On Friday, the Government Accountability Office (“GAO”) released its tenth annual report on compliance with and enforcement of the federal Lobbying Disclosure Act (“LDA”). The report summarizes the results of GAO’s random audits of lobbyists’ quarterly LD-2 activity reports and semi-annual LD-203 contribution reports, and provides a snapshot of the current enforcement environment.
There are a few key takeaways from this year’s report. First, the same compliance issues have continued to plague LDA registrants at about the same rates year after year. Some simple steps could bring many of these registrants into compliance. Second, the U.S. Attorney’s Office for the District of Columbia, tasked with enforcing the LDA, appears to have focused its efforts on “chronic offenders,” and has set up new processes to pursue them. Third, GAO, the Clerk of the House, and the Secretary of the Senate have all quietly adjusted their enforcement or audit procedures in the past few years, making it less likely that a registrant will be audited and less likely that certain types of offenders will be referred for enforcement.
GAO’s audits of LD-2 reports uncover a few simple compliance problems that, year after year, continue to trip up registrants. This year’s GAO report also shows a jump in the percentage of reports that were not backed up with proper financial and issue documentation. Those issues, and some simple reporting tips and reminders, are highlighted below.
- Income and Expense Documentation. This year, registrants were able to provide documentation for their lobbying income and expenses on only 83% of the reports GAO audited, down from 92% last year. GAO expects that registrants will be able to support their income and expenditures claims with financial records, such as invoices and receipts.
- Issue Documentation. Similar to the financial documentation issue, registrants were able to provide documentation supporting the issues they reported lobbying for only 77% of the reports GAO audited this year. This was down from 89% last year. GAO expects registrants to be able to show evidence of the issue lobbied, such as emails, calendar entries, agendas, or similar documents.
- Initial LD-2 Reports. As in prior years, about 10% of entities registering for the first time failed to file a quarterly report for the quarter in which they register. Organizations and individuals that file an LD-1 report for the first time in a quarter must also file an LD-2 report covering their lobbying activity in that quarter.
- Rounding. In another recurring problem area, 26% of reports failed to round expenses to the nearest $10,000. GAO speculates that this may be due to the wording of Form LD-2. The report emphasizes that rounding is the correct approach, as reinforced by new examples on rounding in the House and Senate LDA guidance.
- Former Positions. Each year, about 15-20% of reports may not properly disclose the prior government positions held by listed lobbyists. The first time a lobbyist’s name appears on a report for a client or employer, the report must disclose any Congressional or senior level executive branch position the lobbyist has held in the last twenty years.
Focus on Chronic Offenders
The U.S. Attorney’s Office for the District of Columbia (“USAO”) is tasked with enforcing the LDA, and does so via referrals from the House and Senate. Based on GAO’s report, the USAO appears to have focused its enforcement efforts on “chronic offenders,” those lobbyists who “repeatedly fail to file reports.” These chronic offenders are referred to an Assistant U.S. Attorney for follow-up action, and the USAO reports it has created a new notice for chronic offenders that lists all of their outstanding referrals. Per GAO, the USAO has four chronic offender cases under investigation, and expects to resolve all of them this year. Furthermore, it expects to open more chronic offender cases by the end of 2017.
Shifting Enforcement and Audit Activity
Until the 2015 report, GAO reported auditing 100 LD-2 reports each year. Then, in 2015, it audited only 80 LD-2s. The same is true in this year’s report for 2016. This indicates the drop to 80 audited reports is not an anomaly, but represents a change in methodology at GAO. The end result is that registrants are now slightly less likely to have their LD-2 reports audited than they were in the past. GAO did not change its LD-203 practice of auditing 160 LD-203 reports.
Another interesting development is that the House and Senate have not referred any individual lobbyists to the USAO for LD-203 noncompliance since 2013, and have not referred any lobbyist employer for LD-203 noncompliance since 2014. GAO does not explain why the House and Senate may have ceased referring these matters to the USAO. The USAO has, however, had difficulty enforcing LD-203 compliance against individual lobbyists because they have often left their employer and thus become more difficult to contact. It may be that the House, Senate, and USAO decided that resources dedicated to resolving LD-203 noncompliance would be better applied elsewhere.
The focus on bringing chronic offenders into compliance, and the relative simplicity of resolving some recurring compliance issues, means that now would be a good time for registrants to take stock of their lobbying reporting and recordkeeping practices to determine whether their organization is properly filing LD-2 and LD-203 reports.