For those of you who follow golf in California closely, you are likely aware that the California GCSA and its local chapters are involved with the California Alliance for Golf (CAG). CAG serves as the Unified Voice for Golf in California and leads the industry's efforts on the legislative and regulatory front. I serve on the CAG Legislative Committee and below are updates from CAG as well as some highlights from what was a very successful legislative session for the golf industry:

The Governor signed S.B. 1524 (Dodd; D-Napa) in time to exempt restaurants from what otherwise would have been a requirement to comply with last year’s “junk fees” bill (S.B. 478) a week ago Monday — a late “gut-and-amend” action by S.B. 478’s author with the full support of the union that represents restaurant workers across the state (Unite Here).  Specifically, S.B. 1524:

• Exempts from S.B. 478 mandatory fees or charges for individual food or beverage items sold directly to a customer by a restaurant, bar, food concession, grocery store, or grocery delivery service, or by means of a menu or contract for banquet or catering services that fully discloses the terms of service; and
• Requires mandatory fees or charges be clearly and conspicuously displayed, with an explanation of its purpose, on any advertisement, menu, or other display that contains the price of the food or beverage item.

In late May, we reported that “It isn’t often that one bill can highlight all that separates one side of California’s great water divide from the other — from those interests fixated on conservation as the focus of future supply and those intent on pursuing a more diversified portfolio — from those who are often accused of believing that California can conserve its way out of its aridification predicament and those who are convinced that if conservation is the only tool in the state’s water resiliency toolbox, California is doomed to be hollowed out in much the same way rust belt cities like Pittsburgh and Detroit were in the last quarter of the 20th Century.” 

The bill we were referring to was S.B. 366 (Caballero; D-Merced).  Tagged “California Water Plan: Long Term Supply Targets,” the bill would revise and recast certain provisions regarding The California Water Plan to, and among other things, require the department to instead establish a stakeholder advisory committee and to expand the membership of the committee to include tribes, labor, and environmental justice interests. It would require the department to coordinate with the California Water Commission, the State Water Resources Control Board, other state, and federal agencies as appropriate and the stakeholder advisory committee to develop a comprehensive plan for addressing the state’s water needs and meeting specified long-term water supply targets established by the bill for purposes of The California Water Plan. It would go beyond the current approach to water supply planning by establishing for the 1^st time in the history of the state specific targets to be met by certain dates and requires a financing plan for achieving these targets.

Given that the California golf community’s long-term interest lies with that side of the “great water divide” that finds conservation to be an important but by no means the only tool in the state’s water resiliency toolbox, the California Alliance for Golf (CAG) joined more than 100 hundred other organizations in support of the bill when it was heard in the Assembly Water, Parks, and Wildlife Committee last month, where it passed through on a unanimous bipartisan 13-0 vote. It now moves to the Assembly Appropriations Committee (Chair Buffy Wicks; D-Oakland) and assuming it passes muster there, goes on to the floor and ultimately to the Governor for his signature.

While we always believed that the bill could in no way be construed as creating supply by taking water from the Sacramento Delta or waters otherwise used to support the environment, the bill as finally adopted on that 13-0 vote, contained a series of amendments to ensure that end, undercutting the arguments submitted in opposition by some of the state’s environmental organizations. 

When Senator Caballero presented her bill to the Assembly Committee, she noted that California had already adopted 81 targets in support of electrifying and otherwise de-carbonizing the state, making it more than reasonable to adopt targets for the supply of something as vital to the sustainability of the state as water. She cited the same UCLA/UC Merced/UC Davis study that the bill’s sponsor (California Municipal Utilities Association) cited in their support of the bill — “The Magnitude of California’s Water Challenges” — a study that makes a strong case that changed climactic conditions in the Sierra Nevada and Colorado Basin all but guarantee that California is looking at somewhere between a 10 and 20 percent loss of supply by 2050. Without focusing on certain 21^st Century supply modes (e.g., storm water capture, aquifer recharge, reuse — potable and non-potable, desalination) in addition to continuing to ramp up all forms of conservation, the state won’t be able to thrive. Click here to read that UC study; it’s a revelation. 

A bill that was pulled and made into a 2-year bill by its author late in 2023, due to the limited time available at the end of the 2023 session to craft the amendments necessary to earn the votes required for passage, A.B. 460 (Bauer-Kahan; D-San Ramon), we singled out as one of many presaging a reworking of certain established “water rights” that strike many as impediments to achieving long-term water sustainability and equity, has now passed both houses and moves on to Senate Appropriations in August. In short, A.B. 460 gives the State Water Resources Control Board (SWRCB) the enforcement tools (interim relief orders and hefty fines) capable of effectively policing the ”illegal diversions” now capable of the documentation necessary to deem them “illegal” per a bill authored by Senator Ben Allen (D-Redondo Beach) and signed by the Governor last year — another of the bills we highlighted last year as presaging the reworking of certain established water rights.

[Note: The 1^st half of the 2024 session saw the golf community's success in amending A.B. 3192, a prohibition on the use of all fertilizers and pesticides on golf resorts in the California Coastal Zone, and it saw the bill that would have mandated year-round Standard Time reduced to a study to determine the economic effects of such a change.]

Federal Court Decisions of Import

Because California is its own regulatory state, replete with federal waivers that in certain specific cases obviate United States laws that would otherwise pre-empt the state’s ability to go its own separate way, we rarely report on federal court decisions or federal regulatory rules.

Today we report on both.

We begin with Olson v California, a 9^th Circuit Court of Appeals decision filed June 24 that, had it been successful, would have upended California’s two (2) pieces of legislation dealing with independent contracting versus employment (A.B. 5 and A.B. 2257) and by direct implication, the California Supreme Court’s “ABC” test in the Dynamex decision. In brief, Postmates, Uber, and two individual parties challenged the California legislature’s ability to create exemptions and exceptions for some professions, sectors, and activities while leaving others subject to the stringent ABC test. They challenged the California law on multiple bases — equal protection, due process, contract, and bill of attainder, all of which the District Court rejected. The 9^th Circuit took up an appeal only the equal protection claim, leaving the lower court’s rejections of all other claims intact. The 9^th Circuit rejected it, concluding that “there were plausible reasons for treating transportation and delivery referral companies differently from other types of referral companies, particularly where the legislature perceived transportation and delivery companies as the most significant perpetrators of the problem it sought to address — worker misclassification.” Put another way, the court deferred to the legislature to determine whether there was a compelling state or public interest in making such an invidious distinction. A.B. 2257 remains intact — not a problem so much for those of us in the California golf community who have secured qualified relief for independent contracting — PGA golf professionals, youth sports coaches, and caddies, but very much a problem for the many American states that have been waiting for this case to be disposed before moving forward with their own versions of what California did with the ABC Test and A.B. 5/2257. But for those of you who may have held out hope that this case might bring 100% relief from California’s stringent rules regarding independent contracting, please be informed that such will not be the case.

We continue with the case that has been the subject of massive reporting — the United States Supreme Court’s overturning of the 40-year-old Chevron decision that gave wide berth/deference to federal administrative agencies in the resolution of ambiguities in Congressional delegations of legislative authority regarding the technical issues that are at the core of such agencies’ expertise. It’s easy to see how Chevron will affect the decisions rendered by federal regulatory agencies. By requiring a level of statutory clarity that is often not present in existing laws, more and more federal regulatory questions will be resolved by courts, not necessarily with uniformity, and federal agencies are likely to be chilled in their attempts to use existing statutory authorities to combat novel problems.

But what will that mean for the regulations issued by those California administrative agencies such as CAL EPA that are in essence duplicates of their federal cousins? That is a question that can only be answered over time. However, other than certain federal EPA waivers regarding standards enunciated under the Clean Air Act that could be affected, regulations issued by California’s administrative agencies are likely to continue to be governed by the state’s own set of principles for giving weight to state agency interpretations of state law, known as “interpretive rules,” which give deference to which party, court or agency, has the comparative interpretative advantage. Hint: It’s almost always the agency. Then again, with so many recent US Supreme Court decisions opening with fill-in-the-blank is overturned, who knows? But we should expect that given the composition of the California body politic, this state is likely to pursue every avenue it can to chart a course separate from the federal government to the degree to which that course is not preempted or otherwise obviated by future Supreme Court rulings. And the California golf community would be wise to act on that expectation for now.    

Regulatory Issue (SWRCB) — Urban Water Conservation Targets

The State Water Resources Control Board (SWRCB) has completed the rulemaking process for effectuating the goals established for the state’s urban retail water providers by A.B. 1668, S.B. 606, and last fall’s gubernatorial directive “Making Conservation a California Way of Life.” A goal to save 500,000 acre-feet of water annually by 2040.

We have reported on this in the past but are compelled to report again to allay fears generated by headlines suggesting that urban water jurisdictions are looking at 30% reductions. Yes, a few jurisdictions that have difficult local supply issues and/or poor past conservation performances may be looking at 30% reductions, but those places are few and far between, not to mention generally restricted to remote, lightly populated areas of the state.

As we have reported previously, the regulatory framework created by SWRCB’s new rule is a radical departure from the one-size-fits-all model that characterized the state’s response to the 2014-2016 drought. As the SWRCB fact sheet states, the new regulatory framework “establishes individualized efficiency goals for each Urban Retail Water Supplier ... based on the unique characteristics of the supplier’s service area and give suppliers the flexibility to implement locally appropriate solutions.” The retailers are held to annual targets, not individuals, individual households, or individual businesses, and those “targets” are set by a formula that incorporates local climate, local supply, population, lot size and previous investments in conservation in its final target. Based on that, the state’s largest urban retail water supplier, Los Angeles Water & Power (LADWP), is looking at a 6% target by 2035. 

Specifically, the “formula” is defined on the SWRCB’s website as:

“The proposed regulation would require suppliers to annually calculate their objective, which is the sum of efficiency budgets for a subset of urban water uses: residential indoor water use, residential outdoor water use, real water loss and commercial, industrial, and institutional landscapes with dedicated irrigation meters. Each efficiency budget will be calculated using a statewide efficiency standard and local service area characteristics such as population, climate, and landscape area. Where relevant, suppliers may also include in their objective “variances” for unique uses, or a bonus incentive for potable recycled water use.”

Bottom line: The framework just adopted by SWRCB hews to the definition of good public policy the California golf community (and many others) has been preaching for some time — that good public policy incentivizes the behavior that is the goal thereof and disincentives the opposite, rewarding as in the specific case of conservation the thrifty and penalizing the profligate. The LADWP example is telling for the golf courses whose past conservation performance proved invaluable in 2022 when that agency was faced with a 35% cutback from its wholesaler Metropolitan Water District (MWD). Those courses that had done much in the previous 12 years to reduce their water footprints were in many cases not required to do much if anything, while those courses with less stellar (all were good but not all “stellar”) records were required to make sacrifices in direct proportion to past performance — the same “equity” sought by the SWRCB paradigm and the same equity that can continue to incentivize both water providers and their customers to invest in conservation confident that those investments will accrue to their benefit, not their detriment.

The influential Association of California Water Agencies (ACWA), which represents roughly 90% of the state’s water providers, has endorsed the new framework. Many, but certainly not all, mainstream environmental organizations are less sanguine, many saying publicly that they don’t believe the new framework goes far enough to ensure water resiliency in an era of rapid climatological change. The authors of the Assembly and Senate bills, Laura Friedman (D-Glendale) and former Senator Bob Hertzberg (D-Los Angeles) respectively, agree. They are probably right if one believes that a disproportionate source of future supply is going to be conservation. They are probably wrong if one believes, as the broad coalition that is pushing S.B. 366 in this session believes, that conservation is going to be joined by other supply modes to achieve the resiliency all parties concur in as the ultimate goal.

The Initiative You Won’t See on Your November Ballot

Ten (10) initiatives will appear on the November California ballot, two (2) of them are $10 billion bond issues, the other eight (8) all over the political map:

1. $10 billion school bond.
2. Reaffirmation of same-sex couples to marry.
3. $10 billion climate action bond.
4. Lower voter threshold for local housing and infrastructure bonds.
5. Limit forced labor in prisons.
6. Raise state minimum wage to $18 per hour.
7. Permit local governments to impose rent controls.
8. Require certain health providers to use nearly all revenue from a federal prescription drug program on patient care. (Note:  Aimed at one specific agency in Los Angeles)
9. Make permanent a tax on managed health care insurance plans.
10. Increase penalties for theft and drug trafficking.

It’s the one you won’t see that we share with you for what it should tell the California golf community about the power that matters most in the public arena — public opinion — and why all other “powers” pale in comparison.

After spending more than $25 million to qualify an initiative that would have removed restrictions on drilling near homes and schools, the California Independent Petroleum Association withdrew it. Specifically, the initiative would have overturned S.B. 1137, a state law that prevents drilling new oil and gas wells within 3,200 hundred feet of homes, schools, parks, and hospitals. The association and its industry members determined that spending an additional $100 million or more on a statewide campaign sure to be met by funded opposition from environmental interests and their adherents would not likely prove a wise spend, given what their polling had proven was substantial opposition from the general California electorate before any campaign had begun. 

The California oil and gas industry is an enormous one — many multiples of California’s $15.5 billion golf industry. It employs thousands of Californians directly and more indirectly, generates enormous profits for investors, remits massive state and local taxes, creates myriad economic multiplier effects and provides a product that virtually every Californian uses, making any argument about increasing the cost of that commodity a compelling one for millions of residents as well as the businesses whose price points are disproportionately affected thereby (e.g., travel & tourism).  Unlike golf, which is played by 10% of the state’s population, the products produced by the oil and gas industry are used by virtually every Californian, making almost all stakeholders in that industry. 

Nonetheless, all the economic arguments in the world are not proving enough to overcome the non-economic arguments in favor prohibiting the drilling of new wells within 3,200 hundred feet of homes, schools, hospitals, and parks. Health, safety, and overall quality of life are trumping them in an instance in which the economic argument has palpable heft. This is why we continue to preach the wisdom of doing everything within golf’s ability to preach the societal value proposition of the game and its large fields of play to the 90% of the population that doesn’t play the game in terms that the 90% find compelling — health, environment, recreation, heat relief, green space, community, charity, youth development, school/education support.  And avoid making golf’s case in terms that even the rich oil and gas industry cannot sustain when close to 100%, as opposed to 10%, are directly affected, and a case that, in golf’s case, is microscopic compared to the one oil and gas can offer.