Montana Administrative Register Notice 4-16-233 No. 9   05/06/2016    
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In the matter of the adoption of New Rules I through III and amendment of ARM 4.16.201 and 4.16.509 pertaining to growth through agriculture (GTA)







TO: All Concerned Persons


          1. On June 3, 2016, at 10:00 a.m., the Department of Agriculture will hold a public hearing in Room 225 of the Scott Hart Building at 302 N. Roberts, Helena, Montana, to consider the proposed adoption and amendment of the above-stated rules.


2. The Department of Agriculture will make reasonable accommodations for persons with disabilities who wish to participate in this rulemaking process or need an alternative accessible format of this notice. If you require an accommodation, contact the Department of Agriculture no later than 5:00 p.m. on May 16, 2016, to advise us of the nature of the accommodation that you need. Please contact Benjamin Tiller, Department of Agriculture, P.O. Box 200201, Helena, Montana, 59620-0201; telephone (406) 444-0132; fax (406) 444-9442; or e-mail btiller@mt.gov.


3. The rules as proposed to be adopted provide as follows:



(1)  Prior to making an initial loan or grant determination, the council shall:

(a)  direct the department to ensure applications are completed as required by ARM 4.16.503;

(b)  review all complete applications and the accompanying materials required by ARM 4.15.503;

(c)  determine whether each proposed project meets the requirements of 90-9-308 and 90-9-311, MCA;

(d)  consider information provided by the applicant to the council at a meeting designated for such purpose;

(e)  determine whether grant applicants meet the requirements of 90-9-310, MCA; and

(f)  rank the projects according to the information reviewed.

(2)  After the council has reviewed and ranked the projects, it shall make funding decisions based on eligibility, funds availability, and project rankings.

(3)  The council may provide preference to projects within targeted areas.


          AUTH:          90-9-202, MCA

          IMP:             90-9-202, MCA


REASON:  The council is required by 90-9-203, MCA to adopt rules to be followed by the council in its review process prior to making a loan or grant. The proposed process ensures that the Department of Agriculture may continue to aid the council in administrative functions, while the funding determinations are made by the council. It provides potential loan and grant applicants with a clear explanation of the council's decision-making process.


NEW RULE II POST-DISBURSEMENT MONITORING OF LOANS AND GRANTS (1)  Each recipient of a loan or grant must provide the council with the following reports:

(a)  semiannual reports due on July 31 and January 31 of each year in which a loan or grant is active; and 

(b)  a final report due within 30 days of completion of the project. 

(2) Each report shall describe, at a minimum:

(a)  project objectives achieved;

(b)  expenditures of grant and/or loan funds;

(c)  receipt of matching funds;

(d)  economic impact of the project;

(e)  projected future activities; and

(f)  other information deemed necessary by the council or department to adequately monitor or administer the project.

(3) The department shall monitor the reports for compliance with rules, statutes, and contracts, and report any issues of noncompliance to the council at the second and fourth quarterly meeting of each fiscal year.

(4) If the council determines after review of the department report that a loan or grant requires additional monitoring, it shall direct the department to gather necessary information and report back to the council at the next regularly scheduled meeting.

(5) The council may, at a loan or grant recipient's request, defer or forgive a loan and any accrued interest if the council determines that such action is in the best interest of the recipient, does not conflict with the purposes of the Act, and will not jeopardize the financial integrity of the growth through agriculture program.

(6)  The council will not consider a request to defer or forgive a loan and any accrued interest unless the request is received prior to six months after the recipient is first notified by the department that the recipient has missed an obligation under the loan or grant contract.


          AUTH:          90-9-203, MCA

          IMP:             90-9-202, 90-9-203, MCA


REASON: The proposed rule is required by 90-9-203, MCA. The rule sets forth minimum reporting requirements for all grant and loan recipients. These reports are designed to enable the department and the council to gather the information necessary to ensure council funds are used for the intended purposes. The reports will also aid the department in gathering statistics on the impact council grants and loans have on the recipient companies. The rule also addresses situations in which recipients are unable to meet their obligations under the grant or loan contracts. The rule ensures that delinquent accounts are brought to the attention of the council, which then has the authority to forgive the recipient's obligation or to direct the department to continue collection.



(1)  If a recipient of a loan or grant fails to meet a condition of the loan or grant, the department shall notify the recipient in writing.

(2)  The council shall consider the reported default at a regularly scheduled quarterly meeting and consider whether to:

          (a)  grant requests for forgiveness made pursuant to [NEW RULE II];

          (b)  forgive performance of a grant obligation;

(c)  defer performance obligations;

          (d)  modify the loan or grant agreement;

          (e)  convert a grant to a loan;

          (f)  convert a loan or grant to the default interest rate; or

          (g)  take other action not inconsistent with statute or rule.


          AUTH:          90-9-203, MCA

          IMP:             90-9-202, 90-9-203, MCA


REASON: The proposed rule is required by 90-9-203, MCA. The rule is necessary to inform loan or grant recipients of the council's remedies if the recipient fails to comply with the loan or grant terms. It sets forth the most likely forms of recourse, however does not limit the council's options if the chosen recourse is consistent with current rules and laws.


4. The rules as proposed to be amended provide as follows, new matter underlined, deleted matter interlined:


4.16.201 DEFINITIONS (1) through (1)(b) remain the same

(2)  "Matching Funds" means both cash or in-kind match.  In-kind match is calculated at the actual market price of the services rendered but no more than 25 dollars an hour.  All in-kind match(es) must be project-specific as opposed to the normal operation of an ongoing business. The credit for in-kind match is limited to ten percent of the total match proposed.


AUTH:          90-9-202 90-9-203, MCA

IMP:             90-9-902 90-9-203, MCA


REASON: The council has determined that in-kind match should be limited to ensure that the distinction between in-kind match and payments for "normal operation of an ongoing business" is maintained. The limitation also helps to ensure the financial success of the applicants by helping ensure the recipient adds tangible assets and outside, nonpayroll resources to its operation.


4.16.509 APPLICATION LIMIT (1) remains the same.

(2)  A company may not receive more than $100,000 in grant funding in any 18-month period.


AUTH:          90-9-203, MCA

           IMP:             90-9-203, MCA


REASON:  The council is required to maintain a rule limiting the amount of loans or grants that any company may receive or apply for over a given period of time. The current rule addresses the number of applications within a given period of time, however it does not address a dollar amount. Section 90-9-309, MCA, provides the limits contemplated with respect to loans. That statute limits the total loan amount to $100,000 in a nine-month period. However, similar restrictions do not appear in the grant section found at 90-9-310, MCA. That statute sets a maximum grant amount at $50,000.   However, there is no time restriction. The council has determined that applying a limit to the dollar amount of grants within a given time period is necessary to meet the requirements of 90-9-203, MCA. Given the riskier nature of grant funding when compared to loan funding, the council has determined that no more than $100,000 in grant funding may be given to one company within any 18-month period. This will ensure that grant recipients do not become dependent on grant funding to cash flow their operations.


          5. Concerned persons may submit their data, views, or arguments either orally or in writing at the hearing. Written data, views, or arguments may also be submitted to: Benjamin Tiller, Department of Agriculture, P.O. Box 200201, Helena, Montana, 59601; telephone (406) 444-0132; fax (406) 444-9442; or e-mail btiller@mt.gov, and must be received no later than 5:00 p.m., June 3, 2016.


6. Benjamin Tiller, Department of Agriculture, has been designated to preside over and conduct this hearing.


7. The department maintains a list of interested persons who wish to receive notices of rulemaking actions proposed by this agency. Persons who wish to have their name added to the list shall make a written request that includes the name, e-mail, and mailing address of the person to receive notices and specifies for which program the person wishes to receive notices. Notices will be sent by e-mail unless a mailing preference is noted in the request. Such written request may be mailed or delivered to the contact person in 5 above or may be made by completing a request form at any rules hearing held by the department.


8. An electronic copy of this proposal notice is available through the Secretary of State's web site at http://sos.mt.gov/ARM/Register.  The Secretary of State strives to make the electronic copy of the notice conform to the official version of the notice, as printed in the Montana Administrative Register, but advises all concerned persons that in the event of a discrepancy between the official printed text of the notice and the electronic version of the notice, only the official printed text will be considered.  In addition, although the Secretary of State works to keep its web site accessible at all times, concerned persons should be aware that the web site may be unavailable during some periods, due to system maintenance or technical problems.


9. The bill sponsor contact requirements of 2-4-302, MCA, do not apply to this rulemaking.


10. With regard to the requirements of 2-4-111, MCA, the department has determined that the amendment and adoption of the above-referenced rules will not significantly and directly impact small businesses.



/s/ Benjamin C. Tiller                             /s/ Ron de Yong                         

Benjamin C. Tiller                                  Ron de Yong

Rule Reviewer                                       Director

                                                              Montana Department of Agriculture


Certified to the Secretary of State April 25, 2016.


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