A week before Thanksgiving, the State Ethics Commission quietly announced it had fined an unnamed nonprofit organization and two of its top staff after an investigation found they actively lobbied at the Legislature without complying with the registration and disclosure requirements of the state’s lobbyist law.
After determining that the unregistered lobbying “likely” violated state law and extended over a period of years, the commission fined the organization $2,000. The group’s CEO, who acknowledged lobbying during the 2013 and 2014 legislative sessions, was fined $1,000. A second employee, who lobbied over a longer period, was fined $2,000. Publication of a sanitized description of the matter was included as a condition of settling the case.
The commission noted that the statute of limitations for violations of the lobbyist law is three years, and therefore its findings — and fines — reflected only that limited period.
The fines in this case were not insignificant. The total exceeded the fines levied against the the Hawaii Family Forum and Hawaii Catholic Conference in 2012 for failing to report what the groups spent lobbying against bills providing for same-sex marriage.
In the most recent case, the unnamed group’s CEO, referred to by the commission as “John Doe,” failed to register as a lobbyist and failed to file expenditure reports spanning four separate reporting periods. The other employee, referred to as “Jane Doe,” twice failed to register, and then failed to file expenditure reports covering seven reporting periods. The organization should have also disclosed its spending on lobbying during those same seven periods between 2012 and 2014.
The staff pleaded ignorance, saying they had misunderstood the law and thought it did not apply to employees who lobby on behalf of their nonprofit employers. The commission said that it “understood” their position but did not accept the plea of ignorance as a legitimate defense.
Despite the commission’s announcement, the public remains in the dark about who and what was involved. We don’t know the name of the organization or its staff members, as their identities were carefully scrubbed from the commission’s public findings. That means we don’t know whether the group’s illegal lobbying contributed in any significant way to the passage or defeat of the bills it had targeted, and we don’t know to what extent those bills may have impacted the public. Without additional accountability and transparency, the public is left guessing.
The case illustrates at least three separate problems with the state’s regulation of lobbyists.
First, the definition of a “lobbyist” is ambiguous and open to misinterpretation. To be legally considered a lobbyist, a person must first of all be engaged in lobbying. That is, they must communicate directly or indirectly with officials in the legislative or executive branch for the purpose of influencing legisative or administrative action.
A person must also be compensated in order to be considered a lobbyist and required to comply with the registration and disclosure provisions of state law.
And there are still further conditions. Even if you lobby, and are compensated, you are not required to register and otherwise comply with the law unless you spend five hours or more lobbying in any month, or expend more than $750 in any reporting period. Those reporting periods range from just two months during the annual legislative session to eight months when the Legislature is not in session.
To further muddy the waters, the law itself isn’t clear on exactly what activities must be counted in the five-hour threshold, or what costs must be included in $750 spending trigger, although the commission is always available to offer its advice. If a lobbyist spends hours waiting around the Capitol for a chance to get a few one-on-one minutes with a key legislator, are they supposed to report the hours waiting or the few minutes actually lobbying? These are the kinds of ambibuities that can be seized on by a lobbyist seeking to avoid disclosure.
This leads to the second problem. The existing lobbyist law (Chapter 97 HRS) requires proof of an intent to violate the law before penalties can be imposed for failing to file any report or for submitting a report “containing false information or material omission of any fact.” Omissions must be “wilfull” before a violation can be proved.
The commission backed a 2013 bill that would have eliminated the need to show intent. House Bill 208, which was introduced as part of a package of bills proposed by the commission, was approved by the House but died without a hearing in the Senate.
The commission explained that the “wilfull” intent provision is a relic of an earlier version of the law, which made violations of the lobbyist law punishable as criminal misdemeanors. In order to pursue criminal charges, it was necessary to prove a criminal intent, meaning that the person acted wilfully.
But although criminal penalties were removed more than a decade ago, the word “wilfully” was not removed. The commission testified that this could have been “a simple oversight,” but in my own cynical view it could equally well have reflected a behind-the-scenes move to cripple subsequent enforcement. I’ve seen similar innocuous appearing language with significant legal consequences find its way into bills at the last minute without attribution, a very effective way to sabotage a bill destined for passage.
Retention of the word “wilfully” has certainly made enforcement difficult, as the commission’s own testimony explained.
“To illustrate the absurdity of the state of mind requirement: a person could spend thousands of dollars on lobbying activities, all of which must be reported, not file any expenditure or other lobbyist report, and avoid an administrative penalty simply because the person professed ignorance of his legal reporting requirements,” the commission said in its written testimony. “And, that same person could continue not reporting the thousands of dollars spent on lobbying activities each year as long as he maintained his ignorance of the Lobbyists Law.”
Those in the best position to spot unregistered lobbyists and nudge them into compliance would be legislators and their staff, including office managers and committee clerks, who quickly get to know key lobbyists pushing for or against specific legislation.
Making information about the lobbyist registration and disclosure requirements available at key points in the legislative process, perhaps when testimony is submitted or presented in public hearings, or when making appointments with legislators or their staff, could go a long way in eliminating the “I didn’t know the law applied to me” type of excuses and increase overall compliance.
But that’s problem three. Legislators have had strained relations with the ethics commission for several years, with legislative leaders pushing back against aggressive enforcement, and the suggestion of building ethics and lobbyist compliance into the heart of the legislative process doesn’t seem likely to receive an enthusastic response any time soon.
The bottom line here is that I’m glad that the State Ethics Commission was able to take action against the unnamed nonprofit organization for violations of the lobbyist law, and I give the commission credit for doing as much as possible with the weak enforcement hand they’ve been dealt. But, at the same time, it’s a reminder that lots remains to be done.