Monthly Archives: January 2013

APPROVED: TEC Unanimously Approves Text Msg Contributions

After brief discussion and comments by Jerad Najvar, attorney for Harris County Republicans, the TEC voted unanimously to approve a draft opinion permitting Texas political committees to accept contributions by text message. APPROVED OPINION HERE (the first page is a diagram of each method)

The request proposed two methods for processing text message contributions. One method would have permitted a political committee to accept small-dollar contributions without collecting the contributor’s identifying information, relying on the ability of political committees to accept small-dollar contributions without itemizing contributor information on its campaign finance reports. Although the FEC has approved this method for unitemized contributions, the TEC has previously decided (in Advisory Opinion 207) that Texas law doesn’t permit acceptance of even the smallest of contributions from an anonymous source.  This method, therefore, was not approved.

The second method proposed that the committee use a series of reply text messages to collect the contributor’s name, address, and other required information before processing the contribution. This is the method approved today. The final opinion also confirms that the processing firms do not make a prohibited corporate contribution by advancing a portion of each confirmed text contribution to the political committee pursuant to a normal business agreement (in other words, the committee doesn’t have to wait until the contributor pays the cell phone bill before receiving some of the funds).

I am sure there will be follow-up requests ironing out related issues and proposing different methods, but this is a major step forward. Text contributions will be a bigger deal very soon than they seem today.

TEC Vote Today: Will They Allow Text Msg Contributions?

The Commissioners are expected to vote on the advisory opinion request today, so we should know before noon. I will update after the meeting.

There are several other requests up for consideration today, including a contentious one seeking clarification about the extent to which a sitting legislator may receive compensation from, and solicit funds for, a nonprofit. I will be summarizing all of the advisory opinion business from this meeting as soon as possible.

Obama Campaign Lawyer Concedes Money is Speech

When First Amendment objections are raised against various proposals for campaign finance “reform,” the reformers like to respond simply that “money doesn’t equal speech.” Apparently neither President Obama, nor his campaign attorney, got that memo.

President Obama has announced he’ll set up a 501(c)(4) nonprofit called Organizing for Action to advocate his policy priorities. Bob Bauer, former Obama White House counsel who also headed up the legal team for the Obama campaigns in 2008 and 2012, is now providing services to the nonprofit, which will be allowed to accept contributions in unlimited amounts, including from corporations. As reported by Bloomberg BNA ($) (Hat tip Election Law Blog), Bauer explained at a recent Cato conference why he’s working for the nonprofit and why it plans to spend tons of money:

Bauer said that he is serving as counsel to the new organization and that it “will not be involved in electoral activity at all.” He said the group will be involved in public policy advocacy, adding that the “business of communication on issues … requires resources.”

This is a candid admission from Obama’s own campaign attorney that the Supreme Court had it exactly right in Buckley v. Valeo when it recognized that freedom of speech includes not only freedom to shout to passersby from a street corner, but also the freedom to use financial resources to disseminate ideas:

That is because virtually every means of communicating ideas in today’s mass society requires the expenditure of money. The distribution of the humblest handbill or leaflet entails printing, paper, and circulation costs. Speeches and rallies generally necessitate hiring a hall and publicizing the event. The electorate’s increasing dependence on television, radio, and other mass media for news and information has made these expensive modes of communication indispensable instruments of effective political speech.

It’s nice to see somebody from the left actually admit this is true.

There is much more to discuss with this story, considering Obama’s completely hypocritical stance on political spending, especially since Citizens United (remember his distasteful–and inaccurate– comments about the Supreme Court’s decision in the 2011 State of the Union?).

Texas Ethics Commission Likely to Vote On Text Message Contribution Request Jan 31

To update my earlier post regarding the advisory opinion request filed by Harris County Republicans seeking approval for text message contributions: TEC staff advised that the proposal is definitely on the agenda for the January 31 meeting, and a vote is expected. So, if a method for processing text contributions is approved, it will be open season for tech firms who provide this technology for commercial clients–and some of whom provide it for federal candidates (at least for Obama and Romney)–to set up shop in Texas.

Text message political contributions have the potential to revolutionize political fundraising. Why? Impulse. Impulse drives many commercial transactions, and it is also powerful in political communication. In order to understand the potential, an understanding of how text contributions actually work is necessary.

The campaign first registers a “short code” and “keyword” that are used in tandem. For example, Romney supporters could contribute to the Romney campaign in the latter half of 2012 by texting “GIVE” to 37377. (To my knowledge, Romney and Obama are the only federal candidates to have used text contributions thus far since the FEC’s approval in June 2012; also, while California and Maryland have approved the technology, last I checked no candidates in those states had utilized it, likely because there have not been state-wide races since approval.).

Then, the campaign solicits text contributions by, for example, including an ask at a campaign rally or in a radio advertisement. Imagine a compelling political ad–timed to coincide with an appropriate event–that ends: “If you want to help with a $10 contribution, text GIVE to 12345 RIGHT NOW.” Imagine that technology deployed via Facebook or Twitter to thousands of followers immediately during or after some energizing event.

The contributor hears or sees the solicitation, and texts GIVE to the campaign’s code. The campaign’s automated system (run by a third party firm) responds by text to ask the phone user to confirm intent to contribute and certify eligibility to make the contribution under Texas law (and potentially requesting additional information, if required by the Ethics Commission). If the contribution is confirmed, the contribution amount is added to the contributor’s next cell phone bill.

At pre-determined intervals, for example, on a weekly basis, the third-party “connection aggregator” (the middle man in these text contribution transactions) advances to the campaign a certain portion of all of the contributions processed during the period, with the rest of the contribution amount (less transaction fees) to be sent to the campaign after the cell phone user pays the bill from the wireless carrier.

So, the campaign doesn’t have to wait for the contributors to receive and pay their wireless bills before they get the funds. A portion of the money is advanced pursuant to the campaign’s agreement with the text processing vendor.

More to follow, but this is a basic run-down. You can see how text message contributions can open up an entirely new funding stream that can complement traditional events. The check writers will still be necessary, but texting empowers a whole new swath of folks who a campaign would not reach through traditional means and fundraising. They don’t have to write a check, go to an event, or even get on the campaign website and fill in a webform. All it takes is a series of text messages (potentially as few as two).

And note the added benefit–the campaigns can build a list of cell phone numbers of supporters, all of whom are now invested in the campaign. THAT is powerful. And Republicans and conservatives in Texas have a chance to spearhead this technology, and begin closing the tech gap with Democrats.

McCutcheon v FEC to be Considered by Supreme Court 2/15/13

On Feb. 15, the US Supreme Court will consider whether to accept for review McCutcheon and RNC v. FEC, No. 12-536, a challenge to federal limits on aggregate political contributions. The appellants’ jurisdictional statement was filed 10/26.  Bloomberg BNA coverage here ($). (HT Rick Hasen’s Election Law Blog for covering.) Here is the Supreme Court docket entry.

Disclosure: I (along with Dan Backer and Stephen M. Hoersting) am Of Counsel to Shaun McCutcheon, the individual donor plaintiff/appellant. More coverage and a summary to come soon. 

Catholic Leadership v Reisman: Judge Denies Bexar County DA’s Motion to Dismiss

Catholic Leadership Coalition of Texas v. Reisman is a First Amendment lawsuit brought by three Texas PACs and a related nonprofit to challenge provisions of the Texas Election Code that (i) require all political committees to register with the Ethics Commission before spending more than $500; (ii) require certain types of issue-oriented committees to wait 60 days after registration before spending more than $500; and (iii) prohibit corporations, including nonprofit corporations, from making contributions to support “independent expenditures” that are not coordinated with the benefiting candidate.  This case–and others currently pending in Texas that raise similar claims–will be closely followed on this blog. [Disclosure: I am representing the plaintiffs in Catholic Leadership.]

While a more complete discussion will be posted soon, the latest: the court issued an order Jan 10 denying a motion to dismiss filed by Bexar County DA Susan Reed. The court’s order includes a brief discussion concluding that plaintiffs’ standing remains intact, even though the relevant election has already passed. Pretty straightforward application of Fifth Circuit and Supreme Court precedent regarding standing in the election context.

The case is in the US District Court for the Western District of Texas, Austin Division.

TEC to Consider Request to Allow Contributions to Texas Candidates and PACs Via Text Msg

At its next meeting on January 31, the Texas Ethics Commission (TEC) will have an exciting item on its agenda that could change political fundraising for Texas campaigns. A request for an advisory opinion filed in September seeks approval for Texas PACs to accept contributions by text message. The request was filed on behalf of Harris County Republicans, a political committee using a cutting-edge smartphone app developed by The Flanagan Company, LLC to increase Republican turnout in Harris County. [Disclosure: the author is counsel to Harris County Republicans and filed the request.]

The request and the app were covered by Campaigns & Elections Magazine (article here) and other media outlets, and Houston TV station KHOU featured the story (see below). Counsel for the TEC have indicated that the request (Advisory Opinion Request 576) will likely be discussed at the TEC’s next meeting on January 31, 2013. Jerad Najvar will appear at the meeting to address any questions the Commissioners may have. The meeting will begin at 8:30 a.m in Capitol Extension Room E1.010, and any updates will be covered on this blog.

If the request is approved, it should permit solicitation of text contributions by not only Texas PACs, but also candidate and party committees. Texas would be just the third state to authorize political contributions by text message, after California and Maryland. The Federal Election Commission has also recently approved text contributions for federal campaigns.