[EL] The origins of [undisclosed spending that affects elections in some way, shape or form]?

Wed Nov 4 07:26:23 PST 2015

On the one hand we bemoan the dropping voter turnout numbers across the nation. On the other hand we do things to limit communications with voters, thus making elections seem less important. And the reform industry shouts corruption from every rooftop to still further height voter disaffection from the process. 

Larry

From: law-election-bounces at department-lists.uci.edu [mailto:law-election-bounces at department-lists.uci.edu] On Behalf Of Steve Klein
Sent: Wednesday, November 04, 2015 6:46 AM
To: Craig Holman <holman at aol.com>
Cc: law-election at uci.edu
Subject: Re: [EL] The origins of [undisclosed spending that affects elections in some way, shape or form]?

Craig,

Thank you for your detailed response. I think your assessment of electioneering communications (ECs) is fair, and goes back to the statute's reporting requirements:

"the names and addresses of all contributors who contributed an aggregate amount of $1,000 or more to the person making the disbursement during the period beginning on the first day of the preceding calendar year and ending on the disclosure date."

52 U.S.C. 30104(f)(2)(F) (emphasis added). I will look at the rule / interpretation changes you cite in detail. 

But since no one can even make an electioneering communication right now, nor could have through the entire election cycle thus far (by definition, as Iowa is still more than 30 days away, 52 U.S.C. 30104(f)(3)(A)(i)(II)), we're only dealing with independent expenditures (IEs) and issue advocacy, correct?

We have event-driven reporting for IEs and PAC status in play right now, the latter of which includes comprehensive donor disclosure and, going back to Buckley, is not something to cast upon groups lightly. That's changing quite a bit at the state level, with approval from many federal courts of appeal (some hopeful exceptions), but let's stick with the federal laws and precedent. 

Which old regs required event-driven IE reports to list specific donors either to the group taking them out other than those actually supporting the ad? Given that PACs have regular reporting that includes receipts and disbursements (11 CFR 104.4), I don't think it's a stretch to not require the report of any and all contributors from groups in their event-driven reports:

(e) Content of verified reports and statements and verification of reports and statements.

(1) Contents of verified reports and statement. If a signed report or statement is submitted, the report or statement shall include:
* * * 
(vi) The identification of each person who made a contribution in excess of $200 to the person filing such report, which contribution was made for the purpose of furthering the reported independent expenditure.

11 CFR 109.10 (emphasis added). 

To be sure, I've been on the losing end of a disclosure case against the FEC, upholding the "express advocacy" definition and "major purpose" test as neither vague nor overbroad. That said, those tests still exist for the purpose of limiting disclosure and PAC status. It's far too simplistic a narrative to claim there's been a massive change in campaign finance that's allowed for lots of speech (even expensive speech) that criticizes candidates without falling into the federal disclosure framework. 

-- 

Steve Klein

Attorney*

Pillar of Law Institute

www.pillaroflaw.org <http://www.pillaroflaw.org/> 

*Licensed to practice law in Illinois and Michigan

On Nov 4, 2015, at 5:52 AM, Craig Holman <holman at aol.com <mailto:holman at aol.com> > wrote:

Stephen: 

With BCRA's disclosure requirements, all groups -- including nonprofits -- disclosed their donors behind electioneering communications as well as independent expenditures. We had nearly 100% donor disclosure in 2004 and 2006.

The sensible state of affairs created by BCRA and affirmed by the Court lasted for only about three-and-a-half years. In June 2007, the Supreme Court reversed the McConnell decision in part in the Wisconsin Right to Life decision by allowing corporate and union money to finance electioneering communications if the ads were “issue oriented.” The Federal Election Commission (FEC), the agency charged with implementing and enforcing the campaign finance law, responded later that year by exempting groups making electioneering communications from disclosing contributors’ identities except in special cases in which donors specifically earmarked money for that purpose. [11 C.F.R. § 104.20(c)(9).] 

Thus, corporations, trade associations and corporate-funded front groups could spend money from their treasuries without disclosing the sources of those funds as long as the donors did not specifically give money to finance electioneering advertisements. [Public Citizen 12 Months After (January 2011)] Since then, a similar "earmarking" requirement has been applied by outside groups to avoid disclosure of donors behind independent expenditures, which had not previously been the case.

Just before the 2010 elections, the three Republicans on the FEC issued a statement endorsing an even narrower interpretation of the disclosure rule. They opined that electioneering groups should only have to disclose those donors who specified that their money would be used for a specific ad, aired in a specific race. [Statement of Reasons for Chairman Matthew S. Petersen and Commissioners Caroline C. Hunter and Donald F.McGahn, Freedom’s Watch, Inc., MUR 6002 (Aug. 13, 2010), available at: http://eqs.sdrdc.com/eqsdocsMUR/10044274536.pdf] <http://eqs.sdrdc.com/eqsdocsMUR/10044274536.pdf%5D>  

When Ellen Weintraub, a Democratic commissioner on the agency who voted for the disclosure rule in 2007, read the Republican statement, she commented: “This is an unprecedented narrow reading of the regulation. It’s certainly not what I intended when I voted for that regulation.” [Robert Wechsler, “Ethical Officials and Disclosure Rules,” CityEthics.org <http://cityethics.org>  (Sep. 16, 2010)]. Because few donors are apt to attach such specific instructions to their contributions, the effect of the subsequent FEC interpretations of the Wisconsin Right to Life decision has been to gut the donor disclosure requirement enshrined in BCRA, as well as the donor disclosure requirement that had long before existed for independent expenditures, and to serve as the principal cause of the creation of what we call today "dark money."

Craig Holman, Ph.D.
Government Affairs Lobbyist
Public Citizen
215 Pennsylvania Avenue SE
Washington, D.C. 20003
T-(202) 454-5182 <tel:%28202%29%20454-5182> 
C-(202) 905-7413 <tel:%28202%29%20905-7413> 
F-(202) 547-7392 <tel:%28202%29%20547-7392> 
Holman at aol.com <mailto:Holman at aol.com> 

-----Original Message-----
From: Steve Klein <stephen.klein.esq at gmail.com <mailto:stephen.klein.esq at gmail.com> >
To: Paul Blumenthal <paulblumenthal at huffingtonpost.com <mailto:paulblumenthal at huffingtonpost.com> >
Cc: law-election at UCI.edu <mailto:law-election at uci.edu>  <law-election at uci.edu <mailto:law-election at uci.edu> >
Sent: Tue, Nov 3, 2015 10:32 pm
Subject: Re: [EL] The origins of [undisclosed spending that affects elections in some way, shape or form]?

Indeed, but "The FEC responded by gutting a disclosure provision from the McCain-Feingold law that required groups to disclose their donors when reporting independent spending" doesn't  narrow it down for me, considering electioneering communications never--even in BCRA sans any regulatory interpretation--translated to PAC status.

Sent from my iPad

On Nov 3, 2015, at 8:21 PM, Paul Blumenthal <paulblumenthal at huffingtonpost.com <mailto:paulblumenthal at huffingtonpost.com> > wrote:

The article goes further than that sentence.

On Tue, Nov 3, 2015 at 10:17 PM, Stephen Klein <stephen.klein.esq at gmail.com <mailto:stephen.klein.esq at gmail.com> > wrote:

Paul Blumenthal writes:

"Further, corporations and unions can spend undisclosed 'dark money' on elections through nonprofit corporations, which are not subject to campaign finance disclosure laws due to a prior Supreme Court ruling and a Federal Election Commission rule change in 2007 that eliminated a key reporting requirement."

I assume, despite the evolving definitions of disclosure and undisclosed money that in some way, shape or form affects an election ("dark money"), he's referring to Buckley v.  Valeo as said "prior Supreme Court ruling" (I suppose listing the name or the more ominous "1976" that accompanies the ruling's citation might be too much for dear readers), but what 2007 rulemaking is at issue and how, exactly, did it affect Buckley's precedent? 

Sent from my iPhone

On Nov 3, 2015, at 5:46 PM, Rick Hasen <rhasen at law.uci.edu <mailto:rhasen at law.uci.edu> > wrote:

 <http://electionlawblog.org/?p=77234> “Anthony Kennedy’s Citizens United Disclosure Salve ‘Not Working'”

Posted on  <http://electionlawblog.org/?p=77234> November 3, 2015 8:08 am by  <http://electionlawblog.org/?author=3> Rick Hasen

 <http://www.huffingtonpost.com/entry/citizens-united-anthony-kennedy_5637c481e4b0631799134b92> Paul Blumenthal for HuffPo.

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Paul Blumenthal
Huffington Post
Twitter: PaulBlu | o: (202) 624-9384 <tel:%28202%29%20624-9384>  | c: (202) 714-8545 <tel:%28202%29%20714-8545> 

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