Improving California's Forest and Watershed Management

Improving California’s Forest and Watershed Management MAC TAYLOR LEGISLATIVE ANALYST APRIL 2018 analysis full gutter AN LAO REPORT LEGISLATIVE ANALYST’S OFFICE analysis full gutter AN LAO REPORT Executive Summary Forests Provide Critical Statewide Benefits, but Poor Conditions Put Those Benefits at Risk. Roughly one-third of California is forested, including the majority of the watersheds that serve as the key originating water source for millions of people across the state. These forests also provide critical air, wildlife, climate, and recreational benefits. However, a combination of factors have resulted in poor conditions across these forests and watersheds, including excessive vegetation density and an overabundance of small trees and brush. Such conditions have contributed to more prevalent and severe wildfires and unprecedented tree mortality in recent years, and experts are concerned these trends will continue if steps are not taken to significantly improve the health of the state’s forests. Recommendations. While broad consensus exists about both the problematic conditions of the state’s forests and the types of activities needed to address them, the pace of making the needed improvements is slow. Moreover, the scale of the improvement projects that are currently taking place is relatively small compared to the identified need. We make various recommendations to improve the health of the state’s forested watersheds. These recommendations encompass both larger actions as well as some more moderate steps that we believe could help achieve improved outcomes. √ Improve and Increase Funding and Coordination. • Recognize the statewide benefits that healthy forests can provide by maintaining at least the current level of funding—$280 million annually—for projects to improve forest health. • Take steps to generate additional investments from downstream beneficiaries by (1) requiring the State Water Project to make an annual spending contribution to maintain the health of the Feather River watershed, (2) appropriating $2 million for pilot projects for local water and hydropower agencies to conduct wildfire cost-avoidance and cost-benefit studies, and (3) modifying grant criteria for the Integrated Regional Water Management program to encourage spending on watershed health projects. • Designate the California Natural Resources Agency (CNRA)—rather than the California Department of Forestry and Fire Protection (CalFire)—as the lead agency to oversee proactive forest and watershed health funding and initiatives. • Ensure that future spending is based on clear prioritization criteria that targets funds to maximize statewide benefits—such as reducing fire risk, protecting water supplies, and sequestering greenhouse gas emissions—in particular by promoting larger projects. √ Revise Certain State Policies and Practices to Facilitate Forest Health Activities. • Allow the sale of timber without a timber management plan in specific cases when the primary purpose of the project is forest health in order to help offset the costs of beneficial forest thinning projects. www.lao.ca.gov 1 analysis full gutter AN LAO REPORT • Direct CNRA to submit a report proposing options for how the state might streamline forest health project permitting requirements. √ Improve Landowner Assistance Programs to Increase Effectiveness. • Allocate funding to CalFire for additional forester positions to increase the department’s use of prescribed fire through its Vegetation Management Program. • Restructure California Forest Improvement Program payments to reduce the burden on small landowners by providing partial payments in advance of work being undertaken. √ Expand Options for Utilizing and Disposing of Woody Biomass. • Support the development and incentivize the use of nontraditional wood products by appropriating funding for a pilot grant program. • Increase opportunities for disposing of biomass by (1) requiring CalFire and the California Air Resources Board to analyze when burn permit requirements could be eased and (2) appropriating funding to purchase additional air curtain burners based on an analysis by CalFire. 2 LEGISLATIVE ANALYST’S OFFICE analysis full gutter AN LAO REPORT INTRODUCTION Roughly one-third of California is forested, This report consists of five sections. First, we including the majority of the watersheds that serve review the importance of and benefits provided by as the key originating water source for millions California’s forests. Second, we provide information of people across the state. These forests also regarding how forests are managed in California, provide critical air, wildlife, climate, and recreational including ownership, state and federal policies and benefits. However, a combination of factors have programs, and funding. Third, we review the current resulted in poor conditions across these forests conditions of forests and watersheds across the and watersheds, including excessive vegetation state, including the concerning implications and density and an overabundance of small trees and recent consequences of those conditions, as well brush. Such conditions have contributed to more as the actions that would be needed to make prevalent and severe wildfires and unprecedented improvements. Fourth, in the findings section, tree mortality in recent years, and experts are we highlight shortcomings in how the state concerned these trends will continue if steps are manages its forests and watersheds. Fifth, we offer not taken to significantly improve the health of the recommendations for actions the Legislature could state’s forests. take to improve forest and watershed management in California. WHY FORESTS MATTER Forests Provide Critical Statewide Benefits. Most of State’s Key Watersheds Are Located Forests cover about one-third of the state’s land in Forestlands. In a typical year, the majority of area, containing over 4 billion live trees. (Land is California’s total annual precipitation—in the form considered forested if at least 10 percent of it is of rain and snow—falls in the mostly forested covered by tree canopy, or if it formerly had such Sierra Nevada and southern Cascade mountain tree cover and has not yet been formally developed ranges. The rivers and streams flowing from these for other uses.) While only a small percentage key “source watersheds” provide the crucial of the state’s population lives in forested areas, surface water that a majority of Californians use for forests affect the lives of residents across the drinking and most of the state’s agricultural sector state. Figure 1 (see next page) summarizes the uses for growing crops. Some estimates suggest specific statewide benefits provided by forests. that rain and snow that start in Sierra Nevada Among the most important benefits is the role forests contribute around 60 percent of the state’s forests play in collecting and storing the snowpack developed water supply (water that is captured that most Californians depend on for water. in reservoirs and distributed to users across the Additionally, by storing carbon, the state’s forests state). Forested watersheds in other areas of also play a vital part in helping the state to combat the state are also key for local water supplies. climate change and to meet its ambitious goals For example, the San Bernardino and Cleveland for reducing greenhouse gases (GHGs). The forest National Forests receive 90 percent of the annual ecosystems and the diverse terrestrial, aquatic, precipitation for the Santa Ana River watershed, and plant species that live in them represent from which runoff contributes to the water supplies a public resource belonging to and entrusted for 6 million people in Orange, San Bernardino, and to all Californians. Forestlands also provide a Riverside Counties. variety of recreational opportunities, including in By storing snow through the winter wet season areas preserved, owned, and managed by public then releasing it as melted runoff into streams agencies for broad public access. and rivers through the spring and early summer, www.lao.ca.gov 3 analysis full gutter AN LAO REPORT water supplies the state’s cities and farms will use Figure 1 throughout the rest of the year. Forests—including California’s Forests the mountain meadows located within forestlands— Provide Critical Statewide Benefits also protect water quality by reducing erosion of sediments into streams and by filtering out Water Supply pollutants from runoff. Most of California’s rivers and streams Changing Climate Increases Importance originate in its forests, providing a substantial portion of the water used for drinking and of State’s Forests. Predictions for how climate agricultural production. For example, runoff change will affect California in the coming decades from the snow and rain that falls in the Sierra Nevada forestlands ultimately provides about magnify the importance of the statewide value 60 percent of the water supplies used by that forests can provide. For example, scientists people across the state. predict that in future years, a greater share of the state’s annual precipitation will come as rain rather Climate Change Mitigation than as snow, and that warmer temperatures Healthy trees sequester carbon, helping reduce the amount of carbon dioxide—a will cause snow to melt into runoff earlier in the chief contributor to climate change—in the season compared to historical trends. Downstream atmosphere. The U.S. Forest Service estimates that California’s forests sequester reservoirs, however, do not have the capacity to 2.6 million metric tons of carbon per year. take on the winter water storage role that mountain snowpack has traditionally provided. This increases Wildlife Habitat the importance of efforts to preserve the ability Hundreds of species of animals, fish, and of the state’s forests to capture—and maintain birds reside in the state’s forests. For example, Sierra Nevada forests are home to at higher elevations, for as long as possible—the 60 percent of California’s animal species, and snowpack that the state does continue to receive over one-third of those have been listed as rare, threatened, or endangered. in mountain forests and meadows. Preserving and potentially increasing the role that forests Recreation Opportunities play in sequestering carbon and constraining Millions of visitors from across the state— GHG emissions are also becoming important and from around the world—enjoy hiking, components in the state’s efforts to slow the boating, skiing, and site-seeing in California’s forestlands each year. effects of climate change. Additionally, warming temperatures and the potential for more frequent and severe droughts may cause some areas in lower elevations to become too dry to support the current species of trees, converting those forests these forests provide a natural water infrastructure to shrublands. This potential loss of lower elevation upon which the state has long depended. In a forestlands magnifies the importance of preserving typical winter, mountain snowpack is a “natural the remaining, higher elevation forests. reservoir” that ultimately provides one-third of the FOREST MANAGEMENT How Forests Are Owned, Used, and by the federal government, including by the U.S. Forest Service (USFS), Bureau of Land Managed in California Management (BLM), and National Park Service. 33 Million Acres of Forestland in California Private nonindustrial entities own about one-quarter Owned by Combination of Entities. As shown (8 million acres) acres of forestland. These include in Figure 2, close to 60 percent (nearly 19 million families, individuals, conservation and natural acres) of forestlands in California are owned resource organizations, and Native American tribes. 4 LEGISLATIVE ANALYST’S OFFICE analysis full gutter AN LAO REPORT Industrial owners—primarily timber companies— listed as threatened or endangered. Environmental own 14 percent (4.5 million acres) of forestland. protection policies have also contributed to State and local governments own a comparatively declines in private harvests, along with other small share—only 3 percent (1 million acres) factors. More recently, the economic recession in combined. the late 2000s sharply reduced demand for new Figure 3 (see next page) displays these forest housing construction, thereby also suppressing ownership patterns across the state. In some demand for timber. Since 2009, timber harvesting areas, neighboring parcels are owned by a rates have picked up somewhat, but have not patchwork of different owners. In other areas of the returned to earlier levels. state, a single owner—typically a federal agency— Forest Management Involves Proactive owns a large swath of contiguous land. Activities. “Forest management” is generally Though Private Forestlands Often Used for defined as the process of planning and Timber, Harvesting Has Declined Over Time. implementing practices for the stewardship and As indicated earlier, 39 percent of forestlands use of forests to meet specific environmental, across the state are under private ownership—both economic, social, and cultural objectives. Activities nonindustrial and industrial. Nonindustrial forest forest managers employ include timber harvesting owners are those that typically have less than 5,000 (typically for commercial purposes), vegetation acres of forestland and do not own a processing mill. The majority of these private owners hold Figure 2 parcels smaller than 50 acres and do not typically engage in selling timber. In contrast, private Majority of Forestlands in California industrial interests own forestlands for the purpose Owned by Federal Government of growing, harvesting, and selling timber. Private Local Governments lands have provided the majority of California’s 1% State timber since the 1940s. 2% Figure 4 (see page 7) shows the amount of Private Industrial timber harvested in California on both private 14% and public lands over the past 60 years. While subject to annual variation, total timber harvesting in California has declined by over two-thirds since Private Nonindustrial the late 1950s. As shown in the figure, harvest 25% rates have dropped from over 4.8 billion board feet in 1988—its recent peak—to about 900 million in 2009, when it was at its lowest in recent history—a decline of over 80 percent. These trends are due to a variety of factors, including changes in state and federal timber harvesting policies. For example, several federal Federal laws were passed in the 1970s that shifted the 57% USFS’s forest management objectives away from production forestry and more toward conservation and ecosystem management. Those laws included the National Environmental Policy Act (NEPA)— which requires federal agencies to evaluate any actions that could have a significant effect on the environment—and the Endangered Species Act— which prohibits federal agencies from carrying out actions that might adversely affect a species www.lao.ca.gov 5 analysis full gutter AN LAO REPORT Figure 3 Patchwork of Owners Across California Forestlands Federal government State and local governments Private industrial Private nonindustrial Hewes, Jaketon H.; Butler, Brett J.; Liknes, Greg C. 2017. Forest ownership in the conterminous United States circa 2014: distribution of seven ownership types - geospatial dataset. Fort Collins, CO: Forest Service Research Data Archive. https://doi.org/10.2737/RDS-2017-0007 6 LEGISLATIVE ANALYST’S OFFICE analysis full gutter AN LAO REPORT thinning (clearing out small trees and brush, often noncommercial purposes. The primary product of through mechanical means or prescribed burns), commercial timber operations is lumber that can and reforestation (planting new trees). Figure 5 be sold for revenue. In addition, both commercial (see next page) describes specific activities that and noncommercial timber management activities managers typically undertake to improve the health such as mechanical thinning typically require of forests. As discussed later, research has shown utilization or disposal of “woody biomass” that is that these are the types of activities that are most often not of a size or quality to be used in lumber effective at preserving and restoring the natural production at traditional sawmills. This includes functions and processes of forests, and thereby limbs, tops, needles, leaves, and other woody maximizing the natural benefits that they can parts. In some cases, woody biomass can be used provide. Efforts to extinguish active wildfires are to produce other products, although processing not generally considered to be forest management complications and limited demand can complicate activities, as they are more responsive than these efforts, as we discuss later. Excess forest proactive. material that is not utilized as lumber or some Many Management Activities Result in Need other product is often either burned or left to to Remove Lumber and Woody Biomass. Forest decompose in the forest. Because leaving the management activities often involve the removal material can create a fire hazard, woody biomass of trees or brush, whether for commercial or waste is most commonly disposed of using open Figure 4 Timber Harvesting in California Has Declined Significantly Million Board Feet 7,000 6,000 5,000 Totala 4,000 Private 3,000 2,000 USFS 1,000 1957 1962 1967 1972 1977 1982 1987 1992 1997 2002 2007 2012 2016 a Also includes a small amount of timber harvested by other entities such as the state, tribes, and the federal Bureau of Land Management. USFS = U.S. Forest Service. www.lao.ca.gov 7 analysis full gutter AN LAO REPORT Protection (CalFire) is the lead agency tasked Figure 5 with helping to manage nonfederal forestlands Key Forest Management Activities to and forest health initiatives, although the Preserve and Improve Forest Health other agencies also have some significant responsibilities. Land Preservation Besides those agencies identified in the Acquire land or easements for conservation, figure, certain other federal and state agencies and implement policies to limit spread of development and preserve existing forestland. are also involved in forest management activities, though typically to a lesser degree. Managed Wildfire Allow a fire that ignited naturally—such as from For example, several regulatory agencies a lightning strike—to burn its natural course review and approve activities on forestlands within defined and maintained perimeters rather through their permitting authority. These than putting it out immediately, in order to reduce fuel for wildfires and enhance habitats for plants include the U.S. Fish and Wildlife Service, and wildlife. the California Department of Fish and Wildlife Meadow and Stream Restoration (DFW), the California Air Resources Board Remove encroaching trees, revegetate with native (CARB), and the state’s Regional Water Quality plants, and restore stream channels and Review Boards. We also note that the Wildlife hydrological functions so that meadows better absorb and retain water. Conservation Board allocates state funding to protect, restore, and improve forestlands, and Mechanical Thinning Selectively remove certain trees—including dead the California Conservation Corps undertakes and dying trees, as well as smaller trees and conservation projects to improve forest health, brush—to reduce fuel for wildfires and to enhance including fuel reduction and planting trees. the health of remaining trees. Additionally, in response to a recent outbreak Prescribed Burning of severe tree mortality across the state’s Plan and apply fire to a predetermined area— under controlled conditions—to reduce fuel for forests, the Governor issued an executive order wildfires and enhance habitats for plants and that established a Tree Mortality Task Force wildlife, including for remaining trees. Also referred comprised of state and federal agencies, local to as controlled burns. governments, utilities, and various stakeholders Reforestation to coordinate emergency actions. Reestablish forest tree cover—either through planting or natural regeneration—after natural In addition to the federal and state forest conditions have been disturbed by harvesting, governments, other entities that implement and wildfire, or disease. influence forest management activities include local governments such as cities, counties, and special districts (like water agencies, resource conservation districts, and air districts). pile burning—accumulating vegetation left by forest Landowners, funders of conservation projects, and management activities into manageable piles that concerned stakeholders are also involved in forest are subsequently burned. management decisions and in implementing forest Multiple Entities Involved in Forest projects. These can include local residents, Native Management. The mix of forest ownership American tribes, nongovernmental organizations, across the state means that a number of different private timber companies, and electric utilities. entities are involved in managing forestland. State Holds Some Management Figure 6 identifies the federal and state agencies Responsibilities Over Privately Owned with major forest management responsibilities in Forests. Although the state owns only a small California. As shown in the figure, within the federal share of forestlands, state law tasks CalFire with government this includes the three agencies with certain responsibilities on privately owned lands. the largest forestland holdings in the state. For Specifically, CalFire’s historic mission has been the state, the Department of Forestry and Fire two-fold: (1) the protection of commercial timber 8 LEGISLATIVE ANALYST’S OFFICE analysis full gutter AN LAO REPORT on all nonfederal lands from improper logging forestlands in California, including by administering activities and (2) the protection of watersheds from grant programs. wildland fire in lands identified as part of the “State Partnerships Enable Entities to Work Responsibility Area” (SRA). The SRA includes about Across Ownership Boundaries. While forest 13.2 million acres of forestland across the state— management responsibilities typically align with most of the forest not owned by federal agencies. ownership, natural processes—such as forest CalFire’s SRA responsibilities include (1) enforcing fires, water runoff, and wildlife habitats—do not fire prevention measures such as checking that observe those jurisdictional boundaries. As such, homes have the required “defensible space” clear federal and state agencies have developed certain of brush, (2) fire suppression and other emergency arrangements to collaborate on management response activities, and (3) providing financial activities across California’s forests. For example, and technical forest management assistance to federal law has a provision—known as the “Good private landowners. Additionally, CalFire regulates Neighbor Authority”—that allows states to fund timber harvest activities on both industrial and and implement forest health projects on federally nonindustrial private lands by enforcing the state’s owned land. As discussed later, the federal Forest Practice Rules and reviewing the timber government also funds a number of grant programs harvest and forest management plans that we to encourage collaborative projects on both federal discuss later. The department also leads the state’s and nonfederal forestlands. Additionally, federal efforts to improve and maintain the health of and state agencies have established agreements Figure 6 Major State and Federal Agencies Involved in Forest Management Agency Primary Responsibilities Federal U.S. Forest Service Owns and manages about 15.5 million acres of forestland in California, including 18 National Forests. Oversees activities related to resource development (including timber harvesting, grazing, and energy production), land conservation (including preserving designated wilderness areas), and recreation. Manages and suppresses wildfires on federal lands. Conducts forestry research. Bureau of Land Management Owns and manages about 1.6 million acres of forestland in California, including overseeing activities related to resource development, land conservation, and recreation. National Park Service Owns and manages about 1.4 million acres of forestland in California, including preserving natural and cultural resources and facilitating public access. State Department of Forestry and Prevents and suppresses fire on wildlands within “State Responsibility Areas” Fire Protection (CalFire) (which includes over 31 million acres of private and state-owned forestland). Oversees enforcement of state timber harvesting policies on private lands. Manages 71,000 acres of state research forests and conducts forestry research. Board of Forestry and Fire Serves as regulatory arm of CalFire. Develops state’s forest policies and Protection regulations. Natural Resources Agency Oversees the Timber Regulation and Forest Restoration Program, including coordinating multi-department reviews of Timber Harvest Plans and developing performance measures for how timber harvest policies are attaining the state’s ecological goals. Sierra Nevada Conservancy Allocates state grants for local forest projects in the Sierra Nevada region. Leads collaborative Watershed Improvement Program to restore forests and watersheds in the region. www.lao.ca.gov 9 analysis full gutter AN LAO REPORT for collaborative fire suppression efforts across that moderate fires can have beneficial effects on jurisdictions when fires do occur. forestlands, such as clearing out smaller brush and stimulating natural processes like tree seed State and Federal Forest Management dispersal and replenishment of soil nutrients. Policies and Practices In contrast to USFS, CalFire has maintained its suppression goal, and generally still seeks to Changing Emphasis on Fire Suppression Over Time. Well into the 19th century, suppression was extinguish all naturally occurring fires. This is largely due to the nature of the areas the department not the standard response to wildfire in the rural, is tasked with defending, which often are more sparsely populated West. Naturally occurring fires developed than national forests. typically burned their natural courses. However, as population density grew and forestlands were State Forest Practice Rules Govern Timber developed, wildfire began posing a greater risk to Harvest on Privately Owned Forestlands. lives and property. When USFS was established in The state’s Z’Berg-Nejedly Forest Practice Act 1905, its primary task was to suppress all fires on of 1973 is the main California law that governs the forest reserves it administered. By 1935, USFS the management of California’s privately owned fire management policy stipulated that all wildfires forestlands. The Forest Practice Act authorizes were to be suppressed by 10:00 in the morning the state Board of Forestry and Fire Protection to after they were first spotted. develop regulations related to most commercial and noncommercial timber harvesting activities, known Similarly, the California Legislature first as the Forest Practice Rules (FPR). Under the FPR, appropriated money for fire prevention and landowners who wish to harvest and then sell their suppression work in 1919, and the Division trees must submit and comply with an approved of Forestry was created in 1927. Initially, the state-issued timber harvesting permit. department provided rangers and lookout towers before fully taking on the responsibility to suppress The most common permit for the harvest and fires in SRA in the 1940s. Currently, CalFire has eventual sale of trees is a Timber Harvesting Plan the stated goal of containing 95 percent of all (THP), which describes the scope, yield, harvesting fires—excluding prescribed fires—at ten acres or methods, and mitigation measures that a timber less. These firefighting efforts have been highly harvester intends to perform within a specified successful, with the acreage burned by wildfires geographical area over a period of five years. in California reduced from an estimated annual THPs are primarily utilized by larger industrial average of 4.5 million acres in the 1700s to about harvesters. The FPR also allow the use of other 1 million acres annually in more recent years. permits for harvesting and selling trees, such as a As forestlands have become more developed, Nonindustrial Timber Management Plan (NTMP), firefighting resources have been increased to better which was added by the Legislature in 1991. protect homes and property, further reducing the NTMPs are intended to make it easier for small number of acres burned annually. nonindustrial landowners—those who own less than 2,500 acres and are not primarily engaged USFS, however, has gradually shifted its in the manufacturing of forest products—to better policies back to allowing more fires to burn. The manage their forests, including tree removal and passage of the 1964 Wilderness Act encouraged sale of some relatively small amount of timber. allowing natural processes to occur, including fire. NTMPs involve a longer-term management plan Accordingly, USFS has changed its policy from fire better suited to the intended land uses than a control to fire management, allowing fires to play THP. Additionally, the Working Forest Management their natural ecological roles as long as they can Plan program—enacted through Chapter 648 of be contained safely based on weather patterns, 2013 (AB 904, Chesbro)—allows for a long-term terrain, proximity to development, and other forest management plan for nonindustrial factors. This policy includes both naturally caused landowners who wish to harvest and sell some fires and intentionally prescribed fires. This shift of their trees and who own less than 15,000 reflects a growing resurgence in the perspective 10 LEGISLATIVE ANALYST’S OFFICE analysis full gutter AN LAO REPORT acres of timberlands if the landowner commits negative environmental impacts. For example, an to specific forest management practices. After operation to remove trees for either commercial a THP or other harvest management plan is harvest or to improve the health of the forest prepared, staff from the state’s Timber Regulation could impact habitats for sensitive wildlife or and Forest Restoration Program (TRFRP) review create sediment runoff into a nearby stream and it for compliance with state regulations designed degrade water quality. To prevent such negative to ensure sustainable harvesting practices and impacts, entities seeking to undertake activities to minimize environmental harms. The TRFRP was improve forest health typically must first receive created by Chapter 289 of 2012 (AB 1492, approvals from specified agencies entrusted with Committee on Budget). The California Natural safeguarding water, air, and wildlife resources on Resources Agency (CNRA) takes the lead role in behalf of the public. conducting these reviews but gets assistance from As discussed above, landowners seeking to CalFire, DFW, the Department of Conservation, harvest timber must complete THPs, which include and the State Water Resources Control Board assessments of potential environmental impacts (SWRCB). CalFire is tasked with enforcing the and mitigation requirements. Entities seeking to FPR and ensuring landowners comply with conduct other types of forest management projects approved permits by conducting site inspections. on nonfederal lands and/or projects that are If landowners or timber operators are found to be funded with state dollars typically must attain other out of compliance with FPR requirements, CalFire is types of environmental permits. The major permits authorized to issue citations, fine violators, or shut typically required for forest management projects down harvesting operations. As we discuss below, are summarized in Figure 7 (see next page). there are circumstances in which a permit is not Generally, the most significant and comprehensive required, such as for specified emergencies. reviews are the Environmental Impact Reports Over time, the Legislature has made changes (EIRs) required by the California Environmental to the Forest Practice Act and Rules in order to Quality Act (CEQA). These reviews evaluate address various concerns and encourage certain potential environmental impacts in a number of management practices. For example, in 2012 categories including biological resources, cultural AB 1492 created the TRFRP within CNRA and resources, GHG emissions, and hydrology. Because levied a 1 percent lumber assessment to fund THPs involve state department reviews of potential the program. It also directed CNRA to develop impacts on water quality and wildlife, traditional ecological performance measures to evaluate the commercial timber harvesting projects covered by cumulative impacts of management and harvesting THPs typically do not require a CEQA review or activities on a larger scale and support more additional state environmental permits. long-term goals for minimizing the environmental Projects undertaken on federal lands typically impacts of such activities, which could inform require separate regulatory approvals from federal further modifications to the FPR going forward. agencies. This frequently includes approval of The Legislature and Board of Forestry have also an Environmental Impact Statement required made changes to the FPR to address the effects of by NEPA—which is similar to the state’s CEQA drought and tree mortality, modernize rules for the process—as well as federal permits to preserve building and maintenance of logging roads, take water quality and wildlife species that have been into account the state’s GHG emission-reduction identified as needing special protections. In goals, and promote oak woodlands restoration. general, state permits are not required for projects State and Federal Environmental Laws on federal lands unless they are being funded using Regulate Forest Management Activities. While state dollars. forest owners are responsible for managing their Certain Forest Management Projects Can own lands, state and federal regulatory agencies Qualify for Special Permits or Exemptions. are statutorily required to ensure that those Although many forest management projects on management activities do not result in excessively nonfederal lands require the types of permits www.lao.ca.gov 11 analysis full gutter AN LAO REPORT described in Figure 7, certain types of projects which would allow it to undertake certain types qualify for more streamlined regulatory approvals. of prescribed burning, thinning, and restoration For example, some projects may be covered projects on nonfederal lands across the state by “programmatic” EIRs for which CalFire has without needing to conduct a new CEQA EIR undertaken a large-scale CEQA review. These analysis each time. programmatic EIRs analyze the potential impacts Other agencies, such as Regional Water Quality of a series of similar forest health activities— Control Boards, also have developed some special essentially treating them as one large, ongoing initiatives to expedite the permitting processes for project and creating a broad permit that allows forest management projects in certain instances. similar activities to be implemented over time For example, the North Coast regional board without undertaking additional environmental issued a programmatic permit authorizing limited reviews. For instance, CalFire has approved discharges into waterbodies for landowners in a programmatic EIR—known as a Program Mendocino County who implement specified Timberland EIR—to cover a handful of similar types of restoration and conservation projects projects on nonfederal forestlands in Northern that may result in some sediment runoff while California that combine wildfire reduction with the projects are being implemented. In addition, timber harvest. The department is also in the the Central Valley and Lahontan regional boards process of developing a programmatic EIR for are working together to develop a programmatic its Vegetation Management Program (VMP), permit to regulate “nonpoint source pollution” Figure 7 Major State Environmental Permits Frequently Required for Forest Management Activities Permit Administering Agency Description Timber Harvest Plan CalFire Required for landowners seeking to harvest timber for commercial sale. Must describe the scope, yield, harvesting methods, and mitigation measures planned over five-year period. California Environmental Quality Typically the public agency that Required for projects on nonfederal lands or using state funds that Act Environmental Impact funds or manages the project have the potential to cause physical change in the environment. Must Report (EIR) evaluate, consider alternatives, and potentially mitigate for potential adverse environmental impacts in a number of categories. Can issue Negative Declaration instead of conducting full EIR if initial study finds no evidence of significant negative impacts. California Endangered Species Act Fish and Wildlife Required for projects that have adverse effects on species the state Incidental Take Permit has identified as needing special protections. Must include measures to avoid, minimize, and mitigate those effects. Lake and Streambed Alteration Fish and Wildlife Required for projects that will change the flow of or deposit debris Agreement into a stream, river, or lake. Must include measures necessary to protect fish and wildlife resources. Section 401 Water Quality Regional Water Quality Control Required for projects that impact waters, including wetlands, Certification Boards streams, rivers, or lakes. Must ensure proposed activity complies with all applicable water quality standards, limitations, and restrictions. National Pollutant Discharge Regional Water Quality Control Required for projects with construction activities that will disturb Elimination System Permit Boards more than one acre of land to address potential pollutants from storm water discharge or runoff. Must develop Stormwater Pollution Prevention Plan. Burn Permit Air Resources Board (and local Required for prescribed burns. Must develop a Smoke Management air districts) Plan. Even with permit, can only burn under certain conditions. CalFire = California Department of Forestry and Fire Protection. 12 LEGISLATIVE ANALYST’S OFFICE analysis full gutter AN LAO REPORT that would authorize certain activities on USFS to internally redirect resources from restoration and BLM lands, including specified types of to fire suppression has resulted in a lower rate timber harvesting and vegetation management of restoration. Instead, USFS has treated an projects. These programmatic permits replace the average of about 250,000 acres per year in recent requirement that landowners attain project-specific years. Specifically, in 2017 USFS treated 140,000 permits, but include oversight and monitoring to acres through thinning and prescribed fire and an ensure agreed-upon practices and mitigation are additional 110,000 acres through managed natural employed. fires. According to the draft Forest Carbon Plan, Additionally, the Legislature has instituted several BLM treats about 9,000 acres of its forestlands statutory CEQA exemptions for particular forest annually. The plan also states that CalFire treats management activities, meaning no CEQA review is about 17,500 acres of SRA land per year through required. These include removal of dead trees and its VMP, which is discussed in greater detail below. removal of invasive species. Estimates are not readily available for how many acres of forestlands private landowners treat Forest Carbon Plan Provides Framework on their own each year. A recent report by the for Management to Increase Sequestration Public Policy Institute of California estimates that and Minimize GHG Emissions. The state has ongoing federal and state funding for proactive undertaken a multifaceted effort to reduce GHG forest management in California has averaged emissions and sequester carbon. This includes around $100 million annually in recent years. In this the cap-and-trade program, which involves the section, we describe how these funds have been auctioning of permits that allow businesses to spent. emit GHGs, with the resulting revenue deposited in the Greenhouse Gas Reduction Fund (GGRF). State Funds Several Programs to Promote Another component of the state’s GHG reduction Forest Health. The state funds programs in several strategy is the state’s Forest Carbon Plan, which different state departments that are intended will serve as a blueprint for how the state can to encourage activities that support California’s manage forests in order for them to reduce GHGs. forests, including to reduce wildfire risk. Many It is being prepared by CalFire, CNRA, and CARB, of these programs are designed to assist private with a draft version published in 2017 and a final landowners in effectively managing their lands, version expected in 2018. The plan examines given they own a significant portion of the state’s California’s various forestry needs and available forests. Figure 8 (see next page) summarizes the treatment activities with the goal of increasing state’s major forest management programs and the GHG sequestration by improving forest health and funding that was provided in 2017-18. As shown, reducing GHG emissions by minimizing wildfire as the state’s lead entity for addressing forest severity. It also examines strategies to prevent health, CalFire administers most of these programs. forestland conversions and innovate opportunities We discuss several of these programs in more for wood products and biomass utilization. detail below. State’s Largest Forest Health Program State Programs and Funding for Currently Funded With GGRF. The Forest Management 2017-18 budget package provided a significant one-time infusion of funding for forest management Estimates Suggest Current Spending for from the state’s GGRF. Specifically, as shown in Forest Health Is Treating About 280,000 Acres Figure 8, $200 million was allocated to CalFire for Per Year. Estimates of the level of current forest forest health and fire prevention activities that either health activities being undertaken across the reduce GHG emissions through wildfire avoidance, state vary, particularly because a large proportion or improve carbon sequestration by preserving of forests are owned and managed by private forestland or improving forest health. (CalFire entities. USFS has a stated goal of implementing also received one-time allocations from GGRF fuel reduction treatments on 500,000 acres of its for forest health in previous years but at lesser lands in California each year; however, the need www.lao.ca.gov 13 analysis full gutter AN LAO REPORT Figure 8 Major State Forest Management Programs 2017-18 (In Millions) Program Description Funding Primary Fund Source California Department of Forestry and Fire Protection Forest Health grants Provides grants for large forest management projects $200.0 GGRF including reforestation, fuel reduction, pest management, conservation easements, and biomass utilization. Program goals are to increase carbon storage in forests and reduce wildfire emissions. Vegetation Management Assists SRA landowners on their lands—primarily through 9.6 GGRF the use of prescribed fire—to reduce wildland fuel hazards. Demonstration State Forests Manages eight demonstration state forests for research and 9.0 Forest Resources education on sustainable forestry practices. Improvement Fund Reforestation Provides technical assistance related to reforestation to the 5.5 General Fund, TRFRF forest industry, public agencies, and private landowners. Operates the L.A. Moran Reforestation Center, the state’s seed bank and tree nursery. California Forest Improvement Provides cost-sharing grants to landowners for management 5.0 TRFRF planning, site preparation, tree purchase and planting, timber stand improvement, habitat improvement, and land conservation. Fire and Resource Assessment Provides information, data, analysis, and resource 1.2 General Fund, SRA Fire assessments of forests and rangelands for various state Prevention Fund, GGRF and federal programs. Watershed Protection Conducts monitoring and research for projects that restore 0.8 General Fund or impact watersheds, provides technical assistance and input into Forest Practice Rules development, and provides interagency watershed and fisheries-related trainings. California Natural Resources Agency Timber Regulation and Forest Regulates timber harvesting by reviewing Timber Harvest $46.0 TRFRF Restoration Program Plans and other documents, develops ecological management performance measures, and coordinates some forestry activities across state departments. Department of Fish and Wildlife Forest Land Anadromous Provides grants for habitat improvement for the state’s $2.0 TRFRF Restoration grants at-risk salmon species, including addressing legacy forest management impacts. State Water Resources Control Board Clean Water grants Provides grants for projects that can demonstrate water $2.0 TRFRF quality improvement through the application of forest management measures such as stream restoration, road stabilization, post fire recovery, and fuels reduction. Total $281.1 GGRF= Greenhouse Gas Reduction Fund; SRA = State Responsibility Area; and TRFRF = Timber Regulation and Forest Restoration Fund. 14 LEGISLATIVE ANALYST’S OFFICE analysis full gutter AN LAO REPORT levels—$25 million in 2014-15 and $40 million in As shown in Figure 8, this program has received 2016-17.) CalFire plans to allocate these funds $5 million from the Timber Regulation and Forest via grants for projects through its Forest Health Restoration Fund (TRFRF) in 2017-18. (In some Program. Local entities and collaboratives—such recent years, it has also received funding from the as the Sierra Nevada Watershed Improvement High-Speed Rail Authority for mitigation related Program, described in the nearby box—will be to the state’s high-speed rail project.) The state eligible to apply for these funds. Based on the typically pays 75 percent of the overall costs of the grant criteria CalFire has developed, eligible project, but is authorized to pay up to 90 percent projects must show that they will reduce GHGs, if the project meets certain criteria (such as be located in a priority region (such as an area responding to substantial fire damage). The CFIP is with elevated tree mortality or wildfire threats), structured such that landowners apply for funding, and result in co-benefits (such as improved air receive an approved agreement and scope of work quality improvement or conservation of wildlife from CalFire, then undertake planning habitat). The Governor’s budget proposal for and/or complete the work on their land. Once 2018-19 proposes an additional $160 million from work is completed, CFIP reimburses landowners GGRF to CalFire for this program. for a share of the costs. The state also conducts California Forest Improvement Program oversight during and after the projects. For (CFIP) Helps Smaller Landowners Maintain Their example, participants must agree to keep land in Forestlands. CFIP assists private nonindustrial a “compatible use” (that is, in a forested state) for landowners manage their forestlands. Specifically, at least ten years after work is completed, and the the program offers grants to help individual state monitors that this agreement is kept. While landowners with land management planning, land the number varies each year based on funding conservation practices, fish and wildlife habitat levels and the specific projects undertaken, the improvement, tree purchase and planting, and program funded 183 projects statewide over the practices to enhance the productivity of the land. past two years. Sierra Nevada Watershed Improvement Program The Sierra Nevada Watershed Improvement Program (WIP) was created in March 2015 as a coordinated effort between the state (through the Sierra Nevada Conservancy) and the U.S. Forest Service, along with other governmental and local agency partners. It is intended to increase the pace and scale of restoration and forest health activities within several key California watersheds. The program is formalized through a memorandum of understanding between the state and federal governments, which is designed to increase coordination of restoration efforts at the regional and watershed levels. Both the extent of land area that is covered and the number of agencies proactively working together make this collaborative effort unique. The WIP has three main goals for the Sierra Nevada region: (1) increase investment in forest restoration from a broad array of stakeholders, (2) identify policy-related issues that need to be addressed in order to restore Sierra forests and watersheds to a healthier state, and (3) maintain and expand existing forest-related infrastructure—such as lumber mills and other facilities that process or dispose of wood and woody biomass—in order to support the pace and scale of needed restoration. Currently, WIP partners are working to assess restoration needs and secure funding. The program has identified a subregion in which to conduct initial pilot projects that accelerate regional scale forest and watershed restoration, which it is calling the Tahoe-Central Sierra Initiative. It recently received a $5 million grant from the California Department of Forestry and Fire Protection’s Greenhouse Gas Reduction Fund Forest Health Program to begin implementing forest health projects in this subregion. www.lao.ca.gov 15 analysis full gutter AN LAO REPORT VMP Is State’s Main Forest Program for to test and disseminate sustainable practices. Prescribed Fire. Prescribed fire—employed under That fund receives revenues generated by sales of appropriate conditions—is an important restoration timber or biomass fuels from those demonstration tool that improves forest resiliency and reduces the forests. risk of large, high-intensity fires. It is also generally In addition to the programs displayed in Figure 8, more cost-effective than mechanical thinning the state has provided other one-time resources for and can reach remote areas of the forests where special initiatives related to forest and watershed equipment cannot go. Most prescribed burns occur health. For example, in 2017-18 the Legislature under CalFire’s VMP—the state’s main prescribed provided roughly $10 million from the General Fund burn program. The VMP provides a cost-sharing to CalFire and the Office of Emergency Services option for landowners to assist with the use of for one-time grant programs to address the recent prescribed fire. The program also funds some increase in tree mortality, including to support mechanical thinning projects, though prescribed local efforts to remove dead and dying trees that fire is its primary focus. The specific cost-share pose a threat to public health and safety. The ratio varies based on the share of public-to-private state has also traditionally relied on funding from benefit, as determined by CalFire. Eligible voter-approved resource bonds for some forest applicants must treat forestland located within the and watershed health initiatives. For example, SRA. Landowners apply to participate in the VMP, Proposition 84 (2006) set aside $180 million for and CalFire determines whether a project is suitable the Wildlife Conservation Board to implement for funding. The local CalFire unit then provides the a program to conserve and restore forestlands, personnel, equipment, and expertise to implement including by acquiring conservation easements. the project, and the department assumes the Proposition 1, passed by voters in 2014, included liability for conducting the prescribed burn. As $1.5 billion for various watershed protection shown in Figure 8, in 2017-18 the program received and restoration efforts, many of which may be about $10 million from the General Fund. implemented in forestlands. The VMP treated 17,500 acres with prescribed Additionally, the Legislature recently passed burns in 2017, somewhat more than the average legislation, Chapter 852 of 2017 (SB 5, de León), of approximately 13,000 acres treated per year which places a new general obligation bond— since 1999. This represents a decrease from about Proposition 68—on the June 2018 ballot for 30,000 acres treated per year from 1982 through voter approval. This bond would provide roughly 1998. This decrease is due to several factors, $170 million across various state agencies that including (1) an increase in the amount of planning could be directed towards improving forest and and documentation required for prescribed burns upper watershed health. That total includes due to stricter air quality regulations, (2) projects $35 million for CalFire to improve forest resiliency, more often being in close proximity to populated of which at least $25 million must be allocated areas, and (3) longer fire seasons that can divert to the Sierra Nevada Conservancy for the Sierra CalFire foresters and firefighters who would be Nevada Watershed Improvement Program available to plan and implement prescribed burn described earlier. projects. Significantly More CalFire Spending State Funding for Forest Health Activities Dedicated to Fire Response Than Proactive Comes From Various Sources. As shown in Management. Figure 9 shows CalFire’s two Figure 8, most of the support for the state’s forest major expenditure categories over the past two health programs comes from GGRF, the General decades—fire response and forest management. Fund, or TRFRF. TRFRF, which was created by As shown, spending for suppressing fires has far AB 1492 in 2012, is funded by an assessment on eclipsed that for proactive forest management lumber that generates about $40 million annually. activities. Specifically, fire response spending, The Forest Resources Improvement Fund supports which grew from $650 million in 1998-99 (adjusted the eight demonstration forests CalFire operates for inflation) to more than $2.3 billion in 2017-18, 16 LEGISLATIVE ANALYST’S OFFICE analysis full gutter AN LAO REPORT makes up over 90 percent of the department’s forest health and sustainability, and educational annual spending. In contrast, spending on and awareness campaigns. The 2017 federal proactive activities like resource management and budget provided $234 million for State and Private fire prevention remained relatively flat over the Forestry programs nationally. Additionally, the period, averaging $77 million and 7 percent of the USFS Collaborative Forest Landscape Restoration department’s total expenditures through 2013-14. Program, which received a total of $40 million Beginning in 2014-15, the department began in federal fiscal year 2017, provides grants for receiving some one-time increases from GGRF for larger scale forest health projects on USFS forest health activities. As shown, the significant lands conducted and funded in partnership with addition of GGRF in 2017-18 notably increases nonfederal partners. Based on grants from prior resource management spending compared to years, a share of these federal funds likely will historical levels. be allocated to projects in California. The federal The data shown in the figure, however, may government also administers the Natural Resources somewhat understate fire response and overstate Conservation Service, which provides significant resource management spending. This is because support for private landowners. Finally, the CalFire redirects internal staff resources to help U.S. Department of Agriculture’s Rural Development respond to fire emergencies when needed. Program has provided one-time grant assistance For example, when fire crews are needed for to communities in the Sierra Nevada to develop emergency fire suppression during the limited collaborative biomass projects. time of year they might otherwise be able to Large Share of Federal Forest Management implement prescribed fires—such as during the Funding Has Been Redirected to Fight fall and winter of 2017 when they were fighting the Fires. One key funding issue with the federal wine country and Southern California wildfires—it government’s forest management approach reduces the number of acres CalFire staff can treat is “wildfire borrowing.” Currently, when fire with prescribed burns. Moreover, the number of suppression costs exceed the amount Congress severe fires and extended fire season to which has appropriated, USFS pays for these excess CalFire has had to respond in recent years has costs out of its other budget categories, including necessarily placed the department in a recurring restoration. Unlike CalFire, USFS does not have state of emergency response, as compared to previous years when it could more reliably count Figure 9 on an “off season” during which it could turn its Significantly More CalFire Spending on focus to proactive fire prevention activities. On Fire Response Than Proactive Management the other hand, the impacts of redirecting some Inflation Adjusted in 2017-18 Dollars (In Billions) resources are not as severe as those experienced by USFS—as discussed below—because CalFire is $2.5 able to access additional resources to respond to emergencies. 2.0 Some Federal Funding Also Supports Forest Health Activities. In addition to state monies, 1.5 Fire Response the federal government also funds some forest management and health efforts. Besides managing 1.0 the national forest system, the USFS operates its State and Private Forestry programs, which offer 0.5 assistance to the state and private landowners Resource Management and Fire Prevention for activities including forest health, cooperative forestry, conservation education, and urban and 1998-99 2002-03 2006-07 2010-11 2014-15 2017-18 community forestry. The programs offer technical CalFire = California Department of Forestry and assistance, financial assistance, monitoring of Fire Protection. www.lao.ca.gov 17 analysis full gutter AN LAO REPORT access to emergency funds for large fires. For jurisdictions. Examples include Community Wildfire the federal fiscal year that ended in fall 2015, Protection Plans, which some communities develop USFS redirected $700 million—about one-quarter to identify forest fuel reduction priorities and other of its forest management budget—to cover fire preventative measures. These plans are particularly suppression costs. This redirected money from common and encouraged by the federal and state other programs including recreation, research, governments in communities located adjacent watershed protection, rangeland management, to forestlands. Some limited examples also exist and forest restoration. For example, the State of mountain regions opting to undertake forest and Private Forestry programs—the primary restoration projects intended to preserve local federal effort to provide technical and financial water quality, and using local dollars to match state assistance to protect communities from wildfire— bond funds from the Integrated Regional Water lost $37 million out of a total budgeted amount Management (IRWM) program. (The IRWM program of $234 million that instead went to cover fire provides bond funding—which must be paired suppression costs across the nation. This practice with local funds—for regional groups to implement of redirecting funds from other USFS activities locally determined water resource projects.) For contrasts with how the federal government pays example, the Madera County IRWM group paired for the response to other natural disasters, such $1.5 million in local funds with an equal amount as floods or storms. In those cases, the federal of state bond funds to reduce fuels in the Sierra government typically provides additional funding to National Forest in order to reduce wildfire risk and, cover excess federal emergency response costs, in the words of its IRWM grant application, to help rather than expecting those funds to be redirected “meet long-term water supply needs, [protect] from the portions of the affected department’s base water quality, and augment/restore environmental budget that would otherwise be used for prevention conditions.” Investments by local agencies and and maintenance activities. governments in discretionary forest management Local Governments Also Spend Money on programs can be significantly limited in many rural Forest Health Activities. Counties, cities, special forested areas of the state, however, due to small districts, and other local governments also invest tax bases and—in many cases—economically in forest health activities within their respective disadvantaged populations. CURRENT FOREST CONDITIONS Healthy Forests Display Natural Ecological incidence of major wildfires. We also discuss how Characteristics and Processes. In general, a expanding forest health activities could improve forest is defined as being healthy when it reflects these conditions and the multiple benefits such the natural variability, processes, and resilience it improvements could yield. has historically displayed. Specifically, conditions in Poor Forest Conditions healthy forests typically include (1) a heterogeneous mix of tree species of different ages; (2) a density Forest Management Practices Have of vegetation that matches the supply and demand Increased Forest Density. As noted above, forest of light, water, nutrients, and growing space; and management practices and policies over the past (3) a capacity to tolerate and recover from naturally several decades have (1) imposed limitations on occurring disturbances such as fire, insects, timber harvesting, (2) emphasized fire suppression, and disease. The majority of California’s forests and (3) instituted a number of environmental currently do not meet these health criteria. permitting requirements. These practices and In this section, we discuss the poor conditions policies have combined to constrain the amount of of forestlands across the state and the associated trees and other growth removed from the forest. risks and implications, including increased This has significantly increased the density of trees 18 LEGISLATIVE ANALYST’S OFFICE analysis full gutter AN LAO REPORT in forests across the state, and particularly the small trees and comparatively fewer large trees. prevalence of smaller trees and brush. Overall tree Figure 10 illustrates some key differences between density in the state’s forested regions increased healthy and overly dense forests. The increase by 30 percent between the 1930s and the 2000s. in tree density can have a number of concerning These changes have also contributed to changing implications for California’s forests—including the relative composition of trees within the forest increased mortality caused by severe wildfires and such that they now have considerably more Figure 10 Comparing the Potential Impacts of Healthy and Unhealthy Forests HEALTHY Sporadic small trees and brush, comparatively more large and older trees, 40-60 trees per acre • Smaller and less intense wildfires. • Increased forest resilience to pests, drought, and disease. • Greater mitigation against climate change. • Protected and potentially increased water supply. UNHEALTHY Prevalent small trees and brush, comparatively fewer large and older trees, 100-200 trees per acre • Increased risk of severe forest fires. • Less resilient forests, large numbers of dead trees. • Loss of carbon sequestration benefits, potential increase in emissions. • Threats to water supply and quality, and to hydropower generation. www.lao.ca.gov 19 analysis full gutter AN LAO REPORT disease—as displayed in the figure and discussed dioxide, thereby reducing the amount of carbon below. dioxide in the atmosphere. In this way, healthy Increased Risk of Severe Forest Fires. Dense forests can be an important tool in offsetting forest stands that are proliferated with small trees climate change. Large older trees, however, and shrubs contain masses of combustible fuel store and sequester significantly more carbon within close proximity, and therefore can facilitate than small trees and brush. As such, the dense the spread of wildfires. Moreover, these smaller conditions of the state’s forests—in which small trees can serve as “ladder fuels” that carry wildfire trees are overcrowding and inhibiting the growth up into the crowns of taller trees that might of larger, older trees—represent a lost opportunity have otherwise been out of reach, adding to a to sequester GHG. Moreover, dead trees and fire’s potential spread and intensity. As shown in wildfires release a large amount of carbon into the Figure 11, CalFire estimates that most forested atmosphere at once, thereby contributing to climate regions of the state face a high to extreme threat of change. According to the state’s draft Forest wildfires. CalFire estimates the level of threat based Carbon Plan, “forested lands in the state are the on a combination of anticipated likelihood and largest land-based carbon sink, but recent trends severity of a fire occurring. Large and intense fires and long-term evidence suggest that these lands can have widespread negative consequences, as will become a source of overall net GHG emissions discussed below in the context of recent California if actions are not taken to protect these lands and wildfires. enhance their potential to sequester carbon.” CARB and climate researchers are currently attempting to Less Resilient Forests, Large Numbers quantify these GHG effects, to help the state better of Dead Trees. In addition to increasing fire understand the potential carbon-related benefits risk, overcrowded forests and the associated and risks associated with forests and wildfires. competition for resources can also make forests less resilient to withstanding other stressors. For Threats to Water Supply and Quality, example, trees in dense stands become more Hydropower Generation. Scientists have identified vulnerable to disease—including infestations of several ways in which forest density can reduce pests such as bark beetles—and less able to the amount of water that runs off from source endure water shortages from drought conditions. watersheds into rivers and streams for downstream This vulnerability has been on display in recent uses. For example, if the forest canopy is too years, as an estimated 129 million trees in thick, snow will collect on the tops of the trees and California’s forests died between 2010 and 2017, be exposed to direct sunlight, causing it to more including over 62 million dying in 2016 alone. quickly evaporate rather than collecting on the While this is a relatively small share of the over ground and slowly melting into runoff. A greater 4 billion trees in the state, historically, about volume of trees also means more water may be lost 1 million of California’s trees would die in a typical to evapotranspiration—consumption by the trees year. Moreover, most of the die-off is occurring in order to grow—also leaving less available for in concentrated areas. For example, the Sierra runoff. Additionally, mountain meadows that have National Forest has lost nearly 32 million trees, become overgrown with trees are less able to play representing an overall mortality rate of between their traditional role of “sponges” that store and 55 percent and 60 percent. When dead trees fall gradually release snow and water. to the ground they add more dry combustible fuel Poor forest conditions can also affect water for fires, as well as pose risks to public safety when supplies when they contribute to severe fires. After they fall onto buildings, roads, and power lines. such fires, burned and denuded hillsides are prone Loss of Carbon Sequestration Benefits, to discharging large amounts of sedimentation Potential Increase in Emissions. Another into streams, rivers, and reservoirs during storms. implication of the deteriorating conditions of the Downstream, these sediments can affect both state’s forests relates to how they exacerbate water quality (by introducing soils, nutrients, and climate change. Live trees absorb and store carbon pollutants into water sources) and water supply 20 LEGISLATIVE ANALYST’S OFFICE analysis full gutter AN LAO REPORT Figure 11 Many Areas of the State Face the Threat of Fire 2010 Data provided by California Department of Forestry and Fire Protection. www.lao.ca.gov 21 analysis full gutter AN LAO REPORT (by displacing capacity in reservoirs). Excessive burned by individual fires has been on an upward sedimentation in rivers and reservoirs can also trend, highlighting an increasing incidence of severe impair the ability to generate hydropower when it fires. Additionally, while it is to be expected that clogs intakes, turbines, and other components of fire risk and impacts would increase over the past hydroelectric facilities. several decades as human development spreads The risk of wildfires also threatens the system into areas that formerly were wilderness—creating that supplies water for millions of downstream more opportunities for destruction—the extent water users. Of particular concern for millions of the increase in recent years is significant. Of of Californians is the risk to the Feather River particular note, both the largest and the most watershed, which drains into Oroville Lake—the destructive fires the state has ever experienced primary water source for the State Water Project occurred in 2017—the Thomas fire in December, (SWP). The SWP, which is operated by the state’s which burned nearly 282,000 acres, and the Tubbs Department of Water Resources (DWR), is a water fire in October, which destroyed 5,643 structures storage and delivery system that transports water and significant portions of the city of Santa Rosa. from Northern California to supply 25 million Such severe fires can have negative effects on a people—two-thirds of the state’s population— number of different sectors, as illustrated by the living across the state, as well as 750,000 acres of examples discussed in the nearby box. irrigated farmland mostly in the Central Valley. Improving Forest Conditions The high potential for a fire is also a threat for the Central Valley Project (CVP), a separate water Consensus That Suite of Activities Needed to storage and delivery system owned and operated Improve Conditions. As described earlier, forest by the federal government. The CVP collects managers can undertake several types of activities mountain runoff into reservoirs and then delivers or treatments to reduce forest density and improve it through canals to irrigate about one-third of all the benefits that forests naturally provide. These agricultural land in the state, as well as to provide include mechanical thinning, prescribed burning, municipal water for close to 1 million households. managed wildfire, stream and meadow restoration, Fires affecting any of the multiple Cascade and and land preservation. Most forest experts agree Sierra Nevada watersheds whose runoff feeds that, given the diversity of the state’s forests and reservoirs for the CVP water delivery system would extent of degraded conditions, managers should have major implications—in particular for the Pit implement a combination of such activities across and McCloud watersheds, which drain into Shasta the state. Not every treatment can or should be Lake. employed in every situation. For example, steep and remote forested hillsides that lack road access Increased Incidence of are not practical locations for mechanical thinning Major Wildfires operations. Additionally, in some cases treatment approaches might be most effective when used in Poor Forest Conditions Have Contributed to combination. For example, applying prescribed fire Significant Wildfires in Recent Years. Recent to areas that currently contain large amounts of events have revealed that the risk created by ladder fuels may not be safe until after they have poor forest conditions has begun to manifest been mechanically thinned because of the greater in increasingly frequent and severe wildfires. risk that a fire might escape control. Post-thinning, Figure 12 (see page 24) shows the 20 largest however, prescribed fire can be a good way to fires (as measured by acres burned) and 20 most restrain regrowth of “surface fuels” (small trees and destructive fires (as measured by number of brush) and stimulate natural processes. structures destroyed) in recorded state history. As Improved Forest Health Could Yield Multiple shown, the majority of such fires have taken place Benefits. As discussed earlier, forests provide within the past 20 years. While the overall acreage multiple statewide benefits. Taking additional steps of fires burned across the state’s forests varies to improve the health of the state’s forests could from year to year, the figure shows that the acreage 22 LEGISLATIVE ANALYST’S OFFICE analysis full gutter AN LAO REPORT restore, protect, and potentially magnify these and severity of the fires that will eventually occur. key functions. Specifically, research indicates For example, modeling of different fire scenarios that thinning and restoring forests across the in the Mokelumne watershed estimated that fuel state potentially could lead to increased forest treatments likely would reduce fire size by an resilience against pests and disease, additional average of roughly 40 percent, and reduce the carbon storage, and potentially an increase in acreage of a high-intensity wildfire by approximately snowmelt runoff and water supply. Moreover, 75 percent. (Please see the box on the page 25 for while fully preventing forest fires is impossible— additional discussion of this study.) given inevitable lightning strikes and widespread Forest Treatments Not Without Trade-Offs. human interactions—reducing the amount of fuels While forest management activities can help in the forest could significantly reduce the size improve overall forest health, reduce fire risk, and Recent Fires Have Had Wide-Reaching Negative Impacts Examples of how recent fires have impacted various sectors include the following: Property. Property losses from the October 2017 “wine country” fires in Sonoma, Napa, Solano, Lake, and Mendocino Counties—which included the Tubbs Fire—are expected to add up to between $6 billion and $8 billion. According to the California Department of Insurance, more than 14,000 homes were damaged or totally destroyed, along with nearly 4,000 commercial buildings, 3,200 cars, and 111 boats. These totals understate the total damage, as they do not include uninsured properties or vehicles. State Costs. The state annually spends significant amounts on wildfire response and recovery. In the past ten years, the state has spent nearly $10 billion from the General Fund for the California Department of Forestry and Fire Protection’s wildfire response activities. Recovery costs for debris removal and cleanup, social services (such as shelters and social services), and local assistance (including rebuilding public infrastructure and backfilling property tax losses) can also be significant. For example, the administration estimates that state expenditures on wildfire and recovery activities for the 2017 wine country fires have totaled about $1.5 billion. While costs associated with these fires are eligible for federal reimbursement, the administration estimates that the state General Fund share of these costs will be roughly $400 million. Air Quality. Smoke from the multiple wildfires that burned in the northern part of the state in October 2017 affected air quality and closed schools, airports, and businesses in cities at least 100 miles away from the fires. At its worst, fine particulate matter air pollution in San Francisco— located over 40 miles away from the fires—was measured at 190 micrograms per cubic meter, more than five times the federal health standard of 35 micrograms per cubic meter. Greenhouse Gas (GHG) Emissions. The Sierra Nevada Conservancy estimates that the 2013 Rim Fire—the fourth largest in California history—released 11.4 metric tons of GHG emissions, equivalent to what 2.6 million cars would release in a year. Moreover, burned trees left on the landscape will continue to release additional emissions as they decay over time. Water Supply and Quality. Initial estimates suggest the 2012 Bagley Fire resulted in an estimated 330,000 metric tons of fine sediment and 170,000 metric tons of sand, gravel, and cobbles deposited into Lake Shasta—which stores drinking and agricultural water supplies for millions of customers. Habitat for Fish and Wildlife. One study found that the 2013 King Fire destroyed 30 out of 45 known habitat sites in the El Dorado National Forest for the California Spotted Owl, and that those sites remained unsuitable even a year after the fire. www.lao.ca.gov 23 analysis full gutter AN LAO REPORT Figure 12 Most of the State's 20 Largest and 20 Most Destructive Fires Have Occurred Within the Past Two Decadesa Largest (Acres Burned) Most Destructive (Structures Destroyed) 1920s 1930s 1940s 1950s 1960s 1970s 1980s 1990s 2000s 2010s 300,000 250,000 200,000 150,000 100,000 50,000 1,000 2,000 3,000 4,000 5,000 6,000 a Each bar represents one fire, even if multiple fires occurred in a single year. For example, five of the most destructive fires that are shown in the 2010s occured in 2017. 24 LEGISLATIVE ANALYST’S OFFICE analysis full gutter AN LAO REPORT Analysis of Mokelumne Watershed Finds Forest Treatments Yield Economic Benefits In 2014, the Sierra Nevada Conservancy, U.S. Forest Service, and The Nature Conservancy published an analysis of how wildfire might affect resources in the Mokelumne River watershed under various hypothetical conditions. The report, Mokelumne Watershed Avoided Cost Analysis: Why Sierra Fuel Treatments Make Economic Sense, simulated the outcomes of five potential fire scenarios with and without the application of fuel treatment projects such as forest thinning and prescribed burning. The analysis found that fuel treatments would significantly reduce the size and severity of wildfires, and that the economic benefits of the modeled fuel treatments were two to three times the costs of their implementation. Specifically, the report estimated that while undertaking fuel reduction projects in the watershed would cost nearly $70 million, avoided costs from a severe wildfire (such as structures saved and avoided fire clean-up) as well as potential revenue from the thinning activities (such as from merchantable timber, carbon sequestration, and biomass that could be used for energy or other purposes) could yield benefits of between $126 million and $224 million. The analysis found these economic benefits would accrue to both public and private entities, including the state and federal governments, residential property owners, timber companies, and water and electric utilities. potentially yield other benefits, their implementation mitigate for these types of negative impacts, for can also have other, less desirable consequences. example by leaving certain stands of trees in place For example, in some cases removing trees for wildlife habitat, or by applying prescribed burns can reduce available habitat for certain wildlife. only under specific conditions that minimize public Similarly, roads and heavy equipment necessary health impacts. The regulatory permitting processes for mechanical thinning operations can both described earlier help ensure these types of disrupt habitat for terrestrial species, as well mitigations are implemented. On the whole, forest degrade conditions for fish and aquatic species by managers and the public must weigh the potential increasing sediment runoff into streams. Prescribed negative impacts of undertaking forest health and managed burns have been among the most activities against the potential benefits of applying controversial types of treatments because of the the treatments—and against the risks inherent in potential for the resulting smoke to temporarily not taking actions to improve forest and watershed degrade air quality in surrounding communities. health. Forest managers generally try to minimize and FINDINGS While broad consensus exists about both the we identify and discuss some of the barriers that problematic conditions of the state’s forests and impede major progress towards healthier forests. the types of activities needed to address them, the We organize our findings into four categories: pace of making the needed improvements is slow. (1) funding and coordination, (2) policies and Moreover, the scale of the improvement projects practices, (3) local assistance programs, and that are currently taking place is relatively small (4) disposal of woody biomass. Figure 13 (see next compared to the identified need. In this section, page) summarizes our key findings. www.lao.ca.gov 25 analysis full gutter AN LAO REPORT Figure 13 Summary of Findings 9 Funding and Coordination Not Adequately Addressing Forest Conditions • State spending is not keeping pace with the large costs that have been identified for improving forest conditions. • Downstream beneficiaries are not contributing much to forest health activities. • CalFire is not the best entity to oversee proactive forest health efforts. • The state lacks a clear plan for prioritizing the use of funding to maximize forest benefits. 9 Certain State Policies and Practices Can Inhibit Forest Health Activities • Requiring plans for all timber sales constrains revenues that might encourage additional forest restoration activities. • Some other state permitting requirements can also inhibit forest restoration activities. 9 Constraints Limit Effectiveness of Two Landowner Assistance Programs • Several limitations constrain the use of prescribed fire through CalFire’s Vegetation Management Program. • The reimbursement-based structure of the California Forest Improvement Program creates challenges for landowners. 9 Limited Options for Using and Disposing of Biomass Can Inhibit Forest Thinning Projects • Limited uses for thinned forest materials can both inhibit and increase the costs of forest management activities. • Disposing of unutilized biomass can be challenging, given air quality concerns associated with open pile burning. CalFire = California Department of Forestry and Fire Protection. Funding and Coordination Not wildfire threat and may benefit from fuels Adequately Addressing reduction treatment. According to the plan, CalFire estimates that to address identified Forest Conditions forest health and resiliency needs on Large Identified Costs to Improve Forest nonfederal lands, the rate of treatment would Conditions, State Spending Not Keeping need to be increased from the recent average Pace. As discussed earlier, ongoing state and of 17,500 acres per year to approximately federal funding for proactive forest management 500,000 acres per year. The plan does not in California has averaged around $100 million include associated cost estimates. annually in recent years, treating an estimated • Restoration on Federal Lands. Based on its 280,000 acres per year. This level of treatment has ecological restoration implementation plan, not been sufficient to maintain healthy natural forest USFS estimates that 9 million acres of national conditions, and a backlog of needed activity has forest system lands in California would benefit formed and continues to grow. Experts suggest from treatment. The draft Forest Carbon Plan significant additional funding would be needed to sets a 2020 goal of increasing the pace of increase the pace and scale of treatment activities treatments on USFS lands from the current such that they meaningfully improve current forest average of 250,000 acres to 500,000 acres conditions. While no conclusive, comprehensive annually, and on BLM lands from 9,000 acres assessment of needs and costs has been to between 10,000 and 15,000 acres annually. completed, recent estimates for certain regions • Restoration in the Sierra Nevada Region. include the following: A recent Public Policy Institute of California study cited estimated forest treatment • Restoration on Nonfederal Lands. The draft needs of between 90,000 and 400,000 Forest Carbon Plan states that 20 million acres annually in Sierra Nevada forests to acres of forestland in California face high 26 LEGISLATIVE ANALYST’S OFFICE analysis full gutter AN LAO REPORT bring them back to historical conditions did not contain a cost estimate for the and functions. The authors found that the identified restoration work. associated costs of mechanical thinning Downstream Beneficiaries Not Contributing could vary widely—from net costs of around Much to Forest Health Activities. As discussed, $800 per acre to net revenues of nearly the majority of the state’s developed water supply $1,900 per acre—depending on the size of originates in its forested source watersheds, and the trees removed and their potential sale that supply is threatened by overly dense forest value. This significant range results from the conditions and wildfire risk. Yet despite the inherent degree to which the thinning project primarily interest in maintaining forest health this creates for produces non-revenue generating woody downstream water users, few of those users are biomass, as compared to producing large investing in maintaining the health of their source trees that can be sold as timber. The report watersheds. While comprehensive statewide data also cited a wide range of costs for applying are not available, our review found only a few prescribed fire—from $75 to $647 per acre— examples of water or hydropower agencies that depending on the landscape where it is are opting to spend their local funds on projects applied. to maintain or improve forest health. Instead, as • Restoration to Increase Water Supply. discussed earlier, the bulk of funding for forest A nonprofit organization, The Nature health programs comes either from the state or Conservancy, published a study suggesting federal agencies. that healthier forests could increase The limited examples we found of local streamflow runoff for Sierra Nevada investments in forest health generally were from watersheds by up to 6 percent, but that agencies receiving water and hydropower directly such results would require the current scale from nearby forests. These include the Upper of forest restoration in those watersheds to Mokelumne River Watershed Authority (a joint increase three-fold. Specifically, the report powers authority made up of six water agencies) estimates that a total of about 470,000 acres and the Placer County Water Agency. These groups in the study area has been restored over the are partnering with other agencies (such as USFS) past ten years, yet between 1.1 million and to improve the health of their watersheds, including 1.3 million acres of additional restoration undertaking forest thinning and restoration would be needed to generate the estimated projects. Additionally, a few other groups have water supply benefits. The study estimated paired local funds with state bond funds through this work would cost around $1,000 an acre, the IRWM program to conduct water quality and but that the economic benefits from increased restoration projects in nearby forested upper water yield—particularly from hydropower— watersheds. In contrast, we found few examples could offset a significant amount of those of forest investments from agencies located further costs. downstream from source watersheds—that is, • Restoration in Significant Watersheds. A those that depend on snowmelt runoff that travels nonprofit organization, Pacific Forest Trust, longer distances through the state’s rivers and assessed the conditions of the five source canals, such as agencies in the Central Valley or watersheds that deliver water to the Shasta Southern California. For example, entities that and Oroville reservoirs and determined contract to receive water from the federal Central that almost 65 percent of the forest area Valley Project and those from the SWP have was significantly degraded and merited not made significant financial contributions to restoration. The report also identified a need maintaining or improving the health of the forested to restore over 90 percent of the meadow watersheds above Shasta Dam and Oroville Dam, areas in those watersheds to reestablish the originating sources of the water supply upon their ecological functions. The assessment which they depend. www.lao.ca.gov 27 analysis full gutter AN LAO REPORT The connection between watershed health and activities, such as CNRA, DFW, and SWRCB. water supply has received some additional attention Specifically, it makes it more difficult to coordinate from downstream water users in recent years, likely with other funding sources and pursue other due in part to the increased prevalence of severe objectives—such as protecting water quality and wildfires. In 2014, a coalition of five statewide wildlife habitat—that fall under the jurisdiction of groups—representing the water, forestry, rural, those other departments, as compared to if the environmental, and agricultural sectors—formed the lead entity was an agency or multi-department California Forest Watershed Alliance to advocate for team. Second, while CalFire clearly has an increasing the pace and scale of forest restoration important role to play in contributing to the state’s practices to “promote healthier, more resilient forest health efforts, we believe the department’s forests across California.” Additionally, in 2015 the other vital and time-intensive responsibilities might Association of California Water Agencies issued interfere in its attempts to lead those efforts. The a report recommending increased investments large number of severe fires over the past five years in improving the resiliency of California’s water has demanded that CalFire dedicate even greater sources. These initiatives, however, have stopped resources, time, and attention to its emergency short of calling for downstream beneficiaries to response responsibilities. We are concerned that invest their own funding in upper watershed health the department’s leadership may not be able to projects. Rather, they primarily call for increased simultaneously sustain uninterrupted direction action on the part of the state and federal over proactive forest health efforts—such as governments. developing and overseeing grant programs, forming Recent legislation, Chapter 695 of 2016 partnerships with other agencies, streamlining (AB 2480, Bloom), defines source watersheds permitting processes, and taking other steps as “integral components of California’s water to increase the pace and scale of restoration infrastructure” and states that forest and ecosystem projects—while it is occupied with managing repair in those watersheds may be funded in increasingly frequent and extreme fire emergencies similar ways to the maintenance and repair of other across the state. water infrastructure. The vast majority of water State Lacks Clear Plan for Prioritizing Use of infrastructure projects are funded through local Funding to Maximize Benefits. Given the extent of funds (such as revenues from water user fees), with both the degraded forest conditions and the costs state and federal funds typically making up a much associated with making improvements, the state smaller comparative share. Most local agencies will have to undertake forest health projects on an have not yet begun to consider actions to improve incremental basis. The problem is too vast—and watershed health as typical water infrastructure expensive—to resolve in just a few years. In light projects. of these limitations, focusing available dollars on CalFire Not Best Entity to Oversee Proactive restoration activities in locations where they can Forest Health Efforts. As discussed earlier, achieve maximum impacts will be key. Yet the currently CalFire is the primary state entity charged state lacks a comprehensive, strategic approach with leading the state’s efforts to improve forest for making meaningful improvements in statewide health and overseeing the large investments the forest conditions. state is making using GGRF funds (and potentially Although the state has appropriated hundreds of Proposition 68 bond funds, should it be approved millions of dollars to improve forest health in recent by voters). While we think identifying a lead agency years, these investments have not been guided by to oversee forest health efforts is important, we an overarching, coordinated strategic plan. Rather, have two concerns with assigning CalFire with many programs have allocated grants for activities this responsibility and funding. First, housing this that achieve small-scale, project-level benefits. In funding within one department makes it more general, projects have been evaluated for funding challenging to involve the other state departments on an individual stand-alone basis, rather than that typically have a role in regulating forest health based on how they might fit into a coordinated, 28 LEGISLATIVE ANALYST’S OFFICE analysis full gutter AN LAO REPORT broader scale effort. In the words of one potential, [and] opportunity for biomass use.” stakeholder with whom we spoke, the grants the Given that several of these characteristics currently state has allocated thus far have largely achieved apply to a large proportion of the state’s forests, “random acts of restoration.” This patchwork exactly how the department will prioritize the limited approach is unlikely to yield meaningful progress in funding is unclear. tackling the overall forest conditions and associated Many options exist for how the state might risks. Improvements on one small parcel of land focus its forest health efforts and funding. For will not significantly reduce fire risk or protect water example, some entities have suggested the supply if the surrounding parcels continue to have state should prioritize restoration work in key overly dense and unhealthy conditions. watersheds that provide water supplies to large The state has taken some recent steps to better numbers of Californians, such as those that feed coordinate forest health efforts. For example, into the reservoirs behind the dams at Oroville and the draft Forest Carbon Plan articulates some Shasta. Others have argued that the state should statewide goals that could help improve forest focus on preventing fires on SRA lands, and avoid conditions. It recommends that state conservancies spending state funds on forests that are under (there are ten in various regions across the state) federal jurisdiction. Some groups advocate that in develop “action plans” to prioritize improvements in the near term, the state should prioritize funding their local forests. (The plan states that “alternative for areas that have identified projects and existing leadership capacity will need to be identified partnerships in place because they may be able in areas not covered by state conservancies.”) to pull together local funding and agreements The plan also sets some specific targets for more quickly and initiate work with fewer delays— increasing the annual rate of forest restoration and such as the Tahoe Central Sierra Initiative, a reforestation on nonfederal lands. However, the component of the Watershed Improvement document lacks specific implementation details, Program mentioned earlier. In a slightly different such as how and when the recommended regional argument, some scientists have suggested that the prioritization plans should be developed, and where state should focus its efforts primarily on higher the state should focus its dollars and efforts in elevation landscapes since lower elevation forests the coming years. For example, the plan states an may ultimately be “lost” to the effects of climate overall goal of increasing the rate of fuels reduction change in the coming decades regardless of what treatments on nonfederal lands from the recent restoration activities might be undertaken in the average of 17,500 acres per year to 35,000 acres near term. per year by 2020 and to 60,000 acres per year by Undoubtedly, prioritizing one region or type 2030, but fails to include specific details about how of activity over another is not without trade-offs. or where the state should go about implementing Given limited resources, an intensive focus in one this goal. area could mean delaying restoration work—and Another step the state has taken to better living with heightened risk—in another. This kind coordinate funding is the newly released grant of prioritization can be difficult both politically and guidelines for CalFire’s GGRF-funded Forest Health practically, as most regions can make a compelling Program. These require that proposed projects case for responding to the risks associated with the include “large, landscape-level forestlands,” current conditions of their surrounding forestlands. produce “multiple benefits,” and “target forestlands However, continuing a practice of spreading where projects will have the greatest benefits.” funding and efforts across too many regions could However, the guidelines list several possibilities undermine the effectiveness of those activities. for defining how such benefits will be defined and That the state adopt and follow some kind of prioritized, including “areas with elevated levels of prioritization principles and strategic approach tree mortality and wildfire threats, carbon storage seems vital. www.lao.ca.gov 29 analysis full gutter AN LAO REPORT Certain State Policies and Practices Figure 7 on page 12) are intended to protect Can Inhibit Forest Health Activities against undue negative environmental impacts, these requirements are likely inhibiting some of Requiring Plans for All Timber Sales Might the potential positive environmental effects that Be Discouraging Additional Restoration. We find improved forest health could yield. (Our findings that one key component of the state’s FPR—that and recommendations focus on state regulatory a THP or other timber management plan generally requirements, since federal laws and permits must be prepared any time timber is removed from are beyond the scope of the state Legislature’s the forest and sold commercially—may be inhibiting authority to change.) Project proponents seeking some beneficial forest restoration work. Restoration to conduct activities to improve the health of and forest management work often involves the California’s forests indicate that in some cases, removal of trees that could be commercially viable. state regulatory requirements can be excessively When sold, the revenue generated from sales duplicative, lengthy, and costly, thereby delaying can help offset the cost of restoration activities. and limiting the pace and scale of their proposed However, selling any forest products commercially projects. In particular, stakeholders suggest that usually requires additional documentation, such as undertaking large-scale, multiphase treatments a THP. The FPR were initially created to regulate across many acres of forestland—referred to as timber harvesting on private lands in order to “landscape-level” projects—can be particularly ensure that logging was done in a sustainable difficult given existing permitting structures. This is manner. At the time, the Legislature was concerned because regulatory agencies often consider each that forests were being overharvested for phase of the work as a specific project needing an commercial purposes. This led to the requirement individual set of costly and time-intensive permits, that a THP be prepared anytime harvested trees are rather than considering and approving the overall to be sold. However, based on our conversations strategy. Additionally, when entities want to use with stakeholders, small landowners and state funds to conduct a thinning project on federal proponents of forest restoration projects are finding forestlands, in certain cases they must conduct that the costs and time associated with preparing both the federally required NEPA review and one of these plans can be cost prohibitive. They certain components of the state required CEQA therefore often forego preparing such plans, review, and undertake multiple public comment meaning they also forego the opportunity to earn and scoping periods. As we discussed earlier, revenues from selling any marketable timber. while certain permit exemptions and streamlined Foregoing that revenue reduces the total number processes do exist—such as specific programmatic of projects that can be undertaken with limited EIRs—these only apply for certain types of projects. resources. Solutions to address this concern have been attempted—most notably, the implementation Constraints Limit Effectiveness of of NTMP and the more recent Working Forest Two Landowner Assistance Programs Management Plan program, which have fewer Several Limitations Constrain Use of planning requirements for smaller landowners and Prescribed Fire. There are three main conditions are valid for a longer time period compared to that must be met in order for a prescribed burn to THPs. While these strategies reduce regulatory take place under VMP. First, all documentation— costs for landowners compared to preparing THPs, including a burn plan, CEQA compliance, and they still present substantial upfront costs that are air quality permits—must be completed by the problematic for some small landowners. landowner and CalFire for the project in advance. Some Other State Permitting Requirements Second, CalFire firefighters must be available in Also Can Inhibit Forest Health Activities. the same geographical area as the project in order While the multiple state permits required to carry to conduct the burn. Third, weather conditions out many forest health activities (described in and other factors—such as wind speed, humidity, 30 LEGISLATIVE ANALYST’S OFFICE analysis full gutter AN LAO REPORT temperature, and air quality—must be within the work is completed. Many of these small specified limits established in the burn plan and air landowners, however, do not have the necessary quality permit. money, equipment, or personnel on hand to cover We found in different situations any of these the full upfront costs of the work authorized by three conditions can impede the ability of a VMP CFIP. This limits the number of landowners who project to proceed. In some cases, weather are able to participate in CFIP, and potentially also conditions are such that a prescribed burn might the acreage of private forestland being actively affect air quality conditions in a nearby community managed. in violation of the air quality permit. In other Limited Options for Using and situations, CalFire fire crews are not available Disposing of Biomass Can Inhibit to conduct prescribed burns because they are engaged in firefighting activities. We note that in Forest Thinning Projects recent years, the Legislature has provided CalFire Limited Uses for Thinned Materials Can with additional year-round firefighting staff, which Inhibit, Increase Costs of Forest Management. should increase the department’s capacity both to Some stakeholders report that costs associated combat wildfires and conduct prescribed burns and with the limited options for utilizing or disposing of other proactive forest management activities. woody biomass can prohibit them from undertaking In addition, CalFire has indicated that its projects that would improve the health of their current level of foresters who prepare and forestlands, or limit the amount of acres they review documentation under VMP is inadequate. are able to thin. As discussed earlier, woody According to CalFire, current staff are unable to biomass typically is not useable in traditional prepare enough potential projects to be ready for lumber mills. This is because these byproducts implementation throughout the state when and of timber harvest or thinning operations may be where both weather conditions and the availability of an undesirable species, too small in diameter of firefighting staff would otherwise permit it. for lumber production, or malformed. Historically, Currently, CalFire has 21 foresters that spend much of this excess forest product was burned to part of their time working on the VMP program, produce bioenergy. However, a significant number and they are able to prepare a total of about of bioenergy facilities have closed over the course 25 projects annually. The department is currently of the past two decades. Specifically, in 1991, treating roughly 20,000 acres annually. However, there were 54 woody biomass processing facilities a recent department analysis estimated that it has across the state, with the capacity to produce the capacity to complete 40,000 acres when taking around 760 megawatts of electricity. In contrast, into account the availability of firefighting staff and at the end of 2017 there were only 22 operational other constraints (such as weather conditions that facilities with a total capacity of 525 megawatts. would allow prescribed burns). This suggests that a These closures have occurred as facilities—largely major constraint on completing more VMP projects built in the 1980s—fell out of compliance with more is that not enough of the documentation necessary modern air and energy standards, and as bioenergy to have projects ready to be implemented has been has increasingly had to compete with cheaper prepared. energy sources such as wind, solar, and natural Reimbursement-Based Structure of gas. CFIP Creates Challenges for Landowners. With fewer available facilities, the distances Stakeholders have identified barriers to utilizing biomass must be shipped for processing have CFIP, CalFire’s cost-sharing assistance program increased, correspondingly increasing the overall for forest management activities. As noted earlier, costs of forest thinning projects for landowners this program has a reimbursement-based structure, and project sponsors. Hauling woody biomass where landowners enter into an agreement with is particularly costly due to its weight. Some CalFire and undertake work on their lands, then additional items can be produced using woody receive payment for a share of the costs once biomass, including landscaping materials, www.lao.ca.gov 31 analysis full gutter AN LAO REPORT compost, and products that are manufactured Review)—established a Wood Products Working from wood chips or pellets. These items, however, Group to explore options for expanding the wood generally are too low in value to offset the costs products market. The group released a report in of transporting biomass to facilities for their October 2017 that recommended (1) removing production. As discussed in the nearby box, other barriers and encouraging market development states such as Oregon have been successful in for wood products, (2) promoting innovation, providing market incentives for the development and (3) investing in human capital. The report of new products and adoption of engineered offered various strategies to accomplish each wood products into construction and other uses. recommendation, including outreaching to local California has not taken significant steps towards planning offices and developers regarding new similar efforts. However, legislation—Chapter 368 of building codes that allow for new timber uses, 2016 (SB 859, Committee on Budget and Fiscal conducting pilots or competitions for new wood Oregon Incentivizing Development of New Wood Technologies The state of Oregon recently took actions to incentivize the development and implementation of cross-laminated timber (CLT), a new use for woody biomass, that could provide a model for California. CLT is a wood building product used for framing buildings that is made by bonding layers of lumber. The technology allows the use of smaller pieces of wood that cannot be used in traditional wood beams, meaning it can utilize the biomass produced from forest management activities like thinning. The International Building Code for 2015 recognizes CLT for use in most buildings. While CLT has been used in Europe since the 1990s, it is relatively new to North America. The state of Oregon recently took steps to introduce the manufacturing technology in the United States. Specifically, the state’s economic development agency provided a $150,000 grant for CLT research at Oregon State University and to plan a production line at a mill in a small town in the southern part of the state. The result was the first and only American company to be certified by the American Plywood Association to produce CLT. Subsequently, Oregon provided a loan to the mill for the costs of building the new production line and launched a $200,000 CLT design competition. Grants from the federal government and industry groups helped pay for testing. The competition resulted in a condominium building and parking garage made of CLT in Portland. Currently, an 11-story timber high-rise made from CLT is planned in downtown Portland, which would be the nation’s first high-rise building made from wood. CLT is also used for housing and other smaller buildings. These examples show that relatively small state programs can help in furthering development of the wood products industry. California could be a key region for CLT adoption, particularly since it is a large market for earthquake retrofitting, and certain CLT buildings have performed very well in seismic resistance testing. A federally funded study conducted by an Oregon nonprofit recommended several state actions that could increase investment in and use of CLT, including (1) providing grants or subsidies for equipment, (2) offering loan guarantees on equipment or capital investments, (3) working to change building codes to encourage the use of CLT in Oregon as well as surrounding states, (4) providing outreach and education to engineering and design firms, and (5) providing streamlined permitting for buildings that use CLT. 32 LEGISLATIVE ANALYST’S OFFICE analysis full gutter AN LAO REPORT products (similar to Oregon), and expanding the Regulations Working Group of the Tree Mortality partnerships with community colleges and the Task Force recently issued new guidelines—under California Conservation Corps to develop workforce the authority of the Governor’s tree mortality-related capacity in the forestry and wood products sectors. executive order—for high hazard zone tree removal Disposing of Unutilized Biomass Can Be that relaxed some of those permit requirements, Challenging. As discussed earlier, biomass that these exceptions only apply in areas of extreme is not utilized is most frequently disposed of by tree mortality. For example, the guidelines allow open pile burning. While this approach is often more burning to take place under different less expensive than efforts to use biomass, it still weather conditions, such as slightly higher wind or requires landowners to invest significant time, temperature conditions. planning, and funding. These challenges can also The state has had some success in mitigating create barriers for undertaking forest thinning these challenges and increasing biomass disposal projects. Typically, open pile burns require air in areas with high tree mortality by utilizing “air quality permits from local air districts, burn permits curtain burners,” which are portable incinerators from local fire agencies, and potentially other designed to produce less smoke and GHG permits depending on the location, size, and type emissions than open pile burns. Because they are of burn. To reduce smoke, permits restrict the size contained and have a smaller impact on air quality, of burn piles and vegetation that can be burned, the use of air curtain burners is not as limited by the hours available for burns, and the allowable weather conditions or permitting requirements. moisture levels in the material. These restrictions Currently, CalFire has ten burners, which have been limit the amount of biomass that can be disposed distributed to areas that have experienced high of and increase the per-unit disposal costs. While rates of tree mortality. RECOMMENDATIONS In this section, we recommend steps the (1) which state entity should oversee and lead Legislature could take to address the barriers forest and watershed health efforts and (2) what highlighted above. We begin by providing an fund sources should support the costs of the overview and some overarching comments that additional actions we recommend. Below, we first apply to our package of recommendations, then we discuss each of these crosscutting issues. describe specific recommendations in each of the Larger Role for CNRA. One common theme four broad categories we highlighted in the previous across several of our recommendations is section: funding and coordination, policies and enhancing the role that CNRA plays in the state’s practices, local assistance programs, and disposal forest and watershed health efforts. As described of woody biomass. earlier, the agency currently heads up some forestry-related activities, including THP reviews Overview of Recommendations and certain TRFRF programs, but CalFire oversees Figure 14 (see next page) summarizes our most of the state’s forest health grants. Our various recommendations to improve the health recommendations envision CNRA taking a greater of the state’s forested watersheds. These role in coordinating, overseeing, and reporting to recommendations encompass both larger actions— the Legislature on the state’s forest health activities. such as significant expenditures for landscape-level As described below, we believe the agency is forest health projects—as well as some more well-positioned to bring together multiple state moderate steps that we believe could help achieve departments—including CalFire—to take proactive improved outcomes. Two overarching issues cut steps to increase the pace and scale of forest across several of our specific recommendations: restoration efforts. www.lao.ca.gov 33 analysis full gutter AN LAO REPORT Figure 14 Summary of Recommendations 9 Improve and Increase Funding and Coordination • Recognize the statewide benefits healthy forests can provide by maintaining at least the current level of funding—$280 million—annually for forest treatment projects. • Take steps to generate additional investments from downstream beneficiaries by: – Requiring the State Water Project to make an annual spending contribution to maintain the health of the Feather River watershed. – Appropriating $2 million for pilot projects for local water and hydropower agencies to conduct wildfire cost-avoidance and cost-benefit studies. – Modifying grant criteria for the Integrated Regional Water Management program to encourage spending on watershed health projects. • Designate CNRA—rather than CalFire—as the lead agency to oversee proactive forest and watershed health funding and initiatives. • Ensure that future spending is based on clear prioritization criteria to make meaningful progress on achieving statewide goals. 9 Revise Certain State Policies and Practices to Facilitate Forest Health Activities • Allow the sale of timber without a timber harvest management plan when the primary purpose of the project is forest health in order to help offset the costs of beneficial forest thinning projects. • Direct CNRA to submit a report proposing options for how the state might streamline forest health project permitting requirements. 9 Improve Landowner Assistance Programs to Increase Effectiveness • Allocate funding to CalFire for additional forester positions to increase the department’s use of prescribed fire through its Vegetation Management Program. • Restructure California Forest Improvement Program payments to reduce the burden on small landowners by providing partial payments in advance of work being undertaken. 9 Expand Options for Utilizing and Disposing of Woody Biomass • Support the development and incentivize the use of nontraditional wood products by appropriating funding for a pilot grant program. • Increase opportunities for disposing of biomass by: – Requiring CalFire and CARB to analyze when burn permit requirements could be eased. – Appropriating funding to purchase additional air curtain burners based on an analysis by CalFire. CNRA = California Natural Resources Agency; CalFire = California Department of Forestry and Fire Protection; and CARB = California Air Resources Board. Multiple Funding Options, Though Each would need to rely on funding sources that can Comes With Trade-Offs. Given the magnitude of support significant—multimillion dollar—levels problematic conditions across the state’s forested of spending for these landscape-level projects, watersheds, many of our recommended actions— such as the General Fund and GGRF. Other unsurprisingly—would result in additional costs. We recommended actions, however, encompass more do not identify specific funding sources for each modest steps that are intended to help support activity, as the Legislature has multiple options the larger goal of improved conditions. For these upon which it could rely. activities—such as implementing cost-benefit Some of the costs associated with our analyses, developing alternative wood products, recommendations would be significant, such as or purchasing new air curtain burners—the to increase the pace and scale of large forest Legislature also has the option of using funding treatment projects. To make meaningful progress sources that are able to support smaller, less-costly on improving existing forest conditions, the state expenditures. Such sources include TRFRF and the 34 LEGISLATIVE ANALYST’S OFFICE analysis full gutter AN LAO REPORT Environmental License Plate Fund, which provides acres treated through CalFire’s VMP and CFIP roughly $50 million annually from the sale of license programs. Given the patchwork of ownership and plates for environmental programs and projects. cross-jurisdictional risk, we believe funds should be For all of these funding sources—both large made available for projects both on SRA lands as and comparatively smaller—the Legislature already well as nearby federal lands. In many cases, federal faces many competing priorities. Directing funding agencies have projects identified and ready for to address forest and watershed health and implementation, but do not have sufficient funds to implement our recommended actions would mean complete them. less funding available from any of these sources for The Legislature primarily used GGRF in the other state expenditures. As with all its budgetary current year to support forest restoration activities, decisions, the Legislature will have to balance its and the Governor is proposing an additional multiple priorities. We believe the risks associated $160 million from GGRF on a one-time basis in with failing to address the condition of the state’s 2018-19. We think this is an appropriate fund forests and watersheds merit consideration of our source for such activities, given the GHG risks recommendations despite their associated costs. and benefits associated with forest conditions. Our recommendations also include steps to require However, the General Fund would also be an and encourage greater spending from downstream appropriate fund source given the statewide entities to help pay the costs of sustaining the benefits forests provide. Additionally, we find that it healthy forests on which they depend. would be reasonable for the Legislature to include funding for forest and watershed health in any Improve and Increase general obligation bonds it may propose in future Funding and Coordination years for resource-related activities, given the large upfront costs and long-term statewide benefits Recognize Statewide Benefits From Healthy associated with these projects. (As noted earlier, Forests by Maintaining at Least the Current the Legislature has set aside funding for forest and Level of State Funding. Given the scale and watershed health activities from the proposed bond importance of the state’s forests and the risks it has placed before voters in June 2018.) associated with their current conditions, we find Take Steps to Generate Additional it prudent for the state to prioritize spending to Investments From Downstream Beneficiaries. improve forest health. While federal and local Together with providing additional funding, we entities must continue to play a role in helping believe the state should also help encourage water to address—and pay for—these large and costly and hydropower agencies to spend local funds efforts, the state’s interest in avoiding the adverse to help maintain and improve the health of their impacts associated with unhealthy forests means forested source watersheds. These downstream that providing some state-level funding is also vital. entities are direct beneficiaries of healthy As noted earlier, recent levels of funding are not watersheds and face risks to their water supply and keeping pace with forest restoration needs, and this quality from wildfires and overly dense forests. As is already contributing to negative consequences such, the state should expect that they contribute such as severe wildfires. to improving forest conditions. We recommend the Determining how much to provide for these Legislature take the following three steps to help activities is difficult, given the large need and generate such investments: competing state budget priorities. As a first step, we recommend providing annual appropriations • Require Annual Contribution From SWP of roughly the same amount that was provided to Help Maintain Health of Feather River for these efforts in 2017-18—$280 million. These Watershed. We recommend the Legislature funds could be used for a combination of efforts, adopt budget bill language establishing such as issuing grants for local projects—including an annual requirement that DWR spend a through the Sierra Nevada Watershed Improvement specified amount on projects to maintain Program—as well as to increase the amount of www.lao.ca.gov 35 analysis full gutter AN LAO REPORT and improve the health of the Feather River help those agencies provide evidence to their watershed above Oroville Dam, and directing ratepayers of the value of investing additional the department to recover the costs through local funds in maintaining the health of those its SWP contracts. While determining exactly watersheds. We recommend including a how much funding SWP beneficiaries should requirement that DWR compile these reports pay to protect their water source is somewhat on its website so that other agencies and subjective, we believe this spending communities can also easily access and learn requirement should be enough to support from this state-funded research. ongoing, cumulative wildfire prevention work • Incentivize Upper Watershed Projects in the watershed without imposing an undue Through IRWM Program. We recommend financial burden on downstream ratepayers. encouraging local entities to use local funds For example, the Legislature could require (paired with state IRWM grants) for watershed that DWR spend $10 million per year for health projects by directing DWR to include these projects. The entities that contract for incentives for undertaking such projects in the that water currently pay roughly $1.2 billion IRWM grant application process. Generally, each year for the operations of that system. IRWM grants are allocated as competitive Restoration and maintenance of source grants to local agencies, and applicants must watersheds should be a component of regular commit to funding a portion of the project’s SWP expenditures, and recent legislation cost (typically 50 percent) with local monies. clarified that this is an important and allowable We recommend that the Legislature require infrastructure expenditure. DWR should work DWR to structure future IRWM grant programs with the interagency Forest Health Team at such that regions that opt to undertake CNRA to determine which projects to fund projects improving upper watershed health each year. We also recommend that the (1) are awarded additional points in the Legislature direct DWR to explore and report scoring of competitive grants applications back on options for how the state might and/or (2) face lower local cost-share encourage the federal government to invest in requirements (for example, 30 percent maintaining and restoring the forested source rather than 50 percent). These incentives watersheds that supply the Central Valley would encourage IRWM regions to invest Project system. in projects that benefit their water supply • Provide $2 Million for Cost-Benefit Studies. and quality even if they are implemented We recommend the Legislature appropriate upstream and outside of their region. These $2 million in one-time funding for DWR to new grant conditions could be imposed for initiate a number of pilot projects for local IRWM grants from future bonds. Moreover, water and hydropower agencies to conduct the Legislature could direct DWR to apply wildfire cost-avoidance and cost-benefit prioritized application scoring for the roughly studies. We recommend DWR use this $200 million in IRWM funds remaining to be funding to allocate competitive grants to local appropriated from Proposition 1 (the 2014 agencies, and that the grants include a local water bond). (Proposition 1 language prohibits cost-share requirement so the state does not changes to local match requirements.) bear the full cost of conducting the studies. Designate CNRA as Lead Agency for We estimate each study would cost between Proactive Forest and Watershed Health Funding $250,000 and $1 million to complete in total. and Initiatives. We recommend the Legislature As with the Mokelumne study described task CNRA with heading up a multi-department on page 25, we believe this could help Forest Health Team to improve the health of the local agencies define the benefits and risks state’s forests and watersheds. We recommend associated with their source watersheds. The this team build upon the collaborative group information from these studies could then formed by AB 1492 in 2012, consisting of CNRA, 36 LEGISLATIVE ANALYST’S OFFICE analysis full gutter AN LAO REPORT DFW, SWRCB, and CalFire. While CalFire has Benefit. We recommend that prior to appropriating expert knowledge of the state’s forestry needs and additional funding to improve forest and watershed priorities, a more collaborative approach across health, the Legislature require the administration several departments could help ensure that multiple to report on how such funds will be targeted for funding sources are coordinated and that selected maximum statewide benefit. Given the scale of projects align with other state objectives such as problematic conditions across California’s forests, preserving water quality, reducing GHG emissions, the state must be strategic in its investments and protecting fish and wildlife. This is one of to maximize incremental progress towards the reasons the Legislature enacted AB 1492 to its goals—reducing fire risk, protecting water move the THP and permit review program from supplies, and sequestering GHG emissions. CalFire—where it previously was housed—to While some prioritization criteria have been set CNRA. Moreover, shifting leadership over forest out in the state’s draft Forest Carbon Plan and and watershed health activities to CNRA could CalFire’s GGRF-funded Forest Health Program, help ensure they remain an agency priority even these continue to lack specificity. As discussed during active wildfires when CalFire staff are— earlier, continuing a practice of spreading funding understandably—preoccupied with emergency and efforts across too many regions is likely to response. The Forest Health Team could also undermine the effectiveness of those activities. call upon the Tree Mortality Task Force for insight We do not believe the recommended report need and advice on how the state should proceed in be voluminous nor take many months to compile. addressing forest and watershed health issues, Rather, the administration could build upon given the breadth of perspective and expertise this previous efforts—including the Forest Carbon Plan group can offer. and existing grant programs—to clearly explain to One of the most important responsibilities of this the Legislature how funding proposed for allocation new multi-department team would be overseeing would make meaningful progress on achieving forest health funding. When the Legislature statewide goals, and in particular how the funds appropriates future funding from GGRF or other would be used to encourage larger landscape sources for forest and watershed health efforts, we level projects. Such a report could be included recommend it designate CNRA as the lead agency within a budget change proposal for the requested to oversee those appropriations. CalFire—along funding, or as a stand-alone document. Should the with the other involved departments—still would Legislature feel that this initial report lacks sufficient play a role in helping CNRA determine which efforts detail or find the proposed strategy unsatisfactory, and projects to fund; however, it would not be the it could request a more extensive strategic planning sole administering entity. Proposition 68 would effort to guide forest health expenditures in the provide an additional $15 million in forest health future. funding to CalFire (in addition to $25 million that As discussed above, we believe CNRA is the CalFire would be required to pass along to the best agency to coordinate and oversee proactive Sierra Nevada Conservancy for the Watershed forest health efforts and grant programs and Improvement Program). Should the bond be therefore would likely be the best agency— approved by voters in June 2018, we recommend together with our recommended multi-department the Legislature require that CalFire consult with Forest Health Team—to provide such a report to our proposed CNRA-led multi-department Forest the Legislature. However, should the Legislature Health Team in making allocation decisions for continue to appropriate most funds for forest health those funds. activities to CalFire—from GGRF or other sources— Ensure Future Spending Is Based on Clear this responsibility should correspondingly fall to that Prioritization Criteria to Achieve Maximum department. www.lao.ca.gov 37 analysis full gutter AN LAO REPORT Revise Certain State Policies and are most needed—coupled with strict parameters Practices to Facilitate Forest Health around when such exemptions might be used— could potentially allow these landowners and Activities project proponents to recoup some of their costs Allow Sale of Timber Without Management from restoration. This, in turn, could allow some Plans Under Certain Limited Circumstances. projects that would otherwise be cost-prohibitive In order to help increase the acreage of thinning to move forward or free up additional funding to projects on nonindustrial lands, we recommend potentially increase the amount of acreage thinned. that the Legislature amend the Forest Practice Act Direct CNRA to Propose Options for to allow landowners and restoration projects to sell Streamlining Forest Health Project Permitting some commercially viable timber without having Requirements. To expedite and facilitate to complete a timber management plan when the implementation of larger scale forest health primary purpose of the project is to improve forest projects, we recommend exploring opportunities health. While not required to complete a harvest to reduce some of the duplication, costs, and plan, under our proposal landowners would need time delays associated with the regulatory review to secure an exemption from CalFire certifying process for forest restoration projects. Ensuring that the project was for the purpose of improving that unintended negative environmental impacts are forest health, and the landowner would be required avoided is important, and of course this is the point to acquire any other relevant permits. In making of the regulatory process the state has put in place. such a change, the Legislature would want to be However, modifying the current review process careful about defining which projects are eligible could avoid inhibiting forest health activities for this exception in order to avoid any unintended that are intended to create an overall benefit in consequences, such as detrimental overharvesting. environmental conditions, such as by avoiding Retaining other environmental permitting catastrophic wildfires that have the potential to requirements could help ensure these projects cause even greater damage. do not result in undue negative impacts. Within Specifically, we recommend the Legislature clear and narrow parameters and appropriate adopt legislation directing CNRA to submit a regulatory oversight, we think limited expansions of report to the Legislature recommending options for sales of commercially viable timber could promote streamlining permitting requirements to facilitate additional activities that benefit forest health. and expedite large-scale forest health projects. Statute already allows for some exemptions from We also recommend requiring that CNRA convene timber management plans for commercial harvest an advisory group to provide input into the when specific conditions are met and the activity development of this report. Members of this group addresses an important state need. For example, should include stakeholders from the involved Chapter 583 of 2016 (AB 1958, Wood) allows THP state regulatory agencies (such as CalFire, DFW, exemptions for commercial removal of very specific and the state and regional water quality control trees when that removal is part of a project to boards), agencies frequently involved in funding restore and conserve California black or Oregon forest health projects (including the Sierra Nevada white oak woodlands. That legislation provides Conservancy), and other involved stakeholders examples of reasonable limitations that could be such as environmental groups, forestry replicated under our recommended approach, such organizations, and landowners. As a model for this as specifying: the maximum diameter, number, and work, the agency can build upon the collaborative species of trees that can be harvested; the radius groups convened and the streamlined processes from the restoration area that can be harvested; implemented pursuant to AB 1492, as that effort and the restoration activities that must take place. had similar participants and goals. We recommend Providing similar exemptions from THPs and other the legislative report address the four topics timber management plans for landowners or outlined in Figure 15: (1) problems with the current restoration projects where forest thinning efforts system that lead to delays and duplication of 38 LEGISLATIVE ANALYST’S OFFICE analysis full gutter AN LAO REPORT effort, (2) how to preserve important environmental Improve Landowner Assistance protections under a more streamlined permitting Programs to Increase Effectiveness system, (3) options for reform that could be Allocate Additional Funding to CalFire to accomplished under current law, and (4) options Increase Use of Prescribed Fire. We recommend that would require new legislation to implement. increasing CalFire’s capacity to identify, plan, We recommend that CNRA submit its report to the and implement prescribed fire projects by Legislature no later than May 1, 2019. increasing funding for the VMP. Specifically, we We believe the second topic noted in the recommend the Legislature increase funding for figure—preserving important protections—is the forester positions who prepare and review particularly important because forest treatment the documentation for prescribed burns by a few projects conducted without proper mitigation million dollars annually above the program’s current can result in negative environmental impacts funding level of $10 million. Under the VMP, CalFire (such as to water quality or fish and wildlife) even foresters help design prescribed fire projects and when improving conditions is the overall goal. As ensure projects are in compliance with CEQA, air such, we do not recommend that the Legislature quality requirements, and other state laws before extend blanket CEQA exemptions for all forest they can be implemented. Increasing staff capacity health projects. Similarly, we do not recommend could expedite project documentation and approval waiving endangered species protections for forest processes, thereby increasing the number of management projects (as has been suggested in prescribed burns CalFire and landowners are able some recent legislative proposals at the federal to complete. We note that increasing firefighter level). Our recommended approach seeks to capacity could also have the potential to increase expedite and expand projects to improve forest the likelihood that a prescribed burn project could conditions while maintaining essential regulatory take place. However, the Legislature has provided oversight and avoiding unintended negative CalFire with increased firefighting resources in the impacts. past few years, while funding for VMP foresters Figure 15 Proposed Focus Topics for Forest Health Regulatory Streamlining Report Recommended Reporting Requirement for the California Natural Resources Agency (CNRA) 9 Issues With the Current System. What are specific shortcomings with the current process for permitting forest health projects? Where do delays, duplications of effort, and bottlenecks occur? 9 Preserving Important Protections. What considerations and safeguards would need to be included in a streamlined permitting system to ensure that adequate environmental protections are maintained and to avoid significant negative consequences (for example, ensuring against presenting opportunities for clear-cut timber harvesting)? How might the state go about maintaining such assurances while facilitating the environmental benefits of improved forest health? 9 Options Under Current Law. What options for simplifying regulatory oversight to escalate the pace and scale of forest health projects could be accomplished under existing law (for example, expanding the use of programmatic Environmental Impact Reports or permits for special pilot projects)? What are the associated trade-offs and why are agencies not currently pursuing these options? Are there steps that CNRA or departments should take to more aggressively pursue these options? 9 Options Requiring Legislation. Which simplification options might require new legislation to enact (for example, establishing a new multiagency “umbrella” permit for forest health projects that functions similar to a Timber Harvest Plan)? What are the associated trade-offs and reasons the Legislature should or should not pursue these options? www.lao.ca.gov 39 analysis full gutter AN LAO REPORT has not increased. We also note that additional essential component of the state’s overall forest foresters could result in an increase in the number management strategy, and CFIP can be one of prescribed fire projects that landowners and mechanism to help achieve such improvements. other entities could implement independent of VMP. Expand Options for Utilizing and According to CalFire, its current level of resources is not sufficient to be able to provide technical Disposing of Woody Biomass assistance on such projects. Support Development and Incentivize Use Provide Partial Advance Payments for CFIP of Nontraditional Wood Products. As discussed to Reduce Burden on Small Landowners. To above, thinning and other forest health activities encourage greater landowner participation in the result in woody biomass—small trees, brush, program and reduce the financial burden placed limbs, and other forest residue. Some of the on participants, we recommend making changes challenges associated with utilization of biomass to how CFIP payments are made to landowners. are difficult for the state to address directly. For Specifically, we recommend that the Legislature example, the value of biomass is very low relative authorize CalFire to provide landowners with a to the costs of transporting and processing it, share—for example, up to one-half-of the state’s and simply subsidizing biomass projects—as cost-share payment—in advance of the work some have suggested—could be quite costly. being undertaken. While participants still would However, there are other actions the state can need to fund their own portions of the project take that could result in increased utilization of costs as well as pre-fund a part of the state’s woody biomass. Specifically, we recommend the share, we believe removing a portion of the Legislature provide CNRA with a few hundred upfront investment needed to complete the work thousand dollars to implement competitive grant could encourage greater participation in CFIP. programs for pilot projects to create and support This, in turn, could increase the number—and expanded uses for woody biomass. California associated acreage—of landowners investing could model such projects on similar efforts in improving the health of their own lands. The that have shown success in Oregon, or been program already has provisions in place to recommended by the Wood Products Working ensure state funding is protected. For example, Group. Grants of roughly a couple hundred CFIP already requires a binding upfront legal thousand dollars or less could be awarded agreement between the state and landowners to small businesses, nonprofit organizations, regarding the scope of work to be completed, as and academic institutions to help develop and well as repayment provisions should participants deploy new wood products, manufacturing not fulfill the agreed upon terms. Moreover, the capacity, and uses. If successful, development state already conducts oversight of program and demonstration of new technologies made participants both during and after the work, from woody biomass could encourage private so it would have assurances that program industry to expand future uses. To the extent participants used the funding to implement the this increases biomass utilization, it could help work per the agreement. The state could also offset the costs of some forest health activities consider imposing additional safeguards, such as and avoid the GHG emissions and other provisions requiring applicants to offer collateral environmental damage from allowing biomass to as a condition of the upfront payment, to help decompose or burning it. We also recommend ensure the state is able to recapture funds that that CNRA provide evaluations to the Legislature are not appropriately used. As discussed above, on the outcomes of the pilots, as well as 9 million acres of forestland in California are potential benefits and challenges associated with owned by nonindustrial landowners and nearly expanding such efforts. 90 percent of these owners have less than Increase Opportunities for Disposing of 50 acres of forestland. As such, improving the Biomass. Among its multifaceted response to the health of these privately held forestlands is an tree mortality crisis, the state has adopted two 40 LEGISLATIVE ANALYST’S OFFICE analysis full gutter AN LAO REPORT actions on a limited scope that we believe could carbon emissions and better air quality over time. be expanded to help improve forest health more Therefore, it is important that both departments broadly. consider all of the potential long-term benefits First, we recommend the Legislature require when developing regulations related to open pile CalFire and CARB to analyze whether there are burning. circumstances during which the benefits of open Second, as discussed above, the state pile burning undertaken to help thin forests might acquired ten air curtain burners in order to help outweigh short-term negative effects. As discussed with biomass removal related to the tree mortality above, open burning typically requires special crisis. Air curtain burners are relatively inexpensive permits and is subject to other limitations such as (between $50,000 and $100,000 each) and can weather. However, some of these requirements be moved around the state to support projects have been relaxed in certain regions experiencing as needed. We recommend the Legislature direct high tree mortality. We recommend directing the CalFire to identify areas or projects where there departments to explore whether these types of are few options for biomass utilization, and where modifications should be expanded to other regions permitting or weather conditions frequently limit of the state in order to respond to forest thinning open pile burning. Identifying these regions would operations that are not directly related to the tree help determine how many burners should be mortality crisis. While we acknowledge that burns purchased. Based on this analysis, we recommend can have negative effects on air quality and carbon the Legislature appropriate funding to purchase emissions, we think there are circumstances the number of additional air curtain burners that in which those effects could be justified due to CalFire can demonstrate would effectively increase greater benefits—especially wildfire avoidance and statewide biomass disposal capacity. long-term forest health—that could result in less CONCLUSION The extensive forestlands stretching across could serve as a concerning harbinger of future the state provide numerous benefits to California trends, should the state not take immediate action residents. Among the most crucial are the water to improve the health of its forests. Moreover, a supplies that originate in the forested watersheds changing climate brings increased urgency to along the Southern Cascade and Sierra Nevada preserving forests’ role in sequestering GHGs mountain ranges, and flow downstream to millions and slowing the rate of global warming. While the of Californians across the state. These benefits, extent of deteriorated forest conditions is daunting, however, are at risk. The catastrophic wildfires that progress towards making improvements is both have plagued the state in recent months and years achievable and essential. www.lao.ca.gov 41 analysis full gutter AN LAO REPORT LAO PUBLICATIONS This report was prepared by Rachel Ehlers and Ashley Ames, and reviewed by Brian Brown. The Legislative Analyst’s Office (LAO) is a nonpartisan office that provides fiscal and policy information and advice to the Legislature. To request publications call (916) 445-4656. This report and others, as well as an e-mail subscription service, are available on the LAO’s website at www.lao.ca.gov. The LAO is located at 925 L Street, Suite 1000, Sacramento, CA 95814. 42 LEGISLATIVE ANALYST’S OFFICE