Referendum on Calif. greenhouse law appears headed for voters

SAN FRANCISCO (Legal Newsline)-California voters will likely be asked in the November general election if the state's greenhouse gas law should be put on hold for rosier economic times, a postponement the Democratic frontrunner for attorney general, Kamala Harris, said Monday would be a colossal mistake.

Supporters of the effort to significantly overhaul the Global Warming Solutions Act said Monday they have submitted to officials ample signatures to get their issue on the already-packed Nov. 2 statewide ballot, which will determine the next governor, attorney general, secretary of state and insurance commissioner, among other constitutional posts.

Much to the chagrin of Harris, the top persecutor in San Francisco, and Republican Gov. Arnold Schwarzenegger, the proposed ballot measure sought by a handful of business groups would suspend a state law set that set increasingly stringent caps on greenhouse gas emissions, leading to a 25 percent reduction by 2020.

The proposition if passed, would bar the law-- known as its legislative incarnation, Assembly Bill 32 -- from being implemented until California's beleaguered economy improves. Specifically, the state unemployment rate would have to sink below 5.5 percent for at least four consecutive quarters to put the statute on track.

The landmark law was enacted in 2006, when California's unemployment rate was 4.8 percent. In March, the state's unemployment rate was 12.6 percent, more than seven points higher than would be allowed for AB 32. California's unemployment rate has been above 5.5 percent since July 2007.

AB 32 requires the California Air Resources Board to develop regulations and market mechanisms to reduce California's greenhouse gas emissions by 25 percent by 2020. Under the law, the first mandatory emissions caps will begin in 2012 for significant sources of greenhouse gases, such as power plants and oil refineries, and ratchet down to meet the 2020 goal of a 25 percent reduction in emissions.

The industry-backed organization seeking to amend the controversial greenhouse law is the California Jobs Initiative, which calls itself a coalition of taxpayers, employers, food producers, and voice for energy, transportation and forestry companies.

The group said today it submitted about 800,000 signatures, or nearly twice the 435,000 needed, to get a proposition on the ballot. Officials have until June 24 to verify the thousands of petition signatures.

The signature-gathering effort was largely bankrolled by out-of-state industry giants Tesoro Corp. and Valero Energy Corp., both Texas-based gasoline makers.

Out-of-state companies spearheading the campaign, at least financially, has sparked widespread criticism from some of the greenhouse law's most ardent supporters, including Harris, the district attorney of San Francisco.

The Democrat has made the proposed initiative a campaign issue, calling loudly on her rivals in the AG contest to take public positions on the environmental law Schwarzenegger signed in 2006, amid fanfare by Democrats and environmentalists.

"When Texas oil companies are spending $2 million to buy their way onto our statewide ballot, Californians deserve to know where each and every candidate for attorney general stands on a measure that would amount to an economic and environmental disaster," Harris said. "Californians need to know whether their next attorney general is on the side of our economy and the environment, or with the out-of-state oil interests."

Hoping to get the measure on the ballot, San Antonio, Texas-based gasoline refiners Valero Corp. donated $500,000 and Tesoro Corp. gave $275,000 to the campaign, much to the dismay of Harris.

"California's landmark greenhouse gas laws are under attack, with Texas oil companies pledging millions of dollars to eviscerate our state's leading clean energy and air pollution control standards at the ballot box," she said in a March 29 statement.

The campaign against AB 32 has also received support from the Adam Smith Foundation. The group's Web site calls the entity a Jefferson City, Mo.-based "advocacy organization committed to promoting conservative principles in Missouri."

The California Jobs Initiative 2010, the measure's campaign committee, has argued vehemently that AB 32 will decimate an estimated 1.1 million much-needed jobs in the Golden State.

The leader of the California Republican Party today touted his organization's official support for the proposal, citing the Economic Stress Index for March released earlier in the day by The Associated Press.

Based on unemployment, foreclosure and bankruptcy rates last month, the ESI indicates California, the most populous U.S. state, was home to 12 of the top 20 most economically stressed counties, with populations of at least 25,000, in the nation.

Imperial County topped AP's list, following were Merced, San Benito and Sutter counties.

In his statement outlining his support for freezing the greenhouse law, state Republican Party Chairman Ron Nehring said California's economic recovery is fettered already by its high taxes and regulatory morass, which together weave a gigantic unwelcome mat at California's door to greet business leaders and companies seeking to expand their operations.

He said the "single most significant action" voters can do to make California more hospitable to job-creating economic expansion is to suspend the "global warming tax." On its Web site, the California Jobs Initiative says the greenhouse law is tantamount to "a new $60 billion energy tax," foisted on residents.

The statement of findings accompanying the proposed proposition says: "While protecting the environment is of utmost importance, we must balance such regulation with the ability to maintain jobs and protect our economy."

Industry and taxpayer organizations pushing the proposed initiative say that allowing the law to be enforced in two years will lead to higher retail rates for electricity, gasoline, diesel and natural gas.

Increased household costs for such things as utilities and fuel would hurt many working Californians, who are already struggling amid tough economic times, Jon Fleischman wrote in an April 23 posting on his widely-read conservative blog FlashReport.org.

"The California Jobs Initiative would not weaken or repeal AB32; it would simply protect over a million jobs and spare California families and businesses billions in higher energy costs and other expenses they can't afford in today's depressed economy," wrote Fleischman, a vice chairman of the state Republican Party and president of the Irvine, Calif., public affairs consultancy that bears his name.

Also among the law's critics is Jim Kellogg, of the United Association of Journeyman and Apprentices of the Plumbing and Pipe Fitting Industry of the United States and Canada.

Kellogg, also the secretary-treasurer of the State Building & Construction Trades Council, said in an April 29 op-ed published in Sacramento's political publication Capitol Weekly that the greenhouse gas law is fundamentally flawed.

Passed in the absence of federal legislation to cut greenhouse gas emissions, the Global Warming Solutions Act would result in the loss of 120,000 jobs in the short term alone, Kellogg said, citing a report by the nonpartisan legislative analyst's office, a widely respected voice on economic and budgetary issues.

"I don't doubt that there will be more green jobs in California, perhaps even thousands of them; however, we don't want to put at risk the millions of well-paying, blue-collar jobs that put bread on the table right now," Kellogg wrote. "We need to make sure we do our homework, ask the tough questions and make adjustments as necessary to implement AB 32 in a way that reduces greenhouse gases without hurting millions of families in this state."

Interestingly, Kellogg is a longtime gubernatorial appointee to the California Fish and Game Commission. First appointed to the five-member board in 2002 by Democratic Gov. Gray Davis, Kellogg was reappointed in 2006 by Schwarzenegger, a vocal supporter and signer of AB 32. Kellogg currently serves as the commission president. His term on the wildlife regulatory board expires Jan. 15, 2012.

The Global Warming Solutions Act is outlined in Division 25.5 of the California Health and Safety Code, beginning with �38500. Code Section 38599 allows the governor to suspend the law in one-year intervals during "extraordinary circumstances," including economic ones. Schwarzenegger has not taken advantage of the provision, however.

The ballot measure, which appears headed for the November ballot, was sought after the Democratic-led state Assembly Committee on Natural Resources in January rejected a proposal by Assemblyman Dan Logue, R-Linda, to amend the greenhouse law in the same way the ballot question would.

His Assembly Bill 118 stalled unceremoniously, amid fierce opposition from environmental groups including the Natural Resources Defense Council, the Planning and Conservation League and Sierra Club California.

A researcher at the San Francisco-based nonpartisan think tank, the Public Policy Institute of California, Louise Bedsworth, predicted that campaign spending on the likely proposition could surpass the $154 million record set in 2006 by Proposition 87, a proposal that would have enacted a tax on California oil production. The measure was handily rejected by voters in November 2006.

California-based companies Chevron Corp. and Aera Energy LLC fought the proposition, with Chevron pouring $30 million into the no campaign and Aera, a joint venture of Shell Oil Co. and ExxonMobil Oil, shelling out $27 million to sway voters against the proposition.

As for oil companies' probable battle at the ballot box this year, Bedsworth told Bloomberg News last month that the effort to amend AB 32 is "likely to be one of the most expensive propositions that the state has had."

Backing the proposed initiative is a litany of deep-pocketed trade groups, including the California Manufacturers & Technology Association, the National Petrochemical and Refiners Association and the California Small Business Alliance. Also in support is the Howard Jarvis Taxpayers Association, the Inland Empire county of San Bernardino and the city of Tulare, the community of nearly 60,000 in the heart of the agriculturally-rich Central Valley.

Organizing the effort against changing the law is Californians for Clean Energy and Jobs, a coalition of environmental and civic groups, including the League of Women Voters of California, the Union of Concerned Scientists and the California League of Conservation Voters, which call the clean-energy law a job creator.

The save-AB 32 campaign's honorary co-chairman is noted Republican stalwart George Shultz, who served in top posts in three GOP presidential administrations, long before he became a distinguished fellow at the Hoover Institution, a Stanford University think tank where he chairs the Energy Policy Task Force.

Shultz, who holds a doctorate in industrial economics from the Massachusetts Institute of Technology, served as U.S. President Richard Nixon's secretary of labor from 1969 to 1970 and as his treasury secretary from 1972 to 1974. He served as President Ronald Reagan's secretary of state from 1982 to 1989.

Shultz is a former dean of what today is known as the University of Chicago's Booth School of Business, where he served in the 1960s before entering national politics as a senior staff economist on the White House's Council of Economic Advisers during President Dwight Eisenhower's administration.

In a statement Monday, the former 70s- and 80s-era senior executive at the engineering giant known today as Bechtel Corp. hailed AB 32 as California's "innovative effort to stimulate movement toward cleaner and more secure energy."

Today, Shultz lives in San Francisco and is chairman of the JP Morgan Chase bank's International Advisory Council and co-chair of the North American Forum, which hosts an annual tri-national meeting of government and business leaders from the United States, Canada and Mexico.

Decrying efforts to change the climate-change law, Shultz said the California Jobs Initiative could in the end help maintain American dependence on foreign-extracted oil. He said the proposed initiative, if approved by voters, would "undermine efforts to break that dependence," which the former U.S. top diplomat called a national security issue.

Meanwhile, a June 2008 report from the New York-based advocacy group the Natural Resources Defense Council paints AB 32 as a public health statute, saying the law could prevent annually 700 premature deaths and 18,000 cases of asthma and respiratory illnesses.

On the economic front, Shultz said the ballot measure, if approved, additionally would hurt newly-emerging green, eco-friendly industries.

"This misguided proposition will seriously harm our effort to encourage the growing entrepreneurial ventures that hold the promise of important change toward cleaner energy," he said of the effort to amend AB 32.

In yet another interesting twist, Shultz is a high-profile supporter of Meg Whitman, the Republican frontrunner in California's gubernatorial race.

The billionaire former eBay chief executive has reportedly said she supports suspending the state's greenhouse law for one year. Whitman, a self-described conservative, has not publicly taken a position on the ballot campaign, which Shultz is railing against.

Whitman's campaign did not return requests for comment for this story.

Her likely general election rival, Democratic Attorney General Jerry Brown, has made curbing emissions of heat-trapping pollution, which some scientists say is causing the planet to warm, a cornerstone of his single term as the state's chief legal officer.

As attorney general, Brown, a former governor, sued local governments, including the city of Stockton, to ensure local jurisdictions do their part -- in their planning decisions -- to reduce what he calls climate-altering greenhouse gasses.

In addition to Brown, AB 32 is supported by a range of large companies, said Californians for Clean Energy and Jobs campaign spokesman Steven Maviglio.

Among large businesses that have joined the effort to protect California's greenhouse law is Mountain View, Calif.-based online giant Google Inc., environmental services company Waste Management Inc. of Houston, Texas, low-cost airline Virgin America, based in the Bay-Area, and insurance company Blue Shield of California, said Maviglio, a former state Capitol staffer now an A-list Democratic strategist.

The principal of Sacramento-based Forza Communications, Maviglio was press secretary to ousted Governor Davis, before serving as a top aide to Democratic legislative leaders, including AB 32's author, Assembly Speaker Fabio Nunez of Los Angeles.

Maviglio is co-publisher of the left-leaning blog The California Majority Report, where he often derides the proposed ballot measure as the "Dirty Energy Proposition."

He recently noted that Valero and Tesoro were named among the nation's biggest polluters in a March report by the independent University of Massachusetts Amherst Political Economy Research Institute.

Maviglio has charged that the ballot measure's organizers are actually seeking to essentially repeal the greenhouse gas law, rather than just trying to place a much-needed condition on the law's implementation, as the other side says.

Late last month, after Valero posted quarterly earnings showing a 27 percent increase in profits of its retail operations, Maviglio quipped: "Rather than sinking those profits into cleaning up the pollution from its refineries, Valero is pumping (money) into an initiative that will repel California's clean energy law, AB 32."

At the time Schwarzenegger signed the law, he said Assembly Bill 32 was good for businesses. On Monday, the governor said he will fight the initiative sought by his own political party and by what he called "greedy oil companies who want to keep polluting in our state."

If passed, the ballot measure would make it unlikely that the state Air Resources Board would be allowed to regulate greenhouse gasses, including carbon dioxide, for some years, given the low minimum statewide unemployment rate that would have to be held for a year's time in order for AB 32 to be implemented.

California Employment Development Department figures indicate that since 1976, there have been just three periods when unemployment in the state has remained below 5.5 percent for four or more quarters: January 1988 through December 1989, October 1999 through June 2001, and October 2005 through June 2007.

From Legal Newsline: Reach staff reporter Chris Rizo at chrisrizo@legalnewsline.com.