The countless lobbyists urging Congress to include relief for their clients in the third coronavirus legislative package (“COVID 3.0”) currently pending in Congress may soon be unemployed, at least if the House version becomes law.

The Take Responsibility for Workers and Families Act (H.R. 6379), proposed by Democrats in the House of Representatives on Monday (“House bill”), prohibits “[a]ny corporation that receives Federal aid related to COVID-19” from “carry[ing] out any Federal lobbying activities,” until the corporation has “repaid” all COVID-related aid to the Federal government.

The temporary ban on federal lobbying appears in a part of the 1,432-page bill that imposes a number of “conditions” on corporations that may receive aid under the legislation.  In addition to refraining from federal lobbying, if the House bill becomes law, corporate recipients of COVID-related relief may not pay executive bonuses, pay “any type of compensation” to an executive who leaves the company, buyback any stocks of the corporation, or pay any dividends.

How the lobbying ban would operate in practice is unclear.  For starters, what does it mean to “carry out” lobbying activities?  Under the Lobbying Disclosure Act, “lobbying activities” includes “lobbying contacts”—communications with certain covered government officials on behalf of a client regarding “the formulation, modification, or adoption of Federal legislation” or “the formulation, modification, or adoption of a Federal rule, regulation, Executive order, or any other program, policy, or position of the United States Government—but also “efforts in support of such contacts.”  2 U.S.C. § 1602(7).  Does this mean that any activity related to a government policy that affects the company must cease?  Could the company conduct research for lobbying that will take place after the aid is repaid?

The legislation also raises questions about corporate participation in trade associations that employ lobbyists.  Would this provision ban a corporation from joining and paying due to a trade association?  What about strategizing with the trade association about its own lobbing?  In light of the broad definition of “lobbying activities” under the LDA, the scope of this lobbying ban could be similarly broad.

In addition to the lobbying provisions, which apply only until the COVID-related aid is “repaid,” the House bill would impose permanent conditions and reporting requirements on certain aid recipients.  The bill requires certain so-called “accelerated filers”—a term that the bill directs the Securities and Exchange Commission (SEC) to define—to file detailed disclosure reports with the SEC, disclosing, among other things, all “expenditures for political activities.”  Such reports would include details about independent expenditures, electioneering communications, and trade association and other membership dues paid by the corporation, and would be made available to shareholders and to the public on a quarterly basis.

These provisions are one part of a rapidly developing COVID-19 relief package that is under active negotiation by both parties and both chambers of Congress.  We will continue to monitor whether these provisions advance as part of the COVID 3.0 legislation, and will be ready to advise clients on their impact should they become law.

Tags: campaign finance, coronavirus, corporate political activity, COVID-19, disclosure, lobbying
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Photo of Matthew Shapanka Matthew Shapanka

Matthew Shapanka practices at the intersection of law, policy, and politics. He advises clients before Congress, state legislatures, and government agencies, helping businesses to navigate complex legislative, regulatory, and investigations matters, mitigate their legal, political, and reputational risks, and capture business opportunities.

Drawing…

Matthew Shapanka practices at the intersection of law, policy, and politics. He advises clients before Congress, state legislatures, and government agencies, helping businesses to navigate complex legislative, regulatory, and investigations matters, mitigate their legal, political, and reputational risks, and capture business opportunities.

Drawing on more than 15 years of experience on Capitol Hill and in private practice, state government, and political campaigns, Matt develops and executes complex, multifaceted public policy initiatives for clients seeking actions by Congress, state legislatures, and federal and state government agencies. He regularly counsels and represents businesses in legislative and regulatory matters involving intellectual property, national security, regulation of critical and emerging technologies like artificial intelligence, connected and autonomous vehicles, and other tech policy issues. He also represents clients facing congressional investigations or inquiries across a range of committees and subject matters.

Matt rejoined Covington after serving as Chief Counsel for the U.S. Senate Committee on Rules and Administration, where he advised Chairwoman Amy Klobuchar (D-MN) on all legal, policy, and oversight matters before the Committee, particularly federal election and campaign finance law, Federal Election Commission nominations, and oversight of the legislative branch. Most significantly, Matt led the Committee’s staff work on the Electoral Count Reform Act – a landmark bipartisan law that updates the procedures for certifying and counting votes in presidential elections—and the Committee’s bipartisan joint investigation (with the Homeland Security Committee) into the security planning and response to the January 6th attack.

Both in Congress and at Covington, Matt has prepared dozens of corporate and nonprofit executives, academics, government officials, and presidential nominees for testimony at congressional committee hearings and depositions. He is a skilled legislative drafter who has composed dozens of bills and amendments introduced in Congress and state legislatures, including several that have been enacted into law across multiple policy areas. Matt also leads the firm’s state policy practice, advising clients on complex multistate legislative and regulatory matters and managing state-level advocacy efforts.

In addition to his policy work, Matt advises and represents clients on the full range of political law compliance and enforcement matters involving federal election, campaign finance, lobbying, and government ethics laws, the Securities and Exchange Commission’s “Pay-to-Play” rule, and the election and political laws of states and municipalities across the country.

Before law school, Matt served in the administration of former Governor Deval Patrick (D-MA) as a research analyst in the Massachusetts Recovery & Reinvestment Office, where he worked on policy, communications, and compliance matters for federal economic recovery funding awarded to the state. He has also staffed federal, state, and local political candidates in Massachusetts and New Hampshire.

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