Influence
April 21, 2008
Carrie Levine
In the wake of the Jack Abramoff scandal, everyone from the federal government to your local city council rushed to pass new laws regulating lobbyists.
Now, the trick is keeping all those laws straight.
Compliance lawyers are deluged with questions about what’s legal in which states. They’re still figuring some of it out themselves, all the while dealing with last year’s overhaul of federal lobbying regulations. On top of that, some of their clients are begging for internal audits out of fear that they’re accidentally violating local laws.
They have to get it right. The Abramoff excesses — and other state-level transgressions — have left lobbyists increasingly sensitive to scrutiny and reporting requirements and concerned about the potential for a scandal, even though it isn’t yet clear how aggressively states will enforce the new statutes.
Few firms and companies have a plan in place to deal with all these new laws. In addition, understanding how different statutes are interpreted by local enforcement agencies is “increasingly difficult, and more complicated than ever before,” says Bernard Nash, a partner at Dickstein Shapiro.
Each time lobby laws have changed over the past few years, they’ve become stricter in levels of disclosure or limits on gifts, says Peggy Kerns, director of the Center for Ethics in Government, run by the National Council of State Legislatures. “I first started seeing activity on lobbying regulations when the Abramoff scandal broke in Congress, and it’s almost like the states said, well, let’s review our own laws and let’s make sure an Abramoff situation couldn’t happen.”
Lobbyists in Louisiana can’t spend more than $50 per elected official per meal. In Oregon, a gift ban limits lobbyists to $100 per year on any one legislator. South Carolina is now known as a “no-cup-of-coffee” state — a lobbyist can’t give a decision-maker anything of value. These types of laws, Kerns says, “are really to assure the public that there is a strong line of demarcation between making public policy and influencing it.”
PATCHWORK QUILT’
Nash used to keep a single page of paper on his desk listing information about lobbying and campaign finance laws in the 10 states his clients were most likely to ask him about — one line per state.
But Nash’s simple sheet of paper has now grown into a database of campaign finance and lobbying laws in all 50 states. Nash, a partner who specializes in public policy issues, says associates took months to put the database together in response to a client request for an internal review of their procedures. Other firms, including McKenna Long & Aldridge and Sonnenschein Nath & Rosenthal, have built or are building similar databases.
Michael Zolandz, an associate with the public law and policy strategies group at Sonnenschein, says clients are also asking for advice about whether behavior falls within boundaries. Is it OK to make a call to a government official inquiring about a potential project, for instance?
“There are some states that have gone so far as to regulate anything outside of the formal bid process as procurement lobbying,” Zolandz says.
Stefan Passantino, a partner at McKenna Long & Aldridge, says he’s also hearing concern from clients worried about procurement and contracting. “Anyone who sells goods and services to government has had to address this suddenly,” he says. “They have this patchwork quilt of regulations through the country.”
Wrestling with different and often inconsistent local laws can be confusing, many firms say, and that has pushed some in the direction of hiring local lobbyists as contractors who know how things work. “The same thing I’d have to register for in Virginia or New Jersey, I wouldn’t in Arizona,” says William Murray, a New Jersey-based executive vice president of public affairs for MWW Group. Over the past year, Murray has also worked on advocacy campaigns in Illinois, Pennsylvania, Virginia, and Arizona.
Before he works in a state, Murray says, he double-checks what’s changed recently, and makes sure the firm is still compliant. “You have to,” he says. “It’s just not worth it to you or your client to get tagged on something that sloppy.”
Nash says that so far, none of the clients Dickstein Shapiro advises have been sued and “none have been caught, quote, unquote, by state officials.” Still, clients have asked the firm to conduct internal reviews of their procedures to make sure they’re following all laws, he says, “and as a result, voluntary corrections were made.” For instance, new internal procedures — such as a chain of internal sign-offs that ends at a company’s chief compliance officer — were put in place to make sure things are done correctly in the future.
Many firms and companies that do business in multiple states were reluctant to talk about their compliance efforts on the record, much less acknowledge falling short. One lobbyist who works in Pennsylvania for a company that both lobbies and contracts with local government agreed to be interviewed if both he and his company were not named. The lobbyist says new rules “are an accounting and paperwork nightmare,” and the law has gray areas that are difficult to interpret.
For instance, he says, the law requires accounting of “indirect” lobbying expenses — such as phone bills — if companies spend above a certain threshold.
“I’m not criticizing the overall law, but some of the aspects just become silly,” he says, such as reporting the specific percentage of the salary of someone in another office who puts “substantial” time into a lobbying effort. “We tend to overreport,” he says, to be on the safe side.
Meanwhile, even as local governments move to create new law, it isn’t always clear how agencies can enforce the rules.
In Los Angeles, voters passed a ballot measure in 2006 that revamped the city’s ethics laws and created a new test to determine who is a lobbyist. Now, the law is based on the amount of time someone spends being paid to lobby and on the number of contacts with city officials, not how much money the lobbyist makes per quarter. It also changed some campaign finance regulations that specifically govern lobbyists.
That change can make it more difficult for the city’s ethics commission to investigate complaints, says LeeAnn Pelham, the executive director of the commission, because financial records are easier to examine than time spent on an issue. As for whether the new rules are effective, Pelham says, “the jury is still out.”
“Lobbying generally occurs not in the full light of city council chambers,” she says.