Three political and lobbying experts recently cut through some of the negativity of national politics and helped remarketers understand how the process can still work for their businesses and industry.
The trio appeared on a panel March 29 during the Conference of Automotive Remarketing, focusing on the practical side of politics. They comprised the first panel at CAR to address lobbying and federal rulemaking geared toward consignors, auctions, remarketing businesses, and the International Automotive Remarketers Alliance, the lead partner on the CAR event.
But the insights and lessons they shared could apply to any business industry or sector trying to look out for its interests.
The session, “Industry Issues, Answers & Politics,” featured:
- Leah Dempsey, shareholder and attorney with Brownstein Hyatt Farber Schreck, LLP
- Kenny C. Hulshof, Partner & Chairman of KBS Group, and who served in the U.S. House of Representatives from 1997-2009 representing Missouri's Ninth Congressional District
- Catherine Boland, VP of legislative affairs for MEMA, the Vehicle Suppliers Association
- Moderator Andrea Amico, the founder and CEO of Privacy4Cars and Co-Chair of the IARA’s Education & Compliance Committee that covers regulatory and legislative matters of interest to remarketers and vehicle finance companies.
Is the Lobbying ‘Swamp’ Really That Bad?
The panel offered a primer on lobbying, PACs, and politicking as a backdrop of information that could inform the IARA’s future interest in pursuing lobbying efforts.
The art of advocating in Washington, D.C., like selling used cars, doesn’t always get the best reputation among the public, so Amico kicked off the discussion asking why lobbying, which now reaches $4 billion in annual spending, is worth the investment.
“It's an old saying in Washington DC that when it comes to your particular issue, you're either at the table or you're on the menu,” Hulshof said.
Hulshof told an anecdote about a neighboring farmer in his native southern Missouri who drove an old pickup truck with a bumper sticker, “Drain the Swamp,” and would needle Hulshof about being a “swamp dweller.” But this farmer also had a bumper sticker that read, “Proud to be a Farm Bureau member.”
“I pointed out to him that the American Farm Bureau of which he was a member is one of the most powerful trade associations in Washington, DC,” Hulshof said. “And I happen to know that he grew some corn last season because his corn did better than mine. And the Corn Growers Association is advocating for his interests, as well as the Corn Refiners Association that takes the raw product of corn and turns it into something. Plus, he's a soybean farmer, and the American Soybean Association works with the biodiesel Association in fighting the pet food industry.”
Every Side Has a Story
The reality for every business sector and industry in America is that public policies sooner or later will intersect with their interests, Hulshof said.
“And there is some other entity out there that is directly opposed to what you're for. Likely, they're going to have some advocate, or some lobbyist, or some trade association, that's butting heads with your interests.
“There are people and industries where you may be on one side of that issue, and then there are competitors that may be on the other side of the issue,” Hulshof added. “That's just one small little sliver of why you've seen this proliferation of lobbyists and advocacy groups in Washington, DC.”
Dempsey, who specializes in advocacy for the auto finance industry, tracks consumer groups who are telling the other side of the story to the Consumer Finance Protection Bureau (CFPB) and the Federal Trade Commission (FTC), among other regulators.
“Those consumer groups very much have the ear of the regulators, even when their data is old, even when it's inaccurate, even though they sometimes base it on a study of 15 people done 10 years ago, it's being cited in a lot of what the CFPB is doing,” Dempsey said. “If you're not telling the story about what's happening, providing the data and examples of how the real world works, and what the business community is actually doing, then they [CFPB and FTC] are receiving a very false image of events.”
Amico added that one advantage of an industry working with an advocate is it expands the “radar screen” of regulations and legislation beyond the horizon. Being able to anticipate rules and decisions can help consignors, auctions, and vehicle finance companies figure out, “What do I need to comply with? What will we have to comply with in the future? How will it affect me in the future?” Amico said.
It's critical for any industry to carve out a unique voice, Boland said. “This is why you join trade associations, for like-minded business groups to come together for best practices, to attend conferences like this, and have your own voice in Washington so your legislators your representatives know what you're thinking.”
An industry should communicate with legislators directly and ensure someone else does not speak for them, Boland said.
What Does a Persuasive Political Pitch Look Like?
Amico asked Hulshof, who has experience as a lobbyist and a legislator, what a Congressional representative being lobbied expects or looks for in an advocacy pitch, and how lobbyists strategize to makes sure they present a persuasive message.
“Having a lobbyist or an advocate or a trade association helps put you in touch with the person who is voting on issues that impact your family or your livelihood,” Hulshof said. “It's much easier to stop a bad bill than it is to pass a good bill.”
No Congressional representative is an expert on every industry or topic, so lobbying also provides a valuable educational role, he said. “Elected officials are looking for information they want to be educated.”
For example, a representative who knows the nuances of agriculture may not fully understand “land rights and water fights,” but has a vote that counts as much as the vote of a colleague who has that expertise, Hulshof said.
“If they're only hearing from the consumer advocates or one small section of a very loud section of the electorate, then they need to hear the full story. Having that advocate, that lobbyist, that person who can speak for you to your elected officials becomes very important.”
Even when Congress is not passing or pushing through much legislation, federal agencies and the executive branch, such as CFPB and FTC, are constantly churning out rules and regulations.
A full-time lobbyist in Washington, DC can track and respond to such developments on behalf of an industry full of busy businesspeople, Dempsey said.
“When the CFPB does something outrageous. . . what you've seen recently is that the House Republicans will send a letter over to them outlining their concerns, asking for more information,” she said.
“We recently saw litigation in New York for credit acceptance where they really had some novel legal theories that don't align with law or statutes.
"The letter asked them, ‘What are you doing here? This isn't what we've written into law that you're supposed to be following.’ So it’s good to have people in DC who understand which levers to pull.
"Even if you can't get a bill passed, you may be able to get something done at an agency, or work with the White House, depending on who you know is in charge, and push for executive orders or pronouncements that are helpful to different industries.”
A Real Street Education
Amico pointed out that just as members of Congress have their own life experiences and levels of expertise, businesspeople possess unique insights and knowledge from their operations that can help inform legislative decisions.
“Members of Congress and their staff really want to see what's happening in the district, what's happening in the state,” Amico said. “Invite them to your facility and talk about the pain points that are happening in your business. It's easy to do. And you don't need to be an expert in legislation and talk about where you want to change clauses in bills. What you bring to the table is much more important, because you're bringing the stories that matter.”
Dempsey flagged a few matters related to the remarketing industry that the CFPB and FTC are pursuing, especially since CFPB director Rohit Chopra came from the FTC. Overall, the agencies have frequently published rules that do not follow commonly accepted administrative procedures for rulemaking:
- A motor vehicle trade regulation that puts voluntary products in jeopardy. If this rule becomes law, the disclosures that would be needed to comply with it would take up more time and make the process of car buying far more difficult. The comment period has closed out, but the FTC has not acted on it yet.
- Junk fees are an issue extending across various industries and have attracted White House attention.
- The CFPB faces questions about its constitutionality, and whether the agency and its actions can be deemed legitimate as decided by the U.S. Fifth Circuit Court. The agency gets its funding from the Federal Reserve instead of the Congressional appropriations process. The case is now before the U.S. Supreme Court, with a decision expected in 2024.
Retaining a Lobbyist and PAC
One question facing the International Automotive Remarketers Alliance is whether to retain a lobbyist or align with the lobbying efforts of other trade associations in the automotive sector.
Washington, D.C. offers many firms that work and advocate for trade associations, Boland said. That may be a more affordable option for many organizations since in-house employees can be costlier than work outsourced to a lobbying firm.
“There are all sorts of models and it’s really about where you get the most ROI,” Boland said. “If you want to walk before you run, then maybe look at a firm that can specialize and be your point of contact in Washington. That may be the best way to start because it gives you time to dip your toes in the water and figure out what works and what doesn't before you make the investment. Opening an office in Washington is incredibly expensive.”
A trade association can work successfully with another one if their mutual interests are 100% aligned, Hulshof said.
PACs Provide Entry Gate to More Access
Dempsey advised that setting up political action committees (PACs) can get complicated with many rules and regulations to follow. While it doesn’t buy you votes, which is illegal, a PAC can help a trade group get valuable facetime with members of Congress.
If you have PAC money to spend, it provides entrance to events, such as dinners, weekend trips, and venues where you can network and converse, Dempsey said.
“Some of the industries that are most effective organizations in DC typically have very large PACs.”
A firm like the one Dempsey works for has a PAC that also serves as a resource for clients who need access to members of Congress, she added. Each trade association must decide how best to engage with a PAC.
“I think there is certainly value to them,” Dempsey said. “The more you see someone and the more you hear them talking to you, then you remember what they are saying,” she said of Congress members. Otherwise, they will be hearing different stories from a trade group’s competing interests.
Hulshof emphasized how developing a PAC-relationship with Congress is a long-term investment that depends on building coalitions and consistent communication.
“If the first time you are meeting your member of Congress is when you have an issue that will dramatically affect your industry in a negative way, that is too late,” he said. While they may pay attention to such a plea, it may not be as much of a priority as for an organization that has cultivated a connection and educated them on an industry’s issues and inner workings, he added.
Lobbyists and PACs can do the homework related to an industry’s ongoing issues or concerns that may be emerging, Hulshof said. “They’ll be more ready to go to battle for you instead of taking your first time knock at the door.”
When The Hair Catches Fire
Boland reiterated that businesses and industries should not wait until “your hair is on fire” before trying to build a connection with Congress.
“Now that the Capitol is open again, you can go see your members of Congress without having to be escorted into the building,” she said. Trade groups and their lobbyists can organize annual legislative summits and scheduled lobbying days on Capitol Hill.
“We form small groups, and we fan out all over the Capitol,” Boland said. “And that gives my members the opportunity to meet their member of Congress and that staffer who works for the member of Congress and get to know them.”
That way, when the hair bursts aflame with a pending crisis, the Congressional staff people are not looking at an industry member’s email or phone number and wondering who the person is and why they haven’t heard from them before, she said.
Although Dempsey agreed trade groups should try to engage early, she offered some hope for those business and industry interests who do contact Congress for the first time with flaming hair. It’s still OK to approach them since some staff people may already know about the issue the industry member is advocating about.
She recalled how her firm would educate Congressional representatives on first contact. “You can potentially stop them from making a mistake that would have hurt a lot of their constituents. Even if you must meet with a member of Congress and tell them you don't really like their bill for a certain reason, if you have a good reason why it doesn't make sense for their communities and their constituents, they will thank you for stopping them from doing something that during the next election cycle could be used against them.”
Dempsey added that many staffers are “25-year-olds” who have never worked a day in their life in any real business and could use as much guidance as possible.
Why Speaking Up Is Worth Your Time
Boland relayed how she worked early in her career, at age 25, as an advisory aide to a U.S. Senator while fielding and communicating information from constituents. “Having a voice builds a relationship with members of Congress. Just be involved, and it will impact you. Pay attention to what's coming out of your trade associations on policies in Washington. That way you need to know when to get involved and when you do need to reach out and call that 25-year-old.”
Dempsey said, “It's important to engage. No matter how you do it, either through clients, through letters, through a phone call, through a Zoom video with staff, they need to hear from you. If it's through a government affairs firm like ours, that's helpful, too. But if they're not hearing from you, I think that's when there's an issue.”
Hulshof called for more bipartisan respect across the aisles.
“Here's the bottom line. And I know this isn't what you get from the headlines in the national newspapers or on your cable TV channels that you and I all like to watch. But the 435 House Representatives and the 100 Senators — every one of them has a deep love for this country.
“Now, we may disagree with the votes of the people we have sent to represent us in Washington, DC. But we should respect the process that they've gone through. To me it's not good enough if somebody says, ‘I voted that way because the Republican leadership said I should,’ or the Democratic leadership wanted this vote or that vote. But if they can articulate for you a reason why he or she has voted a certain way, we should respect that because ultimately, they're trying to do the right thing.”