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Regulatory: Do Not Underestimate the Breadth of Lobbying Laws

This month, Hollywood offers us the lobbyist as leading man cum villain, as Kevin Spacey portrays Jack Abramoff in the new movie "Casino Jack" about the lobbying scandal that embroiled Washington, D.C.

Spacey's Abramoff, like other big and small-screen lobbyists from years past, is straight from central casting. He walks the halls of Congress glad-handing and buttonholing legislators, handing out gifts and campaign contributions, and maneuvering to get legislation passed that benefits his clients.

The movie's depiction of Abramoff reflects the common perception of what a lobbyist is and what a lobbyist does. But our assumptions about lobbyists have not kept pace with federal and state laws, which have been amended in recent years to cover a far wider swath of advocacy activities.

No longer is a lobbyist necessarily someone who communicates with legislators, or who is seeking the passage or defeat of legislation. In most jurisdictions, an individual could be required to register as a lobbyist for a host of other activities, such as working to obtain a government contract, trying to change a rulemaking or negotiating a government grant, loan, credit or incentive.

For decades, the federal lobbying law, as interpreted by the Supreme Court, covered only direct communications with members of Congress on pending or proposed federal legislation, and registration was required only of those who spent the majority of their time on such contacts. Few were required to register because the law ignored efforts to influence decisions and policies other than legislation and because it excluded communications with congressional staff and Executive Branch officials.

The enactment of the federal Lobbying Disclosure Act of 1995 (LDA) closed these loopholes. The LDA covers a wide variety of communications, including those made "with regard to": federal legislation; federal rules, regulations, Executive Orders or any other program, policy, or position of the government; the administration or execution of a federal program of policy, including the negotiation, award, or administration of a federal contract, grant, loan, permit or license; or the nomination or confirmation of a person to a position confirmed by the Senate. The LDA also expanded the scope of "covered officials" to include all legislators and legislative staff, as well as thousands of Executive Branch officials.

Similar statutory revisions have occurred at the state level all across the country. Fewer than ten states regulate only legislative lobbying at this point. The vast majority cover work to influence various administrative actions, such as rules, rates, licenses, and procurements. Some do not even require contacts with government officials. In these states, grassroots lobbying (i.e., encouraging others to contact government officials) may be enough to trigger registration.

For in-house counsel, the breadth of these lobbying laws presents three challenges.

First, one must evaluate whether or not a particular activity may be considered lobbying in a jurisdiction, and whether those who engage in the work would be treated as lobbyists. The key questions will include:

  • What type of advocacy is involved? If the focus of the work is something other than legislation, the specifics will be key, as the laws vary widely in what sorts of governmental proceedings are covered. Even building goodwill with government officials may be considered lobbying. Counsel should be prepared for little consistency and a lack of clarity in many of the laws (e.g., "administrative action" is defined in multiple ways from state to state).
  • With which officials are contacts made? Some jurisdictions cover communications with virtually all government employees, while others limit the scope to particular positions, agencies, or offices. In some cases, direct contacts may not be required at all to prompt registration, both in grassroots lobbying and other situations.
  • How much time or money is devoted to the lobbying? Some laws require registration only when expenditures on the lobbying exceed a certain threshold, while others are triggered by devoting a certain number of hours or a certain percentage of time to the covered lobbying.

Second, if the work being performed by corporate personnel amounts to lobbying, the registration and reporting requirements must be considered. Again, the requirements vary greatly by jurisdiction and may require, for example, that a registration be filed in advance, that a written authorization be obtained (when the work is done for a client), that political contributions be reported and that individual lobbyists file personal registrations. Note too that many states prohibit contingent fees for work that is considered lobbying, which can be a significant issue for business that represent clients on certain administrative matters.

Third, if an individual is required to register as a lobbyist, it often falls to corporate counsel to break that bad news to a colleague. Be prepared for an argument. Corporate employees covered by these expansive laws will often reject the suggestion that they may be a lobbyist. Even when the reporting requirements are relatively unobtrusive, few will willingly take on what's been termed the scarlet letter "L." A future column in this series will address the growing sport, popular among elected officials, of imposing new rules and prohibitions on lobbyists - a trend made all the more significant by the expansive coverage of federal and state lobbying laws.

[This is the third in a series of articles on the intersection of corporate compliance, lobbying, and political activities.]

Read William Minor's previous column.

William H. Minor

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