BILL ANALYSIS Ó
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
AB 761 (Levine) - Carbon sequestration: working lands
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|Version: June 2, 2015 |Policy Vote: AGRI. 3 - 0, E.Q. |
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|Urgency: No |Mandate: No |
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|Hearing Date: August 17, 2015 |Consultant: Marie Liu |
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This bill meets the criteria for referral to the Suspense File.
Bill
Summary: AB 761 would establish a grant program at the
Department of Food and Agriculture (CDFA) to fund voluntary
projects that increase carbon sequestration and greenhouse gas
(GHG) emission reductions on working lands.
Fiscal
Impact:
Unknown cost pressures, at least in the tens of millions of
dollars, to the General Fund or the GHG Reduction Fund
(special) to fund the grant program.
Unknown initial and ongoing costs, likely in the hundreds of
thousands to low millions, to the General Fund or the GHG
Reduction Fund (special) to CDFA and potentially to the ARB to
administer the grant program.
Minor and absorbable costs for the Department of Conservation,
the Department of Resources Recycling and Recovery, and the
Department of Water Resources.
AB 761 (Levine) Page 1 of
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Background: The Cannella Environmental Farming Act of 1995, requires CDFA
to establish an environmental farming program to provide
incentives to farmers whose practices promote the wellbeing of
ecosystems, air quality, and wildlife and their habitat and
requires the Secretary of CDFA to convene a five-member
Scientific Advisory Panel on Environmental Farming to advise and
assist federal, state, and local government agencies on issues
relating to air, water, and wildlife habitat. (FAC §§561)
In his 2015-16 budget proposal, Governor Brown directed $10
million from the GGRF toward a new "Healthy Soils Initiative" to
increase carbon in soil to improve soil health, agricultural
productivity, soil water-holding capacity, and decreased
sediment erosion. Governor Brown directed CDFA, under its
existing authority provided by the Cannella Environmental
Farming Act, to coordinate with other key agencies to work on
several new initiatives. CDFA has since developed five action
measures: protect and restore soil carbon; identify funding
opportunities, including market development; provide research,
education and technical support; increase governmental
efficiencies to enhance soil health on public and private lands;
and ensure interagency coordination and collaboration.
Proposed Law:
This bill would, upon appropriation by the Legislature, create
a grant program to fund voluntary projects that increase carbon
sequestration and GHG emission reductions on privately-owned
agricultural lands, ranches, and rangelands. The bill would
define carbon farming as a land management strategy that results
in quantifiable GHG benefits using the US Department of
Agriculture's COMET-Planner, COMET-Farm, and other
quantification tools.
Funding would be prioritized based on the extent that a project
demonstrates carbon farming, sequesters carbon in agricultural
soils, and achieves related co-benefits such as reducing
irrigation demand, increasing yield, enhancing habitat,
enhancing soil structure, among other things.
CDFA, in consultation with the Department of Conservation, the
AB 761 (Levine) Page 2 of
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Department of Resources Recycling and Recovery, the Air
Resources Board (ARB), and the Department of Water Resources,
would be required to develop and adopt project solicitation and
evaluation guidelines to implement the grant program. CDFA would
be required to post quantified benefits of each project on its
website.
Related
Legislation: SB 367 would, upon appropriation, establish a $25
million grant program, to fund projects that reduce GHG
emissions and increase carbon storage in agricultural soils and
woody biomass. SB 367 is currently in the Assembly
Appropriations Committee.
Staff
Comments: By creating a new grant program to fund carbon
farming, this bill would create cost pressures to fund a wide
variety of projects. Staff assumes that these cost pressures are
at least in the tens of millions of dollars based on the
Governor's budget proposal, appropriations made in earlier
versions of this bill, and SB 367.
Under this bill, CDFA would incur administrative costs to create
and then implement the new grant program. CDFA indicates that
its costs are unknown as their costs would be dependent on the
total amount allocated to the program, the number of grant
applications received and awarded, and the size of the grants
awarded. Staff notes that as a rough guide, administrative costs
are often approximately 5% of the size of the grant program.
Assuming the grant program would be in the tens of millions of
dollars, administrative costs would be in the hundreds of
thousands of dollars to the low millions of dollars.
To collaborate with CDFA on the development of the grant program
guidelines, the Department of Conservation, the Department of
Resources Recycling and Recovery, and the Department of Water
Resources anticipate minor and absorbable costs.
The ARB has indicated that it anticipates significant costs
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associated with this bill to develop, review, and implement GHG
reduction methodologies for carbon farming. While this bill
references two existing methodologies to quantify emissions
developed by the US Department of Agriculture (COMET-Planner and
COMET-Farm), ARB believes it would need to review the tools and
each of the 30 mitigation options covered by those tools for
California use. ARB also anticipates costs to develop its own
GHG quantification methodology. For these activities, ARB
assumes it would need 6 PYs in the first year, 4 PYs in the
second, and then 2 PYs ongoing for these responsibilities at a
cost of $974,000, $672,000, and $390,000, respectively.
Additionally, ARB estimates that it would need 2 PYs ongoing to
collaborate with CDFA on development of their funding program,
report on the program's GHG emission reductions, and to evaluate
disadvantaged community benefits at an additional annual cost of
$350,000. These costs assume a $50 million grant program.
Staff notes that while the ARB may have some costs to
collaborate with CDFA, it is unclear if these costs are
duplicative of workload that would be done by CDFA.
Specifically, it is not clear whether ARB needs to independently
verify tools developed by the US Department of Agriculture in
its entirety or develop a separate quantification tool.
Presumably CDFA potentially has the expertise and the
responsibility to do these verifications on their own as the
administrator of the program while ARB's role would be limited
to an oversight role to assure that the assumptions made in
these methodologies are consistent with other similar programs.
Staff notes that the Governor's proposal for the Healthy Soils
Initiative did not include an explicit budget change proposal
for ARB costs associated with the initiative. However, ARB did
receive a block of positions related to working with other
agencies on GGRF expenditures and emission reduction
quantification. It is unclear whether the block of positions
covered the staffing needs that would be created by the Health
Soils Initiative budget change proposal, but it if did, it would
suggest ARB's staffing needs associated with this bill have
already been provided to the ARB. If not, staff assumes that to
the extent the ARB has costs associated with the program, these
costs would be offset by a reduction in CDFA's costs so that the
total administrative costs for the grant program would still be
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limited to approximately 5% of the grant program's size.
This bill does not indicate a funding source. However, given the
eligibility criteria established by the bill, this program could
be funded by the Greenhouse Gas Reduction Fund, which receives
proceeds from the cap-and-trade auctions and must be used to
facilitate the achievement of GHG emission reductions consistent
with AB 32 (HSC §§39710). Staff notes that there are multiple
bills being considered by both houses of the Legislature that
propose projects that would be eligible to receive GGRF funds.
It is unclear how these bills will interact with each other.
Staff notes that a discussion on the spending of GGRF is
anticipated in August as part of a budget discussion.
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