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california legislation > ():
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.

(pdf version)
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, 55524.5,
55525.75, 55527.6, 55862.7, 55864, 55901,
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, as amended, 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 also authorize the secretary to accept a
surety bond, in a form and amount acceptable to

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 bond
guarantee is issued.
(2) Existing law authorizes the Department of Food and
Agriculture, as an alternative to revocation or denial of a license,
to stay a revocation subject to specified conditions for a period of
probation, or issue a license subject to specified conditions,
including a requirement of restitution. Existing law also authorizes
the department to settle or adjudicate the disposition of a case
other than by revocation or denial of a license, including ordering
payment of amounts owing and imposing administrative penalties.

This bill would specify that the restitution or amounts owing
shall be to California farm product creditors to whom the licensee
owes money, and would also authorize the department to require an
applicant, licensee, or respondent to pay for investigative costs
incurred by the department. The bill would authorize the department
to impose an administrative fine, not to exceed $10,000, on
processors who crush grapes for certain violations, including failing
or refusing to pay for a farm product in the manner specified in a
contract.

(3)

(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 license fees
penalties to the secretary, including paying an amount
that is double the amount of the license fee due
equal to that portion of the fees that were not paid for the
last 5 years the business has operated
.
This bill would require a processor who crushes grapes
who violates those provisions to pay an additional administrative
fine to the secretary, up to a maximum of $6,000

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
.

(4) Existing law prohibits the department from recovering
investigative costs for an administrative licensing action or any
action that has not been filed in a court of law.

This bill would delete that prohibition.

(5)

(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 administrative fines
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.


Vote: 2/3. Appropriation: yes. Fiscal committee: yes.
State-mandated local program: no.


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 or a surety bond of the obligations of
the licensee to all California farm product creditors. The
surety bond
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
bond guarantee is issued. The guarantee
or surety bond 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 or surety bond , require
the guarantor to supply financial information to the secretary at
times and to the extent the secretary deems advisable.
(b) A guarantee or surety bond 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 or surety bond
.
(c) An irrevocable guarantee or surety bond deposited
with
accepted by the secretary pursuant to this
section shall not operate as a release for purposes of Section 55637.

SEC. 2.
Section 55524.5 of the Food and
Agricultural Code is amended to read:
55524.5. (a) The Legislature finds there to be a substantial
nexus between the conduct specified in Section 55524 and an applicant'
s or holder's fitness for licensure.
(b) The department shall not dismiss an action where a violation,
however minor, has been established. The department shall not dismiss
an action because the applicant or holder establishes factors in
mitigation.
(c) However, the department may impose discipline other than
denial or revocation of the license. As an alternative to revocation
of a license, the department may stay a revocation subject to terms
for a period of probation. As an alternative to denial the department
may issue a license subject to conditions. Terms of probation or
terms of conditional licensure may include, but are not limited to, a
requirement of restitution to California farm product creditors to
whom the licensee owes money, payment of investigative costs incurred
by the department, payment for extra audits, immediate revocation on
a new violation, or any other terms that respond to the particular
violations or circumstances found. For processors who crush grapes,
terms of probation or terms of conditional licensure may also include
payment of an administrative fine not to exceed ten thousand dollars
($10,000) for violations of Sections 55872, 55874, 55875, and 55879.

(d) Once a finding of a violation has been made, the department
may consider the following factors in assessing the appropriate level
of discipline:
(1) The relative isolation or infrequency of the conduct.
(2) Whether the conduct was a part of a pattern or practice.
(3) Whether the actor had been warned before.
(4) Whether the actor considered the consequences of the conduct.
(5) Whether the actor reasonably relied on others.
(6) The severity of the consequences.
(7) The mens rea of the actor.
(8) In the case of a criminal conviction, evidence of
rehabilitation.
(9) The total licensing history.
(e) The following factors shall not be considered in assessing the
appropriate level of discipline:
(1) The social or economic contributions of the applicant or
holder.
(2) General testimonials as to good character and worthiness to be
licensed.
(3) Economic hardship on the licensee.
(4) "Mercy of the court" pleas in connection with criminal
convictions, pattern or practice violations, or deception.
(5) In the case of a felony criminal conviction, the department
shall not consider rehabilitation unless the convicted person has a
valid certificate of rehabilitation.

SEC. 3. 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
fines under subdivision (c) of Section 55524.5
penalties , the authority to order a respondent to pay
the department for investigative costs
and
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 a surety bond
an irrevocable guarantee in a form and amount satisfactory
to the director secretary , if within
the preceding four years the director
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
a surety bond is posted 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.


(b)

(c) The bond 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.
(c)

(d) The director 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 bond guarantee
, but in no case shall the bond
guarantee
be reduced below ten thousand dollars ($10,000). A
licensee who is notified by the director
secretary
to provide a bond guarantee
in an increased amount shall do so within a reasonable time as
specified by the director secretary .
If the licensee fails to do so, the director
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.
(c) In addition to the license fees and penalties in subdivisions
(a) and (b), any processor who crushes grapes that is found to be
knowingly operating a business within the past five years without a
license required by Section 55521, or has knowingly failed to pay the
fees in accordance with the schedule specified in subdivision (b) of
Section 55861, the processor shall pay an administrative fine in an
amount, as determined by the secretary, up to five times the amount
of the license fees and penalties due, up to a maximum administrative
fine of six thousand dollars ($6,000).

SEC. 5.
Section 55864 of the Food and
Agricultural Code is amended to read:
55864. All fees, administrative fines, and investigative costs
that are collected pursuant to this chapter shall be paid into the
State Treasury monthly and shall be credited to the Department of
Food and Agriculture Fund and, except as otherwise provided in
Section 55433, shall be expended in carrying out this chapter.

SEC. 6.
Section 55901 of the Food and
Agricultural Code is amended to read:
55901. (a) Except as specified in Section 55902, any misdemeanor
which is prescribed by this article is punishable by a fine of not
less than five hundred dollars ($500) or more than five thousand
dollars ($5,000), by imprisonment in the county jail for not more
than one year, or by both that fine and imprisonment.
(b) For a violation of the offense described in subdivision (a),
the department may recover investigative costs, excluding attorneys'
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.
(c) Any person or entity responsible for investigative costs under
this section shall be allowed to audit the department's
investigative costs. The audit must 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.

SEC. 7. 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.