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Dentons & McKenna Long to Merge, Giving Clients a Competitive Edge

Dentons & McKenna partners approve merger. Learn more about how clients inside the US will gain unrivaled access to markets around the world and international clients will enjoy increased strength and reach across the US.

Learn more at http://www.dentons-mckenna-combination.com/

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Dentons & McKenna Long to Merge, Giving Clients a Competitive Edge

FEC Increases Political Contribution Limits, Coordinated Party Expenditure Limits and the Lobbyist Bundling Disclosure Threshold

This week, the Federal Election Commission (“FEC”) published a formal notice in the Federal Register adjusting certain political contribution and expenditure limits and the lobbyist bundling disclosure threshold for inflation in accordance with the Consumer Price Index. In the individual contribution context, the Commission increased the amount a person may contribute to a candidate for federal office from $2,600 per election to $2,700 per election. As a result of this change, an individual may now contribute up to $5,400 per candidate during the 2015-2016 election cycle to any candidate participating in both a primary and general election. The FEC’s adjustment of the contribution limit is retroactive to November 5, 2014, so any 2016 primary contribution given late last year may be legally supplemented by the donor to match the new limits.

In addition to raising the cap on political giving to individual candidates at the federal level, the FEC’s action adjusts the existing annual limit on the amount a donor may give to the general account of the national political party committees – such as the RNC and DNC. In the 2015-2016 cycle, an individual may now contribute up to $33,400 per year to the general account of either party, up from $32,400 in the last cycle. This small uptick in the cap on giving to the national party committee general account also incrementally raises the amount an individual may legally give to the new specialized “convention”, “party headquarter building”, and “legal fund” accounts created by the parties in the wake of last year’s omnibus spending legislation. An individual donor may now give up to $100,200 per year to each of these special accounts, which the national parties can utilize to fund various expenses related to the presidential nominating conventions, upkeep of their party headquarter buildings, and election recounts or other party legal proceedings. For application purposes, the increased limits for giving to a national party, in either the general account or special account context, are retroactive to January 1, 2015.

In conjunction with raising the individual contribution limits for inflation, the FEC also increased the expenditure limitations it places on “coordinated party expenditures” made by national and state party committees in conjunction with general (or special) elections held in the House of Representatives and U.S. Senate. For coordinated expenditures in states with more than one congressional district, the election cycle limit has been raised to $48,000 for 2015 from $47,200 in 2014. The corresponding limit for Senate candidates has also been adjusted for inflation, with the amount of increase varying from state to state, depending on the state’s voting-age population. In Georgia, for example, the coordinated expenditure cap for Senate candidates increased from $708,900 in 2014 to $730,200 for 2015. In high-population states like California and New York, the coordinated expenditure cap increased to $2,847,100 and $1,490,100, respectively.

Another important aspect of the recent FEC notice was the increase in the lobbyist bundling disclosure threshold for political campaign committees. In 2014, a campaign committee was required to disclose to the FEC those contributions it received that were bundled by federal lobbyists/registrants and lobbyist/registrant PACs once such contributions aggregated to $17,300 in value. For 2015, however, the FEC increased this reporting threshold to $17,600 so as to keep up with inflation.

FEC Increases Political Contribution Limits, Coordinated Party Expenditure Limits and the Lobbyist Bundling Disclosure Threshold

A Call for Contribution Limitations from the Bar

The American Bar Association (ABA) has weighed in on a proposal to prohibit federal lobbyists from contributing to, or raising money for, those they seek to influence on Capitol Hill. Yesterday, the ABA’s House of Delegates approved a resolution calling for several significant changes to the Lobbying Disclosure Act – the federal legislation governing lobbyist registration and disclosure.

Of significance to this blog, the resolution calls upon Congress to amend the Act to prohibit lobbyists from working their trade with any member of Congress for whom he or she has raised money in the past two years. The resolution also recommends a refinement of the definition of “lobbyist” to enhance registration and disclosure. With respect to contributions by such lobbyists, the resolution recommends mandating that a federally-registered lobbyist may not:

(a) lobby a member of Congress for whom he or she has engaged in campaign fundraising during the past two years;

(b) engage in campaign fundraising for a member of Congress whom he or she has lobbied during the past two years;

(c) make or solicit financial contributions to the reelection campaign of a member of Congress whom the lobbyist has been retained to lobby for an earmark or other narrow financial benefit; or

(d) enter into a contingent fee contract with a client to lobby for an earmark or other narrow financial benefit for that client.

The proposal is likely to enjoy enhanced stature because of the high caliber, and bi-partisan bona fides of the task force issuing the underlying report recommending the changes this past January. Co-chairs to the ABA task force included former Republican FEC Commissioner Trevor Potter, noted Democratic attorneys Rebecca Gordon and Joseph Sandler, and former Reagan Solicitor General and current Harvard Law School professor Charles Fried. Nothing says “bipartisan” and “mood of America” like agreement between former counsel to Obama for America, John McCain 2008, the Gipper, and Stephen Colbert.

Already, the American League of Lobbyists (ALL) is responding to this shot across its bow with a promise to release a report of its own in response to the ABA’s proposals. ALL President Howard Marlowe has also signaled that the League may embark on an effort kill this portion of the proposal before it gains any traction.   As reported in Roll Call, Marlowe acknowledged “the significance of money in the policymaking process” represents a “significant” problem, but then pivots to signal an effort to kill the proposal with the backhanded compliment that while the leagues’ proposal will be similar, “[t]he ABA knows ‘that they are on the short end of the stick constitutionally when they’re doing that, and it’s not likely to pass muster.’” Marlowe also reached out to Politico to characterize the proposed contribution ban as “not practical at all.”

You have to give ALL props for trying, but there would appear to be far less constitutional infirmity in this proposal, which simply prohibits lobbyists from plying their regulated trade with those they have previously supported politically, than we have seen in other attempted bans on free association and expression covered and criticized by this blog in the past.

There is an old legal saying that “good lawyers know the law, great lawyers know the judge.” The ABA’s proposal looks to refine lobbying effectiveness more towards “what you know” and less towards “who owes you.”  The ABA has captured the mood of the country with a sensible proposal that is as likely to enjoy as much legislative success as anything trying to make its way through an otherwise dysfunctional  legislative environment.

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A Call for Contribution Limitations from the Bar

A Thoughtful Response to a Past Blog Exchange: Is the “Stick” of Regulation Preferable to a Disclosure Scheme?

This week, CityEthics.org analyzed a past exchange that occurred between Common Cause Georgia and the Pay to Play Law Blog that centered on our competing views as to the most effective means of ensuring public confidence in a workable scheme to prevent pay-to-play practices.

Their post is a thoughtful and lengthy analysis of the strengths and weaknesses of the “disclosure only” vs. “government regulation and debarment” schemes emerging throughout the country. Founded as they are by former prosecutors and ethics commission officials whose self-stated mission is to foster such laws as the means “to combat corruption and establish ethical local governments”, it is not surprising that CityEthics.org has reached the conclusion that “[d]isclosure is not an effective solution.”

Notwithstanding the difference in perspectives between the authors of the CityEthics.org site and the contributors to this blog, who view pay-to-play enforcement issues from the perspective of those required to establish compliance programs to comply with such laws and their oft-unintended consequences, the City Ethics post provides a solid recitation of the issue from the perspective of the regulating community and I recommend that you read it. Personal ego impels me, however, to respond to a few of the post’s assertions about the viability of a strict “government prohibition” solution as well as to defend the motivations of those who believe, as we do, that a scheme based on disclosure often accomplishes the same worthwhile goals without the burden of occasional draconian unintended consequences.

The differences in perspectives tend, in large part, toward the tension between what we aspire to achieve and what can realistically be drafted, enforced, and complied with in a real world where enforcement and corporate compliance resources are limited, free speech is respected, and basic human interactions occur between those somehow associated with vendors and those on a public payroll.p.p1 {margin: 0.0px 0.0px 12.0px 0.0px; font: 12.0px Arial} span.s1 {text-decoration: underline ; color: #002fee}

The universal and noble goal of pay-to-play laws everywhere is to prevent corruption that can occur at the intersection of private sector benefits (in the form of gifts and contributions) on the one hand, and the award of government contracts on the other, in an environment in which existing laws to prevent such corruption are deemed unworkable because of the difficulty in proving the quid pro quo connection between the two required to make a criminal case. Jurisdictions adopting pay-to-play laws do so upon reaching the conclusion that such laws are necessary to prevent any potential or perceived linkage that can not be proven but that we all know exists to some degree.

Some such solutions, such as those offered by CityEthics.org, overreach to ban even the most fundamental freedoms of speech and association as a means of ensuring that such linkage not occur (“many jurisdictions require contractors to disclose what they do, and yet contractors keep giving large contributions anyway” and “[t]he same people who oppose restrictions on contractors making campaign contributions also oppose giving money to publicly funded candidates running against wealthy candidates”). Even if we were to conclude that such solutions were the most effective and narrowly tailored available to the problem of unprovable quid pro quo corruption, such laws can become impossible to enforce in the real world. As many jurisdictions have already learned, once one embarks down the path of prohibiting contributions by corporations and their “agents”, one has placed one’s hind-quarters squarely on the proverbial slippery slope. To prevent circumvention of a law by those few bad actors determined to gain an advantage, one must legislate prohibitions against otherwise lawful conduct by a vast array of potential agents (directors, directors’ spouses, relatives, domestic partners, etc). As states such as Colorado have learned, to cast a net wide enough to prevent circumvention one often does so at the expense of the constitutional rights of innocent parties and always at the expense of lawful businesses who simply want to follow the law.

My personal belief is that it is not realistic to conclude, as CityEthics.org does, that corporations “already have excellent compliance programs to deal with these matters” or that those smaller companies which do not “would, in this sense, be at a disadvantage but, luckily, they have many fewer individuals to keep track of.” If this premise is wrong, and our experience working with the private sector tells me it is, a less draconian impediment to legal, but arguably unseemly conduct, than loss of one’s ability to do business with government, is likely appropriate.

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A Thoughtful Response to a Past Blog Exchange: Is the “Stick” of Regulation Preferable to a Disclosure Scheme?

Lay of the Land 2011

As this blog has sought to highlight, pay-to-play laws at the state and municipal levels are in a constant state of transition as political forces seek to respond to public sentiment surrounding the uneasy connections between money, politics and government contracting. If anything, the national patchwork of pay-to-play regulation has become less coherent or uniform over the past several years. This is a trend which does not look to abate in 2011 and which places a premium on corporate compliance personnel who understand the various trends in the law.

Absent dedicated in-house personnel, it is virtually impossible for entities that sell their goods and services on a national scale to remain attuned to the constant evolution of these laws at the local level. It is also virtually impossible for entities found to have violated a local law to engender much sympathy from those charged with its enforcement by pointing out regulatory inconsistencies across the national spectrum or the relevant insignificance of the regulator’s jurisdiction to overall sales. Trust me, we’ve seen folks try it and it doesn’t go over well.

With this in mind, we thought it might be helpful to categorize a few representative jurisdictions to highlight some recent trends. This listing is not comprehensive but rather is designed to be illustrative. Moreover, these laws are always in a state of flux so be sure to check your local jurisdiction for recent updates before relying on what you read on the internet:

Jurisdictions that Impose Significant Restrictions on Contracting with a Potential Penalty of Debarment. The most aggressive jurisdictions ban entities from engaging in government contracting when they, or their agents (however defined), have made political contributions. Those doing business in such jurisdictions need to be especially watchful of their compliance systems and internal data gathering. The stakes are simply too high. With more and more jurisdictions employing online contribution databases, one can easily see how such laws will present a new realm of a “gotcha” bid protest for disgruntled losing bidders. We haven’t seen much of this tactic yet, but one can easily see how step one after being notified that one has lost a competitive bid will be to go online and see if the winner’s board, executives, spouses, family members or domestic partners have inadvertently made a contribution to a relevant government procurement officer’s campaign.

Examples of laws falling in this category include: California, Hawaii, Ohio, New Jersey, Virginia and West Virginia.

Jurisdictions that Mandate Disclosure of Pay-to-Play Contributions. Many jurisdictions do not prohibit entities from procuring government contracts if they, or their agents, have made political contributions. These jurisdictions simply require disclosure of those contributions with the relevant government agency. While such laws certainly lessen the stakes (and cases of “night sweats” so common with in-house compliance personnel), they do not obviate the often unpleasant task of reaching out to your Chairman’s spouse every quarter to inquire about contributions the spouse might have made.

Examples of laws falling in this category include: Connecticut, Illinois, New Mexico, Pennsylvania, and Rhode Island.

Jurisdictions that have limited Pay-to-Play Restrictions to Specific Municipal or Contracting Subsets. Examples of such jurisdictions include Indiana, in which contractors with the State Lottery Commission, and the contractor’s directors, officers and political action committees, are prohibited from making contributions to candidates for state, state legislative or local office, and to a candidate’s committee, a regular party committee or a state legislative caucus committee, while the contract is in effect and during the three years following expiration or termination of the contract.

Likewise, in Louisiana, persons entering into contracts, subcontracts or transactions to provide goods or services related to hurricane rebuilding efforts, which are not publicly or competitively bid, are prohibited from making a contribution to an elected official if such contract or transaction is under the jurisdiction or supervision of the elected official’s agency. In New York, while no expansive regulations have been enacted to date, the State Comptroller has issued an Executive Order which sets forth robust “pay-to-play” regulations relating to entities who do business, or seek to do business, with the New York State Common Retirement Fund.

Jurisdictions that are Designing, but have not yet Implemented, Pay-to-Play Laws. Candidly, this category captures just about every other jurisdiction. It is simply too easy for a legislator, county commissioner, city council or school board to adopt such laws – or talk about adopting such laws – when one of their own has been caught with her hands in the cookie jar.

Examples of laws falling in this category include: Colorado, Georgia, Michigan, North Carolina, Texas and Wisconsin.

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Lay of the Land 2011

Some Nice Recognition

Sometimes writing blog entries can feel somewhat like chopping trees in the forest. If you’re not sure whether anyone heard you yell “timber!” did you really chop that tree down?

At least it looks like someone is reading. The Pay-to-Play Law Blog was recently given the #1 ranking by the Legal Studies Blog in its posting of the “Top 50 Excellent Blawgs You Aren’t Reading Yet”. Let’s shoot for #1 “Blawg You Are Reading” in 2011! Tell your friends!

Read the full article and check out some other blawgs you may not know about yet.

I guess I can take solace in the fact that the blog’s entries will stick around for a while even if it’s one “You Aren’t Reading Yet”. Yesterday I was advised that the United States Library of Congress has selected the Pay-to-Play Law Blog for inclusion in the historic collection of Internet materials related to Legal Blawgs. The Library of Congress described its mission to include “preserv[ation of] the Nation’s cultural artifacts and provid[ing] enduring access to them. The Library’s traditional functions, acquiring, cataloging, preserving and serving collection materials of historical importance to the Congress and the American people to foster education and scholarship, extend to digital materials, including websites.”

According to staff at the Library, the archive project is a way of capturing current events for historical and research purposes. The Law Library of Congress began harvesting legal blawgs in 2007 and the collection has grown into more than one hundred items covering a broad cross section of legal topics. Blawgs can be retrieved by keywords or browsed by subject, name or title.

The Pay to Play Law Blog in the Law Library of Congress will be available to the public here in Spring 2012.

Straight from a “Blawg You Aren’t Reading Yet” to an “artifact”. That’s a full day.

Some Nice Recognition

EVENT: Political Law Compliance after Citizens United – 5/6/10

Campaign Finance, Government Contracting, Tax, Lobbying & Ethics Rules

This comprehensive one-day training seminar brings you up-to-date on Congressional and White House responses to Citizens United and other key developments involving lobbying, ethics and tax rules at this annual conference.

Citizens United reinforced the First Amendment rights of corporations and labor unions to participate in the political process by advocating the election or defeat of clearly identified candidates. After this landmark event, how can groups most effectively, and legally, participate in the political and public affairs process?

Hear from FEC Chairman Petersen; Mike Duncan, former Republican National Committee Chairman; and Michael Boos, Citizens United Vice President and General Counsel.

Thursday, May 6, 2010
8:00 a.m. – 6:00 p.m.
The Offices of McKenna Long & Aldridge LLP, Washington, DC

Program Highlights:

  • Practical developments and new areas of concern in federal campaign finance law
  • A discussion from both sides of the political aisle regarding political party and interest group activity after Citizens United
  • Experience the Supreme Court journey with Michael Boos, Vice President & General Counsel of Citizens United
  • Insights into current DOJ FCPA prosecutions, public-corruption investigations and enforcement priorities
  • Issues affecting nonprofit organizations and donors providing financial support for political activities

Registration Fee:

Register today and Save 50% off the BNA Subscriber rate of $595. Enter discount code “MLA10” at online checkout.

CLE credit will be available.

For more information or to register by phone, call 800-952-2477.

EVENT: Political Law Compliance after Citizens United – 5/6/10