Existing law, the California Land Conservation Act of 1965, otherwise known as the Williamson Act, authorizes a city or county to enter into contracts with owners of agricultural land to preserve the land for agricultural use, as specified, in return for reduced property tax assessments. The act authorizes a landowner to petition the city council or board of supervisors, as applicable, for cancellation of the Williamson Act contract under specified circumstances and imposes a cancellation fee equal to 12.5% of the fair market value of the land without the restriction of the Williamson Act contract. The act also authorizes a landowner of specified agricultural land to petition the board to cancel the Williamson Act contract in order to designate the land as a farmland security zone, whereby the land is eligible for a specified property tax valuation and taxed at a reduced rate for specified special taxes. The act authorizes a landowner to petition the council or board, as applicable, to cancel a farmland security zone contract under specified circumstances and imposes a cancellation fee equal to 25% of the fair market value of the land without the restriction of the contract.

This bill would authorize a landowner landowner, if their land is located in the Counties of Fresno, Kern, Kings, Madera, Merced, San Joaquin, Stanislaus, or Tulare, with a water basin in condition of critical overdraft, to petition the board or council to cancel a Williamson Act contract or a farmland security zone contract if the land meets specified criteria, including, among other things, not having permanent access to sufficient water to support commercially viable irrigated agricultural use on the land, and the landowner would be subject to a land use entitlement for specified energy projects. The bill would authorize a board or council to approve the cancellation if the board or council finds that the land does not have permanent access to sufficient water to support commercially viable irrigated agricultural use and the landowner would be subject to a land use entitlement for the specified energy projects that would use less water than the agricultural use on the land. The bill would require special energy projects to provide a community benefits package, as specified. The bill would prohibit the imposition of a cancellation fee. impose a cancellation fee equal to 6.25% of the fair market value of the property without the restriction of the Williamson Act contract for cancellation of a Williamson Act contract, and would impose a cancellation fee equal to 12.5% of the fair market value of the property without the restriction of the contract for cancellation of a farmland security zone contract. The bill would require the cancellation fees to be collected by the county treasurer, remitted to the Controller, and, upon appropriation by the Legislature, allocated to the Department of Conservation, and for community benefits packages within the county, as specified.

The act requires a board or council, as applicable, to adopt rules governing the administration of agricultural preserves, including rules related to compatible uses consistent with specified principles of compatibility.

This bill would specify that a cancellation under the bills provisions does not prevent a board or council from determining that the specified energy projects are a compatible use on contracted land.

Existing law, the California Land Conservation Act of 1965, otherwise known as the Williamson Act, authorizes a city or county to enter into contracts with owners of agricultural land to preserve the land to agricultural use, as specified. Existing law authorizes the cancellation of a contract under certain circumstances. Existing law requires the city or county to execute and record a certificate of cancellation of contract if the city and county approves a cancellation of a contract. Existing law authorizes the city or county to charge a cancellation fee in an amount equal to 12.5% of the cancellation valuation of the property. Existing law requires these cancellation fees to be transmitted by the county treasurer to the Controller upon collection within 30 days of the execution of a certificate of cancellation of contract, and specifies that these cancellation fees are to be deposited in the General Fund, except as specified.

This bill would instead require that the cancellation fees be transmitted by the county treasurer to the Controller within 45 days of the execution of a certification of cancellation of contract.

Date of Hearing: May 15, 2024

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Buffy Wicks, Chair

ABPCA Bill Id:AB 2528

Author:(Arambula) – As Amended Ver:May 6, 2024

Urgency: No State Mandated Local Program: No Reimbursable: No

SUMMARY:

This bill allow a local governing body in specified areas of the state to, upon a landowner’s request, cancel certain land conservation contracts if the land subject to the contract has certain water supply constraints and if it will be used for specified renewable energy projects. The bill establishes landowner fees for such a cancellation that are less than those established in current law.

Specifically, this bill:

1. For land located in the counties of Fresno, Kern, Kings, Madera, Merced, San Joaquin, Stanislaus or Tulare, with a water basin in condition of critical overdraft, this bill authorizes a landowner to petition the local governing board or council for cancellation of any Williamson Act conservation contract of farmland security zone (FSZ) contract if both the following are true:
   1. (i) the land is located in a basin that is designated as high or medium priority under California’s Groundwater (Bulletin 118) and is subject to a groundwater sustainability plan pursuant to the Sustainable Groundwater Management Act (SGMA), (ii) there are no water or overlying groundwater rights associated with the land sufficient to support commercially viable irrigated agricultural use and (iii) the land does not have permanent access to sufficient water to support commercially viable irrigated agricultural use on the land.
   2. The landowner would be subject to a land use entitlement to use the land for any of the following projects: (i) solar photovoltaic or wind electrical generating power plant and appurtenant facilities, (ii) an energy storage system or (c) an electric transmission line carrying electric power from a solar photovoltaic or wind facility or energy storage system that is located in the state to a point of junction with any interconnected electrical transmission system.
2. Authorizes the local governing board to approve the cancellation only if it finds both of the following: (a) the land does not have permanent access to sufficient water to support commercially viable irrigated agricultural use on the land and (b) the landowner would be subject to a land use entitlement to use the land for a project described above that would use less water than the agricultural use on the land.
3. Establishes contract cancellation fees, as follows:
   1. For a Williamson Act contract cancellation: 6.25% of the fair market value of the property.
   2. For an FSZ contract cancellation: 12.5% of fair market value.
4. Directs cancellation fees, in as-yet unspecified proportions, as follows: “__ percent” to be remitted by the county treasurer to the Controller and, upon appropriation by the Legislature, allocated to the Department of Conservation and “__ percent” for community benefits packages within the county.
5. Defines community benefits packages to include local employment, water services and electricity discounts

FISCAL EFFECT:

1. It is likely the Department of Conservation will need to provide local technical assistance to ensure proper implementation of this bill. The department estimates it will need one new staff member at an annual cost of approximately $155,000 (soil conservation fund).
2. The effect of this bill on General Fund revenue is speculative. Under current law, the first $5 million in Williamson Act cancellation fee revenue is deposited in the Soil Conservation Fund to pay for departmental activities. Any amount above $5 million is placed in the General Fund. According to the Department of Conservation. Williamson Act cancellation fees have led to General Fund deposits in two of the past five fiscal years: $3.7 million in 2018-19 and $7.3 million in 2022-23. To the extent this bill results in cancellations of Williamson Act contracts in a given year that would have otherwise been cancelled pursuant to existing law, and to the extent the total resulting fee revenue would have exceeded $5 million, this bill will result in a loss of General Fund revenue.

COMMENTS:

1. Purpose. The author intends this bill to encourage use of water-constrained land for uses that further the state’s clean energy goals. According to the author:

California has set an ambitious path to achieve a zero net carbon economy by 2045. California has similar ambitious goals to protect and sustainably manage groundwater resources in the state. This confluence of water sustainability needs and clean energy demand creates an opportunity to craft an approach that addresses multiple economic and environmental goals. The California Land Conservation Act of 1965 (Williamson Act) enables cities and counties to contract with landowners who agree to limit their land to agricultural use. However, the Williamson Act has remained largely unchanged since its inception. This bill provides a streamlined Williamson Act cancellation option to facilitate faster siting of energy infrastructure on formerly productive agricultural parcels and provide relief to landowners and local communities. Simplifying Williamson Act cancellations on water-constrained lands addresses water challenges and renewable energy land constraints while providing farmers with alternative economic opportunities for their land and local governments with a broader tax base.

1. Background. The Williamson Act is an agricultural land conservation program. Administered by the Department of Conservation, the Williamson Act allows a private property owner to sign a voluntary contract with their local government that restrict the land subject to the contract to agriculture, open space and compatible uses for the next 10 years. In return, the county assessors values the contracted land as agricultural use, instead of its fair market value. The contracts renew automatically each year, so the contracts are always for a 10-year period. The landowner may cancel the Williamson Act contract at any time, provided local officials make findings that cancellation is in the public interest and that cancellation is consistent with the purposes of the Williamson Act. Such a landowner must pay a cancellation fee that is equal to 12.5% of the “cancellation valuation” of the property.

Similarly, a land owner may petition the local governing board to rescind a Williamson Act contract in order to simultaneously place the land subject to that contract under a new contract designating the property as an FSZ. Land under FSZ contract is subject to a term of 20 years, and a landowner who wishes to cancel such a contract must pay a cancellation fee that is equal to 25% of the cancellation valuation of the property.

The Sustainable Groundwater Management Act (SGMA) requires local agencies to form groundwater sustainability agencies (GSAs) for high- and medium-priority water basins. GSAs must develop and implement groundwater sustainability plans to avoid undesirable results and mitigate water overdraft within 20 years. The requirements of SGMA have strained the viability of large sections of agricultural land.

This bill is supported by many agricultural producers, energy firms and some environmental advocacy organizations. A coalition of agricultural organizations writes:

In many basins, GSAs are currently limiting extractions. If groundwater is a farmers only water source, limiting these extractions means taking land out of production. Further, if a farmer’s surface water is cut off due to water shortages and they are unable to use groundwater, the farmer must make a hard business decision on whether keeping the land in production is possible.

If the state is to achieve its goal of a net zero economy by 2045, California must add more than 114,000 Megawatts of new utility-scale renewables to the grid, including at least 70,000 Megawatts of utility-scale solar.

This bill streamlines the process for a farmer to transition some of their fields from agricultural production to solar thereby saving millions of dollars in Williamson Act cancellation fees. This bill is a win-win for farmers, local communities, and the state.

The bill is opposed by representatives of rural counties and the California Farm Bureau, which writes:

Market forces - not a subsidy to solar energy developers - should drive the decisions that landowners will make around water and land use because there are stakeholders like habitat managers, small farmers, and community water systems that also need water in these basins, and their interests are being reflected by new water markets in those basins. The amended version of AB 2528, while providing a notice to a GSA, still allows a landowner to influence those market-based decisions by leasing lands for development while still potentially receiving a full water allocation from the GSA, to the detriment of the other basin stakeholders

Analysis Prepared by: Jay Dickenson / APPR. / (916) 319-2081

Date of Hearing: April 24, 2024

ASSEMBLY COMMITTEE ON AGRICULTURE

Esmeralda Soria, Chair

ABPCA Bill Id:AB 2528

Author:(Arambula) – As Amended Ver:March 18, 2024

SUBJECT: Williamson Act contracts: cancellation: energy projects

SUMMARY: This bill would authorize a landowner to petition the board or council to allow to cancel a Williamson Act (WA) contract or a farmland security zone (FSZ) contract if the land meets specified criteria, including, among other things, not having permanent access to sufficient water to support commercially viable irrigated agricultural use on the land, and the landowner would be subject to a land use entitlement for specified energy projects, as specified Specifically, this bill:

1. Makes legislative finding and declarations as follows:
   
   1. California has set an ambitious path to achieve a zero net carbon economy by 2045.
   2. California has set goals of at least 60 percent of California’s electricity is renewable by 2030 and for 100 percent by 2045.
   3. California mandates that local water management agencies bring groundwater use to sustainable levels by the early 2040s.
   4. WA should be updated to provide alternative paths for lands that can no longer stay in agricultural production due to water constraints.
   5. States intent of the Legislature to provide a streamlined WA cancellation option to allow the development of renewable energy projects and storage on water-constrained agricultural lands.
      
2. Allows a landowner to petition the board or council for cancellation of any WA or FSZ contract if the land meets both of the following criteria:
   
   1. The land meets one of the following criteria:
      
      1. The land is located in a basin that is either of the following:
         
         1. Designated as high or medium and is subject to a groundwater sustainability plan pursuant to the Sustainable Groundwater Management Act (SGMA), as specified.
         2. Subject to a final judgment in an adjudication action under SGMA.
            
   2. There are no water or overlying groundwater rights associated with the land sufficient to support commercially viable irrigated agricultural use.
      
   3. The land does not have permanent access to sufficient water to support commercially viable irrigated agricultural use on the land.
      
   4. The landowner would be subject to a land use entitlement to use the land for any of the following projects:
      
      1. A solar photovoltaic or wind electrical generating power plant and appurtenant facilities.
      2. An energy storage system.
      3. An electric transmission line carrying electric power from a facility, as specified, that is located in the state to a point of junction with any interconnected electrical transmission system.
         
3. Upon petition pursuant to subdivision (a), the board or council may approve the cancellation of the contract only if it makes both of the following findings:
   
   1. The land does not have permanent access to sufficient water to support commercially viable irrigated agricultural use on the land.
   2. The landowner would be subject to a land use entitlement to use the land for a project, as specified that would use less water than the agricultural use on the land.
      
4. Requires that no cancellation fee shall be imposed on any cancellation in this law.
   
5. Does not prevent a board or council from determining a project, as specified, is a compatible use on contracted land.
   
6. Defines the following terms:
   
   1. “Adjudication action” means as defined by subdivision (a) of Section 10721 of the Water Code.
   2. “Basin” means as defined by subdivision (b) of Section 10721 of the Water Code.
   3. “Bulletin 118” means as defined by subdivision (c) of Section 10721 of the Water Code.
   4. “Energy storage system” means as defined by subdivision (a) of Section 2835 of the Public Utilities Code.
      

EXISTING LAW:

1. Authorizes a city or county to enter into contracts with owners of agricultural land to preserve the land for agricultural use, as specified, in return for reduced property tax assessments. (Food and Agriculture code (FAC) 51200 - 51297.4)
   
2. Authorizes a landowner to petition the city council or board of supervisors, as applicable, for cancellation of the WA contract under specified circumstances and imposes a cancellation fee equal to 12.5% of the fair market value of the land without the restriction of the Williamson Act contract. (FAC 51200 - 51297.4)
   
3. Authorizes a landowner of specified agricultural land to petition the board to cancel the Williamson Act contract in order to designate the land as a farmland security zone, whereby the land is eligible for a specified property tax valuation and taxed at a reduced rate for specified special taxes. (FAC 51200 - 51297.4)
   
4. Authorizes a landowner to petition the council or board, as applicable, to cancel a farmland security zone contract under specified circumstances and imposes a cancellation fee equal to 25% of the fair market value of the land without the restriction of the contract. (FAC 51200 - 51297.4)
   
5. Requires a board or council, as applicable, to adopt rules governing the administration of agricultural preserves, including rules related to compatible uses consistent with specified principles of compatibility. (FAC 51200 - 51297.4)

FISCAL EFFECT: Unknown.

COMMENTS:

Williamson Act Background

WA is a program administered by the California Department of Conservation (DOC) to conserve agricultural and open space land. WA allows private property owners to sign voluntary contracts with counties and cities that restrict their land to agriculture, open space, and compatible uses for the next 10 years. WA contracts automatically renew each year, so that the term is always 10 years in the future. In return for these voluntary contracts, county assessors lower the value of WA contracted lands to reflect the value of their use as agriculture, or open space instead of their market value under Proposition 13. In 1998, the Legislature created an option of establishing a FSZ, which offers landowners a greater property tax reduction for a minimum 20-year contract. The Revenue and Taxation Code sets out valuation procedures for land under WA and FSZ contracts, as well as for other lands whose use is enforceably restricted in various ways, including scenic restrictions, open space easements, restrictions for timber cultivation, and wildlife habitat contracts.

A landowner who wants to develop land restricted by a WA contract has three options: nonrenewal, cancellation, and rescission. The normal way to end a WA contract is for either the landowner or local officials to give "notice of nonrenewal," which stops the automatic annual renewals and allows the contract to run down over the next 10 years (20 years for Farmland Security Zones).

Alternatively, local officials can cancel a contract at the request of the landowner. To do so, local officials must make findings that cancellation is in the public interest and that cancellation is consistent with the purposes of the WA. In addition, the landowner must pay a cancellation fee that is equal to 12.5% of the “cancellation valuation” of the property (25% in the case of FSZs). Typically, the county assessor determines the cancellation valuation, which is set at the property's unrestricted market value. However, a landowner and DOC can separately agree on a cancellation valuation for the land, which takes the place of the value identified by the county assessor. Local officials may approve or deny a cancellation once the cancellation value is determined.

Rescission occurs when the county supervisors cancel a WA contract, but the landowner simultaneously puts an agricultural conservation easement or open space easement on other land of equal or greater value. In addition, state law allows a property owner and a city or county to mutually agree to rescind the WA or FSZ contract on marginally productive or physically impaired land to enter a solar-use easement contract (SB 618, Wolk, 2011). Such a rescission requires a payment of a rescission fee of 10% of the fair market value of the land, half of which goes to the county and half of which goes to the state General Fund. The DOC, in consultation with the Department of Food and Agriculture, must review and approve all solar-use easements.

Land may also be designated as “devoted to open-space uses of statewide significance” if it: (1) could be developed as prime agricultural land; or (2) is open-space land which constitutes a resource whose preservation is of more than local importance for ecological, economic, educational, or other purposes. The Secretary of the Resources Agency is the final judge of whether the land is in fact devoted to open-space use of statewide significance.

Historically, the state made subvention payments to counties in order to make up for a portion of the resulting losses in local property tax revenue from WA and FSZ contracts, and other enforceable open space restriction programs. Specifically, state law requires the Secretary of Natural Resources to direct the Controller to pay counties, out of continuously appropriated funds, at the following annual rates for enforceably restricted land:

• Five dollars per acre for prime agricultural land that is subject to open space easement, WA or FSZ contract, or timber production easement.
• One dollar per acre for other land devoted to open-space uses of statewide significance.
• Eight dollars per acre for land under a FSZ contract and is within three miles of the boundaries of the sphere of influence of an incorporated city.

In total, about 15.4 million acres of land in 52 counties are protected under these types of enforceable restrictions, mostly under WA contracts. Subvention payments totaled about $35 million to $40 million each year from 1994 to 2008. However, the state stopped making subvention payments in Fiscal Year 2009-10 in response to budgetary pressures. In the intervening years, only one county, Imperial, has exited the WA program.

Comments

According to the author, Central Valley residents deserve to live in healthy communities powered by renewable energy. This bill ensures that California meets its climate goals, protects groundwater, and improves air quality by increasing the availability of land for renewable energy projects.

To achieve its goal of a net zero carbon economy by 2045, California must add more than 114,000 Megawatts of new utility-scale renewables to the grid, including at least 70,000 Megawatts of utility-scale solar. However, siting these projects is difficult, as most open land is in the desert, which is home to sensitive habitat and protected species and is federally protected, with a majority of lands precluded from solar development.

Parallel to California’s clean energy goals is Sustainable Groundwater Management Act (SGMA), which aims to bring groundwater to sustainable levels by the early 2040s. The new reality is that the need to conserve vital water resources will unavoidably place many agricultural landowners at risk of losing the ability to farm their land with no viable economic alternative.

This nexus between clean energy goals, water sustainability, and land scarcity presents a rare opportunity to craft policy that achieves multiple statewide goals. This effort will require strategic planning, creativity, and compromise. This bill strikes this balance and will help fulfill the promise of a carbon free future with good-paying jobs, children breathing cleaner air, and mitigation of the worst impacts of climate change on our communities and economy.

Support

Supporters state this bill provides a streamlined WA cancellation option to facilitate faster siting of energy infrastructure on former agricultural parcels and provide relief to landowners and local communities. Simplifying WA cancellations on water-constrained lands addresses SGMA challenges and renewable energy land constraints while providing farmers with alternative economic opportunities for their lands for the benefit for the community and the county where their land is located thus keeping the value of the land for property tax revenue. Otherwise, the land will just sit fallowed for 10 years while waiting for the WA to sunset.

SGMA specifically authorizes Groundwater Sustainability Agencies (GSAs) to control groundwater by regulating, limiting, or suspending extractions from individual wells or extractions in the aggregate. In many basins, GSAs are currently limiting extractions. If groundwater is a farmers only water source, limiting these extractions means taking land out of production. Further, if a farmer’s surface water is cut off due to water shortages and they are unable to use groundwater, the farmer must make a hard business decision on whether keeping the land in production is possible. This bill streamlines the process for a farmer to transition some of their fields from agricultural production to solar thereby saving millions of dollars in WA cancellation fees. This bill is a win-win for farmers, local communities, and the state.

Oppose

Opponents state current law the cancellation of a WA contract carries a 12.5% fee of the fair market value of that land to the local government, reflecting that lowered property tax assessment enjoyed during the contract. This bill prohibits this 12.5% contract cancellation fee, making the entire structure of WA essentially meaningless. This bill effectively eliminates the Solar Use Easement program, created by SB 618 (Wolk), Chapter 596, Statutes of 2011, allowing developers to avoid those fees instead of working with the DOC to ensure that substantial evidence has been provided to ensure no alternative land is available for the solar project, that additional agricultural lands will not be impacted by the solar project and other factors.

Furthermore, opponents state the water-related provisions in this bill are both unnecessary and potentially irresponsible for the long-term sustainability of California agriculture. The bill allows for a declaration of permanent water unavailability, attested to by the landowner and essentially ratified by a County Board of Supervisors, as part of the justification for early and penalty-free WA cancellations. The appropriate entities for setting water allocations in adjudicated basins or critically overdrafted basins are the courts and groundwater sustainability agencies, respectively, designated entities for determining water allocations in groundwater basins. This bill requires no such involvement or coordination with these local regulatory authorities who are charged with overseeing setting and enforcing allocations for landowners. Further, any such declaration is almost certainly irreversible in the future, posing enormous land management challenges for landowners once a solar lease or other energy-related use ends and the development company removes its infrastructure. All other potential future land uses, such as conversion to habitat or construction of dedicated recharge basins, will still require water. Even fallowed land needs some amount of water if it is to be managed responsibly.

Lastly opponents state seeking to cancel WA contracts for free as structured under this is an effort by solar developers to cherry pick lands without worry to the impact to the solar projects neighbors’ (whether other agriculture or open space areas) at no cost. The bill shuns a market-based approach to water availability impacts from SGMA, takes prime agricultural land out of production potential into perpetuity, and limits other potential uses for former agricultural land, such as for groundwater recharge or habitat. Moreover, the bill extends this paradigm to FSZ contracted lands, where the cancellation fees are greater than WA contracts. Instead of supporting California’s approach of cohesive agricultural production, this will lead to a pockmarked landscape of solar energy and storage development littered across California’s prime agricultural lands.

California Farm Bureau suggests, in place of this bill, convening a WA working group inclusive of agriculture, state and local governments, and energy experts (such as the California Independent Service Operator) to improve provisions like the existing Solar Use Easement within the WA while maintaining its core mission to preserve prime agricultural lands.

Community Alliance with Family Farmers state this bill is much too broad and fails to recognize ongoing planning efforts through the Multibenefit Land Repurposing Program and each basin’s groundwater sustainability plans. Any waiver of Williamson Act fees must be much narrower including only applying to critically over-drafted basins in areas consistent with local groundwater and land repurposing planning efforts. In addition, DOC uses cancellation fee revenue to support its work mapping and protecting agricultural land. DOC’s agriculture land protection work is underfunded and during these difficult budget times, reductions to the DOC’s budget should be avoided.

In its opposition letter, Rural County Representatives of California (RCRC) states this bill establishes low-barrier criteria by which an existing contract may be considered for WA cancellation. The bill makes a contract property eligible for its streamlined cancellation provisions simply for being within the jurisdiction of a regulated or adjudicated groundwater basin, regardless of that basin’s groundwater status. Of further concern, a contract property may also be eligible upon a finding that there is “no water…rights…sufficient to support commercially viable irrigated agricultural use” or if the property “does not have permanent access to sufficient water…” In the context of agricultural production, these are insufficiently clear terms, as many agricultural operations employ variable water supply portfolios, switching from temporary to semi-permanent supplies. The bill language does not acknowledge the temporal and logistical realities of securing water supplies for many of the state’s agricultural operations. And, in this day of climate extremes, few sources can rightly be considered permanent under an ordinary reading of this bill’s criteria.

Furthermore, RCRC states the low bar for seeking cancellations that this bill would enact is certain to result in county boards and staffs receiving several more petitions for cancelled contracts than currently occur, requiring those officials and staff to deal with an administrative load that takes resources away from other priorities. Further, because the bill relies on unclear standards with ambiguous thresholds, counties risk litigation for both approved and denied cancellations.

Previous Legislation:

SB 618 (Wolk), Chapter 596, Statutes of 2011, authorized a city or county and a landowner to rescind a WA or FSZ contract on agricultural lands of limited agriculture value and enter into a solar-use easement that restricts the use of land to photovoltaic (PV) solar facilities, with a reduced cancellation fees.

*The committee may wish to consider the following amendments:

1. For WA/FSZ cancelation fee on land that does not have sufficient water to be productive and will be used for solar energy projects the WA/FSZ cancelation fee be half the existing WA/FSZ cancelation, changing the fees from 12.5% on WA land to 6.25% and from 25% on FSZ land to 12.5%.
   
2. A waiver of WA fees reduction must be only applying to basins that are subject to critical conditions of overdraft and not interfere with local GSAs and the Multibenefit Land Repurposing Program efforts.
   
3. Mitigation measures that provide community benefits directly or indirectly related to adverse social and economic impacts including but not limited to local hiring for projects, and water and electricity assistance.

REGISTERED SUPPORT / OPPOSITION:

Support

Agricultural Council of California

Alliance Ag Services

Alliance Appraisal

Almond Alliance

American Clean Power Association

Avantus

Britz Helm

California Association of Winegrape Growers

California Solar Energy Industries Association

California State Association of Electrical Workers

California State Council of Laborers

Candela Renewables

Clearway Energy Group LLC

Coalition of California Utility Employees

Forefront Power, LLC

IBEW Local Union 477

Independent Energy Producers Association

Intersect Power

Large Scale Solar Association

Longroad Energy Management, LLC

Portwood Farms

Regenerate California Innovation, INC

RWE

Schmiederer Family Farms

Tjaarda Ranch LLC

Tule Fog Farm Land LLC

Western Growers Association

Opposition

California Farm Bureau Federation

Farm Bureau of Monterey

Rural County Representatives of California

Tulare County Farm Bureau

Oppose Unless Amended

Community Alliance with Family Farmers

Analysis Prepared by: Victor Francovich / AGRI. / (916) 319-2084

Date of Hearing: April 17, 2024

ASSEMBLY COMMITTEE ON UTILITIES AND ENERGY

Cottie Petrie-Norris, Chair

ABPCA Bill Id:AB 2528 (

Author:Arambula) – As Amended Ver:March 18, 2024

SUBJECT: Williamson Act contracts: cancellation: energy projects

SUMMARY: Provides an avenue for cancellation of Williamson Act contracts on agricultural land to be used for specified energy infrastructure. Specifically, this bill:

1. Allows a landowner to petition the applicable local government for cancellation of a Williamson Act or farmland security contract so long as the land is:
   1. Located either in a basin designated as high or medium priority and subject to various groundwater management plans; has no groundwater rights sufficient to support viable irrigated agricultural use; or does not have permanent access to sufficient water.
   2. Used for either a solar photovoltaic (PV) or wind generation resources, an energy storage system, or an electric transmission line connecting the solar PV, wind, or batteries to the grid.
2. The local government may approve a cancellation only if it finds the land does not have permanent access to sufficient water, and the energy infrastructure project would use less water than the agricultural use on the land.
3. Removes any contract cancellation fees for eligible land undergoing the process in the bill.

EXISTING LAW:

1. Creates the Williamson Act, also known as the California Land Conservation Act of 1965, which authorizes cities and counties to enter into agricultural land preservation contracts with landowners who agree to restrict the use of their land for a minimum of 10 years in exchange for lower assessed valuations for property tax purposes. (Government Code §§ 51200, et seq.)
2. Creates Farmland Security Zones which authorizes cities and counties to allow agricultural land preservation contracts with landowners who agree to restrict the use of their land for a minimum of 20 years in exchange for lower-assessed valuations for property tax purposes. The lowered assessed value, under Farmland Security Zones, is greater than under the Williamson Act. (Government Code §§ 51296-51297.4)
3. Provides three options for ending a Williamson Act contract:
   1. Either the landowner or local officials give "notice of nonrenewal," which stops the automatic annual renewals and allows the contract to run down over the next 10 years. (Government Code § 51245)
   2. Local officials can cancel a contract at the request of the landowner. To do so, local officials must make findings that cancellation is in the public interest and that cancellation is consistent with the purposes of the Williamson Act. The owner must pay a cancellation fee based on the “cancellation value” of the land. (Government Code § 51282)
   3. Local officials cancel a Williamson Act contract, but the landowner simultaneously puts an agricultural conservation easement or open space easement on other land of equal or greater value. This action is called rescission. (Government Code § 51256)
4. Authorizes a city or county and a landowner to simultaneously rescind a Williamson Act contract on marginally productive or physically impaired lands and enter into a solar-use easement that restricts the use of land to photovoltaic solar facilities, as specified. (Government Code §§ 51191-51192.2)
5. Establishes the Sustainable Groundwater Management Act (SGMA), as a statewide framework to protect groundwater resources by requiring local agencies to form groundwater sustainability agencies (GSAs) for the designated high and medium priority water basins. GSAs must develop and implement groundwater sustainability plans to avoid undesirable results and mitigate water overdraft within 20 years. (Water Code §§ 10720-10738)
6. Requires retail sellers and publicly owned utilities to increase purchases of renewable energy such that at least 60% of retail sales are procured from eligible renewable energy resources by December 31, 2030. This is known as the RPS. (Public Utilities Code § 399.11 et seq.)
7. Establishes the policy that all of the state's retail electricity be supplied with a mix of RPS-eligible and zero-carbon resources by December 31, 2045, and 100% of electricity procured to serve all state agencies by December 31, 2035, for a total of 100% clean energy. Requires the California Public Utilities Commission (CPUC), in consultation with the California Energy Commission (CEC), California Air Resources Board (CARB), and all California balancing authorities, to issue a joint report to the Legislature by January 1, 2021, reviewing and evaluating the 100% clean energy policy. (Public Utilities Code § 454.53)
8. Requires the CPUC to adopt a process for each load-serving entity (LSE) to file an integrated resource plan (IRP) and a schedule for a periodic updates to the plan. Requires that the IRP of each LSE contribute to a diverse and balanced portfolio of resources needed to ensure a reliable electricity supply that provides optimal integration of renewable energy resources in a cost-effective manner, meets the emissions reduction targets for greenhouse gases (GHG) established by CARB for the electricity sector, and prevents cost shifting among LSEs. (Public Utilities Code §§ 454.52-454.54)
9. Defines energy storage systems as systems that use mechanical, chemical, or thermal processes to store energy that was generated at one time for use at a later time, or that stores thermal energy for direct use for heating or cooling later. (Public Utilities Code § 2835)

FISCAL EFFECT: Unknown. This bill is keyed fiscal and will be referred to the Committee on Appropriations for its review.

BACKGROUND:

A Place in the Sun – AB 1279 (Muratsuchi, Chapter 337, Statutes of 2022) codified into law the state’s goals to achieve net zero greenhouse gas (GHG) emissions and a reduction of statewide anthropogenic GHGs to at least 85% below 1990 levels by 2045. This parallels the state’s goals for 100% new zero-emission vehicle sales by 2035 and 100% clean electricity by 2045, as established by Governor Newsom’s Executive Order N-79-20 and SB 100 (De León, Chapter 312, Statutes of 2018), respectively. Actualizing these goals will require a significant buildout of clean energy infrastructure. In February 2024, the CPUC adopted its preferred portfolio of generation resources needed to meet our decarbonization goals in 2035.^[1] The decision adopted over 56 gigawatts (GW) of new resources.^[2] For context, in 2018 California’s total electric system generation capacity was ~80 GW.^[3]

On a longer horizon, the Joint Agency SB 100 Report looks at planning 20+ years out to determine how best to implement the 100% clean electricity by 2045 policy.^[4] The first SB 100 report was finalized in March 2021, and included analyses of many pathways to achieve the state’s 2045 clean energy goal.^[5] While showing that achievement of our 100% clean electricity policy is technically achievable, many barriers and expenses must be overcome. For example, to meet our goals, the SB 100 report showed California will need to roughly triple its current electricity power capacity by 2045. This equates to roughly 6 GW of new solar, wind, and battery storage resources are needed to be built annually for the next two decades; an unprecedented acceleration and scale.^[6]

The SB 100 Report will be updated every four years, with future work focused on critical topics, such as land use. ^[7] This focus recognizes the growing concern that given the unprecedented scale of new resources needing to come online in the next decades to meet our clean energy goals, more conflicts are likely to arise over available land. As part of this effort, the CEC and CPUC have been working on geospatial land-use screens to inform estimates of technical renewable resource potential.^[8]

Academic research has also explored land-use issues around renewable development. The Nature Conservancy (TNC) issued their study, The Power of Place, in 2019, focused on California with subsequent updates broadened regionally and nationally.^[9] The TNC study found that “California can decarbonize the electricity sector, but the balance between wind, solar PV, and storage capacity and resultant costs are sensitive to land protections and whether California has access to west-wide renewable energy. Land protections are highly effective in avoiding environmental impacts while achieving GHG targets, but can increase costs, primarily by reducing wind availability.”^[10] The study recommended better modeling to incorporate conservation data and siting constraints into clean energy planning.

In a more recent study from October 2022, the Public Policy Institute of California (PPIC) examined specific land-use issues around solar energy development in the San Joaquin Valley for SGMA-impacted land removed from agricultural production.^[11] The PPIC report concluded that “utility-scale solar development—already an attractive option for landowners owning property with or without water rights—could offer an opportunity to keep lands that exit irrigated production economically productive.” Similar to Power of Place, the PPIC report noted integration between energy system planning and local land use decisions was needed. It also identified the Williamson Act as a barrier to solar development, given the complexities involved with the current cancellation process.

Williamson Act – The California Land Conservation Act of 1965, also known as the Williamson Act, is a program administered by the Department of Conservation (DOC) to conserve agricultural and open space land. The Williamson Act allows private property owners within “an agricultural preserve” to sign voluntary contracts with counties and cities that restrict their land to agriculture, open space, and compatible uses for the next 10 years. These agricultural preserves are areas where a county, or less often a city, wants to protect and promote agricultural uses. To establish an agricultural preserve, the board of supervisors or city council must adopt a resolution that describes the area covered by the preserve.

Williamson Act contracts automatically renew each year, so that the term is always 10 years in the future. In return for these voluntary contracts, county assessors lower the value of Williamson Act contracted lands to reflect the value of their use as agriculture or open space. In 1998, the Legislature created an option of establishing a Farmland Security Zone, which offers landowners a greater property tax reduction for a minimum 20-year contract.^[12]

A landowner who wants to develop land restricted by a Williamson Act contract has three options: nonrenewal, cancellation, or rescission. The normal way to end a Williamson Act contract is for either the landowner or local officials to give "notice of nonrenewal," which stops the automatic annual renewals and allows the contract to run down over the next 10 years.

Alternatively, local officials can cancel a contract at the request of the landowner. To do so, local officials must make findings that cancellation is in the public interest and that cancellation is consistent with the purposes of the Williamson Act. In addition, the landowner must pay a cancellation fee that is equal to 12.5% of the “cancellation valuation” of the property, or 25% in the case of a farmland security contract. The board or city council first issues a notice of tentative cancellation, which becomes final after the landowner meets any conditions or contingencies of the cancellation and any fees are paid.

Typically, the county assessor determines the cancellation valuation, which is set at the property's unrestricted market value. However, a landowner and DOC can separately agree on a cancellation valuation for the land, which takes the place of the value identified by the county assessor. Local officials may approve or deny a cancellation once the cancellation value is determined. Revenues from this cancellation fee are remitted to the state. However, the Williamson Act also allows local jurisdictions to levy their own cancellation fees in addition to the state cancellation fee. The local government retains revenues from the local cancellation fee.

The third option is rescission. Rescission occurs when the county supervisors cancel a Williamson Act contract, but the landowner simultaneously puts an agricultural conservation easement or open space easement on other land of equal or greater value. The landowner must pay a rescission fee of 6.25% of the property’s value, or 12.5% in the case of a farmland security contract. In 2011, the Legislature created an option of establishing solar-use easements which rescinds specified land from the Williamson Act in order to develop photovoltaic solar facilities.^[13] The new easement requires that the land be used for solar photovoltaic facilities for a term of 20 years, or if the landowner requests, for a term of not less than 10 years; a rescission fee of 6.25% must be paid.

COMMENTS:

1. Author’s Statement. According to the author, “California has set an ambitious path to achieve a zero net carbon economy by 2045. California has similar ambitious goals to protect and sustainably manage groundwater resources in the state. This confluence of water sustainability needs and clean energy demand creates an opportunity to craft an approach that addresses multiple economic and environmental goals. The California Land Conservation Act of 1965 (Williamson Act) enables cities and counties to contract with landowners who agree to limit their land to agricultural use. However, the Williamson Act has remained largely unchanged since its inception. This bill provides a streamlined Williamson Act cancellation option to facilitate faster siting of energy infrastructure on formerly productive agricultural parcels and provide relief to landowners and local communities. Simplifying Williamson Act cancellations on water-constrained lands addresses water challenges and renewable energy land constraints while providing farmers with alternative economic opportunities for their land and local governments with a broader tax base.”
2. Land Use Policy Alignment. As noted above, California will need tens to hundreds of gigawatts of new energy generation over the next two decades to meet our clean energy goals. Where to site and locate all of that electricity generation, and its associated transmission and distribution infrastructure, is an outstanding issue, and one likely to grow more challenging as development ramps up. Occurring simultaneously to the state’s clean energy development needing available land for construction, is the state’s water management policies retiring or reducing land usage to promote water sustainability. SGMA mandates local water management agencies bring groundwater use to sustainable levels by the early 2040s. As noted by the Farm Bureau, “estimates of the amount of land that may be retired from agricultural production [as a result of SGMA] in the San Joaquin Valley alone range from about 500,000 acres (PPIC) to more than 900,000 acres (Water Blueprint for the San Joaquin Valley), largely driven by water supply reductions as basins achieve sustainability.”^[14] Finally, the Williamson Act, which was created to protect agriculture and wild spaces from urban sprawl, has provided protection to agricultural land for decades. However, the Act may need updating to capture the reality of land management in the future due to SGMA. The PPIC report even recommends “counties should also consider waiving [Williamson Act] cancellation fees when a parcel loses water access.”^[15]

This bill seeks to align these state policy trajectories by updating the Williamson Act to waive cancellation fees for land impacted by SGMA, or other water reduction measures, and poised to host energy development. Writing in support, the Western Growers Association notes this SGMA-clean energy-Williamson Act nexus is a “win-win for farmers, local communities, and the state.”

1. Who’s the Boss? Writing in opposition, the Farm Bureau notes concern around the low oversight for which lands would be eligible for Williamson Act fee cancellation under this bill. The bill requires a landowner to petition the local government, who then must make findings to support the requested land’s eligibility. However, Farm Bureau notes groundwater sustainability agencies (GSAs) are the appropriate entities for setting water allocations, and their absence from any consultation in this measure undercuts SGMA. It is unclear to committee why the GSAs play no role in the mechanism put forward by this bill. However, upon passage, this bill will be referred to the Committee on Agriculture for its consideration of these issues.
2. Cherry Picking. The Farm Bureau also notes in its opposition an underlying worry that the removal of the Williamson Act cancellation fee will lead to thoughtless solar development on prime agricultural space. The Bureau favors a “market-based approach,” presumably meaning current practice. Moreover, they note a 2017 Joint-University of California study that determined the Central Valley could site enough needed solar “without building on any agricultural lands.”^[16] However, simply noting the volume of open land is no more an indicator of suitability of that land for solar development as it is an indicator for agriculture. Energy development often takes many years, sometimes at financial risk for the developer. Developers must consider not only the desire of the landowner to site energy generation on their property, but the disposition of local governments, some of which are less inclined for solar production given state tax law; the quality of the sun or wind; the soil compactness and land topography; the location to transmission infrastructure; and the congestion of the grid node the facility would be interconnecting into, among other considerations. The presence of Williamson Act cancellation fees, which can run into the millions of dollars for developers, is another barrier. However the removal of these fees does not remove the other numerous considerations the developer must weigh in pursuing a parcel for energy development. It is unclear to committee how the removal of the fee will lead to a rush on prime agricultural land, especially when this bill requires only land with limited water availability eligible for the fee waiver.
3. Related Legislation.

SB 973 (Grove) would permit the cancellation of Williamson Act contracts for land where the landowner commits to limiting the water rights, where permanent water for agriculture use is insufficient, and where a solar energy project is being permitted that will use less water, among other considerations. Status: Referred to the Senate Committees on Local Government and Environmental Quality. Currently not set for hearing.

1. Prior Legislation.

AB 580 (Bennett, 2023) directed the CPUC to consult relevant state agencies about challenges to developing zero-emission energy infrastructure using grant funding from the DOC’s Multibenefit Land Repurposing Program. Status: Held – Assembly Committee on Appropriations.

SB 688 (Padilla, 2023) required the CEC to award grants for agrivoltaic system projects to support research and development in agrivoltaic systems, conduct an evaluation of the grant program, as specified, and publish the evaluation on the CEC website, contingent upon an appropriation from the Legislature. Status: Held – Assembly Committee on Appropriations.

SB 574 (Laird) narrowed the role of the DOC in administering the Williamson Act. Status: Chapter 644, Statutes of 2021.

SB 618 (Wolk) authorizes a city or county and a landowner to simultaneously rescind a Williamson Act contract on marginally productive or physically impaired lands and enter into a solar-use easement that restricts the use of land to photovoltaic solar facilities, as specified. Status: Chapter 596, Statutes of 2011.

1. Double referral. This bill is double-referred; upon passage in this Committee, this bill will be referred to the Assembly Committee on Agriculture.

REGISTERED SUPPORT / OPPOSITION:

Support

Agricultural Council of California
Alliance Ag Services
Alliance Appraisal
Almond Alliance
American Clean Power Association
California Association of Winegrape Growers
California Solar Energy Industries Association
California State Association of Electrical Workers
California State Council of Laborers
Clearway Energy Group LLC
Coalition of California Utility Employees
Forefront Power, LLC
IBEW Local Union 477
Independent Energy Producers Association
Intersect Power
Large Scale Solar Association
Longroad Energy Management, LLC
Portwood Farms
Regenerate California Innovation, INC
Rwe
Tjaarda Ranch LLC
Tule Fog Farm Land LLC
Western Growers Association

Oppose

California Farm Bureau Federation

Analysis Prepared by: Laura Shybut / U. & E. / (916) 319-2083

1. D. 24-02-047; CPUC; Decision Adopting 2023 Preferred System Plan and Related Matters, and Addressing Two Petitions for Modification; R. 20-05-003; February 20, 2024. https://docs.cpuc.ca.gov/PublishedDocs/Published/G000/M525/K918/525918033.PDF ↑

2. Table 4, pg. 68; D. 24-02-047, Ibid. ↑

3. CEC 2018 Total System Electric Generation website: 277,764 GWh/8760h=32GW ↑

4. CEC, CPUC, & CARB; 2021 SB 100 Joint Agency Report: Achieving 100 Percent Clean Electricity in California: An Initial Assessment;” March 2021. ↑

5. Pg. 12, 2021 SB 100 Report. ↑

6. Pg. 11, 2021 SB 100 Joint Agency Report Summary, “Achieving 100% Clean Electricity in California” ↑

7. Pg. 1, 2021 SB 100 Report. ↑

8. California Energy Commission. 2023. California Energy Commission. CEC 2023 Land-Use Screens for Electric System Planning. Data last updated July 18, 2023. From https://experience.arcgis.com/experience/de6ab11146bf47068ff294d87780ce… ↑

9. Latest update: Power of Place – West; TNC; August 2022; https://www.nature.org/content/dam/tnc/nature/en/documents/TNC_Power-of-Place-WEST-Executive_Summary_WEB-9.2.22.pdf ↑

10. Pg. 2, Wu, G.C.; Leslie, E.; Allen, D.; Sawyerr, O.; Cameron, D.; Brand, E.; Cohen, B.; Ochoa, M.; Olson, A. Power of Place: Land Conservation and Clean Energy Pathways for California, 2019. ↑

11. Ayres, et al., Solar Energy and Groundwater in the San Joaquin Valley; October 2022. ↑

12. SB 1182, Costa, Chapter 353, Statutes of 1998 ↑

13. SB 618, Wolk, Chapter 596, Statutes of 2011; sunset statutorily in 2020, but SB 1489, Committee on Gov. and Finance, Chapter 427, Statutes of 2022 added it back to statute. ↑

14. Farm Bureau letter in opposition to AB 2528, Arambula. April 9, 2024. ↑

15. Pg. 23, PPIC Report, Ibid. ↑

16. Hoffacker, Allen, and Hernández; “Land-sparring Opportunities for Solar Energy Development in Agricultural Landscapes: A Case Study of the Great Central Valley, CA.” Environ. Sci. Technol. 2017, 51, 24, 14472–14482. ↑