A Question of Ethics

What Now for Corporations and Campaigns?

February 16, 2010

Q: I work on the re-election campaign of a House Member and I have a question about the fallout of the recent Supreme Court decision lifting restrictions on political spending by corporations. As I understand it, although the decision voided some restrictions on corporations’ political spending, it left others in place. For example, I know that there are still limitations on the extent to which my campaign can work jointly with corporations on getting out the message for our Member. I want to make sure that our campaign does not do anything that might run afoul of the rules. With respect to corporations, what is now fair game?

A: Good question. In fact, in the wake of the Supreme Court’s landmark decision in Citizens United v. FEC, a lot of people are wondering exactly the same thing. What degree of coordination between corporations and campaigns is now permissible?

In the decision, the Supreme Court held that it is unconstitutional for Congress to ban corporations and labor unions from spending money on their own political ads. Specifically, the court struck down a law that had prohibited corporations and unions from expressly advocating the election or defeat of candidates within 30 days of a primary election and 60 days of a general election. For example, the court said, under the law as it existed, it would have been a felony for the Sierra Club to run an ad within 60 days of a general election that urged the public to disapprove of a Congressman who favors logging in national forests. The court said that making this type of speech a felony violated the free speech clause of the First Amendment. Consequently, corporations and unions are now free to spend money on their own political ads.

However, corporations and unions are not free to make contributions directly to candidates’ campaigns. Citizens United did not change that. This means that your campaign may still not accept money directly from corporations. It also means that your campaign may not accept corporations’ “in-kind” contributions, such as supplies, services or anything else of value.

This is significant because one type of in-kind contribution is what is called a coordinated communication. This is essentially where a corporation and a candidate’s campaign work together on a political ad or communication supporting the candidate. While the court struck down restrictions on “independent expenditures” by corporations and unions on political ads, it did not alter, at least for now, the ban on coordinated communications. The court reasoned that when corporations make independent expenditures on their own ads, the absence of coordination with a candidate alleviates any danger that the expenditures might be a quid pro quo for improper commitments from the candidate.

Broadly then, independent expenditures are permissible but coordinated communications are not. So, what makes a communication coordinated? In general, the rules provide that a corporation’s ad or communication would qualify as coordinated if it were done in cooperation, consultation or in concert with a candidate, a campaign or their agents. For assessing whether a given communication qualifies as being coordinated, the FEC has established a multifactor test based on the content of the communication and the conduct of the people involved.

Under the test, a corporation’s communication may qualify as being “coordinated” if it was created, produced or distributed: (1) at the suggestion of the candidate; (2) with material involvement from the candidate on decisions regarding things like the communication’s content, intended audience or mode; or (3) after a discussion with the candidate or candidate’s opponent in which information about campaign plans, projects, activities or needs material to the communication was conveyed to the corporation. This is true whether the coordination is done with the candidate or someone acting on the candidate’s behalf. Moreover, the rules say that a communication can qualify as being “coordinated” with a candidate even absent agreement or “formal collaboration” with the candidate.

But, this test and these rules may well be in flux. In fact, the distinction between independent expenditures and coordinated communications has been the subject of much disagreement for years and has been litigated many times. Even as Citizens United was being decided, the FEC was again considering changes to the rules regarding what counts as coordination.

Last week, as a direct result of the decision, the FEC reopened the opportunity for public comment regarding the new rules. The FEC’s current official guidance regarding coordinated communications states that portions of the guidance may be affected by Citizens United and that the FEC will publish new guidance as soon as possible. Meanwhile, Congress might also act, as last week top Democrats vowed that they would soon introduce a legislative response to the decision to be enacted in time for elections this fall. For now, all you can do is study the rules and guidance as they currently exist and do your best to comply.

Of course, this leaves open all sorts of questions. For example, now that a corporation’s independent expenditures are unrestricted, does any discussion between the corporation’s employees and a campaign regarding a corporation’s political ad disqualify it from being “independent?” If not, who may discuss the ad and what may they say without it rising to the level of coordination? Is it unconstitutional to restrict discussions between corporations and campaigns regarding political ads?

Unfortunately, I don’t have the answers to these questions. But, they should be answered in the coming months by the FEC, Congress, and, I suspect, the courts. Stay tuned.

© Copyright 2010, Roll Call Inc. Reprinted with permission. Widely regarded as the leading publication for Congressional news and information, Roll Call has been the newspaper of Capitol Hill since 1955. For more information, visit www.rollcall.com.


A Question of Ethics

Who May Take Members and Staffers to Dinner?

February 4, 2010

Q: I am a lobbyist with a question about the exceptions to the ban on gifts to Members and staffers. As I understand it, the ban on gifts means that I may not take Members or staffers out to dinner. While wining-and-dining Members and staffers used to be frequent events on K Street, for most of us lobbyists the gift rules have made them a thing of the past. However, a friend of mine who works for a foreign embassy here in D.C. continues to take Members and staffers out for meals to discuss legislation affecting the country he represents. He says that there is an exception to the ban that permits him to do so. Can this be right?

A: It is. Under the rules, you may not treat Members and staffers to dinner. But your friend may. Let’s look at why.

As anyone who has been paying any attention knows by now, the House gift rule prohibits Members and staffers from accepting a gift unless an exception applies. The rules certainly consider an invitation to dinner to qualify as a “gift.” This means that, in the absence of an applicable exception, you may not take Members and staffers out for a meal. But, provided certain conditions are met, your friend may well be permitted to do so. This is because there is an exception to the gift ban for gifts from foreign governments, including embassies of those governments and their employees. Let’s put the exception in context.

Section Nine of Article 1 of the Constitution, which sets forth limits on Congress, provides that “No Person holding any Office of Profit or Trust under them, shall, without the Consent of the Congress, accept of any present, Emolument, Office, or Title, of any kind whatever, from any King, Prince or foreign State.” In English, this means that Members and staffers may not accept a gift from a foreign government unless Congress consents.

In 1966, Congress provided blanket consent for certain types of gifts from foreign governments by enacting the Foreign Gifts and Decorations Act. Prior to the act, gifts from foreign governments to U.S. employees were required to be placed in the custody of the State Department, which would handle the gifts differently depending on whether the recipient was from the executive, legislative or judicial branch of government. This is in large part because potential recipients of such gifts would often need to seek special legislation permitting receipt of the gifts. In some cases, special legislation was passed. In other cases, it was not. In nearly all cases, however, receipt of gifts from foreign governments was a cumbersome process. The act was intended to remedy these problems.

According to a report by the House Foreign Affairs Committee, the act was to provide a uniform set of standards and procedures for the acceptance of gifts and decorations offered by foreign governments to U.S. government employees. The report stated that the tender of gifts from foreign governments was a well-established practice that predated the foundation of the United States. According to the report, because gifts from foreign governments signify that the recipient has in some small measure contributed to more amicable relations with the foreign government, refusal could be regarded as an insult, thereby negating the very purpose for which the gift is intended.

The House gift rules thereafter incorporated an exception to the gift ban explicitly allowing Members and staffers to accept gifts received in accordance with the act. One type of gift permitted by the act, and the one that applies here, is a “gift of minimal value” from a foreign government that is “tendered and received as a souvenir or mark of courtesy.”

For starters, you might be thinking that the check for dinner at many of D.C.’s best restaurants could hardly qualify as something of “minimal value.” At some restaurants these days, a steak can cost upward of $40, and a couple cocktails can double that tab.

But, for purposes of the act, “minimal value,” as it turns out, is not quite as minimal as you might think. While “minimal value” meant less than $50 when the act was passed, the amount is now redefined every three years to reflect changes in the consumer price index. For purposes of the act, “minimal value” currently means less than $335.

An additional question is whether a dinner during which your friend discusses legislation with a Member or staffer counts as a gift that is “tendered and received as a souvenir or a mark of courtesy.” The House ethics committee appears to have answered that question affirmatively. In fact, the manual includes an illustrative example that is right on point. In the example, an embassy official invites a staff member to lunch at a local restaurant to discuss pending legislation concerning his country. The manual states that the staff member may accept the invitation under the minimal value provision of the act.

Note, however, that the answer would be different if your friend were a registered lobbyist or a registered foreign agent. The Ethics Manual states that meals from such lobbyists or agents are not permitted by the act because they are not properly deemed as having been tendered as a souvenir or mark of courtesy. Put another way, under the House interpretation of the exception, embassy officials are being courteous when they host dinners — but registered lobbyists and agents are not. You need thick skin to be a lobbyist these days.

© Copyright 2010, Roll Call Inc. Reprinted with permission. Widely regarded as the leading publication for Congressional news and information, Roll Call has been the newspaper of Capitol Hill since 1955. For more information, visit www.rollcall.com.