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Winter Reading: Zephyr Teachout's "The Forgotten Law of Lobbying"
Wednesday, February 5th, 2014
Robert Wechsler
The draft of Fordham Law professor Zephyr Teachout's new essay, "The
Forgotten Law of Lobbying," which will appear in Election Law
Journal, looks at the history of how American courts have viewed
lobbying. This history provides a valuable perspective on lobbying,
making it more clear what it is about lobbyists that attracts bad feelings.
After all, when looked at in terms of First Amendment free speech and the redress of grievances, as recent court decisions have, lobbyists should be lionized as elves hard at work to make our democracy work. But, as Teachout shows, lobbyists were not seen in terms of the First Amendment until recently. And they were also seen not as elves, but as people corrupting our democratic system.
Should Personal Access Be for Sale?
Before the First Amendment became the principal issue discussed with respect to lobbying, the principal issue was the sale of personal access and influence. What one is selling is a relationship, an ongoing reciprocal relationship, in which a government official gives special access and engages in conduct in return for past personal acts and the implied promise of future acts. These acts may or may not include the exchange of money and goods, but they are unlikely to be quid pro quo exchanges in the simplistic manner in which the current U.S. Supreme Court conceives of corrupt relationships.
As I discussed in my review of Michael Sandel's book What Money Can't Buy: The Moral Limits of Markets (Farrar Straus, 2012)(not referenced by Teachout), a market approach comes with certain norms, which may not be appropriate to government. A market approach places a monetary value on goods and assumes that the principal way of handling these goods is exchange. Like one's vote, personal influence on government officials is something people have believed should not be bought and sold. And yet it is the degree of personal influence that determines the monetary value of a lobbyist. That is why so many of them are former officials, and sometimes even current officials and party leaders.
Sandel explains that a market for government access or favors degrades government "by treating it as a source of private gain rather than as an instrument of the public good." This is not just an observation about the difference between free markets and government, but the central concept in government ethics. What may first appear as a goody-goody way of looking at lobbying (personal influence should not be sold) actually gets to the essence of why lobbying regulation is more central to government ethics than many people think. The failure to recognize this is one of the reasons that most local governments have no lobbying rules in their ethics codes.
Void As Against Public Policy
Until the middle of the twentieth century, it was common for courts to refuse to enforce lobbying contracts on the basis of public policy (it was principally via contract cases that lobbying came before the courts). In Tool Co. v. Norris, 69 U.S. 45, 56 (1864), the U.S. Supreme Court declared, "all agreements for pecuniary considerations to control the business operations of the Government, or the regular administration of justice, or the appointments to public offices, or the ordinary course of legislation, are void as against public policy, without reference to the question, whether improper means are contemplated or used in their execution."
What changed over the last 150 years? Not the growing sanctity of the First Amendment, not for a long time. The right to petition the government was personal and not for sale, like the right to vote. The U.S. Supreme Court in Oscayan v. Arms Co., 103 U.S. 261, 273 (1880) declared, "personal influence ... is not a vendible article in our system of laws and morals." Teachout says that courts' change in outlook derived from the growing sanctity of contracts (contracts began to be enforced presumptively, without a consideration of their civic impact unless illegal acts were expressly contemplated in the contract), as well as from the growing professionalization of lobbyists. In addition, debates about bribery and corruption moved from civil law to criminal law. I would add that lobbying contracts tended no longer to have contingency fees, which were a big problem in the nineteenth century.
A distinction was made between presenting one's views in a public forum and presenting them privately or secretly. This is one argument for lobbying disclosure rules, but most disclosure falls far short of making private influence public in nature. In any event, as Teachout notes, citing the U.S. Supreme Court's decision in Trist v. Child, 88 U.S. 441, 452 (1874), there is "no clear way to regularly distinguish between secret, inappropriate lobbying and appropriate paid lobbying." Teachout says that the issue of secrecy came to replace the issue of personal influence as the "core danger" of lobbying. But as late as 1941, the U.S. Supreme Court considered it legitimate to differentiate between lobbying and other business expenses when it came to tax deductions for businesses, referring to lobbying as a "family of contracts to which the law has given no sanction" (Textile Mills Sec. Corp. v. C.I.R.., 314 U.S. 326, 339 (1941)).
A related distinction used to be made between the use of personal influence to shape official action, and lawyering behavior that was considered more legitimate and professional. The most important sign that personal influence is at play is private communication, in person or otherwise, with officials or their aides. No one objects to public testimony to a committee or to the entire legislature, but communications with an individual committee member or aide is different.
This distinction was even employed in cases involving lobbyists hired by local governments to influence state decisions. In Colusa v. Welch, 122 Cal. 428, 430 (1898), the Colusa County Board of Supervisors employed counsel "to secure, by means of personal solicitation and by means of private interview with members of the legislature of California, and by means of lobbying, the defeat of the bill." According to Teachout, "the Court said it was permissible for a client to employ counsel to influence the legislature by open and public presentation of facts, arguments, and appeals to reason, but not to secretly approach the members of such a body with a view to influence their action at a time and in a manner that do not allow the presentation of opposite views."
Teachout argues that the existence of these cases "makes the claim that there is an original 'lobbying protection' principle in the Constitution very difficult to make."
Criminalization of Lobbying for Private Bills
In 1877, Georgia's draft constitution included a provision criminalizing lobbying, at least those aspects of lobbying that involved personal access sold to those with a financial interest in the matter. The provision's proponents argued that lobbying was corrupting the state government and costing the state millions of dollars a year, especially with respect to private bills. Teachout writes, "The representative body had become a set of auctions for public resources, to be sold to private individuals."
Local Lobbying
In fact, most lobbying at the local level deals with the local equivalent of private bills, that is, contracts, grants, land use planning and permits, and business regulation. Lobbying at the local level is mostly about direct financial benefits to individuals and entities. The U.S. Supreme Court set forth the costs of lobbying with respect to contracts in Oscayan v. Arms Co.., 103 US 261, 276 (1880): "[W]here, instead of placing before the officers of the government the information which should properly guide their judgments, personal influence is the means used to secure the sales, and is allowed to prevail, the public good is lost sight of, unnecessary expenditures are incurred, and, generally, defective supplies are obtained, producing inefficiency in the public service."
Consider this local government scenario. A developer hires a former zoning board member, and current officer of the majority party's local committee, to lobby the zoning board and council with respect to land use changes she is seeking. None of the nearby residents can afford to hiring a lobbyist. They could, of course, join together and hire a former council member to lobby for them. But in most jurisdictions, they won't even know about the developer's lobbying and, even if they do, they are unlikely to think about getting together to do this, or even know whom to hire. This would mean that personal access may be a principal determinant of the result.
But let's say the neighbors are more sophisticated and join together in a neighborhood association to hire another lobbyist. Even though there might now be a level playing field in terms of lobbying, a market in lobbying has been created which will move the battle over the development from public meetings to private communications, and skew even public discussions through the use of sophisticated promotion and fake grass roots groups. The secret expenditure of money in such a matter corrupts the system even if there is a level playing field.
How Else Lobbying Corrupts
Although today, most talk about corruption and rights involves individual lobbyists, the problems are societal rather than individual. Personal, reciprocal relationships, and private meetings, between officials and lobbyists allow undetectable bribery. After all, since a lobbyist's goal is to influence officials (or, in pay to play, not to lose current benefits), anything a lobbyist gives, directly or indirectly, before or after, to benefit an official is intended to influence or reward the official for past, present, or future acts. More goes on in lobbying than relationships, but it is the relationships that count the most. In ongoing reciprocal relationships, immediate quid pro quo is meaningless and, therefore, it is hard to tell the difference between lobbying and bribery. Whether or not any particular lobbyist is doing anything criminal or unethical, lobbying is a powerful enabler of systemic corruption.
But it isn't just our political system and government officials that are corrupted by lobbying. Lobbyists too are corrupted. This was a concern of the U.S. Supreme Court in its decision in Marshall v. Baltimore Ohio Railroad Co., 57 U.S. 314 (1853). The court found that lobbyists are “demoralized" (defined, in this context, by Teachout as "rid of morals") by the lure of profit: "He is soon brought to believe that any means which will produce so beneficial a result to himself are ‘proper means....'" The court referred to lobbyists as "speculators in legislation."
Lobbyists are also corrupted in their role as citizens. According to Teachout, a lobbyist has "a distinct relationship to what he himself might believe. He is selling his own citizenship, or one of the obligations of his own citizenship, for a fee. In this sense, agreeing to work, for pay, on political issues is more akin to selling the personal right to vote than selling legal skills." This is not only true with respect to political issues. It can also be true with respect to the means by which a client chooses to seek financial benefits from a local government. See a recent blog post where I quote this part of Teachout's essay with respect to a particular matter involving a lobbyist's conflict.
Lobbyist Registration
The first lobbying registration law was passed in Massachusetts in 1890. Soon other states followed. Registration started the relative legitimization of lobbying, which included recasting contracts in terms of professional services rather than personal influence.
But it was the 1946 federal law requiring lobbyist disclosure that led to Supreme Court decisions that, while avoiding First Amendment issues, implied that lobbyists had a right to lobby. See United States v. Rumely, 345 U.S. 41 (1953), and United States v. Harriss, 347 US 612 (1954).
Recent vs. Old Lobbying Cases
Although it is now assumed by courts that there is First Amendment protection of lobbying (without any serious analysis of this), some restrictions on lobbying, beyond registration, have been upheld. But the circuits differ in their views. I will deal with the recent cases soon in a post about an essay by Rick Hasen.
Teachout believes that the old cases on lobbying allow for a separation of paid lobbying cases from the usual political speech analysis. For example, she believes that some of the logic of campaign finance cases does not apply to lobbying cases. Most interesting is her recognition that the Citizens United decision was based on the "right to hear," to maximize political information in the public sphere, not on the maximization of political information in government.
"The sale of personal influence is not part of an open market of any kind, but part of a closed market that is only available to office holders by virtue of their official role. Members of government have a different relationship to knowledge in the first place, and it would have to be grounded in a right to receive information in a personal, private forum from paid influencers, because they undoubtedly have a right to receive information from any unpaid influencers, and all forms of information that are not accompanied by a lobbyist."
Nor, Teachout continues, is a courtroom analogy appropriate, because there is no guarantee that anyone will show up to present the case of "the other side" of the issue. One reason is that no one else may know what is going on, or interest in the matter, from "the other side" is too diffuse (e.g., all renters).
Also, she believes that the right to seek redress of grievances does not include every form this takes, nor every form of delivery. The delivery of a petition, the provision of testimony before a public body, these are clearly included. But there is no right to a personal audience with a representative, for example, and similarly, there should be no right to pay someone to use her personal influence through personal meetings or personal communications. I agree. To the extent this is allowed, it may be regulated in a reasonable manner.
Legislative Experiments
Teachout notes that, in the old cases, the judges refused to enforce contracts they found to be possibly corrupt. In the new cases, the judges have refused to allow laws that regulate lobbyists. She concludes that the best thing would be for judges to stop refusing, one way or the other, and allow different jurisdictions to experiment with different lobbying regulations (or none at all) without the courts' interference.
Robert Wechsler
Director of Research-Retired, City Ethics
---
After all, when looked at in terms of First Amendment free speech and the redress of grievances, as recent court decisions have, lobbyists should be lionized as elves hard at work to make our democracy work. But, as Teachout shows, lobbyists were not seen in terms of the First Amendment until recently. And they were also seen not as elves, but as people corrupting our democratic system.
Should Personal Access Be for Sale?
Before the First Amendment became the principal issue discussed with respect to lobbying, the principal issue was the sale of personal access and influence. What one is selling is a relationship, an ongoing reciprocal relationship, in which a government official gives special access and engages in conduct in return for past personal acts and the implied promise of future acts. These acts may or may not include the exchange of money and goods, but they are unlikely to be quid pro quo exchanges in the simplistic manner in which the current U.S. Supreme Court conceives of corrupt relationships.
As I discussed in my review of Michael Sandel's book What Money Can't Buy: The Moral Limits of Markets (Farrar Straus, 2012)(not referenced by Teachout), a market approach comes with certain norms, which may not be appropriate to government. A market approach places a monetary value on goods and assumes that the principal way of handling these goods is exchange. Like one's vote, personal influence on government officials is something people have believed should not be bought and sold. And yet it is the degree of personal influence that determines the monetary value of a lobbyist. That is why so many of them are former officials, and sometimes even current officials and party leaders.
Sandel explains that a market for government access or favors degrades government "by treating it as a source of private gain rather than as an instrument of the public good." This is not just an observation about the difference between free markets and government, but the central concept in government ethics. What may first appear as a goody-goody way of looking at lobbying (personal influence should not be sold) actually gets to the essence of why lobbying regulation is more central to government ethics than many people think. The failure to recognize this is one of the reasons that most local governments have no lobbying rules in their ethics codes.
Void As Against Public Policy
Until the middle of the twentieth century, it was common for courts to refuse to enforce lobbying contracts on the basis of public policy (it was principally via contract cases that lobbying came before the courts). In Tool Co. v. Norris, 69 U.S. 45, 56 (1864), the U.S. Supreme Court declared, "all agreements for pecuniary considerations to control the business operations of the Government, or the regular administration of justice, or the appointments to public offices, or the ordinary course of legislation, are void as against public policy, without reference to the question, whether improper means are contemplated or used in their execution."
What changed over the last 150 years? Not the growing sanctity of the First Amendment, not for a long time. The right to petition the government was personal and not for sale, like the right to vote. The U.S. Supreme Court in Oscayan v. Arms Co., 103 U.S. 261, 273 (1880) declared, "personal influence ... is not a vendible article in our system of laws and morals." Teachout says that courts' change in outlook derived from the growing sanctity of contracts (contracts began to be enforced presumptively, without a consideration of their civic impact unless illegal acts were expressly contemplated in the contract), as well as from the growing professionalization of lobbyists. In addition, debates about bribery and corruption moved from civil law to criminal law. I would add that lobbying contracts tended no longer to have contingency fees, which were a big problem in the nineteenth century.
A distinction was made between presenting one's views in a public forum and presenting them privately or secretly. This is one argument for lobbying disclosure rules, but most disclosure falls far short of making private influence public in nature. In any event, as Teachout notes, citing the U.S. Supreme Court's decision in Trist v. Child, 88 U.S. 441, 452 (1874), there is "no clear way to regularly distinguish between secret, inappropriate lobbying and appropriate paid lobbying." Teachout says that the issue of secrecy came to replace the issue of personal influence as the "core danger" of lobbying. But as late as 1941, the U.S. Supreme Court considered it legitimate to differentiate between lobbying and other business expenses when it came to tax deductions for businesses, referring to lobbying as a "family of contracts to which the law has given no sanction" (Textile Mills Sec. Corp. v. C.I.R.., 314 U.S. 326, 339 (1941)).
A related distinction used to be made between the use of personal influence to shape official action, and lawyering behavior that was considered more legitimate and professional. The most important sign that personal influence is at play is private communication, in person or otherwise, with officials or their aides. No one objects to public testimony to a committee or to the entire legislature, but communications with an individual committee member or aide is different.
This distinction was even employed in cases involving lobbyists hired by local governments to influence state decisions. In Colusa v. Welch, 122 Cal. 428, 430 (1898), the Colusa County Board of Supervisors employed counsel "to secure, by means of personal solicitation and by means of private interview with members of the legislature of California, and by means of lobbying, the defeat of the bill." According to Teachout, "the Court said it was permissible for a client to employ counsel to influence the legislature by open and public presentation of facts, arguments, and appeals to reason, but not to secretly approach the members of such a body with a view to influence their action at a time and in a manner that do not allow the presentation of opposite views."
Teachout argues that the existence of these cases "makes the claim that there is an original 'lobbying protection' principle in the Constitution very difficult to make."
Criminalization of Lobbying for Private Bills
In 1877, Georgia's draft constitution included a provision criminalizing lobbying, at least those aspects of lobbying that involved personal access sold to those with a financial interest in the matter. The provision's proponents argued that lobbying was corrupting the state government and costing the state millions of dollars a year, especially with respect to private bills. Teachout writes, "The representative body had become a set of auctions for public resources, to be sold to private individuals."
Local Lobbying
In fact, most lobbying at the local level deals with the local equivalent of private bills, that is, contracts, grants, land use planning and permits, and business regulation. Lobbying at the local level is mostly about direct financial benefits to individuals and entities. The U.S. Supreme Court set forth the costs of lobbying with respect to contracts in Oscayan v. Arms Co.., 103 US 261, 276 (1880): "[W]here, instead of placing before the officers of the government the information which should properly guide their judgments, personal influence is the means used to secure the sales, and is allowed to prevail, the public good is lost sight of, unnecessary expenditures are incurred, and, generally, defective supplies are obtained, producing inefficiency in the public service."
Consider this local government scenario. A developer hires a former zoning board member, and current officer of the majority party's local committee, to lobby the zoning board and council with respect to land use changes she is seeking. None of the nearby residents can afford to hiring a lobbyist. They could, of course, join together and hire a former council member to lobby for them. But in most jurisdictions, they won't even know about the developer's lobbying and, even if they do, they are unlikely to think about getting together to do this, or even know whom to hire. This would mean that personal access may be a principal determinant of the result.
But let's say the neighbors are more sophisticated and join together in a neighborhood association to hire another lobbyist. Even though there might now be a level playing field in terms of lobbying, a market in lobbying has been created which will move the battle over the development from public meetings to private communications, and skew even public discussions through the use of sophisticated promotion and fake grass roots groups. The secret expenditure of money in such a matter corrupts the system even if there is a level playing field.
How Else Lobbying Corrupts
Although today, most talk about corruption and rights involves individual lobbyists, the problems are societal rather than individual. Personal, reciprocal relationships, and private meetings, between officials and lobbyists allow undetectable bribery. After all, since a lobbyist's goal is to influence officials (or, in pay to play, not to lose current benefits), anything a lobbyist gives, directly or indirectly, before or after, to benefit an official is intended to influence or reward the official for past, present, or future acts. More goes on in lobbying than relationships, but it is the relationships that count the most. In ongoing reciprocal relationships, immediate quid pro quo is meaningless and, therefore, it is hard to tell the difference between lobbying and bribery. Whether or not any particular lobbyist is doing anything criminal or unethical, lobbying is a powerful enabler of systemic corruption.
But it isn't just our political system and government officials that are corrupted by lobbying. Lobbyists too are corrupted. This was a concern of the U.S. Supreme Court in its decision in Marshall v. Baltimore Ohio Railroad Co., 57 U.S. 314 (1853). The court found that lobbyists are “demoralized" (defined, in this context, by Teachout as "rid of morals") by the lure of profit: "He is soon brought to believe that any means which will produce so beneficial a result to himself are ‘proper means....'" The court referred to lobbyists as "speculators in legislation."
Lobbyists are also corrupted in their role as citizens. According to Teachout, a lobbyist has "a distinct relationship to what he himself might believe. He is selling his own citizenship, or one of the obligations of his own citizenship, for a fee. In this sense, agreeing to work, for pay, on political issues is more akin to selling the personal right to vote than selling legal skills." This is not only true with respect to political issues. It can also be true with respect to the means by which a client chooses to seek financial benefits from a local government. See a recent blog post where I quote this part of Teachout's essay with respect to a particular matter involving a lobbyist's conflict.
Lobbyist Registration
The first lobbying registration law was passed in Massachusetts in 1890. Soon other states followed. Registration started the relative legitimization of lobbying, which included recasting contracts in terms of professional services rather than personal influence.
But it was the 1946 federal law requiring lobbyist disclosure that led to Supreme Court decisions that, while avoiding First Amendment issues, implied that lobbyists had a right to lobby. See United States v. Rumely, 345 U.S. 41 (1953), and United States v. Harriss, 347 US 612 (1954).
Recent vs. Old Lobbying Cases
Although it is now assumed by courts that there is First Amendment protection of lobbying (without any serious analysis of this), some restrictions on lobbying, beyond registration, have been upheld. But the circuits differ in their views. I will deal with the recent cases soon in a post about an essay by Rick Hasen.
Teachout believes that the old cases on lobbying allow for a separation of paid lobbying cases from the usual political speech analysis. For example, she believes that some of the logic of campaign finance cases does not apply to lobbying cases. Most interesting is her recognition that the Citizens United decision was based on the "right to hear," to maximize political information in the public sphere, not on the maximization of political information in government.
"The sale of personal influence is not part of an open market of any kind, but part of a closed market that is only available to office holders by virtue of their official role. Members of government have a different relationship to knowledge in the first place, and it would have to be grounded in a right to receive information in a personal, private forum from paid influencers, because they undoubtedly have a right to receive information from any unpaid influencers, and all forms of information that are not accompanied by a lobbyist."
Nor, Teachout continues, is a courtroom analogy appropriate, because there is no guarantee that anyone will show up to present the case of "the other side" of the issue. One reason is that no one else may know what is going on, or interest in the matter, from "the other side" is too diffuse (e.g., all renters).
Also, she believes that the right to seek redress of grievances does not include every form this takes, nor every form of delivery. The delivery of a petition, the provision of testimony before a public body, these are clearly included. But there is no right to a personal audience with a representative, for example, and similarly, there should be no right to pay someone to use her personal influence through personal meetings or personal communications. I agree. To the extent this is allowed, it may be regulated in a reasonable manner.
Legislative Experiments
Teachout notes that, in the old cases, the judges refused to enforce contracts they found to be possibly corrupt. In the new cases, the judges have refused to allow laws that regulate lobbyists. She concludes that the best thing would be for judges to stop refusing, one way or the other, and allow different jurisdictions to experiment with different lobbying regulations (or none at all) without the courts' interference.
Robert Wechsler
Director of Research-Retired, City Ethics
---
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