Loophole Would Keep Lobbyist Spending In Shadows

UPDATE, Thursday Jan 21: The Fair Political Practices Commission approved new rules requiring lobbying interests to report tens of millions in shadowy payments to influence the legislature. But the FPPC’s failure to close a loophole could make the rules moot by allowing companies to funnel those funds through a middle-man and continue keeping most of their spending in the dark.
 
 
"Asked why the commission didn’t take action, say, in 2000 when 52 percent of total payments were being described as “other,” Wierenga said, “There’s been resistance at some base level from the lobbying industry. And I think that previous (commission) chairs had other, higher priorities.”

“'Resistance' from the lobbying industry suggests that the commission must be watchful about how the new rules are applied.

"Already, Consumer Watchdog has alerted the commission that allowing an option to disclose payments as “public affairs” could allow lobbyist groups to hire third parties to avoid disclosure. It may sound cumbersome, but lobbying groups are dogged in their quest for influence. That’s had negative effects on the public’s interest, and it's always a potential threat."

 
ORIGINAL POST:
A loophole that would allow lobbyists to launder money through third parties may stymie the Fair Political Practices Commission’s attempt to shine more light on money spent by big industries to influence the legislature.
 
In December the FPPC unveiled rules requiring lobbyists to provide more detailed accounting of lump sum “other payments to influence.” This catch-all category allows lobbyists to obscure millions of dollars in spending to influence the public in the hopes that moving public opinion will change politicians’ votes. In 2014, these “other payments” accounted for $24.5 million, 69%, of the spending by the top ten lobbyists in Sacramento.
 
Massive spending by the oil industry at the end of the last legislative session is Exhibit A for how little the public knows about where that money goes. The Western States Petroleum Association, or WSPA, spent a record $6.7 million lobbying in the third quarter of 2015, much of it to kill a plan by Senate leaders to reduce petroleum use in California by 50%. 
 
Some of that money paid for videos and print mailers that claimed the bill would make it tougher for families to drive to work or buy groceries. The supposed source was a grassroots-sounding group called the California Drivers Alliance. None of this was disclosed when WSPA reported spending $6.1 million in “other payments.”
 
The Commission’s new rules would require more detail about who was paid and what was paid for, including advertising, media relations, consulting, grassroots organizing, events or research. 
 
But companies that lobby could sidestep the rules entirely by simply funneling spending through a third party. Take the case of the oil industry under the new rules: WSPA would write a $6 million check to ABC Consulting firm. WSPA would disclose $6 million in “public affairs” spending paid to ABC Consulting. Then ABC Consulting would spend all the money for them. Neither WSPA or ABC Consulting would have to explain where the money went and Californians would end up with no more information than we had when the Commission started.
 
Consumer Watchdog called on the Commission to close this gaping loophole in a letter last month, calling for additional disclosure of sub-vendors to eliminate the ability of special interests to hide their spending behind a middle-man. 
 
To do so, the Commission may have to go old school. 
 
Political interests use 21st Century political tactics, but in California the public disclosure of their activities is housed in a 20th Century political database. The technology is so outdated and inflexible that, as FPPC staff wrote in the memo accompanying their proposed rules:
 
"Forms on the Cal-Access system have fixed fields and space restrictions that limit how much new information can be entered. [Secretary of State] technical staff stated that adding new fields to any of the relevant lobbying forms was not feasible."
 
Secretary of State Alex Padilla was blunt about this tech failure at a recent Senate hearing on civic engagement:
 
"The guts of Cal Access and how it’s built and how it has evolved leaves much to be desired," he said. "From a technical, a coding standpoint, it’s often referred to as a Frankenstein monster of code." 
 
It’s time for the legislature to pony up and pay for a campaign database that works for modern voters. If they don’t, voters may have a chance with a proposed ballot initiative that would provide $13 million in new funding to upgrade the system.
 
Until then, the FPPC can require lobbyist disclosures of subvendors to be filed on a separate form and post it as a pdf to their website. It’s far from the ideal solution. But until the legislature, or the voters, finally upgrade our outdated tech it may be the best we can do. 

Capitol Watchdog is owned and operated by nonprofit Consumer Watchdog. For more information about Consumer Watchdog visit http://www.consumerwatchdog.org

 
 

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