Assembly Standing Committee on Agriculture

Good afternoon, everyone. This hearing of the committee on agriculture is called to order. It's gonna be a very light committee, but before our one author shows up, I just wanna go over a few logistics. So as we proceed Oh, did I? As we proceed with a witness and public comment, if there's any today, I want to make sure everyone understands that the assembly has rules to ensure we maintain order and run an efficient and fair hearing.

We apply these rules consistently to all people who participate in our proceedings regardless of the viewpoint they express. In order to facilitate the goal of of hearing as much from the public within the limits of our time, we will not permit conduct that disrupts, disturbs, or otherwise impedes the orderly conduct of legislative proceedings. For all those who will be providing comments today, we ask that you please state your name, the organization you represent, and if you support or or oppose the bill being considered.

Any member of the public may also submit written comments to our committee through email. Emails may be sent to the address found on the committee website, which is [email protected].

And so, again, we only have one bill on the file today, so it's gonna be a short hearing once we get, our author here. We do not have a quorum, but we will open the hearing as a subcommittee. Right. Can we? Yeah.

To allow, bill presentations when the author gets here. And if we don't have a quorum by the end of the presentation of the bill, we'll be placed on call until, we do. So since we don't have anyone here and you guys and I like to share fun facts. I did wanna share a fun fact for the month of June. Couple fun facts.

June is officially the month recognized as national fresh fruit and vegetable month, and I want to highlight two fresh fruits that are grown in my district. And I'll start with berries, which are blueberries and blackberries are are these fruits that are that are in peak season currently, and they're considered prime in June and July, especially given our state's climate.

And some of the things that we learned in doing a little research that California is one of the premier blueberry and blackberry producing states, if you didn't know, yielding roughly hundreds of millions of pounds annually combined and contributing over $560,000,000 per year with blueberry production and over $200,000,000 in blackberry production to the state's economy. You guys didn't know that that's pretty interesting.

And one fun fact I have to share, obviously, I will be biased because I am gonna talk about my district is that Fresno County is the king when it comes to California's blueberry production with over 1,300 acres producing millions of pounds of blueberries every single year.

So that's awesome. So when you eat blueberries, make sure you think of Fresno. Okay? The other fun fruit are in the group of melons. And so also during the summer, June and July is a time to see all the booming melon economy in my district in particular.

And so we lead the nation by supplying roughly 75% of all cantaloupes consumed in The US and virtually all domestic honey deuce nationally. Many of them come from my district. Again, the West Side Of Fresno County and some out in Merced County as well. The majority of this booming $700,000,000 Mellon economy comes from two regions. I will give a shout out to my other colleague, Jeff Gonzales, the Imperial Valley in the South, and then obviously the San Joaquin Valley in the center of the state.

Again, over 90% of commercial watermelon grown in The States are seedless. Do you guys know that?

It's pretty I know. I'm still trying to learn. I was out at Dickey Farms in Sanger, which I'll give them a shout out. I did bring melons to share with the members in the members lounge the other day.

The farmer there told me you have to tap it, and there's a certain noise, and it will tell you if it's really good. I I'm still I'm still, like, been trying to figure it out. So there's It's definitely worse than me. There is a trick apparently to it. I'm still trying to figure it out.

But again, just wanted to share those fun facts. And we had earlier this week, we had yellow ones, orange ones, which I had never eaten, and, obviously, the typical red ones that you guys all see. So, anyways, those are my fun facts for today, and we'll wait for Senator Padilla as he comes in, presents his bill. Mine? Oh.

My oh, there we are. We will save that for another day. Thank you, Senator for being here. You are the man of the hour. Yeah. The man we've all been waiting for. And so, you have file item number one, Senate bill 2023 by Senator Padilla. Senator, please proceed with your bill when you are ready.

Thank you very much, madam chair and members. Appreciate your patience. Affairs to use competitive bidding standards in the awarding of contracts and prohibit sole source contracting. A recent investigation done by the Los Angeles Times has found widespread corruption. Unfortunately, in California affairs, it's found that over $1 million in public funds have been stolen, misappropriated. State auditors have accused officials of dozens of other fairs of misspending millions in public funds.

In order to address some of this corruption, lawsuits were filed by a fair midway operator against the San Diego And Orange County Fairs. It was found as a result of the production of discovery in those cases. Guess San Diego County fair the fair officials there are charged, change the scores of a 2021 contract competition to favor one bidder over another under the direction of the fairgrounds CEO.

Lawsuit against the Orange County Fair revealed that the public contracting codes competitive bidding requirements do not apply to all fair contracts, allowing the bids to be tailored or written to suit one particular bidder. Public contracting code and others were written to guard against favoritism and to promote fair competition state contracts.

Competitive bidding requirements are an important tool for transparency and accountability and promote fair competition. These requirements ensure that the state is securing the best services and benefits for people who have that appropriate expectation. They are public resources. They're enjoyed by many throughout the state, and we must close this loophole to help combat the corruption that is plaguing a cherished tradition in the state. Pleased to be joined today by John Moot, senior counsel at Freeman Mathis & Gary.

You may proceed.

Members of the committee. Public contract code Section 10339 prohibits a state agency from drafting a request for proposal on a public contract for services to be rendered to the state in a way that directly or indirectly limits bidding to anyone better. Section 10421 allows the court to issue a temporary injunction preventing further dealing on a public contract awarded in violation of this provision. There are 54 agricultural districts in the state of California that operate up to 97 fares.

Some of the contracts that these district agricultural associations award are worth up to 40 to $80 million at some of the larger fairs.

Some of these districts, like the thirty second DA, have taken the position that the public contract code does not apply to them. The current state of the law raises questions as to whether in fact the public contract code applies to carnival contracts issued by district agricultural associations. I was counsel for tally amusement in two of these cases. In San Diego, the superior court held that the public contract code up applied to these carnival fair contracts.

Depositions in that case, which I took, uncovered that the CEO of that fair, not once but twice, changed the scores of the RFP to award the contract to their preferred bidder, a large carnival company, RCS.

With this rather explosive evidence from two employees of the twenty second DA, the court granted injunction on the contract under the public contract code prohibited that contract going forward. As a result, the twenty second DA entered into a settlement agreement with Talley Amusement, paid $500,000 in damages, and reinstated them at the fair. The situation in Orange County with the thirty second BAA was very different. In that particular case, superior court ruled the public contract code did not apply to their award of a contract.

Their RFP was written in such a matter that only one contractor in the entire United States could meet the minimum experiences and qualifications of that RFP.

Not surprisingly, only that same contractor, RSC, that we saw in San Diego, was the only one who submitted a bid and they got the award. On top of this, that same company had had the same contract, $80 million fair contract for twenty years without it ever going out to bid. Wow. Because of the lack of competition, they got the contract for another ten years. We appealed the decision of the superior court to the appellate district.

And the appellate district originally in a published opinion said, oh, there's some ambiguity in how we interpret the public contract code and does it apply to this particular contract and upheld the decision of the lower court. We filed a petition with the Supreme Court of California. Supreme Court of California, after reviewing the matter, ordered that decision depublished.

If you could please wrap up.

There was a footnote in that opinion in which the appellate court said, if the legislature intends a different result from this, we invite them to revisit the language of the statute. And that's exactly what this bill does. It takes the exact provision from the public contract code It prohibits writing RFPs so only one person can win them and makes it specifically applicable to all the district agricultural associations throughout the state of California. So there'll be no ambiguity whatsoever in the law.

The agricultural districts must comply with the public contract code.

I think you all know why the public contract code exists and is enforced in the state of California. It's to prevent favoritism, fraud, and the corruption of government contract. What this bill will do, it will take the 54 district agricultural associations who may not think that the law applies to them and hold them to the same standard of every other state agency who who must comply with the public contract code. This bill is intended to address the gap in the law.

Something that emerged only after a blockbuster case. It was revealed. Very, very.

Thank you so much for your testimony. Before we move on, I do wanna, just take note that we do have quorum. So madam secretary, if you could please call the roll.

[Roll Call]

Great. We have quorum. Thank you again for your testimony. We wanna open it up if there is any opposition. Seeing none, we'll put it out to the public for public comment.

If there's anyone here that either supports or opposes the bill, this is your time. Seeing none, open it up to the committee for questions or comments. Vice chairwoman.

Hi. I have a couple questions. I represent the most fares in the state for the assembly, and I have a couple of fares that are concerned. My fares are very small and very, very rural and isolated, so they have limited contractors anyway. How would this bill affect the day to day procurement and contracting process with affairs from soliciting bids through contract execution and performance?

Okay. Ask the question one more time. Sorry. I couldn't hear.

How would it affect the day to day procurement? So, and the contracting process?

I'll give you a brief answer, and then I'll I'll refer to my my expert witness here as look. Again, it gets to the legislative intent of the code per se. Right?

The broad framework that says anything that could be directly or construed is providing a contract to a public for a public benefit or service, which is probably just about everything in these scenarios including ag districts, has to conform to a single complete unified framework, which is that you're gonna have competitive bidding, you're gonna have transparency, and you're not gonna tailor bid requirements to select one bidder in a way that is subrosa. Right?

That leads to all kinds of public it's contrary to public policy. As I would also point out that there are exemptions in the administrative regs that provide and give flexibility to operators and CEOs of ag districts who, for example, have occasion to give small contracts out to an artist to set up a display or a musician to perform at an event. There are already exclusions and provisions for that in the rule making and in the code. So there's no inconsistency there.

This seeks to get out of a gap that's pretty glaring.

And it is, I think, for the public benefit, for the balance. If it's okay, madam chair, I'll let my witness Respond as well.

I would suspect that the fares in under your jurisdiction do not have this problem. We haven't seen this problem at the smaller fares, frankly. It's when you're you're dealing with 40 and $80 million contracts that we've seen this problem arise.

It really doesn't affect the fairs one way or the other. When you write an RFP, you have to write it so that more than one bidder can meet the minimum experience and qualifications. So I think most fare operators excuse me. Most fare managers know how to do this. Why this didn't happen in San Diego and Orange County?

I have my opinion. It's probably not relevant here. But like I say, it really is only a problem when there is substantial amounts of money at issue where the temptation for favoritism and fraud arise. Okay.

Thank you so much. I'm gonna support the bill. I just had some questions for, to clarify. And then one of the things they wanted me to ask was what specific steps would a fair manager need to take to ensure compliance with the bill, and how would they know that they've met those requirements?

Because they're very they don't wanna break the the rules.

Madam Chair, again, defer to my witness.

Well, I I think it's pretty easy, especially in the smaller fairs. They know, you know, who the people who, you know, bid on these carnival contracts. You have to sort of have malintent to write it so only one person can win it. I mean, you really have to be very specific. For example, in Orange County and the one in San Diego, they they set a minimum qualification.

You had to have done so many fairs over this period, over this large that had electronic ticket. Everybody knew there was only one company that met those requirements. Everybody in the industry knew that. So I think for your fair managers, they're gonna know, you know who the different fair operators are.

And they're they're not gonna want to intentionally ride it. So only one person can win it. So I think it's fairly easy for the managers to do that. I know that there's a state agency, fairs in that fairs in exposition committee. They provide advice To agencies who write these contracts.

I know I dealt with them regularly in the course of my proceedings. I think they are available, especially the smaller affairs, to help them make sure that they write these correctly.

Okay. Thank you so much for clarifying. The ripple effect to rural is often not not noticed sometimes. So I just wanted to clarify. Thank you.

Agree.

Any other members questions or comments? Great. I'll just say thank you so much, Senator, for bringing this bill forward. I I do believe that it is a critical piece of legislation to ensure that we aren't seeing these types of incidents and corruption communities. I, in my district, I do have three fairs.

One very large, which is the Fresno fair. And I think that this is important creates important safeguards for the public and also so that the the contracts that are put out are bid in a very fair way to folks. And so thank you again for bringing this forward. I'm looking forward to support this bill today, but I'd like to offer you to close for closing remarks.

Thank thank you very much, madam chair and members, and to your committee staff. And I do wanna take just a brief second and thank my witness, mister Moot, who is not just a distinguished litigator in his own right, but someone I served with many decades ago in public office and who I've worked with professionally for many years as well.

And through his diligence, you know, he's sort of uncovered this and brought this gap to the attention of me as an author and I I think all of us in the legislature. And I think that's all in a good spirit of public service. And we'll close a gap that will close off opportunities for corruption.

So I wanna acknowledge mister Moots work in this regard, thank him, and respectfully ask for an aye vote.

Great. Thank you so much. The motion on the bill is do pass to appropriations committee. Is there a motion on the bill? We have a motion and a second.

Madam secretary, please call the roll.

[Roll Call]

So right now, the bill has seven votes in favor. We will wait for Assemblymember Gonzales to see if he wants to come and add on, but we will do that. But thank you again for presenting your bill with us today.

Thank you madam chair and members.

Before everyone else leaves to the committee members, I did want to just take a moment of privilege. I know I've talked a lot today, but I did wanna announce that today is Victor's last day as well as our amazing secretary. And so I know. We have a double double whammy. Last hearing.

Oh, last hearing. Not last last date. Last hearing. Excuse me. Sorry.

Almost last. We're counting. But I did wanna take pause to recognize them and just share a little bit of of the work that they've done for us. Not just in my time as being chair of the Agriculture Committee, but for the last I think for both of them, they've been here dozens of years and I'll share a little bit of of their background.

But I just wanna say personally to both of them, Nicole and Victor, you guys have been incredible, you know, staff members to this committee.

I know that you guys have served a number of chairs and a number of committee members, and so I wanted to recognize your guys' work today. I think it's bittersweet and, you know, for the members that have been on this committee a few years now. I know Assemblywoman Irwin has been on this committee for a long time. Right? I think you're probably the longest serving.

And and Curry, Aguiar-Curry. So you guys have worked longer with them than I have, but I I have had the incredible pleasure of being the chair over the last few years. And so just to share a little bit about Victor. So if you guys didn't know, Victor has served as a chief consultant for this committee for the past seventeen years. Yeah.

And so as I said, it's a bittersweet moment that he's retiring, but I think that it is important to share, you know, just a little bit of background. So Victor was born in Santa Rosa. He graduated from UC Santa Barbara with a double major in poli sci and history and would soon go on to work in the California State Assembly and Senate under Assemblymember and then Senator Mike Machado, which I've heard stories about. Victor were served under Machado for thirteen years.

While with Machado, Victor was a district representative, a legislative aide, a special projects coordinator, and a field representative.

So I would venture to say he's done a little bit of all these positions and knows a lot. Victor also worked on several political campaigns in the time with the legislature and helped, you know, many folks come through this building. In 2005, Victor started working as the statewide technology director for the Alliance for a Better California. But in 2009, he began to work with this committee as the principal consultant.

He became the solo consultant for the committee in 2016, and over the next few years, he was promoted to chief consultant and then, of course, chief consultant.

During this tenure, he has seen 14 different speakers of the assembly, seven committee chairs, and I will have to give a shout out to his family because he has spent a lot of time here in this building. But his wife, Charice, who's a school psychologist of 31 years. They have two sons, which I've learned about and, you know, they reside here in our in not too far from here in Lodi.

I just wanna personally again thank you, Victor, for being a fair consultant and always making sure that I'm well prepared and that the members of this committee have all the information necessary so that we make the best decisions as we serve the people of California. So again, thank you for your incredible contributions and the mark that you've left for our agriculture committee.

He leaves with a wealth of knowledge that will be missed, so I know that is gonna be a significant loss for this committee, but I'm excited that you've earned your retirement. And I know you wanna have fun. So congratulations again for, you know, going out to enjoy the next chapter of of life. So, again, thank you for the work that you've done with us and with me and with all of us here today.

I also wanna recognize Nicole who also has been around for a long time.

Right, Nicole? I know. She's leaving us too, but she has served as the secretary for the past five years, and so they will be retiring later this month. But since this was our last committee, I did wanna recognize her as well. Just important to note about Nicole that she has worked for the legislature since 1995.

So she knows a lot of and has a lot of stories. I'm sure she's she has been seen a lot. And so I think you started with speaker Doris Allen long time ago. I don't even know who who that speaker was. But in 1996, she went to work as an administrative assistant for Speaker Cruz Bustamante, and in '98, she went to work for the Assembly Rules Committee.

She worked there from 1998 till 2021 when we she came to this committee. And so she would have served under nine different chairs in her time with rules. And so for the past five years, as I mentioned, she's been with us and her and Victor, I will say, hands down are a dynamic duo and made sure that I was always ready. She and I would would try to figure out these buttons. So I think I kind of figured it out today.

But thank you, Nicole, for, obviously, keeping us making sure that this committee run well and efficiently. Again, thank you for your contributions to the state of California. We're so proud to have worked with you. Thank you for your contributions and for leaving a mark and making sure that we're all well prepared. Again, congratulations on this next chapter.

You guys will be missed, but we're excited that you guys will be able to enjoy your retirement. So I just wanted to make sure that I share that with you guys if you guys didn't know, but can we give them a round of applause? So if there's no one else that wants to say anything, we'll oh, no. We're waiting still for is he coming? Okay.

We will wait for Assemblymember Gonzales. But otherwise, this is it. So thank you so much members for being here on time.

Thank you, Assemblymember Gonzales, for showing up. Appreciate it. So madam secretary, will you call the roll.

On file item one, SB 1223 Padilla. Gonzalez? Gonzalez, aye.

Great. And so the bill is out with eight votes. Thank you. And the meeting is adjourned.