CALIFORNIA ELECTIONS / ADVERTISING : Liquor Industry Disclosure of Commercials Ordered

The Fair Political Practices Commission, the state’s political watchdog, notified the alcoholic beverage industry Wednesday that it cannot continue to air political advertisements that do not disclose who is paying for them.

The commission said its opinion was prompted by industry advertisements urging voters to approve Proposition 126, an industry-backed measure, and defeat Proposition 134, an initiative supported by health, law enforcement and public-interest groups. Proposition 126 provides for a modest hike in beer, wine and liquor taxes; Proposition 134 mandates a steep increase.

Earlier ads aired by the liquor industry group Taxpayers for Common Sense had disclosed that major funding for its ads was “provided by the alcohol industry and the Beer Institute.” But the organization dropped the disclosure in spots it began airing last Friday.

Citing what appeared to be a loophole in state law, Barry Fadem, an attorney for the campaign, said the ads did not have to contain full disclosure as long as their content dealt equally with two ballot measures. He said commission attorneys had endorsed his interpretation in an informal telephone conversation.

But on Wednesday, the commission ruled against the exemption in the case of the liquor industry- supported ads. It referred to a legal analysis of Proposition 105, a measure approved by the voters in 1988 requiring political ads in initiative campaigns to disclose their major funding sources.

“In enacting the new disclosure law, the voters clearly wanted to know who is behind the political messages that bombard them each election season,” said commission Chairman John Larson. “Our interpretation of the new law is a reasonable one which provides voters with the broadest disclosure possible.”

A spokesman said the campaign would refuse to pull the ads, arguing that the commission was on weak legal ground.

Sandy Michioku, a commission spokeswoman, said the commission would probably seek legal action against the liquor industry if it does not cancel the ads or change them to include full disclosure.

Minutes after the commission issued its opinion, Sacramento attorney Lance Olson filed a Superior Court lawsuit accusing Taxpayers for Common Sense of violating state law. The lawsuit seeks triple damages against the organization.

Olson, who filed the suit on behalf of the supporters of Proposition 134, estimated that if the lawsuit is successful his clients would be eligible for “hundreds of thousands of dollars” in damages.

Olson said that if there was a loophole in the law it only applied to “voter-qualified initiatives” placed on the ballot by petitions signed by voters. Because Proposition 126 was placed on the ballot by the Legislature, he said the industry could not use the loophole.

In its opinion, the commission said Olson was correct.

“Since the law applies only to initiatives qualified by the voters, we’ve determined that any time spent on anything else in the advertisements doesn’t count,” said Larson. “There would be a terrible loophole if committees could load up their political ads with other issues simply to avoid disclosing major funding sources.”

Calling the opinion “outrageous,” Fadem said the commissioners had “changed their advice in midstream.” He continued to insist that commission attorneys had given him verbal assurances that the ads would be legal. Fadem said he would pursue further legal action.

Since the industry began airing its advertisements without providing full disclosure, two other campaigns have done the same thing. An advertisement featuring actress Angela Lansbury that urges voters to defeat Propositions 131 and 140, which would impose term limits on state officeholders, did not disclose major financing provided by incumbent legislators and political committees organized by Assembly Speaker Willie Brown (D-San Francisco) and Senate President Pro Tem David A. Roberti (D-Los Angeles).

Political advertisements by supporters of the environmental measure Proposition 130, as of Tuesday, began omitting the identity of its principal backer--millionaire investment manager Hal Arbit. Proponents also invoked the loophole, saying they were giving equal mention to their own measure and Proposition 138, which they oppose.

The commission said it would review the environmental and term-limit advertisements to determine if they were complying with state law. It noted, however, that those advertisements did not deal with legislative ballot measures but with initiatives.