INTERPRETATIONINTERPRETATION INVESTIGATIONINVESTIGATION

Interpret State Government Ethics Act

(Ch. 138A) and Lobbying Law (Ch. 120C)

Issue advice & formal advisory opinions to anyone affected by

Lobbying Law

Adopt rules interpreting Ch. 120C & administering Ch. 120C, except for

Art. 2, 4 & 8 (registration & reporting). See 30 NCAC

Investigate alleged violations of

Lobbying Law, including gift ban

Refer alleged registration &

reporting violations to Secretary of

State

2

WHO can request advice?

WHO issues advice?

WHAT can you request?

WHEN must it be requested?

Anyone affected by the Lobbying Law

State Ethics Commission

Advice involving specific questions relating to real or

reasonably anticipated situations

Before situation occurs

3

INFORMAL INFORMAL ADVICEADVICE

FORMAL ADVISORY FORMAL ADVISORY OPINIONOPINION

RequestRequest Written or verbal Must be writtenAdviceAdvice Issued by staff Issued by State Ethics

CommissionConfidentialConfidential Yes YesImmunityImmunity No YesRedacted Redacted Advice Advice PublishedPublished

No Yes•Must publish on website with all identifying information removed unless confidentiality waived•Must share unredacted copy with Secretary of State

4

What is it?What is it? When & to whom When & to whom

does it apply?does it apply? What are the What are the

exceptions?exceptions?

5

LOBBYISTS & LOBBYIST PRINCIPALSCannot knowingly give a gift, directly or indirectly, to “designated individuals”

› Legislators› Legislative

Employees› Public Servants

LIAISON PERSONNEL

Cannot knowingly give a gift, directly or indirectly, to:› Legislators› Legislative Employees

Gift Ban Applies 24/7/3656

Lobbyist or Lobbyist Principal cannot knowingly give a gift with the intent that a designated individual be an ultimate recipient.

7

Legislators› Members of the General Assembly.› Individuals elected or appointed to General

Assembly before taking office.› Candidates.

Legislative Employees› Employees & Officers.› Consultants & Committee Counsel.› Law school interns.› NOT included: nonsupervisory employees of

facility maintenance, food services staff, & pages.

8

Public Servants Executive Branch Constitutional Officers, including

individuals elected or appointed prior to taking office, & candidates.

Heads of principal State departments. Governor’s office employees. Policy-making positions, chief deputies, confidential

assistants. Certain managerial positions. Others designated by Governor. Certain UNC & community college officials, Board of

Governors & boards of trustees members. Voting members of State non-advisory boards.

9

List available on Commission’s website at www.ethicscommission.nc.gov or by calling (919) 715-2071

10

“Anything of monetary value”

Given or received without valuable consideration

No de minimis No de minimis exceptionexception

11

Paid fair market or face value.

Commercially available loans made on same terms & not for lobbying.

Contractual or commercial arrangements not made for lobbying.

Academic or athletic scholarships.

Campaign contributions properly received & reported. (Lobbyists cannot make campaign contributions to certain candidates.)

Certain expressions of condolence.

Cards, letters, notes, e-mails, etc (State Ethics Commission determination).

12

I. FOOD & BEVERAGE FOR “IMMEDIATE CONSUMPTION”

II. MEETINGS & CONFERENCES GENERALLY

III. NON-PARTISAN ORGANIZATIONSIV. INFORMATIONAL MATERIALSV. FAMILY, FRIENDS, OTHERSVI. GIFTS TO STATE OR RELATED TO

STATE BUSINESSVII.AVAILABLE TO GENERAL PUBLICVIII.UNC ATHLETIC TICKETS

13

Gathering Open to the General Public

10 or more attendees Sign or other communication

outside gathering indicating open to the public

If general public is required to pay fee, NOT open to the general public (30 NCAC 07B .0101)

Open Meeting of Public Body Properly noticed under the

Open Meetings Law

14

Lobbyist, Lobbyist Principal, or Liaison Personnel

can pay for food & beverage for “immediate consumption” on premises consumption

All House or Senate members; All members of county or

municipal legislative delegation; Recognized caucus; Committee/commission of

General Assembly; All legislative employees; or Public servant’s entire board or

at least 10 public servants.

At least 10 people associated with associated with person or govt. unit actually attend; or

all shareholders, employees, bd. members,

officers, members, subscribers located in NC

are invited.

Lobbyist, Lobbyist Principal, Liaison Personnel can pay for

Food & beverage for immediate consumption when 1 or more from the following groups are “invited”:

And

“Invited” – written; at least 24 hrs. in advance; date, time, location; from at least 1 host or sponsor; if sponsored by lobbyist or lobbyist principal, must state whether gathering is permitted by this exception. 15

Associated with Associated with person person or govt. unit:or govt. unit:

Employee.Director, officer, partner, holds leadership position.Owner of interest of $10,000 or more.Owner of 5% or more of the business.Registered lobbyist.Commission will make case-by-case determinations on other relationships, such as memberships in organizations.

Associated with person or Associated with person or govt. unit govt. unit actually actually

attendattend::When sponsored by lobbyists or lobbyist

principals, 10 individuals associated with the

“group” of sponsoring lobbyists or lobbyist

principals must actually attend.

• Written notice by 1 host or sponsor to 1 of the qualifying groups is sufficient

• Notices by e-mail are permitted.

16

Lobbyist or lobbyist principal can pay for

Food & beverage for immediate consumption at

Organized gathering where› Public servant’s

attendance is primarily related to public position; and,

› 10 individuals other than public servant or immediate family actually attend or individuals connected with sponsor in specific NC office or county notified & invited.

17

Lobbyist principal Can pay reasonable

actual expenditures for food & beverage, travel, registration, lodging, incidental items of nominal value, incidental entertainment.

1) “Educational” Meeting (primarily related to public duties; see 30 NCAC 07C .0101 ); or, 2) Designated Individual is a “bona fide speaker or panel member”.

Meeting has formal agenda, notice given at least 10 days in advance and attended by at least 10 participants.

Food, beverage, transportation & entertainment must be› Provided to all attendees

or defined groups of 10 or more; and,

› Part of or in conjunction with meeting.

Entertainment must also be incidental to the principal agenda.

18

Applies ONLY to Public Servants & NOT legislators or legislative employees.

Lobbyist or lobbyist principalCan pay for any expense that would otherwise be reimbursable by the State ifPublic servant received approval in advance to accept the expense on behalf of the State.Actual expense may exceed State rate.

19

Lobbyist principal ONLY

Can pay reasonable actual expenditures for food & beverage, travel, registration, lodging, incidental items of nominal value, incidental entertainment.

Attendance at meeting of nonpartisan organization where agency is a member or designated individual attending because of public position.

Meeting has formal agenda, notice given at least 10 days in advance and attended by at least 10 participants.

Food, beverage, transportation & entertainment must be› Provided to all attendees

or defined groups of 10 or more; and,

› Part of or in conjunction with meeting.

Entertainment must also be incidental to the principal agenda.

20

Gifts are allowed if they are:

Made by a lobbyist or lobbyist principal to

Nonpartisan state, regional, national, or international organization of which

Agency is a member; or, Designated Individual is a member or

participant by virtue of public position.21

May give informational materials relevant to designated individual’s public duties.

22

May give gifts to your extended extended family family member who is a designated individual.

23

Gifts based on business, civic, religious, fraternal, personal, or commercial relationship permitted if:Relationship not based on public position; and,Reasonable person would conclude not given for “lobbying.”

24

Lobbyist principal only Can give food & beverage for

immediate consumption, & related transportation to

Designated individual who is a director, officer, board member, employee or independent contractor of lobbyist principal or a 3rd party that received funds from the lobbyist principal at

Conference, meeting, similar event

Available to all attendees of same class

25

May give a plaque or similar non-monetary mementos recognizing designated individual’s services in a field or specialty or to a charitable cause

26

Lobbyist or lobbyist principal

May pay for gifts For use by and

benefit of the State

27

Industry & Tourism Related: Food, beverage, transportation, lodging, entertainment, or related expenses ifGift not otherwise subject to an exceptionPublic servant is responsible for conducting industry recruitment, international trade, or tourism promotionGift was not solicited or accepted in exchange for performing public dutiesGift is reported to the State Ethics CommissionCultural Protocol: GiftValued at less than $100Given in accordance with cultural protocolAs part of overseas trade mission

28

Anything made available to the general public; or

All State employees.

29

UNC Board of Governors, UNC constituent institutions, or their legislative liaisons

Cannot give designated individuals Athletic tickets For lobbying

30

Gift ban applies to Executive Branch public servants.

Gift ban applies at all times. Commission may designate other

boards and commissions as covered by the State Ethics Act.

31

“CODE OF CONDUCT”

32

1.1. Register and ReportRegister and Report..

2.2. IdentifyIdentify.. 3.3. No Contingency FeesNo Contingency Fees.. Cannot accept a fee

contingent upon the outcome of lobbying.

Exception for individuals who are also sales people doing business with the State whose regular remuneration agreement includes commissions based on sales.

Regular remuneration Regular remuneration means any money, thing of value, means any money, thing of value, or economic benefit conferred on or received by the or economic benefit conferred on or received by the individual in return for services rendered or to be rendered individual in return for services rendered or to be rendered by that individual or another.by that individual or another.

33

4.4. Cannot Serve as Treasurer.Cannot Serve as Treasurer. Lobbyists cannot serve as campaign treasurer or assistant campaign treasurer for a political committee for the election of a legislator or Constitutional officer.

5.5. No Use of Cash/CreditNo Use of Cash/Credit. No lobbyist or another acting on lobbyist’s behalf can allow a DI or a DI’s immediate family member to use cash or credit of the lobbyist for lobbying, unless the lobbyist is present.

34

6.6. Appointments to Certain Boards Prohibited.Appointments to Certain Boards Prohibited. Lobbyist ineligible for appointment by State official to any State board that has regulatory authority over the activities of a person or governmental unit the lobbyist currently represents or has represented within 120 days after lobbyist’s registration has expired.

▪ Does not prohibit appointments by local government.

▪ Any appointment or registration made violating this section is void.

35

7.7. Legislators Cannot Be LobbyistsLegislators Cannot Be Lobbyists.. No legislator or former legislator can be a registered lobbyist:

▪ While in office; or,▪ Before the later of the close of the legislative session

during which the legislator served or 6 months after leaving office.

8.8. Certain Public Servants Cannot Be LobbyistsCertain Public Servants Cannot Be Lobbyists.. Constitutional officers and heads of principal State departments cannot be a registered lobbyist while in office or employed or within 6 months thereafter.

36

37

An employee

of a “State agency”

Cannot register as a

lobbyist

To lobby the State

agency that previously employed him or her

For 6 months

after leaving

the State agency

“State agency”

an agency in executive branch

Applies to all employees of

a State agency,

If the former employee registers as a NC

lobbyist within the 6 mo. period, the employee must

indicate the former employing State

agency

State employees, counsel employed under State employees, counsel employed under G.S. 147-17, officer, OR local government G.S. 147-17, officer, OR local government employee employee whose principal duties include “lobbying” legislators or legislative employeeslegislators or legislative employees. . NOT a “lobbyist”. Employing or appointing State entity is NOT a lobbyist principal.Must register and report.No registration fee.Gift Ban applies to giving to legislators and

legislative employees.

38

Lobbying Education: Lobbying Education: Part IIPart II

““LOBBYING”LOBBYING”

Registration and Reporting

• What triggers the requirement to register and report?

• Who must register and when?

• What must be reported?

• When must the report be filed?

What Triggers the Requirement to Register?

What is “Lobbying” What is “Lobbying” G.S. 120C-100(a)(9) a. and b.

• Direct communications or activities with a designated individual or a designated individual’s immediate family member

• Designed to influence current or future legislative or executive action

• Also Includes developing goodwill through communications and activities, including the building of relationships, designed to influence current or future legislative or executive action

Communications or activities with a DI Communications or activities with a DI

or DI’s immediate family or DI’s immediate family

• Designated Individuals include:– legislators, legislative employees; and – legislative candidates who have filed– public servants (G.S. 138A-3(30): and

– State constitutional officer candidates who have filed

Designated Individual’s Immediate Family Members

• Spouse, if not legally separated• child who lives in the household • extended family who live in the household G.S. 138A-

3(17)).

What is “Legislative Action”? G.S. 120C-100(a)(5)G.S. 120C-100(a)(5)

• Generally includes all steps in the legislative process taken by a legislator or a legislative employee – from preparation and research to final action; including reports, bills, amendments, etc., whether or not the matter is identified by an official title, general title, or other specific reference.

• Also includes consideration of any bill by the Governor for approval or veto.

What is “Executive Action”What is “Executive Action” G.S. 120C-100(a)(3)G.S. 120C-100(a)(3)

• Generally speaking, consists of all actions taken by a public servant acting in an official capacity that are necessary to

– consider, prepare, draft, approve, postpone, reject or defeat

– a policy, procedure, guideline, regulation, rule, or a request for proposal or invitation for bid.

NOTNOT “Executive Action”“Executive Action”G.S. 120C-100(a)(3)a.-b.G.S. 120C-100(a)(3)a.-b.

• Prior, present, or possible contested cases, judicial proceedings or quasi-judicial proceedings.

• Communications regarding permits, licenses, eligibility, certification, benefits, claims, rights, obligations, duties, entitlements, payments, or penalties.

• Inquiries about or responding to requests for proposals.Pertains to active RFP, not the development or drafting of

RFP

• Ratemaking.

NOTNOT “Executive Action” “Executive Action” (cont’d)(cont’d)

G.S. 120C-100(a)(3)c.-e.G.S. 120C-100(a)(3)c.-e.

• Internal administrative functions

• Ministerial functions

• Public servant’s communication with a person or another on that person’s behalf with respect to:

– Public comments made at an Open Meeting; or, – Submitted as written comments

on proposed executive action in response to a request for public comment, provided that:provided that:

– Identity of person on whose behalf comments are made is disclosed as part of public participation; and,

– No reportable expenditure is made

What is What is NOT NOT “Lobbying”“Lobbying”G.S. 120C-(a)(9)G.S. 120C-(a)(9)

Lobbying does not include:• Communications or activities as part of

• Business, civic, religious, fraternal, personal, or commercial relationship which are

• Not connected to legislative or executive action.

Example - Communications with a DI that pertain to current contract obligations and duties are not lobbying.

WHO IS A LOBBYIST

An individual who engages in lobbying for payment

• Three types of lobbyists – all lobby and all receive payment for lobbying

Three Types of Lobbyists

1. Firm Employed Lobbyist - Represents the position, interest, or idea of another“ person” or “government unit” but is not directly employed by that person or gov unit, and receives payment for lobbying. G.S. 120C-100(a)(10)b.

2. Contract lobbyist – Contracts (with the lobbyist principal) for payment for lobbying. G.S. 120C-100(a)(10)c.

3. Employee Lobbyist - Is employed by a person and a significant part of that employee’s duties include lobbying

 Except that an employee is not a lobbyist if the individual’s actual duties did not include

5% or more of direct lobbying in any 30-day periodOr

5% or more of goodwill lobbying in any 30-day period

Three Types of Lobbyists, conti…

Who is a Lobbyist Principal? Who is a Lobbyist Principal? G.S. 120C-100(a)(11)G.S. 120C-100(a)(11)

• Person (broadly defined) or governmental unit on whose behalf the lobbyist lobbies AND who pays for the lobbying.

• If the lobbyist is compensated by a law firm, consulting firm, or other entity retained by the person or governmental unit, the principal is the person whose interests the lobbyist represents.

• If the lobbyist is retained by an organization or association, the principal is the organization or association (not the members of the organization).

Who is Who is NOTNOT a “Lobbyist”? a “Lobbyist”?G.S. 120C-700(1) and (2)G.S. 120C-700(1) and (2)

• Expressing Personal OpinionExpressing Personal Opinion.. Individual solely engaged in expressing a personal opinion or stating facts or recommendations on legislative or executive action to a designated individual and not acting as a lobbyist.

• InvitationInvitation.. Person appearing before committee, commission, board council, or other collective body whose membership includes one of more designated individuals at the invitation or request of the committee or a member and who does not act in any further activities as a lobbyist with respect to legislative or executive action.

Who is Who is NOTNOT a “Lobbyist”? a “Lobbyist”? (cont’d)(cont’d)G.S. 120C-700(3)G.S. 120C-700(3)

• Government Officials & EmployeesGovernment Officials & Employees.. Elected or appointed official or employee of State, federal govt., or governmental agency (e.g., county, municipality, school district), when acting solely in connection with matters pertaining to the office and public duties.

– Also, individuals appointed as county attorneys under GS 153A or city attorneys under GS 160A are considered county or city employees.

– Does not include Legislative or Local Gov. Liaison Personnel.

Who is Who is NOTNOT a “Lobbyist”? a “Lobbyist”? ((cont’d)cont’d)

G.S. 120C-700(4)G.S. 120C-700(4)

• Professional Services for ClientsProfessional Services for Clients. . Person performing professional services in drafting bills, or advising and rendering opinions to clients, or to designated individuals on behalf of clients, as to the construction and effect of proposed or pending legislative or executive action where the professional services are not otherwise connected with the legislative or executive action.

Who is Who is NOTNOT a “Lobbyist”? a “Lobbyist”? (cont’d)(cont’d)

G.S. 120C-700(5) and (6)G.S. 120C-700(5) and (6)

• News MediaNews Media.. Person who owns, publishes, or is an employee of any recognized news medium, while engaged in the acquisition and publication of news and commentary on news as a part of their job.

• Designated IndividualsDesignated Individuals.. Designated individuals while acting in their official capacity.

Who is Who is NOTNOT a “Lobbyist”? a “Lobbyist”? (cont’d)(cont’d)

G.S. 120C-700(7) and (8)G.S. 120C-700(7) and (8)

• Responding to InquiriesResponding to Inquiries.. Person responding to inquiries from a designated individual and who does not act in any further activities as a lobbyist in connection with that inquiry.

• Political CommitteePolitical Committee.. Person who is a political committee as defined in G.S. 163-278.6(14), that person’s employee, or that person’s contracted service provider.

REGISTRATIONREGISTRATIONArticle 2Article 2

Who Must Register?

• Lobbyists• Lobbyist Principals• Solicitors• Liaison Personnel • Local Government Liaisons

Lobbyist Registration and FeesLobbyist Registration and FeesG.S. 120C-200; -201G.S. 120C-200; -201

• MustMust register with Secretary of State within 1 business day of lobbying.

• Must file a separate registration for eacheach principal.

• $100 fee for each registration.– Secretary of State may reduce or waive fees for

lobbyists representing nonprofits.

Lobbyist Registration: Lobbyist Registration: Amendments & RenewalsAmendments & Renewals

G.S. 120C-200; -201G.S. 120C-200; -201

• Must file amended registration form within 10 business days of any change.

• Registrations are effective from the date of filing until January 1January 1stst of the following year of the following year.

• Each year new registrations must be filed and fees paid.

Lobbyist Principal Lobbyist Principal Authorizations and FeeAuthorizations and Fee

G.S. 120C-206G.S. 120C-206

• LP must file signed written authorization within 20 business days after lobbyist registers.

• $100 fee paid when LP files first authorization– Pays one fee for the year regardless of number of

lobbyists LP authorizes EXCEPT if LP status is terminated and then renewed in the same year

• Secretary of State may reduce or waive fees for nonprofit principals.

• Must file amended authorization form within 10 business days of any change.

SOLICITATION OF OTHERSSOLICITATION OF OTHERS

““Solicitation of Others”Solicitation of Others”G.S. 120C-101(a)(13)G.S. 120C-101(a)(13)

Broadcast, cable, satellite E-mail or website posting Communication through print media

Mailing Telephone Communication at conference or meeting

• Solicitation (request) of the public• To communicate directly with or contact designated

individuals• For purpose of:

– Influencing legislative or executive action– To further solicitor’s position

• Includes solicitations (requests) made by:

Solicitation of Others”Solicitation of Others”Is NotIs Not

• Any communication made by a person or the person’s agent to the person’s stockholders, employees, board members, officers, members, subscribers, etc.

• Who have affirmatively assented to receive regular publications or notices.

When Solicitation Activities Trigger When Solicitation Activities Trigger Registration & Reporting?Registration & Reporting?

G.S. 120C-215G.S. 120C-215

Solicitor - Person not otherwise required to register and report must register & report when:

– Total expense for solicitation of others

– Exceeds $3,000

– During any 90-day period

• “Expenses” include the cost of:

– Producing & transmitting the communication and

– Cost of planning, hosting, sponsoring, or attending if the communication is made at a conference, meeting, or similar event.

What is a Solicitor Required to Report What is a Solicitor Required to Report G.S. 120C-215 & -404G.S. 120C-215 & -404

• Once registered Solicitor must report

– Solicitation of Others

And

– Reportable expenditures made for lobbying.

– Reports must be filed quarterly.– Failure to timely file a report will void

solicitor’s registration.

LIAISON PERSONNELLIAISON PERSONNEL

Liaison PersonnelLiaison PersonnelLiaison Personnel - State employees, counsel employed under G.S. 147-17, or officer whose principal duties include in practice or as set forth in their job description lobbying legislators legislators or legislative employees.** or legislative employees.** G.S. 120C-100(a)(8)

Who must designate liaison personnel? All agencies of the State, including boards, departments, divisions, UNC constituent institutions, community colleges and other executive branch agencies.

– Exception for State agencies with no staff.

• Is there a limit on the number of liaison personnel in an agency? Yes.

– Generally, no more than 2 individuals can be designated.– The Chief Justice of the Supreme Court must designate at least 1, The Chief Justice of the Supreme Court must designate at least 1,

but no more than 4, individuals to lobby for legislative action.**but no more than 4, individuals to lobby for legislative action.**

Local Government Liaison Local Government Liaison Equivalents Equivalents

G.S. 120C-502 (*New provision*)

• Employees of a county, city or any other local governmental unit whose principal duties in practice or as set forth in their job description include lobbying for legislative action. G.S. 120C-502

State and Local Gov Liaison Personnel Liaison Personnel

• Not “Lobbyists”

• Must Register and Report

• Gift Ban Applies to Gifts from Liaison to Legislators and Legislative Employee

• Agency or Gov Unit Liaison represents is Not a Lobbyist Principal

What are Liaison Personnel and Local Gov Liaison Required to Report?

Liaison Personnel and Local Gov. Liaison Equivalents report what the liaison made and the state or gov unit paid for – “Reportable expenditures” made for lobbying with a value greater

than $10 per DI per day

– “Solicitation of others” when costs exceed $3,000 and the liaison paid for such

– Gifts over $10 in value per DI per dayAND What “reportable expenditures” the Liaison truly paid for

and was not reimbursed for

REPORTINGREPORTINGArticle 4Article 4

What Has to be Reported? What Has to be Reported? • Reportable expenditures made for lobbying• Solicitation of others when total cost of such

solicitation is more than $3,000• Reportable expenditures reimbursed to a lobbyist• Reportable expenditures that are Gifts• The names of persons or gov units the LP

“loaned” its lobbyist to, whether for pay or not• Payments for lobbying and for certain

communications and activities used to lobbying

What Does A Lobbyist Report? What Does A Lobbyist Report? G.S. 120C-402(b)G.S. 120C-402(b)

• Lobbyist reports what the lobbyist truly paid for and was not reimbursed for– “Reportable expenditures” made for lobbying with a value

greater than $10 per DI per day that the lobbyist paid for and was not reimbursed

– “Solicitation of others” when costs exceed $3,000 and the lobbyist paid for such and was not reimbursed

– Gifts over $10 in value per DI per day that the lobbyist paid for and was not reimbursed

and

• Lobbyist reports reimbursed “reportable expenditures” which the lobbyist principal did NOT report (includes reimbursement by LP or by another on LP’s behalf)

What Does A Lobbyist Principal Report? What Does A Lobbyist Principal Report? G.S. 120C-403(b)G.S. 120C-403(b)

• Lobbyist Principal reports what the Principal paid for– “Reportable expenditures” made for lobbying over $10

in value per DI per day that the Principal paid for

– “Solicitation of others” that the Principal paid for when costs for such exceed $3,000

– Gifts over $10 in value per DI per day the Principal paid for

– Payments to lobbyists for lobbying and for certain communications and activities used to lobby

Lobbyist Principal Also ReportsLobbyist Principal Also Reports

• Reportable expenditures” reimbursed or paid to lobbyist which the lobbyist did NOT report

• Name of each person or gov unit to whom the Lobbyist Principal “loaned” its lobbyist, whether for pay not

What is a What is a “Reportable Expenditure”“Reportable Expenditure”

G.S. 120C-100(a)(12)G.S. 120C-100(a)(12)

• Broadly defined• Includes

– Anything of value, separately or cumulatively greater than $10 per DI per calendar day,

– Contracts, agreements, promises, etc. whether or not legally enforceable

• That is directly or indirectly mademade toto, at the requestrequest of, for the benefitbenefit of, or on behalfbehalf of DI or DI’s immediate family

Determining the $10 Reporting Threshold

• To determine if the reporting $10 threshold has been met – use the aggregate total amount of all things of value made to, at the request of, for the benefit of, or on behalf of a DI and that DI’s family members on that calendar day

• For example – provide food and beverages with fmv of $7 to the DI and to the spouse – $14 was given so must report

I. Gifts Reporting(Gifts are reportable expenditures)

***Remember – to give any gift, regardless of its value, there must be an applicable gift ban exception -No de minimus exception***

- First question: Are you allowed to give it? - Second question: Must it be reported?

Gifts that must be reported

• Gifts given to a DI with a value separately or cumulatively value greater than $10 per DI per calendar day

– Includes all gifts given by Lobbyist– Includes all gifts given by LP, EXCEPT

• LP (e)(10) gifts are not required to be reported until the value, separately or cumulatively, is greater than $200

II. “Reportable Expenditures Made for Lobbying” Must Be Reported

• “Reportable expenditures made for lobbying” include expenditures that are not gifts but are:

– Made at the request of or on behalf of DI or DI immediate family member

Or– Made for the benefit of an Immediate family member And – That exceed the $10 threshold

• Also includes certain overhead expenses connected with lobbying events, such as room rental costs.

Reporting of Multi-Sponsored Food and Beverage “Lobbying” Event

• Reporting requirements remain whether the reportable expenditure event is sponsored by one Lobbyist Principal/Lobbyist or many

• Each sponsoring Lobbyist Principal and Lobbyist must report

• Reportable expenditures that are “gifts”

and• Reportable expenditures “made for lobbying”

Reporting of Gift of Food and Beverages at Multi-Sponsored “Lobbying” Event

• Each Sponsoring LP and L Reports the f&b gift – Fair market value of the gift (the food and beverages)

given to and received by a Designated Individual

– Various ways of determining the fair market value of the food and beverage gift

• Cost of ticket if tickets to the event are sold and the only things being given to those attending are food and beverage ***Entertainment cannot be given under most exceptions.***

• If no tickets are sold, caterer’s charge per person • If no caterer, fair market value per person is the total cost

divided by number of attendees AO-L-09-002

Reporting of Reportable Expenditures Made For Lobbying at Multi-Sponsored

“Lobbying” Event• Each LP must also report the amount of its

sponsorship/contribution to the lobbying event Example 1:

Two LPs sponsored a legislative lunch at which the attending legislators were given lunch catered at $25 per person. One sponsor contributed $1,000 and one sponsor contributed $500. Each LP must report the food and beverage gifts of $25 per person and report the amount of its contribution.

Reporting of Reportable Expenditures Made For Lobbying at Multi-Sponsored

“Lobbying” Event

Example 2If the reportable expenditure is a contribution to a “lobbying event” where food and beverage valued at $8 per person was a given, the gift does not need to be reported separately from the amount of the contribution

Details Required on Report• For each reportable expenditure must state

– Fair market value or face value if shown– The date of the expenditure– A description – The name and address of the payee or beneficiary– The name of any DI or that DI’s immediate family

member connected with the expenditure

• And must categorize each reportable expenditure

Fair Market Value of the Reportable Expenditure

• Fair market value or face value of the reportable expenditure must be reported if $10 threshold is met

– Fair market value can be determined a number of ways

– If the reportable expenditure is or includes a gift over $10 in value, the gift and its fair market value must be reported separately

Date of the Reportable ExpenditureThe date of a reportable expenditure

• Made to or for the benefit of a DI or DI immediate family member

– Date the reportable expenditure is received by the DI or DI immediate family member

• Made at the request of or on behalf of a DI or DI immediate family member – Date the reportable expenditure is made by the giver

Description of the Reportable Expenditure

• A description of each reportable expenditure must be included on the report

– For the G.S.120C-401(b)(3) requirement to have meaning this requires more than the categorizing required by 120C-401(c)

– Description should name or otherwise identify the reportable expenditure event, meeting or circumstance.

Who is the Payee?G.S. 120C-401(b)(4)

• “Payee” is the person to whom the money is paid or is to be paid

– When reporting an allowed gift of food and beverages given to an attending legislator, the person who was paid to provide the food and beverages is the payee

– Must list name and address of payee on report

Who is the Beneficiary?G.S. 120C-401(b)(4)

• The “Beneficiary” is the person, other than the designated individual or that designated individual’s immediate family member, who benefited from the reportable expenditure made at the request of or on behalf of the designated individual or that designated individual’s immediate family member.

– When a contribution is made to the food bank at the request of a legislator, the food bank is the beneficiary.

– Must list name and address of beneficiary on report

Reporting Names of DIs and DI Immediate Family

G.S. 120C-401(b)(5)

• General Requirement– Report the names of any DI and any DI immediate

family member “connected” with the reportable expenditure

– “Connected” with the reportable expenditure includes any DI or DI immediate family member requesting, or benefitting in any way, or otherwise related to the reportable expenditure

• LP donation made on behalf of a DI – DI is connected

Exceptions to Reporting Names of DIs Exceptions to Reporting Names of DIs and DI Immediate Familyand DI Immediate Family

G.S. 120C-401(b1)-(b2)G.S. 120C-401(b1)-(b2)

• When more than 15 DI’s benefit from or request**or request** a reportable expenditure, names do not have to be reported; if:if:

– Approximate number benefiting or requesting– Basis for their selection– Approximate # DI family members must be listed separately

• If gift given with intent that a DI be an ultimate If gift given with intent that a DI be an ultimate recipient & L or LP does not know name(s), L or LPrecipient & L or LP does not know name(s), L or LP– Description of DI & immediate family Description of DI & immediate family connected with the RE connected with the RE

that clearly distinguishes its purpose or compositionthat clearly distinguishes its purpose or composition– Approximate number, if known**Approximate number, if known**

Reportable Expenditure Categories

• Reportable Expenditures must be reported under the following categories

– Transportation and lodging– Entertainment– Food and beverages– Meetings and events– Gifts– Other reportable expenditures

When to Report a Reportable Expenditure

Reportable Expenditure Made to or for Benefit of DI or DI Immediate Family

Member

• A reportable expenditure made to or for the benefit of a DI or DI immediate family member (example is an allowed gift)

– Must be reported on the expense report filed for the month the reportable expenditure is received by the DI or DI immediate family member

30 NCAC 10C .0102

Reportable Expenditure Made at the Request of or on Behalf of DI or DI

Immediate Family Member

• A reportable expenditure made at the request of or on behalf of a DI or DI immediate family member (example is a requested contribution)

– Must be reported on the expense report filed for the month the reportable expenditure is made by the giver

30 NCAC 10C .0103

Additional Reporting Required

• Lobbyists and Lobbyist Principals must also report Solicitation of Others when total cost of the solicitation exceeds $3,000.

• Lobbyist Principal must report the names of persons or gov units the LP “loans” its lobbyist to lobby for, whether for pay or not. ***G.S. 120C-403(b)(6)*** (new provision)

Annual Reporting Required by Lobbyist Principals

Annual Reporting of Payments to a Lobbyist for Annual Reporting of Payments to a Lobbyist for Lobbying and for “Lobbying Services”Lobbying and for “Lobbying Services”

G.S. 120C-403(d) and (e) (this is 403(b)(3) recodified)G.S. 120C-403(d) and (e) (this is 403(b)(3) recodified)***there needs to be a technical correction to delete (b)(3)*** ***there needs to be a technical correction to delete (b)(3)***

In the last report a Lobbyist Principal files for the registration year it must report the cumulative combined total of all payments to a lobbyist for:

– lobbying, direct and goodwill

– “lobbying services” - certain listed communications and activities used to lobby during the registration year

Payment

“Payment” defined in G.S. 120C-100(a)(11k) as:

• Any money, thing of value, or economic benefit

• Conveyed to a lobbyist

• For lobbying

Excludes - Excludes - reimbursement of actual travel, administrative expenses, or subsistence

Payments for “Lobbying Services” Payments for “Lobbying Services” G.S. 120C-403(e)(2)G.S. 120C-403(e)(2)

• Lobbyist Principal must report, cumulatively for the year, any payment to a lobbyist for the following activities and communications that were used to lobby within the registration year – Research– Drafting of Written Communications– Monitoring of proposed or pending legislative or

executive action• Includes time spent preparing communications with LP to

relay information on such legislative or executive action

– Time spent advising and rendering opinions to LP as to construction and effect of proposed or pending legislative or executive action

Portion of PaymentPayment that is ReportableG.S. 120C-403(d)(1)

• Consulting or Law Firm Paid LobbyistLobbyist represents Lobbyist Principal but is not directly employed by the Lobbyist Principal and is not under contract with the Lobbyist Principal for lobbying

– Reportable• The portion of the payment that was for lobbying

and• To whom the payment was paid

Portion of PaymentPayment that is ReportableG.S. 120C-403(d)(2) and (3)

• Contract Lobbyist • Lobbyist under contract with Lobbyist Principal for lobbying

– Reportable – the portion of the contract that is reasonably allocated for lobbying

• Full Time Employee Lobbyist or Lobbyist Paid by Annual Fee or Retainer– Reportable

• Lobbyist Principal must estimate and report the portion of the salary, fee, or retainer that is reasonably allocated for lobbying

Estimating or Determining the Portion Reasonably Allocated to Lobbying

• Lobbyist Principal may rely on statement from lobbyist estimating the portion of salary or other payment reasonably allocated for lobbying and lobbying services

• Lobbyist’s estimate must be verifiable in some manner

Lobbyist’s EstimateEstimate is Reasonably Allocated

• A Lobbyist’s estimate is reasonably allocated if it

– Specifies a portion of the lobbyist’s salary, fee or retainer that is the estimated payment for lobbying

– Includes all payments for lobbying conveyed by the Lobbyist Principal to the Lobbyist during the reg yr.

– Includes all payments for lobbying services conveyed by the Lobbyist Principal to the Lobbyist during the registration year

Lobbyist’s EstimateEstimate is Reasonably Allocatedcontinued

– Is consistent with known facts and circumstances underlying employment terms and compensation agreement between the lobbyist principal and the lobbyist

– Is made retrospectively

AND

– Is made in good faith.

30 NCAC 10C .0301

Report Format & CategoriesReport Format & CategoriesG.S. 120C-401(b)-(c)G.S. 120C-401(b)-(c)

• FMV or face value, if shown

• Date of reportable expenditure

• Description• Name & address of

payee or beneficiary• Name of any DI or

immediate family connected with reportable expenditure with certain exceptions

• Transportation & lodging

• Entertainment• Food & beverage• Meetings & events• Gifts• Other reportable

expenditures

Filing DeadlinesFiling DeadlinesG.S. 120C-401(e)-(f)G.S. 120C-401(e)-(f)

• Quarterly filing whether or not reportable expenditures made

– Due within 15 business days after end of filing period

• Monthly if reportable expenditures for lobbying legislators and legislative employees when General Assembly is in session

– Due within 10 business days after end of the month

Filing DeadlinesFiling DeadlinesG.S. 120C-401(e)-(f)G.S. 120C-401(e)-(f)

• Annual Reporting of Payments for Lobbying and Lobbying Services filed with last quarter of filing

• Filed under oath

• Failure to timely file– SOS must send certified letter– 20 days to file report & pay late filing fee of $50/day –

maximum of $500

• Failure to file after notice voids registration

INVESTIGATIONS & INVESTIGATIONS & VIOLATION CONSEQUENCESVIOLATION CONSEQUENCES

Article 6Article 6

JurisdictionJurisdictionG.S. 120C-601 through -603G.S. 120C-601 through -603

State Ethics Commission:• Investigate complaints of

violations of Ch. 120C, except for matters related solely to Art. 2, 4 & 8

• Petition court for subpoenas

• Records are confidential• Report apparent

violations to DA

Secretary of State:• Perform systematic

reviews of reports filed by L & LP

• Investigate complaints of violations related solely to Articles 2, 4, & 8

• Petition court for subpoenas

• Records are confidential• Report apparent

violations to DA

Violation ConsequencesViolation ConsequencesG.S. 120C-602G.S. 120C-602

CriminalCriminal• Class 1 misdemeanor for failure to register as

lobbyist, lobbyist principal (Art. 2) or violation of certain prohibitions/restrictions (Art. 3).

• If convicted, cannot lobby for 2 years.

CivilCivil• Secretary of State or Commission may levy civil

fines for violations up to $5,000/violation.

STATE ETHICS COMMISSIONContact Information

Location:• 424 N. Blount Street

Raleigh, NC 27601-1010 Mailing Address:• 1324 Mail Service Center

Raleigh, NC 27699-1324

Phone:• (919) 715-2071   Fax: • (919)715-1644 Email:• ethics.commission@doa.nc.gov

117

Website: www.ethicscommission.nc.gov