BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                    AB 2146


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          Date of Hearing:  April 4, 2016


                       ASSEMBLY COMMITTEE ON NATURAL RESOURCES


                                 Das Williams, Chair


          AB 2146  
          (Patterson) - As Amended March 28, 2016


          SUBJECT:  Forestry and fire protection:  greenhouse gas  
          emissions


          SUMMARY:  Requires $200 million annually to be continuously  
          appropriated from Greenhouse Gas Reduction Fund (GGRF) to the  
          Department of Forestry and Fire Protection (CAL FIRE) for  
          activities that reduce greenhouse gas (GHG) emissions.   
          Specifies activities eligible for funding including vegetation  
          management, forest overgrowth reduction, and measures to ensure  
          that future fires are more consistent with the historic  
          regenerative fire regime. 


          EXISTING LAW: 


          1)Requires the Air Resources Board (ARB), pursuant to California  
            Global Warming Solutions Act of  2006 [AB 32 (Nunez), Chapter  
            488, Statutes of 2006], to adopt a statewide greenhouse gas  
            (GHG) emissions limit equivalent to 1990 levels by 2020 and  
            adopt regulations to achieve maximum technologically feasible  
            and cost-effective GHG emission reductions.  AB 32 authorizes  
            ARB to permit the use of market-based compliance mechanisms to  
            comply with GHG reduction regulations, once specified  
            conditions are met.








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          2)Establishes the GGRF and requires all moneys, except for fines  
            and penalties, collected by ARB from the auction or sale of  
            allowances pursuant to a market-based compliance mechanism  
            (i.e., the cap-and-trade program adopted by ARB under AB 32)  
            to be deposited in the GGRF and available for appropriation by  
            the Legislature.

          3)Continuously appropriates: 

             a)   10% of the GGRF for the Transit and Intercity Rail  
               Capital Program; 

             b)   5% for the Low Carbon Transit Operations Program; 

             c)   20% for the Affordable Housing and Sustainable  
               Communities Program; and,

             d)   25% for high speed rail.  

          4)Establishes the GGRF Investment Plan and Communities  
            Revitalization Act to set procedures for the investment of GHG  
            allowance auction revenues.  Authorizes a range of GHG  
            reduction investments and establishes several policy  
            objectives, including: 

             a)   Maximize economic, environmental, and public health  
               benefits; 

             b)   Foster job creation; 

             c)   Complement efforts to improve air quality; 

             d)   Direct investment toward the most disadvantaged  
               communities and households in the state; 

             e)   Provide opportunities for businesses, public agencies,  
               nonprofits, and other community institutions to participate  
               in and benefit from statewide efforts to reduce GHG  








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               emissions; and, 

             f)   Lessen the impacts and effects of climate change on the  
               state's communities, economy, and environment. 

          5)Requires the investment plan to allocate (1) a minimum of 25%  
            of the available moneys in the GGRF to projects that provide  
            benefits to identified disadvantaged communities, and (2) a  
            minimum of 10% of the available moneys in the GGRF to projects  
            located within identified disadvantaged communities. 

          6)Requires a state responsibility area (SRA) fire prevention fee  
            (fee) on every habitable structure in the SRA.  Requires fee  
            to be deposited in the SRA Fire Prevention Fund, which is  
            available to the Board of Forestry and Fire Protection (Board)  
            and CAL FIRE to expend for fire prevention activities that  
            benefit the owners of structures within the SRA.  Limits fire  
            prevention activities to the following: 
             
             a)   Local assistance grants established by the Board; 

             b)   Grants to Fire Safe Councils, the California  
               Conservation Corps, or certified local conservation corps  
               for fire prevention projects and activities in the SRA; 

             c)   Grants to a qualified nonprofit organization with a  
               demonstrated ability to satisfactorily plan, implement, and  
               complete a fire prevention project applicable to the SRA; 

             d)   Inspections by CAL FIRE for compliance with defensible  
               space requirements around structures in the SRA; 

             e)   Public education to reduce fire risk in the SRA; 

             f)   Fire severity and fire hazard mapping by CAL FIRE in the  
               SRA; and,

            g) Other fire prevention projects in the SRA that are  
            authorized by the Board. 








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          7)Declares the intent of the Legislature that the Board, CAL  
            FIRE, and ARB should strive to go beyond the status quo  
            sequestration rate and ensure that their policies and  
            regulations reflect the unique role forests play in combating  
            climate change.

          8)Allows CAL FIRE to enter into agreements and make grants and  
            take other actions to develop Program Timberland Environmental  
            Impact Reports (PTEIR) for carbon sequestration and fuel  
            reduction programs to encourage forest resource improvements  
            and otherwise facilitate good timberland management through a  
            program of financial and technical assistance.

          9)Authorizes funds in Timber Regulation and Forest Restoration  
            Fund to be spent for fuel treatment grants and grants to local  
            agencies responsible for fire protection, qualified  
            nonprofits, recognized tribes, local and state governments,  
            and resources conservation districts, undertaken on a SRA or  
            on wildlands not in a SRA that pose a threat to the SRA.   
            Grants are required to reduce the costs of wildland fire  
            suppression, reduce GHG emissions, promote adaptation of  
            forested landscapes to changing climate, improve forest  
            health, and protect homes and communities. 

          THIS BILL:


          1)Requires, starting in the 2016-17 fiscal year, $200 million to  
            be continuously appropriated from GGRF to CAL FIRE for  
            activities that reduce GHG emissions.


          2)Requires CAL FIRE to fund activities that include, but are not  
            limited to, vegetation management, forest overgrowth  
            reduction, and measures to ensure that future fires are more  
            consistent with the historic regenerative fire regime.










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          3)Allows and encourages CAL FIRE to provide both the following:


             a)   Payments to local governmental entities that carry out  
               fire prevention activities; and,


             b)   Incentives for actions by private parties to reduce the  
               risk or intensity of wildfires or improve the resiliency of  
               lands prone to wildfires.


          FISCAL EFFECT:  Continuously appropriates $200 million from  
          GGRF. 


          COMMENTS:  


          1)Existing GGRF funding and programs.  The 2014-15 Budget Act  
            allocated GGRF revenues for the 2014-15 fiscal year and  
            established a long-term plan for the allocation of GGRF  
            revenues beginning in fiscal year 2015-16.  Thirty-five  
            percent of GGRF is continuously appropriated for investments  
            in transit, affordable housing, and sustainable communities.   
            Twenty-five percent is continuously appropriated to continue  
            the construction of the high-speed rail project.  The  
            remaining 40% is subject to annual appropriation by the  
            Legislature for investments in programs that include  
            low-carbon transportation, energy efficiency and renewable  
            energy, and natural resources and waste diversion.  An  
            expenditure plan for the 40% was not included in the 2015-16  
            Budget Act, with the exception of $227 million appropriated to  
            continue funding for specified existing programs.  The  
            remaining 2015-16 revenues, along with 2016-17 revenues, are  
            available for appropriation this year.  











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          The 2016 Annual Report of Cap and Trade Auction Proceeds  
            includes an analysis of funds spent within and benefiting  
            disadvantaged communities, excluding high speed rail spending.  
             According to the report, 39% of expenditures were for  
            projects located within disadvantaged communities and 51% of  
            the overall funding benefited disadvantaged communities.  
            Listed below are the major GGRF program areas, administering  
            agency, and funding to date:


             a)   Transportation and Sustainable Communities


               i)     High Speed Rail, High Speed Rail Authority  
                 (Authority), $750 million


               ii)    Transit and Intercity Rail Capital Program,  
                 Transportation Agency, $225 million


               iii)   Low Carbon Transit Operations Program, Department of  
                 Transportation (Caltrans), $125 million


               iv)    Affordable Housing and Sustainable Communities  
                 Program, Strategic Growth Council (SGC), $530 million


               v)     Low Carbon Transportation, ARB, $325 million


             b)   Clean Energy and Energy Efficiency


               i)     Low-Income Weatherization Program, Community  
                 Services and Development (CSD), $154 million










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               ii)    Energy Efficiency in Public Buildings, California  
                 Energy Commission (CEC), $20 million


               iii)   Agricultural Energy and Operational Efficiency,  
                 Department of Food and Agriculture (CDFA), $75 million


               iv)    Water-Energy Efficiency, Department of Water  
                 Resources (DWR), $75 million


             c)   Natural Resources and Waste Diversion


               i)     Wetlands and Watershed Restoration, Department of  
                 Fish and Wildlife (DFW), $27 million


               ii)    Urban Forestry, Forest Health Restoration, and  
                 Reforestation, Department of Forestry and Fire Protection  
                 (CAL FIRE), $42 million


               iii)   Waste Diversion, Department of Resources Recycling  
                 and Recovery (CalRecycle), $31 million


            The Governor's 2016-17 Budget proposes just under $3.1 billion  
            in expenditures:  


             a)   Continuous Appropriations


               i)     High Speed Rail, Authority, $500 million 


               ii)    Low Carbon Transit Operations, State Transit  








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                 Assistance, $100 million 


               iii)   Transit and Intercity Rail Capital Program,  
                 Transportation Agency, $200 million 


               iv)    Affordable Housing and Sustainable Communities  
                 Program, SGC, $400 million 


             b)   Fifty Percent Reduction in Petroleum Use 


               i)     Transit and Intercity Rail Capital Program,  
                 Transportation Agency, $400 million 


               ii)    Low Carbon Road Program, Caltrans, $100 million 


               iii)   Low Carbon Transportation and Fuels, ARB, $500  
                 million 


               iv)    Biofuel Facility Investments, CEC, $25 million 


             c)   Local Climate Action 


               i)     Transformative Climate Communities, SGC, $100  
                 million 


             d)   Short-Lived Climate Pollutants 


               i)     Black Carbon Woodsmoke and Refrigerants, ARB, $60  








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                 million 


               ii)    Waste Diversion, CalRecycle, $100 million 


               iii)   Climate Smart Agriculture - Healthy Soils and Dairy  
                 Digesters, CDFA, $55 million 


             e)   Safeguarding California/Water Action Plan 


               i)     Water and Energy Efficiency, CDFA and DWR, $30  
                 million 


               ii)    Drought Executive Order, CEC, $60 million 


               iii)   Wetlands and Watershed Restoration/CalEcoRestore,  
                 DFW, $60 million 


             f)   Safeguarding California/Carbon Sequestration 


               i)     Healthy Forests and Urban Forestry, CAL FIRE, $180  
                 million 


               ii)    Urban Greening, Natural Resources Agency, $20  
                 million 


             g)   Energy Efficiency/Renewable Energy 


               i)     Energy Efficiency for Public Buildings, Department  








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                 of General Services, $30 million 


               ii)    California Lending for Energy and Environmental  
                 Needs Center, I Bank, $20 million 


               iii)   Energy Corps, Conservation Corps, $15 million 


               iv)    Energy Efficiency Upgrades/Weatherization,  
                 Department of Community Services and Development, $75  
                 million 


               v)     Renewable Energy and Energy Efficiency Projects,  
                 University of California, California State University,  
                 $60 million  


          1)Background.  California is facing a tree mortality crisis.  On  
            October 30, 2015, Governor Brown issued a proclamation of a  
            state of emergency and sent a letter to the Secretary of the  
            United States Department of Agriculture urging federal support  
            and partnership to address the tree mortality crisis.  Experts  
            predict that an estimated 29 million trees are dead and many  
            more are likely to die by the end of the year due to  
            wildfires, drought, disease, and climate change.   
            Approximately one-third (or 33 million acres) of California's  
            land is classified as forests.  Federal agencies, including  
            the Forest Service, the Bureau of Land Management, and  
            National Park Service, own and manage 57% (or 19 million  
            acres) of those forests.  Forests provide many important  
            functions for the state.  



            California's forests face many threats, including, wildfires,  
            drought, disease, climate change, and forest conversion.  In  








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            2015, there were 8,397 fires in California that burned 846,895  
            acres.  The major fires of 2015 included the Rough (151, 623  
            acres), Valley (76,067 acres), and Butte (70,868 acres) fires.  
             These three fires destroyed thousands of homes and caused the  
            deaths of ten people.  The Valley and Butte fire destruction  
            alone caused an estimated $1 billion in insurance claims.  The  
            cost of the state effort to fight these fires is over a half a  
            billion dollars of general fund expenditures, which is in  
            addition to over $1 billion of budgeted General Fund spending  
            for CAL FIRE.  





            A century of fire suppression has increased the density of  
            California's forests and reduced the size of trees.  In 2013,  
            a team of University of California, Berkeley researchers were  
            surveying and conducting research in the Stanislaus National  
            Forest when the Rim Fire broke out, and they were required to  
            evacuate.  Prior to their evacuation, they discovered as many  
            as 400 trees per acre on the land.  In 1911, the land had  
            between 60 and 90 trees per acre.  Researchers also found  
            between 30 and 40 tons of woody debris per acre on the forest  
            floor, compared with six to eight tons 102 years ago.  In  
            addition to the dramatic increase in tree density, the  
            researchers found more undergrowth species, and while there  
            were still old-growth trees, the average size of the trees was  
            smaller than in 1911.  California has also lost many of its  
            old growth trees to logging.  Larger trees are a more secure  
            way to store carbon because they are more resilient to  
            disturbances such as drought and fire.  Climate change looms  
            as a threat to California's forests because it will increase  
            the likelihood of conditions that lead to tree mortality.  The  
            study titled, "Flammable Planet:  Wildfires and the Social  
            Cost of Carbon," claims that by 2085 California could  
            experience a 36% to 74% increase in area burned by wildfires  
            under a high GHG emissions path. 









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            California's forests are not only susceptible to the effect of  
            climate change but are also contributing to emissions.   
            According to ARB's Short-Lived Climate Pollutant Strategy,  
            wildfires are now the single largest source of black carbon  
            emissions in California, representing 66% of black carbon  
            emissions in 2013.  Black carbon or soot is a major  
            contributor to climate change.  Dead, decaying, and dying  
            trees have been shown to emit GHGs reducing the carbon storage  
            capacity of the wood.  Recent studies have put into question  
            whether California forests are net carbon sinks or emitters,  
            which will impact California's GHG reduction goals. 





          2)Forest Carbon Plan (Plan) and Budget Change Proposal (BCP).   
            In August of 2014, the Forest Climate Action Team (FCAT) was  
            assembled with the primary purpose of developing a Plan by the  
            end of 2016 to address both GHG emissions from forests and the  
            impacts of climate change on California's forests.  On March  
            6, 2016 FCAT released a draft Plan and held two public  
            workshops on the Plan. The FCAT's vision statement is "The  
            Forest Carbon Plan will provide forest carbon targets and an  
            array of strategies to promote healthy wildland and urban  
            forests that protect and enhance forest carbon and the broader  
            range of forest environmental services for all forests in  
            California."



            The Governor's 2016-17 budget includes a BCP to spend $30  
            million for urban and community forestry, $10 million for the  
            Forest Legacy Program, and $140 million from the GGRF for a  
            comprehensive forest health program to further secure forest  








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            carbon and reduce greenhouse gas emissions.  These forest  
            health programs will focus on landscape-scale projects in high  
            risk fire areas.  The BCP includes trailer bill language  
            authorizing CAL FIRE to provide grants and enter in to  
            contract or other cooperative agreements.  It also indicates  
            that all statutory and program requirements will be followed. 





          3)AB 2146.  Both the BCP and this bill call for projects that  
            remove trees and surface fuels. Once this material is removed,  
            it stops sequestering carbon and is often incinerated either  
            in open piles or in a biomass facility.  This initial  
            treatment increases GHG emissions. However, treated forests  
            protect the remaining trees from wildfires, drought, and  
            disease.  There is much academic debate about when a fuel  
            treatment will break even and start reducing GHG emissions.   
            Benefits may be variable depending on whether the forest is  
            subject to a fire, drought, or infestation.  In addition,  
            timber operations may remove all of the trees that were  
            offsetting the initial treatment.  While the BCP trailer bill  
            language and this bill would require CAL FIRE to demonstrate  
            its project reduces GHG emissions, there are no requirements  
            on how to develop the accounting methodology.  The author and  
            committee may wish to amend the bill to require CAL FIRE to  
            develop an accounting system for projects to demonstrate each  
            project provides long-term carbon gains.  The author and  
            committee may wish to also amend the bill to require any  
            funding recipient to utilize only uneven aged management to  
            preserve some of the larger trees on the landscape.



            CAL FIRE has only funded three fuel treatment projects with  
            GGRF.  These projects cost less than $2 million combined.   
            There does not seem to be enough of a track record to support  
            a continuous appropriation for these projects.  Continuous  








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            appropriations diminish the Legislature's ability to oversee  
            and adjust a program during each budget cycle.  The author and  
            committee may wish to amend the bill to remove the continuous  
            appropriation.    





            In California, a majority of forested land is owned by the  
            federal government.  Federal lands are usually untreated and  
            have not seen natural fire for a significant period.   
            Wildfires that start on federal land can spread to nonfederal  
            lands and put private property and lives in danger.   
            California has attempted to partner with the federal  
            government to spend state dollars to leverage federal  
            resources to treat federal forestland in key areas.  The  
            author and committee may wish to amend the bill to allow  
            partnerships with the federal government.





            Besides either emitting or sequestering carbon forests provide  
            many important co-benefits.  Forests provide high quality  
            habitat for thousands of plant and animal species, including  
            many endangered species.  Coastal forests play a vital role  
            maintaining California's salmon population.  Forests provide  
            clean air benefits.  They also play an important function in  
            California watersheds by improving water quality and  
            controlling runoff.  California forests provide a variety of  
            outdoor recreation and educational opportunities.  Many people  
            in rural communities are employed in the forest products  
            industry or tourism industry supported by forests.  The author  
            and committee may wish to may wish to prioritize projects that  
            maximize these co-benefits.

          








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          REGISTERED SUPPORT / OPPOSITION:




          Support




          Madera County Supervisor Rick Farinelli




          Madera County Supervisor Tom Wheeler


          Rural County Representatives of California 


          Opposition


          California Chamber of Commerce


          CalTax 











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          Analysis Prepared by:Michael Jarred / NAT. RES. / (916) 319-2092