Ethics and Lobbying Reform Update

September 14, 2007

On September 14, 2007, the President signed the Honest Leadership and Open Government Act of 2007 (S. 1). This legislation makes important changes in federal election and lobbying laws, as well as the House and Senate rules.

Most of the House rules described below were adopted unilaterally by the House on January 5, 2007 as part of H. Res. 6. All changes in the Senate rules, some additional changes in the House rules and all amendments to statutory law described below were adopted upon the signature of S. 1 by the President, although some provisions have later effective dates.  

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New Earmark Disclosure Rules 

The House rules, as amended by H. Res. 6, currently provide that certain proposed legislation, including committee report language, include a detailed list of all “congressional earmarks,” “limited tax benefits,” and “limited tariff benefits” and the names of the Members who requested them.  The Senate’s new rules impose similar requirements. 

Subject to certain exceptions, the House rules define a “congressional earmark” as “any provision or report language included primarily at the request of a Member . . . authorizing or recommending a specific amount of . . . spending authority . . . for a contract, loan, loan guarantee, grant, loan authority, or other expenditure with or to an entity, or targeted to a specific" State, locality, or Congressional district. The new Senate rules apply a similar definition but use a different term: “congressionally directed spending item.” 

The House and Senate rules define “limited” tax and tariff benefits differently. In the House definition, a tax or tariff benefit will be covered by the rule if it is intended for 10 or fewer beneficiaries, whereas the new Senate rules cover tax benefits intended for a “limited group of beneficiaries under the Internal Revenue Code of 1986.” 

Any Representative or Senator requesting an earmark, congressionally directed spending item, limited tax benefit, or limited tariff benefit is required to submit a written statement to the chairman and ranking minority member of the committee of jurisdiction disclosing the name of the intended recipient of the earmark, congressionally directed spending item, or, in the case of a tax or tariff benefit, the identity of any individual or entity “reasonably anticipated to benefit from” the proposal. The statement must also disclose the purpose of the earmark, congressionally directed spending item or benefit and certify that the sponsor — and the sponsor’s spouse — have no financial interest in its passage.  All such statements will be available for public inspection.  

It should be noted that there are significant differences between the House and Senate procedures regarding these disclosures. A detailed review of these procedures is beyond the scope of this client alert, but clients should be aware that these differences may affect the outcome of the legislative process. 

Gift and Meal Restrictions 

Under the House and Senate rules in earlier Congresses, a Representative, Senator, or his or her staff were permitted to accept gifts and meals from a registered lobbyist or an agent of a foreign principal so long as the recipient “reasonably and in good faith” believed that the value of the gift was under $50 (and that the value of cumulative gifts from a single source valued at $10 or more was under $100 in a given year). 

The new House and Senate rules prohibit such gifts regardless of their value if the recipient knows that the source is a registered lobbyist, an agent of a foreign principal, or an employer of a registered lobbyist or agent of a foreign principal. All organizations that employ registered lobbyists — including corporations and nonprofits — are therefore barred from making gifts to or paying for private meals with Representatives, Senators, or their staff. 

Although these new rules significantly restrict the ability of lobbyists to pay for meals and other items of value, a number of traditional practices will continue to be permissible. For example, both House and Senate rules continue to allow Representatives, Senators, and their staff to participate in certain “widely attended” events that may include food regardless of whether the event is arranged or attended by registered lobbyists. Subject to existing federal and state campaign and election laws, food and drink will also continue to be allowed at campaign fundraising events and events paid for with campaign funds, even if lobbyists are in attendance. 

Travel Reimbursement Rules 

Travel by Representatives, Senators, or their staff that involves registered lobbyists is subject to additional disclosure requirements and restrictions under the new House and Senate rules. The House and Senate rules now prohibit Representatives, Senators, and their staff from being reimbursed for expenses related to most travel that is arranged by a lobbyist. Representatives, Senators, and their staff are also prohibited from being reimbursed for travel where the lobbyist accompanies the Representative, Senator, or staff member on any segment of the trip. Many private organizations that have traditionally paid for Congressional travel are now barred from doing so in most cases. 

The House rules now prohibit Representatives from using personal, official, or campaign funds for travel on private (i.e., non-commercial) aircraft, except in certain, narrow circumstances. The new Senate rules provide that a Senator who flies on a private aircraft must pay the owner of the plane the full market rate for a chartered flight on a private aircraft — usually far more than the commercial first-class commercial fare (which was the measure for valuing travel on private aircraft under the House and Senate rules in earlier Congresses). This new valuation rule is subject to certain exceptions, such as an exception for use of private aircraft that is owned by the government or a member of the Senator’s immediate family. The legislation also amends the Federal Election Campaign Act of 1971 to extend these stricter standards to candidates for federal office. 

Other Provisions 

The legislation imposes other restrictions on lawmaker-lobbyist contacts, including the following: 

  • The House and Senate rules now prohibit a Representative or Senator from participating in an event honoring him or herself (other than in his or her capacity as a candidate for President or Vice President) at a national party convention if the event is paid for by a lobbyist or an organization that employs or retains a lobbyist. 

  • The new Senate rules extend the post-employment prohibition on lobbying activities by Senators and their senior staff from one to two years after they leave the Senate. The House prohibition remains at one year.

  • Under the new House and Senate rules, Representatives and Senators must disclose job negotiations with prospective private-sector employers — and Senators are flatly prohibited from negotiating for employment as a lobbyist — until their successors have been elected. Representatives and Senators must recuse themselves from any matter in which there is a conflict of interest related to such job negotiations. 

  • The Lobbying Disclosure Act is amended to require registered lobbyists to file quarterly rather than semiannual statements with the relevant House and Senate offices. Violations of the Lobbying Disclosure Act are now punishable by a civil fine of up to $200,000 and imprisonment for up to five years. 

  • The Federal Election Campaign Act is amended to require campaigns to disclose certain information related to so-called “bundling” of campaign contributions. 

There are a number of provisions in this legislation that will be subject to interpretation by the relevant Congressional committees and federal agencies. 

Specific client activities that may be affected by this legislation should be carefully reviewed by counsel. 

Gibson, Dunn & Crutcher lawyers are available to assist in addressing any questions you may have regarding these issues. Please contact the Gibson Dunn attorney with whom you work, Adam Di Vincenzo (202-887-3704, [email protected]) or Alan Platt (202-887-3660, [email protected]) in the firm’s Washington, D.C. office, or Mel Levine (310-557-8098, [email protected]) in the Los Angeles office. 

© 2007 Gibson, Dunn & Crutcher LLP

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