Americans are used to handouts for favored groups. Affirmative action in university admissions, corporate “diversity” initiatives, and minority-owned contracting requirements direct opportunities, resources, and contracts to supposedly “oppressed” groups, such as women, Native Americans, blacks, and Hispanics.
In California, state Democrats have embraced another kind of favoritism: contracts for state-certified gay-owned businesses.
The scheme operates through the California Public Utilities Commission (CPUC), which regulates privately owned utility companies. California utilities spent more than $43 billion in 2024 on contractors—fuel suppliers, surveyors, engineers, and others—whose work helps deliver water, gas, electricity, and internet service to California’s 39 million residents.
In 1986, Governor George Deukmejian signed Assembly Bill 3678, which required certain CPUC-regulated utilities to submit annual “plans” for buying goods and services from woman- and minority-owned companies. Two years later, CPUC created its “Supplier Diversity Program,” which would enforce the law and set contracting “goals” for large utilities.
Under a series of Democratic governors, the program has expanded to include gay-owned businesses. In September 2014, then-Governor Jerry Brown signed legislation requiring CPUC to recognize “LGBT-owned businesses” as eligible for supplier-diversity benefits. Five years later, Governor Gavin Newsom expanded the program further, “encouraging” other companies involved in the energy sector to award contracts to gay-owned firms.
In the years that followed, CPUC faced activist pressure as it implemented the gay expansion. BuildOUT California, a since-rebranded LGBT building-industry organization, sent a letter to the commission arguing that “homophobia” existed within “the ranks of the utility companies.” The state’s legislative LGBTQ caucus suggested in a 2021 letter that even considering lower gay-procurement targets was “an insult to the LGBTQ+ community.”
By 2022, CPUC had fully implemented the expansion. In practice, this meant establishing a “goal” for utility companies with annual revenues exceeding $25 million to buy things from state-certified LGBT businesses: 0.5 percent of procurement in 2022; 1 percent in 2023; and 1.5 percent in 2024 and beyond. If “large” CPUC-regulated utilities met these “goals” in 2024, they would have sent roughly $633 million to LGBT-owned firms.
This scheme raises an obvious question: How does a business qualify as officially gay? Paperwork. Supplier Clearinghouse, a group that certifies firms for the CPUC program, features a list of qualifications linked on its website. Applicants can secure certification by providing a letter from an “LGBT organization” attesting to their sexual preferences; proof that a newspaper identified them as “LGBT”; or three letters from “personal contacts” written “on company letterhead” attesting to their homosexual orientation. Corporate officials who “falsely represent” their business as gay face up to a year in county jail.
Supplier Clearinghouse also accepts gay-certification letters from the National LGBTQ+ & Allied Chamber of Commerce. The chamber has its own list of accepted documents, including human resources complaints or police records claiming LGBT discrimination. As NGLCC states on its website, “Certification is a journey, not a destination.”
Mary Ann Horton has experienced this “journey” firsthand. Horton, an early internet pioneer credited with helping develop the e-mail attachment, is a white male who “transitioned” and is now married to a woman. Horton’s company, Red Ace, is registered in California as a woman- and LGBT-owned business.
Hellbound and Down 