Alabama FCPA Update Association of County Commissions of

Alabama FCPA Update Association of County Commissions of Alabama 2015 Legislative Conference Othni J. Lathram Alabama Law Institute

7 Revisions to FCPA in 6 Years • 1 in 2010 – PAC-to-PAC transfer ban and other restrictions • 2 in 2011 – Requires more frequent electronic and electioneering communication reporting • 2 in 2012 – Revises reporting schedule and addresses “robocalls” • 1 in 2013 – Extensive revisions, including new civil penalties and no candidate death penalty • 1 in 2015 – Expanded enforcement provisions, new responsibilities for Ethics Commission, and clarification on reporting issues, among other revisions 2

Overview of 2015 FCPA Revisions • SB 241 (by Senator Orr) was signed by the Governor on June 12 • Revisions took effect on September 1 • Builds off recommendations from FCPA Study Committee that was established from 2012 to 2014 • Expands enforcement provisions • New responsibilities for Ethics Commission • Clarification on reporting issues • Various administrative clean-ups 3

Enforcement Provisions • The 2015 revisions continue the 2013 approach to enforcing FCPA requirements using both civil penalties for routine errors and ultimately criminal penalties for intentional violations. Ø 2013 AG AO raised procedural questions. • The Ethics Commission now has the largest role in enforcing the FCPA. • The Ethics Commission now levies penalties for inaccurate reports. • The So. S / Probate Judge levy penalties for late reports. 4

New Civil Penalty Procedures • If a civil penalty is assessed, the Secretary of State or Probate Judge notifies the party. • A person who is assessed a civil penalty may seek review by filing notice with the So. S or Probate Judge within 14 days. Ø Further review of the penalty is conducted by Ethics Commission. • Fines must be paid within 45 days. Ø May be paid with campaign funds • Safe Harbor for Correcting Reports. Person is not subject to penalty for the first untimely report in an election cycle if the report is filed within 48 hours of being due. 5

Modified Civil Penalties • Beginning with 2018 election cycle, new penalties for reporting violations of any kind: • 1 st Offense: Lesser of $300 or 10% of amount not properly reported • Was previously greater of $300 or 10% • 2 nd Offense: Lesser of $600 or 15% of amount not properly reported • Was previously greater of $600 or 15% • 3 rd Offense: Lesser of $1, 200 or 20% of amount not properly reported • Was previously greater of $1, 200 or 20% • 4 th offense continues to establish a rebuttable presumption of the intent necessary for a criminal violation 6

Criminal Violations under FCPA • An FCPA violation is criminal if it is “intentional” • The AG or DA prosecutes criminal FCPA violations Ø For candidates, venue is in the county where the violation occurred or the county where the alleged violator resides (or is incorporated) • The Secretary of State or Probate Judge notifies the AG or DA of persons who violate the filing requirements 4 or more times in an election cycle. Ø The 4 th violation of filing requirements creates only a rebuttable presumption of a criminal intent to violate law. 7

New Ethics Commission Duties • Ethics Commission is now responsible for: • Investigating and holding hearings on FCPA violations • Conducting or authorizing audits of FCPA filings • Affirming, setting aside, or reducing civil penalties • Referring information to AG or DA for prosecution of any criminal violation • Issuing advisory opinions • Establishing and enforcing administrative rules • Ethics Commission must now have at least one member who is a former elected public official who has served at least two terms 8

Secretary of State Duties The Secretary of State shall perform the following duties: • Maintain the state electronic filing system • Levy and collect civil penalties for untimely reports Ø Probate Judges handle this for municipal candidates • Promulgate administrative rules • Work cooperatively with and assist the Ethics Commission to fully implement and enforce all campaign finance laws 9

Misc. 2015 FCPA Revisions • Candidate may now clearly use money market accounts, debit cards, credit cards, and electronic transfers • Campaign funds may clearly pay legal fees and other costs incurred in connection with performance of official duties • Addresses disposition of campaign property after election – must be sold at FMV or donated within 120 days (unless elected and property is used for official duties) • Candidate must designate an individual to dissolve his or her candidate committee in the event of death or incapacity • Statement of Economic Interests now filed simultaneously with party qualifying papers (i. e. , much later) 10

Misc. 2015 FCPA Revisions (2) • Reduced daily reporting. Those who must file “daily reports” near election (legislative and statewide candidates) are now only required to file them on the actual day the campaign spends or receives $5, 000. Ø Previously, if a daily report was required on any day, the campaign was required to continue filing daily reports until election even if it did not hit the $5, 000 threshold again. • No Annual Reports if no Committee. Candidates are no longer required to file annual reports if they have closed their campaign accounts. Ø Common issue for judges and was a trap in the old law. 11

Misc. 2015 FCPA Revisions (3) • Small campaign exemption. The threshold for electronic filing is lowered from $10, 000 to $5, 000. Ø This means that any candidate receiving more than $5, 000 must now use the electronic filing system. Ø Expect trend to continue. • More offices filing with So. S. Beginning with 2018 election cycle, county candidates will file reports with the Secretary of State’s office like state candidates and will not file with Probate Judge. This requirement does not apply to municipal candidates. 12

Date of Contribution / Expenditure Defined • The date of a “contribution” is the first date that the recipient is able to use the contribution. • For contributions by check, the date is the earlier of: • 10 days from the date the check came into recipient’s control; or • Date the check was deposited into the recipient’s account. • An “expenditure” is now made on the date that the instrument authorizes the expenditure: • For expenditures by check, the date of the check. • For expenditures by electronic payment, the date of the electronic payment. • The payment of qualifying fees is now expressly an expenditure. 13

Look Back at Key 2013 FCPA Revisions • Safe Harbor. No civil penalty if a candidate (or PAC) corrects an error in a report without being prompted. • Repeal of candidate death penalty. • Candidates and PACs may now return or refund contributions. • Repeal of corporate contribution limits. • Legislative Session fundraising “blackout” no longer applies to circuit / district candidates – only applies to legislative and statewide candidates – In effect as of today. • Municipal candidates in cities that cross county lines now only file their FCPA reports in the county where the city hall sits. 14

Questions? 15