Last week, the Department of Justice published an Advance Notice of Proposed Rulemaking (ANPRM), the first step toward a major rulemaking that DOJ says would “modernize” the current regulations, including by clarifying certain exemptions and definitions.

In a client alert today, we review key portions of the ANPRM and the direction it suggests the DOJ envisions for new FARA regulations, which would have implications for our clients, as well as other foreign entities and those who engage with them.

Late last week, the Supreme Court indicated that it intends to review a challenge by Senator Ted Cruz (R-TX) to federal limits on the use of post-election contributions to repay pre-election loans that candidates make to their own campaigns.  This follows an earlier three-judge district court decision that struck down those limits as unconstitutional under the First Amendment.  Although the question presented in Federal Election Commission v. Ted Cruz for Senate relates most directly to the relatively obscure rules governing the repayment of candidate loans, the case represents a continuation of the steady shift in the courts towards a less restrictive federal campaign finance system.

For decades, courts considering constitutional challenges to federal campaign finance regulations have weighed the government’s interest in preventing actual or perceived corruption against individual speech rights protected by the First Amendment.  Most famously, in Buckley v. Valeo, the Supreme Court upheld federal contribution limits as a means of preventing even the appearance of quid pro quo corruption while at the same time striking down campaign expenditure limits that the Court found did little to prevent actual or perceived political corruption.  Since Buckley, this emphasis on the degree to which a challenged regulation serves as an effective check on actual or perceived corruption has been a central feature of federal campaign finance law.

Though never explicitly retreating from this basic proposition, in recent years the Supreme Court has taken an increasingly cramped view of what actually constitutes political corruption.  For instance, the Supreme Court has rejected as insufficiently compelling the prevention of “generic favoritism or influence” (McConnell v. FEC) or merely seeking “influence over or access to” elected officials (Citizens United v. FEC).  Most recently, in McCutcheon v. FEC, the Court struck down aggregate individual contribution limits on the grounds that those limits did “little, if anything,” to address explicit quid pro quo corruption.  Cruz may be the latest example of this trend.

Indeed, a close reading of the earlier district court decision suggests that the case may have significant implications well beyond the loan-repayment rules themselves.  Most notably, the district court imposed a remarkably high factual burden in considering whether the loan-repayment rules serve to prevent demonstrable corruption.  The “appearance” of corruption, in either the form of how the public perceived these payments, or what donors expected, carried nearly no weight in the analysis.  Instead, it was actual corruption the government needed to show.  In striking down the rules, the court noted that the government did “not identif[y] a single case of actual quid pro quo corruption” in the context of the loan‑repayment limit, which the court contrasted with prior cases in which the government put forward evidence of an anti-corruptive effect through witness testimony and detailed factual findings.  According to the court, even “[a] lengthy record may not be sufficient to demonstrate corruption, but the absence of any record of such corruption undermines the government’s proffered interest.”

While the fate of the loan-repayment rules may be of little interest to those not currently running for office, the Court’s consideration of these little-noticed rules may offer important insights into the future of campaign finance regulation more broadly.  If the Supreme Court affirms the district court’s approach, rules that currently may have a weaker connection to threats of “actual corruption”—for example, spousal contribution limits and the remaining restrictions on independent corporate political activities (facilitation of contributions, communications to all employees, etc.)—may be the next to face a challenge.

In the meantime, if the district court decision stands, we would expect all future candidates to cease “contributing” to their campaigns and recast those payments as loans, with a suitable rate of interest.  Striking down the limits on post-election contributions to repay loans may also incentivize candidates who believe they can win to boost late-race self-funding.  This change could also mean that incumbent officeholders with such loans on the books will be more attentive to the fundraising needed to ensure that the loans are repaid.

This post was written with research assistance from Summer Associate Jacob Lichtenstein.

Congressional investigations have continued to play a significant role in the 117th Congress. In February 2021, we predicted that the Democratic majorities in both the House and the Senate would target investigations at the private sector, and this prediction turned out to be correct. Already in 2021, committees in both chambers have launched investigations across a broad range of subjects.

Congressional investigations are deeply infused with politics. Although investigations may seem to proceed by familiar legal process—including document productions and witness testimony—there is actually very little due process in congressional investigations. There are no motions to dismiss, protective orders, or limited discovery orders. There are, however, some rules, and the rules that exist are important.

At the start of a new Congress, the House and Senate, and their committees, adopt internal rules that govern their operations, including rules that affect congressional investigations. These rules are often revised from Congress to Congress. To assist our clients responding to congressional investigations, this alert summarizes House, Senate, and key committee rules relevant to investigations for the 117th Congress, with a particular focus on the rules related to subpoena authority, depositions, and, where applicable, confidentiality.

Throughout recent months, we have closely monitored important developments in the courts and on Capitol Hill related to Congress’s power to issue and enforce subpoenas for documents or witness testimony.  As members of the 117th Congress continue to develop legislative and oversight priorities, a number of recent events signal continued uncertainty in congressional subpoena authority and interest in Congress in clarifying and strengthening that authority.  As discussed below, these recent developments hold significant implications for Congress’s ability to compel cooperation with their investigations.

Continue Reading Recent Developments Shed Further Light on Congressional Subpoena Authority

Earlier today, the House Committee on Oversight and Reform’s “Oversight Plan” was published. The Oversight Plan provides a very useful roadmap of the Committee’s investigative priorities and should be seen as a fair warning to the industries and companies identified in the plan.

In a client alert today, we review key portions of the Committee’s Oversight Plan that are likely to have implications for our clients and others in the private sector.

There are few things as seductive in politics today as good data, and few things as challenging for commercial firms as the statutory bar on the use of FEC data for commercial purposes.  That came to a head yesterday, when the FEC was unable to reach a decision on an advisory opinion request on use of the FEC’s donor data to, among other things, confirm the identity and score potential donors in a client’s existing database.  The case highlights the gap between the regulated community and where a majority of FEC Commissioners may soon take the law.

Continue Reading Use of FEC Data – The Vice Chair Says the FEC Has Taken “A Wrong Turn”

It appears increasingly likely that California Governor Gavin Newsom will face a recall election, leading to questions about how to support or oppose his removal.  The “recall” will actually consist of two ballots, voted at the same election—a vote on whether to recall Newsom and a vote for his replacement if the recall passes.  Potential contributors may be surprised to learn that the state’s contribution limits apply differently to groups supporting or opposing the recall vote than to candidates seeking to replace Newsom.

Continue Reading California Recall Contribution Limits Would Vary for Newsom and Replacement Candidates

Even corporations with careful political law compliance practices can be caught off guard when they learn that an employee is running for public office. The corporation may have a good understanding of what the corporation’s obligations and restrictions are in the political arena, but not fully know how to handle the compliance issues stemming from an employee’s personal candidacy. This alert describes three practical steps that corporations should take to ensure they are complying with the relevant campaign finance and ethics rules.

With a growing chorus of support across the progressive landscape, the For the People Act of 2021 has emerged as a key legislative priority for congressional Democrats in the 117th Congress.  Envisioned as a “transformational anti-corruption and clean elections reform package,” the bill would enact sweeping changes to federal election laws along with important changes to federal campaign finance, lobbying, and government ethics laws.  Taken together, these changes would have significant implications for private parties engaged in all manner of political activity.

After House Democrats relied on their slim majority to pass the For the People Act, the bill now faces more uncertain prospects in the evenly divided Senate.  Nonetheless, Democratic leaders are sure to continue to press aggressively to move the bill through the upper chamber.  Likewise, even absent passage of the entire package, Democrats may look for opportunities to pass key elements of the broader bill on a bipartisan basis.

To assist clients in understanding how the For the People Act would affect their existing activity and compliance obligations, this alert is the fourth of several that will provide insights into key elements of the bill and what they mean for our clients.  This alert addresses the bill’s proposed changes to the federal conflict-of-interest and revolving-door provisions.