Requested by: Michael C. Dotten
Heller Ehrman White & McAuliffe, LLP
Prepared by: Tammy Kempton, Juneau Branch Administrator
Date issued: November 25, 2003
Subject: Application of Lobbying
Law to Executive Branch Meetings
On October 20, 2003, Michael C. Dotten asked the Alaska Public Offices Commission (Commission) for an advisory opinion regarding two issues.The request stated that HellerEhrman represents Flint Hills Resources Alaska, LLC (Flint Hills) andFlint Hills has been negotiating with Williams Alaska Petroleum, Inc. for the purchase of its refining and other assets in Alaska. The two questions are:
1) Whether any Flint Hills employees who are negotiating for the purchase of royalty crude oil with any state official, other than legislators, are obligated to register as lobbyists, regardless of the amount of time spent on such endeavors and regardless of when such activities took place or take place in the future.
2) Whether Allen Wright, Flint Hills Vice President, Public Sector, is “a person who engages in the business, occupation or profession of influencing legislative or administrative action” and therefore whether he should register as a lobbyist regardless of whether he expends 40 hours in a 30-day period for the express purpose of influencing legislative or administrative action.
As a result of the meetings on July 31 and August 1, 2003, Tony Sementelli and Allen Lasater are required to register as lobbyists for 2003. Allen Wright is required to register as a lobbyist for 2003 because his job responsibilities specifically require that he engage in direct communications with public officials in efforts to influence legislative or administrative actions, and he has engaged in such actions in Alaska.
Sec. 24.45.041. Registration
(a) Before engaging in lobbying, a lobbyist shall file a registration statement on a form prescribed by the commission.
Sec. 24.45.141. Civil penalty: Late registration, filing
of required statements or reports.
A person who fails to register or to file a properly completed and certified report or statement, as applicable, within the time required by this chapter is subject to a civil penalty of not more than $10 a day for each day the delinquency continues as determined by the commission subject to right of appeal to the superior court. An affidavit stating facts in mitigation may be submitted to the commission by a person against whom a civil penalty is assessed. However, the imposition of the penalties prescribed in this section or in AS 24.45.151 does not excuse the lobbyist or employer of a lobbyist from filing statements or reports required by this chapter.
Sec. 24.45.161. Exemptions
(4) a person who appears before the legislature or either house, or standing, special, or interim committee, in response to an invitation issued under (c) of this section.
(c) Either house of the legislature by resolution, or both houses of the legislature by concurrent resolution, may invite a person to appear to speak before the legislature or either house with reference to any pending matter. A standing, special, or interim committee of either house of the legislature may, upon the concurrence of a majority of its members, extend an invitation to any person to appear before the committee to give information in regard to, or explain, any matter pending before the committee.
Sec. 24.45.171. Definitions (effective prior to September 15, 2003):
(1) “Administrative action” means the proposal, drafting, development, consideration, amendment, adoption, approval, promulgation, issuance, modification, rejection or postponement by any state agency of any rule, regulation, order, decision, determination, or any other quasi-legislative or quasi-judicial action or proceeding whether or not governed by AS 44.62 (Administrative Procedure Act).
(6) "Influencing legislative or administrative action"
means promoting, advocating, supporting, modifying, opposing,
or delaying or seeking to do the same with respect to any
legislative or administrative action by means including
but not limited to the provision or use of information,
statistics, studies, or analyses in written or oral form
(8) “Lobbyist” means
(A) a person who is employed and receives payments . . . to communicate directly or through the person’s agents with any public official for the purpose of influencing legislative or administrative action if a substantial or regular portion of the activities for which the person receives consideration is for the purpose of influencing legislative or administrative action; or
(B) a person who represents oneself as engaging in the influencing of legislative or administrative action as a business, occupation, or profession.
Sec. 24.45.171. Definitions (effective September 15, 2003):
(1) "Administrative action" means the proposal, drafting, development, consideration, amendment, adoption, approval, promulgation, issuance, modification, rejection, or postponement by any state agency of any rule, regulation, order, decision, determination, or any other quasi-legislative or quasi-judicial action or proceeding whether or not governed by AS 44.62 (Administrative Procedure Act); “administrative action” does not include
(A) a proceeding or an action to determine the rights or duties of a person under existing statutes, regulation, or policies;
(B) the issuance, amendment, or revocation of a permit, license, or entitlement for use under existing statutes, regulations, or policies by the agency authorized to issue, amend, or revoke the permit, license, or entitlement for use;
(D) procurement activity, including the purchase or sale of property, goods, or services by the agency or the award of a grant contract;
(E) the issuance of, or ensuring compliance with, an opinion or activity related to a collective bargaining agreement including negotiating or enforcing the agreement;
(2) "Agency" means a state department, division, commission, board, office, bureau, institution, corporation, authority, organization, committee, council or board in the executive branch, or independent of the executive branch, of state government;
(6) "influencing legislative or administrative action" means to communicate directly for the purpose of introducing, promoting, advocating, supporting, modifying, opposing, or delaying or seeking to do the same with respect to any legislative or administrative action;
(8) "Lobbyist" means a person who
(A) engages in the business, occupation, or profession of influencing legislative or administrative action; or
(B) receives wages or other economic consideration, including reimbursement of travel and living expenses, to communicate directly with any public official
(i) for the express purpose of influencing legislative
or administrative action; and
(ii) during more than 40 hours in any 30 day period in one calendar year.
2 AAC 50.507. Civil Penalty Assessments
(a) A registration statement or report required to be filed under AS 24.45.041, 24.45.051, 24.45.061, or 24.45.081 is delinquent if not received on or before the due date.
2 AAC 50.513. Agency Enforcement of Administrative Lobbying Activities
For the purpose of enforcing AS 24.45.171 (1) and 2 AAC 50, reportable administrative lobbying does not include those attempts to influence
* * *
(4) a proceeding at which an action is taken involving the purchase or sale of property, goods, or services by the agency;
(5) a proceeding at which an action is taken awarding a grant or contract.
2 AAC 50.545. Definitions
(b) "Administrative action," as defined in AS 24.45.171(1), does not include normal inquiries of administrative agencies, or routine actions made necessary by law, or the actions of a person who limits his lobbying activities to appearances before any public proceeding of a regulatory or administrative agency which conducts proceedings in open public hearing for which public notice is given and which creates a record of all proceedings and provides access to the public records or transcripts and to all material which is submitted as part of the record.
(f) “Substantial or regular,” as used in AS 24.45.171(8)(A), means that a person who is not employed specifically for the purpose of influencing legislative or administrative action, or a person whose contractual services are not specifically for the purpose of influencing legislative or administrative action, is considered to be a lobbyist if, within a 30-day period, he spends in excess of four hours in direct communication with a public official or legislative employee in activities directed toward influencing legislative or administrative action as defined in AS 24.45.171(1), (6), (7), and this chapter; when a person becomes a lobbyist upon meeting the tests of this section, he must register in accordance with AS 24.45.041 and must report in accordance with AS 24.45.051 and 2 AAC 50.
HellerEhrman represents Flint Hills Resources Alaska, LLC (Flint Hills) and has requested this formal advisory opinion on behalf of Flint Hills.
Flint Hills has been negotiating with Williams Alaska Petroleum, Inc. to purchase various Williams assets, including a refinery, located in Alaska.
As part of the process, Flint Hills employees have been meeting with the governor and other executive branch public officials to determine whether a future supply of state-owned royalty crude oil can be secured for the refinery.
The first meeting was held on June 13, 2003, between various executive branch officials and Flint Hills employees David Robertson, Tony Sementelli, Allen Lasater, and Allen Wright. The meeting’s subject was Flint Hills’ potential acquisition of the refinery, and included discussions of what the State might ask for in a crude oil sales contract. The meeting lasted approximately two hours. Flint Hills employees did not request any specific government action at that time.
On June 20 (approximately) Mr. Wright had a half-hour meeting with chief of staff James Clark to discuss local issues regarding Flint Hills’ acquisition of the refinery.
On July 25 and 26, Mr. Lasater met with Governor Murkowski for approximately one hour total to discuss ideas regarding the structure of a crude oil purchase contract.
A two-day meeting was held July 31 and August 1, 2003. Mr. Sementelli and Mr. Lasater met with various executive branch officials for a total of eight hours. The two primary topics were 1) the governor’s desire for wholesale refined petroleum products pricing parity between Anchorage and Fairbanks, and 2) the necessity for terms assuring such pricing in any contract for the sale of state-owned royalty crude oil.
Following the meeting, the governor announced that Alaska was entering into contract negotiations with Flint Hills.
Since that time, there have been multiple meetings between Flint Hills employees and various executive branch public officials. These are ongoing negotiations on the terms of a crude oil purchase contract between the State and Flint Hills.
“Mr. Wright’s duties, include, among many others, communicating with public officials in many states in which Flint Hills does business.”
Mr. Wright has had separate meetings with the governor and executive branch public officials regarding Flint Hills’ purchase of the refinery and the contents of the royal oil contract.
The Commission examined a similar fact pattern when it issued Formal Advisory Opinion No. 03-03 LOB, requested by BP Exploration (Alaska), Inc. The distinguishing factor in that opinion is that BP’s employees were meeting with the Governor and his administration to discuss implementation of the Stranded Gas Development Act. In that opinion, the Commission found that “[t]he meetings your letter describes would be lobbying activities requiring BPXA employees to register, except for the provisions of the Stranded Gas Development Act.” The Stranded Gas Development Act mandates that executive branch officials meet with employees of the companies who will be the primary sponsors of the project. Because no comparable statute required the meetings between Flint Hills and public officials, there is no exemption and the activity is covered as lobbying. The lobbying activity must be reported before the lobbying activity can take place if the employee lobbying is an employee whose assigned or normal duties include lobbying activity. If the employee’s normal job duties do not include lobbying activity, the activity is reported after it reaches the reporting threshold.
This is the first time the Commission has examined the dividing line between lobbying activity that requires registration and reporting, and activity attempting to influence administrative action that is exempt from regulation under AS 24.45.171(a) and 2 AAC 50.513. To the extent possible the Commission believes that drawing a bright line test between the two activities will benefit not only Flint Hills but other employers who may find themselves in the same circumstances.
It does not appear that Flint Hills employees were attempting to influence administrative action at the June 13 meeting. That initial meeting appears to have been introductory and informational, thus attendance at that meeting was not lobbying. Even if it was lobbying, the meeting lasted for less than four hours and Flint Hills employees, except for Mr. Wright, did not meet with State officials again in that thirty-day period.
On July 25 and 26, Mr. Lasater had meetings with Governor Murkowski totaling approximately one hour. The subject was the “State of Alaska’s and FHR’s ideas regarding structure on a crude oil purchase contract.” Because Flint Hills’ refinery purchase could not proceed without a State contract for the purchase of Alaska’s royalty oil, and because the State had not yet agreed to contract negotiations, this meeting was part of the process for obtaining that agreement. This meeting falls with the definition of lobbying and, assuming Mr. Lasater’s job responsibilities do not specifically include lobbying, is attributable to the four-hour lobbying limit that was in effect at that time.
The subsequent two-day meeting also proceeded contract negotiations, as evidenced by the governor’s announcement following the meeting that the State was entering into negotiations with Flint Hills. It would appear that Flint Hills participated in the two-day meeting because it could not reach its goal of purchasing Williams’ Alaska assets without assurances of obtaining a multi-year contract with the State to purchase its royalty oil. The administrative action that Flint Hills was attempting to influence was the State’s agreement that it would enter into contract negotiations with Flint Hills. That Flint Hills achieved its goal was verified by the governor’s announcement. It is not, of course, necessary that a person actually influence administrative action to be a lobbyist. It is enough that the attempt is made.
The two-day meeting lasted approximately eight hours and was conducted prior to the statutory changes to the definition of a lobbyist. Thus, the Flint Hills employees who attended are within the purview of the lobbying law and are required to register. They met with public officials for more than four hours in a thirty-day period (AS 24.45.171(8); 2 AAC 50.545(f)) and their activities did not fall within the administrative activities exemptions (AS 24.45.171(1), (6); 2 AAC 50.513).
Meetings following the July 31 / August 1 meeting were and continue to be contract negotiations. Because there is an exemption in the law for persons involved in such activities, Flint Hills employees negotiating the contract with public officials are not required to register. It may be relevant to note that after the Governor announced that the State was entering into contract negotiations with Flint Hills, the people – both for the State and for Flint Hills – attending the subsequent meetings were not those who attended the pre-contract negotiation meetings.
If a contract results from the current negotiations, the law requires that it be ratified by the legislature. Flint Hills employees who meet with legislators and legislative employees to discuss the contract and/or its ratification will not be exempt under the lobbying law, unless they are specifically invited by the full legislature, either house, or a standing or special committee to appear and testify. As 24.45.161(a)(4) and (c). Absent an invitation, Flint Hills employees who communicate with legislators regarding the contract will be required to register as lobbyists once their activities total forty hours in a thirty-day period. Flint Hills employees whose job descriptions specifically include lobbying are required to register prior to lobbying.
Because Mr. Wright communicates directly with public officials on behalf of Flint Hills, he is required to register with the Commission before undertaking lobbying activities in Alaska. Because the June 13 meeting was not lobbying, Mr. Wright was not required to register before attending that meeting. However, he should have registered prior to his June 20 meeting with James Clark, chief of staff for the governor. According to your letter, the subject of the June 20 meeting was “various local issues” regarding Flint hills’ potential acquisition of the Williams’ refinery. Because Flint Hills needed the State to agree to enter into contract negotiations for the purchase of the State’s royalty oil, it appears that a discussion of “various local issues” was part of the process of getting the State to agree to those negotiations.
1. When an organization’s employees meet with the Governor and his administration for the purpose of persuading the State to enter into contract negotiations, the employees’ activities fall within the purview of the lobbying law. Once the State and the organization have agreed to enter into contract negotiations, the organization’s employees participating in the subsequent negotiations are exempt from the lobbying law.
2. Prior to September 15, 2003, employees not employed
specifically to lobby who lobbied
on behalf of their employers were required to register as lobbyists when they spent more than four hours in a thirty-day period lobbying. AS 24.45.041, AS 24.45.171(8), 2 AAC 50.545(f). Tony Sementelli and Allen Lasater are required to register as lobbyists for 2003 as a result of meetings they attended between July 25 and August 1, 2003.
2. Employees employed specifically to lobby are required to register as lobbyists before engaging in lobbying activities. AS 24.45.041, AS 24.45.171(8), 2 AAC 50.545(f). Allen Wright was required to register as a lobbyist prior to his June 20, 2003 meeting with chief of staff James Clark.
3. Flint Hills employees who lobby the legislature will be required to register as lobbyists once they reach the forty-hour in thirty-day limit, unless they are employed specifically to lobby, i.e., attempt to influence the actions of public officials. Those employees must register prior to lobbying the legislature.
4. An individual who fails to register when required is subject to a civil penalty of $10 per day for each day the delinquency continues. AS 24.45.141. Thus Messrs. Sementelli and Lasater are each subject to a continuing penalty of $10 per day until they submit their lobbyist registration statements. Mr. Wright submitted his registration on October 31, 2003, subjecting him to a civil penalty assessment of $1,230.00. However, the Commission, under the authority of AS 24.45.141, is waiving the penalties because Flint Hills is an inexperienced filer and evidenced a good faith effort to comply with Alaska’s laws by requesting this formal advisory opinion when it realized its employees may be subject to the lobbying statutes.
The Commission approved the advice in this letter by an affirmative vote of 4-0 on December 4, 2003. The advice in this opinion applies only to the specific activity for which the advice was requested.
A copy of the original letter requesting the above advisory opinion is available upon request at the Alaska Public Offices Commission. 907/276-4176.