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Home My WebLink About08-1002OPINION OF THE COMMISSION Before: Louis W. Fryman, Chair John J. Bolger, Vice Chair Donald M. McCurdy Paul M. Henry Raquel K. Bergen Nicholas A. Colafella DATE DECIDED: 7/21/08 DATE MAILED: 8/5/08 08 -1002 This Opinion is issued in response to your advisory request dated April 23, 2008. I. ISSUE: Whether, pursuant to Pennsylvania's lobbying disclosure law ( "Lobbying Disclosure Law "), 65 Pa.C.S. § 13A01 et seq., Corporation A, a registered principal, may separately allocate its expenses from those of other registered principals that are its affiliates in determining whether the reporting thresholds for "gifts" and for "transportation and lodging or hospitality received in connection with public office or employment" have been met for purposes of the reporting requirements of Section 13A05(b)(3)(i) of the Lobbying Disclosure Law, 65 Pa.C.S. § 13A05(b)(3)(i). II. FACTUAL BASIS FOR DETERMINATION: On behalf of your client, Corporation A, you request a confidential advisory from this Commission based upon the following submitted facts. Corporation A is a registered principal in Pennsylvania. Each of the following entities is an affiliate of Corporation A: [names of affiliates] (collectively referred to herein as the Affiliates "). Each of the Affiliates is a separately registered principal in Pennsylvania. The interests of Corporation A and the Affiliates are not identical. Corporation A shares some, but not all, of its registered lobbyists with the Affiliates. The in -house lobbyists are employed by Corporation B. Corporation B provides various services to the Affiliates pursuant to "affiliate agreements." Such services include but are not limited to lobbying and legal services. Each of the Affiliates contributes to the overall expenses of Corporation B. You note that Section 13A05(b)(2.1) of the Lobbying Disclosure Law permits Confidential Opinion, 08 -1002 August 5, 2008 Page 2 registrants to use any reasonable methods of estimation and allocation for filing their expense reports. You state that the "total costs" of lobbying are already being allocated separately to Corporation A and each of the Affiliates for purposes of reporting under Section 13A05(b)(2) of the Lobbying Disclosure Law. Your specific inquiry pertains to Section 13A05(b)(3)(i) of the Lobbying Disclosure Law, which requires that an expense report filed pursuant to the Lobbying Disclosure Law identify by name, position, and each occurrence, a State official or employee who receives from a principal or lobbyist gift(s), transportation, lodging or hospitality that must be included in the State official's /employee's Statement of Financial Interests pursuant to Section 1105(b)(6) or (7) of the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa.C.S. §§ 1105(b)(6), (7). The question that you have posed is whether, for purposes of reporting pursuant to Section 13A05(b)(3)(i) of the Lobbying Disclosure Law, Corporation A may separately allocate its expenses from those of the Affiliates in determining whether the reporting thresholds for "gifts" and for "transportation and lodging or hospitality received in connection with public office or employment" have been met, or whether Corporation A and the Affiliates would be considered a single "source" for the purposes of such disclosure on the expense reports. You note that the proposed regulations for implementing the Lobbying Disclosure Law, if approved, would not require affiliated companies to register and report on a consolidated basis. By letter dated June 4, 2008, you were notified of the date, time and location of the executive meeting at which your request would be considered. At the executive meeting on July 21, 2008, Attorney C, [title], and Attorney D, [title], appeared on behalf of Corporation A. Attorney C stated that based upon the Lobbying Disclosure Law and the current draft of the aforesaid proposed regulations, the "source" of gifts, transportation, lodging or hospitality provided by a registered principal would not necessarily include affiliates of the registered principal. Attorney D addressed the reporting of expenses by Corporation A. III. DISCUSSION: Before we begin our substantive analysis of your inquiry, we initially note the following points. First, pursuant to Section 13A08(a) of the Lobbying Disclosure Law, in conjunction with Sections 1107(10) and 1107(11) of the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa.C.S. §§ 1107(10), (11), advisories are issued to the requester based upon the facts that the requester has submitted. In issuing the advisory based upon the facts that the requester has submitted, this Commission does not engage in an independent investigation of the facts, nor does it speculate as to facts that have not been submitted. It is the burden of the requester to truthfully disclose all of the material facts relevant to the inquiry. 65 Pa.C.S. §§ 1107(10), (11). An advisory only affords a defense to the extent the requester has truthfully disclosed all of the material facts. Additionally, pursuant to the same aforesaid statutory provisions, an opinion /advice may be given only as to prospective (future) conduct. To the extent you have referenced conduct that has already occurred, such past conduct may not be addressed in the context of an advisory opinion. However, to the extent you have inquired as to future conduct, your inquiry may, and shall, be addressed. Furthermore, although you have established legal standing to submit your advisory Confidential Opinion, 08 -1002 August 5, 2008 Page 3 request as to your client, Corporation A, you have not established standing as to the Affiliates. Therefore, this advisory Opinion shall be limited to addressing your inquiry as to Corporation A. We shall begin our analysis by reviewing the relevant statutory provisions. The following provisions of the Lobbying Disclosure Law are relevant to your inquiry: § 13A03. Definitions. "Principal." An individual, association, corporation, partnership, business trust or other entity: (1) on whose behalf a lobbying firm or lobbyist engages in lobbying; or (2) that engages in lobbying on the principal's own behalf. 65 Pa.C.S. § 13A03. § 13A05. Reporting. (a) General rule. - -A registered principal shall, under oath or affirmation, file quarterly expense reports with the department no later than 30 days after the last day of the quarter. (b) Content. -- (2.1) For purposes of filing an expense report under this subsection, a registrant may use any reasonable methods of estimation and allocation. (3) The following apply: (i) In addition to reporting the totals required under this subsection, the expense report must identify, by name, position and each occurrence, a State official or employee who receives from a principal or lobbyist anything of value which must be included in the statement under Section 1105(b)(6) or (7) (relating to statement of financial interests) as implemented by Section 1105(d). 65 Pa.C.S. §§ 13A05(a), (b)(2.1)- (3)(i). Sections 1105(b)(6) and (7) of the Ethics Act, which are also relevant to your inquiry, provide as follows: § 1105. Statement of financial interests (b) Required information. - -The statement shall include the following information for the prior calendar year with regard to the person required to file the statement: Confidential Opinion, 08 -1002 August 5, 2008 Page 4 (6) The name and address of the source and the amount of any gift or gifts valued in the aggregate at $250 or more and the circumstances of each gift. This paragraph shall not apply to a gift or gifts received from a spouse, parent, parent by marriage, sibling, child, grandchild, other family member or friend when the circumstances make it clear that the motivation for the action was a personal or family relationship. However, for the purposes of this paragraph, the term "friend" shall not include a registered lobbyist or an employee of a registered lobbyist. (7) The name and address of the source and the amount of any payment for or reimbursement of actual expenses for transportation and lodging or hospitality received in connection with public office or employment where such actual expenses for transportation and lodging or hospitality exceed $650 in an aggregate amount per year. This paragraph shall not apply to expenses reimbursed by a governmental body or to expenses reimbursed by an organization or association of public officials or employees of political subdivisions which the public official or employee serves in an official capacity. 65 Pa.C.S. §§ 1105(b)(6), (7). Subject to certain statutory exceptions not applicable to your inquiry, Section 1105(b)(6) of the Ethics Act requires a public official /public employee to disclose on the Statement of Financial Interests form the name and address of the source and the amount of any gift or gifts valued in the aggregate at $250 or more and the circumstances of each gift, while Section 1105(b)(7) of the Ethics Act requires disclosure of the name and address of the source and the amount of any payment for or reimbursement of actual expenses for transportation and lodging or hospitality received in connection with public office or employment where such actual expenses exceed $650 in an aggregate amount per year. In applying the relevant statutory provisions to your inquiry, this advisory Opinion is limited to addressing the specific question that you have posed, under the facts that you have submitted. The submitted fact that Corporation A and the Affiliates are all separately registered principals inherently includes a factual representation that Corporation A and each of the Affiliates separately qualifies for status as a "principal" as that term is defined by the Lobbying Disclosure Law. Based upon the submitted facts, you are advised that there is no provision in the Lobbying Disclosure Law that would require Corporation A and the Affiliates, as separately registered principals, to be considered a single "source" of gifts, transportation, lodging or hospitality provided to State officials /employees. We therefore hold that Corporation A, a registered principal, may separately allocate its expenses from those of the Affiliates in determining whether the reporting thresholds for "gifts" and for "transportation and lodging or hospitality received in Confidential Opinion, 08 -1002 August 5, 2008 Page 5 connection with public office or employment" have been met for purposes of the lobbying reporting requirements of Section 13A05(b)(3)(i) of the Lobbying Disclosure Law, 65 Pa.C.S. § 13A05(b)(3)(i). Any allocation of expenses would be subject to the requirements of Section 13A05(b)(2.1) of the Lobbying Disclosure Law, 65 Pa.C.S. § 13A05(b)(2.1), as to using a reasonable method of allocation. As a registered principal, Corporation Awould be required to retain all documents reasonably necessary to substantiate filings under the Lobbying Disclosure Law for four years from the respective dates of such filings. 65 Pa.C.S. § 13A05(c). The request for an advisory has only been addressed under the Lobbying Disclosure Law and, derivatively, the Ethics Act to the extent applicable. IV. CONCLUSION: Corporation A, a registered principal, may separately allocate its expenses from those of other registered principals that are its affiliates in determining whether the reporting thresholds for "gifts" and for "transportation and lodging or hospitality received in connection with public office or employment" have been met for purposes of the lobbying reporting requirements of Section 13A05(b)(3)(i) of the Lobbying Disclosure Law, 65 Pa.C.S. § 13A05(b)(3)(i). Any allocation of expenses would be subject to the requirements of Section 13A05(b)(2.1) of the Lobbying Disclosure Law, 65 Pa.C.S. § 13A05(b)(2.1), as to using a reasonable method of allocation. As a registered principal, Corporation Awould be required to retain all documents reasonably necessary to substantiate filings under the Lobbying Disclosure Law for four years from the respective dates of such filings. 65 Pa.C.S. § 13A05(c). Pursuant to Section 13A08(a) of the Lobbying Disclosure Law, 65 Pa.C.S. § 13A08(a), a requester who truthfully discloses all material facts in a request for an advisory and who acts in good faith based upon a written Opinion of this Commission issued to the requester shall not be held liable for a violation of the Lobbying Disclosure Law. The protection afforded for reliance upon this Opinion will remain in effect until such time as any regulation, statutory enactment, or ruling precludes further reliance upon this Opinion. This letter is a public record and will be made available as such. Finally, a party may request this Commission to reconsider its Opinion. The reconsideration request must be received at this Commission within thirty days of the mailing date of this Opinion. The party requesting reconsideration must include a detailed explanation of the reasons as to why reconsideration should be granted in conformity with 51 Pa. Code § 21.29(b). By the Commission, Louis W. Fryman Chair