BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  AB 1132
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          Date of Hearing:   April 17, 2013

                          ASSEMBLY COMMITTEE ON AGRICULTURE
                           Susan Talamantes Eggman, Chair
                 AB 1132 (Eggman) - As Introduced:  February 22, 2013
          
          SUBJECT  :  Commercial feed: license fee: inspection tonnage tax.

           SUMMARY  :  Extends the sunset date to January 1, 2020, for  
          commercial feed operations license fees and the inspection  
          tonnage taxes. 

           EXISTING LAW  requires an annual licensure of a commercial feed  
          operation, per site, ranging from a minimum of $100 to a maximum  
          of $600, as determined by the Secretary of the California  
          Department of Food and Agriculture (CDFA), based upon the  
          recommendations of the Feed Inspection Advisory Board (Board).   
          Requires fees to fund program reserves to a minimum of 25% of  
          the program costs, then fees shall be used to reduce the feed  
          tonnage tax, based upon the recommendations of the Board.  This  
          requirement will sunset on January 1, 2015 and the license cost  
          will revert to $100.

          Existing statute authorizes a maximum tonnage tax on commercial  
          feeds, except for whole grains and hays when unmixed, of fifteen  
          cents ($0.15) per ton for any distributor of commercial feed to  
          an in-state consumer-buyer.  This includes feeds provided by a  
          distributor to his or her own animals.  This rate is established  
          by CDFA, based upon recommendations of the Board.  Based upon  
          the Board recommendations, CDFA may designate 15% of tonnage  
          taxes, or $200,000, whichever is greater, to be used for  
          research and education regarding the safe manufacture,  
          distribution and use of commercial feed.  These funds may only  
          be used for activities approved by the Board, with approval made  
          prior to expenditure.  This statute will sunset on January 1,  
          2015.  After this date, the tonnage tax remains in effect but  
          the use of 15% or $200,000, whichever is greater for research  
          and education regarding the safe manufacturing, distribution and  
          use of commercial feed, is deleted.

           FISCAL EFFECT  :  Unknown.  Legislative Counsel has keyed this  
          bill fiscal and determined that it is a "tax", as determined  
          within the meaning of Section 3, Article XIII A, of the  
          California Constitution, thus requires, for passage in either  
          house, a 2/3 vote (Proposition 26).








                                                                  AB 1132
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           COMMENTS  :  This program is known as the Feed Inspection Program  
          (FIP) and was created in 1972.  Its purpose is to ensure a clean  
          and wholesome supply of milk, meat and eggs by providing clean  
          and wholesome fodder for livestock and poultry, as well as,  
          providing assurance that the product received by the consumer is  
          of the quality and quantity purported by the manufacturer.   
          Inspectors and investigators are located throughout the state to  
          conduct routine sampling and inspections; conduct quality  
          assurance inspections of the manufacturing facilities; respond  
          to consumer complaints; and, enforce the laws and regulations  
          that govern the manufacturing and distribution of animal feed. 

          As part of the FIP, the Safe Animal Feed Education Program,  
          promotes feed safety and security through outreach and  
          education, and performs Voluntary Feed Quality Assurance Audits.  
           The FIP is funded through the collection of a licensing fee and  
          an inspection tax based upon tonnage sold.  Commercial feed  
          licensing is for a one year period, beginning July 1st and  
          expiring June 30th of the following year. The current annual  
          licensing fee is $300.  The inspection tonnage tax is currently  
          at eight cents ($0.08) per ton and is due on a quarterly basis.

          The Board advises or makes recommendations to CDFA on matters  
          relating to inspection and enforcement, annual budget,  
          inspection fees, and regulations required to accomplish the  
          purposes of the law.  The Board is comprised of eight members  
          who possess a commercial feed license and one public member; all  
          are appointed by CDFA for three-year terms.  The Board currently  
          meets at least once a year.

          This is the first time the sunset on the inspection tax has been  
          considered "a tax", requiring a 2/3 vote for passage in both  
          houses.  In the past, previous to Proposition 26 of 2010, this  
          legislation required a simple majority vote in both houses for  
          passage.

           Previous Legislation  :  AB 547 (Mendoza), Statutes of 2009,  
          Chapter 245.  This bill extended the sunset date from January 1,  
          2010 to January 15, 2015 for the Secretary of the Department of  
          Food and Agriculture to (1) set a specific fee for feed  
          licenses, and (2) designate a specified amount of commercial  
          feed tonnage taxes collected be provided for funding for  
          research and education regarding the safe manufacture,  
          distribution, and use of commercial feed.








                                                                  AB 1132
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          AB 2958 (Agriculture), Statutes of 2006, Chapter 285.   This  
          bill allowed commercial feed to be sold by volume, in addition  
          to weight; replaced the $100 biennial commercial feed license  
          fee with an annual fee of at least $100, but not more than $600,  
          upon recommendation of the Board, until January 1, 2010;  
          required the license fee revenue to replenish FIP reserves to  
          25% of its expenditures, after which point the license fee  
          revenue must be used to reduce feed tonnage taxes to a level  
          recommended by the Board; and, increased, from $40 to $100, the  
          penalty imposed for late renewal of a commercial feed license.

          AB 1071 (Matthews), Statutes of 2004, Chapter 929.  This bill  
          expanded the use of commercial feed inspection funds to include  
          research and education until January 1, 2010;  extended the  
          sunsets to 2011 for the licensing of renderers, collection  
          centers and the registration of transporters of inedible kitchen  
          grease and collection centers; permitted the use of rendered  
          products in accordance with the United States Food and Drug  
          Administration rules and regulations; and, required a registrant  
          to notify a county health officer when a contract is terminated  
          or expires.

          REGISTERED SUPPORT / OPPOSITION  :   

           Support 
           
          California Grain and Feed Association

           Opposition 
           
          None on file.

           
          Analysis Prepared by  :    Jim Collin / AGRI. / (916) 319-2084