News & Insights

Coronavirus Impact

Six States Have Now Postponed Primary Elections in Response to COVID-19

As of March 19, primary elections have been postponed in Alabama, Georgia, Kentucky, Louisiana, Maryland, and Ohio. Additional postponements are likely, and we are monitoring each state to keep you apprised of any additional changes. Upcoming elections that could be impacted include a GOP runoff election for Mississippi's 2nd U.S. House district scheduled for March 31 and Pennsylvania's April 28 congressional primary elections.

Impact on FEC Reporting

The FEC announced that campaigns affected by postponements may continue to accept primary contributions until the date of the rescheduled elections. Further, the FEC has adjusted the reporting dates and deadlines for pre-election reports and 48-Hour Notices. The new reporting deadlines are as follows:

The FEC has also clarified that an additional pre-election report is due 12 days before the new election date if a state postpones its election after the original deadline for the applicable pre-election report. Also note that the respective primary election periods for coordinated communications, electioneering communications, Federal election activity and independent expenditures are affected by the postponements.

The FEC's full statement on the adjustments for postponed elections can be read here: https://www.fec.gov/updates/fec-adjusts-report-deadlines-for-postponed-elections/

If you have any questions about how these changes potentially impact you, please contact us.

Event Cancellations and Contract Issues: Force Majeure Is More Than Boilerplate

As events are cancelled across the country, we are seeing a rash of clients needing to cancel the contracts behind these events. Event contracts generally include express cancellation terms that specify under what circumstances the agreement may be terminated, and just as importantly, what financial liability results from the termination. Sometimes deposits are non-refundable, and sometimes a significant percentage of payment is due if a contract is cancelled just before a scheduled event. But most contracts also have a generally overlooked provision, often thought of as boilerplate, that is suddenly relevant.

The force majeure provision in a contract excuses the parties from performing their contractual obligations due to the occurrence of a certain unforeseeable event or circumstance that is beyond a party's reasonable control. Force majeure clauses typically set forth a list of events that occur only rarely, and which can be used to terminate a contract without liability, such as wars, terrorist acts, riots, strikes, regulations or orders by government, floods, fires, earthquakes, and epidemics.  In general, a non-performing party invoking a force majeure provision must show that: (1) the event constitutes a force majeure event under the contract; (2) performance is impossible due to circumstances outside of its control; and (3) no reasonable steps could have been taken to avoid or mitigate the event.

The COVID-19 pandemic is certainly an event that can impact a party's ability to fulfill their contractual obligations.  Whether COVID-19 qualifies as a force majeure event for any given contract depends on the language used in the force majeure clause.  Not all force majeure contract clauses are created equal and the current crisis may or may not be covered as a qualifying event.

Please contact us if you have any questions regarding the effect COVID-19 may have your contractual obligations and business operations.

Expanded Vote-By-Mail and Absentee Balloting

In the past week, several states have postponed primary and runoff elections due to health and safety concerns, often with little notice to voters and election workers.  As a result, government officials and opinion leaders have been fervently calling for states to immediately increase access to vote-by-mail options. While this may be necessary to allow elections to continue during a pandemic, election officials need to carefully consider the serious concerns associated with vote-by-mail balloting and make plans to address them.

For instance, absentee ballots are statistically less likely to be counted than ballots cast in person on Election Day, due to voters' failure to comply with state-specific verification requirements, such as signature-matching and return deadlines, for example, which are necessary to maintain the proper balance between expanded mail-in voting and election integrity. Thus, the increased use of voting by mail will place additional burdens on election officials to provide a notice to voters about ballot deficiencies, which if not cured, will certainly result in lower numbers of verified, counted ballots. In addition, election officials will face the challenge of reaching and mailing ballots to voters who have relocated temporarily due to COVID-19.

While voting by absentee ballot makes it possible for more voters to participate in the election process during this uncertain time in our country, it is incumbent upon state and local election officials to be aware of the likely effects of increased balloting by mail, and to adopt policies and procedures that ensure both accessibility and election integrity. At the same time, everyone involved should expect a highly litigious election season as candidates, parties, and voters struggle to adapt to new rules implemented on short notice.

In Wisconsin, for example, the state's Democratic Party and the Democratic National Committee filed a lawsuit demanding that the Wisconsin Election Commission (i) extend online and absentee voting registration until the Friday before Election Day, (ii) stop requiring a copy of their driver's license and proof of residency with every absentee ballot, and (iii) accept absentee ballots as late as 10 days after the election. This suit is still pending.

And in Arizona, the Maricopa County Superior Court recently considered a challenge to the county recorder's attempt to mail ballots to all registered Democrats after Arizona's primary on March 17 because the county closed 78 polling places due to COVID - 19. The Arizona Attorney General filed a complaint arguing that the County Recorder does not have the power to send ballots to voters who do not request a ballot or are named on the early voting list. The judge in the case granted a temporary restraining order to prevent the mailing of the ballots.

Additional legal challenges are inevitable, and the situation remains fluid. We are closely monitoring each state to remain apprised of any additional changes. If you have any questions about how any of these proposed changes potentially impact you, please contact us.

Text Messaging Programs

As COVID-19 continues to spread across the United States at an unpredictable rate, and voters are nervous to even shake hands with a stranger, let alone go to a campaign rally or answer a canvasser's door knock, the unavoidable question becomes: how can I communicate with supporters, voters, and donors?

Those text messages you receive from campaigns you support - and potentially those you don't - provide a clue. The election-year surge in campaigns using text messaging to contact voters for persuasion, contributions, and getting out the vote was inevitable, but it is now accelerating at an unprecedented pace. For campaigns looking to start or expand their texting efforts, the important question is: is it legal to send text messages to my supporters?

The answer is, it depends.  Under long-standing FCC rules, non-commercial (including issue and political advocacy) robocalls may generally be placed to landline phone numbers, but not cell phones. The law has been interpreted to prohibit sending text messages to cell phones via an automatic telephone dialing system unless a recipient expressly agrees to receive them.  Courts are currently divided on what constitutes an automatic system and what degree of human intervention makes the system non-automated and, thus, permissible. The Supreme Court may consider these issues in upcoming cases, but in the meantime, certain best practices can help prevent a TCPA violation by your campaign. More here. https://www.linkedin.com/pulse/stay-at-home-campaigns-peer-to-peer-textings-biggest-moment-roberts

FEC Update

FEC Office Closed to Visitors; Agency Remains Open and Operational

On March 17, the FEC announced that it remains operational but has closed its offices to visitors and delayed the processing of materials submitted by mail. Any materials submitted to the agency only by mail will be deemed received within 24 hours after the agency resumes normal mail operations. Agency staff continue to process materials submitted electronically, including campaign finance reports, enforcement complaints, and advisory opinion requests.

The FEC's statement on its continuing operations can be read here: https://www.fec.gov/resources/cms-content/documents/website_notice_regarding_status_of_FEC_operations_3-17-20.pdf

D.C. Circuit Upholds FEC Dismissal of LLC Complaints

The D.C. Circuit Court of Appeals recently upheld the FEC's dismissal of several complaints alleging that certain contributions made by corporate LLCs to Super PACs violated the Federal Election Campaign Act's prohibition against giving in the name of another.

The panel opinion (issued by Judges Garland, Tatel, and Edwards) sidestepped the question of whether the dismissal, which was premised on prosecutorial discretion, was even subject to judicial review. (An earlier D.C. Circuit  decision held that an FEC exercise of prosecutorial discretion is unreviewable.)  Instead, the court went directly to examining whether the statement of reasons written by Commissioners Matthew Petersen, Caroline Hunter, and Lee Goodman provided a reasonable basis for dismissing the complaints.  The court held that it did because FEC regulations and precedents may have created confusion about how corporate LLC contributions are treated under the law, thus leaving the regulated community without adequate notice regarding the applicable legal standards.

The FEC does not currently have a consensus position on how the prohibition against giving in the name of another applies to corporate LLC contributions.  But according to the three Commissioners whose reasoning was upheld by the D.C. Circuit, the law would be violated if "funds were intentionally funneled through a closely held corporation or corporate LLC for the purpose of making a contribution that evades the Act's reporting requirements."

If you have any questions about this opinion and how it potentially impacts your organization or its donors, please contacts us.

The court's opinion can be read here:  https://www.cadc.uscourts.gov/internet/opinions.nsf/ADBE5E25C03F52848525852A00533C91/$file/18-5239-1833362.pdf

Senate Holds Confirmation Hearing for FEC Commissioner Nominee; Agency Quorum May Be Restored

On March 10, the Senate Rules and Administration Committee held a confirmation hearing for Trey Trainor, President Donald Trump's Republican nominee to the FEC. Mr. Trainor was first nominated to the FEC in September 2017. If confirmed, the appointment would add the fourth Commissioner the FEC needs to restore a quorum. With a quorum, the FEC could once again hold meetings, issue Advisory Opinions, write regulations, and consider action on audit and enforcement matters.

IRS Update

The Treasury Department is actively considering adjustments to next month's personal income tax filing deadline, but as of today, there is no indication that this will include the upcoming filings for non-profit and political organizations. Currently, the regular filing deadlines for IRS Form 1120-POL (Income Tax Return for Certain Political Organizations) and Form 990 (Return of Organization Exempt From Income Tax) are still in effect. Accordingly, you should plan to file any required Form 1120-POL by April 15 and Form 990 by May 15. As always, automatic six-month extensions are available for both filings.

Lobbying Update

Filing deadlines for federal Lobbying Disclosure Act registrants have not been moved. The next LDA reports are due April 20.

During this period of expanded governmental activity in the economy and day-to-day life, clients are reminded that the usual lobbying rules apply to these unusual circumstances. Direct engagement with government officials and legislators is still subject to lobbying regulation.