State of Alaska

Department of Administration

Alaska Public Offices Commission

Alaska Department of Administration, Alaska Public Offices Commission

AO 08-06-LOB

Number:           AO 08-06-LOB

Requested by:   Chris Wyatt, BP Exploration (Alaska), Inc.
                        Attorney for Employer of Lobbyist

Prepared by:    Patricia Ware
                       Juneau Branch Administrator

Date issued:      September 26, 2008

Subject:           What are employers of lobbyists required to report and in what level of detail for employees performing duties in support of lobbying but not registered as lobbyists?

This letter responds to your request for an advisory opinion about the level of detail required in reports filed by an employer of a lobbyist.  Answers to your July 25 questions are combined with your August 4 questions and re-stated below. The questions have been grouped by topic for ease of response.

Question 1: Must BP report on Schedule B of its quarterly reports to APOC, the names, addresses and other information referenced in AS 24.45.061(b)(3) for its “BP Staff”? Your request defines “BP staff” as “employees within BP who do not communicate directly with public officials but who nevertheless engage in activities that in the broadest sense could be viewed as assisting these activities.”

Question 2: What level of financial detail does AS 24.45.061(b)(3) require for non-lobbyist employees that BP reports individually on Schedule B of its quarterly reports?

  1. What are the criteria for determining whether compensation to these employees is an expenditure that must be reported under AS 24.45.171(13)(B)? Does this and the reference to “direct costs” in 2 AAC 50.545(e) have the same meaning as that term is understood from an accounting perspective?
    (Note: This advisory opinion responds to BP’s request to clarify what employers are required to report under AS 24.45.171(13)(B) and the meaning of direct cost in 2 AAC 50.545(e). The AO does not discuss accounting terms or how direct costs are captured by BP but focuses on costs and expenses that employers must report for non-registered employees.)
  2. Must compensation for these employees who meet with or testify before public officials be itemized to indicate the date and amount of compensation for each such meeting or testimony or is it permissible to aggregate and report the total amount of payments to an employee for such activities during the quarter?
  3. Must the purpose of the work by these employees be stated even though AS 24.45.061(b) appears to require only the total amount paid for lobbying activity during the reporting period (the quarter) and the general purpose of the payment?

Short Answer

The short answer to your first question is yes. BP must report on Schedule B of its quarterly reports to APOC the names, addresses and other information referenced in AS 24.45.061(b)(3) for each of its employees performing services in support of BP’s lobbying goals.  AS 24.45.171(13) defines “payment to influence legislative or administrative action” broadly. Payments made “in support of or assistance to a lobbyist or the lobbyist’s activities” and payments made to employees “for or in connection with direct communication with a public official” must be reported by all employers of lobbyists under AS 24.45.061.

In answer to your second question, an employer of a lobbyist must report payments made to any employee who directly supports or assists the employer’s lobbying activity whether or not the employee testifies or meets with a public official, but need not report general overhead expenses. For all employees who must be reported for on the Schedule B, employer of a lobbyist report form, AS 24.45.061 and AS 24.45.171 requires the employer to report actual gross wages paid and not use a fictional flat rate for classes of employees. The total payments made during the period must be reported and the employee paid the wages must be identified. There is no requirement to identify the specific work performed when wages or compensation is reported.

History

On July 15, 2008 BP submitted a request for an advisory opinion regarding the reporting requirements for employees who perform work in support of lobbying but who do not meet the statutory criteria for registering as a lobbyist. On July 25, 2008, APOC issued AO-08-06-LOB in response to these questions and the opinion was scheduled for the August commission meeting. On August 4th, BP asked for further clarity about reporting requirements based on the draft AO and APOC and BP agreed to delay commission consideration of AO-08-06-LOB so all unanswered questions could be addressed. This is the revised advisory opinion responding to BP’s additional questions regarding reporting requirements for employees not registered as lobbyists.  

Facts

BP has one registered lobbyist in 2008, which is down from 7 registered lobbyists reported by the end of 2007. As an employer of lobbyists, it is subject to the reporting requirements of AS 24.45.061. BP reports expenditures and compensation for its registered lobbyist. As an employer of a lobbyist, BP must report quarterly all payments to the lobbyist in accordance with the reporting requirements in AS 24.45.061(b)(6).  This would cover payments to any person qualifying as a lobbyist, including an employee performing lobbying duties over ten hours in a 30-day period.  AS 24.45.171(11)(A).  This information is reported on APOC form 24-4, employer of lobbyist report form, schedule A.  But the questions here do not concern payments to lobbyists, but rather, payments to others who support that work. 

BP employs other staff who interact with public officials on a more limited basis and whose primary roles are as subject matter experts or upper level managers. These staff members are not registered as lobbyists and their employment duties don’t usually include direct communications with public officials to influence legislative or administrative action. (AS 24.45.171(8), (10).)  BP also employs a group of staff that do not communicate directly with public officials but who provide a range of services that support BP’s lobbying efforts. Examples include staff members serving on a strategy committee regarding BP’s legislative or administrative actions; staff members not serving on the committee but providing input regarding BP’s legislative or administrative strategies; staff members providing administrative and research support to lobbyists and non-lobbyists related to BP’s legislative and administrative goals.

BP currently reports payments to its employees who are not registered as lobbyists on APOC form 24-4, Schedule B. BP has previously reported the information in the aggregate for all non-lobbyist employees who provide services that support BP’s lobbying goals. The aggregate information does not list names of individual employees or the date or purpose of the expenditure.

In its most recent employer of lobbyist report, submitted July 31, BP did identify the name of each employee supporting lobbying efforts and reported for each employee an amount for compensation paid for lobbying related activity during the report period.  But the amount was not the actual gross wages paid.  Instead, BP provided a fictional rate for each of two classes of employees.  

Analysis

Employers of lobbyists are required to report payments to registered lobbyists under AS 24.45.061(b)(6). Required information is reported on APOC’s employer of lobbyist report form 24-4, Schedule A for each registered lobbyist. Additionally, AS 24.45.061 (b)(3) requires employers to report “the total amount of payments made to influence legislative or administrative action during the period.” 

At issue is whether BP should report differently for BP employees who communicate directly with public officials as part of their activities supporting BP’s lobbying agenda than it reports for BP employees whose support of lobbying activities don’t entail actual communications with public officials. Although the definition of “communicate directly” in AS 24.45.171(4) is a required component of the lobbyist definition in AS 24.45.171(11)(A), direct communication is not a factor in the statutory reporting requirements for employers of lobbyists in AS 24.45.061(b) (3).  That requirement is for employers of lobbyists to report “the total amount of payments made to influence legislative or administrative action during the period.”   

AS 24.45.171(13)(B) defines “payment to influence legislative or administrative action” as “a payment in support of or assistance to a lobbyist or the lobbyist's activities, including but not limited to the direct payment of expenses incurred at the request or suggestion of the lobbyist;” (emphasis added). “A payment in support of or assistance to a lobbyist or the lobbyist's activities” is further defined in 2 AAC 50.545(e) to mean “direct costs and expenses incurred by the employer in the current research, drafting, preparation, and adaptation of documents for use by the lobbyist for the purpose of influencing legislative or administrative action.”  We are not aware of any basis for the conclusion that the legislature intended to limit reporting to the payment of expenses incurred by vendors or other non-employees, as BP suggests. Certainly the language in AS 24.45.171(13)(B) is broader: “direct payment of expenses incurred …” is provided as one example of a payment that may support or assist a lobbyist in lobbying activities.  Nothing in 2 AAC 50.545(e) suggests differently:  BP employees who provide advice on legislative or administrative strategy or provide administrative or research support are a direct cost or expense that is in support of or assistance to BP’s lobbyist. As such, BP’s payments to these employees are reportable.

Further support for requiring BP to disclose payments, including employee compensation, to its employees in accordance with AS 24.45.061(b)(3) is found in AS 24.45.171(13)(D), which requires employers to report “compensation, payment, or reimbursement for the services, time, or expenses of an employee for or in connection with direct communication with a public official;” (emphasis added).  The term “in connection with,” expands the reporting requirement from expenses for direct communication to expenses associated with the communications.

BP has asked for clarification of the term “direct cost” in 2 AAC 50.545(e) and how it relates to APOC’s determination that BP must report compensation costs for non-registered employees providing services in support of lobbying. The question is whether “direct costs or expenses” include payments to BP employees who neither directly associate with the agency’s lobbying efforts nor directly communicate with a public official. Possible examples of employees in this category are janitorial staff, payroll staff, webmaster/technology staff, or administrative staff not linked to registered lobbyists or any specific project supporting the agency’s lobbying agenda.

There is no statutory or regulatory definition for “direct costs and expenses” in 2 AAC 50.545(e), but the regulation limits costs and expenses to those for “current research, drafting, preparation and adaptation of documents for use by the lobbyist for the purpose of influencing legislative or administrative action.” The limitation to direct support for the lobbyist should exclude such general overhead expenses, as janitorial or payroll staff.   This reading is consistent with the language of AS 24.45.061(b)(3). APOC has not historically required employers to report overhead expenses

Whether particular costs or expenses are covered will require an examination of the work and its link to lobbying. The litmus test for whether payments to non-registered employees must be reported hinges on whether that employee is engaged in activities that:

  1. influence legislative or administrative action, AS 24.45.061(b)(3);
  2. provide support or assistance to a lobbyist or lobbyist’s activities, AS 24.45.171(13)(B); or
  3. are for or in connection with direct communication with a public official, AS 24.45.171(13)(D).

The purpose of the lobbying disclosure law is to ensure transparency. The legislative intent, as stated in AS 24.45.011, is that “the people are entitled to know the identity, income, expenditures, and activities of those persons who pay, are paid or reimbursed for expenses, or who make expenditures or other payments in an effort to influence legislative or administrative action” AS 24.45.011.  If BP makes an expenditure as part of the company’s efforts “to influence legislative or administrative action,” the public is entitled to know the expenditure and the surrounding details of that expenditure. BP’s previous practice of reporting compensation in a single aggregate amount, while providing some information to the public, falls short of meeting the requirements of AS 24.45.061.

AS 24.45.061(b)(3) requires entities employing a lobbyist to disclose “the total amount of payments made to influence legislative or administrative action during the period, and the name and address of each person to whom these payments have been made during the period by the maker of the report, together with the date and amount.”

The requirement to report payments to staff performing support functions is reinforced by 2 AAC 50.545(e). Payments include “direct costs and expenses incurred by the employer in the current research, drafting, preparation and adaptation of documents for use by the lobbyist for the purpose of influencing legislative or administrative action.” Nothing in this regulation excludes employee compensation as a “direct cost.”  Additional support in regulation for reporting employee compensation is found in 2 AAC 50.450, which specifies that, for both lobbyists and employees covered under AS 24.45.161, disclosure must include “gross wages paid or payable.” The regulation allows for prorating of this cost, as applicable. The only portion of employee compensation not reportable is “routine fringe benefits.” It is noteworthy that the regulation distinguishes between benefits provided specifically to lobbyists and employees covered under AS 24.45.061 and those “made on behalf of all employees.” This supports the Legislative Declaration of Purpose found in AS 24.45.011. Specifically, the public is entitled to know the identity of employees who are being compensated for activities performed in support of lobbying. 

The level of detail required for non-registered lobbyists on Form 24-4, schedule B is specified in AS 24.45.061(b)(3), which requires an employer to disclose “the total amount of payments made to influence legislative or administrative action during the period, and the name and address of each person to whom these payments have been made during the period by the maker of the report, together with the date and amount.”

Reports must also include the name, address and amount of the payment made to each person during the report period. The statute requires the reporting of gross wages, which can be pro-rated so only compensation associated with lobbying is reported, for each employee for the entire reporting period.  The statute doesn’t specify that the address be an employee’s residence and it is sufficient to provide the company address for BP employees.

But AS 24.45.061(b)(3) contains an apparent inconsistency. It appears to require employers to report the total amount of payments made to each person to influence legislative or administrative action during the reporting period while, at the same time, requiring the disclosure of the date and amount of payments, which would seem to require the reporting of the date and amount of each payment to an employee during the reporting period, rather than the total payment.  We believe that a more reasonable interpretation of the requirement to report the “date and amount” of payments would be to require the disclosure of the date and amount of payments to vendors or contractors, but for employees on payroll, and thus receiving regular payments from the employer throughout the reporting period, it would be sufficient to report a single amount per employee of the gross wages paid for covered activity during the reporting period.  

It is noteworthy that AS 24.45.061(b)(6) requires employers only to report the “total amount paid to each lobbyist and the portion of that amount, if any, that was paid for specific purposes, including salary, fees, and reimbursement for expenses;” (emphasis added). It would be inconsistent for the legislature to intend the reporting requirements for employees performing work in support of lobbying to be more stringent than those for registered lobbyists, whose primary role is to influence legislative or administrative action. Further, requiring payroll breakdowns for each employee would be burdensome for employers, and the public interest in disclosure does not seem to be served by providing employee information each quarter in two-week subtotals, if payroll period is bi-monthly, for example.

Compensation cannot be reported at a fictional “flat rate” of $150 for managers or $50 for other employees, as suggested by BP in its request. There is no statutory basis to avoid reporting actual wages. In fact, regulation 2AAC 50.540 requires the reporting of gross wages when reporting compensation of employees. The requirement is to report who is being paid and how much. A fictional rate is not accurate and does not satisfy this requirement.

In summary, the information provided and the statutes and regulations support the requirement that BP must report the names, business address and total amount of payments made to each employee during the report period “to influence legislative or administrative action.” 

Conclusion

BP Exploration (Alaska) Inc. must report the names, addresses, and total amount of payments made to each BP employee who performs functions that “influence legislative or administrative action” in accordance with AS 24.45.061(b)(3). There is no reporting requirement for support staff whose functions are unrelated to influencing legislative or administrative action or in support of or assistance to a lobbyist or lobbyist’s activities. Payments are reportable on APOC form 24-4, Schedule B and should be listed on the “in house lobbying costs” section of the form for BP employees. The address listed may be the company address. Payments must be based on actual wages to an individual employee rather than a fictional flat rate. 

Only the Commission has the authority to approve an advisory opinion.  2 AAC 50.905.  The Commission will rule on staff’s proposed advice at its next regularly scheduled meeting, set for September 24-26.   The Commission may approve, disapprove, or modify the proposed advice.  An advisory opinion must be approved by an affirmative vote of at least four members or it will be considered disapproved.  Both staff’s proposed advice and the Commission’s final advisory opinion apply only to the specific facts and activity for which the advice was requested.  If you wish to testify when the Commission considers this matter, please contact me no later than Monday, September 15.

If you rely on staff’s proposed advisory opinion in good faith and the Commission subsequently rejects the proposed advice, staff will take no enforcement action on your activities up to that point if you acted under the specific facts described.  If you have any additional questions or would like to discuss this proposed advice, please contact me at (907) 465-4865.

The Commission approved the advice in this letter by an affirmative vote of 4-0 on September 26, 2008. 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. Call (907)276-4176 or (800)478-4176.

Law

AS 24.45.011, the lobbying law’s legislative purpose declaration, states “… and that the people are entitled to know the identity, income, expenditures, and activities of those persons who pay, are paid or reimbursed for expenses, or who make expenditures or other payments in an effort to influence legislative or administrative action.”

AS 24.45.061 Reports by employers of lobbyists

(a) Within 15 days after employing, retaining, or contracting for the employment or retention of a lobbyist, the person who employs, retains, or who contracts for the services of a lobbyist shall file a statement with the commission authorizing or verifying that employment, retention, or contract for lobbying services.

(b) A person who employs, retains, or who contracts for the services of one or more lobbyists, whether independently or jointly with other persons, and who directly or indirectly makes payments to influence legislative or administrative action shall file a quarterly report containing

  • (1) the full name, complete business address and telephone number of the person making the report;
  • (2) information sufficient to identify the nature and interests of the person making the report;
  • (3) the total amount of payments made to influence legislative or administrative action during the period, and the name and address of each person to whom these payments have been made during the period by the maker of the report, together with the date and amount;
  • (4) the date and nature of any gift exceeding $100 in value made to any public official and the full name and official position of the recipient of each gift;
  • (5) a general description of the legislative or administrative action that the person making the report has attempted to influence;
  • (6) the name of each lobbyist employed or retained by the person making the report, together with the total amount paid to each lobbyist and the portion of that amount, if any, that was paid for specific purposes, including salary, fees, and reimbursement for expenses; and
  • (7) a notice of termination if the person filing a report has ceased employing or retaining a lobbyist registered under this chapter and if this report constitutes the final report of the lobbyist's activities on behalf of the maker of the report.
(c) Upon request of the commission, information required under this section shall be submitted electronically.

AS 24.45.171(1) defines "administrative action" as:

“the proposal, drafting, development, consideration, amendment, adoption, approval, promulgation, issuance, modification, rejection, or postponement by any state agency of any rule or regulation, 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, regulations, 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;
  • (C) the enforcement of compliance with existing law or the imposition of sanctions for a violation of existing law;
  • (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;&rdquo
  • ;

AS 24.45.171 (4) states “communicate directly” means “to speak with a legislator, legislative employee, or public official;

  • (A) by telephone;
  • (B) by two-way electronic communication; or
  • (C) in person;”

AS 24.45.171 (9) states that “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;”

AS 24.45.171(10) defines "legislative action" as “the preparation, research, drafting, introduction, consideration, modification, amendment, approval, passage, enactment, defeat, or rejection of any bill, resolution, amendment, motion, report, nomination, appointment, or other matter by the legislature, or by a standing, interim, or special committee of the legislature, or by a member or employee of the legislature acting in an official capacity; it includes, but is not limited to, the action of the governor in approving or vetoing a bill or the action of the legislature in considering, overriding, or sustaining that veto and the action of the legislature in considering, confirming, or rejecting an executive appointment of the governor;”

AS 24.45.171(11) defines “lobbyist” as “a person who

  • A) is employed and receives payments, or who contracts for economic consideration, including reimbursement for reasonable travel and living expenses, to communicate directly or through the person's agents with any public official for the purpose of influencing legislation or administrative action for more than 10 hours in any 30-day period in one calendar year; or
  • B) represents oneself as engaging in the influencing of legislative or administrative action as a business, occupation, or profession;”

AS 24.45.071(13) defines “payment to influence legislative or administrative action” as

  • “(A) a direct or indirect payment to a lobbyist whether for salary, fee, compensation for expenses, or any other purpose, by a person employing, retaining, or contracting for the services of the lobbyist separately or jointly with other persons;
  • (B) a payment in support of or assistance to a lobbyist or the lobbyist's activities, including but not limited to the direct payment of expenses incurred at the request or suggestion of the lobbyist;
  • (C) a payment that directly benefits a public official or a member of the immediate family of that official;
  • (D) a payment, including compensation, payment, or reimbursement for the services, time, or expenses of an employee for or in connection with direct communication with a public official;
  • (E) a payment for or in connection with soliciting or urging other persons to enter into direct communication with a public official;
  • (F) a payment or reimbursement for expenses in the categories set out in AS 24.45.051(2);”

2 AAC 50.536. Reporting on the accrual basis by the employer of lobbyist

For the purpose of filing reports as required by AS 24.45.061 (b), the employer shall report the date and amount of all payments made, or costs incurred, for the purpose of influencing legislative or administrative action during a reporting period. When reporting food and beverage on the accrual basis, it is not necessary to list the date and amount of each item charged to the employer. In such instances, the amount of payments made or incurred by the employer to each vendor during the reporting period must be listed in the aggregate.

2 AAC 50.540. Reporting compensation or payments by the employer of lobbyist

When reporting compensation to a lobbyist or payment to an employee, as required by AS 24.45.171 (10)(A), (B), (D) and (E), the amount shown must include the gross wages paid or payable, and prorated as applicable, plus any benefits which are in place of wages, such as stock options or the purchase of annuities. Routine fringe benefits such as the employer's contribution to health plans, retirement plans, etc., which are made on behalf of all employees and the payment of employer's payroll taxes, are not payments to influence legislative or administrative action and are not reportable.

2 AAC 50.545. Definitions

  • (a) In 2 AAC 50.505 - 2 AAC 50.545,
  • (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.
  • (c) "Communicate directly," as used in AS 24.45.171 (8)(A), means to talk, either in person or by telephone, with any public official or legislative employee; it does not include time spent in the research, drafting, preparation, or adaptation of documents for use by the lobbyist.
  • (d) "Legislative action," as defined in AS 24.45.171 (7), includes the actions of an "employee of the legislature acting in his official capacity," and any attempt to influence legislative action includes not only the elected official, but an employee of the legislature as well; money and time spent on lobbying activities involving a legislative employee is reportable by the lobbyist as required by AS 24.45.051 and the employer of a lobbyist as required by AS 24.45.061 (b) and by this chapter. "Legislative employee" means any employee of the legislature acting in his "official capacity," as that term is used in AS 24.45.171 (7).
  • (e) "Payments in support of or assistance to a lobbyist or his activities," as used in AS 24.45.171 (10)(B), includes direct costs and expenses incurred by the employer in the current research, drafting, preparation and adaptation of documents for use by the lobbyist for the purpose of influencing legislative or administrative action.

A copy of the original letter requesting the above advisory opinion is available upon request at the Alaska Public Offices Commission. Call (907)276-4176 or (800)478-4176.