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Bid to suspend California global-warming law gets $1 million from billionaire brothers' firm

The donation to the Proposition 23 campaign comes from a subsidiary of Kansas-based Koch Industries, which owns refineries and controls 4,000 miles of oil pipelines.

September 04, 2010|By Margot Roosevelt, Los Angeles Times

The fight over a November ballot initiative to suspend California's global warming law has escalated sharply with the Koch brothers, oil billionaires and "tea party" backers, making a million-dollar entry into the fray.

The contribution to the campaign for Proposition 23 came Thursday from a subsidiary of Wichita, Kan.-based Koch Industries, the nation's second-largest private company (after the agribusiness giant Cargill). A spokeswoman for the subsidiary, Flint Hills Resources, said the company "may consider additional support." The Kochs' company has estimated annual revenues of $100 billion, owns refineries in Alaska, Texas and Minnesota, and controls about 4,000 miles of oil pipelines.

California's global warming law, known as AB 32, is designed to cut the state's emission of greenhouse gases to 1990 levels by the end of this decade. A significant chunk of the reductions would come through regulations aimed at fostering alternative fuels and generating electricity from solar, wind and other alternative energy sources.

The ballot measure would suspend the global warming law until the state's unemployment rate dropped below 5.5%, a level achieved only three times in the last three decades. Until now, the measure has been largely financed by two Texas-based companies, Valero Energy Corp. and Tesoro Corp., which operate refineries in Wilmington and in Northern California.

The initiative is opposed by environmental groups, most Democratic officeholders and Gov. Arnold Schwarzenegger, a Republican who considers the global warming law one of the major achievements of his tenure. The GOP candidate for governor, Meg Whitman, has said she is leaning against the ballot measure but would take steps if elected to suspend the global warming law for a year.

The Republican U.S. Senate candidate, Carly Fiorina, had refused to state a position in a broadcast debate Wednesday. On Friday she released a statement calling Proposition 23 "a band-aid fix and an imperfect solution" but saying she would vote for it.

Her Democratic opponent, Sen. Barbara Boxer, responded with a statement released by her campaign manager that called Fiorina "out of touch with most Californians" and accused her of "siding with oil companies."

The money from David and Charles Koch could significantly help the campaign for the ballot measure, which has been trailing in most polls. They have founded a web of libertarian organizations and think tanks dedicated in large part to fighting what they see as excessive government regulation. They also have helped finance efforts to develop arguments denying that global climate change is a real phenomenon.

Katie Stavinhoa, a Koch spokeswoman, said the company believes that the state's global warming law will cause "significant job losses and higher energy costs. It sets a bad precedent for future regulation by other states and the federal government."

Schwarzenegger, in a statement, called the contribution "extremely disappointing." He described Proposition 23 backers as "a handful of out-of state polluters supporting … the oil companies' dirty energy proposition."

Scientists say greenhouse gases from burning fossil fuels to power cars and industries are trapping heat in the Earth's atmosphere. California is already experiencing the effects of climate change, they say, with rising sea levels and melting snowpacks that affect the state's chief source of fresh water.

Refinery owners are keenly focused on the state's law and regulations, which could significantly reduce demand for their products.

The goal of AB 32 "is to reduce the use of petroleum," said Charles Drevna, president of the National Petrochemical and Refiners Assn. "What happens in California doesn't stay in California. Other states are waiting to see … if they can inflict similar harm on their constituents."

So far, the Proposition 23 campaign has raised $8.2 million, of which 97% has come from oil interests and 89% from out of state.

The campaign against the measure has raised $6.6 million, including $2.5 million from Thomas F. Steyer, founder of Farralon Capital Management, a $20-billion San Francisco hedge fund, and smaller contributions from environmental groups and clean-tech businesses.

Steyer said that his company has hardly any clean-tech investments but that he is backing the measure because "the lion's share of investment in a clean-air economy is here in California. Our biggest competition is China.... We have to prevent this proposition from passing so we can protect the jobs of the 21st century."


FOR THE RECORD:
The statement above from Thomas F. Steyer that he is backing the measure is incorrect. He opposes the initiative.

margot.roosevelt@latimes.com

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