Ethics & Elections: Legislation Passed by the 2019 Texas Legislature
by Andrew Cates
Texas’s 86th Legislative Session has now concluded, and several bills were passed that will impact nonprofit legislative and election season advocacy going forward. The 2019 legislature filed over 7,000 pieces of legislation, the second highest number of bills filed in the last 60 years, with approximately 50 of those bills related specifically to campaign finance and lobby laws.
Many of the bills that passed clarify rules on how corporations and nonprofits engage in political advocacy through direct campaign expenditures (sometimes referred to as independent expenditures) and through political action committees (PACs). They also impact reporting requirements for organizations and individuals who are required to register as lobbyists in Texas.
A quick note about terminology – when used in the Texas Election Code and therefore in this blog post, the definition of “corporation” includes and applies to all 501(c) nonprofit entities.
HB 368
This bill repeals current law, which prohibits the use of any official audio or video archives of the Texas Legislature in political advertising. The prohibition on use of these materials was previously deemed by the courts to be an unenforceable restriction on First Amendment rights. HB 368 was passed to address these court decisions and to allow the use of audio and video recordings from the Texas Legislature in political advertising.
The governor signed this bill into law on June 10, and it takes effect immediately.
HB 1785
This bill requires all registered lobbyists to state, on their lobbyist registration form, whether they are required to register as a foreign agent under the federal Foreign Agents Registration Act of 1938. This would apply to any lobbyist hired to work for a foreign government.
The governor signed this bill into law on May 23, and it goes into effect September 1, 2019.
HB 2586
This bill clarifies rules for groups that make direct campaign expenditures. It allows the organizations to meet with candidates or campaigns without fear that the meeting would be used against them as evidence of coordination.
Currently, many nonprofits that engage in political activity shy away from meeting with candidates or their campaigns because they are prohibited from coordinating their direct campaign expenditures with the campaign or candidate. Thus, the safest route has always been to set up a wall between the organization and the candidates. This bill allows the candidate/campaign to sign an affidavit and declare under penalty of law that no coordination occurred in a meeting between the group and the campaign.
The bill also requires PACs to include an affidavit in their initial treasurer report asserting that they will not use corporate money to support candidates or PACs that make contributions to candidates, if the PAC intends to use corporate money to make direct campaign expenditures. In addition, if a PAC has filed the affidavit, the new law will now allow corporations to make campaign contributions to that PAC (currently not allowed by the Texas Ethics Commission).
The governor signed this bill into law on June 14, and it goes into effect September 1, 2019.
HB 3044
This bill amends the election code to allow corporations (including nonprofits) to solicit political contributions to their PAC from their members and their members’ families by promising to make charitable contributions that fully or partially match the contributions given by contributors to the PAC. This practice is currently not allowed in Texas, so it will open up new avenues for PACs to fundraise contributions.
The governor signed this bill into law on June 14, and it goes into effect September 1, 2019.
HB 3580
This bill repeals a number of statutes that have been ruled unconstitutional by various courts. In particular, it repeals the same prohibition from HB 368 (also passed) on using House/Senate video and audio in political advertising, and it also repeals the requirement that PACs be set up at least 60 days before an election.
This bill will allow nonprofits[1] and other organizations to not only finance their own PAC with corporate money but will also allow the groups to send corporate money to Direct Campaign Expenditure (DCE)-Only PACs (Super PACs) in Texas for use in supporting or opposing candidates without giving direct contributions to them.
The bill does this by adding a new section to the election code to specify that a corporation can give corporate money to any PAC. If the PAC is directly controlled by the corporation, then nothing changes and the corporation may still continue to fund the administration and fundraising operations of the controlled PAC. But if the PAC is not directly controlled by the corporation (i.e., it’s another group’s PAC to which the corporation would like to give money), the corporation can only give money to that PAC if the PAC is set up to only make direct campaign expenditures and does not make political contributions to candidates or officeholders.
The governor signed this bill into law on May 24, and it goes into effect September 1, 2019.
SB 548
While never anticipated by a nonprofit, there is always a chance that a complaint will be filed with the Texas Ethics Commission or that fines will be levied for late or incorrect lobbying or campaign finance reports. This bill amends the process by which the Texas Ethics Commission must handle these situations.
The bill requires the commission to dismiss a complaint if the group or person amends or corrects the report at issue in the complaint to satisfy all reporting obligations prior to the commission taking action against the group/person. Essentially, this means that if a complaint is filed for an incorrect statement on a lobbying or campaign finance report, the nonprofit can now amend or correct the report and have the complaint dismissed as long as the action is taken very quickly.
Nonprofits should consult an attorney as soon as possible if a complaint is filed against them, to ensure that they fully understand their rights and obligations.
The governor signed this bill into law on June 7, and it goes into effect September 1, 2019.
SB 751
Technological advancements now allow video editing to create the impression that a person is saying or doing something that never actually happened. For example, we’ve seen these employed in commercials and even in live music venues in which holograms are used to portray a deceased musician seemingly interacting with live bands. Unfortunately, the same tactics are now available to make it seem as though candidates and elected officials have said certain things or done certain things that in reality never happened, to their detriment.
This bill attempts to rein in “deepfake videos” in which videos are produced in an attempt to deceive by depicting a real person performing an action that did not actually occur. The bill creates an offense for creating and publishing/distributing a deepfake video with the intent to injure a candidate or influence the outcome of an election within 30 days of an election.
The governor signed this bill into law on June 14, and it goes into effect September 1, 2019.
[1] The tax code prohibits 501(c)(3)s from supporting or opposing candidates. This restriction will continue to apply to (c)(3)s even after this law goes into effect. As such, the bill only changes the rules for nonprofits that are permitted to make independent expenditures and engage in partisan political activity.