In a Dec. 30, 2006 letter to Public Citizen, American Target Advertising, Inc. explains its opposition to legislation that would require disclosure of big money grassroots lobbying campaigns on federal legislation (S.1 ). The letter gives some examples that misstate what the bill would do and are contrary to the stated intentions of the bill's sponsors. To reduce the confusion we have provided alternative answers to the hypothetical questions American Target Advertising (ATA) poses in its letter. Updated Jan. 18, 2007: More Myths and Facts If the language in the bill needs clarification to make this clear, we encourage ATA to make recommended changes, rather than oppose the entire concept of transparency about who is involved in campaigns to influence federal legislation. ATA Hypothetical #1 A small nonprofit organization consisting of three paid employees has one issue, and that is to increase the corporate income tax. They rely entirely on small-dollar contributions from the general public, none of which exceeds $500. They send a letter to two United States senators urging an increase in the corporate income tax. They next email more than 500 citizens explaining their reasons for supporting an increase in the corporate income tax, and suggest that citizens contact their Members of Congress. Myth: ATA Answer: This little grassroots organization would, under your bill, be required to register and report quarterly to Congress under the lobbying disclosure law, identifying who they are, how much they spent, which members of Congress their efforts were directed to, and other information. Fact: OMB Watch Answer: This group would not have to register and report its grassroots lobbying expenditures just because it makes two lobbying contacts and communicates with more than 500 people using email. The group would only have to register if:

• one or more of its employees spends more than 20 percent of his or her time on direct lobbying in a six month period and
• the group spends $24,500 semi-annually on direct lobbying activities (which the Democrats are proposing to change to $10,000 per quarter).

It is correct, as ATA notes, that the bill would consider grassroots lobbying activities as "lobbying activities." However, the Lobbying Disclosure Act is clear that groups must meet the above criteria before registering. Additionally, S. 1 specifically indicates that grassroots lobbying expenditures are not to be counted in determining lobbying expenditures for purposes of registering. Even for groups that must register under the Lobbying Disclosure Act, the sponsors of the bill intended that groups must spend more than $25,000 per quarter on grassroots lobbying activities before reporting such activity. We agree that the language could be strengthened to clarify this intent. However, the bill is clear that communications with less than 500 people or with members should not be counted as a grassroots lobbying expense. ATA Hypothetical #2 Next, this grassroots organization has cobbled together enough money to hire a public relations agent to write and place two full-page ads in The Sunday New York Times. The ads simply say, "Contact your representatives and tell them to increase the corporate income tax because corporations can afford it" The PR agent is retained to expend more than the dollar threshold of what your bill defines as a "grassroots lobbying firm". The PR agent makes no contact with Congress, and spends less than 20 percent of his time writing and placing this simple ad, thus does not fit any of the criteria of a "lobbyist." Myth: ATA Answer: Nevertheless, the PR agent must also register with Congress under the lobbying disclosure law, reporting who his client is, which Members of Congress the effort is direct towards, and other information. Fact: OMB Watch Answer: According to the hypothetical facts, this PR firm has spent more than $25,000 in a quarter on grassroots lobbying for clients. It is assumed that the grassroots lobbying activity is conducted as part of lobbying activities, as defined under the Lobbying Disclosure Act. As a result, ATA is correct that the PR firm would have to register and report the expenditure. It would not, however, have to report which Members of Congress the effort is directed toward. S. 1 specifically exempts the grassroots lobbying report from disclosing which house of Congress or federal agency the effort is aimed at or a list of employees acting on their behalf. They would be required to report the identity of their client, the issues they lobbied on, and provide bill numbers if it is practical to do so. Note that the client that hires the PR firm does not have to register and report. They are identified in the PR firm's report, so the public would know who is behind this full page ad. ATA Hypothetical #3 One senator introduces a bill to increase the corporate income tax. All 500 of the Fortune 500 Companies decide to oppose the bill. Each of them hires a lobbyist, some of whom are former Members of Congress, agreeing to pay each lobbyist $1 million apiece. Each of the Fortune 500 Companies instructs their respective lobbyist to spend less than 20 percent of their time on this lobbying project, thereby avoiding the definition of "lobbyist" in 2 U.S.C. 1602(10). The lobbyists are given one instruction: tell Members that if they vote to increase the corporate income tax, they will never receive another dollar of support. Myth: ATA Answer: So there is $500 million spent by corporations not reported. Fact: OMB Watch Answer: ATA has overstated the case. Assuming the companies have hired the lobbyists as staff, the definition of "lobbyist" in LDA only exempts employees that spend less the 20 percent of their time for "services provided by such individual to that client over a six month period." Even though the Fortune 500 companies instruct each lobbyist not to spend 20 percent of their time on this campaign, it would be shocking to find a full time lobbyist (and pay them $1 million) that was not spending 20 percent of their time on lobbying activities within a six-month period. The Lobbying Disclosure Act requires registration if the person spends 20 percent of his or her activities on all of the combined lobbying activities, not just one campaign. Nonetheless, the ATA hypothetical, although unlikely to occur in reality, would be accurate about nonreporting, but inaccurate on the amount of money involved. In the unlikely facts ATA has presented, the Fortune 500 Companies ar paying these lobbyists 80 percent of $1 million to do something unrelated to lobbying. If each lobbyist spends 19 percent of their time on the campaign, the lobbying portion of their salary would be $190,000 each. This would result in $95 million spent but not reported, not $500 million as claimed by ATA. This is an issue relating to the direct lobbying portions of the Lobbying Disclosure Act, and should be debated separately. Nothing in the grassroots lobbying provision of S. 1 has any bearing on this hypothetical. Although modified slightly over the years, the laws and rules regarding the hypothetical provided have been in place since 1995 — and no one has complained. ATA Hypothetical #4 Under the corporate loophole in your bill, corporations will be allowed to spend unlimited money communicating to their shareholders, employees and officers yet not report. The Fortune 500 Companies spend collectively tens of millions of dollars warning shareholders that an increase in the corporate income tax will result in smaller earnings, and that employees cannot expect salary increases if the bill passes. Myth: ATA Answer: These unreported communication expenditures urge collectively millions of citizens to write Congress to oppose an increase in the corporate income tax. Fact: OMB Watch Answer: The exemption ATA refers to in this situation is meant to protect communications between organizations, their members, officers, employees and shareholders. ATA conveniently fails to mention that any nonprofit with members also can benefit from this exemption. For example, ATA's client organizations could spend millions of dollars urging their members to support the increase in the corporate income tax without any disclosure. As the debate on proposed grassroots lobbying disclosure becomes more heated, the inaccurate examples of its impact on free speech are expanding. Here is the latest we've heard: More Myths and Facts Myth A "political blogger" that has paid advertising on his/her site would have to register and report under LDA if any of his/her messages involved a call to action on federal legislation. Fact Payments for advertising do not constitute "paid efforts to stimulate grassroots lobbying" just because the ad appears next to a blog posting advocating on federal legislation. The blogger would only have to register if:

• The content of the ad contains a grassroots lobbying message AND the blogger accepts fees in excess of $25,000 from others for grassroots lobbying messages in a calendar quarter
• The blogging is part of his/her paid employment and the blogger otherwise engages in direct lobbying that meets the threshold for registration under the Lobbying Disclosure Act.