Since the guilty plea by lobbyist Jack Abramoff, Congress has been hurriedly preparing lobby and ethics reform legislation. Republicans announced their ideas at a Jan. 17 press conference that seemed mostly designed to pre-empt the unveiling of Democrats plan on Jan. 18. The Senate Democrats followed their press event with the introduction of a comprehensive bill authored by Minority Leader Harry Reid (D-NV). In our view, the Reid bill is a solid beginning, but falls short of adequately addressing the culture of corruption that surrounds Washington politics today. To follow is an analysis of the Reid bill and its impact on lobbying generally and nonprofit lobbying specifically.

While Senate and House Republican reform bills are certainly in the works, neither plan has taken shape. In fact, at their joint press conference, Republican leaders in the House and Senate appeared not to have reached full agreement on all the ideas that were advanced. Senate Majority Leader Bill Frist (R-TN) has asked Sen. Rick Santorum (R-PA) to develop the Republican plan for the Senate. Reportedly, Santorum is working from legislation drafted in December by Sen. John McCain (R-AZ). House Speaker Dennis Hastert (R-IL) has asked House Rules Committee Chairman David Drier (R-CA) to head up the Republican House proposal. Hastert has mentioned bringing a House bill to the floor in the first week of February.

The House and Senate Democrats, on the other hand, offered a unified voice on reform, presenting a set of principles including:

• Expanded lobby disclosure,

   

• An extended ban on lobbying by former members of Congress, senior congressional staff, and senior Executive Branch officials from one to two years after they have left office

   

• An end to the "pay-to-play" schemes propagated by Republicans that pressured associations and lobby firms to hire Republicans supportive of their leadership agenda and demanded campaign contributions in return for access to lawmakers.

   

• A requirement of lawmakers and senior congressional staff to disclose negotiations for private sector jobs and of Executive Branch officials seeking private employment to first receive approval from the Office of Government Ethics.

   

• A requirement that conference committee activities be done in sunlight with a 24-hour review period (except in emergencies), thus adding greater fairness and transparency to the legislative process.

   

• Strong enforcement mechanisms, such as criminal penalties for not complying with many of the new reforms. They also would require annual ethics training for all congressional staff.

The Senate Democrats followed up with a legislative proposal on Jan. 20, when Reid introduced S. 2180, the Honest Leadership and Open Government Act of 2006. The bill was co-sponsored by 34 other Democrats in the Senate, which may give it momentum.

Lawmakers are determined to pass a bill quickly, possibly as early as March 1. On Jan. 25, the Senate Homeland Security and Governmental Affairs Committee will hold a hearing on the various lobby reform proposals, including Sen. John McCain's (R-AZ) S. 2128, Sen. Russ Feingold's (D-WI) S. 1398, and Sen. Barack Obama's (D-IL) (S. 2179).

For the nonprofit sector, it is important to understand that none of the bills would restrict direct or grassroots lobbying by any organization. Instead the focus is on greater disclosure, recognizing that lobbying is a First Amendment right to be protected. Moreover, under the Lobbying Disclosure Act, which all the bills would amend, nonprofits that elect to follow the expenditure test can continue using the definitions from the tax code, with which they are already familiar.

Even if the most comprehensive bill that has been introduced is enacted, much more will be needed to stop the pervasive and corrupting influence of money in the political process. For example, none of the bills address publicly financed or clean election laws. Until Congress addresses the root problems, influence peddlers will continue to find ways to circumvent the rules.

For the nonprofit sector and those that cannot "pay to play" in the policymaking process, every change Congress makes to reduce the influence of money will help. Such efforts ensure an open and level playing field in accessing elected leaders, giving nonprofits a more equal footing as those representing moneyed interests.

Summary of Key Lobby Disclosure Provisions in the Reid Proposal

Increase in Frequency of Reporting--from Semiannual to Quarterly

Currently, organizations are required to register, under the Lobby Disclosure Act, (LDA) if its employees/lobbyists meet these two conditions:

• The organization must have one or more compensated employee who engage in federal "lobbying." LDA defines "lobbying" as more than one "lobbying contact" by a person who spends at least 20 percent of his or her time on "lobbying activities" over a six-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 lobbying contacts.

   

• An organization must spend, in total expenses for its lobbying activities, $24,500 in a 6-month period. This also includes money spent on outside lobbyists.

Organizations meeting the criteria above are required to file semi-annual reports identifying lobbyists, clients and employers, and the issues discussed in "lobbying contacts."

Under the Reid bill, the trigger for registering would change from $24,500 in a 6-month period to $10,000 in a 3-month period. Given that the registration requirements have not changed substantially, few additional nonprofits would now be required to register. Filing by lobby firms would also be shifted to quarterly filing.

Grassroots Lobbying Disclosure Requirement

The LDA currently only covers activities described as "direct lobbying," omitting any reference to "grassroots lobbying," which has grown over the years, particularly through firms that generate grassroots responses. Under Reid's legislation, grassroots lobbying would now be disclosed if the organization is required to file an LDA report. Thus, if a nonprofit is not required to register because of its direct lobbying expenditures, it would not need to disclose grassroots lobbying costs. Grassroots lobby firms, however, would be required to disclose their activities if they receive income of or spend $50,000 or more in a quarter, thereby capturing most grassroots lobbying firms under the disclosure requirements. (Firms that receive or spend $250,000 or more must report more frequently.)

Those who are required to disclose grassroots lobbying must provide an estimate of the total costs as well as the total amount related to paid advertising. Communications with members, employees, officers or shareholders are exempted under grassroots lobbying unless a lobbyist pays the organization to undertake such communications.

The Reid bill definition of grassroots lobbying is broader than the definition in the tax code that applies to charities. The bill calls grassroots lobbying any effort to get the "public to communicate their own views on an issue to Federal officials..." For those charities choosing to operate under the IRS expenditure test, grassroots lobbying has a prescribed "call to action" that only applies to attempts to influence legislation. (Charities, however, disclose grassroots lobbying at the local, state and federal level. This bill would only apply to the federal level.) However, the bill does not change the provisions of the LDA that allow charities that elect to fall under the IRS expenditure test to use IRS definitions of lobbying when filling out their LDA reports.

Coalitions

In an attempt to root out puppet coalitions being used as a front for big-money lobbying, Reid's bill would require those filing LDA reports to disclose the name, address, and principal place of business of any organization that contributes more than $10,000 to the lobbying activities semiannually and participates in the "planning, supervision or control" of such lobbying activities. However, the legislation makes an exception for the disclosure requirement if it is publicly available knowledge that the client--the original organization that hired the lobbyist--and the organization that contributed more than $10,000 in the 6-month period to the lobbying campaign are affiliated. This is true unless the organization contributing money controlled or totally planned the lobbying activities. The legislation also protects the privacy of an organization's members or donors

Campaign Contributions

With respect to campaign contributions, Reid's bill is similar to legislation, S. 2128,, recently introduced by McCain. Neither bill would prohibit campaign contributions from lobbyists, but the Reid bill would expand the LDA reporting to include information about campaign contributions from lobbyists to individuals, PACs, and party committees. Under both the Reid and McCain bill, lobbyists and lobbying firms would be required to report dates, total funds raised and recipients of funds at fundraising events.

Travel and Gifts

Currently, congressional rules prohibit lobbyists from paying for travel for members of Congress and their staff, although lobbyists may arrange travel and have their clients pay for it. Travel expenses for members of Congress and their staff can be paid for by corporations or nonprofit organizations, and the sponsor and cost of travel must be reported 30 days after the event and on annual personal financial disclosure forms.

The current limit on gifts to a member of Congress and staff is $50 per item and $100 per year from any individual. The term "gift" covers any gratuity, favor, discount, entertainment, hospitality, loan, or other item having monetary value. In particular, the term includes services, training, transportation, lodging and meals, whether provided in kind, by purchase of a ticket, payment in advance, or reimbursement after the expense has been incurred. A member or employee of Congress may accept a gift only if it is unsolicited and there is no presumption that it is in exchange for influencing a member's governmental duties.

Reid's bill bans gifts from "lobbyists" outright, but does not ban gifts from non-registered advocates.

Travel is not usually treated as a gift. Under Rule 35 of the Standing Rules of the Senate, a reimbursement to a Member, or employee from an individual (other than a registered lobbyist) for necessary transportation, lodging and related expenses for travel to a meeting, speaking engagement, fact-finding trip or similar event is not a gift prohibited by the rule, as long as it is in connection with the duties of the member or employee, and it is disclosed to the Select Committee on Ethics.

Reid's legislation does not ban travel outright. Instead it modifies Rule 35 of the Standing Rules of the Senate to state that a Member of Congress or congressional employee may go on a trip sponsored by a 501(c)(3) organization, as long as a lobbyist does not take a major role in planning or financing the trip, or participate in the trip. The charity must then provide certification to the Select Committee on Ethics that the lobbyist did not plan or attend the trip. Additionally, any 501(c)(3) organization that is affiliated with any group that lobbies before Congress is prohibited from arranging or paying for travel.

Electronic Filing/Online Database

According to the LDA, lobby disclosure forms must be made available for public inspection and copying at reasonable times. Both the Senate and House Clerk's office accepts--and now the House requires--electronic forms.

Like bills introduced by McCain, Rep. Marty Meehan (D-MA) (H.R. 2412) and Sen. Russ Feingold (D-WI) (S. 1398), Reid's bill requires electronic filing, and, like McCain's bill, requires the information be made available not more than 48 hours after a report is filed.

Reid's legislation also directs the Secretary of the Senate to maintain a free searchable database containing the information filed under LDA requirements. It does not go as far as McCain's bill, however, which requires the database also link to relevant Federal Election Commission filings.

See "Reform Must Illuminate Channels of Money, Influence" for more on the database and transparency.

Enforcement

Reid's bill establishes a Senate Office of Public Integrity to receive lobbyist disclosures with authority and resources to conduct audits to ensure compliance with the LDA. Currently, the Secretary of the Senate receives lobbyist disclosures, and it is not clear how the offices will interact. The Reid bill also gives authority to the Office of Public Integrity to refer violations to the Select Committee on Ethics and the Department of Justice (DOJ) for civil and criminal penalties.

The penalties the DOJ can hand out are also increased under Reid's bill. The civil penalties rise from $50,000 to $100,000, subject to the severity of the violation. Reid's bill would also empower the DOJ to impose criminal penalties if an individual knowingly makes defective filings, the penalty not more than 5 years and a fine. If the filings were both knowingly and corruptly defective, the penalty is upped to not more than 10 years and a fine.