A primer: Lobbyists, ethics, rules and the Constitution

Lobbying of the government is enshrined in the U.S. Constitution’s First Amendment which protects the right to “petition government.” This protection applies to petitioning and lobbying whether the petitioners, including lobbyists, are compensated or not. Lobbying is an honorable profession and, just like in other professions, the vast majority of those involved in the lobbying profession are honest, trustworthy and hardworking individuals who take their role and profession very seriously.

Moreover, lobbyists and the legislators they lobby generally act responsibly and in compliance with applicable state and federal laws. However, because there is so much scrutiny on politics and the legislative process, when something improper does occur, it gets into the public domain quickly. As a result, when there is an alleged violation of the law, it becomes a high profile matter that garners public attention and discussion.

The California Legislature has adopted by rule certain recommended conduct rules for lobbyists. Also of interest is the code of conduct by the federal lobbying trade association

There have been several recent instances of lobbyists being fined by the FPPC for violating California’s Political Reform Act of 1974 (PRA). Generally, these cases deal with violations of the gift limits, failure to timely file, or accurately disclose payments made to a lobbyist. In a notable case, the FPPC fined a lobbyist who also serves as a political consultant and had carried unpaid fees for campaign services for several legislators. The fine was for violating the law prohibiting lobbyists from holding legislators “under personal obligation.”

There are only a few specific laws addressing ethical rules for lobbyists. Beyond those, lobbyists are encouraged to abide by codes of ethics in conducting their activities. The Institute of Governmental Advocates (IGA), to which many Sacramento lobbyists belong, has adopted a Code of Ethics.

In addition, the California Legislature has adopted by rule certain recommended conduct rules for lobbyists. Also of interest is the code of conduct by the federal lobbying trade association. All of these provisions provide substantial ethical guidance for lobbyists who lobby California state government. This article is intended to generally review these codes and laws.

State Lobbying Laws and Their Ethical Proscriptions
The Political Reform Act of 1974, adopted by the voters as Proposition 9, contains the main statutes concerning ethics rules for the lobbying profession in the State of California. The PRA’s key provisions can be found in the California Government Code. The purpose of regulating lobbying activities is set forth in Gov’t Code Section 81002(b), which states: “The activities of lobbyists should be regulated and their finances disclosed in order that improper influences will not be directed at public officials.”

The Government Code provides the following main provisions:
• Lobbyists cannot make or arrange gifts in excess of $10 per calendar month to any state legislators, most legislative staff members, and state agency officials whom they or their firm lobby.
• Effective January 1, 2015, lobbyists and lobbying firms may not pay for expenses of fundraising events held at their home or office for officeholders and candidates they are registered to lobby.
• The PRA bans honoraria and limits most gifts to state officials and candidates for state office. As a result, payments cannot be given in consideration for legislators giving speeches, writing articles, or attending gatherings. The general gift limit is currently $460 per calendar year by lobbyist employers.

Be aware that the California Constitution prohibits legislators from receiving earned income from lobbyists.

The most specific lobbyist ethics provisions in the PRA are found in Government Code Section 86205, which provides that no lobbyist or lobbying firm shall:

(a) Do anything with the purpose of placing any elected state officer, legislative official, agency official, or state candidate under personal obligation to the lobbyist, the lobbying firm, or the lobbyist’s or the firm’s employer.
(b) Deceive or attempt to deceive any elected state officer, legislative official, agency official, or state candidate with regard to any material fact pertinent to any pending or proposed legislative or administrative action.
(c) Cause or influence the introduction of any bill or amendment thereto for the purpose of thereafter being employed to secure its passage or defeat.
(d) Attempt to create a fictitious appearance of public favor or disfavor of any proposed legislative or administrative action or to cause any communication to be sent to any elected state officer, legislative official, agency official, or state candidate in the name of any fictitious person or in the name of any real person, except with the consent of such real person.
(e) Represent falsely, either directly or indirectly, that the lobbyist or the lobbying firm can control the official action of any elected state officer, legislative official, or agency official.
(f) Accept or agree to accept any payment in any way contingent upon the defeat, enactment, or outcome of any proposed legislative or administrative action.

Agency Ex parte Communications
Although not a part of the PRA, other State laws impose ex parte communication restrictions on participants in administrative adjudicatory proceedings and before certain state agencies, such as the Public Utilities Commission. Lobbyists who work on regulatory and adjudicatory matters at state agencies should familiarize themselves with such restrictions on their communications when they communicate with officials of those agencies.

Revolving Door Rules for Public Officials Who Become Lobbyists
Revolving door prohibitions affect public officials who go into lobbying and essentially preclude them from communicating with or appearing before any state agency for which the official worked during the 12 months before leaving state employment. Note that this prohibition does not apply to legislative or judicial branch employees.

Criminal Laws
There are also Constitutional and statutory State and federal criminal laws that affect lobbyists who engage in wrongdoing. State bribery and extortion laws, as well as federal laws on bribery, extortion, mail fraud and wire fraud, and Racketeering Influenced Criminal Organizations (RICO) statutes that are based on violations of state laws, all have been used to prosecute State lobbyists in the past.

For example, Article IV, Section 15, of the California Constitution provides: “A person who seeks to influence the vote or action of a member of the Legislature in the member’s legislative capacity by bribery, promise of reward, intimidation, or other dishonest means, or a member of the Legislature so influenced, is guilty of a felony.”

Finally, although there are no recent examples of its use, violations of the PRA by lobbyists can be prosecuted criminally as misdemeanors and a conviction would disqualify a person from acting as a lobbyist for four years.

Legislative Code of Ethics
The Legislature years ago adopted a Legislative Code of Ethics for Lobbyists. Its provisions are the following:

1. You may not offer employment to any Member or legislative employee which impairs his or her independence of judgment as to his or her official duties.
2. You may not offer employment which would require or induce a Member or legislative employee to disclose confidential information.
3. You may not use or disclose any confidential information obtained from a Member or legislative employee for personal financial gain or conspire with any person for such purpose.
4. You may not offer any employment, fee or any other form of compensation to any Member or legislative employee for appearing, agreeing to appear, or taking any other action on behalf of you or a client before any state board of agency.
5. You may not give or agree to give, directly or indirectly, any compensation, reward, or gift to any Member or legislative employee for any service, advice, assistance, or other matter related to the legislative process.
6. You may not offer, arrange for, give or agree to give to any Member or legislative employee, any interest, financial or otherwise, direct or indirect, or engage in any business or transaction or professional activity with that member of legislative employee, which is in substantial conflict with the proper discharge of his or her official duties and responsibilities.
7. Any person is prohibited from inducing or seeking to induce any Member or legislative employee into committing a violation of any provision of the Code of Ethics. A violation is a misdemeanor, but any person who conspires to violate any provision of the Code of Ethics is guilty of a felony.

Institute of Governmental Advocates’ Code of Conduct
In addition, members of the Institute of Governmental Advocates (“IGA”), a professional association for California lobbyists, have agreed to abide by their Code of Conduct, in addition to the ethics rules imposed by law. The following rules comprise the standards of conduct agreed upon by the membership of IGA:

1. Obligations To The Public And Participants Of The Governmental Decision-Making Process:

1.1 All IGA members (“Members”) acknowledge and accept the concept of owing an ethical obligation to the public and participants of the governmental decision-making process.
1.2 A Member owes members of the State Legislature and their staffs, the Governor and members of the Executive Administration, and all governmental employees an obligation of respect as legitimate and proper participants of the governmental decision-making process.
1.3 A Member has a duty to protect confidences when information is given to him or her with an expectation of confidentiality.
1.4 A Member owes participants of the governmental decision-making process an obligation not to mislead them. A Member owes participants of the governmental decision-making process an obligation to correct as quickly as practically possible any incorrect information that the Member provided them.
1.5 A Member owes participants of the governmental decision-making process an obligation to make every reasonable effort to become, and to stay, as informed as possible on the issues and process involved in the Member’s activities.
1.6 A Member owes the public an obligation to make every reasonable effort to promote public understanding of the governmental decision-making process and the proper role of advocacy within that process.
1.7 A Member owes a public officeholder an obligation to inform the officeholder of the Member’s planned opposition to a proposal by the officeholder prior to the Member’s active opposition.
1.8 A Member owes participants of the governmental decision-making process an obligation to inform them of potential adverse effects of proposals to the extent that it can be adverse to known interests of those participants.
1.9 A Member owes the public and participants of the governmental decision-making process an obligation to immediately cease representing a client in a pursued objective and inform the client as quickly as practically possible of the Member’s inability to continue representing the client in the pursued objective if it becomes known to the Member that the client’s effort in the objective is purely harassment, taken out of spite, or otherwise not in good faith, or if the continued representation would violate applicable law or this Code.

2. Obligations To The Client:
2.1 All Members acknowledge that he or she has ethical obligation to their clients.
2.2 A Member owes his client an obligation of understanding, knowledge, competence and continuing effort throughout the process of representation. A Member owes his client an obligation to make every reasonable effort to become, and to stay, as informed as possible on the issues and process involved in the objectives pursued by the Member on his client’s behalf.
2.3 A Member owes his client an obligation that any assurances made by the Member to the client must be regarded as an obligation.
2.4 A Member owes his client an obligation to make all legal and ethical efforts to accomplish an objective pursued by the Member on his client’s behalf. A Member owes his client an obligation to inform the client of the Member’s inability to accomplish a pursued objective as quickly as practically possible after the Member has determined such inability.
2.5 A Member owes his client an obligation to fully inform the client of all material information accumulated and/or known by the Member relating to the objectives pursued by the Member on his client’s behalf. A Member may also owe another party an obligation to protect such material information from the client as confidential. In such a case, the Member must exercise great care and wisdom in properly dealing with the situation and parties to whom the obligations are due.
2.6 A Member owes his client an obligation not to mislead the client. A Member owes his client an obligation to correct as quickly as practically possible any incorrect information that the Member has provided the client.
2.7 A Member owes his client an obligation to advise and counsel the client as to the proper course of conduct upon knowledge and/or suspicion of any contemplated action by the client related to the objectives pursued by the Member on his client’s behalf which is contrary to applicable law, this Code, or the best interests of the client.
2.8 A Member owes his client an obligation not to pursue an objective if the Member’s attitude, opinion or another obligation interferes with the duties to be assumed by the Member within the scope of the pursuit. A Member owes his client an obligation to immediately cease pursuing an objective on his client’s behalf and inform the client as quickly as practically possible of the Member’s inability to continue pursuing the objective if the Member’s attitude, opinion, or another obligation interferes with the duties assumed by the Member within the scope of the pursuit.
2.9 A Member owes his client an obligation to avoid known or anticipated conflicts of interest arising from an inconsistent economic interest between the client and another client, the Member, an associate of the Member, a participant in a joint venture with the Member, or other persons or interests which share in any material way in the revenues of the Member. A Member owes his client an obligation to immediately inform the client of the existence or appearance of any such known or anticipated conflict. A Member owes his client an obligation to sever the relationship with the client if the existence or appearance of such a known or anticipated conflict between the client and the Member, an associate of the Member, a participant in a joint venture with the Member, or other persons or interests which share in any material way in the revenues of the Member cannot be resolved between the conflicted parties. A Member owes his client an obligation to sever subsequently-formed relationships with other clients who have or appear to have such a known or anticipated conflict with the client if the conflict cannot be resolved between the conflicted parties.
2.10 A Member owes his client an obligation to immediately cease pursuing an objective on his client’s behalf and inform the client as quickly as practically possible of the Member’s inability to continue pursuing the objective on his client’s behalf if a physical, mental, or similar condition causes the Member to be unable to pursue the objective in an effective manner.
2.11 A Member owes his client an obligation not to charge fees incommensurate with the objectives pursued by the Member. A Member owes his client an obligation to return any charged fees incommensurate with the objectives pursued by the Member, unless the client has conducted himself in a manner which would render such a return of fees an inequity. A Member owes his client an obligation to return any charged fees unearned by the Member upon severing the relationship with the client, except fees charged solely for the purpose of insuring the availability of the Member.
2.12 A Member owes his client an obligation to include the subject of expenses in any contractual agreement between the Member and the client. A Member owes his client an obligation to only charge those expenditures made on behalf of the client and in furtherance of the objective pursued by the Member on his client’s behalf, unless expressly agreed upon by the client to the contrary in the contractual agreement.
2.13 A Member owes his client an obligation to communicate to the client as quickly as practically possible any significant offers of compromise or settlement. A Member owes his client an obligation to decide within the understanding of the effort any significant offers of compromise or settlement on his client’s behalf if it is practically impossible to timely communicate the offer to the client; and thereafter as quickly as practically possible communicate with the client the Member’s decision.

3. Obligations To Other Governmental Advocates:

3.1 All Members acknowledge and accept the concept of owing an ethical obligation to each other, and all other lobbyists.
3.2 A Member owes other lobbyists an obligation to inform a fellow lobbyist if the Member is contacted by a potential client, and the Member knows, or should know, that the potential client is represented by the other lobbyist; and advise the potential client that the matter of potential employment should not be discussed without either involving the other lobbyist or severing that pre-existing relationship.
3.3 A Member owes other lobbyists an obligation not to mislead them if the Member chooses to provide them information. A Member owes other lobbyists an obligation to correct as quickly as practically possible any incorrect information that the Member has provided them.
3.4 A Member owes other lobbyists an obligation to inform any other lobbyist with whom the Member is in communication on a pursued objective on his client’s behalf as to the specific interest the Member represents. A Member owes other lobbyists an obligation to clarify to any other lobbyist with whom the Member is in communication on a pursued objective on his client’s behalf as to the specific interest the Member represents if the Member makes an appearance representing an interest other than the interest of which the Member originally apprised the other governmental member.
3.5 A Member owes other lobbyists an obligation to respect the positions advocated by other lobbyists, even those in conflict with the positions of the Member’s client.
3.6 A Member owes other lobbyists an obligation to avoid acts or utterances which intentionally may have adverse economic effects upon the business of another governmental advocate.
3.7 A Member owes other lobbyists an obligation to inform a lobbyist of his or her client’s interest on a pursued objective when his client’s interest conflicts with the position advocated by the other governmental advocate and such communication will not compromise the client’s interest.

The foregoing rules are a statement by IGA regarding the standards of conduct for lobbyists mutually agreed upon by the membership. These rules reflect a general consensus of what the public, participants of the governmental decision-making process, clients, Members, and other lobbyists expect of IGA members in pursuing the objectives of their clients in the legislative and regulatory arenas. In general, these rules abide by the venerable maxim that you should deal with others as you would have them deal with you.

These statutes, enforceable by civil and criminal laws, combined with the associational ethical guidelines set forth above, provide a web of rules that govern lobbyists in conducting their professional work and activities. Compliance not only is essential to stay out of trouble, but also fundamentally demonstrates respect to fellow lobbyists, their clients, the elected and appointed officials they lobby, and the institutions of State government in which they operate.
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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. Hiltachk serves as General Counsel to the IGA. Micheli is a member of the IGA Board of Directors.