BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                     SB 367


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          Date of Hearing:  July 1, 2015


                          ASSEMBLY COMMITTEE ON AGRICULTURE


                                 Henry Perea, Chair


          SB  
          367 (Wolk) - As Amended June 24, 2015


          SENATE VOTE:  35-3


          SUBJECT:  Agricultural lands: greenhouse gases.


          SUMMARY:  This bill recasts and expands the membership and  
          duties of the California Department of Food and Agriculture's  
          (CDFA) Environmental Farming Act Science Advisory Panel  
          (Advisory Panel) 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 (GHG)  
          Reduction Fund (GGRF) 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 (SALC) to also address on-farm reductions of greenhouse  
          gas and increased carbon storage.  Specifically, this bill:  


           1) Makes findings and declarations in regard to California  
             agricultural productivity and agriculture's contribution to  
             the environment and reduction of GHGs.










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           2) Adds the definition of "fund" to mean the GGRF.

           3) Renames CDFA's Scientific Advisory Panel on Environmental  
             Farming to the Environmental Farming Act Advisory Panel  
             (Panel).

           4) Expands the duties of CDFA's Environmental Farming program  
             (program) to specifically include activities related to the  
             reduction of on-farm GHG emissions and increases carbon  
             storage in agricultural soils and woody biomass, and allows  
             for the program to provide incentives, as specified. 

           5) Authorizes CDFA to support these on-farm practices and  
             activities by providing permit assistance and coordination  
             and the funding of on-farm demonstration projects, which  
             further the goals of the program.

           6) Adds "climate change" to the list of issues that may be  
             addressed by CDFA's newly termed Panel when providing advice  
             and assistance to government agencies.

           7) Expands the Panel from five to nine members; modifies the  
             background requirements of the appointees, as specified; and,  
             establishes term of appointments.

           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,  
             alternative-energy production from agricultural waste from a  
             farm or at a processing facility and improve on-farm  
             efficiency, and wildlife habitat conservation.

           9) Requires CDFA, in consultation with the Advisory Panel, to  









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             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 (Council) to be  
             expended for agricultural land protection within the grant  
             program described in item 12, below.

           12)Requires the 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.



          EXISTING LAW:    


          1)Requires the CDFA, through the Cannella Environmental Farming  
            Act of 1995, (ACT) 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.  

          2)Establishes the Scientific Advisory Panel on Environmental  
            Farming to assist in the compilation and depository of  
            scientific data from public and private sources, identifying  
            the net environmental impacts of agriculture on the  
            environment; to advise and assist government agencies on the  
            above issues by conducting scientific data reviews and  









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            approving and recommending scientifically valid data.   

           3)Establishes the 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 the California Global Warming  
            Solutions Act of 2006 (AB 32), goals.  

          4)Establishes the Affordable Housing and Sustainable Communities  
            (AHSC) Program, administered by the Council, to GHG emissions  
            though projects that implement land use, housing,  
            transportation, and agricultural land preservation practices.   

                
           5)Establishes SALC as one component of AHSC and is implemented  
            by the California Department of Conservation (DOC).  The  
            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 AB  
            32, 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 GGRF. 

          7)Requires that the GGRF only be used to facilitate the  
            achievement of reductions of GHG emissions consistent with AB  
            32.  To this end, the Department of Finance, in consultation  
            with 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  









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            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 the California  
            Environmental Protection Agency (CalEPA), is required to  
            develop funding guidelines for administering agencies  
            receiving allocations of the GGRF funds that include a  
            component for how agencies should maximize benefits to  
            disadvantaged communities. 


          FISCAL EFFECT:  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.


          COMMENTS:  According to the author, SB 367 provides an update to  
          the 20 year-old Cannella Environmental Farming Act by adding  
          current issues, terms and research needs that expand and direct  
          newly available funds to the needs of California's ever changing  
          environment.  This bill is intended to provide California  
          agriculture opportunities to deal with and participate in the AB  
          32 goal of addressing climate change.


          Supporters of SB 367 state that California agriculture is  
          uniquely positioned to provide climate benefits by reducing  
          greenhouse gas emissions.  Research suggests some agricultural  
          practices will not only reduce greenhouse gas emissions, but can  
          also help to store atmospheric carbon in soils, trees, and other  
          plants.


          They further state: "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  









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          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 draw down  
          atmospheric carbon into soils and woody biomass."


          The opposition states that they have long held that CARB lacks  
          the authority to raise revenues by the auctioning of  
          "allowances" to meet the goals of AB 32."  Further, they  
          "support the cost- effective implementation of AB 32 and that  
          "auctioning runs contrary to the expressed goals of AB 32 for  
          maximizing the benefits and minimizing leakage risks and costs."


          When the Act was created in 1995, agriculture was beginning to  
          realize the impacts of various regulations from non-CDFA  
          agencies.  It was the intent of Assembly Member Cannella to give  
          CDFA and agriculture the ability to better inform other state  
          agencies and departments about how agriculture operates and the  
          impacts of new regulations on them.  Prior administrations have  
          not used this tool but with the implementation of AB 32, new  
          funding sources, and the changes provided by SB 367, CDFA can  
          use the Act to assist agriculture and processors in meeting the  
          challenges of change and compliance.


          The requirements of two appointees having been engaged in  
          research related to "environmentally sustainable agriculture  
          raises several questions.  There is no statutory definition for  
          "environmentally sustainable agriculture," making the selection  
          of these appointees potentially difficult.  The intent of the  
          Cannella Environmental Farming Act is clearly stated in Food and  
          Agriculture Code Section 566 of current law and with that  
          section's expansion within SB 367.  The committee may wish to  
          consider deleting the term "environmentally sustainable  
          agriculture" from the two references for appointees research  
          background, (page 5, lines 38, and page 6, line 9), and replace  









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          it with a reference to section 566, which reflects the intent of  
          the Act.  It would read: "... member who is engaged in the  
          conduct of scientific research related to the purpose or  
          purposes described in Section 566 of this chapter."  This would  
          clearly provide the type of research background needed to  
          qualify for Panel appointees.


          SB 367 is in conflict with SB 400 (Lara); both bills make  
          changes to Health and Safety Code Section 39719 in a different  
          manner.  The committee may wish to ask the author how this  
          conflict will be resolved.


          Background: 





          The Act requires 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 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  









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          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 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 AHSC and is implemented by  
          DOC.  The Council is responsible for overseeing SALC and  
          coordinating DOC with other agencies to develop program  
          guidelines.


          Guidelines for the SALC Program were approved by the 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 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  









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          proceeds to the state.  


          Budget allocations.  The 2014-15 Budget allocates $832 million  
          in GGRF revenues to a variety of transportation, energy, and  
          resource 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).


          Related Legislation:  AB 761 (Levine), currently in the Senate  
          Committee on Agriculture, requires, upon appropriation of  
          funding by the Legislature, CDFA to establish a grant program to  
          fund projects that increase carbon sequestration and GHG  
          emissions reduction on agricultural lands, ranches and  
          rangelands.





          SB 862 (Committee on Budget and Fiscal Review), Chapter 36,  
          Statutes of 2014.  Among other provisions, establishes the  
          Affordable Housing and Sustainable Communities Program,  
          administered by the Council, to reduce GHG emissions though  
          projects that implement land use, housing, transportation, and  
          agricultural land preservation practices.











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          SB 732 (Steinberg), Chapter 729, Statutes of 2008.  Establishes  
          the Council to coordinate member state agencies implementing  
          projects to improve air and water quality, affordable housing,  
          natural resource protection, transportation, and sustainable  
          land use planning; and to meet the goals of AB 32. 


          REGISTERED SUPPORT / OPPOSITION:




          Support



          California Climate & Agriculture


             Network (Co-Sponsor)


          Community Alliance with Family Farmers


            (Co-Sponsor)


          Alameda County Resource Conservation 


            District











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          American Farmland Trust


          Association of Compost Producers


          Big Sur Land Trust


          California Association of Resource


            Conservation Districts


          California Certified Organic Farmers


          California Compost Coalition


          California Farm Bureau Federation


          California Farm Link


          Californians Against Waste


          Community Environmental Council


          Ecological Farming Association


          Environmental Defense Center









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          Land Trust of Santa Cruz County


          Marin Resource Conservation District


          National Hmong American Farmers


          Open Space Authority Santa Clara County


          Pacific Coast Farmers' Market Association


          Peninsula Open Space Trust


          Resource Conservation District of Santa


             Cruz County


          Roots of Change


          Sonoma Resource Conservation District


          Sustainable Agriculture Education


          Sustainable Conservation










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          Valley Land Alliance 


          Wild Farm Alliance


          1 individual




          Opposition


          California Chamber of Commerce




          Analysis Prepared by:Jim Collin / AGRI. / (916)  
          319-2084