Culture Shift in the Land of the Giants

A California County Redefines Corporate Rights

“Our Founding Fathers never intended for corporations to have this kind of power.”

— Anonymous citizen of Humboldt County

When the largest recall effort in Humboldt County history was mounted just weeks after the newly elected district attorney had taken office, residents were confused. When it came to light that a giant corporation was behind the recall, residents were angry. Through a series of community forums, a group of citizens who had studied the history of corporate rights led the community not only to defeat the recall, but to a precedent-setting campaign finance reform law that gets to the root of local control and real democracy.

In the spring of 2003, just a few weeks after Paul Gallegos took office as the District Attorney of Humboldt County, California, a tough campaign was already underway to recall him. True, he hadn’t won by a landslide; the margin of victory was 52-48 percent. But with hardly enough time to hang law diplomas on the walls of his new office, how could Paul Gallegos have so alienated himself from the voters who had put him there? The fact is, he didn’t have to. Alienating a Fortune 500 company was enough to spark a chain of events that would change community politics in Humboldt and could help redefine the way corporations do business across America. All this in a place famous for its trees—not its politics.

One of the most serene landscapes in the United States, Humboldt County is home to the majestic giant redwoods. Flanked by the rugged coast of the Pacific Ocean, Humboldt is a land of foggy mountains, jeweled lakes and sage-banked streams. With just 125,000 people lightly sprinkled over 4,000 square miles, life is slower, cell phone reception is spotty, and neighbors can be hard to glimpse outside of the county seat of Eureka and the nearby town of Arcata.

The population is overwhelmingly white, with a small mix of Latinos and Native Americans. It is also poor; four of every five children receive government lunches. But for those who live in Humboldt, it’s hard to imagine any other place as home. “Folks here feel connected to this place, they care about what goes on here,” said David Cobb, a transplant from Texas and a member of Democracy Unlimited of Humboldt County (DUHC), a collective that works to empower local citizens to take democratic control of their own community.

Throughout Humboldt, voter turnout is high. Support for local nonprofits serving the community is strong. While Arcata is politically progressive, the surrounding county is dominated by logging, ranching, and homesteading. As Cobb points out, “We’ve got a spectrum of types here, environmentalists, lots of Republicans, good ol’ boy networks, and folks that don’t trust the government at all.” This makes politics in Humboldt County a tricky business.

It was in this climate that Humboldt DA Paul Gallegos made a move many called political suicide in his first few days of holding office. In March 2003, he sued the county’s biggest employer, Pacific Lumber (PALCO), for $20 million, charging that the company submitted false information on an environmental impact study to expand logging rights into Humboldt’s Headwaters Forest Preserve.

Just a scant few weeks later, a massive recall campaign had been mysteriously launched. PALCO and its parent company, the Texas-based giant Maxxam Corporation, initially denied instigating the effort. The recall committee, “SafetyFirst! The Committee to Recall Paul Gallegos,” claimed no connection to Maxxam corporation and framed its efforts as a community safety issue, saying that Gallegos was “soft on crime.” It would later be revealed that the corporation contributed over a quarter of a million dollars to the effort—a whopping 93 percent of the total recall coffer—and hired a team of media and political experts to mastermind it.

With a thin election mandate, the Maxxam effort could have marked the end of Gallegos’ political career. Yet the citizenry rallied around their freshly elected DA, raising some $250,000 in mostly small donations for his defense—not because he was beloved, or even because they particularly challenged the notion that Gallegos wasn’t safeguarding the community. Mostly, it wasn’t even about Gallegos.

Something else was in play—a kind of community clarity. The people of Humboldt knew there was more at risk than Paul Gallegos’ job. Democracy itself was in danger of being recalled. Residents were outraged that a corporation, particularly one that wasn’t even local, could muscle its way into their electoral process.

Democracy Unlimited of Humboldt County (DUHC) had a lot to do with the county’s political savvy. Traditional politics would have called for spending time and money battling the issue along the lines that the recall committee had set out—Gallegos’ safety record. That is what the corporate-funded recall team expected. The locals wanted to have a different debate.

“We were involved as volunteers from the start of the recall, trying to keep the discussion around the way it happened instead,” Kaitlin Sopoci Belknap, the director of DUHC, told us. “We published a series of op-eds and hosted workshops talking about the real issue, not whether Maxxam lied, or even whether Gallegos should be recalled, but rather who was in charge in this community. We can’t allow a corporation to come in and buy an election. Why do they have a right to do this?”

It all sounds reasonable. But in the heat of the nasty mudslinging that comes with any big money recall, how could a handful of citizen-activists talking about corporate rights really have an impact? How could they pry open the debate, move beyond the name-calling, and get the community to talk about underlying issues of corporate rights and real democracy? Was it possible that people living together in a community—even one as politically diverse as Humboldt—still believe they are entitled to make decisions for themselves? That democracy “of, by, and for the people” is an ideal worth fighting for? Sopoci Belknap certainly thinks so.

“From local commercials, to the local media, to the DA himself, everyone really embraced the perspective that it was about our rights,” she told us. “It was really exciting to see the actual shift in the discourse.”

What the Maxxam team couldn’t have known was that this community had long been prepared to talk about the role of corporations. All the money and media spin in the world wasn’t going to convince residents that this was about their safety, or that Maxxam executives sitting in their plush offices in Texas cared about the well-being of the people in this remote corner of paradise. By making the wrong gamble, the Maxxam Corporation unwittingly revealed how strongly people feel about the basic democratic ideal that their votes should count. It makes for a strange irony, that this giant corporation helped pave the way for one of the strongest campaign finance reforms in the United States.

Democracy Unlimited’s First Victory

How was it that the good citizens of Humboldt—in the heat of an election crisis—were prepared to sidestep traditional political mudslinging and instead make the recall about the role of corporations? “Preparing” the community to look at these deeper issues started much earlier. “Back in 1997, what would eventually become DUHC was more or less just an informal study group of about a dozen people who would just get together to learn the history of corporate rights,” said Paul Cienfuegos, the co-founder of DUHC.

What that study group learned was shocking. The modern American corporation was originally chartered to perform limited tasks in service to the community, for short periods of time, and at the will of the people. Even banks held only six-month charters, and were required to demonstrate their community value and defend their record at public meetings before the charter could be renewed. Having uncovered this history, the group wondered, “So what happened?” They learned that despite the fact that the word “corporation” never appeared in the U.S. Constitution, over time the legal fiction known as the corporation has gained the same rights people have. These are often referred to as “Corporate Personhood” rights. Over the last 150 years, through heavy lobbying and massive funding, corporate directors have leveraged their access to the courts and legislatures to endow the corporate form with ever-expanding rights. Armed with these rights and lots of money, corporations now have free rein to wreak hazards and hardships on communities and nature while gaining broad access to decision making at the local, state, and national levels.

 

Before Corporations Were King

When American colonists declared independence from England in 1776, they also freed themselves from control by English corporations that dominated trade and extracted wealth. After fighting a revolution to end this exploitation, our country’s founders retained a healthy distrust of corporate power. They limited corporations to a strictly business role. Corporations were forbidden from influencing elections, public policy, and other areas of civil society. The privilege of incorporation was granted only for activities that benefited the public, such as construction of roads or canals. Enabling shareholders to profit was seen as a means to that end. The states imposed conditions (some of which remain on the books) like these:

• Corporate charters (licenses to exist) were granted for a limited time and could be promptly revoked for violating laws.

• Corporations could only engage in activities necessary to fulfill their chartered purpose.

• Corporations could not own stock in other corporations nor own property that was not essential to fulfilling their chartered purpose.

• Corporations were often terminated if they exceeded their authority or caused public harm.

• Owners and managers were responsible for criminal acts committed on the job.

• Corporations could not make any political or charitable contributions nor spend money to influence law making.

For 100 years after the American Revolution, legislators controlled the corporate chartering process. Because of widespread public opposition, early legislators granted very few corporate charters, and only after debate. Citizens governed corporations by detailing operating conditions not just in charters but also in state constitutions and state laws. Incorporated businesses were prohibited from taking any action that legislators did not specifically allow.

Unless a legislature renewed an expiring charter, the corporation was dissolved and its assets were divided among shareholders. Citizen authority clauses limited capitalization, debts, land holdings, and sometimes even profits. They required a company’s accounting books to be turned over to a legislature upon request. The power of large shareholders was limited by scaled voting, so that large and small investors had equal voting rights. Interlocking directorates were outlawed. Shareholders had the right to remove directors at will.

Adapted from the Program on Corporations, Law and Democracy (www.poclad.org)

Addressing Root Causes

By examining the past, Cienfuegos, a longtime organizer, could suddenly see things in the present more clearly. “We had been fighting corporations that were clear-cutting the forests, but at the same time we were giving them the authority for it,” he said. “You could take any issue and the core problem was that we had empowered the corporate form with rights to commit harm.”

Corporations, legal fictions which were intended to be property, now had personhood rights—and with them, the ability to make key economic and political decisions. “Regular people can’t compete with that, no way,” Cienfuegos said. “After about a year of studying corporations’ rights and how they got there, the study group decided to get active, to try to address an issue by the root causes, not in the usual, symptomatic way.”

With this newfound understanding, Cienfuegos and the study group started Democracy Unlimited as a band of volunteers to change the rules locally, where the impacts of decisions touch the ground and affect people’s lives. The first step was educating people about the proper roles for people and corporations.

“We needed to have a culture shift where people understood this relationship,” Cienfuegos said. “Once people understood that they were being cheated, lied to, and virtually colonized by corporations, it was a short step to getting them to take action to change the rules.”

Through a series of public education forums, DUHC began to shift the culture of the community. People in Humboldt began to look around and see just how much corporations were damaging their lives. Intensive extraction of natural resources resulted in such extensive over-fishing and clear-cutting that ecosystems were collapsing, and industry jobs were following suit. Abundant fish stocks had once supported more than 40,000 fishing jobs; by the 1990s, it was estimated that only 5,000 salmon—the primary fish population—remained. Under the Maxxam Corporation’s heavy-handed approach, their employees’ pension funds had been plundered, and rampant clear-cutting had sent vulnerable hillside soils plunging into the rivers during heavy rains.¹ The county’s freshwater resources were under attack from a variety of corporations seeking to bottle and sell unsustainable quantities of the liquid gold. Chain retailers were forcing mom-and-pop stores out of business, virtually hollowing out the local economy. Enough was enough.

The Ballot Initiative

In the winter of 1997, about a dozen of those involved with Democracy Unlimited decided to test the political waters by running a ballot initiative addressing the political role of corporations.

“We didn’t feel we were ready to change the law,” said Cienfuegos, “but thought we’d try creating a government structure to reign in corporate rights, to make that task an official duty.” They looked to other organizations for advice, such as the Program on Corporations, Law and Democracy (POCLAD), which helped them with the language of the ballot initiative and with suggestions for framing the issue. The team decided they were too small a group to take the initiative countywide, and limited the ballot initiative to the town of Arcata. The group organized a series of public meetings to discuss the proposal. Hundreds came, signaling that the issue resonated with the locals. The successful forum energized the DUHC volunteers, who started to believe that maybe there was something that could be done to create change.

The ballot initiative, Measure F, called for the creation of an official committee to “ensure democratic control over corporations conducting business within the city, in whatever ways are necessary to ensure the health and well-being of our community and its environment.” The referendum passed overwhelmingly. Soon Arcata was hosting town hall meetings to establish the Committee for Democracy and Corporations (CDC) to review the role of corporations. An estimated 5 percent of the town’s population attended the meetings.

“The CDC was the first and only standing government committee to address these issues, and all with real public participation,” said Ryan Emenaker, a thoughtful and well-spoken twenty-something who currently serves as chair of the CDC and is also a member of the DUHC collective. “There have been many successes, including a formula restaurant cap and a prequalification contract, which makes it less likely that corporations with environmental or labor violations can win city contracts. We were also the second city in the U.S. to pass an anti-corporate personhood resolution.”²

Despite its success, Measure F had taken its toll on the DUHC’s volunteer team. “It took so much time; everybody was so exhausted, they just moved on,” Paul Cienfuegos said, “Democracy Unlimited was more or less just a shell. We won, but had no long-term organization.”

Enter Kaitlin Sopoci-Belknap, a young, vibrant southwesterner committed to environmental justice and determined to make a move to the Pacific Northwest. “I heard about the work they were doing in Arcata and I just decided to be part of it,” she said. “I basically lived off of my savings for a while, and DUHC was more or less operating out of a corner of my flat. It was just Paul and me, and he was hoping to move on to do other projects.”

After moving to Eureka, she met her partner and 2004 Green Party Presidential candidate, David Cobb, and convinced him to move to Humboldt. By 2004, Sopoci Belknap and others felt the group was ready to take on bigger things. They called a meeting of Democracy Unlimited to talk about the future. Sopoci-Belknap believed that it was “time to make a change, to formalize this group and make it a sustainable, viable organization.” Now the director of Democracy Unlimited of Humboldt County, Sopoci Belknap said that meeting helped DUHC “rise from the ashes like a phoenix,” transforming the group into what it is now: a county-wide education and action organization for local power, with an office, a staff, and a slew of volunteers. It was also at that meeting that the team decided DUHC should, as its first order of business, get involved in the campaign against the Maxxam Corporation’s recall.

Stoking the Fires for Action

Inspired by a community equipped to talk about corporate power, fortified by the lessons learned during the Arcata CDC campaign, and invigorated with a newly organized crew of volunteers, the DUHC was well-prepared to battle the Gallegos recall. In the months leading to the March 2004 recall vote, citizens really got it. The campaign took on a life of its own as the anti-recall forces grew from the initial band of veteran activists to the community at large. County residents from all political persuasions joined the effort. You didn’t have to be a long time radical to agree that an out-of-state corporation shouldn’t decide who got to enforce the county’s laws.

That community awareness was evident on Election Day. Not only was the recall defeated, but Gallegos actually gained support—winning 61 percent of the votes to keep him in office.

After the initial euphoria from winning the recall, a depression set in among those working on the campaign. “It was upsetting that we had to put aside what we were working on, all of us,” Cobb said. “Our community shelled out $250,000 to fight it, and so much time was invested that could have been spent doing something else … On the one hand, it was such a waste.”

The citizens of Humboldt were angry. A fight that no one in the community had asked for had drained the community in many ways. And what was to stop another corporation from trampling their rights next time? “We knew we could take the next step because of the work that had been done already,” Cobb told us with a grin. “We didn’t get to strip corporate rights that time, but the community understood that you can’t be for local control and community rights and also be for corporate rights.” The citizens of Humboldt, unwilling to wait for the next corporate power-grab, were ready to take an offensive posture and ensure that nothing like that could ever happen again in their community.

The “Yes on T” Campaign

In the months following the recall, many folks turned to DUHC for leadership. The group hosted a series of meetings and conversations to discuss what could be done. They spoke with unions, elected officials, farmers, conservationists, business owners, teachers, students, and others. It was not an easy process, given the diversity of those involved. But everyone agreed on one key value: It was time to get big corporate dollars out of Humboldt politics forever. After much discussion and debate, a new citizen referendum, the “Ordinance to Protect Our Right to Fair Elections and Local Democracy,” was born.

Better known as “Measure T,” the referendum’s central purpose was to bar out-of-town corporations from participating in local elections. But the measure’s language also included a direct challenge to the legal doctrine that a corporation must be treated as a person with constitutional rights. The referendum text read: “Only natural persons possess civil and political rights. Corporations are creations of state law and possess no legitimate civil or political rights.” By using such language to affirm the legality of restricting corporate political behavior, the measure reinforced the belief that corporations should be mechanisms to serve the people, not the other way around.

“It isn’t about being anti-business,” Cobb said. “There is a role for corporations, to serve the public good without exploiting people or the planet. It is about being pro-democracy; the current legal system is protecting property rights over people’s rights.”

In Humboldt, that radical idea (or commonsense one, depending upon your point of view) was gaining broader acceptance. From the start, volunteer energy drove the “Yes on T” campaign. A strikingly diverse coalition of organizations endorsed the measure, from the local Democratic Party and Green Party to a range of national environmental organizations and major labor unions. Dozens of local business owners also lent their name to the cause.

It was a clear example of how disparate groups can unite under a common agenda when the issue is about the rights of people to decide versus the rights of corporations to decide. “Put in this context,” Cobb said, “it’s a no-brainer.”

The “Yes on T” campaign had a bit of luck in its naming. Ballot measures are labeled in alphabetical order, and the chance naming of the measure lent itself to making a historical connection with the Boston Tea Party. Although usually remembered as the opening salvo of the American Revolution, the Boston Tea Party was, for the partisans involved, also an act of defiance against the unchecked power of the largest corporation of the day—the British East India Company, a tea monopoly.

To help make that connection, the campaign had thousands of tea bags custom-made that worked as clever combination of hot beverage-makers and political fliers. Emblazoned with a “Vote Yes! Measure T” logo and the scales of justice, the tea bags were distributed at campaign rallies, outreach events, and local restaurants. Everyone wanted to take one. The tea bags were a fun—and effective—way of communicating with the counties’ voters.

The measure was not without opposition; the county’s business establishment, among others, was firmly against the idea. So as the campaign approached the June 2006 primary election, in which the measure would appear on the ballot, national political and campaign finance analysts were intently watching. As John Bonifaz of the National Voting Rights Institute put it, Measure T was “one of the most important local democracy efforts happening anywhere in the United States. If it passes, it will have profound ramifications for campaign finance reform efforts across the country.”

Measure T passed with 55 percent of the vote. The cheers at the Democracy Unlimited office on election night were at a siren pitch.

Eliminating corporations’ influence in the political system, the DUHC partisans say, is the future for corporations everywhere, not just in Humboldt County. The backers of the Humboldt measure encourage other cities and counties to join them changing the rules one city at a time.

The “Yes on Measure T” campaign distributed thousands of tea bags stating, “It’s time for a ‘T’ Party of our own. It’s time for Measure T!”

“Democracy Unlimited is designed to work in solidarity with other communities,” Sopoci Belknap said, with a twinkle in her eye. “We’d love to see a Democracy Unlimited in every community—just call us up.”