New governor tackles affordable housing, CEQA and the tech industry in State of the State

SACRAMENTO -- Gov. Gavin Newsom had plenty for legal watchers in his first annual State of the State address. He doubled down on the state's new legal battles with cities over affordable housing and announced "a comprehensive plan" for dealing with the Pacific Gas & Electric Co. bankruptcy.

Newsom also touched on environmental policy, labor law and his differences with the President Donald J. Trump's administration. He promised unspecified new action on criminal justice changes and set up potential battles with California's technology industry.

The new governor wasted no time in wading into legal wars after taking office on Jan. 7. Attorney General Xavier Becerra sued the city of Huntington Beach at his behest for allegedly not complying with state housing laws. California Department of Housing and Community Development v. City of Huntington Beach, 01046493 (O.C. Super. Ct., filed Jan. 25, 2019).

This led some to ask why the former San Francisco mayor was not taking action against one of several Bay Area cities that may be out of compliance. But on Tuesday, Newsom said he also might sue some, though not all, of the other "47 other cities across California" he accused of neglecting their housing requirements.

"As a former mayor, the last thing I wanted to do was start my term by suing a city," Newsom said. "But they left us no choice. This isn't about picking on Huntington Beach. They happened to be first because of a statute of limitations."

This drew praise from the Legislature's most-outspoken affordable housing advocate.

"The governor made clear that when we say we need to end our severe housing shortage, we mean it and must take firm steps to create a bright and abundant housing future," said Sen. Scott Wiener, D-San Francisco, a former San Francisco deputy city attorney, in an emailed statement.

Newsom also said he would seek "expedited judicial review on CEQA" for housing as has been done "for professional sports." This could lead to opposition from environmental groups that have long used the California Environmental Quality Act in court.

The governor said he has created a "strike team to develop a comprehensive strategy" concerning the PG&E bankruptcy "within the next 60 days." The goal will be to protect fire victims and ratepayers while maintaining the energy supply though it remains to be seen what influence the state can have over a federal bankruptcy proceeding and PG&E has not been found liable for any of the fires.

"My administration will work to make sure PG&E upholds its obligations," Newsom said. "I have convened a team of the nation's best bankruptcy lawyers and financial experts from the energy sector."

Newsom said he would downsize the massive "twin tunnels" water project to a single tunnel leading south from the Delta. Meanwhile, he will push the California High Speed Rail Authority to focus on the Merced to Bakersfield portion of the line running through the Central Valley.

But he insisted high speed rail will go forward and he had no interest in sending "$3.5 billion in federal funding ... back to Donald Trump." Both projects have been major targets for litigation.

While the new governor has often been seen as close to the state's technology industry, he made two announcements that will likely be controversial in Silicon Valley. First, he proposed a new Commission on California's Workforce & Future of Work.

"It's time to develop a new modern compact for California's changing workforce," he said, adding, "This is much bigger than Dynamex," in reference to the 2018 state Supreme Court case that made it harder to classify workers as independent contractors. Dynamex Operations West, Inc., v. Superior Court, 2018 DJDAR 3856.

He also announced plans for a "data dividend," under which technology companies would compensate consumers for the sale of their information. This could put his administration at odds with some of the same technology industry groups that opposed the new data privacy law,.