Welcome to the October 2022 edition of the Political Law Playbook. Of particular note in this month’s edition are continued efforts by Congressional Democrats to pass electoral reform legislation prior to the next Congress. Two bills – one from the House and one from the Senate – lay out different approaches to updating the Electoral Count Act of 1887 in response to the events of January 6, 2021. The House bill has already passed its respective chamber, while the Senate bill still awaits a vote. These legislative efforts follow in the footsteps of failed efforts earlier in September by Senate Democrats to pass a handful of other campaign finance reform packages – most prominently the DISCLOSE Act – that would have fundamentally altered federal campaign finance and election law, encroached upon state authority over non-federal elections, and mandated donor disclosure for large contributors to Section 501(c)(4) nonprofit groups. In the foreign influence arena, there have also been two bipartisan Senate efforts to amend the Foreign Agents Registration Act (FARA), particularly limiting the enumerated exceptions to FARA registration for certain foreign agents.
At the state level, September brought with it a flurry of activity impacting various campaign finance rules in different state jurisdictions. In Massachusetts, the Attorney General rejected a ballot petition designed to curb contribution limits to state super PACs. Meanwhile in Colorado, the Secretary of State implemented contribution limits for school board candidates of $2,500 for individual donations and $25,000 for small donor committees.
Federal Elections & Campaign Finance
Senate Grapples With Election Reform Legislation – With November’s election looming, Senate Democrats worked vigorously last month in an effort to pass two pieces of election reform legislation prior to the close of the current Congress. While Democrat leaders were hopeful to get both the Electoral Count Reform and Presidential Transition Improvement Act and the Enhanced Election Security and Protection Act passed before the pre-election recess, votes on the two pieces of legislation look like they will be delayed until later in the year given uncertainty over bi-partisan support. If passed, the first of these proposed bills would reform the process by which Congress certifies the results of the presidential election. The latter bill would establish new rules for protecting electronic records and toughen penalties for intimidating poll workers or officials.
House Passes Presidential Election Reform Act – Reps. Zoe Lofgren (D-CA) and Liz Cheney (R-WY) introduced a bill last month called the Presidential Election Reform Act, which is similar to its Senate counterpart but differs as it does not address presidential transition provisions. The bill, which narrowly passed the House on a mostly party-line vote, contains three new federal causes of action, including one that acts as an enforcement mechanism for the failure to tabulate legitimate votes cast in accordance with state law.
Democrat and Biden-Backed Election ‘Dark Money’ Disclosure Bill Fails to Progress in Senate – Late last month, the Senate failed to pass the DISCLOSE Act, which contained a wide range of campaign finance transparency and electoral reform initiatives focused on curtailing political engagement by so-called “dark money” groups and strengthening federal authority to regulate political speech. Under the proposed law that was supported by President Biden, donors giving over $10,000 to politically-active non-profits would have been subject to public disclosure. The DISCLOSE Act has gone through several iterations since 2010 following the Citizens United ruling, but none of the proposed versions have come close to becoming law.
FEC Requests More Comments on Proposed Regulation Updates – The Federal Election Commission (FEC) published a Federal Register Notice last month requesting public comments on previously proposed rules that would modernize the agency’s regulations in light of technological advances in communications, recordkeeping, and financial transactions, and that would eliminate and update references to outdated technologies and address similar technological issues. The FEC is also soliciting updated information on electronic payment systems and prepaid card payments since it previously published its proposed rules in 2016.
FEC OKs Use of Campaign Funds for Home Cybersecurity – Last month, the FEC released an Advisory Opinion in response to a request from Sen. Elizabeth Warren (D-MA) approving the use of campaign funds for home cybersecurity costs. Federal campaign finance law generally bars candidates from using political contributions for personal expenditures, but the FEC Commissioners affirmed in their opinion that campaigns can use a reasonable portion of campaign funds to protect the home networks of candidates from cyber-attacks.
Questions Raised About Campaign Advertisements Promoting Rep. Lauren Boebert’s Book – A recent Forbes article raised questions about whether Representative Lauren Boebert (R-CO) is pushing the limits of federal campaign finance law too far with the use of a campaign advertisement that directs viewers to buy her book from online retailers like Amazon, which pay out royalties to Boebert. At issue in the article is the question of whether Boebert’s activities violate the federal prohibition on using campaign funds for personal purposes. While Boebert’s campaign cites two FEC Advisory Opinions to support the legality of its activities, critics in the article argue that the FEC has only tacitly approved book purchases made directly on campaign websites.
Foreign Agents Registration Act (FARA)
Trial of Former Trump Advisor Tom Barrack Begins for Alleged Foreign Agent Violations – The trial of former Trump advisor Tom Barrack began late last month, with the Department of Justice accusing him of using his access to the former president to influence US policy relating to the United Arab Emirates without registering as a foreign agent under federal law. Rather than charging Barrack with potential violations of FARA, however, federal prosecutors in the case are alleging contraventions of a foreign espionage law, which does not require the same evidence of willful intent for a criminal conviction. Barrack pled not guilty to the charges in 2021.
Sens. Grassley, Peters Introduce Bipartisan Legislation To Help Prevent Foreign Influence In U.S. Policy – Sens. Chuck Grassley (R-IA) and Gary Peters (D-MI) introduced a bill last month to limit the “LDA loophole” for those entities seeking to avoid registering under FARA. The bill would require lobbyists who want to claim FARA’s LDA exemption — which allows operatives working for a foreign entity to conduct business under the LDA’s less-stringent reporting requirements — to indicate that on their lobbying disclosure. The stated goal of the bill is to help the Department of Justice narrow the pool of LDA registrants they are examining for potential violations.
Senators Introduce Another Bipartisan Bill to Prevent Foreign Adversaries from Influencing U.S. Policy – In an effort to increase the need for FARA registration by foreign-related actors in the US, Sens. Cornyn (R-TX), Whitehouse (D-RI), Hagerty (R-TN), and Fischer (R-NE) introduced the Preventing Adversary Influence, Disinformation and Obscured Foreign Financing Act (PAID OFF Act) late last month. This bill aims to narrow the commercial and LDA exemptions to FARA registration by requiring federal registration for lobbyists representing clients based in countries deemed by the Commerce Department to be foreign adversaries – a list that currently comprises China, Cuba, Iran, North Korea, Russia and Venezuela.
Non-Federal Elections & Campaign Finance
Ruling by State Attorney General Derails Bid To Limit Super PAC Contributions In Massachusetts – Last month, the Attorney General of Massachusetts Maura Healy rejected a ballot initiative petition that took aim at state super PACs’ ability to receive unlimited contributions. Attorney General Healy ruled that the petition, which proposed reducing super PAC contributions to $5,000, was ineligible to appear on the Massachusetts ballot because it would impinge on constitutional protections guaranteeing free speech.
Spokane City Council Raises Campaign Contribution Cap To $1,000 – Late last month, the Spokane, WA City Council raised the individual donor limit from $500 to $1,000. Previously, individuals could only give up to $1,000 in races meeting certain specifications, but were limited to giving $500 in all other races. Supporters of this change say that this contribution limit increase will help campaigns better compete with independent expenditure groups that are permitted by law to raise and spend unlimited amounts.
District Court Preliminarily Enjoins Parts of New Arizona Voter Law – Late last month, a U.S. District Court judge in Arizona granted a preliminary injunction preventing the state from enforcing two provisions of its recently-passed voting legislation, SB 1260. The ruling came in the wake of a collection of law suits filed by left-leaning advocacy groups and the Democratic National Committee challenging several provisions of the new law on grounds that they unconstitutionally burden voting, speech, equal protection and association rights under the First and Fourteenth Amendments and other federal statutes. In his opinion, District Court Judge G. Murray Snow found sufficient grounds to grant the plaintiff’s request to temporarily bar the State of Arizona from enforcing its new criminal provision prohibiting the knowing registration of out-of-state voters and implementing a new administrative procedure allowing for the cancellation of certain voter registrations indicating potential duplicative or erroneous citizen submissions. The Arizona Attorney General is seeking an appeal of the judge’s preliminary injunction ruling, but the state’s request for an emergency stay was denied.
Colorado SOS Adopts New Contribution Limits For School Board Campaigns – Last month, the Colorado Secretary of State implemented contribution limits for school board candidates statewide and extended post-election report filing deadlines for public officials. As a result of 2022 House Bill 1060, individuals and small donor committees in Colorado are now limited to contributing $2,500 and $25,000 respectively to school board candidates. Previously, school board candidates could receive up to $40,000 from a single contributor.
Federal Judge Rules Against Fair Fight Action in Georgia Voting Lawsuit – On the last day of September, a federal District Court judge ruled against a challenge to various provisions of Georgia’s Election Integrity Act of 2021, including elements impacting absentee ballots, oversight of voter rolls, and its “exact match” requirements that mandate identical names on voters’ voting applications and identification documents. The judge, an appointee of President Obama, ruled against plaintiff Fair Fight Action – a non-profit organization founded by current Democrat gubernatorial candidate Stacey Abrams – and its claims that the Georgia law imposed unconstitutional burdens on voters or was somehow discriminatory in nature. While an appeal of the District Court decision is expected, the ruling allows Georgia’s law to remain in full effect this November.
Federal Judge Rules That Disabled Wisconsin Voters Can Get Help With Returning Ballots – Last month, a federal District Court judge ruled that the Voting Rights Act protected disabled Wisconsin residents from an administrative order issued by the head of the Wisconsin Elections Commission that asserted voters must mail their own ballots under state law. The Wisconsin Elections Commission guidance followed a recent ruling by the Wisconsin Supreme Court that confirmed ballot drop boxes were impermissible under state law. The federal ruling allows disabled Wisconsin residents who have difficulty returning their own ballot to choose someone to do so for them.
Non-Federal Lobbying & Ethics
Gov. Gavin Newsom Signs Law Inspired By $2 Million Success Fee To Influence Insurance Commissioner – As we recently reported on our Dentons Policy Soapbox, California Governor Gavin Newsom signed a bill into law last month that would expand the definition of lobbying to include activities aimed at influencing the Insurance Commissioner or the Director of the Department of Managed Health Care. By doing so, those registering to lobby for such activities can no longer charge success fees for their advocacy activities, which now fall under the existing prohibition on lobbying contingency fees. The move came after two former California state lawmakers were able to negotiate a $2 million success fee for influencing the Insurance Commissioner without having to register as lobbyists or publicly report their advocacy income.
Former Atlanta City Official Sentenced to Jail for Corruption – Former Atlanta Director of Human Services Rev. Mitzi Bickers was recently sentenced to 14 years in federal prison for using her influence to funnel roughly $17 million in business to city contractors in exchange for $2.9 million in bribes. A federal jury found her guilty of money laundering, wire fraud, and conspiracy to commit bribery.
Defense Contractor Pleads Guilty To Making Illegal Contributions To Sen. Collins’ 2020 Campaign – In late September, a former chief executive at engineering firm Navatek pled guilty to violating federal pay-to-play laws that prohibit defense contractors from making certain political contributions. Martin Kao was charged with using family members and a shell company to contribute over $200,000 in illegal donations to Senator Susan Collins’ (R-ME) campaign, as well as with conspiracy and making false statements to authorities. There are no allegations raised against Senator Collins’ campaign, which divested all contributions related to Kao, in the criminal matter. Kao is scheduled for sentencing in February 2023.
SEC Fines Four Advisory Firms for Alleged Pay-to-Play Violations – Last month, the Securities and Exchange Commission (SEC) fined four investment advisors nearly $300K for allegedly being paid investment advisory fees from government entities after making campaign donations to elected officials. The SEC’s pay-to-play rule prohibits investment advisers from providing compensatory advisory services for two years following a campaign contribution to any official who would be in a position to influence the selection of the firm by a government entity. The lone dissenting SEC Commissioner objecting to the levied fines claimed that each enforcement scenario involved one-time, small-dollar contributions by one or two people, and all the investment advisers had established advisory relationships with the relevant government entities before the contributions occurred.
Indiana Contractor Ordered to Pay Restitution to Local Indiana Sanitary District – An Indiana contractor who pled guilty to conspiracy to commit wire fraud for illegally exchanging cash in order to win a contract with the Muncie Sanitary District was recently ordered to pay $104,750 in restitution to the district. Rodney Barber had admitted to giving an ex-local Democratic Party chairman $5,500 to help win the contract, as well as providing a district official with $5,000 to facilitate illegal contributions to then-mayor’s re-election campaign.
The Courts and Free Speech
NC AG Tells 4th Circ. Political Speech Law Is Unconstitutional – North Carolina Attorney General Josh Stein recently asked the U.S. Court of Appeals for the Fourth Circuit to find that a state law criminalizing derogatory political speech violates the First Amendment. Attorney General Stein, whose 2020 campaign aired an ad in violation of the state law, sought a preliminary injunction against the law’s enforcement on the basis that it is unconstitutional. The same suit was previously unsuccessful in federal district court, but the Fourth Circuit has previously been sympathetic to Stein’s arguments – granting his request for a preliminary injunction pausing enforcement of the state law on the basis of chilling speech in advance of an election year. The case is ongoing in the Fourth Circuit.
Political Law Practice Pointers
With the November elections just under a month away as this edition of the Playbook goes to press, this edition’s Practice Pointers focuses on the various reporting obligations of super PACs that engage in independent expenditures at the federal and state level in the days and weeks leading up to the elections. At the federal level, super PACs must file 48-hour reports with the FEC when they make independent expenditures that aggregate $10,000 or more up to the 20th day before election day. The FEC must receive the 48-hour report within 48 hours after the communication is publicly distributed or otherwise publicly disseminated. After the 20th day hits, which for the November 8 election is October 19, federal super PACs must file 24-hour reports with the FEC. The FEC must receive the 24-hour report within 24 hours after the communication is publicly distributed or otherwise publicly disseminated. Each report must itemize the name and address of the payee if the payment or disbursement exceeds the $200 aggregate threshold for itemization; the date, amount, and purpose of the expenditure; and the candidate supported or opposed.
Reporting is more complicated at the state level, as each state has a different reporting framework that varies in reporting cadence, report detail, etc. Some states, like Arizona, begin a weekly reporting cadence three months before the November election, and switch to daily reporting in the closing weeks of the election cycle. Other states, such as Nevada, only require the reporting of independent expenditures on normal quarterly filings. The bottom line is that the web of varying reporting obligations for super PACs that are active at the state level requires a robust internal recordkeeping and reporting framework that is particularly tough to manage in the chaos of the final weeks before an election. The Dentons Political Law Team regularly advises political committees and politically active 501(c)(4) organizations across the country on such matters at the federal and state levels, so please do not hesitate to contact a member of our team if you have any questions.