In The News

The New Campaign Finance Landscape: Super PACs Spending Big in 2012 Election

The New Campaign Finance Landscape: Super PACs Spending Big in 2012 Election

Super PACs are a new kind of political action committee created in July 2010 following the outcome of the federal court case SpeechNow.org v. Federal Election Commission (SpeechNow.org v. Fed. Election Comm’n, 599 F.3d 686 (D.C. Cir. 2010) cert. denied, 131 S. Ct. 553, 178 L. Ed. 2d 371 (U.S. 2010)).

Securities and Exchange Commission Plays Campaign Finance Watchdog

While the courts are de-regulating campaign finance, other branches of government are searching for ways to clamp down. At the national level, the Securities and Exchange Commission has targeted individuals and entities that provide investment advisory services to government pension systems.

Litigation We’re Watching By Terry Martin

Lasted Updated 10/15/2018

Massachusetts Fiscal Alliance v. Sullivan (D. Massachusetts, parties currently filing opening briefs): Massachusetts law requires that television advertisements identifying a candidate within 90 days of his or her election include several government statements, the identification of the payor’s top 5 donors, and the payor making a physical on-screen (or spoken in the case of a radio ad) appearance acknowledging that he or she paid for the ad and identifying his or her city or town of residence. In the case of a group, its chief executive or principal officer must appear and state his or her name and title in addition to acknowledging approval for payment of the ad. A nonprofit corporation challenged these requirements under the First Amendment, arguing that the disclosures are invasive enough to contravene its donors’ First Amendment right of speech and association, and undercut its speech by diluting it with state requirements, especially by exposing the payor’s or the payor’s chief officer to potential scrutiny for their physical appearance on television, including race, sex, or mannerisms. The case will provide important insight into how advertisement disclaimer regimes may be applied, and brings into issue the continuing viability of a line of cases striking down invasive on-contact disclosure requirements from the 1990’s and 2000’s litigated in the U.S. Supreme Court and federal appellate courts, including the 9th Circuit.

United States v. Singh (9th Circuit, parties currently filing briefs): Ravneet Singh, a political consultant, was convicted under the “anti-shredding” provision of the Sarbanes-Oxley Act for his role in a campaign money laundering scheme which funneled campaign contributions from a wealthy Mexican businessman into San Diego local races. Recognizing that the particular theory of the Sarbanes-Oxley Act accepted by the trial court may impose additional, unenumerated reporting obligations on vendors of in-kind services to campaigns beyond the comprehensive reporting obligations of the Political Reform Act, Bell, McAndrews & Hiltachk attorneys filed an amicus brief in the U.S. Court of Appeals for the 9th Circuit urging the court to adopt an interpretation of the “anti-shredding” provision of the Sarbanes-Oxley Act that provides clear guidance to such vendors.

Americans for Prosperity Foundation v. Becerra (9th Circuit opinion issued, awaiting appeal): The California Attorney General requires nonprofits exempt from tax under Section 501(c)(3) of the Internal Revenue Code to submit an unredacted Schedule B list of donors and addresses with their annual IRS Form 990 tax returns. Americans for Prosperity Foundation (“AFPF”) challenged this requirement under the First Amendment’s implied guarantee of expressive association, claiming that by compelling AFPF to submit its donor information to the government, potential donors would be disincentivized for fear of government targeting if the officials disagree with AFPF’s viewpoint. It cited instances in which the Attorney General released the donor information to the public through inadvertence. The lower court found that AFPF had carried its burden to show potential harassment and the government’s stated law enforcement interest was not served by the law, which had never resulted in a single enforcement case being opened. The U.S. Court of Appeals for the 9th Circuit vacated, finding that the donor information requirement was sufficiently narrow to protect AFPF’s First Amendment rights. It argued that because only the government would see the donor info, AFPF was unlikely to experience harassment, and the risk of inadvertent disclosure was only slight. AFPF is expected to file a petition for writ of certiorari. If the U.S. Supreme Court grants review, it will be the first case on compelled disclosure before the high court since 2011. It comes against a wide split of authority among lower federal courts regarding the scope of First Amendment privacy rights and the authority of governments to compel disclosure of nonprofit or campaign donor information.

Citizens for Responsibility and Ethics in Washington v. Federal Election Commission (D.C. District opinion issued, awaiting appeal): Federal Election Commission (“FEC”) regulations interpreting the Federal Election Campaign Act (“FECA”) require a committee to disclose a third party contributor only if his contribution is earmarked for a specific independent expenditure. Citizens for Responsibility and Ethics in Washington (“CREW”) challenged this regulation as being an unreasonable narrowing of the FECA provision it was promulgated to implement. The lower court agreed and struck the regulation. On September 15th, 2018, Chief Justice of the United States John Roberts issued an emergency stay of the lower court’s decision, but was vacated by the Court on September 18th, 2018. The subject party, Crossroads GPS, is expected to appeal to the U.S. Court of Appeals for the District of Columbia Circuit. Further proceedings will have immediate implications for transparency on the campaign trail and the scope of a federal agency’s authority to promulgate regulations.

Higginson v. Becerra and the City of Poway (9th Circuit opinion issued, on remand to the Southern District): The California Voting Rights Act goes farther than the federal Voting Rights Act in presuming that local legislative bodies based on at-large districts harm minority representation. A former mayor challenged the California Voting Rights Act and the City of Poway’s decision to avoid a legal challenge to its election system by transitioning from at-large city council seats to district-based ones as violating the Equal Protection Clause of the Fourteenth Amendment by unconstitutionally advantaging members of racial minorities in their ability to elect representatives. The U.S. District Court for the Southern District of California initially determined that the former mayor lacked standing to sue and the 9th Circuit reversed and remanded to the trial court for additional proceedings. The case is expected to provide additional clarity into how far states may go to advantage minority representation in legislative bodies.

News from Ethics Agencies by Sarah Lang

Last updated 10/15/2018

Fair Political Practices Commission News

The Fair Political Practices Commission has created an online platform for submitting images of campaign advertisements that appear to be a violation of the Political Reform Act’s advertisement disclaimer requirements.  The new platform, dubbed “AdWatch,” allows the public to upload files via the website or send pictures via mobile device, which the FPPC will investigate for legal compliance. Link to Adwatch

Federal Election Commission News

The Federal Election Commission has issued new guidance after the CREW decision, creating new donor disclosure requirements for non-PAC groups like trade associations and 501(c)(4) social welfare organizations that make independent expenditures. There is no change to the reporting requirements for entities that made independent expenditures prior to September 18, 2018. Link to FEC Press Release

Oakland Ethics Commission News

The Oakland Public Ethics Commission and members of the civic technology group OpenOakland publicly launched a new version of their web tool for tracking political contributions in Oakland elections. The website, Open Disclosure (www.opendisclosure.io), shows the source and spending of campaign funds for both Oakland candidates and ballot measure committees. The website pulls campaign finance data form the City of Oakland’s campaign finance reporting database and produces graphs that display sources of funds and how they are spent to influence the election. Link to Press Release

New Legislation By KC Jenkins

Lasted Updated 10/15/2018

New Legislation

Governor Brown signed the following bills into law ahead of his September 30th deadline, relating to elections and the Political Reform Act.

SB 1250

Current law provides that, for purposes of determining a candidate’s domicile, the residence address listed on the candidate’s voter registration form is conclusively presumed to be that person’s domicile. This bill establishes that this presumption applies as long as the address is one of the candidate’s residences, even though the candidate may have another residence where his or her child is enrolled in school, spouse is employed, or mail is received, among other conditions.

AB 2188

This bill requires online platforms, such as a social network, to maintain and make available a complete record of any ad that is paid for by a committee that purchased $500 or more in ads on the online platform in the last year. The online platform must either display the requisite disclaimer in each ad, or include text either linking to the website of the committee that paid for the ad or to another page with the required committee disclosures. The online platform must also include a link to a page with information about the committee’s ad purchases. In addition, this bill changes the disclaimer requirements for electronic media advertisements.

AB 2155

This bill provides that electronic communications sent to those who opted-in to or solicited the communications are not “advertisements” under the PRA. The bill also allows the FPPC to determine that certain types of communications are not advertisements if including the disclaimer would be impracticable. In addition, this bill modifies disclaimer requirements to include the language “Ad paid for by” instead of “Paid for by,” with the exception of certain types of ads, and modifies other formatting requirements for ads paid for by non-party and non-candidate committees.