Public Policy & Law Alert
January 2007
Authors:
Tim Peckinpaugh
+1.202.661.6265
tim.peckinpaugh@klgates.com
David Thomas
+1.202.661.3864
david.thomas@klgates.com
Scott Nelson
+1.202.661.3714
scott.nelson@klgates.com
K&L Gates comprises approximately
1,400 lawyers in 22 offices located in
North America, Europe and Asia, and
represents capital markets participants,
entrepreneurs, growth and middle market
companies, leading FORTUNE 100 and
FTSE 100 global corporations and public
sector entities. For more information,
please visit www.klgates.com.
www.klgates.com
Senate Passes Lobbying and Ethics
Reform Bill
Late last week (January 18, 2007), the Senate passed the most significant set of lobbying
reforms applicable to lobbyists since the Lobbying Disclosure Act of 1995 (LDA). The
Senate bill also would make various changes to Senate gift, travel and other rules applicable
to Senators and their staff. Unlike the new House rules already in place, if the Senate
bill ultimately does not become law because it is not reconciled with companion House
legislation (which has yet to be considered), its Senate rules changes would not take effect
unless separately approved by the Senate. Key provisions of the Senate bill are described
below.
Lobbying Disclosure Reforms
The Senate bill would make a number of changes to lobbying disclosure requirements:
„
LDA reports would be filed quarterly, not semi-annually, and would be have to be filed
electronically and available online within 48 hours.
„
Registration thresholds would be lowered for outside lobbyists representing clients
from $5,000 to $2,500 and for entities with in-house lobbyists from $20,000 to $10,000.
These levels would be adjusted for inflation. In addition, the threshold for disclosure of
entities that contribute to the lobbying activities of a registrant would be lowered from
$10,000 to $5,000.
„
Estimated lobbying expenses would need to be rounded to the nearest $10,000 instead
of the current $20,000.
„
currently caused by each chamber’s use of different software.
„
All past executive and congressional employment of lobbyists would be disclosed, not
just employment during the two immediately prior years, as under current law.
„
In terms of enforcement, the civil penalty for a knowing violation of the LDA reporting
and other requirements would be increased from $50,000 to $100,000. In addition, the
bill would add a new criminal penalty.
„
A certification would be required that the registrant had not violated House or Senate
gift and travel rules.
A separate quarterly report would need to be filed, detailing the political contributions of
each registrant and any lobbyist employees of the registrant. The report would also contain
details on:
„
the lobbyist’s involvement with payments related to Congressional and Executive
Branch trips;
„
the lobbyist’s involvement with events honoring or entities affiliated with a Member,
staffer or senior Executive Branch official; or retreats, conferences or meetings held by
or for the benefit of a Member, staffer or senior Executive Branch official; and
„
any gift above $20 by the lobbyist to a Member, staffer or senior Executive Branch
official.
Public Policy & Law Alert
The Senate and House would also maintain an Internet
database of lobbying disclosure information that
would be linked to information on lobbyists’ political
contributions and other information disclosed in FEC
reports.
The bill would require Senators, on privately funded
official as well as campaign-related travel, to pay
a cost comparable to similar charter travel when
traveling on noncommercial aircraft. Currently, only
the comparable first class cost is required to be paid.
The bill would also mandate electronic filing and a
public database for filers under the Foreign Agents
Registration Act.
Gifts
Travel
Like the new House rules, Senate rules would be
changed to generally ban travel paid for by lobbyists,
agents of foreign principals, and the private entities
that employ or retain them. There are a few exceptions
to this. First, as in the new House rules, Members and
staff could accept travel from entities that employ or
retain lobbyists and foreign agents for one day events
(including an overnight stay). As in the House, a two
night stay could be pre-approved if it is logistically
necessary.
Second, pre-approved 501(c)(3) organizations could
sponsor travel, even if they employ or retain lobbyists
or foreign agents. The House rules do not contain this
exception.
In any case, travel could not be accepted if a registered
lobbyist or foreign agent planned, organized,
requested, or arranged the trip (subject to a de minimis
involvement exception), or if a lobbyist accompanied
the Member or staff on any segment of the trip.
Travel paid for by a permissible private source must
also be pre-approved by the Senate ethics committee.
Before accepting transportation or lodging from such
a source, Members or their staff would have to obtain
a written certification that:
„
the trip will not be financed by a registered lobbyist
or foreign agent;
„
the person offering the transportation or lodging
will not accept, directly or indirectly, funds from
a another person that were earmarked for the
travel;
„
the trip will not be planned, organized, requested
or arranged by a registered lobbyist or foreign
agent; and
„
registered lobbyists will not participate in or
attend the trip.
These changes would take effect 60 days after the bill
is enacted.
Similar to the new House rules, the Senate rules
changes would ban all gifts from registered lobbyists,
agents of foreign principals, or private entities that
retain or employ them, but would retain all of the
existing exceptions to the gift rule. Accordingly, much
like under the new House rules, lobbyists, lobbying
firms, and those who employ or retain them could still
sponsor events if, for instance, they qualify as “widely
attended” events or fit the “reception exception” in
which refreshments of a nominal value (e.g., finger
food) are served at an event. Other key exceptions
include: informational materials, such as books,
videos and other forms of communication, that are
sent to Members and staff; gifts paid for by federal,
state, or local governments; gifts given on the basis of
bona fide personal friendship; and items of nominal
value such as baseball caps or T-shirts.
The bill also would change the Senate rules regarding
the valuation of tickets to entertainment and sporting
events. Under the rules, the market value would be
the face value. If there were no face value, the ticket
would be valued the same as the most similar ticket
that did, in fact, have a face value. If there were no
similar ticket, the valuation would be the cost of the
ticket with the highest face value for that event.
Earmark Reform
“Earmark” is defined as a provision or report language
providing, authorizing, or recommending a specific
amount of spending authority for an entity or that is
targeted to a specific State, locality, or Congressional
district. A “limited tax benefit” is a revenue provision
that provides a federal tax deduction, credit, exclusion
or preference to a beneficiary or a limited group of
beneficiaries and contains eligibility criteria that are
not uniform in application, or a federal tax provision
that provides a beneficiary with transitional relief from
a change in the tax code. A “limited tariff benefit” is
a provision that modifies the tariff schedule for the
benefit of 10 or fewer entities.
Members requesting an earmark, limited tax benefit,
or limited tariff benefit would have to provide a
statement to the chairman and ranking member of the
appropriate committee that includes the Member’s
January 2007 | 2
Public Policy & Law Alert
name, the identity of the beneficiaries, the purpose
of the benefit, and a certification that the Member or
the Member’s spouse has no financial interest in the
benefit. The committees would be required to keep
these statements. If the requested earmark, limited tax
benefit, or limited tariff benefit were included in any
measure reported by the committee or a conference
report filed by the committee or any subcommittee,
the statement on the earmark or benefit would be
required to be posed on the Internet within 48 hours.
Earmarks and limited tax or tariff benefits added in
conference to any bill would be subject to points of
order on the floor, requiring 60 votes to overcome. In
addition, a point of order could be raised against any
conference report, bill or joint resolution reported by
a committee unless the joint explanatory statement or
the committee report included a list of any earmarks,
limited tax benefits and limited tariff benefits, and the
name of the Senator who submitted the item, and that
list was posted on the Internet for at least 48 hours
before consideration of the conference report, bill or
joint resolution. Non-reported bills or resolutions and
conference reports would be subject to similar rules.
In addition, conference reports would have to be
posted on the Internet for 48 hours before they could
be considered.
Although the disclosure requirements above are
similar to the new House rules, the Internet posting
requirements are unique to the Senate bill.
Similar to the House rules, Members would be
prohibited from trading earmarks for votes.
Post-Employment Restrictions
The Senate bill would impose tougher restrictions
on senior Executive Branch officials, Members of
Congress, and Congressional staff.
„
A senior Executive Branch official would be
subject to a two-year (versus one-year now)
“cooling off” period, under federal criminal law,
before being able to seek official action, on behalf
of others, from officials in the department or
agency in which he served or from senior officials
at another department or agency.
„
A Member of Congress would become subject to
a two-year (versus one-year now) “cooling off”
period, under federal criminal law, before being
able to seek official action, on behalf of others,
from Members, officers, or employees of the
Senate or House.
„
Senior Senate staff who earn at least 75% of
Member pay would be banned, under new Senate
rules, from lobbying all Members, officers, and
employees of the Senate for one year. A Senate
staffer earning less than 75% of Member pay
would be subject to the existing one-year ban,
under current Senate rules, on lobbying the
former Senator for whom he worked and the staff
of that Senator or, if he worked for a committee,
the members of the committee and committee
staff. Federal criminal law would be amended
such that all Congressional staff would be barred
for one year from lobbying Members, officers or
employees of the House of Congress in which the
staff worked.
„
The new restrictions would take effect 60 days
after enactment of the bill.
Senators generally would be required to disclose any
post-Senate job negotiations, if such negotiations
took place before the election to elect the Senator’s
successor. In addition, Senate staff making more than
75% of Member pay must notify the Senate ethics
committee of any post-employment negotiations
concerning private employment.
K&L Gates comprises multiple affiliated partnerships: a limited liability partnership with the full name Kirkpatrick & Lockhart Preston Gates
Ellis LLP qualified in Delaware and maintaining offices throughout the U.S., in Berlin, and in Beijing (Kirkpatrick & Lockhart Preston Gates Ellis
LLP Beijing Representative Office); a limited liability partnership (also named Kirkpatrick & Lockhart Preston Gates Ellis LLP) incorporated in
England and maintaining our London office; a Taiwan general partnership (Kirkpatrick & Lockhart Preston Gates Ellis) which practices from
our Taipei office; and a Hong Kong general partnership (Kirkpatrick & Lockhart Preston Gates Ellis, Solicitors) which practices from our Hong
Kong office. K&L Gates maintains appropriate registrations in the jurisdictions in which its offices are located. A list of the partners in each
entity is available for inspection at any K&L Gates office.
This publication/newsletter is for informational purposes and does not contain or convey legal advice. The information herein should not be
used or relied upon in regard to any particular facts or circumstances without first consulting a lawyer.
Data Protection Act 1998—We may contact you from time to time with information on Kirkpatrick & Lockhart Preston Gates Ellis LLP seminars
and with our regular newsletters, which may be of interest to you. We will not provide your details to any third parties. Please
e-mail london@klgates.com if you would prefer not to receive this information.
©1996-2007 Kirkpatrick & Lockhart Preston Gates Ellis LLP. All Rights Reserved.
January 2007 | 3