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Ethics and Lobbying Law Update.
In the fall of 2009 the State Ethics Commission (SEC) adopted and published Advisory Opinion AO-L-09-010 which impacts the reporting of compensation paid by lobbyist principals to lobbyists. On January 28, 2010, the Commission issued additional guidance in an effort to address concerns regarding the meaning and scope of the opinion. Amidst considerable confusion and uncertainty as to compliance, the SEC agreed to delay the effect of the opinion until 1st Quarter 2010 reporting period.
North Carolina’s lobbying laws have always expressed and approved of an allocation of compensation paid by a lobbyist principal to lobbyists between those activities which met the statutory definition of lobbying and those which did not. Even with the expansion of the definition of lobbying (both in scope and range of covered persons) over the years, the statutes maintained this allocation premise and the notion that some activities, such as monitoring the filing of bills or sitting in a committee room listening to proceedings, did not fall under the definition of lobbying.
When the Commission issued AO-L-09-010, many in the legislative community were flummoxed. The opinion effectively redefines “payment for services”. Now, the threshold for reporting of compensation is triggered by a “but for” standard not seen in our laws previously. For the first time, the statutory definition of lobbying is disconnected from what is reported by a principal as being paid for lobbying. Prior to the opinion this was not the easiest determination. But, as noted above, general research, monitoring and other efforts not meeting the "direct" or "indirect" lobbying definitions under GS 120C-100(a)(9) were generally understood and accepted as “non-lobbying activities.”. Thus if a principal paid a lobbyist to do those things, that payment was not a payment for lobbying services and thus not reportable. Now those activities may or may not be lobbying and thus trigger reporting of the compensation.
The distinction becomes arbitrary. Sometimes it will turn on whether the individual is currently registered. Consider two individuals doing the same thing—sitting in the back of a committee room-- but otherwise not talking to any covered persons. One has registered as a lobbyist for one client. The other has not registered for any clients. Suppose the first later uses the information he or she heard in the meeting to perform some action meeting the definition of lobbying. Under AO-L-09-010 and the guidance, the principal would have to report payment for that non-lobbying activity. The unregistered individual’s activity would not trigger any reporting whatsoever. Same activity— two very different results.
Reporting by principals of payment for services to a lobbyist has become challenging for the first and second quarters of 2010. Care should be exercised in determining an allocation if other than 100%.