First Analysis (2-16-00)

THE APPARENT PROBLEM:

In order for Michigan fruits and vegetables to be marketed successfully domestically and internationally, certain standards for storage of these agricultural products in "controlled atmosphere storage" are needed in law. At the request of the Department of Agriculture, legislation has been introduced to do this.

THE CONTENT OF THE BILL:

The bill would amend Public Act 228 of 1959, which provides for promotion of the development of the Michigan fruit and vegetable industry, to define certain terms, revise some of the standards and procedures for licensing of controlled atmosphere (CA) storage, and add civil penalties (in addition to the existing criminal penalties) for violating the act's requirements.

Definitions. The act currently defines "atmosphere storage" and "modified atmosphere storage" ("or similar terms referring to a method of storage of fruits and vegetables") to mean "the storage of fruits or vegetables that have been kept in an approved sealed storage room or in an approved sealed storage building, or in a sealed storage space within the room or building, under controlled conditions of time in days, oxygen content, carbon dioxide content, and temperature as established by regulation of the director of agriculture." The act also allows the term "controlled atmosphere" (which the act does not define) to be referred to by the initials "CA" ("or similar terms or abbreviations").

The bill would keep the current definition (substituting "controlled atmosphere storage" for "atmosphere storage" and deleting reference to "modified atmosphere storage" and to "similar terms referring to a method of storage of fruits and vegetables") and would add a definition for the terms "sealed storage room," "sealed storage space," and "sealed storage building." These terms would mean sealed storage spaces in which a controlled atmosphere is maintained, inferred, advertised, or represented as having a controlled atmosphere.

Misrepresentation of storage conditions. Currently, the act prohibits persons, firms, associations, or corporations from representing fruits or vegetables for sale as having been "exposed to controlled atmosphere or modified atmosphere" unless the fruits or vegetables have been stored in compliance with the act's provisions and rules.

The bill would prohibit "a person or any other legal entity" from doing this. More specifically, the bill would prohibit selling, labeling, describing, advertizing, offering, exposing, exchanging, or transporting fruits or vegetables for sale - when they were represented as having been held under controlled atmosphere storage conditions as specified in the act - unless the fruits or vegetables had been stored in compliance with the provisions of the act and rules promulgated under the act.

Licenses. The act currently prohibits a person, firm, association or corporation from operating controlled atmosphere storage for fruits and vegetables without first obtaining a license from the director of the Department of Agriculture for each sealed storage unit. Application fees are $25 per room, and no license can be issued under the act unless the director (or authorized agent) has inspected the storage facilities and found them to be in compliance with the act and regulations promulgated under the act. Each license expires on November 1 of the year after issue and must be renewed annually unless revoked or suspended.

Under the bill, "a person or other legal entity" would be prohibited from using controlled atmosphere storage without first obtaining a license for each sealed storage unit. The application fee would be increased to $35 a

year, the expiration date would be changed to November 15, and the bill would allow (instead of require) licenses to be renewed annually unless they had been revoked or suspended.

Inspection and sealing requirements. All "controlled atmosphere storage rooms" (a term not defined in the bill) would have to be sealed by the operator, and in order to qualify for controlled atmosphere storage, the room would have to be sealed on or before November 15 of the storage year. (November 15 would be the new expiration date for licenses under the act.) A person or legal entity desiring to maintain a "licensed controlled atmosphere room" would be required to notify the director of the Department of Agriculture within 5 days after the date of sealing.

A department representative would have to place an official seal on the door (of a controlled atmosphere storage room) at the time of inspection (presumably, the inspection required before a license was issued). An operator would be prohibited from breaking the seal or entering the storage room during the days required for the storage period, except when the atmospheric conditions had been interrupted. If interruptions in the atmospheric conditions occurred, the operator would be required to notify the department within 48 hours. Storage rooms whose atmospheric conditions were interrupted could be resealed by an authorized representative of the department.

Facility requirements. The bill would specify that a sealed storage room, space, or building that was used as a controlled atmosphere storage facility for fruits and vegetables would have to be constructed of materials that would allow for the establishment and maintenance of the required levels of carbon dioxide, oxygen, and temperature that would be acceptable to the director of the Department of Agriculture. The room, space or building would be required to have a properly installed and maintained Fahrenheit thermometer, and an approved gas analyzer for the measurement of carbon dioxide and oxygen gases would have to be readily accessible to all sealed rooms or units.

Oxygen levels. Within 14 days after a storage room were sealed, the oxygen within the room would have to be at 5 percent or lower, though during a storage period, the bill would allow the oxygen level to exceed 5 percent for up to 10 days (240 hours).

Minimum storage periods. Generally, apples would have to be stored in a continuously sealed storage room for a minimum of 60 days, though if the atmospheric conditions had been interrupted, the length of storage for "all fruit" would have to be increased to 70 days.

Gala and Jonagold apple varieties, however, could be removed from storage after a minimum of 45 days, though if the atmospheric conditions had been interrupted, this would have to be increased to a minimum of 55 days.

Temperature requirements. The air temperature of a storage room could not exceed 35 degrees Fahrenheit for Jonathan, Rome Beauty, Delicious (all), and Stayman varieties of apples, and could not exceed 41 degrees for all other varieties for the interruption period.

Records. Currently, the act requires that a record, on a form approved by the director of the Department of Agriculture, be kept at "a convenient location adjacent to the storage room, storage space or storage building" from the day that the room, space, or building is sealed to the day the room, space, or building is opened. The record is subject to review by the director or his or her authorized agents "at any time for a period of at least [one] year from the date of sealing."

The bill would require anyone storing fruits and vegetables in a controlled storage atmosphere keep a daily record (at the currently specified "convenient" location and from the day of sealing to the day of opening). The daily records would have to indicate the atmospheric conditions in each sealed storage space from the date of sealing until the date the space is opened, the date and time of the recording, the temperature in degrees Fahrenheit, and the percentages of carbon dioxide and of oxygen. The daily records would have to be made available for inspection at the request of the director.

Rules promulgation. Instead of requiring the director of the Department of Agriculture to "make reasonable rules and regulations in accordance with the provisions of Public Act 88 of 1943," the bill would allow the director or his or her designated agents to promulgate rules under the Administrative Procedures Act.

License actions. Currently, the director of the Department of Agriculture can "withhold and refuse to issue" a license for a controlled atmosphere storage room, space, or building that is not operated (or is not "prepared to be operated") in accordance with the act's requirements. The director also can bring an action to revoke any license issued under the act in the circuit court of the county where the license was issued.

In addition to any other penalties or sanctions provided by law, the bill would allow the director to deny, suspend, or revoke a license after notice and opportunity for a hearing under the Administrative Procedures Act.

Civil penalties. The bill would add new provisions allowing the director of the Department of Agriculture to issue a warning or impose an administrative fine of up to $1,000 for each violation, and to bring an action to enjoin the violation or threatened violation in the county in which the violation had occurred or was about to occur.

After notice and opportunity for a hearing, if the director found that a person had violated any provision of the act, he or she could impose an administrative fine. If a person failed to pay the fine, the director would have to inform the attorney general and the attorney general would be required to bring an action in the appropriate court to attempt to recover the fine. If the director found that a person or firm had violated the act despite the exercise of due care, he or she could issue a warning instead of a fine.

Any civil penalties or recovery of any economic benefits associated with a violation of the act would have to be paid to the state treasury and credited to the department for enforcement of the act.

Criminal penalties. Currently, violations of the act are misdemeanors. The bill would specify that violations of the act's provisions would be misdemeanors punishable by a fine of at least $200 but not more than $5,000 or by imprisonment for up to 90 days.

Repealers. The bill would repeal the section (Section 7) of the act that provides for registration numbers and permits for controlled atmosphere storage units and the section (Section 8) that sets forth labeling requirements.

MCL 286.371 et al.

FISCAL IMPLICATIONS:

According to the House Fiscal Agency, the bill would result in an increase in state revenue and no costs to the state. In fiscal year 1998-99, the revenue generated by license fees under the act came to $6,150. The proposed $10 increase in the license fee would generate an estimated additional $2,460 in state revenue earmarked for administration of the act. The bill also could result in additional state revenue associated with the proposed authorization for the director of the Department of Agriculture to impose administrative fines for violations under the act. (2-15-00)

ARGUMENTS:

For:

The bill would provide a level playing field for the domestic and international marketing of Michigan fruit, particularly Michigan apples. Reportedly, other states and countries have laws specifying the conditions under which controlled atmospheric storage must be done, and have certain shipping certification requirements that Michigan producers cannot meet under current law.

Response:

The bill has some minor, mostly terminological discrepancies that might need clarification.

** In a number of places, the bill refers to "storage facilities for fruits and vegetables," when it seems likely that what is meant is storage facilities for fruits or vegetables.

** The bill appears to contain a redundant requirement in one of the proposed new sections (Section 4a) that operators of licensed controlled atmosphere rooms make their daily records for the sealed storage rooms available for inspection to the director of the Department of Agriculture, upon request, when this requirement already appears (in a slightly different form) in the existing act.

** New requirements for the length of storage in proposed Section 4a appear, first of all, to apply only to fruit, and not to vegetables; secondly, although "all fruit" is mentioned in a provision that would require longer storage when "atmospheric conditions" had been interrupted, the provisions regarding oxygen and temperature requirements appear to apply, in fact, just to apples, and not even to "all fruit," much less to vegetables.

** The bill would add a new definition of "sealed storage room" (which would apply equally to "sealed storage space" and "sealed storage building"), and would slightly revise the current definition of "atmosphere storage" (which also applies to "modified atmosphere storage"), substituting "controlled atmosphere storage" for "atmosphere storage." But the bill then also refers to a number of terms that might be considered variations of these defined terms, including the following: "controlled atmosphere storage facility," "sealed rooms or units," "sealed storage unit,"

"controlled storage atmosphere," "licensed controlled atmosphere room," "sealed controlled storage," and "controlled atmosphere storage rooms." For clarity's sake, some of these terms or references perhaps should be standardized to conform to the definitions given in the bill.

** One subsection (4a) of the bill refers to the air temperature of "any storage room," when it appears that the reference actually is intended to be to "any sealed storage room."

POSITIONS:

The Department of Agriculture supports the bill. (2-15-00)

The Michigan Apple Shippers Association supports the bill. (2-15-00)

Analyst: S. Ekstrom

This analysis was prepared by nonpartisan House staff for use by House members in their deliberations, and does not constitute an official statement of legislative intent.