(The following story by Christopher Dinsmore appeared on The Virginian-Pilot website on October 3.)
NORFOLK, Va. — Norfolk Southern doesn’t shy away from the political truth – money opens doors in Congress.
“It’s become a fact of life,” said Henry D. Light, senior vice president of law at the Norfolk-based railroad. “That’s what gets us in the door if we have a story to tell.”
The Norfolk Southern Good Government Fund has given $385,900 to candidates for federal office through July during the current two-year federal election cycle, according to the Center for Responsive Politics. As of June 30, the railroad’s political action committee ranked 40th in spending on federal candidates among the top corporate PACs, according to the Federal Election Commission.
But the railroad’s campaign contributions tell only part of the story of its attempts to open doors and influence legislation in Washington. In the first six months of 2004, Norfolk Southern spent $1.1 million on lobbying Congress, according to the railroad’s lobbying disclosure statement filed Aug. 3. It typically spends more than $2 million a year on federal lobbying.
It has its own public affairs office in Washington and employs a number of firms to help it monitor legislation and make its case with Congress, including the firm of a recently retired Alabama congressman who also received campaign contributions from Norfolk Southern while in office.
Yet the railroad plays down its spending on lobbying and campaign contributions by the PAC.
Company officials say there’s no quid pro quo – it doesn’t get any legislation – for the spending.
“If it were possible, we might try it,” joked James A. Hixon, Norfolk Southern’s executive vice president-finance and public affairs, about buying legislation. “The money we put into the political process is somewhat small. In the end, I think politicians listen to the voters and what they want.”
Norfolk Southern certainly has a host of issues it wants to be heard on in Congress: eliminating a diesel fuel tax, boosting transportation spending on railroads, getting a piece of homeland security spending, and protecting its coal franchise and the economy in environmental policy, to name some.
“Money buys access, but it doesn’t get bills passed,” said Alex Knott, political editor for the Center for Public Integrity, a Washington-based political spending watchdog group. “But it is a way of making sure they get their phone calls returned.”
To help get its calls returned and its voice heard, Norfolk Southern offers its management employees the opportunity to contribute as much as $5,000 a year, consistent with federal law , to a political action committee.
The Norfolk Southern Good Government Fund contributes to candidates in federal and state elections, but focuses mostly on federal races because the federal government plays a much larger role in overseeing the rail industry, said Light, who is also chairman of the PAC’s steering committee.
“We do have pretty good participation by our management, especially upper management,” said Light, who gives $208 per semi-monthly pay period to the PAC. “Those of us who can do it. We do it because we think it’s important.”
The PAC’s donors include all of Norfolk Southern’s top executives, including David R. Goode, the chairman and chief executive; Henry C. Wolf, vice chairman and chief financial officer; Stephen C. Tobias, vice chairman and chief operating officer; and L.I. “Ike” Prillaman, vice chairman and chief marketing officer.
In addition to contributing to the PAC, some officers also give personally to candidates. For example, in the current election cycle, Goode gave $2,000 to Rep. Bob Goodlatte, a Republican representing the Roanoke area in Congress; $1,000 to Rep. Ed Schrock, the Virginia Beach Republican who recently announced his retirement; $1,000 to Sen. Arlen Specter, R-Pa., a member of the Senate Appropriations Committee and its transportation subcommittee; $1,000 to Rep. Bill Shuster, R-Pa., a member of the House Transportation and Infrastructure Committee; and $500 to Dan Boren, a Democrat running for Congress in Oklahoma.
But Goode’s giving pales in comparison to that of the Good Government Fund, which has given nearly $385,900 in the current election cycle, according to FEC data compiled by the Center for Responsive Politics.
Since 1990, the PAC has given $3.3 million to federal candidates, Knott said. “That’s a serious amount for an entity that size,” he added.
Norfolk Southern and other railroads face some serious competition for the ears of legislators.
Labor union PACs and the PACs of shippers who may be seeking to reregulate the railroads also give to congressional candidates.
“We’re small potatoes in comparison” to the big union PACs, Hixon said.
The United Transportation Union, for example, has given $968,600 in the current election cycle. The Teamsters Union, which recently merged with the Brotherhood of Locomotive Engineers, has given nearly $1.3 million. That’s in addition to the $200,850 spent by the locomotive engineers’ PAC.
Union PACs are typically funded out of union dues.
Not counting the Teamsters, the leading railroad unions have given $2.19 million so far in this election cycle, compared with $1.96 million for the railroad industry.
“It’s become almost a defensive thing to do – to have a PAC to get heard,” Light said. “Unfortunately, well I don’t know if it’s unfortunate or not, but it’s politics. PACs are a necessity.”
Said Knott, “That’s almost a valid defense.”
The Norfolk Southern Good Government Fund directs donations through requests of donors, who may designate their contribution to specific candidates; or through recommendations from its public affairs and legal departments.
Light is straight forward about who gets the money.
“If you see a connection between their roles in Congress and who we are, you would expect to see us on their list,” he said.
Light is equally blunt about why 71 percent of the PAC’s federal campaign donations have gone to Republican candidates in the past two election cycles.
“They are in charge, and they may be more receptive to a business message,” Light said. “You may find in some cases we’re supporting both sides.”
That’s true in South Dakota where the railroad has given $3,000 to Senate Minority Leader Tom Daschle and $5,000 to his challenger, former Republican congressman John Thune.
“Senator Daschle has been helpful to the railroad industry and his opponent has been helpful to the railroad industry, so you have two friends running against each other,” Hixon said.
“I think they would prefer we give to both rather than not give at all.”
Knott called that type of situation a hedged bet. “It’s better for them to bet on a losing horse than not to have any money in the race at all,” he said.
The biggest recipients of the PAC’s largess are Rep. Don Young, R-Alaska, and Rep. John J. Duncan Jr., R-Tenn. Young is chairman of the House Transportation and Infrastructure Committee, which is overseeing the transportation reauthorization. Duncan also sits on the committee.
Other big donations include: $8,000 to Rep. Jim McCrery, R-La., chiarman of the House Ways and Means Subcommittee on Select Revenue Measures; $7,500 to Shuster; $7,500 to Rep. Richard Burr, R-N.C. who is running against Democrat Erskine Bowles for the seat being vacated by Sen. John Edwards, who is the Democratic nominee for vice president.
All told, Norfolk Southern gave $248,140 to Republican candidates and $104,760 to Democratic candidates for House and Senate seats, including many members of the House transportation committee and its counterpart, the Senate Committee on Commerce, Trade and Transportation.
“The cost of running for office has grown so much in recent years,” Light said. “The public doesn’t really understand the needs in the political arena as it should. You need to have PACs.” The other need is someone to tell your story.
Norfolk Southern has five public affairs officers who work in Washington and meet regularly with federal officials. Hixon, Goode and several other senior executives also see federal representatives to discuss issues on occasion.
The railroad also has resident vice presidents in some of its operating states who occasionally work with members of Congress.
The railroad’s public affairs officers spend a majority of their time monitoring issues and keeping abreast of legislation, said Susan Terpay, a Norfolk Southern spokeswoman in Norfolk. They also work to protect the interests of Norfolk Southern and the railroad industry.
“The smallest percentage of their time is focused on proactive efforts to educate legislators about pending issues that affect the industry,” Terpay said.
While the railroad spent $1.1 million lobbying in the first half of 2004 and spends more than $2 million a year, those expenses include the salaries of every employee who engages in lobbying, including an allocation of the salaries of highly paid executives for the time they spend on it.
Besides the in-house lobbying efforts, Norfolk Southern has hired firms, including some of the best known names in inside-the-Beltway glad-handing, to represent its interests.
“It appears that they’re pretty well represented,” said Knott, after reviewing the railroad’s lobbying records. “They have a large number of firms that are the go-to people for getting legislation changed.”
According to mid-year lobbying disclosure statements filed to date, Norfolk Southern engaged at least seven firms and individuals for federal lobbying.
Perhaps the largest is Chambers, Conlon and Hartwell LLC of Washington, which took in about $160,000 from Norfolk Southern in the first half for monitoring the transportation reauthorization and other rail issues, plus energy policy and tax legislation. The firm represents a number of different rail interests.
Hecht, Spencer & Associates of Washington received about $45,000 in the first half for supporting efforts to repeal the 4.3-cent diesel fuel tax and opposing attempts to change the way railroads are regulated.
Then there’s Sonny Callahan & Associates LLC of Mobile, Ala., which received about $60,000 in the first half. While most lobbying reports were neatly typed, the information in Sonny Callahan’s disclosure statement was scrawled by hand. It merely said that Callahan had represented Norfolk Southern for “homeland security issues.”
An Alabama Republican, Callahan retired from the House of Representatives after 18 years in 2002.
Callahan had received $11,000 in campaign contributions from the Norfolk Southern Good Government Fund in his last three election cycles in Congress. He chaired several subcommittees of the House Appropriations Committee and oversaw the Department of Transportation’s spending. He also co-sponsored a bill to modernize the railroad retirement system.
After a required year away from the halls of Congress, Callahan hung out his lobbying shingle and Norfolk Southern promptly hired him, paying him about $60,000 every six months for his services.
“He was one that really understood the railroad industry,” Hixon explained. “We retained him as a consultant after the appropriate time because of the contacts he has in Congress. Like every smart company, we want to make sure we’ve got the right people explaining our side and also explaining why some of the money ought to be directed toward us.”
Former congressmen are pretty common in lobbying circles.
“There are 232 former members of Congress that are currently working as lobbyists,” Knott said. “That’s basically how things work. Congressmen look at it as a retirement option.
They can retire and maintain a six-figure income.” Having a former congressman lobbying for you can pay off too.
“The No. 1 key to influencing legislation is access,” Knott said. “Even retired congressmen still have floor privileges and can walk on to the floor even during a vote to talk to someone.” Hixon said much of Norfolk Southern’s lobbying is merely defensive.
“We just don’t want bad things happening to us,” he said. “We’re just trying to maintain what the Staggers Act gave us, which basically saved the industry.”