ACP/HLB BUDGET REQUEST

 The CDFA Budget Change Proposal (BCP) was approved by both houses and included in the budget.  The BCP is for $2.5 million in additional ongoing appropriations from the General Fund and 65 positions to establish a dedicated citrus division within CDFA was approved by both the Assembly and Senate Budget subcommittees as requested. The new Citrus Pest and Disease Prevention Division will receive $5 million annually from the State.

CCM worked with members of the legislature to submit a request for $10 million in ongoing funds from the General Fund for the ACP/HLB program.  Unfortunately, the request was not included in the final budget bill.  Looking ahead to 2020, it is CCM’s number one legislative priority to secure additional funding from the State to support the Citrus Pest and Disease Prevention Division’s activities in urban areas.

LABOR

AB 5 (Gonzalez): Worker status: employees and independent contractors (Opposed)

AB 5 codifies the California Supreme Court’s April 2018 ruling in Dynamex v. Superior Court of Los Angeles which creates a presumption that a worker is an employee unless the employer can demonstrate by way of a 3-factor test, or “ABC Test”,  that the worker is an independent contractor.  The ABC test is applicable to provisions of the Labor Code, the Unemployment Insurance Code, and the wage orders of the Industrial Welfare Commission.

Below is a summary of the law.  CCM advises growers and packers who utilize independent contractors (eg: trucking/hauling, pest control services, or hedging and topping) to seek legal counsel in order to ensure workers are properly classified. 

A person providing labor or services for remuneration is considered an employee rather than an independent contractor unless the hiring entity demonstrates that the person is:

  1. free from the control and direction of the hiring entity in connection with the performance of the work;
  2. the person performs work that is outside the usual course of the hiring entity’s business; and,
  3. the person is customarily engaged in an independently established trade, occupation or business.

Unless the hiring entity can affirm that each of the three parts in the ABC test are met, the hiring entity (packer, grower, FLC, etc.) would have to reclassify currently independent contractors as employees.

AB 5 differentiates between an individual doing work for someone, and likely being issued a 1099, and a business. Business-to-business relationships are not subject to the ABC test, provided the following criteria are met:

1) If a business entity formed as a sole proprietorship, partnership, limited liability company, limited liability partnership, or corporation (“business service provider”) contracts to provide services to another such business (“contracting business”), the determination of employee or independent contractor status of the business services provider shall be governed by existing test adopted by the Court in Borello v Department of Industrial Relations (1989) :

  1. The business service provider is free from the control and direction of the contracting business entity in connection with the performance of the work, both under the contract for the performance of the work and in fact.
  2. The business service provider is providing services directly to the contracting business rather than to customers of the contracting business.
  3. The contract with the business service provider is in writing.
  4. If the work is performed in a jurisdiction that requires the business service provider to have a business license or business tax registration, the business service provider has the required business license or business tax registration.
  5. The business service provider maintains a business location that is separate from the business or work location of the contracting business.
  6. The business service provider is customarily engaged in an independently established business of the same nature as that involved in the work performed.
  7. The business service provider actually contracts with other businesses to provide the same or similar services and maintains a clientele without restrictions from the hiring entity.
  8. The business service provider advertises and holds itself out to the public as available to provide the same or similar services.
  9. The business service provider provides its own tools, vehicles, and equipment to perform the services.
  10. The business service provider can negotiate its own rates.
  11. Consistent with the nature of the work, the business service provider can set its own hours and location of work.

Due to the complexity of this law, CCM highly recommends that hiring entities seek legal counsel to help them determine if their current contract arrangements are subject to, or satisfy, the ABC test.  Each contractual relationship and scenario should be assessed under the law individually.

AB 5 passed on a party-line vote in both houses and was signed by the Governor on Wednesday, September 19, 2019.

California Citrus Mutual and other agricultural associations opposed the bill because of the potential impact to packers, growers, and Farm Labor Contractors that regularly hire independent truckers and haulers to move fruit.  This bill contains numerous exceptions to the Dynamex test, however, no exception was made for owner-operator truck drivers that serve the agricultural industry.

During the debate, several legislators brought up the concern with owner-operator truck drivers and expressed the need to continue this discussion to provide further exemptions. CCM and others are following up with these members to see if there is a path forward next session.

In his signing message, the Governor announced that he intends to convene a working group to determine how to allow those excluded from the National Labor Relations Act the right to organize. CCM will be engaged as this issue moves forward.

Outcome:  Passed the Assembly 61-16; Passed the Senate 29-11; Signed by Governor Newsom.

AB 171 (Gonzalez) Employment: sexual harassment (Opposed)

AB 171 creates a rebuttable presumption of retaliation due to a person’s status as a victim of domestic violence, harassment or stalking should an employer take an adverse personnel action against such employee within 90 days of the employee providing notice of victim status.  This bill would expand the scope of these provisions by defining “employer” to mean any person employing another under any appointment or contract of hire.

The Department of Fair Employment and Housing (DFEH) is the regulatory agency that enforces FEHA and oversees workplace discrimination, harassment and retaliation issues. AB 171 proposes to add sexual harassment retaliation protections to the Labor Code and contradicts the existing statute of limitations under DFEH of 1 year.

California Citrus Mutual opposes AB 171 because it creates duplicative and contradictory regulation, applies the burden of proof upon the employer, expands the definition of employer to include the contracting entity (joint liability), will hamper employers’ ability to terminate poor performing employees, or employees harassing fellow employees; and expose employers to additional liability under the Labor Code.

Outcome: Passed the Assembly 58-12; Passed the Senate 29-10; No action by Governor as of October 6, 2019.

 WATER

SB 200 (Monning) Safe and Affordable Drinking Water Fund & Budget Appropriation (Support)

Beginning in fiscal year 2020-2021, SB 200 requires five percent of the proceeds from cap and trade revenues in the Greenhouse Gas Reduction Fund (GGRF) – up to $130 million annually – to go into the Safe and Affordable Drinking Water Fund for grants, loans, contracts or services to assist water systems to provide clean water for all Californians.

If five percent of GGRF falls below $130 million, the state is required to make up the difference and provide General Fund dollars to ensure up to $130 million is available annually in the Safe and Affordable Drinking Water Fund beginning in fiscal year 2023-2024 and until June 30, 2030.

SB 200 (Monning) is the implementing legislation that establishes the Safe and Affordable Drinking Water Fund and directs the State Water Resources Control Board on how the fund is to be managed.

For three years, CCM worked with a broad coalition of agricultural and environmental justice organizations to secure funding for clean drinking water solutions in small communities located in rural agricultural areas.  For many communities, a lack of funding for ongoing operations and maintenance resulted in many drinking water systems failing to meeting drinking water standards.  The State Water Resources Control Board Office of Enforcement is authorized by the Porter Cologne Act to take action against an entity that pollutes or threatens to pollute the ground water.  The Office of Enforcement argued that agricultural use of nitrates was justification for enforcement action against individual landowners in the Salinas Valley and Tulare Lake Basin.

To combat these actions, the CCM team along with colleagues, put together a legislative package that minimized agriculture’s exposure to frivolous water board actions and brought in funding from multiple sources for a problem that had multiple contributors, both urban and rural.  That package, known originally as SB 623, won the support of the prior Governor and was embraced by the current Governor Newsom. SB 623 would have created a dedicated funding stream via fees on urban water users and agriculture and would have protected landowners from further enforcement by the board, provided certain criteria were met.

Former Governor Brown was outright opposed to any solution that utilized general funds.  The current legislature, however, didn’t want to pass a fee on urban water customers, nor did some want to provide agriculture any sort of relief from continued enforcement.

Ultimately, SB 623 was dropped and a deal was reached between the Governor, the Legislature, and stakeholders as part of the 2019 Budget and SB 200.  The bill does not include any taxes or fees. The bill also does not include explicit liability protection language for agriculture, however, legal counsel and the Administration have affirmed that given the availability of funds, there is no incentive for the Office of Enforcement to take actions against landowners.

CCM believes that SB 200 is the best possible outcome for all stakeholders.

Outcome:  Passed the Assembly 68-0; Passed the Senate 38-1.  Signed by the Governor July 24, 2019.

SB 1 (Atkins) California Environmental, Public Health, and Workers Defense Act of 2019 (Opposed)

SB 1 would require state agencies to determine that if the federal standards for air, water, endangered and threatened species is changed to be less stringent than the baseline federal standards as of January 19, 2017 and, if so, consider whether it should adopt the baseline federal standards as a measure in order to maintain the state’s protections to be at least as stringent as the baseline federal standards.

In the final days of session, SB 1 was amended to address some, but not all, of our concerns.  The most significant amendment was a very subtle, but critical change in verbiage from “shall” to “may” in the Endangered Species act session. This change allows Fish and Game to consider applying previous standards to species it chooses to list as endangered under the CA Endangered Species Act.  Previous versions of the bill required Fish and Game to apply the previous standards, which would have nullified any new biological opinions.

The amendments did not remove the section of the bill that applies the California Endangered Species Act to the operations of the Central Valley Project.  If SB 1 were to become law, this provision would throw the federal government into litigation with the state and possibly jeopardize negotiations on the Voluntary Agreements. Senate Pro Tem Atkins acknowledged those concerns, but disagreed that the bill as amended would lead to the result the opposition was expressing.

On the final night of the 2019 Session, the Assembly took up SB 1, voting it out 48-22 (9 abstained).  It was passed by the Senate on concurrence 26-14. Senators Caballero, Hurtado, and Galgiani abstained or voted no along with the Republicans. Shortly thereafter, Governor Gavin Newsom announced that he will veto the measure.

Newsom said, “I fully support the principles behind Senate Bill 1: to defeat efforts by the president and Congress to undermine vital federal protections that protect clean air, clean water and endangered species.  Senate Bill 1 does not, however, provide the state with any new authority to push back against the Trump Administration’s environmental policies and it limits the state’s ability to rely upon the best available science to protect our environment.”

This is a positive sign from this Administration and is consistent with their messaging on water.

Outcome:  Passed out of the Assembly 48-22; passed out of the Senate 26-14; Vetoed by Governor Newsom on Friday, September 27, 2019.

SB 559 (Hurtado) California Water Commission: grant: Friant-Kern Canal (Support)

SB 559 would appropriate state funds to the Department of Water Resources for the purposes of restoring the Friant-Kern Canal to its full capacity, subject to an appropriation in the Budget Act.

The bill was amended in Committee to require the grant to be part of a comprehensive solution to groundwater sustainability and subsidence in the San Joaquin Valley and require the joint powers authority to demonstrate a funding match of at least 35% from user fees, local sources, federal funding, or a combination of these sources.

SB 559 was held in Assembly Appropriations and the subsequent General Fund budget request (Trailer Bill) was rejected in the final week of the legislative session. While this outcome is disappointing, CCM remains a committed partner to Friant and other stakeholders to secure funding to address subsidence on the Friant-Kern Canal.

The coalition issued a statement on September 11th expressing a commitment to working toward a “successful partnership for funding…” To this end, CCM is engaging with the coalition and Central Valley legislators to develop a strategy for 2020.

Outcome:  Held in Assembly Appropriations; budget request rejected

PESTICIDES

AB 916 (Muratsuchi) Pesticide use: glyphosate (Oppose)

AB 916 would, until January 1, 2025, prohibit a city, county, charter city, city and county, or a special district, as defined, from using any pesticide that contains the active ingredient glyphosate. AB 916 is a gut and amend.

Status:  Held in Committee (Sen Agriculture)

SB 86 (Durazo) Protect Children from Brain-Damaging Chlorpyrifos Act of 2019 (Oppose)

SB 86 would prohibit the use of a pesticide that contains the active ingredient chlorpyrifos.  SB 86 is a gut and amend.

Status:  Held in Committee (Asm. Environmental Safety & Toxic Materials)

OTHER

SB 54 (Allen)/AB 1080 (Gonzalez) Solid waste: packaging and products (Oppose)

These companion bills would require CalRecycle, before January 1, 2024, to adopt regulations that require producers (1) to source reduce, to the maximum extent feasible, single-use packaging and priority single-use products, and (2) to ensure that all single-use packaging and priority single-use products that are manufactured on or after January 1, 2030, and that are offered for sale, sold, distributed, or imported in or into California are recyclable or compostable.

The measures contain unrealistic timelines, heavy-handed regulations, and penalties that will negatively impact food safety and food quality – increasing food waste and potentially increasing overall food packaging.

Outcome: Held on the Assembly floor. We anticipate this issue will be taken up in the 2020 session.

SB 468 (Jackson) Taxation:  tax expenditures:  California Tax Expenditure Review Board (Opposed)

Would establish the California Tax Expenditure Review Board as an independent advisory body to comprehensively assess major tax expenditures and make recommendations to the Legislature.

While CCM remains opposed, the potential for this bill to result in negative changes to the existing sales tax exemption for agriculture equipment is minimal.  Amendments made to the bill create a process in which there are multiple opportunities for stakeholder engagement and to clarify that no legislative action is required based on the recommendations of the review board.  Furthermore, although the agriculture equipment tax exemption is a “major tax expenditure” by definition, there are multiple higher cost expenditures that are of greater priority and subject to greater scrutiny.

Outcome:   Passed the Assembly 53-21; Passed the Senate 28-10; No action by Governor Newsom as of October 6, 2019.