Contributions by federal contractors to federal independent expenditure-only political action committees, also known as super PACs, may violate the federal pay-to-play prohibition.

On September 25, 2017, the Federal Election Commission (FEC) entered into a Conciliation Agreement with a federal contractor after finding the contractor had violated pay-to-play prohibitions by making contributions to a federal independent expenditure-only political action committee.

The FEC fined the contractor, Suffolk Construction Company, $34,000 for making two $100,000 contributions in 2015 to Priorities USA Action, a super PAC supporting then presidential candidate Hillary Clinton. Because the matter was resolved by agreement between the FEC and the contractor, there was no challenge made to the FEC’s fine.

Several provisions added last week to the House Financial Services appropriations bill would alter some federal campaign laws.

The legislation would prevent some charitable 501(c)(3) organizations such as churches from losing their tax-exempt status for making contributions to candidates. The bill would also allow corporations greater latitude in soliciting employees to contribute to political action committees.

The riders to the bill also include provisions prohibiting the IRS from enacting rules governing political activity and prohibiting the SEC from implementing rules requiring corporations to report to its shareholders a corporation’s political campaign activities.

A further change to campaign finance law in the appropriation bill would bar the use of funds to recommend or require any entity submitting an offer for a federal contract to disclose specified political contributions as a condition of submitting the offer.

The appropriations and other finance bills are expected to be debated this and next week in the House.

Parts of a campaign finance law approved by Missouri voters in November have been ruled unconstitutional.

U.S. District Court Senior Judge Ortrie Smith issued a ruling Friday finding corporations and labor organizations must be permitted to make contributions to campaign committees only supporting or opposing ballot measures, and political action committees must be able to receive contributions from other political action committees.

The court also ruled the ban on contributions to PACs by heavily regulated entities unconstitutional.

Finally, the ruling permanently enjoins the Missouri Ethics Commission from interpreting certain campaign finance provisions in any manner inconsistent with previously issued advisory opinions. Contribution limits will continue to apply only to contributions to candidates unless a contribution to a continuing committee or PAC is restricted or designated for a specific candidate.

The court stayed any injunctive relief ordered for 45 days to allow the state to review the ruling and to allow for an opportunity to appeal.

The Montana Legislature adjourned the 2017 regular session April 28, 2017.  House Bill 340, eliminating the Office of the Commissioner of Political Practices, made it through the House but was tabled in the Senate and did not pass.

Senate Bill 368, increasing contribution limits for both individuals and political action committees and placing the Office of the Commissioner of Political Practices under the jurisdiction of the state Attorney General, passed at the last minute and will be sent to the Governor.

The Montana Legislature will pick up again in January 2019.

On March 27, the West Virginia Senate voted to approve a bill to overhaul campaign finance laws.

Senate Bill 539 will raise campaign contribution limits to allow individuals to donate up to $2,700 to candidates for statewide office per election cycle. Individuals would also be able to contribute up to $5,000 to PACs per year and $10,000 to state parties and caucus campaign committees per year.

The bill also proposes changes to disclosure requirements, allowing citizens to donate up to $1,000 to certain PACs that do not donate to individual candidates or their committees before the donor’s identity must be disclosed.

The bill now moves to the House for consideration.

On Friday, February 3, the Federal Election Commission (FEC) published its price index adjustments for expenditure limitations and the federal lobbyist bundling disclosure threshold.

The lobbyist bundling disclosure threshold has increased for 2017 from $17,600 to $17,900. This threshold amount is adjusted annually. Federal law requires authorized committees of federal candidates, leadership political action committees (PACs), and political party committees to disclose contributions bundled by lobbyists and lobbyists’ PACs.

Additionally, the FEC published its adjusted Coordinated Party Expenditure Limits for political parties for 2017.

Since pre-filing began for the 2017 Arkansas legislative session, multiple measures have been introduced regarding lobbying, ethics and campaign finance.

If passed, measures introduced in the House would require reporting and disclosure of electioneering communications and covered transfers (House Bill 1005), prevent a member of the General Assembly from forming more than one political action committee (PAC) as either a registered agent or an officer (House Bill 1009), require the Secretary of State to make independent expenditures and PAC reports public (House Bill 1010), prohibit PAC-to-PAC transfers (House Bill 1011)  and ban direct contributions to candidates from PACs (House Bill 1012). Several measures introduced in the Senate mirror the House bills.

Additionally, bills introduced in the Senate would bar soliciting or accepting campaign contributions before the expiration of the immediately preceding general election (Senate Bill 2), prohibit elected officials from registering as a lobbyist while serving as an elected state official (Senate Bill 3) and ban constitutional officers, like the governor, from soliciting or accepting loans from lobbyists (Senate Bill 7).

Bernalillo County Commissioner Debbie O’Malley is requesting the county attorney investigate donations to the political action committee (PAC) New Mexicans for New Mexico, which is supporting County Commission candidates Steven Michael Quezada and Robert Chavez.

There is a $1,000 cap for contributions from people doing business with Bernalillo County, but disclosure reports reveal owners of businesses with city contracts donating to the PAC in amounts exceeding the limit.

The matter has been referred to the county’s ethics commission for further investigation.

Effective today, Nevada Senate Bill 246 revises the definition of “committee for political action” to include new threshold levels.

Entities in Nevada whose primary purpose is to affect outcomes of elections are now defined as those with more than $1,500 in contributions or expenditures in a calendar year. Entities whose primary purpose is not to affect outcomes of elections have a $5,000 calendar year threshold. Committees must register with the Nevada secretary of state no later than seven days after qualifying under the revised definition.

The changes in the bill were modeled on similar statutes previously enacted by the state of Maine.

It has been a long cold winter for most of the country and though it may be hard to see, sunshine and warm weather are fast approaching. While cold temperatures and snow are making summer seem far in the distance, Major League Baseball’s opening week is upon us and that means summer is close. With America’s pastime finally here, the Sunlight Foundation did a report on how much Major League Baseball and its clubs contributed to campaigns and PACs throughout the last election cycle.

According to the report, MLB organizations contributed more than $24 million last election cycle. The Chicago Cubs can’t win on the field (they have not been to a World Series since 1945 and have not won since 1908), but they certainly won the political spending war. The Cubs spent $13.9 million, more than $12 million more than any other team. Most of that money, more than $12 million, went to a PAC started by the Ricketts family (the team’s ownership group) established to fight wasteful spending in Washington and the defeat of President Obama. However, not all of the family veered to the right with their spending. Laura Ricketts spend more than $500,000 on Democratic candidates and PACs.

The Cubs rival, and President Obama’s favorite team, the Chicago White Sox were one of the few teams who favored the Democrats in their spending. The White Sox gave several donations to Obama, amounting to $60,000 and only $7,000 to Obama’s opponent in the presidential election, Mitt Romney.

Not all teams spend heavily though. The Toronto Blue Jays did not contribute a single penny, as federal laws do not allow foreign contributions to campaigns. The Oakland Athletics only gave a $5,000 contribution to the league’s PAC and gave nothing to either the Republican or Democratic parties. The New York Yankees, owners of the league’s highest payroll at nearly $229 million, only spent $43,000 off the field in political donations.

In addition to the individual teams contributing, Major League Baseball operates its own PAC, called the MLB Commissioner’s Office PAC. The league collects donations from each team and contributes fairly evenly to both the Democrats and Republicans. The Los Angeles Dodgers were the only team to eschew a donation to the league’s PAC.

Most of the donations coming from baseball were made by team executives and owners. However, a few current and former players decided to contribute. Players to contribute to the Republicans included White Sox second baseman Gordon Beckham, New York Yankees designated hitter Travis Hafner, and San Diego Padres closer Huston Street. Los Angeles Dodgers outfield Tony Gwynn Jr. was the only current player to contribute to the Democrats, but he was joined by Hall of Famers Hank Aaron and Lou Brock.

For a complete look at how each team contributed, check out the Sunlight Foundation’s report. And just remember, no matter how miserable the weather may be today, baseball is here and summer is right around the corner.

The Kansas Governmental Ethics Commission is seeking changes to the fees it charges for lobbyist and political action committee registrations. The commission’s executive director Carol Williams said the commission has not determined the amount of the increase it plans to propose, but that it will likely be a modest amount.

The fees for lobbyists and PACs have not increased in 12 years and the commission receives about a third of its funding through fees. The commission is also recommending an increase in the threshold amount at which a person must register as a lobbyist, from the current $100 in expenditures for lobbying to $500. The current threshold has not increased in 25 years, and the commission believes the proposed amount is a reasonable inflation factor.

The Fair Political Practices Commission has issued notice of proposed amendments to the California Code of Regulations to be considered at a public hearing on December 8, 2011. The proposed regulations codify commission guidance instructing filers to treat an in-kind contribution of the services of salaried personnel to a committee and the expenditure by the person making the salary payment as a contribution made on the payroll date of the salaried personnel.

The commission will also consider regulations which differentiate a contribution from a donation. Under the proposed regulation, a contribution is a payment made for a political purpose and includes payments to a multi-purpose organization. By contrast, a payment to a multi-purpose organization that is not made or used for a political purpose is to be treated as a donation and not a contribution for the purposes of identifying reportable contributions.

Lastly, the commission will consider amendments to the provisions pertaining to primarily formed and general purpose committees to assist filers in determining which label fits the purpose and structure of their committee.

The regulations define a general purpose committee as an ongoing committee which supports multiple candidates and measures in successive elections. General purpose committees include associations, political action committees, political party committees, major donors, as well as entities and individuals making independent expenditures.

The regulation proposes a standard for determining whether a committee is a state, county, or city general purpose committee. A committee will be considered a city or county committee if more than 70 percent of their activity is at the city or county level. Classification as a state committee will be the default.

Pursuant to the proposed regulation, a primarily formed committee is a committee formed or existing to support a single candidate or measure in a specific election. A committee will be considered primarily formed if more than 70 percent of the committee’s contributions and expenditures are for specific candidates or measures during the 24 months preceding the date where the candidate or measure is on the ballot.

Image of the Seal of California by Zscout370 on Wikipedia.

Federal:

How One Criminal Case Hit K Street

Hybrid PACs: Super PACs and Traditional PACs Can Merge

Lobbyists In On ‘Super’ Secrets

OMB Finalizes Details on White House Lobbying Reform Rules

From the States and Municipalities:

Alabama

Commission’s Opinions Further Define 2010 Ethics Law

Delaware

Colbert Takes Satirical Swipe at Abuse of Delaware Spending Disclosure Laws

Minnesota

Disclosure Rules Apply, Campaign Finance Board Says

New Jersey

N.J. Ethics Reform Efforts Bogged Down for Year

New Mexico

New Mexico Governor Signs Bill to Close Loopholes in State Contract Bidding

New York

NYC Mayor Cross-Examined at Ex-Operative’s Trial

Texas

Recall Case Likely to Extend Beyond El Paso

Utah

Lobbyists Want Keys to the Gym and Valet Parking at Capitol

Virginia

Trackers an Evolving but Undeniable Political Force

State and Federal Communications produces a weekly summary of national news, offering more than 80 articles per week focused on ethics, lobbying, and campaign finance.

News You Can Use is a news service provided at no charge only to clients of our online Executive Source Guides, or ALERTS™ consulting clients.

Jim Sedor is editor of News You Can Use.

Q. Are there prohibitions on registered lobbyists hand-delivering a political contribution check [personal, corporate, or PAC] to a candidate at the candidate’s fundraiser?

A. Forty-six states do not regulate the personal delivery of campaign contributions by contributions.  Of course, this assumes all other things being legal, such as session bans, a ban on corporate contributions, a ban on personal contributions by lobbyists, or personally delivering contributions while at the state capitol.

Alaska law provides that lobbyists may not host a fundraising event, directly or indirectly collect contributions, deliver contributions to a candidate, or participate in fund-raising activities.

Kentucky law prohibits a legislative agent from exercising control over a campaign contribution from a PAC and directing it to a specific state legislator, candidate, or committee.  This prohibition includes hand-delivering a contribution.

In Maryland, a lobbyist may not, for the benefit of the governor, lieutenant governor, attorney general, or comptroller, member of the general assembly, or candidate for election to these offices solicit or transmit a political contribution from any person or political committee.

South Carolina has very strict rules governing a lobbyist’s involvement when it comes to political contributions.  Not only are lobbyists prohibited from making personal political contributions —  even as a constituent — they are prohibited from hand-delivering a corporate or PAC check to a candidate at the candidate’s fundraiser.

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