Beyond Influence: Buying US Law

  “Corporations are people, my friends.”

Mitt Romney, in a speech today in Iowa

I’ve wanted to write about ALEC for awhile. I tripped across this very succinct explanation in my print copy of Bloomberg Business Week that made me revisit my plans.  Ever wonder why a bunch of weird ass bills suddenly show up simultaneously in a bunch of legislatures that say things that are basically against the positions of modern science, medicine, and economics?  Well, chances are that some huge corporation has written that bill that will become law in no one’s interest but their own, and it was penned by some member of ALEC.

Kim Thatcher, a Republican state representative in Oregon, introduced a sharply worded anti-cap-and-trade bill this year that said, “There has been no credible economic analysis of the costs associated with carbon mandates.” Apparently, that view is widely shared. Legislation with that exact language has been introduced in dozens of states, including Montana, New Hampshire, and New Mexico.

It’s not plagiarism. It’s a strategy. The bills weren’t penned by Thatcher or her fellow legislators in Helena, Concord, and Santa Fe. They were written by a little-known group in Washington with outsize clout, the American Legislative Exchange Council. Corporate benefactors such as Koch Industries and ExxonMobil (XOM) help fund ALEC with membership dues and pay extra for a seat at the legislative drafting table.

Among ALEC’s prominent members are Pfizer (PFE), Wal-Mart (WMT), Bayer (BAYZF), and Visa (V), according to ALEC annual meeting documents provided by an attendee. The organization’s legislative agenda includes limiting the power of unions, fighting environmental regulations, and overturning President Obama’s health-care reform law. ALEC says it gets about 200 state laws passed each year. The corporate influence is hard to trace and can produce a return on investment that would make a hedge fund manager drool.

“This is just another hidden way for corporations to buy their way into the legislative process,” says Bob Edgar, president of Common Cause, which seeks to reduce money in politics. Reagan Weber, an ALEC spokeswoman, says the group simply facilitates the sharing of information and “good conservative policy.”

ALEC was founded in 1973 by two of the conservative movement’s intellectual midwives, both now dead: Representative Henry Hyde of Illinois and activist Paul Weyrich, who also was a founder of the Heritage Foundation. As a tax-exempt organization, ALEC doesn’t disclose its corporate donors or its member lists beyond those who serve as committee chairmen.

In exchange for annual membership dues of as much as $25,000 plus a fee of $3,000 to $10,000 to get on a bill-writing “task force,” Koch and ExxonMobil representatives sat beside elected officials and policy analysts at an ALEC meeting in April 2010, helping them write model energy legislation that would later be introduced in statehouses around the country, according to the documents. The legislators pay $100 for a two-year membership. The task force bills are considered finished only after the legislators and private-sector members vote separately to approve them, giving each side a veto. Once a model bill is complete, it’s up to ALEC’s legislator members to go back to their home states and shepherd it into law.

ALEC is on the radar of many organizations including the American Association for Justice who keeps track of their activities and publishes white papers on this group of bill-writers for profit, greed and the destruction of public resources.

(W)hile the membership appears to be public sector, the bankroll is almost entirely private sector. In fact, public sector membership dues account for only around one percent of ALEC’s annual revenues. ALEC claims to be nonpartisan, but in fact its free-market, pro-business mission is clear.

The result has been a consistent pipeline of special interest legislation being funneled into state capitols. Thanks to ALEC, 826 bills were introduced in the states in 2009 and 115 were enacted into law.

Behind the scenes at ALEC, the nuts and bolts of lobbying and crafting legislation is done by large corporate defense firm Shook, Hardy & Bacon. A law firm with strong ties to the tobacco and pharmaceutical industries, it has long used ALEC’s ability to get a wide swath of state laws enacted to further the interests of its corporate clients.

ALEC’s campaigns and model legislation have run the gamut of issues, but all have either protected or promoted a corporate revenue stream, often at the expense of consumers. For example, ALEC has worked on behalf of:

• Oil companies to undermine climate change proponents;
• Pharmaceutical manufacturers, arguing that states should be banned from importing prescription drugs;
• Telecom firms to block local authorities from offering cheap or free municipally-owned broadband;
• Insurance companies to prevent state insurance commissioners from requiring insurers to meet strengthened accounting and auditing rules;
• Big banks, recommending that seniors be forced to give up their homes via reverse mortgages in order to receive Medicaid;
• The asbestos industry, trying to shut the courthouse door to Americans suffering from mesothelioma and other asbestos-related diseases; and,
• Enron to deregulate the utility industries, which eventually caused the U.S. to lose what the Securities and Exchange Commission (SEC) estimated as $5 trillion in market value.

The Koch brothers and Koch Industries are all over ALEC.  Their Charitable foundations and businesses provide a lot of funding.  ExxonMobile is also a huge source of funds.  There are several companies representing the interests of  Big Pharma.  ALEC looks like a who who of corporate America’s worst corporate citizens.  The Center for Media and Democracy’s PR Watch put out a Special Report on ALEC’s funding last month.

According to ALEC’s IRS filings, over the past three years it has raised $21,615,465 from corporations, foundations, and other sources, and just over $250,000 in dues paid by state legislators, amounting to slightly more than 1 percent of its income. The gigantic gap between what legislators pay and what ALEC spends is the direct result of the reality that legislators pay a mere $50 a year to be a member, while a corporation can pay up to $25,000 a year or more to be a member of ALEC plus additional fees to be on a task force where corporations get the same right to vote as legislators. They just pay hundreds of times more for that vote.

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For example, the foundations controlled by the billionaire Koch brothers gave ALEC over $200,000 in 2009. (The Claude R. Lambe Foundation, which Charles Koch, his wife and kids help run, donated $125,000 to ALEC. His own Charles G. Koch foundation kicked in an additional $75,000.) That $200k is before whatever is the undisclosed amount of membership “dues” paid by Koch Industries, which is run by Charles and David Koch. There is no public disclosure of annual gifts the company gives to take part in the one-stop shopping ALEC conventions provide to meet with legislators from every state about their wish list…

Other right-wing foundations have also supported ALEC, far beyond the “dues” paid by any legislator. For example, the Castle Rock Foundation, which is run by right-wing beer heir Peter Coors, gave $50,000 last year and in prior years. The right-wing John M. Olin foundation has also been a donor to ALEC. Another of the big right-wing foundations, the Lynde and Harry Bradley Foundation, has been a funder and, for example, gave ALEC $50,000 in 2009 to fund “budget reform” work. Similarly, right-winger Richard Scaife has given ALEC over half a million dollars the past decade or so, through his Allegheny Foundation. Some of the organizations that support ALEC, like Scaife’s, are also deeply invested in the profits of corporations that sit on ALEC’s board. The Allegheny Foundation has held over $11 million of ALEC board member Altria‘s stock, along with major stock holdings in other ALEC corporate board members like Kraft, Coca Cola, AT&T, GlaxoSmithKline, Johnson & Johnson, and Exxon.

ALEC is a major voice for climate change denial, responsible  for the recent spate of voter disenfranchisment laws, and continually pushes for extreme tort reform. There’s a really good primary on ALEC at People for the American Way. ALEC is the well-funded voice of corporate special interests.  Here are two recent examples of state legislature originating from ALEC.

ALEC was influential in crafting and passing a Texas law, dubbed the “Successor Asbestos-Related Liability Fairness Act, that shielded Crown Cork and Seal, a business that in 1966 acquired a company that used asbestos in its products, from lawsuits from the company’s workers. Even though Crown agreed to pay the company’s liabilities, it wanted immunity from paying damages to workers facing asbestos-related diseases. Crown Cork and Seal turned to ALEC to help shape the Texas law, which put an extremely low cap on liability for companies like Crown who acquired companies which committed wrongdoing, known as a “successor immunity” law.” Mark Behrens, an attorney for Shook Hardy, worked as a lobbyist for both ALEC and Crown to encourage allied lawmakers to introduce and pass the bill. The American Association for Justice writes that “this so-called ‘successor immunity’ has all the hallmarks of an ALEC special interest bill. It is plainly designed not with public policy in mind, but rather a specific industry (or in this case, a specific company).” The Texas Supreme Court ultimately found the cap to be an unconstitutional retroactive protection for Crown that inhibited the rights of people to rightfully sue corporations for damages, but similar ALEC-derived laws are still on the books in other states.

In Arizona, an investigative report by NPRfound that ALEC significantly helped one of its clients, the Corrections Corporations of America (CCA), influence the state’s new immigration law. The CCA is a for-profit prison company whose “executives believe immigrant detention is their next big market,” and thought that a law which “could send hundreds of thousands of illegal immigrants” to prison would “mean hundreds of millions of dollars in profits to private prison companies responsible for housing them.” As a dues-paying member of ALEC, the CCA was able to write, present and lobby Arizona policymakers for a draconian immigration bill at an ALEC-hosted conference. “Four months later, that model legislation became, almost word for word, Arizona’s immigration law,” and many of the bill’s cosponsors later received significant campaign contributions from the CCA.  ALEC also helped the CCA by pushing “truth in sentencing” laws that restrict parole eligibility for felons, and consequently increase the number of prisoners.

You name the spurious law, and ALEC is likely behind it.  They write laws that push private school vouchers, strip workers of their right to organize,  make it more difficult to generate revenues to fill budget shortfalls in states, and  undercut healthcare reform efforts.

After the passage of health care reform, ALEC’s top priority has been to challenge the law by encouraging members to introduce bills that would prohibit the law’s insurance mandate. ALEC’s Health and Human Services task force is led by representatives of PhRMA and Johnson & Johnson, and representatives of Bayer and GlaxoSmithKlein sit on ALEC’s board. The group’s model bill, the “Freedom of Choice in Health Care Act,” has been introduced in forty-four states, and ALEC even released a “State Legislators Guide to Repealing ObamaCare” discussing a variety of model legislation including bills to partially privatize Medicaid and SCHIP. The legislative guide utilizes ideas and information from pro-corporate groups like the Heritage Foundation, the Goldwater Institute, the James Madison Institute, the Cato Institute, the National Center for Policy Analysis and the National Federation of Independent Business.

Expanding the disproportionate power of corporations in the legislative process is central to ALEC’s goals. ALEC is responsible for some of the worst outcomes in government we’ve seen in decades.  It is pure influence peddling. Any legislator that relies on ALEC for services should be subject to immediate recall. ALEC represents what’s wrong with this country today.  It is at the heart of single issue, special interest politics that are not in the public’s interest.  They are a perversion of the democratic political process.

Mitt Romney is wrong.  Corporations are not people.  The profit motive is the sole determinant of corporate behavior.  No household or family would put profits before everything else nor should any government that purports to represent its people. I suggest finding out as much about how ALEC influences your state legislature as soon as possible.  A good place to start is with The Nation‘s series ‘ALEC Exposed’. The first in this series shows the role of the Koch’s in ALEC’s model bills.  I’ve pumped this thread up with a lot of juicy links. Please take some time to visit the research of all the nonprofits that have carefully researched this shadowy organization.