God, I love ALEC. Just when you think that they've reached the point at which media coverage of their past cluelessness has inoculated them against any further gaffes, they prove just how out of touch they are again. Speaking to a conservative weekly on efforts by activists to get companies to own up on their support for groups supporting anti-social policies, ALEC spokesman Bill Meierling let this one loose:
“Companies are citizens,” Meierling added. “They have real value. And it’s really dangerous for the American people and American discourse to be held hostage to activist groups.”
That's right America, ALEC matches Rmoney's "corporations are people" comment, and raises the stakes with an assertion that they are in fact citizens, presumably with the rights of citizens. Which raises an interesting question. ALEC outright asserts that corporations are citizens, mentioning nothing about where they are headquartered, and to whom they pay taxes. If corporations are in fact citizens, shouldn't they lose the rights of citizenship when the renounce the tax obligations which come attendant to this through
tax inversion?
Inverted Welfare Queens
Earlier this year, Bloomberg released a list of companies who have undergone corporate inversion. Matching this list against current ALEC funders reveals that at least two have undergone corporate inversion.
Alkermes (formerly based near Boston) and Endo (formerly based near Philadelphia) are pharmaceutical companies who decided to purchase smaller Irish firms in order to skip out on taxes owed in the United States. What makes this blatant abdication of responsibility all the more galling is that a number of these firms are still snagging federal contracts.
A recent report from the Congressional Research Service found that 47 U.S. companies have reincorporated overseas since 2003, nearly double the amount that did in the 20 years before. At least a dozen of the companies that have inverted in the past four years -- including Stratasys and Alkermes -- have won government contracts during that time.
"The federal government has been subsidizing this bad behavior by continuing to reward inverted companies with lucrative federal contracts," [Rep. Rosa] DeLauro [D-CT] said. "These companies take advantage of our education system, our research and development incentives, our skilled workforce and our infrastructure, all supported by U.S. taxpayers, to build their businesses. But when the tax bill comes due, they hide overseas."
For all the disparagement of ordinary folk who happen to have fallen on hard times as "welfare queens," these companies are the ones with the real entitlement issues. They believe that they can build their wealth based on the economic and social infrastructure paid for by the American people, and then do a dine and dash when the bill comes.
Horrible, but what has this got to do with ALEC registering as a foreign agent?
Not So Secret Agent Men
As members of ALEC, Alkermes and Endo are able to influence US legislation, even though they have effectively renounced their citizenship in this country. The problem is that in facilitating this influence, ALEC falls afoul of the 1939 Foreign Agents Registration Act (FARA) which requires:
... persons acting as agents of foreign principals in a political or quasi-political capacity to make periodic public disclosure of their relationship with the foreign principal, as well as activities, receipts and disbursements in support of those activities. Disclosure of the required information facilitates evaluation by the government and the American people of the statements and activities of such persons in light of their function as foreign agents.
To be clear, FARA was enacted in the late 1930s in response to the efforts of German propaganda agents in the United States. This does not mean that FARA only covers action on behalf of other governments, it covers
any attempted foreign influence in which the person paying the bills is a
foreign principal:
The term also includes foreign political parties, a person or organization outside the United States, except U.S. citizens, and any entity organized under the laws of a foreign country or having its principal place of business in a foreign country.
In 1995, activities on behalf of foreign principals disclosed under ordinary registration as a lobbyist were excluded from the purview of FARA. The problem with ALEC is that is ALEC has, in general, refused to register as a lobbyist, because this would mean
losing charity status. Losing its status as a charity would mean not only that corporate donations to ALEC would no longer be tax deductible, but also that ALEC would be compelled to pay tax on its income. All the same, the simple act of registering as a lobbyist would provide ALEC cover from FARA. With the exception of an embarrassing
incident in North Dakota in the 2000s, and an even older one in New Hampshire in the 1980s, they have failed to do so. As such, this business with Alkermes and Endo becomes sketchy.
What went down with ALEC's Oil Sands Academy involving TransCanada and the government of the Canadian province of Alberta?
To ensure that the energy market remains dominated by its fossil fuel company funders, ALEC promotes an array of "model" bills that undermine efforts to protect the environment. One such bill opposes state low-carbon fuel standards, which otherwise could limit the sale of dirty Canadian tar sands. ALEC receives funding from the Canadian company TransCanada, which is aiming to build the controversial Keystone XL pipeline. This ALEC bill was introduced in twelve states in the 2013 and 2014 sessions. According to an e-mail obtained by this reporter, after an ALEC-organized all-expenses paid trip to Alberta in 2012, sponsored byTransCanada, ALEC wrote to the legislators on the trip reminding them of what each lobbyist had paid for on the trip and suggesting they send them "thank you notes."
Now this Oil Sands Academy. This is positively scandalous, and almost certainly a violation of FARA.
The Canadian Connection
In their 2013 Annual Meeting Policy Report ALEC International Relations Tack Force Staff Karla Jones notes:
Private sector prospects and members have begun to understand the tremendous influence that our legislator members have on national and international policy in spite of having no official jurisdiction on this policy.
...
Last October we conducted an Oil Sands Academy in Alberta, Canada to explore the Keystone XL pipeline issue and Canada's oil sands as an inexpensive and secure energy source that will result in American jobs. Nine legislators from seven states participated, and the sponsors have already expressed an interest in sponsoring a similar academy in late September 2013.
So who exactly are these sponsors? Emails
obtained by the Center for Media and Democracy reveal more.
John Adams, Ohio House GOP whip, was sufficiently concerned about the legality of of him participating in the Oil Sands Academy that he sends an email to his legislative aide's Gmail account, asking him to contact Mike Lenzo, the Ohio House GOP counsel. We don't have the response from Lenzo to Rep. Adam's question. We do have about who is funding the trip, and for what purpose.
On the timing of the trip, Jones notes that legislators need to be in Calgary by October 19th, because this is what works for the government of Alberta and the local oil sands producers. Who's paying?
Dinner on the first night was at the up-market Ruth's Chris Steakhouse in downtown Calgary, paid for by American Fuel and Petrochemical Manufacturers (AFPM). The dinner included a presentation to the captive audience of lawmakers from AFPM about Low-Carbon Fuel Standards (LCFS), a mechanism designed to reduce the carbon intensity of transportation fuels. ...
On Wednesday morning, after breakfast at the hotel, legislators were taken to the airport where a private charted plane was waiting to fly them around a number of different tar sands operations. Accompanying the legislators and ALEC staffer Karla Jones, were lobbyists from AFPM, TransCanada, Devon Energy, CEA, Shell Oil, and the Government of Alberta. The flight was chartered by the Alberta Government, at a cost of $22,000, with the costs split evenly between them and another unknown entity.
During the day, legislators toured facilities owned by Shell -- which also provided lunch -- and Devon Energy, where they viewed the massive "Jackfish" tar sands projects. ...
Dinner on Wednesday night was served at the Petroleum Club, sponsored by the Canadian Association of Petroleum Producers.
Upon returning from their trip, some representatives
filed disclosure documents:
Ohio Rep. Clifford Rosenberger reported $1466.67 in “travel” payments or expenses from the Alberta Government, and $1574.40 from ALEC; “meals, food and beverages” from ALEC are also reported
Ohio Rep. John Adams reported $1466.67 in “travel” payments or expenses from the Alberta Government, and $1395.82 from ALEC; “meals, food and beverages” from ALEC are also reported.
Nebraska Sen. Jim Smith does not list an amount from the Alberta Government for the travel expenses paid for the chartered flight within Canada, or any amount that may have been paid by ALEC.
Note that in these disclosures, the Ohio legislators record ALEC as the source of gifts in reality paid for by foreign principals. In short, they acted as the agent of a foreign principal, thereby concealing the true source of efforts intended to influence US law. And, guess what.
It worked.
In the spring of 2013, model resolutions on Keystone XL, mirroring an ALEC model bill, began popping up around the country.
ALEC International Relations staffer Karla Jones went so far pushing ALEC legislative members
to submit comments to the US State Department in support of the pipeline.
This is not a dead matter. The relationship between ALEC and foreign principals in Canada runs deep:
Sandi Walker, an Alberta government spokeswoman from the provincial department of international and intergovernmental relations, said it hosted 54 trips to the oilsands in 2012, including the fall visit co-ordinated by ALEC as part of ongoing efforts to inform legislators and officials about the industry with “fact-based information” to allow key decision-makers to make informed decisions about energy. Each trip typically cost about $3,000, she said.
She said an ALEC representative had contacted Alberta to set up the meeting, explaining that the province maintains relations with a variety of stakeholders and organizations in the U.S.
Conclusion
ALEC wants to have it both ways. If registered as a lobbyist, the actions of ALEC as an agent foreign principals would be shielded from the purview of FARA. The problem is that ALEC refuses to register as a lobbyist, and consequently falls afoul of the requirement to register as a foreign agent.
It turns out this is a big deal.
Any person who willfully violates any provisions of this Act or any regulations thereunder, or in any registration statement or supplement thereto or in any other documents filed with or furnished to the Attorney General under the provisions of this Act willfully makes a false statement of a material fact or willfully omits any material fact required to be stated therein or willfully omits a material fact or a copy of a material document necessary to make the statements therein and the copies of documents furnished therewith not misleading, shall, upon conviction thereof, be punished by a fine of not more than $10,000 or by imprisonment for not more than five years. For some offenses the punishment shall be a fine of not more than $5,000 or imprisonment for not more than six months, or both.
I don't honestly think that sending Karla Jones, or other ALEC staffers is the answer.
I do think that if ALEC is going to proactively seek out foreign principals to represent in the United States, they need to register as lobbyists, and respect the law on these matters. This means losing their charity status, but I'd think that given the choice between ending up in the clink, and raising a bit of cash, that any reasonable person would conclude that registering as a lobbyist is just the right thing to do.