New laws, rules reflect efforts of Farm Team

Issue Date: January 4, 2006

By Kate Campbell
Assistant Editor

With the New Year come some new laws and regulations that California farmers and ranchers should know about. The new rules this year, however, aren't as sweeping or significant as those faced by agriculture in previous years.

With 961 bills sent to the governor's desk for review, 729 were signed into law and 232 were vetoed. Fortunately legislation that was approved will not have devastating effects on agriculture and business.

In some measure this qualified good news is the result of actions taken by Farm Bureau as part of its "Plan to Protect California Family Farms," which was unveiled to the Governor and legislators last spring. The initiative let officials know farmers and ranchers would be watching the bills put forth, and the votes cast.

"In the closing days of the last legislative session, elected officials had the opportunity to take action on many bills that would impact California's agricultural heritage or harm farmers' ability to provide safe and affordable food to consumers," said George Gomes, California Farm Bureau Federation administrator.

"With our active participation in the legislative process, both as individuals and as Farm Team members, we effectively stood our ground to improve the business climate," Gomes said. "We rallied against regulations that would have increased our costs of doing business and we introduced solutions through testimony on pending legislation. Added to that were letters and calls to legislators and regulators from Farm Bureau members throughout the state.

"With the help of our members, we will move into 2006 with renewed energy to tackle what promises to be a challenging legislative session," Gomes said. "Many of the more complex or controversial pieces of legislation have been carried over from the last session as two-year bills."

Proposed legislation carried over from last year touch upon issues such as agricultural burning, farmworker housing, endangered species, workers' compensation, pesticide registration, sales and property tax, San Joaquin River restoration and state water quality policy.

"Farm Bureau will continue to insist officials take into account the cumulative economic impacts of new laws and the mounting costs of regulatory compliance," Gomes said. "New laws and regulations must go through appropriate cost-benefit analysis and be based on sound science before implementation.

"Vigilance and increased participation by Farm Team, and our members statewide, will take on greater importance in the coming year," he stressed.

Assembly Bill 1011, which takes effect Jan. 1, will require major retailers and others to register as pesticide brokers for the first time. In the past, retailers like Home Depot and Wal Mart sold pesticides to consumers, many similar to those sold for agricultural and commercial uses, but did not include a charge for the mill tax.

The Department of Pesticide Regulation monitors collection of the tax--a 2.1-cent-per-dollar assessment on the first sale of pesticides in California. This mandatory seller fee supports pesticide enforcement, health and safety, and other DPR programs. State law also requires DPR registration of pesticides sold in California to assure their safety.

DPR received a total of about $41.6 million in mill fee payments for 2004-05, compared to $34.7 million the prior year. Pesticide registrants, primarily manufacturers, reported total pesticide sales of about $1.9 billion. About half involve agricultural products, with the other half being non-agricultural chemicals, including over-the-counter, consumer products.

The law, carried by Assembly Member Barbara Matthews, D-Tracy, makes it easier for DPR auditors to track over-the-counter pesticide sales in California estimated at $1 billion annually. While pesticide sales are most often associated with agriculture, products subject to the mill fee also include a broad range of professional and household sanitizers, disinfectants and home garden products.

In addition, DPR collected during fiscal year 2004-05 about $1.6 million in unpaid environmental fees and penalties for unregistered pesticide sales.

"It is absolutely critical to establish a level playing field in the marketplace," said DPR Director Mary-Ann Warmerdam. "Law-abiding businesses face unfair competition if others sell unregistered products or fail to pay environmental fees in full. And every dollar unpaid is a dollar denied to regulatory programs that protect the public."

Another aspect of the bill is a change in the way scientific data developed by chemical companies is protected in California. While perhaps an obscure change to the average citizen, it will help reduce the costs of crop protection materials for the state's farmers.

Cynthia Cory, CFBF director of environmental affairs, explained that under federal law any patent is protected for about 20 years, "but what happened at the federal level was the decision to make extra rules on pesticides because they're especially costly to develop," Cory explained.

"The chemical companies were given 15 years of data protection. After that the scientific data underlying pesticide products would enter the public domain. Most companies wait until the 15 years run out before seeking the data.

And, in the other 49 states, when the patents expire, other companies have come in and used the previously developed data to produce pesticides--but not in California," Cory said. "Here, we had a separate law, probably in recognition that we require extra testing and have more stringent registration requirements."

In California chemical companies' data could be protected forever unless the company that owned the data granted use through a letter of authorization, she explained.

"The problem is that some companies were finding ways to get around the law and get the data," Cory said. "Without the original data to base subsequent generations of a product on, it becomes ever more expensive for companies to develop them and more costly for farmers who buy those products."

Cory said that what amounts to a minor change in the law turned into a huge battle last summer that played out during committee hearings and in the corridors of the capitol.

"Paul Wenger (CFBF first vice president) was in the middle of harvest when this situation came to a head," Cory said. "He knows this issue completely and pulled off harvest and came to Sacramento to testify during an Assembly Agriculture Committee hearing.

"Paul explained that the change in the law will not weaken our pesticide protections and that all it would do is increase competition and hopefully reduce the cost of materials farmers need to protect their crops. With Paul's help we were able to create a better understanding of what this change in the state's pesticide regulations will really mean and how it will help family farmers."

This change in the state's pesticide regulations went into effect Jan. 1. And Cory said without the direct involvement of farmers this potentially beneficial change in regulations would not have been made.

Another piece of legislation, AB 1061, also took effect Jan. 1. It covers resolution of growers' payment disputes for in-state produce sales. The bill improves the ability of California's farmers and ranchers to ultimately get paid for the products they produce and sell by creating a more streamlined process for payment disputes.

In the past, existing law allowed growers to dispute payments received for in-state produce sales to the California Department of Food and Agriculture. The new law allows growers with claims under $30,000 to contest payments, or lack of them, through a more streamlined process.

"The changes to the state's Produce Dealers Act included in AB 1061 are based on a similar informal mediation system found in the federal Perishable Agricultural Commodities Act," said Noelle Cremers, CFBF director of natural resources and commodities.

"In the past growers were able to go through an arbitration process when payment was contested, which cost less than full litigation, but was still costly for growers," Cremers said. "This new law will serve as one more tool to help family farms."

A regulatory change going into effect in January involves more stringent enforcement of pesticide regulations and use permit requirements and restrictions. The goal of the beefed-up enforcement program by the Department of Pesticide Regulation and the County Agricultural Commissioners is to better protect the public and those who handle or apply pesticides.

The new Enforcement Guidelines are a cooperative project developed by the California Department of Pesticide Regulation (DPR) and the California Agricultural Commissioners and Sealers Association. The intent of the Enforcement Guidelines is to provide uniform, predictable and fair enforcement responses that are understandable to the regulated community and the public.

Questions about the Enforcement Guidelines may be directed to DPR's Enforcement Branch at (916) 324-4100 or county agricultural commissioners.

The temporary, emergency heat-stress regulations put in place last summer have been extended into the new year. The state Occupational Safety and Health Standards Board voted unanimously on Dec. 15 to extend the regulation for another 120 days.

The formal "rulemaking" process to establish a permanent heat illness prevention rule in California will begin in early 2006. Meanwhile, a bill (AB 805) that would add specific heat illness prevention and response requirements to employers' existing obligations for workplace safety is still pending in the state Legislature.

"On the federal front, we achieved an historical win with the House passage of the bill updating the Endangered Species Act, and we will continue to work with the Senate as they take this issue up this year," said Jack King, CFBF National Affairs manager. "In addition, we will continue to bring attention to the permanent repeal of the Death Tax."

Significant changes in federal individual income tax and estate and gift tax policies have occurred during the last few years, but family farmers have been unable to get the sunset provision in the estate tax laws changed.

"Since the federal individual income tax imposes the largest tax burden on the broadest group of farmers and the federal estate tax can affect the ability to transfer the farm operation to the next generation, these changes are of considerable importance to the farm community," King said.

Federal tax code changes affecting both individual and business income taxes have reduced average tax rates for all farm households, but the effects of these changes vary by type of farm. And they vary by year.

Changes to federal estate tax policies have raised the value of property that can be transferred to the next generation free of the estate tax to $1.5 million in 2005, and tax rates have been reduced.

"This has reduced the number of estates required to pay tax and the amount of taxes owed," King said. "But, despite these changes, appreciating land values and increasing farm size mean a larger share of farm estates are subject to the federal estate tax."

While existing law provides for the phase-in of additional reductions in federal estate taxes, King said considerable uncertainty clouds the long run effects of the changes due to the scheduled 1-year repeal of the tax in 2010 and a reversion to 2001 law in 2011.

"The frequent revisions of the federal tax code have added to its complexity, especially since many of the recent changes have been phased in or are temporary," King said. "This situation requires the efforts of Farm Bureau, the Farm Team and all of our members if we are to secure fair and simplified estate tax laws."

Gomes said that during the coming year, Farm Bureau will again be engaged in the political process to help protect family farms and ensure farmers and ranchers are able to continue providing some of the world's best fresh food, fiber, flowers and forestry products while protecting California's natural environment.

Information on CFBF's Farm Team and it's various political activities on behalf of members is available online at www.cfbf.com.

(Kate Campbell is a reporter for Ag Alert. She may be contacted at kcampbell@cfbf.com.)

Permission for use is granted, however, credit must be made to the California Farm Bureau Federation when reprinting this item. Top