Mar 26, 2007 -- Legal Center Sends Memo to House on the Constitutionality of New Lobbying Disclosure Proposal for Paid Communication Campaigns

Later this spring, the House is expected to take up S. 1, the Lobbying Transparency and Accountability Act of 2007, legislation that will strengthen current lobby disclosure laws as well as change Senate ethics rules. The Senate-passed measure was much stronger than the bill passed in the 109^th Congress and recognizes the benefit of providing citizens with the information they need to understand the amounts of money that are being spent by paid lobbyists to influence the outcome of public policy.

S. 1 seeks to close major loopholes in the Lobbying Disclosure Act (LDA), many of which were brought into the spotlight by the Jack Abramoff lobbying scandals. One of those loopholes, however, remains unaddressed in the Senate-passed bill—that is the income received by lobbying firms who are paid by third parties to conduct communications campaigns that are designed to influence the general public to lobby Congress. There is a new proposal which would require these retained lobbying firms (including professional firms which engage only in public communication campaigns, not direct lobbying efforts) to disclose in a report the amounts that they received to conduct such campaigns. Currently, lobbying firms are only required to report a good faith estimate of the total amount they receive from each client to conduct direct lobbying, not paid lobbying communication campaigns aimed at the general public. Lobbying firms that run these communication campaigns aimed at the general public are not required by current law to register and thus file no reports at all that show how much they have been paid to generate these public communications campaigns. Thus, the public has no way of knowing who is behind the large sums of money often used to influence public policy makers like you. A new House proposal would require retained lobbying firms to disclose not just income related to direct lobbying, but also a good faith estimate of the total amount they receive from a client to conduct media and other paid communications to influence the general public to lobby.

A. The House Proposal Will Require Disclosure by Retained Lobbying Firms and Their Paid Public Communications

The new proposal requires retained lobbying firms to disclose information regarding good faith estimates of amounts spent on "paid public communications" to influence the general public to lobby Congress. Five limiting features of this disclosure requirement should be noted:

• Only a professional lobbying firm, retained by clients, must make disclosure. The new proposal explicitly states that it does not apply to any person or entity other than a retained lobbying firm, and that no person or entity other than such a firm is required to register or file a report under the proposal. Thus, lobbying organizations that conduct grassroots activities on their own behalf are not subject to disclosure for those activities.
• Only paid communications campaigns are covered. Unpaid grassroots advocacy by individuals and volunteer organizations are not subject to disclosure.
• To be subject to the disclosure requirement, a lobbying firm must receive a total income of $100,000 or more for paid communications efforts in any quarterly period. Thus, only large firms in the business of conducting paid communications campaigns for clients will be subject to disclosure.
• Paid communication efforts do not include communications by a lobbying firm retained by an organization for communications to that organization's members (but rather only communications to the general public). Communications by a lobbying firm to the general public primarily for the purpose of recruiting members to an organization are not subject to disclosure.
• The report filed by a lobbying firm for each client must include the client's name, an identification of the issues that the firm is working on for such client, and a good faith estimate of the total amount of income received during the period from the client for communications campaigns to influence the general public to lobby Congress (but only if that total amount of income received by the lobbying firm exceeds $50,000 from the client during the quarterly reporting period).

2. Federal Case Law Upholding Lobbying Disclosure Confirms the Constitutionality of the Proposal for Paid Communications Campaigns by Retained Lobbying Firms

A review of federal case law confirms that this new proposal is constitutional and complies with the First Amendment.

First, the Supreme Court and lower federal courts have already upheld statutes requiring lobbyists to disclose information about their compensated efforts to "artificially stimulate" the public to contact legislators in "letter campaigns." See, e.g., U.S. v. Harriss , 347 U.S. 612 (1954). The new House proposal requires the disclosure of the same type of lobbying activity, and is thus consistent with this Supreme Court decision. Second, cases considering disclosure statutes in the context of ballot initiative contests have approved statutes analogous to the new proposal, providing further support for the constitutionality of this section. We explain this case law below and how it supports the constitutionality of the House proposal outlined above.

The leading case on lobbyist disclosure, U.S. v. Harriss , supra, considered the Federal Regulation of Lobbying Act, which required every person "receiving any contributions or expending any money for the purpose of influencing the passage or defeat of any legislation by Congress" to report information about their clients and their contributions and expenditures. Id. at 614-15. To avoid finding this broadly-drafted Act unconstitutionally vague, the Supreme Court narrowed its definition of lobbying. Included in the Court's narrow definition, however, were not only lobbyists' direct communications with legislators, but also their "artificially stimulated" public "letter campaign[s]" to Congress. [1] Id. at 620; see also id. at 621, n.10 (noting that the Act covered lobbyists' "initiat[ion] of propaganda from all over the country, in the form of letters and telegrams," to influence the acts of legislators). After b alancing the Act's possible infringement of First Amendment rights against the government's interests, the Court found that disclosure of "lobbying," thus defined, did not violate the First Amendment. It reasoned that disclosure served the state interest of "self-protection," and enabled legislators to evaluate lobbying pressures by providing " a modicum of information from those who, for hire, attempt to influence legislation, or who collect or spend funds for that purpose." Id. at 625.

Lower courts, following Harriss, have also upheld similar state lobbying disclosure statutes. For example, in Commission on Independent Colleges and Universities v. New York Temporary State Commission, 534 F. Supp. 489, 498 (N.D.N.Y. 1982) a federal court found that the New York state lobby law requiring disclosure of efforts to "exhort the public to make such direct contact with legislators as outlined in Harriss" did not violate the First Amendment. See also Minnesota State Ethical Practices Board (MSEPB) v. Nat'l Rifle Association , 761 F.2d 509 (8th Cir. 1985); cf. Florida League of Prof'l Lobbyists, Inc. v. Meggs , 87 F.3d 457, 460-61 (11th Cir. 1996) (citing Harriss in upholding Florida law, which required disclosure of expenditures both for direct lobbying and for indirect lobbying activities which did not involve contact with governmental officials).

The lobbying disclosure provision contained in the new House proposal is no broader than those disclosure provisions upheld in Harriss. Indeed, the new House proposal does not go as far as some other state statutes which have required disclosure of communications made by a lobbying firm to a client's own members, a category that the new proposal expressly exempts from disclosure. The new proposal is justified by the same governmental interest of "self protection" articulated in Harriss:

Present-day legislative complexities are such that individual members of Congress cannot be expected to explore the myriad [lobbying] pressures to which they are regularly subjected. Yet full realization of the American ideal of government by elected representatives depends to no small extent on their ability to properly evaluate such pressures. Otherwise the voice of the people may all too easily be drowned out by the voice of special interest groups seeking favored treatment while masquerading as proponents of the public weal….

347 U.S. at 625.

Because the new House proposal will similarly enhance legislators' "ability to properly evaluate [lobbying] pressures" and identify "the voice of special interest groups," it passes muster under the First Amendment.

3. Case Law on Disclosure in the Ballot Initiative Context Indicates that Disclosure of Expenses Related to Paid Communications Campaign is Constitutional.

Opponents of lobbying disclosure may cite case law on the constitutionality of disclosure laws in ballot initiative contests. In this area, the Supreme Court has reviewed disclosure requirements more closely, occasionally striking such laws for infringing upon First Amendment rights. Analysis of this authority, however, demonstrates that it does not undermine the constitutionality of the new House proposal. Courts are generally supportive of laws analogous to this proposal that require disclosure of the identity and financial activity of ballot initiative advocates because such laws provide useful information to the electorate. The adverse case law on ballot initiatives, insofar as it is instructive here, considers statutes that are clearly distinguishable from the new proposal.

The Supreme Court has expressed approval of state statutes requiring the disclosure of funds spent to pass or defeat ballot measures. In First Nat'l Bank of Boston v. Bellotti, 435 U.S. 765 (1978), the Supreme Court recognized the importance of disclosure in the ballot initiative context, noting that "identification of the source of [ballot initiative] advertising may be required as a means of disclosure so that the people will be able to evaluate the arguments to which they are being subjected." Id. at 792, n.32. The Court again recognized this state "informational interest" in Citizens Against Rent Control v. City of Berkeley, 454 U.S. 290 (1981) , where it considered a challenge to the City of Berkeley's ordinance limiting contributions to committees formed to support or oppose ballot measures. Although the Court struck down the contribution limit, it did so based in part on the fact that there were disclosure provisions regarding the committees who were advocating in connection on ballot referenda measures. See City of Berkeley, 454 U.S. at 298 ("[T]here is no risk that the Berkeley voters will be in doubt as to the identity of those whose money supports or opposes a given ballot measure since contributors must make their identities known under [a different section] of the ordinance, which requires publication of lists of contributors in advance of the voting."). This judicial support for disclosure statutes in the ballot initiative context led the Ninth Circuit to hold that, "[g] iven the Supreme Court's repeated pronouncements, we think there can be no doubt that states may regulate express ballot-measure advocacy through disclosure laws." California Pro-Life Council v. Getman, 328 F.3d 1088, 1104 (9th Cir. 2003).

Only when a disclosure law fails to serve an important state purpose will it run afoul of the First Amendment. I n Buckley v. American Constitutional Law Foundation, 525 U.S. 182 (1999), the Court invalidated provisions of a Colorado statute which required (1) sponsors of ballot initiatives to disclose the names and addresses of the paid circulators of ballot petitions, and (2) paid circulators to wear name tags when collecting petition signatures. This holding was based in part on the Court's conclusion that these provisions did not serve the state's informational interest: the "benefit of revealing the names of paid circulators … is hardly apparent and has not been demonstrated." Id. at 203. At the same time, the Court noted approvingly the provision of the Colorado statute which was more analogous to the new House proposal and which required "sponsors of ballot initiatives to disclose who pays petition circulators, and how much." Id. at 205. This requirement informed voters about "the source and amount of money spent by proponents to get a measure on the ballot." Id. Similarly, in McIntyre v. Ohio Elections Comm'n., 514 U.S. 334 (1995), the Court declared unconstitutional an Ohio statute that r equired ballot initiative literature to identify the source of the literature, even in the case of a private citizen. The Court was skeptical of the government's alleged informational interest in this disclosure, finding that "in the case of a handbill written by a private citizen who is not known to the recipient, the name and address of the author add little, if anything to the reader's ability to evaluate the document's message." Id. at 348-49. Given the personal nature of the political handbill at issue, the Court also noted that compelled disclosure was "particularly intrusive," and "reveals unmistakably the content of the [author's] thoughts on a controversial issue." Id. at 355.

The statutes invalidated in Buckley and McIntyre are readily distinguishable from the new proposal in three principle respects. First, this ballot initiative case law is of limited relevance to an analysis of lobbying disclosure. The regulation of lobbying activities serves different state interests than does the regulation of the ballot initiative process. Requiring disclosure of lobbying activities serves to prevent the real or apparent corruption of government officials, as well as important "informational" interests. In the ballot initiative context, however, money is being spent to influence ballot measures, not government officials. So the potential for corruption (and the state interest in requiring disclosure of lobbying activities) is greater and thus materially different than in the ballot initiative context. The Supreme Court has explicitly recognized this difference, stating that the anti-corruption interest that helped justify the disclosure of lobbying activities in Harriss was not relevant to the disclosure statute considered in McIntyre. McIntyre, 514 U.S. at 356, n.20. [2]

Second, in contrast to the statutes considered in Buckley and McIntyre, the new proposal is justified by a stronger state "informational" interest. Whereas the laws invalidated in Buckley and McIntyre provided information of little use to the public, the new proposal would provide to government officials valuable disclosure about "those who for hire, attempt to influence legislation," aiding these officials in their evaluation of the "myriad pressures to which they are regularly subjected." Harriss, 347 U.S. at 625. The new proposal is thus more analogous to the provisions cited approvingly in City of Berkeley and Buckley, which required disclosure of the "the source and amount of money spent by proponents" of ballot initiatives, enabling voters to evaluate the arguments for and against the initiatives. Buckley, 525 U.S. at 205.

Finally, the new House proposal applies only to lobbying firms who conduct paid public communications campaigns for clients who retain those firms. The regulated class is simply not comparable to the private citizen distributing a "personally crafted statement of a political viewpoint" in McIntyre. 514 U.S. at 355. [3] This point is underscored by the fact that the new House proposal applies only to a lobbyist's professional activities; a lobbyist is still free to engage privately in uncompensated McIntyre-style grassroots advocacy without any obligation to make disclosure.

4. Conclusion

Federal case law confirms that the new House proposal dealing with disclosure of paid communications campaigns by retained lobbying firms passes constitutional muster. The Supreme Court and lower federal courts have upheld comparable statutes requiring disclosure of similar lobbying efforts, and found them justified by important state informational interests. Furthermore, the case law on ballot initiatives in no way undermines the constitutionality of this proposal, and instead has expressed approval for analogous statutes requiring the disclosure of the source and amount of funds spent to pass or defeat ballot measures.

[1] For instance, one of the lobbyist-defendants in the Harriss case had "arranged to have members of Congress contacted" about legislation that would raise the price of agricultural commodities and commodity futures "through an artificially stimulated letter campaign." Harriss, 347 U.S. at 616-17.

[2] The Supreme Court explained that:

The [anti-corruption] interest also serves to distinguish United States v. Harriss, 347 U.S. 612, 74 S.Ct. 808, 98 L.Ed. 989 (1954), in which we upheld limited disclosure requirements for lobbyists. The activities of lobbyists who have direct access to elected representatives, if undisclosed, may well present the appearance of corruption.

McIntyre, 514 U.S. at 356, n.20.

[3] In the context of campaign finance regulation, the Supreme Court has upheld statutes requiring disclosure of contributions from private citizens to political parties, committees and candidates. See, e.g., Buckley v. Valeo , 424 U.S. 1 (1976).