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.