LOBBYING DISCLOSURE

IN PENNSYLVANIA

2015 ANNUAL REPORT

PENNSYLVANIA DEPARTMENT OF STATE

February 2017

Tom Wolf

Governor

Pedro A. Cortés

Secretary of the Commonwealth

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Summary of Act 134 of 2006 This Act amends Title 65 (relating to public officers) providing for regulation and disclosure of lobbying activity. The Act establishes the authority of the legislature to regulate persons employed to influence the actions of the General Assembly and the Executive Department in a "fair and equitable manner." It expressly states that membership in a regulated profession shall not excuse a lobbyist from compliance. The Act defines lobbying as "an effort to influence legislative action or administrative action" and includes direct or indirect communication, office expenses, and providing any gift, hospitality, transportation or lodging to a state official or employee for the purpose of advancing the interest of a lobbyist or principal.

The Act defines "administrative action" to include:

- An agency’s: o proposal, consideration,

promulgation or rescission of a regulation;

o development or modification of a statement of policy;

o approval or rejection or of a regulation; or

o procurement of supplies, services and construction under 62 Pa.C.S. (relating procurement).

- The review, revision, approval or disapproval or a regulation under the Regulatory Review Act.

- The Governor’s approval or veto of legislation.

- The nomination or appointment of an individual as an officer or employee of the Commonwealth.

- The proposal, consideration, promulgation or rescission of an executive order.

The Act defines "legislative action" to include an action taken by a state official or employee involving the preparation, research, drafting, introduction, consideration, modification, amendment, approval, passage, enactment, tabling, postponement, defeat or rejection of: -- legislation; -- legislative motions; -- a veto by the Governor; --confirmation of appointments by the

Governor; or -- appointments to public boards; or commissions by a member of the

General Assembly.

Lobbyists, lobbying firms andprincipals may register online atwww.palobbyingservices.state.pa.us.If filing online, registrants may pay theregistration fee online with a creditcard via the website. If paying bycheck, the registrant must print aremittance form that has been pre-populated with their specificinformation and mail it along with theregistration fee. Registration formsare available on the Department’swebsite (www.dos.pa.gov). Theregistration forms can be printed andmailed to the Department. Once theregistration, registration fee and photo(lobbyists only) are received by theDepartment, registration is consideredcomplete. A registration number isthen issued, starting with the letter Pfor principals, F for firms or L forlobbyists. For more information on theDepartment’s Online Services, pleasesee page 6.

Because filing online is faster and moreconvenient, online registrations haveincreased. The number of registrationstends to be higher during the first yearof a biennial registration period. SeeFigure 1, page 3.

If any registration informationchanges, the registrant is required tonotify the Department of that changeby filing an amendment form within 14days of the change taking place. Theseforms are available on theDepartment’s website. Amendmentsmay also be completed online.

7%

41%52%

New Lobbying Activity

Firms

Lobbyists

Principals

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Registration

In 2015, The Department increased thebiannual registration fee from $200 to$300. Any lobbyist, lobbying firm, orprincipal who intends to registerstarting in 2015 must now pay $300 toregister. A lobbyist, lobbying firm orprincipal must file a biennialregistration with the Department ofState, unless exempt under §13A06 ofAct 134 of 2006. This registration mustbe filed within ten days of acting in anycapacity as a lobbyist, lobbying firm orprincipal. See the definition of“engaging in lobbying” in theregulations at 51 Pa. Code § 51.1.Registration must include a $300registration fee to be received withinfive days of filing the registrationstatement, either online or by paper.

The most common exemptions fromregistration include:

--§13A06(4): “an individual whose economic consideration for lobbying, from all principals presented, does not exceed $2,500 in the aggregate during any reporting period”

and

--§13A06(5): “an individual who engages in lobbying on behalf of the individual’s employer if the lobbying represents less than 20 hours during any reporting period.”

A full list of registration exemptionscan be found in §13A06 of Act 134 of2006.

Lobbyists must also supply a photowithin five days of filing a registrationstatement.

3

17

6

4

2

177

25

70

12

196

34

89

23

-50 50 150 250 350 450 550 650 750 850

2015 Online

2015 Paper

2014 Online

2014 Paper

New Registration ComparisonPaper and Online Filings of Firms, Lobbyists and Principals for 2014 and 2015

Principals Lobbyists Firms

Figure 1

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Registration Renewals

A lobbyist, lobbying firm or principalmust renew their registration with theDepartment of State (Department) atthe beginning of each new biennialregistration period, unless exemptunder §13A06 of Act 134 of 2006.

Lobbying registrations expire 10business days after the beginning ofthe new registration period. Aregistration renewal must be filedwithin ten days of acting in anycapacity as a lobbyist, lobbying firm orprincipal. See the definition of“engaging in lobbying” in theregulations at 51 Pa. Code § 51.1.Registration must include a $300registration fee to be received withinfive days of filing the registrationstatement, either online or by paper.

At the time of renewal, registrants areresponsible for reviewing their currentregistration record for any updates orchanges that should be made toensure accurate disclosure.

Registrants have the option ofrenewing their registration online or bypaper. Registrants also have theoption of paying their renewal fee bycredit card if they are completing therenewal online.

Registrants are strongly encouraged touse their current registration record tocomplete their renewal. Someregistrants erroneously create newregistration records when attemptingto renew their registration. This cancreate gaps in the continuity ofregistration information and problemsin accurately assessing non-complianceissues. To continue to use your currentregistration, please renew using yourregistration number. This can becompleted online by selecting theaction “Renew” next to your expiredregistration.

Because renewing online is faster andmore convenient, the Department hasseen a higher volume of registrationrenewals completed online. See Figure2, page 5.

All registrations that are not renewedby mid-January of the new registrationperiod automatically change to astatus of “expired.” If a registrant isnot actively lobbying at this time, theymay choose to wait until they exceedthe income thresholds for registrationbefore renewing their registration.

A registration with a status of“expired” does not prevent theregistrant from amending any priorQuarterly Expense Reports. Once aregistration has expired, it may not betransferred electronically to a new userunless the registrant renews by checkor by having the registration renewedby the previous owner by credit card.The Department gives a 15 day graceperiod for registrations to betransferred to users who will filing onbehalf of the registrant.

Terminations

If a registrant intends to ceaselobbying activity in the Commonwealth,the registrant may file a notice oftermination by paper or online.

If a former registrant wishes to beginlobbying activity after filing a notice oftermination, the former registrantmust initiate a new registrationstatement.

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Figure 2

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Expense Reporting

Section 13A05(a) of the Act requires aregistered principal to file quarterlyexpense reports. If a lobbyist or lobbyingfirm reports all expenses to and throughtheir respective principals, then thelobbyist or lobbying firm is not required tofile quarterly expense reports.

Under certain circumstances, a lobbyingfirm or lobbyist may be required to submita quarterly expense report. According to§13A05(b)(6) of Act 134, a lobbying firm orlobbyist not associated with a firm shallsubmit an expense report if lobbyingexpenses were not contained in anyexpense report filed by a representedprincipal.

A lobbying firm or lobbyist may attach astatement to the report filed by arepresented principal describing the limitsof the lobbyist’s or lobbying firm’sknowledge concerning the expenditurescontained in the principal’s report.

Reporting Periods:

1st Quarter: January 1 - March 31Deadline: April 30

2nd Quarter: April 1 - June 30Deadline: July 30

3rd Quarter: July 1 - September 30Deadline: October 30

4th Quarter: October 1 - December 31Deadline: January 30

0

1000

2000

3000

4000

5000

6000

2015 2014

Paper Reports

Online Reports

Expense Filings for 2014 and 2015

2015 2014

Paper- 1209 (18%) Paper- 1,306 (19%)

Online- 5378 (82%) Online- 5,643 (81%)-------------------------------- ---------------------------------6,587 6,949

Figure 3

The total number of expense reports increased slightly from 2015 to 2014. The majority of reports were filed online. Please see Figure 3.

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General Subjects of Lobbying and Lobbying Costs

Top Ten General Subjects of Lobbying*

2015 2014

1. Health Care 1. Health Care

2. Budget (State) 2. Budget (State)

3. Taxation 3. Energy

4. Energy 4. Taxation

5. Education 5. Education

6. Environment 6. Medicaid/Medicare

7. Insurance 7. Insurance

8. Medicaid/Medicare 8. Environment

9. Liability Reform 9. Economic Developmt.

10. Consumer Affairs 10. Managed Care

*Subjects of lobbying include costs associated with direct and indirect communication, as well as gifts, hospitality, transportation and lodging.

Allocated Cost Categories Reported 2014

Total Expenditure Costs* $2,171,979

Total Direct Communication Costs $80,812,622

Total Indirect Communication Costs $33,153,097

Grand Total $116,371,647

Allocated Cost Categories Reported 2015

Total Expenditure Costs* $7,911,837

Total Direct Communication Costs $309,048,252

Total Indirect Communication Costs $216,806,401

Grand Total $533,766,490

(See Figure 4, Page 8)

*Total expenditure costs include gifts, hospitality,transportation and lodging for state officials oremployees or their immediate families.

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Allocated Lobbying Cost Categories Reported

0 20 40 60 80 100 120 140

2013

2014

Millions

Total Expenditures* Total Direct Communication

Total Indirect Communication Grand Total

*Total expenditure category includes gifts, hospitality, transportation and lodging for state officials or employees or their immediate families.

Figure 4

Lobbying Disclosure Audit Lottery

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The Department’s Division of CampaignFinance and Lobbying Disclosure(Department) holds an audit lottery within60 days of the close of the 4th Quarter.The Department randomly selects 3% of allregistrants for the purpose of auditingregistration and expense records. TheDepartment sends notification letters toall selected registrants, informing them ofthe auditing procedures. The Departmentthen provides all registration andreporting records to an independentauditor.

Auditing Procedures

The auditors contact the registrantsdirectly to request any records that aredeemed necessary to complete the audit.Based on their review of the records, theindependent auditors draft a report to theDepartment and registrant. At that time,the registrant is invited to respond to thefindings. The auditors then issue a finalreport to the registrant and theDepartment. When required, theDepartment acts as an intermediarybetween the auditors and the registrantthroughout the auditing process.

In 2015, the Department selected 91registrants to be audited by The BinkleyKanavy Group, LLC. All audit reportsremain confidential, except whenrequested by the State Ethics Commissionas part of an investigation into an allegedviolation. As such, the audits are a part ofthe enforcement mechanism under theAct.

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Online Services

The Department launched its LobbyingService website in January 2007. Thewebsite provides valuable informationto the registrant, the public and theDepartment.

Registrants and other public site userscan use a search engine that allowsthem to view all registrations andexpense reports that have been filedwith the Department. The online filingsystem provides a search feature thatcan search by a registration number,the first or last name of a lobbyist, thename of a firm or principal, or even theletter P, F, or L entered into theregistration number field to see allregistered principals, firms, orlobbyists. The Department’s websiteprovides instructions on how toregister and file reports, amendmentsand terminations. Individuals can printthese forms for submission to theDepartment if they choose not to usethe online system.

The PA Lobbying Services websiteprovides the option to view and printthe Department’s Lobbying Directory,which lists all registered lobbyists andfirms with accompanying photo andcontact information.

Individuals can also access printableversions of Act 134 of 2006, the finalregulations, the Manual for Accountingand Reporting and reporting deadlinesthrough the Department of State’swebsite.

The PA Lobbying Services websiteallows registrants to create ausername and password that providesthem with access to many other areasof the site. Once they log in, they willbe able to file a registration online.The online system allows users tomanage their registration(s) and filetheir expense reports at any time priorto filing deadlines. Access is available24 hours a day, seven days a week.This allows the user to view the statusof their registration or report and alsoassures them the Department is inreceipt of their filings.

In addition, the Department of Statewebsite offers information onprocedures to obtain ID badges forlobbyists. The ID badges for lobbyistsprovide access to the Capitol Buildingallowing entrance without goingthrough security.

The Department completed anupgrade to the PA Lobbying Serviceswebsite in 2013. There is now theoption for payment of registration feesonline by credit card. Given that allrequired information has beenprovided, this immediately completes aregistration without delay. Also, theDepartment now provides anadvanced search engine includingsubjects of lobbying, affiliated politicalaction committees, affirmations, giftsand subjects of lobbying.

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Additional Information

Administration:

Responsibility for administration and enforcement of Act 134 is assigned to three state agencies and the Pennsylvania Disciplinary Board of the Supreme Court as follows:

• The duties of the Pennsylvania Department of State include overseeing registration, quarterly expense reporting and audits.

• The Pennsylvania State Ethics Commission is responsible for administrative enforcement of the Act and for giving advice and opinions of the Act.

• The Pennsylvania Attorney General is responsible for criminal enforcement of the Act.

• The Disciplinary Board of the Pennsylvania Supreme Court is responsible for administrative enforcement of the Act as it pertains to attorneys.

Contact Information:

Pennsylvania Department of StateDivision of Campaign Finance and Lobbying Disclosurewww.dos.pa.gov

717-787-5280

Pennsylvania State Ethics Commission www.ethics.state.pa.us717-783-1610

Pennsylvania Attorney General www.attorneygeneral.gov

717-787-3391

Pennsylvania Department of State Office of Communications and Press717-783-1621

Pennsylvania Department of StateOffice of Legislative Affairs717-783-1771