Q: Our organization is under the impression that we don’t have to register as lobbyists at the Federal level if we keep our lobbying activity isolated to our internal employees and don’t hire outside consultants.  I don’t think this is accurate.  Can you let me know the registration requirement for federal lobbying?

A: You are correct to be skeptical of this viewpoint.  Keeping lobbying activity isolated to in-house personnel does not impact the need to register.  Registration at the federal level is based on three criteria.  All three must be met in order to warrant registration, or, stated differently, registration is required when all three criteria are met.  The criteria are:

1. An organization spends or is expected to spend at least $14,000 on lobbying activity during a quarterly period;
2. An organization has at least one employee who spends 20% of their time engaged in lobbying activity; and
3. That same 20% employee makes more than one lobbying contact.

When considering whether the monetary threshold has been met, all expenses must be considered including, compensation and reimbursed expenses associated with lobbying activities of all employees (not just designated “government relations” employees), overhead, payments to outside lobbyists and the portion of any dues paid to outside membership organization that are allocated toward lobbying.  Likewise, when determining whether an individual employee meets the 20% standard, all time engaged in any activity that is intended to support lobbying contacts must be considered including background and prepatory work, research, strategy sessions and conversations inside and outside the organization.

Once your organization meets all three thresholds, registration with the House and Senate is required within 45 days.  As a federal registrant, quarterly activity reporting is required as well as semi-annual contribution reporting.

The U.S. Government Accountability Office (GAO) released its audit of federal lobbying compliance for 2021.

For the audit, the GAO reviewed a random sample of 98 quarterly disclosure reports filed for the third and fourth quarters of calendar year 2020 and the first and second quarters of calendar year 2021. They also reviewed random samples of 160 LD-203 reports for the year-end 2020 and midyear 2021 reports.

Among its findings, the GAO concluded 97  percent of filers of lobbying disclosure reports were able to provide documentation to support reported income and expenses, 7 percent of LD-203 reports were missing reportable contributions, and 92 percent of lobbyists who filed new registrations also filed LD-2 reports as required for the quarter in which they first registered.

The audit estimates at least 35 percent of all lobbying disclosure reports did not properly disclose formerly held covered positions.

The 57-page report, released on April 1, is titled “2021 Lobbying Disclosure: Observations on Lobbyists’ Compliance with Disclosure Requirements.“

On March 17, a comprehensive bill aimed at reforming U.S. campaign finance, lobbying, and ethics laws, and improving voter rights and election integrity, was introduced in the U.S. Senate. The sweeping bill, Senate Bill 1, For the People Act of 2021, is companion legislation to House Bill 1, which passed the House on March 3. That bill, also called the For the People Act of 2021, was received in the Senate on March 11.

The bill would require the registration as a federal lobbyist for those counseling in support of lobbying contacts; require super PACs, 501(c)4 groups and other organizations spending money in elections and on judicial nominations to disclose donors who contribute more than $10,000; and, under the definitions of the Federal Election Campaign Act, add “paid internet or paid digital communication” to the definition of public communication and add “qualified internet or digital communication” to the definition of electioneering communication.

The bill creates a reporting requirement under campaign finance laws for disclosing certain foreign contacts and creates an obligation for political committees to notify the Federal Bureau of Investigation and the Federal Election Commission of those contacts. It also prohibits foreign nationals from participating in decision-making about contributions or expenditures by corporations and other entities; prohibits the establishment of a corporation to conceal election contributions and donations by foreign nationals; and requires foreign agents to disclose transactions involving things of financial value conferred on officeholders.

The bill defines the prohibited coordination between campaigns and super PACs, includes creating a “coordinated spender” category in the law to ensure single-candidate super PACs do not operate as arms of candidates, and defines the prohibited coordination between campaigns and super PACs. The bill would repeal existing prohibitions on the Securities and Exchange Commission from finalizing rules to afford shareholders the opportunity to know about the political spending of publicly traded companies and would require shareholder authorization before a public company may make certain political expenditures. It would also repeal existing prohibitions on the executive branch from promulgating rules to require government contractors to disclose all of their political spending.

The bill requires presidential inauguration committees to disclose their expenditures, limits aggregate contributions, and restricts funds being used for purposes unrelated to an inauguration. Additional measures in the bill include a publicly financed 6-1 matching system on small-dollar donations for Senate and presidential candidates, more ethics changes to the executive branch, and substantial changes to federal election law and voter rights.

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. 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. We recently hired a lobbyist that is coming to our company directly from spending a number of years as a Senate staffer.  What restrictions should we be aware of as her new employer in terms of who she can contact on the Hill?

A. Both the House and the Senate have post-employment restrictions for certain individuals leaving their employment on the Hill.  Importantly, the House and Senate ethics committees will discuss with the staffer prior to his or her departure the restrictions under which he or she must operate.  That said, as her new employer you should definitely be aware of what restrictions are applicable to her situation so neither the company nor she violates the rules.

For the Senate, senior staff (currently defined as individuals whose annual salary is $130,500 or more) are subject to a one-year, Senate-wide ban.  Essentially, senior staff leaving the Senate may not lobby the entire Senate for one year following their departure – this includes lobbying contact with personal, committee, and leadership offices.  Staff making less than $130,500 a year are subject to a one year ban from lobbying their particular office – whether personal, committee, or leadership office.

The House restriction for senior staff is a one year ban from lobbying the particular office for which the former staffer worked and there is no ban in the House for staffers making less than $130,500.

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 organization is under the impression that we don’t have to register as lobbyists at the federal level if we keep our lobbying activity isolated to our internal employees.  I don’t think this is accurate.  Can you let me know the registration requirement for federal lobbying?

A. You are correct to be skeptical of this viewpoint.  Keeping lobbying activity isolated to in-house personnel does not impact the need to register.  Registration at the federal level is based on three criteria.  All three must be met in order to warrant registration, or, stated differently, registration is required when all three criteria are met.  The criteria are:

1. An organization spends or is expected to spend at least $12,500 on lobbying activity during a quarterly period;
2. An organization has at least one employee who spends 20 percent of his or her time engaged in lobbying activity; and
3. That same 20 percent employee makes more than one lobbying contact.

When considering whether the monetary threshold has been met, all expenses must be considered, including, compensation and reimbursed expenses associated with lobbying activities of all employees, overhead, payments to outside lobbyists, and the portion of any dues paid to outside membership organizations that are allocated toward lobbying.  Likewise, when determining whether an individual employee meets the 20 percent standard, all time engaged in any activity that is intended to support lobbying contacts must be considered including background and preparatory work, research, strategy sessions and conversations.

Once your organization meets all three thresholds, registration with the House and Senate is required within 45 days.  As a federal registrant, quarterly activity reporting is required as well as semiannual contribution reporting.

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.