California Assembly Bill AB907 Amended / Bill

 BILL NUMBER: AB 907AMENDED BILL TEXT 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.