TITLE 4.AGRICULTURE

Part 1. TEXAS DEPARTMENT OF AGRICULTURE

Chapter 24. TEXAS AGRICULTURAL FINANCE AUTHORITY: FARM AND RANCH FINANCE PROGRAM

4 TAC §24.11

The Board of Directors (the Board) of the Texas Agricultural Finance Authority (the Authority) of the Texas Department of Agriculture proposes an amendment to §24.11, concerning the Authority's Farm and Ranch Finance Program. The amendment is proposed to correct information regarding where copies of the Authority's credit policy may be obtained.

Robert Wood, assistant commissioner for rural economic development, has determined that for the first five year period that the amended section is in effect there will be no anticipated fiscal implications to state or local government as a result of enforcing or administering the proposal.

Mr. Wood has also determined that for each year of the first five years the amended section is in effect, the public benefit anticipated as a result of enforcing the amended section will be to provide correct information to interested persons wishing to review the Authority's credit policy. There is no anticipated effect on microbusinesses or small businesses. There will be no anticipated economic costs to persons required to comply with the proposal.

Comments on the proposal may be submitted to Robert Wood, Assistant Commissioner for Rural Economic Development, Texas Department of Agriculture, P.O. Box 12847, 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 amendment to §24.11 is proposed under the Texas Agriculture Code (the Code), §59.022, which provides the Authority's Board with the authority to adopt rules it considers necessary to administer the Farm and Ranch Finance Program.

The Texas Agriculture Code, Chapter 59 is affected by the proposed amendment.

§24.11.Criteria for Approval of a Loan.

(a) - (b) (No change.)

(c) The Authority has adopted a Credit Policy and Procedures document which contains additional criteria and guidelines used by the Authority in the loan review and approval process. The Credit Policy and Procedure document is adopted by reference herein. Copies may be obtained from the Texas Agricultural Finance Authority [ and Agribusiness Development Program ], Texas Department of Agriculture, P.O. Box 12847, Austin, Texas 78711[ , (512) 475-1619 ].

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 June 3, 2005.

TRD-200502236

Dolores Alvarado Hibbs

Deputy General Counsel

Texas Department of Agriculture

Earliest possible date of adoption: July 17, 2005

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


Chapter 25. TEXAS AGRICULTURAL FINANCE AUTHORITY: RURAL DEVELOPMENT

The Board of Directors (Board) of the Texas Agricultural Finance Authority (the Authority) of the Texas Department of Agriculture proposes amendments to Chapter 25, Subchapter A (Subchapter A), §25.3 and §§25.7 - 25.11, concerning the Authority's Rural Development Finance Program, and the repeal of Chapter 25, Subchapter B (Subchapter B), §§25.20 - 25.34, concerning the Authority's Private Activity Bond Financing Program. The amendments to Subchapter A are proposed to clarify eligibility requirements and requirements for the use of the program and to make the program more efficient. The amendments are also made to make Subchapter A consistent with the current operation of the program as a rural municipal finance program which provides financial assistance to city and county governments; economic development corporations; hospital districts; rail districts; utility districts; special districts; agricultural districts; and private water and wastewater corporations in rural areas to improve or assist in the economic development of the rural area.

The amendments to §25.3 change the definition of "Applicant" to delete references to business entities, change the definition of "Committment" to make that definition consistent with the current operation of the program, and delete the definition of "Guarantied loan amount". Section 25.7 is amended to delete paragraph (a)(6), which relates to applicants that are business entities. Section 25.8 is amended to delete language relating to the timeframe to close a commitment. Sections 25.9 and 25.10 are amended to delete language that relates to business entities, making the section consistent with the current operation of the program. Section 25.11 is amended to correct the information regarding where copies of the Authority's credit policy may be obtained.

The repeal of all sections in Subchapter B is proposed to delete unnecessary sections. The Authority's Private Activity Bond Financing Program is no longer in operation and the rules for this program are no longer needed.

Robert Wood, assistant commissioner for rural economic development, has determined that for the first five year period that the amended sections and the repeal of Subchapter B are in effect there will be no anticipated fiscal implications to state or local government as a result of enforcing or administering the proposal.

Mr. Wood has also determined that for each year of the first five years the amended sections and the repeal are in effect, the public benefit anticipated as a result of enforcing the amended sections will be 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 Authority's Rural Development Finance Program. The public benefit anticipated as a result of enforcing the repeal of Subchapter B will be the elimination of unnecessary rules. There is no anticipated effect on microbusinesses or small businesses. There will be no anticipated economic costs to persons required to comply with the proposal.

Comments on the proposal may be submitted to Robert Wood, Assistant Commissioner for Rural Economic Development, Texas Department of Agriculture, P.O. Box 12847, Austin, Texas 78711. Comments must be received no later than 30 days from the date of publication of the proposal in the Texas Register .

Subchapter A. RURAL DEVELOPMENT FINANCE PROGRAM

4 TAC §§25.3, 25.7 - 25.11

The amendments to §25.3 and §§25.7 - 25.11 are proposed under the Texas Agriculture Code (the Code) §58.022, which provides the Authority's Board with the authority to adopt rules and procedures necessary for the administration of its programs including the setting and collection of fees in connection with the program; and, the Code §58.023, which provides the Authority's Board with the authority to adopt rules to establish criteria for eligibility of applicants under the Authority's financial assistance programs

The Texas Agriculture Code, Chapter 58 is affected by the proposed amendments.

§25.3.Definitions.

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

(1) (No change.)

(2) Applicant--Any rural [ person, corporation, partnership, cooperative, joint venture, sole proprietorship, ] city, county, [ state agency, institution of higher education, ] economic development corporation, or other unit of local [ public ] government filing an application with the Authority for a financial commitment.

(3) - (7) (No change.)

(8) Commitment--Any form of financial assistance provided to an applicant as approved by the board, including [ a guaranty, ] a direct loan, a bond purchase, a participation commitment, or a conduit issuance for a political subdivision [ or any other entity ] providing economic development to a rural area of the state.

(9) - (11) (No change.)

[ (12) Guarantied loan amount--With respect to loans made by a lender and guarantied by the Authority, a sum measured in terms of U.S. dollars that the Authority pays to a lender to acquire an undivided interest in any loan, or in the case of default by borrower, the Authority agrees to pay a lender, not to exceed up to 90 percent of the loan amount or $5 million, whichever is less. The guaranty percentage approved by the board will be that stated in the guaranty agreement negotiated between the Authority and the lender. The lender is required to negotiate an agreement to sell the Authority a participation in the guarantied loan in an amount of no more than 80 percent of the guarantied amount. The Authority will pay the lender a servicing fee as approved by the board.]

(12) [ (13) ] Interest rate--The interest rate charged on a commitment approved by the Authority board for an eligible applicant.

(13) [ (14) ] Lender--A lending institution, including a bank, trust company, banking association, savings bank, mortgage company, investment banker, credit union, underwriter, life insurance company, or any affiliate of those entities, and also including any other financial institution or governmental agency that customarily provides financing for rural economic development loans or mortgages, or any affiliate of such institution or agency.

(14) [ (15) ] Project--An enterprise or project, which would further economic development of a rural area.

(15) [ (16) ] Qualified application--A completed application, including all documents and information required by the Authority and submitted by the lender or applicant for a project, that is consistent with the purpose of rural economic development.

(16) [ (17) ] Rural area--A rural area means an area which is predominately rural in character, and the board defines and considers to be a rural area.

(17) [ (18) ] Staff--The staff of the Authority or staff of the department performing work for the Authority.

(18) [ (19) ] State--The State of Texas.

§25.7.Project Eligibility Requirements.

(a) Projects. An applicant is eligible for a commitment from the Authority if the proposed project meets the following criteria:

(1) - (3) (No change.)

(4) the applicant is a legal entity under the laws of the United States of America and the State of Texas; and

(5) the applicant has a principal place of business in the state . [ ; and ]

[ (6) if the applicant is a corporation, partnership, cooperative or joint venture, the applicant's principal owner or owners provide personal guarantees satisfactory to the Authority.]

(b) - (c) (No change.)

§25.8.Filing Requirements and Consideration of Applications.

(a) - (d) (No change.)

(e) Notification of approval. Upon conditional approval of the qualified application by the board, the Authority will notify the applicant in writing identifying the terms and conditions of the commitment provided. The applicant must accept the conditions of the board within 30 days [ to accept the commitment and 90 days to close the commitment, provided that the board may approve one additional extension of the commitment for a period of no more than 60 days. The Authority will prepare the closing documents in cooperation with the Authority's legal counsel and notify borrower of the closing date established ].

(f) - (i) (No change.)

§25.9.Contents of Qualified Application.

(a) Required information. The qualified application must set forth the information necessary for the determination of eligibility and will include the following, if applicable:

(1) (No change.)

(2) names, addresses, resumes, and references of owners, principal investors, board members, and/or management[ , including percentage of ownership of the business, if applicable ];

(3) articles of incorporation and bylaws, a certificate of good standing with the secretary of state, or other instruments that establish or describe the legal operation or structure of the applicant and the legal authority under which the financing is being requested [ and/or the business ];

(4) a [ business ] plan which includes the following:

(A) information describing the products, services, or public works to be offered;

(B) a statement of how such products or services will help to expand, develop, or diversify the rural economy of the state; and

(C) an estimate of the number of jobs created or retained by the project . [ ; and ]

[ (D) a statement of what percentage of Texas products and suppliers will be used by the project.]

(5) three years of audited financial reports [ historical balance sheets, cash flow statements, income statements, and federal and/or state tax returns ];

[ (6) a pro forma balance sheet, which incorporates the new financing, to be provided by the applicant and/or the lender;]

(6) [ (7) ] pro forma cash flows, income statements and balance sheets for at least three years, including the underlying assumptions used, to be provided by the applicant and/or the lender;

[ (8) a statement of the interest rate used in the pro forma statements;]

(7) [ (9) ] a statement of any licensing requirements , and state or federal regulations that impact the project ;

(8) [ (10) ] a statement that addresses the effect of the project [ business ] on the tax base of the area and any other positive and negative effects of the project on the area;

(9) [ (11) ] assurance of compliance with local zoning laws and building codes, and that the necessary public utilities are available or will be available when needed by the project; and

[ (12) for construction projects, the approximate date construction will commence, completion date, and date by which the project will be fully operational; including copies of cost estimates for construction;]

[ (13) documentation that the preliminary design stage has been completed;]

(10) [ (14) ] disclosure of any and all business and familial affiliations of the applicant, or its owners, principal investors, board members, and management with members of the board, employees of the department, staff, and/or the lender which could present a conflict of interest . [ ; and ]

[ (15) if applicable, a personal history questionnaire and acknowledgment form for all guarantors and/or owners with more than 20% ownership.]

(b) (No change.)

§25.10.General Terms and Conditions of the Authority's Committment.

(a) - (h) (No change.)

(i) Reporting requirements for a commitment provided by the Authority. The applicant shall provide to the Authority [ or lender, whichever is applicable, ] annual audited financial reports [ statements including a balance sheet, income statement and a cash flow statement ]; payment receipts of any applicable personal property taxes; and a statement of the annual employment of the applicant [ applicant's business to the Authority ]. Annual employment shall be expressed in terms of annual full-time equivalent positions. If necessary, the Authority may request other reports or documentation reasonably necessary for an assessment of the applicant's compliance with the program.

§25.11.Criteria for Approval of a Committment.

(a) - (b) (No change.)

(c) The Authority has adopted a Credit Policy and Procedures document which contains additional criteria and guidelines used by the Authority in the review and application approval process. The Credit Policy and Procedure document is adopted by reference herein. Copies may be obtained from the Texas Agricultural Finance Authority [ and Agribusiness Development Division ], Texas Department of Agriculture, P.O. Box 12847, Austin, Texas 78711[ , (512) 475-1619 ].

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 June 3, 2005.

TRD-200502237

Dolores Alvarado Hibbs

Deputy General Counsel

Texas Department of Agriculture

Earliest possible date of adoption: July 17, 2005

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


Subchapter B. PRIVATE ACTIVITY BOND FINANCING PROGRAM

4 TAC §§25.20 - 25.34

(Editor's note: The text of the following sections proposed for repeal will not be published. The sections may be examined in the offices of the Texas Department of Agriculture or in the Texas Register office, Room 245, James Earl Rudder Building, 1019 Brazos Street, Austin.)

The repeal of §§25.20 - 25.34 is proposed under the Texas Agriculture Code (the Code), §58.022, which provides the Authority's Board with the authority to adopt rules and procedures necessary for the administration of its programs including the setting and collection of fees in connection with the program; and, the Code §58.023, which provides the Authority's Board with the authority to adopt rules to establish criteria for eligibility of applicant and lenders under the Authority's financial assistance programs.

The Texas Agriculture Code, Chapter 58 is affected by the proposed repeals.

§25.20.Authority.

§25.21.Purpose.

§25.22.Definitions.

§25.23.Examination of Records.

§25.24.Written Communication with the Authority.

§25.25.Project Eligibility Requirements.

§25.26.Filing Requirements and Consideration of Applications.

§25.27.Inducement Resolution.

§25.28.Policies.

§25.29.Final Approvals.

§25.30.Fees.

§25.31.Closing the Bonds.

§25.32.Alternative Financing Options.

§25.33.Administration.

§25.34.Waivers.

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 June 3, 2005.

TRD-200502238

Dolores Alvarado Hibbs

Deputy General Counsel

Texas Department of Agriculture

Earliest possible date of adoption: July 17, 2005

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


Chapter 26. TEXAS AGRICULTURAL FINANCE AUTHORITY: LINKED DEPOSIT PROGRAM

4 TAC §26.12

The Board of Directors (the Board) of the Texas Agricultural Finance Authority (the Authority) of the Texas Department of Agriculture proposes an amendment to §26.12, concerning the Authority's Linked Deposit Program. The amendment is proposed to correct information regarding where copies of the Authority's credit policy may be obtained.

Robert Wood, assistant commissioner for rural economic development, has determined that for the first five year period that the amended section is in effect there will be no anticipated fiscal implications to state or local government as a result of enforcing or administering the proposal.

Mr. Wood has also determined that for each year of the first five years the amended section is in effect, the public benefit anticipated as a result of enforcing the amended section will be to provide correct information to interested persons wishing to review the Authority's credit policy. There is no anticipated effect on microbusinesses or small businesses. There will be no anticipated economic costs to persons required to comply with the proposal.

Comments on the proposal may be submitted to Robert Wood, Assistant Commissioner for Rural Economic Development, Texas Department of Agriculture, P.O. Box 12847, 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 amendment to §26.12 is proposed 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.

The Texas Agriculture Code, Chapters 44 and 58 are affected by the proposed amendments.

§26.12.Communications with the Authority.

All communications about the program should be directed to the Texas Agricultural Finance Authority, Linked Deposit Program, Texas Department of Agriculture, P.O. Box 12847, Austin, Texas 78711[ , (512) 475-1614 ].

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 June 3, 2005.

TRD-200502239

Dolores Alvarado Hibbs

Deputy General Counsel

Texas Department of Agriculture

Earliest possible date of adoption: July 17, 2005

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


Chapter 28. TEXAS AGRICULTURAL FINANCE AUTHORITY: FINANCIAL ASSISTANCE PROGRAM RULES

The Board of Directors (the Board) of the Texas Agricultural Finance Authority (the Authority) of the Texas Department of Agriculture proposes amendments to §28.2 and §§28.7 - 28.11, §28.15, and the repeal of §28.16, concerning the Authority's Financial Assistance Program. The amendments are proposed to clarify eligibility requirements and requirements for the use of loan proceeds and to make the program more efficient. More specifically, the amendments are proposed to delete language relating to new loans, and modify the sections that relate to renewals to make the sections consistent with the current operation of the financial assistance program. Under the existing program, no new loans will be made, the extension of credit is limited to renewals or extensions of existing loans. The repeal of §28.16, relating to criteria for a direct loan is proposed to delete unnecessary language. Direct loans are no longer being offered under the program.

Section 28.2 is amended to make this section consistent with current law. Section 28.7 is amended to make the section consistent with the current operation of the financial assistance program. Section 28.8 is amended to clarify that only applications for renewal of existing loans are being accepted under the program. At subsection 28.8(d), an amendment is made to make this subsection consistent with current law relating to approval of an application by the board. Section 28.9 is amended to provide that program staff has the sole discretion to determine what documents are acceptable to show information required of an applicant. Section 28.10 is amended to clarify that financial assistance is limited to a renewal of an existing obligation and to the amount of or participation in an existing obligation. Section 28.11 is amended to correct the information relating to where copies of the Authority's Credit Policy and Procedure may be obtained. Section 28.15 is amended to make this subsection consistent with current law relating to approval of an application by the board.

Robert Wood, assistant commissioner for rural economic development, has determined that for the first five year period that the amended sections are in effect there will be no anticipated fiscal implications to state or local government as a result of enforcing or administering the proposal.

Mr. Wood has also determined that for each year of the first five years the amended sections are in effect, the public benefit anticipated as a result of administering and enforcing the amended sections will be to provide a more efficient program to further create an economic benefit to rural areas of the state. There is no anticipated effect on microbusinesses or small businesses, except that eligible entities that are granted financial assistance under the Authority's Financial Assistance Program will benefit from that assistance. There will be no anticipated economic costs to persons required to comply with the proposal.

Comments on the proposal may be submitted to Robert Wood, Assistant Commissioner for Rural Economic Development, Texas Department of Agriculture, P. O. Box 12847, Austin, Texas 78711. Comments must be received no later than 30 days from the date of publication of the proposal in the Texas Register .

4 TAC §§28.2, 28.7 - 28.11, 28.15

The amendments to §28.2, §§28.7 - 28.11 and §28.15 are proposed under the Texas Agriculture Code (the Code), §58.022, which provides the Authority's Board with authority to adopt rules and procedures necessary for the administration of its programs.

The Texas Agriculture Code, Chapter 58 is affected by the proposal.

§28.2.Purpose.

The purpose of the Texas Agricultural Finance Authority (the Authority) is to provide financial assistance to eligible agricultural businesses and to other [ agricultural-related ] rural economic development projects that the board of the Authority considers to present a reasonable risk and have a sufficient likelihood of repayment. The Authority is mandated to support the expansion, development, and diversification of production, processing, marketing, and exporting of Texas agricultural products and to promote the development of [ agricultural-related ] rural economic development projects. These rules establish standards of eligibility and the application procedures for the Authority's financial assistance programs.

§28.7.Project Eligibility Requirements.

(a) Projects. An applicant is eligible for assistance from the Authority if the proposed project meets the following criteria:

(1) the applicant currently has a project financed with the Authority's assistance [ the project provides significant benefits for the expansion or development of diversified, innovative, or value-added production, processing, marketing, or exporting of Texas agricultural products or provides significant benefits for other agricultural-related economic development projects; provided that the board shall give priority to agricultural businesses that include producers of Texas agricultural products; provided, also, that the board will give preference to applicants, the majority ownership of which is held by citizens of the United States; and if the applicant is a corporation, the board will give preference to a corporation organized under the laws of the State of Texas with majority ownership by Texas residents; provided further, that the board will give preference to applicants who are Texas residents doing business in the state and to applicants who can demonstrate that the financed activities will take place predominantly in the state; provided that the board will also give preference to those agricultural businesses that demonstrate a significant new technology or market opportunity for Texas producers; provided, finally, that the board may decline to assist those businesses whose primary purpose is to establish or expand conventional agricultural production ];

(2) the board determines that it is in the best interest of the program to renew the existing obligation [ the project will create or retain employment, directly or indirectly ]; and

(3) the requested assistance amount is not more than the existing obligation, and will be used to renew or extend the existing obligation. [ there is a reasonable level of equity in the project, which is determined on a case-by-case basis by the Authority and the lender; provided that the applicant must provide at least 10% of the total cost of the project for an existing business and at least 25% of the total costs of the project for a start-up; ]

[(4) the applicant must be a legal entity under the laws of the United States of America;]

[(5) the applicant has its principal place of business in the state;]

[(6) the applicant's principal owner or owners provide personal guarantees for the loan satisfactory to the Authority;]

[(7) for the Loan Guaranty Program, the lender submits a preliminary letter of commitment to make the loan based on a partial guaranty from the Authority;]

[(8) for the Direct Loan Program, the lender and borrower submit a preliminary letter of commitment that the lender will service the loan based upon the approval of a direct loan by the Authority.]

(b) - (c) (No change.)

§28.8.Filing Requirements and Consideration of Applications.

(a) Application forms. An applicant or lender seeking a renewal of an existing loan guaranty from the Authority may use the application forms provided by the Authority.

(b) Submission of a qualified application. Applicants are required to obtain a commitment from a lender to participate in [ the direct loan program or ] the loan guaranty program before qualified applications will be accepted by the Authority. Staff will be available prior to submission of the qualified application to assist lenders or applicants in determining project eligibility.

(c) (No change.)

(d) Board review. Staff will submit a report on each qualified application to the board, provided that the board has directed staff to present only those applications which meet those minimum underwriting standards established in the Credit Policy and Procedures, which shall include a recommendation for approval or denial. If staff determines that an application does not meet the minimum underwriting standards established in the Credit Policy and Procedures, then staff shall notify the applicant and the lender in writing to this effect, and shall advise them of which minimum underwriting standards are not met. If staff determines during the underwriting process, that the minimum standards not met are mitigated by other factors in the application, then staff can present the application to the board identifying the waivers to the Credit Policy and Procedures and the mitigating factors. If staff cannot determine mitigating factors for the waivers, then staff will notify the applicant and/or the lender that they may appeal the determination of the staff to the board, but shall have the burden of convincing the board that the minimum standards not met should be waived. The board may, in its discretion, recommend the imposition of conditions and requirements in connection with approval of a qualified application. Approval of a qualified application will be by a majority of [ a quorum of the ] board members present [ , except for the approval requirements identified in §28.10(c) of this title (relating to General Terms and Conditions of the Authority's Financial Assistance) ]. Applications submitted to the Authority for the participation program will not be considered if the eligible project does not meet the minimum underwriting standards established in the Credit Policy and Procedures established by the Authority.

(e) Notification of approval. Upon conditional approval of the qualified application by the board, the Authority will notify the lender and the applicant in writing identifying the terms and conditions of the financial assistance provided. The board may set certain time limits regarding the acceptance of loan commitments by the applicant and lender and time limits regarding the closing of loans by the applicant and lender . [ ; ] However [ however ], in no event shall the time period exceed 30 days to accept the commitment and 90 days to close the loan, provided that the board may approve one additional extension of the commitment for a period of no more than 60 days. Under the loan guaranty program, the lender will prepare the written agreements and documents necessary to close the loan guaranty in accordance with the terms and conditions set forth in the notice of conditional approval. The Authority will send the lender and the applicant final notice of guaranty approval after review of the closing documents by the Authority's legal counsel. [ Under the direct loan program, the Authority will prepare the closing documents in cooperation with the Authority's legal counsel and notify lender and/or borrower of the closing date established. The lender will disburse the loan according to the terms of the note and/or loan agreement. ]

(f) - (i) (No change.)

§28.9.Contents of Qualified Application.

(a) Required information. The qualified application must set forth the information necessary for the determination of eligibility and will include the following, if applicable (staff may determine that documents already in the Authority's files may suffice for any of the following) :

(1) applicant's name, address and telephone numbers;

(2) names, addresses, resumes, and references of owners, principal investors, board members, and management, including percentage of ownership of the business;

(3) articles of incorporation and bylaws, a certificate of good standing with the secretary of state, or other instruments that establish or describe the legal operation or structure of the business;

(4) a business plan which includes the following:

(A) information describing the products or services to be offered; and

(B) how such products or services will help to expand, develop, or diversify Texas agriculture or the rural economy of the state;

(C) an estimate of the number of jobs created or retained by the project; and

(D) a statement of what percentage of Texas products and suppliers will be used by the project:

(5) letters of commitment from other funding sources;

(6) if available, three years of historical balance sheets, cash flow statements, income statements, and federal tax returns;

(7) a pro forma balance sheet which incorporates the new financing, to be provided by the applicant and/or the lender;

(8) pro forma cash flows, income statements, and balance sheets for at least three years, including the underlying assumptions used, to be provided by the applicant and/or the lender;

(9) a statement of the interest rate used in the pro forma statements;

(10) a statement of any licensing requirements;

(11) a statement that addresses the effect of the business on the tax base of the area and any other positive and negative effects of the project on the area;

(12) assurance of compliance with local zoning laws and building codes, and that the necessary public utilities are available or will be available when needed by the project;

(13) for construction projects, the approximate date construction will commence, completion date, and date by which the project will be fully operational; including copies of cost estimates for construction;

(14) documentation that the preliminary design stage has been completed;

(15) disclosure of any and all business and familial affiliations of the applicant, or its owners, principal investors, board members, and management with members of the board, employees of the department, staff, and/or the lender which could present a conflict of interest; and

(16) personal history questionnaire and acknowledgment form for all guarantors and/or owners with more than 20% ownership.

(b) (No change.)

§28.10.General Terms and Conditions of the Authority's Financial Assistance.

(a) Permissible use of financial assistance. The Authority's financial assistance is to be used to finance the project identified on the qualified application and must be a renewal of an existing obligation involving the Authority .

[(b) Minimum amount of financial assistance. The Authority shall not provide financial assistance to an applicant where the guarantied amount of the loan is less than $30,000.]

(b) [ (c) ] Maximum amount financial assistance. The Authority shall not provide a loan guaranty, or a participation purchased to an applicant, including its affiliates, that [ at any one time ] exceeds the current dollar amount of the existing obligation involving the Authority [ $2 million except that by a two-thirds vote of the board, the total aggregate participation purchase or loan guaranty may exceed $2 million but may not exceed $5 million. The assistance in the form of a loan guaranty shall not exceed 90% of the total loan. The Authority board will apply the following as a guideline when approving guaranty applications: a guaranty may not exceed 75% on guaranties of $2 million and over; a guaranty may not exceed 80% for guaranties between $1 million and $1,999,999; a guaranty may not exceed 85% for guaranties between $500,000 and $999,999; and a guaranty may not exceed 90% for guaranties between $30,000 and $499,999. The financial assistance in the form of a guaranty shall never exceed 90% of the total loan or $5 million, whichever is less. Furthermore, the Authority may make, guaranty, insure, coinsure, or reinsure a loan up to the limits described above for a single eligible business which already has an active loan and will consider the guaranty percentage under which the active loan was guarantied, if the action is approved by a two-thirds vote of the members present. The Authority may provide financial assistance to the entity designated to carry out the boll weevil eradication program in accordance with the Texas Agriculture Code, 74.1011 and to a state agency or institution of higher education for an agricultural-related business in amounts approved by the board. The maximum direct loan is $250,000 as established in 28.16(a) of this title (relating to Criteria for a Direct Loan) ].

(c) [ (d) ] Extent of participation in a guaranteed loan. The Authority shall participate in each and every guaranteed loan in an amount not to exceed 80% of the Loan Guaranty Amount, not to exceed the limits in subsection (b) [ (c) ] of this section.

(d) [ (e) ] Interest. The interest rate on the guaranteed loan (not including guaranty fees) shall be the rate charged by the lender and approved by the Authority, subject to the definition established in 28.3 of this title (relating to Definitions).

(e) [ (f) ] Maturity. The maturity of the direct loan, participation purchased, or loan guaranty approved by the Authority must not exceed the useful life of the collateral and may be negotiated between the Authority, the lender, and/or the borrower.

(f) [ (g) ] Security. Loans should [ must ] be secured by collateral of a type, amount, and value which, when considered with other criteria, affords reasonable assurance of repayment.

(g) [ (h) ] Fees. The board has adopted the following fee schedule which will be used as a guideline to calculate the fees payable by the applicant to the Authority within 10 days of the initial funding of the loan. However, the Authority may approve fees as it deems appropriate on a case-by-case basis. A nonrefundable application fee will be required with the qualified application. If the qualified application is approved, the application fee will be credited as part of the total fees charged. Any and all legal fees incurred by the board in issuing a direct loan or loan guaranty will be an obligation of the applicant.

Figure: 4 TAC §28.10(g)

(h) [ (i) ] Closing the financial assistance provided. The lender, the applicant, and the commissioner of agriculture or his designee may attend the verification and signing of the closing documents as prepared by staff and/or the lender.

(i) [ (j) ] Reporting requirements for loan guaranties and participations purchased.

(1) The lender shall report in writing to the Authority as follows:

(A) notification if the loan is placed on a watch list;

(B) quarterly monitoring reports indicating loan balance, repayment status, and any credit changes reported to lender as indicated on the prescribed form; and

(C) notification in the event of any breaches or defaults in the terms, conditions, or covenants of the note, loan agreement, or other loan documents.

(2) The applicant shall provide annual financial statements including a balance sheet, income statement and cash flow statement; payment receipts of personal property taxes; and a statement of the annual employment of the applicant's business to the lender. Annual financial statements should be audited but, if not, they must be signed by the owner of the project. Annual employment shall be expressed in terms of annual full-time equivalent positions. The lender shall submit these reports to the Authority. If necessary, the Authority may request other reports or documentation reasonably necessary for an assessment of the applicant's compliance with the program.

§28.11.Criteria for Approval of Financial Assistance.

(a) - (c) (No change.)

(d) The Authority has adopted a Credit Policy and Procedures document which contains additional criteria and guidelines used by the Authority in the loan guaranty review and approval process. The Credit Policy and Procedure document is adopted by reference herein. Copies may be obtained from the Texas Agricultural Finance Authority [ and Agribusiness Development Division ], Texas Department of Agriculture, P.O. Box 12847, Austin, Texas 78711[ , (512) 475-1619 ].

§28.15.Criteria for Approval of a Participation Purchased.

(a) Eligibility requirements. The Authority may purchase an undivided interest in a loan made by a lender provided that:

(1) - (2) (No change.)

(3) the undivided interest purchased by the Authority does not exceed the maximum amount as stated in § 28.10(b) [ 28.10(c) ] of this title (relating to General Terms and Conditions of the Authority's Financial Assistance); and

(4) (No change.)

(b) - (e) (No change.)

(f) Board review. Staff will submit a report on each participation to be purchased to the board, which shall include a recommendation for approval or denial. If staff determines that a participation does not meet the minimum underwriting standards established in the Credit Policy and Procedures, then staff shall notify the lender in writing to this effect, and shall advise the lender of which minimum underwriting standards are not met. The lender may resubmit the participation application for further consideration at such time as the minimum standards are met. Approval of a participation will be by a majority of [ a quorum of the ] board members present [ , except for the approval requirements identified in Section 28.10(c) ] of this title.

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 June 3, 2005.

TRD-200502240

Dolores Alvarado Hibbs

Deputy General Counsel

Texas Department of Agriculture

Earliest possible date of adoption: July 17, 2005

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


4 TAC §28.16

(Editor's note: The text of the following section proposed for repeal will not be published. The section may be examined in the offices of the Texas Department of Agriculture or in the Texas Register office, Room 245, James Earl Rudder Building, 1019 Brazos Street, Austin.)

The repeal of §28.16 is proposed under the Texas Agriculture Code (the Code), §58.022, which provides the Authority's Board with authority to adopt rules and procedures necessary for the administration of its programs.

The Texas Agriculture Code, Chapter 58 is affected by the proposal.

§28.16.Criteria for a Direct Loan.

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 June 3, 2005.

TRD-200502241

Dolores Alvarado Hibbs

Deputy General Counsel

Texas Department of Agriculture

Earliest possible date of adoption: July 17, 2005

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


Chapter 30. TEXAS AGRICULTURAL FINANCE AUTHORITY: YOUNG FARMER LOAN GUARANTEE PROGRAM

Subchapter A. GENERAL PROCEDURES

4 TAC §30.12

The Board of Directors (the Board) of the Texas Agricultural Finance Authority (the Authority) of the Texas Department of Agriculture proposes an amendment to §30.12, concerning the Authority's Young Farmer Loan Guarantee Program. The amendment is proposed to correct information regarding where copies of the Authority's credit policy may be obtained.

Robert Wood, Assistant Commissioner for Rural Economic Development, has determined that for the first five year period that the amended section is in effect there will be no anticipated fiscal implications to state or local government as a result of enforcing or administering the proposal.

Mr. Wood has also determined that for each year of the first five years the amended section is in effect, the public benefit anticipated as a result of enforcing the amended section will be to provide correct information to interested persons wishing to review the Authority's credit policy. There is no anticipated effect on micro businesses or small businesses. There will be no anticipated economic costs to persons required to comply with the proposal.

Comments on the proposal may be submitted to Robert Wood, Assistant Commissioner for Rural Economic Development, Texas Department of Agriculture, P.O. Box 12847, 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 amendment to §30.12 is proposed under the Texas Agriculture Code, §58.022, which provides the Authority's Board with the authority to adopt rules and procedures necessary for the administration of its programs, including the Young Farmer Loan Guarantee Program.

The Texas Agriculture Code, Chapter 58 is affected by the proposed amendment.

§30.12.Criteria for Approval of a Loan Guarantee.

(a) - (b) (No change.)

(c) The Authority has adopted a Credit Policy and Procedures document which contains additional criteria and guidelines used by the Authority in the loan guarantee review and approval process. The Credit Policy and Procedure document is adopted by reference herein. Copies may be obtained from the Texas Agricultural Finance Authority [ and Agribusiness Division ], Texas Department of Agriculture, P.O. Box 12847, Austin, Texas, 78711[ , (512) 475-1619 ].

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 June 3, 2005.

TRD-200502242

Dolores Alvarado Hibbs

Deputy General Counsel

Texas Department of Agriculture

Earliest possible date of adoption: July 17, 2005

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


Part 2. TEXAS ANIMAL HEALTH COMMISSION

Chapter 41. FEVER TICKS

4 TAC §§41.1, 41.8, 41.9

The Texas Animal Health Commission proposes to amend Chapter 41, which is entitled "Fever Ticks". The proposed amendments to Chapter 41 include: (1) an amendment to §41.1, "Definition of Terms", to define treatment methods for control of fever ticks on free ranging wildlife and exotics. This proposal will provide a mechanism to ensure that deer, and other wildlife capable of carrying fever ticks, are treated for fever ticks when present in an infested pasture or when a pasture is vacated; (2) an amendment to §41.8, "Dipping and treatment of livestock", to require treatment of free ranging wildlife and exotics for control of fever ticks utilizing treatment methods approved by the commission. Native deer and some exotic species are known to be hosts for the Boophilus tick and natural movement of these animals from a quarantine area or quarantined premises to clean areas could promote and propagate the spread of these ticks. In order to ensure that deer or exotics do not spread the tick into a clean pasture or area this amendment will provide the authority to require and specify the mechanism for treatment, should treatment of free ranging wildlife or exotics be necessary to eliminate fever ticks from an area or premises; (3) The Commission is also adding language to §41.9, "Vacation and Inspection of a Premise," regarding the release of restrictions on infested premises that are vacated. The proposed amendments to this section clarify the starting date for the vacation period, reclassify vacated premises to check premises at the end of the vacation period, specify when the check premises restrictions will be released and provide requirements for treatment of free ranging wildlife and exotics on vacated premises. The proposed amendments to this section are necessary for the following reasons: (a) recent empirical data and field trial results indicate that fever ticks can survive longer on vacated pastures (pastures on which there are no known hosts for fever ticks) than previously thought; and (b) Deer and some exotics may continue to serve as hosts for ticks in vacated pastures.

FISCAL NOTE

Mr. Mike Jensen, Assistant Executive Director of Administration, Texas Animal Health Commission, has determined for the first five-year period the rules are in effect, there will be no additional fiscal implications for state or local government as a result of enforcing or administering the rules. The commission does not believe the requirements create an adverse impact on a small businesses or micro-businesses because the prohibition is limited to areas where there is exposure to ticks.

PUBLIC BENEFIT NOTE

Mr. Jensen also has determined that for each year of the first five years the rules are in effect, the public benefit anticipated as a result of enforcing the rules will ensure, that if needed, deer and other animals capable of hosting the ticks are treated in order to eradicate the pest in an area or premise exposed to ticks, therefore there may be effects to individuals required to comply with the rules as proposed.

LOCAL EMPLOYMENT IMPACT STATEMENT

In accordance with Government Code, §2001.022, this agency has determined that the adopted rule will not impact local economies.

TAKINGS ASSESSMENT

The agency has determined that the proposed governmental action will not affect private real property. These proposed rules are an activity related to the handling of animals, including requirements concerning testing, movement, inspection, identification, reporting of disease, and treatment, in accordance with 4 TAC §59.7, and are, therefore, compliant with the Private Real Property Preservation Act in Government Code, Chapter 2007. Furthermore this activity, in part, involves the movement of animals considered to be property of the state and not private property.

REQUEST FOR COMMENT

Comments regarding the proposed amendments may be submitted to Dolores Holubec, Texas Animal Health Commission, 2105 Kramer Lane, Austin, Texas 78758, by fax at (512) 719-0721 or by e-mail at comments@tahc.state.tx.us.

STATUTORY AUTHORITY

The amendments are proposed under the Texas Agriculture Code, Chapter 167, §167.003, which provides for general powers and duties of the commission to eradicate fever ticks and provides authority for adopting the necessary rules to fulfill those duties. Section 167.004 authorizes the commission, by rule, to define which animals can be classified as exposed to ticks. Section 167.006 authorizes the commission to designate for tick eradication any county or part of a county that the Commission believes contains ticks. Section 167.007 authorizes the Commission to conduct tick eradication in the free area. Section 167.021, entitled "General Quarantine Power" provides that "the commission may establish quarantines on land, premises, and livestock as necessary for tick eradication." Section 167.022, entitled "Quarantine of Tick Eradication Area" provides the commission authority to designate a county or part of a county for tick eradication. Section 167.023, entitled "Quarantine of Free Area" provides the commission authority to establish quarantines in the Free Area. Section 167.024, entitled "Movement In or From Quarantined Area" provides the requirement to get appropriate authorization and compliance with the requirements prior to movement. Section 167.032 provides the commission may restrict movement of commodities which are capable of carrying ticks.

The Commission is vested by statute, §161.041(a), with the requirement to protect all livestock, domestic animals, and domestic fowl from disease. The Commission is authorized, by §161.041(b), to act to eradicate or control any disease or agent of transmission for any disease that affects livestock. If the Commission determines that a disease listed in §161.041 of this code or an agent of transmission of one of those diseases exists in a place in this state among livestock, or that livestock are exposed to one of those diseases or an agent of transmission of one of those diseases, the Commission shall establish a quarantine on the affected animals or on the affected place. That is found in §161.061. As a control measure, the Commission by rule may regulate the movement of animals. The Commission may restrict the intrastate movement of animals even though the movement of the animals is unrestricted in interstate or international commerce. The Commission may require testing, vaccination, or another epidemiologically sound procedure before or after animals are moved. That is found in §161.054. That authority is found in §161.048. A person is presumed to control the animal if the person is the owner or lessee of the pen, pasture, or other place in which the animal is located and has control of that place; or exercises care or control over the animal. That is under §161.002.

Section 161.007 provides that if a veterinarian employed by the Commission determines that a communicable disease exists among livestock, domestic animals, or domestic fowl or on certain premises or that livestock, domestic animals, or domestic fowl have been exposed to the agency of transmission of a communicable disease, the exposure or infection is considered to continue until the Commission determines that the exposure or infection has been eradicated through methods prescribed by rule of the commission. Section 161.005 provides that the commission may authorize the executive director or another employee to sign written instruments on behalf of the commission. A written instrument, including a quarantine or written notice, signed under that authority has the same force and effect as if signed by the entire Commission.

No other statutes, articles or codes are affected by the proposed amendments.

§41.1.Definition of Terms.

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

(1) - (4) (No change.)

(5) Dipping or treating--If the Commission requires livestock to be dipped, the livestock shall be submerged in a vat. A spray-dip machine may be used in areas where a vat is not reasonably available. Careful hand spraying may be used for easily restrained horses and show cattle, and when specifically authorized, certain zoo or domestic animals. Livestock unable to go through a dipping vat because of size or physical condition may be hand sprayed. The treatment must be paint marked so that it can be identified for at least 17 days. If the Commission determines that free-ranging wildlife and exotic animals, which are capable of hosting fever ticks, require treatment, they shall be treated by methods and for the duration of time approved by the Commission.

(6) - (20) (No change.)

(21) Tick--Any tick capable of transmitting bovine Babesiosis [ Babesiasis ] (cattle tick fever or bovine piroplasmosis).

(22) (No change.)

§41.8.Dipping and treatment of livestock.

(a) Dipping and treatment of livestock; general. All dipping prescribed in this section must be done under the supervision of a representative authorized by the commission. The commission will authorize for use in dipping only those dips that have been approved by the Animal and Plant Health Inspection Service of the United States Department of Agriculture and the Texas Animal Health Commission for use in official dipping to rid animals of the tick. The concentration of the dipping chemical used must be maintained in the percentage specified for official use by means of the approved vat management techniques established for the use of the agent; or, if applicable, by an officially approved vat side test or field test of the commission. The owner or caretaker of the livestock is responsible for presenting the livestock to the dipping vat, dipping the livestock, and removing the livestock, and will provide such labor as is necessary to perform all required functions. If the Commission requires livestock to be dipped, the livestock shall be submerged in a vat. A spray-dip machine may be used in areas where a vat is not reasonably available. Careful hand spraying may be used for easily restrained horses and show cattle, and when specifically authorized, certain zoo or domestic animals. Livestock unable to go through a dipping vat because of size or physical condition may be hand sprayed. The treatment must be paint marked so that it can be identified for at least 17 days. The Commission may specifically authorize other treatment methods for free-ranging wildlife or exotic species.

(b) Required Dipping or treatment of Livestock.

(1) - (6) (No change.)

(7) Free-ranging wildlife or exotics that are found on infested, exposed or vacated premises, and which are capable of hosting fever ticks will be treated by methods approved by the Commission and for the length of time specified by the Commission.

§41.9.Vacation and Inspection of a Premise.

(a) Vacation of premise. Upon the removal of all livestock from a premise, the premise remains classified as before for the period shown on Table I (Pasture Vacation Schedule, South of Highway 90) or Table II (Pasture Vacation Schedule, North of Highway 90), whichever is applicable. The starting date is the date of the first clean dipping during which [ when ] 100% of the livestock on the premise have been dipped and continued on an official dipping schedule until removed from the premise. The premise will be reclassified to a Check Premise, as provided by subsection (b) of this section, upon the expiration of the time shown in Tables I (Pasture Vacation Schedule, South of Highway 90) or II (Pasture Vacation Schedule, North of Highway 90), whichever is applicable . The Check Premise restrictions will be released [ , or ] when determined by the commission that the premise has no infestation.

(b) - (c) (No change.)

(d) Free-ranging wildlife and exotic animals that are found on vacated pastures or check premises and which are capable of hosting fever ticks shall be treated by methods approved by the Commission and for the length of time specified by the Commission.

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 June 6, 2005.

TRD-200502261

Gene Snelson

General Counsel

Texas Animal Health Commission

Earliest possible date of adoption: July 17, 2005

For further information, please call: (512) 719-0700


Chapter 51. ENTRY REQUIREMENTS

4 TAC §51.8

The Texas Animal Health Commission (commission) proposes amendments to Chapter 51, §51.8, regarding Cattle. The amendment is in regards to entry requirements for cattle for tuberculosis.

The commission recently adopted a new §51.8(b)(3) to require that all sexually intact dairy cattle originating from a tuberculosis free state, or area, that are 6 months of age or older need to be officially identified, and are accompanied by a certificate stating they were negative to an official tuberculosis test conducted within 60 days prior to the date of movement. The requirement also included that heifers which are less than six months of age must enter on a entry permit obtained from the Commission and be moved to a designated facility where the animals will be held until they are tested negative at the age of six months. The original intent was to require "any sexually intact animals" that enter Texas under 6 months of age (without a test), to be restricted until they receive a negative test upon reaching 6 months of age. The Commission is proposing this amendment to correct this oversight.

FISCAL NOTE

Mr. Mike Jensen, Deputy Director for Administration and Finance, Texas Animal Health Commission, has determined for the first five-year period the rule is in effect, there will be no additional fiscal implications for state or local government as a result of enforcing or administering the rule. The commission does not believe the requirements create an adverse impact on a small businesses or micro-businesses. The impact to individuals is limited to ensuring that the health status of these animals is known which protects the livestock industry in this state.

PUBLIC BENEFIT NOTE

Mr. Jensen also has determined that for each year of the first five years the rule is in effect, the public benefit anticipated as a result of enforcing the rule will be clear and concise regulations which can be found in one chapter.

LOCAL EMPLOYMENT IMPACT STATEMENT

In accordance with Government Code, §2001.022, this agency has determined that the adopted rule will not impact local economies and, therefore, did not file a request for a local employment impact statement with the Texas Workforce Commission.

TAKINGS ASSESSMENT

The agency has determined that the proposed governmental action will not affect private real property. The proposed rule is an activity related to the handling of animals, including requirements concerning testing, movement, inspection, identification, reporting of disease, and treatment, in accordance with 4 TAC, §59.7, and are, therefore, compliant with the Private Real Property Preservation Act in Government Code, Chapter 2007.

REQUEST FOR COMMENT

Comments regarding the proposed amendments may be submitted to Delores Holubec, Texas Animal Health Commission, 2105 Kramer Lane, Austin, Texas 78758, by fax at (512) 719-0721 or by e-mail at "comment@tahc.state.tx.us."

STATUTORY AUTHORITY

The amendment is proposed under the following statutory authority as found in Chapter 161 of the Texas Agriculture Code. The commission is vested by statute, §161.041(a), with the requirement to protect all livestock, domestic animals, and domestic fowl from disease. The commission is authorized, by §161.041(b), to act to eradicate or control any disease or agent of transmission for any disease that affects livestock. If the commission determines that a disease listed in §161.041 of this code or an agent of transmission of one of those diseases exists in a place in this state among livestock, or that livestock are exposed to one of those diseases or an agent of transmission of one of those diseases, the commission shall establish a quarantine on the affected animals or on the affected place. That is found in §161.061.

As a control measure, the commission by rule may regulate the movement of animals. The commission may restrict the intrastate movement of animals even though the movement of the animals is unrestricted in interstate or international commerce. The commission may require testing, vaccination, or another epidemiologically sound procedure before or after animals are moved. That is found in §161.054. An agent of the commission is entitled to stop and inspect a shipment of animals or animal products being transported in this state in order to determine if the shipment originated from a quarantined area or herd; or determine if the shipment presents a danger to the public health or livestock industry through insect infestation or through a communicable or noncommunicable disease. That authority is found in §161.048.

Section 161.005 provides that the commission may authorize the executive director or another employee to sign written instruments on behalf of the commission. A written instrument, including a quarantine or written notice signed under that authority, has the same force and effect as if signed by the entire commission.

Section 161.061 provides that if the commission determines that a disease listed in §161.041 of this code or an agency of transmission of one of those diseases exists in a place in this state or among livestock, exotic livestock, domestic animals, domestic fowl, or exotic fowl, or that a place in this state where livestock, exotic livestock, domestic animals, domestic fowl, or exotic fowl are exposed to one of those diseases or an agency of transmission of one of those diseases, the commission shall establish a quarantine on the affected animals or on the affected place.

No other statutes, articles, or codes are affected by the amendments.

§51.8.Cattle.

(a) (No change.)

(b) Tuberculosis requirements.

(1) - (2) (No change.)

(3) All sexually intact dairy cattle, that are 6 months of age or older may enter provided that they are officially identified, and are accompanied by a certificate stating that they were negative to an official tuberculosis test conducted within 60 days prior to the date of entry. All sexually intact dairy cattle [ Heifers ] that are less than six months of age must obtain a entry permit from the Commission, as provided in §51.3(a) of this title, to a designated facility where the animals will be held until they are tested negative at the age of six months. Animals which originate from a tuberculosis accredited herd, and/or animals moving directly to an approved slaughtering establishment are exempt from the test requirement. In addition all sexually intact dairy cattle originating from a state or area with anything less than a tuberculosis free state status shall be tested negative for tuberculosis in accordance with the appropriate requirements for states or areas with a status as provided by Title 9 of the Code of Federal Regulations, Part 77, Sections 77.10 through 77.19, for that status, prior to entry with results of the test recorded on the certificate of veterinary inspection.

(4) - (7) (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 June 6, 2005.

TRD-200502262

Gene Snelson

General Counsel

Texas Animal Health Commission

Earliest possible date of adoption: July 17, 2005

For further information, please call: (512) 719-0700


Chapter 59. GENERAL PRACTICES AND PROCEDURES

4 TAC §59.11

The Texas Animal Health Commission proposes amendments to Chapter 59, entitled General Practices and Procedures by adding a new §59.11 for issuance of a Certificate of Veterinary Inspection (CVI) and assessing a fee.

Animals being exported, or transported to locations such as livestock shows must be inspected and/or tested by an accredited veterinarian to ensure they meet the testing and certification requirements of the destination authority and that required information is recorded on a CVI. The Texas Animal Health Commission (Commission) issues CVI's to veterinarians and the veterinarians fill in the relevant information upon inspection and/or testing of the animals. Agriculture Code, §161.081(d), set the fee for a health certificate at 25 cents per certificate. HB 1363, as amended, would repeal §161.081(d) and authorize the Commission, through §161.0601, to use rulemaking to issue a certificate of veterinary inspection, as well as establish the fee for the certificate. The provisions of the bill will take effect September 1, 2005.

The Commission currently issues three types of CVIs: 1.) "Certificate of Veterinary Inspection" TAHC Form 00-10; 2.) "Equine Certificate of Veterinary Inspection" TAHC Form 99-08; and 3.) "Equine Interstate Movement Passport" TAHC Form 00-02. Currently the Commission sells the certificates in books of 25 certificates. The certificates will continue to be provided in sets of 25 certificates per book. This rule would establish a fee of five dollars ($5.00) for each certificate.

In order to make all veterinarians aware of this change the Commission will disseminate several notices to accredited veterinarians. After the Commission meeting on May 18th, a postcard size notice will be mailed to all Texas accredited veterinarians (approximately 4,000) informing them of the proposed increase in fees. This will be followed by a second notice in July with a "Q & A" letter providing additional information about the fee increase for Large Animal, Equine, and Passport Health Certificates to be effective September 1, 2005.

In order to ensure that there is an equitable transition from utilizing the old CVI's to those issued under this rule the Commission provides the following milestones. Effective September 1, 2005 the Commission will only issue new CVI's. The Commission cannot provide new CVI's until September 1, 2005. Any checks, for new CVI's, received prior to August 31, 2005 will be returned. Those CVI's issued prior to September 1, 2005 may be used and issued by an accredited veterinarian through October 31, 2005. After that date old CVI's will be considered null and void by the Commission. CVI's completed, dated and signed by an accredited veterinarian prior to October 31, 2005 will be valid for the life of the completed document as provided by regulations of the entity receiving the animals represented on the certificate. The Equine Interstate Movement Passport those will be valid for six months from the date of the issuance. Commission staff will review and monitor incoming and outgoing health certificates to ensure compliance with the transition timeline for the new CVI's.

The Commission will refund a veterinarian for every old CVI, returned and unused to TAHC, provided it is a complete set (four sheets of the exact same number per set 3 sheets for Equine Interstate Movement Passports). The Commission will only refund for these old CVI's returned with a postmark of December 31, 2005 or earlier. The refund will be in accordance with the original amount that the practitioner paid per CVI set.

FISCAL NOTE

Mr. Mike Jensen, Deputy Director for Administration and Finance, Texas Animal Health Commission, reports that subsequent to the 78th Legislative Session, TAHC established a Fee Working Group composed of industry and veterinary representatives, and agency staff to investigate various fee schemes which could generate revenue to help offset the costs of state services and regulatory functions. Assuming that HB 1363 of the 79th Legislative Session becomes law effective September, 1, 2005, the Commission proposes increasing the fee for a CVI from $0.25 to $5.00 per health certificate.

Based on this rate and assuming 4,400 books containing 25 health certificates each (110,000 certificates) are issued each fiscal year at $125 per book, the agency anticipates collecting a total of approximately $550,000 per fiscal year. The estimated net revenue from these receipts is approximately $498,020 per fiscal year calculated as $550,000 per fiscal year estimated revenue less $51,980 per fiscal year estimated expense to produce and distribute the certificates and to collect the fees. There will be no effect to small or micro businesses.

PUBLIC BENEFIT NOTE

Mr. Jensen also has determined that for each year of the first five years the rule is in effect, the public benefit anticipated as a result of enforcing the rule will allow the TAHC to maximize its appropriation of general revenue funds by applying the net revenues collected as a cost recovery mechanism to offset the costs of state services and regulatory functions that TAHC is statutorily charged to perform. Such a cost recovery mechanism advances and supports successful program implementation efforts in support of the agency's mission of:

protecting the animal industry from, and/or mitigate the effects of domestic, foreign and emerging diseases;

increasing the marketability of Texas livestock commodities at the state, national and international level;

promoting and ensuring animal health and productivity;

protecting human health from animal diseases and conditions that are transmissible to people;

preparing for and responding to emergency situations involving animals.

LOCAL EMPLOYMENT IMPACT STATEMENT

In accordance with Government Code, §2001.022, this agency has determined that the adopted rule will not impact local economies.

TAKINGS ASSESSMENT

The agency has determined that the proposed governmental action will not affect private real property. The proposed rule is an activity related to the handling of animals, including requirements concerning testing, movement, inspection, identification, reporting of disease, and treatment, in accordance with 4 TAC §59.7, and are, therefore, compliant with the Private Real Property Preservation Act in Government Code, Chapter 2007.

REQUEST FOR COMMENT

Comments regarding the proposed new rule may be submitted to Dolores Holubec, Texas Animal Health Commission, 2105 Kramer Lane, Austin, Texas 78758, by fax at (512) 719-0721 or by e-mail at comments@tahc.state.tx.us.

STATUTORY AUTHORITY

HB 1363, as amended, would repeal §161.081(d) and establish §161.0601 which authorizes the Texas Animal Health Commission through rulemaking to issue and to set the fee for a certificate of veterinary inspection for the transport of domestic and exotic livestock and fowl. The provisions of the bill would take effect September 1, 2005. Furthermore the Commission is vested by statute, §161.041(a), with the requirement to protect all livestock, domestic animals, and domestic fowl from disease. The Commission is authorized, by §161.041(b), to act to eradicate or control any disease or agent of transmission for any disease that affects livestock. If the Commission determines that a disease listed in §161.041 of this code or an agent of transmission of one of those diseases exists in a place in this state among livestock, or that livestock are exposed to one of those diseases or an agent of transmission of one of those diseases, the Commission shall establish a quarantine on the affected animals or on the affected place. That is found in §161.061. As a control measure, the Commission by rule may regulate the movement of animals. The Commission may restrict the intrastate movement of animals even though the movement of the animals is unrestricted in interstate or international commerce. The Commission may require testing, vaccination, or another epidemiologically sound procedure before or after animals are moved. That is found in §161.054. That authority is found in §161.048.

No other statutes, articles or codes are affected by the proposed new rule.

§59.11.Certificate of Veterinary Inspections.

(a) All Veterinarians, licensed and accredited in Texas, that utilize a certificate of veterinary inspection (CVI) for livestock, exotic livestock or domestic fowl shall utilize a current CVI issued by the Commission on or after September 1, 2005. All certificates printed and issued prior to September 1, 2005 will be null and void for issuance after October 31, 2005.

(b) The Commission shall assess a fee of five ($5.00) dollars for each individual CVI. CVI's will be sold in books of twenty five (25) certificates per book.

(c) The CVI may be procured from the Commission through a written request accompanied by a check or money order, for the full amount to cover the requested number of CVI's. The written request shall be sent to TAHC, P.O. Box 12966, Austin, Texas 78711-2966. The Commission may also accept phone orders when paid for by an accepted credit card. Phone orders may be made by calling 1-800-550-8242.

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 June 6, 2005.

TRD-200502263

Gene Snelson

General Counsel

Texas Animal Health Commission

Earliest possible date of adoption: July 17, 2005

For further information, please call: (512) 719-0700