Alabama Exempts Economic Development Officials from Lobbying

Summary:

On April 6, 2018, Alabama Governor Kay Ivey signed a new bill exempting certain activities of economic developers from the state’s lobbying laws. House Bill 317 amended the State Government Code in three important ways:

1. Revised the notification and confidentiality provisions surrounding economic development projects;
2. Created an exemption for certain activities of economic developers from registering as lobbyists; and
3. Clarified the state and local incentives which are subject to notification requirements.¹

Explanation:

Since 2010, the state of Alabama has required economic developers to register as “lobbyists.” For the past eight years, the state regulated traditional lobbying efforts attempting to influence the legislature, but also expanded the notion of lobbying to include contacts with executive agency officials.² The state defined “lobby” or “lobbyist” to include: “promoting or attempting to influence the awarding of a grant or contract with any department or agency of the executive, legislative, or judicial branch of state government.”³ The view that the state regulated “executive agency lobbying” was reinforced by the State Ethics Commission which specifically required economic developers to disclose their activities when registering as lobbyists on its website.

Earlier this month, Governor Kay Ivey signed “The Alabama Jobs Enhancement Act” which, among other things, exempted certain activities of economic developers from the state’s lobby laws. House Bill 317 of 2018 provided three important changes to the economic development community:

1. Revised notification and confidentiality provisions.
   A “Project Entity” (or its representative) is required to give written notification to the Secretary of Commerce about the general parameters of a project if the Project Entity is considering locating or expanding a facility within the state and intending to claim any incentives for the project.⁴ The Project Entity is required to give the required notification when the project parameters are generally known, when a site(s) have been identified or when visiting the state.⁵ The initial required notification may be made on an anonymous basis.⁶ After notifying the Secretary of Commerce, the Secretary shall send a letter to the Project Entity acknowledging the receipt of the required notification.⁷
   
   The Legislature re-emphasized that all information provided by a Project Entity when seeking an economic development incentive from the state or the local community is confidential.⁸ In addition, the Legislature re-affirmed that the state and local communities are authorized to enter into confidentiality agreements with a Project Entity but limited such agreements to two years in duration.⁹
   
   Within two years of a Project Entity announcing the project, the Secretary shall make the required notification available for public inspection.¹⁰ The requirement to make the required notification public does not matter whether the Project Entity ultimately located in Alabama or another state.¹¹
2. Created an exemption for certain activities of economic developers from registering as lobbyists.
   The Legislature specifically exempted economic development professionals from the definition of “lobbyists”.¹² If an economic developer were pursuing incentives through legislative action, seeking funds over which the legislature has discretionary control, requesting incentives that are above and beyond or in addition to the current statutory, or constitutionally authorized incentives, the professional would be required to register as a lobbyist.¹³ The legislature defined an “economic development professional” as a “person employed to advance, specific, good faith economic development or trade promotion projects.”¹⁴ The person could be employed by the Project Entity, a professional services entity or a chamber of commerce or other non-profit economic development organization in the state.¹⁵
3. Clarified which incentives are subject to the notification requirements.
   The Legislature clarified that a Project Entity shall send the required notification to the Secretary when it is seeking any of the following incentives: jobs tax credit, investment credit, tax abatement, port credit, Growing Alabama credit, site preparation grants, training assistance, access road grants, federal grants (administered by the state or local community), direct or indirect cash payment or an in-kind contribution of land, building or equipment.¹⁶
   
   To give the Legislature an opportunity to assess the impact of these changes and to amend the State Ethics Act, the legislation sunsets on April 2, 2019.¹⁷

What’s not addressed by these changes is what happens to economic developers who previously registered as “lobbyists” but are now exempted by the new law. The State Ethics Commission is currently assessing how to treat these situations.

If you have any questions on whether your current activities constitute “lobbying” in the state of Alabama, we highly encourage you to seek counsel from an attorney. Please contact Duff & Phelps’ site selection and incentives specialists if you would like assistance selecting sites or negotiating economic development incentives in the state of Alabama. Our firm has completed nine location projects in the state in recent years; we have the local knowledge and business relationships to help guide you in your decisions.

Sources:
¹ _{State Government Code, Section 41-29-3, Code of Alabama 1975.}
² _{Act No. 2010-762}
³ _{Section 36-25-1.1}
⁴ _{HB 317 of 2018 Section 2 amending Section 41-29-3(a)(1)}
⁵ _Id.
⁶ _Id.
⁷ _Id.
⁸ _{HB 317 of 2018 Section 2 amending Section 41-29-3(b)}
⁹ _Id.
¹⁰ _{HB 317 of 2018 Section 2 amending Section 41-29-3(a)(3)}
¹¹ _Id.
¹² _{HB 317 of 2018 Section 3}
¹³ _Id.
¹⁴ _Id.
¹⁵ _Id.
¹⁶ _{HB 317 of 2018 Section 2 amending Section 41-29-3(a)(2)}
¹⁷ _{See Governor Ivey’s Press Statement (April 6, 2018), “Governor Ivey Signs Alabama Jobs Enhancement Act, Creating Additional Transparency and Accountability” found at https://governor.alabama.gov/press-releases/governor-ivey-signs-alabama-jobs-enhancement-act-creating-additional-transparency-and-accountability/}