Responding to scandals regarding the influence of Members of Congress by those who lobby them, Congress passed the “Honest Leadership and Open Government Act of 2007” (“HLOGA”), which was signed into law by President Bush on Sept. 14, 2007. Pub. Law 110-81. HLOGA greatly restricts the ability of lobbyists, and those who hire them, to provide gifts, travel, food, or lodging to either Members of Congress or their staff. In addition, it toughens disclosure requirements concerning the contributions made by lobbyists to those campaigning for federal office.

One of the new disclosure requirements relates to the process known as “bundling,” where one person gathers campaign contributions from others and then presents them in total to a campaign. With the continued emphasis on fundraising, “bundlers” now have taken special prominence in federal campaigns, where they are often rewarded and given greater visibility for gathering contributions in excess of a certain total. Section 204 of HLOGA addressed the process of bundling by requiring campaign committees to disclose the name and address of those who provide two or more bundled contributions over an inflation-adjusted amount (currently $16,000) and within a semi-annual period. These disclosure requirements were to take effect 30 days after additional rules on the practice of bundling were promulgated by the Federal Election Commission (“FEC”), and then became final. 11 C.F.R. §§ 100, 104, 110. This effective date was March 19, 2009.

This article analyzes the requirements put in place by Congress and how they will affect how campaign contributions are made.

The Definition of Bundled Contribution Makes Clear that the Actions of a Second Person are Required

Under HLOGA, a bundled contribution is defined as a campaign contribution made by one person that is either (1) forwarded to a campaign by another; or (2) received by a campaign and recognized as having been contributed through the actions of another. 2 U.S.C. § 434(i)(8). Congress’ concern is with the fact that one person solicits and controls the contributions of another. Put another way, a person cannot bundle his or her contribution—someone else must be involved. That involvement can either be overt, as when a bundler delivers checks to a campaign, or covert, as when checks are received by a campaign as a result of the actions of one person and understood as such.

The Reach of the New Disclosure Rules is Limited

Under HLOGA, the bundling contributions apply only to (1) those who register as lobbyists with the House of Representatives or Senate; (2) those who employ lobbyists with the House of Representatives or Senate; and (3) political action committees (“PACs”). 2 U.S.C. § 434(i)(7). This is a defined group of those doing business with Congress or involved with making political contributions to political candidates. However, the inclusion of “those who employ lobbyists” could be troublesome for any firm or company that employs both lobbyists and non-lobbyists. This raises the possibility that the bundling rules could apply to all persons who work for such companies, regardless of whether those persons’ work involves lobbying. The FEC addressed this in their rules and noted that “non-lobbyist employees…who forward bundled contributions or receive credit from a [campaign] for bundling contributions are outside the scope of HLOGA Section 204.” 11 C.F.R. § 104.22(a)(2). This does not apply, however, to non-lobbyist employees who bundle contributions at the request of lobbyist employees. Id.

For 2009, the Disclosure Requirements Affect Only Those Who Provide Two or More Contributions Exceeding $16,000 Over a Semi-Annual Period

Under HLOGA, disclosure requirements are triggered only when two or more contributions exceeding a certain amount are received from a bundler by a campaign committee during a semi-annual period. 2 U.S.C. § 434(i)(1-3). Congress set the threshold amount at $15,000 but required the FEC to adjust that amount for inflation. Id. For 2009, the FEC set the threshold amount at $16,000. 11 C.F.R § 100.

What Must be Disclosed and Who Must Disclose It

Under HLOGA, campaign committees must disclose to the FEC the name, address, and employer of each person that it reasonably knows to meet disclosure rules. 2 U.S.C. § 434(i)(1). The campaign alone has the burden of disclosure. Anyone who handles the campaign contributions of others is not required to file disclosure forms with the FEC. As for what constitutes “reasonably knows,” the FEC requires each campaign to check its own records for amounts contributed, as well as websites maintained by the Clerk of the House of Representatives, Secretary of the Senate, and the FEC to determine lobbying or PAC status. 11 C.F.R. § 104.22

How Bundling Rules Will Affect the Practice of Hosting a Fundraising Event

The disclosure requirements put in place under HLOGA do not address how they would apply to all fundraising practices. The FEC addressed much of that in its rules. One area covered in the rules and meriting additional discussion here is the case where an individual or entity hosts or co-hosts a fundraiser.

Must a campaign unilaterally disclose their involvement as hosts or co-hosts and attribute campaign contributions accordingly? The FEC decided that hosting an event in and of itself was not enough to merit disclosure and attribute funds. A blanket rule requiring this “could be confusing and could lead to the compelled disclosure of potentially misleading information.” 11 C.F.R. 104.22(a)(6)(ii)(B). Instead, the FEC decided that the campaign’s decision as to how to credit the receipt of funds would be a controlling factor in determining how to attribute the funds and disclose the host or co-host. Id. There would be no blanket rule or prorated amount that contributions would need to be ascribed to events with more than one host. “[R]eporting committees are in the best position to determine the amount of contributions raised by lobbyists/registrants and their PACs from cohosted fundraisers.” Id.

Summary

The new bundling requirements put in place by Congress and the FEC are disclosure rules only. They do not affect annual contribution limits; rules requiring the formation of PACs or their solicitations. Nor do they reach beyond a limited population of those who lobby Congress or the Executive Branch, the entities that employ such individuals, and PACs. However, for those who enhance their practice or company, either by lobbying Congress or the Executive Branch or involving themselves in political fundraisers, an awareness of these requirements is important. A focus on the ethical considerations behind them is expected to continue in the 111th Congress and in the new administration as well.