Proposition 23, the so-called "California Jobs Initiative" threatening to suspend some of California's unprecedented clean air and renewable energy legislation, is raking in millions of dollars from Texas oil companies and special interest groups in the Midwest that stand to profit from rolled-back environmental regulation.
The initiative, which is to be voted on in California's upcoming November elections, aims to suspend clean air and energy laws under the "Global Warming Solutions Act of 2006" until California's unemployment rate falls below 5.5 percent for a full year. But this might take a while, considering that the state's recession-induced unemployment rate currently hovers around 12.3 percent.
While the proposition claims to be about creating jobs in California, its biggest financial backers are Texas oil companies, including Valero and Tesoro Corporations, who have donated $4 million and $525,000, respectively, to the initiative.
Valero spokesperson Bill Day told HuffPost that the company supports Prop. 23 because it's a "common-sense" approach to solving California's economic problems.
"As you know, California's economy is in trouble, and this would be the worst time to implement a measure like AB 32 that would cause steep price increases for consumers and threaten jobs," Day said. "We employ 1,600 people in the state with an annual payroll of $122 million, and this year Valero will pay more than $71 million in California property and sales taxes, so Valero has an interest in California's continued economic strength."
Valero's 2009 annual report to investors presents a more straightforward account of its financial interests in halting greenhouse gas laws, concluding that any clean air regulations would have an "adverse effect" on its "financial position."
"Any new federal restrictions on greenhouse gas emissions... could result in material increased compliance costs, additional operating restrictions for our business, and an increase in the cost of the products we produce, which could have a material adverse effect on our financial position, results of operations, and liquidity," the company wrote.
Steve Maviglio, a spokesman for the "No on Prop. 23" campaign, called the proposition "a full-out assault" on California's environmental initiatives.
"Prop 23 is a full-out assault on California's clean air and clean energy laws being financed by two Texas oil companies that would rather spend millions trying to kill our law than clean up their mess," he said. "The low-carbon fuel standard would certainly be shelved indefinitely."
Other controversial supporters of Prop. 23 include the Adam Smith Foundation, a right-wing nonprofit in Missouri that has recently been accused of abusing its tax status to funnel money into the initiative without having to disclose its donors. The foundation donated a conspicuous $498,000 to the initiative, which California's Capitol Weekly pointed out is quite a lot, considering the group raised a total of only $5,000 in 2009.
The group did not respond to calls for comment, but questioned by the Los Angeles Times recently, foundation president John Elliot refused to identify the group's donors by name, citing the anonymity granted to donors of tax-exempt foundations under section 501(c) 4 of federal tax law. He did, however, mention the effect that environmental regulations have on Missouri's lucrative coal industry. "Anything to do with energy affects Missouri, No. 1 because we rely heavily on coal," Elliot said.
The foundation has aroused the suspicion of California State Senate President Darrell Steinberg (D-Sacramento) and Assembly Speaker John Perez (D-Los Angeles), who wrote a letterto U.S. Attorney General Eric Holder on August 3 requesting an investigation into the foundation's nonprofit status. Federal law states that a nonprofit may contribute to political campaigns as long as its main purpose is the "promotion of social welfare" -- but the Adam Smith Foundation's only purpose this year seems to be funneling money into Prop. 23.
"This much is clear: the Foundation went from raising only $5,000 in 2009, ending that year with only $109, to contributing $498,000 to Proposition 23 in the first part of 2010," Perez and Steinberg wrote in the letter. "Serious issues are implicated by the use of an out-of-state organization that may be abusing its tax status to avoid having to disclose the name of its donors to a campaign that will have a profound impact on the future of California."
Anita Mangels, a spokeswoman for the Yes on 23 campaign, responded to Steinberg and Perez's allegations by calling their letter a "political vendetta" and pointing out that other big foundations such as the National Resources Defense Council and the Green Tech Action Fund have donated to the "No on Proposition 23" campaign. But LA Times reporter Michael Hiltzik points out that the foundations opposing Prop. 23 are much more open about their donors and activities than Adam Smith has been:
"Green Tech, which has contributed $500,000 to defeat Proposition 23, is affiliated with the San Francisco-based Energy Foundation, which is backed by foundations established by the late William Hewlett and David Packard of Hewlett-Packard fame, and several other charitable funds identified on its website.
The NRDC may not disclose the names of all its contributors, but it's tolerably open about its activities. Its spending of about $1 million to fight 23 (based on the latest campaign filings) comes from an annual budget of about $80 million. It boasts a 40-year record of legal action on environmental issues and has offices in both San Francisco and Los Angeles. It's not a front for special interests, but an interest group in its own right."
Steinberg said he and Perez haven't heard back from Holder yet regarding the investigation, but he hopes at least to arouse the suspicions of California voters.
"We wanted to get this on record and make it clear that while this is first and foremost a California issue, there are a lot of out-of-state interests that are trying to impede our progress," he told HuffPost. "The public ought to be rightly suspicious any time a public foundation hides the name of its donors, a foundation that ends up contributing hundreds of thousands of dollars to help defeat a landmark environmental achievement in California. The very fact that a foundation is fronting for someone should tell the voters in California a lot."