White House Announces Changes to Recovery Act Lobbying Memo

In a blog post [1] on May 29, Norm Eisen, Counsel to the President for Ethics and Government Reform, announced changes to President Obama's March 20 memorandum [2] that placed restrictions on communications between federally registered lobbyists and executive branch employees regarding the use of Recovery Act funds. After completing a 60-day review, the administration modified the oral communications ban to include not just federally registered lobbyists, but everyone who contacts government officials. However, that ban appears to only apply to competitive grant applications that have been submitted for review.

Through the changes, the administration has essentially removed the ban on federal lobbyists communicating orally with agency officials on specific projects related to the Recovery Act. Now oral communications are only prohibited once a competitive grant application has been filed, and the ban lasts until the grant is awarded. However, the restrictions apply to everyone, not just federally registered lobbyists. Further, everyone can communicate with agency officials in writing, and those communications will be posted on the Internet. Eisen wrote, "For the first time, we will reach contacts not only by registered lobbyists but also by unregistered ones, as well as anyone else exerting influence on the process."

Eisen describes the competitive grant applications for Recovery Act funds as "the scenario where concerns about merit-based decision-making are greatest. Once such applications are on file, the competition should be strictly on the merits. To that end, comments (unless initiated by an agency official) must be in writing and will be posted on the Internet for every American to see."

The change in the lobbying restrictions hones in on one particular step in the process of acquiring funding under the Recovery Act and significantly recognizes that not only registered lobbyists can gain influence. However, the changes seem to ignore the influence that can be generated prior to submitting a competitive grant application. More to the point, most of the Recovery Act funds are not distributed through competitive grants but through formula grants, contracts, loans, and tax expenditures. The policy change is silent about disclosure regarding influence-peddling where more money is at stake.

The announcement also made clear that disclosure of contacts with federally registered lobbyists and agency officials will continue to be posted online. "Third, we will continue to require immediate internet disclosure of all other communications with registered lobbyists. If registered lobbyists have conversations or meetings before an application is filed, a form must be completed and posted to each agency's website documenting the contact." This provision seems unclear. It appears to be referencing the earlier sample guidance from the Office of Management and Budget (OMB) that instructed agencies to disclose any contacts with federally registered lobbyists, even when those communications were about procedural issues.

Criticism of the restrictions rested on their reliance on the Lobbying Disclosure Act (LDA) and how they set a double standard on speech. Those registered under the LDA were the only ones who had their oral communications restricted. Critics charged that to avoid the ban on oral communications, organizations and corporations could use a non-registered lobbyist to communicate with agencies on Recovery Act funding.

Now, many of those who decried the March 20 memo are praising the changes. For example, Citizens for Responsibility and Ethics in Washington (CREW) Executive Director Melanie Sloan stated, [3] "By requiring everyone – not just lobbyists – to communicate in writing after grant applications have been filed, the WH is ensuring real merits-based decision-making. For the first time, not just lobbyist communications but also communications by the ubiquitous class of deliberately vaguely titled 'consultants' will be reported."

Public Citizen issued a press release [4] stating that the new rule "levels the playing field between wealthy corporations and non-profit organizations as well as those who can afford hiring an insider lobbying firm and those who cannot. Everyone who requests an earmark must request it in the same way."

Some groups remain opposed to the speech limitations still found in the memo. None of the “good government groups,” save OMB Watch, have expressed concern that the focus is on the smallest share of Recovery Act funds – competitive grant awards – and often the least contentious. The Associated Press [5] quoted an anonymous White House official who said, "The new prohibition against conversations would apply to about $60 billion worth of spending." The Recovery Act provides $787 billion.

Questions still remain about the administration's policy. The updated regulations were announced rather informally via the White House blog. The blog stated that detailed guidance will be issued on the changes. Hopefully, such guidance will provide more clarity and definition to the scant six-paragraph announcement. Perhaps further changes can be made in the future to tweak the rules. The simplest solution is for all communications that attempt to influence federal spending under the Recovery Act to be disclosed.