BILL ANALYSIS Ó
SENATE COMMITTEE ON ENVIRONMENTAL QUALITY
Senator Wieckowski, Chair
2015 - 2016 Regular
Bill No: SB 1350
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|Author: |Wolk |
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|Version: |2/19/2016 |Hearing | 4/6/2016 |
| | |Date: | |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant:|Rebecca Newhouse |
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SUBJECT: Agricultural lands: greenhouse gases: Healthy Soils
Program
ANALYSIS:
Existing law:
1) Under the California Global Warming Solutions Act of 2006
(also known as AB 32), requires the California Air Resources
Board (ARB) to determine the 1990 statewide greenhouse gas
(GHG) emissions level and approve a statewide GHG emissions
limit that is equivalent to that level, to 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 these regulations.
(Health and Safety Code §38500 et seq.)
2) Establishes the Greenhouse Gas Reduction Fund (GGRF) in the
State Treasury, requires all moneys, except for fines and
penalties, collected pursuant to a market-based mechanism be
deposited in the fund. (Government Code §16428.8)
3) Prohibits the state from approving allocations for a measure
or program using GGRF moneys except after determining that the
use of those moneys furthers the regulatory purposes of AB 32,
and requires moneys from the GGRF be used to facilitate the
achievement of reductions of GHG emissions in California.
(HSC §39712)
4) Requires the ARB to develop guidance on reporting and
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quantification methods for all state agencies that receive
appropriations from the GGRF. (Government Code §16428.9)
5) Under the Cannella Environmental Farming Act of 1995 (Food and
Agricultural Code §561 et seq.), requires:
a) The Department of Food and Agriculture (CDFA) to
establish an environmental farming program to provide
incentives to farmers whose practices promote the wellbeing
of ecosystems, air quality, and wildlife and their habitat.
b) The Secretary of CDFA to convene a five-member
Scientific Advisory Panel (Panel) on Environmental Farming
to advise federal, state, and local agencies on air, water,
and wildlife habitat issues, where three members are
appointed by the Secretary of CDFA, and one member each is
appointed by the Secretary of the California Environmental
Protection Agency and the Secretary of the Natural
Resources Agency. One member appointed by the Secretary of
CDFA is required to have at least five years of experience
in agriculture and represent production agriculture.
This bill:
1) Requires the Secretary of CDFA to appoint five members to the
panel, bringing the total Panel membership to seven, and
requires two of those members have at least five years of
experience in agriculture and represent production
agriculture.
2) Requires that at least one of the members appointed by the
Secretary of CDFA have experience in on-farm management
practices that reduce or sequester GHG emissions.
3) Requires ARB to consult with the Secretary of CDFA, and the
Panel, for development of on-farm GHG emission reduction
quantification methodology.
4) Requires CDFA, in consultation with the Panel, to implement a
Healthy Soils Program to provide incentives, including loans,
grants, research, and technical assistance or educational
materials and outreach, to farmers whose management practices
contribute to healthful soils and result in net long-term
on-farm greenhouse gas benefits.
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5) Requires CDFA to implement the program in accordance with
funding guidelines and quantification methodologies developed
by ARB.
6) Appropriates $20 million to CDFA to implement the Healthy
Soils Program.
Background
1) Agriculture and GHG reductions. According to ARB's 2014
Scoping Plan Update, agricultural sources in 2012 accounted
for about eight percent of California's total GHG emissions,
including methane (CH4), carbon dioxide (CO2), nitrous oxide
(N2O), and black carbon. California's agricultural GHG
emission inventory includes on-site emissions from animal
enteric fermentation, manure management, rice cultivation,
energy use (including fuel combustion), crop residue burning,
and soil management practices, particularly fertilizer and
manure applications.
However, various agricultural practices can significantly
reduce GHG emissions, and sequester carbon as well. GHG
reduction and sequestration strategies in the agricultural
sector include reduced energy usage through more efficient
watering systems, such as drip irrigation; reduced nitrogen
fertilizer usage; shifting tilling practices to improve soil
carbon retention; changing livestock feed and practices to
reduce livestock enteric rumination, manure management where
manure is converted to alternative fuels; and establishing
perennial vegetation on land retired from agriculture
production to sequester carbon in the plants and soil. In
addition, recent research also suggests that applications of
compost may result in greater carbon sequestration in soils.
Many of these land management practices to reduce or sequester
GHGs also result in significant environmental cobenefits, such
as improved water efficiency, improved air and water quality,
and greater resiliency of agricultural land to climate change.
2) Cap-and-trade auction revenue. Since November 2012, ARB has
conducted 14 cap-and-trade auctions, generating over $4
billion in proceeds to the state.
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State law specifies that the auction revenues must be used to
facilitate the achievement of GHG emissions reductions and
outlines various categories of allowable expenditures.
Statute further requires the Department of Finance, in
consultation with ARB and any other relevant state agency, to
develop a three-year investment plan for the auction proceeds,
which are deposited in the GGRF.
Disadvantaged communities. SB 535 (de León, Chapter 830,
Statutes of 2012) requires the Department of Finance, in the
investment plan, to allocate at least 25% of available moneys
in the GGRF to projects that provide benefits to disadvantaged
communities, and at least 10% to projects located within
disadvantaged communities.
To meet the SB 535 mandate, the Office of Environmental Health
Hazard Assessment, under CalEPA's guidance, developed a tool
(termed CalEnviroScreen) to assess and rank census tracts
across the state that are disproportionately affected by
multiple types of pollution and areas with vulnerable
populations. CalEPA has designated 25% of census tracts in
California as disadvantaged communities for the purpose of
investing cap-and-trade proceeds.
Additionally, SB 862 (Committee on Budget and Fiscal Review,
Chapter 36, Statutes of 2014) requires ARB to develop
guidelines on maximizing benefits for disadvantaged
communities by agencies administering GGRF funds.
Legal consideration of cap-and-trade auction revenues. The
2012-13 Budget analysis of cap-and-trade auction revenue by
the Legislative Analyst's Office noted that, based on an
opinion from the Office of Legislative Counsel, the auction
revenues should be considered mitigation fee revenues, and
their use requires that a clear nexus exist between an
activity for which a mitigation fee is used and the adverse
effects related to the activity on which that fee is levied.
Therefore, in order for their use to be valid as mitigation
fees, revenues from the cap-and-trade auction must be used to
mitigate GHG emissions or the harms caused by GHG emissions.
In 2012, the California Chamber of Commerce filed a lawsuit
against the ARB claiming that cap-and-trade auction revenues
constitute illegal tax revenue. In November 2013, the
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superior court ruling declined to hold the auction a tax,
concluding that it is more akin to a regulatory fee. In
February of 2014, the plaintiffs filed an appeal with the 3rd
District Court of Appeal in Sacramento. That case is
currently pending.
Budget allocations. SB 862 (Committee on Budget and Fiscal
Review, Chapter 36, Statutes of 2014) established a long-term
cap-and-trade expenditure plan by continuously appropriating
portions of the funds for designated programs or purposes.
The legislation appropriates 25% for the state's high-speed
rail project, 20% for affordable housing and sustainable
communities grants, 10% to the Transit and Intercity Rail
Capital Program, and 5% for low-carbon transit operations.
The remaining 40% is available for annual appropriation by the
Legislature.
The Governor's 2016-17 proposed budget appropriates over $3
billion to a variety of programs and projects in the
transportation, energy, natural resources, and waste diversion
sectors.
3) Healthy Soils Initiative and the budget. In his 2015-16
budget proposal, Governor Brown directed $10 million from the
GGRF toward a new "Healthy Soils Initiative" to increase
carbon in soil to improve soil health, agricultural
productivity, soil water-holding capacity, and decreased
sediment erosion. Governor Brown directed CDFA, under its
existing authority provided by the Cannella Environmental
Farming Act, to coordinate with other key agencies to work on
several new initiatives. CDFA has since developed five action
measures: protect and restore soil carbon; identify funding
opportunities, including market development; provide research,
education and technical support; increase governmental
efficiencies to enhance soil health on public and private
lands; and ensure interagency coordination and collaboration.
However, no appropriations to CDFA for a "Healthy Soils"
program were approved by the Legislature last year.
The Governor's 2016-17 budget proposal appropriates $75
million to CDFA to implement three separate programs, all
under the heading of Climate Smart Agriculture. Of the $75
million, $20 million is proposed to continue CDFA's existing
State Water Efficiency and Enhancement Program (SWEEP), which
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provides financial incentives to growers to implement
efficient water distribution systems; $35 million is proposed
for continuation of CDFA's existing Dairy Digester Research
and Development Program to provide grants for the
implementation of dairy digesters and related management
practices to reduce GHG emissions; and $20 million is proposed
for the development of a Healthy Soils Initiative intended to
capture atmospheric carbon and increase carbon levels in
agricultural soils.
Comments
1) Purpose of Bill. According to the author, "California's
agriculture industry contributes more than $40 billion
annually to our state's economy. Climate change, however,
threatens the continued viability of this industry. The
latest science suggests that future challenges will include
rising temperatures, increases in extreme weather events,
constrained water resources, reduced winter chilling hours,
and rising sea levels. As we enter the fourth year of an
extreme drought, it is clear that farmers and ranchers are on
the frontlines of climate impacts.
"California agriculture is also uniquely positioned to provide
climate benefits by reducing greenhouse gas emissions.
Research funded by the California Energy Commission's Public
Interest Energy Research program suggests that some
agricultural practices will not only reduce greenhouse gas
emissions, but can also help to store atmospheric carbon in
soils, trees and other woody plants. Many of the most
effective climate protection strategies provide additional
environmental co-benefits such as enhanced on-farm resilience
to climate impacts, improved air and water quality, water
conservation, enhanced wildlife habitat and healthy rural
communities.
"The Environmental Farming Act of 1995 (Cannella, 1995)
created the Environmental Farming Panel, an advisory committee
to the California Department of Food and Agriculture. The
panel was created to promote farming practices that
"contribute to the well-being of ecosystems, air quality and
wildlife and their habitat." However, the 1995 Act did not
anticipate the agricultural challenges and opportunities
presented by climate change and should be updated.
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SB 1350 would expand the membership of the Science Advisory
Panel, as authorized by the Environmental Farming Act of 1995.
More specifically, this proposal would add two additional
members to the Science Advisory Panel, one which would have
experience in production agriculture and another member who
would have experience and training in on-farm management
practices that reduce greenhouse gas emissions and/or
sequester carbon. Expanding the membership of the Science
Advisory Panel, in this manner, will add to the portfolio of
scientific knowledge represented and will assist in the
implementation of the Healthy Soils Program to develop and
promote on-farm management practices that have the benefit of
reducing greenhouse gas, sequestering carbon and ultimately,
developing [soil organic matter] in California's soils."
2) Implementing a budget proposal. As noted in the background,
the Governor's 2016-17 budget proposal appropriates $20
million to CDFA for the development of a Healthy Soils
Initiative intended to capture atmospheric carbon and increase
carbon levels in agricultural soils. As SB 1350 also includes
a $20 million appropriation to CDFA for a Healthy Soils
Program, the bill seems to align with the Governor's proposed
budget for the current fiscal year, in addition to providing
the implementing statutory language.
3) Piece by piece. GGRF investments must facilitate the
achievement of GHG emissions reductions. However, after that
requirement is fulfilled, there are a number of other policy
goals that should be considered, including benefits to
environmental quality, resource protection, public health and
the economy, as well as benefits to disadvantaged communities.
Various policy committees have been referred proposals for
investing GGRF moneys, and these committees will likely
consider whether proposals meet basic statutory requirements
and align with legislative priorities. However, in order to
create an optimized investment strategy from GGRF moneys,
proposals should not be considered in isolation, but be
assessed in aggregate to evaluate which set of proposals best
meets the requirements of the fund, uses resources most
efficiently, and maximizes policy objectives. As the budget
committees are considering the Governor's proposal of GGRF
expenditures, the budget process may be an ideal way to
comprehensively consider the numerous policy bills, including
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SB 1350, that propose new programs funded through the GGRF.
4) Criteria for eligible projects? SB 1350 specifies that the
Healthy Soils Program will provide incentives to farmers whose
management practices contribute to healthful soils and result
in net long-term on-farm greenhouse gas benefits.
The bill does not define "healthful soils" or provide clarity
for what is meant by "greenhouse gas benefits." Consequently,
it is not clear what types of projects are eligible for
funding under the program.
Additionally, SB 1350 does not specify what prioritization
will be given to projects. Will prioritization be based on
GHG emissions reduction or sequestration potential? Will
prioritization also take into account cobenefits? If so, what
types of cobenefits will be evaluated? Should CDFA be required
to create program guidelines?
As the bill lacks detail in terms of program goals, project
eligibility, and selection criteria, it is unclear to what
extent the program will result in GHG emissions reductions.
5) Research, outreach, and technical assistance. SB 1350
specifies that incentives provided to farmers under the
program can take the form of loans, grants, research,
technical assistance, educational materials, and outreach. It
is unclear to what extent research, technical assistance, and
educational materials will result in GHG emissions reductions,
and therefore unclear whether these projects would be
appropriate expenditures from the GGRF.
6) Demonstration projects. SB 1350 provides that the program may
include funding of demonstration projects on farms that
further the goals of the program. As noted in comment #3, the
program goals are unclear. Additionally, how will the
demonstration projects differ from the other component of the
program that provides incentives to farmers for healthful
soils and GHG benefits? What will the demonstration element
of the Healthy Soils Program seek to demonstrate?
7) Work in progress. As noted earlier, a relatively recent body
of research has reported on the multiple environmental
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benefits that result from various land and soil management
practices in the agricultural sector. However, as there is
very little specificity in the bill regarding program goals
and implementation, it is unclear at this point how the
Healthy Soils Program will operate to obtain those benefits
and advance the goals of AB 32 to reduce GHG emissions. As
the bill moves forward, the author and sponsor should work to
provide more direction with regard to goals, implementation,
and project eligibility and selection criteria, to ensure the
Healthy Soils Program established in SB 1350 will result in
GHG emissions reductions, and maximize environmental
cobenefits.
Related/Prior Legislation
SB 367 (Wolk, 2015) would recast and expand the membership and
the duties of CDFA's Science Advisory Panel on Environmental
Farming and would appropriate $25 million from the GGRF to CDFA
for the establishment of a new grant program to support on-farm
practices that reduce GHG emissions and increase carbon storage
in soil. SB 367 was held on the Assembly Appropriations suspense
file.
AB 761 (Levine, 2015) provides $50 million to the Department of
Conservation to establish a grant program to fund projects that
increase carbon sequestration in agricultural soils. AB 761 was
held on the Senate Appropriations suspense file.
DOUBLE REFERRAL:
If this measure is approved by the Senate Environmental Quality
Committee, the do pass motion must include the action to re-refer
the bill to the Senate Agriculture Committee.
SOURCE: California Department of Food and Agriculture
SUPPORT:
California Trout
Californians Against Waste
Californians for Pesticide Reform
Carbon Cycle Institute
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Environmental Working Group
Land Trust of Santa Cruz County
Lutheran Office of Public Policy, California
National Audubon Society
Pesticide Action Network
Wholly H2O
OPPOSITION:
CalTax
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