HomeMy WebLinkAbout00-1006 BroganThomas P. Brogan, Esquire
Klett Lieber Rooney & Schorling
240 North Third Street, Suite 600
Harrisburg, PA 17101 -1503
1999.
I. ISSUE:
OPINION 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: 2/1/2000
DATE MAILED: 2/11/2000
00 -1006
Re: Lobbying, Principal, Lobbyist, State Official or Employee, Firm, Function, Hospitality
Expenditures, Separate Lobbyist Report.
Dear Mr. Brogan:
This Opinion is issued in response to your advisory request received on November24,
When a lobbyist hosts a function that is attended by State officials and employees, and
the lobbyist absorbs all of the costs for the event such that no principal includes those costs
in its expense report filed under the Lobbying Disclosure Act, how is the lobbyist to report
those costs, and secondly, how are costs to be reported for hospitality provided to State
officials and employees who attend a large informal event, where the event is open to persons
outside the governmental community, and guests attend with or without invitation and stay for
varying amounts of time?
II. FACTUAL BASIS FOR DETERMINATION:
On behalf of the law firm of Klett Lieber Rooney & Schorling, P.C. (the "Firm ") and on
behalf of one of the Firm's government relations clients who is a principal (hereinafter
"Client /Principal "), you seek an advisory regarding the reporting requirements for hospitality
expenditures under the Lobbying Disclosure Act (the "Act ").
You state that the Firm is a lobbyist, having both an active legal practice and a
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government relations group.
The Firm hosts social functions to which numerous Commonwealth employees,
including members of the Legislature and their staff, and officials and employees from the
Executive Agencies, as well as privately employed individuals are invited. The Firm often fully
absorbs the costs of such events. On other occasions, the Firm co -hosts a function with the
Client /Principal.
Formal and informal invitations are extended to these social gatherings, but no
response is officially required. You state that these events are open to the governmental
community and are "somewhat" open to the public. Recently the Firm hosted an informal
buffet dinner at a local hotel to enjoy a televised sporting event. In attendance were
Commonwealth officials who did not respond to the invitations, individuals whom the firm was
not able to identify, and countless guests who stayed for a very limited time.
You pose two questions. Your first question involves reporting for a function hosted by
the Firm alone. You ask how the costs for a function at the expense of the Firm are to be
reported to the Commission given that no principal would include the figures in its expense
report.
Your second question seeks guidance for both the Firm and the Client /Principal. You
state that it can be administratively impossible to account for the precise number and
identification of all of the guests at such events. Furthermore, you state that some functions
are free - flowing in nature, and that a good faith expenditure amount is extremely difficult to
ascertain given the number of guests who mingle between different, similarly situated
receptions. Finally, you state your view that it would be unfair to associate one hospitality
expenditure amount to all guests considering the variations in their attendance time.
You seek an advisory as to how to comply with the disclosure requirements of the Act
given the above concerns.
By letter dated January 11, 2000, 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 February 1, 2000, a representative from your Firm appeared.
She did not offer any commentary, but made herself available to answer any questions of the
Commission.
III. DISCUSSION: It is initially noted that pursuant to Section 1308(c) of the Act 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 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 provide a thorough response to the questions which you have posed, this
Commission shall review numerous 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
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advancing the interest of the lobbyist or principal; and
(2) direct or indirect communication.
65 Pa.C.S. §1303 (Emphasis added).
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
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
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association or charitable or fraternal nonprofit corporation.
65 Pa.C.S. §1303.
Section 1305 of the Act sets forth the limited conditions under which a separate
expense report by a lobbyist is required:
§1305. Reporting
(a) General rule. - -A lobbyist as required by subsection (b)(6) or
a registered principal shall, under oath or affirmation, file quarterly
expense reports with the commission.
(b) Content. --
(6) A lobbyist shall submit a separate report if, during the
reporting period, the lobbyist engaged in lobbying which was not
contained in the reports filed by the principal or principals
represented by the lobbyist. A separate lobbyist report shall
contain the identity of the principal for whom such lobbying was
performed and shall contain all information required under
paragraphs (2) and (3).
(d) Thresholds for reporting. -- An expense report shall be
filed when total expenses for lobbying exceed $500 for a
registered principal or a registered lobbyist in a reporting period.
In a reporting period in which total expenses are $500 or less, a
statement to that effect shall be filed.
65 Pa.C.S. §1305(a); (b)(6); (d) (Emphasis added).
Section 35.1 of the Lobbying Disclosure Regulations includes the following provisions
which pertain to separate expense reports by lobbyists:
§35.1. Quarterly expense reports.
(e) Pursuant to subsection (n), a lobbyist required to be registered under the act shall
file a separate quarterly expense report or a separate amended quarterly expense
report if the principal fails to file in accordance with subsection (d) or if, during the
reporting period, the lobbyist engaged in lobbying which was not contained in the report
filed by the principal represented by the lobbyist. The deadline for filing a separate
report shall be the 30th day after the date the principal's related report was filed or due.
(n) When a lobbyist is required to file a separate report under subsection (e), the
following shall apply:
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(5) A separate quarterly expense report or separate amended quarterly expense
report shall include all information required by section 1305(b)(2), (3) and (7) of the act.
(7) A lobbyist filing a separate quarterly expense report or separate amended
quarterly expense report shall promptly provide it to the principal.
(8) A lobbyist filing a separate quarterly expense report or separate amended
quarterly expense report shall give written notice to each public official or employe of
the public official's or employe's inclusion in the report within 7 days of the submission
of the report to the Commission. The notice shall include the information which will
enable the public official or employe to comply with section 1105(b)(6) and (7) of the
Ethics Act.
51 Pa. Code §35.1(e), (n)(5), (7) -(8).
The following provisions of Section 1305(b) of the Act pertain to the content of separate
expense reports by lobbyists:
§1305. Reporting
(b) Content. --
(2) Expense reports must contain the following categories:
(i) A single aggregate good faith estimate of the total amount spent for personnel and
office expenses related to lobbying. This subparagraph includes salaries and other
forms of compensation, benefits, vehicle allowances, bonuses and reimbursable
expenses for those involved in lobbying. If compensation is to be reported by or for an
individual or entity whose lobbying is incidental to regular employment, it shall be
sufficient to report a good faith prorated estimate based on the value of the time
devoted to lobbying. Reportable personnel costs include costs for lobbying staff,
research and monitoring staff, consultants, lawyers, lobbyists, publications and public
relations staff, technicaf staff and clerical and administrative support staff who engage
in lobbying but are exempt from reporting under section 1306(6) (relating to exemption
from registration and reporting). This subparagraph includes costs for offices,
equipment and supplies utilized for lobbying.
(ii) A single aggregate good faith estimate of the total amount spent for direct
communication.
(iii) The total costs for gifts, entertainment, meals, transportation, lodging and
receptions, given to or provided to State officials or employees or their immediate
families.
(iv) A single aggregate good faith estimate of the total amount spent for indirect
communication.
(3) 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).
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(7) A registered principal or registered lobbyist that attempts to influence
an agency's preparing, bidding, entering into or approving a contract shall ensure that
the related expenses are included under paragraph (2).
65 Pa.C.S. §1305(b)(2), (3), (7).
Section 35.1(g)(6) of the Lobbying Disclosure Regulations provides for a certain
exception to the reporting requirements:
(g) A quarterly expense report of a principal required to be registered under the act
shall include the following information:
(6) The total costs for gifts, entertainment, meals, transportation, lodging and
receptions, given to or provided to State officials or employes or their immediate
families, except that any cost under this paragraph which is of a value not exceeding
$10 need not be reported under section 1305(b)(3) of the act. If the same or similar
gift, hospitality or transportation or lodging is provided to more than one State official or
employe, the aggregate economic value of which is $10 or more, such value shall be
included in the appropriate totals reported under section 1305(b)(2) of the act.
51 Pa. Code §35.1(g)(6).
Finally, Section 35.1(k)(6) of the Lobbying Disclosure Regulations provides various
valuation methods for occasions or transactions which benefit more than one individual:
(k) For purposes of reporting the value of gifts or transportation, lodging or hospitality i ty
to be disclosed under section 1304 or 1305 of the act, or under section 11 05 b) 6 or
(7) of the Ethics Act:
(6) When more than one individual is benefited incident to an occasion or
transaction, the registrant may calculate the value of the gifts, transportation, lodging or
hospitality provided to a particular individual by one of the following:
(i) Calculating the actual benefit provided to that individual.
(ii) Dividing the totals of expenditures common to more than one beneficiary including individual by the number of recipients, and adding the resulting figures (quotients) with the value of all other gifts, transportation, lodging or hospitality provided to
that particular individual.
(iii) Allocating a portion of the total expenditures common to more than one
beneficiary to each individual based upon each individual's participation and adding
that value to the value of all other gifts, transportation, lodging or hospitality provided to
that individual.
51 Pa. Code §35.1(k)(6) (Emphasis added).
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In applying the above provisions to your inquiry, the first question which you pose is:
When the Firm, a lobbyist, hosts a function that is attended by State officials and employees,
and the Firm absorbs all of the costs for the event such that no principal includes those costs
in its expense report filed under the Lobbying Disclosure Act, how is the Firm as a lobbyist to
report those costs?
It is clear that the costs which are attributable to the State officials and employees and
their immediate family members are reportable under the Act. The statutory definition of
"lobbying" specifically includes the provision of "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." 65 Pa.C.S. §1303 (Emphasis added). This Commission has determined that the
provision of hospitality to a State official or employee by a lobbyist or principal is inherently
within the definition of "lobbying" and is reportable by a registrant under the Act. See, Cook,
Opinion 99 -1001; Chiavetta, Opinion 99 -1003; McGee, Opinion 99 -1022. Thus, assuming
the $500 reporting threshold for the quarter is met, the costs for such hospitality attributable to
the State officials and employees and their immediate family members must be reported; if the
$500 reporting threshold for the quarter is not met, a statement to that effect must be filed.
Under the Act, the primary duty to file expense reports is placed upon principals.
Hospitality which is provided at the expense of a principal is to be reported by the principal.
But there are certain conditions under which a registered lobbyist must file what is called a
"separate report." Pursuant to Section 1305(b)(6 ) of the Act, the registered lobbyist must file a
"separate report" for any quarter in which the lobbyist engaged in lobbying "which was not
contained in the reports filed by the principal or principals represented by the lobbyist." 65
Pa.C.S. §1305(b)(6). Thus, the registered lobbyist must file a separate report for each of its
principals which is not registered (see Roth, Opinion 99- 1006), or which simply fails to include
in its report all that it is required to disclose.
Hospitality expenses which would not be attributable to a principal, but rather, would be
"absorbed" by the lobbyist, would likewise not be "contained in the reports filed by the principal
or principals represented by the lobbyist" and thus would have to be reported by the lobbyist in
a separate report as required by the Act. 65 Pa.C.S. § §1305(a), (b)(6), (d). Where the Firm
would fully absorb the costs of such a function, it would be required to fully report the lobbying -
related costs in a "separate report." Where the Firm would share such costs with the
Client /Principal, the Firm would be required to report its share of the lobbying - related costs.
So that we may fully respond to this part of your inquiry, certain additional points must
be addressed.
The Act requires that a lobbyist's separate report identify the principal for whom the
lobbying was performed. 65 Pa.C.S. §1305(b)(6). Additionally, the Lobbying Disclosure
Regulations require that the lobbyist promptly provide a copy of the separate report to the
principal. 51 Pa. Code §35.1(n)(7). However, we hold that where hospitality has been provided
by a lobbyist such as the Firm merely to maintain contacts and goodwill toward the lobbyist
and all of its clients generally, the lobbyist in filing the requisite separate report is not required
to identify a principal or to provide a copy of the separate report to a principal. Clearly the latter
requirements were not intended to apply under those limited circumstances.
As for the filing deadline for the separate report, the Lobbying Disclosure Regulations
provide, "The deadline for filing a separate report shall be the 30th day after the date the
principal's related report was filed or due." 51 Pa. Code §35.1(e); see also, 51 Pa. Code
§35.1(n)(2). In a situation where no particular principal is involved, there really is no need for
the extra 30 days; nevertheless, for the sake of consistency and to avoid confusion, we hold
that the deadline for filing the separate report is in every case the 30th day after the deadline
applicable to a principal filing an expense report for that same period.
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Finally, with regard to the information which must be disclosed in a lobbyist's separate
report, the Act requires that the separate report shall contain all of the information required by
Sections 1305(b)(2) and (3) of the Act, which would necessarily include any expenditures
required to be disclosed by Section 1305(b)(7). The disclosure required by these Sections of
the Act would be made in Blocks 13 -18 of the Expense Report form, SEC -1303.
We shall now consider the second question which you have posed: How are costs to
be reported for hospitality provided to State officials and employees who attend a large
informal event, where the event is open to persons outside the governmental community, and
guests attend with or without invitation and stay for varying amounts of time? The question
involves a mixture of practical and legal considerations.
While we understand the practical difficulties which you have presented, it is the
registrant's duty to comply with the Act and it is our duty to ensure compliance with the Act.
The fact that compliance may be difficult to achieve in certain situations does not abrogate the
requirements of the Act for the reporting of lobbying expenses.
To comply with the Act, it is necessary to identify the state officials and employees and
their immediate family members who attend such functions. It is not for this Commission to
mandate any particular methods for achieving such identification, but we would suggest as
options the use of sign in sheets, name tags, and "greeters" at each entrance to identify the
attendees and, if you wish, to keep track of their level of participation.
Turning to the matter of valuation, Section 35.1(k)(6) of the Lobbying Disclosure
Regulations provides three valuation methods which may be used to value the hospitality
provided to attendees at these functions: (1) calculating the actual benefit provided to a
particular individual; (2) dividing the totals of the expenditures common to more than one
beneficiary including that individual by the number of recipients, and adding the resulting
figures (quotients) together with the value of all other gifts, transportation, lodging or hospitality
provided to that particular individual; and (3) allocating a portion of the total expenditures
common to more than one beneficiary to each individual based upon each individual's
participation and adding that value to the value of all other gifts, transportation, lodging or
hospitality provided to that individual. The latter method would be useful where attendees
participate at varying levels.
The total of the hospitality attributable to State officials and employees and members of
their immediate families would be included within the total figure reported at Block 15 of the
Expense Report form, pursuant to Section 1305 (b)(2)(iii) of the Act. However, where the
hospitality provided to a given State official or employee would be $10 or less, it would not be
included for purposes of calculating whether the $650 per calendar year reporting threshold
was met for that individual, Buzydlowski, Opinion 99 -1014, and it would not need to be
reported under Section 1305(b)(3) of the Act if and when the reporting threshold would be met.
51 Pa. Code §35.1(g)(6).
As a final note, we will comment on what it means for something to be open to the
public or extended to the public. You state that some of the functions about which you have
inquired are open "somewhat" to the public. (Letter of November 23, 1999 at 1). In our view,
an event is either open to the public or it is not. The functions which ou have described
would not, in our opinion, be considered open to the public. The mere fact that some of the
attendees are not part of the governmental community does not make a function open to the
public, nor is a function open to the public merely because uninvited members of the general
public may wander into the function without being asked to leave.
In light of the definition of "anything of value" in the Lobbying Disclosure
Regulations, the question of whether something is extended free of charge to the general
public can be significant in some cases, although the definition's reference to food, beverage,
and lodging does not include language in that regard.
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While we need not and do not, in this case, determine the factors to be used in
determining whether something is truly open to or extended to the public free of charge, we
would expect that the relevant factors would include, for example, the method by which notice
of the opportunity would be given, and whether the public could be and in fact would be
accommodated.
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: Pursuant to Section 1305 of the Act, a registered lobbyist must file
a separate report or, when applicable, a statement of failure to meet the reporting threshold, as
to lobbying- related hospitality expenses absorbed by the lobbyist. Where such hospitality is
provided by a lobbyist merely to maintain contacts and goodwill toward the lobbyist and all of
its clients generally, the lobbyist in filing the requisite separate report is not required to identify
a principal or to provide a copy of the separate report to a principal. The deadline for filing a
separate report is in every case the 30th day after the deadline applicable to a principal filing
an expense report for that same period. The lobbyist's separate report must contain the
information required by Sections 1305(b)(2), (3), and (7) of the Act. Section 35.1(k)(6) of the
Lobbying Disclosure Regulations provides valuation methods that are to be used for functions
which benefit more than one individual.
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.
By the Commission,
Daneen E. Reese
Chair