July Is No Time For Slacking Off: New Corporate Certifications And Disclosures Required By The Honest Leadership And Open Government Act

Tuesday, July 1, 2008 - 01:00

Lobbyists typically can take a breather when Congress takes its July 4 recess. Not this year. In fact, this summer is a time of high stress in the lobbying community, and for any corporation that employs or retains lobbyists, because compliance with new requirements under the Honest Leadership and Open Government Act (HLOGA) has shot to number one on the to-do list. For the first time in history, individual federal lobbyists and their employing entities must file Form LD-203 with the clerk of the House and the secretary of the Senate certifying, among other things, that they have read and are familiar with the gift and travel rules of the House and Senate and that they have not given a gift they know may not be accepted under House or Senate rules. The new form also requires the reporting of a wide range of payments relating to members and staff of Congress, covered executive branch officials and candidates.

Suddenly, the stakes have gotten very high. Noncompliance with these disclosure and certification requirements is subject to substantially increased civil penalties and to felony criminal penalties. Corporations or lobbyists who provide a gift with knowledge that it may not be accepted under House or Senate rules face the same exposure. A corporation must now assure that it has not given any prohibited gift directly and that it has not reimbursed an employee for anything that constitutes such a gift. In many cases these are falling in the lap of the general counsel or counsel's office. To help counsel keep their cool as this compliance environment heats up, we have outlined below the new certification and disclosure requirements under HLOGA and suggest some steps a company may take to promote compliance.

When Must The LD-203 Be Filed?

The Lobbying Disclosure Act (LDA), as amended by HLOGA, now requires the public filing of semiannual reports, Form LD-203, focusing on gift rule compliance and the reporting of political contributions and politically related expenditures. The first LD-203s must be filed with the clerk of the House and the secretary of the Senate this year no later than July 30 . Succeeding LD-203s must be filed each January 30 (for the preceding July 1 through December 31 period) and each July 30 (for the preceding January 1 through June 30 period).

In their jointly issued guidance on the LDA generally, and on the Form LD-203 specifically, the clerk and the secretary emphasize that they "do not have the authority ... to grant extensions for filing LDA documents." Timely filing of Form LD-203 is essential, so it is crucial that filers, whether individual or corporate, have collected all the information needed to complete the form well before the filing date. It is also important that filers anticipate and resolve as soon as possible any potential reporting or certification issues. Unfortunately, in resolving such issues, reliance on the guidance issued by the clerk and the secretary may be problematic. In their combined guidance document, the clerk and the secretary state, the "document does not have the force of law, nor does it have any binding effect on the United States Attorney for the District of Columbia," the ultimate enforcer of the provisions of the LDA. So counsel must tread this new compliance minefield all the more carefully.

Who Must File The LD-203?

Each active registrant under the LDA and each individual who has been listed as an active lobbyist by his employer-registrant on Forms LD-1 and LD-2 must file the new semiannual Form LD-203. In the case of a corporation registered under the LDA, this means the corporation must file an LD-203 report disclosing and certifying the relevant information for the entire organization, and the individuals listed by the corporation as active lobbyists must each file a separate LD-203 as to their own expenditures and gift rule compliance.

What Exactly Must Be Certified And How Are You Going To Go About Doing It?

While the LD-203 forms are not available as of the time of writing, the guidance of the clerk and the secretary states that the first part of the form will contain identifying information required by HLOGA. The guidance states that the final part of the form will contain, as required by the language of HLOGA itself, "a certification by the person or organization filing the report that the person or organization"

• has read and is familiar with those provisions of the Standing Rules of the Senate and the Rules of the House of Representatives relating to the provision of gifts and travel; and

• has not provided, requested, or directed a gift, including travel, to a member of Congress or an officer or employee of either House of Congress with knowledge that receipt of the gift would violate rule XXXV of the Standing Rules of the Senate or rule XXV of the Rules of the House of Representatives.

Obviously, this certification requires a responsible individual to obtain a copy of the current House and Senate rules on gifts and travel and read them carefully. The second part of this certification requirement is more difficult: whether the corporation has 30 employees or 30,000 employees it must certify that it has not made a gift with the knowledge that the gift would violate the rules, including through reimbursement of anyone it employs or retains. How can the corporation be sure that one of its employees did not submit a reimbursement for something that would constitute a gift? Because ignorance of the law is unlikely to be an excuse here, the corporation should be proactive in making sure its employees know the relevant congressional rules. The employee handbook and company policies would be a good place to start. Make it the company policy to prohibit gifts that violate the law. E-mail or other notification to employees and employee-training modules (online or in person) would be another good step. Obtaining certifications from employees that they haven't sought reimbursement for a prohibited gift also makes sense.

While there is no requirement that a company take any of these steps, they would certainly give the person signing the certification for the company some comfort knowing that he or she can sign in good faith. And these, or similar, compliance and record-keeping measures should allow a company to meet the possibility of an LDA compliance audit by the Office of the Comptroller General. Yes, an audit. Although the Comptroller General will not enforce LDA compliance, HLOGA imposes on that office the statutory duty to provide an annual report to Congress on the general extent of compliance with the LDA; in preparing this annual report HLOGA empowers the Comptroller General "to request information and access to any relevant documents" from any registrant or any employee listed as a lobbyist by a registrant. The Office of the Comptroller General may request the submission in writing of "such information as [it] may prescribe," and it may notify Congress if a person from whom it has requested information has refused to comply.

The kind of company-wide measures mentioned above should also promote compliance with the requirements of what will be the middle part of Form LD-203. This part of the form will require the reporting of all sorts of payments that in some way, shape or form touch members of Congress, covered executive branch officials or candidates. Tracking closely the language of HLOGA itself, the House and Senate Guidance identifies the categories of reportable expenditures:

1. The date, recipient, and amount of funds contributed to any federal candidate or officeholder, leadership PAC, or political party committee, if the aggregate during the period to that recipient equals or exceeds $200.

2. The date, the name of honoree and or honorees, the payee(s) and amount of funds paid for an event to honor or recognize a covered legislative branch official or covered executive branch official (except for information required to be disclosed by another entity under 2 U.S.C.§434).

3. The date, the name of honoree and or honorees, the payee(s) and amount of funds paid to an entity or person that is named for a covered legislative branch official, or to an entity or person in recognition of such official (except for information required to be disclosed by another entity under 2 U.S.C.§434).

4. The date, recipient, the name of the covered official, the payee(s) and amount of funds paid to an entity established, financed, maintained, or controlled by a covered legislative or executive branch official or to an entity designated by such official (except for information required to be disclosed by another entity under 2 U.S.C.§434).

5. The date, the name of honoree and or honorees, the payee(s) and amount of funds paid for a meeting, retreat, conference or other similar event held by, or in the name of, one or more covered legislative branch or covered executive branch officials (except for information required to be disclosed by another entity under 2 U.S.C.§434).

6. The date, the name of honoree, the payee(s) and amount of funds equal to or exceeding $200 paid to each presidential library foundation and each presidential inaugural committee.

The joint House/Senate LDA guidance suggests a very broad reading of these new provisions. So, how can you get tripped up? Here are some examples:

What if the local chamber of commerce invites a member to speak at a luncheon and a company employee goes to the event on the company dime? Based on the guidance, that luncheon constitutes recognition of the member and payment to go to the event becomes a reportable event.

What if a sitting member was involved in the creation of a nonprofit entity? A contribution to that entity would still be reportable even if the member is no longer involved since, in the first instance, the member helped establish the nonprofit. How are you going to know that?

• What if a charity gives a member an award at its annual dinner? The company thinks it is making a charitable contribution by buying a ticket to the dinner, and it is, but it also would be a reportable contribution on the LD-203.

These are just a few examples out of hundreds of possibilities of activity reportable on the new LD-203. The key to compliance here is to educate, educate, educate. Everyone who might approve of the kinds of disbursements now reportable on the LD-203 must familiarize themselves with the language of the form and must learn the right questions to ask about the event or organization being supported. Without educating its people, a company will have no chance of being able to report all covered transactions.

If you haven't started to think about these issues, stop what you are doing and start now. July 30 is just around the corner.

Carol A. Laham , a Partner in Wiley Rein's Election Law & Government Ethics Practice, counsels clients and litigates on compliance with federal, state and local election laws, the Ethics in Government Act, House and Senate Ethics, state ethics laws, the Lobbying Disclosure Act of 1995 and its state counterparts and the Foreign Agents Registration Act. She can reached at (202) 719-7301. Robert L. Walker serves as Of Counsel to the group and provides counseling, investigatory and litigation services to corporate clients and government officials, focusing on government ethics, lobbying compliance. Prior to joining the firm, he was the Chief Counsel and Staff Director of the Senate Ethics Committee and held a similar position with the House Ethics Committee - the only person to have led both committees. He can reached at (202) 719-7585.

Please email the authors at claham@wileyrein.com or rlwalker@wileyrein.com with questions about this article.