disclosure

California recently passed a series of new regulations affecting its “pay-to-play” laws that limit political contributions by state and local government contractors and others involved in proceedings on contracts, licenses, permits, and other “entitlements for use” in the state.  These regulations implement changes to the law that took effect this year, which include applying the

Trade associations, 501(c)(4) social welfare organizations, other outside groups that pay for political advertisements, and their donors now have more answers to long-running questions regarding when donations to these groups are publicly reportable.  After postponing consideration of the issue during its previous meeting, the Federal Election Commission (“FEC”) approved Wednesday an interim final rule on donor disclosure.  The interim rule amends the federal regulations that describe when outside groups that pay for independent expenditures — advertisements that expressly advocate the election or defeat of a clearly identified candidate — must publicly disclose on FEC reports the names of their donors.  The amended rule will take effect 30 legislative days after the FEC transmits the new rule to Congress, which the FEC anticipates will be September 30, 2022.

The interim rule brings the FEC’s regulations into harmony with a 2018 court decision that invalidated a long-standing regulation, 11 C.F.R. § 109.10(e)(1)(vi), requiring outside groups to disclose only those donors who contributed at least $200 to the outside group “for the purpose of furthering the reported independent expenditure.”  The interim final rule strikes the regulation entirely.  However, the FEC added a note to 11 C.F.R. § 109.10(e)(1) that clarifies the remaining portions of the regulation and the relevant statute are still in effect.

In the wake of the 2018 decision, many questions remained about when these groups must disclose donor names.  The revised regulation itself was not meant to answer those questions; it was simply meant to harmonize regulations on the books with existing court decisions.  Some of these questions were answered by an unusual guidance document the Commission posted to its website after the 2018 decision.  That guidance, which remains in effect, provides that groups (other than political committees) that pay for independent expenditures must disclose the names of donors of over $200 who made contributions “earmarked for political purposes” during the reporting period.

But when is a contribution “earmarked for political purposes”?  If a donor provides funds for get-out-the-vote activities, is that donation “earmarked for political purposes”?  If a donor makes a contribution following a presentation from an outside group describing its political activities, is the donation reportable?  What about a donation intended to further a hard-hitting issue advertisement whose purpose, at least in part, is to defeat a particular candidate?  These questions are all left unaddressed in the interim final rule and the website guidance.Continue Reading FEC Commissioners Issue New Guidance on Donor Disclosure for Groups Paying for Political Advertisements