New California Rules Target ‘Shadow Lobbyists'
July 21, 2016 07:52PM ET | Bloomberg BNA
• Lobbyists can rebut presumption that they need to register
• FPPC also imposes $100,000 contribution laundering fine
July 21 (BNA)
-- New rules from California's campaign ethics agency presume that a person who
is paid at least $2,000 a month to communicate with elected officials is a
lobbyist unless shown otherwise.
The five-member Fair Political Practices Commission unanimously approved the changes to its definition of a lobbyist July 21 to target so-called “shadow lobbying.” The rules apply to contract lobbyists who communicate directly with elected officials but don't register as lobbyists. These individuals claim they are
paid for other services such as research, strategy, public relations, and grass
roots organizing, which exempts them from lobbyist registration.
The FPPC's rules haven't kept pace with sophisticated techniques of shadow lobbyists or those who seek to evade or obstruct the law, Senior FPPC Counsel Emelyn Rodriguez told the members before the vote.
When the FPPC investigates such cases, it finds that political consultants may acknowledge they have direct communication with elected officials on behalf of clients. The consultants often fail to produce records or other evidence that track the amount of compensated time for those communications versus other services,
leaving their status as a lobbyist unsettled.
The commission levied its first-ever fine for shadow lobbying in 2013—a $40,500 fine against a political consulting firm and three of its principles for failing to register and file lobbyist reports (3601 Money & Politics Report, 9/20/13).
The new rules trigger a rebuttable presumption that a person is a contract lobbyist if he or she is paid $2,000 or more a month for services that include direct
communication with public officials to influence action. The FPPC will presume
that the payments are for direct communication unless and until the person
offers evidence to rebut the presumption.
In response to questions from commissioners about the type of information that would rebut the presumption, Rodriguez said lobbyists could provide testimony or written statements that they provide other services and don't meet the registration
threshold. The burden is minimal, and doesn't shift the burden of proof to the
“We're talking here about a minimum burden of production,” she said.
Fly in the Soup
The commission approved the rules over the objections of the California Political Attorneys Association and a former commissioner Ronald D. Rotunda that the rules go too far.
In a July 12 letter to the commission, CPAA said the new rules will impose burdensome recordkeeping requirements on people who aren't subject to the Political Reform Act.
“The FPPC is effectively proposing a reverse-record-keeping requirement—mandating that individuals who do not fall under the provisions of the act maintain records to prove they do not meet the registration/reporting thresholds under the act,” Joseph A. Guardarrama, an attorney with Kaufman Legal Group in Los Angeles
wrote, on behalf of CPAA.
In a July 15 letter, Rotunda said the rules raise due process and First Amendment questions about shifting the burden of proof.
“While the FPPC staff argues that this rule merely affects the burden of production, that claim is as hard to swallow as a fly in my soup,” Rotunda said. “If the FPPC simply makes the claim and sits down, the defendant can (and probably will) be found guilty.
In other business, the commission approved more than 40 enforcement actions including:
• A $100,000 fine against AB&I Foundry , an ironworks company in Oakland, Calif., for laundering 37 contributions through employees totaling $23,900 to four mayoral candidates and two city council candidates, reimbursing the employees after they made the contributions. The FPPC fine is in addition to a fine of $14,400
approved by the Oakland Public Ethics Commission July 5.
• A $6,000 fine against Lyft Inc. for failure to file five lobbyist employer reports on time for 2013, 2014, and 2015 as it hired multiple lobbying firms to lobby the
Legislature on bills that applied to burgeoning transportation network companies.
• A $2,082 file against State Controller Betty T. Yee (D) for failure to file six 24-hour
reports that apply to contributions of $1,000 or more and one $5,000 report during her campaign in 2014.
The commission postponed action on a proposed $104,000 fine against Tina Baca Del Rio, a council candidate for the City of Commerce in 2013, for using campaign funds for personal benefit and multiple reporting violations. Del Rio met with FPPC
staff during the meeting and negotiated a settlement that would reduce the fine
to $55,000 and number of counts for PRA violations from 26 to 12. Commissioners agreed to delay their decision for a month to weigh whether to accept the agreement or move ahead with the $104,000 fine.
The proposed fine against Del Rio and the $100,000 fine against AB&I Foundry are among the highest in FPPC history.
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