CEO 07-8 -- April 25, 2007
EXECUTIVE BRANCH LOBBYING
LOBBYING FIRMS AND PROHIBITED INDIRECT EXPENDITURES
SUMMARY:
Section 112.3125(1)(g), Florida Statutes, defines "lobbying firm" to mean a business entity "that receives or becomes entitled to receive any compensation for the purpose of lobbying, where any partner, owner, officer, or employee of the business entity is a lobbyist." Therefore, a law firm can be a "lobbying firm" if even one attorney is registered to lobby. Although the expenditure prohibition in Section 112.3125(6)(a), Florida Statutes, bans direct or indirect expenditures made by a lobbyist or principal, it does not expressly prohibit expenditures made by a "lobbying firm" or a non-lobbyist. However, whether their expenditures are a prohibited "indirect expenditure" depends on a weighing of the factors listed in Rule 34-12.190(3), Florida Administrative Code.
QUESTION:
Is a law firm a "lobbying firm" if only some of its attorneys are lobbyists, and does the expenditure prohibition in Section 112.3125(6)(a), Florida Statutes, apply to the entire firm and every employee in the firm, even those who are not registered to lobby Executive Branch agencies?
Your question is answered as follows.
In your letter requesting this opinion, you raise questions about the prohibitions against lobbyists and principals making certain "expenditures," where you are not registered as an Executive Branch lobbyist under Section 112.3125(3), Florida Statutes, but where some of the attorneys in the firm where you work are. You initially ask whether the law firm is considered to be a "lobbying firm" if only some partners or associates of the firm are registered to lobby.
Section 112.3125(1)(g), Florida Statutes, defines "lobbying firm" to mean
a business entity, including an individual contract lobbyist, that receives or becomes entitled to receive any compensation for the purpose of lobbying, where any partner, owner, officer, or employee of the business entity is a lobbyist.
The use of the word "any" in the definition leads us to conclude that if even one of the partners, owners, officers, or employees of the law firm is registered to lobby Executive Branch agencies and is paid or owed compensation for lobbying, then the entire firm is a "lobbying firm." See Maddox v. State, 923 So.2d 442 (Fla. 2006), where the Florida Supreme Court considered various principles of statutory construction to conclude that the phrase "any trial" in Section 316.650(9), Florida Statutes, literally meant any trial.
However, the significance of whether the law firm is a "lobbying firm" is germane only in the context of the compensation reporting requirement contained in Section 112.3125(5), Florida Statutes. The Legislature chose to require only "lobbying firms" to file compensation reports for each calendar quarter during any part of which one or more of the firm's lobbyists were registered to represent a principal and, to ensure that all compensation for lobbying is reported, Section 112.3125(6)(b), Florida Statutes, bans the payment of compensation to any individual or business entity that is not a "lobbying firm." Thus, being a "lobbying firm" only means that it has to file quarterly compensation reports; questions involving its status as a "lobbying firm" do not affect whether it is prohibited from making expenditures. 1
With regard to expenditures, Section 112.3125(6)(a), Florida Statutes, provides:
Notwithstanding s. 112.3148, s. 112.3149, or any other provision of law to the contrary, no lobbyist or principal shall make, directly or indirectly, and no agency official, member, or employee shall knowingly accept, directly or indirectly, any expenditure.
Section 112.3125(1)(d), Florida Statutes, defines "expenditure" to mean
a payment, distribution, loan, advance, reimbursement, deposit, or anything of value made by a lobbyist or principal for the purpose of lobbying. The term 'expenditure' does not include contributions or expenditures reported pursuant to chapter 106 or federal election law, campaign-related personal services provided without compensation by individuals volunteering their time, or any other contribution or expenditure made by an organization that is exempt from taxation under 26 U.S.C. s. 527 or s. 501(c)(4).
You have asked whether the expenditure prohibition would allow the law firm to pay for meals consumed by Executive Branch agency officials or employees without it being considered a prohibited expenditure when it is not made for the purpose of lobbying. The definition of "lobbies" in Section 112.3125(1)(f), Florida Statutes, includes "an attempt to obtain the goodwill of any agency official or employee." We have promulgated a rule on "Engendering Goodwill." Rule 34-12.180(1), Florida Administrative Code, includes as "goodwill" activities where an expenditure is made by a lobbyist or principal for the "personal benefit" of an Executive Branch agency official or employee. Thus, if a lobbyist or principal pays for the agency official's or employee's meal, it is presumed to be for the purpose of engendering goodwill and is prohibited. The question, then, is whether meals paid for by the law firm, or you, would be prohibited "indirect expenditures." We have promulgated Rule 34-12.190, Florida Administrative Code, on this issue. It provides:
34-12.190 Indirect Expenditures.
(1) Where an expenditure is made to a person other than the agency official or employee by a lobbyist or principal, where the expenditure or the benefit of the expenditure ultimately is received by the agency official or employee, and where the expenditure is provided with the intent to benefit the agency official or employee, such expenditure will be considered a prohibited indirect expenditure to the agency official or employee.
(2) Where an expenditure or the benefit of an expenditure is made to an agency official or employee by someone other than a lobbyist or principal, but the expenditure has been provided by or paid for by a lobbyist or principal who intends thereby to benefit the agency official or employee, such expenditure will be considered a prohibited indirect expenditure to the agency official or employee.
(3) Factors which the Commission will consider in determining whether a prohibited indirect expenditure has been made include but are not limited to:
(a) The existence or nonexistence of communications by the lobbyist or principal, or by the intervening third person, indicating the lobbyist's or principal's intent to make or convey the expenditure to the agency official or employee rather than to the intervening third person;
(b) The existence or nonexistence of any relationship between the lobbyist or principal and the third person, independent of the relationship between the lobbyist or principal and the agency official or employee, that would motivate an expenditure to the third person;
(c) The existence or nonexistence of any relationship between the third person and the agency official or employee that would motivate the expenditure;
(d) Whether the same or similar expenditures have been or are being provided to other persons having the same relationship to the lobbyist or principal as the third person;
(e) Whether, under the circumstances, the third person had full and independent decision-making authority to determine whether the agency official or employee, or another, would receive the benefit of the expenditure;
(f) Whether the third person was acting with the knowledge or consent of, or under the direction of, the lobbyist or principal;
(g) Whether there were or were intended any payments or bookkeeping transactions between the third person and the lobbyist or principal reimbursing the third person for the expenditure; and
(h) The degree of ownership or control the lobbyist or principal has over the third person.
(4) The provisions of this rule may be illustrated by the following examples:
EXAMPLE 1: A law firm which lobbies the agency of Agency Employee A ("A") invites all of its attorneys to attend a weekend retreat. The attorneys are encouraged to bring their spouses or significant others at the firm's expense. A is married to an attorney in the firm and has been asked by her spouse to attend the retreat. The lodging, meals, and entertainment provided to A for the weekend retreat would not be considered a prohibited indirect expenditure to A because the firm's invitation was to A's spouse through his employment with the firm.
EXAMPLE 2: Agency Official B ("B") hosts a turkey shoot attended by other agency officials and employees. Lobbyists who lobby the agency of B give money to a third person, who is not an agency official or employee, to pay for the food and beverages which will be served at the turkey shoot. B orders and prepares the food and beverages. The money provided to the third person by the lobbyists would be a prohibited indirect expenditure to B, because it was given with the intent of benefiting B and his guests at the turkey shoot.
EXAMPLE 3: Agency Official C ("C") and C's spouse have arranged to take a trip to New York City. A lobbyist who lobbies C's agency meets with the spouse and offers her theater tickets. The lobbyist and C's spouse know each other only through the lobbyist's involvement with C. The theater tickets would be a prohibited indirect expenditure to C.
You have not provided any facts for us to weigh in determining whether meals paid for by the law firm, or you, are prohibited indirect expenditures. In CEO 06-14, we considered whether corporate donations which underwrote the annual Prudential Financial-Davis Productivity Awards were indirect expenditures which principals were prohibited from making and agency officials and employees were prohibited from accepting. We applied the indirect expenditure factors in Rule 34-12.190(3), Florida Administrative Code, to conclude that the corporate donations were not prohibited indirect expenditures because the sponsors did not select or have prior knowledge of award recipients, there was no evidence of an intent to make an expenditure for the personal benefit of any individual officer or employee, and it was the non-profit organizations who recognized and rewarded meritorious state employees, not the corporate sponsors. This rationale was cited in CEO 07-3, where we concluded that state agency employees could receive tuition discounts to attend a conference that was underwritten by corporate sponsors who were also principals of lobbyists who lobbied their agency, as well as in CEO 06-15 and CEO 06-7.
As you know, Section 11.045, Florida Statutes, contains nearly identical language prohibiting legislators and staff from accepting expenditures made directly or indirectly by legislative lobbyists or their principals. Although we do not have jurisdiction to interpret or construe the provisions in Section 11.045, Florida Statutes, we have the benefit of guidance that legislative staff have given their own members. In the Interim Lobbying Guidelines for the House and Senate issued on January 20, 2006, a question similar to yours was addressed. Question No. 16 on p. 16 asks:
Can a lobbyist's business partner, employee, spouse, or child, who is not a registered lobbyist, accompany the lobbyist and legislator or legislative employee to dinner and pay for all the food and beverages if the partner, employee, spouse, or child does not actively lobby?
Answer: No. The lobbying expenditure prohibition applies to all food and beverages provided by lobbyists and principals to legislators or legislative employees, directly or indirectly. A lobbyist or principal cannot utilize a third-party intermediary to channel gifts to legislators to circumvent the lobbying expenditure prohibition.
In CEO 06-6, we advised an Executive Branch official that he could not accept wedding gifts from lobbyists, even if the gifts were bought with their personal funds. In CEO 06-17, we opined that health insurance companies who were principals of lobbyists could not give inexpensive trinkets to Executive Branch officials who file financial disclosure. We cite these opinions to demonstrate how strictly we have construed the expenditure prohibition in Section 112.3125(6)(a), Florida Statutes. Although you have not provided us with any facts describing actual situations where you or your law firm have already bought meals for Executive Branch agency officials or employees, we would take a dim view of any situation where a non-lobbyist contrives to circumvent the expenditure prohibition by serving as a conduit for otherwise prohibited expenditures. By the same token, the lack of a factual predicate makes it impossible for us to provide more meaningful guidance about situations which may arise in the future, and the indirect expenditure factors in Rule 34-12.190(3) do not provide a "bright-line rule" against which to measure every event. Nonetheless, because of our strict construction of Section 112.3125(6)(a), Florida Statutes, we particularly would caution against a non-lobbyist buying a meal or making any other expenditure for the personal benefit of an Executive Branch agency official or employee where the funds actually paying for it come, directly or indirectly, from a lobbyist or the principal of a lobbyist.
Accordingly, a law firm is a "lobbying firm" if any partner, owner, officer, or employee of the firm is a lobbyist and it receives or is owed compensation for lobbying. Although the expenditure prohibition in Section 112.3125(6)(a), Florida Statutes, does not expressly prohibit a "lobbying firm" or a non-lobbyist from making an expenditure, it does prohibit direct and indirect expenditures that are attributable to a lobbyist or principal.
ORDERED by the State of Florida Commission on Ethics meeting in public session on April 20, 2007 and RENDERED this 25th day of April, 2007.
______________________________
Norman M. Ostrau, Chairman
[1]Note that the firm of a "lobbyist" as defined in Section 112.3148 and 112.3149, Fla. Stat., is subject to certain prohibitions and disclosure requirements, as provided in those sections.