The basic notion is a good one, but this is a half-way measure that does not fully solve the problem while creating administrative burdens and confusions. For example, would the entire bench of the circuit or only if the applicable division hear en banc reviews? How will California lawyers deal with conflicts between the two “districts” covering their state when the issue depends on State law? What happens when the “districts” construe Federal states differently for San Diego and San Francisco; will Federal law vary depending on what part of the state one is in? Suppose a business is in San Francisco and Los Angeles, which district’s rule should it follow?
Besides, it might be that the Judicial Council has the power to do this, or something close, without the help of Congress.
A better plan would be to keep the Pacific districts (CA, OR, WA, HA, Guam and Northern Marianas) in the Ninth Circuit and create a new Twelfth Circuit for the rest. This would consolidate the states having generally similar cultures in the same circuits. Something like this was done when the Eleventh Circuit was carved out of the Fifth.