BILL ANALYSIS
AB 2240
Page 1
Date of Hearing: April 14, 2010
ASSEMBLY COMMITTEE ON AGRICULTURE
Cathleen Galgiani, Chair
AB 2240 (Ma) - As Amended: April 8, 2010
SUBJECT : Agriculture: processors of farm products: dealers:
licensing: fees.
SUMMARY : Makes permissive the re-evaluation of fees for the Market
Enforcement Branch (MEB); deletes outdated MEB fee structures and
required reporting language; increases the base fees for licenses and
complaints of purchasers of agricultural commodities for processing
and those as a Dealer/Broker; permits the Secretary (Secretary) of the
California Department of Food and Agriculture (CDFA) to appoint a MEB
advisory committee of producers and licensees to provide guidance in
establishing the fees; and, makes technical and conforming changes.
Specifically, this bill :
1)Raises the following fees for produce dealers/brokers:
a) Increases the fee for an aggrieved grower or licensee to file
a complaint from $60 to $100;
b) Increases the fee for each agent of a licensed principal from
$35 to $55; and,
c) Increases the license fee for buyers of annual volumes of
$20,000 or less from $100 to $150.
2)Raises the following fees for processors of farm products:
a) Increases the fee for an aggrieved grower or licensee to file
a complaint from $60 to $100;
b) Increases the fee for each agent of a licensed principal from
$35 to $55; and
c) Increases the license fees for buyers of annual volumes of
$20,000 or less from $100 to $150.
3)Deletes the outdated fee structure and reporting provisions.
4)Creates a statutory advisory committee, to be appointed by the
Secretary of CDFA, of producers and licensees to provide guidance in
the establishment of fees, or permits the reliance of input by an
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existing similar advisory committee.
EXISTING LAW requires any person engaged in the business of processing
or manufacturing any farm product, that solicits, buys, contracts to
buy, or otherwise takes title to, or possession or control of, any
farm product from the producer of the farm product for the purpose of
processing or manufacturing it and selling, reselling, or redelivering
it in any dried, canned, extracted, fermented, distilled, frozen,
eviscerated, or other preserved or processed form, to be licensed (FAC
Section 55401, et. seq.) and establishes the following fee structure:
Aggrieved grower or licensee complaint fee $60 (FAC Section 55722.50)
An agent of a licensed principle$35
License fee for annual sales volumes of:
$20,000 or less $100
$20,000 to $50,000 $400 until 1-1-99;
$300 until 1-1-00;
$200 thereafter.
$50,000 to $2 million $500 until 1-1-99;
$400 until 1-1-00;
$300 thereafter.
$2 million to and over $600 until 1-1-99;
$500 until 1-1-00;
$300 thereafter. (FAC Section 55861)
Requires any person engaged in the business of buying, receiving on
consignment, soliciting for sale on commission, or negotiating the
sale of farm products from a licensee or producer for resale shall be
licensed (FAC Section 56101 et. seq.) and establishes the following
fee structure:
Aggrieved grower or licensee complaint fee $60 (FAC Section 56382.8)
An agent of a licensed principle$35
License fee for annual sales volumes of:
$20,000 or less $100
$20,000 to $50,000 $400 until 1-1-99;
$300 until 1-1-00;
$200 thereafter.
$50,000 to $2 million $500 until 1-1-99;
$400 until 1-1-00;
$300 thereafter.
$2 million to and over $600 until 1-1-99;
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$500 until 1-1-00;
$300 thereafter. (FAC Section 56571)
Provides definitions; authorizes MEB to approve, deny or discipline
licensees; fine for violations of this Chapter, to investigate claims;
provide alternative dispute resolution options; and, provides due
process for violators. (FAC Chapters 6 and 7, of Division 20)
Federal law authorizes similar definitions, claim and investigative
authority, and settlements under the Packers and Stockyards Act (PASA)
of 1921 (7 U.S.C., Sec. 181, et. seq.) and the Perishable Agricultural
Commodities Act (PACA) of 1930 (7 U.S.C., Sec. 499a, et. seq.).
FISCAL EFFECT : This bill is keyed "fiscal" by Legislative Counsel.
COMMENTS : The statutes for MEB, many of which were established in the
1920's, have had few significant changes until SB 1198 (Costa), in
1997, that recast provisions for license denial, suspension, and
revocation; expanded the prohibitions on agent licenses; reduced fees
and created a new complaint process, including a alternative dispute
resolution; and, claim limits. Prior to SB 1198, MEB was the
investigator, the judge, and the enforcer - taking action against a
licensee, while being mandated to "effect" a settlement. Now they are
the analyzers and facilitators, and while maintaining its enforcement
role, the claimants have the option of an informal or a formal
hearing, or to seek civil remedies in the courts.
There are two federal programs, PACA and PASA, both dealing with
similar commodities as MEB. SB 1198 conformed MEB to the federal
processes where possible, giving both PACA and PASA first
responsibility to handle claims. Those commodities not covered by
either federal program, or that the federal programs denied action on,
become the jurisdiction of MEB.
The operating revenue of MEB have been reduced as expenditures have
increased over the past several years. Their current year proposed
budget estimates a year-end deficit causing their advisory board to
recommend a draw of roughly 26%, or $200,000, from their reserves
(known as the trust fund) in order to balance their budget. Without
an increase in license fee revenues, this pattern will continue. The
advisory board has recommended these fee increases during their
December 3, 2009, meeting, as recorded in their minutes. AB 2240
reflects those recommendations.
These fee increases are referenced by the affected industry parties as
a "delicate compromise crafted by the MEB Advisory Committee" and
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should be viewed as an interim solution to prevent MEB from going into
a deficit position for the fiscal year 2011-12. The opponents state
their opposition is not based upon the need for increased fees, but
that only one group of licensee are being increased, rather than an
across the board increase to all licensee groups, making this "an
inequitable" proposal. The committee may wish to consider if the
increase in fees as proposed in AB 2240 are appropriate and adequate
for the payers and for MEB.
RELATED LEGISLATION : AB 1061 (Agriculture), Chapter 613, Statutes of
2005, the Committee Omnibus bill that included creating a procedure
for complaints by growers or licensed produce dealers where the
claimed damages do not exceed $30,000.
AB 1459 (Wiggins), Chapter 143, Statutes of 1999, made technical
changes to require CDFA to include in their evaluation report an
analysis of whether the fee structure is appropriate and to list a
summary of fees paid by commodity and dollar volume.
SB 1198 (Costa), Chapter 696, Statutes of 1997, recast provisions in
"Processors of Farm Products: and "Produce Dealers" Acts for denial,
suspension or revocation of licenses, while exempting livestock
dealers; reduced licensing fees; expanded prohibitions for licensure
of agents; repealed the current complaint process if federal
alternatives are available, and created a new complaint process,
including an alternative dispute resolution option; eliminated
specified surcharge; and, established claim limits and trust fund
payments.
REGISTERED SUPPORT / OPPOSITION :
Support
AB 2240
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California Farm Bureau Federation (Sponsor)
California Bean Shippers Association
California Grain & Feed Association
California Pear Growers
California Seed Association
California State Floral Association
Western Growers
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Opposition
Family Winemakers of California
Analysis Prepared by : Jim Collin / AGRI. / (916) 319-2084