Proposition C – the ballot measure aimed at regulating “indirect” lobbying – passed overwhelmingly in San Francisco on November 3, 2015, with nearly 75% of voters in favor. While the City’s Lobbyist Ordinance already regulates lobbyists who are paid to directly contact City officials, this new ordinance allows the City to further regulate “expenditure lobbyists” who are individuals, businesses, and organizations that urge others to directly contact City officials in order to influence local legislative or administrative action.
These new regulations are designed to promote open government and greater transparency in decision-making. However, the new registration and disclosure requirements could have a chilling effect on public interest, participation, and advocacy efforts in San Francisco. This is especially true for direct lobbyists and permit consultants who are already subject to reporting and disclosure requirements under the Lobbyist Ordinance (For a discussion about direct lobbyists and permit consultants, see “New Lobbyist Ordinance Amendments: Too Much of a Good Thing”. With that said, San Francisco voters made clear their desire for additional oversight of lobbying activity in San Francisco. This ordinance will become operative on February 1, 2016.
Here’s what you need to know about the new regulations:
Expenditure Lobbyist Qualification Threshold
An expenditure lobbyist is an individual, business, non-profit organization, labor union or trade association that makes payments totaling $2,500 or more within a calendar month to solicit, request, or urge other persons to contact City officials in order to influence local legislative or administrative action.
A number of activities count toward the $2,500 threshold, including making payments for public relations, media relations, advertising, public outreach, research, investigation, reports, analyses, or studies. On the other hand, a number of activities do not apply, including payments made to a registered lobbyist who directly contacts City officials, payments made to an organization for membership dues, payments made by an organization to distribute communications to its members, and payments made by a client to a representative to appear on the client’s behalf in a legal proceeding before a City agency.
Let’s consider a few scenarios. Have you spent at least $2,500 within a month to transport speakers to Board of Supervisors meetings? If so, then you would qualify as an expenditure lobbyist. Have you spent at least $2,500 within a month buying advertising that urges members of the public to contact City officials in order to influence local legislative or administrative action? If so, then you would qualify as an expenditure lobbyist. Have you donated at least $2,500 within a month to nonprofit organizations in exchange for their direct lobbying activities? If so, then you would qualify as an expenditure lobbyist.
Expenditure Lobbyist Registration and Reporting
The new law requires expenditure lobbyists to register with the Ethics Commission within five business days after qualifying as an expenditure lobbyist, and pay an annual $500 registration fee. Employees of nonprofit organizations are exempt from paying the fee. At the time of registration, the expenditure lobbyist must provide information about its business, including the nature and purpose of the business and names of corporate officers, including those officers who are charged with authorizing the lobbying payments.
Expenditure lobbyists are also required to file monthly reports with the Ethics Commission and disclose information about its lobbying activities. The reports must include information about:
- The legislative or administrative action that the lobbyist sought to influence, including, if any, information about the resolution, motion, appeal, application, petition, nomination, ordinance, amendment, approval, referral, permit, license, entitlement, or contract;
- The total amount of payments made during the reporting period to influence the action;
- Each payment of $1,000 or more made during the reporting period, including the payment date, the name and address of each person receiving the payment, a description of the payment, and a description of the consideration for which the payment was made; and
- All campaign contributions of $100 or more made or delivered by the lobbyist, or at the lobbyist’s request, to a City official during the reporting period, a candidate for City office, a committee controlled by a City official or candidate, a committee primarily formed to support or oppose a City official or candidate, or a committee primarily formed to support or oppose a measure to be voted on only in San Francisco.
Expenditure lobbyists are also now required to disclose information about campaign contributions, including the contribution amount, the contributor’s name, the date on which the contribution was made, the contributor’s occupation, the contributor’s employer or, if self-employed, its business name, and the committee to which the contribution was made.
Lastly, as with direct lobbyists who are already regulated by the Lobbyist Ordinance, this measure prohibits expenditure lobbyists from making gifts over $25 to City officials, influencing a City issue for the sake of personal employment, or evading the City’s rules and regulations through agents or employees.
Noncompliance with these regulations and reporting requirements could result in late fees of $50 per day, administrative fines up to $5,000 per violation, and/or civil penalties up to $5,000 per violation.
The issues discussed in this update are not intended to be legal advice and no attorney-client relationship is established with the recipient. Readers should consult with legal counsel before relying on any of the information contained herein. Reuben, Junius & Rose, LLP is a full service real estate law firm. We specialize in land use, development and entitlement law. We also provide a wide range of transactional services, including leasing, acquisitions and sales, formation of limited liability companies and other entities, lending/workout assistance, subdivision and condominium work.
