BILL ANALYSIS �
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|Hearing Date:April 28, 2014 |Bill No:SB |
| |1328 |
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SENATE COMMITTEE ON BUSINESS, PROFESSIONS
AND ECONOMIC DEVELOPMENT
Senator Ted W. Lieu, Chair
Bill No: SB 1328 Author:Hill
As Amended: April 21, 2014 Fiscal: Yes
SUBJECT: Weights and measures.
SUMMARY: Authorizes the Department of Food and Agriculture (DFA) to
adopt regulations consistent with federal law to establish a uniform
policy relating to the use of dry or wet tare weight methods of
measurement for the retail sale of meat, poultry, and fish products
and adopt regulations imposing an additional assessment. Also
authorizes DFA to add up to $2 dollars for the business license of a
business using a point of sale (POS) system for purposes of POS
enforcement. Specifies that a grocery store, as defined, that
displays a refund or no charge policy for overcharged items, shall not
be fined or assessed any other penalty for the first item that is not
in compliance during an initial standard inspection.
Existing law:
1)Provides that the Secretary of the DFA has a duty to enforce the
laws relating to weights and measures and measuring devices, and
provides for the enforcement of those laws by the Secretary and each
county sealer under the Secretary. (Business and Professions Code
(BPC) Division 5, Chapter 2, commencing with � 12001)
2)Makes it unlawful for any person to sell any dressed poultry or any
other fowl or smoked, fresh, frozen, cooked, dried, or pickled meats
or fish other than by weight determined at the time of sale on a
scale properly sealed in accordance with specified requirements.
(BPC � 12024.5)
3)Makes it unlawful for any person, at the time of sale of a
commodity, to charge an amount that is greater than the price of the
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commodity. (BPC � 12024.2)
4)Makes it a misdemeanor to knowingly mark or stamp any false or short
weight or measure, or to knowingly mark false tare on any container,
or knowingly sell any falsely marked container. (BPC � 12021)
5)Provides that fat added to fresh meats or roasts is tare weight,
unless the package is clearly and prominently labeled in eight-point
type or larger font with the words "fat added."
(BPC � 12022.5)
6)Makes it a misdemeanor to violate any of the weights and measures
provisions of the BPC or any rules, regulations, tolerances,
specifications, or standards adopted under those provisions. (BPC �
12026)
7)Authorizes the board of supervisors of a county or city and county
to license businesses and to levy business license fees. (BPC
Division 7, Part 1, commencing with � 16000)
8)Establishes the criteria and methodology for cities and counties to
use when inspecting the pricing accuracy of a retail establishment
using a point-of-sale (POS) system, and specifies that enforcement
action may be taken for any item that is not accurately scanned.
(BPC � 13350 (a) (b))
9)Authorizes the county board of supervisors to charge a POS system
inspection fee or an annual registration fee. (BPC �13350 (e))
This bill:
1)Authorizes the DFA to adopt regulations consistent with federal law
to establish a uniform policy relating to the use of dry or wet tare
weight methods of measurement for the retail sale of meat, poultry,
and fish products.
2)Authorizes the DFA to adopt regulations imposing an additional
assessment of up to
$2 dollars to obtain a business license for a business using a POS
system. Requires the fee assessed to be deposited in the DFA Fund.
After appropriation by the Legislature, the fees would be available
to DFA to carry out the provisions relating to the use of POS
systems.
3)Specifies that a grocery store shall not be fined or assessed any
other penalty for the first item not in compliance during an initial
standard inspection, provided that:
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a) The grocery store has a policy to refund the amount of the
product, or to provide the product free of charge, if the amount
charged for the item is greater than the price advertised,
posted, marked, displayed or quoted.
b) The grocery store posts a description of the policy in a clear
and conspicuous manner at each checkout location.
1)Defines "grocery store", for these purposes, as a full-line,
self-service retail store with gross annual sales of $2 million or
more that sells a line of dry groceries, canned goods, nonfood
items, and some perishable items.
FISCAL EFFECT: Unknown. This bill has been keyed "fiscal" by
Legislative Counsel.
COMMENTS:
1.Purpose. This bill is sponsored by the California Grocers
Association . According to the Author, the bill will:
a) Provide a permanent funding source for the Division of
Measurement Standards (DMS) within the DFA to restore programs
eliminated by recent budget cuts.
b) Help establish consistency for businesses and consumers
through a uniform standard for tare weight to be used by
retailers.
c) Incentivize retailers to post a store policy to refund the
price difference or provide the product to the customer free of
charge when an overcharge occurs.
2.Background. According to the Author, the recent State fiscal crisis
has eliminated most general fund monies from the DFA. Because the
DMS was 100% funded by the General Fund, budget cuts have eliminated
certain consumer and business protection programs that ensure
products are labeled accurately, specifically the quantification and
price accuracy programs in the counties which rely on the state to
oversee.
The Author also states that, while counties can adopt programs to
remedy the issue, not all do. The Author indicates that less than
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30 counties have a price accuracy program. Therefore, the Author
notes that a large number of consumers are unprotected from
retailers and manufacturers that mislabel products.
Because not every county has a program, the fees added by the bill
are attached to the business license fee. Further, the Author notes
that there will likely be enough businesses utilizing POS systems
paying the additional $2 dollar fee.
In 2005. AB 889 (Ruskin, Chapter 529, Statutes of 2005) added BPC �
13350 to create a statistical sampling method to test POS system
accuracy. The sampling method is currently partially based on the
national standard set forth in the National Institute of Standards
and Technology Handbook 130. It varies because � 13350 required
that there be a 100 percent accuracy requirement for POS
inspections, while the national standard requires 98 percent
accuracy.
According to the Author, the average chain grocery store has 10,000
items for sale, and hundreds of items are either going on or coming
off sale. The price changes are entered by hand into the system by
employees, and while most stores have a "very good record, a single
violation leads to an enforcement action."
The latest amendments prohibit a grocery store from being fined or
assessed any other penalty for the first item found to not be in
compliance during an inspection, provided that the store has a
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posted policy of refunding the amount of the product, or giving the
product free if the scanned price is greater than the product's
advertised price .
3.National Institute of Standards and Technology Handbook 130 (HB 130)
- Examination Procedures for Price Verification. The National
Conference on Weights and Measures (NCWM), supported by the National
Institute of Standards and Technology (NIST), established the Price
Verification Working Group in 1993 to respond to public concern
about price accuracy in retail stores. In 1995, the NCWM adopted
procedures for verifying the accuracy of automated prices in retail
stores. These procedures are embodied in NIST's HB 130 -
Examination Procedures for Price Verification.
The procedures apply to all retail stores, including food, hardware,
general merchandise, drug, automotive supply, convenience, club or
other stores. The goal of these procedures was to provide
regulators with tools, guidance, and background information, as well
as uniform test procedures and enforcement practices, to enhance the
economic well-being of consumers and retail businesses. Further, by
implementing the price verification program in cooperation with
industry, regulators would help to restore and maintain consumer
confidence in retail pricing practices and technologies, such as
scanners, and provide economic benefits for consumers and
businesses.
According to HB 130, 39 other states have either adopted the
handbook or have guidelines based on the handbook as follows:
a) 30 states have adopted the handbook in its entirety and update
the laws on an annual basis;
b) 7 states have adopted an older version of the handbook;
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c) 2 states have no laws or regulations but use the handbook as a
guideline;
d) 14 states either have no laws or regulations or have laws and
regulations that are not based on the handbook (California
included).
4.Accuracy under HB 130, and California POS Law. Under HB 130, the
required accuracy is 98 percent on the 100-item sample (that is, at
most two errors are permitted on a 100-item sample). If more than
two errors are found and verified, the store does not meet the
accuracy requirement.
Under California POS Law, random samples are taken from up to 50 items
at a retail establishment (BPC � 13350 (a) 4)), and "Enforcement
action may be taken for any item not in compliance" (BPC � 13350
(b)).
While California has a lower number of items to be sampled, which
enables inspections to be conducted much more quickly and
efficiently and at a lower cost to the county and to the retailer,
California law requires compliance with all items scanned in the
sample taken.
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AB 889 (Ruskin, Chapter 529, Statutes of 2005) established the criteria
and methodology in California law by which the pricing accuracy of
POS systems may be verified. In establishing that authority and
standards for inspecting POS systems, Assemblymember Ruskin agreed
to amend the bill to reference HB 130. With regard to those
amendments, the Senate Business, Professions and Economic
Development analysis for AB 889 stated:
"In discussing the amendments to implement this commitment, it
was found that the explicit standards in Handbook 130 only
required a 98% accuracy in the POS systems. Therefore, the
standard would allow a 2% error rate in cost overruns for scanned
prices. This level of error tolerance was not acceptable to
those involved in discussing the amendments. Therefore, this
bill provides that 'Enforcement action may be taken for any item
not in compliance' - eliminating any allowance for cost
overruns."
The latest amendments to this bill seeks to maintain the 100%
accuracy requirement of California law, but waives any fine for a
single scanned item found to be out of compliance during an
inspection. If any additional items are scanned at a higher price
than the advertised or displayed price, the sealer can assess a fine
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for those violations.
5.Prior Legislation. AB 889 (Ruskin, Chapter 529, Statutes of 2005)
authorized counties to inspect the pricing accuracy of retail point
of sale systems. That bill, among other things, established until
2009, the authority for counties to inspect the pricing accuracy of
retail POS systems.
AB 1907 (Ruskin, Chapter 434, Statutes of 2008) extended the POS
inspection law to January 1, 2014.
AB 482 (Hill, Chapter 166, Statutes of 2013) removed the sunset on
the POS inspection provisions, thereby indefinitely extending the
authority for counties to inspect the pricing accuracy of retail POS
systems.
AB 2285 (Ruskin, Chapter 556, Statutes of 2006) made changes to the
list of items required to be displayed for consumers by automatic
checkout systems, and recast the term "automatic checkout" to refer
to the term "point-of-sale" and modified the definition of
"point-of-sale system."
AB 2732 (Washington, Chapter 818, Statutes of 2002) required
automatic checkout systems to display the price read by the
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computer. Also required a business that uses an automatic checkout
system to ensure that the price of the goods or services registered
by the computer is conspicuously displayed to the consumer, along
with any price reductions, taxes, surcharges and the total amount of
the transaction, and authorized enforcement by local governments.
SB 369 (Kopp, 1997) would have required DFA to adopt regulations
relating to retail scanner accuracy, including regulations to verify
the accuracy of advertised prices, price representations and
computations related to retail scanners. This bill would have
authorized counties to charge the owner or operator of retail
scanners an annual registration fee to recover the costs of
inspection and make other requirements. ( Status: SB 369 died in the
Assembly Appropriations Committee.)
6.Arguments in Opposition. California Agricultural Commissioners and
Sealers Association (CACASA) shares the Author's concern that the
Division of Measurement Standards is an integral resource for
California consumers and badly needs additional funding, but argues
that the bill provides for the collection of a fee on businesses to
help fund the DFA in return for relaxed consumer protection laws.
CACASA argues the bill would dilute the law by allowing retailers to
"pass" mandatory annual price verification inspections even in cases
when an overcharged item is discovered during the course of the
test. The measure would prevent the county sealer from taking
action on these overcharges. CACASA insists that, in all cases,
consumers deserve the right to accurate and fair commercial
transactions. Lowering the bar for compliance will only serve to
decrease necessary efforts to comply with the law.
Concerning the April 21 amendments to this bill, CACASA states that the
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amendments do not remove their opposition, stating: "First, the
language specifying that the signage promoting the required 'policy'
to refund a consumer for an overcharged item is 'conspicuous' is not
an acceptable substitute for strict liability independent
enforcement. Consumers are encouraged to be vigilant, but are not
expected to police the industry. Second, the removal of the fines
and penalties for the discovery of an overcharged item also removes
any tools that the county sealers currently employ to encourage
compliance. The current fines for a single overcharge are small
(typically $100 or less), but they are used effectively to bring the
matter to the attention of the retailer."
7.Suggested Amendments. The following amendments are suggested by
Committee staff to clarify and correct the bill:
a) The Author's stated intent is to keep the 100% accuracy
compliance rate to pass a POS inspection in California, but allow
for one overcharge before a fine is assessed. The intent is that
when one violation is found, that a written violation would be
issued, but no fine would be imposed. However, the latest
amendments provide that a store: "shall not be fined or assessed
any other penalty for the fist item not in compliance?" It
appears that it could be argued that a grocery store could not
even be issued a written violation for the first item out of
compliance. Staff recommends the following clarifying amendment
on page 4 lines, 29 through 39:
(d) (1) Notwithstanding any other law, a grocery store that
meets the requirements of paragraph (2) may be issued a written
violation but shall not be fined or assessed any other penalty
for the first item not in compliance during an initial standard
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inspection.
b) The bill refers to a grocery store policy for a refund or free
item: "if the amount charged for the item is greater than the
price advertised, posted, marked, displayed, or quoted." By
specifying the refund or free item is given when the "the amount
charged" is greater, some grocers could argue that the customer
would first have to pay the higher price for the item, in order
to be eligible for the refund or free item. Staff suggests the
following clarifying amendment on page 5, lines 1 through 6:
(2) (A) The grocery store has a policy to refund the amount of
the product, or to provide the product free of charge, if the
amount charged displayed or computed by the POS checkout
register for the item is greater than the price advertised,
posted, marked, displayed or quoted.
c) This bill refers to "each checkout location" however BPC �
13350, which this bill amends consistently uses the term
"checkout registers." Staff suggests the following conforming
amendment:
On page 5, line 6, strike out "location" and insert "register"
d) The latest amendments appears to contain a drafting error.
Staff recommends the following correcting amendment:
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On page 5, line 7 strike out "(C) The entire store"
8.Suggested Author's Amendment. Committee staff suggests amendments to
place a 3 year sunset (January 1, 2018) on BPC � 13350 (d), as added
by this bill, which specifies that a grocery store displaying a
refund or no charge policy for overcharged items, may be issues a
written violation but shall not be fined or assessed any other
penalty for the first item that is not in compliance during an
initial standard inspection.
SUPPORT AND OPPOSITION:
Support:
California Grocers Association (Sponsor)
Opposition:
California Agricultural Commissioners and Sealers Association
Los Angeles County Board of Supervisors
Consultants:Vincent Chee/G.V. Ayers