Maryland Ethics Law Update
The Maryland General Assembly enacted significant reforms to the Maryland Public Ethics Law effective November 1, 2001. Although the new laws affect primarily lobbyists, they will have an impact on the legislative efforts of individuals, businesses and all associations, including non-profit organizations.
Under the new laws, certain activities will trigger new reporting requirements, or may cause an individual or entity to be treated by the Ethics Commission as a lobbyist subject to the provisions of the Ethics Laws.
New Registration Requirements
As a threshold issue, it is important to understand what activities may cause an individual or entity to become a regulated lobbyist subject to the provision of the Ethics Laws. The test has changed. The existing law requires registration, if, during the lobbyist reporting period, which is from November 1st to April 30th and May 1st to October 31st, the person or entity either: (1) communicates with an official or employee of the legislative or executive branch for the purpose of influencing any legislative action and incurs expenses of at least $100 or earns at least $500 as compensation; or (2) spends $100 or more on any gifts, including meals, beverages and special events, on one or more officials or employees of the executive branch for the purpose of influencing any (“any” is recent addition to the law) executive action; or (3) is employed to influence executive action on a procurement contract that exceeds $100,000; or (4) spends at least $2,000 (including postage) for the purpose of soliciting others to communicate with an official to influence legislative or executive action.
The new laws add the following modifications and requirements to those listed above: (1) Any communication with officials or employees of the executive branch for the purpose of influencing the development or adoption of regulations or executive orders is incorporated into the restrictions. (2) Communication in the presence of officials or employees (legislative or executive branch) triggers the registration requirement if the person or entity communicating incurs expenses of at least $100 or earns at least $500 for trying to influence action. (3) Communication not in the presence of the elected official or employee (legislative or executive branch) triggers the registration requirement if the person or entity communicating earns $5,000 or more as compensation for trying to influence action. (4) Any person or entity compensated by a business entity to influence executive action to secure a business grant or loan from the State with a value of more than $100,000, must register as a lobbyist. This provision does not apply to an official or employee of the business entity seeking to secure the grant or loan. (5) The provision requiring registration for influencing executive action on a procurement contract that exceeds $100,000 does not apply to a “bona fide salesperson or commercial selling agency” employed for the purpose of soliciting a procurement contract. (6) Expenditures for salaries, contractual employees, telecommunications and electronic services, advertising and printing are now included in the $2,000 trigger when soliciting others to communicate with an official to influence legislative or executive action.
So, for example, an individual or entity who is hired by ABC Company to go talk to state officials about a Sunny Day Fund grant valued at more than $100,000 must register as a lobbyist. That same individual or entity would have to register as a lobbyist if he or it earned $500 or incurred expenses of $100 or more to meet with state officials about modifying the eligibility requirements for Sunny Day Fund grants in general.
Registration would also be required even if the individual or entity only wrote letters and/or telephoned officials and never actually met with any official in person, so long as the individual or entity was paid $5,000 or more.
The ABC Company would have to register as a lobbyist if it spent at least $2,000 during the reporting period (6 months) to, for example, enroll its dealers to go to Annapolis and lobby their delegates. The ABC Company and/or the individual would also have to register if either spent $100 or more during the reporting period on gifts or meals for officials or employees in connection with influencing executive or legislative action. If an employer, i.e. the ABC Company in the example above, employs a lobbyist but does not engage in any act that would require registration during a reporting period, then the employer does not have to register as a lobbyist as long as the regulated lobbyist that was hired by the employer reports all expenditures.
A lobbying registration form must be submitted no later than five days after taking any action that triggers registration and must be signed by the lobbyist and the employer.
A number of activities remain exempt from regulation under the Ethics Laws, including the actions of the news media in the ordinary course of business and the presentations of religious organizations to the extent their actions are intended to protect the religious practice. Also exempt are appearances before the General Assembly, or a committee or subcommittee, by elected officials or employees of the state, a political subdivision of the state, the United States, or an association engaged exclusively in representing counties or municipal corporations (i.e., MACO and MML). Anyone can make an appearance before the General Assembly, a committee or subcommittee or an executive unit if the appearance is at the specific request of the body involved or at the request of a lobbyist, so long as no other activity is involved. Professional services in drafting bills or rendering opinions to clients also are exempt.
Campaign Finance Disclosure Requirements
There are two new regulated campaign finance disclosure programs added to the law. One program is for individual lobbyists and the second applies to employers paying compensation to lobbyists.
Under the second, if a person or entity (other than a non-profit organization) spends $500 or more to employ a regulated lobbyist for any reason, and the person or entity contributes over $500 to a member/candidate for office in the General Assembly or to one of the four statewide offices, then the person or entity must file a semi-annual report with the State Board of Elections disclosing the amounts of the political contributions made. In other words, one may be required to file separate, bi-annual, campaign contribution reports if one has hired a lobbyist for any reason and has spent over $500 in political contributions toward any of the state offices named. In the example discussed above, all officers and directors of the ABC Company would have to begin reporting all campaign contributions over $500 to statewide candidates.
Criminal violations of the campaign finance laws are regulated under the election law, but civil sanctions are provided by the Ethics Laws administered by the State Ethics Commission.
The additional restrictions upon lobbyists are numerous and not covered in this ethics update. The new law requires the Ethics Commission to provide a training course for lobbyists that lobbyists must attend at least once every two years. Current law already prohibits lobbyists from soliciting campaign contributions for the benefit of state officials and from serving on fund-raising committees or political committees for these candidates.
The new law will also prohibit lobbyists from engaging in any activities that would assist an employer or others in organizing or establishing committees, and it prohibits lobbyists from forwarding tickets or contribution solicitations to a potential contributor.
The new law gives the Ethics Commission ample power to punish offenders. In addition to the ability to require additional reports and information from suspected offenders, the Ethics Commission is also authorized to impose an administrative fine not exceeding $5,000 for each violation of the Ethics Laws. Additionally, the Commission has the authority to suspend the registration of an individual lobbyist who knowingly and willfully violates the lobbying law, and can prohibit that person from lobbying activities and from receiving compensation for up to three years. The Commission may also revoke the registration of an individual registered lobbyist who has been convicted of bribery, theft or other crime based on acts arising from lobbying activities. The new law also changes the maximum fine that can be imposed from $1,000 to $10,000 for a misdemeanor conviction under the Ethics Laws.
Any lobbyist against whom the Commission has taken any action just described can seek judicial review or re-apply to the Commission for re-instatement. The Ethics Commission is hiring a special counsel to advise persons who are subject to the jurisdiction of the ethics commission.
This article is intended as a general summary of the law and should not be read as a substitute for the law itself. The broad implications of this piece of legislation will likely require ongoing interpretations by the Ethics Commission and the Maryland Attorney General.