In July 1998, a prominent California winery agreed to pay $150,000 in fines and other penalties for making a total of $374 in illegal gratuities to a federal official. Since providing meals, beverages or entertainment is a common practice among corporations and their customers, the following is a brief overview of the limitations and prohibitions concerning the making of gifts and gratuities to federal, state and local public officials:
Generally speaking, a "gift" is a payment which benefits a public official. Examples include, meals, lodging, flowers, bottles of wine, tickets to cultural or sporting events, travel expenses, etc. Although the making of gifts to clients or prospective clients may be standard practice in the private sector, such activity is highly regulated when the gift is made to a public official.
Federal Criminal Laws
Federal prosecutors have a broad array of tools at their disposal to enforce prohibitions against illegal gifts. It is important to stress that just because a gift falls within permissible, legal limits does not mean that the gift could be not be deemed a bribe or illegal gratuity (although that possibility is reduced). The Federal courts have ruled that no quid pro quo is required to violate the gratuities laws. If a gift is made "for or because of any official act"—whether in the past or future—then the official who receives the benefit (and in many cases the entity making the gift) could be subject to criminal prosecution. Accordingly;
- gifts cannot be made as a "reward" for past conduct, or as an inducement for future conduct, to any public official; and
- all gifts must be permissible under the limits applicable in each jurisdiction.
Until as recently as 10 years ago, gifts to federal officials were not severely restricted. That is now the rare exception rather than the rule. For officials in the Executive Branch, gifts are generally prohibited, with only very few limited and quite narrow exceptions (such as a $20 or less per occasion de minimis rule). The House of Representatives prohibits gifts and the U.S. Senate limits them to $50 per occasion, although there is a relatively long list of specific exceptions. Since the exceptions for both the Executive Branch and Congress are narrow and specific, we strongly recommend that those rules be consulted prior to the making of any gift.
California's Political Reform Act also closely regulates the receipt of gifts by public officials. Generally, with certain, limited exceptions, gifts to state and local officials are limited to $290 per official per calendar year from a single source. A state or local official also may be disqualified from making a governmental decision if he or she receives a gift of $290 or more during any 12 month period. A separate $10 per month limit applies to gifts made by lobbyists and lobbying firms to state officials for whom they are registered to lobby. We strongly recommend consulting the Act and FPPC regulations prior to making any gift to a state or local official to determine whether an exclusion, exception or special rule applies.
In addition to the limitations applicable to local officials under state law, many local jurisdictions have enacted their own, more restrictive gift rules. These jurisdictions include the City of Los Angeles, the County of Los Angeles, the Los Angeles County MTA and the City and County of San Francisco (which has a combined gift/political contribution limit of $500). Other localities expressly prohibit gifts from vendors or contractors to public officials in their jurisdiction. We strongly recommend that before making a gift to any local official, the applicable ordinances or rules be reviewed to determine if there is a local gift prohibition or limitation in effect.