[atlas:bill]

AN ACT Relating to formation of an organic foods commission; adding a new chapter to Title 15 RCW; and prescribing penalties.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1. For the purposes of this chapter:

(1) "Director" means the director of agriculture or any qualified person or persons designated by the director of agriculture to act for the director concerning some matter under this chapter.

(2) "Department" means the department of agriculture.

(3) "Marketing order" means an order issued by the director under this chapter.

(4) "Organic food" has the definition in RCW 15.86.020.

(5) "Producer" means any person engaged in the business of producing or causing to be produced for market in commercial quantities any organic food. For the purposes of this chapter, "producer" includes bailees who contract to produce or grow any organic food on behalf of a bailor who retains title to the seed and its resulting organic food or the organic food delivered for further production or increase.

(6) "Affected producer" means any producer of organic food.

(7) "Unfair trade practice" means any practice that is unlawful or prohibited under the laws of the state of Washington including but not limited to Titles 15, 16, and 69 RCW and chapters 9.16, 19.77, 19.80, 19.84, and 19.83 RCW, or any practice, whether concerning interstate or intrastate commerce that is unlawful under the provisions of the act of Congress of the United States, September 26, 1914, chapter 311, section 5, 38 U.S. Statutes at Large 719 as amended, known as the "Federal Trade Commission Act of 1914", or the violation of or failure accurately to label as to grades and standards in accordance with any lawfully established grades or standards or labels.

(8) "Person" includes any individual, firm, corporation, trust, association, partnership, society, or any other organization of individuals.

(9) "Cooperative association" means any incorporated or unincorporated association of producers that conforms to the qualifications set out in the act of Congress of the United States, Feb. 18, 1922, chapter 57, sections 1 and 2, 42 U.S. Statutes at Large 388 as amended, known as the "Capper-Volstead Act" and which is engaged in making collective sales or in marketing any organic food or product thereof or in rendering service for or advancing the interests of the producers of such organic food on a nonprofit cooperative basis.

(10) "Member of a cooperative association" or "member" means any producer of organic food who markets his or her product through such cooperative association and who is a voting stockholder of or has a vote in the control of or is under a marketing agreement with such cooperative association with respect to such product.

NEW SECTION. Sec. 2. The marketing of organic foods within this state is affected with a public interest. It is declared to be the policy and purpose of this chapter to promote the general welfare of the state by enabling producers of organic foods to help themselves in establishing orderly, fair, sound, efficient, and unhampered marketing, grading, and standardizing of the organic foods they produce, and in promoting and increasing the sale of such commodities.

NEW SECTION. Sec. 3. Marketing orders may be made for any one or more of the following purposes:

(1) To establish plans and conduct programs for advertising and sales promotion, to maintain present markets, or to create new or larger markets for any organic food grown in the state of Washington;

(2) To provide for carrying on research studies to find more efficient methods of production, processing, handling, and marketing of any organic food;

(3) To provide for improving standards and grades by defining, establishing, and providing labeling requirements consistent with chapter 15.86 RCW with respect to the same;

(4) To investigate and take necessary action to prevent unfair trade practices.

NEW SECTION. Sec. 4. Marketing orders and orders modifying or terminating existing marketing orders shall be adopted by the director only after the director has done the following:

(1) Received a petition as provided for in section 5 of this act;

(2) Given notice of hearing as provided for in section 6 of this act;

(3) Conducted a hearing as provided for in section 7 of this act;

(4) Made findings and a decision as provided for in section 8 of this act;

(5) Determined assent of affected producers as provided for in section 9 of this act.

NEW SECTION. Sec. 5. Petitions for issuance, amendment, or termination of a marketing order for organic food shall be signed by not less than ten percent or fifty of the producers alleged to be affected, whichever is less, and shall be filed with the director. Such petition shall be accompanied by a filing fee of one hundred dollars payable to the state treasurer; and shall designate some person as attorney-in-fact for the purpose of this section. Upon receipt of such a petition, the director shall prepare a budget estimate for handling such petition that includes the cost of the preparation of the estimate, the cost of the hearings, and the cost of the proposed referendum. The petitioners, within thirty days after receipt of the budget estimate by their attorney-in-fact, shall remit to the director the difference between the filing fee of one hundred dollars already paid and the total budget estimate. If the petitioners fail to remit the difference, or if for any other reason the proceedings for the issuance, amendment, or termination of the marketing order are discontinued, the filing fee, including any additional amount paid in accordance with such budget estimates, shall not be refunded. If the petition results, after proper proceedings, in the issuance, amendment, or termination of a marketing order, the petitioners shall be reimbursed for the amount paid for the total filing fee out of funds of the organic food commission as they become available.

NEW SECTION. Sec. 6. Upon receipt of a petition for the issuance, amendment, or termination of a marketing order, the director shall establish a list of producers of organic food who are certified under chapter 15.86 RCW. In establishing or making current such a list of producers and their individual production, the director shall use the producer's name, mailing address, and the yearly average fees paid under RCW 15.86.070 by the producer in the three preceding years or in such lesser time as the producer has produced the organic food in question. Information on each producer shall be mailed to the affected producer on record with the director for verification. All corrections shall be filed with the director within twenty days from the date of mailing. The director shall keep lists as current as possible and may require updated information from affected producers at various times in accordance with rules prescribed by the director.

The producer list shall be final and conclusive in making determinations relative to the assent by producers upon the issuance, amendment, or termination of a marketing order and in elections under this chapter.

The director shall notify affected producers, so listed, by mail that the public hearing affording opportunity for them to be heard upon the proposed issuance, amendment, or termination of the marketing order will be heard at the time and place stated in the notice. The notice of the hearing shall be given not less than ten days nor more than sixty days before the hearing.

NEW SECTION. Sec. 7. At the public hearing the director shall receive evidence and testimony offered in support of, or opposition to, the proposed issuance of, amendment to, or termination of a marketing order and concerning the terms, conditions, scope, and area thereof. Such hearing shall be public and all testimony shall be received under oath. A full and complete record of all proceedings at such hearings shall be made and maintained on file in the office of the director, which file shall be open to public inspection. The director shall base his or her findings upon the testimony and evidence received at the hearing, together with any other relevant facts available to the director from official publications of institutions of recognized standing. The director shall describe in the findings such official publications upon which any finding is based.

NEW SECTION. Sec. 8. (1) The director shall make and publish findings upon every material point controverted at the hearing and required by this chapter and upon such other matters and things as he or she may deem fitting and proper. The director shall also issue a recommended decision based upon the director's findings and shall cause copies of the findings and recommended decision to be delivered or mailed to all parties of record appearing at the hearing, or their attorneys of record. The recommended decision shall contain the text in full of any order, or amendment or termination of existing order, and may deny or approve the proposal in its entirety, or it may recommend a marketing order containing other or different terms or conditions from those contained in the proposal: PROVIDED, That the same shall be of a kind or type substantially within the purview of the notice of hearing and shall be supported by evidence taken at the hearing or by documents of which the director is authorized to take official notice. The director shall not approve the issuance, amendment, or termination of any marketing order unless he or she finds with respect thereto:

(a) That the proposed issuance, amendment, or termination thereof is reasonably calculated to attain the objective sought in such marketing order;

(b) That the proposed issuance, amendment, or termination is in conformity with this chapter and within the applicable limitations, and restrictions in the issuance, amendment, or termination will tend to effectuate the declared purposes and policies of this chapter;

(c) That the interests of consumers of the organic food are protected in that the powers of this chapter are being exercised only to the extent necessary to attain such objectives.

(2) After the issuance of a recommended decision, all interested parties shall have a period of not less than ten days to file objections with the director. The director shall consider the objections and shall issue a final decision which may be the same as the recommended decision or may be revised in light of the objections. The final decision shall set out in full the text of the order. The director shall deliver or mail copies of the final decision to the same parties to whom copies of the findings and recommended decision are required to be sent. If the final decision denies the proposal in its entirety, no further action may be taken by the director.

NEW SECTION. Sec. 9. After the issuance by the director of the final decision approving the issuance, amendment, or termination of a marketing order, the director shall determine by a referendum whether the affected producers assent to the proposed action or not. The director shall conduct the referendum among the affected producers based on the list as provided for in section 6 of this act, and the affected producers shall be deemed to have assented to the proposed issuance, amendment, or termination order if sixty percent or more by number and sixty percent or more by amount of assessment paid of those replying assent to the proposed order. The determination by volume shall be made on the basis of volume as determined in the list of affected producers created under section 6 of this act, subject to rules of the director for such determination.

NEW SECTION. Sec. 10. A marketing order shall define the area of the state to be covered by the order, which may be all or any portion of the state, shall contain provisions for establishment of the organic foods commission and administration and operation and powers and duties of the commission, shall provide for assessments as provided for in this chapter, and shall contain one or more of the provisions in section 3 of this act.

NEW SECTION. Sec. 11. The marketing order shall establish an organic foods commission composed of not less than five nor more than thirteen members. In addition, the director shall be an ex officio member of the organic foods commission. Commission members shall be citizens and residents of this state, over the age of twenty-five years. The term of office of commission members shall be three years with the terms rotating so than one-third of the terms will commence as nearly as practicable each year. However, the first commission shall be selected, one-third for a term of one year, one-third for a term of two years, and one-third for a term of three years, as nearly as practicable. Two-thirds of the commission members shall be elected by the affected producers and such elected members shall all be affected producers. The remaining one-third shall be appointed by the commission and shall be either affected producers, others active in matters relating to the organic foods or persons not so related.

NEW SECTION. Sec. 12. Not less than ninety days nor more than one hundred five days before the beginning of each term of each elected commission member, the director shall give notice by mail to all affected producers of the vacancy and call for nominations in accordance with this section and with the provisions of the marketing order and shall give notice of the final date for filing nominations, which shall not be less than eighty days nor more than eighty-five days before the beginning of such term. Such notice shall also advise that nominating petitions shall be signed by five persons qualified to vote for such candidates or, if the number of nominating signers is provided for in the marketing order, such number as such order provides.

Not less than sixty days nor more than seventy-five days before the commencement of such commission member term, the director shall submit by mail ballots to all affected producers, which ballots shall be required to be returned to the director not less than thirty days before the commencement of such term. Such mail ballot shall be conducted in a manner so that it shall be a secret ballot. With respect to the first organic foods commission, the director may call for nominations in the notice of decision following the hearing and the ballot may be submitted at the time the director's proposed order is submitted to the affected producers for their assent.

The elected members may be elected from various districts within the area covered by the marketing order if the order so provides, with the number of members from each district to be in accordance with the provisions of the marketing order.

The members of the commission not elected by the affected producers shall be elected by a majority of the commission at a meeting of the commission within ninety days before expiration of the term but to fill nonelective vacancies caused by other reasons than the expiration of a term, the new member shall be elected by the commission at its first meeting after the occurrence of the vacancy.

When only one nominee is nominated for any position on the commission, the director shall deem that the nominee satisfies the requirements of the position and then it shall be deemed that the nominee has been duly elected.

NEW SECTION. Sec. 13. The organic foods commission shall hold such regular meetings as the marketing order may prescribe or that the commission by resolution may prescribe, together with such special meetings that may be called in accordance with provisions of its resolutions upon reasonable notice to all members thereof. A majority of the members constitutes a quorum for the transaction of all business of the commission. In the event of a vacancy in an elected or appointed position on the commission, the remaining elected members of the commission shall select a qualified person to fill the unexpired term.

Each member of the commission shall be compensated in accordance with RCW 43.03.230 and shall be reimbursed for travel expenses in accordance with RCW 43.03.050 and 43.03.060.

NEW SECTION. Sec. 14. The organic foods commission shall have such powers and duties in accordance with this chapter as may be provided in the marketing order and shall have the following powers and duties:

(1) To elect a chair and such other officers as determined advisable;

(2) To adopt, rescind, and amend rules reasonably necessary for the administration and operation of the organic foods commission and the enforcement of its duties under the marketing order;

(3) To administer, enforce, direct, and control the provisions of the marketing order and of this chapter relating thereto;

(4) To employ and discharge at its discretion such administrators and additional personnel, attorneys, advertising and research agencies, and other persons and firms that it may deem appropriate and pay compensation to the same;

(5) To acquire personal property and lease office space and other necessary real property and transfer and convey the same;

(6) To institute and maintain in its own name any and all legal actions, including actions by injunction, mandatory injunction, or civil recovery, or proceedings before administrative tribunals or other governmental authorities necessary to carry out the provisions of this chapter and of the marketing order;

(7) To keep accurate records of all its receipts and disbursements, which records shall be open to inspection and audit by the state auditor at least every five years;

(8) To borrow money and incur indebtedness;

(9) To make necessary disbursements for routine operating expenses;

(10) To expend funds for organic foods-related education, training, and leadership programs as the organic foods commission deems expedient;

(11) Such other powers and duties that are necessary to carry out the purposes of this chapter.

NEW SECTION. Sec. 15. Any member of the organic foods commission may also be a member or officer of an association which has the same objectives for which the organic foods commission was formed. The organic foods commission may also contract with such association for services necessary to carry out any purposes authorized under this chapter, if an appropriate contract has been entered into.

NEW SECTION. Sec. 16. (1) There is hereby levied, and there shall be collected by the organic foods commission, upon each and every dollar unit of any organic food product specified in any marketing order an annual assessment that shall be paid by the producer thereof upon each and every such dollar unit sold, processed, stored, or delivered for sale, processing, or storage by the producer. Such assessments shall be expressed as a stated percentage of the net unit price at the time of sale. The total amount of such annual assessment to be paid by all affected producers shall not exceed one percent of the total market value of all affected units sold, processed, stored, or delivered for sale, processing, or storage by all affected producers of such units during the year to which the assessment applies.

(2) The marketing order shall prescribe the percentage rate of such assessment. Such rate may be at the full amount of, or at any lesser amount than, the amount in this section and may be altered from time to time by amendment of such order.

(3) To collect such assessment, each order may require:

(a) Stamps to be purchased from the organic foods commission or other authority stated in such order and attached to the containers, invoices, shipping documents, inspection certificates, releases, or receiving receipts or tickets, the stamps to be canceled immediately upon being attached and the date of cancellation placed thereon;

(b) Payment of producer assessments before the affected units are shipped off the farm or payment of assessments at different or later times, and in such event the order may require any person subject to the assessment to give adequate assurance or security for its payment;

(c) Handlers receiving the organic foods from the producer, including warehousemen and processors, to collect producer assessments from producers whose production they handle and remit the same to the organic foods commission. The lending agency for a commodity credit corporation loan to producers shall be deemed a handler for the purpose of this subsection (3)(c). No affected units may be transported, carried, shipped, sold, stored, or otherwise handled or disposed of until every due and payable assessment required under this section has been paid and the receipt issued, but there is no liability under this section for common carriers in the regular course of their business.

NEW SECTION. Sec. 17. Moneys collected by the organic foods commission under a marketing order from any assessment for marketing purposes shall be used by the organic foods commission only for the purpose of paying for the costs or expenses arising in connection with carrying out the purposes and provisions of such agreement or order.

Upon the termination of any marketing order any and all moneys remaining with the organic foods commission operating under that marketing order and not required to defray expenses or repay obligations incurred by the organic foods commission shall be returned to the affected producers in proportion to the assessments paid by each in the two-year period preceding the date of the termination order.

NEW SECTION. Sec. 18. Any due and payable assessment levied under this chapter, and every sum due under the marketing order in a specified amount, constitutes a personal debt of every person so assessed or who otherwise owes the same, and the same shall be due and payable to the organic foods commission when payment is called for by the organic foods commission. In the event any person fails to pay the full amount of such assessment or such other sum on or before the date due, the organic foods commission may add to such unpaid assessment or sum an amount not exceeding ten percent of the same to defray the cost of enforcing the collecting of the same. In the event of failure of such person or persons to pay any such due and payable assessment or other such sum, the organic foods commission may bring a civil action against such person or persons in a state court of competent jurisdiction for the collection thereof, together with ten percent provided for in this section, and such action shall be tried and judgment rendered as in any other cause of action for debt due and payable.

NEW SECTION. Sec. 19. All moneys that are collected or otherwise received under a marketing order created under this chapter shall be used solely by and for the organic foods commission and shall not be used for any other commission or the department. Such moneys shall be deposited in a separate account or accounts in the name of the organic foods commission in any bank that is a state depositary. All expenses and disbursements incurred and made pursuant to the provisions of any marketing order shall be paid from moneys collected and received pursuant to such order without the necessity of a specific legislative appropriation and all moneys deposited for the account of any order shall be paid from the account by check or voucher in such form and in such manner and upon the signature of such person as may be prescribed by the organic foods commission. None of the provisions of RCW 43.01.050 are applicable to any such account or any moneys so received, collected, or expended.

NEW SECTION. Sec. 20. Any funds of the organic foods commission may be invested in savings or time deposits in banks, trust companies, and mutual savings banks that are doing business in this state, up to the amount of insurance afforded such accounts by the Federal Deposit Insurance Corporation. This section applies to all funds that may be lawfully so invested that in the judgment of the organic foods commission are not required for immediate expenditure. The authority granted by this section is not exclusive and shall be construed to be cumulative and in addition to other authority provided by law for the investment of such funds.

NEW SECTION. Sec. 21. Every administrator, employee, or other person occupying a position of trust under any marketing order and every member actually handling or drawing upon funds shall give a bond in such penal amount as may be required by the organic foods commission or by the order, the premium for which bond or bonds shall be paid by the organic foods commission.

NEW SECTION. Sec. 22. An affected producer subject to a marketing order may file a written petition with the director stating that the order, agreement, or program or any part thereof is not in accordance with the law, and requesting a modification thereof or exemption therefrom. The producer shall thereupon be given a hearing, which hearing shall be conducted in the manner provided in section 7 of this act, and thereafter the director shall make a ruling which shall be final.

Appeal from any ruling of the director may be taken to the superior court of the county in which the petitioner resides or has his or her principal place of business, by serving upon the director a copy of the notice of appeal and complaint within twenty days from the date of entry of the ruling. Upon such application, the court may proceed in accordance with RCW 7.16.010 through 7.16.140. If the court determines that the ruling is not in accordance with law, it shall remand the proceedings to the director with directions to make a ruling as the court determines to be in accordance with law or to take such further proceedings as in its opinion are required by this chapter.

NEW SECTION. Sec. 23. It is a misdemeanor for:

(1) Any person willfully to violate any provision of this chapter or any provision of any marketing order duly issued by the director under this chapter;

(2) Any person willfully to render or furnish a false or fraudulent report, statement of record required by the director or the organic foods commission under this chapter, or any provision of any marketing order duly issued by the director under this chapter or willfully to fail or refuse to furnish or render any such report, statement, or record so required.

In the event of violation or threatened violation of any provision of this chapter or of any marketing order duly issued or entered into under this chapter, the director, the organic foods commission, or any affected producer on joining the organic foods commission shall be entitled to an injunction to prevent further violation and to a decree of specific performance of such order, and to a temporary restraining order and injunction pending litigation upon filing a verified complaint and sufficient bond.

All persons subject to any order shall severally from time to time, upon the request of the director, furnish the director with such information as the director finds to be necessary to enable him or her to effectuate the policies of this chapter and the purposes of such order or to ascertain and determine the extent to which such order has been carried out or has effectuated such policies and purposes, or to determine whether or not there has been any abuse of the privilege of exemptions from laws relating to trusts, monopolies, and restraints of trade. Such information shall be furnished in accordance with forms and reports to be prescribed by the director. For the purpose of ascertaining the correctness of any report made to the director under this section or for the purpose of obtaining the information required in any such report where it has been requested and has not been furnished, the director may examine such books, papers, records, copies of tax reports, accounts, correspondence, contracts, documents, or memoranda as the director deems relevant and that are within the control of any such person from whom such report was requested, or of any person having, either directly or indirectly, actual or legal control of or over such person or such records, or of any subsidiary of any such person. To carry out the purposes of this section the director, upon giving due notice, may hold hearings, take testimony, administer oaths, subpoena witnesses, and issue subpoenas for the production of books, records, documents, or other writings of any kind, and section 7 of this act applies with respect to any such hearing, together with such other rules consistent therewith as the director may from time to time prescribe.

NEW SECTION. Sec. 24. In any civil or criminal action or proceeding for violation of any rule of statutory or common law against monopolies or combinations in restraint of trade, proof that the act complained of was done in compliance with this chapter or a marketing order issued under this chapter, and in furtherance of the purposes and provisions of this chapter, shall be a complete defense to such action or proceeding.

NEW SECTION. Sec. 25. Obligations incurred by the organic foods commission and any other liabilities or claims against the organic foods commission shall be enforced only against the assets of the organic foods commission in the same manner as if it were a corporation and no liability for the debts or actions of the organic foods commission shall exist against either the state of Washington or any subdivision or instrumentality thereof, or against any member officer, employee, or agent of the organic foods commission in his or her individual capacity. The members of any such commission, including employees of such board, shall not be held responsible individually in any way whatsoever to any person for errors in judgment, mistakes, or other acts, either of commission or omission, as principal, agent, person, or employee, except for their own individual acts of dishonesty or crime. No such person or employee may be held responsible individually for any act or omission of any other member of the organic foods commission. The liability of the members of the organic foods commission shall be several and not joint and no member shall be liable for the default of any other member.

NEW SECTION. Sec. 26. Nothing in this chapter permits fixing of prices not otherwise permitted by law or any limitation on production and no marketing order or agreement or any rule adopted under it may contain any such provisions.

NEW SECTION. Sec. 27. All general administrative expenses of the director in carrying out the provisions of this chapter shall be borne by the state: PROVIDED, That the department shall be reimbursed for actual costs incurred in conducting nominations and elections for members of the organic foods commission established under this chapter. Such reimbursement shall be made from the funds of the organic foods commission for which the nominations and elections were conducted by the director.

NEW SECTION. Sec. 28. The restrictive provisions of chapter 43.78 RCW do not apply to promotional printing and literature for the organic foods commission formed under this chapter.

NEW SECTION. Sec. 29. This chapter shall be known and may be cited as the Washington organic foods commission act.

NEW SECTION. Sec. 30. Sections 1 through 29 of this act constitute a new chapter in Title 15 RCW.