In releasing his initial budget proposal on Friday, Gov. Gavin Newsom unveiled a plan to overhaul the state’s approach to pesticide regulation. Newsom wants to replace the flat fee on pesticide sales with a tiered approach based on U.S. EPA toxicity warnings.
While the administration has in the past raised the possibility of increasing the mill assessment, the risk-based approach came as a surprise to the agriculture industry.
“It actually sounds fairly simple, but it's fairly radical,” CalEPA Secretary Jared Blumenfeld explained in a press call. “The more toxic the pesticides, the higher the fee will be assessed.”
The restructuring would draw $45 million in new revenue for the Department of Pesticide Regulation (DPR) and bolster the administration’s expansion of environmental justice initiatives, a central goal under its strategic plan.
In a press briefing, Newsom praised farmers and ranchers, saying he was proud of the agriculture community and that it raises “so much envy around the world.” He recognized the burden farmers face from the state “stacking” so many environmental rules and regulations on them. Yet Newsom then described “a harmful overuse of pesticides in the state” and said regulatory agencies must be “punitive to bad actors that are flagrant.”
“This is something the governor cares deeply about,” said Blumenfeld. “He's said, ‘[CDFA Secretary Karen Ross], Jared, go forward and work out how to do this in a way that moves us in the right direction, that brings everyone along at the same time.’”
Blumenfeld said this is a policy that consumers as well as both conventional and organic farmers want.
“The governor is focused like a laser on improving public health outcomes and enhancing public transparency around pesticide use,” DPR Director Val Dolcini told Agri-Pulse in an interview.
The proposal drew immediate praise from the Natural Resources Defense Council, with policy advocate Allison Johnson saying the environmental group was “thrilled” to see this prioritized in the budget proposal. California Farm Bureau Administrator Jim Houston, however, called the policy reactionary and an effort to gain political points by stoking fear.
“[Pesticides] can be used safely,” he said. “It's not that every time you use an organophosphate or a fumigant people are harmed. That's simply not the case.”
Houston, who learned about the policy the morning Newsom introduced it, shared frustration that the ag community was not at the table when the administration began considering this approach.
A similar situation played out in 2020, when Newsom issued a directive calling on county agricultural commissioners to maintain pesticide enforcement during the pandemic. Commissioners, who felt they were indeed maintaining their full duties to the law, were taken aback and said the messaging was a disservice to the agriculture community at large.
Houston said the Farm Bureau does not want to argue or sue over these policies but to problem solve with the administration through farmer-led solutions. He also pushed back on Newsom’s comments, arguing there is no evidence of flagrant violators, and the state’s robust and effective enforcement system is already designed to address that issue.
The proposal does not offer punitive measures for violators either. The revenues would deliver nearly $10 million to agricultural commissioners to backfill enforcement activities. Yet that pencils out to less than $200,000 per county, adding a modest bump to each office. Dolcini hinted at bills soon to be introduced in the Legislature that will further address enforcement issues.
Houston also questioned the legal authority for penalizing growers who use higher-risk crop protection tools.
“He's trying to apply a sin tax to a regulatory program,” said Houston. “And that's just not going to work under the current paradigm.”
The mill assessment is now capped at 21 mills, or about two cents to the dollar on pesticide sales. The proposal would more than double this to 45 mills for products labeled with “danger” or “poison” as the signal words. Those with just a “caution” label would be assessed at 26 mills.
“[The hazard warnings] are not necessarily the most precise, but it makes—from our perspective—the most sense,” said Blumenfeld. “There's obviously details that need to be worked out.”
Houston argued such a program would be outside DPR’s authority and better handled by another CalEPA department. DPR scientists, he explained, go through a rigorous review process for registering pesticides in the state. That results in qualifications on the use of each pesticide, as far as when and how it can be used. The mill assessment pays for that process. According to Houston, the legal rules governing it are as robust as the California Environmental Quality Act, a broad state law that is continually tested in court.
The mill assessment accounts for 80% of DPR’s funding, which is a central reason for the administration in seeking to raise the fee.
“Over the last several years, there has been significant growth in the scope of DPR’s programs and activities without any significant change in funding,” notes the budget proposal.
The additional revenue would allow the department to hire 44 new staff scientists and outreach specialists to bolster and expand enforcement programs as well as engagement with disadvantaged communities and social justice groups through air quality programs like AB 617.
The policy would backfill much-needed funding for research and cooperative extension programs as well. Blumenfeld expects to generate $20 million a year for research into integrated pest management (IPM) strategies and add nearly $17 million for enforcement and monitoring, which would support underfunded DPR programs related to schools and notification systems.
“That enforcement has been a significant addition,” said Josh Huntsinger, the Placer County agricultural commissioner and president of the County Agricultural Commissioners and Sealers Association (CACASA). “We're asked to do more with the same revenue.”
CACASA strongly supports the increased funding for IPM research as well, and Huntsinger acknowledged the potential impact on the industry of raising costs on crop protection materials.
“UC research is a big part of the reason that agriculture is successful,” he said, noting that funding has been “decimated” in recent decades. “Any backfills to those previous cuts are a good thing, especially in light of the state really—in a regulatory sense—forcing farmers to do more with fewer crop protection products, fewer pesticides available.”
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Dolcini said the administration chose the tiered system over simply raising the flat fee to “incentivize the move to safer and more sustainable pest management tools and practices.” He noted this transition is already underway, as pesticide use reports show. In making more alternatives available to growers, DPR registered nine new biopesticide products in 2019 and 11 in 2020, according to Dolcini.
A companion provision in the budget proposal requests funding to update DPR’s antiquated registration process to a digital system, which Dolcini said would expedite future registrations. The Legislature has already approved 10 new positions to bolster the registration branch of DPR as well, and Dolcini said DPR has worked to further streamline the process.
When asked if the mill assessment proposal is a regressive tax that could hurt small and disadvantaged farmers, Dolcini said he felt it did not single out any one sector, adding that half of those paying the mill fee are in agriculture and the other half are general consumers.
Houston warned that the Newsom policy could have significant tradeoffs, however, beyond raising food prices and availability for underserved residents. Pesticide use reports from DPR show a decline in organophosphates and fumigants, two classes often in the California spotlight for toxicity. During that decline, however, biopesticide use rose by nearly three million pounds on just 46,000 acres. Researchers and extension specialists have long warned that less-toxic pesticides used in higher concentrations could have even more detrimental effects on the environment and carry more risk for people. This was a central concern when the Newsom administration banned the insecticide chlorpyrifos in California in 2019.
“When synthetic or highly toxic are the two primary metrics by which we're evaluating the program,” said Houston, “we're going to lose opportunities to find a more healthy and effective pest management system.”
Despite the strong rhetoric on pesticides, the administration will be handing over responsibility for fleshing out the policy to state lawmakers. Keely Bosler, the state’s finance director, noted that the mill assessment carries the legal standards of a tax and would require a two-thirds vote from the Legislature to change, likely setting up yet another divisive battle between urban and rural lawmakers.
The budget proposal does offer a middle ground. An alternative to overhauling the assessment system would be a simple flat increase to 23 mills on all pesticides. This would generate an estimated $8 million in revenue to address DPR’s structural imbalance.
The plan is likely to evolve as budget negotiations between the two branches begin and as interest groups further assess the many details of the proposal.
When asked why the proposal was tucked away in a trailer bill to be considered within an enormous budget package, rather than through a public regulatory review process, Dolcini said the intention was actually the opposite.
“It’s almost impossible to hide a proposal of this magnitude in the budget,” he said. “it was obviously something that we wanted to really bring a lot of attention to, and, frankly, shine a light.”