Q:
I am the senior compliance officer at a Fortune 100 company with a question about the scope of the Congressional gift rules. I have asked around, and there seems to be some disagreement about the answer to my question. My understanding is that, because our company has in-house lobbyists, the gift rules prohibit us from giving gifts to Congressional employees. But I’m having trouble understanding what it means for a gift to be from our company. We have more than 30,000 employees. I can’t imagine the gift rules apply every time one of them gives a gift to someone in Congress. At least I hope not. So here’s my question. When does a gift count as being “from” a company?

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A: This is what I call the $200,000 question. I’ll explain what I mean in a minute. But first, let’s try to answer it.

As you are aware, the Honest Leadership and Open Government Act of 2007 provides that companies employing in-house lobbyists are bound by the Congressional gift rules. Specifically, the statute applies to “any organization that employs one or more lobbyists and is registered or is required to register.” Such an organization “may not give a gift … to a covered legislative branch official if the person has knowledge that the gift … may not be accepted … under the Rules of the House of Representative or the Standing Rules of the Senate.”

Given your role as compliance officer at a firm that employs lobbyists, I imagine you have had countless headaches navigating your way through a set of Congressional rules that, when drafted, was never intended to apply to anyone but Members and staff. Applying these gift rules to any company, but particularly one as large as yours, poses a host of thorny questions. You’ve asked perhaps the thorniest of all: Who exactly is bound by the rules?

Unfortunately, believe it or not, there is no clear answer. One plausible suggestion is that the rules should apply only to gifts from your in-house lobbyists. After all, the new legislation is clearly aimed at lobbyists, and it is their relationship with Congressional employees that carries the greatest risk of the appearance of impropriety. If not for the fact that your company employs lobbyists, the rules wouldn’t apply to your company at all.

Appealing as this might sound to you, this answer has not been endorsed by either chamber’s ethics committee. Rather, both committees have issued guidance that is at odds with this approach. In the Senate, the Ethics Committee has stated that Senate employees may not accept a gift from the director of a foundation “which occasionally retains help from a local lobbying shop” even where the director himself is not a lobbyist. Likewise, in the House, the Ethics Manual contains guidance suggesting that, in the case of organizations with in-house lobbyists, the rules apply to a broader group of employees than just the in-house lobbyists.

In fact, under one interpretation, the House and Senate guidance could be read to imply that a gift qualifies as being “from” an organization whenever any organization employee gives a gift to any Congressional employee. Yet, this seems difficult to believe. The rules simply can’t apply to every employee in every organization that employs lobbyists. In your case, you have more than 30,000 employees. Are the rules really implicated every time one of those employees gives a gift to one of the 15,000-plus Congressional employees? Across the country, literally millions of people work at companies with in-house lobbyists. Do the rules come into play every time one of those employees gives a gift to someone who happens to work in Congress?

It seems then that the answer must lie somewhere in between. Application of the rules appears to extend further into company ranks than in-house lobbyists alone. Yet, the rules cannot possibly extend to every company employee. Given the absence of official guidance on the issue, where exactly in between the answer lies is anybody’s guess. Until and unless such guidance comes, the best you can do is implement formal compliance mechanisms designed to educate your employees regarding the rules and to minimize the likelihood of a violation.

So, why is this the $200,000 question? Under the statute, if your company violates the Congressional gift rules, it could face a fine of up to $200,000 per violation. In addition, a company employee must periodically certify that your company has not violated the rules, which exposes both the employee and your company to even more potential liability. Of course, in reality, it seems unlikely that the government would seek to impose penalties for minor violations of the rules, particularly by employees whose jobs do not involve regular interaction with Congress. On the other hand, if you are like many compliance officers, you may consider it part of your job responsibility not to take that chance.

C. Simon Davidson is a partner with the law firm McGuireWoods LLP. Click here to submit questions. Readers should not treat his column as legal advice. Questions do not create any attorney-client relationship.