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Michigan enacted a Cottage Food Law in July 2010 that allows individuals to manufacture and store certain types of foods in an unlicensed home kitchen. Only non-potentially hazardous foods may be manufactured in a home kitchen under this law. Potentially hazardous and canned foods must be manufactured in licensed food processing facilities. The Cottage Foods may only be sold directly to a consumer at farmers' markets, farm stands, roadside stands and similar venues. Cottage foods cannot be sold over the internet, by mail order or for wholesale distribution. Each packaged product must be labeled and contain the statement: Made in a home kitchen not inspected by the Michigan Department of Agriculture. Gross sales are limited to no more than $15,000 per household.
Data and analytical methodologies
This proposed rule is not based on any specialized data or analytical methodologies. Portions of this rule (such as pH requirements for home-canned food sold to the public) are based on well-established food science and public health principles.
Fiscal Estimate
DATCP currently licenses and inspects food processing plants under s. 97.29, Stats., This emergency rule exempts certain persons from the need to obtain a food processing plant license. These persons include: (1) a person who cans or otherwise processes certain homemade foods and sells them at farmers' markets, community or social events but receives no more than $5,000 in retail sales of these foods in a license year; and (2) a maple syrup processor that sells evaporated maple sap or syrup for further processing and receives no more than $5,000 in a license year. For purposes of this fiscal estimate, DATCP makes the following assumptions (DATCP does not have any data to document these "best guess" assumptions):
1. About 100 home canners will begin to sell their home-canned products at community or social events or farmers' markets in response to the license exemption under this rule. Few, if any, currently licensed food processing plants will qualify for the exemption or drop their current licenses.
2. About 25 maple sap processors will qualify for a license exemption under this rule. Expected revenue loss is less than $2,400.
Impact of the rule on state government
This emergency rule will have minimal fiscal impact on state government. Revenue losses will be less than $2,400 and will be offset by reduced inspection costs. DATCP will incur some costs to implement the license exemptions and provide public information. DATCP estimates that it will need to reassign 0.1 FTE from other work, and will incur $1,000 in added expense. DATCP expects to absorb these costs within its current budget.
Impact of the rule on local governments
This rule will not have any fiscal impact on local governments.
Fiscal Impact
This rule will not have a significant fiscal impact on the state of Wisconsin or on local governments.
Small Business Impact
This proposed rule implements 2009 Wis. Act 101, which removes license requirements for certain home-canners who wish to sell their products to the public at community or social events, farmers' markets and farm roadside stands. The food safety standards in this rule will help protect the public from serious food safety hazards (including botulism) that may be associated with improperly home-canned products. The prevention of food safety problems promotes public confidence and benefits the entire food industry, including home-canners.
This proposed rule may encourage some home-canning hobbyists to sell their home-canned products at community or social events, at farmers' markets, or at their own farm roadside stands. That may have an adverse competitive impact on licensed canners who currently supply those sales outlets, although the adverse effect is likely to be minimal. Larger food canning businesses that supply canned food for the mass consumer market will not be significantly affected by this emergency rule.
This proposed rule also exempts certain small maple sap processors from licensing under s. 97.29. The exemption will relieve those processors from unnecessary licensing costs and compliance burdens, while ensuring adequate food safety protection.
Environmental Impact
This rule will not have any significant environmental impact.
Agency Contact Person
Questions and comments related to this proposed rule may be directed to:
Debbie Mazanec
Department of Agriculture, Trade and Consumer Protection
P.O. Box 8911
Madison, WI 53708-8911
Telephone (608) 224-4712
Notice of Hearing
Agriculture, Trade and Consumer Protection
The Wisconsin Department of Agriculture, Trade and Consumer Protection (DATCP) announces that it will hold a public hearing on rules relating to new accountability measures for economic development grants and loans under Chapter ATCP 161, required by ss. 93.07 (18) (b) 6. and 7., Stats. (created by 2007 Wisconsin Act 125).
Hearing Information
DATCP will hold the public hearing at the time and location shown below:
Tuesday, December 2, 2010
9:00 a.m. to 12:00 p.m.
WI Department of Agriculture, Trade and Consumer Protection
Board Room, 1st Floor
2811 Agriculture Drive
Madison, WI 53718
Hearing impaired persons may request an interpreter for this hearing. Please make reservations for a hearing interpreter by November 17, 2010 by writing to Linda Merriman Hitchman, Division of Agricultural Market Development, P.O. Box 8911, Madison, WI 53708-8911, Linda.MerrimanHitchman@wisconsin.gov, telephone (608) 224-5132. Alternatively, you may contact the DATCP TDD at (608) 224-5058. Handicap access is available at the hearings.
Submittal of Written Comments
DATCP invites the public to attend the hearing and comment on the rules. Following the hearing, the hearing record will remain open until Monday, December 6, 2010 for additional written comments. Comments may be sent to the Division of Agricultural Development at the address below, by email to Linda.MerrimanHitchman@wisconsin.gov.
To provide comments or concerns relating to small business, you may also contact DATCP's small business regulatory coordinator Keeley Moll at the address above, or by emailing to Keeley.Moll@wisconsin.gov or by telephone at (608) 224-5039.
Copies of Proposed Rule
You may obtain free copies of the proposed permanent rule by contacting the Wisconsin Department of Agriculture, Trade and Consumer Protection, Division of Agricultural Market Development, 2811 Agriculture Drive, P.O. Box 8911, Madison, WI 53708. You may also obtain copies by calling (608) 224-5132 or emailing Linda.MerrimanHitchman@wisconsin.gov. Copies will also be available at the hearing. To view the proposed rule online, go to: http://AdminRules.Wisconsin.gov/.
Analysis Prepared by the Department of Agriculture, Trade and Consumer Protection
This rule implements s. 93.07 (18) (b) 6. and 7., Stats. (created by 2007 Wisconsin Act 125) which require new accountability measures related to state economic development grants and loans. Under s. 93.07 (18) (b) 6. and 7., Stats., the department of agriculture, trade and consumer protection (DATCP) must adopt rules to do all of the following (other agencies that make economic development grants and loans must adopt similar rules):
* Require persons receiving more than $100,000 in economic development grants or loans to submit verified statements to DATCP, and make supporting documentation available for DATCP inspection.
* Establish procedures that will allow DATCP to withhold payments to, recover funds from, or impose financial penalties on grant or loan recipients who submit false information to DATCP or fail to honor the terms of a grant or loan contract. The new procedures must include contract provisions that will allow DATCP to impose penalties on grant or loan recipients who fail to honor contract obligations.
Statutes interpreted
Sections 93.07 (18) (b) 6. and 7., Stats.
Statutory authority
Sections 93.07 (1) and 93.07 (18) (b) 6. and 7., Stats.
Explanation of statutory authority
DATCP has general authority, under s. 93.07 (1), Stats., to interpret laws under its jurisdiction. Sections 93.07 (18) (b) 6. and 7., Stats., require DATCP to adopt certain rules imposing accountability measures related to state economic development grants and loans. This rule implements that statutory mandate.
Related statute(s) or rule(s)
2007 Act 125 also requires the departments of commerce, natural resources, tourism and transportation, the UW system, the Wisconsin technical college system, and the Wisconsin housing and economic development authority to adopt rules that are similar to this rule. DATCP also has existing contract rules for agricultural diversification and development grants (ATCP 161.07) and “buy local" grants (ATCP 161.46).
Plain language analysis
This rule requires the following accountability provisions in each contract for a DATCP economic development grant or loan:
  For a grant or loan of $100,000 or more, a provision requiring the grant or loan recipient to give DATCP a verified statement signed by a certified public accountant (CPA) and a director or principal officer of the grant or loan recipient.
  Provisions allowing DATCP to withhold payments to, recover funds from, or impose financial penalties on grant or loan recipients who submit false information to DATCP or fail to honor the terms of the grant or loan contract.
Comparison with federal regulations
Federal statutes under 31 USC 6304 require contracts for many federal grants.
Many federal grant programs have regulations to ensure grant accountability, including regulations related to grant contracts, contract performance, financial accountability, and remedies for noncompliance.
Administering agencies may deny, suspend or terminate payments to grant recipients who fail to comply with grant contract terms.
If a grant recipient makes false or misleading statements to obtain a grant or benefit, the agency may collect civil forfeitures and assessments that are well in excess of the fraudulently-obtained grant or benefit payments.
Comparison with rule(s) surrounding states
Minnesota:
Minnesota requires recipients of state economic development grants to enter into grant contracts. Recipients may be required to report on the use of funds, and may be required to repay grant funds if they fail to comply with contract terms. Minnesota, like Wisconsin, requires more detailed reports from persons receiving large grants.
Michigan:
Michigan requires certain persons receiving economic development grants (including tax credits for job promotion) to enter into grant contracts, submit verified statements, and report on fund use and benefits. Funding can be reduced or terminated, and recipients can be required to repay funds, for certain reasons.
Illinoi:s
Illinois requires recipients of state economic development grants to enter into grant contracts. Recipients may be required to report on the use of funds, and may be required to repay grant funds if they fail to comply with contract terms. Minnesota, like Illinois, requires more detailed reports from persons receiving large grants.
Iowa:
Iowa requires recipients of state economic development grants to enter into grant contracts. Recipients may be required to report on the use of funds, and may be required to repay grant funds if they fail to comply with contract terms.
Data and analytical methodologies
This rule does not rely on any special data or analytical methodologies. Rule standards and requirements are largely dictated by state law, but also implement practices developed by DATCP under its existing grant and loan programs. These practices are similar to practices used by the federal government, other states and the private sector.
Fiscal Estimate
Background:
This rule implements s. 93.07 (18) (b) 6. and 7., Stats., created by 2007 Wisconsin Act 125, which require new accountability measures related to state economic development grants and loans. In accordance with the provisions of s. 93.07 (18) (b) 6. and 7., Stats., this rule requires the following accountability provisions in each contract for a DATCP economic development grant or loan (other agencies that make economic development grants and loans must adopt similar rules):
For a grant or loan of $100,000 or more, a provision requiring the grant or loan recipient to give DATCP a verified statement signed by a certified public accountant (CPA) and a director or principal officer of the grant or loan recipient.
Provisions allowing DATCP to withhold payments, to recover funds from, or impose financial penalties on grant or loan recipients who submit false information to DATCP or fail to honor the terms of the grant or loan contract.
DATCP currently requires each recipient of an economic development grant or loan to enter into a contract that contains provisions similar to those that s. 93.07 (18) (b) 6. and 7., Stats., requires DATCP to adopt by rule. DATCP will make the necessary modifications to the contract language it currently uses to incorporate the required procedures into each grant and loan contract. DATCP legal, financial and program staff currently conduct procedures to withhold payments to, recover funds from, or impose financial penalties on grant and loan recipients as required by the rule. There will be no additional costs created by these administrative activities.
Agency Contact Person
Questions and comments related to this rule may be directed to:
Linda Merriman Hitchman
Department of Agriculture, Trade and Consumer Protection
P.O. Box 8911
Madison, WI 53708-8911    
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