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Obama’s Executive Order on Ethics- A Journey Through Section 3

         Today we will commence a review of the Obama Executive Order on Ethics, a subject that I suspect will be much discussed over the coming months and years.  We will focus first on the provisions applicable to incoming lobbyists.  Although the E.O. is not limited to lobbyists, its application to them is particularly draconian.  For illustrative purposes, we will consider how the provisions would apply in the case of Eric Holder, the nominee for Attorney General.  

            The relevant provision is Section 3, which requires appointees to agree to the following: 

3.  Revolving Door Ban    Lobbyists Entering Government.  If I was a registered lobbyist within the 2 years before the date of my appointment, in addition to abiding by the limitations of paragraph 2, I will not for a period of 2 years after the date of my appointment: 

(a)    participate in any particular matter on which I lobbied within the 2 years before the date of my appointment; 

(b)  participate in the specific issue area in which that particular matter falls; or 

(c)    seek or accept employment with any executive agency that I lobbied within the 2 years before the date of my appointment.”

Time Period. The first thing to note about this provision is that it is limited to persons who were “registered lobbyists” during the two years prior to their appointment. Thus, for example, Holder was registered as a lobbyist for Global Crossing in 2004. Because this was more than two years before his appointment, it has no impact on his obligations under Section 3.

The time period presumably reflects an assumption that an appointee is more likely to be partial to a client that he or she represented in the recent past. At best, this seems like a gross generalization, but let’s accept it for the sake of argument. This aspect of the appointee’s conflict of interest is already covered by Section 2 of the E.O., which limits the appointee’s involvement in matters relating to a former employer or former client from the previous two years. Section 2, however, applies to all appointees, not merely lobbyists (which makes sense, as there is no reason to believe that lobbyists are unusually attached to their clients- just ask the Indian tribes represented by Jack Abramoff).

Perhaps it is thought that there is an “appearance of impropriety” when ex-lobbyists are involved in matters in any way related to their prior lobbying activities. If so, it is not obvious why this appearance would dissipate after two years. Nevertheless that is the line drawn by the E.O.

Registered Lobbyist. Section 3 applies only to “registered lobbyists.” A registered lobbyist is defined as a lobbyist registered under the Lobbying Disclosure Act, 2 U.S.C. § 1603(a), or a lobbyist identified in a report or registration filed by a lobbying organization under the LDA.

At the outset it should be noted that the LDA is a disclosure statute, designed to give the public a broad picture of who is lobbying and how much is being spent on lobbying. The definitions of what constitute lobbying under the law are technical, and do not necessarily correspond to what the public thinks of as a “lobbyist.” You can be required to register as a lobbyist even though only a small part of your job involves contacting government officials. Moreover, many registrants tend to over-disclose, identifying employees as lobbyists even though they may not meet the formal requirements.

Conversely, not everyone who the public would consider to be a lobbyist is a “registered lobbyist.” For example, two of the most notorious modern influence-peddlers, Mitch Wade and Brent Wilkes (who were convicted for bribing former Congressman Duke Cunningham), were not registered lobbyists, and probably were not required to be under the LDA.

One way to avoid a registration requirement under the LDA is to fall within one of the enumerated exceptions to the definition of “lobbying contact.” For instance, there is an exception for contacts made in the course of “a judicial proceeding or a criminal or civil law enforcement inquiry, investigation or proceeding.” Thus, when Holder represented Chiquita Brands International in a long-running investigation by the Justice Department, he did not register as a lobbyist, even though his representation evidently included significant negotiations and communications with the Department that led to a civil settlement and a subsequent criminal plea. Had Holder registered as a lobbyist for Chiquita, he would be disqualified from becoming Attorney General under Section 3(c).

Another exception to the LDA is for communications “made on behalf of the government of a foreign country or a foreign political party.” These communications are instead governed by the Foreign Agents Registration Act, 22 U.S.C. § 611. Registration under FARA, however, apparently does not trigger Section 3 of the E.O., which I can only assume is an oversight.

Finally, there may be instances where an appointee arguably should have registered as a lobbyist, but failed to do so. Holder, for example, was not registered as a lobbyist for the NFL, although others at his law firm were. However, Holder represented the NFL in an attempt to counter embarrassing publicity regarding the use of performance enhancement drugs:

Holder quickly gathered senior executives from the other three leagues and their player unions and led them into a series of meetings in 2007 with top officials of, among others, the Drug Enforcement Administration (DEA), the FBI, the U.S. Anti-Doping Agency (USADA), and the Office of National Drug Control Policy (ONDCP), the agency that presides over the nation’s “war on drugs.” The sessions began with a measure of fanfare.

Whether or not Holder was required to register as a lobbyist for the NFL would depend on several factors, including which government officials he communicated with and the ostensible purpose of the communications. On the face of it, however, Holder may have had an obligation to register as a lobbyist for the NFL but failed to do so. To ensure that the purposes of the E.O. are not evaded, both the Obama Administration and the Senate will now have to ask appointees about possible improper failures to register under the LDA.

Particular Matter. Section 3(a)’s prohibition against an ex-lobbyist appointee participating in any “particular matter” follows the definition set forth in 5 C.F.R. § 2635.402(b)(3), which defines the term as “matters that involve deliberation, decision or action that is focused upon the interests of specific persons, or a discrete and identifiable class of persons. Such a matter is covered . . . even if it does not involve formal parties and may include governmental action such as legislation or policy-making that is narrowly focused on the interest of such a discrete and identifiable class of persons.” The regulation goes on to explain that a regulation that covered a large and diverse group of people, such as the Social Security Administration’s regulations on appeal procedures for disability claimants, would not be a “particular matter,” while a regulation such as the ICC’s safety standards for trucks on interstate highways would be because it affects only a relatively discrete and identifiable class of persons.

The exact scope of Section 3(a)’s prohibition, however, is of limited relevance in most situations because it is subsumed by the significantly broader prohibition of Section 3(b).

Specific Issue Area. Section 3(b) prohibits the ex-lobbyist appointee from participating in the “specific issue area” in which any matter covered by Section 3(a) falls. The E.O. does not define the term “specific issue area.” The LDA, however, requires that a lobbying report contain “a list of the specific issues upon which a lobbyist employed by the registrant engaged in lobbying activities, including, to the maximum extent practicable, a list of bill numbers and references to specific executive branch actions.”

This definition, it is important to note, leaves a great deal to the discretion of the registrant in defining the boundaries of a “specific issue.” For example, in the Global Crossing report filed by Holder’s law firm, Covington & Burling, the specific issues are identified as “CFIUS process and issues.” Would the E.O. therefore prohibit Holder (if the report had been filed within the two-year time window) from any involvement in CFIUS issues? Suppose the report had used an even broader term, like “foreign investment”? If the scope of the prohibition is to be determined by the report language, the effect of the E.O. will vary widely depending on the words chosen by the person (probably a legal assistant) who filled out the report.

Executive Agency that I lobbied. Section 3(c) prohibits any ex-lobbyist from seeking or accepting employment with any executive agency that he or she “lobbied” in the prior two years. Thus, for example, if Holder had lobbied the Justice Department within the last two years, he would not be able to become Attorney General (absent a waiver, such as that the Obama Administration provided to its nominee for Deputy Secretary of Defense).

The rationale for this rule is not self-evident. If an ex-lobbyist is already prohibited from involvement in any matters involving former clients and in any issues that were the subject of the prior lobbying, why is there also a prohibition against employment with an agency that was lobbied?

Suppose Holder had lobbied the Justice Department in 2008 with regard to the NFL’s policy on performance enhancing drugs. If he became Attorney General, he could presumably recuse himself from all matters involving the NFL or performance enhancing drugs. He would, however, still be supervising the very officials who he had previously lobbied. Perhaps it is thought that this would put those officials in an awkward position. Moreover, if government officials believe that ex-lobbyists could be appointed to powerful positions in their own agencies, they may be intimidated in dealing with politically well-connected lawyers like Holder.

If this is the reason for Section 3(c), however, the provision is not broad enough to achieve its aims. It only applies when the appointee “lobbied” the agency, which means to “have acted as a registered lobbyist.” It seems clear, though, that Holder has repeatedly communicated with the Justice Department and its components in the last two years on behalf of the NFL and other clients. Whether or not those communications technically constituted “lobbying,” they would still threaten the same harm the E.O. seeks to prevent. The logic of the E.O., therefore, seems inconsistent with Holder’s appointment as Attorney General.

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