Amount of lobbying done in the shadows is growing, California ethics officials agree

Jan. 17, 2016 12:05 AM PT

Reporting from Sacramento — The dire warning arrived in a mailer to thousands of state voters from a group called the California Drivers Alliance.

“Gasoline restrictions ... will hurt families in LA,” the geographically targeted mailer warned, alerting the recipient that legislation being debated in Sacramento would “take away our ability to drive to work in our own cars.”

The group’s name sounded as if it was a grass-roots organization of motorists, but it was actually the creation of the Western States Petroleum Assn. as part of its successful lobbying effort last year to kill a proposal that would have reduced gas consumption by 50% in California by the year 2030.

When the leading oil industry association in the state publicly filed a required disclosure of its lobbying effort, there was no mention of its funding of the mail campaign and a related YouTube video.

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“Under usual circumstances, these campaigns can fly under the radar with the public none the wiser,” said Carmen Balber, executive director of the nonpartisan group Consumer Watchdog.

Now, top state ethics officials have agreed that weak laws allow oil companies, labor groups and other special interests to conceal how they spend much of their money trying to influence state government, and that the amount of lobbying in the shadows is growing at an alarming rate.

In a report to the state Fair Political Practices Commission, attorneys for the panel are proposing sweeping new requirements aimed at shedding light on how lobbying firms are spending tens of millions of dollars annually in Sacramento.

“Without additional disclosure, the public cannot determine how interest groups spend money to influence state legislation and agency action,” wrote general counsel Hyla Wagner and senior council Emelyn Rodriguez.

Currently, companies that hire lobbyists must report the amount they pay the advocates, but other spending to influence government officials can be lumped together under a category, “other payments to influence,” without any explanation.

Those other payments could include money spent to hire former politicians not registered as lobbyists to influence decisions behind the scenes, payments to nonprofit groups to advocate a position, and cash spent on television, radio and newspaper ads to pressure lawmakers on a particular bill.

It’s a Mack Truck-sized loophole.

— Carmen Balber, executive director, Consumer Watchdog

The Western States Petroleum Assn. reported a record $6.7 million spent on lobbying in the three-month period ending Sept. 30, when the gas bill was being hotly debated.

The shift toward unreported lobbying is significant, the attorneys found. In the year 2000, the 10 groups that spent the most on lobbying paid out $12.3 million, of which 52%, or $6.3 million, went to “other payments.”

In 2014, the top 10 interests spent $35.7 million, of which 69%, or $24.5 million, was hidden in the unitemized “other” category, the FPPC review found.

The current laws “are completely opaque when it comes to the money companies spend to influence the public in order to get to the lawmakers,” Balber said. “That’s a hole that needs to be fixed.”

The new rules would require itemization of “other payments” of $2,500 or more to include details including the payee, the amount and the primary purpose of the payment, such as advertising, consultants, research and public affairs.

“We think this is the type of stuff people should be able to look up,” said Nicholas Heidorn, an attorney for California Common Cause, a good-government group. “It’s a very significant step forward.”

Lobbyist Jason A. Gonsalves said he is open to the change. “Assuming such disclosure can be done within our existing filings, we support transparency and we feel the members of the Legislature and public have a right to know ‘all activity,’ not just ‘lobbying,’’ Gonsalves said.

Balber said the change does not go far enough. The category “public affairs” is too broad and could allow lobbying firms to hide money spent on grass-roots campaigns, coalition building, publications, phone banking, canvassing and robocalls, she said.

“It’s a Mack Truck-sized loophole,” Balber said.

She is calling on the Fair Political Practices Commission, when it meets Thursday to consider the changes, to also require that payments to subvendors be disclosed so those hired by public affairs firms are not hidden.

Representatives of the Western State Petroleum Assn. did not return requests for comment on the proposed new rules.

Representatives of another top spender on lobbyists, the California Hospital Assn., said disclosing more information is not a significant concern and would not change how they operate.

“It’s just another layer of compliance for them, so it’s another cost of being a lobbyist employer,” said Ashlee Titus, an attorney for the association.

The new reports would have to name the experts in regulatory and medical issues used by the CHA, said Jan Emerson-Shea, a vice president for the association.

They would also have to disclose funding of campaign groups such as Caring for Californians, formed by the hospital association with labor last year to organize rallies at the Capitol and run television ads seeking increased funding for MediCal.

“Because we have always approached this looking to be as transparent as possible, if that [law change] ever were to be the case, so be it,” Emerson-Shea said.

The need for more sunshine is endorsed by Jodi Remke, chairwoman of the Fair Political Practices Commission, who said the goals are to increase transparency and promote compliance.

“The public is entitled to know who is trying to influence public officials and how they are doing it,” Remke said. “Lobbying is largely a self-regulated industry and requiring more detailed reporting is the most effective tool to promote compliance and facilitate enforcement against improper activity.”

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Twitter: @mcgreevy99

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