Gov. Peter Shumlin has signed Senate Bill 93, changing lobbyist reporting requirements. Reports must now be filed for each month the legislature is in session with an additional report in September.

The new law also requires identification of lobbyists contributing to advertisements meant to influence legislation and a report must be filed within 48 hours if such advertisement cost $1,000 or more. Furthermore, a legislator’s candidate committee and a legislative leadership committee may no longer solicit or accept a contribution while the legislature is in session.

These provision are effective July 1, 2015.

On February 24, a lawsuit was filed in Suffolk County Superior Court challenging Massachusetts laws allowing unions to make political contributions while barring corporations from doing the same.

The lawsuit is being brought by the Scharf-Norton Center for Constitutional Litigation at the Goldwater Institute on behalf of two state business corporations against Michael Sullivan, the director of the Office of Campaign and Political Finance (OCPF), which enforces the law.

In 1A AUTO, INC. v Sullivan, the plaintiffs alleges, “There is no legitimate justification for allowing unions to contribute thousands of dollars to candidates, parties, and political committees, while completely banning any contributions from businesses.” The plaintiffs argue the law violates “equal protection, free speech, and free association protected by the Massachusetts and United States constitutions” and are seeking a permanent injunction preventing the OCPF from enforcing the law banning corporate contributions.

Prompted by Secretary of State Kate Brown, a bill in the Oregon Senate would impose campaign contribution limits in a state where contributions are currently unlimited.

Senate Bill 75, now in committee, sets the individual and entity contribution limit at $2,600 per calendar year and the political committee limit at $5,000 per calendar year. These limits are aggregate limits, so total yearly contributions to any state, county, or city candidate or committee cannot exceed the stated limit.

The bill is an amendment to the state constitution, so it would have to be approved by voters before becoming law.

Photo of Oregon Secretary of State Kate Brown by Josh.Goldberg on Wikimedia Commons.

The Federal Election Commission (FEC) has published the 2015-2016 election cycle contribution limits, which have been indexed for inflation. As required by the Bipartisan Campaign Reform Act of 2002, the FEC must adjust certain contribution limits every two years.

The individual and nonmulticandidate PAC contribution limit to federal candidates has increased from $2,600 to $2,700 for both primary and general elections, allowing for a total of $5,400 for a federal candidate.

The limits on contributions by individuals to national party committees has increased from $32,400 to $33,400 per calendar year. Individuals may now contribute $100,200 per calendar year to committees of a national political party for presidential nominating conventions, to committees of a national political party for preparation for and the conduct of election recounts and contests and other legal proceedings, and to committees of a national political party for the construction, purchase, renovation, operation, and furnishing of one or more buildings for party headquarters.

Q. With the start of the New Year, are there any changes I should be aware of in political contribution limits?

 A. Aside from changes as a result of new legislation, the most common adjustment of contribution limits is indexing for inflation.  Typically, adjustments are made biennially for inflation according to the Consumer Price Index.  The Consumer Price Index is calculated by the United States Department of Labor, Bureau of Labor Statistics.

This concept was addressed by the United States Supreme Court in Buckley v. Valeo (1976).  The court allowed federal contribution limits to be adjusted upwards at the beginning of each calendar year by the average percentage rise in the Consumer Price Index for the 12 preceding months.

The principal behind this is quite simple:  it is based on the recognition that the cost of campaigning steadily increases each year based on the increase to cost of living.  Campaign fliers, mailers, yard signs, and media buys do not cost the same in 2013 as they do in 2015.

This year, California adjusted its contribution limits for the 2015-2016 biennium.  In doing so, corporate contributions limits for general assembly candidates increased from $4,100 per election to $4,200.  Washington adjusts its limits in even-numbered years, so the 2014 corporate contribution limit of $950 per election for state legislative candidates will remain the same for 2015.   Illinois adjusts its limits in odd-numbered years, so the 2014 corporate contribution limit of $10,500 per election cycle for legislative candidates will increase to $10,800.

Finally, the indexing of contribution limits usually results from amendments to a state’s administrative code as opposed to its statute.  In order to ensure compliance, a contributor should review both of these sources.

You can directly submit questions for this feature, and we will select those most appropriate and answer them here. Send your questions to: experts@stateandfed.com.

(We are always available to answer questions from clients that are specific to your needs, and we encourage you to continue to call or e-mail us with questions about your particular company or organization. As always, we will confidentially and directly provide answers or information you need.) Our replies to your questions are not legal advice. Instead, these replies represent our analysis of laws, rules, and regulations.

The contribution limit for Maine gubernatorial candidates has been increased by $75, from $1,500 to $1,575 per election.

The contribution limit for county and municipal offices has been increased by $25, from $750 to $775 per election.

The contribution limit for state legislative candidates remains unchanged at $375 per election.

The foregoing adjustments were effective for any election held on or after January 23, 2015.

City Council has cast the first of two required votes to increase contribution limits for officeholder accounts. Ordinance 15-0062 triples total permissible contributions per calendar year to city officeholder accounts to $30,000 for council members and to $75,000 for citywide elected officials.

Individual contributor limits per calendar year will also rise from $500 to $750 for council officeholder accounts and from $500 to $1,000 for citywide officeholder accounts.

The second required vote could take place as early as the next regularly scheduled meeting on February 3, 2015.

On January 9, 2015, a federal court issued a preliminary injunction enjoining the city of Houston  from enforcing its ordinance prohibiting political contributions until the first day of February prior to the day of an election.

In Gordon v. City of Houston, the United States District Court for The Southern District of Texas, Houston Division, found the city did not present any evidence showing the ordinance advanced the city’s interest of preventing the appearance of corruption. The plaintiff argued the ordinance “stifles core political activity and prevents candidates from raising funds to run effective campaigns, yet it does not further the only legitimate governmental interest relevant in this area, i.e., the prevention of corruption or its appearance.”

Because this is a preliminary injunction, the court found the public interest would not be “disserved” by its issuance, concluding, “Any harm caused to defendants by issuing the injunction does not outweigh the more serious harm that will be suffered by Gordon if the challenged ordinance is enforced against him.”

With the Senate passing the House’s omnibus bill, the limits for political contributions to federal political parties will increase when President Barack Obama signs the bill. Included as a rider with House Resolution 83 is an amendment to the Federal Election Campaign Act of 1971 allowing additional contributions to political parties for presidential nominating conventions, for preparation for and the conduct of election recounts and contests and other legal proceedings, and for the construction, purchase, renovation, operation, and furnishing of one or more buildings for party headquarters.

An additional provision of the bill prohibits the federal government from recommending or requiring any entity submitting an offer for a federal contract to disclose, as a condition of submitting an offer, any political contribution, expenditure, independent expenditure, or disbursement for an electioneering communication by the offeror, its officers or directors, or any of its affiliates or subsidiaries.

Another provision included in the bill prohibits the federal government from paying for a portrait of an officer or employee of the federal government, including the president, the vice president, a member of Congress (including a delegate or a resident commissioner to Congress), the head of an executive branch agency, or the head of an office of the legislative branch.

The president has said he will sign the bill.

UDPATE: On December 16, President Obama signed the House Resolution 83 into law.

Photo of the U.S. Capitol by Martin Falbisoner on Wikimedia Commons.

Today, the U.S. District Court of Appeals for the District of Columbia will sit en banc to hear oral arguments challenging the constitutionality of barring contractors from contributing to candidates, parties, and their committees.

On November 2, 2012, in Wagner v. Federal Election Committee, a District Court rejected challenges to the constitutionality of section 441c of Title 2 of the U.S. Code, which prohibits any vendors with contracts with the federal government from making political contributions to federal candidates or political parties. The case, initially brought by the ACLU, asked the court to declare the law unconstitutional as applied to individuals who have personal services contracts with federal agencies.

Because federal workers who are not contractors may make federal political contributions, while contractors performing the same work may not, the suit argued section 441c violates both the Equal Protection Clause of the Constitution and the First Amendment. The court found no First Amendment or Equal-Protection violations, noting “the dissimilar roles of contractors and employees, moreover, justify the distinct regulatory schemes that the Government has fashioned.”

Maryland State Flag

County Executive Ken Ulman gave to charity the $34,000 in campaign contributions he received from insurance executive Jeffrey B. Cohen, who was indicted last month on federal fraud charges. Cohen has been accused of misrepresenting the amount of cash his company had available to provide liability insurance to thousands of bars, restaurants, and strip clubs.

Although current Maryland election law requires political contributions to be used only for campaigns, the state Board of Elections issued a waiver. Ulman, who is Democrat Anthony Brown’s running mate for governor, donated Cohen’s contributions to the Maryland Crime Victims Network and the United Way of Central Maryland.

On July 22, 2014, Gov. Jack Markell signed several bills amending Delaware’s campaign finance and lobbying laws. Senate Bill 187 allows political committees to donate prohibited contributions to certain charitable organizations. House Bill 300 protects whistleblowers from employer retaliation for reporting campaign finance violations or participating in the investigation of such violations.

Both Senate Bill 187 and House Bill 300 became effective upon the governor’s signature. House Bill 301 requires contributions given from a joint account, whether by check, debit card, or credit card, to be attributed to the signator of the contribution. Senate Bill 186 requires entities making contributions of more than $100 to disclose the name and address of one responsible party. A responsible party, as defined by the bill, is an individual who exercises control over the entity.

House Bill 301 and Senate Bill 186 are effective January 1, 2015. Also effective January 1, 2015, is House Bill 306, which imposes late filing fees on lobbyists who file late reports. A fee of $25 will be assessed for the first day and $10 for each subsequent day a lobbyist report is delinquent. The maximum late fee allowable is $100. The Public Integrity Commission may waive such late filing fees if it determines circumstances make imposition of the fee inappropriate.

Of the newly minted legislation, Gov. Markell said, “We must always look to improve our laws to strengthen the public’s confidence in the political process.”

Photo of Governor Jack Markell by John D. (Jay) Rockefeller IV on Wikimedia Commons.

Today, in McCutcheon v. Federal Election Commission (docket 12-536), the United States Supreme Court ruled aggregate limits on federal campaign contributions are an unconstitutional violation of the First Amendment’s guarantee of political expression and association.

Background:

Federal law imposes two types of limits on individual political contributions.

Base limits restrict the amount an individual may contribute to:

• A candidate committee;
• A national party committee;
• A state, local, and district party committee; and
• A political action committee.

Biennial limits restrict the aggregate amount an individual may contribute biennially to:

• Candidate committees; and
• All other committees.

Shaun McCutcheon is an Alabama businessman who regularly makes political contributions to Republican candidates and the Republican National Committee. McCutcheon wanted to contribute $26,200 more to candidates and committees than the aggregate ceiling would allow. The Republican National Committee was also a plaintiff in the suit.

McCutcheon did not challenge the base limits on contributions to individual candidates and entities, but, wanting to give to more candidates and political entities than allowed by law, he challenged the aggregate limits.

Decision:

In a 5-4 decision, with the majority joined by Justice Thomas in a separate concurring opinion, the Court found aggregate limits do not further the permissible government interest in preventing quid pro quo corruption or the appearance of such corruption.

The majority opinion, written by Chief Justice Roberts and joined by Justices Scalia, Kennedy, and Alito, found the aggregate contribution limits do not further the only governmental interest accepted as legitimate in Buckley v Valeo. The 1976 decision by the U.S. Supreme Court found aggregate limits to be a permissible government regulation to curtail corruption or the appearance of corruption.

In McCutcheon, the Court stated, “Congress may not regulate contributions simply to reduce the amount of money in politics.”

The Court equated political contributions with “political campaign speech,” writing, “Money in politics may at times seem repugnant to some, but so too does much of what the First Amendment vigorously protects. If the First Amendment protects flag burning, funeral protests, and Nazi parades—despite the profound offense such spectacles cause—it surely protects political campaign speech despite popular opposition.”

Effect on other jurisdictions: (updated June 16, 2014)

The McCutcheon decision’s effects extend beyond the federal campaign finance laws.

At its May 14, 2014 meeting, the Connecticut State Elections Enforcement Commission announced it would no longer enforce the state’s aggregate contribution limit absent further direction from the General Assembly or a court of competent jurisdiction. The commission stressed, however, the base contribution limits would remain in full force and effect.

In a policy statement dated June 4, 2014, the Maine Commission on Government Ethics and Practices stated it would no longer enforce the yearly $25,000 aggregate contribution limit applicable to individuals and entities contained in Maine Revised Statutes section 1015(3), barring guidance from the legislature or a court. The policy statement noted the commission’s intention to study the issues and perhaps propose legislation during the next legislative session.

The Maryland State Board of Elections issued a guidance memo stating the board would no longer enforce a $10,000 aggregate limit on donors’ contributions to state candidates during a four-year election cycle, while stressing the $4,000 limit on personal contributions to any one candidate was still in place.

The Massachusetts Office of Campaign and Political Finance (OCPF) announced it will no longer enforce the state’s $12,500 aggregate limit on the amount an individual may contribute to all candidates, but will continue to enforce the $5,000 aggregate limit on contributions by individuals to party committees.

A provision in Minnesota’s campaign finance law known as the “special sources limit” will no longer be enforced as applied to individual large donors. U.S. District Judge Donovan Frank issued a preliminary injunction barring enforcement of the law with respect to individual large donors in response to a challenge by the Institute for Justice on First Amendment grounds. Under section 10A.27(11) of the Minnesota Statutes, the special sources limit prohibits a campaign from raising more than 20 percent of its total contributions from lobbyists, political committees, and large donors contributing more than one half of the individual contribution limit. Donovan issued the injunction in light of the precedent set by McCutcheon. The defendants have the opportunity to appeal to the 8th U.S. Circuit Court of Appeals. If they choose not to appeal, the case will proceed to a final ruling at the district court level.

The U.S. District Court for the Southern District of New York struck down a campaign finance law limiting contributions to super PACs. Sections 14-114(8) and 14-126 of the New York Election Law imposed an annual aggregate contribution limit of $150,000 per contributor. Plaintiff New York Progress and Protection PAC challenged the aggregate contribution limits on First Amendment grounds. Citing the precedent established in Citizens United and McCutcheon, the judge enjoined New York’s aggregate contribution limit as an unconstitutional ban on free speech. In its May 2014 meeting, the State Board of Elections determined the $150,000 yearly aggregate limit on political contributions from individuals can no longer be enforced in light of recent federal court decisions. New York campaign finance law imposes a similar aggregate limit of $5,000 on a corporation’s yearly contributions. The board made no ruling with regard to the corporate limit; however that limit is being challenged in federal court.

On April 3, 2014, the Puerto Rico Office of the Electoral Comptroller issued an informational newsletter in light of the U.S. Supreme Court ruling. While the Court referenced similar aggregate limits in other states and jurisdictions, it did not go so far as to declare them unconstitutional. Therefore, the office is not taking any immediate action with regard to the Puerto Rico aggregate campaign finance limits established in 2011. It will request an opinion from the Puerto Rico Secretary of Justice to determine how the Court’s decision relates to Puerto Rico law. The office will issue new informational bulletins as further developments arise.

On April 16, 2014, the Rhode Island Board of Elections voted to support the creation of legislation eliminating aggregate political contribution limits. The vote was in reaction to the McCutcheon decision. State law currently prohibits an individual from making contributions of more than $10,000 in the aggregate to more than one candidate, political action committee (PAC), or political party committee or to a combination of candidates, PACs, and political party committees within a calendar year.

In Vermont, Senate Bill 82 added an aggregate contribution limit of $40,000 per election cycle, which was to take effect January 1, 2015. However, the implementation of the aggregate contribution limit was contingent on the Supreme Court ruling in favor of aggregate limits in McCutcheon. Because the Supreme Court in fact ruled against aggregate limits, Vermont’s aggregate limit will not go into effect.

Wisconsin’s aggregate limits had already been challenged in Young v. Government Accountability Board. The parties in that case agreed to put the case on hold until the McCutcheon decision was issued. Following the ruling, the Government Accountability Board reached a settlement in which it agreed the aggregate contribution limits for individuals and PACs contributing to state candidates were no longer enforceable.

The Wyoming Joint Corporations, Appropriations, and Political Subdivisions Interim Committee ordered a draft bill to repeal the state’s aggregate contribution limits, which conflict with the U.S. Supreme Court’s ruling in McCutcheon.

In light of the ruling in McCutcheon, the Los Angeles Ethics Commission announced it would no longer enforce the aggregate limits on contributions to city and school board candidates. Limits on contributions to individual candidates remain in place.

The San Francisco Ethics Commission adopted a resolution stating it will not enforce the aggregate limit on contributions to city candidates in light of the McCutcheon ruling. The Campaign and Governmental Conduct Code imposes an aggregate limit of $500 multiplied by the number of city elective offices to be voted on in the election. The city’s $500 limit on contributions from an individual to a single city candidate remains in full force.

Analysis:

Quid pro quo corruption narrowly defined:

The Court maintained a narrow definition of quid pro quo corruption, preventing the government from limiting the First Amendment right to make contributions to as many candidates as an individual would like, within the base limits of contributions.

In the decision, the Court marked a solid delineation between corruption and appreciation: “[T]here is a clear, administrable line between money beyond the base limits funneled in an identifiable way to a candidate—for which the candidate feels obligated—and money within the base limits given widely to a candidate’s party—for which the candidate, like all other members of the party, feels grateful. . . . To recast such shared interest, standing alone, as an opportunity for quid pro quo corruption would dramatically expand government regulation of the politi­cal process.”

The Court found the possi­bility that an individual who spends large sums may garner “influence over or access to” elected officials or political parties does not give rise to such quid pro quo corruption.

The Court wrote, “The Government may no more restrict how many candidates or causes a donor may support than it may tell a newspaper how many candi­dates it may endorse.”

Arguing against the dissent’s argument that corruption could still occur even without the circumvention of the base contribution limits, the majority found such an argument would broaden the definition of quid pro quo corruption. The Court stated the dissent’s interpretation “dangerously broadens the . . . definition of quid pro quo corruption . . . and targets as corruption the general, broad-based support of a political party.”

Circumvention of base limits:

The Court found the argument that aggregate contributions could circumvent base contribution limits unconvincing.

The majority said the basis for allowing the law on aggregate limits to stand falls on “speculative” scenarios of corruption, which the Court found “highly implausible” and “hard to believe.” The Court said “experience and common sense” foreclose on many of the scenarios of schemes to funnel money, including one scenario the District Court found had merit. The Court found, “Based on what we can discern from experience, the indiscriminate ban on all contributions above the aggre­gate limits is disproportionate to the Government’s inter­est in preventing circumvention.”

The Court stressed that once an individual reaches the aggregate limit, the law denies “the individual all ability to exercise his expressive and associational rights by contributing to someone who will advocate for his policy preferences.”

Disclosure:

The Court also argued disclosure of contributions “minimizes the poten­tial for abuse of the campaign finance system.”

The majority maintained lifting the aggregate limits encourages money away from entities not subject to disclosure: “Indi­viduals can, for example, contribute unlimited amounts to 501(c) organizations, which are not required to publicly disclose their donors.”

Citing Citizens United, Justice Roberts wrote, “Disclosure requirements burden speech, but—unlike the aggregate limits—they do not impose a ceiling on speech.” In Citizens United, the Court held 8-1 that laws requiring the disclosure of political contribution were constitutional.

Legislative alternatives suggested by the Court:

The majority opinion suggested Congress could create other legislation to curtail circumvention of the base limits, such as enacting legislation targeting restrictions on transfers among candidates and political committees.

Additionally they wrote, “Congress might also consider a modified version of the aggregate limits, such as one that prohibits donors who have contributed the current maximum sums from further contributing to political committees that have indicated they will support candidates to whom the donor has already contributed.”

Overturning Buckley v Valeo’s holding on aggregate limits:

In overturning the 1976 U.S. Supreme Court Buckley v Valeo’s ruling on aggregate limits, the Court found the 38-year-old decision did not thoroughly address aggregate limits in its analysis. The Court also found subsequent laws enacted have “considerably strengthened” statutory safeguards against circumventing base limits through the transfer of contributions between parties and political committees. Additionally the Court argues Buckley did not address the “overbreadth challenge” with respect to the aggregate limits.

The Court rejected an alternative provided in the Supreme Court’s prior Buckley decision finding a person could personally volunteer for a candidate. The majority found “personal volunteering is not a realistic alternative for those who wish to support a wide variety of candidates or causes.”

The Court also heavily relied on campaign finance cases decided in the last few years, such as Citizens United v FEC and Arizona Free Enterprise Club’s Freedom Club PAC v Bennett.

Justice Thomas, in his separate opinion concurring with the majority ruling, writes Buckley “denigrates core First Amendment speech and should be overruled.”

Today, the Massachusetts Office of Campaign and Political Finance (OCPF) announced it will no longer enforce the state’s aggregate political contribution limit for the amount an individual may contribute to candidates.

The law, G.L. §55-7A(a)(5), limits the aggregate amount an individual can contribute to all candidates to $12,500. The OCPF made its decision based on today’s U.S. Supreme Court’s decision, McCutcheon vs. Federal Election Commission, which found aggregate limits on federal campaign contributions are an unconstitutional violation of the First Amendment’s guarantee of political expression and association.

However, the OCPF is going to review the decision more closely before deciding whether the $5,000 aggregate limit on contributions by individuals to party committees can remain standing. On its webpage, the OCPF stated, “The statutory provisions at the federal level that were analyzed by the Court in McCutcheon differ substantially from the law in Massachusetts, and a determination on the applicability of the ruling in this area will be made after careful review.”