TIME Lobbying

Governors Lean Heavily on Industry-Funded Group on Offshore Drilling

Chevron's Jack/St. Malo Oil Platform Departs From Kiewit Offshore
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. Eddie Seal—Bloomberg/Getty Images

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

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
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. Pablo Martinez Monsivais—AP

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
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. Bloomberg—Bloomberg via Getty Images

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
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. Ron Sachs—picture-alliance/dpa/AP Images

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.

TIME 2014 Election

Lobbyist Contributes a Campaign Ad To Thad Cochran

Did former Mississippi senator Trent Lott film an ad for his endangered former colleague because he's a good friend, or because he's trying to keep his gravy train on the tracks?

Over the last three years, former Mississippi senator Trent Lott’s lobbying firm has been paid a total of $680,000 to represent the interests of shipbuilder Huntington Ingalls Industries Inc., and his old Mississippi colleague Sen. Thad Cochran has always had an open door, working to approve $6 billion in contracts for Huntington Ingalls in the last two years alone for Coast Guard Cutters, Navy Destroyers and an amphibious transport dock. A search of Cochran’s Senate websites brings up 110 hits for the company and Cochran toured one of their facilities in Mississippi as recently as March.

Now Lott, the lobbyist, is paying Cochran, the appropriator, back by shooting a 30-second campaign ad on his behalf. In a new ad released today, Lott encourages Mississippians to vote for Cochran in a primary run-off with Tea Party insurgent Chris McDaniel. “Over the years we had to fight for funds and contracts for Ingalls,” Lott says in the ad. “That’s why on June the 24th we have a critical election about our future. Without Thad Cochran we could lose some of these important facilities.”

Of course, Lott is a former senator from Mississippi who remains popular in the state, so the ad could carry some weight—indeed, if it’s counted as a campaign contribution there’s no accounting the value of the ad in the campaign finance system. And he is an old friend of Cochran’s, having served decades with him side-by-side in the Senate.

Still, even if Lott had the purest of motives, the risk that someone would make the connection between his lobbying and Cochran seems like it’s not worth filming this spot. It screams conflict of interest. Because if you didn’t know Lott and Cochran were lifelong friends, it could look like Lott is working to save his gravy train. After all, Lott’s firm also represents Lockheed Martin and Raytheon, two other companies that benefit from Cochran’s work as the top Republican on the Appropriations Defense Subcommittee.

Cochran may be desperate given McDaniel’s surge in the polls, but this wasn’t the wisest ad to cut.

 

TIME Lobbying

Comcast Has About 76 Lobbyists Working Washington On The Time Warner Cable Merger. This is Why.

The company has registered at least 76 lobbyists across 24 firms to work on its impending $45 billion purchase of Time Warner Cable, making for a special ops squad with high-priced relationships to the most powerful members of Congress

How many lobbyists does it take to make a controversial cable merger happen in Washington these days?

Apparently, quite a few. Comcast has registered about 76 lobbyists, spread across 24 firms, to work on its pending $45 billion purchase of Time Warner Cable, according to first quarter 2014 filings with the Senate Office of Public Records.

While some have called it an “army,” Comcast’s lobbying effort is more of a tactical special operations unit. In most cases, lobbyists and firms appear to have been assigned targeted politicians and officials to woo on the merger. In many cases, the lobbyists themselves are former government colleagues of the people they are able to target. And given the sky-high stakes—uniting the top two cable and two of the top three largest internet broadband providers—the company appears to have everyone who matters in Congress covered.

“I don’t think it’s a matter of the complexity of the deals because any number of those lobbying firms are very sophisticated,” says Charles Fried, who served as President Ronald Reagan’s Solicitor General and later co-chaired a task force on lobbying as a Harvard Law School professor, on the number of firms dedicated to the merger. “What it’s about is that many of the lobbying firms have principals or associates who are closely connected to a number—maybe just one—key legislators or bureaucrats or regulators.”

The Comcast team brings together former staffers to some of the most powerful members of Congress together, like Waldo McMillan, a former counsel in Senate Majority Leader Harry Reid’s office, and Malloy McDaniel, Senate Minority Leader Mitch McConnell’s former policy advisor and whip liaison. It includes lobbyists with deep ties to the committees that will evaluate the deal, like Christopher Putala, a former senior staff member of Senate Judiciary Committee. Comcast has also hired lobbyists that are able to target key constituencies that could have a role in the merger. Juan Otero, Comcast’s senior director and policy counsel in its lobbying division and former Committee Director for the National Governors Association, sits on the board of no less than four Hispanic groups, including the Congressional Hispanic Caucus Institute.

A Comcast spokesperson says the high number of firms it employs is due to the complexity of its wide-ranging business. “Comcast and NBCUniversal operate in 39 states, have over 130,000 employees, and function in heavily regulated media and technology businesses,” the spokesperson told TIME in a statement. “It is important for our customers, our employees, and our shareholders that we work with policymakers on the multiplicity of issues that affect our business.”

“With our proposed merger with Time Warner Cable, we have been reaching out to share how the transaction will allow us to continue driving innovation and responding to an intensely competitive environment,” the statement continued. “We will continue to share the public interest benefits of a combined Comcast and Time Warner Cable with the stakeholders participating in the review process, just as we have done throughout prior acquisitions where we have brought new benefits to millions of Americans.”

The 76 lobbyists counted by TIME from public filings all work for firms that cite in their public disclosures work on the merger. But several firms work on multiple issues, and the disclosures do not always identify which lobbyists work on any particular issue. For the purposes of this story, all the lobbyists at firms working on the merger for Comcast were counted. One firm, Gray Global Advisors, was not included in this count because it did not specify work on the merger, even though one of its specialties is mergers with the Federal Communications Commission, which will determine if the deal is in the public’s interest. Two other firms, the Nickles Group and Bloom Strategic Counsel, disclosed that it worked on “issues related to mergers and competition” and “competition issues involving cable and internet service industries” but did not specifically mention Time Warner Cable. They were also left off the list.

Comcast has donated to 32 of the 39 members of the House Judiciary Committee, as well as 15 of the 18 members of the Senate Judiciary Committee, 50 of the 54 House Energy and Commerce Committee and 20 of 24 lawmakers on the Senate Commerce, Science and Transportation Committee, according to Politico. Last year, Comcast spent more than $18.8 million, making it the sixth-highest spender on federal lobbying, according to the Center for Responsive Politics. (Disclosure: TIME magazine is owned by Time Warner, which spun off Time Warner Cable as an independent company in 2009.)

Here is a list of some of the notable lobbyists working for Comcast at lobbying shops that have registered to lobby on the merger:

Comcast Lobbyists With Ties to Key Congressional Committees

  • Krista Stark, Legislative Director for former House Judiciary Chairman Jim Sensenbrenner
  • Pete Filon, former House Energy and Commerce Chairman John Dingell’s general counsel
  • Eric Kessler, Dingell’s chief of staff
  • Jeff Mortier, staff member under House Energy and Commerce Chairman Fred Upton
  • Karina Lynch, investigative counsel to Senate Judiciary Committee Ranking Republican Chuck Grassley
  • Alec French, former Democratic Counsel on the U.S. House of Representatives Judiciary Subcommittee on Courts, the Internet, and Intellectual Property
  • Kevin Joseph, former senior counsel to the Senate Commerce Subcommittee on Communications
  • Paul Bock, chief of staff for former Democratic Sen. Herb Kohl, onetime chairman of the Judiciary Committee’s Antitrust Subcommittee
  • Seth Bloom, general counsel of the Senate Antitrust Subcommittee under Sen. Kohl
  • Manus Cooney, chief counsel and staff director on the Senate Judiciary Committee under former chairman Orrin Hatch, who still serves on the committee

Comcast Lobbyists With Ties to Minority Communities

  • Ingrid Duran, former president and CEO of Congressional Hispanic Caucus Institute
  • Catherine Pino, National Council of La Raza board member
  • Raul Tapia, President Carter’s Deputy Assistant for Hispanic Affairs
  • Earle Jones, Congressional Black Caucus Foundation’s corporate advisory board member
  • Jennifer Stewart, Congressional Black Caucus Institute board member

Comcast Lobbyists With Ties to Current Former Top Politicians

  • Daniel Meyer, former Speaker of the House Newt Gingrich’s chief of staff
  • David Hobbs, former Republican House Majority Leader Dick Armey’s chief of staff and President George W. Bush’s congressional liaison
  • Joe Trahern and Melissa Maxfield, staffers to former Senate Democratic Leader Tom Daschle
  • Daniel Tate, President Clinton’s special assistant for legislative affairs
  • Carlyle Thorsen, former House Majority Leader Tom Delay’s general counsel
  • Susan Hirschmann, former House Majority Whip Tom Delay’s chief of staff
  • Sam Lancaster, staffer to former Speaker Dennis Hastert
  • Chris Israel, Deputy Chief of Staff to Commerce Secretaries Donald L. Evans and Carlos Gutierrez in George W. Bush Adminstration
  • Marc Lampkin, Speaker Boehner’s general counsel
  • Shimon A. Stein, senior policy advisor to House Majority Leader Eric Cantor
  • Stephen Pinkos, House Majority Whip Kevin McCarthy’s policy director and general counsel
  • Michael Eisenberg, whip coordinator for House Minority Whip Steny Hoyer
TIME

Tech Startup Amplifyd Seeks to Bring Lobbying to the People

The idea may be a reach but it raises interesting ideas about the future of political engagement in America

Silicon Valley types have long dreamed of a way to hack the beast of bureaucratic dysfunction known as the U.S. government. Mark Zuckerberg honed in on immigration reform. Sean Parker invested in a mystery venture to attempt improving political engagement. And now a much smaller Bay Area startup with a snazzy name, Amplifyd, is launching with the lofty goal of providing “crowd-sourced lobbying” services to regular Americans.

At the core of the project is an untested idea that stretches the definition of lobbying: Provide an app that allows people to pay to create phone call petitions targeting state and federal legislators.

“We spend so much money trying to get politicians elected but there’s no real system that can effectively communicate our opinions as constituents,” said Amplifyd founder Scott Blankenship. At the same time, Blankenship says, business interests spend millions to influence politicians.

Beginning on June 3, Amplifyd hopes to change that imbalance that by allowing activist groups to initiate campaigns aimed at influencing elected officials with telephone campaigns. For around $7—the exact final price has not been determined—a Concerned Citizen can hire another person to call a member of Congress or a state legislator. Blankenship says about 1,000 people have signed up to be callers, with the promise of earning up to $30 per hour.

The script begins, “Hi, I’m calling on behalf of (name of the person who paid), and this call is being recorded so he can review the call later,” and continues with talking points, complaints, suggestions and the like. From the $7 Concerned Citizen paid for the call $1.50 goes to the campaign, between $2 and $3.50 goes to the caller and the remainder goes to Amplifyd.

Blankenship says he was inspired to build Amplifyd by his experience in the anti-water fluoridation movement, an issue he cared deeply about but didn’t have a lot of time to devote to. “There’s a of people like me who want to live in a society and community that matches what they want and their opinions on how things should be run but not necessarily wanting to sacrifice their family and goals and money to fight for that campaign,” he said.

It’s a business model that depends on people not wanting to make their own phone calls to express their opinions. The $7 price tag on a call could be seen as a high price for a service people can accomplish themselves by literally picking up the phone.

“It’s a mathematical estimate that considers variable calling expenses and payment/transfer fees, then broken out between us, the callers and the campaigners so that all groups are getting paid a decent amount for their efforts,” Blankenship told TIME. “If we can’t stay in the black, then we have failed our mission to provide this tool to our national community.” The price of calls will be reassessed after the product launch, he said.

But the $7 is far cheaper than professional lobbying, even as it shows little resemblance to the real thing. Sure, lobbying involves some working of the phones but as the term implies there’s a bit more to it than that. The lobbyist in its purest form is someone who hangs out in the lobbies outside the Senate and House chambers and corners legislators entering and leaving to make convincing arguments and, when the occasion calls for it, thinly veiled electoral threats. Of course, that doesn’t include all the influence peddled between K Street in Washington and golf courses near and far.

It’s also not strictly true that lobbying is unavailable to everyday Americans. Whether you’re a member of a labor union, a veteran, property owner, or a homeless person, someone in Washington on any given week is likely skulking around the Capitol building trying to convince members of Congress vote in your interest.

Amplifyd does raise interesting ideas about the future of political influence in the age of crowdsourcing. It’s not inconceivable that the site could collect payments from people and use them in a lump sum to hire a real lobbyist outfit, wing-tip shoes and all, on an ad-hoc basis, something that was not really possible before with the same efficiency. And rather than donating to a large organization representing an interest group, under Blankenship’s concept—we’ll call it the Kickstarterification of politics—a person can make more precise donations toward furthering specific causes they care about.

Blankenship says six activist groups are in line to start using Amplifyd when it goes live on June 3. Just how many people are in line to pay $7 so someone else will make a phone call for them remains unknown.

TIME Congress

Lobbyists Push Congress to Curb Misleading Photoshopped Ads

Rep. Lois Capps, D-Calif. speaks at a news conference, March 20, 2012.
Rep. Lois Capps, D-Calif. speaks at a news conference, March 20, 2012. Tom Williams—CQ Roll Call/Getty Images

Fashion and beauty ads where the physical appearance of subjects is dramatically altered can have a dire effect on the health outcomes of young people, say anti-eating disorder groups. A bill introduced last month could prompt the FTC to investigate

Lobbyists concerned with the way digitally altered advertisements impact young women and girls took to Capitol Hill on Thursday to rally support for a new bill.

Members of the Eating Disorders Coalition met with over 50 lawmakers about the Truth in Advertising Act of 2014, introduced on March 27, which they say could prompt the Federal Trade Commission to investigate the impact digitally retouched images have on society.

Seth Matlins, a marketer who works to promote positive images of women and girls, said Thursday he’s concerned about “ads that take Kim Kardashian’s body and make it Miley Cyrus’s.”

“If photoshopped ads told the same bold-faced lies that they do on images there would be regulatory action,” Matlins said during a briefing on the lobbying effort. “Truth in advertising matters because we can no longer sit by and allow this to happen.”

The problem for the Eating Disorders Coalition isn’t the ads themselves; it’s the altered images the ads present. The group handed out before and after images of advertisements from fashion houses like Ralph Lauren and Lancôme that they claimed showed the insidious effect of digital alterations. Speakers, who included a former Photoshop professional who referred to himself as an “eye-con,” told personal stories of how altered images had affected people around them.

Rep. Lois Capps (D-Calif.), a co-sponsor of the new bill, said during the briefing that as a mother and as a school nurse in her home state she had seen the impact altered fashion ads can have on young girls. She acknowledged the bill faced an uphill battle to gain widespread support in today’s Congress, but said there was a historical precedent for action.

“Just as with cigarette ads in the past, fashion ads portray a twisted, ideal image for young women,” she said. “And they’re vulnerable. As sales go up, body image and confidence drops.”

The Eating Disorders Coalition claims the bill is a great first step to preventing some of the negative health outcomes that have been directly linked to these types of images. Though the new bill would not force the Federal Trade Commission to take direct action against advertisers, the federal government would study the use of images where subjects’ physical attributes had been tweaked in order to pursue recommendations on what should be done about it.

Several research studies have found that higher exposure to beauty and fashion magazines increase the likelihood that young girls will develop negative body image and eating disorders. In one study, young girls in Fiji had already begun to develop eating disorders and body image issues only three years after western TV was introduced there.

“The link between false ads and eating disorders becomes increasingly clear every day,” said Rep. Ileana Ros-Lehtinen (R-Fla.), a co-sponsor of the new bill. “We need to instead empower young men and women to have realistic expectations of their bodies.”

But the Federal Trade Commission already has the authority to keep “unfair and deceptive” commerce away from consumers, and Dan Jaffe of the Association of National Advertisers says the federal government already has more than enough power to protect vulnerable communities from false ads. He argues the law as it stands is actually too broad and that eliminating the use of photoshop would be going too far.

“The use of cosmetics and photoshop are widespread practices,” Jaffe says. “It can’t just be the photoshopping that they go after, it would have to be tied to something specific. Are you just going to say that when ever someone photoshops it’s a per se violation? I think that would be going too far.”

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