Q. I’m an in-house lobbyist planning to meet with California legislators to influence state government action. If I go to the meeting accompanied by a registered lobbyist, isn’t my time at the meeting exempt from counting toward the lobbyist registration threshold under the “ride-along” exception?

A. That depends. The California Fair Political Practices Commission (FPPC) amended its regulations in 2016 to narrow the so-called “ride-along” exception.  The exception is now only available to in-house employees who act as “subject matter experts” in communicating with California government officials while accompanied by a registered lobbyist employed or retained by their employer. If the exception does not apply to your circumstances, you must…

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Q: I have been out of the office on an extended vacation.  I just noticed a reminder e-mail that I have a lobbying report due today that cannot be filed electronically.  What are my options?

A: You still have the ability to submit the report in a timely manner.  Your first step should be to confirm the reportable activity for your report.  If it is your lobbyist report, check your calendar or records to see whether you lobbied during the reporting period.  If the report is for your employer, you must review not only your activity, but possibly information for a contract lobbyist as well…

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Q. We file our federal LD-2 quarterly lobbying reports under the IRC definitions.  Does the IRC 5 percent de minimus rule apply to capturing reportable expenditures on our quarterly LD-2 disclosure?

A. In short, yes, but with a caveat.  If your organization has opted to compile lobbying expenditures using Method B or Method C, the 5 percent de minimus rule applies.  As a frame of reference, the IRC allows taxpayers an exception for including the time of individuals who spend less than 5 percent of their time engaged in lobbying activities as defined by the IRS…

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We are always available to answer questions from clients that are specific to your needs, and we encourage you to continue to call or email with questions about your particular company or organization. As always, we will confidentially and directly provide answers and information. Our replies are not legal advice, rather analysis of laws, rules, and regulations.

Q.  Can a PAC from one state make contributions to candidates and ballot measures in a different state?

A.  Yes, an out-of-state PAC may make contributions in a different state, but it must be aware of the state laws governing such a practice.

In most states, the out-of-state PAC will be subject to the same rules governing an in-state PAC, although there may be parameters.  For example:

• In North Carolina, the out-of-state PAC must have a certified assistant treasurer who is a resident of North Carolina.
• In New Jersey, the Election Law Enforcement Commission will determine if the out-of-state PAC has a significant percentage of activity within the state to require registration and reporting.
• In Nevada, the out-of-state PAC must appoint a registered agent from Nevada.
• In New York, out-of-state committees must designate a depository, which must be a banking organization authorized to do business in New York.

In other jurisdictions, an out-of-state PAC must create an in-state PAC before it can contribute.  For instance…Click here to read this and all Ask the Experts articles in full

We have not listed PAC rules for all the states, only examples of some states.
If you have a question on a state not listed here, please contact us directly
at 330-761-9960.

Q. Can I use my company’s federal PAC to make contributions to candidates for state office?

A. With the exception of Massachusetts, contributions from a federal PAC to non-federal state candidates are permissible.  However, the challenging aspect of making these types of contributions is that every jurisdiction has different rules regarding how to register and report such contributions.  To make this a little easier to digest, we have broken down the states into five categories.  Please note:  regardless of the registration and reporting process, in all jurisdictions the federal PAC is subject to the contribution limits according to the law of that jurisdiction…

We have not listed PAC rules for all the states, only examples of some states.
If you have a question on a state not listed here, please contact us directly
at 1-330-761-9960.

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Q: Our company is a registered lobbyist employer in many states, and we regularly do business with universities. Can my company give gifts to university officials and employees?

A: Gifts to university officials and employees fall under the purview of state ethics laws in a majority of states.  Additionally, universities will often have more restrictive gift policies with respect to vendors. It is especially important to understand what your company can and can’t do at this level, because university employees (especially professors) are sometimes unaware of potential restrictions. Potential penalties can include loss of contracts with a university and/or state fines. Further, if your company is registered as a lobbyist employer, some gifts will need to be disclosed on appropriate reports.

The first step to determine whether a gift to a university official or employee will be permissible is to determine the scope of a state’s gift restrictions…

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We are always available to answer questions from clients that are specific to your needs, and we encourage you to continue to call or email us with questions about your particular company or organization. As always, we will confidentially and directly provide answers or information you need. Our replies are not legal advice, just our analysis of laws, rules, and regulations.

Q. My company has registered lobbyists and is a member of local and regional associations in numerous states. Are there any unique disclosure requirements due to these circumstances?

A. You should always consider a couple of different aspects of reporting with this type of relationship. First and most obvious, the dues you pay to a trade association may have to be disclosed on your lobbying disclosure report.  A trade association can engage in lobbying on behalf of its members, making a portion of your dues reportable as a lobbying expense.

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You can directly submit questions for this feature, and we will select those most appropriate and answer them here. Send your questions to: experts@stateandfed.com.

(We are always available to answer questions from clients that are specific to your needs, and we encourage you to continue to call or e-mail us with questions about your particular company or organization. As always, we will confidentially and directly provide answers or information you need.) Our replies to your questions are not legal advice. Instead, these replies represent our analysis of laws, rules, and regulations.

Q. Our company is active and registered as a lobbyist employer in several states. What are best practices for record-keeping? What will we need to access and keep in the event of a state audit?

A. Each state takes a different approach to auditing, requiring registered companies and lobbyists to keep substantiating records for varying periods of time.  As a conservative rule of thumb, it’s generally advisable to keep substantiating records for seven years.  However, for each state where your company has an active registration, you should determine if there is a set document retention policy.  While some states have no set period of time for lobbyists/employers to retain records, a majority of states require retention for a set period of time, usually within a three to five year range.

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You can directly submit questions for this feature, and we will select those most appropriate and answer them here. Send your questions to: experts@stateandfed.com.

(We are always available to answer questions from clients that are specific to your needs, and we encourage you to continue to call or e-mail us with questions about your particular company or organization. As always, we will confidentially and directly provide answers or information you need.) Our replies to your questions are not legal advice. Instead, these replies represent our analysis of laws, rules, and regulations.

Q. When I talk to state officials, I’m always with my registered contract lobbyists. That means I’m exempt from registering, correct?

A. The kind of exemption you are referring to is commonly called an umbrella exception. In most instances, being with a registered lobbyist does not exempt an individual from having to register as a lobbyist.

California and Utah are two states with an umbrella exception, but there are limits to those exceptions. In Utah, an individual is not considered a lobbyist (and thus does not have to register) if he or she:

Interacts with a public official in that official’s capacity as a public official while accompanied by a registered lobbyist who is lobbying in relation to the subject of the interaction or while presenting at a legislative committee meeting at the same time the registered lobbyist is attending another legislative committee meeting; and

Does not make an expenditure for, or on behalf of, a public official in relation to the interaction or during the period of interaction.

California’s umbrella exception is the most well-known, but it was narrowed in March. Now, the umbrella exception will only apply if the individual:

Is an employee of a lobbyist employer;

Meets or speaks with a state official in the company of a registered lobbyist retained by the individual’s lobbyist employer; and

Participates as a subject matter expert regarding a legislative or administrative action at issue.

California’s exception was narrowed to prevent contract lobbyists from being able to utilize the exception and avoid registration and reporting requirements.

As you can see, there are very few umbrella exceptions allowing you to avoid registration. And even when a state has an umbrella exception, there are limits on who can take advantage of them. If you will be attempting to influence a state official, be sure to give us a call prior to your meeting to make sure lobbyist registration will not be required.

You can directly submit questions for this feature, and we will select those most appropriate and answer them here. Send your questions to: marketing@stateandfed.com.

(We are always available to answer questions from clients that are specific to your needs, and we encourage you to continue to call or e-mail us with questions about your particular company or organization. As always, we will confidentially and directly provide answers or information you need.) Our replies to your questions are not legal advice. Instead, these replies represent our analysis of laws, rules, and regulations.

Q. My employer is a wholly owned subsidiary of a parent corporation.  Does a parent corporation, a subsidiary, or other affiliated entity have its own contribution limit or must the contributions be aggregated and have a shared limit?

A. This is a very important question that must be addressed when making a contribution, particularly when there is a hierarchy to the corporate structure.  If a limit is shared, the parent, subsidiary, or other affiliated entity must have an open line of communication when it comes to making political contributions.

In New York, each affiliated or subsidiary corporation, if a separate legal entity, has its own limit.

In California, contributions made by certain combinations of affiliated individuals, entities, and committees must be aggregated.  It all comes down to a matter of control:

• The contributions of an entity whose contributions are directed and controlled by any individual must be aggregated with contributions made by that individual and any other entity whose contributions are directed and controlled by the same individual.
• If two or more entities make contributions directed and controlled by a majority of the same persons, the contributions of those entities must be aggregated.
• Contributions made by entities majority-owned by any person must be aggregated with the contributions of the majority owner and all other entities majority-owned by that person, unless those entities act independently in their decision to make contributions.

So in California, a parent and subsidiary share a contribution limit if the decision to make a contribution is directed and controlled by a majority of the same persons.  If the parent and subsidiary act wholly independently of each other in deciding to make a contribution, the parent and subsidiary each have their own limit.

In New Jersey, if a corporation has subsidiaries, affiliates, branches, or locals, then the contributions of these organizations cannot exceed the applicable contribution limit in the aggregate.  Two or more corporations will be conclusively deemed to be affiliated if:

• Any individual, corporation, partnership, company, association, or other entity owns, directly or indirectly, more than a 30 percent interest in each of such corporations; or
• One such corporation owns, directly or indirectly, more than a 30 percent interest in the other such corporation.

These are just a few examples of aggregation of limits.  As we always advise, verify the rules in your state before making political contributions.

You can directly submit questions for this feature, and we will select those most appropriate and answer them here. Send your questions to: experts@stateandfed.com.

(We are always available to answer questions from clients that are specific to your needs, and we encourage you to continue to call or e-mail us with questions about your particular company or organization. As always, we will confidentially and directly provide answers or information you need.) Our replies to your questions are not legal advice. Instead, these replies represent our analysis of laws, rules, and regulations.

Q. For a number of years, our association has hired outside lobbying firms to lobby on our behalf. I was under the impression that because they registered and reported their lobbying activities for us, we didn’t need to register. Based on a recent conversation, I understand this may not be the case and we may need to register the association itself as a federal registrant. Can you tell me the guidelines in this regard?

A. Thanks for your question. This is a consideration that can often be overlooked when determining the need to register at the federal level. There is no specific exception outlined in the registration requirements that would negate an organization from having to register if it hires outside consultants that registers and reports their activity on behalf of their client. Essentially, if your organization meets the three registration thresholds, you need to register without regard for whether your outside consultants are also registered. The three criteria are:

1. An organization must have at least one employee who spends 20 percent or more of his or her time engaged in lobbying activities. This includes time working and coordinating with your consultant about your lobbying initiatives and also includes background work done in association with a lobbying effort;
2. That same employee must have two or more lobbying contacts. There is no time frame in which the two contacts have to occur. The two contacts could be a year apart from each other but once the second contact has been made, this threshold has been satisfied; and
3. An organization must spend $12,500 or more on lobbying activity during a three month period. Expenditures include payments made to outside consultants and membership organizations that are allocated toward lobbying efforts. In addition, compensation, expenses, and overhead associated with any and all lobbying activity that is occurring within the organization must be calculated for purposes of determining if this threshold has been met.

If your association meets these three requirements, you need to register and begin reporting your internal activities on a quarterly basis. Your outside consultants will also continue to report the activity in which they engage on your behalf.

You can directly submit questions for this feature, and we will select those most appropriate and answer them here. Send your questions to: experts@stateandfed.com.

(We are always available to answer questions from clients that are specific to your needs, and we encourage you to continue to call or e-mail us with questions about your particular company or organization. As always, we will confidentially and directly provide answers or information you need.) Our replies to your questions are not legal advice. Instead, these replies represent our analysis of laws, rules, and regulations.

Q. I want to contribute to an acquaintance in Maryland.  I know there are pay-to-play restrictions.  What are my personal limitations?

A. Is your company “doing public business” with the state of Maryland?  “Doing public business” means having a single contract (an agreement in any form entered into by a governmental entity for a procurement) with a single governmental entity involving cumulative consideration of at least $200,000.  Governmental entity means: (1) the State, a county, a municipal corporation, or other political subdivision of the State; and (2) a unit of the State, a county, a municipal corporation, or other political subdivision of the State.

Contributions in Maryland are still permissible even though your employing organization is doing public business.  The issue is not permissibility, but whether disclosure is required.  If you are an officer or director and the contribution is $500 or more, it must be disclosed.

• Director is a member of the board of directors of a business entity
  [M.C.E.L. §14-101(g)].
• Officer includes an individual who serves as a business entity’s chief executive officer, president, vice president, secretary, treasurer, chief financial officer, managing partner, managing member, or principal or in any other formal or informal role in which the individual exercises substantial independent responsibility for managing the affairs of a business entity [M.C.E.L. §14-101(k)].

If you fall into either category, disclosure is required to the Board of Elections on May 31 and November 30.

You can directly submit questions for this feature, and we will select those most appropriate and answer them here. Send your questions to: experts@stateandfed.com.

(We are always available to answer questions from clients that are specific to your needs, and we encourage you to continue to call or e-mail us with questions about your particular company or organization. As always, we will confidentially and directly provide answers or information you need.) Our replies to your questions are not legal advice. Instead, these replies represent our analysis of laws, rules, and regulations.

Q. What are the key components for a successful government affairs compliance program?

A. We collaborate closely with our clients to create comprehensive and effective compliance programs. During this process, our clients often request guidance on best internal practices and procedures. Certainly, there is no one-size-fits-all approach—a successful compliance program will adapt seamlessly into the fabric of the corporate structure, making every program unique. Notwithstanding, here are five common components for successful government affairs compliance programs:

1. Centralized Oversight: Great compliance programs have a strong organizational structure with oversight and review vested in one dedicated team of government affairs professionals. All requests for corporate contributions, gifts, and events should be approved by the central team. There should be   one employer signatory for all state and local filings—one person who is responsible for oversight and who can attest to the accuracy of registrations and reports. This person typically has oversight of internal team activity, which affords an opportunity for a big picture overview of state and local responsibilities. The responsibility for all company reports should stay within the company—contract lobbyists typically should not be responsible for filing a company’s employer reports. Often, non-lobbyist employee activity, corporate contributions, and/or in-house corporate expenses need to be disclosed on employer reports. Contract lobbyists are not always privy to the necessary reporting information. We recommend working closely with your contract lobbyists to identify necessary reporting information (percentage of retainer dedicated to lobbying efforts, subject matter, etc.) and reviewing draft disclosure reports against company invoices to ensure accuracy in reporting.

2. Recurring Training Opportunities & Assessments: Providing adequate training opportunities for your team is necessary to ensure compliance. Ideally, this should be done on an annual basis, and completion should be required and documented. State and local requirements change quickly, as do team members. This is especially true for sales and procurement executives. We recommend a general training session or refresher course and individual follow-up to assess registration and/or reporting needs.

3. Broad Outreach Across Lines of Business and Departments: Contact with state and local government officials is usually not isolated to only the government affairs team—it can happen anywhere in your corporation, from the executive level to sales. A strong compliance program allows you to reach across lines of business and departments to ensure anyone engaging officials on behalf of your company is staying compliant with relevant rules and restrictions.

4. Clear Policies for Employee Engagement: Can you identify clear internal gift and contribution policies? Your compliance program should utilize and strengthen your existing gift, ethics, and corporate contribution policies. Ensure these policies are specific. For example, what employee activity triggers the policy? What activities are prohibited? What activities require pre-approval by your team? A well-structured compliance program will disseminate these policies companywide, and include a clear roadmap for employee compliance.

5. Open Door Policies and Procedures: In sum, you must make it easy to comply. If it’s too difficult to access information or request approval, your employees simply won’t do it. Is there an intranet, form, or a ticket system you can utilize to ensure your employees can easily access guidance? What resources do you provide to your employees?   Is there a company contact employees can reach to discuss questions or concerns? Further, there must be a fast turn-around time for questions and guidance. The longer something sits in a queue, the higher the risk for noncompliance.

In 2016, it will be more important than ever to keep a close watch on your compliance program.  Having a solid program in place will help when questions arise from the media, stockholders, and activists.

You can directly submit questions for this feature, and we will select those most appropriate and answer them here. Send your questions to: experts@stateandfed.com.

(We are always available to answer questions from clients that are specific to your needs, and we encourage you to continue to call or e-mail us with questions about your particular company or organization. As always, we will confidentially and directly provide answers or information you need.) Our replies to your questions are not legal advice. Instead, these replies represent our analysis of laws, rules, and regulations.

Q. Are there any rules that pertain to making contributions in the weeks leading up to an election?

A. With local elections in 2015 and the upcoming 2016 elections, it is wise to know what the rules are when making contributions in the days and weeks leading up to an election.  Usually, there is a monetary threshold that must be exceeded, and typically there is a short turnaround time to disclose the contribution, usually within 24 hours. In some instances, there is an outright ban on contributions.

In California, contributions of $1,000 or more per candidate made by a major donor during the 90-day period before an election must be disclosed within 24 hours of making the contribution.  Contributions to ballot measure committees and political party committees are also included within this reporting requirement.  The candidate and the ballot measure committee must be on the ballot at the election for which the 90-day period applies.  California’s 90-day pre-election period is the longest in the country.  If numerous special elections are being held, the 90-day periods may overlap.

In Washington, a contribution of $1,000 or more per candidate made by a registered lobbyist during the 21 days before an election must be disclosed within 24 hours of making the contribution.  This includes contributions to candidates and ballot measures appearing on the ballot at the election for which the 21-day period applies, as well as contributions to political party committees and PACs.  The Washington Public Disclosure Commission has a link on its home page that allows for the electronic filing of this report.

In Florida, opposed candidates must return contributions received less than five days prior to an election.

In Tennessee, a PAC is prohibited from making a contribution to a candidate for state office after the 10th day before an election until the day of the election.

These are just a few examples.  As we always advise, verify the rules in your state before making political contributions.

You can directly submit questions for this feature, and we will select those most appropriate and answer them here. Send your questions to: experts@stateandfed.com.

(We are always available to answer questions from clients that are specific to your needs, and we encourage you to continue to call or e-mail us with questions about your particular company or organization. As always, we will confidentially and directly provide answers or information you need.) Our replies to your questions are not legal advice. Instead, these replies represent our analysis of laws, rules, and regulations.