State of Alaska

Department of Administration

Alaska Public Offices Commission

Alaska Department of Administration, Alaska Public Offices Commission

AO 09-10-LOB

Number: AO 09-10-LOB
Requested by: Michael J. Hurley, ConocoPhillips Alaska, Inc.
Prepared by: Patricia Ware
Juneau Branch Administrator
Date Issued: May 2009
Subject: Does a company who loans an employee to a second company have a requirement to report as an employer of a lobbyist if the company has no control over the employee’s duties or actions?

This letter responds to your March 19, 2009 request for an advisory opinion about whether ConocoPhillips Company (Conoco) is required to report an employee on loan to, and under the direction of, Denali – The Alaska Gas Pipeline, LLC (Denali).  Denali reported the employee as a lobbyist and the employee registered as a lobbyist for Denali in 2009.

Short Answer:

The short answer is no. Based on your representation that Conoco is being fully reimbursed by Denali for both Mr. Solie’s salary and expenses and is not directing or controlling Mr. Solie in his activities, including his lobbying activities, staff concludes that Conoco has not made a payment to influence legislative or administrative action, and is not therefore required to register or report as the employer of a lobbyist under AS 24.45.061(b).  The absence of control is significant.  If Conoco directs this employee or exercises any control at all over the work of this employee activity, we believe that it should register and report as an employer of a lobbyist.

History:

In a February 17, 2009 letter to Holly Hill, Wendy King of Conoco stated that it understood that its employee Richard Solie registered as a lobbyist for Denali but, because the employee was on loan to Denali as of January 2, 2009, Conoco believed it did not have any reporting requirements as an employer of a lobbyist.  It stated that Denali as a limited liability company was a bona fide business and argued, by analogy to 2 AAC 50.525(a) (which directs how bona fide associations report as an employer of a lobbyist), that Denali should report as the employer, rather than Conoco.  The letter closed with a statement that Conoco does not have any employer reporting requirements under AS 24.45.061 but that it understood Denali would be filing an employer of lobbyist report.

APOC staff responded on February 20, stating that the letter raised difficult legal issues and inviting Conoco to request a formal advisory opinion from the Commission. You sent a request for a formal advisory opinion that was received on March 24, 2009.

Facts:

Richard Solie registered on January 19, 2009 as a lobbyist on the APOC electronic filing system (Insight). Mr. Solie’s registration lists Denali as the employer, with a lobbying start date of January 20 and an annual fee of $105,084. The subject listed in the registration is “matters related to the natural gas pipeline that Denali intends to construct to transport North Slope gas to North American markets.” Mr. Solie identified as the employer representative for Denali J. Scott Jepsen. Mr. Solie answered “yes” to the question of whether he performs other services for the company, and listed the activity “community relations.”  Mr. Solie amended his registration on January 20 and changed the salary listing from the annual fee of $105,084 to an hourly rate of $61.52. Mr. Solie attended the APOC in-person lobbying ethics training January 8, thus fulfilling the requirement that training be completed prior to lobbyist registration. AS 24.45.041(a)(8). At that training, Mr. Solie corrected the name of the employer provided on the training sign-up sheet by putting a line through “Conoco Phillips” and writing in “Denali.”

On February 13, Mr. Solie faxed notice to APOC that he was terminating lobbying activities and provided a termination date of January 20. Mr. Solie attempted to complete his January lobbyist report in Insight but contacted staff when he had difficulties.  According to the Insight report summary, Mr. Solie filed his January lobbyist report in the Insight electronic filing system on February 27. The report lists fees of $738 and reimbursable expenses of $872.31. 

Mr. Solie is an employee of Conoco who has been on loan or “seconded” to Denali since January 2, 2009 via an agreement between the companies. As part of the arrangement, Conoco pays Mr. Solie his salary and expenses but Denali reimburses Conoco. 

Conoco represents that, since January 2, Mr. Solie’s employment duties “have been and are solely under the direction and control of Denali.” Conoco asserts that it did not employ, retain or contract with Mr. Solie to provide lobbying services and “only learned about his registration as a lobbyist for Denali after the fact.”

Conoco is the parent entity of a subsidiary that owns a fifty-percent interest in Denali. BP Gas Pipelines, LLC (BP) owns the other fifty-percent interest, but according to Conoco, other persons may become owners in the future. Denali is a limited liability company formed in June 2008. Conoco describes Denali’s purpose as “to operate independently in the planning, construction and operation of a proposed large natural gas pipeline project in Alaska.”  

Denali filed a quarterly employer of lobbyist report on April 30 for the period covering January 1, 2009 through March 31, 2009. 
Analysis:
Lobbyists are required to file a registration statement prior to engaging in lobbying. AS 24.45.041(a).  As part of the registration process, AS 24.45.041(b)(2) requires the lobbyist to list “the full name and complete address of each person by whom the lobbyist is retained or employed;” and (b)(3) requires the lobbyist to state “whether the person from whom the lobbyist receives compensation employs the person solely as a lobbyist or whether the person is a regular employee performing other services for the employer that include but are not limited to the influencing of legislative or administrative action.”  Mr. Solie listed Denali as the person employing him.  Denali verified its status as Mr. Solie’s employer, as required under AS 24.45.061(a), by electronically signing the registration on Insight on January 19.
Mr. Solie apparently ended his lobbying work shortly after his initial registration.  AS 24.45.051(a)(6) allows a lobbyist to submit a final report of the lobbyist’s activities “if the lobbyist has ceased the lobbying activity that required registration.”  Although Mr. Solie informed APOC via fax on February 13 that he was terminating his lobbying activities effective on January 20, 2009, he stated his termination date as January 21 when he filed his lobbying report. Because he was registered as a lobbyist for a two-day period (January 20-21), he is required to report under AS 24.45.051. But because he has ended his lobbying activities, filing a report for that single reporting period fulfilled his reporting requirements under AS 24.45.

The employer or employers of Mr. Solie are also responsible for filing an employer of lobbyist report meeting the requirements of AS 24.45.061(b). The report must cover the two days in January that Mr. Solie was registered as a lobbyist.  Denali submitted its first quarter employer-of-lobbyist report April 30. 

But there does not appear to be any dispute that Denali is required to report for the two days Mr. Solie served for it as a registered lobbyist. The question here is whether Conoco also must file an employer report under AS 24.45.061.  See AS 24.45.061(b) (recognizing that persons can jointly employ, retain, or contract for a lobbyists).

A person is required to report as an employer of a lobbyist under AS 24.45.061(b) if the person:
      1.  employs, retains or contracts for the services of a lobbyist, whether independently or jointly with other persons; and
            2.  directly or indirectly makes payments to influence legislative or administrative action.

Conoco has a direct employment relationship with Mr. Solie.  It pays the salary and benefits of Mr. Solie and Mr. Solie’s expenses, which are then reimbursed monthly by Denali. The arrangement between Conoco and Denali is that Mr. Solie is on loan or “seconded” to Denali and has been since January 2, 2009. Conoco asserts that Mr. Solie’s employment duties under this arrangement are “solely under the direction and control of Denali … notwithstanding that he (Mr. Solie) continues to receive his pay check from Conoco” and Conoco further states that it does not “employ, retain or contract with Mr. Solie for lobbying services.”  By paying Mr. Solie’s expenses and compensation, Conoco may be, at least indirectly, making payments to influence legislative action despite the absence of involvement in the actual work of Mr. Solie.   But because Conoco has not retained any responsibility over Mr. Solie’s actual work, which is under the exclusive direction and control of Denali, and because Conoco has no knowledge of, or involvement with, Mr. Solie’s lobbying work, we do not believe that Conoco has employed, retained or contracted “for the services of a lobbyist” as specified in the first part of AS 24.45.061(b).  Those services were sought and directed by Denali without Conoco’s involvement or consent.  The contractual arrangement with Denali separates Conoco from Mr. Solie’s lobbying work, and we therefore conclude that Conoco does not have to report as an employer of a lobbyist.

We reach this conclusion even though Conoco may benefit from Mr. Solie’s lobbying efforts for Denali.  Mr. Solie reported the subject of his lobbying as: “matters related to the natural gas pipeline that Denali intends to construct to transport North Slope gas to North American markets.” Both Conoco and BP, as co-owners of Denali, would benefit from construction of a natural gas pipeline built by Denali and are thus beneficiaries of Denali’s lobbying efforts to construct a gas pipeline. However, there is no requirement in AS 24.45.041 to identify the owners of a company or the potential beneficiaries of a company’s lobbying efforts.  But this information is available to the public on-line on the Alaska Corporations, Businesses, and Professional Licensing website, which reports that each Conoco and BP hold a 50 per cent interest in Denali, LLC. 
Conoco states it should not be required to report as an employer because its situation is similar to a member of a bona fide association under 2 AAC 50.525, who do not report.  That regulation states:
(a) When a lobbyist is employed by a bona fide association, including any bona fide business, trade union, or membership organization, association or society, that association is an employer of lobbyist. The members of the association are not employers of that lobbyist under AS 24.45.061 (a) merely because of that membership and the names of the members need not be reported.
The definition of bona fide association under 2 AAC 50.525(c) defines bona fide association as:
1) an association certified by an officer of the association as having legal status as a corporation or partnership;
(2) an association certified by an officer of the association as operating on the dues of its members, with no one member paying in excess of 25 percent of the total paid by all members;
(3) an association certified by an officer of the association as operating on the dues of its members, having a sliding dues-assessment scale under which no member exceeds an allotted assessment by 25 percent solely for the purpose of supporting lobbying activities, unless that member's name is reported to the commission; or
(4) an association certified by an officer or the association as having annual expenditures for administrative and legislative lobbying, as based on the previous year's experience or current year's estimate, which do not equal or exceed 50 percent of its total expenditures for the year.
Although Denali is not an association, its status as a limited liability company is analogous.  A limited liability company is not a corporation or partnership but, similar to those business organizations, it has an independent existence and its members are not liable for its acts or omissions.  See e.g., AS 10.50.265, 10.50.715, 10.50.730.  Here, however, we understand that there are only two members of Denali and, even if the exception for members of associations were applied, Conoco would not qualify.  As one of only two members of this limited liability company, it very likely pays over 25 percent of the expenses,  (2 AAC 50.525(c)(2) requires that no one member pay in excess of 25 percent of the total paid by all members of an association). 
In summary, because Conoco did not retain any control over its employee and did not direct Mr. Solie in his work and because Denali fully reimbursed Conoco for all of Mr. Solie’s salary and expenses, staff concluded that Conoco is not a joint employer of Mr. Solie.  We believe that Denali has appropriately identified itself on the lobbyist registration report as the person paying Mr. Solie for engaging in lobbying.  If either Conoco or BP were paying a portion of Mr. Solie’s salary or expenses and not being fully reimbursed for such expenses, each company would have a requirement under AS 24.45.061(a) to register as an employer of a lobbyist by certifying that they agree with a lobbyist registration statement as required by AS 24.45.041. In this scenario, a separate lobbyist registration and accompanying registration fee would be required reflecting the details of each employer’s payments to the lobbyist and the specific interests the lobbyist was representing for that employer. Also, if Conoco retained any control over the activities of its loaned employee, we believe that it would have to report under AS 24.45.041 and 24.45.061.  In Mr. Solie’s case, the responsible payer is Denali, who is already registered with APOC as an employer of a lobbyist and timely filed an employer report on April 30 under AS 24.45.061. 

Conclusion:
Because Mr. Solie is a loaned employee whose salary and expenses are being fully reimbursed by Denali and because he is under the sole control and direction of Denali, Denali must file a quarterly report as an employer of a lobbyist, per AS 24.45.061. Because its payments to Solie are reimbursed and it does not retain or exercise control over him, Conoco need not report.  If circumstances change such that Conoco is not fully reimbursed for its loaned employee or it retains or exercises control of any part of the work of the loaned employee, we would probably find a joint employer relationship requiring both entities to register and report as employers of a lobbyist under AS 24.45.061(b).
During the timeframe of this agreement and based on the facts as they have been presented, there is no employer reporting requirement for Conoco under AS 24.45.061.
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, currently scheduled for June 17-19. 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 by June 5.

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 June 17, 2009. 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:

Sec. 24.45.041. Registration; disqualification.
(a) Before engaging in lobbying, a lobbyist shall file a registration statement on a form prescribed by the commission.
(b) The registration form prescribed by the commission must include
(1) the lobbyist's full name and complete permanent residence and business address and telephone number, as well as any temporary residential and business address and telephone number in the state capital during a legislative session;
(2) the full name and complete address of each person by whom the lobbyist is retained or employed;
(3) whether the person from whom the lobbyist receives compensation employs the person solely as a lobbyist or whether the person is a regular employee performing other services for the employer that include but are not limited to the influencing of legislative or administrative action;
(4) the nature or form of the lobbyist's compensation for engaging in lobbying, including salary, fees, or reimbursement for expenses received in consideration for, or directly in support of or in connection with, the influencing of legislative or administrative action;
(5) a general description of the subjects or matters on which the registrant expects to lobby or to engage in the influencing of legislative or administrative action;
(6) the full name and complete address of the person, if other than the registrant, who has custody of the accounts, books, papers, bills, receipts, and other documents required to be maintained under this chapter;
(7) the identification of a legislative employee or public official to whom the lobbyist is married or who is the domestic partner of the lobbyist;
(8) a sworn affirmation by the lobbyist that the lobbyist has completed the training course administered by the commission under AS 24.45.031(a) within the 12-month period preceding the date of registration or registration renewal under this chapter, except that this paragraph does not apply to a person who is a representational lobbyist as defined under regulations of the commission;
(9) a sworn affirmation by the lobbyist that the lobbyist has not been previously convicted of a felony involving moral turpitude; in this paragraph, "felony involving moral turpitude" has the meaning given in AS 15.60.010 , and includes convictions for a violation of the law of this state or a violation of the law of another jurisdiction with elements similar to a felony involving moral turpitude in this state.
Sec. 24.45.051. Reports.
(a) Each lobbyist registered under AS 24.45.041 shall file with the commission a report concerning the lobbyist's activities during each reporting period prescribed in AS 24.45.081 , so long as the lobbyist continues to engage in lobbying activities. The report shall be made on a form prescribed by the commission and filed in accordance with AS 24.45.071 and 24.45.081. Upon request of the commission, information required under this section shall be submitted electronically. The report also must include any changes in the information required to be supplied under AS 24.45.041 (b) and the following information for the reporting period, as applicable:
Sec. 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.
Sec. 24.45.171. Definitions.
In this chapter
(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 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;
(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;
(9) "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;
(10) "legislative action" means 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;
(11) "lobbyist" means 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;
(13) "payment to influence legislative or administrative action" means any of the following:
(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 (a)(2);
2 AAC 50.525. Associations as employers of lobbyists
(a) When a lobbyist is employed by a bona fide association, including any bona fide business, trade union, or membership organization, association or society, that association is an employer of lobbyist. The members of the association are not employers of that lobbyist under AS 24.45.061 (a) merely because of that membership and the names of the members need not be reported.
(b) Dues or similar payments made by any person for membership in a bona fide association, including any bona fide business, trade union, or membership organization, association or society, some portion of which is used to influence legislative or administrative action, need not be included for the purpose of determining whether a person must file reports pursuant to AS 24.45.061 (b).
(c) For purposes of (a) and (b) of this section, "bona fide association," including any bona fide business, trade union, or membership organization, association or society, means
(1) an association certified by an officer of the association as having legal status as a corporation or partnership;
(2) an association certified by an officer of the association as operating on the dues of its members, with no one member paying in excess of 25 percent of the total paid by all members;
(3) an association certified by an officer of the association as operating on the dues of its members, having a sliding dues-assessment scale under which no member exceeds an allotted assessment by 25 percent solely for the purpose of supporting lobbying activities, unless that member's name is reported to the commission; or
(4) an association certified by an officer or the association as having annual expenditures for administrative and legislative lobbying, as based on the previous year's experience or current year's estimate, which do not equal or exceed 50 percent of its total expenditures for the year.
(d) The commission will in its discretion determine, on a case-by-case basis, the reporting requirements and procedures pursuant to AS 24.45 for those associations not qualifying for the exemptions under (a) and (b) of this section.
History: Eff. 12/29/77, Register 64; am 10/18/81, Register 80


AS 24.45.061(a) requires that “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.  APOC does not have a separate employer registration form for employers. Employers are required to review the lobbyist registration form and certify they have retained a lobbyist and agree to the terms outlined in the registration form. Compliance with AS 24.45.061(a) is met by the employer electronically signing the lobbyist registration form in Insight. A lobbyist registration must be certified by the employer prior to a lobbyist being able to submit the registration in the electronic system.

AS 24.45.171(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 (a)(2).

   See Estate of Himsel v. State, 36 P.3d 35, 41 (Alaska 2001) (footnotes deleted), in which the Alaska Supreme Court looked at a “borrowed employee” and concluded that liability should be apportioned between the lending and borrowing employers in accordance with their comparative fault.