Earlier today, I gave a presentation on the executive branch's lobbying disclosure rules to the American Bar Association's Section of Administrative Law and Regulatory Practice at their 2009 Administrative Law Conference.

My slides from the conference are available below.

Lobbyists are in midst of a bonanza in Washington. With the Obama administration pursuing so many goals at once, the influence industry is booming. One area that has lobbyists salivating like cats surrounding a mouse is the $787 billion stimulus package (only about $400 billion of this was actually spending-related) signed into law earlier this year by President Obama. That was the reason that the administration crafted rules for stimulus lobbyists designed to limit their ability to influence spending decisions and make transparent their actions. The rules, smartly summarized by my colleague Daniel Schuman here, included a requirement for agency officials to disclose all contacts made by lobbyists in regards to the stimulus. The Associated Press looked at these disclosures and found little disclosure occurring with wide discrepancies in the format of disclosure among those few reports filed:

President Obama ordered federal officials to disclose their contacts with lobbyists trying to influence how the government doles out money to jump-start the economy. Yet few such communications have been reported even though lobbyists say they are busier than ever with the multibillion-dollar stimulus.

Since the $787 billion American Recovery and Reinvestment Act passed in February, federal agencies have reported 197 contacts with lobbyists about stimulus grants.

In August, the entire government reported only eight such lobbying contacts. The Pentagon, which controls about $7.4 billion in stimulus spending, reported just one lobbying contact so far this year. The Homeland Security Department, with at least $3 billion to spend, reported none.

Forgive me for not believing that the Pentagon has only been contacted by ONE lobbyist and the Homeland Security Department has had ZERO contact with lobbyists over stimulus spending. Other agencies are no better. Of particular concern is the lack of a standardized format for disclosure. According to the AP, "The Education Department described 19 encounters, including Secretary Arne Duncan's meetings with the NAACP and other groups, some with detailed descriptions of the discussions. Energy Department reports include barely legible scrawls as well as 159 pages of public comments on a transmission infrastructure program."

If the administration is going to undertake a serious effort to reduce influence around and bring transparency to stimulus spending they are going to need to reconsider how they are requiring these disclosures. In the recent OMB memo on stimulus lobbying rules, the administration stated its intent on creating a web tool to “facilitate disclosure of lobbyist contacts concerning the Recovery Act.” The development of this tool should also coincide with the creation of standardized disclosure. Beyond that, they need to empower some official at each agency to enforce the disclosure rule.

For right now, this is both not-too-surprising and very disappointing. Maybe we just need a law requiring lobbyists to disclose their contacts. Perhaps the administration, which campaigned on transparency and curtailing the power of lobbyists, could consider putting their weight behind a legislative effort to increase transparency in the influence industry.

Earlier this month, the Inspector General responsible for overseeing the government's bailout of the financial sector released an audit of the Treasury Department and federal banking agencies that raised the specter of “external parties” – such as financial institutions – having “undue influence” over the bailout process. In short, the IG concluded that because the Treasury Department and other banking agencies insufficiently document oral communications between external parties and the federal government, it was “impossible” to determine whether bailout decisions were improperly influenced.

When explaining how to fix this disclosure gap, the Inspector General pointed to rules governing lobbying on the $787 billion economic stimulus funds as a good model for the financial bailout. The IG also noted that the Treasury Department announced on January 27, 2009 that it “would develop new rules to increase transparency and curtail potential lobbyist influence” over the financial industry bailout. And yet, the Treasury Department is still “finalizing” its draft policy 7 months after the press release. (More background available from WSJ and the Washington Times.)

It seems, however, that both the IG and the Treasury Department may not have realized that the model they are using for the financial bailout lobbying rules has itself been updated. They also seem to have forgotten about public disclosure of written communications.

Did Treasury Misunderstand the Lobbying Disclosure Rules?

Mike Stern, former senior counsel for the U.S. House of Representatives, wrote about two peculiarities in the Treasury Department's understanding of the stimulus lobbying rules, as recounted by the IG.

Stern highlights this paragraph from the IG report:

"A Treasury official stated that Treasury’s draft policy for TARP [financial industry bailout] funds is similar to the ARRA [stimulus lobbying] policy. The TARP policy will state that Treasury employees cannot talk to lobbyists or members of the Congress, with one exception—instances of overarching policy discussions.” (emphasis added by Stern)

First, Stern explains that Obama's revised stimulus lobbying rules treat lobbyists and other interested parties similarly with respect to prohibiting certain communications. Yet, the Treasury official's statement on the draft financial bailout lobbying rules does not mention other parties as being included in the ban. Second, the revised stimulus lobbying ban likely does not apply to Members of Congress, and yet the Treasury official's statement states that Treasury employees cannot speak with members of Congress regarding specific projects. (This is probably unconstitutional.)

Even with these problems, the Inspector General embraces the stimulus lobbying guidelines as a model for the financial bailout guidelines. And yet, nowhere does the report mention that the administration has updated and significantly revised its stimulus lobbying guidelines. I wrote about the major revisions earlier.

Based upon Stern's analysis, there are two instances where the IG report failed to note that the Treasury official's statement concerning stimulus lobbying guidelines was no longer operative. Moreover, although the IG report summarized the Treasury Department's interim stimulus lobbying guidelines (which mirror the April 7th stimulus lobbying guidelines promulgated by the OMB), nowhere does the report mention that the stimulus lobbying rules were updated by OMB on July 24th.

Has the Treasury Department failed to update its stimulus lobbying guidelines in accordance with OMB rules? Why weren't OMB's updated stimulus lobbying guidelines summarized in the IG report, even if they haven't yet been adopted by Treasury? Should Treasury use the old or the revised stimulus lobbying guidelines as a model for its financial bailout lobbying guidelines?

What Happened to Disclosing Written Communications About Policy Matters?

There is another problem as well. The original stimulus lobbying rules had a loophole that was closed when they was updated. If Treasury uses the interim Treasury stimulus lobbying disclosure guidelines as a model for its financial bailout disclosure guidelines, and not the revised version promulgated by OMB, it leaves open a tremendous loophole: the absence of public disclosure requirements for written communications by lobbyists (or anyone with financial interests).

The interim OMB rules regarding lobbyists writing to federal employees on policy matters had no public disclosure requirements. The revised OMB rules, however, impose a public disclosure requirement on the writings themselves as well as public disclosure that the communication has taken place.

Specifically, the revised OMB memo tells government employees: "If you receive a written communication from a federally registered lobbyist on behalf of a client or employer concerning Recovery Act policy or projects for funding (including, but not limited to, any written communication from a federally registered lobbyist about a pending application), then please submit that written communication to your designated agency official for posting on the agency’s website within 3 business days of the communication. . . . " (emphasis added)

The IG report, however, explains that "although Treasury and the banking agencies have processes for documenting and responding to written external inquiries, not all have procedures to document oral communications with external parties when discussing TARP funds." (emphasis added) In saying this, the report omits any mention of whether the documents that are received by Treasury should be made public. Implicitly, it implies that this is not required.

And if you look further, the IG report's explanation of the stimulus lobbying guidelines parallels the interim (outdated) OMB guidelines in distinguishing between discrete projects and policy matters. The IG report says that "treasury employees are . . . required to forward written communications from federally registered lobbyists regarding specific projects, applications, or applicants." The interim stimulus guidelines contrast "specific projects, applications, or applicants" with policy matters. The IG report does not mention general policy matters, and implicitly adopts that dichotomy as well. Indeed, it fails to adopt the language of the revised OMB memo requiring publication on a website of policy communications.

As a result, it is unclear whether the IG is recommending that the Treasury Department publicly disclose the written communications on policy matters submitted from lobbyists to federal employees. Further muddying the waters is the statement by the Treasury official, quoted in the IG report, that seems to exempt “instances of overarching policy discussions” from the financial lobbying ban on Treasury employees speaking with “lobbyists or members of the Congress.” The focus of that section of the report is on oral communications, but it could be interpreted to include written communications as well.

In a private email (that I have permission to quote), Stern writes that "As a practical matter, if a lobbyist wants to communicate in writing with Treasury regarding a TARP/ARRA policy matter and for some reason does not want the communication to be disclosed publicly, he or she could just have the letter signed by a non-lobbyist representative (eg, the client’s CEO).” He is right. This is another issue that Treasury should address.

It is a good thing that the IG is pressing the Treasury Department and other banking agencies to be more transparent, particularly as to lobbying that could place taxpayers on the line for billions of dollars. However, there are many additional questions that must be answered by Treasury and the IG -- and soon.

The White House's Office of Management and Budget released the administration's new stimulus lobbying rules on Friday, as John mentioned earlier. In summary, the new rules generally expand who is covered by the ban on agency staff having oral communications regarding Recovery Act grants, although it shrinks the circumstances as to when the ban applies and what it covers. It also closes a loophole pertaining to written communications by lobbyists on policy matters.

The 787 billion dollar question is how does the OMB's July 24th guidance on stimulus recovery lobbying differ from its April 7th memo? (For a short video explaining the old rules, see this.) Here's how the rules have changed.

Who Is Covered?

The rule against agency officials engaging in oral communications with persons applying for federal financial assistance under the Recovery Act has been expanded to nearly everyone, instead of only encompassing lobbyists, as it did before.

However, the ban specifically exempts certain groups of people. It doesn't reach federal government employees. It doesn't cover the elected chief executive of a state, local, or tribal government (e.g., governors and mayors). And the ban doesn't apply to the Presiding Officer or Majority Leader in each chamber of a state legislature.

In addition, the ban does not apply if the subject of the communication to an agency official regards a purely logistical question, or was made at a widely attended gathering. Nor does it cover people responding to communications initiated by agency staff – that is, to answer agency staff questions.

Interestingly enough, it is not clear whether the new rules pertain to Congressional staff or Members of Congress. It seems reasonable to conclude that Congressional staff can communicate with agency officials under the “federal government employee” exemption. However, Members of Congress are not specifically exempted from these rules, although elected officials at the state and local level are specifically mentioned as exempted. (It would be a stretch to fit Members of Congress under the “federal government employee” exemption.)

The omission of Members of Congress probably is an oversight. If followed, banning communications by Members of Congress would likely be unconstitutional, as Congress has oversight responsibilities over agency activities.

When Does The Ban Take Effect?

The ban on oral communications set forth in the April 7th memo prohibits communications “regarding Recovery Act matters” that pertain to “particular projects, applications, or applicants for funding.” Under the old rule, oral communications are prohibited upon the first expression of interest by a party, or even earlier than that, if there's enough indication that the party is interested in a specific project or application.

The new memo changes this considerably. Now, persons interested in receiving Recovery Act money may communicate with agency officials up until the point they file a “formal application.” This is much later on in the process. Conceivably, persons interested in Recovery Act funds may hold off on filing an application for a grant while they lobby administration officials, and then submit the formal paperwork once they've laid the groundwork.

What Does The Ban Cover?

Under the new rule, the ban covers only oral communications concerning pending applications for a competitive grant or other competitive form of federal financial assistance under the Recovery Act. The previous rule covered oral communications regarding all grants, regardless of whether they were competitive or issued based upon a formula. The new OMB memo explains that only competitive grants are covered because “in formula-driven grant contexts, grantees . . . are designated by statute and do not have to compete with others to receive their awards from Federal agencies.”

Final Thoughts

The OMB memo says that the administration will soon release a “web tool” to “facilitate disclosure of lobbyist contacts concerning the Recovery Act.” This will go a long way towards making this a more transparent process. Hopefully, the form will look something like this.

Last Friday's memo also partially closed a loophole identified in an earlier post. Agencies are now required to publish online written communications from lobbyists concerning Recovery Act policies. This alleviates the concern about lobbyists can ask for the creation of specific grants that would benefit their clients without having to disclose their request. It leaves open, however, the ability of lobbyists to ask for the creation of formula-driven grants that would ultimately be distributed to their clients.

As promised by the White House, new stimulus lobbying policies have been released by OMB.

The new guidance clarifies restrictions on lobbying, lifting a more general limitation on meetings between federally registered lobbyists and administration officials, and clamping down on all communications regarding awards for carefully tailored time periods.

We're particularly excited about this announcement:

A web tool is being developed to facilitate disclosure of lobbyist contacts concerning the Recovery Act, and the tool will be available shortly for your agency’s use.

...given that we've long advocated for better real-time disclosure of lobbying contacts online, going so far as to mockup what such a system might look like.

I've embedded the document below. H/t Ellen's and Gabriela's twitter feeds.

As part of the economic stimulus package passed in February, Congress gave the Commerce Department up to $7.2 billion to dole out in grants that promote universal high speed internet access. The legislation also required the Federal Communications Commission to submit a national broadband plan to Congress by February 17, 2010, that will "ensure that all people of the United States have access to broadband capability."

One of the many issues the FCC's plan is required to address is the use of broadband infrastructure and services to advance civic participation. In April, the FCC asked for comments on what such a broadband plan should look like. A first round of comments was due by June 8, 2009, with a second round of comments due by July 7, 2009.

The Sunlight Foundation submitted comments on what a national broadband plan should look like, focusing on the relationship between increased broadband access and civic participation.

We argue that "changes in how (and what) we can communicate, and the speed with which we can do so, will profoundly reshape our democracy. Universal broadband access, ever-increasing bandwidth, and respect for the basic principles underpinning the internet, such as privacy and network neutrality, will result in greater civic involvement in our democracy and stronger connections to one another." Increasing government transparency will further catalyze civic participation.

Even with sufficient bandwidth, however, "all users must be able to access the internet," including those with the least financial means and those living in rural areas.

Read the full comment below.

That was fast. The administration is already seeking a new IT firm to redesign Recovery.gov, the transparency site for stimulus funds. According to Washington Business Journal, the administration will post on June 15 a call for IT contractors to "make improvements to the site by redesigning, implementing and hosting the 2.0 version." This will include:

[U]pdates and changes to the site’s user interface, information architecture and design engineering. According to GSA’s pre-solicitation, the contractor needs expertise in project management, and the ability to “deliver a website with interactive data-visualization, and web-application level functionality.”

The solicitation also states that the Recovery and Accountability Board, RATB, which oversees stimulus rules and regulations, is open to “recommendations for technology improvements for version 2.0 and beyond, including the hosting platform, database technology, CMS, programming languages, etc.”

(via ProPublica)

Three more agencies have begun posting, or provided a place to post, communications between lobbyists and agency officials in regards to funds distributed from the American Recovery and Reinvestment Act (ARRA). Last week, there were eight agencies posting lobbyist communications, as required under the March 20 memorandum issued by President Obama to all agencies involved with the distribution of Recovery Act funds.

The new agencies posting are the Department of Commerce, the Environmental Protection Agency, and the United States Department of Agriculture. The United States Department of Agriculture has yet to post any communications, but has created a page on which to post them.

Here is an updated chart:

Agencies Posting American Recovery and Reinvestment Act Communications With Registered Lobbyists

Agency	Site
Army Corps of Engineers	Visit site
Corporation for National and Community Service	Visit site
Department of Commerce	Visit site
Department of Defense	none
Department of Education	none
Department of Energy	Visit site
Department of Health and Human Services	none
Department of Homeland Security	none
Department of Housing and Urban Development	none
Department of Interior	Visit site
Department of Justice	none
Department of State	none
Department of Transportation	Visit site
Department of Treasury	none
Department of Veterans Affairs	none
Environmental Protection Agency	Visit site
Federal Communication Commission	Visit site
General Services Administration	none
National Aeronautics and Space Administration	Visit site
National Endowment for the Arts	none
National Science Foundation	none
Office of Personnel Management	none
Railroad Retirement Board	none
Small Business Administration	Visit site
Smithsonian Institution	none
Social Security Administration	none
US Department of Agriculture	Visit site
USAID	none

Last week, I wrote about the number of agencies complying with President Obama's memorandum on lobbyist communications related to funds appropriated under the American Recovery and Reinvestment Act (ARRA) -- the stimulus bill. One of the agencies that came out for the most praise was the Federal Communications Commission (FCC), which I said went "beyond the requirements outlined in the March 20th memorandum." It turns out that there is a reason the FCC does such a good job of presenting lobbyist communications as mandated by the memorandum. The Commission was already required by law to disclose ex parte communications -- off-the-record communications -- to the public.

The reason the FCC is required to disclose certain ex parte communications is due to their status as an independent government body. All independent government commissions have restrictions and disclosure requirements on certain types of off the record communications. For the FCC, their ex parte communication rules involve off the record communications made surrounding certain types of proceedings. For our purposes, an important point is asking why the FCC, and independent government commissions, require rules restricting and/or requiring the disclosure of off the record communications. The Frequently Asked Questions (FAQ) page on FCC ex parte communications answers this question nicely:

The ex parte rules govern the manner in which persons may communicate with the Commission concerning the issues in its proceedings. The rules play an important role in protecting the fairness of the FCC's proceedings by assuring that FCC decisions are not influenced by impermissible off-the-record-communications between decision-makers and others. At the same time, the rules are designed to ensure that the FCC has sufficient flexibility to obtain the information that is necessary for it to make reasonable decisions.

This seems to be the exact argument made in support of the ARRA lobbying rules implemented in the March 20 memorandum. Don't we want to reduce the influence of off-the-record communications in the recovery fund distribution decision-making process? If we do, than some restriction on off-the-record communication, along with strong disclosure of permissable communication would be a perfectly -- not to mention tried-and-true -- way to obtain that goal. The rules also provide for "sufficient flexibility" for decision-makers to obtain information about potential projects from those seeking funds, without allowing conversations to be held in private.

The rules implemented in the March 20 memorandum may be new to a lot of government workers and lobbyists, but they clearly have their genesis in the ex parte communications rules aimed at reducing outside influence at independent government bodies. Perhaps other agencies should look to those who already have to disclose off-the-record communications for tips on how to disclosure lobbyist contacts.

Yesterday, Earl Devany, Inspector General for the stimulus, and Rob Nabors, deputy director of the Office of Management and Budget (OMB), went before the Senate Committee on Homeland Security and Government Affairs to discuss details of their oversight plan for recovery funds. One of the chief topics was the web site, Recovery.gov. The White House has sold Recovery.gov as a beacon of transparency, a web site a top a hill that will shine down as an example for all government web sites. However, as our Bill Allison has noted in numerous venues, the web site does not offer all of the information or content that it could. This lack of content became a sticking point in the hearing.

Devaney, who answered most of the questions, agreed with many of the senators who complained that Recovery.gov was not all it was cracked up to be. Describing why citizens are going to the web site, which is receiving high traffic, Devaney chalked it up to "curiosity," but stated that if the web site does not become more interactive and substantive, the public will lose faith in the recovery effort. This applies particularly to interactivity and responses to user comments, Devaney stated, and that the recovery oversight board needed to get out in front of this faster.

In achieving the goal of interactivity, Devaney said that he is talking to outside groups and individuals who have ideas about how to sort through millions of comments and respond appropriately. He also stated that he is willing to meet with any of "the smartest people" to talk about this.

Sen. Tom Coburn raised pointed questions regarding the accessibility of the data, contrasting the data search functions and presentation on Recovery.gov to that of USASpending.gov, the federal site tracking all federal spending. Coburn's biggest issues were the lack of multiple search capabilities on Recovery.gov and why USASpending.gov wasn't used to display the recovery spending. Nabors responded that the public has a unique interest in the recovery spending and that the information needed to be brought to the public in a speedier fashion than USASpending.gov could deliver. The idea behind Recovery.gov is to provide real time tracking of recovery spending. In his "wildest dreams," Nabors declared, he would want to be able to track overall spending, as in what is displayed on USASpending.gov, in real time.

Coburn pointedly asked when the "ideal" Recovery.gov would be online. Devaney, under pressure from Coburn, answered, "Yes," after Coburn asked him if the site would be complete in a year.

One of the more interesting suggestions came from Sen. Claire McCaskill, asking Devaney if he had considered hiring unemployed journalists to provide investigative capability along with context and storytelling to Recovery.gov. Devaney, in what seemed like a happy surprise to McCaskill, stated that he had two interviews scheduled with journalists the very next day. McCaskill responded, "Great minds think alike."