Disclosure forms don't tell full story

Coal's big lobbying group this August sent workers to 264 cities to attend state fairs, visit Kiwanis meetings and set up tables at college campuses, all part of a campaign aimed at powering advocacy for the fuel.

That activity in eight states led to media coverage, a plus for the group, the American Coalition for Clean Coal Electricity, or ACCCE. "Likely members of Congress would have seen those stories and read those stories and seen there was support for coal," said Lisa Camooso Miller, an ACCCE spokeswoman. The effort came just before the Senate was due to return from its August break and consider climate legislation that is likely to have a profound effect on coal.

But none of the money ACCCE spent on that August effort is reflected in the lobbying report it filed with Congress, detailing spending in July, August and September. The report also fails to capture what ACCCE spent on television advertisements featuring "real people" talking about the importance of coal as a source of low-cost electricity in their lives.

The $302,700 that ACCCE told Congress it spent on lobbying in the third quarter does not include the summer spending, the group said, because by law it is not obligated to disclose it. Congress allows groups that file lobbying reports to choose from three formats for totaling their spending. One is a narrower disclosure as defined by Congress. The other two, defined by the Internal Revenue Service, use a far broader definition for lobbying.

ACCCE -- along with groups that include the American Petroleum Institute, the American Wind Energy Association and the Solar Energy Industries Association -- uses the format that excludes grass-roots activity, leaves out most advertising spending and does not show money spent on state and local lobbying.


ACCCE and the other trade groups say they are following the law and that they fully reveal all lobbying expenses to the IRS.

While grass-roots activities "might be influencing Congress," said Ronald Jacobs, an attorney with Venable LLP who works for ACCCE, "on the other hand, it's not captured in the definition of lobbying disclosures, so it's not reported."

But government watchdogs find the uneven disclosure in filing to Congress troubling, especially as more groups use grass-roots work, advertising and community-based efforts to sway lawmakers' votes.

"The stakes are too high," said Tyson Slocum, director of the energy program at Public Citizen. "On every major issue, you see sophisticated efforts to sway the debate one way or another. The outside D.C. grass-roots activity, that sometimes is having the most influence on swinging the public debate."

"Everything hinges on the impact that these grass-roots or AstroTurf campaigns have," Slocum added, "so it's really significant."

Because Congress allows different filing methods, Slocum said it is impossible to compare companies and trade groups and see which ones carry the biggest lobbying wallets. (Public Citizen, which does some lobbying, files under the same method as ACCCE and those others. In the third quarter, it reported $50,000 in lobbying. Slocum said the group does not do state lobbying and does very little grass-roots activity.)

ACCCE reports lobbying as it is required under the federal law as written by Congress, spokeswoman Miller said.

"We didn't write the law," Miller said. "Certainly, the IRS has defined it one way and the Lobbying Disclosure Act [passed by Congress] defines it another."

"We work every day to ensure that we comply with the rules as they are written," Miller added.

Concerns about how lobbying expenditures are reported comes as the House Select Committee on Energy Independence and Global Warming investigates whether ACCCE failed to properly disclose all of its lobbying spending.

Committee Chairman Ed Markey (D-Mass.) asked the trade group whether its lobbying reports should include money paid to the Hawthorn Group, a public relations firm, according to a document viewed by E&E. ACCCE paid the Hawthorn Group, among other things, to coordinate an effort to stop the House climate bill from passing. The committee already is investigating ACCCE for its ties to a subcontractor that in June sent forged letters to House members urging them to vote against climate legislation.

While the Oct. 21 letter Markey sent to ACCCE focuses on the Hawthorn Group and its subcontractors, the grass-roots efforts ACCCE funded this summer also are troubling, committee spokesman Eben Burnham-Snyder said.

"What are these activities? They're trying to influence a member of Congress to vote a certain way," Burnham-Snyder said. "To any common-sense observer, it does appear to be something that's a little out of whack."

ACCCE's summer campaign, called "America's Power Army," was run by the Hawthorn Group and subcontractor Lincoln Strategies, which also worked on the effort to contact lawmakers about the House energy bill.

Lobbying formats vary

The formats that Congress allows companies and organizations to use for their lobbying disclosures are known as methods A, B and C.

Method A, which ACCCE uses, is based on the Lobbying Disclosure Act that Congress passed in 1995. It allows groups to estimate lobbying expenditures using definitions created by that law and a 2007 ethics reform law. In general, method A focuses on visits and calls to lawmakers, aides and the administration and "efforts in support of such contacts," which groups that file under method A generally define as time spent preparing a position paper or meeting with experts to formulate strategy.

Methods B and C use the IRS definition of lobbying, which includes all federal, state and local efforts, advertising and grass-roots outreach to the public. It is more limited, however, in whom it considers a "covered official." Talking about policy with a "covered official" is considered lobbying. Method B is for nonprofits and method C is used by for-profit companies and groups.

A previous filing by ACCCE reveals how much more it spends than what is captured under method A. ACCCE this year switched to method A from the IRS definition, which it used in 2008.

Changing methods meant ACCCE reported a lobbying amount more than 10 times smaller than what it reported when it used the IRS guideline. In the third quarter of 2008, when using method C, ACCCE reported spending $3.8 million on lobbying efforts. The same period this year, it reported $302,700.

ACCCE switched reporting methods "after many, many media comparisons" of the trade group's expenditures to those of other groups that used the less expansive standard, spokeswoman Miller said.

"There was no account taken for option A or option B," Miller said. "In order for a fair comparison, we decided to file the way other organizations in our area were filing. In order to provide a fair comparison, we decided to file under option A."

Differences between methods

When it approved the Lobbying Disclosure Act, Congress allowed the three choices because companies said that they did not want to have to keep different sets of books, according to an official at the Senate Office of Public Records who asked not to be identified, citing the policy of the office. Some companies, the official said, wanted to file the same paperwork they file with the IRS in their form 990.

Many nonprofits chose method B, the official said, because they do not want to threaten their nonprofit status by inviting a comparison between their 990 IRS report and what they file in a lobbying report. Nonprofits in general can do very little lobbying, unless they create another arm separate from the nonprofit entity.

Even if they are filing under method A, groups must report some grass-roots lobbying and advertising, the official said. An example would include an advertisement that urges people to contact Congress when that group's lobbyist is telling a lawmaker that there is grass-roots support for the position the company is taking.

If organizations send people to state fairs and universities to drum up support for the position a lobbyist is making, the official said, that should be counted. But the lobbying reporting under method A does not require groups to itemize their expenses. And, the expert said, there is scant oversight.

"We can't audit and investigate under the law," the official said. "We see a figure. We can't really question unless it seems ridiculously low."

That is part of the problem, said Slocum with Public Citizen.

"Anytime you have a law that has no real enforcement and largely voluntary compliance, you're going to get lots of fudging," Slocum said.

Attorneys for both ACCCE and the American Petroleum Institute, which also funded community outreach efforts this summer, said the federal Lobbying Disclosure Act clearly excludes grass-roots activities.

Proof of that, said Jacobs, attorney for ACCCE, is that Congress in 2007 when it formulated an ethics reform bill considered adding grass-roots activities to what would be reportable as federal lobbying. Grass-roots work ultimately was not included in the legislation.

Who picks which method?

A trade group for the oil and gas industry, API funded 19 rallies across the country in August and September, intended in part to drive phone calls, e-mails and letters to lawmakers about climate legislation. Those expenses were not reflected in the group's third-quarter lobbying report because API files using method A. It reported $2.2 million in lobbying expenses for those three months.

"We feel we're giving a more precise reporting," said John Wagner, senior attorney for API. "We report what the IRS wants," and for federal lobbying, he said, API reports what the Lobbying Disclosure Act rules require.

"We report it," Wagner said of grass-roots efforts. "We just don't report it under the [Lobbying Disclosure Act]. That's not really what the LDA is after. It is a specific definition of lobbying."

The Solar Energy Industries Association also files under method A. It reported spending $342,000 in the third quarter.

"In our case, we really focus on federal lobbying," said Monique Hanis, spokeswoman for the trade group. She added, "There is a tiny smidgen of grass roots." The group doesn't lobby at the state level, she said, and its advertising is "very, very limited" and usually is done as part of a coalition.

The National Association of Manufacturers is among those trade groups that files under method C, using the IRS lobbying definitions. It is done that way for simplicity because the calculations are done for the IRS, said spokeswoman Erin Streeter.

The National Mining Association, a trade group for coal companies, also files under method C. For the third quarter of 2009, it reported $743,025 in lobbying expenses.

"We have to report all of our expenses to the IRS. We just do one report," said Carol Raulston, spokeswoman for the National Mining Association. "So it's for ease of reporting."

The trade group does not do any state lobbying, Raulston said. Grass-roots efforts are mostly online, she said, to save money.

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