The State of the United States Government Relations and Affairs
With hundreds of billions of dollars in infrastructure, technology and clean energy funding coming from a series of major bills passing Congress with bi-partisan support in 2022, it is no surprise that Government Relations work has been a particularly busy area for firms during our most recent round of research.
Capitol Hill and state legislatures
The amount of money poured into lobbying efforts continued to break records with spend hitting a new all-time high of over $4 billion according to a Statista report.
Energy companies and industry groups have been particularly busy on Capitol Hill and in state legislatures in connection with the IRA. In a notable example, last year saw a major victory for lobbyists supporting the removal of the 75% capture rate requirement for carbon capture projects.
This change to the 45Q tax credit made financing for carbon capture projects installed at coal-fired generation facilities, opened opportunities for traditional power producers in the IRA.
The technology sector has also been busy when it comes to Government Relations work around oversight of technology companies, perhaps best exemplified by the Senate TikTok hearings. Market commentators spoke to us about the:
“Longer term trend of bi-partisan support for bolstering supply chains and the uncertainties that can arise from geopolitical developments.”
This trend saw huge spend from tech giants and technology industry organizations as well as labor unions and groups representing foreign interests in lobbying efforts connected to the passage of the CHIPS Act.
Research participants told Chambers how congestion in congress was encouraging greater spend:
“We have seen a drive for government relations firms try to be bigger and better, assembling a legion or an army of lobbyists,”
but that frustrations with the lack of success, largely resulting from political gridlock saw clients moving around between firms more frequently as:
“relationships have become transitory and transactional.”
This speaks to the post-pandemic paradigm continuing in the government relations sphere where:
“Clients are trying to figure out the risks and opportunities in the current public policy environment.”
Increase in lobbying spend to support ESG
In the wake of the GOP regaining control of the House at the mid-term elections, Chambers interviewees spoke to us about the success bi-partisan government relations teams were seeing on the Hill. Political volatility has extended to state-level, where significant corporate entities like Blackrock have dramatically increased lobbying spend in support of ESG investment strategies in the face of opposition from the DeSantis administration in Florida and elsewhere.
Corporations have also sought out expertise in Government Relations at state and local level in efforts to access tax credits and other public finance options created by the IRA and controlled by local government bodies.
Government Relations continues to be more important than ever for companies and organizations seeking to position themselves and their industries for the best results and the greatest growth. As one Chambers interviewee put it:
“More than ever, people understand that you need to be at the table, or you won't be part of the conversation.”