Welcome to the February 2023 edition of the Political Law Playbook. This month’s coverage highlights increases in federal and state campaign contribution limits, lobbyist expenditure caps, and gift restrictions across the country to account for current inflationary pressures. At the federal level, the Federal Election Commission (FEC) significantly raised individual contribution limits to candidates, with donation caps being elevated to $3,300 per election per recipient candidate—an almost 14 percent increase over 2021-22 levels. Many states, including North Carolina, Michigan, and Tennessee, also followed suit by increasing their jurisdictional campaign contribution limits, while others – such as Texas – similarly increased gift and expenditure caps for lobbyists operating in the state.
This month’s Playbook also provides coverage of ongoing legislative activity at the federal and state levels centered on campaign finance reform and donor transparency issues. In Congress, Congressman Jason Crow (D-CO) has reintroduced the End Dark Money Act, which if passed would impose greater disclosure obligations on certain politically-active nonprofit organizations. Meanwhile, legislators in Nebraska have proposed a new regulatory regime that would add disclosure obligations for independent expenditure activity, mandate reporting requirements for electioneering communication conduct, and impose financial penalties on those who fail to comply.
The hot button issue of curtailing foreign influence in the U.S. also continues to get attention from Congress, as Senator Chuck Grassley (R-IA) is taking another run at attempting to close current statutory loopholes in the federal law that allow foreign governments to exert influence through closely-connected business entities. This follows on the heels of the January sentencing of a Hawaiian businesswoman for her role in an unregistered lobbying campaign on behalf of foreign individuals in 2017 and 2018.
Also of particular note in this Playbook is the recent implementation of California’s new pay-to-play restrictions. These changes were covered in detail on our Pay-to-Play Law Blog, and are worth another skim if you and/or your organization do business and are politically-active in California.
Federal Elections & Campaign Finance
Inflation Sends Upper Limit On Federal Campaign Contributions Skyrocketing For The 2024 Cycle – Inflation has caused significant across-the-board increases to federal campaign contribution limits, the Federal Election Commission (FEC) announced just in time for the 2024 election cycle. Under the new caps, an individual donor may now give up to $3,300 per election to candidate committees. Donors can also now give up to $41,300 per year to the national party committees and up to $123,900 per year to the national party committees’ special operational accounts. Similar increases have been put in place for non-multicandidate PAC donors. We have detailed all of the applicable limit increases in a Dentons Soapbox post published earlier this week.
FEC Dismisses Complaint Over Gmail Spam Filter – The FEC recently dismissed a complaint brought by Republican campaign groups who alleged Google’s Gmail spam filters disproportionately flagged their fundraising emails in a way that amounted to a prohibited in-kind contribution to Democrat candidates and committees. In its response to the relevant complaint, Google maintained – and the FEC agreed – that the spam filter was in place for commercial rather than electoral reasons. While the complaint was dismissed last month, Google has concurrently worked to introduce a pilot program for federal campaigns that allows them to exempt emails from being held up by spam filters.
Twitter Reverses Long-Standing Ban On Political Advertising – Twitter is taking a new approach to its political advertising policy in 2023 by relaxing a long-standing prohibition on political ad placement within the platform. The company stated that it would begin allowing cause-based advertising and expand permitted political ads, while keeping in place procedures to review and approve particular content. While it is too early to tell how big of a player Twitter will become in 2024 political advertising, digital strategists anticipate that both federal and non-federal political campaigns will attempt to leverage the platform to reach voters and journalists who help shape overarching political and media narratives.
Newly-Elected Kansas Attorney General Kris Kobach’s Former U.S. Senate Campaign Fined $30,000 By FEC For Accepting Excessive In-Kind Contribution – The federal campaign committee of Kansas State Attorney General and former U.S. Senate candidate Kris Kobach was recently fined $30,000 by the FEC for accepting an excessive donation from a Steve Bannon-linked PAC “We Build The Wall” during Kobach’s failed 2020 Senate bid. Kobach’s campaign committee admitted to the acceptance of an excessive in-kind contribution from the Bannon group when it rented the PAC’s fundraising list at a rate significantly below market value. The FEC’s investigation was instigated by two complaints filed against Kobach’s 2020 campaign by Campaign Legal Center and Common Cause, the latter of which was dismissed by the FEC.
Federal Lobbying & Ethics
Lobbyists Return To Capitol After Years Of Covid Restrictions – After three years of pandemic-related restrictions and liberal proxy voting policies, lobbyists have increasingly returned to Capitol Hill to meet in-person with lawmakers and staff to advocate for their clients. Despite enjoying an incredibly profitable 2022 while working in a hybrid environment, federal lobbyists across Washington are poised to be more active in 2023 and focused on leveraging increased personal interaction opportunities to support the policy and political goals of their corporate and organizational clients. The return to glad-handing and in-person events is almost certain to boost lobbyist spending well beyond the approximately $3 billion spent on federal government affairs activities in 2022 by lobbying principals.
Foreign Agents Registration Act (FARA)
Senators Reintroduce Bill To Crack Down On Undisclosed Foreign Influence – Senator Chuck Grassley (R-IA) and a bipartisan group of senators reintroduced the Disclosing Foreign Influence in Lobbying Act last month to prevent foreign adversaries from influencing U.S. policy without reporting such activity. If passed, this bipartisan bill would work require that any foreign governments and political parties that participate in the planning, supervision, direction or control of a lobbying effort must disclose their activity, regardless of whether they have made a financial contribution to such endeavor. The proposal would attempt to close an existing statutory loophole that permits foreign governments that use closely connected organizations and businesses to lobby the U.S. government without registration.
Hawai`i Businesswoman Sentenced to Jail for Role in Unregistered Foreign Lobbying Campaign – Last month, Hawai`i businesswoman Nickie Mali Lum Davis was sentenced to two years in federal prison for her role in an unregistered lobbying campaign of the Trump Administration and the Department of Justice in exchange for $3 million in compensation. Lum Davis was convicted of an undisclosed influence campaign designed to encourage the federal government to drop an investigation into Malaysian wealth fund 1MDB and arrange for the return of a People’s Republic of China (PRC) dissident living in the United States.
Business Backlash Forces U.K. Rethink On Foreign Lobbying Clampdown – The U.K. Parliament has recently advanced a proposal similar to the U.S. FARA framework as part of its National Security Bill. The measure – the Foreign Influence Registration Scheme – would require most foreign organizations, including businesses and charities, to publicly register every interaction they have with a U.K. policymaker. Additionally, all communications with ministers, officials, members of Parliament, and election candidates deemed to be “for the purpose of influencing U.K. public life” would have to be registered prior to dissemination, and within 10 days of being planned. Failure to comply with these proposed disclosure requirements would carry potential jail time. Several critics have voiced concerns with the breadth of the bill and the bureaucracy of its administration, while others suggest creating lists distinguishing between friendly and unfriendly countries. Other observers point out that this bill will require more reporting from foreign interests than domestic lobbyists and encourage a more directed approach to achieving government transparency.
Non-Federal Elections & Campaign Finance
Michigan Increases Campaign Contribution Limits – The State of Michigan increased political contribution limits effective as of January 1, 2023. The state now has a per-person contribution limit of $2,450 per election cycle for state Senate candidates and $1,225 per election cycle for state House candidates. The new jurisdictional caps also permit individuals to make contributions of up to $8,325 per election cycle to gubernatorial candidates and all other statewide offices. There is also a $48,875 limit for contributions to Senate or House Caucus Committees.
California Increases to Campaign Contribution Limits Go Into Effect Alongside Pay-to-Play Framework – The State of California has increased campaign contribution limits that went into effect on January 1, 2023. The new per-election limit for individuals, business entities, and PACs that contribute to gubernatorial candidates and state legislature candidates is $36,400 and $5,500, respectively. The new per-election limit for contributions to PACs that contribute to candidates is $9,100. These contribution limit increases go into effect alongside the state’s updated pay-to-play law – which was covered in-depth in our Pay to Play Law Blog last year. The newly expanded law increases – from three to 12 months – the time period during which officials are prohibited from receiving campaign contributions from people and entities with business before their agencies and expands the scope of the state’s pay-to-play laws to local elected officials.
North Carolina Increases Campaign Contribution Limits – North Carolina’s contribution limits for individuals and political committee donors were recently increased from $5,600 per election to $6,400 per election for contributions to candidates or political committees. Some exceptions to these limits remain – for example: a candidate and their spouse may contribute unlimited amounts to the candidate’s committee; and any national, state, district, or county executive of any recognized political party is exempt from contribution limits.
Refusal To Disclose Inaugural Donors Exposes Gap In Pennsylvania Law – Recent news reports covering the inauguration of Pennsylvania Governor Josh Shapiro have drawn attention to a transparency gap in state campaign finance law regarding donor disclosure in the inaugural committee context. Unlike federal inaugural committees, which are required by statute to disclose contributors who give over $200 in the aggregate to the organization, Pennsylvania inaugural committees are subject to no such requirements. Many mid-Atlantic states, including Maryland, New Jersey and Virginia, have enacted inaugural transparency laws in recent years, but Pennsylvania still does not mandate financial reporting in this setting. It remains to be seen whether the present media scrutiny will elicit any legislative activity on the issue, but opponents of “dark money” in Pennsylvania politics are pushing for relevant action.
After Big Year For ‘Dark Money,’ Nebraska Senator Blood Proposes Bill Requiring Donor Disclosure – Nebraska state Senator Carol Blood has introduced a bill to address a perceived lack of transparency in political issue advertising in the state. The proposed bill would require disclosures for electioneering communications conducted in the state, update state reporting requirements for independent expenditures, and add fines for late reporting. Supporters see the law as providing much-needed transparency for voters, who would otherwise lack a clear picture of why someone is funding a particular political message against a candidate or initiative. Opponents of the bill point to the burden of reporting requirements and their chilling impact on free speech. The bill has been introduced and is currently awaiting further action in the Nebraska legislature.
Non-Federal Lobbying & Ethics
Pennsylvania Governor Shapiro Announces Gift Ban, Ethics Training For Employees – Pennsylvania Governor Josh Shapiro recently announced a three-part ethics package that places a ban on executive officials soliciting or accepting gifts from lobbyists, requires certain members of the executive branch to sign an integrity pledge, and institutes a mandatory ethics training for the Governor’s cabinet members, office staff, and senior managers. The lobbying gift ban is a total ban on all gifts, discounts, services, and other items or benefits of value given by a lobbyist to public officials and employees. These restrictions replace the 2015 gift ban instituted by former Pennsylvania Governor Tom Wolf, and allows officials to receive food or refreshments from non-lobbyists if the meals are in line with House and Senate per diem rates. These changes are welcomed by government officials and staff, who previously skipped community outreach events for fear of violating the gift ban imposed on state personnel. While the total ban on gifts from lobbyists remains in place, public officials and employees will now be able to enjoy a cup of coffee with a constituent or engage with the community.
Texas Increases Thresholds for Lobbying Registration, Gift Reporting – The Texas Ethics Commission has increased its thresholds for lobbying registration and gift reporting to reflect changes in the consumer index. Beginning January 1, 2023, lobbyists are required to register if they are compensated or reimbursed over $1,760 per calendar quarter or have expenditures over $880 per calendar quarter. The expenditure threshold does not include individual travel, food, lodging, or membership dues. The threshold for annual filers has also been increased to $2,020, meaning lobbyists will not have to file monthly disclosure reports unless they exceed this limit. Finally, expenditures on gifts, food, and beverages will only be reportable if they exceed $100 per occasion.
Tennessee Increases Expenditure Gift Limit For Lobbyist Employers – Effective January 16, 2023, Tennessee’s lobbyist expenditure gift limit for events increased from $65 to $73 per person per event, with an increased annual expenditure gift limit from $130 to $147. While Tennessee generally prohibits lobbyists and lobbyist employers from giving gifts to candidates for public office, officials in the legislative or executive branch, or their immediate families, the state’s framework carves out several relevant exemptions including costs for entertainment, food, refreshments, meals, and beverages for select in-state events.
Ohio House Republicans Introduce Ethics Reform Bill On Eve Of Public Corruption Trial – Ohio House Republicans recently introduced a five-part ethics reform bill before the trial of a former Ohio legislator accused of bribery. The bill, titled the Ohio Ethics and Financial Disclosure Reform Act, would require lobbyists to report all lobbying income from each of their client sources. The bill would also require nominees to the Public Utilities Commission of Ohio – the agency at the center of the corruption scandal – to disclose any income, previous business relationships, or ties to regulated entities. Elected officials would also be prohibited from receiving payment to serve on corporate boards unless the individual held the seat prior to taking office and has ownership in the corporation.
NYC Council Bills Could Slow ‘Revolving Door’ Between City Hall And Lobbying Agencies – The New York City Council recently introduced two bills that would attempt to strengthen the city’s existing revolving door restrictions. Current city laws prevent former top officials, such as deputy mayors and commissioners, from lobbying and appearing before their former agency or branch of government for two years after leaving public service. The new proposals would extend the two-year ban to cover senior policymakers from the Mayor’s Office, the City Council, the budget office and the Law Department to lobbying or doing any work involving any part of city government. Senior policymakers from other agencies would also be banned from appearing before city government for one year, and from appearing in front of their former agency for two years. Finally, certain municipal employees and local elected officials would face a one-year lobbying ban.
Nonprofit Compliance and Disclosure
Congressman Crow Reintroduces ‘Dark Money’ Political Spending Bill – Representative Jason Crow (D-CO) recently reintroduced the End Dark Money Act in the U.S. House of Representatives in an effort to compel greater transparency in nonprofit political activity. This proposed legislation is designed to prevent donors to political organizations from funneling large contributions through Section 501(c)(4) social welfare organizations, which do not have to comply with the same disclosure requirements as political committees. If passed, the bill would allow the IRS to issue guidelines to ensure nonprofits adhere to their social welfare missions or face compelled registration as a PAC, donor disclosure, and/or risk losing their tax-exempt status.
The Courts and Free Speech
Federal Court Confirms That Individuals and Other Politicians Can Spend Money in Texas House Speaker Races – A federal judge in the U.S. District Court for the Western District of Texas recently accepted a settlement that permanently enjoins the state from enforcing an ethics law that would prevent outside spending in campaigns for Speaker of the Texas House. The Texas House of Representatives brought the suit against the Texas Ethics Commission, alleging that the law at issue violated the right to free speech by preventing the spending of personal and campaign funds in support of a speaker candidate. After the settlement agreement, the Texas Ethics Commission is now barred from enforcing laws that would prevent PACs or candidates from using campaign money to aid or defeat a speaker candidate.
Florida Officials Join Lawsuit Challenging ‘Revolving Door’ Ban – Local Florida officials in Miami-Dade County, Palm Beach County, Leon County, and other jurisdictions have filed a lawsuit in U.S. District Court for the Southern District of Florida challenging a state constitutional amendment approved by nearly 80% of voters in 2018 and enacted in 2022. The amendment at issue would bar current officials from lobbying other agencies while in office and prevent officials who leave state government from lobbying their former agency for six years – a significant increase from the current two-year ban in place. Officials challenging the enactment of the amendment argue that it is overbroad and impinges First Amendment rights. The case is currently under review.
Political Law Practice Pointers
This edition’s Practice Pointers focuses on the compliance implications of the campaign contribution and lobbying expenditure limit increases seen across the country. For those organizations and individuals engaging in politics and policymaking in the new year, a quick double check of jurisdictional limit changes will be extremely worthwhile.
At the federal level, the significant increase in FEC contribution limits will have a large impact on individual giving as well as giving by federal PACs that have yet to achieve multicandidate status. Individuals and organizations planning their giving budgets for the 2023-24 election cycle should take heed. In the states, similar increase to giving limits in a plethora of jurisdictions and concurrent adjustments to lobbying registration threshold levels in certain states means that lobbying firms and corporate government affairs compliance teams should adjust their registration screening systems to comply with the new schemes. In either the campaign finance or lobbying context, monitoring these types of amendments to applicable law will avoid inadvertent compliance violations and help prevent unnecessary public disclosure obligations.
While the Dentons Political Law Playbook covers many of the political law framework changes that occur across the country each month, there are many more of note that went into effect at the start of 2023 that bear consideration. The first few months of this year will also witness newly-elected leaders at the state and local levels rolling out updated ethics and conflict of interest provisions that warrant monitoring by those who interact with, influence and do business with government. If you or your organization have any questions about political or policy engagement in specific jurisdictions, the Dentons Political Law Team is here to advise on any federal, state or local compliance matters you may face.
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