News & Features » Cover Story

Party Favors

A behind-the-scenes army fights for control of Virginia's money and influence. How Richmond's powerful lobbying industry plays the system.

by

1 comment
cover_200_0.jpg

“Welcome General Assembly Members” a sign declares at the entrance to Morton's Steakhouse, the upscale Windy City-style eatery in Shockoe Slip that serves up $49 slabs of prime beef and canned Frank Sinatra.

It's the first day of the 2010 General Assembly session but it's a slow night at Morton's. Most legislators are up the hill at the Capitol listening to Gov. Timothy Kaine's farewell address. Yet the empty tables presage something else: a shift in how lobbying and advocacy work in Richmond.

A huge pile of complex issues faces lawmakers who must solve problems in a 60-day annual session. They no longer have time for the kinds of lengthy, alcohol-fueled dinners and all-expense-paid jaunts to exotic spots that were in vogue 30 years ago.

Back then, lobbyists regularly put together exclusive excursions to such places as Bermuda, the Bahamas or Pinehurst, a tony North Carolina golf resort preferred by such bygone and powerful legislators as former Speaker of the House A.L. Philpott. In more leisurely times, lobbyists used to hang out at Chicken's, a former snack bar in the State Capitol, and peddle influence over steaming bowls of Brunswick stew and freshly squeezed limeade.

But if you think lobbying is going the way of Sinatra, think twice. Similar junkets still take place, notably to hunting reserves. Virginia is one of 24 states with no limits on gifts or donations to lawmakers. Nonelected state officials, such as cabinet members and high-ranking staffers, apparently are free to lobby their old offices the moment they leave office. Spokesmen from the Secretary of the Commonwealth and the Attorney General's offices couldn't say what the “sunset” rules are, nor is there an independent commission to review potential conflicts. President Barack Obama, by contrast, has set a two-year ban on former federal officials from lobbying their old offices.

 

lobby-day3.jpg

Lobbyists descend on Capital Square Jan. 18 for what many groups traditionally dub “lobby day,” the unofficial kickoff to the Virginia General Assembly session.

This kind of laissez-faire attitude can lead to cases in which average people can be hurt. A classic case, according to Irene Leech, a Virginia Tech professor who heads the Virginia Citizens Consumer Council, was how Dominion Resources shepherded the reregulation of electricity rates in 2007. The General Assembly passed a law taking away some of the state's regulatory power over rate-setting. The new law, she says, has let American Electric Power, which serves western Virginia, jack up rates that are difficult to pay in recessionary times. “Citizens are really hurting from this,” she says.

All the while, the lobbying trade has grown more sophisticated and Richmond has emerged as a major center for it. The capital city's lobbying and legal clout is disproportionately large for its population size compared with other state capitals such as Raleigh, N.C., or Annapolis, Md.

Richmond's influence is spreading far beyond the borders of the Old Dominion. Two of the city's skyscrapers bear the names of two of the biggest law and lobbying shops — Williams Mullen and McGuireWoods. The firms' reach stretches far beyond Richmond, into Washington and in various other state capitals.

Another downtown tower houses electric utility Dominion, which has one of the most advanced corporate advocacy operations around. It oversees about 30 lobbyists in not only Virginia but also other states. Experts regard Dominion's deft handling of a bill to reregulate electrical power in Virginia three years ago as a textbook case of effective lobbying.

Other firms have been built on politics. “You've got a number of interesting nonlaw firms that have grown up around political figures,” says William G. Thomas, a 70-year-old partner of Richmond law firm Reed Smith who is regarded as the godfather of Virginia lobbying and is referred to as “senator” by some lawmakers. Such firms include Vectre Corp., Capital Strategies, Kemper Consulting and Benedetti and Farris, which specializes in using data mining and other sophisticated technical means to raise large contributions from wealthy, mostly Republican, individuals.

Worlds collide, intertwine and blur between the lobbyists and those making laws. In Richmond there's a constantly spinning revolving door. Reading the list of lobbyists compiled by the Virginia Public Access Project, which tracks political spending and lobbyist registrations, is like reading an out-of-date state government phone book.

As the governorship of Republican Bob McDonnell gains steam, the tectonic plates are once again shifting along lobbyist-thick Cary and Main streets downtown. Eric J. Finkbeiner, once a power broker for former Gov. George Allen, is leaving McGuireWoods to be McDonnell's policy chief. Former Virginia Beach Delegate Terri Suit is leaving Williams Mullen to become the new governor's homeland security maven. Former Republican attorney general and unsuccessful gubernatorial candidate Jerry Kilgore is leaving Williams Mullen for McGuireWoods as is Christopher R. Nolen, who worked for Kilgore in the attorney general's office. Preston Bryant, Kaine's secretary of natural resources, also is joining McGuireWoods. Meanwhile, outgoing Attorney General Bill Mims will move to giant law firm Hunton and Williams.


 

DSC_9533.jpg

Former attorney general and gubernatorial candidate Jerry Kilgore, who recently moved his lobbying practice to McGuireWoods, greets Gov. Bob McDonnell at his inaugural ball Saturday night

SUCH MOVES in and out of six-figure jobs may be great for the career paths of a relatively small group of savvy politicians sworn to protect the public interest. But is it really good for the public?

Virginia has chosen a clear but controversial path in regards to lobbying. And lobbyists say it works well. The system involves unlimited spending and contributions but strict disclosure requirements. The idea is that pretty much anything goes when it comes to contributions — as long as it's reported publicly, precisely, quickly and in full. Lobbyists say that other states that have imposed spending limits, such as New Jersey and Illinois, tend to produce a climate in which ways are found to get around those limits, leading to corruption.

Lobbyists like to point out that indictments and convictions of Virginia politicians are rare. The Virginia Public Access Project tracks expenditures aggressively since its inception in 1997, and its user-friendly database is held up as a national example. And there are some limits on revolving-door situations, such as a rule that outgoing politicians can't lobby their former positions for one year after they leave.

Critics, however, say that Virginia's lobbying system shortchanges average people. True, they may be able to look up every donation, hunting trip and dinner at such favored lobbyist watering holes as Morton's, Capital Ale House or Fleming's. But can they muster the same clout as the deep-pocketed clients of the lobbyists — the various car-dealer associations, hospital groups, big companies, unions, financial groups and real estate organizations?

“It's my feeling that average citizens feel disconnected from the General Assembly and political process,” says Stewart Schwartz, director of the Coalition for Smarter Growth, which encourages “smart growth” land-use development in Virginia and the Washington area. “The perception is that they can't have that much influence as the corporate interests have with multiple lobbyists in there day in and day out.”

In another example, Leech points to Delegate Terry Kilgore, R-Scott County, and the brother of Jerry Kilgore. Delegate Kilgore is backing a bill pushed by electric cooperatives that would allow the use of prepaid electric meters, which would be a customer choice. But Leech worries that the bill would be one-sided toward the power companies, providing few alternatives for low-income families who might not be able to prepay because of weather or an emergency. “Their power would just be shut off,” Leech says.

Virginia may seek a worthy goal in being a business-friendly state, says Lisa Guthrie, executive director of the Virginia League of Conservation Voters. “However, Virginia's loose system of campaign finance and conflict of interest laws are tilted towards the deep pockets of large corporate interests and monopolistic utilities,” she says. Her group tries to “level the playing field and elevate citizen priorities in the decision-making process,” Guthrie says.

Disclosure may sound good, but there are dangers when it's linked to political fundraising, says Mary Boyle, a Washington spokeswoman for Common Cause, which has no office in Virginia. “It's certainly true that there's a particular disadvantage to putting lobbying and political campaign contributions together,” she says. “It's a very proven way to buy access to lawmakers and that's something the average public doesn't get.”

Indeed, several state lawmakers, such as House Speaker William Howell who was contacted for this story, declined to talk — saying they were too busy.


WHILE THE General Assembly gears up and McDonnell takes office, one top lobby shop is emerging as the go-to center for the new Republican era: McGuireWoods Consulting.

Sitting in a sofa in his corner office overlooking the James River, managing director Frank Atkinson emphasizes that his firm is distinctly bipartisan, but “we are pleased that a number of us have had the opportunity to work with Bob McDonnell.” Some such links go back to the days of former Gov. George Allen in the 1990s, when McDonnell was a two-term delegate but was picked to work on such key Republican objectives as welfare reform.

If any firm knows Virginia politics, it's the venerable McGuireWoods. Its former partners have included former Gov. John Stewart Battle (1950 to 1954), first elected to the House of Delegates in 1929, and former Gov. John Dalton (1978 to 1982). Although the firm's bipartisan, it includes a number of former officials such as Atkinson, a University of Virginia Law School graduate who served in the Republican Allen administration.

The consulting arm is gearing up to help its more than 40 clients for what political observers say will be a gloomy General Assembly session. Lingering are such issues as a $4 billion budget gap with related cuts and layoffs in education, local government and Medicaid. Another bleak issue is the floundering, revenue-short transportation system that never got past a deadlock between Democratic Gov. Tim Kaine and a Republican-dominated legislature.

Other matters include business owners possibly losing a “dealer discount,” in which store owners are compensated for handing sales taxes for the state. Another is the possible privatization of Alcoholic Beverage Control stores, a McDonnell idea to raise money that probably will require a special session of the General Assembly. A dark horse concept being floated is to end the 6-percent corporate income tax as an attempt to create jobs. The plan is being pushed by Richmond hedge fund manager Bob Marcellus and legislators such as Republican Sen. Ryan T. McDougle of Hanover. McDonnell hasn't signed onto it and insiders say it's a long shot. McDonnell's idea of raising money by placing tolls on the southbound entrances to Interstates 85 and 95 faces a number of legal obstacles.

Atkinson says one of the key roles as a lobbying firm is researching and providing factual information for its clients. Glad-handing and back-patting isn't as critical to overwrought legislators as helping with straight data that helps them draft laws and develop policy, he says.

One example is Virginia's public-private partnership laws, which McGuireWoods helped develop in the mid-1990s. Atkinson says that two such laws are examples for other states and were developed with help from Henrico Sen. Walter Stosch, who could not be reached for comment. The laws, which help tap private capital for public works projects, led to building state Route 288 that connects Interstates 95 and 64 through Chesterfield County and helped raise funds to renovate the State Capitol.

McGuireWoods also helped land two new corporate headquarters in the state: Hilton Hotels Corp., worth $17 million and 300 jobs, and defense contractor SAIC with $25 million and 1,200 jobs over three years. Both are moving to McLean from California.

McGuireWoods Consulting is expanding beyond its traditional Virginia and North Carolina base, adding offices in Columbia, S.C., Springfield, Ill., and Atlanta. In doing so, Atkinson says, it's evolving a “national practice” that aims to link state government officials and legislators around issues of mutual interest.

The growing practice is what drew former Attorney General Kilgore from Williams Mullen, which he joined in 2005 after losing a gubernatorial battle to Kaine. “I'll be representing more clients around the country on more multistate issues,” Kilgore says. “We'll get several attorneys general to target an issue.”

Kilgore denies rumors that his departure from Williams Mullen was because he was a Republican aiming to help McDonnell, the first GOP governor in almost a decade. “I left Williams Mullen because McGuireWoods has a bigger national practice,” he says. That effort is bipartisan and Kilgore says he'll work closely with another new recruit to McGuireWoods, Jim Hodges, a Democrat who served as South Carolina's governor from 1999 to 2003.

Asked for comment about the defection of such big names as Kilgore, Nolen and Suit, a Williams Mullen spokesman declines comment. “We are in a state of disarray around here,” he says.

As for what national issues he would be involved with, Kilgore couldn't say, but perhaps health-care reform. The Washington Post recently reported that conservative state officials are banding together to fight Obama's health reform efforts. Former Attorney General Bill Mims, for example, signed a letter calling for states to pass laws that oppose provisions in Democratic legislation that require all U.S. citizens to buy health-care plans. “I'm not involved with that,” Kilgore says, “but that's the idea of what we'll be doing.”


 

DSC_7650.jpg

H. Benson Dendy III, president of Vectre Corp., entered politics at age 13 and solidified his reputation as a sharp-as-a-tack Democratic lobbyist while working for megadeveloper John T. “Til” Hazel in the 1980s

THE MCGUIREWOODS initiative isn't the first to link state lobbyists to national causes. Another effort called the Advocacy Group has helped lobbyists find lobbying help in all 50 state capitals for about two decades.

Richmond's representative on the Advocacy Group is H. Benson Dendy III, president of a small, five-person lobbying shop called Vectre Corp. in the BB&T building downtown. In Richmond's lobbying community, Dendy is regarded as a bit of a character. Seen regularly around the General Assembly building, he has a moon face and large, round glasses. Growing up in North Carolina and Tennessee before settling in Richmond as a child, Dendy speaks with a distinctive Southern cadence.

Dendy is regarded as a highly competent operative who got into big-time politics at the tender age of 13. While still at Tuckahoe Middle School, Dendy, now 53, launched a political career as a page in the legislature and then worked for Democratic Delegate George E. Allen Jr. At 15, Dendy was running a political campaign, and while working 70 hours a week in politics he still managed to win a Phi Beta Kappa key as a student at the University of Richmond. “My grades were better because I had to be more organized,” he says.

Stints with the Democratic Party led to gigs with Gov. Chuck Robb. Dendy became associated with Hazel and Thomas, a law firm run by John T. “Til” Hazel, a mega-developer who put together Tysons Corner in Northern Virginia, and William G. Thomas, a polished lobbyist. Following Virginia's bipartisan tradition, Thomas says, “Til worked the Republican side and I worked the Democratic side of the aisle.”

Following the trend of splitting lobbying into nonlawyer boutique firms, Hazel and Thomas set up Dendy as head of Vectre in 1989. Within three years, Dendy had attracted enough attention to be the topic of a Style Weekly cover story that he still has on his desk.

Today his firm represents such clients as hospital corporation Sentara and software giant Oracle and TransUrban, an Australian company that operates the Pocahontas Parkway. As the issues grow more complicated, legislators are more pressed to get things done in short, two-month-long sessions.

“Younger [legislators] with families don't have time to go out to dinner,” Dendy says. “They'd rather that you go to their office and help them with information. We provide information. That's what gives us credibility with legislators.”

“In the general public,” Dendy says, “there is a perception that lobbying is only one side, but in reality, on almost every bill, there are different views.”

“The lawmakers also don't want that much face time. They're into Tweet and Twitter and would often rather text than meet with you,” Dendy says.


IF DENDY represents the small shop, then Dominion is the corporate behemoth when it comes to lobbying. The Richmond-based utility serves most of Virginia with electric power along with parts of North Carolina. It owns nuclear power stations in Wisconsin and Connecticut as well as Virginia, and has natural gas interests in West Virginia, Pennsylvania and other states.

Dominion fought back environmental opposition to a coal-burning electricity plant in Wise County, which is halfway through its construction phase. The company's keenly interested in developing new windmill farms off the Eastern Shore and perhaps building a new nuclear unit at North Anna.

Virginia is the core of Dominion's existence and the Virginia Public Access Project (vpap.org) lists it as the largest corporate giver in the state, doling out $782,904 to state races in the past year. Dominion also has a strong presence in philanthropy, giving away hundreds of thousands of dollars for schools, concerts and civic groups.

Its predecessor firm, Virginia Electric and Power Co., had been a traditional utility more concerned with getting the rates it wanted from the State Corporation Commission than its public image. That changed around 1990 when former chief executives William Berry and Thomas Capps refocused the company to be far more community-oriented, says Eva Teig Hardy, who headed Dominion's lobbying arm until her retirement two years ago.

Hardy came to Dominion in 1990 after serving in Gov. Gerald Baliles' administration and had been in state economic development and with the city of Portsmouth. She helped organize Dominion's wholesale transformation into a company that reached out to the public, upgraded its media representatives and turned lobbying into a smooth and well-funded machine.

“In 1990, the number of lobbyists was much smaller than it is today and today it is a lot more complicated,” she says. From the 1990s through the next decade, Dominion expanded into such states as Pennsylvania, Ohio, Louisiana and New York, among others, and along the way added to its roster of registered lobbyists in various state capitals.

Hardy's former section of the power company bankrolls politicians and deals with environmental issues, but a separate unit handles appeals for electricity rate changes before regulators such as the SCC.

 

Eva-Hardy001.jpg

The grande dame of Virginia lobbyists, Eva Teig Hardy, led Dominion Resources' powerful contingent of influence peddlers at the statehouse for years. Today, the public utility employs 30 lobbyists.

Dominion's strategy is to engage rather than confront. Regarding political money, the plan is to give to both parties and give lots. McDonnell and his Democratic opponent, Creigh Deeds, both received $47,500 in last year's campaign. Another money spigot comes from Dominion employees. “They are encouraged to give money to any candidate of their choice,” says Bob Blue, Hardy's successor. Management is not meddlesome in the process, he says. Dominion's political action committees cannot include management-level officials of vice president or higher.

Yet top management can give whatever it wants to whomever it wants. Dominion Chief Executive Tom Farrell, for example, grew up with McDonnell in Alexandria and rode to school with him every day. Farrell contributed generously to McDonnell's campaign from his own pocket and served as his transition chief.

If ever Dominion's new focus on image and influence paid off, it was in 2007 when it was clear than an experiment to deregulate electricity over time was a failure. Deregulation took off in the late 1990s with the idea that it would generate competition for electricity supply that would lower rates in the state and nationally. But states such as California and Maryland saw their rates rise exponentially while companies such as Enron, which banked on it, ran into huge trouble.

Dominion marshaled its forces to rewrite regulation laws once more with the General Assembly and pulled off a complex bill in a matter of months. But its clout left consumer advocates and environmentalists fuming.

“Dominion was able to put one, sometimes two, lobbyists on each member of the General Assembly,” says Guthrie of the League of Conservation Voters. “How can you match that?”


THE NEWEST trend in advocacy reflects technology and, of course, money. One such firm is Benedetti and Farris, a small company that raises money from high-worth individuals and puts together events such as McDonnell's inaugural festivities in 2006, and more recently Attorney General Ken Cuccinelli's inauguration party.
 
On Jan. 15, cadets wearing military uniforms and tan-gray berets from Benedictine High School guided guests into the Virginia Museum of Arts for an inauguration party for Cuccinelli, himself a devout Catholic and staunch social conservative. “They asked for volunteers in theology class,” one student said.  Inside, men in suits and women in cocktail dresses sipped Bombay gin or Virginia wine while a jazz quartet played. Some pass abstract art gems collected by Sidney and Frances Lewis. Guests could have their pictures taken against a backdrop celebrating the new attorney general.

Putting together such festivities is a specialty of Benedetti and Farris. Tom Benedetti says that he and his partner, Abbey Farris Rodgers, use sophisticated data-mining and personal contacts to draw in political contributions from high net-worth individuals to Republican causes. “We don't do mass mailings,” says Benedetti, who's worked with former Gov. Allen and the Republican National Committee.

“The complete openness of the giving system through VPAP allows better governance,” says Benedetti, who says he's studying how the Obama campaign pioneered the use of social media such as Twitter and Facebook to raise money. “They were extremely effective,” he says.

Money may be flowing through newer and faster sources, but questions remain about whether Virginia's celebrated public disclosure system really protects the public from undue influence by paid lobbyists.

Average citizens may be free to look up Susan Q. Legislator's latest dinner out, but the proof of influence is who gets to sway what legislator or regulator on what issue. Virginia relies so much on public disclosure that there's an assumption that no independent commission or other review is necessary. The lack of high-profile corruption cases seems to vindicate it.

As activists such as Guthrie point out, lobbyist pros may be growing sleeker and more sophisticated and get a handsome price for it. That's why so many public servants stream into lobby shops after their terms end. And while the revolving door swings and the pros get richer, it's another matter how well the public is served or if average citizens wield much influence.

Corrections: Dominion Resources employs 30 lobbyists in Virginia and other states. In the print version of this story, Style incorrectly described the size of Dominion's lobbying operation. Also, Style misidentified the Virginia Public Access Project. We regret the errors.

 

Comments

Showing 1-1 of 1

 

Add a comment