Compliance Notes - Vol. 3, Issue 11

Nossaman eAlert

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

Welcome to 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.

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Campaign Finance & Lobbying

The Federal Election Commission (FEC) approved revisions to Form 1, the Statement of Organization for political committees, including the form’s instructions and an Explanation and Justification for the modifications. The revised form includes voluntary provisions to register independent, expenditure-only political committees and hybrid political committees. Barring any congressional objections to the revised form, it will enter into effect 10 legislative days after Congress receives the form. (FEC Weekly Digests, March 11)

California: California’s Fair Political Practices Commission (FPPC) issued a Draft Opinion addressing the question of a committee’s campaign reporting obligations when it hires a vendor to create and sell non-fungible token (NFT) trading cards, including the underlying blockchain asset. The draft opinion states that NFTs produced and sold by a committee are more analogous to fundraising efforts, similar to gifts provided in exchange for a contribution or attendance at fundraising events. Therefore, a committee would be required to report the entire purchase price of the NFT on the campaign statement and designate the individuals who purchased the NFT as the contribution’s source. The commission will consider this draft opinion on March 24, 2022. (DRAFT FPPC Commission Opinion No. O-22-001)

Florida: The Florida Senate recently passed a bill to curb out-of-state influence in the ballot initiative process by limiting non-Floridians from donating more than $3,000 to ballot initiatives and barring out-of-state political committees from receiving donations worth more than $3,000. This new attempt to constrain funding for constitutional amendment initiatives comes after a federal judge ruled against the state in July regarding similar legislation to restrict donations to political committees backing constitutional amendments. However, changes to the bill extended the limits to also encompass committees opposing ballot initiatives. The bill must return to the House for a final vote. (Renzo Downey, Florida Politics)

New York: New York City Mayor Eric Adams has discontinued a policy issued under his predecessor, Mayor Bill DeBlasio, which required top city officials to voluntarily disclose meetings with lobbyists. Although city officials are not required to disclose such meetings, they are still required to maintain records of such communications, as they may be subject to Freedom of Information Law requests. (Sally Goldenberg, Politico)

Government Ethics & Transparency

Tennessee: Tennessee House Representative Robin Smith (R-Hixson) resigned from the legislature after being charged with one count of honest services wire fraud in connection with a political consulting firm, Phoenix Solutions, which also involved Representative Glen Casada. Prosecutors allege that Smith, Casada and Casada’s former aide, Cade Cothren, worked together to establish the political consulting firm, which was then engineered to provide kickbacks to Smith and Casada. According to court records, Smith and Casada received kickbacks from Cothren in exchange for using their official positions to influence the Tennessee House Speaker’s Office to approve the consulting firm as an official vendor, thereby disbursing state funds to the firm. The day after Smith resigned, she pleaded guilty to the federal wire fraud charge. (Melissa Brown and Adam Friedman, Nashville Tennessean) (See also: Melissa Brown and Adam Friedman, Nashville Tennessean)

Texas: The Texas Ethics Commission found that Houston Republican Eric Dick, who ran unsuccessfully for City Council in 2019, was responsible for a mailing campaign that falsely claimed a group of Black Democrats endorsed him. The mailer featured the Harris County Black Democratic News group and photos of former President Barack Obama, U.S. Representative Sheila Jackson Lee and Houston Mayor Sylvester Turner, among other state legislators and local officials. Mr. Dick initially told the commission he was not responsible for the mailer; however, an investigation found that Mr. Dick requested the mailer, approved the design and arranged for its payment. As a result, the commission voted to issue a $30,000 fine. (TheGrio)

Vermont: Vermont is one of only five states without a statutory code of ethics. However, the Senate Government Operations Committee recently voted 5-0 to endorse a bill creating a state ethics code, sending the bill to the floor. If the full House and Senate adopt the bill, it would codify the ethics code and bind elected officials and state workers in all three branches of government. The bill prohibits elected officials and government employees from engaging in conflicts of interest, giving preferential treatment based on political standing or personal relationship, using private information learned through government work for personal financial gain and accepting gifts intended to influence an official. (Peter Hirschfeld, Vermont Public Radio) (Lola Duffort, VTDigger)

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