On May 9th, Governor Newsom announced his 2019-20 revised state budget proposal which initiated a flurry of activity in the legislature on a number of issues that will impact the agricultural industry.

Chlorpyrifos Cancellation

As reported in the Market Memo last week, the Governor made a point in his budget press conference to discuss the initiation of the cancellation process for chlorpyrifos, stating this is important in “moving California towards safer alternatives.”  CCM President Casey Creamer issued a statement in response to the cancellation, “The process for which this chemical was evaluated was purposely exaggerated to achieve a desired outcome and jeopardizes the scientific credibility of the Department of Pesticide Regulation. This decision sets a terrible precedent for future evaluations and creates a chilling effect on companies planning on making significant investments to bring new products to the market in California.”

In his budget revision, the Governor proposes $5.7 million to identify “alternatives”. The funding will be used to create a government and stakeholder working group and for the expedited registration of non-chemical alternatives, biological control, and softer crop protection tools.

CCM will continue to engage with members of the Administration as the working group is formed and as the cancellation process is undertaken.

Safe and Affordable Drinking Water

Solving the state’s drinking water crisis continues to be a priority for the Governor and this is reflected in his budget proposal which calls for an ongoing funding source to ensure all Californians have access to clean drinking water. “We’re going to solve the problem with ongoing revenue,” he said. “Not onetime, for these lazy folks out there saying, ‘Well, you can solve it all with onetime money.’ It is an ongoing issue, and we are going to solve it with ongoing revenue.”

Newsom’s budget revision stays steady from his January proposal with $168.5 million for drinking water improvements in disadvantaged communities from Proposition 68, another $20 million from the general fund for emergencies, and $4.8 million to set up the ongoing fund.

Newsom has also proposed a budget trailer bill that would establish two separate fee structures on agriculture and municipal water users to create the Safe and Affordable Drinking Water Fund to be used for clean drinking water projects. Consistent with the policy framework of last year’s SB 623, the Governor’s proposal includes provisions that would preclude the State Board from taking enforcement actions against growers provided they are in compliance with existing regulations and pay the fertilizer mill fee.

Last week, the Senate Budget Subcommittee on Natural Resources rejected the Governor’s drinking water proposal and instead approved a continuous annual appropriation of $150 million from the General Fund, contingent upon the enactment of SB 200 (Monning) which establishes a  Safe and Affordable Drinking Water Fund in the State Treasury and directs how the fund is to be used.  SB 200 passed out of the Senate on Thursday.

CCM supports any solution that provides clean drinking water for disadvantaged and rural communities impacted by nitrate contamination AND provides adequate protections for growers who are in compliance with existing water quality regulations from enforcement actions. Staff is working closely with our Sacramento advocates to ensure the Governor’s office and Senate Leadership understand Ag’s position on this issue. We are making it a point to remind the legislature that CCM and a number of other Ag associations have been at the table with the environmental justice community for nearly 2 years working on a solution.

On the Assembly side, Assembly Member Eduardo Garcia’s drinking water proposal, AB 217, was substantially amended by the Assembly Speaker and Appropriations Committee Chair Lorena Gonzalez this week.  In the previous iteration, AB 217 proposed a fee structure on agriculture and municipal water users in combination with a one-time deposit from the General Fund into a special interest bearing Trust to fund drinking water projects.

As amended, this measure significantly increases the fees on agriculture to fund drinking water solutions and allows those fees to be used by the Attorney General for litigation against farmers who are complying with state regulations. In light of these amendments, CCM is opposed to AB 217.

Cap and Trade Expenditure Plan

The Cap and Trade program provides a critical revenue stream for incentive funding that allows agriculture to comply with air quality mandates, specifically farm equipment and diesel engine upgrades and replacements.

After the initial funding of Ag diesel replacements in Fiscal Year 2017-18, the California Air Resources Board (CARB) developed the Funding Agricultural Replacement Measures for Emission Reductions (FARMER) Program. CARB adopted guidelines for the FARMER Program in March 2018 and by February 2019, $124 million, or 92 percent, of Fiscal year 2017-18 funding had been disbursed.

Last year, the agriculture industry partnered with the San Joaquin Valley Air Pollution Control District and secured $132 million in Cap and Trade funding for the FARMER program in FY 18-19.

CARB recently approved a State Implementation Plan to reduce emissions through upgrades and replacements of agricultural equipment. To achieve this, CARB staff is proposing to provide incentives, through programs such as the FARMER Program, to replace 12,000 tier 0, tier 1 and tier 2 agricultural equipment in the San Joaquin Valley by 2024.

The Governor’s original 2019-2020 budget drastically reduced funding for these programs from $132 million to just $25 million. While the revised budget proposal increases the amount to $90 million, it still falls drastically short of the $250 million that CARB has identified as the amount needed to achieve the state’s air quality targets.

Last week, the Senate Budget Subcommittee on Natural Resources rejected the Governor’s Cap and Trade Expenditure Plan. The Senate’s alternative plan maintains the FARMER funding at $90 million and adds $40 million for the Carl Moyer program, $25 million for CDFA’s State Water Efficiency Enhancement Program (SWEEP), and $30 million for CDFA’s Healthy Soils Program.

CCM will continue to work with our commodity partners to seek an increase in funding in the final 2019-20 budget for the FARMER program.

Legislation Update

With a May 17 deadline for fiscal committees to meet and report to the floor bills introduced in their house, the Senate and Assembly Appropriations committees took action on a number of priority bills that were on each committee’s suspense file. Below is a summary of the bills CCM is tracking on behalf of our members.

SB 1 (Atkins). California Environmental, Public Health, and Workers Defense Act of 2019. Opposed.

This bill would require specified state boards to determine that if the federal standards for air, water, endangered and threatened species is changed to be less stringent than the baseline federal standards as of January 19, 2017 and, if so, consider whether it should adopt the baseline federal standards as a measure in order to maintain the state’s protections to be at least as stringent as the baseline federal standards.

This bill would potentially lock in the current biological opinions on the operations of the CVP.

Status: 5/16/19 Senate Appropriations – Pass.

SB 458 (Durazo).  Protect Children from Brain-Damaging Chlorpyrifos Act of 2019.  Oppose.

Would prohibit the use of a pesticide that contains the active ingredient chlorpyrifos.

Status:  5/16/19 Held (killed) in Senate Appropriations.

SB 559 (Hurtado).  Department of Water Resources: grant: Friant-Kern Canal. Support.

This bill would appropriate $400,000,000 to the Department of Water Resources for the purposes of restoring the Friant-Kern Canal to its full capacity. The bill would require the department to make a grant of $400,000,000  to the joint powers authority to restore the capacity of the canal, subject to an appropriation in the Budget Act.

Status:   5/16/19 Senate Appropriations. Do pass as amended.

SB 468 (Jackson). Taxation: tax expenditures: California Tax Expenditure Review Board. Oppose unless amended.

This bill would establish in state government the California Tax Expenditure Review Board as an independent advisory body to comprehensively assess major tax expenditures, as defined, and make recommendations to the Legislature. The bill would require the board to hold annual open and public meetings for the purposes of considering information provided by the public to determine the schedule for a comprehensive assessment of major tax expenditures to be conducted by the Legislative Analyst’s Office.

The sales tax exemption on agricultural implements of husbandry would be subject to a review by the Board and LAO.  There are concerns that a review would invite legislative action to alter or cancel the exemption.  While the bill does not explicitly do this, initiating a review invites criticisms by other interest groups.  CCM has had several meetings with the Author’s office to convey these concerns.  The bill language as described above is a drastic improvement over the original language, which would have placed a sunset on all tax expenditures.

To provide a more accurate and comprehensive assessment of state revenue impacts, CCM is part of a coalition that has offered amendments that any tax expenditure study incorporate “multipliers” or the positive effects on the economy. Additionally, we propose that the assessments also examine California’s policies in the context of competitiveness with other areas of the country.

Status:   5/16/19 Senate Appropriations. Read second time. Ordered to third reading.

CCM urges its members in Senator Jackson’s district to call and express their concerns with this bill.

Labor Bills

AB 9 (Reyes).  Employee discrimination:  limitation of actions. Watch.

Current law authorizes a person claiming to be aggrieved by an alleged unlawful practice to file a complaint with the Department of Fair Employment and Housing within one year from the date upon which the unlawful practice occurred, unless otherwise specified. This bill would extend the above-described period to 3 years for complaints alleging employment discrimination

Status:  5/16/19 Assembly Appropriations – Pass.

AB 51 (Gonzalez). Employee discrimination:  enforcement.  Watch

This bill prohibits an employer from requiring an employee to waive any right, forum, or procedure (mandatory arbitration) for a violation of any provision of the California Fair Employment and Housing Act (FEHA) or the Labor Code as a condition of employment, continued employment or the receipt of any employment-related benefit. This bill also prohibits an employer from retaliating against an employee for refusing to consent to such a waiver.

Status:  5/16/19 Assembly Appropriations – Pass.

AB 170 (Gonzalez). Employment:  sexual harassment: liability. Oppose

Provides that a client employer shall share with a labor contractor all civil legal responsibility and civil liability for harassment, as defined by FEHA to include sexual harassment, gender harassment, and harassment based on pregnancy, childbirth, or related medical conditions, for all workers supplied by the labor contractor.

Status:  5/1/2019 Double referred to Senate Labor, Public Employment and Retirement Committee and Senate Judiciary Committee

AB 171 (Gonzalez). Employment: sexual harassment.  Oppose

Existing law prohibits an employer from discharging or in any manner discriminating or retaliating against an employee who is a victim of domestic violence, sexual assault, or stalking for taking time off work to obtain specified relief if the victim provides notice to the employer of the status or the employer has actual knowledge of the status. Existing law authorizes an employee to file a complaint with the Division of Labor Standards Enforcement for a violation of these prohibitions within one year from the date of occurrence of the violation.  This bill would expand the scope of these provisions by defining “employer” for purposes of these provisions to mean any person employing another under any appointment or contract of hire and to include the state, political subdivisions of the state, and municipalities. 

Status:  5/16/19 Assembly Appropriations – Pass.

AB 555 (Gonzalez). Paid sick leave.  Oppose unless amended.

This bill would modify the employer’s alternate sick leave accrual method to require that an employee have no less than 40 hours of accrued sick leave or paid time off by the 200th calendar day of employment or each calendar year, or in each 12-month period. The bill would raise the employer’s authorized limitation on the employee’s use of carryover sick leave to 40 hours or 5 days.

Amendments offered:

  1. There should be a statewide preemption of local ordinances so jurisdictions follow the same rules;
  2. Payment for sick leave should be paid at the employee’s regular rate of pay (minimum wage for piece rate employees); and
  3. Verification by employers should be allowed after three days.

Status:  5/16/19 Assembly Appropriations – Pass.

AB 403 (Kalra).  Division of Labor Standards Enforcement: complaint.  Watch.

Existing law authorizes a person who believes they have been discharged or otherwise discriminated against in violation of any law under the jurisdiction of the Labor Commissioner to file a complaint with the Division of Labor Standards Enforcement within 6 months after the occurrence of the violation. This bill would extend the period to file a complaint to within 2 years after the occurrence of the violation, except that violations of certain provisions may be filed within one year. This bill contains other related provisions and other existing laws.

Status:   5/16/19 Assembly Appropriations – Pass