The 2020 election brought many changes to Washington, DC, with the Democrats taking control of the White House and the United States Senate and continuing control of the House of Representatives. For businesses, the new political alignment in Washington provides policy opportunities and risks. Democratic control of Washington also creates new Congressional investigation risks for some businesses. It is imperative that an organization have a proactive governmental affairs strategy and implement best practices to establish an effective and compliant governmental affairs program.
As with any election, and particularly with elections where political power shifts from one political party to the other, there are policy implications for businesses. Proactive businesses should evaluate those policy risks and opportunities so they can develop an effective engagement strategy with the federal government. Businesses should also take the following initial steps to ensure their engagement is effective:
- Assess opportunities and risks
- Identify key stakeholders, including government officials, potential allies and opponents
- Identify the key opportunities to influence policy, including the nominations process and through legislation and regulations
When it comes time to interact with government officials and staff, there are best practices to keep in mind:
- Ensure compliance with lobbying requirements before engagement
- Establish internal compliance systems
- Engage early and do not wait for a crisis
- Do not assume they know your business and its issues
- Know your audience
- Engage constituents where possible
- Develop a concise presentation and leave behind documents
- Make a clear request for action
- Ensure no one is blindsided
- Thank them appropriately
Overview of the Federal Lobbying Disclosure Act
The federal Lobbying Disclosure Act of 1995 (“LDA”), as amended by the Honest Leadership and Open Government Act of 2007, is a federal lobbying statute administered by Congress that applies to legislative and executive branch contacts. The LDA does not cover state or local lobbying. State and local jurisdictions have their own lobby registration and reporting requirements.
The LDA requires entities employing in-house lobbyists, lobbying firms, and self-employed lobbyists to register and report certain lobbying activities—including matters lobbied, lobbyists, and lobbying expenses—with the Clerk of the US House of Representatives and the Secretary of the US Senate.
Registrations and quarterly reports are submitted by registrants (i.e., the registered entity), not individual lobbyists. In addition, the LDA requires that semi-annual reports and certifications are submitted by both registered entities and individual lobbyists.
Whether an organization must register depends on whether the entity employs any individual who meets the LDA’s definition of lobbyist. Under the LDA, a lobbyist is an individual who, for compensation, makes more than one lobbying contact and spends 20% or more of his or her time during a quarter on federal lobbying activities, as defined.
The LDA is important for any entity whose employees contact federal officials regarding covered matters. Understanding these requirements, best practices surrounding federal lobby compliance, and potential pitfalls is imperative for any organization that interacts with the federal government.
Necessity of Effective and Compliant Governmental Affairs Program
Any company or organization that is active in the political or public policy arenas should have a robust governance structure that includes an effective compliance management system created specifically to address these activities. Just as companies have compliance policies and processes to address laws designed to prevent bribery, discrimination, and privacy violations, a company that engages with government officials or advocates on political or public policy issues must build a political law compliance system designed to address the unique legal and reputational risks that may arise from such engagements. There is no one-size-fits-all approach, but each company that participates in the political or public policy process should carefully consider what foundational principles, policies, and processes are necessary for the company, not only to engage in a legal and responsible manner, but also to ensure a good governance structure for its decisions.
There are four key components of a political law compliance program. First, the detailed corporate policies should govern a company’s activities in the public policy and political arena. These policies need to be clear and concise. Second, the company must have strong, robust, internal processes and structures, including approval procedures for political contributions, gifts, and lobbying activities, as well as recordkeeping requirements. Next, a comprehensive compliance program needs to focus on what is communicated to both employees and the public. This includes an interactive training and communications program to ensure employees are aware of the requirements that govern their behavior. Additionally, the company should consider what elements of its compliance program it communicates to the public via its corporate website. Finally, a company must build audit and oversight mechanisms into its compliance program to detect potential wrongdoing and to determine whether the program is operating effectively and efficiently.