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WECA Political Update October 13, 2022

Thursday, October 13, 2022

Growth of PLA language in State Legislation Since the second election of Jerry Brown, PLA language in state legislation has exploded. First, the Legislature passed bills prohibiting counties and general law cities from banning PLAs. Next, they enacted a bill to punish charter cities with PLA bans by cutting off state funds; then passed an expansion of skilled and trained workforce mandates with PLA waivers. Finally, let’s review PLA mandates on specific contracting authority. In 2019, the Legislature sent Governor Gavin Newsom 13 bills, which would put them on a pace to match the 25 bills sent in 2018. But the coronavirus intervened, shutting down the State Legislature for much of the year – but not the desire of the State Building and Construction Trades Council and their constituent unions to expand PLAs in California and to incorporate them into State Legislation. So, the pace accelerated in 2021 – the first year of the just concluded two-year session with 28 bills that include PLA language. In 2022, the Legislature considered no fewer than 26 PLA bills. You can read the whole report here.


Governor Newsom calls a special session of the Legislature to consider windfall tax on oil companies over California’s high gas prices. Newsom said he would call a special session of the Legislature to adopt a windfall profit tax on oil companies in response to California’s “outrageous and unconscionable” gas price. The Governor told reporters the session would start December 5, the same day a new class of legislators is sworn in. The work will take place on a separate track from the regular session to focus attention on what Newsom said has become one of the most urgent priorities for Californians: an “inexplicable” gap between gas prices in California and the national average that has grown to a record $2.50 a gallon. It would also allow his administration and lawmakers sufficient time to prepare for what will likely be a tough fight to impose a new tax even with a Democratic super-majority in the Legislature. It would also occur after the November election, sparing candidates from having to take a difficult vote in the heat of campaign season. A new tax would require a two-thirds vote from the Legislature. Republicans have already come out in opposition, calling instead for the state to cut the gas tax — an idea Newsom quickly rejected because there are no guarantees consumers would benefit. (He did not explain how he would prevent these new taxes from being passed on to consumers.)

But California leaders have known for over 20 years some of the reasons for the spread between California and nationwide gas prices were entirely “explicable.” The Los Angeles Times observed, “California officials have had repeated warnings over the last two decades that the state’s unique blend of gasoline is susceptible to supply shortages and sharp price spikes. But despite multiple reports and special committees, California has struggled to find solutions as it tries to reduce its reliance on fossil fuels rapidly. Severin Borenstein, the director of UC Berkeley’s Energy Institute at the Haas School of Business, who sat on statewide committees in 1999 and 2015 aimed at finding possible solutions for the state’s volatile fuel market, noted, “We’ve got to make longer-run plans and not just wait until the crisis is upon us.” None were implemented, he said.

Gas refiner and marketer Valero hit back at California’s Energy Commission (CEC) last week after the agency demanded oil refinery executives explain why gas prices have spiked despite declining crude oil prices.

“[C]rude oil prices are down and industry profits are up, yet gas prices have increased by a record $0.84 per gallon in 10 days in California – a $2.50 difference compared to U.S. prices,” CEC Chair David Hochschild wrote in a Sept. 30 letter to executives. “This degree of divergence from national prices hasn’t happened before, regardless of planned or unplanned refinery maintenance, and no explanation has been provided. The oil industry owes Californians answers.” [For some reason, when I read this – I thought of the famous scene from A Few Good Men between Colonel Jessep and Lieutenant Kaffee. Jessep: You want answers? Kaffee: I think I’m entitled. Jessep: You want answers? Kaffee: I want the truth. Jessep: You can’t handle the truth!]

Hochschild accused the executives of not providing an “adequate and transparent” explanation for the price spike. He noted that the industry’s “lower-than-normal” gasoline stockpiles appear to contribute to a tightening gasoline market that increased gasoline prices over the prior week.

Hochschild demanded that the industry leaders explain why gasoline prices have risen “despite a sharp downturn in global crude prices, no significant unplanned refinery outages in the state, and no increases in state taxes or fees.”

Hochschild asked what the State of California could do to address logistics or other obstacles that have contributed to the price increases. He also demanded that refiners explain why they supposedly allowed inventory levels to drop despite knowing “for months, or in some cases years,” that planned maintenance would occur.

In response, Valero’s Vice President of State Government Affairs, Scott N. Folwarkow, denied any allegations of “price conspiracies” among oil refineries, pointing to a federal judge having thrown out another case finding no basis for them. Instead, Folwarkow blamed low inventories on post-COVID’s growing demand and limited supply. He said the higher prices in California than in the rest of the U.S. had to do with the state being the “most expensive operative environment in the country and (being) a very hostile regulatory environment for refining.”

“California policy makers have knowingly adopted policies with the expressed intent of eliminating the refinery sector,” he said. “California requires refiners to pay very high carbon cap and trade fees and burdened gasoline with the cost of the low carbon fuel standards.”


California Creates Bereavement Leave Requirement On September 29, 2022, Governor Newsom signed AB 1949, which creates protected bereavement leave under the California Family Rights Act (CFRA). As of January 1, 2023, AB 1949 makes it unlawful for an employer to refuse to grant an eligible employee the opportunity to take up to five days of bereavement leave upon the death of a family member. As does CFRA, this new requirement applies to employers with five or more employees. More


Over $6.5 Million In Independent Expenditures Yesterday Over $6.5 million in independent expenditures were reported this week in legislative and statewide races, far and away the single biggest day of this election cycle. The new spending also propelled two senate races into the top two spots for IE spending, vaulting ahead of the previous leader.

The bulk of yesterday’s spending came courtesy of the fossil fuel industry’s Coalition to Restore California’s Middle Class, which spent $4.9 million in seven races:

•       SD 38 - $1,562,275: Supporting Matt Gunderson (R) / opposing Catherine Blakespear (D). SD 38 includes portions of Orange and San Diego Counties, including the whole cities of Carlsbad, Del Mar, Encinitas, Laguna Hills, Mission Viejo, Oceanside, Rancho Santa Margarita, San Juan Capistrano, Solana Beach, and Vista, and portions of the City of San Diego. Blakespear, Encinitas Mayor and Chair of SanDAG, was the number one cheerleader for SanDAG’s recent PLA decision.
•       SD 8 - $1,218,022: Supporting Angelique Ashby (D). SD 8 includes portions of Sacramento County, including the whole cities of Elk Grove and Sacramento. Former Insurance Commissioner and career politician Dave Jones (listed on the ballot as “Environmental Advocate/Educator”) finished first in June – beating Ashby 46%/41%.
•       AD 10 - $827,248: Supporting Stephanie Nguyen (D) AD 10 consists of portions of Sacramento County, including the whole City of Elk Grove and parts of the City of Sacramento. On the Elk Grove City Council, Nguyen will be voting on a Citywide PLA in October. Apparently, the Building Trades want to hold her feet to the fire. Nguyen was the top vote-getter in the primary with 29.9%, legislative staffer Eric Guerra was 459 votes behind her in second with 29.4%.
•       AD 22 - $488,668: Supporting Juan Alanis (R). AD 22 consists of portions of Merced and Stanislaus counties, including the whole cities of Newman, Turlock, Ceres, Modesto, Patterson, and Gustine. While this district includes the entire City of Modesto, it splits off north-eastern Stanislaus County to keep the City of Oakdale whole in neighboring AD 9. This is a new competitive district with 96% of its voters in Stanislaus County and the remainder in Merced, encompassing the cities of Modesto, Turlock, Patterson, Gustine, Newman, and Ceres. Three Republicans, and two Democrats, ran in the June primary. The new district narrowly voted for Joe Biden by 4.6% in 2020, for Gavin Newsom by 2.7% in 2018, and appears to have narrowly voted in favor of recalling Newsom by 52.3%/47.7% in 2021. Alanis was the top vote-getter in the primary, taking 36.5%, with Self in second with 27%. With the GOP candidates taking 52.8% of the vote, this is one of the top targets for both parties in November.
•       AD 40 - $482,990: Supporting Suzette Valladares (R-Inc). AD 40 consists of portions of Los Angeles County, including the whole City of Santa Clarita and parts of the City of Los Angeles. Splits in the City and County of Los Angeles are to balance population while considering communities of interest. The redistricting commission transformed this formerly competitive Santa Clarita Valley district into one that is far more Democratic, imperiling the re-election prospects for incumbent Republican Suzette Martinez Valladares. The new district keeps 71% of the old AD 38’s voters in the Santa Clarita and northern San Fernando Valley areas, loses Agua Dulce to the new AD 34, and, more crucially, the Republican stronghold of Simi Valley in Ventura County to the new AD 42. While the terrain is challenging for Republicans, a progressive labor-backed Democrat advancing out of the top two may leave business groups no choice but to pull out all the stops to try to prevent this moderate-leaning seat from slipping away in November. This area is also likely to be ground zero for both sides going all in for the overlapping congressional race between incumbent Republican Mike Garcia and Democrat Christy Smith. Valladares was the only Republican vote in favor of putting a constitutional amendment codifying Roe vs. Wade on the ballot.
•       SD 36 - $212,800: Supporting Janet Nguyen (R). SD 36 includes portions of Los Angeles and Orange counties, including the whole cities of Artesia, Cerritos, Cypress, Dana Point, Fountain Valley, Hawaiian Gardens, Huntington Beach, Laguna Beach, La Palma, Los Alamitos, Newport Beach, San Clemente, Seal Beach, Stanton, and Westminster, and portions of the cities of Buena Park and Garden Grove. This is a Republican-leaning coastal district with 92% of its voters in Orange County and the remaining 8% in Los Angeles County. No incumbent lives in the district, and AD 72 Republican Assemblymember Janet Nguyen and Huntington Beach Democratic city councilmember Kim Carr ran in the primary. This district, which has a 2% Republican registration advantage, voted for John Cox by 5% in 2018 and narrowly went for Joe Biden by 0.8% in 2020. The 2021 Gavin Newsom recall appears to have passed by slightly over 5% here.
•       AD 39 - $143,010: Supporting Juan Carrillo (D). AD 39 consists of portions of Los Angeles and San Bernardino counties, including parts of the cities of Palmdale, Adelanto, Victorville, Hesperia, and Lancaster. This new safe Democratic majority-Latino VRA district was created by carving out 59% of its voters from the heavily Democratic Lancaster and Palmdale portions of the old AD 36 and adding the deep blue areas of Victorville, Hesperia, and Adelanto from the old AD 33. As the only Republican on the ballot, Paul Marsh claimed the top spot, winning 38.1% of the vote. Carrillo secured the second spot with 30%. With Marsh looking ill-equipped to mount even a token challenge, Carrillo should have little difficulty winning in November. [So, why a $500,000 IE?]

With yesterday’s spending blitz, Coalition to Restore California’s Middle Class has logged the highest general election IEs in state and legislative races by a wide margin, eclipsing the $1.37 million in direct IEs from kidney dialysis provider DaVita. The spending has also vaulted the Dem vs. Dem race in SD 08 to the top of the list with over $2.9 million in IEs, with supporters of Sacramento city councilmember Angelique Ashby far outpacing the spending by allies of former Insurance Commissioner Dave Jones. The SD 38 race between moderate Republican Matt Gunderson and Democrat Catherine Blakespear trails not too far behind at $2.8 million. That race has also seen an additional $3 million spent by state and county party committees. [California Target Book]


Legislative Calendar:

  • Sept. 30 – Last day for Governor to sign or veto bills passed by the Legislature before Sept. 1 and in the Governor’s possession on or after Sept. 1
  • Nov. 8 – General Election
  • Nov. 30 – Adjournment Sine Die at midnight
  • Dec. 5, 12 noon – convening of the 2023-24 Regular Session and special session
  • Jan. 1, 2023 – Statutes take effect