OMB Clarifies Presidential Gag Order on Discussions with Lobbyists

The Director of OMB last week issued a memo to heads of executive departments, clarifying President Obama’s instruction that agencies restrict oral communications with registered lobbyists. The President’s memo only permits in-person or phone conversations between lobbyists and executive branch officials about Recovery Act spending that are limited to "policy issues" that do not "touch upon" particular projects.

OMB Director Peter Orszag’s new memo provides some needed clarification, but the core restriction – the gag order on lobbyists’ discussions about projects – is unaffected. The key points are:

• There are no restrictions on oral communications between lobbyists and agency officials about logistics or implementation, such as how to apply for funding under the Recovery Act, how to conform to deadlines, and requests for information about program requirements under the Recovery Act.

• Communications between federal officials and registered lobbyists are permitted at widely-attended gatherings, as defined in executive branch ethics rules.

• The oral communication bar applies "only to communications with individuals who are Federally registered lobbyists," not more broadly to organizations that lobby or to their non-registered employees.

One matter is sure to require further explanation. OMB says that the President's directive "applies to communications prior to the award of a grant or other Recovery Act funding; it does not restrict grant recipients' representatives' ability to communicate with officials regarding the administration of a grant that has already been awarded." It is not clear, however, whether this would allow a lobbyist to speak with a government official about possible modifications to a grant that would help in the administration of the project.

The bottom line is that Mr. Orszag’s memo does little to make the President’s gag order more palatable for federal lobbyists. In a “Frequently Asked Questions” attachment, the OMB Director instructs that while the gag order applies to federal lobbyists, it does not apply to individuals who used to be federal lobbyists, but are no longer, or to currently registered state lobbyists. It is small comfort that the FAQ admonishes agencies that they should not avoid all contact with federally registered lobbyists because they bring to bear helpful information that facilitates agencies’ evaluation of “policies and projects on the merits.” Just don’t talk to them.

ILLINOIS GOVERNOR RESCINDS BLAGOJEVICH ORDER, EASES PAY-TO-PLAY RESTRICTIONS

The new Illinois pay-to-play law just became a bit less complicated, as Governor Pat Quinn rescinded his predecessor’s executive order regarding campaign contributions by state contractors.

Governor Quinn explained his action by saying there was confusion over the interplay between the Blagojevich order and the state’s pay-to-play statute, and that he wanted to clear the decks as legislators consider proposals recently unveiled by a state reform commission.

The Illinois “pay-to-play” law, like similar laws in states and municipalities around the country, seeks to break the link between campaign contributions and the award of government contracts. Contractors and bidders must file registration statements that list affiliates and key employees, along with their spouses and children, all of whom are barred from contributing to certain officeholders and candidates. Failure to comply with registration obligations can lead to fines, and false statements can give rise to perjury charges. A single violation of the contribution ban allows procurement officers to void contracts and disqualify bids.

The Blagojevich executive order substantially built on the restrictions contained in the Illinois law. While the statute bans contractors from contributing to the executive official responsible for overseeing their state contracts (and to candidates for the same offices), the Blagojevich order banned contributions to all top executive branch officials and candidates, regardless of whether they had responsibility for a particular contract. The former Governor’s order also barred contractors from contributing to state legislators, a group unaffected by the Illinois pay-to-play law. And, the Blagojevich order extended the law's contribution restrictions to a greater number of contractor affiliates, officers and employees.

In the wake of the political scandals that have rocked Illinois, further efforts to reform campaign finance and procurement laws seem likely. In the meantime, however, the rescission of the executive order will somewhat ease the compliance burden on Illinois contractors.

ARKANSAS TO LOBBYISTS: YOU PAY, YOU STAY

A new Arkansas law, which will take effect mid-summer, prohibits lobbyists from paying for food and beverages at any location or event where the lobbyist is not physically present. The bill’s sponsor says the law is aimed at preventing lawmakers from going out for a meal and calling a lobbyist for a credit card number in order to pay for it. Was this really going on? The state Attorney General, perhaps revealing that there was not much, if any, evidence of this practice, said in a statement: “I am pleased to see that ‘absentee lobbying’ will now be a thing of the past, no matter how rarely it happens.”

The new law also bans contingency fees for lobbyists – fees that depend on whether a lobbyist achieves a favorable outcome for the client. Most states ban this practice. Also, lobbyists who deliberately fail to register within five days of beginning lobbying activities are now subject to fines.

UPCOMING FILING DEADLINES

A number of reports are due on April 20, 2009:

• Quarterly activity report for Lobbying Disclosure Act filers

• IRS Form 8872 (for 527 organizations that are monthly filers and do not register and report with the FEC)*

• FEC report (for PACs filing on a monthly schedule)**

*In a non-election year, 527 organizations may elect to file their 8872 report on a semi-annual basis, in which case the next report is due on July 31, 2009. Form 8872 must disclose the organization’s contributions and expenditures.

**In a non-election year, federal PACs may elect to file semi-annually, in which case the next report is due on July 31, 2009.