BILL NUMBER: AB 2257 CHAPTERED 07/16/04 CHAPTER 167 FILED WITH SECRETARY OF STATE JULY 16, 2004 APPROVED BY GOVERNOR JULY 15, 2004 PASSED THE SENATE JULY 2, 2004 PASSED THE ASSEMBLY APRIL 29, 2004 AMENDED IN ASSEMBLY MARCH 22, 2004 INTRODUCED BY Assembly Member Salinas FEBRUARY 19, 2004 An act to amend Sections 77225, 77226, 77229, 77230, 77251, 77252, 77253, 77254, 77255, 77258, 77262, 77264, 77265, 77285, 77289, 77296, 77297, 77298, 77311, 77312, 77313, 77314, 77316, 77317, 77318, 77319, 77320, 77331, 77332, 77333, 77352, 77371, 77373, 77374 of, and to add Section 77260.5 to, the Food and Agricultural Code, relating to the California Pepper Commission. LEGISLATIVE COUNSEL'S DIGEST AB 2257, Salinas. The California Pepper Commission. Existing law provides that there is in the state government the California Pepper Commission. Existing law provides that the commission shall be composed of 5 pepper producers, 5 pepper handlers, and shall include one public member. Existing law provides that the term of office of all members and alternate members of the commission, shall be 3 years from the beginning of the marketing season in the year of their election and until qualified successors are elected, as specified. Existing law defines a marketing year as the period beginning May 1 of any year and extending through the last day of April of the next year. Existing law also provides that terms of office of each member and alternate member of the commission shall be limited to 3 consecutive terms. This bill would provide that a marketing year means the period beginning March 1 of any year and extending through the last day of February of the next year. This bill would also provide that the commission shall be composed of 5 districts reflecting similar total production among the districts, the boundaries of which shall be established by the commission and secretary, as specified. This bill would provide that the commission may also include 2 at-large members elected by the elected producers and handlers on the commission from among individuals who have a financial interest in the California pepper industry but who are not necessarily producers or handlers. This bill would provide that an at-large member or their alternate shall have all the powers, rights, and privileges of any other member of the commission or their alternate. This bill would provide that the term of office of all members shall be 3 years beginning on the first day of February following his or her election. This bill would also eliminate provisions providing that the terms of office of each member and alternate member of the commission be limited to 3 consecutive terms. This bill would expand provisions requiring persons who handle peppers in California to keep records, as specified, to include persons who do not meet the tonnage threshold for handlers, as specified. This bill would make other conforming changes. Because this bill would expand the definition of a crime, it would impose a state-mandated local program. The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement. This bill would provide that no reimbursement is required by this act for a specified reason. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Section 77225 of the Food and Agricultural Code is amended to read: 77225. (a) The commission shall be composed of five districts. The boundaries of each district shall be established by a two-thirds vote of the full commission, that is concurred in by the secretary. District boundaries shall be established to reflect similar total production among the districts in order to ensure proper representation by producers. These boundaries need not coincide with county lines. (b) The boundaries of any district may be changed by a two-thirds vote of the full commission, that is concurred in by the secretary, when necessary to maintain similar total production among the districts and to ensure proper representation by producers. SEC. 2. Section 77226 of the Food and Agricultural Code is amended to read: 77226. (a) "Handler" means any person engaged in marketing of peppers which the person has produced, purchased, or acquired from a producer, or is marketing on behalf of a producer whether as owner, agent, employee, broker, or otherwise. "Handler" does not include any person who handles less than 100 tons of fresh peppers, or the equivalent in dehydrated peppers or pepper seed, in a marketing year. (b) "Handle" means to engage in the business of a handler. (c) The tonnage threshold specified in subdivision (a) may be increased by a two-thirds vote of the commission. (d) The tonnage threshold specified in subdivision (a) may be decreased only if approved by referendum pursuant to Sections 77311 to 77316, inclusive. For purposes of a referendum conducted pursuant to this subdivision, the terms "producer" and "handler" in Section 77311 to 77316, inclusive, includes persons who would become subject to this chapter if the referendum is approved. SEC. 3. Section 77229 of the Food and Agricultural Code is amended to read: 77229. "Marketing year" or "fiscal year" means the period beginning March 1 of any year and extending through the last day of February of the next year. SEC. 4. Section 77230 of the Food and Agricultural Code is amended to read: 77230. (a) "Producer" means any person in this state who grows peppers for market and who, upon request, provides proof of commodity sale. "Producer" does not include any person who grows less than 10 acres of peppers, or produces less than 100 tons of fresh peppers, or the equivalent in dry peppers or pepper seed, in the current marketing year. (b) The acreage and tonnage thresholds specified in subdivision (a) may be decreased only if approved by referendum pursuant to Section 77311 to 77316, inclusive. For purposes of a referendum conducted pursuant to this subdivision, the terms "producer" and "handler" in Sections 77311 to 77316, inclusive, include persons who would become subject to this chapter if the referendum is approved. SEC. 5. Section 77251 of the Food and Agricultural Code is amended to read: 77251. (a) There is in the state government the California Pepper Commission. The commission shall be composed of five pepper producers, five pepper handlers, one public member, and may include two at-large members at the discretion of the commission. (b) Five producers, one from each district, shall be elected by and from producers within the respective districts. Five handlers, representing the major categories of pepper handling as determined by the commission, shall be elected by and from other qualified handlers engaged in the same activity. The determination of what the major categories of pepper handling activities are, and any subsequent change to the categories shall be made by a two-thirds vote of the full commission that is concurred in by the secretary. (c) The public member shall be appointed to the commission by the secretary from nominees recommended by the commission. (d) Two at-large members may be elected by the producers and handlers on the commission from among individuals who have a financial interest in the California pepper industry but who are not necessarily producers or handlers as defined in this article. (e) The secretary and other appropriate individuals as determined by the commission shall be ex officio members of the commission. SEC. 5.1. Section 77252 of the Food and Agricultural Code is amended to read: 77252. (a) The secretary may require the commission to correct or cease any existing activity or function that is determined by the secretary not to be in the public interest or that is in violation of this chapter. (b) If the commission refuses or fails to cease these activities or functions or to make corrections required by the secretary, the secretary may, upon written notice, suspend all or a portion of the activities or functions of the commission until the time that the cessation or correction of activities or functions as required by the secretary has been accomplished by the commission. (c) Actions of the commission in violation of the written notice are without legal force or effect. The secretary, to the extent feasible, shall issue the written notice prior to the commission entering into any contractual relationship affecting the existing or proposed activities or functions that are the subject of the written notice. (d) Upon service of the written notice, the secretary shall notify the commission in writing of the specific acts that the secretary determines are not in the public interest or are in violation of this chapter, the secretary's reasons for requiring a cessation or correction of specific existing or proposed activities or functions, and the secretary's recommendations as to what will make the activities or functions acceptable. SEC. 5.2. Section 77253 of the Food and Agricultural Code is amended to read: 77253. The commission or the secretary may bring an action for judicial relief from the secretary's written notice, or from noncompliance by the commission with the written notice, as the case maybe, in a court of competent jurisdiction, which may issue a temporary restraining order, permanent injunction, or other applicable relief. SEC. 5.3. Section 77254 of the Food and Agricultural Code is amended to read: 77254. When the secretary is required to concur in a decision of the commission, the secretary shall give his or her response to the commission within 15 working days from notification of the decision. The response may be a request that additional information be provided. SEC. 5.4. Section 77255 of the Food and Agricultural Code is amended to read: 77255. The commission shall reimburse the secretary for all expenditures incurred by the secretary in carrying out his or her duties and responsibilities pursuant to this chapter. However, a court may, if it finds that the secretary acted arbitrarily or capriciously in restricting the activities or functions of the commission, relieve the commission of the responsibility for payment of the secretary's legal costs with regard to that action. SEC. 5.5. Section 77258 of the Food and Agricultural Code is amended to read: 77258. Any vacancy on the commission occurring by the failure of the public member or alternate member to continue in his or her position due to a change in status making the member ineligible to serve, or due to death, removal, resignation, or disqualification, shall be filled for the unexpired portion of the term by the secretary from nominees recommended by the commission. That person shall fulfill all the qualifications set forth in this article as required for the member whose office he or she is to fill. SEC. 6. Section 77260.5 is added to the Food and Agricultural Code, to read: 77260.5. Any at-large member elected to the commission, and his or her alternate shall have a financial interest in the California pepper industry and shall have all the rights and privileges of any other member or alternate member, respectively, of the commission. SEC. 7. Section 77262 of the Food and Agricultural Code is amended to read: 77262. The term of office of all members and alternate members of the commission, except ex officio members, shall be three years, beginning on the first day of February following his or her election and until qualified successors are elected. SEC. 8. Section 77264 of the Food and Agricultural Code is amended to read: 77264. A quorum of the commission shall be seven voting members of the commission. An alternate producer or handler member, respectively, may serve in the absence of a member if the member's alternate is absent and the action is necessary to establish a quorum. Unless specified otherwise in this chapter, the vote of a majority of members present at a meeting at which there is a quorum shall constitute the act of the commission. SEC. 8.1. Section 77265 of the Food and Agricultural Code is amended to read: 77265. The secretary or his or her representatives shall be notified and may attend each meeting of the commission and any committee meeting of the commission. SEC. 8.2. Section 77285 of the Food and Agricultural Code is amended to read: 77285. The commission may employ a person to serve at the pleasure of the commission as president and chief executive officer of the commission, and other personnel, including legal counsel, necessary to carry out this chapter. The commission may retain a management firm or the staff from any board, commission, or committee of the state or federal government to perform the functions prescribed by this section under the control of the commission. If the person engages in any conduct that the secretary determines is not in the public interest or that is in violation of this chapter, the secretary shall notify the commission of the conduct and request that corrective and, if appropriate, disciplinary action be taken by the commission. In the event that the commission fails or refuses to correct the situation or to take disciplinary action satisfactory to the secretary, the secretary may suspend or discharge the person. SEC. 8.3. Section 77289 of the Food and Agricultural Code is amended to read: 77289. The commission shall keep accurate books, records, and accounts of all of its dealings which shall be subject to an annual audit by an auditing firm selected by the commission with the concurrence of the secretary. A summary of the audit shall be reported to all producers and handlers, a copy of which shall also be submitted to the department. In addition, the secretary may, as he or she determines necessary, conduct or cause to be conducted a fiscal and compliance audit of the commission. SEC. 8.4. Section 77296 of the Food and Agricultural Code is amended to read: 77296. The commission shall establish an annual budget according to accepted accounting practices. The budget shall be concurred in by the secretary prior to disbursement of funds, except for disbursements made pursuant to Section 77286. SEC. 8.5. Section 77297 of the Food and Agricultural Code is amended to read: 77297. The commission shall submit to the secretary for his or her concurrence, an annual statement of contemplated activities authorized pursuant to this chapter. SEC. 8.6. Section 77298 of the Food and Agricultural Code is amended to read: 77298. The commission and the secretary shall keep confidential and shall not disclose, except when required in a judicial proceeding, all lists of producers and handlers in their possession. SEC. 8.7. Section 77311 of the Food and Agricultural Code is amended to read: 77311. (a) Within 30 days of the effective date of this chapter, the secretary shall have established a list of producers and handlers eligible to vote on implementation of this chapter. In establishing the list, the secretary may require that producers, handlers, and others submit the names and mailing addresses of all producers and handlers. The secretary also may require that the information provided include the quantity of peppers produced by each producer and the quantity of peppers handled by each handler, or, in the alternative, may establish procedures for receiving the information at the time of the referendum vote specified in Section 77312. The request for the information shall be in writing and shall be filed within 10 days following receipt of the request. (b) Any producer or handler whose name does not appear upon the appropriate list may have his or her name placed on the list by filing with the secretary a signed statement identifying himself or herself as a producer or handler. Failure to be on the list does not exempt the person from paying assessments and does not invalidate any industry votes conducted pursuant to this article. (c) Proponents and opponents of the commission may contact producers and handlers on the lists in a form and manner prescribed by the secretary so long as all expenses associated with the contacts are paid in advance. SEC. 8.8. Section 77312 of the Food and Agricultural Code is amended to read: 77312. This chapter, except as necessary to conduct an implementation referendum vote, shall not become operative until the secretary finds as follows in a referendum vote conducted by the secretary: (a) At least 40 percent of the total number of producers from the list established by the secretary pursuant to this article have participated and that either of the following has occurred: (1) Sixty-five percent of the producers who voted in the referendum voted in favor of this chapter, and the producers so voting marketed a majority of the total quantity of peppers in the preceding marketing year by all of the producers who voted in the referendum. (2) A majority of the producers who voted in the referendum voted in favor of this chapter, and the producers so voting marketed 65 percent or more of the total quantity of peppers in the preceding marketing year by all of the producers who voted in the referendum. (b) At least 40 percent of the total number of handlers from the list established by the secretary pursuant to this article, have participated, and that either of the following has occurred: (1) Sixty-five percent of the handlers who voted in the referendum voted in favor of this chapter, and the handlers so voting handled a majority of the total quantity of peppers in the preceding marketing year by all of the handlers who voted in the referendum. (2) A majority of the handlers who voted in the referendum voted in favor of this chapter, and the handlers so voting handled 65 percent or more of the total quantity of peppers in the preceding marketing year by all of the handlers who voted in the referendum. SEC. 8.9. Section 77313 of the Food and Agricultural Code is amended to read: 77313. The secretary shall use fresh weight in calculating the volume voted pursuant to Section 77312. For converting dry weight and seed weight to fresh equivalent weight the secretary shall use the following ratios: 5.3 to 1 for dry weight and 220 to 1 for seed weight. SEC. 8.91. Section 77314 of the Food and Agricultural Code is amended to read: 77314. The secretary shall establish a period in that to conduct the referendum which shall not be less than 10 days nor more than 60 days in duration, and may prescribe additional procedures that may be necessary to conduct the referendum. If the initial period established is less than 60 days, the secretary may extend the period, however, the total referendum period may not exceed 60 days. SEC. 8.92. Section 77316 of the Food and Agricultural Code is amended to read: 77316. If the secretary finds that a favorable vote has been given as provided in Section 77312, the secretary shall certify and give notice of the favorable vote to all affected producers and handlers whose names and addresses are on file with the secretary. SEC. 8.93. Section 77317 of the Food and Agricultural Code is amended to read: 77317. If the secretary finds that a favorable vote has not been given as provided in Section 77312, the secretary shall certify and declare this chapter inoperative. The director may conduct another implementation referendum vote one year or more after the previous vote has been taken. SEC. 8.94. Section 77318 of the Food and Agricultural Code is amended to read: 77318. Upon certification of the commission, the secretary shall do the following: (a) Contact all producers in each district by mail or call meetings of producers in each district for the purpose of nominating and electing persons to the commission. All producers on the secretary's list shall be given written notice of any election meetings at least 10 days prior to the meeting date. To be eligible for election to the commission, producer nominees must present to the secretary a nomination petition with the signatures of at least three eligible producers from the district from which the nominee is seeking election. (b) Contact all handlers by mail or by calling a meeting for the purpose of nominating and electing persons to the commission. All handlers on the secretary's list shall be given written notice of any election meetings at least 10 days prior to the meeting date. To be eligible for election to the commission, handler nominees must present to the secretary a nomination petition with the signatures of at least two eligible handlers who are engaged in the same type of handler activity as the handler seeking nomination. SEC. 8.95. Section 77319 of the Food and Agricultural Code is amended to read: 77319. Subsequent to the first election of members of the commission pursuant to this chapter, persons to be elected to the commission shall be selected pursuant to nomination and election procedures that are established by the commission with the concurrence of the secretary. SEC. 8.96. Section 77320 of the Food and Agricultural Code is amended to read: 77320. (a) Prior to the referendum vote conducted by the secretary pursuant to Section 77312, the proponents of the commission shall deposit with the secretary the amount that the secretary deems necessary to defray the expenses of preparing the necessary lists and information and conducting the vote. (b) Any funds not used in carrying out Section 77312 shall be returned to the proponents of the commission who deposited the funds with the secretary. (c) Upon establishment of the commission, the commission is authorized to reimburse the proponents of the commission for any funds deposited with the secretary that were used in carrying out Section 77312 and for any legal expenses and costs incurred in establishing the commission. SEC. 9. Section 77331 of the Food and Agricultural Code is amended to read: 77331. (a) The commission shall establish the assessment for the following marketing year not later than March 1 of each year, or as soon thereafter as is possible. (b) The assessment for the 1989-90 marketing year shall not exceed twenty-five cents ($0.25) per ton for producers and twenty-five cents ($0.25) per ton for handlers on all peppers grown and shipped on a wet pound or ton basis by producers and handled by handlers. Thereafter, the assessment shall not exceed one dollar ($1) per ton for producers and one dollar ($1) per ton for handlers. (c) The assessment for the 1989-90 marketing year shall not exceed $0.00065 per pound for producers and $0.00065 per pound for handlers on all peppers grown and shipped on a dry pound basis by producers and handled by handlers. Thereafter, the assessment shall not exceed a maximum of $0.0026 per pound for producers and $0.0026 per pound for handlers. (d) The assessment for the 1989-90 marketing year shall not exceed two cents ($0.02) per pound for producers and two cents ($0.02) per pound for handlers on all planting seed grown by producers and handled by handlers. Thereafter, the assessment shall not exceed a maximum of eight cents ($0.08) per pound for producers and eight cents ($0.08) per pound for handlers. (e) The handler shall deduct the producer assessment from amounts paid by him or her to the producer and shall be a trustee of these funds and the assessment owed by the handler until they are paid to the commission at the time and in the manner prescribed by the commission. (f) A fee greater than the amount provided in this section may not be charged unless and until a greater fee is approved pursuant to the procedures specified in Section 77312. SEC. 10. Section 77332 of the Food and Agricultural Code is amended to read: 77332. (a) Unless specified otherwise, this chapter does not apply to persons who grow peppers only for the producer's home use or who grow or produce less than the number of acres or tons established pursuant to Section 77230 of fresh peppers, or the equivalent in dry peppers or pepper seed, in the current marketing year. However, any such person who markets peppers shall file an affidavit with the commission establishing that the person grows less than 10 acres of peppers or produces less than 100 tons of fresh peppers, or the equivalent in dry peppers or pepper seed. The commission shall then determine whether the affidavit should be approved. (b) Unless specified otherwise, this chapter does not apply to any person who handles less than the number of tons of fresh peppers established pursuant to Section 77226, or the equivalent in dehydrated peppers or pepper seed, in the current marketing year. However, any person who is handling peppers shall file an affidavit with the commission specifying that the person handles less than the number of tons of peppers established pursuant to Section 77226. The commission shall, upon receipt of the affidavit, determine whether this chapter applies to that person. SEC. 11. Section 77333 of the Food and Agricultural Code is amended to read: 77333. Every person who handles peppers in California, including persons who handle less than the tonnage threshold established pursuant to Section 77226, shall keep a complete and accurate record of all peppers handled with the name of the producer whose peppers were handled. The records shall be in simple form and contain information as the commission shall prescribe. The records shall be preserved by the handler for a period of two years and shall be offered and submitted for inspection at any reasonable time upon written demand of the commission or its duly authorized agent. SEC. 12. Section 77352 of the Food and Agricultural Code is amended to read: 77352. The commission shall establish procedures for the purpose of according individuals aggrieved by its actions or determinations an informal hearing before the commission, or before a committee of the commission designated for this purpose. Appeals from decisions of the commission may be made to the secretary. The determination of the director shall be subject to judicial review upon petition filed with the appropriate superior court. SEC. 13. Section 77371 of the Food and Agricultural Code is amended to read: 77371. Between May 1, 1993, and April 30, 1994, the commission shall cause a referendum to be conducted among producers and handlers to determine whether the operations of this chapter shall be approved and continued in effect. A favorable vote under this chapter shall be found if the secretary determines from the referendum that a majority of the eligible producers and handlers voting in the referendum voted in favor of continuing the operations of this chapter. If the secretary finds that a favorable vote has been given, the secretary shall so certify and this chapter shall remain effective. If the secretary finds that a favorable vote has not been given, the secretary shall so certify and declare the operations of this chapter suspended upon expiration of the marketing season ending April 30, 1994. Thereupon, the operation of the commission shall be concluded and funds distributed in the manner provided in Section 77375. No bond or security shall be required for any such referendum. SEC. 14. Section 77373 of the Food and Agricultural Code is amended to read: 77373. (a) Upon a finding by a two-thirds vote of the full commission that the operation of this chapter has not tended to effectuate its declared purposes, the commission may recommend to the secretary that the operation of this chapter be suspended. However, any suspension shall not become effective until the expiration of the current marketing year. (b) The secretary shall, upon receipt of the recommendation, or may, after a public hearing to review a petition filed with the director requesting a suspension signed by 20 percent of the producers by number who produced not less than 20 percent of the volume of peppers in the immediately preceding marketing year, and 20 percent of the handlers by number who handled not less than 20 percent of the volume of peppers in the immediately preceding marketing year, hold a referendum among the producers and handlers to determine if the operations of the commission shall be suspended. However, the secretary shall not hold a referendum as a result of the petition unless the petitioner shows, by the weight of evidence, that the operation of this chapter has not tended to effectuate its declared purposes. (c) The secretary shall establish a referendum period, that shall not be less than 10 days nor more than 60 days in duration. The director may prescribe additional procedures as may be necessary to conduct the referendum. At the close of the established referendum period, the secretary shall tabulate the ballots filed during the period. The secretary shall suspend operation of this chapter if the director finds either one of the following has occurred: (1) At least 40 percent of the total number of producers from the list established by the director have participated in the referendum: (A) Sixty-five percent or more of the producers who voted in the referendum voted in favor of suspension, and the producers so voting marketed a majority of the total quantity of peppers in the preceding marketing year by all of the producers who voted in the referendum. (B) A majority of the producers who voted in the referendum voted in favor of suspension, and the producers so voting marketed 65 percent or more of the total quantity of peppers in the preceding marketing year by all of the producers who voted in the referendum. (2) At least 40 percent of the total number of handlers from the list established by the director have participated in the referendum: (A) Sixty-five percent or more of the handlers who voted in the referendum voted in favor or suspension, and the handlers so voting handled a majority of the total quantity of peppers in the preceding marketing year by all of the handlers who voted in the referendum. (B) A majority of the handlers who voted in the referendum voted in favor of suspension, and the handlers so voting handled 65 percent or more of the total quantity of peppers in the preceding marketing year by all of the handlers who voted in the referendum. SEC. 15. Section 77374 of the Food and Agricultural Code is amended to read: 77374. (a) The secretary shall terminate the commission at the end of the then current marketing year if the director finds that the termination of the commission is requested in writing, within a 90-day period, by at least 51 percent of the eligible producers that produce at least 51 percent of the total volume of peppers and at least 51 percent of the eligible handlers that handle at least 51 percent of the total volume of peppers. (b) The person or persons originating the request shall file a written notice with the secretary in a manner that establishes the date the request is initiated. Any person may withdraw his or her name from the petition requesting the termination prior to the time the request is presented to the secretary. (c) The signatures to the petition requesting the termination need not all be appended to one sheet of paper. Each person signing the petition shall specify his or her place of business in a manner that will enable the location to be readily ascertained. (d) The petition shall bear a copy of the notice of intention to terminate. Signatures shall be secured within the time limit specified in this section. SEC. 16. No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution.