Board of Directors Supplemental Packet

Wednesday June 19, 2019 9:00 A.M.

Rural County Representatives of California 1215 K Street, Suite 1650 Sacramento, California 95814

Supplemental Packet Table of Contents June 19, 2019

1. Forest Management and Wildfire Update Page 1 Staci Heaton, Regulatory Affairs Advocate

2. 2019-20 State Budget Update Page 79 Paul A. Smith, Vice President Governmental Affairs Governmental Affairs Staff

3. State Legislative Update Page 109 Governmental Affairs Staff

4. Senate Bill 153 (Wilk) – Industrial Hemp Page 129 Paul A. Smith

5. Update on Senate Bill 182 (Jackson) – Planning and Zoning: Page 145 Wildfire Tracy Rhine, Legislative Advocate

6. Federal Legislative Update Page 197 Governmental Affairs Staff

To: RCRC Board of Directors From: Staci Heaton, Regulatory Affairs Advocate Date: June 17, 2019 Re: Forest Management and Wildfire Update

Summary Several efforts are underway in the Legislature and various state and federal agencies to address California's persistent catastrophic wildfire events. This memo provides an update on many of those activities, and outlines RCRC's involvement and advocacy efforts.

Background California has experienced increased levels of wildfire risk, and faster, more intense burning fires over the past decade due to years of mismanaged forests and escalating impacts from climate change. Last year eclipsed the 2017 fire season, with the Camp Fire in Butte County now recorded as the most destructive wildfire in California State history, the Mendocino Complex Fire as the largest wildfire in modern history, and the Carr Fire destroying more than 1,000 homes and killing six. California leaders are undertaking a number of actions designed to respond to California’s increased fire activity in both the near and long-term.

Issue Commission on Catastrophic Wildfire Cost and Recovery Last year, one of the outcomes of Senate Bill 901 (Dodd) was the formation of the Commission on Catastrophic Wildfire Cost and Recovery (Commission). The Commission was established under the Governor’s Office of Planning and Research (OPR) to examine issues related to wildfires associated with utility infrastructure, as well as to make recommendations on how to equitably distribute costs among impacted parties such as utilities, fire victims and ratepayers. The Commission held its first public meeting on February 25, 2019, and has met four subsequent times, with its last meeting taking place on June 7, 2019. While the Commission’s recommendations are not technically due until July 1, 2019, pressure from the Legislature resulted in the group releasing four draft reports – an executive summary, and three workgroup reports – on May 29, 2019 for public review and comment (Attachment 1).

The workgroup reports discussed the topics of utility liability, wildfire mitigation funds, and homeowners insurance with respect to wildfire mitigation. The Commission’s recommendations strongly favored reform of California’s inverse condemnation statutes

RURAL COUNTY REPRESENTATIVES OF CALIFORNIA 1215 K STREET, SUITE 1650 SACRAMENTO, CA 95814 PHONE: 916-447-4806 FAX: 916-448-3154 WEB: WWW.RCRCNET.ORG 1 as they are applied to investor-owned utilities, combined with a securitized wildfire fund as the only true way to avoid unfair stress on ratepayers. The Commission also provided several recommendations on possible reforms and alternatives to current insurance risk modeling, pricing, and fire mitigation considerations. The Commission took public testimony on the draft reports at its June 7, 2019 meeting, and finalized the reports the same day for transmission to the Legislature.

Senate Select Committee On April 25, 2019, Senate President pro Tempore Toni Atkins announced the formation of a Senate Select Committee (Committee) to assess policy options outlined in Governor Gavin Newsom’s 2019 Report: “Wildfires and Climate Change - California's Energy Future.” The Committee includes key Senators representing RCRC member counties, including Committee Chair Senator Bill Dodd of Napa, Senator Andreas Borgeas of Fresno, Senator Mike McGuire of Sonoma, and Senator Jim Nielsen of Tehama. The Committee held its first hearing on May 8, 2019 to hear presentations from key Newsom Administration representatives on the Governor’s report, then met a second time on June 10, 2019 to receive the Commission on Catastrophic Wildfire Cost and Recovery’s report of recommendations. Each hearing was comprised largely of panelists providing information to the Committee with very little opportunity for public comment.

The Committee is expected to consider the Commission’s recommendations to address the utility wildfire liability and mitigation issue. However, the Administration and legislative leadership released a statement strongly hinting that inverse condemnation reform will not happen this year (Attachment 2). The Committee will consider other existing legislation that addresses wildfire mitigation and utility issues, as well as other possible language addressing the Administration’s desire to modify the prudent manager, bridge financing, and allow cost recovery for investor-owned utilities (IOUs) that act responsibly and in the public’s best interest. Expectations are that a package of legislation will emerge from the Committee similar to last year’s Senate Bill 901 Conference Committee.

RCRC staff will continue to participate in the Committee’s activities through the remainder of the Legislative session.

Homeowners Insurance On May 8, 2019, RCRC staff testified at an informational hearing on access and affordability of homeowners insurance in high fire risk areas, and continues to work with Legislative staff and insurance advocates to explore avenues to increase access to insurance and slow policy cancelations and nonrenewals in high wildfire risk areas. RCRC’s Board of Directors will be considering formation of an ad hoc committee to further explore options for rural residents for greater access and affordability in the California insurance market, particularly as wildfire risk becomes greater across the state. RCRC will continue to meet with the insurance industry directly to attempt to work through the continuing insurance issues to try and come to a resolution, as well as seek additional legislative avenues.

Forest Management Task Force RCRC has been asked to meet with Forest Management Task Force (FMTF) leadership to strategize on how to better engage counties and incorporate their input in the working groups and FMTF activities. The meeting is currently being scheduled, and staff will have

2 a report for the RCRC Board of Directors after it takes place. The next FMTF meeting is scheduled for July 8, 2019, with various subgroups meeting in the interim.

Staff Recommendation RCRC will continue to update the RCRC Board of Directors on the state’s activities on forest health and wildfire prevention as the Administration and Legislature continue to map out their plans for 2019.

Attachments  Commission on Catastrophic Wildfire Cost and Recovery Draft Recommendations  Governor Newsom, Senate President pro Tem Atkins, and Speaker of the Assembly Rendon’s Statement on SB 901 Commission Report

3 4 Staff note: This executive summary and the workgroup reports have not been reviewed or approved by the full commission prior to being released publicly. The workgroup reports are the products of the workgroups established at the April 29th commission meeting, and represent consensus thinking of the members of a given workgroup. The executive summary, compiled by commission staff, is an attempt to reconcile the recommendations of the three workgroups into one cohesive set of proposed recommendations for discussion and consideration at the next commission meeting.

DRAFT Executive Summary

Last September, in the midst of the worst wildfire season in California’s history, the legislature passed and then-Governor Brown signed SB 901. Among other things, the bill created a Commission on Catastrophic Wildfire Cost and Recovery to provide recommendations to the governor and legislature on how to manage the long-term costs and liabilities associated with utility-caused wildfires. This Executive Summary provides an overview of the work of the commission to date, which is divided into three attached sections, each written by a two-member workgroup. The Executive Summary will be put up for consideration and adoption at the June 7, 2019 meeting of the Commission. While the workgroup reports themselves will not be considered for adoption by the full commission, the Executive Summary does not stand alone, as much of the supporting detail and considerations is included in the workgroup reports.

I. Preface The catastrophic wildfires of 2017 and 2018 took 139 lives, destroyed communities, temporarily displaced hundreds of thousands of Californians, burned more than 2.8 million acres, created short- and long-term health problems, and caused irreparable harm to the state’s natural resources. Wildfires have always been a part of California’s natural landscape. However, climate change has resulted in a combination of hotter and drier conditions for longer periods of the year, along with interspersed years that are unusually wet. These extremes in precipitation have built up vegetation that then dries out in the hotter years, providing more fuel for California’s fires and ultimately resulting in more frequent and severe wildfires. Fifteen of the twenty

5 largest California wildfires,1 as well as fifteen of the twenty most destructive,2 have occurred since 2000. This explosive growth in fire activity and accompanying destruction has been coupled with the growth in California’s population and the steady incursion of human settlement into high fire risk areas, in part due to the lack of affordable housing available elsewhere in the state. Together, increasing global temperatures and an increasing population have played direct roles in increasing the fire threat in California. Over the course of the past five months and four public hearings, the Commission has heard from many victims, and learned of the untold damages these recent catastrophic fires have caused. As Shari McCracken of the Butte County Board of Supervisors told the commissioners of the recovery after the Camp Fire, “Though it is hard to quantify, there is a greater feeling of uncertainty and less hope for rebuilding in the Camp Fire than we have seen in other fires…It is the order of magnitude of destruction that people just can’t quite grasp. Second, the order of magnitude of the destruction is testing every level of government […] The County will not be what it was.”3 California’s utilities have played a pivotal role in causing the state’s most destructive recent wildfires, and must take a leadership position in mitigating the risks created by this new reality. As the Governor’s Energy Strike Team noted in its April 2019 report, “California’s electric utilities must be part of the solution to this problem. In the past four years, equipment owned by California’s three largest investor-owned utilities sparked more than 2,000 fires.4 Utility-caused fires tend to spread quickly and be among the most destructive. Hundreds of thousands of miles of electrical transmission and distribution lines snake across the California landscape, often igniting fires during extreme wind events and in remote areas, making early detection and fire suppression extremely challenging. Longer fire seasons make utility-caused fires even more likely.” At the same time, the current method of allocating costs for these fires—socialization through utilities and ratepayers—has destabilized the state’s energy sector, with the largest utilities facing increasing costs of capital and an imminent threat of bankruptcy. This background is fully addressed in the Governors Strike Force Report, so the commission will not repeat here

1 CAL FIRE Top 20 Largest California Wildfires. (last visited May 29, 2019)

2 CAL FIRE Top 20 Most Destructive Wildfires. (last visited May 29, 2019)

3 Shari McCracken. Public Testimony to the commission, March 13, 2019.

4 Carolyn Kousky, et al., Wildfire Costs In California: The Role of Electric Utilities Wharton Risk Management and Decision Processes Center (Sept. 2018), riskcenter.wharton.upenn.edu/wp-content/uploads/2018/08/Wildfire- Cost-in-CA-Role-ofUtilities-1.pdf (last visited Apr. 10, 2019)

6 except to say that these impacts burden ratepayers, wildfire victims, and the state’s overall progress towards our climate and clean energy goals. SB 901, passed in 2018, aimed at addressing this challenge through three key measures: requiring the adoption of wildfire mitigation plans for all electric utilities, providing greater clarity in the cost-recovery process at the California Public Utilities Commission, and incorporating a “stress test” to help guide the CPUC in avoiding critical negative impacts on the health of the investor-owned utilities. As highlighted by the Strike Force Report, the passage of SB 901 led to immediate credit rating downgrades, indicating that SB 901 does not do enough to manage the systemic risk from wildfire to the state’s major utilities. It is with this background in mind that the commission fulfills its mandate to look specifically at the intersection of wildfire and utilities, and to make “recommendations for changes to law that would ensure equitable distribution of costs among affected parties.” The commission’s recommendations are summarized below. Full detail on each recommendation is included in the appendices.

II. Commission Process and Report Structure The Commission on Catastrophic Wildfire approached its work in the spirit of collaboration and maximum public engagement. To this end, the commission met four times, at locations across the state including cities that had either been recently impacted by wildfires, or that face a significant threat of future wildfires. The four meetings were held in the following cities: Sacramento – February 25, 2019 Redding – March 13, 2019 Santa Rosa – April 3, 2019 Ventura – April 29, 2019 In the process, the commission received invaluable testimony from wildfire victims, local governments, utilities and other energy industry experts, ratepayer advocates, financial experts, and other members of the public. The commission received thousands of pages of thoughtful written testimony, accepted on a rolling basis, with a Request for Comment in April including specific questions to help guide the development of this final report. The commission is grateful for all who committed their time, energy, and expertise to this process. Through this process, the commission has amassed a public record, which it has used to inform the recommendations contained here. Where possible commissioners have cited this public

7 record to substantiate their recommendations. In addition, all written comments will be included in the final report for the record. At its April 29th meeting in Ventura, the commission established three workgroups (each made up of two commissioners) to undertake drafting sections of the report, supported by commission staff. These workgroups included one focused on utility liability, one on funding mechanisms to handle damages from future wildfires, and one on issues related to the homeowner’s insurance market in high-risk fire areas. This executive summary highlights the findings and recommendations of each of these workgroups, the full products of which are attached as appendices.

III. Findings

Utility Liability Finding 1. California faces an unprecedented multi-dimensional emergency caused by catastrophic wildfires. Finding 2. California has a decentralized system of regulating and governing the wildfire prevention and mitigation of its 56 public and private electrical utilities that creates inconsistent rules for addressing wildfire risk, redundancy of effort and squandering of scarce resources. Finding 3. The current application of inverse condemnation, holding utilities strictly liable for any wildfire caused by utility equipment regardless of standard of care or negligence, imperils the viability of the state’s utilities, customers’ access to affordable energy and clean water, and the state’s climate and clean energy goals; it also, does not equitably socialize the costs of utility-caused wildfires. Finding 4. The increasing costs of capital and the risk of bankruptcy associated with the application of strict liability inverse condemnation doctrine to water companies, publicly- owned utilities, and investor-owned utilities is harmful to wildfire victims, ratepayers, and the utilities themselves. Finding 5. The current process for determining cost recovery contributes to the uncertainty that utilities face, ultimately increasing costs to ratepayers while resulting in insufficient investment in wildfire mitigation.

Funding Mechanisms Finding 6. The financial mechanisms for paying wildfire liabilities associated with utility- caused fires are strained and not sustainable for victims, ratepayers and utility shareholders.

8 Finding 7. Wildfire risk is created by multiple parties who should all be incentivized to reduce risk and share in paying for wildfire damages. Finding 8. The time required for, and the uncertainty of, investor-owned utility wildfire cost recovery from ratepayers reduces investor confidence in utilities, and limits utility access to capital after a major fire. Finding 9. Californians’ electric costs are increasing due to wildfire mitigation investments and other capital and regulatory requirements. Finding 10. The liabilities associated with wildfire are challenging to model and not well understood.

Homeowner’s Insurance Finding 11. Admitted lines home insurance is becoming more difficult and more expensive to obtain in high wildfire risk areas in California. Finding 12. As more homeowners in the WUI are unable to find home insurance from admitted carriers, more are having to purchase fire insurance from the surplus lines market or from the FAIR Plan. Finding 13. The home insurance market in California is not in crisis yet, although we are marching steadily toward a future where home insurance will be increasingly unavailable and/or unaffordable for many in the wildland urban interface in California. More destructive fires in the future of the sort we saw in 2017 and 2018 will only accelerate this trend. Finding 14. California does not currently require a new government created insurance program beyond than the FAIR Plan to support home insurance availability in the WUI.

IV. Recommendations As is clear from the findings above, the current wildfire situation in California requires a balancing act. It is critical that not only utilities, but also homeowners, renters, federal, state and local government, and others, act to reduce the risks of wildfires in the WUI. We must not incentivize risky behavior, including the risks many Californians take by continuing to move into the most fire-prone areas of the WUI; by remaining un- or underinsured; or by neglecting to maintain proper home hardening and fire safety standards. But we also cannot put the entire cost of wildfires onto ratepayers’ backs. Cost recovery from utility-related fires must be spread across those with the responsibility to help reduce these wildfires in a way that is fair, does not incentivize risk, and does not overly burden utilities to the extent that they could be driven out of business.

9 This is not an easy task. Where the commission landed, after hours of testimony and expert consultation, is as follows: First, the prudent manager standard for electric utilities must be modified to bring clarity to the cost-recovery process. Second, the commission recommends that the current strict liability application of inverse condemnation for utilities be replaced with a fault-based standard. If the inverse condemnation/strict liability standard is reformed, the commission recommends the creation of a modest Wildfire Victims Fund to more quickly and equitably socialize wildfire costs. Such a fund would be structured to avoid subsidizing risk: it would only be available to utilities found to be prudent, and would only pay out settlements to claimants at the levels they would have received in the absence of the fund’s creation. In the absence of inverse condemnation/strict liability reform, the commission recommends the Wildfire Victims Fund be much larger, though we recognize some real challenges, risks, and downsides to this outcome – not least of which is that creation of a large fund might go against the overarching need to ensure that the state is not ultimately subsidizing risky behavior from homeowners, renters, federal and local officials, and utilities. The commission has attempted to address some of these concerns through the fund details but many questions and concerns remain. Absent either reform of strict liability or the establishment of a large wildfire fund, immediately revising the prudent manager standard and establishing a liquidity fund would resolve some of the issues currently facing the state’s electric utilities. Finally, the commission recommends a series of reforms related to the homeowner’s insurance markets, to maintain availability and affordability of insurance in the wildland urban interface, while also ensuring that policy prices remain fundamentally tied to risk. Although the summary recommendations below were written up separately by the commission workgroups, the commission urges that any changes to inverse condemnation, the prudent manager standard, cost recovery, or creation of a Wildfire Victims Fund be considered in a coordinated fashion. Interactions between the three frameworks are so direct and so strong that modification of one or more without close coordination is likely to lead to failure of policy effectiveness or other severe unintended consequences.

Utility Liability The commission recommends the following as the clearest way to more equitably socialize costs, relieve the extreme burden of ratepayers, and meet the principles enumerated by the Governor’s Energy Strike Force.

10 Recommendation 1. Replace the current strict liability application of inverse condemnation for electric and water utilities with a fault-based negligence standard The current liability regime stems from the constitutional doctrine of inverse condemnation. In applying this doctrine, courts have assigned liability to utilities even in the absence of a finding of negligence. Converting this strict liability regime to a fault-based standard reduces the burden to ratepayers by removing significant wildfire liability, decreasing the cost of capital, and reducing the risk of bankruptcy, while maintaining a robust incentive for utilities to mitigate wildfire risk. Recommendation 2. Revise and clarify the prudent manager standard for utilities The current inverse condemnation rules include a prudent manager standard to determine cost recovery. Refining the prudent manager standard is a necessary additional step to provide clarity to utilities and their lenders. When utility equipment contributes to a wildfire, the CPUC must determine that the utility prudently managed its system before IOUs can recover liability costs from their electric customers. The commission received testimony that that the current standard for determining prudency is unclear and protracted. This process has led to significant uncertainty in the capital markets regarding the costs that utilities face, which in turn leads to increased costs for utility customers. Regardless of whether the strict liability application of inverse condemnation remains the rule, the commission recommends modifications to the approach of determining prudence, in order to bring certainty to the process while still holding utilities responsible for negligence. The objectives of this reform would be to 1) ensure that ratepayers pay for just and reasonable investments (such as investments in prevention and safety), but do not pay for avoidable, negligent behavior and 2) ensure cost recovery reflects the host of factors—including risky homeowner or renter behavior—that contribute to the extent of wildfire damage, and does not hold utilities solely liable in cases where other factors contribute to the magnitude of the damages. Below are three options for reforming the prudent manager standard. In the absence of a Wildfire Victims Fund or other mechanism to further socialize costs: Cost Recovery Option 1: Burden shifting. In order to increase the certainty that prudently incurred costs will be allowed in rates, CPUC process could be modified to allow for a presumption of prudence for a utility wildfire expense given a prima facie showing but still allow for a challenger to attempt to prove, by a preponderance of the evidence, that an expense was imprudently incurred.

11 And/Or Cost Recovery Option 2: Further refinement of those SB901 factors the CPUC should consider when assessing disallowances, to give a higher weighting to those factors that acknowledge the unique, exogenous circumstances possibly present in a catastrophic wildfire. If a Wildfire Victims Fund is simultaneously created and utility shareholders make a substantial up-front contribution to the Fund: Cost Recovery Option 3: Maximize utility shareholder liability up to the point it harms ratepayers or impacts service. One option might be to have a predetermined maximum liability that shareholders may be subject to under the current (or an alternative) framework for prudency. This option should only be considered if only if shareholders make substantial upfront contributions to a fund. Recommendation 3. Establish an Electric Utility Wildfire Board which consolidates governance of all utility catastrophic wildfire prevention and mitigation into a single entity separate from the California Public Utilities Commission. The IOUs, POUs, and cooperatives are governed by separate wildfire prevention and mitigation rules. Moreover, there is no consolidated data gathering, best practices development, or other centralized efforts to maximize the state’s fire prevention and mitigation efforts. This results in inconsistent policies, duplication of efforts, and lack of efficient coordination. The commission recommends that a single, purpose-built state entity be created to have governing authority over all utility wildfire prevention and mitigation activities. The entity would set and enforce safety standards and implement, administer and adjudicate fault-based standards for both IOUs and POUs. The workgroup envisions a robust entity with (a) data collection and other information technology efforts; (b) liability and conduct standards development activities; and (c) liability standards enforcement activities.

Taken together, these actions would significantly reduce the risk to ratepayers from overwhelming wildfire liability. But taking these actions would not entirely eliminate that risk. Utilities would continue to face liquidity challenges if they are perceived to face the risk of significant wildfire liabilities under the revised prudent manager standard. For this reason, the commission recommends that an additional modest funding mechanism be considered to create a buffer against the shock of liability from catastrophic fires. Such a mechanism is further described below. In the event that the inverse condemnation/strict liability standard were revised, such a fund would need to cover significantly less liability, and

12 would therefore require a smaller capitalization than if the current inverse doctrine were to stay in place.

Funding Mechanism: Wildfire Victims Fund Catastrophe funds, such as a Wildfire Victims Fund, can be useful tools when rapid changes in perception of risk from a particular peril (wildfire, hurricane, earthquake) lead to disruptions in insurance markets or to a risk that traditional insurers are either unable or unwilling to manage through the normal underwriting process. The degree to which the State’s utilities continue to face such a perception will determine whether a fund is needed, and if so, how large it should be. In the absence of reform to the current application of strict liability to the state’s utilities, the commission recommends that the legislature establish a large and broadly sourced Wildfire Victims Fund to more quickly and equitably socialize wildfire costs. Ultimately, how such a reserve fund is structured, and how effective it is, depends on what other reforms the legislature adopts. To be most effective, a fund should be coupled to greater investment in wildfire mitigation, and to reforms to the liability regime, cost recovery process, and property insurance markets. At the same time, while this discussion focuses on a fund that would be designed to pay claims from wildfire victims, the commission believes that a smaller fund, designed to provide liquidity to utilities after large wildfires, could provide some but not all of the benefits of the larger claims-paying fund. Recommendation 4. Absent changes to the strict liability application of inverse condemnation, the legislature should consider establishing a large and broadly sourced Wildfire Victims Fund, to more quickly and equitably socialize wildfire costs, and maintain the heath of the state’s utilities. This fund should be designed based upon the following objectives: 1. Pool risks broadly, and be sourced beyond electric ratepayers. 2. Include contributions from utility shareholders and ratepayers that reflect differential risk 3. Limit risk pooling when the utility engages in negligent behavior. 4. Treat wildfire victims fairly 5. Improve utility solvency and liquidity so that utilities may continue to offer reliable, affordable service to Californians and make progress towards California’s clean energy goals 6. Maintain incentives for all parties to pursue wildfire mitigation efforts.

13 Recommendation 5. The Wildfire Victims Fund, which should be created as soon as possible—ideally to cover potential 2019 fires, but if not the 2020 fire season and beyond-- should be tax-exempt, and limited to “catastrophic” electric utility caused wildfires.5 The fund would ideally have the following attributes: Participation and Capitalization: Participation in the Fund should be voluntary, with participants benefitting from changes to the cost-recovery standard. Participating utilities must maintain a specified level of commercial wildfire liability or general liability, with a specified minimum deductible. The Fund should be highly capitalized to survive anticipated third-party damages6and with relatively equal contributions from ratepayers, shareholders, property owners (through a surcharge on property insurance) and the State of California (through forfeited tax revenue from the tax-exempt status of the Fund, and through statewide investments in mitigation). Claims Payment: The Fund should pay claims in excess of the mandated, combined commercial insurance and deductible, up to a cap. Specifically, the Fund should pay a maximum amount per fire incident, and a maximum amount per utility in a given year. Any excess liability incurred by a utility would remain with that utility and be subject to CPUC prudency review and follow through cost allocation. It is critical that the fund not have the perverse outcome of actually incentivizing risky behavior on the part of utilities or claimants. To that end, claimants to the Wildfire Victims Fund should not be entitled to larger settlements than they would have received in the absence of its creation. The fund should pay insured, underinsured, and uninsured losses from utility caused wildfires at values approximating their settlement value through predetermined discounts. Similarly, if a utility is found to be imprudent, or partially imprudent with respect to a wildfire, the fund should pay claims only up to a specified amount, directly tied to the level of up-front shareholder contributions to a fund. In addition to claims payment, money contributed to or earned by a Wildfire Victims Fund should be used for a variety of purposes to further its goals, including purchase of reinsurance or other risk transfer, developing a better understanding of and recommendations for risk based approaches to wildfire mitigation, and public education on the risk of wildfire and the actions that can be taken to avoid or reduce vulnerability

5. For detailed recommendations and considerations on these decision points, please see the Fund Workgroup Report. The commission also recommends that the legislature should continue to monitor exposure faced by water utilities and consider in the future whether any additional financing mechanisms are needed to transfer risk and recover costs in that sector.

6 See (Wildfire Fund Workgroup Section) for a details discussion of fund capitalization and modeling needs.

14 Sunset Clause: Finally, the fund should not be permanent. Instead, it should be designed to last so long as necessary but no longer (estimated 10 years), with a planned mechanism to wind down Fund operations and return unused capital to all contributors in an equitable fashion. Challenges in Creating a Wildfire Victims Fund Establishing a Wildfire Victims Fund of sufficient size and with adequate contributions, that does not perversely incentivize risky behavior on the part of homeowners, renters, federal, state and local officials, and utilities, is a daunting task. Creating a large, deep-pocketed fund could have the unintended outcome of encouraging claimants to inflate their claims, for instance. Or, the presence of the fund as a backstop could encourage homeowners, renters, and local governments to pay less attention to important fire-prevention efforts. Balancing the objective of creating a large enough fund to be meaningful, the importance of better socializing costs, and the imperative to actually reduce the overall risk of catastrophic wildfire presents important challenges. Key among these is that the likely largest potential contributor to the fund, PG&E, is currently undergoing Chapter 11 reorganization, and its financial liabilities for fires in 2017 and 2018 have not been resolved. This reorganization, which will not be finished this legislative session, may have implications for the utility’s available liquidity to contribute immediately to a fund. This is particularly concerning given the likely higher contribution expected from PG&E due to its territory size and recent wildfire history. In addition, shareholders of all the state’s IOUs may object to sizeable initial contributions to the fund, even though they will benefit from the risk pooling a fund creates as well as from associated cost recovery reform. Maintaining payouts at current settlement values both for subrogation claims from insurers, and for payments to underinsured homeowners, also present both legal and implementation challenges. Moreover, once established, a fund would require some mechanism to ensure submitted claims for under- and un-insured homeowners are reasonable, given there is no intermediary such as the courts, or an insurance company, reviewing claims’ veracity. Not maintaining payouts at current settlement values, and the potential for claims inflation, both will dramatically increase the cost of the fund and so compromises its likely usefulness. Finally, there are important affordability challenges to consider in thinking through the potential of a large Wildfire Victims Fund. The state has an overall goal of maintaining affordable electric utility rates, which could be increased as a result of utility contributions to such a fund. On the other hand, such a fund might be the least-worst option for utility customers in that it would render a future of escalating and unpredictable electricity bills somewhat less costly and much more predictable.

15 Creating and maintaining a very large Wildfire Victims Fund, combined with significant cost recovery reform, is not an easy path. Further work is needed to identify the costs, consequences, and feasibility of parts of the proposal as presented here.

Insurance Insurance is becoming more difficult and more expensive to obtain in high wildfire risk areas in California, and while we are not yet in a crisis, it will be increasingly unavailable and/or unaffordable for many in the wildland urban interface in California. More destructive fires in the future of the sort we saw in 2017 and 2018 will only accelerate this trend. The state should take measures to help bring stability to the market, while ensuring that the market accurately reflects the underlying risk. The commission recommends the following: Recommendation 6. California should preserve its risk-based approach to pricing insurance. The commission strongly recommends that California maintain incentives created through risk-based pricing of insurance for all stakeholders to avoid and mitigate risk. Furthermore, the state should not act to suppress prices in high-wildfire risk areas by increased cross-subsidy from low-risk areas. Recommendation 7. Improve the California FAIR Plan, California’s last-resort basic home insurance, by increasing the claims cap. In addition, the commission believes that a targeted premium subsidy for existing homeowners in the WUI who are very low income and for whom the FAIR Plan is the only option for insurance is potentially justified. Recommendation 8. Improve the California Insurance Guarantee Association by increasing the claims cap. Recommendation 9. Require Fire Risk Underwriting Models used by insurers to be filed and approved by CDI. In addition, require insurers to file annually with CDI for review and approval the insurers’ replacement cost estimating models/tools and the inputs they are using as well as a comparison of recent loss experience to estimates based on these tools. Recommendation 10. Set home fire risk reduction and community risk reduction standards with input from insurers and require insurers to write insurance where home owner and community both meet standards OR require insurers to implement a tiered mitigation credit based on the level of home hardening. Recommendation 11. Require insurers to calculate and provide a replacement housing estimate in writing to insureds annually and before entering into insurance contract. Recommendation 12. Require CDI to undertake a data call on the insurers’ subrogation claims, as well as on the insurers reinsurance cost and availability.

16 Recommendation 13. Require homeowners insurers to offer a one-year notice of non- renewal, in addition to the existing 45-day notice, when there is no change in the risk presented at the insured property within the homeowners’ control, or if the insured has been with the same insurer for five years or more. Recommendation 14. Mandate that all homeowners’ insurers offer a “Difference in Conditions” policy or a Comprehensive Personal Liability/Residential Workers’ Compensation coverage. Recommendation 15. Require that there be a valid quote for insurance coverage before any real estate offer is accepted.

Reduction of Wildfire Risk in California As noted at the outset, the commission recognizes that addressing the impact of wildfires on California’s utilities requires both reducing fire risk on the front end, and fairly paying out for claims based on fire damages when they occur. While most of this report focuses on cost liability and cost recovery, we cannot lose sight of the critical need to mitigate the risk that these fires will become catastrophic. These final recommendations focus on this important point. Recommendation 16. Establish a Wildfire Vulnerability Risk and Reduction Coordinator within the Governor’s Office of Planning and Research. The Risk Reduction Coordinator would be charged with conducting research and providing regular recommendations to the legislature, governor, CPUC, Insurance Commissioner, and local governments on optimal levels of risk mitigation spending within the state by various parties. Recommendation 17. Provide significant state investments in prevention and mitigation efforts, whether funded by a state tax and a specific fund in the state budget for direct mitigation or small grants for home hardening. Recommendation 18. Take action to significantly increase consistency of private property maintenance laws by developing best practices or minimum standards for fire risk, and minimum allowed penalties for non-compliance. Recommendation 19. The workgroup recommends that the state require that any municipality or government body that approves new development, including new construction on vacant land, is able to provide firefighting service to that property within a certain maximum time. Recommendation 20. Development fee for new construction in the WUI. New development that will put more lives and property at risk, ought to pay a development impact fee to the State of California to help find risk reduction efforts that will benefit the new development.

17 V. Conclusion In this report, the commission has attempted to address the current catastrophic wildfire liability situation in a way that recognizes the severity of the problem and its many different contributors; addresses the critical need to provide cost recovery for those with serious damages while not bankrupting utilities in the process; and highlights the importance of actively reducing wildfire risk while simultaneously structuring a system to pay for damages from these fires. Bearing all these factors in mind, the commission recommends that the legislature immediately revise the CPUC’s prudent manager standard and cost recovery process along the lines discussed above. The commission further recommends a change to the current inverse condemnation/strict liability standard, with the addition of a modest Wildfire Victims Fund to pay out claims quickly and equitably. In the absence of inverse/strict liability reform—or in the event this is not a possible near-term alternative—the commission recommends that the state create a larger Wildfire Victims Fund to cover reasonable costs incurred in catastrophic wildfires. However, the commission fully recognizes the challenges of capitalizing and standing up such a fund, and understands that in the short term a smaller bridge fund may be necessary, on the road to eventual inverse condemnation/strict liability reform.

18 UTILITY WILDFIRE LIABILITY WORKGROUP REPORT Commissioner Kahn and Commissioner Nava

Staff note: The executive summary and the workgroup reports have not been reviewed or approved by the full commission prior to being released publicly. The workgroup reports are the products of the workgroups established at the April 29th commission meeting, and represent consensus thinking of the members of a given workgroup. The executive summary, compiled by commission staff, is an attempt to reconcile the recommendations of the three workgroups into one cohesive set of proposed recommendations for discussion and consideration at the next commission meeting.

I. Findings from Public Testimony Governor Newsom’s April 12, 2019 report Wildfires and Climate Change: California’s Energy Future (“Strike Force Report”) covers much of the background necessary for this report. In many places, the Strike Force Report provides explanations and supporting data which parallel the work and findings of this workgroup. Herein, where relevant, the workgroup will cite the Strike Force Report rather than reproducing that information.

Finding 1. California faces an unprecedented multi-dimensional emergency caused by catastrophic wildfires. The commission received evidence that the state faces an emergency with many causes as described in the Strike Force Report.1 The cumulative effects of population growth and expansion into high fire severity zones, the effects of climate change, and many years of insufficient application of resources to combat and harden against the growing threat of wildfires have created conditions in which millions of Californians now and for the foreseeable future are vulnerable to the devastating consequences of catastrophic wildfires.

1 Governor Newsom’s Strike Force. “Wildfires and Climate Change: California’s Energy Future”, pp 2

LeRoy Westerling, public testimony. February 25, 2019. “A warming, drying landscape with more variable precipitation has resulted in more, larger, and more severe wildfires across the west.”

19 Though stakeholders and experts provided the commission with evidence of myriad causes of this emergency, this commission’s charge was to focus on utility infrastructure. In doing so, the commission received input focused on two subjects related specifically to utility liability: 1. The decentralized manner in which the state’s 56 investor-owned utilities (IOUs), publicly-owned utilities (POUs) and cooperatives manage the risk of catastrophic wildfire. 2. The effect the state’s current utility wildfire liability regime is having on the ability of the state to properly respond to the fire emergency and to equitably allocate its costs. In the following findings, the workgroup will discuss both of those subjects.

Finding 2. California has a decentralized system of regulating and governing the wildfire prevention and mitigation activities of its 56 publicly-owned and investor-owned electrical utilities and cooperatives that creates inconsistent rules for addressing wildfire risk, redundancy of effort, and squandering of scarce resources. The commission heard from a wide variety of fire victims, utility company representatives, government officials, fire emergency experts and other stakeholders, all of whom stated that additional resources are needed to prevent wildfires. The governor and legislature have already recognized this need and have begun to address it,2 although substantially greater resources are required, particularly in relation to the threat posed by utility infrastructure. Currently, as outlined in SB 901 last year, IOUs are required to develop and submit Wildfire Mitigation Plans to the California Public Utilities Commission (CPUC) for approval (PUC section 8386). The majority of the POUs are required to independently develop wildfire mitigation plans and have them available for public comment. Thus, each of the state’s POUs sets its own standards and programs in its wildfire mitigation plan, and this behavior is not regulated by the CPUC beyond the existing statewide standards3. Separately, each of the state’s six investor- owned utilities sets its own standards and programs for addressing the fire emergency which behavior is regulated by the CPUC.

2 Exec. Order No. N-05-19 (2019). Retrieved from https://www.gov.ca.gov/wp-content/uploads/2019/01/1.8.19-EO-N-05- 19.pdf.

Proclamation of a State of Emergency (22 March 2019). Retrieved from http://www.fire.ca.gov/general/downloads/45- DayReportPlans/3.22.19-Wildfire-State-of-Emergency.pdf

Veklerov, K. (2018, August 8). “California giving out $170 million in cap-and-trade revenue to help prevent wildfires.” San Francisco Chronicle. Retrieved from https://www.sfchronicle.com/california-wildfires/article/California-doles-out-170-million- in-13139050.php?psid=6rRXA

3 See CPUC General Order 95 and General order 165.

20 The State of California has no regulatory agency or other body with the responsibility or authority for coordinating and governing the comprehensive wildfire prevention and mitigation of the IOUs, POUs and cooperatives. There are numerous practices which the state’s utilities can adopt to improve wildfire prevention and mitigation, however there is no regulatory mechanism for adopting a uniform, flexible statewide approach to the emergency for all electrical utilities.4 There is a need for improved data collection about the utility wildfire risk and utilization of advanced technology to combat the emergency. But, there is no centralized method for the state to marshal its resources in this regard as, for example, Florida has adopted with its hurricane agencies. The approach of consolidating regulations, governance and problem solving into a single agency or board with statewide responsibility has been successfully undertaken in analogous circumstances by California5 and other states.6

Finding 3. The current application of inverse condemnation imperils the viability of the state’s utilities, customers’ access to affordable energy and clean water, and the state’s climate and clean energy goals and does not equitably socialize the costs of utility-caused wildfires. The state’s three major IOUs—Pacific Gas & Electric (PG&E), Southern California Edison (SCE), and San Diego Gas & Electric (SDG&E)—face a crisis in that they have limited and expensive access to capital to fund their operations, and they face the significant risk of bankruptcy. This case for this is clearly outlined in the Strike Force Report.7 This circumstance increases electricity rates, imperils 75 percent of the state’s residents’ ability to have their energy needs served.

4 The CPUC’s Wildfire Mitigation Plan proceedings established through SB901 provide a significant step in this direction, however this process needs improvement and leaves out the state’s POUs.

5 See California Earthquake Authority, public testimony, April 3, 2019.

6 John Rollins, public testimony, April 3, 2019. “Over 25 years ago, in the wake of Hurricane Andrew, Florida faced an acute availability and affordability crisis in homeowners insurance. An abrupt rise in insurers’ cost of capital after the unexpected and severe storm losses broke the connection between the property hazard risk faced by consumers and the insurers and reinsurers who commit capital to share that risk. Florida had an existing guaranty fund to deal with the dozen insolvent insurers, but responded to the state’s future needs by chartering a trio of institutions: a state-backed scientific body to assess hazard risk (the Florida Commission on Hurricane Loss Projection Methodology or “Commission”), a state-backed reinsurer (the Florida Hurricane Catastrophe Fund or “Cat Fund”), and a state-backed direct insurer (now known as Citizens Property Insurance Corporation, or “Citizens”). Each institution plays a unique role in market stabilization.”

7 Governor Newsom’s Strike Force. “Wildfires and Climate Change: California’s Energy Future”, pp 3

21 The state’s POUs and cooperatives which serve 25 percent of the state’s residents, also face financial crisis from the current liability regime. POUs are unable to shift the burden of their liability threat, and as such the costs will be born directly by the ratepayers,8 or will force the utilities into bankruptcy. While ratings agencies have indicated that this threat is not as great as that faced by the IOUs, they have nonetheless indicated potential ratings downgrades.9 The state’s greenhouse reduction goals are also dependent on healthy utilities that are able to support renewable energy markets, energy efficiency programs, and technology advancements. As utilities face a higher cost of capital and the risk of bankruptcy, these programs will suffer. The state’s water providers also face risk from the current liability scheme.10 Water utilities provided testimony that they are increasingly facing litigation for wildfire damages under inverse condemnation in instances where the water utility had no role in starting the fire. They testified that this liability puts at risk their ability to provide service to customers. The state must comprehensively addresses two overriding problems:

1. The lack of a coordinated approach by the electric utilities to the climate caused catastrophic wildfires (see Finding No. 2 above) and

2. The flawed system of allocating liability to the state’s privately-owned utilities, publicly-owned utilities and publicly-owned water utilities.

8 Sacramento Municipal Utilities District (SMUD). Letter to the commission 22 April 2019 “Publicly owned utilities like SMUD, which don't have shareholders to bear the costs of the damages inflicted by a catastrophic fire, have only one recourse to fund any wildfire liability - to collect from our customers. These inevitable rate impacts cannot avoid having a disproportionate impact on our most vulnerable populations that are least likely to afford it, including low income customers, the elderly, and renters. A major wildfire, like recent fires elsewhere in California, could cause SMUD's electric rates to jump by upwards of 25 percent.”

9 Sacramento Municipal Utilities District (SMUD). “Recently ratings agencies have started reassessing POU's financial risk to wildfire catastrophes and responsibility for claims given the strict liability standard in California. Like other utilities, SMUD ratings have been recently placed on "outlook negative" by Moody's, a status that is a precursor for downgrading ratings absent any structural risk changes.”

10 California Water Association et al. Letter to the commission. April 22, 2019. “The dangers posed by the current application of the inverse condemnation doctrine are highlighted by the judgment against the Yorba Linda Water District (“YLWD”) after the 2008 Freeway Complex Fire. In this case the Superior Court determine that, ‘neither the Plaintiffs nor the YLWD (or any YLWD public improvement) caused the Freeway Complex Fire.’ Despite this, Yorba Linda Water District had to pay out nearly $70 million because a portion of its water system was damaged by the fire, which interrupted the flow of water to the fire hydrants in one neighborhood. The Superior Court did not find that Yorba Linda Water District did anything wrong or was negligent. […] Yorba Linda Water District had ‘full liability’ even though it was also a victim of the fire and because the fire damaged the water system. And now this same logic is being used as the foundation of suits against other public drinking water providers, including the City of Ventura in relation to the 2017 Thomas Fire..”

22 Otherwise, the utilities and their ratepayers will suffer significant and increasing consequences.

Finding 4. The increasing costs of capital and the risk of bankruptcy associated with the application of strict liability inverse condemnation doctrine to water companies, publicly- owned utilities, and investor-owned utilities is harmful to wildfire victims, ratepayers, and the utilities themselves. Victims: The risk of utility bankruptcy harms both major classes of the victims of wildfires. Under bankruptcy, property and casualty victims (i.e., non-property loss victims) are unfairly forced to have their claims moved from civil court proceedings to bankruptcy jurisdiction, and property loss victims may be subordinated to post-bankruptcy victims’ claims. Ratepayers: The application of strict liability to utilities under current law severely and unfairly prejudices the ratepayers of privately-owned utilities, publicly-owned utilities and water utilities. The IOU Ratepayers: IOUs have two sources of revenue to pay for their inverse condemnation liabilities – their shareholders and their ratepayers. The evidence submitted to the commission is that (a) these utilities face significant difficulty and expense in purchasing insurance to cover these liabilities,11 (b) these liabilities render the IOUs unable to obtain critically needed capital, including capital to invest in fire prevention activities and (c) the effect of these liabilities is to significantly increase the cost of capital, or to render the IOUs (currently PG&E and potentially SoCal Edison & SDG&E) bankrupt. The alternative to the shareholders of these utilities bearing the costs of strict liability – the ratepayers absorbing this cost - is equally untenable. The commission has received testimony that the consumer, commercial and industrial customers of the IOUs currently pay among the nation’s highest utility rates.12 Additionally, regardless of strict liability costs, these rates will necessarily increase significantly because the ratepayers will pay for fire prevention efforts and

11 Josh Jiang, Marsh Risk and Insurance Services. Public testimony. March 13, 2019. “Most traditional liability insurers have already decided to exclude wildfire liability insurance or discontinue writing liability insurance for California utilities going forward. A few remaining large carriers with strong parents and balance sheets are still offering large capacity limits, but at a premium level pricing at a 1 in 2 or 1 in 3 loss ratio. Attachment points on liability vertical towers no longer seem to matter given the severity of those losses as carriers want to charge the same rate for the capacity even at a higher attachment point. If wildfire losses of the last few years continue for the California utilities, a collapse of the insurance market will follow. We expect the liability insurance market to continue being distressed until meaningful regulatory reform, new and improved technology and mitigation tools can be implemented to reduce wildfire frequency and severity.”

12 The California Large Energy Consumers Association. Letter to the commission. April 22, 2019. “California’s industrial electricity rates are almost double those of other western states. For example, in January 2019: Nevada’s average industrial rate was 4.94 ¢/kWh; Arizona’s was 5.96 ¢/kWh; Texas’ was 5.25 ¢/kWh; these can be compared to California’s average industrial rate of 11.43 ¢/kWh.”

23 capital costs.13 The result of the application of strict liability for inverse condemnation is the risk of significantly increasing the already-high cost of electricity service to 75% of the state’s electricity customers either directly through cost-shifting or indirectly as a result of bankruptcy. The POU Ratepayers: The current application of strict liability to POUs and cooperatives serving 25% of the state’s residents also significantly burdens ratepayers. This is because the shareholders of these utilities are the ratepayers. Thus, under current law, 100% of the cost of inverse condemnation liability is passed through to these ratepayers. Testimony submitted to the commission demonstrates that POUs are already are facing (1) the inability to obtain insurance at reasonable costs14 if at all;15 (2) rising costs of capital; and (3) rising fire prevention costs.16 Under the current liability scheme, many of the state’s publicly-owned utilities and cooperatives are one catastrophic fire away from financial ruin, the cost of which will be entirely the responsibility of the ratepayers. In particular, testimony from Plumas-Sierra Rural Electric Cooperative demonstrated the paralyzing consequences of the application of inverse condemnation to our residents in remote forested counties.17 Water Utilities: The state’s water utilities similarly face the risk that the current utility liability scheme will imperil their services and customers. These companies point to the liability imposed by the application of the inverse condemnation rule to them in the Yorba Linda case to assert – without contradiction – that unless the inverse condemnation law is changed, they

13 The Utility Reform Network. Letter to the commission. April 22, 2019. “For example, the amount Pacific Gas & Electric Company (PG&E) proposes to spend in 2020 to prevent wildfires and purchase wildfire liability insurance would increase average annual electric bills by $84 for residential customers. Customers will face additional bill increases from PG&E’s wildfire prevention activities and insurance costs before 2020 that are not yet reflected in rates. And these wildfire-related costs are likely to increase further for many years after 2020.”

14 Sacramento Municipal Utilities District (SMUD). Letter to the commission 22 April 2019. “Last year we were able to roughly double our wildfire insurance, while incurring a four-fold increase in premium costs. Renewal conversations have started and while we don't expect the market to move away from us, we do anticipate even higher costs.”

15 Bob Marshall, Plumas-Sierra Rural Electric Cooperative. Public Testimony, March 13, 2019. ”Last year, we went up for renewal and got $35,000 costs for $15 million of umbrella coverage. This year, no one would touch it except for Lloyd’s of London, who was $7 million for a massive deductible. That would have been a 10% to 15% rate increase for something that didn’t provide very much cover.”

16 SB 901 requires both investor-owned utilities and publicly-owned utilities to develop and implement wildfire mitigation plans. The cost of implementation will be passed directly on to ratepayers.

17 Bob Marshall, Plumas-Sierra Rural Electric Cooperative. Public Testimony, March 13, 2019. “The bottom line is that we are trying to self-insure because we can’t get commercial insurance because of the strict liability issue. I know that someone needs to pay for that and the driving issue at the heart of this is climate change; but this is not socializing the damage, it is dumping the costs on us. Adding millions of dollars of cost to a small utility is going to put a lot of us out of business. We believe the answer is reformation of the law; however, even a cap would be tremendous.”

24 could face the possibility of being unable to provide clean drinking water to the state. The union employees of these companies (and the other utilities) have provided similar testimony.18

Finding 5. The current process for determining prudence and cost-recovery contributes to the uncertainty that utilities face, ultimately increasing costs to ratepayers while resulting in insufficient investment in wildfire mitigation. Establishing that strict liability does not apply to the state’s electric and water utilities,19 without further legal reform, will not rectify the problems identified above. The consensus of the electrical utilities and their lenders and investors is that the state must adopt uniform, objective fault-based standards and a mechanism for implementation of those standards in order for the state to meet the wildfire challenges identified in this report and the Strike Force Report.

II. Utility Liability Recommendations

Recommendation 1. Replace the current strict liability application of inverse condemnation for electric and water utilities with a fault-based negligence standard. Rationale: As discussed above, the current liability regime creates the potential that the state’s electric and water utilities will be unable to meet their responsibilities; unfairly overburdens ratepayers; and inequitably allocates the costs of the fires. In their work soliciting and receiving extensive public, stakeholder and expert input, the members of this workgroup did not hear from a single source that the current liability scheme works satisfactorily as implemented. Suggested alternatives focused on two solutions to the current crisis if the current liability scheme were left in place and included bonding, cost recovery fund, risk spreading and others. However, each alternative pointed either to the

18 California Water Service & Utility Workers Union of America. Letter to commission. April 22, 2019. “With the climate change-fueled proliferation of wildfires, community water systems facing unrestrained wildfire liabilities will, no doubt, find it increasingly difficult to make needed improvements to the State’s drinking water infrastructure. The Governor’s Strike Force explains…that the absence of a fault-based wildfire liability standard will negatively affect the ability of energy utilities to provide customers with safe and affordable electricity. The same is true for community water systems, only more so because their customer totals, invested plant and equipment, and sources of investment capital are orders of magnitude smaller than those of electric utilities.”

19 The commission notes that neither the Supreme Court nor the legislature has ever opined on this subject and, of course, has not opined on this subject in response to the unique wildfire emergency the State now faces.

25 ratepayers or the taxpayers assuming the crushing, uninsurable, unlimited liability created by the application of strict liability inverse rules. Changing the strict liability rules for applying inverse condemnation to a fault-based standard allocates the cost of catastrophic wildfires more equitably than those which impose these costs on ratepayers or taxpayers.

Recommendation 2. Revise and clarify the prudent manager standard Along with changing the strict liability application of inverse condemnation to a fault-based standard, the workgroup recommends the legislature undertake modifications to the prudent manager standard, to provide greater certainty regarding when utilities are able to recover costs related to wildfire damages. [Staff Note: these concepts are discussed further by the Wildfire Fund Workgroup in their findings and recommendations]

Recommendation 3. Establish an Electric Utility Wildfire Board which consolidates governance of all electric utility catastrophic wildfire prevention and mitigation into a single entity separate from the California Public Utilities Commission. A single, purpose-built state entity should be created to have governing authority over all utility wildfire prevention and mitigation activities. The entity would set and enforce safety standards and implement, administer and adjudicate fault-based standards for both IOUs and POUs. The workgroup envisions a robust entity with (a) data collection and other information technology efforts; (b) liability and conduct standards development activities; and (c) liability standards enforcement activities. The Electric Utility Wildfire Board would have the following functions, among others: 1. It would set rules, regulations and procedures for governing all California electric utility wildfire reduction activities including any wildfire mitigation plans, rules for hardening the grid, and electricity shut offs. It would consolidate the current California expertise in those areas to perform these functions and it would be sensitive to local needs and conditions in doing so. 2. It would advise the CPUC and other ratemaking authorities of the burdens placed on the utilities and mandate or request (as the law allows) those authorities to provide the ratepayer funding for such activities 3. It would develop research and data collection and public education capabilities, and consolidate those already existing, to provide a robust proactive forum for California to meet the utility wildfire challenge in the future 4. It would have authority to fine or otherwise punish the utilities and their officers and directors for non-compliance and to refer more serious violations to criminal authorities. These powers shall be independent of its liability adjudicating functions described below. Thus, a

26 utility and its officers and directors could be subject to punishment in circumstances in which the utility is not liable for the consequences of a particular fire. This is intended to address the moral hazard issue. 5. It would have adjudicative functions regarding the fault based liability standard using administrative law judges pursuant to California's administrative law system. If a victim of a wildfire claims that a utility is liable for the consequences to it of a wildfire under the fault based liability system the victim shall file a claim with the board and that claim shall be resolved under fault based standards with Judicial review. If the claim is upheld the utility shall pay the claim, not the ratepayers in the case of the IOUs. If the claim is denied because the utility was not at fault under the circumstances, the victim shall have recourse to a possible wildfire fund if qualified thereunder and otherwise the consequences of the fire will be treated identically with other no-fault based circumstances. All property owners and other potential victims will be encouraged to continue to utilize California's property insurance resources which should be augmented to make more robust. Rationale: Currently the six IOUs and 50 POUs and cooperatives are governed by separate and different wildfire prevention and mitigation rules. Moreover, there is no consolidated data gathering, best practices development and other centralized efforts to maximize the state’s fire prevention and mitigation efforts. This results in inconsistent policies, duplication of efforts and lack of efficient coordination. The Strike Force Report recommends the CPUC undertake significant efforts to remedy these deficiencies for the IOUs.20 The workgroup supports the Strike Force’s suggestions but instead recommends that all of such efforts be placed in a new entity which applies these efforts to all of the state’s electric utilities. This workgroup is skeptical of the efficacy of the Public Utilities Commission handling this responsibility for the investor-owned utilities, as the CPUC is already overburdened with regulatory responsibility over water utilities, transportation, telecommunications and other activities. In addition, the CPUC has evolved a quasi-judicial process which does not offer the flexibility and speed required in responding to the evolving threat of wildfires, or the needs of the victims in an aftermath of a fire, and the CPUC’s actions leading up to and during the current crises has saddled it with a credibility crisis with respect to these issues. In order to fairly implement a fault based-liability standard, all electric utilities must be governed by a single set of liability standards and a single oversight authority. By consolidating statewide expertise in the prevention and mitigation activities of state vis-à-vis utilities and wildfires, the state will achieve a maximum level of efficiency and expertise.

20 See Governor Newsom’s Strike Force. “Wildfires and Climate Change: California’s Energy Future” “Part 4: A More Effective CPUC with the Tools to Manage a Changing Utility Market”. pg. 40-43

27 Considerations regarding liability recommendations The workgroup recommends the above as the clearest and most durable way to more equitably socialize costs, relieve the extreme burden of ratepayers, and meet the principles enumerated by the Strike Force Report. These actions would not entirely eliminate the risk of overwhelming liability from utilities and ratepayers. However, they would go a significant way toward reducing that risk. An additional funding mechanism should be considered to create a buffer against the shock of additional liability. Under the recommendations above, if a fund is needed, the cost of capitalizing it would be significantly reduced. As noted earlier, wildfire prevention and risk mitigation are a critical aspect of any effort to manage the costs of utility-related catastrophic wildfires. The recommendations above should be undertaken in conjunction with significant effort to reduce overall risk. To this end, the Strike Force Report notes that 25% of the state’s population or 11 million people live in a high fire risk area. There are many reasons for this reality, but one critical element is that local city and county governments permitted such development. As California struggles with new approaches to forest management, continued approval for homes in high fire risk areas will exacerbate the problem. Local governments must recognize this risk as they make land use decisions.

28 Wildfire Fund and/or Other Funding Mechanism(s) Workgroup Report Chair Peterman and Commissioner Wara

Staff note: The executive summary and the workgroup reports have not been reviewed or approved by the full commission prior to being released publicly. The workgroup reports are the products of the workgroups established at the April 29th commission meeting, and represent consensus thinking of the members of a given workgroup. The executive summary, compiled by commission staff, is an attempt to reconcile the recommendations of the three workgroups into one cohesive set of proposed recommendations for discussion and consideration at the next commission meeting.

I. Summary The following findings, drawn from comments to the Commission, inform our conclusion that existing financial mechanisms and frameworks are insufficient to manage utility wildfire risk and liabilities. The legislature should further clarify the CPUC cost recovery process and establish a broadly sourced Wildfire Victims Fund to more quickly and equitably socialize wildfire costs. Ultimately, how such a fund is structured, and how effective it is, depends on what other reforms the legislature adopts. This workgroup has primarily focused our analysis, and discussion, to understand how a fund could best perform absent those reforms. However, the workgroup believes that a fund, to be most effective, should be coupled to greater investment in wildfire mitigation, and liability regime, cost recovery, and property insurance market reforms.

Establishing a Wildfire Victims Fund of sufficient size and with adequate contributions is a daunting task, and while this workgroup focused on a fund that would be designed to pay claims from wildfire victims, we believe that a smaller fund, designed to provide liquidity to utilities after large wildfires, could provide some but not all of the benefits of the larger claims- paying fund.

29 II. Findings

Finding 1. The financial mechanisms for paying wildfire liabilities associated with utility caused fires are strained and not sustainable for victims, ratepayers and utility shareholders. As the Strike Force Report notes and other commenters endorsed, “[T]he current system for allocating costs associated with catastrophic wildfires – often caused by utility infrastructure, but exacerbated by drought, climate change, land-use policies, and a lack of forest management – is untenable both for utility customers and for our economy. Multi-billion dollar wildfire liabilities over the last several years have crippled the financial health of our privately and publicly owned electric utilities. . . . Utilities rely on credit to finance ongoing infrastructure investments, including wildfire mitigation. As utilities’ credit ratings deteriorate, their borrowing costs increase and those costs for capital necessary to make essential safety improvements are passed directly to customers. These downgrades, and the prospect of additional utility bankruptcy filings, directly impact Californians’ access to safe, reliable and affordable electricity.”1

Rating agency reports suggest that further credit rating downgrades are likely if the wildfire risk to utility shareholders remains unchanged.2 In addition to ratepayer and shareholder impacts, financially distressed and/or insolvent utilities create much greater risks that victims will not be paid in full for their wildfire losses, and greater risk for all parties that do business with the utilities, including the renewable energy industry.

Investors and rating agencies assert that investors will be unwilling to invest in California utilities if the primary risk to solvency persists - the potential that fire liabilities will emerge that are larger than the utility’s assets. Unresolved, this market concern can create liquidity issues for utilities immediately following a fire. Specifically, after a fire, utilities are seeking to raise money to pay for claims at the same time their equity may be declining in value. Such liquidity issues can complicate the payment of wildfire victim claims and lead to utility bankruptcy filings. Absent solutions to what Institutional Equity Investors refers to as “massive, unbounded liability,” market confidence is unlikely to return to sufficient levels to affordably fund utility operations and ongoing capital investments.

1 “Wildfires and Climate Change: California’s Energy Future”, Governor Newsom’s Strike Force, p2-3 2 Institutional Equity Investors. Written comments to the commission, April 22, 2019. p.8-9.

30 Historically, insurance markets have provided the necessary buffer to ensure liquidity and solvency. However, testimony received by the Commission indicated insurance markets for utility wildfire liability have contracted significantly, with few if any insurers being willing to offer coverage for these losses.3

Finding 2. Wildfire risk is created by multiple parties who should all be incentivized to reduce risk and share in paying for wildfire damages. It is hard to parse responsibility across all stakeholders for wildfire. The demarcation between human factors and natural causes is less clear and more case specific than for other catastrophic perils. Each stakeholder contributes to the cumulative risk of catastrophic wildfire and no stakeholder can avoid all risk solely by their own action.

Socializing the costs of utility caused wildfires across a broader set of parties larger than utility shareholders and electricity customers is a more equitable apportionment of risk. It is equitable to allocate a share of costs to parties that have some control over causes that contribute to the overall utility wildfire problem in the state. At the same time, equity means insuring that the impacts on those least able to manage additional costs is not overwhelmingly large.

Significant efforts are underway by all parties to reduce wildfire risk. As the publicly owned utilities note in their comments, all utilities and communities have taken efforts over the last several years to implement wildfire mitigation measures and continue to work together to reduce risk. Nonetheless, parties can continue and expand efforts to manage risk:

● Utilities can better assess their wildfire risks, make investments to reduce wildfire risk, ensure proper maintenance of their systems, and demonstrate accountable spending of already approved investments. ● Utility boards and management, can identify, quantify, and create internal accountability and incentives for risk management. The Board has the responsibility to insure that compensation and other incentives align management’s performance with shareholders and customer interest in safety.

3 As EEI notes, “In past decades, the traditional insurance market provided sufficient and affordable protection for wildfire liability for California’s investor-owned utilities because wildfire liabilities were smaller. But due to the rise in frequency and severity of wildfires in California along with the current liability regime, this is no longer the case.” (Institutional Equity Investors. Written comments to the commission, April 22, 2019, p.9). Further, utility insurance providers testified that “most traditional liability insurers have already decided to exclude wildfire liability insurance or discontinue writing liability insurance for California utilities going forward[…]If wildfire losses of the last few years continue for the California utilities, a collapse of the insurance market will follow.” (Josh Jiang, Marsh Risk and Insurance Services. Public testimony. March 13, 2019)

31 ● The PUC can further clarify a framework for cost recovery of reasonable utility investments. ● The CPUC can approve, and ratepayers can pay for, additional investments in wildfire hazard reduction associated with utility infrastructure. ● The state can invest in additional wildfire hazard reduction in communities and limit or prevent the development of new property at risk for wildfire damage. ● The state has a role to assist or require that communities adopt practices that limit wildfire risk to themselves and their neighbors. ● The state also has a role in ensuring that state (and federal) lands are managed in a way that minimizes risk of ignition and spread of wildfire.

● Property owners and communities can mitigate risk by hardening homes and infrastructure and maintaining defensible space. ● Local governments can enact and enforce defensible space ordinances that reduce the intensity of fire when it enters developed areas. All stakeholders suffer if wildfires persist at the current scale. As the Strike Team report explains, “Under the status quo, all parties lose – wildfire victims, energy consumers, and Californians committed to addressing climate change.”4

All benefit if wildfires can be managed more effectively. Several commenters5 to the Commission suggest that the requirement to contribute (in various ways), including via a wildfire catastrophe fund, creates incentives for all to more aggressively mitigate wildfire risk and damage and more equitably allocates wildfire costs.

Finding 3. The time required for, and the uncertainty of, investor-owned utility wildfire cost recovery from ratepayers reduces investor confidence in utilities and limits utility access to capital after a major fire. When utility equipment contributed to a wildfire, the CPUC must determine that the utility prudently managed its system before IOUs can recover liability costs from their electric customers. This determination may be years after the fire has occurred due to the length of the

4 Governor Newsom’s Strike Force. “Wildfires and Climate Change: California’s Energy Future”, pp 1 5 See Edison Electric Institute. Written letter to the commission April 22, 2019.

32 civil litigation process to determine liability (including settlement of wildfire claims) 6 and subsequent CPUC cost recovery proceeding, which begins only after the civil process is complete.

The Commission received testimony that that the current standard for cost-recovery is unclear and protracted.7 Furthermore, critics of the current prudency determination and cost recovery standard argue that the standard is out of line with reasonableness standards used by the Federal Energy Regulatory Commission (FERC) and civil law, which place the burden on the party objecting to cost recovery (FERC) or asserting negligence (civil law) to show that imprudence or negligence has occurred.8

Ratepayer advocates remind the Commission that the purpose of a reasonableness review is to “avoid outcomes that would have utility ratepayers bear costs arising from utility mismanagement.”9 As such it is important to have a standard that clearly disallows cost recovery for liabilities stemming from utility imprudence.

SB901 acknowledged that although limiting cost recovery to only prudent expenses is important to protect ratepayers, so is having solvent utilities. The stress test adopted by SB901 sets a maximum limit to non-recoverable (disallowed) costs, but applies this limit only to 2017 fire liabilities.

SB901 also acknowledges the complex circumstances that may lead to a wildfire. For wildfires that occur in or after 2019, SB 901 directs the CPUC’s prudency evaluation to consider twelve factors that more directly relate to wildfire causes and assessment, including the role of climate change in exacerbating wildfires (UPUC section 451.1).

To date, there has been only one significant instance where an investor owned utility requested cost recovery for third-party wildfire damage in excess of general liability insurance.10 Cost-recovery was not granted in this case, although this review occurred prior to

6 After the wildfires in 2007, SDG&E pursued settlement of its civil liability claims, and then in 2015 filed an application for cost recovery at the CPUC (Application 15-09010). The PUC adopted its decision denying cost recovery in 2017. CPUC (D.)17-11-033. November 30, 2017. 7 See written testimony from Southern California Edison, Edison Electric Institute, Consumer Attorneys of California. 8 See written comments from Pacific Gas & Electric, Southern California Edison, Edison Electric Institute 9 The Utility Reform Network. Written letter to the commission, April 22, 2019. 10 California Public Utilities Commission, ORDER DENYING REHEARING OF DECISION (D.) 17-11-033. July 12, 2018

33 passage of SB 901 and so did not explicitly reflect the twelve factors enumerated therein. CPUC’s disallowance of SDG&E’s WEMA cost recovery application and the scale of 2017 and 2018 wildfire liabilities have raised questions as to whether a more predictable standard of review for wildfire claims is warranted, and whether it should be more permissive given the nature of the risk, size of potential liabilities, and assumptions of cost socialization assumed in “no-fault” liability. Cost recovery standards were identified by several commenters to the Wildfire Commission as the key element in need of refinement in order to restore market confidence in California utilities.

Finding 4. Californians’ electric costs are increasing due to wildfire mitigation investments and other capital and regulatory requirements. The Strike team report and ratepayer advocates express concern that passing more wildfire costs to electric customers will further reduce electricity affordability.11

The CPUC May 2019 report pursuant to SB 695, “Actions to Limit Utility Cost and Rate Increases,” affirms that electric rates and bills are going up. The report explains that rising rates and bills stem from declining utility sales, while revenue requirements continue to grow to meet statutory mandates and operational needs.

Mitigating wildfire risk is also increasing electric costs. The SB695 report details that the costs of proposed projects in utility Wildfire Mitigation Plans could result in increases of up to seven percent in monthly bills for residential customers, not accounting for any adverse change in the cost of capital for the utilities. Commenters indicated similar.12

11 TURN states that “California is in the midst of a utility bill affordability crisis. High energy bills resulted in 886,000 California households being shut off by PG&E, SCE, SDG&E and SoCal Gas in 2017, impacting more than 2.5 million people, most of whom are children.” (The Utility Reform Network. Written comments to the commission, April 22, 2019,) CLECA and The California Farm Bureau note that California industrial and agricultural customers pay nearly twice the cost for power as their western neighbors. The Farm Bureau asserts that “a tipping point has been reached such that ratepayers can no longer be the sole funders.” (The Farm Bureau. Written comments to the commission, April 22, 2019) 12 TURN notes that, “ Yet these figures represent only the initial impacts of what could well be years of higher utility spending to prevent wildfires, leading to increased rates that persist for decades into the future, not to mention impacts from any utility-caused wildfires in 2019 and beyond.” (The Utility Reform Network. Written comments to the commission, April 22, 2019) Wildfire mitigations costs increase rates as well for publicly-owned utilities. SMUD notes that its wildfire mitigation spending has already increased rates 1.5%-2% (SMUD. Written comments to the commission, April 22, 2019). CLECA highlights that commercial customers also face likely rising costs from the 2017 and 2018 fires. CLECA notes “the combined wildfire liability for PG&E for these two years would represent a 18% increase in rates for

34 The perceived financial risks of investing in California utilities create their own substantial costs. Because utilities must attract new capital - generally a 50/50 mix of debt and equity - in order to construct new infrastructure, with the interest (debt) and return (equity) paid for out of rates, increases in risk perception have direct implications for rates. Since the 2017 fires and the disallowance of SDG&E cost recovery for the 2007 fires (the decision on which occurred contemporaneously with the 2017 fires), the credit quality of California utilities has deteriorated precipitously. This impact has been felt even by Sempra, the parent company of SDG&E, despite the fact that there have been no utility caused fires in SDG&E’s service territory since 2007, and the utility is widely recognized as a global leader on utility wildfire practices. Credit downgrades lead to increases in the cost of borrowing for utilities that ultimately will be reflected in customer rates. More recently, all three utilities proposed large increases in the allowed return on equity, which they believe will be required to attract new equity investment. While that proceeding is ongoing and its outcome is far from clear, what is clear is that a substantially higher return on equity (the “cost” of equity) - reflecting the same risks that have led to higher debt costs - will likely be required to attract new investment in California utilities.13

These correlated changes dramatically raise the costs of any future utility infrastructure projects for wildfire safety or other reasons. In comments, Institutional Equity Investors noted that current California IOU projects call for $70 billion in capital expenditures in the next five years that will need investor financing and utility cost recovery.14

PG&E bundled primary voltage industrial rates by 2023.” “The combined wildfire liability for these two years would represent a 5% increase for SCE bundled primary voltage industrial rates by 2023.” (CLECA. Written comments to the commission, April 22 2019. Appendix 1, p.1). 13 Institutional Equity Investors estimate that “a 1% increase in the cost of debt occasioned by a ratings downgrade, coupled with an ensuing 3% increase in the cost of equity, would result in a 6.5% increase in the average monthly bill of PG&E customers. Customers of Southern California Edison and San Diego Gas & Electric would suffer similarly.” (Institutional Equity Investors. Written comments to the commission. p.10) The publicly- owned utilities note that even investment grade utilities face risks of higher costs, “Even with interest rates at historically low levels, a downgrade from AA to A would result in $3-4 million of additional interest costs annually for every $1 billion of borrowing, or $100 million over the life of the bonds.” (California Municipal Utilities Association et al. Written comments to the commission p.3) 14 Institutional Equity Investors. Written comments to the commission, April 22, 2019, p.4.

35 Several commenters suggested that given issues with electricity affordability, any changes to cost recovery should consider ratepayer impacts and any Wildfire Victims Fund should be capitalized more broadly than via ratepayers alone.15

Finding 5. The liabilities associated with wildfire are challenging to model and not well understood. The science is clear that wildfire severity and the frequency of large fires are increasing due to climate change. However, specific liabilities are difficult to model.

The Commission heard substantial testimony by various parties (insurance industry, insurance brokers, and utility representatives) that rely on models to understand and price future wildfire risks. There are a variety of approaches to understanding wildfire risks including historic loss experience, more recent loss experience, highly complex Catastrophe Models, and expert judgment. None can, at this point, accurately specify the expected future wildfire losses in California from utility-caused wildfire. As AIR notes in its comments, “In the case of rare but severe catastrophic events, including wildfires, highly variable historical experience provides an insufficient basis to assess future loss potential.”

The challenges with estimating losses involve changes in the value at risk due to new housing development and increasing building and reconstruction costs, uncertainty about the degree to which mitigation measures will be implemented by communities and homeowners that lower risk, uncertainties about the effectiveness of utility Wildfire Mitigation Plans when fully implemented, and changes in the climate and weather environment, among others. There is no precise answer to basic questions about the risk of wildfires and the likely magnitude of future liabilities created by them.

There is, currently, no clear understanding of what a “worst case” wildfire in California might look like. This workgroup cannot exclude the possibility that the 2017 and 2018 wildfires were 1 in 250 year events or that they were 1 in 20 year events, and the workgroup does not know whether average losses over the past 20 years or the past 5 are an appropriate level to plan for over the next decade. The answers to these questions will depend on both what actions are taken to reduce risk as well as on the weather and climate that creates the conditions that can lead to catastrophic wildfires.

15 See written comments to the commission from The Utility Reform Network, Pacific Gas & Electric, and Southern California Edison.

36 III. Considerations Objectives and Recommendations Summary Recommendation: Given the findings above, the workgroup recommends that the Legislature, in furtherance of a more equitable distribution of utility-caused wildfire costs, revise the CPUC cost recovery process and establish a Wildfire Victims Fund.

This workgroup believes it is paramount that any such changes and new financing mechanisms be consistent with the objectives detailed below in order to avoid unintended consequences that result in more instability for wildfire victims and electricity ratepayers. The workgroup strongly recommends that legislation for cost recovery reform and a victims’ fund only be pursued if there are clear, specific assurances and legal safeguards in place to ensure these objectives are achieved. In many cases, it is reasonable for legislation to delegate implementation details to responsible agencies for further development. However, given the need for certainty among the delicate and complex interactions of the Commission’s broader set of recommendations, the workgroup recommends strong legislative clarity regarding the primary components and interaction of any changes to strict liability, cost recovery, and related financing mechanisms.

Cost Recovery Objectives Objective 1: Ensure ratepayers pay for just and reasonable investments, but do not pay for avoidable, negligent behavior.

Objective 2: Ensure cost recovery standards reflect the host of factors that contribute to the extent of wildfire damage and does not hold utility shareholders solely liable in cases where other factors contribute to the magnitude of the damages.

Objective 3: Be as predictable as possible to all stakeholders, given Objectives 1 and 2.

Fund Objectives Objective 1- Broadly pooled risks, beyond electric ratepayers.

Risk pooling creates state-wide economies of scale and addresses the overall perceived risk to all California utilities regardless of their ownership structure. The financial environment at all utilities has deteriorated in one form or another (IOU credit downgrades, challenges to POUs of accessing insurance) and all utilities are facing significant challenges in managing a risk as large as liability from catastrophic wildfires. One solution is to create an entity of sufficient scale for which even the largest foreseeable fire related liabilities are not destabilizing, and then to facilitate risk transfer from the threatened utilities to this entity. Complimentary to this

37 approach is the need to reduce the risks from wildfire, hence decreasing the magnitude of the liabilities.

Risk pooling, in order to be maximally cost-effective, should provide an opportunity for inclusion of POUs, and POU participation should be encouraged (especially for those with large service territories in high fire risk areas). This means creating a path for POUs to feasibly contribute to the fund commensurate with their risk. POU customers are also the owners of their systems, therefore playing the roles of both IOU shareholders and ratepayers. They could opt to make an initial contribution equivalent to an IOU’s shareholder contribution plus an additional ratepayer contribution or could opt to make a higher ongoing contribution.

Given the diversity of stakeholders with some responsibility and ability to reduce wildfires, as noted in Finding 2, as well as the potential ratepayer affordability crisis noted in Finding 4, the fund should require contributions from utility ratepayers, utility shareholders, from property owners, and from the state. These parties all benefit from the risk pooling, greater certainty, and efficient claims process that a fund would provide.

Objective 2: Contributions from utility shareholders and ratepayers reflect differential risk.

Contributions should be actuarial – tied to risk. One approach to establishing contributions would be to look at recent losses, while another approach would be to identify key physical characteristics that are correlated with risk and to adjust utility contributions based on them, such as total overhead circuit miles versus undergrounded systems or the number or proportion of utility customers located in high risk areas. Over time, more sophisticated actuarial tests may inform utility and ratepayer contributions, or private markets using actuarial experience will develop utility specific pricing which can inform appropriate contributions.

Objective 3: Limit risk pooling when the utility engages in negligent behavior.

When the utility acts prudently, then the workgroup believes it is equitable, and practical, to have all parties pay some portion of the damage costs, and not require repayment of a fund. However, when a utility fails to act prudently, utility shareholders should repay some portion of the damages to the fund in addition to paying any penalties that might result from further investigations. A key attribute of insurance and risk pooling is financing loss even when a party has acted imprudently, the rationale for which is further apparent if an imprudent loss causer has effectively prepaid for that liability with higher premiums . However, an imprudent utility should not be fully shielded by the fund from the risk of being unable to recover cost from ratepayers. The degree to which the utility is shielded should depend significantly on the degree to which it contributed resources to the fund.

38 Objective 4: Treat wildfire victims fairly.

A fund should offer more certainty to wildfire victims regarding timely claims repayment and provide support for the under and uninsured.

Objective 5: Improve utility solvency and liquidity.

The best solutions to address solvency and liquidity require both reducing the overall liability and more widely socializing it, which is best addressed by a combination 0f mitigation, strict liability reform, cost recovery reform, and a fund. However, there are some particular fund attributes that can better support the objectives of liquidity and solvency. Such attributes include fund sizing and bond authority commensurate with probable wildfire risk, limits to third party claims, and contribution structures that enable access by utilities to lower cost financing.

Objective 6: Maintain incentives for all parties to pursue wildfire mitigation efforts.

Sustainability of a fund is highly dependent on all parties increasing efforts to reduce wildfire risk and reduce total costs. The easiest fire liabilities to manage are the ones that are never created because of wildfire prevention efforts. The presence of a well-capitalized fund may reduce incentives for utilities, property owners and local governments to invest in mitigation and maintain adequate insurance. As such, any fund should be structured in a manner to reduce this moral hazard. For example, relying on post event liability assessments, in addition to limiting upfront contributions from utilities, creates an incentive to avoid costly catastrophic fires. Moreover, a track record of vulnerability reduction will make re-insurance and cheaper capital more available, thus reducing the costs of managing the remaining wildfire risk.

IV. Detailed Recommendations on Cost Recovery and a Fund

Cost Recovery Recommendations Given the limited experience California has with cost recovery for catastrophic fires, it is difficult to identify with certainty what constitutes reasonable pre- or post-event behavior, though. Although ratepayers should not pay for imprudent conduct or negligence, they should pay for wildfire costs when a utility acts in a reasonable manner - our collective understanding of this increases with experience. The workgroup believes there are several modifications of the current approach to determining prudence that better acknowledge the intent of inverse condemnation to socialize costs and the evolving understanding of reasonable utility practices, while still holding utilities responsible for imprudent conduct or negligence.

39 The workgroup recommends Options 1 and 2 if no action is taken to further socialize costs or if a liquidity fund is created and Option 3 if a Wildfire Victims Fund is simultaneously created and utility shareholders make a substantial upfront contribution to the fund.

Cost Recovery Option 1: Burden of proof shifting. The CPUC review process for utility wildfires could be modified to allow for a presumption of prudence for a utility wildfire expense given a prima facie showing, but still allow for a challenger to attempt to prove, by a preponderance of the evidence, that an expense was imprudently incurred. This change should not impact other cost-recovery processes at the CPUC.

Current CPUC cost recovery review process, as described above, requires that the utility prove, by a preponderance of the evidence, that the expense was prudently incurred. In order to increase the certainty that prudently incurred costs will be allowed to be recovered in rates, the CPUC process could be modified to allow for a presumption of prudence for a utility wildfire expense given a prima facie showing, but still allow for a challenger to attempt to prove, by a preponderance of the evidence, that an expense was imprudently incurred. The difference between these legal philosophies is apparent in the case of the SDG&E 2007 wildfire cost recovery request: the request to recover federally regulated expenses was deemed prudent and approved by FERC (where the burden of proof was on the party challenging the utility’s prudency) while the request to recover state regulated expenses was denied by the CPUC (where the burden of proof was on the utility to show their expenses were prudently incurred).

Cost Recovery Option 2: Further refinement of the SB901 factors the CPUC should consider when assessing disallowances.

SB901 (Dodd, 2018), section 451.1 lists 12 factors the CPUC may consider when evaluating applications for catastrophic wildfire cost recovery. The workgroup believes could be further enhanced by mandating the CPUC to give a higher weighting to the SB901 factors that acknowledge the unique, exogenous circumstances possibly present in a catastrophic wildfire. This might be accomplished via a statutory modification to PUC 451.1 that requires the CPUC to make a determination of the degree to which related factors (PUC 451.1(a)(7)-(11)) reduce the percentage of liability from a wildfire that utility shareholders should be accountable for, even if utility operations were the cause of a wildfire and other factors (PUC 451.1(a)(1)-(6)) would counsel against the recovery of costs in rates. Thus if a utility negligently caused a fire, shareholders would bear full responsibility if exogenous factors did not contribute to the liability, but might only face partial responsibility if exogenous factors were important in generating the liability.

Cost Recovery Option 3: Limits on utility shareholder liability—only if shareholders make substantial upfront contributions to a fund.

40 If shareholders make a substantial upfront contribution to a Wildfire Victims Fund, one option for cost recovery is to have a predetermined maximum liability that shareholders may be subject to under the existing, or a revised, prudency framework. One option might be to apply a version of the SB901 stress test16 to all wildfire cost recovery claims. Another is to limit liability to a percentage of the market capitalization of an electric utility on the day prior to the ignition of a wildfire. For example, if a utility had a market capitalization of $50 billion the day before a wildfire, it might be limited to paying a maximum of $10 billion in losses for any single incident if found to be imprudent. Any costs above that limit would be recoverable from ratepayers or through a fund. By making upfront contributions to a fund, a utility would in effect be pre-funding any future rate recovery denials and so is reasonably entitled to expect some limitation on risks. Any such cap would need to be set at such a level as to continue to avoid a moral hazard. In general, the workgroup favors incorporating functionally identical features into the recapitalization procedure of an adequately sized Wildfire Victims Fund rather than making changes of this type to the CPUC cost recovery standards.

Additional Options:

The workgroup notes that another option, proposed in one form in Senate Bill 1088 (Dodd, 2018) and subsequently by utilities in other fora is to create explicit criteria for operation, maintenance, and investment by a utility. Under this proposal, a utility would be deemed prudent if it met the required criteria in pre-wildfire reviews. This approach makes sense in theory in that it would allow for all parties to create an objective and measurable set of criteria that could be met by the utility as a whole and would thus avoid the perception of an after-the- fact “perfection in practice” standard for prudency review. The challenge with this approach is developing a set of criteria that are an adequate pre-event proxy for prudent management of safety in the wildfire context. While the utilities have performed significant analysis of these issues in the Safety Model Assessment Proceeding, Risk Assessment Model Proceeding, and Wildfire Mitigation Plan processes, there is still no consensus on a set of standards or practices that would allow for a pre-event prudence determination.

There does appear to be consensus by many parties other than the investor owned utilities that current Wildfire Mitigation Plans do not provide a set of criteria that would allow for implementation of this approach. At this time the workgroup does not recommend such an approach for cost recovery. Such an approach may be reasonable in the future once there is

16 SB 901 established authority within the CPUC to develop a mechanism (the “stress test”) to determine when the denial of cost recovery would put the utility in financial jeopardy, and to allow cost recovery in such cases.

41 more collective experience with the mitigation plans and generally what constitutes reasonable action.

Finally, the workgroup recommends reviewing the CPUC fine authority to issues fines for any violations. Revisions could include increasing the $8 million cap on fines for citations related to wildfire mitigation, statutorily increasing the maximum fines allowed under PUC section 2107, and altering the disposition of fine revenue to the Wildfire Victims Fund or towards mitigation measures.

While cost recovery is a critical issue in the absence of a Wildfire Victims Fund, the presence of a claims paying fund fundamentally alters the situation so far as ratepayers are concerned. To the degree that a fund acts as an insurer of wildfire liabilities - similar to a larger version of the utility’s general liability insurance policy, there will be fewer or perhaps no cost recovery applications to the CPUC because all wildfire expenses will be recovered from the fund, not as expenses in rates.

Ratepayers don’t get something for nothing with this arrangement - rather than managing large fire liabilities as expenses in rates that may cause unprecedented bill volatility17 ratepayers would pay a non-bypassable charge that, in conjunction with contributions from other parties, serves to insulate them from the costs of future fires via a Wildfire Victims Fund.

From the utility shareholder perspective, the magnitude of their pre-event contributions to the fund is logically connected to the certainty of post-event cost recovery process from the fund or at the CPUC. To the degree that utilities contribute to a Wildfire Victims Fund, they are in some sense pre-paying for avoiding future disallowance perceived unlimited risk from the cost- recovery process. They should be willing to contribute more to a fund to the degree that they receive certainty regarding the maximum value of a repayment to the fund or of a disallowed expense that they would most likely fail to recover from ratepayers.

Wildfire Victims Fund Recommendations Catastrophe funds, such as a Wildfire Victims Fund, can be useful tools when rapid changes in perception of risk from a particular peril (wildfire, hurricane, earthquake) lead to disruptions in

17 “[PG&E] estimates $30 billion in damages for 2017 and 2018 fires. But the operating revenue of their electricity business is less than $13 billion a year…If future fires continue to create liabilities similar to those over the last two years and PG&E can’t cover the new losses by selling bonds, rates would have to double in the first year and continue to continue to grow at an unsustainable rate year after year.” Steve Weissman to Ana Matosantos https://gspp.berkeley.edu/news/news-center/the-massive-cost-of-the-new-normal-in-wildfires-climate-change- era

42 insurance markets or to a risk that traditional insurers are either unable or unwilling to manage through the normal underwriting process. The purpose of catastrophe funds in these cases is to pool risk at sufficient scale to cost-effectively manage it. The catastrophe fund agrees to a transfer of liability for a particular type of claim from another party (a homeowner or an insurance company that writes homeowner policies) to itself. Assuming the catastrophe fund can be structured to more efficiently manage the risk, it may be able to manage the peril at more affordable cost. This can be critical to allowing continued access to home insurance for customers that are exposed to the peril in question.

Fund scope: a. The Wildfire Victims Fund should pay claims for only electric utility caused wildfires.

Based on testimony received at public hearings, the workgroup recommends a Wildfire Victims Fund created at this point in time should focus on utility caused wildfires rather than all causes of wildfire or on additional perils. While there are signs of strain in the home insurance market in California—and this will likely worsen unless there is a significant reduction in wildfire losses—at this point there is not a property insurance crisis. In order to limit a Fund’s costs, and therefore impacts on all stakeholders, it should be limited to covering only utility wildfire liabilities. Similarly, although the workgroup appreciates the concerns raised by water utilities regarding the potential inverse condemnation liabilities they face from fires, we think the challenge facing water utilities is unique from electric utilities. Any reforms to the strict liability standard should consider reforms for water utilities as well. The CPUC and legislature should continue to monitor exposure faced by water utilities and consider in the future whether any additional financing mechanisms are needed to transfer risk and recover costs in that sector.

The workgroup recommends that participation in the fund be voluntary, but that only participating utilities should be allowed to benefit either from Wildfire Victims Fund claims paying resources, as well as from any changes in prudency review that are enacted concurrently with creation of the fund. In this construct, the workgroup believes that all investor owned utilities will opt to participate in a well-designed Wildfire Victims Fund and many Publicly Owned Utilities may opt in as well, so long as contributions required from their ratepayers are fair. An alternative participation scheme would require participation by all utilities above a certain size (load served or overhead circuit miles) and allow optional participation by smaller utilities.

The workgroup recommends that payments from the fund occur only for catastrophic fires. One approach to define “catastrophic” is an event that exceeds the maximum coverage reasonably available to utilities via their privately obtained general liability and wildfire specific insurance. For IOUs, this is currently between $1 and $1.5 billion. POUs have a broader range of

43 available insurance due to the broader size range of POUs in the state. An alternative approach would be to pay for wildfires that exceed a fixed threshold – i.e., $1 billion - and to require all utilities to obtain coverage equal to that amount or to participate in private risk pooling arrangements that are equal to that amount.

Given the desire to more broadly socialize costs, the workgroup recommends a claims paying fund rather than a liquidity only fund. While a liquidity fund can provide greater access to capital following a wildfire, testimony indicated that other tools, such as allowing investor- owned utilities to securitize debt to raise capital in the aftermath of a fire, can also achieve the same objective without requiring an upfront ratepayer investment. However, the cost to utilities to raise capital post event may be greater if equity value has diminished post-event or if the scale of the event raises solvency concerns. If wildfire costs are more broadly socialized via changes to the strict liability standard, then a complementing liquidity fund may provide additional benefits to utilities and ratepayers, including access to lower cost capital.

In the event that other barriers prevent creation of a claims paying fund but would allow for creation of a smaller liquidity only fund, primarily funded by ratepayers, the workgroup recommends that only modest changes to cost recovery be considered (Cost Recovery Options 1 and 2). b. The Wildfire Victims Fund should pay insured, underinsured, and uninsured property losses from utility caused wildfires at values approximating their settlement value.

In recent utility caused wildfires (2007, 2015, 2017, 2018) there have been significant liabilities beyond those covered by insurance. Insurance coverage has proven insufficient to fully compensate victims, some homes destroyed in the fire carried no insurance whatsoever, many renters lacked coverage, and construction costs increased dramatically due to shortages of skilled labor after the fires, and local governments lacked sufficient coverage for infrastructure loss. While estimates vary, there can be no question that underinsurance of liabilities is a significant fraction of total liabilities in recent catastrophic events. As a result, resolving the crisis for utility ratepayers, insuring that fire victims get paid for their losses, and stabilizing financial conditions for electric utilities requires steps to reduce the magnitude of under- and uninsured property [staff note: see further discussion in Insurance Workgroup Report] and also developing a Wildfire Victims Fund that can pay claims beyond those that are covered by current utility liability insurance.

At the same time, if a Wildfire Victims Fund covers insured, underinsured, and uninsured claims, the fund must avoid creating incentives not to purchase insurance. The fund should be designed to avoid these incentives by paying the settlement value of claims, or a range of predetermined values, rather than their full value. Insured claims for catastrophic loss,

44 depending on the facts, settle at values far below 100 cents on the dollar. Underinsured claims, both because they can be subject to greater uncertainty and because they are not vetted by a claims adjustment process, tend to settle at even greater discounts. The workgroup believe that while compensation for both insured, underinsured, and uninsured losses should be compensable from a fund, Wildfire Victims Fund payments for insured losses should reflect the approximate settlement value of a claim. Most parties recommend that insured claims should be subject to automatic reduction, within the range of which such claims historically settle. Although several parties suggested claims settle at 50% of insured loss, no party suggested a clear legal mechanism for requiring such a reduction. Details on how the reductions would be calculated should be further explored and are a critical part of any authorizing legislation. If insured claims cannot be guaranteed an automatic reduction, this would put significant upwards pressure on the needed fund size.

Underinsured claims against the fund should be covered at a substantially lower level and claimants must agree not to litigate their claim. Wildfire Victims Fund payments for underinsured fractions of property claims should reflect the differential settlement value between insured and underinsured losses. Faster claims resolution and increased certainty could be important incentives for underinsured claimants to participate in a Wildfire Victims Fund.

The workgroup recommends that local governments receive compensation for settlement value of infrastructure destroyed by fire. Local governments should be encouraged to adequately insure critical infrastructure and those that do should receive a higher settlement value for insured losses.

The workgroup recommends that private parties that were totally uninsured but can substantiate their loss - either renters that carried no insurance for their personal property or homeowners that chose not to obtain homeowners coverage or participate in the FAIR Plan - could receive an offer of a flat settlement from the Wildfire Victims Fund at a low value - perhaps $10,000 per household. This would assist these parties in reestablishing their lives while disincentivizing the choice not to obtain insurance coverage before a disaster strikes. Bodily injury and other tort claims should not be covered by the fund. c. The Wildfire Victims Fund should be created as soon as possible to cover the 2020 fire season and beyond, and ideally would include coverage for 2019 fires.

The problem of utility wildfire liability is urgent. Current lack of a solution creates imminent risk for all utilities in the state. There is a very real risk that a fire in a non-bankrupt utility’s service territory would precipitate a rapid deterioration of financial status leading to a bankruptcy. A bankruptcy filing will significantly reduce the ultimate payment that wildfire

45 victims of prior fires receive. For the bankrupt PG&E, a fire in its service territory would, due to the operation of federal bankruptcy law, create an “administrative claim” on the firm which takes priority over all pre-bankruptcy claims, including those of 2015, 2017, and 2018 fire victims. A large fire in PG&E’s service territory in 2019 could potentially threaten payment of the bankruptcy settlement value of 2018 and earlier wildfire victims.

The lesson of SB901 and the fall 2018 fires is that the State cannot afford to wait to put in place a long-term solution for utility caused wildfire even as it implements mitigation strategies that in the long run will reduce the risks. Therefore, we recommend that a Wildfire Victims Fund should cover liabilities in the 2019 and later fire seasons. This should be possible since the legislation will be enacted prior to the most dangerous part of the season while payments to victims will not occur until after the claims process, which typically takes at least one to two years. Thus liabilities from a fire that occurs even in the 2019 wildfire season would not necessarily need to be paid by a Wildfire Victims Fund structure that pays claims after insurance companies, plaintiffs for uninsured parties, and others have negotiated to a settlement of claims. Delayed implementation of the fund or delayed claims coverage by the fund will only raise the risk that in the interval between action by the State and the beginning of coverage, a catastrophic wildfire will further degrade the likelihood that current and future victims get fair compensation. Given enactment during the 2019 legislative session, the risks to current fire victims in the absence of a long-term fix, and the time required to adjudicate claims, we see no reason why a Wildfire Victims Fund if established, should not pay claims for the 2019 fire season.

Some challenging implementation issues are raised by the bankruptcy of PG&E. Whether and how a bankrupt entity could raise funds during the reorganization process without impairing the priority of other creditors is uncertain. There is enormous potential benefit to participating in a Wildfire Victims Fund for all unsecured creditors in terms of avoiding potentially massive administrative claims due to additional wildfires. These questions can only be answered by the parties to the PG&E bankruptcy and perhaps even then only via a plan of reorganization. If PG&E cannot participate in a Wildfire Victims Fund until it exits the bankruptcy process, this would significantly increase the value to PG&E bankruptcy stakeholders of an expeditious resolution to the bankruptcy and reorganization process.

Fund Administrative Structure:

A Wildfire Victims Fund administrative structure must be effective, transparent, and maximize the fund’s resources to pay claims. The relatively simple administrative structure established for the California Earthquake Authority (CEA) is a good model for a Wildfire Victims Fund. The Earthquake Authority is run by a three-member board appointed by state government to

46 which CEA executive leadership reports. The board serving a Wildfire Victims Fund should be appropriately compensated and include subject matter experts, including expertise on utility financing and operations, insurance claims and actuary assessments, and catastrophic fire modeling. a. Tax Exempt Status. Any administrative structure must be designed to create tax exempt status for the fund. Tax exempt status will facilitate greater effectiveness of investor owned utility contributions to the fund, since they will not be subject to taxation. It will also facilitate more efficient use of earnings created from the funds reserves or principal. If the principal is subject to taxation, far less of it will be available to reinvest, pay claims, purchase reinsurance or invest in mitigation efforts.

In order to be tax exempt while also remaining distinct from the State (in order to avoid placing state finances at risk from wildfire liabilities), a fund must be clearly designed to provide a public benefit to the state. A Wildfire Victims Fund clearly provides a public benefit given the threat posed by wildfires to provision of an essential service to the citizens of the state. Efforts should be made to articulate this benefit and to seek favorable IRS treatment of fund contributions and earnings as soon as a fund structure is created. b. Use of funds. Money contributed to or earned by a Wildfire Victims Fund should be used for a variety of purposes to further its goals. First and foremost, resources of the fund would be available to pay wildfire related liabilities that exceed the attachment point to the fund for any participating utilities. In addition, fund resources could be used to purchase reinsurance or other risk transfer to the degree that they are available and cost effective.

The workgroup recommends that the state authorize the fund to spend a small fraction of its resources on developing a better understanding of and recommendations for risk based approaches to wildfire mitigation. This research could serve as an important independent arbiter of best practices in reducing wildfire vulnerability. Any analyses conducted by the fund should be shared with all stakeholders to increase knowledge about effective approaches to reduce overall risk of catastrophic fire.

The workgroup also recommends that the state authorize the fund to expend a small fraction of its resources on educating the public more effectively about the risk of wildfire and the actions that it can take to avoid or reduce vulnerability. The CEA has done very effective work educating the public about the value of simple mitigation strategies and has created significant risk reduction by doing so. A Wildfire Victims Fund should be authorized to take similar cost effective steps for the State. Indeed, the case is even stronger for a Wildfire Victims Fund because many interventions that homeowners, communities, and utilities can take have spillover effects. That is, reducing fuel loads on a property or in a community provides benefits

47 to neighbors. The Wildfire Victims Fund should be enabled to educate all stakeholders about cost-effective actions they can and should be taking to reduce risk.

Fund Financial Structure: a. The claims paying capacity of the fund should be structured as a “layer-cake” or “tower” of different forms of claims paying capacity. Fundamentally, the goal of the fund’s financial structure would be to maximize the ability of the Wildfire Victims Fund, given available resources, to pay claims over time. To a significant degree, the structure is dependent on both the amount of money available to the fund, expected future cashflows, and the willingness of reinsurers or other risk transferees to accept wildfire risk in exchange for reasonable compensation. Legislation creating a fund would need to establish both a clear set of rules for what increment of wildfire liability would be retained by utilities and clear authority for the fund to take appropriate actions to develop an efficient claims paying structure.

There is wide variation in the use of pre-event funding versus post-event assessment authority on the part of catastrophe funds. Post-event assessment authority can be used when the risk is not fully understood or when effectiveness of risk mitigation measures is poorly characterized. Both are important concerns for the case of wildfire: committing pre-event capital when risks and risk-mitigation are poorly constrained can unnecessarily raise costs.

 The workgroup recommends that legislation creating a fund should require that participating utilities maintain a commercial wildfire liability or general liability policy equal to at least 10% of their gross earnings or 1 billion dollars for investor owned utilities. 18 The state should require the deductible for the policy be equal to at least 5% of their earnings or $500 million for investor owned utilities. Utilities would be free to structure lower deductibles for other types of liability that might occur in the general course of business.  The workgroup recommends that the Wildfire Victims Fund pay, for utilities that pay into the fund, any claims in excess of 10% of gross earnings for public utilities or $1.5 billion for investor owned utilities or the maximum level of reasonably available commercial wildfire insurance, whichever is greater.  The workgroup recommends that the Wildfire Victims Fund pay a maximum amount per fire incident and a maximum amount per utility in a given year. Any excess liability

18 Others have proposed higher retention. See Consumer Attorneys of California. Written comments to the Commission, April 22, 2019.

48 incurred by a utility would remain with that utility and be subject to CPUC prudency review and follow through cost allocation.  The fund should be authorized to utilize risk transfer mechanisms - reinsurance, insurance linked securities, or others - to maximize the claims paying capacity of the fund. Current market conditions are such that reinsurance would likely be unavailable to the fund except to cover losses at a very high level - perhaps above the level of liabilities from recent catastrophic wildfires.

Once settlement values are clarified, claims are paid by the fund if they are above the attachment point for a utility. If a utility is found to be imprudent, or partially imprudent with respect to a wildfire, the fund would pay claims up to a specified amount, directly tied to shareholder contributions to a fund. Especially in early years when the fund is smaller, many catastrophe funds rely on post- assessment bonding authority. This is a pre-arranged legal authority to levy an assessment on insurance policies that can then be used to finance borrowing used to pay claims.

The fund should be permitted, if in its management’s opinion it lacks sufficient pre-event capacity to fund likely wildfire liabilities, to arrange for contingent post-event bonding authority via post-event assessments on electricity customers and home insurance policyholders. b. The fund should be designed to last so long as necessary but no longer.

The workgroup recommends that the Wildfire Victims Fund be designed to last only so long as needed and that its need be subject to regular, periodic reassessment and reauthorization by the legislative and executive branches on a 5- or 10-year basis.19 As mitigation becomes more effective either on the part of utilities or communities, the Wildfire Victims Fund may cease to be necessary because utility caused wildfires will either become less frequent or decrease in intensity and destructiveness. If the fund becomes unnecessary in future, and so the fund is not reauthorized for further claims-paying capacity, there should be a pre-planned mechanism to

19 Often after a major catastrophe, there is temporary uncertainty about how to price a risk. This uncertainty can lead to withdrawal of normal property and casualty insurance. But once primary insurers and their reinsurers better understand the risk, or it is better mitigated by, for example, structure hardening, they may return to a market. For this reason, some catastrophe funds have been designed to sunset once a “normal” insurance market redevelops. Hurricane Iniki necessitated the creation of the Hawaii Hurricane Relief Fund, which was then mothballed after ten years once private insurers reentered the market. Funds need not exist in perpetuity.

49 wind down fund operations, pay outstanding bonds, and return unused capital to all contributors in an equitable fashion. c.. The appropriate size of a Wildfire Victims Fund.

A key question raised by the Strike Team Report is the necessary size of a Wildfire Victims Fund. The workgroup recommends a fund be sized to survive anticipated third-party damages, with a high probability (95% or greater) for a period of time sufficient to ensure that utility mitigation specified in Wildfire Mitigation Plans is deployed and is effective. Based on recently filed Wildfire Mitigation Plans, and allowing for possible delays, 10 years should be sufficient.

The workgroup further believes that a Wildfire Victims Fund should be sufficiently sized to have claims paying capacity - either through pre-event funding or post-event assessments - sufficient to cover a higher wildfire risk scenario that reflects the belief that loss experience over the past two years is an element of the “new normal” rather than a once-in-a-century (or two century) statistical aberration.

The legislature and the Governor must engage with catastrophe risk modelling experts to determine an appropriate claims paying capacity for this higher risk scenario using the best available catastrophe models, appropriately modified to reflect the recent change in risk perceptions, the time duration of the fund, and the fact that the fund is intended to pay all third-party property (not tort) related claims from utility-caused (as opposed to all) wildfires.

Based on recent Senate testimony from consultants employed by the Governor’s team to evaluate fund size and electricity rate impacts, an appropriate claims paying capacity may be approximately $40 billion, but further analysis is justified to increase confidence in this estimate.

Such analysis should begin with commercially available catastrophe models. These models are the best tools available to estimate the potential for large but very infrequent losses due to wildfire. These models are far from perfect however and so work done to estimate appropriate size of a Wildfire Victims Fund must also consider expert judgment regarding the degree to which currently available models realistically predict the likelihood of recent loss experience.

A Catastrophe modelling-based analysis of fund size should also consider a variety of other context-specific factors. These include the fraction of all wildfire losses that are likely to be utility caused. Such an analysis should be designed to estimate 10-year losses rather than 1- year losses, as is typical for commercial catastrophe models. Fund size estimation should also take into account the degree to which mitigation may reduce risk and the degree to which total value at risk may increase over the relevant time frame. Given that these models are

50 designed to simulate insured loss, estimates will also have to be modified to reflect both underinsured and uninsured losses, if covered, as well as any settlement discount. Finally, an analysis of required fund size should consider the attachment point for the fund.

Given the unknown likelihood of the unprecedented loss experience of the past three years, pre-event funding (including reinsurance capacity) might be scaled to reflect a more optimistic assessment of likely requirements for claims paying capacity while post-event assessment might be used to cover the difference between an optimistic and a more pessimistic view and so higher level of needed claims paying capacity. d. Equitable Sources of Contribution to a Wildfire Victims Fund.

As many parties as possible that have some ability to control the risk of wildfire should be asked to contribute to a Wildfire Victims Fund. Different pre- and post- event funding structures, including a stream of contribution payments or post event bonding authority, may allow for access to lower cost capital. The legislature and Governor should further explore, and allow for, funding mechanisms that reduce the cost of capital while ensuring the fund is adequately capitalized. This report details below how pre-event contributions could be structured , however the workgroup recommends the legislature consider post-event funding options as well in order to manage overall initial capital commitment.

Investor owned utility ratepayers could contribute to the fund via a 20-year bond charge, similar in size to the DWR bond charge, as well as via payment in rates for utility general liability insurance coverage. For example, authorization for a new ratepayer charge equal to the $812 million annual DWR bond charge scheduled to end late-2020, can provide cumulative net present value contribution of $11.5-13.5 billion. This contribution acknowledges the role that electric customers have to socialize liability for utility caused fires. A fund also limits the rate variability and potential shock that arises from relying only on post-event funding to pay liabilities. Moreover, by sizing the charge to be the same as the outgoing DWR bond charge, this approach reduces incremental bill impacts to ratepayers for fund capitalization. However, under the status quo, the DWR bond charge sunset would result in incremental bill reductions. As such, the ultimate size of any new bond charge should support the equitable sharing of costs across electric customers, shareholders, and property owners, and may be less than the DWR bond charge if a smaller fund is created.

Investor owned utility shareholders could contribute to the fund via a one-time cash contribution or a stream of payments equal to the net present value of the ratepayer contribution. The contribution shares of individual investor owned utilities should be sized to reflect actuarial risks of each utility depending on a variety of factors including recent loss experience, fire risk in their service territory, value at risk in the high wildfire risk areas of their

51 service territory, and others. This contribution acknowledges the value of the fund, (and associated reforms), in establishing a more stable damage payout and cost recovery environment, which has positive benefits for utility shareholders and continue utility solvency. The workgroup recognizes that ensuring voluntary contributions from shareholders is difficult to require via legislation. The legislature and Governor’s office should consult with utilities and financial market experts regarding how to best incentivize shareholder contributions. A requirement to recapitalize the fund in the event of utility negligence should be smaller the greater the upfront utility contribution. Likewise, the scope of changes to cost recovery, and the degree of pre-event certainty of recovering costs, should depend on the degree to which a utility contributes to initial capitalization of a fund.

Publicly owned utilities could contribute an equivalent up-front (equivalent to shareholder) and ongoing (equivalent to ratepayer) contribution, with both sized to reflect the size of their customer base. Thus a POU ratepayer would pay an additional charge equivalent to the extension of the DWR bond charge plus an incremental charge needed to finance the upfront contribution.

These contributions ensure policy fairness both between ratepayers and shareholders and between participating investor owned and publicly owned utilities.

Property Insurance Policy Holders in California would be subject to a surcharge on their insurance policies sufficient to raise funds equivalent to electric customer contributions. This charge would amount to approximately on average $80 per year.20 The purpose of such a surcharge is different than existing surcharges collected from property owners and more research is needed regarding how to best structure to ensure there are direct benefits to property owners and how any such surcharge interacts with Prop 26 and Prop 13. The legislature may consider limiting such a surcharge only to properties in Tier 2 or Tier 3 fire zones, even though broader socialization better supports the risk pooling objective. It is important to note the independence of the Wildfire Victims Fund from the State of California may be a factor in distinguishing such a surcharge on insurance policies from a tax requiring supermajority approval.21

20 The intention is to have similar collections from property owners as from ratepayers and IOU shareholders, and that the fees would be levied for 10 years or the length of the fund. As such, this fee may be smaller or greater per property if the fund size is different than the assumed $40 billion, and may decline over time if a smaller capitalization is needed. 21 Schmeer v. County of Los Angeles (2013) 213 Cal.App.4th 131, 1326–1327.

52 The State of California contributes to the fund via foregone tax revenue due to the fund’s tax- advantaged status and via investment in wildfire mitigation that, if effective, will reduce the size of the fund and lowers the probability that post-event assessments will be triggered. The Wildfire Victims Fund does not require direct taxpayer contributions, although the workgroup strongly recommends that taxpayers substantially increase wildfire mitigation targeted to reducing wildfire risks for individual homes and in communities at highest risk for wildfires. This is above and beyond the current funding from the Greenhouse Gas Reduction Fund of $200 million per year; the workgroup recommends an additional $3 billion in annual near-term (next 5 years) mitigation funding designed to limit draws on the fund via risk-targeted investment, with a particular focus on areas at highest risk for utility caused fires. e. Wildfire Victims Fund post-event contributions

Ideally, post-event assessment will not be required because mitigation efforts will reduce utility caused wildfire risks sufficiently that the higher levels of claims paying capacity will not be required. If initial capitalization does prove insufficient, a Wildfire Victims Fund should have authority to levy post-event assessments on parties sufficient to pay claims up to the $40 billion level, or another level established by further analysis of a high-risk wildfire scenario. Contingent, post-event assessment provides incentives for mitigation (and adequate ongoing mitigation funding) by the utilities and the state. Post-even bonding authority also accounts for the possible need to upsize the fund if liabilities prove greater than expected.

Several parties, including The Utility Reform Network (TURN) and the California Large Energy Consumers Association (CLECA), argue that utilities should be required to repay the fund for any payments associated with fires where utility negligence was later found. The utilities suggest that alternatively, the loss causer should pay a higher contribution to rates recovered through ratepayers. It is important to assign some additional financial responsibility to the loss causer to limit the funds coverage of any claims associated with negligence, but also necessary to maintain solvent utilities.

To achieve this balance, the workgroup recommends utility shareholders be required to repay fund payments associated with an imprudent utility fire up to a certain threshold amount. This utility repayment can be subject to a pre-established cap, for example a certain percentage of market capitalization the day before a fire or a stress-test designed to maintain utility credit quality. The level of this cap should be higher if utilities do not contribute substantial up front contributions to the Wildfire Victims Fund and lower if they choose to make such contributions. Utilities should also be subject to fines and penalties from the CPUC for negligence, which can be remitted to the fund.

53 Observations regarding feasibility of a fund

Establishing a Wildfire Victims Fund of sufficient size and with adequate contributions is a daunting task.

It is made more challenging by the fact that a key potential contributor, PG&E, is currently undergoing Chapter 11 reorganization, but exit from the Chapter 11 process may only be possible with liability reform. The creation of a fund and cost recovery reform that is calibrated to utility shareholder Fund contributions is the best path forward.

It is made more challenging by the fact that all shareholders of IOUs may object to sizeable initial contributions to the fund, even though they will benefit from the risk pooling a fund creates as well as from associated cost recovery reform.

It is made more challenging by the fact that maintaining payouts at current settlement values both for subrogation claims from insurers and for payments to underinsured homeowners present legal and implementation challenges. But not limiting these payouts would dramatically increase the cost of the fund and so compromise its usefulness.

It is made more challenging by the affordability challenges the state faces in electric utility rates. However, the workgroup believes this proposal renders a future of escalating and unpredictable electricity bills somewhat less costly and much more predictable.

It is made more challenging by the affordability challenges currently being experienced by homeowners in the WUI seeking to purchase fire or homeowners insurance. But it will help to stabilize California’s homeowner’s insurance market whereas modification of inverse condemnation doctrine may be a fundamentally force.

The solution we propose - a Wildfire Victims Fund coupled to significant cost recovery reform - is not an easy path. Further work is needed to identify the costs, consequences, and feasibility, of parts of the proposal as presented here. The workgroup believes that this combination of reforms will best protect victims, ratepayers, homeowners, and ultimately the health and wellbeing of the citizens of the state of California.

The workgroup believes that a smaller, liquidity only fund could provide some but not all of the benefits of a larger claims paying fund. The workgroup recommends that no or only modest cost recovery changes should be made if such liquidity only fund is created primarily using electricity customer resources with little utility shareholder contribution.

Other elements of this report discuss reform to the liability framework for utility caused wildfires in California as well as potential associated modification to CPUC cost recovery

54 process for these catastrophes. The workgroup emphasize that such change would have implications for what we have recommended here: possible changes in cost recovery as well as creation of Wildfire Victims Fund to pre-fund liabilities associated with utility caused catastrophic wildfires.

Modification of the current strict liability framework to a fault-based liability framework would reduce but not eliminate the need for a utility-focused Wildfire Victims Fund by limiting instances in which a utility is liable for wildfire to those in which it acted negligently. Presumably, a negligent utility would be unable to prove to the CPUC that costs associated with its negligence were prudent, and thusly utility shareholders rather than ratepayers would be liable for any liabilities still the responsibility of electric utilities. Non-negligent utility- caused wildfire liabilities would be the responsibility of homeowners and their insurance companies. In both such cases a Wildfire Victims fund could assist with timely claims payment.

The workgroup emphasizes the degree to which change in the liability regime would alter utility liability for wildfire is uncertain. It might be that most wildfire liability would shift to home insurers under this approach. On the other hand, it is also possible that victims would be successful in proving in court that utilities conduct in setting fires was negligent. If so, then a change in liability regime could be destabilizing to utilities because it would predictably lower the odds of cost recovery for wildfire expenses while not reducing the underlying expense. Shareholders and ratepayers might end up needing to create a Wildfire Victims Fund or take major reforms to cost recovery because of the benefits of stable utilities with good access to capital markets. Any changes to inverse condemnation, cost recovery, or creation of a Wildfire Victims Fund must be considered and undertaken in a coordinated fashion. Interactions between the three frameworks are so direct and so strong that modification of one or more without close coordination is likely to lead to failure of policy effectiveness and severe unintended consequences.

55 56 Homeowners Insurance and Mitigation Workgroup Report Commissioner Jones and Commissioner Wara

Staff note: The executive summary and workgroup reports have not been reviewed by the full commission prior to being released publicly. The workgroup reports represent consensus thinking of the members of that particular workgroup, and are not currently reflective of the opinions of the full commission. The executive summary, compiled by staff, is an attempt to reconcile the recommendations of the three workgroups into one cohesive set of proposed recommendations for discussion and consideration at the next commission meeting.

I. Context/Findings

Finding 1. Admitted lines home insurance is becoming more difficult and more expensive to obtain in high wildfire risk areas in California. The Department of Insurance (“Department;” “CDI”) and the Personal Insurance Federation of California (PIFC) testified that rate increases have been filed1 with the Department and will continue to be filed for homes insured in the wildland-urban interface (WUI), which will make insurance more expensive. While most homeowners in the WUI are still able to obtain insurance from admitted carriers, over time more will likely be denied based on the level of wildfire risk and will have to obtain insurance from the surplus lines market or from the state- created Fair Access to Insurance Requirements (FAIR) Plan, which is the fire insurer of last resort available to homeowners who cannot otherwise find home insurance. Under state law, insurers have the discretion to decide where and whether to write home insurance policies and the Insurance Commissioner has no authority to mandate home insurers to write or renew insurance in the WUI. However, insurers are obligated to participate in the FAIR Plan and pay assessments when the FAIR Plan suffers losses that exceed its ability to pay claims.

1 Personal Insurance Federation of California. Public testimony to the commission, March 13, 2019. California Department of Insurance. Public testimony to the commission, February 25, 2019 and April 3, 2019.

57 Insurance Access in the WUI The Department found that there was a 15 percent increase in insurer initiated non-renewals from 2015 to 2016 in the WUI.2 The Department also found that there has been a significant increase in complaints from homeowners in the WUI regarding non-renewals and premium charge increases, as well as complaints about insurers declining to write new insurance. Current law requires insurers to provide homeowners with a 45-day notice of non-renewal with a reason for that decision.

Insurance Affordability in the WUI Insurance pricing is also increasing for homes in the WUI. A Rand study found that on average home insurance in two WUI counties was 25 percent higher in price than for homes in non-WUI counties.3 According to the Department of Insurance, on average home insurance rates in areas of high risk of fire are at least 50% higher than rates for homes outside the WUI. Further, insurance prices in the WUI are likely to continue to increase significantly. Both the representative of the Personal Insurance Federation of California and the Department of Insurance testified that many insurers have filed for additional rate increases and are likely to do so on a regular basis for the foreseeable future. Due to insurers’ loss experience associated with wildfires, the Department is approving rate increases and will likely approve more rate increases for insurers selling coverage in the WUI.

2 California Department of Insurance. “The Availability and Affordability of Coverage for Wildfire Loss in Residential Property Insurance in the Wildland-Urban Interface and Other High-Risk Areas of California: CDI Summary and Proposed Solutions” Appendix E and p.1. 3 RAND. “The Impact of Changing Wildfire Risks on California's Residential Insurance Market,” California's Fourth Climate Change Assessment, California Natural Resources Agency. August, 2018.

58 Finding 2. As more homeowners in the WUI are unable to find home insurance from admitted carriers, more are having to purchase fire insurance from the surplus lines market or from the FAIR Plan, indicating a growing problem. The home insurance market in California is not in crisis yet, although we are marching toward a future where home insurance will be increasingly unavailable and/or unaffordable for many in California’s WUI. More destructive fires in the future of the sort we saw in 2017 and 2018 will only accelerate this trend.

Increased Use of Alternatives to Admitted Lines Carriers in the WUI While the vast majority of home insurance written in California is from traditional “admitted” carriers,4 insurance from admitted carriers will increasingly become more challenging to find and less affordable for homeowners in the WUI. Homeowners who are unable to find insurance from an admitted insurance carrier can access the “surplus lines” market through a “surplus lines broker.”5 According to CDI, surplus lines writers make up less than one percent of the overall home insurance market overall in California. The Department of Insurance does not have figures for the percentage of homes in the WUI that are insured by the surplus lines market. Although the surplus lines market share of the overall home market in California is currently very small, it is growing, and the surplus lines market share in the WUI areas is likely disproportionate as compared to the overall market in the state. This growth is likely to accelerate as homeowners find it more difficult to find insurance from admitted insurance carriers. The FAIR Plan is an insurance program available to California homeowners who cannot find admitted lines homeowners insurance. Created by statute, the plan is not-for-profit, is not subsidized by the State of California or the taxpayers, and is intended to provide fire insurance coverage to homes that the private market refuses to cover.6

4 97%, according to the Personal Insurance Federation of California. 5 The surplus lines market is one where the insurers offering the insurance and the insurance itself are less regulated by the state – the price of surplus lines insurance is not regulated by the state, for example. Surplus lines insurance is available for most homeowners in the WUI, but the price is higher than that of insurance from admitted carriers and the price of surplus lines insurance will increase in the face of the recent wildfire loss experience of insurers. 6 The FAIR plan is the fire insurer of last resort for California homeowners. FAIR Plan coverage is subject to multiple limitations that make it less desirable than an admitted lines policy and is also generally more expensive than an admitted insurers’ homeowners policy, because the FAIR Plan is taking the homes that the private market refuses to insure due to the risk that those homes face from fires. The FAIR Plan was created by the California

59 As more homeowners in the WUI are unable to find home insurance from admitted carriers, more are having to purchase fire insurance from the FAIR Plan. The number of FAIR Plan policies written in the WUI is increasing yearly. It is important to note that while over the last five years the FAIR Plan policies written in the WUI have grown 50%, that the FAIR Plan policies make up only a very small share of the overall number of homes in California generally and in the WUI in particular. There are 3.6 to 4.5 million homes in the WUI, of which 1 million are in areas rated high or very high risk. As of January 1, 2018, there are only 33,898 FAIR Plan policies written in the WUI. This means that the large majority of homeowners in the WUI are able to find insurance from admitted carriers or the surplus lines market – at least for now. Even as this report is being written there are reports of more homes in the WUI being denied renewal of or newly written home insurance. Insurers in recent years are increasingly using wildfire risk models to assign a risk score to each home, and then based on that risk score the insurer decides whether to renew or write new insurance for that home. While pricing of home insurance is regulated by the CDI, the decision to sell (or not to sell) insurance to a particular homeowner is within the purview of the insurers themselves. The models incorporate factors that are related to the risk of wildfire and the propensity of a home to burn, including fuel, surface composition, slope, aspect, distance to high risk areas and firefighter access. Based on the risk score, insurers are deciding whether to renew or write new insurance for homes and deciding on pricing. The Department of Insurance, however, has found that there are a number of factors that are not included in the models. Homeowners’ efforts to create defensible space around the home and other home fortification and construction measures are not included in the current models. Likewise, many types of community mitigation measures are not considered in the models. But evidence suggests that adherence to more stringent building codes, the use of firebreaks, and other community based efforts can help reduce exposure to wildfire loss and

Legislature and Governor after inner city riots in the 1960s led to widespread redlining of inner city African- American neighborhoods by insurance carriers. The FAIR Plan by law must set its rates based on risk. The FAIR Plan is also required by law to have reserves sufficient to pay future claims, so it has to collect enough premium in order to have sufficient reserves to pay future claims. The FAIR Plan is not subsidized by the State of California or the taxpayers. It is also not a state agency; it is a not-for-profit whose board consists of the major home insurers in the state. In the event that the FAIR Plan has insufficient reserves to pay claims, the FAIR Plan can assess all admitted home insurers proportionate to their market share to replenish its reserves. . FAIR Plan policies are limited to fire insurance. Homeowners who purchase a FAIR Plan policy can also purchase a “differences in conditions” coverage or umbrella policy from an admitted insurer, on top of the FAIR Plan policy, to cover the usual sorts of risks that a traditional home insurance policy covers beyond fire insurance.

60 indeed, these are many of the measures suggested by the insurance industry itself to reduce risk.7 Moreover, there are issues with regard to how the models treat access – no consideration is given to road width, shoulders, or the availability of multiple access routes for firefighting equipment. Finally, the Department notes that the there is no credible data to support the models’ assumptions that the propensity to burn increases with each change in risk score, which also calls into question the level of granularity (individual homes) at which the risk score is being applied by the insurers.8

Finding 3. California does not currently require a new government created insurance program other than the FAIR Plan to support home insurance availability in the WUI. There are additional laws that should be enacted to help homeowners in the WUI avoid underinsurance; to make sure that the models that insurers are using capture all risk reduction factors; to give homeowners more time in certain circumstances before their insurance is not renewed; and to align insurance availability with home and community risk reduction. These and other reforms to improve the insurance market are set forth in the Recommendations. The workgroup concludes that California is not at a point of crisis where an additional government insurance program should be established to write insurance in the WUI when there is already the FAIR Plan for that purpose. There are just under 34,000 FAIR Plan policies written in WUI, versus 1 million homes in areas of high or very high risk. Most homeowners in the WUI and even in high risk areas are still able to find private insurance, and taking the modest step of providing a means tested premium subsidy for low income households currently in the WUI would address the affordability issues more effectively. Additional recommendations to improve the FAIR Plan are found in the Options and Recommendations section below.

7 See Insurance Institute on Home and Business Safety, https://ibhs.org/wildfire/wildfire-demo-2019/. (Last accessed May 13, 2019) 8 California Department of Insurance. “The Availability and Affordability of Coverage for Wildfire Loss in Residential Property Insurance in the Wildland-Urban Interface and Other High-Risk Areas of California: CDI Summary and Proposed Solutions.” pp 9-10.

61 II. Issues to Consider with Regard to Potential Policy Responses to Insurance Affordability and Availability Policymakers need to take into account a number of considerations in developing options and recommendations to address the growing problem of home insurance unavailability and unaffordability in the WUI.

Insurance price and availability is based on underlying risk. California should act to reduce the underlying risk of wildfire to the extent feasible First it is important to recognize, as the Commission was told repeatedly through expert testimony,9 reductions in insurance availability and relatively higher pricing in the WUI is based on the underlying risk of wildfires. Insurers are deciding whether to make insurance available or not based on their evaluation of the underlying risk of wildfire for those homes seeking insurance. So too with pricing. Insurers’ premium prices are based on their loss experience which in turn reflects the underlying risk of wildfires - including and especially recent loss experience. Insurers are filing rate increases with the Department of Insurance based on the increase in risk faced by homes in the WUI and are likely to continue to do so until pricing reflects their current view of the level of risk. If the goal is to make insurance both more available and more affordable, then the state, first and foremost, needs to invest in taking steps to reduce the risk of wildfires, to the extent that it can do so. Some aspects of the risk of wildfires are outside the control of any one state, such as temperature rise and drier conditions due to climate change. The State of California is an international leader in taking steps to reduce the emission of greenhouse gases which are a major contributor to climate change, but other states, the United States government, and other countries are not taking similar steps fast enough, and so there are some aspects of the increased risk of wildfires that will be outside of California’s control. However, as set forth in the Governor’s Strike Force Report, there are steps the state can take to reduce risks through improved forest management, better land use decision-making, improved building code standards, requiring utilities to “harden” their equipment and take other steps to reduce the incidence of utility caused wildfires, and ensuring that local governments take steps to increase community wildfire resilience and to enact and enforce meaningful defensible space and other code requirements for homeowners.

9 See Personal Insurance Federation of California. Written comments to the commission. April 22, 2019; Also California Department of Insurance. Public testimony, April 3, 2019.

62 Insurance Price and Availability Sends Important Market Signals about Underlying Wildfire Risk Second, insurance availability and pricing send important market signals about the underlying risk of living in an area. Policymakers need to consider the potentially significant consequences of taking steps that artificially mask those price signals. Masking insurance price and availability market signals can create incentives for more people to move to areas where the risk of wildfire is high, further compounding the likelihood of deaths, injuries, and property losses in those areas where wildfire risk is high. For example, if the state were to require that home insurance for homes in the WUI be priced the same as home insurance for homes outside the WUI, the price of insurance in the WUI would no longer reflect the higher risk and, in ultimate effect, an incentive would be created for people to live in a higher risk area. At the same time, the cost of living for people who make the choice not to live in the WUI would also increase (see below). In evaluating whether to subsidize homeowners insurance in the WUI, policymakers need to consider whether the state wants to encourage more people to move into the WUI. We believe that doing so will lead to more deaths and injuries of both residents and first responders, destruction of property, loss of homes, more damages to be paid by utilities (if a fire is caused by utility) and consequent costs to shareholders and utility ratepayers, and more costs for local, state and federal governments and taxpayers. Climate change is a reality and it’s having an effect on the frequency and severity of wildfires. Insurance pricing and availability reflect the increase in wildfire risk and send an important signal that the risk is growing substantially. Suppressing that market signal could result in more people and businesses locating in areas of higher risk with consequent increases in deaths, injuries, loss of property, etc. Policymakers should not attempt to suppress the impact of climate change on homeowner and business decision making by artificially suppressing insurance pricing and availability market signals about climate change. Masking Insurance Price and Availability Signal Shifts Risk/Cost to Those Who Live in Lower Risk Areas Policymakers also should consider the potential for cost shifting from those who live in the WUI to those who do not live in the WUI. For example, if that state were to require that insurance in the WUI be priced the same as insurance outside the WUI, the net effect would be to raise prices outside the WUI, in order to collect enough premium to cover the risks in the WUI where the premium would now be lower than needed to cover fire risks. Homeowners in lower risk areas outside the WUI will have to be

63 charged more to make sure insurers collect enough premium to have sufficient reserves to cover higher frequency and severity of wildfire claims in the WUI. Should people who live in low risk areas subsidize insurance costs of those who live in higher risk areas? Insurance is a mechanism to pool risk and spread risk over large numbers of people, and thereby obtain the most efficient and lowest actuarially based price for those risks covered by the insurance. Arguably, everyone is benefiting from access to insurance, which in turn relies on spreading risk to a large number of people, so because everyone is benefitting the price should be the same regardless of the risk. However, some homes present much higher risks than others. There are relatively fewer homes at high risk of wildfire as compared to the overall number of homes in California. Those higher risk homes don’t need to be in the general risk pool for the general risk pool to have sufficient numbers of homes over which to spread risk, and to the contrary, those higher risk homes are imposing potentially higher costs on the insurer and raising costs for everyone who purchased the insurance. States allow insurers to take into consideration risk factors associated with the property being insured in pricing insurance. Homes that are at greater risk of fire due to location in a high risk area, the strength of the fire-fighting capacity of the community, the home’s proximity to those services, the materials used and codes to which the home was built, and other considerations are all allowable factors for home insurance pricing and availability in California. One underlying rationale for this is that what people pay for insurance should be based on the risks that their property and similar properties face, not the risk that other properties with completely different risk profiles face. Constraining pricing artificially for high risk homes would result in unfair cross subsidies or further motivate the insurer to non-renew in high risk areas. A second rationale for risk-based pricing is to encourage risk reduction measures. If insurance pricing does not take into account risk the home faces, then there is a lesser incentive for the homeowner, or the community in which the home exists, to take steps to reduce the risk. Requiring those in lower risk areas to subsidize those in higher risk areas by artificially constraining price penalizes those who live in lower risk areas.

Government Provided Insurance Sometimes government needs to step in to provide insurance where private market participants withdraw entirely, but care in design of a government insurance program is critical because of danger that government response can have negative unintended consequences.

64 When private insurers withdraw entirely from a market or decline to write certain risks, government may need to step in to provide insurance that the private market is not otherwise providing. We are not at this point yet with regard to the home insurance market for fire risk in the WUI in California. When the government has stepped in, in other contexts, it has been because private insurers decline to write any insurance for certain risks. Only when the private market has failed entirely have governments stepped in to provide insurance. The concern about doing so before the private market has failed is one of the government supplanting the private market. Government should only step in where private market won’t provide insurance.

Example: California Earthquake Authority One example of government provided insurance is the California Earthquake Authority. The CEA provides residential earthquake insurance for Californians. Pricing of the CEA residential earthquake insurance is based on risk. The CEA is not supported by the state general fund so there is no taxpayer subsidy. Prior to the Northridge Earthquake of 1994, home insurers were required by law to include earthquake insurance in their policies. After the enormous losses suffered by home insurers in the Northridge Earthquake, insurers notified policymakers that they could no longer afford to include earthquake insurance in their home insurance policies because the risk and magnitude of the earthquake losses were too great. Home insurers advised policymakers that they would stop writing home insurance in California if they were required to include earthquake insurance with home insurance. In this case, the private market withdrew entirely from providing residential earthquake insurance after the Northridge Earthquake. The State of California responded by creating the California Earthquake Authority (CEA), a government agency which issues a residential earthquake insurance policy. Importantly, the Legislature required that the earthquake insurance issued by the CEA is priced based on the underlying risk, so there is no taxpayer or government subsidy. The CEA is required to have sufficient reserves to cover claims from two contemporaneous major earthquakes. The CEA is an example of the government stepping in when the private market has withdrawn completely from covering a particular risk. That situation is not currently present with regard to wildfire insurance risk in the WUI – insurers have not withdrawn entirely from the market.

Example: The California FAIR Plan Another example of government intervention in the insurance market is the California FAIR Plan. FAIR Plan pricing is based on risk. The FAIR Plan is the insurer of last resort for fire

65 coverage but does not supplant the private market. Customers can only purchase FAIR Plan policies upon a showing that they have attempted but were unable to purchase a policy from an admitted carrier. The FAIR Plan is not funded by the general fund so there is no taxpayer subsidy. The FAIR Plan has the ability to assess insurers if its capital is exceeded by losses. The FAIR Plan is another example where the state government intervened when it became impossible for homeowners to obtain fire insurance in certain areas of California – originally the inner city. Importantly, the FAIR Plan is not taxpayer subsidized and must price based on the underlying risk. This means that the FAIR Plan is not able to compete unfairly with the private market insurers and keeps the FAIR Plan from supplanting the private market. The FAIR Plan works as intended – it is the insurer of last resort for those who cannot otherwise find fire insurance in the WUI or elsewhere. Below we will discuss what might be done to assist lower income homeowners who cannot afford the FAIR Plan in a way that does not put the FAIR Plan itself at an unfair competitive advantage against the private market insurers or artificially reduce the FAIR Plan price so that it does not reflect the underlying risk of wildfire.

Example: Florida Hurricane insurance Subsequent to Hurricane Andrew in 1993, Florida took a number of actions to shore up private residential insurance because carriers declined to write policies covering wind damage. First, Florida established a Scientific Commission to model Hurricane catastrophe risk in a transparent and accountable manner. Second, Florida established a catastrophic risk reinsurance fund known as the Florida Hurricane Catastrophe Fund. Third, Florida established a public insurance provider of last resort called Florida Citizens Insurance Corp (FCIC) as an insurer of last resort. FCIC has the ability to assess insurers if its capital is exceeded by losses. Both the Catastrophe Fund and FCIC are required to use the Commission’s catastrophic risk model. This example was a response to a total market failure. The Commission asked the witness who testified about the Florida example whether California was in the same market failure condition as Florida when it created Florida Citizens Insurance Corporation; the witness answered in the negative.10

Example: The National Flood Insurance Program The National Flood Insurance Program (NFIP) was established in 1968 in response to the unwillingness of insurers to cover flood perils. The NFIP does not price entirely based on risk - it

10 See John Rollins, public testimony to the commission, April 3 2019

66 is subsidized by federal taxpayer dollars. Thus it is an example of lower risk taxpayers subsidizing higher risk taxpayers. Over its history, the NFIP has proven to be very expensive in part because it has masked price signals that otherwise would incentivize avoidance of flood risks. The NFIP is not a good example for California to look to address the home insurance pricing and availability challenge in the WUI, as this would distort the market pricing of risk.

California already has the FAIR Plan As mentioned, California already has an insurer of last resort for fire - both inside and outside of the WUI - the California FAIR Plan. The not-for-profit FAIR Plan draws upon the lessons learned from prior government interventions in private insurance markets – it is priced based on the actual risk so it is not masking the price signal associated with the fire risk, nor is the price subsidized by taxpayers. It is an insurer of last resort and it is not supplanting the private market through unfair pricing or taxpayer subsidies. It is required to have sufficient reserves to cover future claims, but in the event those reserves are exceeded it can assess the private home insurers to replenish its reserves to pay claims.

California FAIR Plan Affordability The Wildfire Commission heard testimony that FAIR Plan policies can be difficult to afford for low-income homeowners in certain high-risk locations. For those homeowners who are of limited means, the FAIR Plan can be quite expensive, particularly as rates rise to reflect the recent loss experience. The solution is not to artificially suppress the FAIR Plan price. The workgroup recommends alternative solutions below (See Recommendation #3).

Benefits of Aligning insurance availability and pricing with risk reduction efforts Another issue considered by the Wildfire Commission is the benefit of aligning insurance pricing and availability with risk reduction efforts. Ideally, insurance should be available and priced to reflect meaningful risk reduction steps taken by homeowners and communities in the WUI. Such is not the case currently.

Current home insurer fire risk underwriting models are inadequate As discussed above, the fire risk models used by insurers to decide whether to renew or write insurance in the WUI do not take into account home and community fire mitigation efforts. Whether it is defensible space, following modern fire building codes (post-2008), hardening the roof of a home, protecting the eaves of the home, using heat resistant glass in windows, etc, insurers’ models do not consider these risk reduction efforts. Current fire risk underwriting models for homes also fail to take into account the actions fire officials are asking homeowners take to reduce fire risk to their homes.

67 Under current law, the risk score models utilized to decide whether or not to write insurance for homeowners do not have to be filed with CDI, let alone approved by CDI. Moreover, the models are not required to be publicly vetted. The workgroup recommend a process to publicly vet these models and to require their approval by the CDI.

Positive benefits of incentivizing homeowners and communities to reduce fire risk There are large positive benefits to be gained in risk reduction from aligning insurance availability and pricing with homeowner and community risk reduction efforts, as long as those efforts demonstrably reduce risk. Currently, the underwriting risk models most utilized by insurers fail to incentivize homeowners to make improvements to homes, because the models do not account for those improvements.

An example where risk reduction standard set for homeowners drives availability of insurance An important successful example where home insurance availability was aligned with homeowner risk reduction is that of the Wildfire Partners project in Boulder Colorado. Homeowners in Boulder County, Colorado live in the WUI. They were facing increasing instances of home insurers declining to renew or write new home insurance because of wildfire risk. To address this problem, Wildfire Partners was established. This non-profit worked with the county and insurers to develop, based on the best available science, a standard for home defensibility and wildfire risk reduction. Insurers agreed that if a third party verified that the homeowner met this risk reduction standard the insurer would write insurance for the home. This is a successful example where homeowner risk reduction actions were aligned with insurance being made available. The workgroup recommends that California establish a similar program statewide in the WUI.

III. Recommendations

Recommendation 1. Doing nothing to improve insurance conditions in the state is not a good option. The workgroup strongly believes that doing nothing to improve access and affordability of homeowners’ insurance is not a good option. We believe that doing nothing will lead to continued deterioration of insurance availability and pricing in the WUI.

Recommendation 2. California should preserve its risk based approach to pricing home insurance. The workgroup strongly recommends that California maintain incentives created through risk- based pricing of insurance for all stakeholders to avoid and mitigate risk. Furthermore, the state

68 should not act to suppress prices in high-wildfire risk areas by increased cross-subsidy from low- risk areas.

Recommendation 3. Improve the California FAIR Plan. FAIR Plan coverage limits have not increased in several decades even as the cost of housing in California has increased dramatically. The FAIR Plan coverage limits should be increased to reflect current construction costs for dwellings in the WUI. The workgroup believes that FAIR Plan policies should follow CDI recommendations to allow for an increase in coverage limits to $3,000,000 and then allow increases by an inflation factor at specified intervals. The workgroup believes that a targeted premium subsidy for existing homeowners in the WUI who are very low income and for whom the FAIR Plan is the only option for insurance is potentially justified. This subsidy should be available only to homeowners who currently live in high risk areas and are currently insured by the FAIR Plan or become insured by the FAIR Plan in the future. It should be unavailable to homeowners who move into high fire risk areas in future. This premium subsidy could be funded out of general fund revenues. The FAIR Plan itself should not be subsidized nor should pricing in the FAIR Plan be artificially constrained. Price should continue to be based on risk.

Recommendation 4. Improve the California Insurance Guarantee Association. California law establishes a “California Insurance Guarantee Association” (CIGA) to pay claims for property insurers who are unable to pay claims due to insolvency. The CIGA is made up of the property and casualty insurers writing insurance in the state and is capitalized through assessments on them. The CIGA is an important safety net for insureds when they are faced with the insolvency of their insurer. Current state law establishes a cap on the dollar value of claims that can be paid from the CIGA to a homeowner whose insurer has become insolvent. That cap is currently $500,000.11 The workgroup recommends, based on input from the Department of Insurance, that the cap be raised to $1,000,000 and then increased by an inflation factor on an annual basis. The cap needs to be lifted because there are many homes in the WUI whose replacement value and insurance coverage exceeds the cap and so the existing cap would result in a payment from the CIGA which is far below that which the homeowner would have otherwise received from their insurer. In addition, the CIGA cap has not been increased since its inception in the 1960s.

11 (Ins Code §1063.1)

69 Recommendation 5. Require Fire Risk Underwriting Models used by insurers to be filed and approved by CDI. As discussed above, the Department of Insurance has found a number of limitations with the fire risk models used by insurers. Given the reliance and importance of those models in determining whether home insurance will be renewed or written, the workgroup recommends that, like other critical aspects of home insurance, the models ought to be filed with and approved by the California Department of Insurance, and that the Department of Insurance should be provided with the necessary resources and expertise to review and approve the models based on the best available science. The Department’s review and approval of the models should be based on the best available science regarding inclusion of factors that contribute or diminish the risk to a home from wildfire.

Recommendation 6. Set standards for home fire risk reduction and community risk reduction, with input from insurers, and require insurers to write insurance where the home owner and the community both meet standards. Widespread home hardening upgrades are an important strategy to reducing wildfire risks to homeowners. A McClatchy analysis of impact of the post-2008 wildfire building codes in the Camp Fire footprint shows that homes meeting these more stringent defensibility codes had much higher survivability rates than those without. This was true even where ember cast was a major driver of fire and setbacks were sometimes relatively tight. Meeting the higher standard appeared to matter a great deal in Paradise. The Insurance Institute for Business and Home Safety (IBHS)’s empirical tests of home meeting the post-2008 wildfire building code standard also indicates higher survivability. On the other hand, many homes meeting post-2008 code burned in the Tubbs Fire, indicating that more than home hardening is essential to defensibility during a fire with high ember cast. Consistent with conceptual recommendations by the Department of Insurance, the workgroup recommends that CAL FIRE be directed by statute to establish a wildfire risk reduction standard for homes and, separately, for communities, which reduces the risk of loss due to wildfires. . CAL FIRE, in consultation with the Department of Insurance, may include all factors that are material to reducing the risks at both the individual home and the community level. The workgroup recommends that state law require insurers to write an insurance policy for a home when both that home and the community where the home is located meet CAL FIRE’s wildfire risk reduction standard. This recommendation builds on the successful Wildfire Partners example in Boulder Colorado, where a risk reduction standard was set and if a homeowner met it, the insurer would write insurance for the home. Such a scenario aligns risk reduction actions by both the homeowner and community with the availability of insurance, and could be enhanced by the grants or loans proposed in Recommendation 16. It uses

70 insurance availability to incentivize risk reduction, and makes sure that the risk reduction demonstrably reduces risk. This recommendation addresses the understandable frustration felt by homeowners in the WUI who follow the directions of local fire officials by hardening their homes, only to be unable to find private insurance, and acknowledges that community level mitigation actions can be taken to reduce risk. CAL FIRE and the IBHS are already working on developing a three-tiered approach to improving a home’s survivability in the face of wildfire.12 This effort is modelled on the “Fortified Home” program for hurricane and high wind events, and may serve as a useful framework for the requirement to write insurance for a hardened home.

Recommendation 7. Require insurers to implement a tiered mitigation credit based on the level of home hardening. This alternative recommendation, proposed by the California Department of Insurance, would be less effective than Recommendation 6, but could rely on the same CAL FIRE standards. Mitigation credits may provide a signal to homeowners as to the actions that would reduce their risk, but such an incentive may not be that helpful to the consumer nor provide enough of a push to make upgrades to one’s home. Moreover, a mitigation credit does not address the unavailability of insurance in the first instance. Insurers would still be free to decline to renew or write insurance for homes that meet the CAL FIRE Standard. A mitigation credit does a homeowner no good if they cannot find insurance.

Recommendation 8. Require insurers to calculate and provide a replacement housing estimate in writing to insureds annually and before entering into an insurance contract. A significant number of fire survivors are underinsured, according to testimony received by the Commission. They have insurance, but their insurance coverage is not sufficient to cover the full cost of replacing their homes. State law does not place a duty on insurers to make sure that the insured has sufficient coverage to replace their home. However, insurers have the construction cost data not only from their replacement cost tools but also from the many total losses that they settle after approving the construction cost.

12 California Department of Insurance. “The Availability and Affordability of Coverage for Wildfire Loss in Residential Property Insurance in the Wildland-Urban Interface and Other High-Risk Areas of California: CDI Summary and Proposed Solutions.” pp 5-6.

71 In the wake of multiple fires in the last two decades and the Oakland Hills/Tunnel Fire in 1991, the Department of Insurance found that many homeowners were underinsured. The Department also found that where insurers had provided a home replacement cost estimate to insureds, the estimates varied widely and often failed to incorporate all the cost components associated with replacing the home. In 2011, then Insurance Commissioner Dave Jones issued a regulation requiring insurers to use a complete, consistent and comprehensive method of calculating the replacement cost of a home, so that consumers would have the best possible information about the cost of replacing their home upon which to make their decision about the amount of insurance coverage. The insurance industry sued to challenge the regulation which, after seven years of litigation, was upheld by the California Supreme Court. However, state law only requires that homeowners be given notice of their right to request a replacement cost estimate every two years. The workgroup agrees with the original legislation sponsored by CDI in 2018 calling for insurers to provide a replacement cost estimate annually and recommends that a state law should be enacted to require insurers to provide a complete replacement cost estimate annually to their insureds before renewal and before writing a new home insurance policy. Such an estimate should prominently indicate if the replacement cost estimate is above the current level of coverage. The insurers should also be required to annually validate their replacement cost estimates against actual construction costs in the market where the home is located. Requiring that the replacement cost estimate be provided annually will give consumers better information to decide how much insurance to purchase.

Recommendation 9. Require insurers to file annually with CDI for review and approval the insurers’ replacement cost estimating models/tools and the inputs they are using as well as a comparison of recent loss experience to estimates based on these tools. Consistent with comments from the Department of Insurance, the workgroup also recommends that state law be enacted to require insurers to file for review and approval their home replacement cost estimating models and the inputs they are using for those models as well as a comparison of recent loss experience compared to the estimated based on those models. The estimates of replacement cost are critically important to making sure that homeowners have the information they need to decide how much insurance they should have. Given the importance of the models, the Department should be allowed to review and approve them to better protect consumers.

72 Recommendation 10. Require CDI to undertake a data call on the insurers’ subrogation claims. There is insufficient information available to decision makers about the extent of insurer subrogation claims. The Department of Insurance should be required by law to annually undertake a data call of insurers with regard to their subrogation claims associated with wildfires.

Recommendation 11. Require CDI to undertake a data call on the insurers reinsurance cost and availability. More information on the cost of reinsurance and its availability would be useful, so that the Department and policymakers are able to have better insight into the home reinsurance market trends in pricing and availability. The Department should be required by newly enacted state law to undertake an annual data call of insurers with regard to the limits, attachment points, breadth of coverage, and price of reinsurance they are purchasing.

Recommendation 12. Require homeowners insurers to offer a one-year notice of non-renewal, in addition to the existing 45-day notice, when there is no change in the risk presented at the insured property within the homeowners’ control, or if the insured has been with the same insurer for 5 years or more. Consistent with comments made by the Department of Insurance, the workgroup recommends that state law be enacted to require home insures to provide a one year notice of non-renewal to homeowners before non-renewing, where there has been no change in the risk presented at the insured property within the homeowners control or where the insured has been with the insurer for at least 5 years. Homeowners are frustrated that they are being non-renewed despite having no change at their property that would raise the risk of wildfire and despite having been a long standing customer. A one year notice will give these homeowners a chance to look for and obtain other insurance.

Recommendation 13. Mandate all homeowners insurers offer a “Difference in Conditions” policy or a Comprehensive Personal Liability/Residential Workers’ Compensation coverage. The FAIR Plan insurance covers only fire risk. It does not cover the other sorts of liability risks that one would find in a standard home insurance policy. A number of insurers have begun offering “Differences in Conditions” coverage or “Comprehensive Personal Liability/Residential Workers Compensation” coverage to those who have purchased FAIR Plan coverage to cover the other risks that would be found in a standard home insurance policy. Consistent with comments made by the Department of Insurance, the workgroup recommends that state law be enacted to require all home insurers to offer these additional

73 coverages, so that FAIR Plan policy purchasers have the opportunity to augment their FAIR Plan coverage with these additional coverages.

Recommendation 14. Require that there be a valid quote for insurance coverage before any real estate offer is accepted. The workgroup recommends that state law be amended to require the buyer of real estate in the WUI to obtain a valid quote for insurance before an offer in a real estate transaction can be accepted. A quote from the FAIR Plan would be sufficient to meet this requirement. This recommendation provides a risk communication tool to potential home buyers. The rationale for this requirement is to make sure that the buyer understands the cost to insure the property before entering a contract to purchase the property rather than discovering too late that the cost of insurance exceeds their ability to pay and then having to breach the contract and forfeit the deposit. Although there is already an insurance requirement related to receiving a mortgage, that part of the real estate transaction occurs too late in the home-buying process to be informative to the home buyer.

Reduction of Wildfire Risk in California Wildfire risk mitigation efforts are occurring at an unprecedented scale both by private actors and State and local governments. Nevertheless, the workgroup received abundant testimony and written comments indicating that actions may still be inadequate and lack sufficient coordination to be maximally effective and cost-effective. Moreover, there is a clear lack of coordination between different actors in their mitigation efforts.

Recommendation 15. Establish a Wildfire Vulnerability Risk and Reduction Coordinator within the Governor’s Office of Planning and Research. The Risk Reduction Coordinator would be charged with conducting research and providing regular recommendations to the legislature, governor, CPUC, Insurance Commissioner, and local governments on optimal levels of risk mitigation spending within the state by various parties. To address the lack of coordination the workgroup recommends creation of a Wildfire Vulnerability Risk and Reduction Coordinator within the Office of Planning and Research. The Risk Reduction Coordinator would be charged with conducting research and providing regular recommendations to the legislature, governor, CPUC, Insurance Commissioner, and local governments on optimal levels of risk mitigation spending within the state by various parties. There is currently no single actor considering how best to mitigate risks from wildfire in California. Instead, there are multiple parties acting to control risk within their area of authority, each with unique expertise, different levels of funding, and operating with unique biases. The Risk Reduction Coordinator would be charged with developing risk based metrics

74 for various wildfire risk reduction activities that could then be utilized to ensure that the most effective and cost-effective measures are being taken to reduce risk. The Risk Reduction Coordinator could also play a role of watchdog – alerting all parties to areas where underinvestment in cost-effective risk reduction is occurring. Publicly vetted risk-based metrics developed by the Risk Reduction Coordinator could also be useful in determining whether Wildfire Mitigation Plans filed by utilities with the CPUC are adequate or require additional mitigation measures. These risk-based metrics should be developed in collaboration with the Department of Insurance, the insurance and reinsurance industries, and with the benefit of their collaboration and input.

Recommendation 16. Additional Risk Mitigation Recommendations The workgroup recommends significant additional investments in prevention and mitigation efforts, whether funded by a state tax and a specific fund in the state budget for direct mitigation or small grants for home hardening. Sustained funding for such mitigation actions could be enhanced by the state engaging in a risk transfer mechanism related to some of the state costs related to wildfires and their aftermath, freeing up funds for pre-disaster mitigation. The workgroup further recommends that the state, perhaps via the Risk Reduction Coordinator (see Recommendation 15), take action to significantly increase consistency of private property maintenance laws by developing best practices or minimum standards for fire risk and minimum allowed penalties for non-compliance.

Recommendation 17. Clarifying the responsibility of local fire-fighting capacity when local governments are approving new developments. The workgroup recommends that the state require that any municipality or government body that approves new development, including new construction on vacant land, is able to provide firefighting service to that property within a certain maximum time. This would increase the proportion of firefighting responsibility to the municipality that is approving developments.

Recommendation 18. Development fee for new construction in the WUI. New development of housing and commercial structures in the WUI faces high risk of wildfire that in turn creates costs for the State. The State needs to invest substantially in reducing the risk of wildfire. New development that will put more lives and property at risk, ought to pay a development impact fee to the State of California to help find risk reduction efforts that will benefit the new development. The rebuilding of existing properties that were completely or partially destroyed by earlier wildfires should be exempt from paying the fee.

75 76 FOR IMMEDIATE RELEASE: Contact: Governor's Press Office Wednesday, May 29, 2019 (916) 445-4571 Governor, Senate President pro Tem and Speaker of the Assembly Statement on SB 901 Commission Report

SACRAMENTO – Governor Gavin Newsom, Senate President pro Tem Toni Atkins and Speaker of the Assembly Anthony Rendon issued the following statement after the release of the Commission on Catastrophic Wildfire Cost and Recovery’s draft report:

“The rise in catastrophic wildfires, fueled by climate change, is a direct threat to Californians. As the fifth largest economy in the world, California must have safe, reliable and affordable power. This need for energy, however, must not endanger our state’s progress toward our clean energy goals. We are committed to decisive action this Session to strengthen our emergency response systems, mitigate wildfires, help achieve the state’s clean energy goals and support safe, reliable and affordable power.

“Last year, the Legislature stepped up through a special Conference Committee to address the threat of utility caused wildfires. But knowing that climate change was an ongoing contributing factor to future wildfires, the Committee established a special commission, the Commission on Catastrophic Wildfire Cost and Recovery, to hold public meetings throughout the state to hear views from the public and experts as diverse as our state and then to prepare a report of its assessment of the issues surrounding catastrophic wildfire costs and the reduction of damage. The Commissioners were also called on to make recommendations for future changes to our laws to ensure equitable distribution of costs among affected parties. We want to thank the SB 901 Commission for their diligent work in tackling these issues and submitting a draft report five weeks ahead of the July 1 deadline. We look forward to closely reviewing the full findings and receiving a finalized report in the coming weeks.

“Building on the Conference Committee’s work last year, both the SB 901 Commission and the Governor's Strike Force report underscore the urgent need for the state to act again this year.

77 “The report of the Governor's Strike Force made clear the Legislature must promptly act to strengthen mitigation efforts, expand and modernize our emergency response and firefighting systems, harden our energy grids and delivery infrastructure, and to hold bad actors like PG&E accountable. And now the SB 901 Commission draft report makes clear that we must act now to stabilize the energy market and our utilities by addressing the liability faced by utilities after catastrophic wildfires.

“We will pursue legislation to tackle these important issues. To provide certainty and accountability, we will seek equitable resolution on the prudent manager standard, bridge financing and to allow cost recovery for electricity providers who act responsibly and in the public's best interest. These actions will include insisting on a culture of safety for utilities and on affordability for ratepayers.

“We are committed to continuing the exploration of the impact of strict liability on the costs to ratepayers, on wildfire victims and on the solvency of our utilities. If the trend of massive, catastrophic wildfires persists, we may need to pursue additional changes.

“Together we can build toward a safe, affordable and reliable energy future.”

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Governor Gavin Newsom State Capitol Building Sacramento, CA 95814

78 To: RCRC Board of Directors From: Paul A. Smith, Vice President Governmental Affairs Governmental Affairs Staff Date: June 17, 2019 Re: 2019-20 State Budget Update

Summary This memo provides an initial analysis of the 2019-20 State Budget Package.

Background This week, the California Legislature approved a large number of budget trailer bills that accompany the 2019-20 State Budget (Assembly Bill 74). Last Thursday, both houses of the Legislature approved Assembly Bill 74 in order to meet the June 15th Constitutional deadline for the Legislature to pass a state budget.

It should be noted that as of today, the State Budget Package remains incomplete – there are a number of budget trailer bills on a variety of subjects that have yet to be finalized and considered by the Legislature, including items to address cannabis, housing, homelessness, and lowering the tax burden for middle-income taxpayers. It is expected that further State Budget items will be adopted in the coming days and weeks to complete the entire State Budget Package. Under the State’s Constitution, a spending plan must be adopted by July 1st. While the budget bill (i.e. Assembly Bill 74) must be enacted by July 1st, not every component has to be enacted by that date.

Attachment  RCRC’s Preliminary Analysis of the 2019-20 State Budget Package

RURAL COUNTY REPRESENTATIVES OF CALIFORNIA 1215 K STREET, SUITE 1650 SACRAMENTO, CA 95814 PHONE: 916-447-4806 FAX: 916-448-3154 WEB: WWW.RCRCNET.ORG 79 80 RCRC’S PRELIMINARY ANALYSIS OF THE 2019-20 STATE BUDGET PACKAGE

Key Issues/Changes for RCRC Member Counties in the 2019-20 State Budget Package

 Continues to provide $644,000 for the State’s Payment in Lieu of Taxes Program for 2019-20;  Provides an additional $87.2 million to assist counties in replacing antiquated voting systems;  Provides more than $1.3 billion in Cap-and-Trade revenues for various greenhouse gas reduction programs, including $200 million for forest health and wildfire prevention projects pursuant to 2018’s Senate Bill 901 (Dodd), and $25 million for organics diversion programs;  Provides $100 million from the Greenhouse Gas Reduction Fund, and $30 million from the General Fund to establish the Safe and Affordable Drinking Water program. In addition, provides $3.4 million to the State Water Resources Control Board from the General Fund for administrative start-up costs. The framework of the fund will be established in a yet-to-be-determined trailer bill;  Includes more than $300 million for disaster preparedness, response and recovery activities, including local assistance funds for recovery from the Camp Fire and other 2018 and 2017 wildfires, enhanced emergency response support for the California Department of Forestry and Fire Protection (CAL FIRE) and California Office of Emergency Services (CalOES), and funding for prepositioning of state and local government resources that are part of the statewide mutual aid system;  Provides $75 million to CalOES for state and local preparation and response related to Public Safety Power Shutdown actions initiated to reduce the risk of utility-initiated wildfires during severe weather. Funding will likely support installing back-up power at CAL FIRE and CalOES facilities, local planning and training, and establishing community centers with backup power and air conditioning;  Includes $650 million in one-time funding to assist local governments in addressing homelessness, though detailed funding allocation methodology is not specified; and,  Includes a $750 million one-time appropriation to the California Department of Housing and Community Development to assist local governments with meeting Regional Housing Need Assessment goals. Specific allocation methodology will be outlined in a yet-to-be determined trailer bill.

The bills passed by the Legislature to construct a state spending plan include:

 AB 74, the main Budget Bill, which includes the bulk of the appropriations for the coming fiscal year;  SB 76, the education finance trailer bill, which enacts various education provisions;  SB 77, the higher education trailer bill, which enacts various changes to the University of California, the California State University, and the California Community Colleges systems;

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81  SB 82, the state government trailer bill, which addresses a number of state government programs, including the replacement of voting system;  SB 83, the employment trailer bill, which addresses a number of labor-related issues, including the Paid Family Leave program;  SB 84, the Political Reform Act of 1974 trailer bill, which addresses the Secretary of State’s online filing and disclosure system;  SB 85, the public resources trailer bill, which makes various changes to the Fish and Game, Food and Agriculture, Health and Safety, and Public Resources Codes;  SB 87, the transportation trailer bill, which addresses a number of state and local transportation programs;  SB 92, the taxation trailer bill, which makes various changes, including the exemption of sales and use tax on menstrual and diapers products;  SB 93, the Budget Act of 2018 augmentation trailer bill, which appropriates an additional $112.5 million from the General Fund for contingencies and emergencies;  SB 94, the public safety trailer bill, which makes a number of revisions to several public safety programs;  SB 95, the courts trailer bill, which makes a number of revisions relating to the operation of the courts; and,  SB 105, the public safety facilities financing trailer bill, which enacts various corrections provisions.

Administration of Justice, Corrections, and Law Enforcement 2011 Realignment of Public Safety Responsibilities to Counties. In 2011, the Governor and Legislature enacted the realignment of various state programs to counties. The State Budget Package estimates revenues available to support these programs, including funds in the Community Corrections Subaccount (implementation of Assembly Bill 109). Comparing January revenue estimates to those in the Governor’s May Revision, “base” funding estimates for the Community Corrections Subaccount in 2019-20 have been revised downward from $1.41 billion to $1.38 billion, reflecting a lower-than-expected performance in state sales tax. In addition, the State Budget Package estimates that counties will see the following in “growth” funds associated with the Community Corrections Subaccount: $66.7 million in 2018-19 (which will be distributed in Fall 2019), and $85.7 million in 2019-20 (which will be distributed in Fall 2020). These growth figures were pegged, respectively, at $102.3 million and $93.6 million in the Governor’s January proposed Budget.

The 2011 Realignment fiscal structure also ensures continued funding for several local public safety subventions (rural sheriff grants, COPS, etc.). Funding for Realignment is made primarily via a dedication of 1.065 percent of the state portion of the sales tax rate, and secondarily through a portion of Vehicle License Fee revenues. These revenue commitments are now constitutionally protected following the passage of Proposition 30 (Temporary Taxes to Fund Education) in 2012.

AB 109 funding is directed to counties from the state-level Community Corrections Subaccount. Annual funding from the Community Corrections Subaccount is dictated by the 2011 Realignment fiscal structure set forth in statute, and the overall funding level 2

82 produced by the dedicated state sales tax within a given fiscal year. Actual allocations to counties are made according to a permanent formula developed several years ago by a nine-member County Administrative Officer committee, with the assistance of the California State Association of Counties.

Given special provisions around 2011 Realignment revenues, the funds flow continuously and automatically and, therefore, do not require annual appropriation via the State Budget.

Additional County Probation Funding (Senate Bill 678). The State Budget Package includes a proposed allocation of $112.8 million in 2019-20 for incentive payments to county probation departments as a result of ongoing efforts to reduce state prison commitments of felony probationers. Under the provisions of Senate Bill 678 (Leno, 2009) and a revised allocation methodology enacted in 2015, counties share in the state savings that result from reduced felony probationers sent to state prison.

Assembly Bill 109 Planning Grants. The State Budget Package includes another one- time $7.95 million appropriation for counties to revise and update their Community Corrections Partnership (CCP) plans. Each year since the passage of 2011 Realignment, the state has provided funds to support local implementation of AB 109, namely, the work in constructing and reviewing a county’s CCP plan. Funds are allocated to each county as a fixed-dollar amount ($100,000, $150,000, or $200,000) based on population. The Board of State and Community Corrections requires counties to report on the outcomes adopted by a county’s CCP, and the ongoing progress in meeting those outcomes in order to receive the planning grant funds. (Assembly Bill 74)

Courthouse Construction and Judicial Branch Deferred Maintenance. The State Budget Package commits $15 million to address deferred maintenance projects in courthouses, as well as $20.2 million to support operations and maintenance of facilities constructed since 2007. In April, the Department of Finance made several related requests to address changes in projects costs for construction underway, including an additional appropriation of $17.2 million to cover higher-than-anticipated bids associated with the construction of the New El Centro Courthouse in Imperial County. The State Budget Package also provides $2.8 million towards a land acquisition for an El Dorado County Courthouse. (Assembly Bill 74)

Judgeship Funding. The State Budget Package includes $30 million in 2019-20 (and $36.5 million annually beginning in 2020-21) to fund 25 previously authorized superior court judgeships. Distribution of the judicial positions will be determined by the Judicial Council’s Judicial Needs Assessment, expected to be updated in late summer 2019. The 2018 preliminary update demonstrates that 127 additional judicial officers are needed to meet statewide workload demands. Although Riverside and San Bernardino Counties have – by a significant margin – the most severe judgeship need, a number of RCRC member counties also have a demonstrated shortfall between funded judicial positions and assessed judicial need. The State Budget Package also provides funding for sheriff- provided court security associated with the new judicial officers. (Senate Bill 74 and Senate Bill 95)

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83 Juvenile Justice. The State Budget Package moves the Division of Juvenile Justice (DJJ) out of the California Department of Corrections and Rehabilitation (CDCR) to a new department within the Health and Human Services Agency, effective July 1, 2020. The State Budget Package includes $1.2 million for staff needed to facilitate the transition, and to launch a new independent training institute that will train staff on best practices and cultivate the cultural change needed to accompany the department’s enhanced focus on rehabilitative and therapeutic approaches. (Senate Bill 94)

Peace Officer Standards and Training. The State Budget Package appropriates $34.9 million ongoing to Peace Officer Standards and Training (POST) to restore the department to previous funding levels that support peace officer training and local assistance. For 2019-20 and 2020-21, $20 million is prioritized for use of force and de- escalation training. (Assembly Bill 74)

Proposition 47. The State Budget Package updates its estimate of state savings associated with the implementation of Proposition 47 at a slightly lower amount of $78.4 million, attributable to reduced levels of adult incarceration and taking into account changes to court and parole system workload.

Approved by California voters in 2014, Proposition 47 reduces penalties for a variety of specified offenses, and dedicates the ‘savings’ from prosecuting and housing these offenders into programs that support K-12 schools for at-risk youth, victim services, and mental health and drug treatment. Proposition 47 requires the Department of Finance to calculate savings associated with the measure annually. The state savings figure for the current year will be finalized, pursuant to provisions in the proposition, in August 2019.

Proposition 57. The State Budget Package includes $14.8 million in funding for county probation departments to supervise a temporary increase in the Post-Release Community Supervision (PRCS) population as a result of implementation of Proposition 57. California voters approved Proposition 57 in November 2016, allowing certain non-violent felons serving a sentence in state prison to seek early parole consideration. The measure also empowered the Department of Corrections and Rehabilitation (CDCR) to readjust credit- earning rules so that inmates can earn earlier release opportunities. (Assembly Bill 74)

Further, the State Budget Package requires CDCR to report to the Legislature and Legislative Analyst’s Office regarding any proposed regulatory changes associated with Proposition 57 credit earning provisions. (Senate Bill 94)

State Crime Laboratories. The State Budget Package provides an additional $25 million to backfill the continued decline in revenues in the DNA Identification Fund, which will help assure continued processing of evidence for counties. Furthermore, additional monies are provided to maintain and replace forensic laboratory equipment. Local law enforcement agencies in 46 counties (nearly all rural) utilize state labs for analysis of forensic evidence. The purpose of the statewide laboratory system, which was established by the Legislature in 1973, was to provide quality and consistent forensic services. (Assembly Bill 74)

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84 Standards and Training for Corrections. The State Budget Package includes an ongoing augmentation of $6.2 million to the Board of State and Community Corrections for purposes of reimbursing local agency costs for training of local corrections personnel. This augmentation brings the overall dedication of funding for Standards and Training for Corrections to $21 million, which is more reflective of historic funding levels. (Assembly Bill 74)

Trial Court Budget Reserves. The State Budget Package increases the trial court reserve cap to 3 percent beginning June 30, 2020. Beginning in the 2013-14 State Budget, trial courts were limited to a 1 percent year-over-year budget reserve. In recognition that this restriction has presented considerable operational challenges for trial courts, the Governor proposed a modification to the limit. (Senate Bill 95)

Trial Court Security – New Court Facilities. The State Budget Package includes $7 million – the same amount in the last several budgets given that no new court facilities have qualified for the upcoming fiscal year – to address increased court security costs from new (post-Realignment) trial court construction.

In 2011, the Legislature realigned California’s trial court security funding scheme so the state would pay counties directly, rather than indirectly through the courts. Similar to other criminal justice realignment programs, a fixed percentage of sales tax revenue is allocated to each county to pay for trial court security. A number of recently-constructed courthouses have resulted in increased court security costs since enactment of 2011 Realignment, most notably in Calaveras County and San Benito County. To receive monies, counties must demonstrate to the Department of Finance the need for increased trial court security staff as a result of the post-Realignment (after October 9, 2011) opening of newer and oftentimes larger courthouses.

RCRC continues to work with the California State Sheriff’s Association and the California State Association of Counties to ensure that counties experiencing deficiencies in their trial court security funding are able to properly staff these recently-opened facilities. (Assembly Bill 74)

Violence Intervention and Prevention Grants. The State Budget Package renews and increases funding for a long-standing program administered through the Board of State and Community Corrections (BSCC). The California Violence Prevention and Intervention Program (Cal-VIP) provides grant funds to cities and community-based organizations for specified violence reduction activities. This year’s budget increases funding on a one-time basis by $21 million (for a total of $30 million available in 2019-20); program funding would revert to $9 million in future budget years. Of particular note is that the State Budget Package requires that $3 million of the Cal-VIP funding be set aside for competitive grants to cities with populations of 40,000 or less. More information on the grant program is available on the BSCC’s website. (Assembly Bill 74)

California Environmental Protection Agency Assembly Bill 32 Cap-and-Trade Proceeds. The State Budget Package allocates more than $1.36 billion from the state’s Cap-and-Trade auction proceeds via the Greenhouse Gas Reduction Fund (GGRF) to support programs that decrease or sequester emissions 5

85 from greenhouse gases (GHG), which is around $100 million more than was proposed in the Governor’s May Revision. The added funds are from an expected uptick in the revenues from the Cap-and-Trade auction proceeds, allowing for a higher expenditure level than expected earlier in the year. Some of the funds were re-allocated from existing programs to create new programs addressing wildfire prevention and readiness activities in the wildland urban interface (WUI), while the “new” $100 million is largely being allocated to the State Water Resources Control Board for improvements to the state’s Safe Drinking Water program.

The final Cap-and-Trade Expenditure Plan also preserves key allocations proposed by the Governor in January, including the $200 million to the California Department of Forestry and Fire Protection (CAL FIRE) for forest health and prescribed fire programs promised in last year’s Senate Bill 901 (Dodd). Attempts to redirect those funds away from forest management and restoration programs to home hardening and other wildfire preparedness efforts by special interest groups were unsuccessful due to advocacy by RCRC and other stakeholders heavily involved in originally securing the inclusion of the funds in SB 901. The final Cap-and-Trade Expenditure Plan also includes only $25 million for organics waste diversion implementation, despite the Senate recommending a $75 million allocation, and RCRC and other partners advocating for a $100 million funding level. This allocation is consistent with prior funding for the program, but with the California Department of Resources Recycling and Recovery (CalRecycle) set to finalize its Senate Bill 1383 short-lived climate pollution regulations in the next few months, funding for infrastructure and implementation will be vital to the program’s success. (Assembly Bill 74)

Key allocations in the final Cap-and-Trade Expenditure Plan include:

 $200 million to CAL FIRE for forest health, resilience, and wildfire prevention programs, including $35 million for prescribed burn projects, as prescribed in 2018’s Senate Bill 901 (Dodd). These funds will aid in implementing the state’s Forest Carbon Plan and Strategic Fire Plan, as well as the new forest health provisions passed as part of SB 901, and will include grants to local agencies, including counties, for forest health programs around communities.  $25 million to CalRecycle for waste diversion programs, including implementation of Senate Bill 1383’s (Lara) short-lived climate pollutant reduction requirements.  $100 million to the State Water Resources Control Board for the state’s Safe Drinking Water Program.  $10 million to CAL FIRE to create various programs for fire prevention and preparedness in the wildland urban interface (WUI), consisting of:  $1 million for a new fire outreach and extension program consisting of 17 fire extension advisors located in selected counties;  $250,000 to reimburse counties for training to local planners on how to address land use planning issues in the WUI;  $250,000 to the Office of Planning and Research to inventory and publish on its website local planning best practices that can be reflected in ordinances and enforcement practices undertaken at the local level in the WUI;

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86  $6 million for a block grant program to county groups to help implement fire prevention and preparedness community action in collaboration with University of California fire advisors, resource conservation districts, and others; and,  $2.5 million to reimburse counties for maintenance of evacuation routes during emergencies.  $62 million for climate smart agriculture programs, including $28 million for the Healthy Soils Program, and $34 million for methane reduction programs.  $65 million to replace and upgrade diesel engines and equipment in the agricultural sector.  $182 million for low-carbon transportation programs with a focus on diesel emissions reductions including incentives for zero-emission trucks, transit buses, and freight equipment and programs to help individuals replace older, higher emission passenger vehicles.  $35 million to the Workforce Development Board for apprenticeship programs to help prepare workers for a carbon-neutral economy.  $3million for a study to determine the key actions the state must take to achieve a carbon-neutral economy.

The final 2019-20 Cap-and-Trade Expenditure Plan included in the 2019-20 State Budget Package is as follows:

2019-20 Cap-and-Trade Expenditure Plan

Final Investment Category Department Program (In Millions) AB 617 - Community Air $245 Protection Air Toxic and Criteria AB 617 - Local Air District Air Resources Board $20 Air Pollutants Implementation Technical Assistance to $10 Community Groups Clean Vehicle Rebate Project $238 Clean Trucks, Buses & Off-Road $182 Freight Equipment Low Carbon Air Resources Board Enhanced Fleet Modernization Transportation $65 Program Agricultural Diesel Engine $65 Replacement and Upgrades

Healthy Soils $28 Climate Smart Department of Food & Agriculture Agriculture Methane Reduction $34

Healthy & Resilient Forests $165 Prescribed Fire & Fuel $35 Healthy Forests CAL FIRE Reduction Wildland-Urban Interface and $10 Other Fire Prevention Activities

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87 Urban Forestry $10

Short-Lived Climate CalRecycle Waste Diversion $25 Pollutants Air Resources Board SB 1013 – HFC Program $1

Coastal Commission & SF Bay Conservation Coastal Resilience $3 and Development Commission

Integrated Climate Community Services & Action: Mitigation and Low-Income Weatherization $10 Development Resilience California Natural Urban Greening $30 Resources Agency California Conservation Energy Corps $6 Corps Transformative Climate Strategic Growth Council $60 Communities Strategic Growth Council Climate Change Research $5 Climate and Clean Energy Research California Environmental Transition to a Carbon-Neutral $3 Protection Agency Economy Strategic Growth Council Technical Assistance to Technical Assistance $2 Disadvantaged Communities Workforce Development Apprenticeships for a Green Workforce Training $35 Board Economy State Water Resources Safe Drinking Water Safe Drinking Water $100 Control Board Total $1,367

Department of Toxic Substances Control Insolvency. The State Budget Package includes a one-time appropriation of $27.5 million from the General Fund to the Department of Toxic Substances Control (DTSC) to offset DTSC’s structural budget imbalance for FY 2019-20. This one-time augmentation is part of the stop-gap solution proposed in the Governor’s May Revision that buys the Administration more time to develop a fee package that adequately supports DTSC’s operations. DTSC’s structural deficit will impair its ability to effectively oversee hazardous waste management, impact the state’s ability to perform post-cleanup monitoring of Superfund/National Priority List sites (as required by federal law), and significantly delay the clean-up of newly identified contaminated sites for which there are no responsible parties. (Assembly Bill 74)

RCRC will closely track attempts to modify and increase those fees that support DTSC’s operations and will engage in attempts to improve DTSC’s permitting and oversight operations and its responsiveness to stakeholders.

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88 Office of the Secretary for Environmental Protection/Rural Certified Unified Program Agency Assistance. The State Budget Package maintains the same level of funding, $835,000, for the continued reimbursement of qualified Certified Unified Program Agencies (CUPAs) located in thirteen low-population counties. (Assembly Bill 74)

State Water Resources Control Board. The State Budget Package includes $2.5 million in one-time General Fund monies to continue funding the placement and filling of temporary water tanks for households that lost their water supply because of a dry well.

The State Budget Package also includes $12.5 million in one-time General Fund monies to projects/communities in the southern San Joaquin Valley, including: $4 million to Sanger to repair a water tank and well, as well as connect the community of Tombstone to Sanger’s centralized water system; $2.5 million for a new water and tertiary treatment plant for Tulare County; $1 million to Tulare and Fresno counties to improve access to water in communities such as Orosi and Del Rey; $1.5 million for storage and recharge projects in Selma; $1 million to Dinuba to replace a well; and, $2.5 million to bring small communities in Tulare and Kern counties into compliance with safe drinking water standards and remove arsenic from water supplies. (Assembly Bill 74)

Sustainable Pest Management. The State Budget Package includes a one-time increase of $5.7 million in General Fund monies to the Department of Pesticide Regulation (DPR) to assist in the transition to safer pesticide alternatives, particularly as DPR commences the regulatory process to cancel the registration of chlorpyrifos. This action was announced on May 6, 2019.

Chlorpyrifos is an insecticide used primarily on nut and fruit trees, as well as vegetable and grain crops grown in California. Acute exposure has been under close scrutiny for some time given the serious risks to human health, especially in children and sensitive populations. Over the last few years, DPR has taken actions to significantly reduce the use and exposure through protective mitigation measures to further restrict its use. This action by DPR does not affect RCRC member counties directly; however, it may have implications to the workload of County Agricultural Commissioners. (Assembly Bill 74)

Temporary Assistance for Certified Recycling Centers. The State Budget Package includes $5 million to provide temporary assistance of $1,000 per month to roughly 400 low-volume beverage container recyclers, which are often located in rural areas. With the closure of many certified recycling centers, it is increasingly difficult for consumers to redeem their beverage containers, especially in rural counties. This modest assistance will help sustain those recycling centers at the greatest risk of closure. (Assembly Bill 74)

RCRC continues to press for broader programmatic changes that significantly increase consumer access to beverage container redemption opportunities. Without convenient redemption opportunities, the Beverage Container Recycling program can easily become a regressive tax that disproportionately impacts lower-income Californians.

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89 Education Community Colleges. The State Budget Package provides for two years of tuition-free community college attendance. To accomplish this goal, a total of $46 million is provided to include a second year of tuition-free community college. First-time students enrolled in classes full-time at any of California's 115 community colleges already have the first year of tuition waived at participating campuses. This additional funding builds on the "California College Promise" spearheaded by the Legislature in 2017. (Senate Bill 77)

University of California/Cooperative Extension. The State Budget Packet maintains the funding proposed in the Governor’s January proposed Budget and the Governor’s May Revision of $72.6 million for the UC Agriculture and Natural Resources division (commonly referred to as UCCE). This level of funding has remained virtually unchanged since the early 2000’s. However, in the 2018-19 State Budget Package the Legislature created a specific line item to ensure monies for UCCE are provided. To some degree, the line item inoculates the UCCE program from being swept into the overall budget for the University of California. (Assembly Bill 74)

Emergency Preparedness, Response and Recovery Disaster Preparedness, Response and Recovery. In 2018, California suffered its most devastating wildfire year to date, with more than 100 fatalities, and 22,700 structures and 1.8 million acres destroyed. As wildfire becomes the most urgent natural disaster facing California, the State Budget Package contains more than $300 million dedicated to disaster preparedness, creates new programs in response to the ongoing wildfire crisis, and augments several programs to enhance the state’s general disaster response capabilities.

Expanding Firefighting Surge Capacity and Improving Use of Technology: The State Budget Package includes $95.1 million in General Fund support to the California Department of Forestry and Fire Protection (CAL FIRE) for new year-round fire engines, expanded heavy fire equipment operator staffing during emergency wildfire events, accelerated replacement of fire engines and other mobile equipment, and the operation of five additional CAL FIRE/California Conservation Corps fire crews. These funds will also allow CAL FIRE to dedicate staff to reviewing data gathered via remote sensing technology, satellite imagery, and other technology to support development of more effective initial and extended fire suppression strategies, and will be used to add 100 fire detection cameras linked into the existing command centers to provide additional data on conditions. Finally, these funds include an expanded health and wellness program to help maintain the long-term physical and mental health and wellbeing of CAL FIRE firefighters. (Assembly Bill 74)

Immediate Aid to School Restart Operations: The State Budget Package includes $13.8 million from the Federal Trust Fund to assist local educational agencies with expenses related to reopening schools after the 2017 Northern and Southern California wildfires. (Assembly Bill 74)

Property Tax Backfills: The State Budget Package includes $518,000 in General Fund monies to reimburse Los Angeles, Mendocino, Napa, Orange, San Diego, Solano, Tuolumne, and Ventura Counties for 2018-19 property tax losses resulting from the 2018 10

90 wildfires. This is in addition to the $31.3 million enacted by the Legislature in February 2019 via Assembly Bill 72, which provided $11.5 million for local agencies in Butte, Lake, Los Angeles, Orange, Riverside, Shasta, and Siskiyou Counties for estimated losses in 2019-20 as a result of the 2018 wildfires, $16.1 million for local agencies in Butte County for estimated losses in 2020-21 and 2021-22 due to the 2018 Camp Fire, and $3.6 million for local agencies in Lake County for estimated losses in 2019-20, 2020-21, and 2021-22 due to the wildfires in 2015, 2016, and 2017. (Assembly Bill 74)

Wildfire Recovery: The State Budget Package allocates $10 million in General Fund monies to support local communities in Butte County in the recovery process from the devastation of the 2018 Camp Fire, which destroyed more than 18,000 structures, and 90 percent of the Town of Paradise. The package also dedicates $15 million in General Fund monies to provide additional relief to local agencies statewide that have been impacted by wildfires. (Assembly Bill 74)

Dedicated Debris Removal Team: The State Budget Package includes $2.8 million in ongoing General Fund monies to the Department of Resources Recycling and Recovery (CalRecycle) to establish a dedicated debris removal team, and to assist local governments in the preparation of debris removal plans for future incidents. (Assembly Bill 74)

Implementation of the Wildfire Prevention and Recovery Legislative Package: The State Budget Package includes funding for implementation of the Wildfire Prevention and Recovery Legislative Package of 2018, including $3.4 million from the Greenhouse Gas Reduction Fund to the Air Resources Board to enhance air quality and smoke monitoring, forecasting, and modeling activities to align with the anticipated increase in prescribed burns associated with Senate Bill 1260 (Jackson), and $7.9 million to the State Water Resources Control Board and the Department of Fish and Wildlife (DFW) to support efforts to review timber harvest plan exemptions pursuant to Senate Bill 901 (Dodd). RCRC supported both bills in 2018 as measures that will help the state reach its long- term forest management and wildfire prevention goals. (Assembly Bill 74)

Mutual Aid System: The 2019-20 State Budget Package includes $25 million in ongoing General Fund monies for prepositioning of existing California Governor’s Office of Emergency Services (CalOES) and local government resources that are part of the statewide mutual aid system. This is a continuation of the funds that RCRC advocated for as part of the Disaster Readiness for Safer Communities (D-RiSC) coalition to secure in the 2018-19 State Budget Package. (Assembly Bill 74)

9-1-1 System Upgrades: The State Budget Package includes a one-time investment of $60 million to the State Emergency Telephone Number Account (SETNA) to continue improvements to the state's current 9-1-1 system. The goal is to begin upgrading the California Public Safety Microwave Network from an analog system to a digital system in the current year to enhance emergency response communications. The investment would reduce reliance on the SETNA fee during the 9-1-1 enhancement process, but is contingent on legislation to modernize the SETNA fee structure, which would be implemented January 1, 2020, and generate around $170 million annually during the build-out. The fee would be adjusted annually based on actual costs, and create a more 11

91 stable funding structure to allow CalOES to implement a statewide Next Generation 9-1- 1 system. (Assembly Bill 74)

Broadband Communication and 9-1-1 Integration: The State Budget Package contains $1 million from the SETNA fund to support the implementation of emergency communications coordination and First Responder Network Authority broadband network services to ensure that the state maintains an established 9-1-1 system while transitioning towards the Next Generation 9-1-1 system. (Assembly Bill 74)

State Water Board Emergency Response: The State Budget Package includes $1 million in ongoing General Fund monies to the State Water Resources Control Board (SWRCB) to improve emergency response capabilities between the SWRCB, regional water boards, and other state entities during emergencies to help lessen the water impacts of disasters on vulnerable populations. (Assembly Bill 74)

Housing Disaster Response and Recovery Unit: The State Budget Package provides $2 million to the Department of Housing and Community Development to create a permanent Disaster and Response Recovery Unit to provide housing expertise during statewide disaster recovery efforts, and to hire a consultant to conduct local needs assessments related to the 2018 Camp and Woolsey Fires. (Assembly Bill 74)

Public Education: The State Budget Package contains a one-time General Fund allocation of $50 million to jumpstart a comprehensive, statewide educational campaign on disaster preparedness and safety. The effort will include local grants to address local and regional needs with an emphasis on public health and safety. (Assembly Bill 74)

Public Safety Radios: The State Budget Package includes $59.5 million for CalOES to develop and implement the California Interoperable Public Safety Radio System to allow various agencies the ability to communicate with each other more effectively during an emergency. (Assembly Bill 74)

CAL FIRE Deferred Maintenance: The State Budget Package includes $3 million to CAL FIRE as part of the state’s ongoing effort to address the statewide backlog of deferred maintenance. (Assembly Bill 74)

Public Safety Power Shutdown. The State Budget Package includes $75 million for the California Office of Emergency Services (CalOES) for state and local preparation and response related to Public Safety Power Shutdown (PSPS) actions initiated to reduce the risk of utility-initiated wildfires during severe weather. PSPS events are likely to substantially increase in many rural communities, leaving affected areas without power for extended periods of time. Funding will likely support installing back-up power at California Department of Forestry and Fire Protection (CAL FIRE) and CalOES facilities, local planning and training, and establishing community centers with backup power and air conditioning. (Assembly Bill 74)

RCRC has been very active at the California Public Utilities Commission (CPUC), and has party status in both the De-Energization Rulemaking Proceeding and the Utility Wildfire Mitigation Plans Rulemaking Proceeding. RCRC will continue to engage in 12

92 CPUC de-energization proceedings, especially with respect to how notice is provided to local governments and how utilities will be required to mitigate impacts to sensitive populations. RCRC continues to believe that utilities bear some responsibility for mitigating the impacts of PSPS events, and that PSPSs should be used by utilities as a last resort to avoid wildfire risk, not just as a way for utilities to reduce liability.

General Government County Revenues/Basic Aid Districts. The State Budget Package includes $144,000 to reimburse Alpine County for funding shortfalls in their Educational Revenue Augmentation Fund (ERAF). Funding shortfalls in Alpine County’s ERAF are triggered under a complex formula associated with having all of its school district(s) as Basic Aid. Over the past several years, RCRC has joined advocacy efforts to secure monies for a number of RCRC member counties that are experiencing shortfalls in property tax revenues. (Assembly Bill 74)

Fairs. The State Budget Package maintains the commitment in the Governor’s January proposed Budget to include $7 million to address deferred maintenance within the network of the state’s fairs. It also maintains the ongoing commitment of approximately $2.6 million for the support of local fairs, which is consistent with the last five enacted State Budget Packages. Commencing in the 2015-16 State Budget Package, $2.6 million in ongoing monies was to be directed to the Fairs and Expositions Fund for redistribution to improve the financial situation of smaller fairs, as well as provide training for Fair Board members.

In 2017, the Legislature enacted RCRC-supported Assembly Bill 1499 (Gray), which dedicates the state portion of the Sales and Use Tax collected from transactions at fairgrounds to support the network of fairs.

Paid Family Leave. The State Budget Package expands the wage supplement for California’s Paid Family Leave program by allowing an additional two weeks of paid leave. California’s current system offers six weeks of paid leave for new parents, at levels ranging from 60 to 70 percent of their compensation. The current paid family leave scheme is funded by a payroll tax on employees. The State Budget Package will expand the paid leave to eight weeks, effective July 1, 2020.

It should be noted that Governor Newsom has outlined a goal of ensuring that all newborns and newly adopted babies can be cared for by a parent or a close family member for the first six months. Under the State Budget Package, each parent in a two- parent family will be entitled to eight weeks of Paid Family Leave, totaling four months of leave for both - which the Governor has described as a “down payment” on his six month goal.

The Administration will convene a task force to consider different options to phase-in and expand Paid Family Leave to meet the Administration’s Paid Family Leave goal of six months. By November 2019, the task force will issue recommendations for consideration in the 2020-21 State Budget Package. The remaining details on how to finance this expansion remain unclear.

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93 The Paid Family Leave program is separate from the laws requiring employers to allow employees time off from work to care for family members (Federal and California family and medical leave laws require counties to provide eligible employees with up to 12 weeks of time off per year to care for themselves and family members). The expansion of Paid Family Leave consequently does not directly affect the amount of time off counties must allow eligible employees; however, the expanded benefits may encourage some employees to take longer leaves in practice. The effects of implementing this benefit may be subject to collective bargaining. (Senate Bill 83)

Sales Tax Exemption for Menstrual and Diapers Products. The State Budget Package exempts menstrual products, including tampons, sanitary napkins, menstrual sponges and cups, and children’s diapers from sales and use tax (both the state and local portions) for two years – from January 1, 2020, to December 31, 2021. The State Budget Package includes provisions intended to backfill counties for the loss of 2011 Realignment obligations associated with the sales and use tax exemption for menstrual and diapers products. The Governor’s May Revision had originally proposed the sales and use tax exemption without backfilling local governments for revenue losses that were expected to be $21.5 million statewide in 2019-20, and $41 million each subsequent year. (Senate Bill 92)

Voting Systems Replacement. The State Budget Package includes an additional one- time allocation of $87.2 million in General Fund monies to counties in replacing and upgrading county voting equipment. This additional appropriation builds upon last year’s budget enactment of $134 million to assist counties in replacing outdated voting equipment. Last year’s effort created a dollar-for-dollar match program for the purchase of hardware, software, and initial licensing for the replacement of voting systems purchased after April 29, 2015. However, this year’s effort revises the match requirement. For counties with more than 50 precincts, a 25 percent county match is required; for counties with fewer than 50 precincts, no county match is required. (Assembly Bill 74 and Senate Bill 82)

With the enactment of Senate Bill 450 (Allen, 2016), counties are undergoing dramatic changes in the way elections are administered. SB 450 authorizes counties to conduct elections using the “vote center” model. SB 450 allows specified counties on or after January 1, 2018 to conduct any election as an all-mailed ballot election at the discretion of the Board of Supervisors, if certain conditions are satisfied. In 2020, all other counties could utilize this option, with the exception of Los Angeles County. This voting system assistance program anticipates that counties with more than 50 precincts will go to a vote center model, and counties with fewer than 50 precincts will continue with the precinct model. The State Budget Package also includes $3.8 million for voter education and outreach on the new vote center model.

Williamson Act. The State Budget Package continues to only include $1,000 for the Williamson Act program. This is the lowest possible dollar figure that allows the program to remain in the State Budget.

The Williamson Act, also known as the California Land Conservation Act of 1965, authorizes cities and counties to enter into agricultural land preservation contracts with 14

94 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. (Assembly Bill 74)

Housing and Homelessness No Place Like Home. The State Budget Package provides for a $7 million General Fund loan for the No Place Like Home (NPLH) program in order to meet funding needs of the program. The NPLH program provides for grant funding to local governments for permanent supportive housing for individuals experiencing homelessness. The program is funded by the issuance of $2 billion dollars in general obligation bonds. This loan to the program is necessary to due to the delay in deposit of bond proceeds into the NPLH fund. (Senate Bill 74)

Resources Bay Delta Water Quality. The State Budget Package includes revenue originating from the passage of Proposition 68, approved by California voters in 2018. Proposition 68 authorized $4 billion in general obligation bonds for a variety of the state’s natural resource needs. The State Budget Package includes $70 million of the $200 million authorized for implementation of voluntary agreements that provide multi-benefit water quality, water supply, and watershed protection and restoration for the watersheds of the state to achieve the objectives of integrating regulatory and voluntary efforts, implementing an updated State Water Resources Control Boards’ San Francisco Bay/Sacramento-San Joaquin Delta Estuary Water Quality Control Plan, and ensuring ecological benefits. In addition, language is included to require the California Natural Resources Agency to provide a report to the legislative subcommittees with jurisdiction regarding the expenditure of funds related to voluntary agreements including: (1) a list of projects for which the agency has approved expenditure of these funds and the associated costs of the projects; (2) assurance that this funding will not be used to fulfill any current mitigation requirements; (3) confirmation that the use of the funding is consistent with existing water quality standards; and (4) a list of the criteria used to select the projects. An update on the status of the voluntary agreements is also required. (Assembly Bill 74)

Butte Conservation Camp. The State Budget Package includes $2.65 million for the preliminary phase to replace the Butte Conservation Camp in Butte County to update the facility to current operational requirements. (Assembly Bill 74)

Butte County Fire Department. The State Budget Package provides $2 million for contracts with Butte County to support operation of one year-round Butte County Fire Department fire station, and to meet other budgetary needs. (Assembly Bill 74)

California Department of Fish and Wildlife. The State Budget Package provides $17 million for the California Department of Fish and Wildlife to provide fish screens for the water conveyance tunnel between Lake Nacimiento and Lake San Antonio in San Luis Obispo County. This funding will assist in securing the water supplies of project users dependent on flows out of the reservoir complex. Not more than 5 percent is available for administrative costs. (Assembly Bill 74)

15

95 California Department of Food and Agriculture. The State Budget Package includes new authority for the distribution of any moneys in the “unclaimed gas tax” reserve account for expenditure on statewide agricultural programs as agreed upon by the Secretary of Food and Agriculture and county agricultural commissioners. With this authority in place, there will be additional flexibility to direct funding to county agricultural programs relative to each county’s expenditures from the preceding fiscal year. (Senate Bill 85)

The State Budget Package also includes an additional $600,000 from the Environmental License Plate Fund ($200,000 per year for three years) for the California Department of Food and Agriculture (CDFA) for the collections of rare plants under the state’s California Biodiversity Initiative. In addition, budget bill language was added requiring collaboration between CDFA and the California Department of Fish and Wildlife on the implementation of this activity. (Assembly Bill 74)

The State Budget Package provides one-time General Fund monies for the following: $2 million for the Center for Food and Agriculture in San Rafael; $300,000 for the Santa Barbara Earl Warren Showgrounds; $5 million for the Seed Bank; and, $500,000 for the Homeless Garden in Santa Cruz. (Assembly Bill 74)

California Department of Parks and Recreation. The State Budget Package includes an additional funding of $45.6 million to address the California Department of Parks and Recreation’s deferred maintenance backlog: $34 million in General Fund monies, and $11.6 million from Proposition 68 funds. In addition, $30.5 million in one-time General Fund monies are being provided to a number of parks in urban areas to update parks for the state’s urban centers. (Assembly Bill 74)

California Department of Forestry and Fire Protection Shasta/Trinity Unit Headquarters. The State Budget Package includes $4.3 million for preliminary actions to relocate the CAL FIRE Shasta/Trinity Unit headquarters facility. (Assembly Bill 74)

California Department of Forestry and Fire Protection Butte Fire Center Facility Replacement. The State Budget Package provides $2.6 million for preliminary actions to replace the CAL FIRE Butte Fire Center. (Assembly Bill 74)

California Department of Forestry and Fire Protection Humboldt/Del Norte Unit Headquarters. The State Budget Package includes $1.86 million for preliminary actions to relocate the CAL FIRE Humboldt/Del Norte Unit headquarters facility. (Assembly Bill 74)

California Department of Forestry and Fire Protection Hollister Air Attack-Bear Valley Fire Station/Helitack Base Relocation. The State Budget Package includes $12.1 million for preliminary actions to acquire a new facility to relocate the CAL FIRE Hollister Air Attack-Bear Valley Fire Station/Helitack Base. (Assembly Bill 74)

California Department of Forestry and Fire Protection Paso Robles Air Attack Base. The State Budget Package includes $285,000 for infrastructure improvements to CAL FIRE’s Paso Robles Air Attack Base. (Assembly Bill 74) 16

96 Defensible Space Assistance Program. The State Budget Package includes $5 million in General Fund monies to assist low-income residents in complying with their defensible space requirements through regionally led grant programs in up to three counties that contain a very high wildfire hazard severity zone. Groups eligible for grants include, but are not limited to, local governments, fire safe councils, and resource conservation districts.

RCRC supported the creation of this grant program early in the budget process recognizing the need for aid to low-income residents in rural communities with completing their defensible space and safeguarding their homes against wildfire. (Assembly Bill 74)

Ishi Conservation Camp. The State Budget Package includes $5.3 million to fund increased costs associated with the Ishi Conservation Camp: Replace Kitchen project, which the Department of Finance may authorize prior to awarding the construction contract. (Assembly Bill 74)

Office of the State Fire Marshal. The State Budget Package includes trailer bill language that allows a city or county to delegate fire and panic safety inspection responsibilities to either the chief building official or chief housing official. The new language also contains provisions allowing a city or county fire department that inspects a building used as a public or private school for compliance with building standards adopted by the State Fire Marshal to charge and collect a fee for the inspection in an amount sufficient to pay the costs of that inspection. Finally, new provisions allow a governing body of a city, county, or district that relies on an all-volunteer fire department for provision of fire protection services, to request either the State Fire Marshal or another city or county with regular full-time members of a regularly organized fire department to enforce building standards and other regulations adopted by the State Fire Marshal. (Senate Bill 85)

Shot Hole Borer Invasive Beetles. The State Budget Package includes $5 million in one-time General Fund monies for local assistance to cure or suppress diseases associated with the invasive Shot Hole Borer beetle. (Assembly Bill 74)

State Payment in Lieu of Taxes. The State Budget Package makes no changes to the $644,000 in funding to the State Payment in Lieu of Taxes (PILT) program from the Governor’s January proposed Budget; however, it does not include funding for arrearages of approximately $8 million, accumulated over several budget cycles in the early 2000’s.

California’s State PILT was established in 1949 to offset adverse impacts to county property tax revenues that result when the state acquires private property for wildlife management areas. This program provides modest funding to 36 counties to offset these losses. (Assembly Bill 74)

State Responsibility Area Fee Backfill. The State Budget Package includes $84 million to the California Department of Forestry and Fire Protection (CAL FIRE) from the Greenhouse Gas Reduction Fund (GGRF) to backfill funds that would’ve been collected if the State Responsibility Area (SRA) fee were still in effect. These funds are used for fire prevention activities. The SRA fee was suspended in 2017 as part of a deal between 17

97 the Brown Administration and the Legislature to extend the Cap-and-Trade Auction Program through 2030. There were discussions at the Legislature to lift the suspension on the fee in this package, but RCRC and other stakeholders successfully advocated against such an action, and successfully secured the continued backfill from the GGRF. (Assembly Bill 74)

Transportation The State Budget Package continues to implement the Road Repair and Accountability Act of 2017 (commonly known as Senate Bill 1), which provides monies for state and local transportation infrastructure. Funding for SB 1 is derived from recent increases in motor fuel taxes and vehicle registration fees. The State Budget Package estimates an average of $5.4 billion per year over the next ten years for a mix of state and local transportation projects.

The State Budget Package provides $4.8 billion in new SB 1 funding. Of this amount, $1.2 billion is available to all cities and counties for local road repairs, and another $1.2 billion is available for the repair and maintenance of the state highway system. $400 million is available to repair and maintain the state’s bridges and culverts. $307 million is available to improve trade corridors, and $250 million is available to increase flow throughout congested commute corridors. The State Budget Package also reflects $458 million for local transit operations, and $386 million for capital improvements for transit, commuter, and intercity rail. The RCRC Board of Directors adopted a “support” position on SB 1 when it was considered in 2017, and reiterated that sentiment when members of the Board of Directors voted to oppose Proposition 6 (which had the effect of repealing the recent increases in motor fuel taxes and vehicle registration fees associated with SB 1). (Senate Bill 87)

Repayment of Transportation Loans. The State Budget Package repays all outstanding General Fund transportation loans, no later than June 30, 2020. This includes $236 million from the Traffic Congestion Relief Fund, and $ 873 million in loaded weight fees. All remaining weight fee revenues are required to be repaid by 2020-21.

Short Line Railroads. The State Budget Package directs the California Transportation Commission to establish a statewide competitive grant program to fund short-line railroad projects such as railroad reconstruction, maintenance, upgrades, or replacements.

Water California Department of Water Resources. The State Budget Package includes one- time funding of $9.25 million in General Fund monies for the Atmospheric River Research Program. This funding is for research to improve observations, forecasts, and decisions related to understanding atmospheric river precipitation events. (Assembly Bill 74)

Safe and Affordable Drinking Water. The Governor’s proposal to establish a new special fund for the State Water Board to assist communities, particularly disadvantaged communities, in paying for the short-term and longer-term costs of obtaining access to safe and affordable drinking water was not included in the final package. Instead, the State Budget Package includes $100 million from the Greenhouse Gas Reduction Fund, $30 million from the General Fund, and $3.4 million to the State Water Resources Control 18

98 Board from the General Fund for administrative start-up costs. This funding will accompany a yet-to-be-determined Trailer Bill that sets up the framework of the Safe Drinking Water Program and Fund. Additionally, the Trailer Bill will specify that five percent of the GGRF is continuously appropriated beginning in 2020 with an annual cap of $130 million. The General Fund will act as a backstop in the event that the Safe Drinking Water Fund falls short. The funding will sunset in 2030. (Assembly Bill 74)

Flood Protection. The State Budget Package includes $92.5 million to the Department of Water Resources (DWR) for multi-benefit flood projects, including $16 million for the Yolo Bypass Phase I implementation, and $3 million for the Tisdale Weir and Bypass Program. These funds originate from the Water Quality, Supply, and Infrastructure Improvement Fund of 2014. In addition, DWR was also allocated $98 million from the California Drought, Water, Parks, Climate, Coastal Protection, and Outdoor Access for All Fund for a number of projects including: $8.52 million for the Reclamation District 17 flood project; 7.88 million for the Southport Setback Levee project; $55 million for Yolo Bypass Phase I Implementation; $3 million for the Paradise Cut flood project; and $15 million for the Butte Slough Outfall Gates project. These funds shall be available for expenditure or to be encumbered until 30 June 2022. (Assembly Bill 74)

19

99 2019-20 Funded Mandates

Allocation of Property Tax Revenues (Ch. 697, Stats. 1992) (CSM-4448) Crime Victims' Domestic Violence Incident Reports (Ch. 1022, Stats. 1999) (99-TC-08) Custody of Minors-Child Abduction and Recovery (Ch. 1399, Stats. 1976; Ch. 162, Stats. 1992; and Ch. 988, Stats. 1996) (CSM-4237)

Domestic Violence Arrest Policies (Ch. 246, Stats. 1995) (CSM-96-362-02) Domestic Violence Arrests and Victims Assistance (Chs. 698 and 702 , Stats. 1998) (98-TC-14) Domestic Violence Treatment Services (Ch. 183, Stats. 1992) (CSM-96-281-01)

Health Benefits for Survivors of Peace Officers and Firefighters (Ch. 1120, Stats. 1996) (97-TC-25)

Local Agency Ethics (Ch. 700, Stats. 2005) (07-TC-04)

Medi-Cal Beneficiary Death Notices (Chs. 102 and 1163, Stats. 1981) (CSM- 4032)

Medi-Cal Eligibility of Juvenile Offenders (Ch. 657, Stats. 2006) (08-TC-04)

Peace Officer Personnel Records: Unfounded Complaints and Discovery (Ch. 630, Stats. 1978; Ch. 741, Stats. 1994) (00-TC-24)

Rape Victim Counseling (Ch. 999, Stats. 1991) (CSM-4426)

Sexually Violent Predators (Chs. 762 and 763) State Authorized Risk Assessment Tool for Sex Offenders (Chs. 336, 337, 886, Stats. 2006; Ch. 579, Stats. 2007) (08-TC-03) Tuberculosis Control (Ch. 676, Stats. 1993; Ch. 685, Stats. 1994; Ch. 116, Stats. 1997; and Ch. 763, Stats. 2002) (03-TC-14)

Unitary Countywide Tax Rates (Ch. 921, Stats. 1987) (CSM-4317 and CSM-4355)

20

100 2019-20 Suspended Mandates

Absentee Ballots (Ch. 77, Stats. 1978) (CSM-3713)

Absentee Ballots-Tabulation by Precinct (Ch. 697, Stats. 1999) (00-TC-08)

Accounting for Local Revenue Realignments (Ch. 162, Stats. 2003; Ch. 211, Stats. 2004; Ch. 610, Stats. 2004) (05-TC-01)

Adult Felony Restitution (Ch. 1123, Stats. 1977) (04-LM-08)

AIDS/Search Warrant (Ch. 1088, Stats. 1988) (CSM-4392)

Airport Land Use Commission/Plans (Ch. 644, Stats. 1994) (CSM-4507)

Animal Adoption (Ch. 752, Stats. 1998) (04-PGA-01, 98-TC-11)

Brendon Maguire Act (Ch. 391, Stats. 1988) (CSM-4357)

California Public Records Act (Ch. 463, Stats. 1992; Ch. 982, Stats. 2000; Ch. 355, Stats. 2001) (02-TC-10 and 02-TC-51)

Conservatorship: Developmentally Disabled Adults (Ch. 1304, Stats. 1980) (04-LM-13)

Coroners' Costs (Ch. 498, Stats. 1977) (04-LM-07)

County Treasury Withdrawals (Ch. 784, Stats. 1995) (96-365-03)

Crime Statistics Reports for the Department of Justice (Ch. 1172, Stats. 1989, Ch. 1338, Stats. 1992, Ch. 1230, Stats. 1993, Ch. 933, Stats. 1998, Ch. 571, Stats. 1999, Ch. 626, Stats. 2000) (02-TC-04 and, 02- TC-11) and Crime Statistics Reports for the Department of Justice Amended (Ch. 700, Stats. 2004) (07-TC-10)

Crime Victims’ Domestic Violence Incident Reports II (Ch. 901, Stats. 1984) (02-TC-18)

Deaf Teletype Equipment (Ch. 502, Stats. 1980) (04-LM-11)

Developmentally Disabled Attorneys' Services (Ch. 694, Stats. 1975) (04-LM-03)

DNA Database & Amendments to Postmortem Examinations: Unidentified Bodies (Ch. 822, Stats. 2000; Ch. 467, Stats. 2001) (00-TC-27, 02-TC-39)

Domestic Violence Background Checks (Ch. 713, Stats. 2001) (01-TC-29)

Domestic Violence Information (Ch. 1609, Stats. 1984) (CSM-4222)

Elder Abuse, Law Enforcement Training (Ch. 444, Stats. 1997) (98-TC-12)

Extended Commitment, Youth Authority (Ch. 267, Stats. 1998) (98-TC-13)

21

101 False Reports of Police Misconduct (Ch. 590, Stats. 1995) (00-TC-26)

Fifteen-Day Close of Voter Registration (Ch. 899, Stats. 2000) (01-TC-15)

Firearm Hearings for Discharged Inpatients (Chs. 9 and 177, Stats. 1990) (99-TC-11)

Grand Jury Proceedings (Ch. 1170, Stats. 1996) (98-TC-27)

Handicapped Voter Access Information (Ch. 494, Stats. 1979) (CSM-4363)

Health Benefits for Survivors of Peace Officers and Firefighters (Ch. 1120, Stats. 1996) (97-TC-25)

Identity Theft (Ch. 956, Stats. 2000) (03-TC-08)

In-Home Supportive Services II (Ch. 445, Stats. 2000; Ch. 90, Stats. 1999) (00-TC-23)

Inmate AIDS Testing (Ch. 1579, Stats. 1988; Ch. 768, Stats. 1991) (CSM-4369 and CSM-4429)

Interagency Child Abuse and Neglect Investigation Reports Mandate (Ch. 958, Stats. 1977) (00-TC-22)

Judiciary Proceedings (Ch. 644, Stats. 1980) (CSM-4366)

Law Enforcement Sexual Harassment Training (Ch. 126, Stats. 1993) (97-TC-07)

Local Coastal Plans (Ch. 1330, Stats. 1976) (CSM-4431)

Mandate Reimbursement Process (Ch. 486, Stats. 1975) (CSM-4204 and CSM-4485)

Mandate Reimbursement Process II (Ch. 890, Stats. 2004) (05-TC-05)

Mentally Disordered Offenders' Extended Commitments Proceedings (Ch. 435, Stats. 1991) (98-TC-09)

Mentally Disordered Offenders: Treatment as a Condition of Parole (Ch. 228, Stats. 1989; Ch. 706, Stats. 1994) (00-TC-28, 05-TC-06)

Mentally Disordered Sex Offenders' Recommitments (Ch. 1036, Stats. 1978) (04-LM-09)

Mentally Retarded Defendants Representation (Ch. 1253, Stats. 1980) (04-LM-12)

Missing Persons Report (Ch. 1456, Stats. 1988; Ch. 59, Stats. 1993) (CSM-4255, CSM- 4368, and CSM-4484)

Modified Primary Election (Ch. 898, Stats. 2000) (01-TC-13)

22

102 Not Guilty by Reason of Insanity (Ch. 1114, Stats. 1979) (CSM-2753)

Open Meetings Act/Brown Act Reform (Ch. 641, Stats. 1986) (CSM-4257 and CSM- 4469)

Pacific Beach Safety: Water Quality and Closures (Ch. 961, Stats. 1992) (CSM- 4432)

Perinatal Services (Ch. 1603, Stats. 1990) (CSM-4397)

Permanent Absent Voters II (Ch. 922, Stats. 2001, Ch. 664, Stats. 2002, and Ch. 347, Stats. 2003) (03-TC-11)

Personal Safety Alarm Devices (8 Cal. Code Regs. 3401 (c)) (CSM-4087)

Photographic Record of Evidence (Ch. 875, Stats. 1985) (98-TC-07)

Physical Education Reports (Ch. 640, Stats. 1997) (98-TC-08)

Pocket Masks (Ch. 1334, Stats. 1987) (CSM-4291)

Post Conviction: DNA Court Proceedings (Ch. 943, Stats. 2001) (00-TC-21, 01-TC-08)

Post Election Manual Tally (2 Cal. Code Regs., 20120 to 20127, incl.) (10-TC-08)

Postmortem Examinations : Unidentified Bodies, Human Remains (Ch. 284, Stats. 2000) (00-TC-18)

Prisoner Parental Rights (Ch. 820, Stats. 1991) (CSM-4427)

Pupil Residency Verification and Appeals (Ch. 309, Stats. 1995) (96-384-01)

Removal of Chemicals (Ch. 1107, Stats. 1984) (CSM 4211 and 4298)

School Bus Safety I and II (Ch. 624, Stats. 1992; Ch. 831, Stats. 1994; and Ch. 739, Stats. 1997) (CSM 4433 and 97-TC-22)

Scoliosis Screening (Ch. 1347, Stats. 1980) (CSM 4195)

Senior Citizens Property Tax Postponement (Ch. 1242, Stats. 1977; Ch. 43, Stats. 197 8 ) (CSM-4359)

Sex Crime Confidentiality (Ch. 502, Stats. 1992; Ch. 36, 1993-94 1st Ex. Sess.) (98-TC- 21)

Sex Offenders: Disclosure by Law Enforcement Officers (Chs. 908 and 909, Stats. 1996) (97-TC-15)

23

103 Sheriffs Court Security Services (Ch. 22, Stats. 2009) (09-TC-02)

SIDS Autopsies (Ch. 955, Stats. 1989) (CSM-4393)

SIDS Contacts by Local Health Officers (Ch. 268, Stats. 1991) (CSM-4424)

SIDS Training for Firefighters (Ch. 1111, Stats. 1989) (CSM-4412)

Stolen Vehicle Notification (Ch. 337, Stats. 1990) (CSM-4403)

Structural and Wildland Firefighter Safety Clothing and Equipment (8 Cal. Code Regs., 3401 to 3410, incl.) (CSM-4261-4281)

Threats Against Peace Officers (Ch. 1249, Stats. 1992; Ch. 666, Stats. 1995) (CSM-96- 365-02)

Very High Fire Hazard Severity Zones (Ch. 1188, Stats. 1992) (97-TC-13)

Victims' Statements-Minors (Ch. 332, Stats. 1981) (04-LM-14)

Voter Identification Procedures (Ch. 260, Stats. 2000) (03-TC-23)

Voter Registration Procedures (Ch. 704, Stats. 1975) (04-LM-04)

24

104 2019-20 State Budget - Addendum Assembly Bill 74 contains specific projects within RCRC Member Counties, which includes: Courthouse Construction and Judicial Branch Deferred Maintenance. $17.2 million to cover higher than anticipated costs associated with the construction of the New El Centro Courthouse in Imperial County. The State Budget Package also provides $2.8 million towards a land acquisition for an El Dorado County Courthouse. Lake Nacimiento and Lake San Antonio. $17 million for the California Department of Fish and Wildlife to provide fish screens for the water conveyance tunnel between Lake Nacimiento and Lake San Antonio (San Luis Obispo County). This funding will assist in securing the water supplies of project users dependent on flows out of the reservoir complex. Not more than 5 percent is available for administrative costs. Lake Tahoe. $500,000 for a scientific study to identify causes of decline in water clarity, future climate change impacts on water quality, and actions to address those issues. $1 million to the Tahoe Conservancy to stabilize recently acquired parcels, manage open space, protect water quality, and improve public access, and $7 million (Proposition 68) for acquisition of environmentally sensitive or significant resource areas. Santa Rosa Camp Rebuilding. $23.5 million to rebuild camps destroyed in the Woolsey and Tubbs Fires, including Camp Newman in Santa Rosa (Sonoma County). Clear Lake. $70,000 for the Clear Lake Community Center (Lake County). Jackson. $750,000 to design a storm water system upgrade in the City of Jackson (Amador County). California Conservation Corps.  $22.573 million to replace the kitchen, multipurpose room, and dorm at the existing Auburn Campus (Placer County);  $808,000 for working drawings to add a multipurpose facility at the Fortuna Residential Center (Humboldt County);  $3.745 million for working drawings to replace the existing Greenwood Residential Center (El Dorado County); and,  $3.55 million for working drawings to replace the Ukiah Residential Center (Mendocino County). Debris Removal Team. $2.782 million to establish a dedicated team to facilitate debris removal and assist local governments prepare debris removal plans for future incidents. Big Trees State Park. $1.8 million for campsite relocation at the Big Trees State Park (Calaveras County). Colusa-Sacramento River State Recreation Area. $397,000 for preliminary plans for a redesigned and improved boating support and camping facilities (Colusa County).

105 Fort Ross. $2.5 million (Proposition 40) to construct the Fort Ross Cultural Trail as part of the California Coastal Trail. $3.9 million for preliminary plans for new cabins, replacing the water treatment system, creation of camping spaces, stabilization of historic structures, and adaptive rehabilitation of structures for classrooms and interpretive areas (Sonoma County). Lake Oroville State Recreation Area. $1.3 million (Proposition 84) to construct Gold Flat Campground upgrades, including replacing failing infrastructure (Butte County). Oceano Dunes State Vehicle Recreation Area. $192,000 for working drawings to replace Le Sage Bridge and implement a sediment track out prevention project. $815,000 for four positions and equipment for environmental conservation and regulatory compliance programs (San Luis Obispo County). San Luis Reservoir State Recreation Area. $1.7 million for ramp enlargement, parking improvements, and lighting upgrades (Merced County). North Coast Rail Authority. $10.8 million for dissolution of the authority, including retirement of outstanding debts and $2 million for Sonoma-Marin Area Rail Transit safety upgrades. Flood Relief. $1.5 million for flood relief for the City of Sebastopol (Sonoma County). Paradise Sewer System. $800,000 to prepare environmental documents to construct a new sewer system in Paradise (Butte County). Los Banos Fire. $5 million for construction of a new Fire Emergency Operations Center (Merced County). Butte County Fire. $2 million for contracts to support operation of one year-round fire station, and to meet other budgetary needs (El Dorado County). El Dorado County Courthouse. $2.8 million for land acquisition (El Dorado County). Imperial County. $1 million for the Sheriff’s Department to support the Valley College Medical Assistant and Correctional Academy. Mendocino Community College. $1 million to implement a construction trades program in Lake and Mendocino Counties. Yuba Community College Distric.t $1.427 million for preliminary plans and working drawings for a performing arts facility at the Woodland Community College (Yolo County). Lake Tahoe Community College District. $1.447 million for preliminary plans and working drawings for RFE and Science modernization (El Dorado County). Porterville College. $835,000 for preliminary plans and working drawings for the Allied Health Buildings at the Kern Community College District’s Porterville College campus (Tulare County).

106 Redwoods Community College District. $22 million for replacement of the arts building (Humboldt County). UC Merced Medical School. Authorizes the University of California to pursue a medical school project at or near the Merced Campus with Legislative intent to support debt service for project bonds (Merced County).

107 108 State Legislative Update June 17, 2019

Agriculture CA AB 417 AUTHOR: Arambula [D] TITLE: Agriculture and Rural Prosperity Act LAST AMEND: 05/16/2019 SUMMARY: Enacts the Agriculture and Rural Prosperity Act. Authorizes the Secretary of Food and Agriculture to carry out various activities to support rural communities and further the development of rural agricultural economies in California, including, among other things, consulting with government agencies and members of the public and private sectors to identify opportunities and partnerships to further the development of rural agricultural economies, and disseminating information on the department's website. STATUS: 06/06/2019 To SENATE Committee on AGRICULTURE. Lobbyist: John, Mary-Ann Position: Support 06/10/2019

Cannabis CA AB 1356 AUTHOR: Ting [D] TITLE: Cannabis: Local Jurisdictions: Commercial Cannabis LAST AMEND: 05/16/2019 SUMMARY: Exempts a local jurisdiction that, on or before, and until specified dates, submitted to the electorate of that jurisdiction, a certain local ordinance or resolution relating to retail cannabis commercial activity that received a specified vote of the electorate. Provides that these provisions are prohibited from being construed to require a local jurisdiction to authorize adult use retail cannabis commercial activity. STATUS: 05/30/2019 In ASSEMBLY. From third reading. To Inactive File. Lobbyist: Paul Position: Oppose 05/21/2019

CA SB 153 AUTHOR: Wilk [R] TITLE: Industrial Hemp LAST AMEND: 05/17/2019 SUMMARY: Revises provisions regulating the cultivation and testing of industrial hemp to conform with the requirements for a state plan under the federal Agricultural Marketing Act and federal Agriculture Improvement Act. Revises the definition of industrial hemp. Expands the registration requirements to apply to growers of industrial hemp for noncommercial as well as commercial purposes. Imposes new requirements for the handling and transmittal of registration information. STATUS: 06/03/2019 To ASSEMBLY Committee on AGRICULTURE. Lobbyist: Paul Position: Watch 01/24/2019

109 CEQA CA AB 394 AUTHOR: Obernolte [R] TITLE: Cal. Environmental Quality Act: Exemption: Fire Safety LAST AMEND: 06/13/2019 SUMMARY: Exempts from the California Environmental Quality Act egress route projects or activities undertaken by a public agency that are specifically recommended by the State Board of Forestry and Fire Protection that improve the fire safety of an existing subdivision if certain conditions are met. Requires the lead agency to hold a noticed public meeting to hear and respond to public comments before determining that a project or activity is exempt. STATUS: 06/13/2019 In SENATE. Read second time and amended. Re-referred to Committee on NATURAL RESOURCES AND WATER. Lobbyist: John, Mary-Ann, Staci, Tracy Position: Support 05/13/2019

County Operations CA SB 139 AUTHOR: Allen [D] TITLE: Independent Redistricting Commissions LAST AMEND: 06/12/2019 SUMMARY: Requires certain counties to establish an independent redistricting commission to adopt the county's supervisorial districts after each federal census. Requires these commissions to take steps to encourage county residents to participate in the redistricting process. Specifies certain procedures for a commission's hearing process relating to notice, the number of hearings, and translation of hearings. Requires the county to provide for reasonable funding and staffing of the commission. STATUS: 06/12/2019 From ASSEMBLY Committee on ELECTIONS AND REDISTRICTING with author's amendments. 06/12/2019 In ASSEMBLY. Read second time and amended. Re-referred to Committee on ELECTIONS AND REDISTRICTING. Lobbyist: Paul Position: Concerns 04/17/2019

Corrections CA SB 144 AUTHOR: Mitchell [D] TITLE: Criminal Fees LAST AMEND: 05/21/2019 SUMMARY: Repeals the authority to collect these fees, among others. Makes the unpaid balance of any court-imposed costs unenforceable and uncollectible and would require any portion of a judgment imposing those costs to be vacated. Deletes the authority of the court to impose liens on the defendant's property and make a post-trial determination of the defendant's ability to pay and to order the defendant to pay the costs of the public defender. STATUS: 06/06/2019 To ASSEMBLY Committee on PUBLIC SAFETY. Lobbyist: Paul Position: Oppose 05/22/2019

110 Emergency Management CA SB 209 AUTHOR: Dodd [D] TITLE: Wildfire Warning Center: Fire-Weather Monitoring LAST AMEND: 06/10/2019 SUMMARY: Establishes in the state government the California Wildfire Warning Center. Provides for representatives from the Public Utilities Commission, the Office of Emergency Services, the Department of Forestry and Fire Protection, 2 county fire chiefs, a representative of an electrical corporation, and a representative of a local publicly owned electric utility. STATUS: 06/10/2019 From ASSEMBLY Committee on GOVERNMENTAL ORGANIZATION with author's amendments. 06/10/2019 In ASSEMBLY. Read second time and amended. Re-referred to Committee on GOVERNMENTAL ORGANIZATION. Lobbyist: John, Staci, Tracy Position: Support 06/10/2019

Emergency Services CA SB 160 AUTHOR: Jackson [D] TITLE: Emergency Services: Cultural Competence LAST AMEND: 04/02/2019 SUMMARY: Requires a county to integrate cultural competence into its emergency plan, upon the next update to its emergency plan. Requires a county to provide a forum for community engagement in geographically diverse locations in order to engage with culturally diverse communities. STATUS: 06/06/2019 To ASSEMBLY Committee on GOVERNMENTAL ORGANIZATION. Lobbyist: Tracy Position: Watch 01/29/2019

CA SB 438 AUTHOR: Hertzberg [D] TITLE: Emergency Medical Services: Dispatch LAST AMEND: 05/02/2019 SUMMARY: Prohibits a public agency from delegating, assigning, or contracting for 911 emergency call processing or notification duties regarding the dispatch of emergency response resources, unless the contract or agreement is with another public agency. Exempts from that prohibition a public agency that is a joint powers authority that contracted for emergency response resources on or before a specified date, under certain conditions. STATUS: 06/13/2019 To ASSEMBLY Committees on LOCAL GOVERNMENT and HEALTH. Lobbyist: Tracy Position: Support 05/10/2019

111 Energy CA AB 1144 AUTHOR: Friedman [D] TITLE: Self-Generation Incentive Program: Community Energy LAST AMEND: 04/11/2019 SUMMARY: Requires the Public Utilities Commission, in administering the self-generation incentive program, to allocate a certain percent of the annual collection for the program for pilot projects for the installation of community energy storage systems, and any renewable distributed generation resources associated with those systems, in communities in high fire threat districts. STATUS: 06/04/2019 In SENATE Committee on ENERGY, UTILITIES AND COMMUNICATIONS: Not heard. Lobbyist: John Position: Support 05/21/2019

CA SB 167 AUTHOR: Dodd [D] TITLE: Electrical Corporations: Wildfire Mitigation Plans LAST AMEND: 04/08/2019 SUMMARY: Requires each electrical corporation, as part of specified protocols, to additionally include protocols related to mitigating the public safety impacts of disabling reclosers and deenergizing portions of the electrical distribution system that consider the impacts on customers who are receiving medical baseline allowances. Authorizes electrical corporations to deploy backup electrical resources or provide financial assistance for backup electrical resources to those customers. STATUS: 05/09/2019 To ASSEMBLY Committee on UTILITIES AND ENERGY. Lobbyist: John, Staci Position: Support 05/21/2019

CA SB 774 AUTHOR: Stern [D] TITLE: Electricity: Microgrids LAST AMEND: 05/01/2019 SUMMARY: Requires each electrical corporation to collaborate with certain entities in its service territory to identify locations where sources of back-up electricity may provide increased electrical distribution grid resiliency. Authorizes electrical corporations to file applications with the Public Utilities Commission to invest in, and deploy, microgrids to increase that resiliency and prohibits the Commission from approving microgrid applications that use a certain cost-recovery mechanism. STATUS: 06/06/2019 To ASSEMBLY Committee on UTILITIES AND ENERGY. Lobbyist: John Position: Watch 05/28/2019

CA AB 1783 AUTHOR: Rivas R [D] TITLE: H-2A Worker Housing: State Funding LAST AMEND: 05/16/2019 SUMMARY:

112 Prohibits the provision of state funding for the purposes of planning, developing, or operating any housing used to comply with the federal law requirement to furnish housing to H2A workers. Requires a local government to notify the development proponent in writing if the local government determines that the development does not meet certain requirements by a specified time. Authorizes a local governmental entity to conduct a design review or public oversight of the development. STATUS: 06/13/2019 To SENATE Committees on HOUSING and GOVERNANCE AND FINANCE. Lobbyist: John Position: Watch 05/28/2019

Fairs CA AB 635 AUTHOR: Bigelow [R] TITLE: District Agricultural Associations: Insurance SUMMARY: Authorizes a district agricultural association to purchase commercial automobile and mobile equipment insurance from a joint powers agency that is created for the purpose of providing liability coverage for district agricultural associations. STATUS: 05/29/2019 To SENATE Committee on AGRICULTURE. Lobbyist: Mary-Ann Position: Support 05/22/2019

Fire CA AB 41 AUTHOR: Gallagher [R] TITLE: Disaster Relief: Camp Fire SUMMARY: Provides that the state share for disaster project allocations is up to 100% of total state eligible costs connected with the Camp Fire that started on November 8, 2018, in the County of Butte. STATUS: 06/06/2019 To SENATE Committee on GOVERNMENTAL ORGANIZATION. Lobbyist: Staci Position: Support 02/20/2019

CA AB 235 AUTHOR: Mayes [R] TITLE: Recovery of Catastrophic Wildfire Costs and Expenses LAST AMEND: 04/30/2019 SUMMARY: Authorizes the Public Utilities Commission to consider the electrical corporation's financial status and determine the maximum amount the corporation can pay the state without harming ratepayers or materially impacting the electrical corporation's ability to provide adequate and safe service. STATUS: 05/29/2019 To SENATE Committee on ENERGY, UTILITIES AND COMMUNICATIONS. Lobbyist: Staci Position: Watch 03/18/2019

113 CA AB 247 AUTHOR: Dahle [R] TITLE: Disaster Relief: Carr and Klamathon Fires SUMMARY: Provides that the state share for disaster project allocations to local agencies is up to 100% of total state eligible costs connected with the Klamathon fire that started on July 5, 2018, in the County of Siskiyou, and the Carr fire that started on July 23, 2018, in the County of Shasta. STATUS: 06/11/2019 From SENATE Committee on GOVERNMENTAL ORGANIZATION: Do pass to Committee on APPROPRIATIONS. (14-0) Lobbyist: Staci Position: Support 06/04/2019

CA AB 1516 AUTHOR: Friedman [D] TITLE: Fire Prevention: Wildfire Risk LAST AMEND: 06/11/2019 SUMMARY: Requires the Department of Forestry and Fire Protection, the Public Utilities Commission, an electrical corporation, and a local publicly owned electric utility to make available on their respective websites a guidebook of tree and shrub species that cannot encroach overhead conductors at any time. STATUS: 06/11/2019 From SENATE Committee on NATURAL RESOURCES AND WATER with author's amendments. 06/11/2019 In SENATE. Read second time and amended. Re-referred to Committee on NATURAL RESOURCES AND WATER. Lobbyist: Staci, Tracy Position: Support 06/13/2019

CA AB 1612 AUTHOR: Quirk [D] TITLE: Department of Fish and Wildlife: Invasive Species LAST AMEND: 03/28/2019 SUMMARY: Establishes the Invasive Species Response Fund in the State Treasury and would continuously appropriate money deposited in the fund to the department to respond to nonnative vertebrate species invasions in coordination with other relevant government agencies. STATUS: 03/28/2019 To ASSEMBLY Committee on WATER, PARKS AND WILDLIFE. 03/28/2019 From ASSEMBLY Committee on WATER, PARKS AND WILDLIFE with author's amendments. 03/28/2019 In ASSEMBLY. Read second time and amended. Re-referred to Committee on WATER, PARKS AND WILDLIFE. Lobbyist: Mary-Ann, Staci Position: Watch 02/25/2019

CA SB 190 AUTHOR: Dodd [D] TITLE: Fire Safety: Building Standards: Defensible Space LAST AMEND: 04/30/2019 SUMMARY: Requires the Office of the State Fire Marshal to develop a model defensible space program. Requires the Office to make available on their website a

114 Wildland Urban Interface Fire Safety Building Standards Compliance training manual for the training of local building officials, builders, and firefighters. STATUS: 06/06/2019 To ASSEMBLY Committees on GOVERNMENTAL ORGANIZATION and NATURAL RESOURCES. Lobbyist: Staci, Tracy Position: Support 03/18/2019

CA SB 462 AUTHOR: Stern [D] TITLE: Community Colleges: Fire Resiliency Workforce Program LAST AMEND: 06/13/2019 SUMMARY: Requires the Chancellor's Office of the California Community Colleges, working in collaboration with the Academic Senate for California Community Colleges, to develop a forest and woodlands restoration workforce model curriculum and vocational programs to be offered by community college districts commencing on or before a specified date. STATUS: 06/13/2019 From ASSEMBLY Committee on HIGHER EDUCATION with author's amendments. 06/13/2019 In ASSEMBLY. Read second time and amended. Re-referred to Committee on HIGHER EDUCATION. Lobbyist: Staci Position: Support 06/10/2019

Fish & Wildlife CA AB 128 AUTHOR: Gloria [D] TITLE: Horses: Protection LAST AMEND: 04/24/2019 SUMMARY: Makes it unlawful to offer horsemeat for sale for human consumption. Requires a written bill of sale or written instrument to be provided when any person purchases, consigns, sells, or accepts the donation of an animal, as defined in the act, at a public or private auction. Requires a person who purchases an animal in these circumstances to sign a sworn statement acknowledging and agreeing to comply with Proposition 6. STATUS: 05/22/2019 To SENATE Committee on JUDICIARY. Lobbyist: Mary-Ann Position: Watch 12/18/2018

115 Forestry CA AB 1160 AUTHOR: Dahle [R] TITLE: Forestry: Timber Operations: Sustained Yield Plans LAST AMEND: 04/11/2019 SUMMARY: Requires a sustained yield plan for timber operations under the Z'berg-Nejedly Forest Practice Act to be effective for a certain period of time. STATUS: 06/11/2019 From SENATE Committee on NATURAL RESOURCES AND WATER: Do pass to Committee on APPROPRIATIONS. (8-0) Lobbyist: Staci Position: Support 05/29/2019

CA SB 226 AUTHOR: Nielsen [R] TITLE: Watershed Restoration: Wildfires: Grant Program LAST AMEND: 06/11/2019 SUMMARY: Requires the Natural Resources Agency to develop and implement a watershed restoration grant program for purposes of awarding grants to private property land owners to assist them with watershed restoration on watersheds that have been affected by wildfire. Requires the agency to provide technical resources to the private property land owners seeking assistance with watershed restoration. STATUS: 06/11/2019 From ASSEMBLY Committee on NATURAL RESOURCES with author's amendments. 06/11/2019 In ASSEMBLY. Read second time and amended. Re-referred to Committee on NATURAL RESOURCES. Lobbyist: Mary-Ann, Staci Position: Support 03/25/2019

Health Care CA AB 1544 AUTHOR: Gipson [D] TITLE: Community Paramedicine LAST AMEND: 05/16/2019 SUMMARY: Establishes the Community Paramedicine or Triage to Alternate Destination Act. Authorizes a local EMS agency to develop a community paramedicine or triage to alternate destination program, to provide specified community paramedicine services. Requires the authority to develop regulations to establish minimum standards for a program and would further require the Commission on Emergency Medical Services to review and approve those regulations. STATUS: 06/13/2019 To SENATE Committees on HEALTH and JUDICIARY. Lobbyist: Tracy Position: Oppose.Unless.Amend 05/21/2019

Homelessness CA AB 728 AUTHOR: Santiago [D] TITLE: Homeless Multidisciplinary Personnel Teams LAST AMEND: 05/01/2019 SUMMARY: Expands the goals of the Homeless Adult and Family Multidisciplinary Personnel

116 Team to include facilitating the expedited identification, assessment, and linkage of individuals at risk of homelessness to housing and supportive services, and the expedited prevention of homelessness. Allows members of the Team to access and share confidential information. STATUS: 06/10/2019 In SENATE Committee on HUMAN SERVICES: Heard, remains in Committee. Lobbyist: Tracy

Housing CA AB 178 AUTHOR: Dahle [R] TITLE: Energy: Building Standards: Photovoltaic Requirements LAST AMEND: 04/02/2019 SUMMARY: Specifies that residential construction intended to repair, restore, or replace a residential building damaged or destroyed as a result of a disaster in an area in which a state of emergency has been proclaimed by the Governor is required to comply with the photovoltaic requirements, if any, that were in effect at the time the damaged or destroyed residential building was originally constructed. STATUS: 06/04/2019 In SENATE Committee on ENERGY, UTILITIES AND COMMUNICATIONS: Not heard. Lobbyist: John, Tracy Position: Support 05/13/2019

CA ACA 1 AUTHOR: Aguiar-Curry [D] TITLE: Local Government Financing: Affordable Housing LAST AMEND: 03/18/2019 SUMMARY: Creates an exception to the 1% limit on the ad valorem property tax rate on real property that would authorize a city or county to levy an ad valorem tax to service bonded indebtedness incurred to fund the construction, reconstruction, rehabilitation, or replacement of public infrastructure or affordable housing, if the proposition proposing that tax is approved by 55% of the voters of the city or county. STATUS: 05/20/2019 In ASSEMBLY. Read second time. To third reading. Lobbyist: Paul, Tracy Position: Support 05/09/2019

CA SB 330 AUTHOR: Skinner [D] TITLE: Housing Crisis Act LAST AMEND: 06/12/2019 SUMMARY: Requires a local agency that proposes to disapprove a housing development project that complies with applicable, objective general plan and zoning standards and criteria that were in effect at the time the application was deemed to be complete, or to approve it on the condition that it be developed at a lower density, to base its decision upon written findings supported by substantial evidence on the record that specified conditions exist, and places the burden of proof on the local agency to that effect. STATUS:

117 06/12/2019 From ASSEMBLY Committee on HOUSING AND COMMUNITY DEVELOPMENT with author's amendments. 06/12/2019 In ASSEMBLY. Read second time and amended. Re-referred to Committee on HOUSING AND COMMUNITY DEVELOPMENT. Lobbyist: Tracy Position: Pending 02/20/2019

CA SCA 1 AUTHOR: Allen [D] TITLE: Public Housing Projects SUMMARY: Repeals provisions prohibiting the development, construction, or acquisition of a low-rent housing project in any manner by any state public body until a majority of the qualified electors of the jurisdiction in which the development, construction, or acquisition of the project is proposed approve the project by voting in favor at an election. STATUS: 06/04/2019 From SENATE Committee on HOUSING: Be adopted to Committee on ELECTIONS AND CONSTITUTIONAL AMENDMENTS. (9-0) Lobbyist: Tracy Position: Support 06/04/2019

Land Use CA AB 1486 AUTHOR: Ting [D] TITLE: Surplus Land LAST AMEND: 05/16/2019 SUMMARY: Expands the definition of local agency to include sewer, water, utility, and local and regional park districts, joint powers authorities, successor agencies to former redevelopment agencies, housing authorities, and other political subdivisions of this state, and any instrumentality thereof, that is empowered to acquire and hold real property, thereby requiring these entities to comply with requirements for the disposal of surplus land. STATUS: 06/13/2019 To SENATE Committees on GOVERNANCE AND FINANCE, HOUSING and GOVERNMENTAL ORGANIZATION. Lobbyist: Paul Position: Oppose.Unless.Amend 03/05/2019

CA SB 182 AUTHOR: Jackson [D] TITLE: Local Government: Planning and Zoning: Wildfires LAST AMEND: 05/24/2019 SUMMARY: Requires the Office of the State Fire Marshal, in consultation with the Office of Planning and Research, on or before a certain date, to review the wildfire risk reduction standards and specified wildfire risk reduction standards that meet certain requirements, adopt standards for third party inspection and certifications for a specified enforcement program, and update the maps of the very high fire hazard severity zones. STATUS: 06/13/2019 In ASSEMBLY. Suspend Assembly Rule 96.

118 06/13/2019 Re-referred to ASSEMBLY Committees on HOUSING AND COMMUNITY DEVELOPMENT and LOCAL GOVERNMENT. Lobbyist: Staci, Tracy Position: Pending 02/04/2019

CA SB 249 AUTHOR: Nielsen [R] TITLE: Land Use: Subdivision Map Act: Expiration Dates LAST AMEND: 03/28/2019 SUMMARY: Authorizes within the county of Butte, the legislative body to extend the expiration date, as specified, of any approved tentative map or vesting tentative map that meets certain criteria, including that it was approved on or after a specified date and that it relates to the construction of single or multifamily housing. STATUS: 05/16/2019 To ASSEMBLY Committee on LOCAL GOVERNMENT. Lobbyist: Staci, Tracy Position: Support 03/26/2019

Law Enforcement CA SB 192 AUTHOR: Hertzberg [D] TITLE: Posse Comitatus SUMMARY: Repeals provisions of Posse Comitatus which makes an able-bodied person 18 years of age or older who neglects to aid and assist in making an arrest, retaking into custody a person who has escaped from arrest or imprisonment, or preventing a breach of the peace or the commission of any criminal offense, after being lawfully required by a uniformed peace officer or a judge, guilty of a misdemeanor as specified. STATUS: 06/11/2019 From ASSEMBLY Committee on PUBLIC SAFETY: Do pass to Committee on APPROPRIATIONS. (7-0) Lobbyist: Paul Position: Pending 01/31/2019

Parks CA AB 1111 AUTHOR: Friedman [D] TITLE: Office of Outdoor Recreation LAST AMEND: 05/20/2019 SUMMARY: Establishes the Office of Outdoor Recreation in the Office of the Governor. Requires the office to undertake certain activities, including supporting the outdoor recreation economy and working toward equitable access to outdoor areas of the state by engaging in specified activities. Requires the office to create an advisory committee to provide advice, expertise, support, and service to the office. Authorizes the office to receive the assistance and funds from public and private sources. STATUS: 06/13/2019 To SENATE Committees on NATURAL RESOURCES AND WATER and GOVERNMENTAL ORGANIZATION. Lobbyist: Mary-Ann Position: Support 05/22/2019

119 PERS CA SB 266 AUTHOR: Leyva [D] TITLE: Public Employees Retirement: Disallowed Compensation LAST AMEND: 05/17/2019 SUMMARY: Establishes new procedures under the Public Employee Retirement Law for cases in which PERS determines that the benefits of a member or annuitant are, or would be, based on compensation that conflicts with the Public Employees Pension Reform Act, and other specified laws and thus impermissible under PERL. Applies procedures retroactively to determinations made on or after a certain date, if an appeal has been filed and the employee member, survivor, or beneficiary has not exhausted specified remedies. STATUS: 05/30/2019 To ASSEMBLY Committee on PUBLIC EMPLOYMENT AND RETIREMENT. Lobbyist: Paul Position: Watch 06/12/2019

Sales Tax CA AB 1049 AUTHOR: Grayson [D] TITLE: Sales and Use Taxes: Exemption: On-call Volunteer Fire LAST AMEND: 04/10/2019 SUMMARY: Provides an exemption from sales and use tax for the sale of, or the storage, use, or consumption of, equipment that is purchased for exclusive use by an on-call volunteer fire department. STATUS: 05/16/2019 In ASSEMBLY Committee on APPROPRIATIONS: Held in committee. Lobbyist: Paul Position: Support 05/07/2019

Solid Waste CA AB 1080 AUTHOR: Gonzalez [D] TITLE: Circular Economy and Plastic Pollution Reduction LAST AMEND: 05/22/2019 SUMMARY: Enacts the Circular Economy and Plastic Pollution Reduction Act, which would establish the policy goal of the state that, by 2030, manufacturers and retailers achieve a 75% reduction of the waste generated from single-use packaging and products offered for sale or sold in the state through source reduction, recycling, or composting. STATUS: 06/13/2019 To SENATE Committee on ENVIRONMENTAL QUALITY. Lobbyist: John Position: Support 05/15/2019

CA AB 1509 AUTHOR: Mullin [D] TITLE: Solid Waste: Lithium Ion Batteries LAST AMEND: 05/01/2019 SUMMARY: Establishes the Lithium Ion Battery Recycling Program in the Department of

120 Resources Recycling and Recovery. Requires a covered entity to provide a list of covered products that it sells or offers for sale in the state to the department and the total number of each covered product it sold in the state during the prior year, and to update those lists annually. STATUS: 06/06/2019 To SENATE Committee on ENVIRONMENTAL QUALITY. Lobbyist: John Position: Support.In.Concept 04/05/2019

CA AB 1583 AUTHOR: Eggman [D] TITLE: Recycling Market Development Act LAST AMEND: 05/20/2019 SUMMARY: Requires the Department of Resources Recycling and Recovery to convene a Statewide Commission on Recycling Markets and Curbside Recycling and would require the commission to, among other things, issue policy recommendations to achieve specified market development goals and waste reduction goals and provide regular feedback to the department on public messaging designed to encourage proper recycling and to minimize contamination in curbside recycling programs. STATUS: 06/13/2019 To SENATE Committees on ENVIRONMENTAL QUALITY and GOVERNANCE AND FINANCE. Lobbyist: John Position: Support 03/27/2019

CA SB 54 AUTHOR: Allen [D] TITLE: Circular Economy and Plastic Pollution Reduction Act LAST AMEND: 05/22/2019 SUMMARY: Enacts the Circular Economy and Plastic Pollution Reduction Act. Establishes the policy goal of the state that, by 2030, manufacturers and retailers achieve a 75% reduction of the waste generated from single-use packaging and products offered for sale or sold in the state through source reduction, recycling, or composting. STATUS: 06/06/2019 To ASSEMBLY Committee on NATURAL RESOURCES. Lobbyist: John, Mary, Staci Position: Support 05/15/2019

CA SB 450 AUTHOR: Umberg [D] TITLE: Environmental Quality Act Exemption: Supportive Housing LAST AMEND: 04/11/2019 SUMMARY: Exempts from the California Environmental Quality Act projects related to the conversion of a structure with a certificate of occupancy as a motel, hotel, apartment hotel, transient occupancy residential structure, or hostel to supportive housing or transitional housing that meet certain requirements. STATUS: 05/16/2019 To ASSEMBLY Committee on NATURAL RESOURCES. Lobbyist: John, Tracy Position: Support 05/21/2019

121 CA SB 667 AUTHOR: Hueso [D] TITLE: Greenhouse Gases: Recycling Infrastructure LAST AMEND: 04/29/2019 SUMMARY: Requires the Department of Resources Recycling and Recovery to develop, on or before January 1, 2021, and would authorize the department to amend, a 5 year investment strategy to drive innovation and support technological development and infrastructure, in order to meet specified organic waste reduction and recycling targets, as provided. STATUS: 06/06/2019 To ASSEMBLY Committee on NATURAL RESOURCES. Lobbyist: John Position: Support 06/10/2019

Telecommunications CA AB 1366 AUTHOR: Gonzalez [D] TITLE: Voice Over Internet Protocol LAST AMEND: 05/20/2019 SUMMARY: Extends until a specified date the qualified prohibition upon the commission, a department, an agency, or a political subdivision of the state regulating VoIP and Internet Protocol enabled service, with the additional qualification that the commission, a department, an agency, or a political subdivision of the state would be authorized to exercise regulatory jurisdiction and control as expressly and specifically directed by the Legislature in the interest of public safety or consumer protection. STATUS: 06/13/2019 To SENATE Committee on ENERGY, UTILITIES AND COMMUNICATIONS. Lobbyist: Tracy Position: Pending 04/15/2019

CA SB 431 AUTHOR: McGuire [D] TITLE: Mobile Telephony Service Base Transceiver Station Tower LAST AMEND: 06/12/2019 SUMMARY: Requires the commission, in consultation with the Office of Emergency Services, to develop and implement performance reliability standards, as specified, for all mobile telephony service base transceiver station towers, commonly known as "cell towers," located within a commission-designated Tier 2 or Tier 3 High Fire Threat District. STATUS: 06/13/2019 In ASSEMBLY. Suspend Assembly Rule 96. 06/13/2019 Re-referred to ASSEMBLY Committee on RULES. Lobbyist: John, Tracy Position: Pending 06/17/2019

CA SB 560 AUTHOR: McGuire [D] TITLE: Wildfire Mitigation Plans LAST AMEND: 06/13/2019 SUMMARY:

122 Requires that the procedures for notifying a customer who may be impacted by the deenergizing of electrical lines include notification, as a priority, at a circuit-by-circuit level, of critical first responders, health care facilities, and operators of telecommunications infrastructure. STATUS: 06/13/2019 To ASSEMBLY Committee on UTILITIES AND ENERGY. 06/13/2019 From ASSEMBLY Committee on UTILITIES AND ENERGY with author's amendments. 06/13/2019 In ASSEMBLY. Read second time and amended. Re-referred to Committee on UTILITIES AND ENERGY. Lobbyist: John, Tracy Position: Pending 06/17/2019

CA SB 670 AUTHOR: McGuire [D] TITLE: Telecommunication: Community Isolation Outage LAST AMEND: 06/10/2019 SUMMARY: Requires the Office of Emergency Services, on or before July 1, 2020, to adopt, by regulation, appropriate thresholds for a community isolation outage. Requires a provider of telecommunications services, as defined, that provides access to 911 service to notify the office, as provided, whenever a community isolation outage occurs limiting the provider's customers' ability to make 911 calls or receive emergency notifications. STATUS: 06/10/2019 From ASSEMBLY Committee on COMMUNICATIONS AND CONVEYANCE with author's amendments. 06/10/2019 Read second time and amended. Re-referred to ASSEMBLY Committee on COMMUNICATIONS AND CONVEYANCE. Lobbyist: Tracy Position: Support 06/11/2019

Transportation CA AB 891 AUTHOR: Burke [D] TITLE: Public Property: Safe Parking Program LAST AMEND: 05/17/2019 SUMMARY: Requires a city or a county with a population greater than a specified number, in coordination with cities and other entities, to establish a safe parking program that provides safe parking locations and options for individuals and families living in their vehicles. Requires a safe parking program to provide a bathroom facility and onsite security. Exempts a municipality that has a specified safe parking program administered by a nongovernmental entity operating in its jurisdiction from these requirements. STATUS: 06/06/2019 To SENATE Committee on GOVERNANCE AND FINANCE. Lobbyist: Paul Position: Pending 04/05/2019

CA AB 1810 AUTHOR: Transportation Cmt TITLE: Transportation: Omnibus Bill LAST AMEND: 06/04/2019 SUMMARY:

123 Excludes the California Transportation Commission from the Transportation Agency. Establishes it as an entity in state government. Requires it to act in an independent oversight role. Extends the Department of General Services authorization to purchase and equip heavy mobile fleet vehicles and special equipment for use by the Department of Transportation. Increases the cap on the total value of vehicles and equipment purchased through best value procurement authorization. STATUS: 06/04/2019 From SENATE Committee on TRANSPORTATION with author's amendments. 06/04/2019 In SENATE. Read second time and amended. Re-referred to Committee on TRANSPORTATION. Lobbyist: Paul Position: Support 06/05/2019

Water CA AB 134 AUTHOR: Bloom [D] TITLE: Safe Drinking Water Restoration LAST AMEND: 05/20/2019 SUMMARY: Requires each regional engineer to arrange for a prescribed comprehensive assessment of each failed water system in the region of the drinking water regional office to be completed. Requires the board, upon adoption of an assessment of funding need, to convey to each regional engineer a list of at-risk water systems in that region and additional information. Requires the board by a specified date of each year to review the assessment of funding need and to prioritize the public water systems. STATUS: 06/13/2019 To SENATE Committees on ENVIRONMENTAL QUALITY and NATURAL RESOURCES AND WATER. Lobbyist: Mary-Ann Position: Watch 12/18/2018

CA AB 217 AUTHOR: Burke [D] TITLE: Income Taxation: Credits: Exclusions LAST AMEND: 06/13/2019 SUMMARY: Allows a refundable young child tax credit against the taxes imposed under the Personal Income Tax Law, for each taxable year beginning on or after January 1, 2019, in an amount equal to $1,176 multiplied by the earned income tax credit adjustment factor, not to exceed $1,000 per each qualified taxpayer per taxable year. STATUS: 06/13/2019 In ASSEMBLY. ASSEMBLY Rule 97 waived. 06/13/2019 Re-referred to ASSEMBLY Committee on REVENUE AND TAXATION. 06/13/2019 In ASSEMBLY. Joint Rule 62(a) suspended. 06/13/2019 From ASSEMBLY Committee on REVENUE AND TAXATION with author's amendments. 06/13/2019 In ASSEMBLY. Read second time and amended. Re-referred to Committee on REVENUE AND TAXATION. Lobbyist: Mary-Ann Position: Oppose.Unless.Amend 05/23/2019

124 CA AB 402 AUTHOR: Quirk [D] TITLE: Water Resources Control Board: Local Primacy Delegation LAST AMEND: 03/05/2019 SUMMARY: Includes enforcement costs as costs covered by the annual Drinking Water Surveillance Program grant. Authorizes any local primacy agency, with the approval of the State Water Resources Control Board, to elect to participate in a funding stabilization program. Requires the State Board, during any fiscal year for which a local primacy agency participates in the program, to establish and collect all fees payable by public water systems for the local primacy agency activities. STATUS: 05/29/2019 To SENATE Committee on ENVIRONMENTAL QUALITY. Lobbyist: Mary-Ann Position: Support 06/04/2019

CA AB 448 AUTHOR: Garcia E [D] TITLE: Water Rights: Stockponds LAST AMEND: 04/03/2019 SUMMARY: Provides that the owner of a stockpond built prior to a specified date, that does not have a capacity greater than ten acre feet, may obtain a right to appropriate water for the principal purpose of watering livestock if that person files a claim for a water right with the State Water Resources Control Board accompanied by a fee not later than a certain date, with certain exceptions. STATUS: 05/16/2019 In ASSEMBLY Committee on APPROPRIATIONS: Held in committee. Lobbyist: Mary-Ann Position: Support 03/19/2019

CA AB 658 AUTHOR: Arambula [D] TITLE: Water Rights: Water Management LAST AMEND: 04/02/2019 SUMMARY: Authorizes a groundwater sustainability agency or local agency to apply for, and the State water Resources Control Board to issue, a conditional temporary permit for diversion of surface water to underground storage for beneficial use that advances the sustainability goal of a groundwater basin. STATUS: 06/06/2019 To SENATE Committee on NATURAL RESOURCES AND WATER. Lobbyist: Mary-Ann Position: Pending 06/10/2019

CA AB 912 AUTHOR: Muratsuchi [D] TITLE: Marine Invasive Species: Ballast Water LAST AMEND: 05/06/2019 SUMMARY: Defines the term land under the Marine Invasive Species Act, and revises the coastal boundaries used to define the Pacific Coastal Region. STATUS:

125 05/29/2019 To SENATE Committees on NATURAL RESOURCES AND WATER and ENVIRONMENTAL QUALITY. Lobbyist: Mary-Ann Position: Pending 02/22/2019

CA AB 1588 AUTHOR: Gloria [D] TITLE: Drinking Water and Wastewater Operator Certification LAST AMEND: 05/08/2019 SUMMARY: Requires operators of complex industrial facilities, including members of the military and military service veterans, to receive appropriate equivalent experience credit and education credit for work and tasks performed that are directly related to the operation of water or wastewater facilities. Relates to water treatment operator certification. STATUS: 06/06/2019 To SENATE Committees on ENVIRONMENTAL QUALITY and VETERANS AFFAIRS. Lobbyist: Mary-Ann Position: Support 06/12/2019

CA SB 45 AUTHOR: Allen [D] TITLE: Wildfire, Drought, and Flood Protection Bond Act 2020 LAST AMEND: 04/04/2019 SUMMARY: Enacts the Wildfire, Drought, and Flood Protection Bond Act of 2020, which, if approved by voters, authorizes the issuance of bonds to finance projects to restore fire damaged areas, reduce wildfire risk, create healthy forests and watersheds, reduce climate impacts on urban areas and vulnerable populations, protect water supply and water quality, protect rivers, lakes, and streams, reduce flood risk, protect fish and wildlife from climate impacts, and protect coastal lands and resources. STATUS: 04/24/2019 From SENATE Committee on GOVERNANCE AND FINANCE: Do pass to Committee on APPROPRIATIONS. (5-2) Lobbyist: Mary-Ann Position: Support 05/02/2019

CA SB 200 AUTHOR: Monning [D] TITLE: Safe and Affordable Drinking Water Fund LAST AMEND: 05/17/2019 SUMMARY: Establishes the Safe and Affordable Drinking Water Fund in the State Treasury to help water systems provide an adequate and affordable supply of safe drinking water in both the near and the long term. Authorizes the State Water Resources Control Board to provide for the deposit into the fund of federal contributions, voluntary contributions, gifts, grants, and bequests. Provides that moneys are available to fund grands, loans, contracts, or services to assist eligible recipients. STATUS: 06/10/2019 To ASSEMBLY Committee on ENVIRONMENTAL SAFETY AND TOXIC MATERIALS. Lobbyist: Mary-Ann Position: Support 06/14/2019

126 CA SB 414 AUTHOR: Caballero [D] TITLE: Small System Water Authority Act of 2019 LAST AMEND: 05/17/2019 SUMMARY: Creates the Small System Water Authority Act of 2019 and states legislative findings and declarations relating to authorizing the creation of small system water authorities that will have powers to absorb, improve, and competently operate noncompliant public water systems. STATUS: 06/10/2019 To ASSEMBLY Committees on ENVIRONMENTAL SAFETY AND TOXIC MATERIALS and LOCAL GOVERNMENT. Lobbyist: Mary-Ann Position: Support 05/22/2019

CA SB 474 AUTHOR: Stern [D] TITLE: Habitat Conservation Fund LAST AMEND: 05/21/2019 SUMMARY: Relates to the State Wildlife Protection Act of 1990. Establishes the Wildlife Protection Subaccount in the Habitat Conservation Fund and would require the Controller, if an appropriation is made for this purpose in any fiscal year, to transfer $30,000,000 from the General Fund to the subaccount, less any amount transferred from specified accounts and funds, to be expended by the board for the acquisition, enhancement, or restoration of wildlife habitat. STATUS: 06/06/2019 To ASSEMBLY Committee on WATER, PARKS AND WILDLIFE. Lobbyist: Mary-Ann Position: Concerns 04/01/2019

CA SB 487 AUTHOR: Caballero [D] TITLE: Department Of Water Resources: Aerial Snow Survey LAST AMEND: 06/11/2019 SUMMARY: Requires, to the extent an appropriation is made for these purposes, the department's California snow survey program to conduct aerial surveys of the snowpack and conduct supporting forecasts of runoff volume and timing for the watersheds of the Sierra Nevada and Cascade Range and the Klamath-trinity Mountains, including areas that drain or supply water to major reservoirs and lakes. STATUS: 06/11/2019 From ASSEMBLY Committee on WATER, PARKS AND WILDLIFE with author's amendments. 06/11/2019 In ASSEMBLY. Read second time and amended. Re-referred to Committee on WATER, PARKS AND WILDLIFE. Lobbyist: Mary-Ann Position: Pending 02/25/2019

CA SB 559 AUTHOR: Hurtado [D] TITLE: Department of Water Resources Grant LAST AMEND: 05/17/2019 SUMMARY: Appropriates funds to the Department of Water Resources for the purposes of

127 restoring the Friant-Kern Canal to its full capacity. STATUS: 06/06/2019 To ASSEMBLY Committee on WATER, PARKS AND WILDLIFE. Lobbyist: Mary-Ann Position: Support 06/13/2019

128 To: RCRC Board of Directors From: Paul A. Smith, Vice President Governmental Affairs Date: June 17, 2019 Re: Senate Bill 153 (Wilk) – Industrial Hemp

Summary This memo provides an overview of Senate Bill 153 (Wilk), which would construct a more robust state regulatory structure for the cultivation and testing of industrial hemp.

Background In December of 2018, the Congress passed and President Trump signed into law the 2018 Farm Bill, the omnibus bill, renewed every five years, which puts forth agricultural and food policy in the United States. In key sections of the 2018 the Farm Bill, industrial hemp became legal under federal law. However, for industrial hemp to be legal, each state must adopt regulatory plans that conform to the rules put forth in the Farm Bill. Of importance is the definition of industrial hemp as containing less than 0.3 percent tetrahydrocannabinol (THC) by weight.

In 2013, the Legislature enacted Senate Bill 566 (Leno) which enacted the California Industrial Hemp Farming Act. It allowed the cultivation and processing of hemp and established a registration scheme, effective upon federal approval. In 2018, the Legislature enacted Senate Bill 1409 (Wilk) which provided some updates in state law pertaining to the cultivation and processing industrial hemp. It should be noted that this bill was enacted just a few months prior to the enactment by Congress of the 2018 Farm Bill.

In 2016, the voters approved the Adult Use of Marijuana Act (Proposition 64) legalizing cannabis for adult use. In a remote section of Proposition 64, industrial hemp was addressed by removing the requirement for federal approval, and triggered the provisions of SB 566, effective January 1, 2017.

Issue This year, Senator Scott Wilk (R-Santa Clarita) has introduced Senate Bill 153. SB 153 would conform the cultivation and testing of industrial hemp requirements for a state plan under the federal Farm Bill. Specifically, SB 153 revises the definition of industrial hemp to mean an agricultural product, expands the registration requirements to apply to growers of industrial hemp for noncommercial as well as commercial purposes, and imposes new requirements to county agricultural commissioners for the handling and

RURAL COUNTY REPRESENTATIVES OF CALIFORNIA 1215 K STREET, SUITE 1650 SACRAMENTO, CA 95814 PHONE: 916-447-4806 FAX: 916-448-3154 WEB: WWW.RCRCNET.ORG 129 transmittal of registration information to the California Department of Food and Agriculture (CDFA).

RCRC staff has been engaged with Senator Wilk’s office and SB 153’s sponsors and has requested that SB 153 be amended to do the following:

 More clearly recognize and protect local land use control;  Narrow the definition of ‘established agricultural research institution’ to conform to federal law;  Clarify CDFA’s regulatory authority to ensure that California law complies with the 2018 Farm Bill; and,  Make additional technical and clarifying revisions.

SB 153 recently passed the State Senate by a vote of 35 to 0, and is currently scheduled to be heard in the Assembly Agriculture Committee on July 3, 2019.

Staff Recommendation Information only. A number of RCRC members are addressing the issue of permitting the cultivation of industrial hemp in light of changes to both state and federal law. This memo is to help guide RCRC member counties with what state statutory changes are being considered.

Attachment  Copy of Senate Bill 153 (Wilk)

130 AMENDED IN SENATE MAY 17, 2019 AMENDED IN SENATE MARCH 25, 2019 SENATE BILL No. 153

Introduced by Senator Wilk (Coauthors: Senators Caballero and Galgiani)

January 23, 2019

An act to amend Sections 81000, 81003, 81004, 81005, and 81006 of, and to add Sections 81012, 81013, 81014, and 81015 to, the Food and Agricultural Code, relating to industrial hemp, and making an appropriation therefor.

legislative counsel’s digest SB 153, as amended, Wilk. Industrial hemp. Existing federal law, the Agricultural Act of 2014, authorizes an institution of higher education, as de®ned, or a state department of agriculture, as de®ned, to grow or cultivate industrial hemp under an agricultural pilot program, as de®ned, under certain conditions. Existing federal law, the Agricultural Marketing Act of 1946, as amended by the Agriculture Improvement Act of 2018, requires a state or Indian tribe desiring to have primary regulatory authority over the production of industrial hemp in the state or territory of the Indian tribe to submit to the United States Secretary of Agriculture, through the state department of agriculture or the tribal government, as applicable, a plan, with speci®ed contents, under which the state or Indian tribe monitors and regulates that production. Existing state law regulates the cultivation and testing of industrial hemp, as de®ned. Existing state law requires an entity that is either a grower of industrial hemp for commercial purposes or a seed breeder that develops varieties of industrial hemp for sale or research to register

131 2 with the county agricultural commissioner of the county in which it intends to cultivate industrial hemp and to annually renew its registration. Existing state law exempts an established agricultural research institution, as de®ned, from these registration requirements. Existing state law requires the Department of Food and Agriculture to establish a registration fee and appropriate renewal fee to be paid by registrants. Under existing state law, these fees are deposited in the Department of Food and Agriculture Fund and continuously appropriated to the department for the administration and enforcement of this registration program and other provisions regulating the cultivation of industrial hemp. Existing state law requires a county agricultural commissioner to transmit information collected pursuant to these provisions to the department. Under existing state law, a violation of these provisions is a misdemeanor. Under existing state law, these provisions are only operative to the extent authorized by federal law, as set forth in an opinion of the Attorney General. Before enactment of the federal Agriculture Improvement Act of 2018, an opinion of the Attorney General issued pursuant to existing state law concluded that industrial hemp may only be grown pursuant to these provisions to the extent authorized by the federal Agricultural Act of 2014. This bill would revise the provisions regulating the cultivation and testing of industrial hemp to conform with the requirements for a state plan under the federal Agricultural Marketing Act of 1946, as amended by the federal Agriculture Improvement Act of 2018, by, among other things, revising the de®nition of industrial hemp, expanding the registration requirements to apply to growers of industrial hemp for noncommercial as well as commercial purposes, imposing new requirements on the department and county agricultural commissioners for the handling and transmittal of registration information, imposing new testing requirements, providing new enforcement procedures, to be operative as of the effective date of an approved state plan, as de®ned, and imposing new conditions on eligibility to participate in the industrial hemp program, as de®ned. By expanding registration requirements, including payment of registration fees, to growers of industrial hemp for noncommercial purposes, the bill would establish a new source of revenue for a continuously appropriated fund, thus making an appropriation. The bill would require the Secretary of Food and Agriculture, in consultation with the Governor and the Attorney General, to develop

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and submit a state plan to the United States Secretary of Agriculture, as provided, on or before January 31, 2020. By imposing new registration requirements on growers of industrial hemp for noncommercial purposes, the violation of which would be a misdemeanor, this bill would impose a state-mandated local program. By increasing the duties of county agricultural commissioners, this bill would impose a state-mandated local program. The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement. This bill would provide that no reimbursement is required by this act for speci®ed reasons. Vote: majority. Appropriation: yes. Fiscal committee: yes.​ State-mandated local program: yes.​

The people of the State of California do enact as follows:

line 1 SECTION 1. Section 81000 of the Food and Agricultural Code line 2 is amended to read: line 3 81000. De®nitions. line 4 For purposes of this division, the following terms have the line 5 following meanings: line 6 (a) ªApproved state planº means a state plan that is approved line 7 pursuant to Section 297B of the federal Agricultural Marketing line 8 Act of 1946 (added by Section 10113 of the federal Agriculture line 9 Improvement Act of 2018 (Public Law 115-334)) and in effect. line 10 (b) ªBoardº means the Industrial Hemp Advisory Board. line 11 (c) ªEstablished agricultural research institutionº means an line 12 institution that is either of the following: line 13 (1) A public or private institution or organization that maintains line 14 land or facilities for agricultural research, including colleges, line 15 universities, agricultural research centers, and conservation research line 16 centers. line 17 (2) An institution of higher education, as de®ned in Section 101 line 18 of the federal Higher Education Act of 1965 (20 U.S.C. Sec. 1001), line 19 that grows, cultivates, or manufactures industrial hemp for purposes line 20 of research conducted under an agricultural pilot program or other line 21 agricultural or academic research. line 22 (d) ªIndustrial hempº means an agricultural product, whether line 23 growing or not, that is limited to types of the plant Cannabis sativa

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line 1 L. and any part of that plant, including the seeds of the plant and line 2 all derivatives, extracts, the resin extracted from any part of the line 3 plant, cannabinoids, isomers, acids, salts, and salts of isomers, line 4 with a delta-9 tetrahydrocannabinol concentration of no more than line 5 0.3 percent on a dry weight basis. line 6 (e) ªIndustrial hemp programº means growth of industrial hemp line 7 pursuant to this division and, if in effect, an approved state plan. line 8 (f) ªSeed breederº means an individual or a public or private line 9 institution or organization that is registered with the commissioner line 10 to develop seed cultivars intended for sale or research. line 11 (g) ªSeed cultivarº means a variety of industrial hemp. line 12 (h) ªSeed development planº means a strategy devised by a line 13 seed breeder, or applicant seed breeder, detailing their planned line 14 approach to growing and developing a new seed cultivar for line 15 industrial hemp. line 16 SEC. 2. Section 81003 of the Food and Agricultural Code is line 17 amended to read: line 18 81003. (a) (1) Except for an established agricultural research line 19 institution or a seed breeder subject to Section 81004, and before line 20 cultivation, a grower of industrial hemp shall register with the line 21 commissioner of the county in which the grower intends to engage line 22 in industrial hemp cultivation. line 23 (2) The application shall include all of the following: line 24 (A) The name, physical address, and mailing address of the line 25 applicant. line 26 (B) The legal description, Global Positioning System line 27 coordinates, and map of the land area on which the applicant plans line 28 to engage in industrial hemp cultivation, storage, or both. line 29 (C) The approved seed cultivar to be grown, including the state line 30 or county of origin. line 31 (3) (A) The application shall be accompanied by a registration line 32 fee, as determined pursuant to Section 81005. line 33 (B) A registration issued pursuant to this section shall be valid line 34 for one year, after which the registrant shall renew the registration line 35 and pay an accompanying renewal fee, as determined pursuant to line 36 Section 81005. line 37 (b) If the commissioner determines that the requirements for line 38 registration pursuant to this division are met and that the applicant line 39 is eligible to participate in the industrial hemp program, the line 40 commissioner shall issue a registration to the applicant.

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line 1 (c) A registrant that wishes to alter the land area on which the line 2 registrant conducts industrial hemp cultivation, storage, or both, line 3 shall, before altering the area, submit to the commissioner an line 4 updated legal description, Global Positioning System coordinates, line 5 and map specifying the proposed alteration. Once the commissioner line 6 has received the change to the registration, the commissioner shall line 7 notify the registrant that it may cultivate industrial hemp on the line 8 altered land area. line 9 (d) A registrant that wishes to change the seed cultivar grown line 10 shall submit to the commissioner the name of the new, approved line 11 seed cultivar to be grown. Once the commissioner has received line 12 the change to the registration, the commissioner shall notify the line 13 registrant that it may cultivate the new seed cultivar. line 14 (e) (1) The commissioner shall transmit information collected line 15 under this section to the department. line 16 (2) The following information shall be transmitted by the line 17 commissioner to the department no more than ®ve business days, line 18 and submitted by the department to the United States Department line 19 of Agriculture no more than 30 business days, after the date on line 20 which it is collected, or, in the case of subparagraph (C), the date line 21 of a change in registration status: line 22 (A) Contact information for each grower of industrial hemp. line 23 (B) A legal description of the land on which the grower engages line 24 in industrial hemp cultivation. line 25 (C) Registration status of the grower of industrial hemp. line 26 (f) The department and the commissioner shall retain line 27 information collected under this section for at least three years line 28 after collecting or receiving it. line 29 SEC. 3. Section 81004 of the Food and Agricultural Code is line 30 amended to read: line 31 81004. (a) (1) Except when grown by an established line 32 agricultural research institution, and before cultivation, a seed line 33 breeder shall register with the commissioner of the county in which line 34 the seed breeder intends to engage in industrial hemp cultivation. line 35 (2) The application shall include all of the following: line 36 (A) The name, physical address, and mailing address of the line 37 applicant. line 38 (B) The legal description, Global Positioning System line 39 coordinates, and map of the land area on which the applicant plans line 40 to engage in industrial hemp cultivation, storage, or both.

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line 1 (C) The approved seed cultivar to be grown for seed production, line 2 including the state or county of origin. line 3 (D) If an applicant intends to develop a new California seed line 4 cultivar to be certi®ed by a seed-certifying agency, the applicant line 5 shall include all of the following: line 6 (i) The name of the seed-certifying agency that will be line 7 conducting the certi®cation. line 8 (ii) The industrial hemp varieties that will be used in the line 9 development of the new California seed cultivar. line 10 (iii) A seed development plan specifying how the listed line 11 industrial hemp varieties will be used in the development of the line 12 new seed cultivar, measures that will be taken to prevent the line 13 unlawful use of industrial hemp or seed cultivars under this line 14 division, and a procedure for the maintenance of records line 15 documenting the development of the new seed cultivar. line 16 (3) (A) The application shall be accompanied by a registration line 17 fee, as determined pursuant to Section 81005. line 18 (B) A registration issued pursuant to this section shall be valid line 19 for one year, after which the registrant shall renew its registration line 20 and pay an accompanying renewal fee, as determined pursuant to line 21 Section 81005. line 22 (b) If the commissioner determines that the requirements for line 23 registration pursuant to this division are met and that the applicant line 24 is eligible to participate in the industrial hemp program, the line 25 commissioner shall issue a seed breeder registration to the line 26 applicant. line 27 (c) A registrant that wishes to alter the land area on which the line 28 registrant conducts industrial hemp cultivation, storage, or both, line 29 shall, before altering the area, submit to the commissioner an line 30 updated legal description, Global Positioning System coordinates, line 31 and map specifying the proposed alteration. Once the commissioner line 32 has received the change to the registration, the commissioner shall line 33 notify the registrant that it may cultivate industrial hemp on the line 34 altered land area. line 35 (d) A registrant that wishes to change the seed cultivar grown line 36 shall submit to the commissioner the name of the new, approved line 37 seed cultivar to be grown. Once the commissioner has received line 38 the change to the registration, the commissioner shall notify the line 39 registrant that it may cultivate the new seed cultivar.

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line 1 (e) A registrant developing a new California seed cultivar who line 2 wishes to change any provision of the seed development plan shall line 3 submit to the commissioner the revised seed development plan. line 4 Once the commissioner has received the change to the registration, line 5 the commissioner shall notify the registrant that the registrant may line 6 cultivate under the revised seed development plan. line 7 (f) All records pertaining to the seed development plan shall be line 8 kept and maintained by the seed breeder and be available upon line 9 request by the commissioner, a law enforcement agency, or a seed line 10 certifying agency. line 11 (g) (1) The commissioner shall transmit information collected line 12 under this section to the department. line 13 (2) The following information shall be transmitted by the line 14 commissioner to the department no more than ®ve business days, line 15 and submitted by the department to the United States Department line 16 of Agriculture no more than 30 business days, after the date on line 17 which it is collected, or, in the case of subparagraph (C), the date line 18 of a change in registration status: line 19 (A) Contact information for each seed breeder. line 20 (B) A legal description of the land on which the seed breeder line 21 engages in industrial hemp cultivation. line 22 (C) Registration status of the seed breeder. line 23 (h) The department and the commissioner shall retain line 24 information collected under this section for at least three years line 25 after collecting or receiving it. line 26 SEC. 4. Section 81005 of the Food and Agricultural Code is line 27 amended to read: line 28 81005. (a) The department shall establish a registration fee line 29 and appropriate renewal fee to be paid by growers of industrial line 30 hemp and seed breeders, not including an established agricultural line 31 research institution, to cover the actual costs of implementing, line 32 administering, and enforcing the provisions of this division. line 33 (b) Fees established pursuant to subdivision (a) that are collected line 34 by the commissioners upon registration or renewal pursuant to line 35 Section 81003 or 81004, except for amounts retained pursuant to line 36 this subdivision, shall be forwarded, according to procedures set line 37 by the department, to the department for deposit into the line 38 Department of Food and Agriculture Fund to be used for the line 39 administration and enforcement of this division. A commissioner line 40 or the county, as appropriate, may retain the amount of a fee

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line 1 necessary to reimburse direct costs incurred by the commissioner line 2 in the collection of the fee. line 3 (c) The board of supervisors of a county may establish a line 4 reasonable fee, in an amount necessary to cover the actual costs line 5 of the commissioner and the county of implementing, line 6 administering, and enforcing the provisions of this division, except line 7 for costs that are otherwise reimbursed pursuant to subdivision line 8 (b), to be charged and collected by the commissioner upon line 9 registrations or renewals required pursuant to Section 81003 or line 10 81004 and retained by the commissioner or the county, as line 11 appropriate. line 12 SEC. 5. Section 81006 of the Food and Agricultural Code is line 13 amended to read: line 14 81006. Industrial Hemp Growth Limitations; Prohibitions; line 15 Imports; Laboratory Testing. line 16 (a) (1) Except when grown by an established agricultural line 17 research institution or a seed breeder, industrial hemp shall be line 18 grown in acreages of not less than one-tenth of an acre at the same line 19 time. line 20 (2) Seed breeders, for purposes of seed production, shall only line 21 grow industrial hemp in acreages of not less than one-tenth of an line 22 acre at the same time. line 23 (3) Seed breeders, for purposes of developing a new California line 24 seed cultivar, shall grow industrial hemp in dedicated acreage of line 25 not less than one-tenth of an acre and in accordance with the seed line 26 development plan. The entire area of the dedicated acreage is not line 27 required to be used for the cultivation of the particular seed cultivar. line 28 (b) Clandestine cultivation of industrial hemp is prohibited. All line 29 plots shall have adequate signage indicating they are industrial line 30 hemp. line 31 (c) Industrial hemp shall include products imported under the line 32 Harmonized Tariff Schedule of the United States (2013) of the line 33 United States International Trade Commission, including, but not line 34 limited to, hemp seed, per subheading 1207.99.03, hemp oil, per line 35 subheading 1515.90.80, oilcake, per subheading 2306.90.01, true line 36 hemp, per heading 5302, true hemp yarn, per subheading line 37 5308.20.00, and woven fabrics of true hemp ®bers, per subheading line 38 5311.00.40. line 39 (d) (1) Except when industrial hemp is grown by an established line 40 agricultural research institution, a registrant that grows industrial

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line 1 hemp under this section shall, before the harvest of each crop and line 2 as provided below, obtain a laboratory test report indicating the line 3 THC levels of a random sampling of the dried ¯owering tops of line 4 the industrial hemp grown. line 5 (2) Sampling shall occur no more than 30 days before harvest. line 6 (3) The sample collected for THC testing shall be taken with line 7 the grower or seed breeder present. The department shall establish, line 8 by regulation, the sampling procedures, including all of the line 9 following: line 10 (A) The number of plants to be sampled per ®eld, and any line 11 composting of samples. line 12 (B) The portions of the plant to be sampled. line 13 (C) The plant parts to be included in a sample. line 14 (D) Additional procedures as necessary to ensure accuracy and line 15 the sanitation of samples and ®elds. line 16 (4) The sample collected for THC testing shall be accompanied line 17 by the following documentation: line 18 (A) The registrant's proof of registration. line 19 (B) Seed certi®cation documentation for the seed cultivar used. line 20 (C) The THC testing report for each certi®ed seed cultivar used. line 21 (5) The laboratory test report shall be issued by a laboratory line 22 approved by the department, using a department-approved testing line 23 method. The testing method shall use postdecarboxylation or line 24 similarly reliable methods for determining THC concentration line 25 levels. The laboratory test report shall indicate the percentage line 26 concentration of THC on a dry-weight basis, indicate the date and line 27 location of samples taken, and state the Global Positioning System line 28 coordinates and total acreage of the crop. If the laboratory test line 29 report indicates a percentage concentration of THC that is equal line 30 to or less than 0.3 percent, the words ªPASSED AS CALIFORNIA line 31 INDUSTRIAL HEMPº shall appear at or near the top of the line 32 laboratory test report. If the laboratory test report indicates a line 33 percentage concentration of THC that is greater than 0.3 percent, line 34 the words ªFAILED AS CALIFORNIA INDUSTRIAL HEMPº line 35 shall appear at or near the top of the laboratory test report. line 36 (6) If the laboratory test report indicates a percentage line 37 concentration of THC that is equal to or less than 0.3 percent, the line 38 laboratory shall provide the person who requested the testing not line 39 less than 10 original copies signed by an employee authorized by line 40 the laboratory and shall retain one or more original copies of the

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line 1 laboratory test report for a minimum of two years from its date of line 2 sampling. line 3 (7) If the laboratory test report indicates a percentage line 4 concentration of THC that is greater than 0.3 percent and does not line 5 exceed 1 percent, the registrant that grows industrial hemp shall line 6 submit additional samples for testing of the industrial hemp grown. line 7 (8) A registrant that grows industrial hemp shall destroy the line 8 industrial hemp grown upon receipt of a ®rst laboratory test report line 9 indicating a percentage concentration of THC that exceeds 1 line 10 percent or a second laboratory test report pursuant to paragraph line 11 (7) indicating a percentage concentration of THC that exceeds 0.3 line 12 percent but is less than 1 percent. If the percentage concentration line 13 of THC exceeds 1 percent, the destruction shall begin within 48 line 14 hours, and be completed within 7 seven days, after receipt of the line 15 laboratory test report. If the percentage concentration of THC in line 16 the second laboratory test report exceeds 0.3 percent but is less line 17 than 1 percent, the destruction shall take place as soon as line 18 practicable, but no later than 45 days after receipt of the second line 19 test report. line 20 (9) A registrant that intends to grow industrial hemp and who line 21 complies with this section shall not be prosecuted for the cultivation line 22 or possession of marijuana as a result of a laboratory test report line 23 that indicates a percentage concentration of THC that is greater line 24 than 0.3 percent but does not exceed 1 percent. line 25 (10) Established agricultural research institutions shall be line 26 permitted to cultivate or possess industrial hemp with a laboratory line 27 test report that indicates a percentage concentration of THC that line 28 is greater than 0.3 percent if that cultivation or possession line 29 contributes to the development of types of industrial hemp that line 30 will comply with the 0.3 percent THC limit established in this line 31 division. line 32 (11) Except for an established agricultural research institution, line 33 a registrant that grows industrial hemp shall retain an original line 34 signed copy of the laboratory test report for two years from its date line 35 of sampling, make an original signed copy of the laboratory test line 36 report available to the department, the commissioner, or law line 37 enforcement of®cials or their designees upon request, and shall line 38 provide an original copy of the laboratory test report to each person line 39 purchasing, transporting, or otherwise obtaining from the registrant

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line 1 that grows industrial hemp the ®ber, oil, cake, or seed, or any line 2 component of the seed, of the plant. line 3 (e) If, in the Attorney General's opinion issued pursuant to line 4 Section 8 of Chapter 398 of the Statutes of 2013, it is determined line 5 that the provisions of this section are not suf®cient to comply with line 6 federal law, the department, in consultation with the board, shall line 7 establish procedures for this section that meet the requirements of line 8 federal law. line 9 SEC. 6. Section 81012 is added to the Food and Agricultural line 10 Code, to read: line 11 81012. (a) A grower of industrial hemp or seed breeder that line 12 the secretary determines has violated a provision of this division line 13 listed in the approved state plan or an additional requirement listed line 14 pursuant to subdivision (b) of Section 81015, including, but not line 15 limited to, by failing to provide a legal description of the land on line 16 which industrial hemp is grown, failing to register as required, or line 17 exceeding the 0.3 percent THC limit established in this division, line 18 shall be subject to the following consequences: line 19 (1) For a negligent violation, as determined by the secretary, line 20 the sole consequences under state law, which shall occupy the ®eld line 21 to the exclusion of all consequences that may otherwise be imposed line 22 by local ordinance or regulation, shall be as follows: line 23 (A) If the violation is not a repeat violation subject to paragraph line 24 (2), the grower of industrial hemp or seed breeder shall comply line 25 with a corrective action plan, to be established by the secretary, line 26 that includes both of the following: line 27 (i) A reasonable date by which the grower of industrial hemp line 28 or seed breeder shall correct the negligent violation. line 29 (ii) A requirement that the grower of industrial hemp or seed line 30 breeder shall periodically report to the secretary, for a period of line 31 at least the next two calendar years, on the compliance of the line 32 grower of industrial hemp or seed breeder with this division or the line 33 approved state plan. line 34 (B) If a grower of industrial hemp or seed breeder commits a line 35 negligent violation three times in a ®ve-year period, the grower line 36 of industrial hemp or seed breeder shall be ineligible to participate line 37 in the industrial hemp program for a period of ®ve years beginning line 38 on the date of the third violation. line 39 (2) For a violation committed with a culpable mental state line 40 greater than negligence, the secretary shall immediately report the

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line 1 grower of industrial hemp or seed breeder to the Attorney General line 2 of the United States and the Attorney General of this state, as line 3 applicable. line 4 (b) This section shall become operative as of the effective date line 5 of an approved state plan. line 6 SEC. 7. Section 81013 is added to the Food and Agricultural line 7 Code, to read: line 8 81013. (a) Except as provided in subdivision (b), any person line 9 convicted of a felony relating to a controlled substance under state line 10 or federal law before, on, or after January 1, 2020, shall be line 11 ineligible, during the 10-year period following the date of the line 12 conviction, to participate in the industrial hemp program. line 13 (b) Subdivision (a) does not apply to a registrant lawfully line 14 growing industrial hemp before December 20, 2018, under a pilot line 15 program authorized by Section 7606 of the federal Agricultural line 16 Act of 2014 (7 U.S.C. Sec. 5940). line 17 SEC. 8. Section 81014 is added to the Food and Agricultural line 18 Code, to read: line 19 81014. A person that materially falsi®es any information line 20 contained in an application under Section 81003 or 81004, or other line 21 application to participate in the industrial hemp program, shall be line 22 ineligible to participate in the industrial hemp program. line 23 SEC. 9. Section 81015 is added to the Food and Agricultural line 24 Code, to read: line 25 81015. (a) On or before January 31, 2020, the secretary, in line 26 consultation with the Governor and the Attorney General, shall line 27 develop and submit to the United States Secretary of Agriculture line 28 a state plan, consistent with this division, pursuant to Section 297B line 29 of the federal Agricultural Marketing Act of 1946 (added by line 30 Section 10113 of the federal Agriculture Improvement Act of 2018 line 31 (Public Law 115-334)), including a certi®cation that the state has line 32 the resources and personnel to carry out the practices and line 33 procedures described in clauses (i) through (iv) (iv), inclusive, of line 34 subparagraph (A) of paragraph (2) of subsection (a) of that section. line 35 (b) In an annex to the state plan, the secretary shall list the line 36 provisions of this division that are included in the state plan, and line 37 any additional requirements in the state plan, that shall be subject line 38 to enforcement pursuant to Section 81012. line 39 SEC. 10. No reimbursement is required by this act pursuant to line 40 Section 6 of Article XIIIB of the California Constitution because

142 13 line 1 a local agency or school district has the authority to levy service line 2 charges, fees, or assessments suf®cient to pay for the program or line 3 level of service mandated by this act or because costs that may be line 4 incurred by a local agency or school district will be incurred line 5 because this act creates a new crime or infraction, eliminates a line 6 crime or infraction, or changes the penalty for a crime or infraction, line 7 within the meaning of Section 17556 of the Government Code, or line 8 changes the de®nition of a crime within the meaning of Section 6 line 9 of Article XIII B of the California Constitution.

O

143 144 To: RCRC Board of Directors

From: Tracy Rhine, Legislative Advocate

Date: June 17, 2019

Re: Update on Senate Bill 182 (Jackson) – Planning and Zoning: Wildfire

Summary This memo provides an update on Senate Bill 182, authored by Senator Hannah-Beth Jackson (D-Santa Barbara), which establishes a structure for development, permitting and land use decisions in Very High Fire Risk Areas (VHFRA).

Background Recent wildfires in California have been increasingly catastrophic, with the most destructive wildfires outpacing the previous year’s statistics. Last year, the Mendocino Complex fire burned 460,000 acres and destroying 1,600 structures, followed by the Camp Fire in Butte County that destroyed over 18,000 structures and killed 85 individuals. The increased loss of life and structural damage has intensified the focus on communities existing in the Wildland-Urban Interface (WUI), roughly defined as the area where human development meets or intermingles with undeveloped wildland. The prudence of continuing to build, or rebuild, homes in the WUI has come to the attention of policy makers in Sacramento - placing local government land use decisions in fire- prone as the centerpiece of these discussion. Experts in the fire community have advocated for rethinking how California plans and constructs housing in the WUI with some experts advocating a prohibition on all building in wildfire-prone areas.

Issue The after-effects of the Camp fire, a wildfire that affected 27,000 residents from the town of Paradise and surrounding communities is an examination of how housing developments are planned in high fire risk areas. For example, during the Camp fire, the one main road allowing for evacuation became clogged by vehicles, hampering escape efforts and causing several fatalities. Many experts believe that wildfire risk in high fire hazard areas can be mitigated by community level planning and fire-resistant construction materials, while others believe there should be a full moratorium on building in certain areas of the state.

Following the enactment of Senate Bill 901 (Dodd, Chapter 626, Statutes of 2018), key legislators and legislative staff continued to discuss wildfire-related policy proposals for the upcoming 2019 session. Because most wildfire-related legislation in 2018 focused

RURAL COUNTY REPRESENTATIVES OF CALIFORNIA 1215 K STREET, SUITE 1650 SACRAMENTO, CA 95814 PHONE: 916-447-4806 FAX: 916-448-3154 WEB: WWW.RCRCNET.ORG

145 on fuel and vegetation management, and the 2018 fire season ended with the devastating Camp Fire in November, recent discussions and proposals are focused on land use planning and housing development in the WUI.

In response to legislative working group discussions in the fall, Senator Jackson’s staff contacted RCRC in an effort to collaborate on a proposal that would address planning and housing construction in fire prone areas while retaining local land use discretion. Initial legislative working group proposals presented included:

 Making local jurisdictions responsible of fire suppression costs in WUI areas;  Allowing civil cost recovery for state costs of firefighting if local protection was inadequate;  Requiring fire hardening of structures to acquire insurance; and,  A complete ban on building in certain high fire risk areas of the state.

RCRC staff worked with Senator Jackson’s office and a small group of stakeholders to craft an alternative proposal – SB 182 - that would preserve maximum local discretion in land use decision making while addressing the concerns surrounding development in the WUI.

Foundationally, SB 182 sets forth a structure of increased fire risk strategies to be used by local governments to plan and permit for housing development in a VHFRA, defined as state, local and locally designated Very High Fire Hazard Severity Zones (VHFHSZ). Specifically, SB 182 provides for the following:

 Local jurisdictions upon the next revision of its housing element or local hazard mitigation plan, on or after January 1, 2020, must update its safety element to include a retrofit strategy for home hardening against wildfire.

 Local jurisdictions upon the next revision of its housing element on or after January 1, 2021, must update its land use element to include various goals, objective and policies related to VHFRA and wildfire risk reduction standards (Standards), as defined.

 Within 12 months of updating the land use element consistent with the requirements above, the local jurisdiction must adopt a VHFRA overlay zone.

 A local government must make findings, based on substantial evidence in the record, that a housing development in a very high fire risk area meets specified Standards in order to: o Approve a discretionary permit, entitlement or ministerial permit for construction of a new residence or structure that increases occupancy; o Enter into a development agreement; and, o Approve a tentative map, or parcel map for a subdivision.

 Sets forth specific Standards required for developments in the VHFRA, determined by development size, including: o All developments must comply with current applicable building, vegetation management and defensible space requirements, have a wildland fire

146 hazard mitigation assessment and wildfire hazard mitigation plan and meet specified National Fire Protection Association standards; o Developments of nine units or more must additionally have a fire protection plan that includes community level wildfire mitigation planning and a mechanism for funding the maintenance of defensible space; and, o Developments of 100 or more housing units must, in addition to all other requirements outlined, be consistent with the Office of Planning and Research (OPR) “Fire Hazard Planning – General Plan Technical Advice Series” and comply with any additional Office of State Fire Marshall (OSFM) risk reduction standards.

 By December 31, 2025, local governments must establish an enforcement program that will document compliance with the Standards established for the respective housing developments through property compliance inspections at least once every three years.

 Requires the OSFM by January 1, 2023 to adopt wildfire risk reduction standards pursuant to this bill, update VHFHSZ fire maps and identify areas of exceptional fire risk.

 Requires Council of Governments’ (COG’s) and the Department of Housing and Community Development (HCD) to take into consideration the amount of VHFRA land within a jurisdiction when developing the methodology to allocate regional housing need.

 Adds reducing development pressure in VHFRA as an objective of the Regional Housing Need Allocation (RHNA) plan through considering allocating a lower portion of housing to a jurisdiction if appropriate due to the risk to life and safety to catastrophic wildfire.

 Requires a lower portion of housing to be allocated to jurisdictions with a greater proportion of VHFRA than the regional average if: (1) it determined that its likely the jurisdiction would need to identify lands in that area as an adequate site to meet its RHNA; (2) Compliance with wildfire risk reduction standards would impair the development of the amount and type of housing set forth in the jurisdiction’s RHNA; and, (3) A suitable alternative site exist outside the jurisdiction but within the COG’s jurisdiction to accommodate the remaining regional housing need.

 Includes placeholder language for Greenhouse Gas Revolving Fund monies for projects that control the spread of wildfire and improves life safety.

The current version of SB 182 is the result of significant pressure from the Legislature to increase threshold requirements for local governments to approve housing developments in the VHFRA. Additional pressure from legislators concerned with the possible exacerbating effects of SB 182 on the state’s housing shortage has resulted in numerous revisions to the RHNA provisions of the bill. Specifically, amendments have been made to weaken the ability of a COG or HCD to reallocate portions of RHNA to areas that pose less risk to life and safety from catastrophic wildfire. Though RCRC staff

147 continues to negotiate the requirements of the bill in an effort to create reasonable public policy that maintains local land use control while also recognizing the need to mitigate risk through appropriate development planning in fire prone areas of the state, it is imperative that SB 182 contain both RHNA relief for affected jurisdictions and funding for the increased planning mandates of the bill. The state must have a holistic policy conversation about the obligations of local governments to zone for increased housing production in areas of the state that pose significant risks to residents, especially those that require access to very-low and low income housing options.

Staff Recommendation RCRC will continue to update the RCRC Board of Directors on the progress of SB 182.

Attachment  Copy of Senate Bill 182 (Jackson)

148 AMENDED IN SENATE MAY 24, 2019 AMENDED IN SENATE APRIL 30, 2019 AMENDED IN SENATE MARCH 28, 2019 SENATE BILL No. 182

Introduced by Senator Jackson

January 29, 2019

An act to repeal Section 815.11 of the Civil Code, to amend Sections 65007, 65302, 65584, 65584.04, and 65584.06 of, and to add Sections 65011, 65012, 65013, 65040.16, 65302.11, 65860.2, 65865.6, 65962.1, and 66474.03 to, the Government Code, to amend Section 13132.7 of the Health and Safety Code, to add Article 10 (commencing with Section 4751) to Chapter 10 of Part 2 of Division 4 of the Public Resources Code, and to amend Section 45 of Chapter 626 of the Statutes of 2018, relating to local government.

legislative counsel’s digest SB 182, as amended, Jackson. Local government: planning and zoning: wild®res. (1) The Planning and Zoning Law requires the legislative body of a city or county to adopt a comprehensive, long-term general plan that includes various elements, including, among others, a housing element and a safety element for the protection of the community from unreasonable risks associated with the effects of various geologic and seismic hazards, ¯ooding, and wildland and urban ®res. Existing law requires the housing element to be revised according to a speci®c schedule. Existing law requires the planning agency to review and, if necessary, revise the safety element upon each revision of the housing element or local hazard mitigation plan, but not less than once every 8

149 2 years to identify new information relating to ¯ood and ®re hazards and climate adaptation and resiliency strategies applicable to the city or county that was not available during the previous revision of the safety element. This bill would require the safety element, upon the next revision of the housing element or the hazard mitigation plan, on or after January 1, 2020, whichever occurs ®rst, to be reviewed and updated as necessary to include a comprehensive retro®t strategy, as speci®ed. The bill would also require the planning agency to review and, if necessary, revise the safety element upon each revision of the housing element or local hazard mitigation plan, but not less than once every 8 years, to identify new information relating to retro®t updates applicable to the city or county that was not available during the previous revision of the safety element. By increasing the duties of local of®cials, this bill would create a state-mandated local program. (2) Existing law requires the general plan to include a land use element that designates the proposed general distribution and general location and extent of the uses of the land for, among other purposes, housing, business, and industry. Existing law additionally requires the general plan to include a housing element and requires each local government to review and revise its housing element, as speci®ed. This bill would require a city or county that contains a wildland-urban interface very high ®re risk area, as de®ned, upon each revision of the housing element on or after January 1, 2021, to amend the land use element of its general plan to contain, among other things, the locations of all wildland-urban interface very high ®re risk areas within the city or county and feasible implementation measures designed to carry out speci®ed objectives goals, objectives, and policies relating to the protection of lives and property from unreasonable risk of wild®re. The bill would require the city or county to complete a review of, and make ®ndings related to, wild®re risk reduction standards, as de®ned, upon each subsequent revision of the housing element, as provided. The bill would require the State Board of Forestry and Fire Protection to review the ®ndings and make recommendations, as provided. The bill would additionally require the Of®ce of the State Fire Marshal, in consultation with the Of®ce of Planning and Research, on or before January 1, 2023, to review the wild®re risk reduction standards and speci®ed wild®re risk reduction standards that meet certain requirements, adopt reasonable standards for third-party inspection and

150 3

certi®cations for a speci®ed enforcement program, and update the maps of the very high ®re hazard severity zones, as speci®ed. Existing law requires county or city zoning ordinances to be consistent with the general plan of the county or city, as speci®ed. This bill would require a city or county that contains a wildland-urban interface very high ®re risk area, within 12 months following the amendment of the city or county's land use element, to adopt a wildland-urban interface very high ®re risk overlay zone or otherwise amend its zoning ordinance so that it is consistent with the general plan, as speci®ed. This bill would additionally prohibit the legislative body of a city or county that contains a wildland-urban interface very high ®re risk area, upon the effective date of the revision of the city or county's land use element, from entering into a development agreement for property that is located within a wildland-urban interface very high ®re risk area, approving speci®ed discretionary permits or other discretionary entitlements for projects located within a wildland-urban interface very high ®re risk area, or approving a tentative map or a parcel map for which a tentative map was not required for a subdivision that is located within a wildland-urban interface very high ®re risk area, unless the city or county makes speci®ed ®ndings, ®ndings based on substantial evidence in the record. By increasing the duties of local of®cials, this bill would impose a state-mandated local program. (3) Existing law requires the Department of Housing and Community Development, in consultation with each council of governments, to determine each region's existing and projected housing need, as provided. Existing law requires each council of governments, or the department for cities and counties without a council of governments, to adopt a ®nal regional housing need plan that allocates a share of the regional housing need to each city, county, or city and county and that furthers speci®ed objectives. This bill would make legislative ®ndings and declarations regarding the need to reconcile the con¯icting goals of reducing the number of the state's residents that face wild®re risk while at the same time addressing decades of low housing construction rates and declares the intent of the Legislature to determine a method of addressing these two goals in the regional housing needs allocation process. This bill would require the regional housing needs allocation plan to additionally further the objective of reducing development pressure

151 4 within very high ®re risk areas by considering allocation of a lower proportion of housing to jurisdictions that contain a greater amount of land within those very high ®re risk areas, as speci®ed. (4) Existing law requires the council of governments, or delegate subregion, as applicable, to develop a proposed methodology for distributing the existing and projected regional housing need and, to the extent that suf®cient data is available as provided, to include speci®ed factors to develop the methodology that allocates regional housing needs, including, among other factors, the rate of overcrowding. This bill would additionally require the council of governments, or delegate subregion, as applicable, to include within those factors, the amount of land in each member jurisdiction that is within a wildland-urban interface very high ®re risk area. For cities and counties without a council of governments, existing law requires the Department of Housing and Community Development to determine and distribute the existing and projected housing need, unless that responsibility is delegated as provided to cities and counties, based upon available data and in consultation with the cities and counties, taking into consideration, among other things, the availability of suitable sites and public facilities. This bill would also require the amount of land in each city and each county that is within a wildland-urban interface very high ®re risk area, as de®ned, to be taken into consideration by the department. By increasing the duties of local of®cials, this bill would impose a state-mandated local program. (5) Existing law requires, for any conservation easement purchased with state funds on or after January 1, 2019, wherein land subject to the easement includes some forest lands, or consists completely of forest lands, to the extent not in con¯ict with federal law, the terms of any applicable bond, or the requirements of any other funding source, that the landowner agree, as part of the easement, to maintain and improve forest health through promotion of a more natural tree density, species composition, structure, and habitat function, to make improvements that increase the land's ability to provide resilient, long-term carbon sequestration and net carbon stores, as well as watershed functions, to provide for the retention of larger trees and a natural range of age classes, and to ensure the growth and retention of such larger trees over time. This bill would revise and recast this provision to instead require, for any conservation easement purchased with state funds on or after

152 5

January 1, 2020, wherein land subject to the easement is comprised of speci®ed forestland, to the extent not in con¯ict with federal law, the terms of any applicable bond, or the requirements of any other funding source, that the terms of the conservation easement address maintaining and improving forest health and resiliency to disturbances in order to conserve and enhance the land's ability to provide long-term carbon sequestration, climate bene®ts, and watershed functions. The bill would also require the conservation easement, and any required management plan, to guide forest and other land management undertaken by the landowner to promote, among other things, native forest ecological structure and species composition, as speci®ed. (6) Existing law requires the Of®ce of Planning and Research to implement various long-range planning and research policies and goals that are intended to, among other things, encourage the formation and proper functioning of local entities and, in connection with those responsibilities, to adopt guidelines for the preparation and content of the mandatory elements required in city and county general plans. This bill would require the Of®ce of Planning and Research, on or before January 1, 2023, in collaboration with cities and counties, to develop and post on its internet website a clearinghouse of local ordinances, policies, and best practices relating to land use planning in wildland-urban interface very high ®re risk areas, wild®re risk reduction, and wild®re preparedness, as speci®ed. (7) Existing law requires, until the 2023±24 ®scal year, the amount of $165,000,000 to be appropriated from the Greenhouse Gas Reduction Fund to the Department of Forestry and Fire Protection for healthy forest and ®re prevention programs and projects that improve forest health and reduce greenhouse gas emissions caused by uncontrolled wild®res. This bill would require an unspeci®ed amount of those funds to be allocated by the Department of Forestry and Fire Protection for grants to cities and counties that contain one or more wildland-urban interface very high ®re risk areas for programs and projects that have the dual bene®t of controlling the spread of wild®re and improving life safety, as speci®ed. The bill would require the department to prioritize local assistance grant funding applications from local agencies based on the proportion of land located in wildland-urban interface very high ®re risk areas or on the recommendation of the State Board of Forestry and Fire Protection for ®re safety improvements.

153 6

(8) Existing law requires a common interest development within a very high ®re severity zone to allow an owner to install or repair a roof with at least one type of ®re retardant roof covering material that meets speci®ed requirements. This bill would require the one type of ®re retardant roof covering material to additionally meet, at a minimum, class B standards, as speci®ed in the International Building Code. (9) The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement. This bill would provide that no reimbursement is required by this act for a speci®ed reason. Vote: majority. Appropriation: no. Fiscal committee: yes.​ State-mandated local program: yes.​

The people of the State of California do enact as follows:

line 1 SECTION 1. Section 815.11 of the Civil Code is repealed. line 2 SEC. 2. Section 65007 of the Government Code is amended line 3 to read: line 4 65007. As used in Sections 65302.9, 65860.1, 65865.5, 65962, line 5 and 66474.5, the following terms have the following meanings, line 6 unless the context requires otherwise: line 7 (a) ªAdequate progressº means all of the following: line 8 (1) The total project scope, schedule, and cost of the completed line 9 ¯ood protection system have been developed to meet the line 10 appropriate standard of protection. line 11 (2) (A) Revenues that are suf®cient to fund each year of the line 12 project schedule developed in paragraph (1) have been identi®ed line 13 and, in any given year and consistent with that schedule, at least line 14 90 percent of the revenues scheduled to be received by that year line 15 have been appropriated and are currently being expended. line 16 (B) Notwithstanding subparagraph (A), for any year in which line 17 state funding is not appropriated consistent with an agreement line 18 between a state agency and a local ¯ood management agency, the line 19 Central Valley Flood Protection Board may ®nd that the local line 20 ¯ood management agency is making adequate progress in working line 21 toward the completion of the ¯ood protection system.

154 7

line 1 (3) Critical features of the ¯ood protection system are under line 2 construction, and each critical feature is progressing as indicated line 3 by the actual expenditure of the construction budget funds. line 4 (4) The city or county has not been responsible for a signi®cant line 5 delay in the completion of the system. line 6 (5) The local ¯ood management agency shall provide the line 7 Department of Water Resources and the Central Valley Flood line 8 Protection Board with the information speci®ed in this subdivision line 9 suf®cient to determine substantial completion of the required ¯ood line 10 protection. The local ¯ood management agency shall annually line 11 report to the Central Valley Flood Protection Board on the efforts line 12 in working toward completion of the ¯ood protection system. line 13 (b) ªCentral Valley Flood Protection Planº has the same line 14 meaning as that set forth in Section 9612 of the Water Code. line 15 (c) ªDeveloped areaº has the same meaning as that set forth in line 16 Section 59.1 of Title 44 of the Code of Federal Regulations. line 17 (d) ªFlood hazard zoneº means an area subject to ¯ooding that line 18 is delineated as either a special hazard area or an area of moderate line 19 hazard on an of®cial ¯ood insurance rate map issued by the Federal line 20 Emergency Management Agency. The identi®cation of ¯ood line 21 hazard zones does not imply that areas outside the ¯ood hazard line 22 zones, or uses permitted within ¯ood hazard zones, will be free line 23 from ¯ooding or ¯ood damage. line 24 (e) ªNational Federal Emergency Management Agency standard line 25 of ¯ood protectionº means the level of ¯ood protection that is line 26 necessary to withstand ¯ooding that has a 1-in-100 chance of line 27 occurring in any given year using criteria developed by the Federal line 28 Emergency Management Agency for application in the National line 29 Flood Insurance Program. line 30 (f) ªNonurbanized areaº means a developed area or an area line 31 outside a developed area in which there are fewer than 10,000 line 32 residents that is not an urbanizing area. line 33 (g) ªProject leveeº means any levee that is part of the facilities line 34 of the State Plan of Flood Control. line 35 (h) ªSacramento-San Joaquin Valleyº means lands in the bed line 36 or along or near the banks of the Sacramento River or San Joaquin line 37 River, or their tributaries or connected therewith, or upon any land line 38 adjacent thereto, or within the over¯ow basins thereof, or upon line 39 land susceptible to over¯ow therefrom. The Sacramento-San

155 8

line 1 Joaquin Valley does not include lands lying within the Tulare Lake line 2 basin, including the Kings River. line 3 (i) ªState Plan of Flood Controlº has the same meaning as that line 4 set forth in subdivision (j) of Section 5096.805 of the Public line 5 Resources Code. line 6 (j) ªTulare Lake basinº means the Tulare Lake Hydrologic line 7 Region as de®ned in the California Water Plan Update 2009, line 8 prepared by the Department of Water Resources pursuant to line 9 Chapter 1 (commencing with Section 10004) of Part 1.5 of Division line 10 6 of the Water Code. line 11 (k) ªUndetermined risk areaº means an urban or urbanizing area line 12 within a moderate ¯ood hazard zone, as delineated on an of®cial line 13 ¯ood insurance rate map issued by the Federal Emergency line 14 Management Agency, which has not been determined to have an line 15 urban level of protection. line 16 (l) ªUrban areaº means a developed area in which there are line 17 10,000 residents or more. line 18 (m) ªUrbanizing areaº means a developed area or an area outside line 19 a developed area that is planned or anticipated to have 10,000 line 20 residents or more within the next 10 years. line 21 (n) ªUrban level of ¯ood protectionº means the level of line 22 protection that is necessary to withstand ¯ooding that has a line 23 1-in-200 chance of occurring in any given year using criteria line 24 consistent with, or developed by, the Department of Water line 25 Resources. ªUrban level of ¯ood protectionº shall not mean line 26 shallow ¯ooding or ¯ooding from local drainage that meets the line 27 criteria of the national Federal Emergency Management Agency line 28 standard of ¯ood protection. line 29 SEC. 3. Section 65011 is added to the Government Code, to line 30 read: line 31 65011. For the purposes of Sections 65302.11, 65860.2, line 32 65865.6, 65962.1, and 66474.03, unless the context requires line 33 otherwise, the following terms have the following meanings: line 34 (a) ªAdequate progressº means the city or county is taking line 35 concrete steps reasonably calculated to achieve funding and line 36 implementation of the applicable standard with the timeframe line 37 speci®ed in subdivision (b) of Section 65012. line 38 (b) ªWildland-urban interfaceº and ªwildland-urban interface line 39 areaº mean both of the following:

156 9

line 1 (1) AnyªVery high ®re risk areaº means any lands located line 2 within a very high ®re hazard severity zone, as de®ned in line 3 subdivision (i) of Section 51177, designated pursuant to line 4 subdivisions (a) and (b) of Section 51179, or as indicated on maps line 5 adopted by the Department of Forestry and Fire Protection pursuant line 6 to Section 4202 of the Public Resources Code. line 7 (2) Any other lands determined by the governing body of the line 8 city or county to be located within an area where structures and line 9 other human development meet or intermingle with undeveloped line 10 wildland or vegetative fuels. line 11 SEC. 4. Section 65012 is added to the Government Code, to line 12 read: line 13 65012. (a) For the purposes of Sections 65302.11, 65860.2, line 14 65865.6, 65962.1, and 66474.03, ªwild®re risk reduction standardº line 15 means the following: line 16 (1) For a development of any size: line 17 (A) The regulations adopted by the State Board of Forestry and line 18 Fire Protection, the State Fire Marshal, and the California Building line 19 Standards Commission regarding defensible space, vegetation line 20 management, fuel modi®cation, and materials and construction line 21 methods for exterior wild®re exposure, including, but not limited line 22 to, all of the following, or the successor provisions: line 23 (i) Chapter 7A of the California Building Code. line 24 (ii) Chapter 49 of the California Fire Code. line 25 (iii) Section R337 of the California Residential Code. line 26 (iv) Chapter 12-7A of the California Referenced Standards line 27 Code. line 28 (v) Subchapter 2 (commencing with Section 1270) of Chapter line 29 7 of Division 1.5 of Title 14 of the California Code of Regulations. line 30 (vi) Article 3 (commencing with Section 1299.01) of Subchapter line 31 3 of Chapter 7 of Division 1.5 of Title 14 of the California Code line 32 of Regulations. line 33 (vii) Section 3.07 of Article 3 of Subchapter 1 of Chapter 1 of line 34 Division 1 of Title 19 of the California Code of Regulations. line 35 (B) Preparation of a wildland ®re hazard assessment and wild®re line 36 hazard mitigation plan approved by the enforcing agency in line 37 accordance with Chapter 4 of the 2018 edition of the NFPA 1144: line 38 Standard for Reducing Structure Ignition Hazards from Wildland line 39 Fire, except Sections 4.2.5.8 and 4.3.3(2) thereof, or with the

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line 1 successor regulations as adopted by the State Fire Marshal pursuant line 2 to Section 65013. line 3 (C) An enforcement program established, funded, and line 4 implemented to verify ongoing compliance of the defensible space, line 5 vegetation management, and fuel modi®cation requirements of line 6 the regulations described in paragraph (1), and with any continuing line 7 obligations imposed under a ®re protection plan or wild®re hazard line 8 mitigation plan established for the project. The enforcing agency line 9 may charge a fee suf®cient to cover the costs of administering the line 10 program and providing any inspections conducted by the enforcing line 11 agency. The program shall ensure that compliance is documented line 12 for each affected property or structure at least once every three line 13 years. Acceptable methods of compliance inspection and line 14 documentation shall be determined by the enforcing agency and line 15 may include any of the following: line 16 (i) The local, state, or federal ®re authority or designee line 17 authorized to enforce vegetation management requirements. line 18 (ii) The enforcing agency. line 19 (iii) Third-party inspection and certi®cation authorized to line 20 enforce vegetation management requirements. line 21 (D) Sections 4.1, 4.1.1, 4.1.2, 4.3.1, 4.3.2, 4.3.4, 4.7.1, 4.7.2, line 22 and 4.7.3 of the 2014 edition of the NFPA 1720: Standard for the line 23 Organization and Deployment of Fire Suppression Operations, line 24 Emergency Medical Operations and Special Operations to the line 25 Public by Volunteer Fire Departments, or with the successor line 26 regulations adopted by the State Fire Marshal pursuant to Section line 27 65013. line 28 (E) Chapters 3 to 7, inclusive, of the 2017 edition of the NFPA line 29 1141: Standard for Fire Protection Infrastructure for Land line 30 Development in Wildland, Rural, and Suburban Areas, or with the line 31 successor regulations adopted by the State Fire Marshal pursuant line 32 to Section 65013. line 33 (F) The 2017 edition of the NFPA 1142: Standard on Water line 34 Supplies for Suburban and Rural Fire Fighting, or with the line 35 successor regulations adopted by the State Fire Marshal pursuant line 36 to Section 65013. line 37 (G) Chapter 6 and Sections 5.1 to 5.1.3.5, inclusive, of the 2018 line 38 edition of the NFPA 1144: Standard for Reducing Structure line 39 Ignition Hazards from Wildland Fire, or with the successor

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line 1 regulations adopted by the State Fire Marshal pursuant to Section line 2 65013. line 3 (2) For a development of nine units or more: line 4 (A) All of the standards set forth in paragraph (1). line 5 (B) A ®re protection plan setting forth reasonable site-speci®c line 6 safety measures to ensure that the development as a whole is line 7 planned and constructed to resist the encroachment of uncontrolled line 8 ®re. The ®re protection plan may be combined with the wild®re line 9 hazard mitigation plan prepared for the development in accordance line 10 with subparagraph (B) of paragraph (1). The plan shall include, line 11 but not be limited to, all of the following: line 12 (i) A development layout that reduces wild®re risk to the greatest line 13 extent practicable, through measures that may include, but are not line 14 limited to, clustering of structures in the lowest risk areas on the line 15 property, while still requiring all structures to be separated by a line 16 safe distance to avoid the spread of ®res from structure to structure, line 17 the use of natural and manmade features as ®re breaks, and the line 18 establishment of community protection ®re breaks on the perimeter line 19 of the property. line 20 (ii) Identi®cation of a low-risk ®re safety area where community line 21 members can evacuate to and wait until emergency service line 22 providers can reach them. line 23 (iii) Implementation of mechanisms, including funding, to line 24 maintain common areas and open spaces within the development line 25 so that ground fuels do not promote the spread of wild®re and line 26 aerial fuels do not allow the spread of a ®re through the tree line 27 canopy. line 28 (C) A condition on the development that all parcels within the line 29 development containing structures are subject to an ongoing, line 30 permanent fee, tax, or assessment, an assessment through a line 31 homeowners' association, or a similar funding mechanism line 32 suf®cient to ensure that defensible space maintenance is funded line 33 and occurs on a schedule so as to comply with subparagraph (C) line 34 of paragraph (3), and other requirements for maintaining defensible line 35 space under law, including, but not limited to, Section 4291 of the line 36 Public Resources Code. line 37 (D) The development shall not be approved unless the city or line 38 county ®nds, based on substantial evidence in the record, that the line 39 development can be reasonably accessed and served in the case line 40 of a wild®re.

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line 1 (3) For any development subject to this subdivision that includes line 2 100 or more residential dwelling units: line 3 (A) All of the standards set forth in paragraphs (1) and (2). line 4 (B) The development shall be consistent with all applicable line 5 recommendations included in the Of®ce of Planning and line6 Research's most recent publication of ªFire Hazard line 7 Planning±General Plan Technical Advice Series,º or other line 8 equivalent standards as adopted by the State Fire Marshal pursuant line 9 to Section 65013, or conditions imposed by the city or county that line 10 provide the same practical effect as the recommendations or other line 11 standards and are at least the equivalent of the recommendations line 12 or other standards in reducing the risk to life and property from line 13 catastrophic wild®re. line 14 (C) Additional wild®re risk reduction standards adopted by the line 15 State Fire Marshal pursuant to Section 65013, or conditions line 16 imposed by the city or county that provide the same practical effect line 17 as the standards and are at least the equivalent of the standards in line 18 reducing the risk to life and property from catastrophic wild®re. line 19 (b) Until December 31, 2025, a development shall be deemed line 20 in compliance with the wild®re risk reduction standards set forth line 21 in subparagraphs (C) to (F), inclusive, of paragraph (1) of line 22 subdivision (a) if the city or county ®nds, based on substantial line 23 evidence in the record, that the responsible state and local agencies line 24 have made adequate progress toward providing protection from line 25 wild®re risk to the level set forth in those standards, or wild®re line 26 protection standards adopted by the city or county that meet or line 27 exceed those standards. line 28 (c) Nothing in this section shall be construed to limit the existing line 29 authority of the State Fire Marshal or any other public agency line 30 under any other law from adopting standards that are more line 31 protective of life and property from the risk of wild®re. line 32 SEC. 5. Section 65013 is added to the Government Code, to line 33 read: line 34 65013. (a) On or before January 1, 2023, the Of®ce of the line 35 State Fire Marshal, in consultation with the Of®ce of Planning and line 36 Research, shall do all of the following: line 37 (1) Review the wild®re risk reduction standards identi®ed in line 38 Section 65012 and adopt wild®re risk reduction standards that line 39 meet all of the following requirements:

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line 1 (A) Account for differences in the size of proposed line 2 developments, consistent with the categories set forth in Section line 3 65012. line 4 (B) Include successor provisions to the NFPA standards set line 5 forth in subparagraphs (B) and (D) to (G), inclusive, of paragraph line 6 (1) of subdivision (a) of Section 65012. The successor provisions line 7 shall meet or exceed the identi®ed NFPA standards. line 8 (C) Include any additional requirements for ®re hardening or line 9 similar building standards applicable to structures located in areas line 10 with restricted access or service in the event of wild®re. line 11 (D) Establish community-scale risk reduction measures, line 12 including, but not limited to, all of the following: line 13 (i) Community design and layout. line 14 (ii) Separation from wild®re sources. line 15 (iii) Location and construction of infrastructure to reduce line 16 ignition potential and ensure availability of water and power line 17 supplies essential for ®re suppression during a wild®re. line 18 (E) Are designed to reduce the risk of catastrophic loss due to line 19 wild®re of any residential structures within a development to an line 20 estimated 1-in-100 chance in any given year. based upon the best line 21 available science and objective scienti®c methodologies. line 22 (F) Are directly applicable to, and account for, California's line 23 climate, weather, topography, and development patterns. line 24 (2) Adopt standards for third-party inspection and certi®cation line 25 conducted pursuant to subparagraph (C) of paragraph (1) of line 26 subdivision (a) of Section 65012. line 27 (3) (A) Update the maps of the very high ®re hazard severity line 28 zones pursuant to Section 51178. line 29 (B) In updating the maps pursuant to subparagraph (A), the line 30 State Fire Marshal shall identify areas within very high ®re hazard line 31 severity zones where new residential development poses line 32 exceptional risk to future occupants of the development and to ®re line 33 personnel and other public safety personnel that must access the line 34 development during a wild®re. line 35 (b) Standards applicable to small developments not subject to line 36 paragraph (2) or (3) of subdivision (a) of Section 65012 shall be line 37 reasonable, feasible, and achievable for a development of that size line 38 in the community in which the development is located. line 39 (b) Standards adopted pursuant to this section, regulations and line 40 rules of general applicability adopted pursuant to Section 65012,

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line 1 and regulations and rules of general applicability adopted by state line 2 or local agencies as necessary to implement those standards, shall line 3 be reasonable, and shall be feasible and achievable for the majority line 4 of developments in each category set forth in subdivision (a) of line 5 Section 65012. line 6 (c) Standards adopted pursuant to this section shall be adopted line 7 pursuant to the Administrative Procedure Act (Chapter 3.5 line 8 (commencing with Section 11340) of Part 1 of Division 3 of Title line 9 2). line 10 (d) Nothing in this section shall be construed to limit the existing line 11 authority of the State Fire Marshal or any other state or local public line 12 agency under any other law from adopting standards that are more line 13 protective of life and property from the risk of wild®re. line 14 SEC. 6. Section 65040.16 is added to the Government Code, line 15 to read: line 16 65040.16. On or before January 1, 2023, the Of®ce of Planning line 17 and Research, in collaboration with cities and counties, shall line 18 develop and post on its internet website a clearinghouse of local line 19 ordinances, policies, and best practices relating to land use planning line 20 in wildland-urban interface areas, very high ®re risk areas, wild®re line 21 risk reduction, and wild®re preparedness. The of®ce shall regularly line 22 update the clearinghouse materials made available pursuant to this line 23 section. line 24 SEC. 7. Section 65302 of the Government Code is amended line 25 to read: line 26 65302. The general plan shall consist of a statement of line 27 development policies and shall include a diagram or diagrams and line 28 text setting forth objectives, principles, standards, and plan line 29 proposals. The plan shall include the following elements: line 30 (a) A land use element that designates the proposed general line 31 distribution and general location and extent of the uses of the land line 32 for housing, business, industry, open space, including agriculture, line 33 natural resources, recreation, and enjoyment of scenic beauty, line 34 education, public buildings and grounds, solid and liquid waste line 35 disposal facilities, greenways, as de®ned in Section 816.52 of the line 36 Civil Code, and other categories of public and private uses of land. line 37 The location and designation of the extent of the uses of the land line 38 for public and private uses shall consider the identi®cation of land line 39 and natural resources pursuant to paragraph (3) of subdivision (d). line 40 The land use element shall include a statement of the standards of

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line 1 population density and building intensity recommended for the line 2 various districts and other territory covered by the plan. The land line 3 use element shall identify and annually review those areas covered line 4 by the plan that are subject to ¯ooding identi®ed by ¯ood plain line 5 mapping prepared by the Federal Emergency Management Agency line 6 (FEMA) or the Department of Water Resources. The land use line 7 element shall also do both of the following: line 8 (1) Designate in a land use category that provides for timber line 9 production those parcels of real property zoned for timberland line 10 production pursuant to the California Timberland Productivity Act line 11 of 1982 (Chapter 6.7 (commencing with Section 51100) of Part 1 line 12 of Division 1 of Title 5). line 13 (2) Consider the impact of new growth on military readiness line 14 activities carried out on military bases, installations, and operating line 15 and training areas, when proposing zoning ordinances or line 16 designating land uses covered by the general plan for land, or other line 17 territory adjacent to military facilities, or underlying designated line 18 military aviation routes and airspace. line 19 (A) In determining the impact of new growth on military line 20 readiness activities, information provided by military facilities line 21 shall be considered. Cities and counties shall address military line 22 impacts based on information from the military and other sources. line 23 (B) The following de®nitions govern this paragraph: line 24 (i) ªMilitary readiness activitiesº mean all of the following: line 25 (I) Training, support, and operations that prepare the men and line 26 women of the military for combat. line 27 (II) Operation, maintenance, and security of any military line 28 installation. line 29 (III) Testing of military equipment, vehicles, weapons, and line 30 sensors for proper operation or suitability for combat use. line 31 (ii) ªMilitary installationº means a base, camp, post, station, line 32 yard, center, homeport facility for any ship, or other activity under line 33 the jurisdiction of the United States Department of Defense as line 34 de®ned in paragraph (1) of subsection (g) of Section 2687 of Title line 35 10 of the United States Code. line 36 (b) (1) A circulation element consisting of the general location line 37 and extent of existing and proposed major thoroughfares, line 38 transportation routes, terminals, any military airports and ports, line 39 and other local public utilities and facilities, all correlated with the line 40 land use element of the plan.

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line 1 (2) (A) Commencing January 1, 2011, upon any substantive line 2 revision of the circulation element, the legislative body shall line 3 modify the circulation element to plan for a balanced, multimodal line 4 transportation network that meets the needs of all users of streets, line 5 roads, and highways for safe and convenient travel in a manner line 6 that is suitable to the rural, suburban, or urban context of the line 7 general plan. line 8 (B) For purposes of this paragraph, ªusers of streets, roads, and line 9 highwaysº mean bicyclists, children, persons with disabilities, line 10 motorists, movers of commercial goods, pedestrians, users of public line 11 transportation, and seniors. line 12 (c) A housing element as provided in Article 10.6 (commencing line 13 with Section 65580). line14 (d) (1) A conservation element for the conservation, line 15 development, and utilization of natural resources including water line 16 and its hydraulic force, forests, soils, rivers and other waters, line 17 harbors, ®sheries, wildlife, minerals, and other natural resources. line 18 The conservation element shall consider the effect of development line 19 within the jurisdiction, as described in the land use element, on line 20 natural resources located on public lands, including military line 21 installations. That portion of the conservation element including line 22 waters shall be developed in coordination with any countywide line 23 water agency and with all district and city agencies, including line 24 ¯ood management, water conservation, or groundwater agencies line 25 that have developed, served, controlled, managed, or conserved line 26 water of any type for any purpose in the county or city for which line 27 the plan is prepared. Coordination shall include the discussion and line 28 evaluation of any water supply and demand information described line 29 in Section 65352.5, if that information has been submitted by the line 30 water agency to the city or county. line 31 (2) The conservation element may also cover all of the line 32 following: line 33 (A) The reclamation of land and waters. line 34 (B) Prevention and control of the pollution of streams and other line 35 waters. line 36 (C) Regulation of the use of land in stream channels and other line 37 areas required for the accomplishment of the conservation plan. line 38 (D) Prevention, control, and correction of the erosion of soils, line 39 beaches, and shores. line 40 (E) Protection of watersheds.

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line 1 (F) The location, quantity, and quality of the rock, sand, and line 2 gravel resources. line 3 (3) Upon the next revision of the housing element on or after line 4 January 1, 2009, the conservation element shall identify rivers, line 5 creeks, streams, ¯ood corridors, riparian habitats, and land that line 6 may accommodate ¯oodwater for purposes of groundwater line 7 recharge and stormwater management. line 8 (e) An open-space element as provided in Article 10.5 line 9 (commencing with Section 65560). line 10 (f) (1) A noise element that shall identify and appraise noise line 11 problems in the community. The noise element shall analyze and line 12 quantify, to the extent practicable, as determined by the legislative line 13 body, current and projected noise levels for all of the following line 14 sources: line 15 (A) Highways and freeways. line 16 (B) Primary arterials and major local streets. line 17 (C) Passenger and freight online railroad operations and ground line 18 rapid transit systems. line 19 (D) Commercial, general aviation, heliport, helistop, and military line 20 airport operations, aircraft over¯ights, jet engine test stands, and line 21 all other ground facilities and maintenance functions related to line 22 airport operation. line 23 (E) Local industrial plants, including, but not limited to, railroad line 24 classi®cation yards. line 25 (F) Other ground stationary noise sources, including, but not line 26 limited to, military installations, identi®ed by local agencies as line 27 contributing to the community noise environment. line 28 (2) Noise contours shall be shown for all of these sources and line 29 stated in terms of community noise equivalent level (CNEL) or line 30 day-night average sound level (Ldn). The noise contours shall be line 31 prepared on the basis of noise monitoring or following generally line 32 accepted noise modeling techniques for the various sources line 33 identi®ed in paragraphs (1) to (6), inclusive. line 34 (3) The noise contours shall be used as a guide for establishing line 35 a pattern of land uses in the land use element that minimizes the line 36 exposure of community residents to excessive noise. line 37 (4) The noise element shall include implementation measures line 38 and possible solutions that address existing and foreseeable noise line 39 problems, if any. The adopted noise element shall serve as a line 40 guideline for compliance with the state's noise insulation standards.

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line 1 (g) (1) A safety element for the protection of the community line 2 from any unreasonable risks associated with the effects of line 3 seismically induced surface rupture, ground shaking, ground line 4 failure, tsunami, seiche, and dam failure; slope instability leading line 5 to mudslides and landslides; subsidence; liquefaction; and other line 6 seismic hazards identi®ed pursuant to Chapter 7.8 (commencing line 7 with Section 2690) of Division 2 of the Public Resources Code, line 8 and other geologic hazards known to the legislative body; ¯ooding; line 9 and wildland and urban ®res. The safety element shall include line 10 mapping of known seismic and other geologic hazards. It shall line 11 also address evacuation routes, military installations, peakload line 12 water supply requirements, and minimum road widths and line 13 clearances around structures, as those items relate to identi®ed ®re line 14 and geologic hazards. line 15 (2) The safety element, upon the next revision of the housing line 16 element on or after January 1, 2009, shall also do the following: line 17 (A) Identify information regarding ¯ood hazards, including, line 18 but not limited to, the following: line 19 (i) Flood hazard zones. As used in this subdivision, ª¯ood line 20 hazard zoneº means an area subject to ¯ooding that is delineated line 21 as either a special hazard area or an area of moderate or minimal line 22 hazard on an of®cial ¯ood insurance rate map issued by FEMA. line 23 The identi®cation of a ¯ood hazard zone does not imply that areas line 24 outside the ¯ood hazard zones or uses permitted within ¯ood line 25 hazard zones will be free from ¯ooding or ¯ood damage. line 26 (ii) National Flood Insurance Program maps published by line 27 FEMA. line 28 (iii) Information about ¯ood hazards that is available from the line 29 United States Army Corps of Engineers. line 30 (iv) Designated ¯oodway maps that are available from the line 31 Central Valley Flood Protection Board. line 32 (v) Dam failure inundation maps prepared pursuant to Section line 33 6161 of the Water Code that are available from the Department of line 34 Water Resources. line 35 (vi) Awareness Floodplain Mapping Program maps and 200-year line 36 ¯ood plain maps that are or may be available from, or accepted line 37 by, the Department of Water Resources. line 38 (vii) Maps of levee protection zones. line 39 (viii) Areas subject to inundation in the event of the failure of line 40 project or nonproject levees or ¯oodwalls.

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line 1 (ix) Historical data on ¯ooding, including locally prepared maps line 2 of areas that are subject to ¯ooding, areas that are vulnerable to line 3 ¯ooding after wild®res, and sites that have been repeatedly line 4 damaged by ¯ooding. line 5 (x) Existing and planned development in ¯ood hazard zones, line 6 including structures, roads, utilities, and essential public facilities. line 7 (xi) Local, state, and federal agencies with responsibility for line 8 ¯ood protection, including special districts and local of®ces of line 9 emergency services. line 10 (B) Establish a set of comprehensive goals, policies, and line 11 objectives based on the information identi®ed pursuant to line 12 subparagraph (A), for the protection of the community from the line 13 unreasonable risks of ¯ooding, including, but not limited to: line 14 (i) Avoiding or minimizing the risks of ¯ooding to new line 15 development. line 16 (ii) Evaluating whether new development should be located in line 17 ¯ood hazard zones, and identifying construction methods or other line 18 methods to minimize damage if new development is located in line 19 ¯ood hazard zones. line 20 (iii) Maintaining the structural and operational integrity of line 21 essential public facilities during ¯ooding. line 22 (iv) Locating, when feasible, new essential public facilities line 23 outside of ¯ood hazard zones, including hospitals and health care line 24 facilities, emergency shelters, ®re stations, emergency command line 25 centers, and emergency communications facilities or identifying line 26 construction methods or other methods to minimize damage if line 27 these facilities are located in ¯ood hazard zones. line 28 (v) Establishing cooperative working relationships among public line 29 agencies with responsibility for ¯ood protection. line 30 (C) Establish a set of feasible implementation measures designed line 31 to carry out the goals, policies, and objectives established pursuant line 32 to subparagraph (B). this subdivision. line 33 (3) Upon the next revision of the housing element on or after line 34 January 1, 2014, the safety element shall be reviewed and updated line 35 as necessary to address the risk of ®re for land classi®ed as state line 36 responsibility areas, as de®ned in Section 4102 of the Public line 37 Resources Code, and land classi®ed as very high ®re hazard line 38 severity zones, as de®ned in Section 51177. This review shall line 39 consider the advice included in the Of®ce of Planning and line 40 Research's most recent publication of ªFire Hazard Planning,

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line 1 General Plan Technical Advice Seriesº and shall also include all line 2 of the following: line 3 (A) Information regarding ®re hazards, including, but not limited line 4 to, all of the following: line 5 (i) Fire hazard severity zone maps available from the Department line 6 of Forestry and Fire Protection. line 7 (ii) Any historical data on wild®res available from local agencies line 8 or a reference to where the data can be found. line 9 (iii) Information about wild®re hazard areas that may be line 10 available from the United States Geological Survey. line 11 (iv) General location and distribution of existing and planned line 12 uses of land in very high ®re hazard severity zones and in state line 13 responsibility areas, including structures, roads, utilities, and line 14 essential public facilities. The location and distribution of planned line 15 uses of land shall not require defensible space compliance measures line 16 required by state law or local ordinance to occur on publicly owned line 17 lands or open space designations of homeowner associations. line 18 (v) Local, state, and federal agencies with responsibility for ®re line 19 protection, including special districts and local of®ces of line 20 emergency services. line 21 (B) A set of goals, policies, and objectives based on the line 22 information identi®ed pursuant to subparagraph (A) for the line 23 protection of the community from the unreasonable risk of wild®re. line 24 (C) A set of feasible implementation measures designed to carry line 25 out the goals, policies, and objectives based on the information line 26 identi®ed pursuant to subparagraph (B) including, but not limited line 27 to, all of the following: line 28 (i) Avoiding or minimizing the wild®re hazards associated with line 29 new uses of land. line 30 (ii) Locating, when feasible, new essential public facilities line 31 outside of high ®re risk areas, including, but not limited to, line 32 hospitals and health care facilities, emergency shelters, emergency line 33 command centers, and emergency communications facilities, or line 34 identifying construction methods or other methods to minimize line 35 damage if these facilities are located in a state responsibility area line 36 or very high ®re hazard severity zone. line 37 (iii) Designing adequate infrastructure if a new development is line 38 located in a state responsibility area or in a very high ®re hazard line 39 severity zone, including safe access for emergency response

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line 1 vehicles, visible street signs, and water supplies for structural ®re line 2 suppression. line 3 (iv) Working cooperatively with public agencies with line 4 responsibility for ®re protection. line 5 (D) If a city or county has adopted a ®re safety plan or document line 6 separate from the general plan, an attachment of, or reference to, line 7 a city or county's adopted ®re safety plan or document that ful®lls line 8 commensurate goals and objectives and contains information line 9 required pursuant to this paragraph. line 10 (4) Upon the next revision of a local hazard mitigation plan, line 11 adopted in accordance with the federal Disaster Mitigation Act of line 12 2000 (Public Law 106-390), on or after January 1, 2017, or, if a line 13 local jurisdiction has not adopted a local hazard mitigation plan, line 14 beginning on or before January 1, 2022, the safety element shall line 15 be reviewed and updated as necessary to address climate adaptation line 16 and resiliency strategies applicable to the city or county. This line 17 review shall consider advice provided in the Of®ce of Planning line 18 and Research's General Plan Guidelines and shall include all of line 19 the following: line 20 (A) (i) A vulnerability assessment that identi®es the risks that line 21 climate change poses to the local jurisdiction and the geographic line 22 areas at risk from climate change impacts, including, but not limited line 23 to, an assessment of how climate change may affect the risks line 24 addressed pursuant to paragraphs (2) and (3). line 25 (ii) Information that may be available from federal, state, line 26 regional, and local agencies that will assist in developing the line 27 vulnerability assessment and the adaptation policies and strategies line 28 required pursuant to subparagraph (B), including, but not limited line 29 to, all of the following: line 30 (I) Information from the internet-based Cal-Adapt tool. line 31 (II) Information from the most recent version of the California line 32 Adaptation Planning Guide. line 33 (III) Information from local agencies on the types of assets, line 34 resources, and populations that will be sensitive to various climate line 35 change exposures. line 36 (IV) Information from local agencies on their current ability to line 37 deal with the impacts of climate change. line 38 (V) Historical data on natural events and hazards, including line 39 locally prepared maps of areas subject to previous risk, areas that line 40 are vulnerable, and sites that have been repeatedly damaged.

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line 1 (VI) Existing and planned development in identi®ed at-risk line 2 areas, including structures, roads, utilities, and essential public line 3 facilities. line 4 (VII) Federal, state, regional, and local agencies with line 5 responsibility for the protection of public health and safety and line 6 the environment, including special districts and local of®ces of line 7 emergency services. line 8 (B) A set of adaptation and resilience goals, policies, and line 9 objectives based on the information speci®ed in subparagraph (A) line 10 for the protection of the community. line 11 (C) A set of feasible implementation measures designed to carry line 12 out the goals, policies, and objectives identi®ed pursuant to line 13 subparagraph (B) including, but not limited to, all of the following: line 14 (i) Feasible methods to avoid or minimize climate change line 15 impacts associated with new uses of land. line 16 (ii) The location, when feasible, of new essential public facilities line 17 outside of at-risk areas, including, but not limited to, hospitals and line 18 health care facilities, emergency shelters, emergency command line 19 centers, and emergency communications facilities, or identifying line 20 construction methods or other methods to minimize damage if line 21 these facilities are located in at-risk areas. line 22 (iii) The designation of adequate and feasible infrastructure line 23 located in an at-risk area. line 24 (iv) Guidelines for working cooperatively with relevant local, line 25 regional, state, and federal agencies. line 26 (v) The identi®cation of natural infrastructure that may be used line 27 in adaptation projects, where feasible. Where feasible, the plan line 28 shall use existing natural features and ecosystem processes, or the line 29 restoration of natural features and ecosystem processes, when line 30 developing alternatives for consideration. For the purposes of this line 31 clause, ªnatural infrastructureº means the preservation or line 32 restoration of ecological systems, or utilization of engineered line 33 systems that use ecological processes, to increase resiliency to line 34 climate change, manage other environmental hazards, or both. line 35 This may include, but is not limited to, ¯ood plain and wetlands line 36 restoration or preservation, combining levees with restored natural line 37 systems to reduce ¯ood risk, and urban tree planting to mitigate line 38 high heat days. line 39 (D) (i) If a city or county has adopted the local hazard line 40 mitigation plan, or other climate adaptation plan or document that

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line 1 ful®lls commensurate goals and objectives and contains the line 2 information required pursuant to this paragraph, separate from the line 3 general plan, an attachment of, or reference to, the local hazard line 4 mitigation plan or other climate adaptation plan or document. line 5 (ii) Cities or counties that have an adopted hazard mitigation line 6 plan, or other climate adaptation plan or document that substantially line 7 complies with this section, or have substantially equivalent line 8 provisions to this subdivision in their general plans, may use that line 9 information in the safety element to comply with this subdivision, line 10 and shall summarize and incorporate by reference into the safety line 11 element the other general plan provisions, climate adaptation plan line 12 or document, speci®cally showing how each requirement of this line 13 subdivision has been met. line 14 (5) Upon the next revision of the housing element or the hazard line 15 mitigation plan, on or after January 1, 2020, whichever occurs line 16 ®rst, the safety element shall be reviewed and updated as necessary line 17 to include a comprehensive retro®t strategy. The comprehensive line 18 retro®t strategy shall include, but is not limited to, all of the line 19 following: line 20 (A) A list of the types of retro®ts needed in an area based on line 21 ®re risk. line 22 (B) A process for identifying and inventorying structures in line 23 need of retro®t or ®re hardening. line 24 (C) Goals and milestones for completing needed retro®t work. line 25 (D) Potential funding sources and ®nancing strategies to pay line 26 for needed retro®ts on public and private property. line 27 (6) After the initial revision of the safety element pursuant to line 28 paragraphs (2), (3), (4), and (5), the planning agency shall review line 29 and, if necessary, revise the safety element upon each revision of line 30 the housing element or local hazard mitigation plan, but not less line 31 than once every eight years, to identify new information relating line 32 to ¯ood and ®re hazards, climate adaptation and resiliency line 33 strategies, and retro®t updates applicable to the city or county that line 34 was not available during the previous revision of the safety line 35 element. line 36 (7) Cities and counties that have ¯ood plain management line 37 ordinances that have been approved by FEMA that substantially line 38 comply with this section, or have substantially equivalent line 39 provisions to this subdivision in their general plans, may use that line 40 information in the safety element to comply with this subdivision,

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line 1 and shall summarize and incorporate by reference into the safety line 2 element the other general plan provisions or the ¯ood plain line 3 ordinance, speci®cally showing how each requirement of this line 4 subdivision has been met. line 5 (8) Prior to the periodic review of its general plan and prior to line 6 preparing or revising its safety element, each city and county shall line 7 consult the California Geological Survey of the Department of line 8 Conservation, the Central Valley Flood Protection Board, if the line 9 city or county is located within the boundaries of the Sacramento line 10 and San Joaquin Drainage District, as set forth in Section 8501 of line 11 the Water Code, and the Of®ce of Emergency Services for the line 12 purpose of including information known by and available to the line 13 department, the agency, and the board required by this subdivision. line 14 (9) To the extent that a county's safety element is suf®ciently line 15 detailed and contains appropriate policies and programs for line 16 adoption by a city, a city may adopt that portion of the county's line 17 safety element that pertains to the city's planning area in line 18 satisfaction of the requirement imposed by this subdivision. line 19 (h) (1) An environmental justice element, or related goals, line 20 policies, and objectives integrated in other elements, that identi®es line 21 disadvantaged communities within the area covered by the general line 22 plan of the city, county, or city and county, if the city, county, or line 23 city and county has a disadvantaged community. The line 24 environmental justice element, or related environmental justice line 25 goals, policies, and objectives integrated in other elements, shall line 26 do all of the following: line 27 (A) Identify objectives and policies to reduce the unique or line 28 compounded health risks in disadvantaged communities by means line 29 that include, but are not limited to, the reduction of pollution line 30 exposure, including the improvement of air quality, and the line 31 promotion of public facilities, food access, safe and sanitary homes, line 32 and physical activity. line 33 (B) Identify objectives and policies to promote civil engagement line 34 in the public decisionmaking process. line 35 (C) Identify objectives and policies that prioritize improvements line 36 and programs that address the needs of disadvantaged communities. line 37 (2) A city, county, or city and county subject to this subdivision line 38 shall adopt or review the environmental justice element, or the line 39 environmental justice goals, policies, and objectives in other

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line 1 elements, upon the adoption or next revision of two or more line 2 elements concurrently on or after January 1, 2018. line 3 (3) By adding this subdivision, the Legislature does not intend line 4 to require a city, county, or city and county to take any action line 5 prohibited by the United States Constitution or the California line 6 Constitution. line 7 (4) For purposes of this subdivision, the following terms shall line 8 apply: line 9 (A) ªDisadvantaged communitiesº means an area identi®ed by line 10 the California Environmental Protection Agency pursuant to line 11 Section 39711 of the Health and Safety Code or an area that is a line 12 low-income area that is disproportionately affected by line 13 environmental pollution and other hazards that can lead to negative line 14 health effects, exposure, or environmental degradation. line 15 (B) ªPublic facilitiesº includes public improvements, public line 16 services, and community amenities, as de®ned in subdivision (d) line 17 of Section 66000. line 18 (C) ªLow-income areaº means an area with household incomes line 19 at or below 80 percent of the statewide median income or with line 20 household incomes at or below the threshold designated as low line 21 income by the Department of Housing and Community line 22 Development's list of state income limits adopted pursuant to line 23 Section 50093 of the Health and Safety Code. line 24 SEC. 8. Section 65302.11 is added to the Government Code, line 25 to read: line 26 65302.11. (a) Upon each revision of the housing element on line 27 or after January 1, 2021, each city or county that contains a line 28 wildland-urban interface very high ®re risk area shall amend the line 29 land use element of its general plan to contain all of the following line 30 with respect to lands located within a wildland-urban interface line 31 very high ®re risk area: line 32 (1) (A) The goals contained in the most recent Strategic Fire line 33 Plan for California prepared by the Department of Forestry and line 34 Fire Protection. line 35 (B) The locations of all wildland-urban interface very high ®re line 36 risk areas within the city or county. line 37 (C) The data and analysis described in the Of®ce of Planning line 38 and Research's most recent publication of ªFire Hazard line 39 Planning±General Plan Technical Advice Series.º

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line 1 (D) The goals of any local hazard mitigation plan, community line 2 wild®re protection plan, and climate adaptation plan that has been line 3 adopted by the governing body of the city or county. line 4 (2) Objectives and policies, based on the goals, data, and line 5 analysis identi®ed pursuant to paragraph (1), for the protection of line 6 lives and property from unreasonable risk of wild®re. These line 7 objectives and policies shall take into consideration, and be line 8 consistent with, the information, goals, policies, objectives, and line 9 implementation measures included in the safety element in line 10 accordance with paragraph (3) of subdivision (g) of Section 65302. line 11 (3) Feasible implementation measures designed to carry out the line 12 objectives goals, objectives, and policies established pursuant to line 13 paragraph (2). this subdivision. line 14 (b) (1) After the initial amendment of the land use element line 15 pursuant to subdivision (a), the governing body of the city or line 16 county shall review all of the following upon each subsequent line 17 revision of the housing element, but not less than once every eight line 18 years: line 19 (A) The implementation of the wild®re risk reduction standards, line 20 as de®ned in Section 65012, within the jurisdiction. The governing line 21 body shall make written ®ndings, based upon substantial evidence, line 22 regarding whether the city or county has implemented the wild®re line 23 risk reduction standards during the preceding planning period. line 24 period, or made adequate progress toward implementing the line 25 wild®re risk reduction standards as provided in subdivision (b) of line 26 Section 65012. line 27 (B) The designation of lands within the jurisdiction as line 28 wildland-urban interface very high ®re risk areas pursuant to line 29 subdivision (b) of Section 65011. The governing body shall make line 30 written ®ndings, based upon substantial evidence, supporting the line 31 determinations made in accordance with that subdivision. line 32 (2) The draft ®ndings required under this subdivision shall be line 33 submitted to the State Board of Forestry and Fire Protection and line 34 to every local agency that provides ®re protection to territory in line 35 the city or county at least 90 days prior to adoption by the line 36 governing body. line 37 (A) The State Board of Forestry and Fire Protection shall, and line 38 a local agency may, review the draft ®ndings and recommend line 39 changes to the city or county within 60 days of its receipt regarding line 40 both of the following:

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line 1 (i) Whether the city or county has implemented the wild®re risk line 2 reduction standards during the preceding planning period, or made line 3 adequate progress toward implementing the wild®re risk reduction line 4 standards as provided in subdivision (b) of Section 65012. line 5 (ii) Whether the designation of lands within the jurisdiction as line 6 wildland-urban interface very high ®re risk areas is appropriate. line 7 (B) (i) Prior to the adoption of its draft ®ndings, the governing line 8 body shall consider the recommendations, if any, made by the line 9 State Board of Forestry and Fire Protection and any local agency line 10 that provides ®re protection to territory in the city or county. If line 11 the governing body determines not to accept all or some of the line 12 recommendations, if any, made by the State Board of Forestry and line 13 Fire Protection or the local agency, the governing body shall line 14 communicate in writing to the State Board of Forestry and Fire line 15 Protection or the local agency, its reasons for not accepting the line 16 recommendations. line 17 (ii) If the governing body proposes not to adopt the State Board line 18 of Forestry and Fire Protection's recommendations concerning its line 19 draft ®ndings, the State Board of Forestry and Fire Protection, line 20 within 15 days of receipt of the governing body's written response, line 21 may request in writing a consultation with the governing body to line 22 discuss the State Board of Forestry and Fire Protection's line 23 recommendations and the governing body's response. The line 24 consultation may be conducted in person, electronically, or line 25 telephonically. If the State Board of Forestry and Fire Protection line 26 requests a consultation pursuant to this subparagraph, the governing line 27 body shall not approve the draft element or draft amendment until line 28 after consulting with the State Board of Forestry and Fire line 29 Protection. The consultation shall occur no later than 30 days after line 30 the State Board of Forestry and Fire Protection's request. line 31 (C) The State Board of Forestry and Fire Protection shall notify line 32 the city or county and may notify the Of®ce of the Attorney line 33 General that the city or county is in violation of state law if the line 34 State Board of Forestry and Fire Protection ®nds that the written line 35 ®ndings do not substantially comply with this section, or that the line 36 city or county has otherwise failed to substantially comply with line 37 this section or with Section 65860.2, 65865.6, 65962.1, or line 38 66474.03. 65860.2. line 39 (3) Any interested person may bring an action to compel line 40 compliance with the requirements of this subdivision. The action

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line 1 shall be brought pursuant to Section 1085 of the Code of Civil line 2 Procedure. line 3 SEC. 9. Section 65584 of the Government Code is amended line 4 to read: line 5 65584. (a) (1) For the fourth and subsequent revisions of the line 6 housing element pursuant to Section 65588, the department shall line 7 determine the existing and projected need for housing for each line 8 region pursuant to this article. For purposes of subdivision (a) of line 9 Section 65583, the share of a city or county of the regional housing line 10 need shall include that share of the housing need of persons at all line 11 income levels within the area signi®cantly affected by the general line 12 plan of the city or county. line 13 (2) It is the intent of the Legislature that cities, counties, and line 14 cities and counties should undertake all necessary actions to line 15 encourage, promote, and facilitate the development of housing to line 16 accommodate the entire regional housing need, and reasonable line 17 actions should be taken by local and regional governments to line 18 ensure that future housing production meets, at a minimum, the line 19 regional housing need established for planning purposes. These line 20 actions shall include applicable reforms and incentives in Section line 21 65582.1. line 22 (3) The Legislature ®nds and declares that insuf®cient housing line 23 in job centers hinders the state's environmental quality and runs line 24 counter to the state's environmental goals. In particular, when line 25 Californians seeking affordable housing are forced to drive longer line 26 distances to work, an increased amount of greenhouse gases and line 27 other pollutants is released and puts in jeopardy the achievement line 28 of the state's climate goals, as established pursuant to Section line 29 38566 of the Health and Safety Code, and clean air goals. line 30 (b) The department, in consultation with each council of line 31 governments, shall determine each region's existing and projected line 32 housing need pursuant to Section 65584.01 at least two years prior line 33 to the scheduled revision required pursuant to Section 65588. The line 34 appropriate council of governments, or for cities and counties line 35 without a council of governments, the department, shall adopt a line 36 ®nal regional housing need plan that allocates a share of the line 37 regional housing need to each city, county, or city and county at line 38 least one year prior to the scheduled revision for the region required line 39 by Section 65588. The allocation plan prepared by a council of

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line 1 governments shall be prepared pursuant to Sections 65584.04 and line 2 65584.05. line 3 (c) Notwithstanding any other provision of law, the due dates line 4 for the determinations of the department or for the council of line 5 governments, respectively, regarding the regional housing need line 6 may be extended by the department by not more than 60 days if line 7 the extension will enable access to more recent critical population line 8 or housing data from a pending or recent release of the United line 9 States Census Bureau or the Department of Finance. If the due line 10 date for the determination of the department or the council of line 11 governments is extended for this reason, the department shall line 12 extend the corresponding housing element revision deadline line 13 pursuant to Section 65588 by not more than 60 days. line 14 (d) The regional housing needs allocation plan shall further all line 15 of the following objectives: line 16 (1) Increasing the housing supply and the mix of housing types, line 17 tenure, and affordability in all cities and counties within the region line 18 in an equitable manner, which shall result in each jurisdiction line 19 receiving an allocation of units for low- and very low income line 20 households. line 21 (2) Promoting in®ll development and socioeconomic equity, line 22 the protection of environmental and agricultural resources, the line 23 encouragement of ef®cient development patterns, and the line 24 achievement of the region's greenhouse gas reductions targets line 25 provided by the State Air Resources Board pursuant to Section line 26 65080. line 27 (3) Promoting an improved intraregional relationship between line 28 jobs and housing, including an improved balance between the line 29 number of low-wage jobs and the number of housing units line 30 affordable to low-wage workers in each jurisdiction. line 31 (4) Allocating a lower proportion of housing need to an income line 32 category when a jurisdiction already has a disproportionately high line 33 share of households in that income category, as compared to the line 34 countywide distribution of households in that category from the line 35 most recent American Community Survey. line 36 (5) Af®rmatively furthering fair housing. line 37 (e) The Legislature ®nds and declares the need to reconcile the line 38 con¯icting goals of reducing the number of the state's residents line 39 that face wild®re risk while at the same time addressing decades line 40 of low housing construction rates and declares the intent of the

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line 1 Legislature to determine a method of addressing these two goals line 2 in the regional housing needs allocation process. line 3 (6) Reducing development pressure within very high ®re risk line 4 areas by considering allocation of a lower proportion of housing line 5 to those jurisdictions that contain a greater amount of land within line 6 very high ®re risk areas through one of the following: line 7 (A) The appropriate council of governments, or for cities and line 8 counties without a council of governments, the department, may line 9 allocate a lower proportion of housing to a jurisdiction if line 10 appropriate due to the risk to life and safety from catastrophic line 11 wild®re. line 12 (B) A lower proportion of housing shall be allocated to a line 13 jurisdiction if the appropriate council of governments, or for cities line 14 and counties without a council of governments, the department, line 15 determines all of the following: line 16 (i) The jurisdiction is composed of a greater proportion of very line 17 high ®re risk areas than the regional average. line 18 (ii) It is likely the jurisdiction would otherwise need to identify line 19 lands within the very high ®re risk area as adequate sites pursuant line 20 to Section 65583 in order to meet its housing need allocation. line 21 (iii) Compliance with the wild®re risk reduction standards set line 22 forth in Section 65012 and the regulations of the State Fire line 23 Marshal adopted pursuant to Section 65013 would otherwise line 24 impair development of the amount and type of housing set forth line 25 in the jurisdiction's housing need allocation. line 26 (iv) Suitable alternative sites exist outside the jurisdiction, but line 27 within the council of governments' jurisdiction, to accommodate line 28 the remaining regional housing need. line 29 (f) line 30 (e) For purposes of this section, ªaf®rmatively furthering fair line 31 housingº means taking meaningful actions, in addition to line 32 combating discrimination, that overcome patterns of segregation line 33 and foster inclusive communities free from barriers that restrict line 34 access to opportunity based on protected characteristics. line 35 Speci®cally, af®rmatively furthering fair housing means taking line 36 meaningful actions that, taken together, address signi®cant line 37 disparities in housing needs and in access to opportunity, replacing line 38 segregated living patterns with truly integrated and balanced living line 39 patterns, transforming racially and ethnically concentrated areas

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line 1 of poverty into areas of opportunity, and fostering and maintaining line 2 compliance with civil rights and fair housing laws. line 3 (g) line 4 (f) For purposes of this section, ªhousehold income levelsº are line 5 as determined by the department as of the most recent American line 6 Community Survey pursuant to the following code sections: line 7 (1) Very low incomes incomes, as de®ned by Section 50105 of line 8 the Health and Safety Code. line 9 (2) Lower incomes, as de®ned by Section 50079.5 of the Health line 10 and Safety Code. line 11 (3) Moderate incomes, as de®ned by Section 50093 of the Health line 12 and Safety Code. line 13 (4) Above moderate incomes are those exceeding the line 14 moderate-income level of Section 50093 of the Health and Safety line 15 Code. line 16 (h) line 17 (g) Notwithstanding any other provision of law, determinations line 18 made by the department, a council of governments, or a city or line 19 county pursuant to this section or Section 65584.01, 65584.02, line 20 65584.03, 65584.04, 65584.05, 65584.06, 65584.07, or 65584.08 line 21 are exempt from the California Environmental Quality Act line 22 (Division 13 (commencing with Section 21000) of the Public line 23 Resources Code). line 24 SEC. 10. Section 65584.04 of the Government Code is amended line 25 to read: line 26 65584.04. (a) At least two years prior to a scheduled revision line 27 required by Section 65588, each council of governments, or line 28 delegate subregion as applicable, shall develop, in consultation line 29 with the department, a proposed methodology for distributing the line 30 existing and projected regional housing need to cities, counties, line 31 and cities and counties within the region or within the subregion, line 32 where applicable pursuant to this section. The methodology shall line 33 further the objectives listed in subdivision (d) of Section 65584. line 34 (b) (1) No more than six months prior to the development of a line 35 proposed methodology for distributing the existing and projected line 36 housing need, each council of governments shall survey each of line 37 its member jurisdictions to request, at a minimum, information line 38 regarding the factors listed in subdivision (e) that will allow the line 39 development of a methodology based upon the factors established line 40 in subdivision (e).

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line 1 (2) With respect to the objective in paragraph (5) of subdivision line 2 (d) of Section 65584, the survey shall review and compile line 3 information that will allow the development of a methodology line 4 based upon the issues, strategies, and actions that are included, as line 5 available, in an Analysis of Impediments to Fair Housing Choice line 6 or an Assessment of Fair Housing completed by any city or county line 7 or the department that covers communities within the area served line 8 by the council of governments, and in housing elements adopted line 9 pursuant to this article by cities and counties within the area served line 10 by the council of governments. line 11 (3) The council of governments shall seek to obtain the line 12 information in a manner and format that is comparable throughout line 13 the region and utilize readily available data to the extent possible. line 14 (4) The information provided by a local government pursuant line 15 to this section shall be used, to the extent possible, by the council line 16 of governments, or delegate subregion as applicable, as source line 17 information for the methodology developed pursuant to this section. line 18 The survey shall state that none of the information received may line 19 be used as a basis for reducing the total housing need established line 20 for the region pursuant to Section 65584.01. line 21 (5) If the council of governments fails to conduct a survey line 22 pursuant to this subdivision, a city, county, or city and county may line 23 submit information related to the items listed in subdivision (e) line 24 prior to the public comment period provided for in subdivision line 25 (d). line 26 (c) The council of governments shall electronically report the line 27 results of the survey of fair housing issues, strategies, and actions line 28 compiled pursuant to paragraph (2) of subdivision (b). The report line 29 shall describe common themes and effective strategies employed line 30 by cities and counties within the area served by the council of line 31 governments, including common themes and effective strategies line 32 around avoiding the displacement of lower-income households. line 33 The council of governments shall also identify signi®cant barriers line 34 to af®rmatively furthering fair housing at the regional level and line 35 may recommend strategies or actions to overcome those barriers. line 36 A council of governments or metropolitan planning organization, line 37 as appropriate, may use this information for any other purpose, line 38 including publication within a regional transportation plan adopted line 39 pursuant to Section 65080 or to inform the land use assumptions

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line 1 that are applied in the development of a regional transportation line 2 plan. line 3 (d) Public participation and access shall be required in the line 4 development of the methodology and in the process of drafting line 5 and adoption of the allocation of the regional housing needs. line 6 Participation by organizations other than local jurisdictions and line 7 councils of governments shall be solicited in a diligent effort to line 8 achieve public participation of all economic segments of the line 9 community as well as members of protected classes under Section line 10 12955. The proposed methodology, along with any relevant line 11 underlying data and assumptions, an explanation of how line 12 information about local government conditions gathered pursuant line 13 to subdivision (b) has been used to develop the proposed line 14 methodology, how each of the factors listed in subdivision (e) is line 15 incorporated into the methodology, and how the proposed line 16 methodology furthers the objectives listed in subdivision (e) of line 17 Section 65584, shall be distributed to all cities, counties, any line 18 subregions, and members of the public who have made a written line 19 or electronic request for the proposed methodology and published line 20 on the council of governments', or delegate subregion's, internet line 21 website. The council of governments, or delegate subregion, as line 22 applicable, shall conduct at least one public hearing to receive oral line 23 and written comments on the proposed methodology. line 24 (e) To the extent that suf®cient data is available from local line 25 governments pursuant to subdivision (b) or other sources, each line 26 council of governments, or delegate subregion as applicable, shall line 27 include the following factors to develop the methodology that line 28 allocates regional housing needs: line 29 (1) Each member jurisdiction's existing and projected jobs and line 30 housing relationship. This shall include an estimate based on line 31 readily available data on the number of low-wage jobs within the line 32 jurisdiction and how many housing units within the jurisdiction line 33 are affordable to low-wage workers as well as an estimate based line 34 on readily available data, of projected job growth and projected line 35 household growth by income level within each member jurisdiction line 36 during the planning period. line 37 (2) The opportunities and constraints to development of line 38 additional housing in each member jurisdiction, including all of line 39 the following:

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line 1 (A) Lack of capacity for sewer or water service due to federal line 2 or state laws, regulations or regulatory actions, or supply and line 3 distribution decisions made by a sewer or water service provider line 4 other than the local jurisdiction that preclude the jurisdiction from line 5 providing necessary infrastructure for additional development line 6 during the planning period. line 7 (B) The availability of land suitable for urban development or line 8 for conversion to residential use, the availability of underutilized line 9 land, and opportunities for in®ll development and increased line 10 residential densities. The council of governments may not limit line 11 its consideration of suitable housing sites or land suitable for urban line 12 development to existing zoning ordinances and land use restrictions line 13 of a locality, but shall consider the potential for increased line 14 residential development under alternative zoning ordinances and line 15 land use restrictions. The determination of available land suitable line 16 for urban development may exclude lands where the Federal line 17 Emergency Management Agency (FEMA) or the Department of line 18 Water Resources has determined that the ¯ood management line 19 infrastructure designed to protect that land is not adequate to avoid line 20 the risk of ¯ooding. line 21 (C) Lands preserved or protected from urban development under line 22 existing federal or state programs, or both, designed to protect line 23 open space, farmland, environmental habitats, and natural resources line 24 on a long-term basis, including land zoned or designated for line 25 agricultural protection or preservation that is subject to a local line 26 ballot measure that was approved by the voters of that jurisdiction line 27 that prohibits or restricts conversion to nonagricultural uses. line 28 (D) County policies to preserve prime agricultural land, as line 29 de®ned pursuant to Section 56064, within an unincorporated and line 30 land within an unincorporated area zoned or designated for line 31 agricultural protection or preservation that is subject to a local line 32 ballot measure that was approved by the voters of that jurisdiction line 33 that prohibits or restricts its conversion to nonagricultural uses. line 34 (3) The distribution of household growth assumed for purposes line 35 of a comparable period of regional transportation plans and line 36 opportunities to maximize the use of public transportation and line 37 existing transportation infrastructure. line 38 (4) Agreements between a county and cities in a county to direct line 39 growth toward incorporated areas of the county and land within line 40 an unincorporated area zoned or designated for agricultural

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line 1 protection or preservation that is subject to a local ballot measure line 2 that was approved by the voters of the jurisdiction that prohibits line 3 or restricts conversion to nonagricultural uses. line 4 (5) The loss of units contained in assisted housing developments, line 5 as de®ned in paragraph (9) of subdivision (a) of Section 65583, line 6 that changed to non-low-income use through mortgage prepayment, line 7 subsidy contract expirations, or termination of use restrictions. line 8 (6) The percentage of existing households at each of the income line 9 levels listed in subdivision (e) (f) of Section 65584 that are paying line 10 more than 30 percent and more than 50 percent of their income in line 11 rent. line 12 (7) The rate of overcrowding. line 13 (8) The housing needs of farmworkers. line 14 (9) The housing needs generated by the presence of a private line 15 university or a campus of the California State University or the line 16 University of California within any member jurisdiction. line 17 (10) The loss of units during a state of emergency that was line 18 declared by the Governor pursuant to the California Emergency line 19 Services Act (Chapter 7 (commencing with Section 8550) of line 20 Division 1 of Title 2), during the planning period immediately line 21 preceding the relevant revision pursuant to Section 65588 that line 22 have yet to be rebuilt or replaced at the time of the analysis. line 23 (11) The region's greenhouse gas emissions targets provided line 24 by the State Air Resources Board pursuant to Section 65080. line 25 (12) The amount of land in each member jurisdiction that is line 26 within a wildland-urban interface very high ®re risk area. line 27 (13) Any other factors adopted by the council of governments, line 28 that further the objectives listed in subdivision (d) of Section line 29 65584, provided that the council of governments speci®es which line 30 of the objectives each additional factor is necessary to further. The line 31 council of governments may include additional factors unrelated line 32 to furthering the objectives listed in subdivision (d) of Section line 33 65584 so long as the additional factors do not undermine the line 34 objectives listed in subdivision (d) of Section 65584 and are applied line 35 equally across all household income levels as described in line 36 subdivision (f) of Section 65584 and the council of governments line 37 makes a ®nding that the factor is necessary to address signi®cant line 38 health and safety conditions. line 39 (f) The council of governments, or delegate subregion, as line 40 applicable, shall explain in writing how each of the factors

183 36

line 1 described in subdivision (e) was incorporated into the methodology line 2 and how the methodology furthers the objectives listed in line 3 subdivision (d) of Section 65584. The methodology may include line 4 numerical weighting. This information and any other supporting line 5 materials used in determining the methodology, shall be posted line 6 on the council of governments', or delegate subregion's, internet line 7 website. line 8 (g) The following criteria shall not be a justi®cation for a line 9 determination or a reduction in a jurisdiction's share of the regional line 10 housing need: line 11 (1) Any ordinance, policy, voter-approved measure, or standard line 12 of a city or county that directly or indirectly limits the number of line 13 residential building permits issued by a city or county. line 14 (2) Prior underproduction of housing in a city or county from line 15 the previous regional housing need allocation, as determined by line 16 each jurisdiction's annual production report submitted pursuant line 17 to subparagraph (H) of paragraph (2) of subdivision (a) of Section line 18 65400. line 19 (3) Stable population numbers in a city or county from the line 20 previous regional housing needs cycle. line 21 (h) Following the conclusion of the public comment period line 22 described in subdivision (d) on the proposed allocation line 23 methodology, and after making any revisions deemed appropriate line 24 by the council of governments, or delegate subregion, as applicable, line 25 as a result of comments received during the public comment period, line 26 and as a result of consultation with the department, each council line 27 of governments, or delegate subregion, as applicable, shall publish line 28 a draft allocation methodology on its internet website and submit line 29 the draft allocation methodology, along with the information line 30 required pursuant to subdivision (e), to the department. line 31 (i) Within 60 days, the department shall review the draft line 32 allocation methodology and report its written ®ndings to the line 33 council of governments, or delegate subregion, as applicable. In line 34 its written ®ndings the department shall determine whether the line 35 methodology furthers the objectives listed in subdivision (d) of line 36 Section 65584. If the department determines that the methodology line 37 is not consistent with subdivision (d) of Section 65584, the council line 38 of governments, or delegate subregion, as applicable, shall take line 39 one of the following actions:

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line 1 (1) Revise the methodology to further the objectives listed in line 2 subdivision (d) of Section 65584 and adopt a ®nal regional, or line 3 subregional, housing need allocation methodology. line 4 (2) Adopt the regional, or subregional, housing need allocation line 5 methodology without revisions and include within its resolution line 6 of adoption ®ndings, supported by substantial evidence, as to why line 7 the council of governments, or delegate subregion, believes that line 8 the methodology furthers the objectives listed in subdivision (d) line 9 of Section 65584 despite the ®ndings of the department. line 10 (j) If the department's ®ndings are not available within the time line 11 limits set by subdivision (i), the council of governments, or delegate line 12 subregion, may act without them. line 13 (k) Upon either action pursuant to subdivision (i), the council line 14 of governments, or delegate subregion, shall provide notice of the line 15 adoption of the methodology to the jurisdictions within the region, line 16 or delegate subregion, as applicable, and to the department, and line 17 shall publish the adopted allocation methodology, along with its line 18 resolution and any adopted written ®ndings, on its internet website. line 19 (l) The department may, within 90 days, review the adopted line 20 methodology and report its ®ndings to the council of governments, line 21 or delegate subregion. line 22 (m) (1) It is the intent of the Legislature that housing planning line 23 be coordinated and integrated with the regional transportation plan. line 24 To achieve this goal, the allocation plan shall allocate housing line 25 units within the region consistent with the development pattern line 26 included in the sustainable communities strategy. line 27 (2) The ®nal allocation plan shall ensure that the total regional line 28 housing need, by income category, as determined under Section line 29 65584, is maintained, and that each jurisdiction in the region line 30 receive an allocation of units for low- and very low income line 31 households. line 32 (3) The resolution approving the ®nal housing need allocation line 33 plan shall demonstrate that the plan is consistent with the line 34 sustainable communities strategy in the regional transportation line 35 plan and furthers the objectives listed in subdivision (d) of Section line 36 65584. line 37 SEC. 11. Section 65584.06 of the Government Code is amended line 38 to read: line 39 65584.06. (a) For cities and counties without a council of line 40 governments, the department shall determine and distribute the

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line 1 existing and projected housing need, in accordance with Section line 2 65584 and this section. If the department determines that a county line 3 or counties, supported by a resolution adopted by the board or line 4 boards of supervisors, and a majority of cities within the county line 5 or counties representing a majority of the population of the county line 6 or counties, possess the capability and resources and has agreed line 7 to accept the responsibility, with respect to its jurisdiction, for the line 8 distribution of the regional housing need, the department shall line 9 delegate this responsibility to the cities and county or counties. line 10 (b) The distribution of regional housing need shall, based upon line 11 available data and in consultation with the cities and counties, take line 12 into consideration market demand for housing, the distribution of line 13 household growth within the county assumed in the regional line 14 transportation plan where applicable, employment opportunities line 15 and commuting patterns, the availability of suitable sites and public line 16 facilities, agreements between a county and cities in a county to line 17 direct growth toward incorporated areas of the county, the amount line 18 of land in each city and each county that is within a wildland-urban line 19 interface very high ®re risk area, or other considerations as may line 20 be requested by the affected cities or counties and agreed to by the line 21 department. As part of the allocation of the regional housing need, line 22 the department shall provide each city and county with data line 23 describing the assumptions and methodology used in calculating line 24 its share of the regional housing need. Consideration of suitable line 25 housing sites or land suitable for urban development is not limited line 26 to existing zoning ordinances and land use restrictions of a locality, line 27 but shall include consideration of the potential for increased line 28 residential development under alternative zoning ordinances and line 29 land use restrictions. The determination of available land suitable line 30 for urban development may exclude lands where the Federal line 31 Emergency Management Agency (FEMA) or the Department of line 32 Water Resources has determined that the ¯ood management line 33 infrastructure designed to protect that land is not adequate to avoid line 34 the risk of ¯ooding. line 35 (c) Within 90 days following the department's determination line 36 of a draft distribution of the regional housing need to the cities and line 37 the county, a city or county may propose to revise the determination line 38 of its share of the regional housing need in accordance with criteria line 39 set forth in the draft distribution. The proposed revised share shall line 40 be based upon comparable data available for all affected

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line 1 jurisdictions, and accepted planning methodology, and shall be line 2 supported by adequate documentation. line 3 (d) (1) Within 60 days after the end of the 90-day time period line 4 for the revision by the cities or county, the department shall accept line 5 the proposed revision, modify its earlier determination, or indicate line 6 why the proposed revision is inconsistent with the regional housing line 7 need. line 8 (2) If the department does not accept the proposed revision, line 9 then, within 30 days, the city or county may request a public line 10 hearing to review the determination. line 11 (3) The city or county shall be noti®ed within 30 days by line 12 certi®ed mail, return receipt requested, of at least one public line 13 hearing regarding the determination. line 14 (4) The date of the hearing shall be at least 10 but not more than line 15 15 days from the date of the noti®cation. line 16 (5) Before making its ®nal determination, the department shall line 17 consider all comments received and shall include a written response line 18 to each request for revision received from a city or county. line 19 (e) If the department accepts the proposed revision or modi®es line 20 its earlier determination, the city or county shall use that share. If line 21 the department grants a revised allocation pursuant to subdivision line 22 (d), the department shall ensure that the total regional housing line 23 need is maintained. The department's ®nal determination shall be line 24 in writing and shall include information explaining how its action line 25 is consistent with this section. If the department indicates that the line 26 proposed revision is inconsistent with the regional housing need, line 27 the city or county shall use the share that was originally determined line 28 by the department. The department, within its ®nal determination, line 29 may adjust the allocation of a city or county that was not the subject line 30 of a request for revision of the draft distribution. line 31 (f) The department shall issue a ®nal regional housing need line 32 allocation for all cities and counties within 45 days of the line 33 completion of the local review period. line 34 (g) Statutory changes enacted after the date the department line 35 issued a ®nal determination pursuant to this section shall not be a line 36 basis for a revision of the ®nal determination. line 37 SEC. 12. Section 65860.2 is added to the Government Code, line 38 to read: line 39 65860.2. (a) Not more than 12 months following the line 40 amendment of the land use element of a city's or county's general

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line 1 plan pursuant to Section 65302.11, each city or county that contains line 2 a wildland-urban interface very high ®re risk area, as de®ned in line 3 Section 65011, shall adopt a wildland-urban interface very high line 4 ®re risk overlay zone or otherwise amend its zoning ordinance so line 5 that it is consistent with the general plan, as amended. line 6 (b) Notwithstanding any other law, the minimum requirements line 7 set forth in this section shall apply to all cities, including charter line 8 cities, and counties that contain a wildland-urban interface very line 9 high ®re risk area. The Legislature ®nds and declares that line 10 establishment of minimum requirements for wild®re protection in line 11 wildland-urban interface very high ®re risk areas is a matter of line 12 statewide concern and not a municipal affair as that term is used line 13 in Section 5 of Article XI of the California Constitution. Except line 14 as expressly stated, it is not the intent of the Legislature to limit line 15 the ordinances, rules, or regulations that a city or county may line 16 otherwise adopt and enforce beyond the minimum requirements line 17 outlined in this section. line 18 SEC. 13. Section 65865.6 is added to the Government Code, line 19 to read: line 20 65865.6. (a) Notwithstanding any other law and subject to line 21 subdivision (b), after the amendments to the land use element of line 22 the city's or county's general plan and zoning ordinances required line 23 by Sections 65302.11 and 65860.2 have become effective, the line 24 legislative body of a city or county that contains a wildland-urban line 25 interface very high ®re risk area, as de®ned in Section 65011, shall line 26 not enter into a development agreement for property that is located line 27 within such a wildland-urban interface very high ®re risk area line 28 unless the city or county ®nds, based on substantial evidence in line 29 the record that the project and all structures within the project are line 30 protected from wild®re risk in accordance with the wild®re risk line 31 reduction standards de®ned in Section 65012, in effect at the time line 32 that the development agreement is entered into, or wild®re line 33 protection standards adopted by the city or county that meet or line 34 exceed the wild®re risk reduction standards. standards in effect at line 35 the time that the development agreement is entered into. line 36 (b) Subdivision (a) shall apply only to a development agreement line 37 entered into on or after the date upon which the statutes of line 38 limitation speci®ed in subdivision (c) of Section 65009 have run line 39 with respect to the amendments to a city's or county's general plan line 40 and zoning ordinances required by Sections 65302.11 and 65860.2

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line 1 or, if the amendments and any associated environmental documents line 2 are challenged in court, the validity of the amendments and any line 3 associated environmental documents has been upheld in a ®nal line 4 decision. line 5 (c) For purposes of this section, ªwild®re risk reduction line 6 standardsº has the meaning means the wild®re risk reduction line 7 standards set forth in Section 65012. 65012 that are adopted line 8 pursuant to Section 65013 or implemented by the city or county line 9 pursuant to subparagraph (B) or (C) of paragraph (1) of line 10 subdivision (a) of, or subparagraph (B), (C), or (D) of paragraph line 11 (2) of, subdivision (a) of Section 65012. line 12 (d) This section shall not be interpreted to change or diminish line 13 the requirements of any other law or ordinance relating to ®re line 14 protection. In the event of con¯ict among the wild®re risk line 15 reduction standards, or between the wild®re risk reduction line 16 standards and the requirements of any other law relating to ®re line 17 protection, such con¯icts shall be resolved in a manner which on line 18 balance is most protective against potential loss from wild®re line 19 exposure. Nothing in this section shall be construed to limit the line 20 existing authority of a city or county under any other law from line 21 adopting ordinances, rules, or regulations beyond the minimum line 22 requirements outlined in this section. line 23 SEC. 14. Section 65962.1 is added to the Government Code, line 24 to read: line 25 65962.1. (a) Notwithstanding any other law, and subject to line 26 subdivision (b), after the amendments to the land use element of line 27 the city's or county's general plan and zoning ordinances required line 28 by Sections 65302.11 and 65860.2 have become effective, a city line 29 or county that contains a wildland-urban interface very high ®re line 30 risk area, as de®ned in Section 65011, shall not approve a line 31 discretionary permit or other discretionary entitlement that would line 32 result in the construction of a new building or construction that line 33 would result in an increase in allowed occupancy for an existing line 34 building, or a ministerial permit that would result in the line 35 construction of a new residence, for a project that is located within line 36 such a wildland-urban interface very high ®re risk area unless the line 37 city or county ®nds, based on substantial evidence in the record line 38 that the project and all structures within the project are protected line 39 from wild®re risk in accordance with the wild®re risk reduction line 40 standards de®ned in Section 65012, or wild®re protection standards

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line 1 in effect at the time the application for the permit or entitlement line 2 is deemed complete, adopted by the city or county that meet or line 3 exceed the wild®re risk reduction standards. standards in effect at line 4 the time the application for the permit or entitlement is deemed line 5 complete. Approval of a ®nal map or parcel map that conforms to line 6 a previously approved tentative map pursuant to Section 66458 line 7 shall not constitute approval of a ministerial permit for purposes line 8 of this section. line 9 (b) Subdivision (a) shall only apply to a discretionary permit, line 10 discretionary entitlement, or ministerial permit issued on or after line 11 the date upon which the statutes of limitation speci®ed in line 12 subdivision (c) of Section 65009 have run with respect to the line 13 amendments to a city's or a county's general plan and zoning line 14 ordinances required by Sections 65302.11 and 65860.2 or, if the line 15 amendments and any associated environmental documents are line 16 challenged in court, the validity of the amendments and any line 17 associated environmental documents has been upheld in a ®nal line 18 decision. line 19 (c) This section shall not be interpreted to waive or reduce a line 20 city or county's obligation pursuant to Section 65863 to ensure line 21 that its housing element inventory accommodates, at all times line 22 throughout the housing element planning period, its remaining line 23 share of its regional housing need. line 24 (d) This section shall not be interpreted to change or diminish line 25 the requirements of any other law or ordinance relating to ®re line 26 protection. In the event of con¯ict among the wild®re risk line 27 reduction standards, or between the wild®re risk reduction line 28 standards and the requirements of any other law relating to ®re line 29 protection, such con¯icts shall be resolved in a manner which on line 30 balance is most protective against potential loss from wild®re line 31 exposure. Nothing in this section shall be construed to limit the line 32 existing authority of a city or county under any other law from line 33 adopting ordinances, rules, or regulations beyond the minimum line 34 requirements outlined in this section. line 35 (e) For purposes of this section, ªwild®re risk reduction line 36 standardsº means those wild®re risk reduction standards set forth line 37 in Section 65012 that are adopted pursuant to Section 65013 or line 38 implemented by the city or county pursuant to subparagraph (B) line 39 or (C) of paragraph (1) of subdivision (a) of, or subparagraph

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line 1 (B), (C), or (D) of paragraph (2) of, subdivision (a) of Section line 2 65012. line 3 SEC. 15. Section 66474.03 is added to the Government Code, line 4 to read: line 5 66474.03. (a) Notwithstanding any other law and subject to line 6 subdivision (b), after the amendments to the land use element of line 7 the city's or county's general plan and zoning ordinances required line 8 by Sections 65302.11 and 65860.2 have become effective, each line 9 city and each county that contains a wildland-urban interface very line 10 high ®re risk area, as de®ned in Section 65011, shall deny approval line 11 of a tentative map, or a parcel map for which a tentative map was line 12 not required, for a subdivision that is located within such a line 13 wildland-urban interface very high ®re risk area unless, in addition line 14 to any ®ndings required under Section 66474.02, the city or county line 15 ®nds, based on substantial evidence in the record that the project line 16 and all structures within the project are protected from wild®re line 17 risk in accordance with the wild®re risk reduction standards de®ned line 18 in Section 65012, in effect at the time the application for the line 19 tentative map or parcel map is deemed complete, or wild®re line 20 protection standards adopted by the city or county that meet or line 21 exceed the wild®re risk reduction standards. standards in effect at line 22 the time the application for the tentative map or parcel map is line 23 deemed complete. line 24 (b) Subdivision (a) shall only apply to an approval of a tentative line 25 map, or a parcel map for which a tentative map was not required, line 26 on or after the date upon which the statutes of limitation speci®ed line 27 in subdivision (c) of Section 65009 have run with respect to the line 28 amendments to the land use element of the city's or county's line 29 general plan and zoning ordinances required by Sections 65302.11 line 30 and 65860.2 or, if the amendments and any associated line 31 environmental documents are challenged in court, the validity of line 32 the amendments and any associated environmental documents has line 33 been upheld in a ®nal decision. line 34 (c) For purposes of this section, ªwild®re risk reduction line 35 standardsº has the meaning means those wild®re risk reduction line 36 standards set forth in Section 65012. 65012 that are adopted line 37 pursuant to Section 65013 or implemented by the city or county line 38 pursuant to subparagraph (B) or (C) of paragraph (1) of line 39 subdivision (a) of, or subparagraph (B), (C), or (D) of paragraph line 40 (2) of, subdivision (a) of Section 65012.

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line 1 (d) This section shall not be interpreted to change or diminish line 2 the requirements of any other law or ordinance relating to ®re line 3 protection. In the event of con¯ict among the wild®re risk line 4 reduction standards, or between the wild®re risk reduction line 5 standards and the requirements of any other law relating to ®re line 6 protection, such con¯icts shall be resolved in a manner which on line 7 balance is most protective against potential loss from wild®re line 8 exposure. Nothing in this section shall be construed to limit the line 9 existing authority of a city or county under any other law from line 10 adopting ordinances, rules, or regulations beyond the minimum line 11 requirements outlined in this section. line 12 SEC. 16. Section 13132.7 of the Health and Safety Code is line 13 amended to read: line 14 13132.7. (a) Within a very high ®re hazard severity zone line 15 designated by the Director of Forestry and Fire Protection pursuant line 16 to Article 9 (commencing with Section 4201) of Chapter 1 of Part line 17 2 of Division 4 of the Public Resources Code and within a very line 18 high hazard severity zone designated by a local agency pursuant line 19 to Chapter 6.8 (commencing with Section 51175) of Part 1 of line 20 Division 1 of Title 5 of the Government Code, the entire roof line 21 covering of every existing structure where more than 50 percent line 22 of the total roof area is replaced within any one-year period, every line 23 new structure, and any roof covering applied in the alteration, line 24 repair, or replacement of the roof of every existing structure, shall line 25 be a ®re retardant roof covering that is at least class B as de®ned line 26 in the Uniform Building Code, as adopted and amended by the line 27 State Building Standards Commission. line 28 (b) In all other areas, the entire roof covering of every existing line 29 structure where more than 50 percent of the total roof area is line 30 replaced within any one-year period, every new structure, and any line 31 roof covering applied in the alteration, repair, or replacement of line 32 the roof of every existing structure, shall be a ®re retardant roof line 33 covering that is at least class C as de®ned in the Uniform Building line 34 Code, as adopted and amended by the State Building Standards line 35 Commission. line 36 (c) Notwithstanding subdivision (b), within state responsibility line 37 areas classi®ed by the State Board of Forestry and Fire Protection line 38 pursuant to Article 3 (commencing with Section 4125) of Chapter line 39 1 of Part 2 of Division 4 of the Public Resources Code, except for line 40 those state responsibility areas designated as moderate ®re hazard

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line 1 responsibility zones, the entire roof covering of every existing line 2 structure where more than 50 percent of the total roof area is line 3 replaced within any one-year period, every new structure, and any line 4 roof covering applied in the alteration, repair, or replacement of line 5 the roof of every existing structure, shall be a ®re retardant roof line 6 covering that is at least class B as de®ned in the Uniform Building line 7 Code, as adopted and amended by the State Building Standards line 8 Commission. line 9 (d) (1) Notwithstanding subdivision (a), (b), or (c), within very line 10 high ®re hazard severity zones designated by the Director of line 11 Forestry and Fire Protection pursuant to Article 9 (commencing line 12 with Section 4201) of Chapter 1 of Part 2 of Division 4 of the line 13 Public Resources Code or by a local agency pursuant to Chapter line 14 6.8 (commencing with Section 51175) of Part 1 of Division 1 of line 15 Title 5 of the Government Code, the entire roof covering of every line 16 existing structure where more than 50 percent of the total roof area line 17 is replaced within any one-year period, every new structure, and line 18 any roof covering applied in the alteration, repair, or replacement line 19 of the roof of every existing structure, shall be a ®re retardant roof line 20 covering that is at least class A as de®ned in the Uniform Building line 21 Code, as adopted and amended by the State Building Standards line 22 Commission. line 23 (2) Paragraph (1) does not apply to any jurisdiction containing line 24 a very high ®re hazard severity zone if the jurisdiction ful®lls both line 25 of the following requirements: line 26 (A) Adopts the model ordinance approved by the State Fire line 27 Marshal pursuant to Section 51189 of the Government Code or an line 28 ordinance that substantially conforms to the model ordinance of line 29 the State Fire Marshal. line 30 (B) Transmits, upon adoption, a copy of the ordinance to the line 31 State Fire Marshal. line 32 (e) The State Building Standards Commission shall incorporate line 33 the requirements set forth in subdivisions (a), (b), and (c) by line 34 publishing them as an amendment to the California Building line 35 Standards Code in accordance with Chapter 4 (commencing with line 36 Section 18935) of Part 2.5 of Division 13. line 37 (f) Nothing in this section shall limit the authority of a city, line 38 county, city and county, or ®re protection district in establishing line 39 more restrictive requirements, in accordance with current law, than line 40 those speci®ed in this section.

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line 1 (g) This section shall not affect the validity of an ordinance, line 2 adopted prior to the effective date for the relevant roo®ng standard line 3 speci®ed in subdivisions (a) and (b), by a city, county, city and line 4 county, or ®re protection district, unless the ordinance mandates line 5 a standard that is less stringent than the standards set forth in line 6 subdivision (a), in which case the ordinance shall not be valid on line 7 or after the effective date for the relevant roo®ng standard speci®ed line 8 in subdivisions (a) and (b). line 9 (h) Any quali®ed historical building or structure as de®ned in line 10 Section 18955 may, on a case-by-case basis, utilize alternative line 11 roof constructions as provided by the State Historical Building line 12 Code. line 13 (i) The installer of the roof covering shall provide certi®cation line 14 of the roof covering classi®cation, as provided by the manufacturer line 15 or supplier, to the building owner and, when requested, to the line 16 agency responsible for enforcement of this part. The installer shall line 17 also install the roof covering in accordance with the manufacturer's line 18 listing. line 19 (j) No wood roof covering materials shall be sold or applied in line 20 this state unless both of the following conditions are met: line 21 (1) The materials have been approved and listed by the State line 22 Fire Marshal as complying with the requirements of this section. line 23 (2) The materials have passed at least 5 years of the 10-year line 24 natural weathering test. The 10-year natural weathering test line 25 required by this subdivision shall be conducted in accordance with line 26 standard 15-2 of the 1994 edition of the Uniform Building Code line 27 at a testing facility recognized by the State Fire Marshal. line 28 (k) The Insurance Commissioner shall accept the use of ®re line 29 retardant wood roof covering material that complies with the line 30 requirements of this section, used in the partial repair or line 31 replacement of non®re retardant wood roof covering material, as line 32 complying with the requirement in Section 2695.9 of Title 10 of line 33 the California Code of Regulations relative to matching line 34 replacement items in quality, color, and size. line 35 (l) No common interest development, as de®ned in Section 4100 line 36 or 6534 of the Civil Code, may require an owner to install or repair line 37 a roof in a manner that is in violation of this section. The governing line 38 documents, as de®ned in Section 4150 or 6552 of the Civil Code, line 39 of a common interest development within a very high ®re severity line 40 zone shall allow for at least one type of ®re retardant roof covering

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line 1 material that meets the requirements of this section and that is, at line 2 a minimum, class B, as de®ned in the International Building Code. line 3 SEC. 17. Article 10 (commencing with Section 4751) is added line 4 to Chapter 10 of Part 2 of Division 4 of the Public Resources Code, line 5 to read: line 6 line 7 Article 10. Conservation Easements on Forested Lands line 8 line 9 4751. This article shall apply to any conservation easement line 10 contracted for purchase with state funds on or after January 1, line 11 2020, wherein land subject to the easement is comprised of existing line 12 forestlands, as de®ned in subdivision (g) of Section 12220, line 13 covering at least 20 percent of its area or a minimum of 40 acres, line 14 whichever is smaller. To the extent not in con¯ict with federal line 15 law, the terms of any applicable bond, or the requirements of any line 16 other funding source, the terms of the conservation easement shall line 17 address maintaining and improving forest health and resiliency to line 18 disturbances in order to conserve and enhance the land's ability line 19 to provide long-term carbon sequestration, climate bene®ts, and line 20 watershed functions. Provisions in the conservation easement, and line 21 any required management plan, shall guide forest management, line 22 and other land management undertaken by the landowner, to line 23 promote native forest ecological structures and species composition line 24 consistent with the forest type, including stand canopy spacing line 25 and density, and the development or retention of key structural line 26 elements for climate adaptation, including, but not limited to, line 27 larger, older trees that bene®t vulnerable ®sh and wildlife. line 28 SEC. 18. Section 45 of Chapter 626 of the Statutes of 2018 is line 29 amended to read: line 30 Sec. 45. (a) (1) The sum of one hundred sixty-®ve million line 31 dollars ($165,000,000) shall be appropriated from the Greenhouse line 32 Gas Reduction Fund in the annual Budget Act each year through line 33 the 2023±24 ®scal year to the Department of Forestry and Fire line 34 Protection for healthy forest and ®re prevention programs and line 35 projects that improve forest health and reduce greenhouse gas line 36 emissions caused by uncontrolled wild®res. line 37 (2) (A) Of the amount appropriated pursuant to paragraph (1), line 38 the sum of ____ dollars ($____) shall be allocated by the line 39 Department of Forestry and Fire Protection for grants to cities and line 40 counties that contain one or more wildland-urban interface very

195 48

line 1 high ®re risk areas, as de®ned by Section 65011 of the Government line 2 Code, for programs and projects that have the dual bene®t of line 3 controlling the spread of wild®re and improving life safety, which line 4 may include, but are not limited to, any of the following: line 5 (i) New, improved, or expanded access roads in populated areas line 6 within a wildland-urban interface very high ®re risk area. line 7 (ii) Public or private water supply or delivery facilities suitable line 8 for ®re®ghting in a wildland-urban interface very high ®re risk line 9 area. line 10 (iii) Remote infrared cameras for detection of wild®res. line 11 (iv) Siren warning systems for wild®res. line 12 (B) The department shall prioritize local assistance grant funding line 13 applications from local agencies based upon the proportion of land line 14 in the jurisdiction located within wildland-urban interface very line 15 high ®re risk areas, as de®ned in Section 65011 of the Government line 16 Code. line 17 (C) Upon development of the recommendations of the State line 18 Board of Forestry and Fire Protection pursuant to Section 4290.5 line 19 of the Public Resources Code, the department shall prioritize local line 20 assistance grant funding applications from local agencies for ®re line 21 safety improvements recommended by the board. line 22 (b) The sum of thirty-®ve million dollars ($35,000,000) shall line 23 be appropriated from the Greenhouse Gas Reduction Fund in the line 24 annual Budget Act each year through the 2023±24 ®scal year to line 25 the Department of Forestry and Fire Protection to complete line 26 prescribed ®re and other fuel reduction projects through proven line 27 forestry practices consistent with the recommendations of the line 28 Forest Carbon Plan, including the operation of year-round line 29 prescribed ®re crews and implementation of a research and line 30 monitoring program for climate change adaptation. line 31 SEC. 19. No reimbursement is required by this act pursuant to line 32 Section 6 of Article XIIIB of the California Constitution because line 33 a local agency or school district has the authority to levy service line 34 charges, fees, or assessments suf®cient to pay for the program or line 35 level of service mandated by this act, within the meaning of Section line 36 17556 of the Government Code.

O

196 To: RCRC Board of Directors From: Paul A. Smith, Vice President Governmental Affairs Sheryl Cohen, Partner, American Continental Group Date: June 17, 2019 Re: Federal Legislative Update

Summary This memo provides an update on a number of issues being addressed at the federal level, and signals a variety of issues likely to be addressed in our nation’s capital.

Issues Cannabis Banking Senate Minority Leader Chuck Schumer (D-New York) recently conveyed in a tweet that Congress should decriminalize cannabis at the federal level before considering a legal safe harbor for the banking industry such as the Secure and Fair Enforcement Banking Act (SAFE Act). Minority Leader Schumer’s tweet was a response to House Democrats who attached the SAFE Act to the House financial services and general government appropriations bill. The House Appropriations Committee approved the spending measure, with the “SAFE Act,” attached on June 12, 2019. The SAFE Act has bipartisan support in the House, but without support from Minority Leader Schumer or Senate Majority Leader Mitch McConnell (R-Kentucky), the SAFE Act is unlikely to pass the Senate. Instead, Senate Minority Leader Schumer prefers the approach set forth the Marijuana Freedom and Opportunity Act, a bill he introduced with Representative Hakeem Jeffries (D-New York) that would amend the Controlled Substance Act and decriminalize marijuana under federal law.

Senator Cory Gardner (R-Colorado) and Senator Elizabeth Warren (D-Massachusetts) introduced an alternative to the SAFE Act, which would amend the Controlled Substances Act to grant states authority to enforce their own laws related to marijuana. The Strengthening the Tenth Amendment Through Entrusting States (STATES) Act would stop short of decriminalizing marijuana at the federal level, but would grant assurances to businesses and consumers in states where marijuana has been legalized in some form that the federal government will not supersede state law in this area.

RURAL COUNTY REPRESENTATIVES OF CALIFORNIA 1215 K STREET, SUITE 1650 SACRAMENTO, CA 95814 PHONE: 916-447-4806 FAX: 916-448-3154 WEB: WWW.RCRCNET.ORG

197 A bipartisan coalition of 12 governors, led by California Governor Gavin Newsom, issued a letter of support for the STATES Act. The letter urged Congress to respect the right of states to establish and enforce their own cannabis laws. While support for the STATES Act continues to grow, critics argue a legislative fix that does not de-list cannabis as a Schedule 1 drug would further complicate the regulatory framework. In addition, the bill would not satisfy Senate Minority Leader Schumer’s condition that a cannabis banking solution decriminalizes marijuana under federal law.

Disaster Aid On June 6, 2019, President Trump signed a $19.1 billion disaster relief bill that provides billions of federal funds to communities recovering from devastating wildfires and other natural disasters. The final disaster supplemental proposal includes several provisions that would aid rural counties and other communities recovering from destructive wildfires:

 Emergency Forest Restoration Program: $480 million is provided for the Emergency Forest Restoration Program for non-industrial timber restoration.

 Emergency Conservation Program: $558 million is provided for the Emergency Conservation program for repairs to damaged farmland.

 Emergency Watershed Protection Program: $435 million is provided for the Emergency Watershed Protection Program for rural watershed recovery.

 Rural Community Facilities: $150 million is provided for Rural Development Community Facilities grants for small rural communities impacted by natural disasters in 2018 and 2019.

 U.S. Forest Service: $720 million is provided to repay funds borrowed from non- fire accounts to cover the cost of wildfire suppression activities from Fiscal Year 2018. Also included are funds to take action to reduce hazardous fuels on federal and non-federal lands, and to prevent an increased risk of significant wildfires from timber resources that were decimated in the storms.

Congress took nearly six months to approve this disaster relief proposal while affected communities were left to rebuild with minimal federal assistance. The approval process was drawn out by partisan feuding over the allocation of federal funds. A six-month delay in essential disaster recovery funds is the latest example of rural counties bearing the brunt of gridlock and polarization in Congress.

Rural Broadband The Federal Communications Commission (FCC) is under mounting pressure to reevaluate the accuracy of the broadband mapping data used in FCC’s 2019 Broadband Deployment Report. On June 2, 2019, Senate Minority Leader Schumer became one of the loudest critics yet when he pointed to the disparities between the FCC’s report and a

RURAL COUNTY REPRESENTATIVES OF CALIFORNIA 1215 K STREET, SUITE 1650 SACRAMENTO, CA 95814 PHONE: 916-447-4806 FAX: 916-448-3154 WEB: WWW.RCRCNET.ORG

198 3rd party study conducted by Microsoft. In addition, Representative Doug Collins (R- Georgia), Ranking Member of the House Judiciary Committee, wrote a letter to FCC Chairman Ajit Pai requesting the FCC to consider a more accurate and reliable approach to mapping broadband coverage. Unreliable broadband coverage data from the FCC paints an overly optimistic picture of broadband coverage in rural areas, and undermines the ability of policymakers to prioritize funding for areas that are truly underserved. More members are calling for improvements to broadband mapping data to better address the digital divide and improve broadband coverage in rural areas.

While stakeholders and policymakers continue to debate with the FCC on the veracity of its broadband data, Congress is considering a spending bill that would provide $680 million in grant funding for broadband deployment projects in rural areas. The grants are part of a $3.9 billion rural development program included in the Agriculture-Rural Development-FDA funding bill that would fund the U.S. Department of Agriculture through Fiscal Year 2020. $680 million is an $80 million increase over previously enacted funding levels for rural broadband programs. However, this funding level fails to make a dent in the $40 billion of investment the FCC claims is required to close the digital divide.

Rural Call Completion The FCC has completed its implementation of the Improving Rural Call Quality and Reliability Act of 2017. New regulations for third-party intermediate providers that offer consumer call services will be directed to meet new standards to improve consumer call performance. Congress adopted the rural call completion act after previous efforts by the FCC were unable to fully address concerns about calls not being completed to rural areas.

Payments In Lieu of Taxes Congress has yet to pass an Interior-Environment appropriations bill for Fiscal 2020, and funding for Federal Payments In Lieu of Taxes (PILT) is in limbo. The House version of the Interior-Environment appropriations bill is expected to reach the floor next week. The bill would fully fund Federal PILT, a policy supported by the overwhelming majority of members of Congress. The Senate Appropriations Committee will introduce their own version of the Interior-Environment appropriations bill for Fiscal 2020 in the coming weeks as appropriators attempt to approve spending measures that will fund the federal government before the fiscal year begins in October.

Secure Rural Schools Program Senators Ron Wyden (D-Oregon), Mike Crapo (R-Idaho), Jeff Merkley (D-Oregon), and Jim Risch (R-Idaho) have reintroduced the Forest Management for Rural Stability Act (Act), S. 1643. The Act would create an endowment fund to permanently finance the Secure Rural Schools (SRS) program, and provide counties with stable funding for delivering public services. The RCRC Board of Directors adopted a support position on the Act in January 2019.

RURAL COUNTY REPRESENTATIVES OF CALIFORNIA 1215 K STREET, SUITE 1650 SACRAMENTO, CA 95814 PHONE: 916-447-4806 FAX: 916-448-3154 WEB: WWW.RCRCNET.ORG

199 The Act relieves SRS recipients from the annual turmoil associated with the Congressional appropriations process, and provides guaranteed federal support for critical projects needed for schools, infrastructure, and law enforcement. The Act would authorize a one-time Congressional appropriation to seed a new endowment fund for SRS and receipts from timber harvests on federal forest land would be deposited annually. Annual payments to counties will use SRS funding levels from Fiscal Year 2017 as a baseline, and funds will be distributed to counties using the SRS formula (85 percent of payments for Title I and 15 percent for Title III).

While Congress considers the Act, the SRS program must be reauthorized under current law to maintain funding through Fiscal 2020. On May 30, 2019, Representative Joe Neguse (D-Colorado) and Representative Cathy McMorris Rodgers (R-Washington) introduced H.R. 3048, a bill to extend SRS. The bill was referred to the House Committees on Agriculture and Natural Resources, where SRS advocates hope the bill will move quickly to extend program funding before the new fiscal year begins on October 1, 2019.

Fiscal 2020 Appropriations Congress is considering appropriations measures that would fund the federal government through Fiscal 2020. Lawmakers hope to approve the necessary appropriations by the end of the current fiscal year on September 30, 2019. The House approved the first “minibus” bundle of spending measures that includes the Defense, Energy-Water, Labor- HHS-Education, and State-Foreign Operations appropriations bills. President Trump has threatened to veto the $985 billion over objections to the topline funding levels that would add to the federal deficit.

The Democrat-backed spending bundle will also face opposition in the Senate, where Republicans will argue the House allocated funds based on unrealistic estimates of the topline spending caps that have yet to be determined. Senate Republicans are in ongoing negotiations with the White House on a budget deal that would raise the spending caps and have held off on considering any spending measures until a deal is reached. Without a bipartisan agreement on the spending caps that has support from the White House, the appropriations process could spiral towards another government shutdown in September.

Infrastructure President Trump derailed negotiations with congressional Democrats on infrastructure legislation after pledging not to work with Democrats on a bipartisan basis until investigations into the Administration and presidential campaign are withdrawn. President Trump had been working with House Speaker Nancy Pelosi (D-San Francisco) and Senate Minority Leader Schumer on an infrastructure package that would invest $2 trillion of federal funds on infrastructure projects across the U.S. Draft text was never released, but any infrastructure legislation of that magnitude would include significant investments in rural America’s underfunded infrastructure.

RURAL COUNTY REPRESENTATIVES OF CALIFORNIA 1215 K STREET, SUITE 1650 SACRAMENTO, CA 95814 PHONE: 916-447-4806 FAX: 916-448-3154 WEB: WWW.RCRCNET.ORG

200 President Trump ended negotiations on May 22, 2019, after he cut a meeting short with congressional Democrats and delivered his ultimatum in the White House Rose Garden. A day before the White House meeting was scheduled, President Trump issued a letter to Congress that said White House support for a $2 trillion infrastructure proposal would be contingent upon Congress approving the U.S.-Mexico-Canada Trade Agreement. The letter signaled that infrastructure was no longer a leading priority for the Trump Administration. After the White House meeting, House Transportation and Infrastructure Committee Chairman Peter DeFazio (D-Oregon) pledged to continue work on an infrastructure package without President Trump. Congress remains divided on how to finance a $2 trillion infrastructure investment and the prospects of a bipartisan proposal without President Trump are slim.

Staff Recommendation Informational Only. RCRC staff and its federal advocacy team will continue to pursue a robust federal affairs program to address our federal priorities.

Attachment  Copy of S. 1643 Support Letter

RURAL COUNTY REPRESENTATIVES OF CALIFORNIA 1215 K STREET, SUITE 1650 SACRAMENTO, CA 95814 PHONE: 916-447-4806 FAX: 916-448-3154 WEB: WWW.RCRCNET.ORG

201 202 June 10, 2019

The Honorable Ron Wyden Member of the U.S. Senate 221 Dirksen House Office Building Washington, D.C. 20510

RE: S. 1643 - The Forest Management for Rural Stability Act - SUPPORT

Dear Senator Wyden:

On behalf of the Rural County Representatives of California (RCRC), I offer our support for S. 1643, the recently-reintroduced Forest Management for Rural Stability Act (FMRSA) pertaining to the Secure Rural Schools (SRS) program. RCRC is an association of thirty-six rural California counties, and the RCRC Board of Directors is comprised of elected supervisors from each of those member counties.

Adopted in 1906, federal law requires the U.S. Forest Service to provide counties and schools with 25 percent of the revenues generated on federal forest lands from a variety of activities including timber harvesting, mining, and recreational activities (commonly referred to as the 25 percent receipts rule). Due to your extensive work, in 2000 Congress enacted the SRS program to provide funding for forested counties and school districts to replace revenue from dwindling forest receipts due to a national decline in timber harvesting. When first enacted, SRS provided $90 million in 2001 (in 2017 dollars) to California’s forested counties, with nearly half of the funding allocated to school districts, and the other half allocated to counties for county roads. SRS initially expired in 2006, but, again, due to your efforts, has been reauthorized multiple times; however, most reauthorization efforts have included program funding reductions.

In March of 2018, Congress enacted a 2018 federal spending bill which contained a reauthorization of SRS payments for Fiscal Year 2017 and Fiscal Year 2018. However, the on-again, off-again flow of SRS payments continues to frustrate California’s forested counties. Not only are the revenue losses problematic, but the lack of certainty in receiving these payments makes it difficult for forested counties to properly build annual budgets. He recently reintroduced FMRSA creates a permanent endowment fund to provide stable and increased funding for forested counties that is separate from the current annual appropriations process.

1215 K Street, Suite 1650, Sacramento, CA 95814 | www.rcrcnet.org | 916.447.4806 | Fax: 916.448.3154

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203 Reauthorization and funding of the Federal SRS program has, and will continue to be, a high priority for RCRC. Over the past year, RCRC leadership and staff have met with your staff and other Congressional staff members to discuss the approach reflected in FMRSA.

We are pleased to see this legislation contains many of the fundamentals that have been discussed to ensure a base level of funding to forested counties along with the flexibility to remain in the SRS payment scheme. We are also pleased that S. 1643 does not dissuade – from a financial aspect – any attempt to responsibly increase levels of timer production on federal forested lands.

We are pleased to offer our support and wish to convey appreciation to you and your staff for working on a responsible alternative to the current approach to payments to forested counties. Also, we look forward to working with you and the coauthors of FMRSA to enact its provisions and offer any assistance we can provide to accomplish this goal.

If you should have any questions or concerns, please do not hesitate to contact me at [email protected] or (916) 447-4806 or RCRC’s legislative advocate in Washington D.C., Sheryl Cohen at [email protected] or (202) 327-8100.

Sincerely,

PAUL A. SMITH Vice President Governmental Affairs cc: The Honorable Dianne Feinstein, Member of the U.S. Senate The Honorable Kamala Harris, Member of the U.S. Senate The Honorable Jeff Merkley, Member of the U.S. Senate The Honorable Jim Risch, Member of the U.S. Senate The Honorable Michael Crapo, Member of the U.S. Senate Jonathan Shuffield, NACo

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