Since our last update on Texas campaign regulations, there have been major developments, both in Texas and nationwide. The Texas Ethics Commission (“TEC”) has been active in rulemakings, while the U.S. Supreme Court issued a ruling that has significant ramifications for campaign finance laws in the future.

This Client Alert covers areas of interest for political campaigns, political committees, and other interested persons in complying with Texas laws. Locke Lord Bissell & Liddell has extensive experience in all of these areas, and we are able to assist our clients with compliance.

Reporting Political Expenditures

Last June, we reported on the TEC’s proposal to further regulate what types of information must be included in the description of an expenditure. At its December 2009 meeting, the TEC adopted rules, which set forth two requirements for descriptions. For every expenditure, the person making the expenditure must place it into one of 19 categories, such as advertising expense, consulting expense, event expense, or legal services. After categorizing the expenditure, the person must provide an additional description that makes the reason for the expenditure clear. For example, instead of just describing an expenditure as “rent,” the candidate should list it as “campaign office rent,” and instead of just describing legal fees as “legal fees,” the description should be “legal fees for campaign/officeholder matters.” The rules will not take effect until after the July 2010 semi-annual report is due.

Corporate Political Activities

Recently, the United States Supreme Court ruled that it was unconstitutional to prohibit corporations from engaging in third party advertising (advertising not coordinated with a candidate) either supporting or opposing a candidate. See the Client Alert where we analyzed this case.

At its February meeting, the TEC discussed the impact of the case. The TEC, after reviewing comments we and others submitted about the matter, decided to form a subcommittee of three commissioners to determine what impact the ruling will have on Texas laws. We will monitor the subcommittee’s activities and remain involved in the process. At this time, there is no clear guidance on the extent to which this case will open opportunities for corporations to participate in Texas elections, or how corporations would report such expenditures. For this reason, we encourage our clients to be patient until the TEC provides guidance.

Helpful Reminders

With campaign season upon us, we encourage our clients to review our previous updates for compliance help. Our March 2008 Client Alert outlined the rules for reporting expenditures by credit card, the restrictions on contributions from out-of-state political committees, and the restrictions on automated telephone calls. The June 2008 Client Alert discussed how to report political contributions maintained, as well as the prohibition on contributions from partnerships and limited liability companies.

Upcoming Deadlines

February 16: Personal Financial Statements are due for all candidates whose names will appear on the ballot in 2010.  

February 22: 8-Day Reports are due for opposed candidates on the March primary ballot, as well as political committees who have supported or opposed those candidates.  

April 5: 8-Day Reports are due for opposed candidates in the April primary runoff election, as well as political committees who have supported or opposed those candidates.  

April 30: Personal Financial Statements are due for all officeholders except those required to file on February 16.