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In 2008, Learning How to Live With New Rules

Ethics reforms topped the Congressional agenda in 2007, including earmark reforms, new lobby disclosure requirements and a proposal to overhaul the Congressional ethics process.

The result is that much of the 2008 agenda is likely to be consumed with figuring how to implement last year’s reforms and identifying where additional fixes will be required.

For example: A key reform passed last year requires lobbyists to report their revenues quarterly instead of semiannually, and requires organizations that lobby to report the campaign contributions made by their employees. Lobbyists also will be required to report the contributions that they “bundle” for candidates.

But the Clerk of the House and the Secretary of the Senate have said they will not issue the new quarterly reporting forms until March 3 (the first quarterly filing deadline is April 20), and they will not commit to when the contribution reporting form will be released. The Federal Election Commission — currently operating without enough commissioners to issue anything — has not yet issued rules for the bundling reports.

Companies are scrambling to develop compliance systems to make sure they are gathering all the new information required, and several experts in the field said it would not be surprising if Congress is faced with calls for reforms when unexpected bugs appear in the new reporting systems.

“We are adding layer after layer of new policies and procedures,” said Mike McNamara, a partner at Sonnenschein Nath & Rosenthal. “We very well may be back here a couple of years from now” trying to rewrite the rewritten rules.

Trade associations are assessing their own compliance issues after getting less-than-bright-line guidance from the Secretary of the Senate and Clerk of the House about a new reporting requirement for associations. The provision was intended to require disclosure of the members of short-lived, issue-specific coalitions that lobby, but it appears that trade associations and professional groups now will have to list their members who are actively involved in setting policy and making lobbying decisions.

Chris Vest, director of public policy for the American Society of Association Executives, said “trade associations that are involved in lobbying are going to have to review the guidance carefully and determine on their own what is their responsibility for disclosure.”

Congress also is in implementation mode for its own ethics procedures.

In the waning days of 2007, a Congressional ethics task force headed by Rep. Mike Capuano (D-Mass.) released a proposal to overhaul the House ethics process, creating a new bipartisan Office of Congressional Ethics to initiate and review allegations of Member misconduct and advise the ethics committee of its findings.

Speaker Nancy Pelosi (D-Calif.) has indicated her intention to bring up the ethics reforms as part of a rules package early this year, but Republicans are raising concerns about the task force proposals. In particular, GOP Members have complained that the proposal creates an additional layer of ethics review that serves as a sort of a pre-screening service for the existing ethics committee, without reforming the ethics committee itself.

Capuano himself has acknowledged that implementation of his reforms may be a challenge, and “it is certainly reasonable to expect that unforeseen adjustments will have to be made.”

Therefore, the task force report suggests that the House “establish a review panel of members to conduct an ongoing review of the ethics process during the 110th Congress and perhaps beyond.”

2008 also will be the first full year of implementation of earmark disclosure rules in the House and Senate; in 2007, the House moved the Homeland Security appropriations bill without a list of earmark requests because the rules were still being finalized. Several pieces of authorizing legislation, including the Water Resources Development Act, had disclosure requirements revised as the bills were in the committee process.

The second session of the 110th Congress begins with the disclosure rules more clearly in place, but there may still be efforts to amend them. In the House, each earmark is disclosed along with a letter from the Member sponsoring the project verifying that the Member and his or her spouse has no financial interest in the project. The Senate requires only a certification from each Senator that none of their earmarks poses a financial conflict, but there are likely to be calls from outside groups for the Senate to at least release individual certification letters like the House.

Brett Kappel, an ethics and campaign finance attorney at Vorys, Sater, Seymour and Pease, said “this is going to be a year of fits and starts,” as compliance issues pop up that require additional clarification from Congress.

For instance, Kappel said, companies are struggling with how to comply with a new provision requiring them to disclose donations to charities affiliated with a Member of Congress because it is not always clear to the donor which charities fall into this category. “There is no place to turn to ask if this is a member of Congress’ charity,” Kappel said, so “if anybody asks for your money and it goes to Washington, you have to ask a lot of questions” about the makeup of the group.

Meredith McGehee, policy director of the Campaign Legal Center, said she has little sympathy for K Street firms that complain about the new compliance burden because many are gaining business advising other companies how to meet their own obligations. “That’s what this year is going to be about: getting the high-priced talent to tell you how you can do what you want to do,” she said.

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