SB2527 HD2.DOC

PART I

SECTION 1. The purpose of this Act is to promote and support agriculture by, among other things:

(1) Amending the definition of "agricultural commodity" in section 147-1, Hawaii Revised Statutes;

(2) Establishing the agriculture inspection and certification special fund;

(3) Transmitting all fees and moneys collected by the department of agriculture pursuant to chapters 144, 145, 147, and 150, Hawaii Revised Statutes, and rules adopted pursuant to section 141-4, Hawaii Revised Statutes, to the agriculture inspection and certification special fund;

(4) Allowing the department of agriculture to enter into agreements with government and private agencies to hire inspectors; and

(5) Repealing the certification services revolving fund established in section 147-101 and transferring all moneys and unpaid obligations of the fund to the agriculture inspection and certification special fund.

SECTION 2. Chapter 147, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and read as follows:

"§147-__ Agriculture inspection and certification special fund. (a) There is established within the state treasury the agriculture inspection and certification special fund.

(b) The following shall be deposited into the fund:

(1) Fees, charges, fines, and penalties designated by law or rule for deposit into the fund;

(2) Federal funds received for inspecting, certifying, weighing, classifying, or grading of agricultural commodities to be imported into, exported from, or shipped within the state;

(3) Grants and gifts;

(4) Funds received for food safety or food security certification seals;

(5) Funds received for promoting safety-certified food suppliers and services related to food safety;

(6) All interest earned or accrued on moneys deposited in the fund; and

(7) Any other moneys made available to the fund.

(1) The licensure of commission merchants, dealers, brokers, agents, processors, and retail merchants;

(2) The administration, operation, and enforcement of chapter 144, part I of chapter 145, chapter 150, this chapter, and rules adopted pursuant to section 141-4; and

(3) The inspection, certification, weighing, or grading of agricultural commodities that are to be imported into, exported from, or shipped within the state.

No moneys from the general fund or other special or revolving funds shall be expended by the department for the administration, operation, or enforcement of chapter 144, part I of chapter 145, chapter 150, this chapter, or rules adopted pursuant to section 141-4; provided that the expenditure of moneys from the general fund for central services and departmental administrative expenses shall be permitted. Moneys in the agriculture inspection and certification special fund expended to cover costs of administering chapter 144, part I of chapter 145, chapter 150, this chapter, and rules adopted pursuant to section 141-4, shall include the costs of salaries, fringe benefits, operating expenses, equipment, motor vehicles, contracts for services, and promotional expenses."

SECTION 3. Section 141-4, Hawaii Revised Statutes, is amended to read as follows:

"§141-4 Weights of coffee; rules. The department of agriculture may make rules respecting the weighing of coffee prior to its shipment to points outside the [~~State,~~] state, and providing for the certification of weights thereof. Further, a reasonable schedule of fees to defray the expense of administering this section shall be established by the department, which fees shall be collected and [~~deposited with~~] transmitted to the state director of finance [~~to the credit of the general~~] for deposit into the agricultural inspection and certification special fund; provided that the department shall consult the appropriate industries, organizations, and agencies prior to the promulgation of the rules."

SECTION 4. Section 144-5, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) There shall be paid to the department for all feeds distributed or imported for use or sale in this [~~State,~~] state, inspection fees as established by the rules of the department; provided that the department shall exempt by rule the payment of inspection fees on feed not subject to specific requirements of this chapter or rules adopted under this chapter. All inspection fees collected shall be [~~deposited with~~] transmitted to the state director of finance [~~to the credit of the general~~] for deposit into the agricultural inspection and certification special fund."

SECTION 5. Section 145-14, Hawaii Revised Statutes, is amended to read as follows:

"§145-14 Disposition of fees and charges. All fees, charges, expenses, fines, and other moneys collected pursuant to this [~~chapter~~] part, and interest earned on the moneys shall be [~~deposited with~~] transmitted to the state director of finance [~~to the credit of the general~~] for deposit into the agriculture inspection and certification special fund."

SECTION 6. Section 147-1, Hawaii Revised Statutes, is amended by amending the definition of "agricultural commodity" to read as follows:

""Agricultural commodity” means fresh fruits and fresh vegetables of every kind and character, whether or not frozen or packed in ice, whether produced in the [~~State~~] state or imported, nuts, and coffee, whether cherry or parchment, or green beans, which have been produced in the [~~State, and~~] state, raw unprocessed honey, whether produced in the [~~State~~] state or imported[,], milk which has been produced in the state, poultry eggs or poultry carcass or meat which has been produced in the state, and any live animal included in section 142-49 or the carcass or meat of these animals, whether produced in the state or imported except the carcass or meat of horses or llamas."

SECTION 7. Section 147-10, Hawaii Revised Statutes, is amended to read as follows:

"§147-10 Income from certification and agriculture control activities. [~~Except for fees collected by the department pursuant to part VII, all~~] All fees, expenses, and penalties collected by the department pursuant to this part and part II shall be [~~deposited with~~] transmitted to the director of finance [~~to the credit of the general~~] for deposit into the agriculture inspection and certification special fund."

SECTION 8. Section 147-34, Hawaii Revised Statutes, is amended to read as follows:

"§147-34 Inspection; certification fees. The board of agriculture may designate any appropriately-certified employee or agent of the department as an inspector to classify and inspect fresh and processed flowers and foliage for quality and condition and to determine if containers, packing materials, and methods of packing meet the minimum requirements established. In addition the inspector may classify and inspect flowers and foliage for quality and condition at the request of persons having a financial interest in the commodities [~~in order~~] to ascertain and to certify to those persons the grade, classification, quality, or condition thereof and other pertinent facts. The department may fix, assess, and collect or cause to be collected fees for those certification services [~~when they are performed by the employees of the department~~]. The fees shall be on a uniform basis and in an amount reasonably necessary to cover the cost of certification services provided at the request of persons having a financial interest. [~~Except for fees collected by the department pursuant to part VII, all~~] All fees collected by the department pursuant to this part shall be [~~deposited with~~] transmitted to the [~~state~~] director of finance [~~to the credit of the general~~] for deposit into the agriculture inspection and certification special fund."

SECTION 9. Section 147-64, Hawaii Revised Statutes, is amended to read as follows:

"§147-64 Deposit of moneys. [~~Except for fees collected by the department pursuant to part VII, all~~] All fees, charges, expenses, civil penalties, and other moneys collected by the department under this part or any rules prescribed by the department pursuant to this part shall be [~~deposited with~~] transmitted to the [~~state~~] director of finance [~~to the credit of the general~~] for deposit into the agriculture inspection and certification special fund."

SECTION 10. Section 147-74, Hawaii Revised Statutes, is amended to read as follows:

"§147-74 Grading standards and regulations[.]; fees. (a) Subject to chapter 91, the department of agriculture may make rules with respect to:

(1) Sale and transportation for sale of eggs for human consumption;

(2) Specific grades or standards of quality, condition, and size or weight classes which shall conform when practical to those established by the United States Department of Agriculture as local conditions will permit;

(3) Inspection and classification;

(4) Assessment and collection of fees for requested certification as to grade, standard of quality, condition, and size of weight classes;

(5) Labeling of containers of imported and locally produced eggs and marking of individual imported eggs as to origin;

(6) Seller’s invoice for sale of eggs;

(7) Records of imported shell eggs of foreign origin;

(8) Methods of determining egg quality, which shall not include recandling or any other method applied to eggs in interstate commerce which is discriminatory or impairs that commerce in any way or requires a cost increase of eggs in interstate commerce; and

(9) Enforcement of this part and of the rules adopted under this part.

(b) Any fees collected pursuant to this part shall be transmitted to the director of finance for deposit into the agriculture inspection and certification special fund."

SECTION 11. Section 147-97, Hawaii Revised Statutes, is amended to read as follows:

"§147-97 Disposition of fees. All fees collected under this part shall be [~~paid into a special fund established by the department of agriculture and shall be expended for the purposes of this part.~~] transmitted to the director of finance for deposit into the agriculture inspection and certification special fund."

SECTION 12. Chapter 147, Hawaii Revised Statutes, is amended by amending the title of part VII to read as follows:

"PART VII. [~~Certification Services Revolving Fund~~] Temporary Inspectors"

SECTION 13. Section 147-102, Hawaii Revised Statutes, is amended to read as follows:

"[[]§147-102[]] Certification and audit services[.] by temporary inspectors. The department of agriculture shall fix, assess, and collect fees for certification or audit services provided by temporary inspectors employed under this [~~part;.~~] chapter. The fees shall be in amounts necessary to cover all costs of the administration and provision of the certification or audit services provided under this [~~part;~~] chapter; provided that the department of agriculture shall establish charges for traveling expenses and extraordinary services when the performance of the services involves unusual cost. The fees and charges established by the department of agriculture shall not be subject to chapter 91[.] and, upon collection, shall be transmitted to the director of finance for deposit into the agriculture inspection and certification special fund. The department of agriculture may employ temporary inspectors to assist in providing certification or audit service under parts I, III, IV, VIII, and IX, and those temporary inspectors shall be exempt from chapter 76."

SECTION 14. Section 147-112, Hawaii Revised Statutes, is amended to read as follows:

"[[]§147-112[]] Cooperative agreements and contracts to provide auditing and certification services. The department may enter into cooperative agreements with the United States Department of Agriculture or other agreements and contracts with private parties or other governmental agencies for the purposes of:

(1) Auditing and certifying that applicants are following good agricultural handling, processing, and manufacturing practices; [~~and~~]

(2) Hiring and paying travel and other expenses for inspectors to perform the certification and audit services required under this chapter;

[~~(2)~~] (3) Maintaining food safety, security, and product traceability[.]; and

(4) Establishing and maintaining an Internet food safety promotional and reporting system."

SECTION 15. Section 147-114, Hawaii Revised Statutes, is amended to read as follows:

"[[]§147-114[]] Fees and deposit of moneys. (a) The department shall fix, assess, and collect fees for the audit and certification services provided under this part[.], including fees for hiring inspectors to perform the services. The fees shall be as established under cooperative agreement with the United States Department of Agriculture or other governmental agencies or, if not applicable, as established by rule under section 147-7. The department [~~may~~] shall also charge an amount necessary to cover all costs of traveling expenses and extraordinary services when the performance of the services involves unusual cost in their performance.

(b) [~~Except for fees collected by the department pursuant to part VII, all~~] All fees and expenses collected by the department pursuant to this part shall be [~~deposited with~~] transmitted to the director of finance [~~to the credit of the general~~] for deposit into the agriculture inspection and certification special fund."

SECTION 16. Section 147-126, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

"(b) [~~Except for fees collected by the department pursuant to part VII, all~~] All fees and expenses collected by the department pursuant to this part shall be [~~deposited with~~] transmitted to the director of finance [~~to the credit of the general~~] for deposit into the agriculture inspection and certification special fund."

SECTION 17. Section 147-101, Hawaii Revised Statutes, is repealed.

["~~§147-101 Certification services revolving fund.~~ There is established a certification services revolving fund for use by the department of agriculture to support certification or audit services established under parts I, III, IV, VIII, and IX. Moneys in the fund may be expended for materials, salaries, equipment, training, travel, and other costs related to providing certification or audit services. Notwithstanding section 147-10, 147-34, 147-64, 147-114 and 147-126, moneys derived from the certification or audit services provided by temporary inspectors employed under this part or from charges for traveling expenses or extraordinary services shall be deposited into the fund."]

SECTION 18. (a) The repeal of section 147-101, Hawaii Revised Statutes, shall not rescind any fees authorized or imposed under that section that would have been deposited into the certification services revolving fund. From July 1, 2010, the fees under those sections shall be deposited into the agriculture inspection and certification special fund.

(b) On the effective date of this Act:

(1) All moneys in the certification services revolving fund on June 30, 2010, shall be transferred to the agriculture inspection and certification special fund;

(2) All unpaid obligations of the certification services revolving fund on June 30, 2010, shall become payable from the agriculture inspection and certification special fund; and

(3) The certification services revolving fund shall cease to exist.

SECTION 19. (a) Between July 1, 2020, and September 30, 2010, the department of agriculture shall adopt new or amend existing rules to impose or increase fees authorized to be charged under section 141-4, chapter 144, part I of chapter 145, chapter 150, chapter 147, Hawaii Revised Statutes, and rules adopted pursuant to section 141-4, Hawaii Revised Statutes, without regard to the public notice and public hearing requirements of section 91-3, Hawaii Revised Statutes, the small business impact review requirements or chapter 201M, Hawaii Revised Statutes or the limit on fee increases under section 92-28, Hawaii Revised Statutes. The department shall set the fees through a two-tiered increase at amounts intended to generate sufficient revenues to pay the operation and maintenance costs of implementing the agriculture inspection and certification programs of chapter 141, chapter 144, part I of chapter 145, chapter 147, chapter 150, Hawaii Revised Statutes, and rules adopted pursuant to section 141-4, Hawaii Revised Statutes, and central services and departmental administrative expense assessments of section 36-27 and section 36-30, Hawaii Revised Statutes.

(b) If, by September 30, 2010, the department of agriculture has not complied with subsection (a), then the fee charged for each inspection or certification conducted under authority of section 141-4, chapter 144, part I of chapter 145, chapter 147, chapter 150, Hawaii Revised Statutes, and rules adopted pursuant to section 141-4, Hawaii Revised Statutes, shall be $65 per hour or as established under cooperative agreement with the United States Department of Agriculture or other governmental agencies commencing October 1, 2010, and the fee charged for licensure of or license renewal for a commission merchant, dealer, broker, agent, processor, or retail merchant shall be:

(1) $80 for commission merchant, dealer, broker, agent, or processor;

(2) $20 for a retail merchant; and

(3) $10 for each branch store,

commencing October 1, 2010.

(c) Any subsequent amendments to the rules adopted or amended pursuant to subsection (a) or the fee established under subsection (b) shall be subject to all applicable provisions of chapter 91, chapter 201M, and section 92-28, Hawaii Revised Statutes.

SECTION 20. Notwithstanding section 2 of this Act, there is appropriated out the general revenues of the State of Hawaii the sum of $ or so much thereof as may be necessary for fiscal year 2010-2011 to be deposited into the agriculture inspection and certification special fund; provided that general fund appropriations to the fund shall cease when moneys collected in the agriculture inspection and certification special fund become sufficient to carry out the purposes of this Act.

There is appropriated out of the agriculture inspection and certification special fund the sum of $ for fiscal year 2010-2011. The sum appropriated shall be expended by the department of agriculture for the purposes of this part.

PART II

SECTION 21. The purpose of this part is to provide a funding alternative for department of agriculture staff by requiring that:

(1) Certain proceeds of the agricultural loan revolving fund be deposited into a new department of agriculture staffing special fund; and

(2) These proceeds be expended for department personnel salary, fringe benefit, and operating costs.

SECTION 22. Chapter 141, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated

and to read as follows:

"§l41- Department of agriculture staffing special fund. (a) There is established within the treasury of the State the department of agriculture staffing special fund.

(b) Deposits into the special fund pursuant to section 155-14(b) shall be made by the director of finance.

Any interest earned or accrued on moneys in the special fund shall be deposited and credited to the special fund.

(c) Expenditures from the special fund shall be made to pay the salary, fringe benefits, and operating costs of department personnel whose positions, on June 30, 2009, were funded from the general fund or the agricultural loan reserve fund.

(d) Any unexpended moneys in the special fund on June 30, 2015, shall be transferred by the director of finance to the agricultural loan reserve fund on July 1, 2015."

SECTION 23. Section 155-14, Hawaii Revised Statutes, is amended to read as follows:

"§155-14 Funds; application of payments. (a) There is created a special fund to be known as the agricultural loan revolving fund, from which moneys shall be loaned by the department of agriculture under this chapter. [The department, by its board of agriculture, may transfer moneys from the agricultural loan revolving fund to the aquaculture loan revolving fund, from which moneys shall be disbursed by the department pursuant to chapter 219, and may transfer moneys from that revolving fund to the agricultural loan revolving fund for disbursement pursuant to this chapter; provided that:

~~(1)~~ ~~The amount of moneys transferred shall not exceed $1,000,000 for each revolving fund within the calendar year; and~~

~~(2)~~ Twenty days prior to the convening of each regular session of the legislature, the department shall report to the legislature all transfers that were made between the agricultural loan revolving fund and the aquaculture loan revolving fund during the preceding calendar year and the balance of each revolving fund as of December 31 of each year.]

(b) All interest and fees collected by the department under this chapter shall be deposited [in the agricultural loan reserve fund to the extent needed to carry on the operations of the department including payments for consultative services that would strengthen the agriculture loan program; any moneys surplus to these needs shall be transferred to the agricultural loan revolving fund at the discretion of the department.] into the department of agriculture staffing special fund.

[~~All~~] Fifty per cent or $1,000,000 of the payments received on account of principal, whichever is less, shall be [~~credited to~~] deposited into the department of agriculture staffing special fund under section 141- and the remaining payments received on account of principal shall be retained by the agricultural loan revolving fund[.]; provided that the agricultural loan revolving fund shall maintain the reserve required under subsection (c).

(c) A proper reserve shall be maintained in the agricultural loan revolving fund to guarantee payment of loans under [~~section~~] sections 155-5[.] and 155-5.5.

(d) All funds [~~of the department~~] in the revolving fund, except those required to be deposited into the department of agriculture staffing special fund, pursuant to subsection (b) shall be paid out on warrants signed by the chairperson of the board of agriculture.

Deposits into the department of agriculture staffing special fund shall be made by the director of finance."

SECTION 24. Before the convening of the Regular Session of 2012, the department of agriculture shall submit to the legislature a report identifying the amount of money deposited into the department of agriculture staffing special fund from July 1, 2010, until December 31, 2011, pursuant to this part, the amount of money expended or encumbered between those dates, and the projected amount to be deposited into the special fund from January 1, 2012, until June 30, 2012. The department also shall include in the report a recommendation on whether this part should be repealed earlier than June 30, 2015.

PART III

SECTION 25. The purpose of this part is to establish a weights and measurements special fund, to enable the department of agriculture's measurement standards program to be financially self-supporting.

SECTION 26. Chapter 486, Hawaii Revised Statutes, is amended by adding a new section to part I to be appropriately designated and to read as follows:

"§486- Weights and measurements special fund. There is established the weights and measurements special fund to be administered by the board. All moneys received by the board as application fees and for licenses or otherwise under this chapter shall be deposited into the special fund. All interest earned or accrued on moneys deposited in the special fund shall become part of the special fund. Moneys in the special fund shall be expended to cover all costs of administering this chapter, including the costs of salaries, fringe benefits, operating expenses, equipment, motor vehicles, contracts for services, and promotional expenses. Moneys in the special fund shall be subject to sections 36-27 and 36-30. A reserve shall be maintained in the special fund to cover contingency costs, including accrued vacation leave, unemployment insurance, and workers' compensation."

SECTION 27. (a) Between July 1, 2010, and September 30, 2010, the board of agriculture shall adopt new or amend existing rules to impose or increase fees authorized to be charged under chapter 486, Hawaii Revised Statutes, without regard to the public notice and public hearing requirements of section 91-3, Hawaii Revised Statutes, or the small business impact review requirements of chapter 201M, Hawaii Revised Statutes. The board shall set the fees at amounts intended to generate sufficient revenues to pay the operation and maintenance costs of implementing chapter 486, Hawaii Revised Statutes, and central services and departmental administrative expense assessments of sections 36-27 and 36-30, Hawaii Revised Statutes.

(b) If, by September 30, 2010, the board of agriculture has not complied with subsection (a), then the fee charged for each licensing, testing, calibration, or inspection of a measuring or other device shall be $ effective October 1, 2010.

PART IV

SECTION 28. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 29. This Act shall take effect on July 1, 2020; provided that part II shall take effect on January 20, 2020, and shall be repealed on , and section 155-14, Hawaii Revised Statutes, shall be reenacted in the form in which it read on the day before the effective date of this Act.

THE SENATE	S.B. NO.	2527
TWENTY-FIFTH LEGISLATURE, 2010		S.D. 2
STATE OF HAWAII		H.D. 2