BILL ANALYSIS Ó
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
AB 264 (Dahle) - Farm products: processors: produce dealers:
seeds
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|Version: July 16, 2015 |Policy Vote: AGRI. 3 - 0, JUD. |
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|Urgency: No |Mandate: Yes |
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|Hearing Date: August 17, 2015 |Consultant: Robert Ingenito |
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This bill does not meet the criteria for referral to the
Suspense File.
Bill
Summary: AB 264 would (1) remove seeds from the definition of
"farm product" under market enforcement provisions regarding
produce dealers, thereby removing seed dealers from these
provisions, (2) retain one market enforcement provision
pertaining to the use of product liens for seed owned and grown
by a seed producer and sold to a seed dealer under contract, and
(3) add to the California Seed Law the authority for the
California Department of Food and Agriculture (CDFA) to
establish methods and procedures to settle disputes regarding
financial terms and lack of payment by a seed dealer to a seed
grower.
AB 264 (Dahle) Page 1 of
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Fiscal
Impact: CDFA estimates that the bill would result in a revenue
loss of $68,000 (special funds). The department's administrative
costs would be minor and absorbable.
Background: The California Seed Law (CSL) was enacted in 1967 to ensure
that agricultural and vegetable seed is properly and accurately
identified taken to market.. Under the CSL, CDFA is empowered
to make regulations concerning seed quality, including
germination standards for various types of seeds. Seed quality
is analyzed through the Seed Services program administered by
CDFA. The CSL is generally enforced at the local level,
specifically by county agricultural commissioners who enter into
cooperative agreements with CDFA to maintain specified statewide
compliance levels on all seed sold. In return, county
agricultural commissioners receive annual subvention payments
for expenses incurred in association with approved enforcement
activities. Commissioners and CDFA are empowered to issue
"stop-sale" orders to the owner or custodian of any lot of
agricultural or vegetable seed that violates provisions of the
CSL, as well as prevent the movement or disposal of seeds
subject to a "stop-sale" order, or declare non-compliant seeds a
nuisance and order them seized.
The CSL also empowers CDFA to establish methods and procedures
for the resolution of disputes between labelers and others
concerning conformance with label statements, advertisements, or
other disputes regarding the quality or performance of seed.
The CSL requires such disputes to go through these methods and
procedures as a prerequisite to pursuing other dispute
resolution mechanisms, such as litigation in court. Finally,
the CSL requires seed labels to provide the purchaser with
notice of the requirement to follow the resolution procedures,
as well as of the consequences for failing to follow those
procedures.
Funding for carrying out programs under the CSL is supported
through industry seed assessments and registration fees, which
are administered by CDFA. Every labeler of agricultural or
vegetable seed offered for sale in California, or any person who
sells that seed in California, must annually register as a seed
AB 264 (Dahle) Page 2 of
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labeler and pay an annual fee. In addition, those who are
registered seed labelers must also pay an assessment based on
their annual dollar volume in sales.
Proposed Law:
This bill would, among other things, do all of the following:
Expand CDFA regulatory authority within the CSL to
establish methods and procedures to settle disputes
regarding financial terms and lack of payment by a seed
dealer to a seed grower.
Authorize CDFA, should the dispute end in favor of the
grower, to require compensation for the estimated value of
the seed production services a grower provides to a dealer.
If a dealer fails to comply, CDFA may revoke the dealer's
registration and prevent the dealer from renewing the
registration until the debt has been paid.
Exclude flower, agricultural, and vegetable seed from
the definition of "farm product" under market enforcement
provisions regarding produce dealers, but not processors.
Related
Legislation: SB 1399 (Galgiani, Chapter 277, Statutes of 2014)
extended the operation and repeal dates for provisions of the
California Seed Law, including an annual county subvention for
enforcement activities necessary to carry out these provisions,
until July 1, 2019, and January 1, 2020, respectively. This
bill eliminated certain provisions establishing a method of
calculating apportionments based on units of activity, and
instead requires the amount of the subvention designated to each
participating county to be established in a memorandum of
understanding between the county agricultural commissioner and
the Secretary of CDFA, in consultation with the Seed Advisory
Board.
AB 264 (Dahle) Page 3 of
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Staff
Comments: The Seed Services Program annually receives
approximately $1.6 million from fees and assessment collections.
As noted above, the funds are used to conduct a statewide
compliance monitoring program and administer the dispute
resolution process for seed complaints, which occur at a
frequency of about one formal complaint per year. Since there
has been two cases involving non-payment since 2005, the Seed
Services Program does not foresee significant additional costs
to administer the dispute resolution for those situations.
The Market Enforcement Branch (MEB) would lose approximately
$68,000 in annual license fees that it collects from the 199
firms and 207 agents that buy seeds who would no longer need to
be licensed under the provisions of the bill; however additional
firms involved with seed transactions may require licensing.
Licensing of these firms would generate additional potential
revenue, the extent of which is currently unknown.
Any local government costs resulting from the mandate in this
measure are not state-reimbursable because the mandate only
involves the definition of a crime or the penalty for conviction
of a crime.
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