Stop Qip Tax Coalition v. Dept. of Food and Agr. CA3 ( 2022 )

Filed 1/26/22 Stop Qip Tax Coalition v. Dept. of Food and Agr. CA3
NOT TO BE PUBLISHED
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
or ordered published for purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
THIRD APPELLATE DISTRICT
(Sacramento)
----
STOP QIP TAX COALITION, C092810
Plaintiff and Appellant, (Super. Ct. No.
34201980003273CUWMGDS)
v.
DEPARTMENT OF FOOD AND
AGRICULTURE,
Defendant and Respondent;
SAVE QIP DAIRY FARMERS,
Intervener and Respondent.
This appeal concerns a matter of statutory interpretation. Anticipating the United
States Department of Agriculture (federal agency) might promulgate a federal milk
marketing order (federal order) covering California, the California Department of Food
and Agriculture (department) sponsored Food and Agricultural Code1 (the Code) section
1 All further section references are to the Food and Agricultural Code unless
otherwise specified.
1
62757, which was enacted by the Legislature without any modification. Section 62757
was added to chapter 3.5 of part 3 of division 21 of the Code.2
Subdivision (a) of section 62757 provides, in pertinent part, “[i]f a federal milk
marketing order is established in California, the secretary [of the department] is
authorized to establish a stand-alone quota program, the details of which shall be
included in the pooling plan.” Subdivision (c) of section 62757 states, “The stand-alone
quota program shall be pursuant to a recommendation by the review board established
pursuant to Section 62719 and approved by a statewide referendum of producers
conducted pursuant to Sections 62716 and 62717.”
Pursuant to section 62757, the review board recommended, the department
approved, and the dairy producers adopted by referendum the Quota Implementation
Plan. The Quota Implementation Plan states: “It is the intent of the Legislature that the
Department implements [sic] a stand-alone quota plan, adopted by producer referendum,
only if and when [the federal agency] adopts a [federal order] for California. The
‘pooling plan’ referenced in the Trailer Bill (Section 62757 of the Food & Ag Code)
means this Plan.” The federal agency later issued a final rule promulgating a federal
order covering California, with an implementation date of November 1, 2018. (Milk in
California; Federal Milk Marketing Order Promulgation, 83 Fed.Reg. 26547 et seq. (June
8, 2018) (Final Rule).)
Plaintiff Stop QIP Tax Coalition asserts the Quota Implementation Plan is
procedurally deficient. Plaintiff believes the Legislature’s reference to “the pooling plan”
in section 62757, subdivision (a) and its incorporation of the statutes enumerated in
section 62757, subdivision (c) required the department to amend the then-existing
California milk pooling plan (previously adopted and implemented pursuant to chapter 3)
2 All further chapter references are to chapters contained in part 3 of division 21 of
the Code.
2
to include the stand-alone quota program -- a process that would have required a public
hearing. We conclude section 62757, while certainly not a model of clarity, imposes no
such requirement. We affirm.
FACTUAL AND PROCEDURAL BACKGROUND
Prior to November 1, 2018,3 “California ha[d] operated a unique milk price
stabilization and marketing program since the 1930’s. The program classifie[d] milk
products into five categories: Class 1 includes fluid products such as the several varieties
of milk; Class 2 includes yogurt, cottage cheese and heavy cream; Class 3 includes frozen
milk products; Class 4a includes butter and non-fat dry milk; and Class 4b includes
cheeses. The program establishe[d] minimum prices for raw milk depending upon the
class of product for which the milk w[ould] be used. The program was created to address
destructive trade practices that resulted because processors that predominantly made
Class 1 products could afford to pay more for raw milk than could processors making
other classes of products.
“The California [L]egislature enacted the Gonsalves Milk Pooling Act of 1967[4]
to address market disparities that resulted from the existing price stabilization and
marketing program. California’s pooling plan s[ought] to eliminate pricing inequalities
by pooling the revenues generated by the sale of raw milk and redistributing the revenues
among all producers according to a blended price that [wa]s based on milk usage across
the state regardless of the use for which a particular producer’s milk [wa]s purchased. At
the same time, the minimum prices that [we]re used to calculate each processor’s
obligation to the pool for raw milk (‘pool obligation’) var[ied] according to the end-
product produced. Accordingly, Class 1 processors typically ha[d] a larger pool
3 The California federal order was effective October 17, 2018, but started to apply
to affected parties on November 1, 2018. (Final Rule, supra, 83 Fed.Reg. at 26547.)
4 The Gonsalves Milk Pooling Act is contained in chapter 3 (§§ 62700-62731).
3
obligation than . . . processors of other end products. In sum, the pooling system
reduce[d] the competition among dairy farmers for contracts with Class 1 processors and
reduce[d] the incentives Class 1 processors ha[d] to extract concessions from the dairies
that suppl[ied] their milk.
“The pooling plan redistribute[d] the pooled revenues according to a quota system
that include[d] both a quota and an over-base price. California producers [we]re
allocated quota share based upon their historic Class 1 milk production. Quota shares
c[ould] also be purchased from other producers. Owning quota [wa]s beneficial because
quota price exceed[ed] overbase price by [a certain amount per] hundredweight and
producers [we]re paid at quota price for milk contributed to the pool up to the amount of
quota shares they own[ed]. The lesser, overbase price [wa]s paid for milk contributed to
the pool in excess of quota. Consequently, many producers ha[d] elected to purchase
quota shares in order to maximize the price they receive[d] for their raw milk.
“Each month, the [department] calculate[d] the gross amount each processor
owe[d] its various producers. Processors [we]re authorized to subtract from the gross
amounts certain deductions such as transportation and regional quota allowances. Where
the total value of milk that a processor use[d] [wa]s greater than the amount the processor
owe[d] its producers, the processor pa[id] the difference into the pool equalization fund.
Conversely, a processor [wa]s paid from the pool equalization fund when the total
amount the processor owe[d] its producers exceed[ed] the value of the milk it used.”
(Ponderosa Dairy v. Lyons (9th Cir. 2001) 259 F.3d 1148, 1151-1152, revd. on other
grounds in Hillside Dairy, Inc. v. Lyons (2003) 539 U.S. 59 [156 L.Ed.2d 54].)
In the Gonsalves Milk Pooling Act, the Legislature anticipated the federal agency
might at some point adopt a federal order covering California. In that regard,
section 62726 provides: “Notwithstanding other laws to the contrary, in the event a milk
marketing order under the jurisdiction of the United States Department of Agriculture or
other appropriate federal agency, is created by referendum or under the applicable laws
4
and procedures relating thereto, in this state or in any geographical area within this state,
the provisions of this chapter or any part thereof which is in conflict with such federal
order, or which is unnecessary or is a duplication thereof, shall be suspended in the
geographical area covered by and during the existence of such federal order. The
director[5] shall take such steps and procedures as are necessary to wind up and conclude
the administration and enforcement of the provisions of this chapter, or any part thereof,
prior to the suspension date.” Section 62728 further provides: “The director shall
terminate any pooling plan in effect in any marketing area without notice or hearing at
any time that there ceases to be a stabilization and marketing plan in force and effect in
such marketing area, establishing minimum prices to be paid to producers, unless
minimum prices payable by distributors to producers for fluid milk in such marketing
area are subject to a federal milk marketing agreement or order which is not in conflict
with, or in duplication of, the pooling plan.”
In early 2015, three dairy producer cooperatives petitioned the federal agency to
consider creating a federal order in California. The federal agency granted the petition
and conducted a public hearing in late 2015. On February 14, 2017, the federal agency
announced a recommended decision to establish a federal order in California. (Milk in
California; Recommended Decision and Opportunity To File Written Exceptions on
Proposal To Establish a Federal Milk Marketing Order, 82 Fed.Reg. 10634 et seq. (Feb.
14, 2017) (Recommended Decision).) The Recommended Decision included provisions
related to the establishment of minimum regulated prices for farm milk and a pooling
program to distribute the revenue from milk sales. (Id. at 10634.)
5 The references to director in the Code are to the department’s secretary. (See
Delano Farms Co. v. California Table Grape Com. (2018) 4 Cal.5th 1204, 1244, fn. 6
[director was the department’s secretary’s former title].)
5
The federal agency noted the “California State Order” implemented by the
department “is codified in the Pooling Plan for Market Milk, as amended, and in two
Stabilization and Marketing Plan(s) for Market Milk, as amended, for the Northern and
Southern California marketing areas.” (Recommended Decision, supra, 82 Fed.Reg. at
10639.) The federal agency explained the “California State Order” “is similar to the
recommended [federal order] in most respects. California handlers currently report milk
receipts and utilization to [the department], which calculates handler prices based on
component values derived from finished product sales surveys. Likewise, [federal order]
handlers report milk receipts and utilization to the Market Administrators, who calculate
handlers’ pool obligations according to price formulas that incorporate component prices
based on end product sales values. Under both programs, the value of handlers’ milk is
pooled, and pool revenues are shared by all the pooled producers.” (Id. at 10636.)
However, “[t]he [federal order] would not provide for the quota and non-quota milk
pricing tiers found under the [California milk pooling plan]. Under the recommended
[federal order], regulated handlers would be allowed to deduct monies, in an amount
determined and announced by [the department], from blend prices paid to California
dairy farmers for pooled milk and send those monies to [the department] to administer the
quota program.” (Ibid.)
The federal agency announced: “This decision finds that the California quota
program should remain a function of [the department] in whatever manner [the
department] deems appropriate. Should [the department] continue to use producer
monies to fund the quota program, this decision finds that the proper recognition of quota
values within a California [federal order] . . . is to permit an authorized deduction from
payment to producers, in an amount determined and announced by [the department].”
(Recommended Decision, supra, 82 Fed.Reg. at 10634.) The federal agency
recommended adding section 1051.11 to title 7 of the Code of Federal Regulations, as
follows: “California Quota Program means the applicable provisions of the California
6
Food and Agriculture [sic] Code, and related provisions of the pooling plan administered
by the [department].” (Id. at 10684.)
On March 16, 2017, the department sent a letter to the dairy industry notifying the
industry the federal agency had published the Recommended Decision to establish a
federal order for California, but the federal order would not incorporate quota. The
department explained the federal order “would necessitate quota to operate independently
of [the federal order] as a stand-alone program, administered by the [department]” and it
had issued a statement at the federal agency’s public informational meeting that the
department would review its existing legislative authority to determine whether it could
administer a stand-alone quota program, independent of a pricing and pooling scheme.
On May 12, 2017, the department’s secretary advised the federal agency that, “to
ensure a stand-alone quota program is not disrupted, it is necessary to remove any
statutory ambiguity that may exist in California’s statutes. Therefore, it is the
[department’s] intention to sponsor legislation to ensure the proper authority lies with the
department, convene the Producer Review Board (Board), pursuant to . . . section 62719,
develop the necessary details for a stand-alone quota program, and hold a producer
referendum on the Board’s recommendations.”
In his declaration, Jim Houston, who served as the department’s undersecretary
from January 2015 to September 30, 2017, declared he was the sole drafter of section
62757, which he referred to as the “2017 Trailer Bill.”6 Houston drafted section 62757,
subdivision (a) to state “ ‘the details of [the stand-alone quota program] shall be included
in the pooling plan’ after consultation with [the department’s] legal staff, because the
recommended [federal order] defined the stand-alone quota program as consisting of ‘the
6 Plaintiff raised several objections to various portions of Houston’s declaration in
the trial court, all of which were sustained. We do not recite any of the challenged
statements.
7
applicable provisions of the [Food and Agricultural Code], and related provisions of the
pooling plan administered by the [department].’ ” Houston presented testimony in
support of the sponsored legislation at two legislative subcommittee hearings and stated
he believed “the 2017 Trailer Bill was universally viewed as a noncontroversial bill, and
thus [it] received little legislative scrutiny.”
The Assembly Budget Subcommittee No. 3 on Resources and Transportation
considered the draft legislation on May 16, 2017. The report attached to the agenda
states, in pertinent part: “In February 2017, the [federal agency] recommended
establishing a federal order that would incorporate California dairy. [The federal agency]
is now in the process of taking public comments on the recommendation. [The federal
agency] is scheduled to host an official vote of California dairy farmers between late fall
of 2017 and early spring of 2018 on whether to join the federal order. If California dairy
farmers choose to join the federal order, the existing California milk pricing system
(which includes a quota system) would be repealed, but there would be no quota system
under the federal order. California dairy farmers may be interested in maintaining a
California-specific quota system (in addition to the federal order).
“The proposed trailer bill language would authorize [the department] to establish a
California-specific quota system contingent upon approval through a dairy farmer
referendum. According to [the department], it is important for dairy farmers to know
whether [the department] has authority to implement a California-specific quota system
before a vote is taken on whether to join the federal order. Dairymen and processors
operate based on strategic financial forecasting, which includes quota as a significant
variable. Without state authority being explicit prior to the conducted vote by [the
federal agency], such financial forecasting would not be possible.” (Assem. Budget
Subcom. No. 3 on Resources and Transportation, Rep. on Milk Pooling Trailer Bill
Language, May 16, 2017, pp. 41-42.)
8
The Senate Budget and Fiscal Review Subcommittee No. 2 considered the draft
legislation on May 18, 2017. The report attached to the agenda states, in pertinent part:
“In February 2017, the [federal agency] recommended establishing a federal order that
would incorporate California dairy. [The federal agency] is now in the process of taking
public comments on the recommendation. [The federal agency] is scheduled to host an
official vote of California dairy farmers between late fall of 2017 and early spring of
2018 on whether to join the federal order.
“If California dairy farmers choose to join the federal order, the existing California
milk pricing system (which includes a quota system) would be repealed, but there would
be no quota system under the federal order. California dairy farmers may be interested in
maintaining a California-specific quota system (in addition to the federal order).
“The proposed trailer bill language would authorize [the department] to establish a
California-specific quota system contingent upon approval through a dairy farmer
referendum. According to [the department], it is important for dairy farmers to know
whether [the department] has authority to implement a California-specific quota system
before a vote is taken on whether to join the federal order.” (Sen. Budget and Fiscal
Review Subcom. No. 2, Rep. on Milk Pooling Trailer Bill Language, May 18, 2017,
p. 16.)
The Legislature made no changes to the draft legislation and enacted
section 62757 as proposed, effective June 27, 2017. (Stats. 2017, ch. 26, § 38.)
Section 62757 was added to chapter 3.5.
On September 21, 2017, the department’s secretary approved the recommended
Quota Implementation Plan, as proposed by the producer review board. The producer
review board had conducted four public meetings and had received input from the public
and technical assistance from department staff in preparing the document.
On October 6, 2017, the department’s acting chief of the milk pooling branch sent
a letter to California milk producers, enclosing the proposed Quota Implementation Plan
9
and a ballot for voting on whether to adopt it. The letter provided: “If the proposed
[Quota Implementation Plan] is approved, the existing Pool Plan for Market Milk will
remain in effect. If a [federal order] is promulgated in California, at that time the [federal
order] and the [Quota Implementation Plan] would become effective.” On January 5,
2018, the department certified that the eligible milk producers voted in favor of adopting
the Quota Implementation Plan.
On June 8, 2018, the federal agency issued its final rule promulgating the federal
order for California. (Final Rule, supra, 83 Fed.Reg. at 26547 et seq.) The final rule
added section 1051.11 to title 7 of the Code of Federal Regulations, as proposed in the
Recommended Decision. (Id. at 26552.) The final rule provided “[a]ffected parties must
comply with all provisions of this rule beginning November 1, 2018.” (Id. at 26547.) In
the department’s view, the then-existing California pooling plan (previously adopted
under chapter 3) was suspended by operation of law under section 62726 on November 1,
2018, because it was inconsistent with the federal order.
Plaintiff filed a verified petition for writ of mandate and complaint for declaratory
relief and/or other extraordinary relief against the department (petition), seeking to
invalidate the Quota Implementation Plan. Plaintiff argued the Quota Implementation
Plan was an underground regulation without force or effect because the department failed
to hold one or more public hearings during the formulation process. The trial court
denied the petition, finding no merit in plaintiff’s contentions. Plaintiff appeals.
DISCUSSION
We consider questions of statutory interpretation in accordance with well-
established principles of statutory construction. “The settled rules of statutory
construction require that we look to the words of the statute itself as the most reliable
indicator of legislative intent. [Citation.] If the statutory language is ambiguous, the
court may examine the context in which the language appears, adopting the construction
that best harmonizes the statute internally and with related statutes. When the language is
10
susceptible of more than one reasonable interpretation, the court may turn to a variety of
extrinsic aids to assist in interpretation, such as the ostensible objects to be achieved by
the statute, the evils to be remedied, the legislative history, public policy and the statutory
scheme of which the statute is a part. [Citation.] And, in construing statutory language,
the court will not adopt an interpretation that would produce absurd consequences.”
(Cooley v. Superior Court (2001) 89 Cal.App.4th 785, 789.) We review de novo the
department’s interpretation of the statute, upheld by the trial court, while respecting the
department’s expertise as the agency charged with administering the milk marketing
statutory scheme. (Yamaha Corp. of America v. State Bd. of Equalization (1998) 19
Cal.4th 1, 7-8.)
Before we delve into the analysis, we note plaintiff challenges the trial court’s
reasoning on several grounds. We do not address the arguments as presented because, as
explained ante, our standard of review is de novo. In that regard, plaintiff believes the
Legislature intended for the department to amend the then-existing California milk
pooling plan to include the stand-alone quota program, and thus the department was
required to conduct one or more public hearings in accordance with California Code of
Regulations, title 3, section 2080.4, which pertains to hearings to adopt, amend, or
terminate stabilization and marketing plans or a milk pooling plan.
The bases for plaintiff’s interpretation appear to be: (1) the Legislature’s use of
the words “included in the pooling plan” in section 62757, subdivision (a) must
necessarily refer to the pooling plan adopted and implemented under chapter 3;
(2) section 62757, subdivision (c) incorporates the hearing provisions in sections 62716
and 62717, and the long-standing history that a hearing is required in accordance with
California Code of Regulations, title 3, section 2080.4 when the pooling plan is adopted,
amended, or terminated; and (3) section 62757, subdivision (c) incorporates section
62719, which establishes the review board, and the review board “exists only to ‘advise’
[the department] ‘in the administration of the pool plan.’ ”
11
We first consider whether section 62757, subdivision (c) imposes a hearing
requirement on the department by providing the stand-alone quota program shall “be
approved by a statewide referendum of producers conducted pursuant to Sections 62716
and 62717.” We conclude it does not. To find otherwise, we would have to add
language to the statute or disregard the Legislature’s “statewide referendum” limiting
language. We will do neither.
Section 62716 states that, “[f]ollowing the required hearing, the director shall
submit the pooling plan to producers concerned for their approval or disapproval in a
statewide referendum” and then prescribes certain requirements as to the referendum.
Section 62717 prescribes the votes required for approval of “the proposed pooling plan”
and, pertinent to plaintiff’s argument, states the secretary may amend or terminate “the
plan” “after notice and public hearing has been given in the same manner as is provided
in Chapter 2 (commencing with Section 61801) for stabilization and marketing plans.”
Plaintiff asserts “[t]he multiple references to a public hearing in the statutes whose [sic]
process was incorporated into Section 62757 demonstrates [sic] that the Legislature
contemplated a process consistent with [the department’s] long-standing history
whenever significant changes were made to the Pooling Plan.” Plaintiff ignores the
language of the statute.
Plaintiff’s overbroad interpretation as to the incorporated provisions of
sections 62716 and 62717 renders meaningless the limiting language “approved by a
statewide referendum of producers conducted pursuant to” the statutes, “violating the rule
of statutory construction that, ‘whenever possible, significance must be given to every
word in pursuing the legislative purpose, and the court should avoid a construction that
makes some words surplusage.’ ” (Doe v. Saenz (2006) 140 Cal.App.4th 960, 984
[exemption statutes did not incorporate all crimes specified in Pen. Code, § 667.5, subd.
(c) because the statutes included the limiting language “ ‘crime against an individual,’ ”
indicating only such crimes were incorporated].) Indeed, plaintiff’s interpretation renders
12
the limiting language in section 62757, subdivision (c) superfluous. Had the Legislature
intended to incorporate the entirety of sections 62716 and 62717, as plaintiff asserts,
there would have been no need to include the “statewide referendum” limiting language
in the subdivision. The limiting language used by the Legislature indicates it intended to
incorporate only the procedures addressing the statewide referendum mentioned in
sections 62716 and 62717, nothing more.
In the same vein, just as we do not delete words from a statute, we also do not add
words to a statute. (City and County of San Francisco v. International Union of
Operating Engineers, Local 39 (2007) 151 Cal.App.4th 938, 945 [“[w]e may not add
language to a statute that is not otherwise present”].) Section 62757 does not contain the
word “hearing.” The hearing references in the other statutes upon which plaintiff relies
indicate that when the Legislature has intended to prescribe a hearing, it has done so
expressly. (E.g., §§ 62704, 62705, 62717.) The absence of such an express requirement
in section 62757 is instructive. (See Dyna-Med, Inc. v. Fair Employment & Housing
Com. (1987) 43 Cal.3d 1379, 1395 [absence of express language used by the Legislature
in other relevant statutes instructive].)
Plaintiff also ignores the language of section 62757 as it relates to section 62719.
Section 62757, subdivision (c) states “[t]he stand-alone quota program shall be pursuant
to a recommendation by the review board established pursuant to Section 62719.”
(Italics added.) The plain language of the statute indicates the Legislature merely
intended to clarify that the “review board” it was referencing was the review board
established under section 62719 and not a newly created or different board.
Section 62757, subdivision (c) assigns to the review board the new task of making a
recommendation regarding the establishment of a stand-alone quota program. Thus, we
find no support for plaintiff’s argument that the review board may only advise the
department in the administration of a pooling plan established under chapter 3.
13
Finally, we turn to plaintiff’s interpretation of section 62757, subdivision (a).
Plaintiff argues “[t]he Legislature’s repeated reference to ‘the pooling plan’ in Chapters
3.0 and 3.5 [of the Code] -- 41 times in the former, and four additional times in the latter
(excluding Section 62757) -- resolves any doubt about its intent” in requiring in
section 62757, subdivision (a) that the details of the stand-alone quota program “shall be
included in the pooling plan.” Plaintiff asserts the department does not and “cannot
dispute that ‘including’ the [Quota Implementation Plan] in the pooling plan would
require [the department] to amend the pooling plan. [The department] also do[es] not and
cannot dispute that an amendment to the pooling plan would require [the department] to
give notice and hold hearings pursuant to California Code of Regulations, Title 3,
section 2080.4, only after which the producers would vote on the proposed amendment.”
The Legislature’s use of the phrase “the pooling plan” is certainly ambiguous.
At first blush, plaintiff’s interpretation -- that “the pooling plan” language in
section 62757, subdivision (a) is synonymous with “the pooling plan” established under
chapter 3 -- appears to harmonize statutes concerning the same general subject matter in
the Code (i.e., milk marketing and pricing). (People v. Shabazz (2006) 38 Cal.4th 55, 67
[provisions relating to the same subject matter should be harmonized to the extent
possible].) Upon a more thorough consideration of the whole statute, however, and after
reading subdivisions (a) and (c) of section 62757 together, plaintiff’s interpretation does
not yield a reasonable result.
Interpreting section 62757, subdivision (a) as plaintiff does, there are two options
for the scheme created by reading subdivisions (a) and (c) together. Either the stand-
alone quota program had to be established pursuant to subdivision (c) of section 62757
before the details thereof could be included in the chapter 3 pooling plan via amendment,
or the Legislature’s intent was that the stand-alone quota program would be established
by amending the pooling plan, the process of which would require a statewide
referendum as provided in section 62717.
14
Starting with the second option first, we again run into the issue of surplusage
discussed ante. If the Legislature’s intent was for the department to establish the stand-
alone quota program by amending the then-existing pooling plan, there would have been
no need for the Legislature to add subdivision (c) to section 62757. That is because a
substantive pooling plan amendment under chapter 3 already has a prescribed procedure
-- requiring a public hearing and a statewide referendum. (§ 62717.) If the process of
amending a pooling plan was intended to be the process by which to establish the stand-
alone quota program, subdivision (c) of section 62757 would be superfluous. Moreover,
the procedure laid down in subdivision (c) of section 62757 is different than the pooling
plan amendment procedure in section 62717, indicating the Legislature did not intend for
section 62717 to govern the procedure for establishing the stand-alone quota program.
The first option also does not support plaintiff’s interpretation because it leads to
an absurd result. If the Legislature intended for the department to initially establish the
stand-alone quota program in accordance with subdivision (c) of section 62757 and to
thereafter amend the then-existing pooling plan to include the details of the stand-alone
quota program, the department would have been required to conduct two statewide
referendums to approve the same program. Section 62757, subdivision (c) requires the
department to receive approval in a statewide referendum to establish the stand-alone
quota program, and section 62717 provides substantive amendments to “the pooling
plan” may only be made “if producers assent to the proposed amendments at a
referendum conducted in the same manner and in the same number as provided for the
referendum approving the pooling plan.” Such a scheme -- where an agency is required
to conduct a statewide referendum for the same program twice -- is clearly illogical and
could not have been contemplated by the Legislature. Moreover, this scheme would
require the department to conduct a public hearing after the stand-alone quota program
was already approved by the producers in the first referendum, which is also illogical.
15
There is another factor militating against plaintiff’s interpretation. Section 62757
is located in chapter 3.5, titled “milk pooling” (bolding and capitalization omitted)
instead of chapter 3, titled “equalization pools” (bolding and capitalization omitted).
When statutes in chapters other than chapter 3 have referred to “the pooling plan” or “a
pooling plan” within the meaning of chapter 3, the Legislature has used chapter 3-specific
language to signal the cross-reference. (See, e.g., §§ 61411.2 [“unless the milk is subject
to a pooling plan as authorized in Chapter 3 (commencing with Section 62700) and the
pooling plan provides . . .”], 62191, subd. (b)(4) [same], 62193, subd. (b) [same];
§§ 62146, subd. (c) [“Chapter 3 (commencing with Section 62700 or any pooling plan
established thereunder”], 62149, subd. (d) [same], 62151, subd. (d) [same].) This is true
of section 62750 in chapter 3.5 as well, which contains three “pooling plan” references
and starts with “[n]otwithstanding any provision of Chapter 3 (commencing with
Section 62700) in conflict with this section or any pooling plan for market milk in effect
under that chapter . . . .” Although section 62756 in chapter 3.5 does not cross-reference
chapter 3, the statute ties its “pooling plan” reference to a specific pooling plan
previously in existence -- “[i]f the continued operation of this chapter is not approved, the
secretary shall continue in operation the pooling plan in effect on December 31, 1993.”
The Legislature’s decision to not cross-reference chapter 3 or identify a specific pooling
plan previously in existence in section 62757 cuts against plaintiff’s argument.
Because we agree the language in section 62757, subdivision (a) is ambiguous, we
consider the legislative history and the context within which the statute was adopted to
discern the statute’s meaning. (Mejia v. Reed (2003) 31 Cal.4th 657, 663 [“ ‘Both the
legislative history of the statute and the wider historical circumstances of its enactment
may be considered in ascertaining the legislative intent.’ ”].) The legislative history is
sparse, and the Legislature made no amendments to the statute as introduced. We note,
however, that the department sponsored and drafted the statute to conform to the
language in the federal agency’s Recommended Decision. We further note both
16
legislative committee reports7 stated section 62757 was proposed because the federal
agency issued the Recommended Decision and, if the federal agency promulgated the
federal order, “the existing California pricing system (which includes the quota system)
would be repealed.” (Assem. Budget Subcom. No. 3 on Resources and Transportation,
Rep. on Milk Pooling Trailer Bill Language, supra, pp. 41-42; Sen. Budget and Fiscal
Review Subcom. No. 2, Rep. on Milk Pooling Trailer Bill Language, supra, p. 16.)
The Recommended Decision, in turn, proposed to add section 1051.11 to title 7 of
the Code of Federal Regulations, stating: “California Quota Program means the
applicable provisions of the California Food and Agriculture [sic] Code, and related
provisions of the pooling plan administered by the [department].” (Recommended
Decision, supra, 82 Fed.Reg. at 10684.) Although the federal agency noted the
“California State Order” was “codified in the Pooling Plan for Market Milk, as amended,
and in two Stabilization and Marketing Plan(s) for Market Milk, as amended, . . .” the
language proposed for section 1051.11 to title 7 of the Code of Federal Regulations was
“the pooling plan” and not “the Pooling Plan for Market Milk.” (Recommended
Decision, at 10639.) The federal agency further stated, “the California quota program
should remain a function of [the department] in whatever manner [the department] deems
appropriate.” (Id. at 10634.)
7 “ ‘[I]t is well established that reports of legislative committees and commissions
are part of a statute’s legislative history and may be considered when the meaning of a
statute is uncertain.’ ” (People v. Cruz (1996) 13 Cal.4th 764, 773, fn. 5.) “ ‘The
rationale for considering committee reports when interpreting statutes is similar to the
rationale for considering voter materials when construing an initiative measure. In both
cases it is reasonable to infer that those who actually voted on the proposed measure read
and considered the materials presented in explanation of it, and that the materials
therefore provide some indication of how the measure was understood at the time by
those who voted to enact it.’ ” (Ibid.)
17
We glean from the language and location of the statute in the Code and the history
and context surrounding its enactment that the Legislature’s purpose in enacting
section 62757 was to: (1) give the department the authority to establish and administer a
stand-alone quota program under the anticipated circumstance that the federal order
would suspend (§ 62726) or terminate (§ 62728) the then-existing milk pooling plan
previously adopted under chapter 3;8 (2) conform the language in section 62757 to the
language proposed for section 1051.11 to title 7 of the Code of Federal Regulations in the
Recommended Decision; and (3) prescribe the procedural requirements for adopting the
stand-alone quota program.
“In the end, we ‘ “must select the construction that comports most closely with the
apparent intent of the Legislature, with a view to promoting rather than defeating the
general purpose of the statute, and avoid an interpretation that would lead to absurd
consequences.” ’ ” (Torres v. Parkhouse Tire Service, Inc. (2001) 26 Cal.4th 995, 1003.)
With the foregoing in mind, we conclude the best and most reasonable interpretation of
“the pooling plan” language in the statute in furtherance of the legislative intent, and the
one that does no violence to the language of the statute itself or render any portion
surplusage, is that the details of how the stand-alone quota program would be operated
and implemented must be reduced to writing in a document deemed by the department
and federal agency to be the pooling plan. The legislative history and historical context
surrounding section 62757 indicate the phrase was not intended to have a technical
meaning tied to chapter 3. The department considered the Quota Implementation Plan to
be the pooling plan in the event the federal order was promulgated because it would work
in tandem with the federal order, as provided in the Recommended Decision. This
comported with the Legislature’s intent.
8 None of the statutes in chapter 3 mention repeal of a pooling plan.
18
That the Quota Implementation Plan is “the pooling plan” and contains only the
details of the stand-alone quota program does not cut against our interpretation. The
Legislature did not prescribe what the contents of the pooling plan had to include, other
than the details of the stand-alone quota program (which includes the imposition of
assessments that are pooled together to pay a premium to quota holders). Our
interpretation also does not mean “the statute reads ‘the secretary is authorized to
establish a stand-alone quota program, the details of which shall be included in the stand-
alone quota program,’ ” as plaintiff contends. As plaintiff notes, the words “program”
and “plan” denote two different things. Under our interpretation, the program is the
quota scheme funded by assessments whereas the plan is the written document that sets
forth the details of how the quota scheme will be implemented and administered.
Additionally, our interpretation does not mean “that two pooling plans were in existence
in California for nearly a year -- the [Quota Implementation Plan], and the state Pooling
Plan, which continued to govern until the [federal order] became effective,” as plaintiff
asserts. Both section 62757, subdivision (a) and the Quota Implementation Plan
expressly state the stand-alone quota program would only go into effect if and when the
federal agency promulgated a federal order, and the Quota Implementation Plan contains
only the details of the stand-alone quota program.
We further find no merit in plaintiff’s legislative history arguments. Plaintiff
asserts Houston’s testimony before the Assembly Budget Subcommittee No. 3 on
Resources and Transportation on May 16, 2017, supports its position because Houston
told the committee that section 62757 “was merely a clarification of existing law, with no
change in policy.” In plaintiff’s view, “that policy -- and any pre-existing authority --
required a hearing as a predicate to adopting the [quota plan].” Plaintiff is mistaken.
Houston said section 62757 was “really just a clarification of existing statute. Some
other tidbits. The secretary is invested with significant administrative authority as the
instrumentality of the state to administer and enforce the provisions of the pooling act. It
19
is the intent of the Legislature that the power conferred in this chapter shall be liberally
construed. And my point -- those are in existing statute -- so my point is that we are not,
in our opinion changing any policy. We are simply clarifying and making sure that it is
certain to any future court that we have the authority to assess the producers and to use
that to pay for quota.” The policy to which Houston referred had to do with the
department’s authority to administer quota, it did not pertain to any procedural
requirements.
Plaintiff’s interpretation is also directly contradicted by Houston’s further
testimony, as follows: “So we want to use the Producer Review Board which is a statute
[sic] and have that be a venue for the industry to talk about quota and to make
recommendations. And then there’s also a process currently in statute that the producers
can then vote on that. So they would get together in the Producer Review Board, they
would say, hey, this is how we want quota to run and then they would send it out to a
referendum and the producers would vote and approve on, approve that. Our hope is that
all of that would occur prior to their vote on a federal order which we think is [going to]
be in Fall.” Houston’s testimony is consistent with the requirements set forth in
section 62757, subdivision (c).
Plaintiff also relies on a question asked by an Assembly member during the
legislative committee’s hearing. The Assembly member’s question as to the substantive
or technical nature of the statute is not “a proper subject for consideration in determining
the Legislature’s intent.” (California Teachers Assn. v. San Diego Community College
Dist. (1981) 28 Cal.3d 692, 701.)
In sum, we conclude section 62757 does not require the department to: (1) amend
the previous California milk pooling plan adopted and implemented pursuant to chapter 3
to include the stand-alone quota program; or (2) conduct one or more public hearings
prior to holding the referendum.
20
DISPOSITION
The judgment is affirmed. The department shall recover its costs on appeal. (Cal.
Rules of Court, rule 8.278(a)(1) & (2).)
/s/
Robie, J.
We concur:
/s/
Hull, Acting P. J.
/s/
Krause, J.
21