HomeMy WebLinkAbout99-1006 RothOPINION OF THE COMMISSION
Before: Daneen E. Reese, Chair
Austin M. Lee, Vice Chair
Julius Uehlein
Louis W. Fryman
John J. Bolger
Frank M. Brown
Susan Mosites Bicket
DATE DECIDED: 8/31/99
DATE MAILED: 9/14/99
99 -1006
Terry E. Roth
3518 N. Third Street
Harrisburg, PA 17110
Re: Lobbying, Lobbyist, Attorney, Registration, Exemption, Principal, Legal Identity,
Association, Reporting, Principal, Exempt Principal, Administrative Action, Budget,
Quarterly Expense Report, Funding, Communication, Expense, Proration, Utilities,
Separate Report.
Dear Ms. Roth:
This Opinion is issued in response to your advisory request received on August 2,
1999.
I. ISSUE:
Under the Lobbying Disclosure Act: is the time frame to register as a lobbyist
computed within ten days of the engagement or the actual receipt of compensation which
exceeds $2500; who is the principal when there is a group of councils or chapters having
no separate legal identity; is a registered lobbyist required to file a separate report as to a
principal which is exempt from registering and reporting; is funding advocacy at an agency
encompassed within the definition of administrative action; are communications and
activities with state officials, initiated at their request, considered lobbying; and is there a
need for proration of lobbying expenses as to office, direct and indirect communication
expenses by a lobbyist.
II. FACTUAL BASIS FOR DETERMINATION:
You are an attorney who represents a number of state level, non - profit human
service groups. Your work includes activities which constitute lobbying under the Lobbying
Disclosure Act (Act).
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Page 2
You pose the following inquiries.
You are uncertain as to whether you will reach the $2500 threshold because you
are primarily paid on an hourly basis. You ask whether your deadline for registration is
within ten days after the Act goes into effect or ten days after you engage in lobbying.
Assuming you must register as a lobbyist, you inquire as to who is the "principal" in
each of the following situations:
a. You are paid by one of thirteen Girl Scout Councils to perform a
variety of functions, including some lobbying as defined in the Act, for the PA
Girl Scouts Legislative Network. The Network includes all thirteen Councils
in Pennsylvania since there is no state -level Girl Scout organization. While
each Council is a private, non - profit corporation, the Network is an informal
group with no legal identity or address. The work is on behalf of Girl Scouts
in Pennsylvania.
b. You are paid by one chapter of the National Multiple Sclerosis Society
(NMSS) to do work, including some lobbying, for a coalition consisting of the
four NMSS chapters in Pennsylvania. Each individual chapter is a private,
non - profit corporation. There is no legal identity or address for the informal,
state -level coalition. The work is on behalf of people with MS in
Pennsylvania.
c. You are paid by Pennsylvania Protection and Advocacy (PP &A), a
federally funded, private non - profit agency mandated under federal law to
advocate on behalf of people with disabilities. You are paid to work with the
Disability Budget Coalition, an informal coalition of 60 non - profit
organizations, which has no legal identity or address. Some of the work
includes lobbying, as defined in the Act, on behalf of Pennsylvanians with
physical and sensory disabilities.
d. You are paid by United Cerebral Palsy of Pennsylvania (UCPP), a
private non - profit corporation, to do work, including lobbying as defined by
the Act, on behalf of the Pennsylvania Developmental Disabilities Council
(PDDC) for families of children with disabilities. PDDC is a state agency
exempt from registration under the act.
If you are required to register because your compensation from all principals totals
more than $2500 in a quarter, but some or all of your principals are exempt since they do
not spend $2500 in a quarter, you ask whether you must report the amounts the exempt
principals have paid you for lobbying. If you are required to file such reports, you ask
whether you must file a report for each exempt principal separately or whether you may
combine the expenses in one report. Finally, you inquire as to whether you would include
in such expenses those principals who have paid you less than $500 in the quarter.
Some of your work involves advocating for additional funds for publicly funded
programs. If you advocate with the Department of Public Welfare (DPW) to increase the
budget for a particular program, you ask whether that activity is lobbying.
If you or one of your principals is asked by a state agency to provide assistance,
you ask whether the provision of that assistance constitutes lobbying, as for example,
serving on DPW's Attendant Care Advisory Committee providing advice to the Secretary,
providing information or assistance to a legislator or legislative staff person at their request
or testifying at a hearing when asked. You state that under the regulations, this would not
be a gift, but if your actions advance a principal's interest, you ask whether you or your
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non - exempt principals have to report such time as an expense.
Further, you pay no rent since your office is a room in your home. You inquire
whether you need to estimate a fair rental value and include a portion in the total. You
posit the same question as to direct and indirect communications. Even though you have
paid for all of your office equipment, you ask whether such equipment and utilities should
be prorated.
By letter dated August 9, 1999, you were notified of the date, time, and location of
the public meeting at which your request for an Opinion was to be considered.
At the public meeting on August 31, 1999, you appeared and reiterated the above.
You offered some additional commentary, which may be fairly summarized as follows.
You concede that the Act applies to you in that some of your activities constitute
lobbying. However, your role is less direct and more indirect in that you educate
constituency groups about issues and how they can influence such issues. Since your
clients' strengths are at the grass roots level, no gifts or hospitality are provided. Most of
your clients will not exceed the $2500 quarterly expense threshold for registration under
the Act.
You inquire as to who are the principals for some of your clients which are 501(c)(3)
organizations that are limited by the IRS as to funding and activities for lobbying. For the
Girl Scouts and NMSS, typically the individual councils /chapters contribute to a fund
administered by one selected council /chapter. However, for PP &A, it is a designated
agency that receives governmental funding and lobbies on behalf of 60 organizations.
III. DISCUSSION: It is initially noted that pursuant to Section 1308(c) of the Act 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. This 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, this Commission must review
the pertinent definitions and substantive provisions of the Act and related Regulations.
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:
"Legislative action." An action taken by a State official or
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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:
(1) 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:
(1) on whose behalf a lobbyist influences or attempts
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Id.
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.
The related term "association" is broadly defined in the Lobbying Disclosure
Regulations as follows:
51 Pa. Code §31.1.
Association - -An "association" as defined in the Association
Code in 15 Pa.C.S. §102 (relating to definitions). The term
includes a corporation, a partnership, a limited liability
company, a business trust or two or more persons associated
in a common enterprise or undertaking. The term does not
include a testamentary trust or an inter vivos trust as defined in
20 Pa.C.S. §711(3) (relating to mandatory exercise of
jurisdiction through orphans' court division in general).
The issues before us will now be addressed seriatim.
Your first inquiry relates to the time frame for registration. Under the Act, an
individual lobbyist is exempt from the Act's registration /reporting requirements until such
time as his or her compensation from all principals represented exceeds $2500 in a
quarter. 65 Pa.C.S. §1306(3)(ii). Since you are paid on an hourly basis, you, as an
individual lobbyist, would qualify under the cited exemption until such time as your
compensation from all principals represented would exceed $2500 in a quarter.
Parenthetically, if you were paid on a retainer or similar basis, then the requirement to
register would occur at such time as your compensation would exceed $2500, irrespective
of the actual lobbying activity that might be performed in that quarter. Once the threshold
of $2500 would be exceeded, you would no longer qualify for exemption and would have
ten days within which to register. See, 65 Pa.C.S. §1304(a).
Your second inquiry seeks to identify the "principal" in four scenarios.
The first two scenarios are strikingly similar. The first scenario involves thirteen Girl
Scout Councils, each of which is a private non - profit corporation. The thirteen Councils
have formed an informal "Network" that has no legal identity or address. You state that
you do some lobbying for the "Network," but that your payment comes from only one of the
thirteen Councils. Similarly, in the second scenario which you have presented, you do
some lobbying for a "Coalition" of four Chapters of NMSS. Each of the four Chapters is a
private non - profit corporation. The "Coalition" itself has no legal identity or address, and
only one of the four Chapters pays for your lobbying work. In each of these two situations,
the issue is whether the principal is the individual Council or Chapter which pays you, or
the "Network" or "Coalition" whose interests are also being advanced. The resolution of
this issue requires a weighing of various factors.
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The definition of "principal" as set forth in the Act consists of two parts. The first
part lists individuals and various forms of entities which may qualify as a principal. 65
Pa.C.S. §1303. The second part of the definition requires that there either be a lobbyist
acting on behalf of the principal or a principal engaging in lobbying on its own behalf.
In reviewing the first part of the definition, it is clear that corporations and
associations are among the forms of entities which may qualify as principals. Based upon
the facts which you have submitted, all of the Girl Scout Councils and NMSS Chapters are
corporations. Thus, the Councils and Chapters as individual corporations would be
capable of being principals, if the remaining criteria would be met.
As for the "Network" and "Coalition," such factually do not have any "legal"
existence as groups. However, such a group could, for purposes of applying the Act, fall
within the definition of "association" quoted above. That definition includes ". . . two or
more persons associated in a common enterprise or undertaking." 51 Pa. Code §31.1
(Emphasis added). Since the term "person" is not itself defined by either the Act or
Regulations, the definition from the Statutory Construction Act of 1972 applies, which
definition specifically includes corporations. 1 Pa.C.S. §1991. Such a group could fall
within the definition of "association." However, under the unique factual circumstances that
exist where a group such as the Network or Coalition does not have any legal identity,
status as an association under the Act would not be thrust upon the group; rather, the
ability to be treated as an association would be an option available to it.
The individual Girl Scout Councils and their Network and the individual NMSS
Chapters and their Coalition would all be equally capable of being principals under the first
part of the definition of that term. The question of whether the Network or the Coalition are
to be considered associations under the Act, or whether the component corporations are to
be considered separately, becomes a factual determination.
If the entities comprising a group that has no legal status choose to be an
association under the Act, the association itself is the principal. Section 1305 (b)(5)
requires that a principal must identify in its expense report any entity which contributed
more than 10% of the total resources received by that principal within the quarter. Thus, if
one or more of the councils /chapters belonging to an association would make such a
contribution, they would have to be identified on the expense report of the principal.
If the entities comprising a group that has no legal status do not choose to be an
association under the Act, the individual councils /chapters are to be considered
separately. Entities that engage in lobbying on their own behalf would clearly qualify as
principals. Others that would not engage in lobbying on their own behalf would qualify if
they would be represented by a lobbyist for economic consideration that they would pay.
In applying the above analysis to these first two situations which you have posed,
we believe that the one chapter and one council that make the expenditures are the
principals. The submitted facts do not establish a choice by the individual corporations
comprising the "Network" of Girl Scout Councils or the "Coalition" of NMSS Chapters to be
"associations" under the Act. The submitted facts do form a basis for finding that in this
case, the particular chapter of the National Multiple Sclerosis Society and the particular
Girl Scout Council which provide the compensation to you would be the principals, rather
than the "Coalition" or "Network" which they, together with other chapters and councils,
have respectively formed. Thus, the specific Chapter and Council making the expenditures
would have to register as principals if their respective total expenses for lobbying would
exceed $2500 in any quarter.
As to the above two situations, our decision is consonant with what we believe to be
the mutually agreed upon operation of those chapters /councils. Such a result will not
necessarily be dispositive of similar cases. These types of issues are by their very nature
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both factually and legally intensive.
The third scenario involves PP &A, a federally funded private non - profit agency
which advocates on behalf of people with disabilities. Since PP &A pays you to work with
the Disability Budget Coalition, an informal coalition of sixty non - profit organizations, PP &A
would be the principal. As such, PP &A would be subject to the Act.
Finally, as to UCPP, a private non - profit corporation for which you lobby on behalf
of the PDDC for families of children with disabilities, UCPP would be the principal.
Assuming that UCPP does not qualify for an exemption, it would be subject to the
provisions of the Act. See, Keltz, Opinion No. 99 -1004.
Your third inquiry raises the question of your representation of principals, some of
whom are not exempt due to their expending more than $2500 in any quarter and some of
whom are exempt in that their total expenses for lobbying do not exceed $2500 in any
quarter. The specific question becomes whether you as a registered lobbyist would have
to file a separate report pursuant to Section 1305(b)(6) of the Act as to those exempt
principals who would not themselves be required to register and file reports.
Section 1305(b)(6) requires a lobbyist to submit a separate report if he engaged in
lobbying which was not contained in the reports filed by the principal(s) represented by the
lobbyist. In drafting this provision, the General Assembly did not limit the obligation to
report to registered principals but extended it to all principals. Second, the obligation for
the separate lobbyist report references reporting as to principals represented by the
lobbyist. Literally, this would include a principal who is represented by a lobbyist and who
is exempt from registration and reporting. In our view you must file a separate report under
Section 1305(b)(6) because on its face, the Act requires a registered lobbyist to file the
report not only as to registered principals, but all principals.
As to your subsidiary questions, you could not file such a report for each principal
on a combined basis. The Act requires that you file a separate quarterly report in each
instance where you engaged in lobbying during the reporting period which was not
contained in a report filed by the principal(s) you represent. Although the above might
suggest that only one report is required, even if several principals are represented, the
second sentence of this Section of the Act makes it clear that a report must be separate as
to each principal because the Act requires the lobbyist to identify the principal (singular)
who is represented.
As to your inquiry of whether you would have to include principals who have paid
you less than $500 in a quarter, the $500 reporting threshold does not relate to the
compensation which you receive but to the total expenses of the principal in the quarter.
Thus, if the exempt principal has expenses that are greater than $500, you would have to
file the report; if the total expenses for that exempt principal are $500 or less, you would
merely file a statement to that effect.
Turning to your fourth inquiry which relates to your advocacy before DPW for
additional funding as to certain programs, you ask whether seeking funding increases for a
particular program would be considered lobbying. "Administrative action," as defined
above, includes an effort to influence an agency's development or modification of a
guideline or statement of policy. Although the terms "guideline" and "statement of policy"
are not defined in the Act, per the Lobbying Disclosure Regulations (51 Pa. Code §31.1
(definition, "administrative action "), they are as defined in 1 Pa. Code §1.4, specifically:
Guideline - A document, other than an adjudication, interpretation or
regulation, which announces the policy an agency intends to implement in
future rulemakings, adjudications or which will otherwise guide the agency in
the exercise of administrative discretion. The document may not amend,
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repeal or suspend a published regulation or otherwise effectively
circumscribe administrative choice, but shall establish a framework within
which an agency exercises administrative discretion. If authorized by
statute, the documents may be incorporated into or published as regulations.
The term includes, but is not limited to:
(1) Plans for agency operation and administration which
establish important policies to be utilized in the future exercise
of administrative discretion.
(2) General policies and plans for the award and
administration of discretionary grants of public monies.
(3) Announcements of principles and standards to be applied
in future adjudications.
Statement of policy - A document, except an adjudication or a regulation,
promulgated by an agency which sets forth substantive or procedural
personal or property rights, privileges, immunities, duties, liabilities or
obligations of the public or a part thereof. The term includes a document
interpreting or implementing a statute enforced or administered by an
agency. The term includes, but is not limited to, guidelines and
interpretations.
1 Pa. Code 1.4. (Emphasis added); see also, related definition of "statement of policy" in
45 P.S. §1102.
If your activity of seeking additional funding for certain programs encompasses
general policies and plans for the award and administration of discretionary grants of
public monies, you are advised that such activity would be considered lobbying.
Your fifth inquiry concerns whether any of the following activities would be lobbying:
a principal being requested by a state agency to provide assistance, as for example,
providing advice to the DPW Secretary as to the Attendant Care Advisory Committee;
requests by a legislator or legislative staffer to provide information or assistance; and a
request by a legislator or legislative staffer to testify at a hearing. You also inquire as to
whether you or your principal would have to report your time if such activities constitute
lobbying.
In response to your inquiry, the source of the initiation of the activity, whether the
principal /lobbyist or the state official or employee, is not dispositive as to whether the
activity is lobbying. Rather, it is the nature of the activity itself which controls. Thus,
where there would be an effort to influence legislative or administrative action in any given
contact, the activity would be lobbying even though the contact may have been initiated by
a state official /employee. Lobbying expenses are required to be included within the totals
in reports filed pursuant to the Act.
Your final inquiry relates to the matter of reporting expenses by your principal or by
you in a separate lobbyist report. We will first consider the total office and business
expenses and then address those expenses related to direct and indirect communication.
Regarding office and business expenses, issues of attribution or proration do not
arise in this context. Your principal pays you a certain amount of compensation for your
lobbying efforts. Such compensation constitutes the total expenses of that principal vis -a-
vis you as its lobbyist. If you were to break down that compensation in terms of fees to
yourself and office overhead, you would then have to add all of those expenses back in as
part of the "single aggregate good faith estimate of the total amount spent for personnel
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and office expenses related to lobbying." See, 65 Pa.C.S. §1305(b)(2)(i). Thus, it would
be nonsensical to break down your principal's expense as to your compensation into
component parts merely to add those components back together to arrive at the aforesaid
total.
As for lobbying activities which comprise the other three separate categories of
"total" reporting under Section 1305(b)(2), the principal must attribute or prorate those
activities and expenses which relate to that particular aspect of lobbying activities. As to
the method used, the Regulations provide latitude. See, 51 Pa. Code §35.1.
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.
IV. CONCLUSION:
An individual engaged in lobbying activity must register within ten days after
receiving total compensation for lobbying that exceeds $2500 in any quarter. When a
lobbyist is paid by a single entity to advance the interests of a group of entities which
group does not have any legal status, the question of whether the group is to be
considered an "association" and therefore the principal, or whether the entities comprising
the group are to be considered separately under the definition of "principal," is a factual
determination. If the entities comprising a group that has no legal status choose to be an
association under the Act, the association itself is the principal. If the entities comprising a
group that has no legal status do not choose to be an association under the Act, the
individual entities comprising the group are to be considered separately under the
definition of "principal." The submitted facts form a basis for finding that in this case, the
particular chapter and council which provide the compensation to the lobbyist would be the
principals. A registered lobbyist who represents both exempt and non - exempt principals
would have to file a separate quarterly expense report for each exempt principal that is not
required to file a quarterly report. Actions by a lobbyist in advocating for a funding
increase for a particular program within a Commonwealth agency constitute administrative
action if the action attempts to influence general policies and plans for the award and
administration of discretionary grants of public monies. Interaction by a lobbyist as to state
officials or employees in the executive or legislative branch constitutes lobbying where it is
an attempt to influence legislative or administrative action, regardless of whether the
lobbyist or state official /employee initiated the contact. The compensation a lobbyist
receives from a principal does not have to be broken down between fees and overhead in
that such would be included within that principal's total personnel and office expenses
related to lobbying. As for lobbying activities which comprise the other three separate
categories of "total" reporting under Section 1305(b)(2), the principal must attribute or
prorate those activities and expenses which relate to that particular aspect of lobbying
activities. As to the method used, the Regulations provide latitude. See, 51 Pa. Code
§35.1.
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 opinion
of the Commission issued to the requestor shall not be held liable for a violation of the Act.
This opinion 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 §39.1.
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By the Commission,
Daneen E. Reese
Chair