A Question of Ethics

May Lobbyists Still Host Campaign Fundraisers?

March 23, 2009

Q: As a lobbyist in the Washington, D.C., area for many years, I have frequently hosted fundraisers for Congressional campaigns. I am a one-man operation, and these events have been one of my most reliable ways to network with Members and staffers. I am trying to determine whether the recent efforts to crack down on lobbyists’ interactions with Members require me to discontinue these fundraisers. In particular, I know that there a new rules concerning funds raised by lobbyists. Do these rules prohibit me from hosting fundraisers for Members’ campaigns?

A: Your question is very timely. Just last month, the Federal Election Commission published new rules requiring campaign committees to disclose funds raised by lobbyists. Their stated purpose is to make transparent the influence that lobbyists such as yourself might gain by fundraising on behalf of a campaign committee.

The rules implement requirements set forth in Section 204 of the Honest Leadership and Open Government Act of 2007. Even before the HLOGA, campaign committees were required to identify people who personally made large contributions. Now, under Section 204 of the HLOGA, campaign committees must also identify lobbyists who raise contributions from other people as well. The requirements apply to federal candidate committees, leadership PACs and party committees. A committee’s disclosure requirement is triggered if, during a given six-month period, it receives more than $16,000 in contributions that were “bundled” by a lobbyist. Contributions made personally by a lobbyist do not count toward the limit.

So, what does it mean for contributions to be “bundled”? Under the rules, there are two ways that funds can qualify as being bundled. The first is when a lobbyist “forwards” contributions directly to the committee. To be forwarded means to be delivered or transmitted by the lobbyist, whether physically or electronically. Therefore, if, during a relevant period, a lobbyist delivers or transmits more than $16,000 to a committee, the committee must publicly disclose the amount and the name of the lobbyist.

The second type of bundled contribution is one that the committee “credits” to a lobbyist. This occurs when, through records, designation or some other means, the committee recognizes the lobbyist as being responsible for raising the contribution. The rules include a nonexhaustive list of ways in which a committee might recognize the lobbyist.

For example, a committee “credits” a lobbyist when it gives the lobbyist a title, such as “ranger,” corresponding to the amount of funds the lobbyist raised. Another way for a committee to credit the lobbyist is to provide access to certain exclusive events or activities as a result of the contributions.

In addition, if the committee maintains a tracking identifier or any other record tying the contribution to a particular lobbyist, this may qualify as crediting the contribution to the lobbyist. One more example of crediting described in the rules is a memento, such as a photograph or autographed book.

In all of these cases, the rules stress that the focus is on how the committee views the contributions — not how the lobbyist views them. If the committee takes some action to credit the contribution to the lobbyist, then it qualifies as being bundled.

So, how do these rules apply to your fundraisers? Most importantly, the mere fact that a lobbyist hosts a fundraiser does not mean that the committee must treat all contributions from the fundraiser as having been “bundled’ by the host lobbyist.

Rather, the rules say contributions received at the lobbyist’s fundraiser are bundled only if they fall under the circumstances described above. That is, they qualify if the lobbyist forwarded the funds or was credited for them. Therefore, at the events that you host, the funds raised do not count as bundled contributions unless you forward the funds to the committee or you are somehow credited by the committee.

Suppose, for example, you host a campaign fundraiser where the attendees donate $100,000, well above the $16,000 threshold at which disclosure is triggered. Suppose also that you do not forward the funds to the committee, but rather the attendees make the contributions personally. In this circumstance, the committee would not be required to disclose your identity unless it credited you in some way for the funds raised.

In sum, the new rules do not prohibit your fundraisers. In fact, the new rules are not a prohibition at all. Rather, they are a disclosure requirement. So, even if you were to bundle $100,000 of contributions for a committee during one of your fundraisers, this would not mean that you would be breaking the law. Rather, it would mean that the committee receiving the contributions would be required to disclose the fact that you had bundled $100,000 for the committee.

So if you don’t mind the world knowing about your fundraising efforts, fundraise away.

© Copyright 2009, 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

May Companies Host Members of Congress for Meals?

March 9, 2009

Q: I am hoping that you can settle a disagreement my brother and I have been having about providing meals for Members of Congress. I work for a lobbying firm in Washington, D.C., and my brother is an executive for a poultry company in Indiana. He recently told me that every year his company receives an official visit from the Representative in his district. The Representative tours the facility, and the company then treats him to a traditional on-site chicken dinner with company employees.

This surprised me. At our lobbying firm, our attorneys are always reminding us that we may not buy a meal for a Member, even during a visit to our office. They say there are certain events where we can serve Members light food and drink, but that we can never serve them meals. Who is right — me or my brother?

A: I have good news. You are both right. Believe it or not, in the circumstances you describe, your brother’s company may host a Member for dinner, but your lobbying firm may not. Here’s why.

As you are no doubt aware, in recent years there has been ever- increasing scrutiny of lobbyists and their interactions with Members. The result is that in many cases House ethics rules are stricter for lobbyists than they are for everyone else. You have presented just such a case.

Generally, the gift rule prohibits Members and staffers from receiving anything of value unless an exception applies. Given the breadth of the prohibition, however, there is a long list of exceptions. In most cases, these are designed to prevent the rule from intruding too far into the everyday lives of Members and staffers.

The exception that you appear to have in mind is the one allowing Members to accept light food and refreshments at certain events. Sometimes referred to as the “toothpick rule,” the exception applies only to “food or refreshments of a nominal value,” and it explicitly excludes any food offered as “part of a meal.” This restriction may explain your attorneys’ advice. And, they are right. Unless some other exception applies, the rules generally prohibit meals from being provided to Members or staffers. Neither your firm nor your brother’s could provide a meal to a Member under the toothpick rule.

However, there is another exception that is relevant here — one that applies to your brother’s company but not to your firm. It is a specific application of a general exception allowing Members to receive anything for which a waiver is granted by the House Committee on Standards of Official Conduct. Under this exception, the ethics committee has issued a general waiver allowing Members to accept a meal from a business when it is “incident to a visit to a business site.” To qualify for the waiver, the meal must be during an official Member visit to a business site, offered by management of the site being visited, on the business’s premises and in a group setting with employees of the organization. In your brother’s case, all of these criteria appear to be met, so the meal provided by his company does not violate the rules.

According to the House Ethics Manual, the reasoning behind this waiver is that, during the course of Members’ taking official visits at House expense, they are sometimes offered the courtesy of a de minimis amount of food. The manual states that “the acceptance of such occasional, incidental courtesies does not violate the spirit of the gift rule.”

Given this reasoning and the waiver’s criteria, you might think that your lobbying firm would qualify as well. After all, your firm is just as capable of meeting the criteria. And, if occasional, incidental courtesies from a poultry company don’t violate the spirit of the gift rule, why would the spirit of the rule be violated if the same courtesies were extended by a lobbying firm?

Unfortunately for your firm, it doesn’t qualify. The Ethics Manual specifically excludes Washington-area offices of lobbying or law firms from the scope of the waiver. While the committee does not explain why it singles out these D.C. firms, the reason may have to do with fact that the meal must be “incidental to legitimate official activity.” The committee may have concluded that Members should rarely take official visits to D.C. law and lobbying firms, and that to allow the waiver for such visits would be to risk abuse of the waiver.

Ultimately, whatever the committee’s reasoning may be, the result is clear. Under the terms of the waiver, your brother’s company may host a Member for a meal during an official visit, but your lobbying firm may not.

© Copyright 2009, 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.