After years of criticism, the California Public Employees’ Retirement System made headlines in December when its board voted to lower the expected rate of return on investments from 7.5 percent to 7 percent over the next three years. The move was billed by board members as a responsible reaction to years of unrealistic projections followed by unimpressive returns.

But on another front, CalPERS continues to defy critics who say the giant pension agency should focus like a laser on achieving strong returns instead of using investments to make political statements.

Early last year, the CalPERS board rejected a staff recommendation that it resume investing in tobacco stocks after a 16-year moratorium. The board not only rejected that advice, in December, it broadened the ban to include more companies with ties to the tobacco industry.

Now a freshman lawmaker from Silicon Valley – California’s first Indian-American state lawmaker – is pushing for a bill with the potential to cause billions of dollars in investment losses for CalPERS.

Assemblyman Ash Kalra, D-San Jose, launched his legislative career by introducing Assembly Bill 20, which would require CalPERS and the California State Teachers’ Retirement System to sell all their investments in companies involved in building the disputed Dakota Access pipeline. For CalPERS, this divestment would start with the forced sale of about 1 million shares of Energy Transfer Partners, the pipeline’s primary builder, a Dallas-based Fortune 500 firm.

Divestment would not prevent Dakota pipeline’s construction

The Army Corps of Engineers has given its final approval to the project. As such, critics say Kalra’s bill – if enacted – would amount to a costly gesture of disapproval that achieved nothing beyond signaling the state of California’s allegiance with the Standing Rock Sioux tribe and environmentalists who have protested the pipeline plan.

CalPERS staff strongly opposed Kalra’s proposal, sayings such a forced divestment would yield losses of at least $4 billion. CalSTRS has no estimate of the cost yet.

The toll is so heavy on CalPERS because the ban would be so broad, applying not just to energy firms and their contractors but to the banks that financed the 1,100-mile project. Many of these banks have otherwise excellent relationships with California businesses and government agencies.

Despite staff concerns, last week, the CalPERS board took its first step toward an activist position on the project. It called on Energy Transfer Partners to choose a new route away from Indian land, echoing the concerns’ offered by opponents. A CalPERS statement warned that without a route change, it was possible that there could be “escalation of conflict and unrest as well as possible contamination of the water supply.” This, CalPERS said, could lead to a costly public backlash against the banks.

Kalra praised CalPERS’ statement but said he would continue pushing his bill. He depicted the state government as a “significant investor in the Dakota Access Pipeline” that should take steps to “respect the sovereign rights of the Standing Rock Sioux tribe and raise awareness on the environmental impacts” the project would have on tribe lands.

Trump’s OK of Dakota project could affect state Democrats’ view

CalPERS, which has a portfolio last officially estimated at $309 billion, prefers lobbying the companies it invests in to change their policies rather than make divestment threats. Some coverage of the statement from last week suggested this was just such a measured step, not a first sign of weakened opposition to Kalra’s bill.

But how CalPERS deals with Kalra’s legislation could become caught up in the rhetorical war between state leaders and the Trump administration, which cleared the way for a project blocked by the Obama soon after Donald Trump was sworn in Jan. 20.

State leaders’ eagerness to cast themselves as enemies of Trump has been the target of mockery by Sacramento Bee columnist Dan Walters, who questions how this will help California deal with its many problems.

But Trump’s hardline position on immigration and embrace of fossil fuels continues to infuriate state Democrats. In a state in which Trump lost in November by more than 4.2 million votes, the downside to opposing him at every turn seems minimal.

Nationally, this was most conspicuous with the furloughs of air-traffic controllers. But in California, there was also some specific obnoxiousness in Port Hueneme. I wrote about it here in August. The short version: the Army Corps of Engineers said its budget was so starved by sequestration that it couldn't afford to do dredging and coastal maintenance that are needed to prevent water damage to coastal neighborhoods.

Ventura County Star columnist Timm Herdt accepted this premise uncritically and wrote a piece about how evil House Republicans were to blame. Nice legwork, Timm. Great insight.

As I wrote at the time …

“The Transportation Department, parent to the FAA, has a $73 billion annual budget. Of course Transportation Secretary Ray LaHood could find another way to make his department’s share of budget cuts required by the March 1 sequestration of funds.

“Another word for this is ridiculous. The same Transportation Department has sent $3.5 billion to California for our bullet-train boondoggle.”

Soon after, Congress figured this out and ordered transportation officials to prioritize.

Uncritical regurgitation of Obama talking points

Now along comes a California example of the Obama administration’s attempt to make the sequester as bad as possible — and it finds an accomplice in Ventura County Star columnist Timm Herdt, who in a 700 words doesn’t even raise the possibility that the White House may be to blame for failing to prioritize federal spending or demand smarter decision-making from Army engineers:

“If there is any place in America where one can take a photograph of the obtuse federal process known as sequestration, it is in a small coastal community in Southern California.

“In the city of Port Hueneme, a beach that is typically as wide as a football field has disappeared. The Pacific Ocean is encroaching. It has already wiped out an outdoor shower used by beachgoers and undermined a sidewalk. It is threatening to breach a city street called Surfside Drive. Beyond that are homes, condominiums and public facilities. …

“‘We’re not a beach-resort community,’ says Mayor Ellis Green. ‘We are a humble town.’

“The winter is approaching, which will bring with it storms and higher tides. The seawater is creeping toward what Green calls a ‘catastrophe’ that could cause tens or hundreds of millions of dollars in damages.

“If this happens, it will not be a natural disaster. It will be a super storm brought about by federal budget paralysis.”

Later on, Herdt more specifically blames “leadership in the House” for refusing to ride to the rescue of the Army Corps of Engineers and fund needed work.

Never mentioned: Army Corps’ budget has gone up

Does he mention that the Army Corps of Engineers multibillion-dollar civil works’ budget is higher this year than last year, which certainly suggests what we’re seeing in Port Hueneme is sequester theater?

No.

Does Herdt mention that the sequester was the White House’s idea?

No.

Does Herdt mention the reports that lots of agencies that feared doom and gloom quietly prioritized spending and felt few effects from sequestration, as the Washington Post, Reason and many other publications have repeatedly reported?

No. Hey, Timm, even the Canadians  have figured out sequestration isn’t what it was billed. And note that an L.A. Times report insinuates this is all theater as well.

But in California, if you’re an opinion columnist, your default position is usually to find a way to blame everything on evil conservatives.

And so you conclude that the federal government — which had a $3.5 trillion budget last year and a $3.5 trillion budget this year — can’t handle its customary Port Hueneme protection responsibilities because of House Republicans.

Feel free to groan. And groan. And groan some more.