Public Policy & Law Alert House Passes Ethics Rules Changes

Public Policy & Law Alert
January 2007
House Passes Ethics Rules Changes
Tim Peckinpaugh
Scott Nelson
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
Lobbyists and Those Employing Them Face New Restrictions;
Overall Effect Unclear
Wasting no time in trying to address the alleged “culture of corruption” in Washington, the
House Democrats introduced, and successfully passed, a range of changes to the House
ethics rules on January 4, 2007, the first day of the new Congress. The changes generally
restrict lobbyist interaction with House Members and staff regarding gifts and travel, and
also provide for disclosure of requested earmarks and narrowly targeted tax and tariff
benefits. However, the new rules may not change the day-to-day business of Washington
as much as first expected. For instance, although registered lobbyists, agents of foreign
principals and entities that employ or retain those lobbyists or agents1 are now prohibited
from giving gifts to House Members and staff (even those under $50, as the old rules
allowed), all the often-used exceptions to the gift rules still remain in place.
Previously, House Members and staff were allowed to accept gifts from essentially anyone
if the value of the gift was less than $50 and the cumulative total of all gifts received from
the same source was less than $100 in a calendar year. The most important change to the
gift rules is that House Members and staff may no longer accept gifts from registered
lobbyists or entities that retain or employ registered lobbyists, even if the gift is below the
previous $50/$100 safe harbor.
However, the 23 exceptions to the gift rule that previously existed remain valid and provide
exception to the new rule regarding registered lobbyists and those who employ registered
lobbyists. In other words, lobbyists, lobbying firms, and those who employ them may 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. Federal campaign contributions
from lobbyists and those who employ them are also exempt from the gift rule, perhaps
resulting in lobbyists increasing their participation in political events. Generally, these
exceptions are nuanced in operation, and legal counsel should be sought before proceeding
under any of them.
The rules also clarify the valuation of tickets to sporting and entertainment events. Tickets
will be valued at face value, or, if a ticket has no face value, at the highest cost of a ticket
with a face value for that event.
Although the new gift rules may not result in real changes in lobbying activities, the new
travel rules reflect significant changes. Current rules prohibit Members and staff from
directly accepting reimbursements for travel from registered lobbyists, and the new rules
expand this prohibition to entities that employ or retain lobbyists.
Public Policy & Law Alert
There are some exceptions to this rule. First, entities
that employ lobbyists may reimburse Members and
staff for one-day events, such as conventions or
meetings, including an overnight stay. The House
ethics committee may approve a two-night stay when
it is “practically required” for participation in the oneday event. In any case, Members and staff may not
accept reimbursement for travel from entities that
employ and retain lobbyists if a registered lobbyist
accompanies the traveler on any portion on the trip
or plays more than a very limited (“de minimis”)
role in planning, organizing, requesting, or arranging
the trip.
Second, public colleges and universities that employ
or retain lobbyists are exempted and may provide
reimbursement for travel to Members and staff.
In addition, registered lobbyists may accompany
Members and staff on these trips, although they
still may not participate in the planning, organizing,
requesting, or arranging of the trip in more than a de
minimis way.
The new rules also require significant public
disclosure and pre-authorization from the House ethics
committee. Before the trip is taken, Members or staff
must obtain, from the source of the reimbursement a
certification regarding the nature of the sponsoring
organization, that the trip will comply with other
travel rules (noted above), including that the source
of the reimbursement will not accept any funds from
another source that are earmarked for financing the
trip. The Member or staff must submit the certification
to the ethics committee before the trip and obtain prior
approval for the trip from the committee.
The new rules also shorten the time to make disclosures
(certification, authorization, existing disclosures)
regarding the trip to the Clerk of the House from 30
days to 15 days after travel is completed.
The new travel regulations become effective on March
1, 2007 to permit the House ethics committee to issue
guidance on some issues (e.g., define the de minimis
standards for lobbyist participation in organizing
the trip).
Under the new rules, committee reports and joint
explanatory statements to conference reports must
include a list of earmarks and “limited” tax and
tariff benefits contained in any reported bill, joint
resolution, or conference report and the name of the
Member who requested the item. Bills or resolutions
not reported by committee, or a manager’s amendment
containing these items may not come to the floor
unless the chairman of each committee to which the
bill was originally referred (or the proponent in the
case of a manager’s amendment) has put a similar
list or statement in the Congressional Record. Failure
to disclose earmarks and the tax/tariff benefits along
with identification of the sponsoring Member of each
earmark or benefit will result in a non-waiveable
point-of-order against House floor consideration of
the appropriations, tax, or trade bill.
Earmarks are defined as any funding, included
primarily at the request of a Member, that is targeted
to a specific place and falls outside a formula-driven
or competitive process award. “Limited” tax and tariff
benefits are provisions that would benefit 10 or fewer
The new rules also prohibit Members from trading
earmarks for votes. Members must also certify that
they and their spouse have no financial interest in their
requested earmark.
Other Issues
Although Members may continue to use
“commercially available” airplanes, they may no
longer use official, personal, or campaign funds to
pay for privately owned planes.
Members and staff must participate in annual
ethics trainings.
In an effort to end “the K-Street Project,” Members
may no longer influence employment decisions
of private entities based on the partisan political
affiliation of a prospective employee.
The Senate is now considering its own set of ethicsrelated changes, regarding both internal Senate
rules and statutory provisions. Although the House
gift and earmark rules are already in effect and the
travel restrictions become effective on March 1,
2007, any statutory changes made by the Senate (e.g.,
post-employment restrictions, lobbying disclosure
enhancement) that are new or may conflict with the
House rules would need to be reconciled by the House
and signed by the President. Summaries of any Senate
ethics changes will be forthcoming after the Senate
has acted.
January 2007 | 2
Public Policy & Law Alert
The new rules give similar treatment to registered
lobbyists and foreign agents as well as entities that
employ or retain registered lobbyists and entities that
employ or retain foreign agents throughout the sections
on gifts and travel. For the sake of simplicity, the
balance of this alert refers only to registered lobbyists
and entities that employ or retain those lobbyists. The
reader should assume inclusion of the counterpart
foreign agent or entity employing or retaining the
foreign agent throughout the alert.
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 if you would prefer not to receive this information.
©1996-2007 Kirkpatrick & Lockhart Preston Gates Ellis LLP. All Rights Reserved.
January 2007 | 3