Looking for transparency in campaigns

By Marianne Goodland
THE COLORADO STATESMAN

In the wake of the January Citizens United v. FEC decision by the U.S. Supreme Court, two Democratic lawmakers hope legislation introduced this week will put some transparency into corporation or labor union contributions used for electioneering communications.

Senate Bill 203, sponsored by Sen. Morgan Carroll, D-Aurora, and House Majority Leader Paul Weissmann, would attempt to put registration and disclosure requirements into statute to address the Supreme Court decision. It will be heard in the Senate State, Veterans and Military Affairs Committee on Monday.

Last January, the Supreme Court ruled 5-4 that corporate and labor union funding of independent political broadcasts could not be limited under the First Amendment. The Court, in ruling in favor of Citizens United, struck down a portion of the McCain-Feingold Act that barred corporations and labor unions from purchasing independent electioneering communications, which could primarily be print or broadcast or mailings. Independent expenditures, which fund the independent electioneering communications, are defined in Colorado as expenditures that are not coordinated with a candidate or a political action committee.

In response to the Supreme Court decision, Gov. Bill Ritter sent interrogatories to the Colorado Supreme Court to find out how the decision would affect Colorado’s Amendment 27 campaign finance laws. In March, the state court said that Amendment 27’s provisions barring independent expenditures by corporations and labor unions were no longer constitutional. However, direct contributions to candidates or political action committees by corporations or labor unions were still prohibited under Amendment 27, since the U.S. Supreme Court dealt only with independent expenditures, not direct contributions. And corporations and labor unions are also barred from making direct contributions to so-called 527 committees, under a bill passed by the General Assembly in 2007.

The Supreme Court decision has prompted a number of states to take action, according to the National Conference of State Legislatures. Four states — Arizona, South Dakota, West Virginia and Iowa — have already passed legislation to deal with the Citizens United decision. Arizona’s law allows for corporate and labor union contributions but requires those organizations to register with the Secretary of State prior to making political expenditures above a threshold amount. South Dakota and West Virginia’s laws are very similar, according to NCSL. Iowa’s law goes further, requiring the leadership of an organization approve the political expenditure before it is made and that the approval must be made in the year in which the expenditure is made. Ten other states have introduced legislation this year to deal with the decision; in two states, the legislation failed; but in eight others the bills are still wending through the process.

SB 203 is modeled on the laws passed in Arizona, South Dakota and West Virginia. The bill states that corporations and labor unions shall not be prohibited from making independent expenditures, but expenditures exceeding $1,000 must be disclosed through registration as an independent expenditure committee with the secretary of state. The $1,000 limit was chosen because it is generally difficult to do media buys for less than that, according to Carroll.

The disclosures must include the name of the organization, a “natural person” authorized to act as the registered agent, all affiliated persons, and in the case of foreign corporations, the aggregate ownership interest in the corporation held by a foreign person or company. Corporate subsidiaries must register on behalf of its parent company. In the case of labor organizations, the local union can register on behalf of affiliated local, national or international labor groups that will be making the independent expenditure.

SB 203 requires any communications that are broadcast, printed, mailed or delivered and that are coming from an independent expenditure must clearly identify who paid for the communication and the individual who is the registered agent.

The bill also includes language intended to provide media outlets with immunity from liability, if the media outlet refuses to run an electioneering ad because the independent expenditure committee failed to register with the secretary of state or failed to make proper disclosures. However, Carroll told The Statesman Wednesday that it is not up to the media outlet to verify that the committee registered to file its proper disclosures. She said the media outlets are to maintain logs of who purchases electioneering communications, which are available under public records, and it would be up to a journalist or watchdog group to file a complaint with the secretary of state.

The issue with Citizens United, Carroll said Monday, is the potential for millions of dollars from corporations or labor unions to flow into Colorado political advertising but without Colorado citizens knowing who buys the ads. “If we do nothing,” Carroll said, “we will have unlimited amount of corporate and labor union spending without disclosures, up to an including foreign corporations.”

Weissmann said Monday that corporations and unions should be under the same rules “if they start playing politics. Coloradans deserve to know who’s paying,” he said. “For those who say money doesn’t influence, that’s not true. When you get hundreds of calls or emails per day, you call your friends first,” Weissmann, said, and people want to know who gets called back first and who gains influence and access.

Carroll said that a candidate has accountability if he or she makes outrageous statements, which can backfire; but with independent expenditures groups or individuals other than the candidate can purchase without limits and disclosure and “fire away…It’s already difficult to identify who buys what,” she said.

The bill also would affect electioneering spending by 501(c)3 and 501(c)4 organizations, which are nonprofit organizations that are to be non-political in their chief purpose as listed with the Internal Revenue Service. If a non-profit organization spends more than $1,000 it will have to register as an independent expenditure committee, Carroll said. Currently, a 501(c)3 can spend only 10 percent of its funds on issues and is not supposed to spend anything on electoral campaigns. But a 501(c)4 is an “enigma,” Carroll said Wednesday, because they register as “mixed purpose” organizations. According to the IRS, a 501(c)4 organization can lobby or participate in political campaigns or elections so long as that is not their chief purpose, according to the IRS, and they do not to disclose their donors unless the donation is earmarked for a political purpose. A 501(c)4 can include local employee associations, civic leagues and social welfare organizations. No state has yet figured out how to require disclosure as it applies to the 501(c)4 groups, Carroll said. She also said she did not include requirements that expenditures should be approved by corporate or union leadership, as was done with the Iowa law, given the amount of time left in the session.

Carroll said that if SB 203 passes, she intends for it to go into effect immediately, in time for the 2010 elections. However, she also expects that someone will look for a test case in order to challenge the law.

In the big picture, Carroll said, this “simply exposes to the public money and elections. People are already uncomfortable with the amount of money in elections, and corporations and labor union contributions can dwarf what individuals can give.” The danger of having millions or even billions of untraced, undisclosed cash involved in Colorado’s elections are deeply problematic, she said, and the public has a right to know. This won’t stop it but it will expose the contributions.

Marianne@coloradostatesman.com