accordance with the sections, determine that they will not grow organic cotton and/or whose cotton is destroyed due to a determination made by a technical review committee, The department recognizes that such compensation may not in all cases serve to make the grower whole, and that an organic grower may incur uncompensated costs as a result of implementation of the sections. The department is not able to determine those specific costs at this time, as those would depend on several factors including the actual amount of organic acreage involved, the actual market price at the time, the quality of the crop and actual production costs of individual growers. The 70% indemnification formula proposed to be used to determine the amount of reasonable compensation that will be provided to organic cotton growers is based on a variety of factors including average sales information for organic cottonseed and lint obtained from organic growers and average production costs obtained from organic cotton growers. Also considered were eradication program costs incurred in treating of cotton acres adjacent to untreated organic cotton and additional administrative and operational costs to the program due to the need for additional monitoring of organic fields.

The department has determined that a takings impact assessment under the Private Real Property Rights Preservation Act, Texas Government Code, Chapter 2007 (the Act), is not required for the new sections because the governmental action being proposed falls within the exceptions to the Act. Section 2007.003(b)(6) exempts governmental actions taken to prohibit or restrict a condition or use of private real property if the governmental entity can show that the condition or use constitutes a public or private nuisance. The new sections are proposed in accordance with the Texas Agriculture Code, Chapter 74, Subchapter D, which provides for the establishment of a comprehensive boll weevil and pink bollworm eradication program in Texas. The Texas Legislature has acknowledged the vital importance of the eradication effort in Texas by declaring the pink bollworm and boll weevil public nuisances and has further declared that they are "a menace to the cotton industry, and their eradication is a public necessity." (§74.101(a)). As part of the eradication effort, the Legislature has directed the commissioner of agriculture to develop rules and procedures to protect the eligibility of organic cotton production for certification, while, in all events, maintaining the effectiveness of the boll weevil or pink bollworm eradication program (§74.125). As noted, the department's directive is two-fold, to protect organic certification while meeting the legislature's general declaration to abate declared public nuisances, in this case, the boll weevil and pink bollworm. While the traditional method of treatment for boll weevil and pink bollworm eradication includes the use of pesticides, such treatment cannot be used in the production of organic cotton, making organic cotton fields more susceptible to infestation. The proposed rules provide a means by which organic cotton may be grown, with safeguards included, in the event an infestation occurs. The department believes that the proposed rules serve to protect the eligibility and certification of organic cotton production, as much as is possible, and require action to destroy organic cotton production only where it becomes necessary in order to maintain the effectiveness of the eradication program. Further, if cotton is destroyed or an organic grower in an active eradication zone chooses not to grow organic cotton, reasonable compensation will be provided to that grower, as allowed by §74.125.

Comments on the proposal may be submitted to Matt Brockman, Special Assistant for Producer Relations, Texas Department of Agriculture, P. O. Box 12847, and Austin, Texas 78711. Comments must be received no later than 30 days from the date of publication of the proposal in the Texas Register .

The new sections are proposed under the Texas Agriculture Code (the Code), §74.125, which provides the department with the authority to develop rules and procedures to protect the eligibility of organic cotton growers to be certified by the commissioner of agriculture, ensure that certification by the commissioner meets national certification standards and in all events maintain the effectiveness of the boll weevil or pink bollworm eradication program administered under the Code, Chapter 74, Subchapter D, including rules that provide indemnification for organic cotton growers for reasonable losses that result from a prohibition of production of organic cotton or from any requirement of destruction of cotton; and the Code, §74.120, which provides the department with the authority to adopt reasonable rules to carry out the purposes of the Code, Chapter 74, Subchapter D.

The code that will be affected by the proposal is the Texas Agriculture Code, Chapter 74, Subchapter D.

§3.600.Statement of Purpose and Authority.

The Texas Agriculture Code (the Code), Chapter 74, Subchapter D, §74.1011 designates the Texas Boll Weevil Eradication Foundation, Inc. (the foundation) as the entity to carry out boll weevil and pink bollworm eradication in Texas. The Code, §74.120, provides the Commissioner of Agriculture with the authority to adopt reasonable rules to carry out the purposes of Chapter 74, Subchapter D. The Code, §74.125 provides that the Commissioner shall adopt rules and procedures to protect the eligibility of certified organic and transitional cotton production in active eradication zones while ensuring the ultimate success of the boll weevil eradication program in Texas. Section 74.125 further provides that rules adopted under that section may provide indemnity for the organic cotton growers for reasonable losses that result from a prohibition of production of organic cotton or destruction of organic cotton. Mitigation of losses with production of an alternative crop may be required by the foundation board of directors. The foundation board may not treat or require treatment of organic cotton with chemicals that are not allowed for use on certified organic cotton. Plow-up of an organic cotton field may be required as an alternative to treatment with chemicals.

§3.601.Definitions.

The following words and terms, when used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise.

(1)

Active eradication zone-A boll weevil eradication zone established in accordance with the Texas Agriculture Code, Chapter 74, Subchapter D, in which a referendum of cotton growers has been held and both the establishment of an eradication program and a maximum assessment have been approved by growers for that zone and eradication activities are in progress or the zone has been declared eradicated by the commissioner.

(2)

Certified organic crop - A crop which has undergone independent third party verification by the department or a registered certifying agent that the crop has been produced in compliance with the Texas Organic Standards, Chapter 18 of this title (relating to Organic Standards and Certification), and qualified for full organic status, including the requirement that the land on which the crop is grown has had no prohibited materials applied for at least 36 months prior to harvest.

(3)

Commissioner - The Commissioner of Agriculture or her designee.

(4)

Department - The Texas Department of Agriculture

(5)

Foundation - The Texas Boll Weevil Eradication Foundation

(6)

Plow-up - To shred or plow in a manner which prevents further growth.

(7)

Transitional crop - A crop which has undergone independent third party verification by the department or a registered certifying agent that the crop has been produced in compliance with the Texas Organic Standards, Chapter 18 of this title, and fulfills all requirements except the 36 months required for full organic status. A certified transitional organic crop must be produced on land that has had no prohibited materials applied for at least 12 months prior to harvest.

(8)

Trap count- The number of boll weevils recorded as captured in a pheromone trap on a weekly basis by an employee of the foundation.

(9)

Trigger levels- Standards established by the foundation for the number of weevils recorded in a trap or for the number of weevils trapped per acre that would initiate further action by the foundation.

§3.602.Planting of Certified Organic or Transitional Cotton in Active Eradication Zones.

The decision on whether to plant certified organic or transitional cotton in any field located in an active eradication zone will be made solely by the grower producing the crop, subject to any designations of prohibited growing areas under the Code, §74.118, and rules adopted thereunder. Neither the foundation nor the department will urge or persuade, in any way, a grower or growers to plant or not to plant certified organic or transitional cotton.

§3.603.Communication with Organic Producers; Notification of Organic Production.

(a)

Growers applying for or holding certified organic or transitional organic certification with the department or a private organic certification agency and who intend to devote acres to organic or transitional crops must submit all appropriate documentation to the department's Organic Certification Program, in accordance with Chapter 18 of this title (relating to Organic Standards and Certification), in order to be recognized by the foundation as a certified organic or transitional grower for purposes of this section.

(b)

The department will contact all producers with certified organic or transitional acreage in an active boll weevil eradication zone before January 1 of each year by sending notice to the address on file with the department's Organic Certification Program for the grower. These producers will be informed that they should notify the foundation of their planting intentions no later than the date of planting the crop. It is the responsibility of the grower to inform the foundation of the location of all certified organic or transitional production within an active boll weevil eradication zone.

(c)

The foundation will communicate with all growers of certified organic or transitional crops in active eradication zones to discuss eradication activities in and around the production of such crops and to plan measures to minimize problems such as drift.

§3.604.Protection of Organic Certification.

(a)

The foundation will take steps reasonably necessary to protect the certification of organic crops during the course of its normal eradication activities.

(b)

In the event the foundation or an individual working for the foundation inadvertently treats a certified organic or transitional field or portion of a crop, either directly or through drift, with products not allowed by the producer's certifying entity, the foundation will indemnify the grower in accordance with subsection (d) of this section. This indemnification will continue on an annual basis until the earliest date that the exposed field or crop is eligible to return to the status it held prior to the inadvertent treatment by the foundation.

(c)

For purposes of this section, a determination of whether or not a direct treatment or drift occurred will be made by the department in accordance with established procedures.

(d)

In the event of a confirmed case of direct treatment or drift of chemical applied for or by the foundation's board of directors, the grower will receive just and reasonable compensation in an amount recommended by the foundation board and approved by the commissioner.

§3.605.Trigger Levels.

(a)

During the first season of treatment in an active boll weevil eradication zone, the "diapause" phase of the program, all organic producers may plant certified organic or transitional cotton consistent with §3.602 of this title (relating to Planting of Certified Organic or Transitional Cotton in Active Eradication Zones), without regard to boll weevil trap captures. Producers will be required to communicate with the foundation as prescribed in §3.603 of this title (relating to Communication with Organic Producers; Notification of Organic Production).

(b)

Certified organic or transitional cotton fields in active boll weevil eradication zones will adhere to the same trap count trigger levels that are set for conventional cotton fields in that zone beginning in the first full season of the program and continuing each season thereafter.

(c)

Trap count triggers will be set under the following conditions.

(1)

The foundation will inform organic growers of the trigger levels at the beginning of each season.

(2)

The trap count trigger level may change during the season, and when these changes are made, the foundation will inform organic growers at least 48 hours prior to implementing a new trap count trigger level.

(3)

Traps around organic cotton fields will be checked at the same interval as traps around conventional fields in the same zone.

(4)

The establishment of the trap count trigger level and placing of traps will be based on sound scientific and entomological considerations and shall be implemented in a fair and equitable manner.

(d)

If an organic or transitional field surpasses the set trap count trigger level, a technical review committee will determine if destruction of that field or other alternative action should be required using the following procedures.

(1)

This committee will consist of the foundation program director or his designee, a member of the foundation's technical advisory committee appointed by the commissioner, and the Integrated Pest Management (IPM) specialist/ agent from the Texas Agricultural Extension Service serving the respective area.

(2)

No less than two committee members will meet at the field in question within 48 hours after the field surpasses the trap count trigger level.

(3)

The committee will consider factors established by the foundation's technical advisory committee and approved by the foundation's board and the commissioner including, but not limited to, crop damage, trap captures in nearby traps, and cost to the eradication program.

(4)

The technical review committee shall make a written recommendation to the commissioner on the organic cotton field in question specifying the recommended actions and justification for those actions.

(5)

The commissioner shall review the technical review committee's recommendation and make a final determination on the action required.

(6)

Should the commissioner determine that some type of eradication activity should occur, the grower may be required to either destroy the crop as prescribed in §3.606 of this title (relating to Crop Destruction), or may choose to allow the crop to be treated

(e)

Destruction of an organic cotton crop under this section will not be required, regardless of trap captures, once the crop in that field has reached cut-out stage for that season. This stage will be determined through the following process.

(1)

For purposes of this section, "cut-out stage" is defined as at least 50% of cotton plants in a field having four or fewer nodes above white flower.

(2)

The grower will contact the foundation when they believe their crop has reached cut-out stage;

(3)

A foundation representative will inspect the field within 48 hours after being contacted by the grower to confirm that it has reached cut-out stage.

(4)

If there is a dispute relating to the stage of the crop, the IPM agent/specialist or county extension agent serving the area, will inspect the crop and determine if cut-out stage has been reached.

(5)

The foundation will notify the department when it is determined that a field has reached cut-out stage.

§3.606.Crop Destruction; Extensions, Choice of Conventional Treatment.

(a)

Crop destruction. A grower who has been notified that destruction of their organic cotton crop is necessary will have no more than seven calendar days from the date of receipt of notification to destroy that crop by plow-up.

(b)

Extension requests. A request for a deadline extension will be handled as follows.

(1)

The department may, on written request by a grower, grant an extension of the destruction deadline. Request for extensions may be granted for the following reasons:

(A)

weather factors;

(B)

illness;

(C)

mechanical failure; or

(D)

other good cause, as determined by the department.

(2)

A written request for an extension of the destruction deadline must be submitted on a form prescribed by the department.

(3)

Request forms may be obtained from either the department or the foundation.

(4)

Failure to complete the form in its entirety may result in denial of the request.

(5)

All requests for extensions shall be postmarked on or prior to the destruction deadline

(c)

Penalties for not destroying a crop by the deadline.

(1)

If the crop is not destroyed within seven calendar days of the date of notification or expiration of an approved extension, the compensation the grower is entitled to under §3.608 of this title (relating to Calculation of Indemnity), for that acreage will be decreased by 50%.

(2)

If the crop is not destroyed within 20 calendar days of the date of notification or expiration of an approved extension, the grower will no longer be entitled to compensation under §3.608 of this title, for that acreage.

(3)

The department may assess an administrative penalty of not more than $5,000 per day if the crop is not destroyed within 21 calendar days after the date of notification.

(4)

If the crop is not destroyed by the 21st day, the department may destroy the crop.

(d)

Choosing conventional treatment.

(1)

In lieu of crop destruction, a grower may notify the foundation and the department that he or she chooses to cancel his or her organic or transitional certification on the acreage that has been ordered to be destroyed so that conventional treatment may be used.

(2)

Such notification must be provided in writing to both the foundation and the department and must be postmarked, if sent by mail, or faxed before the destruction deadline. The same penalties described in subsection (c) will apply if notification is not received by the destruction deadline.

(3)

After both the foundation and the department receive this notification, the Foundation will treat the field in the same manner as all conventional cotton fields in the same zone.

(4)

A grower choosing to cancel organic certification will not be entitled to compensation under §3.608 of this title, for that acreage.

§3.607. Eligibility for Indemnification.

(a)

Until each respective zone is declared eradicated by the commissioner, certified organic and/or transitional cotton growers in the Western High Plains, Northwest Plains, Permian Basin, El Paso/Trans Pecos, and Northern Rolling Plains Boll Weevil Eradication Zones will be eligible for compensation under the following conditions.

(1)

The grower must have planted certified organic or transitional cotton during the 1997, 1998 or 1999 crop year.

(2)

The grower's base acreage will be based on the grower's choice of one of the following:

(A)

land acres planted to certified organic and transitional cotton in 1999; or

(B)

an average of land acres planted to certified organic and transitional cotton in the 1997, 1998, and 1999 crop years.

(b)

Until each respective zone is declared eradicated by the commissioner, certified organic and/or transitional cotton growers in the Southern Rolling Plains, South Texas/Winter Garden, and Rolling Plains Central Boll Weevil Eradication Zones will be eligible for compensation as negotiated between the grower and the foundation and approved by the commissioner.

(c)

Certified organic and/or transitional cotton growers in all other boll weevil eradication zones will be eligible for compensation under the following conditions.

(1)

The grower must have an application for transitional or organic cotton approved by the department's Organic Certification Program at least one year before the date a referendum is held establishing a boll weevil eradication program and assessment and approving a budget for that zone.

(2)

The grower's base acreage will be based on the growers choice of one of the following:

(A)

the grower's land acreage planted to certified organic and/or transitional cotton in the year preceding the crop year on which the referendum is based; or

(B)

an average of the grower's land acreage planted to certified organic and/or transitional cotton in the year preceding the crop year on which the referendum is based and the two previous years.

§3.608.Calculation of Indemnity.

(a)

To be eligible for compensation, a grower must report the Farm Service Agency farm numbers, physical locations, and acreage on each farm that the grower will use as the base acreage calculated in §3.607 of this title (relating to Eligibility for Indemnification), to the foundation before planting each year on a form provided by the foundation. This acreage must be certified organic or transitional acreage.

(b)

If the grower does not plant certified organic or transitional cotton on this base acreage, or if certified organic or transitional cotton on the growers base acreage is destroyed through the requirements of this chapter, the grower will be entitled to indemnification:

(1)

within 30 days after the grower has reported income from an alternative crop grown on that acreage to the foundation; or

(2)

by October 31 if no alternative crop is grown.

(c)

A decision by a grower not to plant certified organic or transitional cotton on his or her base acreage will be based on best farming practices and approved by the department's Organic Certification Program.

(d)

The following factors will be considered when calculating indemnity payments for organic cotton growers:

(1)

eligible acreage - the base acreage, in land acres, determined as provided in §3.607 of this title, and identified for that field as described in this section;

(2)

yield - the yield per acre will be determined by using the Average Production History for that farm, as determined by the Federal Crop Insurance Corporation; and

(3)

mitigation -the proceeds from any other crop grown on that acreage will be deducted from the grower's indemnification.

(e)

When a grower is entitled to indemnification, the foundation will indemnify the grower in accordance with one of the following formulas, whichever results in the lesser payment:

(1)

eligible acreage x yield x $1.00 per pound less mitigation; or

(2)

eligible acreage x yield x $1.00 per pound, minus 30% (30% reduction to approximate harvest and administrative costs).

(f)

After a zone has been declared eradicated by the commissioner:

(1)

any grower who plants certified organic or transitional cotton will be eligible for indemnification on an acre per acre basis only, if all or part of a crop is required to be destroyed;

(2)

indemnification will only be available for certified organic and/or transitional cotton acreage that is required to be destroyed; and

(3)

indemnification will be 70% of Acreage x Yield x $1.00 per pound.

(g)

The commissioner will resolve any dispute between the grower and the foundation regarding the amount of indemnification.

§3.609.Payment of Assessment.

(a)

Organic growers who plant certified organic or transitional cotton will be required to pay an assessment in accordance with the Code, Chapter 74, Subchapter D and rules adopted thereunder. This assessment will be in the amount set for the entire zone and will be billed in the same manner as all cotton grown in the zone.

(b)

Organic growers who choose to receive indemnity in lieu of growing certified organic or transitional cotton, and it is determined the decision was made in accordance with §3.608(c) of this title (relating to Calculation of Indemnity), will have their indemnity reduced by an amount equal to the assessment that would have been due on that acreage.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on January 27, 2000.

TRD-200000580

Dolores Alvarado Hibbs

Deputy General Counsel

Texas Department of Agriculture

Earliest possible date of adoption: March 12, 2000

For further information, please call: (512) 463-4075


Chapter 17. MARKETING AND PROMOTION DIVISION

Subchapter G. GO TEXAN PARTNER PROGRAM RULES

4 TAC §§17.301, 17.303-17.306, 17.308

The Texas Department of Agriculture (the department) proposes amendments to Chapter 17, Subchapter G, §§17.301, 17.303-17.306 and 17.308 concerning the GO TEXAN Partner Program (GOTEPP).

Section 17.301(9) is amended to expand the number of eligible small businesses by including entities with fifty or fewer full time employees or $1 million or less gross receipts.

Section 17.303(6) is amended to specifically include businesses, other than those meeting the definition of small business, along with other entities. This change will clarify that businesses not meeting the definition of small business may meet eligibility criteria under this eligibility category.

Section 17.304(4) is amended to require all franchise tax, child support, conflict of interest and program eligibility information in one form provided by the department. This change will make the application process more convenient for the public and more efficient for the department.

Section 17.305(1), is amended to require the name of the entity, phone number and email address, if available, of the applicant on the cover page for the project request. This change will facilitate communication between the applicant and the department. Section 17.305(3) is amended to clarify that paragraph. Section 17.305(4), is amended to require the inclusion in the project narrative of projected sales increase information and a statement identifying which eligibility criteria in §17.303 of the program rules is met by the applicant. This change will expedite the processing of project requests by the department. New paragraph (8) has been added to §17.305 to requiree applicants to submit, along with their original project request, ten copies of the request for distribution to the board.

Section 17.306(f) is amended to require the deposit of funds within ten business days after receiving a request for funds from the department. This change will allow successful applicants to keep the matching funds until the department is prepared to implement the approved project. Also, subsection (f) is being amended to grant the GO TEXAN Partner Program Advisory Board authority to accept in-kind contributions with a documented, clear monetary value from program applicants, in an amount not to exceed 10% of the total grant amount. This change will serve to expand the pool of potential applicants.

Section 17.308(f) is amended to clarify use of certain project request funds. This change will give notice to applicants that 15% of all funds for each approved project request will be spent on the department's GO TEXAN program.

Ulrike Lapham, Funding Coordinator for Marketing and Promotion, has determined that for the first five years there will be a fiscal impact for state government as a result of implementing and enforcing the amendments. The five-year fiscal impact for these changes will be a loss in interest revenue due to the department changing the timeline for submitting matching funds by successful applicants. The loss in revenue will vary greatly depending on many factors such as the number of entities choosing to participate in the program, the level of participation and the amount of matching funds submitted to the department. Because of these factors, the department is unable to calculate an accurate fiscal impact for state government. There will be no fiscal impact for local government.

Ms. Lapham has also determined that for the first five years the amendments are in effect the public benefit of administering and enforcing the amendments will be a potential increase in the diversity of Texas agricultural products marketed and the resulting economic benefits to the public. There will be no costs to microbusinesses, individuals, or small businesses that will be required to comply with the amendment; however, there will be a benefit to eligible small businesses that are successful applicants and receive funding under this program.

The amendments to §§17.301, 17.303-17.306 and 17.308 are proposed under the Texas Agriculture Code (the Code) §12.016, which provides the department with the authority to adopt rules as necessary for the administration of its powers and duties under the Code; the Code, §12.0175 which authorizes the department to establish programs to promote products grown in Texas and products made from ingredients grown in Texas and to charge a membership fee for those programs not to exceed $50; and the Code, §46.012, which provides the department with the authority to adopt rules to administer the GO TEXAN Partner Program.

The chapter that will be affected by this proposal is Code Chapter 46 of the Texas Agriculture Code.

§17.301.Definitions.

The following words and terms, when used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise.

(1)-(8)

(No change.)

(9)

Small business-- A [ An ] legal agricultural [ enterprise with annual gross receipts not in excess of $500,000. ] entity, including a corporation, partnership, or sole proprietorship that:

(A)

is formed for the purpose of making a profit; and

(B)

has fewer than 50 full-time employees or less than $1 million in annual gross receipts.

(10)

(No change.)

§17.303.Eligibility.

An eligible applicant must be:

(1)-(5)

(No change.)

(6)

any other entity or business, other than a business meeting definition of small business, that promotes the marketing and sale of Texas agricultural products. For purposes of this section, the department shall have the sole discretion to determine whether an entity meets program eligibility requirements.

§17.304.Requirements for Participation.

To be eligible for participation in the program through the use of matching funds under this subchapter, an applicant must:

(1)-(3)

(No change.)

(4)

submit a [ sworn ] notarized affidavit on a form provided by the department certifying and disclosing the following:

(A)

that applicant is not currently delinquent in the payment of any franchise taxes owed the State of Texas under Chapter 171, Tax Code and will notify the department of status change; and

(B)

[ (5) submit a sworn affidavit certifying ] that applicant is not currently delinquent in the payment of child support and will notify the department of status change; and

(C)

[ (6) submit a sworn affidavit ] disclosing any existing or potential conflict of interest relative to the evaluation and implementation of the project plan by the board and acknowledge that applicant will notify the department of status change; and

(D)

that applicant meets all program requirements to apply for matching funds; and

(5)

[ (7) ] submit to the department, within ten business days after receiving a request for funds from the department, [ board approval for the project request, ] cash matching funds as specified in the project request and in accordance with this subchapter.

§17.305.Project Requests.

A project request submitted by an eligible applicant must describe the advertising or other market-oriented promotional activities to be carried out using matching funds. The department shall not submit to the board a project request submitted under this subchapter unless the request includes:

(1)

a cover page including the name of the entity, name, title, [ and ] address, phone number and email address, if available, of applicant;

(2)

(No change.)

(3)

a [ an ] one page abstract [ of approximately ] , preferably 200 words or less, [ on one page, ] including the title, if any, a brief description of the project, specific objectives and importance of the project, project plan and methodology, and expected contribution to further or enhance the GO TEXAN Program;

(4)

a detailed specific narrative or factual description of the project, anticipated benefits to a specific region of the state, to specific commodities, any preliminary market research [ or ] and sales percent increases to be achieved as a result of the project, a description of expected results, a biography of the applicant, [ and ] a description of the business entity , and a statement identifying the eligibility criteria in § 17.303 of this title (relating to Eligibility) that applicant meets. [ ; ]

(5)-(7)

(No change.)

(8)

The applicant shall submit, along with the original project request, ten copies of the original project request.

§17.306.Filing Requirements and Consideration of Project Requests.

(a)-(e)

(No change.)

(f)

Deposit of matching funds. Matching funds for board approved project requests shall be deposited with the department within ten business days after [ board approval ] receiving a request for funds from the department. For purposes of this subchapter, "matching" means a dollar-per-dollar amount. The Department may accept in-kind contributions with a documented, clear monetary value from program applicants to satisfy the matching funds requirement. For purposes of this subchapter, the board shall have sole discretion to approve the use of in-kind contributions, in an amount not to exceed 10% of the total project request, to satisfy the matching funds requirement.

§17.308.Use of Funds.

(a)

Funds received under this subchapter may only be used for activities promoting the sale of Texas agricultural products and administering the program.

(b)-(e)

(No change.)

(f)

85% of all funds for each approved project request shall be expended to promote the specific product(s) of applicants and 15% of all funds for each approved project request shall be expended on the department's [ to promote the ] GO TEXAN Program. If feasible and practical, the 15% portion of funds for each individual project request will be expended in a manner that directly or indirectly promotes the specific product(s) of applicant.

(g)

(No change.)

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State, on January 28, 2000.

TRD-200000605

Dolores Alvarado Hibbs

Deputy General Counsel

Texas Department of Agriculture

Earliest possible date of adoption: March 12, 2000

For further information, please call: (512) 463-4075