October 3, 2016

FEC Considers Expanding Foreign National Restrictions

Holland & Knight Eyes on Washington Blog
Christopher DeLacy

On September 29, 2016, the FEC considered expanding restrictions on foreign national involvement in U.S. elections. This was the second time in one month that the Commission deliberated on this topic. Democrats on the Commission have put forth two proposals: Rescinding AO 2006-15 (TransCanada) and Proposed Rulemaking on Foreign Influence. Republicans have put forth two proposals: Promoting Voluntary Compliance and Proposed Policy on Domestic Corporations Controlled by Foreign Nationals. The Commission has deadlocked 3-3 along party lines on three proposals and has carried over the forth for future consideration. 

This latest proposal focuses exclusively on corporate contributions and foreign national ownership percentage, foreign national board membership, foreign government ownership, and entity type (e.g., public and private corporations, LLCs, and non-profits). Previously rejected proposals had included providing revised guidance regarding corporate PAC’s administered by the U.S. subsidiaries of foreign parent companies. 

Federal law currently prohibits foreign nationals from contributing, donating, or spending funds in connection with any federal, state, or local election in the U.S., either directly or indirectly. This prohibition is absolute and applies to both direct contributions to candidates and contributions to third-parties that make contributions to candidates. In addition, the prohibition applies to direct payments for independent expenditures and electioneering communications and contributions to third-party entities that pay for independent expenditures and electioneering communications. It is also unlawful to solicit, accept or receive a campaign contribution from a foreign national.  Foreign national contributions can result in significant civil penalties and prison time.

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