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