Last Updated: July 2012 Federal Update: October 2013

Transcription

1 Last Updated: July 2012 Federal Update: October 2013 PUERTO RICO LOBBYING REGISTRATION AND REPORTING McConnell Valdés LLC (Puerto Rico) Antonio Escudero Viera and Samuel Céspedes Sabater Foley Hoag LLP (Federal) Tad Heuer and Pat Cerundolo Table of Contents 1. Federal Registration and Reporting 2. Puerto Rico Registration and Reporting The following is intended to provide a brief overview of the various potential registration and reporting requirements under Puerto Rico 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 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 1 Page

2 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 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 2 Page

3 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. 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. 3 Page

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. 4 Page

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. Puerto Rico Registration and Reporting h. Lobbyist Registration and Reporting The Puerto Rico Senate and the House of Representatives keep separate registries for lobbyists. Lobbying is defined as an act in which money or other compensation is exchanged to mediate, influence, or put pressure on the legislative process to pass or not to pass any legislation through direct communication with any member of the Senate or the House of Representatives or through their employees or advisors. Any person with the intention of lobbying in the House of Representatives or the Senate must complete a form available at the Secretariat of each legislative chamber. This requirement is regulated, in the Senate, by Administrative Order 05-16, and in the House of Representatives, by Rule 48 of the chamber s regulations. Both chambers keep a list of registered lobbyists. The Lobbying Registry of the House or Senate can be accessed through the following internet websites: The lobbyist registration form for the Senate is available at this website: 5 Page

6 lderos.pdf The forms require the following information: Name of the person or entity to be registered; Type of organization. If a corporation, the Registration Number issued by the Puerto Rico Department of State must be provided; Certificate of good standing issued by the Puerto Rico Department of State; Address, telephone numbers, address of the person or entity to be registered; Name of each employee, member, shareholder or contractor authorized to participate in lobbying efforts on behalf of a client; Type of activity or business; and Name of client(s). (The Senate requires one form to be completed for each client represented) The information provided will be available to the public through the Secretariat of each chamber and through their respective websites. Any person that professionally represents the interests of a client in the legislative process must abide by the regulations. The Secretary of each legislative chamber will issue the corresponding certificate of registration. i. Prohibitions Any person engaged in representing its client's interests through the legislative process, who is not duly registered, cannot represent itself as a lobbyist before the legislature. j. Gift and Lobby Expenditure Restrictions Puerto Rico law forbids public officials or employees, in all branches of government, from accepting or soliciting goods of economic value as compensation for performing the public official's duties and responsibilities. In addition, public officials or employees are prohibited from soliciting or accepting gifts, favors, services, donations, loans, or any other item of value from a person that: Has been or attempts to be engaged in a contractual, commercial, or financial relationship with the agency or legislative body for which the public official or employee works; Engages in business or other activities that are directly regulated by the agency; Has interests that can be substantially affected by the compliance or noncompliance of the duties of the public official or employee; or 6 Page

7 Is a foreign official, without prior approval of the Legislative Assembly. However, the executive and legislative branches of government can make exceptions to the referred prohibition, taking into consideration the functions and duties of the employee or public official. Any exceptions will be in each agency s employee manual, internal rules, or in the Code of Ethics of the House or Senate. The following are examples of the exceptions that are normally included in an agency s employee manual or internal rules: Public officials and employees may be able to accept gifts if the circumstances reflect that the motives for the gift arise from a personal or family relationship. Public officials and employees may accept food of nominal value, during a meeting or inspection of a facility. Public officials and employees may accept promotional material, such as pens, pencils, notebooks, calendars and other products of nominal value. Public officials and employees may accept financial aid and other forms of economic assistance incidental to education or training. k. Penalties Violations of the gifts or donation restrictions may result in civil and criminal penalties, including fines and confinement. 7 Page