Close your eyes and imagine a lobbyist. What does he or she look like? A K Street suit taking a Congressperson to lunch? A local powerbroker waiting outside the mayor’s office at City Hall? Chances are, you have never spent a moment considering whether Pennsylvania’s Lobbying Disclosure Act or the City of Philadelphia’s Lobbying Code applies to you and your company. You’re not anything like the lobbyists you were imagining, so why would your actions fall under lobbying laws?
Surprisingly, Pennsylvania’s and Philadelphia’s lobbying laws cover a wide range of activity, some of which is far removed from the commonly understood definition of lobbying. The broadly written laws are expansive not just in their definition of what is and what is not “lobbying,” but also in their application, as each statute applies to three classes of individuals/entities: lobbyists, lobbying firms and “principals.” Each law defines principal slightly differently, but any individual, association, corporation or any other entity (including non-profits) that engages in lobbying on its own behalf, either directly or through a lobbying firm or lobbyist, will fall under the statutes.
Each law defines lobbying as “an effort to influence legislative action or administrative action” including direct or indirect communication, the incurring of office expenses or the providing of “any gift, hospitality, transportation or lodging to a [State/City] official or employee for the purpose of advancing the interest of the lobbyist or principal.” At the state level, this definition specifically includes the overwhelming majority of procurement by the state, and therefore any efforts that fit the broad definition of lobbying by a company and relate to procurement (i.e. its efforts to sell goods and/or services to the Commonwealth) can put that company within the scope of the Pennsylvania lobbying law.
In the event that lobbying activities are being conducted, both the Pennsylvania and Philadelphia laws create a registration requirement and a reporting requirement. To comply with the registration requirement, the lobbyist, lobbying firm and the principal must each register with the Pennsylvania Department of State or the Philadelphia Board of Ethics, as applicable, within 10 days after the lobbying activities exceed a threshold of $2,500. These registrations must also be renewed and updated annually under the Philadelphia’s Lobbying Code and every two years under the Pennsylvania Lobbying Disclosure Act.
To comply with the reporting requirement, a registered principal must file quarterly expense reports. An expense report is only required when total expenses exceed $2,500 for the registered principal in a reporting period. If less, a statement to that effect can be filed. However, this $2,500 threshold includes not just the typical direct intuitive expenses of a principal for lobbying (such as the cost of gifts and the fees of hiring lobbyists), but also the principal’s internal expenses such as salaries of any employees who devoted time to lobbying (which can be prorated based on the amount of time such employees spent on lobbying activities).
There are a number of exceptions, additional requirements and nuances in each of the Pennsylvania Lobbying Disclosure Act and the Philadelphia Lobbying Code that are beyond the scope of this article. However, business owners, company executives and non-profit administrators should be aware of the potential that their activities may fall under the statutes, since any failure to register or report could result in sanctions and negative publicity for a company. If you would like more information on this issue and how it could affect you or your company, please contact David L. Hyman at (215) 496-7224 or dhyman@kleinbard.com.