A bill recently signed into law by Hawaii Gov. Josh Green significantly expands the scope of the state's lobbying law to cover procurement activities. When the law takes effect on Jan. 1, 2027, its expanded scope will have significant implications for state contractors and companies seeking to do business with Hawaii governmental bodies.
H.B. 412 was introduced as part of a broader ethics reform package, which also included changes to the administrative enforcement process for violations of Hawaii ethics and lobbying laws and provisions related to campaign contributions by registered lobbyists. H.B. 412 includes three major changes to Hawaii state lobbying laws:
- First, it expands the definition of "lobbying" to include procurement activities. In doing so, Hawaii joins the growing list of states that have expanded the scope of lobbying beyond legislative and administrative contacts to include attempts to do business with the public sector. Under the expanded definition, the term "lobbying" in Hawaii will include contacts "concerning the solicitation or award of a contract" that are made outside of the state's formal procurement process.
- Second, the law includes a significant new enforcement mechanism: For the first time, contracts entered into in violation of the state lobbying law will be voidable at the option of the state of Hawaii. In other words, a government contractor that fails to appropriately register and submit lobbying reports after engaging in procurement lobbying risks giving its state counterparty a unilateral right to void the contract, in addition to civil penalties of $5,000 per violation.
- Third, H.B. 412 imposes a presumption that individuals who lobby on behalf of their employer or a company in which they have an ownership stake are being compensated to lobby. This may make it more likely for such individuals to qualify as lobbyists, and to be required to register and submit reports accordingly.
A number of questions remain regarding the implementation of H.B. 412 and the obligation of persons who do business with the state of Hawaii to register as lobbyists. Even now, however, it is clear that the law imposes significant new compliance obligations on government contractors. The new law's provision allowing the state to void contracts secured in violation of lobbying requirements introduces a major compliance concern for vendors, contractors and consultants who may become subject to a lobbying law for the first time. Because failure to comply with the lobbying law could provide the state with a legal right to rescind public contracts, with potentially significant financial and reputational consequences, government contractors should consider putting an appropriate compliance framework in place before the law takes effect.
The expanded Hawaii lobbying law will apply to contacts with a broad range of policymakers, including elected officials, senior executive branch officers, officers and employees of the University of Hawaii, as well as members of state boards, commissions and agencies. Holland & Knight will closely monitor developments regarding the implementation of H.B. 412 as the effective date approaches.
