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Ian Lind • Online daily from Kaaawa, Hawaii

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Ethics Commission should take a second look at lobbying restriction

August 29th, 2011 · 5 Comments

The State Ethics Commission’s relatively new executive director, Les Kondo, has been leading the commission towards a more aggressive enforcement posture. I generally welcome the move as overdue and very much needed, and he’s doing a good job.

But, at the same time, I have concerns about at least one of Kondo’s recent moves. During a conversation this past week, I asked about his controversial advice that members of state boards or commissions are prohibited from being paid legislative lobbyists on any matters that were considered by their boards.

I told Kondo that I have doubts about his position, which has provoked serious concerns among lawmakers, lobbyists, and some other political observes.

Kondo spelled out his position in a May 26 letter to members of a legislatively-created Mortgage Foreclosure Task Force.

The State Ethics Code prohibits a member of the Task Force from being compensated to represent non-governmental organizations, such as businesses, both for-profit and not for-profit, trade organizations, or other groups, on matters in which the Task Force participated or will participate. For example, a member of the Task Force who is an employee of a company may not receive a salary to lobby on behalf of the company on legislation that was recommended by the Task Force. Similarly, a member of the Task Force may not otherwise be paid to privately lobby on behalf of a company, trade organization, or other group on legislation that was recommended by the Task Force.

Kondo vociferously defends his interpretation of the law (Section 84-14 HRS).

“When I hear people say they don’t understand what we’re saying, I go back and read all that we’ve written,” Kondo said. “It makes sense to me. Perhaps I’m biased, because I wrote part of it, but I feel like the guidance we’ve given is clear.”

Kondo acknowledged reading the statute “as literally as we can.”

He said the intent of the provision is to prevent anything akin to “influence peddling.”

“I’ve been telling folks that you’re not able to profit from the privilege of serving.”

I should be happy that Kondo and the commission are becoming more aggressive in enforcing the ethics laws and have not been afraid to ruffle feathers of those in powerful positions. But in this case I’m not. And I’ve been puzzling through why I haven’t been persuaded of Kondo’s position.

First, there’s a matter of style. I first began reading opinions issued by the ethics commission in 1983, when I was hired as state director of Common Cause, the public interest lobbying group. I’ve gone back to those prior opinions from time to time when researching stories as a reporter, and more recently as a blogger.

Traditionally, ethics opinions have been very long on precedent and nuance, and spend considerable time examining the specific factual situations they are being asked to consider. Opinions often reflect the commission’s efforts to be sure application of the law makes sense in those specific circumstances. At times, the commission has turned away from literal interpretations when it determined that they did not make sense.

For example, in Advisory Opinion 91 (1971), the commission looked at the application of the conflict of interest law to a state licensing board. At that time, the law had no provision for boards, like licensing boards, where specific industry knowledge and experience is required and where conflicts of interest are inevitable.

The commission pointed back to one of its earliest opinions, in which it had applied the conflict provisions to limit actions of board members, and quoted from an undeleted version:

… Boards, such as that of Engineers, Architects and Surveyors … are formed by legislation specifically providing that a certain number of the members of the Board be of the profession regulated. This is a clear policy decision by the legislature that the members of these professions are best informed as to the standards of proficiency in the profession to which its members should be held.

As a result, the commission declined to impose a literal interpretation of the statute. Instead of requiring licensing board members to disqualify themselves from issues involving their industry, they only required that they avoid matters directly and specifically impacting their own businesses.

The conflict of interest law was later amended to include this common sense approach as an exception to the general rule.

A person whose position on a board, commission, or committee is mandated by statute, resolution, or executive order to have particular qualifications shall only be prohibited from taking official action that directly and specifically affects a business or undertaking in which he has a substantial financial interest; provided that the substantial financial interest is related to the member’s particular qualifications.

Kondo does not finesse his advice in the letter to the foreclosure task force. He offers a simple, black & white view of the law’s meaning that has no room for subtlety.

That’s a significant difference from past practice and, as I look at it now, it’s a potential red flag that the matter really hasn’t been thought through sufficiently.

Kondo says his advice impacts only a limited number of people, but falls most heavily on professional lobbyists and “the one-man shop.”

But it would also fall heavily on public interest groups as well, since many advocacy groups rely on a key representative or employee knowledgeable about their key issues.

For example, what if the legislature appointed a task force to consider revamping the sunshine law, or campaign spending laws. Under Kondo’s interpretation, any public interest advocates named to the task force would be unable to play any role in lobbying or advising their organizations on the issue if they were paid by the organizations. Meanwhile, other special interests could afford to hire professional lobbyists in addition to any representatives they might have serving as members. I don’t think that would contribute to a higher standard of ethics.

So here was my first question to Kondo about the foreclosure task force. Since its members were selected to reflect specific interests, the exemption cited above means they are not bound by the general principle that a public employee is prohibited from taking official action that directly affects “a business or other undertaking” in which the employee, spouse, or a dependent child have a “substantial financial interest.”

Task force members, because of the need for their special backgrounds, are given a pass and allowed to ignore the most important and direct type of conflict of interest restriction by taking official action affecting their own business interests that would otherwise have been prohibited, in this case approving recommendations to the legislature.

So, I asked, isn’t it illogical to allow official actions to be taken by task force members despite their conflicts, but then prohibit them from subsequent lobbying at the legislature, where they have could not take any official action and where their influence would be diluted by the many other competing interests?

Alternatively, shouldn’t the lobbying restriction only apply to the matters not subject to the exemption, that is, any matters dealing directly and specifically with the company that the member/lobbyist has a financial interest in, as opposed to matters that apply to a number of companies in an industry or a class of companies?

In addition, Kondo’s opinion fails to acknowledge that lobbying entails a First Amendment right “to petition the Government for a redress of grievances.”

While lobbyist rights can be limited for compelling reasons, such as deterring corruption by requiring full disclosure, these limits have to be a carefully drawn as possible and only for good reason.

So far, at least, the Kondo and the commission haven’t made a compelling case, in my personal view at least.

It seems to me that the commission feels that a literal reading of the statute requires the hard-line stance. But perhaps that literal reading isn’t appropriate.

With this in mind, I think there a way to look at the relevant part of the statute that doesn’t necessarily reach the same conclusion.

My suggested alternative reading takes into account the facts of the situation, including the nature of the task force. There are different types of boards and commissions. Some can take final binding action, approving or withholding licenses, authorizing contracts, hiring and firing personnel, buying and selling public property, adopting rules and regulations that have the force of law, etc. Others can take only nonbonding actions or make recommendations. The mortgage foreclosure task force, for example, was charged with making recommendations for legislation, resulting in a bill which would then be subject to the regular legislative process, a.k.a. “sausage mill”.

In addition, it recognizes that the legislature could have directed that lobbyists would not be eligible to serve on the task force, if that were their intent.

The conflict of interest provision in question is the first part of Section 84-14(d), shown here in italics.

(d) No legislator or employee shall assist any person or business or act in a representative capacity for a fee or other compensation to secure passage of a bill or to obtain a contract, claim, or other transaction or proposal in which he has participated or will participate as a legislator or employee, nor shall he assist any person or business or act in a representative capacity for a fee or other compensation on such bill, contract, claim, or other transaction or proposal before the legislature or agency of which he is an employee or legislator.

The confusing thing here is that it is an extremely broad provision, stated in just a few words, and intended to be applied to the very different circumstances of legislators and state employees, including board and commission members.

It seems to me the first part can be unpacked into two parallel provisions.

First, for legislators:

No legislator…shall assist any person or business or act in a representative capacity for a fee or other compensation to secure passage of a bill…in which he has participated or will participate as a legislator….

And, for employees:

No…employee shall assist any person or business or act in a representative capacity for a fee or other compensation…to obtain a contract, claim, or other transaction or proposal in which he has participated or will participated as a…employee…

I think this might sidestep the application of language intended for the circumstances of legislators to the different circumstances of task force members, and avoid a blanket prohibition on legislative lobbying by task force members.

Again, the big caveat. I’m not an attorney, and certainly not an ethics attorney. And this idea isn’t fully developed here.

But I think it suggests that a careful, step-by-step analysis of the kind done for many previous ethics commission opinions might lead to a different result than a blanket prohibition on lobbying by task force members.

Tags: Ethics · lobbyists

5 responses so far ↓

  • 1 kalaheo // Aug 29, 2011 at 10:04 am

    Ian,

    I believe reasonable people can have significant differences of opinion.

    In this case Les Kondo appears to be saying that if you are given the special access allowed to task force members, being employed by a lobbying group to promote their interests is unethical.

    I may be reading that incorrectly, but it seems like a completely reasonable position. If a special interest wants to hire lobbyists… well, I still hate that, but then it’s up to the lobbyist to try get appointments, trips and dinner dates with our elected representatives.

    I not only admire Les Kondo’s position, but I admire that he is making it so clear. There is no room for the two standard ‘hand caught in the cookie jar’ excuses of “oh my goodness, all these rules and regulations are just too complicated to keep straight” OR “but I was accepting money to lobby from inside in a way that completely different from the way that’s against the rules.”

    I’m still pretty tweaked that Councilman Nestor Garcia got away with accepting hundreds of thousands of dollars from a pro-rail lobbying organization for a no-show do-nothing “job” while functioning as the swing vote that kept this current rail plan alive. He apparently got a complete pass from the Honolulu ethics board as well as from most of our local media.

    We need more people working for us like Les Kondo. I wish him all the best after he gets fired and replaced by some insider stooge.

  • 2 Larry // Aug 29, 2011 at 10:45 am

    The Ethics Commission is there to monitor and enforce the ethics laws, not unethical conduct. This is key to understand, and I think both Ian and Les Kondo are clear on that.

    If adjustment is needed, it needs to be done with legislation. The Legislature has refused recently to hear any ethics bills that have been introduced.

    Perhaps the way around that is through advocacy. Citizens and citizens groups need to pressure the Legislature. To do that, though, requires some understanding of what is going on, or at least, trust in advocacy organizations such as Common Cause to dig into and understand the issues. We need to stop tolerating power plays, conflicts of interest, and money grabs on the part of our elected officials.

    Reading Ian’s article isn’t easy. I suspect that the average person’s eyes would glaze over very quickly. Ian has that understanding based on his experience, and he has great trust from his readers. But he’s not an advocate, except basically in writing excellent analytical articles like this one.

    We also could use simplification so that both ordinary citizens and legislators can understand the law and hence, the behavior that is expected of them. As we saw during that terrible Hee/Galuteria bill process this past session, legislators not only don’t understand the law, but don’t want to be controlled by the law. Remember how they cut off Les Kondo’s testimony (video on Disappeared News)? That was a clear demonstration by the chair of the committee that ethics was not high on his agenda. It was more than a little insight into the legislative mind, as was the hostile questioning of Kondo that followed. Legislators were ignorant of the law and didn’t want to discuss how it should or might be interpreted.

    Les Kondo is on the right track. He’s trying to make the law clear. This is a welcome contrast to previous practice.

    If things need changing, it’s going to be a joint effort. He won’t be able to do that alone.

  • 3 ohiaforest3400 // Aug 29, 2011 at 11:46 am

    This seems to be a common-sense step in the right direction, although the statute needs to be gender neutralized in the process (not “he” this and “he” that).

    I agree that task force members benefit to some extent from their participation (e.g., they are deemed credible/authoritative and may have opportunities to meet with legislators). However, I’m not sure “special access” is involved anymore than what those members get in their regular lobbying. Certainly, iof you asked non-profit/tax-exempt entities regularly included on task forces because they are “stakeholders” but can not dole out campaign cash, I don’t think you’d find any of them claiming special access by virtue of their task force membership. Rather, it’s a chance to amplify their voice a bit while educating the legislature and the public, as a whole.

    Fact is, legislators often use task forces as shields/swords for what they were going to do anyway. If the task force makes a recommendation with which they agree, they defend their position as one recommended by the task force, not by their own, perhaps dubious agenda. If the task force makes a recommendation with which they disagree, they just ignore it. Other times, task forces are used to push an issue off the front burner or to punt to make it look like the legislature is doing something. They don’t ant to admit it, but the legislators themselves lack the expertise and time during session to act on complicated issues, will not fund the staff resources necessary to get/keep the expertise in-house, and want to get validation/advice on the cheap.

    The legislature needs to introduce/hear this type of bill and do something about it, not just punt to a task force or behind the scenes arm twisting. I’m not holding my breath, ‘tho.

  • 4 Dan Mollway // Aug 29, 2011 at 2:34 pm

    Ian, I think you have written an excellent article on the problems engendered by the State Ethics Commission’s May 26 opinion regarding the Mortgage Foreclosure Task Force. I think your instincts on the law, review and commentary on how the Commission in the past carefully analyzed the ethics laws, and ramifications of the May 26 opinion are quite accurate. I mention this May 26 opinion as a Commission opinion, as I assume such an important ruling would not have been issued without the involvement of the Commissioners.

    It would take a lot of space to go over the problems with the May 26 opinion. As you point out, this is a very complex area, and a very simplistically written statute (as well as confusing statute) is being interpreted in a very simplistic and categorical way.

    I read the May 26 opinion, and was quite confused by it in terms of the extent of what was being prohibited, other than to say every “matter” raised by any member of the Task Force during its meetings. I don’t think a simplistic memorandum opinion in this case was appropriate; the matter should have been subject to a great deal of research before the issuance of an opinion, and the differences between a task force and other state boards should have been carefully considered. As you point out, there is quite a difference between boards that deal with specific matters, such as contracts, permits, and rulings, as opposed to a group of people representing diverse viewpoints brought together (on purpose) for the purpose of narrowing issues for the legislature to consider.

    Further, as far as I can recall, this is the first time this issue has come before the Commission. Thus, an advisory opinion should have been issued by the Commission after careful research. I don’t think it is a straight-forward question.

    The statute in question, section 84-14(d), deals with “currently serving” state employees, state officials and state board members representing third parties “for a fee or other compensation” in basically two types of situations.

    The first of these relates to representing a third party for pay before one’s own agency. Apparently, this was a problem when the ethics code was written, and it does deal with the notion of influence-peddling. For example, should an employee in one division of a department be hired by a third party to represent that party for pay before his or her own division or another division of the department? The answer is no, because the employee is likely to have inside information and long-time connections to fellow employees. The Commission has thus stated in advisory opinions in the past that a state employee cannot be hired by a company to sell things to his or her own department. This problem does come up, but not too often.

    The second restriction in section 84-14(d) relates to a situation that comes up only rarely–perhaps a few times in the last 30 years. That restriction is that a state official, employee, or board member cannot represent a third party for pay if the state employee, etc., participated in the “matter” of the representation, or will in the future participate as a state employee, etc., in the “matter” of the representation.

    I use the term “matter” because while the statute refers to specific things like “contracts” and “claims”, it has sweeping language that brings in any “transaction” or “proposal”. Because of this broad language, in the past the Commission, in interpreting section 84-14(d), has often used the word “matter”.

    It should be noted that it is very rare for a “matter” that arises in one agency to move to another for official action. Thus, there are probably only a few advisory opinions on this particular restriction.

    As you point out, especially in reference to Advisory Opinion 91, the Commission in the past has not interpreted statutes merely literally, and to do so actually flies in the face of the primary rule of statutory interpretation, which is that statutes are to be construed in terms of legislative intent. In other words, what was the (ethical) evil meant to barred by section 84-14(d), and does that evil exist with regard to this task force and others that might be created?

    As you point out, there are also First Amendment issues here, in the sense that one has the right to petition government for redress of grievances, etc. Also to be considered is the fact that the Lobbyists Law (chapter 97, HRS) allows legislators to invite lobbyists occasionally to appear before the legislature without triggering the reporting requirements of the lobbying law. So, there is the additional issue of what happens if a legislator or legislative committee were to invite a lobbyist who serves on a task force to comment on a bill that may raise similar or the same issues raised by the task force?

    Again, this is a very complex area, and should be subject to extensive consideration before an opinion is issued.

    As you suggest, the current ruling would bar, for instance, the director of Common Cause from serving on a task force on issues of good government because the director lobbies on these issues. You point to similar situations. These are important considerations.

    I am writing about this because hastily written opinions by the Commission will have the unfortunate effect of weakening the stature of the Commission, thus not furthering ethical government, but rather undermining confidence in the Commission.

    I do think a task force in general would be subject to the State Ethics Code (I would not want to see members of a given task force being allowed to receive expensive gifts); however, that does not mean that the various provisions of the State Ethics Code apply in the same way all the time–one has to consider the particulars of any given situation.

    I would also say that notions that the Commission now is more aggressive in enforcement than prior Commissions is absolutely not true. It should be kept in mind that the Commission makes all determinations in terms of when to enforce the law and to what extent. Thus, the Commissioners ultimately determine the extent of enforcement.

    It should also be kept in mind that the Commission’s rulings can be appealed ultimately to the State Supreme Court–thus care should be taken when rendering advice or enforcing the laws. The Commission is not the final arbiter of what the State Ethics Code means. The State Supreme Court is. The Commission should never be afraid to rule because of a lawsuit, but on the other hand, care should be taken to avoid unnecessary litigation.

  • 5 Lopaka43 // Aug 29, 2011 at 4:47 pm

    Ian,
    I strongly agree with the sensible position you are taking.
    I would add that there is another benefit in allowing lobbyist participation in task forces and other working discussion groups. If the task force is actually representative of all the interests involved in a controversial issue, it brings all parties face to face and can produce understanding and consensus building that is unlikely to occur in the standard settings.
    Finally, I would say that Les Kondo caused the same sort of problem with the Neighborhood Boards with his literal interpretations of the Sunshine Law, preventing Neighborhood Board members from participating in community planning workshops because the matter would come before the Board although the Board’s opinion is purely advisory.
    It took several sessions at the Legislature to create a process by which Neighborhood Board members could legally participate in the planning for their Neighborhoods!

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