Welcome to the final summer abridged edition of the Political Law Playbook, published as Congress returns from their August recess and as Washington and the country gear up for the final stretch into the 2022 midterm elections. Of particular note in this edition is an uptick in Foreign Agents Registration Act (FARA) scrutiny for internationally-linked non-profits and think tanks.
As we highlighted in the March 2022 edition of the Playbook, the FARA Unit at the Department of Justice (DOJ) has increasingly issued public guidance indicating that non-profits and think tanks can possibly engage in FARA registrable activities. Last month, the FARA Unit released an advisory opinion where it instructed a consulting firm to register under FARA for: (a) conducting outreach to policymakers about participation in events on behalf of a research collaboration between a foreign government and a number of non-governmental partners; and (b) preparing a study funded by a foreign country that would foster bilateral exchange and cooperation between that nation and the US. These are common activities for many think tanks and non-profits that have an international focus, and as such the latest FARA Unit guidance could open up such entities to registration obligations to the extent that activities are done at the behest of a foreign government.
In light of the FARA Unit’s recent focus in this space, four Republican senators sent a letter to the DOJ concerning the potential FARA implications of the Brookings Institution’s interaction with the Qatari government in creating the Brookings Doha Center. Brookings, one of the most well-known and funded think tanks in Washington, did not register under FARA for the collaboration with the Qatari government, prompting the request that the DOJ investigate the matter to assess whether the joint project was completed in accordance with the tenets of FARA.
Federal Elections & Campaign Finance
FEC Approves Google Pilot Program Allowing Political Fundraising Emails to Bypass Spam Filters – In a 4-1-1 vote last month, the Federal Election Commission (FEC) issued an advisory opinion ruling that will allow Google to continue with a pilot program that will allegedly work to prevent campaign finance emails from automatically ending up in recipient spam folders. In the opinion response adopted by a majority of the FEC Commissioners, the agency concluded that the Google program would not amount to something of value to political candidates that would violate existing campaign finance laws.
TikTok to Restrict Paid Political Posts Ahead of 2022 Midterms – TikTok announced last month that it would work to prevent content creators from posting paid political messages on the short-form video app as part of its preparation for the US midterm elections in November. While TikTok has banned paid political ads since 2019, campaign strategists have skirted the ban by paying influencers to promote political issues.
Federal Lobbying & Ethics
House Democrats To Propose Ban on Lawmakers Trading Stocks – New legislation will be introduced this month by House Democrats that will aim to ban lawmakers, their spouses and senior congressional staff from trading stocks unless such security transactions take place within a qualified blind trust. This proposed bill follows in the footsteps of similar pieces of legislation that have been introduced in Congress over the past year that seek to ban or limit securities transactions by lawmakers. The pending House legislation reportedly mirrors a Senate bill introduced last February – the Ban Congressional Stock Trading Act. That bill contains legislative language requiring all sitting members of Congress, as well as their spouses and children, to divest from specified types of investments or to place their assets in a qualified blind trust within 120 days of the bill’s enactment.
FBI Arrests Ex-Congressman TJ Cox on Charges of Fraud and Money Laundering – The FBI recently arrested TJ Cox, a Democrat who represented California’s 21st District from 2019 to 2021, on charges including 11 counts related to alleged money laundering and one count of purported financial institution fraud. The indictment, filed last month, asserts that Cox schemed to fund and reimburse people close to him for donations to his campaign by diverting $1.7 million from companies he was affiliated with into unauthorized bank accounts that he created. If Cox is convicted of the enumerated charges in the indictment he could face up to 20 years in prison and a substantial fine.
Foreign Agents Registration Act (FARA)
FARA Unit Releases Advisory Opinion Potentially Impacting Think Tanks – Last month, the FARA Unit of the DOJ released an advisory opinion indicating that think tanks and other non-profit organizations may be subject to FARA registration obligations if they are undertaking certain activities at the request of foreign governments. In the advisory opinion, the FARA Unit advised that a consulting firm should register under FARA for both conducting outreach to policymakers about the participation in events on behalf of a research collaboration between a foreign government and a number of non-governmental partners, and preparing a study funded by a foreign country that would foster bilateral exchange and cooperation between the US and that nation’s government.
Senators Send Letter to DOJ Regarding FARA Compliance Questions Concerning the Brookings Institution – Last month, four Republican senators on the Senate Judiciary Committee sent a letter to Attorney General Merrick Garland regarding FARA compliance questions concerning the Brookings Institution’s past partnership efforts with the Qatari government to establish the Brookings Doha Center. Senators Grassley (R-IA), Cornyn (R-TX), Cruz (R-TX), and Cotton (R-AR) indicated in their correspondence to the DOJ that they believe that Brookings was operating as a foreign agent of the Qatari government during this partnership, and thus should have registered under FARA for its work in establishing and operating the Doha Center.
Non-Federal Elections & Campaign Finance
Philly’s Board of Ethics Will Consider Banning Super PAC “Redboxing” Ahead of the 2023 Mayoral Race – The Philadelphia Board of Ethics recently heard testimony on a proposed amendment to the city’s campaign finance regulations dealing with the increasingly prevalent act of “redboxing” by candidate committees seeking to communicate with outside independent expenditure groups. Redboxing, as we have previously discussed in the Playbook, is a strategy that has been employed by a number of candidates for federal office where their campaign committees convey instructions to potential independent expenditure groups (i.e., Super PACs) via internet communications posted for public consumption in designated areas of their websites. The strategy emerged out of the federal regulatory safe harbor for “publicly available information”, which is also common at the state and local level in some jurisdictions. Seeking to nip the practice in the bud at the city level, the Philadelphia BOE is considering changes to its rules that would limit the practice as a tool to circumvent anti-coordination rules in city elections.
PA Supreme Court Upholds Mail Voting Law – The Pennsylvania Supreme Court recently reversed a lower court decision in finding that a state law allowing voters to mail ballots without providing a reason is constitutional. The law in question passed in 2019 with bipartisan majorities, and paves the way for any eligible PA voter to cast a ballot by mail in the 2022 midterms and beyond.
North Carolina Elections Board Looking For Public Input Regarding Political Committee Regulations – The North Carolina State Board of Elections is seeking public comment on proposed rule changes regarding political committees that fail to file timely financial disclosure reports. The proposed rules, among many things, seek to better define the process by which a candidate or committee treasurer can request a good cause waiver for any civil penalty assessed by the state board for a late campaign finance submission. The recommended changes also seek to clarify the means by which the state will notify parties of their ability to submit a written explanation before the board imposes additional fines for failing to file required campaign finance reports.
Non-Federal Lobbying & Ethics
Former Indiana State Senator Sentenced to 10 Months Imprisonment – Former Indiana state Senator Brent Waltz was sentenced last month to 10 months imprisonment after he acknowledged his role in a scheme to route $40,500 in illegal contributions to his failed bid for Congress. The sentencing pronouncement follows in the wake of his decision in April of this year to plead guilty to two separate felonies: making and receiving conduit contributions by way of straw donors; and making false statements to the FBI.
Former Tennessee House Speaker Glen Casada Pleads Not Guilty to Federal Corruption Charges – Former Tennessee House Speaker Glen Casada and his aide Cade Cothren were indicted late last month on federal criminal charges related to alleged money laundering, bribery, conspiracy, honest services wire fraud, and other related activities. Prosecutors claim both men lead a political consulting firm run under a false identity for the purposes of facilitating business from the Tennessee General Assembly and generating financial kickbacks for personal gain.
Non-Profit Engagement and Disclosure
Conservative Non-Profit Received $1.6 Billion From Single Donor – In the largest ever public and single contribution to a politically focused non-profit, the Utah-based non-profit Marble Freedom Trust received $1.6 billion from a single donor, Barre Seid. Seid, a Chicago electronics company executive and philanthropist who has previously been tied to smaller anonymous contributions to other conservative groups, donated the contribution in the form of stock.
The Courts and Free Speech
Court Nixes Rule Barring US Court Workers’ Political Speech – In a recent 2-1 decision, the US Court of Appeals for the DC Circuit affirmed a lower court’s ruling that restrictions on the political activities placed upon employees of the judicial branch of the federal government violated their First Amendment rights. Restrictions were adopted by the Administrative Office of the US Courts during the Trump Administration, and barred employees of the federal court system from attending campaign events, giving money to candidates or engaging in other off-duty partisan political activities.
Political Law Practice Pointers
As the November 8, 2022 midterm elections loom, we have now entered the 60-day period that triggers federal electioneering communications reporting with the FEC. This reporting requirement is particularly important for 501(c)(4) “issue advocacy” groups that disseminate issue ads or public policy communications that reference federal candidates, but refrain from express advocacy language mentioning particular elections or asking for direct support of or opposition to specified candidates. Under applicable federal law, electioneering communications are defined as television, radio or broadcast communications disseminated within 60 days of an election that refer to a clearly identified federal candidate and are distributed to the relevant electorate for such candidate. A communication must be receivable by 50,000 or more persons in a candidate’s district or jurisdiction to be considered distributed to the relevant electorate. Communications sent out to the electorate via social media, websites, or emails do not qualify as electioneering communications under federal law.
Within the 60-day period prior to a federal election, individuals, corporations, and other entities that disseminate electioneering communications must file 24 hour reports with the FEC each time they spend more than $10,000 for a communication. Under applicable law, each electioneering communication must also contain a disclaimer identifying who paid for the communication and indicating whether any candidate or candidate’s committee authorized the communication. All disclaimers must be clear and conspicuous regardless of the medium in which the communication is transmitted. A disclaimer is not clear and conspicuous if it is difficult to read or hear, or if the placement is easily overlooked.
The Dentons Political Law Team regularly advises clients in this space on the compliance obligations of preparing and disseminating electioneering communications in the run-up to federal elections. If you have questions regarding a proposed electioneering communications program before the November midterms, please reach out to us for assistance.
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