Vol. 80, No. 10, October 2007
he enactment of 2007 Wis. Act 1, which merged the state Elections Board and the state Ethics Board into the new Government Accountability Board (GAB), has brought renewed attention to the intersection between campaign activity and the work of the Wisconsin Legislature. This article briefly summarizes how the GAB's creation is changing the regulation of elections and lobbying and reviews the wide-ranging impact of the state's lobby law on lawyers practicing in Wisconsin.
It is unclear when the GAB will become operational. Act 1 provided for the GAB to begin operating on Sept. 1, 2007, or on the 31st day after three key staff positions were filled - legal counsel, elections division administrator, and ethics division administrator. The GAB likely will hire the legal counsel in November, after which it will seek applications for the administrator positions. This suggests the GAB will become operational in early 2008.
Peter C. Christianson, U.W. 1977, is a partner in Quarles & Brady LLP, Madison. He practices in government relations, lobbying and government ethics law, elections and campaign finance, and health law.
Historical View of the Elections and Ethics Boards
The Ethics Board was created by Chapter 90, Laws of 1973, which also created the Code of Ethics for Public Officials and Employees, administered by the Ethics Board. 1989 Wis. Act 338 transferred administration of the lobbying law from the Office of the Secretary of State to the Ethics Board. The state Elections Board was created in July 1974, when the legislature enacted a comprehensive campaign finance disclosure law, Chapter 334, Laws of 1973, in the wake of the Watergate scandal.
While at this writing it is unclear when the GAB will become operational, it is clear why the legislature and the governor combined these two formerly freestanding regulatory bodies. Many of the laws administered by the Elections Board and the Ethics Board affect the conduct of electoral campaigns. In recent years, politicians from across the political spectrum have been critical of decisions rendered by the Elections Board. The Ethics Board has not been immune from criticism either, with some legislators complaining about statutory interpretations that have made it more difficult for people who run campaigns to solicit legal contributions from lobbyists and their clients.
The methods used by the two boards to investigate and arrive at decisions differ significantly. The Elections Board consisted of partisan appointees selected because of their roles in and knowledge of the partisan political process. The Elections Board produced decisions and formal opinions during often lively public meetings at which political
considerations were never far from the surface. Critics complained that the substance of a decision might depend on the partisan makeup of the body at the time and that a change in membership might yield a different result the next time a similar question arose.
The Ethics Board, on the other hand, was comprised of nonpolitical appointees with little direct knowledge of the workings of the legislature or the interplay between electoral politics and activities inside the state Capitol. When the Ethics Board rendered formal opinions, only the requesting party received the complete text, with just a brief summary released for public consumption.
Perhaps the complaint most often heard about both bodies, however, was the lack of coordination between them. At times, a decision reached by one board appeared to be in conflict with a decision rendered by the other board.
Composition of the Government Accountability Board
2007 Wis. Act 1 provides for a six-member Government Accountability Board to be comprised exclusively of retired circuit court or court of appeals judges or retired supreme court justices, three confirmed by the state Senate and three confirmed by the state Assembly. The initial members are:
- Michael W. Brennan, Marshfield, retired Clark County Circuit Court judge;
- Thomas Cane, Appleton, retired District Three Court of Appeals judge;
- David G. Deininger, Monroe, retired District Four Court of Appeals judge;
- William Eich, Madison, retired Dane County Circuit Court judge;
- James Mohr, Eagle River, retired Vilas County Circuit Court judge; and
- Gerald C. Nichol, Madison, retired Dane County Circuit Court judge.
The first task confronting the GAB will be to hire a legal counsel/administrator and administrators for the Elections and Ethics divisions. Elections Board executive director Kevin Kennedy and Ethics Board executive director Roth Judd are expected to be candidates for these positions. All other Elections Board and Ethics Board staff members will be transferred to the GAB. Until the GAB has hired its administrators, the Elections and Ethics boards will continue to function as usual.
Review of Past Opinions
2007 Wis. Act 1 requires the GAB to review and reaffirm all past regulations, orders, formal opinions, and written guidelines during its first year of operation. The GAB may extend the review period by up to six months.1 Regulations, orders, opinions, or guidelines that are not reaffirmed will expire automatically.
How the GAB will approach this major responsibility remains to be seen. Given the volume of decisions made and policies established by each board, it is unclear how the members of a volunteer body could conduct such a comprehensive review during a 12- to 18-month period. While some legislators made it clear at public hearings that such a comprehensive review should occur, the GAB may be forced by time constraints alone to reaffirm past decisions without conducting a decision-by-decision review.
How the Lobby Law Affects Wisconsin Lawyers
Although the creation of the GAB changes the regulators, it does not change the underlying laws. Wisconsin lawyers need to understand that the potential impact of the lobby law on their practices may be substantial. A few examples help make the point:
• A business client calls with a complaint about a matter involving a state agency. She has a problem with the way the agency has interpreted its mandate under a particular statute. In your conversations with the agency's officials, you tell them that the rule should be changed.
• A client advises you of pending state legislation that will have a negative impact on his business and asks you to help him articulate his position to local legislators. You attend the public hearing and begin sending letters on the client's behalf to legislators.
What do these examples have to do with Wisconsin's lobby law? In both situations you and your client may unwittingly enter the realm of lobbying. The law imposes a registration requirement on certain clients, and licensure and authorization requirements on you when your conduct exceeds a certain threshold.
Understanding how the lobby law affects Wisconsin lawyers who might not think of their advocacy as "lobbying" is important, because the law imposes criminal and civil penalties on lawyers and clients alike.
The law becomes applicable to lawyers when they meet the statutory definition of lobbyist contained in Wis. Stat. section 13.62(11). A lobbyist is an individual who is paid to engage in lobbying, as defined in section 13.62(10). If that individual's duties are not limited exclusively to lobbying, the individual "is a lobbyist only if he or she makes lobbying communications on each of at least five days within a reporting period."
A lobbying communication is defined in section 13.62(10g) as an oral or written communication with an agency official, elective state official, or legislative employee that attempts to influence the legislative or administrative rule-making process. The law defines legislative action broadly, while administrative action is narrowly defined. Under the law legislative action includes virtually everything the legislature has the power to do. It covers the process from the moment a legislator receives the spark of inspiration to draft a bill through all stages of the legislative process, action by the governor, and any attempt to override the governor's veto or partial veto.
The law defines administrative action rather narrowly,2 limiting it to the process by which an agency promulgates, amends, or repeals an administrative rule under chapter 227. Attempts to sell goods and services to state agencies generally are exempt from this definition, as are contested case hearings. In addition, inquiries to an agency as to the proper interpretation of an existing rule also are exempt. Legislative review of proposed rules, however, is included within the statutory definition of legislative action.
When Licensure Is Required
Licensure as a lobbyist is required when the lawyer is hired to advocate for a change in state law or an agency's administrative rule and the lawyer takes action on five days or more in a reporting period (January through June, or July through December).3 When lawyers begin to advocate to an agency that it should modify its administrative rule to better reflect the enabling legislation, they may only engage in this activity on up to four calendar days before the law requires licensure.
Pursuant to the First Amendment, the law protects certain legislative advocacy that otherwise would require licensure. An individual is free to lobby the state senator and state representative who represent his or her home (not business) address without ever needing to be licensed. This is true even if an individual is paid, and without regard to the fee. But if an individual lobbies legislators other than those from his or her home district, the exception does not apply.4
This means that when a client calls to request help in articulating his or her position on pending legislation, you may freely contact your own two legislators. But if you contact other legislators or attend a public hearing to advocate the client's position, you must then begin to count use of your four "free days" so that you will know when your legal obligation to become licensed arises.
A Few Words About "Free Days"
For years, lobby law reformers argued that Wisconsin's lobby law encouraged underreporting of lobby activity. Before revision of the lobby law in 1989, the secretary of state (who had the regulatory authority at the time) interpreted the law to permit a business employee to engage in lobbying on up to 12 days in a reporting period before licensure as a lobbyist was required. In response to the complaint that too few individuals were registering as lobbyists, the secretary of state promulgated an administrative rule that decreased the number of free days from 12 to six. Effective Jan. 1, 1989, the lobby law reduced that number to four.
The "free day" concept produces some strange results. Any contact on a day "uses" the day, and so if a lawyer writes a letter each day for five days to a different state agency official advocating a change in an administrative rule, the threshold has been met. On the other hand, a lawyer could continuously lobby all 132 state legislators around the clock for four consecutive days without exceeding the threshold.
Lobbyist status requires a lawyer to obtain a lobby license and the client to become registered as a principal, which is "any person who employs a lobbyist" according to
section 13.62(12). Acquiring the status of lobbyist also triggers detailed recordkeeping and reporting obligations for both the lawyer/lobbyist and the client/principal.
Forms and More Forms
Currently, a lobbyist and principal must complete and file two forms with the State Ethics Board. (It is expected that the GAB will prepare its own similar forms.)
• Registration of Organization Employing a Lobbyist and Authorization of Lobbyists (Eth-5). This form registers the client as a principal and must be accompanied by a $375 fee. There is also a $125 fee to authorize each lobbyist. The form demands certain information about the client and its intended areas of activity. Registration under the law expires on Dec. 31 of each even-numbered year (Dec. 31, 2008 for the 2007 session).
• Application for Lobbying License (Eth-7). Lawyers and other people use this form to obtain a license to lobby. A single license may be used to lobby on behalf of all clients who have registered as principals and who execute the necessary authorization. The fee is $250 for a license to lobby for a single client or $400 to lobby for more than one client. The 2007 session license also expires on Dec. 31, 2008.
All employees of a client are held to the same threshold; if a client's employee engages in lobbying communications on five or more days in a reporting period, that employee must be licensed.
Most employees of local governmental units, however, are permitted to engage in lobbying activities without being required to register as lobbyists. Section 13.621(3) provides an exemption from licensure and reporting for each local official. The definition in section 13.62(11m) exempts all persons elected to local office as well as "every person who is employed by a county, city, town, village, or school district who is not employed principally to influence legislative or administrative action."
Recordkeeping and Reporting Under the Lobby Law
All lobbyists and principals are subject to detailed recordkeeping and reporting requirements, which include contemporaneous disclosure of the subject matter of lobbying activities and semi-annual reporting of the time spent on lobbying and the expense associated with such activity.
The recordkeeping requirements should not be onerous for lawyers who are accustomed to maintaining detailed time records. But you may find it necessary to modify your time system because both you and your client must specifically account for the time spent on direct communication with public officials and the time spent on preparation for such activity.
From the client's perspective this requirement may be quite burdensome, because the client is required to keep track of time spent by each of its nonlobbyist employees who spend more than 10 hours on lobby activity during each reporting period.
Many clients find preparing the lobby report to be a daunting endeavor the first time the task is undertaken. Detailed information on completing the lobby report is beyond the scope of this article. The Ethics Board has a "Quick Reference Guide" to reporting, available at http://ethics.state.wi.us.
The prohibited practices section is another very important part of the law. When you become a lobbyist you forfeit the right to make unfettered campaign contributions, and the law contains substantial penalties for violations. In general, lobbyists and principals are prohibited from furnishing anything of value to any elective state official, candidate for elective state office, legislative employee, agency official, or personal campaign committee of any such official, candidate, or employee.
In the case of state agency employees, only persons who participate in the administrative rule-making process are in the class of restricted recipients. Finally, certain relatives are exempted from the class of restricted recipients by section 13.625(6).
A lobbyist is permitted to make campaign contributions only during certain periods. Contributions to personal campaign committees may be made only in the candidate's election year, between June 1 and the date of the general election, and only if the legislature is not in session. A lobbyist's spouse is not restrained from making campaign contributions at any time, and a lobbyist may make contributions to parties (for example, the Republican Party of Wisconsin) and caucus committees (for example, the Assembly Democratic Campaign Committee) at any time.
In addition, the law contains two other prohibitions applicable to lobbyists. Contingent fee lobbying is prohibited by section 13.625(1)(d), and section 13.625(1)(a) states that a lobbyist may not "instigate legislative or administrative action for the purpose of obtaining employment in support or opposition thereto." In other words, a lobbyist may not foment the introduction of a bill for the sole purpose of drumming up work.
Penalties for Violating the Lobby Law
Significant penalties may be imposed for violating the lobby law.
- For lobbyists, the general penalty for a lobby law violation is a forfeiture of up to $1,000.5
- For principals, the general penalty for a lobby law violation is a forfeiture of up to $5,000.6
- The penalty for a lobbyist or an employee of a principal for falsifying information needed to complete the semi-annual lobby report is a fine of up to $1,000 and up to one year in jail.7
- Any lobbyist who acts as a lobbyist without being licensed or who procures a lobby license by fraud or perjury may be subject to a forfeiture of up to $1,000 and is ineligible "to be licensed as a lobbyist for a period of three years from the date of such conviction."8
- The penalty for a principal, lobbyist, or other individual filing a lobby report "which he or she does not believe to be true" is a Class H felony - a prison term of up to six years and/or a fine not to exceed $10,000.9
Strategies for Avoiding Licensure and Registration
It is entirely appropriate for lawyers to structure their activities to avoid the necessity of licensure as a lobbyist by the lawyer and registration as a principal by the client. The following strategies may be used:
- Structure your activities so that you make lobbying communications on no more than four days in a reporting period.
- In the case of issues pending before the legislature, contact only the state senator and state representative who represent your home address.
- Encourage your client's employees to keep their own activities below the new lobby law thresholds.
- If your client is a local government unit, rely on your client and its employees to make the contacts with all agency and other legislative officials. You can prepare the necessary documents and materials and give them to the client for use by local elective officials and employees who can take advantage of the "local official" exemption.
- Encourage your business clients to join and work through their trade associations to advocate for desired statutory and administrative rule changes.
If you or a client's employee exceeds the threshold, licensure and registration is required and all of the lobby law's provisions become applicable to both of you. Act with knowledge. Don't step over the line from being an intentional advocate to becoming an unintentional lobbyist.