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Water Association Failed to File Lobbying Expenditures Related to Assemblywoman Cristina Garcia’s AB 1794 Central Basin Water Bill

Three of the Association’s Board Members would become appointed Central Basin Directors after the bill passed.


A Hews Media Group Community News investigation has revealed that the Central Basin Water Association, a nonprofit based in Azusa that “disseminates factual and educational data concerning the depletion of groundwater in the Central Basin,” and an association that takes the opposite position on most legislative items concerning Central Basin Water, has failed to report  lobbying activity on its financial documents, known as 990’s, a violation of state and federal laws that could result in a revocation of its non-profit status.

In addition, it appears yet another conflict of interest and effort to financially injure Central Basin have been associated with Assemblywoman Cristina Garcia’s AB 1794 passed in 2016, which, among other items, mandates non-elected appointed directors to the board.

The documents show that during the time AB 1794 was winding its way through the legislature, future Central Basin directors, who would be appointed after AB 1794 passed, were actively working on CBWA’s Board of Directors and not reporting their lobbying efforts.

Mark Grajeda, CB VP Dan Arrighi, and CB Director Frank Heldman were listed as board members with Grajeda, one of the first appointees under AB 1794, listed as president and Heldman as a director.

The person in charge of overseeing the financials, the Treasurer of the CBWA, was Arrighi.

In addition to the tax ramifications, it appears as if all parties involved with Garcia and AB 1794 were covertly working to ensure its passage. 

During the time Grajeda, Arrighi, and Heldman were on CBWA’s Board, the association was actively lobbying to pass AB 1794, which was vehemently opposed by all CB Board Members.

2017 CBWA Board showing Grajeda, Arrighi, and Heldman

2016 CBWA Board showing Grajeda and Arrighi.

2015 CBWA Board showing Grajeda and Arrighi.

And they were paying CB’s law firm at the time, Nossaman, LP to lobby in favor of AB 1794.

The payments by the CBWA occurred in 2015-’16 and 2017-‘18 to Nossaman, who was recently fired by the Commerce-based agency.

Payments to the firm in 2015-’16 totaled over $76,000, while payments in 2017-’18 totaled nearly $67,000.

CBWA payment to Nossaman for 2015 and 2016. Source: CA. Sec. of State’s Office

As a percentage of total revenue, the numbers were 49% in 2015-’16 and 41% in 2017-’18.

Under Internal Revenue Service codes, CBWA must follow the “no substantial part” rule that allows for lobbying, provided the lobbying is not a substantial part of a nonprofit’s overall activities.

Under the no substantial part rule, all lobbying expenditures must be reported on the 990’s and must give a detailed description of all lobbying activities and the 

type of activity, such as media advertisements or legislator meetings. 

CBWA’s failure to report the lobbying expenditures for 2015-2017 could cause it to lose its tax-exempt status, resulting in all of its income being subject to tax. 

Organizations that lose their status are subject to an excise tax of 5% of the lobbying expenditures for the year in which they cease to qualify for exemption. 

CB Director Leticia Vasquez, who was on the board at the time and opposed AB 1794, did not mince words about Nossaman working with CBWA, “It’s disappointing that Nossaman failed to follow the law and  properly report to Central Basin that they were hired by the Central Basin Water Association to work as their lobbyist while simultaneously serving as Central Basin’s attorney’s. That was a clear conflict of interest.”