BILL ANALYSIS Ó AB 1894 Page 1 Date of Hearing: March 30, 2016 ASSEMBLY COMMITTEE ON AGRICULTURE Bill Dodd, Chair AB 1894 (Committee on Agriculture) - As Amended March 1, 2016 SUBJECT: Food and agriculture: omnibus bill. SUMMARY: Authorizes the Department of Food and Agriculture (CDFA) to collect assessments for the Standardization Program (SP) and Citrus Program (CP) together and specify an adequate time frame for remittance and clarify the authority of CDFA's Dairy Marketing Branch (DMB) to finance environmental research projects of interest to the dairy industry. Specifically, this bill: 1) Changes CP late payment date from the 10 days after assessment is due to 10 day after the following month when a CP assessment is due, which conforms the CP to the SP. 2) Clarifies that citrus handlers are responsible for the payment of assessments and inspection fee associated with CP. 3) Defines, as it relates to milk and dairy products marketing, educational and research activities to mean any effort to develop and improve the management practices of dairy producers and AB 1894 Page 2 processors, including, but not limited to, practices associated with the environmental sustainability of land, air quality, and water quality. 4) Allows CDFA to fund educational and research activities. 5) Makes conforming and technical changes. EXISTING LAW: 1)Establishes the California Citrus Advisory Committee to develop and make recommendations to CDFA regarding procedures for implementing an inspection program; requires producers of citrus varieties grown in this state, as specified, to pay an assessment; requires the assessment to be collected at the end of each month; and, requires any payment not made by the 10th day of the month following the month for which the assessment is payable, incur a penalty of 10% of the assessment owed. 2)Regulates milk and dairy products, as specified, and requires every milk handler subject to that regulation to pay specified assessments and fees to CDFA to cover the costs of regulating milk. Establishes the CDFA Fund as a special fund, to be used, among other things, for laws regulating the marketing of milk and other dairy products, and the stabilization and marketing of market milk. FISCAL EFFECT: Unknown. COMMENTS: AB 1894 Page 3 Citrus In the current Food and Agricultural Code (FAC), the SP and CP have distinct language specifying the due dates of assessments and the date penalty payments begin accruing. For the SP, statutes specify payments are late 30 days after the date produce is shipped. For the CP, language governing the late payment schedule is ambiguous. Since the inception of the CP, FAC has been interpreted and applied 10 days and one month following the date assessments was due (approximately 40 days). After confusion arose over late payments between the two programs, a legal review was conducted by CDFA. Late payment dates for the two programs were clarified, and it was determined that the citrus industry's assessments are actually payable on the tenth day of the following month from which the citrus was received, meaning the citrus industry has only 10 days rather than 40 days to remit payment to CDFA. Requiring the industry to remit payment within a 10 day time period prior to issuing penalties for late payment is unreasonable and could interrupt business practices. While legal determination has been established, ambiguity in state statute still exists and requires rectification. This bill clarifies this issue by conforming the two programs late assessment payments. Dairy AB 1894 Page 4 In the late 1990's, environmental regulations were in the process of being considered for California's dairy industry. Following an initial review, it was determined that regulations were extremely costly and that additional scientific research/review was needed to understand what regulations would be beneficial to the industry and the environment. The industry concluded that funding for environmental activities was to be provided via DMB's budget. DMB's budget funding is paid two thirds by dairy producers and one third by dairy processors. In the interest of performing this work, CDFA has cited existing authority per FAC to fund an environmental staff position and coordinate activities. The funds for these activities are collected from market milk and manufacturing milk producers, as well as milk processors in California, using pre-existing assessment authority and are for the benefit of producers and processors. Using the current assessment collection authority ensures that all parties benefiting from these projects help finance them. Current FAC authorizes DMB to develop and maintain positive marketing conditions; bring about and maintain stability; and, provide education activities for the dairy industry. The broad interpretation of this statutory mandate is that CDFA may use this authority to fund environmental research projects. The ambiguous nature of the language does, however, bring into question the legality of the continued use of DMB funds. This bill clarifies DMB's authority to fund environmental research projects using existing funds. REGISTERED SUPPORT / OPPOSITION: AB 1894 Page 5 Support None on file. Opposition None on file. Analysis Prepared by:Victor Francovich / AGRI. / (916) 319-2084