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Proposition 23 A Test For National Climate Law

SACRAMENTO (AP) -- If the supporters of Proposition 23 prevail in the Nov. 2 election, California's landmark global warming law would be suspended indefinitely.

But the out-of-state oil companies funding the initiative appear to have their sights set higher. Success in halting California's climate-change law by showing the public doesn't support it would give momentum to the opponents of similar legislation that has stalled in Congress.

The ballot initiative also has the power to reverse one of Gov. Arnold Schwarzenegger's signature environmental accomplishments. In 2006, he signed the Global Warming Solutions Act, a Democratic bill that requires reduction of greenhouse gas emissions statewide to 1990 levels over the next decade.

The law, AB32, is a cornerstone of the environmental legacy the Republican governor is trying to leave and is scheduled to take effect in 2012. The California agency overseeing air regulations has already started working on the rules to implement it.

Proposition 23 calls for a postponement of AB32 until the state's unemployment rate, now at 12.4 percent, falls to 5.5 percent and stays there for a year—a feat that has happened just three times over the last 30 years, according to state statistics.

Oil companies have contributed millions to pass Proposition 23 campaign, with $6.5 million coming from three sources: Texas-based Valero Corp. and Tesoro Corp., which have contributed $4 million and $1.5 million respectively; and Flint Hills Resources of Wichita, Kan., a company owned by David and Charles Koch, which donated $1 million. The Koch brothers have attracted media attention recently because of their contributions to Republican and tea party causes.

AB32 calls for limits on emissions generated by industry, transportation, electricity generation and natural gas consumption. The law also calls for a third of the state's electricity and energy to come from renewable resources by 2020. The new mandates would reduce consumption of fossil fuels.

Supporters of Prop. 23 say that increased regulations and fees on industrial greenhouse gas emitters would prompt companies to leave the state or expand elsewhere, taking sorely needed jobs with them.

Katie Stavinoha, spokeswoman for Flint Hills Resources, said the company donated to the initiative out of concern that implementation of AB32 would lead to higher energy costs and job losses.

"Flint Hills Resources is concerned about the bad precedent that AB32 sets, that would potentially result in regulation by other states or the federal government," she said.

The National Petroleum Refiners Association showed how far beyond California the oil companies backing the initiative are looking. In a September e-mail, association president Charles Drevna urged members to protect their self-interests and donate to the initiative.

He wrote that a defeat for the initiative "could energize environmental fanatics around the country and in Washington to match California's destructive policies with their own versions of AB32."

George P. Shultz, the former U.S. secretary of state and a co-chairman of the No on Prop. 23 campaign, said the out-of-state oil companies are worried that new climate regulations in California could spread internationally.

"They would be able to point to that vote and say these efforts don't have support even in California, which is known as a state that is environmentally conscious," he said.

Shultz said he is not worried about California acting alone. He is more concerned that the proposition, if successful, would slow momentum to develop alternative energy and undercut the state's edge in that industry.

Schwarzenegger has registered his own frustration with the oil companies as they have poured millions of dollars into the initiative. In a September speech to the Commonwealth Club in Santa Clara, he said the companies were acting on "self-serving greed."

Schwarzenegger's California Dream Team, a committee that donates money to initiative campaigns, had not contributed to the opposition as of Sept. 20.

Unlike many environmental showdowns, this contest does not draw a straight line between environmentalists against businesses.

The California Chamber of Commerce, a supporter of Schwarzenegger, has remained silent on the initiative. Although the vast majority of the money raised to support Proposition 23 has come from oil companies, Shell Oil is opposed and California-based Chevron Corp. is neutral.

Green technology businesses and venture capitalists have funded the opposition, saying California is attracting more clean-energy investment than all other states combined.

Thomas Steyer, founder of investment firm Farallon Capital Management LLC., has given $2.5 million to fight the initiative so far. The longtime Democratic donor says his company invests both in oil companies and alternative energy and clean technology companies.

He said delaying the planned greenhouse gas regulations— perhaps indefinitely—would shift development of alternative-energy technology to other state or countries.

"I totally believe this clean tech revolution is going to happen," Farallon said. "It's just not going to happen in California" (if the initiative passes).

California's utility companies have not sided with the oil companies.

Pacific Gas & Electric Co., the state's largest utility, announced its opposition to the initiative in July, saying global warming could cost California's economy tens of billions of dollars each year in losses to agriculture, tourism and other sectors.

Sempra Energy, which operates natural gas power plants and solar facilities, also opposes the initiative.

"Our company is heavily investing in clean technology, as well as alternative fuel vehicles," Sempra spokesman Doug Kline said. "All of those support California's public policy to reduce global warming. We're well on the path here."

Still, Proposition 23 supporters say businesses are leaving California because of its regulatory and tax environment. State Assemblyman Dan Logue, R-Marysville, author of the initiative, said he asked businesses why they left California.

"They all came up with the same formula: energy costs are too high, regulations are too much, and the taxes are too high," he said.

(© 2010 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed.)

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