.Pay to Play in the State Capital

The newest scandal reveals how business actually gets done in Sacramento — and it's not pretty, particularly if you care about the environment.

The latest political scandal to rock Sacramento offered a rare glimpse this past week into how business actually gets done in the state capital. And it’s rather ugly, especially when you dig into the details of the case. Unfortunately, the California Fair Political Practices Commission, which uncovered the scandal, and the mainstream press, which duly reported on what the FPPC had found, chose to focus mostly on technicalities — the specific laws broken by an influential lobbying firm and the large fine it received — rather than the giant loophole in state law that allowed for obvious influence peddling, in which powerful special interests got to ask Governor Jerry Brown and dozens of state Democratic Party leaders for favors as they handed them big checks while sipping expensive booze, smoking fine cigars, and dining on catered food.

So far, the scandal has centered on high-powered lobbyist Kevin Sloat and his Sacramento firm, Sloat Higgins Jensen Associates. Under California law, it’s illegal for lobbyists to make campaign donations directly to candidates. The law is designed to limit pay-to-play politics so that a lobbyist who is actively working to support or oppose legislation can’t get what he or she wants simply by making large contributions to key politicians.

But the Sloat scandal showed that lobbyists are easily circumventing this law. Instead of making donations themselves, they hold lavish parties that they call “fundraisers,” and they invite their clients to meet face-to-face with high-ranking politicians. Then, as the lobbyists and their clients press the politicos to give them what they want, the clients hand over $10,000 checks. According to the FPPC, from 2009 to 2012, Sloat held at least 26 such soirées at his upscale Sacramento home, involving at least forty politicians, including the governor and state Senate leader Darrell Steinberg.

The FPPC announced on Monday that it had levied a record $133,500 fine against Sloat and his firm. But the fine was based not on the actual substance of what was going on at Sloat’s parties, but rather on the fact that he had provided the booze, cigars, and floral arrangements, and that these items constituted illegal campaign contributions.

The case against Sloat badly missed the point. The scandal is not that lavish fundraisers often include cocktails, cigars, and flowers — and that someone other than a lobbyist should pay for them. The scandal is that a lobbyist, who makes his living off of money he gets from his clients and who is prohibited by law from using this money to make campaign contributions to politicians, can instead hold exclusive parties in which his clients can hand over those donations themselves.

Moreover, the FPPC seems to be strangely naive about all this. Rather than pointing out the need to close the loophole that allows pay-to-play transactions between special interests and politicians at exclusive parties, the agency sent “warning” letters to Brown and the others. The letters detailed the reasons why lobbyists aren’t allowed to supply party favors, and then added that the agency had found no evidence that the politicians knew that Sloat had done so, and so had done nothing wrong.

Um, really? Then what was the point of these parties? Was it really just to raise funds for political campaigns or was it all about special interests getting to pay politicians while lobbying with their lobbyists?

Robert Stern, who wrote California’s political ethics law and is the former head of the FPPC, said the point of the parties was obvious. “The whole purpose is for these public officials to meet directly with lobbyists and their clients,” he said. “And the reason that [the clients] make donations is not because [they] support the legislator. The reason [they] do it is have access to the legislator. It’s a business decision.”

So what business was going on at these parties? Although we don’t know exactly who was on the guest lists, we do know, based on public records filed with the Secretary of State’s Office, who Sloat’s clients are and what they’ve paid him to do on their behalf over the years.

And though he has many clients in varying industries, some of them have arguably worked against the best interests of California residents and the environment. One of his best clients, for example, is Aera Energy LLC, which is jointly owned by Shell Oil and Exxon Mobile. Over the past decade, Aera has paid Sloat’s firm $740,618 to lobby against proposed stricter regulations and new taxes on the oil industry in California. And since 2012, Sloat has worked tirelessly — and successfully — on behalf of Aera to block attempts to enact a moratorium on fracking in the state.

Another of Sloat’s clients is the powerful Metropolitan Water District, which supplies water to much of Southern California. In the past decade, Metropolitan has paid Sloat’s firm $1.89 million, and in the past few years, his primary job on behalf of the district has been to lobby for the construction of two giant water tunnels in the Central Valley that would ship Northern California river water to the south.

Sloat’s client list also includes Pacific Gas & Electric Company. The investor-owned utility has paid his firm $1.86 million since 2003, and in the past few years, Sloat has lobbied on behalf of PG&E to limit home-solar rooftop installations throughout the state and to prevent stricter regulations for nuclear power plants from being enacted.

Another of Sloat’s clients, the American Progressive Bag Alliance, an industry group representing plastic bag manufacturers, paid him $50,000 last year to lobby against a proposed statewide ban on plastic bags — an effort that was successful.

On Monday, Steinberg announced that he had appointed a new Senate panel to devise stricter ethics rules and tougher campaign laws in the wake of the most recent scandal. At the top of the panel’s list should be a prohibition on private parties held by lobbyists, their clients, and politicians.


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