IN THIS ISSUE – “Everyone Washes Their Hands, No One Gets Dirty”

CORNER OFFICE & POLITICS

  • Villaraigosa Wins Police Support
  • Newsom Gains Deep-Pocket Public Worker Union Backing
  • Frustrated Lawmaker Proposes Up or Down Votes on Bills

WATER

  • SoCal Water Giant Explores Majority Stake in Delta Tunnels
  • Drought Conditions Return to Golden (Brown) State

ENERGY

  • Utah May Sue California Over Coal Energy Pricing
  • US Shale Oil Production Hits Gusher

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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FOR THE WEEK ENDING FEB. 16, 2018, READ ALL ABOUT IT!!

 

Villaraigosa Wins Police Support

California organizations representing both police chiefs and rank-and-file officers put their law enforcement muscle behind Antonio Villaraigosa’s campaign for governor on Monday, contending that his Democratic rival, Gavin Newsom, supported criminal justice and public safety measures that are anathema to their priorities.

The California Police Chiefs Association and the Peace Officers Research Association of California pointed to Villaraigosa’s record as mayor of Los Angeles, where crime dropped amid an increase in police ranks, as well as his opposition to eliminating cash bail and Gov. Jerry Brown’s 2011 prison realignment push. Villaraigosa told the law enforcement leaders that he was open to reviewing the data to see if it warranted dialing back the initiatives that cops believe went too far.

The head of the police chiefs also cited the group’s opposition to Newsom’s marijuana legalization bid and said his 2016 gun-control measure was unnecessary given the changes pushed in the Legislature that year. “Was the initiative necessary, or was it for the purposes of politics?” asked Edward Medrano, president of the police chief’s organization.

Medrano said the totality of the recent changes – “realignment” that cut the state’s prison population by shifting certain felons to county jails; Proposition 47 that reduced some drug and property crimes to misdemeanors from felonies and Proposition 57 that created additional ways for inmates to receive early release – are still unknown. Californians, Medrano argued, have endured enough social experimentation over the last seven years.

The endorsements represent support not only from the chiefs, but from the workers they supervise. Even in the depths of recession, Villaraigosa refused to lay off officers in Los Angeles.

Newsom, the lieutenant governor and former San Francisco mayor, and Villaraigosa lead in public polls. Newsom has won endorsements from firefighters, teachers and nurses, giving him a clear edge among organized labor. In addition to leading the weed legalization and ammunition-control ballot campaigns in 2016, he’s established his brand by being out front on issues favored by liberal Democrats: He was the only statewide elected official to endorse Proposition 47 and joined fairly early in the cause to eliminate cash bail.

http://amp.sacbee.com/news/politics-government/capitol-alert/article199697984.html

 

Deep-Pocket Public Worker Union Backs Newsom

The Service Employees International Union, one of the most powerful and deep-pocketed labor unions in the state, endorsed Lt. Gov. Gavin Newsom’s gubernatorial bid on Tuesday.

“SEIU California members are ready to work our hearts out to see Gavin Newsom sworn in as California’s next governor,” said Roxanne Sanchez, the union’s president. “We believe that California can show the nation the way forward to a society that values every person and makes real progress toward economic and racial justice. Gavin Newsom will be both a visionary leader and, more important, a partner of working people in accomplishing these goals.”

SEIU, which has about 700,000 members statewide, will focus on boosting support for Newsom in Los Angeles County and other large urban areas with a focus on minority voters and union households.

The union plans to spend a minimum of hundreds of thousands of dollars on these efforts and will put its members — most of whom work in Los Angeles County — to work on the ground, according to someone familiar with their plans who was not authorized to speak publicly.

L.A. County and minority voters are groups that Newsom’s strongest rival, former Los Angeles Mayor Antonio Villaraigosa, is counting on in his gubernatorial bid.

Villaraigosa sparred with SEIU Local 721 over layoffs and an increase in the retirement age when he was mayor, with the union at one point labeling him “Mayor Two-Face” and accusing him of “flying all over the country, managing his image and trying to secure his next job” while city workers struggled to serve Angelenos.

SEIU is among the most politically active labor unions in California. Its state council alone spent more than $14 million during the 2016 election, and that doesn’t include separate political spending by local chapters.

Last year, in a special election to fill an Assembly seat, the union’s state council spent at least $327,000 boosting Wendy Carrillo’s successful bid, according to financial disclosures filed with the California secretary of state.

The Democratic candidates have been courting the group, stopping by a strike by one of the union’s locals last year and promising to fight for higher wages for healthcare workers at another local’s forum earlier this month.

The announcement comes just over a week before California Democrats gather for their annual convention, where they will vote on endorsing candidates in the governor’s race and other contests. Groups such as SEIU will be visibly active trying to get their preferred candidate the nod.

http://www.latimes.com/politics/essential/la-pol-ca-essential-politics-updates-powerful-labor-union-backs-gavin-newsom-1518550712-htmlstory.html

Frustrated Lawmaker Proposes Up or Down Votes on Bills

Hundreds of bills are placed on the “suspense file” of the fiscal committees each year, based on staff analyses of what they would cost state taxpayers. Twice during the year — in May and again in August — lawmakers on those committees convene to quickly dispense with those bills. Legislation that is held never gets an up-or-down vote.

“Everybody can wash their hands of it, no one’s hands are dirty,” Melendez said of the existing process.

Her effort in 2017 to create whistleblower protections for legislative staff members was held without a vote in the Senate Appropriations Committee last summer. Democrats revived it in the wake of the ongoing focus on sexual misconduct in the Legislature, and Gov. Jerry Brown signed it into law last week.

Melendez’s Assembly Constitutional Amendment 23 would require the removal of any legislative chair whose committee didn’t call a formal vote on every bill in its possession. The lawmaker would be barred from serving on that committee for the remainder of the legislative session.

http://www.latimes.com/politics/essential/la-pol-ca-essential-politics-updates-california-s-legislature-should-no-1518553858-htmlstory.html

 

SoCal Water Giant Explores Majority Stake in Delta Tunnels

In a dramatic twist on the Delta tunnels saga, Southern California’s powerful water agency is exploring the feasibility of owning the majority stake in the controversial project, a move that raises fears of a “water grab.”

Under the plan floated Monday by three board members, the Metropolitan Water District of Southern California would pour an extra $6 billion or more into the tunnels plan beyond what it has already pledged, enabling the twin tunnels to get built at the same time. Last week, facing a significant funding shortfall, the Brown administration announced it was scaling back the project to just one tunnel for now.

One of the Metropolitan board members, Brett Barbre, said Tuesday the agency’s increased involvement could ensure both tunnels get built. Metropolitan could then sell some of its surplus water to San Joaquin Valley agricultural districts that, to this point, have refused to pledge any dollars to the tunnels project because of its staggering cost.

Barbre said he believes the farmers “will eventually come in, and I think it’s important and imperative for Met to provide that leadership…..If we can work out a deal down the road where if they take the water, they pay for the water, that makes sense.”

Metropolitan’s heightened role could revive the faltering twin-tunnels approach. The tunnels project, known officially as California WaterFix, is in the midst of back. Lacking the $16.3 billion needed to fund both tunnels at once, Gov. Jerry Brown’s administration last week said it expects to phase in the project, starting with one tunnel for an estimated $11.1 billion. A second tunnel could get built years later if the rest of the dollars materialize.

So far the concept of Metropolitan taking on a larger share of the project is in its exploratory stages. The Metropolitan staff is pulling together financial analyses at the request of Barbre and fellow board members Rich Atwater and Steve Blois, who introduced the idea Monday at a meeting of Metropolitan’s water planning and stewardship committee.

Jeff Kightlinger, Metropolitan’s general manager, said Tuesday he’d like “Met to take a hard look at this.”

“I do think it’s important for people to step up and still do big things,” he said. “It would be good for California, frankly, if it were all done. It’s going to be hard to go back and do that second (tunnel) phase. … Once you’re in the ground, you should build it the right size.”

The project, regardless of size, is to be paid for by south-of-Delta water agencies. The Brown administration is leaving it up to them to figure out the financing.

“It’s up to the participating agencies to hammer out the best way to fund the project they need to protect their water supply reliability,” said Lisa Lien-Mager, a spokeswoman for Brown’s Natural Resources Agency.

Urban agencies have embraced WaterFix because they can spread the costs over millions of ratepayers; Metropolitan believes its customers would get rate increases of $1.90 to $2.40 a month for its share of a single-tunnel project. The Metropolitan board voted last fall to contribute more than $4 billion for a roughly 25 percent share of the twin-tunnels project.

But farmers who rely on Delta water could see their costs quadruple or more. Only one agricultural district, the Kern County Water Agency, has expressed interest in participating.

A bigger role for Metropolitan raises the specter of a Southern California “water grab” in the Delta, where landowners, local governments and many environmental groups already view the project with deep suspicion.

“It would certainly raise a lot of concerns to have Metropolitan controlling the Delta tunnels,” said WaterFix critic Doug Obegi, an attorney with the Natural Resources Defense Council. “Management of the Delta is supposed to be by the state on behalf of all the state’s citizens … and giving Met greater control really undermines trust that the facility would be operated responsibility and that would be operated with the benefit of all Californians.”

Northern California critics were dismayed when Metropolitan spent $175 million buying a cluster of islands in the Delta in 2016, possibly to help with construction of the tunnels.

http://www.sacbee.com/news/local/article199950429.html#storylink=cpy

 

Drought Conditions Return to Golden (Brown) State
Atmospheric conditions that helped create the recent multiyear California drought have returned, leaving the state dry and exceptionally warm this winter and its residents wondering if another long dry spell is on the way.

A ridge of high-pressure air off the West Coast has persisted for much of the past three months, blocking many Pacific storms from reaching California and weakening others that do get through. Normally such ridges tend to come and go, but they also lingered during the 2012-16 drought, the worst in the state’s history.

“We are now seeing another year that looks like one of those drought years,” said Daniel Swain, a postdoctoral researcher at the Institute of the Environment and Sustainability at the University of California, Los Angeles, who during the drought coined the term “ridiculously resilient ridge” to describe the atmospheric pattern.

“This one is definitely a resilient ridge, but we don’t know if it’s quite reaching the ‘ridiculous’ threshold,” said Dr. Swain, who blogs about California’s weather.

By one measure, at least, drought has already returned. According to the United States Drought Monitor, most of the southern half of California is now experiencing moderate or severe drought, a marked change from three months ago, when less than 10 percent of the state was in moderate droughtand no part was in severe drought.

The Los Angeles area has been especially dry. Dr. Swain said that Los Angeles has had only one 24-hour period with rainfall of more than one-third of an inch in nearly a year. The one exception, Jan. 8-9, was the day the Santa Barbara area just to the north was inundated with even more rain, leading to deadly mudslides.

But overall, the current conditions are far less extreme than in 2015 and 2016, at the tail end of the drought. At times in 2015 more than half the state was considered to be in extreme drought, the drought monitor’s highest category. That spring, the state imposed a mandatory 25 percent reduction in water use in urban areas.

State water officials note that this year, as a result of the drought-ending rains of a year ago, there is plenty of water in California’s reservoirs, so there are no critical supply issues that could lead to similar restrictions.

Even so, the dry, warm weather that has persisted since late fall is taking a toll, with snowpack in the Sierra Nevada — the source of about one-third of California’s water — at 21 percent of normal on Monday. Without a flurry of storms to add to the snowpack in the next few months, the low snowpack could eventually lead to supply problems, especially if dry conditions persist for the next few years.

The high-pressure ridge tends to shunt storms north toward British Columbia, said Marty Ralph, director of the Center for Western Weather and Water Extremes at the Scripps Institution of Oceanography.

“It’s very normal to have a ridge,” said Dr. Ralph, who studies so-called atmospheric rivers, trails of tropical moisture that in a normal year are responsible for much of California’s precipitation. “It usually breaks down at some point and packs of storms break through.”

A few studies have suggested that the persistence of such blocking ridges in certain parts of the world may be linked to climate change. But a range of conditions in the Pacific Ocean not necessarily related to climate change, including El Niño and La Niña, can contribute to the formation and positioning of a ridge, Dr. Swain said.

The thin California snowpack is also a function of high temperatures. Following a record warm summer and fall in the state, temperatures have continued well above normal this winter. In the Sierra town of Truckee, Calif., on Thursday the high temperature, 64, was 21 degrees above the historical average.

“What we’re seeing is more precipitation as rain than as snow,” said Doug Carlson, a spokesman for the state Department of Water Resources. The warmer temperatures raise the snow line, the elevation above which it is cold enough that precipitation falls as snow. They also cause what snow there is to melt faster.

Rain runs off immediately, while snowpack serves as a reservoir of water that is released over time as it melts. So, changes in the proportions of snow and rain and the rate of snowmelt can affect the availability and timing of water for people, industry and agriculture.

The snowpack conditions in the Sierra this year may be an extreme example of what scientists suggest will be the case with climate change — that as average temperatures rise, average snowpack will decline, perhaps by as much as 25 percent by midcentury.

The blocking pattern in the atmosphere has also brought warm, dry conditions to the Rocky Mountains and the Colorado River basin, said Greg Smith, a senior hydrologist with the National Weather Service in Salt Lake City.

“The pattern is very strong this year,” Mr. Smith said. Most of the storms track to the north of the region, he said, “and the storms that do come in tend to be weak.”

The situation in the lower Colorado basin — most of Arizona and parts of Utah, New Mexico, Nevada and California — is especially bad, with snow totals at or near record lows at many locations.

As in California, the upper Colorado basin — parts of Arizona, New Mexico, Utah, Colorado and Wyoming — had plenty of snow runoff last year, Mr. Smith said. But without significant snowfall by April, even the upper basin will suffer. His forecast for the runoff this year into Lake Powell, the reservoir at the junction of the upper and lower basins, is the seventh-lowestin history, with expectations that the reservoir will receive less than half of its usual supply from melting snowpack.

“There’s definitely some concern for supplies in some areas as we see these forecast numbers drop,” Mr. Smith said. “We’re kind of hopeful we’ll see a pattern change in the next couple of months. We’re running out of time.”

https://www.nytimes.com/2018/02/13/climate/california-drought.html

 

Utah Prepares to Sue California Over Coal Energy Pricing

Utah lawmakers gave initial approval to a proposal that would set aside $2 million to sue California over rules that make coal-fired power more expensive.

The proposal from Republican Rep. Mike Noel passed through a subcommittee with only one Democratic lawmaker raising objections. It marked the latest attempt by the state’s GOP leadership to help a struggling coal industry that is key to economies in several central Utah counties.

Noel said California’s policy is hurting coal miners in his rural district and violates the U.S. Constitution’s Commerce Clause. He said the taxpayer money is a small price to pay for standing up to what he calls “California’s war on Utah coal.”

California utilities pay an extra $15 per megawatt hour to buy power from Utah’s coal-fired Intermountain Power Plant.

“They’re trying to put their values on us,” Noel said.

Sen. David Hinkins, a Republican who represents several of the state’s counties most dependent on coal production, called on his fellow lawmakers to make a stand.

“The next thing it will be the pork produced in the state,” Hinkins said. “It would be like us saying we don’t want to take California almonds or California oranges but we’ll take them from Florida.”

California regulators and environmental groups disagree.

California Air Resources Board spokesman Stanley Young said in an emailed statement that the state’s system is not singling out Utah.

“California’s cap and trade program is designed to reduce climate-changing gases and rewards electricity with lower carbon pollution used by Californians — regardless of where that electricity comes from,” Young said.

The system has survived previous court challenges from business leaders in California.

Sen. Jim Dabakis, a Democrat from Salt Lake City, questioned why the coal companies aren’t paying for the lawsuit and pointed out that a Salt Lake City law firm that testified the case is winnable is biased because it will get paid to win the case or lose it.

“This is the state taking millions like they do every year and going up to the dome of the Capitol and just throwing it out there, wasting it,” Dabakis said. “They pick lawsuits that have no chance.

Lawmakers who several years ago backed a Utah plan to spend $53 million in public money on an Oakland, California-coal shipping terminal say the proposed expansion would allow them to ship coal to Asia. But the Oakland City Council voted to ban coal shipments, leading to a court battle that is awaiting a ruling from a federal judge in California.

The new proposed money was inserted into an appropriations bill by the Natural Resources, Agriculture and Environmental Quality Appropriations Subcommittee and now moves on to an executive appropriations committee.

Ashley Soltysiak, Utah chapter director for the Sierra Club, said the organization is firmly against a proposal that would keep valuable funds from state programs that need it, like air quality measures.

“The people of California have spoken: They don’t want to have dirty, polluting energy in their state,” Soltysiak said. “This would be a gross waste of Utah taxpayer dollars. This is lawsuit is ridiculous.”

Out-of-state demand for Utah’s coal had led to a drop in coal production to about 14 million tons in 2017, down from about 27 million tons in the mid-2000s, said Michael Vanden Berg, energy and mineral program manager at the Utah Geological Survey.

Larry Johnson, mine manager at Alton Coal Development, testified in support of the proposal, saying coal production is down 40 percent since 2015. That has led to a cutback in hours for mine workers.

“What are they are trying to make coal more comparable to solar and wind rates,” Johnson said. “It’s not right.”

https://www.sacbee.com/news/business/article199763069.html#storylink=cpy

 

US Shale Oil Production Hits Gusher

Wall Street Journal excerpt, Feb. 13

U.S. shale companies are churning out crude oil at a record pace that could overwhelm global demand and reverse the oil market’s fragile recovery, a top energy-market observer said Tuesday.

U.S. shale production is growing faster in 2018 than it did even during the boom years of $100 a barrel oil prices from 2011 to 2014, said the International Energy Agency in its closely watched monthly report. The difference this time: Oil prices are about 40% lower.

The situation is “reminiscent of the first wave of U.S. shale growth,” when a flood of American oil built up a global glut and sent prices crashing over four years ago, said the Paris-based IEA, which advises governments and corporations on energy trends.

Oil prices fell after the report’s release in Europe. Brent, the international benchmark was down 0.69% at $62.17, while U.S. prices were down 1.35% at $58.51.

Shale producers “cut costs dramatically” during the oil-industry downturn, the IEA said. They then took advantage of the Organization of the Petroleum Exporting Countries cartel’s decision last year to cut its own output, which helped prices rise from the low $40s to over $70 a barrel in January.

Unlike countries like Russia, shale-oil companies—using techniques like hydraulic fracturing, or fracking—are able to pounce when prices rise and pull back when the market falls. They can drill wells, and then wait to complete the process until it is profitable.

Shale-oil producers had promised investors that they would focus on profits this year as prices rose and abandon the pump-at-any-cost mentality that crashed the market. But shale companies have a backlog of nearly 7,000 wells that have been drilled but not completed. That allows operators to increase production by extracting oil from the backlog rather than spending significant amounts on drilling, meaning U.S. output could rise even higher than expected.

U.S. oil output could rise as high as 11 million barrels a day by 2019, some oil-industry analysts say, rivaling that of Russia, the world’s biggest crude producer. The U.S. currently pumps over 10 million barrels a day, the most since 1970.

“All the indicators that suggest continued fast growth in the U.S. are in perfect alignment,” the IEA said

Led by U.S. shale companies, crude output from non-OPEC nations is expected to outpace the growth in oil demand in 2018, the IEA said. That is an important data point for oil traders who have been watching to see if shale production could catch up to robust demand that has been fueled by a strong global economy.

“U.S. shale is growing as sharply as it was in 2013-2014,” said Bjarne Schieldrop, chief commodities analyst at SEB Markets. But the situation is different now because of the OPEC-led agreement to curb production, Mr. Schieldrop added.

OPEC and 10 other countries including Russia—whose combined output accounts for over 55% of global supply—have cut far more than the 1.8 million barrels a day they promised, according to the IEA.

The shale-oil growth will apply downward pressure on prices in the coming weeks. But as long as OPEC sticks to the deal, there won’t be a dramatic correction, Mr. Schieldrop said.

Saudi Arabia’s oil minister, Khalid al-Falih, has said there is an “oversized focus” on shale production growth. “I don’t lose sleep over it,” Mr. Falih said during the World Economic Forum last month in Davos, Switzerland.

Until two weeks ago, oil prices had risen almost nonstop for over six months.

The optimistic sentiment was driven not only by OPEC but also by strong economic news, geopolitical flare-ups in Iraq, Saudi Arabia and Iran, and supply outages in Venezuela and the U.K. Separately, oil storage levels around the world have fallen.

The IEA said commercial oil inventories in the Organization for Economic Cooperation and Development—a group of industrialized, oil-consuming nations, including the U.S.—fell by 55.6 million barrels in December, in the largest drop since 2011.

“The huge drop in inventories is a bullish signal,” said Giovanni Staunovo, commodities analyst at UBS Wealth Management.

But inventory levels in the U.S. have begun to rise again, after months of falling, as U.S. output rises. The IEA on Tuesday noted that as “oil price rises have come to a halt and gone into reverse…so might the decline in oil stocks, at least in the early part of this year.”