MASSACHUSETTS LOBBYING, REGISTRATION AND REPORTING Foley Hoag LLP Tad Heuer and Pat Cerundolo

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1 Last Updated: October 2013 MASSACHUSETTS LOBBYING, REGISTRATION AND REPORTING Foley Hoag LLP Tad Heuer and Pat Cerundolo Table of Contents 1. Federal Registration and Reporting 2. Massachusetts Registration and Reporting The following is intended to provide a brief overview of the various potential registration and reporting requirements under federal and Massachusetts laws with respect to the lobbying activities of most social sector organizations, both nonprofit and for-profit, including public charities, social welfare organizations and other forms of organization with a social change mission. The lobbying limitations imposed on tax-exempt organizations by the Internal Revenue Code are described in the section entitled Nonprofit Taxation and are not reiterated here. 1. Federal Registration and Reporting Organizations that engage in a specified amount of lobbying activities and lobbying contacts through personnel that receive financial or other compensation are required to register and file disclosure reports under the Lobbying Disclosure Act of 1995, as amended (most recently by the Honest Leadership and Open Government Act of 2007). Other than religious orders, tax-exempt churches, and their integrated auxiliaries, all social sector organizations nonprofit as well as for-profit that otherwise meet the thresholds on lobbying contacts and overall expenses (discussed below) must register and file reports. a. Registration The federal Lobbying Disclosure Act (the Act ) is intended to reach professional lobbyists those paid to lobby on behalf of an employer or client. Thus, if a social sector organization engages in covered lobbying contacts through its own staff that exceed the statutory thresholds, that organization must register as a lobbying entity, and must register its individual employee-lobbyists (who are sometimes referred to as inhouse lobbyists). If, however, a social sector organization employs lobbyists only from an outside lobbying firm, the outside lobbying firm must register (and identify its social

2 sector client) if its lobbying exceeds the statutory thresholds, but the social sector organization itself is not required to register. All federal lobbying registrations and reports must be filed electronically at a single location, which covers registration for both the Secretary of the Senate s Office and the Office of the Clerk of the House. A social sector organization is required to register its employee-lobbyists if it meets the following two conditions: First, the organization must have one or more compensated employees who (a) make more than one lobbying contact on behalf of the organization and (b) spend at least 20% of their total time for the organization on lobbying activities over a given quarterly reporting period. A lobbying contact is a written, oral or electronic communication to a covered federal official, (which includes a Member of Congress, congressional staff, and certain senior executive branch officials), with respect to the formulation, modification or adoption of a federal law, regulation, rule, program, or policy, or the administration or execution of a federal program or policy. Lobbying activities include not only lobbying contacts but also background activities, research, and other efforts that support lobbying contacts. Note that there are also several enumerated exceptions to what constitutes lobbying contacts for purposes of the Act for instance, they do not include testifying or submitting written testimony, and do not include lobbying either legislators or governmental bodies at the state or local levels. A Section 501(c)(3) organization that has made the safe harbor election under Section 501(h) of the Code has the option of using either the Act s definition of lobbying activities or the Internal Revenue Code s definition of influencing legislation to determine the organization s reporting obligation. Second, the organization must have spent more than $12,500 in a quarterly reporting period on lobbying activities. The $12,500 includes salaries, overhead, and other expenses, as well as payments to any outside lobbyists made during the three-month reporting period. This figure is increased periodically for inflation. If an organization hires an outside lobbyist or a lobbying firm, then the outside lobbyist and his/her lobbying firm must register on behalf of the client/organization if he/she (a) makes more than one lobbying contact with a covered official on behalf of that client/organization, (b) spends at least 20% of his/her time for that client/organization in a given quarterly reporting period on lobbying activities, and (c) his/her/its total income from that client/organization for lobbying exceeds $3,000 in that quarterly reporting period

3 Lobbyists are required to be registered within 45 days after either (a) being hired by a client (if the intent is that the lobbyist will make more than one lobbying contact and meet the 20% threshold), or (b) making a second lobbying contact (if the intent to make a second contact did not exist at the outset of the engagement) and meeting (or intending to meet) the 20% threshold. Information required on the registration form, known as the LD-1 form, includes: identification of the lobbyist(s); the client or employer of the lobbyist(s); identification of any foreign entity and its contributions over $5,000 (if the foreign entity owns 20% of the client or controls, plans or supervises its activities); and a list of the general issue areas on which the registrant expects to lobby. b. Reports Registrants under the Lobbying Disclosure Act are required to file both quarterly and semi-annual reports. Quarterly reports by the lobbying entity (either the outside lobbying firm or the employer of in-house lobbyists), also known as LD-2 reports, are to be filed within 20 days after the end of each calendar quarter. Among other items, these reports must include not only the issues lobbied upon, but the bill numbers lobbied upon, the names of the lobbyists, and the Houses of Congress and federal executive branch agencies contacted. Reports must also include a good faith estimate of either lobbying expenditures (for reports filed by organizations who employ in-house lobbyists), or income received from clients (for reports filed by outside lobbyists). Amounts in excess of $5,000 are to be rounded to the nearest $10,000. Semi-annual reports by individual lobbyists, also known as LD-203 reports, are due on January 30 and July 30. The required disclosures in these reports include: the names of all political committees established or controlled by the lobbyist or registered organization; disclosures of contributions by each lobbyist of more than $200 to federal candidates or officeholders, political committees, or leadership PACs; and funds disbursed for events to honor covered government officials, to entities that are named for or in recognition of such officials and to entities that are controlled or designated by such officials. The name of each presidential library and inaugural committee to which contributions of at least $200 were made during the semi-annual period must also be reported. Additionally, registrants are required to certify that the organization or person filing the report has read and is familiar with the rules of the House and Senate regarding gifts and travel, and that they are compliant with these rules. For more detailed information, the House Clerk maintains a comprehensive Guide to the Lobbying Disclosure Act at

4 c. Penalties Amendments in 2007 to the Lobbying Disclosure Act increased the civil penalties for violations of the Act and for failing to remedy a defective filing to up to $200,000. In addition, the amendments imposed criminal penalties for knowingly and corruptly failing to comply with the Act, with a maximum of five years imprisonment. d. Grassroots Lobbying The Lobbying Disclosure Act only applies to direct lobbying direct communications with covered federal officials, and the lobbying activities that the person making the direct communication engages in to prepare for those contacts. Grassroots lobbying is not covered. An organization that engages only in grassroots lobbying will not be required under the Act to register and report. e. Congressional Gift and Travel Rules The Lobbying Disclosure Act imposes civil and criminal penalties on registered lobbyists (or organizations that employ them) for violations of congressional gift and travel rules. The Act expressly prohibits any registered lobbyist, any organization that employs them (and is required to register), and any employee required to be listed as a lobbyist from making a gift or providing travel to a Member of Congress or staffer (and other covered officials ) if the registrant has knowledge that the gift or travel may not be accepted under House and Senate rules. The congressional gift and travel rules, and the numerous exceptions to those rules, are extremely detailed and particularly restrictive with regard to registered lobbyists. No attempt will be made here to summarize those rules. Any questions concerning the applicability of the congressional gift and travel rules to specific situations should be addressed to counsel with specific expertise in this area of law. f. Federal Funds and Grants Grant money and funds under federal contracts may not be used by nonprofits and other organizations for lobbying or for other advocacy or political activities unless authorized by Congress. These restrictions apply to both direct and grassroots lobbying at the federal, state and local levels. g. Resources Jack Maskell, Lobbying Regulations on Non-Profit Organizations, CRS Report (May 7, 2008)

5 The House gift and travel rules are available online at al.pdf The Senate gift and travel rules are available online at Office of the Clerk, United States House of Representatives, Guide to the Lobbying Disclosure Act (Effective Jan. 1, 2008; Revised Feb. 15, 2013), William V. Luneburg, Tomas M. Susman, & Rebecca H. Gordon, The Lobbying Manual: A Complete Guide to Federal Lobbying Law and Practice (4th ed. 2009). 2. Massachusetts Registration and Reporting The Massachusetts lobbying law is found at Mass. Gen. Laws c. 3, The Secretary of the Commonwealth, as the office charged with administering the law, issues guidance and advisory opinions regarding the applicability of the law to specific factual scenarios not expressly addressed by the statute. a. Lobbyist Registration Massachusetts law requires two distinct categories of lobbyists to register with the Secretary of the Commonwealth: Legislative-branch lobbyists (known as legislative agents ) and executive-branch lobbyists (known as executive agents ). Any individual who meets all three of the following thresholds within a single biannual reporting period must register as either a legislative or executive lobbyist, respectively: Legislative Thresholds 1) Makes at least one lobbying communication with a government employee; 2) Receives compensation or reward for legislative lobbying, defined as a) any act to promote, oppose, influence or attempt to influence legislation, b) any act to promote, oppose or influence the governor s approval or veto of legislation, c) any act to influence the introduction, sponsorship, consideration, action, or non-action on any piece of legislation, or d) strategizing, planning and research, if performed either in connection with or for use in an actual lobbying communication; and 3) Engages in legislative lobbying for more than 25 hours, or receives $2500 or more in compensation for legislative lobbying activity

6 Executive Thresholds 1) Makes at least one lobbying communication with a government employee; 2) Receives compensation or reward for executive lobbying, defined as a) any act to promote, oppose, influence, or attempt to influence the decision of any executive branch officer or employee regarding either legislation or the adoption, defeat or postponement of a standard, rate, rule or regulation, b) any direct communication with a covered executive official in attempt to influence a policy or procurement decision, or c) strategizing, planning and research, if performed either in connection with or for use in an actual lobbying communication (the statute also contains several limited exceptions to this general definition); and 3) Engages in executive lobbying for more than 25 hours, or receives $2500 or more in compensation for executive lobbying activity. The law contains no express exemption from registration for an individual who engages in volunteer lobbying on behalf of a nonprofit or social service organization. However, because the statute states that an individual must receive compensation or reward to be classified as a legislative or executive agent, individuals who are engaged solely in volunteer and/or pro bono lobbying are not required to register. b. Organization Filings Organizations that employ lobbyists for hire are known as lobbying entities. They must file annual lobbying entity registration statements and pay an annual registration fee. This fee may be waived for entities representing nonprofit clients, at the Secretary s discretion. Within ten days of registration (or of being hired by a new client), lobbying entities must file a declaration naming their client(s) and the individual lobbyists who will represent them. Every lobbying entity is also required to file biannual reports, which must include a detailed list of expenditures incurred, payments made, campaign contributions made, issues lobbied upon, and compensation received from clients. Organizations that hire lobbyists, either from lobbying entities or as in-house employees, are known as lobbying clients. They must file annual client registration statements and pay an annual fee. This fee may be waived for nonprofit clients, at the Secretary s discretion. Within ten days of hiring either a lobbyist entity or an in-house lobbyist, a lobbying client must file a declaration to this effect with the Secretary. Every lobbying client is required to file biannual reports, in January and July, which must include a list of all lobbying-related salaries paid and expenditures made

7 c. Lobbyist Filings Individual lobbyists must file annually a list of the clients for whom they will be lobbying, and pay an annual registration fee. Lobbyists must also file biannual reports, itemizing their lobbying activities, clients, expenditures, and lobbying-related income. Prior to registration, and annually thereafter, each lobbyist must complete an online or inperson seminar on the lobbying law offered by the Secretary. d. Links to Instructions and Forms Registration is entirely electronic, and the Secretary maintains a comprehensive set of guidance documents on registration and disclosure report filing at e. Gift and Lobby Expenditure Restrictions Massachusetts law bans lobbyists from giving gifts of any kind or nature to public officials and public employees, and prohibits lobbyists from purchasing meals for public officials and public employees. Massachusetts law does not restrict lobbying expenditures, but does require that all such expenditures (including political contributions) be itemized and reported in the biannual reports of lobbying entities and individual lobbyists. Massachusetts law restricts the extent of political contributions that can be made by lobbyists. Lobbyists are limited to donating $200 annually to any given candidate, and are limited to donating $200 annually to any political committee (other than a ballot question committee). All individual donors (both lobbyists and non-lobbyists) are subject to aggregate annual contribution limits of $12,500 to all state, county, and local candidates, and $5,000 to all state political action committees. f. Penalties The penalties for violating the registration provisions of the lobbying statute include fines of up to $10,000 and up to five years imprisonment. g. Resources The Secretary s guidance on registration and disclosure report filing is available at The The Secretary s Frequently Asked Questions are available at The Secretary s database of lobbyists is available at

8 Links to the applicable lobbying statutes (Mass. Gen. Laws c. 3, 39-50) are available at Any person who may be subject to the lobbying statute is entitled by Mass. Gen. Laws c. 3, 41 to request a confidential advisory opinion from the Secretary as to the applicability of the statute under specific factual scenarios. Advisory opinions are available, in redacted form, at The Office of Campaign and Political Finance (OCPF) is an independent state agency that administers the Massachusetts campaign finance law. Its legal resources, including its Advisory Opinions, Interpretive Bulletins, and Memoranda, are available at The OCPF chart of annual campaign contribution limits is available at Links to the applicable campaign finance statutes (Mass. Gen. Laws c. 55) are available at