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Lobbyist Ethics Tips July 2010


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Lobbyist Ethics Tips July 2010

  1. 1. centertop<br />Lobbyist Ethics Tips<br />A Monthly Free Report on Lobbying Ethics<br />July 2010<br />This month’s tips:<br />So You’re a Lobbyist... What Next?<br />Registering to Lobby as a Non-Profit<br />How to (Correctly) File Your LD-203<br />How to Report Lobbying the Executive Branch<br />What Defines a Meal on the Hill?<br />Giving A Gift: What Won’t Land You in Jail?<br />Drinks at the Bar: A Quick and Dirty Guide<br />Taking a Member or Staffer to a Ticketed Event<br />From’s Lobby Blog & The Lobbying Compliance Handbook<br />, Washington Representatives Online <br />A division of Columbia Books & Information Services<br />Editors: Brittany Carter, Elise Hill, Drew Johnson, Madiha Qureshi, and Charles Slife<br />So You’re a Lobbyist... What Next?<br />HLOGA is a complex law and can be tough to fully understand. So it’s back to basics with our first tip: Who must register as a lobbyist? Merely making one contact with a lawmaker does not mean that an individual must register as a lobbyist. There are several triggers that must be met before registration.<br />Before filing an LD-1 (registration form), a lobbying organization (including an individual doing business as a sole-proprietor lobbying firm), must meet certain triggers. Triggers depend on whether the organization retains clients (reports lobbying income on registration forms) or employs its own in-house lobbyists (reports expenditures on registration forms).<br />If retaining clients, one person (or entity) must:<br />Make more than one lobbying contact and<br />Spend more than 20% of time on lobbying activities  and<br />Must receive more than $3,000 in lobbying income in quarter<br />If employing lobbyists for own issues, one person (or entity) must<br />Make more than one lobbying contact and<br />Spend more than 20% of time on lobbying activities  and<br />Must spend more than $11,500 on lobbying activities in quarter<br />Registering as a lobbyist:<br />Once the thresholds are reached by the organization or individual filing, an LD-1 form must be filed at the earliest point, either…<br />Within 45 days of being retained/employed to make lobbying contact<br />Within 45 days of first lobbying contact<br />What must be filed:<br />Organizations are required to report the issues upon which they are lobbying or being retained to lobby, and the lobbyists expected to be lobbying for the organization / client.<br />Organizations required to file quarterly income and expenditure reports (Form LD-2).<br />Organizations AND individual lobbyists are required to file semi-annual report of political contributions / other payments (Form LD-203).<br />All lobbyists are subject to compliance with the House and Senate gift and ethics rules, and must certify on their LD-203 form that they have read and understood the ethics rules.<br />These disclosures are filed with the House Office of the Clerk and the Secretary of the Senate.<br />******************************************************************************<br />How to Register to Lobby as a Non-Profit<br />Lobbying by nonprofits and charitable organizations can be a touchy issue on K Street. Regardless of how noble the cause they’re lobbying for is, many government relations representatives for charities want to skip on registering. Part of it is just trying to escape the term “lobbyist” for the usual reasons, but more often than not, it’s because of confusion over two different sets of rules for lobbying by charities adopted by IRS and the Congress. Here’s something charities should take comfort in: the government likes you. Both laws are not as complicated or scary as perceived, and with a little bit of due diligence, it’s entirely possible to lobby while staying legally within all the limits. But bear in mind that, if your activities and expenditures meet the thresholds, you must register under the LDA - whether you want to be a lobbyist or not.<br />The LDA (and as amended by HLOGA) states that in addition to reporting all lobbying expenditures on their Form 990, nonprofits may also be required to register with Congress and report their activities, but only if they meet these two thresholds:<br />You have an employee who is a “lobbyist,” defined as someone who spends 20% or more of his/her time engaged in lobbying activities and the same employee makes one or more lobbying contact in the same quarter<br />Your total federal lobbying expenses are expected to exceed $11,500 during a quarter<br />501 (c) (3) public charities can also invite members of Congress and their staff or families to attend fundraising events free of charge, so long as they extend the invitation themselves (and not through corporate sponsors or non-employees), the primary purpose of the event is fundraising, and any entertainment offered to the Members or their staff is provided to all attendees equally.<br />As for keeping track of lobbying activities for IRS purposes (which you must do in order to file your 990), two options exist. Either an organization must submit to the “substantial part” test, where the IRS looks at activities and expenditures to determine how much time and money you’re spending on lobbying, or the organization may elect to an expenditures (501 (h) ) test.<br />The 501 (h) test is often the best way to go for most 501 (c) (3) charities – just file a one-page form – not just because it provides generous limits on how much they can spend on lobbying, but also because it gives very clear and helpful definitions of what legislative activities do not constitute lobbying. Note that this election is in fact a limitation on the amount of time and money that the organization can spend on lobbying – but for most nonprofits, whose primary purpose is not lobbying, this election makes sense. Note that private foundations are prohibited from attempting to influence legislation or participating in partisan politics.<br />******************************************************************************<br />How to (Correctly) File Your LD-203<br />In last week’s ethics tip, we discussed registering as a lobbyist. This week we’ll take a look at another form that all lobbyists must contend with: the LD-203. Background: The LD-203 was first required as part of HLOGA, and unlike the LD-1 and LD-2, the LD-203 is filed by both organizations and individual lobbyists. It is submitted on a semi-annual basis, on July 30 and Jan. 30.<br />Information filed: Organizations and lobbyists are required to disclose the following:<br />Any PACs that are “controlled” by the org/lobbyist<br />Contributions of $200 or more made to federal candidate committees, national party committees, and leadership PACs<br />Lobbyists serving on a board of a “non-connected” PAC are also required to disclose the contributions made by the PAC<br />Donations to presidential libraries of $200 or more<br />Donations to inaugural committees of $200 or more<br />Payments of any amount for the following:<br />Events which “honor or recognize” a covered executive branch or legislative branch official<br />Entity named for a legislative branch official<br />Entity financed, maintained, established or controlled by legislative branch or executive branch official (only applies to entities that are established while serving as covered official)<br />Meeting held in the name of covered legislative branch or executive branch officials<br />Finally, and very importantly, registrants must state compliance with the House and Senate gift rules:<br />“Registrant has read the House and Senate rules related to gifts and travel and has not provided, requested, or directed any gift including a gift of travel to a member, officer, employee of the House or Senate with the knowledge that giving that gift or the receipt of that gift by the House or Senate member or employee would violate Senate Rule XXXV or House Rule XXV.”<br />For more information on the gift and ethics rules, see our Lobbying Compliance Handbook.<br />******************************************************************************<br />How to Report Lobbying the Executive Branch<br />D.C. is abuzz with President Obama’s nomination of Solicitor General Elena Kagan to the U.S. Supreme Court.  As she is currently a member of the Executive Branch, any attempts to wine or dine Ms. Kagan in the days and weeks leading up to the Senate’s confirmation hearings must fall safely under the Executive Branch gift and ethics rules. So let’s take a look at some of those ethics / gift rules:<br />General rule: “prohibited sources” (those with business before the particular agency) may not give a gift (or gifts) to agency employees. Executive branch employees may not supplement their income in any way, and are subject to certain limits on de minimis gifts or entertainment.<br />There is a $20 aggregate limit per occasion<br />There is a $50 aggregate limit per year<br />Other particular exceptions (e.g. widely attended gatherings, modest items of food and refreshment, opportunities and benefits that are generally available to the public, etc.), may be applied if all the necessary factors are in place (see the Office of Government Ethics for additional, complete information on this topic)<br />Political appointees within President Obama’s administration are also under an additional Executive Order that restricts gifts they can accept. Political appointees (of which Ms. Kagan is one), may not accept gifts from lobbyists. These political appointees may NOT use certain gift rule exceptions which are in place for other types of executive branch employees (see above, and the OGE’s site). Political appointees may not accept a meal, attendance, or entertainment at a lobbyist-sponsored event.<br />Political appointees in President Obama’s administration have also signed a pledge not to become lobbyists after their service in government.<br />******************************************************************************<br />What Defines a Meal on the Hill?<br />The House and Senate Ethics Rules are very strict regarding providing food and meals (notice they are two different things) to Members and Staffers. Lobbyists and lobbying organizations must be especially careful that they stay within the rules – because they are not allowed to give “any thing of value” to a Member or staffer, provision of food or a meal must fall within one of several exceptions. The Ethics rules recognize certain food as a meal, regardless of its cost. Even low-cost meals such as pizza, hot dogs, or sandwiches are counted as meals.<br />Meals at a Glance As Defined by Ethics Rules<br />MealMenu Is a MealMenu NOT a MealBreakfastFull breakfast: eggs, bacon, etc.Continental breakfast: Bagels, muffins, doughnuts, juice, coffee, teaLunchSandwiches, hot dogs, pizza, soups, luncheon entrees, salads, hamburgersLight appetizers – not as part of a mealDinnerSandwiches, hot dogs, pizza, soups, dinner entrees, salads, hamburgers; carving stations, pasta stationsLight appetizers, no heavy hors d’oeuvres offered as a substitute for a meal<br />If you are a lobbyist or your organization employs or retains a lobbyist, in order to offer and pay for a Member or staffer’s meal under the menu descriptions above, it must fall within one of the exceptions listed below for it to be legally offered to a Member/staffer.<br />There are specific circumstances where a lobbyist or lobbying entity is allowed to pay for a meal of a Member/staffer in the House and Senate and one additional type of meal which applies only to Senators and Senate staff. The meal exceptions include meals served at, by or involving:<br />A charitable event<br />A widely attended event<br />A constituent event in Washington, D.C. (applies to House and Senate)<br />A Senate “constituent event” – held in home state of senator<br />An educational event<br />Training in the interest of the House and/or Senate<br />Circumstances involving personal friendship<br />Circumstances in which the meal is received/offered in his/her role other than as congressional Member or employee<br />A meal incident to a site visit<br />A federal, state, or local government entity<br />A foreign government<br />A relative<br />A political fundraising event<br />An awards ceremony or occasion where a Member/staffer is being honored<br />For each exception noted above, there are several factors that must ALL be present in order for the exception to apply. Seek guidance when planning a meal or event where food may be served and Members or staffers invited. <br />******************************************************************************<br />Giving a gift: What won’t land you in jail?<br />June seems to be the month where everyone is holding bridal showers and baby showers, and the full complement of high school and college graduations are also in full force. Lobbyists should be cautious when deciding whether to give a particular gift. In addition to food, drinks, travel, and lodging, there are occasions when people want to give tangible gifts to Members and staffers — and sometimes those who want to give gifts are lobbyists and the organizations and associations that employ or retain them. The $49.99/$99.99 allowance — in place before the enactment of HLOGA — still applies to non-lobbyists, and in certain instances, the organization or company that employs or retains the lobbyists. However, HLOGA included a gift ban that applies to every individual lobbyist and every lobbying firm.<br />General rule on gifts: Lobbyists and entities that employ or retain lobbyists (and registered foreign agents) may not pay for or give any gift to a Member of Congress or a Congressional staffer. For purposes of the gift rule, an entity that employs or retains lobbyists to represent only the organization’s interests will not be considered a lobbyist.<br />Type of GiftFactors Allowing GiftSpecial occasions:  Weddings, Anniversaries, Babies, GraduationsGeneral Waiver: Advance written request from Member/staffer for general waiver for gifts for wedding or birth of a baby (not public)-If no advance waiver, must obtain specific waiver for specific gifts (public)-If valued at more than $335, must be disclosed on personal financial disclosure report-Waiver may be requested on case-by-case basis for significant anniversaries and graduationsGifts to Spouses or relatives of Members/staffersGifts to spouses or relatives of Members and staff may not be accepted if given to circumvent the prohibitions on gifts to Members and staffers<br />Tangible gifts to Members and staffers from sources other than lobbyists still fall within the $49.99 gift limit, with no acceptable gifts from a single source in a calendar year valued in excess of $99.99. <br />An entity that employs or retains lobbyists only to lobby for its own interests is, for purposes of the gift rules, not itself a lobbyist. That means that a corporation that employs or retains a lobbyist could pay for and send flowers to a Member’s office congratulating him on his new baby, but the individual lobbyist or a lobbying firm could not. To be perfectly safe, don’t send a gift and don’t send flowers. Send a card.<br />******************************************************************************<br />Drinks at the Bar: A Quick and Dirty Guide<br />This is a short tipsheet on buying drinks for your favorite Congressional staffers at the bar – whether it’s the annual Cinco de Mayo party or an unintentional meet-up at Tortilla Coast, here’s what you can and can’t do.<br />Remember the gift rule: no lobbyist may offer any thing of value to a member of Congress or Congressional staffer. But there is an exception for food and drink of nominal value. The guidance is a little complicated, so stick with us here. When can an item of food and drink of nominal value be offered by a lobbyist to a Member/staffer?<br />The recent interpretations by the House and Senate ethics committees would suggest some possible rules of thumb:<br />(chart next page)<br />Drinks at the Bar – A Guide<br />Food / Beverages OfferedSetting and CircumstancesSenate Standard is “food items from lobbyists and others valued at $10 or less and offered at an organized event, media interview or other appearance where such food items are normally offered to others”House Standard is “group or social setting”Pitcher of beer at the barSpontaneous, accidental; no invitations, not a  planned eventProbably, because it is drinks only, no foodYes, offered in a group, social settingPitcher of beer at the barEmailed invitations to specific people:  “Meet at Tortilla Coast 5 to 7 on Thursday”Yes, because it is an “organized event”Yes, offered in a group, social settingBottle of wine at the barOffered to anyone who wants a glassProbably, but only if no food and only if wine is of nominal valueYes, offered in a group, social setting and only if the wine is of nominal valueBottle of wine at the barOrganized wine tasting, invitations sent to specific peopleYes, provided the wine is of nominal value, because there is no food and it is an organized social eventYes, provided the wine is of nominalvalueMargaritas and nachosLobbyist pays check for everyone in the bar on Cinco de Mayo nightProbably, but only if the nachos offered do not exceed $10 valueYes, offered in a group, social setting and nachos are light appetizers, not part of a mealMargaritas and nachosCinco de Mayo gathering organized by a certain group, lobbyist pays a share of the costsYes, an organized social event akin to a reception, nachos are light appetizers, not part of a mealYes, offered in a group, social setting, also organized event akin to a reception and nachos are light appetizers, not part of a meal<br />******************************************************************************<br />Taking a Member or Staffer to a Ticketed Event<br />Lobbyists must be careful when inviting their favorite members of Congress or Congressional staffers out to sporting or other ticketed entertainment events. Below is an abbreviated explanation of when you can or cannot invite someone to a sporting event.<br />Remember: The gift rule is that lobbyists or lobbying firms may not provide anything of value to a member of Congress or Congressional staffer.<br />Tickets and Events: Members and staff may be offered tickets to sporting events, concerts, and other types of events. The rules specify what may and may not be accepted and how such tickets are to be priced for purposes of personal payment by Members and staff.<br />How much does a Member or staffer have to pay for a ticket to a sporting event or concert? The price would differ depending on the source of the ticket and the amount (if any) on the ticket.<br />Source: The source of tickets is the entity or person who paid for the tickets.  For example, if a lobbyist wants to take a Member or staffer to a ticketed event using tickets provided by his/her firm or company, he/she would not be the source of the tickets. In this case, the firm or company is the source, AND the personal friendship rule would not permit a Member or staffer to accompany a lobbyist date to an event using such a ticket. The individuals themselves would be required to pay the face value of the tickets to the firm or company in order for the tickets to be used.<br />Valuation: Generally speaking, all gifts are valued at their retail, not wholesale, value under the gift rules.  Further, for tickets to sporting or other entertainment events, the rules provide specific guidance as to how to value tickets for purposes of Member/staff payment for their use.  The general rule: Members and staff must pay market value for all gifts unless there is an applicable exception.<br />Type of Ticketed EventHouseSenateAthletic, sporting event – ticket with face valueMember/staffer pays face value, if identical to price available for tickets sold to the publicMember/staffer pays face value, if identical to price available for tickets sold to the publicAthletic, sporting event – ticket with NO face valueMember/staffer pays highest individually-priced ticket for the eventMember/staffer pays highest individually-priced ticket for the eventor may ask for Senate Ethics approval in advance of event to pay price of a comparable ticket to same event.  Written and independently verifiable information (including seat location, parking, access to areas not open to the public, and the availability of food and refreshments) must be submitted to show that the ticket offered them is equivalent to another ticket that does have a face valueEvent in a skybox with food, beverages, and/or parkingMember/staffer pays either face value or highest individually-priced ticket for the event plus the value/costs of food and parking in accordance with other gift rules and exceptionsSee above<br />The information in this report is condensed from the Lobbying Compliance Handbook. Now available as an easily-readable e-book at <br />The information in this free ethics report is complete and accurate to the best of our knowledge. This report should not be construed as legal advice. Please consult counsel for advice on specific ethics situations.<br />