January 2009

Legislative and Executive Branch Lobbying Changes and Increased Contribution Limits

10 min

New Guidance from the Clerk and Secretary, New Executive Order from the President, and New Contribution Limits from the FEC

The rules governing lobbying for both the Legislative and Executive branches of federal government have changed, and the FEC has announced the new contribution limits for federal elections.

On January 16, just before the start of the four-day inaugural weekend, the Clerk of the House and the Secretary of the Senate issued revised Guidance for the Lobbying Disclosure Act (“LDA”). On his first full day in office, President Obama issued an Executive Order that immediately changed the gift rules for certain political appointees and modified the limits placed on the so-called Revolving Door between government and the private sector. Further, the FEC has raised certain contribution limits—including the amount that individuals may give to candidates—for the 2010 election cycle.

Legislative Branch Changes

The Clerk of the House and the Secretary of the Senate have issued revised Guidance for both the LD-203 and the LD-2 reports. Under the LDA, this Guidance is nonbinding, but explains how the Clerk and the Secretary view adequate compliance with the law. Most lobbyists defer to the Guidance when determining how to file reports. Fortunately, the changes are relatively minor in scope—the LD-2 was due only five days after the Guidance was issued, and the LD-203 is due on January 30, 2009.

Releasing new Guidance days before reports are due follows a pattern established last July when the Clerk and the Secretary issued two different—and widely divergent—versions of the Guidance for the LD-203 at the end of June and then again in mid-July.

LD-203 Guidance

Speakers at Events: The new Guidance makes clear that designating a covered official as a “speaker” does not necessarily bypass the need to disclose the cost of the event as one honoring or recognizing a covered official. If a covered official “receives a special award, recognition, or honor,” then the cost of the event must be disclosed—whether or not the covered official makes formal remarks to the other event participants.

Purchase of Tables or Multiple Tickets: Earlier Guidance suggested that, in most cases, the purchase of multiple tickets or tables at an event honoring or recognizing a covered official did not constitute a reportable expense. The new Guidance states that such large purchases will be examined on a case-by-case basis. If the House or the Senate determines that the purchase is so substantial that it appears the filer is paying the costs of the event, then the purchase must be disclosed on the LD-203. Similarly, if the filer’s involvement in planning the event is sufficient enough to satisfy the definition of “sponsor” in the Gift Rules of the House or the Senate, then the entity must report paying the costs of the event.

Payments for Events: The Guidance makes clear that, if one organization makes a payment to another organization for the purpose of hosting an event to honor or recognize a covered official, then the paying organization must report the expense on its LD-203, even if it is not listed as a sponsor on the promotional materials for the event.

LD-2 Guidance

The revised Guidance specifies that an organization must report payments to third parties—such as a trade association—that will be used for lobbying. A reporting entity must “contact any other organization to which it pays membership dues in order to learn what portion of the dues is used by the latter organization for lobbying activities.” Further, “a registrant cannot apportion the lobbying expense part of the dues to avoid disclosure.”

Notably, the Guidance does not address how organizations that use LDA definitions to report their “lobbying activities” will account for payments to organizations that use Internal Revenue Code definitions to track their own expenditures (or vice versa). For example, a corporation that uses the LDA definitions is not ordinarily required to disclose expenditures for state and local lobbying or grassroots activities. If the same corporation pays dues to a trade association that calculates its lobbying expenses using the Internal Revenue Code—which does capture state, local, and grassroots lobbying expenditures—then it may now be responsible for reporting its share of these expenses. Although the Guidance states that this revision simply codifies oral advice long given by the Clerk and the Secretary, it is not clear that the LDA compels disclosure of trade association payments when using LDA definitions.

Executive Branch Changes

President Obama’s Executive Order requires all political employees of the new Administration—including those appointed by the President and Vice President, Senior Executive Service appointments, and all Schedule C appointees—to sign a pledge that they will honor six principles set forth in the Executive Order:

  1. That they will not accept gifts from individual registered lobbyists or organizations registered under the LDA.
  2. That they will not participate, for two years, in certain decisions related to their former employment.
  3. That, if they were a registered lobbyist within two years before their appointment, they will not participate in matters on which they lobbied, participate in specific issue areas for which they lobbied, or seek employment in an executive branch agency that they lobbied within the two years prior to their appointment.
  4. That they will be subject to a two-year ban on certain post-employment activities.
  5. That if they leave the government they will not lobby any covered executive branch official or non-career Senior Executive Service employee for the remainder of the Obama Administration.
  6. That they will make hiring decisions based on a candidate’s “qualifications, competence, and experience.”

Items 2 through 5 are likely to make the biggest impact on individuals seeking positions in the Administration and on Administration officials seeking employment in the private sector. These restrictions are far more rigorous than those of prior administrations.

Fewer Exceptions to the Gift Rules

The ban on gifts from lobbyists is incredibly stringent—much more so than the House and Senate Gift Rules. Although these new Administration Gift Rules include a number of exemptions—e.g., gifts given out of personal friendship, or food and drink of modest value—they do not encompass all of the exemptions to the Office of Government Ethics (“OGE”) regulations governing gifts for the rest of the Executive Branch.

For example, the restrictions imposed by the Executive Order do not allow for attending either so-called “widely-attended events” paid for by organizations registered as lobbyists, or events where the invitation is based on “social hospitality” (i.e., the “Washington hostess” exception). Under the OGE rules, an Administration appointee could have attended an annual convention sponsored by a registered lobbyist as long as the invitation came directly from the sponsoring organization. Similarly, an Administration official could have attended a social event at a lobbyist’s home, provided that admission was free and the invitation came directly from the host.

The Executive Order has also eliminated the exception for gifts from political committees. In the past, a trade association PAC was free to invite a cabinet secretary (or any other official not prohibited from campaign activities under the Hatch Act) to a fundraiser for its PAC. Under the new rules, if the trade association is registered under the LDA, it may no longer pay for travel or lodging incident to such an event.

Gifts Prohibited and Permitted

Under the Executive Order, the term “gift” is defined to include any gratuity, favor, discount, entertainment, hospitality, loan, forbearance, or other item having monetary value. It includes gifts of training, transportation, local travel, lodgings and meals, whether provided in-kind, by purchase of a ticket, payment in advance, or reimbursement after the expense has been incurred.

This definition extends to items of value given directly or indirectly. A gift is solicited or accepted “indirectly” if it is:

  • Given with the employee’s knowledge and acquiescence to his parent, sibling, spouse, child, or dependent relative because of that person’s relationship to the employee; or,
  • Given to any other person, including any charitable organization, on the basis of designation, recommendation, or other specification by the employee (except as permitted for the disposition of certain perishable items).

The term “gift” does not include:

  • Modest items of food and refreshments, such as soft drinks, coffee and donuts, offered other than as part of a meal;
  • Greeting cards and items with little intrinsic value, such as plaques, certificates, and trophies, which are intended solely for presentation;
  • Gifts given on the basis of a personal relationship;
  • Gifts resulting from the business or employment activities of an employee’s spouse when it is clear that such benefits have not been offered or enhanced because of the employee’s official position;
  • Gifts customarily provided by a prospective employer in connection with bona fide employment discussions;
  • Opportunities and benefits, including favorable rates and commercial discounts, available to the public or to a class consisting of all Government employees or all uniformed military personnel, whether or not restricted on the basis of geographic considerations;
  • Rewards and prizes given to competitors in contests or events, including random drawings, open to the public unless the employee’s entry into the contest or event is required as part of his official duties;
  • Anything which is paid for by the Government or secured by the Government under Government contract;
  • Any gift accepted by the Government under specific statutory authority, including the pre-approved payment of travel expenses for attendance at a meeting that takes place away from the Government employee’s official duty station; or,
  • Anything for which market value is paid by the Government employee.

Although a typo in the Executive Order makes the exception somewhat unclear, it also appears that free attendance, course or meeting materials, transportation, lodgings, food and refreshments, or reimbursements for such expenditures may be accepted by Government employees if provided by an organization recognized as tax exempt under Section 501(c)(3) of the Internal Revenue Code.

The Administration appears to have drafted the Executive Order with some haste—the typo leaves the full list of exemptions somewhat ambiguous, and the heightened restrictions on gift-giving may have several unintended consequences. For example, many Administration employees may still accept travel and accommodations when attending a meeting “that takes place away from the employee’s official station.” Administration appointees may not, however, accept “local travel,” and the “widely-attended event” exception on which Washington-based associations have relied for decades appears to longer apply. Reading these rules together leads to a rather peculiar result. Could Administration officials really accept an invitation to travel cross-country, but be forced to decline an opportunity to attend an event in the District of Columbia?

In practice, appointees will likely continue to be able to participate in local events.  Nothing in the Executive Order prohibits an Administration official from traveling on his or her own to the event (or, more likely, having the agency pick up cab fare if he or she is attending in his or her official capacity) and giving a speech.  Because the widely-attended event exception—the basis for accepting meals at speaking engagements—is no longer applicable, the official may not accept lunch or dinner. Light refreshments are, however, specifically exempted under the Executive Order. In other words, speaking to an association or attending a meeting typically does not involve the acceptance of a gift, as along as a meal is not involved.

Implementation of these new rules will likely require further guidance from the Obama Administration—including, perhaps, an additional set of Executive Orders to clarify these initial changes.

Contribution Limits

On January 23, the Federal Election Commission announced that federal election contribution limits have been increased to account for inflation. An individual contributor may now give up to $2,400 per election to candidate for the U.S. House of Representatives or the U.S. Senate. In addition, individuals may now give up to $30,400 to each of the national party committees—i.e., the RNC, DNC, NRCC, DCCC, NRSC, and DSCC. These new figures constitute a $100 and $1,900 increase, respectively, from the contribution limits imposed in the 2008 election cycle.

Finally, the overall biennial contribution limit for individual contributors has been increased by $7,300 to $115,500. Of this amount, an individual may give up to $45,600 to candidates and $69,900 to PACs and political parties. Of the $69,900, no more than $45,600 may be given to local parties and PACs. In application, an individual contributor may give no more than $45,600 to candidates, and no more than $45,600 to PACs—including connected PACs, such as corporate or association PACs, leadership PACs, and non-connected PACs.

The biennial period runs from January 1, 2009 until December 31, 2010. The limit applies to all federal contributions that an individual makes during that time, regardless of when the election is held—e.g., a contribution made in 2009 to a Senate candidate who does not stand for reelection until 2012 still counts towards the 2009-2010 biennial limit.

A chart of all contribution limits for individuals and PACs can be found here.

Important Upcoming Dates
LD-203 Due Dates
January 30, 2009
July 30, 2009
January 30, 2010
July 30, 2010

LD-2 Due Dates
April 20, 2009
July 20, 2009
October 20, 2009
January 20, 2010

FEC Reporting Dates
January 31, 2009: Year-End Report
July 31, 2009: Midyear Report
January 31, 2010: Year-End Report