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May 04, 2023

Can the ‘California Effect’ Survive in a Hyperpartisan America?

The California Issue For decades the state has been setting policy for the whole

The California Issue

For decades the state has been setting policy for the whole nation. Now red states are pushing back.

Credit...Illustration by Erik Carter

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By Conor Dougherty

For a while this winter, seemingly every text message that Buffy Wicks received asked if she was running for Congress. Representative Barbara Lee, of California's 12th District, which includes Oakland, had announced that she would enter the race for Dianne Feinstein's soon-to-be-vacated Senate seat. This decision by Lee, who is 76, created a rare opportunity for the next generation of California Democrats to vie for federal office. And Wicks — a 45-year-old State Assembly member who lives in Lee's district and was last re-elected with 85 percent of the vote — seemed like a natural candidate.

Soon enough, however, Wicks put out a statement that, humbled as she was by the suggestion, she wouldn't be seeking the seat. In March, I met Wicks at her office in Sacramento, where she was seated between a window overlooking the city and pictures from her years in the Obama administration. She told me that aside from the ego boost of having "House of Representatives" in her obituary, there was little for Congress to offer her. Her current job is bigger and more important, she argued, than much of what happens in Washington. "I pass big bills here," Wicks told me. "Why would I walk away from my ability to do that and go be one of 435 people in a very divided House that does not have a great track record of actually accomplishing anything?"

Consider, she said, an internet-privacy bill she drafted last year, called the Age-Appropriate Design Code. It requires websites to ratchet up their default privacy settings to protect children from online tracking and data collection. The bill was signed by Gov. Gavin Newsom over the opposition of the tech industry, which argued that it was too complicated to implement and tantamount to a state law setting national policy. That, in fact, was the point: Wicks passed the law with help from a member of Britain's House of Lords, who had created similar regulations in her country, in the hope that if Britain and California passed the same rules, a global standard was likely to follow.

California has been so successful at bending national policy in its direction that academics have taken to calling the phenomenon the California effect. From labor and consumer protections to corporate governance, energy and animal-welfare measures, California's laws are the most widely copied in the nation. Most corporations can't afford to ignore its mammoth market (its $3.6 trillion economy is the world's fifth-largest, exceeding India's); they often end up adopting California's rules across the country because doing so is cheaper than trying to craft two separate sets of products and policies.

For decades, California has been able to fund a sprawling administration whose agencies have federal-size budgets and wide latitude to set and enforce rules. But as the nation has fractured along cultural and economic lines, Republican governors, like Greg Abbott of Texas and Ron DeSantis of Florida, have sought to experiment with legislative activism of their own — a kind of anti-California effect. Recently, a number of red states have tried to create conservative guidelines for textbooks, explored ways of preventing companies from paying for employees’ abortions, tried to stop (or at least slow) the move away from fossil fuels and sought to limit Medicaid patients’ access to gender-transition care.

Newsom wants California to aggressively meet this new challenge. Aides to the governor say he often shows up to morning meetings fuming about some new bill signed by a Republican governor, seeking ideas for how to counter. When Texas passed a law allowing private citizens to sue abortion doctors, Newsom used it as a model for legislation that would allow Californians to sue manufacturers of illegal guns. When Walgreens announced that it would not sell mifepristone, an abortion medication, in certain states, Newsom responded on Twitter, writing that California would try to end a contract with the pharmacy.

What Newsom aspires to is a whole new kind of California effect, one that goes way beyond environmental and consumer regulations — regulations that, even though they had national impact, were first and foremost about improving life for California residents. This fight is purely about changing behavior beyond the borders of his state. Newsom describes the gun law as his "first foray" into this area, promising that he is "barely winding up." If companies accede to Republican demands to deny abortion coverage or curb diversity and clean-energy efforts, he warns, they should expect to pay a financial price in California. "All these corporations, they’re silent, they’re complicit in all of this," Newsom says. "In the spirit of Reagan, it's a time for choosing."

The California effect began with smog. In 1972, Mary Nichols was a young environmental lawyer driving through the haze to a Los Angeles courthouse, where she hoped a legal victory would help improve the region's air pollution. Two years earlier, Congress passed the Clean Air Act, and Nichols's firm was arguing that the law required the E.P.A. to compel California to create a plan to solve the smog problem — in other words, that it was the federal government's responsibility to push the state to act. The case was ultimately successful, and it was the start of Nichols's career as one of the auto industry's most powerful regulators. From her perch on the West Coast, she would spend the next five decades doing the reverse: Instead of using the federal government to change California, she would use California to change the nation.

Seven years after the Clean Air Act lawsuit, Gov. Jerry Brown appointed Nichols to be chairwoman of the California Air Resources Board (CARB), a pollution agency created in 1967. Around that time, Congress, in response to the demands of the influential California delegation, gave the state a powerful regulatory tool: a waiver that allowed California, and only California, to set air-quality standards higher than the federal government's. The auto industry lobbied fiercely against the waiver, worried that California would use it to determine policy for the whole country, which of course it did: As CARB forced carmakers to reduce particulate matter and toxins like nitrogen oxides and ozone, the rules Nichols put in place became the national standard.

David Vogel, an emeritus professor of political science at the University of California, Berkeley, who coined the phrase California effect, argues that businesses ultimately came to appreciate California's environmental rules. "Having cleaner air benefited just about every sector of the Los Angeles economy," he says. "Carmakers had to adjust, but they came to accept them, and particular firms saw them as a competitive advantage." California's regulatory climate encouraged innovations like the low-emission engine Honda produced in the 1970s, the three-way catalytic converter Volvo pioneered later that decade and Tesla's popularization of electric vehicles. Each of these developments prompted rivals to continue innovating to keep up.

As California became the de facto regulator of the auto industry, Nichols says, lawmakers recognized that their power could be used elsewhere. "People realized you could do the same thing in other areas," she told me. "It showed that we could take on a problem and really expect things to change — that we didn't have to just try to convince the federal government to act." In recent decades, California's appliance and energy rules have set national standards for televisions, washing machines and a host of battery-operated contraptions as diverse as golf carts and electric toothbrushes.

Today the idea that California can — and should — create rules beyond its borders is so soaked into the way of doing things that when you ask a policymaker to comment on the topic, the reaction is, as a lobbyist named Jennifer Fearing puts it, "Well, duh." Fearing works exclusively for nonprofits, from an office that sits off the Capitol Mall in Sacramento, amid stuffed animals and recycled goods that are souvenirs of various environmental and animal-protection campaigns. Last year, she helped shape Senate Bill No. 54, which aims to eliminate single-use plastics and force manufacturers to reduce the amount of plastic in their packaging. The hope, she says, is that companies will redesign their packages nationally.

On the day we met, Fearing was preparing to go into a hearing room and push for a separate bill that would require all washing machines sold in the state to be affixed with a new kind of filter to capture microplastics. The familiar pattern followed: An industry lobbyist objected that the manufacturers couldn't meet the standard; the committee moved the bill anyway, confident that they would figure it out.

Governor Newsom puts a lot of stock in the idea that the nation still sees California as a cultural barometer. "It's moral authority," he says. "It's only through the power of emulation that states follow California's lead." In the 1970s, when the state was a beacon of postwar growth, that position needed little defending. With 39 million residents, California is still by far the nation's most populous state. That's nine million more than Texas (the nation's second most populous), so it will remain in that position for a good deal longer. But the boom years are long past over: Its population is now declining. Many residents are heading to more affordable Southern states, whose expanding subdivisions and elementary schools resemble the California of the 1950s and 1960s — and whose politicians are now experimenting with flexes of their own.

Ron DeSantis, who recently announced his candidacy for president, is clearly the archrival here, though Newsom tries not to mention him by name, referring to him as "this guy down in Florida." More than any other Republican, DeSantis has tried to position Florida as a kind of red-state alternative where everything from Covid shutdowns to education and energy policy communicates the opposite of California values. At times his agenda is so extreme that it seems performative. Earlier this year, for example, DeSantis's proposed budget included a tax break for gas stoves, which California is trying to phase out to help combat climate change. There is also the ongoing battle with Disney (a "California-based corporation," as DeSantis calls it) over a special tax district where the company operates its theme parks. The conflict began after the company criticized a Florida law that limits classroom instruction about gender identity and sexual orientation.

In January, Florida announced it would block the A.P. African American studies course from its high schools, rejecting the curriculum as historically inaccurate. When the College Board, the nonprofit that sets national college-placement exams like the SATs and A.P. subject tests, released an updated curriculum in February, topics like mass incarceration and Black Lives Matter were reduced or removed. Some textbook makers already produce alternate versions for high school American history classes that omit material portraying the nation's legacy of racial discrimination as something that continues today.

Newsom told me that his tweet threatening to cancel a Walgreens contract was in part retaliation for Florida's actions on education: "You want to know why I did that to Walgreens? That was my blood boiling on the A.P. on Black studies." He felt that the College Board had "completely capitulated" to conservatives, but he didn't have the leverage to do much about it. That frustration prompted him to act even more quickly when Walgreens made its announcement about mifepristone several weeks later. Unlike the situation with the College Board, Newsom had a clear idea of how to put pressure on Walgreens. "We are going to use our market power," he told me. "Absolutely."

Legal scholars worry that this interstate rivalry threatens to return the country to the trade wars of two centuries ago, when states tried to disadvantage their neighbors and hamper cross-border industries. In the 19th century, the Supreme Court largely ended these fights by establishing the dormant commerce clause — ruling that because the Constitution grants Congress the power to regulate interstate commerce, states are prohibited from engaging in protectionism. Now, experts warn, a new kind of trade war is brewing, only this time the impetus is politics instead of actual trade. With Congress in a chronic deadlock, governors of America's most populous states are trying to resolve the country's most divisive issues by crafting laws that target one another.

"One of the virtues of federalism is supposed to be that each state's voters get to determine laws in the state they live in," says Ruth Mason, a law professor at the University of Virginia. "But if there's no limit on one state's ability to export laws to another, then voters in smaller states will not get to determine local law because California or Texas will do that for them." Newsom isn't moved by the plight of smaller states, but he does sympathize with companies — pharmacies, publishers, insurance companies and investment managers — trying to do business in a deeply divided country. "This is not my natural state," he says, referring to the combative stance he has taken. "But as I pray, I’ve got to move my feet. The rights regression and rollback is happening in real time. I’m not going to look back and regret that I did not meet this moment."

The Supreme Court's rightward shift would seem like a potential check on California's ambitions, but conservatives tend to give states wide latitude in local matters. Last month, in a 5-4 ruling that blurred ideological lines, the court upheld a California initiative that bans the sale of pork unless farms — almost all of which operate out of state — create larger pens for sows. Proposition 12, as it's known, was widely seen as a test of just how far states could go in passing regulations whose impacts are mostly beyond their borders. Pork producers could just decide to stop selling ham and bacon in California, but many are unlikely to, given that according to the National Pork Producers Council, Californians consume about 13 percent of all U.S.-raised pork. Some large producers like Hormel Foods have already said they will comply.

Mason, who has written about the case, argues that the ruling charts a path for a new class of "rivalries and reprisals." "States have long had wide latitude to ban products for safety reasons," she says. "The question in this case was whether a state could ban a product purely for moral reasons. You may agree with California, but just wait until a state whose politics you disagree with tries to do it."

Justice Brett Kavanaugh, who sided with Chief Justice John Roberts and Justices Samuel Alito and Ketanji Brown Jackson in dissenting in part from the majority opinion, raised exactly that point. How far is this going to go? What if a state banned goods produced by workers who make less than $20 an hour? Or goods made by employees whose companies don't give them abortion care — or goods made by employers that do, or fruit picked by undocumented immigrants? Kavanaugh was echoing the concerns of 26 states that submitted a brief in support of the pork industry. Joining the brief was a predictable collection of agricultural and Republican-leaning states like South Dakota, Texas and Wyoming that seemed like natural opponents to the law. But amid all the red states who signed on to argue that the law was a bad idea — that it gave California too much power to set national policy — there was a notable absence: Florida.

Erik Carter is a graphic designer and an art director in New York. His work often plays off an internet aesthetic and mixes media to create humorous juxtaposition.

Conor Dougherty is an economics reporter and the author of "Golden Gates: Fighting for Housing in America." His work focuses on the West Coast, real estate and wage stagnation among U.S. workers. @ConorDougherty

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