New regulations to have little impact on lobbyists

Lobbyists who fundraise for lawmakers have found themselves under new regulation, but while the headlines portend significant changes in the manner in which lobbyists conduct their trade, in practice, it should have little impact.

The Federal Election Commission (FEC) recently clarified its rule for implementing section 204 of the Honest Leadership and Open Government Act of 2007 (HLOGA). Section 204 requires campaign committees to disclose information about certain contributions forwarded or raised by persons or entities that are reasonably known to be registered lobbyists.

The new rule, while well-intentioned, highlights the difficulty in trying to perfect the current campaign finance system.

The purpose of the provision was to shed light on who was raising money for members of Congress and, perhaps of equal importance, which members were doing favors for lobbyists who raised the money. Early versions of HLOGA had lobbyists themselves filing the reports, but in the end Congress decided to assume the responsibility.

In practice, the new regulation will require the reporting of a lobbyist’s identity under limited circumstances. For example, a lobbyist’s name will have to be reported only when a campaign committee receives more than $16,000 (indexed for inflation) in a six-month period, generally, excluding contributions made from the lobbyist or the lobbyist’s spouse. Those contributions must be either forwarded to the candidate or “credited” by means of some written record as having been raised by the lobbyist.

Credit may also be conferred to the lobbyist by some form of recognition for his or her fundraising efforts. While a record has to be in writing, a designation does not. It could be a title, a picture or an invitation to an event that is available only to those who raised a certain amount. Contributions forwarded or credited are collectively referred to as “bundled” contributions. The same requirements apply in the case of a lobbyist political action committee (PAC) that raises funds for a candidate campaign committee, leadership PAC or political party committee. In this instance, its contribution is also not counted toward the $16,000 threshold.

If a candidate’s campaign committee or leadership PAC or a political party committee receives bundled contributions, it must determine whether the bundler is a lobbyist. And if the bundled contributions come from a PAC, the committee must determine if the PAC is “established or controlled” by a lobbyist. This is done by inspecting the House and Senate lobbyist disclosure databases. In either instance, if the answer is in the affirmative, the recipient committee must file a new form with the FEC reporting the identity of the lobbyist or the PAC and the aggregate amount raised.

Will this rule alter the fundraising activities of lobbyists? Probably not. Few lobbyists collect checks and deliver them to a candidate, because they know that practice is problematic. If they ever did, campaigns will not give lobbyists written credit or designations for raising contributions. And lobbyists could simply limit the amount they raise to just under the reporting threshold; $15,999 is still a lot of money.

Nothing in the rule limits the ability of a lobbyist to host a fundraiser. In fact, it may well increase the number of lobbyist-sponsored fundraisers so that lobbyists can be seen by members for whom they are raising money.

According to the FEC, it is not the hosting of a fundraiser that triggers the reporting requirement. Rather, it is the actions that the committee takes in response to the event. If the lobbyist does not deliver contributions from others at the event and if the fundraising committee does not make any written records or bestow any designations such as a title, the recipient would not have to report the identity of the lobbyist or lobbyist PAC.

The mere knowledge by a candidate that a lobbyist or a PAC connected to a lobbyist raised more than the threshold amount is not sufficient to trigger the reporting requirement.

The rule could affect the ability of the congressional party committees, such as the Democratic Congressional Campaign Committee or the National Republican Senatorial Committee, to raise funds. Those organizations do bestow titles — e.g., the Chairman’s Club — and allow individuals who raise a certain amount to participate in events, such as ski trips or golf outings.

If a lobbyist were to raise in excess of $16,000 in order to participate in events reserved for those who raise more than a threshold amount, his or her identity would be disclosed. If the contribution was from a lobbyist’s personal funds, however, no report would be required.

Spulak served as staff director of the House Rules Committee, then as general counsel to the House of Representatives. He is now a partner in the Public Policy and Government Affairs Practice Group at King & Spalding.