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Administration Clarifies Lobbying Restrictions for Stimulus Funding


									DLA Piper | Publications | Administration clarifies lobbying restrictions for stimulus fund... Page 1 of 5

30 JUL 2009

Administration clarifies lobbying restrictions for stimulus funding

William H. Minor Meghan E. Barron

The Obama Administration has issued updated guidance regarding a controversial Executive Memorandum that limited communications by registered lobbyists with Executive Branch officials regarding programs and funding available through the American Recovery and Reinvestment Act of 2009 (the Recovery Act, also known as ARRA or the stimulus act). In the new guidance, the Administration substantially retreats from the terms of the Executive Memorandum issued in March with respect to lobbyist communications regarding Recovery Act projects. Instead, certain prohibitions are now extended to all individuals making contact with government officials on competitive stimulus funding. The Executive Memorandum, entitled “Ensuring Responsible Spending of Recovery Act Funds,” included a series of directives to the heads of the executive departments and agencies. Together, the directives were intended to “empower executive department and agency officials to exercise their available discretion and judgment to help ensure that Recovery Act funds are expended for projects that further the job creation, economic recovery and other purposes of the Recovery Act and are not used for imprudent purposes.” In the Executive Memorandum, the President argued: “We must not allow Recovery Act funds to be distributed on the basis of factors other than the merits of proposed projects or in response to improper influence or pressure.” A central element of the announced policy prohibited executive department or agency officials from engaging in oral communications with registered federal lobbyists regarding certain Recovery Act


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projects and funding. This provision prompted strong objections from the lobbying community and questions about its constitutionality. A variety of groups, including the American Civil Liberties Union, Citizens for Responsibility and Ethics in Washington and the American League of Lobbyists, petitioned the White House to revise the policy, arguing that the provision was a poorly tailored and ill-advised restriction on free speech. The Executive Memorandum directed the Office of Management and Budget to issue guidance on the various provisions. OMB issued interim guidance on April 7, 2009 and, at the President’s request, issued significantly revised guidance on July 24, 2009 in the form of a new memorandum from OMB Director Peter Orszag to department and agency heads. This article outlines the requirements in the July 24 guidance and notes significant departures from the earlier version. Standards of Conduct for Government Officials The updated guidance outlines four different standards of conduct for government officials depending upon the subject matter and method of communication, and a fifth category remains from the initial Executive Memorandum. 1. Communications about Pending Applications for a Recovery Act Competitive Grant or Other Competitive Form of Federal Financial Assistance Under OMB’s updated guidance, a person or entity (whether or not he or she is a lobbyist) may not engage in oral communications with a government official concerning a pending application for a Recovery Act competitive grant or other competitive form of federal financial assistance (e.g., a competitive loan) during the period of time commencing from the submission of a formal application until the award of the competitive funds. Written communications are permissible, but must be reported by the government official if they are made by federally registered lobbyists. The updated guidance clarifies that prior to the submission of a formal application for competitive funding and after the award of such funds, any individual or entity, including a federally registered lobbyist, may communicate orally or in writing about any matter that is not the subject of a pending application. In addition, the updated guidance provides for certain exceptions to the oral communications prohibition, including communications that are purely logistical, communications made at a widely attended gathering and communications initiated by a federal agency official. In contrast, the original policy specifically focused on federally registered lobbyists, prohibiting them from attending any meeting or participating in any telephone conversation with executive department or agency officials concerning particular projects, applications or applicants for funding under the Recovery Act. Registered lobbyists were permitted only to submit written communications on these topics. 2. Communications about Recovery Act Policies and Projects for Funding Lobbyists and others are permitted to engage in oral communications with officials regarding Recovery Act policies and projects for funding as long as the conversation does not also include a discussion of a


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pending application for competitive grant funding during the pendency of the application. The updated guidance clarifies that if such communications occur between a government official and a lobbyist speaking on behalf of a client or employer for whom the lobbyist is federally registered (and the communications are not purely logistical or made in the course of a widely attended event), the fact that such a meeting or conversation took place must be documented by the official and publicly disclosed on the agency’s Recovery Act website, including the date and time of the communication, the names of the lobbyists and officials involved in the conversation, the name of the lobbyist’s client, a description of the substance of discussion and any written materials prepared by outside participants and submitted at the meeting. In addition, any written communications from a lobbyist on behalf of a client or employer (including communications regarding a pending application) must also be publicly disclosed in the same manner. 3. Communications about Logistical Questions Related to the Recovery Act Both the OMB interim and updated guidance clarify that lobbyists are permitted to engage in oral conversations with officials regarding general questions about “the logistics or implementation” of Recovery Act funding. As noted above, the updated guidance clarifies that these communications are an exception to the prohibition on oral communications concerning a pending application for competitive funds during the period of time between the submission of a formal application and the award of the funds. Furthermore, government officials that engage in communications with lobbyists regarding logistical questions are not required to record and report such contacts. According to the guidance, logistical matters include a request for a meeting, a request for the status of an action or any other similar administrative request as long as it does not include an attempt to communicate about Recovery Act policy or a particular project or application for funding. OMB further identifies the following as permissible logistical questions: questions about how to apply for funding and how to conform to deadlines; inquiries about which agencies or officials should receive applications or questions; and requests for information about program requirements and agency practices under the Recovery Act. 4. Oral Communications at Widely Attended Gatherings The OMB guidance states that officials are permitted to engage in public communications at a widely attended gathering concerning Recovery Act funding. “Widely attended gathering” is defined in the Standards of Ethical Conduct for Employees of the Executive Branch to include events attended by a large number of people from throughout an industry or profession who represent a wide range of interests. For such events, officials are not required to document the communication, even if registered lobbyists are in attendance. However, the Executive Memorandum’s restrictions do apply to any private oral communications with lobbyists that might occur at, or following, such an event. 5. Communications about Tax-Related Provisions of the Recovery Act By its own terms, the Executive Memorandum does not apply to the tax-related provisions in Division B of the Recovery Act, which presumably may be the subject of lobbying communications and need not be disclosed publicly other than under the standard requirements of the Lobbying Disclosure Act. Procedures for Disclosing Certain Communications


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As noted previously, the Executive Memorandum and the revised guidance require that certain communications be disclosed publicly and provide a recommended procedure for officials contacted by lobbyists and others regarding the Recovery Act. Agency officials are directed to inquire whether anyone appearing or communicating regarding Recovery Act policies or projects for funding is a registered lobbyist. If the person contacting an official is a lobbyist, the OMB guidance instructs the official to inform the person that the conversation will be documented and disclosed. OMB’s guidance instructs officials to document each in-person or telephonic conversation with a lobbyist regarding Recovery Act policy matters immediately after the contact using an electronic form to record the date of the contact, the names of the parties to the conversation, the name of the lobbyist’s client(s), a general, one-sentence description of the substance of the conversation and any written materials prepared by outside participants and submitted at the meeting. OMB directs officials to send such forms via email to a designated agency official for posting on the agency website. The same is to be done for written communications received from lobbyists regarding Recovery Act funding. Agencies typically post such disclosures on a special page within the agency’s Recovery Act website. Frequently Asked Questions As noted above, the Executive Memorandum prompted initial concerns from a variety of interested parties and has also raised a number of questions about the reach and intent of the policy, many of which were answered by the revised OMB guidance. Frequently asked questions include: Do the reporting requirements apply to all communications from lobbyists, and do they also apply to lobbying organizations and their employees more generally? The OMB updated guidance clarifies that the reporting requirements apply only to communications by federally registered lobbyists who are communicating on behalf of a client for which they are registered. They do not apply to lobbying organizations or their non-registered employees more generally. Which Executive Branch officials are covered by the provision? The Executive Memorandum does not define the term “agency official,” leaving some to question whether it applies broadly to all agency employees. Moreover, the format of the document – a “Memorandum to the Heads of Executive Departments and Agencies” – suggests that it may not cover independent agencies, which are not typically subject to such pronouncements. However, independent agencies have taken steps to comply with the Executive Memorandum, including posting communications received from lobbyists. Without clarification, it appears safe to assume that all Executive Branch officials involved in Recovery Act matters are covered. Are contacts with state and local governments, which are charged with making a large portion of the Recovery Act expenditures, covered by the Executive Memorandum? No, the Executive Memorandum only applies to federal Executive Branch officials and to lobbyists registered at the federal level. Federal lobbyists may lobby at the state level for Recovery Act funding for clients, subject to state laws.


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Notwithstanding the revisions, will government officials communicate with lobbyists on Recovery Act funding? The revised guidance states that the policy is intended to provide transparency, not to bar communications with lobbyists. Nonetheless, both lobbyists and non-lobbyists are well advised to be explicit with government officials about the nature of proposed meetings and lobbying communications (e.g., “we are seeking to meet with you to discuss general Recovery Act matters, not a pending application for competitive funding” or “this letter concerns only logistical matters related to the Recovery Act”). Executive Branch officials who face obligations under the Executive Memorandum will appreciate those who demonstrate an awareness of the requirements and a sensitivity to the issues raised by this policy.


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