Beware of trade associations bearing gifts?

Apr. 12, 2012 — A proposed regulation by the Office of Government Ethics (OGE) to tighten the restrictions on the ways that lobbyists are permitted to influence federal employees has ignited a firestorm of opposition from lobbyists and the trade associations that employ them.

“This rule is completely wrong-headed,” said James Clarke, senior vice president for public policy at ASAE, which serves as a kind of trade association for trade associations. “It would stifle the communication between the government and the private sector, which is exactly what we need more of right now.”

Under a long-standing federal restriction, executive branch employees are not allowed to accept gifts from so-called “prohibited sources” — people or groups who have business pending before the employee’s agency, or members of an industry that is regulated by the agency — or any gifts given “because of the employee’s official position.”

There are a variety of exceptions to those rules, however, including one for free or reduced-price admittance to “widely attended gatherings,” such as industry conferences and trade shows. The new rule would make that exception (and another that currently permits “de minimis” gifts with a value of less than $20) unavailable if the source of the gift is a lobbyist or a lobbying organization.

It is the proposed limiting of the “widely attended gatherings” exception that has caused the most controversy. Many interest groups have used the exception in the past to offer federal officials free admittance to a range of events, from trade shows and conferences to gala balls and cocktail parties.

“It is no secret that social events of this type sometimes are used as ‘lobbying tools,’” the OGE said. The concern of the Administration is that free invitations of certain social events may promote the “cultivation of familiarity and access that a lobbyist may use in the future to obtain a more sympathetic hearing for clients.”

“This is a rampant form of influence peddling,” said Craig Holman, the government affairs lobbyist for the public interest group Public Citizen. “The wealthy special interests are able to buy some sense of indebtedness with government officials, and that’s a type of indebtedness that the rest of us cannot afford.”

Benign educational events caught in the net?

But opponents claim that the event restriction would effectively prohibit federal employees from attending events that are meant to be educational. “By proposing the rule in this way, they are going to catch events that are purely educational in nature,” said Corey Henry, a spokesperson for the American Frozen Food Institute. “When we invite staff from federal agencies to our events, they are explicitly invited for educational purposes.”

In the proposed rule, the OGE took the position that federal officials “should not be precluded categorically” from accepting gifts of attendance to events that “would provide a legitimate educational or professional development benefit that furthers the interests of an agency.” For that reason, the limitations on the widely attended gathering exception would not apply to nonprofit groups and scientific organizations. Trade associations would be covered by the proposed rule, because “the primary concern of such associations generally is not the education and development of members of a profession or discipline,” according to the OGE.

Many opponents of the proposed rule, however, questioned the distinction between non-profit groups and trade associations, claiming that education is an essential part of the mission of many such associations.

While some supporters of the proposed rule acknowledged that there might be events hosted by trade associations that do serve a legitimate, educational purpose, they pointed out that often the educational purpose is merely a cover for the real purpose, which is to develop relationships that may come in handy in the future, or “soft lobbying.” (See box below on the Motion Picture Association of America.)

“What these trade groups want is not to provide officials with education,” Holman said. “What they want is to put them up in a luxurious hotel room and give them free dinners and drinks and make sure that everyone has a fun time.”