Section of State and Local Government







State & Local News
Vol. 19, No. 3, Spring 1996

Otto J. Hetzel is a professor of law at Wayne State University and also practices law in Washington, D.C. with the firm of Pepper, Hamilton & Scheetz.

Washington's Labyrinthine Ways

By Otto J. Hetzel

With Republican and Democratic Presidential Candidates Now Selected, Congressional Legislation Now Becomes the Battleground for Election Advantage. Now that Senate Majority Leader Dole only needs formal affirmation of his candidacy at the convention, various pending legislative measures, resolution of the debt limit ceiling and the budget impasse, will become the focus in Washington. Budget agreements for the remaining five departments seem unlikely. Again, the probable result will be a series of continuing resolutions, while remaining differences between the White House and Republican-controlled Congress are negotiated over time. Given that these resolutions involve significant percentage reductions from last year's levels, Republicans could simply announce success in the budget battle by totaling up their reductions and declaring victory. It was surprising they didn't use the earlier occasion when they obtained a commitment from the President for a seven-year balanced budget to do so when they had that chance.

Democrats would appear to gain little by giving in to cuts on domestic programs of concern to their constituents. Republicans cannot afford to be blamed again for another government closedown. While the difference in specific amounts is now modest, under $4 billion, the policy divide over how and where reductions will be taken is still wide. Democrats will continue to resist environmental, crime control, and medicare cuts. Continued opposition to Republican cuts in these areas is likely to benefit them in fall elections. Real accommodation in each side's positions seems unlikely, but the dynamics are volatile and public perceptions in allocating blame are more likely to drive decisions than policy positions. And, Spring just arrived!

Republicans Working to Increase Success in Their Contract With America. In an effort to salvage some success in achieving their Contract With America, House Republicans have now agreed to several compromises to allow them to realize a greater number of their Contract commitments. A presidential line-item veto was enacted and limited tort law reform was passed based on conference committee compromises between House and Senate versions. The movement on legislation was to allow the Republican Congress to avoid a "do-nothing" label, that the failure to compromise was about to stamp on them.

Republicans Push Federal Preemption of State Product Liability Laws. Tort reform it is not, but agreement on federal limits to state punitive damages, if only as to product liability lawsuits, seemed likely to become law shortly, until Clinton announced he would veto it. A House-Senate conference compromise was approved imposing federal limits on state product liability laws. In an age of returning power to the states, this bill is a curious anomaly. The compromise is a far cry from the Republican House version, part of the Contract With America. The federal legislation would cap state laws providing for punitive damages at $250,000 or two times compensatory damages, whichever is larger. Businesses with less than twenty-five employees would only be liable for the smaller of the two limits. An exception the President found insufficient would allow judges to override the limits where the manufacturer's or seller's conduct was "egregious." He also objected to federal elimination of state-authorized "joint and several" liability.

Provisions in the earlier House version dropped from the compromise include "loser pays" for court costs and attorney fees, protection from liability for products receiving Food and Drug Administration approval, and exclusion of doctors, drug companies and makers of medical products from liability lawsuits. The bill does provide for a national statute of limitations on product liability of two years or until discovery of the cause of harm. Whether any compromise can be reached with the White House is problematic at this point.

Talk About Positive Thinking, Senator Dole Engineers Congressional Compromise for Line Item Veto for President. Another part of the House Republican Contract, authority for the President to rescind or reduce specific appropriations items, new entitlement spending, or narrowly targeted tax breaks, was enacted under a compromise fashioned by Senator Dole, once he returned from his successful campaigning for the nomination. Now the President is limited to either accepting or vetoing the whole bill. Under the President's new authority, his item veto would be subject to congressional reversal. Congress could still insist on the expenditure of funds, initially by a majority vote, but if that was vetoed, then a two-thirds majority would be required. Stalled by concerns about giving Clinton that authority, especially during the current budget dispute, Dole personally moved the compromise forward. But, don't bet that it will be made effective until late in this current term, at best.

Of course, these new powers would not permit the President to add or re-direct funds, issues that are at the core of the current budget conflict. Forty-three states now give their governors some form of line-item veto. Constitutional challenges are still likely and support from Democrats is problematical. Senator Robert Byrd has strongly opposed Congress ceding more budget power to the President. It seems ironic that Congress has now voluntarily transferred considerable power back to the President, after a hard fought battle culminating just over twenty-two years ago to wrestle power away from then President Nixon. One ignores history at one's peril.

With the recent dismissal of allegations he made false statements to the House Finance Office only thirteen counts remain in the two-year old prosecution of the former powerful House leader. The Supreme Court had limited the scope of one of the statutes under which he was being charged solely to lying to executive branch officials. Other counts of converting federal funds and campaign contributions to his own use remain, but have been vigorously denied. Unless federal prosecutors appeal, answers to the remaining allegations will await trial, now set to start in May.

Special Counsel Investigation of Former Secretary Sam Pierce's Administration of HUD Ends with a Whimper. Originally indicted on twenty-five counts of committing perjury before a grand jury and lying to Congress regarding his role in obtaining funds for clients, former Interior Secretary James Watt agreed to a fine and public service for the misdemeanor of attempting to mislead a grand jury. Seven of the counts were dismissed following the Supreme Court ruling that restricted prosecutions for lying to Congress. Watt admitted making misleading statements in a letter responding to FBI requests for documents by denying he had relevant documents. With this action, the Special Counsel's inquiry of former Secretary Sam Piece's administration of HUD is completed. The saga did significant damage to HUD's reputation and left the former Secretary badly disparaged as a result of the revelations and successful prosecutions of his former aides.

The Lobbying Disclosure Act of 1995: A More Inclusive Lobbying Disclosure Law Enacted After Fifty Years. Lobbying disclosure requirements were significantly increased starting January 1, 1996, and were extended to matters before the executive branch as well as Congress. Knowledge of the specific provisions should be an immediate priority for any lawyer who becomes involved with federal funding and administrative decisions. After registering, the first reports will be due August 14, 1996, so if it applies, calculate the time for completion of the report in your summer vacation plans. Separate registrations and reports for each client are required where lobbying involves more than one client or organization.

Long stalled, voter discontent with special interests appeared finally to force the Act's passage, just before year-end. The Act forces lobbyists (especially lawyers previously afforded some exemptions for their role) to register, disclose their clients, their contacts, the issues involved, what they are working on, and how much they are paid. The law is intended to reach lobbyists who currently advise clients but do not directly contact lawmakers or senior executive branch officials. This is the first change since 1946 in registration and disclosure requirements. The GAO has calculated that only a third of the 14,000 lobbyists estimated as operating in Washington, D.C. were registered under prior laws, and even those who did register provided only limited information about their activities.

The Act covers "lobbyists" who make "lobbying contacts" with "covered legislative and executive branch officials." Lobbyists are employees, individuals, or firms, making more than one lobbying contact, who spend at least 20 percent of their total time either for their employer (an in-house lobbyist) or for a client lobbying (as an individual or firm). "Lobbying contacts" are defined as members of Congress, congressional staff, and senior executive branch officials. The definition of a lobbyist is: an individual who is employed or retained for compensation to make more than one lobbying contact, and whose lobbying activities constitute at least 20 percent of his or her services performed for that client or their employer during a six-month period. Covered "lobbying contacts" are with regard to:

  1. the formulation, modification, or adoption of federal legislation (including legislative proposals);
  2. the formulation, modification, or adoption of a federal rule, regulation, executive order, or any other program, policy, or position of the U.S. government;
  3. the administration or execution of a Federal policy (including the negotiation, award, or administration of a federal contract, grant, loan, or permit, or license); or
  4. the nomination or confirmation of a person for a position subject to confirmation by the Senate.

"Lobbying activities" now covered include, in addition to actual contacts, efforts in support of lobbying contacts, including preparation and planning activities, research,and other background work that is intended at the time it is performed for use in contacts and coordination with the lobbying activities of others. The application of the Act to what has been termed "grass-roots lobbying" is not absolutely clear. Engaging in lobbying activities without making lobbying contacts does not require registration or filing of reports. Expenses in support of lobbying contacts, however, may require documentation of the expenses and income associated with grass-roots lobbying as support of lobbying contacts that occur.

The specific definitions of those covered as "lobbying contacts" for the executive branch include: the President and Vice-President, employees of the Executive Office of the President, any person subject to confirmation by the Senate, and any officer or employee in a position of a confidential, policy-determining, policymaking, or policy-advocating character. Covered congressional contacts include those with: elected members of the House and Senate; their personal staffs; committee and leadership staffs; staffs of a working group or caucus; elected officers of either house; and legislative employees required to file financial disclosure reports.

If asked, any lobbyist making an oral lobbying contact must state whether his or her lobbying firm or organization is registered, identify the client, and disclose any foreign interest regulated by the Act. Written lobbying contacts must disclose foreign interests regulated by the Act.

One consequence of the legislation may be to encourage coalitions or associations to employ or retain other persons to conduct lobbying activities. This would allow the individual members to avoid the reporting requirements, since contributions or dues from individual members need not be reported, only gross amounts spent.

The definition of communications constituting a "lobbying contact" is quite broad and is likely to bring many attorneys and consultants previously able to avoid registration within the reach of the Act. Any oral or written communication (including an electronic communication) is covered, with nineteen specified exemptions. These can be of significance to attorneys directly involved in contacts or advising others in dealing with the federal government who desire to avoid contacts that may trigger the need to register and report expenditures. This may be achieved, if special care is taken by limiting lobbying activities to communications made:

  1. by a federal, state, or local government elected or appointed official, or employee, acting in their official capacity;
  2. by a representative of a media organization if the purpose is to gather and disseminate news and information to the public;
  3. in a speech, article, or publication publicly distributed by mediums of mass communication;
  4. requesting a meeting, the status of an action, or other administrative request, so long as not an attempt to influence the contacted, covered official;
  5. while participating in an advisory committee subject to the Federal Advisory Committee Act;
  6. in testimony before a legislative committee or task force or submitted for inclusion in the hearing record;
  7. by written response to an oral or written request from a covered official for specific information;
  8. as required by subpoena, or otherwise compelled by statute or other action of Congress or an executive branch agency;
  9. in response to a solicitation for communications to a specified official, such as in a Federal Register notice for comments for proposed regulations;
  10. disclosing information, the unauthorized disclosure of which is prohibited by law, to an agency official regarding a judicial proceeding, criminal or civil law enforcement inquiry or proceedings, or a filing or proceeding required by statute or regulation to be conducted on a confidential basis;
  11. in compliance with agency procedures regarding an adjudicatory proceeding;
  12. in the course of a public proceeding on the record;
  13. in a written petition for agency action required to be a matter of public record according to agency procedures;
  14. on behalf of an individual's benefits, employment or other personal matters involving only that individual (except to obtain private legislation for the individual's relief);
  15. by a disclosure by an individual protected by the Whistleblower Protection Act, Inspector General Act, or another provision of law; and
  16. by a tax-exempt church or religious order, officials of a self-regulatory organization under the SEC or directly to the SEC.

Individual clients who spend more than $5,000 on lobbying, and organizations spending more than $20,000, must also register and file semi-annual disclosure reports. The requirements extend to in-house lobbyists. Violators can incur fines of up to $50,000. Reflective of the constitutional sensitivities that limited enforcement under the 1946 Act, specific construction rules provide that the Act's provisions shall not be construed to interfere with the first amendment rights to petition the government for redress of grievances, the right to express personal opinion, the right to association, nor to authorize a court to prohibit lobbying activities or contacts.

Exceptions from the Act's requirements are provided for some specified nonprofit entities: lobbying officials who work for a government corporation, an organization of state or local elected officials, an Indian tribe, a national or state political party, a government-sponsored enterprise (such as the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation, and the Student Loan Marketing Association), and public utilities. Obviously some lobbying before the ban was quite successful for those who were exempted.

Turnabout Is Fair Play: Federal Agency Anti-Lobbying Act Proposed to Limit Executive Branch Lobbying. Covering all federal employees except those receiving Senate confirmation, the measure would restrict use of appropriated funds for activities intended to promote public support or opposition to any legislative proposal. No longer could funds be spent producing publications, news releases, film, or video presentations that could be used to promote or defeat any legislation. Possible violations would be investigated by the General Accounting Office and funds misused would have to be reimbursed to the Treasury.

Congress has long resented executive branch lobbying unless it supports the majority's position. The bill seems a bit unrealistic at this stage, however. Its attempt to prohibit development and publication of factual materials that could be of use to various interest groups lobbying Congress would inhibit a fundamental function of government and the source of funds to pay back amounts subsequently determined to have been improperly used is not apparent except from congressionally approved funding for other obligations of the agency or department. Doesn't Congress even want the facts?

If You Didn't Make A Gift To Your Favorite Member Of Congress Last Year, Its Probably Too Late Now! Also effective January 1, 1996, members of Congress and their staff are subject to new ethics rules regarding the acceptance of "gifts." These are broadly defined to include any item having a monetary value, such as meals, lodgings, transportation, gratuities, tickets, favors, discounts, entertainment, hospitality, loans, forbearance, and services. Rule 52 of the House restricts Members and staff generally from accepting all gifts, referred to as "zero tolerance," except from personal friends, and these are limited to $250. Under Senate Rule 35, Senators and staff may not accept any item with a $50 value, and only up to a $100 aggregate limit from any single source. Gifts with a value of less than $10 are neither limited nor reportable. In a candid explanation of the reason lobbyists contribute, because of the official position held, Speaker Gingrich noted, "There's no way around it. You didn't get the gift before you were elected. You ain't gonna get the gift after you leave." The only exception is from family members and personal friends. Of course, you still may make a campaign contribution of any amount up to $1,000 per election, if you like. The only difference may be how the member can use it, personally or professionally.

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