State House for Sale: SC's unregistered lobbyists profit in 'gray area'

jself@thestate.comJuly 27, 2013 

  • Top lobbyists More than 330 lobbyists registered in January to represent about 500 clients at the State House during the legislative session that ended in June. About 460 clients and 280 lobbyists reported their spending and earnings during the session. Here’s a/ look at the lobbyists who earned the most, ranked by their earnings. Included are employer, total lobbying income, number of clients registered, some clients and issues lobbied on and the status of those issues.

    No. 1 – Richard Davis, president, Capitol Consultants, $645,252, 45 clients, including the city of North Myrtle Beach, S.C. Chiropractic Association, Davis would not comment on specific work he completed for clients.

    No. 2 – Ted Riley, partner at Riley Pope & Laney, $240,313, 18 clients, including S.C. Children’s Hospital Collaboration, which supported legislation to allow schools to stock EpiPens that inject emergency allergy medication into students (passed) and a bill to improve sports team protocol for dealing with concussions (passed). Also, S.C. Academy of Physician Assistants, which supported bill to relax restrictions on the scope of physician assistants (passed). Represented several hospital systems on Medicaid expansion (failed).

    No. 3 – Tony Denny, Denny Public Affairs, $227,476, 15 clients, including Altria, a Philip Morris Tobacco conglomerate, lobbying against a bill to levy a 5-cent tax on electronic cigarettes (ongoing; bill remains in House). Also, South Carolinians for Responsible Government, lobbying for the state’s first “school choice” tax credit program providing tax credits for donations made for private-school scholarships for disabled children (passed).

    No. 4 – Rex Kneece, Kneece Law Firm; $149,773, eight clients, including the Motion Picture Association, monitoring a bill giving motion picture businesses tax rebates for work done in the South Carolina (passed).

    No. 5 – Jason Puhlasky, Parker Poe Consulting; $149,167, 10 clients, including K-12 Inc., lobbying for an expanded virtual learning act and eliminating a cap on online credits for traditional students (passed). Also, Republic Services of S.C., a waste company lobbying for a bill that would limit counties’ control of waste (ongoing; bill is in the Senate).

    No. 6 – Ed Poliakoff, Nelson Mullins law firm, $140,500, nine clients, including Teachers Insurance and Annuity Association-College Retirement and Equity Fund, lobbying legislation affecting the longtime provider of retirement programs to college and university officials, state employees and public school teachers, and AT&T.

    No. 7 – Darrell Campbell, Campbell Consulting Group, $138,074, 12 clients, including Palmetto Health, lobbying for Medicaid expansion (failed); Belron U.S., formerly Safelite glass company, monitoring insurance-related legislation; Pfizer, lobbying for passage of a bill that would allow schools to have EpiPens available for students with life-threatening allergies (passed).

    No. 8 – Bob Coble, Nexsen Pruet law firm and former Columbia mayor, $131,476, 15 clients, including StoneMor South Carolina, a national cemetery organization, following cemetery regulations; Providence Hospital, lobbying for Medicaid expansion (failed) and for the state to fund the certificate of need program (failed). Also, Winthrop University and the S.C. Judicial Department, among others, lobbying on budget issues.

    No. 9 – Vicki Parker, Parker Poe Consulting; $122,391, 11 clients, including the S.C. Cable Television Association, monitoring broadband issues; Merck Sharp and Dohme Corp., monitoring state funding for vaccine and other drug-access programs; S.C. Hospital Association and Lexington Medical Center, lobbying for Medicaid expansion (failed) and other issues; and the Consumer Healthcare Products Association, watching a bill that would make pseudoephedrine products available by prescription only (ongoing).

    No. 10 – Sally Rogers, Nexsen Pruet; $116,167, 10 clients, including Waste Management of S.C., lobbying for a bill that would limit county control over trash flow (ongoing).

    SOURCE: S.C. Ethics Commission, lobbyists and clients Key issues: Lobbying victories and losses this year The idea that big spending on lobbying equals a big payoff isn’t always true. Health care groups spent more than $150,000 this year, for instance, trying to persuade legislators to expand Medicaid, an effort that failed. Meanwhile, Boeing spent less than $50,000 lobbying the Legislature and won $120 million in state money. A look at key issues, during the session that ended in June, and the role lobbyists played. Medicaid: Big money, big drag

    Hospital groups mounted an effort to persuade the GOP-controlled Legislature to accept federal expansion of the Medicaid health care program for the poor, but the political toxicity of the Obama Administration’s Affordable Care Act prevailed and the effort failed. The S.C. Hospital Association led the charge, spending $186,911 on lobbying activities, the second-highest amount spent on direct lobbying by any single lobbying group.

    “We were up against the confusion and the complexity of the Affordable Care Act,” said Rozalynn Goodwin, policy and research director for the Hospital Association, adding the fight to expand Medicaid will continue.

    Registered lobbyists: S.C. Hospital Association: executive vice president Allan Stalvey, Elizabeth Powers Harmon, John Ames and Goodwin. Also, Vicki Parker, Parker Poe Consulting.

    Flying under the radar

    Boeing, which has a North Charleston aircraft manufacturing plant, spent $47,752 on lobbying this year and posted one of the most impressive deals at the State House: the state agreed to borrow $120 million to give to the company as an incentive for a promised $1 billion expansion. The General Assembly passed the bill and Gov. Nikki Haley, a Lexington Republican, signed it into law in exactly two weeks.

    A Boeing spokesperson declined to comment on how the deal came about.

    Registered lobbyists: Mark Elam, Ashley Holbrook and John Moloney. Sally Rogers and Bob Coble, Nexsen Pruet.

    Trash wars

    A bill that would limit S.C. counties’ ability to control the flow of waste pitted national waste companies against counties. The bill passed the House and now is in the Senate, where it was approved in committee and could be considered in January. Two trash companies spent more than $350,000 combined last year to push the bill. This year, they spent $171,604 together. The S.C. Association of Counties was a big opponent of the bill. The association lobbies on several issues and, combined, spent $112,278 on lobbying activity this year, registering 10 lobbyists.

    Registered Lobbyists: Waste Management of South Carolina: Bob Coble and Sally Rogers, Nexsen Pruet. Also, Edwin Givens, and Mark Kelley, Will McCain and Angelia Owens of Kelley, McCain and Smith-Owens government relations firm. Republic Services of S.C.: Dan Cooper, Vicki Parker and Jason Puhlasky, Stephen Smith of Parker Poe Consulting. Also, Christopher Lindsay. Other opponents: Conservation Voters of S.C., Horry County Solid Waste Authority, Three Rivers Solid Waste Authority, and Sierra Club.

    Clearing the road block

    The General Assembly passed legislation including more than $150 million for roads and bridges, including an extra $50 million a year for the State Infrastructure Bank to use to borrow up to $500 million for interstate and highway projects. Lawmakers and lobbyists attribute the effort’s success to a coalition of business and industry groups coming together. Three organizations with registered lobbyists that pushed for road money spent more than $167,000 combined.

    Registered lobbyists: The S.C. Chamber of Commerce: Robert Barnett, Katie Schanz, Darrell Scott, Tim Timmons. S.C. Trucking Association: president Richard Todd, Jennifer Patterson. Bill Ross with the S.C. Alliance to Fix Our Roads; 17 other state agencies and 34 local chambers of commerce.

    Side effects of nullification

    A bill that passed the S.C. House – and now is on priority status in the state Senate – would outlaw parts of the federal Affordable Care Act. The bill is similar to model legislation promoted in other states by Tea Party groups.

    The S.C. Alliance of Health Plans, representing a coalition of health insurance agencies and brokers, opposed the bill, said Jim Ritchie, the association’s director and a former state senator. Ritchie says the bill would cause “a lot of unintended consequences” in state government and health care, including shutting down parts of the Medicaid system in South Carolina, because Medicaid statutes were updated and included in the Affordable Care Act.

    Lobbyist: Kendall Buchanan, formerly of Richardson and Ritchie Consulting, now a deputy director of the S.C. Department of Insurance

    Packing heat

    A bill to allow citizens who have concealed weapon permits to carry their guns into restaurants drew support from Second Amendment groups and the National Rifle Association. The NRA has spent $19,332 so far this year on lobbying, more than twice what it spent in 2012 and nearly four times what it spent in 2011. The bill passed the Senate and House, but due to changes made in the House, the bill must receive Senate approval again.

    Lobbyist: Anthony Roulette, NRA

    The meth debate lands in S.C.

    A Senate bill that would make cold medicines containing pseudoephedrine available by prescription only has not had a hearing yet, but opposition already is mounting. The Consumer Healthcare Products Association, which represents the manufacturers of the over-the-counter cold medicines that contain the key ingredient used in “cooking” methamphetamine, has fought similar bills in other states. This year, the association spent $17,812 lobbying state lawmakers.

    The association supports state use of a database system to track pseudoephedrine purchases, a system paid for by drug manufacturers that South Carolina now uses.

    Law enforcement officials question the effectiveness of that system in curbing meth manufacturing.

    Lobbyists: Dan Cooper, Jason Puhlasky and Vicki Parker of Parker Poe Consulting.

    SOURCE: S.C. Ethics Commission, lobbyists and organization websites
    Big spenders A look at the top 20 lobbying organizations that paid the most in direct payments to lobbyists from January through May 2013, the first of two annual reporting periods for lobbyists and their clients. The amount does not include other lobbying expenses, including supplies, payment to support staff, and political contributions lobbying organizations made to candidates.

    1. AT&T Services – $185,658

    2. S.C. Hospital Association – $147,464

    3. Waste Management of South Carolina – $109,250

    4. Duke Energy Carolinas – $103,932

    5. Municipal Association of S.C. – $99,734

    6. S.C. Chamber of Commerce – $87,660

    7. S.C. Medical Association – $82,437

    8. Altria Client Services – $81,410

    9. City of North Myrtle Beach – $80,000

    10. SCANA Corp. – $76,928

    11. S.C. Association of Counties – $75,559

    12. S.C. Farm Bureau Federation – $71,834

    13. Belron U.S., formerly Safelite Group – $70,500

    14. S.C. Health Care Association – $66,572

    15. S.C. Poultry Federation – $66,322

    16. S.C. Bankers Association – $66,125

    17. Norfolk Southern Corp. – $65,000

    18. Evidence-Based Associates – $64,131

    19. BlueCross BlueShield of S.C. – $63,200

    20. HCA North Florida Division – $61,312

    SOURCE: S.C. Ethics Commission

— The debate hinged on whether a bill reshaping the state’s sex education law would ensure that public school students learn medically accurate information about sex and its risks or, indirectly, encourage them to have sex by showing them how.

But driving the April debate before a S.C. House panel was a fight the groups did not mention – a tug-of-war for more than $1 million a year in state money.

The stakes are high.

For at least a decade, teen pregnancy prevention groups have been lobbying lawmakers to keep the money flowing to the programs they run. If lawmakers rewrite state law – changing what students should learn about sex – the direction of public money for pregnancy prevention programs also could shift.

“Have you ever heard the expression ‘follow the money’?” said state Rep. Dwight Loftis, R-Greenville, a key negotiator in determining who would be eligible to apply for sex education money in this year’s state budget. “When there’s money involved, it’s always that (driving the issue).”

Hundreds of companies and groups seek state money each year, for causes ranging from sex education to industrial expansion. To press their cases, the groups employ hundreds of lobbyists.

More than 500 corporations, industry associations and advocacy groups registered with the state and made $8.1 million in direct payments to lobbyists from January to May, according to recent state ethics filings. During that same period, more than 330 lobbyists registered with the state, including one lobbyist – top-earning Richard Davis – who was paid $645,252 by his clients.

But not everyone trying to influence lawmakers at the State House registers with the state as a lobbyist as required by the state’s ethics law, some lobbyists and ethics experts say.

“The perception among lobbyists is that there are many, many people who do not register and should register,” said Ashley Hunter with McKay Public Affairs and a lobbyist whose clients include the S.C. Campaign to Prevent Teen Pregnancy, one group vying for the pregnancy prevention money. “Our ethics laws are written to prevent (lobbying without reporting),” she said, adding, “It’s unfortunate that loopholes are found in every law.”

“There could be clarification on how we define lobbying” in the law, said Ted Riley, a partner at the Riley Pope and Laney law firm and the state’s second highest-earning lobbyist, according to recent disclosures. “One thing we try to do,” Riley said of his firm, “is not even go in the gray area.”

But some, the lobbyists and others say, operate openly in that gray area of the state’s lobbying law, winning millions of state dollars.

Not everyone who lobbies has to register.

S.C. law allows people to lobby without registering as long as they are not paid directly to lobby and their expenses do not exceed $500 a year, said Cathy Hazelwood, a State Ethics Commission attorney.

That is a weakness in state law, government watchdog groups say, an arbitrary threshold that allows lobbying groups to decide for themselves whether they should register.

“If I’m involved in lobbying, I should register and disclose,” said John Crangle, the unpaid director of Common Cause South Carolina.

“If you looked at what they are doing, you’d see that they are spending more than $500 on lobbying activity,” Crangle said of those who operate in the ethics law’s gray areas. “How else could they support that kind of advocacy?”

‘Just part of the process’

More than two decades ago, lawmakers updated the state’s ethics laws in an effort to shed light on the influence of lobbyists and end a culture of bribery that prompted a federal corruption investigation and indictments of lobbyists and lawmakers.

Now, lobbyists must disclose how much they earn and from whom. The groups they represent also must say how much they spend on lobbyists, events for elected officials and political contributions.

The process gives the public some idea of what special interests are paying out to drive public policy and spending.

But despite disclosure rules, much of the influence that groups exert on lawmakers – and the money and motivations driving them – remains hidden from public view, while lawmakers are lobbied, in part, behind closed doors.

Consultants, legislative liaisons for state agencies and others – none registered lobbyists – are present throughout the legislative process, taking notes, answering questions, monitoring bills or working with private clients who want “eyes and ears” at the State House, said Rex Kneece, whose law firm provides lobbying and consulting services.

In the sex education debate, for instance, the groups pushing agendas included those that employed registered lobbyists and some that did not, including Heritage Community Services, a Charleston-based abstinence curriculum developer that has received almost $5 million in state money over the last decade.

Sometimes, it is hard to tell the difference between the lobbyists and non-lobbyists, based on their activities, according to state Rep. Donna Wood, R-Spartanburg.

The women representing Heritage who talked to Wood, for instance, did what lobbyists do – they came to the state representative’s office and asked her to back their position, opposing the sex education legislation.

“They contacted me – they contacted every legislator on the committee and were asking for support,” said Wood, a freshman legislator, of the Charleston-based nonprofit. “They just want to secure their place at the table.”

“That’s just part of the process,” Wood said. “I look at that as information.”

Occasionally, it is hard to tell lobbyists from people expressing their personal opinions about an issue, Wood said, adding she assumes people engaging in direct-lobbying activities are registered. “Maybe, we should make all the lobbyists put badges on that say, ‘I’m a registered lobbyist,’” she joked.

Forcing more disclosure would be tricky, Wood said, because, as an elected official, she wants to keep her door and mind open to the public’s perspectives.

But it might help the public and lawmakers to know the financial benefits at stake for groups that are trying to drive public policy – just as lawmakers now must disclose their public sources of income to reveal potential conflicts of interest, Wood said.

“If they are going to lobby, they should be registered,” Wood said. “You need to know what’s on the line and why they’re lobbying.”

Weighing in on sex ed

The sex ed debate flared this year after New Morning Foundation, a private, nonprofit reproductive health advocacy group, assisted in drafting language for a bill revising the state’s sex education law.

The bill, introduced by state Rep. B.R. Skelton, R-Pickens, would have required sex education teachers to be trained, students to receive medically accurate information, and schools and districts to report what they teach in sex ed classes, supporters say.

Following criticism at a subcommittee hearing, Skelton’s version was rejected and replaced with a compromise between abstinence and safe-sex advocates. That bill now is before the House Education Committee, awaiting consideration next year.

From January through May, New Morning paid four lobbyists $18,500 to push Skelton’s bill, a response to New Morning’s findings that more than three out of four of the state’s 85 public school districts do not comply with at least one requirement of state law governing reproductive health education.

Another supporter of the bill is the S.C. Campaign to Prevent Teen Pregnancy, which paid McKay Public Affairs' Hunter $10,500 from January through May to promote the bill and to ensure Prevent Teen Pregnancy continues to receive state money for its programs.

Prevent Teen Pregnancy has received more than $5.2 million from the state since 2002 to train teachers and advise districts on approaches to teaching sex education. The organization has worked on some level with more than half the school districts in the state over the last decade, director Forrest Alton said.

Opponents of Skelton’s bill included groups also vying for abstinence money. However, the opponents did not employ lobbyists registered with the state. Instead, their employees reached out to lawmakers to give input on how to ensure the opposing groups continued to remain eligible for state money.

For example, S.C. Parents Involved in Education, run by Sheri Few, a Lugoff Republican political consultant, has concerns about the legislation. Few says she has not contacted lawmakers about it but adds that she has talked to House lawmakers about state money for abstinence programs.

Few’s organization has received about $1 million in state money for its abstinence programs since 2008. Few said she has worked with about 12 school districts on their abstinence programs and is developing an abstinence curriculum written specifically for an African-American faith community.

Few competes for state money with Heritage Community Services, which has received more than $4.8 million in state money since 2002 to support its programs, including publishing its own abstinence curriculum.

Six S.C. school districts reported using Heritage curricula in response to the New Morning Foundation survey of districts, conducted through a Freedom of Information Act request.

Anne Badgley, Heritage’s founder and director, said the New Morning report “does not accurately reflect our services,” without saying specifically how.

Asked for the number of schools or a list of school districts using Heritage’s curriculum, Badgley decline to provide the information, citing privacy concerns for schools and students, most of which Heritage evaluates for internal research that it publishes, she said. She also said the “numbers and populations served are in constant fluctuation due to changing funding streams,” making it difficult to know how many students, schools or districts are using Heritage’s curriculum.

Money in play

Lawmakers involved in the sex-ed fight describe behind-the-scenes jockeying for state money, and suspicions of unfair competition or money not being used wisely.

Heritage received state money for its programs as early as 2002. In 2003, however, the Campaign to Prevent Teen Pregnancy started receiving part of the state’s sex-ed money. After debate over which group should get more of that money, lawmakers eventually agreed to a “truce,” splitting the money between the two groups.

Then, lawmakers put in place a competitive bidding process for the money meant to open the door for new groups. Competition for the abstinence money has been on the rise. Each year the budget proviso, setting the eligibility requirements to get state money, undergoes changes that pass between the House and Senate.

There have been efforts to disqualify competitors from getting pregnancy prevention money through revisions to the budget proviso that determines who is eligible, some lawmakers and others say.

Few, of Parents Involved in Education, said she has reached out to House lawmakers, including Greenville state Rep. Loftis, to ensure her group and another newly formed Upstate abstinence group can compete for state money every year.

Few’s organization has been awarded state abstinence money twice. Both times, Heritage objected, arguing that Few’s group was ineligible.

Few and Rep. Loftis, who helped write House eligibility requirements for the money, said they suspect Heritage has worked with state Senate allies to give Heritage the advantage in competing for state money.

“There’s reason to believe that, in recent years, the proviso has been wordsmithed to the effect that one entity (Heritage) would get the money,” Loftis said.

“When you eliminate all competition, it’s like an earmark,” Few said.

Heritage director Badgley said she has fought for high standards – not to edge out competition.

State Sens. Larry Grooms, R-Berkeley, and Chip Campsen, R-Charleston – co-sponsors of a Senate version of the budget proviso detailing who is eligible for the pregnancy prevention money – both rebuffed accusations that Heritage received favoritism in the budget process.

“That’s incorrect,” Grooms said. “The proviso, in last year’s budget, it allowed for competition between the abstinence groups.”

While critics say Heritage and groups like it should register with the state as lobbyists, Campsen said reaching out directly to lawmakers is a common way for interest groups to “keep the option open for (their groups) being able to be awarded this money.”

“(That’s) all they’re doing, like anyone else who lobbies or communicates about an item in the state budget,” Campsen said of Heritage, whose board of directors includes the Charleston Republican’s sister, according to the non-profit’s website.

But some watchdog groups say groups, including nonprofits, should disclose when their efforts to influence lawmakers move away from making statements on issues toward asking for money.

Having a financial stake in the outcome of legislation should be the threshold for requiring someone to register as a lobbyist, said Ashley Landess, president of the libertarian S.C. Policy Council.

“It’s one thing to approach a lawmaker as an individual or as an affiliated group if you aren’t asking for money – that’s free speech,” Landess said. “The difference comes where there is a financial benefit.”

Spreading the message

Heritage has an advocacy arm, the Healthy Family Formation Coalition, through which it has shared its concerns about the proposed sex education legislation, using newsletters and a 30-page document detailing why it opposes the bill.

Badgley said her staff researched the bill to help her group understand its potential impact on children. Then, staffers distributed the document to lawmakers and went over it with some legislators in their offices.

Supporters of the bill say Heritage misrepresented what the proposal would do.

Heritage argued that Planned Parenthood, the health care nonprofit that provides abortion services, was behind the bill. But Planned Parenthood was not involved in writing it and has not lobbied for it, said its lobbyist, Sloane Whelan.

The Heritage document also says several state health and education agencies are working to outlaw abstinence education programs, and Skelton’s bill would have encouraged sex by providing detailed illustrations of sexual activity.

Following public comment at the April subcommittee meeting where opponents used similar rhetoric, Skelton grew frustrated.

“I’m a little bit disappointed that the red herrings have been brought up on this bill,” Skelton said. “If you’re satisfied with the level of teen pregnancy, if you are satisfied with the level of abortions, if you’re satisfied with the level of STDs and high-school dropouts ... if you’re satisfied with the high medical costs, then vote against this bill.”

Representatives of New Morning and the S.C. Campaign to Prevent Teen Pregnancy, and lawmakers who support revisions to the sex education law, frequently dispute claims they are anti-abstinence. They add Skelton’s proposal would not have taken away the ability of local school districts to decide what curriculum to use, just required they do more reporting of what is being taught.

“There’s nothing in the proposed amendment or current language (of the bill) that would encourage teens to have sex,” said Doug Bryant, a lobbyist for New Morning and former director of the state Department of Health and Environmental Control. “That’s absolutely counter to what we would put forward.”

Hunter, the lobbyist for Teen Pregnancy Prevention, said opponents of the bill used “scare tactics” to thwart its passage.

“Every year, there are different and unique efforts that are made to confuse the issue,” she said. “That’s a lobbying tactic.

“If you aren’t sure where your votes are and you’re not sure where it’s going to come out, just confuse the issue so that legislators won’t want to deal with it.”

Level the playing field

Nonprofits should push their missions, as long as they follow state and federal guidelines for lobbying, said Madeleine McGee, president of the S.C. Association of Nonprofit Organizations.

And, despite its critics’ skepticism, Heritage says it does.

Badgley, of the Charleston abstinence nonprofit, said she would register as a lobbyist if her organization’s actions warranted it. But its lobbying activities this year only cost $468, below the $500 threshold, she said.

Badgley arrived at the amount by considering staff time for seven staff members who spent a total of 16 hours calling, emailing and visiting lawmakers “to educate them regarding our concerns about the impact (the sex education bill) could have on the youth of our state.”

State Ethics Commission attorney Hazelwood says Heritage likely is operating within the state’s ethics law. To qualify as a lobbying expense, an employee must be paid to lobby, Hazelwood said, not paid a salary that sometimes includes lobbying duties.

Crangle, director of Common Cause, disagrees with Hazelwood’s interpretation of the law, saying a person’s salary and any other material or travel costs should count toward the $500 threshold.

The state’s lobbying law is weak, Crangle said, allowing groups engaged in lobbying to decide whether their activities reach the $500 threshold.

“It’s hard to know whether they’re actually lobbying or not, or crossing the threshold,” Crangle said. “That’s the problem with not registering and not disclosing.

“You don’t know how much they’re spending, (and) you don’t know what the bills are that they’re working on – that’s a huge omission in the disclosure process.”

Reach Self at (803)771-8658

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