June 26, 2012

In an exposé first published at Truthout.org , Steve Horn and Sarah Lynne show how a host of corporate lobbying groups create and bend laws in their favor.

HOW IS it that no matter whom we elect as our state representatives--Democrat, Republican or other--we most often end up with policies that privilege the corporate agenda over the public interest?

It's a simple question, raised by laws promoting charter schools, fracking, union-busting, privatization, deregulation, and countless other corporate-friendly policies that have spread like wildfire around the country, particularly in recent legislative sessions.

As it turns out, the answer is relatively simple. Big business in the United States has perfected a legislative "playbook"--a methodical strategy for turning the wish list of multinational corporations into a state-level policy agenda with bipartisan support.

The specific details of legislative processes are many and intricate, yet the corporate playbook for exploiting state-level policy is straightforward and critical to understand.

To the extent there has been any discussion of this playbook at all, it has centered almost exclusively on the role of the conservative American Legislative Exchange Council (ALEC) and its model legislation process.

Stateside Associates senior vice president Michael Behm

But a closer examination reveals a well-coordinated network of many corporate-sponsored organizations--not ALEC only--that are influential in state politics. "Stealth lobbyists" use this network to advance their clients' agendas in statehouses nationwide.

The playbook's background: Big players and their network

If corporate America's playbook were actually in print, one of the oldest, most worn, most often referenced, most scribbled-on versions of it would be in the hip pocket of Michael Behm.

Behm is the senior vice president of Stateside Associates, a Virginia-based firm that specializes in stealth lobbying.

The most powerful lobby firm of which you've never heard

Founded in 1988, Stateside is self-described as the "industry leader" in state and local governmental affairs counseling. The company's home page tempts potential clients with a program that "transcends the conventional categories" of lobbying. The page further explains:

State and local government relations--done well--protects the bottom line, promotes brand awareness, builds champions among policymakers and safeguards the ability of corporations and associations to succeed.

Stateside's corporate clients are a testament to the success of its strategy. They include the likes of Visa, FedEx, Intuit, Microsoft, the Grocery Manufacturers Association and United Technologies. Past clients have described the firm as "essential," "proactive" and "unmatched."

A lobbying behemoth--the self-proclaimed largest firm of its kind--Stateside has enough tricks up its sleeve to tackle even the most difficult, and often delicate, lobbying cases.

"We came to Stateside Associates asking them to accomplish a complex, nationwide task in a very short time frame. Stateside came through with flying colors, sooner than expected and needed almost no direction after getting the assignment," testified Thomas Kerr, vice president and assistant general counsel for Bayer Corporation.

Despite the complexities inherent to its acclaimed case-by-case lobbying approach, Stateside's successful strategy begins and ends with the same corporate playbook.

In fact, Stateside's founder, CEO and President, as well as former Executive Director of ALEC, Constance Campanella, was among the first to turn the unspoken playbook of corporate America into a concrete lobbying practice.

The playbook's related service at Stateside is now called "Groups Practice" and is run by none other than Behm himself.

So, what exactly is "Groups Practice"?

"Groups"--ALEC, CSG, NCSL and more

"Groups" is the bland euphemism coined by Stateside's Campanella to refer to 501(c)(3) nonprofit organizations that provide education and networking opportunities specifically to state-level elected officials. "Groups Practice" is Stateside's name for a stealth lobbying strategy oriented around these Groups.

If advocacy happens through the Groups, then expenses for what is in effect lobbying are considered tax-deductible charitable donations, unlike all other lobbying expenses. In addition, stealth lobbyists don't have to be registered to influence and sometimes even vote on model legislation.

By far the best-known of the Groups is ALEC, infamous for its role in promoting Castle Doctrine and voter ID legislation. ALEC has also been influential in spreading charter schools, tort reform, union-busting and overall deregulation.

But ALEC is far from alone in this game.

The three largest "other ALECs," and the most influential Groups in state politics are the Council of State Governments (CSG), the National Conference of State Legislatures (NCSL) and the State Legislative Leaders Foundation (SLLF). There are similarities in processes and structure among these organizations, but there are also several important differences.

Some, like CSG and NCSL, are essentially professional associations with automatic membership for all state-level elected officials. Though they are supported in large part by public tax dollars, both of these Groups also receive a substantial amount of support from private donors.

ALEC, with its selective membership of a primarily Republican Party membership base, has a right-wing ideological edge that the others lack. SLLF, like ALEC, is a purely corporate-funded Group, but it specifically targets legislative leaders in both the mainstream parties.

However, the shared structure of all the Groups--their nonprofit tax status--allows them all to be exploited, albeit to varying degrees, by their corporate sponsors. Groups are granted their nonprofit, tax-exempt status due to their declared educational purpose. This tax exemption is just icing on the cake for corporate sponsors that gain access to Group legislative membership.

Part One of this series described each of the largest Groups, providing information about membership, meetings, policy positions and in some cases model legislation. This part focuses on how corporate lobbyists use this network of Groups to turn a private agenda into public policy.

Powerful, but far from unique

The niche of stealth lobbying is so profitable that in addition to Stateside, other firms also participate. One is MultiState Associates. This firm, founded four years before Stateside in 1984, employs the same overall strategy of using the Groups to promote corporate agendas.

MultiState offers a flexible, "full range" program to respond to the changing needs of corporate clients, which in the past have included Honda North America; Bechtel Enterprises, Inc.; the American Automobile Association; Engineering THE LAW, Inc. and others that are unlisted. The firm employs a unique, nationwide network of lobbyists that "can assist quickly and efficiently in helping clients strategize."

Just as Campanella has had prominent roles in both ALEC and Stateside, some of MultiState's lobbyists are involved in the same revolving-door of leadership between the Groups and stealth lobby firms. MultiState's Senior Adviser Daniel Spargue, for example, served as the executive director and CEO of CSG for 19 years before jumping ship to accept his current position.

But how exactly do lobby firms like Stateside and MultiState use the Groups (NCSL, CSG, SLLF and ALEC) to advance corporate agendas? What "expertise" did Spargue and Campanella pick up during their time working as CSG and ALEC senior staff?

It is time to turn to the lobbyists' playbook itself.

The playbook

The objective of the Playbook is to begin with a private agenda and end with a public policy with bipartisan support. These are the six simple steps to achieving that goal.

Step one: Fund Groups

Donations to Groups are tax-deductible investments. In practice, donations open the door to stealth lobbying opportunities for some of the world's biggest and most lucrative multinational corporations.

Stateside's web site explains that being involved in the Groups--something that requires a donation--is an important part of any government affairs strategy because it provides access to the Groups' meetings. These meetings, or conferences, provide "opportunities to educate and motivate policymakers and build sustained professional relationships."

Stateside's "Schedule by Organization" demonstrates that its lobbyists are active in all the Groups, as well as every professional association of state government officials, giving them the opportunity to meet thousands of legislative leaders on both sides of the aisle.

Stateside is a major backer of the NCSL Foundation and gave it $12,500 as a "Gold Sponsor" in 2012. It was last documented paying annual dues to the CSG Associates program in 2011.

Taking a similar approach, Leonard Gilroy of the Reason Foundation, a Koch Family Foundations-funded think tank that promotes free-market policies, calls himself "agnostic" in that he goes to all of the big Groups' functions. He calls these Groups "variations of the same theme."

"I hate to say it this flippantly, but sometimes I forget where I am--you know, is this ALEC or NCSL? They're not that different," Gilroy remarked in an interview with Truthout.

Indeed, some of the largest corporations like Koch Industries have decided to skip the middlemen by directly funding NCSL, CSG, ALEC and/or SLLF, giving their own lobbyists access to every state-level legislator in the nation. The list of stealth lobbying giants that have recently funded all four of the biggest Groups includes AstraZeneca Pharma; AT&T Corporation; Chevron Corporation; Comcast Cable Communications; International Paper; Intuit; Kraft Foods Global, Inc.; and Procter & Gamble. Of course if any of these companies needs extra support with an especially big issue, they can also hire the services of firms like Stateside and MultiState.

Step two: Representation on Group boards, task forces

In order to be able to raise agenda points, promote a policy or do anything beyond the standard conference "schmoozapalooza," lobbyists must in most cases participate in Group meetings, committees and task forces.

Stateside makes a conscious effort to put its lobbyists into Group leadership roles in order to advance the interests of its client base. Behm, for example, has participated for decades on various Group boards and task forces, including subcommittees of the NCSL Foundation. He also attends the CSG Suggested State Legislation (SSL) Committee meetings and said in an interview with Truthout that he has worked with every SSL committee chair throughout his 20-year tenure.

But it doesn't stop there.

According to a press release, Behm is currently serving his fifth consecutive term as the vice president of the NCSL Foundation, a public/private board charged with determining which NCSL programs to fund--and with providing the funding to boot.

"In his role as Vice President, Behm has raised the profile of the Foundation and has worked with the Board to increase fundraising efforts," the release stated. In other words, Behm has increased the private sector's involvement in NCSL, allowing a corporate-friendly agenda to shape public policy.

Coordination of advocacy efforts in various Groups, in part through leadership positions like Behm's, is an important part of Stateside's expertly-crafted, "hands-on" approach to lobbying. But Behm's hyper-involvement also highlights an "interlocking directorate" of leadership that manages the Groups.

The interlocking directorate is formed by the participation of individuals from both the private and public sectors in the leadership of more than one Group. Behm, for example, directly links NCSL, CSG and Stateside.

The significance of the interlocking directorate is twofold.

First and most obvious, it means that the Groups cohere into a network with a shared perspective lent to them by their common members. Second, the common members form ties between the Groups and lobbying firms like Stateside and MultiState, further blending public and private agendas within the network.

Step three: Set a pro-business education agenda

One of the primary functions of the Groups and the main reason they are allowed their nonprofit tax status in the first place, is that they host a range of educational meetings and conferences for state officials.

Behm, a long-term observer of the education process through CSG and NCSL, told Truthout that educating legislators is the Groups' most important function. By his judgment, state legislators are just "regular people," who are underprepared when they are elected and who need to be trained to do their job as leaders.

"These folks come into office desperately needing guidance about state budgets. They come in not understanding how the federal government works," Behm said.

In response to the immense knowledge gap legislators experience, especially when first taking office, Group conferences host sessions on everything from the environment, to education, to the economy, to basic organizational skills. Content of the education sessions favors corporate concerns and perspectives.

The 2012 NCSL Legislative Summit provides an example of the type of education elected officials receive. Self-described as "the nation's premier meeting of legislators and staff," the Summit is expected to feature ideas for cutting millions from state budgets. This conference, to be held in Chicago in August, will host speakers like Douglas Oberhelman, CEO of Caterpillar Inc. and head of the board of directors of Eli Lilly, as well as Edward B. Rust Jr., CEO of State Farm Mutual and recently named vice chairman of the US Chamber of Commerce.

The 2011 CSG Energy and Environment Task Force meeting included an education session titled, "The Global Value of Coal: Clean Coal Technologies Open the Door," which presented "clean coal" as the solution to "global electricity poverty." This is far from the "neutral" perspective that Wisconsin Democrat Mark Pocan, of ALEC Exposed fame, told Truthout in an interview that he sees at all major Group meetings except those hosted by ALEC.

While the free-market ideology of ALEC is clear, the perspective of other bipartisan Groups becomes harder to define, though the limits are clearly set by the invisible hand of corporate America.

NCSL's perspective is based loosely on states' rights and often promotes increasing "flexibility."

Though a CSG perspective has never been formally articulated in any way, its CEO David Adkins said in a press release that, during his time as governor of Puerto Rico, current CSG President, Gov. Louís Fortuño, demonstrated "attributes" CSG hopes to emulate.

On closer inspection, Fortuño's "innovative solutions" recognized by Adkins were actually rampant privatization campaigns in Puerto Rico implemented in an effort to reduce a $3.3 billion budget deficit.

The education system in the Group Network is also multi-tiered, providing extra levels of corporate tutelage for more invested legislative leaders.

Each Group hosts broad, membership-wide educational conferences, like the NCSL Legislative Summit mentioned above.

But some Groups also host more specialized training programs. CSG, the largest of them, hosts leadership training programs for first-time legislators, for "the next generation of legislative leaders," and for "the nation's top state government officials from all three branches," among many other specialized programs.

Most of the smaller leadership trainings are by invitation only, after a nomination process based loosely on nominees showing interest and aligning themselves with the CSG's perspective. Individuals who don't favor corporate-friendly approaches to the issues are unlikely to make the cut.

Step four: Schmooze

The most common form of state-level stealth lobbying involves creating personal relationships between public and private sector Group members. Most frequently, this occurs at corporate-sponsored meals and outings between policy sessions at various Group conferences.

Fred Risser, a Democratic Party state senator from Wisconsin and longest-serving state-level public official in US history, explained that Group conferences are great places to network both with the public and private sector. Risser has participated in both CSG and NCSL in the past.

"I have created lifetime relationships with individuals I have met at these conferences and I have found that on occasion contacting them outside the confines of these conferences has proved quite valuable," Risser said in an interview with Truthout.

Michael Adams, director of Strategic Planning for the Virginia Senate, agreed with Risser saying, "The most important opportunity is to be able to network with people who have similar responsibilities in other places."

Personal relationships also help lobbyists like Behm keep their thumb on the pulse of state government. Stateside boasts of more than 4,000 legislative contacts that facilitate its successful stealth lobbying strategy.

Step five: Model legislation

The most notorious aspect of this playbook, which put ALEC on the map, is the model legislation process--a process of legislative template sharing through either CSG, ALEC or both.

In his professional blog, Behm wrote that few other Group conference sessions "stimulate the heart rates" of lobbyists more than those dealing with the model legislation process.

Stateside's web site boasts that its lobbying program has been successful in both securing the adoption of model bills that lead to favorable legislation for clients and defeating model legislation "potentially damaging to a client."

According to ALEC's web site, "State legislators often find model bills valuable for learning from each others' experiences and expertise." In other words, model bills make it easier for legislators to share ideas, thus increasing the likelihood that similar legislation will be enacted nationwide.

That holds true for model bills endorsed by both Groups. Whether via CSG or ALEC, lobbyists from the private sector are allowed to recommend that a certain model be endorsed or rejected. Often this recommendation is made by a vote in the task force, behind closed doors, charged with screening model legislation. However, only public-sector members get a final say in the matter.

ALEC generally endorses bare-bones model bills that are then widely distributed as templates. By contrast, CSG prefers to distribute templates based on previous enactments--meaning bills already passed in at least one state or territory--rather than drafting models from scratch.

Though it might be easier to push an agenda into law through ALEC, special interests hoping to have broader (read: bipartisan) support for their model bills turn to CSG. Lena Taylor, another Democratic Wisconsin state senator, of "Fab 14" fame (referring to the 14 senators who fled the state of Wisconsin during the 2011 protests), said in an interview with Truthout that CSG models are more respected and thus easier to distribute because they represent bipartisan endorsements.

Taylor herself, introduced legislation that opened the state of Wisconsin to an influx of virtual charter school providers. A few years later, her bill was endorsed as CSG model legislation.

Step six: Model bills distributed nationwide

After becoming a CSG or ALEC model, the bill must be distributed to statehouses everywhere by agenda-friendly legislators, who have been through the corporate-filtered Group education system--legislators who have brushed shoulders with some of the most powerful private interests in the world.

This is where the normal legislative process begins. Lobbying at the statehouse itself is a transparent process compared to lobbying in the Groups because participating lobbyists have to register, and any expenses, however nominal, are not tax-deductible.

Though the skids are often greased by this point in time, this type of lobbying still can be necessary. As ALEC points out, a model bill is only considered for enactment if a legislator sponsors it and others vote on it.

Adding the final touch to their lobbying strategy, Stateside and MultiState both provide access to networks of lobbyists, well-positioned in statehouses around the nation, to assist with this final step.

This all begs the question: does this strategy really work?

Case study: Stateside and the Department of Defense

Stateside funds all of the major Groups and participates in all the meetings that they sponsor. The firm has lobbyists like Behm strategically placed on various influential boards and maintains relationships with thousands of legislators and legislative aides. This provides a general framework that allows Stateside to craft specific strategies for individual clients, Exhibit A being the US Department of Defense (DoD).

In the past, Stateside and the DoD have worked together, to prevent civilian encroachment on military facilities. "Civilian encroachment" is a euphemism for common citizens getting in the way of the building of military bases and other facilities around the U.S., i.e. hindering the military agenda.

As the National Academy of Public Administration explains, "Encroachment, which includes incompatible civilian development near military facilities and the expansion of military operations into civilian areas, is reducing the military's ability to train its fighting forces and execute its missions."

The real question here, summed up: is this preventing "encroachment" or granting the DoD carte blanche to land grab in areas heavily populated by civilians? The latter appears much more likely, given the clout of the military-industrial complex in domestic and global affairs.

One of the Stateside's first actions was to create a NCSL Executive Committee Task Force dedicated to this issue.

In 2008, around the time the Task Force was being established, Stateside also endorsed a "sustainability summit" co-hosted by the DoD and NCSL. Legislators from twelve states were invited to attend. Behm and his associate at Stateside, Adriane Miller, also participated.

More educational meetings were also hosted by NCSL on the subject, most recently the 2011 Task Force on Military and Veteran's Affairs meeting that Behm also attended. The Task Force adopted three policy positions related to the DoD's agenda.

The DoD agenda isn't just isolated to NCSL, however. CSG Committees have passed related resolutions, and also endorsed a model bill addressing the issue of encroachment.

In order for the DoD-oriented template bill to be endorsed as a CSG model, it had to first become the law in at least one state--in this case, Kansas.

Originally the bill, HB 2445, which prevents civilian encroachment on military facilities without prior notification, reached the Kansas statehouse in the hands of Rep. Tom Sloan (R-Kansas). After it was enacted in his home state, Sloan brought it to CSG. He was recognized by the DoD for his role in getting the CSG model passed in 2010.

"Preventing civilian encroachment on military facilities is important to sustain the training capabilities at Ft. Riley, McConnell Airbase, Forbes Field and the Smokey Hill National Guard facility. These facilities contribute more than $8 billion annually to the Kansas economy," said Sloan in a press release.

The CSG model legislation process is old hat for Sloan. CSG has recognized Sloan-sponsored enactments as its own models at least three times in the past.

Clearly integrated into the network of Groups, Sloan is an active part of the interlocking directorate. He has worked with CSG, NCSL, Stateside (through interaction with Behm) and the DoD itself, successfully blending their perspectives and assisting the process of turning a private agenda into a public one.

It is the ultimate triple whammy for taxpayers. First, they are paying taxes on their home and property. Secondly their federal taxes get siphoned into the DoD's bloated budget, some of which is used to lobby--sometimes against the homeowners' property interests. And then thirdly, adding insult to injury, that taxpayer money is also pooled into respective state budgets, where some of it is set aside into appropriations that fund groups like CSG and NCSL, where the military agenda is being pushed, as has been shown, full-steam ahead.

This same basic strategy of exploiting the network of Groups for private gain is recycled time and again through this well-oiled machine.

Another layer of support for stealth lobbyists

In the bureaucratic quagmire of Groups, sometimes even the best stealth lobbyists need a little help from like-minded friends.

For this, they turn to lobbyist trade associations like the State Government Affairs Council (SGAC). SGAC is a private organization, fully funded by contributions from the private sector.

Headquartered in Alexandria, Virginia, (in the same building as MultiState Associates) SGAC provides "networking" and "professional development" opportunities for private-sector stealth lobbyists hoping to employ the corporate playbook and exploit the Groups Network. Over 182 multinational corporations and/or their affiliated trade associations paid for a SGAC membership in 2012.&SGAC has connections to all of the major Groups and is a major player in the network. It also hosts its own public/private meetings, the most important and prominent being the annual Leaders Policy Conference (LPC).

Sponsored by the SGAC Foundation in cooperation with CSG and NCSL, the LPC is a corporate-sponsored educational opportunity provided exclusively for, the legislative leadership of all 50 states, NCSL, CSG Executive Committees, ALEC Board of Directors, SGAC members and private sector representatives. It is at this forum where one can see quite clearly that ALEC is merely a small part of a vast network, a network which is the engine that fuels state governments' nationwide on a bipartisan consensus.

SGAC's relationship with other organizations in the network is personified by its immediate past President and current Board member, Christopher Badgley. Badgley, a lobbyist for the Pharmaceutical Research and Manufacturers of America, is also a member of the Associates Advisory Committee of CSG and is a member of various health and human services committees for CSG, ALEC and NCSL, making him one of the most well-connected lobbyists in the network.

Well-positioned stealth lobbyists like SGAC's Badgley, Stateside's Behm and Campanella, as well as Gilroy from the Reason Foundation, are all part of the interlocking directorate that controls the tightly knit network of Groups.

The takeaway

Clearly, the corporate playbook in the statehouses extends far beyond the tentacles of ALEC, which is but a small part of a vast, complex network of nonprofits.

The multilayered, dynamic system of corporate representatives mingling with state legislators and public officials in a network of quasi-governmental nonprofits, allows the small number of people who are part of the interlocking directorate to wield a huge amount of power in shaping public policy. Under the guise of conducting educational activities, the stealth lobbyists of the "other ALECs" reduce the choice of citizens to which version of the corporate agenda to accept.

Will citizens, then, continue to accept such a scheme? Time will tell.

First published at Truthout.org.