Every day, our journalism dismantles barriers and shines a light on the critical overlooked and under-reported issues important to all North Carolinians.
Before you go …
If you like what you are reading and believe in independent, nonprofit, nonpartisan journalism like ours—journalism the way it should be—please contribute to keep us going. Reporting like this isn’t free to produce and we cannot do this alone. Thank you!
Corporate lobby plans May meeting in Charlotte
An influential corporate lobbying organization prepares to hold its spring summit meeting in Charlotte on May 11, and lawmakers from around the state will be among the most-desired invitees.
The group – the American Legislative Exchange Council, known as ALEC – is a particularly effective group of corporate advocates who have united sympathetic legislators with free-market enthusiasts.
The news this month that Coke, Pepsi, Kraft, McDonald’s, Wendy’s, Intuit and others have dropped their membership in ALEC helped bring the obscure world of corporate political influence into better focus.
ALEC’s efforts could influence everything from torte reform to medical drug regulation, say observers at North Carolina Advocates for Justice, a nonprofit, nonpartisan association of attorneys.
And, according to Sourcewatch, from the Center for Media and Democracy, several WNC legislators and other lawmakers with mountain influence are members of ALEC. They are:
- House Speaker Thom Tillis (R-Mecklenburg): ALEC International Relations Task Force Member and 2011 ALEC State Legislator of the Year
- Rep. Tim Moffitt (R-Buncombe): ALEC International Relations Task Force Member
- Rep. Chuck McGrady (R-Henderson)
- Rep. Mike Hager (R-Rutherford and Cleveland)
- Sen. Tom Apodaca (R-Buncombe, Henderson and Polk): ALEC Education Task Force Member
Locally, ALEC has been highlighted in recent weeks by activists opposed to the transfer of Asheville’s water system to an independent authority. The activists worry that ALEC members Moffitt and McGrady have pushed actions that could lead to privatization of the public water system.
How ALEC works — in and out of WNC
Sourcewatch says that, through ALEC, corporate lobbyists work behind closed doors with select state legislators to develop laws that directly benefit their business’ bottom line.
Lawmakers who are active in ALEC — mostly Republicans — then bring those proposals home and introduce them in statehouses as their own public policy innovations, without disclosing the role of corporations in crafting the bills.
ALEC boasts that it has over 1,000 pieces of “model legislation” introduced by lawmakers every year, with one in five of them passing into law.
Carolina Public Press called the five legislators Sourcewatch lists as ALEC participants and task force leaders who are from or are influential in Western North Carolina to ask about their involvement.
Hager, McGrady and Moffitt – all relative newcomers elected in 2010 during the historic turn of the state legislature to its Republican majority – responded.
All three lawmakers deny any knowledge of ALEC’s direct influence in getting bills it writes introduced, arguing that the group’s conferences primarily serve educational and networking purposes.
“I don’t know of anybody in the N.C. General Assembly that has introduced model legislation from ALEC,” Moffitt said. “As far model legislation, I’m fully capable of crafting my own.”
And while Hagar says he appreciates ALEC conferences as an opportunity to network and learn from other legislators, he sees himself as an independent thinker on issues that affect North Carolinians.
“I don’t feel like I’m doing the right thing for my constituents if I just listen to some entity out there, whoever it is,” he said.
McGrady agreed, adding that he has no plans to attend ALEC’s May 11 meeting.
“I’m in the middle of a primary race, so I’m not thinking of much else until 14 days from now,” he told CPP the end of April, as he hustled to his next engagement.
Looking for influence
But Todd Barlow, political affairs counsel for North Carolina Advocates for Justice, has studied bills introduced in the North Carolina legislature in the past year that were, he said, developed as model legislation by ALEC.
One bill would knock the teeth out of a current law that enables people injured while trespassing on another’s property—knowingly or not—to sue if they are injured, Barlow said.
Another would provide pharmaceutical companies a high level of immunity against lawsuits in cases where people are harmed by using a drug, if the drug has been approved by the FDA.
The latter “is an ALEC model bill, straight down the line,” Barlow said. “What’s interesting is that ALEC is funded by national and international corporate special interests, and legislators are introducing their bills verbatim.”
‘A sophisticated operation’
ALEC says it works to achieve the twin goals of limited government and free enterprise. But a recent New York Times story called ALEC “a sophisticated operation for shaping public policy at a state-by-state level.”
The Times reviewed ALEC documents showing that “special interests effectively turn ALEC’s lawmaker members into stealth lobbyists, providing them with talking points, signaling how they should vote, and collaborating on bills affecting hundreds of issues like school vouchers and tobacco taxes.”
The Times reports that ALEC is financed by more than 200 private-sector members, whose annual dues of $7,000 to $25,000 accounted for most of its $7 million budget in 2010. A primer on the group, appearing in Durham’s The Independent Weekly last year, said ALEC’s members include conservative think tanks, along with more than 300 corporations and 2,000 free-enterprise-minded state legislators.
On the heels of pressure from liberal groups threatening a boycott of companies associated with ALEC, National Public Radio reported that the group recently shut down its task force on public safety and elections, which reportedly wrote controversial measures promoting gun rights, voter ID and immigration reform.
“They’re a target now,” said Rep. Tim Moffitt, reflecting on the recent scrutiny, both as a member of ALEC’s International Relations Task Force and chair of a House committee interested in promoting public-private partnerships as a means of reducing the size of government — a major interest of ALEC.
“Honestly, it’s much ado about nothing, at least from this legislator’s point of view,” he said. “I’m a member of any number of (similar) groups, and this is an organization, not unlike a handful of others, where legislators from different states get together and talk about things that are pressing in their state, so I get an idea of what’s happening, and what I need to pay attention to.”
But of concerns that the group is producing model legislation that passes as a member’s own offering, Moffitt said: “Quite honestly, that part of it has been a little bit overblown. I’ve not taken any draft legislation from any of these organizations. The stuff I’m interested in, I’m certainly capable of crafting (legislation) on my own.
“But it is instructive to understand what’s happening in other states and in the public sector,” he continued. “A lot of times those rules are developed without congressional oversight, too. And it’s helpful to understand what private industry is up to. So these organizations provide an opportunity to become more informed, and do the things that best serve your constituents.”
UNC-Asheville political scientist Bill Sabo tends to agree. “I don’t see (ALEC’s) work as overtly problematic. The issue to me is, do legislators have the time and resources to examine the nuances of these bills?”
In the U.S. Congress, he points out, members have legislative staff to help research and develop proposed legislation; state legislators do not enjoy such staff support.
“They’re not professionals,” Sabo said, “and when you have amateur legislators, they can fall prey to any organization that can coordinate” to provide background information, model text and other resources needed to develop legislation.
“I don’t see them walking the halls in the legislature like a registered lobbyist,” Barlow said. But, he added: “They’re in a very dangerous area, in terms of their nonprofit status. Whether they’ve crossed the line, I don’t know. It seems incredible to me that a corporation can make a tax-deductible contribution to ALEC, and then that money is used to create legislation to promote that corporation. That seems like an amazing loophole in the law.”
But there could be big changes in store at ALEC if some critics have their way. As a nonprofit, tax-exempt organization, ALEC accepts tax-free contributions and describes itself as a nonpartisan group that does not engage in lobbying activities, which would be strictly limited under its federal tax status as a 501(c)(3) organization.
Yet, according to The Independent Weekly, the organization that spent more than $2 million in its 2010 fiscal year “bringing the lips of corporations to the ears of conservative state legislators,” stated on its tax form that it is only in the business of “sharing research and educational info.”
Last summer, the government watchdogs at Common Cause asked the Internal Revenue Service to investigate. Should the IRS move against ALEC, the outcome could be a massive fine and the reorganization of the group into a 501(c)(4) – which can engage in political lobbying – but donations are not tax-exempt.
So far, there’s no sign the IRS is investigating. So does ALEC rightly claim non-profit tax status?
“I don’t see why not,” Moffitt said. “If Common Cause is going to make that assertion, they ought to have the courage to look at all of these organizations, and not single this one out.”
But Sabo says the scrutiny is probably appropriate.
“It doesn’t bother me that organizations like ALEC or Common Cause perform their functions,” he said, “but it does bother me some that they would exploit the tax codes, as nonprofits.”