Recent Legislation Defines Prohibited “Coordination” Between Candidates and Super PACs.

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As part of its effort to increase oversight and disclosure of independent expenditures, the New York State legislature recently passed Bill Number A10742/S08160, a copy of which can be found on the New York State Senate website. The bill amends the New York State Election Law by clarifying what will be considered “coordination” between a candidate and an independent expenditure committee, such as would render the expenditure to be non-independent, making the amount of the expenditure a contribution to the candidate. These new requirements apply to elections regulated by the New York State Board of Elections, and do not impact Federal or New York City races, which are governed by the Federal Election Commission (“FEC”) and the New York City Campaign Finance Board (“CFB”), respectively.

In the aftermath of the Citizens United decision by the United States Supreme Court, the ability of outside groups to spend unlimited sums of money advocating for and against candidates and ballot proposals has been limited mainly by the requirement that those expenditures be independent of the candidate. Thus, a candidate could not direct or control the expenditure, or coordinate their campaign strategy with a supposedly outside group that has the ability to raise and spend money far beyond that of the candidate. While the concept is simple, there has been very little clear guidance on what exactly will be considered coordinated activity. By this bill, introduced at the request of Governor Cuomo, the Legislature both defined coordinated activity, and changed the application of the regulations to focus them squarely on independent expenditure committees. The Bill passed both houses of the New York State Legislature before the end of the session in June, and was signed by Governor Cuomo on August 24, 2016. The bill provides for an immediate effective date upon adoption.

Here are some examples of conduct that will render a communication coordinated:

-       If the candidate, their committee or their agents, participated in the formation of the independent expenditure committee within two years of the election and the payment or expenditure is made to benefit that candidate;

-       The candidate appears at a fundraising event hosted by the independent expenditure committee within two years of the election in which the candidate is involved;

-       The independent expenditure committee employs a former employee of the candidate, or one that held a policy-making non-administrative role for the candidate within two years of the election in which the expenditure is made to benefit the candidate;

-       The independent expenditure committee or its agent is a member of the candidate’s immediate family or is managed or directed by a member of the candidate’s immediate family;

-       The independent expenditure committee re-publishes campaign materials from the candidate that are not publicly available;

-       The candidate, its agents or committee, shares or rents space with the independent expenditure committee;

-       After the committee is formed, if the committee has strategic discussions with the candidate within two years of the election;

-       The independent expenditure committee and the candidate retain the same professional campaign services firm (i.e. Red Horse), unless the firm executes a confidentiality agreement expressly stating that it will not disclose strategic information regarding each party with the other party;

-       The independent expenditure committee utilizes strategic information related to the candidate that is not otherwise available by subscription, from a person previously employed by the candidate as a consultant, vendor or contractor.

The bill then specifically states that the following conduct is not coordination:

-       A candidate responding to an inquiry regarding their position on various issues;

-       A public communication showing the candidate as a business owner in the same manner as before the election, while not supporting or opposing the candidate;

Notably, the proviso that directly impacts labor unions’ ability to communicate with their members lies elsewhere, and is untouched. This is significant because it preserves the ability of labor organizations to communicate with their members regarding election issues and candidates, without the need to report what is spent, and the communications themselves, to the New York State Board of Elections.

The bill also touched on a number of related matters. For instance, there is a new requirement that Political Action Committees (“PACs”) disclose the name and occupation of individuals that exert “operational control” over the PAC, as well as a prohibition on PACs making independent expenditures and independent expenditure committees contributing to PACs. The statute also decreased the reporting threshold for lobbyists, while also requiring disclosure of funding sources above $2,500, excluding funding by dues. Finally, there are changes to disclosure requirements for 501(c)(4) lobbyist entities that file “Source of Funding” reports with the Joint Commission on Public Ethics.

The new independent expenditure disclosure rules bring New York State’s regulation of this area more in line with the systems already in place at the Federal level through the FEC, and at the New York City level through the CFB. This has been a brief summary of the pertinent portions of the legislation, so please do not hesitate to contact our office with any specific questions or concerns.

By: Steven C. Farkas, Esq.

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