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california legislation > AB 907

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AB 907 (Ma)
As Amended June 21, 2012
2/3 vote

|ASSEMBLY: | |(May 26, 2011) |SENATE: |36-0 |(August 13, |
| | | | | |2012)|
(vote not relevant)

Original Committee Reference: TRANS.

SUMMARY : Authorizes the California Department of Food and
Agriculture (CDFA) to impose sanctions three times the amount of
unpaid or underpaid license fees and requires any bond or
irrevocable guarantee, placed in lieu of proof of financial
responsibility, to include both past and future debts owed, as a
requirement of obtaining a processor's license.

The Senate amendments delete the Assembly version of this bill,
and instead:

1)Include all debts, past and future, to be considered in the
value of the surety bond or irrevocable guarantee that ensures
financial responsibility and ability to pay for the licensee's
obligations at the time the guarantee is issued as a
requirement of processor license approval.

2)Provide definition for "irrevocable guarantee" to include a
personal or corporate guarantee, a certificate of deposit, a
bank letter of credit, or a surety bond, as determined to be
appropriate by the secretary of CDFA.

3)Increases by three times the amount of fees due to the
secretary of CDFA if any person is found to be operating as a
processor without a license within the last five years that
person has operated.


1)Defines processor to mean any person that is engaged in the
business of processing or manufacturing any farm product, that
buys, or contracts to buy, any farm product for the purpose of
processing or manufacturing it and selling, reselling, or

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redelivering it in any processed form. It does not include
any retail merchant, as specified.

2)Requires that all processors of farm products apply and obtain
processor licenses with CDFA.

3)Requires up to four years' financial documentation as part of
the license application. If the secretary determines that an
applicant/licensee is unable to pay in full for future farm
product purchases, the applicant/licensee is denied a license,
with the following exception:

a) A surety bond may be posted in lieu of financial
responsibility for a minimum of $10,000 or 20% of the total
annual value of the products the applicant/licensee intends
to purchase.

4)Authorizes the secretary of CDFA, through the Market
Enforcement Branch (MEB), to enforce processor marketing laws
through licensing, fees, bonds, liens, audits, investigations,
violations, and penalties.

AS PASSED BY THE ASSEMBLY , this bill established new procedures
for the reporting of ladder or hoist equipment safety issues by
authorizing a port agent to review the initial report of a
suspected ladder or hoist safety standard violation, and any
information gathered as part of the preliminary investigation.

FISCAL EFFECT : According to the Senate Appropriations
Committee, likely minor increase in revenue from additional
penalties deposited in the Department of Food and Agriculture
Fund for unpaid licensing fees

COMMENTS: The Senate amendments that replaced the previous
version of this bill work to resolve the following issue:

Most wineries pay farmers for delivered grapes in a timely
manner; however, each year a few wineries neglect to pay
growers, causing economic hardship to those farming operations.
Within the last three years, the CDFA's MEB received formal
complaints from 214 winegrape growers against 81 wineries,
alleging $10.4 million in nonpayment for delivered grapes. This
bill authorizes CDFA to impose sanctions three times the amount
of unpaid or underpaid license fees, as well as requires any
bond or irrevocable guarantee, placed in lieu of proof of

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financial responsibility, to include both past and future debts
owed as a requirement of obtaining a processor's license. This
bill has been amended as a result of negotiations between
winegrape growers and wineries, and is noncontroversial in its
current form.

This bill was substantially amended in the Senate and the
Assembly-approved provisions of this bill were deleted. Senate
amendments have not been heard in an Assembly policy committee.
The Assembly version of this bill dealt with safety measures to
protect boat pilots. The Senate version relates to processors
of farm products and processor's licenses.

Analysis Prepared by : Victor Francovich / AGRI. / (916)

FN: 0004589