Welcome to the April 2023 edition of the Political Law Playbook. This month’s coverage reports on new developments from the Federal Election Commission (“FEC”) and updated travel and gift disclosures for members of the judicial branch. Also of note to our readership are potential imminent changes to the Foreign Agents Registration Act (“FARA”), with signals from both the Department of Justice (“DOJ”) and Congress that regulations may soon be changing for individuals and entities representing foreign principals or foreign governments. A DOJ representative hinted at these potential changes during remarks at the 2023 Summit for Democracy, and lawmakers have introduced several bills in both the House and Senate targeting foreign principal disclosure. Future editions of the Playbook will closely cover these developments as they progress.

At the state level, a number of jurisdictions across the country have seen pertinent legislation adopted on a range of campaign finance, election, and lobbying issues. Notably, in West Virginia, Governor Jim Justice recently penned a pair of bills into law that would substantially raise the threshold for state grassroots lobbying registration and independent expenditure reporting, and in New Jersey, Governor Phil Murphy signed a bill that would reform New Jersey’s campaign finance rules. Several states – including Georgia and Ohio – also continued the nationwide trend of increasing campaign contribution limits for the 2023-24 election cycle so as to keep pace with rising inflation.

Federal Elections & Campaign Finance

FEC Internet Communications Disclaimer Rules Go Into Effect – The FEC’s new disclaimer rules for public communications went into effect last month, after the Commission approved the updated regulations in December of last year. In its new regulations, the FEC approved changes to the definition of “public communication” and expanded the application of existing disclaimer requirements to online political advertising settings. Under the new rules, Commission disclaimer requirements now apply to internet public communications “placed for a fee” on another’s website, digital device, application, or advertising platform, with some de minimis exceptions for advertisements where it would be impracticable to include applicable notice language. You can find a more in-depth analysis of these changes in a recent publication posted on our Dentons Soapbox blog.

FEC Hears Testimony On Use Of Campaign Funds To Cover Salaries, Health Care – At its meeting last month, the FEC received hearing testimony from sitting representatives and former federal candidates concerning proposed regulations that would loosen current restrictions on the ability of candidates to receive a salary from campaign funds. As the rules stand now, candidates are able to use campaign funds to pay either the minimum salary for the office sought or the income the candidate earned the year before their candidacy—whichever is lower. They are also able to draw upon campaign funds to provide committee staff (but not themselves) with health care coverage.

Senate Select Committee on Ethics Issues Letter of Admonition – Last month, the Senate Select Committee on Ethics issued a rare public letter of admonition to Senator Lindsay Graham (R-SC) – the first such letter it has published since 2018.  The letter contends that during a media interview in a Senate office building, Sen. Graham solicited campaign contributions on behalf of former Georgia senate candidate Herschel Walker in violation of Senate rules that prohibit campaign solicitations in federal buildings and restrict the use of official resources for campaign activity. The correspondence was issued in the wake of Sen. Graham’s self-reporting of the described violations.

Political Parties Shift Strategy to Self-Funded Candidates – Political parties may be shifting their approach for the upcoming 2024 elections towards self-funded candidates. Previously, political parties have leaned heavily on super PACs to raise and spend massive war chests in support of their respective candidates for office. Going into the 2024 federal election, however, many potential senate candidates could be self-funded rather than looking to outside spenders to support their campaigns. In states such as Montana, Wisconsin, Michigan, and Arizona, potential self-funders on both sides of the aisle are contemplating running for office. The benefits of having self-funded candidates are notable, including the preservation of funds for direct campaign spending, the ability of self-funding candidates to contribute or loan their campaigns unlimited funds, and access to advertising discounts when purchasing time on broadcast channels and other television networks. 

Federal Lobbying & Ethics

Supreme Court Justices Now Subject to New Ethics Disclosures on Trips, Other Gifts – Last month, the Judicial Conference of the United States’ Committee on Financial Disclosure revised its reporting requirements for Justices of the US Supreme Court and other federal judges concerning disclosure of free trips, meals, and gifts accepted from corporations or other organizations. According to a letter from the Administrative Office of the U.S. Courts to Sen. Sheldon Whitehouse (D-RI), these policies went into effect on March 14, 2023 and provide clarity on a previous reporting exception that allowed federal judiciary members to avoid reporting gifts of personal hospitality. With this revision, covered members of the judiciary will now have to report any gifts that are not of a “personal, non-business nature” on their annual financial reports and are still prohibited from accepting gifts from anyone with business in front of the courts. Despite these changes, reform advocates are still seeking stricter travel and gift reporting rules for the judicial branch, which has much less burdensome gift rules than the legislative and executive branches of federal government. Many transparency groups are also separately advocating for the implementation of a separate “code of conduct” for the US Supreme Court.

Foreign Agents Registration Act (FARA)

US Deputy Attorney General Signals Upcoming FARA Reform – In her remarks ahead of the 2023 Summit for Democracy, Deputy Attorney General Lisa Monaco discussed the US’ commitment to combatting foreign influence on American soil, citing FARA as one of the federal government’s best tools for combatting foreign interference in US policy and politics. In her recent prepared remarks, Monaco announced that DOJ plans to strengthen FARA and will subsequently be issuing new rules to clarify the range of activities that require registration under the act. The FARA Unit’s uneven record of success in enforcing the law’s registration and disclosure requirements in recent years has led many members of Congress to call for reform (such as the PAID OFF Act) and spurred federal prosecutors to turn to other statutes as means to police acts of foreign political influence. Monaco’s remarks indicate that FARA enforcement remains a strong priority of the DOJ and signify that its regulations may soon be given additional teeth.  This is consistent with the Advanced Notice of Proposed Rulemaking that was issued in December 2021, which we highlighted in the January 2022 Playbook.

Senate and House Bills Introduced to Increase Foreign Influence Disclosure for Nonprofits, Think Tanks – Senator Chuck Grassley (R-IA) and Representative Jack Bergman (R-MI) introduced companion bills in the Senate and House last month targeting think tanks and nonprofit groups for increased disclosure requirements. The Think Tank Transparency Act of 2023 would require think tanks and non-profits engaged in influencing US policy or public opinion to disclose all funds provided by foreign principals as well as all contracts and agreements entered into with foreign principals within 90 days of the contribution or contract. The bill proposes creating an online database where such disclosures would be made available for immediate public inspection and instituting penalties for non-disclosure, including civil fines. In addition to the Think Tank Transparency Act, several other lawmakers also introduced legislation last month targeting foreign influence in domestic politics. Sen. Grassley introduced S. 829, which would amend the Lobbying Disclosure Act to require disclosure of any foreign government or political party involved in directing, planning, supervising, or controlling a lobbyist’s activities. In the House, Rep. Joe Wilson (R-SC) introduced H.R. 1819, which would clarify the application of FARA’s registration exemption for religious, scholastic, academic, and scientific pursuits and simplify the foreign gift disclosure policy. Each of these pieces of legislation has been referred to committee for further review.

European Union’s Proposed ‘Foreign Agents’ Law Spooks NGOs – The European Union (“EU”), in an effort to curb foreign influence in continental politics, is currently considering the adoption of a new disclosure law that would require any nongovernmental groups, consultancies, and academic institutions to report any non-EU funding. The legislation under development mirrors US disclosure requirements under FARA in that it would require such groups to report any non-EU funding for public disclosure.  Unlike FARA, however, the disclosure requirements would only apply to organizations rather than individuals. Although transparency regulations typically have not been popular in Europe in recent years, EU officials are pushing ahead with the gathering of information from stakeholders, the issuance of questionnaires to key constituencies, and seeking input from civil society groups as they craft the legislation. The law is expected to be considered for finalization in late May.

Non-Federal Elections & Campaign Finance

High Inflation Leads to Increased Campaign Contribution Limits for 2023-24 Georgia Elections – The Georgia Government Transparency and Campaign Finance Commission recently announced increased contribution limits for donations to political candidates and committees in the 2023-2024 election cycle. With these upward adjustments due to inflation, individual donors will now be able to give up to $8,400 per primary or general election to candidates for statewide office, including Governor, Lieutenant Governor, and Attorney General, and up to $3,300 per primary or general election to candidates for non-statewide offices such as General Assembly and county or municipal positions. For more details on the contribution limit increases in the Peach State, please see our recent client alert.

Colorado GOP Pens FEC Letter on Plans to Challenge the State’s Open Primary Law – The Colorado Republican State Central Committee sent a letter to the FEC last month requesting an advisory opinion on how the Committee may challenge an existing state law that permits unaffiliated voters to cast their ballots in either Democrat or Republican primaries unless overridden by 75 percent of party committee membership. Colorado’s open primary law, passed in 2016 as Proposition 108, was challenged in court in 2022, but the case was dismissed based on the individual plaintiffs’ lack of standing. Now, under new leadership, the Committee has plans to take on the state law by creating a legal fund to help defray the cost of challenging its constitutionality, which serves as the basis for the Committee’s request.

Elections Transparency Act Signed into Law in New Jersey – New Jersey Governor Phil Murphy recently signed into law the Elections Transparency Act, which represents a major overhaul of campaign finance rules associated with New Jersey elections. The new law implements revised reporting standards for campaign contributions over $200 and for independent expenditures over $7,500 made by super PACs, 501(c)(4), and 501(c)(6) groups. The bill doubles contribution limits to candidates, permits the governor to appoint a new slate of Election Law Enforcement Commission (ELEC) commissioners without Senate approval, and decreases the statute of limitations for ELEC investigations from ten years to just two years. The new law also erases local pay-to-play laws in favor of the statewide law preventing contributions over $300 for those holding or seeking government contracts.

Philadelphia City Council Candidate Violated State and Local Campaign Finance Laws – Former city sanitation worker Terrill Haigler, who has been running for Philadelphia City Council, recently ended his bid for that position amid a flurry of allegations that he misused campaign funds in violation of state and local laws. Haigler, popular on social media as “ya fav trashman,” ended his campaign last month after failing to pay campaign staffers over $14,000 in wages and funneling over $17,000 to his personal bank account, which is prohibited by city law. Haigler disputed that his transfer of campaign funds was a corrupt act, contending that he used the funds to live during his run for City Council.  This claim squares well with the issues currently under review at the FEC on how – and how much – candidates may pay themselves salaries from campaign funds.

NYC Mayor Eric Adams Faces Thousands In Fines For Potential Campaign Finance Violations – New York Mayor Eric Adams faces between $20,000 and $50,000 in potential fines due to alleged campaign finance violations associated with his Transition and Inauguration Entity (“TIE”). According to the city’s Campaign Finance Board, Adams mishandled his 2021 TIE fund by accepting prohibited donations, failing to close the fund, and ignoring Board requests for information. Adams’ attorney argues that all of the purportedly problematic contributions, given by donors with business before the city in violation of state pay-to-play laws, were returned and represented only a small percentage of the total funds raised. In light of the seriousness of the claims raised, the Board voted to give Adams additional time to respond to its letters of inquiry before finalizing specific fines for the described violations.

WV Governor Signs Two Bills That Would Decrease Political Contribution Transparency – West Virginia Governor Jim Justice signed a pair of campaign finance bills into law late last month after a divided state legislature first rejected and then passed a motion to reconsider the proposed legislative changes. The first bill increases contribution limits that trigger reporting requirements for grassroots lobbying in the state. Currently, anyone spending over $500 in a three-month period or $200 in any one month on grassroots lobbying activities is required to register as a sponsor of a grassroots lobbying campaign, and any person contributing over $25 must be reported to the state Ethics Commission. Under the new laws, sponsors can now spend up to $5,000 in a three-month period or up to $1,000 in any one month before triggering registration requirements. On top of the loosened registration requirements, the threshold for disclosing donors jumped from $25 to $1,000. The second bill passed by the legislature and signed into law will increase the reporting threshold for independent expenditures in West Virginia from $250 to $1,000. The changes in both bills will go into effect on June 8, 2023.

Campaign Contribution Limit Exception Triggered In Race For Chicago Mayor – In the recently-concluded Chicago mayoral race, candidate Paul Vallas made a personal contribution to his campaign of $100,100 that triggered an exception to otherwise-applicable contribution limits for all candidates in the race. Under Illinois law, restrictions on how much a candidate can receive from a single donor are subject to an exception for races where self-funding candidates give their own campaigns over $100,000. This exception applies to all elections across Illinois, including municipalities like the City of Chicago. Vallas’ contribution, specifically intended to trigger this statewide exception for the Chicago mayoral race, paved the way for all candidates, including the now-mayor elect Brandon Johnson, to accept unlimited donations from donors in the mayoral race.

Ohio Increases Contribution Limits for 2023-2025 – Contribution limits under Ohio law for PACs, political contributing entities (“PCEs”), and individuals who may contribute to statewide candidates, candidates for General Assembly, county parties, PACs, and PCEs have increased from $13,704.41 to $15,499.69 per election. Donors now may give up to $46,499.08 per calendar year to state parties, compared to the previous $41,113.24 limit.  The limits also rose for contributions to legislative campaign funds, now sitting at $23,249.54 per calendar year. The amount of gifts corporations and labor unions may provide per year to state political parties, county political parties, or legislative campaign funds for certain specified purposes such as facilities, equipment, and supplies, increased from $11,274.23 to $12,751.16.

Georgia Lawmakers Move To Ban Direct Private Election Administration Funding – During the recently concluded 2023 legislative session, the Georgia General Assembly approved Senate Bill 222, which would enact a ban on out-of-state private donations (so-called “Zuckerbucks” donations) to local election officials and offices. If signed into law as expected by Governor Brian Kemp, the bill would prevent local election officials from receiving direct private donations from outside entities for the purpose of defraying election operations costs.  Private donations, according to the bill’s sponsor, State Sen. Max Burns, will instead need to be made in a centralized fashion to the state and distributed equitably by the State Election Board.  The bill, like many passed recently in state legislatures across the country, is a direct legislative response to recent private donations made to targeted local election offices across the country by nonprofit entities such as the Center for Technology and Civic Life, which is affiliated with Mark Zuckerburg.

Non-Federal Lobbying & Ethics

Changes To City of Austin Lobbying Rules OK’d by Ethics Review Commission and City Council – The City of Austin recently approved changes to its lobbying ordinance last month after its Ethics Review Commission recommended and the City Council passed several updates to the existing legal framework. The new rules seek to clarify annual lobbying registration requirements and reporting deadlines for quarterly activity reports in addition to providing clarity on how and when penalties for late filings are assessed.

Pay-to-Play

Anaheim Council Approves Continued Funding for Angel Stadium Corruption and Pay-to-Play Investigation – The Anaheim City Council has agreed to give more funding to an investigation involving the sale of Angel Stadium, which was plagued with pay-to-play and corruption allegations. In 2020, the City originally sold the stadium and the surrounding area in a deal worth $320 million that was later swept up in an FBI corruption probe. In the wake of this federal review, the City hired outside consultancy JL Group to further investigate past campaign contributions, contracts and various official dealings associated with the project. The investigation – which has been ongoing since August of last year – has yielded a number of startling preliminary findings and recommendations for future public policy change, but continued funding is required to complete the analysis. Over public dissent, the City Council raised the cap on the investigation’s cost to $1.5 million but authorized the additional spending on the conditions that JL Group provide monthly progress reports and complete its investigation by the summer.

Nonprofit Compliance and Disclosure

Nonprofits, Neighborhood Groups Push Back Against Proposed Long Beach Rule That Would Regulate Them As Lobbyists – Nonprofits, neighborhood organizations, and business improvement districts risk being categorized as lobbyists under new recommendations proposed by the Long Beach Ethics Commission. These groups, previously exempted under the original rules adopted in 2010, could be captured by an expanded definition of lobbying and low registration thresholds that require a person to register and make lobbyist disclosures if they spend 10 hours or more per quarter contacting city officials, inclusive of preparation time. Affected groups expressed concern about their organizations’ ability to enact tracking systems and record the required information due to resource constraints, and they worry the proposed requirements will negatively impact membership. While the Commission has not yet enacted these changes, it has tasked an ad hoc committee to continue modifying its recommendations to the lobbying ordinance.

Practice Pointers

This month’s Practice Pointers focus on the anticipated updates to FARA and potential registration and reporting implications for organizations affiliated with foreign entities or governments. As discussed above, US Deputy Attorney General Lisa Monaco’s remarks ahead of the 2023 Summit for Democracy suggest that significant changes to DOJ’s approach to FARA enforcement may be just around the corner, making now the time for affected organizations to take stock of their potential reporting obligations under the statute. In her remarks, Monaco stated the DOJ plans to modernize the FARA regime, bolster transparency for foreign activities in the US, and clarify activities requiring registration under the statutory and regulatory framework – all of which indicate potentially stricter regulations and enforcement efforts may soon be unleashed on organizations and individuals with foreign ties. Calls for reforming the current foreign disclosure framework extend beyond the DOJ, as demonstrated by the flurry of legislative activity in both chambers of Congress. With potential changes coming from executive officials and legislators alike, now is the time for organizations to remain vigilant concerning their potential reporting and registration obligations. 

While there is no firm indication at this time whether Monaco’s comments are just a teaser for an expected Notice of Proposed Rulemaking later this year or something more, organizations with foreign affiliations and connections should take a close look at current regulations to analyze whether their conduct potentially implicates FARA. It is also good practice for organizations with international ties to ensure there are systems in place to help individuals and entities understand the scope of FARA’s registration framework as activities and engagement evolve over time. While previous editions of Playbook have discussed DOJ’s challenges with pursuing legal actions against alleged FARA violators, the possibility of imminent reforms offering DOJ more tools to enforce the statute highlight the continuing need for individuals and entities operating in this space to remain compliant.

As Dentons Political Law Team regularly advises organizations on FARA compliance and other issues related to campaign finance, election, and lobbying law, please do not hesitate to reach out for advice on any specific questions you or your organization may have.

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