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The Epic Scale of Lobbying Cash

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Google Spent Even More on Lobbying Than Comcast in 2014

Google headquarters in Mountain View, Calif. on Jan. 30, 2014.
Justin Sullivan—Getty Images Google headquarters in Mountain View, Calif. on Jan. 30, 2014.

Outspent the cable giant currently seeking approval for a merger

Google’s influence is increasingly being felt in Washington, according to a corporate spending watchdog.

The search giant spent $16.83 million on federal lobbying in 2014, according to public records analyzed by public interest nonprofit Consumer Watchdog — just a little bit more than the $16.8 million spend racked up by noted big spender Comcast last year, as it sought to win approval for a planned $45 billion merger with Time Warner Cable.

Google is also spending considerably more than its direct competitors, such as Microsoft, which spent $8.33 million on lobbying efforts, and Facebook, which spent $9.34 million. In fact Google’s spend was the largest of 15 tech and communications companies that Consumer Watchdog tracks, including Verizon, Time Warner Cable and IBM.

As Google continues to expand to new business ventures, such as its just-announced contribution to a $1 billion investment into SpaceX, the company must wrangle with an ever-growing list of laws and policies. The Washington Post pulled back the curtain a bit on how Google spends its lobbying dollars earlier this year, revealing that the tech giant regularly funds research at think tanks and invests in advocacy groups on both sides of the political aisle.

Current political issues that would likely be of high interest to Google include the revamping of net neutrality laws and President Obama’s new initiative to ensure that cities are able to build their own municipal broadband networks, which could lead to faster Internet for customers.

MONEY The Economy

The Richest 1 Percent Hold Nearly Half of All Global Wealth

A study released by Oxfam shows the rich are indeed getting richer as nearly half of all global wealth is concentrated in wealthy elites.

TIME Campaign Finance

D.C. Influencers Spend More on Advertising and PR Than Lobbying

capitol-building
Getty Images

Forget lobbying. When Washington, D.C.’s biggest trade associations want to wield influence, they often put far more of their money into advertising and public relations, according to a new Center for Public Integrity investigation.

Take, for example, the American Petroleum Institute. The oil and gas industry trade group spent more than $7 million lobbying federal officials in 2012. But that sum was dwarfed by the $85.5 million it paid to four public relations and advertising firms to, in effect, lobby the American public — including $51.9 million just to global PR giant Edelman.

From 2008 through 2012, annual tax filings show, the API paid Edelman a staggering $327.4 million for advertising and public relations services, more than any other contractor.

It’s been well-publicized how much industry spends on lobbying the government, but not so much is known about how much money goes toward influencing the public. In an effort to find out more, Center for Public Integrity reporters examined the tax returns for trade associations that spent more than $1 million on lobbying in 2012. The IRS requires the groups to report their top five contractors.

Of $3.4 billion in contracts reported by the 144 trade groups from 2008 through 2012, more than $1.2 billion, or 37 percent, went toward advertising, public relations and marketing services, more than any other category. The second-highest total, $682.2 million, or 20 percent of the total, was directed toward legal, lobbying and government affairs.

By industry sector, the biggest clients of PR, marketing and ad services were energy and natural resources associations.

The public relations industry is on a growth tear while the number of federally registered lobbyists is actually shrinking. Public relations work, unlike lobbying, is not subject to federal disclosure rules, and PR and advertising campaigns can potentially influence a broader group of people. In addition to Edelman, among the other major players are President Barack Obama’s go-to ad agency GMMB, “issue-advocacy” firm Goddard Gunster and government policy specialists Apco Worldwide.

While not a complete accounting of spending, the analysis provides a glimpse into just how important the public relations industry is to groups seeking to influence public policy.

Big energy leads spending

Boosted by the $327.4 million-worth of contracts Edelman inked with the American Petroleum Institute — consistently the largest contracts the Center found in five years of collected data — the energy and natural resources industry outspent every other sector on advertising and public relations.

The API, Growth Energy — which represents ethanol producers — and other energy and natural resources trade groups collectively spent more than $430.5 million on PR and advertising to help burnish their image between 2008 and 2012.

It’s not clear how much of the total went into the bank accounts of the PR and advertising firms and how much was passed on to media companies, however. Edelman declined to comment with Center reporters for this story. Edelman likely left some of the work for the API to its Blue Advertising subsidiary, which offers media planning and placement in its services and discloses work for the oil giant on its website.

Other top energy and natural resources interests included the National Fisheries Institute, which represents seafood harvesters, wholesalers and retailers, and the National Biodiesel Board, whose members take recycled cooking oil and animal fats and turn them into fuel.

Business associations — led by the U.S. Chamber of Commerce — represented the second largest industry category, paying PR and advertising firms a total of at least $214.9 million from 2008 through 2012. The U.S. Chamber, the nation’s biggest lobby and a prolific spender on political ads, paid $173.5 million to its top advertising firms during the five-year period.

In 2010 and 2012, all five of the trade group’s top contractors were advertising agencies.

The U.S. Chamber paid Republican media-buying firm National Media Research, Planning & Placement more than $60.8 million for advertising services in 2009 alone. National Media, based in Northern Virginia, researches voter demographics and behaviors and places ads in key media markets.

Another top advertising contractor for the U.S. Chamber was Revolution Agency, which the trade group paid more than $38.2 million from 2010 through 2012.

Revolution is a Northern Virginia-based advocacy firm that possesses the “Creativity of Madison Avenue” and the “Strategic Discipline of a Political Campaign,” according to its website. Its partners all formerly worked as staffers or consultants for Republican lawmakers, and the firm’s clients have included business groups and the telecommunications industry.

The agency was behind an award-winning public affairs campaign targeting the proposed Consumer Financial Protection Bureau, an agency birthed out of the 2008 financial crisis. The campaign on behalf of the U.S. Chamber included a TV ad that attacked the proposed bureau as a “massive new federal agency that will create more layers of regulation and bureaucracy.”

The finance, insurance and real estate sector ranked third in contracts with advertising and PR agencies, paying $184.5 million to contractors, including favorites the Most Organization, a West Coast advertising agency, and Locust Street Group, a “grassroots” advocacy firm. The sector was led by the National Association of Realtors and America’s Health Insurance Plans.

The Most Organization, based in Orange County, California, earned more than $116.7 million from 2010 through 2012 for its work to promote the National Association of Realtors in a national advertising campaign.

Fourth in PR spending based on top contracts was the food and beverage industry, which paid out $104.5 million from 2008-2012. Big spenders included the American Beverage Association, which has been shelling out millions to try and keep cities and states from taxing sugary drinks.

Rounding out the top five industries for PR and advertising spending was communications and electronics, led by CTIA — The Wireless Association, which represents telecommunications companies like AT&T Inc. and Verizon Communications Co. Also in that category: the Software Alliance.

Steve Barrett, editor-in-chief of trade magazine PR Week, says it’s clear why trade associations rely so heavily on PR and advertising.

“They certainly want to influence the general public,” he says, “because the general public will then influence the politicians, the lawmakers or the regulators in that particular industry.”

Edelman leads PR firms

The Center’s analysis includes the top five contractors for each trade association. Annual totals need to be at least $100,000 to be reported. The Center looked only at trade associations that spent more than $1 million on lobbying in 2012, according to the Center for Responsive Politics. [See Methodology.]

Edelman’s lucrative contracts with the American Petroleum Institute helped the PR giant earn $346.8 million, significantly more money from top trade associations than any other advertising or public relations firm, according to the Center’s analysis. But the oil industry trade group wasn’t the firm’s only client.

Others included the Business Roundtable ($9.9 million), a group of CEOs who advocate for business-friendly policies, the Software Alliance ($2.5 million) and the Grocery Manufacturers Association ($1.8 million).

The food-industry trade group paid Edelman more than $1 million in 2011 for work related to its campaign to put select nutrition facts on labels — a move that some health experts criticized as a way to head off the Food and Drug Administration’s effort to require more comprehensive labeling.

Edelman is the country’s largest independent public relations firm. It employs more than 5,000 workers and maintains subsidiaries that specialize in grassroots communications and advertising.

The firm’s Washington office has a staff of 225, which includes “former journalists, campaign veterans, political speechwriters, White House staffers and legislative aides,” according to the firm’s website. Among them: Steve Schmidt, a senior advisor to Arizona Republican Sen. John McCain’s 2008 presidential campaign; former White House deputy press secretary Jamie Smith; and former Sens. Judd Gregg, R-N.H., and Kent Conrad, D-N.D.

Edelman is known for its at-times controversial tactics. In 2006, the firm was forced to apologize for creating a misleading grassroots campaign for Wal-Mart. To polish the company’s reputation, the agency had created “Working Families for Wal-Mart,” for which a couple drove across the country blogging positive accounts of the retail giant’s employees and customers — initially without disclosing that they were compensated. The campaign, which launched amid bad press about the company’s employment practices, sought to portray Wal-Mart workers as happy middle-class families.

More recently, leaked documents revealed Edelman’s aggressive plans to attack opponents of a pipeline being developed by TransCanada Corp. Within days of the leak, TransCanada announced that it was severing ties with Edelman.

In both cases, according to reports and leaked documents, Edelman maintained the same three-step approach: promote positive messages, respond to criticism and pressure opposition groups.

Michael Bush, a spokesman for the firm, declined to comment for this story. In an email, he wrote, “We do not talk about the work we do for clients.”

Public relations and advertising agencies boast of their communications savvy, but firms contacted for this story were mum. Some, like Edelman, declined to comment, while others did not return repeated phone calls and emails seeking comment.

Most trade associations also did not respond to the Center’s inquiries.

Lisa Graves, executive director of liberal watchdog group the Center for Media and Democracy, which operates the website PRWatch.org, says trade associations are designed to be a “shield and a sword” for their corporate members.

“It’s important for people to know more about how the trade associations operate and which PR operations they’re funding,” she says, “because those nonprofit entities are extremely powerful special interests in Washington, D.C.”

‘Turning the tide’

Communications firm GMMB ranked second behind Edelman. The agency, which has offices in Washington, D.C., and Seattle, brought in $123.5 million from contracts with five different associations in the beverage, communications, transportation and business industries from 2008 through 2012.

Known most prominently for its political work on behalf of Barack Obama’s presidential campaigns — GMMB’s leadership team includes Obama’s campaign advisor Jim Margolis — the firm has created ad blitzes for trade groups including CTIA and the American Beverage Association, whose members include Coca-Cola and PepsiCo.

From 2009 through 2012, the wireless association paid GMMB $40.5 million to produce ads, including one TV spot with the message that “wireless is freedom.” The beverage association, which teamed up with GMMB on a 2012 ad campaign to promote new prominently displayed calorie labels, paid the firm more than $55.2 million.

The Most Organization and National Media Research, Planning and Placement were the third- and fourth-highest paid contractors for advertising and public relations services. Goddard Claussen (now Goddard Gunster) came in fifth, followed by Revolution Agency, which was sixth, thanks mostly to its work for the U.S. Chamber of Commerce, according to the Center’s data analysis.

Apco Worldwide, which ranked seventh, earned $42.9 million from trade associations. The Washington, D.C.-based firm is known for its work for the tobacco and health care industries. Mike Tuffin, a managing director in the firm’s Washington office, joined Apco in 2012 after serving as executive vice president of America’s Health Insurance Plans, a trade group that represents health insurers.

On behalf of AHIP, the agency created front group Health Care America to attack filmmaker Michael Moore’s 2007 documentary Sicko, which demonized American health insurers, according to Wendell Potter, a former industry-executive-turned-whistleblower. (Disclosure: Potter is a regular columnist for the Center for Public Integrity.)

In the two years before Congress passed health care reform in 2010, Apco won at least two contracts with AHIP, totaling more than $5 million.

Among former government officials at Apco are ex-Gov. Bill Richardson, D-N.M., and ex-Congressmen Don Bonker, D-Wash., and Tim Roemer, D-Ind.

Ogilvy & Mather came in just behind Apco, earning nearly $41 million from four trade associations during the five-year period reviewed by the Center. But the firm, a subsidiary of communications giant WPP, earned almost all of its money from the American Chemistry Council, which represents chemical companies.

The American Chemistry Council paid Ogilvy more than $15 million in 2008 alone. That year, the firm led a couple of PR and advertising campaigns on behalf of the trade group, including one that discouraged Americans from supporting a ban on products containing phthalates, a group of chemicals found in plastics and suspected of causing changes in hormone levels, birth defects and other health effects.

The firm earned awards for the phthalates campaign, which it dubbed “From Toxic to Truthful: Turning the Tide on Phthalates.” Even though Congress eventually banned the use of certain types of phthalates in children’s toys, the firm patted itself on the back for helping to “neutralize negative coverage” and bring “a noticeable shift in the public mood.”

FleishmanHillard ranked ninth, according to the Center’s analysis. Its public relations and advertising clients included the American Petroleum Institute ($27.6 million) and CropLife America ($1.5 million), which represents the manufacturers of pesticides and agricultural chemicals.

The firm, which describes itself as being driven by “the power of true,” has consistently ranked within the top three of the world’s highest-paid public relations companies for the past five years, according to the World PR Report published by the Holmes Report. Its D.C. office is led by Kris Balderston, a former State Department official and deputy assistant to former President Bill Clinton.

Keeping the players straight in the advertising and public relations game is no easy task due to a series of massive mergers that have taken place over the past decade or so. GMMB, for example, is actually a subsidiary of FleishmanHillard, which is owned by the giant advertising and communications holding company Omnicom Media Group, based in New York City.

But most of the subsidiaries function under their own names.

Locust Street Group rounds out the top 10 firms for PR and advertising services. The Washington, D.C.-based agency earned $23.6 million in trade group money from 2008 through 2012, almost all of which came from America’s Health Insurance Plans. It’s unclear what exactly the agency did on the insurance group’s behalf — the firm’s founder, David Barnhart, declined to answer questions for this story — but Locust Street Group’s website says it builds “boots on the ground” coalitions and creates social media campaigns to help influence lawmakers.

“D.C. may have K Street with tons of lobbyists,” the firm’s slogan says, “but small towns all over America have a Locust Street.”

High stakes, big reward

For public relations agencies, landing a contract with a large trade association is a big deal.

“The stakes are high, and the competition is intense,” says Larry Parnell, director of George Washington University’s master’s program in strategic public relations. “But as you can see, winning one of these things is very lucrative.”

It’s difficult to draw sweeping conclusions from the data analyzed by the Center. Trade groups often vaguely describe the services their top contractors provide as “professional fees” or “consulting.” Many firms offer a wide range of services, at times making it unclear exactly what kind of work was done on the industry associations’ behalf.

Because the Center only reviewed the most politically active trade associations, the data didn’t include some industry groups that fell below the $1 million lobbying threshold but still spent heavily on public relations and advertising.

But the contractor information provides an inside look at the way trade associations use PR and advertising to ply the American mind. Trade groups determined to fight regulations and boost profits of their members have spent heavily to influence how the public perceives policies that affect everything from the air we breathe to the beverages we drink.

The strategy, public relations experts say, is not designed to replace lobbying so much as it is to enhance it.

“You can leverage [public relations work] so your lobbying is to a finer point,” says Parnell, noting that lobbyists can better influence lawmakers by showing them polling gathered by “grassroots” PR campaigns. “It provides air cover.”

“People and organizations are getting increasingly sophisticated with their communications strategies. They are more multi-dimensional,” adds Anne Kolton, vice president of communications for the American Chemistry Council. “With any advocacy [effort], the key is to create an echo chamber so people hear your message in numerous venues.”

There are some advantages to putting millions into PR rather than lobbying. For example, a trade association may be pushing a particular policy that is not so popular with the public. As long as it doesn’t directly contact a government official, it need not report who it has hired to do the PR work. Lobbying firms generally must report how much they are paid, who their clients are and what subject areas they are working on.

Misleading tactics

PR agencies may further obfuscate their role by creating so-called “front groups” that appear to be grassroots organizations, in an effort to push their clients’ messages. It is often difficult to discern who is behind these manufactured entities, though sometimes information can trickle through.

For example, the tax form for the National Mining Association showed that it paid $4 million to Weber Merritt, a Northern Virginia public affairs firm, as an independent contractor. The services were listed as “Count on Coal” in 2012, according to IRS filings.

Count on Coal calls itself a “grassroots organization” that educates people on coal-powered electricity. Its social media and online petitions, which criticize government proposals to cut carbon emissions, all omit ties to the mining association.

While this type of “grassroots” mobilization is increasingly driven by an industry or paid consultants, it is only one piece of the growing demand for communications professionals, who specialize in everything from crisis management to social media advocacy.

In 2013, the global public relations industry grew 11 percent over the previous year to $12.5 billion, according to trade journal The Holmes Report.

The steady rise in public relations worldwide spending has been accompanied by an overall drop in lobbying spending, beyond the trade group sector.

Lobbying expenditures peaked in 2010, when special interests spent $3.6 billion on lobbying federal lawmakers. Since then, they have declined steadily, falling to $3.2 billion in 2013, according to the Center for Responsive Politics. The total number of registered lobbyists has also dropped.

Some say the change indicates a shift toward so-called “soft lobbying,” a strategy that enables industry groups and unions to influence public policy not only with public relations, but through think tanks, nonprofit organizations and grassroots groups that aren’t subject to federal disclosure rules.

Journalists overwhelmed

The golden age for PR has coincided with the decline of mainstream journalism, especially newspapers, which have suffered from plummeting ad revenue that has necessitated layoffs in newsrooms across the country.

Today, not only are PR professionals outnumbering journalists by a ratio of 4.6 to 1, but the salary gap between the two occupations has grown to almost $20,000 per year, according to the Pew Research Center. The widening employment and income disparities have left journalists underpaid, overworked and increasingly unable to undertake independent, in-depth reporting.

Rick Edmonds, a writer for the Poynter Institute who covers the business of journalism, says the shift has been particularly evident in the coverage of science and health news. Many news organizations that once reported extensively on those issues no longer have the resources to cover them adequately, and special interests have filled the void.

“A great deal of science and health news is coming from the PR side,” Edmonds says.

For trade associations like the American Petroleum Institute, that’s part of the larger public relations strategy that makes lobbying federal lawmakers a lot easier.

“If we’re concerned about a particular member [of Congress], we will educate that constituency and encourage people to weigh in with their elected official,” Jack Gerard, the American Petroleum Institute’s president and CEO, told The Washington Post in a 2012 interview explaining the mentality behind the trade group’s PR offensive. “Congress is a lagging indicator. Congress is responsive to the American people. That’s why a well-educated electorate is a key to sound policy.”

The gradual shift from a focus on traditional lobbying toward greater use of the “outside game of politics,” or communications like PR, has been going on for at least a decade, close observers say, but is now accelerating with advances in technology, social media and digital strategies, says Doug Pinkham, president of the Public Affairs Council, an association of public affairs professionals who specialize in corporate PR, lobbying and grassroots advocacy.

Not all of the trade associations reviewed by the Center spent more money on top contracts for public relations and advertising than on those for lobbying and legal services. But the data appear to support broader trends in the so-called “influence industry.”

“In the world we live in now,” says Pinkham, “if you have an issue that is visual and has a compelling narrative, we’re better off spending more resources on trying to educate the public” than relying on traditional lobbying.

Troubled industries turn to PR

The trade associations that rely most on PR and advertising campaigns are usually those representing industries facing the heaviest regulation and the most public contempt, says Edward Walker, a sociology professor at the University of California, Los Angeles, and author of the book Grassroots for Hire.

And the campaigns are often tied to specific public policy crises. As Walker says, they usually launch “when industries really feel threatened that they might actually lose a policy battle.”

Over the last few years, both the American Petroleum Institute and the American Beverage Association have used PR campaigns to defend their respective industries during heated debates over issues like the proposed Keystone XL pipeline and proposed taxes on sugary drinks.

At the outset of 2012, the American Petroleum Institute announced a “Vote4Energy” campaign to promote the industry in a contentious election year. Its social media endorsed the idea that domestic oil production would bring jobs, revenue and national security.

With Edelman’s help, the American Petroleum Institute also organized a speech and panel discussion targeting “key influencers” in attendance, including think tanks, government officials and the media. Online groups also emerged, like “Energy Tomorrow,” which hosts a blog by Mark Green, a journalist-turned-industry-blogger.

In addition to Edelman’s work, the petroleum group paid FleishmanHillard $22.8 million in 2012 for advertising to promote hydraulic fracturing, or fracking, to skeptical citizens. TV advertisements targeted a half-dozen shale gas-producing states, including Pennsylvania, Texas and North Dakota, emphasizing small-town reliance on energy and downplaying environmental impacts, as part of its Energy from Shale campaign.

Big soda

Few industries have felt more threatened in recent years than soda makers.

Since 2009, the makers of sugary beverages have found themselves under attack from government officials and public health advocates who have blamed soft drinks for the nation’s expanding waistlines and have favored taxing popular sweetened beverages.

The American Beverage Association has fought back — vigorously — with the help of Goddard Gunster, a Washington, D.C.-based firm famous for creating the “Harry and Louise” ad campaign that helped bury President Clinton’s health care reform proposal in 1993 and 1994.

Goddard has produced anti-tax ads and created front groups in cities and states considering soda taxes. In 2012, the firm helped the association defeat two soda-tax ballot measures in Richmond and El Monte, California — campaigns that preceded its 2014 ballot-box battles in San Francisco, where voters rejected a soda-tax measure, and Berkeley, where a sugary-drink tax passed.

Jenny Wang, a public health worker and mother of two girls, recalls how the beverage industry flooded Richmond with anti-tax ads, buying up the town’s billboards and hiring residents to deliver mailers door-to-door.

“We didn’t have the manpower to fight against all of that messaging,” says Wang, a former Richmond resident who supported the soda tax. “They were so pervasive and so persuasive.”

John Dunbar contributed to this report.

TIME Lobbying

Governors Lean Heavily on Industry-Funded Group on Offshore Drilling

Chevron's Jack/St. Malo Oil Platform Departs From Kiewit Offshore
Eddie Seal—Bloomberg/Getty Images Birds fly as pedestrians watch tug boats transport the Chevron Corp. Jack St. Malo semi-submersible drilling and production platform to the Gulf of Mexico from Kiewit Offshore Services in Ingleside, Texas, U.S., on Nov. 15, 2013.

Energy lobbying firm worked through industry-funded advocacy group to provide research and resources

It was a brisk February morning, and the governors of Alabama, Mississippi, Virginia and North Carolina were seated around a ring of tables draped with pleated beige fabric in the ornate Nest Room of Washington, D.C.’s Willard InterContinental Hotel. Sitting across the tables was Interior Secretary Sally Jewell, whom the governors had invited so they could make their case for expanding offshore energy production. It was a long-awaited meeting for the governors, and they’d armed themselves with specific “asks” — that Jewell’s department open access to oil and gas drilling in the Atlantic, for instance, and improve “regulatory certainty” for energy companies operating rigs off the coasts.

The get-together this past winter was but one small push in the type of broader political campaign that occurs every day in countless Washington conference rooms, watering holes and hotel suites. For the past three years, a group of eight, mostly Republican governors from coastal states has been lobbying the Obama administration to expand access to the nation’s offshore oil and gas deposits, working through an organization called the Outer Continental Shelf Governors Coalition.

While the message from the governors that morning would have come as no surprise to Jewell, less clear, perhaps, was that the governors were drawing on the research and resources of an energy lobbying firm acting on behalf of an oil industry-funded advocacy group.

Indeed, the background materials handed to the governors for the meeting, right down to those specific “asks,” were provided by Natalie Joubert, vice president for policy at the Houston- and Washington D.C.-based HBW Resources. Joubert helps manage the Consumer Energy Alliance, or CEA, a broad-based industry coalition that HBW Resources has been hired to run. The appeal for regulatory certainty, for example, came with a note to the governors that Shell, a CEA member, “felt some of the rules of exploration changed” after it began drilling operations in the Arctic.

The governors’ efforts have produced more than just talking points. This summer, the coalition won a major victory when the Interior Department said it would accept applications to probe the Atlantic seabed for oil and gas with seismic tests, a significant step toward allowing drilling off the East Coast — drilling that has been off-limits for decades. While the federal government ultimately controls where offshore drilling is allowed, the Obama administration has made clear it will allow production where the public — and public officials — support development.

And so it appears as if CEA’s considerable investment of time and resources has paid off. Indeed, a review of thousands of pages of public documents, obtained by the Center for Public Integrity through records requests, shows that much of the governors coalition work has been carried out by HBW Resources and CEA, a group that’s channeled millions in corporate funding to become a leading advocate at the state level for drilling.

The governors coalition is just one of many groups, such as the American Legislative Exchange Council (in which CEA is actively involved), that allow powerful corporate interests to gain a direct line to state policy makers not available to common citizens or other stakeholders, all under the banner of a generic advocacy organization.

“It would be alarming I think for many people if they found out that some of the biggest polluters were running a governors group, but less so if it’s a nonprofit,” said Nick Surgey, director of research at the Center for Media and Democracy, a liberal advocacy group. “That one step removed stops the alarm bells going off, but it should really concern people.”

The documents suggest that CEA staff attended the February meeting with Jewell, but Interior Department spokeswoman Jessica Kershaw did not respond to a question asking whether Jewell knew of CEA’s involvement, saying only that the department speaks with “a broad group of stakeholders,” and considers “all points of view.” She said Jewell told the governors that the department “is committed to working with them and their participation in the planning process is fundamental for any kind of coastal development.”

The Center requested interviews with staff of each of the governors — additional coalition members include the chief executives of Alaska, Texas, South Carolina and Louisiana — but none made anyone available, though Alaska responded to questions in writing.

There’s been little effort to explain CEA’s relationship with the coalition, which is currently chaired by North Carolina Gov. Pat McCrory. The coalition’s website made no mention of CEA until recently, when one page was edited — after the Center began reporting this article — to acknowledge the organization provides “information and administrative support.” In March, when the Center first asked who staffs the coalition, Ryan Tronovich, a spokesman for McCrory, said the governors provide the staff (records show Tronovich actually consulted with CEA to answer the Center’s questions). When the Center asked again after learning of CEA’s involvement, Tronovich said in an email that he “should have been more clear,” and compared CEA’s help to that given by an intern. (The Republic Report, an investigative news website, first reported a possible connection with CEA in February when it noted that a coalition letter appeared to have been written by Joubert.)

In an interview, David Holt, president of CEA and managing partner of HBW Resources, said CEA provides assistance to the coalition at the governors’ request. He said both the coalition and CEA have an “all-of-the-above” energy policy that supports renewable as well as fossil fuels. He also characterized his organization’s role as supportive of the coalition in the same way any number of stakeholders may be.

But there’s no evidence that any other group has played a substantive role in the coalition, or that environmental organizations have been invited to any of its meetings. Earlier this month, the McCrory administration organized a meeting with federal officials to discuss Atlantic drilling; no other governors were there, but staff representing the governors of South Carolina and Virginia did attend. McCrory administration staffers told journalists and environmental organizations that the meeting was closed to interest groups so as not to “allow for the potential of the appearance of influence.” In fact, CEA and other industry groups did attend the meeting. Nadia Luhr, the legislative counsel for the North Carolina Conservation Network, wrote a letter to the administration protesting the circumstances of the meeting. She had not previously been aware of CEA’s role in the coalition, but indicated she wasn’t surprised.

“It’s just another example,” she said, “of industry having a voice where no one else does.”

Rebirth of an industry

Each May, tens of thousands of people gather in Houston for the Offshore Technology Conference, the industry’s premier event, and in 2011 they were looking for a fresh start. A year earlier, the Deepwater Horizon rig had exploded in the Gulf of Mexico just weeks before the conference, killing 11 people and leading to the largest oil spill in the nation’s history. In the aftermath, Obama placed a moratorium on deep-water drilling and canceled plans to allow drilling in the waters off Virginia.

Nevertheless, the 2011 conference was bigger than ever, with exhibit booths displaying the latest in drilling technology sprawling over nearly 600,000 square feet of Houston’s Reliant Park complex, which encompasses a cavernous exhibition center, an indoor arena that seats nearly 6,000 people, and covered outdoor booths. There were policy discussions and technical events with titles like “Active Heating for Life of Field Flow Assurance.” The first day kicked off with a panel hosted by Holt and an executive with Noble Energy that featured officials from the five inaugural states of the coalition — Texas, Alaska, Virginia, Mississippi and Louisiana — who decried the federal government for standing in the way of development.

It was there that the governors of those five states announced their coalition, with a stated goal of improving dialogue between the states and the federal government. The coalition’s first chairman was Louisiana Gov. Bobby Jindal, who as a congressman in 2006 sponsored a bill that would have removed the federal moratoriums on drilling in the Atlantic and Eastern Gulf. In 2010, as governor, Jindal railed against Obama’s deep-water moratorium — a moratorium that had been lifted by the time the 2011 conference was held. The governor has been a reliable friend to the oil industry, which has contributed more money to his campaigns than any other sector — more than $1.4 million over the past decade, according to the Center for Responsive Politics and the National Institute on Money in State Politics.

Jindal’s office did not respond to an interview request or to questions about the coalition’s formation. Sharon Leighow, a spokeswoman for Alaska Gov. Sean Parnell, the second chairman of the coalition, said in a written response that the founding governors, not CEA, had decided to form the coalition. When asked how CEA got involved, she wrote: “Unknown.” (Parnell recently lost a bid for re-election.)

CEA president Holt said the governors approached his group because it represents not only energy companies, but also other sectors like airlines, trucking and construction. “They knew of us and asked CEA because we represent the whole economy,” he said.

Some environmental advocates have a dimmer view of why the group was formed that May. “The Outer Continental Shelf Governors Coalition is a Trojan horse,” said Richard Charter, who has fought against offshore drilling for decades and is now a senior fellow at the Ocean Foundation, which supports marine conservation. Oil companies and other industry groups, including CEA, started a campaign a decade ago to repeal the Atlantic moratorium by lobbying officials and the public state-by-state, he said, and the coalition is the culmination of that effort. “They want to create the appearance that a bunch of coastal states are clamoring for ‘drill here, drill now.’”

Throughout its three-and-a-half-year life, the governors coalition has focused on the Interior Department’s “Five-Year Program” — the arcane, bureaucratic process the department uses to plan the nation’s offshore drilling regimen — lobbying at each incremental turn for the department to open more areas to drilling and to ease restrictions where drilling is underway. The coalition has also pushed for the federal government to share more drilling revenue with the states.

The Center requested documents related to the governors coalition from the three states that have chaired the coalition. Louisiana and Alaska provided thousands of pages, though Alaska’s response was heavily redacted. North Carolina has yet to respond to the request, which was submitted in April.

Whatever the origins of the coalition, the documents show that Holt was an early driving force. In May 2011, he and his colleagues at CEA designed a logo for the group. In July, he sent an email to Chip Kline, deputy director of Jindal’s Office of Coastal Activities,congratulating Louisiana on being named the coalition’s first chair, stressing that the governors would add a “meaningful voice” to the energy debate. When they were planning the coalition’s first meeting, alongside a Republican Governors Association gathering in Jackson Hole, Wyoming, and RSVPs weren’t coming in as hoped, Holt fired off a message saying, “REALLY need to have this OCSGC meeting to get things rolling.”

Voice of the consumer?

The Consumer Energy Alliance calls itself “The Voice of the Energy Consumer.” The group was formed in 2006, operating initially out of a small office park in Houston. Its first board of directors included executives with Shell, Hess and a wind power company, as well as geologists and representatives of “consumer” industries such as trucking. Also on the board: Jim Martin, chairman of the 60 Plus Association, which bills itself as the conservative alternative to the elderly advocacy group AARP, but which is also part of the well-financed political network led by Charles and David Koch, the billionaire industrialists with major stakes in oil and gas.

Holt, 48, who speaks with folksy Texan charm, has been the alliance’s only president. Before starting CEA, he had worked in government affairs for Hart Energy, an industry publishing company, and before that, he says, as legal counsel to the top oil and gas regulator in Texas.

The alliance says it seeks to improve understanding of the nation’s energy needs and advocates for lower energy prices through an “all-of-the-above” policy of increased domestic energy production. Over the past eight years, the group’s membership has grown to about 240 corporate entities, including groups from “energy consuming” industries like transportation and construction, as well as energy companies. CEA also claims to have some 400,000 individual members who have signed petitions or taken other actions that are described on its website. (In October, however, Wisconsin regulators rejected a petition CEA had filed in an electricity rate case there after an investigation by the Madison Capital Times revealed that some of the 2,500 people whose names had been used were unaware they appeared on the petition, and actually opposed CEA’s stance. CEA said it stood by the 2,500 signatures, but had actually requested that the petition be withdrawn before it was rejected.)

In 2011, the year the governors coalition was formed, CEA’s annual revenue ballooned to $3.8 million from just $737,000 the previous year, and it’s remained above $3 million since then. Holt says the majority of CEA’s members are from “consuming” sectors and that its funding comes from all members. He wouldn’t say who pays what, however, and tax records show that in 2011 and 2012, the most recent years available, at least 30 percent of the money came from just three entities: the American Petroleum Institute, the American Fuel and Petrochemical Manufacturers and America’s Natural Gas Alliance, each a prominent oil and gas industry group.

More than $1 million of that revenue goes as a management fee to HBW Resources, an energy-focused lobbying and consulting firm that Holt formed in 2008 along with Michael Whatley — a former chief of staff for Sen. Elizabeth Dole — and Andrew Browning, who had worked as a lobbyist and in the Department of Energy. With the exception of a few regional directors, CEA’s staff is comprised of HBW staff, and to the layman, it’s hard to tell the difference between the two.

HBW’s Washington, D.C., office sits in a giant truncated pyramid of a building, with sloped outer walls, that overlooks Farragut Square on the city’s lobbyist-dense K Street. The firm has offices in five other cities in the U.S. and Canada and has its fingers in many pies. Its 18 employees manage not only CEA, but also the Energy Producing States Coalition, a group of state lawmakers that work on energy policy, and the National Ocean Policy Coalition, a collection of energy companies, commercial fishing organizations and other business interests that opposes the Obama administration’s oceans policy. Whatley is also the vice president of Nebraskans for Jobs and Energy Independence, ostensibly a group of Nebraskans who support the construction of the Keystone XL pipeline. The firm lobbies on behalf of just a handful of clients, including Noble Energy and The Babcock and Wilcox Company, which makes nuclear reactors and other industrial power equipment.

HBW employees have contributed tens of thousands of dollars to dozens of political campaigns. Notably, they gave $1,600 to Democrat Terry McAuliffe — who, following his election as governor of Virginia last year, joined the governors coalition after Whatley and Joubert made a direct appeal to one of his senior advisers during a December meeting. They also gave more than $8,300 to Gov. Nikki Haley of South Carolina within a day of a coalition meeting that Haley attended, in Houston in 2013.

One of the firm’s first major campaigns began in late 2009, when Whatley worked with a Canadian diplomat to help block state and federal attempts in the U.S. to pass low-carbon fuel standards, which could have threatened imports from Canada’s tar sands oil deposits.

The effort previewed what would become a recurring strategy for Whatley and his colleagues: pairing a public advocacy campaign with direct, behind-the-scenes appeals to elected officials, urging them to make similar public comments in their own voices. More recently, CEA has worked through the American Legislative Exchange Council, the conservative state legislators group, to oppose a new federal rule limiting greenhouse gas emissions.

Holt says his organization supports all forms of energy production and is directed by its board, which no longer includes energy companies. “We are a consumer controlled and a consumer funded and a consumer dominated organization,” he said.

Most of its campaigns and communications focus on oil and gas, however. That, coupled with what’s known about its funding, has led some advocacy groups to view CEA as a front group for energy companies, an entity created to give the appearance of an independent and broad-based voice. To these advocacy groups, the governors coalition is just another player in the larger game. “This is a purposed campaign to mislead the public,” said Claire Douglass, campaign director for climate and energy at Oceana, an environmental group that opposes offshore drilling. “The politicians are now doing industry business, not being public servants.”

Gaining speed

The governors coalition’s work inched forward through much of its first year-and-a-half, at least in part because there wasn’t that much it could do. The Interior Department had excluded new areas from the current drilling plan, covering 2012-2017, and it hadn’t yet begun substantive work on the next one. The coalition wrote letters to Congress and the Obama administration (two of which appear to have been edited by Shell and Exxon Mobil), urging open dialogue and pressing on other issues, such as revenue sharing. It held periodic meetings. On December 7, 2012, three Alaska officials — Kip Knudson and Nathan Butzlaff, who led Parnell’s work on the coalition, and state Commerce Commissioner Susan Bell — attended CEA’s holiday party at the Old Ebbitt Grill in Washington, according to emails.

In 2013, the newly-elected McCrory, formerly a Duke Energy executive, joined the coalition, adding an important player in the group’s push for drilling off the South Atlantic coast. The group had a new chairman in Parnell, who before entering office had been ConocoPhillips’ chief lobbyist in Alaska and had worked on energy for Patton Boggs, a D.C. lobbying firm that represented Exxon Mobil.

As part of the coalition’s effort to establish itself, the governors and CEA formalized their relationship with a memorandum of understanding designating CEA as volunteer staffwith specific duties to manage the organization. It held a “strategy session” with the American Petroleum Institute.

In October, the coalition convened at the Beau Rivage Resort and Casino in Biloxi, Mississippi, alongside the annual gathering of the Southern States Energy Board for what would be a formative meeting. The following year would present the first opportunity for the group to weigh in on the next five-year drilling plan, and the governors and CEA wanted to make sure they were prepared to make their case.

Govs. Parnell, McCrory and Bryant, along with staff of the other governors, met for more than an hour in one of the resort’s ballrooms with executives from Exxon Mobil, Shell, Spectrum Geo — a seismic testing company — and other energy groups, including the Southeastern Coastal Wind Coalition, to hear their concerns, according to a meeting agenda.

Briefing documents prepared by CEA include talking points on the economic benefits of drilling, saying, “the key is to echo these messages to Congress and the Obama Administration, encouraging them to pursue a sensible path that allows for Atlantic leasing.” The document adds that “coastal governors, legislators, and other stakeholders should play a lead role in delivering the messages below to the Administration and to Congress.”

According to notes from the meeting prepared by CEA’s Joubert, Randall Luthi, president of the National Ocean Industries Association, an offshore industry group, advised the governors that they could suggest to the Interior Department which areas should be leased, and he “urged the governors to keep their areas of potential interest as broad as possible.” He also warned of “increasing activism by NGOs against seismic activity and cautioned the governors about some of these groups’ false rhetoric.”

The day after the meeting, Tony Almeida, a senior adviser to McCrory, sent an email to Holt saying the governor had agreed to serve as vice-chairman of the coalition. “Great news, Tony!” Holt replied, adding, “Great work yesterday. Pat was outstanding! Lots of key action items. We can’t thank you enough for all your support and leadership on OCSGC. 2014 is going to be… interesting. :)”

An “interesting” year

This year, the debate over drilling in the Atlantic picked up significantly just as the coalition finally gained the sort of direct access to the Obama administration it had been seeking. And, the emails show, CEA played a critical role in helping the governors respond.

Two weeks before the governors’ meeting with Jewell that cold February morning in Washington, officials from Alaska and North Carolina had a series of email exchanges and phone calls with CEA’s Joubert to prepare for the meeting. Joubert advised Donald van der Vaart — North Carolina’s deputy environment secretary, who had been tasked with preparing McCrory — on specific policies, such as what to request regarding seismic testing. Van der Vaart asked Joubert to send talking points, noting that a previous briefing book she had sent was “an amazing resource.”

In that meeting at the Willard, Jewell reportedly told the governors that her job isn’t “to get in the way of development,” but rather “to make sure it’s done right.” She and her staff also noted that environmental organizations had increased scrutiny of seismic testing, so her department would make sure appropriate mitigation measures were in place to protect marine animals.

Just days after the meeting, the Interior Department released a long-awaited environmental assessment that would allow seismic testing, and the governors coalition decided to defer to industry for their response. “Natalie — Would you be able to check with NOIA and/or API to see where they are on their respective reviews/analyses?” wrote Butzlaff, the Parnell staffer, in March, referring to the National Ocean Industries Association and the American Petroleum Institute, and calling Joubert by her first name. Joubert responded that the industry hadn’t yet reached consensus, but that it “has concerns more broadly that setting a precedent for stringent mitigation measures in the Atlantic could affect future measures in the Gulf and the Arctic.”

This past summer, the Interior Department said it would begin reviewing applications for that testing, with those more stringent measures in place. At the same time, it began accepting comments from industry, advocacy groups and other stakeholders on which areas it should open to drilling beginning in 2017.

Representatives of the governors coalition have maintained that it is an open and transparent group that strives to include different viewpoints. But the Center was only able to learn the details of the organization by submitting records requests — which North Carolina still has not provided — and there’s no evidence that opponents of drilling have been invited to any meetings.

Indeed, critics point to that North Carolina meeting earlier this month as the perfect illustration of what’s wrong with the way the governors coalition operates. On Nov. 6, North Carolina hosted a meeting on the five-year planning process that focused on the Atlantic. Officials from the Department of Environment and Natural Resources told journalists and environmental groups that the event was invitation only and that “neither special interest groups nor industry representatives” would be present.

That was true in regard to environmental groups — but apparently not for others. During the event, reporters waited in the halls of Raleigh’s Nature Research Center as state and federal officials listened to panel discussions that featured, among others, a CEA staffer and someone from the Center for Offshore Safety, an industry group.

McCrory did allow reporters in, but not until after the meeting was finished, and industry groups had given their presentations. McCrory’s position hasn’t wavered, and he made that clear, telling reporters that “North Carolina ought to participate in our country’s energy independence.”

TIME Tech

Tech Firms Desert Powerful Right-Wing Group After Climate Change Spat

Silicon Valley distances itself from the American Legislative Exchange Council

Google wasn’t the first major tech company to leave powerful conservative activist organization the American Legislative Exchange Council (ALEC) over its position on climate change, but it seems to have been the one that set the other dominoes falling.

After Google Executive Chairman Eric Schmidt said Monday that the company would no longer support the group, which opposes environmental regulations and has said climate change could be “beneficial,” Yahoo, Facebook and Yelp all issued statements indicating that, for unspecified reasons, their memberships in the group would be allowed to expire.

Microsoft had already quit the organization in August, according to the liberal group Common Cause which monitors ALEC, after a Boston-based investment group raised questions about the company’s support in light of ALEC’s opposition to federal renewable energy programs.

The group is known for creating model legislation that promotes free market and conservative policies, which it then works to pass in state legislatures around the country. On energy policies, it has sponsored initiatives to curb the authority of the Environmental Protection Agency and opposed federal programs aimed at increasing the production of energy from renewable sources.

It has been extraordinarily effective at getting legislation passed, particularly in the last several years, and has become a favorite target of progressive groups, much like the billionaire industrialist Koch brothers, who are themselves reputed to be major ALEC supporters. ALEC did not respond to multiple requests for comment from TIME. In response to news that Google would be pulling its support, ALEC CEO Lisa Nelson said in a statement, “It is unfortunate to learn Google has ended its membership in the American Legislative Exchange Council as a result of public pressure from left-leaning individuals and organizations who intentionally confuse free market policy perspectives for climate change denial.”

The most recent wave of departing Silicon Valley companies haven’t explained their decisions to leave ALEC, but the news comes after intense lobbying from liberal and environmental organizations. “We reevaluate our memberships on an annual basis, and are in that process now,” Facebook said in a statement. “While we have tried to work within ALEC to bring that organization closer to our view on some key issues, like net neutrality, it seems unlikely that we will make sufficient progress and so will be unlikely to renew our membership in 2015.”

Similar spurts have happened in the past. According to records kept by ALEC watchdog The Center for Media and Democracy, in 2012 both Coca-Cola and Pepsi announced a parting of ways with ALEC. The same year McDonald’s announced it was revoking support for the group and Pepsi followed the next day with an announcement that it too had cut ties with the group.

The Guardian reported in 2013 that ALEC was facing a “funding crisis” following the departures of a number of member firms.

TIME

Herbalife Hires Biden’s Former Chief of Staff

Herbalife Ltd. signage is displayed outside of Herbalife Plaza in Torrance, Calif. on Feb. 3, 2014.
Bloomberg/Getty Images Herbalife Ltd. signage is displayed outside of Herbalife Plaza in Torrance, Calif. on Feb. 3, 2014.

Alan Hoffman will oversee the company's vast lobbying effort in Washington, DC. as it fights allegations that its business model is a predatory pyramid scheme

In yet another chapter in what has become a real-life, Wall Street-D.C. soap opera, the nutritional supplements company Herbalife announced today that it has hired Vice President Joe Biden’s former chief of staff, Alan Hoffman.

Hoffman, who left Biden’s side in 2012 to join Pepsi Co., will start in August as Herbalife’s new executive vice president in charge of everything from “public policy” to “government affairs”—a title that translates, in layman’s terms, to the person who will oversee the company’s vast lobbying effort in Washington, DC.

It’s a big job. Herbalife is reportedly under investigation by the Federal Trade Commission, the Department of Justice, the FBI, and at least two state attorney generals over allegations that the company’s business model is a predatory pyramid scheme.

Herbalife’s arch nemesis, the billionaire hedge fund manager Bill Ackman, gave a three-hour presentation on Tuesday this week outlining his case against the company, which he describes as a “criminal operation” that fleeces poor people by promising, but not delivering, lucrative rewards for selling Herbalife’s nutritional supplements.

But Herbalife’s all-star team of backers, which includes former Secretary of State Madeleine Albright, the activist investor Carl Icahn, and soccer celeb David Beckham, have dismissed Ackman’s allegations out of hand as “completely false and fabricated.”

Ackman has led a lonely crusade against the company for the last 18 months, spending $50 million of his investors’ money hiring a battalion of investigators to prove that the company is misleading distributors, misrepresenting sales figures and selling its products at inflated prices. Ackman became tearful Tuesday describing the company’s practices, which he compared to those used by the Mafia, the Nazis, and Enron.

Ackman’s hedge fund, Pershing Square Capital Management LP, has also bet against Herbalife in the market and stands to gain $1 billion if the company’s stock collapses.

Herbalife’s stock has soared and plummeted, roller coaster-like, since December 2012, when Ackman first vowed to take the company down. Since January 2013, Herbalife has thrown itself into the battle, dumping roughly $2 million on official lobbying efforts in Washington, according to the Center for Responsive Politics. That kind of spending marks a major increase for the company, which shelled out about the same amount on lobbying over the course of a decade between 1998 and 2008.

This week, the company suggested that it may sue Ackman for defamation — something public companies seldom do, in part because the legal barriers are very high and in part because such an action could give Ackman the power to demand access to some of Herbalife’s non-public records. (Ackman responded Tuesday to a question about the possible lawsuit: “Bring it on.”)

Hoffman, who has worked for all three branches of government, has close ties with officials within the Department of Justice, the Federal Trade Commission, Congress, and the Obama administration. “I look forward to ensuring that the public more clearly understands the critical role the company plays in advancing good nutrition,” Hoffman said in a statement today. “I also look forward to promoting the economic opportunities that this global nutrition company provides for hard-working people in communities everywhere.”

During Ackman’s presentation this week, which he promised would be a “death blow” for the company, Herbalife’s stock actually rose, ending the trading day 25% higher than where it had started. Ackman alleged that the company had bought its own stock to make its price rise.

Herbalife’s retail strategy depends on hiring salespeople who do not draw an independent income, but instead share in revenues generated by the salespeople they recruit, and those of their recruits’ recruits. Herbalife does not dispute that model.

But Ackman alleges that many of Herbalife’s “customers” are purchasing the company’s products in an effort to qualify to open a branded “nutrition club,” which the company bills as a lucrative business opportunity. Ackman says his investigators’ analysis of a sample of Herbalife’s “nutrition clubs” lost an average of at least $12,000 a year, and that fewer than 2% of its salespeople made more than $5,000 last year. Herbalife says those numbers misrepresent its model, where many customers sign up as “salespeople” to get discounts on the products for themselves, their friends and family.

“I’m an extremely, extremely persistent person. Extremely,” Ackman said Tuesday. “And when I believe I am right, and it is important, I will go to the end of the earth.” Whether he’s right or wrong, he’s up against a formidable team in Washington, DC.

TIME Lobbying

Ukrainian Employer of Joe Biden’s Son Hires a D.C. Lobbyist

Hunter Biden
Pablo Martinez Monsivais—AP Hunter Biden waits for the start of the his father's, Vice President Joe Biden's, debate at Centre College in Danville, Ky. on Oct. 11, 2012.

An obscure private Ukrainian natural gas company has been hiring friends and family of Secretary of State John Kerry and Vice President Joe Biden, while seeking to influence Congress

When Vice President Joe Biden’s son, R. Hunter Biden, joined the board of a private Ukrainian oil and natural gas company this spring, he explained his new job as a legal one, disconnected from any effort to influence the Obama Administration. In a press release, the younger Biden boasted of his abilities on issues like improving corporate transparency.

But the company, Burisma Holdings, did not disclose at the time the scope of their plans for influencing the U.S. government. Recently released documents show that Biden’s hiring coincided with the launch of a new effort to lobby members of Congress about the role of the company in Ukraine and the country’s quest for energy independence.

David Leiter, a former Senate chief of staff to Secretary of State John Kerry, signed on to work as a lobbyist for Burisma on May 20, 2014, about a week after Biden announced he was joining the company, according to lobbying disclosures filed this month.

Leiter’s involvement in the firm rounds out a power-packed team of politically-connected Americans that also includes a second new board member, Devon Archer, a Democratic bundler and former adviser to John Kerry’s 2004 presidential campaign. Both Archer and Hunter Biden have worked as business partners with Kerry’s son-in-law, Christopher Heinz, the founding partner of Rosemont Capital, a private-equity company.

Biden’s office referred questions to a Burisma spokesman, who says Biden has not been involved in contacting members of Congress or the Obama Administration about the company. “His role, like all board members, is to provide strategic guidance to Burisma,” said Lawrence Pacheco, who works in Washington D.C. for FTI Consulting, a communications firm that is also employed by Burisma.

But Burisma is contacting officials in Washington through Leiter’s lobbying firm, ML Strategies. “ML Strategies is working with Burisma to educate U.S. officials about the company and its role in creating a stable and secure energy future for Ukraine, not any specific policy or legislation,” Pacheco said. “Burisma supports energy independence, economic growth, national sovereignty and regional stability and will engage as needed to encourage efforts to further these goals.”

Some Democratic senators, meanwhile, have been working to secure more U.S. funding, either directly or through entities like the Export-Import Bank, to improve Ukraine’s domestic energy production potential. On June 27, Sen. Edward Markey of Massachusetts, wrote President Obama a letter with three other Democratic senators calling for increased aid. “We should leverage the full resources and expertise of the U.S. government to assist Ukraine in improving its energy efficiency, increasing its domestic production, and reforming its energy markets,” wrote Markey, who has also proposed legislation with about $40 million in additional aide for Ukranian energy development.

Markey’s letter was trumpeted by Burisma Holdings as a commendable move towards securing the future security of Ukraine. “Burisma Holdings today applauded the range of U.S. legislative support for development of Ukraine’s broad and untapped resources and an increase in transparency and good governance,” the company said in a statement on the day the letter was released.

An aide in Markey’s office told TIME that Leiter, Biden and Archer were not part of discussions that led to the drafting of the letter or the legislation. Staff for the other senators who signed the letter, Ron Wyden of Oregon, Jeanne Shaheen of New Hampshire and Christopher Murphy of Connecticut, also said they did not have contact with Leiter, who could not be reached for comment.

Burisma Holdings is owned by a Cypriot holding firm, Brociti Investments Limited, which is controlled Nikolai Zlochevskyi, a former Ukranian government minister, according to Cypriot records. It controls government development licenses in three regions of Ukraine, and sells to industrial customers in the country, according to the company.

By taking a job with Burisma, the younger Biden has put himself in the middle of a struggle between the United States and Russia, which currently provides the bulk of the natural gas supplies to Ukraine. Both the White House and European nations have recently emphasized the strategic interest in making Ukraine less dependent on Russia.

Since Hunter Biden took the new job, his father, Vice President Joe Biden, has continued to serve as the Obama Administration’s point person on Ukraine, traveling to the country as recently as June for the inauguration of President Petro Poroshenko and talking to Poroshenko by phone at least five times in the last month.

“I’ve spent a considerable amount of time in the last two months in Ukraine,” the elder Biden said on June 19. “You see what the Russians are doing relative to using gas as a foreign policy tool to try to alter behavior. And so it’s — around the world in varying degrees it’s of significant consequence in terms of security, both economic and political security of a nation.”

There is no legal barrier to prohibit Hunter Biden from working with a company that can be impacted by the policy decisions of his father, and the White House has maintained that the Vice President has not been influenced by his son’s employment. “The Vice President does not endorse any particular company and has no involvement with this company,” said his spokeswoman Kendra Barkoff.

But Hunter Biden’s new job, along with the association with Burisma of other politically-connected businessmen, has raised concerns among some Ukraine watchers. “It’s unhelpful when we are trying to get across to the Ukrainians to clean up corruption and special deals for special folks,” said Ed Chow, a senior fellow at the Center for Strategic and International Studies, a U.S. think tank. “It maybe sends the wrong message that Westerners are just hypocritical.”

Additional reporting by Alex Rogers and Zeke Miller/Washington

TIME Supreme Court

Explaining Aereo’s Demise: Bad for Cord-Cutters, Good for Lawyers

Supreme Court Aereo
Bloomberg—Bloomberg via Getty Images Chet Kanojia, chief executive officer of Aereo Inc., left, leaves the U.S. Supreme Court following oral arguments by Aereo Inc. and American Broadcasting Companies Inc. in Washington, D.C., U.S., on Tuesday, April 22, 2014.

The Supreme Court ruled out one type of TV gizmo, but the question of how copyright law works in the cloud-computing age remains unresolved

The U.S. Supreme Court’s decision today in the much-awaited Aereo case leveled a gnarly blow to the growing population of “cord-cutters” and granted an unexpected boon to Washington lobbyists.

The decision limits cord-cutters’ choices in what is an already anemic landscape. As of now, people who want to watch TV without paying for cable or satellite television can subscribe to video streaming sites like Netflix or Hulu for a set price each month. Or they can purchase actual hardware, like Apple TV or Roku, which act like updated, Internet-connected versions of old-school set-top cable boxes.

But when it comes to negotiating copyright fees—the heart of the Aereo case—those much-celebrated “disruptive technologies” aren’t really all that disruptive at all. All of them, from Netflix to Roku, play by the entrenched industry’s rules, dutifully paying what’s known as retransmission consent fees (or “retrans fees”) to broadcasters and other content producers to transmit their shows to paying customers. Netflix, for example, paid AMC for the rights to offer binge-watch favorite “Breaking Bad.”

Aereo was the only company that side-stepped the industry entirely by refusing to pay any retrans fees whatsoever. Aereo argued that it was merely facilitating people’s established right use an antenna to capture “free-to-air” broadcast signals passing through public airwaves. For the last 30 years, the court has interpreted the Copyright Act to protect people’s right to watch broadcast TV captured over an antenna at home. So long as that TV watching experience constituted a “private performance,” within the definition provided by the law, broadcast companies could not demand payment from people, the court held.

But on Wednesday, the court did not buy Aereo’s argument. Its decision not only obliterated Aereo’s business model, it also threw wide-open the door for new questions about certain passages in the Copyright Act. What is the definition of a “private performance” anyway? Why is it a “private performance” if I put an antenna on my roof, capture broadcast signals, and save them onto my DVR player to watch later, and it’s not a “private performance” when that antenna is 20 miles away in Aereo’s antenna farm, and I save those broadcast signals onto the cloud?

And with that—cue the lawyers!

In the ruling today, both the majority and dissenting opinions predicted future scuffles both in Congress and the courts over exactly this question. While the majority ruled that customers streaming broadcast TV through Aereo fell under the category of a “public performance”–not a private one–the three dissenting justices argued that Aereo had not, in fact, “performed at all.”

In both opinions, hundreds of words were dedicated to parsing the meaning of a “performance” and both ended up leaving open the possibility that the court would have to hear more cases on the matter when new technologies continued to emerge. Both suggested that perhaps Congress would need to clarify the meaning of the law.

“We cannot now answer more precisely how the Transmit Clause or other provisions of the Copyright Act will apply to technologies not before us,” Justice Steven Breyer wrote for the majority. “Questions involving cloud computing, DVRs, and other novel issues not before the Court…should await a case in which they are squarely presented.”

That sort of deep ambiguity is music to the ears of lawyers and lobbyists. Over the next year or so, Washington should gird itself for hordes of well-paid lawyers to pore over the Copyright Act in an effort to interpret it—and particularly the definition of a “performance”—in such a way that it behooves their clients and, perhaps more to the point, squeezes out whatever competition has emerged in that rapidly developing space.

We should expect cloud computing companies, including Dropbox, Google and Microsoft, to try to ensure that the definition of “performance” does not expand to include every time someone “plays back” a file on one of their services. We should also expect that other industries, particularly those that gain from strong copyright laws, like the Motion Picture Association of America, will try to make that the definition of “performance” as broad as possible in order to create legal concerns for cloud computing companies that allow users to store files without checking for copyright violations.

Whether Aereo will be around to see the other shoe drop remains to be seen. While most analysts agree that Aereo will be lights out by the end of the summer, the company seemed unwilling to throw in the towel. “Our work is not done,” Aereo CEO Chet Kanojia said in a statement following the decision “We will continue to fight for our consumers and fight to create innovative technologies.”

TIME

Cantor Considering His Next Move After Stunning Primary Defeat

US House Majority Leader Eric Cantor
Ron Sachs—picture-alliance/dpa/AP Images US House Majority Leader, Republican from Virginia Eric Cantor, holds a news conference where he announced his resignation effective 31 July, on Capitol Hill in Washington DC, on June 11, 2014.

House Majority Leader Eric Cantor stands to gain a significant raise should he decide to go the lobbying route

Majority Leader Eric Cantor’s sudden fall from power could end in the clutches of the private sector. But one possibility, K Street, does not seem to entice Cantor.

“I don’t think that I want to be a lobbyist,” said Cantor Sunday on ABC’s This Week. “But I do want to play a role in in the public debate.”

So where else would he go?

Chris Jones, a managing partner of CapitalWorks who was called “K Street’s talent scout” in a profile from The Hill, believes that Cantor will move to New York and take a “prominent role” at one of the major banks.

“I don’t think he’ll be a standard lobbyist at a law firm,” says Jones. “I think he’ll go big … I think he’s a major power player.”

A move to banking or financial services would continue Cantor’s close ties to those industries: Cantor’s top three campaign contributors over the past year were investment firms Blackstone Group, Scoggin Capital Management and Goldman Sachs, according to the Center for Responsive Politics.

But if Cantor does decide to play a role in the public arena, he could easily serve as a conduit between big money and top Republicans in the campaign finance netherworld that he managed so well as a politician.”I believe he will start or expand a political operation similar to the American Action Network or Crossroads [GPS],” says a longtime Cantor ally, who spoke on the condition of anonymity. “He will be a sought-after advisor for presidential campaigns. He will serve on corporate boards and possibly have a senior advisor role in a company.”

Of course, Cantor could still push through the well-worn revolving door by joining a business community that would welcome him with open arms. Cantor’s support for limited government and skill set would guide an easy transition to K Street.

“Increasingly the House Republican caucus has been viewed as a little bit unwieldy and hard to work with,” says Jones. “[Cantor] understands all the elements, all the factions, the whims of politics. And he’s able to interpret, analyze [and] read the tea leaves.”

Becoming a lobbyist would also significantly increase Cantor’s current salary of $193,400 a year.

“I think that the bidding probably starts at $1 million,” says Ivan Adler, an executive recruiter for the McCormick Group. “I think he would be a magnet for business at any law firm. He would be a tremendous advocate for the interests of anybody that wanted to sign up with him. I think he’s got a really bright future.”

Cantor’s senior staff has already reached out to explore his lobbying options, according to one recruiter. The source estimated that he could make anywhere from half a million to four million dollars a year, depending if he engaged in advocacy for a non-profit or for a business association. The top officers at some financial lobbies, including the Managed Funds Association and the Institute of International Finance, earned compensation packages between $2.2 million and $3.9 million, according to a recent study conducted by National Journal.

“I’ve been very gratified by the number of people that have reached out to me already,” said Cantor on Sunday.

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