Posts Tagged ‘mda@stateside.com’

Defending Your Government Affairs Program from Shareholder Petitions

October 11, 2012

By Mark Anderson, Senior Vice President

As Chair of the American Bar Association’s (ABA) Government Affairs Practice Committee, I participated recently in an instructive CLE session addressing shareholder petitions that require the disclosure of political activity. While these petitions are not new phenomena, recent events including the Supreme Court decision in the Citizens United case, have raised the profile of the issue.   Because even the prospect of a shareholder petition on political transparency could have a damaging impact on a government affairs program, preparation is the best way to defend against—or even avoid altogether—a shareholder petition.

According to the Conference Board, while the number of shareholder petitions rose dramatically after Citizens United (from 40 in 2010 to over 100 so far in 2012), the success rate between 2011 and 2012 fell from 30 percent to just over 20 percent. The petitions ranged from requiring disclosure to shareholders of certain types of political activity, to more draconian measures such as a cease and desist of all political activities.

A reason for the diminishing return is likely the proactive and effective ways that many companies are now dealing with the petitions, or even acting in advance of a petition.  Understanding that corporations have different policies and procedures governing political expenditures such as campaign contributions, there are some common methods by which corporations have effectively dealt with the transparency issue without crippling their government affairs programs. The following are a few tips to help you to be prepared to defend your government affairs program in light of this rise in shareholder petitions.

  1.  Understand that there are activist groups that have been advancing this issue.  The Center for Political Accountability has a model shareholder petition online and the Corporate Reform Coalition has an “activist toolkit” for use on political transparency issues.   Some of these groups are promoting this transparency to stifle political contributions from corporations.  First, they compel a company to disclose its contributions, then they can use an issue (often not business-related) supported by a candidate to threaten boycotts or pickets based on a single corporate contribution to that candidate.  Therefore, the movement should not be considered an organic uprising of shareholders, but an organized activist effort aimed at your corporation. 
  2. It is more difficult to defend a political contribution to a candidate, a stance on legislation, or a membership in one the groups of state and local officials in the absence of information about why it was done.  So make guidelines available to your shareholders that outline qualities you support in candidates and policies your corporation supports.  For example, you may support candidates that promote a certain tax stance or whose platform supports a more favorable climate for business.    If you have outlined that beforehand, you will be better prepared to defend a political contribution and combat the notion that you support every tenet of that candidate’s platform including non-business issues.
  3. Given all of the rhetoric about corporate spending, your shareholders probably think that you are doing many things that you are not, so ask your shareholders what information they would like to have about corporate political spending.
  4. Use the discourse with shareholders as an opportunity to build understanding about the role that government affairs plays within the corporation.  By actively engaging, much of the distrust that often builds in the absence of information may dissipate—or even be replaced with an understanding the value that government affairs may add to the corporation and shareholders.

The possibility of a shareholder petition can be a chilling event.   However, being prepared to defend your government affairs program can certainly help to alleviate many of the concerns and raise confidence that your program will be able to withstand challenges by activist groups.

***

Mark Anderson is Senior Vice President working at Stateside Associates managing the Regulatory Services Division. He advises clients on engagement strategy and directs educational and “grasstops” campaigns directed at governors and regulatory officials. Mr. Anderson also has created issue advocacy coalitions and facilitates work group meetings of state and federal stakeholders addressing environmental issues.

EPA Conspicuously Absent at ECOS Spring Meeting

March 27, 2012

By Mark Anderson, Senior Vice President

The Environmental Council of the States (ECOS) convened its Spring Meeting last week in Austin, Texas.  I would sum up the theme of the meeting by quoting the first lunch speaker, Executive Director of the Texas Commission on Environmental Quality Mark Vickery, stating that the relationship between EPA and the states requires “complete reformation.”  Two trends conspired to make this so—dissatisfaction with EPA over increasing mandates and policy changes with little state input, and the dramatic decline in EPA participation with ECOS.  The second-day lunch keynote speech, always reserved for the EPA Administrator or an appropriate high-level designee, was absent a speaker. 

Throughout the three-day meeting, issue after issue was raised by ECOS members about states not having the resources to carry out many EPA directives.  Yet there was not sufficient high-level EPA involvement in the meeting to have a meaningful dialogue about it.  A state and federal co-regulator relationship that should be built on trust and cooperation has clearly deteriorated. 

The problem was apparent not only in the rhetoric, but also in the specific policy discussions undertaken during the meeting.  At the opening plenary, Pennsylvania Department of Environmental Protection Secretary Michael Krancer brought up his support for HR 3867, the “Sunshine for Regulatory Decrees and Settlements Act of 2012.”  This legislation addresses the concern of the states that EPA, with increasing frequency, will settle lawsuits by organizations by agreeing to initiate rulemakings behind closed doors.  As such, by the time states are allowed to comment on the subsequent rulemaking, EPA responds by claiming that they are bound by the lawsuit.  The legislation would require EPA to allow comments by affected parties prior to agreeing to settlements.

Another more heated example of this lack of communication was a discussion over new air monitoring requirements.  Wisconsin Department of Natural Resources Secretary Cathy Stepp spoke about the lack of clarity with EPA’s requirements.  Many states chimed into the discussion both about the lack of adequate guidance from EPA in the face of substantial new requirements and the importance of good modeling.  Again, the focus of the discussion was not on whether modeling is important, but the fact that EPA mandates policy changes for the states and then provides little communication or support about how to achieve them.

Which brings me to what I think is the most significant event during this meeting—passage of the resolution, “Challenges of Achieving Significant Greenhouse Gas (GHG) Emissions Reductions.”  The resolution discusses the challenges that face the states in meeting the US-ratified United Nations Framework Convention on Climate Change GHG emissions reduction mandate.  The mandate calls for an 80 percent reduction in GHG emissions from 1990 levels by 2050—a massive undertaking by any metric.   The resolution calls on EPA to provide scenarios in which states could achieve these reductions and provide a study of the costs and benefits of doing so.  As I discussed in an earlier blog, true discussion amongst the states about the costs associated with complying with climate change requirements had been unprecedented.  The resolution passed unanimously. 

States discussing challenges posed by EPA has been a mainstay at ECOS meetings.  The difference at this meeting was the level of frustration, and the lack of significant participation by EPA officials to listen and respond.  This is particularly troublesome for the states during times of great budget strain at both the state and federal level, and it represents one of the most fundamental hurdles in the EPA-state relationship.

As a result, “you should contact your federal delegation,” was a suggestion offered by ECOS members to their peers far more frequently at this meeting than I have ever witnessed.  EPA is no longer engaging meaningfully with the states and is forcing states to look elsewhere for guidance and support.

All good relationships require trust.  When dealing with any state and local officials group, I always advise my clients to participate consistently and respect the organization and its members through open and honest communication.  EPA has violated these principles and the relationship is suffering as a result.


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