Summary of the H.R. 2412, the Special Interest Lobbying and Ethics Accountability Act of 2005

On May 17, Reps. Marty Meehan (D-MA) and Rahm Emanuel (D-IL) formally filed H.R. 2412, the Special Interest Lobbying and Ethics Accountability Act (SILEA), a lobbying reform bill. The bill amends the Lobbying Disclosure Act of 1995 (LDA) and focuses on four main areas of reform: enhancing lobby disclosure, slowing the revolving door, curbing excesses in privately funded travel, and strengthening enforcement and oversight of ethics and lobbying disclosure. This summary provides background on LDA and details on the bill.

Background

The LDA was passed in 1995 to cover "professional lobbyists", who are compensated to engage in lobbying activities on behalf of an employer or client. When organizations lobby through their own staff, the organization is required to register, not the employee if the employee qualifies as a lobbyist under the LDA.

Organizations are required to register its employee/lobbyists under two conditions:

  • The organization must have one or more compensated employees who engage in "lobbying". LDA defines "lobbying" as more than one "lobbying contact" by a person who spend at least 20% of their time on "lobbying activities" over a 6 month period. A "lobbying contact" is currently defined as an oral or written communication to a covered official with respect to the formulation, modification or adoption of a law or regulation. The definition of a "lobbying activity" currently includes "lobbying contacts" and activities in support of the lobbying contacts.
  • An organization must spend, in total expenses for its lobbying activities, $22,500 in a 6 month period. This also includes money spent on an outside lobbyist.

Once the registration requirement is met, organizations are required to file semi-annual reports identifying the lobbyist, clients and employers, and the issues discussed.

The provisions of the LDA currently cover only activities described as "direct lobbying", omitting any reference to "grassroots lobbying". Direct lobbying covers communication between the lobbyist and covered officials and their staff, whereas grassroots lobbying is defined as a "call to action" , such as an action alert sent to the general public. Consequently, an organization that only engages in grassroots lobbying is not covered by the LDA. (The Meehan bill would not change this.)

Nonprofits that use the lobbying expenditure test under Section 501(h) of the Internal Revenue Code have the option, under the LDA, to use the IRS Form 990 definitions on their LDA reporting forms. This is because Form 990 requires charities to disclose direct and grassroots lobbying expenditures at the federal, state and local level under IRS definitions, and this saves them from having to calculate under a different standard. The IRS definitions are far more extensive than LDA requirements.

The Meehan Bill

The bill amends the Lobby Disclosure Act of 1995 (LDA), which requires organizations that engage in a certain amount of lobbying activity to register and file disclosure reports. It focuses on four main areas of reform: enhancing lobby disclosure, slowing the revolving door between Congress and lobbying firms, curbing excesses in privately funded travel, and strengthening enforcement and oversight of ethics and lobbying disclosure. There is no general exemption for nonprofit organizations, except for churches and their integrated auxiliaries.

Increased Disclosure

To enhance lobby disclosure, the bill would require lobbyists to file financial disclosures quarterly rather than semi-annually. Charities that use the IRS lobbying expenditure test could still file the Form 990 in lieu of the LDA forms. Other nonprofits would have to comply with the legislation's requirements.

The bill also requires electronic filing of lobbying disclosure reports. Currently, the usefulness of LDA reports is limited by their lack of timeliness. The semi-annual reports are often filed when lobbying on a bill has been completed, limiting access to information on the amounts spent on specific legislative battles. Mandatory e-filing would eliminate the lag time in data entry for the House and Senate Clerk's office.

Reports to Include Grassroots Lobbying

The legislation mandates that lobbyists that meet the LDA threshold must disclose amounts spent on grassroots lobbying. However, grassroots lobbying expenses, in any amount, would not count toward the disclosure threshold. Consequently, an organization that only conducts grassroots lobbying would not be required to disclose under LDA.

Communications by charities to their own "members, employees and shareholders" would be exempt from the reporting requirements. However, neither the LDA nor SILEA defines who constitutes a "member". Form 990 filers could ostensibly continue to use the Internal Revenue Service definition of member. Under IRS regulation 56.4911-5, a member is defined as someone that contributes more than a nominal amount of time or money to the organization. Other nonprofits could possibly use their organization's definition of membership, if the organization has so defined it.

Opponents of grassroots lobbying disclosure are concerned that the requirement would chill nonprofit's freedom of speech due to the increased financial burdens that come with increased reporting requirements. An increase in cost may preclude small nonprofits from engaging in lobbying activities. Proponents of grassroots disclosure argue increased disclosure will deter some lobbyists and clients from improper activities and expose sham nonprofits that operate as fronts for private corporate interests.

Coalition Membership Disclosure

SILEA also contains a provision to provide transparency of anonymous lobbying coalitions by requiring members of lobbying coalitions to report their involvement. This requirement is identical to a provision in H.R. 1302, the Stealth Lobbying Disclosure Act, introduced by Rep. Lloyd Doggett (D-TX) earlier this year. The provision contains a total exception for 501(c)(3) organizations. Other 501(c) organizations, such as social welfare organizations, unions and trade associations, are also exempt if they have "substantial exempt activities other than lobbying with respect to a specific issue for which it engaged the person filing the registration statement". The term "substantial" is undefined. It is unclear whether it refers to an entire subject area, such as children, or sub-topics such as child health or child nutrition.

Congressional Travel

The recent scandals involving Rep. Tom Delay (R-TX) was the impetus for requiring nonprofits, when sponsoring travel costs for a member of Congress or their staff, to submit written certification verifying that the trip was not planned or financed by a registered federal lobbyist. The legislation bans lobbyists from arranging travel for members or staff.

Increased Oversight

The legislation would direct the Government Accountability Office (GAO) to investigate and report to Congress twice annually on the enforcement of lobbying regulations. The House and Senate Clerk's Office has oversight of lobbying registering requirements, but has little enforcement power. The GAO is charged with ensuring those offices have the resources for effective oversight and enforcement.

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