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IN THIS ISSUE – “They Feel Sacramento is on the Other Side of the Moon”
- State Auditor: Flawed Accounting System Threatens California Finances
- PG&E Restructuring – A Power Play Begins
- Tech Titans “Feel Sacramento is on the Other Side of the Moon”
- California-Based Companies Must Add Female Directors By New Year’s Day
- Newsom’s Threat to Sue Feds Over Delta Pumps May Stop River Flow Agreements
- Groundwater Law “Will Change the Landscape” Starting in January
- Beach Christmas Tree is a Surfer’s Community Tradition
FOR THE WEEK ENDING DEC. 20, 2019
Capital News & Notes (CN&N) harvests California legislative and regulatory insights from dozens of media and official sources for the past week, tailored to your business and advocacy interests. Please feel free to forward.
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Happy Holidays! CN&N will next publish for the week ending 1/2/20
Sacramento Bee & State Auditor Report
A growing number of California state agencies are missing budget deadlines because of a $1 billion accounting program that has major problems remaining unaddressed despite its escalating cost, according to a new state audit.
Up to 62 state government departments missed an October 2019 deadline to submit financial statements to the State Controller’s Office, up from 48 for the 2017-2018 fiscal year, according to the audit published Tuesday.
Those delays due threaten the state’s ability to produce its annual financial report on time, which could undermine California’s credit, potentially driving up borrowing costs by billions of dollars, according to the audit.
The program known as FI$Cal, launched in 2005, has repeatedly been delayed as costs rose. That trend is likely to continue even though key parts of the project have been abandoned, according to the audit.
“It requires an aggressive schedule that is already proving unrealistic,” the audit states.
The program is intended to give California state government a single accounting system, replacing a hodgepodge of systems that developed over time in dozens of departments.
FI$Cal has been blamed for impeding transparency in the state’s spending, after the Controller’s Office has declined requests for wide-ranging data from transparency website OpenTheBooks.com. The site has been able to get detailed spending records from all 49 other states, but not from California, according to the organization’s founder.
“Even though it’s home to Silicon Valley, the state government isn’t letting tech drive transparency when it comes to its own records,” the founder said in a Forbes op-ed.
A project update earlier this year moved the projected end date from July 2019 to June 2020, while updating its cost to $1.06 billion.
State Auditor report summary:
Gov. Gavin Newsom says he wants Pacific Gas & Electric Co. to become a “radically restructured and transformed utility that is responsible and accountable…”
Newsom, in rejecting the company’s plan to emerge from bankruptcy late last week, once again denounced it for “more than two decades of mismanagement, misconduct, and failed efforts to improve its safety culture.”
“PG&E’s recent management of the public safety power shutoffs did not restore public confidence,” he wrote. “For too long, PG&E has been mismanaged, failed to make adequate investments in fire safety and fire prevention, and neglected critical infrastructure.”
The governor demands more direct control over PG&E’s management, including a new slate of directors, mostly Californians, subject to his administration’s approval, and a provision that its operating license be transferred “to the state or a third-party when circumstances warrant.”
Thus, Newsom seems to be edging toward the notion, championed by San Jose Mayor Sam Liccardo and other political figures, of converting what is now a state-regulated, investor-owned monopoly into some sort of governmental entity.
There’s precedent for that in California. Quite a few of its cities already operate electric power services; some rural irrigation districts are also power providers, and the Sacramento Municipal Utility District was created in the 1930s to supplant PG&E in Sacramento County.
However, the state is already somewhat complicit in PG&E’s fall from grace. A misbegotten, misnamed “deregulation” of the state’s utilities, decreed in 1996 by the Legislature and then-Gov. Pete Wilson, compounded by successor Gray Davis’ mismanagement of the subsequent energy crisis, led to PG&E’s first bankruptcy and the near-insolvency of other utilities.
It had scarcely emerged from that bankruptcy when the Legislature and Govs. Arnold Schwarzenegger and Jerry Brown began demanding that utilities phase out carbon-based power generation in favor of “renewables” to fight climate change.
Yes, PG&E neglected the maintenance of its transmission grid and that, tragically, led to destructive and deadly wildfires when high winds downed high-voltage lines. And facing many billions of dollars in claims from wildfire victims, it once again declared bankruptcy.
But where was the Public Utilities Commission, whose members are appointed by the governor, when this was happening? The PUC is charged with regulating utilities’ rates, making sure that they are providing safe and reliable service, and protecting their profitability so that they can attract investment and borrow money.
One must wonder whether political pressure to shut down nuclear and fossil fuel plants and buy expensive wind and solar power while keeping customers’ power bills from skyrocketing contributed to the neglect of maintenance.
So what happens now?
Newsom could have his say on PG&E’s plan to emerge from bankruptcy because of legislation that gives it access to special bond financing to compensate wildfire victims only on condition that it satisfies state-set conditions.
A settlement with wildfire victims, announced earlier in the month, makes them supporters of PG&E’s restructuring plan. PG&E shareholders, most of the big institutional investors, are also on board.
Indirectly, Newsom’s rejection letter to PG&E’s top executive, Bill Johnson, allies the governor with a rival financial stakeholder group, the utility’s lenders, who want to take over its management.
Newsom must become less implicit and more explicit. If he wants a state takeover of the nation’s largest investor-owned utility, he should say so and take responsibility for what happens.
Simply imposing more political micromanagement on an investor-owned corporation would make accountability to ratepayers, shareholders and lenders — not to mention its financial viability — even cloudier.
The powerful tech giants of Silicon Valley may wield some of the biggest lobbying budgets in Washington, but they have been comparatively absent in their home state’s capital — where they are now on the defensive.
California caught the world by surprise last year when it passed the nation’s strongest data privacy law, instantly making Sacramento one of the most important regulators of global tech. As members of the California legislature forged the deal on a defining challenge of the digital age, the internet companies were slow to awaken to the threat, and brought few of their considerable resources to bear.
The combined lobbying firepower of Google, Facebook and two major tech trade associations amounted to just $235,000 in the three months leading up to the vote, compared with $3 million from the four biggest oil interests. Facebook, then mired in the Cambridge Analytica scandal, spent less than $18,000 that quarter, according to disclosure records.
The business community’s recent attempts to roll back parts of the privacy law, which takes effect in January and will give consumers more control over personal data, hasn’t gone much better, further underscoring the disconnect between Silicon Valley and its powerful neighbors a two hours’ drive away.
The Washington travails of Mark Zuckerberg and other Silicon Valley czars are well-known, and tech companies have been grappling with aggressive European regulators eager to rein them in for years now — the European Union has the world’s most stringent privacy law. But the companies’ reluctance to plunge into California politics has hurt them, strategists say, as they grapple with proposals from state lawmakers and a ballot initiative system that has produced two data-privacy campaigns in less than three years.
“You just get the sense that they feel that Sacramento is on the other side of the moon,” said Andrew Acosta, a Democratic strategist.
That light touch looks to be changing as California dives deeper into data-privacy regulation. Facebook, Google and the trade groups TechNet and the Internet Association are on track to boost their combined lobbying spending by more than 80 percent this year and next, compared to the last two-year legislative session. Those four groups spent a combined $1.3 million to influence policymakers in the first nine months of the year. And Facebook has just hired a well-connected Sacramento insider, Mona Pasquil Rogers, to run its California policy shop.
But is it too late? Souring public sentiment about tech’s role in society and daily life may undermine companies’ efforts to shape policy in Sacramento, where even business-friendly Republicans have raised alarms. California’s ballot initiative process adds another layer of unpredictability.
This year’s tech lobbying blitz, to the surprise of many, did not yield major carveouts in the new Privacy Act. What’s more, the consumer privacy advocate behind the law, Alastair Mactaggart, said he was so concerned by such efforts to water it down that he decided to advance a second ballot initiative for 2020. The new version would add new consumer protections — and prevent the Legislature from making any changes that would weaken the Privacy Act.
That could explain why tech companies who don’t like California’s new privacy rules are leaning on Washington for regulations that would supersede state laws — an end-run on Sacramento. Last month, a tech and telecom-funded foundation helped send a delegation of California lawmakers to Washington. In meetings with their counterparts in Congress, the tech-friendly caucus discussed the flaws in California’s law and the merits of federal preemption, one of the organizers told POLITICO.
One might assume state politicians facing reelection would shiver at the thought of alienating a company worth the GDP of Argentina or Saudi Arabia. And to be sure, the sector does have friends in the Legislature. But a closer look at campaign finance records shows that Big Tech has not been a big player in candidate races.
Facebook is by far the sector’s biggest spender, with $1.7 million in contributions since 2009 (excluding those made by a former company executive to his own campaign for attorney general in 2010). Google has spent $959,000, state records show, while Apple has given just $256,000.
Compare that to $5.3 million that AT&T funneled into candidates’ coffers during that period, and $6.2 million from labor powerhouse SEIU.
In fact, strategists say, some progressive lawmakers might even welcome opposition from companies like Facebook. “If Facebook did a big independent expenditure against Buffy Wicks,” Acosta said, pointing to a first-term assemblywoman who has championed privacy rights, “Buffy Wicks would say, ‘Bring it on!’”
“It’s telling that candidates running for president are now using Mark Zuckerberg in their ads and highlighting him as a negative,” he added. “Facebook’s on the ground and everyone’s kicking them.”
Facebook and Google declined to comment.
Amazon’s foray into local politics offers a cautionary tale. The company suffered a public relations backlash and electoral defeat in November after pouring nearly $1.5 million into a PAC backing business-friendly candidates for Seattle City Council.
But another veteran Sacramento strategist thinks it is even riskier for tech to remain on the sidelines. Steve Maviglio, a ballot initiative consultant, believes the industry’s ambivalence about publicly opposing the 2018 data-privacy initiative created an opening for California’s privacy law.
Maviglio was hired by a tech and telecom coalition to fight the initiative. But rather than pledge millions to defeat it, he said, the companies took a wait-and-see approach, not wanting to be the first to jump. The first contribution didn’t come until February 2018, four months after the initiative was filed, campaign records show. That April, reeling from the Cambridge Analytica fallout, Facebook announced it would no longer fight the privacy measure.
The initiative had strong polling, and in June the Legislature unanimously passed the Privacy Act as part of a deal to get it off the ballot. By passing it in the Capitol, lawmakers regained the power to make changes without going back to the voters.
“There was a fundamental misunderstanding of how the initiative system worked and what they had to do,” Maviglio said. “It was painful to try to get them engaged, and frankly, that’s one of the reasons the Privacy Act passed last year. They simply didn’t know how to engage and head it off.”
Roger Salazar, another veteran Democratic consultant, drew a contrast between the tech startups of today and the hardware and software giants like Hewlett Packard and Apple that ruled Silicon Valley in the 1980s. The valley’s first generation companies tended to hire “old school” executives, he recalled, “types of corporate managers who understood how to deal with government.”
Newer tech businesses don’t tend to have the same kinds of safeguards or relationships, he said, possibly because they’ve grown at such a dizzying rate.
“I think they’ve been blindsided,” Salazar said, “because they didn’t understand the process, they didn’t understand the environment they were operating in, they didn’t understand the political system in California.”
The tipping point for Facebook’s image — in Sacramento and just about everywhere else — was the Cambridge Analytica scandal that exploded in early 2018. The British consulting firm hired by the Trump campaign acquired data from millions of the social network’s users that had been gathered without their knowledge and used it to try to manipulate likely voters with political ads before the 2016 election.
Google’s data-gathering practices and market dominance has also been under the microscope, especially as the company expands into the personal health realm and tries to acquire Fitbit.
In early November, California Attorney General Xavier Becerra revealed an ongoing probe into Facebook’s handling of personal data stemming from Cambridge Analytica. Becerra, a former Southern California congressman, also announced he was suing the company for allegedly stonewalling his investigation.
In a sign of the company’s fall from grace, Becerra’s reelection campaign used the news as fundraising fodder.
“Xavier sued Facebook,” read the email blast. “Big Tech is no longer an infant. These corporations are running at Olympic speed. It’s time for the industry to be treated as an adult.”
For 46 publicly held companies in California with all-male boards, the clock is ticking.
The corporations, including pharmaceutical, financial and software companies that tend to be on the smaller, younger side, have only until revelers ring in 2020 to name a woman to their boards of directors or face a $100,000 penalty.
A bill signed into law by former Gov. Jerry Brown in September 2018 required public companies with headquarters in California to name at least one female director by the end of 2019. The law further mandates that companies with five-member boards have at least two female directors by the end of 2021; corporations with six or more directors need at least three women. The penalties for failing to comply rise accordingly.
The Golden State became the first in the nation to legislate the requirement for female board members, inspiring lawmakers in Massachusetts and New Jersey to introduce similar proposals. Illinois enacted a pale version of the California law, requiring publicly traded companies to report each year their boards’ demographics and plans to promote diversity.
Researchers tracking the situation in California say the new law appears to be having the intended effect, with more than 90% of publicly traded companies based in the state now in compliance — and with women added to at least two dozen all-male boards just since July. But the measure has also drawn legal challenges, as many observers predicted.
In acknowledging “serious legal objections” to the law, Brown said when he signed that it was nonetheless important to send a message to the male-dominated business world. That message has resulted in at least two lawsuits. One was filed in November by the libertarian Pacific Legal Foundation, a public interest law firm, on behalf of a shareholder of OSI Systems Inc., a manufacturer of airport security, medical and other equipment based in Hawthorne.
In that suit, filed in U.S. District Court in Sacramento, Creighton Meland Jr., a retired corporate attorney, maintains that the “woman quota” would force him to discriminate when voting for OSI board members. Instead of voting for the best candidate, he said, he would have to consider the person’s sex as well. OSI, which did not respond to multiple requests for comment, has a seven-member board that includes founder and Chief Executive Deepak Chopra (not the internationally famed holistic medicine proponent).
“We’re not claiming that the injury to him is having a woman on the board per se,” said Anastasia Boden, a senior attorney with the Pacific Legal Foundation, who is handling the Meland case. “The injury is forcing people to make decisions based on sex.”
That would violate the equal protection clause of the U.S. Constitution, which was meant to create a sex- and race-blind society, she said, adding: “This law … just reduces people back down to their immutable traits.”
An earlier challenge was filed in August by Judicial Watch, a conservative group based in Washington, on behalf of three California taxpayers. That suit argues that spending taxpayer money to enforce the law would violate the state’s Constitution. Jill Farrell, a Judicial Watch spokeswoman, said the case was scheduled to be heard March 9 in Los Angeles County Superior Court.
Both suits name Secretary of State Alex Padilla, whose office handles corporate filings and processes the records of entities that conduct business in California. Padilla has asked a judge to throw out the Judicial Watch lawsuit, saying taxpayers have not been harmed and thus have no standing to sue. Paula Valle, a spokeswoman for the secretary of state, said his office would review the Pacific Legal Foundation suit and “respond in court.”
Although the number of women in boardrooms is rising, sexual parity remains a distant prospect in California and globally. According to the accounting giant Deloitte’s most recent report on the issue, released in October, women hold just 16.9% of board seats worldwide, a 1.9-point increase from 2017. Norway, with 41% of board seats held by women, the highest percentage in the world, was the first country to enact legislation requiring female representation, in 2005.
In California, women now hold 21.2% of the board seats at the state’s 444 largest corporations, according to 2020 Women on Boards, an education and advocacy organization based in Los Angeles. In the boardrooms of the 414 companies on the Russell 3000 lists in both 2018 and 2019, female corporate directors gained 183 seats between July 2018 and June 2019. Still, 36 of the Russell 3000 companies in California had no women on their boards as of June. The Russell 3000 tracks the performance of the 3,000 largest U.S.-traded stocks.
State Sen. Hannah-Beth Jackson — the Santa Barbara Democrat who wrote the legislation, Senate Bill 826 — noted when the measure became law that a quarter of California’s publicly traded companies did not have a woman on their boards.
This was despite the fact that women made more than 70% of buying decisions, she said, making their input “critical to discussions and decisions that affect corporate culture, actions and profitability.”
Of the legal challenges, Jackson said recently in a statement: “I certainly respect the constitutional right of anyone to challenge the law in our courts. However, I strongly believe that this measure meets constitutional requirements and will be held up in court. Significant research has shown the importance of adding women to boards to improve profitability and add to the economic well-being of the state, as well the interest of the state to advance gender equality.”
The law itself does appear to have spurred some companies to add women to their boards. Skechers, Stamps.com and TiVo, for instance, all named women to previously all-male boards after SB 826’s passage; they and several other companies contacted for this story did not respond or issued a “no comment” to requests for interviews.
“We knew that someone would sue,” said Betsy Berkhemer-Credaire, a Los Angeles executive recruiter and board member of the California chapter of the National Assn. of Women Business Owners, which lobbied extensively for the measure. She said she doubted that the cases would get far.
“I don’t expect it to be much beyond a kerfuffle,” said Berkhemer-Credaire, who is also chief executive of 2020 Women on Boards. “The reason I sound so cavalier about it is that we’ve already won the hearts and minds of corporations and good-governance leaders throughout the country. We’ve already won the public awareness campaign.”
Institutional investors have helped to spark public awareness about the relative lack of diversity in the boardroom. TIAA’s “Women on Boards” initiative, which began in 2018, targeted about 470 mid- and small-cap companies, asking that each company either add a female director or adopt a formal policy to emphasize diversity. More than one-third of the companies had added a female director by the end of the 2019 proxy season. Companies that did not cooperate faced TIAA opposition via proxy votes.
The long-running failure of some technology companies to include women on their boards helped to fuel support for the mandate. Twitter, the social networking entity founded in San Francisco in 2006, tweeted the naming of its first female director in November 2013, days after becoming a public company. Diversity proponents had disparaged the company for having a board consisting only of white men, including three directors named Peter.
One company that determinedly maintained an all-male board, until recently, was Skechers. The nearly three-decade-old footwear brand, based in Manhattan Beach, would seem to be the sort of fashion and fitness entity that would benefit from female feedback in the boardroom.
In 2014, CtW Investment Group, which was working with union pension funds investing in Skechers, pushed other shareholders to urge Skechers to freshen its largely insider board by adding diversity of “gender, race and experience.” Only last May did the company name Katherine Blair, a partner with Manatt, Phelps & Phillips, as its first female director.
Blair said by email that she was too busy to speak. The company did not respond to requests for comment, but Robert Greenberg, the chief executive and board chair, said in the statement naming Blair that her background
“expands the diverse viewpoints of our board.” Her appointment brought the nine-member board to 10.
Two other companies that named women to their boards after the law went into effect would not weigh in on the topic.
Eric Nash, a spokesman for El Segundo-based Stamps.com, a provider of online postage and shipping software, said the company had no comment beyond its April announcement of entrepreneur Kate Ann May’s appointment to the board. May did not respond to a request for comment.
TiVo Corp., the San Jose-based company whose device became the generic name for digital video recorders, did not respond to emails and calls seeking comment about its appointment of two women to its board in April. Loria Yeadon, chief executive of the YMCA of Greater Seattle, declined to speak. Laura Durr, a former technology executive, could not be reached.
A study by Daniel Greene and Vincent Intintoli, Clemson University assistant finance professors, and Kathleen Kahle, a University of Arizona finance professor, showed that, as of July, 70 of the 602 publicly traded companies with headquarters in California were not in compliance with the new law. Since then, the number has dropped to 46 (about 8%), said Clemson’s Greene. The three did not name the companies.
The initial study showed that the costs of board expansion were negligible for the largest firms but substantial for the smallest. For many firms, the study showed, the cost of expanding a board to accommodate a woman could outweigh the financial penalty for failing to comply by the 2019 deadline.
Companies that continue to fail to satisfy the law face fines of $300,000 for a second or subsequent violation.
SeaSpine Holdings Corp., a medical device company based in Carlsbad that was spun off from its parent in 2015, recently named two women to its board who brought expertise in marketing and finance. But they were not the first females in the company’s boardroom. Another woman, who had been on the board since before SB 826, resigned after a work-related move to Boston.
SeaSpine President and Chief Executive Keith Valentine said he applauded the new law’s goal of moving more women into boardrooms.
“From our perspective, I think this is appropriate, progressive movement forward,” he said. “There are going to be folks who want to argue it. … We have very talented people now on our board, and we’re a better company for it.”
Kimberly Commins-Tzoumakas, a seasoned CEO and one of the two women SeaSpine appointed, said board seats have typically been filled through historical relationships. “I do not believe that every all-male board is in place for discriminatory reasons,” she said. “I do, however, commend California for taking a stand of inclusion and opening doors for equality on boards.”
Even before he was sworn into office, Gov. Gavin Newsom threw his weight behind a series of tentative deals, brokered by his predecessor, that were intended to bring lasting peace to California’s never-ending battles over water and endangered fish.
The deals, designed to reallocate water from the state’s major rivers, have yet to be finalized a year later.
Now, one of the nation’s most powerful farm irrigation districts says it will back out of the agreements completely if Newsom follows through with a pledge to sue President Donald Trump over a federal plan to pump more water to farmers from the Sacramento-San Joaquin Delta, the fragile estuary on Sacramento’s doorstep.
The agreements are intended to resolve a more than decade-old dispute over how much water should be left in the state’s major rivers to prop up endangered fish populations. Those same rivers also supply California’s massive farm belt and cities from San Francisco to San Diego. It’s one of the most contentious, complicated issues facing the new governor.
Last week, Tom Birmingham, the general manager of the Westlands Water District, told Newsom’s top environmental policy appointees the massive Fresno-based water district was going walk to away from the water-sharing deals if Newsom sues Trump.
“The state’s threat of litigation places those far-reaching changes at risk, and until the issues that gave rise to this threat are resolved, it will be impossible to reach a voluntary agreement,” Birmingham said in a December 10 email to Wade Crowfoot, secretary of the Natural Resources Agency, and Jared Blumenfeld, secretary of the state Environmental Protection Agency. “At this point, the ball is in the state’s court.”
Jeff Sutton of the Tehama-Colusa Canal Authority in Willows, a major Sacramento Valley irrigation district, made a similar threat to state officials the same day. Neither Sutton or Birmingham could be reached for comment. A Newsom spokeswoman said the administration remains committed to brokering a deal.
On Thursday, U.S. Sen. Dianne Feinstein, a longtime ally of the farmers in Westlands’ district, waded into the debate by posting a letter to the Trump and Newsom administrations on her official Twitter account, urging the factions to work together.
“I’m worried that we’re on a disastrous course for California’s water management that will harm our communities and environment,” she tweeted. “There’s only one way to avoid this potential crisis, and that’s for (Newsom) and (Interior Secretary David Bernhardt) to work together.”
The new threats significantly complicate the tentative deals brokered by former Gov. Jerry Brown shortly before he left office. His administration described them as a grand water-sharing agreement that would bring an end to the dispute between farmers, cities, fishermen and environmentalists over how much water should be left the state’s two most important rivers, the Sacramento and San Joaquin, which flow into the Delta and out under the Golden Gate Bridge.
Under Brown’s proposal, farm irrigation districts and cities would surrender water to prop up fish populations and kick in about $800 million for habitat restoration projects. The state said it would contribute $900 million to the projects. The farms and cities agreed to the plan because they felt it was less onerous than a dramatic restriction on water use favored by the State Water Resources Control Board.
Newsom, who had just been elected governor, said at the time the “voluntary agreements are preferable to a lengthy administrative process and the inevitable ensuing lawsuits.” This week, the administration continued to stand by the deals. Newsom’s Natural Resources Agency spokeswoman, Lisa Lien-Mager, said in an email Wednesday that the tentative settlements “create more opportunities for species to survive and thrive.”
With the threat last week, Westlands has aligned itself even more closely with Trump and his aims for California’s water system, which would send more water from the Delta to Westlands. The water district already has close ties to the president — their former chief lobbyist is Bernhardt, Trump’s Interior secretary.
From the start, Brown’s agreements have been controversial. Environmentalists argued the plan didn’t go nearly far enough. The State Water Resources Control Board last December, just before Brown left office, sided with environmentalists and voted in favor of a more aggressive plan to increase flows in three key San Joaquin Valley rivers, in spite of Brown’s compromise.
Environmentalists say that for far too long, too much water has been sucked from the state’s rivers by farms and cities up and down the state. For instance, in some summers nearly 90 percent of the water in the Tuolumne River is diverted to farms and the city of San Francisco, leaving precious little for imperiled cold-water native fish like salmon and steelhead.
The board said it would revisit its ruling if a settlement was ever finalized.
Last week, a consortium of major environmental groups said the settlement talks aren’t progressing nearly fast enough and they urged the water board to “move forward rapidly” on a similar flow plan for the Sacramento River and its tributaries in order to save fish populations.
Newsom, meanwhile, has made numerous overtures to farm interests since taking office in an effort to the get settlements finalized. He started by replacing the chair of the water board, Felicia Marcus, who was viewed by farmers as tied too closely to the environmental movement.
Since then, negotiations among the various parties to the settlements have continued behind closed doors, and little has been said publicly beyond a July 1 white paper posted on the Natural Resources Agency’s website.
The document reports “substantial progress” had been made but also made clear that lots of work remained: Environmental reviews, for example, wouldn’t be finalized until 2021.
Keeping the negotiations on track also was central to Newsom’s decision to veto a bill in September that was backed by some of the state’s most influential environmental lobbyists. He infuriated environmentalists by vetoing Senate Bill 1, which would have used state law in an attempt to block every environmental initiative launched by the federal government since Jan. 20, 2017 — the day Trump took office.
Newsom said the bill would have derailed the settlement discussions. Westlands and other California water exporters feared SB 1 would create a new legal barrier that would have prevented California and the federal government from working together to manage the state’s fisheries and water supplies.
At the heart of the debate are the two massive Delta pumping stations near Tracy that supply water to irrigation districts like Westlands and to the state’s major cities as far south as San Diego. One set of pumps is run by the state; the other by the federal government. Environmentalists say decades of pumping have ruined populations of salmon, smelt and other species.
As Newsom has tried to balance these forces, the Trump administration had been moving ahead on its own Delta pumping plan designed to send more water to Westlands and other farm districts, fulfilling a pledge Trump made to San Joaquin Valley farmers while campaigning in Fresno three years ago.
The plan, developed by the U.S. Fish and Wildlife Service and National Marine Fisheries Service, would overhaul the rules governing the Delta to allow more water to be pumped south to San Joaquin Valley farms such as Westlands.
On Thursday, the Trump administration released its final environmental impact statement on the pumping plan, saying it will “optimize water deliveries and power production for California communities and farms in an environmentally sound manner.”
Last month, Newsom’s administration said Trump went too far, and he promised to sue to protect the environment.
“As stewards of this state’s remarkable natural resources, we must do everything in our power to protect them,” Newsom said in a prepared statement at the time.
Roger Patterson of the Metropolitan Water District of Southern California — who’s been involved in the negotiations and received copies of Westlands’ email — said he doesn’t believe the talks are doomed.
Patterson said he’s been told separately by Birmingham, the Westlands general manager, that his email threatening to back out of negotiations was intended to prod state and federal officials to figure out a compromise.
The process “has had a lot of bumps over the last year,” said Patterson, assistant general manager of Metropolitan. “It’s hard stuff, and I don’t think anybody’s saying they’re giving up on the process.”
But Doug Obegi, a lawyer for the Natural Resources Defense Council, said Westlands’ threat to walk away from the talks — so soon after threatening to walk during the SB 1 debate — amounts to the farm-water agency trying to “bully the state into backing away from fighting the Trump administration.”
“It does feel like we’ve seen this dance before,” Obegi said.
Agricultural and urban groundwater users in Merced County may soon have to sacrifice for the future, if a new state-mandated sustainability plan that limits consumption moves forward.
“The water wars have begun,” Atwater Mayor Paul Creighton said before City Council passed a resolution supporting the plan. “If we’re good stewards now, we’ll continue to be able to grow.”
The Merced Groundwater Basin is one of 21 in the state identified as critically overdrafted, and one of 48 identified as high priority. A basin is critically overdrafted when the average annual amount of groundwater extraction exceeds the basin’s annual water supply. Most San Joaquin Valley basins are critically overdrafted.
“The goal is to bring the basin into balance by increasing recharge and decreasing demand,” said Merced County Water Resource Coordinator Lacey Kiriakou. “The intention is that by 2040, we’re going to have a sustainable groundwater basin.”
But California farmers are anxious. While the plan aims to create a steady and sustainable water supply for the Central Valley, groundwater limits will change its economic future. The Valley is sustained off its fertile land, with agriculture making up 20% of economic output and 18% of jobs.
In areas of nearby Tulare County, farmers will have to cut groundwater use by 40%. Some farmland will be forced to shrink, while others will not survive. An uncertain future and the Central Valley’s higher than average unemployment rate is making Valley farmers nervous for their livelihood.
“Because of the sustainable yield being lower than the current pumping rate, it could mean that land may have to be fallowed in order to reduce pumping,” Kiriakou said. “The GSAs do have the ability to impose allocations on individual users that would limit pumping.”
Groundwater extraction will be reduced by about 75% in areas of Merced County, said Nic Marchini, a farmer and Vice Chair of the Merced Subbasin GSA.
“From an agricultural perspective, the landscape will change,” he said. “I’m really hoping we can get our act together.”
Crops that require a lot of water, like almonds, may have to be cycled out for less thirsty ones like olives, Marchini said. Others with low marketplace value, such as crops used as feed by dairy farmers, will also be harder to justify growing, he said.
The Merced Subbasin’s water storage declines at an average rate of 192,000 acre-feet per year, mainly due to groundwater pumping.
The sustainability plan calls for agricultural and urban groundwater consumption to be reduced by 10% to achieve a net-zero groundwater change. Groundwater will be allocated to each local agency’s area of authority. An allocation agreement has not been reached, but would be developed once the plan is implemented.
The plan will mainly affect those without access to surface water, said Marchini. Those within the Merced Irrigation District will see little change.
Recharge projects that put water back into the basin could also incur a cost for residents. Recharge opportunities are most promising in the southeast part of the basin, Marchini said. However, until the plan moves forward, there is no certainty which projects will be adopted, how much they will cost or how they will be paid for.
Implementing the plan is projected to cost between $1.2 to $1.6 million annually. Additional projects and management are expected to reach $22.9 million total.
Given the plan’s wide and long-lasting effects, the GSAs engaged the public and got feedback at Coordinating Committee and Stakeholder Committee meetings that were open to the public. The committees answered questions and took comments into consideration.
“I’ve had a lot of questions from my neighbors,” Marchini said. “Everybody is concerned.”
Marchini said the years of planning have been tense and exhausting, but that it is exciting to have the plan on the cusp of completion.
“Overall, I think agriculture is resilient, and will continue to be resilient,” Marchini said.
Orange County Register
The Christmas tree greeting passersby at Calafia State Beach in San Clemente is what people want it to be.
For some, it’s the perfect place for a family holiday photo, an oh-so-California backdrop with the ocean, surfers, sand and sunsets to boast about to family and friends in colder climates.
For others, it has become a place to honor beach-loving relatives no longer here for the holidays.
Or perhaps, it’s simply a nice resting spot to soak in some holiday cheer during a trek along a coastal trail that leads to the decorated tree just steps from the sand.
For 11 years, local surfer Debbie Sheldrake-Stetson has propped up a large tree at this beach in the dark of night, a tradition the community looks forward to each year and one that has grown in popularity, as social media helps spread the word.
“Sometimes I want to stop,” Sheldrake-Stetson said with a chuckle while standing next to the tree on a recent day. “It’s just become so huge and they look forward to it.”
Exactly who “they” are is mostly unknown, with strangers coming down to put decorations on the tree each year. Some have personalized messages or clues about who left the decoration. Others are simple – such as a small wood branch adorned with colorful ribbons.
“Isn’t this so cute?” she asked while cradling the branch. “It’s handmade, I love it, this is one of my favorite ones.”
Sheldrake-Stetson, who years ago lived near Santa Barbara, first put a small tree at the surf break Rincon 20 years ago, when her daughter was two years old.
“It was as tall as she was, it only fit two ornaments,” she said. “Now, it’s as tall as a two-story building.”
When she made San Clemente her home, she was saddened by the lack of holiday spirit at her favorite beach, Calafia, a place just south of the San Clemente Pier where she searched the sand for seaglass for her jewelry business, San Clemente Sea Glass.
So one day she brought a tree down to the sand, standing it up in a small hole she found between rocks.
For four years, the tree was right on the sand, but some years it was hauled off by beach maintenance crews or stolen in the dark of night. So she found a spot on the steps leading down to the beach, next to the railroad, where she could use a bike lock to affix the tree to a sign post.
Each year, the number of ornaments and visitors has grown. “Last year, it was so full there was nowhere to put an ornament,” Sheldrake-Stetson said.
This year, she put aside $110 for the tree, with Blake’s Christmas Tree lot in Dana Point matching her donation to get a 9- to 10-footer off the lot.
She has bags full of ornaments left through the years, and starts the tree off each year with some of her favorites – including bulbs that read “No Toll Road” and others with personalized touches, mementos that mean something to someone.
“I tried to pick the most special ones. I’m sorry if I left some of the special ones off, I have so many ornaments I don’t know what to do with them. I’d like them to go to a needy family,” she said.
“They are just floating around in my car right now. I have probably four bags full of ornaments.”
On a recent day, Sheldrake-Stetson added her own ornament – an owl – and pointed out some of her favorites that adorn the tree.
She cradled a white angel to showcase its beauty. “She’s just so pretty,” she said. “She just represents Christmas.”
Others have brought memorials down, to honor family or friends who have passed away.
“The tree means to you what you want it to mean,” Sheldrake-Stetson said. “It just touches me. That’s why I still do it, it has become so big. I like hiding up in my car watching people take pictures.”
One ornament is filled with crayons that have melted in the sun, making a rainbow of colors with the signature “Hana 2015.” One person, who simply signs “SK,” adds an ornament each year.
“See the baby?” she said, pointing to a picture on her phone of two kids next to the tree, one of many she’s collected of people posing with it. “The baby is now 9.”
There are some things Sheldrake-Stetson asks of the community who come down to add to the tree: don’t use anything glass, for fear it will break, and try to double wrap the string so ornaments stay tight on the tree when the wind blows.
“I have to be responsible with the tree in order to keep doing it,” she said.
And if you happen to have a bucket on your beach outing, try to give the tree a bit of love to keep it alive.
“If people come down and they can water it – not with saltwater – there’s a shower there,” she said, pointing to the nearby beach concession. “This is the community’s tree.”