BILL ANALYSIS                                                                                                                                                                                                    



                           SENATE COMMITTEE on AGRICULTURE
                          Senator Cathleen Galgiani, Chair

          BILL NO:    SB 250                    HEARING:  04/16/13
          AUTHOR:   Wolk                        FISCAL:  Yes
          VERSION:  04/10/13                    CONSULTANT:  Anne Megaro
          

                         Olive Oil Commission of California


           SUMMARY  :

          This bill would create the Olive Oil Commission of California to  
          engage in olive oil quality and nutritional research and to  
          recommend grades and labeling standards.  This bill would  
          prescribe membership, board of directors, powers and duties,  
          implementing and voting procedures, assessments and  
          recordkeeping, penalties, continuation or termination of the  
          commission, and creation of quality standards.  This bill would  
          not become operative until a favorable producer referendum vote.
          

           BACKGROUND AND EXISTING LAW  :

          Existing law provides for the creation of marketing programs  
          within the California Food and Agriculture Code, Division 22.   
          The Legislature "finds and declares that the agricultural and  
          seafood industries are vitally important elements of the state's  
          economy and are supported by state established commissions and  
          councils specified in this division that are mandated to enhance  
          and preserve the economic interests of the State of California."  
           

          There are currently 16 active commissions in California, all of  
          which are governed by boards of directors and overseen by the  
          California Department of Food and Agriculture (CDFA).  These  
          commissions were created to enhance their industries by  
          investing in promotion, advertising, education, marketing  
          research, scientific research, and the creation and regulation  
          of quality standards.  

          Existing law provides that commissions are industry-funded  
          programs and assessed through grower and/or handler fees.  The  
          industry pays for all costs of the commission, including all  
          costs for governmental oversight. The fee rate may be prescribed  
          in statute with the potential to be increased by a referendum  
          vote of the commission.





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          California produces 99% of the olives grown in the United  
          States.  According to the California Olive Oil Council, there  
          are over 400 growers on approximately 30,000 acres dedicated to  
          the production of olive oil.  With over 50 varieties of olives  
          grown in California, it is estimated that the 2013 harvest will  
          produce over 2.4 million gallons of oil.

           PROPOSED LAW  :

           This bill:  

             1.   Creates the Olive Oil Commission of California to engage  
               in olive oil quality and nutritional research, and to  
               recommend grades and labeling standards to the secretary.

             2.   States declarations and general provisions.

             3.   Defines olive oil, district boundaries, handler,  
               marketing season, producer, and advisory committee.

             4.   Creates a board of directors (board) composed of six  
               producers (two from each district), three handlers (one  
               from each district) and one public member appointed by the  
               secretary from nominees recommended by the board.  Provides  
               for alternate members.

             5.   Authorizes the board to modify the number of producers  
               and handlers who serve on the board.  These changes must be  
               adopted by a two-thirds vote in concurrence with the  
               secretary, and prior notice must be given to all commission  
               members.

             6.   Creates an advisory committee to advise the board on  
               issues affecting the commission.  There shall be seven  
               members serving three-year terms.  The chair shall be  
               selected by the members. 

             7.   Provides that the secretary of CDFA and the chair of the  
               advisory committee be ex-officio members of the board, in  
               addition to other appropriate persons as determined by the  
               board.

             8.   Authorizes the secretary to require the commission to  
               correct or cease any activity or function that is  
               determined not to be in the public interest or is in  
               violation of this chapter.  Upon commission refusal or  
               failure to comply, the secretary may, upon written notice,  





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               suspend commission activities or functions. Either party  
               may seek judicial relief in court.

             9.   Requires the commission to reimburse CDFA for all  
               expenditures incurred in carrying out this chapter.

             10.  Authorizes the commission to sue and be sued and enter  
               into contracts.

             11.  Authorizes the secretary or his or her representative to  
               be notified and attend meetings of the board, except for  
               executive sessions called for the purpose of discussing  
               litigation against the department.

             12.  Provides that no member of the board or any committee  
               shall receive a salary.  Except for ex-officio members,  
               members may receive reasonable and necessary traveling  
               expenses and meal allowances for attendance at meetings or  
               special assignment.

             13.  Designates that all monies received by any person from  
               assessments levied under this chapter be deposited in banks  
               of the board's choosing.

             14.  Relieves the state of any liability for actions of the  
               commission or its contracts.  No member, employee or agent  
               of the commission shall be personally liable for contracts  
               or responsible individually for any error except for their  
               own acts of dishonesty or crime.

             15.  Authorizes the board to: 

                  a.        Adopt and amend bylaws, rules, regulations,  
                    and orders.
                  b.        Administer and enforce this chapter.
                  c.        Appoint officers and employ persons to serve  
                    as president, chief executive officer, legal counsel,  
                    or other personnel. 
                  d.        Fix compensation for employees.
                  e.        Appoint committees.
                  f.        Establish offices and incur expenses, invest  
                    funds, enter into contracts and agreements, and create  
                    liabilities and borrow funds.
                  g.        Record and keep accurate books and accounts  
                    which are subject to an annual audit that shall be  
                    submitted to the Legislature and the department.
                  h.        Present facts and negotiate with state,  





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                    federal and foreign agencies.
                  i.        Conduct and contract for research to study  
                    olive oil quality and nutrition; collect contributions  
                    and funds for research purposes.
                  j.        Collect information, such as crop statistics,  
                    and distribute periodic communications to producers.
                  aa.       Establish an assessment rate.
                  bb.       Establish an annual budget which shall be  
                    concurred in by the secretary.
                  cc.       Submit an annual statement of activities for  
                    concurrence by the secretary.
                  dd.       Investigate and prosecute civil violations of  
                    this chapter and file complaints with law enforcement  
                    agencies.
                  ee.       Engage in activities creating, amending and  
                    enforcing olive oil quality standards.

             16.  Establishes implementation and voting procedures to be  
               administered by the secretary and provides that the initial  
               referendum vote be funded by proponents of this chapter.

             17.  Requires 40 percent of the total number of producers to  
               cast a referendum vote to begin operation of the commission  
               and that either of the following must also occur: 

                  a.        Of those votes, 65 percent must vote in favor  
                    of the commission. That same 65 percent must also  
                    represent producers who, when total production volume  
                    is combined, produce the majority of olive oil of all  
                    those participating in the referendum vote.

                  b.        Of those votes, a majority of producers must  
                    vote in favor of the commission, and those producers  
                    must represent 65 percent or more of the total  
                    quantity of olive oil produced by those participating  
                    in the referendum vote.

             18.  Authorizes the secretary to declare this chapter  
               inoperative upon a failed referendum vote.  The secretary  
               must wait at least one year before conducting another vote.

             19.  Establishes an assessment rate to be paid by producers  
               of not more than $0.25 per gallon of olive oil.  An  
               increase in this rate must be approved by a referendum  
               vote, and a penalty shall be paid on any past due  
               assessment.






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             20.  Requires every handler and producer to keep complete and  
               accurate records of all olive oil handled.  Records must be  
               kept for two years and available for inspection.

             21.  Provides that all proprietary information be  
               confidential.

             22.  Authorizes the commission to levy civil penalties not  
               exceeding $1,000 for persons who furnish false documents to  
               avoid paying assessment fees and for persons who destroy,  
               alter, refuse, or fail to furnish reports or records  
               required to be kept by this chapter. 

             23.  Authorizes the board to establish procedures for  
               individuals aggrieved by its actions, including appeals and  
               judicial review.

             24.  Authorizes the commission to commence civil actions and  
               utilize all remedies provided in law for collection of  
               assessments and civil penalties.

             25.  Provides for continuation, suspension, or termination of  
               this chapter through commission member referendum vote.

             26.  Requires the secretary to hold a public hearing once  
               every five years to determine whether this chapter should  
               be continued.  Should a substantial question be raised, the  
               secretary shall hold a referendum vote to determine if the  
               commission shall be continued.

             27.  Authorizes the board, upon two-thirds vote, to recommend  
               to the secretary that the commission be suspended for  
               failure to effectuate its declared purposes.  The secretary  
               shall then hold a referendum vote.

             28.  Authorizes the commission to serve as the advisory body  
               to the secretary on all matters pertaining to olive oil  
               quality standards.


           COMMENTS  :

           Need for this bill:   According to the author, "California's  
          olive oil industry has been growing exponentially over the past  
          five years.  The industry believes it is time to support a  
          coordinated 
          effort to provide for olive oil research and standards to  





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          promote the sustainability and success of this important  
          agricultural product."

           Fraud in the marketplace:   According to supporters of this bill,  
          the commission will address fraudulent practices in the  
          marketplace.  Supporters state that "California produces some of  
          the highest quality extra virgin olive oil.  However, the  
          California olive oil industry faces fierce global competition  
          from producers who do not adhere to the same high quality  
          standards as California producers.  In fact, the UC Davis Olive  
          Center released a surprising study based on laboratory and  
          sensory testing, that found that 69 percent of imported  
          extra-virgin olive oils bought off the shelves of California  
          supermarkets failed to meet international standards.  The study  
          concluded that many of them were falsely labeled as extra virgin  
          grade."

           Interim subcommittee hearing:   The Senate Committee on  
          Agriculture's Subcommittee on Olive Oil Production and Emerging  
          Products held an informational hearing on January 26, 2012  
          entitled "Challenges Facing California's Olive Oil Industry."   
          This hearing primarily discussed fraudulent marketplace  
          practices and enforcement of olive oil standards.

           Commissions:   Several existing commissions have been successful  
          in achieving goals of improving product quality, expanding  
          markets, funding research, and establishing product grades and  
          standards.  However, there have been, and are currently pending,  
          lawsuits against the department and marketing programs for  
          violations of free speech rights in regards to mandatory  
          assessments used for commodity marketing and advertising.  The  
          current bill is focused on creating the Olive Oil Commission of  
          California to conduct research and establish product grades and  
          standards and does not specifically authorize the use of  
          assessment fees for advertising purposes.


           RELATED LEGISLATION  :

          AB 2695 (Hernandez), Chapter 605, Statutes of 2010.  Created the  
          California Nursery Producers Commission with prescribed  
          membership, powers, duties, and responsibilities of the  
          commission.  Authorized the commission to engage in outreach,  
          education, promotion, marketing, and research relating to  
          nursery products.

          AB 1912 (Evans), Chapter 585, Statutes of 2010.  Created the  





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          California Apiary Research Commission with prescribed  
          membership, powers, duties and responsibilities of the  
          commission.  Authorized the commission to engage in research and  
          education programs relating to honeybees.

          AB 606 (Ma), Chapter 366, Statutes of 2009.  Created the  
          California Blueberry Commission with prescribed membership,  
          powers, duties, and responsibility of the commission. Authorized  
          the commission to engage in education, promotion, marketing, and  
          research relating to blueberries.


           SUPPORT  :
          
          Anchordoguy & Co.
          Bari Olive Oil Company
          Blossom Vineyards
          California Harvesting
          California League of Food Processors
          California Olive Oil Council
          California Olive Ranch
          Dickson Napa Ranch
          ENZO Olive Oil Company/P-R Farms, Inc.
          Kennedy Ranch
          Lodi Farming, Inc.
          Maben Family, LLC
          McCorkle Land Company
          Adam Englehardt, Individual
          Chris Lagorio, Individual
          Mark Salwasser, Individual
          John D. Williams, Individual


           OPPOSITION  :
          
          None received