New Jersey says No to SuperPACs

Today, the New Jersey Election Law Enforcement Commission issued Advisory Opinion 01-2013  holding that a committee organized under Section 527 of the IRS code and intending to make solely independent expenditures (i.e., expenditures not coordinated with candidates or parties) of $2,400 or more in the 2013 New Jersey legislative elections must be classified as a political committee under New Jersey law, subject to registration, reporting, and contribution limits, if over half of its total activity is for that purpose.  The Fund for Jobs and Growth represented that it is an organization incorporated in the District of Columbia that will make only independent expenditures in support of legislative candidates in New Jersey elections in 2013 and that more than  half of its spending will be in support of that independent expenditure program in New Jersey.

ELEC held that independent expenditure activity comes within the meaning of “aid or promote” the election or defeat of a candidate as used in the definition of “political committee” under New Jersey law because that definition does not differentiate between activity that is “coordinated” and activity that is “independent” of a candidate.  ELEC applied the “major purpose” test derived from Buckley v. Valeo (1976) in concluding that spending in excess of half of the Fund’s total spending on independent expenditures in New Jersey elections would constitute a “major purpose” of supporting New Jersey candidates in 2013 elections.

Because the Fund is a “political committee,” ELEC stated it must observe New Jersey law with respect to contribution limits in addition to registration and contributor reporting requirements.  Specifically, the Fund may receive no more than $7,200 per election from a contributor (except for contributions from political party committees and legislative leadership committees).  ELEC reached this result notwithstanding the Fund’s representation that since the time of the U.S. Supreme Court opinion in Citizens United v. FEC (2010) and the subsequent Court of Appeals opinion in v. FEC (D.C. Cir. 2010) (en banc), no court has upheld a government restriction on the amount that an independent expenditure-only committee (more popularly known as a super PAC) may receive as a contribution.

Will this ELEC Advisory Opinion become the subject of a court challenge?  Stay tuned.

Genova Burns Of Counsel Gregory E. Nagy assisted with this post. 

Court Denies Cert in Danielczyk

It’s been a roller coaster week for campaign finance law. Last week the Supreme Court accepted the McCutcheon case, as we discussed here. And this morning, the Court denied cert in the Danielczyk case which involved the constitutionality of the long-standing ban on direct corporate  contributions (see our previous discussions of the case here and here).

SCOTUS Accepts Campaign Finance Case for Review

Today,  the Supreme Court of the United States agreed to hear McCutcheon v. FEC, which as we discussed here, addresses the constitutionality of the federal aggregate contribution limits.  These limits restrict how much an individual can give to federal candidate and party committees in a two-year period.  This will be the first case the Court hears on campaign contribution limits after its landmark  ruling three years ago in Citizens United.

SCOTUS Considers Petitions in Two Campaign Finance Law Cases

Today, during its conference, the Supreme Court will consider whether to issue certiorari on two campaign finance cases: Danielczyk v. United States and McCutcheon v FEC.

In Danielczyk v. United States, which we’ve previously discussed here, the Court will consider whether to accept a case that challenges the constitutionality of the ban on campaign contributions by corporations in the Federal Election Campaign Act and whether restrictions or bans on the right to make campaign contributions should be reviewed under strict scrutiny, as other restrictions on political expression are, or instead under a less stringent standard.

In McCutcheon  v. FEC,  the Court will consider whether to accept a case that  challenges the constitutionality of 2 U.S.C. section 441a(a)(3)(A), which limits individual contributions to federal candidates to $46,000 over the course of a two-year election cycle (i.e. the biennial limit).

If either of these cases will be accepted, that will be noted among the regular orders due out at 9:30 a.m. on Tuesday.  Stay tuned.

Updated Threshold For 2013 FEC Lobbyist Bundling Reporting

The Federal Election Commission (“FEC”) released an updated reporting threshold for the 2013 calendar year for lobbyist bundling reporting. The threshold, indexed for inflation, increased to $17,100 for the 2013 calendar year from $16,700 for the 2012 calendar year. Reporting committees, authorized committees of Federal candidates, leadership PACs, and political party committees, must file Form 3L, a bundling disclosure report, if the reporting committee received two or more “bundled contributions” exceeding the reporting threshold during the reporting period. Reporting periods run from January 1-June 30 and July 1-December 31 of each calendar year. A “bundled contribution” is any contribution that is either (1) forwarded to a reporting committee by a lobbyist/registrant or lobbyist/registrant PAC, or (2) received by the reporting committee and credited to a lobbyist/registrant or lobbyist/registrant PAC through “records, designations, or other means of recognizing that a certain amount of money has been raised.”

The FEC  has released Frequently Addressed Questions on Lobbyist Bundling on its website  to assist reporting committees in determining if it must file Form 3L.

FEC Contribution Limits for 2013-2014

The Federal Election Commission has released increased contribution limits for the 2013-2014 cycle.  These figures are indexed for inflation and generally increase with every election cycle.

Individual contributors can now contribute up to $2,600 per election to a candidate and $32,400 per calendar year to national party committees. The total amount of federal contributions that an individual can give during a two-year cycle also increased to $123,200, including $48,600 to candidates and $74,600 to parties and PACs.

New Momentum for Campaign Finance Changes in New York?

Last week, philanthropists and government officials met with advocates for the overhaul of New York State campaign finance laws.  The meeting, organized by the Piper Fund, featured remarks from New York Attorney General Eric Schneiderman and State Senate Democratic Leader Andrea Stewart-Cousins.  Advocacy for State election campaign reform, along the lines of New York City’s public campaign financing law, is expected to reach a higher level in this year’s legislative session.  But will it succeed?

In the meantime, New York City’s law continues its evolution.  Last week, the City Council voted by an veto-proof margin of 47-1 to exempt member organizations and corporations from disclosing member-to-member communications regarding candidates and ballot issues as “independent expenditures.” This bill passed over the opposition of the NYC Campaign Finance Board, a reminder that the legislature often has the last word on the scope of the campaign finance laws to which its members – as candidates – are subject.

Governor Cuomo’s State of the State: Campaign Finance Reform

In his State of the State today, Governor Cuomo laid out his vision for campaign finance reform in New York.  Here are some of the highlights:

  1. Political or lobbying contributions of more than $500 must be disclosed within 48 hours.
  2. Any and all covered contributions to a PAC, “lobbying 501(c)(3)”, other 501(c) organization, political committee, or political party over $500 should be disclosed within 48 hours, and within 24 hours near Election Day.
  3. Expand and clarify the types of political communications that must be reported to and filed with the Board of Elections by candidates, labor organizations, corporations political committees, and other entities as well as the contributions made to the entities that paid for such communications
  4. Lower contribution limits, including aggregate party committee and individual limits
  5. Close corporate subsidiary loophole
  6. Increase disclosure of independent expenditures, including clarifying distinction between political advocacy and issue advocacy
  7. Strong enforcement regime
  8. Public financing system modeled after the New York City Campaign Finance Program.


Pay-to-Play Resolutions for 2013

Out with the old, in with the new. Here are a few practical tips government vendors in New Jersey should add to their list of resolutions:

As a final resolution, be proactive. Don’t wait for problems to arise before you give attention to your compliance plan. The pennies you invest today in prevention will avert draining your dollars in hope of a cure tomorrow.

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