This report examines the history, finances, and activities of the American Legislative Exchange Council, a 501(c)(3) organization with headquarters in Washington, D.C., that bills itself as “the nation’s largest bipartisan, individual membership association of state legislators.”

As this report shows, however, ALEC is little more than a tax-exempt screen for major U.S. corporations and trade associations that use it to influence legislative activities at the state level. ALEC allows these corporations to do what they couldn’t attempt directly or openly without risking public criticism. They funnel cash through ALEC to curry favor with state lawmakers through junkets and other largesse in the hopes of enacting special-interest legislation — all the while keeping safely outside the public eye.

The organization’s national meetings appear to be mostly window dressing for policy decisions that have already been made, either within the organization’s offices in Washington, D.C., or in closed consultations with the corporations and other like- minded interests that finance virtually all its activities. Indeed, the state legislators who attend ALEC meetings are joined by the platoons of lobbyists, corporate executives, and representatives of assorted trade and professional associations who pay to have the lawmakers as their captive audience. 

The tie that binds is money, and ALEC’s major underwriters have included the now-disgraced Enron Corporation, as well as the American Nuclear Energy Council, the American Petroleum Institute, Amoco, Chevron, Coors Brewing Company, Shell, Texaco, Chlorine Chemistry Council, Union Pacific Railroad, Pharmaceutical Research & Manufacturers of America, Waste Management, Philip Morris Management Corporation, R.J. Reynolds Tobacco and many other of the nation’s major corporations and trade associations. 

Founded in 1973 by conservative activist Paul Weyrich, ALEC occupies prime office space in downtown Washington, operates on an annual budget of roughly $6 million, and employs a full-time staff of around thirty. In its early years, reflecting Weyrich’s vision, ALEC focused almost exclusively on the hot-button social issues on the right-wing’s political agenda – anti-abortion, anti-feminist, anti-voting rights for the District of Columbia. In the late 1980s, however, ALEC abandoned most of these issues in favor of those that had the benefit of attracting substantial corporate donations.

ALEC pursues its mission chiefly by generating and promoting hundreds of “model” bills, resolutions, and policy statements every year. The state lawmakers said to be “members” of ALEC seem to have little or no real control over the inner workings of the organization. ALEC’s “private-sector members” — three hundred corporate sponsors each paying tens of thousands of dollars a year — appear to run the show, from financing the organization and selecting the issues it pushes, to exercising veto power over its policy positions.

These corporate underwriters father legislation that is drafted with help from ALEC’s staff, approved as “model” bills by the organization’s board, and then introduced by ALEC’s legislator “members” in state capitals from coast to coast. 

ALEC’s success rate is enviable. During the 1999 and 2000 state legislative sessions alone, the organization says more than 450 pieces of legislation based on ALEC’s “model” bills were enacted into law.(1) 

Protecting corporate polluters from environmental regulation is a major ALEC goal. The corporations and trade associations that finance virtually all of ALEC’s activities have used it to mount a wide-ranging and effective assault against laws safeguarding public health and the environment.

ALEC exploits a weakness of state legislatures. Forty-one states have only part-time legislators, and 33 of those have no paid legislative staff. Many state lawmakers are overwhelmed by the hectic, often-frenzied pace of annual sessions. ALEC’s “model” bills and packets of background information on key issues frequently shape the supposed solutions to a wide range of state problems and issues. It is doubtful that the impact of many of the bills is understood by short-handed and busy lawmakers ill-equipped to fully recognize hidden agendas.

This report is based on thousands of pages of primary financial documents and other source material, including tax returns filed by ALEC, its affiliates, and its major underwriters; financial disclosure reports filed by state lawmakers who have participated in ALEC-sponsored junkets and other activities; and thousands of newspaper, magazine, wire-service, and other news-media accounts from 1978 to the present.

Among the key findings: 

• ALEC isn’t by any stretch of the normal meaning of the words a membership association of state legislators. The dues paid by state lawmakers (or paid by state legislatures on their behalf), in fact, make up only a negligible portion of ALEC’s total revenues—typically, about one percent a year.
• For two-year dues of $50, ALEC’s “legislator members” can avail themselves of perquisites that can include junkets to prime tourist destinations in the United States, free or heavily subsidized trips that resemble vacations for their spouses and children, and an assortment of other fringe benefits that range from no-cost child care and medical tests to free Broadway theater tickets and dinners at expensive restaurants.
• ALEC’s more than three hundred corporate sponsors pay annual membership dues ranging from $5,000 to $50,000 to advance their agendas, plus additional fees of $1,500 to $5,000 a year to participate in ALEC’s various task forces, where, according to an ALEC publication, “legislators welcome their private-sector counterparts to the table as equals.”
• Many state legislators are able to tap official travel accounts to pay for their trips to ALEC’s annual meetings and to other ALEC-sponsored events, thus shifting the cost of their trips—air fares, lodging, meals, and entertainment—to taxpayers. An examination of financial-disclosure forms filed by state legislators in 1999 and 2000 suggests that taxpayers foot the bill for at least $3 million in expenses the lawmakers incur each year in connection with their travel to ALECsponsored meetings.
• ALEC’s state chairs often solicit corporate lobbyists and corporate representatives to provide “scholarships” for state legislators to attend ALEC’s annual meetings and other events—and, in some cases, the costs of taking along their spouses and other family members.
• Nationwide, gaping holes in many state ethics and financial-disclosure laws not only allow state legislators to receive gifts—such as free travel, lodging, meals, and the like—but also to do it without adequate disclosure. In most states, legislators do not even have to report gifts received by their spouses and children. As a consequence, ALEC and its corporate sponsors can offer state legislators a large assortment of valuable perquisites that, too often, lawmakers do not have to include on their public financial-disclosure forms. (See Appendix.)
• A review of applicable state ethics and financial-disclosure requirements, coupled with an examination of financial-disclosure forms filed by state legislators whose names appear on a list of state “leaders” published by ALEC, suggests that virtually all of the largesse lavished on state legislators in connection with ALEC-sponsored meetings and other activities goes unreported.
• Throughout most of ALEC’s history, the tobacco industry has been one of its chief underwriters. For many years the nation’s major tobacco companies gave ALEC more than $200,000 a year, sponsored golf and tennis events at ALEC meetings all over the country, and paid its legal bills. In most years, in fact, the tobacco industry’s contributions to ALEC have significantly eclipsed the combined dues paid by all of its “legislator members.”
• Although its incorporation papers stipulate that “the corporation shall not participate in, or intervene in (including publishing or distribution of statements), any political campaign on behalf of any candidate for public office,” from the early to mid-1980s ALEC operated a political action committee (“ALEC-PAC”) for the purpose of making contributions to its favored candidates for public office. The PAC was notable in that it apparently engaged exclusively in “nonfederal” political activities, which have many fewer reporting requirements all effectively beyond the regulatory reach of the Federal Election Commission.
• Although ALEC calls itself the largest, bipartisan, individual membership association of state legislators” in virtually all its promotional materials, it is only nominally “bipartisan” and declines to make its membership list public. All of the state legislators who serve as officers of ALEC are Republicans, and only one of the organization’s twenty-nine directors is a Democrat.