A Stealth Way a Bill Becomes a Law: Business Week

With the help of a quiet D.C. organization called ALEC, corporations pen GOP legislation

Jeffrey Coolidge/Getty Images

By Alison Fitzgerals

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.

ExxonMobil paid $39,000 in dues and task force fees to the group last year and sponsored a reception at the annual meeting in San Diego for $25,000, company spokesman Alan Jeffers says. ExxonMobil has spent about $230,000 on ALEC dues, meetings, and sponsorships over the last five years. In August it will sponsor a natural gas workshop for $45,000. “We try to provide our views on legislation to anyone who will listen, including legislators and nongovernmental organizations,” Jeffers says.

Wichita-based Koch was one of 14 ALEC “vice-chairmen,” or $25,000 sponsors, at ALEC’s 2010 annual meeting, according to the documents. The Charles G. Koch Charitable Foundation, founded by the energy conglomerate’s chief executive officer, gave $75,858 to ALEC in 2009, according to its tax returns. The group now has 33 employees and a budget of $7 million.

“As a nonpartisan organization that includes both public- and private-sector members, ALEC’s mission aligns closely with many of the principles to which we are committed—economic freedom, limited government, and individual liberty,” says Koch spokesman Philip Ellender.

Thatcher, the Oregon legislator and an ALEC member since 2004, is happy with her membership. ”When you get input from the private sector and you get input from the public sector, you can get legislation that can be good for everyone.”

The bottom line: ALEC, a partnership of legislators and companies, says it gets about 200 state laws passed each year.