BILL ANALYSIS �
SENATE TRANSPORTATION & HOUSING COMMITTEE BILL NO: AB 1566
SENATOR MARK DESAULNIER, CHAIRMAN AUTHOR: Holden
VERSION: 06/10/14
Analysis by: Nathan Phillips FISCAL: Yes
Hearing date: June 24, 2014
SUBJECT:
Inedible kitchen grease
DESCRIPTION:
This bill increases the authority of the California Department
of Food and Agriculture (CDFA) and the California Highway Patrol
(CHP) to oversee and enforce laws related to the collection,
transportation, storage, and rendering of inedible kitchen
grease (IKG).
ANALYSIS:
AB 3587 (Harvey), Chapter 434, Statutes of 1994, established the
IKG Program, under which CDFA charges a fee on transporters of
IKG to fund a program to reduce theft of IKG. Beginning in the
early 1990s, theft of IKG and related damage to IKG containers
became an increasing problem as its value as a biofuel grew.
Existing law:
Establishes annual administrative fees required of licensed
IKG renderers, collection centers, and transporters and a
sunset date of July 1, 2015 for collection of the annual fees.
Specifies minimum requirements for rendering or collection
center license applicants, including that they have never been
convicted of a felony related to adulterated or mislabeled
food, and have not previously violated existing regulations
associated with collecting, rendering, or transporting IKG.
Requires a licensed renderer to keep records for two years of
sales and transportation of IKG, and to provide records upon
demand to any peace officer of the state.
Allows any peace officer of the state, during normal business
hours, to inspect any premises maintained by a licensed
renderer or registered transporter, and any IKG located on the
AB 1566 (HOLDEN) Page 2
premises, for the purpose of determining whether that renderer
or transporter is complying with the record maintenance
requirements.
Gives the CDFA power to revoke licenses and registration
certificates for renderers or collection centers that have
violated regulations pertaining to the handling or
transportation of IKG.
Defines as misdemeanors violations of IKG record keeping or
exhibiting of IKG records to peace officers, and sets monetary
penalties for the violations.
Specifies required information and fees for registration of
licensed IKG renderers or collection centers, including
applicant name and address, and identification of vehicles and
employees involved in the business.
Prohibits any person from taking possession of IKG from an
unregistered transporter, an unlicensed collection center, or
an unlicensed renderer, or knowingly taking possession of
stolen IKG.
Allows for small-scale, individual, non-commercial rendering
and transportation of IKG under specified conditions.
Prohibits any person who is not a registered transporter or
licensed renderer of IKG from transporting IKG from inside the
state to outside the state.
Regulates the removal of parked and abandoned vehicles,
including provisions that establish the authority to remove
vehicles, their disposition, responsibilities for costs of
towing and impoundment, and the rights of vehicle owners.
Establishes procedures for the arrest of vehicle operators and
their release upon promise to appear.
Establishes fines for failure to comply with record keeping
regulations, in the Vehicle Code and equivalently in the Food
and Agriculture Code. For first, second, and third offenses,
the base fines are $500, $1,000, and $2,000, respectively,
with corresponding total bail amounts (including penalty
assessments) exceeding $2,000, $4,000, and $8,000,
respectively.
AB 1566 (HOLDEN) Page 3
This bill :
Increases the stringency of requirements for renderer and
collection center licenses, including that applicants may be
refused licenses if they have violated existing law pertaining
to IKG.
Increases fines for failure to comply with record keeping
regulations, doubling the base fine for a first offense from
$500 to $1,000; and quintupling the fines for second and third
offenses from $1,000 to $5,000, and $2,000 to $10,000,
respectively. When penalty assessments are included, total
corresponding bail amounts exceed $4,000, $20,000, and
$40,000.
Allows authorized CDFA and CHP employees to inspect rendering
and collection center facilities, manifests, and any premises
owned by licensed renderers, collection centers, or registered
transporters of IKG.
Specifies appeals processes for denial and revocation of
licenses for renderers and collection centers.
Extends sunset dates for the collection of annual fees charged
by CDFA by five years, from July 1, 2015 to July 1, 2020.
Requires more stringent record keeping by IKG transporters,
renderers, or collection centers, in the form of an electronic
or written manifest.
Allows peace officers to remove and impound vehicles found to
be illegally loading, unloading, or transporting IKG.
Requires conspicuous labeling of vehicles used to transport
IKG.
Makes technical and conforming changes to align the Vehicle
Code with the Food and Agricultural Code.
COMMENTS:
1.Purpose . According to the author, the market for biofuels
continues to increase substantially in the state, and as
prices have increased for IKG, so has theft and illegal
handling of this biofuel feedstock. This includes illegal
activity both within the state and across state lines. The
AB 1566 (HOLDEN) Page 4
purpose of this bill is to enhance, clarify, and align
enforcement of IKG operations across two key regulating
agencies, CDFA and CHP, to ensure that penalties for illegal
activity are more than the cost of doing business.
2.IKG and growing IKG theft . IKG is a feedstock for
waste-to-energy products including biodiesel fuel and is
obtained by processing of products including used cooking oil
and animal carcasses. Currently, there are 46 renderers, 53
collection centers, and 388 transporters licensed in the
state. Over the last decade, the market price of IKG has
increased by four to six times, responding to the demand for
biofuels in the state. With this increase in value of IKG has
come a dramatic increase in theft and illegal handling, both
within California and nationally. According to the CDFA, IKG
theft has become a major crime in our cities and counties.
3.Increasing fines as a deterrent . As a general policy measure,
the effectiveness of increasing fines as a deterrent is
debatable. In this bill, however, the increase in fines -
doubling for a first offense and quintupling for second and
third offenses - is simply keeping pace with the market value
of IKG, which has more than quadrupled over the last decade.
The author's assertion that the fine increase is needed to
offset the cost of doing business seems reasonable on that
basis. It is important to note, however, that penalty
assessments added on to base fines can increase the total fine
by many multiples. According to the CHP, the total fine
associated with the base fines specified in this bill exceeds
a factor of four.
Because the violations in both the Vehicle Code section and
the Food and Agriculture Code section are misdemeanors, both
code sections are subject to the same increase of total bail
over the base fine amounts. Thus, in both code sections
amended by this bill, the total bails for first, second, and
third offenses would exceed $4,000, $20,000, and $40,000. For
a small, otherwise legal operator guilty of sloppy record
keeping but not premeditated criminal intent, these total fees
appear to be excessive. The author asserts that all of the
current licensees operate businesses of a scale that could
absorb a first offense, and that licensees should learn their
lesson after a first offense and have no excuse for second or
third offenses short of willful negligence. Nevertheless, the
magnitude of the fines proposed in this bill may serve as a
barrier to successful entry by some small business owners who
AB 1566 (HOLDEN) Page 5
make a single mistake in record keeping.
4.Towing and impoundment of vehicles involved in illegal IKG
transport . Amendments to the Vehicle Code in this bill are
largely technical and conforming so that the Vehicle Code is
aligned to the Food and Agriculture Code. The two key new
additions to the Vehicle Code by this bill are 1) a
requirement for conspicuous labeling of licensed vehicles
transporting IKG; and 2) a provision authorizing peace
officers to impound vehicles involved in illegal IKG
transportation. Provisions in this bill related to towing and
impoundment are in accord with existing state law, including
sections of the Vehicle Code related to removal of parked and
abandoned vehicles.
5.Penalty for lack of vehicle labeling ? This bill does not
specify penalties for transporters who fail to place
registration decals on their vehicles. Other sections
addressed by this bill prescribe penalties only for failure to
maintain or exhibit records. The committee may wish to amend
the bill to specify penalties for non-compliance with
provisions that reduce or exempt from penalties otherwise
legally operating transporters who have made an honest mistake
in failing to place registration decals or to place them
correctly.
6.Second referral: health and safety issues of IKG handling .
Previous to its consideration in this committee, issues of
food and agricultural safety were addressed in a hearing of
the Senate Committee on Agriculture, where the bill passed by
a 5-0 vote on June 17, 2014.
RELATED LEGISLATION:
AB 2378 (Huber), Chapter 303, Statutes of 2012, increases
maximum fines for specified crimes related to IKG theft, and
requires that transporters, renderers, and collection centers
maintain records on IKG for two years.
SB 513 (Canella), Chapter 337, Statutes of 2011, creates the
Rendering Industry Advisory Board, defines membership and
duties, and reauthorizes the licensing of renderers and the
collection of fees to sunset January 1, 2016.
AB 2612 (Agriculture), Chapter 393, Statutes of 2010, an omnibus
bill, expands rendering definitions of a "collection center,"
changes collection centers' licensure expiration dates, and
AB 1566 (HOLDEN) Page 6
exempts collection centers from specified fees.
AB 1249 (Galgiani), Chapter 280, Statutes of 2009, authorizes
transportation of animal carcasses to alternative facilities
during states of emergency, and extends the sunset date to
January 1, 2016, for the CDFA administration fee for the IKG
Program.
Assembly Votes:
Floor: 73-0
Appr: 17-0
Ag: 7-0
Trans: 15-0
POSITIONS: (Communicated to the committee before noon on
Wednesday, June 18,
2014.)
SUPPORT: Pacific Coast Rendering Association
California Grain and Feed Association
Claremont Chamber of Commerce
California Restaurant Association
OPPOSED: None received.