Larry Levy and Andrew Rafalaf ()
Life is about to get much more difficult for lobbyists and their clients. New York City has enacted a number of significant amendments to the Lobbying Law, which, most notably, expand the definition of lobbying, alter the financial threshold that triggers reporting requirements, carve out specific rules for architects and engineers, and create a new enforcement regime. See Admin. Code §§3-211.
These changes to the Lobbying Law are not unexpected. In fact, they are the culmination of efforts first begun in 2006, when the city last amended its lobbying laws. At the time, the law called for the creation of a joint Lobbying Commission, which was established in February 2011 by Mayor Michael Bloomberg and City Council for the purpose of evaluating the effectiveness of the city’s lobbying regulation and the performance of the City Clerk’s Office in enforcing the laws. The commission’s conclusions and recommendations resulted in these most recent amendments. Notably, the new law calls for a similar review to be initiated between 36 and 48 months after the new law takes effect.
It appears the amended law seeks to strike a balance. On the one hand, it captures a tremendous amount of activity that would not have been ensnared under prior iterations. On the other, it establishes carve-outs for certain types of activities that could otherwise be considered lobbying. All told, it stands to create a tremendous amount more work for many who would never have thought their interactions with the city to be lobbying.
The most significant change to the Lobbying Law, effective May 16, 2014, is the vastly broader definition of what constitutes lobbying. First, the amended law addresses various interactions with the City Council that were not addressed under previous iterations of the law. Whereas previously lobbying the City Council included only efforts to influence “the passage or defeat of any local law or resolution,” the amended law counts as lobbying:
• Efforts to affect “any determination by the city council or any member thereof with respect to the introduction, passage, defeat, or substance of any local legislation or resolution,” Admin. Code §3-211(c)(1) (emphasis added); and
• Attempts to influence the City Council to conduct or refrain from conducting oversight activity or an investigation.
Likewise, the amended law labels as lobbying many more types of interactions with the mayor, executive branch and agencies, including:
• Efforts to influence “any determination by the mayor to support, oppose, approve, or disapprove any local legislation or resolution, whether or not such legislation or resolution has been introduced in the city council” id. (emphasis added);
• Attempts to influence a decision of an agency of the city regarding a rule, or regulation, including whether or not to propose one, as well as attempts to initiate, prevent or influence a rate-making proceeding; and
• Efforts to influence mayoral executive orders, prior to there being any official action initiated by the city.
Lobbying is not, however, constrained to local matters. In fact, the amended law counts as lobbying any attempt to influence a city official, officer or employee, to support or oppose any federal or state legislation, rule or regulation, whether or not any such action is pending.
Collectively, these changes create a presumption that virtually any compensated interaction with a government official or employee, which in any way seeks to advocate for or against initiating, modifying, or terminating a government action is a lobbying activity, unless the activity falls into one of a few enumerated exceptions, such as proffering testimony on the record at a public hearing.
As before, the Lobbying Law establishes a monetary threshold that triggers when a lobbyist or its client must report lobbying activity. Under the amended law, effective Jan. 1, 2014, the reporting threshold has been raised to $5,000 per year in combined reportable compensation and expenses for purposes of lobbying activity, bringing it in line with New York State’s reporting requirement. However, lobbyists and clients must be aware that all expenses associated with lobbying, including expenses incurred by the lobbyist, such as secretarial services, travel, copying and mail charges, as well as any expenses that have been reimbursed by a client, are included in the calculation.
Unfortunately, the city law differs from the state law by creating two special lobbying categories not recognized under state law. The first category includes organizations that have combined reportable compensation and expenses of between $5,000 and $10,000 per year for lobbying on their own behalf, without the assistance of an outside paid lobbyist. Such organizations need only report lobbying activity twice a year instead of the standard six reports. However, this special category will not become effective until the Clerk’s office implements certain technological changes to facilitate the different reporting schedule, or two years after the law’s enactment, whichever is sooner.
The second special category imposes different requirements on architects and engineers, which need not report lobbying activity until they have combined income and expenses in furtherance of such activity of $10,000 per year. Given that few, if any, such individuals or firms have ever registered as a lobbyist, believing their work to be technical in nature, and aware that the work product of architects and engineers is frequently required by the government, such as creating environmental impact statements for land use matters, the amended Lobbying Law has created various exceptions for these entities in an effort to capture only activity properly deemed to be lobbying.
First, it excludes from the definition of lobbying any work performed pursuant to a contract or subcontract with a city agency directing a capital project. Second, unlike under prior versions of the law, architecture and engineering presentations to community boards are no longer considered lobbying activity where the government decision is subject to an adjudicatory proceeding and ultimately rests with a board or commission, such as the Board of Standards and Appeals.
The City Clerk is charged with promulgating special rules for architects and engineers that designate authorizations and decisions as “minor” based on: the size and cost of the relevant project; the size, class, and/or value of the property to which the relevant project relates; and the size of the architecture or engineering firm typically involved in the type of project at issue. Presumably, this will eliminate registration requirements for small businesses and property owners that are likely to have only one matter before the city, where such matter is of modest value, including zoning resolutions before the planning commission or decisions related to real property by any other board or commission.
Architects and engineers, and those working under their direct supervision, have been granted one final reprieve. Whereas the expenses or costs associated with the preparation for, or pursuant to, lobbying activity are ordinarily considered reportable, expenses or costs incurred by architects and engineers in design work and plans drafting will not be counted as lobbying for any purpose, including reaching the monetary threshold, even if such work is preceded or followed by lobbying activity.
Not surprisingly, the new law requires the Clerk’s Office to much more aggressively enforce the lobbying law and punish those that do not comply. In fact, the Clerk is now expected to proactively seek out violators. For example, the Clerk will be required to review entities and individuals listed in the city’s “Doing Business Database,” as well as those registered as lobbyists with New York State, to determine if any should have registered as a lobbyist or lobbyist client and failed to do so. The Clerk will also review notices of appearances before city agencies, boards, commissions and the City Council to uncover unregistered and unreported lobbying activity.
Violators are subject to fines and, possibly, criminal penalties. For those that have previously filed a statement of registration with the Clerk, the fine is set at $25 per day, per missing report. Those lobbyists and clients that have not previously filed a registration statement, but must do so now are subject to a $10 per day, per report fine for the failure to file a timely statement of registration or any other required report.
As a balance to this new enforcement initiative, the City Clerk, by rule, will establish a six-month amnesty period for entities, both lobbyists and their clients that have never registered or filed, to properly register and report lobbying activity, without incurring any financial penalty. To participate, one will have to file a written notice of intent and an application, on forms prescribed by the City Clerk. Further, the Clerk is now given discretion to waive or reduce fines.
Outreach and Education
In an attempt to ease the transition and promote compliance, the City Clerk is charged with conducting an educational outreach program. The City Clerk is required to work with city agencies and the City Council to develop notices and advertisements aimed at persons and organizations that do business with the city. Additionally, the City Clerk must develop an online training program as soon as is practicable that will include, among other things, an anti-corruption component. Lobbying entities, depending on the entities’ size and number of clients, are required to send one or more employees to be trained by the City Clerk’s Lobbying Bureau at least once every two years. Newly registered lobbyists must have a representative participate in the City Clerk’s training program within 15 days of initiating lobbyist activity.
At its most basic, the revised law completes New York’s journey from regulating the classic lobbyist, one with “special” access to government officials and employees, to regulating anyone who is paid to assist in presenting information to government officials or employees, including those who do so as part of their regular employment duties. Since the bulk of the amendments are not effective until May 16, 2014, it remains to be seen what the final implementation will look like, in particular the rules to be established by the City Clerk.
What is clear is that many differences remain between the city and New York State laws governing lobbying activity, and that lobbyists and their clients must comply with both, even where they overlap. In fact, the New York State Lobbying Act requires lobbyists and their clients to report lobbying activity to the state’s governing body, the State Joint Commission on Public Ethics (JCOPE), if they engage in lobbying activity before a municipality, which includes the five counties of the City of New York, as well as the city. Now, more than ever, lobbyists and their clients should consult competent counsel to ensure proper compliance.
Larry Levy is of counsel to Bracewell & Giuliani. Andrew Rafalaf is a senior associate with the firm.