On September 6, the Internal Revenue Service (IRS) issued a notice of a proposed rulemaking for allowing certain tax-exempt organizations to no longer be required to report the names and addresses of contributors on their annual reports.

Previously, the IRS had issued a guidance to this effect, but on July 30, the IRS guidance limiting these disclosure requirements was set aside by a federal judge.

In Bullock v. IRS, the U.S. District Court District of Montana (Great Falls) found the IRS violated the Administrative Procedure Act by not providing notice and allowing a public comment period before the guidance was issued. It predicated this decision by finding the guidance was a legislative rule.

On July 16, 2018, the U.S. Treasury Department and the IRS had announced certain tax-exempt organizations would no longer be required to report the names and addresses of contributors on their annual reports. This exemption from reporting applies to tax-exempt organizations generally not receiving tax-deductible contributions, such as labor unions, volunteer fire departments, issue-advocacy groups, local chambers of commerce, veterans’ groups, and community service clubs, according to the department’s press release.

These organizations are still required to continue to collect and keep the donor information and to make it available to the IRS upon its request.

This change did not affect the information required to be reported by charities primarily receiving tax-deductible contributions, such as 501(c)(3) organizations, certain nonexempt private foundations, or 527 political organizations. The Treasury Department and IRS had given three primary reasons for the change:

1. 1. The IRS makes no systematic use of this information collected by these organizations
   2. The policy reduces the risk of inadvertent disclosure or misuse of confidential information
   3. The policy saves both private and government resources

Comments on the proposed rule will be accepted for 90 days after the notice’s publication in the Federal Register.

Four more states making campaign finance and lobbying changes. Check out which states are passing legislation in this week’s NYCU Video Digest!

U.S. District Judge Charles Kornmann struck down a ban on out-of-state contributions to ballot question committees recently passed by voters.

Kornmann found Initiated Measure 24 unconstitutional because it violates First Amendment rights to engage in political speech.

Additionally, Kornmann said the measure violates the Commerce Clause by interfering with the free flow of money between persons from another state and South Dakota committees.

The ruling is a permanent injunction that stops the planned implementation on July 1.

The state must now determine if it will appeal the decision to the U.S. Eighth Circuit Court of Appeals.

National/Federal

Acting Defense Secretary Cleared of Wrongdoing in Probe of His Ties to Boeing
Washington Post – Dan Lamothe and Heather Ryan | Published: 4/24/2019

The Pentagon’s watchdog cleared Acting Secretary of Defense Patrick Shanahan of wrongdoing in an investigation examining whether he used his influence at the Defense Department to favor Boeing, his former employer. The results seemingly clear the way for President Trump to nominate Shanahan to take over as Pentagon chief. The probe was launched after the department’s inspector general received reports saying Shanahan had boosted Boeing in meetings, disparaged Boeing’s competitors, pressured Pentagon officials to buy Boeing products, and sought to influence the Air Force’s decision on accepting a Boeing aircraft after technical problems delayed its delivery.

As Buttigieg Builds His Campaign, Gay Donors Provide the Foundation
New York Times – Jeremy Peters and Shane Goldmacher | Published: 4/30/2019

After vaulting into the top tier of presidential candidates vying for the 2020 Democratic nomination, South Bend Mayor Pete Buttigieg is building a nationwide network of donors that is anchored by many wealthy and well-connected figures in LGBT political circles. Buttigieg’s candidacy has struck a powerful chord with many top LGBT donors. Though many said they believed they would see a gay man or lesbian become a serious contender for the White House, most of them had never considered it beyond the abstract. But the LGBT community is no monolith, and Buttigieg’s candidacy is exposing tensions that have been papered over during the period of relative unity and common purpose that has taken hold since President Trump took office.

Biden Faces Conflict of Interest Questions That Are Being Promoted by Trump and Allies
MSN – Kenneth Vogel and Iuliia Mendel (New York Times) | Published: 5/1/2019

Then-Vice President Joe Biden traveled to Kiev in March 2016 and threatened to withhold $1 billion in U.S. loan guarantees if Ukraine’s leaders did not dismiss the country’s top prosecutor, who had been accused of turning a blind eye to corruption in the country. The prosecutor general was soon voted out by Parliament. Among those who had a stake in the outcome was Hunter Biden, the younger son of the former vice president, who at the time was on the board of an energy company owned by a Ukrainian oligarch who had been in the sights of the fired prosecutor general. The broad outlines of how the roles of the father and son intersected have been known for some time. New details about Hunter Biden’s involvement have pushed the issue back into the spotlight just as the elder Biden is beginning his campaign for president.

Congressional Democrats’ Emoluments Lawsuit Targeting President Trump’s Private Business Can Proceed, Judge Says
MSN – Jonathan O’Connell, Ann Marimow, and Carol Leonnig (Washington Post) | Published: 4/30/2019

A federal judge ruled Democrats in Congress can move ahead with their lawsuit against President Trump alleging his private business violates the Constitution’s ban on gifts or payments from foreign governments. The decision by U.S. District Court Judge Emmet Sullivan adopted a broad definition of the anti-corruption law and could set the stage for Democratic lawmakers to begin seeking information from the Trump Organization. The Justice Department can try to delay or block the process by asking an appeals court to intervene. Sullivan refused the request of the president’s legal team to dismiss the case and rejected Trump’s narrow definition of emoluments, finding it “unpersuasive and inconsistent.”

In Its Fight to Keep Drug Prices High, Big Pharma Leans on Charities
Los Angeles Times – Ben Elgin (Bloomberg) | Published: 4/29/2019

Many self-styled patient-advocacy groups with murky origins or hidden funders have cropped up since 2017. With names like the Doctor-Patient Rights Project or the Defenders Coalition, such groups pursue various policy aims that include effectively aiding pharmaceutical companies’ efforts to defeat drug-price proposals. The nonprofits take public positions in newspaper op-eds and letters to Congress while drug makers, beset by years of negative publicity over price hikes, tend to remain in the background. The groups say they are independent. That is not true for all of them, said Marc Boutin, chief executive of the National Health Council, which has more than 50 patient groups and dozens of drug makers as members. “There are a number of groups created by pharma companies that look and act like patient organizations, but they’re 100 percent funded by industry,” said Boutin, who did not name any specific examples.

Maria Butina, Russian Who Conspired to Infiltrate Conservative U.S. Political Groups, Sentenced to 18 Months
Boston Globe – Spencer Hsu and Rosalind Helderman (Washington Post) | Published: 4/26/2019

A federal judge sentenced Russian gun rights activist Maria Butina to 18 months in prison Friday after calling her plot to penetrate conservative U.S. political circles without disclosing she was working as a foreign agent for the Kremlin “dangerous” and “a threat to our democracy.” Butina pleaded guilty to conspiring with a senior Russian official to access the National Rifle Association (NRA) and other groups without registering with the U.S. Justice Department from 2015 until she was arrested and detained in July. Butina admitted she worked under the direction of Alexander Torshin, a former Russian government official, and with an American political operative on a multiyear scheme to establish unofficial lines of communications with Americans who could influence U.S. politics.

‘No Corporate PAC’ Pledges Aren’t Always So Pure
Roll Call – Kate Ackley | Published: 4/29/2019

Many incumbents in the club of Democratic lawmakers who refuse corporate PAC dollars still accept donations from colleagues and party committees that take the funds. Numerous freshman Democrats who ran on a no-corporate-PAC-money mantra opened their re-election coffers to donations this year from party leaders and committees, such as the New Democrat Coalition Action Fund, that are full of funding from some of the nation’s best-known companies. Taking donations from party leaders and committees allows pledge-takers to stick to their vows while cleansing some of the “dirty” dollars and diluting the influence of the companies, but not banishing such money entirely.

Pete Buttigieg Swears Off the Lobbyist Money He Once Accepted
New York Times – Jeremy Peters and Shane Goldmacher | Published: 4/26/2019

Pete Buttigieg, whose upstart presidential campaign has benefited from an early surge of donations and national attention, will no longer accept contributions from federal lobbyists, bowing to pressure from fellow Democrats who want to reform the way campaigns raise money. Buttigieg, the mayor of South Bend, Indiana, was somewhat isolated among his rivals for the 2020 Democratic nomination because he initially accepted lobbyist money, putting him at odds with the more progressive wing of his party. He will return the contributions he had already accepted from lobbyists, which his campaign said totaled $30,250 from 39 individuals.

Trump Views the Supreme Court as an Ally, Sowing Doubt About Its Independence Among His Critics
MSN – Robert Barnes and Josh Dawsey (Washington Post) | Published: 4/27/2019

President Trump’s tweets demonstrate he views the U.S. Supreme Court as an ally, and safeguard against lower court defeats and congressional opponents. His administration’s lawyers have tried to leapfrog the legal process to seek the high court’s quick review of adverse rulings and nationwide injunctions by lower courts. They are also ready to go to court as the president resists demands from congressional Democrats investigating his conduct, business dealings, and personal finances. Critics of the president say his rhetoric seeds doubts about the Supreme Court’s independence, complicates the role of Chief Justice John Roberts Jr., and could taint the victories Trump achieves there.

When the Mueller Investigation Ended, the Battle Over Its Conclusions Began
MSN – Mark Mazzetti and Michael Schmidt (New York Times) | Published: 5/1/2019

Special counsel Robert Mueller wrote a letter in March complaining to Attorney General William Barr that a four-page memo to Congress describing the principal conclusions of the investigation into President Trump “did not fully capture the context, nature, and substance” of Mueller’s work. What followed was a dayslong, behind-the-scenes tussle over the first public presentation of one of the most consequential government investigations in American history. A richer picture of that battle has emerged, one of testy letters (Barr described one as “snitty”) and at least one tense telephone call between the special counsel Mueller and Barr. The two were longtime friends who found themselves on opposite sides of an embattled president. The growing evidence of a split between them also brought fresh scrutiny on Barr.

From the States and Municipalities

California – State Officials Keep Hiring Their Relatives. Will Newsom Crack Down on Nepotism?
Los Angeles Times – Patrick McGreevy | Published: 5/1/2019

California agencies have a long history of nepotism, along with pledges to end such favoritism, but the practice continues. Workers in at least seven state agencies have alleged favoritism shown to family members and friends of administrators in the last decade. Getting a desirable job in state government too often depends on who you know, say watchdogs and employees who have raised red flags. A 2017 investigation found 835 employees of the Board of Equalization, or 17.5 percent of its workforce at the time, were related by blood, adoption, marriage, or cohabitation.

Florida – Former David Straz Staffers Say Nashville Consultant Played Big Role in Campaign’s Failure
Tampa Bay Times – Charlie Frago and Christopher O’Donnell | Published: 4/30/2019

A few days before voters went to the polls in the first round of Tampa’s mayoral election, the David Straz campaign was in an uproar over a missing $225,000. Straz said he was freezing campaign spending until the missing money could be accounted for, members of his team said, but no one could come up with an answer. The reason, they said: political consultant Bill Fletcher was the only one who knew how campaign money was being spent. The Nashville-based consultant had the purse strings while also directing millions of dollars to his own company to buy television, radio, and digital advertising. He answered only to Straz, a political novice. Near-total power wielded by a single consultant is highly unusual and potentially dangerous, said veteran political consultant Adam Goodman.

Kansas – Former Salina Senator Pads State Salary with Travel, Food Vouchers
Topeka Capital Journal – Tim Carpenter | Published: 4/30/2019

The former state senator hired as Kansas Gov. Jeff Colyer’s regulatory fixer billed taxpayers thousands of dollars for driving to and from the job in Topeka after his official work station was quietly switched from a state office building near the Capitol to his residence in Salina. Tom Arpke, who burnished a political reputation in the Senate and House as a fiscal conservative eager to expose spending he considered superfluous, was chosen by Colyer to serve as the executive branch’s regulatory ombudsman. The decision to designate Arpke’s office as his personal residence 112 miles away from the Curtis State Office Building adjacent to the Capitol was necessary to justify Arpke’s monthly claims that taxpayers should pay him extra every time he drove to Topeka for work.

Massachusetts – For Sale in the Pot Industry: Political influence
Boston Globe – Andrew Ryan, Beth Healy, Dam Adams, Nicole Dungca, Todd Wallach, and Patricia Wen | Published: 5/1/2019

The law that legalized recreational marijuana in Massachusetts tried to make room for the little guy by limiting the number of cannabis shops a company could own or control. It also directly encourages proposals from black and Latino entrepreneurs whose community members were often unfairly targeted for arrest when pot was illegal. But so far, winning a license to sell marijuana in Massachusetts often seems to be determined by whom you know, or if you can afford to pay a lobbyist or consultant who knows people. Frank Perullo, the owner of Novus Group – which claims to be “one of the nation’s leading cannabis consulting firms” – estimates he has deployed his political connections and expertise to help push 40 to 50 proposed pot shops in Massachusetts.

Michigan – Federal Court: Michigan political maps illegally rigged to ‘historical proportions’
Detroit News – Jonathan Oosting | Published: 4/25/2019

A federal court in Michigan became the latest in the country to strike down its state’s legislative and congressional district maps, ruling they were examples of unconstitutional partisan gerrymandering.  A panel of three judges in the U.S. District Court of the Eastern District of Michigan cited evidence that showed Republicans loaded some districts with Democratic voters and divided Democratic communities between other Republican-held seats, practices known as packing and cracking. The panel is giving the Republican-led House and Senate until August 1 to redraw the maps and get them signed into law by Gov. Gretchen Whitmer. If state officials do not finalize new maps by then, the court would draw new boundaries itself and could appoint a special master to do so.

Missouri – ‘Pay to Play’ Case Sinks St. Louis County Executive Steve Stenger
St. Louis Post-Dispatch – Jeremy Kohler, Jacob Barker, and Robert Patrick | Published: 4/30/2019

A federal grand jury indicted St. Louis County Executive Steve Stenger on charges of bribery, mail fraud, and the theft of honest services for trading political favors for campaign contributions. Stenger is accused of ensuring that donor John Rallo and his companies obtained contracts with the county and received other favors. Stenger also is accused of ensuring that an unnamed company obtained a state lobbying contract from the St. Louis Economic Development Partnership and taking actions to conceal the illegal conduct. Recent investigations by The St. Louis Post-Dispatch have raised concerns about county contracts going to Stenger’s political donors, and the county council began an ethics investigation into the matter.

New Hampshire – Sununu Inaugural Team Releases Conflict of Interest Policy, Months After Declining to Do So
New Hampshire Public Radio – Casey McDermott | Published: 4/25/2019

When faced with questions earlier this year about the thousands of dollars paid out from his inaugural committee to his sister and top political advisor, New Hampshire Gov. Chris Sununu’s team said those payments followed state and federal regulations, and “the organization’s bylaws and conflict of interest policy.” New Hampshire lacks comprehensive disclosure and compliance rules around gubernatorial inaugural committees, and Sununu is the first sitting governor required to detail how his committee raises and spends money in reports filed with the secretary of state’s office.

New Jersey – The Tax Break Was $260 Million. Benefit to the State Was Tiny: $155,520.
New York Times – Nick Corasaniti and Matthew Haag | Published: 5/1/2019

The Economic Opportunity Act, a measure intended to kick-start the sputtering post-recession economy in New Jersey, particularly in its struggling cities. The state would award lucrative tax breaks to businesses if they moved to New Jersey or remained in the state, creating and retaining jobs. But before the bill was approved by the Legislature, a series of changes were made to its language that were intended to grant specific companies hundreds of millions of dollars in additional tax breaks. Many of the last-minute changes to drafts of the bill were made by a real estate lawyer, Kevin Sheehan, whose influential law firm has close ties to Democratic politicians and legislative leaders in New Jersey. Sheehan was allowed to edit drafts of the bill in ways that opened up sizable tax breaks to his firm’s clients.

New York – Mayor de Blasio and City Hall Staff Cozied Up to Lobbyists and Special Interests in Hundreds of Meetings, News Analysis Shows
New York Daily News – Anna Sanders | Published: 5/2/2019

“I don’t sit down with lobbyists, I don’t talk to lobbyists, and I haven’t for years,” New York City Mayor Bill de Blasio said recently. But a New York Daily News analysis of public records shows otherwise. De Blasio’s deputy mayors, commissioners, and high-ranking aides had at least 358 meetings and talks with both contract and in-house lobbyists in just 11 months, records show. They spoke with 332 different lobbyists during that time, between March 1, 2018, and January 31 of this year. Six of the contract lobbyists are with Kramer Levin Naftalis & Frankel, a law firm that represented de Blasio during a probe into his fundraising. City taxpayers paid the firm $2.6 million for representing the mayor.

New York – Some Top Albany Lobbyists Aren’t Following Sweeping Disclosure Rule
Albany Times Union – Chris Bragg | Published: 4/27/2019

New requirements imposed by the New York Joint Commission on Public Ethics (JCOPE) say lobbyists must disclose the names of lawmakers, agency employees, or local elected officials they directly lobby concerning legislation, regulations, and other matters. A review of the first filings covered by the requirement, reflecting lobbying performed in the first two months of the year, shows many top firms are trying to comply – some in extreme detail – but several prominent firms are not. Bolton St. Johns has not disclosed lobbying any lawmakers or agency officials this year despite employing a lengthy roster of lobbyists and having dozens of clients with legislative business. Whether JCOPE would penalize powerful lobbyists for not following the rule remains to be seen. Critics said it is also far from clear that the new disclosure rule would survive a court challenge.

North Dakota – Legislature Approves Republican-Written Ethics Measure
Dickinson Press – John Hageman (Forum News Service) | Published: 4/25/2019

North Dakota lawmakers approved a bill that sets rules to comply with a voter-approved constitutional amendment aimed at ethics reform. The ballot initiative bans lobbyist gifts to public officials, requires the disclosure of the “ultimate and true source of funds” spent to influence elections and state government action, and creates a new state ethics commission that could investigate malfeasance. Greg Stites, an attorney hired by Measure 1 supporters to lobby lawmakers, said the implementation bill falls short by narrowing the definition of lobbyist and leaving holes in reporting requirements.

Ohio – Ex-Dayton Commissioner, State Lawmaker Arrested; More Arrests Coming, Feds Say
Dayton Daily News – Laura Bischoff, Josh Sweigart, Thomas Gnau, Cornelius Frolick, and Mark Govaki | Published: 4/30/2019

An investigation by federal agents into suspected public corruption in the Dayton area led to charges against Joey Williams, a local bank executive and former city commissioner; former state Rep. Clayton Luckie; city employee RoShawn Winburn; and Brian Higgins, a local man who once owned a dead body hauling business. Four separate federal indictments detail allegations of bribes, fraud, and contract steering. The charges involve allegations of wrong-doing starting in 2014. The separate schemes arose out of the same investigation, authorities said. FBI Assistant Special Agent Joseph Deters said the lengthy investigation used sophisticated methods to “uncover what appears to be a culture of corruption in Dayton-area politics.”

Tennessee – Why This Republican Lawmaker Hired His Own Personal Lobbyist to Work the Capitol Halls
The Tennessean – Joel Ebert | Published: 5/2/2019

Tennessee Rep. Martin Daniel officially hired a lobbyist recently, making him the first lawmaker in recent memory to have such an employee at his disposal. Nashville resident Drew Lonergan filed his lobbyist registration with the Tennessee Ethics Commission on March 25. Lonergan said he had been “consulting” for Daniel since January but registered as a lobbyist after consulting ethics officials. Lonergan’s sole employer listed on his lobbyist registration is Daniel, who is the only current lawmaker to have a personal lobbyist. Daniel said he pays Lonergan out of his own pocket and does not use campaign money to cover the expense.

The Washington Legislature adjourned sine die April 28.

During the 105-day legislative session, lawmakers passed House Bill 1195 amending the definitions of commercial advertiser and independent expenditure.

House Bill 1195 requires independent expenditures to be reported electronically with the Public Disclosure Commission if the aggregate value of similar expenditures from the same source exceeds $1,000.

The Legislature also passed House Bill 1379 raising the threshold for identifying and disclosing the top five contributors of a political advertisement sponsored by a political committee from $700 to $1,000.

House Bill 1379 requires political advertisements to disclose the sponsor’s top five contributors and if any are political committees the sponsor must also disclose the top three donors to those contributors.

The bills have been delivered to the Gov. Jay Inslee to sign, veto part of it, or veto all of it.

Last week, the Government Transparency and Campaign Finance Commission voted to raise contribution limits.

For statewide elected offices the contribution limits raised from $6,600 to $7,000 for primary and general elections.

Primary and general runoff elections limits were raised from $3,900 to $4,100 for statewide elected offices.

Contribution limits for all other offices were also raised from $2,600 to $2,800 for primary and general elections and from $1,400 to $1,500 for primary and general runoff elections.

The previous contribution limits had not changed since 2016.

Political candidates in Oklahoma will be able to accept $2,800 per election from individuals the next time they run.

The Federal Election Commission increased the individual contributions limit $100 to account for inflation. It is the first increase in four years.

The limit increase applies to primary, runoff primary, and general election ballots in 2020, as well as candidates in any special election this year.

Today, the Federal Election Commission (FEC) published the 2019-2020 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 $2,700 to $2,800 for both primary and general elections, allowing for a total of $5,600 for a federal candidate.

The limits on contributions by individuals to national party committees has increased from $33,900 to $35,500 per calendar year.

Individuals may now contribute $106,500 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.

The North Carolina State Board of Elections increased the contribution limit in the state to $5,400 for candidate committees and others that are subject to legal limits.

State law ties the amount to inflation based on the Consumer Price Index, which had a 4.7% increase from July 1, 2016, to July 1, 2018.

The new limit will remain in effect through December 31, 2020.

On October 18, the 6th Circuit U.S. Court of Appeals heard arguments to keep or overturn the permanent injunctions prohibiting certain portions of state campaign finance and ethics law from being enforced.

In 2017, U.S. District Judge William Bertelsman ruled the prohibition on lobbyists providing gifts and campaign contributions to lawmakers was unconstitutional.

The Kentucky Registry of Election Finance and the Kentucky Legislative Ethics Commission argued the campaign finance revisions are critical and do not eliminate speech but merely channel speech.

The plaintiffs argued the judgement was proper because the Legislature determined restrictions based on who the speaker was.

National:

For Women on the 2018 Campaign Trail, ‘Sexism’ Is No Longer a Forbidden Word
Connecticut Post – Avi Selk (Washington Post) | Published: 9/21/2018

Several women in high-profile national races this year have broken from decades-old conventional wisdom that cautioned female candidates against complaining of sexism, lest they be painted as weak or angry or to being accused of playing what Donald Trump called “the woman card” during his presidential campaign. Celinda Lake, a Democratic pollster, conducted a survey in 2012 that found fears of a backlash against speaking up were unfounded. But not until this cycle – after Trump’s win and the subsequent #MeToo movement to out powerful men accused of sexual assault – has she seen female candidates do so in numbers.

Federal:

‘Can You Do This?’: Russia probe conflicts rampant among Rosenstein replacements
Politico – Darren Samuelsohn and Josh Gerstein | Published: 9/27/2018

President Trump may think he is getting rid of a problem if he pushes Deputy Attorney General Rod Rosenstein out of the Justice Department. But cleaning house will hardly end the president’s headaches from special counsel Robert Mueller’s investigation into Russian election meddling and whether the Trump campaign coordinated with Moscow on its efforts. Several administration appointees in line for Rosenstein’s role overseeing Mueller’s probe come with their own baggage, from direct involvement in the investigation to recent work at law firms with clients mired in the inquiry.

Obama White House Counsel Gregory Craig Under Scrutiny by Prosecutors in Offshoot of Mueller Probe
Washington Post – Tom Hamburger | Published: 9/23/2018

Federal prosecutors have stepped up their investigation of prominent Washington, D.C. attorney Gregory Craig for work he conducted at his former law firm on behalf of the Ukrainian government in 2012, an effort coordinated by Paul Manafort. Craig’s case, and that of two Washington lobbyists who worked with Manafort on Ukrainian matters, were referred to federal prosecutors in New York, who appear to be focused on whether the three failed to register as foreign agents while working with Manafort’s Ukrainian clients. The investigation of Craig, along with lobbyists Vin Weber and Tony Podesta, has shaken K Street’s lobbying and legal community, which until recently had faced little scrutiny of its representation of foreign clients.

Political Nonprofits Seek Answers After Court Decision Targeting ‘Dark Money’
Washington Post – Michelle Ye Hee Lee | Published: 9/21/2018

Nonprofit advocacy groups historically have not been required to publicly disclose their donors, as political committees must. But a federal judge threw out a rule that allowed the groups to withhold donors’ identities, broadening the type of donors who would now be subject to disclosure. The U.S. Supreme Court declined to intervene in the case. The decision will no doubt shed more light on the contributors to politically active nonprofits, although exactly how much is uncertain as groups and federal officials take stock of the decision. In the absence of new regulation, nonprofit groups are left in a gray area, which could lead to new methods of avoiding disclosure and maintaining donor privacy.

From the States and Municipalities:

Alabama: Reform Panel to Vote on Changes to Alabama Ethics Law
AL.com – Mike Cason | Published: 9/20/2018

The Alabama Code of Ethics Clarification and Reform Commission will vote on proposals to amend the state ethics law at its next meeting in October, which will be sent to lawmakers. The Alabama Court of Criminal Appeals recommended the Legislature clarify the definition of a lobbying “principal” in its ruling upholding ethics convictions against former House Speaker Mike Hubbard. The court said it believed the law was applied correctly in Hubbard’s case but could envision other cases where the definition was problematic. The definition is important because the law places restrictions on principals like it does on lobbyists, such as prohibitions on giving money or gifts to public officials.

Florida: NRA Sway: For Florida officials, it’s always Hammer time
Tampa Bay Times – Steve Contorno | Published: 9/21/2018

Those who work in the Florida agency that oversees gun permits never know when National Rifle Association (NRA) lobbyist Marion Hammer will command their attention, or what about. Nights, weekends, and even holidays, she sends messages to senior department officials with complaints and demands. They often respond within minutes. Hammer’s singular power over Florida lawmakers, especially Republicans, is the stuff of Tallahassee legend. Yet according to a review of hundreds of Hammer’s emails with the state Department of Agriculture, her sphere of influence stretches far beyond gun legislation. Emails from 2014 to 2017 show the lobbyist involves herself in a wide array of day-to-day tasks of an agency that was accused five years ago in a lawsuit of being run by the NRA.

Illinois: Cook County OK to Restrict Campaign Cash from Lawyers, Others Seeking ‘Official Action,’ Appeals Court Says
Cook County Report – Jason Bilyk | Published: 9/25/2018

A state appellate court ruled Cook County has the power to make ethics rules that apply to county officers, finding the board of commissioners did not overstep in prohibiting real estate lawyers and others from contributing to the campaigns of county officials when they are seeking “official action” from the county.  While the county has for decades used its ethics ordinance to place limits on who can give money to county officials, and how much they can donate to their campaigns, the ordinance was amended in 2016 to extend restrictions which had been applied previously to lobbyists and contractors, now to reach “persons seeking official action from the county.”

Missouri: Clean Missouri Will Be on November Ballot After High Court Refuses to Hear Challenge
Kansas City Star – Alison Kite | Published: 9/24/2018

The Missouri Supreme Court will not reconsider a ruling allowing voters to decide on a ballot measure that would reform the state’s ethics laws. The decision reaffirms a state appeals court ruling letting the so-called Clean Missouri initiative appear on the November ballot as Constitutional Amendment 1. Opponents had claimed the initiative violates the state constitution by addressing too many topics. The measure would lower campaign contribution limits, eliminate nearly all lobbyist gifts, require a waiting period before lawmakers and their staffers can become lobbyists, and open legislative records. It also would turn the task of drawing legislative district maps over to a nonpartisan expert and reviewed by a citizen commission.

New York: Crystal Run Did Raise a Red Flag
WRAL – Chris Bragg (Albany Times Union) | Published: 9/25/2018

In a meeting with The Albany Times Union editorial board, New York Gov. Andrew Cuomo emphatically stated that Crystal Run Healthcare, had never warned his campaign of potential problems with its $400,000 in donations. Moreover, the governor said if the company had done so, Crystal Run would have effectively “admitted to a crime.” But in response to the newspaper’s questions about Cuomo’s statement, his campaign acknowledged what the governor said that day was not true: Crystal Run had indeed approached the campaign with concerns about its contributions. The FBI and the U.S. attorney’s office in Manhattan have been investigating whether 10 separate $25,000 checks from Crystal Run officials to Cuomo in October 2013 were reimbursed by the company through bonuses. If that occurred, it could violate state election law.

New York: Percoco Sentenced to Six Years for Corruption
Albany Times Union – Robert Gavin | Published: 9/20/2018

A judge sentenced Joseph Percoco, a former top aide to New York Gov. Andrew Cuomo, to six years in federal prison for accepting more than $320,000 in bribes from businesspeople looking to buy influence with state. The bulk of the bribes came in the form of a “low-show” job given to Percoco’s wife by an energy company that wanted to build a power plant in the Hudson Valley. While prosecutors did not accuse Cuomo of any wrongdoing, the trial cast a shadow over his administration, especially in light of early campaign promises when he was first elected to clean up Albany.

North Carolina: NC House Speaker Tim Moore’s Legal Contract with Start-Up Raises Questions
Raleigh News and Observer – Dan Kane | Published: 9/25/2018

A short time into Anne Whitaker’s tenure as chief executive officer of KNOW Bio, a pharmaceutical start-up, she learned of a legal services contract given to an attorney she had never heard of for services she felt were of questionable value for a company that was barely a year old. The lawyer was North Carolina House Speaker Tim Moore. When she learned the details of his contract and his work, which struck her as federal lobbying, Whitaker said she terminated it with the support of company board members. Whitaker said KNOW Bio’s co-founder, Neal Hunter, had given Moore the contract. What Whitaker said she did not know is that Moore, as the powerful Rules Committee chairperson, had earlier helped Hunter with a controversial development that was in danger of failing.

Oklahoma: Oklahoma Ethics Commission Hit with Federal Lawsuit Over Gift Rules
The Oklahoman – Nolan Clay | Published: 9/26/2018

The Institute for Justice is asking a federal judge to find Oklahoma’s gift-giving restrictions do not apply to informational materials. Over the last few years, the state Ethics Commission has imposed stricter rules on what lobbyists and the organizations they represent can give to lawmakers and other state officials. Under the current rules, the institute could give a book to a state government official in recognition of a special occasion like election to office if the book costs $100 or less. It also could give a state official a $10 book once a year. In light of those limitations, it is “effectively impossible” for the organization to distribute a copy of the book “Bottleneckers: Gaming the Government for Power and Private Profit,” which is valued at $15, to educate lawmakers, the institute’s attorneys said.

Oklahoma: Oklahoma Supreme Court Rejects Ethics Commission Request for More Money
The Oklahoman – Nolan Clay | Published: 9/25/2018

The Oklahoma Supreme Court rejected the state Ethics Commission’s request for more funding. The commission chairperson has accused legislators of cutting the agency’s appropriation because stricter rules had been imposed on their conduct. The commission asked the justices to take action to get it enough money to perform at least its basic duties. It complained lawmakers have underfunded it for years in violation of the Oklahoma Constitution. To avoid running out of money, the commission is now charging candidates, lobbyists, PACs, and others more to register.

Tennessee: Nashville Judge Rules Against State in Lawsuit Over ‘Blackout Period’ for PACs
The Tennessean – Joey Garrison | Published: 9/27/2018

Davidson County Chancellor Ellen Hobbs Lyle struck down a Tennessee law that prohibits nonpartisan PACs from giving campaign contributions within 10 days of an election. Under the law, only committees controlled by a political party have been able to donate to candidates 10 days out from an election. “Elected officials and political parties cannot lawfully censor disfavored political speakers while reserving special treatment in the political process for themselves,” said Daniel Horwitz, an attorney for Tennesseans for Sensible Election Laws. Deputy Attorney General Janet Kleinfelter said the state intends to appeal the decision.

The Oakland Public Ethics Commission and OpenOakland, a civic technology group, have jointly released a new version of their web tool, Open Disclosure, to track political contributions in Oakland elections.

The corresponding app, to be released on September 25, will show the source and spending of campaign funds for both Oakland city candidates and ballot measure committees.

In addition to displaying sources of contributions, the new release will also include data on spending by independent expenditures.

On September 15th, Chief Justice of the United States John G. Roberts, Jr. issued an order staying a lower federal district court’s order invalidating a Federal Election Commission (FEC) campaign finance disclosure regulation. Robert’s stay was decided on Saturday after the U.S. Court of Appeals for the District of Columbia Circuit denied an emergency motion for the stay made earlier the same day.

On August 3, a federal district court had ruled a campaign finance disclosure regulation, followed for decades by the FEC, failed to uphold disclosure requirements required by a federal statute. Chief Judge Beryl A. Howell of the United States District Court for The District of Columbia issued an order, in CREW v. FEC, vacating 11 C.F.R. §109.10(e)(1)(vi), but stayed the vacatur for 45 days to give time for the FEC to issue interim regulations comporting with the statutory disclosure requirements of 52 U.S.C. §30104(c). The court also has allowed the FEC 30 days to change an earlier FEC dismissal to conform with the court’s ruling.

The case originated because of independent expenditures made in a 2012 Ohio senate race by the non-political social-welfare nonprofit Crossroads Grassroots Policy Strategies (Crossroads GPS), an affiliate of the American Crossroads Super PAC. Crossroads GPS did not report donors when reporting its independent expenditures, while it acknowledged receiving contributions over $200, arguing the donors did not donate funds directly tied to any specific reported expenditure, as the FEC interpreted 11 C.F.R. §109.10(e)(1)(vi) to require. Non-political committees making independent expenditures over $250 in a calendar year must comply with disclosure obligations closely analogous to those imposed on political committees.

The vacated regulation required the identification of each person who made a contribution in excess of $200 to the person filing a disclosure report, including for non-political 501(c)(4) non-profit entities making independent expenditures, if the contribution was made for the purpose of furthering the reported independent expenditure. The district court found the regulation, as construed and applied by the FEC, did not require the disclosure of donors, absent the donor’s express agreement that the funds be used for the specific expenditures reported to the FEC, even though the donor may otherwise support and in fact contribute for the purpose of funding those expenditures.

The district court found the regulation impermissibly narrows the mandated disclosure in 52 U.S.C. §30104(c)(2)(C), which requires the identification of such donors contributing for the purpose of furthering the non-political committee’s own express advocacy for or against the election of a federal candidate, even when the donor has not expressly directed that the funds be used in the precise manner reported.

Can I use my company’s federal PAC to make contributions to candidates for state office?

With the exception of Massachusetts, contributions from a federal PAC to non-federal state candidates are permissible.  However, the challenging aspect of making these types of contributions is that every jurisdiction has different rules regarding how to register and report such contributions.  To make this a little easier to digest, we have broken down the states into five categories.  Please note:  regardless of the registration and reporting process, in all jurisdictions the federal PAC is subject to the contribution limits according to the law of that jurisdiction.

Category #1:  You do not have to do anything.  Simply make the contribution to the state candidate as you would any other contribution from your federal PAC.  This option is usually only available if your FEC filings are current and complete.  Examples of these jurisdictions include Alabama, Delaware, South Dakota, and West Virginia.

Category #2:  You must register and report as a state PAC.  In these instances, your federal PAC is treated no differently than any other out-of-state PAC.  You must register your federal PAC using that jurisdiction’s registration forms.  You must report your contributions using state forms and file your reports according to that jurisdiction’s filing deadlines.  Examples of these jurisdictions include Connecticut, Georgia, and Tennessee.

Category #3:  You may file your FEC registration and reports in lieu of state registrations and reports. The tricky thing about these jurisdictions is keeping track of whether you file your reports according to the jurisdiction’s reporting schedule or the FEC’s reporting schedule.  Examples of these jurisdictions include Kentucky, New Mexico, and North Dakota.

Category #4:  You have to register using state form and report using your FEC filings, or vice versa. Examples of these jurisdictions include Illinois, South Carolina, and Virginia.

Category #5:  You have a choice regarding how to register and report.  These two jurisdictions include Iowa and Kansas.

As was mentioned, in Massachusetts, federal PACs may not contribute to campaigns in that state.  Federal PACs must establish a separate segregated fund for contributions in Massachusetts and comply with the same requirements as in-state committees.  The separate segregated fund must be established as a depository account in a financial institution authorized to transact business in Massachusetts and having its main office, or a branch office, in Massachusetts.

We have not listed PAC rules for all the states, only examples of some states. If you have a question on a state not listed here, please contact us at 330-761-9960