New Laws Impacting Agriculture for 2015

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New Laws Impacting Agriculture for 2015

Dennis Albiani

Every year a host of laws are enacted in California that impact farmers and other agriculture businesses. 2014 was no exception. The year started with the introduction of several controversial measures that would have impacted the agriculture industry, including strict regulation of antibiotics used in livestock production, mandatory labeling of food containing GMO ingredients, further restrictions on crop protection materials including neonicotinoids, and revisions to the milk pricing formula to redistribute end product value. However, these measures either failed to pass the legislature or were vetoed by the Governor.

Ultimately, the new laws that were enacted and that impact farmers, ag suppliers, and processors did not amend the Food and Agriculture Code, but are more broad-based employment and water related.

Below is a short synopsis of some of the new statutes of which every practitioner advising businesses within the agriculture industry should be aware.

Sustainable Groundwater Management Act, Senate Bill No. 1168 (Pavley), Assembly Bill No. 1739 (Dickinson) and Senate Bill No. 1319 (Hill) Groundwater has served as an important resource for California farmers for generations. California law recognizes that groundwater is a property right and runs with the overlying landowner. Last September, Governor Brown signed historic sustainable groundwater legislation that will for the first time establish oversight of groundwater by the Department of Water Resources (DWR) and the State Water Resources Control Board.

Combined, the bills establish that the policy of the state of California is to manage groundwater basins at the local level. However, in the event a local groundwater basin is not being managed sustainably or is being mismanaged, the State Water Resources Control Board will act as a backstop to manage the basin. Specifically, the act:

  • Establishes that it is the policy of the state that groundwater resources be managed sustainably for long term water supply reliability and multiple economic, social, or environmental benefits for current and future beneficial uses.
  • Requires that each basin or sub basin be managed by a Sustainable Groundwater Management Agency. The agency shall be formed on or before January 1, 2017. Failure to form a local agency may result in the State Water Resources Control Board taking control of the basin until a local governance structure is implemented. A new groundwater sustainability agency created pursuant to the act may require registration of extraction facilities and the installation of a water measuring devices. It may also adopt fees to implement the program. The bills establish 2015 as the baseline year.
  • Requires that a groundwater sustainability plan be submitted to DWR by January 2020 and every five years after that. The plan must result in "sustainable yield" within 20-year horizon; however, immediate actions to obtain sustainable yield must be achieved and demonstrated in the reports filed every 5 years. A local agency may submit an alternative (existing) plan that is the functional equivalent of a groundwater sustainability plan.

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  • Requires that the basins be balanced to "sustainable yield," which is newly defined, and includes language that mandates surface water and groundwater connectivity be considered. The newly created term "sustainable yield" was a major issue, because it moves state law from the common law requirement of "safe yield," which has been defined in numerous cases.
  • Requires that a groundwater sustainability plan cover the entire basin. It can be by one plan or multiple plans. DWR shall prioritize basins and sub basins as provided in the California State Groundwater Elevation Monitoring (CASGEM) program. DWR, in consultation with California Department of Fish & Wildlife, shall identify and develop criteria to identify groundwater basins and sub basins that should be prioritized based on adverse impacts to habitat and surface water resources. The bill allows a local agency to request DWR to revise boundaries of a basin in Bulletin 118.
  • Requires annual pumping reports for every extractor, no matter the size. There is an exemption for domestic wells under 2 acre feet per year.
  • Permits the State to intervene:
    1. After January 1, 2017, if a groundwater sustainability agency has not been formed.
    2. After January 31, 2020, if a groundwater sustainability plan has not been adopted by the local agency(s).
    3. If DWR has determined that the groundwater sustainability plan is inadequate or is not being implemented.
    4. If the basin is in a state of long term overdraft or in a condition where groundwater extractions result in significant depletion of interconnected surface waters.

This act is a paradigm shift in groundwater use, management, and regulation for California. It is certain that many additional issues will arise as the act is implemented, and there will likely be attempts by stakeholders to amend the provisions. However, farmers, processors input suppliers, financiers, and the entire industry must understand that the act is significant and will likely result in major changes to the ag industry in many communities in California.

Mandatory Paid Sick Leave, Assembly Bill No. 1522 (Gonzalez) Much has been written about the "Healthy Workplaces, Healthy Families Act of 2014," but few of the articles emphasize that every employer that already provides paid sick leave still must review their policy to make sure it complies with the new law. There are several specific issues that are unique to this statute.

The law requires three days of paid sick leave per year for every eligible full and part time employee, beginning July 1, 2015. The employee accrues paid sick leave for every 30 hours worked. Employees may carry over accrued sick leave to the following year, but the employer may cap the accrual of sick leave at 6 days or 48 hours. The law applies to the employee or the employee’s family member, and is broadly defined to include actions such as diagnosis and preventative care as well as recovery from domestic abuse, sexual assault, or stalking. There are few exceptions, but they include employees covered by a collective bargaining agreement that meets specific standards, including binding arbitration, and a regular hourly pay rate of not less than 30% more than the state minimum wage. Other exceptions are not likely pertinent to ag employers.

Joint Liability, Contractor Businesses, Assembly Bill No. 1897 (R. Hernandez) Production agriculture has been managing the issue of joint liability for employment violations for a few years. However, AB 1897 imposes new joint liability on any private sector business contracting for services that are within the client employer’s usual course of business. Joint liability is imposed when the contractor fails to properly pay wages or overtime, does not ensure employees had required rest or meal breaks, lets a workers’ compensation insurance policy lapse, or fails to remit employee contributions. AB 1897 defines "labor contractor" as an individual or entity that supplies, either with or without a contract,

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a client employer with workers to perform labor or services within the client employer’s usual course of business.

This bill expands joint liability to all agricultural suppliers, processors, service providers, and farmers with 25 or more employees who may use labor contractors for a variety of services. Significant litigation concerns surround the term "usual course of business." There are a host of questions regarding the scope of the legislation. Consider the example of an equipment company that hires a service provider to provide on-farm mechanical services for farmers. Is this within an equipment company’s "usual course of business"? What about an ag input (e.g., fertilizer, seed, or crop protection material) supplier who hires a company to supply labor to apply the input? Legal advisors should discuss this issue with their clients and encourage them to hire contractors with reputable employment practices and ask for copies of proof of workers compensation insurance and employment policies.

Mandatory Organics Recycling, Assembly Bill No. 1826 (Chesbro) This legislation was spawned from the state goal of recycling 50% of organic material by 2020. The statute requires "major generators of organic waste" (8 cubic yards per week) to have an organics recycling plan by January 1, 2016. This threshold is reduced to 4 cubic yards per week on January 2, 2017. This plan would require organic waste to be sent to a recycler or processor of organic material. The bill defines "organic waste" as food waste, green waste, landscape and pruning waste, non-hazardous wood waste, and food-soiled paper mixed with food waste. Qualified businesses must source-separate organic waste from other waste and subscribe to a basic level of organic recycling service, manage their organic waste on site, or self-haul their own organic waste. Industry worked to ensure that traditional agricultural and food processing organic material management streams such as livestock feed and rendering were maintained and counted as "organic recycling services."

Almost any farmer with permanent crops, ag or food processor, packing shed operator, livestock producer, or huller will fall under the definition of major generator of organic waste. Therefore, they need to have a plan for managing the organic waste that complies with the statute. It is important to note that traditional management methods, such as feeding the organic material to livestock, rendering, or chopping and application on their land, do qualify as acceptable recycling practices.

The new 2015/16 legislative session has begun. The legislature is relatively inexperienced, with 68 of the 80 Assembly members serving in their first or second term and 8 Senators never having served in the legislature. Additionally, these newly-elected legislators are still being shaped by structural reforms. Redistricting by the Citizen Commission has resulted in districts drawn more to comply with the standards of political reform legislation and less on gerrymandering. Legislators first elected have the opportunity to serve 12 years in one legislative chamber. Additionally, this last session was the first to operate under Proposition 25, which provides for a majority vote budget. With longer service, fewer gerrymandered districts, and more opportunity for oversight by the Legislature, California’s ag industry hopes that future legislation will be balanced to help promote a strong economy and protect natural resources.

Dennis Albiani is a shareholder of California Advocates, a broad-based contract lobbying firm in Sacramento. He is a registered lobbyist and advocates on issues, including energy, agriculture, water, natural resources and food. He has a JD from McGeorge, with honors, and a BS in Agriculture Business Management, Minor in Water Science, from Cal Poly, SLO, where he graduated as an outstanding senior.

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