Senate Standing Committee on Rules

All right. Well, good morning, ladies and gentlemen. Thank you so much for joining the Senate Rules Committee on this July 3, 2024. Let's get our business started and establish a quorum. Want to say good morning to Madam Secretary.

[Roll Call] Quorum.

Quorum has been established. Thank you so much, Madam Secretary. Ladies and gentlemen who are here in the committee room and watching online, we are near the deadline for policy, and that means each one of these hard working Senators are going to be in and out of committee. None of them mean any disrespect.

But just know that there are six committees happening all at once. All start at 9:00. And so it will be in and out today, and we do send sincere apologies, and that will also include myself. We also will have our Vice Chair, who will be here in just a few moments.

What we'd like to be able to do, as is typical here at Senate Rules Committee, is take up some administrative items. Then we'll start out with Ms. Leslie. And we're going to ask Ms. Leslie to please come forward. And we'll get Leslie right to you and apologize about the delay.

We're going to take care of some housekeeping items, and we'll come right back over to you to be able to have a formal introduction. So, ladies and gentlemen, committee, we'd like to be able to start our administrative part of today's hearing. Under bill referrals, would like to be able to take up item two, reference bills to committees. Is there a motion for approval?

We refer the bill.

Thank you so much. That is a motion by Senator Laird. Madam Secretary, can you please call the roll?

[Roll Call] Four to zero.

That's a 4-0 vote. That item is going to remain on call. Ladies and gentlemen, committee, we're now going to be going on to floor acknowledgments. These are items three through six. Items three through six.

Mr. Chair, I would move items three through six.

Thank you so much. That is a motion by Mr. Laird. Madam Secretary, can you please call the roll?

[Roll Call] Four to zero, on call.

4-0 vote. We're going to keep that on call. Thank you so much to the committee. We're now going to turn it over to Madam Board Member. Madam Board Member, it's wonderful to see you. Ms. Leslie, thank you so much. We're going to open up our appointee presentations.

Ms. Leslie is advancing from the Governor's Office as a board member for the Independent System Operator Governing Board. And it is hot. And we're going to anticipate you're going to give us an update here today. So we're going to knock on wood, lights stay on. So, long story short, we are grateful for your hard work.

We appreciate your service to the people of California. Madam Board Member, we're going to provide you with two minutes for opening testimony. If there are any individuals here in the hearing room that you'd like to be able to acknowledge or watching online, do invite you to do so. I'll give you a 30 second warning when you get close to that two minutes. The floor is yours, and again, welcome the committee.

Thank you, Chair McGuire.

Yes. You're doing good. We're going to turn up Ms. Leslie's mic just a bit.

Good morning, Chair McGuire, soon to be, I hope, Vice Chair Grove, and Committee Members. It's good to see you all this morning. It's a privilege to be here today to be considered for a three year term to the CAISO board. For those of you who do not know me, which fortunately, I am meeting you for the first time. I'm a fourth generation Californian. I was born and raised in the Bay Area. My family comes from the San Joaquin Valley, Fresno and Kern area.

I've lived for the last 20 years down in Los Angeles, where I met my husband, Allen, and raised my two sons, Jacob and Michael. And unfortunately, they will not be here today because I believe they are working. But they may be listening in, I hope, as is my mother, Joan Leslie, in the Bay Area, in the PG &E territory, as a matter of fact, awaiting her.

No comment.

Yeah, no comment. Okay. Professionally, I have worked for the last 30 years in local, state, and federal government and business. I began my career here in Sacramento with, this is going to date me, except for Senator Laird's going to understand, for Leo McCarthy. He was my first boss for 10 years. He was the former Speaker and the Lieutenant Governor. He was a great guy. He was my mentor and my friend for a very long time.

I learned early on that the importance of public private partnerships are critical for us achieving our goals. And I lead a business group down in Los Angeles called the Los Angeles Business Council. I've worked hard and am committed to reliability and effective and cost effective decarbonization of the world's fourth largest economy.

Fourth or fifth, depending on the day, here in California. And at the CAISO, we do this by planning robust transmission. We operate an efficient and effective energy market, which is greatly expanding, as you know. And we've integrated high levels of clean energy. We're up to about six gigawatts a year.

We have to get to seven and stay there for 10 years, right, to get to our SB 100 goals. And we've done this in a dependable and effective way, hopefully a low cost way to Californians, or the lowest cost. And we continue to enhance the grid with effective new markets like the energy imbalance market, the EIM.

That market is in 22 balancing authorities. And as you know, we got FERC permission and voted to create the EDAM, which is the day ahead market. This will allow us to create greater market participation in the west. So I look forward to your questions today, and I appreciate your time and consideration.

Madam Board Member, we appreciate you being here. Thank you so much. We're going to open it up. We're going to start with Senator Laird.

Thank you. And I apologize, I have to, the minute I'm done asking you questions, go present a bill in Labor and participate in a debate there. And I will be back to vote and try to be back for the others, although I can see Mr. Rechtschaffen with a sigh of relief right now.

So let me ask a couple of questions to kick it off. And one is to tee off of what you said, obviously, renewables and the grid and grid management is a big deal. On storage, how do we connect more storage to the grid? Or how does Cal ISO help in partnership to facilitate that? Because it makes a big deal in allowing our renewables to work.

Well, part of the reason, you know, today is looking like maybe a 45,000 megawatt day. We think that'll be our peak today, even with this extreme heat and that we have a buffer of at least 3000 megawatts before we would have to use any alternative options like flex alerts and other things.

And part of the reason we're in such good shape at the moment is we had two cool years, right, of weather, which was a blessing and a lot of rain. But basically it's because we, you know, the CPUC, through the RA planning process, allowed us to literally put almost eight gigawatts of battery storage onto the grid. And we'll be at about 10 gigawatts by the end of this year.

So that's really the buffer at that neck, you know, the peak of our energy use, the neck of the duck, so to speak. That battery storage helps us with that, with the peak power. When our solar goes off, we have the battery storage, so battery storage is critical to reliability.

And I'm just understanding, because we have problems in sort of connecting things to the grid, how you are a partner and sort of trying to address that or ease that.

Well, I think we've been successful with interconnecting the 8000 battery storage. And I think that's our job to interconnect it, right, and plan for it, and then we depend on the LSCs to actually do it. Right. And so we successfully have done it. I'm not sure if I'm answering your question.

Well, I think that our challenge is meeting our goals. It is about getting things up and getting them on the grid. We have the challenge of expediting that and then dealing with that. But you have sort of some responsibilities in relation to the grid that really are going to provide guidance or help facilitate that. I'm looking for how you view that.

So since August 2020, when we had the load shed, I think it enhanced the cooperation greatly between the CPUC, the CEC, and the CAISO. And what happened is the amount of planning we have done with the CPUC IRP, you know, we've identified exactly where, you know, power should go and where we can do it at the lowest cost in terms of transmission upgrades. And so batteries aren't randomly put on the grid.

They're actually part of a planning process that shows us where they should go in order to offset, you know, energy needs, particularly in urban areas where there's high energy use. So this is a highly coordinated and forecasted...

I get that. And you see, I'm very lucky, because in my district, some of the biggest things, transmission exists. If wind comes on, the transmission is at Diablo. If storage comes on in Morro Bay, there's leftover fossil fuel storage. All the storage that has come on in Moss Landing connects to the transmission from the formal fossil fuel. Not some of the other districts are as lucky. I mean, Senator McGuire's, the wind up there is in a transmission desert. And so how do you help facilitate some of the things that address that issue?

Well, because we have a lot of ways to acquire energy that isn't being generated in his district. Right. So our energy imbalance market, for instance, we're bringing power in from different places in the west, hydro from the northwest. And I believe Senator McGuire is going to be in very good shape. We just okayed $6 billion worth of new transmission, of which, you know, a third of that is wind offshore. Right. So we're planning for at least four gigawatts at Humboldt and Monterey. Right. So...

Morro Bay. Don't freak out the people.

Okay. I'm so sorry. Moro Bay. I will never say Monterey ever again.

I'm teasing.

Moro Bay.

Yeah, well, and then, and I couldn't help but resist. You're so excited about the fact that it rained for two years. One person's rain is another person's levee breaking, highway falling in the ocean, wharfs going down. So the other thing is you teed up the question in your opening about what's going to happen today to demand management.

And traditionally there's skepticism about demand management, but on that key day in September of 2022, without consulting Cal ISO, the Governor sent out the mass email blast and everybody at Cal ISO, this can't be right. The demand is dropping. And I think you can only do that once or twice a year and have it work. But what did that your view about demand management?

Well, I've always been a fan of demand management, but that's because I come from Los Angeles and I served on Department of Water and Power Board for many years. So I've seen what demand management can do. Yeah, it's a powerful, it's a powerful tool. The challenge with it is the dependability of people powering down. Because that's voluntary, right. It's not, it's not a mandatory deal. But I think in utilities where people have had experience with demand management, it works really effectively.

Okay, well I appreciate that. I'd love to talk more but I have to go to the Labor Committee, and I will be back to vote. And I appreciate you... I'm one of the few, maybe Senator Grove, we were here for your last confirmation and had an animated discussion that satisfied me along with your service. So thank you for being willing to do another term.

Thank you.

Thanks, Mr. Chair.

Thank you so much, Mr. Senator. Please, Madam Vice Chair.

Thank you, Mr. Chair. My apologies for being tardy. Good to see you Ms. Leslie. I think you've done an incredible job from the last time that we saw you. And I appreciate your, not only your knowledge, but your ability to convey your knowledge and make sure that just stuff gets done.

I do have a question because something new came up since the last time we've had a confirmation. Down in Otay Mesa, It took 17 days to put out a lithium battery fire and evacuated a local area, mostly low socioeconomic, disadvantaged community area where this battery station is at.

It released highly toxic fumes into the area, hydrogen fluoride being one of them, where the definition of a danger to life and health is 30 parts per million. And this fire over 17 days released about 600 parts per million into the air.

How are you coordinating with the CPUC and the CEC to ensure that adequate battery storage is safe? It's down there in black and brown communities, and that was a disaster. And they can't even put the fire out. They just have to wait for it to continue to burn. So can you expand on that and what your plan is?

Well, you know, the growth of batteries storage has been exponential in a very short period of time. And I'm not sure the California building fire codes have kept up. And I know that you've had legislative committee meetings about it, about updating the fire code. I think also the technologies of batteries are quite different.

You know, we have the lithium four hour battery, which we've been depending on, but quite frankly, flow batteries are becoming commonplace. And then a flow battery, you don't have the concentration of energy where the batteries heat like that. They flow through the, literally, they flow through. Right. If they're not, you're not...

This is going to sound really technical. You're not shoving power into a battery. Okay. And then it's sitting there and it's heating up. Right. Instead, there's a flow through of the energy, so there's no heat getting concentrated in one place.

So I think the technology of batteries is improving now, and that the code needs to catch up because that's a safety issue. Right. That's a fire and safety issue, the managing of the batteries. Fortunately or unfortunately, we don't regulate that at the CAISO.

That's not exactly our swim lane, but we're very aware of it, and you're right to bring it up because the safety of batteries, particularly given our reliance on them at the moment, and the tool that they're providing us and managing a reliable grid is quite important. So I appreciate your comments.

Thank you. Have you ever heard of geological thermal energy storage?

No.

I'd like to send you some information on it. California is doing what they call a transition off of domestic fuel and getting imported fuel from foreign countries. But nevertheless, we're not getting permits. But they're using technology in my district to capture the water underground in the oil caverns. Like the water, and it's steam generated heats up, and they've actually demonstrated it can hold battery storage for 400 days.

So I'd just like to send you some information. I think it's something. I know new technologies, wind, offshore wind, everything is coming online very, very fast. And I just think instead of, you know, I don't want to say transition from lithium batteries to this, but I just saying there's got to be better technology out there instead of just letting lithium burn for days.

And this is all underground and it's used with water, so it's hydro. I'd like to send you some information. I think you're exceptional at what you do. I'm glad you're willing to take on this opportunity that the Governor has given you for another term.

I remember visiting Cal ISO, and it was all the computer screens and everything that you have to track to make sure that when Californians flip that switch, the lights come on. So, thank you for being here today and let me ask those questions. And thank you for allowing me to sending you this information.

I appreciate it. Thank you.

Thank you so much, Madam Vice Chair. We're going to turn it over to Senator Eggman.

Good morning. Thank you for being here. You're very excited about energy. I like that. Can you talk a little bit about, as we continue to diversify the grid, the regionalization of the grid and the potential, like, even a national grid? Can you talk about that and the difficulties with that or potentials?

Well, okay, so the question is both what do I think about a regional grid a national grid?

Correct. As we look at the complication of regionalization, how much is that compounded going national?

I like that question, because that's a big thing. Okay. We just came from the IRC back in Washington in May. That's where all the ISOs meet and convene. And we met with the FERC commissioners, three of them. And the good news is, we were considered leaders in the country at this point, particularly on our queue management and the FERC 2023 Order.

The reason I say this is, as you know, FERC does regulate us, does manage us, and we have to adhere to a tariff in order to do business. So within the tariff is what we're allowed to do. So I like to start with regional first because even that's a stretch for a lot of people to get their head around. Right, because we formed the CAISO to manage our BA. Right.

And what happened was that as we created these laws to integrate high levels of clean energy, we're much better off being in a regional partnership. And what we learned from the EIM, the energy imbalance market that began now almost six or seven years ago, is we've saved $5.5 billion by moving power, about 5% of our real time power, over 22 BAs.

So what happens is the geographic differences start to be a plus, because when our solar goes down, there's still wind blowing, you know, in the west and vice versa. And when we've gotten in trouble, like back in 2020, the Northwest Hydro came and helped us. Right. And other parts of the west.

And then when the west and the southwest were in trouble the last two years, and I'm very excited about the rain because we stayed cool and we didn't have the same load demands, we were able to export power. So this importing and exporting, transporting a power on a western grid is critical to our ability to add 120 gigawatts of new power to this system, which is currently a 50 gigawatt system. Right. This is three times, almost three times bigger. Right.

So I would say the western, having a western energy market is critical to our success. And that's why we moved ahead with the day ahead market. So instead of just trading real time, we're now going to trade a day ahead, and we could be trading upwards of 80% of our power in the west. Okay. 80% of the power in the west, that's a lot of power moving, right.

Now people have to opt into that. That's a voluntary system. Right. But I'm really happy to say that, you know, PacifiCorp in Nevada committed and is now, you know, working with us for the EDAM that would launch into 2026. And also, Portland just signed, and we have commitments right now, and I'm very happy to say this from both SMUD and BANC and DWP. So I think it was critical that California utilities want to be part of the EDAM. It tells you they greatly benefit of that 5.5 billion we got.

You know, California benefited about a third of that. You know, so that's. So instead of curtailing hailing solar and basically dumping it, we were able to sell it into a market. Okay. Much better. We were also able to buy power. Right. At a reasonable cost as well.

So the regional market, the EIM, was critical to demonstrate that we could do it, right, in a cost effective way. And we did it through a joint governing. I don't know if you're aware of that. The CAISO, we have a parallel WEIM board. And about three years ago, the market design for the EIM, we share joint responsibility for.

Because in fairness to these other states, as much as they love the Governor's appointment and the Senate confirmation out of California, you know, I'm not sure they love the idea of us governing 80% of their market. Okay, so that's the energy market. Not an RTO, but a governing organization of an energy market. So I would say so far, that's the that's the path.

And that way we can have more assurance that the energy is clean.

Yes. And Senator, I mean, we, you know, we don't... FERC right now, I love the balance of FERC. I think a lot of people were concerned about FERC and who would serve as FERC members. But what I've learned over the last couple of years is that's one of the least politicized group.

They have to keep a balance of Democrat and Republicans at all time, no matter who's appointing. So it keeps, it means you can't stack a FERC board. Okay. And I think that's right because this is serious, serious energy management. Okay. It should not be politicized. Okay.

It should be, you know, it should be maximized and optimized to the best use. A national grid, you know, this, this is something DOE talks about, the Department of Energy. We created a new SPTO. Do you know this? It's a new supporting partnering transmission owner. We're bringing in SunZia. We greenlighted TransWest and SunZia.

This is a good strategy to save money on transmission costs because basically transmission gets planned in other states and it gets built, and it gets built in partnership with, with merchant private entities, which means we're not paying for it. We only start paying once it hits the California line. So this is a great way to save money.

Yeah, sure. Go ahead, build out your systems. Now the best example of that is the Western Spirit line coming out of New Mexico right now. We've got about 1.3 gigawatts of power coming out of New Mexico into California. Pretty much our CCAs and our munis offloaded that a couple years ago. But that's a real high risk deal.

Right. Because the private sector had to do that. That's what I was saying about public private is this is not going to get built on the back of all government. Okay. We're definitely in an enhanced partnership. So the private sector has to feel like they've got, they can see a pathway themselves, right, to take that risk.

So in terms of a national grid, I think you're seeing, it's being allowed. FERC, CAISO, DOE, they're allowing for these innovative new ways of doing business that I think that are helping us. So that's the closest to sort of nationalizing a grid is allowing these sort of private efforts. Does that...

Yeah. No, and it sounds promising. And when we're managing all of these things coming in, and I must have been bored last night because I watch too much of the Judiciary Committee on AI bills. How many... Yeah. How do, in all of these predictive models about when things are coming on off, how much AI are we using and how rigorously is it tested?

You know, that question came up with Senate staff a couple weeks ago, and that's a question I've also been monitoring and reading. So I read up about how we handle that. Okay. So it turns out the CEC does a basic forecast of what our needs are, right.

And that's, they go back to the LSEs, right, the load serving entities, and they ask them. And a lot of that's done based on history. Right. And the only problem with history at this point is it's not really telling us about the future, is it?

So I think the feeling right now is where AI and data, data servicing, data demand, you know, will be, Senators, is mainly in the east right now. But to pretend like we don't have Silicon Valley in the west is, I think it's short sighted.

And I think that's really a policy issue. Because we need to get our arms around how fast that data demand is going to be and how quickly AI, and everything's been exponential now. So it's hard to plan based on the past for the future in this area. So I personally would spend some time on that. Okay.

That's all I need.

By the way, the other question I'd ask is who's going to pay for that? Okay. Because. Okay. Okay. Yeah, yeah.

Thank you.

Thank you so much. Please, Mr. Senator.

Thank you, Mr. Chair. Or according to the headline, should I say Mr. Governor?

There we go. Good times. All right, thank you.

Are you Governor today? Oh, okay, fine.

He just wanted to, he wasn't gonna tell anybody, so I let the... I mean, it's all over the place right now, so it's not like I'm telling a secret or anything. I just want to let everybody know that, you know, it's a special day that we have the Governor with us in Rules Committee, so... I wasn't going to say that, but I do believe it.

But just as handsome. You'll take that.

Well, first of all, I certainly wouldn't want your job. I've toured Cal ISO and, you know, paid attention to what they have to do, and I certainly wouldn't want that responsibility on my head. So thank you for doing it.

I might make a suggestion next time we have a hearing like this, that we have a glossary of all the three letter and four letter acronyms. You've done a great job of explaining all of them. So I appreciate you trying to bring us up to speed on that. And I've gone through the research on you.

I'm going to support you. So my question, your vote isn't contingent on my question. So I just want to get some thoughts. And I've asked a lot of folks this same question, or either CEC or PUC or this. You know, California is trying to lead the world on zero emissions and getting to that point and having that goal. I've had an opportunity to tour other countries that are embracing small modular nuclear reactors as a part of that solution and part of that goal.

And just wondering if you had some thoughts on that and if you wouldn't mind sharing them with us on, is that appropriate for California? Should we be thinking about it? I know we've got a long ways to go before we would ever do anything like that, but should we be kicking off the conversation here in California about that?

Well, I can tell you, two years ago, back at the IRC meeting of all the RTOs, a presentation was done on this. I think in the east, they're seriously thinking about it. For sure. For California, that's tough because we've had a certain track record, we have a certain history.

And I think we basically said that we don't want to do that anymore. In fact, we basically fought to close all our nuclear facilities. Right. And the only exception we made to that now is Diablo because we're hedging with Diablo while this energy transition occurs.

So I think the good news for you is it will probably happen in the east. The bad news is, I don't think, I don't see it happening in the west anytime soon. I see the adoption of hydrogen, like, you know, see it coming from DWP. We have IPP, and I just think we're banking on that. We're banking on that being the next killer app, aren't we? Yeah, we are.

Thank you so much, Mr. Senator. Madam Board Member, again, appreciate you going in depth. And it just shows the knowledge that you have and the passion that you have for the job. We'd like to be able to talk about the gap that we see over the past few years and getting over the hump of potentially peak challenges in a day like this, or going into a two period of extreme heat.

Do you believe that we're a year away, two years away, to be able to meet that peak demand that we see? If you can kind of look in your crystal ball. We've heard we're about 24 months away, but what's your take on that?

The wild card is Mother Nature, isn't it? You know, if I had a crystal ball that could tell me... I sat here with Laird and Senator Grove, I think, six years ago, then again three years ago, and the extreme heat was a new phenomena, and now it's a regular occurrence. So it's like, you have to take it...

The way I would look at it is, I lived in Sacramento, and I've never seen a 110 degree day. You know, that's what today's going to be. Right. And when you go onto CAL FIRE and you see what's going on in the state right now, it's scary. Now, a lot of this was predicted.

You know, a lot of academics told us we'd be here right now. You know, Dan Mazmanian, I don't know if you know him, from USC. I remember seeing a modeling exercise he went through 10 years ago that showed us that we would have fires up and down the state and sea level rise.

Okay, so saying all that, do I think that we had some warning about where we are right now? We did. The good news is. The good news is August 2020 happened. Because there was a shotgun marriage with CEC, CPUC, and CAISO that both the Legislature and the Governor made crystal clear. So the enhanced working relationship of those three entities in the last three or four years means that we're in the best shape we can...

Unloading additional supply, especially when we need it, getting into those longer term contracts. Right. And then also focusing on in state build out, right, of looking at those peak periods.

Well, this is what we have that's different than 2020. We now have eight gigawatts of battery storage. Right. And we're going to have 10, 10. What that does is that mitigates that neck of the duck from five to 10. Then behind it, we put...

Well, we put the strategic reserve, didn't we. Once through cooling is being held in reserve, that's another two gigawatts. Right. And then I would say because of that cool weather and because we built out a regional, a regional energy market, we now have the best relationship with our western partners than we've ever had.

So, you know, they will import power to us. The other thing we did is we were bringing in much more contracted imported energy. Right. Like out of New Mexico. So right now, you know, you want me to say that in two years, we're going to hit a magic point, where...

What I'm looking for just for you, is that, look, I think that bottom line is from where we were in the depths that you just said in 2020 to where we're at now, we're in much better shape. There's still more work to do. Right. To be able to. But in particular of those days, which were incredibly tough. Right. We're going through Covid. We had massive wildfires and extreme heat and blackouts.

Right.

Important lesson learned. Right?

Yes.

Much more collaboration and then planning for the worst.

Yes.

Would you feel like we've hit bottom, we've stabilized, and now we're heading towards long term resiliency? Would that be an accurate statement?

Yes, as long as Mother Nature doesn't unload something super fierce on us, we anticipate...

Yeah. 100%.

Okay. No, serious. I mean. I mean, I'm joking, but I'm serious.

Yeah. Kidding, not kidding. Yeah.

Not kidding. Yeah, I'm serious. I'm terrified. Yeah. I'm somewhat terrified, but that's okay.

Happy 4th of July, everybody. Hey. See, there we go. Yeah. Yeah. All right.

Yeah. No, I think. I think it's appropriate to be... To be... To feel the urgency of the situation. How's that?

100%. Yeah. And I think, as Senator Laird alluded to, I think that where the Senate wants to be able to focus is where we can control the process. Right. How do we bring on larger scale energy plants, whether it's geothermal, onshore offshore wind, commercial grade solar, battery storage, and those associated transmission lines.

Which, candidly, and being from the North Coast, Achilles Heel of so much of what we need to be able to do. Right. Be able to get that energy into the rest of the market here in the state. And we'll let you close and we'll open it up for public comment.

Governor.

There we go.

I think the most important thing that can happen is the way that we've enhanced cooperation at the regulatory level and with state departments and agencies, we need that same level of communications happening on the permitting process because we have that emergency permitting. But we're... Yes. Okay.

What you meant was in the next two years, we have enough room on the grid to continue to grow at the clip of six to seven gigawatts. Okay. But then there's going to be this moment where if we don't have new transmission, we've run out of space. Is that... That's what you were talking about?

Oh, yeah.

Yeah. That's true. So. Yes. So feel like in, you know, the next three years, we really have to have expedited transmission.

Yeah.

To the key areas we can bring power on to the grid.

And more to come on that, I promise. And we're going to hope it's coming in August. So. Yes. Madam Board Member, Thank you. We are grateful for your testimony here today. We're going to now open it up for public comment.

We're going to welcome any individual who would like to be able to come forward to the microphone in support. If you could please step forward at this time. We're looking for public comment in support of Madam Board Member. Please come forward. It's nice to see you. Howdy. Howdy. Come on down. Hi.

I'm not used to being alone. Good morning. Tiffany Phan on behalf of a couple of entities in support. The California Efficiency and Demand Management Council in support, Intersect Power in support, MCE is in support, and also CalCCA. Thank you.

Thank you. Good to see you, Tiffany. Would like to be able to see if there's anyone else who would like to be able to speak in support, if you could please advance at this time. Hearing and seeing no one stand. We're now going to look for those who may be in opposition. Anyone in opposition, if you please advance to the microphone at this time. Seeing no one rise. We're going to bring it back to committee. Discussion, debate or motion?

Motion to move the conferee to the Senate Floor for full confirmation.

Thank you so much. Motion on the floor by Madam Vice Chair. Madam Secretary, can you please call the roll?

[Roll Call]

That's a 4-0 vote, on call. Madam Board Member, fabulous job today. Thank you so much. And thank you for your incredible work on behalf of the state. Thank you so much. Happy Fourth. Thank you so much. What we'd like to be able to do, if it's alright with the committee.

Is that we'd like to be able to lift the call on a few of our administrative items, if it works for each and every one of you. We're going to start with our bill referrals. And as we start lifting calls, we're going to invite Mr. Rechtschaffen to be able to come forward. Let's start with bill referrals. The current vote is four zero under bill referrals, item number two. Madam Secretary, can you please call the roll?

[Roll Call]

5-0 vote, final vote. That item is now closed. We're now going to be moving on to floor acknowledgments. The current vote is 4-0. Madam Secretary, can you please call the absent Members?

[Roll Call] Five to zero.

That's a 5-0 vote, final vote. Floor acknowledgments are now closed.

Ladies and gentlemen, Committee, we're now going to be turning our attention to Mister Rekshoff. And we want to say Mister Board Member, welcome. Mister Rekshoffen is here from the California Air Resources Board for appointment from Governor Newsom. Mister board Member, we welcome you to Committee. It's nice to see you, sir. Thank you so much.

Happy early fourth to you. We appreciate you being here. With a kickstart of your holiday weekend enrolls Committee, you're living the dream. You're gonna have two minutes to be able to provide opening testimony to the Committee.

We're gonna invite you to be able to acknowledge any family or friends who are here with you and who are watching online. I will give you a 32nd warning when you get close to that. Two minutes, sir. Thank you so much. You have had a career serving the people of California. The floor is yours.

Thank you very much. Senator Mcguire, I'd like to introduce my wife, Karen Kramer, who's here. Our kids are working. I don't think they're gonna be able to listen today. I'm very honored to have been nominated to the board by Governor Newsom.

I have spent my entire career in government or the nonprofit sector working on environmental, climate and clean energy issues. The Air Resources Board plays a critically important role in meeting the state's clean air, climate and equity goals. I hope to be able to meaningfully contribute to these efforts. As a board Member, I welcome your questions and discussion.

Mister Bormer. Thank you. We want to welcome Karen as well to Committee. It's wonderful that she's here. Thank you so much. We're going to open it up to be able to see if there's any questions, comments from the Committee, please. Mad if I share? The floor is yours.

Thank you, Mister Governor.

There we go. Good times.

Thank you. I guess it's not Mister Governor, it's just Governor. Right? Just the title. Right. Okay. Thank you, Governor. I appreciate the time that you spent with me yesterday. I do appreciate it. Or, excuse me, Monday. I appreciate that time. We talked about several things.

One of the things that I wanted to go over with you is that your expertise, and I say that because I really do believe it. You have the benefit of the Public Utilities Commission and prior service and now with the California Air Resources Board.

And I think that gives you a distinct advantage because you have the knowledge of how Legislature and the Governor impact our policies, impact the service, and how being on the California Air Resources Board impacts the cost of utilities. And you have that previous experience and knowledge.

Are you concerned or do you have solutions about how California can meet its clean air goals without creating burdens that will disproportionately affect small business or the middle class and continue to increase cost of goods and gas and fuel in the State of California.

I think we need to be very conscious of the most cost efficient ways to reduce carbon and meet our clean aeros through all our programs, the ones administered by our energy agencies and the Caiso. And the energy imbalance market is one of many tools we can use to hold down costs.

Programs at the PUC and programs at the airboard administers. We need to have a whole of government approach to deal with the climate problem. I think we have more of that than we've had in the past.

And a very important part of that effort is to make sure that rates are affordable to people and clean energy devices and electric vehicles. Charging access to our clean energy infrastructure is affordable to people. We can't leave people behind. So it needs to be top of mind in everything we do across the Administration.

Thank you. Monday, we also talked about not punitively punishing individuals that didn't have the technology or connectivity to the grid. Like for instance, we talked about farmers and electric forklifts that didn't have connectivity from PG and E in the Central Valley.

How can you punish them for not meeting the electrification goals of forklifts when there's no electricity to be provided to them? One of the things that we didn't talk about that I should have asked you was there's similar concerns with our railroad. It's a great transportation system here in the State of California.

Regulations that the Cal Air Resources Board sent last year requires 30 by 2035 to have emissions free locomotives when moving through the State of California. Is there technology out there and is that going to be feasible for us to be able to attain that? Is there something on the horizon that you know about that we don't?

And if we can't achieve that, will train still be able to mint goods to provide services to Californians in the State of California?

Well, let me respond to your first question first. We can't and we shouldn't and we don't punish people who can't electrify or meet our regulations if they don't have access to clean electricity or electricity, period.

And built into our rules at the airboard, including the forklift regulation that we just adopted, our exemptions and exceptions in cases where electricity hasn't been brought or can't be brought fast enough to the places where people need to fuel up. That's a critically important pragmatic solution to implementing those rules.

I'm not familiar in depth with our locomotive rule. I do know that all of our rules need to be cost effective and technologically feasible. So I'm confident even though I wasn't on the board at the time when the board took those actions it had in mind, are these technologically feasible?

Can they be reached in the time period necessary? But I think in all of carbs rules, the forklift rule I mentioned, all of the clean vehicle rules CARB staff builds in pragmatic outs and exceptions.

When technology doesn't materialize as fast as we think it's going to, whether or not it's because of COVID supply chain issues or delivery problems or electrification problems, that's core of all the rules that CARB adopts.

Thank you.

The last question I have is that the Senate Republican Assembly caucuses sent a letter to the California resources board regarding the regulations on the Low carbon fuel standards and the concern that we have is because of the cost of fuel, that carbs regulatory process on this for the lcfs could by your own estimate yours mean carbs own estimates increase cost of fuel by 47 cents a gallon.

Are you concerned that the program regulations are going to make the gas cost in the State of California go up? Is there something that you guys are going to do to try to address that?

And I say that because like my colleague across the desk for me from Stockton, we represent the Central Valley and we just don't get on a, I don't know, transit bus or a transit, you know, rail car or something. We drive where we go.

And so we're disproportionately impacted with the miles that we actually drive in the Central Valley compared to like a San Francisco or a Los Angeles. So are you going to address that? And if you are, can you tell me how?

Well, I can't tell you exactly how, but I can tell you absolutely. Absolutely. We can and will address that. The question of affordability of all our programs, including the Low carbon fuel standard, is top of mind.

I think the $0.47 estimate that you were referring to was probably contained in the statement of the economic analysis, the so called surreal, I apologize, Senator Jones, I don't want to use an acronym I can't remember calls for, but it's an economic analysis that agencies are required to undertake before any major rule is adopted.

And I think that was a worst case scenario. It's very hard for many reasons to predict what the impact of a program is going to have on gas prices the market's not transparent. The market's subject to many economic factors beyond the control of any state. The price of crude oil worldwide, refinery production, refinery outages, and so forth.

We're trying very hard to get a better handle and more transparency on what causes prices to increase.

I will say the Energy Commission, their division of Petroleum market oversight, recently concluded that over the past four years, 80% of the increase in gas prices that we've seen is a result of refining, distribution, and marketing activities, not the result of any environmental programs.

So all that's to say is it's a very big and important problem, one we're not neglecting. There are cost cap provisions in the Low carbon fuel standard, but we will continue to look at this issue very carefully.

I also want to point that over the long term, there's no question that as we electrify, consumers will save a lot of money because the cost of owning and operating electric vehicles and fueling with electricity is much cheaper over the lifespan of an automobile.

It doesn't, it doesn't in any way derogate from the concern you raise and the importance of dealing with any cost impacts right now.

Thank you. So I usually am pretty solid on where I am on comfreys and votes and stuff, but you surprised me. Remind me of my friend, the Senate pro tem emeritus. Right. Ideology, you know, ideology. We are ideological.

We are way on different sides of the spectrum on what we think the state's energy needs should be and where should we go and how you regulate those things. But you are, you listen, you take into consideration, you try to mitigate those things to bring people more to the middle.

You just don't blatantly go, this is, this is the way it is, and this is what we're moving forward. And if it costs you money, too bad you're not one of those people.

You prove that with the conversations that you had with my dairy industry, where I have the largest dairies, some of the most dairies in the State of California, when you addressed their digester issue.

And even though I think that you started at this side after you met with industry and how it impacted them, you were very helpful then to navigate that system. So I appreciate you being the person that you are, and I thank you for answering my questions.

Well, thank you very much, Senator Gove. I really appreciate those comments.

Thank you very much.

Thank you, Madam Vice Chair.

Senator, thank you. Nice to see you. And we had the honor of meeting the first time when I was in the Stockton City Council and then Governor, then Attorney General Brown came in and threatened to sue us on our General plan, saying, this plan is bad. And Cliff was his, so they weren't.

Well, I will say I was the only one who did not vote for that General plan. So I was able to be helpful, I think, in getting a good resolution for all of us. Thank you very much. But Cliff was very instrumental in hopefully kind of rewriting the future of Stockton from where our self interests were going.

And now where we've turned now. And while we're a decent sized city, we remain an agricultural industry part of it. Right. So I guess my question is around how do we continue to produce the best food in the world here in California as our. It comes in conflict sometimes with a lot of our climate goals.

And I know our farmers and everybody feel a lot of pinches, and it's not just because air and water, but that's part of it, and soil. So what do you think are the biggest things that we're working on that is going to ensure that we're able to maintain a healthy agricultural economy in California?

That's a big question.

And a lot of that has been accomplished by our sister agency, the California Department of Food and Agriculture, which I think has been extremely thoughtful in trying to move the agricultural industry to more sustainable practices through climate smart practices, through incentives and grants and many, many other programs, alternative manure management programs, dairy plus and so forth.

It's a tough question because some practices will have to change, but we want to do it in a way that we have a sustainable agricultural community.

I think for the Air Resources Board, one thing we can do, and this relates to what I was talking about with Senator Grove, is to make sure that our regulations are thoughtful and smart and don't wipe out businesses.

So, for example, in one of the board's most important rules dealing with clean trucks, the advanced clean trucks rule, there is an exemption for any business with fewer than 50 vehicles or less than $50 million in assets. And then even for that, for small fleets or for ones that operate in rural areas, there's longer compliance times.

So hopefully that will give a longer Runway to agricultural users. Likewise, we did something similar in the forklift rule we just adopted. We gave a longer Runway for compliance for crop providers.

And we also have money in the greenhouse gas reduction Fund that the Legislature approves every year, that some of that money's gone to promote sustainable farming practices. So those are some of the things I think we can work on, but we need to do it in partnership with our sister agencies. I'll say one more thing.

The Governor has very ambitious conservation goals. And agricultural lands are certainly identified as lands that can provide carbon sinks for a lot of emissions in the city.

Okay. And then just. I have a maybe 617. I think that's the number area in my district. Can you talk about how you think that program is rolling out?

And because there's still a lot of, you know, a lot of tension and complaints in the EJ community with offsets and everything, how are we working to accomplish that in reasonable ways? I know one of the issues is around my port, and people are very upset with the port all the time. So I guess that.

And I don't know if every 617 is by a port, but I know that's been a major source of contention in our area.

I think it was a bold statute by the Legislature because for the first time we said we're not just going to. Or the first time in this level of sophistication and detail, we said we're not just going to.

That if air quality rules benefit the state as a whole or the region as a whole, but we're going to look at local impacted communities and sources that are not otherwise regulated and communities that continue to bear the brunt of disproportionate harms. And the Legislature has allocated hundreds of millions of dollars for the program.

I think rightfully so. My sense so far is that the program has been working, but it's still going through growing pains and needs to improve and do more. I think it's resulted in a lot of collaboration with local entities. Not perfect. I understand there have been tensions at the local level. I don't know what those are.

We just approved last fall a blueprint for the next phase of AB 6117.

And in that we called on things like providing more technical assistance, assistance and support for the local air districts, consulting with them earlier so they can develop rules to retrofit existing sources, to provide more money for community emissions monitoring and reporting, to do community based enforcement.

And also there's a lot of communities that have just been on the edge that are not getting fully funded by the program. We gave more flexibility for those communities to develop emission reduction plans that are not as formal or binding as the first round, but nonetheless can achieve emission reductions. So I think it's a good program.

It's an important program. It's still going through growing pains. And we continue to try to work as closely as possible with the local air districts and local communities.

I mean, this isn't really part of your role. Do you see evidence of us all moving towards a direction where we have shared goals and a shared vision. Of. Where we're trying to go. When you say we, us.

Well, I guess I think about my 617 group in Stockton, and then I think about my, my mother in law who lives in the Oreville area, who's currently evacuated because of a fire, but says, you know, it's just summer. We just call it summer, like kind of with a blindness to anything else.

And it's just a different perspective. Right. It's always been hot. It's summer versus other people. Like we've got problems. Right. Because unless we agree, unless I think of what the issue is, it's really hard to work in concert together going forward. Well, that's a big question.

Yeah, I know, but in Chapter four. Yeah, I think. But it's the things that trouble me. Well, they trouble, they very, very important. I think there's some reason for optimism in California. There is a lot of shared intent and commitment to our big goals. I think more than there was 10 or 15 years ago.

And if you look at what we've done, we've accomplished a lot. We set a goal for 1.51.0 million emission vehicles in 2012. We would, we beat that two or three years ahead of time. The growth in renewable energy is astonishing. It's the growth in stores that Mary Leslie was talking about.

We've made enormous strides beyond what we thought we could make. We have a singular focus in California on equity, about making sure that we're not leaving communities behind and that we keep the energy costs and other costs affordable. We are deeply committed to doing that.

We did that through the pandemic in a way that no other state did. That providing with the Legislature's help, providing for forgiveness for people who are behind on their utility bills and committing to making greater access for our programs. So it's a big, tall task. And climate is very, very difficult. It's hard to make change.

It's very hard to make change. But I think there's a shared, I think more than there has been, there's a shared commitment to some of those big picture goals.

Thank you very much. My pleasure. Thank you, Senator. Amy, let's go to leader Jones.

Thank you, sir. If you've done any research on the panel Members up here, you probably discovered that I've been highly critical of CARB since I first got elected here in 2010 and not a big fan of a lot of their policies and procedures and actions and, and that's not any one person's fault.

So I'm certainly not going to, and you're new, so I would like to get your thoughts on a couple of things. And I've got a list of stuff, but I'm only going to the top two that are top of mind for me right now.

Vehicle Miles traveled is a topic that's, you know, across the state, carb's kind of leading the way on this. The County of San Diego has been trying to lead the way on this.

And, you know, we're at a spot now where, in my opinion, people that are driving electric vehicles, fully electric vehicles that don't purchase gasoline, are being subsidized by those of us that do buy gasoline through the gasoline taxes for construction and maintenance of highways and roads.

If we accomplish the grand goal that the Governor has, Governor Newsom has of zero emissions vehicles by 2035 or 20, whatever date we pick, how are we going to Fund highway construction and highway maintenance if nobody's buying gasoline and paying the gasoline tax?

And so that's long term, short term, how do we equalize the current situation of gas vehicles subsidizing electric vehicles currently on the road?

And when you say gas subsidizing electricity.

You mean because, I'm sorry, gas subsidies, the gas taxes, paying for road construction, subsidizing electric vehicles having access to those roads?

That is a very important issue. It's an issue that has come about now because we have, we've done well and we've been successful in having electric vehicles on the road, but we need to have electric vehicles pay their fair share.

You can argue they have less wear and tear on the roads, but they certainly have some wear and tear on the roads. I know we as a state, let's.

Dive into that quick. I wasn't going to bring that up, but how would you argue that an electric vehicle has less wear and tear on the roads than a gas vehicle?

Well, it may be smoother riding. It may be leaking oil. I don't know the exact details.

Okay. And the reason I ask specifically for clarification on that is electric vehicles are much heavier than gasoline vehicles because of the battery system. And so I think some people would argue that there are more wear and tear on the roads than the gas tank.

And I'm not qualified to. Okay, that's fair. But I stipulate, I agree with you. They have somewhere in tear for sure. Thank you. There's no question. We can't pretend otherwise. And we need to figure out an appropriate pricing strategy so that electric vehicles contribute to the maintenance of the roads that they use.

I know, we as a state have been thinking about that. I know that the California Transportation Agency has been. Been doing road pricing pilots. There's different ideas for what that should look like, and we need to do.

That, and we're moving in the same direction there as far as we have to do something. But currently, all of the models that I've seen and all of the experiments or conversation has been across the board on this vehicle mileage tax or the term that you just used. I apologize. It's been across the board.

Not specific to EV's, and so are you. I think I hear what you're saying. Are you saying that we do need to come up with a program that's specific to EV's so that they're paying their fair share? Or I guess expand on your personal thoughts on how we would do that.

I don't know the specifics, and I don't know if you may be referring to something in the works that I don't know. Well, I'm asking you if there's. Zero, I don't know the details. I know that we've been talking about it.

People have identified, academics, policymakers have identified this as a very real problem, and we need to come up with some type of solution.

I have seen different pilots in place administered by the transportation agency, maybe local, regional transportation agencies as well, seeing about how if you can charge people for the amount of miles that they use, something other than a gas tax, gas vehicles still pay full registration fees at DMV. I mean, electric vehicles still do that.

So that's, you know, they're still paying some costs of operating the system, but obviously they're not paying through a gas tax.

Okay, and then last question. I think you rightfully said in your comments that California has been very successful in lots of these programs. And I would agree with that statement. You know, one of the things I think that California has led in and been very successful is cleaning up the air.

And I remember when I was a kid in California, we had smog days, even in San Diego, where we had to stay in the school for the day because the air quality was so bad. We don't have those anymore. And so obviously that's something that's been successful.

But have we reached the point now where we've reached the law of diminishing returns when now we're looking.

Looking at regulating gas mowers, gas yard trimmers and things like that that have contribute so little greenhouse gas emissions to the air, but while at the same time we're watching China emissions become greater and greater and greater to the point now where a recent report says that China, their greenhouse gas emissions, now the United States and the European Union combined.

Does CARB have a role or can we presume a role? Can we make a role where we're going to start holding China accountable for the outrageous emissions that they're causing on the global scale?

Well, we're powerful at CARB, but we're not that powerful that we can control China. But I think it's important, Senator Jones. To distinguish, because the Governor keeps arguing that we're leading the world.

The governor's right here. The Governor Newsom, I don't want to say the real, you're the real Governor. I mean, come on.

I mean, Governor Newsom, I'm sorry I caused all this confusion this morning regarding who's the Governor, you know, but he makes these grand plans and grand proclamations that California's going to do this, California's going to do that.

Why don't we have some kind of trade agreement with China led by CARB to start holding China accountable for what they're doing to the air?

I don't think we can do that as a state, but let me, we can't enter trade agreements but try to. Do the Paris accord without the feds. More to the point, I would like to answer your question in two ways. First, I want to distinguish between greenhouse gas emission controls and just air quality controls.

I don't think we're regulating lawn mowers and handheld devices and other things like, or small, small appliances, small sources for greenhouse gas emissions. We're doing that for air quality reasons.

And unfortunately, despite the incredible success we've had in reducing smog, we still have the worst air quality regions in the state, in the country, in the Central Valley and in the south coast. And we are at a point of somewhat diminishing returns because we've controlled the biggest sources.

But nonetheless, there literally thousands of tens of thousands of people who live in areas in the state which violate the health based standards of the Clean Air Act. And it's our role and the role of the local air districts to come up with control measures to address that.

And some of them may be smaller and smaller sources because we've regulated all the Low hanging fruit and so forth. On the question of our role vis a vis China, I think the Legislature has made clear that they want California to be a leader on in reducing climate, and we do what we can.

We are uniquely vulnerable to the impacts of climate change. The insurance Commissioner just issued a report this week showing that we've lost seven and a half $1.0 billion. We suffered seven and a half $1.0 billion in losses and 500 deaths from heat waves just in the past five or 10 years.

We have a snowpack that is very vulnerable to climate change along coastline. We also have a lot of businesses that have come here to participate in sustainable climate control efforts. So we benefit economically from some of that. I think we do our part and hopefully we set an example for provinces and other jurisdictions around the world.

But we can't obviously control everything and certainly not the economy of something like China.

Thank you so much, Mister Leiter. We're going to turn it over to Senator Grove and we're going to look to Michael, if you don't mind. The mics are pretty Low, if we don't mind turning up the Member mics as well. Sorry about that. Thank you.

So I just, I had a follow up question because my colleague from Stockton mentioned mitigation, and so I did have a. It reminded me of a piece of legislation that was going through the agricultural community where I'm the Vice Chair, about foreign owned land. I'm sorry, foreign owned land. I'll tie that to you in just 1 second.

So there was a Bill going through building about foreign owned land, and it was interesting to me that PERS and investment portfolios came in, in strict opposition of that because they had investments in Canada who owned farmland in our central valley.

And the reason why they were upset is because they were allowed to present a piece of that portfolio as green because they were getting carbon offsets. Canada allows carbon offsets for farming trees, even though the trees are in California. Canada's portfolio allows it to be credited as green because they allow the trees to have carbon offsets.

But what we didn't realize during that hearing, it's not reciprocal.

So even though foreign countries have land in the Central Valley that allow them to have green offsets because of the trees, how come CARB doesn't allow our farmers to have mitigation for every tree they plant for a carbon offset, like you do a private business or a home that plants trees?

Well, we do have, we do allow offsets in California. We have strict protocols to make sure that offsets result in greenhouse gas emissions that would not otherwise occur, that they're verifiable, additional and enforceable.

I'm not aware of any protocol that deals specifically with the use of farmers planting trees on their lands, but we certainly have offset providers in California who are earning credits by reforesting and maintaining, not maintaining forests, but reforesting preventing deforestation. And the legislatures authorized the use of offsets in our cap and trade program in 2017.

The Legislature said you can have up to 8% of your compliance. I believe it's up to 8% of your compliance can be achieved through offsets. 4% has to be only. No more than 4% can be out of California. So the Legislature's indicated a preference for more of those offsets to occur within California.

So I guess my question again, just to clarify, is that farmers have trees in the Central Valley and they plant them, but they're not entitled to those offsets. We all know that trees are a natural carbon sequestration.

You have some of the largest farming communities in the Central Valley, the top three food producing counties in the world, and our farmers don't have the same reciprocal offset that other countries get for credit in that. And we don't get the same reciprocal offsets that they do for foresterization. And so why is that?

And why will Nutcarb allow them to use the cap and trade carbon offsets and the other offsets in the scoping plan to offset every tree they plant?

I can't comment on what this particular program in Canada because I don't know what the requirements are, but we approve offsets based on legislative direction. And in AB 32, the original climate change Bill passed in 2006, the Legislature was very clear.

It wanted to limit offsets to only those that are additional and enforceable, real, quantifiable, and there's a fifth requirement.

So in order to effectuate that legislation, CARB has set up a rigorous process to make sure that anybody who's engaging in voluntary reductions, like potentially the situation you're talking about, meets stringent requirements so that the benefits of those programs are real. So I don't know the specifics of the type of activity that you're talking about.

I don't know if the farmers have tried to get a protocol approved through CARB, but I think we need to be that stringent to meet legislative directions.

So let me ask it in a different way. You said real and quantifiable. If a farmer prints, I don't know, 60 acres, 360 acres of almonds or pistachios or whatever, avocados, they're all green leaves, they're all natural carbon sequestration.

Can you find out why CARB, which you sit on the board of, would not allow them to have offsets for every tree that they plant? Because they're meeting those requirements. They're real. They're real trees, and it's a real offset. And it's quantifiable and you can count it.

Well, another big. Yeah, I can certainly find out. And if you send the specifics of the particular program that people are concerned about. A big hurdle too, though is that the offsets have to be additional. You have to show that in the absence of an offset program, the planting of the tree the would not have otherwise occurred.

In other words, we don't want to give people credit for doing what they're doing anyway because that doesn't result in an additional reduction in ghg emissions. And recall that our climate goals, AB 32, SB 32, SB 1279, require dramatic reductions in the climate emissions. So we can't simply keep things status quo. Guess you had an almond orchard.

You're keeping it that way. We want to additional reductions, additional benefits to be realized to meet those goals.

Thank you for answering that. Thank you Governor, for allowing me to do that.

Thank you so much Senator. Vice Chair, Mister board Member. I'm going to go to public comment, and before we do, I want to see if there's any additional questions or comments from the Committee. I'm just going to very briefly talk about the Low carbon fuel standard and look forward to our continued discussion on fuel prices.

And I know that's something that we'll follow up on here later. And then the other issue of biofuel investment in the State of California greatly appreciated our opportunity to be able to sit down, have a conversation and we'll follow up sometime in July and greatly appreciated that. Thank you. Of course, follow up second. Thank you so much.

And Miss Chin want us to say always thank you to Lisa who will be following up and getting that set up. What we'd like to be able to do is open it up for public comment. Any and every one of you are welcome. Mister Brown is in the house.

Doing to the mic floor is yours first and last name and organization.

Good morning, Mister Pro Tem. Nice to see you. Louis Brown here today on behalf of the California Advanced Biofuels alliance, we represent the producers of biodiesel and renewable diesel in the State of California and are here in support of Mister Rekhshafen's appointment. Thank you. Thank you.

And I'd also like to reference Pacific Environment, support on their behalf as well. Thank you.

Thank you so much.

Thank you. Julee Malinowski-Ball on behalf of the California Electric Transportation Coalition, testifying today in support of Director Rechtschaffen's appointment. Vice Chair Grove, you hit on exactly why we actually like working with him and are here today, which is because he is 100% committed to better air quality and decarbonization.

And we can agree to disagree on things, but he's always, the door is always open and he's always keeping the conversation going on where the shades of gray are in a world that isn't very black and white in solutions. So that is why we're here today. Thank you for your time.

Thanks Julee. Good to see you. Good morning.

Morning. John Winger here on behalf of the Coalition for Renewable Natural Gas, also in support of the confirmation. Appreciate all the dialogue that we've had and look forward to future conversations on a lot of difficult policy issues. Thanks.

Thanks John. Hey, good morning.

Good morning Mister Chair and Members. Victoria Rome with the Natural Resources Defense Council, in support for the reasons stated. Thank you.

Good to see you. Thank you so much. Good morning.

Good morning. Virgil Welch on behalf of the California Carbon Solutions Coalition. Very pleased to support Mr. Rechtschaffen. I've had the privilege to work with Cliff for many years and proud to support him. Thank you.

Thank you for being here. Good morning.

Good morning Mr. Pro Temp and Senators. Jason Bryant on behalf of the Western United Dairies. We're in support of the appointment. Thanks very much.

Hope to get through well. Good morning.

Tiffany Phan on behalf of the California Efficiency and Demand Managed Council, in support. Intersect Power in support. Cal CCA in support and MCE. Thank you.

Thank you. Good morning.

Good morning. Bill Magavern with the Coalition for Clean Air, in support. Board Member Rechtschaffen brings valuable expertise and a commitment to cleaning up our air, protecting our climate and providing equity for all Californians.

Thank you, Bill. Hi, good morning.

Good morning, Mister Chair and Members. Michael Pimentel, Executive Director of the California Transit Association. Happy to be here in support of Director Rechtschaffen's appointment. I personally have worked with Director Rechtschaffen for more than a decade across his time in the governor's office, at the the CPUC and now at the California Resources Board.

I know him to be highly pragmatic, very approachable, very thoughtful in his deliberations. And he brings to his role at CARB a lot of firsthand expertise on what's going to be necessary for us to make the transition to electric technologies across all modes viable. And so again, offer our full support for the director in his appointment. Thank you.

Thank you so much. Hi, good morning.

Hi, good morning. Nicole Hutchinson with CALSTART, in strong support.

Thank you. Hey, good morning.

Good morning. Megan Mekelburg, on behalf of Valley Clean Air Now, we greatly appreciate the advice and support that the Board Member has provided to the valley. His unique experience leading in climate work, a variety of senior roles across multiple administrations, gives him valuable perspective in how California can administer its climate goals. So thank you and we are in strong support.

Thank you so much. Hey, good morning.

Good morning, Mister Chairman, Members. Theo Pahos, representing the Calpine corporation, very much in strong support of Mr. Rechtschaffen here today. I'd also like to say personally, I represent a number of different industries, as some of you know. And my dealings with him has been very fair, very reasonable, and always seems to find an answer. Thank you.

Thank you so much. We're going to do a last call for those who may be in support. If you could please come forward this time. This is going to be last call for individuals in support. If you could please step forward.

Seeing no one stand, we're now going to see if there's anyone who would like to be able to speak in opposition. Anyone in opposition, if you could please step forward at this time. Seeing no one stand, we're now going to bring it back to Committee, see if there's any last minute discussion, debate, or we'll welcome a motion.

We have a motion by Madam Senator, Senator Eggman. Thank you so much for your testimony. Truly appreciate it. Madam Secretary, if you could please call the roll.

[Roll call]

That's a 3-0 vote. We're going to keep that on call for Senator Laird. Board Member, thank you so much. Karen, thank you. And happy fourth. Thank you so much. All right now, ladies and gentlemen, we're going to be moving on to our final appointment of the day. We'll then be going into executive session.

We're going to welcome, Mr. Marino. Welcome, sir, Director of the Office of Data and Innovation. As Mr. Marino makes his way down to the dais. Mr. Marino, we're going to have you advance two minutes worth of opening testimony. During that opening, please feel free to welcome any family, friends who are here with you or watching online.

As you get close to that two minutes, I'll give you a 30 second prompt. Thank you so much. Running the new agency, very grateful for all the hard work. The floor is yours.

Thank you. Thank you, Mister Chair and Members of the Committee. As a lifelong Californian, I am humbled by this opportunity to serve my state, and I thank you for considering my appointment as Director of the Office of Data and Innovation.

I am grateful to the governor for entrusting me with this duty, and to Secretary Tong of the Government Operations Agency for her fearless leadership and guidance. I also want to recognize my wife, Ginny, and my mother, who are here with us today.

Our son Hopper is four years old and still too much of a wild man to invite into this chamber, so he'll be watching from preschool this morning. Ginny, I can safely say that if it were not for your love and unwavering support, I would not be sitting before this distinguished Committee today. Thank you. And I love you.

And of course, I want to recognize the team at ODI. Thank you for all reminding me every day what it means to be a humble and dedicated public servant. Innovation is not about the latest and greatest technology.

Innovation happens when someone seizes the opportunity of a new idea or technology and discovers how it can be used to improve our lives. By definition, innovation must be human-centered. This is why you will hear every great business leader insist that their company success and their ability to innovate depends on being customer-obsessed.

Prior to joining state service, I worked as a data journalist, empowering consumers with the necessary information to make informed decisions at critical moments in their lives, such as buying a home or taking a new job.

I did this by becoming customer obsessed and using every data point at my disposal to deeply understand their challenges and create strategies to effectively address their needs. I came to public service as a volunteer during the pandemic, at a time when innovation in how our government serves the public was desperately needed.

More than ever before, we had to empathize with people in order to serve them equitably and effectively. This is when I was introduced to ODI, and I was amazed to find that an organization was designed within state government to do exactly that.

ODI's mission is to partner with state departments in order to provide the tools, training, and support they need so that they may become customer-focused, truly understand their customers, and deliver equitable and exceptional services.

We must move away from the mindset that people have to come to us to get the service they need and recognize that we have a duty to meet people where they are and serve them quickly, effectively, and in a way that ultimately respects their dignity. This concludes my opening remarks, and I'm happy to address any questions you have for me.

Mr. Marino, thank you so much. We appreciate those opening testimony. I have a three-year-old at home, and I know what you mean. They could be alien at times. My goodness. It's good stuff. Absolutely.

Talk to me in 20 years.

There we go. Exactly. But we look forward to meeting Hopper, my goodness. Why don't we turn it over to Committee to see if there's any questions, comments, questions, comments from Committee at this time. Please, Madam Vice Chair.

Thank you again, Governor. Thank you for being here, and I appreciate you. During COVID I was in leadership, and we had heard about you and how you just came in and tried to figure out how to help fix things, even voluntarily.

And that just shows the character of who you are, first of all, not wanting anything in return, but just your immediate concern for the state and the situation we were in, trying to figure out how to operate from a level of not in person, if that made sense. I do have one question.

Do you anticipate that ODI, or the Office of Data Innovation, because I know people hate acronyms, will engage with the Legislature to determine if any of the Gin AI-related policies and procedures required or processes required by the Governor by executive order need to be codified?

And you're a person that, I mean, what you say will be very impactful, because, I mean, I think you're right now the smartest person in the room when it comes to this. And so we'll have to listen to what you have to say as an answer.

But I think that who you are as a person of character will balance that situation, regardless of who's calling the shots or not, if that makes sense. Go ahead.

Absolutely. And thank you, Senator. I appreciate that question very much.

It certainly is very timely, and we are really taking, I want to say, a whole of government approach at this time as it relates to our response to generative AI, certainly within the government operations agency and my colleagues at CalHR, DGS and then outside of our agency at GO-Biz and elsewhere, we are implementing on the governor's executive order, on Gen AI, and doing so within the purview of government operations.

So we recognize that it is absolutely critical to provide the guardrails so we can have safe and responsible Gen AI within the state. It's absolutely critical that we develop these skills within the state workforce because as it will be used for any number of nefarious purposes or by bad actors, our state workforce and our state professionals have to be able to use this tool in kind so we can address those challenges in addition to all of the great benefits that it can potentially bring to how we serve Californians.

All of that is to say that whether or not the regulations or guidelines that we're putting into place ought to be codified, I think you all will decide, and I am always happy to advise on these issues.

We are currently having regular legislative engagement sessions with you all and your staff, I believe now on a monthly basis as we work through the executive order. And I, of course, am always available to discuss any specific concerns or questions that you may have on the topic.

Thank you. Thank you. And I look forward to your confirmation.

Thank you, Madam Vice Chair. Let's turn it over to-- Please, Senator.

Thank you and welcome. In your responses to the Rules Committee, you really highlighted training and you highlighted the Cal Academy. What role do you think training is going to play and where would you like to see the workforce in five years because of the training you're working on as opposed to now?

Thank you for that question. I appreciate it very much because I believe that training is absolutely at the core one of our strongest strategies for government transformation that we have. Another strategy that we have is bringing on new talent to the state, which we will need to develop new strategies for and may be a longer tail.

So I believe that training is our fastest and most effective way to realizing the transformation that we want to see. The training that we've developed currently has to do with our response to the governor's executive order on embedding equity, where ODI was required to develop a set of service delivery standards that support equity.

And our first response in doing so was setting a plain language standard, a statewide plain language standard, that all Californian-facing materials be written in an 8th grade reading level.

And so we realize as a human-centered organization that we cannot set forth a standard such as that without providing the guidance and the training so our departments and our workforce can implement that.

When we first designed that curriculum and released it on CalLearns in partnership with CalHR, it, I want to say sold out, but it's offered free to all state workers, but it sold out within hours. And we've trained over 500 state staff and we've moved forward with making it asynchronous online training.

And so now we imagine that that's now going to be available at any time to any member of state staff that wants to take that.

Now, that's just one first step, but it's a very important first step because it is low lift, high impact, in that if we can bring our workforce along and being able to empower them with the ability to communicate in such a way that Californians can understand the services we're offering to them, that can make a very big difference.

I think the thing is, when I was a local government manager, we did a boot camp for managers because they just promoted and thrown into it. And we did a 32 hours training on discipline, performance evaluation, ADA, budgeting, all the kinds of things they were expected to do. And we had all these ways we could measure it.

Suddenly we didn't have appeals to the Civil Service Commission because people were handling it at the local level. How would you measure whether this training is working? What measurements would tell you that it's achieved what you wanted it to achieve?

That's a very good question and sort of a complicated one in that part of the training that we need to offer is, in fact, this performance measurement and performance management approach, in addition to training on modern analytics and customer success metrics, customer success metrics for departments to implement in their business operations so they can begin measuring their success in a more effective and modern way.

That is a big gap that exists in the state currently. And we understand why because government has not typically been approached as a business. We don't have a marketing department. We're the only game in town.

It's a good thing Senator Grove already asked her question. You would be teeing her up right now.

We don't have-- We're the only game in town. So we need to train departments in order to measure their success. And so it's really going to be, by extension of that and whether or not they are able to successfully implement and demonstrate, hold themselves accountable and demonstrate that they are being successful in measuring their success, being transparent about where there are gaps and then taking action to fill those, and we will be there to support them all the whole--

Okay, I think it just goes out without saying we're interested in that.

We're interested in how you measure it and how you see that it works over time, because obviously it'll circle back and instruct what you have in the training, because if you're not addressing what people need and not changing sort of some of the problem areas, you'll know. Well, thank you. I appreciate the responses to the question.

Thank you, Senator.

Thank you so much. Senator, any additional discussion. Please, Senator.

Hi, and welcome. So help me understand, too, will you decide on the projects, or will the departments bring a project to you? Right, like, so when we pass a bill and they say, you know, we would do outreach, we're gonna do all these things.

I'm always saying, what do we doing besides putting a dashboard up? Because I don't think the average California is looking at anybody's dashboard, right. And so we're very proud of our dashboards. I don't think it's effective.

So will you, like, do a comprehensive review of all the departments and how they're achieving customer service, or will they come to you and ask you for assistance, or will we do it?

Sort of all of the above. As a new organization, we are trying different ways to approach business development and customer engagement, things like that. I will say that what's, I think, to answer your question, what's core to our approach is healthy skepticism and ensuring that we approach every problem, every engagement with thorough discovery and problem definition.

So I'll give you a perfect example. The Department of Toxic Substance Control came to us as the Office of Data and Innovation and asked for us to build them an app. They wanted us to build them an app to collect public comment. And we said, we understand the outcomes that you want. You want more public engagement.

You want more public engagement from underserved communities, which, in order to meet their equity targets. But we're not quite so sure that an app is necessarily the answer.

And so before embarking on building an app, which we certainly could do, we did user research, and we went into the communities that they were serving, and we did research on whether or not apps were actually being adopted and downloaded by these communities, so on and so forth.

We discovered in that research that their primary engagement mechanism was a letter in the mail. And so that letter in the mail, you know, in the digital age, it's very frustrating for someone like myself, because to Senator Laird's question, we can't, we don't know if they opened the letter. We don't know if they received the letter.

And in a digital engagement environment, we can tell if they opened the email. And it actually streamlines that funnel of communication, because the action that we're asking them to take: provide us a comment, it greatly reduces their time tax because they don't have to sit down, write a letter, put a stamp on an envelope, and go to the post office. They click the button that says, click here to comment.

And so throughout that process, it was a very successful pilot. We increased their engagement and we helped them meet their goals, but we found the solution by talking to their users. And this is a very common theme across government. We are often approached already with a solution.

And so what's important about how we're approaching our work and how we're communicating to state departments, how we can ingest, engage with them, is that you have to be open to a problem definition. You have to be open to discovery, that you have to be open to a different way of doing things.

So in essence, you're bringing more systematic thinking into the department about what's the goal, who's the customer, what are we trying to do?

That is the goal. And this also relates to the training aspect, because that approach, in addition to a mindset shift and a culture shift, also requires certain skill sets that departments don't necessarily have in terms, or tools, in terms of how do I do this user research, what does the interview guide look like?

How do I make sure I'm doing it equitably? How do I reach the people that I need to reach? And those skills and those processes are well established in the private sector, and they know how to reach their customer and understand them. And so we need to bring more of those approaches into our state departments.

And how is it going hiring people to help you meet this goal?

So ODI is small. And what I like to say is that no matter how large you were to grow our organization, we would not be able to achieve this lofty goal ourselves. That's actually not the point. The point is that we'll never be able to be the capacity, we have to build the capacity.

And so, again, this is why training is so core to our mission and to our model. And it really is co-creation. So what we need to do is hire enough subject matter experts within our department to be able to pair with other departments to solve these problems alongside them, create playbooks, create training, and then hope to scale that along the way. As far as hiring within ODI, we're having good success.

We have a mixture of state staff and those from the private sector. And many folks who are at ODI right now were actually in my shoes, were volunteers during the pandemic, and then came on and have been with us this whole time.

I look forward to your confirmation.

Thank you.

Thank you, Senator. Mr. Leader.

Thank you, sir. Just a quick question on your resume. I noticed an interesting change of career back in 2018, 2020 and just wanted to, and I'm not asking anything personal or anything you don't want to share, just wanted to say, just give you an opportunity to kind of talk about that and see what led to that career change.

Are you, you're speaking to the--

From journalism into the digital innovation government operations agency?

Yes. Thank you for that question. I am delighted at that career change because I feel that I've found my path. When I was first working in the technology space, data journalism really is working within the content marketing divisions of these technology companies.

What we're doing is using the data that we, the big data that they have at their fingertips to provide insights to customers that are valuable in their own right, but also build trust for the brand and help to convert them into customers, right. And so these were mission-driven technology companies, which I was drawn to.

And I felt that in doing my work, I was serving the public as well as helping them serve their bottom line. I didn't know that doing this kind of work was possible until I volunteered and was introduced to ODI, was introduced to the cross-functional teams at the state who were doing this innovative work.

And I just couldn't look back at that point because of the fact that, especially because of the fact that I know I have the skills and experience that can make a significant difference in the way we deliver services at the state. And so at this point, I feel a duty to this service.

Thank you for that question, Senator.

And then just on a kind of specific question to the office, and can you kind of dive into just a little bit, and, I don't, maybe just encapsulate how best you can? Your office and the Department of Technology appear to have some of the same responsibilities and maybe even some of the same processes, projects and outcomes.

And so, you know, one of the things I'm concerned about is duplicating government bureaucracies, which I don't support. So how do you-- and I know your department, your office is new, so you're probably still trying to figure all this out. Where are you at on that? Where do you see it going? Can you address that a little bit?

Sure. Yes. Thank you for that question. It's an important question. It's a question that our colleagues in other state departments have, and it's important for our organization to continue to distinguish and tell our story so the state workforce understands how to work with us and CDT most effectively.

Our purview as it relates to training the state workforce to improve business processes that include the voice of Californians, redesign services, and then build the tools and the skills in analytics to measure that success is squarely in our purview. That is not something that is really owned by any other department across the state.

Where we really do connect and where it's a very good relationship, is that many of the tools and technologies that we're introducing as part of these processes need to be scaled. They need strong security and governance, and we can partner with CDT in that regard in a very effective way.

Again, we're small, CDT has a great breadth of power workforce, and so we are very complimentary in that regard.

And would you say that that arrangement at this point time is neutral, positive, needs some work?

Very positive. Very positive.

Thank you so much, Mr. Leader. All right. Thank you, Mr. Director. What we're going to do is we're going to open it up for any individual who would like to be able to speak in support.

If you'd like to be able to speak in support of this potential appointment, if you could please come forward at this time. Hey, good morning. Nice to see you.

Good morning, Mister Chair and Members. Courtney Jensen on behalf of the Technology Industry Association of California. We are pleased to support the appointment of Jeffrey Marino as Director of the Office of Data and Innovation.

TechCA's mission is to build better partnerships between government and industry by promoting transparency and best practices to help modernize digital services for all Californians. As you heard, with significant experience in both private and public sectors, Director Marino has the vision and leadership skills to drive innovation across California state programs.

More than ever, California needs strong leadership in technology, data and design as programs modernize to meet the growing expectations of those who live in California, Director Marino has the talent and character to influence change through strategy, collaboration and team building.

Representing more than 50 member companies ranging from the world's most recognizable technology brands to local consulting firms that support California agencies, TechCA is proud to support his confirmation. Thank you.

Thank you. Good to see you. Let's see if there's anyone else who would like to be able to speak in support, if you could please advance at this time. We're going to do a last call for anyone who would like to speak in support.

All right, let's see if there's anyone who would like to be able to speak in opposition. If you could please advance at this time. We're going to do a last call. Seeing no one rise, let's bring it back. Members, if there is discussion, debate or a motion.

Thank you, sir. I'd like to make a motion to move Director Marino to the full floor for confirmation.

Thank you so much, Madam Vice Chair. Mister Director, thank you for your time, your effort, your hard work. On behalf of the people of California, we're grateful you're here, we're grateful your family is here as well. It means the world to us, Madam Secretary, let's call the roll.

[Roll call]

That's 4-0 vote. We're going to keep that on call. Thank you so much. Hope you have a wonderful fourth and some well deserved downtime. Give our best to Hopper. Thank you.

All right, ladies and gentlemen, Committee, to those who are here in the audience, what we're going to do is that everyone who is here in Committee is on each vote. So what we'd like to be able to do is recess into the executive session. We're going to get this Committee on votes, then Members could leave.

We'll then go back into regular session, wait for Mr. Laird to come back from Labor Committee, get his vote at regular session, get his vote in executive session, and then go back in and officially adjourn. So, ladies and gentlemen, we're going to now go into executive session. Thank you all for being here today.

We're going to come back into regular session.

So we'll lay out the game plan. We're waiting for Senator Lair to be able to come back. He's on his way. We'll get-- Senator Laird is tromping through the heat. Senator Laird is back from the heat. We're gonna play. Hey, there we go.

Before we get into it, we're going to do the how hot is it game. How hot is it out there, Senator Laird? 115, he just said. All right. Hey, there we go. That's right. No, hey, there we go. It is definitely going to be warm today.

All right, so what we'd like to be able to do is we're going to run through 1 (a), (b) and (c). We're going to run through 1 (a), (b) and (c). That will be in our regular session. We're then going to recess, go back into executive session.

We're going to get Senator Laird's vote on executive session, come back into regular session and adjourn. 95 degrees, there we go. See, ball me. All right, here we go. We're now going to be moving into Governor appointees. Our first one is item 1(a), Mary Leslie. Current vote is 4-0.

Madam Secretary, can you please call the absent Members?

[Roll call]

5-0 vote. That appointment is included and out. We're now going to be moving on to item 1 (b), Mr. Rechtschaffen for the California Air Resources Board. The current vote is 4-0. Can you please call the absent? 3-0, hot dang. 3-0. Can you please call the absent Member?

[Roll call]

4-0 vote. That item is closed. Final vote and out. We're now going to move on to item 1(c), Mr. Marino, Director of the Office of Data and Innovation. Current vote is 4-0. Madam Secretary, can you please call the absent Member?

[Roll call]

5-0 vote. Final vote. We're closing it down and Mr. Marino is out and heading to the floor. We are now going to go back into our executive session. We'll get a quick vote, come back in a regular session, say happy-- So I do want to say thank you so much to the amazing rules crew.

Two more meetings left, everybody, huh? Two more meetings left. My goodness. Lisa's asked for four. But thank you so much. Have a wonderful Fourth of July weekend. We are now adjourned.