Dan Morain

State official picks fight with King Coal. But King Coal has secret weapon – Democrats

A front loader moves coal at the Peabody Energy Somerville Central surface mine in Indiana.
A front loader moves coal at the Peabody Energy Somerville Central surface mine in Indiana. Bloomberg

Suddenly, California Insurance Commissioner Dave Jones is at the front of the national war over coal and climate change. And thanks to our Legislature, Jones seems to be losing to the Republican attorney general of the oil state of Oklahoma.

Yes, politics get weird.

 
Opinion

Oklahoma Attorney General Mike Hunter and 11 other Republican attorneys general, plus Kentucky Gov. Matt Bevin, rode cavalry-like to the rescue of the insurance and fossil fuel industries in June by sending Jones a saber-rattling letter threatening to sue him.

It was off-the-wall, to be sure. But then Jones had been pushing the boundaries of his power. Nothing wrong with that. Like all politicians, Jones is ambitious and looking to move up, running to become California attorney general in 2018. By law, insurance commissioners can issue what are known as “data calls,” essentially requesting that insurance companies turn over information about themselves.

To an unpracticed eye, the amendment to SB 488 is innocuous. But it would bar Jones from asking for insurance company holdings in fossil fuels without specific Legislative approval.

Jones’ predecessor, Republican Steve Poizner, used the power to call on insurance companies to disclose data related to holdings in Iran. Creative guy that he is, Jones has called on insurance companies to provide data detailing their investments in oil, gas and coal. He also requested that they divest from coal, warning that coal holdings threaten insurance companies’ financial stability.

Insurance companies grumble but understand it’s wise to comply, given Jones’ power and the size of the California insurance market, which, depending on how it’s counted, is third or fourth largest in the world.

So today, on Jones’ website, consumers can see that Allstate Insurance Co. divested more than $1 billion in coal holdings. Others did not agree to divest. You also can see that State Farm Mutual Automobile Insurance has $8.2 billion invested in fossil fuel, and that Northwestern Mutual Life has $23 billion invested in fossil fuel. And so on.

That got under the skin of Oklahoma’s new attorney general, Mike Hunter, or at least his donors, many of whom are from the energy and insurance industries. Oklahoma Gov. Mary Fallin appointed Hunter in February to replace Scott Pruitt, who was Oklahoma’s attorney general before President Donald Trump appointed him to run the Environmental Protection Agency. Pruitt had made a name for himself by doing the bidding of energy companies in lawsuits to block Barack Obama’s energy and environmental policies.

Understanding he had big shoes to fill, Hunter signed the June 19 letter calling Jones’ data call related to coal and fossil fuel misguided “and inconsistent with the principle of comity among the United States.” Making clear whom he represents, Hunter wrote: “It is our responsibility to protect the interests of those insurance companies harmed by your new initiative, as well as the many energy businesses, their employees and their customers who are the targets of your attempt at public shaming.”

“Only energy industries that are important to states like ours are targeted by your divestment campaign,” the letter said. And it concludes: “If you continue to call for divestment and require discriminator disclosures of fossil fuel investments, we will be forced to consider the legal avenues of relief available to protect our insurance carriers, energy consumers and consumers.”

Hunter was playing to crowds in Tulsa and Enid. Out West, in green California, Jones could only hope that Hunter will sue. It’d be a surefire way to raise Jones’ profile. But alas, Hunter has been quiet since sending the letter.

Not so the lobbyists in the Capitol.

At Jones’ urging, Sen. Steve Bradford, D-Gardena, introduced Senate Bill 488, a well-meaning effort to promote diversity in the insurance industry. The bill would expand a requirement that insurance companies doing business in California disclose whether their suppliers are minority-, women-, veteran-, disabled veteran-, or LGBT-owned. It also would force insurance company boards to disclose the diversity makeup of their boards.

The Senate Insurance Committee weakened it some, but not so much that Jones would oppose it. The Senate approved it 38-0. In the Assembly Insurance Committee last month, however, the issue turned.

At the urging of the insurance industry, Insurance Committee Chair Tom Daly, D-Anaheim, agreed to an amendment that, to an unpracticed eye, is innocuous. But it would bar Jones from asking for insurance company holdings in fossil fuels without specific legislative approval. Insurance companies, which requested the amendment, declared their support for the bill.

“The notion we’re going to affect climate change through the Insurance Department is preposterous,” lobbyist Theo Pahos said on behalf of the Association of California Insurance Companies at the Assembly Insurance Committee hearing.

Environmentalists have mobilized, signing a letter to the Legislature demanding that the language be stripped from the bill. Jones is opposing the measure he once sought, unless the restrictions are stripped from the measure.

“The very powerful oil, gas and coal industry feels threatened about anyone asking questions about what they’re doing,” Jones told me.

And so the insurance commissioner has gotten his fight, and his bit of the spotlight, and Mike Hunter, attorney general of the great state of Oklahoma, has done his solid for his constituent fossil fuel interests. For the moment, without firing a shot, King Coal appears to have won.

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