New California Lobbyist Disclosure Rules Good First Step But Loophole Will Undermine Change, Says Consumer Watchdog

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Santa Monica, CA — The Fair Political Practices Commission today approved a new regulation requiring more disclosure of shadow payments by the state’s biggest lobbyists on advertising and other spending to influence lawmakers. Consumer Watchdog said a loophole in the rules could allow big industries or other lobbyists to continue concealing this spending by funneling the funds through third parties.

“We support the FPPC’s efforts to take on a flaw in lobbyist disclosures that hides tens of millions in payments by the state’s biggest lobbyists 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,” said Carmen Balber, executive director of Consumer Watchdog.

The rules will require companies to provide more detailed accounting of lump sum “other payments to influence” on lobbying reports. This catch-all category allowed the state’s biggest lobbying spenders to obscure millions of dollars spent 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, or 69% of the spending by the top ten lobbyists in Sacramento, according to the FPPC.

Consumer Watchdog said the Commission could close the loophole by requiring additional disclosure of sub-vendors. Read the letter:

Here’s how the loophole could work: The Western States Petroleum Association (WSPA) could write a $6 million check to ABC Consulting firm. WSPA would disclose $6 million in “public affairs” spending under the new rules, paid to ABC Consulting. Then ABC Consulting would use the money to pay for advertising, research, consultants, grassroots campaigns or anything else WSPA requested. Under the rules approved today, neither WSPA or ABC Consulting would have to explain where the money went and Californians would end up with little more information than they have today.

In the third quarter of 2015, the Western States Petroleum Association, or WSPA, spent a record $6.7 million lobbying, much of it to kill a plan by Senate leaders to reduce petroleum use in California by 50%. $6.1 million of that was disclosed in a lump sum as “other payments to influence,” with no information about where the money was spent.
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 rules as approved will require lobbyists reports to detail any direct spending on advertising, media relations, consulting, grassroots organizing, events or research, as well as payments to employees of lobbyists that are currently not itemized.

Several commissioners raised questions about how reporting firms could circumvent the rules. Commission Chair Jodi Remke said the FPPC will report back in October after the first reports under the new rule are filed.


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Carmen Balber
Carmen Balber
Consumer Watchdog executive director Carmen Balber has been with the organization for nearly two decades. She spent four years directing the group’s Washington, D.C. office where she advocated for key health insurance market reforms that were ultimately enacted into law as part of the Affordable Care Act.

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