NEW YORK LOBBYING REGISTRATION AND REPORTING Day Pitney LLP (New York) Jill A. Collins and Jennifer M. Pagnillo

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1 Last Updated: January 2012 Federal Update: October 2013 NEW YORK LOBBYING REGISTRATION AND REPORTING Day Pitney LLP (New York) Jill A. Collins and Jennifer M. Pagnillo Foley Hoag LLP (Federal) Tad Heuer and Pat Cerundolo Table of Contents 1. Federal Registration and Reporting 2. New York Registration and Reporting The following is intended to provide a brief overview of the various potential registration and reporting requirements under federal and New York 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

2 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 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 - 2 -

3 from that client/organization for lobbying exceeds $3,000 in that quarterly reporting period. 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

4 For more detailed information, the House Clerk maintains a comprehensive Guide to the Lobbying Disclosure Act at 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

5 g. Resources Jack Maskell, Lobbying Regulations on Non-Profit Organizations, CRS Report (May 7, 2008). 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. New York Registration and Reporting On August 15, 2011, Governor Cuomo signed into law the Public Integrity Reform Act of This Act implemented increased transparency and more strict disclosure requirements for lobbyists and clients of lobbyists, and also established a new organization that will be tasked with administering and enforcing the Lobbying Act (and other related ethics laws). Under the new legislation, the Joint Commission on Public Ethics Enforcement (the Commission ) has replaced the Commission on Public Integrity (in place since 2007), and the Commission on Public Integrity no longer has any authority to provide advisory opinions, conduct investigations and otherwise enforce the law. The New York Lobbying Act applies to lobbyists and public corporations, and to clients or employers of lobbyists who in any year during the biennial period ( , , etc.) reasonably anticipate expending, incurring or receiving more than $5,000 of combined reportable compensation and expenses for lobbying activities. Lobbying means any attempt to influence any legislation or resolution, a gubernatorial executive order, state agency rules, rate making proceedings, decisions with respect to procurement, tribal-state compacts, and local legislative or executive action. An attempt to influence means any activity intended to support, oppose, modify, delay, expedite or otherwise affect any of these actions (including, but not limited to, the introduction of such - 5 -

6 legislation or resolution). However, there are several exclusions (for example, one for taxexempt churches attempting to influence local law). Note: Lobbying includes activities on the local level. Lobbying in counties with populations above 50,000 is covered by the Lobbying Act, and municipalities may also have their own rules with respect to lobbying. a. Lobbyist Registration Biennial Requirement Every lobbyist that reasonably anticipates expending, incurring, or receiving, or who actually expends, incurs, or receives, more than $5,000 in combined reportable compensation and expenses for lobbying activity on a state and/or local level in any year during the biennial period, is required to file a biennial Statement of Registration with the Commission, together with certain information, including a copy of the signed written lobbying agreement, or a written summary of an oral agreement. Reportable compensation includes any salary, fee, gift, payment, benefit, loan, advance, or any other thing of value paid, owed, given, or promised to the lobbyist by the client or employer for lobbying. For reporting purposes, reportable compensation includes any such compensation paid or owed to the lobbyist for the purpose of lobbying. All reportable compensation in any form must be recorded during the calendar year when it was accrued. Reportable expenses means any expenditures incurred by or reimbursed to the lobbyist for the purpose of lobbying. Reportable expenses include, but are not limited to the following: advertising, telephone, electronic advocacy, food, beverages, tickets, entertainment, parties, receptions or similar events, advocacy rallies, consultant services, expenses for non-lobbying support staff, and courier services when said expenses are part of a lobbying effort. Among other disclosures, the statement of registration must disclose the name of any statewide elected official, state officer or employee, member of the legislature or legislative employee with whom the lobbyist has a reportable business relationship, and provide details of the subject of the transaction and any compensation to be paid by virtue of the business relationship. Reportable business relationship means a relationship in which compensation is paid by a lobbyist or by a client of a lobbyist, in exchange for goods, services or anything of value, the total value of which is in excess of $1,000 annually, to be performed or provided by (i) any statewide elected official, state officer, state employee, member of the legislature or legislative employee, or (ii) any entity in which the lobbyist or the client of the lobbyist knows or has reason to know the statewide elected official, state officer, - 6 -

7 employee, member of the legislature or legislative employee is a proprietor, partner, director, officer or manager, or owns or controls ten percent or more of the stock of such entity (or one percent in the case of a corporation whose stock is regularly traded on an established securities exchange). In addition, each individual registered as a lobbyist must complete an online ethics training course provided by the Commission at least once in any three-year period during which he or she is registered as a lobbyist. There are certain exemptions to the biennial registration requirement for individuals who lobby solely on their own behalf or for certain public officers who lobby when discharging their official duties. Further detail on these exemptions is accessible through the link provided in paragraph e below. b. Lobbyist Filings - Bi-Monthly Reports In addition, any lobbyist required to file a biennial Statement of Registration must also file bi-monthly reports with the Commission. The first bi-monthly report is due by the fifteenth day of the month following the end of the bi-monthly period in which the lobbyist was first required to register, and are due bi-monthly thereafter until the end of the biennial registration period. Furthermore, if a lobbyist in any lobbying year reasonably anticipates that it will expend, incur or receive combined reportable compensation and expenses of more than $5,000 in connection with any attempts to influence a determination by a public official, or by a person or entity working in cooperation with a public official, with respect to the solicitation, award or administration of a grant, loan, or agreement involving the disbursement of public monies in excess of $15,000, it will be required to file a NYS Lobbyist Disbursement of Public Monies Report. Beginning June 1, 2012, any registered lobbyist performing lobbying on its own behalf and not on behalf of a client, that has (i) spent over $50,000 for reportable compensation and expenses for lobbying during the calendar year or for the 12-month period preceding the due date of the bi-monthly report, and (ii) at least three percent of whose total expenditures for the same period were devoted to lobbying in New York, shall report to the Commission the names of each source of funding over $5,000 that were used to fund the lobbying efforts. There are certain exclusions to this requirement, and the Commission may waive disclosure where harm may occur. c. Semi-annual Filings Client of Lobbyist Semi-annual reports must be filed by any client retaining, employing or designating a lobbyist or lobbyists, whether or not any such lobbyist was required to file a bi-monthly - 7 -

8 report, if the client reasonably anticipates that during the year it will expend or incur an amount in excess of $5,000 of combined reportable compensation and expenses for the purposes of lobbying. A client includes every person or organization that retains, employs or designates any person or organization to carry on lobbying activities on behalf of such client. Among other disclosures, the semi-annual report must disclose the name of any statewide elected official, state officer or employee, member of the legislature or legislative employee with whom the client of a lobbyist has a reportable business relationship, and provide details of the subject of the transaction and any compensation to be paid by virtue of the business relationship. In addition, beginning June 1, 2012, any client required to file a semi-annual report that has (i) spent over $50,000 for reportable compensation and expenses for lobbying during the calendar year or for the 12-month period preceding the due date of the bi-monthly report, and (ii) at least three percent of whose total expenditures for the same period were devoted to lobbying in New York, shall report to the Commission the names of each source of funding over $5,000 that were used to fund the lobbying efforts. There are certain exclusions to this requirement, and the Commission may waive disclosure where harm may occur. Note: Additional rules apply to lobbying in connection with procurement contracts. d. Termination of Lobbyist If the retainer, employment, or designation of a lobbyist is terminated at any time before the end of the biennial registration cycle, both the lobbyist and the client (or employer) must give written notice to the Commission no later than 30 days after such termination. No notice need be filed if the termination takes effect at the end of the biennial registration cycle. Termination of a lobbyist does not relieve the lobbyist or client from complying with the reporting and filing requirements, including the requirements for the reporting period in which the termination occurs, covering all lobbying activity up to the effective date of such termination. e. Links to Instructions and Forms At the time of the update of this publication, the Commission is still in the process of updating its website to provide relevant information, forms and instructions. The website, located at has some information and links to certain - 8 -

9 forms and instructions. As the Commission continues to update its website the available resources may continue to change. f. Prohibitions The Lobbying Act prohibits compensation which is contingent on the outcome of the lobbying. In addition, individual lobbyists, lobbyist-employees of an organization, and clients of such lobbyists (employers in the case of an organization with lobbyist-employees), and their respective spouses and minor children, are prohibited from offering or giving a gift to any public official (or the official s spouse or minor child), unless under the circumstances it is not reasonable to infer that the gift was intended to influence such public official. The term gift means anything of more than nominal value given to a public official in any form including, but not limited to money, service, loan, travel, lodging, meals, refreshments, entertainment, discount, forbearance, or promise, having a monetary value, with certain exclusions. A meal is deemed to be of more than nominal value. Note that complimentary attendance at bona fide charitable or political events, including food and beverage, will not constitute a gift. See Section 1-c of the Lobbying Act and the Commission on Public Integrity's Advisory Opinion No for additional guidance on gifts. g. Penalties Penalties include fines up to $50,000, criminal penalties and disbarment from acting as a lobbyist. h. Resources New York Legislative Law Article 1-A, 1-a through 1-v (2011), known as The Lobbying Act. Public Integrity Reform Act of 2011, 2011 N.Y. Laws ch Additional guidance is available at the Commission s website at