BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON NATURAL RESOURCES AND WATER
                             Senator Fran Pavley, Chair
                                2015 - 2016  Regular 

          Bill No:            SB 1020         Hearing Date:    April 12,  
          2016
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          |Author:    |Wieckowski             |           |                 |
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          |Version:   |March 29, 2016                                       |
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          |Urgency:   |No                     |Fiscal:    |No               |
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          |Consultant:|William Craven                                       |
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                        Subject:  Land use:  mitigation lands

          BACKGROUND AND EXISTING LAW
          Existing law (Government Code Section 65967) authorizes an  
          agency required to mitigate its environmental impacts to pay for  
          that mitigation in several ways including transferring an  
          interest in land to a third party, providing funds to third  
          parties to acquire land or easements or to undertake the  
          mitigation, or to create an endowment under specified terms. 

          For mitigation that will not be completed prior to the start of  
          activities that will affect wildlife species listed under the  
          California endangered species act, the Department of Fish and  
          Wildlife (DFW) requires that a trust account or other form of  
          approved security document is established to ensure that funding  
          is available to carry out mitigation and monitoring measures in  
          the event the applicant fails to complete these activities. DFW  
          generally requires that the performance security be in the form  
          of an irrevocable letter of credit, surety bond, a bank trust or  
          escrow account, or another form of security approved in writing  
          in advance.

          PROPOSED LAW
          This bill would create another way for a public entity,  
          specifically the East Bay Regional Parks District, to fulfill  
          its mitigation responsibilities. The bill states that in lieu of  
          an endowment or other method mentioned above, that an entity may  
          do all of the following: 








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             A)   Possess budget reserves in excess of the funds required  
               to meet the mitigation obligation;
             B)   Retain permanent stewardship and maintenance staff to  
               manage the resource; and does both of the following: 
               1)     Acts as an agent for the state to acquire, plan, and  
                 develop units of the state park system pursuant to  
                 section 5003.03 of the Public Resources Code. 
               2)     Works in collaboration with the state and other  
                 local entities to implement a project pursuant to the  
                 Natural Communities Conservation Planning Act. 

          ARGUMENTS IN SUPPORT
          According to the author, East Bay Regional Parks District has an  
          80-year history of responsible fiscal and environmental  
          governance and is organized to serve a steward of parklands in  
          perpetuity. In his view, it is unreasonable to require districts  
          to set aside mitigation funds which could be better used for  
          staffing to actually manage protected land. He believes that the  
          district should be able to rely on proven asset liquidity as an  
          alternative form of mitigation. 

          Save Mount Diablo works closely with the district and stated  
          that any concern about changing the provisions in this law  
          should not apply to the district because of its record, funding,  
          staff, and experience that can't be matched by any other public  
          agency. 

          ARGUMENTS IN OPPOSITION
          A coalition of land trusts and other conservation groups,  
          including the California Council of Land Trusts (CCLT), is in  
          opposition. CCLT and others have built California's endowment  
          procedures in a series of 5 bills over the past several years  
          that it considers to be the nation's premier law regarding how  
          mitigation endowments are held and managed. The coalition is  
          very concerned that the exception for East Bay Regional Parks  
          inevitably opens the door to a myriad of exceptions for every  
          agency not wishing to meet mitigation endowment requirements-a  
          policy it states has been rejected on three previous occasions  
          in both houses of the California Legislature. 

          The coalition points out that other funding mechanisms are  
          specifically allowed in existing law (such as performance bonds)  
          for the long-term stewardship of the mitigation property. It  
          considers SB 1020 as "jumping completely past other funding  








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          mechanisms to completely exempt selected public parties from any  
          form of dedicated financial assurance for mitigation lands." 

          COMMENTS
          This bill is a work in progress and it may turn out that in this  
          case the absence of a bill may define success. In conversation  
          with the regional park district and DFW, staff is not convinced  
          the two entities are talking with each other as closely as they  
          could or should. 

          For example, the district's estimates of what may be required in  
          an endowment vastly exceed what the department thinks may be  
          required. The district's estimate is based on an array of  
          current and future projects that it is not sure DFW is aware of.  
          DFW thinks it may be aware of all the proposed projects. 

          That said, because this is an area of the law that DFW and other  
          parties worked for several years to solidify, DFW and many of  
          those other parties are very reluctant to carve out another  
          exemption that could be exploited by third parties that are far  
          less successful than the district in protecting natural  
          resources. 

          The proposed language on budget reserves does not work for the  
          department because a budget reserve one month may not be there  
          the next. 

          On the other hand, in a quick conversation with the district,  
          and based on the information on the DFW website, it appears that  
          at least some potential common ground exists regarding the use  
          of irrevocable letters of credit. These are relatively  
          inexpensive, would not tie up a lot of the district's capital,  
          and can be constructed to meet DFW's requirement of permanence. 

          The suggested amendments delete the budget reserve provision,  
          add a provision for an irrevocable letter of credit or trust  
          funds, and clarify that the district retains the obligation to  
          maintain the mitigation consistent with permit requirements  
          which ensures that the state will not be eventually liable for  
          any mitigation costs. It also narrows the applicability of this  
          proposed new section to special districts established to create  
          and operate parks. With those additional provisions it does not  
          seem necessary to include the other provisions regarding section  
          5003.3 of the Public Resources Code or the Natural Communities  








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          Conservation Planning Act. 

          These amendments are not intended to be a final work product.  
          They are intended to set the stage for continued conversations  
          between the parties and represent a good-faith effort based on  
          available information. Committee staff should be involved in  
          subsequent conversations and all future amendments and the  
          Committee of course reserves the right to re-hear the bill at a  
          future time. 

          SUGGESTED AMENDMENTS 
          
             1.   Add restriction that the new language only applies to  
               entities created pursuant to Public Resources Code Section  
               5500. 
             2.   Page 4, line 15. Delete budget reserves provision and  
               substitute irrevocable letter of credit or trust funds. 
             3.   Page 4, line 17. Add provision that in addition to  
               entity retaining permanent stewardship and maintenance  
               staff, that it will also maintain mitigation obligations  
               consistent with permit requirements, and insure that there  
               will be no state financial liabilities incurred through a  
               failure to maintain those mitigation obligations. 
             4.   Delete page 4, lines 19-25. 

          
               
          SUPPORT
          East Bay Regional Park District (sponsor)
          John Muir Land Trust
          Save Mount Diablo


          OPPOSITION
          California Council of Land Trusts
          Center for Natural Lands Management
          Defenders of Wildlife
          Sequoia Riverlands Trust
          Sierra Foothill Conservancy
          The Nature Conservancy 
          Wildlife Heritage Foundation
          
                                      -- END --
          








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