HomeMy WebLinkAbout18-1500 ConfidentialPHONE: 717- 783 -1610
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To the Requester:
ADVICE OF COUNSEL
March 2, 2018
FACSIMILE: 71 7- 787 -0806
WEBSITE: www.ethics.12a.gov
18 --1500
This responds to your letter dated January 4, 2018, received January 8, 2018, by
which you requested a confidential advisory from the Pennsylvania State Ethics
Commission.
Issue: Whether, pursuant to Pennsylvania's lobbying disclosure law ( "Lobbying
ID scTosure Law "), 65 Pa.C.S. § 13A01 et seq., a registered lobbying firm hired by a
company ( "the Company ") to provide services including: (1) providing advice and
counsel to the Company regarding matters of interest involving state and local
governments in Pennsylvania; (2) identifying and referring prospective clients to the
Company; (3) facilitating meetings with potential clients for the Company; (4) advocating
on behalf of the Company and its subsidiaries; and (5) engaging state governmental
officials to help the Company and its subsidiaries get hired by government entities or
their contractors or sub - contractors, would be permitted to receive payments for such
services in the form of stock options and commissions on gross sales.
Facts: As A of B, you request a confidential advisory from the Pennsylvania State
Ethics Commission. You have submitted facts that may be fairly summarized as
follows.
B is registered as a lobbying firm in Pennsylvania. B has been asked to engage
with a company ( "the Company') to provide services including: (1) providing advice and
counsel to the Company regarding matters of interest involving state and local
F in Pennsylvania; (2) identifying and referring prospective clients to the
Company; (3) facilitating meetings with potential clients for the Company; (4) advocating
on behalf of the Company and its subsidiaries; and (5) engaging state governmental
officials to help the Company and its subsidiaries get hired by government entities or
their contractors or sub - contractors. You ask whether B would be permitted to receive
payments for such services in the form of stock options and commissions on gross
sa es.
The particular terms for the fee agreement would be as follows:
[terms of fee agreement].
Based upon the above submitted facts, you pose the following questions:
(1) Whether, pursuant to the Lobbying Disclosure Law, B would be permitted
to accept the aforesaid payment terms; and
Confidential Advice, 18 -1500
March
Page 2
(2) Whether accepting the aforesaid fee arrangement would in any way
violate Section 13A07(e) of the Lobbying Disclosure Law, pertaining to
contingent compensation, or would run afoul of the Commission's decision
in Stine, Opinion 10 -1001.
Discussion: It is initially noted that pursuant to Section 13A08(a) of the Lobbying
Disclosure 1 aw, 65 Pa.C.S. § 13A08(a ), in conjunction with Sections 1107(10) and
1107(11) of the 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, the 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 E 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.
As a registered lobbying firm in Pennsylvania, B is subject to the prohibitions,
restrictions and requirements imposed upon lobbying firms by the Lobbying Disclosure
Law.
The Lobbying Disclosure Law, 65 Pa.C.S. § 13A01 et seq., defines the term
"lobbying" and the related terms "administrative action," legislative action," and
"legislation" as follows:
"Lobbying. " An effort to influence legislative action or
administrative action in this Commonwealth. The term
includes:
(1) direct or indirect communication;
(2) office expenses; and
(3) providing any gift, hospitality, transportation or lodging
to a State official or employee for the purpose of
advancing the interest of the lobbyist or principal.
"Administrative action." Any of the following:
(1) An agency's:
(i) proposal, consideration, promulgation or
rescission of a regulation;
(ii) development or modification of a statement of
policy;
(iii) approval or rejection of a regulation; or
(iv) procurement of supplies, services and
construction under 62 Pa.C.S. (relating to
procurement).
(2) The review, revision, approval or disapproval of a
regulation under the act of June 25, 1982 (P.L.633,
No. 181), known as the Regulatory Review Act.
(3) The Governor's approval or veto of legislation.
Confidential Advice, 18 -1500
March ,
Page 3
(4) The nomination or appointment of an individual as an
officer or employee of the Commonwealth.
(5) The proposal, consideration, promulgation or
rescission of an executive order.
"Legislative action." An action taken by a State official or
employee involving the preparation, research, drafting,
introduction, consideration, modification, amendment,
approval, passage, enactment, tabling, postponement,
defeat or refection of:
(1) legislation;
(2) legislative motions;
(3) a veto by the Governor; or
(4) confirmation of appointments by the Governor or
appointments to public boards or commissions by a
member of the General Assembly.
"Legislation." Bills, resolutions, amendments and
nominations pending or proposed in either the Senate or the
House of Representatives. The term includes any other
matter which may become the subject of action by either
chamber of the General Assembly.
65 Pa.C.S. § 13A03.
Section 13A07(e) of the Lobbying Disclosure Law provides as follows:
§ 13A07. Prohibited activities
(e) Contingent compensation.—
(1) A person may not compensate or incur an
obligation to compensate a person to engage in lobbying for
compensation contingent in whole or in part upon any of the
following:
(i) Occurrence, nonoccurrence or amendment of
legislative action.
(ii) Occurrence, nonoccurrence or amendment of
an administrative action other than
procurement described in Paragraph iv o
the definition of 'administrative action under
section 13AO3 (relating to definitions).
(2) A person may not engage in or agree to
engage in lobbying for compensation contingent in whole or
in part upon any:
(i) Occurrence, nonoccurrence or amendment of
legislative action.
Confidential Advice, 18 -1500
March ,
Page 4
(ii) Occurrence, nonoccurrence or amendment of
an administrative action other than
procurement described in ParagraP iv of
the definition of administrative action's under
section 13AO3.
(3) This subsection shall not apply to vendors.
65 Pa.C.S. § 13A07(e) (Emphasis added). B is a "person" as that term is defined by the
Lobbying Disclosure RRegulations, 51 Pa. Code § 51.1.
The term "vendor" is defined as: "Any offeror, bidder or contractor that, for
economic consideration, sells or provides a service or supply or engages in
construction. The term does not include an attorney at law, a lobbyist or a lobbying
firm." 65 Pa.C.S. § 13A03.
In applying the above provisions to your inquiry, you are advised as follows.
The Lobbying Disclosure Law would not prohibit B from receiving contingent
compensation from the Company for procurement lobbying that would not involve the
occurrence, nonoccurrence, or amendment of legislative action. For those particular
services provided by B to the Company, including: (1) identifying and referring
prospective clients to the Company; (2) facilitating meetings with potential clients for the
Company; and (3) engaging state governmental officials to help the Company and its
subsidiaries get hired by government entities or their contractors or sub - contractors, the
proposed terms of the fee agreement would not run afoul of the Lobbying Disclosure
Law.
With regard to other services provided by B to the Company that would constitute
"lobbying" as the Lobbying Disclosure Law defines that term, a contingent
compensation arrangement would be rohibited. The submitted facts do not enable a
conclusive determination of whether the stock options to be provided under the fee
agreement would constitute contingent compensation for the "non- procurement"
lobbying performed by B for the Company. For example, the submitted facts do not
indicate whether the value of the stock would be impacted by the outcome of the
lobbying effort (cf., Std, Opinion 10 -1001, at 2). Therefore, you are generally advised
that the Lobbying D -isclosure Law would not prohibit B from accepting stock options for
non - procurement lobbying performed by B for the Company as long as such
compensation arrangement would not involve contingent compensation contrary to
Section 13A07(e) of the Lobbying Disclosure Law.
Lastly, your questions have only been addressed under the Lobbying Disclosure
Law and derivately, the Ethics Act to the extent applicable.
Conclusion: As a registered lobbying firm in Pennsylvania, B is subject to the
pro i itions, restrictions and requirements imposed upon lobbying firms by
Pennsylvania's lobbying disclosure law ( "Lobbying Disclosure Law "), 65 Pa.C.S. §
13A01 et seq. Based upon the submitted facts that: (1) B has been asked to engage
with a company "the Company ") to provide services including providing advice and
counsel to the Eompany regarding matters of interest involving state and local
overnments in Pennsylvania, identifying and referring prospective clients to the
Company, facilitating meetings with potential clients for the Company, advocating on
behalf of the Company and its subsidiaries, and engaging state governmental officials to
help the Company and its subsidiaries get hired by government entities or their
contractors or sub - contractors; (2) the proposed fee agreement between B and the
Company would include payments for such services in the form of stock options and
commissions on gross sales; and (3) the particular terms for the fee agreement would
be as follows:
Confidential Advice, 18 -1500
March
Page 5
[terms of fee agreement],
you are advised as follows.
The Lobbying Disclosure Law would not prohibit B from receiving contingent
compensation from the Company for procurement lobbying that would not involve the
occurrence, nonoccurrence, or amendment of legislative action. For those particular
services provided by B to the Company, including: (1) identifying and referring
prospective clients to the Company; (2) facilitating meetings with potential clients for the
Company, and (3) engaging state governmental officials to help the Company and its
subsidiaries get hired by government entities or their contractors or sub - contractors, the
proposed terms of the fee agreement would not run afoul of the Lobbying Disclosure
Law.
With regard to other services provided by B to the Company that would constitute
"lobbying" as the Lobbying Disclosure Law defines that term, a contingent
compensation arrangement would be prohibited. The submitted facts do not enable a
conclusive determination of whether the stock options to be provided under the fee
agreement would constitute contingent compensation for the "non- procurement"
lobbyingg performed by B for the Company. Therefore, you are generally advised that
the Lobbying Disclosure Law would not prohibit B from accepting stock options for non -
procurement lobbying performed by B for the Company as long as such compensation
arrangement would not involve contingent compensation contrary to Section 13A07(e)
of the Lobbying Disclosure Law.
Your questions have only been addressed under the Lobbying Disclosure Law.
Pursuant to Section 13A08(a) of the Lobbying Disclosure Law, a requester who
truthfully discloses all material facts in a request for an advisory and who acts in good
faith based upon a written Advice or Opinion of the Commission issued to the requester
shall not be held liable for a violation of the Lobbying Disclosure Law.
This letter is a public record and will be made available as such.
Finally, if you disagree with this Advice or if you have any
reason to challenge same, you may appeal the Advice to the full
Commission. A personal appearance before the Commission will be
scheduled and a formal Opinion will be issued by the Commission.
Any such appeal must be in writingg and must be actuali
received at the Commission within thirty (30) days of the date of this
Advice pursuant to 51 Pa. Code § '13.2(h). The appeal may be
received at the Commission by hand delivery, United States marl,
delivery service, or by FAX transmission (717 -787 -0806. Failure to
We such an appeal at the Commission within thirty (30) days may
result in the dismissal of the appeal.
Sin ly,
Robin M. Hittie
Chief Counsel