K Street cashes in as clients navigate uncertainty

Several top lobbying shops beat their July through September quarterly earnings from the same period last year amid protracted uncertainty on Capitol Hill and heightened regulatory activity by the Biden administration. 

Lobbyists are required to disclose their activities and earnings every three months, with the latest reports rolling in around the midnight deadline last Friday.

In addition to the firms’ latest quarterly earnings, lobbyists opened up about behind-the-scenes efforts largely drowned out by the ongoing House Speaker drama and another potential government shutdown. 

“While cable TV remained fixated on the shutdown risk and Speakership melodrama, behind the scenes a lot of Congressional effort went into bills to fund government and extend expiring programs, strengthen our defense in an increasingly dangerous world and smartly address emerging tech risks and opportunities,” Bruce Mehlman, partner at Mehlman Consulting, told The Hill in a written statement. 

Loren Monroe, a principal at BGR Government Affairs, told The Hill his firm’s strong growth “underscores the importance clients place on being engaged in Washington, despite the media narrative that Congress can’t get anything done.” 

Several firms told The Hill their lobbyists are actively engaged on issues, including appropriations, artificial intelligence and pharmacy benefit manager (PBM) reform.  

Massive, must-pass packages — including the farm bill, Federal Aviation Administration reauthorization and the National Defense Authorization Act — are potential vehicles to advance policy proprieties in a Congress that’s quickly running out of time. 

There’s a “limited amount of bandwidth in Congress, frankly,” Nadeam Elshami, co-chair of Brownstein Hyatt Farber Schreck’s government relations department, told The Hill.

Navigating a changing regulatory landscape 

Federal agencies are also advancing their policies “away from the political theatre in the Capitol,” Monroe said, and clients want to know how those policies will impact their interests, particularly in the business community. 

New regulations stemming from major legislative packages passed last Congress “are coming online,” and clients want to know how to prepare for them, Elshami said. 

Most notably, the Inflation Reduction Act (IRA), Infrastructure Investment and Jobs Act, and CHIPS and Science Act — all signed into law by President Biden in recent years — have opened the door to billions of dollars in funding, grants and tax credits. 

“The regulators are still really working to fill out the contour of a lot of the policy to implement those programs,” Karishma Page, a partner at K&L Gates and co-leader of the firm’s public policy and law practice, told The Hill. 

K&L Gates’s federal lobbying revenue hit $3.9 million last quarter. Page said there has been an uptick in nonlobbying activity as firms gather information to help their clients navigate the new regulations and congressional oversight. 

“What smart stakeholders are doing right now is staying engaged,” Page said. 

Firms are also working to mitigate the partisan shocks to the legislative system by building bipartisan teams and campaigns, several lobbyists told The Hill. 

“I feel like every year I say I’ve never seen anything like it though, and then they find a way to top it,” said Jeff Forbes, a founding partner at Forbes Tate.

Forbes Tate’s federal lobbying revenue topped $6.2 million last quarter, up from $5.9 million during the same period last year.

“I think that we’re seeing that you need to really run full campaigns anymore, and our ability to do that has really helped our firm grow,” Forbes said. 

Swipe fee battles loom for some lobbyists

Visa hired Forbes Tate last quarter to support its ongoing campaign against the Credit Card Competition Act, a bill that has sparked a lobbying battle between banks and retailers. 

The bill, reintroduced by Sens. Dick Durbin (D-Ill.) and Roger Marshall (R-Kan.) in June, would require financial institutions with $100 billion or more in assets to offer at least two network options for processing credit card transactions. 

At least one of those networks must be an option other than Visa or Mastercard, which dominate a combined 80 percent of the U.S. credit card network market. 

Visa and Mastercard are members of a coalition opposing the bill, which includes major financial institutions including Capital One, JPMorgan Chase and Wells Fargo. The Electronic Payments Coalition has argued the bill would help big box stores and compromise popular rewards programs, among other concerns. 

The bill’s supporters say the increased competition would help bring down the cost of credit card “swipe fees,” which currently average around 2 percent. The Nilson Report estimated retailers paid more than $160 billion to process nearly $10.6 trillion in credit, debit and prepaid card payments last year last year.

Lobbyists on both sides of the fight have told The Hill the most likely path forward would be to attach the bill to one of the must-pass packages making their way through Congress.  

“It’s anyone’s guess what happens” on the vehicle, Forbes told The Hill, adding, “We have made our point to a lot of people who may not have agreed with us on the last go-round who are really starting to understand what we’re talking about.” 

Big Pharma and benefits remain on the radar

PBM reform has also emerged as a bipartisan priority in a polarized Congress.  

No fewer than a dozen bills have been introduced this year to target the pharmaceutical industry intermediaries, address increasing consolidation among PBMs and bring greater transparency to prescription drug pricing and access. 

The Pharmaceutical Research and Manufacturers of America (PhRMA), the dominant trade group representing the pharmaceutical industry, has supported PBM reform bills. Organizations that have gone head-to-head with PhRMA in the past, including AARP, are also in favor of PBM reforms.

But none of those legislative proposals would lower drug prices, the Pharmaceutical Care Management Association (PCMA), the trade association representing PBMs, previously told The Hill.

The PCMA, which significantly upped its federal lobbying spending this year, has urged Congress to instead focus on promoting competition in the prescription drug marketplace. 

Regulations loom as the next major battleground

On the regulatory front, several lobbyists mentioned a new Department of Labor rule that would redefine the term fiduciary under the Employee Retirement Income Security Act of 1974 (ERISA).

The proposed rule would “more appropriately define when persons who render investment advice for a fee to employee benefit plans and IRAs are fiduciaries,” the rule’s Office of Management and Budget (OMB) summary states.  

The Labor Department submitted the proposed rule to OMB in early September. OMB records show organizations — including the Securities Industry Financial Markets Association, National Association of Insurance and Financial Advisors and U.S. Chamber of Commerce — have since met with OMB and Labor Department officials. 

Those are just a few of the policy battles heating up ahead as the end of the year — and the start of election season, when legislators and the president will be focused on campaigning — draws closer.