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IN THIS ISSUE – “An Unmanaged Transition Could Spell Disaster in a Lot of Different Ways”
Energy Commissioner Siva Gunda on California’s shift from petroleum to renewables
Hot Debates Abound in the State’s Capital:
- Governor’s Order Increases Water Storage; Angers Environmentalists
- Will California’s Transition to Renewables Run Out of Gas?
- Legislators’ Vent Frustrations With Lack of Housing Homeless
- Controversy Continues for Guaranteed Income Experiments
- “It Should Raise Eyebrows”: Assembly Speaker Appoints Attorney General’s Spouse to Oversee…the Attorney General’s Budget
Capital News & Notes (CN&N) harvests California policy, legislative and regulatory insights from dozens of media and official sources for the past week. Please feel free to forward this unique client service.
FOR THE WEEK ENDING FEB. 17, 2023
Governor’s Order Increases Water Storage; Angers Environmentalists
CalMatters
Facing an onslaught of criticism that water was “wasted” during January storms, Gov. Gavin Newsom on Monday suspended environmental laws to give the go-ahead to state officials to hold more water in reservoirs.
The governor’s executive order authorized the State Water Resources Control Board to “consider modifying” state requirements that dictate how much water in the Sacramento-San Joaquin Delta is allowed to flow into San Francisco Bay.
In January, after floodwaters surged into the bay, farm groups, Central Valley legislators and urban water providers complained that people and farms were being short-changed to protect fish. They urged state officials to store more water in reservoirs, which would increase the supply that can be delivered this summer to farm fields in the Central Valley and millions of Southern Californians.
Environmental activists say Newsom’s order is another sign that California is shifting priorities in how it manages water supply for humans and ecosystems.
They said the order will likely harm Chinook salmon and Delta smelt. Large numbers of newborn Chinook salmon have perished in recent drought years — the result of low flows in the Sacramento River and its tributaries.
Doug Obegi, a Natural Resources Defense Council long-time advocate, called Newsom’s order the latest action in “a breakdown of law and order in the Delta.” In every critically dry year since 2012, Obegi said, the state’s flow rules and water export restrictions have been waived.
“Now, it seems, we’re going to start waiving them in average years,” Obegi said, adding that it’s the first time that the state has waived Delta outflow standards in a year that isn’t designated critically dry.
“The executive order seems to signal the governor’s intention to put his thumbs on the scale in favor of extinction in the Delta.”
The state water board’s Delta flow rules are designed to help enforce the federal and state Endangered Species Acts, which protect Chinook salmon, green sturgeon, Delta smelt and longfin smelt.
Sarah Woolf, a farmer in the Westlands Water District in the San Joaquin Valley, said that in the past several years, her family has fallowed roughly half of their land. Her family received zero allocation of Delta water in the last two years and relied almost entirely on groundwater.
Saying that the regulations can be too rigid in dry years, Woolf said the governor’s order could provide flexibility in better managing water supplies.
“We’re hopeful that this results in more water supply for a higher percentage of the contract water we are able to receive,” she said.
Randy Fiorini, a Merced County farmer, said farmers and other water users are routinely deprived of water to protect environmental resources. Now, he said, the governor is tipping the balance in the other direction.
“This gives us the chance to capture as much water now as we possibly can,” he said.
Newsom’s order says: “To ensure adequate water supplies for purposes of health, safety, the environment, or drought resilient water supplies, the Water Board shall consider modifying requirements for reservoir releases or diversion limitations in Central Valley Project or State Water Project facilities.”
His order adds that to enable those actions, two state laws — Water Code Section 13247, which requires state agencies to comply with all water-quality rules, and Public Resources Code, Division 13, which ensures environmental quality, and its regulations — “are suspended.”
The order means it’s likely that the water board will allow more water to be stored later this year in Lake Shasta and Lake Oroville, the state’s largest reservoirs, plus more water to be pumped south into San Luis Reservoir in the San Joaquin Valley. Oroville as of today contains 115.6% of its historic average and Shasta is at 88.1%. The order also aims to streamline and increase groundwater recharge projects.
In an immediate response to Newsom’s order, the state Department of Water Resources and the U.S. Bureau of Reclamation on Monday jointly petitioned the state water board to loosen the Delta flow rules “to ensure the availability of an adequate water supply while also ensuring protection of critical species and the environment.”
Water board officials said in an emailed statement to CalMatters that they “are reviewing the request carefully, in coordination with the California Department of Fish and Wildlife.” They said the agency’s decision will come “within the next week.”
Newsom has been under heavy criticism in recent years for using his emergency power to issue orders for handling COVID-19, the death penalty and other state issues.
Newsom said in the order that he hopes to help “maintain critical flows for fish and wildlife.”
Storing more water could “protect cold water pools for salmon and steelhead” later in the year, the order says. During drought, low reservoir levels can lead to lethally warm water for salmon when they spawn in the summer and fall. Holding water in reservoirs now may help the ecosystem later with improved water quality, enhanced flows and cold water for reproducing salmon.
But Obegi said fish need substantial flows now. High river flows push young salmon along in their spring journey from the Central Valley to the ocean, while reduced flows lead to higher mortality.
Put in place decades ago, the Delta flow regulations at stake now are designed to help juvenile salmon reach the ocean and protect the Delta from seawater intrusion, which can occur when flows from the Sacramento and San Joaquin rivers are reduced. Many environmentalists say the flow rules aren’t strong enough to protect fish, while some water user groups say they allow too much water to flow into the ocean.
Triggered by January’s conditions, the rules require that 29,200 cubic feet per second of water flow through the Delta through most of February. But last week, state and federal agencies unveiled a forecast saying flows could drop to 15,000 cubic feet per second. Environmental groups objected in a Feb. 10 letter to the state water board, warning “that the U.S. Bureau of Reclamation and the California Department of Water Resources appear likely to violate the minimum Delta outflow requirements.”
Three days later, Newsom issued his order.
Newsom’s order points out that heavy rains in 2021 were followed by the driest January through March in over a century. A similar pattern, he said, is emerging now, with the December and January storms followed by a dry February, so more water needs to be held back in reservoirs to protect cities and farms from another drought-plagued summer.
“[T]he frequency of hydrologic extremes experienced in the State is indicative of an overarching need to continually reexamine policies to promote resiliency in a changing climate,” Newsom stated.
As of Feb. 14, Delta outflow was measured at 18,000 cubic feet per second, which is just 61% of the flow required under the water board’s restrictions.
Governor’s statement:
Will California’s Transition to Renewables Run Out of Gas?
Sacramento Bee
Since 1896, the sprawling Phillips 66 refinery in Rodeo has turned millions of barrels of crude oil into everything from asphalt and kerosene to gasoline and diesel. But not for much longer.
Next year, California’s oldest refinery will begin converting animal fats, food waste and cooking oil into cleaner fuel for trucks and other heavy equipment.
The resulting reduction in carbon emissions will be the equivalent of taking 1.3 million vehicles off the road annually, company officials estimate. That would improve California’s chances of meeting its ambitious climate goals, which include reducing greenhouse gases to 40% below 1990 levels by 2030.
The refinery’s transition comes as California accelerates its historic move away from fossil fuels. It also highlights the careful balancing act officials must perform in their pursuit of a future fueled by clean energy.
Advance too slowly, and the state won’t hit its targets. Retreat too hastily from oil and gas, and millions of low-income residents who will continue to rely on it stand to be harmed, experts warn.
Volatile gas price spikes, premature refinery closures and large-scale layoffs of oil industry workers could all be consequences of entering the post-fossil age without proper planning.
In other words, California must ensure it will have enough in the tank to get it through the change. “An unmanaged transition could spell disaster in a lot of different ways,” said California Energy Commissioner Siva Gunda.
To avoid a worst-case scenario, California is working rapidly to electrify its economy with a new infrastructure of transmission lines, wind and solar farms and charging stations. The state is offering incentives to residents who want to add solar panels and battery storage to their homes and buy electric vehicles. But experts say that’s only part of the equation to ensuring a reliable and equitable transition away from petroleum.
California will be a different place in 2035 if the goals now in place are realized. State officials anticipate that 12.5 million electric vehicles will be on the road — at least 14 times the number today — with more than a million new charging stations to keep them there.
Wind turbines may float off the Pacific coast for the first time. Fields that once grew alfalfa and dates could instead sprout solar panels. But in the midst of this revolution, more than half of the vehicles in California — about 17 million — will still be powered by gas, driven by those who will need it to get from home to work and everywhere in between.
The average purchase price of an electric vehicle is roughly $10,000 above the industry average for gas-powered vehicles, according to Kelly Blue Book. Surveys indicate that the price gap will likely shrink over the next decade, and in the meantime, drivers can offset some of the up-front cost by applying for federal tax credits and California rebates.
Whether prices will drop fast enough and charging stations proliferate rapidly enough, is a big unanswered question. And just like failing to provide enough power for electric vehicles could thwart the state’s climate goals, so could underestimating the long-term demand for gasoline.
“There’s a recognition that we are going to phase out gasoline and as we do, we’re going to lose more refineries,” said Severin Borenstein, an energy economist at UC Berkeley. “And figuring out how to manage that so supply and demand don’t get out of whack I think is going to be important.”
Experts worry that a trend of such refinery closures — if not adequately timed to meet the changes in demand — could harm Californians without the means to purchase zero-emission vehicles.
“When you restrict supply and prices go up, the people who are hurt the most are low-income,” Borenstein said. “So it’s really inequitable, and that’s something we have to take seriously.” Borenstein argues that instead of restricting the supply of gasoline, California’s transition to clean energy should focus more heavily on reducing the demand for it.
That’s why the California Energy Commission, the state’s primary energy policy and planning agency, recently embarked on an 18-month study to better understand the future of demand for fossil fuels. It will analyze the regulatory and market forces driving California’s volatile gas and oil market, including the impact of refineries taken offline for maintenance or closed outright.
The hope is that the study, expected to be ready for public review by mid-2024, will provide a path to clean energy while providing reasonable forecasts for changes to the demand for oil. California’s major oil companies and their trade organization are encouraged by the prospect of the state’s study, but they’re waiting anxiously to find out what assumptions officials used to derive their forecasts.
Last month, a report criticized the state’s Air Resources Board’s newly-adopted plan for how California will meet ambitious greenhouse gas reduction targets. The Legislative Analyst’s Office, which advises the state Legislature on policy and fiscal matters, said the plan lacked “a clear strategy.”
\Without more specificity, LAO added, it could delay action and increase the risk that the state doesn’t meet its 2030 goal of reducing greenhouse gases to a level at least 40% below what they were in 1990.
“Right now, we are dominated by policies that are aspirational, but good energy policy cannot be based on hope,” said Catherine Reheis-Boyd, CEO of the trade organization Western State Petroleum Association. “Consumers deserve a plan that takes care of their concerns for the environment and does it in the most affordable way. Right now, they have no plan.”
And now, Newsom is leading a campaign to cap the profits of oil companies and punish them for allegedly price-gouging Californians.
“It’s politically positive, but you’ve got to realize that it likely will lead to further reductions in gasoline availability and take away incentives for companies to invest in long-term assets and equipment,” said James Sweeney, a professor of management science and engineering at Stanford.
Supporters of the penalty argue that it would help motorists by discouraging oil producers from raising the price at the pump in California out of line with the national average. “This is a market that is heaven for these refiners,” said Jamie Court, president of Consumer Watchdog, a major proponent of the proposed penalty.
Tyson Bagley, a second-generation California oil worker, instead said it feels as though Newsom has “declared a war” on his industry.
“I have never seen an industry become so demonized by the state of California, elected officials and environmentalists,” said Bagley, United Steelworkers representative and health and safety worker at Phillips 66 Rodeo Refinery. “They look at us like public enemy number one and that is inaccurate.”
A century ago, California was the nation’s leading oil producer. But aging oil fields, stringent climate policies and a preference for cleaner natural gas over heavier California crude have diminished its output.
Over time, the state has become increasingly reliant on imported crude oil to produce its transportation fuel, with more than 70% coming from Alaska and foreign countries, according to data from the California Energy Commission. And with new efforts to impose further restrictions on the oil and gas industry and reduce air pollution in California communities, imports will only continue to grow.
Oil workers, in turn, will face layoffs and companies that serve in-state production may potentially be forced to shutter or reinvent themselves for green energy or construction sectors. “I’m definitely not a climate change denier, but I’m in the business of protecting good jobs,” Bagley said. “They don’t need to pull the carpet out from under people’s feet when they’re working in an industry that people need to thrive and be successful.”
California’s unique fuel landscape — an isolated market where all of the transportation fuel sold is refined locally by a handful of companies such as Phillips 66, Marathon Petroleum and PBF Energy — makes navigating the state’s transition to clean energy more challenging.
Oil industry representatives argue that burdensome state regulations — which incentivize such conversions — are jeopardizing the state’s refining capacity, which could make Californians more vulnerable to gasoline supply shortages and price spikes.
Paul Davis, senior vice president of PBF Energy, cautioned that if the situation worsens, the state may find itself following in Australia’s footsteps and subsidizing operations at its last remaining oil refineries. “We’re just flabbergasted by the tactics of the administration,” Davis said, adding that PBF representatives met with his administration twice a year ago to explain that the state was short gasoline. “They are just going to exacerbate what we still think is going to be a pretty dire supply system situation in the state very soon.”
https://www.sacbee.com/news/politics-government/capitol-alert/article271060772.html#storylink=cpy
Legislators’ Vent Frustrations With Lack of Housing Homeless
CalMatters
An increasingly bipartisan chorus points to two stark, seemingly contradictory trends for resolving homelessness: The state keeps spending more to address the crisis, and the crisis keeps getting worse. So where, they ask, is all the money going?
On Wednesday, California lawmakers got something that resembles an answer.
The state’s Interagency Council on Homelessness, a state body tasked with overseeing the state’s homelessness strategy and divvying up funding to local governments, issued a report detailing just how much the state has spent on the crisis between 2018 and 2021 — and what it’s gotten in return.
The answer to those questions, according to the report: The state has spent nearly $10 billion and provided services to more than 571,000 people, each year helping more people than the last.
And despite all that, at the end of year three, the majority of those more than half a million Californians still didn’t end up with a roof over their heads. The number of unsheltered Californians continues to swell.
Presented at a three-hour joint committee hearing in the Assembly, the report has sent housing policy experts across the state into a twitter. Services for the homeless are so disjointed — split among nine state agencies, hundreds of county and municipal governments, nonprofits and charitable organizations — the 253-page document may be the first statistical birds-eye view of the state’s many-tentacled efforts.
But it also shows just how intractable the problem is.
“One of the largest challenges facing the state is the inflow of new people into homelessness, even as efforts to help people experiencing homelessness expand,” the report reads.
What the report did not address is how the state can spend its money more effectively. Nor was it asked to. The report comes at the request of the Legislature, which included an ask in its 2021 budget for a “comprehensive view of the homelessness response system,” not an audit nor a list of recommendations.
But it may provide lawmakers, service providers and advocates with some helpful hints about what’s working, what isn’t and for whom.
“We’ve sent people to the moon,” said Oakland Assemblymember Buffy Wicks, a Democrat who chairs the Assembly’s housing committee. “We can solve homelessness in California.”
MORE:
Controversy Continues for Guaranteed Income Experiments
CalMatters
The city of Stockton made national headlines four years ago when it started its guaranteed income experiment, in which it gave 125 households $500 a month, no strings attached.
The preliminary results: A 2021 report found that after a year, the recipients were nearly twice as likely as a control group to be able to pay for an unexpected expenses, were more likely to have jobs and said their mental health was better.
Now, more than 40 similar pilot programs have run, are operating or are planning to launch around the state, CalMatters found. They’re sending certain groups of low-income people unrestricted cash payments ranging from $300 to $1,800 a month for periods of six months to three years.
In all, the programs represent the largest modern U.S. experiment in unrestricted cash payments, with more than 12,000 Californians expected to receive more than $180 million in public and private funds.
Former Stockton Mayor Michael Tubbs: “I hope people learn that you can trust people with money. Money may not solve every single issue, but every single issue is more solve-able when folks have their basics taken care of.”
Proponents argue that unconditional cash — as opposed to typical government assistance programs — gives people in poverty the freedom to address the myriad challenges that hold them back: high rent or a broken-down car, a lack of savings or an unexpected emergency.
Critics say such unrestricted payouts discourage work, and that California can’t afford to expand its social safety net this way. Also among the skeptics: Lorena Gonzalez Fletcher, leader of the California Labor Federation, who argues that relying on cash programs to supplement family incomes lets employers off the hook for paying low wages.
Gonzalez Fletcher: “If you work 40 hours a week, or 50 or 60 hours a week, you should not live in poverty, and you should not be able to qualify for social service programs.”
What’s it like for participants? Some told Jeanne that they were able to spend more time with their family, take a more active role in their kids’ education or take training for job prospects.
Noé Salgado, who works the equivalent of two warehouse jobs, treated his family to an amusement park trip: “It felt really good to see my kids happy. It was a feeling I’ll never forget.”
KCRA-TV
California Attorney General Rob Bonta’s wife, Assemblymember Mia Bonta, has been tapped to lead a budget committee that oversees and helps determine his agency’s spending, a decision that some political experts say is ethically questionable.
Assembly Speaker Anthony Rendon, D-Lakewood, recently appointed Mia Bonta, as the chairwoman of the Assembly Budget Subcommittee 5, which focuses on how taxpayer dollars are used on the state’s various public safety agencies, including the California Department of Justice. Both Bontas are Democrats.
“It should raise eyebrows,” said Bob Stern, former general counsel for the state’s Fair Political Practices Commission. “What’s going on with them? It seems to me they have a tin ear about ethics.”
“I believe Ms. Bonta will continue to be independent and unbiased in her legislative judgment, as she has been since starting her service in the Assembly,” Speaker Rendon said in a statement, defending his decision. “The Legislature has a robust and transparent budget process, designed with checks and balances to ensure the best possible budget is passed. Our final Assembly budget proposal must be identical to the Senate, and will be approved or vetoed by the governor. Additionally, we can’t set salaries or benefits for state constitutional officers, so no elected official can ever personally or financially benefit from our budget process,” he said.