BILL ANALYSIS Ó 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