Trade Associations Targeted by New Obama Administration Regulation

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September 21, 2011; Source: PoliticoAs Politico puts it, “President Barack Obama isn’t finished with K Street.” Last week NPQ Newswire covered a report from Charity Lobbying in the Public Interest that indicated that one of the Obama Administration’s policies to rein in the influence of lobbyists had an unexpected deleterious effect: the two-year prohibition against lobbyists taking positions with the executive branch in agencies they had previously lobbied actually led to decreased transparency in K Street lobbying, with particularly adverse consequences for nonprofits that lobby.

Now, the Obama Administration’s Office of Government Ethics is promulgating a rule that would prohibit federal employees from attending the all-but-ubiquitous Capitol Hill receptions, annual trade association meetings, and policy seminars sponsored by trade associations. There are two exceptions: If a federal government employee has a speaking gig at the event or if the event is sponsored by “nonprofit professional associations, scientific organizations and learned societies.”

If you’ve spent any time on Capitol Hill, it’s hard not to pass one of these events and wonder how you might sneak in and score some high-quality food and low-quality trinkets. But this is serious business for the tens of thousands of trade association members—501(c)(3)s, 501(c)(4)s, and 501(c)(6)s—that belong to the American Society of Association Executives. The organizations represented on the ASAE board reflect the diversity of associations that might or might not be affected by this rule: From the American Industrial Hygiene Association to the Association of Home Appliance Manufacturers, the American Speech-Language-Hearing Association, the Fort Worth Convention and Visitors Bureau, Hyatt Hotels and Resorts, the American Society of Civil Engineers, Delta Sigma Phi Fraternity, the American Beverage Association, and the American Society for Public Administration.

As a trade association of trade associations, ASAE can’t advocate solely for the “learned societies” among its members while ignoring the corporate special interests that are also in the mix. ASAE president John Graham has asked to meet with the Office prior to the November 14 close of the period for comments on the proposed regulation in order to make the case for exempting all associations from this rule. In his letter to the OGE acting director, Graham wrote,

Yes, many trade associations do engage in advocacy, but they also hold numerous programs, seminars, and other events where industry experts share valuable perspectives, raise important questions, and help formulate strategies for addressing difficult, complex issues. Banning government employees from these types of events does not promote informed policymaking or rule making.

Politico quoted a couple of lawyers saying that the proposed rule doesn’t quite make sense, particularly in exempting what might be learned societies that might also do a lot of heavy special-interest lobbying too, such as the American Bar Association fighting against tort reform or the American Medical Association taking whatever stands it might want on Medicare and Medicaid reimbursement rules.

Applauding the proposed rule, however, was the Ralph-Nader-founded Washington watchdog, Public Citizen, even though the rule would apply to its own events and prohibit federal employees from participating unless they were speakers. According to Public Citizen’s Craig Holman, “These proposed rules are excellent, in a word. Employees were not supposed to attend these events that were being conducted by prohibited sources—anyone who had business before that agency.”

Will this rule clamp down on special interest lobbyists wining and dining federal government employees, further dampening the power and influence of K Street, or is this another well-intentioned Obama Administration effort to control lobbyists that will inadvertently harm nonprofit-sector outreach and education to federal officials?—Rick Cohen

  • Steven T. Ast

    AESC and Obama advisors should differentiate “trade associations” and “membership societies”.

    Either can(and usually do) have separate education foundations which afford them tax-deductible 501(c)(3) status, but their (c)(4) or (c)(6) status does not offer tax-deductibility. The folks at the U.S. Treasury Department oversee their 501(c)(3) status.

    (c)(4) and (c)(6) status is another matter-who oversees/evaluates?

    The Obama Administration’s recommendations re
    lobbying should apply to all.