On September 14, 2007, President Bush signed into law "The Honest Leadership and Open Government Act of 2007" (HLOGA) significantly expanding the scope and reach of the federal lobbying registration and disclosure laws and extending the coverage of the U.S. House and Senate ethics rules to lobbyists, lobbying firms, registered foreign agents, and the companies, clients, associations, and entities that employ or retain them.

For the first time, not only are lobbyists and lobbying firms subject to regulation, registration, disclosure, and filings, but now the clients and employers of lobbyists and lobbying firms also are swept into the provisions of federal law and subject to the penalties for non-compliance.

Who Is Impacted?

  • Any company that employs a federal lobbyist, regardless of where that individual or company is located

Example: XYZ Insurance Company in West Memphis, Tennessee employs a director of government relations who works in the corporate headquarters in Tennessee and handles all state and federal lobbying responsibilities of the company. The new provisions of the law require the company to file more frequently and report more information. Additionally, both the company and the employee-lobbyist must now have a brand new semi-annual filing (described more fully below), which requires more recordkeeping and new compliance systems to properly capture and report the information.
  • Any entity that retains a lobbying firm or lobbyist on a contractual basis, even if the lobbyist is not an employee of the company
Example: ABC Insurance Company in Atlanta, Georgia has no employees who are registered federal lobbyists. However, the company retains a lobbying firm in Washington, D.C. that monitors federal legislation and handles any lobbying responsibilities for the company in the nation's capital. Under the new law, the company is subject to the provisions of the gift and travel rules related to congressional staff, employees, and members.
  • A company that retains or employs a registered foreign agent is subject to the same provisions of law governing lobbyists and lobbying firms

What Is the Impact of the New Law?

  • Any company that employs a registered federal lobbyist or registered foreign agent is now subject to new filing, disclosure, and reporting provisions. The filings are required of both the company itself and by each individual employee who is registered as a lobbyist or foreign agent.
  • The changes in the law for those entities that employ a registered federal lobbyist are:
    • The triggers for employees' registration as lobbyists under the Lobbying Disclosure Act of 1995 (LDA) have been amended and reduced to quarterly expenditures of $10,000 by the company, rather than semi-annual expenditures of $20,000 for lobbying activities under the prior law. There are other factors required to trigger registration; those factors were not changed under the new law.

    • The former semi-annual reporting under the LDA has been increased to quarterly reports, due 20 days after the reporting period ends, rather than 45 days after the semi-annual reporting period ends.

    • New disclosures of prior employment of employees registered as lobbyists are required, as are additional reporting and disclosure of memberships in associations and coalitions.

    • A new semi-annual report is required to be filed by the employer and by the lobbyist/employee of the company, disclosing (1) the existence of any federal political action committee (PAC) established by the company or the lobbyist; (2) contributions from the company PAC or the employee to any federal candidate or officeholder, federal leadership PACs, or national party committees of $200 or more; and (3) any contributions from the company or the individual lobbyist to any events honoring federal officeholders or officials, entities established or designated by federal officeholders or officials, presidential library funds and inaugural committees, or other recipients described in the new law.

    • A representation under penalty of perjury that the filer (including the company and the individual employee(s) registered as lobbyist(s)) is familiar with the ethics rules of the U.S. House and Senate and that neither the company nor the lobbyist has given any gift to any member, officer, or employee of Congress in violation of the gift rules of the House or Senate.
Example: XYZ Insurance Company in West Memphis, Tennessee, because it employs its own federal lobbyist, must make new filings regarding its federal lobbying activities quarterly instead of semi-annually. Plus, the individual employee and the company must now separately file a report twice per year that attests under penalty of perjury that neither the company nor the lobbyist/employee has violated the congressional gift rules.
  • Any company that retains or employs a registered federal lobbyist is subject to new restrictions on gifts to members and employees of Congress, regardless of whether the gift is given by a lobbyist
Example: ABC Insurance Company in Atlanta, Georgia has no employees who are registered as lobbyists, but does retain a lobbying firm in Washington, D.C. to monitor legislation and assist the company's chief executive officer (CEO) in getting meetings with key members and staff in Congress on issues of importance to the company. The company and all its employees are now subject to the congressional gifts and travel rules. The CEO takes the local congressman to dinner during the CEO's annual trip to Washington, D.C. It is now illegal for the company to reimburse the CEO for the costs of the dinner, and the cost of the dinner cannot exceed $49.99 (drinks included). The extent and reach of the congressional gift and travel rules are extensive … and any entity that employs or retains a federal lobbyist is now subject to the prohibitions of the rules.

What Are the Penalties for Violation of the Law?
HLOGA carries stiff civil and criminal penalties for its violation, and it authorizes random audits of all filings required under HLOGA:

  • Civil penalties up to $200,000 for failure to comply with the disclosure and reporting provisions of the act
  • Criminal penalties up to five years in federal prison for "knowingly and corruptly" failing to properly report and disclose gifts that violate the House and Senate ethics rules
  • The U.S. Government Accountability Office (GAO) is directed to conduct random audits of all filings under the LDA and is authorized to request documentation from filers to substantiate the reports filed
  • HLOGA has added to the federal criminal code a blanket prohibition against violation of the House and Senate ethics rules by any individual or entity, with violators subject to prosecution by the United States Department of Justice

HLOGA makes it imperative that any entity that employs or retains a federal lobbyist, lobbying firm, or registered foreign agent take the following steps:

  • Become familiar with the provisions of HLOGA and ascertain its impact on the company
  • Conduct an internal compliance assessment and identify needed changes
  • Establish a compliance and reporting system to ensure proper recordkeeping and reporting of pertinent information required by the law

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.