SB2931

SECTION 1. The legislature funds that public trust in government is essential for our democracy to function effectively. One area of concern has been public perception of undue influence by lobbyist on legislative decisions. The current approach for addressing this concern has been to require registration of lobbyists and public disclosure of their expenditures and activities. However, Hawaii's lobbyist disclosure law appears to contain numerous loopholes that allow lobbyists to evade disclosure of their expenditures and activities. For example, a review of all lobbyist reports shows only eight disclosures of expenditures involving legislators.

Lobbyists are able to influence public decisions not only through their lobbying business, but also through contributions to political campaigns and gifts to public office. Even a series of gifts of small value can help build influential relationships with public officials. To ensure lobbyist disclosures are accurate, the Hawaii ethics commission needs the authority and staffing to conduct spot audits.

While lobbying often occurs at the legislature, officials in the executive branch also make public decisions that involve lobbying, such as whether to veto a bill, release a project's funding, select a contractor, or approve permits. These lobbying activities should be included in the state law regulating lobbyists.

The purpose of this Act is to provide a more comprehensive law to govern lobbyists in the State.

SECTION 2. Chapter 97, Hawaii Revised Statutes, is amended by adding two new sections to be appropriately designated and to read as follows:

"§97- Persons or entities that hire lobbyist; registration. (a) Each person or entity that employs or contracts for the services of one or more lobbyists, whether independently or jointly with other persons, shall file a registration form with the state ethics commission within five days of hiring a lobbyist.

(b) Each person or entity shall provide and certify the following information:

(1) The name, mailing address, and business telephone number of the person or entity;

(2) The name and principal place of business of the person or entity; and

(3) The subject areas on which the lobbyist has been employed or contracted to lobby.

(c) A registered person or entity shall report any change in any of the information contained in the registration statement within ten days after the change has occurred.

(d) Any person or entity that is required to register under this section shall file a notice of termination within ten days after the lobbyist ceases the activity for which the lobbyist was hired. The person or entity shall remain subject, however, to the requirements of chapter 97 for the period during which the registration was effective.

§97- Retention of records. Each lobbyist shall retain all records, including financial documents, receipts, computer records, or other records necessary to substantiate compensation, for a period of four years."

SECTION 3. Section 97-1, Hawaii Revised Statutes, is amended to read as follows:

"§97-1 Definitions. When used in this chapter:

[~~(1)~~] "Administrative action" means the proposal, drafting, consideration, amendment, enactment, or defeat by any administrative agency of any rule, regulation, or other action governed by section 91-3[.], and includes any actions taken by the governor, lieutenant governor, executive department directors, administrative boards, and public employees, excluding employees of the judiciary.

[~~(2)~~] "Administrative agency" means a commission, board, agency, or other body, or official in the state government that is not a part of the legislative or judicial branch.

[~~(3)~~] "Contribution" includes a gift, subscription, forgiveness of a loan, advance, or deposit of money, or anything of value and includes a contract, promise, or agreement, whether or not enforceable, to make a contribution.

[~~(4)~~] "Expenditure" includes a payment, distribution, forgiveness of a loan, advance, deposit, or gift of money, or anything of value and includes a contract, promise, or agreement, whether or not enforceable, to make an expenditure. "Expenditure" also includes compensation or other consideration paid to a lobbyist for the performance of lobbying services. "Expenditure" excludes the expenses of preparing written testimony and exhibits for a hearing before the legislature or an administrative agency.

[~~(5)~~] "Legislative action" means the sponsorship, drafting, introduction, consideration, modification, enactment, or defeat of any bill, resolution, amendment, report, nomination, appointment, or any other matter pending or proposed in the legislature.

[~~(6)~~] "Lobbyist" means any individual who for pay or other consideration engages in lobbying in excess of five hours in any month of any reporting period described in section 97-3 or spends more than $750 lobbying during any reporting period described in section 97-3.

[~~(7)~~] "Lobbying" means communicating directly or through an agent, or soliciting others to communicate, with any official in the legislative or executive branch, for the purpose of attempting to influence legislative or administrative action or a ballot issue.

[~~(8)~~] "Person" means a corporation, individual, union, association, firm, sole proprietorship, partnership, committee, club, or any other organization or a representative of a group of persons acting in concert."

SECTION 4. Section 97-2, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

"(b) Each lobbyist shall provide and certify the following [~~information~~]:

(1) The name, mailing address, and business telephone number of the lobbyist[.];

(2) The name and principal place of business of each person by whom the lobbyist is retained or employed or on whose behalf the lobbyist appears or works and a written authorization to act as a lobbyist from each person by whom the lobbyist is employed or with whom the lobbyist contracts[.];

(3) The subject areas on which the lobbyist expects to lobby[.];

(4) A photograph of the lobbyist; and

(5) A $50 registration fee; provided that this fee shall not apply to non-profit organizations that have been determined and designated to be a non-profit organization by the Internal Revenue Service, with gross revenues of less than $50,000 per year."

SECTION 5. Section 97-2.5, Hawaii Revised Statutes, is amended to read as follows:

"§97-2.5 Renewal of registration. (a) Each registered lobbyist shall renew the lobbyist's registration [~~biennially~~] annually by filing a registration and authorization form with the state ethics commission within ten days of the opening of [~~the 1983~~] each regular session of the legislature [~~and on every odd-numbered year's session thereafter~~]."

SECTION 6. Section 97-3, Hawaii Revised Statutes, is amended as follows:

1. By amending subsection (a) to read:

"(a) The following persons shall file a statement of expenditures with the state ethics commission on March 31, May 31, and January 31 of each year:

(1) Each lobbyist[.];

(2) Each person who spends $750 or more of the person's or any other person's money in any six-month period for the purpose of attempting to influence legislative or administrative action or a ballot issue by communicating or urging others to communicate with public officials; provided that any amounts expended for travel costs, including incidental meals and lodging, shall not be included in the tallying of the $750[.]; and

(3) Each person who employs or contracts for the services of one or more lobbyists, whether independently or jointly with other persons. If the person is an industry, trade, or professional association, only the association is the employer of the lobbyist."

2. By amending subsection (c) to read:

"(c) The statement shall contain the following information:

(1) [The name and address of each person with respect to whom expenditures for the purpose of lobbying in the total sum of $25 or more per day was made by the person filing the statement during the statement period and the amount or value of such expenditure;

~~(2)~~ The name and address of each person with respect to whom expenditures for the purpose of lobbying in the aggregate of $150 or more was made by the person filing the statement during the statement period and the amount or value of such expenditures;

~~(3)~~] The total sum or value of all expenditures for the purpose of lobbying made by the person filing the statement during the statement period in excess of $750 during the statement period;

(2) Information on meetings or events, including dinners, receptions and parties, sponsored in whole or in part by the lobbyist, to which public officials and their staff are invited, including the event purpose, date, names of attending public officials and staff, total amount paid for the event, and estimated value provided;

(3) Any campaign donations made or gifts given to public officials and staff, including the date of the donation or gift, the dollar amount of the contribution or value of the gift, and the name of the public official or staff that accepted or received the donation or gift;

(4) The name and address of each person making contributions to the person filing the statement for the purpose of lobbying in the total sum of $25 or more during the statement period and the amount or value of such contributions; and

(5) The subject area of the legislative and administrative action which was supported or opposed by the person filing the statement during the statement period[.]; including any bill number or rule number, if applicable."

SECTION 7. Section 97-6, Hawaii Revised Statutes, is amended to read as follows:

"§97-6 Administration. (a) The state ethics commission shall administer and implement this chapter, and shall have the following powers and duties:

(1) Initiate, receive, and consider charges concerning alleged violations of this chapter, and investigate or cause to be investigated on a confidential basis, the activities of any person to determine whether the person is in compliance with this chapter;

(2) Prescribe forms for the statements and reports required by sections 97-2 and 97-3 and establish orderly procedures for implementing the requirements of those provisions;

(3) Render advisory opinions upon the request of any person subject to this chapter. If no advisory opinion is rendered within thirty days after the request is filed with the commission, it shall be deemed that an advisory opinion was rendered and that the facts and circumstances of that particular case do not constitute a violation of this chapter. The opinion rendered or deemed rendered, until amended or revoked, shall be binding on the commission in any subsequent charges concerning the person subject to this chapter who sought the opinion and acted in reliance on it in good faith, unless material facts were omitted or misstated by the person in the request for an advisory opinion;

(4) Issue subpoenas, administer oaths, and exercise those powers conferred upon the commission by section 92-16;

(5) Adopt rules, not inconsistent with this chapter, as in the judgment of the commission seem appropriate for the carrying out of this chapter and for the efficient administration of this chapter, including every matter or thing required to be done or which may be done with the approval or consent or by order or under the direction or supervision of, or as prescribed by, the commission. The rules, when adopted as provided in chapter 91, shall have the force and effect of law; [~~and~~]

(6) Have jurisdiction for purposes of investigation and taking appropriate action on alleged violations of this chapter in all proceedings commenced within three years of an alleged violation of this chapter. A proceeding shall be deemed commenced by the filing of a charge with the commission or by the signing of a charge by three or more members of the commission. Nothing shall bar proceedings against a person who by fraud or other device prevents discovery of a violation of this chapter[.];

(7) Require that lobbyists attend training sessions on the requirements of this chapter; and

(8) Conduct audits, as may be necessary, to ensure the accuracy of all reports and information submitted pursuant to this chapter.

(b) Charges concerning the violation of this chapter shall be in writing, signed by the person making the charge under oath, except that any charge initiated by the commission shall be signed by three or more members of the commission. The commission shall notify in writing every person against whom a charge is received and afford the person an opportunity to explain the conduct alleged to be in violation of the chapter. The commission may investigate, after compliance with this section, such charges and render an informal advisory opinion to the alleged violator. The commission shall investigate all charges on a confidential basis, having available all the powers herein provided, and proceedings at this stage shall not be public. If the informal advisory opinion indicates a probable violation, the person charged shall request a formal opinion or within a reasonable time comply with the informal advisory opinion. If the person charged fails to comply with such informal advisory opinion or if a majority of the members of the commission determine that there is probable cause for belief that a violation of this chapter might have occurred, a copy of the charge and a further statement of the alleged violation shall be personally served upon the alleged violator. Service shall be made by personal service upon the alleged violator wherever found or by registered or certified mail with request for a return receipt and marked deliver to addressee only. If after due diligence service cannot be effected successfully in accordance with the above, service may be made by publication if so ordered by the circuit court of the circuit wherein the alleged violator last resided. The commission shall submit to the circuit court for its consideration in issuing its order to allow service by publication an affidavit setting forth facts based upon the personal knowledge of the affiant concerning the methods, means, and attempts made to locate and effect service by personal service or by registered or certified mail in accordance with the above. Service by publication when ordered by the court shall be made by publication once a week for four successive weeks of a notice in a newspaper of general circulation in the circuit of the alleged violator's last known state address. The alleged violator shall have twenty days after service thereof to respond in writing to the charge and statement.

(c) If after twenty days following service of the charge and further statement of alleged violation in accordance with this section, a majority of the members of the commission conclude that there is probable cause to believe that a violation of this chapter has been committed, then the commission shall set a time and place for a hearing, giving notice to the complainant and the alleged violator in the same manner as provided in subsection (b). Upon the commission's issuance of a notice of hearing, the charge and further statement of alleged violation and the alleged violator's written response thereto shall become public records. The hearing shall be held within ninety days of the commission's issuance of a notice of hearing. If the hearing is not held within that ninety-day period, the charge and further statement of alleged violation shall be dismissed; provided that any delay that is at the request of, or caused by, the alleged violator shall not be counted against the ninety-day period.

All parties shall have an opportunity to:

(1) Be heard;

(2) Subpoena witnesses and require the production of any books or papers relative to the proceedings;

(3) Be represented by counsel; and

(4) Have the right of cross-examination.

All hearings shall be in accordance with chapter 91. All witnesses shall testify under oath and the hearings shall be open to the public. The commission shall not be bound by the strict rules of evidence but the commission's findings shall be based on competent and substantial evidence.

All testimony and other evidence taken at the hearing shall be recorded. Copies of transcripts of the record shall be available only to the complainant and the alleged violator at their own expense. All fees collected under this chapter shall be deposited into the general fund.

(d) A decision of the commission pertaining to the conduct of any person subject to this chapter shall be in writing and signed by three or more of the members of the commission. A decision of the commission rendered after a hearing together with findings and the record of the proceeding shall be a public record.

(e) A person who files a frivolous charge with the commission against any person covered by this chapter shall be civilly liable to the person charged for all costs incurred in defending the charge, including but not limited to costs and attorneys' fees. In any case where the commission does not issue a decision or final conclusion in which the commission concludes that a person has violated this chapter, the commission shall, upon the written request of the person charged, make a finding as to whether or not the charge was frivolous. The person charged may initiate an action in the circuit court for recovery of fees and costs incurred in commission proceedings within one year after the commission renders a decision that the charge was frivolous. The commission's decision shall be binding upon the court for purposes of a finding pursuant to section 607-14.5.

(f) The commission shall cause to be published yearly summaries of decisions, advisory opinions, and informal advisory opinions. The commission shall make sufficient deletions in the summaries to prevent disclosing the identity of persons involved in the decisions or opinions where the identity of such persons is not otherwise a matter of public record under this chapter.

(g) The commission shall conduct random or spot audits of lobbyists, as may be necessary, to ensure compliance with this chapter."

SECTION 8. Section 97-7, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) Any person who:

(1) Wilfully fails to file any statement or report required by this chapter;

(2) Wilfully files a statement or report containing false information or material omission of any fact;

(3) Engages in activities prohibited by section 97-5; or

(4) Fails to provide information required by section 97-2 or 97-3;

shall be subject to an administrative fine imposed by the commission that shall not exceed [~~$500~~] $1,000 for each violation of this chapter. All fines collected under this section shall be deposited into the general fund."

SECTION 9. There is appropriated out of the general revenues of the State of Hawaii the sum of $ or so much thereof as may be necessary for fiscal year 2008-2009 for the state ethics commission to conduct random audits as may be necessary to ensure compliance with chapter 97, Hawaii Revised Statutes.

The sum appropriated shall be expended by the state ethics commission for the purposes of this Act.

SECTION 10. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun, before its effective date.

SECTION 11. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 12. This Act shall take effect upon its approval; provided that section 9 shall take effect on July 1, 2008.

INTRODUCED BY:	_____________________________

THE SENATE	S.B. NO.	2931
TWENTY-FOURTH LEGISLATURE, 2008
STATE OF HAWAII