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Top groups’ lobbying spending drops in divided Congress

Some K Street firms still saw higher revenues, as AI and regulations drive interest

Maya Wiley, president and CEO of  the Leadership Conference on Civil and Human Rights, and Meta CEO Mark Zuckerberg participate in the “AI Insight Forum” in the Kennedy Caucus Room in the Russell Senate Office Building on Sept. 13.
Maya Wiley, president and CEO of the Leadership Conference on Civil and Human Rights, and Meta CEO Mark Zuckerberg participate in the “AI Insight Forum” in the Kennedy Caucus Room in the Russell Senate Office Building on Sept. 13. (Bill Clark/CQ Roll Call)

Total spending on lobbying by the biggest interest groups fell in the first three quarters of 2023 compared with last year amid partisan gridlock in a divided Congress.

In the first nine months of the year, top influence groups spent $199.3 million on lobbying efforts, down about 16 percent from the $238.3 million spent through the end of September last year, according to disclosures filed with the House and Senate last week. The dip came as the steady clip of major laws that moved through the last Congress slowed to a trickle this session with Democrats controlling the Senate and Republicans the House, where GOP leadership has struggled to maintain control of its conference.

“Clearly, there’s less spending out there going on because we don’t have three major bills moving through the process that we did in the last Congress,” said Rich Gold, who heads Holland & Knight’s public policy and regulation group. 

Eight of the top 10 spenders so far this year spent less than in the same time period last year, even though some of the lobbying firms that spoke to CQ Roll Call said they personally weren’t feeling the revenue squeeze.

One of the outliers, the American Hospital Association, which ranked fourth in overall spending this year, reported $17.1 million in outlays through the end of September, up from $15.1 million in the first three quarters of last year. And CTIA, which represents the wireless communications industry, made the top 10 this year in ninth place after spending $11.6 million, up from $9.4 million for the same period in 2022, when it was not in the top 10.

Last Congress, with Democrats in control of the House, Senate and White House, movement on the 2021 bipartisan infrastructure law and the 2022 semiconductor industry and climate and tax laws drove spending by outside groups. The 118th Congress hasn’t moved legislation of equivalent scope, which was expected given the split control of the House and Senate, Gold said. 

Still, some firms on K Street saw upticks from their clients. Holland & Knight reported $12.5 million in lobbying revenue in the third quarter, up from $12 million the previous quarter and $11.3 million in the third quarter of last year. 

“There are no mega-magnets up on the Hill to draw a lot of spending,” Gold said. “What you’re actually seeing is the reality of divided government, and people both understanding and anticipating that with the House in Republican hands, the ability of Democrats in the Senate and the White House to have their way on issues legislatively is greatly reduced.”

On the spending side, the U.S. Chamber of Commerce led the pack with $48.6 million reported lobbying expenditures so far this year, compared with $58.4 million during the first nine months of last year. The National Association of Realtors followed with $33.5 million through the end of September, down from $56.2 million in the first three quarters of 2022. Though not required, the association includes campaign spending in its lobbying disclosures during election years, which may account for some of the drop.

Health industry groups, top technology companies and AARP, formerly known as the American Association of Retired Persons, rounded out the rest of the top 10 spenders through the first three quarters of this year. 

Meta Platforms Inc., the parent company of Facebook, spent $14.6 million, and Amazon, which is facing growing scrutiny from antitrust and labor practices perspectives, spent $13.4 million. 

Other notable players in the tech space included ByteDance Inc., the Chinese parent company of the popular video-sharing social networking app TikTok. Congress has toyed with banning the app, amid fears of Chinese influence and censorship, and grilled TikTok’s CEO Shou Zi Chew for hours in March. 

ByteDance reported spending $3.8 million on lobbying in the third quarter, up 142 percent from what it spent in the first quarter. The company was the 11th-biggest spender from July through September, just behind AARP, although it didn’t even crack the top 20 for total spending so far this year.

Loren Monroe, a principal at BGR Group, said lobbying firms are subject to the same financial headwinds as the rest of the economy but urged clients not to mistake divided government or chaos in the House for an absence in legislative activity. Congress eventually will have to pass a handful of spending and reauthorization bills, including for defense programs, the Federal Aviation Administration and agriculture and nutrition programs, even if other major packages have fallen by the wayside. 

“Certainly there are fewer bills throughout the year, but there are inevitably large bills that are getting passed, maybe past the deadline, or in an omnibus, or packaged together with different non-germane amendments. But Congress has a way of acting when there are deadlines,” Monroe said. “The bills do get done. And if you wait to the last minute to try to engage or to change a provision, it’s too late.”

BGR Group reported $10.5 million in lobbying revenue in the third quarter, up from the previous quarter and the third quarter last year. Health care issues, including drug prices and legislation to rein in pharmacy benefit managers, have driven client spending, Monroe said, along with foreign policy and defense issues, including the annual National Defense Authorization Act.

Artificial intelligence is an issue drawing client interest from across sectors, Monroe and other lobbyists said. Senate Majority Leader Charles E. Schumer, D-N.Y., has organized a series of bipartisan briefings for senators on AI with the hope that the effort will culminate in legislation regulating the sector. 

Hunter Bates, a partner at Akin Gump Strauss Hauer & Feld, credited AI in part for the firm’s $14.3 million in lobbying revenue in the third quarter, the highest ever for the firm.

“This significant milestone reflects our extensive work navigating a range of issues from trade and healthcare to the particularly dynamic field of AI, where Akin senior counsel and former Chief Counsel to Leader Schumer Reggie Babin has been instrumental,” Bates said in a statement.

Nadeam Elshami, the government relations department co-chair for Brownstein Hyatt Farber Schreck, said AI is an issue that cuts across sectors for the lobbying firm’s clients. Brownstein reported $15.1 million in federal lobbying revenue in the third quarter, down compared with the previous quarter and third quarter of 2022. But year-to-date lobbying revenue at the firm is up overall compared with this time last year. 

“It’s not just the innovators who are developing AI, but what does it mean in health care? What does it mean for defense? What does it mean for transportation? What does it mean for energy? We’re starting to see that AI is in fact creeping into various sectors within our firm,” he said. “I think there’s an opportunity for something — unclear what that is yet — to pass Congress next year.”

Elshami agreed with Monroe, citing annual appropriations, defense reauthorization and the pharmacy benefit manager issue as top legislative targets. The Biden administration’s regulatory activity, particularly on health care and energy, has also kept the firm busy, he said. 

Holland & Knight’s Gold agreed, saying the sharp increase in rule-making activity, driven by the implementation of laws passed by the 117th Congress and the Biden administration’s tougher regulatory posture, has also driven client spending as legislative activity has cooled.

“The administration is making up for that by initiating the greatest regulatory onslaught probably in the last 65 years. The number of regulations we’re going to have coming out over the next nine months has never in my adult life been seen before,” Gold said. “The executive branch action on the regulatory side is more than compensating for the [decrease] in bills moving through Congress.”

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