Virginia companies spend big bucks to sway federal government
- March 1, 2009
WASHINGTON - Ten of Virginia’s top 20 revenue-producing public companies combined to spend more than $100,000 a day lobbying the federal government last year, records show.
While CEOs tried to stay a step ahead of the sliding U.S. economy, and then-candidate Barack Obama took a firm stand against corporate influence in Washington, eight Virginia-based companies - including Richmond-based Altria Group Inc., Genworth Financial Inc. and Dominion Resources Inc. - each spent north of $1 million in 2008 trying to influence lawmakers.
Altria, parent company of cigarette maker Philip Morris USA, topped the lobbying list, spending $13.8 million to sway Washington politicians.
The median amount the top 20 revenue-earners spent lobbying was $465,000, according to an analysis of federal disclosure forms by Media General News Service. Lobbyists must report their spending every three months, listing issues they seek to influence.
Below is a look at the top spenders, top revenue earners, those who changed their lobbying posture, those who did not lobby at all, and how the lobbying reporting requirements still allow for secrecy in the big business of government influence.
In moving its headquarters from New York to Richmond last year, Altria became the state’s second-largest company, based on 2008 revenues. But on the lobbying list, it’s far and away No. 1 - spending more than defense contractor General Dynamics Corp. (No. 2) and railroad company Norfolk Southern Corp. (No. 3.) combined.
Altria spent $13.8 million on five in-house lobbyists, 22 contractors and what the company’s government affairs vice president Bruce Gates called a defensive strategy to minimize taxes on tobacco products.
“Our product is one that is constantly viewed as a source of income,” he said.
One of the first bills President Barack Obama signed into law increased the tax on cigarettes by 61 cents per pack to fund an expansion of children’s health insurance - a bill Altria opposed.
But Altria has bucked the tobacco industry by supporting a bill to empower the Food and Drug Administration to regulate tobacco products. You wouldn’t know it based on disclosure forms, though. Reporting rules do not require lobbyists to indicate their position on issues, just to list the subjects on which they lobbied.
Insurer Genworth Financial Inc. (No. 4 in lobbying) spent $3.4 million dollars on government affairs in 2008, a year in which the insurer lost $572 million.
“It is important for policymakers and elected officials to better understand the issues we face in our industry, ... particularly in this economic environment,” said company spokeswoman Yokima Cureton.
Nearly a third of Genworth’s lobbying spending came in the last three months of the year as the company lobbied for the $700 billion Wall Street bailout package. At the same time, Genworth pursued the acquisition of Minnesota-based InterBank. By owning a bank and becoming a savings and loan, Genworth would be eligible for the bailout funds. The deal to buy InterBank is still not completed.
Genworth also lobbied on housing and health issues, including bills related to Alzheimer’s family assistance and long term care trust accounts (neither passed). Genworth’s lobbying disclosure forms do not indicate positions taken.
McLean-based Capital One Financial Corp., which received $3.6 billion under the bailout, also lobbied on banking and finance issues last year.
But long before bailouts were in vogue, Virginia-based companies held out their hats at Uncle Sam’s door. None has received more money in recent years than Falls Church-based Defense Department contractor General Dynamics Corp.
General Dynamics spent $6.7 million lobbying on defense and homeland security spending bills last year and $7.2 million the year before. What did they get in return? Government contracts totaling $30.6 billion, according to the Office of Management and Budget, the agency that tracks federal dollars. The company has ranked among the top five recipients of government contracts every year since 2000.
General Dynamics officials were hesitant to talk about their lobbying efforts.
“It’s an education process,” said Kendell Pease, the company’s vice president of government relations. “Many of our programs are very complex, and we have many requests by members [of Congress] asking for more information.”
In 2008, General Dynamics’ largest contracts were $1 billion to build a submarine in Connecticut, $613 million to make tanks and $538 million to produce armored Stryker vehicles.
All of those contracts - and 47 percent of the taxpayer dollars awarded to the company in 2008 - came without a competitive bidding process. The government lists General Dynamics as the “unique source” for the defense work.
“We don’t go into detail about our process,” Pease said.
Few companies do. Computer Sciences Corporation of Falls Church spent $980,000 lobbying on defense and other issues in 2008 and received $4.4 billion in government contracts that fiscal year. They did not return calls seeking comment for this story.
For government contractors, lobbying goes beyond trying to influence legislation, said Steve Lunceford, spokesman for McLean-based BearingPoint Inc. The technology consulting firm counts on government contracts for 40 percent of its revenues, he said, mainly from the U.S. Agency for International Development and the Pentagon.
“Our lobbying efforts are really market intelligence,” Lunceford said. “It’s more, what’s going on in the federal government, what are the priorities going to be?”
Even meat packers get in on the government business. Smithfield Foods Inc., Virginia’s sixth-largest revenue-producing company, lobbies routinely to block excessive government regulation, a spokesman said. The company reported lobbying on energy (think biofuels), trade and labor issues. But it also got a $35 million Defense contract to provide food for military commissaries.
Five of the state’s top 20 revenue-earning companies reported net income losses in 2008. Even a depressed economy apparently is no reason to cut the lobbying budget.
Most of the 20 companies increased or held steady their 2008 lobbying efforts compared to 2007. Five companies, including The Brink’s Co. and Dominion Resources, increased lobbying spending by 50 percent or more.
“When the government is handing out billions of dollars to help salvage the economy, lobbyists are going to be among the last people to lose their jobs,” said Massie Ritsch, spokesman for the Center for Responsive Politics. “They are people who can deliver revenue in terms of government loans, tax subsidies and contracts.”
Dominion increased its lobbying effort just as Congress began to tackle a sweeping climate change bill last spring, which would have had a major impact on the energy company and its coal-fired power plants. Dominion lobbied against the bill, which the Senate killed in June.
Company spokesman David Botkins said in a prepared statement, “We believe in being engaged in the democratic process on behalf of our customers, employees and shareholders.”
Brink’s did not return calls seeking comment.
Railroad giant Norfolk Southern doubled its lobbying spending in 2008 to $6.3 million, focusing on transportation and environmental issues.
“[Trains] are easier on the environment; we are very fuel-efficient and we can help take some of the strain off of the highway system, ... it’s very important constituents know about that,” said Frank Brown, spokesman for Norfolk Southern.
Despite all the reporting requirements and Congress displaying lobbying forms online, few companies go so far as Norfolk Southern to detail its lobbying efforts.
Its last lobbying report had specificity like this: “opposed section 105 that increases maximum truck weights to 97,000 [pounds].” The bill did not pass.
The rail company supported coal-to-liquid technologies in the climate change bill and opposed the Railroad Antitrust Enforcement Act and on-time performance rules for passenger trains. None of those bills passed last Congress.
Usually companies list the issues they lobbied or the bill numbers they worked. But they don’t typically say whether they supported or opposed all or part of the bill.
“Companies tend to do the minimum,” said Ritsch at the Center for Responsive Politics.
Glen Allen-based international packaging company MeadWestvaco also reports clearly its legislative positions - opposing the climate change bill, a so-called fair pay bill and labor’s Free Choice Act, and supporting a free trade agreement with Colombia. The fair pay act became the first bill Obama signed into law. The other issues remain pending.
The transparency of these two Virginia companies should be a “model for every company,” Ritsch said. But even this level of reporting fails to capture all the ways companies influence lawmakers.
“When a defense contractor puts an ad in the Metro station that members of Congress and their staffs use or that officials at the Pentagon use, that’s intended to influence decision-making, but that’s not lobbying,” Ritsch said.
Nor do lobbying forms show campaign contributions the companies’ affiliated political action committees make to federal candidates. Thirteen of Virginia’s top 20 have such PACs. Combined they gave $12.3 million to federal candidates in the last two-year election cycle.
What me? Lobby?
Three of Virginia’s top 20 companies, including Mechanicsville-based Owens & Minor Inc., reported no lobbying expenditures last year. But that doesn’t mean they sat out the legislative process.
“In the past we’ve generally relied on our trade associations and coalitions to act on our behalf,” said Trudi Allcott, a spokeswoman for Owens & Minor, a medical supply company. The Health Industry Distributors Association spent $110,000 lobbying the federal government last year for the 180 companies it represents.
And Richmond-based CarMax Inc., which had not lobbied at all in 2007, hired a D.C. firm last fall to successfully fight for tax incentives for car buyers and other issues in the bailout bill.
Companies that are veterans at the lobbying routine say it’s simply part of doing business.
“There are lots of people with lots of ideas that may adversely affect our business,” said Smithfield Foods spokesman Dennis Treacy. “We need to be on guard.”
For Top 50 Virginia business listings:
Click here for an interactive chart of the lobbying spending for the top 20 firms.