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IN THIS ISSUE – Why Does Leon Panetta Drive a ’51 Chevy Pickup?*
- *To Avoid “Rolling Cyberdisasters”
- Legislature Acts to Move Up Newsom Recall; $215 Million Tab
- “We Have the Wrong Reflex When It Comes to Housing”; Legislature Continues Inaction
- Insurance Regulator Backs Building Ban in Fire Areas
- Higher Ed Enrollment Drops – California Community Colleges Hardest Hit in US
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 service.
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FOR THE WEEK ENDING JUNE 11, 2021
*To Avoid “Rolling Cyberdisasters”
NY Times
Leon Panetta is one of the few American government officials who can look around at the nation’s rolling cyberdisasters and justifiably say, “I told you so.”
The former secretary of defense, CIA director and California member of Congress was among the first senior leaders to warn us, in the most sober of terms, that this would happen in a 2012 speech that many derided as hyperbolic. He didn’t foretell every detail, and some of his graver predictions — a cyberattack that could derail passenger trains or worse, derail trains loaded with lethal chemicals — have yet to play out. But the stark vision he described, of hackers seizing our critical switches and contaminating our water supply, is veering dangerously close to the reality we are living with now.
Mr. Panetta, watching from his Monterey home, has his own simple solution for staying safe — and specifically making sure his internet-connected Lexus isn’t hacked. A few years ago, he fixed up his dad’s old 1951 Chevy truck, and that is what he uses to get around.
When he does drive the Lexus, he has careful instructions for his passenger: “I tell my wife, ‘Now be careful what you say.’”
In just the past few months, hackers — we still don’t know who — were caught messing with the chemical controls at a water treatment plant in Florida, in what appeared to be an attempt to contaminate the water supply just ahead of Super Bowl weekend in Tampa. Ransomware attacks are striking every eight minutes, crippling hospitals and American mainstays like gas, meat, television, police departments, NBA basketball and minor league baseball teams, even ferries to Martha’s Vineyard. This past week, the targets were one of the world’s largest meatpacking operators and the hospital that serves the Villages in Florida, America’s largest retirement community. The week before it was the pipeline operator that carries half the gas, jet fuel and diesel to the East Coast, in an attack that forced the pipeline to shut down, triggered panic buying and gas shortages and was just days from bringing mass transit and chemical refineries to their knees.
And those are just the attacks we see. Beneath the surface, American businesses are quietly paying off their digital extortionists and burying breaches in hopes that they never see the light of day. China continues to cart off America’s intellectual property, most recently in an aggressive cyberassault on the defense industrial base, and curiously, New York’s Metropolitan Transportation Authority. Russia’s government hackers have shut off the power in Ukraine twice. They’ve reached the control switches at American power plants, and breached nuclear plants too. And Russia’s elite intelligence agency, the S.V.R., slithered its way through hundreds of American companies and government agencies for nine months before it was caught. In the process, it wrecked confidence in the software supply chain. And, officials concede, its agents are quite likely still inside.
To anyone who had been paying the slightest bit of attention, none of this comes as a surprise. We are racing toward — in fact have already entered — an era of visceral cyberattacks that threaten Americans’ way of life. And yet, despite the vulnerabilities these attacks reveal, individuals, organizations and policymakers have yet to fundamentally change their behavior.
“If not this, then what?” Mr. Panetta still asks. “What will it take?”
He fears it really will take the “Cyber Pearl Harbor” he predicted nearly a decade ago, when he warned of what would come if Americans didn’t shape up: a coordinated cyberattack on critical infrastructure that “would cause physical destruction and the loss of life, an attack that would paralyze and shock the nation and create a profound new sense of vulnerability.”
In the decade that followed, cybersecurity experts quibbled with his word choice — “Cyber Pearl Harbor” — arguing alternately that it was overly alarmist or infantilizing, that the use of war lingo leaves everyday Americans and mainstream organizations with the impression they are helpless to combat illusive “cyberbombs.”
That, Mr. Panetta says, was never his intention. “I got some complaints about using the word ‘Pearl Harbor,’” Mr. Panetta conceded. “They said you should be very careful about using that word, and my response was, ‘Call it whatever the hell you want.’ It’s a national security threat. Don’t try to fool yourself that somehow, just because you don’t like the words, the threat is not real.”
These days, Mr. Panetta has swapped analogies. Like most Californians, he has fire on his mind. The former secretary of defense resides on his family’s old walnut farm turned vineyard in the parched Carmel Valley, where the surrounding hills are still singed from last year’s fires. The entire state is bracing for another inferno. And Mr. Panetta can’t help but see our digital woes through a ring of fire.
“You know cyber is a little bit like playing with fire,” he reflected on a recent afternoon. “You’re not quite sure just how something is going to play out. It could blow back on you from a dozen different directions.”
Before Mr. Panetta served as defense secretary, he was director of the Central Intelligence Agency, between 2009 and 2011. And it was during his tenure there that the United States, in partnership with Israel, accelerated the first major act of cyberdestruction against Iran.
That attack, which began under President George W. Bush but ramped up under the Obama administration, used a computer worm called Stuxnet to infiltrate the computers that controlled the rotors that spun Iran’s uranium centrifuges at Natanz nuclear facility. Intermittently, over a period of many months, Stuxnet sped the centrifuges up, while slowing others down, in a series of attacks designed to look like natural accidents.
By the time the worm escaped Natanz in 2010, and the ruse was up, Stuxnet had quietly destroyed roughly 1,000 centrifuges. Short term, it was a resounding success: It set Iran’s nuclear ambitions back years. Long term, it demonstrated the destructive power of code and lit a fire that, very quickly, started blowing back on the United States from a dozen different directions.
Less than two years later, Iran launched its own destructive attacks. The first targeted Saudi Aramco, the world’s largest oil company, where Iranian hackers used malware to destroy data on 30,000 Aramco computers and replace it with an image of a burning American flag.
“That was their way of saying, ‘Hello,’” Mr. Panetta said.
In a matter of months, Iran’s hackers came for the United States. As oil was to the Saudis, so was finance to the American economy, and in the fall of 2012 Iran’s hackers started pounding American banks with unprecedented waves of web traffic in what is known as a denial-of-service attack. One by one, websites belonging to Bank of America, the New York Stock Exchange, and dozens more banks sputtered or collapsed under the load.
It was in the midst of those attacks that October that Mr. Panetta gave his “Pearl Harbor” speech.
“It was like looking behind you and seeing that what you created could very well come back to get you,” Mr. Panetta said. “Once those capabilities fell into the wrong hands, I was witnessing firsthand how they could be used to really hurt us, to damage our country, our national security, and was still frustrated by the failure to have a coordinated approach to dealing with the threat.”
A decade later, he’s still frustrated. “It’s like there’s a fire and you’re ringing a bell, but the fire department doesn’t show,” he said.
With ransomware attacks ramping up, the Biden administration has been racing to establish long overdue cybersecurity measures. President Biden recently signed an executive order that raises the bar for the cybersecurity of federal agencies and contractors. If companies do not meet that bar, they will be blocked from doing business with the federal government, rendering many commercially unviable. And after the ransomware attack on Colonial Pipeline in May, Mr. Biden forced new cybersecurity requirements on the pipeline industry, using the Transportation Safety Administration’s oversight powers.
But with so much of the nation’s critical infrastructure — 85 percent — in private hands, government can only do so much.
So, what is it going to take to keep Americans safe? It’s a big question.
The answers, though, can be small. The kindling for these digital infernos is buggy and out-of-date software nobody bothers to patch. It’s companies that don’t back up their data or have a security plan for ransomware attacks, despite their ubiquity. It’s the failure to use different passwords and turn on two-factor authentication. The hackers who tried to contaminate Florida’s drinking water exploited the fact that employees shared the same password and ran a decade-old version of Windows software. At the pipeline, it came down to the lack of multi-factor authenticationon an old employee account.
It’s “cyberhygiene,” the accumulation of day in, day out investments and inconveniences by government, businesses and individuals that make hackers’ jobs harder. And some are very low tech.
Among the few high-profile organizations that was not actually hacked last year was the Democratic National Committee. Going into 2020, Bob Lord, the D.N.C.’s first chief information security officer, employed a novel approach to help ensure that hackers stayed out of D.N.C. emails this time. He posted signs over the urinals in the men’s room and on the wall in the women’s room reminding everyone to run their phone updates, use the encrypted app Signal for sensitive communications and not click on links.
https://www.nytimes.com/2021/06/05/business/leon-panetta-cyber-attacks.html?smid=tw-share
Legislature Acts to Move Up Newsom Recall; $215 Million Tab
CalMatters
Democratic lawmakers are taking steps to move up the date of the all-but-certain election to recall Gov. Gavin Newsom — a sign they may be listening to arguments that doing so could help him stay in office.
Thursday morning, the state Department of Finance released estimatesshowing it would cost California’s 58 counties at least $215 million to hold the recall election. A few hours later, the leaders of the state Assembly and Senate announced they would include the money in the state budget they’re required to pass by Tuesday — and would waive the 30-day period the law gives them to review election costs. That helps pave the way for the election to be as soon as September instead of the traditional November.
Senate Pro Tem Toni Atkins and Assembly Speaker Anthony Rendon: “This funding will allow for an earlier recall election.”
Ironically, Democratic lawmakers are waiving the very rules they wrote in 2017, when they added more steps to California’s recall process in an unsuccessful attempt to defeat the recall of Democratic state Sen. Josh Newman of Fullerton. In that case, they were trying to delay the election. Now, they’re trying to accelerate it — though the jury’s still out on whether the legislators’ maneuvers will help Newsom any more than they helped Newman.
The rapid-fire changes illustrate the power the Legislature’s supermajority of Democrats wields over state law. They also underscore the fact that although election dates may seem set in stone, some can be shaped by the party in charge.
The $215 million cost to counties is not the final tally for a recall election, according to the finance department. The secretary of state’s costs have yet to be calculated.
Finance is required to provide estimates regarding the costs of the recall election to the governor, secretary of state, and the chairperson of the Joint Legislative Budget Committee after the secretary of state provides notice that there are sufficient signatures to initiate a recall, which it has not done yet.
Costs to individual counties ranged from a few hundred thousand dollars to tens of millions of dollars. Under a provision passed earlier this year, all California registered voters will receive a mail ballot for special elections held in 2021, similar to the 2020 presidential election, due to ongoing concerns about the coronavirus.
https://www.sacbee.com/news/politics-government/capitol-alert/article252031393.html#storylink=cpy
“We Have the Wrong Reflex When It Comes to Housing”;
Legislature Continues Inaction
Sacramento Bee
With $758,990, you can buy a median-priced house in California.
It’s a price tag that’s only getting more expensive.
The median single-family home in the Golden State sold for 23.9% more in March 2021 than it did a year ago, and 5.7% more since December, according to the state Department of Finance. The numbers underscore an increasingly exclusive housing market that’s squeezing middle- and low-income families out of California.
Local fees and environmental regulations complicate construction in California. And during the COVID-19 pandemic, wealthier Californians fleeing city centers for single-family neighborhoods helped incite jaw-dropping bidding wars that locals frequently lose.
Ninety percent of Californians are concerned about housing prices, according to a recent Public Policy Institute of California report, and 33% are considering moving to states with more affordable markets.
Little relief from the Capitol is on the way.
The Legislature hasn’t passed a significant housing production package since 2017. Ideas to reform zoning regulations to allow for more multi-family buildings and duplexes failed in 2019 and 2020. This year, similar proposals face opposition from local governments and neighborhood associations with allies in the Capitol.
Newsom has also fallen short of his 2018 campaign pledge to build 3.5 million units by 2025. Housing advocates argue he’s largely failed to flex his executive influence over a Legislature lukewarm on ambitious housing bills.
While California for the first time since 2008 built more than 100,000 units in 2020, according to the finance department, it’s still falling woefully short of what’s needed to end the crisis.
California would need 500,000 new units annually to meet Newsom’s goals. Even using the more conservative California Housing and Community Development projection of a 1.8 million-unit shortage would require the state to construct tens of thousands of units more than its current average.
“We have kept our broken status quo and have not changed our approach to housing,” said Senate Housing Committeer Chair Scott Wiener. “Which means both the Legislature and governor need to move forward transformational pro-housing policies. And if we do that, over time we can end this debilitating shortage.”
Change is anything but easy in the California Capitol, where bold housing proposals frequently go to die.
Pro-housing organizations lauded Senate Bill 50 in 2019 as the best legislative tool to mandate more construction. It would have forced cities to green light taller apartment buildings and multi-family homes near transit- and job-rich areas.
Bay Area and Los Angeles Democrats said that SB 50 would strip cities of local control, undermine the state’s environmental goals or exacerbate gentrification in certain neighborhoods.
Newsom and Senate President Pro Tem Toni Atkins, D-San Diego, then urged lawmakers to collaborate on a housing production plan that the governor could sign in 2020.
It didn’t happen.
A proposal to make it easier for cities to zone for buildings with up to 10 units was killed, as were bills to streamline the environmental review process for smaller projects, expand the state’s density bonus law for affordable housing and allow duplexes on single-family parcels and homes in commercial zones.
“There hasn’t been any momentum to break down the silos,” said David Garcia, policy director for the Terner Center for Housing Innovation at UC Berkeley.
Lisa Hershey, executive director of Housing California, which advocates for affordable access to homes, also said the state needs stronger accountability.
“We can’t afford to have another year where our solutions are thwarted by the zero-sum game, or the all-or-nothing mentality,” Hershey said. “Will policymakers seize the opportunity to invest in our problems? Where all people are guaranteed a safe, stable, affordable home, and everyone can thrive regardless of race, age, identity or zip code?”
Housing advocates say they have some reason to hope.
After announcing a $76 billion surplus in May, Newsom’s budget proposal includes $9.3 billion for housing and homelessness solutions. He set aside $1.75 billion for affordable housing projects, $100 million to help first-time homeowners make down payments and $3.5 billion to convert hotels and other buildings into homes for those experiencing or teetering on the edge of homelessness.
Dan Dunmoyer, president and CEO of the California Building Industry Association, said some lower-profile laws are making incremental change. He pointed to legislation like a 2019 law that makes it harder for cities to restrict new development.
It’s scheduled to sunset in 2025, but Sen. Nancy Skinner, D-Berkeley, introduced a new measure this year to extend that deadline until 2030.
Dunmoyer said more leadership is needed from Newsom and legislators to reduce other barriers, like development fees and regulations that make construction an expensively long process.
“We need to really look at this holistically, comprehensively,” Dunmoyer said. “We really need to make sure that we take all the necessary steps to address the housing crisis.”
Democratic senators have again introduced measures that died in 2020, including those to encourage duplexes, smaller apartment buildings and housing in areas traditionally zoned for strip malls or retail stores.
A proposal in the Assembly would also ban local governments from imposing parking requirements that the California Apartment Association contends would do away with burdensome mandates that stymie construction.
The Legislature still needs to pass “signature legislation that would pass that would address that huge shortfall,” Garcia said.
Jason Elliott, Newsom’s top adviser on housing and homelessness, agrees.
During a recent Capitol Weekly housing policy conference, Elliott also said it’s time to stop saying “no” to so many ideas, and start committing to innovative solutions.
“Fundamentally, I believe, the governor believes, that we have the wrong reflex when it comes to housing in this state,” Elliott said. “It’s really just a question of how do we turn it over, turn that assumption over? Let’s start with ‘yes.’”
https://www.sacbee.com/news/politics-government/capitol-alert/article251959643.html#storylink=cpy
Insurance Regulator Backs Building Ban in Fire Areas
NY Times
At the start of wildfire season, California’s insurance regulator has backed sweeping changes to discourage home building in fire-prone areas, including looking at cutting off new construction in those regions from what is often their only source of insurance — the state’s high-risk pool.
The proposals, many of which would require approval by the State Legislature, could remake the real estate market in parts of California and are the latest sign of how climate change is beginning to wreak havoc with parts of the American economy.
On Friday, the insurance commissioner, Ricardo Lara, endorsed proposals that include halting state funding for infrastructure in certain areas prone to fire, leaving vacant lots undeveloped and the expansion of more stringent building codes.
“These ideas are going to be challenging,” Mr. Lara said at the beginning of a meeting of the Climate Insurance Working Group, which he established and which recommended the changes. “We are really going into uncharted territory.”
The building industry quickly pushed back against the recommendations. Dan Dunmoyer, president of the California Building Industry Association, said it wasn’t necessary to limit development because building standards are already strong enough to protect homes in high-risk areas.
“If you build to the minimum code requirements, you are building a fire-safe home,” Mr. Dunmoyer said. He added that if the state wanted to keep insurance available in those areas, it should allow insurers to raise their rates.
The new proposals mark the latest chapter in California’s struggle to cope with years of record-breaking wildfires starting in 2017. Those fires led to insurance claims from homeowners that were unmatched in number and size, which in turn caused huge losses for insurers, wiping out decades’ worth of profits.
In response, insurers have begun pulling out of fire-prone areas, threatening people’s ability to buy and sell homes, which depends on access to affordable insurance. That’s because banks generally require insurance as a condition of issuing a mortgage.
The state has taken a series of increasingly aggressive steps, including temporarily banning companies from dropping some customers after wildfires. But those steps were meant to be a stopgap as state officials searched for more lasting changes that would allow the insurance industry to keep doing business in high-hazard areas.
California’s experience could become a model for the rest of the United States, which has staggered through a series of devastating wildfires, hurricanes, floods and other disasters.
In addition to the human toll, those disasters have put growing pressure on the financial sector, prompting large investors to warn of a “systemic threat” to the economy. President Biden last month told federal officials to prepare for financial shocks from climate change, including disruption in the insurance market.
The proposals endorsed by Mr. Lara offer a window into the scale of changes that may be necessary to prepare for those shocks.
The recommendations include changes to the insurance industry itself, such as making it easier for insurance companies to charge higher premiums based on the losses they expect to suffer from future disasters. Currently, they can only seek higher rate requests based on past losses.
But other proposed changes reflect the growing consensus among experts that accelerating climate risk is fast becoming uninsurable — and if governments want insurance to remain affordable, it will mean finding new ways to limit people’s exposure to that risk.
In California, like most other states, local officials have significant control over where homes are built. Those officials face powerful incentives to permit the construction in fire-prone areas: New houses mean more jobs and more residences, which translate into more tax revenue.
But expanding development into fire-prone areas also carries costs, such as the need to fight wildfires, evacuate people and repair damage afterward. A significant share of those costs are borne by the state and by insurance companies, who have little influence over the decision to build there in the first place.
The recommendations call on the state to put pressure on local officials to be more selective about where new homes can be built, even if that means cutting off state support. The state should determine the areas where climate risk “is too high for state dollars to be used to support new development and infrastructure,” according to the working group.
If local officials still want to build in high-risk areas, the recommendations call for an expansion of tough building standards. California already has one of the most exacting building codes for areas exposed to wildfires, but those codes only apply to the most dangerous areas.
And if local officials insist on building in places exposed to wildfires, the recommendations call for preventing those homes from getting insurance through the state’s FAIR Plan. That state-mandated plan is California’s insurer of last resort; it offers coverage to homeowners who have been denied traditional coverage. Without access to the FAIR Plan, homeowners would run the risk of having no insurance at all.
“When insurance availability is guaranteed to all new developments, then homes may be built in areas where no private insurer may be willing to write insurance,” the report says.
The Personal Insurance Federation of California, which represents the industry and was represented on the working group, said it supported the recommendations.
State Senator Bill Dodd, a Democrat whose district includes Napa, Sonoma and other areas hit hard by recent wildfires, said he was open to many of the recommendations, including stopping access to the FAIR Plan for new homes in high-risk areas, halting infrastructure spending and expanding building codes. “We’ve got to rethink how we are developing” in those places, he said.
He said he thought those ideas could find backing from other lawmakers in Sacramento, too. “A lot of my colleagues are having the same problems with their constituents not being able to get insurance,” Mr. Dodd said. “They’re open to listening.”
In an interview, Mr. Lara said the state was hurting homeowners by allowing construction to continue in those places.
“Owning a home that loses value because it’s uninsurable is really not affordable — it is a false promise that we’re making to future homeowners,” Mr. Lara said. “We need to have an honest conversation before we build into more of these sensitive areas: Do we truly recognize the risk? Or will these communities just exacerbate the problems that we’re already living under?”
Higher Ed Enrollment Drops – California Community Colleges Hardest Hit in US
EdSource & NPR
In a dramatic illustration of the impact of the pandemic on many students’ college plans, enrollments at California’s community colleges are down an average of 11% to 12% systemwide, far higher than the preliminary estimates of 5% to 7% after schools opened last fall.
According to a memo sent to the board of governors of the 116 community college system, the decline in student headcounts — referring to the total number of both part-time and full-time students — in some colleges ranged from 30% to 50%. The board will consider the issue at its meeting to be held on Monday and Tuesday next week.
Presented by vice chancellors Marty Alvarado and Lizette Navarette, the memo described the declines in stark terms, including suggesting that the existence of some of the colleges with the steepest declines could be at risk.
“These declines represent a significant challenge for the system overall, and potential future threat to individual viability barring significant local efforts to remain student centered,” the memo stated, without naming any individual colleges.
The greatest declines have been among older students, male students and first-time students.
In total, the chancellor’s office is now estimating that there was a decline across the state of nearly 187,000 students compared to fall 2019. It’s the latest evidence that, among California’s higher education systems, it is the state’s 116 community colleges and the students they enroll that have suffered the most during the coronavirus pandemic.
“The types of students that we serve in our system — underrepresented people of color, first generation college students, student parents — are the types of people that the pandemic had the greatest impacts on,” said John Hetts, who oversees data research for the system.
The colleges saw enrollment declines in the fall among students of all races and ethnicities, but especially among Black, Native American and Latino students. Black students declined by 15%, Native American students by 18% and Latino students by 12%, according to the chancellor’s office’s latest estimates.
By contrast, California’s two four-year university systems, the 23-campus California State University and the University of California with nine undergraduate campuses, slightly increased their undergraduate enrollments in the fall.
There are likely a number of reasons that students are enrolling at lower rates. Older students may be unable to take classes because they have children who are at home in distance learning. Students from low-income families may be working more hours because of lost wages in their family and don’t have time to take classes. Other students may not have adequate internet access to take classes online, or they may have been enrolled in programs that don’t translate well to distance learning.
Regardless of the causes, the board memo from the chancellor’s office suggested there would be no easy fix to the problem. “Enrollment will continue to be a significant ongoing problem that needs the system’s full attention and strategic planning,” it stated. “Pandemic-era and post-pandemic planning cannot be approached in the traditional fashion.” Rather, it advised the board that “more must and should be done to attract post-traditional learners.”
Since last year, community colleges in California have been trying to engage former students with marketing campaigns and by reaching out directly to them with phone calls and emails. The state Legislature last month also approved $20 million meant to support those efforts and help colleges reengage students who have either dropped out or are at risk of leaving.
Nationally, undergraduate college enrollment fell again this spring, down nearly 5% from a year ago. That means 727,000 fewer students, according to new data from the National Student Clearinghouse.
“That’s really dramatic,” says Doug Shapiro, who leads the clearinghouse’s research center. Fall enrollment numbers had indicated things were bad, with a 3.6% undergraduate decline compared with a year earlier, but experts were waiting to see if those students who held off in the fall would enroll in the spring. That didn’t appear to happen.
“Despite all kinds of hopes and expectations that things would get better, they’ve only gotten worse in the spring,” Shapiro says. “It’s really the end of a truly frightening year for higher education. There will be no easy fixes or quick bounce backs.”
Overall enrollment in undergraduate and graduate programs has been trending downward since around 2012, and that was true again this spring, which saw a 3.5% decline — seven times worse than the drop from spring 2019 to spring 2020.
The National Student Clearinghouse attributed that decline entirely to undergraduates across all sectors, including for-profit colleges. Community colleges, which often enroll more low-income students and students of color, remained hardest hit by far, making up more than 65% of the total undergraduate enrollment losses this spring. On average, U.S. community colleges saw an enrollment drop of 9.5%, which translates to 476,000 fewer students.
https://www.npr.org/2021/06/10/1005177324/spring-numbers-show-dramatic-drop-in-college-enrollment