For Clients & Friends of The Gualco Group, Inc.
IN THIS ISSUE – “Summer in Sacramento: Triple-Digits and Tough Decisions for Governors”
Political journalist on the closing days of the legislative session
- Ending the Suspense: Legislature Picking Winners & Losers
- Final Days of Legislative Session Shape Newsom’s National Image; “You Don’t Want to Go Over the Progressive Waterfall and Crash”
- Governor Hands A Big Climate Change Agenda to Legislature
- “Regardless of Drought or Flood”: Newsom’s New Water Plan for California
- Price of Water Bubbling Up
- California Power Grid to Fall Short of Demand, Regulator Forecasts
- Silicon Valley Young Guns Departing for “Wartime CEOs”
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 AUG. 12, 2022
Ending the Suspense: Legislature Picking Winners & Losers
CalMatters
In simultaneous marathon hearings, the appropriations committees in the Assembly and Senate rattled through hundreds of bills in a single discharge of rapid-fire legislating.
Many proposals lived to see another day. Among them: Gov. Gavin Newsom’s proposal for new courts to compel more homeless individuals to seek mental health and substance abuse treatment, and bills to strictly limit the use of solitary confinement in California jails and prisons, allow for the composting of human remainsand increase family leave payments for lower-wage workers, though it wouldn’t take effect until 2024.
But many other closely watched bills came to an unceremonious end, killed in one of Sacramento’s most opaque lawmaking processes. They included a Republican-backed bill that would have capped copays for insulin, a California Medical Association-backed proposal making it easier for doctors to approve procedures and prescriptions without first getting permission from an insurance company, and a bill to allow prosecutors to go after social media companies for knowingly addicting children.
It’s called the suspense file. For months, the appropriations committees, tasked with assessing the fiscal impact of any bill outside the annual budget, gather any legislation with more than a negligible price tag and put it to the side.
Then twice a year, after legislative leaders decide which bills live and which die behind closed doors, they announce the results in a single hearing. In most cases, no public votes are taken and no debates are held.
In theory, this arcane procedure allows lawmakers to quickly run through the hundreds of fiscal bills they need to consider by the end of the legislative session, which arrives at the end of this month. Today, the two committees ran through more than 820 bills.
In practice, it’s also a good way for Democratic lawmakers, who hold super-majority power, to kill legislation without having to take a public, and potentially politically difficult, stand. The stakes were especially high today. The legislative session ends this month and many lawmakers will either retire or be replaced before the next one begins, making this the last opportunity for some legislators to leave their mark on state policy. Politically, it’s also a tense time: the November general election is less than three months away.
Thus, bills requiring gun owners to buy liability insurance and forcing law enforcement agencies to let the public listen to police radio transmissions were also quietly killed. Who pulled the trigger? The public often has no way to know for sure. We can only count the legislation that succumbed.
In this case, more than 200 were killed, while nearly 600 stayed alive.
In some ways, the suspense file that state lawmakers churned through on Thursday — a lengthy list of hundreds of bills that they either silently sent to their death or let survive another day — didn’t live up to its reputation.
That’s because the secretive, twice-annual process — which allows legislators to shelve bills they deem too expensive, as well as those that may be politically inconvenient or strongly opposed by powerful interest groups — left undecided some of the most highly anticipated battles of the legislative session.
So the suspense isn’t over for a slew of controversial bills among the more than 600 that made it through, setting lawmakers up for contentious public votes with the end of the legislative session less than three weeks away — and the Nov. 8 general election less than three months away.
The proposals could also put Gov. Gavin Newsom in a precarious political position if they land on his desk: Newsom, who in recent months has been steadily elevating his national profile in what some have interpreted as groundwork for a future presidential run, declined to comment Thursday on whether he plans to sign a contentious bill lawmakers sent him last week that would permit Oakland, San Francisco, and Los Angeles to launch trial supervised drug injection sites.
Here’s a look at some of the bills that could present Democratic lawmakers and Newsom with especially complex political conundrums. They would:
Decriminalize certain psychedelic drugs.
Limit solitary confinement in prisons, jails and private immigration detention facilities.
Tighten California’s concealed carry gun law.
Restrict prosecutors’ ability to seek either the death penalty or life without parole for some accomplices in certain felony murders.
Classify as unprofessional conduct physicians and surgeons’ dissemination of COVID “misinformation or disinformation.”
Require school districts to have COVID testing plans.
Expand online privacy protections for youth.
Protect out-of-state families seeking gender-affirming care for their transgender children in California.
Create a framework to force severely mentally ill Californians into treatment and housing.
Allow the state to negotiate wages, hours and work conditions for the entire fast-food industry.
Increase payments from the state’s paid family leave program for lower-wage workers, starting in 2024.
Permit farmworkers to vote by mail in union elections.
Allow legislative staffers to unionize.
Speed up affordable housing construction.
Give certain cities the green light to allow eligible bars, restaurants and nightclubs to sell liquor until 4 a.m., instead of the previous 2 a.m. cutoff.
Legalize human composting.
More:
Final Days of Legislative Session Shape Newsom’s National Image;
“You Don’t Want to Go Over the Progressive Waterfall and Crash”
Politico’s California Playbook
Whether Gov. Gavin Newsom is laying presidential groundwork or just polishing his national image, there’s a growing Sacramento perception that Newsom’s larger aspirations will shape the next few weeks.
Sacramento’s late summer is a time of triple-digit days and increasingly tough decisions for governors. Organized labor, environmental advocates, business groups and other interests vie to get bills on the governor’s desk or block them — or at least soften them into acceptable form — working the cracks between liberal and moderate Democrats. Every Democratic California governor strives to keep that proverbial political canoe afloat by delivering for the left without overly antagonizing the center.
Democratic strategist Roger Salazar told Politico: “You don’t want to go over that progressive waterfall. You want to keep going down that stream but you don’t want to go too far and then end up crashing.”
Newsom has demonstrated that instinct since his mayoral days, where he balanced landmark social policy with a business-friendly centrist streak. He’s always been seen as ambitious.
But the governor’s recent plunges into the national political scene have bolstered a belief among lawmakers and lobbyists that Newsom is viewing this legislative deluge through a national lens, seeking to bolster his progressive reputation without playing into attacks that California is overly liberal or hostile to business.
Newsom’s late appeal for ambitious climate legislation has kindled enthusiasm among environmentalists. But there is some suspicion that the governor is moving now to shore up his left flank and notch an environmental win that he could tout, matching the recent federal breakthrough.
His ability to get a green deal across the finish line – no easy task, given the formidable oil-labor coalition that has torpedoed some of his ideas – could reverberate beyond California.
He’s also contending with policies that carry obvious political risk. Perhaps no measure illustrates this better than a bill letting San Francisco, Oakland, and Los Angeles pilot sites where people can use drugs under government supervision. Newsom lauded the idea when he was running for governor but has been silent on a follow-up bill that has passed the Legislature.
Governor Hands A Big Climate Change Agenda to Legislature
CalMatters
Newsom is pushing state lawmakers to pursue a series of beefed-up measures to combat climate change, which he outlined in a memo sent to legislative leaders in the past week. But behind the ambitious goals — unveiled soon after the governor urged state regulators to add teeth to California’s climate strategy — lurk large logistical hurdles, including:
Timing. Lawmakers have little time left to accomplish what Newsom spokesperson Alex Stack described as an “ambitious climate agenda for this session”: The session ends in three weeks.
Frustration. Assemblymember Al Muratsuchi, a Torrance Democrat, has sponsored bills related to three of Newsom’s five major proposals — but the governor didn’t appear to support the bills, and none made it past the state Senate. “We need him to not only to nudge the Legislature, which has been working on these issues for years, we need his leadership, we need his willingness to push back against big oil and its allies,” Muratsuchi said. “The Legislature cannot do it on its own.”
Confusion. Newsom wants lawmakers to establish a buffer of at least 3,200 feet between new oil and gas production wells and homes, schools and parks — but a state agency is already in the midst of a rulemaking process to do the same thing.
Feasibility. Newsom wants to significantly accelerate California’s pace of greenhouse gas cuts — even though the state isn’t on track to meet its existing goal.
“I don’t think we lack for ambitious targets. What’s missing is a key strategy, a firm strategy to implement our existing targets,” said Danny Cullenward, policy director at CarbonPlan.
Governor’s Climate Legislation Asks:
“Regardless of Drought or Flood”: Newsom’s New Water Plan for California
LA Times & CalMatters
With California enduring a historic drought amplified by global warming, Gov. Gavin Newsom on Thursday released a new plan to adapt to the state’s hotter, drier future by capturing and storing more water, recycling more wastewater and desalinating seawater and salty groundwater.
The governor’s new water-supply strategy, detailed in a 16-page document, lays out a series of actions aimed at preparing the state for an estimated 10% decrease in California’s water supply by 2040 due to higher temperatures and decreased runoff. The plan focuses on accelerating infrastructure projects, boosting conservation and upgrading the state’s water system to match the increasing pace of climate change, securing enough water for an estimated 8.4 million households.
Newsom called it “an aggressive plan to rebuild the way we source, store and deliver water so our kids and grandkids can continue to call California home in this hotter, drier climate.”
Newsom spoke about the plan Thursday morning in Antioch, where a desalination plant is being built to treat brackish water.
A key prong of Newsom’s plan is to fast-track projects — including reservoirs, groundwater recharge facilities and desalination plants — by streamlining the state’s notoriously lengthy and convoluted environmental review process, a strategy he also employed in a highly controversial energy blueprint.
“The time to get these damn projects is ridiculous. It’s absurd. It’s reasonably comedic,” Newsom said. “In so many ways, the world we invented from an environmental perspective is now getting in the way of moving these projects forward.”
(Former GOP Gov. Arnold Schwarzenegger voiced a similar sentiment in a recently published newsletter: “We can’t be held hostage any more by those who use our environmental review system against us. If a project can’t be approved in a year, what are we even doing? If anyone can sue to slow down every project with no consequences, what are we incentivizing?”)
However, Newsom’s own administration recently denied a permit for a massive proposed desalination plant in Huntington Beach that had been debated for more than 20 years.
State Sen. Brian Dahle, a Bieber Republican who’s running for governor against Newsom, said in a statement: “Gavin Newsom has had more money and opportunity to increase our water supply than any other Governor in history. He has done nothing. Voters have approved over $27 billion in bonds over the years to increase water storage in this state and yet we haven’t seen one extra drop of water needed for our residents.”
The plan calls for expanding water storage capacity above and below ground by 4 million acre-feet; expanding average groundwater recharge by 500,000 acre-feet; accelerating wastewater recycling projects to reuse at least 800,000 acre-feet of water by 2030; building projects to capture more runoff during storms, and desalination of ocean water and salty groundwater.
“The best science tells us that we need to act now to secure California’s water future. Climate change means drought won’t just stick around for two years at a time like it historically has,” Newsom said in a statement. “Drought is a permanent fixture here in the American West and California will adapt to this new reality.”
The projected loss of 10% of the state’s water supply within two decades translates to losing 6 million to 9 million acre-feet per year on average — more than the volume of Shasta Lake, the state’s largest reservoir, which holds 4.5 million acre-feet.
The state’s plan refers to how warmer temperatures unleashed by rising levels of greenhouse gases are leading to what many scientists describe as aridification. A warmer climate makes the atmosphere “thirstier,” pulling more moisture from the landscape through evaporation and increasing the amount plants take in, leaving less runoff flowing into streams and rivers.
“Regardless of drought or flood, in this changed climate there will be less water available for people to use,” the state plan says. “To match the pace of climate change, California must move smarter and faster to update our water systems. The modernization of our water systems will help replenish the water California will lose due to hotter, drier weather.”
The extreme dryness and high temperatures during the 2012-16 drought, closely followed by the current drought since 2020, “send a strong climate signal that we must heed,” the plan says. It says these more extreme conditions make clear that California should “double down” on a set of actions to bolster the state’s water supply “with haste.”
State officials said executing the strategy, which builds on the governor’s water resilience portfolio released in 2020, will require coordination with local and federal agencies and tribes.
The plan includes targets and timelines, such as expanding desalination of brackish groundwater to 84,000 acre-feet by 2040, and boosting the state’s capacity to capture storm water by 500,000 acre-feet by 2040. For comparison, the total annual water use of Los Angeles is nearly 500,000 acre-feet.
Among other things, the state plan calls for creating a groundwater recharge coordinating committee to help implement projects that will capture water and replenish aquifers.
To offset the increased evaporation and reduction in supplies brought on by the changing climate, the plan says, “California must capture, recycle, de-salt, and conserve more water.” It says the new set of priorities will “put to use water that would otherwise be unusable, stretch supplies with efficiency, and expand our capacity to bank water from big storms for dry times.”
The plan says this approach is designed for a “climate prone to weather whiplash.”
Plan:
Bakersfield Californian
The Indian Wells Valley Groundwater Authority in eastern Kern County has signed a letter of intent to buy the rights to 750 acre-feet of state water for $6,396,000 from a State Water Project contractor in Kings County.
The purchase is part of the authority’s plan to bring that overdrafted groundwater basin into balance.
The seller is Utica J.L.J. LLC, which purchased the Jackson Ranch and is developing a truck stop and industrial center on 400 acres at Utica Avenue and Interstate 5, just south of Kettleman City.
If approved by the groundwater authority, Dudley Ridge Water District and the Department of Water Resources, this would be a permanent water sale — not a one-time purchase.
Cost per acre foot would be $8,528.
That’s a 55 percent increase in price since the last time state water out of Dudley Ridge was permanently sold in 2009. Back then, John Vidovich sold 14,000 acre-feet of his State Water Project contract water to the Mojave Water District in Apple Valley for $5,500 per acre foot, or $77 million.
The Indian Wells Valley Groundwater Authority isn’t a State Water Project Contractor but it could work out a deal for an existing contractor to take and store the Dudley Ridge Water on its behalf.
The authority has been in discussions with the Antelope Valley-East Kern Water Agency to make such a deal. Though nothing has been settled, the agencies are starting a feasibility study to look at extending an existing AVEK pipeline from California City 50 miles north to the Indian Wells Valley using a $7.6 million grant from DWR.
Assuming the Dudley Ridge water purchase goes through, this would be just the beginning for the desert basin, said the authority’s attorney Keith Lemieux.
Given environmental and other constraints on the State Water Project’s ability to deliver contractors’ full allotments, the reliability of the 750 acre-feet of water brings it closer to 400 acre-feet a year on average, Lemieux said.
That’s a drop in the bucket of what the authority needs. The valley only has 7,600 acre-feet of natural flow every year while nearly 28,000 acre-feet is pumped out, prompting some to deem it “the most upside down” basin in the state.
Those numbers are why the authority imposed a hefty “replenishment fee” of $2,130 per acre-foot charged to all groundwater pumpers in the basin over the next five years. It’s anticipated the fee will raise $50 million, which the authority will use to buy and import more water.
It also imposed strict groundwater allocations that will take agriculture from its current 62 percent of the area’s total groundwater use down to 0 percent by 2040. That’s when the Sustainable Groundwater Management Act, which prompted these actions, is fully implemented.
Meanwhile, the City of Ridgecrest received $2.5 million from the State Water Resources Control Board toward a wastewater recycling facility that is hoped will provide 2,000 acre-feet a year that can be injected back into the aquifer.
Though DWR gave the authority’s groundwater sustainability plan its seal of approval back in January, the basin is still mired in legal uncertainty.
Two groundwater users filed lawsuits against the plan based on the replenishment fee. Mojave Pistachios and Searles Valley Mineral, both sued to stop the fee but in late May an Orange County judge denied their request for injunction. Neither entity has paid into the replenishment fee, Lemieux said.
The Indian Wells Valley Water District also filed a suit seeking a “comprehensive adjudication” of water rights in basin, which could reconfigure who has rights to how much groundwater, a fundamental underpinning of the groundwater sustainability plan. The water district has consistently paid the replenishment fee.
California Power Grid to Fall Short of Demand, Regulator Forecasts
CalMatters
The Capitol is abuzz with talk of new spending to fight climate change, but the outlook was grim at a Senate subcommittee hearing Tuesday. Despite the state’s efforts to bring more energy projects online, it is projected to fall short of rising energy demand in the coming years, Mark Rothleder, Chief Operating Officer at the California Independent System Operator, told committee members.
The electrical grid, already producing 1,700 megawatts below its ideal capacity, could fall 1,800-2,000 megawatts short of California’s needs by 2025, Rothleder said. That forecast comes as the state prepares to close the Diablo Canyon Power Plant — a nuclear facility that provides nearly a tenth of California’s power — along with several gas-powered plants, and as lawmakers negotiate how to allocate an additional $3.8 billion in energy spending before the end of the month.
The state is working to phase out fossil fuels. But climate change has heightened power demand, with heat waves and drought causing more stress on the grid sooner than officials anticipated. And renewable energy projects have been delayed by supply chain issues.
Silicon Valley Young Guns Departing for “Wartime CEOs”
NY Times
SAN FRANCISCO — The young kings of Silicon Valley are dismounting their unicorns.
They’re writing sentimental blog posts that outline their legacies. They’re expressing hope for their companies’ prospects. They’re quitting their jobs leading the start-ups they founded.
In recent weeks, Ben Silbermann, a co-founder of the digital pinboard service Pinterest, resigned as chief executive; Joe Gebbia, a co-founder of the home rental company Airbnb, announced his departure from the company’s leadership; and Apoorva Mehta, the founder of the grocery delivery app Instacart, said he would end his run as executive chairman when the company went public, as soon as this year.
The resignations signify the end of an era at these companies, which are among the most valuable and well-known to emerge from Silicon Valley in the past decade, and of the era they represent.
In recent years, investors have dumped increasingly large sums of money into a group of highly valued start-ups known as unicorns, worth $1 billion or more, and their founders have been treated as visionary heroes.
Those founders fought for special ownership rights that kept them in control of their companies — a change from the past, when entrepreneurs were often replaced by more experienced executives or pressured to sell.
But when the stock market fell dramatically this year, hitting money-losing tech companies especially hard, this approach began to change. Venture capitalists pulled back on their deal-making and urged Silicon Valley’s prized young companies to cut costs and proceed cautiously.
The industry began to talk of “wartime C.E.O.s” who can do more with less, while bragging about lessons learned from previous downturns.
Patience for visionaries wore thin. Founder-led companies started to seem like liabilities, not assets.
“All of that changed in the last 90 days, and it’s not coming back anytime soon,” said Wil Schroter, the founder of Startups.com, an accelerator program for young companies. The “we’ll figure it out later” story is no longer attractive to investors, he added.
In addition to Mr. Silbermann, Mr. Gebbia and Mr. Mehta, founders at the top of Twitter, Peloton, Medium and MicroStrategy have all resigned this year.
They’re not leaving on a high note. Shares of Pinterest are down 60 percent from a year ago. Elliott Management, an activist shareholder known for pressuring companies to make big changes, recently took a stake in the company. Airbnb shares are down 25 percent from a year ago. And Instacart lowered its internal valuation almost 40 percent in March, as it prepares to go public in a hostile market.
More: