Big Business Gives Lungren Major Financial Support

As attorney general for the past eight years, Dan Lungren has made no apology for accommodating big business. Now that Lungren is campaigning to become governor, business is helping him out.

With a campaign that will cost upward of $20 million by the Nov. 3 election, the Republican nominee is drawing big contributions from the oil industry, developers, utilities, timber companies, agribusiness, finance and insurance interests and wealthy conservatives--more than $5 million.

“We support those candidates who support economic growth, and that’s what it boils down to,” said William Campbell, president emeritus of the California Manufacturers Assn.

If Lungren wins, captains of California industry believe that they will have an ally. He proved it many times during his tenure as attorney general.

“I did not want to drive more business and jobs out of California,” Lungren said in an interview, promising to continue “business-friendly” policies if he beats his rival, Lt. Gov. Gray Davis.

Lungren said it is his political philosophy that attracts campaign contributions, and that he doesn’t shape his views or actions to curry favor with donors.

Those close to Lungren cite his personal aversion to asking supporters for donations, saying he generally delegates this duty to his campaign staff.

Reflecting the importance the nation’s Republicans place on his victory, Lungren’s largest source of money is the Republican Party and GOP officeholders. They gave $2.4 million of the $17 million he raised by the end of September.

However, Lungren’s backing comes from more than party loyalists. Records show that some businesses and industries that benefited from his stands and actions have given generously:

* Lungren has received more than $500,000 from agricultural interests in this campaign, and more than $1 million since he took office in 1991.

John Peace, political director of the California Farm Bureau, said Lungren endeared himself to agriculture when he worked as a congressman on immigration issues that helped ensure an adequate supply of farm labor.

Lungren’s office has sided with agricultural interests on some pesticide issues. In June, the attorney general decided against filing a suit that could lead to new warnings to farm workers when the heavily used fungicide captan, a carcinogen, has been sprayed.

The attorney general’s office earlier joined the Wilson administration in efforts to allow farmers to apply one of the most widely used soil fumigants, methyl bromide, which is thought to cause birth defects and damage the ozone layer, without issuing warnings to nearby communities.

“Dan has a long history of having served agricultural needs very well,” Peace said.

* In 1991, Lungren resolved a suit against the wine industry over use of lead foil around bottle tops. Some of his deputies had suggested that vintners pay $3 million, but Lungren settled for $900,000 and the industry’s promise to stop using lead.

“What’s the purpose here?” he said. “Are we supposed to remove a potential unhealthful exposure, or is it to get the most money for government?”

E&J; Gallo, a defendant in the case, has given Lungren $112,000 this year and $223,000 in past years. A Gallo executive declined to discuss the donations.

“Our people felt the attorney general was very evenhanded,” Wine Institute lobbyist Mike Falasco said, citing Lungren’s handling of the suit as a major reason that many wineries would back his candidacy.

* Lungren has acted against expanded gambling on Indian reservations. He has accepted at least $75,000 from gambling interests, primarily California card clubs and horse tracks, which view Indian casinos as a major threat. Los Alamitos racecourse gave $50,000 this year to a separate campaign committee to help Lungren’s election.

“Unrestricted Indian gaming is a disaster for horse racing,” said Dr. Edward Allred, owner of Los Alamitos. “You can’t compete with slot machines.”

* Lungren, who supports tougher limits on litigation, has taken in at least $1.1 million this year from perhaps the single largest target of lawsuits, the insurance industry. Companies and agents have given Lungren $1.8 million since his first statewide campaign in 1989.

* Major law firms that primarily engage in corporate work have given Lungren more than $1 million since 1989. Many of them go head to head with plaintiffs’ lawyers who support Davis.

“I am troubled that Gray Davis is being supported by . . . trial lawyers who have fought tort reform tooth and nail,” said former federal Judge Robert Bonner, a longtime Republican donor and a partner at Gibson, Dunn & Crutcher in Los Angeles. The firm’s partners have given Lungren more than $80,000 during his tenure.

* In some instances, Lungren donors have benefited from his aides’ decisions. The Department of Justice, without seeking bids, awarded a $49-million contract in 1996 to NEC Technologies to upgrade the fingerprint tracing system used by law enforcement. NEC had developed the original system.

This year, Packard Bell-NEC, another subsidiary of NEC, gave Lungren’s campaign $45,000. Executives said the firm’s donations to Lungren’s campaign were not tied to the contract.

“We had a superior technical solution,” said Tony Doonan, who represented NEC.

Gary Cooper, a state official who helps oversee the computer system, called the procurement process fair and said it would have cost more to switch manufacturers. The losing vendors are complaining, he said, because “more people listen in an election year.”

Executives at Cogent Systems Inc., which wanted to bid on the upgrade, were so dismayed by the process that they have been raising money for Davis. “It’s pretty simple,” said Cogent sales and marketing manager Gerry Schmidt. “We want to put ourselves in a position so we can have a constructive dialogue with people.”

Environmental Stands Assailed

On his television commercials, Lungren emphasizes his case-hardened support of the death penalty, and the tough laws he championed. But as California’s top lawyer, he also has authority to enforce antitrust and environmental laws. And it is this role that has engendered some of the harshest criticism of his job performance.

In 1996, Lungren lined up against local prosecutors and environmentalists in a nasty legislative fight. He argued for repeal of a statute that empowered prosecutors to criminally charge corporate leaders if their companies polluted waterways, whether they knew about the pollution or not.

The repeal was signed into law. It was backed by the oil industry, one of Lungren’s top donors.

Atlantic Richfield and its employees have given Lungren campaigns $230,000, including $101,000 this year. Chevron has given Lungren $328,000, including $160,000 this year. Chevron Chairman Kenneth Derr is Lungren’s Northern California fund-raising chairman.

Jack Coffey, who oversees Chevron’s governmental affairs, said enforcement of California’s tough environmental regulations will not differ dramatically, no matter who is elected governor. Chevron is more interested in helping Lungren, Coffey said, because he would protect Republican seats in reapportionment after the 2000 census.

“The environment is not an issue,” he said.

While his supporters give Lungren high marks for environmental and consumer protection, critics say he repeatedly has sided with business on important issues.

Lungren’s handling of environmental issues has been “poor, very poor,” said Golden Gate University law professor Clifford Rechtschaffen, who was a deputy attorney general during the first two years of Lungren’s tenure.

Rechtschaffen cites Lungren’s written argument in a 1995 U.S. Supreme Court case stemming from a timber industry challenge to the Clinton administration’s interpretation of the Endangered Species Act.

Some deputies wanted Lungren to side with Clinton. However, the attorney general argued on the side of timber companies, taking a narrow view of whether an endangered species is harmed when landowners cut trees or plow fields where the species may live.

The brief said a broad interpretation of “harm” would subject vast tracts of private land to federal regulation. It cited 3.8 million acres of Southern California sage that is home to the California gnatcatcher and 383,000 acres of timber owned by Simpson Timber Co. in Northern California spotted owl country.

The high court sided 6 to 3 with the Clinton administration.

Landowners mentioned or referred to in Lungren’s brief are big donors. The Irvine Co., which owns land that is gnatcatcher habitat, has given $407,000 to Lungren campaigns since 1989. A top Irvine executive is Lungren’s statewide fund-raising chairman.

Simpson Timber gave Lungren $100,000 earlier this year. Company spokeswoman Maureen Frisch said it is Simpson’s largest single contribution to a candidate.

The reason for the donation? “There is no one issue or ruling,” Frisch said. “It’s really a matter of knowing [Lungren], and following him for a number of years.”

Lungren spokesman Rob Stutzman said such briefs generally are written by career deputies who “have not the faintest clue who may or not be contributors.”

The attorney general has broad power to force polluters and manufacturers to comply with Proposition 65, a 1986 initiative giving him authority to sue over water pollution and requiring warning labels on harmful chemicals.

Lungren had some notable victories. His deputies forced makers of calcium supplements--taken by many women to prevent osteoporosis--to remove lead from their product.

In July, Lungren’s deputies negotiated a $43.8-million settlement with Unocal, the largest state environmental penalty, for a spill of millions of gallons of petroleum in San Luis Obispo. As part of the settlement, Unocal agreed to evacuate the town of Avila Beach and clean up the contamination.

“Our [environmental] enforcement has been vigorous and effective,” said Assistant Atty. Gen. Roderick Walston, who oversees the civil division.

The bulk of Lungren’s Proposition 65 actions have come only after environmentalists threatened or took legal action. In many other instances, his office has declined to join Proposition 65 actions.

One involved proposed litigation against a company represented by Nielsen, Merksamer, Parrinello, Mueller & Naylor--one of the most influential law firms in the state capital.

The nonprofit Environmental Law Foundation in Oakland threatened a suit in 1993 against the makers of dental fillings on the grounds that the law requires warning labels on substances containing mercury. Dental amalgam contains small amounts of mercury, a substance known to cause birth defects.

As the law required, the foundation notified the attorney general of its intent to sue.

The case was reviewed by Lungren’s environmental lawyers and then by chief deputy Dave Stirling, the Republican nominee to succeed Lungren.

Stirling provided attorney Steve Merksamer, who represented one of the manufacturers, with a letter saying that the attorney general would not sue and that “there is no conclusive evidence of the reproductive toxicity of mercury” from tooth fillings.

“My God. It’s hard to know where to start to criticize a letter like that,” foundation attorney James Wheaton said, contending that Stirling went beyond offering a legal analysis and contradicted the state’s own scientists’ findings.

Lungren, who only vaguely recalled the case, said there was nothing unusual about Stirling’s letter. “We do a good-faith effort to look at these things. We try to tell people what we find,” Lungren said.

Earlier this year, the state Office of Environmental Health Hazard Assessment refused a request by Merksamer’s client to take mercury off the list of chemicals known to cause birth defects.

Now, Wheaton is close to settling with several other manufacturers of dental amalgam. But Merksamer’s client, Kerr Manufacturing, continues to litigate the issue.

Merksamer, a former deputy attorney general and chief of staff to former Gov. George Deukmejian, is a Lungren campaign advisor and fund-raiser.

Attorneys at his firm have given Lungren more than $25,000 during his tenure. Merksamer noted that he contributes to many Republican candidates and said donations to Lungren did not influence what he called a “ridiculous” case.

Donors Cite Social Stands

Much of Lungren’s support comes because of his stands on social issues.

He has received about $400,000 this year from fellow conservatives who oppose abortion and support tax-funded vouchers for private school tuition. Howard Ahmanson, heir to the Home Savings and Loan fortune, gave Lungren $50,000 this year. A political action committee that Ahmanson helps fund gave Lungren an additional $150,000 in September.

In appellate court cases, Lungren has argued against late-term abortions, and for parental permission when a minor is seeking an abortion. He has argued against same-sex marriages, and has defended the Boy Scouts’ right to restrict its membership.

Legal opinions by his office have sided with religion on questions regarding separation of church and state. Lungren deputies concluded that Downey school officials, having allowed businesses to post sectarian ads on a baseball field fence, had to sell ad space to Edward DiLoreto, who wanted to post the Ten Commandments.

But state and federal judges have ruled against DiLoreto, who contributed $2,100 to Lungren before the 1996 opinion came out and $5,000 since. The money, DiLoreto said, is not linked to the opinion. “I don’t want any favors,” he said. “I like the Republican philosophy.”

Morain reported from Sacramento, Leeds from Los Angeles. Times director of computer analysis Richard O’Reilly and the Campaign Study Group of Virginia contributed to this story.

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Donations to Lungren Campaign

Following are the largest contributions to Republican Atty. Gen. Dan Lungren’s campaign for governor.

Donor: National Republican Party

1998 total through Sept. 30: $2.1 million*

Relationship: GOP sees California campaign as nation’s most important race.

****

Donor: The Irvine Co.

1998 total through Sept. 30: $263,000

Relationship: Orange County development company, major donor to GOP candidates

****

Donor: Alex G. Spanos

1998 total through Sept. 30: $252,500

Relationship: Stockton developer, owner of San Diego Chargers; longtime GOP backer

****

Donor: A. Jerrold Perenchio

1998 total through Sept. 30: $200,000

Relationship: Majority owner of Spanish-language network Univision; has given $235,000 to Lt. Gov. Gray Davis.

****

Donor: Calif. Independent Business PAC

1998 total through Sept. 30: $200,000**

Relationship: Conservative Christian businessmen have financed dozens of antiabortion candidates in the 1990s.

****

Donor: Chevron Oil

1998 total through Sept. 30: $160,000

Relationship: Petroleum, chemical interests

****

Donor: Allstate Insurance

1998 total through Sept. 30: $150,000

Relationship: Insurance companies back Lungren’s stance for tighter limits on lawsuits.

****

Donor: U.S. Automobile Assn.

1998 total through Sept. 30: $130,000

Relationship: Insurance company

****

Donor: Farmers Insurance

1998 total through Sept. 30: $125,000

Relationship: In addition to the parent company donation, dozens of Farmers agents have made small donations.

****

Donor: Hilton Hotels

1998 total through Sept. 30: $123,000

Relationship: One of largest donors to the campaign against Proposition 5, which would expand gambling on Indian reservations. Lungren opposes the initiative, too. Hilton gave $75,000 to Davis.

****

Other donors of $100,000 or more

Sierra Pacific and Simpson timber companies

Fireman’s Fund and Republic Indemnity

Edison International

E&J; Gallo

California Restaurant Assn.

Steve Beneto, who owns petroleum trucking company in West Sacramento

Container Corp., owned by Sen. Rob Hurtt (R-Garden Grove)

Rupert Murdoch, chairman of News Corp., which owns Fox Broadcasting

Foster Friess, chairman of the Brandywine Fund and financier

* Includes the GOP and its U.S. Senate and congressional campaign committees.

** Includes $50,000 separate contribution from Howard Ahmanson, a founding member of the PAC.

Source: Lungren campaign finance statements filed with the secretary of state

Compiled by Times director of computer analysis Richard O’Reilly and staff writer DAN MORAIN