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Warning! This is a not the current version of this legislative bill.
Italicized text includes proposed additions to law or the previous version of the bill.
Struck text includes proposed deletions to law or the previous version of the bill.

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PASSED THE SENATE AUGUST 13, 2012
PASSED THE ASSEMBLY AUGUST 23, 2012
AMENDED IN SENATE JUNE 21, 2012
AMENDED IN SENATE MARCH 19, 2012
AMENDED IN SENATE JUNE 8, 2011
AMENDED IN ASSEMBLY APRIL 14, 2011
AMENDED IN ASSEMBLY MARCH 15, 2011

INTRODUCED BY Assembly Member Ma

FEBRUARY 17, 2011

An act to amend Sections 55523.3,55525.75, 55527.6, 55862.7, and
55922 of the Food and Agricultural Code, relating to processors of
farm products, and making an appropriation therefor.


LEGISLATIVE COUNSEL'S DIGEST


AB 907, Ma. Processors of farm products.
(1) Existing law requires a processor of farm products, as
defined, to be licensed by the Secretary of Food and Agriculture, and
provides that an application for a license or for a renewal of a
license that shows the applicant to be in an unsound financial
condition is sufficient grounds to deny an application. Existing law
provides that if the secretary is not satisfied that an applicant or
licensee is financially responsible, the secretary may, in lieu of
denying, suspending, or revoking the license, accept an irrevocable
guarantee of the obligations of the licensee to all California farm
product creditors. Existing law also requires a licensee or applicant
to furnish and maintain an irrevocable guarantee if the secretary
determines that, in the preceding 4 years, the person has engaged in
certain conduct, including a violation that resulted in license
revocation.
This bill would specify that the irrevocable guarantee may 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, in an amount that is at least sufficient to pay the
obligations of the licensee at the time the guarantee is issued.
(2) Existing law requires a person found to be operating a
business within the past 5 years without a license or who has a
failed to pay a license fee pursuant to a certain schedule to pay
additional penalties to the secretary, including paying an amount
equal to that portion of the fees that were not paid for the last 5
years the business has operated.
This bill would increase that penalty amount to 3 times the
portion of the fees that were not paid for the last 5 years the
business has operated.
(3) Under existing law, the funds collected pursuant to the
provisions regulating processors of farm products are deposited in
the Department of Food and Agriculture Fund in the State Treasury,
and are continuously appropriated for the administration and
enforcement of those provisions.
Because the additional penalties that would be authorized by this
bill would be deposited in the Department of Food and Agriculture
Fund in the State Treasury, the bill would make an appropriation.
The bill would make other technical, nonsubstantive changes.
Appropriation: yes.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

SECTION 1. Section 55523.3 of the Food and Agricultural Code is
amended to read:
55523.3. (a) If the secretary is not satisfied that an applicant
or licensee is financially responsible, the secretary may, in lieu of
denying, suspending, or revoking the license, accept an irrevocable
guarantee of the obligations of the licensee to all California farm
product creditors. The irrevocable guarantee may 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, and shall be in an amount that is at least sufficient to
pay for the licensee's obligations at the time the guarantee is
issued. The guarantee shall be for any period, in any form, and in
any amount that the secretary may, from time to time, require. The
secretary may, as a condition of accepting and maintaining the
guarantee, require the guarantor to supply financial information to
the secretary at times and to the extent the secretary deems
advisable.
(b) A guarantee placed with the secretary pursuant to subdivision
(a) shall support an action in a court of competent jurisdiction by a
farm products creditor for obligations of the licensee to the
creditor and by a state officer for the obligations of the licensee
to the state related to transactions subject to the guarantee.
(c) An irrevocable guarantee accepted by the secretary pursuant to
this section shall not operate as a release for purposes of Section
55637.
SEC. 2. Section 55525.75 of the Food and Agricultural Code is
amended to read:
55525.75. (a) The withdrawal of an application for a license
after it has been filed with the department does not deprive the
department of its authority to institute or continue a proceeding
against the applicant or to enter an order denying the license,
unless the department consents in writing to the withdrawal.
(b) The expiration or forfeiture by operation of law of a license,
or its forfeiture or cancellation by order of the department or by
order of a court of law, or its surrender without the written consent
of the department, does not deprive the department of its authority
to institute or continue a disciplinary proceeding against the holder
upon any ground provided by law or to enter an order revoking the
license or otherwise taking disciplinary action against the holder.
(c) Any action brought by the department against an applicant or
holder does not abate by reason of the sale or other transfer of
ownership of the business that is a party to the action, except with
the written consent of the department.
(d) Nothing in this division or in any other provision of this
code deprives the department of the authority to settle or adjudicate
a disposition of a case other than by revocation or denial. The
department or the department's designee may compromise with the
applicant or holder in a written stipulation and order. The
department may, following a hearing, order probation on terms and
conditions as determined by the department. The authority conferred
by this subdivision shall include, but is not limited to, the
authority to order payment of amounts determined owing to California
farm product creditors, the authority to dismiss an action on the
department's own initiative, the authority to order administrative
penalties, the authority to order a respondent to pay for heightened
audit scrutiny, the authority to suspend a license for a period of
years, or any combination of remedies other than final revocation or
denial of a license.
SEC. 3. Section 55527.6 of the Food and Agricultural Code is
amended to read:
55527.6. (a) Licensees or applicants for a license shall be
required to furnish and maintain an irrevocable guarantee in a form
and amount satisfactory to the secretary, if within the preceding
four years the secretary determines that they have done any of the
following:
(1) Engaged in conduct which demonstrates a lack of financial
responsibility including, but not limited to, delinquent accounts
payable, judgments of liability, insolvency, or bankruptcy.
(2) Failed to assure future financial responsibility unless an
irrevocable guarantee is provided.
(3) Otherwise violated this chapter which resulted in license
revocation.
(4) The irrevocable guarantee may 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.
(c) The guarantee shall not be less than ten thousand dollars
($10,000) or 20 percent of the annual dollar volume of business based
on farm product value returned to the grower, whichever is greater,
as assurance that the licensee's or applicant's business will be
conducted in accordance with this chapter and that the licensee or
applicant will pay all amounts due farm products creditors.
(d) The secretary, based on changes in the nature and volume of
business conducted by the licensee, may require an increase or
authorize a reduction in the amount of the guarantee, but in no case
shall the guarantee be reduced below ten thousand dollars ($10,000).
A licensee who is notified by the secretary to provide a guarantee in
an increased amount shall do so within a reasonable time as
specified by the secretary. If the licensee fails to do so, the
secretary may, after a notice and opportunity for a hearing, suspend
or revoke the license of the licensee.
SEC. 4. Section 55862.7 of the Food and Agricultural Code is
amended to read:
55862.7. (a) If any person is found to be operating a business
without the license required by Section 55521, or failed to pay a fee
in accordance with the schedule in subdivision (b) of Section 55861,
that person shall pay to the secretary double the amount of the
license fee due pursuant to this chapter.
(b) In addition to subdivision (a), if any person is found to be
operating a business within the past five years without a license
required by Section 55521, or failed to pay the fees in accordance
with the schedule in subdivision (b) of Section 55861, that person
shall pay to the secretary an amount equal to three times that
portion of the fees that were not paid for the last five years the
business has operated.
SEC. 5. Section 55922 of the Food and Agricultural Code is amended
to read:
55922. (a) Any person that violates any provision of this chapter
is liable civilly in the sum of not less than five hundred dollars
($500) or more than one thousand dollars ($1,000) for each violation,
to be recovered in an action by the secretary in any court of
competent jurisdiction. All sums which are recovered under this
section shall be deposited in the State Treasury to the credit of the
Department of Food and Agriculture Fund.
(b) The department may recover investigative costs, excluding
attorney's fees and administrative overhead, for those charges where
there has been a conviction in a court of law, or a court-supervised
settlement has been reached. Nothing in this section allows the
department to recover investigative costs for an administrative
licensing action or any action that has not been filed in a court of
law.
(c) Any person or entity responsible for investigative costs under
this section shall be allowed to audit the department's
investigative costs. The audit shall be performed by a third-party
certified public accountant and paid for by the person or entity
requesting the audit. The department shall promulgate regulations to
implement this subdivision by June 1, 2002.