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By Alex Nieves |
Presented by Megafire Action |
With help from Camille von Kaenel
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The cap-and-invest debate is still going. | Damian Dovarganes/AP |
ALREADY ON THE AGENDA: The end of the legislative session offered up more questions than answers about the future of California’s signature climate program, teeing up a ready-made fight the next governor will have to deal with. State lawmakers headed home from Sacramento a little over a week ago after reaching a deal to divvy up a shrinking pot of revenue generated by the state’s emissions trading program, known as cap and invest. The agreement calls for the money, raised by selling pollution permits to major polluters, to be split among transit, housing and clean water programs, but Senate leaders and dozens of interest groups that rely on the dollars have made it clear they aren’t satisfied. That’s because the agreement punted on larger structural changes to cap and invest, which the Senate has been rattling sabers over for months. That scuffle has centered around the California Air Resources Board’s decision in May to expand a controversial new incentive that will allow oil refineries and other major carbon emitters to reduce the number of permits they need to buy by investing in cleaner technology beginning in 2028. That idea for the incentive emerged after oil companies warned that California’s climate rules could force them to leave the state, an exodus that would further hike already sky-high gas prices. But legislative analysts argue it will shrink the state’s only dedicated pool of funding for climate programs, leaving little to no money for public transit, affordable housing, wildfire mitigation and more. A list of unrealized Senate priorities released last month would have capped and eventually phased out the new incentive. Gov. Gavin Newsom avoided commenting on the Senate’s proposal, while interest groups involved in negotiations said it received a chilly reception by the Assembly. Senators like Eloise Gomez Reyes, who leads her chamber’s budget committee in charge of climate funding, hope that a new governor will turn the tide in their favor. “These are public dollars, and we have a responsibility to make sure they are invested transparently, equitably and in ways that deliver meaningful benefits to the communities that need them most,” Gomez Reyes said in a statement. “I look forward to working with the next administration to build on this progress and find opportunities for meaningful collaboration.” The debate will test how deftly Xavier Becerra, who is widely expected to defeat Republican Steve Hilton and take office in January, can walk a climate tightrope he has tried to balance. While Becerra has expressed skepticism about California’s ambitious climate goals — including a proposed 2035 ban on the sale of new gas cars — he has spent the months since the primaries highlighting his record defending climate policies when he was state attorney general during President Donald Trump’s first term. “Obviously there were things in the campaign that raised red flags for some of us, but since the primary, we've seen a moderation of that,” said Katie Valenzuela, a consultant for environmental justice groups active in cap-and-invest discussions. “I'm hopeful that this administration will be pragmatic and see you can’t keep shuffling the issue like a hot potato for the next four, potentially eight years.” But reopening discussions around the polluter incentive would inevitably draw the ire of oil companies, which Becerra made clear during the primary he believes the state still needs for the foreseeable future to keep gas prices down. Becerra’s campaign declined to comment on his stance on cap and invest. He’ll have to offer some clarity on his stance sooner rather than later as CARB is scheduled to begin accepting applications from companies interested in using the incentive in June. Once it does, making changes to the program will become much more difficult to make. Did someone forward you this newsletter?Sign up here!
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A message from Megafire Action: Every catastrophic wildfire we prevent is a home that doesn’t burn and an insurance bill that doesn’t double. Governor Newsom has the opportunity to sign the most comprehensive package aimed at preventing catastrophic wildfires in our nation’s history. It includes SB 894, SB 1079, SB 973, AB 1699, AB 1891, AB 1934, AB 1960, and AB 1964. Governor Newsom: Sign the Joint Megafire Prevention Package today. |
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Gavin Newsom's Delta water plan has problems. | Nell Redmond/AP |
NO DEAL: The Central Valley’s largest and most powerful irrigation district is pulling out of a deal with Newsom to direct more money towards habitat restoration in the Bay-Delta region. Westlands Water District announced late Friday that it was calling off the agreement after the State Water Resources Control Board proposed changes to the plan that, among other things, would increase state oversight. Westlands General Manager Allison Febbo said in a statement that the changes upend “the balance the parties spent years working to achieve.” The announcement came shortly after the Trump administration also threatened to withdraw support and two Central Valley representatives called the Board’s proposed changes a “bait and switch.” The escalation spells trouble for Newsom, who has cast the plan as a signature water policy and generally been aligned with the Trump administration on the need to send more water to the Central Valley. The 2022 deal Newsom struck with major water agencies to overhaul the management of the Bay-Delta region was meant to give them an alternative to established rules that protect endangered fish species while also sending water to cities and farms. In exchange for the greater flexibility, the deal called for the agencies to provide more money for habitat restoration in the sensitive ecosystem. Environmental groups fiercely oppose the plan, though for opposite reasons: They are concerned the plan will harm already declining populations of endangered species. The Board is set to consider the plan at its meeting in late October.
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Susan Collins on Maine, Trump and the GOP’s future Jonathan Martin heads to Perry’s Lobster Shack for a wide-ranging conversation with Sen. Susan Collins on her reelection fight, the politics of the middle and the Republican Party’s path ahead.
Watch now. |
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A fight over propane is heating up. | David Goldman/AP |
SPARKING A FIRE: The Trump administration has found another of California’s niche environmental mandates to go after: A ban on single-use propane cylinders, like the small ones commonly used in camping stoves. The federal Pipeline and Hazardous Materials Safety Administration ruled Monday that California’s ban is federally preempted, siding with Worthington Enterprises, an Ohio manufacturer that makes the single-use cylinders. The 2024 state law authored by Sen. John Laird intended to replace single-use cans with reusable and refillable ones. It was set to take effect in 2028 but is now blocked, unless a court overrules this week’s ruling. Transportation Secretary Sean Duffy lashed out at “California’s radical environmentalists” in a statement announcing the decision, adding that “we’re stopping this nonsense in its tracks so all Americans can enjoy the great outdoors and access the affordable energy they deserve.” Laird called the ruling a “disastrous decision for our environment” and “a move that benefits special interests” in a statement Tuesday. Worthington, along with the attorneys general of Kansas and Ohio, had pushed for the federal preemption in an effort to bring California in line with other states. California Attorney General Rob Bonta, meanwhile, joined local rural governments in urging PHMSA to let the ban stand, arguing it was in California’s best interest. They said that millions of single-use cylinders wind up in landfills, illegal dumps and recycling facilities, where leftover propane can trigger fires and explosions. Bonta’s office did not respond to a question about whether it would sue over the decision. Doug Kobold, the executive director of the California Product Stewardship Council, which sponsored the original law, told POLITICO in an interview that his group would likely now work on alternative legislation next year to force manufacturers to take back and recycle the cans instead.
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A message from Megafire Action:  
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NEW GIG: The Trump administration has tapped a former renewables executive with California ties to lead its offshore energy agency. The Interior Department has elevated Michael Olsen, who joined the department in February as an adviser under Deputy Secretary Kate MacGregor, to head the Marine Minerals Administration, Heather Richards, Hannah Northey and Ian M. Stevenson report. Olsen will replace Matt Giacona, a former lobbyist for offshore oil companies, who served as the new agency’s first acting director but has taken a job with the oil service giant Halliburton. Olsen previously worked at the Interior Department during the George W. Bush administration and later worked as a consultant in mining, offshore wind and oil and gas development. He was a founding board member and vice chair of Offshore Wind California, an industry group that supports offshore wind projects. He will now lead an agency that has helped kill offshore wind projects around the country and promote oil drilling off California’s coast.
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Where energy, tech and policy connect POLITICO Surge helps readers follow the policy and political forces behind data center growth, rising electricity demand, infrastructure pressure and the energy transition.
Subscribe Now. |
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— Nevada GOP Gov. Joe Lombardo is blasting Newsom’s energy policies for high fuel prices as he runs for reelection. — Following lawsuits against the city of Los Angeles for hydrants going dry during the Palisades fire, state lawmakers sent a bill to Newsom to clarify what public water agencies have to do for firefighting — and what is an unreasonable expectation. — Long Beach is cleaning up from damage from hurricane-driven surf over the weekend.
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A message from Megafire Action: Washington has spent years on hearings, task forces, and promises about wildfire prevention. Governor Newsom can act now. The Joint Megafire Prevention Package is a chance for California to lead on wildfire prevention, making homes and communities more resilient, strengthening local preparedness, and accelerating firetech deployment.
The Joint Megafire Prevention Package includes SB 894, SB 1079, SB 973, AB 1699, AB 1891, AB 1934, AB 1960, and AB 1964.
Governor Newsom: Sign the Joint Megafire Prevention Package to protect people, homes, and communities from catastrophic wildfire before it’s too late. |
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More from POLITICO in California POLITICO Pro California policy moves fast, and the stakes are high. POLITICO Pro offers exclusive California policy reporting, expert analysis, and powerful tools to help professionals learn what’s happening, understand what it means, and act with confidence statewide — all on the POLITICO Pro policy intelligence platform. Learn more. POLITICO Advertising Solutions POLITICO Advertising Solutions helps organizations reach and engage influential California policy and political audiences. Through custom advertising, sponsorships, and content solutions, we connect your message with decision-makers across the state. To learn more, contact Jesse Shapiro jshapiro@politico.com.
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