# Regulating Interest Groups

## Regulating Congressional Lobbyists

Generally, the United States requires systematic disclosure of lobbying in all branches of government, including in Congress.

### Learning Objectives

Describe the key difficulties that make the regulation of lobbying activity challenging

### Key Takeaways

#### Key Points

• The rules often specify how much a lobbyist can spend on specific activities, and how to report expenses; many of the laws and guidelines are specified in the Lobbying Disclosure Act of 1995.
• Sometimes defining clearly who is a "lobbyist" and what precisely are lobbying activities can be difficult.
• The legal ramifications of lobbying are further inter-tangled with aspects of campaign finance reform, since lobbyists often spend time seeking donations for the reelection efforts of congresspersons; sorting out these issues can pose ethical challenges.
• Supporters for regulating lobbying hold the view that existing regulations designed to rein in the excesses of lobbying have not been effective, and that reforms and regulations have not cleaned up the system "at all".
• Laws requiring disclosure have been more prevalent in the twentieth century.

#### Key Terms

• lobbyist: A person remunerated to persuade (to lobby) politicians to vote in a certain way or otherwise use their office to effect a desired result.
• disclosure: The act of revealing something

The United States generally requires a systematic disclosure of lobbying, and it may be one of the few countries to have such extensive requirements. Disclosure in one sense allows lobbyists and public officials to justify their actions under the banner of openness and with full compliance of the law. The rules often specify how much a lobbyist can spend on specific activities, and how to report expenses. Many of the laws and guidelines are specified in the Lobbying Disclosure Act of 1995.

Clearly defining who is a "lobbyist" and what precisely are lobbying activities can sometimes be difficult. According to the Lobbying Disclosure Act, several authorized definitions include: Lobbying activities means "lobbying contacts and efforts in support of such contacts, including preparation and planning activities, research and other background work that is intended, at the time it is performed, for use in contacts, and coordination with the lobbying activities of others. " Lobbying contact means "any oral or written communication (including an electronic communication) to a covered executive branch official or a covered legislative branch official."

Distinguishing lobbyists from a strategic adviser can still be difficult, since the duties of each can often overlap and are hard to define precisely. There have been issues raised about what constitutes the difference between a lobbyist and a bundler. One report described bundlers as "supporters who contribute their own money to a campaign and solicit it from others. " There was a question whether such persons were really lobbyists involved with raising campaign monies for the election of Barack Obama, and whether Obama had broken his own pledge not to receive money from lobbyists.

The legal ramifications of lobbying are further inter-tangled with aspects of campaign finance reform, since lobbyists often spend time seeking donations for the reelection efforts of congresspersons. Sorting out these issues can pose ethical challenges. There are numerous regulations governing the practice of lobbying, often ones requiring transparency and disclosure. People paid to lobby must register with the secretary of the Senate and the clerk of the House of Representatives within 45 days of contacting a legislator for the first time, or 45 days after being employed. An exception is that lobbyists who earn less than $3,000 per client for each fiscal quarter, or whose total lobbying expenses are less than$11,500 each quarter, do not need to register. Part-time lobbyists are exempt from registering unless they spend more than 20% of their working hours doing lobbying activities in any quarter. If lobbyists have two or more contacts with a legislator as a lobbyist, then they must register. Requirements for registering also apply to companies that specialize in lobbying, or ones that have an in-house lobbyist, particularly if they spend more than $11,500 on lobbying. Laws requiring disclosure have been more prevalent in the twentieth century. In 1946, there was a so-called "sunshine law" requiring lobbyists to disclose what they were doing, on whose behalf, and how much they received in payment. The resulting Federal Regulation of Lobbying Act (1946) governed lobbying rules up until 1995 when the Lobbying Disclosure Act replaced it. In 2002, the Federal Election Campaign Act of 1971 later amended the law to the McCain Feingold Act, which contained rules governing campaign contributions. Lobbying law is a constantly evolving field; the American Bar Association published a book of guidelines in 2009 with over 800 pages. American Bar Association: The American Bar Association published a book about lobbying regulations. Lobbyists sometimes support rules requiring greater transparency and disclosure: "Our profession is at a critical point where we can either embrace the constructive changes and reforms by Congress or we can seek out loopholes and continue the slippery slide into history along side the ranks of snake oil salesmen." —Lobbyist Gerald S. J. Cassidy, 2007. Supporters for regulating lobbying hold the view that existing regulations designed to rein in the excesses of lobbying have not been effective, and that reforms and regulations have not cleaned up the system at all. Jack Abramoff said lobbyists could "find a way around just about any reform Congress enacted. " He gave the following example: You can't take a congressman to lunch for$25 and buy him a hamburger or a steak or something like that... But you can take him to a fund-raising lunch and not only buy him that steak, but give him $25,000 extra and call it a fund-raiser -- and have all the same access and all the same interactions with that congressman. A similar view suggested that lobbying reform efforts have been "fought tooth and nail to prevent its passage" since the people with the power to reform would curtail their own powers and income flows. ## Regulating Executive Branch Lobbyists Lobbying the Executive Branch is similar to any other branch of the U.S. government and is regulated by laws pertaining to disclosure. ### Learning Objectives Summarize the key reasons behind the movement of lobbying activity from the state to the federal level ### Key Takeaways #### Key Points • Executive branch agencies added a new layer of rule-making to congressional legislation. • It was not until the 20th century that lobbying the Executive Branch really emerged as a widespread issue with several new political trends in the government. • Many executive branch agencies have the power to write specific rules and are a target for lobbying. #### Key Terms • executive branch: The branch of government that oversees the carrying out of the laws, led by the president. • lobbying: Lobbying (also lobby) is the act of attempting to influence decisions made by officials in the government, most often legislators or members of regulatory agencies. Most lobbying during the nineteenth century happened within state legislatures. While the federal government had a larger jurisdiction, it did not handle many matters pertaining to the economy. The state governments did much more legislating than the federal government. When lobbying did happen, it was often "practiced discreetly" with little or no public disclosure. By one account, more intense lobbying in the federal government happened from 1869 to 1877 during the administration of President Grant near the start of the so-called Gilded Age. The most influential lobbyists wanted railroad subsidies and a tariff on wool. At the same time in the Reconstruction South, lobbying was intense near the state legislatures, especially regarding railroad subsidies, but it also happened in other areas, such as gambling. For example, Charles T. Howard of the Louisiana State Lottery Company actively lobbied state legislators and the governor of Louisiana for the purpose of getting a license to sell lottery tickets. President Grant: President Ulysses S. Grant was in office during a period of more intense lobbying in the federal government between 1869 and 1877. But, it was not until the 20th century that lobbying the Executive Branch really emerged as a widespread issue with several new political trends in the government, including: • Expensive campaigns. Winning reelection meant spending huge sums on expensive media, particularly television advertising. Congresspersons seeking reelection found themselves having to spend much of their time raising money instead of governing. In 1976, the average cost of running for a House seat was 86,000. By 2006, it was 1.3 million. Running for Senate was even pricier, with an average cost in 2006 of$8.8 million.
• Increased Complexity. This was partly the result of a continuing shift of legislative authority from state governments to Washington and partly the result of new technologies and systems. It became difficult for voters or watchdog groups to monitor this activity since it became harder to follow or even comprehend. Complexity encouraged more specialized lobbying, often with more than one agency affected by any one piece of legislation. It also encouraged lobbyists to become familiar with the intricate details and history of many issues. Executive branch agencies added a new layer of rule-making to congressional legislation. The economy expanded.

In many ways, lobbying the Executive Branch is similar to any other branch of the U.S. government and is thereby regulated by laws pertaining to disclosure discussed in Regulation Congressional Lobbyists. However, it is true that many executive branch agencies have the power to write specific rules and are a target of lobbying. Federal agencies, like the State Department, make rules to give aid money to countries like Egypt. In fact, an Egyptian-American businessman named Kais Menoufy organized a lobby to try and halt U.S. aid to Egypt.

Further complicating the relationship between lobbying and the Executive Branch is the fact that it is possible for one level of government to lobby another level. The District of Columbia, seeking better voting rights for its citizens, has been lobbying Congress and the president for greater power—including possible statehood or voting representation in Congress. An assessment in 2011 suggested that the district needed to rethink its lobbying strategy, since its past efforts have only had "mixed results."

## Results of the 1946 Act

The Federal Regulation of Lobbying Act of 1946 was a statute enacted by the United States Congress to reduce the influence of lobbyists.

### Learning Objectives

Summarize the contents of the 1946 Federal Regulation of Lobbying Act and reactions to it

### Key Takeaways

#### Key Points

• Section 308 of the bill forced lobbyists to register with the Clerk of the House of Representatives and the Secretary of the Senate and to provide information including the names and addresses of their employers, and to identify in whose interest the particular lobbyist worked.
• The 1946 Act expanded the definition of who could be considered a lobbyist. It included in this category any person who directly or indirectly solicits, collects, or receives money or any other thing of value to be used principally to aid in relation to the passage or defeat of any legislation.
• Lobbyists challenged the Regulation of Lobbying Act on the grounds that it was vague and unclear.

#### Key Terms

• provision: A clause in a legal instrument, a law, etc., providing for a particular matter and/or stipulation.
• scope: The breadth, depth or reach of a subject; a domain.
• regulation: A law or administrative rule, issued by an organization, used to guide or prescribe the conduct of members of that organization; can specifically refer to acts in which a government or state body limits the behavior of businesses.

The Federal Regulation of Lobbying Act of 1946 was a statute enacted by the United States Congress that was intended to reduce the influence of lobbyists on the government.

There is general agreement that money is a key variable in lobbying. This has been viewed as problematic, because it allows those with the most financial resources to influence government more than those who possess less money. The Federal Regulation of Lobbying Act of 1946 was specifically crafted to deal with this issue. The act defined lobbying as an activity, and thus created the legal conditions for the behavior to be regulated by the government.

Lobbying for Pay: There is general agreement that money is a key variable in lobbying.

The provisions of the act define lobbying in the following manner:

Section 308 states that, "any person who shall engage himself for pay, or for any consideration, for the purpose of attempting to influence the passage or defeat of any legislation by the Congress of the United States shall, before doing anything in furtherance of such object, register with the Clerk of the House of Representatives and the Secretary of the Senate and shall give to those officers in writing and under oath, his name and business address, the name and address of the person by whom he is employed, and in whose interest he appears or works, the duration of such employment, how much he is paid and is to receive, by whom he is paid or is to be paid, how much he is to be paid for expenses, and what expenses are to be included. "

Section 307 further describes what is regulated. "The Provisions of this act apply to any person (except a political committee as defined in the Federal Corrupt Practices Act, and duly organized State or local committees of a political party), who by himself, or through any agent or employee or other persons in any manner whatsoever, directly or indirectly, solicits, collects, or receives money or any other thing of value to be used principally to aid, or which the principal purpose of which person is to aid, in the accomplishment of influencing, directly or indirectly, the passage or defeat of any legislation by the Congress of the United States. "

Lobbyists claimed that the Regulation of Lobbying Act was unconstitutional on the grounds that it was vague and unclear. In a 1954 case (United States v. Harriss), the Supreme Court made its voice heard on the issue. The Court upheld the act's constitutionality, but it also narrowed the scope and application of the act. The Supreme Court ruled that the act applied only to paid lobbyists who directly communicated with members of Congress, and only when that communication regarded pending or proposed federal legislation. This meant that lobbyists who visited with congressional staff members, rather than members of Congress themselves, were not considered lobbyists. In addition, the act only monitored attempts to specifically influence the passage or defeat of legislation in Congress, and thus excluded other congressional activities or communication between officials and lobbyists. Finally, the Court also ruled that the act only applied to individuals who spent at least half of their time lobbying. This set basic occupational limits as to who would be affected by the law.

## The Reforms of 1995

The Lobbying and Disclosure Act of 1995 was legislation aimed at bringing a level of accountability to federal lobbying practices in the United States.

### Learning Objectives

Summarize the content and effectiveness of the lobbying reforms of 1995

### Key Takeaways

#### Key Points

• The law was amended substantially by the Honest Leadership and Open Government Act of 2007.
• The Lobbying and Disclosure Act of 1995 defines a number of provisions attempting to maintain a degree of transparency in the activities of lobbyists.
• The legislation does not include those lobbyists whose "activities constitute less than 20 percent of the time engaged in services", thus failing to regulate grassroots (small donors) lobbying.
• The ultimate failure of the Lobbying and Disclosure Act of 1995 was in its failure to provide adequate funding to implement the regulations.

#### Key Terms

• loophole: A method of escape, especially an ambiguity or exception in a rule that can be exploited in order to avoid its effect.
• transparency: (figuratively) openness, degree of accessibility to view
• lobbyist: A person remunerated to persuade (to lobby) politicians to vote in a certain way or otherwise use their office to effect a desired result.

The Lobbying and Disclosure Act of 1995 (2 U.S.C. § 1601) was legislation aimed at bringing a level of accountability to federal lobbying practices in the United States. This law was then amended substantially by the Honest Leadership and Open Government Act of 2007. Under provisions which took effect on January 1, 2006, lobbyists are required to register with the Clerk of the House of Representatives and the Secretary of the Senate. Failing to do so is punishable by a civil fine of up to $50,000. The Clerk and Secretary must refer any acts of non-compliance to the United States Attorney for the District of Columbia. ### Bill Provisions Definitions: The LDA defines a number of provisions attempting to maintain a degree of transparency in the activities of lobbyists. The legislation defines a client as: "...any person or entity that employs or retains another person for financial or other compensation to conduct lobbying activities on behalf of that person or entity. A person or entity whose employees act as lobbyists on its own behalf is both a client and an employer of such employees....". The legislation also includes lobbyists that are affected: "The term "lobbyist" means any individual who is employed or retained by a client for financial or other compensation for services that include more than one lobbying contact, other than an individual whose lobbying activities constitute less than 20 percent of the time engaged in the services provided by such individual to that client over a six month period. " Also included in the legislation are the definitions of what actions must be disclosed, which includes lobbying to certain members of the Executive Branch who are included on specific payrolls. Also included are members of Congress. Loopholes: The legislation does not include those lobbyists whose "activities constitute less than 20 percent of the time engaged in services", thus failing to regulate grassroots (small donors) lobbying. The LDA includes a number of other "thresholds" that define what must be recorded. Any organization that contributes more than$10,000 towards lobbying activities must also be registered. Amounts even slightly below this threshold are exempt from reporting. The outline for registration includes "name, address, business telephone number, and principal place of business of the registrant, and a general description of its business or activities;" as well as for the client. The register must also include a statement of what issues the registrant expects to lobby or what may have already been lobbied.

After recording, the records are maintained by the Clerk of the House and the Secretary of the Senate. Due to severe understaffing, these two offices are unable to check for illegal activities or corrupt practices. This is the significant failure of this bill. During a hearing before the Senate Committee on Rules and Administration, Senator Christopher Dodd stated that "[s]ince 2003, the Office of Public Records has referred over 2,000 cases to the Department of Justice, and nothing's been heard from them again."

Senator Christopher Dodd: Senator Christopher Dodd, while pointing out gaps in the 1995 lobbying reform, was himself implicated in controversy surrounding his role as Chairman of the Senate Banking committee and his relationship with Countrywide Financial

## Lobbying Scandals and the Reforms of 2007

The Honest Leadership and Open Government Act of 2007 sought to amend and strengthen parts of the Lobbying Disclosure Act of 1995.

### Learning Objectives

Describe the rules that the Honest Leadership and Open Government act put in place to regulate lobbying

### Key Takeaways

#### Key Points

• The bill strengthens public disclosure requirements concerning lobbying activity and funding, places more restrictions on gifts for members of Congress and their staff, and provides for mandatory disclosure of earmarks in expenditure bills.
• The bill sought to address the " revolving door " issue, by declaring limitations on the ability of members of the government to serve as lobbyists following the end of their terms.
• The bill requires lobbyist disclosure filings to be filed twice as often, by decreasing the time between filing from semi-annual to quarterly.

#### Key Terms

• revolving door: The movement between roles as legislators and regulators become lobbyists
• disclosure: The act of revealing something
• house ethics rules: The Committee on Ethics, often known simply as the Ethics Committee, is one of the committees of the United States House of Representatives. Prior to the 112th Congress it was known as the Committee on Standards of Official Conduct.

### Lobbying Scandals and the Reforms of 2007

The Honest Leadership and Open Government Act of 2007 is a law of the United States federal government that amended parts of the Lobbying Disclosure Act of 1995. It strengthens public disclosure requirements concerning lobbying activity and funding, places more restrictions on gifts for members of Congress and their staff, and provides for mandatory disclosure of earmarks in expenditure bills. The bill was signed into law by President George W. Bush on September 15, 2007.

Details of the bill include closing the revolving door, prohibiting senators from gaining undue lobbying access by increasing the "cooling off" period before they can lobby Congress from one to two years, prohibiting cabinet secretaries and other senior executive personnel from lobbying the department or agency in which they worked for two years after they leave their position, and prohibiting senior Senate staff and officers from lobbying contacts with the entire Senate for one year, instead of just their former employing office. The bill also includes numerous other prohibitions and requirements including:

Closing the Revolving Door: As the former Under Secretary of Agriculture for Food, Nutrition, and Consumer Services and lobbyist for the Podesta Group in 2009, Ellen Haas represents the revolving door phenomenon that the 2007 lobbying reforms sought to address.

• Prohibits senior House staff from lobbying their former office or committee for one year after they leave House employment.
• Requires that executive and legislative branch employees who leave government positions and seek to lobby on behalf of Native American tribes face the same revolving door provisions as others.
• Exempts those who serve as elected or appointed officials of Native American tribes.
• Prohibits members of Congress and their staff from influencing hiring decisions of private organizations on the sole basis of partisan political gain.
• Subjects those who violate this provision to a fine and imprisonment for up to 15 years.
• Prohibits lobbyists from providing gifts or travel to members of Congress with knowledge that the gift or travel is in violation of House or Senate rules.
• Full public disclosure of lobbying activity.
• Requires lobbyist disclosure filings to be filed twice as often, by decreasing the time between filing from semi-annual to quarterly.
• Requires lobbyist disclosures in both the Senate and House to be filed electronically and requires creation of a public searchable Internet database of such information.Increases civil penalty for knowing and willful violations of the Lobby Disclosure Act from 200,000 and imposes a criminal penalty of up to five years for knowing and corrupt failure to comply with the Act.
• Requires the Government Accountability Office to audit annually lobbyist compliance with disclosure rules.
• Requires lobbyists to certify they have not given gifts or travel that would violate Senate or House rules.
• Requires the disclosure of businesses or organizations that contribute more than 15,000 semiannually in campaign contributions for any federal elected official, candidate (including Senate, House and Presidential), or leadership PAC.
• Requires lobbyists to disclose to the Secretary of the Senate and the House Clerk their campaign contributions and payments to Presidential libraries, Inaugural Committees or entities controlled by, named for or honoring members of Congress.
• Includes congressional pension accountability.

Unlike previous lobbying regulations, the 2007 reforms also made an attempt to amend House ethics rules in the following ways:

• Requires disclosure of employment negotiations by members and staff.
• Prohibits members from engaging in any agreements or negotiations about future employment until a successor has been selected unless the member files a statement with the Committee on Standards of Official Conduct; and requires that members recuse themselves from any matter in which there is a conflict of interest or appearance of a conflict.
• Requires senior staff to notify the Committee on Standards of Official Conduct within three days if they engage in negotiations or agreements for future employment or compensation.
• Requires that members prohibit their staff from having any lobbying contact with the Member's spouse if such individual is a registered lobbyist or is employed or retained by a registered lobbyist to influence legislation.
• Requires that travel by members financed by outside groups be posted on a searchable, sortable and downloadable website by August 1, 2008. Requires that members' financial disclosure forms be posted on a searchable, sortable and downloadable website by August 1, 2008.
• Prohibits members from attending parties held in their honor at national party conventions if they have been sponsored by lobbyists, unless the member is the party's presidential or vice presidential nominee.

## Obama vs. the Lobbyists?

Early in his presidency, Obama said "[lobbyists] won't find a job in my White House," but softened his stance later in the campaign.

### Learning Objectives

Summarize the Obama White House's position on hiring former lobbyist

### Key Takeaways

#### Key Points

• On January 21, 2009, Obama issued an executive order which stated no appointee who was a registered lobbyist within the two years before his appointment could participate on matters in which he lobbied for a period of two years after the date of appointment.
• As of March 21, 2009, at least thirty officials appointed by Obama had been lobbyists in the past five years.
• Critics of Obama's administration claim Obama is retreating from his own ethics rules barring lobbyists from working on the issues about which they lobbied during the previous two years by issuing waivers.

#### Key Terms

• appointee: a person who is appointed
• waiver: Something that releases a person from a requirement.
• recusal: An act of recusing. To remove oneself from a decision/judgment because of a conflict of interest.

Early in his presidential campaign, Obama stated that "they [lobbyists] won't find a job in my White House", but softened his stance later in the campaign. On January 21, 2009, Obama issued an executive order for all future appointees to his administration, which stated, no appointee who was a registered lobbyist within the two years before his appointment could participate on matters in which he lobbied for a period of two years after the date of appointment. Three formal waivers were initially issued in early 2009, out of 800 executive appointments: to William J. Lynn III, a lobbyist for Raytheon, to hold the position of Deputy Secretary of Defense; to Jocelyn Frye, former general counsel at the National Partnership for Women and Families, to serve as Director of Policy and Projects in the Office of the First Lady; and to Cecilia Muñoz, former senior vice president for the National Council of La Raza, to serve as Director of Intergovernmental Affairs in the Executive Office of the President. As of March 21, 2009, at least thirty officials appointed by Obama had been lobbyists in the past five years. Ten additional waivers were announced in September 2009.

President Barack Obama: Starting his presidential years as an outspoken advocate of lobbying regulation, President Obama's actions in relation to lobbying have led some to believe that he has not lived up to the high ethical standards that he set out for himself.

Not all recent former lobbyists require waivers; those without waivers write letters of recusal stating issues from which they must refrain because of their previous jobs. USA Today reported that 21 members of the Obama administration have at some time been registered as federal lobbyists, although most have not within the previous two years. Lobbyists in the administration include William Corr, an anti-tobacco lobbyist, as Deputy Secretary of Health and Human Services and Tom Vilsack, who lobbied in 2007, for a national teachers union, as Secretary of Agriculture. Also, the Secretary of Labor nominee, Hilda Solis, formerly served as a board member of American Rights at Work, which lobbied Congress on two bills Solis co-sponsored, and Mark Patterson, Treasury Secretary Timothy Geithner's chief of staff, is a former lobbyist for Goldman Sachs.

The Citizens for Responsibility and Ethics in Washington have criticized the administration, claiming that Obama is retreating from his own ethics rules barring lobbyists from working on the issues about which they lobbied during the previous two years by issuing waivers. According to Melanie Sloan, the group's executive director, "It makes it appear that they are saying one thing and doing another. "