ETHICS COMMISSION ENTITY RULES UPDATE

File Comments by April 1st...

March 25, 2008

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PAAT Members:

As you know, at our request, the Commission held a working session on March 13th to discuss the proposed new rules relating to reporting for those entities which receive compensation or make expenditures. In addition to Commission staff, Chairman Tom Harrison and former Chairman Tripp Davenport were in attendance, as well as new Commissioner Wilhelmina Delco.

As in most situations that deal with complicated, often myopic provisions of the law, there are some changes that we believe are important, others that we wish were left alone but are hard to defend, and those that we think are not good ideas. The key provisions covered by the rule changes are summarized below - for those of you who don’t want to read much of this material - and are explained more in depth here - for the few of you who want to look at the issue in boring detail.

Summary of Proposed Rules Regarding Entity Reporting & Registration:

1. 34.45: entities that avoid registration by having someone report on their behalf would now clearly be subject to the same limits and restrictions on expenditures as are individual registrants.

2. 34.65: registrants that are reporting on behalf of an entity avoiding registration must do so in the same time period as the individual registrant would have had to report the expenditure if it were made personally.

3. 34.85: entities avoiding registration must now use one of their registrants to report the expenditure, instead of any registrant, which is the current rule. So entities having no lobbyists must either get one, or the entity itself would have to register if required to do so. In addition to reflecting the name of the entity for which a registrant is reporting, the specific amount being reported on behalf of the entity will be required. An additional part of this rule clarifies that, except for split expenditures, expenditures by an entity, which are reported by a registrant on its behalf, are covered by the exception to the bribery provisions of the Penal Code.

We ask that you consider submitting comments in general support of the proposed rules with the exception of the first part of 34.85. For those of you that have clients which are associations, or for those of you which may be members of associations in which the member companies of the association don’t have their own lobbyists and use the association’s lobbyist to report expenditures, the proposed rule below (Sec. 34.85) will not allow them to continue that practice.

We believe that a better approach, and one you should consider addressing in your comments, would be for the Commission to continue to allow persons who are not registered for the entity to report when there is no lobbyist working directly for the entity - but for the Commission to change its form so as to allow the public to more easily determine when an entity has made an expenditure.

By way of review, click on the link below to download a memo with more detailed information, including specific recommendations for each proposed rule.  We hope that you will consider commenting to the Commission about the proposed rules in some form. Comments should be filed with the Commission by April 1 if possible.

As a reminder, we have outlined this issue in more detail on our website.

Please let us know of any questions you have about this complicated, but important issue.