Shadow Lobbying

Patrick McGreevy
January 16, 2015

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.

“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.
It’s a Mack Truck-sized loophole. – Carmen Balber, executive director, 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.

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.”

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