Legislature Passes Utility Wildfire Response Bill

Below is an update on the Utility Wildfire Response Bill courtesy of the Agricultural Energy Consumers Association (AECA). 

This morning California Assembly provided the final legislative approval of a complicated bill responding to recent utility caused catastrophic wildfires, with a vote of 63-8. After several months of legislative hearings and debate, the Governor’s office and a handful of legislators revealed the lengthy bill last Friday. Legislators acted quickly to comply with the Governor’s self-imposed July 12th deadline in hopes that the legislation would prevent another credit downgrading for the state’s two major Investor Owned Utilities that are not currently in bankruptcy.

The lively debate on the Assembly floor recognized the cost implications to ratepayers. Several members, including the authors of the bill, committed to work with the Governor on follow up measures that would help to mitigate the impacts of rising electricity rates on agricultural and industrial ratepayers.

The bill now awaits signature by the Governor. Almost immediately after the bill’s passage by the Assembly, the Governor issued a statement thanking and congratulating the legislature on their work on the issue.

AB 1054 (Holden, Burke, Mayes)

Summary:
AB 1054 includes numerous provisions related to addressing wildfires caused by utility infrastructure:

• Bolster safety oversight
•  Recover costs from damages to third parties
• Establish a shareholder/ratepayer jointly funded wildfire fund to address future damages
• Provide utility employee protection
• Limit ratepayer exposure to PG&E liability during bankruptcy

Safety Oversight:
AB 1054 requires the state’s three main investor owned utilities (IOUs), PG&E, SCE AND SDG&E to make $5 billion in aggregate safety investments (system hardening) without return on equity that would otherwise borne by ratepayers.

The measure also establishes the California Wildfire Safety Advisory Board (CWSAB), consisting of seven members to advise and make recommendations related to wildfire safety for both IOUs and public owned utilities (POUs).

Recovery of Costs:
AB 1054 seeks to clarify the current “prudent manager” standard used to determine whether a utility can recover costs arising from a covered wildfire. The measure allows cost recovery if the costs and expenses are determined just and reasonable based on reasonable conduct by the electrical corporation. It considers factors both within and beyond the utility’s control, including humidity, temperature, and winds.

Wildfire Fund:
AB 1054 establishes a Wildfire Fund to pay eligible claims arising from a covered wildfire. The fund will be jointly funded by utility shareholders and utility ratepayer’s utility shareholders will contribute $7.5 billion initially and an additional $3 billion over 10 years ($300 million per year) to the wildfire fund. Ratepayer contributions will include a non-bypassable energy usage charge of $0.005 (half cent/kWh) for 15 years to securitize $10.5 billion for the wildfire fund. The total charge equates to $13.5 billion (or roughly 900 million a year). Farming and food processing’s share of the $13.5 billion is expected to total roughly $1 billion over the 15-year period.

The measure requires utilities (shareholders) to repay monies to the fund when they are found imprudent with limits. Ratepayers will have no obligation to repay monies in the fund.

The measure limits insurance subrogation of liability to the fund, to not exceed 40% in utility caused fires where the utility acted prudently.

Utility Employee Protection:
AB 1054 expands employee protection measures to include the sale of all or a material portion of the assets of the electrical corporation, including the voluntary or involuntary change in ownership of assets to a public entity (municipalization). The successor employer is required to maintain all wages, hours, and other benefits for three years for all employees.

PG&E Bankruptcy:
AB 1054 requires PG&E to resolve all pre-bankruptcy claims and achieve a CPUC approved reorganization plan that is both consistent with the state’s climate goals and renewable portfolio standards and determined to be neutral to the ratepayers of the IOU. In other words, PG&E shareholders are responsible for all liability claims from 2017 and 2018 wildfires, a liability estimated at approaching $30 billion.

Analysis:
While the measure is far from perfect and costly from a ratepayer perspective, it appears to be a vast improvement over SB 901 enacted last year that left ratepayers exposed to significant liability costs. Under the current situation ratepayers are exposed to significant costs associated with California’s strict liability standard for utility caused wildfires. Ratepayers are also currently exposed to significant costs relating to IOU credit rating downgrades due to wildfire risk that significantly increase utility borrowing costs. Finally, PG&E ratepayers are currently exposed to liability costs resulting from the PG&E bankruptcy, which under AB 1054, become the sole responsibility of PG&E shareholders. AB 1054 limits ratepayer exposure to $13.5 billion and ensures utility shareholders are picking up a portion of liability moving forward.

Fiscal Impact:
$0.005/kWh (half cent) for each kilowatt used for the next 15 years. This money will be refunded to the ratepayers if not used for wildfire liability.

Indirect Fiscal Impacts:
Ratepayers, including farming and food and fiber processing operations, will also face ongoing rate impacts associated with system hardening and wildfire mitigation efforts moving forward. However, at least $5 billion of these costs will not include the normal IOU ROE, which results in significant net savings of approximately $2.5 billion. Ratepayer exposure to increased costs of borrowing are also reduced. Finally, ratepayer exposure under strict liability is limited to $13.5 billion statewide.

The California Cotton Ginners and Growers Association (CCGGA) along with other agricultural associations had the unique opportunity to tour the Tulare Lakebottom area with Val Dolcini. Dolcini is the current Acting Director of the California Department Pesticide Regulation as well as the Deputy Secretary for Agriculture at the California Environmental Protection Agency. The tour included critical discussions surrounding crop protection tools, primarily the use of chlorpyrifos on cotton and possible alternative solutions once it is no longer able to be used. On part of the tour, Acting Director Dolcini and Director of Regulatory Affairs, Jodi Devaurs were able to join others in a helicopter tour of the J.G. Boswell ranches. During this segment of the tour Acting Director Dolcini was able to get a visual as to why the current 40 and 80 acre application limits for chlorpyrifos are simply not feasible or sustainable in an integrated pest management system. In addition, the group was able to discuss the importance of aerial application along with the science, technology and testing that is put into place to ensure aerial applications are done in the safest and most responsible manner to minimize drift. Thank you to Lakeland Dusters Aviation, J.G. Boswell Company as well as Hronis Ranch for hosting the tour. Other agricultural associations that participated in today’s tour were Western Agricultural Processors Association, California Agricultural Aircraft Association, Western Plant Health Association and the California Fresh Fruit Association. The Association has been heavily engaged with Acting Director Dolcini, as well as with CDPR and CalEPA, on the many issues surrounding crop protection tools and cotton, today’s tour was an excellent opportunity to back up the numerous conversations that had been had and will serve as an important tool as we move forward in discussions.

Temperatures have been warming up and heat illness prevention remains at the forefront!  WAPA has available Heat Illness Prevention Tool Kit to carry in your supervisors or foreman vehicles.  The kit consists of a rugged plastic folder with tabs and materials inside. The kit includes: Heat Illness Prevention Training Guide, Safety toolbox talks, Heat Illness cards, Heat Illness Prevention Poster, Urine color chart, and Tabs for your heat illness prevention policy, emergency numbers, and address/field maps as required by the heat illness standard.  Contact our office for more information (559) 455-9272 or visit our website www.agprocessors.org.

The California Center for International Trade Development at State Center Community College District is hosting the Valley Agribusiness Job Fair on August 1, 2019 from 10:00 a.m. to 2:00 p.m. at the DoubleTree by Hilton Fresno Convention Center. This is a convenient opportunity for employers to meet face to face with job seekers in one location. To register or for more information visit www.fresnocitd.org/jobfair or call (559) 243-7280. Please see the attached flyer below for more information about the event.

Event Flyer

UPDATE: Social Security Administration Confirms They Will Take NO ACTION for Employer’s Who Do Not Comply with No-Match Letters

 By: Michael C. Saqui and Gregory Blueford

As we previously reported, in conjunction with Chris Schulte of CJ Lake, LLC and Rob Roy of Ventura County Agricultural Association, the Social Security Administration (“SSA”) began mailing Educational Correspondence (“EDCOR”) notifications to employers who submit at least one 2018 W-2 with a SSN mismatch or no-match. These notices differed from previous mismatch/no-match letters as they did not include names or SSNs. Instead, employers were only notified that they submitted W-2s with mismatched SSNs and the raw number of W-2 forms the employer submitted that do not match.

The key question that employers had been asking about receiving these letters was, naturally, “What action should I be taking?” There were differing opinions on what steps employers are required to take, one of which was to recommend that employers follow the direction of the EDCOR letter and login to the SSN Business Services Online portal to get the actual names of the employees at issue and take steps to verify the reason as to the mismatch of specific employees.

Taking a more employer-centric approach, Dowling Aaron, CJ Lake, LLC and VCAA put our collective mind power, legal experience and resources together and took the complete opposite approach, recommending that employers should NOT login to the BSO portal and only verify their own records in-house and report to the SSA based on those records.

Yesterday, we received word that our recommendation was correct. In a letter from SSA Acting Commissioner Nancy A. Berryhill to Congressman Jim Costa, the SSA confirmed that the EDCOR mismatch letters are only educational in nature and that the SSA will not take any action, nor are there any SSA-related consequences, for employers’ non-compliance with the EDCOR mismatch letters.

COUNSEL TO MANAGEMENT:

The SSA’s letter to Congressman Costa is attached here for your full review. As outlined in the original guidance from Dowling Aaron, CJ Lake, LLC and VCAA, employers should take the following steps when receiving EDCOR mismatch or no-match letters:

*  Employers should NOT login to the BSO to get the actual names of mismatched employees to avoid the possibility of establishing constructive knowledge that the employer was hiring unauthorized workers;

*  Employers should, at very most, only take the following steps:

–   Review the names and SSN information submitted by the employer to SSA;

–   Provide any necessary corrections to SSA on the Form W2-C within 60 days of receiving the no-match, and/or;

–   Respond to SSA that the employer has confirmed that the names and SSN information provided match the information provided by its employees.

*   Take no further action and to not retain the letter in your files.

The SSA further confirmed in their letter that they are not sharing information with the Department of Homeland Security/ICE and are specifically forbidden to do so under the law and that there are no immigration or work-authorization conclusions to be drawn from the letter.  Among the other interesting tidbits in the letter is that the SSA has mailed out 577,349 letters as of April 26, 2019 which covers the mismatches for tax year 2018 and that the SSA will mail out the remaining letters in the fall. Thus, employers should expect a second wave of these letters coming out later this year.

Again, employers should only check their own records for accuracy and should NOT login to the BSO system. However, if employers do receive mismatch/no match letters that do specifically identify employees, there are different requirements that must be undertaken, which are outlined in our original recommendation.

Thank you again to Chris Schulte of CJ Lake, LLC and Rob Roy of Ventura County Agricultural Association for their hard work and assistance on this matter. Contact The Saqui Law Group, a division of Dowling Aaron Incorporated should you have any further questions on this issue or receive a mismatch/no match letter which specifically identifies employees.

On Tuesday, April 30th the EPA released their Proposed Interim Registration Review Decision for glyphosate, an important step in the registration review process. The EPA responses contains several key comments, including:

“The EPA conducted an independent evaluation of the carcinogenic potential of glyphosate and has determined that glyphosate is “not likely to be carcinogenic to humans.” The agency’s cancer classification is based on a thorough weight-of-evidence review of all relevant data and is in accordance with the agency’s 2005 Guidelines for Carcinogen Risk Assessment.”

“EPA’s cancer evaluation is more robust than IARC’s evaluation. IARC’s evaluation only considers data that have been published or accepted for publication in the openly available scientific literature. As a result, IARC only considered a subset of the studies included in the EPA’s evaluation.”

“The Agency’s cancer evaluation for glyphosate is also more transparent. EPA’s draft cancer evaluation was presented to a FIFRA SAP for external peer review. EPA solicited public comment on the carcinogenic potential of glyphosate as part of the SAP process, which is well-documented with an agenda, transcript, meeting notes, and final SAP report. EPA responded to the SAP report, addressed panel recommendations, and made revisions to its cancer assessment that were transparent and provided to the public. EPA also solicited public comment on its full human health and ecological risk assessment for glyphosate in February 2018. In contrast, IARC meetings are not accessible to the public. Its deliberations are closed, its process does not allow for public comments to be submitted for consideration, there are no materials provided in advance of the meeting, and IARC’s reports are final without an external peer review.”

“The EPA has not identified any new information received during the public comment period which ended on April 30, 2018 that would result in changes to the conclusion of its cancer assessment. The agency’s cancer conclusion is consistent with other regulatory authorities and international organizations, including the Canadian Pest Management Regulatory Agency, the Australian Pesticide and Veterinary medicines Authority, the European Food Safety Authority, the European Chemicals Agency, the German Federal Institute for Occupational Safety and Health, the Joint FAO/WHO Meeting on Pesticides Residues, the New Zealand Environmental Protection Authority, and the Food Safety Commission of Japan.”

In addition to the posting of the proposed decision, the EPA also issued strong comments in an interview with the Des Moines Register and in an official press release. The press release includes comments from EPA Administrator Andrew Wheeler and U.S. Secretary of Agriculture Sonny Perdue.

A 60-day public comment period will follow as a next step and then EPA will respond to the comments and issue the Interim Review Decision. That decision will not become final until EPA conducts an Endangered Species Act assessment. There is no set timeline for the final decision.

Tuesday’s comments by the EPA are important and consistent with the findings of regulatory authorities around the world for more than 40 years. Bayer’s official statement can be found online here: https://www.bayer.us/en/newsroom/press-releases/article/?id=123301

Attached is a report written courtesy of Bob Hutmacher, University of CA West Side REC and UC Davis Plant Sciences Dept., regarding hail damage and cotton crops. For the pdf, see the button link below.

Cotton Field Check- Hail Damage

Chinese tariffs, depressed cotton prices, but an abundant supply of water have sent mixed messages to cotton growers as they head into the 2019 planting season.  As a result, California is preliminarily only expecting a 1.5% increase in overall cotton acreage for 2019.

According to preliminary planting intentions survey conducted by the California Cotton Ginners and Growers Association this month, the Association is currently estimating approximately 184,000 acres of pima, 17,000 acres of Hazera and 60,000 acres of upland statewide for the 2019 cotton season plus or minus 10%.   This survey is based on surveys from all of the gins in California and things could change when final field surveys are completed by CDFA.  If it plays out, it will represent a 4% decrease in pima acreage and a 25% increase in upland acreage in California as compared to 2018.   Again, this is preliminary, but reflects what all gins are reporting.

For the past couple of weeks, the California Air Resources Board (CARB) has been sending out and collecting agricultural equipment surveys from farms, agricultural operators, and first processing facilities.  CARB has partnered with Cal Poly San Luis Obispo to conduct the survey and anonymize the received data, in order to help display the types of equipment being utilized from field to first process.  The survey covers all mobile agricultural equipment including tractors, combines, balers, agricultural use ATV’s, forklifts, and various other equipment.  The data that is collected and organized is utilized to help determine allocation of hundreds of millions in incentive monies targeting the turnover of agricultural equipment from both federal and local air district incentive programs.  The survey submittal deadline has now been extended to May 15^th, 2019. 

The survey can be found on Cal Poly’s website by clicking the link below.  If you would like a hard copy, please feel free to reach out to Chris McGlothlin with CCGGA at chris@ccgga.org or by phone at (559) 252-0684.

Cal Poly Ag Equipment Survey Section

In response to a petition by the Xerces Society, Defenders of Wildlife, and the Center for Food Safety, the Fish and Game Commission (Commission) list four (4) species of bumblebees as endangered under the California Endangered Species Act (CESA).  The California Department of Fish and Wildlife (CDFW) has prepared an evaluation report (Petition Evaluation) for the Petition.  The Commission referred the petition to CDFW.  The four species include Crotch bumble bee, Franklin bumble bee, Western bumble bee, and Suckley cuckoo bumble bee.  After reviewing the Petition and other relevant information, the Department found that “the Petition provides sufficient scientific information to indicate the petitioned action may be warranted. Therefore, the Department recommends the Commission accept the Petition for further consideration under CESA.”

The report cites several factors or threats affecting the ability of all the petitioned species to survive and reproduce and they fall into four main categories: 1) present or threatened modification or destruction of their habitat; 2) competition; 3) disease; and 4) other natural and human-related factors, including pesticide use, genetic factors, and climate change.  Within these categories, agriculture is highlighted many times as posing a threat.  Under habitat destruction, agricultural conversion of lands is cited as a contributor to loss of habitat.  Within the category of competition, the report highlights threats from other species of bees, “particularly of other bee species imported and managed to pollinate crops or produce honey” as a direct threat by reducing pollen and nectar resources.  Under “other factors” the report specifically highlights the use of herbicides and pesticides as having “several negative impacts on native bumble bees, including degrading habitat and removing floral resources, causing direct mortality and sublethal effects, reducing population success and survival rates, and increasing disease risk.

What does all this mean?  The Department now has 12 months to produce a peer-reviewed report based upon the best scientific information available that advises the Commission whether the petitioned action is warranted.  Finally, the Commission, based on that report and other information in the administrative record, then determines whether or not the petitioned action to list the species as threatened or endangered is warranted.  If listed, this will put even more pressure on the use of pesticides and herbicides in agricultural settings.  This will have to be closely monitored over the next several months.