new-york-1590175_640New York Governor Andrew Cuomo finally signed his administration’s signature political law reform bill last week, on August 24, 2016. The bill passed out of the New York legislature earlier this year and will have a significant impact on state-level Super PACs, nonprofit organizations involved in lobbying efforts in New York, and political consultants, in particular.

The bill’s provisions affecting Super PACs will be effective 30 days after the signature date, meaning that the new law will now be in place for the November general elections and many of the new lobbying-related disclosures will take effect before the next legislative session. It remains to be seen, though, how quickly the New York state agencies tasked with enforcing and implementing the new law will develop the forms for the registrations and reporting now required under the law for New York Super PACs, political consultants, and nonprofit organizations.

Interestingly, before it was signed, the bill drew criticism over the donor disclosure requirements that it imposes on nonprofit organizations such as 501(c)(4) social welfare organizations and 501(c)(3) charities that are engaged in lobbying and other issue advocacy in New York. These provisions could be the subject of a lawsuit on constitutional grounds, which would further delay their impact.

For more details on the major changes under the new law, please see our earlier coverage of the bill.

From now until the polls close on Tuesday, November 8, 2016, politics will be inescapably in the air – and in the workplace. Employees will be talking, and sometimes arguing, and sometimes participating in one campaign or another. Prudent employers should take note of what they may be required to do or prohibited from doing about their employees’ desire to participate in the electoral process. Continue Reading Election Year Tips for Employers

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

PanelOn Wednesday, April 9, at 6:00 Ron Jacobs will moderate a panel at the George Washington University Law School on the IRS’s proposed rules for political activity of 501(c)(4) organizations. Panelist include Cleta Mitchell of Foley & Lardner LLP, John Pomeranz of Harmon, Curran, Spielberg & Eisenberg, LLP, and Paul Ryan of the Campaign Legal Center. Each brings a different perspective to what the IRS has proposed and how it will affect political activities on the right and left. The event is free and open to the public.

Tasher Great Room, Burns Law Library, GW Law 716 20th St NW, Washington, DC 20052

dollar signHouse staff that are paid above a certain rate are limited in the amount of outside income they may receive. The House Ethics Committee announced today that the rate of pay for 2014 that triggers the limits is $120,749 or $10,062 a month. Anyone earning that rate for more than 90 days is subject to the limit. For 2014, the limit on outside earned income remains at $26,955.

This often comes up when Congressional staff also do compensable work for a Member’s campaign. Thus, if a chief of staff exceeds the $120,749 income limit, that person may not receive more than $26,955 in annual compensation from the campaign. Although it is not the campaign’s legal obligation to monitor these limits, it is certainly not in the candidate’s interest to have an Ethics Committee investigate staff for exceeding the earned income limits.

In addition to the restrictions on income, the $120,749 threshold is also the trigger for when staff have to file financial disclosure reports. Any employee who exceeds this rate of pay for 60 days or more is required to file an annual report. In addition, this salary level also requires written disclosure of job negotiations and recusal when there is “any matter in which there is a conflict of interest or an appearance of a conflict” when negotiating employment.






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.

It is new appointee time in the administration. Very few presidential appointees serve out even one administration, much less two, as is possible now with President Obama’s reelection. For example, the normal life of a political Deputy Assistant Secretary is only about 16-18 months.

What should you do if you are asked to consider serving in a political position in the administration? The first rule is: Do not be a bystander in your own nomination and confirmation process. More than just a presidential appointment is at stake; so are your reputation, your career, and your ability to perform the position should you actually be appointed. Have your own counsel.  Remember, every person in the nomination and confirmation process except you and the person you retain have someone else’s interests in mind. As an old Washington hand once said to me, “Unless the other fellow succeeds only if you succeed, do not place your fate in his hands.”

The second rule is a corollary of the first. Do not change your current employment status until the day you take the oath of office in government. The reasons for this rule are time tested: First, it takes longer than you dream from “Would you consider . . .” to appointment. This is particularly the case if the position is one requiring Senate confirmation. But even without the Senate process, the investigation to ensure that have paid your taxes, your resume is correct, and you have nothing in your background that might make you unsuitable for appointment takes months, not weeks.

Second, you may not end up being appointed. A senator may want his or her person appointed for reasons completely unrelated to you. Politics may drive an appointment to another person. So, do not change your position, move, sell or buy a house, or otherwise rely upon being appointed until you have taken the oath of office.

The third rule is that the appointment process is more intrusive than you have ever thought possible. Unless you currently hold a security clearance – and, frankly, even if you do – you will find the appointment process to be intrusive, repetitive, and requiring the disclosure of way too much personal and financial information. Expect this information to become public.  Your personal information may properly remain within the government unless the facts are just too good not to leak. But your financial information is automatically public  – you will have to file an annual public financial disclosure form.

The fourth rule is not to start work at the agency or department until you are appointed. The process takes so long that it is always tempting to start as a consultant and “get to work.”  If your position is the least visible and requires confirmation, this opens you to extensive committee questioning. These are questions you would rather not be asked and the administration would, generally speaking, not have you answer.

While there are other rules, the final major one is not to say anything about being under consideration and to avoid the press if at all possible. You are either the President’s or a Cabinet Secretary’s appointment. Do not forget this. It is for the President or the Secretary to announce his or her choice and to characterize it in terms of the administration’s goals and objectives. If you have to say something, clear it with the White House or the Secretary’s staff first and then stick to the script, keeping in mind of course, rule number one.

Ed Wilson served at the White House and Treasury during the Reagan Administration and has screened and counseled nominees through the nomination and confirmation process as both a government official and private attorney.

When does a 501(c)(6) trade association have to disclose its members to the public? Not often, as the schedule of contributors provided to the IRS is not a public document. California – as is so often the case – has other ideas about that. If a 501(c) organization makes independent expenditures in California state races, or is involved in a ballot measure, new rules from the California Fair Political Practices Commission will require disclosure of certain members or contributors.

New Rules:

On May 19, 2012, the California Fair Political Practices Commission’s (“FPPC”) new rules governing disclosure became effective. These new rules require organizations, such as 501(c)(6) trade associations, 501(c)(4) social welfare organizations, and 501(c)(3) charities, to disclose certain contributors or members if those organizations are involved either in independent expenditures supporting or opposing candidates or an effort to support or oppose ballot measures (note that charities can only be involved in the latter).

California law requires any entity that that raises, contributes, or makes independent expenditures of over $1,000 to register as a political committee. That has been the law for some time. What is new is how these entities must disclose donors. There are two types of donors that must be disclosed:

  • Any donor that “makes a payment in response to a message or a solicitation indicating the organization’s intent to make a contribution or independent expenditure,” will have to be disclosed as a donor.
  • If the organization uses funds that were donated without that knowledge, then the organization must disclose its donors using a last-in-first-out accounting method until the amount of the expenditure is fully accounted for.

The second prong is only triggered if the organization has made an expenditure or contribution prior to the time the payment was made. In other words, the FPPC’s regulation takes the view that such donors had constructive knowledge that their contribution might be used for a political expenditure. If even these donors do not cover the costs of the expenditure, then the organization lists itself as the contributor.

An organization may avoid disclosing a donor based on “evidence clearly establishing specific circumstances that show the donor did not intend that its payment” would be used political purposes. The rule is silent as to what type of evidence would be sufficient.


Because these rules are so complicated, an example might help. Imagine a trade association that raises $10,000 from donors with an explicit ask that these contributions will be used for an IE. It then contributes $9,000 to an independent expenditure committee. The association itself will be treated as a political committee subject to registration and reporting. It will disclose the $9,000 contribution out and the $10,000 in contributions in. Next the association makes another contribution to an IE committee of $5,000. It has disclosed $1,000 of the source of that contribution (from the prior funds it solicited), but will now have to report the last $4,000 in revenue it received from members who contributed (e.g., through a dues payment) after the trade association made the $9,000 contribution for the IE effort.

Bottom Line:

This new rule may require 501(c) organizations to disclose far more about their donors if they are active in California. Nonprofits will have to think carefully about their activities and what they will have to disclose. Members and donors will have to be careful to understand whether their contributions or even dues payments may have to be disclosed – and linked to a trade association or other group’s political activity.

The rule is unlikely to accomplish much in terms of disclosure – how much value is there in knowing which widget manufacturers contributed to the Widget Manufacturers Association? – but it certainly stands to complicate the relationship between advocacy groups and their donors.

The FPPC has published a memorandum explaining the new rule.

Welcome to Political Law Briefing, where Venable’s Political Law team will provide timely updates, insights, and commentary on campaign finance, lobbying disclosure, gift and ethics, pay-to-play, and all the other laws that impact how you interact with the government. Whether it’s the latest court decision that changes the rules of the game in the middle of an election year, or a state’s new ethics rules written to confront last year’s big lobbying scandal, we will help you to understand how it will affect you and your organization and how you can take advantage of those changes to stay at the top of your game.

We hope you will subscribe to receive alerts about new posts on Political Law Briefing. You can also sign up to receive our more in-depth client alerts about major decisions in the political law field.

This election cycle has been off to a busy start and so have we. We have expanded our team to include former FEC General Counsel Larry Norton; Scott Gluck, who brings extensive experience to our team with pay-to-play laws, and in particular, their impact on the financial industry; and Jeff Hunter, who has worked on many campaigns. They join Ron Jacobs, Ed Wilson, Greg Gill, George Constantine, Alexandra Megaris, and Janice Ryan. We are all looking forward to posting on Political Law Briefing.