The Connelly-Areias-Chandler Rice Straw Burning Reduction Act of 1991 (the Phase Down Act) mandated the phase down of rice straw burning in California's Sacramento Valley. When the Act was written, it was anticipated that a new market for rice straw would be created that would provide an alternative to burning rice straw. However, six years into the phase down, approximately 99 percent of the straw not burned continues to be incorporated into the soil, a practice that the rice growers object to because it is costly and may be conducive to increased incidence of crop diseases. In its 1997 status report, the Advisory Committee on Alternatives to Rice Straw Burning estimated that, at the current rate of development, only two percent of the straw produced in the year 2000 would find commercial uses.

In 1997, when the Phase Down Act limited rice straw burning to 38 percent of the acreage planted, rice growers turned to the California Legislature seeking relief from the phase down. The resulting legislation, Senate Bill 3 18, authored by Senator Mike Thompson, created the Rice Straw Demonstration Project Fund (the Rice Fund) and directed the California Air Resources Board to administer it. The Rice Fund will provide grants of up to 50 percent for projects which utilize California rice straw according to criteria developed by the Air Resources Board in consultation with the Department of Food and Agriculture, the Trade and Commerce Agency, and the University of California.

A draft of this document, Rice Straw Demonstration Project Fund Program Description and Draft Proposed Invitation for Grant Requests, was released for public comment on January 12, 1998. A public workshop was held on January 22, 1998, to discuss the Rice Fund Program and the proposed funding criteria included in the document. The draft document was revised to reflect comments received at the January 22 workshop and comments from other reviewers. The Board adopted the revised document, including funding criteria, at its January 29, 1998, public meeting in Sacramento. The Board directed the staff to issue the Invitation for Grant Requests.

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