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Restrictions on the Use of Restrictions on the Use of Federal Assistance Funds for LobbyingFederal Assistance Funds for Lobbying

Federal Assistance Law DivisionFederal Assistance Law DivisionU.S. Department of CommerceU.S. Department of Commerce

JAOM FMCJAOM FMC

May 2007May 2007

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What statutes, regulations, and guidelines govern What statutes, regulations, and guidelines govern lobbying activities by Federal assistance recipients?lobbying activities by Federal assistance recipients?

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Lobbying Statutes, Regulations, and GuidelinesLobbying Statutes, Regulations, and Guidelines

Many appropriation acts restrict the use of funds Many appropriation acts restrict the use of funds for “publicity or propaganda”for “publicity or propaganda”– Commerce Department, FY 2006: Public Commerce Department, FY 2006: Public

Law 109-108, Title VI, Sec. 601Law 109-108, Title VI, Sec. 601

18 U.S.C. § 191318 U.S.C. § 1913

31 U.S.C. § 1352 (Byrd Amendment) Common 31 U.S.C. § 1352 (Byrd Amendment) Common Rule, 15 CFR § 28Rule, 15 CFR § 28

Lobbying Disclosure Act (LDA) of 1995 Lobbying Disclosure Act (LDA) of 1995 – 2 U.S.C. §§1601-16072 U.S.C. §§1601-1607

Cost principles: OMB Circulars A-21, A-87, A-Cost principles: OMB Circulars A-21, A-87, A-122, Part 31 of the Federal Acquisition Regulation122, Part 31 of the Federal Acquisition Regulation

Other requirements may arise in specific statutesOther requirements may arise in specific statutes

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Publicity or Propaganda ProhibitionPublicity or Propaganda Prohibition

Appropriation Acts often restrict use of funds for “publicity or propaganda”Appropriation Acts often restrict use of funds for “publicity or propaganda”

Department of Commerce version:Department of Commerce version:

““PL 109-108, TITLE VI--GENERAL PROVISIONS, SEC. 601. No part of PL 109-108, TITLE VI--GENERAL PROVISIONS, SEC. 601. No part of any appropriation contained in this Act shall be used for publicity or any appropriation contained in this Act shall be used for publicity or propaganda purposes not authorized by the Congress.”propaganda purposes not authorized by the Congress.”

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Publicity or Propaganda ProhibitionPublicity or Propaganda Prohibition

What is “publicity or propaganda”? Defined by administrative interpretation. Scores of Government What is “publicity or propaganda”? Defined by administrative interpretation. Scores of Government Accountability Office cases on topic regard definitionAccountability Office cases on topic regard definition

Recent examples: agencies issued video news releases and/or contracts with media figures that resulted in Recent examples: agencies issued video news releases and/or contracts with media figures that resulted in promotion of agency programs without attributing the government as the source of the informationpromotion of agency programs without attributing the government as the source of the information

– Examples: “No Child Left Behind” (television’s Armstrong Williams was a prominent subcontractor), Examples: “No Child Left Behind” (television’s Armstrong Williams was a prominent subcontractor), the Medicare prescription drug program, and the “Healthy Marriage Initiative”the Medicare prescription drug program, and the “Healthy Marriage Initiative”

Contrast GAO opinions with Department of Justice Office of Legal Counsel opinions of Jan. 19, 2001 and July 30, 2004: http://www.usdoj.gov/olc/. Executive agencies follow Department of Justice

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Publicity or Propaganda ProhibitionPublicity or Propaganda Prohibition

For many years, applicability to Federal grantees unclearFor many years, applicability to Federal grantees unclear In 1981, Comptroller General opined that restriction applies to In 1981, Comptroller General opined that restriction applies to

grant recipients: B-202975, Nov. 3, 1981grant recipients: B-202975, Nov. 3, 1981 Restriction limited to lobbying the United States Congress; Restriction limited to lobbying the United States Congress;

does not apply to lobbying at the state level: B-214455 (Nov. does not apply to lobbying at the state level: B-214455 (Nov. 24, 1984; B-206466 (Sept. 13, 1982)24, 1984; B-206466 (Sept. 13, 1982)

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18 U.S.C. § 191318 U.S.C. § 1913 General prohibition against using General prohibition against using

appropriated funds to lobby appropriated funds to lobby Congress on legislationCongress on legislation

Does not prohibit Does not prohibit “communicating” with Congress “communicating” with Congress if requested, or requesting if requested, or requesting “through proper official channels” “through proper official channels” legislation or funding the Agency legislation or funding the Agency deems necessary for the efficient deems necessary for the efficient conduct of the public businessconduct of the public business

Statute is broad; violation is Statute is broad; violation is criminal offensecriminal offense

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18 U.S.C. § 191318 U.S.C. § 1913 Does this restriction flow down to Does this restriction flow down to

Federal assistance recipients? Federal assistance recipients?

– Appropriations restrictions often flow Appropriations restrictions often flow down, and some officials have down, and some officials have indicated an interest in flowing down indicated an interest in flowing down this requirement. At least two this requirement. At least two Federal court cases so far, however, Federal court cases so far, however, suggest this law is limited to Federal suggest this law is limited to Federal agencies and employees but this agencies and employees but this includes FMC members and staff — includes FMC members and staff —

– See Grassley v. Legal Services CorpSee Grassley v. Legal Services Corp., ., 535 F.Supp. 818 (S.D. Iowa, 1982); 535 F.Supp. 818 (S.D. Iowa, 1982); American Federation of Government American Federation of Government Employees v. District of ColumbiaEmployees v. District of Columbia, , not reported in F.Supp.2d, 2005 WL not reported in F.Supp.2d, 2005 WL 1017877 (D.D.C., May 2, 2005). 1017877 (D.D.C., May 2, 2005). See See alsoalso 1981 WL 23148 (Comp. Gen.), 1981 WL 23148 (Comp. Gen.), B- 202975, B- 202975, Matter of: Bobbi Fielder, Matter of: Bobbi Fielder, House of Rep. (Nov. 3, 1981)House of Rep. (Nov. 3, 1981)

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31 U.S.C. §135231 U.S.C. §1352Byrd AmendmentByrd Amendment

Common Rule, 15 CFR Part 28 Common Rule, 15 CFR Part 28

Enacted in 1989, prohibits use of Enacted in 1989, prohibits use of

Federally-appropriated funds to influence Federally-appropriated funds to influence Congress in awarding of contracts, Congress in awarding of contracts, grants, loans and cooperative agreementsgrants, loans and cooperative agreements

Requires certification from organizations Requires certification from organizations requesting or receiving Federally-requesting or receiving Federally-appropriated funds that they have not and appropriated funds that they have not and will not use Federally-appropriated funds will not use Federally-appropriated funds to lobby for a Federal contract, grant, to lobby for a Federal contract, grant, loan, or cooperative agreementloan, or cooperative agreement

See alsoSee also OMB Guidance and OMB Guidance and Clarification Notices: 54 FR 52306 Clarification Notices: 54 FR 52306 (12/20/89), 61 FR 1412 (1/19/96), 55 FR (12/20/89), 61 FR 1412 (1/19/96), 55 FR 24540 (6/15/90), and 57 FR 1772 24540 (6/15/90), and 57 FR 1772 (1/15/92)(1/15/92)

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31 U.S.C. § 135231 U.S.C. § 1352 Byrd Amendment Byrd Amendment

Common Rule, 15 CFR Part 28Common Rule, 15 CFR Part 28

Requires disclosure of names of registered lobbyist if organizations receiving Requires disclosure of names of registered lobbyist if organizations receiving funds over $100,000 have used non-appropriated funds to make contacts regarding funds over $100,000 have used non-appropriated funds to make contacts regarding Federal awardsFederal awards

Implementing regulations contain:Implementing regulations contain:– Appendix A - standard language for certification of compliance with this law (in the Appendix A - standard language for certification of compliance with this law (in the

Commerce Department, CD 511)Commerce Department, CD 511)– Appendix B - Standard Form LLL, to disclose covered lobbying from non-appropriated Appendix B - Standard Form LLL, to disclose covered lobbying from non-appropriated

funds if the recipient received a grant or cooperative agreement in excess of $100,000funds if the recipient received a grant or cooperative agreement in excess of $100,000

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What agencies do with What agencies do with SF LLL DisclosuresSF LLL Disclosures

Then, on May 31 and Then, on May 31 and November 30 each year, November 30 each year, agency heads must collect and agency heads must collect and compile the forms and submit compile the forms and submit a report to the House and a report to the House and Senate: 15 C.F.R. Senate: 15 C.F.R. § § 28.60028.600

First, file them

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Lobbying Disclosure Act (LDA) of 1995Lobbying Disclosure Act (LDA) of 19952 U.S.C. §§ 1601-16072 U.S.C. §§ 1601-1607

LDA expanded definition of LDA expanded definition of “lobbying” under Byrd “lobbying” under Byrd Amendment to almost any Amendment to almost any contact with “covered contact with “covered officials” on almost any officials” on almost any Federal actionFederal action

Also, organizations no Also, organizations no longer need disclose longer need disclose amount of money spent on amount of money spent on lobbying or describe lobbying or describe specific lobbying activitiesspecific lobbying activities

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Lobbying Disclosure Act (LDA) of 1995 Lobbying Disclosure Act (LDA) of 1995 2 U.S.C. §§ 1601-1607 2 U.S.C. §§ 1601-1607

For grants and cooperative For grants and cooperative agreements, lobbying expenditures agreements, lobbying expenditures must be disclosed once they reach must be disclosed once they reach $100,000$100,000

$100,000 civil penalty if an $100,000 civil penalty if an organization makes a prohibited organization makes a prohibited expenditure or fails to file the expenditure or fails to file the required certification and required certification and disclosuredisclosure

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Federal Cost PrinciplesFederal Cost Principles

Cost principles differ, but generally prohibit use of funds to influence Cost principles differ, but generally prohibit use of funds to influence Federal, state, local elections and Federal and state legislation by direct Federal, state, local elections and Federal and state legislation by direct contact or by publicity or propaganda (including “grassroots” lobbying) contact or by publicity or propaganda (including “grassroots” lobbying)

SeeSee 2 C.F.R. Subtitle B (OMB Circulars A-21, Sections 28, 33; Circular 2 C.F.R. Subtitle B (OMB Circulars A-21, Sections 28, 33; Circular A-87, Sections 24, 28; and Circular A-122, Section 25, 30)A-87, Sections 24, 28; and Circular A-122, Section 25, 30)

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Cost Principles:Cost Principles:Membership FeesMembership Fees

Membership fees can be an Membership fees can be an allowable cost, but if an allowable cost, but if an organization the grantee joins organization the grantee joins lobbies, that may violate cost lobbies, that may violate cost principles principles

Publicity and propaganda Publicity and propaganda restriction can also applyrestriction can also apply

SeeSee 2 C.F.R., Subtitle B (OMB 2 C.F.R., Subtitle B (OMB Circulars A-21, Sec. 33; A-87, Circulars A-21, Sec. 33; A-87, Sec. 28; A-122, Sec. 30) Sec. 28; A-122, Sec. 30)

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Social and Civic Organizations Social and Civic Organizations Under 501(c)(4)Under 501(c)(4)

Under 1996 revisions to the LDA, Under 1996 revisions to the LDA, 2 U.S.C. 2 U.S.C. §§ 1611, tax-exempt 1611, tax-exempt organizations formed under organizations formed under Section 501(c)(4) of the Internal Section 501(c)(4) of the Internal Revenue Code are INELIGIBLE Revenue Code are INELIGIBLE for Federal financial assistance if for Federal financial assistance if they engage in lobbying as they engage in lobbying as defined in the LDAdefined in the LDA

These groups are often referred to These groups are often referred to as “social organizations” or “civic as “social organizations” or “civic organizations”organizations”

ALL lobbying is prohibited, not ALL lobbying is prohibited, not just lobbying with Federal fundsjust lobbying with Federal funds

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SummarySummary Propaganda restriction flows to grantees, but Propaganda restriction flows to grantees, but

determined on a case-by-case basisdetermined on a case-by-case basis

Grantees cannot use Federal funds to influence a Grantees cannot use Federal funds to influence a Federal agency official, or a Member of Congress Federal agency official, or a Member of Congress or staff, in connection with the awarding of any or staff, in connection with the awarding of any Federal contract, grant, or other financial Federal contract, grant, or other financial assistanceassistance

Grantees required to disclose certain lobbying Grantees required to disclose certain lobbying contactscontacts

Cost principles implement lobbying and Cost principles implement lobbying and membership limitsmembership limits– Grantees must adhere to principles with care as Grantees must adhere to principles with care as

many costs are unallowable as either a direct cost or many costs are unallowable as either a direct cost or through indirect cost ratethrough indirect cost rate