BILL ANALYSIS Ó SB 1148 Page 1 Date of Hearing: August 29, 2012 ASSEMBLY COMMITTEE ON WATER, PARKS AND WILDLIFE Ben Hueso, Chair SB 1148 (Pavley) - As Amended: August 24, 2012 SENATE VOTE : 24-14 SUBJECT : Fish and Game Commission: Department of Fish and Game SUMMARY : Makes numerous changes to implement policy recommendations arising out of a Strategic Vision process for the Department of Fish and Game (DFG) and the Fish and Game Commission (FGC) in order to improve the effectiveness of these entities in protecting and managing state fish and wildlife resources. Specifically, this bill : 1)States legislative findings and declarations regarding the Strategic Vision process that was initiated as a result of the passage of AB 2376 in 2010 and the need for reforms to improve and enhance the capacity of DFG and FGC. States legislative intent to focus more of the work of the FGC on implementing state hunting and fishing laws, and to enhance DFG's ability to focus on managing its lands, its enforcement responsibilities, its conservation programs, and enhancing the scientific basis of DFG's decisions. 2)Requires the Office of Planning & Research (OPR) to include trustee agencies such as DFG in developing the state Environmental Goals and Policy Report. 3)Modifies and updates requirements related to sustainable management of the state's hatchery program and native fisheries, including the following: a) States legislative findings and declarations regarding the role of hatcheries and the importance of genetic diversity in managing California native trout species, and that DFG seek to provide diverse recreational angling opportunities. b) Requires DFG to make publicly available on its Internet website information on the inventory of California trout streams maintained by DFG. SB 1148 Page 2 c) Requires DFG every 5 years to update the state Strategic Plan for Trout Management adopted in 2003, and specifies objectives the plan shall be intended to ensure, including providing angling opportunities, conserving wild and native trout, and ensuring environmental sustainability and overall ecosystem watershed health. d) Requires the plan to be guided by specified considerations including adaptive management of trout populations to be self-sustaining, increasing angler satisfaction, ensuring appropriate age distribution of wild trout, and establishing ecologically and environmentally sustainable hatchery and stocking practices for native trout. e) Requires DFG to prepare trout management plans consistent with the Strategic Plan for Trout Management, for all wild trout waters within three years following designation of a wild trout water by the FGC, and to update the plans every 5 years. f) Requires priority to be given for stocking native hatchery-produced species where stocking is determined appropriate by DFG. Provides that waters where stocking is not appropriate include waters where stocking would adversely affect species listed under state or federal endangered species acts. Requires hatchery-produced trout to be stocked to support sustainable angling opportunities and fishing access, including urban fisheries. g) Requires DFG to ensure that trout stocked for recreational purposes are unable to reproduce, with specified exceptions. h) Requires DFG to form a strategic trout management team to oversee trout management statewide pursuant to the Strategic Plan for Trout Management. Requires DFG's Strategic Plan for Trout Management to be reviewed by the Strategic Trout Management Team, the hatchery operations committee, and an ad hoc peer review committee to ensure sound management, improved genetic diversity, and best available science. i) Deletes obsolete provisions relating to state hatchery SB 1148 Page 3 production goals and clarifies that the state hatchery production goal is 2.75 pounds of released trout per sport fishing license sold, and that a predominant number of released fish be catchable size or larger. j) States that at least $2 million dedicated under existing law to the Heritage and Wild Trout program from the Hatcheries and Inland Fisheries Fund (HIFF) may be used for development of trout management plans, and that up to 25% may be expended for watershed restoration projects, resource assessment and scientific inquiry. Clarifies that funds from the HIFF may be used for development of the state Strategic Plan for Trout Management, and states that funding for Heritage Trout Waters is a priority for the HIFF. aa) Requires DFG on an annual basis to invest in hatchery facility improvements and rehabilitation to ensure progress towards achieving hatchery production targets. bb) Authorize DFG, beginning January 1, 2015, to obtain hatchery-produced fish from any California-based hatchery if all of the following criteria are met: i) The hatchery production goal of 2.75 pounds of released trout per sport fishing license sold is not met; ii) DFG, following an inspection, determines the hatchery is in compliance with standards that are as stringent as those in effect at state hatcheries in order to minimize the risk of the spread of disease or invasive species; and, iii) The cost per pound of the fish provided by the hatchery does not exceed the cost of state hatchery fish calculated equivalently, including transportation costs. cc) Appropriates $1 million from the Hatchery and Inland Fisheries Fund to DFG for capital outlay expenditures necessary for improvements to state hatcheries to achieve hatchery fish production goals. Requires DFG to prioritize capital outlay investments based on expected improvements in hatchery egg and fish production. 4)Establishes a program for review, approval and oversight of SB 1148 Page 4 mitigation and conservation banks as follows: a) States legislative findings and declarations regarding the values and importance of conservation and mitigation banks in providing habitat lands which are managed to fulfill mitigation requirements, and the need for greater transparency to ensure mitigation requirements are fully met and to fund the regulatory costs of DFG related to mitigation and conservation banks. States legislative intent that conservation banking, mitigation banking, and other forms of mitigation for impacts to fish and wildlife species comply with applicable law and are consistent with specified principles, including that the mitigation should be proportional to the quantified impact, whenever feasible be based on landscape scale conservation planning and the ecological needs of impacted species, be based on best available science, include monitoring for effectiveness, be transparent to the public and participants, and that mitigation costs for landowners to participate should be reasonable and flexible. b) Requires any person seeking to establish a mitigation or conservation bank to submit a bank prospectus to DFG with a fee of $10,000 to cover the costs of DFG's review. Specifies what must be included in a bank prospectus. Establishes procedures for DFG's review and approval of a bank prospectus. c) Authorizes any person interested in establishing a bank to submit an optional draft prospectus for review by DFG, accompanied by a fee of $1,500 to cover DFG's costs, with total review fees for a prospectus not to exceed $10,000. d) Once the bank prospectus is approved, allows the applicant to submit a bank agreement package to DFG consistent with the prospectus and include specified information. Requires payment of a $25,000 fee to cover DFG's review. Establishes procedures for DFG's review and approval of the package, including authority for assessment of additional fees if necessary to cover DFG's review of new information or substantial changes requested by the applicant. e) Provides similar procedures and fee requirements for amendments to approved banks. SB 1148 Page 5 f) Prohibits any bank from being operative, vested or final, and prohibits any bank credits from being issued, until DFG has provided written approval of a bank and a conservation easement has been recorded on the site. g) Requires DFG after a bank is approved to conduct compliance review and to establish and maintain a database, available on DFG's website or another website that is linked to DFG's website, which allows bank sponsors to update information about mitigation and conservation banks. h) Requires DFG to provide an annual report to the Legislature on the mitigation and conservation bank program. i) Requires DFG to collect a total payment of $60,000 per bank to cover all or a portion of DFG's bank implementation and compliance costs, with payments due following credit releases. j) Requires DFG to annually adjust mitigation and conservation bank fees to reflect changes in the Implicit Price Deflator, and requires DFG to adopt guidelines and criteria to implement mitigation and conservation bank requirements. The guidelines shall incorporate information from a 2011 Memorandum of Understanding the state entered with federal agencies for purposes of jointly establishing a coordinated approach to mitigation and conservation banking in California. 5)Makes the following changes relating to fees charged for fish and game activities: a) Requires FGC to adjust license, stamp, permit and tag fees for inflation based on changes in the Implicit Price Deflator, pursuant to Section 713 of the Fish and Game Code, at least every 5 years. b) Requires, with regard to the fees for lifetime sportsmen's licenses, sport and commercial fishing licenses, commercial fish business and vessel licenses, hunting licenses, ocean sport fishing enhancement stamps, commercial fishing enhancement stamps, and trapping licenses that the FGC adjust the license fees to recover, SB 1148 Page 6 but not exceed, all reasonable administrative and implementation costs of DFG and the FGC relating to those licenses. c) Provides that except where the Fish and Game Code expressly prohibits the adjustment of statutorily imposed fees, the FGC may establish a fee or the amount thereof by regulation. Requires that fees established by the FGC shall be in an amount sufficient to recover all reasonable administrative and implementation costs of the FGC and DFG relating to the program for which the fee is paid. Authorizes the FGC to establish a fee structure to phase in fee adjustments to provide for full cost recovery within 5 years. d) Clarifies the DFG's authority to establish and adjust fees for CEQA filings, streambed alteration agreements, and scientific collector permits. Requires that the fees be sufficient to recover all reasonable administrative and implementation costs and authorizes DFG to establish a fee structure to phase in fee adjustments to provide for full cost recovery within 5 years. 6)Shifts responsibility from the FGC to the Ocean Protection Council (OPC) for future modifications and updates to Marine Protected Areas (MPAs). Requires the OPC to act on petitions for modifications every 3 years. Requires DFG prior to OPC's decision to review the petition and make recommendations to the OPC, to consult with other agencies with responsibility for ocean activities, including the FGC, the Regional Water Quality Control Board, the State Lands Commission, and the Coastal Commission. Requires establishment of a scientific peer review process and requires the OPC to establish a process for public participation in the OPC's decisions. Authorizes the DFG to establish a unit or division of ecosystem-based management within DFG to facilitate this review and to further conservation of marine resources under DFG's jurisdiction. EXISTING LAW : 1)Establishes DFG in the Natural Resources Agency and provides that wildlife resources are held in trust by DFG for the people of the state, and generally charges DFG with administration and enforcement of the Fish and Game Code, SB 1148 Page 7 along with the FGC. 2)Establishes the FGC in the Constitution and authorizes the Legislature to delegate to the FGC powers relating to the protection and propagation of fish and game. 3)Provides in the Fish and Game Code for various licenses and permits with some fees set statutorily, others set by DFG or the FGC, and many, but not all, adjusted for inflation. 4)Establishes a state policy to maintain wild trout fisheries and discourages artificial planting of hatchery raised nonnative fish in wild trout waters. Provides for designation of Heritage Trout Waters containing indigenous native trout species. Requires that one third of sport fishing license fees be used for attaining specified production goals for state hatcheries by certain dates, and designates $2 million of those funds for the Heritage and Wild Trout program. 5)Directs DFG to establish and update a database of wetlands mitigation banks. Establishes a state policy to preserve wetlands habitat and requires DFG to develop and administer a program for wetlands mitigation banks in the Sacramento/San Joaquin Valley. 6)Requires the FGC every three years after MPAs are established to receive and consider petitions for modifications to the MPAs. FISCAL EFFECT : According to the Assembly Appropriations Committee: 1)Unknown workload costs to DFG and the commission to review and adjust fees as needed (special funds). These costs should be covered by fee revenue, which DFG and the commission can set to ensure they do so. However, there may be a lag between the time DFG and the commission develop and adopt fees and the time any resulting revenue increase is realized. It is not clear DFG or the commission has the resources to cover these activities from other funds until they receive additional fee revenue. 2)Ongoing costs of an unknown amount, but potentially exceeding $1 million dollars annually, to DFG to mark hatchery-produced trout (special fund). SB 1148 Page 8 3)Ongoing cost in the tens of thousands of dollars to DFG to support the strategic trout management team (special fund). 4)Significant costs, likely in the low millions of dollars annually, to DFG to plan, review, establish and monitor conservation and mitigation bank programs (special fund). These costs should be fully covered by the fees the bill authorizes DFG to collect from applicants. 5)Ongoing costs, possibly in excess of $1 million dollars, to the Ocean Protection Council, to regulate commercial fishing in MPAs (special fund). These costs should largely be offset by savings to the commission, which will no longer regulate fishing in MPAs. Amendments adopted on the Assembly Floor also appropriate $1 million from the HIFF for capital outlay expenditures necessary to improve and rehabilitate state hatchery facilities. COMMENTS : This bill implements numerous changes designed to implement broad policy recommendations arising out of a Strategic Vision process conducted this past year to improve the capacity of DFG and the FGC to carry out their public trust mandates for protection and management of fish and wildlife. AB 2376 (Huffman), Chapter 424, Statutes of 2010, directed the Secretary of Natural Resources to appoint a state executive committee, blue ribbon citizen commission (BRCC), and broad-based stakeholder advisory group to engage in a public deliberative process and develop recommendations to improve the effectiveness of DFG and the FGC. The groups met for several months and released a final report in April 2012. The report includes broad recommendations on such issues as mission, scope of responsibilities, scientific capacity, principles to guide natural resources management, permitting and enforcement. This bill contains four major themes: it modifies various fee authorities of DFG and the FGC to allow for recovery of administrative costs; establishes a process for review, approval and oversight of mitigation and conservation banks; updates California's hatcheries and wild trout program; and shifts responsibility for certain aspects of MPA adaptive management from the FGC to the OPC. This bill creates a program for review, approval and oversight SB 1148 Page 9 of mitigation and conservation banks. These changes facilitate private sector participation in providing necessary mitigation opportunities and are supported by many participants in the mitigation and conservation bank industry. Mitigation and conservation banks are entities established by private firms to offer mitigation to project proponents for projects requiring permits from DFG. Conservation banks are generally understood to provide mitigation for species, while mitigation banks are generally understood to provide mitigation for wetlands losses. DFG has found that mitigation and conservation banks can provide more effective habitat conservation than piecemeal per project mitigation, but available information on the status of banks has been limited. Although mitigation and conservation banks have been an ongoing activity for many years, the policy has for the most part not been codified. In the absence of an established funding source, DFG has also suspended approval of any new mitigation banks at this time. This bill provides the fee revenue to cover DFG's program costs, which promotes the Strategic Vision goal of ensuring that programs have identified funding sources. The database requirements also further the goals of increased transparency and accountability. The option allowing an applicant to submit a draft prospectus for pre-review seeks to meet the goals, identified in the Strategic Vision, of providing assistance to applicants with pre-project planning and making the application review process more consistent and transparent to applicants. This bill makes numerous reforms to update DFG's hatcheries and wild trout programs. Among other things, it reflects advancements in the scientific understanding of the impacts of hatchery practices on native fish populations, and the importance of genetic diversity in maintaining wild self-sustaining populations. This bill seeks to balance the goal of providing quality outdoor recreational opportunities for fishermen who pay license fees that support fishery programs, with the goal of sustainable ecosystem-based management. The Strategic Vision placed a priority on science-based decision-making and overall ecosystem health. Regular updates to the existing Strategic Plan for Trout Management are proposed to provide an overarching systematic framework for the management of all trout species. This bill also seeks to incorporate best practices into hatchery production. Maintaining and promoting genetic diversity in hatchery fish is recognized as critical to producing robust and resilient fish and a healthy fishery. Existing policy and numerical goals on SB 1148 Page 10 stocking to promote angler opportunities, established through AB 7 (Cogdill), Chapter 689, Statutes of 2005, are retained, and program goals are clarified to align with current practice and scientific understanding. DFG is specifically authorized to purchase trout from private hatcheries to meet trout stocking goals, if specified conditions are satisfied. This bill also appropriates $1 million from the HIFF for improvements to state hatcheries needed to help meet state hatchery production goals. The hatchery and wild trout reforms in this bill seek to promote the goals identified in the Strategic Vision of maintaining healthy ecosystems, promoting public outdoor recreation opportunities, practicing adaptive management, ensuring science-based decisions, and promoting ecosystem based management informed by credible science. The requirement for DFG to make information on trout inventories available on DFG's website also promotes the Strategic Vision's goal of providing timely access to data collected or used by DFG and the FGC. These provisions recognize the changing diversity of California by requiring that areas where hatchery-produced trout are stocked to provide angling opportunities and fishing access include urban fisheries. This bill includes provisions allowing DFG and the FGC to adjust various licensing fees to achieve cost recovery, with direction to phase in fee increases as necessary for various programs. These changes apply to both sport and commercial fishermen and to hunters. Inadequate funding was identified in the Strategic Vision process as one of the greatest barriers to implementation of DFG's mission, and it was acknowledged that meaningful change must include fiscal reforms. The provisions in this bill giving DFG and the FGC authority to adjust fees as necessary to recover program costs is consistent with recent legislative actions giving more fee setting authority for fishing and hunting to the FGC which would set the fees through a regulatory process under the Administrative Procedures Act (APA). Information provided by DFG and FGC staff early on in the Strategic Vision process emphasized the need for financial stability, and the difficulty both entities face with unfunded mandates. In particular, DFG and the FGC noted that 57% of the fees for licenses and permits in the Fish and Game Code require legislative action in order to adjust fees to bridge the gap between revenues and operational costs. The Legislature has frequently imposed new statutory mandates on DFG without providing the funding necessary for SB 1148 Page 11 implementation. This bill begins the process of correcting that problem by shifting authority from the Legislature to the FGC and DFG to make adjustments in fees as necessary to recover but not exceed reasonable administrative and implementation costs relating to the particular license or permit. Supporters of this bill note the long overdue need for reform of the state's wildlife management and in particular highlight support for the provisions transferring responsibility for ongoing management of California's MPAs, now that the network of MPAs has been established, to the OPC. Opponents in particular objected to provisions included in prior versions clarifying strict liability for fish and game code violations and creating a private cause of action. The private cause of action and strict liability provisions were deleted from this bill in the Assembly Appropriations Committee. As a result of the amendments taken, opposition was removed by the Realtors, Western Growers, California State Association of Counties, Regional Council of Rural Counties, Civil Justice Association, California Central Valley Flood Control Association, El Dorado County Irrigation District, Valley Ag Water Coalition which are now neutral. The remaining opposition is focused primarily on two provisions of the bill, a section which states legislative intent regarding mitigation principles, and the section of the bill which shifts responsibility for some MLPA related functions to the OPC. Proposed Amendments : The author is proposing amendments to delete legislative intent on mitigation principles, to restore a consultation role for the FGC for future revisions to MPAs, and technical clean-up amendments to the mitigation banking proposal. REGISTERED SUPPORT / OPPOSITION : Support Audubon California California Coastkeeper Alliance California Trout Defenders of Wildlife Endangered Habitats League Environmental Defense Fund SB 1148 Page 12 Green California Humane Society of United States Monterey Bay Aquarium Natural Resource Banking Coalition Natural Resources Defense Council Ocean Conservancy Paw Pac The Nature Conservancy The Wildlands Conservancy Trout Unlimited Wildcoast Opposition American Council of Engineering Companies of California California apartment Association California Aquaculture Association California Association for recreational Fishing California Bean Shippers Association California Building Industry Association California Cattlemen's Association California Chamber of Commerce California Construction and Industrial Materials Association California Farm Bureau Federation California Fisheries and Seafood Institute California Grain and Feed Association California Lobster and Trap Fishermen's Association California Outdoor Heritage Alliance California Pear Growers Association California Sea Urchin Commission California Seed Association California Waterfowl Association California Wetfish Producers Association California Wheat Growers Association Carmichael Water District\ Pacific Egg and Poultry Association Partnership for Sustainable Oceans Placer County Water Agency Reeb Governmental Relations Western Plant Health Association Western States Petroleum Association Analysis Prepared by : Diane Colborn / W., P. & W. / (916) 319-2096 SB 1148 Page 13