Firms with LGBTQ ownership have an advantage in winning contracts from the California Public Utilities Commission — but only if they can prove it.
U.S. Assistant Attorney General Harmeet Dhillon said Wednesday she has opened an inquiry into the commission’s program encouraging utilities to meet a “voluntary” goal of 1.5% procurement from state-certified LGBTQ-owned businesses which, if met, amounts to $633 million annually.
“I don’t know how who somebody sleeps with is relevant to their provision of utilities-related support services. That’s rhetorical. I think we know it isn’t,” Ms. Dhillon told podcast host Glenn Beck. “It’s nonsense, it needs to stop, and it’s illegal.”
Her comments followed an explosive report by Manhattan Institute senior fellow Christopher Rufo on the commission’s Supplier Diversity Program, a 1988 initiative aimed at promoting female- and minority-owned contractors that was expanded in 2014 to include LGBTQ-owned businesses.
“To qualify, residents must go through the state’s official gay-certification program — and face up to a year in jail if they’re not gay enough,” said Mr. Rufo, whose Tuesday report was co-authored with City Journal senior investigative reporter Austen Hufford.
To qualify for LGBTQ certification, companies must check at least one box on a 13-item checklist from the Supplier Clearinghouse, which certifies the “LGBT status” of contractor ownership for the commission.
The list includes providing a copy of the owner’s same-sex marriage, civil union or domestic partnership; evidence of “family building efforts” with a same-sex partner, including in vitro fertilization and surrogacy, and media references to the owner’s LGBTQ identification.
The clearinghouse also accepts a letter from an attorney or physicians; three letters of reference from personal contacts on their “company letterhead or stationery” who can “vouch/attest to LGBT status,” or one letter from a “recognized LGBT organization.”
Firms with non-gay owners who lie to secure contracts face up to a year in prison under Assembly Bill 1678, the 2014 legislation signed by Gov. Jerry Brown adding LGBTQ-owned businesses to the list of companies benefiting from the “business enterprise procurement” program.
The program, which also covers businesses owned by women, people of color and disabled veterans, requires utilities to establish “minimum long-term procurement goals for each category,” but insists that the goals are not mandatory quotas.
“No penalty shall be imposed for failure of any utility or other covered entity to meet or exceed procurement goals,” said the commission in its updated rules published in 2022.
Mr. Rufo said the commission may be violating the spirit if not the letter of California Proposition 209, the 1996 initiative banning government entities from considering race, sex, ethnicity and other factors in education and contracting.
“In practice, however, the agency cajoles utilities into compliance by requiring them to collect extensive demographic data, submit detailed annual reports, list their plans for increasing procurement from favored groups, and explain ’any circumstances that may have resulted in not meeting’ their procurement ’goals,’” said the report.
BREAKING: The Department of Justice is opening an inquiry into California’s gay-certification program. As always, @AAGDhillon is moving into action—and defending the principle of equality under the law. https://t.co/hHc92ZS2hD
— Christopher F. Rufo ⚔️ (@christopherrufo) June 17, 2026
Ms. Dhillon said that California consumers are footing the bill for such “minority set-asides.”
“How does that help the ratepayer, everybody who consumes utilities in the state of California, get the best rates? It doesn’t,” she said. “Obviously, when you have set-asides and special contracts like that, you have inflation because people know that their status is a commodity that they can actually sell, because it’s being forced on the state and on the ratepayers.”
The report was met with jaw-dropping on the right.
“I can’t believe this is real,” said the Libs of TikTok account on X. “California has a gay certification checklist to ensure taxpayer funded contracts only for lgbtq people, are being awarded to people who are gay enough.”
Kyle Mann, editor-in-chief of The Babylon Bee, the satirical Christian conservative website, replied: “If my @TheBabylonBee writers had pitched this as a joke, I would have rejected it for being too outlandish.”
Ms. Dhillon encouraged companies that may have lost out on utility contracts to consider taking legal action.
“I think this is illegal, so we’re definitely looking into what can be done about it by the Department of Justice,” she said, “But the other people who can do something about it in some instances can be private parties [that] weren’t picked for a contract because they don’t have the correct boxes checked.”
Terrie Prosper, CPUC communications director, said that the voluntary program established by the state legislature in 1986 benefits consumers by encouraging competition.
“As such, the Supplier Diversity Program has existed for almost 40 years with the fundamental and ongoing goal of advancing the American and Californian private enterprise marketplace through free, open, and transparent competition,” she said in an email.
She said that the program “encourages utilities to purchase at least 23 percent of their total procurement from diverse suppliers,” including women, minorities, disabled veterans and LGBT individuals.
“Advancing competitive procurement opportunities for everyone by having voluntary programs like this assists utilities into reaching new markets, increasing shareholder value, and controlling costs,” Ms. Prosper said.
