Annual GAO Report on Federal Lobbying Compliance Shows Mixed Enforcement Bag: Fewer Audits, More and Larger Enforcement Penalties
Monday, March 28, 2016

On Friday, the Government Accountability Office (GAO) issued its ninth annual report on compliance with the federal Lobbying Disclosure Act (LDA), covering from mid-2014 through mid-2015. As in the past, the report is based on random audits of lobbyists’ filings and analysis of enforcement by the U.S. Attorney’s Office for the District of Columbia.  We examine the report’s data on enforcement, discuss common compliance issues, and identify three takeaways from the report.

Enforcement on the Rise

The report contains two noteworthy facts about enforcement of the LDA.  First, the GAO conducted fewer audits of quarterly LD-2 reports than it had in the past, looking at only 80 reports instead of the approximately 100 that it has historically examined (though it still audited the standard 160 semi-annual LD-203 contribution reports).  The report does not give any indication of whether this was a temporary or permanent reduction in audits, or what caused it.  While the audits are supposedly done at random and GAO does not conduct them to force registrants into compliance, they still make up part of the enforcement scheme insofar as surviving an audit should be a goal of all registrants.

Second, while audits were down, civil penalties are up in both frequency and amount, with potential for continued increases in coming years.  According to the report, we should expect the U.S. Attorney’s office to announce up to five LDA enforcement actions soon.  This could make 2015-2016 the busiest year for civil penalties on record.  The GAO also notes that a previously-announced settlement of $125,000 is the largest ever for noncompliance.  Finally, in 2013 (the most recent year with complete data) Congress referred significantly more noncompliant lobbyists to the U.S. Attorney for potential enforcement than in prior years.  This could indicate even more civil settlements to come.

Common Compliance Issues

The areas where the GAO found the highest rates of noncompliance included:

  • Former Positions. 21% of LD-2 reports may not have properly disclosed lobbyists’ prior government work. In advance of audits, the GAO searches public sources like LinkedIn to review work history of audited lobbyists to find unreported positions that it can ask about in the audit.

  • Rounding. 31% of LD-2 reports did not round to the nearest $10,000. The report speculates, based on anecdotal evidence, that some registrants report exact amounts instead of rounded amounts because the rounding rule is contained in congressional guidance and the law, but the LD-2 form can be read to request an exact dollar figure.

  • LD-203 Reporting. 15% of registrants failed to file semi-annual LD-203 reports documenting political contributions, required of all lobbyists whether they made covered contributions or not. This is a big issue, because the LD-203 both reports contributions and is a mechanism of ensuring lobbyist compliance with Congressional gift rules. Lobbyists who do not file an LD-203, even if inadvertently, avoid this compliance mechanism. The auditors also check these reports against FEC campaign finance reports to seek out violators.

Three Key Takeaways

The report contains a few takeaways for registrants.  First, compliance is not easy.  By many of the rubrics the GAO measured, 20% or more of registrants are not in compliance with the law even though most of those audited said compliance was easy or very easy.  This indicates that even those who think they are in close compliance may have missed an issue.  Second, while odds of facing audit are slightly down, odds of paying a penalty are increased, as are penalty amounts.  While these cases still focus on what the GAO refers to as “chronic offenders,” the U.S. Attorney’s Office’s increased emphasis over the years on these cases bears watching.  Third, the GAO has continued to streamline and perfect its audit processes and is looking at more than just filings – for example, the report explains GAO might look at lobbyists’ social media accounts and FEC reports to catch noncompliance.  For these reasons, it is more important than ever that registrants be prepared for an audit or potential enforcement action.


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