United States: New Lobbying And Ethics Law Taking Effect—Take Steps Now To Ensure Compliance

Recently, the President signed into law the Honest Leadership and Open Government Act, which imposes new lobbying disclosure and ethics requirements. Moreover, the law establishes new civil and criminal liability for failure to comply. These new requirements and potential civil and criminal penalties hold implications for corporations and other entities engaged in any political or advocacy activities, even if they are not currently registered as lobbyists. This PoGo Alert summarizes the new changes and the compliance actions that should be taken before 2008 to ensure your organization has a system in place to comply with these requirements.

Changes to Lobbying Disclosure, Gift, and Earmark Rules

The new law imposes significant new restrictions and reporting requirements relating to lobbying activities, gift and travel rules, and legislative earmarks. Some of the new provisions have already been implemented, and the other provisions take effect soon; the new reporting requirements generally take effect January 1, 2008. We provided a more lengthy analysis of these new provisions when Congress passed the legislation in August. The most significant changes are summarized below.

Lobbying registration: Under the new lower lobbying expenditure threshold, companies, trade associations, and other entities that employ an in-house lobbyist who makes two or more lobbying communications with covered officials and spends twenty percent or more of his/her time on lobbying-related activities must register under the Lobbying Disclosure Act if the entity makes $10,000 in lobbying-related expenditures over a three-month period (including internal salaries and payments to outside lobbyists). For lobbying/consulting firms, the registration requirement is now triggered by receiving $2,500 in income from lobbying over a three-month period. The requirement to register makes an entity subject to the additional obligations listed below and to the new civil and criminal liability

Lobbying reports: Reports must now be filed quarterly, rather than semi-annually. As has been the case, each report must list each in-house lobbyist and lobbying expenditures and receipts. Additional disclosures are now required. For instance, lobbyists, including in-house lobbyists of corporations, must now disclose in their reports any prior federal government service over the preceding twenty (20) years. Coalitions and associations must also identify in their reports any organization that contributes more than $5,000 to the coalition or association to fund its lobbying activities in that quarterly period and that actively participates in the planning, supervision, or control of lobbying activities. Effective Jan. 1, 2008 (first report due Apr. 20, 2008).

Electronic filing: Lobbyist reports filed with Congress and registrations and supplements filed under the Foreign Agents Registration Act (FARA) must now be filed electronically. Effective Jan. 1, 2008 for lobbying reports; effective Dec. 13, 2007 for FARA reports.

Semi-annual disclosure of political contributions: Twice a year, and separate from the quarterly lobbying reports, lobbyists (including in-house lobbyists) will have to report to Congress all of their federal political contributions above $200. Each corporation or entity that has filed a lobbying registration must also report political contributions above $200 made by the corporation or entity or by a political action committee (PAC) established or controlled by the corporation or entity. Effective Jan. 1, 2008 (first report due July 30, 2008).

Certification of compliance: Lobbyists must now certify semi-annually that they understand and have complied with Congressional restrictions on providing gifts and travel to lawmakers and their staffs. Corporations and other entities that have filed a lobbying registration must certify that no one in their employ has violated any of the gift or travel restrictions, with the potential for civil or criminal liability for non-compliance or a false certification.¹ Effective Jan. 1, 2008.

Gifts and Travel Restrictions

Broad prohibition on lobbyist gifts: Although gifts were previously permissible under a certain dollar amount, gifts from lobbyists and lobbying organizations to Members of Congress, their staffs, and their immediate family members are now generally prohibited, regardless of value. Violations are subject to potential civil or criminal liability. Nevertheless, roughly two dozen exceptions still apply. A new Senate exception was adopted that allows Senators to participate in home-state constituent events, but there are very specific requirements that must be satisfied, including: the cost of the meal must be less than $50, no lobbyist may be present, at least five constituents must be in attendance, and attendance by the Senator must be appropriate to the duties of his/her office. This will be a difficult standard to meet, as it seemingly requires an assurance that nobody in attendance is a registered lobbyist, including in-house corporate lobbyists. Already in effect.

Travel restrictions: Lobbyists, corporations that employ or retain a lobbyist, and lobbying firms generally may not organize, plan, or pay for trips for Members of Congress or their staffs. Nor may lobbyists join lawmakers or staff on any portion of a trip. Moreover, all reimbursed travel must be approved in advance and conform to specific time and other limits. In seeking prior approval from the ethics committee, Members of Congress must vertify that no lobbyist was involved in requesting, planning, arranging, or organizing the event other than to a de minimus extent. One-day, one-night trips for fact-gathering purposes may still be permitted in some limited circumstances, subject to pre-approval. A special exception applies in the Senate to travel paid for by 501(c)(3) organizations, and an exception in the House applies to travel paid for by institutions of higher education. These new travel restrictions can significantly affect the ability of organizations to invite Members of Congress or Congressional staff to speak at or participate in conferences, annual meetings, site visits, and other events held outside of Washington, D.C. Effective in the Senate the later of Nov. 13, 2007 or the issuance of Ethics Committee guidance (expected by Dec. 13, 2007); already in effect in the House.

Valuation of private plane travel: Senators and their staffs must now pay for flights on private jets at charter flight or fair market value rates. House Members and their staffs continue to be prohibited from flying on private jets. Already in effect

Additional Restrictions on Public Officials & the Legislative Process

Earmarks: Requests for earmarks generally must include justifications, information about the intended recipient, and a certification that the sponsoring Member will not receive a personal benefit. In addition, Senate earmarks must be identified in a database at least 48 hours before they are voted upon. Already in effect .

Conference: Legislative provisions not included in either the House or Senate version of a bill may not be added to a conference report. If such a provision is added, it will be subject to a point of order in the Senate. Moreover, provisions contained in both the House and Senate versions may not be removed in conference. Removal of such language is also subject to a point of order. Already in effect.

Lobbying by family members: Spouses of Members of Congress, and the immediate family of Senators, may not lobby the offices of their husbands or wives. For Senate spouses, there is an exception if the spouse has been a lobbyist for more than a year prior to the Senator’s election or to the marriage. Already in effect.

Post-employment restrictions: The new law extends the ban on lobbying by Members of Congress and certain staff members for specified periods of time after leaving their positions. Effective the earlier of Congress’ adjournment or Dec. 31, 2007.

Negotiating for private sector employment: Members of Congress and certain senior staff members are barred from negotiating private sector employment that involves lobbying activities unless they notify House or Senate officials within three days of commencing negotiations. Already in effect

Bundling: Candidates, political action committees, and political parties must, on a semi-annual basis, report to the Federal Election Commission (FEC), contributions that are "bundled" by persons "reasonably known" to be lobbyists, organizations that retain lobbyists, or political committees controlled by lobbyists or their employers. Two or more contributions will be considered bundled if the lobbyist collects and forwards them to the political committee or if they are received by the committee and credited to the lobbyist. The threshold for reporting bundled contributions is an aggregate amount raised of $15,000, indexed for inflation, in any semi-annual period. The law requires the FEC to promulgate rules regarding specific reporting requirements. Effective three months after the FEC issues regulations.

National party conventions: Members of Congress may not attend events held in their honor during the national party convention period if the events are funded by a lobbyist or organizations that retain lobbyists (unless the Member is a nominee for President or Vice President). Already in effect.

Prepare for these New Restrictions Now To ensure compliance with these new requirements, your organization should take steps now, as necessary, to revise policies and prepare to gather and report additional information regarding your lobbying and political activities. Most of the reporting provisions take effect beginning January 1, 2008; many of the new restrictions are already in effect or soon will be, as detailed above.

For instance, your organization may need to:

• Develop organization-wide policies to ensure that all employees are fully briefed on and are in compliance with all applicable Congressional gift and travel restrictions, lobbying restrictions, and restrictions relating to sponsorship of convention events. See above, generally.
• If you are not currently registered as a lobbying organization, assess whether the new monetary thresholds require you to register and/or file based on anticipated or actual lobbying expenditures during the first quarter of 2008. See Lobbying registration above.
• Inform the preparer of your lobbying reports that reports must now be made quarterly and filed electronically. See Lobbying reports and Electronic filing above.
• Establish procedures to gather the additional information required beginning with the first quarterly filing in 2008, and develop a compliance system so that you can certify that your organization has complied with Congressional gift and travel restrictions. See Additional disclosures and Certification of compliance above.
• Establish procedures to report all political contributions made by your lobbyists, your organization, or your PAC above $200. See Semi-annual disclosure of political contributions above.
• Keep in mind the new disclosure and reporting provisions relating to political contributions, bundling, and earmark requests as you plan your advocacy activities. See Semi-annual disclosure of political contributions, Earmarks, and Bundling above.
• Take into account employment negotiation requirements applicable to Members of Congress and staff if you are considering hiring a Congressional staffer or a Member of Congress.

Footnotes

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.