[House Report 104-699]
[From the U.S. Government Publishing Office]



104th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES

 2d Session                                                     104-699
_______________________________________________________________________


 
          LOBBYING DISCLOSURE TECHNICAL AMENDMENTS ACT OF 1996

                                _______
                                

 July 24, 1996.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

_______________________________________________________________________


    Mr. Canady, from the Committee on the Judiciary, submitted the 
                               following

                              R E P O R T

                        [To accompany H.R. 3435]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on the Judiciary, to whom was referred the bill 
(H.R. 3435) to make technical amendments to the Lobbying 
Disclosure Act of 1995, having considered the same, report 
favorably thereon with an amendment and recommend that the bill 
as amended do pass.

                                CONTENTS

                                                                   Page
Purpose and Summary..............................................     3
Background and Need for the Legislation..........................     3
Hearings and Subcommittee Consideration..........................     4
Committee Consideration and Vote.................................     4
Committee Oversight Findings.....................................     5
Committee on Government Reform and Oversight Findings............     5
New Budget Authority and Tax Expenditures........................     5
Congressional Budget Office Cost Estimate........................     5
Inflationary Impact Statement....................................     5
Section-by-Section Analysis and Discussion.......................     6

  The amendment is as follows:
  Strike out all after the enacting clause and insert in lieu 
thereof the following:

SECTION 1. SHORT TITLE AND REFERENCE.

  (a) Short Title.--This Act may be cited as the ``Lobbying Disclosure 
Technical Amendments Act of 1996''.
  (b) Reference.--Whenever in this Act an amendment or repeal is 
expressed in terms of an amendment to, or repeal of, a section or other 
provision, the reference shall be considered to be made to a section or 
other provision of the Lobbying Disclosure Act of 1995.

SEC. 2. DEFINITION OF COVERED EXECUTIVE BRANCH OFFICIAL.

  Section 3(3)(F) (2 U.S.C. 1602(3)(F)) is amended by striking 
``7511(b)(2)'' and inserting ``7511(b)(2)(B)''.

SEC. 3. CLARIFICATION OF EXCEPTION TO LOBBYING CONTACT.

  (a) Certain Communications.--Section 3(8)(B)(ix) (2 U.S.C. 
1602(8)(B)(ix)) is amended by inserting before the semicolon the 
following: ``, including any communication compelled by a Federal 
contract, grant, loan, permit, or license''.
  (b) Definition of ``Public Official''.--Section 3(15)(F) (2 U.S.C. 
1602(15)(F)) is amended by inserting ``, or a group of governments 
acting together as an international organization'' before the period.

SEC. 4. INTERESTS.

  (a) Section 4.--Section 4(b)(4)(C) (2 U.S.C. 1603(b)(4)(C)) is 
amended by striking ``direct interest'' and inserting ``significant 
direct interest''.
  (b) Section 5.--Section 5(b)(2)(D) (2 U.S.C. 1604(b)(2)(D)) is 
amended by striking ``of the interest, if any,'' and inserting ``of any 
significant direct interest''.
  (c) Section 14.--Section 14 (2 U.S.C. 1609) is amended--
          (1) in subsection (a)(2), by striking ``a direct interest'' 
        and inserting ``a significant direct interest''; and
          (2) in subsection (b)(2), by striking ``a direct interest'' 
        and inserting ``a significant direct interest''.

SEC. 5. ESTIMATES BASED ON TAX REPORTING SYSTEM.

  (a) Section 15(a).--Section 15(a) (2 U.S.C. 1610(a)) is amended--
          (1) by striking ``A registrant'' and inserting ``A person, 
        other than a lobbying firm,''; and
          (2) by amending paragraph (2) to read as follows:
          ``(2) for all other purposes consider as lobbying contacts 
        and lobbying activities only--
                  ``(A) lobbying contacts with covered legislative 
                branch officials (as defined in section 3(4)) and 
                lobbying activities in support of such contacts; and
                  ``(B) lobbying of Federal executive branch officials 
                to the extent that such activities are influencing 
                legislation as defined in section 4911(d) of the 
                Internal Revenue Code of 1986.''.
  (b) Section 15(b).--Section 15(b) (2 U.S.C. 1610(b)) is amended--
          (1) by striking ``A registrant that is subject to'' and 
        inserting ``A person, other than a lobbying firm, who is 
        required to account and does account for lobbying expenditures 
        pursuant to''; and
          (2) by amending paragraph (2) to read as follows:
          ``(2) for all other purposes consider as lobbying contacts 
        and lobbying activities only--
                  ``(A) lobbying contacts with covered legislative 
                branch officials (as defined in section 3(4)) and 
                lobbying activities in support of such contacts; and
                  ``(B) lobbying of Federal executive branch officials 
                to the extent that amounts paid or costs incurred in 
                connection with such activities are not deductible 
                pursuant to section 162(e) of the Internal Revenue Code 
                of 1986.''.
  (c) Section 5(c).--Section 5(c) (2 U.S.C. 1604(c)) is amended by 
striking paragraph (3).

SEC. 6. DISCLOSURE OF INDIVIDUAL REGISTERED LOBBYISTS.

  Section 5(b) (2 U.S.C. 1604(b))--
          (1) in paragraph (2), by inserting ``and'' at the end of 
        subparagraph (B), by striking subparagraph (C), and by 
        redesignating subparagraph (D) as subparagraph (C), and
          (2) by redesignating paragraphs (2), (3), and (4) as 
        paragraphs (3), (4), and (5), respectively, and by adding after 
        paragraph (1) the following:
          ``(2) a list of employees of the registrant who acted as 
        lobbyists on behalf of the client during the semi-annual 
        reporting period;''.

SEC. 7. EXEMPTION BASED ON REGISTRATION UNDER LOBBYING ACT.

  Section 3(h) of the Foreign Agents Registration Act of 1938 (22 
U.S.C. 613(h)) is amended by striking ``is required to register and 
does register'' and inserting ``has engaged in lobbying activities and 
has registered''.

                          Purpose and Summary

    H.R. 3435 addresses several technical issues which have 
been raised during the initial months of implementation of the 
Lobbying Disclosure Act (Public Law 104-65). The amendments 
made by the bill will strengthen what is already widely viewed 
as a significant and successful law.

                Background and Need for the Legislation

    The Lobbying Disclosure Act of 1995 (``LDA'') was the first 
substantive reform in the laws governing lobbying disclosure 
since the Federal Regulation of Lobbying Act of 1946. This 
reform was necessary in major part due to the Supreme Court's 
narrow construction of the 1946 Regulation of Lobbying Act in 
U.S. v. Harriss 1 which effectively eviscerated the Act. 
At the behest of the Committee on the Judiciary, this landmark 
legislation was passed in the House in identical form to the 
Senate passed language. This action enabled the 104th Congress 
to send the bill directly to the President, thus passing the 
first meaningful lobbying disclosure legislation in 40 years.
---------------------------------------------------------------------------
    \1\ 347 U.S. 612 (1954).
---------------------------------------------------------------------------

      Explanation of Changes Made by the Bill to Public Law 104-65

    The eight sections of H.R. 3435 are designed to clarify 
several technical issues under the bill. Section 2 of the bill 
would clarify the definition of a covered executive branch 
official under the Act. Section 3 of the bill would add a 
clarification of the exception to a lobbying contact so that 
any communication compelled by a Federal contract, grant, loan, 
permit or license would not be considered a lobbying contact. 
Section 3 also would make plain that groups of governments 
acting together as international organizations would not be 
required to register under the LDA. Section 4 of the bill would 
clarify what a ``direct interest'' is when a registrant has an 
affiliation with a foreign interest.
    In addition, section 5 of the bill would clarify how 
estimates based on the tax reporting system can and should be 
used in relation to reporting lobbying expenses. This section 
also would provide that registrants engaging in executive 
branch lobbying and who make section 15 election must use the 
tax code uniformly for all of their executive branch lobbying 
registration and reporting under the LDA.
    Section 6 of the bill would make the reporting requirement 
of the LDA consistent with the registration requirement by 
eliminating the duplicative reporting requirement of 
maintaining a list of lobbyists for each general issue area 
under the LDA. This section would make uniform the registration 
requirement that the name of each employee of the registrant 
who acts as a lobbyist on behalf of a client be disclosed in 
similar fashion in the registrant's semiannual reports.
    Section 7 of H.R. 3435 would clarify the original intent of 
the LDA by providing that anyone engaged in even a de minimis 
level of lobbying activities on behalf of a foreign commercial 
entity can register under the LDA rather than the Foreign 
Agents Registration Act of 1938. This change would reaffirm the 
Congressional intent of requiring disclosure of foreign non-
governmental representations under the LDA and disclosure of 
foreign governmental representations under the Foreign Agents 
Registration Act. Finally, section 8 of the bill would make a 
purely technical change to the Foreign Agents Registration Act 
by striking the term ``political propaganda'' and inserting in 
its place ``informational materials.'' The changes made by 
section 8 would complete the changes made to this terminology 
that were not included in the LDA.

                       Subcommittee Consideration

    On May 30, 1996, the Subcommittee on the Constitution met 
in open session and ordered favorably reported the bill, H.R. 
3435, with a single amendment in the nature of a substitute by 
voice vote, a quorum being present.

                    Committee Consideration and Vote

    On July 16, 1996, the Committee met in open session and 
ordered favorably reported the bill H.R. 3435 with a single 
amendment in the nature of a substitute by a recorded vote of 
25 yeas to 0 nays, a quorum being present.

                         Vote of the Committee

    Final passage. The bill H.R. 3435 was ordered favorably 
reported as amended by a roll call vote of 25 to 0.
        AYES                          NAYS
Mr. Hyde
Mr. Moorhead
Mr. McCollum
Mr. Gekas
Mr. Coble
Mr. Smith
Mr. Schiff
Mr. Canady
Mr. Goodlatte
Mr. Buyer
Mr. Hoke
Mr. Bono
Mr. Heineman
Mr. Conyers
Mrs. Schroeder
Mr. Frank
Mr. Boucher
Mr. Reed
Mr. Nadler
Mr. Scott
Mr. Watt
Mr. Becerra
Ms. Lofgren
Ms. Jackson Lee
Ms. Waters

                      Committee Oversight Findings

    In compliance with clause 2(l)(3)(A) of rule XI of the 
Rules of the House of Representatives, the Committee reports 
that the findings and recommendations of the Committee, based 
on oversight activities under clause 2(b)(1) of rule X of the 
Rules of the House of Representatives, are incorporated in the 
descriptive portions of this report.

         Committee on Government Reform and Oversight Findings

    No findings or recommendations of the Committee on 
Government Reform and Oversight were received as referred to in 
clause 2(l)(3)(D) of rule XI of the Rules of the House of 
Representatives.

               New Budget Authority and Tax Expenditures

    Clause 2(l)(3)(B) of House Rule XI is inapplicable because 
this legislation does not provide new budgetary authority or 
increased tax expenditures.

               Congressional Budget Office Cost Estimate

    In compliance with clause 2(l)(3)(C) of rule XI of the 
Rules of the House of Representatives, the Committee sets 
forth, with respect to the bill, H.R. 3435, the following 
estimate and comparison prepared by the Director of the 
Congressional Budget Office under section 403 of the 
Congressional Budget Act of 1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                     Washington, DC, July 19, 1996.
Hon. Henry J. Hyde,
Chairman, Committee on the Judiciary,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
reviewed H.R. 3435, the Lobbying Disclosure Technical 
Amendments Act of 1996, as ordered reported by the House 
Committee on the Judiciary on July 16, 1996. CBO estimates that 
enacting this bill, which would make technical changes to the 
Lobbying Disclosure Act of 1995, would result in no significant 
cost to the federal government. Enacting H.R. 3435 would not 
affect direct spending or receipts. Therefore, pay-as-you-go 
procedures would not apply to this legislation.
    The bill contains no private-sector or intergovernmental 
mandates as defined in Public Law 104-4 and would have no 
significant impact on the budgets os state, local, or tribal 
governments.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Mark 
Grabowicz.
            Sincerely,
                                              James L. Blum
                                   (For June E. O'Neill, Director).

                     Inflationary Impact Statement

    Pursuant to clause 2(l)(4) of rule XI of the Rules of the 
House of Representatives, the Committee estimates that H.R. 
3435 will have no significant inflationary impact on prices and 
costs in the national economy.

               Section-by-Section Analysis and Discussion

                         Section 1. Short title

    This section provides that this Act may be cited as the 
``Lobbying Disclosure Technical Amendments Act of 1996.''

        Sec. 2. Definition of Covered Executive Branch Official

    Section 2 of the Lobbying Disclosure Technical Amendments 
Act addresses an unclear statutory reference in section 3(3)(F) 
of the Lobbying Disclosure Act (LDA) that defines a covered 
executive branch official in part as ``any officer or employee 
serving in a position of a confidential, policy-determining, 
policy-making, or policy advocating character described in 
section 7511(b)(2) of title 5, United States Code.'' 2 The 
legislative history of this Committee 3 concluded that the 
Senate drafted language included more federal employees than 
its stated intent of capturing only ``Schedule C'' employees.
---------------------------------------------------------------------------
    \2\ 2 U.S.C. 1602(3)(F).
    \3\ House Comm. on the Judiciary, Lobbying Disclosure Act of 1995, 
H. Rep. No. 339, 104th Cong., 1st Sess. 13 (1995).
---------------------------------------------------------------------------
    To facilitate compliance with the statute, the intended 
scope of coverage of section 3(3)(F) was for ``Schedule C'' 
employees only.4 The change to the definition made in 
section 3 of H.R. 3435 reflects the stated intent of this 
definition and will make plain to agencies and departments in 
the executive branch who among their employees are ``covered 
executive branch officials'' under the Lobbying Disclosure Act. 
The amendment made by this section narrows the statutory 
reference in subsection 3(3)(F) to ensure that only ``Schedule 
C'' employees are ``covered executive branch employees'' as 
defined in subsection 3(3)(F). The amendment makes plain that 
employees in the Senior Executive Service are not covered 
executive branch employees as defined by the Lobbying 
Disclosure Act.
---------------------------------------------------------------------------
    \4\ 120 Cong. Rec. S10,550-01 (daily ed. July 24, 1995) (statement 
of Sen. Levin).
---------------------------------------------------------------------------

         Sec. 3. Clarification of Exception to Lobbying Contact

    Section 3(8)(B) of the LDA lists a series of exceptions to 
the definition of ``lobbying contact.'' Subsection 3(8)(B)(ix) 
excepts communications ``required by subpoena, civil 
investigative demand, or otherwise compelled by statute, 
regulation, or other action of the Congress or an agency.'' The 
guidance from the Clerk of the House and Secretary of the 
Senate highlight an example for application of this exception 
where a contractor is required, under the terms of a government 
contract, to provide on-going technical assistance.5 The 
Committee concurs with this interpretation and believes that it 
is consistent with the purpose of this exception, which 
recognizes that communications that are compelled by an action 
of the federal government should not fall within the definition 
of a lobbying contact under the Act.
---------------------------------------------------------------------------
    \5\ ``Lobbying Disclosure Act Guidance,'' issued by the Clerk of 
the House of Representatives and the Secretary of the Senate, No. 1, 
February 12, 1996, pp. 3-4.
---------------------------------------------------------------------------
    The change made by section 3(a) of H.R. 3435 would codify 
this guidance to ensure that required communications under the 
terms of a Federal contract, grant, loan, permit, or license 
will not be considered lobbying contacts under the Act.
    Section 3(b) of H.R. 3435 clarifies the definition of a 
``public official'' in subsection 3(15)(F) of the LDA. This 
subsection currently defines a public official in part as any 
national, regional, or local unit of any foreign government. 
However, because no express exemption exists for communications 
by international organizations composed of groups of 
governments acting together (such as the World Bank), such 
international organizations are potentially subject to the 
registration and reporting requirements of the LDA. In view of 
the clear exemption of foreign governments under the LDA, it 
appears to have been an oversight not to have included groups 
of governments acting together as international organizations 
in this exemption as well. This clarification would confirm 
that officials and employees of such organizations will be 
treated in the same manner as employees of the governments that 
comprise them.

                           Sec. 4. Interests

    LDA registrants are required to identify certain foreign 
entities who have an interest in the outcome of their lobbying 
activities. These foreign entities must be disclosed in 
registrations (2 U.S.C. 1603(b)(4)(C)), in semiannual reports 
filed by registrants (2 U.S.C. 1604(b)(2)(D)), and in 
communications with covered legislative and executive branch 
officials (2 U.S.C. 1609).
    The absence of clear guidance in the Lobbying Disclosure 
Act on the interests subject to these disclosure requirements 
has been a source of considerable confusion among registrants. 
In particular, the current ``direct interest'' standard if 
literally construed could require U.S. multinational companies 
which participate in debates on international issues to list 
potentially hundreds of wholly-owned foreign subsidiaries and 
affiliates. This was not the intention of the Lobbying 
Disclosure Act. Section 4 of H.R. 3435 accordingly would amend 
the above-referenced provisions of the Act to clarify that only 
foreign entities with a ``significant direct interest'' in the 
outcome of a registrant's lobbying activities must be 
identified. The Committee wishes to emphasize, however, that 
this clarification would not in any way alter the requirement 
that lobbyists identify in their registration statements ``any 
foreign entity that holds at least a 20 percent equitable 
ownership'' in the lobbyist's client. The change in section 4 
merely would confirm that once such ownership interests have 
been identified, they need not be restated in subsequent 
reports or communications with covered officials unless the 
foreign entity also has a ``significant direct interest'' in a 
particular issue lobbied.
    The Committee has declined to include a specific definition 
of ``significant direct interest'' in the bill, because of the 
multitude of factual circumstances the definition would have to 
cover. We believe it preferable to rely on a good faith, common 
sense application of this term by registrants to their specific 
circumstances.
    While it may be difficult to define precisely the meaning 
of significant direct interest, the Committee does wish to 
provide registrants with general guidelines. At one extreme, 
the Committee intends ``significant direct interest'' to mean 
something more than mere equity ownership and the generalized 
interest parent companies always have in the activities of 
their subsidiaries and affiliates. Nor will this standard 
generally apply to lobbying matters that are for the exclusive 
or predominant interest of the U.S. registrant rather than its 
foreign parent, subsidiary or affiliate. For example, questions 
arising under the National Labor Relations Act or involving 
workplace safety rules presumptively would not be of 
substantial direct interest to a U.S. subsidiary's foreign 
parent, even though the parent often will have a generalized 
interest in such questions.
    At the other extreme, the Committee intends that where the 
U.S. entity is acting merely as an agent for a foreign 
affiliate, and the U.S. entity may not have engaged in the 
lobbying activities but for the foreign affiliate's interest, 
the interest must be disclosed. Thus, for example, a 
registrant's lobbying on trade legislation affecting the 
interests of both a U.S. parent and its foreign subsidiary--
such as the duty rates for subsidiary company goods imported by 
the U.S. parent--presumptively would constitute a reportable 
significant direct interest.

            Sec. 5. Estimates Based on Tax Reporting System

    Section 15 is intended to be used as an alternate method 
for the reporting of lobbying expenses for those subject to 
sections 6033(b) and 162(e) of the Internal Revenue Code. These 
sections apply respectively to non-profit organizations and 
businesses required to keep records of lobbying expenses for 
tax purposes.
    However, due to the lack of harmonization between the 
Internal Revenue Code's definition of ``influencing 
legislation'' and the Lobbying Disclosure Act's definition of 
``lobbying activities,'' confusion has resulted as to which 
definition should be used for the Act's threshold test for a 
``lobbyist'' when registrants make the section 15 election.
    The Clerk of the House and Secretary of the Senate recently 
issued non-binding guidance dated February 12, 1996, which 
states that an entity may use the Internal Revenue Code's 
definitions of ``lobbying activities'' provided for by section 
15 in determining who is a lobbyist under section 3(10) of the 
Act.6 To the extent that the guidance states that the 
definitions in the Internal Revenue Code may not be used in 
lieu of the LDA's definition of ``lobbying contact'' for 
purposes of determining who is a lobbyist under section 3(10), 
or for purposes of identifying general and specific lobbying 
issues in executive branch lobbying, the amendment made by 
section 5 of H.R. 3435 would change this interpretation.
---------------------------------------------------------------------------
    \6\ ``Lobbying Disclosure Act Guidance,'' issued by the Clerk of 
the House of Representatives and the Secretary of the Senate, No. 1, 
February 12, 1996, pp. 4-5.
---------------------------------------------------------------------------
    The Committee intends that when registrants elect to use 
their tax estimate, they may not change the number that is 
ultimately reportable to the Internal Revenue Service. This 
expense number may include grassroots lobbying expenses and 
state lobbying expenses for some registrants which are not 
activities that mandate record keeping or disclosure under the 
LDA. However, those registrants making a section 15 election 
can and must avail themselves of the definitional sections in 
the Internal Revenue Code for executive branch lobbying only, 
including the tax code's definition of a covered executive 
branch official.
    Section 5 of the Lobbying Disclosure Technical Amendments 
Act would require that all lobbying of the legislative branch 
be measured by the LDA's definition of ``lobbying activities'' 
which encompasses the definition of a lobbying contact. While 
registrants would report their expenses for lobbying activities 
using their tax code estimate, they would use the LDA's 
definitions for all other registration and reporting purposes.
    Section 5 then makes clear that for purposes of executive 
branch lobbying only, those registrants who choose to use the 
tax code estimate also must use all the definitions under the 
tax code (including ``influencing legislation'' and ``covered 
executive branch official'') to determine registration and 
reporting requirements for their executive branch lobbying, 
including what their lobbying activities are, whether the 20 
percent threshold test is met, and which lobbyists need to be 
disclosed for registration and reporting purposes. In other 
words, once the section 15 election is made, for purposes of 
executive branch lobbying registrants must use their tax 
records uniformly. Not only would a registrant report lobbying 
expenses based on its tax records, but it would then use its 
tax records uniformly for all other LDA registration and 
reporting requirements for executive branch lobbying.
    Guidance from the Clerk of the House and Secretary of the 
Senate advises that trade associations and other tax-exempt 
organizations required by section 6033(e) to report 
nondeductible lobbying expenses with reference to section 
162(e) may rely on the ``safe harbor'' established under 
section 15(b) of the LDA for estimating reportable lobbying 
activity.7 The Committee concurs with this interpretation 
and believes that it is consistent with the purpose of this 
provision to avoid duplicative record keeping requirements. The 
Committee believes this reporting option should also be made 
available to the small number of trade association registrants 
not required by the Internal Revenue Code to report non-
deductible lobbying expenses to their members (i.e., those 
whose members are tax-exempt) if they nevertheless elect to do 
so, adhering to the same standards and requirements followed by 
associations required to make such reports.
---------------------------------------------------------------------------
     7  ``Lobbying Disclosure Act Guidance,'' issued by the Clerk 
of the House of Representatives and the Secretary of the Senate, No. 1, 
February 12, 1996, p. 4.
---------------------------------------------------------------------------

         Sec. 6. Disclosure of Individual Registered Lobbyists

    Section 6 of the Lobbying Disclosure Technical Amendments 
Act would limit the record keeping of registrants under section 
5 of the LDA by eliminating the requirement that the report 
contain a list of lobbyists for each general issue area. 
Instead, the registrant would provide a list of all employees 
who acted as a lobbyist for the organization in one section.
    This amendment would make the reporting requirement of the 
Act consistent with the registration requirement contained in 
section 4(b)(6) of the Act. The change made by this section 
also would eliminate the need for organizations with a wide 
range of general issue areas and a large number of registered 
lobbyists to undertake the time-consuming task of discerning 
which lobbyists worked on which issue. In sum, section 6 would 
eliminate a burdensome requirement without diminishing or 
devaluing the scope of information disclosed by registrants 
under the Act.

       Sec. 7. Exemption Based on Registration under Lobbying Act

    Under the Lobbying Disclosure Act, any lobbyist who 
represents a foreign interest and registers under the Lobbying 
Disclosure Act is required to provide detailed information of 
such foreign interest. In section 9(3) of the Lobbying 
Disclosure Act, Congress determined that the LDA rather than 
the Foreign Agents Registration Act of 1938 (FARA) disclosure 
standards are appropriate for disclosure of such information.
    Section 7 of the Lobbying Disclosure Technical Amendments 
Act would clarify the section 3(h) exemption in FARA so that 
any agent of a foreign principal engaged in lobbying 
activities, other than a government or foreign political party, 
who registers under the LDA in connection with the agent's 
representation of such foreign principal would be exempt from 
the requirements of FARA. Under section 7 of H.R. 3435, 
registrants not required to register under the LDA may do so if 
engaged in lobbying activities. While such registrants may not 
meet the threshold registration requirements of the LDA, such 
as the 20 percent requirement, these registrants would be 
subject to the LDA's disclosure requirements. There is no 
reason for requiring more from less active lobbyists of foreign 
entities. (By contrast, domestic lobbyists who do not meet all 
of the threshold requirements are wholly exempt from 
disclosure.)
    The Committee's intention is to reaffirm the bright line 
distinction between governmental and non-governmental 
representations. Agents of private commercial foreign 
principals will be exempt from FARA requirements so long as 
they register under the LDA, whether the level of their 
reportable activity is substantial (requiring LDA 
registration), or de minimis (LDA registration optional). For 
registered entities, this exemption from FARA requirements 
applies to all employees, including but not limited to those 
listed as lobbyists. Agents who fail or choose not to register 
under the LDA (or who terminate their LDA registration) will 
remain subject to FARA.

                     Sec. 8. Furnishing Information

    Section 8 of the bill was added after the text was reported 
from committee to address purely technical changes to the 
Foreign Agents Registration Act of 1938 (FARA). In sections 
4(e) and 11 of FARA, the term ``informational materials'' 
should have been inserted in place of the term ``political 
propaganda'' when additional such changes were made to FARA by 
the Lobbying Disclosure Act. Section 8 accordingly would make 
these changes.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3 of rule XIII of the Rules of the 
House of Representatives, changes in existing law made by the 
bill, as reported, are shown as follows (existing law proposed 
to be omitted is enclosed in black brackets, new matter is 
printed in italic, existing law in which no change is proposed 
is shown in roman):

                    LOBBYING DISCLOSURE ACT OF 1995

          * * * * * * *

SEC. 3. DEFINITIONS.

  As used in this Act:
          (1) Agency.--The term ``agency'' has the meaning 
        given that term in section 551(1) of title 5, United 
        States Code.
          * * * * * * *
          (3) Covered executive branch official.--The term 
        ``covered executive branch official'' means--
                  (A) * * *
          * * * * * * *
                  (F) any officer or employee serving in a 
                position of a confidential, policy-determining, 
                policy-making, or policy-advocating character 
                described in section [7511(b)(2)] 7511(b)(2)(B) 
                of title 5, United States Code.
          * * * * * * *
          (8) Lobbying contact.--
                  (A) * * *
                  (B) Exceptions.--The term ``lobbying 
                contact'' does not include a communication that 
                is--
                          (i) * * *
          * * * * * * *
                          (ix) required by subpoena, civil 
                        investigative demand, or otherwise 
                        compelled by statute, regulation, or 
                        other action of the Congress or an 
                        agency, including any communication 
                        compelled by a Federal contract, grant, 
                        loan, permit, or license;
          * * * * * * *
          (15) Public official.--The term ``public official'' 
        means any elected official, appointed official, or 
        employee of--
                  (A) * * *
          * * * * * * *
                  (F) a national, regional, or local unit of 
                any foreign government, or a group of 
                governments acting together as an international 
                organization.
          * * * * * * *

SEC. 4. REGISTRATION OF LOBBYISTS.

  (a) * * *
  (b) Contents of Registration.--Each registration under this 
section shall contain--
          (1) * * *
          * * * * * * *
          (4) the name, address, principal place of business, 
        amount of any contribution of more than $10,000 to the 
        lobbying activities of the registrant, and approximate 
        percentage of equitable ownership in the client (if 
        any) of any foreign entity that--
                  (A) * * *
          * * * * * * *
                  (C) is an affiliate of the client or any 
                organization identified under paragraph (3) and 
                has a [direct interest] significant direct 
                interest in the outcome of the lobbying 
                activity;
          * * * * * * *

SEC. 5. REPORTS BY REGISTERED LOBBYISTS.

  (a) * * *
  (b) Contents of Report.--Each semiannual report filed under 
subsection (a) shall contain--
          (1) * * *
          (2) a list of employees of the registrant who acted 
        as lobbyists on behalf of the client during the semi-
        annual reporting period;
          [(2)] (3) for each general issue area in which the 
        registrant engaged in lobbying activities on behalf of 
        the client during the semiannual filing period--
                  (A) a list of the specific issues upon which 
                a lobbyist employed by the registrant engaged 
                in lobbying activities, including, to the 
                maximum extent practicable, a list of bill 
                numbers and references to specific executive 
                branch actions;
                  (B) a statement of the Houses of Congress and 
                the Federal agencies contacted by lobbyists 
                employed by the registrant on behalf of the 
                client; and
                  [(C) a list of the employees of the 
                registrant who acted as lobbyists on behalf of 
                the client; and]
                  [(D)] (C) a description [of the interest, if 
                any,] of any significant direct interest of any 
                foreign entity identified under section 4(b)(4) 
                in the specific issues listed under 
                subparagraph (A);
          [(3)] (4) in the case of a lobbying firm, a good 
        faith estimate of the total amount of all income from 
        the client (including any payments to the registrant by 
        any other person for lobbying activities on behalf of 
        the client) during the semiannual period, other than 
        income for matters that are unrelated to lobbying 
        activities; and
          [(4)] (5) in the case of a registrant engaged in 
        lobbying activities on its own behalf, a good faith 
        estimate of the total expenses that the registrant and 
        its employees incurred in connection with lobbying 
        activities during the semiannual filing period.
  (c) Estimates of Income or Expenses.--For purposes of this 
section, estimates of income or expenses shall be made as 
follows:
          (1) * * *
          * * * * * * *
          [(3) A registrant that reports lobbying expenditures 
        pursuant to section 6033(b)(8) of the Internal Revenue 
        Code of 1986 may satisfy the requirement to report 
        income or expenses by filing with the Secretary of the 
        Senate and the Clerk of the House of Representatives a 
        copy of the form filed in accordance with section 
        6033(b)(8).]
          * * * * * * *

SEC. 14. IDENTIFICATION OF CLIENTS AND COVERED OFFICIALS.

  (a) Oral Lobbying Contacts.--Any person or entity that makes 
an oral lobbying contact with a covered legislative branch 
official or a covered executive branch official shall, on the 
request of the official at the time of the lobbying contact--
          (1) * * *
          (2) state whether such client is a foreign entity and 
        identify any foreign entity required to be disclosed 
        under section 4(b)(4) that has [a direct interest] a 
        significant direct interest in the outcome of the 
        lobbying activity.
  (b) Written Lobbying Contacts.--Any person or entity 
registered under this Act that makes a written lobbying contact 
(including an electronic communication) with a covered 
legislative branch official or a covered executive branch 
official shall--
          (1) * * *
          (2) identify any other foreign entity identified 
        pursuant to section 4(b)(4) that has [a direct 
        interest] a significant direct interest in the outcome 
        of the lobbying activity.
          * * * * * * *

SEC. 15. ESTIMATES BASED ON TAX REPORTING SYSTEM.

  (a) Entities Covered by Section 6033(b) of the Internal 
Revenue Code of 1986.--[A registrant] A person, other than a 
lobbying firm, that is required to report and does report 
lobbying expenditures pursuant to section 6033(b)(8) of the 
Internal Revenue Code of 1986 may--
          (1) make a good faith estimate (by category of dollar 
        value) of applicable amounts that would be required to 
        be disclosed under such section for the appropriate 
        semiannual period to meet the requirements of sections 
        4(a)(3) and 5(b)(4); and
          [(2) in lieu of using the definition of ``lobbying 
        activities'' in section 3(7) of this Act, consider as 
        lobbying activities only those activities that are 
        influencing legislation as defined in section 4911(d) 
        of the Internal Revenue Code of 1986.]
          (2) for all other purposes consider as lobbying 
        contacts and lobbying activities only--
                  (A) lobbying contacts with covered 
                legislative branch officials (as defined in 
                section 3(4)) and lobbying activities in 
                support of such contacts; and
                  (B) lobbying of Federal executive branch 
                officials to the extent that such activities 
                are influencing legislation as defined in 
                section 4911(d) of the Internal Revenue Code of 
                1986.
  (b) Entities Covered by Section 162(e) of the Internal 
Revenue Code of 1986.--[A registrant that is subject to] A 
person, other than a lobbying firm, who is required to account 
and does account for lobbying expenditures pursuant to section 
162(e) of the Internal Revenue Code of 1986 may--
          (1) make a good faith estimate (by category of dollar 
        value) of applicable amounts that would not be 
        deductible pursuant to such section for the appropriate 
        semiannual period to meet the requirements of sections 
        4(a)(3) and 5(b)(4); and
          [(2) in lieu of using the definition of ``lobbying 
        activities'' in section 3(7) of this Act, consider as 
        lobbying activities only those activities, the costs of 
        which are not deductible pursuant to section 162(e) of 
        the Internal Revenue Code of 1986.]
          (2) for all other purposes consider as lobbying 
        contacts and lobbying activities only--
                  (A) lobbying contacts with covered 
                legislative branch officials (as defined in 
                section 3(4)) and lobbying activities in 
                support of such contacts; and
                  (B) lobbying of Federal executive branch 
                officials to the extent that amounts paid or 
                costs incurred in connection with such 
                activities are not deductible pursuant to 
                section 162(e) of the Internal Revenue Code of 
                1986.
  (c) Disclosure of Estimate.--Any registrant that elects to 
make estimates required by this Act under the procedures 
authorized by subsection (a) or (b) for reporting or threshold 
purposes shall--
          (1) inform the Secretary of the Senate and the Clerk 
        of the House of Representatives that the registrant has 
        elected to make its estimates under such procedures; 
        and
          (2) make all such estimates, in a given calendar 
        year, under such procedures.
          * * * * * * *
                              ----------                              


        SECTION 3 OF THE FOREIGN AGENTS REGISTRATION ACT OF 1938

  Sec. 3. Exemptions.--The requirements of section 2(a) hereof 
shall not apply to the following agents of foreign principals:
  (a) * * *
          * * * * * * *
  (h) Any agent of a person described in section 1(b)(2) or an 
entity described in section 1(b)(3) if the agent [is required 
to register and does register] has engaged in lobbying 
activities and has registered under the Lobbying Disclosure Act 
of 1995 in connection with the agent's representation of such 
person or entity.