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Former top Schwarzenegger aide agrees to pay $32,500 in fines for shadow lobbying of state officials

In 2009, Gov. Arnold Schwarzenegger's chief of staff at the time, Susan Kennedy, takes a break with a cigar in the smoking tent area of an outdoor courtyard at the governor's office at the state Capitol.
(Robert Durell / For The Times)

Susan Kennedy, the former top aide to Gov. Arnold Schwarzenegger, has agreed to pay $32,500 in fines for shadow lobbying, or advocating for clients before a state agency without registering as a lobbyist, according to documents released Monday.

The state Fair Political Practices Commission’s enforcement staff says Kennedy failed to register though she attempted to influence the California Public Utilities Commission from 2012 through 2014 on behalf of her clients, Lyft Inc. and San Gabriel Valley Water Co. Kennedy was paid $201,000 for the lobbying work.

Kennedy served on the California Public Utilities Commission from 2003 to 2006. She was chief of staff to Schwarzenegger from 2007 to 2011 before she became a consultant.

She signed an agreement with the FPPC enforcement staff admitting to the violations of the state Political Reform Act.

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“In this case, the violations were serious since the public and other interested parties were not informed of Kennedy’s lobbying activity,” the agreement says. “While Kennedy maintains she did not intend to qualify as a lobbyist, given her experience and sophistication, she should have been aware at the time that her activity qualified as lobbying.”

The agreement and fines are expected to be approved by the Fair Political Practices Commission on Feb. 15.

The panel has been investigating shadow lobbying for years at the state Capitol and has fined others who have tried to secretly influence state government.

The state defines a lobbyist as someone who receives $2,000 or more in a calendar month to communicate directly, or through an agent, with state officials for the purpose of influencing legislative or administrative action. Such people must register as lobbyists with the state and periodically report who is paying them, how much and for what purpose.

Kennedy failed to register and disclose her payments, resulting in eight violations of the Political Reform Act. In 2012, Lyft Inc. gave Kennedy a $15,000-a-month contract to help “strategic management” of Lyft’s public policy interests, the report said.

Lyft and other ride-hailing firms including Uber were under the scrutiny of the PUC for operating without its approval at the time, and Lyft agreed to pay a fine of $20,000 for operating without the agency’s authority.

After being retained by Lyft, Kennedy contacted CPUC President Michael Peevey, Executive Director Paul Clanon and other staff to convince them that the state should work with the ride-hailing firms, not shut them down.

At Kennedy’s prodding, the California Public Utilities Commission decided to adopt rules on the new industry regarding liability insurance, driver licensing and background checks, driver training programs and vehicle inspections.

James C. Harrison, an attorney for Kennedy, said she “moved immediately once the discrepancy was identified to provide the necessary information requested by the FPPC. Integrity and character are hallmark principles in how Kennedy conducts herself in business, which is why she is acting swiftly and looks forward to its resolution.”

Updates from Sacramento »

patrick.mcgreevy@latimes.com

Twitter: @mcgreevy99


UPDATES:

3:15 p.m.: This article was updated to provide total amount of fines and a comment from Kennedy’s attorney, James C. Harrison.

This article was originally posted at 2:20 p.m.


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