The Third House:Lobbyists, Money, and Power in Sacramento

Jay Michael and Dan Walters, with Dan Weintraub

Ch. 3: Political Warfare Politics is war, and lobbyists are the field

generals Variety of tactics available Must adapt tactics as circumstances change

12 tactics

1. Win on the merits1. Preferred. Cheapest & cleanest

2. Win procedurally1. Effective, but may reveal weakness on merits

Example: last-minute attempt in 1999 to ban big-box retailers from selling groceries. Hammered by governor as “sleazy” attempt to circumvent process

12 tactics, continued

4. Win through grassroots activation

5. Win by mobilizing public opinion through “paid media”

6. Win by mobilizing public opinion through influencing the news media

7. Win with a silver bullet (to kill)

8. Win by burying the issue in the state budget

12 tactics, continued

9. Win at the ballot box

10. Win by negotiations

11. Win by moving the issue onto the courts

12. Win by postlegislative administrative action

13. Win the old-fashioned way by buying it

Example #1: Medical Malpractice 1975: lawsuits with huge awards cause

hike in malpractice insurance premiums California Medical Association wins Medical

Injury Compensation Reform Act (MICRA) $4M war chest High regard for medical profession Favorable media coverage Poorly organized opposition (trial lawyers)

PICRA Escalation Business coalition sought to extend MICRA

to other lawsuits (Personal Injury Compensation Reform Act) Deadline for compromise looming as 1987

session was ending; key players adjourned to Frank Fat’s

Finally, deal written on a napkin and carried into the Senate the next day

The Deal Drastic restriction in product liability laws

offset by fee increases for lawyers prosecuting medical malpractice cases. Doctors got promises that protections already in

place against lawsuits would not be touched. Insurance companies won a reprieve from

threatened regulations gaining momentum in the Legislature.

No Public Debate The legislation was rushed into print in less

than 48 hours and brought to the Assembly and state Senate for immediate votes on the last night of the legislative session for the year. No caucusing allowed No amendments by those not present at Fat’s

Business as Usual The napkin deal came to symbolize how

narrow economic interests dominate lawmaking in CA

But for Brown it was one of his proudest accomplishments, and he called it the “hallmark” of the session. He had brought peace, if only for a time, to the

seemingly insoluble battle over liability laws.

Immunity from Tobacco Lawsuits One of the most unpopular aspects of the

deal was immunity for the tobacco industry Repealed by legislature in 1997 In 2002, the California Supreme Court eliminated

almost all protections from lawsuits for the industry (Myers v. Phillip Morris)

Removed “immunity” from cases stemming from pre-1998 activity

Example #2: Utilities Deregulation In 1996, CA deregulated privately owned

electric utilities Regulation of distribution lines left intact Business of generating power separated from the

business of distributing it to the public Utilities to spin off much if not all of their generating

capacity, then compete with other resellers for customers, who will choose their suppliers and even purchase "green" energy from companies selling wind and solar.

What did the utilities get? $20-$28.5 B in paybacks to the utilities for

their bad generating plants (obsolete generators, mostly nuclear). These charges would be levied through

"transition fees" and other surcharges, buried in customers' bills

During the time it would take to pay back those bad investments, retail prices would be frozen.

What Went Wrong? SoCalEd and PG&E sold off too much of

their generating capacity and had too little of their own supply at a time when rates were still frozen. Then came a hot summer and a cold winter. The utilities found themselves at the mercy of

independent producers (e.g. Enron). Customers, buying power at fixed costs, had little

incentive to conserve.

The End of Davis Davis was forced to

use billions of CA taxpayer dollars to buy energy and save the utilities from bankruptcy (and CA from blackouts)

Enron trailer

Ch. 4: Money Money turns powerless into powerful – e.g.

California Indian tribes Reforms and arrests may cause dents in

the system and superficial reforms, but money, like water, always finds an outlet

The Major Players Health care providers California Correctional Peace Officers

Association California Teachers Association Indian gaming tribes

Bryan v. Itasca County (1976)

If a state statute regarding an activity conducted in a state is merely civil and regulatory in nature, it is not enforceable against Indian tribes within the state.

Seminole v. Butterfield (1979)

When Florida tried to shut down Seminole Tribe bingo games, the Seminole took the state to court.

The Supreme Court held that, given Bryan, the Seminole Tribe high-stakes bingo games could not be regulated by the state.

California vs. Cabazon (1987)

In 1983, the Cabazon and Morongo bands sued Riverside County for trying to shut down their bingo and card gambling operations.

The Supreme Court upheld Bryan and the tribes’ sovereignty, – Tribal gambling was beyond the reach of state

regulation.

Congress Reacts Cabazon spurred Congress to act to

regulate Indian gambling.– Although the Supreme Court had ruled

that the states could not do so, the possibility remained for the federal government to regulate tribal gambling.

The Indian Gaming Regulatory Act (1988)

Transferred to the states the authority to regulate Indian gaming.

Established three classes of Indian gaming:– CLASS I: traditional Indian social gaming with minimal prizes; no

regulation.– CLASS II: bingo and various card games where the payout is from

a players’ pool, to be regulated by the tribes and the National Indian Commission.

– CLASS III: all other gaming, including casinos and slot machines, allowed only if legal in the state and agreed to in a compact negotiated between the state and the tribe.

Allows for mediation if the state fails to negotiate Class III compacts in good faith.

Neither the tribes nor the states liked the new law

Tribes were prohibited from Class III gaming unless the states agreed.

States were prohibited from regulating Class II gambling, and were prevented from sharing in any economic benefits from tribal gaming.

California Indian Gaming

Until 1997, most CA Indian gaming was Class II.

After IGRA was approved, the tribes sought to expand into casino gambling.– At first, Gov. Wilson refused to sign Class III

compacts; the tribes and the state sought federal intervention.

The Wilson-Pala Compact

41 Indian casinos were in operation, but they were considered illegal because they did not operate under compacts.

In March 1998, Wilson signed an agreement with the Pala Band of Mission Indians.– Eventually, 11 tribal compacts were approved,

but most tribes rejected the deal.• No slot machines, limit of 19,900 gambling devices

Prop 5 Supported by coalition of 40 tribes not

included in the 1998 compacts.– Mandated governor to sign compacts– Allowed slot machines

Opposed by Nevada gaming interests, Wilson, and labor unions.

$100 million was spent on the initiative campaign.

Hotel Employees Union v. Davis (1999)

Prop 5 was approved overwhelmingly by CA voters, 62.4% to 37.6%.

Declared unconstitutional by the CA Supreme Court, August 1999– Would have allowed Nevada- and New

Jersey-type casinos, which are prohibited by the state constitution.

Davis Signs Compacts

After Prop 5 was declared unconstitutional, Gov. Davis began negotiations with various state tribes.

On Sept. 9, 1999, Davis signed 60 compacts with various tribal leaders.– Most of the provisions of Prop 5 were included,

such as the allowing of slot machines

Prop 1A Validated the compacts negotiated between

Davis and 60 Indian nations Constitutional amendment rather than statutory Approved by 64.5% of voters, March 2000

Gaming Today

In 2009, the latest year for which figures are available, tribal gaming in California brought in $6.9 billion, down from $7.3B in 2008 and $7.8B in 2007.

CA Correctional Peace Officers Empowered in late

1970s Granting of

collective bargaining rights

Proposition 13 “Tough on crime”

laws

The Power of the CCPOA Beneficial contracts despite ongoing budget

crisis http://

www.sfgate.com/cgi-bin/blogs/nov05election/detail?entry_id=85077

Prisons Under Pressure

Lobbying Today: Select & Elect? Has the CA lobbying process come full

circle from the era of Artie Samish to today?