BILL ANALYSIS Ó SB 250 Page 1 Date of Hearing: June 19, 2013 ASSEMBLY COMMITTEE ON AGRICULTURE Susan Talamantes Eggman, Chair SB 250 (Wolk) - As Amended: June 3, 2013 SENATE VOTE : 35-2 SUBJECT : Olive Oil Commission of California. SUMMARY : This bill establishes the Olive Oil Commission of California (OOCC) to engage in olive oil quality and nutritional research and to recommend grades and labeling standards. This bill authorizes OOCC to levy an annual assessment, as specified, on producers, as defined. This bill becomes operative upon a favorable producer referendum vote. Specifically, this bill : 1. Creates OOCC, as specified, to engage in olive oil quality and nutritional research, and to recommend grades and labeling standards to the Secretary (Secretary) of the California Department of Food and Agriculture (CDFA). 2. States declarations and general provisions. 3. Defines olive oil, district boundaries, handler, marketing season, producer, and advisory committee for OOCC. 4. Creates a board of directors (board) composed of six producers, three handlers and one public member appointed by the Secretary of CDFA from nominees recommended by the board. Provides for alternate members. 5. Allows 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 OOCC members. 6. Creates an advisory committee to advise the board on issues affecting the OOCC. There shall be seven members serving three-year terms. The chair shall be selected by the members. 7. Provides that the Secretary and the chair of the SB 250 Page 2 advisory committee be ex-officio members of the board, in addition to other appropriate persons as determined by the board. 8. Allows the Secretary to require the OOCC 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 OOCC refusal or failure to comply, the Secretary may, upon written notice, suspend OOCC activities or functions. Allows either party to seek judicial relief in court. 9. Requires OOCC to reimburse CDFA for all expenditures incurred in carrying out this chapter. 10. Allows OOCC to sue and be sued and enter into contracts. 11. Requires the Secretary, or his or her representative, to be notified and allows them to attend meetings of the board, except for executive sessions called for the purpose of discussing litigation against CDFA. 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. Requires 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 OOCC or its contracts. No member, employee or agent of OOCC shall be personally liable for contracts or responsible individually for any error except for their own acts of dishonesty or crime. 15. Allows, but does not limit, the board to perform the following powers and duties: 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, SB 250 Page 3 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 CDFA; h. Present facts and negotiate with state, 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; and, 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% of the total number of producers to cast a referendum vote to begin operation of OOCC and that either of the following must also occur: a. Of those votes, 65% must vote in favor of OOCC. That same 65% 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; and, b. Of those votes, a majority of producers must vote in favor of OOCC, and those producers must represent 65% or more of the total quantity of olive oil produced by those participating in the referendum SB 250 Page 4 vote. 18. Requires the Secretary to declare this chapter inoperative upon a failed referendum vote. Allows the Secretary to conduct another referendum vote no sooner than one year after the previous referendum. 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. 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. Allows OOCC 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. Requires the board to establish procedures for individuals aggrieved by its actions, including appeals and judicial review. 24. Allows OOCC 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 OOCC 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 OOCC shall be continued. 27. Authorizes the board, upon two-thirds vote, to recommend to the Secretary that OOCC be suspended for failure to SB 250 Page 5 effectuate its declared purposes. The Secretary shall then hold a referendum vote. 28. Authorizes OOCC to serve as the advisory body to the Secretary on all matters pertaining to olive oil quality standards. EXISTING LAW authorizes various marketing and promotion commissions (commissions) to promote the production and marketing of California agricultural commodities. Commissions have a variety of powers covering promotion, advertising, education, production or post-harvest research, and quality standards and inspections. Commissions cover a variety of commodities FISCAL EFFECT : Unknown. This bill has been keyed fiscal by Legislative Counsel. COMMENTS : According to the author, "California's olive oil industry has been growing rapidly 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 promote the sustainability and success of this important agricultural product." Supporters state 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 always adhere to the same high quality standards as California producers. The University of California, Davis Olive Center, released a study based on laboratory and sensory testing that found that 69% 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. According to CDFA, the purpose of marketing programs is to provide agricultural producers and handlers an organizational structure, operating under government sanction, which allows them to solve production and marketing problems collectively that they could not address individually. Current marketing programs' activities include commodity promotion, research, and maintenance of quality standards. Commissions provide a SB 250 Page 6 structure for solving problems and also provide a vehicle for collecting funds to support activities. For accomplishing the purposes stated by the author for this industry, a commission may be an appropriate entity. Current commissions and marketing orders have been successful in expanding markets, improving product quality, and providing more research for pests and disease prevention. In recent years, one commission was terminated by the industry and another had an audit by the Secretary, which revealed potential misuse of funds. This bill has language requiring annual audits, and upon determination of the need, the Secretary may conduct a fiscal and administrative audit of OOCC. PREVIOUS 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. This bill also 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 California Apiary Research Commission with prescribed membership, powers, duties and responsibilities of the commission. This bill 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. This bill authorized the commission to engage in education, promotion, marketing, and research relating to blueberries. REGISTERED SUPPORT / OPPOSITION : Support Anchordoguy and Company Bari Olive Oil Company Blossom Vineyards California Harvesting California League of Food Processors California Olive Oil Council SB 250 Page 7 California Olive Ranch Corto Olive Company Dickson Napa Ranch ENZO Olive Oil Company/P-R Farms, Inc. Kennedy Ranch Lodi Farming, Inc. Maben Family, LLC McCorkle Land Company Yocha Dehe Wintun Nation Opposition None on file. Analysis Prepared by : Victor Francovich / AGRI. / (916) 319-2084