Trial Engrossment of Amendment A01777 to House Bill 1526 P.N. 1921, Regular Session 2019-2020

A01777

THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

No.

1526

Session of

2019

INTRODUCED BY IRVIN, CAUSER, PASHINSKI, BERNSTINE, A. DAVIS,

T. DAVIS, DeLISSIO, FEE, FREEMAN, GREINER, HANBIDGE, HERSHEY,

HICKERNELL, M. K. KELLER, KINSEY, LONGIETTI, MALAGARI,

MILLARD, MOUL, OWLETT, RADER, RYAN, SAPPEY, SAYLOR, SNYDER,

STRUZZI, WEBSTER AND ZIMMERMAN, MAY 29, 2019

REFERRED TO COMMITTEE ON AGRICULTURE AND RURAL AFFAIRS,

MAY 29, 2019

AN ACT

Amending Title 3 (Agriculture) of the Pennsylvania Consolidated

Statutes, in general provisions, providing for Agriculture-

Linked Investment Program; and making related repeals.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1. Title 3 of the Pennsylvania Consolidated Statutes

is amended by adding a chapter to read:

CHAPTER 6

AGRICULTURE-LINKED INVESTMENT PROGRAM

Sec.

601. Scope of chapter.

602. Legislative intent.

603. Definitions.

604 . General authority of commission.

605. Agriculture-Linked Investment Program.

606. Liability.

607. Funding cap.

§ 601. Scope of chapter.

This chapter relates to the Agriculture-Linked Investment

Program.

§ 602. Legislative intent.

It is the intent of the General Assembly that farmers be

offered an incentive to use agricultural best management

practices as part of an approved nutrient or odor management

plan, manure management plan, agricultural erosion and

sedimentation plan or Federal conservation plan to prevent

nutrients from washing off farm fields and animal concentration

areas and entering surface water and groundwater, to prevent

soil erosion, to reduce or mitigate odor and to conserve land,

water and related natural resources. These incentives shall take

the form of low-interest capital in exchange for the

implementation of such approved practices.

§ 603. Definitions.

The following words and phrases when used in this chapter

shall have the meanings given to them in this section unless the

context clearly indicates otherwise:

"Agricultural erosion and sedimentation plan." An erosion

and sedimentation plan established under The Clean Streams Law.

"Best management practices." A practice or combination of

practices determined by the commission to be effective and

practicable, given technological, economic and institutional

considerations, to manage and conserve land, water and related

resources and to manage nutrients to protect surface water and

groundwater, taking into account applicable nutrient

requirements for crop utilization. Best management practices

shall include, but not be limited to:

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(1) Conservation tillage.

(2) Crop rotation.

(3) Soil testing.

(4) Manure testing.

(5) Diversions.

(6) Manure storage facilities.

(7) Storm water management practices.

(8) Nutrient application.

(9) Stream bank fencing.

(10) Riparian buffers.

(11) Pasture livestock watering systems where stream

bank fencing is installed.

(12) Odor barriers.

(13) Development of a voluntary nutrient or odor

management plan.

(14) Manure management plans.

(15) Agricultural erosion and sedimentation plans.

(16) Federal conservation plans.

"Commission." The State Conservation Commission established

by the Conservation District Law.

"Conservation District Law." The act of May 15, 1945

(P.L.547, No.217), known as the Conservation District Law.

"Eligible borrower." Any person, individual, partnership,

corporation or legal entity who has an interest in property in

this Commonwealth, who engages in agricultural operation in this

Commonwealth, who has legal and financial responsibility for the

agricultural operation and who has developed an approved

nutrient management plan under Chapter 5 (relating to nutrient

management and odor management), a manure management plan or an

agricultural erosion and sedimentation plan or other commission-

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approved Federal or State conservation program or approved best

management practices.

"Lending institution." Any financial institution that is

authorized to issue commercial loans, is a State depository

approved by the Board of Finance and Revenue and enters into an

agreement with the State Treasurer for participation in the

Agriculture-Linked Investment Program. The term includes any

agricultural credit association affiliated with the Farm Credit

Bank, a federally chartered instrumentality pursuant to the Farm

Credit Act of 1971 (Public Law 92-181, 12 U.S.C. §§ 2001-2023),

as amended, that enters into an agreement with the State

Treasurer for participation in the Agriculture-Linked Investment

Program.

"Manure management plan." A manure management plan

established under The Clean Streams Law.

"Nutrient management plan." A written site-specific nutrient

plan approved by the commission or its delegated agent which

incorporates best management practices to manage the use of

plant nutrients for crop production and water quality

protection consistent with the criteria established under

Chapter 5.

"Odor management plan." A written site-specific plan

approved by the commission or its delegated agent which

incorporates best management practices to reduce or mitigate

odor consistent with the criteria established under Chapter 5.

"The Clean Streams Law." The act of June 22, 1937 (P.L.1987,

No.394), known as The Clean Streams Law.

§ 604 . General authority of commission.

(a) Authority.--The commission shall retain and may utilize

the authority established in the Conservation District Law and

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Chapter 5 (relating to nutrient management and odor management)

as well as any other authority delegated or bestowed upon the

commission in the administration of this chapter, including

money appropriated, given, granted or donated to the commission

for the purposes of this chapter. Nothing in this chapter shall

be construed to abrogate or abridge the authority of the

commission under any other statute or grant of authority.

(b) Best management practices.--

(1) The commission or the commission's delegated agent

may review applications to approve the best management

practice for which the applicant is seeking a loan under this

chapter.

(2) The commission may vote to expand the list of best

management practices to assure new technological,

environmental and scientific advances and discoveries. The

commission may consider and make available practices

established in statute or regulation to further the purposes

of this chapter. Upon establishing a new best management

practice, the commission shall submit a notice to the

Legislative Reference Bureau for publication in the

Pennsylvania Bulletin. A new best management practice shall

take effect upon publication in the Pennsylvania Bulletin.

§ 605. Agriculture-Linked Investment Program.

(a) Eligibility.--An operator who desires to receive an

Agriculture-Linked Investment Loan shall submit a loan

application to a lending institution. The application shall

contain information demonstrating all of the following:

(1) The applicant is an eligible borrower.

(2) The best management practice for which the applicant

is seeking a loan under this chapter has been approved by the

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commission or the commission's delegated agent for

implementation.

(3) Reasonable estimated costs for implementation of the

approved best management practices sought to be funded have

been provided by a project designer and concurred in by the

commission or its delegated agent.

(b) Implementation of program.--The procedures applicable to

the Agriculture-Linked Investment Program are as follows:

(1) A lending institution wishing to participate in this

program shall enter into an investment agreement with the

Commonwealth.

(2) A lending institution shall accept and review

applications for loans from eligible borrowers.

(3) A lending institution shall apply all usual lending

standards, practices and forms to determine the

creditworthiness of each eligible borrower.

(4) Upon the lending institution's approval of an

eligible borrower's loan application, the lending institution

shall submit to the State Treasurer a request for the

transfer of Agriculture-Linked Investment Loan money in an

amount equivalent to the amount of the loan approved, along

with the application and any supporting documents filed in

accordance with subsection (a).

(5) The State Treasurer shall review the submitted

request for the transfer of money and any supporting

documentation for completeness prior to the transfer of

Agriculture-Linked Investment Loan money to the lending

institution.

(6) Upon determination of the completeness of the

request for money and supporting documentation, the State

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Treasurer shall transfer to the lending institution money

equivalent to the amount of the loan approved as follows:

(i) if the lending institution is a State

depository, the State Treasurer shall deposit the money

in a collateralized certificate of deposit in the name of

the Commonwealth which, except as provided in this

chapter, conforms to the legal requirements for deposits

in State depositories; or

(ii) if the lending institution is an agricultural

credit association affiliated with the Farm Credit Bank,

the State Treasurer shall invest the money in bonds,

notes, debentures or other obligations or securities

issued by the Farm Credit Bank.

(7) The interest rate payable by lending institutions

with respect to Agriculture-Linked Investment Loan money

shall be the interest rate on deposits in State depositories

as established by the Board of Finance and Revenue from time

to time, as otherwise provided by law, reduced by any subsidy

that the commission may agree to pay under this chapter.

(8) Principal balances of Agriculture-Linked Investment

Loan money with each lending institution shall be adjusted

periodically as follows:

(i) If the lending institution is a State

depository, the principal amount of the certificate of

deposit shall be adjusted not less than semiannually to

reflect the reduction of the principal outstanding on the

loan. The interest earned plus an amount equal to the

principal repaid by the borrower shall be remitted not

less than semiannually by the lending institution to the

State Treasurer.

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(ii) If the lending institution is an agricultural

credit association in conjunction with the Farm Credit

Bank, the face value of the bonds, notes, debentures or

other obligations or securities outstanding shall, at the

option of the State Treasurer, be periodically reduced by

payment or redemption to match as nearly as possible the

amount of principal outstanding on program loans, and the

interest earned shall be payable to the State Treasurer

as due in accordance with the terms of the bonds, notes,

debentures or other obligations or securities.

borrowers shall be:

(1) Loans shall not exceed $250,000.

(2) Loans shall be amortized over a term not to exceed

seven 12 years.

(3) The interest rate shall be established at or prior

to the approval of the eligible borrower's loan application.

(4) The interest rate charged by a lending institution

to an eligible borrower shall reflect a percentage rate

reduction below the prevailing market loan interest rate

otherwise applicable to the borrower that is equal to the

percentage rate reduction, if any, below the rate set by the

Board of Finance and Revenue at which the certificates of

deposit associated with the loan are placed or at which the

investment in bonds, notes, debentures or other obligations

or securities of the Farm Credit Bank associated with the

loan are made.

(5) The interest rate charged by a lending institution

to an eligible borrower may be either a fixed rate for the

entire term of the loan or a variable rate which shall be

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adjusted semiannually to reflect changes in the interest rate

established by the Board of Finance and Revenue for deposits

in State depositories as otherwise provided by law.

(6) Except as modified by the requirements of this

chapter, a lending institution may apply its usual policies

and practices with respect to the administration, collection

and enforcement of loans issued under this chapter.

(d) Interest subsidy.--

(1) The commission, at the commission's discretion, may

enter into an agreement with the State Treasurer to subsidize

the interest rate charged to eligible borrowers under this

program with money provided to the commission under section

4(6) of the Conservation District Law or section 512

(relating to Nutrient Management Fund) .

(2) Under the agreement, the commission may designate

from time to time a block of loans of a certain aggregate

dollar amount which the commission wishes to subsidize and

shall deposit in advance into a restricted escrow account in

the State Treasury an amount estimated by the State Treasurer

to be sufficient to make the yield over a seven-year 12-year

term on the Agriculture-Linked Investment Loan money to be

transferred to lending institutions in connection with each

designated block of subsidized loans equivalent to the yield

the money otherwise would have earned at interest rates

established from time to time by the Board of Finance and

Revenue for deposits in State depositories as otherwise

provided by law. Withdrawals from the restricted escrow

account shall be made by the State Treasurer at the times

when interest becomes due and payable from lending

institutions on Agriculture-Linked Investment Loan money

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associated with subsidized loans.

(3) Among its terms, the agreement shall contain

provisions:

(i) To require the deposit of additional money into

the restricted escrow account when the parties agree that

the account balance has become insufficient to fully fund

the subsidy.

(ii) To permit the withdrawal of money from the

escrow account when the parties agree that the account

balance exceeds the amount needed to fully fund the

subsidy.

(4) The amount to be deposited into the restricted

escrow account as to each block of loans designated by the

commission shall be determined by calculating that the loans

will be amortized over seven 12 years at a fixed rate of

interest which is a number of percentage points below the

prevailing market interest rate for such loans, to be

designated by the commission.

§ 606. Liability.

(a) Immunity.--The Commonwealth, the State Treasurer and the

commission shall not be liable to a lending institution in any

manner for payment of the principal or interest on the loan made

to an eligible borrower.

(b) Loss of subsidy upon default.--A default by an eligible

borrower in repayment of an Agriculture-Linked Investment Loan

shall result in the loss of the subsidy provided under this

chapter, in which case the interest rate payable by the lending

institution shall revert to the interest rate on deposits as

established by the Board of Finance and Revenue from time to

time as otherwise established by law. As used in this

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subsection, the term "default" means a loan which is more than

90 days in arrears on payments.

chapter shall continue only so long as the commission furnishes

money to pay for it. In the event funding is exhausted or

otherwise unavailable, the interest rate payable by lending

institutions shall revert to the interest rate on deposits in

State depositories as established from time to time by the Board

of Finance and Revenue as otherwise provided by law.

§ 607. Funding cap.

The aggregate amount of Agriculture-Linked Investment loans

issued under this chapter shall not exceed $25,000,000

outstanding at any one time.

Section 2. Repeals are as follows:

(1) The General Assembly declares that the repeal under

paragraph (2) is necessary to effectuate the addition of 3

Pa.C.S. Ch. 6.

(2) The act of December 12, 1994 (P.L.900, No.130),

known as the Agriculture-Linked Investment Program Act, is

repealed.

Section 3. Continuation is as follows:

(1) The addition of 3 Pa.C.S. Ch. 6 is a continuation of

the act of December 12, 1994 (P.L.900, No.130), known as the

Agriculture-Linked Investment Program Act. The following

apply:

(i) Except as otherwise provided in 3 Pa.C.S. Ch. 6,

all activities initiated under the Agriculture-Linked

Investment Program Act shall continue and remain in full

force and effect and may be completed under 3 Pa.C.S. Ch.

6. Orders, regulations, rules and decisions which were

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made under the Agriculture-Linked Investment Program Act

and which are in effect on the effective date of section

2 of this act shall remain in full force and effect until

revoked, vacated or modified under 3 Pa.C.S. Ch. 6.

Contracts, obligations and collective bargaining

agreements entered into under the Agriculture-Linked

Investment Program Act are not affected nor impaired by

the repeal of the Agriculture-Linked Investment Program

Act.

(ii) Except as set forth in subparagraph (iii), any

difference in language between 3 Pa.C.S. Ch. 6 and the

Agriculture-Linked Investment Program Act is intended

only to conform to the style of the Pennsylvania

Consolidated Statutes and is not intended to change or

affect the legislative intent, judicial construction or

administration and implementation of the Agriculture-

Linked Investment Program Act.

(iii) Subparagraph (ii) does not apply to the

addition of the following provisions:

(A) 3 Pa.C.S. § 602.

(B) The definitions of "agricultural erosion and

sedimentation plan," "best management practices,"

"Conservation District Law," "eligible borrower,"

"manure management plan," "nutrient management plan,"

"odor management plan" and "The Clean Streams Law" in

3 Pa.C.S. § 603.

(D) 3 Pa.C.S. § 605(a)(2) and (3), (c)(1) and

(d)(1).

(2) (Reserved).

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Section 4. This act shall take effect in 60 days.

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