Recovery Act Memo May Restrict Free Speech Rights

On March 20, President Barack Obama issued a memorandum [1] stating that federally registered lobbyists cannot verbally communicate with executive branch officials regarding specific projects to be funded through the American Recovery and Reinvestment Act of 2009. Instead, lobbyists must submit their views in writing. The goal of preventing stimulus funds from being spent based on influence or "on the basis of factors other than the merits" is widely seen as laudable. However, many are charging that the rules are a violation of lobbyists' First Amendment right to petition the government.

Many advocates say the intentions of the memo are understandable and commendable, ensuring that public funds are spent responsibly and in a transparent manner. On March 20, President Obama announced [2], "Decisions about how Recovery money will be spent will be based on the merits. They will not be made as a way of doing favors for lobbyists. Any lobbyist who wants to talk with a member of my administration about a particular Recovery Act project will have to submit their thoughts in writing, and we will post it on the Internet for all to see. [. . .] And this plan cannot and will not be an excuse for waste and abuse."

Section 3 of the memo states that executive department or agency officials cannot consider the view of a lobbyist registered under the Lobbying Disclosure Act of 1995 (LDA) regarding "particular projects, applications, or applicants for funding under the Recovery Act unless such views are in writing." In addition, all written communications from a registered lobbyist must be posted publicly by the agency on its recovery website. If a person has not registered under the LDA, he or she is not subject to the provisions of this memo and can communicate in person or over the phone regarding funding under the Recovery Act.

Government officials may communicate verbally with registered lobbyists only if it addresses the Recovery Act generally, meaning that the discussion does "not extend to or touch upon particular projects, applications, or applicants for funding, and further that the official must contemporaneously or immediately thereafter document in writing: (i) the date and time of the contact on policy issues; (ii) the names of the registered lobbyists and the official(s) between whom the contact took place; and (iii) a short description of the substance of the communication. This writing must be posted publicly by the executive department or agency on its recovery website within three business days of the communication."

In response, outrage has grown over the rules for lobbyists seeking stimulus funds, with some alleging that the memo could violate lobbyists' First Amendment rights to petition the government and, in fact, not reduce improper influence on spending decisions. Those who are not registered lobbyists could have the same conversations that lobbyists are prohibited from having and yield influence, but such contacts would not even have to be disclosed.

On March 31, several groups called on the administration to revise its memo to instead require disclosure of all contacts with private interests seeking government funding. The American Civil Liberties Union (ACLU), Citizens for Responsibility and Ethics in Washington (CREW), and the American League of Lobbyists (ALL) sent a letter [3] to White House Counsel Gregory Craig asking him to rewrite new lobbying rules for the stimulus package.

Specifically, the organizations' letter asks that Section 3 be withdrawn because it "is an ill-advised restriction on speech and not narrowly tailored to achieve the intended purpose." The letter notes the counterproductive nature of the memo, referencing "non-lobbyists employed by potential recipients of Recovery Act funds, who are permitted oral contact with executive branch officials, may well have contributed significant funds to the presidential campaign and/or to the campaigns of members of Congress who sit on the committees with oversight jurisdiction over the Department of the Treasury, the Federal Reserve and the expenditure of Recovery Act funds."

The letter goes on to suggest, "A better alternative would be to require disclosure of any and all communications with executive branch officials regarding a particular project, application, or applicant for funding. [. . .] The name and business affiliation of the individual who engages in an oral communication about such a matter, the name of the official contacted, the date of the contact, and the subject of the contact could all be publicly available, perhaps on the Treasury Department's website."

The letter also notes that the rules in the memo ignore the role played by lawmakers, corporate executives, and other non-lobbyists who are free to talk to officials about specific stimulus projects without disclosure requirements. While disclosure is the ultimate goal, the new rules do not catch those who need to be included, such as unregistered lobbyists.

An ALCU press release [4] further illustrated the point. Caroline Fredrickson, the organization's Washington director, said, "If the aim of this provision is government transparency, the focus should not be on those who already disclose their activities publicly. This directive wholly excludes the Goliaths of Wall Street from its applicability and instead restricts the speech rights of those who are dutifully filing quarterly reports of their contacts with the administration and Congress."

Meanwhile, it is unclear how useful the new disclosure rules will be when LDA requirements are currently not abided by and are not entirely understood by those who must report. A report [5] released April 1 from the Government Accountability Office (GAO), entitled Observations on Lobbyists' Compliance with Disclosure Requirements, found that some lobbyists had a misunderstanding of the reporting requirements, lobbyists were only "generally able to provide some documentation" for their reports of lobbying activity and political contributions, and some lobbyists had trouble backing up their filings.

As required by the Honest Leadership and Open Government Act of 2007, GAO reviewed a random sample of 100 lobbyist disclosure reports filed during the first three quarters of 2008 and selected a random sample of 100 reports of federal political contributions filed in the middle of 2008. The report found that "in approximately 14 percent of cases, the documentation provided either was incomplete or contradicted the reported amount of income or expense" and that a dozen filings had to be amended by lobbyists. "Some small firms and sole proprietors indicated they did not understand the requirement for both firms and individual lobbyists to file reports on financial contributions," according to GAO.

In his Jan. 21 executive order on ethics [6], Obama called upon the Ethics Office and the Office of Management and Budget to identify "steps the executive branch can take to expand to the fullest extent practicable disclosure of … executive branch procurement lobbying…" Section 4(c)(4) of the order calls for identifying immediate actions the executive branch can take and, if needed, recommendations for legislative changes.

The new Recovery Act lobbying rules could act as an example for future lobbying disclosure reform as envisioned by the ethics executive order. For example, by establishing rules for everyone to disclose their lobbying with the executive branch without regard to whether an individual or entity is registered under the LDA, the public will have a much better picture of special interests influencing implementation of the Recovery Act. The alternative is that lobbyists will be more inclined to send those who are not required to register under the LDA, which will ultimately discourage accurate reporting.