Welcome to the inaugural edition of the Political Law Playbook. Each edition of this new monthly update will highlight important developments and noteworthy news events from across the spectrum of subject matters on which the Dentons Political Law, Ethics & Disclosure team regularly advises. From updates on federal and state campaign finance and lobbying enforcement happenings to news regarding congressional investigations, the Foreign Agents Registration Act (“FARA”) and nonprofit disclosure matters, each version of the Political Law Playbook will cover the waterfront on issues related to the influence of federal, state and local policy and politics. We know that our readership is inundated with news and commentary on politics each day, so we will do our best each month to be as selective and informative as possible.

Of particular note in this month’s edition is the release of a report by an American Bar Association taskforce on FARA reform, an issue that continues to garner news headlines and interest from Members of Congress on both sides of the aisle. The report recommends a host of changes that will be of interest to international businesses, governments and stakeholders, and their domestic agents, who interact with government and the American public. If implemented, the findings and proposals would seek to clarify the registration and reporting requirements contained in the over 80-year-old statute, provide more specific insight on the application of the various legal exemptions to FARA registration (particularly the commercial exemption), and increase the number of advisory opinions released annually by the Justice Department. It is difficult to see all of the recommendations finding their way into law in any future legislative changes to FARA, but the policy justifications for the changes and observations about the current enforcement arena are quite worthy of our readership’s time.

Thanks for your time and enjoy the Playbook’s maiden voyage.

Federal Lobbying & Ethics

Investigation Raises Questions About Federal Judges Trading Litigant Stocks During Cases - A recent investigation by The Wall Street Journal discovered problematic trading by 131 federal judges who heard hundreds of cases between 2010 and 2018 involving companies in which they or a family member owned stock, in potential violation of federal law and judicial-ethics rules. Is a further tightening of the federal judicial conflict of interest rules on the horizon? It seems so (see below).

Bipartisan Lawmakers Target Judges’ Stock Trading With New Bill - A bipartisan group of lawmakers is set to unveil a bill that will establish new requirements for federal judges to report their stock trades and publish financial disclosure forms online. The bill, dubbed the Courthouse Ethics and Transparency Act, seeks to require that federal judges report stock trades of assets valued over $1,000 within 45 days of their occurrence.

Warren Asks SEC To Probe Potential Insider Trading At Fed - Sen. Elizabeth Warren (D-MA) pushed the U.S. Securities and Exchange Commission (SEC) to investigate potential insider trading by top Federal Reserve officials, including Vice Chair Richard Clarida and the heads of two of the Fed's regional banks, who have since resigned. Sen. Warren wrote a letter to the 12 regional Fed banks the same day — Sept. 16 — calling for a ban on senior officials' "ownership and trading of individual stocks" to be implemented within 60 days. Her proposed rule would ban individual stock ownership by Members of Congress, Cabinet secretaries, senior congressional staff members, federal judges, White House staff members and other senior agency officials.

Fed's Internal Watchdog to Review Trades by Top Officials - The Office of Inspector General (OIG) for the Board of Governors of the Federal Reserve System is set to review whether trading activity by certain senior officials was in compliance with both relevant federal law and ethics rules.

GAO Releases Report on DOD Revolving Door Rule Enhancement - The Government Accountability Office (GAO) recently released a report regarding the enforcement of post-employment restrictions (“revolving door rules”) by the Department of Defense (DOD). Although the GAO found that DOD has improved its efforts to inform departing employees of post-government restrictions that are designed to protect against conflicts of interest, it still raised questions about whether more should be done on the enforcement front for former Department officials who leave to work for federal defense contractors.

Federal Elections & Campaign Finance

Supreme Court to Resolve Ted Cruz-FEC Fight - The US Supreme Court has agreed to hear arguments on a federal campaign finance dispute involving Sen. Ted Cruz (R-TX), who is seeking reimbursement for a loan he made to his reelection campaign in 2018. Under a little-known federal campaign finance provision, there is a $250,000 cap on candidate use of campaign contributions collected after an election for reimbursement of personal loans previously made to a candidate’s campaign. In this matter, Cruz personally loaned his Senate campaign $260,000 and seeks full reimbursement from post-election funds. Since the existing cap does not allow Cruz to receive complete repayment, he has challenged the FEC framework on free-speech grounds. The US District Court for the District of DC previously ruled in Senator Cruz’s favor, but the FEC has directly appealed the decision to the USSC for review. Stay tuned…

Giuliani Associate Lev Parnas Convicted in Campaign Finance Fraud Case - Lev Parnas, an associate of former NY City Mayor Rudolph Giuliani, was recently found guilty of committing multiple federal criminal campaign finance violations related to the solicitation and concealment of foreign campaign contributions from a Russian financier via a “straw donor scheme” involving several other individuals. In addition to violating the federal ban on foreign donations and contributions in connection with federal and state elections, Parnas was also convicted of conspiring to make illegal campaign finance contributions in the name of others, making false statements to the FEC, and falsifying records to obstruct the FEC’s administration and enforcement of campaign finance matters. These illegal activities helped facilitate access for Parnas to a range of political events involving federal and state elected officials and candidates, including former President Donald Trump.

Senate Democrats Fail to Advance Voting and Elections Bill Over GOP Opposition - Senate Democrats recently failed in their effort to advance a piece of legislation seeking a litany of voting law changes that would have seriously altered both federal and state elections and political speech. The procedural vote in the Senate to begin debate on the Freedom to Vote Act was 49 in favor and 51 against – falling well short of the 60 votes needed to advance the bill under existing filibuster rules. As a result, a portion of the Democrat base is intensifying pressure on Senate Democrats to change long-standing filibuster rules to better enable passage of the bill. Several Democrat Senators, Senators Joe Manchin (D-WV) and Kyrsten Sinema (D-AZ) most prominently, have made clear their opposition to undermining the filibuster for this bill or other legislative prerogatives.

Federal Court Orders FEC to Rule on NRA Shell Entity Campaign Allegation - In the wake of a 2019 lawsuit filed against the National Rifle Association (NRA) by the Campaign Legal Action Center for the Giffords Law Center to Prevent Gun Violence, Judge Emmet Sullivan of the U.S. District Court for the District of Columbia ruled that FEC must take action on the long-pending complaints. The plaintiffs in the matter allege that the NRA illegally utilized shell entities to coordinate with a number of federal candidates, including former President Trump, in past election cycles. The NRA denies the allegations as politically-motivated attacks, but we will see how the case progresses.

Nebraska GOP Rep. Fortenberry Indicted - The Justice Department recently charged Congressman Jeff Fortenberry (R-NE) with one count of scheming to falsify and conceal material facts and two counts of making false statements to federal investigators in conjunction with an ongoing investigation into alleged illegal campaign contributions made by a foreign national to his congressional campaign. The indictment against Rep. Fortenberry asserts that he repeatedly lied to and misled federal authorities during their examination of alleged financial support provided by a Nigerian-born billionaire to his reelection effort. The Congressman denies all wrongdoing in conjunction with the investigation and alleged illegal contribution scheme, and we will follow along closely as the case progresses.

Foreign Agents Registration Act (FARA)

How to Fix FARA, According to FARA Lawyers - An ABA task force recently presented proposals on how to “fix” FARA, laying out a 60-page report that offered almost two dozen recommendations for improving the enforcement and application of the statue. The highlighted recommendations primarily focus on steps Congress can take to update the law, but also touch on actions the Justice Department’s FARA Unit can embrace to clarify and improve enforcement of the statute.

Justice Department Issues FARA Advisory Opinion on Political Consultants - The Justice Department released an advisory opinion that provides greater clarity regarding the definition of “political consultant” for purposes of FARA registration. In the opinion, the FARA Unit opines that consultants do not need to register as political consultants when merely providing information about US policy to a foreign client and not engaging in direct lobbying contacts themselves. Some interesting food for thought for US-based consultants advising their international client base.

Non-Federal Lobbying & Ethics

Pennsylvania Lawmakers Working On Bills In Harrisburg That Would Curb The Influence Of Lobbyists - Pennsylvania’s state House of Representatives has begun advancing a package of legislation aimed at curbing lobbyist influence, including limiting gifts from lobbyists and prohibiting lobbyists from trying to sway an elected official for whom they also worked as a campaign strategist. The relevant bills have already won passage in the House State Government Committee, but require floor votes in both the House and Senate to get to Gov. Tom Wolf’s desk. Stay tuned.

Indicted Former City Club of Chicago President Fined $75K by Ethics Board for Violating Lobbying Rules - The Chicago Board of Ethics fined former head of the City Club of Chicago Jay Doherty $75,000 for violating the city’s Governmental Ethics Ordinance in lobbying on behalf of three separate clients without ever having registered for those clients. This is yet another recent example of local lobbying enforcement authorities around the country clamping down on unregistered advocacy efforts with substantial monetary penalties.

Non-Federal Elections & Campaign Finance

Georgia Campaign Finance Commission Votes to Approve Increase to Contribution Limits - The contribution limit for a permissible donor giving to candidates for statewide offices increased $600 to $7,600 for each primary and general election, and increased $400 to $4,500 for each runoff election. The contribution limit for a permissible donor giving to candidates for non-statewide offices increased $200 to $3,000 for each general and primary election, and increased $100 to $1,600 for each runoff election.

Vote Postponed on Proposal to Shield 'Maybe' Candidates From Having to Report Finance - The Rhode Island Board of Elections ultimately decided to postpone a vote on allowing potential candidates for state and local office to "test the waters" without revealing how much they raise or spend. The decision to hold off on the vote came after receiving strident opposition from across the political spectrum, including from state Republican Party Chairwoman Sue Cienki, the citizens advocacy group Common Cause, two of the already-announced Democratic candidates for governor, and a group of state legislators.

California Gov. Gavin Newsom Signs into Law a Collection of Election and Campaign Finance Related Bills, Including Assembly Bill 31 That Extends Voting by Mail and Mandates Automatic Ballot Distribution by Mail - In a flurry of legislative activity following his victory in the recent California recall election, Governor Gavin Newsome recently signed into law a collection of new bills focused on voting and campaign finance issues. Most prominent of the new laws was Assembly Bill 31, which requires county elections officials to mail a ballot to every active registered voter for all elections. Assembly Bill 319 forbids foreign governments or foreign principals from making a contribution, expenditure, or independent expenditure in connection with a state or local ballot measure or election. Assembly Bill 136 makes a person who uses campaign funds in violation of the Political Reform Act resulting in an egregious personal benefit liable in an administrative or civil action. Senate Bill 686 requires a limited liability company that qualified as a committee or a sponsor of a committee to file a statement of members with the California Secretary of State. These bills become effective January 1, 2022.

Ohio Elections Commission Rules in Favor of State Rep., Others in Finance Complaint - In a near unanimous vote, the Ohio Elections Commission ruled that the American Legislative Exchange Council did not violate Ohio campaign finance laws when it provided software worth $3,000 to three state legislators (State Rep. Scott Wiggam, R-Wooster, Sen. Robert McColley, R-Napoleon, and Rep. Bill Seitz, R-Cincinnati) during their 2020 campaigns.

Election Day Results From Major Races in VA, NJ, and Others – Republicans had a strong election night on Tuesday, securing a major victory in the Virginia gubernatorial election as Glenn Youngkin defeated former Gov. Terry McAuliffe. Republicans also captured the races for Lieutenant Governor and Attorney General, and retook the House of Delegates in Virginia. And in the New Jersey gubernatorial election, Republican Jack Ciattarelli and Democratic incumbent Gov. Phil Murphy are locked in a dead heat as votes are still being counted. In the New York City mayoral race, Eric Adams (D) became only the second African American elected mayor in the city’s history, and Alvin Bragg was elected Manhattan district attorney – becoming the first African American to lead this office. In Boston, Michelle Wu easily defeated City Councilor Annissa Essaibi George to become the first woman and first person of Asian descent to be elected mayor in Boston.

Pay-to-Play

L.A. Councilman Mark Ridley-Thomas and ex-USC Dean Indicted on Bribery Charges - Los Angeles City Councilman Mark Ridley-Thomas was indicted on federal charges that he allegedly took bribes from Marilyn Louise Flynn, a dean at the University of Southern California at the time, in exchange for directing millions of dollars in public funding to the university when he was on the L.A. County Board of Supervisors.

California Sets New Rules Regarding Behested Payments and Certain Charitable Donations Made on Behalf of Lawmakers - On October 21^st, California regulators approved new transparency requirements for charitable contributions made on behalf of politicians with whom the donors may be trying to curry favor - an attempt to increase transparency among donors who make nonprofit donations to organizations aligned with various public officials. Under the changes approved, an elected official must report, when known, the name of the person directing a behested payment through a donor-advised fund. When the contribution is made anonymously, the elected official must note that in disclosure filings. California regulators also voted to increase disclosure requirements when elected officials solicit donations for charities to which they have financial ties.

Congressional Investigations

House Votes to Hold Steve Bannon in Contempt for Defying a Subpoena - The U.S. House of Representatives recently approved a criminal contempt report against former presidential advisor Steve Bannon for defying a subpoena from a House panel probing the January 6 attack on the U.S. Capitol. The 229-202 vote in the Democratic-controlled chamber was largely along party lines, with nine GOP members joining Democrats.

Political Law Practice Pointers

This edition’s Practice Pointers focuses on federal lobbying disclosure obligations under the Lobbying Disclosure Act (LDA) and Honest Leadership and Open Government Act (HLOGA). As many in our readership know, October is the month in which federal lobbying registrants are required to submit their third quarter LD-2 filings to the Clerk of the House and Secretary of the Senate. Many of you in the regulated community may simply file and forget, but we’re here to remind you that’s not the end of your responsibilities under the LDA and HLOGA. Federal law encourages you to keep records regarding your lobbying disclosure submissions for at least 6 years post-filing, and also authorizes the GAO to randomly audit your public filings each year for compliance with the LDA.

The Dentons Political Law Team is currently advising clients with regard to GAO audits and has extensive experience helping organizations navigate the GAO review process, which has recently become more onerous and recordkeeping driven. If your organization or client has questions regarding LDA compliance or the GAO audit process, please reach out to us for assistance. 

Please click here for more information on the Dentons Political Law, Ethics & Disclosure team.