A proposed regulation to rein in “pay-to-play” practices at the state’s second largest public pension fund has stirred opposition from businesses for being too broad.
The groundbreaking California State Teachers’ Retirement System regulation, set for a Thursday hearing, would limit campaign contributions from companies engaged in or seeking business with the pension fund worth more than $100,000 in income or fees.
The limit of $1,000 would apply to all campaign contributions to any existing CalSTRS board member or candidate. It also applies to candidates and officeholders in the posts of state controller, state treasurer and the governor.
The controller and treasurer sit on the CalSTRS board as ex-officio members.
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Port of Long Beach: hearing this week |
According to a CalSTRS “statement of reasons,” the regulation is designed to address what is known in the investment industry as pay-to-play, where money managers and investment houses make campaign contributions to officeholders connected with public pension funds and then receive lucrative contracts from those funds.
Last year, press reports revealed that several investment companies benefited from this practice, winning contracts from CalSTRS and the California Public Employees’ Retirement System after making contributions to former treasurer Phil Angelides and former controller Steve Westly, both of whom were running for governor.
Among those singled out in a Los Angeles Times investigation was Boston-based real estate investment firm Beacon Capital Partners LLC.
There have been other attempts to rein in pay-to-play, but few as far-reaching as this one put forward late last year by CalSTRS. In part because of its broad language, the proposal has stirred opposition from the California Chamber of Commerce, which recently testified against the proposed regulation and announced the formation of a coalition of business groups to fight it.
While the regulation is aimed at money managers, the chamber said it likely would ensnare far more businesses.
“This blanket restriction could apply to businesses that provide information technology services, food products, insurance, building or maintenance supplies, legal services, copying services, office supplies and more,” the group said.
What’s more, the chamber argued, enacting the regulation could prompt other agencies to pass similar ones, enacting in piecemeal fashion a stringent statewide campaign contribution limit.
“This would have an impact on many more companies across the state,” the chamber said.
In making its case, the chamber cited recent state court rulings throwing out campaign contribution limits that went beyond Proposition 34, which was approved by voters in 2000. It limits individual contributions to statewide officeholders to $20,000.
Port Plugs
State air quality regulators plan to hold a public hearing this week at the Port of Long Beach as they consider a rule requiring almost all container and passenger ships docking at California’s biggest ports to hook up to shoreside power starting in 2010.
The aim of the state Air Resources Board regulation, which is due for final consideration this fall, is to sharply cut emissions from diesel engines that can run for hours while ships are at dock. If enacted, regulators say diesel emissions at the ports of Los Angeles and Long Beach could be cut by 30% by 2025.
Shipping companies oppose the regulation, saying that hooking up to shoreside power outlets could prove too expensive. Not only would they have to reconfigure their ships to accommodate bulky transformers, they also would be subject to electricity price swings, especially during the summer months (the peak cargo shipping season).
Also, shipping companies are concerned that each port would have the power hookups configured in a slightly different way, making standardization difficult.
Instead, they are expected to push regulators to keep ship-to-shore power hookups as an option, not a mandate. In the past couple of years, China Ocean Shipping Co. voluntarily agreed to use shore power at the Port of Los Angeles. Shipping line NYK has agreed to retrofit its ships to have the ability to hook up to shore power.
In a presentation in January, Air Resources Board staff members promised to work with electric utilities to guarantee affordable power supplies for the ports. But they still intended to go ahead with the shore power mandate.
Water Discharge Permits
Also this week, the State Water Resources Control Board is set to consider whether to craft a uniform standard for all of the state’s local water boards to follow when it comes to approving permits for facilities to discharge waste into local waterways.
The California Manufacturers and Technology Association has been pushing hard for such a standard, saying it’s too cumbersome for companies with many facilities to comply with differing discharge standards. Also, the association argues that local water boards often set discharge limits that are infeasible or not based on sound science, making it too costly for businesses to comply.
Environmentalists have countered that industry is trying to “water down” the discharge standards. And, as of late January, water quality control board staff appeared to side with environmentalists in rejecting the development of uniform statewide standards. This week, industry will have a last chance to make its case before the issue is decided.
Fine is a staff writer with the Los Angeles Business Journal.
