BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                     AB 264


                                                                    Page  1


          CONCURRENCE IN SENATE AMENDMENTS


          AB  
          264 (Dahle)


          As Amended  July 16, 2015


          Majority vote


           -------------------------------------------------------------------- 
          |ASSEMBLY:  | 80-0 | (May 14,      |SENATE: |40-0  | (August 31,     |
          |           |      |2015)          |        |      |2015)            |
          |           |      |               |        |      |                 |
          |           |      |               |        |      |                 |
           -------------------------------------------------------------------- 


          Original Committee Reference:  AGRI.


          SUMMARY:  Removes seed from the definition of "farm product"  
          under market enforcement provisions regarding produce dealers,  
          thereby removing seed dealers from these provisions; retains 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, adds to the California Seed Law  
          (CSL) 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.


          The Senate amendments:


          1)Allow, that if a dispute is resolved in favor of a grower, the  
            compensation to the grower may reflect the cost of production  
            services, as specified.








                                                                     AB 264


                                                                    Page  2


          2)Allow the Secretary of CDFA to revoke a dealer's licenses if  
            the dealer does not comply with a financial judgment as a  
            result of a dispute. 


          3) Provide for a process for liens in the dispute process. 


          EXISTING LAW:  


          1)Requires that any person engaged in the business of buying or  
            reselling, as specified, farm products from a licensee or  
            producer for resale, to be licensed by the Market Enforcement  
            Branch (MEB).


          2)Defines farm products to include every agricultural,  
            horticultural, viticultural, and vegetable product, as  
            specified. 


          3)Provides exemption from licensing several classes of products,  
            including flower or agricultural or vegetable seed not  
            purchased from a producer.


          4)Establishes CSL which requires every labeler of specified  
            seeds for sale or that is sold in this state, or persons  
            receiving or possessing seeds for sale or that sells in this  
            state, to annually register with CDFA, as specified, and to  
            pay an annual assessment that funds the activities of this  
            law.  


          5)Requires labeling requirements for seed sold and that  
            regulations be adopted for germination standards, enforcement  
            tolerances and examination procedures, sampling methods,  
            schedule of fees, and other such regulations, as specified.   
            These regulations are required to be as near as practicable to  
            the Federal Seed Act (FSA).









                                                                     AB 264


                                                                    Page  3



          FISCAL EFFECT:   According the Senate Appropriations Committee,  
          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.


          COMMENTS:  MEB has regulatory and fee authority over all farm  
          products, which includes a broad definition of agricultural  
          products.  There are several exemptions to MEB authority,  
          including flower or agricultural or vegetable seed not purchased  
          from a producer.  MEB enforces laws to protect against unfair  
          business practices between those who grow, package, and process  
          California farm products.


          CSL was enacted in 1967 to ensure that agricultural and  
          vegetable seed is properly and accurately identified on the  
          product label and that it meets quality standards, including  
          germination, variety and species.  Seed labeling and standards  
          are also regulated under FSA.  According to the author, over the  
          past few years there has been increasing confusion over which  
          seed transactions are subject to MEB oversight, which dealers  
          need to obtain licenses, and which seeds are regulated by CSL.   
          Furthermore, MEB staff have been citing seed dealers and  
          threatening them with fines unless they register as produce  
          dealers under MEB.  


          The sponsor of this bill states it will simplify all seed  
          transactions and consolidate them under the governance of CSL  
          and FSA.  Funding for the CSL program is through industry seed  
          assessments and registration fees and is administered by CDFA.   
          Furthermore, the sponsor stresses that there have not been any  
          complaints from seed farmers to MEB in more than five years.  In  
          conversations, the sponsors pointed out that the seed industry  
          is a highly regulated industry with both state and federal laws,  
          and that only a small number of transactions in California fall  
          under MEB rules.  This bill will help streamline seed  
          transactions, while still protecting buyers, sellers and the  
          public.









                                                                     AB 264


                                                                    Page  4



          The senate amendments strengthen protection to growers and  
          establish a lien process under CLS, similar to what currently  
          exist in MEB.  This bill is substantially similar to the version  
          that was passed by the Assembly. 


          Analysis Prepared by:                                             
                          Victor Francovich / AGRI. / (916) 319-2084  FN:  
          0001336