Judge clears former lobbyist, overturns $30,000 fine

cjarvis@newsobserver.comJanuary 7, 2012 

— A Wake County Superior Court judge has cleared former lobbyist Don Beason of violating the law when he didn’t register to lobby on behalf of five companies and a trade association that wanted to sell imported iron for state highway projects.

Judge Paul Ridgeway ruled Beason doesn’t have to pay the $30,000 fine Secretary of State Elaine Marshall imposed last year.

The judge found parts of North Carolina’s lobbying reform law enacted in 2007 were ambiguous and that the secretary of state had overstepped her authority in issuing the fines.

Following probes by the secretary of state’s lobbying division and the state auditor, in 2010 a record-setting $110,000 fine was levied against Beason, who for years was one of the state’s most influential lobbyists. An administrative law judge reduced the fine to $6,000, but then Marshall bumped it up to $30,000.

Beason petitioned for a review in Superior Court, where Ridgeway found a number of problems with the new law.

“The court concludes that regardless of how laudable the public policy objectives of North Carolina’s lobbying law, and regardless of the good intentions of the Secretary of State to pursue that public policy, the facts and law presented in this case require that the civil assessment against the petitioner be reversed and set aside,” Ridgeway wrote in his order, issued Friday.

Beason’s attorney, Michael Weisel of Raleigh, said today that the ruling was important for his client and lobbyists.

“Judge Ridgeway used unambiguous language to vindicate Don Beason. Further, he made it crystal clear the N.C. secretary of state has no authority to interpret the lobbying laws.”

The N.C. Coalition for Lobbying and Government Reform, which pushed for the reforms, says the law obviously needs to be fine-tuned.

“Judge Ridgeway ruled on the letter of the law but not the intent,” director Jane Pinsky said today.

At the core of Ridgeway’s ruling was his determination that North Carolina’s law defines a lobbyist as someone who engages in “direct communication” with legislators or their staffs to try to influence legislative or executive action. In Beason’s case, there was no evidence that he had any direct communication on behalf of these clients.

Even though he collaborated with his partners – his son, Mark Beason, and T. Jerry Williams – to develop a lobbying strategy, communicated with his clients and told his son how to proceed, the law doesn’t say that’s illegal. The judge suggested the General Assembly could have prohibited indirect communication through intermediaries.

Ridgeway also noted a peculiarity about the lobbying law: It gives the authority to interpret the law to the N.C. Ethics Commission, and the authority to administer it to the secretary of state. In fact, the Ethics Commission can veto any rules the Secretary of State imposes on lobbyists.

The significance of that is that the deference courts are supposed to give state agencies in interpreting administrative law is not appropriate in this case, the judge decided. It also means that the secretary of state overstepped her authority, Ridgeway wrote.

Another anomaly in the law came up regarding the state’s claim that Beason had destroyed records. Later, after he had been fined, Beason said he had found the records. Ridgeway said that would have been a violation under an old rule that said a “filer” must retain all records for three years. But that rule was replaced by a new one changing the word “filer” to “lobbyist.”

The allegations arose out of Beason’s representation of Sigma Corp., a New Jersey firm with a warehouse in Hamlet that imports and sells foreign manufactured cast iron and steel. The company retained Beason because it wanted to repeal the state’s “Buy America Act,” which prohibited the Department of Transportation from using foreign steel and iron.

Beason registered to represent that company, but not four other companies and an Indian trade association, some of which gave Sigma money to reimburse it for lobbying expenses. Beason’s firm received more than $100,000 from them. Beason testified in 2010 that he didn’t know some of Sigma’s payments to him actually came from other companies.

Beason retired from lobbying in 2007 after it surfaced that he had given then-House Speaker Jim Black a $500,000 interest-free loan. The state Attorney General’s Office, which represents the secretary of state in the case, could not be reached Saturday to comment on whether it intends to appeal the ruling.

Jarvis: 919-829-4576

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