Episode 34: Does Virginia really have a "shadow government" of lobbyists?

There are many ways to influence legislators and policymakers: some write letters and call their lawmakers; others organize campaigns to march or campaign. Organized capital -- in the form of businesses and industry -- has the most influence of all. That’s where lobbying comes in.

Lobbyists hold so much influence in Virginia that there's even a term for it in Richmond: a “shadow government” that dominates Virginia policy-making without a single elected official. How does this shadow government work--and why is Virginia so uniquely susceptible to their influence? How important is that influence overall?

This week, we talk to Jeff Schapiro, a political columnist for the Richmond Times-Dispatch, who has covered Virginia's politics and government for over forty years. We also talk with Robert Zullo, founder and editor of the Virginia Mercury, an independent news organization based in Richmond, to learn exactly how lobbyists operate in Virginia--and what their influence means for our state laws.

Episode Transcript

Nathan Moore: This is Bold Dominion, an explainer for state politics in a changing Virginia. I’m Nathan Moore.

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We talk a lot about government here on Bold Dominion. That’s because we’re interested in the levers of power and the way they touch our lives. At the end of the day, government is nothing more than a tool for a big group of people to make decisions about their collective welfare. Things like setting public health guidelines, setting environmental regulations, even setting limits on which substances you’re allowed to put into your body.

People have opinions. They want the government to make decisions that affect our state. Sometimes they call their lawmaker or write a letter. Organized people have more influence. Organized capital -- in the form of businesses and industry -- has even more influence.

That’s where lobbying comes in. You’re probably familiar with the term in general -- lobbying is advocacy. And lobbyists are those folks in nice suits who try to convince lawmakers to do what they want at every level of government.
As with almost every political topic we’ve discussed on this show, it turns out that Virginia is especially… well, let’s say interesting when it comes to lobbyists. We have a LOT of them. In 2019 and 2020, more than twenty-eight hundred lobbyists were registered in Virginia, hired on behalf of more than eleven hundred clients. These lobbyists vary in size -- anywhere from single individuals to enormous many-armed law firms. Their clients vary, too; everything from single-interest groups to businesses to entire branches of local government. In fact, there’s even a term for it in Richmond: a “shadow government” that dominates Virginia policy-making without a single elected official.

Jeff Schapiro: As the legislature has grown and become more diverse, so too has the lobbying business. Lobbying is as well about generating public support on issues. So there are lots of firms that have popped up in Virginia in the past 20 or 25 years that specialize in press communications, grassroots organizing, and the numerous manifestations thereof.

NM: That’s Jeff Schapiro, a political columnist for the Richmond Times-Dispatch. He’s been covering Virginia politics for forty years. We’ll hear more from him later in the episode about how government and lobbying have changed in Virginia.

But first, we sit down with journalist Robert Zullo. He’s the editor-in-chief of Virginia Mercury, an independent news outlet based in Richmond. Robert sat down with Bold Dominion producer Aaryan Balu to explain what makes Virginia unique when it comes to lobbying.

Robert Zullo: I think one of the things that makes Virginia a little bit unique is: even our long legislative sessions are fairly short compared to other states. Some states have year-round legislators, we obviously meet in staggered years for different lengths of time, 45 and 60-day sessions. So that kind of compressed timeframe, along with the fact that we have part-time lawmakers who don't have big salaries and don't have a lot of money for staffs of their own...we rely on lobbyists. And when I say "we," you know, our policymakers rely on lobbyists, probably more than...maybe more than lawmakers in other states, especially on con complex or controversial legislation.

Aaryan Balu: Yeah, we've spoken with Delegate Sally Hudson a couple of times. One of the things that she's mentioned is that, you know, lawmakers, they don't have like the Congressional Research Office, or whatever it is to do that work for them. So their staffs are relatively limited compared to however much money lobbyists have. So with that in mind, who are some of the biggest players in the lobbying game here in Virginia?

RZ: Well, you have the ones that are kind of the more household name-type firms so McGuireWoods, Williams-Mullen, Capital Results, and there are, you know, there are many others, there are kind of smaller lobbying firms that might only have two or three lobbyists. There might be, you know, sole practitioner-type guys who have maybe just one or two clients. So they range from very, very big to very, very small.

And one of the ways that the big ones are so successful, is they often employ, you know, they employ everyone from former members of the General Assembly, former secretaries, former cabinet-level officials from gubernatorial administrations, and, you know, everybody in between in the politics and policy room. Because they kind of know the lay of the land, they might know the power dynamics or the partisan split on a vote, or the intra-party dispute. So that's often seen as an advantage in a lobbyist.

AB: So what's the consequence of that system in terms of how our government, you know, shapes out to be?

RZ: What I can say from my experience covering the General Assembly--when I was working for the Richmond Times-Dispatch, one of the things that I've mostly focused on was utility regulation and energy-type bills. And these things are massively complex. The legislation is almost always being pushed by, you know, Dominion Energy. They're looking to change the code in a way that's beneficial, you know, usually to their, to their bottom line and their shareholders.

And frankly, you know, lawmakers just don't have the expertise and the staffing to really vet some of these complicated issues. It's one of the reasons why, particularly with you know, electric utility regulation, it's kind of always up for debate every year. It's never really a settled subject. Because, you know, going back to 2015, when Dominion got the legislature to pass a very controversial base-rate freeze, that, you know, most people will tell you locked in bills that were way too high, or locked in base electric rates that were way too high. The legislature is always coming back and trying to tweak and fine-tune. And there's always a big battle over electric utility regulation. And that's something that you're very heavily reliant on lobbyists to kind of explain the terms of a bill. I vividly remember, you know, one Senate Commerce and Labor Committee meeting a few years ago, where the committee chairman, Senator Dick Saslaw, you know, pointed to Jack Rust, he's a lobbyist for Dominion and says, you know: "If Jack tells you there's no double-dip in this bill, you can take that to the bank!" And that was just a really, I thought that that was a very emblematic moment. Or a good example of, you know, some of the deference that's given to lobbyists in some of these committee meetings.

I mean, so much of it has to do with the compressed timetable. I mean, that Senate Commerce and Labor Committee might have 30 bills on the docket that day. And they might set five minutes of comment per side, on, you know, something that you know, a 30-page bill overhauling electric regulations in Virginia. And I think any normal person, you know, would tell you that that's really not enough time to talk through and debate and hear how all the ins and outs of something that complicated.

One of the things that we've also observed is, whenever there's legislation that divides two powerful interest groups, because of these same dynamics--you know, the shortened session, the lack of staffing and budget for independent expertise for members of the General Assembly--often what they'll do on controversial legislations just tell two interest groups to hash it out. And then they'll endorse whatever they, whatever they come up with.

And you've seen that in the, you know, the long struggle to resolve balance billing in Virginia. I mean, it was pretty explicit, you know, it's "tell the hospitals and tell the health insurance industry to get in a room and fix this, or we'll come up with a fix." They really like...they try to defer to consensus. I mean, I can't tell you how many times in the General Assembly and a committee meeting you've heard: "Well, we have peace in the valley on this bill!" And usually what "peace in the valley" means is that whatever warring interest groups are fighting over legislation have agreed mutually, you know, agreed to some set of terms. Now is that set of terms, always the best thing for regular people? You know, not always.

AB: Wow. Is that kind of where this notion of a "shadow government" comes from?

RZ: The Shadow Government, in my experience in Virginia government and politics, usually refers to the kind of the nexus of McGuireWoods and Dominion Energy, two of the biggest, biggest players, the General Assembly. The late CEO, president, and chairman of Dominion, Tom Farrell, and Richard Cullen, the head of McGuireWoods, were brothers-in-law, so there was a family connection there as well. And there was a lot of overlap between those two companies.

And I think the other thing that kind of lends that aura--lends the idea of a shadow government is you see actual people from the real government moving over, you know, to McGuireWoods, which probably has, I don't think I'm going out a limb by saying they have the deepest bench of, you know, ex-government officials, not just in Virginia, but you know, they have lobbying business with the federal government, and then in other states as well. You know, people like, you know, former Chiefs of Staff to Governor Terry McAuliffe, former Secretaries of Natural Resources. So I think that that's what kind of created that term is, you know, people moving from the real government to the so-called shadow government.

AB: How does that interact, if at all, with Virginia's very permissive campaign finance laws in terms of how money gets in and what it can be spent on?

RZ: Well, it's I mean, it's something that you hear about a lot. I mean, I wrote a column not too long ago about the death, yet again, of campaign finance reform in this session. It's one of those things that everyone thinks is a good idea until they actually have to buckle down and do it. And then it seems like it's always time for another study. I think it's not so much the campaign finance limits, it's the fact that there are very few prohibitions in Virginia on what you can actually spend your campaign money on. You know, there's a general expectation, I think, when you donate to a campaign that you're contributing to, you know, advertising or some kind of actual campaign-related expense, but there's almost no requirement that candidates actually use that money for that. So I think the lack of any restrictions on how that money can be used, coupled with the absence of limits on donations, is a pretty bad--is a pretty bad recipe. And I think most normal people will tell you that.

I think that lots of times at the General Assembly, they really don't think they have a problem, because they haven't, you know, they'll say, "Well, where are the scandals? You know, where are the scandals?" But they're kind of happening in plain sight, because...there is no scandal because things that would get people sent to prison in other states are perfectly legal here. Like, you know, you can use your campaign money for your legal bills. You can use it for your wardrobe. You can use it for any number of personal expenditures because there's really no...we have a good reporting system in Virginia, and you can go and see, you know, how much people spend, but, you know, it's anyone's guess as to whether that stuff was really a valid campaign expenditure.

AB: So is the role of lobbying firms sort of to be legislative experts? Sort of what I'm getting at is: given that there's kind of not that many limits on how money can go directly to lawmakers--you know, in my very cynical picture of the way lawmaking works, if an interest wants something done, they can give money to lawmakers...so I'm trying to figure out what the lobbying firm does separately from that.

RZ: Well, I think that that's a--it's more complicated than: "we just gave you $1,000 for your campaign, therefore support this bill." You know, every member of the General Assembly will tell you: "Well, donations don't buy votes. Donations don't buy votes." And I think for a lot of people, that's true. I do think that it's more complicated than just saying: "A donation plus B legislation equals C, the outcome that we want." Because there's so many diverging interests down there. There's, you know, how a member of the House, for example, has to think about, okay, how's this gonna look, if, you know, if I run on this bill in two years? Or if this bill, if this vote is used against me in two years.

So I think that what a lot of people will tell you is a donation can buy you a certain degree of access, but it might not buy you, you know, an outcome. It certainly doesn't look good, you know, for the average person to say, you know: "This candidate took X amount of money from X company and then passed their, you know, passed the bill they wanted." But those I mean, those are the decisions that individual lawmakers have to weigh, you know, kind of on their own--on their, on their own consciences and their, you know, future political prospects.

You know, the way that I look at a controversial piece of legislation or controversial legislative debate, is, you know, which interest is actually going to top, you know, come out on top. Because the most fascinating ones to me are the ones that kind of paralyze the General Assembly, because they're like, you know, the health insurance industry versus the hospital industry, or the doctors versus the health insurers, where these two, like, you know, heavyweight constituencies...and me being cynical journalist is fascinated to see, you know, who comes out on top in those.

You know, I think that some of the things that to make, you know, Virginia unique, like I said--our compressed legislative schedule, you know, the limited budget lawmakers have for their staff, you know, the difficulty in procuring like independent expertise on really complex pieces of legislation involving industries, like health care, energy, you know, taxation, telecommunications, things like that.

So, I think that most of the people in the General Assembly are trying to do the right thing. You know, based on my experience. But it is a difficult job, when you're dealing with, you know, what can be between a thousand, two thousand, twenty-five hundred bills in a legislative session, some of them massively complex, and you really have to defer to lobbyists on one side or the other of an issue to try to get a sense of what's really going on.

NM: Robert Zullo is the editor-in-chief of Virginia Mercury, an independent news outlet covering state politics. You can find them at Virginia Mercury dot com. Stick around -- in the next part of the episode, we’ll be talking to reporter Jeff Schapiro about ways Virginia lobbying has changed, and where it might be heading in the future.

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Thanks to Robert Zullo of the Virginia Mercury, we’ve got a pretty good idea of Virginia’s current lobbying system -- how limited time and money contribute to the so-called “shadow government” of special interests and law firms. But it wasn’t always this way. So how did we get here?

Jeff Schapiro is a political columnist for the Richmond Times-Dispatch. He’s been covering Virginia government and politics since the 1980s, so he’s got a pretty long view of how these dynamics have changed. He sat down with Bold Dominion producer Aaryan Balu to discuss the past and future of lobbying in Virginia; the factors that got us here, and the solutions that might get us out of it.

JS: A lot of what lobbying is about is maintaining conversations with legislators and regulators and policymakers. And that was largely an intimate one of when I started doing this 40 plus years ago. The economy was far less diverse than it is now--not that it wasn't diversifying. Therefore, the interests that were represented before the General Assembly, the state legislature, were not nearly as numerous. So in addition to this phenomenal growth in the number of people who lobby, there has been a phenomenal increase in the number of interests who lobby.

Plus, this growth was fed by the growing partisan competition within the legislature. When Virginia was a one-party state in the kind of old-guard, large-D Democratic sense, there were far fewer lobbyists. Because to push the right button or throw the right lever meant ingratiating oneself with you know, a handful of legislators. They were all, if you will, members of the same club.

Well, with the rise of the Republican party as a legislative power, Republican legislators wanted to talk to lobbyists who shared their origins--shared their pedigree. So this meant that firms--lobbying firms, law firms, entities involved in advocacy that had been essentially one flavor (large-D Democratic) suddenly became bipartisan. And so beginning of the 80s, as the Republicans were getting up a head of steam as a legislative party, lobbying became a far more bipartisan exercise.

AB: Who are the big players and how do they go about exerting influence?

JS: Among the most visible, of course, are the large law firms. Of course, there is McGuireWoods, Hunton Andrews Kurth, Troutman Pepper, in an earlier iteration Maze and Valentine, these were all venerable Virginia law firms that had significant legislative and regulatory practices. But again, as the economy has grown and become more diverse, as the lobby--as the legislature has grown and become more diverse, so too, has the lobbying business. And it's not simply, you know, a lawyer with a mastery of some arcane section of the code going to a legislator and you know, asking him or her to carry a bill that might make a modification. Lobbying is as well about generating external support for issues. Public support on issues.

So there are lots of firms that have popped up in Virginia in the past 20 or 25 years that specialize in press communications, grassroots organizing, placing advertising over the air or online. It's using social media, increasingly using social media to take an interest story directly to an audience. So what we have seen is just an explosive increase in the number of people involved in the many aspects of advocacy.

Using McGuireWoods, again, as the, you know, one of the more visible examples--when it commits to getting involved in an issue, it is committing multiple resources. Not just lawyers and advocates, but communicators, folks who are going to help with messaging, whether it's over the ai, online, whether it's person to person. It might be something as simple as a...dare I call it a crib sheet. Something that boils to its essence, what an issue is about, and how the legislature should address it. It is a line of work with many, many more facets than it once had. And it is often paired with political donations.

I will make another point. And this is something that's particularly interested me as redistricting, which is going to change dramatically in Virginia, has become hyper partisan. The gerrymander has extended disproportionate influence to narrow bands of the electorate. And if one is an aspiring legislator or an incumbent, one is going to be mindful of the votes that count the most in one's district. If the lines of a House or Senate district are drawn to give conservative voters the biggest say, then it goes without saying that a legislator or an aspiring legislator is going to be hyper-mindful of them.

And what I think that has meant is that legislators are frequently incurious. They just don't think a lot about issues that don't mean a lot to the voters whose views count the most. And I think this does a couple of things. One, it means that politicians are not thinking very often about concerns beyond those most important to their voters. You know, the issues that might have statewide application. It also means that lobbyists, an important source of information in any legislative setting--that information is far more powerful, far more influential. Because more often than not, they're dealing with legislators who are unfamiliar with the issue, or just bewildered by it. So pair that control of information with control often of significant numbers of campaign dollars. That gives you a pretty good idea just how influential lobbyists can be.

AB: It is interesting. Doing the show over the last year or so--seeing how all of these topics in Virginia tie together. You mentioned gerrymandering, campaign finance, growing hyperpartisanship...the part-time legislature in Virginia has also been brought up as part of the reason there is such an information imbalance. You have these full-time lawyers who can work on these bills and you've got these part-time legislators who have a month to pass things. If you have a reaction that in particular, I'd love to hear it.

JS: Virginia, if only for image sake, you know, clings mightily to this idea of citizen legislators, of a part-time General Assembly. That delegates and senators you know, live, work, and walk among the people they serve, that somehow a part-time legislature is more fully representative of Virginia and its people. I get that. Again, I think there's maybe a bit of civics-book optimism to that.

But I think as well that one of the problems with our legislature is that our expectations perhaps are unrealistic. Yes, public service is its own reward. I get that. But the time that legislating demands in a greatly changed state, one that is no longer dominated by the countryside. A state that is now dominated by its suburbs and its cities, its metropolitan areas. A state whose population, at least in my day, has grown from 5.3 million to 8.5 million, the complexity of the issues that are brought to the legislature--that the legislature must address--all of this has just made for a much more demanding line of work. And in a part-time legislature, that forces people who may have political ambitions to make a decision between their working lives and their political aspirations.

AB: So we've talked about kind of how we have gotten here and where we are. Is this a system that, you know, is in desperate need of change? And if so, what are some ways you imagined we might get there?

JS: One of the ways that perhaps the scales are better balanced, is if, you know, we could come up with ways that would make it easier to recruit more and better candidates to the legislature. Part of that--not all of it, but part of it--has to do with redistricting. If districts are more competitive, I think that will tend to force legislators to, you know, find the middle. That'll keep the lobbyists very busy, and they're like that!

I think we also need to do something about legislative compensation. Delegates are paid $17,600 a year, Senators $18,000, their salaries haven't increased since the 90s. If adjusted for inflation, they would be entitled to about $35,000-$40,000 a year. That they're paid as little as they are, and have to play games with their compensation, which they do, is indefensible. And frankly, it only contributes to the public's skepticism, if not outright cynicism, about politics in general and the legislature in particular. Doing something to maybe elevate the skill set of legislators, I think that would, that would make a big difference.

I think it is important, however, that lobbyists are a valuable source of information to public officials, whether they are appointed or elected. A lobbyist gets nothing--and I mean nothing--but trouble if a lobbyist lies, misrepresents, or fabricates information on an issue. The best lobbyists, the professional lobbyists, know their issues cold. They share that information with...legislators in this instance. But as well, they make clear that they understand, they recognize there's another side.

Lobbyists are enormously helpful to me, not just in terms of keeping up with the ins and outs of the legislative or regulatory process and the personalities that frequently shape both. But just the basic information, as well as sources of information that can provide a fuller and more detailed account of what's going on. If that's a service for me, know too that that can be a service for legislators. But it also assumes I think that legislators are curious in that.

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Nathan Moore: Jeff Schapiro is a political columnist for the Richmond Times-Dispatch. Thanks to him and Virginia Mercury editor Robert Zullo for joining us this week.

My name’s Nathan Moore, and I’m the host of Bold Dominion. Big thanks as always to our producer Aaryan Balu. And thanks also to our assistant producers, Rachel Liesendahl and David Hunt. Find this show online at BoldDominion.org. Really… go ahead and subscribe… it’s just a click away.

And hey! We’re always on the lookout for topics for future episodes. Send your ideas to our email address – BoldDominion@virginia.edu. That’s BoldDominion@virginia.edu. Or direct message us on Facebook, Twitter, or Instagram. 

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