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Friday, August 22, 2008, 4:31 PM

Political GPS: Last-Minute Guide to Partying at the Presidential Nominating Conventions

If you’ve ever planned a big wedding, imagine if every detail – the invitations, the food, the drinks, the band, even the folks who will offer a few words at the microphone – had to be approved by your lawyer.

Welcome to Presidential convention parties, 2008 style. Thanks to a new federal ethics law passed by Congress in 2007, the House and the Senate each have a rule that prohibits certain convention events. Now, a company or trade association that employs or hires federal lobbyists may not pay for a party that “honors” a Member of Congress. For months, aspiring hosts have been tied in knots trying to figure out exactly what that means. Concern over legal restrictions has even led some companies to give up altogether on the idea of hosting an event.

As event planners pour over last-minute details and party hosts begin to look forward to the day it’s all over, here are some last-minute reminders to help you be sure that your event is federally-compliant:
  • Invitations and Publicity: The House of Representatives, unlike the Senate, says that it’s okay for party sponsors to “honor” a group of people – the Nevada Congressional delegation, for example – that is comprised entirely of Members of Congress. The catch is that invitations and publicity for convention events may not mention a House Member by name or give the Member a title, such as “special guest.”
  • Event Speakers: In this area, the House and Senate interpret the law differently. The House says that giving a Member an exclusive speaking or “very prominent” ceremonial role is equivalent to honoring that Member. In other words, no employer of lobbyists may pay for such events. The Senate is less strict on this point, saying that honoring a Member does not include having a Senator as a “featured speaker.”
  • Giving Your Money to Someone Else: You may be tempted to get into the game with a last-minute donation to an organization that does not employ or hire lobbyists, and let them pay for an event or gift item. If you donate the money to a non-lobbyist entity, such as the host committee or a non-profit, you are still violating the law if your organization employs or hires lobbyists and you earmark the funds for an event honoring a Member.
  • Beware the Congressional Gift Rules: There is such a preoccupation with the new convention event rule that some people forget that any event (or any item of value) still has to pass muster with Congressional gift rules. So, if food and drinks are served at the event, the event has to fit within one of the gift rule exceptions, such as those covering receptions and widely-attended events.
  • State Officials: If state officials will be attending your party or receiving some item of value, be sure that state gift rules are satisfied. The Democratic Convention poses a special challenge. Amendment 41 to the Colorado Constitution prohibits professional lobbyists from knowingly paying for any meal, beverage or other item to be consumed by a public officer (a term which includes Colorado elected officials). This recent amendment was upheld by the state courts, but the new Independent Ethics Commission has yet to offer any substantive guidance. Until they do, a “drinks and finger food” event might satisfy the Congressional “reception” exception, but could still get the company and the state official in hot water.
  • Fundraisers: Most fundraising events fall outside the new ethics rules, but must still comply with campaign finance laws. A previous Political GPS post addressed the concept of corporate facilitation. In short, no employees should be collecting contribution checks. Company employees may be asked to work on the event, but only if the company receives advance payment from the campaign committee for the market value of such services, including compensation, benefits and overhead. The company must also receive advance payment for catering and food services, as well as use of its customer lists.

We hope everyone sponsoring or attending convention events has a good time. You’ve certainly earned it!

The Wild, Wild (Mid) West: Missouri Contribution Limits Repealed

Effective August 28, 2008, there will be no limits on campaign contributions in Missouri state elections. The State’s repeal of its current limits applies to candidates for governor, lieutenant governor, secretary of state, state auditor, attorney general, judges, and state legislators.

While the limits are gone, the “Show Me State” is demanding greater transparency. Any person or entity required under the law to file campaign disclosure reports must electronically report contributions exceeding $5000 within 48 hours of receipt. Late filers or those who file reports containing errors face penalties equal to the amount of the contribution.

In July 2007, the State Supreme Court struck down a previous attempt to repeal the limits, but that ruling was based on procedural grounds. Though short-lived, Missouri voters got a glimpse of what campaigns will be like under the new regime. Governor Blunt twice raised more than $1 million in a single day.

The Buffet Table is Now Open: North Carolina Amends Ethics & Lobbying Law

North Carolina Governor Mike Easley signed H.B. 2542 on August 15, which made “clarifying changes” to the state’s lobbying and ethics laws. Among other things, the new law loosens the restrictions relating to when public officials can accept food and beverages from lobbyists. Under prior law, food and beverages could only be accepted at certain public events and other events related to the official’s position. Now, officials can eat and drink at open meetings of public bodies, and certain events sponsored by corporations and other organizations which are open to the public or a large number of invitees.

Jim Kahl to Speak at ASAE’s 2008 Annual Association Law Symposium

Jim Kahl will be a panelist addressing “Lobbying, Ethics & Campaign Finance Reform: Challenges & Opportunities in an Election Year,” as a part of the Annual Association Law Symposium sponsored by ASAE & The Center for Association Leadership. The event will be held on Friday, September 19, 2008, at the Ronald Reagan Building & International Trade Center in Washington, D.C. from 8 AM to 5:30 PM. You can see Jim’s panel at 10:45 AM. For more information, click here.

Next Posting

Political GPS will take some time off and return after the conventions. Enjoy the rest of summer!

If you have any questions or would like more information, please feel free to contact Larry (LNorton@wcsr.com, (202) 857-4429) or Jim (JKahl@wcsr.com, (202) 857-4417).

Friday, August 15, 2008, 2:52 PM

Political GPS: New Cops on the Beat: How Turnover at the FEC Can Change the Regulation of Politics

Until about a month ago, the Federal Election Commission was paralyzed by an impasse over the appointment of new Commissioners. New bundling regulations, which Congress mandated be adopted by March 2008, remained in limbo. Investigations were stalled. The advisory opinion process – critical in a Presidential election year – ground to a halt.

Five new Commissioners have now taken their seats on the Commission, one of whom previously served for a couple of years as a recess appointee. Today we take a brief look at the matters that await the Commission’s attention and the inevitable fight over policy and priorities.
  • Enforcement: For over six months, the Commission was unable to open an investigation, approve a settlement, or authorize litigation. The “new” Commission thus inherits a substantial backlog. Whatever Commission votes may have been taken in pending matters, such as opening investigations or finding probable cause, at least some of those votes will undoubtedly be revisited by the new members. There will also be an issue of timing. Will controversial matters be acted upon and announced in the coming weeks or will final action be delayed until after the election?
  • Supporting Political Advocacy by Non-Profits: A new lawsuit was recently filed against the FEC, challenging prior Commission action to prevent 527s and other non-profits from evading contribution limits and source prohibitions. Among other things, the suit challenges new FEC rules that allow the agency to regulate groups that raise money by telling donors that their funds will be used to support or oppose a clearly-identified federal candidate. The “old” Commission touted these rules as a serious response to what some considered to be circumvention of campaign finance laws. Will the “new” Commission defend these rules as vigorously? There are major implications here, not just for the non-profits, but also for wealthy donors and corporations that are prohibited under these rules from contributing money in response to solicitations of this kind.
  • Coordinating with Candidates and Political Parties: A few weeks ago, the District of Columbia Court of Appeals struck down key aspects of FEC regulations dealing with coordination between campaigns and parties, on the one hand, and independent spenders, on the other. The purpose of coordination rules is to prevent campaigns and parties from evading contribution limits by having donors finance campaign activity directly – for example, paying for television ads crafted by the campaign. For years the FEC has struggled to find a balance that gives meaning to this prohibition, but that also avoids ensnaring in lengthy investigations candidates, parties, media buyers and other vendors, and third-party groups. The “new” Commission will need to respond to the court order and adopt new rules.
  • Coordination and the Internet: The new FEC has, however, already closed an enforcement matter that recognizes the breadth of the so-called Internet Exception and its interaction with the coordination rules. The FEC found that the former State Chairman of the Iowa Democratic Party and his wife did not make an illegal in-kind contribution to the Obama campaign by operating a political blog that supported his campaign. The FEC noted that such uncompensated individual internet activity is specifically permitted by FEC regulations and that a campaign may coordinate with such an Internet website about communications as long as no fee is charged for placing information on the website. (MUR 5949)
  • Hiring a New Staff Director: Sounds mundane, but the FEC “Staff Director” exercises a lot of clout. The person that fills this vacant position will direct the agency’s Audit Division, which pours over committees’ records; the Reports Analysis Division, which examines reports and issues RFAI’s (“Requests for Further Information”); the Office of Administrative Fines, which slaps PACs and other filers with penalties for late submissions; and the Office of Alternative Dispute Resolution, a favorite of Commissioners for handling alleged violations they believe are less egregious. Not that they always agree on what those are.

More PACS Filed with the FEC

Business may be slumping, but the FEC announced that the number of PACs has increased over the first six months of 2008. Since January 2007, roughly 550 new PACs registered with the Commission. Corporate PACs remain the largest category, with 1,578 committees.

More on Numbers – the LDA Contribution Reports

Lobbyists and organizations that employ them disclosed nearly 100,000 contributions and other payments under the semi-annual report required by the lobbying and ethics reform law. The vast majority were campaign contributions that are separately reported to the FEC. The reports reflect a great deal of confusion about what other donations and payments had to disclosed, a situation that was exacerbated by new guidance published by Congress just two weeks before the reports were due.

Pay-to-Play on Steroids

We have reported in earlier editions of Political GPS about existing and pending pay-to-play laws around the country. In New York City, lobbyists and persons doing business with the city are limited in their ability to make political contributions (e.g., only $400 for mayoral candidates). Because of the expansive definition of “doing business,” over 12,000 people are already on the “blacklist” of limited donors, including officers of corporations and not-for- profits, and even leaders of churches and synagogues. You can search the list of limited contributors at this link.

If you have any questions or would like more information, please feel free to contact Larry (LNorton@wcsr.com, (202) 857-4429) or Jim (JKahl@wcsr.com, (202) 857-4417).

Friday, August 8, 2008, 5:27 PM

Political GPS: Politics and the Internet: Regulators Struggle to Keep Up

As new technologies transform politics, agency regulators circle warily: they try not to stifle innovation, but are determined to provide rules for it. What is emerging is a scheme of stove-piped regulation – different rules for different media, even when the nature of the activity is exactly the same. And in an environment of rapid technological change, it doesn’t take long for new rules to become obsolete.

Nonetheless, for companies, trade associations, and non-profits, it is important to be aware of developments relating to the use of new media in fundraising, PAC administration, and communicating with employees:
  • On July 28, 2008, the IRS issued a directive explaining that a mere link on the Web site of a charitable organization – a 501(c)(3) - - may constitute prohibited political activity because of information obtained from clicking on the link. The IRS says it will examine “context” to determine whether a charity is steering someone toward information about specific candidates and their positions on specific issues. This includes “electronic proximity,” meaning the number of “clicks” between the objectionable material and the section 501(c)(3)’s website.
  • The FEC has taken more of a hands-off approach, especially regarding an employee’s use of work computers and Internet access. Generally, FEC regulations limit employees to “occasional, isolated, or incidental use” of work facilities in connection with volunteer campaign activity. However, rules adopted in 2006 allow employees to make unlimited use of work computers, at home or in the office, subject to the employer’s rules for personal use of computers and Internet access.
  • While much Internet activity is unregulated by the FEC, restrictions apply to advertising placed on another Web site for a fee and activities coordinated with candidates or political party committees. For instance, an organization may not provide goods or services at no charge (e.g., web video, e-mail list) or a charge that is less than the usual or normal charge for such goods or services (e.g., advertising space). This is an in-kind contribution, subject to federal contribution limits and source prohibitions.
  • Restrictions also exist for online fundraising by corporate or trade association PACs, and for endorsements of federal candidates. Because a PAC may solicit contributions only from its restricted class, access to online solicitations must be limited to the members of that group, either through password protected sites, use of an e-mail listserv, or other means. Corporate and trade association endorsements must be similarly targeted.

Colorado Ballot Initiative on Pay-to-Play?

A proposed ballot initiative known as the Clean Government Initiative would add the State of Colorado to the list of states that restrict campaign contributions from government contractors and their employees. The Colorado proposal appears to have the requisite number of signatures to qualify for the November ballot. If approved by voters, it would bar “no-bid” (also known as “sole source”) government contractors from making a campaign contribution to a candidate for public office or political party during the term of the contract and for two years thereafter. Violators, including owners, officers, and directors of the contractor, would be subject to penalties for violations.

Meanwhile, in Illinois . . .

A pay-to-play bill passed by the Illinois legislature continues to sit on the Governor’s desk. As we reported in the July 2 Political GPS, the Illinois General Assembly sent its version of pay-to-play to Governor Blagojevich on June 30. The law would prohibit companies, their executives, and even family members from making campaign contributions if the company has or seeks government contracts in excess of $50,000. In a recent news report, the Governor suggested he would consider signing the bill if the legislature also passed a jobs bill.

If you have any questions or would like more information, please feel free to contact Larry (LNorton@wcsr.com, (202) 857-4429) or Jim (JKahl@wcsr.com, (202) 857-4417).

Friday, August 1, 2008, 3:34 PM

Political GPS: LD-203: With The First One In, What Did We Learn?

The new semi-annual reports were filed by lobbyists and their employers on July 30, 2008, following a month of shifting guidance and a late-released form. There have been more than a few surprises, and probably more to come as the House and Senate continue to grapple with problems and concerns that arose with this first filing. Some initial observations:
  • The certification requirement – For organizations filing the LD-203, Congress surprisingly failed to require that one person certify compliance with House and Senate gift rules. Filers simply had to use the organization’s password and press the “submit” key. Nonetheless, guidance published by Congress warns that a “signatory” of the LD-203 must be “a person responsible for the accuracy of the information contained in the filing.” More importantly, even without a formal “signer,” a person who submits a false certification on behalf of a company can still be held criminally liable under laws prohibiting false statements to the government.

  • More on the name game - If you search the House and Senate databases for a filed LD-203 report, you will find a line inserted that did not appear on the online form. It states: “Digitally Signed By:” Underneath these words, the House has taken the liberty of inserting the name of the “Contact Person” whose name appears near the top of the form, while the Senate has inserted the name of the organization. This language only muddies the question of just who is certifying what on the LD-203.

  • Establish, finance, maintain, or control – We can’t help but recall from our tenure at the FEC how much attention the agency devoted to defining the terms “established, financed, maintained, or controlled,” which appear in both the new lobbying law and the Federal Election Campaign Act. Congress chose a different course: ignore the language. Even though the new lobbying law requires filers to report payments to entities established, financed, maintained, or controlled by a covered official, Congress offered no explanation as to how these terms should be applied. Moreover, there’s no drop-down menu on the LD-203 for reporting this category of disbursements. So what do you do about payments to organizations where a Member of Congress sits on the executive committee or serves as vice-chair? Does the Member “control” the organization?

  • Random audits are coming – Please remember that the new law subjects LD-203 reports to random audits by the Comptroller General. For organizations that may not have felt as prepared as they would have liked, the next six months provide an opportunity to implement appropriate record-keeping policies, systems for approval, and training on gift rules. For those who have already done these things, it is important that lobbyists and compliance officials receive annual training and timely updates as the House and Senate issue additional guidance. And remember not to throw away the supporting documents for your LD-203 filings. You should save copies of checks, invitations, solicitations – all records reflecting your due diligence efforts – for six years. Audit your own systems before the Feds do!

What Happened To The New Bundling Provisions?

The new federal lobbying and ethics law called for disclosure of contributions that are “bundled” by federal lobbyists. The notion was to expose the influence gained by encouraging others to contribute to a favored candidate. But the law hasn’t taken effect – and won’t before the November election.

Under the new lobbying law, the bundling provisions do not take effect until three months after the FEC adopts implementing rules. The problem is that shortly after the law passed, the FEC became hobbled by a stalemate over nominations and for over six months lacked a quorum for adopting new rules. FEC Chairman Donald McGahn said this week that it would be practically impossible for the FEC to adopt new rules in time to affect the 2008 elections.

Millionaires: Burdened No More By McCain-Feingold Law

Following a Supreme Court decision last month, the FEC announced earlier this week that it will not enforce the so-called “Millionaire’s Amendment” of the McCain-Feingold law. The law allowed opponents of wealthy, self-funded candidates to receive contributions in excess of the usual limits. The Supreme Court held that it was unconstitutional to deprive wealthy candidates of their spending advantage by making the opposing candidate more competitive. The FEC has also announced that it will not pursue individual contributors who made increased contributions prior to the Supreme Court’s ruling.

If you have any questions or would like more information, please feel free to contact Larry (LNorton@wcsr.com, (202) 857-4429) or Jim (JKahl@wcsr.com, (202) 857-4417).

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