Political Law Briefing

Procedural Complications Stall Decision by D.C. Circuit on Federal Government Contractor Contribution Ban

A final ruling on the constitutionality of the long-standing ban on contributions by federal government contractors met a significant setback last week when the D.C. Circuit remanded the case to the trial court. In an opinion issued on May 31, 2013, about two weeks after oral arguments, a three judge panel of the D.C. Circuit concluded that the case, Wagner v. Federal Election Commission, must be heard en banc by the full panel of judges of the D.C. Circuit. 

The appellate court relied on an older provision of the Federal Election Campaign Act (“FECA”), section 437h, which states that the national committee of any political party, the Federal Election Commission (“FEC”), or any voter in a Presidential election “may” file a claim that a portion of the FECA is unconstitutional in a district court, and the district court “immediately shall” certify the constitutional questions to a circuit court, which must then hear the matter en banc. Last fall, a lower federal court heard the case and upheld the contractor ban, finding that it does not violate the First and Fifth Amendment rights of government contractors and concluding in two sentences that section 437h did not require certification of the constitutional questions. 

Despite arguments from both the FEC and the plaintiffs that the three judge panel could hear the case, the court stated that section 437h is a mandatory procedure for this type of claim, based on its reading of the language, and that an en banc hearing was required. The court cited the legislative history behind the section as support for its reading, including the need to have questions about the constitutionality of FECA provisions resolved quickly by circuit courts to enable these questions to reach the Supreme Court as soon as possible.     

The court’s decision, however, will actually result in considerable delays in Wagner’s path to the Supreme Court, as it imposes a new set of procedural hurdles. The district court must first identify and certify the constitutional questions in the case, thereby sending the case back to the D.C. Circuit. Scheduling and holding additional oral arguments on the merits of the case in front of the en banc D.C. Circuit may take several weeks or even months, and the issuance of an opinion on the constitutionality of the ban could be some time after that. A possible appeal to the Supreme Court, at this point, may not be completed until after the 2014 midterm elections.

Meg Rohlfing*

*Admitted to practice in Virginia; not yet admitted in Washington, D.C.

501(c)(4)s: Why all the fuss?

Obviously the IRS has spent a great deal of time trying to determine whether certain groups qualify for exemption under Section 501(c)(4) of the tax code. Why 501(c)(4) status matters so much is really about disclosure and not about tax revenue at all.

Unlike contributions to Section 501(c)(3) organizations, contributions to 501(c)(4)s are not deductible by the donor. Thus, the tax consequences flow to the recipient, not the donor. That is, the recipient does not have to pay taxes on its revenue. There is another part of the tax code, Section 527, that allows political organizations not to pay tax on the revenue they spend for political activities, meaning that there is very little tax difference between a 501(c)(4), which is limited in how much political activity it can conduct, and a 527, which can spend every penny it brings in on political activity.

So why does it matter which section of the tax code applies? Disclosure. To understand how we got here, a little history is needed.

The late 1990s and the rise of the 527

Rewinding to a time when we were still going to party like it’s 1999, there were major limits on a 501(c)(4)’s federal political activity. Specifically, the Federal Election Campaign Act (“FECA”) prohibited corporations from making “independent expenditures” that expressly advocated the election or defeat of candidates. Thus, most 501(c)(4)s were not permitted to make independent expenditures. In other words, although under tax law a 501(c)(4) could engage in limited political activity (as long as it was not its primary purpose), it could not do so under campaign finance law. 501(c)(4)s could, however, engage in issue advocacy, which could refer to candidates.

The IRS’s concept of campaign intervention is broader than just “express advocacy.” Thus, many groups that were engaged in activities that looked a lot like campaign intervention, even if they did not expressly advocate, chose to organize under Section 527. There were no disclosure obligations in that section of the tax code, so it really was a function of choosing which bucket the organization fit into: 501(c)(4) or 527. Even if the IRS were to challenge a 501(c)(4) on the basis that its primary purpose was campaign intervention, the result would have been to categorize it as a 527, and little or no additional tax likely would have been due.

In reality, during this time, many donors simply gave large contributions to the national political parties because they could accept “soft money.” This funded “issue ads” that were often thinly-veiled efforts to support or oppose candidates. 

527 disclosure

Over time, more and more groups organized under Section 527 and avoided registering as political committees under FECA. They did this by avoiding express advocacy in their public communications. Thus, they could accept unlimited individual and corporate funds, and not disclose their donors or their expenditures anywhere. 

Congress reacted to this perceived loophole by passing a law that required organizations claiming to be exempt under Section 527 to register with the IRS and, if they were not otherwise required to disclose their donors and expenditures (with the FEC or a state), file regular disclosures with the IRS.

Thus, even if 527s avoided registering with the FEC – which was important from the standpoint of not being subject to contribution limits of $5,000 per person per year and no corporate contributions – they would still have to disclose donors publicly.

Shortly after the 527 disclosure provisions were added, Congress enacted the Bipartisan
Campaign Reform Act, which prohibited the political parties from accepting soft money. Thus, the only real outlet for those who wished to make large political contributions was 527 committees.

Citizens United

In January 2010, the Supreme Court changed everything by allowing corporations to make independent expenditures. Now 501(c)(4)s could engage in express advocacy, as long as campaign intervention was not their primary purpose. And, 501(c)(4)s do not have to disclose their donors. There are still FEC disclosure obligations for 501(c)(4)’s that make independent expenditures or raise money through explicit calls to elect or defeat a candidate, but through careful crafted messages disclosure can often be avoided. 

The IRS controversy

Which brings us to why the IRS needs to know about the political activities of a 501(c)(4) organization. If the 501(c)(4) should actually be a 527, the overall tax consequences are minimal. But, the disclosure consequences are extreme. As a 501(c)(4), an organization can make independent expenditures but avoid disclosing any information about its donors. A 527, on the other hand, has to disclose all of its donors, either to the IRS or to the FEC as a super PAC (or to a state, but this post focuses on federal campaign activities). If the IRS were to deny exempt status to a 501(c)(4) and determine it should be a 527, then it may face penalties for not registering and reporting with the IRS.

In sum, the consequence of whether any of the Tea Party groups involved in this controversy satisfied the requirements of a 501(c)(4) organization or were better classified as 527s was whether their donors had to be disclosed or not. We will discuss at another time whether the tax code is really the best way to deal with disclosure issues.

Ron Jacobs

Lessons Learned: How to Take 5 Successfully (or Not)

Last week, Lois Lerner, the now suspended Director of Exempt Organizations for the IRS, appeared before the House Oversight Committee. She gave a brief opening statement, in which she proclaimed that she had “not done nothing wrong” and that she had “not broken any laws.”

 

Her lawyer had already informed the Committee that she would refuse to answer questions so as not to incriminate herself. When the Committee began asking questions, she did as promised and refused to answer.

Now there is a debate among legal experts as to whether, by making her opening statement, she waived her Fifth Amendment right against self-incrimination. Some experts, including Alan Derschowitz (BNA subscription required) have said she waived her right to not to answer questions, while others, such as a former counsel to the House of Representatives (BNA subscription required) have suggested she did not.

Whether she waived or not, the important thing to remember is why one would take the Fifth, and how to do it successfully, so that legal experts aren’t debating it for all to see.

Why take the Fifth?

Why would someone want to refuse to testify? Primarily if they would be forced to make statements that could potentially incriminate them in a criminal activity. Such self-incrimination can arise in response to being asked to explain a document submitting false information to a regulator (a violation of 18 U.S.C. § 1001), being asked questions about committing a crime, or being asked to explain contradictory statements made to the government (and therefore admitting to committing perjury).

How to do it?

Leaving aside the specifics of the Lerner situation, there are three parts to a successful effort to refuse to answer questions. One is legal, one is political or public-relations oriented, and the third is practical. All three are equally important.

Refusing to Answer Gracefully: Developing a working relationship with the committee may help avoid sitting at the witness table and being forced to refuse to answer questions, both publicly and repeatedly. Possible approaches might include providing documents requested (note that producing documents pay be privileged in certain circumstances and this must be done very carefully), having corporate entities answer written questions (corporations have no right not to incriminate themselves), and providing witnesses to the Committee who have relevant information but who do not face criminal exposure.

Once that working relationship is forged, then the witness’s lawyer can discuss with the Committee that his or her client will have to refuse to answer questions. Although a letter may be required, this often starts with informal conversations or calls. Discussions about how many questions the Committee will answer before dismissing the witness are also helpful.

Legal Considerations: As the Lerner controversy makes clear, the best way to avoid questions of waiver is simply to not make any opening statement at all beyond providing the witness’s name and thanking the Committee for holding the hearing. Even before the hearing, responding to staff questions or sitting for an interview can effectuate a waiver. Thus, written responses should come from the lawyer or a corporate entity—not the witness personally (of course, this may require separate counsel for the company and the witness).

Practical Considerations: At the hearing, invoke the privilege to any and all questions asked. As some witnesses have discovered, selectively invoking the right may subject them to extensive depositions. Finally, as this witness found out, once you invoke your Fifth Amendment rights, leave.

(you can watch this exchange from the Senate Homeland Security and Government Oversight committee here, starting at about minute 42)

At the end of the day, the prospect of a witness having to refuse to answer a string of questions before the cameras may simply be too tempting a target for a Committee to pass up. But with careful groundwork and legal maneuvering, the risks of waiver can be minimized and the bad publicity contained.

Ron Jacobs and Ray Shepherd, Chair, Venable Congressional Investigations Practice 

Unlimited Contributions to New Jersey Super PAC Now Allowed

State campaign finance laws change constantly, but not always this quickly. In late March, the New Jersey Election Law Enforcement Commission (ELEC) issued an advisory opinion stating that independent expenditure-only political committees (Super PACs) in New Jersey would be subject to the same contribution limits as other New Jersey political committees.

At that time, ELEC said that it lacked authority to decline to enforce the limits, even while recognizing that its decisions might well be contrary to a growing number of federal and state courts holding that contribution limits on independent groups are unconstitutional. But after being sued in federal district court for a temporary injunction by the same group who requested the advisory opinion, ELEC changed course. On April 25, ELEC consented to a preliminary injunction, prohibiting the agency from enforcing contribution limits against Super PACs in New Jersey. It has been reported that at its meeting last week, ELEC agreed to a permanent injunction from enforcing the limits, but this has not yet been formalized in court.

Also reported from that meeting is that ELEC will support legislation requiring independent expenditure groups to disclose their donors if they do not qualify as state political committees, which are already required to do so. We will monitor the legislation and provide updates as information becomes available.

Larry Norton and Ron Jacobs

A Texas-Sized IRS Controversy? Governor Perry Vetoes Disclosure Legislation

It seems the IRS controversy has spilled into the states. Late last week Governor Rick Perry vetoed legislation that would have required the disclosure of high-level donors by many politically active organizations, including those exempt under Section 501(c)(4) of the Internal Revenue Code. After a Republican legislature passed the bill, there was a fevered internet grassroots campaign urging him to veto it. Ultimately, Governor Perry rejected the bill, citing the recent IRS controversy as one of his reasons.

In reality, the two seem to have very little to do with one another – state disclosure obligations and federal income tax status involve different bureaucracies, different tests, and different legal interests. But, perhaps the fear of bureaucratic meddling into core First Amendment activities and the disclosure and harassment of donors could be a sign of a more hands-off approach to politics.

The veto bucks the recent the trend of state legislatures imposing new disclosure requirements on tax-exempt organizations that engage in political activities. The bill would have required persons or organizations (excluding labor organizations) that make political expenditures (e.g.,
independent expenditures) exceeding $25,000 during the calendar to disclose donors who contribute over $1,000 and file regular reports. Current law requires these organizations to disclose only their political expenditures over $100. 
 
It remains to be seen whether other states will feel similar legislative effects of the IRS controversy, or whether donor-disclosure laws will continue to be the new norm.

Ron Jacobs and Larry Norton

IRS Fallout Continues: Where are we now?

It’s been less than three weeks since the IRS admitted to targeting applications for tax-exempt status filed by some conservative organizations. Much has happened since then on both the personnel front and with congressional oversight hearings.

On the personnel front, the acting IRS commissioner (Steven Miller) resigned and the President named a new acting commissioner. The IRS commissioner of tax exempt and government entities (Joseph Grant) announced his retirement effective June 3, and the director of exempt organizations (Lois Lerner) was placed on administrative leave.

In addition to personnel changes, three congressional hearings have been held. The House Ways and Means Committee was the first, held just seven days after the news broke. At this hearing, the then-acting IRS Commissioner admitted that “foolish mistakes were made,” in reviewing tax-exempt organizations for additional scrutiny, but denied that the process was partisan.

The acting Commissioner and two other IRS officials were before the Senate Finance Committee on May 21. The next day, the House Oversight Committee called as witnesses several current and former top IRS officials as well as the Treasury Secretary. This hearing drew much attention because of Ms. Lerner’s emphatic denial of wrongdoing and assertion of her Fifth Amendment right against self-incrimination in response to the Committee’s questions. The hearing also drew attention because several committee members publicly scolded the Inspector General (IG) for failing to turn over information to Congress when problems were first discovered in May 2012.

These hearings revealed two pieces of important information: first, senior IRS officials knew as early June 2011 that certain groups were flagged for additional review based on certain keywords. Second, email exchanges between IRS officials revealed that they recognized that singling out such groups was problematic. Although the hearings have occurred in a short period of time and have revealed important information, we expect more hearings in the near future.

For more detailed analysis of the IRS fallout, click here to listen to a radio interview Jeff Tenenbaum, the chair of Venable’s non-profit practice group, did with the Inner Loop. More certainly to come.

Ron Jacobs and Larry Norton

Oral Arguments at the D.C. Circuit Signal Delay in Decision on Federal Ban on Government Contractor Contributions

On May 16, 2013, the U.S. Court of Appeals for the D.C. Circuit held oral arguments in the case challenging the long-standing ban on federal government contractor political contributions, Wagner v. Federal Election Commission.  Last fall, a lower federal court upheld the ban, in section 441c of the Federal Election Campaign Act (“FECA”), finding that it does not violate the First and Fifth Amendment rights of government contractors.  That order was quickly appealed to the D.C. Circuit in November. 

A ruling is likely to be delayed, however, if the oral arguments held today are any indication.  In a last-minute round of activity in early May, the court ordered the plaintiffs and the Federal Election Commission (“FEC”) to submit briefs addressing whether the FECA requires that the case be heard en banc by the D.C. Circuit. 

Typically, cases at the federal appeals court level are heard by a panel of three judges, but an en banc hearing, which includes all of the judges of the court, may be used according to civil procedure rules or statutory requirements.  A provision of the FECA dating back to the 1940s, section 437h, states that the national committee of any political party, the FEC, or any voter in a Presidential election “may” file a claim that a portion of the FECA is unconstitutional in a district court, and the district court “immediately shall” certify the constitutional questions to a circuit court, which must then hear the matter en banc. 

Both parties agreed today that nothing in the language of the section or its history indicates that a circuit court must always hear these constitutional questions en banc.  However, the oral argument was consumed with this procedural issue, leaving no time for detailed arguments about the federal contractor ban itself.

In the coming weeks, the court may decide to send the case back to the district court to properly certify the constitutional issues for an en banc hearing, or the court may find that it can hear the case with a three judge panel and could potentially order additional arguments on the merits.  Under either scenario, it seems a decision on the constitutionality of the federal contractor contribution ban may be some time coming.

Meg Rohlfing*

*Admitted to practice in Virginia; not yet admitted in Washington, D.C.

The Current IRS Firestorm over Conservative Political Nonprofits: Any Lessons for the Rest of the Tax-Exempt Community?

On May 10, 2013, the nonprofit tax bar – and much of the country – was rocked by reports that Lois Lerner, director of the Internal Revenue Service’s Exempt Organizations Division apologized for the Service’s inappropriate flagging of conservative political groups for additional review during the 2012 election season. She made this apology in response to a question from longtime nonprofit tax attorney Celia Roady at the annual meeting of the American Bar Association’s tax section in Washington, DC. Lerner admitted that would-be tax-exempt entities that included the words “Tea Party” or “patriot” in their applications for recognition of exempt status were singled out for additional scrutiny, including burdensome questionnaires and, in some cases, improper requests for the names of their donors.

And on May 14, 2013, the Treasury Inspector General for Tax Administration released his report on the issue, concluding that “[e]arly in Calendar Year 2010, the IRS began using inappropriate criteria to identify organizations applying for tax-exempt status to review for indications of significant political intervention.” The report said that “[t]he IRS . . . identified for review Tea Party and other organizations applying for tax-exempt status based upon their names or policy positions instead of indications of potential political campaign intervention.” Would-be 501(c)(4) exempt organizations are permitted to engage in some political campaign intervention, but it cannot constitute the primary activity of the organization.

There has been no evidence to date that the IRS made approval or denial decisions regarding these exemption applications based on these criteria, but the fact that additional scrutiny was leveled on this basis alone is, without question, very troubling. The IRS must enforce the tax-exempt provisions of the federal tax code – especially if there are signs of abuse – but the Service has a strict obligation to do so objectively, without bias, and without regard to political viewpoints.

The IRS has undertaken major compliance projects targeting certain sectors of the tax-exempt community. Colleges and universities and credit counseling agencies are two recent examples. In fact, the IRS’ final report on its college and university compliance project was just released last month (click here to read Venable’s article on the report). In conducting such reviews, the IRS certainly had to use criteria to identify the colleges or universities, or the credit counseling agencies, to be subject to such scrutiny. Sometimes the name of an entity easily identifies itself as falling into a particular category, but sometimes it does not.

In the current firestorm, it is not at all clear how an entity’s name suggests whether it will be engaged in prohibited political activity. It is understandable that, for efficiency reasons, the IRS tried to find ways to more easily identify would-be exempt organizations that might be engaged in impermissible political campaign activity (perhaps it could have focused on those groups that checked the box on the exemption application stating  they would engage in political activities). That being said, there is no question that the manner in which the IRS went about doing so was wholly inappropriate.

There are legitimate concerns that organizations are using their 501(c)(4) tax-exempt status to engage in political activity that exceeds the current limits. Many in Congress have raised this as an issue. Thus, we can expect more attention by the IRS and others in this area.

In the end, are there any lessons for the broader tax-exempt community? Yes, but until the Treasury Inspector General’s report is digested, it is too soon to say. More to come on that front in the coming weeks. But to nonprofit attorneys like this author – someone who works very closely with the IRS Exempt Organizations Division – this is a rare instance of a very public spotlight being shined on a world that is usually reserved for the inside-baseball players that reside in Washington.

Jeff Tenenbaum

Two Organizations in One? Candidate Using Assets from Prior State Race to Support Run for U.S. Senate Can Avoid Issues Through Arms-Length Arrangements

Sitting state office holders often run for federal office. As a recent decision from the FEC reminds us, it is important that resources from the state campaign not be used in the federal campaign, unless the federal campaign pays fair-market-value for those resources. Indeed, this same principle applies when other types of related organizations seek to share funds and other assets, whether that might be a 501(c)(4) and related political organization, a candidate committee and leadership PAC, or other organizations identified with a single cause or individual. Absent arms-length agreements, sharing resources can be result in a “contribution,” subject to applicable limits and source prohibitions, as well as reporting requirements.

Background of the Complaint

Josh Mandel, the Treasurer of Ohio, ran for the U.S. Senate in 2012. A complaint filed against him alleged:

1.) That his Senate campaign took over his state campaign’s website without compensation;

2.) That his state campaign impermissibly paid for travel relate to his Senate campaign; and

3.) That his Senate campaign used a state campaign email list without proper compensation.

The FEC accepted Mandel’s explanations for the first two, but deadlocked as to whether the state campaign properly compensated for the email list (the net result is the same: the case was closed). The FEC also rejected a fourth allegation that the State of Ohio had provided an excessive in-kind contribution to the Senate campaign.

The FEC’s analysis of these issues provides a good roadmap for how a state candidate can avoid giving his or her federal campaign impermissible contributions.

Transferring the Web Site

Mandel’s state campaign used a very logical domain: www.joshmandel.com. His Senate campaign thought it would be a good domain as well. The complaint alleged the transfer from one campaign to another was done without properly compensating the state campaign for the fair market value of the web site. 

Mandel explained that in reality, the Senate Campaign hired a web development company to take over hosting and development for the site and to coordinate an arm’s length deal with the company that had been running the site for the state campaign. Payments to the new vendor were all clearly disclosed as being made by the Senate campaign. The FEC said it had no information to suggest that the transfer was done at less than fair-market-value, and accepted this arrangement.

Compliance Tip: Hiring a new company to handle the arm’s-length transaction is a good idea. If you want to keep the same web company, then you should clearly document the payment from the federal campaign to the state campaign for the web site. This cost should include the domain itself and any IP from the state campaign that the federal campaign will use (such as photos, web applications, code, etc.).

Travel

Mandel made a number of trips outside of Ohio just before announcing his Senate candidacy and paid for the travel with his state campaign funds. The total cost for this travel was about $20,000. The complaint alleged that these trips were related to “testing the waters” activities and needed to be funded from federally-permissible sources (i.e., individual contributions subject to the then-applicable limit of $2,500 per person). The complaint argued that since he made these trips just before announcing his candidacy and received contributions from these states shortly after he announced his candidacy, it was clear that the travel was related to his campaign.

Mandel provided information to the FEC about the purpose of the trips (a National Association of State Treasurers meeting, a pension policy meeting, and a leadership retreat) and argued that they all involved official state business. He paid for them with state campaign funds – rather than official state funds – to avoid any question that they might be considered state political activities, as opposed to official state business. The FEC accepted this explanation, and rejected the complaint’s theory that the timing and future contributions were enough to prove he was testing the waters.

Compliance Tip: Be careful to avoid using state campaign funds to test the waters. This could include travel, polling, focus groups, or other expenses related to forming a federal campaign. Document state campaign purposes for any activities, and do not use the deliverables unless the federal campaign pays fair-market-value for them.

Email Lists

The FEC deadlocked on the issue of the email list that the state campaign provided to the Senate campaign. Mandel argued that he had an arm’s-length agreement that was typical for lists. First, the state campaign would provide the Senate campaign with its list. In exchange, the Senate campaign would provide the state campaign with an updated list in the future, based on names the Senate campaign acquired.

The FEC’s General Counsel accepted this arrangement as consistent with prior advisory opinions dealing with traditional mailing lists. It is not clear why two Commissioners rejected this approach, but presumably they will publish an explanation at some point.

Compliance Tip: Carefully document any list exchanges so that there is a clear record of a fair-market exchange. Given the uncertainty as to why two Commissioners do not think the email list exchange is the same as a traditional mailing list exchange, it may be prudent to seek an advisory opinion or even to make a payment for the list.

Use of State Resources

The complaint also alleged that the Senate campaign used a newsletter prepared by the Treasurer’s official office (the newsletter appeared on the official Treasurer’s website and the Senate campaign site). The complaint alleged that this newsletter was an impermissible in-kind contribution from the State of Ohio. Mandel responded that the two-page newsletter was prepared by employees on their personal time. The FEC accepted this explanation, and, because creating a two-page newsletter would not take much time, exercised its prosecutorial discretion to dismiss that allegation.

Compliance Tip: Be very careful not to use any resources from your government office for either your state or federal campaign. State law here may actually present a bigger problem than the federal law. Similarly, be cautious of state laws that may prohibit asking subordinates to do “volunteer” campaign work for you.

Don’t Forget Pay-to-Play

Finally, it is worth noting that as the Ohio Treasurer, Mr. Mandel was a covered official under the SEC's pay-to-play rule. Therefore investment advisors doing business with Ohio (or who plan to do business with Ohio) should be careful not to allow certain executives to contribute to the federal campaign. More information about the SEC’s rule can be found here,
here, and here. Many states also have pay-to-play laws, but these do not affect federal candidates because they are preempted
by the Federal Election Campaign Act.

Compliance Tip: If you are covered by the SEC’s pay-to-play rule, provide notice of this to potential contributors so that they are not enticed into contributing in violation of the rules. If you are an investment advisor, be certain that you have all of the necessary policies and procedures in place to avoid making a prohibited contribution.

Ron Jacobs

New York Ethics Watchdog Makes Additional Tweaks to Proposed Ethics Rules

New York State’s ethics and lobbying watchdog, the Joint Commission on Public Ethics (“JCOPE”), released revised draft amendments to its gift and honoraria rules and source of funding (“SOF”) regulations. JCOPE will seek formal public comment on all of these proposed rules. Copies of the new draft rules can be found here.

In January, JCOPE began accepting public comments on its revised SOF rule, which requires organizations that devote substantial resources to lobbying activity in NYS to disclose their sources of funding over $5,000. The revised rules included an exemption if there was a “substantial likelihood” that disclosure would cause harm (to the filer or the filer’s donors). In response to concerns that the substantial likelihood standard was unconstitutionally high, JCOPE lowered the standard. Under the new proposal, a filer only has to show that disclosure would cause a “reasonable probability of harm.” The new standard, if ultimately adopted, likely will increase the number of filers seeking exemption to the disclosure requirement.

New amendments to the gift and honorarium rules also were made public at the end of April. Initial draft regulations were released for informal public comment in February. The new versions, which will be submitted for another round of public comment, incorporate suggestions made by the regulated community. Highlights of these changes include:

(1) clarification that a gift from an “interested source” (i.e., lobbyists or state contractors) is presumptively impermissible,

(2) new requirements to meet the widely attended events exception, and

(3) the inclusion of a bright line dollar amount for determining what is “nominal” ($10).

JCOPE will announce the opening of the public comment periods for these draft regulations through its e-blast service and on its website.

Alexandra Megaris