BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | SB 367| |Office of Senate Floor Analyses | | |(916) 651-1520 Fax: (916) | | |327-4478 | | | | | ----------------------------------------------------------------- THIRD READING Bill No: SB 367 Author: Wolk (D) Amended: 6/2/15 Vote: 21 SENATE AGRICULTURE COMMITTEE: 5-0, 4/7/15 AYES: Galgiani, Cannella, Berryhill, Pan, Wolk SENATE ENVIRONMENTAL QUALITY COMMITTEE: 7-0, 4/29/15 AYES: Wieckowski, Gaines, Bates, Hill, Jackson, Leno, Pavley SENATE APPROPRIATIONS COMMITTEE: 7-0, 5/28/15 AYES: Lara, Bates, Beall, Hill, Leyva, Mendoza, Nielsen SUBJECT: Agricultural lands: greenhouse gases SOURCE: California Climate and Agricultural Network Community Alliance with Family Farmers DIGEST: This bill recasts and expands the membership and the duties of the California Department of Food and Agriculture's (CDFA) Science Advisory Panel on Environmental Farming to include on-farm practices to reduce greenhouse gas emissions and increase carbon storage in soil. This bill appropriates $25 million from the Greenhouse Gas Reduction Fund to CDFA for the establishment of a new grant program to support these activities. This bill also appropriates 2% of the proceeds from this fund to the Strategic Growth Council's Sustainable Agricultural Lands Conservation Program to also address on-farm reductions of greenhouse gas and increased carbon storage. ANALYSIS: Existing law: 1)Requires the CDFA, through the Cannella Environmental Farming Act of 1995, to establish and oversee an environmental farming SB 367 Page 2 program that provides incentives to farmers whose practices promote the well-being of ecosystems, air quality, and wildlife and their habitat. 2)Establishes the Scientific Advisory Panel on Environmental Farming (Science Panel) to, among other responsibilities, advise and assist government agencies on the above issues by conducting scientific data reviews and approving and recommending scientifically valid data. 3)Establishes in 2008 the Strategic Growth Council as a cabinet-level committee that is tasked with coordinating the activities of member state agencies to, among other things, improve air and water quality, protect natural resources and agricultural lands, and assist state and local entities in the planning of sustainable communities and meeting AB 32 (Nunez, Chapter 488, Statutes of 2006) goals. 4)Establishes the Affordable Housing and Sustainable Communities (AHSC) Program, administered by the Strategic Growth Council in 2014, to reduce greenhouse gas (GHG) emissions though projects that implement land use, housing, transportation, and agricultural land preservation practices. 5)Establishes the Sustainable Agricultural Lands Conservation (SALC) Program as one component of the AHSC and is implemented by the California Department of Conservation (DOC). The Strategic Growth Council is responsible for overseeing SALC and coordinating DOC with other agencies to develop program guidelines. 6)Requires the California Air Resources Board (ARB), through the California Global Warming Solutions Act of 2006 (referred to as AB 32, Health and Safety Code §38500 et seq.), to determine the 1990 statewide GHG emissions level, to approve a statewide GHG emissions limit equivalent to that level that will be achieved by 2020, and to adopt GHG emissions reductions measures by regulation. ARB is authorized to include the use of market-based mechanisms to comply with the regulations. All monies, except for fines and penalties, collected pursuant to a market-based mechanism are deposited in the Greenhouse Gas Reduction Fund (GGRF). (According to the Senate SB 367 Page 3 Environmental Quality Committee analysis). 7)Requires that the GGRF only be used to facilitate the achievement of reductions of GHG emissions consistent with AB 32 (Health and Safety Code §39710 et seq.). To this end, the Department of Finance, in consultation with the ARB and any other relevant state agencies, is required to develop, as specified, a three-year investment plan for the moneys deposited in the GGRF. The investment plan must allocate a minimum of 25% of the funds to projects that benefit disadvantaged communities and to allocate 10% of the funds to projects located within disadvantaged communities. Additionally, ARB, in consultation with California Environmental Protection Agency (CalEPA), is required to develop funding guidelines for administering agencies receiving allocations of GGRF funds that include a component for how agencies should maximize benefits to disadvantaged communities. (According to the Senate Environmental Quality Committee analysis). This bill: 1) Makes findings and declarations in regards to California agricultural productivity and agriculture's contribution to the environment and reduction of GHGs. 2) Renames CDFA's Scientific Advisory Panel on Environmental Farming to the Environmental Farming Advisory Panel (Advisory Panel). 3) Expands the duties of CDFA's Environmental Farming Program (EFP) to specifically include activities related to the reduction of on-farm GHG emissions and increased carbon storage in agricultural soils and woody biomass. 4) Authorizes CDFA to support these on-farm practices and activities by providing permit assistance and coordination and the funding of on-farm demonstration projects. 5) Deletes CDFA's authority to assist in the compilation and depository of scientific data from public and private sources identifying the net environmental impacts of agriculture on SB 367 Page 4 the environment. 6) Adds "climate change" to the list of issues that may be addressed by CDFA's newly termed Advisory Panel when providing advice and assistance to government agencies. 7) Recasts and expands the duties and membership of the Advisory Panel as specified. 8) Provides $25 million, upon appropriation by the Legislature, to CDFA to support on-farm projects to demonstrate agricultural management practices and activities that reduce GHG emissions and increase carbon storage in soils and woody biomass. Projects may include, but are not limited to, soil-building and carbon-sequestration practices, irrigation efficiency and water conservation measures, on-farm alternative-energy production and efficiency, and wildlife habitat conservation. 9) Requires CDFA, in consultation with the Advisory Panel, to develop and implement a grant program to support the activities listed above. 10)Requires the secretaries of CDFA and the Natural Resources Agency to enter into a memorandum of agreement, including other relevant state agencies, to ensure the greatest possible coordination and collaboration in implementing these programs and projects. 11)Requires that no less than 2% of GGRF proceeds be appropriated to the Strategic Growth Council to be expended for agricultural land protection within the grant program, below. 12)Requires the Strategic Growth Council to establish and administer a grant program, as part of the SALC Program, to provide incentives for the adoption and use of land management practices that would reduce GHG emissions and sequester carbon in soils and woody biomass. Background SB 367 Page 5 The Cannella Environmental Farming Act of 1995 requires the CDFA to establish and oversee an environmental farming program that provides incentives to farmers whose practices promote the well-being of ecosystems, air quality, and wildlife and their habitat. The act also created the Science Panel to, among other responsibilities, advise and assist government agencies on these issues by conducting scientific data reviews and approving and recommending scientifically valid data. The Science Panel is also authorized to research, review, and comment on data used as the base for proposed environmental policies and regulatory programs so that agricultural activities are accurately portrayed and to identify incentives to encourage agricultural practices with environmental benefits. The Strategic Growth Council was created in 2008 as a cabinet-level committee that is tasked with coordinating the activities of member state agencies to improve air and water quality, protect natural resources and agricultural lands, increase the availability of affordable housing, promote public health, improve transportation, encourage greater infill and compact development, revitalize community and urban centers, and assist state and local entities in the planning of sustainable communities and meeting AB 32 goals. The AHSC Program, administered by the Strategic Growth Council, was created in 2014 to reduce greenhouse gas (GHG) emissions though projects that implement land use, housing, transportation, and agricultural land preservation practices. The AHSC Program receives 20% of the annual proceeds from the Greenhouse Gas Reduction Fund to achieve these goals (SB 862 of 2014; Health and Safety Code § 39719). The SALC Program is one component of the AHSC and is implemented by the DOC. The Strategic Growth Council is responsible for overseeing the SALC Program and coordinating DOC with other agencies to develop program guidelines. Guidelines for the SALC Program were approved by the Strategic Growth Council on January 20, 2015, and include three major elements: 1) sustainable agricultural land strategy plans, which would provide grants to develop local strategies to ensure long-term protection of highly productive and critically SB 367 Page 6 threatened agricultural land; 2) agricultural conservation easements; and 3) financial incentives for adoption and use of land management practices. The guidelines specifically state that the third element is not included in the 2014 request for grant applications, but will be addressed in future years. Background on Cap-and-Trade Funds. ARB has conducted ten cap-and-trade auctions, generating almost $1.6 billion in proceeds to the state. Budget allocations. The 2014-15 Budget allocates $832 million in GGRF revenues to a variety of transportation, energy, and resources programs aimed at reducing GHG emissions. Various agencies are in the process of implementing this funding. The budget agreement specifies how the state will allocate most cap-and-trade auction revenues in 2015-16 and beyond. For all future revenues, the legislation appropriates 25% for the state's high-speed rail project, 20% for affordable housing and sustainable communities grants, 10% to intercity capital rail projects, and 5% for low-carbon transit operations. The remaining 40% is available for annual appropriation by the Legislature. (According to the Senate Environmental Quality Committee analysis). Comments Agriculture and Climate Change. Farmers and ranchers are uniquely sensitive to the effects of climate change as agriculture is largely dependent upon uncertain weather patterns and the availability of natural resources. For example, the current multi-year drought has caused many farmers to fallow fields, sell livestock due to lack of available grazing, and lay-off employees due to reduced workload and productivity. The potential for agriculture to contribute to the reduction of climate change by sequestering carbon and reducing GHG emissions is not fully realized or utilized. Plants absorb CO2 from the atmosphere and use it to grow, produce fruits and vegetables, and to also store carbon in the soil. Animals produce manure that could be used to create energy (through methane digesters), compost, and several other valuable products, while reducing the emission of methane and other GHG. Land management practices SB 367 Page 7 have been and are continuing to be adopted to reduce negative effects on the environment such as drip irrigation, reduced land tillage, nitrogen management, and the use of cover crops. This bill would provide funding to continue the development and implementation of on-farm management practices to further the environmental benefits of California's agricultural lands. [Note: See Senate Agriculture Committee and Senate Environmental Quality Committee analyses for a full discussion of this bill] FISCAL EFFECT: Appropriation: Yes Fiscal Com.:YesLocal: No According to the Senate Appropriations Committee, "This bill would specify that $25 million shall be available, upon appropriation by the Legislature, to support three specific programs at CDFA." SUPPORT: (Verified 6/2/15) California Climate and Agriculture Network (CalCAN) (co-source) Community Alliance with Family Farmers (co-source) Abbott Ranch Agricola: flora et fauna Alameda County Resource Conservation District American Farmland Trust Association of Compost Producers Audubon California Berry Blest Farm Big Bluff Ranch Burroughs Family Farms Burroughs Family Orchards Burrows Ranch, Inc. Cachuma Resource Conservation District California Association of Resource Conservation Districts California Certified Organic Farmers California Cloverleaf Farms California Compost Coalition California Farm Bureau Federation California FarmLink California Institute for Rural Studies SB 367 Page 8 California League of Conservation Voters California State Grange Californians Against Waste Camp Grant Ranch Canvas Ranch Carbon Cycle Institute Center for Food Safety Central Valley Farmland Trust Coastal Environmental Rights Foundation Community Environmental Council Defenders of Wildlife Dixon Ridge Farms Eaton Cattle Co. Ecological Farming Association Eden Urban Farms Environment California Environmental Action Committee of West Marin Environmental Defense Fund Environmental Entrepreneurs Four Elements Organics Foxwhelp Farm Frog Hollow Farm Full Belly Farm Grass Valley Grains Green Oaks Creek Farm Greenbelt Alliance Harpos Organics Hilltop & Canyon Farms Humboldt Regeneration Brewery & Farm Jackrabbit Farms Jacobs Farm/Del Cabo Kern Family Farm Land Trust of Santa Cruz County Live Earth Farm Mamen Consulting Markegard Family Grass-Fed, LLC Molino Creek Farm Morris Grassfed Occidental Arts and Ecology Center Page's Organics Paicines Ranch Peninsula Open Space Trust SB 367 Page 9 Pie Ranch Porter Creek Vineyards Quetzal Farm Resource Conservation District of Santa Cruz County Riverdance Farms Rominger Brothers Farm Roots of Change Samuels Ranch San Diego Roots Sustainable Food Project San Mateo County Resource Conservation District Santa Clara Valley Open Space Authority Sierra Farms Lamb Sonoma Resource Conservation District Sustainable Agriculture Education Sustainable Conservation Swanton Berry Farm The Mendocino Grain Project The Trust for Public Land Travaille & Phippen, Inc. Valley Land Alliance Viriditas Farm Wild Farm Alliance Wild Willow Farm and Education Center Yolo County Resource Conservation District OPPOSITION: (Verified6/2/15) California Chamber of Commerce ARGUMENTS IN SUPPORT: According to the author, "The modernization of the twenty-year old Environmental Farming Act gives the California Department of Food and Agriculture the authority and resources to more effectively deliver programs and improve growers' access to resources for addressing climate change and other pressing environmental concerns." According to those in support, "Growers around the state have already begun to see the effects of drought, decreased chilling hours and extreme heat on their productivity and profitability. At the same time, growers and scientists recognize the tremendous potential for agriculture and agricultural lands to not only reduce existing greenhouse gas emissions, but also to SB 367 Page 10 draw down atmospheric carbon into soils and woody biomass." ARGUMENTS IN OPPOSITION: According to the California Chamber of Commerce, "CalChamber supports the cost-effective implementation of AB 32. CARB's decision to arbitrarily withhold and sell (auction) allowances will raise billions of dollars at the expense of California businesses and consumers. This approach runs contrary to expressed goals of AB 32, which is maximizing benefits and minimizing leakage risks and costs. As CalChamber has long held, CARB lacks authority to raise revenue through the auction of allowances. Given the substantial legal uncertainties surrounding CARB's authority to impose an auction, expending the proceeds is premature;" therefore the California Chamber of Commerce is opposed to this bill that would fund on-farm agricultural management projects with AB 32 auction revenues. Prepared by:Anne Megaro / AGRI. / (916) 651-1508 6/2/15 20:13:17 **** END ****