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If you need more evidence that our regulation of lobbyists is less than robust, consider the Hawaii State Ethics Commission’s most recent enforcement action.
On Feb. 2, 2015 the commission announced it had levied fines against the Land Use Research Foundation, a prominent developer-backed advocacy group, and David Arakawa, the foundation’s executive director, for failing to comply with the state’s lobbyist law during the years from 2008 through 2014.
The commission’s investigation found Arakawa lobbied at the legislature on behalf of LURF through that period without registering as a lobbyist, and without filing regular reports on behalf of himself and the foundation disclosing expenditures for the purpose of lobbying. This was “likely” to have violated state law, the commission concluded.
Although the violations were spread through the period, a three-year statute of limitations applies to the lobbyists law, Chapter 97 HRS. During that abbreviated period, Arakawa twice failed to register, and neglected to file nine expenditure reports, according to the commission’s report on the matter. The foundation, while not required to register as a lobbyist, should have filed the same nine required reports.
Arakawa and the foundation each agreed to pay a $2,000 fine to settle the matter. On its face, the law worked. Violators were found and penalized.
The commission concluded Arakawa “appeared to have genuinely misunderstood the law,” believing that he was exempt from the lobbyist requirements.
Other observers are less generous, citing Arakawa’s experience, including eight years at Corporation Counsel, the city’s top legal office, during the administration of Honolulu Mayor Jeremy Harris. They say that given his legal background, he should obviously have known better.
Arakawa told the commision he believed his lobbying was exempt under a provision that applies to experts invited by the Legislature to make occasional appearances due to their specialized knowledge. However, the commission has long said that the exemption is not meant to cover groups who press their own legislative agenda for and against proposed bills. Although the commission’s interpretation has been made quite clear, Arakawa is certainly not the first or the only lobbyist to use the provision to justify noncompliance with the lobbyist law.
While the commission considers the case to have been resolved by its findings and the monetary fines, questions remain about whether Arakawa has complied with the city’s parallel lobbyist requirements, and whether LURF has in fact accurately and fully reported its lobbying activities.
Attempts to reach Arakawa for comment yesterday through the LURF office, and through email sent to the address used in his lobbyist registration, were not successful.
LURF describes itself as a lobbying and advocacy organization, “the only Hawaii based organization devoted exclusively to promoting the interests of the development community, particularly in the areas of land use laws, regulations, and public policy.”
The group, first incorporated in 1979, describes itself as a “strong and effective advocate and lobbyist,” which “provides an ‘industry voice’ for landowners and developers.”
The Legislature’s archives show LURF has presented testimony for and against dozens of specific bills in each of the past several years. In addition, the group’s own website lists numerous other activities that appear to fall within the legal definition of lobbying.
The organization’s federal nonprofit tax returns show that it has an annual budget of more than $300,000, virtually all of it in dues and contributions from members.
Its members include “major Hawaii landowners, developers, resort operators and a utility company,” according to one of its self-descriptions.
Carleton Ching, the former Castle & Cooke lobbyist who is Gov. David Ige’s nominee to take over as director of the Department of Land and Natural Resources, served as an officer and director of the organization until resigning following his nomination.
In light of the State Ethics Commission’s finding that Arakawa was lobbying and should have complied with the state’s lobbyist law, what about the similar requirements imposed by the city’s lobbyist ordinance?
The city and state ethics commission’s share similar missions but separate jurisdictions. The state commission regulates lobbyists who attempt to influence decisions at the Legislature, or in executive departments. The city commission regulates lobbyists who are trying to steer decisions of the city council and city administration in favor of their employers or clients.
Like its state counterpart, the city’s lobbyist law requires lobbyists to register with the ethics commission, and to file annual reports that include the amounts they receive in fees or contributions for lobbying, as well as amounts spent and specific issues they have lobbied on.
A search of the city’s online Docushare system turns up a number of instances in which Arakawa testified for or against specific legislation on behalf of the foundation over the past several years. However, his name does not appear on the lists of registered lobbyists maintained by the city’s ethics commission.
When asked whether the state case had triggered a similar review of LURF’s lobbying at the city, Chuck Totto, executive director of the Honolulu Ethics Commission, confirmed he was aware of the state ruling. And while Totto acknowledged that Arakawa’s name has not been among those registered as a city lobbyist, he declined to comment on this situation, saying that he could not discuss any of his office’s ongoing investigations.
The city’s relatively expansive definition of “lobbyist” is contained in Article 13 of the Revised Ordinances of Honolulu.
“‘Lobbyist’ means any person who engages oneself for pay or other consideration for the purpose of influencing, directly or indirectly, and whether by such person or through any agent or employee or other person in any manner whatsoever, the policy making process of the City and County of Honolulu.”
This broad definition of lobbyist, like state law, includes indirect lobbying, often referred to as “grassroots lobbying,” which means urging other people or organizations to contact their elected officials in support or opposition to legislation, proposed rules, or other covered policy matters, which might include many of LURF’s many advocacy activities.
The city ethics commission can impose civil fines on officials or employees who violate conflict of interest or other provisions of the ethics code. However, in the case of lobbyists found to have violated provisions of the law, the only penalty provided is a ban of up to one year on lobbying.
Totto said the commission has in the past been reluctant to take such action, and its mandate does not currently include other enforcement options. In addition, the city’s lobbyist law does not cover the organizations that employ or contract with lobbyists, which have no reporting requirement.
Totto expressed frustration at the limited options for dealing with violations of the lobbyist law, which he said has not been amended or strenthened since it was first adopted decades ago.
In August 2014, during the State Ethics Commission’s investigation of LURF’s lobbying activities, Arakawa filed several overdue expenditure reports on behalf of the organization.
Five of those reports are currently available online covering the period from January 1, 2013, though April 30, 2014.
During the 2013 calendar year, the only full year for which the data is available, Arakawa reported being paid just $1,859.68 for all of his lobbying activities on behalf of LURF.
That came to just 1.6 percent of his annual $115,000 salary, which was disclosed on the organization’s federal tax return for the period. If taken at face value, less than 2 percent of Arakawa’s time was devoted to anything related to lobbying, whether preparing and writing testimony, communicating the group’s recommendations to members on specific measures, or spending time communicating with legislators or their staff.
And LURF’s total reported lobbying expenditures during 2013 further seem equally unbelievable. The total for all reported lobbying costs, including Arakawa’s salary, came to just $1,897.19, which was just one-half of 1 percent of the group’s $342,715 in total expenses during the year, according to its tax filing.
Les Kondo, executive director of the State Ethics Commission, said his office does not have the resources to audit lobbyist disclosure reports. It receives lobbyist reports, checks for essential information, and then files them without evaluation.
“We look to make sure that the basic information requested is provided, such as contact information, and who you are lobbying for,” Kondo said in a telephone interview Tuesday. “But in terms of doing an audit, to make sure the numbers are accurate? No.”
One thing seems clear. If regulating lobbyists and obtaining full disclosure of their activities is something the public wants and needs, it’s obvious we have very long way to go.