Corporations turn to ballot to combat California's progressive agenda, raising alarms

Twice in the last two weeks, major corporations have scored wins in their fights against progressive policies approved by Democrats at the California Capitol.

First, the Secretary of State announced that fast food companies had collected enough signatures to force a referendum on a state law meant to boost wages for restaurant workers. Last week, oil companies’ effort to overturn an environmental safety law that would ban new drilling projects near homes and schools similarly qualified for the ballot.

Both laws are now on hold until voters decide in November 2024 whether to uphold them.

That added to frustrations among California’s labor unions, environmentalists and good government groups, who alleged corporations are abusing the direct democracy process and intentionally misleading voters who signed petitions calling for the referendums.

“This is about corporations not being able to win in the Legislature and trying to hoodwink voters into taking away the progress that Californians have made,” said Tia Orr, executive director of the Service Employees International Union of California.

The powerful labor union, which represents 700,000 workers and 17 local unions, is leading a coalition considering reforms to the referendum process. Any proposal to change California's century-old system of direct democracy is likely to spark pushback from businesses that are increasingly using it as a check on the Democratic Legislature.

Jennifer Barrera, president and chief executive of the California Chamber of Commerce, said companies are turning to the referendum process, in part, in response to the Legislature becoming a “super super majority by one party.”

The California Independent Petroleum Assn. declined a request for an interview.

The organization and oil companies spent at least $20 million to qualify the referendum on the law requiring a buffer zone around new oil and gas wells, a marquee policy in a package of climate change bills that Gov. Gavin Newsom pushed through the Legislature in the final days of the legislative session in August.

Newsom ripped the industry after the referendum qualified, his latest rhetorical attack in an ongoing assault on Big Oil.

“Greedy oil companies know that drilling results in more kids getting asthma, more children born with birth defects, and more communities exposed to toxic, dangerous chemicals — but they would rather put our health at risk than sacrifice a single cent of their billions in profits," Newsom said in a statement.

Rock Zierman, the petroleum association's chief executive, criticized the way in which Newsom “circumvented the normal bill review process” by introducing the legislation late in the year, without time for the usual amount of hearings, testimony or analysis.

"Allowing voters to decide the question of SB 1137 and how the state meets its energy needs is the very definition of democracy,” Zierman said in a statement.

It's an argument that flips the original inspiration for direct democracy on its head. Progressive-era Gov. Hiram Johnson is largely credited with pushing for the system to balance the influence corporations held over lawmakers in the early 20th century.

Voters ratified the adoption of the initiative, referendum and recall in 1911 at a time when state government “had for decades been under the control of the Southern Pacific Railroad,” according to the Initiative and Referendum Institute at USC. To ask voters to reverse a law on the next statewide ballot, proponents of a referendum must obtain signatures from 5% of the number of voters in the last gubernatorial election.

“They had this feeling that there was a vast kind of unrepresented majority that were being ignored because of the power of the special interests,” said John Matsusaka, a professor of business and law at USC and executive director of the institute. “So they wanted to create tools, that if this happened, would give the majority the chance to override their elected officials.”

With Democrats now holding 32 seats out of 40 in the state Senate and 62 out of 80 in the Assembly, the tables have turned in Sacramento.

A system created as a check on the influence of business interests is now being taken advantage of more often by companies to challenge the power of unions and other groups pushing progressive policies through the state Capitol.

In recent years, cigarette makers, bail bonds companies and plastic manufacturers have sponsored referendums asking voters to overturn state laws to limit or ban their products. Qualifying a referendum for the ballot delays a law from taking effect, giving businesses more time to sell their products and services in California.

Outside of California, Matsusaka said, many high-profile referendum campaigns have been launched by progressive groups trying to reverse decisions made by Republican legislatures.

Barrera downplayed concerns about the strategy and argued that it's rarely employed in California. She compared the half-dozen referendums that have qualified for the ballot over the last decade to the thousands of laws enacted by the Legislature and governor in California over that same time period.

“I don't think that it is an abuse of the system,” she said. “I would suggest the only reason you're hearing about this is because one of the referendums is a priority from labor last year that went before the Legislature and is gaining national attention.”

Barrera is referring to Assembly Bill 257, a labor-backed law that created a new council with the ability to set work and pay standards for fast-food workers.

The efforts to overturn the fast-food law and the oil drilling setbacks legislation have been tainted by accounts of signature gatherers misrepresenting the purpose of the petitions to Californians outside supermarkets and retail stores all over the state.

A person collecting signatures outside a Nob Hill Foods grocery store in Alameda told Noel Rabinowitz that signing the petition on the oil referendum would protect communities from neighborhood drilling.

Rabinowitz, 52, said the argument sounded great. Then he read the petition and realized his signature would support an effort to do the opposite.

“I said to the gentleman, ‘Well, this really seems misleading, potentially a person could really misunderstand the effect of signing this,'” he said.

Rabinowitz declined to sign the petition and his colleagues at an environmental nonprofit, where he works as a media technologist, encouraged him to report the incident to the state. He said he filled out a form online after the November encounter and hasn’t heard anything since.

“Nothing,” he said. “Zero. It’s like I'm shouting into the void. Did it even submit? I don't know.”

Under California law, there's little recourse for misleading voters. It's a crime for proponents of a proposed ballot measure and signature gatherers to intentionally mislead people or make false statements, but violations are difficult to prove and treated as misdemeanors.

"We know that there's probably hundreds of thousands, if not more, of those signatures that were turned in to qualify these referendums where voters were completely deceived in what they were signing a petition for," said Orr of SEIU California. "Unfortunately, our laws don't allow for any accountability for that deception from multi-billion dollar corporations who have found loopholes in our referendum process."

Orr's organization, among others, filed a complaint with the attorney general's office and shared videos of signature gatherers misrepresenting the purpose of referendum petitions.

In one audio recording, an unidentified signature gatherer tells a man that California recently “allowed the drilling of old pumps” a quarter mile away from schools.

“And that can cause Erin Brockovich disease,” the signature gatherer said, imploring the man to sign his petition by referring to the activist and whistleblower who famously linked PG&E to groundwater contamination that sickened residents of Hinkley, Calif.

“So, we’re just basically trying to get everybody to vote on this so that the power is in the voters' hands," the signature gatherer said.

Orr and her coalition believe the referendum process is ripe for reform.

"There is a coalition that is coming together and demanding some change," Orr said. "I'm hopeful that this year is our year that we create a democratic process in our referendum system that doesn't allow for these multi-billion dollar corporations to steal our democracy and to steal progress. We have a deep interest in solving this."

Matsusaka of USC agreed that the referendum process is not working as intended, but said it never has.

"The only people who can generally afford to run a petition campaign in order to collect signatures are actually wealthy individuals and organizations. That's kind of always been a feature of it," he said.

For the most part, proponents of statewide referendums and ballot measures hire outside, independent firms to gather the petition signatures required to qualify a proposal for the ballot, often paying a fee per signature.

Lies told by signature gatherers are problematic, he said, and mean that qualification of a referendum is not an indication that Californians will reverse the law. But he described the concern over the signature gathering as a bit of a "sideshow." He said voters generally see through well-financed campaigns.

California voters have delivered a mixed record on referendums in recent years. They upheld a ban on single-use plastic bags in 2016, and in 2022 confirmed the law to prohibit the sale of certain flavored tobacco products. In 2020, voters overturned a law to end the monetary bail system in California.

"Anybody with enough money or signatures can put it on the ballot, but ultimately, they can't pass it," Matsusaka said. "Ultimately, it goes to the voters of California and the majority rules."

This story originally appeared in Los Angeles Times.