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Thus far, a preliminary study has revealed that only a small number of organizations, associations or individuals who are employed to X influence the passage or defeat of legislation before the Congress of the United States have filed statements as required under the act.

We have found that some organizations and individuals which are engaged in influencing legislation have not complied on advice of counsel. In many cases private counsel have given the Act a very narrow and restricted interpretation.

One of the principal reasons offered by such organizations and individuals who have not complied is that they are not within its purview because they claim that their "principal purpose" is not to influence legislation. The phrase "principal purpose" is referred to in section 307 of the act.

It is our position that the phrase "principal purpose" means any purpose which is not merely incidental to the activities of the person or organization in question. Any other interpretation would make the act meaningless and ineffective and would clearly defeat the expressed intention of the Congress.

Senator FERGUSON. You use the expression entirely different from the counsel for the respective lobbyist or people?

Mr. KAUFMAN. That is correct. We take a different viewpoint. Many organizations and individuals have not filed statements as required because they claim that "principal" means "primary" or "major." Our interpretation is amply substantiated by the legislative history of the act and by decisional law. This view, in our opinion, removes any doubt, as to those who are covered by the act. We think that a judicial interpretation will support our view.

However, it should be pointed out that the act has not been tested. Although there are numerous cases construing the phrase "principal purpose" as we have interpreted it, a court might choose to disregard such interpretation. In the event that the statute is construed by the courts in such a way that it becomes ineffective we shall then make specific recommendations whereby the Federal Regulation of Lobbying Act could be strengthened.

Senator FERGUSON. Could you give us a hypothetical case, what you might call a typical case, where the counsel would not consider it as principal business, and where you would contend it was principal business?

Mr. KAUFMAN. Yes, I believe I can, Senator Ferguson. I have observed that, for example, in connection with the CIO and AFL and United States Chamber of Commerce, while they have many different functions which they render to their membership, one of their important functions is that of attempting to influence legislation. Now, section 305 of the act requires a filing with the Clerk of the House of the amount of receipts and expenditures for lobbying purposes. In my conferences with counsel and that was a policy which we thought should be followed, in view of the provisions of this act, that we should discuss it over a table-counsel took the position that in view of the fact that they rendered so many different functions to their membership, they were not required under the statute, to file the statement, because lobbying was not their principal activity. x

Senator FERGUSON. In other words, they may have had 50 activities, of which lobbying was one?

Mr. KAUFMAN. That is correct. In a situation like that, Senator, I believe you will agree that they might not have a principal or a prime function, they have so many different functions.

Senator FERGUSON. In other words, no one of the 50 or the 20, or whatever it may be, is a prime one?

Mr. KAUFMAN. That is correct. And if they are all important functions, they are not incidental functions and if we were to adopt the view taken by counsel that it has to be a prime or a major function-

Senator FERGUSON (interposing). There would be very few lobbyists?

Mr. KAUFMAN. There would be no lobbyists.

The CHAIRMAN. What is the reason, Mr. Kaufman, that they give for not wanting to register as an association, when they are willing to register certain members of the association? What advantage is there in not registering the association itself?

Mr. KAUFMAN. I believe the reason for that, Mr. Chairman, is the fact that the filing of the statement, under section 305, requires a listing of all expenditures over $10 by name and address and the listing of all expenditures for lobbying purposes, and I don't think that these associations particularly relish the idea of filing those statements.

The CHAIRMAN. In what light do you regard the Nation-wide advertising campaign put on for the purpose of influencing the Congress or of getting people to exert pressure or make their desires known to the Members of Congress? Does that come under the head of "lobbying"?

Mr. KAUFMAN. I would say that it certainly does come under the heading of lobbying, and I would say that if an association engages in such activity, and their lobbying purposes are not merely incidental to their major activities, they would be required to file and register under the act.

The CHAIRMAN. It is not necessary that they come to Capitol Hill? Mr. KAUFMAN. They don't have to come to the Capitol.

The CHAIRMAN. One can be a lobbyist without coming to the Capitol?

Mr. KAUFMAN. Correct.

The CHAIRMAN. In fact, the most effective lobbying is in inciting personal letters from the folks back home.

Mr. KAUFMAN. That is correct. As a matter of fact, that very point was brought out in the course of Senator La Follette's committee report to the Congress, in which he stated that one of the groups that they desired to cover is the group that does not appear on the Hill but exerts their pressure away from the Hill.

The CHAIRMAN. And if the organization itself were required to register, it would have to make public the amount which it expends indirectly, as well as directly, for influencing legislation.

Mr. KAUFMAN. That is correct. And we have observed, Senator Aiken, that while many of them have individual lobbyists registered, yet there was this reluctance to file that statement under section 305 of the act, and so the first thing that this unit concentrated upon was to obtain compliance with section 305 by these associations, by talking with them, by advising them of our point of view on the interpre

tation of the act, and by giving them a reasonable opportunity to comply.

Senator FERGUSON. What significance do you put on the word "or" contained in the statement in section 307 of the statute, "The provisions of this title shall apply to any person (except political committees as defined in the Federal Corrupt Practices Act, and duly organized State or local committees of a political party), who by himself, or through any agent or employee or other persons in any manner whatsoever, directly or indirectly, solicits, collects, or receives money or any other thing of value to be used principally to aid or"-underlining the word "or"-"the principal purpose of which person is to aid, in the accomplishment of any of the following purposes:

"(a) The passage or defeat of any legislation by the Congress of the United States.

"(b) To influence, directly or indirectly, the passage or defeat of any legislation by the Congress of the United States."

Mr. KAUFMAN. I believe what was meant there was this: You can have a case where a man may receive an amount of money to be used principally for the purpose of influencing legislation, and again you may have a case where he does not receive money to be used principally for the purpose of influencing legislation, yet his principal purpose may be that of influencing legislation.

Senator FERGUSON. Let us take the case of a delegation coming to Washington-I am just trying to get at an understanding of what the law means a delegation coming to Washington, such organization paying their way; they stay at a hotel 3 or 4 days; come up to the Hill, and there they are interested in legislation; they are either for or against a bill. Now, is that covered in this case?

Mr. KAUFMAN. I would say "Yes." I would say the organization that paid the expenses of the delegation must report that to Congress. Senator FERGUSON. Even though that organization is a voluntary organization?

Mr. KAUFMAN. That is right. They have to report that expenditure if it is not an incidental purpose to the existence of that organization. We have the word "principal" and we are willing to read it into the act.

Senator FERGUSON. But how many organizations are created solely for the purpose-I use the word "solely"-for the purpose of lobbying? Mr. KAUFMAN. I don't know of one, frankly.

Senator FERGUSON. So, then, when you get away from the words "solely for the purpose" you get to the words "principal part" and you have very few, if any, where you could really say, "Well, their whole job is lobbying" or that their principal job is lobbying.

Mr. KAUFMAN. That is correct.

Senator FERGUSON. It is a relative term, and therefore if you use the limited interpretation, you have practically eliminated the effectiveness of the act.

Mr. KAUFMAN. I think you destroy the entire effectiveness of the

act.

Senator FERGUSON. So what you are contending is that the court will, as I understand it, make a fair interpretation of the words "principal purpose?"

Mr. KAUFMAN. That is correct.

Senator FERGUSON. How many cases have you pending at the present time?

Mr. KAUFMAN. I take it that by "pending" you mean in court? Senator FERGUSON. In court, yes.

Mr. KAUFMAN. We have no cases in court as yet.

Senator FERGUSON. You have no cases in court?

Mr. KAUFMAN. We have a suit that has been brought by the NAM, a suit that is civil in nature, to restrain the Attorney General from enforcing it, and seeking a declaratory judgment; but the position of the Department is that their remedy there is a wrong one because this is a criminal statute and you can't test it out by a declaratory judgment.

Senator FERGUSON. Injunction would not lie to restrain the enforcement of criminal law?

Mr. KAUFMAN. Yes, sir.

Senator FERGUSON. Have you submitted this to any grand jury? Mr. KAUFMAN. Not as yet. I have been given the authority to appear before a grand jury, and as I have stated, I believe the Attorney General covered this in the release in January. We are going to submit to a grand jury only such cases where it is apparent

Senator FERGUSON (interposing). You are going to select the good cases?

Mr. KAUFMAN. Yes; we are going to submit such cases where there was an out-and-out attempt to evade the operation of the act; in other words, where there was not an honest difference of opinion; where, for example, they did not at least seek the opinon of counsel to see whether or not they should comply, and when they did not comply, it was done pursuant to an opinion of counsel. We will present such cases as warrant presentation to the grand jury, always keeping in mind the fact that we will look for the element of out-and-out evasion.

Senator FERGUSON. In your opinion, is there any change that you think ought to be made at this time in this language, or do you think that if this is fairly interpreted according to your version, it is sufficiently strong to be a really effective lobbying law?

Mr. KAUFMAN. Senator, that eloquently sums up our position. That is our position exactly. There can be differences of opinion over the interpretation of the act, as there are over every act, but it is our position that this act can be interpreted to mean exactly what our position is, and that is that "principal" means not incidental and that the language of the act is clear, and that people know, particularly associations, exactly what they are required to do under the act; and, as a matter of fact, this is borne out by the various opinions of counsel which I have seen submitted to me by the various associations. I think that each opinion-I don't remember seeing any opinion that dwells on any other subject matter that each opinion devoted a great deal of time to the interpretation of the word "principal” and in most cases, these associations resolved the doubt in their favor and there was not a filing as required under section 305.

Senator FERGUSON. Has there been a wholesale nonfiling?

Mr. KAUFMAN. I would say there has been wholesale nonfiling under section 305. I say that for this reason: Up until the end of 1947 there were approximately 1,000 individual lobbyists who had registered, but only approximately 200 associations had filed the statements required under section 305.

I will say that their spirit in most cases is one of cooperation. When you ask them to come in and you advise them of the fact that the Department intends to enforce this act; that it is an act of Congress, and under the act the Department of Justice has the duty to enforce the act, in most cases there seems to be agreement over the fact that-well, they were not sure what they ought to do, but in view of the fact that the Department of Justice feels that there should be compliance, they will comply.

Senator FERGUSON. Is their feeling that they do not want to comply with section 305, which is the setting out of the amount of money, or is their feeling that they do not want to be classed as lobbyists because that term may, to many people, mean something wrong? But, in fact, lobbying can be beneficial as well as detrimental. can be used to give facts as well as to avoid giving facts. Mr. KAUFMAN. That is correct.

It

Senator FERGUSON. Now, what do they give usually as the reason for not filing under 305? Is it that they just don't want to be classed as lobbyists?

Mr. KAUFMAN. The reason that they give for not registering under section 305 is the fact that they interpret the word "principal" as not applying to them, but my own viewpoint, Senator, is that I am inclined to agree with you that, in most cases, they feel that there is some stigma attached to being registered as a lobbyist. I might say that does not really apply in these particular cases, because they have had individuals register under section 308 as lobbyists, so there is right there an admission that there are lobbying activities carried on in behalf of the association.

Senator FERGUSON. Let us take a hypothetical case where a lawyer is under a general retainer, say, of $10,000 a year, but he only makes two trips to Washington and spends a week on each occasion, where he tries to influence or defeat legislation-is he a lobbyist? Suppose he takes a general retainer, he does not get anything extra.

Mr. KAUFMAN. That question has been propounded time and time again to us by counsel in and out of Washington. I have my own view on it. It is not the view of the Department, and I shall be very happy to give it to you, Senator.

Senator FERGUSON. Yes; I should like to have you give it.

Mr. KAUFMAN. I think that where an attorney is a general attorney for corporation X, and among the duties he is required to perform for corporation X is that of influencing or attempting to influence legislation, and while we cannot break down specifically how much of his fee should be allocated, yet I believe he has the duty of allocating part of his fee. The attorney can, in his own mind, determine how much time has been devoted to lobbying purposes and, therefore, file a statement with Congress setting forth the amount of money that he received for lobbying, the particular piece of legislation in which he was interested, and how much has been expended in connection with it, because Í think what Congress was getting at-Congress did not intend to do away with lobbyists, because, as you pointed out, Senator, good lobbyists perform a useful function, but what they wanted to do was to be able to appraise the value of the information which they were receiving from these associations and pressure groups and individuals, and a step in that direction is the filing of a financial statement.

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