Existing law, the Cemetery and Funeral Act (act), establishes the Cemetery and Funeral Bureau (bureau) for the licensure and regulation of crematories. The act requires every licensee operating a crematory pursuant to a license issued in compliance with the act to pay specified regulatory charges, and requires those fees to be deposited in the Cemetery and Funeral Fund (fund), which is continuously appropriated for the purpose of implementing the act. The act requires that any change in ownership of a crematory be reported to the bureau. Under the act, when a change of ownership occurs, the existing crematory license lapses and the new owner must obtain a new license from the bureau.

This bill would authorize a crematory license to be assigned when a change of ownership occurs if specified conditions are satisfied, including payment of a fee of $750 to the bureau. The bill would require the fee to be deposited in the fund. By establishing a new source of revenue for a continuously appropriated fund, the bill would make an appropriation. The bill would require a new owner to submit to the bureau a copy of the final sales agreement within 10 days after a sale of a crematory is final, would require the new owner to submit to the bureau proof that any required permit to operate the crematory issued by a local air pollution control district has been assigned to the new owner within 60 days after a sale of a crematory is final, and would make a failure to comply with these provisions a ground for disciplinary action.

Existing law, the Cemetery and Funeral Act (act), establishes the Cemetery and Funeral Bureau (bureau) for the licensure and regulation of crematories. The act requires every licensee operating a crematory pursuant to a license issued in compliance with the act to pay specified regulatory charges, and requires those fees to be deposited in the Cemetery and Funeral Fund (fund), which is continuously appropriated for the purpose of implementing the act. The act requires that any change in ownership of a crematory be reported to the bureau. Under the act, when a change of ownership occurs, the existing crematory license lapses and the new owner must obtain a new license from the bureau.

This bill would authorize a crematory license to be assigned when a change of ownership occurs if specified conditions are satisfied, including payment of a fee of $750 to the bureau. The bill would require the fee to be deposited in the fund. By establishing a new source of revenue for a continuously appropriated fund, the bill would make an appropriation. The bill would require a new owner to submit to the bureau a copy of the final sales agreement within 10 days after a sale of a crematory is final, would require the new owner to submit to the bureau proof that any required permit to operate the crematory issued by a local air pollution control district has been assigned to the new owner within 60 days after a sale of a crematory is final, and would make a failure to comply with these provisions a ground for disciplinary action.

Existing law, the Cemetery and Funeral Act, Act (act), establishes the Cemetery and Funeral Bureau (bureau) for the licensure and regulation of crematories. Existing law The act requires every licensee operating a crematory pursuant to a license issued in compliance with the act to pay specified regulatory charges, and requires those fees to be deposited in the Cemetery and Funeral Fund (fund), which is continuously appropriated for the purpose of implementing the act. The act requires that any change in ownership of a crematory be reported to the bureau. Under existing law, the act, when a change of ownership occurs, the existing crematory license lapses and the new owner must obtain a new license from the bureau.

This bill would instead authorize a crematory license to be assigned when a change of ownership occurs, as provided. The bill would require, upon a change of crematory ownership, the new owner to submit an application to approve the assignment of the license to the bureau after the change of ownership. The bill would require the new owner to notify the bureau of the potential change of ownership and any required inspections that must be conducted at least 30 days prior to the change of ownership. The bill would provide that the assignment is effective upon approval of the application by the bureau. occurs if specified conditions are satisfied, including payment of a fee of $750 to the bureau. The bill would require the fee to be deposited in the fund. By establishing a new source of revenue for a continuously appropriated fund, the bill would make an appropriation. The bill would require a new owner to submit to the bureau a copy of the final sales agreement within 10 days after a sale of a crematory is final, would require the new owner to submit to the bureau proof that any required permit to operate the crematory issued by a local air pollution control district has been assigned to the new owner within 60 days after a sale of a crematory is final, and would make a failure to comply with these provisions a ground for disciplinary action.

Existing law, the Cemetery and Funeral Act, establishes the Cemetery and Funeral Bureau (bureau) for the licensure and regulation of cemetery brokers. Existing law requires an application for license as a cemetery broker to be made in writing on the form prescribed by the bureau and filed at the principal office of the bureau. crematories. Existing law requires that any change in ownership of a crematory be reported to the bureau. Under existing law, when a change of ownership occurs, the existing crematory license lapses and the new owner must obtain a new license from the bureau.

Existing law, the Cemetery and Funeral Act, establishes the Cemetery and Funeral Bureau for the licensure and regulation of cemetery brokers. Existing law requires an application for license as a cemetery broker to be made in writing on the form prescribed by the bureau and filed at the principal office of the bureau.

This bill would make a nonsubstantive change to this provision.

 THIRD READING  

Bill No: AB 1560

Author: Flora (R)

Amended: 4/18/23 in Assembly

Vote: 21

SENATE BUS., PROF. & ECON. DEV. COMMITTEE: 12-0, 6/12/23

AYES: Roth, Nguyen, Alvarado-Gil, Archuleta, Ashby, Becker, Dodd, Glazer, Niello, Smallwood-Cuevas, Wahab, Wilk

NO VOTE RECORDED: Eggman

SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8

ASSEMBLY FLOOR: 74-0, 5/18/23 (Consent) - See last page for vote

SUBJECT: Crematories: change in ownership

SOURCE: Cemetery and Mortuary Association of California

DIGEST:

This bill provides a new regulatory process to transfer ownership of a licensed crematory to a new owner, as specified.

ANALYSIS:

Existing law:

1. Establishes the Cemetery and Funeral Bureau (Bureau) under the Department of Consumer Affairs (DCA) for the licensure and regulation of cemeteries, funeral establishments, crematories, cemetery salespersons, hydrolysis facilities, brokers, managers, cremated remains disposers, and endowment care, as specified. (Business and Professions Code (BPC) § 7600 et seq.)
2. Authorizes a crematory to be operated by a corporation, partnership, or natural person provided that a valid crematory license has been issued by the Bureau. (BPC § 7112)
3. Requires any change in ownership of a crematory be reported to the Bureau and states that any transfer in a single transaction or a related series of transactions of more than 50 percent of the equitable interest in a licensed crematory constitutes a change of ownership. (BPC § 7712.1)
4. Requires whenever a change of ownership in a crematory occurs, that the existing license lapses and the new owner obtains a new license from the Bureau, and the Bureau cannot require an applicant to obtain a new permit or license from any other governmental agency when the existing permit or license is valid. (BPC § 7712.1)
5. Authorizes the Bureau to require such proof as it deems advisable concerning the compliance by such applicant with all the laws, rules, regulations, ordinances, and orders applicable to the applicant, and the Bureau cannot issue a crematory license until it has satisfied itself that the public interest will be serviced. (BPC § 7712.4)
6. Requires the Bureau to adopt, and from time to time may amend rules and regulations prescribing standards of knowledge and experience and financial responsibility for applicants for a crematory license, and in reviewing an application for a crematory license, the Bureau may consider acts of the applicant, including acts of incorporators, officers, directors, and stockholders of the applicant, which must constitute grounds for the denial of a crematory license. (BPC § 7712.5(a))
7. Authorizes the Bureau, upon receipt of a crematory license application, to investigate the physical status, plans, specifications, and financing of the proposed crematory, the character of the applicant, including if applicable, its shareholders, officers, directors, or member and any other qualifications required of the applicant as specified. (BPC § 7712.5(b))
8. Specifies the requirements for the operation of crematories. (HSC 8341 et seq.)

This bill:

1. Revises the requirements for a change in ownership of a crematory and when a change occurs the following apply:
   1. The new owner may submit an application to assign the crematory license;
   2. If the new owners submits an application for a) above, the new owner must submit the application at least 30 days before the change of ownership occurs;
   3. The new owner pays required fees;
   4. The Bureau approves or disapproves the application; and,
   5. The application may be approved prior to the final date of sale.
2. Requires the new owner to submit a copy of the final sale agreement within 10 days after sale of a crematory is final.
3. Requires the new owner to submit proof to the Bureau that any required permit to operate the crematory issued by the local air pollution control district has been has been assigned to the new owner within 60 days after the sale of the crematory is final.
4. States that a failure to comply with the requirements above is grounds for disciplinary action.
5. Prohibits the Bureau from requiring, an applicant seeking a new ownership of a crematory, to obtain any new permit or license from a local government agency when the existing permit or license is valid.
6. Establishes a fee of $750 to assign a crematory license.

Background

Cemetery and Funeral Bureau. The Bureau licenses, regulates, and investigates complaints against California funeral establishments, funeral directors, embalmers, apprentice embalmers, cemetery brokers, cemetery salespersons, cremated remains disposers, crematories, crematory managers, cemetery managers, cemetery brokers and the nearly 194 licensed privately-owned cemeteries in the state. The Bureau does not have authority over cemeteries operated by religious organizations, cities, counties, or cemetery districts, and the military or Native American tribal organizations. Currently, the Bureau licenses and regulates approximately 13,100 licensees in the 13 different licensing categories. The Bureau has the oversight responsibility for both fiduciary and operational activities of its licensing population. The Bureau has statutory authority to enforce the licensing and practice acts in the BPC along with jurisdiction over specified provisions of the Health and Safety Code (HSC) dealing specifically with human remains, cemetery and crematory provisions.

Licensed Crematories. As noted by the Bureau, a crematory is a place of business with a building or structure containing a furnace used for the reduction of human remains, by way of incineration. A crematory must be operated under the supervision of a Licensed Crematory Manager. The crematory manager is responsible for the operation of the facility and in the cremation of human remains. A crematory license can be issued to an individual, partnership or corporation. In order to obtain a crematory license, the following application information must be provided to the Bureau:

1. A complete application with the required filing fee.
2. A corporate resolution delegating authority to submit the application, if applicant is a corporation.
3. A certified copy of Articles of Incorporation if applicant is a corporation.
4. A Partnership agreement, if applicable.
5. A Permit to operate a crematory issued by the local air pollution control district.
6. Land use or zoning permit.
7. A Certified copy of a Deed, lease, or other instrument which provide the applicant with the right to possess and use the property where the business will be located;
   1. A statement signed by the applicant, setting forth the following 3 requirements:
   2. A complete and detailed financial statement showing assets, liabilities, and reserve.
   3. A statement of proposed plan of operation, which shall include the type of selling.
8. A full, true, and complete copy of the standard agreement, which will be used for funding of, prearranged cremations.
9. Plans and specifications of the crematory and building, which must be sufficient to allow the Bureau to determine, among other things, adequacy of storage for cremated and uncremated remains.
10. Copy of a recent fire inspection report or a certificate of occupancy.
11. Evidence of a written contract with a licensed cemetery for final disposition of cremated remains that are in its possession after 90 days of the date of death.
12. Submit Certification Affidavits for all officers, owners and partners.

Although a license is attached to a crematory, the crematory is a business operation, and like many other businesses, a crematory business can be sold or transferred to new owners. Under current law, BPC Section 7712.1, in order to transfer a crematory license to a new owner, the new owner must submit an entirely new application to the Bureau and obtain a new license for the crematory to operate.

As noted by the sponsor, this can disrupt the business process and cease the operations of the crematory business until the Bureau can approve a new application for a new ownership. This bill aims to streamline the change in ownership process for a crematory license, when a currently licensed crematory business seeks to change ownership of the crematory business by more than 50 percent to ensure that operations of the crematory business can continue during the transfer of ownership. If a licensed crematory business has met the licensure requirements specified in statute, including local jurisdiction zoning requirements and air pollution control permits, this bill allows a new owner to transfer ownership of the crematory including the Bureau-issued license number without having to reapply to the Bureau for a new license. This will result in the license number remaining the same, and if there are any disciplinary actions pending or associated with that license, the new owners would assume that record as well. This bill provides the Bureau with authority to review the new application and determine whether it will approve or disapprove the change in ownership request. This bill establishes a fee for the license transfer process.

FISCAL EFFECT: Appropriation: Yes Fiscal Com.: Yes Local: No

SUPPORT: (Verified 6/27/23)

Cemetery and Mortuary Association of California (source)

OPPOSITION: (Verified 6/27/23)

None received

ARGUMENTS IN SUPPORT: Cemetery and Mortuary Association of California writes in support and notes, “AB 1560 resolves a problem with existing Business and Professions Code Section 7712.1. That law requires a crematory to stop performing services between the closing of the purchase and the time the Cemetery and Funeral Bureau grants a new license to the purchaser. The cessation of operations can create a significant and unnecessary hardship for the community, families, and the crematory.”

ASSEMBLY FLOOR: 74-0, 5/18/23

AYES: Addis, Aguiar-Curry, Alanis, Alvarez, Arambula, Bains, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Calderon, Juan Carrillo, Wendy Carrillo, Chen, Connolly, Megan Dahle, Davies, Dixon, Essayli, Flora, Mike Fong, Gabriel, Gallagher, Garcia, Gipson, Grayson, Haney, Hart, Holden, Hoover, Irwin, Jackson, Jones-Sawyer, Kalra, Lackey, Lee, Low, Lowenthal, Maienschein, Mathis, McCarty, McKinnor, Muratsuchi, Stephanie Nguyen, Ortega, Pacheco, Papan, Jim Patterson, Joe Patterson, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Reyes, Luz Rivas, Robert Rivas, Rodriguez, Blanca Rubio, Sanchez, Santiago, Schiavo, Soria, Ta, Ting, Valencia, Wallis, Ward, Weber, Wicks, Wood, Zbur, Rendon

NO VOTE RECORDED: Cervantes, Vince Fong, Friedman, Villapudua, Waldron, Wilson

Prepared by: Elissa Silva / B., P. & E.D. / 916-651-4104

6/28/23 10:41:54

**** END ****

SENATE COMMITTEE ON

BUSINESS, PROFESSIONS AND ECONOMIC DEVELOPMENT

Senator Richard Roth, Chair

2023 - 2024 Regular

Bill No: AB 1560 Hearing Date: June 12, 2023

Subject: Crematories: change in ownership

SUMMARY:

Establishes a new process to transfer ownership of a licensed crematory to a new owner, as specified.

Existing law:

1. Establishes the Cemetery and Funeral Bureau (Bureau) under the Department of Consumer Affairs (DCA) for the licensure and regulation of cemeteries, funeral establishments, crematories, cemetery salespersons, hydrolysis facilities, brokers, managers, cremated remains disposers, and endowment care, as specified. (Business and Professions Code (BPC) § 7600 et seq.)
   
2. States that the powers and duties of the Bureau is subject to review by the appropriate policy committees of the Legislature. (BPC § 7602)
   
3. Authorizes the Bureau to establish necessary rules and regulations for the administration and enforcement of the Cemetery and Funeral Act (Act), as specified. (BPC § 7606)
   
4. Authorizes a crematory to be operated by a corporation, partnership, or natural person provided that a valid crematory license has been issued by the Bureau. (BPC § 7112)
   
5. Requires any change in ownership of a crematory to be reported to the Bureau. (BPC § 7712.1)
   
6. States that any transfer in a single transaction or a related series of transactions of more than 50 percent of the equitable interest in a licensed crematory constitutes a change of ownership. (BPC § 7712.1)
   
7. Requires whenever a change of ownership in a crematory occurs, that the existing license lapses and the new owner obtains a new license from the Bureau, and the Bureau cannot require an applicant to obtain a new permit or license from any other governmental agency when the existing permit or license is valid. (BPC § 7712.1)
   
8. Authorizes the Bureau to require such proof as it deems advisable concerning the compliance by such applicant with all the laws, rules, regulations, ordinances, and orders applicable to the applicant, and the Bureau cannot issue a crematory license until it has satisfied itself that the public interest will be serviced. (BPC § 7712.4)
   
9. Requires the Bureau to adopt, and from time to time may amend rules and regulations prescribing standards of knowledge and experience and financial responsibility for applicants for a crematory license, and in reviewing an application for a crematory license, the Bureau may consider acts of the applicant, including acts of incorporators, officers, directors, and stockholders of the applicant, which must constitute grounds for the denial of a crematory license. (BPC § 7712.5(a))
   
10. Authorizes the Bureau, upon receipt of a crematory license application, to investigate the physical status, plans, specifications, and financing of the proposed crematory, the character of the applicant, including if applicable, its shareholders, officers, directors, or member and any other qualifications required of the applicant as specified. (BPC § 7712.5(b))
    
11. Requires each crematory licensee to keep records as required by the Bureau to ensure compliance with all laws relating to the disposition of cremated human remains and file an annual report with the Bureau describing the operations of the licensee including the number of cremations made, the disposition, and any other information required. (BPC § 7712.8)
    
12. Requires a crematory to at all times employ a licensed crematory manager to manage, supervise, and direct its operations and requires each crematory to designate a licensed crematory manager to manage the crematory and report that designation to the Bureau within 10 days of the effective date, and any change in the designated manager must be reported within 10 days. (BPC § 7713(a))
    
13. Specifies the requirements for the operation of crematories. (HSC 8341 et seq.)

This bill:

1. Revises the requirements for a change in ownership of a crematory and when a change occurs the following apply:
   
2. The new owner may submit an application to assign the crematory license;
   
3. If the new owners submits an application for a) above, the new owner must submit the application at least 30 days before the change of ownership occurs;
   
4. The new owner pays required fees;
   
5. The Bureau approves or disapproves the application; and,
   
6. The application may be approved prior to the final date of sale.
   
7. Requires the new owner to submit a copy of the final sale agreement within 10 days after sale of a crematory is final.
   
8. Requires the new owner to submit proof to the Bureau that any required permit to operate the crematory issued by the local air pollution control district has been has been assigned to the new owner within 60 days after the sale of the crematory is final.
   
9. States that a failure to comply with the requirements above is grounds for disciplinary action.
   
10. Prohibits the Bureau from requiring, an applicant seeking a new ownership of a crematory, to obtain any new permit or license from a local government agency when the existing permit or license is valid.
    
11. Establishes a fee of $750 to assign a crematory license.

FISCAL EFFECT:

This bill is keyed fiscal by Legislative Counsel. According to the Assembly Committee on Appropriations the measure will result in negligible costs to the Bureau.

COMMENTS:

1. Purpose. This bill seeks to revise the licensure process when a licensed crematory changes ownership. The Cemetery and Mortuary Association of California is the sponsor of this bill. According to the author, “Business and Professions Code Section 7712.1 requires a crematory to stop performing services between the closing of the purchase and the time the Cemetery and Funeral Bureau grants a new license to the purchaser. The cessation of operations can create a significant and unnecessary hardship for the community, families, and the crematory.”
2. Background.

Cemetery and Funeral Bureau. The Bureau licenses, regulates, and investigates complaints against California funeral establishments, funeral directors, embalmers, apprentice embalmers, cemetery brokers, cemetery salespersons, cremated remains disposers, crematories, crematory managers, cemetery managers, cemetery brokers and the nearly 194 licensed privately-owned cemeteries in the state. The Bureau does not have authority over cemeteries operated by religious organizations, cities, counties, or cemetery districts, and the military or Native American tribal organizations. Currently, the Bureau licenses and regulates approximately 13,100 licensees in the 13 different licensing categories. The Bureau has the oversight responsibility for both fiduciary and operational activities of its licensing population. The Bureau has statutory authority to enforce the licensing and practice acts in the BPC along with jurisdiction over specified provisions of the Health and Safety Code (HSC) dealing specifically with human remains, cemetery and crematory provisions. With respect to the financial aspect of the industry, the Bureau is responsible for the oversight and regulation of preneed funeral trust funds, cemetery endowment care trust funds, and cemetery special care trust funds. With respect to the sale of insurance policies used to fund preneed funeral arrangements, the Department of Insurance regulates the sales of such policies while the Bureau ensures compliance with price disclosures and contract requirements under the Bureau’s jurisdiction.

Licensed Crematories. As noted by the Bureau, a crematory is a place of business with a building or structure containing a furnace used for the reduction of human remains, by way of incineration. A crematory must be operated under the supervision of a Licensed Crematory Manager. The crematory manager is responsible for the operation of the facility and in the cremation of human remains. A crematory license can be issued to an individual, partnership or corporation. In order to obtain a crematory license, the following application information must be provided to the Bureau:

1. A complete application with the required filing fee.
2. A corporate resolution delegating authority to submit the application, if applicant is a corporation.
3. A certified copy of Articles of Incorporation if applicant is a corporation.
4. A Partnership agreement, if applicable.
5. A Permit to operate a crematory issued by the local air pollution control district.
6. Land use or zoning permit.
7. A Certified copy of a Deed, lease, or other instrument which provide the applicant with the right to possess and use the property where the business will be located;
   1. A statement signed by the applicant, setting forth the following 3 requirements:
   2. A complete and detailed financial statement showing assets, liabilities, and reserve.
   3. A statement of proposed plan of operation which shall include the type of selling.
8. A full, true, and complete copy of the standard agreement which will be used for funding of prearranged cremations.
9. Plans and specifications of the crematory and building, which must be sufficient to allow the Bureau to determine, among other things, adequacy of storage for cremated and uncremated remains.
10. Copy of a recent fire inspection report or a certificate of occupancy.
11. Evidence of a written contract with a licensed cemetery for final disposition of cremated remains that are in its possession after 90 days of the date of death.
12. Submit Certification Affidavits for all officers, owners and partners.

The laws governing crematories and crematory operations are specified in both the BPC and the HSC. For individuals who are working as crematory operators in a licensed crematory, HSC § 8347(a) requires the crematory licensee, or his or her authorized representative, to provide instruction to all crematory personnel involved in the cremation process. The instruction must lead to a demonstrated knowledge on the part of the employee(s) regarding identification procedures used during cremation, operation of the cremation chamber and processing equipment and all laws relevant to the handling of a body and cremated remains. Additionally, the instruction must be outlined in a written plan and maintained by the crematory licensee for inspection and comment by the Bureau’s field representative.

Although a license is attached to a crematory, the crematory is a business operation, and like many other businesses, a crematory business can be sold or transferred to new owners. Under current law, BPC 7712.1, in order to transfer a crematory license to a new owner, the new owner must submit an entirely new application to the Bureau and obtain a new license for the crematory to operate.

As noted by the sponsor, this can disrupt the business process and cease the operations of the crematory business until the Bureau can approve a new application for a new ownership. This bill aims to streamline the change in ownership process for a crematory license, when a currently licensed crematory business seeks to change ownership of the crematory business by more than 50 percent to ensure that operations of the crematory business can continue during the transfer of ownership. If a licensed crematory business has met the licensure requirements specified in statute, including local jurisdiction’s zoning requirements and air pollution control permits, this bill would allow a new owner to transfer ownership of the crematory including the Bureau-issued license number without having to reapply to the Bureau for a new license. This will result in the license number remaining the same, and if there are any disciplinary actions pending or associated with that license, the new owners would assume that record as well. This bill provides the Bureau with authority to review the new application and determine whether it will approve or disapprove the change in ownership request. This bill establishes a fee for the license transfer process.

By streamlining the change of ownership process, as proposed by this bill, it does not change the current requirements for operations of a crematory including a licensed crematory manager, crematory contract requirements, prohibition against requiring human remains be cremated in a casket, maintain cremation records as specified in § 8343 HSC, prohibition on certain elements being contained in the cremation chambers, flag cremation guidelines, and disposition of cremated remains, among others.

1. Arguments in Support. The Cemetery and Mortuary Association of California writes in support and notes, “AB 1560 resolves a problem with existing Business and Professions Code Section 7712.1. That law requires a crematory to stop performing services between the closing of the purchase and the time the Cemetery and Funeral Bureau grants a new license to the purchaser. The cessation of operations can create a significant and unnecessary hardship for the community, families, and the crematory. AB 1560 rectifies this issue by amending Section 7712.1 to require the purchaser of a crematory to submit an application to the Cemetery and Funeral Bureau for the bureau’s approval of the assignment of the license. The amendments would also require the new owner to notify the bureau of the potential change of ownership and any required inspections that need to be conducted a minimum of thirty calendar days prior to the change of ownership.”

SUPPORT AND OPPOSITION:

Support:

Cemetery and Mortuary Association of California

Opposition:

None received

-- END --

Date of Hearing: May 10, 2023

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Chris Holden, Chair

ABPCA Bill Id:AB 1560

Author:(Flora) – As Amended Ver:April 18, 2023

Urgency: No State Mandated Local Program: No Reimbursable: No

SUMMARY:

This bill authorizes a new owner of a crematory to submit an application to the Cemetery and Funeral Bureau (Bureau) to assign the crematory license before the change of ownership occurs and allows the Bureau to approve the application prior to the date of the final sale.

Specifically, this bill:

1. Deletes the requirement that when a change of ownership in a crematory occurs, the existing license must lapse and the new owner must obtain a new license from the Bureau.
2. Instead specifies when a change of ownership in a crematory occurs, all of the following apply:
   1. The new owner may submit an application to the Bureau to assign the crematory license at least 30 days before the change of ownership occurs and must pay the required fee.
   2. If the new owner submits an application to assign the crematory license, the Bureau must approve or disapprove the application and may approve the application prior to the date of the final sale.
3. Requires the new owner, within 10 days after a sale of a crematory is final, to submit to the Bureau a copy of the final sales agreement.
4. Requires the new owner, within 60 days after a sale of a crematory is final, to submit to the Bureau proof that any required permit to operate the crematory issued by a local air pollution control district has been assigned to the new owner.
5. Specifies that failure to provide the documentation in 3) and 4) above constitutes grounds for disciplinary action.
6. Sets the fee to assign a crematory license at $750 dollars, to be paid by the proposed assignee and deposited in the Cemetery and Funeral Fund.

FISCAL EFFECT:

Negligible costs to the Bureau.

COMMENTS:

1. Purpose. The author of this bill seeks to improve continuity of operations when a crematory undergoes a change of ownership. This bill is sponsored by the Cemetery and Mortuary Association of California. According to the author:

[This bill] would enable communities to continue to be served without unnecessary interruption when a crematory is sold. [This bill] provides for advance notice to the state, together with state approval and oversight, including enforcement authority, to ensure that the crematory continues to adhere to all of the applicable laws and regulations and consumers are protected.

1. Background. The Bureau is responsible for administering and enforcing the Cemetery and Funeral Act, which includes licensing and regulating more than 13,000 licensees in 14 different licensing categories, including crematories, crematory managers, and cremated remains disposers. There are currently 227 licensed crematories with the authority to operate in California.

Existing law requires, when a crematory changes ownership, the crematory license to lapse and the new owner to apply for a new license. The author and sponsors of this bill contend the existing process is disruptive to crematory operations and creates hardships for the crematory and the people in need of its services. This bill would allow the purchaser of a crematory to apply to have the license reassigned and authorizes the Bureau to approve the application before the final sale occurs.

The Bureau, upon receipt of an application for a new crematory license, is authorized to investigate the physical status, plans, specifications, and financing of the proposed crematory, the character of the applicant, including its shareholders, and any other qualifications required of the applicant. To defray these expenses, applicants are required to pay a $750 fee when filing the application. This bill would similarly require an applicant seeking to have an existing license assigned to them to pay $750.

Analysis Prepared by: Jennifer Swenson / APPR. / (916) 319-2081

Date of Hearing:

ASSEMBLY COMMITTEE ON BUSINESS AND PROFESSIONS

Marc Berman, Chair

ABPCA Bill Id:AB 1560

Author:(Flora) – As Amended Ver:March 16, 2023

SUBJECT: Crematories: change in ownership.

SUMMARY: Authorizes a new owner of a crematory to submit an application to the Cemetery and Funeral Bureau (bureau) to assign the license before the change of ownership occurs and allows the bureau to approve the application prior to the date of the final sale.

EXISTING LAW:

1. Regulates and licenses funeral establishments and directors; cemeteries and cemetery managers, brokers, and salespersons; embalmers and apprentice embalmers; crematories and crematory managers and cremated remains disposers; hydrolysis facilities, and reduction facilities under the Cemetery and Funeral Act. (Business and Professions Code (BPC) §§ 7600-7746)
2. Establishes the Cemetery and Funeral Bureau under the Department of Consumer Affairs (DCA) to administer and enforce the Cemetery and Funeral Act. (BPC § 7602(a))
3. Subjects the bureau to review by the appropriate policy committees of the Legislature. The review shall be performed as if the Cemetery and Funeral Act were scheduled to be repealed as of January 1, 2024. (BPC § 7602(b))
4. Specifies that a funeral establishment’s license may be assigned upon payment of a specified fee, the filing of a completed application, and upon submission of an audit report prepared and signed by an independent certified public accountant or public accountant currently licensed in this state. Requires the assignee to comply with all provisions previously placed on the assignor. (BPC § 7630)
5. Requires a change in the ownership of a crematory to be reported to the bureau. (BPC § 7712.1)
6. Specifies that any transfer of more than 50 percent of the equitable interest in a licensed crematory constitutes a change of ownership. (BPC § 7712.1)
7. Specifies that when a change of ownership in a crematory occurs, the existing crematory license shall lapse and requires the new owner to obtain a new license from the bureau. (BPC § 7712.1)
8. Prohibits the bureau from requiring an applicant to obtain any new permit or license from any other governmental agency when the existing permit or license is valid. (BPC § 7712.1)
9. Requires the bureau to adopt rules and regulations prescribing standards of knowledge and experience and financial responsibility for applicants for a crematory license. In reviewing an application for a crematory license, the bureau may consider acts of the applicant, including acts of incorporators, officers, directors, and stockholders of the applicant, which shall constitute grounds for the denial of a crematory license. (BPC § 7712.5(a))
10. Specifies that upon receipt of an application for a crematory license, the bureau may cause an investigation to be made of the physical status, plans, specifications, and financing of the proposed crematory, the character of the applicant, including, if applicable, its officers, directors, shareholders, or members, and any other qualifications required of the applicant, and for this purpose may subpoena witnesses, administer oaths, and take testimony. (BPC § 7712.5(b))
11. Requires, at the time of the filing of the application, the applicant to pay to the Cemetery and Funeral Fund $750 to defray the expenses of investigation. In the event $750 is insufficient to defray all of the expenses, the applicant must within five days after request by the bureau, deposit an additional sum sufficient to defray such expenses, provided that the total sum shall not exceed nine hundred dollars ($900). (BPC § 7712.5(c))
12. Requires every crematory licensee operating a crematory to pay an annual regulatory charge for each crematory of seven hundred fifty dollars ($750). (BPC § 7712.9)
13. Specifies that in addition to an annual regulatory charge for each crematory, every licensee operating a crematory shall pay an additional charge of eleven dollars and fifty cents ($11.50) per cremation made during the preceding quarter, which charges shall be deposited in the Cemetery and Funeral Fund. (BPC § 7712.9)

THIS BILL:

1. Deletes the requirement that when a change of ownership in a crematory occurs, the existing license must lapse and the new owner must obtain a new license from the bureau.
2. Specifies that when a change of ownership in a crematory occurs, all of the following apply:
   1. The new owner may submit an application to assign the crematory license.
   2. If the new owner submits an application to assign the crematory license, the new owner shall submit the application at least 30 days before the change of ownership occurs.
   3. If the new owner submits an application to assign the crematory license, the new owner shall pay a $750 fee.
   4. If the new owner submits an application to assign the crematory license, the bureau shall approve or disapprove the application.
   5. If the new owner submits an application to assign the crematory license, the bureau may approve the application prior to the date of the final sale.
3. Requires the new owner, within 10 days after a sale of a crematory is final, to submit to the bureau a copy of the final sales agreement.
4. Requires the new owner, within 60 days after a sale of a crematory is final, to submit to the bureau proof that any required permit to operate the crematory issued by a local air pollution control district has been assigned to the new owner.
5. Specifies that failure to provide the aforementioned documentation constitutes grounds for disciplinary action.
6. Sets the fee to assign a crematory license at $750 dollars, to be paid by the proposed assignee and deposited in the Cemetery and Funeral Fund.

FISCAL EFFECT: Unknown. This bill is keyed fiscal by Legislative Counsel.

COMMENTS:

Purpose. This bill is sponsored by the Cemetery and Mortuary Association of California. According to the author: “The legislation would enable communities to continue to be served without unnecessary interruption when a crematory is sold. [This bill] provides for advance notice to the state, together with state approval and oversight, including enforcement authority, to ensure that the crematory continues to adhere to all of the applicable laws and regulations and consumers are protected.”

Background.

Cemetery and Funeral Bureau. The bureau is responsible for administering and enforcing the Cemetery and Funeral Act, which includes licensing and regulating more than 13,000 licensees in 14 different licensing categories, including crematories, crematory managers, and cremated remains disposers.^[1] A crematory is a place of business with a building or structure containing a furnace used for the reduction of the body of a deceased human to its essential elements by way of incineration. There are currently 227 licensed crematories with the authority to operate in California.^[2]

Currently, when a crematory changes ownership, the crematory license must lapse and the new owner must apply for a new license.^[3] The author and sponsors of this bill contend that the existing process is disruptive to crematory operations and creates hardships for the crematory and the people in need of its services. This bill would allow the purchaser of a crematory to apply to have the license reassigned and authorizes the bureau to approve the application before the final sale occurs. These changes are intended to improve continuity of operations when a crematory undergoes a change of ownership.

The bureau, upon receipt of an application for a new crematory license, is authorized to investigate the physical status, plans, specifications, and financing of the proposed crematory, the character of the applicant, including its shareholders, and any other qualifications required of the applicant.^[4] To defray these expenses, applicants are required to pay a $750 fee when filing the application.^[5] In the event that the costs of the investigation exceed $750, the bureau may request that the applicant pay up to an additional $150.^[6] This bill would similarly require an applicant seeking to have an existing license assigned to them to pay $750.

Current Related Legislation.

AB 528 (Irwin) would authorize a public or private cemetery to designate a separate, clearly marked section of the cemetery where deceased pets could be buried in the same plot, niche, crypt, or vault with their deceased owners so long as the pet and human remains be in separate containers. Pending in this committee.

Prior Related Legislation.

SB 1443 (Roth), Chapter 625, Statutes of 2022, subjected the Cemetery and Funeral Bureau to review by the appropriate policy committees of the Legislature as if the bureau and Cemetery and Funeral Act were scheduled to be repealed on January 1, 2025.

SB 606 (Glazer), Chapter 375, Statutes of 2019, subjected the Cemetery and Funeral Bureau to review by the appropriate policy committees of the Legislature as if the bureau and Cemetery and Funeral Act were scheduled to be repealed on January 1, 2024.

AB 180 (Bonilla), Chapter 395, Statutes of 2015, merged the Funeral Directors and Embalmers Law and the Cemetery Act into the Cemetery and Funeral Act, merged the State Funeral Directors and Embalmers Fund and the Cemetery Fund into the Cemetery and Funeral Fund, increased the fee from $400 to $750 that every crematory licensee is required to pay annually, increased from $8.50 to $11.50 the fee that every licensee operating a crematory must pay per cremation made during the preceding quarter, and subjected the bureau to review by the appropriate policy committees of the Legislature as if the bureau and Cemetery and Funeral Act were scheduled to be repealed on January 1, 2020.

ARGUMENTS IN SUPPORT:

The Cemetery and Mortuary Association of California, the sponsor of this bill, writes in support:

[This bill] resolves a problem with existing … law [which] requires a crematory to stop performing services between the closing of the purchase and the time the Cemetery and Funeral Bureau grants a new license to the purchaser. The cessation of operations can create a significant and unnecessary hardship for the community, families, and the crematory.

[This bill] rectifies this issue by [requiring] the purchaser of a crematory to submit an application to the Cemetery and Funeral Bureau for the bureau’s approval of the assignment of the license. The amendments would also require the new owner to notify the bureau of the potential change of ownership and any required inspections that need to be conducted a minimum of thirty calendar days prior to the change of ownership.

Together, these amendments ensure that the bureau receives advance notification of a change of ownership, a reasonable period of time to perform any needed inspections, and the ability of a crematory to continue to serve the community.

ARGUMENTS IN OPPOSITION:

None on file.

IMPLEMENTATION ISSUES:

Bill structure. As currently drafted, this bill places the provision requiring an applicant to pay a $750 fee in the same code section (BPC § 7712.9) as a requirement that every crematory licensee operating a crematory to pay an annual $750 regulatory charge for each crematory. The author may wish to consider moving the provision requiring an applicant to pay a $750 fee to the code section (BPC § 7712) that requires applicants for a new crematory license to pay a $750 fee.

Timelines. This bill currently requires, if the new owner is going to submit an application to the bureau to preserve continuity of operations, that they do so at least 30 days before the change of ownership occurs. The author may wish to consider amending the bill to afford the bureau more time to process the application.

Lapse Upon Transfer. This bill deletes the language specifying that a license will lapse upon transfer, but does not specify what happens to the license under this bill. As a result, the author may wish to consider clarifying whether the license will lapse if the new owner does not apply to have the license re-assigned.

REGISTERED SUPPORT:

Cemetery and Mortuary Association of California

REGISTERED OPPOSITION:

None on file.

Analysis Prepared by: Kaitlin Curry / B. & P. / (916) 319-3301

1. Cemetery and Funeral Bureau. (n.d.). Licensing applications. Cemetery and Funeral Bureau. Retrieved April 21, 2023, from https://www.cfb.ca.gov/licensee/app.shtml ↑

2. Department of Consumer Affairs. (n.d.). License Search. Department of Consumer Affairs. Retrieved April 21, 2023, from https://search.dca.ca.gov/results ↑

3. BPC § 7712.1 ↑

4. BPC § 7712.5(b) ↑

5. Ibid. ↑

6. BPC § 7712.5(c) ↑