Compliance Notes - Vol. 3, Issue 16
RECENT LOBBYING, ETHICS & CAMPAIGN FINANCE UPDATES
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
The Federal Election Commission (FEC) concluded that a federal Super PAC that received donations from LLCs had an obligation to ascertain the source of the contributions behind the LLC under the FEC’s attribution regulations. The FEC did not seek a civil penalty, but its decision puts other donors and Super PACs on notice that it will be enforcing these reporting provisions. (Zach Montellaro, Politico) See our recent e-Alert for an analysis of this opinion.
Georgia: U.S. District Judge Mark Cohen ruled that Stacey Abrams, the Georgia Democratic gubernatorial candidate, cannot immediately begin raising and spending unlimited campaign contributions through a leadership committee because she is not yet the Democratic Party’s nominee. Under a state law passed last year, certain top elected officials and party nominees can create “leadership committees” to raise unlimited campaign funds and coordinate with the candidate’s campaign. Abrams is the only Democrat who qualified to run for governor, effectively making her the party’s nominee. However, the judge found that to be considered the nominee and therefore have the ability to use a leadership committee, the law requires a candidate to be selected in a primary election. (Kate Brumback, Associated Press)
Illinois: Illinois state lawmakers approved a bill limiting how much money judicial candidates can raise from “dark money” sources and individual donors. The bill prohibits candidates for judicial office from receiving more than $500 during an election cycle from any committee, association, organization or group of people that is not required to disclose its contributors. The measure also adds an enforcement mechanism, where any contribution over $500 from a dark money source would be considered an “anonymous contribution” and would be forfeited to the state. The bill still requires approval from Governor JB Pritzker. If signed, the bill would take effect immediately and be in effect for the 2022 election cycle. (Peter Hancock, Capitol News Illinois)
South Carolina: According to campaign finance reports, developers in South Carolina have made contributions to Horry County Council candidates that exceed the state's $1,000 per candidate per election cycle limit. Some developers have contributed to candidates multiple times through limited liability companies (LLCs) and by capitalizing on the state ethics law that allows businesses to donate to political campaigns as individuals. The so-called "LLC loophole" in South Carolina's campaign finance laws treat each organized LLC as a separate "individual" with its own campaign donation limit. This treatment enables one developer with multiple LLCs to donate $1,000 to the same candidate multiple times. While some ethics experts acknowledge the LLC loophole is a legal and common practice, they say it is an "unfortunate" pattern in South Carolina. (J. Dale Shoemaker, The State)
International: As part of a broader set of reforms aimed at protecting Ireland’s elections from foreign interference (particularly from Russia), Irish political parties may not accept donations in the form of cryptocurrencies. (Philip Ryan, Independent.ie)
Government Ethics & Transparency
The Department of Justice reached a $10,000 settlement agreement with Kenneth J. Buck, the former Executive Director for the Department of Homeland Security (DHS) Office of Management Integration, to resolve a federal ethics probe. The settlement resolves civil allegations that Buck violated federal conflict of interest rules after leaving DHS in 2016 and False Claims Act allegations for submitting false invoices to conceal his involvement with a DHS contract following his departure from government service. (Sarah N. Lynch, Reuters)
Tennessee: Despite strong opposition from various nonprofit organizations that are not required to disclose donors, Tennessee lawmakers are poised to pass an ethics and campaign finance reform bill targeting spending by such organizations. The measure would require certain nonprofit groups to disclose any expenses over $5,000 made within 60 days of an election when using candidate names and images in advertisements. Under current law, such organizations can use a candidate’s name and image in advertisements before an election and are not required to disclose their campaign spending as long as they do not expressly advocate for the candidate. (Adam Friedman, Tennessean)