‘It’s just inherently intimidating’: Watchdog agency under fire for pressuring groups it regulates to oppose transparency bill

A rare and heated dispute has erupted between California’s campaign finance regulators and open-government groups that have accused the watchdog agency of pressuring them to rescind their support for legislation designed to show who is funding political ads.

Supporters of the bill criticized the state Fair Political Practices Commission for heavy-handed tactics that they said included pushing groups the commission has the power to investigate and fine to drop their support for the transparency bill.

“It’s really inappropriate for a regulator who has enormous power over organizations to call up those organizations over which they have power, and lobby them,” said Trent Lange, president of California Clean Money Campaign. “It’s just inherently intimidating to have your regulator call you and ask you to do something.”

Michele Sutter, co-founder of the group Money Out Voters In, called it “shocking behavior by the FPPC.”

The bill, which died on the second to last night of the session, would have required political committees that pay for print, radio and television ads on candidates and ballot measures to clearly identify the top financial contributors to the campaigns.

The state FPPC objected to late amendments by lawmakers that it felt affected its ability to prevent donors from secretly funneling money to a campaign in amounts that are higher than legal limits by laundering contributions through a third party.

Currently political action committees and businesses can contribute no more than $4,200 to a legislative candidate.

A business that wants to skirt those rules to give $50,000 to a candidate might illegally try to launder the money by distributing it to 12 employees who would then donate less than $4,200 each to the candidate.

The FPPC said the bill would make it harder to prosecute cases by narrowing the prohibition on earmarking laundered contributions to situations in which the original source of the money “expressly consents” to earmarking, said Phillip Ung, legislative and external affairs director for the FPPC.

“It really narrowed the circumstances in which we could successfully prosecute money laundering to the most obvious cases that we almost never run into,” Ung said.

Supporters of the bill, including former FPPC General Counsel Bob Stern, denied that the bill would have made it harder to take action against money-laundering schemes and said the measure advanced the cause of greater disclosure.

Assemblyman Jimmy Gomez (D-Echo Park), a co-author of the bill, said that despite widespread support from the political reform community, including 106,000 signatures on petitions, he was surprised when the FPPC opposed the bill, which he said “gave cover” to Republicans to vote “no.”

The bill failed to get a two-thirds vote when no Republican senators supported it. GOP lawmakers said during the floor debate that the FPPC’s opposition was a factor in their vote.

Many Republicans already had objections to provisions of the bill, including one that would allow organizations including unions and trade groups to collect up to $7,000 from their members for candidates and ballot measure committees.

Gomez shared concerns that the FPPC advocacy effort was heavy-handed.

“I think it’s a legitimate concern,” Gomez said. “They called every one of our supporters, the good government groups, and tried to peel them off. I think these groups might feel unnecessary pressure to change their positions.”

Emily Rusch, executive director of consumer advocacy group CalPIRG, said she was approached by Ung to drop her support for the bill.

She said the FPPC has appropriately taken public positions on bills within its jurisdiction in the past, but this is the first time she remembers getting a call from an official at the agency asking her to change her position.

Updates from Sacramento »

“He did make it clear it was a priority of the chair,” Rusch said referring to FPPC Chairwoman Jodi Remke. As a result, Rusch said she spent several hours re-reviewing the bill before deciding to maintain her group’s position of support.

An agency lobbying an organization it has the power to regulate “raises some questions,” Rusch said.

An officer with another nonprofit group, who spoke on condition of anonymity for fear of angering the FPPC, said that Ung also mentioned that Remke was taking note of which groups supported the bill and which opposed it.

“He said he didn’t like to play hardball, but he did feel compelled to remind me that the FPPC, particularly the chair, would have a long memory on this,” the officer recalled. “It seems pretty out of line to me.”

Ung said he acted appropriately while aggressively representing the FPPC’s position.

He said AB 700 was a priority for the commission and that pointing that out to people he spoke with was not meant as a threat.

“I said the commission has a long memory about this stuff,” Ung recalled. “When people push reform, we remember who supported it and who didn’t.”

Ung said he has no power to punish groups that refuse to adopt a position he is advocating.

“The way we have the firewalls designed here I don’t know how I could direct enforcement to go after somebody. I don’t direct enforcement,” Ung said.

Ung also called officials with California Common Cause, according to the group’s executive director, Kathay Feng.

“They are engaging in very strong tactics that many organizations are finding to be uncomfortable,” Feng said. “The uncomfortability is that we are simultaneously being lobbied by an entity that is taking a different position on a bill, and also has the power of enforcement of campaign finance laws over us.”

Feng and others said they think they know the motivation behind the FPPC’s opposition to AB 700 and another bill that would have required those trying to influence state procurement contract decisions to register as lobbyists.

It involves the Political Reform Act that then-Secretary of State Jerry Brown and others won voter approval for in 1974, Feng said. The law limits and requires disclosure of campaign contributions and other political activity.

Feng said the FPPC’s opposition to some bills this year reflects a desire by the Brown-appointed panel to simplify the law, not expand it.

“I have heard both Jodi Remke and Gov. Brown say publicly that they think it’s time to trim the Political Reform Act,” Feng said. “How that plays out in policy is something that we are experiencing right now.”

Stern agreed with Feng about the FPPC’s opposition to new disclosure bills.

Commissioners “have been somewhat resistant to changing the law,” he said. “I think they want to simplify the law. That’s their main goal. Any time you change the law it makes it more difficult for the agency and the regulated community.”

Remke declined comment to The Times, referring instead to a letter the commission sent to legislators about the bill. Agency spokesman Jay Wierenga said the FPPC’s priorities include effective enforcement and improved transparency.

“Nothing about simplifying the law should be construed as meaning we want to weaken it,” Wierenga said. “On the contrary, an easier-to-understand law would improve compliance and enforcement and would encourage civic participation, hopefully improving public trust.”

patrick.mcgreevy@latimes.com

Follow @mcgreevy99 on Twitter

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