Capitol Alert

Key Schwarzenegger aide nabbed in ethics probe

California Gov. Arnold Schwarzenegger, left, walks with his chief of staff, Susan Kennedy, to a Capitol news conference in Sacramento, Calif., Wednesday, Aug. 23, 2006.
California Gov. Arnold Schwarzenegger, left, walks with his chief of staff, Susan Kennedy, to a Capitol news conference in Sacramento, Calif., Wednesday, Aug. 23, 2006. AP

Susan Kennedy, a former aide to Govs. Gray Davis and Arnold Schwarzenegger, has agreed to pay a $32,500 fine from the state ethics watchdog for failing to register as a lobbyist while advocating for Lyft and a Southern California water company.

The Fair Political Practices Commission said Kennedy lobbied her former colleagues at the California Public Utilities Commission from 2012 to 2014 and did not register her activities with the state. She received $201,500 in payments from Lyft and the San Gabriel Water Valley Water Co. during that time.

Lyft hired Kennedy, a Democrat who served as a commissioner from 2003 to 2006, months after the agency sent a cease-and-desist letter to the company in August 2012 for operating without the commission’s authority.

Kennedy contacted then CPUC President Michael Peevey and other staff members to persuade them to work with ride-sharing companies instead of shutting them down, according to an agreement between Kennedy and the FPPC. Lyft paid Kennedy $76,500 as she lobbied the commission to engage in a rulemaking process for ride-sharing companies and attempted to influence regulations.

“The efforts of Kennedy and Lyft were successful as the resulting rules and regulations adopted many of the suggestions and positions put forward by Kennedy and Lyft during the rulemaking process,” the FPPC states in the stipulation.

The San Gabriel Water Co., an investor-owned public utility that had a pending rate-setting case before CPUC, paid Kennedy $125,000 for consulting services to work on government regulations, legislative and public affairs issues in the first half of 2014, according to the agreement.

The FPPC said the company sought to increase water rates for customers in the city of Fontana, which the city and school district opposed, and recover costs related to a Sand Hill treatment plant.

Kennedy met with Peevey and Commissioner Michael Picker to discuss the San Gabriel case and attempt to influence the commission’s decision related to the treatment plant. The commission eventually approved a modified rate increase.

As part of the settlement agreement with the FPPC, Kennedy agreed that she lobbied the commission on behalf of both companies. She was also required to register as a lobbyist and file late lobbyist disclosure forms.

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

Kennedy served as chief of staff to then-Gov. Schwarzenegger from 2007 to 2011. She previously held titles of cabinet secretary and deputy chief of staff under former Gov. Davis, communications director for U.S. Sen. Dianne Feinstein and executive director of the California Democratic Party.

The FPPC is expected to vote to approve or reject the settlement at its next meeting on Feb. 15. A spokesman for the agency said the case was referred to the FPPC by the Attorney General’s Office.

Taryn Luna: 916-326-5545, @TarynLuna

Related stories from Sacramento Bee