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 To be a Lobbyist or not to be a Lobbyist

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 Reporting the Amount Spent on the LD-2

Second quarter federal lobbying disclosure reports are due on July 21 and LD-203 expenditure reports are due on July 30. In addition, many states have mid-year lobbying reports due this month. We’ll have a series of posts on things to remember when preparing these reports in the next few days.

Paperwork

 

Like 15 other states, Ohio has a law that prohibits false statements made during a campaign. The law allows virtually anyone to file a complaint alleging that an ad is false and allows the Ohio Elections Commission to make the initial determination as to whether it is truthful or not. The problem is that once the Commission issues a finding that an ad is false, the next step is a referral to a prosecutor who may or may not do anything about it. Unfortunately for the speaker, media outlets may refuse to carry the message.

That’s exactly what happened to the Susan B. Anthony List (“SBA List”) during the 2010 Congressional elections: after the Ohio election board found the SBA List’s statement about the effect of a Congressman’s votes on the Affordable Care Act and abortion funding to be false, a billboard vendor refused to put up the message (because the candidate sent a letter threatening to sue the vendor if it put up the ad).  A federal judge refused to hear the case because of the pending (though ultimately dismissed) state enforcement proceeding. Another group that claimed it wanted to run an ad with the same message was also rebuffed by the federal courts because, according to the court, there was no proof that the group would face enforcement.

Last week, the Supreme Court heard oral argument in the case. The narrow legal issue was whether the federal court could hear the challenge at all. The justices seemed very skeptical that SBA List shouldn’t get its day in court. They also seemed skeptical of the Ohio law and whether an administrative agency should be allowed to determine whether a campaign communication is true or false. Justice Scalia characterized any agency charged with making such determinations as “the ministry of truth.”

Although most people probably think that it is good for candidate speech to be truthful, the SBA List case shows that whether something is truthful or not is often a very nuanced question. This is the billboard at issue:

Driehaus

Although the Ohio Elections Commission found probable cause to believe the ad was false, as the SBA List’s attorneys and others have explained, the SBA List based its claim on a study from the U.S. Conference of Catholic Bishops and stands behind the message.

Thus, whether the ad was false or not is at least debatable, making it the kind of electoral issue that perhaps should be left to the voters to evaluate, rather than the bureaucracy. That might explain why commenters on all sides of the debate have said that a “ministry of truth” is such a dangerous proposition in elections.

Based on the oral argument, it seems likely that the Supreme Court will agree, give the SBA List its day in court, and that ultimately the Ohio law will fall.

As a reminder that it’s not the complicated campaign finance laws but the simple ones that will get people into trouble, a straw donor in southern California recently pleaded guilty to a number of federal charges. The charges included:

  • Writing a $120,000 check to a super PAC that he knew would be reimbursed by a foreign national;
  • Writing a number of checks to local candidates, using money from the same foreign national; and
  • Having others write checks to the same candidates using money from the foreign national.

MIXINGAlso ensnared in this case are a political consultant and a lobbyist who assisted with the scheme.

The simple lessons:

1.)    Foreign nationals may not contribute to any election – federal, state, or local – in the United States. This includes making contributions to super PACs.

2.)    Do not try to evade this rule by giving through third parties or by reimbursing contributions.

3.)    Never give a contribution using someone else’s money or that will be reimbursed by someone else.

4.)    Do not offer to reimburse someone else for a campaign contribution he or she makes, whether it is through gifts, bonuses, expense reimbursements, a raise, or in any other way.

5.)    Only give contributions from your own money, up to the applicable limits. A simple reference card for the federal limits can be found here.

When the owner of a business runs for public office, he or she has to be careful not to use the assets of the business for the campaign. In the past, this issue has come up when the business owner uses money from a business account, uses customer mailing lists, or business equipment in a campaign. Prepaying the company for services, renting lists at fair-market value, or taking an authorized distribution are some ways to avoid illegal corporate contributions.

wrestlingThe FEC recently dealt with a novel argument that a letter from a business to a newspaper asking for a retraction from the newspaper was an in-kind contribution to the candidate who was the owner of the business.

The newspaper ran two columns critical of Linda McMahon, the owner of World Wrestling Entertainment Inc. (“WWE”) and the 2012 candidate for Senate in Connecticut. The columns did not mention the WWE by name, but referred to the “pornography and mock violence of the wrestling business from which” the candidate had made her living and referred to her business of “violence, pornography, and raunch.” In response, WWE sent a letter demanding a retraction of the columns because WWE was not engaged in violence or pornography, and threatened a lawsuit against the paper if a retraction was not forthcoming.

In response to the letters, the newspaper filed a complaint with the FEC, alleging that the WWE letter was an attempt to support the campaign by silencing the newspaper. The FEC unanimously disagreed. The General Counsel’s report explains that the WWE had a clear business interest in defending its reputation and made no mention of the campaign in its letters. The FEC found that the letters were not for the purpose of influencing a federal election.

This is obviously a unique case, but it serves as a reminder of the need to erect high walls between a candidate’s business interests and the campaign.

Capitol

 

 

 

 

In case you missed our webinar last week on government affairs compliance, you can click here for the recording and here for the presentation materials. We covered topics including:

  • Creative ways to be involved in the political process; 
  • Operating a compliant PAC;
  • Federal and state lobbying compliance;
  • Pay-to-play laws that affect business with state and local governments;
  • New efforts to force transparency on companies and nonprofits, and
  • Enforcement trends.

Please join us for a webinar on January 16, 2014, at 1:00pm EST, which will provide a tune-up on government affairs compliance and examine recent trends. We will cover all the major topics you need to be thinking about as you ramp up for lobbying the new Congress and state legislatures and prepare for the mid-term elections:

  • Forming and operating a PAC or Super PAC
  • Federal and state lobbying compliance
  • Gifts to public officials and employees
  • Pay-to-play laws and doing business with state and local governments 
  • Legislating transparency by 501(c) organizations and public companies
  • Enforcement trends 

To register, click here.

Buried in the recently‐enacted and controversial North Carolina Voter ID law is an additional restriction on political activity by lobbyists. North Carolina already prohibited lobbyists from making personal political contributions at any time, and from collecting and transferring contributions from multiple donors (known as bundling). Starting October 1, lobbyists will be prohibited from collecting and transferring even a single political contribution from one individual to a candidate or campaign committee. Although the new restriction clearly applies to physically collecting and transmitting contributions to candidates and campaign committees, the impact on the mere solicitation of contributions remains unclear.  

This latest restriction serves as a reminder that many jurisdictions heavily regulate political activity by lobbyists. Federal law imposes complex bundling regulations that are often difficult to navigate for both the lobbyist and campaign committee. State and local laws vary. Some prohibit lobbyists from serving as treasurer of a political committee (Maryland), prohibit contributions from lobbyists during legislative sessions (e.g., Wisconsin), or impose lower contribution limits on lobbyists (New York City). Many jurisdictions that do not restrict or prohibit lobbyist activity impose disclosure requirements on both the lobbyist and the entity that employs them when the lobbyist or employer contributes to candidates or committees (Maryland, California, Washington State).

Before lobbying in a new state, lobbyists and their employers are well-advised to check on these restrictions and disclosure requirements. Apart from the potential fines and other sanctions, an inadvertent violation can undermine a lobbying effort and tarnish the reputations of all who are involved.

A leaked email written by a senior Congressional aide became fodder for the politics section of the Washington Post last week, painting a picture of secret industry collusion with candidate campaigns on independent expenditures. The aide’s email, reportedly written to several of his boss’s campaign officials, explained that a prominent industry trade association was committed to an independent expenditure in support of the candidate, and wanted to be put in touch with the campaign.

The official reaction from both the trade association and the candidate’s campaign was that the aide was misinformed. According to the association, there was no such offer or commitment, although it had engaged in preliminary discussions about hosting an industry-sponsored PAC fundraiser for the candidate. The campaign explained that the aide “made inaccurate assumptions” about the type of assistance the industry group could provide the campaign, and that no communications took place between the campaign and the
association that would constitute coordination in violation of the federal campaign finance laws governing independent expenditures.

Perhaps by bringing the email to light the leaker sought and achieved some measure of damage control, allowing all involved to refute, publicly and contemporaneously, any inappropriate conduct. Even so, this kind of revelation can have damaging consequences. At the very least, there is plenty of embarrassment to go around. Worse, it could be a trigger for a government investigation.  The following lessons are worth keeping in mind:

  1. Assume that email will come to light. When your email ends up in the Washington Post, something has probably gone awry. But this should not be totally unexpected. Even without being leaked to a reporter, email is easily discoverable by government investigators. As this example highlights, don’t write anything in an email that you wouldn’t feel comfortable seeing in the newspaper.
  2. Talk to the right people and be clear in your communications. Under House and Senate Ethics rules, Congressional aides are not permitted to engage in campaign activities on official time or to use official resources for campaigning. While the ethics rules do permit aides to refer campaign-related inquiries to the campaign, any other campaign-related activities must be done voluntarily on their own time and using their own resources. In this example, the aide used his personal email account to communicate about the campaign-related matters. But that alone is not indicative of full compliance with the ethics rules. As a general rule of thumb, it is preferable to not discuss campaign matters with official staff. Take the time to identify the appropriate campaign officials and talk to them at the appropriate time. Above all, be clear in your communications with those officials about your interests and goals to avoid misunderstandings—don’t assume that they understand all of the nuances of the campaign finance laws.
  3. Know the rules on IE coordination. If your organization intends to engage in independent expenditure activities and doesn’t have a policy on coordination in place, now is the time to put one in place and provide training to everyone involved.