A deep dive into California’s lobbying laws

The Political Reform Act of 1974 (PRA) and the political laws of California govern lobbying, ethics and political campaigns. Some cities and counties have ordinances regulating lobbying activity as well. This article discusses in general the laws that regulate the lobbying provision at the state level.

The 2014 Legislative Session produced a number of bills that would have substantially changed the rules that affect lobbying activity. The Legislature passed legislation that would have zeroed out lobbyist gifts and lowered the gift limits for all public officials to $200, as well as eliminated gifts of golf, spa treatments and a host of perks for public officials. However, Gov. Jerry Brown vetoed all these bills.

The lobbyist in one case also served as a political consultant and had carried for an extended period of time unpaid fees for campaign services for several legislators.

The only significant legislation that Governor Brown signed affecting lobbyists eliminated the $500 exemption for payments for campaign events held by lobbyists for candidates and officeholders in their homes or offices. This means that the flat prohibition on lobbyists and lobbying firms making contributions to such candidates and officeholders is zero.

Lobbyists should pay special attention to compliance issues because a series of 2014 FPPC prosecutions make clear the agency has a renewed emphasis on investigating lobbyists for violations of the gift limits, failure to timely file or accurately disclose payments made to a lobbyist and, in a notable recent case, the FPPC fined a lobbyist for violating the law prohibiting lobbyists from holding legislators and officeholders “under personal obligation.”

The lobbyist in this case also served as a political consultant and had carried for an extended period of time unpaid fees for campaign services for several legislators, which the FPPC found constituted a violation of the law prohibiting lobbyists from holding legislators and officeholders “under personal obligation.”

Lobbying Laws
The laws regulating lobbyists in the State of California are found in the PRA, which was adopted by the voters as Proposition 9 in June 1974. The purpose of lobbyist regulation as stated in the PRA is: “The activities of lobbyists should be regulated and their finances disclosed in order that improper influences will not be directed at public officials.” Gov’t Code Sec. 81002(b). The PRA can be found in the California Government Code, Title 9 (Political Reform), and Chapter 6 deals specifically with lobbyists. Chapter 6 contains Sections 86100 through 86300.

The PRA requires lobbyists to attend a lobbyist training session once each Legislative Session for a refresher.

The PRA charges the Fair Political Practices Commission (FPPC) with enforcing the PRA. The FPPC has adopted regulations on lobbying which are contained in Title 2, Sections 18109-18997 of the California Code of Regulations. Article 1 (Sections 86100 – 86118) of Chapter 6 sets forth registration and reporting requirements. Article 2 (Sections 86201 – 86206) deals with prohibitions. Article 3 (Sections 86300) provides exemptions.

There are no professional prerequisites for entering the lobbying profession. However, the PRA requires lobbyists to attend a lobbyist training session once each Legislative Session for a refresher on the PRA and other laws relevant to lobbyists. This training session reviews common situations lobbyists may face and the application of the laws, including criminal laws that govern their conduct. No lobbyist may engage in lobbying without filing a certification of attendance at a biennial training session.

The main provisions of the PRA related to lobbying govern the definition of who is a lobbyist, a lobbying firm and a lobbyist employer. These sections also provide for the registration of lobbyists, lobbying firms and their clients, called “lobbyist employers”, and for quarterly reporting of specified activities and expenditures, including detailed information about what lobbyists are paid, by whom, and which bills or regulations they lobbied for or against. No other California professionals are required to provide such detailed information concerning their activities and finances.

The following is an explanation of the PRA provisions dealing specifically with the lobbying profession. Article 1, Gov’t Code Sections 86100 – 86118, deals with registration and reporting. Persons who qualify as lobbyists, lobbying firms and lobbyist employers must register with the Secretary of State electronically and in writing.

Entities must file within 10 days of qualifying. The Secretary of State must charge lobbying firms and lobbyist employers a $50 per year registration fee. A lobbyist certification must contain specified information, including a recent photo and understanding of prohibitions. The lobbying firm registration must include detailed information and lobbyist employer information must contain specified data on their lobbying interests.

The lobbyist employer registration must include detailed information. Lobbyists, lobbying firms and lobbyist employers must renew their registration each even-numbered year. Any changes in registration statement information must be updated within 20 days after the change and there are specified procedures for terminations of lobbying activity. Registration information must be made public by the Secretary of State within 30 days of filing.

Governmental agencies that retain lobbyists and lobbying firms are not exempt and must register and report their lobbying activity.

The Secretary of State must publish a directory of lobbyists, lobbying firms and lobbyist employers. The Secretary of State must maintain an online version of this information. Lobbyists, lobbying firms and lobbyist employers must keep detailed accounts, records, bills, and receipts for the information reported. The terms “activity expense” and “agency official” are defined. Activity expenses must be reported and include specified information.

Certain notices must be included on invitations to elected officials. Certain information needs to be included in any report of gifts made and the information must be provided to the beneficiary within 30 days of the end of the calendar quarter. A lobbyist must file a quarterly report with specified information. Lobbying firms must file quarterly reports with specified information. Lobbyist employers and $5,000 filers must file statements. Lobbyist employers and $5000 filers must file quarterly reports with specified information.

All state and local agencies that are registered as lobbyist employers must disclose payments of $250 or more related to lobbying. Reports must be filed during the month following each calendar quarter. An original and one copy of each report must be filed with the Secretary of State, unless done so electronically.

Article 2, Gov’t Code Sections 86201 – 86206, deals with prohibitions applicable to lobbyists and lobbying firms. “Gift” is defined. A lobbyist or lobbying firm is prohibited from making a gift of more than $10 in a calendar month, or arranging to make a gift, to any person including legislators, their key staff members and members of the Executive Branch of California government the lobbyist or lobbying firm is registered to lobby.

A lobbying firm is prohibited from making a gift or gifts totaling more than $10 in a calendar month to any state legislative official.

A person cannot knowingly receive any unlawful gift. No lobbyist or lobbying firm can place officials under personal obligation; deceive officials on any material facts; cause the introduction of a bill or amendment to be later employed on that measure; attempt to create a fictitious appearance of public favor or disfavor; represent falsely that the lobbyist can control the official action of an official; and, accept any payment contingent upon the outcome of official action. Fees to an investment manager by a placement agent registered with the SEC are not prohibited.

Article 3, Gov’t Code Section 86300, deals with exemptions. These provisions of the PRA do not apply to elected public officials or employees of the state, any newspaper or periodical of general circulation, or those representing a bona fide church or religious society for specified purposes. However, as noted above, governmental agencies that retain lobbyists and lobbying firms are not exempt and must register and report their lobbying activity.

Who is a Lobbyist?
A lobbyist is an individual who is compensated and who communicates directly with legislative or state agency officials to influence legislative or administrative action on behalf of his or her employer or a client. An individual who only receives reimbursement for reasonable travel expenses will not become a lobbyist. In addition to registration and reporting, a lobbyist is prohibited from making a gift or gifts totaling more than $10 in a calendar month to any state legislative official (including legislative employees) and to any official or employee of a state administrative agency his or her employer or lobbying firm lobbies.

What are Lobbying Firms?
A lobbying firm is a business entity that is compensated and communicates directly with legislative or state agency officials to influence legislative or administrative action on behalf of any client. In addition to registration and reporting, a lobbying firm is prohibited from making a gift or gifts totaling more than $10 in a calendar month to any state legislative official (including legislative employees) and to any official or employee of a state administrative agency the firm lobbies.

What are Lobbyist Employers and Lobbying Coalitions?
A lobbyist employer is any individual or entity that employs a lobbyist or contracts for the services of a lobbying firm. A lobbying coalition is a group of 10 or more individuals or entities that pool their funds for the purpose of hiring a lobbyist or lobbying firm. State legislative and agency officials and employees are prohibited from receiving gifts totaling more than $440 in a calendar year from various sources.

Other – Reporting by $5,000 Filers
A $5,000 filer is an individual or entity that does not make payments to a lobbyist or a lobbying firm but still spends $5,000 or more in a calendar quarter to influence legislative or administrative action, such as placing an advertisement or sending a mailing urging others to contact their legislators concerning pending legislation. State legislative and agency officials and employees are prohibited from receiving gifts totaling more than $440 in a calendar year from various sources.

Campaign Laws
Lobbyists in advising their clients about political giving need to be aware of California’s campaign contribution limits under Prop. 34. The PRA imposes contribution limits in state election campaigns.

The principal provisions of the PRA’s campaign laws applicable to lobbyists prohibit lobbyists from making any political contribution to support any incumbent or candidate for elective state office if the lobbyist is registered to lobby the government agency of the incumbent or the agency to which the candidate seeks election.

Effective January 1, 2015, a new provision of the PRA prohibits lobbyists and lobbying firms from using the $500 threshold exemption for paying expenses for campaign fundraising events for candidates or officeholders they are registered to lobby when those events are held in the lobbyists’ homes or offices. Lobbyists are not prohibited from recommending political contributions to their lobbyist-employer clients or from attending political fundraising events for these clients.

The FPPC provides a helpful document entitled “Lobbying Frequently Asked Questions” that addresses the $10 gift rule, arranging gifts, contributions restrictions, revolving door, and other specific issues of interest and application to lobbyists. Lobbyists and their staff who assist them with compliance efforts should periodically review this guidance from the FPPC.
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Ed’s Note: Thomas W. Hiltachk is the Managing Partner of Bell, McAndrews & Hiltachk, a law firm specializing in political law. Chris Micheli is a Principal with the lobbying firm of Aprea & Micheli, Inc. Charles H. Bell is the Senior Partner of Bell, McAndrews & Hiltachk.