House Judiciary Warns DoJ on Perata Leaks

I've been mulling this around in my head for a few days. Three powerful members of the House Judiciary committee have have sent a letter to the Justice Department calling for an investigation into leaks surrounding the inquiry into State Senate President Pro Tem Don Perata.

No article since November 2004 has explicitly said that any information came from a federal government source. But in a letter to U.S. Atty. Gen. Michael B. Mukasey obtained by The Times on Monday, U.S. Reps. John Conyers Jr., Linda Sanchez and Zoe Lofgren wrote, "We are disturbed and concerned that news story after news story . . . has cited federal law enforcement sources as the basis of information."

The only article specifically mentioned in the July 31 letter was a story in the San Francisco Chronicle. The article cited "sources familiar with the probe," a broad term that could encompass federal agents, defense attorneys and people who have been questioned [...]

On Friday, the day after the congressional letter was sent, a Wall Street Journal article said the investigation into Perata "gained momentum over the past year." The article's details were attributed to anonymous people "close to the defense," who said Perata's longtime political consultant, Sandi Polka, was granted immunity to compel her to answer questions.

(Here's that SF Chron article mentioned in the letter.)

The Perata investigation certainly has dragged on for years, leading to him needing more and more funds to raise in his defense. In particular, the dumping of $250,000 from the California Democratic Party into his legal defense fund raised a lot of eyebrows around these parts. After the initial explanation of "We're the CDP and we can do what we want," a secondary explanation was that the investigation had been politicized and that this was part of the DoJ's efforts to prosecute and delegitimize Democrats. A couple weeks later, out comes this letter, signed by two members of the California delegation. But it's Conyers' participation that makes me believe that this is a real concern. I trust Conyers enough to think that he wouldn't simply badger the DoJ to help out a political problem in California.

Of course, let's look at what the letter is actually alleging. It's not suggesting that the investigation itself is unnecessarily political, but that someone inside the investigation is using the media to disparage Perata. That may well be true, but it doesn't necessarily follow that the whole investigation is a farce.

Let's now look at what this does NOT suggest:

• It in no way excuses the CDP for paying off Perata with $250,000 in the middle of an election year, whether that money was simply laundered through them and earmarked for Perata or not. Based on this SacBee report, it appears Perata is perfectly capable of raising money for himself:

Senate President Pro Tem Don Perata has solicited at least $200,000 this year from political interest groups for a nonprofit foundation that promotes and rallies support for one of his bills.

The arrangement, apparently legal, allows the Senate leader to solicit unlimited funds for his own political agenda without having to detail how the money is spent.

"He may have found a loophole in the Political Reform Act that needs to be closed," said attorney Bob Stern, a co-author of the state's Political Reform Act who now runs the Center for Governmental Studies in Los Angeles.

Which leads me to point 2:

• There is no way that Perata should still be Senate President Pro Tem at this point. While he has done a good job of hammering Republicans for their intransigence on the budget, this image hit, as well as the constant distraction of having to find new ways to raise money for his legal bills, are not what we need at this sensitive time, ESPECIALLY when Darrell Steinberg is waiting in the wings and perfectly capable of performing the same duties without the black cloud of indictment hanging over the head of the Democratic leadership. They haven't even taken a caucus vote on this yet, to my knowledge - it's currently scheduled for August 21, but during these budget negotiations that's doubtful to come off.

It is perfectly consistent to be skeptical of the Justice Department's case against Perata and to ALSO demand that he step down from his leadership position, and to excoriate the CDP for their conduct in either shoveling Perata money or acting as a conduit for that fund transfer.

Why The Perata/CDP Scandal Threatens The Budget Fight

(Air America readers take note: I also cover California politics at my site and Calitics, the progressive website for the Golden State. Forgive my parochial interests today)

As many have noticed, the Leadership has moved on the offense in the budget fight. They're not negotiating with themselves, instead staking out a fairly strong position for changing the revenue model and rejecting a stop-gap, borrow-and-spend, cuts-only approach. Media wags, who normally act like two year-olds and talk about "working together" as if this would solve the problems in Sacramento, are responding to the aggressive approach. George Skelton writes today about how California voters "can't handle the truth," how they want unlimited services without paying for them, and how they need to face reality. He also specifically cited the 2/3 requirement as crippling the state. Dan Walters says it's about time for a "budget cage-match," the ideological battle to once and for all address the structural deficit and budgeting-by-catastrophe that has become commonplace.

Yet at the same time, the California Democratic Party hands $250,000 to the Senate President Pro Tem to pay for his legal bills, causing oodles of outrage. Over the last two days I've been given a lot of reasons for this. "The money was earmarked for Perata," they say. Perata has his own campaign account already and he's perfectly capable of raising his own cash. If people want to hide their donations by legally laundering them through the CDP, that's nothing the state party should involve itself with. There ought to be transparency. "He's being railroaded," they say. That's certainly possible in an era of Bush league justice, but nobody is making that case credibly, just talking about how long the investigation has dragged on.

And then there's this excuse. "If the Senate leader is indicted, that will hurt downticket races." But the appearance of impropriety in the CDP legally laundering contributions and paying for Perata's legal defense fund is doing the EXACT same thing, and at a crucial time. The LAT op-ed that Bob mentioned is just the beginning.

Furthermore, I have no idea why Sen. Perata is still the leader. Sen. Steinberg, who did a $10 fundraiser in Sacramento a couple days ago and who I feel represents a breath of fresh air, is perfectly capable of carrying out the duties, and having someone this tainted as the face of the budget fight is incredibly damaging. It won't be long before the press connects this story and the budget story, and then all the mostly laudable efforts to cast a stark difference between Democrats and Republicans on the budget will be compromised. For the life of me, I can't figure out why the caucus has not demanded immediate leadership elections. I believe Steinberg is scheduled to take over on August 11, when we'll already be down the road in budget negotiations. It is the height of stupidity to thrust someone into the leadership at that late date. He should have been in there a month ago.

At the least, Perata can return the money and throw himself fully into this budget fight as a means of preserving what's left of his legacy. The CDP can return to its core mission of electing Democrats, and if it has to give back this $250K to donors, so be it. But at a time when the momentum is on Democrats' side and the budget fight is going to consume all the oxygen for the next couple months, allowing a distraction like this is a huge mistake.

"I believe that there is market manipulation at the refinery level"

That was Assembly Speaker Fabian Nunez today at an event in downtown Los Angeles, in front of a Chevron station (that was selling gas for a low low $3.49, I think the advance man could've found stations 30-40 cents higher without too much trouble), as he announced with Assemblymen Mike Davis, Mike Feuer and Mike Eng a series of bills to combat rising gas prices and the artificial depression of refinery supply. The bills will seek to oversee refinery maintenance, expand regulatory authority, and deal with the "hot fuel" issue. The Speaker said that "During the electricity crisis a few years ago, California adopted similar measures to keep energy companies from using these convenient (refinery) shutdowns to amp up their profits, and today we're going to make sure oil companies can't use Enron-like tactics on California consumers."

This is an object lesson in why now was the exact wrong time for the CDP to accept $50,000 from the prime progenitor of those Enron-style tactics. And it actually came up in the press conference.

Nunez referenced a Wall Street Journal article (behind the wall, sadly) that detailed how refineries are cashing in on high gas prices by artificially lowering their supply through various methods, particularly shutdowns. The three bills work out this way:

1) new oversight committee: Nunez and Eng's bill would create the California Petroleum Refinery Standards Committee, made up of the Attorney General, the State Controller and a couple political appointees, which would develop standards for maintenance and operations at California refineries, would look into shutdowns and would increase mandatory reporting from oil companies regarding them, would take audits and inspections, and would ensure compliance. Penalties for not complying to these standards, would be "very stiff" and would be considered felonies, not misdemeanors.

2) "Hot fuels": temperature varies in fuel, and it impacts the weight of gasoline, which since it's sold by the gallon impacts the price. The suspicion is that oil companies are manipulating temperature variations to give the consumer less for its money. Assemblyman Mike Davis' bill would seek a comprehensive study, cost-benefit analysis, and recommendations on what the national standard for gasoline temperature should be. Right now it's 60 degrees; the concern is that the number should be higher.

3) Petroleum Industry Information Reporting Act: oil companies are not releasing enough data to determine properly the efficacy of inventory levels and profit margins. Assemblyman Mike Feuer's bill would mandate monthly financial reports on oil supply, demand, and price issues. It would also allow that information to be shared with the Attorney General and the Board of Equalization.

These appear to be decent bills that correctly address the issue of artificial refinery supply. However, in the question-and-answer session that followed, there was an example of why it is not smart to play both sides of this fence.

The fact that the backdrop of the press conference was a Chevron statement is telling; after all, they own 25% of the refineries in the state, and they are getting rich off the high gas prices being made by their actions at those refineries. The VERY FIRST QUESTION offered to Speaker Nunez was about his trip to South America paid for in part by Chevron. Nunez replied that the trip was "insignificant," that the trip was taken to learn more about alternative fuels in South America, that he stands for issues that are important to Democrats, and that he resented any attempt to question his ethics. And right after the presser was over, during a sort of press gaggle, he told the radio reporter who asked that question that is was either a "cheap shot" or a "chicken shit" question (I wasn't quite close enough to fully make it out). The reporter replied that the information was out there and she was just giving the Speaker a chance to respond.

Clearly that's a fair question. And clearly it's fair to ask whether, at a time where the Speaker of the Assembly is accusing Chevron of market manipulation and of engaging in "Enron-like tactics," it's the best time for the CDP to be taking a $50,000 contribution from that same corporation. Now more than ever, the message should be united, and the perception here is quite confusing, and more hurtful than the money is helpful. I appreciate these efforts to stop market manipulation, but I do not appreciate giving the opposition another arrow in their quiver through the appearance of impropriety of this donation. I renew and strengthen my call for the Party to return the money and work in more innovative ways to fundraise and grow the party.

CDP: Please Give Chevron Back Their Money

I am fairly surprised that more has not been made in the blogosphere of the unwelcome news that Chevron is doing everything it can to buy off the California Democratic Party and some of its top legislators. Outside of this small item in The Oil Drum, pretty much nobody has said a word about the fact that the CDP accepted a $50,000 check from a company that is attempting to artificially depress capacity and manipulate the energy market in a way that is shockingly similar to how Enron made themselves a fortune during the 2000-2001 energy crisis. You can read the details here.

As a delegate to this party, I feel personally tainted by this donation. I feel like there is a concerted effort to buy my silence. It will not work, and I want to outline why I am respectfully asking this party, of which I am a member and to which I pay dues, to return the money.

I don't think I have to go into how Chevron controls the oil market in California by owning most of the refineries, and that in another era that would rightly be called a trust. I don't need to discuss their record profits or their expenditures of $44 million to defeat ballot propositions like Prop. 87 and Prop. 89 last year, or their consistently greedy profit-taking at a time of record gas prices throughout the state, or how they refuse to increase refining capacity to keep that profit artificially high. And I don't need to explain how corporations aren't in the business of charity, and that every expenditure they make has a stated outcome, whether for public relations purposes or to engender favorable legislation or just to keep government off their backs while they continue to rake in billions. What I can talk about is the poverty of imagination that leads the CDP to take a gift like this.

What bothers me most about taking a fat corporate donation like this, from the very interest group you fought tooth and nail against on Prop. 87 just 6 months ago, is how LAZY it is. There are an unlimited amount of ways to raise $50,000 that not only show no appearance of impropriety or corporate favoritism, but bring people into the process and grow the party, which are the key metrics for politics in the 21st century. If you really needed $50,000 in a state of 37 million people, how about this: ask 50,000 to give a dollar to specifically ensure that the CDP won't be beholden to big corporate money. You can hold dollar parties and write about how giving citizens a stake brings them closer to the party. And in return for that dollar, you could give people prominent space on the CDP website to upload a minute of video about what problems facing California most affect them. Then, once the money is collected, PUBLICLY REBUFF Chevron by telling them that their donation has been paid by the people. Not only would you be seen as populist folk heroes, you would be investing in the party by allowing 50,000 Calfornians get a share and a stake. That's called people power. The new metrics for the Presidential campaigns, for example, are not just money but numbers of donors, because that shows a broad base of support. A party that gets rich off fat $50,000 checks is a mile wide and an inch deep. We already have a party like that in California. It's called the Republican Party.

If that corporate money were even drilled in to infrastructure and party building, that would be something. But typically, it's not. And the party that continues on a traditional model of collecting big corporate checks and running big broadcast ads will be obsolete in a new media environment. Stoller:

We need to figure out new metrics for receiving party support aside from money and polling. Perhaps opt-in email addresses acquired? Friends on MySpace? Newly registered voters (I like this one)? Chatter across blogs using sites such as Blogpulse?

I'm not sure, but the whole landscape of politics is shifting. It's like an entirely new grammar is emerging, but we're not there yet.

A "dollar party" strategy, that could spread virally through social networking sites (is the CDP even on MySpace or Facebook?), that would bind more people to the party in a small way and set up a core of activists for GOTV, that would allow a press release that says "50,000 donors!" instead of hiding the fact that one polluting Big Oil ripoff artist gave you 50,000 dollars... would simply be a forward-thinking way to grow the party and gather attention.

I'm sure that there are a host of conciliators and "my-party-right-or-wrong" types that have a problem with me sharing even a scintilla of disagreement with the state party (there's another guy that believes in the silencing of any alternative voices, he resides at 1600 Penn. Ave, Wash, DC, 20500). First of all, I would have them take a look at the rise of DTS voters and the lack of success in joining the progressive wave in 2006 and ask them where all that brushing aside criticism has gotten them. But the second thing I would ask them is, why are you a Democrat? What do you believe, if anything? And how do you square that belief with the fact that one of the companies most committed to stopping any progress on global warming or reducing dependence on foreign oil just handed you - you! - a wad of money in order to shut you up?

The Speaker's Office claims that these donations won't impact Democrats' ability to take a hard look at what Chevron is attempting to do on refining capacity, and that "tough" legislation is forthcoming. I would hope so. I cannot impact what individual candidates receive in gifts; at least, not until election season. I can have an impact when it's my party. I'm a delegate and a member in good standing. I know for a fact that members of the Party leadership read this site. I'm asking those in charge at the CDP, nicely, to give back the Chevron money. I want to work on innovative fundraising solutions that can simultaneously fund the important work of the party and bring it closer to the people whom it serves. But like any addiction, the first step is admitting you have a problem.