With summer well under way across the country, welcome to an abridged July version of the Political Law Playbook. This edition highlights changes from the Federal Communications Commission (“FCC”) to regulations on automated “robocalls,” significant Congressional action targeted at curbing foreign influence in the US, and a federal court ruling that enjoins an alleged campaign of governmental censorship of political speech by the Biden Administration.
The plaintiffs in the pending First Amendment litigation – the States of Missouri and Louisiana – assert that the federal government actively communicated and coordinated with social media platforms to restrict online political speech. While the federal district court’s preliminary injunction has since been appealed by the Biden Administration, the allegations – if established as true – would constitute an unprecedented campaign of content-based government censorship of political speech. On Capitol Hill this summer, the Senate recently passed legislation aimed at increasing disclosure and reducing the influence of foreign actors in American politics. Meanwhile in the states, the summer season brings with it a ramp up of campaign efforts by political organizations and candidates as these stakeholders begin to look toward as the 2024 primary season just around the corner.
Federal Elections & Campaign Finance
New FCC Restrictions Governing “Robocalls” Go into Effect This Week – Updated regulations from the Federal Communications Commission concerning artificial or pre-recorded telephone calls (i.e. “robocalls”) go into formal effect this week. These new rules contain several changes and modifications intended to protect consumers that will have a direct impact on nonprofit organizations and political entities who communicate with the public across the country. Notably, under the new regulations, callers must provide an automatic “opt-out” option within two seconds of the caller identifying themselves via ether an interactive voice or key-pad mechanism. Robocalls must now also identify the name of the individual who recorded the call and the name of the organization sponsoring the call. Organizations making robocalls must also now have a written policy in place and on-demand for how they maintain a do-not-call list.
The Super PAC Frenzy Redefining Campaign Operations – The wind-up to the 2024 election this summer has seen an increase in Super PAC activity on-the-ground in key battleground states across the country. A host of organizations in many target jurisdictions have already commenced activities such as door-knocking, text-based fundraising, hosting political events, disseminating issue and candidate-focused advertising, and distributing promotional and advocacy materials. In support of these efforts, this new batch of Super PACs has already spent more than $14 million in independent expenditures toward the 2024 primary – a sharp increase from the approximate $1 million spent at this time in 2015. The activities of the 2024-cycle Super PACs also appear to be further testing the legal limits of coordination with federal candidates under applicable law. To this end, many watchdog organizations have remarked on what they describe as a “new level of brazenness” by Super PACs seeking to involve themselves in campaign activities and vice versa. The groups engaged in such activities, however, maintain that they are fully compliant with applicable law.
OpenSecrets Report Finds Record Contributions from “Dark Money” Groups and Shell Companies in 2022 Midterm Elections – A recent report published by OpenSecrets regarding the 2022 midterm elections found that federal political committees accepted $615 million in so-called dark money from nonprofit entities and “shell companies” that are not required to report their baseline donors. This represents a threefold increase in “dark money” contributions for 2022 as compared to the 2018 midterm cycle. The report also highlighted what it classified as a simultaneous dip in federal political disclosure by Section 501(c)(4) groups during the 2022 cycle, with such politically-active nonprofits reporting just $25 million in spending – the lowest amount recorded since the Citizens United decision in 2010. The report posits several reasons for the simultaneous trends of increased dark money spending and decreased disclosure, and likewise speculates that the 2024 election will see a continued uptick in what it terms as “gray money” political engagement – organizational spending that is either only partially reported or reported through multiple layers of public disclosure.
Presidential Candidate Vivek Ramaswamy Offers 10% Commission To His Grassroots Fundraisers –Upstart Republican presidential candidate Vivek Ramaswamy has come up with a novel fundraising method for his 2024 White House bid – offering grassroots fundraisers a 10% “commission” of the total amount of funds they can raise. Ramaswamy’s campaign, which is largely self-funded, has created a dashboard for fundraisers to track their progress against stated goals and developed a series of “special awards,” such as a personal call with the candidate and event invites, to incentivize increased engagement by stakeholders. His campaign states that the program has been legally vetted and approved by the FEC, while skeptics question the ethical considerations raised by such a fundraising program.
Foreign Agents Registration Act
Senate Passes Bipartisan Bills to Counter Foreign Influence in US Policy – The Senate recently passed two bipartisan bills that would reform the federal government’s current approach to foreign agent registration, signaling potential changes on the horizon for those representing foreign interests before the US government. Both the Lobbying Disclosure Improvement Act (S. 264) and the Disclosing Foreign Influence in Lobbying Act (S. 829) are targeted at closing a loophole that permits registered lobbyist to forego additional registration as a foreign agent under FARA. The Lobbying Disclosure Improvement Act would require registered lobbyists to disclose whether they were exempt from FARA’s registration because of their registered lobbyist status, helping the DOJ to identify which individuals are utilizing the exemption. The Disclosing Foreign Influence in Lobbying Act would require lobbyists to identify any foreign countries or political parties involved in the direction, planning, supervision, or control of their activities, regardless of whether the foreign entity makes any financial contribution to such activities.
Dual Citizen Indicted for Failure to Register Under FARA – The Department of Justice recently indicted a dual US-Israeli citizen, Gal Luft, on a series of federal criminal charges, including failure to register as an agent under FARA for his purported activities to advance the agenda of the Chinese government and China-based principals. Luft allegedly agreed to recruit and pay a former high-ranking US government official on China’s behalf, including in 2016 while the former official was an adviser to then-President-elect Donald Trump. Luft also allegedly wrote a dialogue between his co-conspirators in which he included information favorable to China. The dialogue was then published in a Chinese newspaper online and sent to individuals in the US.
Non-Federal Elections & Campaign Finance
New Ballot Measure Seeks To Restrict Spending On Alaska Elections – In the wake of Alaska’s state contribution limits being overturned by the Ninth Circuit Court of Appeals in 2021, the state has finally proposed new political donation limits. In 2022, the midterm elections in the state proceeded with no giving caps, and saw some donors giving up to $100,000 in the state’s gubernatorial elections. Now, a new ballot measure submitted to the Alaska Division of Elections would implement a $2,000-per cycle limit on direct giving to an individual candidate’s campaign and a $5,000-per year limit on an individual’s giving to a political party or other group. If approved, the ballot measure would be put to a public vote during Alaska’s 2024 elections.
Non-Federal Lobbying & Ethics
Canada Overhauls Its Lobbyist Code of Conduct – Canada’s Lobbying Commission has made its first changes to the country’s federal lobbying laws in eight years, with an eye towards ensuring “ethical” and “transparent” lobbying conduct. Under the new rules, national lobbyists are now restricted from “seeking favors” from public office holders where the recipient could be seen as having a sense of obligation towards the lobbyist, whether due to political work or a close relationship. The updates also include new definitions of what constitutes “political work,” “gifts,” and “close relationship,” among others. Canada’s Lobbyist Code of Conduct previously prohibited all gifts from lobbyists, but the new amendments allow for the provision of certain “low value gifts”, other gifts of appreciation, and certain promotional items.
Hawai`i Governor Josh Green Signs 18 Separate Ethics Bills Designed to Rebuild Public Trust – Hawai`i’s state government continues to add to its rooseter of government ethics laws, spurred on by a 2022 bribery scheme involving two state legislators. In recent months, Governor Josh Green signed a package of seven lobbying and ethics laws into law and likewise secured the promulgation of nearly two dozen regulations to reform government transparency in the state. The bills signed into law add increased fines for political committees that fail to comply with state registration and reporting requirements as well as other required financial disclosure obligations. The new laws and regulations also institute a ban on registered lobbyist contributions to officials during the legislative session and increase penalties for public corruption crimes. A complete list of the bills Governor Green signed into law can be found here.
Nonprofit Compliance and Disclosure
Federal Prosecutors Investigate Political Nonprofit Groups for Fund-Raising Fraud – Two recent federal subpoenas issued by the US Attorney’s Office for the Southern District of New York reveal that federal prosecutors are scrutinizing 10 political nonprofit groups for potentially defrauding donors. Prosecutors are seeking recordings of fundraising calls made by five of these groups in an effort to crack down on so-called scam PACs. As covered in previous editions of the Playbook, scam PACs often promise prospective donors that their contributions funds will be used to help particular candidates or committees, only to use these funds for the benefit of the PAC operators. The five groups under harshest review have purportedly raised over $89 million since 2014, with a majority of these funds stemming from robocall campaigns. The investigation into the targeted committees’ records indicates that one of the targeted PACs has funneled up to 90 percent of contributions it received back into robocall fundraising efforts, while spending just one percent on advertising, get-out-the-vote efforts, or donations to candidates.
The Courts & Free Speech
Louisiana Federal Judge Enjoins Federal Officials From Contacting Social Media Companies – The US District Court for the Western District of Louisiana recently enjoined dozens of federal agencies and officials from contacting social media companies for the purpose of censoring social media information. The injunction comes as part of the case Missouri v. Biden, in which the States of Missouri and Louisiana allege that government actors have colluded with and/or coerced social-media platforms to suppress disfavored speakers, viewpoints, and content on social-media platforms using public pressure campaigns, private meetings, and other forms of direct communication regarding content characterized by the defendant as misinformation, disinformation, and malinformation. The plaintiffs cite First Amendment concerns with the defendants’ activity, alleging that their conduct amounts to government censorship via directed private action. Presiding Judge Terry A. Doughty issued a preliminary injunction on free speech grounds, calling Defendants’ actions a “far-reaching and widespread censorship campaign.” The Biden Administration has since appealed the injunction.
Practice Pointers
Although we are in the midst of a sweltering summer, July is one of the busiest months of the year from a federal, state, and local political law compliance reporting perspective. Thus, it is timely to emphasize the importance of maintaining robust recordkeeping and disclosure systems. Campaign finance, lobbying, and corporate filing requirements vary significantly by jurisdiction both in terms of when reports are due and what information must be disclosed. As such, businesses and organizations engaged in such activities must be prepared to aggregate relevant reporting data from their teams and navigate the host of reporting systems that exist at the federal and non-federal levels. Because of the pure volume of reports due during this time period, it is important for regulated entities to have an understanding of upcoming filing deadlines and reporting commitments, particularly with an election season at hand. As Dentons Political Law Team regularly advises clients on lobbying, corporate, and campaign finance filings, please do not hesitate to reach out if your organization or client has questions.
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