BILL ANALYSIS Ó SB 367 Page 1 Date of Hearing: August 26, 2015 ASSEMBLY COMMITTEE ON APPROPRIATIONS Jimmy Gomez, Chair SB 367 (Wolk) - As Amended August 17, 2015 ----------------------------------------------------------------- |Policy |Agriculture |Vote:|7 - 0 | |Committee: | | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | |Natural Resources | |8 - 1 | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | | | | | | | | | | | | | | | ----------------------------------------------------------------- Urgency: No State Mandated Local Program: NoReimbursable: No SUMMARY: This bill establishes a $25 million grant fund, upon appropriation by the Legislature from the Greenhouse Gas Reduction Fund (GGRF), for projects that reduce greenhouse gas (GHG) emissions from agricultural operations, as specified. SB 367 Page 2 This bill expands and revises the membership and duties of the California Department of Food and Agriculture's (CDFA) Environmental Farming Act Science Advisory Panel (Panel) to include on-farm practices to reduce GHG emissions and increase carbon storage in soil. Specifically, this bill: 1)Renames CDFA's Scientific Advisory Panel on Environmental Farming, the Environmental Farming Act Advisory Panel. 2)Expands CDFA's environmental farming program (Program) to specifically include activities related to the reduction of on-farm GHG emissions and increased carbon storage in agricultural soils and woody biomass. 3)Specifies that incentives provided by the Program may include grants, loans, research, technical assistance, or educational materials and outreach. 4)Authorizes CDFA to support on-farm practices and activities by providing permit assistance and coordination, and by funding demonstration projects that further the goals of the program. 5)Adds the impact of agriculture on climate change to the list of issues that may be addressed by the Panel when providing advice and assistance to government agencies. 6)Revises the membership of the Panel to consist of nine members as specified SB 367 Page 3 7)Authorizes a state agency that receives data recommended by the Panel to adopt and incorporate the data into the appropriate program. If a state agency does not use the data recommended, requires the agency to provide the Panel with a written statement of reasons. 8)Requires the Panel to submit a biennial report on their work as specified. 9)Requires the Air Resources Board (ARB) to provide guidance on GGRF expenditures. 10)Requires the Strategic Growth Council (SGC) to establish and administer a grant program, as part of the Sustainable Agricultural Lands Conservation (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, and provide other cobenefits on working agricultural operations. Requires at least 2% of GGRF proceeds to be appropriated to SGC for the grant program. 11)Requires CDFA to develop and implement a grant program to reduce GHG emissions and increase carbon storage in agricultural soils and woody biomass, including: a) Soil-building and carbon sequestration practices. SB 367 Page 4 b) Irrigation efficiency and water conservation measures. c) Alternative energy production and energy efficiency. d) Wildlife habitat conservation. 12)Specifies that $25 million from the GGRF, upon appropriation by the Legislature, will be available to CDFA for the above grant program and to carry out the purposes of the bill. 13)Requires the Secretaries of CDFA and NRA to enter into a memorandum of agreement among CDFA, the Department of Conservation, and other relevant state agencies to ensure the greatest possible coordination and collaboration in implementing these programs and projects. FISCAL EFFECT: 1)Cost pressures of up to $25 million to fund the CDFA grant program including annual CDFA grant administrative costs of an estimated $2 million (GGRF). 2)Increased initial ARB costs of $2 million and ongoing annual costs of $1.2 to $1.6 million to provide guidance, develop quantification methodologies for grant programs, and evaluate projects. 3)Additional unknown CDFA costs to expand the membership and SB 367 Page 5 duties of the Farming Act Science Advisory Panel. 4)Unknown funding shifts within the SGC grant program. COMMENTS: 1)Purpose. According to the author, this bill modernizes the Environmental Farming Act of 1995 to ensure that California maximizes its opportunities to achieve voluntary GHG emission reductions in the state's agriculture sector by developing and promoting projects and on-farm practices that also have other environmental and health benefits. Upon appropriation, this bill will also direct $25 million to the CDFA for a grant program to support on-farm demonstration projects, and will direct 2% of the GGRF annual proceeds to the Strategic Growth Council's Sustainable Agricultural Lands Conservation Program. 2)Background. The Cannella Environmental Farming Act of 1995 requires CDFA to establish and oversee an environmental farming program to provide incentives to farmers with practices that promote the well-being of ecosystems, air quality, and wildlife and their habitat. The act also created the Scientific Advisory Panel on Environmental Farming (Panel) to advise and assist government agencies, provide recommendations, and conduct scientific data reviews. The Panel is to identify incentives to encourage agricultural practices with environmental benefits. SB 367 Page 6 The California Global Warming Solutions Act of 2006 (AB 32, Chapter 488, Statutes of 2006), requires ARB 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. Current law 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 the ARB and any other relevant state agencies, is required to develop a three-year investment plan for GGRF proceeds. The investment plan must allocate a minimum of 25 percent of the funds to projects that benefit disadvantaged communities and to allocate 10 percent of the funds to projects located within disadvantaged communities. Additionally, ARB, in consultation with 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 n communities. Analysis Prepared by:Jennifer Galehouse / APPR. / (916) 319-2081 SB 367 Page 7