CLFP Staff Reviewing New Bills Introduced in the Legislature

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CLFP staff has been reviewing the thousands of new bills introduced in the Legislature in January and February. The legislative policy committees have begun holding hearings on these measures and CLFP will be taking positions and weighing in on measures impacting the food processing industry. Some of the key legislative issues CLFP is currently actively engaged include:

Cottage Food Operators: Two bills have been introduced that seek to allow small food businesses operating out of a private home that produce "non-potentially hazardous goods" (so called "cottage food operations") to comply with fewer regulations. While CLFP understands and sympathizes with the desire to make the regulatory environment less burdensome for small business, CLFP expressed significant food safety and public health concerns with these measures to the legislative authors. CLFP has encouraged the legislators authoring these measures to consider working with the California Department of Public Health and the Administration on avenues to help streamline the licensing and inspection processes for cottage food operators.

State Water Resources Control Board (SWRCB): Two bills have been introduced providing much needed due process reform at the SWRCB. The SWRCB is currently exempt from the safeguards found in the Administrative Procedures Act (APA). SB 964 (Wright) defines circumstances where the APA should apply so stakeholders can participate in the rulemaking process in a meaningful way. SB 965 (Wright) improves the SWRCB’s rulemaking process by addressing ex-parte communications. The void left in the communication process by the current ex-parte interpretation eliminates the ability for SWRCB leaders to learn firsthand about stakeholder issues. CLFP believes it is imperative SWRCB members have access to as much information as possible in order to make informed regulatory decisions.

Regulatory Reform: A number of bills have been introduced that try to create more transparency, accountability and oversight of regulatory agencies. One major theme of these measures is increased legislative oversight and involvement in the regulatory process. State agencies have been granted broad authority to promulgate regulations on a variety of matters with potentially significant impacts on the regulated community. CLFP believes it is vital that legislators learn how their legislative mandates have been interpreted and implemented, to provide feedback to regulators, to hear concerns from regulated parties, and to inspire new legislation, if necessary. Legislation has been introduced that will make it easier for the Legislature to provide agency oversight, particularly in those instances when regulations are found to exceed legislative authority.

Climate Change/Cap and Trade: The central question at the Legislature focusing on AB 32's cap-and-trade regulation is what control the Legislature may or may not have over the estimated $3 billion that will be generated in the first year of the cap-and-trade auction. Currently, there are a few minor efforts underway by various interest groups to position themselves to receive a portion of the revenues should the Legislature have control. For the moment, only two bills, AB 1532 (Perez) and SB 1572 (Pavley), are at the nexus of the dispute. Both bills seek to establish Legislative hegemony over the funds from the sale of allocations to the stakeholders. The Governor's budget includes GHG auction revenue to cover other environmental projects that are currently funded by the general fund. The outcome of the debate turns on the application of a Supreme Court case entitled Sinclair Paints vs. Board of Equalization (Sinclair). Sinclair Paints took up the question whether a charge imposed by the state on manufacturers who are not otherwise regulated is a fee or a tax for purposes of Proposition 13's supermajority requirements. (See Cal. Const., art. XIII A, section 3; Health & Safety. Code, section 105725 et seq.). The Supreme Court overturned the lower court ruling finding it was a tax. The Court held that a fee must bear a reasonable relationship [nexus] to the burden imposed by those charged with the fee and that the fee must not exceed the cost of the program it is funding. At its simplest, Sinclair will limit power of the Legislature and the Governor to spend the money - but only if it holds.

Energy: The only bill that stands a chance of potentially lowering electricity rates is SB 971 (Cannella). This bill will reduce the cost of compliance for publicly owned utilities (POUs) and irrigation districts (IDs) required to meet the 33 percent Renewable Portfolio Standard (RPS) by 2020 by allowing them to net out any large hydroelectric contracts for generation. Currently, all utilities including municipal utilities and irrigation districts are required to meet the RPS pursuant to Senate Bill (x1) 2 (Simitian) which increased the current 20 percent RPS by 2010 to 33 percent by 2020. By netting out their large hydroelectric contracts POUs and IDs will only be required to meet the 33 percent requirement against any fossil fuel generation in their portfolios. Currently, any hydroelectric generation above 30MW is not an eligible renewable under California's RPS.

The CLFP Government Affairs Committee has been reinvigorated and will play an important role in helping set the priorities and policy direction for CLFP. The committee will also assist in the organization of the CLFP Day at the Capitol this summer. Please contact Trudi Hughes if you are interested in participating on this committee.

Articles contributed by Trudi Hughes, Director, Government Affairs and John Larrea, Director, Government Affairs

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