BILL ANALYSIS Ó AB 761 Page 1 Date of Hearing: April 28, 2015 ASSEMBLY COMMITTEE ON WATER, PARKS, AND WILDLIFE Marc Levine, Chair AB 761 (Levine) - As Amended April 21, 2015 SUBJECT: Carbon sequestration: working lands SUMMARY: Declares that $50 million shall be available upon appropriation by the Legislature to the Department of Food and Agriculture (CDFA) to establish a grant program to fund projects that increase carbon sequestration and greenhouse gas (GHG) emissions reduction on working lands. Specifically, this bill: 1)States legislative findings and declarations regarding data showing soil and vegetation management practices can enhance soil carbon sequestration and produce environmental and agricultural co-benefits, and the existence of specific management strategies with potential to sequester carbon and help meet state GHG emission reduction goals. Further finds California's agricultural lands and rangelands account for nearly 50% of the state's land area and hold potential to sequester millions of tons of carbon, enhance agricultural productivity, and increase resilience to climate change and drought. 2)Declares that $50 million shall be available, upon appropriation by the Legislature, to CDFA to establish a grant AB 761 Page 2 program to fund voluntary projects that increase carbon sequestration and GHG emissions reductions on working lands. 3)Provides that a project shall be eligible for grant funding if the project is both on working lands and assists the state in meeting its GHG emission reduction goals. 4)Requires CDFA to prioritize funding for projects that provide the greatest level of the following benefits: a) Demonstrate carbon farm planning; b) Sequester carbon in agricultural soils; c) Reduce irrigation demand; d) Increase yield and productivity on working lands; e) Enhance habitat; f) Reduce water quality impacts from agricultural lands. 5)Requires CDFA, in consultation with the Department of Conservation (DOC), the Department of Resources Recycling and Recovery, the State Air Resources Board (ARB), and the Department of Water Resources (DWR), to develop and adopt project solicitation and evaluation guidelines to implement the grant program. AB 761 Page 3 6)Requires CDFA to quantify the benefits of each project funded and post the evaluation information on their Internet Web site. 7)Defines Carbon Farm Planning for purposes of this bill to mean a landscape-level conservation planning process designed to identify GHG emissions reducation and sequestration and mitigation opportunities on working lands and to quantify those GHG benefits using the United States Department of Agriculture's COMET-Planner, COMET-Farm, and other quantification tools. 8)Defines Working Lands for purposes of this bill to mean privately-owned agricultural lands, ranches, and rangelands. EXISTING LAW: 1)Requires CDFA to establish and oversee an environmental farming program to provide incentives to farmers whose practices promote the well-being of ecosystems, air quality, and wildlife and their habitats. 2)Requires, pursuant to the California Global Warming Solutions Act (AB 32), ARB to adopt a statewide GHG emissions limit equivalent to 1990 levels by 2020 and to adopt rules and regulations to achieve maximum technologically feasible and cost-effective GHG emission reductions. 3)Requires a 20% reduction in urban per capita water use by 2020, and requires agricultural water management plans and efficient water management practices for agricultural water suppliers. AB 761 Page 4 4)Authorizes the DOC's Division of Resource Conservation to work with Resource Conservation Districts on soil and water conservation objectives. 5)Requires generators of organic waste to arrange recycling services for the organic waste material. 6)Proposition 1, the Water Bond approved by the voters in November 2014, makes $7.5 billion in general obligation bond funds available for, among other things, programs to increase water conservation and efficiency, and for ecosystem and watershed protection and restoration. $35 million is authorized to be used by DWR for loans to local agencies to aid in the acquisition and construction of agricultural water conservation projects. Requires DWR to determine if there will be a net saving of water as a result of each project and if the project is determined by DWR to be cost effective. FISCAL EFFECT: Specifies that $50 million shall be available upon appropriation of the Legislature from an unspecified fund source. COMMENTS: 1) Author's Statement: This bill seeks to fund studies to examine what agricultural practices will best enhance the inherent carbon sequestration associated with working lands, as well as reduce agricultural water needs through water retention. AB 761 establishes a $50 million grant program to fund pilot projects to expand use of composting and other best agricultural management practices on working lands. Research shows these practices are expected to increase soil AB 761 Page 5 carbon sequestration (reduce GHG emissions), improve water retention, and make agricultural land more resilient to climate change and drought. There is an opportunity based on research conducted by the University of California at Berkeley (UC Berkeley) in Marin and Yuba counties to see great benefits from improved agricultural practices. This bill is needed to explore if that opportunity exists in settings outside of what was studied in Marin and Yuba counties. That research specifically called for further evaluation. 2) Marin Study highlights: A report published in 2014 on research conducted by UC Berkeley over 7 years on 540 acres in Marin County found that use of compost on rangeland could sequester up to 3 year's worth of California's total annual GHG emissions. This was based on a one-time only dusting of compost. This and other studies show that a one-time dusting of compost will allow the land to sequester carbon for at least 30 years and maybe for as much as a century. The research also indicated that water needs for rangeland can be reduced by 25 percent while creating healthier rangeland that has more native grasses. This bill seeks to determine whether these remarkable results can be replicated on rangeland and other agricultural settings throughout California. The grant program could thus lead to a significant increase in the capacity of the agricultural sector to reduce overall GHG emissions. Additionally, these practices hold promise to make agricultural lands more drought resistant, and to reduce overall water irrigation needs for agriculture. 3) Double-referral to Assembly Natural Resources Committee: This bill was double-referred to the Assembly Natural Resources Committee which heard this bill on April 13, 2015, and passed it on a vote of 8-1. AB 761 Page 6 4) Potential water saving benefits in line with state goals: The Assembly Natural Resources Committee analysis further discusses the state's goals for GHG emissions reductions, and the carbon sequestration potential of compost applications and other working lands management practices. Of particular interest to this committee, is the additional potential for carbon farming and other management practices to increase water retention. Specifically, this bill includes within the categories of projects that would be eligible for grant funding those that not only increase carbon sequestration and GHG emissions reductions, but also produce the co-benefits of reducing agricultural irrigation demand and making rangelands more resilient to drought. As indicated above, the studies in Marin and Yuba counties showed that applying compost to rangelands improves soil water retention and can reduce water needs by 25%. The Governor in his 2015-16 budget presents a new "Healthy Soils" initiative, and similarly notes that increasing carbon in soils has the benefit of increasing the soil's water holding capacity. The California Water Action Plan, developed by the California Natural Resources Agency with CalEPA and CDFA, and approved by the Governor in January 2014, states that water conservation must become a way of life for all Californians, and calls for expanding agricultural and urban water conservation and efficiency. The Plan indicates that the Administration will work with local and regional entities to develop performance measures to evaluate agricultural water management practices. The Plan further states that the Administration will work with the Legislature to expand funding for urban and agricultural water use efficiency, and encourages the state to focus on multiple-benefit projects. 5) Prior and related legislation: AB 1826 (Chesbro), Chapter 727, Statutes of 2014, requires generators of specified amounts of organic waste to arrange recycling services for the organic waste matter. AB 761 Page 7 AB 2636 (Gatto), Chapter 825, Statutes of 2014, among other things, required the proceeds of bonds authorized in Proposition 1 to be issued and available for purposes of loans for agricultural water conservation projects to be transferred to the CalConserve Water Use Efficiency Revolving Fund and used by DWR to acquire and construct agricultural water conservation projects. Support Arguments: Supporters emphasize that land managers of working landscapes can dramatically increase carbon storage in soils by employing a number of practices that are climate beneficial, including compost application, riparian restoration, no-till farming, windbreaks, agroforestry, and other practices. They also note that in addition to increasing carbon sequestration in soils and plant materials, these practices offer additional water, habitat, and economic benefits for farmers and other working land managers. They also emphasize that if California is to meet its GHG reduction goals, it must seek GHG reductions in all sectors. Working lands in California have enormous untapped potential to contribute to achieving these goals. Opposition Arguments: The Center for Biological Diversity opposed a prior version of this bill, unless amended because it believed the bill assumes livestock rangelands are the best possible end use of compost and would directly only fund livestock rangelands. It should be noted that, as now amended, this bill applies to voluntary projects on all privately owned agricultural lands, not just rangelands, and includes a number of types of eligible projects that may reduce GHG emissions and sequester carbon, in addition to composting. REGISTERED SUPPORT / OPPOSITION: AB 761 Page 8 Support Carbon Cycle Institute Audubon California California Cattlemen's Association California Trout Central Coast Forest Association (in concept) Land Trust of Santa Cruz County Opposition Center for Biological Diversity (prior version; unless amended) Analysis Prepared by:Diane Colborn / W., P., & W. / (916) 319-2096 AB 761 Page 9