Column: Fearing a rebuff in court, lead paint companies are trying to stick taxpayers with their cleanup bill

Three big paint companies must be terrified that they are going to be thrown for a big loss by the California Supreme Court — a loss worth hundreds of millions of dollars to them.

We know this because the companies are spending millions to push a ballot measure that would nullify, as though by the back door, the judgment being considered by the court. You wouldn’t know it by reading the text of the proposed initiative; you have to read between the lines.

To grasp the true intent of the measure, you’d have to know that in 2014, in a lawsuit brought by 10 California cities and counties, a state judge ordered the three former manufacturers of lead paint — Conagra, NL Industries and Sherwin-Williams — to spend $1.15 billion to abate the dangers from that paint still in California homes. And that in November, a three-judge panel of the state Court of Appeal largely upheld that judgment, though it cut the firms’ exposure to an estimated $600 million. And that the rulings were based on the theory that the residual paint constituted a “public nuisance” for which the companies were responsible.

The text of the initiative doesn’t mention the companies at all. But the measure “is specifically targeted at our case,” Danny Y. Chou, an assistant Santa Clara County counsel, told me. That’s because it declares that “lead-based paint” in residential properties “is not a public nuisance,” which cuts the heart out of the cities’ and counties’ legal victory. It’s written to apply to “all cases pending on, pending on appeal on, or filed after, November 1, 2017, and to any injunctions, judgments, or other remedies issued in those cases.” The Court of Appeal didn’t uphold the original lead paint judgment until Nov. 14, so it would be subject to the initiative. The initiative also would prevent any other counties or cities from bringing similar lawsuits against the paint manufacturers.

Even measured against corporate-sponsored ballot initiatives of the past — a genre bristling with noxious, self-serving attacks on the public interest — this is a remarkably sleazy and dishonest effort. The measure is manifestly designed to absolve three corporations of a legal judgment imposed and upheld by four state judges, and leave taxpayers with an enormous bill.

The companies conceal their self-interest by dressing up the initiative as a $2-billion bond-funded program to remediate “structural and environmental hazards” in homes and schools across the state. Of that, $1.5 billion is to be reserved for residences. The industry calls its measure the Healthy Homes and Schools Bond Act Trust Fund Program. It should be clear, however, that it’s the very definition of a poisoned chalice.

“It’s an outrage that these private companies now want the public to bail them out of a problem they created over the last 50 to 75 years,” says Joseph Cotchett, the San Francisco lawyer who represented several plaintiff jurisdictions in the lawsuit. “To this day, lead paint is still poisoning our children.”

Let’s recall the corporate activities that led to the original $1.15-billion judgment against these three manufacturers. As we recounted in April, the plaintiffs in the lawsuit asserted that the defendant companies’ predecessors had assiduously promoted the use of lead paint inside the home even though they understood that it could be hazardous to occupants’ health.

Warnings about children’s propensity to gnaw on painted surfaces and become poisoned with lead were common in medical journals by the 1920s. By the 1930s, parents were warned to avoid using lead-based decorative materials in children’s nurseries and bedrooms. Yet the industry kept promoting residential lead paint by advertising its durability. Vintage evidence produced in court indicated that the industry reckoned that childhood lead poisoning was chiefly a slum problem — “most of the cases are in Negro and Puerto Rican families,” an industry lobbyist wrote to a federal official in 1956.

The defendant companies maintained that they stopped marketing residential lead paint once the hazards became clear. But that didn’t wash with Santa Clara Superior Court Judge James P. Kleinberg, who assessed the companies $1.15 billion for the cost of inspecting 3.5 million California homes and apartments built before 1978, when lead paint was outlawed, and removing or abating remaining lead hazards. The appellate judges upheld the ruling, which relied on the theory that the companies had helped create a “public nuisance,” but narrowed it to homes built before 1951.

“Despite all the strides we’ve made over several decades to get lead poisoning down in children,” says Cyrus Rangan, chief of toxicology and environmental assessment at the Los Angeles County Department of Public Health, “it remains the most important pediatric environmental health issue we face.”

The program funded by the initiative would be “not even close to a substitute for the judgment” received in court, Chou told me. Leaving aside that it would reduce funding for lead paint abatement in the 10 cities and counties that won the judgment against the companies, according to state Legislative Analyst Mac Taylor, over time it would cost nearly twice the list price. Taylor assumed that the state would float the bonds for 35 years at a 5% interest rate, incurring $1.9 billion in interest. Taxpayers would be saddled with that burden, while the corporations that already have been found responsible in court would get off scot-free.

Instead of an estimated $600-million program focused on homes in 10 cities and counties, this program would have to apply to the entire state and cover all “environmental and structural deficiencies.” The funds left for lead paint abatement in the 10 jurisdictions that won their lawsuit would be a fraction of what they’ve been awarded.

The program, moreover, would be placed in the hands of the state Department of Housing and Community Development, an agency with a budget of $376 million and no expertise at managing a statewide home and school abatement program. The initiative caps the administrative budget of the abatement program at 5% of the total, which would make it impossible to run effectively. “They’re setting up a program that can’t work,” Chou says.

The three companies already have seeded the initiative campaign with $2 million each. As my colleague Liam Dillon has reported, that’s probably more than sufficient to collect the 365,880 voter signatures needed to place the measure on the November ballot. Millions more in fatuous TV advertising would probably be needed to secure victory for the initiative, but Conagra, NL and Sherwin-Williams undoubtedly would consider the money well-spent if it relieves them of a $600-million court judgment.

The California initiative, it’s proper to observe, comes right out of the industry’s playbook for circumventing court judgments. In 2013, while NL Industries and other lead paint manufacturers were facing lawsuits brought on behalf of 173 children poisoned by lead in Wisconsin, state legislators quietly slipped into a budget bill a four-word change in state liability law that would nullify the lawsuits retroactively.

Why did they do this? Documents unearthed by the Guardian in 2016 suggested it was done at the behest of the late Harold Simmons, the owner of NL Industries, who had made $750,000 in under-the-counter campaign contributions to Scott Walker, Wisconsin’s Republican governor, who was facing a recall election. Walker won the recall, but the legislation didn’t do so well. The retroactive provision was invalidated by a federal appeals court as unconstitutional. The lead poisoning cases are still pending in Wisconsin state court.

The paint companies can’t hide their financial interest quite as easily in California because state law requires them to disclose their contributions to the initiative campaign. But if the measure gets certified for the ballot, you can expect to be showered with rank untruths and misrepresentations about what it will achieve. Of the representatives of the three companies listed as officers of the initiative committee, two — Megan Garcia, a Washington lobbyist for Conagra, and Robert J. Wells, a PR executive for Sherwin-Williams — didn’t respond to my request for comment. I couldn’t reach the third, Timothy Hardy, a lawyer for NL.

The initiative’s Sacramento front persons referred me to their PR representative, Tiffany Moffatt, who sent me a boilerplate comment so vacuous and misleading I’m loath to insult your intelligence with it. Suffice to say she asserted that the measure “provides an important public benefit of addressing the state’s housing crisis by increasing the supply of safe and affordable homes that would otherwise be unlivable.”

Moffatt didn’t mention that four judges have found that some of these homes are unlivable because of the paint industry’s actions. But the implication that defendants facing a $600-million judgment are doing anyone a favor by sticking taxpayers with the bill deserves to be laughed into oblivion. And the initiative they’re promoting deserves to be voted into a place in the corporate hall of shame, right near the top.

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