Existing law authorizes the Department of Forestry and Fire Protection (CalFire) to implement a program in urban forestry to encourage better tree management and planting in urban areas to increase integrated, multibenefit projects by assisting urban areas with innovative solutions to problems, including greenhouse gas emissions, public health impacts of poor air and water quality, urban heat island effect, stormwater management, water shortages, lack of green space, lack of urban parks that are accessible to pedestrians, vandalism, and insufficient tree maintenance. Existing law authorizes the Department of Resources Recycling and Recovery (CalRecycle) to develop a program to increase the use of compost products in agricultural applications.

This bill would enact the Community Climate and Drought Resilience Program of 2016 and would require CalFire to review the urban forestry program and, if necessary, revise the program to provide funding priority to multibenefit carbon sequestration projects and to establish local or regional targets for urban tree canopy. The bill would require CalRecycle, by July 1, 2017, to develop and implement a program that provides incentives for certain projects that increase drought resilience and result in quantifiable reductions in the emissions of greenhouse gases through increased carbon sequestration in urban and rural areas.

Existing law authorizes the Department of Forestry and Fire Protection (CalFire) to implement a program in urban forestry to encourage better tree management and planting in urban areas to increase integrated, multibenefit projects by assisting urban areas with innovative solutions to problems, including greenhouse gas emissions, public health impacts of poor air and water quality, urban heat island effect, stormwater management, water shortages, lack of green space, lack of urban parks that are accessible to pedestrians, vandalism, and insufficient tree maintenance. Existing law authorizes the Department of Resources Recycling and Recovery (CalRecycle) to develop a program to increase the use of compost products in agricultural applications.

This bill would enact the Community Climate and Drought Resilience Program of 2016 and would require CalFire to review the urban forestry program and, if necessary, revise the program to provide funding priority to multibenefit carbon sequestration projects and to establish local or regional targets for urban tree canopy. The bill would require CalRecycle, by July 1, 2017, to develop and implement a program that provides incentives for certain projects that increase drought resilience and result in quantifiable reductions in the emissions of greenhouse gases through increased carbon sequestration in urban and rural areas.

Existing law establishes the California Conservation Corps in the Natural Resources Agency as a service organization providing employment and training for young men and women. Existing law authorizes the Director of the California Conservation Corps, implementing the corps program, to recruit and employ corpsmembers and to adopt criteria for employment in the program.

This bill would require the Department of Resources Recycling and Recovery to award grants to local conservation corps certified by the California Conservation Corps for projects that improve the climate and drought resiliency of urban canopies, community landscaping, and urban greening efforts through the use of various water conservation methods, including the application of compost and mulch. The project would require the department to consider certain factors in selecting a project for a grant, and would require the department to give priority to projects that would aid urban canopies at the greatest risk from drought. The bill would require a project that receives a grant to leverage state and local funds. The bill would authorize the department, in coordination with local water agencies, to develop a pilot program to study the use of compost in landscaping to assist local water agencies in increasing groundwater supply and reducing evaporation.

SENATE COMMITTEE ON APPROPRIATIONS

Senator Ricardo Lara, Chair

2015 - 2016 Regular Session

SB 1294 (Pavley) - The Community Climate and Drought Resilience Program of 2016

This bill meets the criteria for referral to the Suspense File.

Bill Summary:

SB 1294 requires the California Environmental Protection Agency (CalEPA) and the Department of Food and Agriculture (CDFA), in coordination with specified state entities, to develop, annually update, and post to the CalEPA’s website, recommendations for promoting the use of compost throughout the state by

January 1, 2018. The bill would also require CalEPA and CDFA to assess state programs to determine how those programs may increase the use of compost for purposes of increasing carbon sequestration in urban and rural areas. Finally, the bill would require the California Department of Fire and Forestry (CalFIRE) to review the urban forestry program implemented pursuant to the California Urban Forestry Act of 1978, and revise the program to achieve specified goals.

Fiscal Impact:

• Unknown, but significant costs to CalEPA and CDFA, (Cap and Trade) to develop recommendations for promoting the use of compost throughout the state, and assessing programs.
• Unknown, but significant costs to CalFIRE (Cap and Trade) to review and revise the urban forestry program.
• Minor costs to the Department of Resources Recycling and Recovery, the State Water Resources Control Board, and the State Air Resources Board for consultation.

Background:

1. Carbon sequestration.
   
   According to the U.S. Geological Survey (USGS), carbon sequestration is used to describe both natural and deliberate processes by which CO₂ is either removed from the atmosphere or diverted from emission sources and stored in the ocean, terrestrial environments (vegetation, soils, and sediments), and geologic formations.
   
   Terrestrial sequestration (sometimes referred to as “biological sequestration”) is typically through forest and soil conservation practices that enhance the storage of carbon (such as restoring and establishing new forests, wetlands, and grasslands) or reduce CO₂ emissions (such as reducing agricultural tillage and suppressing wildfires).
   
2. Carbon storage in soils.
   
   According to the U.S. Environmental Protection Agency (US EPA), the stock of carbon in soils is the result of a balance between inputs (usually plant matter) and outputs (primarily CO₂ flux during decomposition of organic matter). The entire portion of carbon held in the soil and undergoing decomposition is collectively referred to as “soil organic matter” (SOM) or “soil organic carbon”.
   
   According to Dr. Jeff Creque of the Carbon Cycle Institute, to a large degree, soil productivity is linked to the amount of carbon it contains. Carbon improves the tilth and water retention capabilities of soil and it is a central element in SOM, that component of dirt that contains all the biological residues and byproducts that make plants grow. Soils act as a sink for carbon, storing exponentially more carbon than persists in the atmosphere as CO₂ along with more potent GHGs such as methane and nitrous oxide. By increasing soil carbon, soil fertility and water retention capacity is increased. This results in more robust vegetation, which captures more carbon from the atmosphere. The carbon is stored underground in the roots, residual dry matter (on the surface) and in enhanced populations of microorganisms in the soil.
3. Compost.
   
   According to CalRecycle, compost is the controlled decomposition of organic material such as leaves, twigs, grass clippings, and food scraps. A wide range of materials may be composted, but they must consist of principally organic components (i.e. carbon-containing remnants or residues of life processes). Compost products may vary since the properties of any given compost depend on the nature of the original feedstock and the conditions under which it was decomposed. However, mature compost is normally dark brown in color and should have an even texture and a pleasant, earthy aroma.
   
   Composting is a means of controlling and accelerating the decomposition process. An overabundance of soil organisms is responsible for transforming the organic matter in compost into carbon dioxide, water, humic substances (components of soil that affect physical and chemical properties and improve soil fertility) and energy in the form of heat.
   
   Composting diverts organic materials out of landfills and turns it into a product that is useful for soil restoration. In addition to improving the quality of the soil, compost prevents soil erosion, reduces the need for chemical fertilizers, herbicides, and pesticides, and enables better soil water retention.
4. Regulating compost.
   1. A coordinated effort.
      
      Multiple state agencies are involved with regulating composting. CalRecycle permits compostable material handling operations and facilities. ARB is charged with monitoring and regulating sources of emissions of GHGs that cause global warming in order to reduce GHG emissions. CDFA annually inspects compost facilities selling to organic food producers for adherence to National Organic Program regulations. SWRCB and the regional water quality control boards issue individual waste discharge permits for larger composting facilities.
      
      Last year, the Legislature passed, and the Governor signed, AB 1045 (Irwin, Chapter 596, Statutes of 2015) which requires CalEPA, in coordination with relevant agencies, to develop and implement policies to aid in diverting organic waste from landfills by promoting the use of agricultural, forestry, and urban organic waste as feedstock for compost and by promoting the appropriate use of that compost throughout the state. In addition, AB 1045 requires the group of agencies to develop recommendations for promoting organic waste processing and recycling infrastructure statewide and update annually thereafter.
   2. Healthy Soils Initiative.
      
      The term “healthy soils” refers to ensuring that agricultural soils have adequate soil organic matter or soil carbon content. Increasing the amount of soil organic matter can provide multiple benefits, such as: being a source of nutrients for plants, water retention, effect on the persistence and biodegradability of pesticides, carbon sink that prevents the escape of CO₂ and methane GHG to the atmosphere, soil structure stability and reduced erosion.
      
      In his 2015-16 budget proposal, Governor Brown directed $10 million from 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 the California Department of Food and Agriculture (CDFA), under its existing authority provided by the Canella 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.
5. Farming and GHG reductions.
   
   Various agricultural practices can significantly reduce GHG emissions, and sequester carbon. 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 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.
6. Safeguarding California.
   
   According to the Senate Natural Resources & Water Committee’s analysis on this bill, Safeguarding California is a climate adaptation strategy, which was released in early 2016, provides an integrated climate adaptation and resiliency program. The report highlights that many effective climate adaptation strategies cross “sectoral and jurisdictional boundaries” and responding to climate risks requires coordination across agencies and political boundaries. Later versions of Safeguarding California are expected to continue the emphasis on cross-sector integration and complementarity of approaches to promote climate resiliency and adaptation.
7. Urban forestry program.
   
   According to the Senate Committee on Natural Resources & Water’s analysis on this bill, CalFire’s urban forestry program leads the effort to advance the development of sustainable urban and community forests in California and CalFire works closely with numerous groups to achieve these aims. Existing law recognizes that urban forestry projects may provide multiple benefits to the community including, for example, increasing water supply, promoting energy conservation, reducing GHG emissions and improving public health, among others.
8. 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. 

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 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 proposed 2016-17 budget allocates $3.1 billion GGRF revenues to a variety of transportation, energy, and resources programs aimed at reducing GHG emissions.

Proposed Law:

This bill:

• Requires the CalEPA and CDFA, in coordination with specified state entities, to develop, and annually update, recommendations for promoting the use of compost throughout the state by January 1, 2018.
• Requires the recommendations to be posted on CalEPA’s website
• Requires CalEPA and CDFA to assess state programs to determine how those programs may increase the use of compost for purposes of increasing carbon sequestration in urban and rural areas.
• Requires the California Department of Fire and Forestry review the urban forestry program implemented pursuant to the California Urban Forestry Act of 1978, and revise the program to achieve specified goals.

-- END --

SENATE COMMITTEE ON ENVIRONMENTAL QUALITY

Senator Wieckowski, Chair

2015 - 2016 Regular

Bill No: SB 1294

SUBJECT: The Community Climate and Drought Resilience Program of 2016

ANALYSIS:

Existing law:

1. Requires the California Environmental Protection Agency (CalEPA), in coordination with the State Water Resources Control Board (SWRCB), the Air Resources Board (ARB), and the Department of Food and Agriculture (CDFA), to establish policies to encourage recycling of organic waste and coordinate oversight and regulation of organic waste recycling facilities. (Public Resources Code (PRC) §422649.87 et seq.)
   
   1. Requires CalEPA, in coordination with specified agencies, to develop and implement policies to aid in diverting organic waste from landfills by promoting the use of agricultural, forestry, and urban organic waste as a feedstock for compost and by promoting the appropriate use of that compost throughout the state.
      
   2. Requires CalEPA to promote a goal of reducing at least 5 million metric tons of greenhouse gas emissions (GHGs) annually through the development of working lands, such as agricultural lands, land used for forestry, and rangeland.
      
   3. Requires specified agencies to assess the state’s progress towards developing the organic waste processing and recycling infrastructure necessary to meet the specified state goals, such as the May 2015 Short-Lived Climate Pollutant Reduction Strategy and the Healthy Soils Initiative.
      
   4. Requires specified agencies to develop recommendations for promoting organic waste processing and recycling infrastructure statewide no later than January 1, 2017, and update annually thereafter.
      
2. Establishes the California Urban Forestry Act of 1978 to expand and improve the management of trees and related vegetation in communities throughout the state. (PRC §4799.06 et seq.).
   
3. 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 and requires the Department of Finance, in consultation with ARB and any other relevant state agency, to develop, as specified, a three-year investment plan for the moneys deposited in the GGRF. (Government Code §16428.8).
4. 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. (Health and Safety Code §39712).
   

This bill:

1. Enacts the Community Climate and Drought Resilience Program of 2016.
   
2. Makes several findings and declarations.
   
3. Requires the Department of Forestry and Fire Protection (CalFire) to review urban forestry program implementation and revise the program, if necessary, to provide funding priority to multibenefit carbon sequestration projects and to establish local or regional targets for urban tree canopy.
   
4. By July 1, 2017, requires CalRecycle, in consultation with relevant state agencies, to establish an incentives program for the use of compost from organic waste in farming and landscaping practices that increase drought resiliency and result in GHG emission reductions through increased carbon sequestration in urban and rural areas.
   
5. Requires CalRecycle to contract with state-certified conservation corps to assist in community outreach, compost delivery and application, and other urban greening projects.
   

Background

1. Carbon sequestration.
   
   According to the U.S. Geological Survey (USGS), carbon sequestration is used to describe both natural and deliberate processes by which CO₂ is either removed from the atmosphere or diverted from emission sources and stored in the ocean, terrestrial environments (vegetation, soils, and sediments), and geologic formations.
   
   Terrestrial sequestration (sometimes referred to as “biological sequestration”) is typically through forest and soil conservation practices that enhance the storage of carbon (such as restoring and establishing new forests, wetlands, and grasslands) or reduce CO₂ emissions (such as reducing agricultural tillage and suppressing wildfires).
   
2. Carbon storage in soils.
   
   According to the U.S. Environmental Protection Agency (US EPA), the stock of carbon in soils is the result of a balance between inputs (usually plant matter) and outputs (primarily CO₂ flux during decomposition of organic matter). The entire portion of carbon held in the soil and undergoing decomposition is collectively referred to as “soil organic matter” (SOM) or “soil organic carbon”.
   
   According to Dr. Jeff Creque of the Carbon Cycle Institute, to a large degree, soil productivity is linked to the amount of carbon it contains. Carbon improves the tilth and water retention capabilities of soil and it is a central element in SOM, that component of dirt that contains all the biological residues and byproducts that make plants grow. Soils act as a sink for carbon, storing exponentially more carbon than persists in the atmosphere as CO₂ along with more potent GHGs such as methane and nitrous oxide. By increasing soil carbon, soil fertility and water retention capacity is increased. This results in more robust vegetation, which captures more carbon from the atmosphere. The carbon is stored underground in the roots, residual dry matter (on the surface) and in enhanced populations of microorganisms in the soil.
   
3. Compost.
   
   According to CalRecycle, compost is the controlled decomposition of organic material such as leaves, twigs, grass clippings, and food scraps. A wide range of materials may be composted, but they must consist of principally organic components (i.e. carbon-containing remnants or residues of life processes). Compost products may vary since the properties of any given compost depend on the nature of the original feedstock and the conditions under which it was decomposed. However, mature compost is normally dark brown in color and should have an even texture and a pleasant, earthy aroma.
   
   Composting is a means of controlling and accelerating the decomposition process. An overabundance of soil organisms is responsible for transforming the organic matter in compost into carbon dioxide, water, humic substances (components of soil that affect physical and chemical properties and improve soil fertility) and energy in the form of heat.
   
   Composting diverts organic materials out of landfills and turns it into a product that is useful for soil restoration. In addition to improving the quality of the soil, compost prevents soil erosion, reduces the need for chemical fertilizers, herbicides, and pesticides, and enables better soil water retention.
   
4. Regulating compost.
   
   1. A coordinated effort.
      
      Multiple state agencies are involved with regulating composting. CalRecycle permits compostable material handling operations and facilities. ARB is charged with monitoring and regulating sources of emissions of GHGs that cause global warming in order to reduce GHG emissions. CDFA annually inspects compost facilities selling to organic food producers for adherence to National Organic Program regulations. SWRCB and the regional water quality control boards issue individual waste discharge permits for larger composting facilities.
      
      Last year, the Legislature passed, and the Governor signed, AB 1045 (Irwin, Chapter 596, Statutes of 2015) which requires CalEPA, in coordination with relevant agencies, to develop and implement policies to aid in diverting organic waste from landfills by promoting the use of agricultural, forestry, and urban organic waste as feedstock for compost and by promoting the appropriate use of that compost throughout the state. In addition, AB 1045 requires the group of agencies to develop recommendations for promoting organic waste processing and recycling infrastructure statewide and update annually thereafter.
      
   2. Healthy Soils Initiative.
      
      The term “healthy soils” refers to ensuring that agricultural soils have adequate soil organic matter or soil carbon content. Increasing the amount of soil organic matter can provide multiple benefits, such as: being a source of nutrients for plants, water retention, effect on the persistence and biodegradability of pesticides, carbon sink that prevents the escape of CO₂ and methane GHG to the atmosphere, soil structure stability and reduced erosion.
      
      In his 2015-16 budget proposal, Governor Brown directed $10 million from 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 the California Department of Food and Agriculture (CDFA), under its existing authority provided by the Canella 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.
      
5. Farming and GHG reductions.
   
   Various agricultural practices can significantly reduce GHG emissions, and sequester carbon. 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 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.
   
6. Safeguarding California.
   
   According to the Senate Natural Resources & Water Committee’s analysis on this bill, Safeguarding California is a climate adaptation strategy, which was released in early 2016, provides an integrated climate adaptation and resiliency program. The report highlights that many effective climate adaptation strategies cross “sectoral and jurisdictional boundaries” and responding to climate risks requires coordination across agencies and political boundaries. Later versions of Safeguarding California are expected to continue the emphasis on cross-sector integration and complementarity of approaches to promote climate resiliency and adaptation.
   
7. Urban forestry program.
   
   According to the Senate Committee on Natural Resources & Water’s analysis on this bill, CalFire’s urban forestry program leads the effort to advance the development of sustainable urban and community forests in California and CalFire works closely with numerous groups to achieve these aims. Existing law recognizes that urban forestry projects may provide multiple benefits to the community including, for example, increasing water supply, promoting energy conservation, reducing GHG emissions and improving public health, among others.
   
8. 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. 

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 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 proposed 2016-17 budget allocates $3.1 billion GGRF revenues to a variety of transportation, energy, and resources programs aimed at reducing GHG emissions.

Comments

1. Purpose of Bill.
   
   According to the author:
   

As part of his 2015 inaugural address, the Governor outlined six key pillars needed to achieve long term climate change inducing pollutant reductions, including the reduction of short-lived climate pollutants, increased carbon sequestration in the land and safeguarding California by maximizing climate resilience and adaptation strategies.

This year, the Department of Finance and ARB finalized California’s latest climate investment blueprint; the plan outlined a multitude of sound investment opportunities for California’s climate investments built on the Governor’s key strategies to address climate change. The plan further noted that to achieve our long term climate pollutant emissions goals, the state will need to accelerate current programs and projects, pursue innovative strategies across sectors and maximize environmental, economic and health co-benefits.

SB 1294 integrates the concepts outlined in Governor Brown’s inaugural address and the Second Investment Plan and provides an opportunity for the state to approach several key climate pollution and reduction strategies (trees and urban greening, landscape resiliency, water conservation and efficiency, and organic waste and compost) via a set of complementary and innovative programs.

1. What’s the funding source?
   
   This bill requires CalRecycle to create a new program to provide incentives for the use of compost from organic waste in farming and landscaping practices that increase drought resilience and result in GHG emissions reductions through carbon sequestration in urban and rural areas.
   
   This bill does not identify a funding source. However, the background information provided by the author states that this bill “[e]stablishes a program that prioritizes investment in projects that maximize GHG emissions, climate resiliency benefits and co-benefits across multiple sectors (e.g. stormwater capture and reuse for an urban forestry project not only potentially reduces net carbon from the water system but also ensures the tree does not die (ensures GGRF investment produces carbon reduction benefits) and increases urban canopy (also potential to reduce carbon) while also reducing the chance the tree is drought stressed and ultimately succumbs to bark beetle (climate resiliency benefits).” It appears that a likely funding source for this bill may be GGRF.
   
2. 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 that propose new programs funded through the GGRF. 
   
3. Creating another funding program?
   
   This bill requires CalRecycle, by July 1, 2017, in consultation with relevant state agencies, to develop and implement a program that provides incentives for compost-related projects that increase drought resilience and result in quantifiable reductions in GHG emissions through increased carbon sequestration in urban and rural areas.
   
   Establishing a new program takes effort and money to administer. For example, public engagement/outreach and workshops are necessary to create the program; staff time is required to review proposals and process funds. For FY 2016-17, CalRecycle expects the administration costs alone for the Organics Grant Program to be $3 million. Also, anytime a new program is created, and funded through GGRF, there are various requirements that need to be met by the agency administering the program as well as ARB. ARB must provide new program guidance on how to report and quantify GHG reductions and on how to maximize benefits to disadvantaged communities. Each administering agency must prepare an expenditure report to document how the program will reduce GHG emissions. Creating disparate programs that have the same goals and purpose as existing state efforts may create governmental inefficiencies and avoidable expenses.
   
4. Work with what we already have.
   
   Last year, the Legislature passed, and the Governor signed, AB 1045 (Irwin, Chapter 596, Statutes of 2015) which, among other things, requires CalEPA, in coordination with relevant state agencies, to develop and implement policies to aid in diverting organic waste from landfills by promoting the use of agricultural, forestry, and urban organic waste as feedstock for compost and by promoting the appropriate use of that compost throughout the state. The first set of recommendations from these efforts is due January 1, 2017, and must be annually updated thereafter.
   
   SB 1294, by July 1, 2017, would require CalRecycle, in consultation with relevant state agencies, to create a program that provides incentives for the use of compost in certain projects that increase carbon sequestration in urban and rural areas.
   
   The first set of compost recommendations mandated by AB 1045 is due when SB 1294 would go into effect. What if the agencies’ recommendations, which were mandated by the Legislature less than a year ago, differ in direction, scope, or proposed actions than the program in SB 1294? It may be more prudent to work within the existing statutory structure that officially began four months ago and is expected to provide the first annual set of recommendations eight months from now. A question arises as to whether the purpose of the program proposed in SB 1294 may best fit within the AB 1045 framework of the relevant agencies working to develop and implement policies to promote the appropriate use of compost throughout the state.
   
   In order to ensure that CalEPA’s coordinated efforts with relevant agencies, pursuant to AB 1045, consider ways to use compost as a means of increasing carbon sequestration in urban and rural areas, the Committee may wish to consider amending SB1294 by replacing Chapter 3 on Page 6, lines 11-26 with the following:
   
   1. An amendment to add a paragraph to PRC §42649.87(c) mandating the assessment of the state’s programs on how they may increase the use of compost in order to increase carbon sequestration in urban and rural areas.
      
   2. An amendment to add promotion to the use of compost throughout the state to PRC §42649.87(c)(4), which currently pertains to the development of recommendations for promoting organic waste and recycling infrastructure.
      
   3. An amendment to add a section to PRC Chapter 12.9, pertaining to organic waste, to require the appropriate agency to develop a program that implements policies to promote the use of compost, if recommended to do so pursuant to PRC §42649.87(c)(4).
      
5. State-certified conservation corps.
   
   The local conservation corps program was established in 1993 with the purpose of supporting the success of disadvantaged youth through a structured program of natural resources conservation and related activities. There are approximately 13 certified local corps in the state. This bill requires CalRecycle to enter into an agreement with state-certified conservation corps to assist with community outreach, compost delivery and application, and other urban greening projects. A question arises as to whether it is prudent to limit such an opportunity to only 13 corps considering other local organizations exist around the state that also provide workforce training to youth in disadvantaged communities.
   
   In conjunction with the proposed committee amendments in Comment #5, the committee may wish to consider amending the bill to add a paragraph to PRC §42649.87(c) mandating the assessment of the state’s programs on how they may incorporate workforce training to youth in disadvantaged communities when feasible.
   
   

Related/Prior Legislation

AB 1045 (Irwin, Chapter 596, Statutes of 2015) requires CalEPA in coordination with specified agencies, to among other things, develop and implement policies to aid in diverting organic waste from landfills by promoting the use of agricultural, forestry, and urban organic waste as a feedstock for compost and by promoting the appropriate use of that compost throughout the state.

DOUBLE REFERRAL:

This measure was heard in the Senate Natural Resources & Water Committee on March 29, 2016, and passed out of committee with a vote of 7-2.

SOURCE:

TreePeople, Los Angeles Conservation Corps, and Los Angeles Neighborhood Land Trust

SUPPORT:

California Association of Local Conservation Corps

California League of Conservation Voters

Clean Water Action

Earth Watch Institute

From Lot to Spot, Inc.

Los Angeles Beautification Team

The Trust For Public Land

OPPOSITION:

None received

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SENATE COMMITTEE ON NATURAL RESOURCES AND WATER

Senator Fran Pavley, Chair

2015 - 2016 Regular

Bill No: SB 1294 Hearing Date: March 29, 2016

Subject: The Community Climate and Drought Resilience Program

BACKGROUND AND EXISTING LAW

Existing law establishes the California Conservation Corps (corps) in the Natural Resources Agency as a service organization providing employment and training for young men and women (see Public Resources Code (PRC) §§14000 et seq.).

The corps was created in 1976 and employs for one year young adults generally between the ages of 18 – 25. The corps offers programs throughout the state and aims to, among other things, provide youth with educational and training opportunities and increase their understanding and appreciation of the environment (PRC §14000).

In addition to the corps, existing law provides for local conservation corps (local corps) that must meet certain criteria including those the corps must meet (see PRC §14406). Existing law provides for eligible local corps to be certified annually to be in compliance with these criteria by the corps (PRC §14507.5).

The local corps program was established in 1993 with the purpose of supporting the success of disadvantaged youth through a structured program of natural resources conservation and related activities. Local corps may obtain funding from a variety of sources (state funding support for local corps is included in the comments).

Existing law establishes the Department of Resources Recycling and Recovery (CalRecycle) in the California Environmental Protection Agency, and the Department of Forestry and Fire Protection (CalFire) in the Natural Resources Agency.

Existing law establishes the California Urban Forestry Act of 1978 (PRC §§4799.06 et seq.) to expand and improve the management of trees and related vegetation in communities throughout the state. CalFire’s urban forestry program leads the effort to advance the development of sustainable urban and community forests in California and CalFire works closely with numerous groups to achieve these aims. Existing law recognizes that urban forestry projects may provide multiple benefits to the community including, for example, increasing water supply, promoting energy conservation, reducing greenhouse gas emissions and improving public health, among others.

According to CalRecycle, methane emissions from organic waste in the state’s landfills are a significant source of statewide greenhouse gas emissions. Diverting this waste stream provides multiple benefits as methane emissions are avoided and the compost and mulch generated from this waste is used to improve soil health and save water. Recent research, for example, showed that adding a mulch layer of appropriate thickness can reduce surface evaporation of water up to 40% or more compared to from bare soil for the conditions studied. The use of mulch and compost has the potential to reduce urban water demand for landscaping which is estimated to represent up to half of urban water use.

Existing law requires a reduction in statewide greenhouse gas emissions to 1990 levels by 2020. In addition, Executive Orders S-03-05 and B-30-15 establish post-2020 greenhouse gas emissions reduction targets. The state has several strategies to reduce climate-related pollution, improve air quality and maximize health and economic co-benefits of addressing climate-related pollution.

The climate adaptation strategy “Safeguarding California” released earlier in 2016 provides an integrated climate adaptation and resiliency program. The report highlights that many effective climate adaptation strategies cross “sectoral and jurisdictional boundaries” and responding to climate risks requires coordination across agencies and political boundaries. Later versions of “Safeguarding California” are expected to continue the emphasis on cross-sector integration and complementarity of approaches to promote climate resiliency and adaptation.

Existing law requires the Department of Finance, in consultation with the Air Resources Board and other state agencies, to submit a triennial investment plan to the Legislature identifying investments that will help the state achieve its greenhouse gas emissions reduction goals while realizing additional co-benefits using proceeds of the greenhouse gas emissions cap-and-trade auction revenues. The Second Investment Plan was released in January 2016 and includes urban forestry and composting, among other projects.

PROPOSED LAW

This bill would establish the Community Climate and Drought Resilience Program of 2016, and direct CalFire and CalRecycle to promote policies and incentives that advance helping urban and rural communities adapt to climate change, improve water management and drought preparedness, provide workforce training to youth in disadvantaged communities, maximize carbon sequestration and ensure the maintenance of associated climate pollutant reduction benefits through the improvement and continued management of the urban forest canopy, and the development and application of compost made from organic waste diverted from landfills.

This bill would provide specific direction to each department to achieve these goals. This bill would:

1. Direct CalFire to review and revise, as needed, its urban forestry program to
   1. Provide funding priority for multi-benefit carbon sequestration projects such as mulching, watering or pruning, and the use of on-site water capture, recycled water or other local water, among others, as specified, and
   2. Establish local or regional targets for the urban tree canopy, particularly in disadvantaged communities, including, for example, forest diversity, as specified.
2. Further direct CalFire to update its regulations, as needed, and provide planning and technical assistance for eligible applicants and guidance to grantees and local governments regarding best practices and metrics for urban forest health.
3. Direct CalRecycle to develop and implement a program by July 1, 2017 to provide incentives for projects that use compost from organic waste in farming and landscaping practices in urban and rural areas that increase drought resilience and provide quantifiable greenhouse gas emissions reductions, as specified.
4. Require CalRecycle to enter into an agreement with state certified conservation corps, to assist in community outreach, compost delivery and application and other eligible urban greening projects, and update its regulations, as needed, to implement this program.

In addition this bill would:

1. Make appropriate and supporting legislative findings.
2. State legislative intent to create an innovative natural resource management program that improves greenhouse gas sequestration, improves drought preparedness and helps communities address the effects of climate change, as specified, and to provide employment opportunities for at-risk youth in landscape management strategies, especially in disadvantaged communities, that minimize climate impacts.
3. Define relevant terms.

ARGUMENTS IN SUPPORT

According to the author, “[a]s part of his 2015 inaugural address, the Governor outlined six key pillars needed to achieve long term climate change inducing pollutant reductions, including the reduction of short-lived climate pollutants, increased carbon sequestration in the land and safeguarding California by maximizing climate resilience and adaptation strategies.”

“This year, the Department of Finance and the Air Resources Board finalized California’s latest climate investment blueprint; the plan outlined a multitude of sound investment opportunities for California’s climate investments built on the Governor’s key strategies to address climate change. The plan further noted that to achieve our long term climate pollutant emissions goals, the state will need to accelerate current programs and projects, pursue innovative strategies across sectors and maximize environmental, economic and health co-benefits.”

“SB 1294 integrates the concepts outlined in Governor Brown’s inaugural address and the Second Investment Plan and provides an opportunity for the state to approach several key climate pollution reduction strategies (trees and urban greening, landscape resiliency, water conservation and efficiency, and organic waste and compost) via a set of complementary and innovative programs.”

ARGUMENTS IN OPPOSITION

None received

COMMENTS

Double-referral. This bill is double-referred to both this Committee and the Senate Environmental Quality Committee (Senate EQ). Elements of the bill under Senate EQ’s jurisdiction, such as CalRecycle and greenhouse gas and other climate pollutant emissions reductions, among others, are included here for completeness and context only.

Technical amendment. According to the author’s office, a drafting error led to the inadvertent codification of all of the legislative findings. The Committee may wish to require that the findings be uncodified and the remaining proposed language in PRC §75300 – legislative intent language and specific direction to CalRecycle and CalFire – be split into two sections for clarity. [Amendment 1]

Work-in-progress. This bill is a work-in-progress, and Committee staff understand that further amendments are planned by the author. In view of this, the author may wish to consider that the meaning of several terms, such as community greening, urban greening, local conservation corps, climate-friendly, and best practices may be usefully clarified; the structure of the proposed CalRecycle program for the corps may also be clarified; watering, pruning and other activities may not always result in multi-benefit carbon sequestration; which program CalFire shall provide technical assistance to eligible applicants for; and the considerable overlap between existing urban forestry program language and the findings reported here, among others. Additionally, no funding source is provided for the activities required by the bill and it may be that funding from certain sources will require further clarification in the proposed program language. Should the bill pass this Committee today, the Committee may wish to direct staff to continue providing assistance to the author’s office.

Consistent with the Administration’s climate plans. Both composting of organic waste and resources for urban forestry are identified as multi-benefit climate adaptation strategies in the “Safeguarding California” report and have received funding in the past. The bill’s specific direction on urban forestry, for example, includes policies, such as encouraging urban tree canopy goals, among those specified in “Safeguarding California.” However, due to the cross-sectoral nature of these programs, not all of the state entities with jurisdiction or potential jurisdiction over portions of the urban forestry or composting programs are included in the bill.

The local corps’ mission is consistent with the goals of the CalFire and CalRecycle programs affected by this bill. In fact, the FY 2014/2015 urban forestry grants for projects included three to local corps. Five projects funded through a recent CalRecycle organic composting grant project did not include any awards to local corps. CalRecycle has a Budget Change Proposal pending in the current budget cycle for $100 million of cap-and-trade auction revenues which are proposed to be largely spent on organic waste recycling grants, among other categories.

The current CalFire draft grant guidelines. In the CalFire Urban and Community Forestry FY 2016/2017 draft California Climate Investment Grant Guidelines, eligible projects must demonstrate that they will achieve and maintain a net reduction in greenhouse gas emissions and, if no immediate greenhouse gas emissions reduction benefit is achieved, must be sustained until a net greenhouse gas emissions reduction benefit is realized and maintained for 10 years thereafter. Draft guidelines encourage potential grantees to work with CalFire in developing their proposals.

CalRecycle’s support for local corps. CalRecycle supported the purposes of the local corps at the state level in part through community recycling services and litter abatement projects. The CalRecycle grant program supporting the local corps recently diversified from dependence solely upon the Beverage Container Recycling Fund. According to CalRecycle, local corps receive entitlement funding from four special funds administered by CalRecycle and over $20 million was appropriated in the FY 2015 – 2016 budget for this purpose. Funding is distributed evenly among all 13 certified local corps and these corps must engage in activities related to the source of the funding.

Benefits to public health from urban forestry programs. There are public health and environmental benefits associated with reducing heat stress in communities. In addition to poorer public health, urban heat islands can result in increased use of energy with an associated potential degradation in air quality and increase in greenhouse gas emissions. Urban forest canopies have been shown to help reduce temperatures and the resulting impacts. Planting and maintaining urban forest canopy has the potential to be a cost-effective method of reducing the urban heat island effect and directly and indirectly reducing climate pollutant emissions.

Recent related legislation

AB 2722 (Burke, 2016) would establish the Transformative Climate Communities Program to promote a coordinated and integrated approach to climate pollutant reduction strategies (before the Assembly Natural Resources Committee).

SB 367 (Wolk, 2015) would authorize the Department of Food and Agriculture’s environmental farming program to provide incentives and other assistance for farmers whose practices promote the well-being of ecosystems, have caused the establishment of a grant program to promote land practices that sequester carbon, and appropriated Greenhouse Gas Reduction Funds to this end (held in the Assembly Appropriations Committee Suspense file).

SB 760 (Mendoza, 2015) would have established a program to provide grants to disadvantaged communities for community enhancements providing multi-benefit environmental benefits (the bill was subsequently amended to a different topic).

AB 1045 (Irwin, c. 596, Statutes of 2015) requires the development and implementation of policies to divert organic waste from landfills and promote composting and the use of the compost.

AB 876 (McCarty, c. 593, Statutes of 2015) requires enhanced reporting of compostable organic materials.

AB 761 (Levine, 2015) would require the Department of Food and Agriculture to establish a program to provide grants for voluntary projects to promote carbon sequestration on working lands (held in the Senate Appropriations Committee Suspense file).

AB 1023 (Eggman, 2013) would have created a program for industry including incentives to promote composting and other waste diversion to reduce greenhouse gas emissions (held in the Assembly Appropriations Committee Suspense file).

AB 921 (Allen, 2011) would have addressed the use of compost in agriculture to reduce water use and its potential climate benefits (held in the Assembly Appropriations Committee Suspense file).

SUGGESTED AMENDMENTS

AMENDMENT 1

Revise PRC §75300 (Section 1) to separate the legislative findings into an uncodified section and retain subdivisions (b) and (c) in separate codified sections.

SUPPORT

TreePeople (sponsor)

California Association of Local Conservation Corps

California League of Conservation Voters

Clean Water Action

Climate Resolve

From Lot To Spot, Inc.

Los Angeles Beautification Team

Sierra Club California

The Trust for Public Land

1 Individual

OPPOSITION

None Received

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