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IN THIS ISSUE – “Essentially Gaming the System”
Ethics Professor on legislators endorsing family and staff for their seats
MONEY & POLITICS
- Newsom Unveils State Budget for FY22-23 Today…Is California on the Edge of a Fiscal Cliff?
- Family Trees Take Root in the Legislature
NATURAL RESOURCES & UNNATURAL WEATHER
- Summer 2022: Torrid Heat, Raging Wildfires, Prolonged Drought
- Water Districts Tighten Grip on Your Faucet
- Air Resources Board Releases Climate Change Plan – Globally Influential Emissions & Energy Policy
- ZEV Subsidies Total $319 Million
- Salton Sea May Be Leading Lithium Source for EVs
- Coastal Commission Dumps Cold Water on $1.4-Billion SoCal Desalination Plant
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 MAY 13, 2022
Newsom Unveils State Budget for FY22-23 Today…Is California on the Edge of a Fiscal Cliff?
Sacramento Bee, Politico & Volcker Alliance
Today is the big day. The day when Gov. Gavin Newsom unveils his “May Revision” Fiscal Year 22-23 budget.
What can we expect?
For starters, Newsom will likely include an update on his proposal to send a rebate to California drivers to address high gas prices. Then there’s the governor’s controversial “CARE Court” proposal. And Newsom has signaled that he wants to have a fight over abortion rights, in the aftermath of the U.S. Supreme Court’s likely decision to overturn Roe v. Wade.
And on Thursday, the governor’s office released new details of an $18.1 billion inflation relief package, which includes more money for rental assistance, coverage for past-due utility bills and $1,500 checks for every hospital and skilled nursing facility worker, among other things.
We can also expect big news regarding the state’s surplus today. Last month, Senate budget leaders estimated California would have an extra $68 billion in its coffers — the high end of a projection from the nonpartisan Legislative Analyst’s Office, which in January put the number far lower, at $29 billion. Finance Director Keely Bosler on Thursday wouldn’t comment on what the governor’s estimate would be, but hinted it could be one for the books.
“There is a really significant, in my historical context, upgrade to the May revision forecast,” she said of the surplus.
Looming large over the budget conversation is the issue of the Gann Limit. With such a hefty surplus, there’s once again a concern that California could hit the 1970s spending limit. The Legislative Analyst’s Office warns the state could be teetering on the edge of a budget deficit in the next couple of years due to the limit. Senate budget leaders have already signaled that they’d like to put an amendment on the ballot in the next couple years to change it, and we’re curious to see if Newsom would also back such a measure.
Meanwhile, California may be flush right now, but is it on borrowed time?
That’s the finding of a new research study of 11 states published by the Volcker Alliance, a nonprofit founded by former Federal Reserve Board Chair Paul Volcker.
The paper found that California is facing a so-called “fiscal cliff” beginning in 2026, when federal COVID-19 relief cash runs out.
“While the federal COVID-19 aid provides a historic opportunity to make much-needed and long-overdue investments in our citizens and communities, equally important is the ability of states and local governments to ensure ongoing spending is accounted and paid for. California should take note of our findings to ensure long-term programs have sustainable funding in place before relief funds run dry and they find themselves on the edge of a fiscal cliff,” said William Glasgall of the Volcker Alliance, in a statement.
Last year, Congress sent $350 billion to state and local governments as part of the American Rescue Plan Act. California’s share was $27 billion, which must be obligated by the end of 2024 and spent by 2027. As of July 31 last year, California has obligated nearly all of it ($26.7 billion), according to the report.
But rather than spending that money on projects like water and sewer systems, broadband, infrastructure or repayment of federal loans to state unemployment trust funds, as recommended by the Volcker Alliance, California has committed much of it to recurring expenditures which will likely outlive the funding behind them.
“States that use (federal relief dollars) for one-time projects are less likely to incur a fiscal cliff than states that devote the dollars to maintaining or expanding services or to creating recurring programs,” the report says.
Volcker, who died in 2019, served as Chair of the Federal Reserve under both Presidents Jimmy Carter and Ronald Reagan. He also chaired the Economic Recovery and Advisory Board under President Barack Obama.
Report:
https://www.volckeralliance.org/resources/195-billion-challenge
Governor’s May Revise Budget Summary:
https://www.ebudget.ca.gov/FullBudgetSummary.pdf
Family Trees Take Root in the Legislature
CalMatters
This year’s bumper crop of vacancies in both the Assembly and Senate means there are an unusual number of departing legislators doing their best to bequeath their seats to chosen successors. It’s a trend that highlights just how small and insular the Legislature can be.
Where such behavior can cross an ethical line is when a lawmaker effectively “denies other candidates a fair shot…by essentially gaming the system,” said John Pelissero, a senior scholar with Santa Clara University’s Markkula Center for Applied Ethics.
Just to name a few examples from this year:
- Democratic state Sen. Bob Hertzberg is termed out of his seat in the San Fernando Valley. As he runs to be a Los Angeles County supervisor, he’s throwing his considerable political weight behind Daniel Hertzberg. Connection: That last name is no coincidence. The two are father and son.
- In late January, Democrat Autumn Burke departed the Assembly early to take a job with a lobbying firm. The next day, she endorsed Robert Pullen-Miles for her Inglewood seat. Connection: Pullen-Miles is Burke’s former district director.
- Democratic U.S. Rep. Jackie Speier announced her retirement last November. A few weeks later she backed San Mateo Assemblymember Kevin Mullin to take her spot. Connection: He served as her district director, and Mullin’s father was a close political ally of Speier’s.
Staffers often form the bench of potential fresh-faced candidates, though sometimes the relationship between incumbent and their designated replacement is less direct.
Consider state Sen. Sydney Kamlager, who is now running for the congressional seat soon to be vacated by fellow Democrat Karen Bass, a candidate for Los Angeles mayor.
The connection? In 2010, Holly Mitchell took Bass’ place in the state Assembly with Bass’ endorsement. When Mitchell made the jump from Assembly to state Senate three years later, she endorsed Kamlager, her former district director, to take her spot. Last year, when Mitchell left the Senate to win her seat on the Los Angeles County Board of Supervisors, Kamlager once again took her boss’ place with her endorsement.
And who took Kamlager’s seat in the Assembly with her blessing? Her former policy advisor, Isaac Bryan.
Family trees often take root in the California Legislature. Among the 120 current members in the Assembly and Senate, 13 — a little more than 10% — are related to current or former members by blood or by marriage.
That includes Oakland Assemblymember Mia Bonta, who won a 2021 special election to take her husband Rob’s seat after he was appointed to be attorney general and is unopposed for reelection this year. The list also includes another Democrat, San Diego Assemblymember Akilah Weber, who took her mother Shirley’s seat after she was named Secretary of State, and Sen. Susan Rubio and Assemblymember Blanca Rubio, Democratic sisters from the San Gabriel Valley.
Missing from the list is Burke, the Inglewood Democrat who endorsed Pullen-Miles, because she recently left the Legislature. Burke’s mother, Yvonne, was the first Black woman to serve in the California Assembly. Prior to her election in 2014, Autumn was running a business consulting firm and had no electoral experience.
Of many instances of incumbent intervention this election season, few have raised as many eyebrows as Daniel Hertzberg’s bid to fill the San Fernando Valley-based seat being vacated by his father. Having served as both Assembly speaker and majority leader in the Senate, few are as well established within the Legislature and the state Democratic Party as the elder Hertzberg.
Since launching his own campaign, Daniel Hertzberg, a business development manager for a DoubleTree Inn in the South Bay, has raised four times more campaign cash than his three opponents combined, with maximum contributions from unions, health care industry groups, tribal governments and the campaign coffers of other Democratic lawmakers. The campaign has also racked up some of the state’s most coveted endorsements, including members of Congress, 24 current senators, the California Labor Federation and the California Democratic Party.
That’s led some critics to cry nepotism.
There’s a perception “that he’s riding on the coattails of dad,” said Sean Rivas, chairperson of the Democratic Party of the San Fernando Valley. An umbrella organization for Democratic clubs throughout the valley, the organization endorsed Hertzberg’s main opponent in the race, Caroline Menjivar.
The sense that the race was meant to be a “coronation of father to son just turned people off,” Rivas said.
Daniel Hertzberg says while his resume may not be that of a typical candidate, it gives him a valuable perspective. A model U.S. Senate Team Club president in college, he said he put his identity as a politics nerd on hold after graduating when he got a job at a hotel, waiting on tables, washing dishes and cleaning toilets. He eventually worked his way up to developing business leads for Hilton, but he points to those humble beginnings as a strength.
On a podcast last October produced by the law and lobbying firm Orrick Herrington & Sutcliffe, Sen. Hertzberg also anticipated some of the criticism aimed at his son’s campaign.
“There’s an argument against legacy — it’s like, ‘Oh, who do you think you are?’” he said. “But as long as you’re humble, gracious, a good listener, thoughtful and engaged with folks…those are the factors that are important.”
Summer 2022: Torrid Heat, Raging Wildfires, Prolonged Drought
NY Times
Torrid heat, raging wildfires and prolonged drought are putting California residents at increased risk of power outages, officials said, as extreme weather driven by climate change puts additional stress on the state’s already-taxed energy grid.
Officials said in an online briefing that they were preparing for a scenario in 2022 that would see California fall short of energy demands by about 1,700 megawatts. The shortfall is likeliest to occur in the summer after the sun sets, depriving energy providers of solar energy.
One megawatt is enough electrical capacity to power 1,000 average California homes, according to the California Energy Commission. Under poor conditions, the state could lack the amount of energy it takes to power more than one million homes.
The situation could be worsened if a heat wave causes residents to turn to air-conditioners for comfort en masse, driving up energy demand.
“If all of those things were to occur there, there is real potential for outages, and we have to be prepared for that,” said Mark Rothleder, senior vice president for the California Independent System Operator, which helps maintain the state’s power grid.
Extreme weather and fire damage to the grid could result in a shortfall of an additional 5,000 megawatts.
Officials also warned of higher power bills for Californians, as providers cover the rising costs of natural gas, increased transmission costs and mitigating wildfire risk.
Electric bills for the average customer of Pacific Gas & Electric, California’s largest utility, will rise 9 percent by 2025, to $211, according to the presentation. That’s on top of a 12 percent increase in the average bill from 2019 through this year.
California officials are taking steps to ease the worst effects of climate change on the energy grid. In the briefing Friday, which was provided by the office of Gov. Gavin Newsom, officials said the state had ramped up energy conservation efforts, stepped up energy procurement and revised its forecasts to account for the changing climate.
The state is also increasing its investment in renewable energy, which helps address demand without contributing to the conditions that are straining California’s energy grid.
“The past few summers, we’ve had to rely on emergency measures,” said Alice Reynolds, the president of California’s Public Utilities Commission. “But at the same time, the grid is getting cleaner and cleaner.”
Water Districts Tighten Grip on Your Faucet
CalMatters
Get ready for a summer of brown lawns, water cops and even public shaming.
The stakes of California’s devastating drought got a lot higher on Tuesday, when state water officials announced that residents and businesses used nearly 19% more water in March than they did two years ago, CalMatters’ Rachel Becker reports.
The massive increase represents California’s highest level of water use since 2015 — and is a sharp rebuke of Gov. Gavin Newsom’s plea last year that Californians voluntarily slash their water use by 15%.
The backsliding increases pressure on Newsom to order mandatory statewide water restrictions — a step he appears reluctant to take, instead preferring to leave most of the details to local governments. And, as some Californians react with fury to unprecedented local restrictions, one understands why Newsom may be loath to issue top-down orders ahead of the June 7 primary election.
Michael McNutt, a spokesperson for the Las Virgenes Municipal Water District, which serves wealthy enclaves west of Los Angeles: “People freaked out. It was insane. I felt terrible for the front-office staff, which are doing a tremendous job for us. Irritated, pissed-off people, all that stuff.”
Indeed, about 6 million Southern Californians will face never-before-seen water restrictions next month. On Tuesday, the Los Angeles Department of Water and Power unveiled its game plan to achieve the required cuts: Nearly 4 million people will be limited to watering their lawns twice a week for eight minutes. Las Virgenes Municipal Water District may limit outdoor watering to just once a week.
Santa Clara County, which saw its water use increase by 30% in March compared to the same point in 2019, wants to hire “water cops” for the first time in its history to issue fines of as much as $500 to residents who waste water, the Mercury News reports.
And the East Bay Municipal Utility District will make public the names, home addresses and water use data of customers who violate its restrictions after voting last month to immediately adopt an excessive water use penalty ordinance.
Air Resources Board Releases Climate Change Plan – Globally Influential Emissions & Energy Policy
California Air Resources Board
The California Air Resources Board (CARB) today released a draft plan that, when final, will guide the state’s transition to a clean energy economy, drastically reduce the use of fossil fuels, achieve carbon neutrality by 2045 or sooner, and significantly clean the state’s air especially in disadvantaged communities disproportionately burdened by persistent pollution.
The draft 2022 Climate Change Scoping Plan is the third update to the state’s initial 2008 Scoping Plan. It identifies a technologically feasible, cost-effective and equity-focused path to achieve carbon neutrality over the next two decades while also assessing the progress the State is making towards reducing its greenhouse gas emissions by at least 40 percent below 1990 levels by 2030.
Release of the draft plan triggers a formal 45-day public comment period. During the 45-day public comment period, the Environmental Justice Advisory Committee may provide additional input on the draft plan. The Board will consider the plan in June and may then provide direction to staff, with an additional period of public comment and engagement prior to the second meeting of the Board in the fall to consider adopting a final draft of the plan.
“The draft Scoping Plan sets out an ambitious vision that advances equity and addresses the existential crisis of our generation with guidance for the concrete steps and actions needed to actually make it work,” said CARB Executive Officer Richard Corey. “When final, it will serve as the actionable plan for a more sustainable California for our children and a model for other industrialized economies around the world as they consider how to make their transition to a clean energy economy that provides health benefits and economic opportunity.”
California is the fifth largest economy on the planet and the draft plan covers every sector. The most significant aspect of the draft plan is the aggressive pace and scale it calls for to reduce our reliance on fossil fuels wherever they are currently used in California. It achieves this goal by building on and accelerating successful approaches to carbon reduction including regulations, incentives, and carbon pricing that have been in place for a decade and a half.
At the center of this shift away from fossil fuels is an accelerated transition to zero-emission transportation, phasing out the use of fossil gas used to heat homes and buildings, and providing communities with sustainable options for walking, biking, and public transit so that people do not have to rely on cars. Action in the transportation sector will be buttressed by an acceleration of adding more clean, affordable, and reliable renewable energy to displace fossil-fuel fired electricity generation and scaling up new options such as hydrogen and renewable gas for hard-to-electrify end uses.
This accelerated shift away from petroleum will make California more energy secure, less impacted by volatile global oil price fluctuations, and will deliver significant health benefits to all Californians, especially those in low-income communities of color that are most impacted by air pollution from truck and car traffic and freight delivery.
Achieving California’s goal of carbon neutrality by 2045 or sooner will also require re-envisioning our forests, farmlands and rangelands to ensure that they play as robust a role as possible in reducing emissions and incorporating and storing more carbon. This focus will establish healthier forests that are more resistant to wildfires, and increased health benefits from reduced exposure to wildfire smoke. The plan also makes clear that in order to succeed in balancing remaining carbon output with carbon storage, California will need to go beyond the capacity of our natural and working lands and deploy additional methods of capturing carbon dioxide that include pulling it from industrial smokestacks or drawing it out of the atmosphere itself and then safely and permanently storing it.
These efforts place a priority on ensuring that all these efforts provide benefits to frontline communities most heavily burdened by persistent pollution and who will disproportionately bear the impacts of a warming planet.
The draft 2022 Climate Change Scoping Plan was developed by the California Air Resources Board in an unprecedented process of collaboration and coordination with multiple state agencies. That broad-based coordination lays the foundation for a whole of government approach to future implementation. Development of the plan also included robust public engagement including over a dozen workshops, webinars or public meetings over the past year.
In addition, the draft plan was shaped by recommendations from the Environmental Justice Advisory Committee to ensure that environmental justice and frontline communities are front and center in the state’s efforts to address the climate emergency. The EJAC held 18 meetings and there are some five dozen recommendations of the committee referenced throughout the draft plan. Ongoing collaboration with the EJAC will be essential to ensure that the final plan is as robust as possible.
The draft Scoping Plan evaluated four potential scenarios for achieving carbon neutrality, all of which will also achieve the 2030 goal of reducing GHG emissions 40% below 1990 levels. Two of those scenarios would achieve carbon neutrality by 2035; the other two by 2045. Through extensive modeling to determine future policy impacts on health and the economy CARB staff concluded that Scenario 3 provided the most economically and technologically feasible route to carbon neutrality, including providing equity-based solutions focused on affordability and job preservation. Scenario 3 aligns with all applicable statues and Executive Orders while deploying a broad portfolio of existing and emerging fossil fuel alternatives and clean technologies. It also provides a feasible timeline to develop the infrastructure and technology needed, especially the rapid build-out of renewable energy, and a lower overall cost of implementation with minimal impact on the economy. It will achieve an approximately 90% reduction in petroleum usage by 2045, and reduces greenhouse gas emissions 80% by 2050, another state target.
The draft Scoping Plan also reviews California’s existing climate programs, such as the Low Carbon Fuel Standard, Cap-and-Trade and the Renewables Portfolio Standard, among others. The draft Plan explains how these programs have been changed since the last Scoping Plan in 2017 and outlines other programs and actions needed to achieve a low-carbon economy.
https://ww2.arb.ca.gov/sites/default/files/2022-05/2022-draft-sp.pdf
ZEV Subsidies Total $319 Million
Politico
More than a quarter million Californians have now received a “Clean Fuel Reward,” totaling more than $319 million, for purchasing or leasing a plug-in electric vehicle, according to Gov. Gavin Newsom’s office.
As a result, California’s zero-emission vehicle sales now account for more than 16% of all vehicles sold in the state.
As part of his 2022-23 budget, Newsom is promoting a $10 billion funding package aimed at expanding zero-emission vehicle access and affordability. It will also support construction of electric vehicle infrastructure as part of the transition away from fossil-fuel-burning vehicles.
“Our state is on the frontlines of extreme weather, and we’re taking aggressive steps to protect Californians from the costs of climate change – transitioning away from the big polluters fueling this crisis and towards clean energy,” Newsom said in a statement. “These incentives make it easier and cheaper to make that transition.”
The “Clean Fuel Reward” program is 18 months old, and provides an instant price reduction of up to $750 for electric vehicles at participating retailers.
Salton Sea May Be Leading Lithium Source for EVs
CNN Business
The Salton Sea, which lies roughly in the middle of the massive geologic low point, isn’t really a sea, at all. The largest inland lake in California, it’s 51 miles long from north to south and 17 miles wide, but gradually shrinking as less and less water flows into it. At one time, it was a thriving entertainment and recreation spot, business that has also largely dried up. It’s left behind abandoned buildings and shallow, gray beaches. The highways that ring the lake are traversed now mostly by passing trucks.
A super-heated mineral stew
Over the past few years, companies have been coming here to extract a valuable metal, lithium, that the car industry needs as it shifts to making electric cars. Lithium is the lightest naturally occurring metal element on Earth, and, for that reason among others, it’s important for electric car batteries, which must store a lot of electricity in a package that weighs as little as possible.
What’s more, with the Salton Sea Basin’s unique geography, engineers and technicians can get the lithium with minimal environmental destruction, according to companies that are working there. In other places, lithium is taken from the earth using hard rock mining that leaves huge, ugly scars in the land. Here, it exists naturally in a liquid form, so extraction doesn’t require mining or blasting.
Over thousands of years, floodwaters from the Colorado River, carrying minerals pulled away from the Rocky Mountains, the Ruby Canyon, Glen Canyon, the Grand Canyon and more, have washed into these lowlands. Time and again the water has come and evaporated, leaving behind metals that have ended up deep in the ground.
Lithium is abundant in the Salton Sea Basin. In fact, people working to extract it say there could be enough to make batteries for all the electric cars expected to be built in this country for many years, freeing the United States from reliance on foreign lithium suppliers. That’s been a priority for the Biden administration.
The Earth’s crust is thin here, and there’s water deep underground close to the seething hot liquid rock inside the Earth, called magma. Trapped in that naturally occurring oven, that water has become a super-heated mineral stew.
Geothermal energy companies have been here for decades drilling down into the nearly 700 degree water, allowing it to instantly boil up out of the ground. Steam from the hot brine — so-called because of its high mineral content — spins turbines, generating electricity. It’s then pumped back down into the Earth where it gets heated back up to start over again. This sort of energy is considered clean and renewable since it relies on heat occurring naturally in the Earth.
“It’s one of the largest geothermal energy fields in the world,” said Derek Benson, chief operating officer of EnergySource Minerals.
EnergySource Minerals was spun off in 2018 from EnergySource, a geothermal power company that’s been generating electricity from hot Salton Sea brine for a decade. EnergySource Minerals is now working to get lithium from the brine it’s been using for energy.
How much lithium is here, exactly, and how much might be extracted, are questions that a research team from Lawrence Berkeley National Laboratories are working to figure out.
Roughly a quarter of the water taken from deep underground here is dissolved rocks, a vastly higher mineral concentration than you you’d find in ordinary seawater, according to Patrick Dobson, a Berkeley Labs geologist leading the research. Lithium makes up roughly 200 parts per million, he said, which compares to about 10 parts per million in some other hot geothermal fields.
“That’s why this is of interest,” he said. “It’s not just any geothermal brine. There’s certain places where there’s an enrichment in lithium in the brine and the Salton Sea is the place in the US where we’re really focusing our attention on.”
People who’ve worked with this brine have long known about its contents, but there’s no use for loads of undifferentiated minerals and selectively extracting them wasn’t economical. But that was before electric cars became a big deal, and the price of lithium started to rocket. So companies have invested in new technologies to pull lithium from the brine.
“We use what we call lithium selective adsorption,” said Benson. “And so we pass the lithium bearing brine across one of our proprietary adsorbers. It has a chemistry that has an affinity for lithium and really only the lithium.”
One of the challenges is how efficiently these technologies can draw lithium out of the brine, said Berkeley Labs’ Dobson. While there’s a lot of lithium in the brine, these extraction techniques probably won’t be able to take out 100% from every drop.
Also, as the lithium is taken out of the brine and the brine is then pumped back deep underground, will lithium levels be notably depleted or will the the levels be replenished as more lithium is leeched out of the rocks?
“We know from measurements of rocks that are still in the reservoir that not all the lithium is present in the brine,” he said. “There’s still lithium present in the rocks.”
Collecting lithium now looks like a bigger moneymaker for companies like EnergySource than their original business of just generating electricity from the steamy soup. In fact, other companies are getting into the geothermal energy business largely so they can get lithium. In their case, electricity is just a bonus.
Not far from EnergySource’s tan-colored geothermal power stations, a company called Controlled Thermal Resources has its own small power station. This one is currently in the testing phase, but CTR has already formed a partnership with General Motors, which will purchase lithium produced here for its electric vehicles. More recently, the Italian EV battery company Italvolt announced plans for a spin-off company to work with CTR. Plans call for Statevolt, as the spin-off is called, to build a battery manufacturing facility nearby, using both energy produced by CTR’s generators and lithium taken from brine there. The plant could someday produce enough batteries for 650,000 electric vehicles annually, according to Italvolt.
Putting battery manufacturing on-site will eliminate material shipping costs as well as the carbon dioxide emissions from all the ships, trains and trucks needed to carry the lithium to battery factories that are, today, mostly located in Asia, said Rod Colwell, CEO of CTR.
This new rush of interest could mean good things for a community that needs some help. Decades ago, the Salton Sea was a tourist destination, with people flocking to the California desert oasis to enjoy boating and water skiing. That was before evaporation dried up the lake, concentrating pollutants in the shrinking body of water.
More:
https://www.cnn.com/2022/05/11/business/salton-sea-lithium-extraction/index.html
Coastal Commission Dumps Cold Water on $1.4-Billion SoCal Desalination Plant
CalMatters
After more than 20 years of buildup, the California Coastal Commission on Thursday evening unanimously rejected a project that could very well determine the future of turning seawater into drinking water in drought-stricken California, CalMatters’ Rachel Beckerreports. So contentious was Poseidon Water’s proposal to build a $1.4 billion desalination plant in Huntington Beach that Thursday’s public hearing and discussion stretched nearly 12 hours. Still, commission Executive Director Jack Ainsworth said the vote wasn’t necessarily the final word on desalination in California, pointing to more optimistic prospects for the proposed Doheny Desalination Facility in south Orange County’s Dana Point.