Lobby Definitions, Thresholds & Registration
For Corporations, Subsidiaries & Non Profits
August 28, 2015
Recently, three well-connected partners in a prominent California Strategies public affairs firm have agreed to pay fines to California’s political watchdog agency for attempting to influence state government decisions without registering as lobbyists1. In this case the partners, “crossed over the line which separates policy consultants from lobbyists.” In other situations, corporations have come under increased scrutiny for unwittingly participating in lobby activities without registration or proper financial disclosure.
Whether due to ignorance or malfeasance,
“covert” or “shadow lobbying”—the act of engaging in lobbying activities without being registered—has become a more common practice in the past decade. However, legal action by states against these actions is on the rise.
In Michigan, Governor Snyder announced in his 2012 State of the State speech that he would work with lawmakers to, “promote greater accountability and transparency in government by enacting overdue reforms to Michigan’s campaign finance, lobby and ethics laws.” Knowing the basic definitions and thresholds that trigger registering under the Michigan Lobby Registration Act can help keep your organization out of trouble.
As Defined by the Michigan Lobby Registration Act
A Person is defined as, “a business, individual, proprietorship, firm, joint venture, syndicate, business trust, labor organization, company, corporation, association, committee, or any other organization or group of persons acting jointly, including a state agency or a political subdivision of the state.”
Lobbying is defined as, “communicating directly with an official in the executive branch of state government or an official in the legislative branch of state government for the purpose of influencing legislative or administrative action.”
Lobbyable Public Officials are state level officials who may exercise personal discretion when making a decision concerning legislative or administrative actions. A list of lobbyable officials is available at: http://www.michigan.gov/sos/0,1607,7-127-1633_11945_46448-188034–,00.html . You can search the list by Executive Branch, Legislative Branch or University Presidents.
Types of Lobbyists & Thresholds for Registration
The thresholds used for this article apply to 2015. Public Act 83 of 1986 requires that various reporting thresholds, fees and penalties provided under the Act be adjusted on January 1 of each year to reflect the percentage of change in the consumer price index for Detroit.
Types of Lobbyist Registrations
A Lobbyist is usually a corporation, association or other type of organization that compensates or reimburses an independent “lobbyist agent”—or its own employee(s)—to lobby public officials.
A lobbyist agent is an individual, firm or other type of organization that is paid or reimbursed to lobby public officials on behalf of an employer or client. Individuals usually meet the definition of a Lobbyist Agent rather than a Lobbyist.
Employees of Lobbyist or Lobbyist Agents
There are two levels of employees that must be disclosed, usually by lobbyists (“Person”) or lobbyist agent firms. If employees are being compensated or reimbursed for lobbying in any amount the employee and employer together should determine if the employee is a lobbyist agent or a non-registered employee.
Non-registered employees must meet a much lower threshold than a lobbyist agent. The employer must provide the employee name and address on a Registration Form or a Financial Report Summary form so that the employee is identified as someone that lobbies for the company/lobbyist.
The threshold for registering as a lobbyist is met when a person (e.g. a corporation, etc.) makes expenditures of more than $2,375.00 during any 12-month period for lobbying in general; or a person who expends more than $600.00 during any 12-month period to lobby a single public official. Once either threshold is met, one must register within 15 calendar days. Note: Expenditures include payments to a lobbyist agent.
As for the state—or a political subdivision of the State—they must register immediately upon contracting for a lobbyist agent regardless of the amount spent for lobbying. Any person entering into a contract to exceed these thresholds during any 12-month period immediately becomes a Lobbyist.
The lobbyist agent threshold is met when a person is compensated or reimbursed more than $600.00 during any 12- month period for lobbying, at which point they must register within 3 calendar days. Any person entering into a contract to receive more than this threshold during any 12-month period is required to register immediately as a lobbyist agent.
An employee lobbyist meets the threshold when paid in excess of $24.00 by their employer for any lobby activities during any 12-month period.
Parent Companies & Subsidiaries
Lobbyist registrations are required of both parent companies and their subsidiaries, even though it is not explicitly stated in the Lobby Registration Act. The following excerpt from the 1984 Darlow2, 1 5(4), 7(1) Interpretive Statement (IS) clarifies registration requirements in Michigan.
“There is nothing in the Act [(Lobby Act, 1978 PA 472)] which suggests that a parent corporation may file a single registration form and report the lobbying expenditures of its subsidiaries. On the contrary, sections 5(4) and 7(1) of the Act (MCL 4.415 and 4.417) require any person who makes expenditures of more than $1,000* for lobbying or more than $250* on lobbying a single public official in a 12 month period to register as a lobbyist.”
Section 6(1) (MCL 4.416) defines a “person” as a business, individual, proprietorship, firm, partnership, joint venture, syndicate, business trust, labor organization, company, corporation, association, committee, or any other organization or group of persons acting jointly.
Therefore, if a parent corporation or a subsidiary (defined as “person”) of that corporation make expenditures for lobbying in excess of the thresholds established in section 5(4), each “person” must register as a lobbyist. Each “person” that is registered as a Lobbyist must also file bi-annual report summaries even if a registrant has no activities or expenditures to disclose for the reporting period.
*Thresholds referenced in Darlow were from the date the IS was issued in 1984.
Rule 2 – Registered Lobbyist & Lobbyist Agents
Under section R 4.412 Rule 2, when a duty or prohibition is imposed upon a lobbyist or lobbyist agent by the act, that duty or prohibition extends to all employees of those persons who are, or should be, registered as a lobbyist or lobbyist agent and extends to all contacts by such persons with public officials. These duties and prohibitions begin as of the date a lobbyist or lobbyist agent…: Contracts with, or employs a lobbyist agent; influences or attempts to influence a public official, or makes an expenditure which has a purpose of influencing legislative or administrative action.
Reporting requirements (e.g., food & beverage) are not limited to when the Lobbyist or Lobbyist agent is actively lobbying specific legislation or an administrative ruling; they are based on—and begin upon—registration.
Lisa Farnum, MPP is President of Honeycutt Executive Resources, LLC, a firm that specializes in PAC compliance, research and association management. Lisa has been helping clients resolve campaign finance issues and maintain compliance for more than 15 years. She earned a Bachelor of Arts in Business Administration from Northwood University and a Master of Public Policy from the University of Michigan, Dearborn. Ms. Farnum has over 25 years of experience in business and association management.