Questions about LDA Guidance Remain

New congressional guidance [1] on lobbyist reporting and registration termination under the Lobbying Disclosure Act (LDA) has sparked concerns over accuracy and potential conflicts with current law. The guidance addresses filing requirements for lobbyists, as well as criteria for deregistering as a lobbyist, particularly important given President Barack Obama's hiring rules that place restrictions on those who have lobbied in the past two years. The deregistration rules may create enormous loopholes that could result in non-reporting of lobbyist activities.

On June 9, the Clerk of the House and the Secretary of the Senate released updated guidance on compliance with the LDA. The congressional offices also answered five questions [2] about terminating a lobbyists' registration. An individual is required to register if he or she has two lobbying contacts or if 20 percent or more of his or her time is dedicated to lobbying. Also, each individual that "is registered or required to register" must file Form LD-203, a new semi-annual reporting requirement on campaign contributions. The only way for an individual that "is registered or required to register" to avoid filing LD-203 is to stop being a registered lobbyist.

According to the new guidance, a lobbyist can deregister if the person has had fewer than two lobbying contacts over two consecutive quarters. However, the LDA says that even if there are fewer than two lobbying contacts in a quarter, if an individual spends 20 percent of more of his or her time lobbying, the individual cannot deregister.

Many worry that if the guidance is implemented, a number of active lobbyists would deregister. They couldn't lobby two or more people, but they could direct others to make actual contact with covered officials, similar to a conductor in front of an orchestra. Even if a person spent 100 percent of his or her time on lobbying, as long as the person only has one contact with covered officials in each quarter, he or she could escape lobbying disclosure.

Attorneys at Caplin & Drysdale stated in their Political Activity Law Bulletin [3] that they believe the notice was intended to convey that "an individual can deregister if he or she has never met the ‘two contacts’ test, does not meet that test in the current quarter and does not expect to meet it in the upcoming quarter." They also indicated that "this new guidance seems to create a discrepancy with the plain meaning of the statute."

The guidance may have been issued as a response to the mass of federal lobbyists deregistering in the wake of the strict requirements under Obama’s executive order on ethics [4], which prohibits, for two years, an individual registered under the LDA from working in an agency that he or she lobbied. Additionally, a political appointee may not participate in "any particular matter" that the person lobbied on within the past two years and may not participate in the specific issue area in which the particular matter falls. A question that remains unanswered is whether lobbyists, who have retroactively amended their lobbying reports, will be able to join the administration.

The Hill reports [5] that the two congressional offices plan to review the guidance they just issued in light of the possible inconsistencies with the law. The article also notes that many major law firms are advising their clients not to deregister until the congressional offices complete their review. Improperly deregistering and not reporting under the LDA carries severe penalties.