Earlier this month the Government Accountability Office (GAO) released its tenth annual report on compliance with and enforcement of the federal Lobbying Disclosure Act (LDA). The GAO found that “some lobbyists were still unclear about the need to disclose certain previously held covered positions, such as paid congressional internships or certain executive agency positions. GAO estimates that 15 percent of all LD-2 reports may not have properly disclosed 1 or more previously held covered positions. However, over the past several years of reporting on lobbying disclosure, GAO has found that most lobbyists in the sample rated the terms associated with LD-2 reporting as “very easy” or “somewhat easy” to understand.”
In regards to enforcement Andrew Garrahan of Covington and Burling reports that, “Another interesting development is that the House and Senate have not referred any individual lobbyists to the USAO for LD-203 noncompliance since 2013, and have not referred any lobbyist employer for LD-203 noncompliance since 2014.”
Additionally, Garrahan argues that “based on GAO’s report, the USAO appears to have focused its enforcement efforts on “chronic offenders,” those lobbyists who “repeatedly fail to file reports.” These chronic offenders are referred to an Assistant U.S. Attorney for follow-up action, and the USAO reports it has created a new notice for chronic offenders that lists all of their outstanding referrals. Per GAO, the USAO has four chronic offender cases under investigation, and expects to resolve all of them this year. Furthermore, it expects to open more chronic offender cases by the end of 2017.”
Following the annual review of Lobbying Disclosure Act Guidance, Secretary of the Senate and the Clerk of the House of Representatives issued revised guidance on January 31st, 2017. Outlined below are the new updates included in the revised guidance. The full revised guidance can be found here.
Updated Registration Threshold
As required by the LDA, the lobbying disclosure thresholds referenced throughout the Guidance have been updated to reflect changes in the Consumer Price Index (as determined by the Secretary of Labor) during the preceding 4-year period. After January 1, 2017, an organization employing in-house lobbyists is exempt from registration if its total expenses for lobbying activities does not exceed and is not expected to exceed $13,000 during a quarterly period. The $3,000 income threshold for lobbying firms remains unchanged. See Guidance Section 4 on “Who Must Register and When” for additional information.
The previous Guidance update included non-substantive grammatical changes throughout and revisions to sections that previously referred to Line numbers in the reporting forms, as the current online filing system no longer relies on Line numbers. References to the LDA were also revised to identify the citation from the U.S. Code, with Internet links added in the online Guidance document to the U.S. Code.
Identification of Client and Covered Officials
Clarification is added in Guidance Section 4 to reflect the requirement of lobbyists to identify their client and interest of foreign entities when making lobbying contacts, and the requirement of covered officials or their employing office to identify whether the individual is a covered official.
Outside Retained Lobbyists
Guidance Section 4 includes an additional example confirming that outside retained lobbyist names are not reported on the registration (LD-1) or quarterly activity reports (LD-2) of organizations that employ in-house lobbyists. The section re-affirms that outside retained lobbying costs must be taken into account when calculating lobbying expenses. Outside retained lobbyists file their own registration and quarterly reports.
Income and Expense Rounding and Reporting, Agencies Contacted
Guidance Section 6 includes a new example to clarify that income or expenses are required to be rounded to the nearest $10,000. Another example is expanded to suggest care be taken when an organization uses an entire office budget for reporting purposes, since additional lobbying expenses need to be factored in and may be overlooked when using such an expense reporting method. In the discussion of “Contents of the Report,” additional clarification is added to confirm that filers should choose the most specific Agency available from the reporting system list. If the list does not display the government entity contacted, the filer is advised to select the agency or department in which the entity is housed.
Lobbyist and Registrant Contribution Reports (LD-203)
An example is added to Guidance Section 7 to make it clear that sole proprietors, including those who register with their lobbyist name as the registrant name, are required to file two contribution reports each filing period—one report for the registrant and one report for the individual lobbyist.
Public Availability and Compliance
In Guidance Section 10, filers are encouraged to use the online public databases for compliance purposes, to verify that registrations and reports have been received and processed into the public databases. Registrations and reports are available online at the House website at http://lobbyingdisclosure.house.gov, as well as the Senate website at http://www.senate.gov/lobby.
This week the U.S. Travel Association flew in hundreds of travel executives to meet with members on a range of issues including the “Open Skies” agreements. According to Politico, Delta, American and United have been lobbying the Trump administration to take action against the United Arab Emirates and Qatar, which they accuse of violating their agreements with the U.S. by subsidizing their state-owned carriers, Emirates, Etihad Airways and Qatar Airways. The travel executives have taken the side of the Persian Gulf carriers and will tell members “that Open Skies agreements have been critical to America’s efforts to capture a share of the highly lucrative international travel market,” Cathy Reynolds, a spokeswoman for the U.S. Travel Association, wrote in an email.”
All three airlines are part of the Partnership for Open and Fair Skies, a coalition of airline companies and related organizations. In 2015, under the Obama Administration, the group spent $6.1 million lobbying. The group has continued its efforts under the Trump Administration. Politico reports that the coalition has “sent letters to President Donald Trump and Secretary of State Rex Tillerson and has been running TV ads on the issue.”
Since the election of President Trump organizations from an array of industries have been focusing on re-writing their government relations playbook for the new administration. For the first time in 8 years, organizations feel like there is a chance to usher through substantial changes on Capitol Hill. According to Jeffrey Taylor, Managing Partner of USGRI.com, “Based on President Trump’s cabinet, the policy and management differences with the outgoing Obama Administration will be stark, substantial, significant, and aimed at systemic change in nearly every area of government policy that affects business.”
Industries that has already begun to see change during the Trump Administration include a few of the President’s favorites: real estate, construction, entertainment, hospitality, gambling and, golf courses. Politico reports, “Since taking office in January, Trump has made moves — from rolling back water quality permits to signaling big changes on overtime pay and internet betting — that benefit the fields he knows best. And his former peers — partners and competitors alike — are finding familiar faces in Trump’s White House and Cabinet agencies, who have the power to make even more of their wish lists come true…This is the first time a president of the United States is someone so familiar with private clubs,” said Henry Wallmeyer, president and CEO of the National Club Association, the trade group for private clubs. “That’s a unique circumstance.”
When President Trump took office many industries and organizations new that it would call for a re-examining of the lobbying playbook. Throughout his campaign, Trump called for a draining of the swamp and to implement new lobbying reforms. Moreover, Republicans won a supermajority in the 2016 elections, changing the political landscape of Washington, D.C. Jeffrey Taylor, Managing Partner of USGRI.com, argues that “Some presidential transitions are so Earth shaking that they require companies to conduct a much deeper analysis of their government relations plans; Carter to Reagan, Bush to Clinton, Clinton to Bush, Bush to Obama were all substantial ideological flips… but Obama to Trump is not your typical transfer of power. It is a monster change in direction for the U.S.; and by extension for U.S. and foreign business and industry.”
When President Obama took office in 2009, he also had supermajorities in both chambers of Congress, many companies initiated a new government relations efforts. However, according to Taylor, “Based on President Trump’s cabinet, the policy and management differences with the outgoing Obama Administration will be stark, substantial, significant, and aimed at systemic change in nearly every area of government policy that affects business.” This means companies need to re-write their playbook for the new administration.
However, Taylor also argues that “those that want to engage in a first-time government relations effort don’t need to carve out a big lobbying budget, there are firms that can capably and economically represent your company in Washington for a reasonable budget – and it gets you in the game!”
In the Trump era, one strategy that organizations will employ is how they frame their argument. Taylor suggests that President Trump “believes – rightly or wrongly – that he’s beholden to no one for his victory, except ‘middle America’ who elected him. In the past few week, he and his Administration has come to adopt a message of fighting for the ‘forgotten man’.” President Trump indicated this in his first speech before a Joint Session of Congress saying, “Dying industries will come roaring back to life. Heroic veterans will get the care they so desperately need. Our military will be given the resources its brave warriors so richly deserve. Crumbling infrastructure will be replaced with new roads, bridges, tunnels, airports and railways gleaming across our very, very beautiful land. Our terrible drug epidemic will slow down and, ultimately, stop. And our neglected inner cities will see a rebirth of hope, safety and opportunity. Above all else, we will keep our promises to the American people.” Therefore, organizations that can frame their argument as being advantageous to the average American will be significantly more impactful.
This week’s lobby log post looks into the current debate over lobbying transparency in the European Union. Currently steps are being made to make lobbying more transparent through the introduction of a mandatory transparency register. Politico reports, “Negotiations on setting up a mandatory transparency register, which lobbyists and activists would have to sign up to in order to meet with MEPs and senior EU officials, are to begin behind closed doors in the coming months. But lawyers from the Council of the EU, representing governments, have already raised questions about the legality of the plan.”
In 2011 the European Commission, the executive of the E.U. headed by President Juncker, and the European Parliament, composed of Members of the European Parliament (MEPs) who are directly elected by voters in each of the 28 Member States, created a voluntary lobbying register. Politico reports that, “As of Thursday, 11,191 organizations — including consultancies, trade associations and NGOs — had voluntarily signed up to the existing register…The [new] idea is to expand that register, make meetings with senior EU officials conditional on being signed up to it, and give it more staff and resources.” However, lobbyists have also complained that regulations in individual member states overlap the current E.U. initiative. For example, “Ireland…introduced its own register in 2015 which covers meetings with MEPs as well as national politicians,” according to Politico.
The problem historically with creating such a registry in the E.U. has been the Council. “So far, we never got the Council on board,” said Hübner [chair of the Parliament’s Constitutional Affairs Committee] “We never managed to have the three institutions on board and we never managed to make it obligatory.”
The Council is the main-decision making body of the each where “government ministers from each E.U. country meet to discuss, amend and adopt laws, and coordinate policies. The ministers have the authority to commit their governments to the actions agreed on in the meeting.” The Council opposes the initiate because it argues, “the Commission’s decision to regulate lobbying by using a so-called inter-institutional agreement is problematic — and possibly not legal,” according to a legal opinion obtained by Politico.
Since his inauguration, President Trump and the Republican controlled Congress have worked at light-speed to dismantle many Obama-era regulations like the 2010 Dodd-Frank Act. On Friday, Feb. 3, 2017 President Trump issued the “Presidential Executive Order on Core Principles for Regulating the United States Financial System” executive order, which according to Politico “backed sweeping changes to U.S. financial regulations…taking the first step toward undoing one of his predecessor’s signature legislative initiatives.”
Such actions have ignited fierce debate and lobbying activity. However, the Wall Street Journal reports that, “The number of federal lobbyist registrations last year fell to its lowest mark in 18 years, according to an analysis of new public records, as lobbyists increasingly exploit loopholes in disclosure rules. Some 11,143 total lobbyists filed registrations in 2016, down from 14,153 in 2008, the year before President Barack Obama took office—a decrease of nearly 30%, according to an analysis of lobbying records by the nonpartisan Center for Responsive Politics.”
The 2016 year-end and fourth quarter LDA results are in. Many of the top firms saw decreased Q4 revenue when compared to the same period in 2015. However, much of this decrease in revenue can be attributed to the focus on the election. Politico has ranked the top firms below. The figures were verified with the firms, except those marked with an asterisk, which were estimated based on Senate filings:
This week the Senate has been busy with the confirmation hearings for President-Elect Trump’s cabinet nominations. On Wednesday, the Senate Foreign Relations Committee’s confirmation hearing of Secretary of State nominee Rex Tillerson became heated over ExxonMobil’s lobbying activities connected to sanctions on Russia while Mr. Tillerson was the CEO.
Responding to a question from Senator Bob Menendez (D-N.J.) Mr. Tillerson denied opposing sanctions on Russia saying, “I have never lobbied against sanctions. …To my knowledge, Exxon never directly lobbied against sanctions,” reports The Hill. This resulted in Senator Menendez pulling “out printed pages of lobbying disclosure reports filed by Exxon going back to at least 2009, listing legislation that would further impose sanctions on Russia. One form described a lobbying topic as “Russian Aggression Prevention Act, provisions related to energy.” CNN reports that Sen. Menendez continued saying, “I know you weren’t lobbying for the sanctions.” In fact, he said: “Exxon became the in-house lobbyist for Russia against these sanctions.”
Politico Influence reports that “Exxon, for its part, chimed in on Twitter, “Let’s be clear: We engage with lawmakers to discuss sanction impacts, not whether or not sanctions should be imposed.” Let’s be clear: That is akin to saying you’re “educating” instead of “lobbying.” Exxon was raising concerns about how sanctions would impact them, such as inconsistencies between the rules in the United States and in Europe. The staffers on the receiving end understood this to be lobbying against the proposals as written.”
Throughout the hearing Mr. Tillerson’s connection to Russia has been under scrutiny. As CEO of ExxonMobil, Mr. Tillerson met with Russian President Vladimir Putin on several occasions and was awarded the “Russian Order of Friendship” in 2012, according to Politico.
On Monday, during a closed-door meeting the House Republican Conference voted to adopt an amendment to the proposed House rules package, which was set to be voted on Tuesday. The amendment put forward by Judiciary Committee Chairman Bob Goodlatte’s (R-Va.) would move the Office of Congressional Ethics (OCE) watchdog under the oversight of lawmakers through the House Ethics Committee.
The OCE is an independent, non-partisan entity charged with reviewing allegations of misconduct against Members, officers, and staffers of the United States House of Representatives. The office was first created in 2008 under then Speaker of the House, Nancy Pelosi. According to Politico, “Congress had created the office in the wake of Jack Abramoff scandal, which included the GOP lobbyist’s admission that he tried to bribe lawmakers. At the time, lawmakers hoped to stop anything like that from ever happening again.”
By Tuesday however, there was widespread outcry from both democrats on the Hill and outside groups about Chairman Goodlatte’s amendment. In a statement House Minority Leader Nancy Pelosi (D-Calif.) said, “Republicans claim they want to ‘drain the swamp,’ but the night before the new Congress gets sworn in, the House GOP has eliminated the only independent ethics oversight of their actions. Evidently, ethics are the first casualty of the new Republican Congress. The Office of Congressional Ethics is essential to an effective ethics process in the House, providing a vital element of transparency and accountability to the ethics process. The amendment Republicans approved tonight would functionally destroy this office. Congress must hold itself to the highest standards of conduct. Instead, the House Republicans Conference has acted to weaken ethics and silence would-be whistleblowers.” Similarly, the Citizens for Responsibility and Ethics in Washington (CREW) released a statement saying, “Undermining the independence of the House’s Office of Congressional Ethics would create a serious risk to members of Congress, who rely on OCE for fair, nonpartisan investigations, and to the American people, who expect their representatives to meet their legal and ethical obligations…If the 115th Congress begins with rules amendments undermining OCE, it is setting itself up to be dogged by scandals and ethics issues for years and is returning the House to dark days when ethics violations were rampant and far too often tolerated.”
By Tuesday afternoon House Majority Leader Kevin McCarthy (R-Calif.) was forced to call an emergency House Republican Conference to reverse the decision on the amendment. However, Politico reports that “McCarthy’s motion to restore the current OCE setup was adopted by unanimous consent after Trump himself got involved” tweeting “With all that Congress has to work on, do they really have to make the weakening of the Independent Ethics Watchdog, as unfair as it ……..may be, their number one act and priority. Focus on tax reform, healthcare and so many other things of far greater importance! #DTS.”
Minority Leader Pelosi released another statement following the House Republican Conference’s removal of Chairman Goodlatte’s amendment saying, “House Republicans showed their true colors last night, and reversing their plans to destroy the Office of Congressional Ethics will not obscure their clear contempt for ethics in the People’s House. Once again, the American people have seen the toxic dysfunction of a Republican House that will do anything to further their special interest agenda, thwart transparency and undermine the public trust.”
Some Republican members praised President-Elect Donald Trump’s involvement in the issue. According to The Hill, “Rep. Tom Cole (R-Okla.) said late Tuesday that President-elect Donald Trump “deserves a lot of credit” for House Republicans ditching a plan to weaken the Office of Congressional Ethics (OCE). “I think he deserves a lot of the credit. Look, I think it’s absolutely the right thing to do,” Cole told CNN’s Erin Burnett OutFront.
Following the Republican’s decision to remove the amendment from the House rules package (H.R. 5), the House of Representatives, approved the rules of the 115th Congress in a vote by the Yeas and Nays: 234 – 193.
Much of President-Elect Trump’s electoral campaign focused on “draining the swamp” and cleaning up Washington through ethics reforms, particularly around lobbying. During the election President-Elect Trump’s campaign released a plan for a lobbying reform package and implemented strict rules about lobbyists serving during the transition and in President-Elect Trump’s administration. Lobby Blog will continue to monitor ethics regulation changes under the 115th Congress and Trump Administration.