With a key deadline a month away, two national paint companies are turning up the pressure on California lawmakers to absolve them of potentially hundreds of millions of dollars in legal penalties from lead paint hazards.
The companies, Sherwin-Williams and ConAgra, have hired five lobbying firms, sponsored a website, purchased advertisements and spent at least $2.8 million on a political campaign. At issue is a state court ruling finding that the companies promoted the use of lead paint in homes even after they knew the material could harm children, and making them financially responsible for cleaning it up.
Sherwin-Williams and ConAgra are behind a proposed November ballot initiative that would overturn the court decision, eliminate their financial penalty and instead authorize a $2-billion taxpayer-funded bond to fund the cleanup of lead paint and other health hazards in homes and schools.
Instead of taking the initiative to voters, the companies would prefer to strike a deal with lawmakers to relieve some of their burden. Sherwin-Williams and ConAgra face a June 28 deadline to withdraw the measure, which is expected to have collected enough valid signatures to get the secretary of state's blessing for placement on the statewide ballot.
"I think it's fair to say that there's interest," Anthony Dias, a Sherwin-Williams attorney, said of conversations the companies have had with lawmakers, though he declined to name any of the legislators. "The Legislature understands that they are better equipped to deal with an issue than the courts are."
There are no pending bills that would address the companies' concerns. Publicly, lawmakers are reacting to the companies' push with fury. A half-dozen legislators have written bills that would further penalize the paint companies, including one that would add a new $2 fee on all paint sold in California — by any paint company — that would go into effect if the November initiative passes.
Lawmakers took turns pillorying the companies at a public hearing last week on the proposed initiative.
"I've never heard such deceptive testimony in my life," Assemblyman Bill Quirk (D-Hayward) said. "It takes a lot to get me angry. You have gotten me angry."
Striking some compromise would spare the paint companies potentially tens of millions in campaigning to pass a statewide ballot measure. A failed 2008 effort by Texas oilman T. Boone Pickens to provide billions in state subsidies for consumers to purchase natural gas vehicles fueled by companies Pickens owned cost $23 million.
The dispute over who's responsible for cleaning up lead paint, which became illegal to use in homes in 1978, dates back 18 years. Ten cities and counties, including Los Angeles, sued Sherwin-Williams, ConAgra and NL Industries, arguing that lead paint in homes was a public nuisance and that the three companies should have to pay to get rid of it.
In November, a state appeals court largely upheld a lower-court ruling that put the companies on the hook for cleaning up paint in homes built before 1951, an amount likely to be hundreds of millions of dollars. Earlier this month, the plaintiffs settled with NL Industries for $60 million and as part of the deal that company withdrew its support for the proposed initiative.
Sherwin-Williams and ConAgra are pursuing an appeal of the case at the U.S. Supreme Court while also ramping up efforts in the Legislature. They argue that the court ruling, specifically the declaration that lead paint in homes is a public nuisance, harms not only them but also homeowners. The court required the companies to clean up pre-1951 homes, but provided no funding to get rid of lead paint in those built afterward.
This finding, Sherwin-Williams and ConAgra contend, makes owners of homes built after 1951 responsible for the lead cleanup. That's an assessment shared by the California Hispanic Chambers of Commerce among other business groups. The companies started a website warning that the court ruling "red tags" millions of California properties. Lawmakers have said they've received thousands of emails from their constituents in response.
The companies and their supporters went further in the hearing last week, arguing that the implications of the court decision for homeowners were akin to the racist government-backed mortgage lending policies in the 1930s known as redlining and the recent lead crisis in Flint, Mich.
The cities and counties that sued Sherwin-Williams and ConAgra vigorously disagree with the companies' legal argument, and independent observers share that stance. Sean Hecht, a UCLA School of Law professor who has followed the litigation, said the court decision doesn't increase homeowners' liability.
The companies "want to scare people into thinking this is going to be this dramatic problem for the real estate community and maybe tenants, and it's hard for me to see how the ruling does what they say at all," Hecht said.
Instead, cities and counties argue, the paint companies are trying to use the threat of a ballot measure and their current lobbying efforts to erase their current legal problems and avoid future ones. The existing court ruling applies only to the 10 local governments that sued and, unless the laws change or the initiative is successful, others in California could do the same thing.
"Our lawsuit sets forth a blueprint by which city attorneys, county counsels, other public prosecutors for other jurisdictions throughout this state can file similar public nuisance lawsuits and obtain similar funds," Jenny Lam, a deputy county counsel in Santa Clara, told legislators at last week's hearing.