[House Report 104-441]
[From the U.S. Government Publishing Office]
104th Congress Report
HOUSE OF REPRESENTATIVES
1st Session 104-441
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PROVIDING FOR THE CONSIDERATION OF HOUSE RESOLUTION 299,
AMENDING HOUSE RULES TO PLACE LIMITATIONS ON COPYRIGHT ROYALTY INCOME FOR
HOUSE MEMBERS, OFFICERS AND EMPLOYEES
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December 21, 1995.--Referred to the House Calendar and ordered to be
printed
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Mr. Solomon, from the Committee on Rules, submitted the following
R E P O R T
[To accompany H. Res. 322]
The Committee on Rules, having had under consideration
House Resolution 322, by a record vote of 10 to 0, report the
same to the House with the recommendation that the resolution
by adopted.
BRIEF SUMMARY OF PROVISIONS OF RESOLUTION
The resolution provides for the consideration in the House
of House Resolution 299, placing limits on book royalty income
for House Members, officers and employees. The rule provides
for consideration, without intervening point of order, of a
motion to amend printed in the record on the rule if offered by
the chairman of the Rules Committee. The resolution and
amendment are debatable for 30 minutes equally divided between
the chairman and ranking minority member of the Rules
Committee. The rules provides that the previous question is
ordered on the motion to amend and on the resolution to
adoption without intervening motion.
background and legislative history
On December 12, 1995, Representative Nancy Johnson of
Connecticut, chairman of the House Committee on Standards of
Official Conduct, introduced House Resolution 299, a resolution
to amend House Rules regarding outside earned income. The
measure was cosponsored by eight other members of the 10-
member, bipartisan Standards Committee. The resolution was
referred exclusively to the Rules Committee as a matter of
original jurisdiction.
The resolution was introduced pursuant to a vote of the
Committee in connection with the report it issued on December
12th on the ``Inquiry into Various Complaints Filed Against
Representative Newt Gingrich.'' In its report, the Committee
found that Representative Gingrich ``did not violate the House
Rule governing book contracts or royalty income'' and that
``the book contract was in technical compliance with the
``usual and customary'' standard of House rules regarding
royalty income.'' However, the Committee went on to indicate
that ``the original advance greatly exceeded the financial
bounds of any book contract contemplated at the time the
current rules were drafted,'' and that it ``strongly questions
the appropriateness of what some could describe as an attempt
by Representative Gingrich to capitalize on his office.''
Conquently, the Committee recommended in its report that
House Rule 47 (``Limitations on Outside Employment and Earned
Income'') be changed to subject royalty income derived from
books written while one is a Member to the same limits as other
sources of outside earned income.'' A copy of the proposed rule
was appended to the report.
The current House rule XLVII (``Limitations on Outside
Employment and Earned Income)'', was revised as part of the
Ethics Reform Act of 1989 (Public Law 101-194). It applies to
all Members as well as House officers and employers whose pay
is disbursed by the Clerk of the House and exceed the annual
rate of basic pay in effect for grade GS-16 of the General
Schedule under section 5332 of title 5 of the U.S. Code
(currently $81,529), and is employed for more than 90 days in a
calendar year. The exception to this definition is for the
total ban on honoraria which applies to all Members, officers
and employers of the House.\1\
\1\ The Committee on Standards of Official Conduct has determined
the certain matters are excluded from the honorarium ban such as
compensation for activities where speaking, appearing or writing is
only an incidental part of the work for which payment is made; witness
or juror fees; fees to qualified individuals for conducting worship
services or religious ceremonies; payments for works of fiction,
poetry, lyrics, or script; or payments for performers who appear on
stage. ``House Ethics Manual'' 102nd Congress, 2d Session, April 1992,
pp. 93-94.
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Clause 1 of rule XLVII prohibits Members, and officers and
employers paid at least $81,529, from receiving outside earned
income in excess of 15% of the Executive Level II salary (which
is the same as a Member's base pay), or roughly $20,000. Clause
2 prohibits such individuals from receiving any compensation
for: (1) affirmation with or employment by any firm,
partnership, association, corporation or other entity which
provides professional services involving a fiduciary
relationship; (2) for practicing a profession that involves a
fiduciary relationship; (3) from serving as an officer or
member of a board of any association, corporation or other
entity; or (4) from teaching except by the prior notification
and approval of the ethics committee.
Clause 3(e) currently defines outside earned income as
``wages, salaries, fees, and other amounts received or to be
received as compensation for personal services actually
rendered.'' The current definition goes on to specify certain
matters not considered as outside earned income, including: (1)
the salary of Members, officers or employees; (2) compensation
derived by such individuals for personal services rendered
prior to the effective date of the rule (calendar year 1991),
or prior to becoming a Member, officer, or employee, whichever
comes later; (3) paid to a tax-qualified pension, profit-
sharing, or stock bonus plan received by such individuals; (4)
amounts received by such individuals from services rendered by
them in a trade or business in which they or their family holds
a controlling interest and in which both personal services and
capital are income-producing factors; and (5) ``copyright
royalties received from established publishers pursuant to
usual and customary contractual terms.''
Thus, under current House Rules, copyright royalties are
considered to be unearned rather than earned income. As the
most recently published version of the ``House Ethics Manual''
puts it:
House Rule 47 has long exempted book royalties from outside
earned income restrictions, royalties being deemed a return on
the author's intellectual property, akin to other unrestricted
returns on property.\2\
\2\ Id., p. 94.
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summary of provisions of house resolution 299
H. Res. 299 would amend clause 3 of rule XLVII as follows:
Copyright royalties earned while a Member, officer or
employee would be counted as earned income subject to the
outside earned income cap of 15% of a Member's salary.
Copyright royalties for works published before becoming a
Member, officer or employee of the House would be exempt from
the cap.
Copyright royalties could not be received unless from an
``established publisher pursuant to usual and customary
contractual terms'' and unless the contract receives the prior
approval of the ethics committee.
Advance payments on royalties would be prohibited to
Members, officers or employees but could be made to literary
agents, research staff, and other persons working on behalf of
the Member, officer or employee.
Contracts providing for a deferral of royalties could not
be approved by the ethics committee, though exceptions could be
made as deemed appropriate.
The provisions of the rule apply to royalties received
after December 31, 1995.
summary of solomon substitute made in order by the rule
Section 1 of the substitute would amend House Rule XLVII
(``Limitations on Outside Employment and Earned Income'') by
inserting a new clause 3 (treatment of royalty income), and by
redesignating the existing clause 3 (definitions) as clause 4.
The new clause 3 would contain the following provisions:
Unlimited royalties could still be received by Members,
officers and employees under the existing ``usual and customary
contractual terms'' standard (by virtue of retention of the
existing clause 4(e) exemption of royalties from definition of
earned income).
Advances on royalties would be prohibited except for
payments to literary agents, researcher, or other individuals
working on behalf of the Member, officer or employee on the
publication (other than to persons employed by the House or
relatives of the Member, officer or employee), and solely for
the benefit of the literary agent, researcher or other
individual. (italic provisions are not contained in H. Res.
299)
Royalties from contracts entered into or after Jan. 1,
1996, could not be received without the prior approval of the
contract by the ethics committee as being in compliance with
the requirement of clause 4(e)(5) that royalties are received
``from an established publisher pursuant to usual and customary
contractual terms.''
Provisions would be effective on January 1, 1996 (sec. 2 of
substitute).
COMMITTEE VOTES
Pursuant to clause 2(l)(2)(B) of House rule XI the results
of each rollcall vote on an amendment or motion to report,
together with the names of those voting for and against, are
printed below:
Rules Committee Rollcall No. 276
Date: December 21, 1995.
Measure: Rule for consideration of House Resolution 299,
amending House rules to place limits on copyright royalty
income for Members, officers or employees.
Motion By: Mr. Moakley.
Summary of Motion: Strike the provision making in order a
motion to amend by Mr. Solomon.
Results: Rejected, 3 to 6.
Vote by Member: Dreier--Nay; Goss--Yea; Linder--Nay; Diaz-
Balart--Nay; McInnis--Nay; Waldholtz--Nay; Moakley--Yea;
Frost--Yea; Solomon--Nay.
Rules Committee Rollcall No. 277
Date: December 21, 1995.
Measure: Rule for consideration of House Resolution 299,
amending House rules to place limits on copyright royalty
income for Members, officers or employees.
Motion By: Mr. Dreier.
Summary of Motion: Report the rule favorably to the House.
Results: Adopted, 10 to 0.
Vote by Member: Dreier--Yea; Goss--Yea; Linder--Yea; Diaz-
Balart--Yea; McInnis--Yea; Waldholtz--Yea; Moakley--Yea;
Beilenson--Yea; Frost--Yea; Solomon--Yea.
The text of the motion to amend to be offered by the
chairman of the Committee on Rules made in order by the rule is
as follows:
Strike all after the resolving clause and insert the
following:
SECTION 1. AMENDMENT TO HOUSE RULE XLVII (LIMITATIONS ON OUTSIDE
EMPLOYMENT AND EARNED INCOME).
Rule XLVII of the rules of the House of Representatives is
amended by redesignating clause 3 as clause 4 and by inserting
after clause 2 the following new clause:
``3. A Member, officer, or employee of the House may not--
``(1) receive any advance payment on copyright
royalties, but this paragraph does not prohibit any
literary agent, researcher, or other individual (other
than an individual employed by the House or a relative
of that Member, officer, or employee) working on behalf
of that Member, officer, or employee with respect to a
publication from receiving an advance payment of a
copyright royalty directly from a publisher and solely
for the benefit of that literary agent, researcher, or
other individual; or
``(2) receive any copyright royalties pursuant to a
contract entered into on or after January 1, 1996,
unless that contract is first approved by the Committee
on Standards of Official Conduct as complying with the
requirement of clause 4(e)(5) (that royalties are
received from an established publisher pursuant to
usual and customary contractual terms).''.
SEC. 2. EFFECTIVE DATE.
The amendment made by section 1 shall take effect on January
1, 1996.