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Welcome to the Holtzman Vogel Josefiak Torchinsky Law Blog. We aim to keep you up to date on important legal developments and other items of interest. On this blog, we’ll track developments in the news and changes to the rules and regulations affecting political committees, corporate PACs, SuperPACs, trade associations, non-profit groups and advocacy organizations. We’ll also keep you updated on the lobbying and ethics arena. The Law Blog is designed to supplement our regular newsletter.

On behalf of the Holtzman Vogel Josefiak Torchinsky team, I hope you find this site helpful and interesting. And we hope you’ll become a regular visitor. (If you’d like to receive our newsletter, please click here to sign up.)

Jill Holtzman Vogel


Thursday, February 19th, 2015

The FEC’s press release is here.  The FEC has dubbed the three new accounts the “Convention Account,” the “Headquarters Account,” and the “Recount Account.”


Friday, January 16th, 2015

The comment period for the FEC’s Advance Notice of Proposed Rulemaking (ANPRM) in response to the Supreme Court’s decision in McCutcheon v. FEC closed yesterday.  Select comments are posted below.

 

Holtzman Vogel Josefiak PLLC

Former FEC Commissioners Elliott, Smith, von Spakovsky, and Wold

Center For Competitive Politics (Brad Smith)

Perkins Coie LLP

Campaign Legal Center/Democracy 21

Public Citizen

 

UPDATE: The FEC posted all comments on Jan. 26 (click through to 2014-01).  Commissioner Weintraub reported that “over 32,000 commenters” had spoken.  Our own rough count shows that roughly 18,000 of these commenters submitted a form email through the League of Women Voters.

Commissioner Weintraub on the comments received: “I’m really interested in the individual comments. . . . What I think is most interesting is the level of passion we’re seeing from the general public on these issues. People really do care about this, that they’re getting a raw deal and that their democracy is taken away from them from people who are more wealthy.”


Wednesday, December 10th, 2014

The new proposed national party contribution limits are here.

Bloomberg reports, “Right now, individual donors may give the national party committees up to $32,400 per year. The new proposal would allow donors to add gifts of up to $97,200 to each of three causes: presidential nominating conventions, building funds, and legal proceedings, such as recounts. That’s a grand total of $324,000 per year.”

Bloomberg‘s description of the proposal is correct with respect to the RNC and DNC.  Under the proposal, national party committees (such as the RNC and DNC) could each establish a new segregated account for national convention funding, and all national committees (RNC, DNC, NRSC, DSCC, NRCC, DCCC, plus the recognized national committees of minor parties) could establish separate accounts for building expenses and recount/content proceedings.

The national congressional committees (NRSC, DSCC, NRCC and DCCC) would not be able to establish convention accounts, and would not receive the benefit of that additional contribution limit – thus, the “grand total” for each congressional committees would be $226,800 per year from an individual donor.  (Note: Early reports of the new contribution limit provision included varying calculations of how much donors would be able to give.  Some of these calculations were incorrect.)

Among other implications, this provision would allow the national committees to devote their “regular” funds raised (contributions up to $32,400) exclusively to electoral activities.  As the Wall Street Journal notes, “The new rules wouldn’t only dramatically increase the amount individuals could donate to parties, but would again allow parties to raise money for purposes separate from candidate advocacy.”


Monday, October 27th, 2014

FEC Vice Chair Ann Ravel released a statement on Friday afternoon that included a very unexpected announcement. According to Vice Chair Ravel, who will Chair the agency next year, the FEC “has failed to acknowledge the importance of providing transparency to the public no matter what the medium of political communication. A re-examination of the Commission’s approach to the Internet and other emerging technologies is long overdue.” Loosely translated, the Vice Chair thinks we need more reporting and FEC oversight when it comes to political speech on the internet.

The FEC’s Republican Commissioners countered here.

News Coverage

Washington Times

Washington Times (2)

Fox News

Daily Caller

Fox, Interview with FEC Chairman Lee Goodman

Newsmax, Interview with FEC Chairman Lee Goodman

The Vice Chair, who previously served on California’s campaign finance regulatory body, the Fair Political Practices Commission, refers in her Friday statement to a 2003 report issued by her former agency on internet political practices.  That report preceded efforts in California to impose new regulations on internet political speech that focused on the supposed problem of campaign-paid bloggers and reporters.  Ravel drove an unsuccessful effort “to require news websites and bloggers to disclose payments received from campaigns and political committees.”  She later revised that proposal, and the FPPC adopted new regulations just before Ravel left for the FEC.  The Los Angeles Times reported on Ravel’s California regulations here.

 

UPDATE: Washington Free Beacon: “Republicans on the Federal Election Commission are vowing to fight regulations on online political advocacy that they say would chill free speech and potentially lead to politicized targeting of Internet writers and video-makers. . . . [FEC Chairman Lee] Goodman said the panel’s Republicans are united in their opposition.”

UPDATE: Republican Commissioners ask the public to submit comments on Vice Chair Ravel’s statement regarding further internet regulations.

UPDATE: Vice Chair Ravel’s former colleague at the California Fair Political Practices Commission, law professor Ronald Rotunda has written an op-ed for the Wall Street Journal.  Rotunda writes, “Ms. Ravel appears to be dreaming of imposing on the nation what she was unable to impose on California—the regulation of political speech on the Internet. . . . Before Ms. Ravel became chairwoman, the California commissioners investigated whether there was a problem with so-called dark money on the Internet. We held hearings, and the bipartisan group of commissioners found nothing warranting regulation. But Ms. Ravel insisted that there was a problem, and claimed that bloggers admitted to her that they receive undisclosed funding from partisan interests. That sounded ominous, and reporters asked her who these bloggers were. She refused to identify them but asserted, ‘I suspect it is fairly common.’ . . .  In the end Democrats and Republicans on the FPPC objected to her proposal, and it never came to a vote.”


Wednesday, August 6th, 2014

The FEC was the winner yesterday in the D.C. Circuit’s decision in Stop This Insanity Inc. Employee Leadership Fund v. FEC, and the connected PAC (SSF) rules survived intact, even as the court referred to those rules as a “statutory artifact,” and labeled SSFs “functionally obsolete,” “idiosyncratic and outmoded,” and an “oddity … in the wake of” Citizens United.

Much of the press coverage focused on the decision’s Rolling Stones references, and those who commented on the actual opinion generally reported a sweeping FEC victory.

 

But what the court actually had to say about disclosure will almost certainly fuel future challenges to the FEC’s defense of existing regulations:

“Although McCutcheon intimates disclosure is an obvious antidote to corruption and so appropriately included within the anticorruption rationale, the correlation is not self-evident and disclosure cannot be reflexively substituted as the Commission’s raison d’etre. Not every intrusion into the First Amendment can be justified by hoisting the standard of disclosure.”

– D.C. Circuit, August 5, 2014, Stop This Insanity Inc. Employee Leadership Fund v. FEC

 

This language is especially interesting in light of what three Commissioners wrote less than a week before:

“[T]he entire purpose of the political committee status test boils down to a single, compelling policy interest: disclosure. Disclosure of donors and political spending is crucial. . . . Dark money is an increasing problem. The FEC’s mission is to ensure that voters receive the information they need – the information that the Supreme Court has said they are entitled to – in order to make informed decisions.”

– Three FEC Commissioners, MUR 6538/6589, July 30, 2014


Tuesday, July 15th, 2014

The Center for Public Integrity (borrowing from an earlier piece by Ellen Aprill) explains:

A federal law passed in 1913 created [Section 501(c)(4)] as a “catch all” for nonprofit groups that weren’t necessarily educational or charitable but provided a public service and operated “exclusively for the promotion of social welfare.”

Thank a macaroni factory run by the nonprofit New York University Law School for their evolution.

Responding to business complaints about the arrangement, Congress in 1950 passed a law levying taxes on nonprofits’ “unrelated business income.” If nonprofits — 501(c)(3)s like hospitals, charities and universities and 501(c)(4)s — could run a side business, it meant they weren’t operating “exclusively” for their exempt purpose.

The U.S. Department of the Treasury, the IRS’ parent agency, ultimately issued new regulations interpreting “exclusively” as “primarily.” In other words, social welfare nonprofits could engage in other kinds of activities so long as they operated primarily for the common good.


Monday, July 14th, 2014

Washington Free Beacon:

The campaign finance reform efforts of a massive network of liberal and Democratic groups are explicitly designed to limit conservatives’ ability to oppose key parts of the left’s agenda, according to the head of the group coordinating those efforts.

The admission comes as parts of that network attempt to present the case for campaign finance reform as politically and ideologically neutral, and to recruit and reach out to conservatives and Republicans who might support it under those pretenses.

Democracy Alliance president Gara LaMarche presented the organization’s push for such reform, which involves a litany of major left-wing political and policy groups, not simply as a foil against corruption or corporate capture but as a prerequisite for the group’s other policy goals, all of which are left of center. …

Altering the nation’s campaign finance laws, he said, would allow the Democracy Alliance and its network of affiliated groups to more easily advance liberal policies that have nothing to do with campaign finance.

Democracy Alliance’s President is certainly not the first to admit this.  Recently, a representative from an environmental group said the same thing, as did Demos.


Friday, July 11th, 2014

Yesterday evening, a Florida judge held that portions of Florida’s latest Congressional redistricting ran afoul of the state’s Fair Districts amendments, which “call for the decennial redistricting process to be conducted without taking into account partisan makeup or incumbent advantage.”  According to Politico, the judge did “not specify whether new district lines need to be drawn for the 2014 elections. The court will have to order further motions to determine the next steps, but it’s unclear when those motions will be delivered. The Legislature is also expected to appeal the ruling to the state Supreme Court.”

A variety of “non-partisan” nonprofit organizations celebrated the ruling. As Politico explains, “The plaintiffs in the case — the League of Women Voters, Common Cause of Florida and other Democratic-aligned groups — were largely funded by National Democratic Redistricting Trust, which was formed to fund the party’s efforts to combat Republicans who sought to solidify their historic win in 2010 through the redistricting process.”

One of the “non-partisan” nonprofits involved in representing the Democratic Party was the Campaign Legal Center. The Center’s Executive Director, Gerald Hebert, issued a statement: “The Florida Legislature ignored the law and the will of Florida voters and let itself be hijacked by Republican political consultants and operatives.  The decision today is a devastating indictment of those who manipulated the redistricting process secretly behind closed doors and tried to shield it from the public.”

This statement is a fairly typical statement from a litigant who just won a “political” case.  What is notable is that in criticizing the “political consultants and operatives,” Hebert fails to mention that he’s one too, and that he now uses his perch at the non-partisan, nonprofit Campaign Legal Center to pursue the exact same work he did for the Democratic Party during the past 15 years.

Not too long ago, “From 1999 to 2002, Gerry [Hebert] served as General Counsel to IMPAC 2000, the National Redistricting Project for Congressional Democrats.”  In 2004, PBS referred to Hebert as “a Democratic redistricting operative,” and in 2011, NPR called him “a Democrat who often handles election law cases.”  Hebert has represented Texas Democrats in redistricting litigation during the past two rounds of redistricting: in the mid-2000s, he represented a number of Texas Democrats challenging Texas’ redistricting plan, and he took on the same role in litigation stretching from 2011 through 2013.


Wednesday, June 25th, 2014

The Hill: “Democrats are sounding the alarm about spending by outside conservative groups, even as skeptics question whether their anxiety is genuine or simply a tactic to turbo-charge their own fundraising efforts.  On Tuesday, Senate Democrats introduced legislation to force outside advocacy groups to publicly disclose their donors, even though the proposal has little chance of passing. Similar efforts went nowhere in 2010 and 2012. . . . Sen. Charles Schumer (N.Y.), his party’s chief political guru in the Senate, warned that outside conservative groups will likely outspend their liberal counterparts by a greater margin than in 2010, when Republicans picked up six Senate seats and captured the House. . . .Senate Democrats are pushing two initiatives. The Disclose Act of 2014 would require any advocacy group that spends $10,000 or more on election ads to disclose its donors to the Federal Election Commission within 24 hours.  They have also coalesced behind a constitutional amendment that would empower Congress to regulate campaign fundraising activity without interference from the Supreme Court. . . . Meanwhile, even some on the left admit that one of the prime purposes of the complaints about ‘dark money’ is to prompt liberal donors to open their checkbooks.  ‘The outrage is good for fundraising,’ a Senate Democratic aide acknowledged Tuesday.”

Some in the press may finally be picking up on the real motivations behind these efforts.

 


Monday, June 23rd, 2014

The SEC announced its first case brought under the agency’s new pay-to-play rules for investment advisors (Rule 206-4(5)).

According to the SEC’s press release: “The Securities and Exchange Commission today charged a Philadelphia-area private equity firm with violating “pay-to-play” rules by continuing to receive advisory fees from the city and state pension funds following campaign contributions made by an associate in 2011 to the governor of Pennsylvania and a candidate for mayor of Philadelphia. . . . An SEC investigation found that TL Ventures violated pay-to-play rules by continuing to receive compensation from two public pension funds – Pennsylvania’s state retirement system and Philadelphia’s pension plan – within two years after an associate made a $2,500 campaign contribution to a Philadelphia mayoral candidate and a $2,000 campaign contribution to the governor of Pennsylvania. . . . The SEC’s order finds that TL Ventures violated Sections 203(a), 206(4) and 208(d) of the Investment Advisers Act of 1940 as well as Rule 206(4)-5.  TL Ventures is ordered to pay disgorgement of $256,697, prejudgment interest of $3,197 and penalty of $35,000.  TL Ventures agreed to be censured and to cease and desist from committing or causing any violations and any future violations of the provisions referenced in the order.  TL Ventures neither admitted nor denied the findings in consenting to the SEC’s order.”

The severity of the penalty in light of the two modest contributions made here is certain to be noticed by within the financial industry.