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register nowLast month the Chicago Board of Ethics made headlines when it fined former Obama administration official David Plouffe $90,000 for failing to register as a lobbyist after communicating with city officials by email.

But the story did not end there. According to the Chicago Tribune, the city’s ethics board is now looking into potential lobbying registration violations by dozens of individuals and companies. As with the Plouffe matter, these potential violations trace back to messages sent to Mayor Rahm Emanuel’s personal email accounts, which were released in response to a pair of open records lawsuits.

These developments in Chicago serve as a potent reminder of the penalties and reputational risks from ignoring state and local lobbying registration laws.

Continue Reading Chicago Crackdown on Unregistered Lobbying May Expand to Dozens of Individuals, Companies

On January 28, 2017, President Trump signed an Executive Order that imposes an extra layer of ethics obligations on presidentially appointed members of the White House and Executive Branch.

Overall, President Trump’s Executive Order takes a somewhat different approach than the “Ethics Pledge” issued by the Obama administration, expanding some restrictions and loosening others. In general, under the Trump Pledge, the restrictions imposed on the revolving door out of the government are stricter, while the restrictions on the way in are more flexible and not as rigorous.

On the way in, President Trump’s Ethics Pledge permits lobbyists to seek and accept jobs at an agency that they have lobbied within the last two years, subject to certain recusal obligations. Other front-end changes include:

  • Waivers of the Ethics Pledge are not public, as they were in the Obama administration; and
  • Waivers are granted by President Trump himself (or his designee), not by the Director of the Office of Management and Budget, as was the case under President Obama.

On the post-employment side, President Trump’s Pledge seeks to plug a loophole in the Obama Pledge that had been widely criticized — that only “lobbying” as defined under the Lobbying Disclosure Act, was prohibited, while behind-the-scenes activity known as “shadow lobbying” was permitted. Other post-employment restrictions include:

  • The post-employment revolving door ban applies to more than just lobbying contacts; it also applies to lobbying activities, which includes research, planning, and other behind-the-scenes activities that support lobbying contacts;
  • The post-employment revolving door ban has been expanded to prohibit former officials from representing a foreign government or political party, as those terms are used in the Foreign Agents Registration Act of 1938 (this ban was also in place under President Bill Clinton);
  • Former officials are banned for a period of five years from engaging in lobbying activities related to the former official’s agency; and
  • Former officials may not engage in lobbying activities with respect to any covered executive branch official (or non-career Senior Executive Service) in the entire executive branch for the remainder of the administration.

One thing that both Obama’s and Trump’s Ethics Pledges contain is a prohibition on gifts from lobbyists — the Executive Order bars appointees from accepting gifts from registered lobbyists and organizations that employ them.

For a full comparison of both ethics pledges, please click here.

Practical Effects

What are the practical effects for individuals going into the Administration, and for their former and future employers?

Understand what Happens if a Lobbyist from your Company or Organization goes into the Administration: If a former government relations professional for your organization, or even a hired lobbyist, is appointed to a position in the Trump administration, your company or organization may be affected. For example, if your lobbyist on environmental issues receives an appointment to an EPA post, he or she may be barred from reviewing matters in which you were represented (or even entire issues that he or she lobbied on). Under the Obama administration, this was not an issue because lobbyist were banned from serving in certain capacities. But now, you may need to develop alternate strategies to accommodate the presence of former lobbyists in the administration.

Understand the Scope of the Ban in the Future: Because the five-year post-employment ban applies to behind-the-scenes activities in support of lobbying, the employment prospects for administration officials will be significantly more limited than in the past. The Pledge appears to prevent hiring a former Trump political appointee to serve as a strategic advisor for government affairs, even if that person operates in a manner that does not require registering as a lobbyist. The five-year post-employment ban also appears to bar other types of behind-the-scenes work in support of lobbying, such as research, drafting leave-behind documents, and creating issue scorecards.

Whether your organization has a seasoned government affairs program or is newly considering the opportunities presented by a change in administration, Venable’s Political Law Practice Group can help you navigate gift rules and other ethics issues that arise along the way.

The Department of Justice Inspector General’s (IG) office recently released a highly critical audit of DOJ’s Foreign Agents Registration Act of 1938 (FARA) enforcement program. The audit, combined with recent news stories potentially involving FARA, may foreshadow an increased awareness of this sometimes overlooked registration requirement. But increased attention likely does not mean an increase in prosecutions, at least based on DOJ’s initial response to the audit.

Background on FARA

FARA is a federal criminal statute requiring certain persons acting on behalf of foreign principals to register and file periodic reports with the Department of Justice. The law requires any agent of a foreign principal to register with DOJ within ten days of engaging in political or quasi-political activities. These include activities such as lobbying, public relations, and direct or indirect political activities. FARA also requires foreign agents to file copies of informational material disseminated on behalf of a foreign principal to two or more persons with DOJ within 48 hours of their dissemination.

Persons required to register must provide DOJ with information on the nature of their relationship with the foreign principal, the work to be performed for the foreign principal, and, on a semi-annual basis, a report of the activities performed on behalf of the foreign principal and funds received from, or disbursed on behalf of, the foreign principal. Penalties for failing to comply with FARA can include a fine of $10,000 or imprisonment for up to five years.

Key points from the audit

The IG’s audit was especially critical of DOJ’s failure to prosecute FARA cases. In particular, the audit focused on the high proportion of new registrants who fail to file within the required ten-day period. In its review, the audit found that only 23% of new registrants filed timely registrations. In addition, materials disseminated on behalf of foreign principals were filed within the required period only 39% of the time, and almost half lacked a proper disclaimer (explaining that the agent is disseminating the information on behalf of a foreign principal).

The IG audit called on DOJ to improve its controls and oversight of FARA registration. Does this mean that a crackdown is in the works? Probably not. In response to the IG’s findings, DOJ pointed to several reasons why stricter enforcement is neither likely nor warranted:

  1. There is no penalty for late filings;
  2. At least half of the filings that were considered late (beyond ten days) were filed within 30 days (it appears even DOJ has a grace period); and
  3. According to DOJ, “the primary means of achieving FARA’s main purpose of transparency is through voluntary disclosure in compliance with the Act.”

Takeaways

Criminal enforcement of FARA, except in the case of a willful violation, will probably continue to be rare. However, DOJ appears to be developing tools to monitor more effectively whether the public is complying with FARA. For example, DOJ is expanding its efforts to identify potentially non-compliant registrants. The Audit confirmed that DOJ had limited itself to web searches or research on LexisNexis, but that it now is reaching out to other government agencies to obtain information about potential non-filers. DOJ also indicated that it will seek to make its FARA advisory opinions available to the public, perhaps as early as March 2017.  These opinions will provide further insight into how DOJ is approaching FARA registration.

With renewed focus on FARA, and DOJ’s indication it will expand its voluntary compliance efforts, we expect to see an uptick in the FARA Registration Unit’s activities, including more letters to violators seeking voluntary compliance.

The best way to avoid being caught in a Justice Department audit is by taking FARA seriously and implementing a compliance program. Here are three best practices:

  1. Know who pays your bills — FARA covers direct and indirect activity by foreign principals, so be sure to perform adequate due diligence before you engage in political or quasi-political activity.
  2. Take advantage of the Lobbying Disclosure Act exemption — If you lobby on behalf of a foreign private sector principal and are registered under the LDA, you are exempt from FARA requirements. Not only are the registration and reporting requirements under the LDA easier to comply with, it’s also cheaper to register under the LDA (no fee) compared with FARA ($305 for each foreign principal). Note that this exemption does not apply to agents of a foreign government (or a foreign government-controlled entity) or to a foreign political party.
  3. Seek guidance — For now, DOJ’s FARA advisory opinions are not readily accessible, and the law is arcane and unclear in many respects. To avoid getting into hot water, seek legal guidance on the front end of your engagements with foreign principals or foreign-controlled entities.

United States and California flagsThe Fair Political Practices Commission – the agency responsible for administering and enforcing California’s campaign finance and lobbying laws – has unanimously approved a rule change intended to force more consultants to register as lobbyists and strengthen the agency’s hand in enforcing state lobbying laws. The rule will take effect September 16, 2016.

FPPC chair Jodi Remke has called this the “first step” in cracking down on “shadow lobbying,” and has indicated that the agency intends to focus on lobbying compliance in the coming year.

California lobbying law recognizes two types of lobbyists: in-house lobbyists, who lobby on behalf of their employer, and contract lobbyists, who lobby for a client. This change affects only contract lobbyists.

Continue Reading California Cracking Down on Lobbyist Registrations

The Lobbying Disclosure Act Guidance (Guidance) issued by the Clerk of the House of Representatives and the Secretary of the Senate was updated on June 15. The updates clarify currently existing provisions of the LDA, add additional examples, replace references to the LDA with hyperlinked citations to the U.S. Code, and remove references to Line numbers (the online reporting platform does not have Line numbers for drafting reports, but the final version of the reports available on the House and Senate websites still have Line numbers).  The Guidance is available here. A brief discussion of the changes to the Guidance is below:

Continue Reading Revisions to the Lobbying Disclosure Act Guidance: What These Changes Mean for You

By White House/Chuck Kennedy (White House (P090612CK-0875)) [Public domain], via Wikimedia Commons
Thinking about sponsoring or hosting an event at the presidential nominating conventions in Cleveland and Philadelphia?  Or considering giving free items to attendees?

Venable’s client alert summarizes recent guidance on convention events from the House and Senate ethics committees, and discusses both new and old ways that the national parties and the host cities are raising money to pay for the conventions.

Our Political Law Group has extensive experience advising companies, trade associations, and nonprofits in navigating the gift rules that apply to convention events, and making political contributions.

 

cleanslateFor those who have placed lobbying registration at the top of their New Year’s resolution list, New York State and New York City have made it easier to take the plunge. Starting on January 1, lobbyists and organizations that employ or retain lobbyists that have failed to register with either the state and/or city may register and file back reports without facing penalty.

New York State: This amnesty program, conducted by New York’s Joint Commission on Public Ethics (JCOPE), runs from January 1 to June 30, 2016. Entities or individuals that have previously been contacted by regulators for failure to comply with New York’s lobbying laws do not qualify. The amnesty program permits those who have never submitted required filings to apply. The amnesty covers any unregistered lobbying that has taken place since December 10, 2006.

To participate in the program, applicants must submit a form found on the JCOPE website. They must also submit (1) all registration statements and periodic reports for lobbying activity occurring between January 1, 2013 and the date of application for amnesty, and (2) applicable fees for those “old” filings. In addition, applicants must comply with a training component.

New York City: The New York City Clerk’s office has established a similar program for lobbyists and companies that should have filed a statement of registration or client annual report under NYC’s lobbying rules. NYC’s program also runs from January 1 to June 30, 2016 and covers unreported lobbying conducted from December 10, 2006 to the present.

year-end-reportsJanuary is always a busy month for filing lobbying and campaign finance reports. It is also a good time to think about changes for the upcoming year that might simplify filing obligations.

•  State Lobbying Reports. Most states require year-end reports to be filed at some point in January. Many also require re-registration or renewal of registration for the next year. Pay attention to deadlines, and think about where you are likely to be active in 2016. Perhaps it is time to de-register or let your registration lapse if you will not be active in a particular state. Different states have different thresholds for when registration and reporting are required, so be sure to consider how what you are doing matches what is required. Continue Reading PAC and Lobbying Deadlines Loom Large in January—and a Chance to Get Organized

Earlier this month, Virginia Governor Terry McAuliffe signed into law a new bill making significant changes to Virginia’s lobbying and gift laws. The critical changes made by this bill, Senate Bill No. 1424, will become effective on January 1, 2016. Many of the revisions focus on gift reform, but the bill also contains important changes affecting lobbying as well as pay-to-play compliance.  Continue Reading Virginia Tightens the Reins: Major Lobbying and Gift Law Changes to Take Effect in 2016

Following a major rewrite last year of its “pay-to-play” disclosure rules, Maryland has made further changes that expand the obligations of state and local government contractors to report their political contributions, and those of their subsidiaries, officers, directors, partners, and PACs. Now, in addition to reporting direct contributions to candidates, contractors will also have to disclose contributions made to independent expenditure groups and political parties that are “for the benefit” of covered candidates. The new law also changes reporting deadlines, and clarifies that companies holding state or local contracts awarded prior to January 1 must file disclosure reports until performance is complete.

The contribution disclosure requirements for lobbyist-employers will also change so that the two disclosure regimes mirror one another.

These new changes take effect on June 1, 2015, just five months after the last round of changes and the rollout of a new online reporting system.

Key features of the new law include…