HomeMy WebLinkAbout99-1500 ConfidentialADVICE OF COUNSEL
October 8, 1999
99 -1500
Re: Lobbying, Principal, Lobbyist, Exemption, Individual, Corporation.
This responds to your letter dated August 8, 1999, by which you requested advice from
the State Ethics Commission.
Issue: Whether a corporation or its secretary /treasurer would be subject to the
registration and reporting requirements of the Lobbying Disclosure Act where the corporation
is paid by a state trade association, and the secretary /treasurer is paid by the corporation, to
perform duties which include lobbying on behalf of the state trade association, but the
corporation spends less than $2500 annually for lobbying purposes and the
secretary /treasurer is paid less than $1000 per quarter for lobbying activities.
Facts: As the Secretary /Treasurer of Corporation A, you request an advisory
from the State Ethics Commission with regard to registration and reporting under the
Lobbying Disclosure Act ( "the Act ").
Corporation A is a company owned by you and your spouse. Your spouse is the
President of Corporation A, and you are its Secretary /Treasurer. The corporation was formed
in 1997 in anticipation of your retirement from your former position as Officer B of Association
C, a state trade association of D licensed by Department E. Corporation A and Association C
entered into a three year contract for the limited continuation of certain services by you
through Corporation A.
Under the contract, Corporation A has two primary functions. The first is to perform
your former duties in conjunction with Association C's political action committee (PAC) known
as "F." You state that you serve as the PAC's Treasurer, which is a non - salaried position
without Trustee status. The Trustees make all decisions as to political contributions and fund
raising activities. You prepare and mail the checks and process the deposits. Any
Legislators who call Corporation A in reference to Association C /PAC F support for a fund
raising activity are referred to a Trustee of PAC F.
The second of Corporation A's primary contractual functions is to perform your former
duties as Officer B of Association C in conjunction with Association C's Committee G. This
Committee is a standing committee of the Association. Its Members are appointed each year
by the Association's Chairman of the Board. Your /Corporation A's duties include: reviewing
and analyzing legislative bills and regulatory issues of interest to Industry H, and periodically
reporting same to Committee G; preparing, when requested, reports for the Association C
membership; preparing semiannual reports for the Committee Chairman to present to the
Association C membership; attending two meetings of Committee G; maintaining liaison and
contact with appropriate state authorities, departments, agencies and legislative aides;
Confidential Advice, 99 -1500
October 8, 1999
Page 2
assisting in drafting legislation as requested by the Chairman of the Committee; and
maintaining a good working relationship with other state trade associations.
You state that Corporation A has maintained very detailed time sheets since 1997, and
that the total time which could be classified as lobbying is minor and consists of periodic
discussions with Department E officials, and on rare occasion, a legislative aide. Neither you
nor Corporation A lobby legislators because Association C has others who handle that
function.
Corporation A is paid $3,250 per month by Association C for fulfilling the terms of the
contract. You state that Corporation A does not expend $2500 annually, let alone quarterly,
for lobbying purposes.
As President of Corporation A, your spouse is paid $400 per month by Corporation A
for performing administrative duties.
As Secretary /Treasurer of Corporation A, you are paid $1,100 per month by
Corporation A for performing the duties of Secretary /Treasurer and for fulfilling the terms of
Corporation A's contract with Association C. You state that having calculated your hourly
compensation to be $16 per hour, your total compensation for lobbying as now defined by the
Lobbying Disclosure Act and Regulations never approaches $1,000 per quarter, let alone
$2500 per quarter.
You request a confidential advisory confirming that under the Lobbying Disclosure Act,
you would be exempt from registering as a lobbyist and Corporation A would be exempt from
registering as a principal.
Discussion: It is initially noted that pursuant to Section 1308(c) of the Lobbying Disclosure
Act ( "Act "), 65 Pa.C.S. §1308(c), in conjunction with Sections 7(10) and 7(11) of the Ethics
Act, 65 P.S. § §1107(10), (11), advisories are issued to the requestor based upon the facts
which the requestor has submitted. The Commission does not engage in an independent
investigation of the facts, nor does it speculate as to facts which have not been submitted, in
issuing advisories. It is the burden of the requestor to truthfully disclose all of the material
facts relevant to the inquiry. An advisory only affords a defense to the extent the requestor
has truthfully disclosed all of the material facts.
In order to decide the issues which you have raised the pertinent definitions and
substantive provisions of the Act and related Regulations must be reviewed.
Section 1303 of the Act defines "lobbying" as follows:
"Lobbying." An effort to influence legislative action or
administrative action. The term includes:
(1) providing any gift, entertainment, meal, transportation or
lodging to a State official or employee for the purpose of
advancing the interest of the lobbyist or principal; and
(2) direct or indirect communication.
65 Pa.C.S. §1303.
The key terms "legislative action," "administrative action," "direct communication," and
"indirect communication" that are within the definition of "lobbying" are themselves defined as
follows:
Confidential Advice, 99 -1500
October 8, 1999
Page 3
"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 rejection of
legislation; legislative motions; overriding or sustaining a veto by
the Governor; or confirmation of appointments by the Governor or
of appointments to public boards or commissions by a member of
the General Assembly.
"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 guideline or a
statement of policy; or
(iii) approval or rejection of a regulation.
(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.
(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.
"Direct communication." An effort, whether written, oral or by
any other medium, made by a lobbyist or principal, directed to a
State official or employee, the purpose or foreseeable effect of
which is to influence legislative action or administrative action.
"Indirect communication." An effort, whether written, oral or
by any other medium, to encourage others, including the general
public, to take action, the purpose or foreseeable effect of which
is to directly influence legislative action or administrative action.
The term includes letter- writing campaigns, mailings, telephone
banks, print and electronic media advertising, billboards,
publications and educational campaigns on public issues. The
term does not include regularly published periodic newsletters
primarily designed for and distributed to members of a bona fide
association or charitable or fraternal nonprofit corporation.
65 Pa.C.S. §1303.
The term "principal" is defined in the statute as follows:
"Principal." Any individual, firm, association, corporation,
partnership, business trust or business entity:
Confidential Advice, 99 -1500
October 8, 1999
Page 4
Id.
(1) on whose behalf a lobbyist influences or attempts to
influence an administrative action or a legislative action; or
(2) that engages in lobbying on the principal's own
behalf.
The term "lobbyist" is defined in the statute as follows:
"Lobbyist." Any individual, firm, association, corporation,
partnership, business trust or business entity that engages in
lobbying on behalf of a principal for economic consideration.
The term includes an attorney who engages in lobbying.
As for the substantive provisions to be reviewed, the following statutory exemption is to
be considered in determining whether you or Corporation A would be exempt from the
registration and reporting requirements of the Act:
§1306. Exemption from registration and reporting
The following individuals and activities shall be exempt from registration under
section 1304 (relating to registration) and reporting under section 1305 (relating to
reporting):
(3) Any of the following:
* * *
* * *
(ii) An individual whose compensation for lobbying, from
all principals represented, does not exceed $2,500 in the
aggregate during any reporting period.
* * *
65 Pa.C.S. § §1306(1), (3).
The first issue is whether you as an individual are exempt from registering as a lobbyist
given that you have only one client for which you provide lobbying services, and for which
services you are paid less than $1,000 per quarter. Based upon the facts which you have
submitted, it is clear that the exemption of §1306(3)(ii) would apply to you as an individual.
Since your total compensation from all principals" represented is less than $1,000 per
quarter, you do qualify for this exemption and you are not subject to the registration and
reporting requirements of the Act.
However, this exemption only applies to an "individual." Lobbyists which are firms or
other entities do not qualify for this exemption. Gibboney, Opinion No. 99 -1005; Powell,
Opinion No. 99 -1008; Flaherty, Opinion No. 99 -1010.
Based upon the facts which you have submitted, Corporation A is being paid to
perform duties which include lobbying on behalf of Association C. Therefore, Corporation A
is a lobbyist rather than a principal under the facts which you have presented. Since
Corporation A is not an individual, it does not qualify for the above exemption under Section
1306(3). Furthermore, none of the other statutory exemptions at Section 1306 of the Act
would apply to Corporation A. Thus, Corporation A would be subject to the registration and
Confidential Advice, 99 -1500
October 8, 1999
Page 5
reporting requirements of the Lobbying Disclosure Act.
If it has not already done so, Corporation A must immediately register with the State
Ethics Commission as a lobbyist. As for reporting, if Association C would not qualify for
exemption from the registration and reporting requirements of the Act, such that it (the
Association) would be filing reports under the Act, Corporation A would be required to "sign -
off" on such reports to attest to their validity and accuracy. 65 Pa.C.S. § §1305(a),(b)(4). If
Association C would fail to include all of Corporation A's lobbying and lobbying - related
expenditures in such reports, or, if Association C would qualify for exemption from the Act's
registration and reporting requirements such that it would not file reports under the Act,
Corporation A would be required to file "separate" expense reports as required by the Act. 65
Pa.C.S. §1305(b)(6); Roth, Opinion No. 99 -1006.
The propriety of the proposed conduct has only been addressed under the Act and
derivatively the Ethics Act to the extent applicable; the applicability of any other statute, code,
ordinance, regulation or other code of conduct has not been considered in that they do not
involve an interpretation of the Act.
Conclusion: As an individual whose total compensation for lobbying does not exceed
$2500 in the aggregate during any quarter, you are not subject to the registration and
reporting requirements of the Lobbying Disclosure Act ( "the Act"). As a corporation which is
paid by Association C to perform duties which include lobbying Corporation A is a lobbyist as
defined by the Act and Regulations. Corporation A does not qualify for exemption from the
registration and reporting requirements of the Lobbying Disclosure Act.
If it has not already done so, Corporation A must immediately register with the State
Ethics Commission as a lobbyist. If Association C would not qualify for exemption from the
registration and reporting requirements of the Act, such that it (the Association) would be
filing reports under the Act, Corporation A would be required to "sign -off" on such reports to
attest to their validity and accuracy. If Association C would fail to include all of Corporation
A's lobbying and lobbying - related expenditures in such reports, or, if Association C would
qualify for exemption from the Act's registration and reporting requirements such that it would
not file reports under the Act, Corporation A would be required to file "separate" expense
reports as required by the Act.
Pursuant to Section 1308 of the Act, a requestor 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 requestor shall not be held liable for a violation of
the Act.
This advice 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 writing and must be actually 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 mail, delivery service, or by FAX transmission (717- 787 - 0806).
Failure to file such an appeal at the Commission within thirty (30) days may
result in the dismissal of the appeal.
Confidential Advice, 99 -1500
October 8, 1999
Page 6
Sincerely,
Vincent J. Dopko
Chief Counsel