ETHICS COMMISSION UPDATE
Meeting News of Note

June 17, 2009

PAAT Members

As discussed in our previous e-mail, there were two items on the Ethics Commission agenda last week that specifically impact the lobby community. Both issues did not move and I have provided some of the discussion high points below.

Also note that the Commission briefly went over the ethics related legislation of note that passed during the session. Click here to download the Commission’s summary of the relevant bills. We will send out a more specific legislative update under separate cover.

Ethics Commission Meeting Issues of Note:

1. Advisory Opinion Request 457
The Commission staff considered the adoption of an advisory opinion request that would in essence have the effect of prohibiting any corporation that does not have a lobbyist from inviting an elected official to talk to their audience and paying any expenses for that person to be there (transportation, lodging, food, etc). The exceptions will be if the expenditures can be reported as a lobby expenditure or a political contribution (which a corporation cannot make). Click here to download the draft opinion (AOR 457). PAAT testified that this opinion could have a lot of unintended consequences, particularly for non-profits and could hamper appropriate access to government officials. 

Concern: Since we now know that the Commission legal staff believes that it may be a felony for an incorporated entity to provide any benefit (e.g. food, transportation, lodging) to an officeholder unless the benefit is reported as a lobby expenditure (thereby taking it out of the category of being a corporate campaign contribution), we need to caution all of our clients and legislator friends that this felony exposure could exist if someone were to file a complaint. We are working with the Commission to see if there is a way to address their concerns without such a drastic result. In the meantime, be certain that your company or clients know that they must report all expenditures related to an officeholder speaking to their constituents as a lobby expenditure.

Outcome: The Commissioners agreed that they needed to examine all of the implications of this Opinion and it was not adopted.

2. Ticket and Suite Cost Rulemaking
The Commission, for the third time, took up the proposed rules on how to evaluate ticket costs for a suite at an entertainment event for expense reporting purposes. The current methodology being proposed by staff is that all the expenses involved in using a suite must be counted as entertainment, which may have the effect of making some sports venues off limits for officeholders and state employees because the pro rata expense of the suite exceeds the annual limit for entertainment. Click here to review the rules.

As you know, PAAT has been working with the Commission for several months on this issue and has made numerous suggestions to make this rule more workable and fair in its application, but the Commission has not yet agreed with our reasoning. We testified once again in support of Option 2 (which was the option we suggested during the March working group):
1) The cost of the tickets to a suite should not be included in the suite cost;
2) The cost of the suite should be combined with any other food and beverage costs associated with the event, and
3) The per person amount that is ultimately determined should be reported as food and beverage, and not as entertainment.  

The Commission has ruled in past Advisory Opinions (see EAO 119 and EAO 136) that the cost of a venue for an event should be reported under the food and beverage category, so this approach is consistent with that policy.

While Commissioners Harrison and Delco agreed with our reasoning, Chair Fischer and Commissioner Graham were aggressively opposed to the concept of reporting suite costs as food and beverage. They believe this gives lobbyists an unlimited hall pass to entertain members because there is no cap on food and beverage and they feel it would essentially render the $500 entertainment cap meaningless.

Concern: As always, our mission is to promote transparency and accountability – rather than limits or restrictions. We maintain that everything must still be reported and the option we suggested provides consistent and clear guidelines for everyone to follow without having the consequence of potentially criminalizing attendance at a sporting event where everything is being reported. 

Outcome: A motion was made to adopt Option 1 (all costs that are related to the use of a suite at an entertainment event should be attributed to the suite and reported as entertainment) but it failed by a vote of 4-3 (need 6 votes to adopt). Needless to say, there is no agreement at the Commission as to what they want to do. We are continuing to work on this issue. Stay tuned.

The next Commission meeting is scheduled for Thursday, August 6. Let me know if you are interested in joining us for the fun...

Jack