Introduction

Happy new year and welcome to the January 2025 edition of the Political Law Playbook. All of us here at Dentons hope you had a wonderful holiday season. This month’s newsletter comes to you on the heels of President Trump’s inauguration, and with a new administration comes a different political landscape. Notably, just hours into his second term, President Trump revoked a Biden administration executive order on ethics that imposed a five-year lobbying ban for administration officials leaving federal government and a lifetime ban on lobbying for foreign governments. We will continue to provide topical updates on the Trump Administration here, as well as through timely Client Alerts. 

Of particular note in this month’s edition of the Playbook is the House Ethics Committee’s decision to close several investigations regarding Members’ personal use of campaign funds and issue new guidance on such expenditures. Additionally, the Department of Justice finally issued long-awaited proposed regulatory updates to the Foreign Agents Registration Act (“FARA”). On the state level, the New York City Campaign Finance Board announced that it was withholding public matching funds from Mayor Eric Adams’ reelection campaign and a Boston City Councilor was indicted on federal corruption charges.

Federal Elections & Campaign Finance

FEC Complaint Alleges Straw Donor Scheme – In December, a nonprofit organization filed a complaint with the Federal Election Commission (“FEC”) accusing two groups that engaged in controversial tactics to bolster third-party conservative candidates and oppose Republican candidates in the run-up to the 2024 election of violating campaign finance laws through their involvement in an alleged straw donor scheme. The complaint alleges that an organization named Stop China Now, Inc. was created and used as a straw donor to funnel money into a Super PAC called Save Western Culture. “Straw donations” involve a funder giving money to an intermediary who then donates to a group or candidate in order to illegally hide the original source’s identity. Federal campaign finance law prohibits making contributions in the name of another. The complaint notes that Stop China Now was the sole contributor to Save Western Culture, with a $1.6 million donation two weeks after the Super PAC was registered with the FEC. The complaint also asserts that available information supports “finding reason to believe that Stop China Now, Inc. was not the true source of the $1,600,000 contributed in its name to Save Western Culture, and that Stop China Now, Inc. served as a straw donor for this contribution.” Watchdog group Citizens for Responsibility and Ethics in Washington also filed a complaint with the FEC against the two groups for similar allegations. 

District Court Imposes $240,000 Civil Penalty on Unions For Improper Payroll Deduction Practices – The US District Court for the District of Columbia entered a Consent Judgment against Plumbers and Pipefitters Local Union No. 9 and Plumbers and Pipefitters Local Union No. 9 Political Action Committee for a total joint civil penalty of $240,000 after the court found that they had violated a conciliation agreement with the FEC. In the conciliation agreement, the Union and its PAC admitted that they violated the Federal Election Campaign Act and FEC regulations by soliciting and accepting contributions for the PAC without obtaining the appropriate written authorizations demonstrating the voluntary nature of the contributions, by operating a reverse check-off system, and by using such funds to make federal contributions and expenditures. In addition to the civil penalty, the court also required the Union and the PAC to refund contributions that were improperly deducted from Union members’ paychecks, and permanently enjoined the Union from deducting contributions from Union members’ paychecks without first obtaining the required authorizations and providing the required notices.

FEC Seeks Comments on Proposed Rulemaking Regarding Modification and Redaction of Contributor Information – In December, the FEC published a Notice of Proposed Rulemaking in the Federal Register that seeks public comment on proposed regulations that would establish procedures for contributors or their agents to request the FEC to modify or redact, in whole or in part, certain contributor information from disclosure reports or statements filed with the agency. The procedures would apply only in certain limited circumstances when there is a reasonable probability the contributor may face threats, harassment, or reprisal. Federal campaign finance law generally requires political committees to disclose the name, mailing address, occupation, and employer of each individual whose contributions aggregate more than $200 in a calendar year or, for campaigns, in an election cycle. Moreover, conduits and intermediaries receiving and forwarding earmarked contributions to candidates must disclose every contributor’s name and mailing address, regardless of the amount of the earmarked contribution. The FEC must then post the reports and statements containing the identification information on its website. The Supreme Court has required that there be an exemption from these reporting requirements when there is a “reasonable probability” that the contributor may face threats, harassment, or retaliation. From time to time, the courts and the FEC have granted such exemptions. The proposed rules would add procedures to the FEC’s regulations for processing these requests. Comments on the proposed rules must be submitted by February 18, 2025.

Federal Lobbying & Ethics

President Trump Revokes Biden Ethics Pledge – On his first day in office, President Trump issued a slew of executive orders that rescinded past executive orders from former President Biden, including his ethics order and pledge that strengthened existing revolving door restrictions on former government officials registering to lobby or working as a foreign agent, and cracked down on so-called shadow lobbying by former senior administration officials. President Trump has yet to issue a new executive order on ethics or an associated ethics pledge for his own political appointees, which he is expected to do in the coming days. But for those Biden appointees wanting to enter the proverbial “revolving door” of government service, any such restrictions from the pledge they signed have been lifted. 

House Ethics Committee Closes Inquiries into Allegations of Personal Use of Campaign Funds and Releases New Guidance on Personal Use – In late December, the House of Representatives Committee on Ethics decided to close several investigative matters into allegations that Members may have used campaign funds for purposes that were not legitimate or verifiable. The closed investigations include those involving Representative Sanford Bishop (D-GA), Representative Wesley Hunt (R-TX), and Representative Alexander Mooney (R-WV). Clause 6 of the House’s Code of Official Conduct provides that Members “may not convert campaign funds to personal use in excess of an amount representing reimbursement for legitimate and verifiable campaign expenditures,” and generally “may not expend funds from a campaign account of such individual that are not attributable to bona fide campaign or political purposes.” Federal campaign finance law also prohibits the personal use of campaign funds, and the FEC has issued regulations and guidance relating to the definition of “personal use.” The Committee’s longstanding guidance notes that the requirement under Clause 6 that expenditures be “verifiable” is “separate from, and in addition to, whatever record requirements are imposed by the [FEC].” However, in a recent report, the Committee acknowledged that existing law and guidance from the FEC on this issue is often ambiguous. Accordingly, the Committee released new guidance clarifying the rules on personal use of campaign funds by Members.

Foreign Agents Registration Act

Justice Department Proposes New FARA Regulations – In late December, the Department of Justice released a much-anticipated Notice of Proposed Rulemaking that seeks to amend and clarify its regulations promulgated under FARA. The proposed rules contain several changes to significant regulations, including those relating to the exemptions for commercial activities and lawyer representations, and an overhaul of the rules relating to the dissemination and reporting of informational materials. If you would like to learn more, the Dentons Political Law Team released a Client Alert in January outlining the most notable proposed changes.

Former Congressman Federally Indicted for Failing to Register under FARA – In December, a federal grand jury indicted former Congressman David Rivera for failing to register as a foreign agent of a sanctioned Venezuelan media tycoon on whose behalf he allegedly lobbied the Trump administration. The indictment alleges that between June 2019 and April 2020, Mr. Rivera lobbied US officials, including an unnamed senior official in the executive branch, to remove sanctions against Raúl Gorrín, a billionaire Venezuelan businessman. Federal prosecutors allege that Rivera was aided in that effort by another unnamed former US official and resident of New York, who he paid $125,000 from the over $5.5 million he received from Gorrín or on his behalf. Mr. Rivera has been charged with money laundering and failing to register under FARA, as required when lobbying US officials on behalf of foreign individuals and companies. Mr. Rivera was previously arrested in 2022 in another illegal lobbying case. He has denied any illegal lobbying on behalf of Venezuela’s government.

Pay-to-Play

Hawai`i Poised to Consider New Pay-to-Play Rules – Twenty years ago, Hawai`i lawmakers attempted to curtail campaign donations from government contractors, but the state legislature excluded contributions from principals of the companies and their family members from the restrictions. Earlier this year, a Civil Beat and New York Times investigation found that nearly $1 in every $5 donated to Hawai`i political campaigns since 2006 came from people with ties to government contractors. The investigation also uncovered fundraising parties involving contractors and state employees. Now, state lawmakers have indicated that they plan to revisit the ban on contractor donations this year. The Campaign Spending Commission, the agency tasked with overseeing political donations in Hawai`i, has proposed a bill that would ban principals of government contractors and their family members from donating to campaigns for the duration of the company contract. Such individuals would also not be able to contribute to political action committees. Rather than a complete ban, Representative David Tarnas, chairman of the House Judiciary and Hawaiian Affairs committee, is considering a proposal to restrict the amount of money that people connected to contractors are allowed to donate. Representative Tarnas also said he would prefer that this session’s bill be focused on for-profit companies.

Non-Federal Elections & Campaign Finance

Maine Delays Enforcement of New PAC Donor Limits – The Maine Attorney General announced recently that the state will delay its enforcement of a new contribution limit to allow time for a lawsuit to work its way through the courts. Maine voters approved a citizen initiative in November of last year to cap the amount of money that can be donated to political action committees seeking to influence candidate elections at $5,000. The limit does not apply to PACs operated by political parties or to those that seek to influence referendum campaigns. The law was set to take effect on December 25, 2024. The Institute for Free Speech sued the state in US District Court on behalf of two political action committees connected to a Republican state lawmaker, arguing that the limit is unconstitutional and directly contradicts the US Supreme Court’s 2010 ruling in Citizens United v. the Federal Election Commission. Maine’s Attorney General has delayed enforcement of the law until May 30, 2025.

Pro-Stacey Abrams Groups Fined $300,000 for Georgia Campaign Finance Law Violations – The Georgia State Ethics Commission recently voted unanimously to fine two advocacy groups that were founded by former state legislator and gubernatorial candidate Stacey Abrams and previously led by now-sitting US Senator Raphael Warnock. The Commission found that the New Georgia Project and its affiliated New Georgia Project Action Fund illegally engaged in election work for Abrams and others without disclosing their campaign contributions and spending. The groups’ current leadership admitted 16 instances of illegal activity in a consent decree and will pay a $300,000 fine. Ethics officials determined that the groups failed to register as an independent campaign committee before taking contributions for electioneering, and failed to file campaign finance reports of contributions and spending during Abrams’ gubernatorial race in 2018. The groups repeated the same illegal activity in 2019 when they campaigned to extend public transportation in suburban Gwinnett County. Both Abrams and Warnock have denied any involvement.

NYC Mayor’s Reelection Campaign Denied Public Matching Funds – The New York City Campaign Finance Board recently announced that it is withholding public matching funds from Mayor Eric Adams’ reelection campaign, citing bookkeeping irregularities and a federal criminal case against Adams involving straw donors. Under the City’s public campaign finance program, mayoral candidates who receive donations from New Yorkers of up to $250 are eligible to have the contribution matched eightfold with public tax dollars. “After thoroughly reviewing all available information including the details of the indictment of Mayor Adams, the board has determined that there is reason to believe the Adams campaign has engaged in conduct detrimental to the matching funds program in violation of law, including the Campaign Finance Act and board rules,” the Board’s chair stated. Adams’ campaign is likely to appeal the decision.

Fulton County, GA Sheriff Ordered to Pay $43k for Campaign Finance Violations – Fulton County, Georgia Sheriff Patrick Labat has agreed to pay $43,000 to the Georgia State Ethics Commission for violations of the state’s campaign finance laws stemming from his 2020 election campaign. The Commission cited Sheriff Labat for six violations in a consent order released in December. The violations included failure to disclose certain ownership interests, transfers from his campaign account, and campaign expenditures. “Georgians expect their elected officials to follow the law with respect to their political campaigns, and this Order shows that failure to do so will not be ignored or treated lightly. We expect the Sheriff’s campaign will be compliant with state law moving forward,” the Executive Director of the Commission said in a statement. Labat, who was re-elected as Fulton County Sheriff in 2024, did not publicly comment on the violations.

Former NC Lieutenant Governor Fined $35k to Settle Campaign Finance Violation Allegations – The campaign of former North Carolina Lieutenant Governor Mark Robinson paid a $35,000 fine to settle allegations related to campaign finance violations from his successful 2020 run for the office. Robinson was the Republican nominee for North Carolina governor in 2024, but lost to Democrat Josh Stein in November. It had been reported that tens of thousands of dollars in donations to and expenditures by Robinson’s campaign violated state campaign finance laws, including allegations of contributions in excess of 2020 limits, unidentified donors, and cash withdrawals from campaign accounts. As part of a settlement agreement with the State Elections Board, the Robinson campaign agreed to pay $35,065.52. The settlement also releases the campaign from having to pay for the investigation or having to file amended campaign finance reports for the period in question. 

Proposed VA Legislation Aims to Have Political Ads Disclose Use of AI – In December, Virginia State Senator Scott Surovell pre-filed a bill in advance of the General Assembly session commencing this month that would require political ads to disclose the use of artificial intelligence (“AI”). The bill requires that such ads contain a conspicuous statement at the beginning of their communication that states, “THIS MEDIA DOES NOT REPRESENT A TRUE RECORDING OF THE CANDIDATE.” The legislation also outlines strict requirements for the disclaimer, including that it must cover at least 33% of the image for any visuals, and audio media must include a verbal reading of such conspicuous statement that takes at least five seconds to complete. If enacted, violators would be found guilty of a Class 2 misdemeanor. If the ad is released within 90 days of an election, however, the charge would be upgraded to Class 1.

Federal Judge Rules Kansas Law Defining Political Committee Does Not Cover Certain Advocacy Organizations – At the beginning of January, a US District Court judge held that a small Kansas organization primarily engaged in local issue advocacy activities should not be compelled under Kansas state law to register as a political action committee despite campaigning for the election of a specific local candidate. The case arose after the Kansas Governmental Ethics Commission ordered Fresh Vision OP, a local nonprofit organization, to file paperwork as a PAC following the group’s expenditure of more than $100 to advocate for a local candidate for mayor. The court ruled that legal precedent “require[s] that a group have the major purpose—not simply a major purpose—of express advocacy before a state may designate the group as a political committee. But [the law’s] definition of a political committee impermissibly allows Kansas to designate Fresh Vision (a group with a major purpose of express advocacy but no more than that) as a political committee.” Thus, groups such as Fresh Vision that only occasionally engage in campaign speech cannot be subjected to the full weight of campaign finance standards applicable to PACs in Kansas. The court imposed a permanent injunction preventing state officials from designating Fresh Vision as a PAC. 

Ninth Circuit Holds Oxnard, CA Contribution Limits Unconstitutional – In December, a panel of the US Court of Appeals for the Ninth Circuit ruled that an Oxnard, CA voter-approved initiative, which imposed contribution limits from individuals and political action committees, violated the First Amendment. At issue were a $750 limit on campaign contributions by a single person for citywide candidates such as the mayor, and $500 for city council candidates. Political action committees were limited to contributing $1,500 per election to citywide candidates, and $1,000 to city council candidates. The panel opined that while courts ordinarily should defer to the legislature in determining whether contribution limits are closely drawn to the legitimate governmental interest of avoiding quid pro quo corruption or its appearance, it determined that the City’s contribution limits presented sufficient danger signs of constitutional risks to the electoral process that an independent examination of the record was deemed necessary. In conducting its review, the panel held that the City’s contribution limits were not narrowly tailored to match the City’s interest in avoiding the reality or appearance of quid pro quo corruption, and therefore, were unconstitutional under the First Amendment. In early January, the City asked the Ninth Circuit to rehear the case en banc.

Non-Federal Lobbying & Ethics

PA Court to Decide Whether Lobbyist Emails to Lawmakers Are Public Records – Last year, the Pennsylvania Senate denied a request under the state’s Right-to-Know Law for emails between lawmakers and a group of lobbyists. Spotlight PA had requested the correspondence as part of its investigation into allegations of political corruption in the city of DuBois, which had employed lobbyists and received generous state grants. The state senate denied the request on the grounds that the emails did not fall under one of the 19 categories of records that the legislature must make public under state law. Spotlight PA appealed, arguing that a clause within the law provides public access to lobbyist-lawmaker correspondence. It says that “correspondence” between lawmakers and constituents that would identify the person or the reason they are writing is exempt — except when the correspondence is between lawmakers and lobbyists. The case is now before the Commonwealth Court, and a decision is likely to take months. 

Ohio Ethics Commission Rejects Cleveland Guardians’ Attempts to Gift Tickets to County Officials – The Ohio Ethics Commission has blocked two efforts in recent years by the Cleveland Guardians Baseball Club to give Cuyahoga County Council members access to free game tickets. The County’s Inspector General first sought the Commission’s guidance in 2022 after the Guardians offered each County councilmember 100 tickets to distribute or use themselves at up to three games in the 2022 baseball season. The Council was told that members cannot accept outside compensation – defined as anything of value – from parties the County does business with or for “performing any duty, act or service” in their official capacity. A year later, a councilman sought the Commission’s guidance again after the Guardians amended their offer by asking Council members to identify up to three organizations that the team could send the tickets to instead. In this second scenario, the Commission advised against the exchange, finding that it attempts to do indirectly what is directly prohibited. No free tickets have been provided, and the Guardians declined to comment on the described offers.

Colorado Court Rules Ethics Commission Cannot Assert Jurisdiction Over Certain Local Governments – A Denver district court judge has recently upheld a decision of the Colorado Court of Appeals ruling that the state’s Independent Ethics Commission (“IEC”) cannot assert jurisdiction over local governments that have their own ethics codes. In the lawsuit at issue, the City of Glendale, CO claimed that it had established its own code of ethics that would take the City outside of the jurisdiction of the IEC. Under subsection 7 of the state ethics law, any county or municipality may adopt ordinances or charter provisions with respect to ethics matters that are more stringent than any of the provisions contained in the state ethics law. The Commission, however, has claimed jurisdiction when it believes an ethics code adopted by a county or municipality, including those with home rule authority, is insufficient, which is what they claimed in the suit at issue. In her ruling, Denver District Court Judge Jill D. Dorancy wrote that there is no authority for the IEC to hold concurrent jurisdiction with a municipality so long as the municipality has addressed the issue over which the IEC was created. 

Boston City Councilor Indicted on Federal Corruption Charges – In December, Boston City Councilor Tania Fernandes Anderson was federally indicted on charges of wire fraud, theft concerning programs receiving federal funds, and other associated allegations. In the indictment, federal prosecutors say she hired a relative to her staff in 2022 at a salary of $65,000 a year. The relative allegedly got paid a $13,000 bonus in May 2023 and then later kicked back $7,000 of it to Fernandes Anderson in a pre-arranged deal. The Councilor is also accused of lying to the City of Boston by hiding the fact that she was related to the staff member. Last year, Fernandes Anderson was also ordered to pay a $5,000 fine after admitting to hiring her son and sister to full-time positions on her staff. The Massachusetts state ethics commission said those hires violated the Commonwealth’s conflict of interest laws. Fernandes Anderson has plead not guilty to all charges. She currently faces up to 20 years in prison for the wire fraud charges and up to 10 years for the theft charge. Boston Mayor Michelle Wu has publicly urged Fernandes Anderson to resign from her public position.

Practice Pointers

This edition’s Practice Pointers offers our annual reminder of the political law compliance logjam that is the month of January. Campaign finance and lobbying reports at the federal, state, and local level, replete with various deadlines, coverage periods, report contents, and even method of delivery (we’re looking at you and your snail mail requirement for lobbying filings, New Hampshire) can cause headaches for government affairs and regulatory departments looking to get the new year off to a good start. The Dentons Political Law Team has extensive experience aiding clients of all shapes and sizes with navigating the wide-ranging reporting deadlines occurring during January and at all other times of the year, and routinely aids such clients in preparing comprehensive compliance frameworks that can withstand the chaotic start to each year. As such, please do not hesitate to reach out with any questions.

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