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NAICUGOVERNMENT RELATIONS ACADEMYWhat Every College Needs to Knowabout Lobbying Compliance and 990sJanuary 30, 2012C. RANDALL NUCKOLLSRNUCKOLLS@MCKENNALONG.COM(202)496-7176

Topics of Discussion What Constitutes Lobbying underfederal law Calculation of Lobbying Expenses forLDA and IRS reporting purposes Congressional Gift and Travel Rules Executive Branch Rules/ObamaExecutive Orders

The New Worldfor LobbyistsLobbying Disclosure ActOffice of Government Ethics House and SenateObama Executive OrderEthics RulesOffice of theComptroller GeneralSpecial InterestGroups/MediaUniversity government relations representativeIRS/FEC

Lobbying Disclosure Act The LDA is intended to provide broaddisclosure of both Legislative and ExecutiveBranch lobbying activities Signed into law by President Clinton in 1995 Subsequent minor technical amendments Major changes were made by the HonestLeadership and Open Government Act of2007 (HLOGA)

Lobbying DisclosureFramework The LDA is built around the definitions of a– lobbyist– covered legislative & executive branchofficials– lobbying activities– Exceptions LDA contains its own definitions of these terms Corporations and nonprofit entities may usealternative IRS definitions

Who is a Lobbyist?The LDA defines a “lobbyist” using a three-part test:1. More than one “lobbying contact” with covered officials2. “Lobbying activities” constitute 20% or more of theservices performed by that individual on behalf ofhis/her employer or client during any quarter3. Total organization “lobbying expenses” of 11,500 perquarter in the case of an employed “lobbyist” (or 3,000per quarter in income for a lobbying firm)

Who Must Register? Individuals are “lobbyists”. A corporation or nonprofit groupthat has at least one employee who meets the definition of a“lobbyist”, meets the definition of “registrant” and mustregister under LDA If an organization hires an outside person or entity thatmeets the definition of a “lobbyist” – then that outsideperson or entity must register under the LDA and disclosethe corporation as the “client” Form LD-1 registration must be filed within 45 days– After lobbyist is employed or retained– After lobbyist employee makes second contact andmeets 20% threshold;

Covered Contacts(LDA Definition)Oral, written or electronic communications with coveredLegislative or Executive Branch official regarding:– formulation, modification, or adoption of Federallegislation– formulation, modification, or adoption of a Federal rule,regulation, Executive order, policy or position– the administration or execution of a Federal program orpolicy (including the negotiation, award oradministration of a Federal contract, grant, loan,permit or license)– the nomination or confirmation of a person subject toconfirmation by the Senate

What is NOT a “Lobbying Contact” EXCEPTIONS – “lobbying contact” does NOT include:– a speech, article, publication or other material that is distributedand made available to the public through a medium of masscommunication– a request for a meeting, a request for the status of an action, orother similar administrative request– testimony given before Congress or submitted for inclusion inthe public record– information provided in writing in response to an oral or writtenrequest, or in response to a request for public comments in theFederal Register– required by subpoena or civil investigative demand– written comment filed in the course of a public proceeding– made by the media if the purpose is gathering anddisseminating news and information to the public.

Covered Individuals(LDA Definition) A “Covered Legislative Branch Official”includes– Members of Congress– an elected officer of either House of Congress– employees of a Member, Committee, leadershipstaff, joint committee, working group or caucus

Covered Individuals(LDA Definition) A “Covered Executive Branch Official” includes– the President– the Vice President– any officer or employee in the Executive Office of thePresident– any Executive Schedule level I – V officer oremployee– any member of the armed services at or above paygrade O-7 & above– “Schedule C” political appointees

Covered Individualsusing IRC definitions “Covered Executive Branch Official” includes– All White House staff– Top two officials of all departments within theExecutive Office of the President (OMB, STR)– Top two officials (and immediate staff) of eachCabinet Agency– Any person in the Executive Branch withlegislative responsibility with whom you interactin attempting to influence specific legislation

“Lobbying Activities”(LDA Definition)Lobbying activities means lobbying contactsAND efforts in support of such contactsincluding preparation and planning activities,research and other background work that isintended, at the time it is performed, for usein contacts, and coordination with thelobbying activities of others

Categories of Lobbying Expenses Calculation of time, overhead for allemployees engaged in lobbying activities; Hard costs (travel, hotels, conference fees,meals) Payments to outside lobbying firms, vendors,consultants, coalitions Percentage of association dues for lobbying State and local lobbying costs for Method B Grassroots communications for Method B

IRS 990 Reporting New IRS Form 990 requires additionalreporting of lobbying PART IV – Question 4 – “Did the organizationengage in lobbying activities”? If “YES”,complete Schedule C, Part II If no internal lobbying --then answer NO Schedule C – Part II-A for those that made a501(h) Safe Harbor election; Form 5768 Schedule C - Part II-B for those that made noSafe Harbor election;

Special Issues for Using OutsideLobbying Firms Your retainer agreement language and recordkeeping do matter Be specific regarding the scope of services andwhether you anticipate lobbying activities or politicalcommunications The work of outside firms must be included inlobbying expenses for LDA/federal tax filings Both a nonprofit and its outside firms may need toregister depending on the factual situation The LDA reports of a nonprofit and its outside firmsshould be consistent in disclosing lobbying expensesfor LDA and tax purposes

Surviving a Federal Audit Auditors want to see a system in place thattracks the type of information that must beprovided; time sheets, collection of information Full disclosure of topics, sections of bills beinglobbied IRS Auditors ask questions about percentage oftime spent by senior executives DCAA and other government contract auditorsare asking questions about nature of servicesperformed by outside consulting firms hired bycorporations

Semiannual LDA (LD-203) Reports Filed by Registrants and individual Lobbyists (1/30and 7/30) Must disclose campaign contributions or donationsto presidential libraries/inaugural committees 200 Also expenditures with respect to legislative &executive branch officials:– For events honoring covered officials– to an entity named after or in recognition of such official– to an entity “established, financed, maintained orcontrolled” or an entity designated by such official– to pay for a meeting, retreat or conference held by or inthe name of one or more officials

LD-203 CertificationRequirement LDA reports filed by Registrant and each listedlobbyist must include certification that:– They have “read and [are] familiar with” the gift& travel rules– Have “not provided, requested, or directed”any gift or travel “with knowledge” of anyviolation of these rules Increased civil fines up to 200,000 and criminalpenalties up to 5 years in jail for a knowingviolation

Byrd Amendment 31 U.S.C. § 1352 (2000), FAR Subpart 3.8 Prohibits use of “appropriated” federal funds toinfluence any type of federal award, includingcontracts, subcontracts, grants and cooperativeagreements Requires disclosure of payments made to outsidelobbyists to influence a federal award

Activities CoveredBy The Byrd Amendment Any communications to Congress oragency intended to influence an award,including its extension, renewal ormodification (including exercise ofoptions), or the earmarking of funds for aparticular program within a bill

Exempt Byrd AmendmentActivities Discussions with an agency regarding products/servicesprior to issuance of an RFP Agency and legislative liaison activities not related to aparticular federal award Providing information specifically requested by Congressor an agency Post-award communications regarding administration ofan award Technical services provided by employees or outsideconsultants in connections with preparation of a proposalor negotiation of an award

Byrd AmendmentDisclosure/CertificationRequirements While disclosure applies only to federal awards greaterthan 100,000, the costs of Byrd activities for all awards(regardless of value) are still unallowable Flow to sub-awardees Standard Form LLL requires identification of LDAregistrants engaged in covered activities for that award(but not internal employees) Awardee must certify that appropriated funds not usedfor internal or external lobbying

University Lobbying Disclosure andEthics Compliance Checklist Does at least one employee of the University make“lobbying contacts” and spend 20% or more time on“lobbying activities”? If yes, is University registeredunder the Lobbying Disclosure Act? Does the University have a policy stating who is allowedto make “lobbying contacts” on behalf of theUniversity? Does the University have a procedure for tracking andreporting of “lobbying contacts” made by employees? Is the University capturing and reporting all costs of“lobbying activities” to nearest 10,000? Calculationsshould include salary, benefits, and overhead; Traveland other expenses; Payments to outside lobbyingfirms; and an appropriate percentage of dues paymentsto lobbying organizations.

University Lobbying Disclosure andEthics Compliance Checklist How does University pay for lobbying expenses? Howdoes University pay for gifts/meals to Members ofCongress and staff? Does University track lobbying activities that must bedisclosed on Byrd Amendment forms (LLL forms)? Has University educated key administrators aboutHouse and Senate gift and travel rules? Does the University obtain an acknowledgement fromkey employees that no gifts/travel has been offered to aMember of Congress or staff in violation of the rules? Are the Governmental Affairs officers/Public affairsofficers/Legal Counsel knowledgeable and prepared toanswer any media questions that might arise?

Federal Gifts and Travel RulesCommon Questionslobbying community1. What is the scope of the gift ban onlobbyists?2. What type functions may I host?Widely attended Events? NominalFood?3. Are Members/staff or Executiveofficials allowed to accept hostedtravel? Length of trip? LobbyistInvolvement?4. BASIC RULE - Member of Congressand staff and Executive Branchofficials may NOT accept ANYTHINGof value from ANYONE – whetherpersonal or official – UNLESSacceptance is allowed under one ofthe Exceptions to the gift rules

We tell our Congressionalclients they may NEVER: Solicit a gift from any person who hasinterests before the House; Accept a gift that is linked to any officialaction that the individual has taken, or isbeing asked to take; Accept any other gift, unless specificallyallowed under one of the provisions of theHouse/Senate gift rules.

The biggest change for lobbyingorganizations & their employees:Under HLOGA, no lobbyist and no employee ofan organization employing lobbyists (or hiringoutside lobbyists) may rely on the “ 50”exception in giving gifts to any Member ofCongress or staff.More than 20 other exceptions remain available