Political Law Notes - February 2017

Date: February 14, 2017

2017 is not yet fifty days old and there have already been several significant developments in the political law arena, and many more are likely to follow.  Lobbyists and others that interact with the federal government have to contend with new ethics rules.  New federal political contribution limits have been approved by the Federal Election Commission.  And the new Administration and Congress are suggesting more changes in the area of lobbying and political advocacy – including possibly narrowing or eliminating the prohibition against political activities by Section 501(c)(3) organizations.  Here’s a summary of the major developments thus far.

For more information, please contact: Jim Kahl or Jeff Altman


New Government-Wide Ethics Rules 

The Office of Government Ethics (OGE) adopted new gift rules for all government employees, which went into effect on January 1, 2017.   Government employees are generally prohibited from accepting gifts from “prohibited sources” (e.g., persons regulated by or that have business before an agency), or gifts given because of the employee’s official position, unless allowed by a specific gift exception.  The amended rules leave some old rules in place, tighten some rules, and open up a few new opportunities for engagement with government officials. As in the past, a gift is defined broadly to include a meal or anything of value. 

OGE declined to increase the “de minimis” gift exception threshold (now 25 years old) to account for inflation.  As a result, a prohibited source can generally continue to offer government employees a gift valued at $20 per occasion, with a $50 annual aggregate limit.  On the other hand, government employees now have to obtain written agency approval before accepting an invitation to a widely attended gathering, such as an industry conference, from a prohibited source.  Event sponsors should anticipate government invitees asking for more information about widely attended gatherings in order to satisfy questions from their agency ethics officials.   

Event sponsors will be happy to learn that OGE now permits a government employee who speaks at an event to also attend a separate “speakers’ dinner” in conjunction with the event.  OGE is also permitting executive branch employees, like their Congressional colleagues, to accept informational materials related to their duties from outside sources.  Written agency approval will be required for informational materials valued at over $100 per year.

President Trump Signs Lobbying & Ethics Executive Order 

Following up on his campaign promise to “drain the swamp” in Washington, President Trump signed an executive order on January 28 outlining the ethics obligations of his appointees.   

The executive order strictly limits appointees’ ability to accept gifts from lobbyists – a restriction first imposed by President Obama.  As a result, President Trump’s appointees cannot take advantage of the full range of gift exceptions available to career employees under the OGE gift rules.  President Trump’s order also directs OGE to adopt rules to apply the executive order’s restrictive lobbyist gift ban to all government employees.  If the OGE Director follows through on this, significant additional changes to the government-wide gift rules will be required.  

The executive order’s “revolving door” provisions make it easier for lobbyists to join the administration, but they will generally be subject to greater restrictions when their employment ends.  An individual who was a registered lobbyist in the two years preceding appointment can now work for the agency he or she formerly lobbied.  President Obama had generally prohibited such employment.  However, the new order prevents an appointee from engaging in “lobbying activities” with respect to his former agency for 5 years after leaving service.  In addition, appointees have a lifetime ban on accepting work from foreign governments or foreign political parties which would require registration under the Foreign Agents Registration Act.  But, the order reduces from two years to one year the “cooling-off period” during which certain senior executive branch officials are prohibited from representing others before their former agency.   

It is not yet clear if other lobbying or ethics changes are on the way.  President Trump has previously suggested expanding the definition of a “lobbyist” to close loopholes. This might take the form of deleting the “two contacts” or “20 percent” of time thresholds that are parts of the current lobbyist registration test, which would greatly increase the number of organizations required to register under the LDA. 

FEC Adjusts Some Political Contribution Limits for 2017-2018 Cycle 

The Federal Election Commission has made minor adjustments to some of the individual and PAC contribution limits for the 2017-2018 election cycle.  The amount that individuals and non-multicandidate PACs can give to federal candidates remains at $2700 per election to each federal candidate.  Since primary and general election contests are viewed as separate “elections,” an individual or a non-multicandidate PAC may contribute a total of $5400 to a federal candidate.  The $5,000 per year individual contribution limit to PACs is also not affected.

On the other hand, individuals and non-multicandidate PACs can now give $33,900 per year to each national party committee (up from $33,400).  They can also give $101,700 per year (up from $100,200) to each of the national party committee accounts for presidential nominating conventions, election recount and legal proceedings, and national party headquarters buildings.

Contribution limits for larger PACs are not readjusted each election cycle. As a result, “multicandidate” PACs – those with 51 or more contributors that have contributed to 5 or more federal candidates – can still contribute $5000 per candidate per election, $15,000 per year to a national party committee, $5000 per year to other PACs, and $45,000 per year to each of the national party special accounts.  

The FEC also adjusted the reporting threshold for candidates, leadership PACs and political parties that receive lobbyist bundled contributions.  Now, they must report contributions aggregated by a lobbyist if they exceed $17,900 in a semiannual period.

The 2017-2018 contribution chart is available here

On the Horizon in 2017: Are Political Spending Restrictions on Section 501(c)(3) Organizations Going Away? 

2017 is sure to bring more changes on the political law front.  Just last week, President Trump repeated his support for overturning the “Johnson Amendment” – a long-standing provision in the tax code that strictly prohibits churches and other Section 501(c)(3) charitable organizations from engaging in any political campaign activities.  If the law is changed, individuals and organizations may be able to support entities engaging in political speech with tax deductible deductions.  At the same time, the administration is also considering an executive order to loosen political restriction on churches. These changes could make religious organizations new vehicles for supporting and opposing candidates in 2018 and beyond.  

At this time, it is unclear whether any repeal of the Johnson Amendment would apply broadly to narrow or remove the prohibition against political activities for all Section 501(c)(3) organizations, or provide just a limited carve-out for churches and religious organizations.  Although the Administration can change the interpretation or enforcement of the current prohibition, any formal repeal of the statutory prohibition would require Congressional action.

We’ll be following this issue and other new developments closely in Political Law Notes. Also, you can view Jim Kahl and Jeff Altman’s recent webinar – Federal Lobbying & Ethics Rules in 2017 – here.  A PDF copy of the webinar PowerPoint can be seen here