Compliance Notes – Vol. 1, Issue 6

Nossaman eAlert

We read the news, cut through the noise, and provide you the notes.

Welcome to Volume 1, Issue 6 of Compliance Notes from Nossaman’s Government Relations & Regulation Group – a periodic digest of the headlines, statutory and regulatory changes, and court cases involving campaign finance, lobbying compliance, election law, and government ethics issues at the federal, state, and local level.
Your attorneys, policy advisors, and compliance consultants are available to discuss any questions or how specific issues may impact your business.
If there is a particular subject or jurisdiction you’d like to see covered, please let us know.

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Campaign Finance & Lobbying Compliance

Nevada: The Nevada Secretary of State’s office is reviewing allegations made by James Parker, MedMen’s former Chief Financial Officer, that the cannabis company’s co-founders made illegal campaign donations to Gov. Steve Sioslak. (Michelle L. Price, AP)

Pennsylvania: The Third Circuit said that a Pennsylvania law intended to prevent political corruption by precluding gaming businesses from making campaign contributions violates the First Amendment. The opinion held that, although the state has an important interest in preventing quid pro quo corruption, the law is overbroad. (Bernie Pazanowski, Bloomberg Law)

Texas: James Denny Dannenbaum, an octogenarian ex-CEO of an influential engineering firm and former University of Texas regent, was sentenced to two years’ probation for funneling illegal campaign contributions to U.S. congressional candidates. (Gabrielle Banks, Houston Chronicle)


California: The California Supreme Court denied review and rejected a challenge to the California Voting Rights Act (CVRA) without comment or any published dissent. Don Higginson, former mayor of the San Diego County community of Poway, challenged the 2002 law, which shifted to district elections to avoid a lawsuit under the California law. His lawyers argued that the new district boundaries were drawn for racial reasons, violating constitutional standards of race neutrality. Note: CVRA applies to local governments, school boards and other agencies where evidence shows that a majority group has historically voted as a block to elect its own candidates, or to pass race-based ballot measures opposed by minorities. If so, they must stop electing representatives at large, from their entire area, and instead choose candidates from individual districts, which may have different racial and ethnic majorities. (Bob Egelko, San Francisco Chronicle)

Florida: In a 125-page ruling, U.S. District Judge Robert Hinkle wrote that the state can’t stop felons from voting if they’re too poor to pay back court-ordered fees, fines and restitution to victims. (Lawrence Mower, Tampa Bay Times)

Texas: Texas ultimately won the nearly seven-year fight to keep its voter ID law on the books, but federal District Judge Nelva Gonzales Ramos of Corpus Christi ruled the state is on the hook for nearly $6.8 million in legal fees and costs to the parties who sued. A spokesperson for the Texas attorney general indicated the state will appeal the ruling. (Alex Ura, The Texas Tribune)

Government Ethics

The Justice Department is closing investigations into three U.S. senators (Kelly Loeffler, James Inhofe, and Dianne Feinstein) for stock trades made shortly before the coronavirus market turmoil, but is continuing a related investigation into Sen. Richard Burr. (Aruna Viswanatha, The Wall Street Journal)

Georgia: Fulton County District Attorney Paul Howard allegedly padded his pay with $195,000 in salary supplements from the City of Atlanta that he funneled through a nonprofit he heads as CEO. The Government Transparency and Campaign Finance Commission filed a dozen allegations against Howard, many for failing to disclose his secondary employment as the CEO for People Partnering for Progress. In prior statements, Howard has strongly denied any wrongdoing. (Bill Rankin, The Atlanta Journal-Constitution)


As explained in a Nossaman e-alert last week, the IRS adopted final regulations for tax exempt groups (except for public charities, private foundations, and political organizations), allowing these nonprofits, including social welfare organizations, to withhold their donors from the IRS, though they must still keep records of donor information.

Political Speech & Campaign Advertisements

President Donald Trump signed an executive order (EO) targeting social media companies days after Twitter called two of his tweets "potentially misleading." The EO seeks to curtail the power of large social media platforms by reinterpreting a 1996 law known as the Communications Decency Act. Section 230 of that law provides broad immunity to websites and tech companies that curate and moderate their own platforms, and has been described by legal experts as "the 26 words that created the internet." Legal experts on both the right and the left have raised serious concerns about the EO, saying it may be unconstitutional because it risks infringing on the First Amendment rights of private companies and because it attempts to circumvent the two other branches of government. Tech companies are pushing back on the order. Facebook and Google said Trump's proposal risks harming the internet and digital economy. (Brian Fung, Ryan Nobles and Kevin Liptak, CNN)

The U.S. Court of Appeals in Washington dismissed a lawsuit brought by the nonprofit group Freedom Watch and YouTube personality Laura Loomer. The suit accused tech giants Twitter Inc., Facebook Inc., Apple Inc. and Alphabet Inc.’s Google of violating antitrust laws and conspiring to suppress conservative views online in a coordinated political plot. A three-judge panel held in a decision only four pages long that the organization didn’t provide enough evidence of an antitrust violation. It also found the companies aren’t state entities that can violate free speech rights. A lawyer for Freedom Watch and Loomer said they would petition to have the case reheard by an enlarged, “en banc” panel of the court’s judges and, if necessary, take the case to the U.S. Supreme Court. (Erik Larson, Bloomberg Politics)

End Citizens United filed a new complaint with the U.S. Senate Ethics Committee alleging that Senator Cory Gardner used images of Senate proceedings in a TV ad for his reelection campaign in violation of Senate rules that forbid using images of Senate proceedings. The complaint also alleges that Gardner used his congressional social media account for political purposes in an attempt to tease the ad in violation of Senate rules that forbid lawmakers from using their official internet accounts for political purposes. (Ernest Luning, Colorado Politics)

A three-judge panel on the D.C. Circuit Court of Appeals ruled that political consulting and lobbying firms cannot tap Paycheck Protection Program loans disbursed by the Small Business Administration (SBA), because a decades-old regulation bars the SBA from subsidizing political speech. The American Association of Political Consultants (AAPC) requested a preliminary injunction against the SBA ban, arguing it violates the First Amendment rights of lobbyists and political consultants. The AAPC said the group is "reviewing the opinion and considering our options" for an appeal. (Harper Neidig, The Hill)

Signature Gathering

Arkansas: The state's requirement for in-person signatures on petitions to place measures on the ballot was struck down in federal court. U.S. District Judge P.K. Holmes ruled that (1) the requirement that voters sign in the presence of a canvasser and (2) the requirement that the canvasser signs an affidavit in the presence of a notary public signifying that all signatures were personally witnessed by the canvasser, violate the plaintiff's free speech rights. State law requires petitions seeking to place a constitutional amendment on the ballot in the Nov. 3 general election to have 89,151 signatures of registered voters, a number set by calculating 10% of the votes in the previous gubernatorial election. The law also requires signatures come from at least 15 of the state's 75 counties. The petitions are due July 6. (Doug Thompson, Arkansas Democrat Gazette)

Colorado: Colorado Secretary of State Jena Griswold has issued a series of temporary rules that enable signature gathering for ballot petitions during the COVID-19 national health crisis. The rules outline provisions that will allow unaffiliated or independent candidates who file their petitions with the Secretary of State, as well as petitioners for state ballot initiatives, to utilize mail and email to gather requisite signatures in addition to normal in-person signature gathering. Those who do decide to gather signatures in-person are encouraged to follow local health guidelines. (Colorado Secretary of State, Notice of Temporary Adoption)

Nevada: Fair Maps Nevada, the group behind a ballot petition that would create an independent commission to redraw state legislative districts, will have extra time to gather the needed signatures to qualify for the 2020 ballot. U.S. District Court Judge Miranda Du wrote in her decision that the stay-at-home order issued in Nevada effectively barred Fair Maps from gathering signatures while it was in effect and not granting an extension for a corresponding period of time would be “both unreasonable and unfair.” (Colton Lochhead, Las Vegas Review-Journal)


Arizona: A complaint filed with Attorney General Mark Brnovich claims Daniel Jonathan Epstein, the 29-year-old son of Arizona state Rep. Denise "Mitzi" Epstein, was registered and voting in both Arizona and California for years despite residing in New York. The claim shows he's listed on the Permanent Early Voting List, Arizona's voluntary mail-in voter roll that doesn't need renewing. If substantiated, this could represent multiple felonies under Arizona law, according to the complaint. (Cole Lauterbach, The Center Square)

California: The Republican National Committee, National Republican Congressional Committee and California Republican Party filed a lawsuit to block California Gov. Gavin Newsom and Secretary of State Alex Padilla from sending all voters in the state mail-in ballots for the general election, arguing the move is unconstitutional and invites voter fraud. (William Cummings, USA Today)

Louisiana: A new lawsuit filed by the League of Women Voters of Louisiana seeks to expand Louisiana voters’ ability to cast ballots by mail for the 2020 elections, claiming the state’s emergency election plan fails to provide voters adequate protection during the COVID-19 pandemic. Thirty-three states and Washington, D.C., have decided to expand absentee voting because of the pandemic. (Ashley White, Lafayette Daily Advertiser)

Michigan: The League of Women Voters filed a lawsuit against Secretary of State Jocelyn Benson challenging Michigan's statutory requirement that all absentee ballots be returned by 8 p.m. on Election Day in order to be counted. In 2018, no-reason absentee voting passed by state referendum, giving voters the right to cast absentee ballots by mail or in person beginning 40 days before an election. Since regular mail can often take days, the lawsuit says the old rule conflicts with the intention of the state referendum to expand absentee voting. (Todd Spangler, Detroit Free Press)

Montana: The Montana Supreme Court restored the state’s June 2 mail-in ballot receipt deadline for the upcoming primary when it overruled a lower court order temporarily suspending the deadline. The high court’s order means voters must get their mail-in ballots to their local election office or other drop off locations by 8 p.m. on Election Day. (Kevin Trevellyan, Montana Public Radio)

New Jersey: After widespread allegations of voter fraud in Paterson’s recent city council vote-by-mail election, two councilmembers are demanding a recount and criminal investigation and an NAACP leader says the results should be thrown out and a new election ordered. Gov. Phil Murphy ordered the vote-by-mail only election to keep people safe during the coronavirus crisis. In the upcoming primary, the governor will allow one in-person voting site per town. (Jonathan Dienst and Joe Valiquette, NBC New York)

Pennsylvania: A federal judge ruled that the Pennsylvania Department of State must provide a way for visually-impaired voters to fill out an absentee or mail-in ballot online, print it at home and return it to their county elections office. (Emily Previti, Pennsylvania Post)

Texas: The Texas Supreme Court ruled that a lack of immunity to the new coronavirus does not qualify a voter to apply for a mail-in ballot. Texas voters can qualify for mail-in ballots only if they are 65 years or older, have a disability or illness, will be out of the county during the election period, or are confined in jail. The Texas election code defines disability as a “sickness or physical condition” that prevents a voter from appearing in person without the risk of “injuring the voter’s health.” Voters are not required to say what the disability is when they request an absentee ballot on the basis of a disability. The voters simply check a box on the application form and if their application is properly filled out, local officials are supposed to send them a ballot. The state ultimately conceded that officials can't reject those voters. (Alexa Ura, The Texas Tribune)

Virginia: A federal judge has denied a request from six Northern Virginia voters challenging Virginia election officials over the loosening of absentee voting restrictions. Under current law, Virginians must list one of a number of state-authorized excuses for why they cannot vote in person on Election Day, such as a work, family or school obligations or an out-of-town trip. Under a law that takes effect July 1, voters will be able to cast absentee ballots without providing an excuse. (Justin Mattingly, Richmond Times-Dispatch)

West Virginia: Thomas Cooper, a mail carrier in Pendleton County, was charged in a criminal complaint with attempted election fraud by altering “2020 Primary Election COVID-19 Mail-In Absentee Request" forms from eight voters. Cooper was responsible for mail delivery for the three towns from which the tampered requests were mailed: Onego, Riverton, and Franklin, West Virginia. According to the affidavit, Cooper admitted to altering some of the requests, saying it was a joke. (DOJ Press Release)

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