Julia DiLaura stories from The Center for Public Integrity

Foreign companies pay to influence U.S. policy

United States — 2011-11-29T11:45:24-05:00

For example, from 1998 to mid-2004, London-based BP plc spent close to $25 million* lobbying the U.S. government—the third-highest amount among foreign entities. Surprisingly, this international energy giant lobbied nearly as much on matters related to the environment and Superfund as it did on oil and gas issues. One likely explanation: BP and its U.S. affiliates are listed as the potentially responsible parties for 162 Superfund pollution sites that, collectively, have cost the Environmental Protection Agency $1.1 billion in analysis and clean-up costs. All told, records reveal, 22 foreign companies listed as potentially responsible parties for 275 Superfund sites in 40 U.S. states reported lobbying on the same issue or directly to the EPA.

During these same six-plus years, the Center analysis shows, companies with headquarters in more than 100 foreign nations* spent more than $520 million* lobbying the federal government. Over that time, those companies employed 550 lobbying firms and teams of 3,800 lobbyists, more than 100 of whom were former members of Congress. Companies based in the United Kingdom alone spent more than their counterparts in 38* U.S. states during that time period.

BP, which ranked 52nd among lobbying groups overall—just ahead of insurance giant American International Group Inc., the American Bankers Association and Merrill Lynch & Co. Inc.—was one of several oil companies involved with Arctic Power, a lobbying consortium that has led the years-long efforts to open the Arctic National Wildlife Refuge to oil exploration and drilling.

In late 2002, in the face of the debate over the potential profitability of developing the region, BP—like a number of large U.S. oil companies—withdrew from the lobbying group, citing the action as a cost-cutting move and deferring its decision on whether to expand Alaskan operations into ANWR until Congress had finished its deliberations.

Registration Requirements

Foreign governments are not required to register their lobbyists with the Senate Office of Public Records (which tracks all other individuals and organizations that lobby the U.S. federal government) even if they conduct activities that meet the U.S. government's definition of lobbying. Instead, foreign governments, political parties and politicians complete a more intensive disclosure of activities under the Foreign Agents Registration Act at the Department of Justice.

Therefore, international spending reported under the Lobbying Disclosure Act—and included in the Center's LobbyWatch database—is not a complete illustration of foreign entities attempting to influence the U.S. government. It is rather a more limited reflection of foreign-business spending.

There's not much ambiguity, however, about why these foreign companies seek to keep their voices heard in Washington: they typically have a direct stake in this nation's ever-shifting canon of business law and tax policy.

For example, each of the three top-spending foreign companies—DaimlerChrysler Corp. of Germany, pharmaceutical giant GlaxoSmithKline of the United Kingdom and BP plc—all have extensive business operations within the United States.

Those companies that don't actually operate within the United States almost universally depend on advantageous trade policy, either with U.S. markets or under the parameters of international trade agreements in which the United States is a definitive power. Not surprisingly, international trade was by far the most common issue foreign companies reported lobbying on, followed by defense and taxation and the Internal Revenue Code.

But lobbying by foreign companies doesn't stop at business and trade policy or the outsourcing-friendly contract system: many foreign groups lobby on U.S. domestic policy, even as it's being negotiated in Congress.

For example, U.K.-based GlaxoSmithKline, the second-highest-spending foreign company, consistently reported lobbying on Medicare and Medicaid reform issues during the nearly seven years studied. The pharmaceutical giant, one of more than 90 foreign companies that reported lobbying on health issues or the Department of Health and Human Services, is also a member of lobbying machine PhRMA, whose more than $65 million* spent during the period in question earned the industry huge victories with Congress and the FDA.

And as they seek to influence U.S. policy, foreign companies primarily seek the same top lobbying firms that their domestic counterparts tend to rely on.

The five lobbying firms that led the industry in the entire 1998 to 2004 period— Interpublic Group of Companies Inc., Piper Rudnick, WPP Group plc, Patton Boggs and Akin Gump Strauss Hauer & Feld LLP—also received the most money from foreign companies.

Not surprisingly, those familiar lobbyists tread the same well-worn corridors of power. Just as in the lobbying industry at large, the U.S. Senate and U.S. House of Representatives were by far the most lobbied by foreign companies, followed by the Departments of State, Commerce, Treasury and Defense, and the Office of the U.S. Trade Representative.

Nor should the result of that access be surprising. Sixteen foreign companies that paid Washington-based representatives to lobby the Department of Defense between 1998 and mid-2004 received more than $16.4 billion in Pentagon contracts during that time, $5.6 billion of which was awarded without competition.

Your tax dollars at work—on K Street

2011-11-17T16:30:01-05:00

Note to readers: This story has been reposted. Since the report was originally released, the Center for Public Integrity has changed the way it calculates lobbying expenditures to reflect a more stringent methodology for determining the total amounts. The change was made to correct the potential overstatement of totals. Figures or relevant text that have been changed are indicated with asterisks. (3/31/2006)

At a time of enormous budgetary constraints, states, cities and public schools have spent hundreds of millions of dollars on lobbyists to plead their cases before legislators and regulators in the nation's capital.

During the last six years, in fact, roughly* 300 universities have spent in excess of $114 million*, while more than 1,400 local governments have doled out more than $343 million* to secure funding for everything from freeways to fire trucks, according to a study of lobbying disclosure records conducted by the Center for Public Integrity. Similarly, the 56 states and U.S. territories, many of them facing severe budget shortfalls, have spent well in excess of $55 million*.

"It's almost like the lobbyist 'tax,'" said Keith Ashdown, vice president for policy and communications at Taxpayers for Common Sense, a federal-budget watchdog organization. "If you're from a local entity and you're trying to get funded and you don't have a senior lawmaker on the right committee in Congress, you have to basically pay a tax to lobbyists to get recognized."

Still, public organizations have more to lose by not hiring an advocate on the federal level, said Bob Stern, president of the Center for Governmental Studies, a non-profit organization devoted to addressing social problems and researching policy changes for more effective governance.

"It would be penny-wise, pound-foolish for them not to have a presence in Washington," he said.

Given that congressional representatives are focused, above all, on the consequences that legislation has on their own districts, he added, public agencies benefit from having an additional envoy to pursue their distinct interests.

And if they don't make that effort, Stern said, "the federal government screws the states, the states screw the counties, and the cities and counties don't have any money left."

Lobbying activity reported on behalf of public entities spiked during the past six years, with expenditures by universities, for example, more than* doubling between 1998 and 2003 to $25 million*. Meanwhile, local government spending on lobbyists increased about 110 percent to $70 million*. For states, the figure went up 87 percent to about $10 million*.

The increase is almost inevitable, Ashdown said. Once local governments realize the return hiring a lobbyist can bring, the natural reaction is to reinforce that advantage by spending even more.

"[The result is] this perpetual cycle of having to hire more hired guns to get more federal dollars," he said. Lobbyists for state and local governments and public schools listed appropriations bills as their area of legislative interest on 54 percent of disclosure forms filed since 1998, the Center found. Other top issues were transportation, federal education programs and spending and environmental issues including spending on the superfund cleanup program.

Although an investment in lobbying is better than the alternative for most states, municipalities and public universities, it is still a loss within the budget process, Ashdown says.

"They're basically taking money out of what they're going to get to pay for the project," he told the Center. "They're getting even less money than they would if the process actually worked. To pay for greasing the wheels in Washington, you're getting less money going where it needs to go." But local governments aren't likely to abandon a tactic with a reasonable chance of success, he added, regardless of any hesitations about risking taxpayer money in lobbying ventures that may not pay off.

After all, the prevalence of competitors eager to snatch up any funding not being aggressively pursued leaves them little alternative.

"It really is difficult if you're in public service to unilaterally disarm, and say, 'I'm not going to bring anything back,'" Ashdown said. "If you're an elected official, you do what it takes."

One of the best opportunities for a lobbyist to push a public entity's agenda is through the process of appropriations earmarks, in which funding is approved because a congressman or senator puts it in a bill in such a way that only certain companies can fulfill its terms. Some congressional observers fear that the number and size of earmarks have become excessive in recent years, and it is increasingly narrow special interests that are benefiting most.

"It's not based on the need of any local area, it's based on who you hire," Ashdown noted. "And does anybody from your state sit on the committee? Is anyone on the right committee to have influence?"

"It's not about the best projects anymore."