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Jail Time a Real Attention-Getter in New Ethics Bill

With President Bush set to sign a comprehensive ethics reform bill as soon as this week, lobbyists are scrambling to understand the sweeping scope of a measure they spent most of the year hoping would simply go away.

Most worrisome for lobbyists: criminal penalties on top of complicated new disclosure requirements. For the first time ever, stepping outside the lines could mean up to five years in jail.

In particular, K Street outfits are struggling with a requirement that an individual in every organization must certify that nobody in that group violated strict new gift and travel rules.

For companies and large trade associations, the requirement forces one person to accept legal responsibility for potentially thousands of others, since the gift and travel restrictions apply across the board, not just to registered lobbyists.

Ethics compliance experts are packing their schedules with briefings to educate lobbyists on the rules. And they are helping groups develop accounting systems to protect those who certify disclosure reports.

“Everybody needs to know what’s coming and realize it’s not just for somebody else,” said Cleta Mitchell, an ethics expert and partner at Foley & Lardner. “People have to understand the nuances and the fine print.”

The law will require lobbyists to file disclosure reports quarterly, twice as often as now. And every six months, they need to file an additional report detailing their political contributions and payments to any outside group affiliated with a Member of Congress.

Adding to the confusion about the extra reporting, lobbyists have to negotiate staggered effective dates for different portions of the reform package.

For example, while a House gift ban has been in force all year, the prohibition will only take effect in the Senate upon enactment of the law.

The criminal penalty for violating the law takes effect on both sides of the Capitol once the bill is signed, but lobbyists will only have to certify they have followed the new rules beginning Jan. 1, 2008 — in a quarterly report they will file months later.

Ethics experts said in contrast to past years, when lobbying disclosure violations were rarely referred for federal prosecution, and even more rarely punished — a 2006 report found that despite hundreds of referrals over the course of a decade, only three firms had paid fines to settle cases — the new law will have teeth. That’s because while the Lobbying Disclosure Act cloaked its enforcement provisions in secrecy, under the new law, the Clerk of the House and the Secretary of the Senate will have to publicly disclose how many violators they refer for federal prosecution. The Justice Department, in turn, will have to disclose how many cases it is pursuing.

Further, the law charges the General Accountability Office with conducting spot audits of disclosure reports to make sure sloppy or false filings don’t fall through the cracks.

With plenty to sort out and much at stake, lawyers in the business of keeping lobbyists on the right side of the law said they expect to be explaining the new regime for months to come.

On Monday, Ken Gross, an ethics expert with the firm Skadden, Arps, Slate, Meagher & Flom, gave briefings on the reform package at 10 a.m., 10:30, 12:30 p.m., 3 and 4.

Marc Elias, an ethics and election lawyer with Perkins Coie, compared the crush of interest in the law to the compliance headaches that multiplied in 2003 after the Bipartisan Campaign Reform Act took effect.

“For lobbyists and companies that have them, it’s a significant change in the way they do business,” he said.

K Streeters are beginning to register that fact.

As lawmakers lurched through the reform debate this year, many downtown brushed off proposed changes as incidental. But with President Bush in recent days signaling he will sign the bill despite misgivings, lobbyists from groups large and small are preparing to get versed in the new order.

Officials with the National Association of Realtors already have briefed the government affairs team on the bill and instructed them to operate as though all its provisions were already in force, a spokeswoman said.

Lobbyists for the National Association of Manufacturers will get up to speed this month, spokesman J.P. Fielder said. “This is something we take very seriously, and we’re very committed to remaining in compliance with the laws,” he said.

Consistently one of the top corporate spenders on lobbying, AT&T started briefing its sprawling team last week and has several more two-hour sessions planned to ensure both state and federal lobbyists know the ins and outs of the law, spokeswoman Claudia Jones said.

She said the company has a compliance expert on staff to answer any questions as they come up. That’s a luxury not available to scores of boutique shops and solo practitioners downtown.

To assist smaller operations, the American League of Lobbyists is planning a series of training seminars that will kick off later this month. Brian Pallasch, the league’s president, said the group will post information about the new rules online and may compile a compliance guide or set up a process to give lobbyists access to ethics experts.

Julie Chlopecki, partner at a smaller firm called Xenophon Strategies, said she has been discussing the new rules with her colleagues for months. The firm plans to convene a closed-door session on the rules this month. “It’s the most important thing I’m going to do in the next couple of weeks,” Chlopecki said. “We’re prepared to do whatever it takes. Hopefully that won’t mean spending thousands of dollars. But if it does, we’ll do it.”

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