Introduction

History

Money

Federal

Lobbyist or not?

Sources

ISSUE

ALEC (Who is ALEC?)

Issue Sections

	Understanding The Issue
	Analysis and Perspectives
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Who is ALEC?

You might not have heard of the American Legislative Exchange Council, but chances are you've been affected by its work.

The organization (ALEC for short) drafts "model legislation" used as the basis for often-controversial state laws, including an Arizona bill requiring police to lock up anyone who can't prove they entered the country legally.

ALEC worked with the National Rifle Association (NRA) to push Florida's 2005 stand-your-ground law, made famous by the killing of Trayvon Martin in February 2012, into 18 other states. It also pushed for voter ID laws, which studies have found disenfranchise the poor, minorities and the elderly.

The organization calls itself "a nonpartisan public-private partnership of America's state legislators, members of the private sector and the general public." More than 2,000 state lawmakers are members. Ninety-six of its alumni now serve in Congress. Though it claims to be nonpartisan, 23 of the 24 legislators on its board of directors are Republican, as are all but one of its state leaders.

The vast majority of ALEC's money comes from corporations. And much of its model legislation is written for the benefit of those corporations - regardless of how it would affect the vast majority of Americans. The legislation - sometimes enacted nearly word for word - covers nearly every topic imaginable, from worker and consumer rights to the environment, education and prisons - "reshaping our democracy, state by state," as Lisa Graves, executive director of the Center for Media and Democracy, said.

The center obtained more than 800 of the group's previously secret model bills and resolutions and published them as ALEC Exposed.

Where did ALEC come from?

In September 1973, a small group gathered in Chicago to launch a bold new project to take their agenda to the state legislatures.

They included Paul Weyrich, co-founder of conservative think tanks the Heritage Foundation and the Free Congress Foundation. He was one of the architects of the Religious Right movement in the late 1970s, co-founding the Moral Majority with Jerry Falwell.

Also at the meeting were Illinois Rep. Henry Hyde, a former press aide for Richard Nixon who would be elected to the U.S. House of Representatives the following year, and Louis Barnett, whose resume includes stints as political director of the American Conservative Union, the oldest conservative lobbying group in the country, and as national political director of President Ronald Reagan?s political action committee, Citizens for the Republic.

The group grew in power and influence under Reagan's presidency. When Reagan formed a national task force on federalism in 1981, it included ALEC National Chairman Tom Stivers of Idaho. The task force relied heavily on ALEC members for expert testimony, and ALEC created more task forces that worked directly with the administration to develop policies.

In 1981, ALEC published and distributed 10,000 copies of Reagan and the States, which described how to decentralize government from the federal to the state level. Two years later, it distributed a two-part report on education that, as ALEC puts it, "laid the blame for the nation's educational decline squarely where it belonged - on centralization, declining values, and an increasingly liberal social agenda that had pervaded schools since the 1960s." Its solutions included a voucher system, merit pay for teachers and higher academic and behavioral standards for students.

By the late 1980s, ALEC had begun to push model bills and actively solicit more input from the private sector.

Corporations pay for ALEC

Charles and David Koch are the sons of the late Fred Koch, founder of Koch Industries - the second-largest privately held company in the United States. They have contributed more than $196 million between 1998 and 2008 to dozens of libertarian, conservative and free-market organizations, the New Yorker reported in 2010. Koch Industries also spent more than $50 million on lobbying and gave $8 million to political campaigns, 80 percent of them for Republican candidates.

A Koch Industries representative has served on the ALEC private enterprise board (recently renamed the private enterprise advisory council) for nearly 20 years.

"Of all the Kochs' investments in right-wing organizations, ALEC provides some of the best returns: it gives the Kochs a way to make their brand of free-market fundamentalism legally binding," wrote Graves.

Graves estimates the Kochs have given ALEC more than $1 million, although nobody outside the organization knows for sure. Unlike registered lobbyists or political action committees, ALEC is not required to disclose its donors publicly.

The group's private enterprise council includes...

Its chairman is W. Preston Baldwin, president and CEO of lobbying firm Centerpoint360.

According to the group's latest IRS Form 990 filing, it took in $9.2 million in 2011. Of that, less than $100,000 (about 1 percent) came from legislators' membership dues. The rest came from corporations, foundations and other sources.

ALEC charges state legislators $100 for a two-year membership. Dues for private sector members are much higher - running from $7,000 to $25,000.

Others, like the Kochs, have paid far more. Big donors include Exxon Mobil and the Allegheny Foundation, a nonprofit controlled by right-wing billionaire Richard Scaife.

Federal influence

While ALEC primarily seeks to influence state legislation, its ambitions don't end there.

The group has its eye on the U.S. Constitution - its Article V Handbook outlines the process for states to propose a constitutional amendment to balance the federal budget.

ALEC also has developed a "Federal Relations" program to provide its alumni in Congress - 87 in the House of Representatives and nine in the Senate - "with information and testimonial support from the states on pressing policy matters."

Reynolds American, one of the biggest tobacco companies in the world, was corporate co-chair of the program in 2011, according to the Center for Media and Democracy.

One of ALEC's federal alumni was Rep. John McHugh of New York, who served in the House of Representatives from 1993 to 2010 after eight years in the state Senate. He led an 11-year charge to "reform" the U.S. Postal Service (USPS), culminating in the Postal Accountability and Enhancement Act passed by Congress in 2006.

At the time, the postal service was profitable, despite the proliferation of email and other electronic substitutes for physical mail. The law called for the postal service to pre-fund health benefits for employees who would retire during the next 75 years. And the organization only had 10 years to do it - costing it about $5.5 billion a year until 2016. No other government agency or private company has to bear this kind of financial burden; it has accounted for about 95 percent of the postal service's losses.

Critics say it was all part of a push by ALEC and its corporate backers to privatize the postal service by forcing its financial collapse. Conservative groups such as the Cato Institute and the National Taxpayers Union have called for its privatization for years.

Privatization of the USPS would end its monopoly on most paper mail delivery, creating a boon for private competitors like FedEx and UPS - longtime members of ALEC. UPS sits on the group's private enterprise advisory council.

Note: Lobby99 has covered isues regarding the United States Postal Service. Read our discussion here.

Is ALEC a lobbying organization?

Despite its massive influence on state governance, ALEC is not registered as a lobbyist. Instead, it is incorporated as a 501(c)3 charity (the type of charity that exists solely to help people). All corporate and individual donations are tax-deductible.

Because ALEC is not an official lobbyist, it can pay for legislators to travel to out-of-state resorts to be wined and dined, meet with corporate representatives and take part in task force meetings behind closed doors. In some cases, legislators have used taxpayer money to attend such junkets.

In 2011, ALEC received more than $1.2 million in "scholarship" funds from organizations and individuals to reimburse lawmakers for travel expenses to ALEC meetings, according to its IRS return.

An open records request by the Center for Media and Democracy unearthed a list of about a dozen corporations who donated to the Wisconsin scholarship fund - an apparent violation of lobbying rules that prohibit legislators from accepting anything of value from companies that employ lobbyists in the state.

The IRS says no organization qualifies for 501(c)3 tax-exempt status if a substantial part of its activities involves influencing legislation: "An organization will be regarded as attempting to influence legislation if it contacts, or urges the public to contact, members or employees of a legislative body for the purpose of proposing, supporting, or opposing legislation, or if the organization advocates the adoption or rejection of legislation."

However, organizations may "conduct educational meetings, prepare and distribute educational materials, or otherwise consider public policy issues in an educational manner without jeopardizing their tax-exempt status."

Watchdog group Common Cause in April filed a complaint with the IRS, accusing ALEC of violating its tax-exempt status by lobbying state legislators.

In December, Bloomberg News reported that ALEC was considering setting up a separate 501(c)4 nonprofit - which can do an unlimited amount of lobbying - in anticipation of a possible IRS audit.

Democratic lawmakers in several states have introduced bills to make ALEC register as a lobbying group, which would restrict its gifts to legislators and force public disclosure of its funding sources. To date, none have made it into law. Another such measure was introduced in Minnesota in January.

Where does our information come from?

Click here to read the Center for Media and Democracy report on ALEC's activity in Wisconsin.

The Nation magazine has written a series of articles about ALEC and the way it operates. You can read the articles here.

The Center for Media and Democracy has put together a summary of ALEC's model legislation.

You can learn more about the Koch brothers in this New Yorker article.

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