BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                      



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          |SENATE RULES COMMITTEE            |                  AB 1616|
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                                 THIRD READING


          Bill No:  AB 1616
          Author:   Gatto (D), et al.
          Amended:  8/24/12 in Senate
          Vote:     21

           
           SENATE HEALTH COMMITTEE  :  8-0, 6/27/12
          AYES:  Hernandez, Harman, Alquist, Anderson, Blakeslee, 
            DeSaulnier, Rubio, Wolk
          NO VOTE RECORDED:  De León
           
          SENATE APPROPRIATIONS COMMITTEE  :  7-0, 8/16/12
          AYES:  Kehoe, Walters, Alquist, Dutton, Lieu, Price, 
            Steinberg
           
          ASSEMBLY FLOOR  :  56-19, 5/29/12 - See last page for vote


           SUBJECT  :    Food safety:  cottage food operations

           SOURCE  :     Author


           DIGEST  :    This bill regulates the production in home 
          kitchens of food for sale, referred to as cottage food 
          operations.

           Senate Floor Amendments  of 8/24/12 include provisions 
          deemed necessary by the Administration to ensure proper 
          implementation of the bill.  (See analysis section for 
          details of the 8/24/12 amendment)

           ANALYSIS  :    The Sherman Law makes it unlawful to 
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          manufacture, sell, deliver, hold, or offer for sale any 
          food that is misbranded.  Food is misbranded if its 
          labeling does not conform to specified federal labeling 
          requirements regarding nutrition, nutrient content or 
          health claims, and food allergens.  Violation of this law 
          is a misdemeanor.

          The existing California Retail Food Code (CRFC) provides 
          for the regulation of health and sanitation standards for 
          retail food facilities, as defined, by the Department of 
          Public Health (DPH).  Under existing law, local health 
          agencies are primarily responsible for enforcing the CRFC.  
          That law exempts private homes from the definition of a 
          food facility, and prohibits food stored or prepared in a 
          private home from being used or offered for sale in a food 
          facility.  That law also requires food that is offered for 
          human consumption to be honestly presented, as specified.  
          A violation of these provisions is a misdemeanor.

          This bill includes a cottage food operation, as defined, 
          that is registered or has a permit within the private home 
          exemption of the CRFC.  This bill also excludes a cottage 
          food operation from specified food processing establishment 
          and Sherman Law requirements.  This bill requires a cottage 
          food operation to meet specified requirements relating to 
          training, sanitation, preparation, labeling, and 
          permissible types of sales and would subject a cottage food 
          operation to inspections under specified circumstances.  
          This bill requires a food facility that serves a cottage 
          food product without packaging or labeling to identify it 
          as homemade.  This bill establishes various zoning and 
          permit requirements relating to cottage food operations.  
          Double-jointed with AB 2297 (Hayashi).

          Specifically the August 24, 2012 amendments do the 
          following:

          1. Create a Food Safety Fund in the state Treasury for 
             monies collected by the DPH pursuant to the provisions 
             of this bill.

          2. Phase in gross annual sales limitations on cottage food 
             operators, beginning with a $35,000 sales maximum  in 
             2013, a $40,000 maximum in 2014, and a $50,000 maximum 

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             beginning in 2015 and in each subsequent year. 

          3. Clarify allowable locations for the direct and indirect 
             sales of cottage food products.

          4. Clarify that a third party retailer involved in indirect 
             sales must hold a valid permit from the enforcement 
             agency.  

          5. Clarify the definition of "registered or permitted area" 
             to include the kitchen of the private home and attached 
             rooms within the home that are used exclusively for 
             storage.

          6. Amend the definition of "Permit" in the CRFC to include 
             a cottage food operation. Specify that "registration" is 
             synonymous with "permit." 

          7. Require kitchen equipment to be clean and maintained in 
             a good state of repair.

          8. Remove the requirement that a home inspection, conducted 
             by a representative of a local enforcement agency based 
             on a consumer complaint, be conducted during regular 
             business hours.  Remove the ability of the local 
             enforcement agency representative to pursue a search 
             warrant through an appropriate court upon denial of 
             access to the registered area of the home to be 
             inspected. 

          9. Remove the requirement that cottage food operations be 
             subject to specified sections of the CRFC pertaining to:

             A.    posting signage regarding employee handwashing, 
             B.    warewashing machine specifications,
             C.    design and construction of utensils and equipment,
             D.    mechanical exhaust ventilation,
             E.    lockers for employees,
             F     flooring material specifications,
             G.    specifications for janitorial sinks, or
             H.    construction, alteration, or remodeling. 

          10.Require that employees of cottage food operations be 
             subject to handwashing requirements and personal 

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             cleanliness requirements, as described, and require 
             employees to wear gloves when contacting food and 
             food-contact surfaces, and other requirements, as 
             described.

          11.Require a person who prepares or packages cottage food 
             products to complete a food handler course instructed by 
             DPH within three months of becoming registered.  Specify 
             that the course not exceed four hours in length.  
             Require CDPH to work with local enforcement agencies to 
             ensure proper notification to cottage food operators. 

          12.Specify that cottage food products are prohibited from 
             being potentially hazardous food that requires time or 
             temperature control to limit pathogenic micro-organism 
             growth or toxin formation.

          13.Make changes to the list of nonpotentially hazardous 
             foods DPH must adopt by adding biscuits, trail mixes, 
             and deleting rice cakes and rice noodles.  Authorize the 
             State Public Health Officer to add or delete food 
             products to or from the list, as specified.  Require DPH 
             to give notice of changes to this list on its website 
             and excludes the approved food products list from 
             administrative rulemaking requirements. 

          14.Require the State Public Health Officer to provide 
             technical assistance and develop, maintain, and deliver 
             commodity-specific training related t the safe 
             processing and packaging of cottage food products to 
             local enforcement agencies.  Authorize local enforcement 
             agencies to collect a surcharge fee not to exceed 
             reasonable costs DPH incurs through the administration 
             of this training, to be deposited into the Food Safety 
             Fund. 

          15.Allow an authorized enforcement officer to enter, 
             inspect, issue citations to, and secure any samples, 
             photographs or other evidence from a cottage food 
             operation during hours of operation and other reasonable 
             times.  Allow local enforcement officers to suspend or 
             revoke a cottage food operators permit for specified 
             violations, or immediately close an operation if an 
             imminent health hazard. 

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          16.Recast provisions prohibiting a city or county from 
             prohibiting cottage food operations from the Health and 
             Safety Code to the Government Code.

          17.Make various technical and conforming changes.

           Background  

           Cottage foods  .  Cottage foods are classified as certain 
          non-potentially hazardous foods, such as bread, granola, 
          popcorn, and nuts, that do not require time and temperature 
          control for safety.  Cottage food operations are, in many 
          cases, unlicensed or unregistered, and the limited 
          oversight of these operations may present a gap in our 
          current food safety and security system in this country, 
          according to the Association of Food and Drug Officials 
          (AFDO).  According to the National Conference of State 
          Legislatures, 31 states have laws to regulate cottage and 
          home-based food production and it continues to be a subject 
          of legislative interest.  Most states do not conduct 
          regular, routine inspections for CFOs in the same manner as 
          they would for commercial kitchens.  Some states also 
          require the home kitchen to be inspected only if the LEHD 
          has particular reason to suspect any unsafe food is 
          associated with the kitchen.  According to information from 
          the Sustainable Economies Law Center (SELC), a supporter of 
          this bill, most cottage food laws only allow for the direct 
          sale to consumers (such as at farmer's markets) but some 
          also allow for the sale of homemade foods to grocery stores 
          and restaurants.  

           AFDO guidance  .  AFDO, an international, non-profit, food 
          industry-focused organization aimed at streamlining and 
          simplifying federal, state, and local regulations, issued 
          regulatory guidance in April 2012 to discuss best practices 
          for the oversight of cottage foods.  According to AFDO, the 
          regulatory guidance document is a consensus effort to set 
          standards for CFOs that preserve public health while still 
          allowing for economic opportunity.  Highlights of this 
          guidance include the following:

          1.  Definitions  .  AFDO provides definitions for "cottage 
             food products" and "potentially hazardous food," which 

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             are fairly consistent with the definitions in this bill. 
              A key distinction is AFDO's definition of "cottage food 
             operation," which is defined in part as a person who 
             produces cottage food products only for sale directly to 
             the consumer. AFDO suggests prohibiting sales by 
             internet, mail or phone order, consignment or wholesale. 
              This bill goes beyond this definition by including 
             indirect sales of cottage food products to third-party 
             retailers.

          2.  Permitting and inspections  .  AFDO suggests that all 
             cottage food operators be permitted annually by the 
             regulatory authority on forms developed by that 
             authority.  AFDO suggests the regulatory authority be 
             required to examine the premises of the CFO to determine 
             it to be in compliance with requirements.  AFDO guidance 
             permits the regulatory authority to inspect at any time, 
             and whenever there is reason to believe the cottage food 
             operation is in violation of these requirements or is 
             operating in an unsanitary manner.  This bill does not 
             describe inspection requirements.  Class A CFOs are 
             merely required to self-certify that they meet 
             applicable requirements.  Class B CFOs are required to 
             be permitted, but the bill is silent on how inspections 
             would occur for this class. 

          3.  Non-potentially hazardous food items  .  AFDO provides a 
             list of food items they consider to be non-potentially 
             hazardous, and therefore acceptable for CFOs, as well as 
             a list of food items AFDO considers unacceptable for 
             CFOs.  This bill issues a list of items that is largely 
             similar to the AFDO list, but with a few notable 
             exceptions:  (a) this bill allows chocolate covered 
             non-perishable foods, whereas AFDO prohibits tempered or 
             molded chocolate or chocolate-type products; (b) this 
             bill allows mustards, which AFDO prohibits; (c) this 
             bill adds baked goods such as breads, whereas AFDO 
             allows most breads except for focaccia-style breads with 
             vegetables and/or cheeses; and (d) this bill lists 
             additional items that AFDO does not address, like honey 
             and sweet sorghum syrup, dried mole paste, fruit butters 
             and nut butters.                  
          
           CRFC  .  CRFC was established to create uniformity between 

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          California's retail food safety laws and those of other 
          states, as well as to enhance food safety laws based on the 
          best available science.  CRFC is modeled after the U.S. 
          Food and Drug Administration's (FDA) Food Code, a model 
          that assists food control jurisdictions at all levels of 
          government by providing them with a scientifically sound, 
          technical and legal basis for regulating the retail and 
          food service segment of the industry (restaurants and 
          grocery stores and institutions such as nursing homes).  
          CRFC, among other things, establishes uniform food safety 
          and sanitation requirements for local jurisdictions to 
          follow and establishes the authority of local environmental 
          health jurisdictions to adopt a food safety inspection 
          program with state oversight.  Local jurisdictions are 
          granted the authority to inspect food facilities, 
          immediately suspend a permit, conduct hearings, take 
          samples or other evidence, impound food or equipment, and 
          issue reports as necessary to protect the public's health.  
          The federal model Food Code, published by the FDA along 
          with the U.S. Public Health Service, states that "food 
          prepared in a private home may not be used or offered for 
          human consumption in a food establishment." 

           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  Yes   
          Local:  Yes

          According to the Senate Appropriations Committee:

           One-time costs of $150,000 to $300,000 (General Fund) for 
            DPH to adopt regulations regarding foods that may be 
            produced by cottage food operations.

           Unknown costs to local environmental health departments 
            to regulate cottage food operations (local funds).  
            Because local environmental health departments have the 
            authority to levy fees, these costs are not reimbursable 
            by the state.

           SUPPORT  :   (Verified  8/27/12)

          American Federation of State, County and Municipal 
          Employees, AFL-CIO
          Bay Localize
          Berkeley Food Policy Council

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          California Food and Justice Coalition
          California State Grange
          Central Coast Alliance United for a Sustainable Economy
          Community Alliance with Family Farmers
          East Bay Urban Agriculture Alliance
          forageSF
          La Cocina
          Los Angeles Bread Bakers
          Oakland Food Policy Council
          Proyecto Jardin
          San Diego Hunger Coalition
          San Francisco Urban Agriculture Alliance
          Sustainable Economies Law Center
          Terry Lamphier, County Supervisor, District III, County of 
          Nevada
          Valley Ford Young Farmers Association
          Whole Foods Northern California

           OPPOSITION  :    (Verified  8/27/12)

          Alameda County Board of Supervisors
          California Association of Environmental Health 
            Administrators 
          California Retail Food Safety Coalition
          Health Officers Association of California
          Jackie's Jams

           ARGUMENTS IN SUPPORT  :    The Community Alliance with Family 
          Farmers (CAFF) supports this bill because they claim the 
          availability of commercial kitchens across the state is 
          uneven, and particularly in rural areas where CAFF's 
          members live.  CAFF states that with the recent rise of the 
          local food movement throughout the state, many people in 
          urban areas also want to be able to process and sell food 
          from their homes.  The East Bay Urban Agriculture Alliance 
          (EBUAA) sees this bill as providing groundbreaking 
          opportunities to facilitate a local food economy and access 
          to healthy food in the community and statewide.  EBUAA 
          claims the costs associated with accessing commercial 
          kitchens are currently too high for people, which creates 
          unnecessary barriers to micro-enterprises seeking to 
          process and sell the least hazardous types of food on a 
          neighborhood or regional basis. 
          

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          The Los Angeles Bread Bakers supports this bill because it 
          will decriminalize artisanal food production.  They believe 
          hunger, food insecurity and nutrition-related chronic 
          disease can be eliminated by removing barriers to 
          small-scale food production, which will promote a healthy, 
          sustainable community-based food system that benefits food 
          producers and consumers alike.  Whole Foods Market supports 
          this bill and claims they make special efforts to find and 
          sell unique products that are grown and processed locally.  
          Whole Foods supports legislative efforts to stimulate local 
          food production to meet the demand for artisan, specialty 
          and locally produced foods that cottage food operators, 
          empowered by this bill, are sure to provide the state. 
          
           ARGUMENTS IN OPPOSITION  :    The California Association of 
          Environmental Health Administrators (CAEHA) is opposed 
          unless two provisions are amended.  CAEHA asserts that this 
          bill is a major departure from the CRFC in two ways: it 
          would allow food prepared in private homes to be sold to 
          the public, and it would pre-approve a set of "low-risk" 
          foods to be prepared and sold in this manner.  CAEHA states 
          that the limitations they have been considering for these 
          indirect or wholesale sales have not allayed the concerns 
          of local regulators.  The inspection of private homes by 
          local or state regulators is fraught with enforcement 
          challenges and the geographic or sales volume limitations 
          considered for these indirect sales are likely to be 
          impractical to establish and impose.  CAEHA says that while 
          it may be possible to develop criteria to limit these 
          indirect sales, these have not yet been identified.  Local 
          regulators understand that legitimizing the emerging 
          cottage food industry in California may have some economic 
          and limited nutritional benefits.  CAEHA asserts that they 
          would remove their opposition if this bill was amended to 
          allow only direct sales to consumers.  
           
          CAEHA also expresses concern over the list of pre-approved 
          low-risk not potentially hazardous foods in this bill.  
          CAEHA instead suggests using the list proposed by the 
          National Association of Food and Drug Officials, which has 
          been reviewed and approved by food safety experts across 
          the nation. CAEHA also suggests amending the bill to give 
          DPH authority to add or delete foods on the list as needed 
          in order to keep the list current and valid. 

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           ASSEMBLY FLOOR  :  56-19, 5/29/12
          AYES:  Alejo, Allen, Ammiano, Atkins, Beall, Bill 
            Berryhill, Block, Blumenfield, Bonilla, Bradford, 
            Brownley, Buchanan, Butler, Charles Calderon, Campos, 
            Carter, Chesbro, Davis, Dickinson, Eng, Feuer, Fong, 
            Fuentes, Furutani, Galgiani, Gatto, Gordon, Hayashi, 
            Roger Hernández, Hill, Huber, Hueso, Huffman, Jeffries, 
            Lara, Bonnie Lowenthal, Ma, Mendoza, Mitchell, Monning, 
            Nestande, Olsen, Pan, Perea, V. Manuel Pérez, Portantino, 
            Skinner, Smyth, Solorio, Swanson, Torres, Valadao, 
            Wieckowski, Williams, Yamada, John A. Pérez
          NOES:  Achadjian, Conway, Donnelly, Beth Gaines, Garrick, 
            Grove, Hagman, Halderman, Harkey, Jones, Knight, Logue, 
            Mansoor, Miller, Morrell, Nielsen, Norby, Silva, Wagner
          NO VOTE RECORDED:  Cedillo, Cook, Fletcher, Gorell, Hall


          CTW:mk  8/28/12   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  SEE ABOVE

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