81.12

OPINION NO. 81-12

A registrant has requested State Ethics Commission advice on two matters concerning the lobbyist provisions of the Maryland Public Ethics Law (Article 40A, Title 5, Annotated Code of Maryland, the Ethics Law.)

The first matter has to do with whether the individual (the Registrant) must register as a lobbyist on behalf of a trade association (the Association), if he represents it only as part of his duties as an executive of a member entity (the Member). The Registrant indicates that he is not paid by the Association, and incurs no expenses on its behalf. He receives his sole salary from the Member, which does not reduce his pay to account for his lobbying efforts on behalf of the Association. The Registrant states that his lobbying efforts consist of testifying before various legislative committees on matters relating to Association policy; research and background work for this testimony is done at home. He indicates that he also performs community service work on what could be viewed as "company time"; his salary is not reduced to reflect this community work. He notes that the nature of his business often requires work in non-standard business hours, and suggests that his legislative and community service work can be viewed as on his own time.

Our consideration of this issue involves those provisions of the Ethics Law which set out who must register as a lobbyist and who must authorize the lobbyist to act. Section 5-103(a) of the Ethics Law requires lobbyists to register with the Commission. Section 1-201(r) defines a legislative lobbyist to include a person:

1) who, in the presence of any official or employee in the legislative or executive branch, communicates with that official or employee for the purpose of influencing any legislative action, and
2) #032; for that purpose, either incurs expenses of $100 (exclusive of personal travel and subsistence expenses) or receives $500 or more as compensation.

As the Registrant testifies before committees on proposed legislation, he meets the first criteria of appearing before legislative officials with the intent to influence their actions. However, he incurs no expenses in this connection. Thus, he would only be required to register under section 5-103 if he receives $500 or more in compensation. Compensation is defined in section 1-201(g) of the Ethics Law as "any money or thing of value regardless of form received or to be received by any individual covered by this title from an employer for service rendered. If lobbying is only a portion of a person's employment, compensation means a prorated amount based on the time devoted to lobbying compared to the time devoted to other employment duties." We note that the Registrant's official employment schedule often involves erratic hours, and that daytime personal hours could be replaced by the evening and other ordinarily off-time hours devoted to his employer's business.

We recognize that under these circumstances some daytime activities of professional and management personnel could be viewed as personal, especially where they involve community services unrelated to their job responsibilities. However, the Registrant's legislative activities involve lobbying efforts in areas closely and integrally related to his employer's interests, and directly on behalf of a trade association of which his employer is a member. In this situation we believe that to treat the Registrant's legislative activities as those of a personal volunteer is to engage in an unwarranted fiction. The much more realistic approach is to recognize that his legislative efforts are on behalf of his employer and part of the regular duties for which he is compensated by his employer.

However, only some of the Registrant's duties involve lobbying. Under the Ethics Law definition, he must therefore prorate his salary to determine what percentage of it reflects his lobbying duties. This percentage of his salary is lobbyist compensation. If it is $500 or more, then he is required to file a registration. The proration required to determine lobbyist compensation should accurately reflect the Registrant's overall employment relationship with his employer. Thus, if his work requires him to provide service on time otherwise his own, this time should be counted in establishing total hours of employment. Salary proration can be calculated based upon the actual hours worked or based upon an average work week. (An average work week calculation must reflect average hours taking into account an erratic work schedule.) Using either basis, the actual hours spent on lobbying including preparation, travel and dining (if for a lobbying purpose) should be totaled and compared with the total work hours to determine the percentage of a Registrant's time spent on lobbying. This percentage will, when multiplied by the Registrant's salary during a reporting period, result in actual lobbying compensation. 1

A complete registration must be accompanied by an authorization by a Registrant's employer. Section 1-102(i) of the Ethics Law defines employer as "...any person paying compensation to another person for services rendered." In this case, the Registrant's employer is the Member firm that pays his salary; the Association pays him nothing. His registration should thus include an authorization from the Member. However, because he is acting on behalf of the Association, we believe that the Association should also signify its consent to the Registrant's activities by signing the authorization. Provision is made for this on registration forms recently developed by the Commission.

The second issue presented here is whether the Association must also register if it sponsors special events (paid for out of its own funds) to which legislators are invited. In implementing near identical lobbying provisions under the prior law, the Commission's predecessor agency, the Public Disclosure Advisory Board, held that an organization would be required to register as a lobbyist. (Opinions No. 13, 5:13 Md. R. 1087 (June 30, 1978) and No. 16, 5:13 Md. R. 1088 (June 30, 1978)) We find no basis for a contrary conclusion, and thus agree that the Association may be required to register as a lobbyist if it meets the criteria of section 1-201(r) set forth above. We believe that the various special events sponsored by the Association to which State officials are invited bring these officials into the presence of members of the Association, who would act as its representatives. Under this circumstances, we conclude that the Association through its members is in the presence of State officials at these special events.

While a purpose of these special events is to help Association members and State officials to get to know each other, this purpose does not, in our view exclude the consideration that such events are also designed to create a favorable atmosphere among legislators and members of the executive branch for the consideration of legislative action, present or future, concerning the Registrant's industry. Further, the Association would seem to be incurring lobbying expenses by paying for the meals and beverages of various State officials attending these events regardless of whether the source of funds used is membership dues or funds raised by the Association through ticket sales. If these expenses exceed $100 during a given reporting period, then the Association meets the criteria defining a lobbyist, and must register in accordance with the provisions of Title 5 of the Ethics Law.

Herbert J. Belgrad, Chairman
    Jervis S. Finney
    Reverend John Wesley Holland
    Barbara M. Steckel

Date: April 6, 1981

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1 The Registrant has supplied us with insufficient information to determine his actual lobbying compensation in this particular case. He should, however, apply this formula to determine his lobbying compensation, including research, preparation or travel times, as well as compensation for actual testimony. If his lobbying compensation as determined under this formula exceeds $500 then he is required to register under section 5-103 of the Ethics Law.