Washington State House of Representatives Office of Program Research |
BILL ANALYSIS |
Economic Development, Agriculture & Trade Committee | |
HB 3046
Brief Description: Establishing the Washington beer commission.
Sponsors: Representatives P. Sullivan, Newhouse, Grant, Kristiansen, Quall, Armstrong, Blake, Haler, Wallace, Skinner, Clibborn, Chandler, Condotta, Kessler, Morrell, Simpson, Conway, Kirby, Sells, Rodne, Kilmer and Linville.
Brief Summary of Bill |
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Hearing Date: 1/31/06
Staff: Meg Van Schoorl (786-7105).
Background:
Agricultural commodity commissions and boards may be established in Washington law either
under individual chapters or as part of enabling acts covering multiple commodities. Commodity
commissions perform a variety of functions, including advertising, sales promotion, research, and
education, related to a particular commodity.
Currently, 24 commodity commissions are established under Washington law. Six were created
under their own individual chapters: apple; dairy products; fruit; beef; tree fruit research; and
wine. Six were created under the 1955 Commodity Commission Enabling Act and have their
own chapters under the Washington Administrative Code (WAC): potato; seed potato; bulb;
wheat; fryer; and barley. The remaining 12 were created under the 1961 Commodity
Commission Enabling Act and have their own chapters under the WAC: hop; dry pea and lentil;
mint; blueberry; alfalfa seed; red raspberry; cranberry; strawberry; asparagus; Puget Sound
salmon; canola and rapeseed; and turfgrass seed.
Depending upon industry priorities, some commissions perform primarily marketing programs;
some perform only research programs; some commissions perform both. The majority of the
commissions' funding derives from mandatory producer assessments. Their annual budgets
range from $12,000 to $6.1 million.
In recent years, there have been numerous court challenges nationwide objecting to commodity
commissions' use of mandatory assessments for advertising and market promotion programs.
The lawsuits have centered on allegations that such programs infringe upon First Amendment
rights to free speech by mandating that producers pay assessments to fund generic advertising
with which they may disagree.
In 2003, a court challenge brought against the Washington Apple Commission resulted in
legislation to restructure commodity commission statutes in terms of governance, speech, and
oversight of commission activities, budget and programs.
Summary of Bill:
Public Interest
The production and proper promotion of Washington beer is in the public interest and is vital to
the state's economic well-being because it provides jobs, tax revenues and other benefits to the
state and local communities. This chapter is only one part of a comprehensive scheme to
regulate production and marketing of Washington beer. This chapter is enacted in the exercise of
the police powers of the state to protect the health, peace, safety and general welfare of its
citizens.
Speaking on Behalf of the Washington State Government
The Legislature charges the Washington Beer Commission (Commission), with oversight by the
Director of the Department of Agriculture (Department), to speak on behalf of the Washington
government with regard to the marketing and promotion of Washington-produced beer.
Establishing the Beer Commission
Creation of the Commission requires that a referendum be conducted by the Department and
approved by a specified number of affected producers. A "producer" is any person or other entity
licensed under Title 66 RCW to produce beer within the state and who produces less than
100,000 barrels of beer annually per location. An "affected producer" is any producer subject to
this chapter. The referendum procedure is initiated when the Director of the Department is
petitioned to implement the chapter and determine producer participation and the assessment.
Procedural requirements for the petition and for the referendum are specified in section 5 of the
bill. If the Director determines that the referendum has been approved, he or she will appoint
commission members within 60 days and will direct the commission to initiate the producers'
assessment. If the Director determines that the referendum has not been approved, he or she will
take no further action to implement or enforce the chapter.
Commission Members
The Commission will have seven voting members, including six producers and the Director of
the Department. The Director will appoint the producer members of the Commission, taking into
consideration recommendations made by a statewide craft brewing association or other affected
producers. The Director will seek balanced representation on the Commission on the basis of
beer produced and geographic location. Qualifications for commission membership, procedures
relating to transacting commission business, terms, appointments, and reimbursement of
expenses are described in sections four and six of the bill.
Commissioner Responsibilities
The Commission shall:
The Commission must submit to the Director for approval any plans, programs, and projects
concerning advertising, promotion and education, market research and development. The
Director must review the advertising or promotion program to ensure that no false claims are
made. The Commission must also submit for the Director's approval its proposed research plan,
its commodity-related education and training plan, and budget.
Research, Promotional, Educational Program
The Commission may create and conduct a comprehensive and extensive research, promotional
and education campaign. The campaign must take into account the needs of producers, market
conditions, and public awareness. Research goals may include efforts to:
Donations and Promotional Hosting
The Commission may purchase or receive donations of beer or malt beverages from any brewery
worldwide and use them for promotional purposes. Beer and malt beverages furnished and used
in-state are subject to beer and wine taxes. No liquor license, permit or bond is required of the
Commission for authorized promotional activities. Commission expenditures for agricultural
development, trade promotion and promotional hosting must be approved by the Commission as
specific line items at its annual public budget hearings.
Obligations of the Commission
Obligations incurred by the Commission and other liabilities or claims against the commission
will be enforced only against the assets of the Commission. No liability for the debts or actions
of the Commission will exist against the state, its subdivisions and instrumentalities, or
individual members, employees or agents of the Commission or the state.
Assessments
An annual assessment of 10 cents per barrel of beer produced, up to 10,000 barrels per location,
is levied upon beer produced by an affected producer. The assessment is a personal debt of each
producer assessed. The consequences for lack of payment are described in section 16 of the bill.
The Commission must adopt rules for payment and collection of the assessment. The assessment
of an individual affected producer may be reduced based upon in-kind contributions to the
Commission. Moneys collected will be deposited into a separate account in a state depositary.
Expenditures from the account may be made without specific legislative appropriation.
Disclosure
Certain agricultural business records, Commission records, and Department records relating to
the Commission and producers are exempt from public disclosure. These are further identified in
sections 25 and 26 of the bill. Some records may be shared between the Department and the
Commission, or used in a suit or administrative hearing involving this chapter.
Appropriation: None.
Fiscal Note: Requested on January 24, 2006.
Effective Date: The bill contains an emergency clause and takes effect immediately, except for Section 26, relating to public disclosure exemptions for agriculture and livestock, which is effective July 1, 2006.