Chamber seeks cash from insurers, financial firms for new effort

Introduction

Even as it plowed tens of millions of dollars into ads this year to help mostly Republicans notch Congressional victories, the U.S. Chamber of Commerce was initiating a new effort to raise millions more from energy, health insurance, financial services, and other firms to fund a new anti-regulatory campaign.

The latest initiative includes such top business priorities as fighting the regulation of greenhouse gases by the Environmental Protection Agency; curbing the power of the recently created Consumer Financial Protection Bureau; and trying to ease the implementation costs of the new health care reforms for insurers and businesses. The Chamber has created a regulatory advocacy unit run by its top lobbyist, Bruce Josten, to shepherd the program.

The Chamber’s message appears to be working: at least a handful of companies, including some in the energy sector, have opened their wallets wider in the past few months, say K Street fundraising sources familiar with the Chamber’s latest solicitations.

Several oil giants, including Chevron Corp., ConocoPhillips Corp. and Exxon Mobil Corp., have been solicited by the Chamber for funding for the new drive, and at least one of them has agreed to write a six-figure check, according to two energy lobbyists who requested anonymity. The new funds are being donated on top of the annual dues that the companies pay to the Chamber.

Since the Nov. 2 election, a pair of top Chamber executives, David Chavern and David Hirschmann, have made fundraising pitches to several New York financial powers, including at least three large private equity firms — The Blackstone Group, KKR and Texas Pacific Group — other financial lobbyists said. It seems likely that some will donate funds for the anti-regulatory drive, they added.

Also targeted are several major health insurers that last year kicked in much of the $86 million that was funneled through America’s Health Insurance Plans to the Chamber. That money was spent on a huge but unsuccessful advertising effort to kill health care legislation. A health industry source says that he’s not certain how the new Chamber pitch is going with that sector.

Josten told the Center that “it’s natural you’re going to solicit people who have expressed and supported your previous efforts.” Josten said that the effort is “getting some receptivity,” noting that the threat of new regulations “is not lost on the business world.”

The Chamber’s fresh initiative will include beefed-up lobbying, new advertising, online projects and litigation to thwart regulations it opposes. “We’ll look for opportunities to challenge regulations,” Josten explained. Some of these challenges are going to be “legislative, some are going to be regulatory and some will be in the courts.”

Donohue says job creation threatened

In a speech to his board of directors on Nov. 17, Chamber Chairman Tom Donohue publicly unveiled the new campaign, excoriating what he called a “tsunami of regulations of unprecedented force” that he said represent the “biggest single threat to job creation.”

Donohue’s speech broadly referenced costly new regulatory burdens for business stemming from reform legislation enacted by Congress in the last year, as well as new regulatory threats from the Environmental Protection Agency. “There are thousands of new and questionable rulemakings in the pipeline,” he said.

As part of the new effort, Josten said the Chamber plans to hire a regulatory economist who can “draft comments on the impacts of new regulations” in hopes of persuading federal agencies to scuttle or curb planned regulations. The Chamber plans to reach out broadly in search of political and business allies, he said. “We’re building a network of interested parties that we’ll need,” Josten said, adding that it “takes years to write regulations.”

The campaign’s ad component, which is being coordinated by Tom Collamore, the senior vice president for communications, began in November in inside-the-Beltway publications like Politico and National Journal. The ads focus on what the Chamber sees as an expanding regulatory threat to U.S. jobs and economic growth. A first ad features a road sign with confusing arrows pointing in different directions that encircle the words, “This Way to Jobs.” The Chamber also sent members of Congress, governors and state and local chambers a new board game of the same name.

As the campaign picks up speed, the Chamber will focus on both paid advertising and press coverage, Collamore said. “We’ll be looking to beef up our online presence.” A new Chamber website, www.thiswaytojobs.com, is designed to increase awareness of the regulatory landscape, he added.

Donohue’s mid-November speech warned of alleged threats from “183 new agencies, commissions, panels and other bodies” created by the recently enacted health care law. The Dodd-Frank financial reform law includes “320 required rulemakings, another 220 suggested rulemakings and over 170 reports and studies,” he added.

The Chamber is not opposed to all federal regulations, he said, asserting that the new effort is not designed to “weaken the regulation of business.” But Donohue added that “we cannot allow this nation to move from a government of the people to a government of regulators.”

More lawsuits coming

The Chamber’s new anti regulatory drive will include “even greater activism” by the group’s litigation machinery, Donohue told the board. The Chamber uses one legal arm, the Institute for Legal Reform, for state court battles, and its National Chamber Litigation Center for federal cases.

In August, the Chamber’s litigation center and another advocacy group, the Coalition for Responsible Regulation, sued the EPA and asked a federal appeals court to review a climate change “endangerment finding” the agency issued late last year. That finding is the basis for the agency to regulate greenhouse gases as threats to human health and safety. The EPA regulations affect cars and light duty trucks as well as power plants, refineries, and factories. The Chamber’s lawsuit questions whether the Clean Air Act can be used to regulate greenhouse gases.

Further, the Chamber’s litigation center in July joined other groups and Louisiana Sen. Mary Landrieu in asking the Fifth Circuit Court of Appeals to uphold a ruling that ended the Obama administration’s drilling moratorium in the Gulf of Mexico. The court ruled in favor of that request, but a second, narrower moratorium was quickly imposed by the Interior Department and remained in place until the Obama administration lifted it in October.

The Chamber also plans to intensify pressure on regulators as they write rules carrying out the sweeping financial services and health care reforms that were enacted by Congress. Last month, in response to a proposed rule that would give shareholders more rights to nominate candidates to company boards through proxy access, the Chamber’s litigation center and the Business Roundtable sued the Securities and Exchange Commission.

The rule, which the Chamber fears would give too much power to unions and activist groups, has been put on hold and didn’t go into effect this month as planned. Oral arguments in the lawsuit are likely early next year. The Chamber’s accused the SEC of failing to adequately evaluate the rule’s impacts on “efficiency, competition and capital formation.”

The Chamber will also be continuing its advocacy for some of the top priorities of the private-equity industry — including firms it is now soliciting for funds to fuel the anti-regulatory initiative. Some of the larger private-equity firms worry that under the Dodd-Frank reform law, they could be designated as posing systemic risks if they should fail, which would trigger tougher regulation and more capital requirements. At least two of the big equity firms, Blackstone Group and KKR, have been Chamber members for some time.

Consumer bureau is top priority

Arguably the top priority on the Chamber’s financial agenda is to limit the scope of the new Consumer Financial Protection Bureau, being set up by Harvard law professor Elizabeth Warren. The Chamber’s Center for Capital Market Competitiveness, run by David Hirschmann, recently warned financial firms that the agency has “nearly unprecedented powers,” citing its budget of “more than $500 million in the first year alone.”

To spotlight its efforts and discourage “any efforts to politicize the allocation of credit,” the Chamber has launched a website tracking the new bureau — www.cfpbspotlight.com. The Chamber, Josten said, will “be supportive of efforts to make the (bureau) accountable to Congress.”

On health care, the Chamber has pushed aggressively for one of the top priorities of health insurers: a broad interpretation of new rules that require health insurers to spend a specific minimum percent of customer premiums on a variety of health care services, or provide rebates to customers. The requirement, which begins in 2011, is one that many insurers have worried could be burdensome and expensive.

The Department of Health and Human Services recently issued a rule that gives health insurers some leeway on implementation and allows states to seek exemptions from the 2011 start date, which four have already done. But the Chamber still worries that the fixed percentages in the rules are too high

The new formulas, which require some insurers to use 85 percent of their premiums for health care services and others to pay 80 percent of premiums, depending on the markets they cover, are too onerous, Josten said. “We’d support Congressional attempts to change the numbers,” he said, predicting that some bipartisan support could emerge on the issue.

Josten said the Chamber has already begun fighting a provision of the health care law that requires any company buying goods or services worth $600 or more a year to file with the Internal Revenue Service a 1099 report documenting the purchases. The Chamber has sent several letters to Capitol Hill (including one this week) attacking the provision — which has drawn criticism on both sides of the aisle.

A health industry source told the Center that the Chamber in the last few months has approached several large insurers who helped fund the group’s 2009 ad effort. Among the health insurers that wrote the biggest checks the last time around were Aetna, Cigna, Humana, United Healthcare and Wellpoint. It’s not clear how responsive the insurers have been to the new Chamber solicitations.

Lobbying veterans said the Chamber’s expanded anti-regulatory effort could be a useful tool for corporations to stay out of the spotlight on issues related to their self-interest. “If the Chamber can run a good publicity and public affairs drive to give cover to the various industries being regulated, it would be smart,” says Charlie Black, a key GOP lobbyist who runs the Prime Policy Group.