BILL ANALYSIS Ó SB 250 Page 1 Date of Hearing: June 25, 2013 ASSEMBLY COMMITTEE ON JUDICIARY Bob Wieckowski, Chair SB 250 (Wolk) - As Amended: June 3, 2013 SENATE VOTE : 35-2 SUBJECT : Olive oil commission of california KEY ISSUE : should the state establish the olive oil commission of california to engage in quality and nutritional research and recommend grades and labeling standards In a rapidly expanding industry? FISCAL EFFECT : As currently in print this bill is keyed fiscal. SYNOPSIS This non-controversial bill seeks to establish the Olive Oil Commission of California, with a prescribed membership and specified powers, duties and responsibilities vested in a commission board of directors, but only if the olive oil industry votes in sufficient number to approve this self-assessment process modeled after other similar agriculture commissions in California. Among other things, the board of directors would be authorized to conduct quality and nutritional research and to recommend to the Secretary of the California Department of Food and Agriculture olive oil grades and labeling standards. In addition, the bill would authorize the commission to levy an annual assessment on producers, as defined, not to exceed the reasonable costs of implementing the chapter's provisions, and would authorize the commission to expend those funds for the purpose of implementing the bill. There is no known opposition and the bill received strong bi-partisan support in the Senate. SUMMARY : Establishes the Olive Oil Commission of California to engage in olive oil quality and nutritional research and to recommend grades and labeling standards. Specifically, 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 of the SB 250 Page 2 California Department of Food and Agriculture (Secretary). 2)States declarations and general provisions. 3)Defines the terms "olive oil," "district boundaries," "handler," "marketing season," "producer," and "advisory committee." 4)Creates a board of directors composed of six producers, three handlers 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. 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. Provides for seven members serving three-year terms and a chair selected by the members. 7)Provides that the Secretary 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, suspend commission activities or functions. Allows either party to seek judicial relief in court. 9)Requires the commission to reimburse the California Department of Food and Agriculture for all expenditures incurred in carrying out this chapter. 10)Allows the commission to bring suit, be subject to suit, 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. SB 250 Page 3 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 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 subject to an annual audit submitted to the Legislature and the department; h) Present facts and negotiate with state, federal and foreign agencies; i) Conduct and contract for research to study olive oil quality and nutrition and to 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; SB 250 Page 4 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 be funded by proponents of this chapter. 17)Requires that 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 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; or 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 calling 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 be 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 SB 250 Page 5 review. 24)Authorizes the commission to commence civil actions and utilize all remedies provided in law for collection of assessment and civil penalties. 25)Provides for continuation, suspension, or termination of this chapter through commission referendum. 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. 28)Authorizes the commission 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 to promote the production and marketing of California agricultural commodities. Commissions have a variety of powers covering the advertising, promotion, education, production or post-harvest research, and quality standards and inspections, and similar commissions already cover a variety of other commodities. COMMENTS : 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 promote the sustainability and success of this important agricultural product." Fraudulent Practices : Supporters state that California produces some of the highest quality extra-virgin olive oil in the world. However, the California olive oil industry faces fierce global competition from producers who reportedly do not adhere to the same high quality standards as California producers. The UC Davis Olive Center released a study based on laboratory and SB 250 Page 6 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 nationally-reported study concluded that many of these products were falsely labeled as extra-virgin grade. Organizational benefits : According to the California Department of Food and Agriculture, 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 structure for solving problems and also provide a vehicle for collecting funds to support activities. Effectiveness of commissions : Several existing commissions reportedly have been successful in achieving goals of improving product quality, expanding markets, funding research, and establishing product grades and standards. 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. This bill includes language requiring annual audits, and upon determination of need, the Secretary may conduct a fiscal and administrative audit of the commission. RELATED LEGISLATION : AB 2695 (Hernández), Chapter 605, Stat. 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, Stat. 2010. Created by the 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, Stat. 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 SB 250 Page 7 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 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 Landy Company Tocha Dehe Wintun Nation Opposition None on file Analysis Prepared by : Drew Liebert and Alex Nowinski / JUD. / (916) 319-2334