Good morning, California.

“The majority of the constituents would love to not have to switch back and forth. They would love to have more light in the afternoon.”—Democratic Assemblyman Kansen Chu of San Jose to the San Francisco Chronicle, on his legislation to stop springing forward and falling back. That said, don’t forget to set your clocks ahead one hour before you go to sleep Saturday night.

PG&E bankruptcy brinkmanship

Hedge funds are jockeying for position in PG&E's bankruptcy.

Financial analysts came to the Capitol to meet with Gov. Gavin Newsom and key legislators to get a better understanding of how lawmakers intend to come to the aid — or not — of the state’s distressed electric utilities.

Hedge funds with big investments in Pacific Gas & Electric are jockeying for position in the utility’s bankruptcy proceedings, with an eye toward placing members on PG&E’s reconstituted board of directors.

  • According to Bloomberg, “Some of the biggest players in distressed debt have banded together in PG&E Corp.’s bankruptcy to press their case for repayment of about $12.5 billion.”
  • They include New York hedge fund billionaire Paul Singer of Elliott Management Corp. The presence of Wall Street heavyweights “foreshadows some hard-fought battles over who gets what in the bankruptcy process,” Bloomberg writes.
  • Adding to fears about a domino effect, Moody’s downgraded Edison International and Southern California Edison, making it more costly for the utility to borrow money:

Moody’s: “The outlooks for Edison and SCE are negative.”

Newsom convened a special task force a month ago to come up with a proposal within 60 days for handling utilities’ liability in a time of climate change when heat and high winds drive ever more ferocious wildfires.

  • Democratic Sen. Bill Dodd of Napa met with the analysts on Thursday and awaits Newsom’s proposal:

Dodd: “We need to be ready and willing and able to act. … Ultimately, the Legislature understands this a real problem. We all know the issues. We all know that it’s going to be important to get resolution.”

No issue matters more to the future of Newsom’s administration, or to the state’s economy.

As for the rest of us, expect to pay higher electric bills.


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Toxic bills are coming due

Jared Blumenfeld faces a structural deficit as head of CalEPA.

Jared Blumenfeld, Gov. Gavin Newsom’s pick to head of the California Environmental Protection Agency, clearly has his work cut out.

  • CALmatters’ reporter Julie Cart spoke with him for this piece: “California offers hope and inspiration on how to solve problems, from an innovation perspective but also politically. It’s exciting to be in California right now.”

Last week, Blumenfeld offered a sober assessment to a joint legislative committee about the serious challenges facing the Department of Toxic Substances Control, one of the departments that is under CalEPA, and the health implications for Californians.

  • California has 9,800 toxic sites where there is no reasonable party that caused the pollution, leaving the state on the hook for paying clean-up costs.
  • The Santa Susana Field Laboratory near Simi Valley is a toxic stew of nuclear waste and rocket fuel. His task is to force the feds and Boeing to make good on their promise to clean it, something they don’t want to do.
  • Santa Clara County has more Superfund toxic waste sites requiring clean-up than any other county in the United States. Toxins have leached into groundwater and rise in vapor form.

Blumenfeld: “There are buildings all over the Silicon Valley where this a significant issue.”

  • The department faces a structural deficit.

Blumenfeld: “Clean-up costs have outstripped revenue. Costs are set to increase.”

Much of the detritus is a legacy of the post-World War II boom in California, compounded by the lingering impact of mining.

  • Legislators praised Blumenfeld for being straight with them, even as the depth of the problem facing the state began to sink in.

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Republican battleground: Boyle Heights

In some California districts, Republicans have disproportionate clout.

A Republican primary challenge to President Donald Trump could run through Boyle Heights in east Los Angeles.

At least, that’s Mike Madrid’s theory, as described by CALmatters’ Ben Christopher. A Republican strategist and fierce Trump critic, Madrid believes the right anti-Trump candidate could launch a primary challenge against the president by exploiting the GOP’s presidential nominating rules.

The math goes like this: 

  • Every California congressional district gets three delegates, no matter how many or how few Republicans vote in that district.
  • That means a would-be Republican challenger could make headway by ignoring the rural Republican bastions of California, where tens of thousands of votes are needed to win a delegate, and focus on turning out the relatively small number of Republicans in the Democratic bastions of Oakland, San Francisco, or east L.A.

Christopher likens the GOP primary rules to the U.S. Senate, where sparsely populated states like Wyoming and the Dakotas have disproportionate clout. Republican voters in the least-red sections of California could have the loudest voices in their state party.

Madrid: “If there is going to be an insurgency, California is arguably the most important state.”

Texas Sen. Ted Cruz tested that theory in 2016, back when he was not on speaking terms with Trump and tried to block his nomination. It didn’t work then. But 2020 is a new year.

A reprieve for sunscreen

A sunscreen bill's been gutted.

Deferring to the U.S. Food and Drug Administration, Assemblywoman Laura Friedman dropped legislation that would have restricted the sale of sunscreen lotion containing chemicals that are toxic to coral reefs. For now.

  • On the opening day of the legislative session, the Glendale Democrat introduced a bill to prohibit the use of octinoxate or oxybenzone in sunscreen. Hawaii banned the substances, which are toxic to coral reefs.
  • Outgoing FDA chief Scott Gottlieb last month proposed to update requirements for sunscreen products. A few days later, Friedman gutted the suntan lotion bill and replaced it with one that seeks to ensure the accuracy of water meters.

She is, however, pursuing legislation that would ban the sale of fur in California.

Friedman: “There is no such thing as cruelty-free fur.”

Take a number: $235 million

PG&E wants to spend millions on employee bonuses.

After scrapping a plan to pay $130 million in bonuses last month, Pacific Gas & Electric Co. is seeking permission from a bankruptcy court judge to pay $235 million in bonuses to as many as 10,000 employees.

John Mader, president of Engineers and Scientists of California Local 20:“Employees have options, and we as a company — we really need these skilled employees.”

Commentary at CALmatters

Business tax increases have a negative impact on Californians.

Robert Gutierrez, California Taxpayers Association: Negative impacts of a business tax increase would be felt far and wide, because business taxes get passed on to consumers and shareholders, and have a negative impact on wages for jobs that are preserved. The last thing middle-class Californians need is an even higher cost of living, wage stagnation or more risk for their retirement investments.

Tambry Lee, Aliso Canyon survivor: At the age of 44, my lungs inexplicably failed, and have never recovered. For over a decade, I’ve had a chronic shortness of breath, a high pulse rate, and have been dependent on oxygen tanks, inhalers, and I’ve been unable to walk any distance or even carry my purse, without triggering deep chest pains. I’m one of the fortunate ones, because I’m still alive.

Please email or call me with tips, suggestions and insights, [email protected], 916.201.6281. Thanks for reading, please tell a friend and sign up here.

See you Monday.