HBA-MPA H.B. 102 76(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 102 By: Alvarado State Affairs 2/8/1999 Introduced BACKGROUND AND PURPOSE Currently, state law does not address the practice of lobbying at the municipal level. Any regulation of lobbying within municipalities occurs through ordinance on a city-by-city basis. H.B.102 extends parallel standards governing the practice of lobbying at the state level to cities having a population of not less than 700,000 nor greater than 1,000,000. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. SECTION BY SECTION ANALYSIS SECTION 1. Amends Subtitle B, Title 2, Local Government, by adding Chapter 27, as follows: CHAPTER 27. LOBBYING RESTRICTIONS IN CERTAIN HOME-RULE MUNICIPALITIES SUBCHAPTER A. REGISTRATION Sec 27.001. APPLICATION. Provides that this chapter applies only to a municipality between 700,000 and 1,000,000 in population. Sec. 27.002. DEFINITIONS. Defines the terms "administrative action," "commission," "communicates directly with," "compensation," "expenditure," "governing body of a municipality," "immediate family," "legislation," "member of the governing body," "person," and "registrant." Sec. 27.003. MUNICIPAL ETHICS COMMISSION. Requires a municipality to either establish an ethics commission or contract with the Texas Ethics Commission to perform the duties specified in this bill. Requires the composition of a municipal ethics commission to be established by ordinance. Requires the commission to adopt rules as necessary to enforce this chapter, and authorizes it to adopt a code of conduct for registrants. Sec. 27.004. PERSONS REQUIRED TO REGISTER. (a) Provides that a person must register with the municipal ethics commission (commission) if that person spends more than the amount determined by commission rule, but not less than $200, on one or more governing body members during a calendar quarter, to influence legislation or administrative action, or if the person receives compensation or reimbursement for such activities in an amount greater than the amount set by commission rule in a calendar quarter. (b) Provides that a person must register with the commission if the person communicates directly with a member of a municipal governing body in order to influence legislation or administrative action as a part of the person's regular employment. Members and employees of governmental entities are not required to register under this chapter. (c) Provides that a person who communicates directly with members of a municipal governing body for purposes of influencing administrative action need not register with the commission if the person is an attorney of record or pro se, the person enters an appearance in a public record of a docketed matter before the governing body and that communication is the only activity that would otherwise require the person to register.. Sec. 27.005. EXCEPTIONS. Exempts the following persons from the provisions of this chapter: (1) a person who owns, publishes, or is employed by a newspaper, or other regularly published periodical, a radio or television station, a wire service, or other bona fide news medium, if the person does not otherwise engage in additional activities requiring registration under this chapter; (2) a person whose only direct communication with a member of a municipal governing body in order to influence legislation or administrative action is an appearance or testimony at a public hearing for which that person receives no compensation, other than actual expenses incurred in attending the hearing; (3) a person employed or retained by an entity whose only activity is to encourage other persons employed or otherwise associated with the entity to communicate directly with a municipal governing body to influence legislation or administrative action; (4) a person whose only activity to influence legislation or administrative action is to compensate a registrant to act in that person's behalf; (5) a person whose only activity to influence legislation or administrative action is to attend an event attended by a member of a municipal governing body, if the cost of the event is paid by a business, union, or association; (6) a person whose only compensation consists of reimbursement of wages not earned, or travel, admission, and food and beverage expenses incurred from attendance at a meeting or entertainment event where members of a municipal governing body are present, including travel expenses and food and beverages consumed, if the cost of the event is paid by a business, union, or association; and (7) a person who communicates directly with a member of a municipal governing body on behalf of a political party to influence legislation or administrative action and whose pertinent expenditures and compensation do not exceed $5,000 in one calendar year. Sec. 27.006. REGISTRATION. (a) Requires a person required to register under this chapter to file a registration form prescribed by the commission and pay a fee. (b) Provides that the registration fee expires at midnight on December 31 of each year unless the person submits a registration renewal form and fee. Authorizes the registrant to file the renewal form and fee any time during December of the year in which the registration expires. (c) Requires the commission to set the fee for registration and registration renewal to be not less than $100 for a registrant employed by a tax exempt organizations, or $300 for all others. (d) Requires that revenues from fees be deposited in the municipal treasury and spent in a manner determined by the commission. (e) Requires that a person must register not later than the fifth day after the date on which the person or the person's employee makes first contact with a member of a municipal governing body. (f) Provides that the written and verified registration must contain: (1) the registrant's full name and address; (2) the registrant's normal business, business phone number and address; (3) the full name and address of each person who employs the registrant or on whose behalf the registrant communicates directly with members of the municipal governing body to influence legislation or administrative action; (4) the subject matter and administrative designation of the legislation or administrative action that is the subject of the registrant's direct communication with a municipal governing body; (5) the name, address and occupation of any person employed by the registrant to assist in direct communication with a member of a municipal governing body to influence legislation or administrative action, and the subject and administrative designation of the legislation or administrative action that is the subject of the person's direct communication with that body; (6) the amount of compensation or reimbursement paid to the registrant by each person who retains that registrant; (g) Sets forth required monetary categories under which compensation must be reported. (h) Provides that, if the registrant's activities are on behalf of a business, trade or consumer interest association, the registration form must list the number of the organization's members, the names of members who determine the group's policy relating to influencing legislation or administrative action, a description of how such policy decisions are made, and a list of persons making annual grants or contributions to the organization in excess of $50. (i) Provides that, if the registrant's activities are on behalf of a corporation that is not publically traded, the registration form must list the number of shareholders, the name and address of each officer or board member, and the name of each person owning 10 percent or more of the shares of the corporation. (j) Requires the registrant to list each client for whom the registrant communicates directly with municipal governing body, if the person who retains the registrant is a business entity engaged in representing clients to influence legislation or administrative action. (k) Requires the registrant, if there is a change in the information concerning entities represented by the registrant, to file an amended statement of the changes not later than the next reporting date. Sec. 27.007. LISTING OF MUNICIPAL OFFICERS AND EMPLOYEES. Authorizes the commission by rule to compel officers or employees of other governmental entities, except for members of the legislative branch, to file with the commission their name, the entity represented, and the subject of the communication, and other information the commission considers relevant. Sec. 27.008. ACTIVITIES REPORT. (a) Requires each registrant to file with the commission a written, verified report on a form prescribed by the commission. (b) Provides that the report must contain a listing of the expenditures made by the registrant or on his behalf and with his consent to communicate directly with a member of a municipal governing body or the member's immediate family, including transportation and lodging, food and beverages, entertainment, gifts, awards and mementos, and expenditures made for the member's attendance at fund-raisers or charity events. (c) Provides that the report must contain a listing of the expenditures made by the registrant or on his behalf and with his consent for advertising, direct mailings, and other mass media communications, if those communications are directed to someone other than a member, employee, or stockholder of the entity retaining the registrant, and which supports or opposes legislation or administrative action. (d) Provides that the report must contain a listing of the subject matter on which the registrant or the registrant's representative directly communicated with a municipal governing body. (e) Prohibits the registrant from reporting an expenditure in more than one expenditure classification. (f) Provides that the registrant must be present at the event for expenditures involving transportation and lodging, food and beverages, and attendance at fund-raising and charitable events. Sec. 27.009. DETAILED REPORT. (a) Requires the registrant to file with the commission a report stating any expenditure of over $50 in one day for transportation and lodging, including the name of the member of the municipal governing body on whose behalf the expenditure was made, and the place, date and purpose of the transportation or lodging. (b) Provides that the report must contain a listing of any expenditure of over $50 in one day for food or beverage for the member of the municipal governing body, or immediate family of a member, including the name of the member, the place, date, and amount of the expenditure. (c) Provides that the report must contain a listing of any gift presented to a member of a municipal governing body valued at more than $50, including the name of the member, a description of the gift, and the amount of the expenditure to secure the gift. (d) Provides that the report must contain a listing of expenditures for attendance by members of a municipal governing body at political fund-raisers or charity events, including the name of the member, the name of the charity or candidate holding the event, and the date of the event. (e) Requires that an expenditure for a gift presented in conjunction with a member's attendance at a charity event or political fund-raiser be reported under Subsection (c) rather than Subsection (d). (f) Authorizes a registrant to apportion cost based on the number of people in attendance at an event, if the amount of expenditure on transportation and lodging, food and beverages, or entertainment cannot reasonably be attributed to one member of a municipal governing body. Sec. 27.010. EXPENDITURES ATTRIBUTABLE TO GROUPS. Provides that expenditures attributable to members of a municipal governing body be stated as having accrued to elected members, members of a board, commission, or other administrative body appointed by the municipal governing body, employees of the governing body, the immediate family of a member or employee of the governing body, or through events to which all elected members are invited. Provides that an expenditure is attributable to the person who consumes the food or beverage, receives a gift, or for whom admission, transportation or lodging expenses are paid. Requires that expenditures benefitting members of the immediate family of a member or employee of a governing body be aggregated and reported in the events category. Requires that, if it is impossible to determine the portion of an expenditure directly attributable to a member of a governing body, it may be apportioned on the basis of the total number of persons in attendance. Requires that, if all elected members of a governing body are in attendance, the registrant report the expenditure separately under the provisions of Subsection 27.010(a)(5). Sec. 27.011. MODIFIED REPORTING. Authorizes a person who does not intend to make expenditures of more than $1,000 during a calendar year excluding the person's food, travel, lodging expenses, and membership dues, to file a registration form or registration renewal with a written declaration of intent. Requires a registrant filing under this section to file annually not later than January 10, covering activities during the previous calendar year. Requires a registrant who exceeds $1,000 in one year to file monthly reports, with the first report covering the period beginning January 1 through the date on which the next reporting period ends. Sec. 27.012. FILING DATES FOR SUPPLEMENTAL REPORTS. Provides that a registrant must file required reports between the first and 10th of each month covering activities for the previous month. Requires persons making expenditures on the registrant's behalf to provide an account of those expenditures to the registrant not later than seven days before the date on which the registrant's report is due. Sec. 27.013. TERMINATION NOTICE. Requires a registrant who ceases actions requiring registration to file a statement acknowledging termination of those activities, which becomes effective upon filing, but does not relieve the person of responsibility for filing reports required for activities during the period when the person was registered. Sec. 27.014. MAINTENANCE OF REPORTS. Requires all reports filed under this chapter to be made available to the public for inspection during regular business hours. Requires the commission to provide appropriate forms, maintain them in alphabetical files, remove them from the files after five years, and to maintain a deputy to receive registrations and reports, and make them available to the public. Requires the commission to retain reports filed under this chapter for at least four years from the time the report is filed, and that registrants retain records necessary for those reports for the same period. Sec. 27.015. TIMELINESS OF FILING REGISTRATIONS AND REPORTS. Provides that a registration or report is timely if it is filed by U.S. mail, a common or contract carrier, and bears the proper address, postage, or carrying charges, and a cancellation or receipt mark indicating a time within the filing period before the deadline, or satisfactory proof thereof. Sec. 27.016. LIST OF REGISTRANTS AND EMPLOYERS. Requires the commission to prepare a list by February 1st each year of registrants indicating those who employ that registrant, and a list of each person or concern employing a registrant and each registrant employed by them. Requires that the above list be sent to each elected member of the governing body of the municipality. SUBCHAPTER B. PROHIBITED ACTIVITIES. Sec. 27.101. FALSE COMMUNICATIONS. Prohibits a person from knowingly and willfully making a false statement, or presenting a document containing a false statement, without presenting a written statement of the truth, to a member of a municipal governing body for the purpose of influencing legislation or administrative action. Sec. 27.102. CONTINGENT FEES. Prohibits a person from hiring another person to influence legislation or administrative action for an amount contingent on the passage, repeal, or defeat of legislation, or the outcome of administrative action, and prohibits any person from accepting such a contingent fee. Provides that sales commissions, other expressly authorized payments, or fees for legal representation in adversarial proceedings before administrative bodies are not prohibited. Sec. 27.103. RESTRICTIONS ON EXPENDITURES. Prohibits a registrant or a registrant's representative from presenting to a member of a municipal governing body a loan, a gift of cash or a negotiable instrument, an expenditure for transportation and lodging, an expenditure for entertainment over $500 in one calendar year, an expenditure for gifts over $500 in one calendar year, an expenditure for awards or mementos over $500, an expenditure for transportation or lodging, food or beverages, entertainment, or attendance at a fund-raiser or charitable event at which the registrant is not present. Prohibits a member of a governing body from soliciting, accepting, or agreeing to accept any of the above from a registrant or the registrant's representative. Sec. 27.104. EXCEPTIONS. Provides that the following are not prohibited: a loan made in the normal course of business from an entity that has been legally engaged in lending money for at least one previous year; a loan, loan guarantee, or gift from a person within the second degree of affinity or consanguinity to a member of a municipal governing body; necessary expenditures for transportation or lodging for travel directly related to the duties of a member of a governing body, or a conference, seminar, or similar event requiring the member's services; incidental transportation as determined by commission rules; or political contributions. SUBCHAPTER C. SANCTIONS. Sec. 27.201. CRIMINAL PENALTIES. Provides that a person who intentionally and knowingly violates the prohibition on contingent fees (Section 27.102) commits a felony in the third degree, and a person who violates any other provision of this chapter commits a Class A misdemeanor. Provides that this chapter does not affect criminal responsibility under state perjury laws, nor does it prevent the commission from imposing a civil penalty. Sec. 27.202. CIVIL PENALTY FOR FAILURE TO REGISTER. Requires that a person who receives compensation or reimbursement or makes expenditure to influence legislation or administrative action and fails to file a registration form or a required activity report pay a civil fine determined by commission rule not in excess of three times the compensation, reimbursement, or expenditure. Sec. 27.203. CIVIL PENALTY FOR LATE FILING. Requires the commission to determine if a required filing is late. Provides that a registration filed without the required fee is considered late. Requires the commission to mail to the person responsible for the filing, the commission, and the appropriate attorney for the municipality an immediate notice of the determination of lateness. Provides that for a filing determined to be late, the person responsible for the filing is liable for a civil penalty, not to exceed $100 a day for each day the report or registration is late. Requires the commission to issue by registered mail a warning of liability to the person responsible for the filing if it is determined to be more than 30 days late, and provides that if payment is not made within 10 days after the warning, the person is liable for a fine determined by commission rule, not to exceed $10,000. Requires that penalties paid voluntarily be deposited in the municipal treasury and credited to the commission. Provides that this section is in addition to other available sanctions. Sec. 27.204. FAILURE TO FILE ALL REQUIRED FORMS. Requires the commission to determine whether all registered persons have filed all required forms, and if a person has not filed, the commission must send by certified mail a notice of its determination. Requires the commission to file a sworn complaint with the appropriate prosecuting attorney if the person has not filed the required form, statement, or report within 21 days of the date the notice is sent. Sec. 27.205. ENFORCEMENT. Authorizes the commission, the attorney general, or any municipal attorney to enforce this chapter. Authorizes a district court in the county where the municipality is located, at the request of a citizen of the state, to issue an injunction to enforce this chapter. Authorizes a person to file with the prosecuting attorney or the commission a statement alleging violations of this chapter. Sec. 27.206. VENUE. Provides that an offense under this chapter may be prosecuted in Travis County or any other county permitted under the Code of Criminal Procedure. SECTION 2. Amends Section 36.10(a), Penal Code, by including a member of a municipal governing body among those persons not required to report a gift, award, or memento under the provisions of Sections 36.08 (Gifts to Public Servant) and 36.09(Offering Gift to Public Servant), Penal Code. SECTION 3. Effective date: January 1, 2000. Requires that the governing body of a municipality establish a municipal ethics commission not later than September 1, 1999, and that the commission adopt rules and forms to implement the provisions of this chapter not later than October 1, 1999. Requires that if the municipality fails to establish a municipal ethics commission by September 1, 1999, the Texas Ethics Commission shall act as a municipal ethics commission, and if the commission fails to adopt rules or forms by October 1, 1999, the Texas Ethics Commission shall adopt rules or forms before November 1, 1999, and that both actions by the Texas Ethics Commission shall remain in effect until January 1, 2001, or the first anniversary of the establishment of the commission and its adoption of rules or forms, whichever date is later. SECTION 4. Emergency clause.