BILL ANALYSIS                                                                                                                                                                                                    Ó



                            SENATE AGRICULTURE COMMITTEE
                         Senator Anthony Cannella, Chairman

          BILL NO:    AB 2682                   HEARING:  07/03/12
          AUTHOR:   Assembly Agriculture CommitteeFISCAL:  Yes
          VERSION:  06/07/12                    CONSULTANT:  Anne Megaro
          
                                    Agriculture.

           SUMMARY:

          Existing law:

              1.   Permits the California Science Center to establish a 
               space-age museum in its building at Exposition Park in the 
               City of Los Angeles.

             2.   Provides for a 1% assessment on gross sales of varieties 
               and species of fruit trees, nut trees, and grapevines, with 
               exceptions.  Funds are used for research programs, 
               specifically the University of California Foundation Plant 
               Services program (FPS), which produces, tests, maintains 
               and distributes premium foundation-level virus and 
               disease-tested plant materials for use by California 
               nurseries.  

             3.   Provides definitions for "milk products plant" and 
               "handler" of milk products.

             4.   Provides classifications for milk products for the 
               purpose of milk marketing.

             5.   Establishes the Dairy Council of California which shall 
               consist of 24-25 members, nominated by dairy producers, 
               producer-handlers, and handlers, and appointed by the 
               secretary of CDFA.  Existing law also provides for 
               nomination procedures and assessment fees.

             6.   Establishes the California Walnut Commission for the 
               efficient development and management of a national and 
               international advertising and promotion program that will 
               enhance the reputation and competitiveness of the 
               California walnut industry.  In addition to an assessment 
               fee, the commission receives export assistance funds from 
               the federal government.  If federal export assistance funds 
               are not provided for two consecutive budget years, the 
               funds are deemed permanently terminated and the commission 
               becomes inoperative, unless a referendum vote by producers 
               is conducted.




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           This bill:
           
             1.   Permits the California Science Center to establish an 
               air and space center in its building at Exposition Park in 
               the City of Los Angeles.

             2.   Exempts certain species or varieties of olive trees 
               (table olives), or varieties of other named agricultural 
               produce, from a 1% annual assessment if it can be 
               demonstrated that no benefit is derived by these species or 
               varieties for programs relating to plant inspection, 
               quarantine and pest control.

             3.   Redefines "milk products plant" to not include a 
               properly licensed retail food facility that does either of 
               the following: 

                  a.        Packages dairy products in the presence of the 
                    consumer.

                  b.        Cuts, wraps, and packages cheese, excluding 
                    cottage cheese, that is purchased from a licensed 
                    manufacturer of milk products, labels the products 
                    pursuant to all applicable state and federal laws, and 
                    sells the product only to consumers on the premises of 
                    the retail food facility.

             4.   Classifies kefir from a class 1 to a class 2 milk 
               product for the purposes of milk marketing, and to conform 
               to federal standards.

             5.   Redefines "handler" of milk products to include any 
               person who secures custom processing services on an ongoing 
               basis.

             6.   Amends language relating to the Dairy Council of 
               California:

                  a.        Authorizes the secretary of the California 
                    Department of Food and Agriculture (CDFA) to appoint 
                    all members of the Dairy Council of California.  
                    Members may hold office at the pleasure of the 
                    secretary, and members who represent producers are no 
                    longer eligible to hold office.  






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                  b.        Repeals language relating to Dairy Council of 
                    California member nominations to allow for alternative 
                    procedures to select new members, including but not 
                    limited to, nominations, preference voting, and 
                    district representation.  Such procedures shall be 
                    recommended by the council and approved by the 
                    secretary.

                  c.        Authorizes the secretary to assess a 1% 
                    interest rate on unpaid assessment fees for each 30 
                    days the fee is unpaid. 

             7.   Increases from two to three consecutive budget years the 
               time frame for which federal targeted export assistance 
               funds are deemed permanently terminated when the federal 
               government fails to provide these funds to the California 
               Walnut Commission.  Also provides clarification that the 
               full process to avoid discontinuation of the commission be 
               followed if said federal funds are permanently terminated.


           COMMENTS:

          1.Purpose of Bill:   Assembly Agriculture Committee's 2012 
            Omnibus bill changes designation of the California Science 
            Center's space-age museum to an air and space center; makes a 
            technical change to exempt certain varieties of olive trees 
            from fee assessments; classifies kefir (comparable to a 
            yogurt-based drink) as a class 2 milk market product; makes 
            technical changes to exclude grocery stores who cut and wrap 
            cheese from the definition of milk processors; makes technical 
            changes to the appointment of members to the Dairy Council of 
            California; makes technical changes to the rules for the 
            California Walnut Commission to become nonoperational. No 
            language in this bill is considered controversial.

           2.Space Museum:  The California Science Center (CSC) was 
            authorized to establish a space-age museum in 1996.  On April 
            12, 2011, the National Aeronautics and Space Administration 
            (NASA) announced that CSC was competitively selected to 
            receive the Endeavor, one of the three flown Space Shuttle 
            Orbiters.  By updating the name of the museum to conform to 
            standard language used in the science and space center field, 
            the supporters believe the new "air and space center" language 
            will assist the CSC Foundation in its fundraising for the 
            project.






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           3.Olives:  SB 707 (Cannella/Wolk) from 2011 included olive trees 
            in the existing 1% gross sales fee assessment, with the intent 
            to only include olive trees used for producing olive oil.  
            This bill clarifies that the secretary may exempt trees that 
            produce table olives from the assessment fee.

           4.Cut and wrap cheese:   CDFA requires licensing of all milk 
            products plants which engage in the business of handling, 
            receiving, processing, or manufacturing milk products.  
            Therefore, any grocery store that cuts and wraps cheese 
            in-house is considered a "milk products plant" and would need 
            to obtain a license.  Since the enactment of this provision in 
            1983, grocery stores are now required to obtain permits that 
            safeguard public health and ensure consumers that food was 
            handled safely.  This bill provides technical changes to 
            exclude retail food facilities that cut and package cheese 
            from the definition of "milk products plant" and thus from the 
            requirement to obtain the corresponding license.

           5.Kefir:   Dairy food processors pay for milk based upon the 
            products in which is it used, such as fluid milk, butter, 
            cheese, ice cream, etc.  Existing law provides for milk 
            product classification to categorize such products for milk 
            marketing purposes.  Most of California's milk use 
            classifications are identical to those in the federal system; 
            however, in 2002 federal law classified kefir, similar to 
            drinkable yogurt, as a Class 2 product.  In order for 
            California to remain competitive in the national market, this 
            bill aligns state law with federal law and reclassifies kefir 
            as a Class 2 product.

           6.Dairy Council of California:   Established in 1919, the Dairy 
            Council of California (DCC) serves California communities 
            through nutrition education programs that focus on healthy 
            eating and provides free nutrition lesson plans and programs 
            to school children and their families. DCC is a state 
            government entity that is solely funded by, and works on 
            behalf of, California dairy farmers and milk processors, and 
            is governed by industry-elected members.  Upon review by DCC 
            staff and industry members, and in working with CDFA, it was 
            determined that definitions, election processes, and 
            enforcement of fees would require updates and clarifications.

           7.California Walnut Commission:   Established in 1987, the 
            California Walnut Commission (CWC) is an agency of the state 
            that works in concurrence with CDFA and is funded by mandatory 
            assessments of growers.  CWC is mainly involved in health 





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            research and export market development activities.  Existing 
            law requires the secretary of CDFA to hold a hearing every six 
            years to determine whether CWC should be continued.  If, after 
            the hearing, a substantial question exists among producers as 
            to whether the commission should continue, the secretary shall 
            schedule a referendum vote.  A 1998 amendment to this section 
            failed to appropriately include the hearing process as 
            precluding the referendum vote.  This bill would make the 
            technical change to clarify that the full hearing and vote 
            process is to be followed if the targeted export assistance 
            funds from the federal government are permanently terminated, 
            and increases from two years to three consecutive budget years 
            the time allowed for federal funding to lapse before these 
            funds are determined permanently terminated. 


           RELATED LEGISLATION:  

          SB 707 (Cannella/Wolk), Chapter 343, Statutes of 2011.  Includes 
          olive trees in the existing 1% gross sales fee assessment.

          AB 2218 (Woods), Chapter 289, Statutes of 1998.  Changes the 
          conditions under which the California Walnut Commission may 
          exist and how a referendum vote is to be approved.


           PRIOR ACTIONS:
           
          Assembly Floor 72-0
          Assembly Appropriations16-0
          Assembly Agriculture  9-0


           SUPPORT:
           
          California Grocers Association
          California Science Center Foundation
          Dairy Institute of California


           OPPOSITION:
           
          None received









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