[House Report 104-441]
[From the U.S. Government Publishing Office]



104th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES

 1st Session                                                    104-441
_______________________________________________________________________


       PROVIDING FOR THE CONSIDERATION OF HOUSE RESOLUTION 299, 
 
AMENDING HOUSE RULES TO PLACE LIMITATIONS ON COPYRIGHT ROYALTY INCOME FOR 

                HOUSE MEMBERS, OFFICERS AND EMPLOYEES

                                _______


  December 21, 1995.--Referred to the House Calendar and ordered to be 
                                printed

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   Mr. Solomon, from the Committee on Rules, submitted the following

                              R E P O R T

                       [To accompany H. Res. 322]

    The Committee on Rules, having had under consideration 
House Resolution 322, by a record vote of 10 to 0, report the 
same to the House with the recommendation that the resolution 
by adopted.

               BRIEF SUMMARY OF PROVISIONS OF RESOLUTION

    The resolution provides for the consideration in the House 
of House Resolution 299, placing limits on book royalty income 
for House Members, officers and employees. The rule provides 
for consideration, without intervening point of order, of a 
motion to amend printed in the record on the rule if offered by 
the chairman of the Rules Committee. The resolution and 
amendment are debatable for 30 minutes equally divided between 
the chairman and ranking minority member of the Rules 
Committee. The rules provides that the previous question is 
ordered on the motion to amend and on the resolution to 
adoption without intervening motion.

                   background and legislative history

    On December 12, 1995, Representative Nancy Johnson of 
Connecticut, chairman of the House Committee on Standards of 
Official Conduct, introduced House Resolution 299, a resolution 
to amend House Rules regarding outside earned income. The 
measure was cosponsored by eight other members of the 10-
member, bipartisan Standards Committee. The resolution was 
referred exclusively to the Rules Committee as a matter of 
original jurisdiction.
    The resolution was introduced pursuant to a vote of the 
Committee in connection with the report it issued on December 
12th on the ``Inquiry into Various Complaints Filed Against 
Representative Newt Gingrich.'' In its report, the Committee 
found that Representative Gingrich ``did not violate the House 
Rule governing book contracts or royalty income'' and that 
``the book contract was in technical compliance with the 
``usual and customary'' standard of House rules regarding 
royalty income.'' However, the Committee went on to indicate 
that ``the original advance greatly exceeded the financial 
bounds of any book contract contemplated at the time the 
current rules were drafted,'' and that it ``strongly questions 
the appropriateness of what some could describe as an attempt 
by Representative Gingrich to capitalize on his office.''
    Conquently, the Committee recommended in its report that 
House Rule 47 (``Limitations on Outside Employment and Earned 
Income'') be changed to subject royalty income derived from 
books written while one is a Member to the same limits as other 
sources of outside earned income.'' A copy of the proposed rule 
was appended to the report.
    The current House rule XLVII (``Limitations on Outside 
Employment and Earned Income)'', was revised as part of the 
Ethics Reform Act of 1989 (Public Law 101-194). It applies to 
all Members as well as House officers and employers whose pay 
is disbursed by the Clerk of the House and exceed the annual 
rate of basic pay in effect for grade GS-16 of the General 
Schedule under section 5332 of title 5 of the U.S. Code 
(currently $81,529), and is employed for more than 90 days in a 
calendar year. The exception to this definition is for the 
total ban on honoraria which applies to all Members, officers 
and employers of the House.\1\
    \1\ The Committee on Standards of Official Conduct has determined 
the certain matters are excluded from the honorarium ban such as 
compensation for activities where speaking, appearing or writing is 
only an incidental part of the work for which payment is made; witness 
or juror fees; fees to qualified individuals for conducting worship 
services or religious ceremonies; payments for works of fiction, 
poetry, lyrics, or script; or payments for performers who appear on 
stage. ``House Ethics Manual'' 102nd Congress, 2d Session, April 1992, 
pp. 93-94.
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    Clause 1 of rule XLVII prohibits Members, and officers and 
employers paid at least $81,529, from receiving outside earned 
income in excess of 15% of the Executive Level II salary (which 
is the same as a Member's base pay), or roughly $20,000. Clause 
2 prohibits such individuals from receiving any compensation 
for: (1) affirmation with or employment by any firm, 
partnership, association, corporation or other entity which 
provides professional services involving a fiduciary 
relationship; (2) for practicing a profession that involves a 
fiduciary relationship; (3) from serving as an officer or 
member of a board of any association, corporation or other 
entity; or (4) from teaching except by the prior notification 
and approval of the ethics committee.
    Clause 3(e) currently defines outside earned income as 
``wages, salaries, fees, and other amounts received or to be 
received as compensation for personal services actually 
rendered.'' The current definition goes on to specify certain 
matters not considered as outside earned income, including: (1) 
the salary of Members, officers or employees; (2) compensation 
derived by such individuals for personal services rendered 
prior to the effective date of the rule (calendar year 1991), 
or prior to becoming a Member, officer, or employee, whichever 
comes later; (3) paid to a tax-qualified pension, profit-
sharing, or stock bonus plan received by such individuals; (4) 
amounts received by such individuals from services rendered by 
them in a trade or business in which they or their family holds 
a controlling interest and in which both personal services and 
capital are income-producing factors; and (5) ``copyright 
royalties received from established publishers pursuant to 
usual and customary contractual terms.''
    Thus, under current House Rules, copyright royalties are 
considered to be unearned rather than earned income. As the 
most recently published version of the ``House Ethics Manual'' 
puts it:

    House Rule 47 has long exempted book royalties from outside 
earned income restrictions, royalties being deemed a return on 
the author's intellectual property, akin to other unrestricted 
returns on property.\2\
    \2\ Id., p. 94.
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             summary of provisions of house resolution 299

    H. Res. 299 would amend clause 3 of rule XLVII as follows:
    Copyright royalties earned while a Member, officer or 
employee would be counted as earned income subject to the 
outside earned income cap of 15% of a Member's salary.
    Copyright royalties for works published before becoming a 
Member, officer or employee of the House would be exempt from 
the cap.
    Copyright royalties could not be received unless from an 
``established publisher pursuant to usual and customary 
contractual terms'' and unless the contract receives the prior 
approval of the ethics committee.
    Advance payments on royalties would be prohibited to 
Members, officers or employees but could be made to literary 
agents, research staff, and other persons working on behalf of 
the Member, officer or employee.
    Contracts providing for a deferral of royalties could not 
be approved by the ethics committee, though exceptions could be 
made as deemed appropriate.
    The provisions of the rule apply to royalties received 
after December 31, 1995.

        summary of solomon substitute made in order by the rule

    Section 1 of the substitute would amend House Rule XLVII 
(``Limitations on Outside Employment and Earned Income'') by 
inserting a new clause 3 (treatment of royalty income), and by 
redesignating the existing clause 3 (definitions) as clause 4. 
The new clause 3 would contain the following provisions:
    Unlimited royalties could still be received by Members, 
officers and employees under the existing ``usual and customary 
contractual terms'' standard (by virtue of retention of the 
existing clause 4(e) exemption of royalties from definition of 
earned income).
    Advances on royalties would be prohibited except for 
payments to literary agents, researcher, or other individuals 
working on behalf of the Member, officer or employee on the 
publication (other than to persons employed by the House or 
relatives of the Member, officer or employee), and solely for 
the benefit of the literary agent, researcher or other 
individual. (italic provisions are not contained in H. Res. 
299)
    Royalties from contracts entered into or after Jan. 1, 
1996, could not be received without the prior approval of the 
contract by the ethics committee as being in compliance with 
the requirement of clause 4(e)(5) that royalties are received 
``from an established publisher pursuant to usual and customary 
contractual terms.''
    Provisions would be effective on January 1, 1996 (sec. 2 of 
substitute).

                            COMMITTEE VOTES

    Pursuant to clause 2(l)(2)(B) of House rule XI the results 
of each rollcall vote on an amendment or motion to report, 
together with the names of those voting for and against, are 
printed below:

Rules Committee Rollcall No. 276

    Date: December 21, 1995.
    Measure: Rule for consideration of House Resolution 299, 
amending House rules to place limits on copyright royalty 
income for Members, officers or employees.
    Motion By: Mr. Moakley.
    Summary of Motion: Strike the provision making in order a 
motion to amend by Mr. Solomon.
    Results: Rejected, 3 to 6.
    Vote by Member: Dreier--Nay; Goss--Yea; Linder--Nay; Diaz-
Balart--Nay; McInnis--Nay; Waldholtz--Nay; Moakley--Yea; 
Frost--Yea; Solomon--Nay.

Rules Committee Rollcall No. 277

    Date: December 21, 1995.
    Measure: Rule for consideration of House Resolution 299, 
amending House rules to place limits on copyright royalty 
income for Members, officers or employees.
    Motion By: Mr. Dreier.
    Summary of Motion: Report the rule favorably to the House.
    Results: Adopted, 10 to 0.
    Vote by Member: Dreier--Yea; Goss--Yea; Linder--Yea; Diaz-
Balart--Yea; McInnis--Yea; Waldholtz--Yea; Moakley--Yea; 
Beilenson--Yea; Frost--Yea; Solomon--Yea.
    The text of the motion to amend to be offered by the 
chairman of the Committee on Rules made in order by the rule is 
as follows:
  Strike all after the resolving clause and insert the 
following:

SECTION 1. AMENDMENT TO HOUSE RULE XLVII (LIMITATIONS ON OUTSIDE 
                    EMPLOYMENT AND EARNED INCOME).

  Rule XLVII of the rules of the House of Representatives is 
amended by redesignating clause 3 as clause 4 and by inserting 
after clause 2 the following new clause:
  ``3. A Member, officer, or employee of the House may not--
          ``(1) receive any advance payment on copyright 
        royalties, but this paragraph does not prohibit any 
        literary agent, researcher, or other individual (other 
        than an individual employed by the House or a relative 
        of that Member, officer, or employee) working on behalf 
        of that Member, officer, or employee with respect to a 
        publication from receiving an advance payment of a 
        copyright royalty directly from a publisher and solely 
        for the benefit of that literary agent, researcher, or 
        other individual; or
          ``(2) receive any copyright royalties pursuant to a 
        contract entered into on or after January 1, 1996, 
        unless that contract is first approved by the Committee 
        on Standards of Official Conduct as complying with the 
        requirement of clause 4(e)(5) (that royalties are 
        received from an established publisher pursuant to 
        usual and customary contractual terms).''.

SEC. 2. EFFECTIVE DATE.

  The amendment made by section 1 shall take effect on January 
1, 1996.

                                
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