Q: I am general counsel of a trade association with hundreds of
member businesses throughout the country. My question concerns the new law
requiring us to disclose the identity of any member business that “actively
participates” in planning our lobbying activities. We are struggling with this
new obligation because the term “actively participates” is so vague that it
seems virtually impossible to determine to whom it applies. I have heard that
another trade association has filed suit to challenge the legal validity of the
new law. How did the challenge come about? And, must our organization comply
while it is pending?
A: Before turning to your questions, it is worth reviewing the basic
rules of lobbying disclosure to see where this particular requirement fits in.
Broadly speaking, the Lobbying Disclosure Act requires lobbyists to file regular
reports disclosing the identity of their clients and the interests that they
represent. It also requires businesses with in-house lobbyists to file such
reports. These requirements shine sunlight on businesses’ lobbying activities.
Businesses cannot avoid this sunlight merely by conducting their lobbying
activities through another organization. Until last year, the LDA prevented this
method of eluding disclosure by requiring all lobbying organizations to disclose
the identity of any business that substantially funds their lobbying activities
and “in whole or in major part, plans, supervises or controls” those activities.
Last fall, however, Congress determined that even with this requirement some
businesses were still forming lobbying coalitions and eluding disclosure.
Congress therefore broadened the disclosure obligation to require organizations
to identify any member business that substantially funds their lobbying
activities and “actively participates” in the planning, supervision or control
of such activities. The stated purpose of this change was to close “a loophole
that ... allowed so-called ‘stealth coalitions,’ often with innocuous-sounding
names, to operate without identifying the interests engaged in the lobbying
Whether Congress intended to target trade associations, the new law does
raise tricky questions. The challenge now is to determine which, if any, of your
member businesses qualify as “actively participating” in lobbying activities.
This is particularly difficult not just because of the vagueness of “actively
participates,” but also because of the somewhat vague definition of “lobbying
activities,” which covers efforts in support of your “lobbying contacts”
(another defined term), including “preparation or planning activities, research
and other background work” intended for use in such contacts.
Associations that would prefer not to attempt the perplexing task of
determining which members qualify as “actively participating” in “lobbying
activities” have an alternative. An organization is excused from the disclosure
requirement if it simply lists all of its members on the Internet.
Last November, three trade associations that apparently were not enthused
with this option jointly sent a letter seeking guidance from the Secretary of
the Senate and the Clerk of the House. The Senate Secretary and the House Clerk
thereafter issued the requested guidance, which states that “actively
participating” means “engaging directly” and provides examples. These include
participating in decisions about selecting lobbyists and formulating lobbying
priorities and strategies. Conversely, they said, a member does not “actively
participate” when it merely plays a “passive role” in lobbying activities.
Examples include “occasionally” responding to requests for information in
support of lobbying activities or expressing an opinion regarding legislative
goals through means generally “on par with” all other members.
At least one of the three associations that had sent the letter, the National
Association of Manufacturers, was so dissatisfied with the guidance that it
filed suit. The suit argues that the disclosure requirement impermissibly
burdens the First Amendment rights of freedom of speech, assembly and
petitioning the government to redress grievances. The argument that may have the
best chance of success, however, is that the language is unconstitutionally
The NAM argues not only that the term “actively participates” is vague but
also that the term “lobbying activities” is. This latter argument faces a
challenge because the term “lobbying activities” implicates so many other
reporting requirements that have been in place since 1995. If the term is
unconstitutionally vague, it is fair to ask how lobbying firms have managed to
file reports for the past 12 years. Moreover, the fact that the term “lobbying
activities” is so important to the LDA’s requirements means that, if the NAM’s
challenge of that language were to prevail, the court’s decision would
essentially gut the LDA and force Congress to start over.
One could argue that the very fact that the Senate and House provided such
detailed guidance illustrates not that the language is clear, but rather just
the opposite. Otherwise, why would such detailed guidance be necessary?
Moreover, the guidance is of limited relevance to the language of the
requirement itself given that the guidance explicitly states that it does not
bind the very official responsible for enforcing the requirement: the U.S.
Attorney for the District of Columbia.
All of this, while pertinent to how we got here and where the law might go
next, still leaves your second question of whether you must comply in the
meantime. Yes, you must. The fact that a court might strike down the new
requirement is not a sufficient reason to ignore the law as it is currently
written. And, the first report is due April 20. So, if you don’t want to post a
list of all of your members, you should do whatever you can to determine which
of your business members you must identify on your disclosure report. This could
take a lot of work at substantial cost. However, the newly heightened civil and
criminal penalties for noncompliance mean the cost of not doing the work could
be even greater.
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