On December 13, 2023, the Chicago City Council approved amendments (Amendments) to the City of Chicago (the City) Governmental Ethics Ordinance, Municipal Code Chapter 2-156 (the Ordinance), that make important changes regarding registration of City lobbyists and regulations related to City lobbying. The changes take effect July 1, 2024. Below are some key takeaways from the Amendments.
General Changes Affecting All Lobbyists
1. Who is a “lobbyist”? The Amendments simplify the definition of “lobbying” by removing generalized language (“including but not limited to”) in favor of an enumerated list of administrative actions. Communication with City personnel to influence such specific administrative actions, in addition to any and all contacts with elected members of the Chicago City Council or their staffs intended to influence legislation, will be defined as lobbying (subject to certain carveouts and exemptions).
Removing the existing “including but not limited to” language from the definition of “administrative action” makes the definition of lobbying clearer and narrower. This change creates a “finite” definition of administrative action, as it was described for the Committee on Ethics by the Executive Director of the Chicago Board of Ethics — the City agency that regulates lobbying. The list of “administrative action” will include “the interpretation of any local law, rule, or regulation.” It remains unclear how broadly the Board of Ethics will read that provision. In addition, although “contract negotiation” is not mentioned as a type of “administrative action” in the Amendments, the Board of Ethics staff has indicated that it intends to treat most contract negotiations connected with the “procurement of goods, services, or construction” as the seeking of “administrative action.” Finally, the Amendments clarify that urging a City employee or official to take action with respect to any state or federal law or regulation is considered “administrative action.”
2. Minimum monetary or hourly registration thresholds. Under the Amendments, a lobbyist must register only if, in any given quarter, such lobbyist (1) has at least $1,250 of combined lobbying-related compensation and expenses or (2) spends over 20 hours on lobbying. An in-house employee who engages in lobbying among other duties must track “lobbying” hours in relation to total hours and determine when a pro rata share of that employee’s salary, if annual, relating to lobbying exceeds $1,250 in a calendar quarter.
3. Task force participation. Under the Amendments, participation on a task force, commission, working group, advisory committee, or similar body at the request of any City personnel or agency does not require registration unless the participant advocates for additional work, responsibilities, contracts, grants, or other treatment from the City on behalf of an employer or client.
4. Increased specificity in reports of lobbying activity. In quarterly reports describing lobbying activity before agencies, a registered lobbyist must provide (1) identifying information about the matter the lobbyist sought to influence (including such specifics as document or file numbers) and, for the first time ever, (2) the outcome sought by the client.
Changes Related to Nonprofit Entities
1. Exemption for individuals who lobby on behalf of small/medium nonprofit entities. Under the Amendments, an individual who engages in lobbying on behalf of a nonprofit entity shall be deemed a lobbyist only if (1) such individual is compensated for their efforts or undertakes the efforts as a matter of professional engagement (thus excluding civic volunteers but including retained pro bono counsel or other professionals), (2) the quarterly hours or compensation/expenses of that individual exceed the thresholds previously described, and (3) such nonprofit entity has both an annual “operating budget” and “net assets or fund balances” of $5 million or more.
“Operating budget” means the “Total expenses” reported on IRS Form 990. “Net assets or fund balances” means the “Net assets or fund balances” reported on IRS Form 990.
2. Grassroots lobbying. The lobbying registration requirements do not apply to persons who as a member of, or on behalf of, a nonprofit entity make “grassroots lobbying communications” to members of the public soliciting their communication to any City personnel or agency for the purpose of influencing an administrative action or legislative action.
Additionally, registration is not required by a person whose lobbying activities are limited to participation in or organization of a “grassroots lobbying event” sponsored by a nonprofit entity intended to influence an administrative action or legislative action by inviting participants to a location where City personnel are accessible.
3. Additional registration carveouts. Under the Amendments, lobbying registration is not required for individuals who make “self-defense” communications on behalf of a nonprofit entity or who communicate with the City solely through participation in a temporary youth employment program or transitional employment program. A “self-defense” communication is one regarding administrative or legislative action that potentially harms the existence of a nonprofit entity, the powers and duties of such an entity, the tax-exempt status of an entity, or the tax deductibility of contributions to that entity.
The Amendments, as newly enacted and not yet in effect, have not yet been officially interpreted by the Board of Ethics. Accordingly, any decisions about lobbying registration and reporting should be made based on the facts of a specific situation, with legal advice tailored to those facts given the then-current text of the Ordinance and any official interpretations of it issued at such time.
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