Two weeks after retiring from Congress in 2013, ex-U.S. Rep. Jerry Costello (D-Ill.) started collecting a $15,000 monthly check from a federal employee labor union that received critical help from him as a legislator.
Under congressional “revolving door” rules, Costello would have to wait a year before signing on with the union, or anybody else, to lobby his former colleagues. But because Costello was paid for “political consulting” by the union, he was able to begin collecting checks immediately.
Costello, who lives in Downstate Belleville, isn’t the only ex-member of Congress who jumped almost immediately into special interest consulting — a potentially lucrative field for ex-lawmakers that doesn’t require the detailed reporting requirements legally required of lobbyists, who must publicly disclose clients and income.
Former U.S. Rep. Bill Lipinski (D-Ill.), who retired from Congress in 2005, and former U.S. Sen. Evan Bayh (D-Ind.), who left the Senate in 2011, also began working as advisers to special interests within months of leaving Capitol Hill.
While they’re legally permitted, consultant arrangements run counter to the spirit of federal law that sheds light on government influence and restricts when someone leaving Congress can become a congressional lobbyist, critics say.
Unlike lobbyists, consultants aren’t legally required to disclose work they do on behalf of their special interest clients. Critics call this kind of consulting “shadow lobbying.”
“By allowing that type of shadow lobbying activity, we are allowing special interests and especially wealthy special interests to influence public policy without disclosure to the public,” said Craig Holman, who lobbies for campaign finance reform and government ethics for the watchdog organization Public Citizen.
Federal guidelines narrowly define lobbying as involving direct contact with a member of Congress or staff. But critics say consultants can provide the same kind of influence by offering strategic advice to special interests — without having to register as a lobbyist.
A consultant working behind the scenes can “identify who [in Congress] needs to be contacted, write the messages and have someone else make the phone call” to actually lobby for or against legislation, Holman said.
Holman also suspects some consultants are more directly lobbying on the sly, and he’d like to see legislation requiring disclosure of all congressional consulting activities, along the lines of what’s mandated for lobbyists. What’s more, he said the U.S. Department of Justice should devote more staff to better monitor consultants to guard against improper influence in Congress.
“That alone would just help close this loophole. That would be remarkable, if there were some cop on the beat. You only need to catch a few of these abusers and you put the entire industry on notice,” Holman said.
Timothy LaPira, a political scientist at James Madison University, believes the current law is “narrowly written” and needs to be changed so that people involved in policy advocacy have to register as lobbyists whether or not they are directly calling members of Congress.
“If what you are doing is trying to influence the policy process you are a lobbyist,” LaPira said.
Ex-Reps Reap Big Bucks
When Costello announced his retirement from Congress, the National Air Traffic Controllers Association reported the “sad news,” describing him as “a great supporter and friend.”
Costello provided critical help to the union while chairing, or serving as the top Democrat, on the House aviation subcommittee.
In 2006, contract negotiations broke down between the Federal Aviation Administration and the air traffic controllers union. The FAA then imposed a new contract with work rules that infuriated controllers: Union members lost the right to a rest period after two hours directing air traffic. Future pay raises were cut back.
Within two years, 3,000 of the 15,000 federal controllers quit. Costello, while in Congress, responded by introducing and then pushing for legislation to require the FAA to submit to mediation and binding arbitration when contract talks are at an impasse. It took five years, but his efforts – backed by NATCA – paid off in 2012 when a new law passed.
Costello left Congress on Jan. 2, 2013. Two weeks later, the union paid him the first monthly check of $15,000 for his new position as political consultant.
Because Costello was not required (or legally allowed) to register as a lobbyist, that type of information would not be made public through lobbyist disclosure reports. Rather, it entered the public record a year later, only because the union had to disclose expenses under U.S. Department of Labor rules.
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For his consultant work for the air traffic controllers over two years, Costello earned $360,000, records show.
In 2015 – after the revolving door period ended – Costello registered as a lobbyist for the union. He then publicly disclosed his fee and work attempting to shape the FAA Reauthorization law, which provides funding for air traffic controller positions. By this time, the union raised his rate to $200,000 a year, disclosure reports show.
In addition to the union contract, Costello had a second consulting job in 2014 with the Association of American Railroads, the trade group for freight rail. As with the air traffic controllers, Costello went to bat for the rail industry as a member of the House transportation committee. In 2012 he helped the railroads keep longer, heavier trucks — major competitors to rail companies — off the highways by beating back legislation favoring truckers.
In 2015, Costello registered as a lobbyist for the railroads and is paid an annual rate of $200,000, records show.
In a written statement, Costello conceded that most of his clients retain him as a consultant rather than as a lobbyist, saying, “I have several clients. I lobby for a few and provide strategic advice and planning for the majority as a consultant. Since my clients do not want their competitors to know their business activities or plans, I have an agreement not to discuss their activities beyond what is required.”
Costello said he complies with all lobbying rules.
The freight railroad association also hired Lipinski, the former top Democrat on the House railroad subcommittee, as a consultant the year he left Congress in 2005.
As part of that consulting arrangement, Lipinski worked on a public relations campaign involving CREATE, a transportation efficiency program he helped birth while in Congress. The project helped alleviate freight congestion in and near Lipinski’s Southwest Side district.
The freight group was one of the partners that benefitted from his legislative work to set up some of the funding for the more-than-$1 billion rail project.
Ed Greenberg, a spokesman for freight rail group, would not disclose how much it paid either Costello or Lipinski as consultants, but said of both: “No lobbying took place while either man was under a consulting relationship with the AAR.”
Lipinski registered as the trade group’s lobbyist in 2007 – after the revolving door restriction expired – collecting $660,000 over seven years, federal records show.
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Lipinski did not respond to multiple phone messages and emailed questions.
For retiring senators, revolving door rules prohibit lobbying the Senate for two years. But even after two years passed, Bayh hasn’t registered as a lobbyist.
Within a month of retiring from the Senate in early 2011, he was hired by two firms. The McGuireWoods law firm, which is registered to lobby and has a large federal practice, brought Bayh, an attorney, on as a partner. He also was hired as a senior adviser for private equity firm Apollo Global Management.
At McGuireWoods, Bayh advises clients whose business goals “are impacted by the actions of Congress, the executive branch, or by governors and legislators across the country,” according to his law firm biography.
In the Senate, Bayh was active on health care issues. After he joined the law firm, it picked up lobbying clients in the health and medical devices industries — three of them based in his home state of Indiana, records show.
While still subject to the two-year lobbying ban, Bayh wrote an opinion piece for the Sept. 27, 2012, edition of the Wall Street Journal, urging Congress to repeal a 2.3 percent tax on medical devices passed to help fund Obamacare. He argued the tax “threatens thousands of American jobs and our global competitiveness” and “will stifle critical medical innovation.”
In the op-ed piece, he said the tax killed expansion plans at Cook Medical of Indiana, a McGuireWoods client. He also said the tax would have a job-killing impact on Hill-Rom, another Indiana firm that became a client of McGuireWoods the next year.
Records show Cook has paid McGuireWoods $1.49 million in lobbying fees while Hill-Rom paid $375,000.
After Bayh joined McGuireWoods, it picked up another Indiana client — the Health and Hospitals Corporation (HHC) of Marion County — which benefitted from a $143,000 federal earmark engineered by Bayh in 2009 when he was still in the Senate.
In 2013, HHC hired McGuireWoods to lobby on undefined “provisions” for the federal Build America Bonds program, which helped finance construction of a new hospital. HHC has paid McGuireWoods $427,000 in lobbying fees, records show.
An HHC spokesman said, “Evan Bayh has never done any lobbying” for the hospital system.
Neither Cook nor Hill-Rom responded to requests for comment.
Bayh declined to be interviewed but Robert Lewis, a spokesman for McGuireWoods, said in a written statement: “Former Sen. Evan Bayh counsels clients on various issues. However, he does not lobby. He carefully and faithfully complies with all applicable rules and regulations, both in letter and in spirit.”
Separate from his work for McGuireWoods, Bayh joined Apollo Global Management in January 2011, with specific responsibility for policy issues.
Eric Kuo, a spokesman for Apollo, declined to discuss Bayh’s role, but said: “Senator Bayh is not and never has been a lobbyist for Apollo.”