Lobbying Beyond Washington: Mastering the Differences in State and Federal Compliance March 23, 2010...

Lobbying Beyond Washington:Mastering the Differences in State and Federal

ComplianceMarch 23, 2010 2:00-3:30 PM EDT

An audioconference brought to you by Lobbyists.info

Jill Vogel, Holtzman Vogel PLLCJason Torchinsky, Holtzman Vogel PLLCNola Werren, State & Federal Communications

Today’s Schedule

• State Lobbying Overview– Jason Torchinsky– Jill Vogel

State LobbyingJill Vogel

Jason Torchinsky

Holtzman Vogel PLLC

4Overview• Implications of State Lobbying Rules• Grassroots Lobbying• Thresholds and Exemptions• Goodwill Building and Other Activities• Reporting State Lobbying Activity• Who Must Register• Other State-Level Restrictions on Lobbyists• Enforcement• Other Considerations• Conclusion

Why Engage in State Level Lobbying

• Federal Government is transferring funds to state governments for distribution

• Regulatory changes happen faster at the state level– Handheld v. hands-free cell phone laws– Internet safety issues

• Many types of business operate under heavy state regulation– Insurance– Banking– Telecommunications

6States Regulating• States are Regulating More

– Influencing state level policy is now a growing business• New York State

– 2007 - $171.2 million– 2000 - $66 million

• Washington State– 2007 - $43 million

• California– 2005 - $225 million– 2000 - $180 million

• Texas – 2005 - $175 million

States Regulating (cont’d)

– If you are going to participate in this process, national “patchwork” of 50 different rules govern your activity

– Landscape constantly changing• At least 13 states changed lobbying laws in 2006

– State laws are constantly changing– Even state level lobbyists can make the

national news – as happened recently in California, and Florida

Primary Differences from Federal Lobbying

• Federal LDA rules require registration and reporting only for direct contact with government officials– Limited disclosure of spending

• State laws vary widely– Some states cover only direct lobbying– Some states cover grassroots lobbying– Some states require detailed expenditure reports– Some states even require advocacy groups to publicly

disclose donors

9Implications of State Lobbying Rules

• State lobbying rules may have implications for individuals and firms that only engage in Federal lobbying– Interactions with state officials may be covered, even if

you are attempting to influence federal policy– Many states are even more aggressive than the federal

government in regulating and enforcing compliance with lobbying and ethics laws

• Random Audits• Automatic Fines• Civil and Criminal Penalties

Implications of State Lobbying Rules (cont’d)

• Grassroots advocacy is regulated in many states– Contrast with federal advocacy where grassroots

activity is not regulated or disclosed• State lobbying rules vary greatly from state to

state and the rules in one state are not applicable to neighboring states

11Grassroots Lobbying

• Grassroots Lobbying– Many states regulate attempts to influence the

general public and encourage them to contact public officials

– Some states consider this type of activity to be lobbying and others treat it as reportable, but separate from lobbying

Grassroots Lobbying (cont’d)

• Examples:– NY and GA treat grassroots activity as lobbying– CA and NC treat grassroots activity separately with

separate disclosure or registration requirements– WI does not require registration for grassroots

activity, but if the organization also engages in direct lobbying, grassroots expenses may be reportable

Grassroots Lobbying (cont’d)

• Examples of grassroots lobbying– Issue advocacy advertising– Outreach to other interested groups or parties– Organizing local “town-hall” meetings on an issue

Thresholds and Exemptions

• Thresholds and Exemptions– Although many states have thresholds under which

registration is not required, many require registration for ANY compensation or ANY activity

– Thresholds may be compensation or time based

Thresholds and Exemptions

• Compensation Thresholds:– FL: anything of value /$1, registration is required if

there is any compensation for lobbying activity.– MI: threshold is indexed to inflation and adjusts

every year. For 2010, the threshold is $550.– PA: requires registration of lobbyists who receive

more than $2,500 per quarter for lobbying and organizations that spend more than $2,500 for lobbying.

Thresholds and Exemptions (cont’d)

• Time Thresholds:– MA: no registration if lobbying is “incidental” to

usual or principal business activities. “Incidental” is defined as more than 25hours of lobbying per year

– ME: exempts employees who lobby less than 8 hours/month

– WI: exempts individuals who lobby on each of at least 5 days during a 6 month reporting period

Thresholds and Exemptions (cont’d)

• Most states require registration within 3-10 days of lobbying; many require registration prior to lobbying– IL: provides a 2 day window to register– PA: requires registration within 10 days of acting

as a lobbyist– NY: requires contract lobbyists to register within

15 days and in-house lobbyists to register within 10 days

Goodwill Building and Other Activities

• Several States require registration for “goodwill building” activities.

• Goodwill building may be an important to consider if you are asking state officials to take a position on federal policy.

Goodwill Building and Other Activities

• Examples of Goodwill building activities– Meeting with a state official/relationship-building– Assisting a state official with a non-official project– Attending a golf outing/other event with an official

Goodwill Building and Other Activities (cont’d)

• States that consider “goodwill building” activities to be lobbying in some circumstances:– Texas

• Considered to be lobbying if communication is to generate goodwill to influence potential future legislation or administrative action

– Oregon• Any correspondence with a legislator to engender

goodwill building

Goodwill Building and Other Activities (cont’d)

• Vermont– Goodwill building is defined as communications or

activities with a legislator or administrative official intended ultimately to influence legislative or administration action

• Illinois– Any influence to promote goodwill is considered to be

lobbying.

Reporting State Lobbying Activity

• States may require detailed accounting of lobbying expenditures– Many states require you to itemize expenditures

to benefit public officials, where permitted• GA: requires disclosure of date, amount and description

of the expenditure, and name of client, official receiving the benefit, and the matter discussed, if any

• PA: requires itemization of gifts or expenditure to benefit a public official if the value of such gifts to that official aggregate to more than $250 per year

Reporting State Lobbying Activity (cont’d)– Clients may also be required to report, even if client

registration is not required• Client reporting may include an itemized list of lobbying

expenses, including payments to vendors and lobbyists.– TN: requires semi-annual client reports that disclose amount

spent on compensation, other lobbying expenses, and expenses for events to which members of the General Assembly are invited

– PA: requires quarterly reporting by clients of amounts spent on direct lobbying, grassroots lobbying, and for the benefit of public officials and their families.

– AZ: requires a single annual report by the client in addition to quarterly reports by the lobbyist

Reporting State Lobbying Activity (cont’d)

– During the legislative session, additional reporting may be required.• Utah requires a Supplemental Activity report 10 days

following the close of session and 7 days before any general election

• Arkansas requires monthly reports when the legislature is in session

Who Must Register

• Unlike at the federal level, where only the lobbyist registers, state requirements vary

• Many states require that individual lobbyists or lobbying firms, as well as clients, file separate registrations– Massachusetts requires registration by both the lobbyist

and the client– Florida requires a signed authorization statement from the

client

Other State Level Restrictions on Lobbyists

– Some states prohibit officeholders from receiving campaign contributions while the legislature is in session

• Virginia

– Some states prohibit lobbyists from serving as campaign treasurers

– Most states prohibit lobbying for a contingency fee

Other State Level Restrictions on Lobbyists (cont’d)

– State level gift rules are often stricter with gifts from lobbyists (like the federal rules)

• New York– In some states, state level lobbying encompasses local

level lobbying. For example, even if you are only lobbying at the NYC level, you need to register w/NY state. You have an independent responsibility to register w/both NYC and NY state

– Donor disclosure for organizations in some states• PA, MN, MA

Enforcement

– Many states have instituted random audits of a percentage of the registered lobbyists each year

• New York, Indiana, California– Most states impose automatic fines for each day a

report or registration is late– States have become increasingly aggressive in their

enforcement in recent years– Many state lobbying laws have potential criminal

penalties associated with non-compliance• Michigan

Other Considerations– Record keeping is key

• Keep documents relevant to the reports• Many states require keeping certain records for a certain

number of years, but no consistency in requirements.– Ohio- 2 years– Idaho- 3 years– Oklahoma- 4 years– Colorado- 5 years

– Know gift and ethics rules in states where active– Your client may rely on you to tell them if and when they

need to register or report

Conclusion

• Engaging in state activity is often necessary for your business or your clients

• State level lobbying is a growing field and you may be asked to do more of it in more states

• It is vital that you know and comply with the rules of the state or states where you are operating– Always make this assessment before you begin activity in

any state• Opponents would like nothing more than to tie you

up on procedural errors or alleged “ethical” issues

Questions?Jill Vogel

Jason TorchinskyHoltzmanVogel PLLC

98 Alexandria Pike, Suite 53Warrenton, VA 20186

(540) 341-8809jh@holtzmanlaw.net

jtorchinsky@holtzmanlaw.net

The information contained herein can not be distributed without the consent of Holtzman Vogel PLLC and Columbia Books & Information Services, Inc. The presentation and materials presented in association with this audioconference do not constitute legal advice and should not be relied upon

as legal services without consulting individual counsel

How to Do Business Within the States

March 23, 2010Nola R. Werren, Esq.

• Companies active in soliciting business from state and municipal entities are subject to statutes, regulations, and rules

• In addition, activities with federal officials, PAC and corporate contributions, and employee personal political activity require compliance attention

Why Compliance? Why Now?

Three Primary Areas:

Gift Laws

Lobbying Laws

Pay-to-Play Laws

U.S. Jurisdictional Rules

Federal, Lobbyist Disclosure Act

Counties, 3,14150 with a population over 100,000

States, 50 plus D.C. and Puerto Rico. Stateagencies have their own guidelines and penalties

Municipalities, School Districtsnearly ∞ 254 with a population over 100,000

Solutions can be implemented depending on the type and size of the risk

Education/training Coordinated registration for lobbyists and entities with risk-

related activity Cross line-of-business gift reporting databases to limit risk

exposure where specific dollar thresholds used Specific needs compliance depending on line-of-business

needs and business models [procurement laws] Consider limiting or prohibiting activity where risk may be

too great

Solutions35

Rewards of aSuccessful Compliance Program Strengthen brand/reputation Avoid debarment, fines, penalties, and negative

publicity Insure maximum growth opportunities Firms that are ahead of the curve, will be the firms

best positioned to earn new business in a stricter

environment

Current Trends in Procurement

• Increasing involvement in procurement activity

• Increased reporting of gifts• Increased training to sales representatives

SO WHY BE CONCERNED?

In the News Today

• Media eyes are on what big business is spending

• New York requirement of registering procurement lobbyists

Registration

• How many states require registration for procurement lobbying?

Procurement Registration and/or Reporting:• Arkansas

• Connecticut[unless acting solely as a salesperson]

• Delaware• Florida• Georgia• Idaho• Illinois

[if seeking to influence a cabinet-level official]

• Indiana• Kentucky

[if attempting to influence the official granting of a contract]

• Louisiana• Maryland• Massachusetts

• Michigan• Mississippi• Missouri• New Hampshire• New Jersey• New York• North Carolina• Ohio• Pennsylvania• Rhode Island• Tennessee• Texas

[if lobbying activities are more than 5% of compensated time]

Before any lobbying is done …

Time ThresholdsTime Thresholds

When Is Registration Required?

Thresholds

Pro-rata share of salary

Certain number of hours

Certain number of days

DollarDollar

“First Toe In The Water” Arizona Colorado Delaware Florida [Legislative and Executive] Georgia Illinois Iowa [Legislative and Executive] Kansas Kentucky [Legislative] Louisiana Mississippi Missouri

Nebraska Nevada New Hampshire New Mexico North Dakota Oklahoma Rhode Island South Carolina South Dakota Tennessee Utah West Virginia

• Lobbyist Registration Form

• Registration Fee

• Photograph

• Employer Authorization

• Training Class

• Electronic Filing Application

What Is Required to Register?45

• Annual

• Every two years

• Ongoing

Term of Registration46

Then, what do you have to do?

Keep Track of Everything………

Salary [Pro-rata share of salary based on time spent lobbying]

Reimbursed and unreimbursed expenses

Reimbursed expenses for your personal food, travel, and lodging

Staff and Office Expenditures

Keep Track of Everything……..

Food, beverages, entertainment, recreation on behalf of reportable officials [where permitted]

Group Expenditures….who will disclose? Who was at the dinner? Tax and Tip Honoraria Political Contributions

Gift Law GENERAL

Gift law is a prohibition, limit, or restriction on providing gifts to public officials. Includes anything of personal value: meals,

entertainment, transportation, and lodging Each jurisdiction has its own gift law: federal,

state, and local There are special gift limits for lobbyists

and lobbyist employers in 27 states

Gift Law TIPS

“Not even a tic tac” “Nominal Value” [Branded items] Consumed in the presence of the lobbyist In connection with a national conference

[“Let’s go have a drink” does not qualify] Notification to official required? Is reimbursement allowed? Within a certain time? Spouse and family members included in threshold? Do NOT rely on the official to know the law

Contract Lobbyists

• A contract is always needed.• Control the expenses of the contract lobbyist.• Let them know if they can give gifts or make

contributions.

Contract Lobbyists

• Consider a pre-approval gift form.• Cumulative limits tracking is important.• Require them to provide you with a copy of

the reports they file.

• Are Accountable to:– Boss

– Government Officials

– Colleagues

– The Public

Compliance Summary

– Know the rules in the jurisdictions where you and your teams operate

– Alert new hires to the rules, alert compliance to new hires– Beware “Everyone does it”, do not take someone else’s word – Determine permissibility and appropriateness of conduct

beforehand• If you are unsure, ask• Consult services

– Be aware of legislation that may affect you. Be the “go to” person in government affairs to help your company.

– If it would look bad in the newspaper, it is not worth the reputational risk, even if it is legal.

State and Federal Communications, Inc.

330-761-9960www.stateandfed.com

80 South Summit Street, Suite 100Akron, Ohio 44308Fax: 330-761-9965

Questions on the audioconference:

• Elise Hill– ehill@columbiabooks.com– (240) 235-0277

• Don’t forget to take the follow-up survey to receive your certificate of attendance!

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