A Question of Ethics

Who is Picking Up the Tab for Sunday Brunch?

February 20, 2007

Q: I am a staff member of the House Appropriations Committee. After church last Sunday, my husband and I chatted with a married couple who are new to the area. They were both very nice, so we invited them to brunch at a diner where my husband and I go every week after church. When the check came, which was $65 for the four of us, the husband, Jason, insisted on paying, despite our objection. I noticed that he initially tried to use a corporate credit card but then switched because the diner only accepts cash. My question is this: I know that the new rules forbid accepting gifts from lobbyists and from companies that retain lobbyists. However, Jason is not a lobbyist, and I am not aware that the company Jason works for retains any lobbyists. I thought it would have been impolite to ask. Was it OK for Jason to pay?

A: Before the recent amendments to the gift rule, Jason’s gesture would not have raised a problem. Under the old gift rule, it was permissible to accept gifts worth less than $50, regardless of the source. Because you and your husband’s share of the $65 brunch was presumably less than $50, you would have been in the clear.

However, the recent amendments change the analysis by eliminating the $50 exception for companies that retain lobbyists. Specifically, the new gift rule provides that, with some exceptions, you may not “knowingly accept a gift from … a private entity that retains or employs registered lobbyists.”

Your question raises the two trickiest aspects of the new rule regarding gifts from companies. The first is determining when a gift is “from” a company. The second is the relevance of a recipient’s knowledge about the source of a gift.

As to the first question, the gift is either from Jason personally, or it is from the company where he works. This is important because if the gift were from Jason personally, you wouldn’t need to worry about whether the company employs lobbyists. The new rule would still allow you to accept the gift, assuming Jason was not trying to evade the rule.

So who is the gift from? A recent ethics committee memorandum regarding the gift rule amendments states that a gift is from a company if it is paid for with company funds, such as a corporate credit card. Although Jason used his own money here, that was only after a failed attempt to use a corporate credit card. Therefore, it is possible that he later obtained reimbursement from the company, in which case the gift would have been from the company.

If the gift was from the company, the next question is the relevance of your knowledge of this fact, as well as whether the company “retains or employs” lobbyists. For example, what if the company paid for the gift but you didn’t know? In addition, while you say you are not aware that the company retains lobbyists, what if you’re wrong? Would that matter? Or does your lack of knowledge protect you from a violation?

The rule is not clear on these points, and the committee has not provided much guidance. Until it does so, one can only speculate about how it would interpret the rule.

It is possible, I suppose, that the committee might adopt the strictest interpretation of the rule. That is, a violation would exist anytime you accept a gift from a company that happens to employ or retain lobbyists, regardless of your knowledge of these facts. However, this would impose a strict duty of inquiry upon gift recipients. By accepting a gift, the recipient would be taking the chance that the source is not a company that retains or employs lobbyists. Therefore, before accepting a gift, the recipient would need to take all steps necessary to be certain that this is not the case.

Another consequence of the strictest approach is that it would highlight the ambiguity of the phrase “employ or retain” lobbyists. What does it mean for a company to “retain” a lobbyist? What if the company once retained lobbyists but recently stopped doing so? What if the company only retains lobbyists from time to time, as the need arises?

The strictest interpretation does seem at odds, however, with the language of the rule, which forbids Members and staff from “knowingly” accepting a gift from a company that retains lobbyists. So, to adopt this interpretation, the committee would have to conclude that “knowingly” applies to accepting the gift but does not apply to the fact that it is from a company that retains lobbyists. This seems unlikely.

On the other hand, a completely relaxed interpretation of the rule seems no more likely. Under such an interpretation, it would be a violation only if you clearly knew that the source of a gift was a company that employs or retains lobbyists. Great, but the problem is that Members and staff could avoid violations simply by keeping themselves in the dark. The House’s general requirement that Members and staff adhere to the spirit of the rules, as well as the committee’s recent instruction to avoid “narrow, technical readings” of the gift rule, both suggest that the committee will not adopt this interpretation either.

Ultimately, a sensible approach probably lies somewhere in the middle. On the one hand, recipients should not be strictly liable in situations in which they did not know that the gift was from a company that employs or retains lobbyists. After all, if a recipient is unaware that the source of a gift is a company with lobbyists, there is little risk that the company’s lobbyists will receive undue influence in exchange for the gift. On the other hand, Members should not be able to escape liability simply by keeping themselves ignorant of the fact that a company has lobbyists.

Where does this leave us regarding the brunch with Jason and his wife? It seems unlikely that the rule was designed to prohibit a brunch with new friends. However, given the ambiguity of the rule, one cannot be sure. The committee has recently advised that Members and staff should consult with the committee with questions before accepting any gift. Until the committee clarifies the new rule regarding gifts from companies, the safest course is to do as they say and take questions like yours to the committee.

© Copyright 2007, Roll Call Inc. Reprinted with permission. Widely regarded as the leading publication for Congressional news and information, Roll Call has been the newspaper of Capitol Hill since 1955. For more information, visit www.rollcall.com.


A Question of Ethics

Ethics Pitfalls Lie in Impromptu Super Bowl Gesture

February 5, 2007

Q: I am a Senator who has spent years working to increase federal funding for cancer research. At a cancer fundraiser last week, a former NFL star from the state I represent, whom I’d never met before, said that he wanted me to have two tickets to the Super Bowl that the NFL had given him. I declined the tickets, but told him that he should give them instead to a boy from our state who was recently diagnosed with a very rare form of cancer and is a big fan of one of the Super Bowl teams. The boy is the son of a friend of the family, and his story has been on the local news.

“What a Senator wants, a Senator gets,” the player said. He gave the tickets to the boy, and the boy was elated. However, I ran all of this by a senior aide in my office, and she said that I may have an issue under the ethics rules. I don’t think that’s right because I didn’t accept the tickets. Who is right?

A: Unfortunately, your aide is right. In fact, your question is a useful reminder that the road to an ethics violation is sometimes paved with good intentions.

The Senate Gifts Rule, Standing Rule 35, is a general prohibition upon Members accepting a gift of any kind, unless the gift falls into one of the 23 categories of exceptions. So, to determine whether a particular course of conduct runs afoul of the rule, there are always two questions to ask. First, does the conduct qualify as accepting a gift? And, second, do any of the exceptions apply?

One might think that the first question is easy here. After all, while it is clear that you have been offered a gift, you declined. How could that possibly qualify as accepting a gift?

Well, it doesn’t. And, up until that point, you were fine. It’s what you did next that, however well-intentioned, may have exposed you to trouble.

A gift to a person other than a Member can sometimes count as a gift to the lawmaker. This is true where: 1) the gift was given with the knowledge and acquiescence of the Member and 2) the Member has reason to believe the gift was given because of his or her official position.

Here, it is difficult to argue that these criteria are not met. After all, the former player gave the tickets to the boy at your suggestion. Thus, you surely acquiesced in the gift. And, from the former player’s response, you had reason to believe that the gift was given to the boy because of your position.

The next question, then, is whether any of the exceptions apply. Unfortunately, they don’t. At least not at the moment. By that I mean there still may be the opportunity to make one applicable.

There are two exceptions worth considering. The first applies to “anything for which, in an unusual case, a waiver is granted” by the Ethics Committee. Although a Senator typically would seek a waiver from the committee before receiving a gift, it might be worth requesting a waiver now, if for no other reason than your case really does seem “unusual.”

The other exception to consider applies to anything that the Senator promptly returns or for which he or she reimburses the donor. Given that the game was Sunday, it is too late for the boy to return the tickets. However, you still can cure your potential violation if you or the boy’s family reimburses the former player.

This leads to one last tricky question. How much? For a start, the fact that the former player himself received the tickets free of charge almost certainly is not relevant. Generally, the amount that the donor paid for a gift is not conclusive regarding the amount you must reimburse. Rather, the focus is on the fair market value of the gift.

As for the market value of the tickets, a recently enacted amendment to Senate Rule 35 would seem to be right on point. It provides that the market value of a ticket to a sporting event is the face value of the ticket.

However, because it is nearly impossible to buy Super Bowl tickets at face value, it could be argued that such tickets should be a special case. This year, Super Bowl tickets with a face value of $600 were being sold by ticket brokers for an average price of about $3,000. Therefore, one might ask, isn’t the “fair market value” of the ticket really $3,000? If so, wouldn’t it provide an end-around to avoid the gift rules if the committee were to treat just the face value of Super Bowl tickets as the fair market value? Wouldn’t it allow people looking to purchase legislative influence to “sell” Super Bowl tickets to Members at a fraction of what the rest of the public pays? In the case of the $600 tickets, couldn’t someone buy them for $3,000 and then provide them to a Member for $600?

While these are all good questions, the new Senate rule that sports tickets should be valued at their face value, as it is written, does not make any exception for events where tickets are scarce. Therefore, the rule suggests that you can reimburse the player the face value of the tickets, not the price that brokers were charging for the tickets. However, just to be sure, I still would consider seeking guidance from the committee. After all, if you do, the committee might even conclude this is an unusual case justifying a waiver, in which case you won’t have to pay anything at all.

© Copyright 2007, Roll Call Inc. Reprinted with permission. Widely regarded as the leading publication for Congressional news and information, Roll Call has been the newspaper of Capitol Hill since 1955. For more information, visit www.rollcall.com.