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Corporate America's Trojan Horse in the States The Untold Story Behind the American Legislative Exchange Council
Chapter Two -- Corporate Dividinds “Our members join for the purpose of having a seat at the table. That’s just what we do, that’s the service we offer. The organization is supported by money from the corporate sector, and, by paying to be members, corporations are allowed the opportunity to sit down at the table and discuss the issues that they have an interest in.”
—Dennis Bartlett,
American Legislative Exchange Council, 1997
By nearly any standard, ALEC’s “private-sector members” get a big bang for their bucks. For dues that reportedly range from $1,500 to $5,000 (on top of their annual membership fees), ALEC’s “private-sector members” can buy a seat—and a vote—on one or more of its ten standing task forces, which cover territory ranging from civil-justice to trade and transportation issues.(2) In this way they can work to draft the legislation they want, have it rubber-stamped by ALEC’s membership, and, in most cases, expect to see the legislation introduced in state legislatures by sympathetic lawmakers. ALEC’s corporate bylaws spell out the organization’s philosophy: “The purposes and objectives of ALEC shall be to work in cooperation with the private sector to promote individual liberty, limited government, and free enterprise.” ALEC’s task forces craft the organization’s public-policy agenda—its “model” legislation and issue positions. On each task force, the private-sector representatives have an equal vote with the state legislators—and effective veto power over the task force’s activities and legislative recommendations. Nothing can move out of the task force without agreement from its private-sector representatives. For ALEC’s corporate sponsors, “a seat at the table”—on one or more of its task forces—is the ideal mechanism for pushing “model” legislation favorable to their interests. Consider, as just one example, ALEC’s recent work in the criminaljustice arena. “ALEC developed model criminal justice policies that kept criminals off of our streets for longer periods of time,” one of its recent publications notes, “and allowed private industry to use its expertise to help states meet their growing incarceration needs.” The publication goes on to point out that twenty-eight states have authorized the use of private prisons to house inmates. Is it any surprise that ALEC’s Task Force on Criminal Justice has been cochaired by a representative of Corrections Corporation of America, the nation’s largest operator of private prisons? Another active private-sector participant in ALEC’s Task Force on Criminal Justice is the National Association of Bail Insurance Companies, whose membership consists of the ten companies that write the great majority of court-appearance bonds in the United States. In a recent brochure, the association touts “the ALEC connection” as “an essential ingredient of NABIC’s legislative strategy.” The brochure lays bare exactly how surely and swiftly the “pay-to-play” arrangement has paid off. “In 1995, within two years of joining ALEC,” the brochure points out, “a member of the NABIC Board sat on the ALEC Board, ALEC had approved several model bills in support of commercial surety bail, and, furthermore, had completed a study on the failure of government-funded pretrial release programs (to be followed by a similar additional study two years later, in 1997).” The brochure goes on to list, among “some of the tools forged by the ALEC- NABIC partnership,” four so-called model bills, including “The Uniform Bail Act,” which, among other things, would eliminate pretrial release agencies and create new business for bail bondsmen. “In addition,” the brochure notes, “ALEC hammered away with briefing papers exposing the wrongs of pretrial release, the 10 percent deposit bail system, and problems with jail overcrowding.” Officials of the association clearly feel that their investment has paid rich dividends: “For many years NABIC has given considerable financial support to ALEC and to the ALEC Criminal Justice Task Force. . . . Through ALEC, NABIC has had a channel to express its interests to a majority of the states’ speakers of the house and presidents of the senate.” Nor, by any means, are the nation’s bailcompanies alone. An organization’s willingness to cough up the requisite task-force fees often seems to be the key factor in ALEC’s willingness to push a particular cause. “Pay-To-Play” Payoffs Environmental Protection. Virtually all the “model” bills bear positive-sounding names but, over the past decade, ALEC-sponsored legislation has tried to weaken many of our nation’s environmental protections. ALEC’s inventory of “model” legislation includes such measures as “The Environmental Good Samaritan Act,” the “Environmental Literacy Improvement Act,” the “Groundwater Protection Act,” and “The Private Property Protection Act.” All these measures have emanated from ALEC’s Task Force on Energy, Environment, Natural Resources, and Agriculture, which clearly knows, as the saying goes, on which side its bread is buttered. “The best chance we have to improve the environment,” the task force’s staff director said on Earth Day 1998, “is to break the stranglehold of the command-and-control policies promoted by the EPA and the extremist environmental lobby.”(3) ALEC’s “model” bills and packets of background information on key issues frequently shape the discussion of proposed state remedies to environmental problems. Moreover, many of the bills appear to protect major polluters and other business interests from environmental regulation. The ALEC task force that deals with environmental issues pushes more than two dozen pieces of “model” legislation – everything from resolutions on biotechnology and environmental justice to “fill-in-the-state” bills like the “Common Sense Scientific and Technical Evidence Act” and the “Waste Tire Abatement Act.” Typically, the task force’s private-sector members write the legislation that’s up for discussion. The legislative and corporate members, sitting elbow-to-elbow around a table, vote separately on each measure; a majority on both sides is needed to approve “model” legislation. Consequently, the state legislators cannot move anything out of a task force without the consent and formal concurrence of most of their privatesector counterparts. (ALEC’s board of directors can veto a task force’s decision but rarely does.) ALEC’s “Economic Impact Statement Act” is a telling example of its approach to environment-related legislation. Little wonder that most of the big corporations behind ALEC would love to see this one on the books: It would require state agencies to produce detailed “economic impact statements” for all existing and proposed environmental regulations. ALEC says the draft legislation has been designed “to provide environmental protection while permitting the creation of wealth through requiring an economic analysis of new environmental regulations.” In truth, the proposed legislation seems little more than a perversion of the 1969 National Environmental Policy Act, which mandates environmental impact statements for significant federal government actions. Environmental activists have long used the landmark federal law to promote the public interest by halting or delaying potentially destructive projects; now, through ALEC’s “model” legislation, corporate special interests aim to turn the tables at the state level. Although ALEC’s self-described mission is to limit government, here’s a case where it conveniently puts aside its principles: Agencies or other arms of state governments, after all, would have to generate all those economic impact statements required under its “model” legislation. The New Mexico Fish and Game Department has estimated, for example, that it would need twenty additional employees, at a cost of $1.5 million a year, to get the job done. “The Environmental Good Samaritan Act” is another piece of apple-pie legislation, at least judging from its title. Borrowed from Pennsylvania’s “Growing Greener” legislative package, which was adopted at the end of 1999, it aims to give developers immunity from prosecution under environmental laws while they are cleaning up land they polluted. Then there’s ALEC’s “Environmental Audit Privilege and Qualified Disclosure Act,” which opponents in some states have branded the “Polluter Protection Act.” This proposed law puts the public’s right to know about environmental, workplace, and industrial hazards far behind protecting the secrecy of polluters and other corporate wrongdoers. State penalties are waived for polluters that conduct “self-audits” and report their own violations of environmental laws, and audit reports are sealed as privileged information. ALEC’s “model” legislation was reportedly drafted by lawyers for Coors Brewing Company. In the early 1990s, the company battled the Colorado Public Health and Environment Department over smog-forming volatile organic compounds (VOCs) emitted by its brewery in Golden, Colorado. Although Coors and the state eventually settled on $237,000 in penalties, with Coors agreeing to reduce the brewery’s VOC emissions by 200,000 tons a year, the company apparently decided to strike back, through ALEC’s “model” bill. As a high-ranking EPA enforcement official put it: “This is coming from big companies that have been targets of enforcement action.”(4) And consider this final case in point: ALEC’s “Private Property Protection Act,” a bill that, if successful, ultimately could lead to the effective dismantling of such broadly popular environmental-protection laws as the 1972 Clean Water Act, the 1973 Endangered Species Act, and the 1990 Clean Air Act. This piece of “model” legislation grew out of an ALEC resolution that expressed the organization’s opposition to “any governmental attempt at whatever level and by whatever means to confiscate, reduce the value of, or restrict the uses of private property unless to abate a public nuisance affecting the public health and safety.” When most people think of the Fifth Amendment, they think of the clause that confers on individuals the right not to incriminate themselves. But the Fifth Amendment also holds that “No person shall be . . . deprived of life, liberty, or property without due process of law, nor shall private property be taken for public use without just compensation.” Accordingly, for example, when government condemns land for a highway or commercial airport, it must pay the owner fair market value for his or her lost property. The U.S. Supreme Court has consistently upheld a carefully limited interpretation of this amendment, designed to protect the broad public interest. Over the past decade, however, real-estate developers and others pushed a radical reinterpretation of the Fifth Amendment as part of a wide- ranging drive to eviscerate the land-use aspects of a generation of environmental- protection laws. They argue that any government action—a new zoning law or wetlands regulation, for example, or the adoption of a wildlife habitat preservation plan—may constitute a “taking” for which a property owner must be compensated. In California, State Senator Raymond Haynes has sponsored a veritable slew of ALEC-written “Private Property Bills” over the years. Haynes, who recently completed a term as ALEC’s national chairman, has been amply rewarded for his dedication to the organization. He’s been on the receiving end of numerous ALEC-paid trips, including a ten-day trip to Australia in 1998 that included three days on the shores of the Great Barrier Reef, where, Haynes later admitted, little work was conducted. The purpose of the trip, Haynes said, was to set up an Australian version of ALEC. While on the trip, Haynes found himself staying in a luxury hotel that was so expensive he called ALEC’s headquarters in Washington, D.C., to make sure that it was picking up the tab, which came to $1,600 for six nights. “It was not a place I would have picked, but they picked it,” Haynes later told a reporter for The Orange County R e g i s t e r . “So I didn’t squawk all that much.” Far from squawking, in fact, many of ALEC’s “legislator members” appear to be ready, willing, and able to carry water, whenever needed, for the organization’s corporate underwriters. Electricity Restructuring. In the mid-1990s, many states restructured their electric power industries with broad support from the publicinterest community. But the efforts of Enron Corporation to champion its vision of restructuring is a telling example of the influence of major corporations over ALEC. In pushing for deregulation, ALEC was advancing the cause of Enron and another of its largest corporate benefactors, Koch Industries, Inc. In June 1996, ALEC’s board of directors approved “model” legislation calling for deregulation of the $220 billion industry, and in November 1996 an ALEC task force, meeting in Salt Lake City, approved the “model” legislation, which recommended that states open their electric-utility markets to competition by the year 2000. The corporate members of the task force that took up the issue, however, were sharply divided. The side that won – a coalition of private energy companies, including Enron and Koch Industries, and large industrial users of electricity – had purchased most of the “private-sector” seats on the task force. The side that lost – representatives of investor-owned utilities and their trade association, the Edison Electric Institute – walked out of the session and later renounced their ALEC memberships. “It’s a situation where you buy a seat at the table and then you have the opportunity to vote and drive policy,” EEI’s Tim Kichline later told a reporter. “We don’t have enough votes. If they are going to do something we like, they don’t need our votes, and if they are going to do something we do not like, we can’t stop them.”(5) The following August, Kenneth Lay, Enron’s chairman and chief executive officer, was a keynoter at ALEC’s annual convention in New Orleans. In a speech titled “Restructuring Competition . . . Not Accommodation!” — a pitched battle cry for deregulation of the nation’s energy industry — Lay urged the state legislators to reject the “calculated machinations of cozy monopolists” and to open retail electricity markets “with both haste and completeness.” State legislators who attended could connect the dots, concluding that Lay’s appearance had something to do with the $20,000 that Enron had chipped in to finance the meeting. “I didn’t think it was a coincidence,” James Ports, a lawmaker from Maryland, told a reporter. (6) Tobacco. As noted earlier, the tobacco industry has been one of ALEC’s chief underwriters. For many years the nation’s major tobacco companies gave ALEC more than $200,000 a year (7), sponsored golf and tennis events at ALEC meetings all over the country, and paid some of its legal bills.(8) In most years, in fact, the tobacco industry’s contributions to ALEC have significantly eclipsed the combined dues paid by all state lawmakers to be members of the organization. Through much of the 1980s and 1990s, ALEC was one of the tobacco industry’s most dependable allies on issues big and small. ALEC has frequently provided Big Tobacco with support for the industry’s advocacy activities. In 1987, for example, professors Bernard L. Weinstein and Harold T. Gross of Southern Methodist University called for the elimination of state excise taxes—such as those levied on purchases of liquor, gasoline, and tobacco—in an opinion piece for The New York Times. The recommendation, they wrote, was drawn from their recent study for ALEC. They did not mention that the tobacco industry is a large contributor to ALEC. (9) In 1988, the tobacco industry financed ALEC’s annual symposium on indoor air pollution, which featured its paid experts as speakers. Nonetheless, Constance Heckman, who was ALEC’s executive director at the time, told a reporter for the Los Angeles Times that she saw little chance of conflict. “We are conservative; we are pro- business,” she was quoted as saying. “They [tobacco companies] don’t change us. They just compound our effectiveness on the issues that we agree on.” In 1990, ALEC gave the tobacco industry valuable ammunition by releasing a report in which it argued that higher excise taxes, the revenue-raising darlings of states, are often counterproductive, resulting in lost revenue, businesses, and jobs.(10) The study found that consumers are willing to make the extra effort to cross state borders to avoid paying higher taxes, even if the resulting savings are just for one type of item. This study was trotted out for years as state after state considered increases in cigarette taxes. Over the years, the tobacco industry has used the congenial atmosphere of ALEC meetings to secure powerful allies in state legislatures from coast to coast. Consider the case of Jeffrey Coy, a Pennsylvania state representative who, while attending ALEC’s 1990 annual meeting in Monterey, California, played golf in an outing sponsored by R.J. Reynolds Tobacco Company. Coy was the chief sponsor of legislation that would limit consumer suits over defective products —a bill that critics have said is designed to benefit tobacco interests. He told a reporter for Gannett News Service that he saw no appearance of a conflict of interest in playing golf at the R.J. Reynolds outing, noting that the company was a member of ALEC’s Task Force on Product Liability. “Anyone who knows me well knows I play a lot of golf,” he said. “I play with a lot of different people with a lot of different interests. At that tournament, it’s safe to say, the words ‘product liability’ were never mentioned. Do [tobacco companies] have an interest in the bill? Absolutely. Are they the only companies interested in this bill? Absolutely not.” Coy said that he attended the conference because it included panel discussions on product liability and tort reform. “I spent a great deal of time talking to legislators from other states about product liability and tort reform,” he said.(11) Golden Rule Insurance Company. Golden Rule bills itself as “the pioneer of Medical Savings Accounts,” and over the years ALEC has carried water for the company in innumerable ways—including, of course, the development of “model” state legislation to promote MSAs. (J. Patrick Rooney, Golden Rule’s chairman, has long been a member of ALEC’s “Private Enterprise Board.”) In 1994, testifying before the House Energy and Commerce Subcommittee on Oversight and Investigations, State Representative Mike H. Coffman of Colorado said ALEC played an instrumental role in helping Golden Rule thwart his efforts to reform the state’s health-insurance industry. “There seemed to be a very close linkage between Golden Rule and the American Legislative Exchange Council,” Coffman told members of the subcommittee. “The American Legislative Exchange Council participated in the fight against my legislation by producing position papers that were word for word that of Golden Rule’s and sent them to legislators prior to key votes. This greatly reinforced Golden Rule’s lobbying capability against my reform efforts.”(12) Texaco, Inc. Corporate sponsorship of ALEC provides a company’s top executives with a captive audience of state legislators and a convenient public-relations platform. “The American people need someone in their corner to prevent the imposition of costly and unnecessary programs and help strike an affordable balance between environmental needs and affordable energy,” James W. Kinnear, Texaco’s president and chief executive officer, told ALEC’s 1991 annual meeting in Seattle. He urged legislators, in implementing the 1990 Clean Air Act, not to require the use of reformulated, less polluting gasoline. Procter & Gamble Company. In 1990, with at least fourteen states considering bans on nondegradable disposable diapers and five other states poised to levy special taxes on disposable diapers, ALEC loaned one of its big corporate benefactors —the manufacturer of Pampers—a little help on the PR front. “This is the fad fringe issue of the year,” Jerry Taylor, then ALEC’s legislative director, told Advertising Age. “Legislators want to make it look like they are doing something for the environment, to solve the solid waste crisis, and diapers are an easy target.” American Petroleum Institute, Amoco Corporation, Chevron Corporation, ExxonMobil Corporation. In 1990, when North Carolina Attorney General Lacy Thornburg sought to bar major oil companies from retailing gasoline in the state, ALEC produced a study for its funders in the the industry that said Thornburg’s plan would be a recipe for higher prices and would cost consumers $92 million more each year. In 1991, ALEC followed up with a report that was sharply critical of renewed calls for a windfall-profits tax on oil companies. “The windfall profits tax is nothing more than a means of taking income away from the private sector for use by the public sector,” the report said. “It can be opposed on the grounds that, given the way Washington wastes its revenues, the funds would be better used in private hands.” Later that year, ALEC endorsed the Marine Spill Response Corporation’s push for immunity for oil-spill responders. At the time, most coastal states did not allow spill responders immunity from removal costs or damages. The MSRC, which is financed by major oil companies, is lobbying states to adopt the federal standard, which provides immunity unless the responder acts with gross negligence or willful misconduct. American Nuclear Energy Council. In 1992, the lobbying arm of the nuclear-power industry (now the Nuclear Energy Institute) wrote “model” state legislation, which ALEC then adopted, that would have required state utility commissions to conduct “rolling prudency reviews” of nuclear power plants. The nuclear-power companies wanted state utility commissions to review the construction of nuclear power plants at various stages and to decide at each juncture whether the costs could be passed on to ratepayers. Such reviews were typically conducted only after construction had been completed. State public utility commissions had generally refused to allow utilities to pass on to their customers most cost overruns on the construction of nuclear power plants. As a result, the shareholders of nuclear-power companies had to absorb $15 billion in costs that he companies once assumed would be added to the electricity rate base. Pharmaceutical Research and Manufacturers of America; Bayer Corporation, GlaxoSmithKline; Eli Lilly & Company; Merck & Company, Inc.; Pfizer, Inc. In 1993, ALEC helped form the Coalition for Equal Access to Medicines, which described itself as “an ad hoc volunteer organization.” Its mission: to kill provisions of the deficit- reduction bill that aimed to encourage states to establish lists, or “formularies,” of approved Medicaid drugs. The Congressional Budget Office estimated that formularies would save the federal government at least $275 million over five years. States expected to save almost as much. According to The New York Times (13), the coalition was created and financed by the prescription-drug industry. Its organizing committee included an officer of ALEC, which was a member of the coalition. Over the years, pharmaceutical manufacturers have been among ALEC’s most generous corporate benefactors. National Rifle Association. In 1993, ALEC adopted a resolution expressing its opposition to a waiting period to buy firearms and a ban on semiautomatic firearms. “The administration and Congress should take a hard look at ALEC’s resolution,” James Baker, the executive director of the National Rifle Association’s Institute for Legislative Action, said. The NRA is a longtime funder of ALEC.
2. Center for Policy Alternatives report, “ALEC and the Extreme Right-Wing Agenda – What Every Legislator Should Know” 3. Washington Times, April 23, 1998, “Earth Day activists fume over corporate ‘greenwashing’ 4. Governing magazine, June 1997, “Can polluters police themselves?” 5. Austin American-Statesman, Nov. 2, 1997, “Lawmakers’ corporate classmates: A lesson in access” 6. Ibid 7. Boston Globe, Aug. 27, 1992, “Tobacco group lines up troops for tax-plan war” 8. Los Angeles Times, May 22, 1988, “Big Tobacco buying new friendships” 9. New York Times, Feb. 22, 1987, “Tax revision at the state level: States should follow the federal cue” 10. Los Angeles Times, May 22, 1988, “Big Tobacco buying new friendships” 11. Gannett News Service, Sept. 13, 1990, “The good life: Franklin County lawmakers’ expenses detailed” 12. Federal News Service, Aug. 3, 1994, Prepared statement to the House Energy and Commerce Subcommittee on Oversight and Investigations 13. New York Times, July 7, 1993, “Drug industry musters a coalition to oppose a change in Medicaid”
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