PROPOSED RULEMAKING
[7 PA. CODE CH. 130c]
Sustainable Agriculture Programs
[29 Pa.B. 1496] The Department of Agriculture (Department), under the specific authority conferred by section 15(1) of the Sustainable Agriculture Act (act) (3 P. S. §§ 2101--2117), proposes to establish Chapter 130c to read as set forth in Annex A. Section 4(a) of the act (3 P. S. § 2104(a)) directs the Department to establish a program to promote sustainable agriculture. Sections 4(b), 8 and 12 (3 P. S. §§ 2104(b), 2108 and 2112) of the act delineate the duties of the Department and direct the Department to establish loan programs and grant programs to encourage the practice of sustainable agriculture.
The proposed regulations will delineate the objectives of the loan and grant programs and the general conditions for obtaining a sustainable agriculture loan or grant. In addition, the proposed regulations will establish submission, processing and review procedures, eligibility and evaluation criteria, notification and recordkeeping requirements and enforcement mechanisms for the sustainable agriculture loan program, the sustainable agriculture grant program and the alternative crop grant program. Sustainable agriculture emphasizes farm practices which are ecologically beneficial, ensure and improve the quality of the soil and water for future generations and make the best use of on-farm resources thereby eliminating or reducing the need for off-farm inputs, such as fertilizers and pesticides. The loan and grant programs are intended to promote and encourage the use and development of sustainable agriculture practices.
The major features of the proposed regulations are summarized as follows:
Summary of Major Features
Subchapter A. General Provisions Proposed § 130c.1. (relating to objectives) sets forth the overall objectives and purpose of the sustainable agriculture act.
Proposed § 130c.2. (relating to definitions) sets forth the definitions of proposed words and terms used in this chapter.
Proposed § 130c.3. (relating to records) establishes the proposed recordkeeping requirements for the recipients of sustainable agriculture loans or grants.
Proposed § 130c.4. (relating to conflict of interest) allows members of the Board to apply for sustainable agriculture loans or grants or alternative crop grants, provided they meet specified criteria.
Proposed § 130c.5. (relating to notice of disposition of application) establishes the time period in which the Board will notify an applicant of the acceptance or rejection of the application.
Proposed § 130c.6. (relating to loan or grant cancellation) will allow the Secretary to cancel a sustainable agriculture loan or grant or an alternative crop grant when a determination is made that the funds are not being used properly.
Proposed § 130c.7. (relating to right of recovery) establishes the Department's right to recover, from a sustainable agriculture loan or grant recipient or an alternative crop grant recipient, moneys not expended in accordance with the act, the loan or grant agreement or this proposed chapter.
Proposed § 130c.8. (relating to deficits) limits the Department's financial obligation to the amount of the sustainable agriculture loan or grant or the alternative crop grant.
Subchapter B. Sustainable Agriculture Loan Program Proposed § 130c.11. (relating to objective) sets forth the proposed objectives of this subchapter, which are to establish the procedures and requirements of the sustainable agriculture loan program.
Proposed § 130c.12. (relating to funding) sets forth the requirement of availability of funding, delineates the sources from which funding for the sustainable agriculture loan program may be obtained and establishes the requirement that all funds pertaining to the sustainable agriculture loan program must be deposited into the revolving loan account.
Proposed § 130c.13. (relating to amount of loan) delineates the maximum loan amounts allowed under the sustainable agriculture loan program.
Proposed § 130c.14. (relating to general conditions) establishes the interest rate to be charged on sustainable agriculture loans and delineates the maximum term of a loan and the payment plans available. This section also contains the sustainable agriculture loan agreement, security, default and verification requirements and establishes the Department's right to recall the entire principal balance of a sustainable agriculture loan plus interest due.
Proposed § 130c.15. (relating to submission of application) sets forth the sustainable agriculture loan application process, including the deadline for submission of loan applications.
Proposed § 130c.16. (relating to processing of applications) establishes the procedure which the Department will follow when processing a sustainable agriculture loan application and delineates the duties of the executive director and the Board regarding the processing of sustainable agriculture loan applications.
Proposed § 130c.17. (relating to applicant eligibility) establishes the criteria which individuals, family farm partnerships, family farm corporations and corporate farms must meet to be considered for a loan under the sustainable agriculture loan program.
Proposed § 130c.18. (relating to review of a loan application) sets forth the criteria which the Board will use when reviewing and evaluating sustainable agriculture loan applications.
Proposed § 130c.19. (relating to eligible uses) delineates the agricultural practices for which sustainable agriculture loan proceeds may and may not be used.
Subchapter C. Sustainable Agriculture Grant Programs and Alternative Crop Grant Programs Proposed § 130c.31. (relating to objectives) sets forth the proposed objectives of this subchapter, which are to establish the procedures and requirements of the sustainable agriculture grant program and the alternative crop grant program.
Proposed § 130c.32. (relating to funding) sets forth the requirement of availability of funding and delineates the sources from which funding for the sustainable agriculture grant program and the alternative crop grant program may be obtained.
Proposed § 130c.33. (relating to amount of grant) delineates the maximum dollar value of any grant which can be awarded under the sustainable agriculture grant program or alternative crop grant program.
Proposed § 130c.34. (relating to general conditions) regarding the sustainable agriculture grant program and the alternative crop grant program discusses the requirements of a grant agreement and sets forth default and verification conditions and requirements.
Proposed § 130c.35. (relating to submission of application) sets forth the application process for the sustainable agriculture grant program and alternative crop grant program, including the deadline for submission of grant applications and limitations.
Proposed § 130c.36. (relating to processing of applications) establishes the procedure which the Department will follow when processing a sustainable agriculture grant program application or an alternative crops grant program application and delineates the duties of the executive director and the Board regarding the processing of the grant applications.
Proposed § 130c.37. (relating to applicant eligibility) establishes the criteria which individuals, family farm partnerships, family farm corporations, corporate farms and nonprofit educational institutions must meet to be considered for a grant under the sustainable agriculture grant program or the alternative crop grant program.
Proposed § 130c.38. (relating to review of a grant application) sets forth the criteria which the Board will use when reviewing and evaluating sustainable agriculture grant applications and alternative crop grant applications.
Proposed § 130c.39. (relating to eligible uses) delineates the agricultural practices for which sustainable agriculture grant and alternative crop grant proceeds may and may not be used.
Fiscal Impact
Commonwealth The proposed regulations do not create any fiscal impact or impose any costs on the Commonwealth, which are not already contained in the act itself. The act and these proposed regulations are intended to have a positive fiscal impact on the Commonwealth, through increased return on investment to the producer/farmer, increased soil and water quality and other ecological benefits which accrue from reducing or eliminating the need for fertilizers and pesticides.
Political Subdivisions The proposed regulations will not have any direct fiscal impact on political subdivisions.
Private Sector The proposed regulations will not have any direct fiscal impact on the private sector except for the possible positive effects discussed with regard to their fiscal impact on the Commonwealth.
General Public The proposed regulations will not have any direct fiscal impact on the general public, although the general public may benefit from the decreased use of pesticides and fertilizers and the increased soil and water quality these proposed regulations seek to promote.
Paperwork Requirements
These proposed regulations will result in increased paperwork requirements of the recipients of sustainable agriculture loans and grants and alternative crop grants. The recipients of the loans and grants will be required to keep detailed records of all sustainable agriculture activities and projects undertaken using the loan or grant moneys. The Department will incur increased paperwork requirements through tracking and recordkeeping requirements and review of applications related to the sustainable agriculture loan program, the sustainable agriculture grant program and the alternative crop grant program.
Regulatory Review
Under section 5(a) of the Regulatory Review Act (71 P. S. § 745.5(a)), on March 5, 1999, the Department submitted a copy of these proposed regulations to the Independent Regulatory Review Commission (IRRC) and to the Chairpersons of the House and Senate Agriculture and Rural Affairs Committees. In addition to submitting the proposed regulations, the Department has provided IRRC and the Committees with a copy of a detailed Regulatory Analysis Form prepared by the Department in compliance with Executive Order 1996-1 ''Improving Government Regulations.'' A copy of this material is available to the public upon request. If IRRC has an objection to any portion of the proposed regulations, it will notify the Department within 10 days of the close of the Committees' review period. The notification shall specify the regulatory review criteria which have not been met by that portion. The Regulatory Review Act specifies detailed procedures for review, prior to final publication of the regulations, by the Department, the General Assembly and the Governor of objections raised.
Contact Person
Interested persons are invited to submit written comments regarding the proposed regulations within 30 days following publication in the Pennsylvania Bulletin. Comments are to be submitted to Lyle Forer, Director, Bureau of Plant Industry, Department of Agriculture, 2301 North Cameron Street, Harrisburg, PA 17110-9408, (717) 772-5203.
Effective Date
The proposed regulations will become effective upon final adoption.
SAMUEL E. HAYES,
SecretaryFiscal Note: 2-115. No fiscal impact; (8) recommends adoption. Grant moneys could come from a line item specifically appropriated in the budget, farmland preservation, United States Department of Agriculture and programs from private industry.
Annex A
TITLE 7. AGRICULTURE
PART V. BUREAU OF PLANT INDUSTRY
CHAPTER 130c. SUSTAINABLE AGRICULTURE PROGRAMS Subch.
A. GENERAL PROVISIONS B. SUSTAINABLE AGRICULTURE LOAN PROGRAM C. SUSTAINABLE AGRICULTURE GRANT PROGRAMS AND ALTERNATIVE CROP GRANT PROGRAMS
Subchapter A. GENERAL PROVISIONS Sec.
130c.1. Objectives. 130c.2. Definitions. 130c.3. Records. 130c.4. Conflict of interest. 130c.5. Notice of disposition of application. 130c.6. Loan or grant cancellation. 130c.7. Right of recovery. 130c.8. Deficits. § 130c.1. Objectives.
The purpose of the act is to:
(1) Establish a program for sustainable agriculture practices and to create the Board.
(2) Define the powers and duties of the Department and the Board.
(3) Provide for sustainable agriculture loan and grant programs and an alternative crop grant program.
(4) Provide for funding.
§ 130c.2. Definitions.
The following words, phrases and terms, when used in this chapter, have the following meanings, unless the context clearly indicates otherwise:
Act--The Sustainable Agriculture Act (3 P. S. §§ 2101--2117)
Agricultural activity or farming--The commercial production of agricultural crops, livestock or livestock products, poultry products, milk or dairy products or fruits and other horticultural products.
Alternative crop--Crops not normally grown on an annual or rotational basis in this Commonwealth. The term may include crops used to replenish soil nutrients, crops used for animal or human consumption or crops used to reduce reliance on fuel, agricultural chemicals or synthetic fertilizer.
Applicant--A farm enterprise applying for a loan or grant.
Beneficial insects--Insects which, during their life cycle, are effective pollinators of plants, are parasites or predators of pests, or are otherwise beneficial to farming.
Board--The Board of Sustainable Agriculture.
Corporate farm--A corporation formed for the purpose of engaging in agricultural activity or farming which is not a family farm corporation.
Creditworthy--The ability to pay debts as they become due, to offer sufficient security and collateral and having no history of any previous default on loans specified in § 130c.14(g) (relating to general conditions).
Department--The Department of Agriculture of the Commonwealth.
Executive Director--The person appointed by the Secretary to advise the Board. The Executive Director's duties include:
(i) Reviewing, evaluating and submitting loan applications to the Board.
(ii) Identifying sustainable agriculture practices.
(iii) Integrating and coordinating sustainable agriculture activities and education.
(iv) Developing information systems.
(v) Promoting sustainable agriculture practices.
Family farm corporation--A corporation formed for the purpose of farming in which the majority of the voting stock is held by and the majority of the stockholders are natural persons or their spouses or other persons related to the natural persons or their spouses and at least one of the majority stockholders is residing on or actively operating or managing the farm and none of the stockholders of which are corporations.
Family farm partnership--A general partnership entered into for the purpose of farming, having no more than three unrelated members and having at least one member residing on or actively operating or managing the farm.
Farm enterprise--A natural person, family farm corporation, family farm partnership engaged in farming or a corporate farm or nonprofit educational institution.
Farmland--Land in this Commonwealth that is capable of supporting the commercial production of agricultural crops, livestock or livestock products, poultry products, milk or dairy products, fruit or other horticultural products.
Fund--Sustainable Agriculture Fund--A fund created by section 7 of the act (3 P. S. § 2107) and established by the Department which shall receive all revenues and appropriations, allowed under the act. The Fund shall pay all costs, except administrative expenses, related to the Program. This Fund shall also contain the revolving loan account created by section 9 of the act (3 P. S. § 2109).
Individual--A natural person, meaning a single person as distinguished from a group or class, and as distinguished from a partnership, corporation or association.
Nonprofit educational institution--A State-owned or State-related college or university in this Commonwealth or any nonprofit organization, association or group in this Commonwealth which:
(i) Has demonstrated a capacity to conduct agricultural research or education programs.
(ii) Has experience in research or education in sustainable agricultural practices.
(iii) Qualifies as a nonprofit organization under section 501(c) of the Internal Revenue Code of 1986 (26 U.S.C.A. § 501(c)).
Pest--An insect, rodent, nematode, fungus, weed or any other form of terrestrial or aquatic plant or animal life or virus, bacteria or other microorganism (except viruses, bacteria, or other microorganisms on or in living man or other living animals) which the Administrator of the Environmental Protection Agency declares to be a pest under section 25(c)(1) of the Federal Insecticide, Fungicide and Rodenticide Act of 1947 (7 U.S.C.A. § 136w(1)).
Pesticide--
(i) A substance or mixture of substances intended for preventing, destroying, repelling or mitigating a pest.
(ii) A substance or mixture of substances intended for use as a plant regulator, defoliant or desiccant.
Program--The Sustainable Agriculture Loan Program.
Project--A specific plan set forth on a loan or grant application submitted under the act and this chapter, describing sustainable agriculture or alternative crop practices to be implemented using loan or grant funds received under that application.
Secretary--The Secretary of Agriculture of the Commonwealth or a designee.
Sustainable agriculture--An integrated system of plant and animal production practices having a site-specific application that will over the long term:
(i) Satisfy human food and fiber needs.
(ii) Enhance environmental quality and the natural resource base upon which the agricultural economy depends.
(iii) Make the most efficient use of nonrenewable resources and on-farm resources and integrate, where appropriate, natural biological cycles and controls.
(iv) Sustain the economic viability of farm operations.
(v) Enhance the quality of life for farmers and society as a whole.
§ 130c.3. Records.
(a) A recipient of grant or loan funds under the act and this chapter shall maintain books, records and other evidence pertinent to expenditures and costs incurred in connection with the sustainable agriculture project to which those funds are applied. The books and records shall be maintained according to generally accepted accounting principles.
(b) Financial records, supporting documents, statistical records and other records pertaining to any loan or grant made under the act shall be retained by the recipient for 3 years following the year in which the loan or grant expires.
(c) The records and documents shall be available for inspection or audit at reasonable times by the Department or its authorized agents.
§ 130c.4. Conflict of interest.
A member of the Board may apply for a sustainable agriculture loan or grant or an alternative crop grant provided all decisions regarding the loan or grant application are subject to section 3(j) of the Public Official and Employee Ethics Act (65 Pa.C.S. § 1103(j)) and if the action does not violate the State Adverse Interest Act (71 P. S. §§ 776.1--776.8), or 4 Pa. Code Chapter 7, Subchapter K (relating to code of conduct for appointed officials and State employes).
§ 130c.5. Notice of disposition of application.
The Board will provide an applicant written notice of the acceptance or rejection of the application by mailing a notice within 90 days of receipt of the application. If the application is incomplete, the Board will follow the action prescribed by § 130.16 or § 130.36 (relating to processing of loan applications; and processing of grant applications).
§ 130c.6. Loan or grant cancellation.
A sustainable agriculture loan or grant or an alternative crop grant may be canceled by the Secretary upon a determination that the funds are not being spent or utilized in accordance with the act, the loan or grant agreement or this chapter.
§ 130c.7. Right of recovery.
The Department has the right to make a claim for and receive from the loan or grant recipient moneys not expended in accordance with the act, the loan or grant agreement or this chapter. When a loan or grant recipient defaults, the Department has the right to make a claim for and receive from the loan or grant recipient, the principle balance of the loan and interest incurred to date. Payment shall be due within 60 days of the written demand.
§ 130c.8. Deficits.
The Department's financial obligation is limited to the amount of the sustainable agriculture loan or grant or the alternative crop grant. The Department is not responsible for funding cost overruns incurred by loan or grant recipients.
Subchapter B. SUSTAINABLE AGRICULTURE LOAN PROGRAM Sec.
130c.11. Objective. 130c.12. Funding. 130c.13. Amount of loan. 130c.14. General conditions. 130c.15. Submission of application. 130c.16. Processing of applications. 130c.17. Applicant eligibility. 130c.18. Review of a loan application. 130c.19. Eligible uses. § 130c.11. Objective.
This subchapter establishes the requirements and procedures of the Program, under which an applicant may receive a loan to implement farming practices that emphasize sustainable agriculture in this Commonwealth.
§ 130c.12. Funding.
Sustainable agriculture loans will be made to the extent funds are made available in the revolving loan account. The revolving loan account, created under section 9 of the act (3 P. S. § 2109), shall be used to fund all sustainable agriculture loans. The revolving loan account shall be funded by appropriations made by the General Assembly and interest earned on the account and interest from loan repayment.
§ 130c.13. Amount of loan.
The maximum amount of a loan is $15,000 for farm enterprises which are not corporate farms and $25,000 for corporate farms.
§ 130c.14. General conditions.
(a) Interest rates. The interest rate on any loan shall be calculated using simple interest at the percentage rate equal to the Federal Reserve discount rate at the time the loan was made.
(b) Term of loan and rate of payment. The term of the loan may not be greater than the useful life of the project, which shall be defined in the loan agreement. The term of the loan may not exceed 7 years. Payments shall be made monthly, quarterly or semiannually, as determined by the Board.
(c) Security.
(1) Requirement. The Board will secure each loan before distributing the loan proceeds and its lien position may not be less than a second position as to liens on real estate and equipment connected with the farm operation. A loan shall be fully secured and no part of the loan may be unsecured.
(2) Valuation of collateral. Real estate security shall be valued on the basis of resale value, taking into account any liens or encumbrances on the land.
(3) Additional security. The Board may require other and additional security as it deems just and reasonable, including personal liability promissory notes with confessions of judgment, judgment notes, additional collateral, insurance and guarantees.
(d) Sale of real or personal property. If the recipient sells real or personal property connected with the project which is subject to a lien in favor of the Department or Board the principal balance of the loan and interest incurred to date shall immediately become due and payable.
(e) Verification. Within 3 months of the project completion date specified in the loan agreement, the recipient shall submit to the Department a final report which includes written receipts, records and any other pertinent documentation evidencing the total amount of the costs incurred and expenditures associated with the project. At the same time, the recipient shall also submit a narrative report describing the effectiveness of the project, the results obtained, the experience gained and the personal knowledge acquired.
(f) Failure to verify. If the required receipts, records and documentation are not submitted within the 3-month period or a portion of loan proceeds are unaccounted for, the Secretary may demand that the recipient repay the entire principal balance of the loan or a lesser amount and interest incurred to date. Payment shall be due within 60 days of the written demand.
(g) Loan agreement. A recipient shall sign a loan agreement setting forth the term and amount of the loan, a repayment schedule and other terms or conditions as the Department may reasonably require.
(h) Previous default. A loan will not be made under this chapter to an applicant who has previously defaulted on a loan made, guaranteed or insured by the Commonwealth, the Federal government or by the government of another state.
(i) Default. A recipient who fails to abide by the terms of the act, the loan agreement or this chapter shall be in default. Additionally, a loan will be declared in default if the loan recipient fails to make the required payment within 30 days of the due date. When a loan recipient defaults the Department may seek recovery of the loan funds as delineated in § 130c.7 (relating to right of recovery). A default may be waived by the Secretary, after consultation with the Board, in the event of a physical disability suffered by the recipient or other extenuating circumstances.
§ 130c.15. Submission of application.
An applicant desiring to be considered for a loan under this chapter shall submit to the Board, on a form prepared by the Board, an application for a loan. The completed application shall contain all information requested by the Board. Applications shall be postmarked by July 31 of each year.
§ 130c.16. Processing of applications.
(a) Executive Director. Upon receipt of an application for a sustainable agriculture loan and any required supporting documentation, the Executive Director will review this information for completeness and accuracy and submit it to the Board. If the Executive Director determines the application is incomplete or inaccurate, final processing of the application may be discontinued or additional data may be requested. If additional data is requested, processing of the application will cease until the applicant supplies the requested data. If additional data has been requested, the Executive Director may terminate the processing of an incomplete application when the additional data is not supplied within 30 days of a written request.
(b) Board. The Board will review all complete applications and supporting documentation and shall have the power to accept, accept with special conditions or reject applications and issue loans in accordance with the general considerations and eligibility criteria of the act and this chapter.
§ 130c.17. Applicant eligibility.
(a) Individuals. To be eligible for a loan under this chapter, the applicant, if an individual, shall be:
(1) A resident of this Commonwealth or show sufficient evidence that he intends to become a resident.
(2) An active resident operator or resident manager of the farm.
(3) Sufficiently educated, trained or experienced to carry out the project and shall certify he will participate in the project for the duration of the loan period.
(4) Able to prove and document that the farmland or farm enterprise for which the loan is acquired is located in this Commonwealth.
(5) Able to demonstrate the proceeds of the loan will be used for eligible sustainable agriculture purposes as defined in the act and this chapter and that all loan proceeds will be used exclusively for sustainable agriculture purposes in Commonwealth farming operations only.
(6) Creditworthy.
(b) Family farm partnership. To be eligible for a loan under this chapter, if a family farm partnership, the applicant's principal operating or managing partners shall:
(1) Be residents of this Commonwealth or demonstrate they intend to become residents.
(2) Have no more than three unrelated members.
(3) Have at least one member residing on or actively operating or managing the farm.
(4) Demonstrate the applicant or the principal operating or managing partners thereof have sufficient education, training or experience to carry out the sustainable agriculture project proposed in the loan application and shall certify that he or they will participate in the project for the duration of the loan period.
(5) Be able to prove and document that the farmland or farm enterprise for which the loan is acquired is located in this Commonwealth.
(6) Be able to demonstrate the proceeds of the loan will be used for eligible sustainable agriculture purposes as defined in the act and this chapter and that all loan proceeds will be used exclusively for sustainable agriculture purposes in Commonwealth farming operations only.
(7) Be creditworthy.
(c) Family farm corporation. To be eligible for a loan under this chapter, the applicant, if a family farm corporation, shall meet the following requirements:
(1) The family farm corporation shall be incorporated or registered to do business in this Commonwealth.
(2) The principal operating or managing members or shareholders of the family farm corporation shall be residents of this Commonwealth or show sufficient evidence that they intend to become residents.
(3) At least one of the majority stockholders of the family farm corporation shall reside on or actively operate or manage the farm.
(4) None of the shareholders of the family farm corporation may be corporations.
(5) The applicant or the principal operating or managing members or shareholders of the family farm corporation shall have sufficient education, training or experience to carry out the sustainable agriculture project proposed in the loan application and shall guarantee that he or they will participate in the project for the duration of the loan period.
(6) The family farm corporation shall demonstrate that the farmland or farm enterprise for which the loan is acquired is located in this Commonwealth.
(7) The family farm corporation shall be able to demonstrate the proceeds of the loan will be used for eligible sustainable agriculture purposes as defined in the act and this chapter and that all loan proceeds will be used exclusively for sustainable agriculture purposes in Commonwealth farming operations only.
(8) The family farm corporation shall be creditworthy.
(d) Corporate farm. To be eligible for a loan under this chapter, the applicant, if a corporate farm, shall meet the following requirements:
(1) The corporate farm shall be incorporated or registered to do business in this Commonwealth.
(2) The principal operating or managing members or shareholders of the corporate farm shall have sufficient education, training or experience to carry out the sustainable agriculture project proposed in the loan application and shall guarantee that the corporation will participate in the project for the duration of the loan agreement.
(3) The corporate farm shall demonstrate that the farm enterprise owns or leases farmland in this Commonwealth.
(4) The corporate farm shall be able to demonstrate the proceeds of the loan will be used for eligible sustainable agriculture purposes as defined in the act and this chapter and that all loan proceeds will be used exclusively for sustainable agriculture purposes in Commonwealth farming operations only.
(5) The corporate farm shall be creditworthy.
(e) Nonprofit educational institution. A nonprofit educational institution is not eligible for a loan.
§ 130c.18. Review of a loan application.
(a) Evaluation. The Board will evaluate the application based on the applicant's eligibility as set out in § 130c.17 (relating to applicant eligibility).
(b) Ranking. No single factor will be paramount. In rendering a decision, the Board will rank the application based on the following criteria:
(1) Financial responsibility. Financial responsibility reflecting the ability of the applicant to meet and satisfy all debt service as it becomes due and payable, continue farm operations and protect the Department against undue risk. The applicant's cash flow history, total assets controlled, equity owned, contingent liabilities and history of earnings to date are significant measures of financial responsibility.
(2) Collateral offered on available security. The requirement of collateral and collateral taken shall reasonably protect the Department, provide the necessary control of equity and repayment and leave the applicant in a position to reasonably manage the farm operation. The applicant's ability to give the Department a first position in terms of a lien on collateral or to share a first position, will be given great weight.
(3) Repayment capacity. The relevant criminal and credit history and ratings of the applicant as determined from credit reporting services and other sources.
(4) Tax obligations. The payment to date of all tax obligations due and owing by the applicant to the Commonwealth or any political subdivisions thereof.
(5) Projected use. The manner in which loan proceeds will be utilized in furthering sustainable agriculture in this Commonwealth. This encompasses the goals of the project, its impact on agriculture, the environment and society, its ability to increase farm profitability and productivity, and the potential for success of the project.
(6) Capital needs (amount of the loan). The Board will look at the capital needs of the applicant in light of available funds.
(7) Farming practices. The intent to use practices that would improve soil fertility, lower the cost of production, cause the optimum and environmentally compatible use of off-farm inputs, such as chemical or synthetic fertilizers, insecticides and herbicides, or otherwise promote sustainable agriculture. These practices are further explained and defined in § 130c.19 (relating to eligible uses).
(c) Discretion. The Board may exercise its judgment in reviewing applications and in determining the amount of each loan so that, when possible, the widest audience becomes acquainted with the principles of sustainable agriculture. This discretion may be exercised to assure loan funds are distributed to the maximum number of applicants and dispersed throughout this Commonwealth.
§ 130c.19. Eligible uses.
(a) Loan proceeds. Proceeds from a loan made under this chapter shall be used by the loan recipient solely for eligible sustainable agriculture practices. Sustainable agriculture practices include agricultural practices which:
(1) Are ecologically beneficial.
(2) Improve and ensure the soil and water quality for future generations.
(3) Enhance environmental quality and the natural resource base upon which the agricultural economy depends.
(4) Make the most efficient use of nonrenewable resources.
(5) Integrate natural biological cycles and controls, such as planting cover crops to defend against insects and weeds, using mechanical tillage to control weeds and relying on natural systems, such as biological controls and natural predators.
(6) Ensure the optimum and environmentally compatible use of or eliminate the need for the purchase of off-farm inputs such as chemical or synthetic fertilizers, insecticides and herbicides.
(7) Make the best use of on-farm labor and resources, such as using animal and plant manure to enrich soil.
(8) Sustain the economic viability of farm operations, by implementing practices which lower production costs.
(9) Enhance the quality of life for farmers and society.
(10) Satisfy human food and fiber needs.
(11) Emphasize planting a diverse array of crops and the production of alternative crops.
(b) Ineligible uses of proceeds. Loan proceeds may not be used for any of the following purposes:
(1) To refinance a portion of the total project cost or any other existing loans or debts.
(2) To finance, fund or to use in a project outside the geographic boundaries of this Commonwealth.
(3) To purchase off-farm inputs, such as chemical or synthetic fertilizers, insecticides and herbicides.
(4) To fund any educational or promotional program.
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