LEGISLATIVE ETHICS AND THE WATER LAWYER, A PRIMER

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1 LEGISLATIVE ETHICS AND THE WATER LAWYER, A PRIMER CHARLES C. CHUCK BAILEY, Austin Attorney at Law State Bar of Texas 7 TH ANNUAL THE CHANGING FACE OF WATER RIGHTS IN TEXAS May 18-19, 2006 San Antonio CHAPTER 15

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3 BIOGRAPHY Charles C. Chuck Bailey has been involved in government law for over thirty years. After receiving his law degree in 1974, he served as an Assistant Criminal District Attorney in Lubbock where he tried close to one hundred jury trials in three years and was appointed Felony Chief. In 1978 he moved to Austin to serve as Assistant General Counsel, then as General Counsel at the Texas Department of Public Safety. In 1981 he joined Governor Bill Clements legal office as Assistant General Counsel where he helped pass portions of the Governor s legislative package. After a tour as Special Assistant for Elections for the Texas Secretary of State, he was hired by the State Comptroller s office where he served in a number of capacities including Chief Administrative Law Judge and Deputy Comptroller for Legal Affairs and Tax Policy. In 1993, Lt. Governor Bob Bullock asked Mr. Bailey to leave private practice to become General Counsel and Chief of Staff. While working for the Lt. Governor, Bailey was involved in mediating and drafting the Edwards Aquifer Act (SB 1477) and worked closely with the Senators of State leadership on a great number of issues. Since late 1995 Bailey has maintained his own law office focusing on lobbying at the Legislature and various state agencies. He has represented various interests including Bexar Metropolitan Water District, the Bass Brothers, the City of Brownsville, Texas Rental Association, EZCORP and many other clients at both the Texas Legislature and state agencies. He continues to practice administrative and government law at different state agencies, including, the State Comptroller, Texas Department of Insurance, Texas Alcoholic Beverage Commission, the State Lottery, Texas Environmental Quality Commission and others. A detailed resume is available upon request.

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5 Legislative Ethics And The Water Lawyer, A Primer Chapter 15 LEGISLATIVE ETHICS AND THE WATER LAWYER, A PRIMER I know, I know. Legislative ethics is an oxymoron. But, there are laws on the books covering such things as ethical behavior on the part of nearly everyone concerned with the legislative process. In 1993, the Texas Legislature passed its first major ethics reform bill in several years. SB 1 which was codified primarily into Title 3 and 5 of the Texas Government Code, Sections 305, 571, 572 and 573. While there were some do s and don ts such as prohibiting conversion of campaign contributions to personal use, the main thrust of the bill was reporting. No contribution caps were implemented under the belief that transparency was better than prohibition. And, there is always the 1 st Amendment question about whether prohibiting or capping contributions violates free speech. There are three areas that lawyers practicing at the legislature must consider. First, when do you stop practicing law and move into the lobbying realm. Second, if you are lobbying, what are your obligations as to reporting your activities, and, third, how are conflicts of interest to be handled. To determine if you are lobbying, look at Texas Government Code The general rule is if you are paid or receive reimbursement, not including your own travel, food or lodging, of not less than $200 per quarter to communicate directly with a member of the legislative or executive branch to influence legislative or administrative action, you are lobbying. There is an exception for administrative lawyers. If a lawyer is attorney of record or pro se, enters his appearance on a public record through pleadings or other written Page 1

6 Legislative Ethics And The Water Lawyer, A Primer Chapter 15 documents in a docketed case pending before an agency, and that attorney activity is the only thing that would have required filing as a lobbyist, the attorney need not do so. follows: When do you cross the line from lawyering to lobbying. A good example is as An attorney who has been paid more than $200 per quarter, by a client, goes to a state agency to inquire about a rule which his client dislikes. As long as he simply asks questions and obtains the agency s interpretation of the rule, no lobbying. Once he says your rule and interpretation are all wrong and need to be changed, he has crossed the line. Once the line is crossed, lobbyists are required to register and pay a fee currently $500 for a year, due when lobbying starts. In addition to registration, activity reports must be filed monthly or annually depending on how much the lobbyist spends on things such as meals, entertainment and gifts. The threshold for monthly reporting is $1,000/quarter. All of this is covered by Texas Government Code and the Texas Ethics Commission Rules and Ethics Advisory Opinions. In addition to the expenditure reports, lobbyists must also report each time a client is added or lost. The law provides that the report lists the name of the client, its address and who the decision makers are as it relates to lobbying decisions. The reporting forms, provided by the Ethics Commission, are both self-explanatory and public. Not only is the identity of the client public, but so is the range of remuneration. Fees are listed in ranges although a lobbyist can denote the actual fee. There are civil and criminal penalties provided for failure to comply with the law. Ethics Advisory Operations provide not only guidance in the law, but act as a defense to prosecution, under some circumstances. Texas Government Code Page 2

7 Legislative Ethics And The Water Lawyer, A Primer Chapter 15 The conflict of interest area has been troublesome from the time lobbyist registration was started. In the 1993 Legislature on the whole, was not concerned with conflicts and it wasn t until the 2003 legislative session that the lobby laws were amended to specifically address the issue. Texas Government Code now states that a lobbyist is prohibited from representation of a client before the legislature or executive branch in a substantially related matter in which a client s interests are materially and directly adverse to another client or employer interest. If the lobbyist reasonably believes each client will not be materially affected, within 2 days of becoming aware of the conflict, the lobbyist, in writing, notifies each client and within the 10 days notifies the Ethics Commission on forms provided by the Commission. If within the same time frame, the lobbyist receives a written approval from all affected clients, he may continue his representation of both. Violation of this section can result in a fine of up to $2,000 and loss of registration for up to 2 years. An intentional violation of this section is a Class A misdemeanor. One final provision for lawyers/lobbyists to note is Texas Government Code which prohibits contingent fees based on the passage or defeat of legislative or administrative action. It seems clear with the passage of the conflict of interest provision, nearly all work performed by the lawyer/lobbyist will be ethically regulated by the Government Code. However, because legal work often bleeds over into lobbying, lawyers should consult the Disciplinary Rules of Professional Conduct to make sure their ethical conduct passes every test. Page 3

8 Legislative Ethics And The Water Lawyer, A Primer Chapter 15 Hypotheticals 1. Two lawyers in the same firm represent competitive water districts. There is no legal conflict, but certainly a political conflict. Can the lawyers remain at the same firm, both keeping the clients? One provides legal services; the other lobbying. 2. Is there a conflict when a lobbyist represents a groundwater district association and a municipal water utility? 3. May a non-lawyer lobbyist provide legal advice to a client relating to a bill he is working on? 4. Does a lobbyist have a conflict where a member of the legislature is carrying a client s bill and the lobbyist is pushing another piece of legislation that the member opposes? 5. Does a licensed attorney have to worry about the Disciplinary Rules of Professional Conduct or the Texas Government Code when the attorney is engaged in lobbying activities? 6. What obligations does any attorney/lobbyist have when he gives free legal advice to a member of the legislative or executive branch? 7. Does the revolving door statute at the Texas Commission on Environmental Quality apply to lawyers? 8. When does legal work become lobbying? 9. Should a lawyer lobbyist give written reports to a governmental client? If the report contains legal advice? If the report is political in nature? 10. Is it good practice for a lawyer/lobbyist to testify on behalf of a lobby client? Page 4