Lobbying Beyond Washington: Mastering the Differences in State and Federal Compliance March 23, :00-3:30 PM EDT An audioconference brought to you by Lobbyists.info Jill Vogel, Holtzman Vogel PLLC Jason Torchinsky, Holtzman Vogel PLLC Nola Werren, State & Federal Communications 1

Today’s Schedule State Lobbying Overview – Jason Torchinsky – Jill Vogel 2

State Lobbying Jill Vogel Jason Torchinsky Holtzman Vogel PLLC 3

4 Overview Implications of State Lobbying Rules Grassroots Lobbying Thresholds and Exemptions Goodwill Building and Other Activities Reporting State Lobbying Activity Who Must Register Other State-Level Restrictions on Lobbyists Enforcement Other Considerations Conclusion

Why Engage in State Level Lobbying Federal Government is transferring funds to state governments for distribution Regulatory changes happen faster at the state level – Handheld v. hands-free cell phone laws – Internet safety issues Many types of business operate under heavy state regulation – Insurance – Banking – Telecommunications 5 © 2010 HoltzmanVogel PLLC & Columbia Books & Information Services

6 States Regulating States are Regulating More – Influencing state level policy is now a growing business New York State – $171.2 million – $66 million Washington State – $43 million California – $225 million – $180 million Texas – $175 million © 2010 HoltzmanVogel PLLC & Columbia Books & Information Services

7 States Regulating (cont’d) – If you are going to participate in this process, national “patchwork” of 50 different rules govern your activity – Landscape constantly changing At least 13 states changed lobbying laws in 2006 – State laws are constantly changing – Even state level lobbyists can make the national news – as happened recently in California, and Florida © 2010 HoltzmanVogel PLLC & Columbia Books & Information Services

Primary Differences from Federal Lobbying Federal LDA rules require registration and reporting only for direct contact with government officials – Limited disclosure of spending State laws vary widely – Some states cover only direct lobbying – Some states cover grassroots lobbying – Some states require detailed expenditure reports – Some states even require advocacy groups to publicly disclose donors 8 © 2010 HoltzmanVogel PLLC & Columbia Books & Information Services

9 Implications of State Lobbying Rules State lobbying rules may have implications for individuals and firms that only engage in Federal lobbying – Interactions with state officials may be covered, even if you are attempting to influence federal policy – Many states are even more aggressive than the federal government in regulating and enforcing compliance with lobbying and ethics laws Random Audits Automatic Fines Civil and Criminal Penalties © 2010 HoltzmanVogel PLLC & Columbia Books & Information Services

Implications of State Lobbying Rules (cont’d) Grassroots advocacy is regulated in many states – Contrast with federal advocacy where grassroots activity is not regulated or disclosed State lobbying rules vary greatly from state to state and the rules in one state are not applicable to neighboring states © 2010 HoltzmanVogel PLLC & Columbia Books & Information Services 10

11 Grassroots Lobbying – Many states regulate attempts to influence the general public and encourage them to contact public officials – Some states consider this type of activity to be lobbying and others treat it as reportable, but separate from lobbying © 2010 HoltzmanVogel PLLC & Columbia Books & Information Services

Grassroots Lobbying (cont’d) Examples: – NY and GA treat grassroots activity as lobbying – CA and NC treat grassroots activity separately with separate disclosure or registration requirements – WI does not require registration for grassroots activity, but if the organization also engages in direct lobbying, grassroots expenses may be reportable 12

Grassroots Lobbying (cont’d) Examples of grassroots lobbying – Issue advocacy advertising – Outreach to other interested groups or parties – Organizing local “town-hall” meetings on an issue 13

14 Thresholds and Exemptions – Although many states have thresholds under which registration is not required, many require registration for ANY compensation or ANY activity – Thresholds may be compensation or time based © 2010 HoltzmanVogel PLLC & Columbia Books & Information Services

Thresholds and Exemptions Compensation Thresholds: – FL: anything of value /$1, registration is required if there is any compensation for lobbying activity. – MI: threshold is indexed to inflation and adjusts every year. For 2010, the threshold is $550. – PA: requires registration of lobbyists who receive more than $2,500 per quarter for lobbying and organizations that spend more than $2,500 for lobbying. 15 © 2010 HoltzmanVogel PLLC & Columbia Books & Information Services

Thresholds and Exemptions (cont’d) Time Thresholds: – MA: no registration if lobbying is “incidental” to usual or principal business activities. “Incidental” is defined as more than 25hours of lobbying per year – ME: exempts employees who lobby less than 8 hours/month – WI: exempts individuals who lobby on each of at least 5 days during a 6 month reporting period 16 © 2010 HoltzmanVogel PLLC & Columbia Books & Information Services

Thresholds and Exemptions (cont’d) Most states require registration within 3-10 days of lobbying; many require registration prior to lobbying – IL: provides a 2 day window to register – PA: requires registration within 10 days of acting as a lobbyist – NY: requires contract lobbyists to register within 15 days and in-house lobbyists to register within 10 days 17 © 2010 HoltzmanVogel PLLC & Columbia Books & Information Services

Goodwill Building and Other Activities Several States require registration for “goodwill building” activities. Goodwill building may be an important to consider if you are asking state officials to take a position on federal policy. © 2010 HoltzmanVogel PLLC & Columbia Books & Information Services 18

19 Goodwill Building and Other Activities Examples of Goodwill building activities – Meeting with a state official/relationship-building – Assisting a state official with a non-official project – Attending a golf outing/other event with an official © 2010 HoltzmanVogel PLLC & Columbia Books & Information Services

Goodwill Building and Other Activities (cont’d) States that consider “goodwill building” activities to be lobbying in some circumstances: – Texas Considered to be lobbying if communication is to generate goodwill to influence potential future legislation or administrative action – Oregon Any correspondence with a legislator to engender goodwill building 20 © 2010 HoltzmanVogel PLLC & Columbia Books & Information Services

Goodwill Building and Other Activities (cont’d) Vermont – Goodwill building is defined as communications or activities with a legislator or administrative official intended ultimately to influence legislative or administration action Illinois – Any influence to promote goodwill is considered to be lobbying. 21 © 2010 HoltzmanVogel PLLC & Columbia Books & Information Services

Reporting State Lobbying Activity States may require detailed accounting of lobbying expenditures – Many states require you to itemize expenditures to benefit public officials, where permitted GA: requires disclosure of date, amount and description of the expenditure, and name of client, official receiving the benefit, and the matter discussed, if any PA: requires itemization of gifts or expenditure to benefit a public official if the value of such gifts to that official aggregate to more than $250 per year 22 © 2010 HoltzmanVogel PLLC & Columbia Books & Information Services

23 Reporting State Lobbying Activity (cont’d) – Clients may also be required to report, even if client registration is not required Client reporting may include an itemized list of lobbying expenses, including payments to vendors and lobbyists. – TN: requires semi-annual client reports that disclose amount spent on compensation, other lobbying expenses, and expenses for events to which members of the General Assembly are invited – PA: requires quarterly reporting by clients of amounts spent on direct lobbying, grassroots lobbying, and for the benefit of public officials and their families. – AZ: requires a single annual report by the client in addition to quarterly reports by the lobbyist © 2010 HoltzmanVogel PLLC & Columbia Books & Information Services

24 Reporting State Lobbying Activity (cont’d) – During the legislative session, additional reporting may be required. Utah requires a Supplemental Activity report 10 days following the close of session and 7 days before any general election Arkansas requires monthly reports when the legislature is in session © 2010 HoltzmanVogel PLLC & Columbia Books & Information Services

Who Must Register Unlike at the federal level, where only the lobbyist registers, state requirements vary Many states require that individual lobbyists or lobbying firms, as well as clients, file separate registrations – Massachusetts requires registration by both the lobbyist and the client – Florida requires a signed authorization statement from the client © 2010 HoltzmanVogel PLLC & Columbia Books & Information Services 25

Other State Level Restrictions on Lobbyists – Some states prohibit officeholders from receiving campaign contributions while the legislature is in session Virginia – Some states prohibit lobbyists from serving as campaign treasurers – Most states prohibit lobbying for a contingency fee 26 © 2010 HoltzmanVogel PLLC & Columbia Books & Information Services

Other State Level Restrictions on Lobbyists (cont’d) – State level gift rules are often stricter with gifts from lobbyists (like the federal rules) New York – In some states, state level lobbying encompasses local level lobbying. For example, even if you are only lobbying at the NYC level, you need to register w/NY state. You have an independent responsibility to register w/both NYC and NY state – Donor disclosure for organizations in some states PA, MN, MA 27 © 2010 HoltzmanVogel PLLC & Columbia Books & Information Services

Enforcement – Many states have instituted random audits of a percentage of the registered lobbyists each year New York, Indiana, California – Most states impose automatic fines for each day a report or registration is late – States have become increasingly aggressive in their enforcement in recent years – Many state lobbying laws have potential criminal penalties associated with non-compliance Michigan 28 © 2010 HoltzmanVogel PLLC & Columbia Books & Information Services

Other Considerations – Record keeping is key Keep documents relevant to the reports Many states require keeping certain records for a certain number of years, but no consistency in requirements. – Ohio- 2 years – Idaho- 3 years – Oklahoma- 4 years – Colorado- 5 years – Know gift and ethics rules in states where active – Your client may rely on you to tell them if and when they need to register or report 29 © 2010 HoltzmanVogel PLLC & Columbia Books & Information Services

Conclusion Engaging in state activity is often necessary for your business or your clients State level lobbying is a growing field and you may be asked to do more of it in more states It is vital that you know and comply with the rules of the state or states where you are operating – Always make this assessment before you begin activity in any state Opponents would like nothing more than to tie you up on procedural errors or alleged “ethical” issues © 2010 HoltzmanVogel PLLC & Columbia Books & Information Services 30

Questions? Jill Vogel Jason Torchinsky HoltzmanVogel PLLC 98 Alexandria Pike, Suite 53 Warrenton, VA (540) The information contained herein can not be distributed without the consent of Holtzman Vogel PLLC and Columbia Books & Information Services, Inc. The presentation and materials presented in association with this audioconference do not constitute legal advice and should not be relied upon as legal services without consulting individual counsel 31 © 2010 HoltzmanVogel PLLC & Columbia Books & Information Services

How to Do Business Within the States March 23, 2010 Nola R. Werren, Esq. © 2010 State and Federal Communications, Inc. & Columbia Books Inc. 32

Companies active in soliciting business from state and municipal entities are subject to statutes, regulations, and rules In addition, activities with federal officials, PAC and corporate contributions, and employee personal political activity require compliance attention Why Compliance? Why Now? Three Primary Areas: Gift Laws Lobbying Laws Pay-to-Play Laws 33

U.S. Jurisdictional Rules Federal, Lobbyist Disclosure Act Counties, 3, with a population over 100,000 States, 50 plus D.C. and Puerto Rico. State agencies have their own guidelines and penalties Municipalities, School Districts nearly ∞ 254 with a population over 100,000 34

Solutions can be implemented depending on the type and size of the risk Education/training Coordinated registration for lobbyists and entities with risk- related activity Cross line-of-business gift reporting databases to limit risk exposure where specific dollar thresholds used Specific needs compliance depending on line-of-business needs and business models [procurement laws] Consider limiting or prohibiting activity where risk may be too great Solutions 35

Rewards of a Successful Compliance Program Strengthen brand/reputation Avoid debarment, fines, penalties, and negative publicity Insure maximum growth opportunities Firms that are ahead of the curve, will be the firms best positioned to earn new business in a stricter environment 36

Current Trends in Procurement Increasing involvement in procurement activity Increased reporting of gifts Increased training to sales representatives 37

SO WHY BE CONCERNED? 38

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In the News Today Media eyes are on what big business is spending New York requirement of registering procurement lobbyists 40

Registration How many states require registration for procurement lobbying? 41

Procurement Registration and/or Reporting: Arkansas Connecticut [unless acting solely as a salesperson] Delaware Florida Georgia Idaho Illinois [if seeking to influence a cabinet-level official] Indiana Kentucky [if attempting to influence the official granting of a contract] Louisiana Maryland Massachusetts Michigan Mississippi Missouri New Hampshire New Jersey New York North Carolina Ohio Pennsylvania Rhode Island Tennessee Texas [if lobbying activities are more than 5% of compensated time] 42

Before any lobbying is done … Time Thresholds When Is Registration Required?  Thresholds  Pro-rata share of salary  Certain number of hours  Certain number of days Dollar 43

“First Toe In The Water” Arizona Colorado Delaware Florida [Legislative and Executive] Georgia Illinois Iowa [Legislative and Executive] Kansas Kentucky [Legislative] Louisiana Mississippi Missouri Nebraska Nevada New Hampshire New Mexico North Dakota Oklahoma Rhode Island South Carolina South Dakota Tennessee Utah West Virginia 44

Lobbyist Registration Form Registration Fee Photograph Employer Authorization Training Class Electronic Filing Application What Is Required to Register? 45

Annual Every two years Ongoing Term of Registration 46

Then, what do you have to do? 47

Keep Track of Everything………  Salary [Pro-rata share of salary based on time spent lobbying]  Reimbursed and unreimbursed expenses  Reimbursed expenses for your personal food, travel, and lodging  Staff and Office Expenditures 48

Keep Track of Everything……..  Food, beverages, entertainment, recreation on behalf of reportable officials [where permitted]  Group Expenditures….who will disclose?  Who was at the dinner?  Tax and Tip  Honoraria  Political Contributions 49

Gift Law GENERAL Gift law is a prohibition, limit, or restriction on providing gifts to public officials.  Includes anything of personal value: meals, entertainment, transportation, and lodging  Each jurisdiction has its own gift law: federal, state, and local  There are special gift limits for lobbyists and lobbyist employers in 27 states 50

Gift Law TIPS  “Not even a tic tac”  “Nominal Value” [Branded items]  Consumed in the presence of the lobbyist  In connection with a national conference [“Let’s go have a drink” does not qualify]  Notification to official required?  Is reimbursement allowed? Within a certain time?  Spouse and family members included in threshold?  Do NOT rely on the official to know the law 51

Contract Lobbyists A contract is always needed. Control the expenses of the contract lobbyist. Let them know if they can give gifts or make contributions. 52

Contract Lobbyists Consider a pre-approval gift form. Cumulative limits tracking is important. Require them to provide you with a copy of the reports they file. 53

Y O U Are Accountable to: – Boss – Government Officials – Colleagues – The Public 54

Compliance Summary – Know the rules in the jurisdictions where you and your teams operate – Alert new hires to the rules, alert compliance to new hires – Beware “Everyone does it”, do not take someone else’s word – Determine permissibility and appropriateness of conduct beforehand If you are unsure, ask Consult services – Be aware of legislation that may affect you. Be the “go to” person in government affairs to help your company. – If it would look bad in the newspaper, it is not worth the reputational risk, even if it is legal. 55

State and Federal Communications, Inc South Summit Street, Suite 100 Akron, Ohio Fax:

Questions on the audioconference: Elise Hill – – (240) Don’t forget to take the follow-up survey to receive your certificate of attendance! 57