BILL ANALYSIS                                                                                                                                                                                                    



                                                                        AB 1826


                                                                        Page  1





       Date of Hearing:  April 20, 2016


                          ASSEMBLY COMMITTEE ON AGRICULTURE


                                   Bill Dodd, Chair


       AB 1826  
       (Mark Stone) - As Amended April 5, 2016


              AS PROPOSED TO BE AMENDED: Legislative Counsel RN 16 11934


       SUBJECT:  Organic products.


       SUMMARY:  Makes significant changes to the State Organic Program (SOP),  
       renaming it the California Organic Food and Farming Act (Act); changes  
       registration fees, funding and reporting requirements, among other  
       provisions.  Specifically, this bill:  


       1)Deletes current version of the bill.


       2)Provides legislative findings regarding the SOP history and the  
         National Organic Program (NOP); duplication of fees and registration  
         requirements for California growers; enforcement by SOP and NOP; and,  
         declares that the purpose of amending SOP is to reform fees and  
         paperwork, and create a framework whereby the SOP enforcement  
         activities supplement the NOP-funded enforcement, in California.


       3)Changes the title from the California Organic Products Act of 2003 to  
         the California Organic Food and Farming Act.








                                                                        AB 1826


                                                                        Page  2






       4)States that the purpose of SOP is to require it to do the following:


          a)   Promote coordination of federal, state, and local agencies in  
            implementation of NOP;


          b)   Expand, improve, and protect the production of organic  
            products; and,


          c)   Provide technical assistance, education, outreach, and guidance  
            to the organic industry; 


       5)Permit the Secretary (Secretary) of the California Department of Food  
         and Agriculture (CDFA) to receive and expend state and federal funds  
         for activities authorized under this Act.


       6)Adds that the Advisory Committee (AC) to the Act is required to  
         advise the Secretary on education, outreach, and technical assistance  
         for organic producers.


       7)Expands and changes the make-up of the AC by adding a representative  
         from an accredited certifying agency operating within this state,  
         reducing from two to one member representing consumers.


       8)Permits the Secretary, to the extent funds are available and in  
         consultation with the AC, to establish procedures for and conduct the  
         following activities:


          a)   Receive and investigate complaints filed by any person  
            concerning suspected acts of noncompliance with this Act or  
            federal organic standards.







                                                                        AB 1826


                                                                        Page  3







          b)   Conduct periodic spot inspections;


          c)   Conduct periodic prohibited substance testing on products  
            labeled as organic;


          d)   Conduct farmers' market inspections;


          e)   Expand, improve, and protect the production of organic  
            products;


          f)   Assist operations in achieving organic certification, including  
            transition to organic; 


          g)   Provide technical assistance, education, outreach, and guidance  
            to the organic industry;


          h)   Reimbursement of investigation, enforcement, and market  
            surveillance expenses, including expenses incurred by any CAC for  
            actions conducted pursuant to this Act; and, 


          i)   Conduct any hearings, appeals, mediations, or settlement  
            conferences from actions taken to enforce this chapter.


       9)Requires any investigation, inspection, and prohibited material  
         testing reports be sent to the Secretary for any required enforcement  
         action.


       10)Requires the Secretary to coordinate activities authorized under 7),  







                                                                        AB 1826


                                                                        Page  4





         and 8), with other county and state licensing, registration,  
         inspection and fee collection procedures applicable to registrants.


       11)Adds the following definitions to the Food and Agricultural Code  
         (FAC):


          a)   Defines "accredited certification operation" to mean an entity  
            accredited by the United States Department of Agriculture (USDA)  
            to certify operations as compliant with the federal organic  
            standards.


          b)   Defines "certified operation" to mean a producer, handler, or  
            retail food establishment that is certified organic by and  
            accredited certification agency as authorized by the NOP.


          c)   Defines "data" to mean the information provided annually by  
            entities registered under the act including certified acreage and  
            gross product sales. 


          d)    Defines "department" to mean the State Department of Public  
            Health (DPH).


          e)   Defines "director" to mean the Director of DPH and the State  
            Public Health Officer for DPH.


          f)   Defines "exempt operation" to mean a production or handling  
            operation that sells organic agricultural products but is exempt  
            from certification under NOP.


          g)   Defines "federal organic standards" to mean the federal  
            regulations governing production, labeling, and marketing of  







                                                                        AB 1826


                                                                        Page  5





            organic products under NOP, and any amendments to NOP or  
            regulations made subsequent to the enactment of this Act.


          h)   Defines "inspection" to mean the act of examining and  
            evaluating a production or handling operation to determine  
            compliance with state and federal law.


          i)   Defines "producer" to mean a person engaged in the business of  
            growing or producing food, fiber, feed, or other agricultural  
            -based consumer products.


          j)   Defines "prohibited substance" to mean a substance prohibited  
            for use in organic production or handling, or is not provided for  
            in state or federal law.


          aa)  Defines "residual testing" to mean an official or validated  
            analytical procedure that detects, identifies, and measures the  
            presence of chemical substances in or on raw or processed  
            agricultural products.


          bb)  Defines "retail food establishment" to mean a restaurant,  
            delicatessen, bakery, grocery store, or retail outlet with an  
            in-store food service or processed or prepared raw and  
            ready-to-eat food.


          cc)  Defines "State Organic Program" or "SOP" to mean a state  
            program that meets the requirements of NOP, is approved by the  
            Secretary of USDA, and is designed to ensure that a product sold  
            or labeled as organically produced under the NOP requirements is  
            produced and handled using organic methods.


       12)Permits fees collected under the Act to be used, under advisement of  







                                                                        AB 1826


                                                                        Page  6





         the AC, for activities authorized by the Act, including assisting  
         operations in achieving certification, conducting education and  
         outreach, entering research and development partnerships, and  
         addressing production and marketing obstacles to the growth of the  
         organic sector.


       13)Deletes the requirement that each registrant provide a copy of their  
         registration to each county agricultural commissioner (CAC) in which  
         they operate.


       14)Requires, prior to the sale of any organic product, every person in  
         the production or handling of raw or agricultural products sold as  
         organic is required to register with CDFA, and requires annual  
         renewal of registration until no longer engaged in activities  
         requiring registration.


       15)Revises the information required for registration, by deleting  
         detailed descriptions of facilities and locations, and instead  
         requires an address or parcel number, and uses the following  
         categories for purposes of registration:


          a)   Citrus;


          b)   Fruit and vegetable row crops;


          c)   Livestock and dairy;


          d)   Stone fruit


          e)   Tree fruit








                                                                        AB 1826


                                                                        Page  7






          f)   Tree nuts; and,


          g)   Other, including but not limited to, organic fallow ground,  
            herbs and mushrooms, cut flowers, and apiaries.


       16)Revises fee schedule from a flat fee per total sales to an up to  
         fee, set by the Secretary in consultation with the AC, reduces three  
         fees as show below, and eliminates other fees for initial  
         registration and multi-ingredient products.


         Current schedule                             AB 1826 Schedule     
         Gross Sales    Fee                        Gross Sales    Fee


          --------------------------------------------------------------- 
         |$10,001/25,00|$   75     |           |             |           |
         |0            |           |           |             |           |
         |             |           |           |             |           |
         |             |           |           |             |           |
         |-------------+-----------+-----------+-------------+-----------|
         |$25,001/50,00|$ 100      |           |$10,000/50,00|$   75     |
         |0            |           |           |0            |           |
         |             |           |           |             |           |
         |             |           |           |             |           |
         |-------------+-----------+-----------+-------------+-----------|
         |$50,000/100,0|$ 175      |           |             |           |
         |00           |           |           |             |           |
         |             |           |           |             |           |
         |             |           |           |             |           |
         |-------------+-----------+-----------+-------------+-----------|
         |$100,001/250,|$ 300      |           |$            |$ 100      |
         |000          |           |           |50,000/250,000|           |
         |             |           |           |             |           |
         |             |           |           |             |           |
          --------------------------------------------------------------- 







                                                                        AB 1826


                                                                        Page  8








       17)Exempts any adjustments of fee levels from the Office of  
         Administrative Law hearing requirements.


       18)Deletes the provisions for a "public information sheet," replacing  
         it with requirement for CDFA or CAC to provide the name and address  
         of registrant, the nature of their business, and the names of all  
         certification agencies for the NOP or SOP.


       19)Increases the fee cap the Secretary, in consultation with the AC,  
         may charge a certifying agency operation in California to $500, and  
         permits certifying agencies to submit annual registration fees and  
         application on behalf of their clients


       20)Requires any certifying agency to make specified records available  
         to the Secretary of CAC within 72 hours of a request.


       21)Replaces the detailed listing of required records to be kept by a  
         producer, handler, or retailer with the requirement that accurate and  
         specific records are kept as required by the Secretary, in  
         consultation with the AC.


       22)Makes technical, clarifying and conforming changes.


       EXISTING LAW:  SOP is statutorily mandated to enforce the federal  
       Organic Food Production Act of 1990; NOP regulations; the California  
       Organic Products Act of 2003; and, SOP regulations.  Every person  
       engaged in California in the production or handling of raw agricultural  
       products sold as organic, must register with CAC in the county of  
       principal operation prior to the first sale of the product.  In  
       addition, every person engaged in this State in the processing or  







                                                                        AB 1826


                                                                        Page  9





       handling of processed products is required to register with DPH. 





       Generally, CDFA registers and enforces organic provisions related to  
       raw agricultural products while DPH registers and enforces organic  
       provisions related to processed organic products.  SOP's enforcement  
       activities are coordinated with DPH, the USDA's NOP, and California's  
       CAC's SOP's activities include program administration; county biologist  
       training; spot inspections; residue testing and sampling; complaint  
       investigations; registration; and, providing information and guidance  
       to the California organic industry.  





       Federal law establishes NOP, which requires operations that produce or  
       handle organic agricultural products to comply with federal organic  
       standards and be certified by a certifying agent, as specified.  NOP  
       has recognized SOP as a state organic program and has delegated  
       enforcement of federal organic standards and regulations to SOP.


        


       FISCAL EFFECT:  Unknown.


       COMMENTS:  The California Certified Organic Farmers (CCOF) is a trade  
       association, as well as an approved organic certifying agent; they want  
       to bring more consistency to the state and federal programs by reducing  
       the required paperwork for farmers and reduce the cost of filing with  
       SOP.  They state that much of the paperwork and fees are duplicative of  
       NOP, and that much of the information required of SOP is already  
       collected by the certifying agents.  Further, they state that SOP puts  







                                                                        AB 1826


                                                                        Page  10





       California organic producers, processors and handlers at a competitive  
       disadvantage.


       California Agricultural Commissioners and Sealers Association (CACASA)  
       have raised concerns over AB 1826, while supporting the proposed intent  
       of the bill.  They have strong concerns with the change that sends  
       administrative penalties directly to CDFA rather than to the  
       investigating (county) agency and that the location of where producers'  
       products are handled and/or processed should be provided with the  
       registration.  Additionally, they are concerns that the reduction in  
       fee revenues could reduce their ability to provide enforcement.


       California was the first state to create an Organic Food Act in 1979.   
       In 1990, SOP was created under the Organic Foods Production Act of 1990  
       which authorized USDA to establish the NOP regulations.  USDA finished  
       development of NOP regulations in 2002.  The purpose of these laws is  
       to ensure that the consumer is purchasing organic products when labeled  
       as organic.





       According to USDA, organic agriculture has grown substantially over the  
       past years to an annual sales level of more than $39 billion in the  
       United States and over $75 billion worldwide.  The numbers of certified  
       organic operations have significantly increased, continuing the trend  
       of double digit growth in the organic sector.  According to new data,  
       there are now 21,781 certified organic operations in the United States.  
        California has roughly 4,160 registered organic operations.  CDFA  
       estimates that California producers account for over 40% of the organic  
       production in the U.S.


       AB 1826 proposes to rename the SOP registration fee to "fee for  
       producers for the purposes of funding the activities" authorized by the  
       Act, and make the fee schedule a hard cap rather than a fixed number.   







                                                                        AB 1826


                                                                        Page  11





       They reduce the fee for three different levels of gross sales by  
       combining them with a lower level and using the lower level's fee  
       amount.  While a limited number of producers would benefit from the  
       lower fees, the bill provides the Secretary the ability to reduce all  
       levels of fees.  The committee may wish to consider if lowering fees  
       for a limited number of participants, and not all, is an appropriate  
       policy.


       This bill defines "department" as the DPH when used in this Act, and  
       then requires registration with the "department", while the intent is  
       to have CDFA carry out the registration organic producers and handlers.  
        The committee may wish to consider changing the registration  
       references from "department" to "Secretary."  (Page 13, lines 4 and 7)


       The committee may wish to consider a technical amendment to change the  
       request of inspection by any authorized state of local authority from  
       "72 hours" to "three business days".  (Page 23, line 4)


       RELATED LEGISLATION:  SB 643 (McGuire), Chapter 719, Statutes of 2015,  
       established a comprehensive licensing and regulatory framework for the  
       cultivation, manufacture, transportation, storage, distribution, and  
       sale of medical cannabis; and, required CDFA, by January 1, 2020, make  
       available a certified organic designation and organic certification  
       program for medical marijuana, if permitted under federal law and the  
       NOP.


       AB 2612 (Agriculture), Chapter 393, Statutes of 2010, among other  
       changes, authorized promulgation of regulations to streamline organic  
       registration; clarified the administration of SOP; authorized the  
       development of an online SOP registration system; and, made conforming  
       changes.


       AB 2628 (Tom Berryhill), Chapter 395, Statues of 2010, allowed CAC to  
       file a certified copy of a final decision with the court that directs  







                                                                        AB 1826


                                                                        Page  12





       the payment of a civil penalty pursuant to violations of SOP, and, if  
       applicable, a copy of any order that denied a petition for a writ of  
       administrative mandamus; and, required the court to enter judgment  
       immediately upon that filing and at no cost.


       SB 730 (Speier), Chapter 685, Statutes of 2005, prohibited any  
       aquaculture, fish, or seafood product (including farmed and wild  
       species) from being labeled or represented as "organic," until such  
       time that USDA's NOP, or CDFA implements formal certification  
       standards.  





       REGISTERED SUPPORT / OPPOSITION:




       Support
























                                                                        AB 1826


                                                                        Page  13






          California Certified Organic Farmers (Sponsor)


          Archi's Acres


          Bennett Farms, Inc.


          Bolthouse Farms


          California Center for Cooperative Development


          California Climate & Agriculture Network


          California Farmlink


          California League of Conservation Voters


          Capay Organics


          Cornucopia Institute


          Ecological Farming Association


          Frey Vineyards


          Full Belly Farm









                                                                        AB 1826


                                                                        Page  14






          Harpos Organics


          Heirloom Organic Gardens


          Hunter Orchards


          LaRocca Vineyards


          Leavitt lake Ranches


          Orange County Produce


          Organic Consumers International


          Organic Trade Association


          Panorama Meats


          Quarter Acre Farm


          Rancho Rendezvous Farms, dba Fandango Olive Oil


          Roots of Change 


          Samuelson Consulting









                                                                        AB 1826


                                                                        Page  15






          Seven Bridges Cooperative Microbrewery, Inc.


          Stoney Point-Pine Hill Orchards


          Straus Family Creamery


          The Farmers Guild


          The Peterson Family


          Traditional Medicinal


          Vedder Company, L.P., dba Vedder Ranch


          Wood Cattle Ranch Inc.




          Opposition


          None on file







          Analysis Prepared by:Jim Collin / AGRI. / (916) 319-2084








                                                                        AB 1826


                                                                        Page  16