The US District Court for the District of Columbia denied a challenge to donor disclosure requirements of those paying for broadcast messages in the weeks before an election under Federal Election Commission (FEC) rules. Citizens United, a 501(c)(4) organization filed a lawsuit against the FEC claiming that television ads for its film, Hillary: The Movie, should not be subject to donor disclosure requirements under FEC rules. In January a three-judge panel ruled against the group.

The case involves FEC rules for electioneering communications, television and radio commercials mentioning the name of a federal candidate aired 60 days before the general election or 30 days before a primary. Any electioneering communication that is allowed is subject to disclosure and disclaimer requirements.

According to the July 18 opinion, all three judges agreed there were "no genuine issues of material fact presented," and therefore not enough evidence to go forward and their summary judgment request was denied.

According to BNA Money and Politics ($$), Citizens United will file an appeal with the Supreme Court, but since the Court is now in recess there will not be any action on the case until late September.

Citizens United has now announced plans to release in September a new movie focused on Senator Barack Obama (D-IL). And at least for now, donor disclosure rules remain in place.

The Hill reports that the Democratic Senatorial Campaign Committee (DSCC) is "trying their luck with a series of candidate ads that inhabit a gray area of the law, and observers say the approach could be a game-changer in the continuing battle over campaign finance reform." Campaign finance rules restrict the amount of money the DSCC can spend on coordinated efforts with a campaign, but the DSCC argues that since the ads do not ask the viewers to vote for the candidates, the law does not apply. Republicans however, argue that the ads are illegal and have filed Federal Election Commission (FEC) complaints. The DSCC's new Mississippi ad features Senate candidate and former Governor Ronnie Musgrove. The DSCC has also funded part of the Oregon Democratic Party's series of issue ads featuring Senator Gordon Smith's opponent, state Representative Jeff Merkley.

The Hill notes; "Jennifer Duffy, a Senate race analyst at The Cook Political Report, and others say the legal question is an open one, election law expert Jan Baran said Democrats appear to have an airtight case, because candidates are allowed to participate in 'non-express advocacy' communications outside of 90 days before the general election."

Others might say it is irrelevant if FEC complaints are made say, since the FEC is actually the "Failure-to-Enforce Commission." Because of the FEC's enforcement failures, some are advocating for the replacement of the FEC with a new body, the Federal Election Administration (FEA). Senators John McCain (R-AZ) and Russ Feingold (D-WI) have introduced the Federal Election Administration Act (S.478) and a companion measure in the House (HR 421) introduced by Representative Chris Shays (R-CT). For more information about this three member agency, click here.

Last week, the New York Times reported that the Department of Health and Human Services (HHS) has drafted regulations that would allow any federal grant recipient to obstruct a woman's access to contraception. All grant recipients would have to certify that they will not refuse to hire providers who object to abortion and even certain types of birth control. According to Senator Hilary Clinton (D-NY) the proposed regulation will be released next week. And in response, some organizations are vigorously opposing the proposal and are trying to gear up public opposition even before the proposed rule is published. You can send a letter to HHS Secretary Leavitt here.

The leaked draft proposed rule states; "any of the various procedures — including the prescription, dispensing and administration of any drug or the performance of any procedure or any other action — that results in the termination of the life of a human being in utero between conception and natural birth, whether before or after implantation." This broad definition may cover many types of birth control, such as oral contraceptives and emergency contraception, and therefore protects the right of medical providers to refuse to offer them. It also says it is needed to ensure that federal money does not "support morally coercive or discriminatory practices or policies in violation of federal law."

More Senators have signed on as a co-sponsor to the Senate Campaign Disclosure Parity Act (S.223). The bill would require Senate candidates to file their campaign finance reports electronically. Senator Tom Harkin (D-IA) and Senator Jon Tester (D-MT) make the co-sponsor list total 44, yet a measure with almost half the Senate listed as a cosponsor remains stalled.

Voters should be able to know the identities of those who are providing significant financial support in Senate races. Currently, the Senate's paper campaign finance reports have to be entered into a computer before the information goes online. This time-consuming process means the public will likely not have access to the information until after the election. This commonsense bill will hopefully only continue to gain more support.

After some clamor, on July 16, 2008 the Secretary of the Senate and the Clerk of the House issued updated Guidance for the Lobbying Disclosure Act (LDA). Changes were made to the section on Form LD-203, the semiannual filing which individual lobbyists and their employers disclose contributions and other politically related expenditures. The form also has a certification that the filer has read, understands, and has not violated the gift and travel rules. This report is due July 30. The updated Guidance can be found here.

A National Journal ($$) column titled, "Just The Beginning The Implementation Of Congress' New Ethics Law Has Hit A Number Of Snags," covers some of the various remaining issues of the Honest Leadership and Open Government Act of 2007 (HLOGA). "As difficult as it was for Congress to enact lobbying and ethics changes last year, that may have been the easy part compared with actually carrying out and enforcing the new rules." The column references the letter a group of lawyers wrote to the House clerk and the Senate secretary asserting that the lobbying guidelines "significantly misinterpret" the HLOGA. "The guidelines included overly broad examples of when lobbyists must report donations to organizations controlled by lawmakers, and events that 'honor or recognize' a lawmaker or other official covered by the law, these critics said."

Regulations are overdue, disclosure forms and guidelines have come under fire, and a key congressional ethics office has failed to open on time. [. . .] But House leaders have yet to follow through on those appointments.

And there will be lobbying and ethics issues to be addressed in the future including tighter revolving-door rules, and better disclosure requirements for lawmakers involved private-sector job negotiations.

The Senate overwhelmingly approved a new federal wiretapping law, the FISA Amendments Act (HR 6304) by a vote of 69-28. President Bush signed the bill into law on July 10. Existing lawsuits against telecom companies that assisted with the administration's warrantless wiretap program would be waived if a federal district court ruled that there was "substantial evidence" that the companies received written assurances that the program was authorized by the president. Amendments that would have limited the companies' ability to gain immunity from lawsuits failed. In addition, it allows warrantless surveillance of foreign targets who may be communicating with people in the U.S. Read the AP story here.

Shortly after Bush signed the bill into law, the American Civil Liberties Union (ACLU) announced the filing of a lawsuit charging that the new law did not include proper constitutional protections, seeking a permanent injunction that would bar the government from conducting surveillance activity under the law. The Nation Magazine joined a coalition of plaintiffs that includes Amnesty International USA, Human Rights Watch, Global Fund for Women, PEN American Center, Washington Office on Latin America, and Service Employees International Union. A posting from the Nation states; "We believe the challenged law undermines the ability of The Nation's editors, writers, contributors and staff to gather information that is critical to their work. The ability to communicate confidentially with sources is essential to journalists' work. Many of the people with whom the Nation's staff and contributors communicate will not share information if they believe that their identities cannot be kept confidential."

The campaign of Senator Gordon Smith (R-OR) filed a complaint with the Federal Election Commission (FEC) claiming his Democratic opponent, Jeff Merkley, and the Democratic Party are attempting to circumvent campaign finance law. Two television commercials have Merkely discussing his work on veterans' issues paid for by the Oregon Democratic Party with help from the Democratic Senatorial Campaign Committee. The state Democrats argue that they do not have to count the money spent on the ads as a contribution to the campaign because they are not meant to advocate for Merkley's election, instead, are issue ads meant to advocate for veterans. The ad never mentions Merkely is a candidate for the Senate, and does not mention Smith. Smith's campaign argues that the Democratic Party is using the strategy of releasing issue ads to try to give more money to Merkley for advertising.

The Oregonian reports, "The details of federal election law - and of just how the ad was put together - are complex. But the two ads featuring Merkley test the limits of the laws governing campaign finance. [. . . Paul Ryan, from the Campaign Legal Center] said the legality of the Merkley ads could hinge in part on whether they republished material from the Merkley campaign. The Smith complaint alleges that the veterans ad takes material from the Merkley Web site. Reiff, [a Democratic Party of Oregon laywer] however, said the ad merely 'echoed themes' used by the Merkley campaign."

Decide for yourself, watch one of the ads here.

Meanwhile, this complaint is one more item the new FEC commissioners are waiting to tackle. The FEC convened yesterday (July 10) for the first time in more than six months, and during the first open meeting Republican election lawyer Donald McGahn was named chairman. The FEC faces a lot of work. The Campaign Legal Center wrote a letter to the FEC urging that they quickly produce rulemakings related to the Honest Leadership and Open Government Act, including rules for the disclosure of bundled lobbyist contributions.

The Baltimore Sun has highlighted the National Association for the Advancement of Colored People (NAACP) and the fact that it is not allowed to engage in partisan politics, not surprising, as all 501(c)(3) organizations are prohibited from doing so. "Individually, many NAACP members have lauded Obama's nomination as a victory for racial progress. But they also say the organization continues to tread a delicate path, careful not to give the appearance of partisanship, especially since it has been accused of being too political in the past." A month before Election Day 2004, the Internal Revenue Service (IRS) initiated an audit of the NAACP's tax-exempt status because of a speech Julian Bond made criticizing the Bush administration. After two years, the investigation was dropped.

"In an election year, criticism of nonprofits typically increases, as does IRS scrutiny," said Gary Bass, executive director of OMB Watch, a nonprofit watchdog organization in Washington. [. . .] "I would say that the IRS has increased scrutiny the last election cycles, in part because of the gamesmanship that goes on - one side constantly filing petitions against the other side," Bass said. He thinks IRS rules are ambiguous. Any objection or complaint triggers an inquiry, which may or may not lead to a full-scale audit. "For groups who talk about critical policy issues, it then means that they are left with uncertainty as to what they can and cannot do," Bass said.

For more information on this topic, see our resource center, IRS Rules on Election Activities of Charities

Legal counsel that represents labor and nonprofit organizations that register under the Lobby Disclosure Act (LDA) have written to the Secretary of the Senate and the Clerk of the House regarding the LD-203 Contributions Reporting System and the new LDA guidance. They are concerned that the new guidance "misinterprets" the Honest Leadership and Open Government Act (HLOGA), and are concerned that it will "chill ordinary interaction and association with Members of Congress and impose undue and unreasonable recordkeeping and reporting burdens on registrants and their employed lobbyists."

One item of contention is the Revised Guidance for section 203(a) of HLOGA, which requires lobbyists and groups that employ lobbyists to report all of their contributions to pay the cost of an event that honors a legislative or executive branch official. Example 3 in the new guidance states; "Registrant 'R' sponsors an event. Senator 'Y' is listed on the invitation as an attendee. Representative 'T' is listed on the invitation as a speaker. 'R' would disclose the date, amount, recipient(s) of funds, and 'Y' and 'T' as being recognized."

The letter explains that the "practical implications of Example 3 are far-reaching. Members of Congress and other government officials frequently attend or speak at events that are sponsored or funded, at least in part, by entities that employ lobbyists, including policy forums, seminars, meetings, conferences, conventions and other events that have nothing to do with 'honoring or recognizing' the officials." They ask that Example three is withdrawn from the guidance.

Meanwhile, the Washington Post reports that lawyers are "working overtime to field questions and complaints from lobbying groups eager to fill the thing out correctly by the July 30 deadline. [. . .] Jan W. Baran of Wiley Rein notes that the new law asks lobbyists to report any contributions they make to groups established, financed, maintained or controlled by members of Congress or their staff. Such groups include charities and schools named for sitting lawmakers. But he said there is no specific place on the form to list such expenditures. [. . .] Several lawyers also cite ambiguity in the form's instructions. For instance, it demands that lobbyists disclose payments they make in connection with events at which lawmakers and their aides are honored or recognized."

Philanthropy News Digest had a "5 Questions For" column with OMB Watch Executive Director Gary Bass. The questions addressed nonprofit advocacy, particularly how philanthropic support of advocacy is changing. During which, Bass commends a new report on the topic from Atlantic Philanthropies.

He states that a question that continues to stir confusion is whether you can still lobby if you receive public-sector funds and questions on nonpartisan voter engagement.

I firmly believe that from his bully pulpit, the new president, whether it is McCain or Obama, should strongly encourage nonprofits to be involved in a broad range of advocacy activities. I also think foundations have a crucial role to play in helping nonprofits express their voice and in creating a positive framework for change in America. You can't sustain the kind of change I'm talking about — big-vision change — with bake sales.

According to the Denver Post, Priests and deacons serving in the Archdiocese of Denver will be prohibited from donating money to political candidates and from making endorsements under an upcoming directive from Archbishop Charles Chaput. The directive states that clerics "may not publicly participate or endorse political campaigns or initiatives, or publicly affiliate themselves with groups whose primary purpose is to do so." This is of interest because it seems that they would not be allowed to donate in the capacity as a private citizen, separate from their occupational role as a priest. While charities, educational institutions and religious organizations cannot make donations to campaigns, individuals can do so in a personal manner, and not on behalf of an organization.

A federal judge has denied a preliminary injunction request by SpeechNow.org. The 527 group filed a lawsuit against the Federal Election Commission (FEC) in February 2008, challenging federal campaign finance laws that prohibit contributions of more than $5,000 per year to political committees as an unconstitutional violation of free speech and association rights. SpeechNow.org contends that it is unconstitutional to require organizations to comply with the contribution limits for political committees as long as the speech is independent of any candidate or party, funded only by individuals, and therefore can not be corrupt. The case will likely will be appealed to the D.C. Circuit.

Bob Bauer at moresoftmoneyhardlaw.com commented that "Judge Robertson's decision against SpeechNow will not in the long run have done this organization much harm, and it may have done it a favor. [. . .] his opinion highlighted that case's difficulties, particularly the ones that the Supreme Court—speaking hear of the majority deciding cases like Davis—may pounce on."

In a very suspicious manner, the decision states; "SpeechNow's carefully constructed test-case embodiment of 'independence' does not shield it from reasonable campaign finance regulation. [. . . ] neither does the First Amendment require Congress to ignore what its members surely know — that an organization may be legally independent under FEC rules while nonetheless functioning as a fully integrated arm of a major political party."

As Bauer describes, "Robertson decides to locate SpeechNow within a controversy in which it has had no part, and in doing so, he tries to lighten his persuasive burden in arguing the constitutional merits of its claim. In effect, he moves the argument from the activity to the actor, and he implies that the actor is somewhat disreputable and its position not properly given much weight.

The ruling comes to the opposite conclusion on this issue as the Fourth Circuit in the recent North Carolina Right to Life v. Leake case.

BNA Money and Politics ($$) reports that forms and instructions for the new lobbying disclosure form, LD-203, have been released. Lobbyists and their organizations, as mandated under the Honest Leadership and Open Government Act, will have to detail the amount of campaign contributions and other payments linked to lawmakers. The new disclosure form will have to be filed twice a year, first filing deadline is July 30, 2008.

The forms that lobbyists and lobbying organizations must fill out have menus calling for reporting of four types of contributions or payments:

• campaign contributions regulated by the Federal Election Commission, including contributions by a political action committee controlled by the lobbyist or organization;
• "honorary" expenses linked to lawmakers;
• expenses for meetings involving lawmakers; and
• donations to presidential libraries.

The form calls for reporting on honorary expenses, which Kenneth Gross of the firm Skadden Arps Slate Meagher & Flom warned in the BNA article that "using the words 'honorary expense,' the form may not make it clear that payment to an event where a member of Congress merely speaks or is recognized but is not honored must be reported."

Information is available from the Senate here or from the House here.

The Treasury Inspector General for Tax Administration (TIGTA) has released an audit report addressing improvements in educating and enforcing the prohibition against political activities for tax-exempt organizations. The purpose of the audit was to determine the effectiveness of the Internal Revenue Service's (IRS) Political Activities Compliance Initiative (the Initiative). The audit addressed how effective the IRS is in addressing alleged incidences of political campaign intervention and "whether actions had detected repeated campaign intervention by previously identified organizations."

The audit found that the Initiative could be improved "to ensure that tax-exempt organizations receive timely notification that they might be involved in prohibited political activity. Also, the EO function needs to clarify why certain referrals are not included in the Initiative."

Recommendations laid out in the audit include :

• ensure that all referrals of potentially prohibited political intervention are reviewed in a timely manner.
• Improve the consistent understanding of prohibited political intervention criteria.

The IRS expects an active 2008 election cycle, and will start the Initiative even earlier this year. To read the full report, click here.