The election of Donald Trump creates a drastic shift in government relations strategies in DC.

With a new year, companies and not for profits should be reevaluating their government affairs programs just as they will review their tax, marketing and financial planning. More significantly, this year, a new U.S. government will form, and a new presidential administration commence.

U.S. and foreign businesses and industries should accordingly carefully review their government relations, lobbying, and public affairs strategies in Washington, DC. Companies that have engaged in government relations during the Obama years now need to fully re-write their government relations plan in a city soon to be led by President Donald J. Trump. Those engaging in government affairs for the first time need to move fast.

Trump’s executive team promises to be very different in governing philosophy, public policy, and management than President Obama’s team; but based on Trump’s cabinet picks; it will be substantially different than President Bush’s as well.

Based on that absolute shift, business and industry must reevaluate its government relations strategy for 2017. With a new pro-business focus, no company or industry will want to be on the sidelines for the next four years. Those businesses that have existing government affairs efforts in Washington need to reassess and revise old plans and write a new ones. And those that want to engage in a first-time government relations program need to get in the game now. Based on President-elect Trump’s cabinet choices thus far, the policy and management differences with the outgoing Obama Administration will be substantial; aimed at systemic change in nearly every area of government policy that affects business:

 

  • Appropriations, budget, tax, trade
  • Energy, oil/gas, renewable energy, energy management
  • Transportation, infrastructure, air and shipping transport
  • FCC and telecom
  • Financial services, Dodd Frank, digital assets
  • Healthcare, life sciences, pharma, medical technology
  • Gaming, hospitality
  • Education
  • Municipality
  • Labor, immigration
  • Ocean technology, environment, climate
  • Internet, cyber, privacy, social media
  • National security & defense
  • International Relations

 

Thus, if your company has had a government relations effort during the Obama Administration, then a re-evaluation is critical because what was advocated by the U.S. government between 2009-2016 will now be substantially dismantled and replaced with a new governing philosophy and public policy agenda.

For instance, President-elect Trump has chosen conservative U.S. Rep. Tom Price to serve as his Secretary of Health and Human Services and to overhaul the Affordable Care Act (ACA) (Obamacare). Price is the former chair of the Republican Study Committee, the group of movement conservative members of the House of Representatives. Moreover, in 2013, he introduced in Congress a substantive bill to replace the Affordable Care Act.

Trump’s choice of Price to head HHS will stand in exact contrast to the political ideology and pro- ACA position of the current HHS Secretary, Sylvia Burwell.

Other members of his cabinet also come from a more conservative, pro-growth, limited government, less government regulation philosophy including Governor Rick Perry, as the new Secretary of the U.S. Department of Energy, Andrew Puzder, CEO, Hardee’s, to be Secretary of Labor, Scott Pruitt, Attorney General of Oklahoma, to head the Environmental Protection Agency (EPA), Linda McMahon, a principal with the Worldwide Wrestling Federation, as the new Administrator of the Small Business Administration, Dr. Ben Carson, the new Secretary of Housing and Urban Development, Wilbur Ross as Secretary of Commerce, Steve Mnuchin, Secretary of the Treasury, U.S. Rep. Rep. Ryan Zinke, the next Secretary of the Interior, United States Marine Corps General James Mattis (ret.) as Secretary of Defense and Betsy DeVos as Secretary of Education.

To be fully prepared, companies need to take the time necessary to strategize a new plan, hire the right professionals in Washington, identify the right issues for the company, and be a ready to educate the “new” U.S.  Federal  government.

Duane Morris Government Strategies has a Washington, DC-based government relations and lobbying office for U.S. and foreign companies, organizations, and governments that want to develop a more professional and interactive relationship with the U.S. federal government; Congress, the Executive Branch and regulatory agencies.

We can assist with congressional relations, regulatory affairs, developing positive brand equity for your company throughout the U.S. government, business to government (b2g) contracts, lobbying on specific legislative or regulatory issues, advising on current policy and political developments, and assisting with industry associations where your company is a member. We can provide a comprehensive, substantive and personalized suite of U.S. government affairs services for a cost-effective and competitive budget.

 

 

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Italian Referendum: Lessons Learned

In an earlier comment we wrote that: “The ‘populist’ movement that inspired the raise of Trump and Sanders  may be about to surge through Europe. If so, it will change drastically the Continent’s political landscape in ways not seen since  World War II”.

In Italy, the last polls published before Sunday’s referendum showed a widening opposition to Prime Minister Matteo Renzi’s proposed constitutional reform package. Although there were rumors that the contest had tightened up in the last two weeks, when polls could not legally be published, the government ultimately lost by a wide margin. Just under 60 percent of the Italian electorate voted against Renzi’s package, whereas just over 40 percent supported it (turnout was a historically high 65.5 percent.) Renzi, speaking just after midnight on Monday morning, acknowledged defeat. He thanked the country for its involvement in the debate and for the high level of participation. He also made it clear that he would tender his resignation.

Italy now needs a new government and likely some electoral reform.

Italy’s biggest problem, however, is not debt, economics, or even immigration. It is the widespread disillusionment of Italy’s youth. The most striking revelation to emerge from public opinion polling prior to the referendum was the extent to which young people feel excluded from the political system. Macro Advisory Partners, a London-based consulting firm, found in its final pre-referendum poll that opposition to Renzi’s reforms was strongest among the youngest voters. Fifty-eight percent of Italians between ages 18 and 24 said that they rejected the constitutional reform package, as did 51 percent of Italians between 25 and 34; opposition among students was 59 percent. The youngish Renzi had hoped that the youth would throw its support behind his “hope and change” message of reform. In reality, however, they were more likely to support Beppe Grillo and his populist Five Star Movement.

Young Italians have good cause for disillusionment. Despite the fact they are, on average, more educated than their parents are, many are under- or unemployed and still live in the homes they grew up in. Tackling this disillusionment, which is leading to an exodus of youth from the country and a decline in participation among the mainstream political parties, needs to be the next government’s top priority.  If Italy’s political leadership cannot promise the rising generation better material circumstances or real political engagement, it, and the rest of Europe. will soon have to face the consequences.

How Effective Target Setting Can Impact a Grassroots Campaign

Duane Morris Government Strategies, LLC pic
Duane Morris Government Strategies, LLC
Image: dmgs.com

Attorney and businessman Martin Milita is graduate of the Temple University School of Law, and served as the chief executive officer of Fiore Group Companies, Inc. from 1996 to 2001. Currently, Martin Milita serves as senior director at Duane Morris Government Strategies, LLC, a company that provides a full range of government relations and public affairs services such as grassroots campaigning.

A grassroots campaign is usually undertaken by an organization seeking to impact pending legislation. Because the main objective of a grassroots campaign is to get legislators to take notice of the campaign’s message, some lobbyists may rely on large numbers and loud voices. However, a reliance on these factors may defeat the overall purpose of the campaign.

One of the things that lobbyists must observe in conducting grassroots campaign is effective target setting. Phone calls and mailing in large numbers may be effective if all supporters can actively participate in the campaign, but that is not always the case. Otherwise, lobbyists should target the quality of the legislator connections, not the quantity. In fact, even a small number of phone calls can create a huge impact of they are targeted to people who maintain close relationships with politicians. As such, lobbyists must build these relationships and eventually put them to good use when the need arises.

“Is Congress an endangering species?”

For businesses hoping to have an influence on the course of regulation, much of the action has moved from Congress to the executive branch. The last few years have seen an expansive exercise of federal power through the issuance of new regulations, the reinterpretation of existing ones, and the enforcement of both, as well as more novel regulatory approaches. The trend shows through in virtually every regulatory area, and it looks likely to continue through 2015 and beyond.

On the one hand, the Obama administration is proud of its assertive approach, pointing to progress even in the face of what it calls a “do-nothing” Congress. By contrast, congressional Republicans — and some constitutional scholars — have accused the administration of regulatory overreaching.

But one thing seems certain about this new wave of administrative activism: it spells new headaches for business.

More regulation means more compliance costs and challenges. More aggressive enforcement means harsher penalties and more intrusive sanctions for failure to comply. And more key decisions being made by the executive branch — rather than by Congress or the courts — means businesses have to be even more focused and strategic to make their views known and influence the outcomes.

Federal agencies have been testing the limits of their statutory authority. Like the president, agency leaders also see themselves as taking up the mantel that Congress dropped.

For example, no major environmental statute has undergone a major reauthorization since the 1990s. In the meantime, new environmental challenges — greenhouse gases, new findings about substance toxicity, and the like — have emerged. In some cases, there is broad agreement — among stakeholders, if not in Congress — that revisions are needed because the laws as currently written cannot be interpreted to address these newer concerns.

As the number and scope of administrative rules multiply, so do the penalties for non-compliance. If just measured in fines alone, these penalties are rising fast: more than $13 billion in 2014, up from about $7 billion in 2013, according to economist Brandon Garrett at the University of Virginia. (In 2008, the figure was closer to $2 billion.) And, in the realm of consumer protection, for example, the Federal Trade Commission has been increasingly willing to go to court to seek monetary damages or consumer redress rather than settling for an injunction- blocking future non-compliant behavior.

Moreover, enforcement actions are increasingly resulting in much more than a fine and an order to stop the violations. Prosecutors are demanding deep and very specific changes in management and embedding monitors in the company to ensure that they occur. Settlements are requiring corporate policy changes, staff training, remedial community training programs, and more.

Additionally, companies facing even the threat of enforcement actions have allowed regulators to influence their policies in new ways. For example, after a safety crisis, General Motors signed an accord with the National Highway Traffic Safety Administration in which it agreed to implement training policies that expressly disavow statements diluting the safety message in internal communications. The move is part of a growing trend of agencies trying to change corporate culture.

In another case, the Consumer Product Safety Commission is calling on retailers to pull products from their shelves when the agency cannot convince manufacturers to recall them. Retailers are increasingly willing to go along; now that the commission’s civil penalty cap has increased from $1.8 million to $15 million.

Regulators are also becoming more aggressive in their efforts to root out alleged misdeeds, largely through efforts to recruit insiders. For example, in 2013 the government enhanced whistleblower protections for employees of government contractors and extended the protections to subcontractors. When coupled with significant awards afforded to whistleblowers, the protections amount to deputizing the workers of America to blow the whistle on their employers and act as a partner in enforcement.

The recent regulatory expansionism will continue through 2015 — and likely beyond — thanks to a striking confluence of events.

  • Firstly, the third year of a president’s term tends to be the most aggressive in terms of policymaking. Midterm elections are over, political appointees are firmly in place, and the administration is acting with its legacy in mind. By contrast, in 2016, the administration may face pressure to pull back on rulemaking for the sake of pre-election politics or transitional smoothing.
  • Secondly, the 2013 decision by Democrats to strip Republicans’ ability to filibuster the president’s nominees has resulted, for the first time in a decade, in a federal appeals bench — including the all-important D.C. Circuit — in which judges appointed by Democrats considerably outnumber Republicans. These judges are generally thought to be more receptive to the regulators in legal challenges to the administration’s authority.
  • Thirdly, a U.S. Supreme Court ruling in 2013, City of Arlington v. FCC, appears to give agencies wide discretion in deciding the scope of its statutory authority. Arlington continues a tendency running back 30 years for courts to defer to agencies when there is ambiguity about whether the agency is allowed to act under its authority established by Congress. As a result, unless Congress clearly mandates otherwise, agencies can expand their authority as far as they see fit. And since their statutory authority tends to be quite broadly stated, agencies have a lot of leeway.

Companies struggling with compliance do have a range of options, however.  As they devise their compliance strategy, companies may want to seek guidance from agencies on how their rules might apply to them; seek waivers, exceptions and mitigating guidelines; and develop sound policy reasons to have the agency construe its rules in a manner that achieves the regulatory goal but is less onerous for a company.

Congress still has a role to play in affecting an industry’s regulatory burden. For one, a legislator can write letters or hold hearings in an attempt to influence agencies on important issues. Congress can constrain agency actions by appropriations riders or budgetary restrictions. And legislative wins are still possible for companies that can find issues that can be agreed by both sides of the aisle as job creators.

It is more important than ever to build and sustain relationships with relevant agencies. That means interacting with them regularly and educating them about issues important to your industry. The goal is to build your reputation and their comfort level well before any sensitive issues come up, such as potential enforcement actions or proposed regulations you want to fight.

As in the case of agency leaders, it’s important for companies to establish ongoing relationships with relevant members of Congress, rather than reaching out only when they need something from them.