Perspectives: An autopsy of an advertising blitz

The California Fair Political Practices Commission touts that The Political Reform Act “cemented California as a national leader” in “promoting transparency and fairness” in political spending.

But the system established by the Act is still so complex and so confusing that it’s difficult – if not downright impossible – to drill down on how much a special interest has spent to specifically influence a specific issue.

Consider, for example, the hubbub earlier this year over “Gavin’s gas tax,” SBX1-2, Gov. Gavin Newsom’s proposal to cap the profit of oil companies.

As the San Francisco Chronicle’s Dustin Gardiner recently reported, three nonprofits “with innocuous-sounding names” (Californians Against Higher Taxes, Californians for Affordable and Reliable Energy and Californians for Energy Independence) hammered the state with “a blizzard of social media posts and television ads” criticizing the proposal before it was approved in late March.

Back in 2014, the Natural Resources Defense Council revealed that all three of these organizations are tied to the Western State Petroleum Association, Chevron and the California Business Roundtable (of which Chevron is a member).

Indeed, the Chronicle reported that San Rafael attorney Steven Lucas helped organize all three groups, and the latest available IRS filings for the orgs show Catherine Reheis-Boyd, the president and CEO of Western States, sits on the boards of two of them (Californians for Energy Independence and Californians Against Higher Taxes), while Rob Lapsley, the president of the California Business Roundtable, sits on the board of the third (Californians for Affordable and Reliable Energy).

So, there’s really no question at this point that the three “innocuous-sounding” organizations are really fronting for Big Oil, or more specifically Western States, Chevron and the business roundtable.

But trying to follow along in the state’s mandated disclosures where money was spent, and for what purpose, is difficult. At best.

Western States, Chevron and the business roundtable are all registered as “Lobbyist Employers” with the California Secretary of State, which means they have to file quarterly a Form 635, a Report of Lobbyist Employer. The three front groups whose names were on the ads against the governor’s proposal aren’t registered to lobby. Instead, they had to file during the first quarter of 2023 a Form 645, a Report of Person Spending $5,000 or More to Influence Legislative or Administrative Action, which basically is a lobbying disclosure for groups not registered to lobby in California.

The 2023 first quarter lobbying disclosures for Western States, Chevron and the business roundtable all show them giving money to one or more of the front groups (as well as Chevron giving money to Western States and the business roundtable).

The front groups’ disclosure all show them spending money on consultants and advertising and “for public affairs,” which could include “coalition building, grassroots campaigns and public policy initiatives including news releases, media campaigns, literature and mailings, canvassing, and special events.” Two of the three front groups, Californians for Affordable and Reliable Energy and Californians Against Higher Taxes, specifically reference SB X1-2 as a bill they sought to influence that quarter. Californians for Energy Independence just said it lobbied on “GENERAL ISSUES RELATING TO ENERGY INDEPENDENCE AND CREATION OF ENERGY INDUSTRY JOBS”.

So, generally, we can see that Western States, Chevron and the business roundtable are funneling money to the front groups – and, again, generally, for SBX1-2 lobbying. But except for in one instance, the dollar figures don’t line up and the funds are labelled so broadly that’s hard to know whose money went for what, or what was actually spent on things like making advertisements versus hiring consultants to make advertisements.

What is clear is that Western States paid Californians for Affordable and Reliable Energy $262,950 for advertising – and Californians for Affordable and Reliable Energy turned around and paid $262,950 to the public affairs company Unearth Campaigns for advertising.

There’s no way to tell from the disclosures what, exactly, that $262,950 went to, if some of it paid for Unearth Campaign’s services or all of it went to producing advertising. That’s unclear. But thanks to the notation “[A]” next to both expenditures on the Western States and Californians for Affordable and Reliable Energy disclosures, we know that that money was spent, generally, on advertising.

As documented under FPPC reporting requirements, filers are explicitly allowed to lump related expenditures together on these forms. As an example, the FPPC’s guidance states, “A lobbyist employer paid a firm $100,000 to develop television, newspaper, and electronic commercials urging the public to contact their legislator to support a crime bill. A portion of that fee ($10,000) was for consulting fees for public affairs strategy and advocacy. The total expenditure amount would be reported using the payment code [A] for an ‘advertising’ expenditure as the primary purpose of the payment was for commercial spots.”

So, again, we know for certain Californians for Affordable and Reliable Energy spent $262,950 of Western States money on SBX1-2 advertising with Unearth Campaigns. But after that, things get real fuzzy real fast.

The system established by the Political Reform Act is still so complex and so confusing that it’s difficult – if not downright impossible – to drill down on how much a special interest has spent to specifically influence a specific issue.

The business roundtable reports giving $2.1 million to Californians for Affordable and Reliable Energy. Chevron reports giving $3.6 million to Californians for Energy Independence. And Western States reports giving $975,000 to Californians Against Higher Taxes.

But the Business Roundtable and Chevron labelled their expenditures as “[O],” for “all other payments,” including dues, making it unclear what that money was actually earmarked for.

We know from the Californians for Affordable and Reliable Energy’s disclosure that it paid Applied Paradigms, the political shop of Richie Ross’ son Joaquin, about $3.2 million for advertising. But, again, we don’t know how much of that money went to develop advertising or to compensate Joaquin Ross for his work. Did all of the business roundtable’s $2.1 million go to that advertising purchase? We don’t know that either.

We also know that Californians for Energy Independence paid the consulting firm Winner & Mandabach Campaigns $4 million for advertising as well as more than $38,000 to two consultants. Did all of Chevron’s money go towards Winner & Mandabach’s advertising? How much did Winner & Mandabach pocket from that $4 million, and how much went to advertising production? The disclosures offer no insights.

Meanwhile, Western States earmarked its $975,000 payment to Californians Against Higher Taxes specifically for “public affairs” purposes. But Californians Against Higher Taxes only reported spending a little more than $345,000 on public affairs. It reported spending $40,000 on consultants and nearly $275,000 on advertising. So, did Californians Against Higher Taxes just sit on the rest of the Western State’s contribution and pay for its other expenditures from another pot of money? There’s no way for the public to know just by reading the disclosures.

And there’s the rub. For a national leader in transparency, California’s disclosure system for political spending leaves a lot of unanswered questions, even after a close reading of publicly available documents. And that’s saying nothing about the amount of work you have to do cross-referencing disclosures or looking up vague but critical codes like “[A]” and “[O].”

There is no evidence whatsoever that any of the entities or individuals named in this article did anything wrong or improper. In fact, it’s just the opposite: Every time Capitol Weekly tried to drill down on a particular question about a disclosure or expenditure or a code, it found a legitimate, reasonable, legal explanation (sometimes with some guidance from the FPPC).

The point rather is just how difficult it is to make sense of all these disclosures and figures, especially when the entire Cal-Access system exists, at least in theory, to empower and enlighten the voting public and to hold political spenders accountable.