Welcoming the Trojan Horse: Arkansas Voters Approve Term Limits, While Banning Corporate Contributions and Lobbyist Gifts

CoffeeCupWhen Arkansas legislators gave voters a chance to approve a constitutional amendment banning corporate contributions and gifts from lobbyists, even the referendum’s sponsor thought it was doomed.  Why?  Because coupled with these reforms was a provision extending legislators’ term limits, a measure so unpopular that voters had previously rejected it by a 40-point margin.  Indeed, a committee opposing the referendum brought a 10-foot wooden horse to campaign events to help convince voters that the only real intention of the referendum was to get rid of term limits.

Whatever the motivations – which at times were hard to discern as the Republican legislature that placed the referendum on the ballot later passed a resolution to oppose it – the referendum passed last week with 53% of the vote.  It makes a number of important changes in Arkansas law, including:  Continue Reading

LD-203 Compliance Tips

The LD-203 obviously includes a number of different disclosures. In practice, many reports show very little activity because the categories to be disclosed are fairly narrow. However, the report is filed under penalties of making false statements, so organizations have to know that they did not make any covered payments.

The Whole Company

ChartAs our previous posts have explained, many of the contributions that must be disclosed are not necessarily in the purview of the government affairs department. For example, a corporate philanthropy department might make a contribution to a charity that focuses on hunger relief. But, if a Member of Congress established that charity, it has to be disclosed on the LD-203. Similarly, an executive might ask the company to contribute to a charity active in a community where the company is located. But, again, if the executive were responding to a request from the Congressman’s district director, and that DD serves on the board of the charity, it is a contribution “designated” by a covered official. Continue Reading

Other LD-203 Categories

Yesterday, we focused on the honoring and recognizing categories of expenses that have to be reported. There are also three other categories that have to be disclosed on the LD-203 report.

  • Political Contributions: Contributions made by registered lobbyists, the connected PAC of a registrant, or a PAC controlled by a lobbyist must be disclosed on the LD-203 if:
  1. the aggregate contributions to an entity equal or exceed $200 during the six-month reporting period; AND
  2. the recipient is a federal candidate, leadership PAC, or federal political party.

Contributions to other PACs (e.g., a trade association PAC or a company’s connected PAC) from a lobbyist do not have to be disclosed. State contributions also do not have to be                 disclosed.

  • Presidential Library Foundations: If contributions to a presidential library foundation aggregate to $200 or more during the six-month reporting period, they must be disclosed.
  • Presidential Inaugural Committees: Contributions that equal or exceed $200 during the six-month reporting period must be disclosed. The Guidance makes clear that this includes payments to the official Presidential Transition Organization. It also would include payments to the official inaugural committees for tickets to inaugural events, but would not include payments to other entities that host inaugural events (e.g., a state society).

Honoring and Recognizing

The LD-203 requires registrants and lobbyists to disclose a variety of payments made for the purpose of honoring and recognizing covered officials. Guidance issued by the House and Senate includes some very helpful examples.

Payments that need to be disclosed fall in four different categories.

  1. The cost of an event to honor or recognize a covered legislative branch official or covered executive branch official;
  2. Payments to an entity that is named for a covered legislative branch official, or to a person or entity in recognition of such official;
  3. Payments to an entity established, financed, maintained, or controlled by a covered legislative branch official or covered executive branch official, or an entity designated by such official; or
  4. The costs of a meeting, retreat, conference, or other similar event held by, or in the name of, one or more covered legislative branch officials or covered executive branch officials. Continue Reading

To be a Lobbyist or not to be a Lobbyist

The end of the second quarter is a good time to terminate individuals who will no longer serve as lobbyists because they can end their LD-203 obligations with this mid-year report. If the individuals do not have a reasonable expectation of being a lobbyist in the current or next quarter, then the Guidance says that the individual may be terminated. A lobbyist is someone who has made more than one lobbying contact (ever) and spends more than 20 percent of his or her time on lobbying activity in a three-month period. Thus, if an individual is changing roles, or the organization has determined that the person does not (and will not in the next quarter) spend 20 percent of his or her time on lobbying activity, then termination is appropriate. Remember, an organization can always re-list the person if things change. Continue Reading

Reporting the Amount Spent on the LD-2

puzzle

For what seems like such a simple question, many organizations have a very hard time calculating the amount they spend on lobbying activities.

A few reminders might help:

  • Include any payments to outside lobbying firms in this figure. Even if it seems like double counting (since those firms will report the amount they receive from your organization), the LDA and guidance are clear that payments to lobbying firms must be included. Continue Reading

SEC Charges Private Equity Fund with Pay-to-Play Violation

P2PFor the first time since it issued its pay-to-play rule in 2010, the SEC has charged a private equity firm with violating Rule 206(4)-5. The company charged agreed to disgorge nearly $260,000 in fees earned and to pay a $35,000 penalty as a result of two impermissible contributions made by the same “covered associate.” This initial enforcement action likely signals enhanced regulatory enforcement in this area.

Rule 206(4)-5 prohibits firms from receiving compensation for investment advisory services for government entities if the firm or any “covered associate” makes contributions above a de minimus amount ($350 if the person is eligible to vote for the candidate, $150 if he is not) to a government official who can directly or indirectly influence the hiring of an investment adviser by a governmental entity. Indirect influence includes appointing board members who make investment decisions. The ban applies for two years from the date the contributions are made. Under the rule, covered associates generally include general partners, managing members, executive officers (e.g., president, vice president in charge of a principal business unit or function, and those who perform policy-making functions), any employees who solicit government business, and their supervisors.

Continue Reading

Come and Get Us: Some States in No Hurry to Respond to Supreme Court Ruling on Aggregate Limits

FlagsIn every election, campaigns and their political fundraisers must navigate a complex and ever-changing array of laws, which increasingly are being rewritten by the courts. The rules changed again last month, when the Supreme Court in McCutcheon v. FEC struck down the limit on the amount an individual may give during an election cycle to all federal candidate and PACs, and to the national political parties. While the ruling did not directly involve any state laws, the Court’s reasoning – that the First Amendment forbids restrictions on how many candidates or committees a donor may support – cast doubt on the constitutionality of laws in about a dozen states that also impose aggregate limits.

Yet with elections just weeks or months away, only a few of the states potentially affected by McCutcheon have indicated how they will interpret and apply it. Most have been silent, perhaps waiting for a lawsuit to force the issue, or a contributor who flouts the aggregate limit and dares the state to enforce it. Continue Reading

Discussion on IRS Rulemaking – Video Available

Ron Jacobs recently moderated a panel at the George Washington University Law School on the IRS’s proposed rules for political activity of 501(c)(4) organizations. The panelists included Cleta Mitchell of Foley & Lardner LLP, John Pomeranz of Harmon, Curran, Spielberg & Eisenberg, LLP, and Paul Ryan of the Campaign Legal Center.

You can watch the presentation below:

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