Several recent changes have been made to state and local lobbying laws which deserve attention from those who are active in government affairs in California.
Expanded Disclosure Requirements for State “Grassroots Lobbying” Ads
The Governor signed a bill (SB 459) which will require an “Ad paid for by” line on “grassroots lobbying” ads regarding state bills and state agency matters; i.e., ads which urge readers or viewers to contact state legislators or other state officials about pending bills or state agency matters. The law refers to these types of ads as “issues lobbying advertisements.”
This new law will also require entities which pay for state-level grassroots lobbying to disclose more information about these activities on their lobbying reports, whether they file as lobbyist employers or “$5,000 Filers.” Whereas reports currently require lobbying entities to include payments made for grassroots lobbying ads along with all other lobbying expenses, under the new law, reports will have to itemize when a payment is for a grassroots lobbying ad, and will have to specify which state bills or agency matters the ad supported or opposed. Perhaps more notably, entities which pay for grassroots lobbying ads will have to file an additional report within 72 hours of running the ad.
Importantly, these new grassroots lobbying disclosure and disclaimer requirements will not take effect until one year after the Secretary of State updates its on-line filing system to allow for the new reports. The Secretary of State’s office indicated that it has not yet begun this project, so we do not anticipate these new grassroots lobbying disclosure rules to go into effect until 2024 at the earliest.
New Form Required During Last Months of Legislative Session
Under SB 459, lobbyist employers will be required to file a report if they hire a lobbying firm during the last two months of the legislative session (i.e., July and August). The report must be filed within two days of the lobbyist employer hiring the lobbying firm. This law was prompted by the enormous amount of lobbying that occurs at the end of the legislative session and the fact that current law does not require disclosure until after the Legislature votes on, and the Governor signs, new laws.
It is not clear from the new law whether a new form, or simply the existing registration amendment for adding new clients is required. It is clear however, that the disclosure will be required in July/August of 2023 regardless of whether the Secretary of State’s office has finalized a new form.
State Lobbying Law Expanded to Cover Certain
Department of Insurance Matters
In response to a controversy involving a large “win bonus” earned by a former state legislator in connection with Department of Insurance (“DOI”) approval of a merger between insurance companies, the State Legislature amended the state’s lobbying law to cover merger approvals and other DOI and Department of Managed Care actions. (AB 1783.) This law, which takes effect on January 1, 2023, will not only require lobbying firms, insurance companies and others to register and report specified lobbying activities; it will also prohibit lobbyists from earning win bonuses in connection with these types of DOI actions in the future.
This law follows efforts by the California Fair Political Practices Commission (“FPPC”) and various groups over the past few years to require entities seeking state government approval of a contract, permit or other matter involving a named entity to register and file lobbying reports. Although local lobbying laws typically require real estate developers and government contractors to register in connection with permitting and contracting matters, state laws have never applied to matters involving named parties, and instead have only applied to state bills, agency regulations and other matters of general application. Though the Governor has stymied efforts to expand the lobbying law in the past, this recent law relating to DOI approvals may signal the State Legislature’s willingness to amend the lobbying law to cover these types of matters at all state agencies in the future (which would increase the number of registrants exponentially).
Anaheim Increases Penalties for Lobbying Law Violations Following Scandal Relating to Sale of Angels Stadium
Lobbyists in Anaheim will now be subject to stricter regulations and heavier penalties. Federal investigations regarding the former Mayor and former Chamber of Commerce CEO spurred the City Council to strengthen the City’s lobbying laws (though the new regulations and penalties most likely would not have impacted the allegedly improper activities of the Mayor or CEO). While the City Council was unable to agree on stricter campaign finance laws, it voted to increase penalties for failure to comply with the City’s lobbying laws: up to six months in jail, a $1,000 fine, and/or being disqualified from lobbying City officials for one year.
Los Angeles City Ethics Commission Targets Non-Filers
The Los Angeles City Ethics Commission (“LACEC”) has attempted to amend and expand the City’s lobbying law several times over the last 20 years, but these proposals have been stalled by the City Council, for various reasons. The most recent LACEC proposal also seems to be held up at Council, although the Council may be willing to act in light of the scandals plaguing City Hall. In addition, several Councilmembers have recently submitted proposals to increase fines for not complying with the lobbying laws and to place more restrictions on registered lobbyists.
In response to the Council’s unwillingness to adopt a new lobbying law, LACEC staff has become more assertive with regard to non-filers and has recently levied numerous, large fines against them. One recent development has been the levying of fines against land use planning firms and “permit expediters” for failing to register and to file lobbyist reports. Although several of these entities have asserted to the LACEC that other planning firms, permit expediters, in-house lobbyists and grassroots lobbying organizations are not filing, there seems to be an inconsistency in enforcement. Though LACEC staff continues to focus on non-filing violations and has several active investigations, recently there seems to be a more conciliatory approach to those who were truly not aware of their reporting obligations, as long as they immediately come into compliance, pay the applicable registration fees, and pay a fine.
The LACEC is also focusing on nonprofit organizations, businesses and real estate entities’ employees which have not registered as City lobbyists, based on the allegation that these in-house employees have spent 30 hours or more on lobbying activities during a three-month period and had at least one substantive lobbying contact with a City official or employee, thereby qualifying as lobbyists under City law. Very few in-house employees are currently registered as lobbyists, and the LACEC seems to have an increased concern about project managers, government affairs managers and other in-house employees who are interacting with City officials on a regular basis but not registering as lobbyists.
The LACEC is also looking at whether nonprofit organizations which conduct grassroots lobbying should be filing “Major Filer” lobbying reports because they have spent $5,000 or more on grassroots lobbying during a calendar quarter. Social media campaigns, websites and mailers to residents are staples in fights over development projects and controversial ordinances, but few if any property owners or project opponents file Major Filer reports.
* * *
Feel free to contact a Sutton Law Firm attorney or Political Compliance Specialist with any questions about these new state and local lobbying laws.
THIS ALERT IS INTENDED FOR GENERAL INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE LEGAL ADVICE.
About the Sutton Law Firm
The Sutton Law Firm specializes in political and election law, representing businesses, individuals, candidates, ballot measures, PACs and nonprofit organizations involved in the political and legislative processes on the state, local and national levels. The firm offers its clients a full range of legal, reporting and litigation services.