February 2019 Political Compliance Update

Political compliance continues to come under scrutiny from both government investigators and the media. Politically active individuals and companies should remain vigilant concerning their registration and disclosure obligations. The following are a few recent changes and developments in the areas of federal and state lobbying, campaign finance and pay-to-play.

Federal:

The Federal Election Commission (FEC) recently released updated contribution limits for individuals, political action committees (PACs), and state and national party committees for the 2019-2020 election cycle. The contribution limits were adjusted for inflation as required by the Bipartisan Campaign Reform Act of 2002. Click here to download a chart with the new limits. The revised limits affect contributions made by individuals and non-multicandidate PACs.

The threshold for disclosing lobbyist bundlers has also increased for 2019 by $500. The FEC published new expenditure limits, and the bundling disclosure threshold for federal lobbyists increased from $18,200 to $18,700. Federal law and the FEC now requires all authorized federal candidate committees, leadership political action committees and political party committees to disclose all contributions bundled by lobbyists and lobbyists’ political action committees.

New York State:

Last summer, New York State codified a long-standing placement agent ban into law, and the Joint Commission on Public Ethics (JCOPE) issued new lobbying regulations.

In 2009, New York State Comptroller Thomas DiNapoli issued a policy banning the use of placement agents or intermediaries for the purpose of introducing a fund or external investment manager to the New York Common Retirement Fund. Effective August 2018, the use of placement agents is also prohibited under state law.   

The new lobbying regulations took effect January 1, 2019. The regulations require lobbyists to identify both who is paying for their services and who the services are intended to benefit—the contractual client and the beneficial client, respectively. Additionally, lobbyists will need to include greater specificity regarding lobbying activity, including reporting the name of public officials lobbied and their government office and previously non-reportable information on grassroots lobbying and the use of social media, among other changes.

While the new lobbying regulations do not have the force and effect of law, JCOPE has stated the regulations will shape how the agency views and enforces lobbying registration and disclosure. Companies and individuals lobbying in New York State should act accordingly. 

New Mexico:

On February 4, 2019, Governor Michelle Lujan Grisham signed Senate Bill 191, titled Lobbyist Reporting Requirements. The bill, which closes an inadvertent loophole from previous lobbying disclosure legislation, requires employers and lobbyists to disclose the cumulative total of all expenditures of less than $100 made or incurred during a covered reporting period. These expenditures must be separated into different categories: meals and beverages, entertainment and other expenditures. SB 191 will become effective July 1, 2019.

Montana:

The U.S. Supreme Court recently declined to hear a challenge to Montana’s political contribution limits in Lair v. Mangan. Proponents of the case viewed the low limits—$340 per election for most statewide offices—as violating the First Amendment, while those opposed viewed the limits as encouragement for more civil engagement. The decision ends seven years of legal challenges, and, for the time being, maintains states’ ability to restrict how much individuals or entities can contribute to political candidates and committees.

Illinois:

Illinois’ pay-to-play laws are being challenged in federal court by a Chicago-based real estate firm after losing a contract when the company’s founder made political contributions in violation of the state’s procurement code. The state’s pay-to-play laws prohibit government contractors or affiliated persons from contributing to a political candidate for a state office that oversees the awarding of contracts that the contractor currently holds or seeks to hold. The founder of the real estate firm violated the state procurement code by making contributions to Illinois gubernatorial candidates—whose office oversaw the awarding of the contract in question—causing him to lose a one-year deal with the state. The founder is arguing that his First Amendment rights of free speech and Fourteenth Amendment rights of equal protection under the law were violated, and further seeks a temporary injunction to void the state’s decision. To avoid losing business and incurring costly litigation, individuals and companies who do business or seek to do business with public entities should consult applicable pay-to-play laws and regulations prior to making any political contributions.

Contact Information

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