II. Lobby Clients
A. Texas’ Escalating Lobby Spending
B. The Nation’s No. 4 State Lobby?
C. Million-Dollar Clients
D. Top Clients By Interest Category
1. Energy & Natural Resources Clients: Up to $60 Million
2. Ideological & Single-Interest Clients: Up to $49 Million
3. Health Clients: Up to $43 Million
4. Miscellaneous Business Clients: Up to $37 MillionA. Texas’ Escalating Lobby Spending
Over the past decade, special interests have spent between $1.1 billion and $2.4 billion on more than 62,000 Texas lobby contracts. As the accompanying table shows, lobby spending has increased over this period far more than the number of lobbyists, clients and contracts.
Texas’ lobby spending peaks in odd-numbered years when the biennial Texas Legislature convenes in its regular session. Lobby spending has increased over time, regardless of whether you compare odd-numbered legislative years (striped bars) or the even-numbered years that lack a regular legislative session (solid bars). Lobby spending peaks at the end of the year—after the last lobby reports are filed. The numbers presented here are year-end data.
This report reveals the industries and clients that spent the most to influence public officials in 2007, as well as Texas’ top hired guns that year. As the accompanying graph shows, lobbying is a growth industry. Special interests spent up to $348 million on Texas lobbyists in 2007, more than double the $164 million maximum that they spent in 1998. Exact contract values are unknown because Texas lobbyists report them in ranges such as “$50,000 to $99,999”. As discussed later in this report, a reform implemented in September 2007 mandates better disclosure of the biggest lobby contracts—including disclosing the exact value of contracts worth $500,000 or more.
Texas’ Escalating Lobby Spending, (1998-2007)
of Contracts
of ContractsNote: Data only include contracts with minimal values greater than zero.
*These totals would mislead since many lobbyists and clients reappeared each year.
B. The Nation’s No. 4 State Lobby?
The adage “Everything’s bigger in Texas” is difficult to prove or disprove where lobby expenditures are concerned. A kaleidoscope of different state lobby reporting requirements subjects any state lobby ranking to numerous caveats. Undeterred, the Washington, D.C.-based Center for Public Integrity has ranked state lobby expenditures for several years. The most recent edition of the Center’s “Hired Guns” report covers 2006 lobby data.1 By that reckoning Texas ranked as the nation’s No. 4 lobby in 2006, down from No. 2 in 2005.2
Top Lobby States in 2006
RankState
Spending
ClientsCalifornia New York Florida Texas Massachusetts Source: Center for Public Integrity
This ranking is subject to important caveats. As discussed above, the Texas Legislature does not convene regular sessions in even-numbered years. As such, 2006 was an off year for the Texas lobby.3 Moreover, most of the top lobby states listed in the accompanying table disclose the actual value of their lobby incomes, whereas Texas discloses lobby compensation in ranges (e.g. $50,000 to $99,999). This is significant because the Center compared the minimum value of Texas lobby contracts to the actual value of lobby contracts in other major states.4 Had the Center used the maximum Texas value of more than $250 million, then Texas would have ranked second only to California—in an off year for the Texas Legislature. By contrast, in the 2005 session year, the maximum value of Texas lobby contracts surpassed actual values reported in California.
The Center’s Texas data differ from those used in this report for a couple of reasons. First, the Center tracks a wider universe of lobby expenditures that includes the amount that special interests pay registered lobbyists (these data are analyzed in this report) along with the amount that those lobbyists spend wining and dining politicians (data not analyzed here). In addition, the Center tracks all lobby contracts whereas this report just tracks paid ones.
C. Million-Dollar Clients
By the end of 2007, 31 clients spent more than $1 million apiece on 814 lobby contracts. Collectively these 31 mega-clients paid lobbyists up to $69 million, accounting for a remarkable 20 percent of all the money spent on Texas lobbyists. As usual, AT&T flexed Texas’ largest lobby muscle, spending up to $10.2 million on 126 contracts. The company announced in June 2008 that it would move its headquarters from San Antonio to Dallas. Dallas paid the behemoth $5 million in public funds to seal the deal.5 AT&T competitors Verizon and Time Warner Cable also ranked among Texas’ top 15 clients. Yet they collectively spent less than half of what their larger rival did.
Million-Dollar Clients
Client
of ContractsInterest AT&T, Inc. Communications Energy Future Holdings Corp. Energy TX Utilities Co (TXU) Energy McGinnis Lochridge & Kilgore Lawyers & Lobbyists Energy Future Holdings Corp. Energy Verizon Communications Locke Liddell & Sapp Lawyers & Lobbyists Baker Botts Lawyers & Lobbyists TX Cable & Telecom. Assn. Communications Vinson & Elkins Lawyers & Lobbyists TX Medical Assn. Health TX Trial Lawyers Assn. Lawyers & Lobbyists Ryan & Co. Finance TX Assn. of Realtors Real Estate Time Warner Cable Communications Linebarger Heard Goggan... Lawyers & Lobbyists Mesa Water, Inc. Energy City of Austin Ideological/Single Issue CenterPoint Energy Energy UST Public Affairs, Inc. Agriculture Atmos Energy Corp. Energy TX Assn. of School Boards Other Wholesale Beer Dist. of TX Miscellaneous Business ExxonMobil Corp. Energy Assn. of Electric Co’s of TX Energy City of Houston Ideological/Single Issue Texans for Lawsuit Reform Ideological/Single Issue American Electric Power Energy Reliant Energy Energy Hunt Building Co. Real Estate Impact TX Communication Lawyers & Lobbyists
No. 3-ranked lobby client TXU Corp. started the year promoting its quest to build 11 filthy new coal plants in Texas. In February 2007 buyout firms Kohlberg Kravis Roberts & Co. and TPG Group announced a $45 billion bid to acquire TXU, canceling all but three of the new coal plants. Calling themselves Energy Future Holdings Corp., the buyout partners spent up to $7.7 million on 68 lobby contracts to consummate the takeover.6 These suitors, TXU and TXU’s Luminant subsidiary together spent up to $14 million on 177 lobby contracts—a lobby squeeze that surpassed even the mighty AT&T. Other jumbo clients are discussed later in this report.D. Clients By Interest Category
This report categorizes Texas’ 2007 lobby contracts by their underlying interests. Energy & Natural Resources clients led the herd. They accounted for 17 percent of all lobby expenditures, spending up to $60 million. Ideological & Single-Interest clients consumed 14 percent of the lobby pie, spending up to $49 million. The next largest categories, Health and Miscellaneous Business, also are discussed below.
Clients By Interest Category
Interest Group
of Contracts
of Contracts
Max. ValueEnergy/Nat'l Resources Ideological/Single Issue Health Miscellaneous Business Lawyers & Lobbyists Communications Finance Real Estate Insurance Transportation Computers & Electronics Construction Agriculture Other Labor Unknown
1. Energy & Natural Resources Clients: Up to $60 Million
The up to $60 million that Energy & Natural Resources clients spent on 1,101 contracts accounted for 17 percent of all lobby spending. As discussed earlier, TXU, Luminant and their buyout suitors dominated this sector, collectively spending up to $14 million on 177 lobby contracts. Most of the other top lobby clients in this sector also are electric power interests. (Classified in the Ideological and Single-Interest category, the non-profit Cities Aggregation Power Project makes wholesale electricity purchases on behalf of more than 100 cities.)
The top clients in the oil and gas industry were Atmos Energy (which acquired TXU’s gas operations in 2004), ExxonMobil and Shell. Two fossil-fuel trade groups also spent up to $500,000 on the lobby.Top Energy & Natural Resources Clients
Client
of Contracts
of Contracts
ContractsEnergy Future Holdings Corp.* TX Utilities Co. (TXU)* Mesa Water, Inc. CenterPoint Energy Atmos Energy Corp. ExxonMobil Corp. Assn. of Electric Co’s of TX* American Electric Power* Reliant Energy, Inc. Shell Oil Co. Exelon Power* Constellation Energy Group* Entergy Corp.* El Paso Electric Co. NRG Energy, Inc.* Waste Control Specialists, LLC* Luminant Holding Co.* TX Electric Cooperatives Direct Energy, LP TX Pipeline Assn. City Public Service of San Antonio* TX Oil & Gas Assn. *Nuclear power interest.
The most explosive regulatory issue for Atmos are its pipelines, which have killed five Texans in recent years. A hard-hitting investigative series aired by WFAA-TV of Dallas found that a Texas Railroad Commission investigation initially identified faulty pipeline couplings as the probable cause of one recent Atmos blast. Yet the final report by this agency—led by three elected commissioners who collectively received more than $40,000 from Atmos’ political committee—covered up these coupling concerns.7 Under pressure from WFAA and the Dallas Morning News, two of the three commissioners ordered gas utilities to replace the implicated couplings within two years in November 2007.8 As the accompanying graph shows, Atmos spent up to $1.3 million on Texas lobbyists during the 2007 couplings probe—a 150 percent increase over the maximum of $510,000 that it spent during the preceding session. After Atmos contractors ruptured a Dallas pipeline in May 2008, nobody notified emergency personnel until after the first of three explosions erupted an hour later. The blasts destroyed two homes and hospitalized three people, one of whom did not survive.9
Atmos Energy Expenditures On Texas Lobbyists
Dallas billionaire T. Boone Pickens—who influenced Texas’ 2006 elections with $1.2 million in political contributions—controls the No. 3 Energy & Natural Resources client. His Mesa Water owns vast rights to Ogallala Aquifer water in the Panhandle and wants to transport it to thirsty markets around the Dallas Metroplex.10 Mesa expenditures on Texas lobbyists swelled 937 percent from 2001 to 2007.
Mesa Water Expenditures On Texas Lobbyists
With Mesa Water paying lobbyists more than $1 million in 2007,11 the Texas Legislature further watered down indulgent laws governing so-called “fresh water supply districts.” These changes helped five Pickens employees form a water supply district on Pickens’ Panhandle ranch. That backwater district claims governmental powers of eminent domain to condemn private land for a 320-mile pipeline to the Metroplex.12 Another Pickens company, Mesa Power, plans to build the nation’s largest wind farm in the Panhandle and transmit clean kilowatts over that same route to the smog-smothered Metroplex. With the wind farm encountering fewer political headwinds, Mesa Power spent just $125,000 on the lobby in 2007.
Another Dallas billionaire—Harold Simmons—operates Waste Control Specialists (WCS). After several sessions of intense lobbying by WCS, the Texas Legislature in 2003 authorized the creation of privately run low-level nuclear waste dumps in West Texas’ Andrews County (just one company applied for this franchise). WCS continues to rely on aggressive lobbying. It informed investors in 2008 that regulators require the company “to obtain and retain numerous operating permits… any of which could be subject to revocation, modification or denial.” 13 Yet this company has encountered few regulatory hurdles that it cannot clear. Harold Simmons ranked as Texas’ eighth-largest contributor in the 2006 election cycle, giving $1.1 million to state political committees and candidates. Only one other individual surpassed the $315,000 that Governor Rick Perry took from Simmons that cycle.14 Simmons and Pickens were major underwriters of the Swiftboat attack ads on 2004 Democratic presidential candidate John Kerry; Simmons spent $2.9 million to fund similar attacks on Barack Obama in the summer of 2008.15
Waste Control Expenditures On Texas Lobbyists
The long-term strategy of WCS, which reported an operating loss of $14 million in 2007, is to “provide ‘one-stop shopping’ for hazardous, low-level and mixed low-level radioactive wastes.”16 Helping expand the waste supply, Texas lawmakers approved a 2007 measure allowing school districts to offer tax abatements to new nuclear reactors.17 Texas accounted for one-fourth of the 31 new nuclear reactors proposed to federal regulators by August 2008.18 In May 2008, Governor Perry’s Texas Commission on Environmental Quality (TCEQ) appointees gave WCS a license to dispose of up to 1.2 million cubic yards of uranium-mining byproduct wastes.19 WCS, which is licensed to store low-level radioactive waste onsite, is pressuring the TCEQ to let it permanently dispose of this waste there.20 Three TCEQ employees recently resigned because they said TCEQ brass treated the WCS license as a done deal. A major concern raised about the WCS facility is that radioactivity could leach into the Ogallala Aquifer, which covers parts of eight states. Company tests also found that 43 people have been exposed to radiation at the plant as a result of malfunctioning ventilators that contaminated the plant’s lunchroom and nearby hallways.21
2. Ideological & Single-Interest Clients
Ideological & Single clients spent up to $49 million on more than 1,500 lobbyists, accounting for 14 percent of all lobby spending. Local government interests dominated this category. Local governments use the lobby to compete against one another for scarce state and federal funds. These lobbyists have swarmed in recent years against legislative efforts to limit the property taxes upon which local governments depend. At the end of the 2007 session, the Texas Municipal League celebrated the demise of various proposals to cap property-tax hikes. In 2008 local governments continue to track four interim legislative committees studying limits on property taxes and appraisals. County governments also are calling for public disclosure of property sales prices, which they argue would result in higher property tax appraisals.
Top Ideological & Single-Interest Clients
Client
Value of Contracts
Value of Contracts
ContractsCity of Austin City of Houston Texans for Lawsuit Reform TX Municipal League Harris Co. Commissioners Court Independent Colleges & Universities of TX Port of Houston Authority American Cancer Society City of Dallas Bexar Metropolitan Water District Lower Colorado River Authority Texans for School Choice Metropolitan Transit Authority of Harris Co. City of San Antonio Cities Aggregation Power Project TX Association of Counties TX Industry Project
The largest non-governmental client in this category was Texans for Lawsuit Reform (TLR), which has used Texas’ largest political committee to shield the legal liabilities of businesses that harm consumers, workers or communities. TLR’s past successes have driven it offshore in the search for a new cause of action. Its 2007 claim to fame was a new law that forces injured dredging workers to sue their employer in the county where the injury occurred or where their employer is based.22 Workers previously filed these cases in their hometowns in the Rio Grande Valley, where TLR believes that Hispanic judges and juries are too sympathetic to injured workers. Promoters of the bill skirted one obvious fact: The dredging industry recruits workers from the depressed border because few others will do such dangerous work for relatively low pay.The Independent Colleges and Universities of Texas (ICUT) seeks increased public funding for students at private schools through the Tuition Equalization Grant Program. The state appropriated $106 million for this program in the 2008-2009 budget, less than ICUT sought.
American Cancer Society lobbyists helped pass a 2007 ballot measure authorizing the state to issue $3 billion in cancer-research bonds. Proposition 15’s success (61 percent of the vote) reflected its lobby pragmatism. It encountered no organized opposition because it proposed massive expenditures to cure cancer. The anti-cancer lobby knew that a proposal to prevent cancer through strict controls on the emissions of known carcinogens, for example, would have unleashed fierce opposition from the state’s petrochemical industry.23 If politics is the art of the possible, the special-interest lobby is there to suppress what’s possible. Speaking of which, the Texas Industry Project is a group of more than 60 shipping, energy and manufacturing companies that Baker Botts organized to promote their mutual interest in weak environmental regulations.Texans for School Choice is a lobby arm of wealthy school-voucher enthusiast James Leininger of San Antonio. During the 2006 election, this group’s political committee spent $155,880, plowing 81 percent of it into the failed GOP House campaigns of George Antuna and Martha Wong.
The legislatively created Bexar Metropolitan Water District is struggling for survival. In 2007 then-House Natural Resources Committee Chair Robert Puente proposed transferring control of BexarMet from its elected board to Bexar County Commissioners.24 Proponents said this would resolve the utility’s chronic mismanagement problems.25 BexarMet defenders countered that Puente ultimately wanted the municipally owned San Antonio Water System (SAWS) to swallow its competitor (SAWS revived this conspiracy theory by making Puente its interim CEO in May 2008).26 Puente’s original bill was blocked by opponents who said that dissolving BexarMet’s board would dilute minority voting rights. As enacted, the bill preserves the board but subjects it to a panel of legislative overseers who can put BexarMet in receivership if it does not pass environmental and financial audits.27
BexarMet Expenditures On Texas Lobbyists
The new law would have put Puente on Bexar Met’s oversight board—if he remained in the House.28 Instead, citing fatigue, Puente announced his retirement from the House in October 2007.29 Exacerbating Puente’s exhaustion was the prospect of a tough Democratic primary in which he would have to explain his support for GOP House Speaker Tom Craddick as well as his cozy relationship with lobby pal Marc Rodriguez.30 In 2006 Puente bought a foreclosed home and quickly flipped it to Rodriguez for a fast profit of at least $24,000.31 The deal looked like a possible payoff for all the times that Puente had pushed legislation sought by Rodriguez’s clients.Some Rodriguez Clients With Legislative Links to Robert Puente
*Rodriguez signed this client the following year in 2004.
Client
Natural Resources Committee (NRC)CL Ranch Testified in NRC for Puente’s SB 3, 4/12/05 City Public Service Beneficiary of Puente’s HB 1292 in 200732 Noble-Kidd Development Testified in NRC for Puente’s HB 4085, 4/18/07 Onion Associates33 Testified in NRC for Puente’s HB 3772, 4/18/07 San Antonio Water System Testified in NRC for Puente’s HB 1292, 3/21/07 TX Water Quality Assn. Testified in NRC for Puente’s SB 1633, 5/21/03* Water Exploration Co. Testified in NRC on Puente’s SB 1570, 6/20/03
BexarMet had its own sleaze. During the 2007 session, Puente got the Bexar County District Attorney to investigate allegations that BexarMet’s public relations contractor, T.J. Connolly, made illegal corporate contributions to BexarMet board candidates.34 Connolly, who participated in BexarMet’s Austin lobby squeeze, did not register as a Texas lobbyist.35 After a grand jury indicted Connolly on political contribution charges in January 2008 prosecutors also secured indictments of BexarMet General Manager Gil Olivares on charges that he sexually harassed some employees and wiretapped others.36 None of this bodes well for the BexarMet’s legislative probation.3. Health Clients
Health industry clients spent up to $43 million on more than 1,000 contracts, accounting for 12 percent of all lobby spending. Much of the health industry—including insurers, hospitals, physicians, dentists and pharmaceutical interests—promoted 2007 measures that expanded the Children’s Health Insurance Program and increased Medicaid reimbursements.37 A federal judge has exerted ongoing pressure on Texas to increase Medicaid spending for children through his oversight of the settlement of a class action lawsuit filed in 1993.38
Top Health Clients
Client
Value of Contracts
Value of Contracts
ContractsTX Medical Association Pharmaceutical Research & Man. of America TX Hospital Association TX Pharmacy Association TX Association for Home Care TX Dental Association TX Association of Health Plans Blue Cross Blue Shield of TX E. TX Medical Center Regional Healthcare System GlaxoSmithKline CVS/Caremark Health Advocate SUNRx Hospital Corporation of America Cancer Therapy & Research Center Aetna, Inc. St. Luke's Episcopal Health System
The Texas Medical Association (TMA) paid 29 lobbyists up to $1.8 million—more than twice what any other Health interest spent. TMA plugged the Cancer Prevention and Research Institute, which will spend $300 million a year on cancer research.39 TMA helped defeat a bill to require physicians to disclose if they have financial stakes in the testing facilities to which they refer patients.40 TMA’s doctor lobby stifled competition, telling its members that it pulled the plug on 88 bills seeking to expand the health practices of non-physicians (much as the Texas Dental Association excised a bill to let dental hygienists administer local anesthetics).41 TMA orthopedists won a recent round of turf footsy in court. In early 2008 Austin appellate judges overturned the State Board of Podiatric Medical Examiners, which had pronounced ankle bones as part of the “foot.”42 Note that even state judges do not escape the lobby’s reach. During their 2006 election campaigns, the two appeals judges who ruled in this case took a total of $8,750 from TMA’s PAC and $3,000 from the Texas Podiatric Medical Association PAC.43The Texas Pharmacy Association celebrated significant increases in the 2007 session on Medicaid reimbursements for generic and name-brand drugs (an industry represented by the Pharmaceutical Research and Manufacturers of America). Pharmacies are clashing with prescription benefits companies such as SUNRx over kickbacks from drug companies, mail-order drugs and pharmacy reimbursements.
The biennial state budget approved in 2007 increased reimbursements five percent for nursing home and in-home care providers (represented by the Texas Association for Home Care). This failed to keep up with a 2007 congressional increase in the minimum wage.44
The Texas Association of Health Plans helped bottle up two bills opposed by health insurers. One promoted the use of out-of-network health providers.45 The other sought to standardize Byzantine contracts between insurers and providers.46 The nauseating intricacies of the health care system spawn for-profit middlemen, such as Pennsylvania-based Health Advocate, which offers to help patients and employers navigate this chaos.
4. Miscellaneous Business Clients
The diverse clients falling into the Miscellaneous Business sector spent up to $37 million, accounting for 11 percent of all lobby spending. Some of the biggest spenders in this category were alcohol and gambling interests. The wholesale alcohol industry made a big play in 2007 to repeal rules that force bars and restaurants to buy alcohol from package liquor stores.47 Package stores retaliated by urging lawmakers to allow manufacturers to sell directly to package stores—thereby bypassing wholesalers.48 Hung up—or over—by this wicked mix of drinks, legislators never uncorked either bill from the House Licensing Committee.
Top Miscellaneous Business Clients
Client
of Contracts
of Contracts
ContractsWholesale Beer Distributors of TX GEO Group, Inc. Licensed Beverage Distributors TX Package Stores Association Aces Wired, Inc. Pearson Education Administaff, Inc. H.E. Butt Grocery Co. TX Association of Manufacturers Amusement & Music Operators of TX Silverleaf Resorts, Inc. Landry’s Restaurants, Inc. TX Retailers Association BG Distribution/Republic Beverage Gulf Greyhound Partners, Ltd. Multimedia Games, Inc.
Gambling interests have unsuccessfully pressed lawmakers for years to expand their industry. A key goal has been to introduce slot-like machines called “video lottery terminals,” such as those produced by Austin-based Multimedia Games. Gulf Greyhound and other race tracks argue that they cannot survive without slots. Houston-based Landry’s Restaurants, which owns Nevada casino interests, has urged its home state to embrace casinos. Meanwhile some Amusement and Music Operators of Texas members have operated illegal slot-like machines called “eight liners.” Aces Wired tried to convince prosecutors that similar machines that it installed in recent years are legal simply because they track winnings on a debit card that can be redeemed for goods from participating retailers.49 Texas Attorney General Greg Abbott disagreed in an opinion issued in early 2007. Abbott then orchestrated raids on Aces facilities in eight cities in May 2008.50Two state contractors in the Miscellaneous sector spent heavily to lobby the state. The Geo Group (formerly Wackenhut Corrections) spent up to $1.1 million on 22 lobbyists in 2007, or 15 times what it spent during the 2005 session.51 In late 2007 the state abruptly revoked Geo Group’s contract for a juvenile detention facility in West Texas after officials belatedly “discovered” squalid conditions there. Nonetheless, the state continued to pay Geo to run nine other facilities in the state.52 Another state contractor, Pearson Education, paid six lobbyists an average of up to $100,000 apiece. In addition to selling textbooks to Texas schools, Pearson won a 2007 contract to administer Texas Medical Board exams.
The Texas Association of Manufacturers is a major defender of the tax changes made in a 2006 special session (taking effect in 2008). Lawmakers in that special session funded a property-tax cut by replacing a loophole-ridden franchise tax with a margins tax on businesses. Lawmakers tweaked this tax change again in the 2007 session.53 Businesses benefiting the most from the changes are capital- and property-intensive enterprises, including manufacturers and the oil and gas industry. To neutralize retailers such as H.E. Butt Grocery, lawmakers also included a one-half percent cut in the tax rate on wholesalers and retailers. Apart from nailing big businesses that had formed limited partnerships as a tax dodge, the new tax fell heaviest on small, competitive businesses with high costs and limited profits such as specialty contractors,54 as well as certain professional partnerships (such as attorneys, architects, doctors and accountants). The failed push by professional firms to squirm out of the tax may help explain why the lobby rankings of these firms soared in 2007 (see “Top 100 Lobby Clients in Texas” at the end of this report). The tax firm Ryan & Co.—which ranked as the No. 282 lobby client in 2005—ranked No. 12 in 2007. And four law firms ranked among Texas’ top 10 lobby clients in the state in 2007—four times the number with that ranking in 2005.
Dallas-based Silverleaf Resorts has a history of infuriating customers. It has spawned class-action lawsuits and hundreds of complaints with the Better Business Bureau and state regulators. Customers have accused Silverleaf of using high-pressure, deceptive sales tactics to sell time shares in low-end, poorly maintained resorts. Silverleaf settled investigations by the state Attorney General and Real Estate Commission in 1997 by agreeing to comply with state real estate laws and improve customer disclosures.55
©Copyright Texans for Public Justice, September 2008
