Category: Lobbying

Via Election Law Blog, Ken Gross notes that the Clerk and Secretary are reconsidering the guidance that would allow de-listing of a lobbyist who engages in no more than one lobbying contact per quarter.  This comports with my information.  I suspect that there will be additional guidance in the near future that closes this loophole.

Covington’s Political Law Update (hat tip again to Rick Hasen) also discusses the “de-listing” of lobbyist issue, stating as follows: 

“Many in Washington had interpreted the structure of the statute to mean that the 3-month period applies to the 20% time threshold, but not to the two-or-more-contacts requirement. The Clerk and Secretary apparently read this definition to mean that a lobbyist is an individual employed or retain for services that include more than one lobbying contact per quarter. If the Clerk and the Secretary stick to this view, individuals who have not had more than one contact in two consecutive quarters (and do not plan to in the future) can de-list, even if they still spend more than 20% of their time on lobbying activities. The Obama Administration’s restrictions on registered lobbyists has made the question of when a lobbyist can de-register more important than ever. Because the statutory basis for the Clerk and Secretary’s interpretation is somewhat dubious, it may be prudent to hold off a bit on de-listings until it is clear that they intend to stand by their interpretation.” 

Although the language of the new guidance seems quite clear, I think Covington’s caution is well-advised—it would be prudent to see if the Clerk and Secretary decide to reconsider this issue.

            The Clerk of the House and Secretary of the Senate last week released new guidance on the requirements of the Lobbying Disclosure Act.  Among other things, this guidance addressed when a registrant may “terminate” a lobbyist (i.e., remove an individual from the list of persons who act as lobbyists on that registrant’s reports).  This is an issue that has become important only in the last couple of years, as being a “registered lobbyist” now involves both regulatory burdens and restrictions on one’s ability to obtain employment in the Obama Administration.   

            The new guidance states: “A registrant may remove a lobbyist only when (i) that individual’s lobbying activities on behalf of that client did not constitute at the end of the current quarter, and are not reasonably expected in the upcoming quarter to constitute, 20 percent of the time that such employee is engaged in total activities for that client; or (ii) that individual did not in the current quarter and does not reasonably expect in the upcoming quarter to make more than one lobbying contact per quarter.” 

            As pointed out by the law firm of Caplin and Drysdale (hat tip: Rick Hasen’s Election Law Blog), this guidance is problematic because “[t]he LDA, as well as prior House and Senate guidance, make clear that an individual qualifies as a lobbyist by spending 20% of his/her time engaged in lobbying activities for a client in a calendar quarter and making two or more lobbying contacts over the course of services provided for that client (even if the second contact occurs in a later quarter). Thus, an individual qualifies as a lobbyist if he/she made two or more lobbying contacts at any point during their work for a client, and not merely in the current or subsequent calendar quarter.”   

            Under the new guidance, someone who has made more than one lobbying contact for a client in the past, and continues to spend more than 20 percent of his or her time on lobbying activities, could apparently be de-listed if he or she made no more than one lobbying contact in the current quarter and did not expect to make more than one in the upcoming quarter.  This would essentially mean that one could be an unregistered lobbyist so long as one is careful to limit one’s lobbying contacts to one per quarter, though this would seem contrary to the language and prior interpretation of the LDA. 

            This would seem to open up a very significant new loophole in the LDA.

            John Wonderlich of the Sunlight Foundation posts regarding potential changes to the Obama policy on stimulus lobbying.   There are two basic aspects to these changes, as announced by WH special counsel Norm Eisen on May 29, 2009.  First, the administration proposes to extend the ban on oral communications regarding certain stimulus matters “to contacts not only by registered lobbyists but also by unregistered ones, as well as anyone else exerting influence on the process.”  This means that whatever the restrictions are on oral communications, they will apply equally to registered lobbyists, non-lobbyists with an interest in stimulus projects (e.g., company executives), and others who might want to influence the process (Members of Congress?). 

            Second, there would be a narrowing of the subject matter covered by the ban on oral communications.  According to Eisen, the restriction on oral communications would be limited to the period “after competitive grant applications are submitted and before awards are made.”  This seems to be a much narrower restriction than under the current policy, which applies, without time limitation, to all oral communications regarding “particular projects, applications, or applicants for funding” under the stimulus bill. 

            As Wonderlich points out, the first change suggests a recognition by the Obama administration that its attempt to distinguish between communications of registered lobbyists and those of non-lobbyists is unrealistic and unfair:

            “Relying on the distinctions of the Lobbying Disclosure Act (which defines who must register as a lobbyist) was too easy to skirt, since the influential are often not lobbyists. This was one of the main complaints from CREW, ACLU, and ALL, who suggested lobbyists were being unfairly singled out, and pointed to well-heeled CEOs and campaign contributors who are clearly influential, but often fall below the 20 percent threshold for lobbying registration. Sunlight has often made this point as well, and CREW has already praised the forthcoming guidance.” 

            One wonders whether the administration will revisit some of its other policies that arbitrarily discriminate against registered lobbyists. 

It is also worth noting that by applying equally to both lobbyists and non-lobbyists, the new policy would also seem to be an improvement from a First Amendment standpoint.  The main First Amendment concern with the current policy is that it arbitrarily prevents one group from petitioning the government.  The new policy, on the other hand, restricts all oral communications from any source during the period when specific applications are being evaluated.  This seems much more like a requirement that a particular proceeding be conducted “on the record,” which would not appear to raise any serious constitutional concerns.

           As I have discussed before, the Obama Administration has imposed, by executive order, certain rules that apply only to lobbyists registered under the Lobbying Disclosure Act.  One of these rules prohibits executive branch officials from meeting with lobbyists regarding specific projects funded by the stimulus bill.   

            The principal author of these policies is apparently Norm Eisen, who serves as the special counsel to the president for ethics and government reform.  Mr. Eisen met last week with representatives of three groups which oppose the stimulus lobbying rule, Citizens for Responsibility and Ethics in Washington (CREW), the American Civil Liberties Union (ACLU) and the American League of Lobbyists (ALL).  He posted a description of this meeting on the White House blog (hat tip: Paul Blumenthal of the Sunlight Foundation). 

            There is not much substance to Eisen’s description of the meeting.  What caught my eye, though, was his explanation of why he had agreed to the meeting in the first place:  “As the President has noted, one of the hallmarks of being tough is that you not only talk to the people you agree with—you talk to the ones you disagree with.” 

            Unless I am missing something, Eisen appears to be analogizing his willingness to meet with CREW, the ACLU and ALL to the President’s willingness to meet and have dialogue with the leaders of unfriendly regimes like Iran, Venezuela, and Cuba.  This seems like a strange analogy to begin with; one would think that the administration has an obligation to listen to American citizens aggrieved by government policy that is quite different from the considerations which govern whether to conduct discussions or negotiations with foreign governments, hostile or otherwise. 

            Leaving that aside, though, the whole point of the executive order on stimulus lobbying is to forbid executive officials from meeting with registered lobbyists to discuss certain subjects.  Admittedly, the order doesn’t distinguish between lobbyists who “agree” or “disagree” with the administration, but it is premised on the notion that the very act of meeting with or talking to lobbyists creates either the appearance or the reality of impropriety.  It seems odd that an administration so proudly unafraid of meeting with representatives of hostile foreign powers is scared of meeting with a lobbyist for Topeka, Kansas. 

Laura Rozen at Foreign Policy has an interesting article about the impact of the Ethics Executive Order on individuals who have lobbied for public interest groups.  It highlights the arbitrary and unfair impact of Section 3, which applies only to those registered under the Lobbying Disclosure Act.  As one source quoted in the article notes: 

The former Clinton administration official added that this just becomes a perverse disincentive not to register. “LDA is entirely unenforceable and I believe has [almost] never been enforced,” she said. “So, good people who believed in disclosure now have a disincentive.” 

            While the unfairness of Section 3 is not limited to “activist lobbying,” it does seem particularly silly that someone like Tom Malinowski, who was registered to lobby for Human Rights Watch, is effectively barred from a job in the administration, while Eric Holder, who represented Chiquita Brands in matters relating to its payments to and support of Columbian death squads, is not. 

Section 3 of the Ethics Executive Order would appear to establish a broad ban on former lobbyists participating in any “specific issue area” on which they lobbied during the two years before being appointed to the Obama Administration.  The Lobbying Disclosure Act, 2 U.S.C. §1604(b)(2)(A), requires that lobbying reports contain “a list of the specific issues upon which a lobbyist employed by the registrant engaged in lobbying activities.” Although the E.O. does not define the term “specific issue area,” it seems reasonable to assume that this term is intended to refer to the specific issues which must be disclosed under the LDA. 

As I pointed out with regard to Mark Patterson, in line to be the chief of staff to Treasury Secretary Geithner, the identification of specific issues on the LDA form thus becomes a huge problem for appointees covered by Section 3 of the E.O.  It appears, however, that the Obama Administration, or at least parts thereof, may be adopting a more convenient interpretation of the E.O.  In Patterson’s case, Treasury does not consider itself to be bound by the identification of specific issues on the LDA form filed by Goldman Sachs.  Instead, Patterson’s recusal will be based on a different (and apparently secret) list of specific issues that he and the Treasury General Counsel’s office develop. 

The theory underlying this approach is that because Goldman Sachs did not disclose its specific issues by individual lobbyist, it is possible that some issues were handled solely by lobbyists other than Patterson.  Moreover, one can always re-write the “specific issues” identified on the LDA form to make them more specific, thus reducing the scope of the appointee’s required recusal.  Treasury was apparently displeased that some of the “specific issues” listed on Goldman’s form (e.g., “credit default swaps clearing,” “investment banking issues,” and “general economic conditions”) were not all that specific. 

What are the problems with this approach?  First, it seems inconsistent with the E.O.’s purpose in basing its restrictions on the LDA.  Presumably, the reason for using the LDA is that it provides an objective and publicly available record of who is a lobbyist, who was lobbied and what subjects were lobbied on.  Allowing individual appointees and their agencies to deviate from the public record based on arbitrary and undisclosed criteria hardly seems designed to enhance public confidence in the process. 

Second, there are bound to be questions raised with regard to discrepancies between LDA forms and the recusal decisions of particular agencies.  How does the administration know that Goldman’s LDA form does not accurately identify the issues Patterson worked on?  Is it making its determinations solely on Patterson’s current recollection?  Has it looked at the records underlying the LDA filing? 

Moreover, if the administration believes an LDA form is inaccurate, it ought to follow the procedures set forth in the law for correcting the filings.  The Clerk of the House and Secretary of the Senate are required to “review, and, where necessary, verify and inquire to ensure the accuracy, completeness and timeliness of registrations and reports” under the LDA.  If the administration believes that Goldman’s LDA filing was inaccurate, it ought to notify the Clerk and Secretary, who can then request that Goldman review and, if necessary, amend its reports.  See 2 U.S.C. § 1605(2) & (7). 

If Goldman was overly general in describing the “specific issues” on which Patterson lobbied, it was likely because Goldman and Patterson wanted the public to know as little as possible about their lobbying activities.  Now that this general description is inconvenient, why should Patterson be allowed, in effect, to amend the LDA filing in secret?  Instead, Goldman should file an amended report that states what Patterson really did. 

Personally, I think Section 3 of the E.O. is stupid and should be rescinded.  But until that time, the administration should abide by its restrictions.

             ABC News reports that Mark Patterson, a former lobbyist for Goldman Sachs, is in line to become chief of staff to incoming Treasury Secretary Tim Geithner.  The article does not say whether the Obama Administration is considering a waiver of the Ethics E.O. for Patterson.   

            Would Patterson be able to take the chief of staff job without a waiver?  According to the last LDA filing listing Patterson as a lobbyist, Patterson lobbied the House, the Senate and the “Federal Reserve System.”  The specific lobbying issues on which Patterson worked included (1) the Foreclosure Prevention Act of 2008; (2) credit default swaps clearing; (3) over-the-counter derivatives; (4) investment banking issues and, my favorite, (5) “general economic conditions.” 

            Under Section 3(b) of the Ethics E.O., Patterson would be precluded from participating in any of these specific issues. Unless Geithner wants a chief of staff who can only discuss sports and the weather, I’m thinking Patterson needs a waiver.    

           Roll Call offers this report on the reaction of Washington lobbyists to the new E.O. on ethics.  It makes several interesting points.  First, it notes that the E.O. is viewed as a virtual ban (absent a waiver) on hiring lobbyists by the new Administration.  Second, it notes that some lobbyists are looking for ways of getting around the ban by, for example, taking a job on Capitol Hill in order to “get clean” (i.e., after two years working for Congress the lobbyist would no longer be subject to the restrictions on hiring incoming lobbyists). 

            Finally, the reporter observes that there will now be a strong incentive to avoid registration as a lobbyist.  For example: 

One registered lobbyist noted with some frustration the sight of an acquaintance who is not a lobbyist but who seems very much like one. 

“I asked him, ‘Are you a lobbyist?’ and he said ‘no,’” this source recalled, “But he talks to Members of Congress all the time.  He told me, ‘I’m allowed to give my opinion on things.’”  

Since enforcement of the Lobbying Disclosure Act is virtually unheard of, the temptation not to register will inevitably become greater as a result of the E.O.

GAO has released its audit of lobbying disclosure filings (Lobbying Disclosure: Observations on Lobbyists’ Compliance with New Disclosure Requirements).  The audit was required by the Honest Leadership and Open Government Act of 2007 (HLOGA).  GAO randomly selected 100 lobbying disclosure reports and then asked the lobbyists to provide support for eight “key elements” of the reports, to wit:  

            1.  The amount of money received for lobbying activities

            2.   The amount of money spent on lobbying activities

            3.  The specific issues on which they lobbies

            4.  The Houses of Congress and agencies which they lobbied

      5.  The names of individuals who acted as lobbyists for the client

      6.  The names of foreign entities with interest in the client

      7.  The names of lobbyists no longer acting for the client

8.  The names of any member organizations of a coalition or association that actively participated in lobbying activities on behalf of the client     

            The audit uncovered no earthshaking revelations.  This should not be surprising, given the limited scope of GAO’s work.  As GAO explained, “our work to examine lobbyists’ compliance was limited to reviewing support provided by the lobbyists, which included both documentation and oral explanations.”  Moreover, “our work did not include identifying lobbyists that failed to register and report in accordance with HLOGA requirements, or whether for those lobbyists that did register and report, all lobbying activity was disclosed.” 

            One cannot escape the impression that the Lobbying Disclosure Act works largely on the honor system.  Given that the information presented to GAO was limited to documentation and verbal explanations that the lobbyists chose to present,  and that GAO did not do any investigation to determine whether lobbyists were disclosing all lobbying activity, it is somewhat difficult to see how GAO could have uncovered anything that the lobbyists did not want it to see.   

            Even so, GAO did determine that in one case the documentation provided was inconsistent with the amount of lobbying expenses reported.  As a result of discussions with GAO these lobbyists realized that they had been reporting their lobbying expenses incorrectly and filed an amended report.  GAO did not identify the lobbyists in question, but the Clerk’s database shows that one of the audited lobbyists, Intuit, filed an amended disclosure in August that increased the amount of reported lobbying expenses for the first quarter of 2008 by approximately $250,000.