With 365 days in the year and a seemingly infinite amount of space on the Internet to be filled with content, it’s easy to lose perspective. No one ever picked up many Twitter followers downplaying the importance of a news story. Lawyers, reporters, bloggers and other commentators tend to make each day’s new development seem like the most important development since, well, yesterday’s new development.
But the end of any year – especially the one before a presidential election year – is a good opportunity to look back and try to identify the most impactful developments in law and practice. Some developments changed politics immediately and obviously. The impact of others will be realized fully only in the coming year and in years that follow. Here is my list of the five most important political law developments of 2015.
With its prosecution of a Virginia-based operative for violating the anti-coordination provisions of federal campaign finance law, and its settlement with a well-regarded lobbying firm for violating the Lobbying Disclosure Act, the Department of Justice signaled that it will enforce federal lobbying laws, and that it will not cede enforcement of the thorniest campaign finance laws to the Federal Election Commission.
On the lobbying front, for several years following the post-Abramoff reforms to federal lobbying and ethics laws, some in the industry suspected that DOJ lacked the interest or resources necessary to enforce the LDA. Coming on the heels of a handful of LDA prosecutions in 2013 and 2014 involving little known defendants that resulted in one $200,000 default judgment and settlements ranging from $30,000 to $50,000, the Justice Department’s $125,000 settlement this year with the blue chip firm The Carmen Group should put any such notions to rest.
Perhaps more importantly, the Carmen Group case appears to be the first to involve issues other than registration and reporting failures. Indeed, the failure to disclose issues lobbied with sufficient specificity is one of the most prevalent LDA reporting mistakes, and it might be the one that first drew Justice’s attention to The Carmen Group.
On the campaign finance front, DOJ prosecutions in recent years seemed to have centered on relatively straightforward issues like corporate contributions and straw donor schemes. But with the prosecution of Tyler Harber for illegally coordinating expenditures between a Virginia congressional candidate and a Super PAC he controlled, the Justice Department took on an issue as to which the FEC itself has been unable to reach much if any agreement this decade.
One additional aspect to this development: Over the years, “watchdog” and other political reform groups have filed many dozens if not hundreds of largely unsuccessful civil complaints against candidates, campaign committees and other political players. Frustrated in recent years by what they perceive as a lack of enforcement by the FEC, these groups now seem to have been emboldened by the uptick in DOJ enforcement, and have begun requesting criminal investigations of candidates and their campaigns. Expect continued use of this tactic in 2016 and beyond.
4. “Independent” Redistricting
Since our nation’s founding, one of the greatest perks of incumbency has been the constitutional authority to redraw legislative district lines. In the most recent redistricting rounds, Republicans — aided by developments in computers and technology — have wielded redistricting power with incredible effect. Today, some people even believe that gerrymandering is the root of all political evil — particularly when combined with unacceptably low voter registration rates and barely-there turnout by voters in party primaries.
Against this background, there have been attempts in states across the country to make redistricting more “independent” by insulating it from raw political considerations. Many of these efforts center on involving unelected citizens as influencers or decision-makers in the redistricting process. (I have expressed skepticism about these efforts.)
Voters in Arizona actually stripped the Arizona state legislature of its redistricting authority via a constitutional amendment, and vested the power instead in an independent commission. The Arizona legislature sued to recover its authority, but in June, the Supreme Court upheld the constitutional amendment and the independent commission it established. The legislature argued that the independent commission violates the Elections Clause of the federal constitution, which states that the time, place and manner of holding elections are to be established by the legislature in each state. However, the Court reasoned that, because the legislative power derives from the people, the people of a state are its legislature — and thus they can act directly through a constitutional amendment, instead of indirectly through their elected representatives, to change the manner in which legislative districts are drawn.
We are now more than halfway to the next round of redistricting. As technology advances, gerrymandering becomes even more effective, and the electorate continues to polarize, expect voters to continue to devise ways to weaken — or, following Arizona’s lead, to strip altogether — state legislative redistricting power.
3. Super PACs Do Grassroots
There are two ways to look at Super PACs. The first is the traditional way. A Super PAC raises money in unlimited amounts from individuals, corporations and other PACs and non-profit organizations, and spends the money on paid media. The new way takes stock of the amount of funds that are potentially available to be raised and spent in support of a candidate, and then attempts to raise those funds into the entity that can spend them most effectively and efficiently relative to the other entities supporting that candidate.
There are some things that a Super PAC never is going to be able to do — such as scheduling the candidate, moving him or her from A to B, prepping for debates and writing speeches. There are other things that Super PACs have begun doing this cycle — retail events, research, rapid response — and have done pretty effectively. Still, there remain a few things that Super PACs conceivably could do but, for the most part, have not been doing. Chief among them has been grassroots organizing.
Just this week, Right to Rise USA, the leading Super PAC supporting Jeb Bush, mailed blank correspondence cards and envelopes to its backers, requesting that they write handwritten notes to undecided voters in early primary states. Throughout the past year, Super PACs supporting Carly Fiorina and Bobby Jindal have held town hall meetings — featuring appearances by the candidates the candidates themselves — at which the Super PACs collected the names and contact information of potential supporters. And for the past several years, Ready for Hillary engaged in a multi-million dollar campaign to create a national database of Clinton supporters.
I don’t think anyone has figured this out yet. Ready for Hillary built what by all accounts was a huge national list, but the Clinton presidential campaign has it now. It is unclear what the Fiorina and Jindal Super PACs are doing or might in the future do with the relatively fewer signups they have collected. (Some suspect the signups were just a ruse to facilitate a Super PAC-funded campaign event for the candidates.) But someone is going to figure this out — the opportunity is just too big not to — and when that happens, it will be a game changer. In addition to making for a more efficient use of the total dollars behind a candidate, it will further strengthen Super PACs and the consultants who run them. At the end of the cycle, instead of being left with an empty bank account, the PACs will have very valuable lists and data — and that will make those PACs players in future cycles. (See #2, below, regarding the institutionalization of valuable information in LLCs to be used across organizations and cycles.)
Using an LLC to hide the source of political contributions is so 2012. The far more cutting edge use of an LLC and other corporate forms is as a highly specialized vendor to a very specific type of political client, or a limited number of clients.
Of course, for many years, the LLC has been the corporate form of choice for political consultants and vendors who need to invoice clients, pay themselves and one or more employees, and protect themselves against contract and tort liability. What’s different about the emerging model is the placement of the LLC at the very heart of a movement, campaign or project, where it functions as a servicing company to an array of aligned entities — for example, a 501(c)(3), a (c)(4), a non-connected PAC and a Super PAC.
Instead of being spread out across multiple entities, strategy, data, other valuable information — as well as talent — is institutionalized in the LLC. The payment of fair market value by the LLC’s clients for the services and products they use insulates the clients against most (but not all) campaign finance violations. And the LLC’s for profit tax status and private ownership mean that there is very little if any transparency over its financing and operations.
This model of product and service delivery is not for amateurs. There is real potential for excessive contributions, corporate contributions and coordination that must be anticipated and protected against. But for well-funded, sophisticated operatives and projects, it is a powerful new approach.
1. The Pre-Candidacy Phase
No surprise here, and no shortage of controversy. The most important political law development of 2015 was the emergence of a “pre-candidacy” phase. During this phase — which ends when an individual begins to “test the waters” or declares a candidacy and thus comes within the scope of the FEC’s regulatory jurisdiction — potential candidates work closely on political projects with an array of operatives and organizations, some of whom they would be barred from coordinating with if they were testing the waters or running for office. Potential candidates also raise funds for such organizations during this time, including in some cases funds that are in amounts or from sources that the Federal Election Campaign Act would prohibit if they were exploring or running.
Jeb Bush exploited this phase fully and aggressively, helping Right to Rise USA raise over $100 million, strategizing with it, and sitting for interviews and participating in the shooting of other footage that the Super PAC later could use in support of his candidacy. Now languishing in low single digits in most polls, the success of Bush’s pre-candidacy phase is a — if not the — primary factor keeping him in the race.
Much has been written, and much more will be written, on this subject. The FEC recently issued an advisory opinion. Multiple complaints are pending at the FEC. Watchdog groups have demanded a criminal investigation. And in the event of an enforcement action, litigation could ensue over whether the FEC’s regulatory jurisdiction — which, to the extent that it encompasses exploratory activities by potential candidates, already is stretched beyond the limits of the FECA — covers activities and expenditures by individuals who, despite what the press, watchdogs and political opponents say, maintain that they are neither exploring nor running for office. We are likely years away from clarity on this issue, but in the meantime, it has fundamentally altered the presidential campaign playbook, and the impact already is trickling down the ballot.