4 TAC §§26.1, 26.3, 26.8 - 26.10
The Board of Directors (the Board) of the Texas Agricultural
Finance Authority (the Authority) of the Texas Department of Agriculture adopts
amendments to §26.1, §26.3, and §§26.8- 26.10, concerning
the Authority's Linked Deposit Program, with changes to the proposal published
in the May 24, 2002 issue of the
Texas Register
(27 TexReg 4476). Amended §26.10 is adopted with a non-substantive change
to subpart 26.10(14)(C)(i). Amended §26.1, §26.3 and §§26.8-26.9
are adopted without changes and will not be republished.
The amendments are adopted to clarify eligibility requirements and requirements
for the use of loan proceeds and to make the program more efficient and to
provide a more efficient program to further create an economic benefit to
rural areas of the state and to generate a greater number of eligible applicants
for the Linked Deposit Program. More specifically, the amendments are proposed
to clarify eligibility requirements for natural disaster assistance and designation
as a customarily grown or alternative crop to make the sections consistent
with current practice, to specify when loan proceeds may be applied to existing
debt, to specify how natural disaster assistance funds may be used, and to
clarify that livestock is eligible as a customarily grown and/or alternative
crop, as is current practice. The amendments to §26.1 add livestock to
the definitions of "Alternative agriculture crops", "Customarily grown" and
"Eligible borrower" and add a definition of "Livestock" and "Nonagricultural
business". The term "Alternative agriculture crops" has also been changed
to read "Alternative agricultural crops", to make the term consistent with
its use elsewhere in Chapter 26 and in law. The definition of "Current market
rate" is amended to change the biennium date which may be used to determine
the maturity date of a loan from the next to the current biennium. The definition
of "Customarily grown" is also amended to provide that the most recent version
of the Texas Agricultural Cash Receipts by Commodity publication will be used
to determine which crops meet definition of customarily grown crops or livestock.
The definition of "Eligible borrower" is amended to specify that a person
providing nonagricultural goods or services is eligible if those goods or
services provide an economic benefit to a municipality or county in a rural
area. Section 26.3 is amended to specifically add livestock to the purpose
statement.
Section 26.8 is amended to correct a grammatical error and to change the
time by which notice of funding of the loan must be received from noon to
9 a.m. Section 26.9 is amended, at subsection (a), to provide that a loan
may be applied to existing debt only when required by the lender to finance
the expansion of an eligible project. New subsection (b) is added to provide
natural disaster assistance may be used only to finance or refinance an operating
loan. The new subsection will clarify for borrowers use of funds and is consistent
with the uses intended when the natural disaster assistance program was established.
Section 26.10 is amended throughout to specify that a livestock operation
is eligible for participation in the program, as is current practice. Paragraph
26.10(12) is also amended to delete the listing of customarily grown crops
and replace the list with language that provides that the department will
maintain a list of customarily grown crops based on the most recent version
of the Agricultural Cash Receipts by Commodity publication, as is current
practice. Paragraph 26.10(13) is also amended to delete the list of alternative
agricultural crops and replace the list with language that provides that the
department will maintain a list of customarily grown crops based on the most
recent version of the Agricultural Cash Receipts by Commodity publication,
as is current practice. The deletion of the list will also allow the department
to consider customarily grown or alternative crops not on the list, as they
qualify, rather than having to amend 26.10. Paragraph 26.10(14) is amended
to provide more specific eligibility requirements for natural disaster assistance.
Subpart 26.10(14)(C)(i) is adopted with a non- substantive change which adds
the words "(if available)" after the references to the option of providing
of documentation establishing the applicant's eligibility for the Livestock
Indemnity Program or the Livestock Assistance Program to show eligibility
for natural disaster relief. This change is made by staff because it has been
determined that both of these programs are not currently funded and the documentation
identified in (i) regarding the Livestock Indemnity Program and the Livestock
Assistance Program is therefore, not available at this time, but may be in
the future. Paragraph 26.10(17) is amended to provide more specific eligibility
requirements for nonagricultural businesses located in a rural area.
No public comments were received on the proposal.
The amendments to §26.1, 26.3 and §§26.8-26.10
are adopted under the Texas Agriculture Code (the Code), §44.007. which
provides the Authority's Board with the authority to adopt rules for the loan
portion of the Linked Deposit Program; and the Code, §58.022, which provides
the Authority's Board with authority to adopt rules and procedures necessary
for the administration of its programs, including the Linked Deposit Program.
§26.10.Program Limitations.
In addition to the limitations already set forth in these rules, the
following limitations apply.
(1)
Not more than $30 million, of which $10 million may only
be used to finance water conservation projects, and of which $5 million may
be used only to finance the economic development of businesses in rural areas,
may be placed concurrently in linked deposits under the Act.
(2)
The maximum amount of a loan to produce alternative crops
or livestock is $250,000.
(3)
The maximum amount of a loan to finance production of a
crop or livestock declared eligible for natural disaster relief is $250,000.
(4)
The maximum amount of a loan to finance water conservation
projects or equipment for agricultural production purposes is $250,000.
(5)
The maximum amount of a loan to finance an eligible borrower
in a rural area is $250,000.
(6)
The maximum amount of a loan to process and market agricultural
crops or livestock is $500,000.
(7)
All linked deposits placed under this program shall expire
upon expiration of the biennium; however, subject to legislative authorization
and approval by the Authority and the comptroller, linked deposits that expired
as a result of the expiration of the biennium may be renewed.
(8)
The state shall not be liable for any failure to comply
with the terms and conditions of the loan, or any failure to make any payments
or any other losses or expenses that occur directly or indirectly from the
program.
(9)
An applicant may have more than one application and linked
deposit loan with the program provided that the total applications and total
linked deposits approved do not exceed the limitations of the program maximums
as defined in paragraphs (2)-(6) of this section, and that any previous outstanding
linked deposit loans with a lender be of a satisfactory status. The total
of all linked deposit loans to an applicant cannot exceed a maximum of $500,000.
(10)
A person shall not receive approval of an application
if a previous loan under the program is in default.
(11)
An applicant who proposes operations to produce crops
or livestock that are customarily grown in this state is not eligible for
participation in the production financing for alternative crops portion of
the program.
(12)
Customarily grown crops or livestock are not eligible
for participation in the production financing for alternative crops or livestock
portion of the program. The Department shall maintain a list of crops or livestock
that it has determined to be customarily grown in the state. The list will
include, at a minimum, all crops and livestock with cash receipts of $5,000,000
or more as listed in the most recent version of the Agricultural Cash Receipts
by Commodity, compiled by the Texas Agricultural Statistics Service.
(13)
Alternative agricultural crops or livestock (including
crops or livestock that are not customarily grown in the State of Texas) are
eligible for participation in the production financing portion of the program.
The Department shall maintain a list of alternative agricultural crops or
livestock, which shall consist of all crops and livestock with cash receipts
of less than $5,000,000 as listed in the most recent version of the Agricultural
Cash Receipts by Commodity, compiled by the Texas Agricultural Statistics
Service. The Authority may, on a case by case basis, approve for program participation
crops or livestock which are not listed in the Agricultural Cash Receipts
by Commodity, compiled by the Texas Agricultural Statistics Service.
(14)
A project is eligible for natural disaster relief in this
state if:
(A)
the project resides in a county that has been declared
in a state of natural disaster by the United States Department of Agriculture
or the President of the United States;
(B)
the declared disaster is still in effect on the date the
application is submitted to the Authority;
(C)
the applicant submits either:
(i)
an insurance proof of loss (required for applicants with
crop insurance), IRS Schedule F, or documentation establishing the applicant's
eligibility for the Livestock Indemnity Program (if available), the Livestock
Assistance Program (if available) or similar federal or state natural disaster
relief program, from a relevant period of time, to establish that the applicant
was personally harmed by the disaster; or
(ii)
if the applicant is entering the business of producing
agricultural crops or livestock, documentation from USDA or a Texas Cooperative
Extension Agent to establish that production of the crop or livestock to be
produced by the applicant has declined during the disaster period in the county
or counties where the project will reside;
(D)
the decline in the production or harm suffered by the applicant
was caused by the natural disaster; and
(E)
the term of the natural disaster linked deposit commitment
does not exceed the lesser of the normal operating cycle of the business or
15 months.
(15)
The following types of equipment considered as water conservation
equipment for agricultural production purposes are eligible for financing
in the production financing portion of the program: underground pipe; in-line
valves; pipe increasers/reducers; gate valves; fittings and bushings; flow
meters and accessories; complete circular watering systems; drip irrigation
systems complete with installation; and any other equipment which can be identified
and verified as water conservation equipment for use within the state.
(16)
The following types of water conservation projects would
be eligible for financing under the program: brush control projects, stock
tank renovation or construction; dam renovation or construction; or any other
project that can be identified as a water conservation project.
(17)
A nonagricultural business meeting the criteria for being
located in a rural area is eligible if the business provides an economic development
benefit to a municipality or county in a rural area. Because the program is
intended to "encourage the development or expansion of businesses in rural
areas of this state," preference will be given to applicants who create or
retain employment in a rural area.
This agency hereby certifies that the adoption has been
reviewed by legal counsel and found to be a valid exercise of the agency's
legal authority.
Filed with the Office of
the Secretary of State on July 2, 2002.
TRD-200204199
Dolores Alvarado Hibbs
Deputy General Counsel
Texas Department of Agriculture
Effective date: July 22, 2002
Proposal publication date: May 24, 2002
For further information, please call: (512) 463-4075