On Nov. 29, Tim Sullivan appeared before the Senate Select Committee on Mining and presented a report critiquing the state’s mining laws. The report was commissioned by the Wisconsin Mining Association, a trade group for which he serves as chairman.
Sullivan urged the state to “unleash the economic power of Wisconsin’s rich mineral deposits for our citizens.” He said the mining bill that narrowly failed to pass the state Senate earlier this year “needs improving,” but he offered few details.
Sullivan is the former head of Bucyrus International, a Milwaukee-based manufacturer of mining equipment. In recent weeks, he has emerged as a key player in ongoing efforts to revamp the state’s mining laws.
The mining bill in the past legislative session drew more than 8,500 hours of lobbying activity by more than 50 groups. Sullivan’s role this time around seems as key as any of those efforts.
Yet Sullivan is not a lobbyist. He’s not registered with the state Government Accountability Board and he doesn’t report how many hours he spends bending official ears on the issue.
Some lawmakers have noted that Sullivan’s advice was solicited, not thrust upon them. “It’s not so much that Tim Sullivan is lobbying us — it’s more the other way around,” says state Sen. Bob Jauch, D-Poplar, the committee’s vice chairman.
Jonathan Becker, head of the GAB’s ethics division, says that doesn’t make any difference: “Even if the Legislature is reaching out for the information, if you provide it, that’s lobbying.”
But Sullivan chairs the mining association as a volunteer. And the lobby law, Becker confirms, “only applies to people who get paid.” So he doesn’t have to register.
Tim Sullivan / Photo courtesy of The Business Journal
Now controversy has erupted over the announcement, made soon after his mining committee appearance, that Sullivan was elected to serve on the board of Cliffs Natural Resources, the owner of large iron ore mines in Minnesota and Michigan’s Upper Peninsula. The company’s board members last year received compensation of between $173,000 and $225,000.
Bob Seitz, a registered lobbyist for Gogebic Taconite, which had and may still have an interest in opening a $1.5 billion iron mine in northern Wisconsin, accuses Sullivan of wanting to make mining more difficult to kneecap the competition.
“A mine in northern Wisconsin would be a direct, lower-cost competitor to Cliffs’ mines already in place,” Seitz says.
According to Sullivan, federal rules barred revealing his ties with Cliffs earlier. But Seitz says he could and should have refrained from testifying.
“To have someone with a significant financial interest in a competing company not disclose that violates the spirit of the law,” Seitz says, speculating that Sullivan’s example could allow others to evade the reporting rules. “All you’d have to do is set up a nonprofit and volunteer for it.”
Creating a sham organization to evade the lobbying law strikes Becker as “a fiction and a fraud” that would be investigated as such. But just having a financial stake in legislation, as is alleged for Sullivan, does not make anyone a paid lobbyist. “I don’t think it violates anything,” Becker says.
Sullivan says he has no stock in Bucyrus, his former company, or any other mining concern, and that his consulting work with various mining interests is all done for free. His role on the Cliffs board, which he’ll start in January, will be his only paid gig, and could affect his role with the mining association: “That’s a discussion I plan to have with the (WMA) board.”
Some allege that Sullivan’s openness to changes in the mining bill is at odds with the position of the mining association. Sullivan says that’s not true, and mining association board member Jim Wood backs him up.
“The bill can be better,” Wood says. “That is the position of WMA and Tim Sullivan.” In fact, Wood hopes Sullivan will stay on as chairman of the mining association board.
If a person is doing more than incidental lobbying of state or federal lawmakers about specific legislation which could impact a significant source of their personal income, they should be required to formally register as a “lobbyist.”
It shouldn’t matter that they claim to be lobbying only as an unpaid volunteer for one particular non-profit organization, if they also receive significant income from another related source.
It also shouldn’t matter whether that related income source is in or out of Wisconsin.
Their significant unregistered and unreported special interest lobbying could have the same potential for negative impacts on the public interest that formally registered and reported lobbying can have, so why should they be exempt?
This article exposes serious loopholes in Wisconsin’s lobbying regulations that need to be closed immediately.
On another tack, I thought that legislative and congressional lobbying by federally registered non-profit organizations was strictly limited by the IRS. The IRS used to prohibit non-profits from spending more than 20% of their “resources” on lobbying, and it didn’t matter whether the lobbying was done by paid or unpaid personnel representing the organization. The IRS could require non-profits to document their compliance, so legitimate Wisconsin non-profits I’ve known have always kept lobbying to a minimum.
Does this IRS rule still apply to Wisconsin non-profits, or only some types of non-profits?
Shouldn’t significant hours of unpaid lobbying effort by an influential person like Mr. Sullivan be considered an “in-kind contribution” with substantial dollar value that should be included and documented to the IRS and State of Wisconsin as part of the Wisconsin Mining Association’s overall financial income and expenditures?
And if such in-kind donations of time put the Association over the IRS limit for non-profits, shouldn’t the Association’s non-profit status be revoked? (It sounds like the Association spends a lot more than 20% of their resources on lobbying, even without inclusion of volunteer time.)
If current federal and state laws don’t include these requirements and limits, they SHOULD, because the public has a right to know and NEEDS to know the full extent and all types of lobbying that influence the public’s government.
It’s frightening to hear about the proliferation of phony, secretive, NON-non-profits who receive flagrantly inappropriate tax-exempt benefits and protections, and use their “non-profit” status to seriously damage our democracy by skirting normal tax, lobby, campaign and disclosure regulations.
This corruption must stop.