Referendum Process Now Being Used By Wealthy

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When California’s reform-minded Gov. Hiram Johnson launched the referendum process in 1911, his idea was to give common citizens more of a voice in setting state policy.

If citizens couldn’t afford to hire lobbyists in Sacramento, at least they could band together in petition drives to put their proposals onto the ballot. Or so the argument went.

But thanks to the mounting cost of statewide political campaigns, the referendum process has increasingly become a vehicle for wealthy individuals or major corporations to sidestep the legislative process and push for pet projects that sometimes provide hidden benefits for the authors.

And so, on the ballot this November, one of the richest men in the world is backing an initiative aimed at getting drivers in the state to shift away from gasoline to other fuels, notably natural gas.

Perhaps not coincidentally, the chief proponent of the idea is the nation’s largest supplier of transportation-related natural gas: T. Boone Pickens, a multibillionaire who ranks as the world’s 369th-richest person.

Pickens, 80, once a wheeler-dealer in the oil market, more recently has been focusing on wind power and natural gas, and he hopes the state and nation will do the same.

Warning that the United States is too dependent on foreign oil, he has been taking out TV commercials and lobbying politicians to shift away from petroleum to wind-powered electricity and natural gas-powered vehicles.

Nationwide, his Pickens Plan would push the federal government to help private industry build a $1.2 trillion network of windmills – similar to windmills he already is building in Texas – to provide electricity.

Using wind power instead of natural gas for electricity, he says, would allow drivers to start fueling their cars with natural gas – similar to that sold by his Clean Energy Fuels Corp. in California – rather than gasoline.

“I want a federal mandate that any new vehicles should go on natural gas,” Pickens said during a question-and-answer meeting with The San Diego Union-Tribune  editorial board, attended by editors and reporters from the newsroom. The board regularly invites newsmakers to discuss current events.

In California, Pickens is behind the campaign for Proposition 10, which would provide subsidies for alternative fuels – with a strong tilt toward natural gas.

The literature for Prop. 10 says it is backed by “a coalition of renewable energy and alternative fuel companies.” But the only known contributor to this “coalition” is Clean Energy Fuels Corp. – formerly known as Pickens Fuels Corp. – which has kicked in $3.25 million to support the proposal.

The bill would authorize $5 billion in state-funded bonds to support research and development projects in alternative energy as well as rebates to vehicles using alternative fuels.

According to the state fiscal analysis office, Proposition 10 would cost taxpayers roughly $325 million per year for the next 30 years to finance the bonds, as well as $10 million a year over the next decade for administrative costs.

Critics note that Proposition 10 promotes natural gas over gasoline-electric hybrids, a cleaner and cheaper technology that is already making inroads into the marketplace. Proposition 10 would offer up to $50,000 in rebates to vehicles fueled by natural gas, but far less to hybrids.

Judy Dugan, an energy specialist with Consumer Watchdog in Santa Monica, said the only hybrid that meets the qualifications specified by the referendum is the Toyota Prius, which could gain a $2,000 rebate. Rebates for natural gas cars, Dugan said, would start at $10,000.

“On the basis of market distortion alone, this is crazy,” Dugan said. “There’s already a federal subsidy for natural gas vehicles, which Pickens is lobbying to be continued through 2018.”

Michael Shames, who heads San Diego’s Utilities Consumers’ Action Network, adds that a shift to natural gas would be “problematic in a lot of ways.” Shames, who once owned several natural-gas vehicles, said few mechanics know how to fix natural-gas engines and few filling stations offer natural gas.

On the other hand, a government-mandated, taxpayer-supported shift to natural gas would undoubtedly bring needed business to Clean Energy Fuels Corp.

Clean Energy is a relatively small company, with about 170 stations in the United States and Canada servicing 14,000 vehicles, mostly trucks and buses. Its revenue last year was $118 million, less than 4 percent of Pickens’ net worth. The company lost $9 million last year, compared with a $78 million loss the year before.

Clean Energy’s shareholders apparently believe that government mandates could help. Since Pickens started promoting his energy plan this month, the company’s stock price – which had been slumping since May – has jumped more than 20 percent to $12.88.

“His stock has risen by $100 million,” Dugan said. “That’s more than twice the amount he’s spending on his ads (for the Pickens Plan).”

Pickens isn’t the only multibillionaire with an energy plan on the ballot.

Also on the ballot this November is Proposition 7, a proposal almost wholly backed by Arizona multibillionaire Peter Sperling, ranked by Forbes  magazine as the 799th-richest person in the world.

Sperling has no apparent vested interest in the proposal. His wealth comes from his connection to Phoenix University, founded by his multibillionaire father John Sperling. His proposition, which requires the state to get 50 percent of its power from renewable sources, has won endorsements from a couple of environmental activists, such as the chairs of the Rainforest Action Network and the Oceanic Society.

But a number of major environmental groups, including the National Resources Defense Council and the California League of Conservation Voters, have joined with the state’s largest utilities – Pacific Gas & Electric, Southern California Edison and Sempra Energy – to oppose the proposition.

The critics complain that the proposal is seriously flawed, especially because it locks the state into existing technologies and requires a two-thirds vote of the Legislature to alter it. Nobody has done a study to see if it is feasible to conduct such a dramatic shift to renewables.

Shames, who opposes Proposition 7, said both propositions share the same flaw: Because they only depend on one person – whether Pickens or Sperling – they lack the vetting that would come from having input of a wider variety of sources.

“A well-intentioned individual with an excessive amount of money doesn’t necessarily have the capacity to present a comprehensive policy initiative on a complex topic,” he said. “That takes a broader cross-section of the public.”

That’s an idea that Hiram Johnson would undoubtedly agree with.

Contact the author, Dean Calbreath, at: (619) 293-1891; [email protected]

Consumer Watchdog
Consumer Watchdog
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