Client Alert

In the wake of new federal lobbying and ethics legislation, signed into law in September 2007, the Senate issued this week important guidance for any company considering hosting an event at the 2008 Presidential nominating conventions. The Senate also issued guidance regarding other gift rules that, under the new law, apply not only to Members of Congress, but also to the private sector.

It is essential that companies employing federal lobbyists keep abreast of these periodic statements from the House and Senate ethics committees. Companies that employ federal lobbyists are now subject to criminal liability and substantial fines for violating Congressional gift and travel rules, and filers under the Lobbying Disclosure Act are now subject to random audits. Moreover, on or before July 31, 2008, a representative of every organization that employs a federal lobbyist must certify, under penalty of perjury, that the organization is familiar with Congressional gift and travel restrictions and has complied with these restrictions during the first six months of the year. See earlier client alert on the semi-annual certification requirement.

Presidential Nominating Conventions
Under the new federal ethics and lobbying law, a House or Senate Member is no longer permitted to attend an event held during a national political party nominating convention if the event is in honor of the lawmaker and is directly paid for by a registered federal lobbyist or an organization employing federal lobbyists. The newly-published guidance for Senate Members clarifies that the prohibition covers events where one or more Senators are identified by name or title, as well as events honoring a group composed solely of Members of Congress.

By way of example, the Senate Ethics Committee notes that "an event honoring the 'Nevada Congressional Delegation' would be prohibited, but one honoring 'Nevada Republican Officials' or ‘Nevada Delegates' would be permissible."

Also, while the new law bars events “directly paid for” by lobbyists or organizations employing lobbyists, the Senate Ethics Committee has clarified that the prohibition includes situations where funds are donated to a non-lobbyist entity and earmarked for an event honoring a Member.

The House Ethics Committee previously issued guidance on this same subject, but interpreted the new law less narrowly. Unlike Members of the Senate, House Members may participate in events organized to honor a Congressional delegation or caucus, so long as the event (including invitations and publicity) does not name or provide any special benefit to a particular Member.

Please bear in mind that events sanctioned by either the House or Senate Ethics Committees, or both, must also comply with one of the exceptions to the gift rules – that is, the event must be a “reception,” “widely-attended event,” or a “charity” event, as defined by the House and Senate ethics committees. These exceptions have very specific requirements and should be examined carefully. Failure to adhere to these exceptions can subject the company to civil and criminal liability.

Other Guidance on Receptions, Items of Little Intrinsic Value
House and Senate gift rules permit Members to attend receptions, even if paid for by a lobbyist or organization that employs lobbyists, so long as the food and refreshments are of nominal value and are not offered as part of a sit-down meal. Over time, this has been interpreted as permitting receptions at which hors d’oeuvres and drinks are served, or a “continental-style” breakfast. New guidance issued by the Senate Ethics Committee clarifies that this exception “includes food and drink of nominal value at an organized event, media interview, or other appearance where such items are customarily provided to speakers, panelists, and participants.”

The rules of both houses of Congress also permit Members to accept gifts of little intrinsic value, even if offered by a lobbyist or organization that employs lobbyists. New guidance issued by the Senate Ethics Committee specifies that gifts of baseball caps, T-shirts, and greeting cards are permitted, regardless of their value. Also permitted are gifts of non-food items valued at less than $10, as well as food, flowers, and perishables valued at less than $10 that are brought or delivered to a Senate office and are not part of a meal.

Conclusion
The new federal ethics and lobbying legislation presents significant compliance challenges in 2008. Because representatives of companies and trade associations must now provide sworn certifications that their organizations understand and are in compliance with Congressional gift and travel rules, ongoing guidance from the ethics committees should be incorporated into training programs, and reflected in policies and procedures. Previous client alerts on The Honest Leadership and Open Government Act of 2007 may be found at www.wcsr.com/teams/political-law-practice.

Lawrence H. Norton and James A. Kahl served as General Counsel and Deputy General Counsel, respectively, of the Federal Election Commission, spanning the period from September 2001 to September 2007. Larry and Jim are frequent speakers on corporate political activities and related compliance issues.