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

Last Updated 12/24/2018

Exline v. Gilmor (Santa Clara County Superior Court, parties currently filing opening briefs): The Political Reform Act requires public officers to disclose their economic interests on the FPPC Form 700 in order to allow the agency and members of the public to identify conflicts of interest. A private citizen initiated suit against the Mayor of Santa Clara for failing to list the d/b/a name of a company in which she was alleged to have an ownership interest on multiple Form 700s. The private citizen initiated the suit after the District Attorney refused to bring an enforcement action, arguing that the Mayor did not have a financial interest in the company during some of those years, and during others she properly reported the legal name of the company even if she omitted the d/b/a name. The case is expected to provide some clarity as to the scope of the required disclosures.

Institute for Free Speech v. Jackley (D. South Dakota, parties currently filing opening briefs): South Dakota law requires organizations that incur expenditures over $100 for communications “concerning… ballot questions” to include a statement in their ads disclaiming coordination with any candidate, officeholder, or committee, further revealing the organization’s name, web address, and mailing address, and finally identifying the five largest contributors to the entity in the preceding calendar year. A nonprofit exempt from tax under IRC section 501(c)(3) challenged these restrictions under the First Amendment as being vague for failing to include sufficiently precise definitions for the conditions that trigger the law’s application and for failing to allow a state agency to provide advice as to the same, and by regulating advertisements about issues that are not campaign related. The case could provide a data point in determining at what point the state’s interest in providing the public with information via comprehensive regulation is overcome by the constitutional guarantee of fair notice, and additionally whether protections for “issue speech” that do not obviously relate to a campaign have continuing significance to campaign finance law in the area of public disclosure.

Citizens for Responsibility and Ethics in Washington v. Federal Election Commission (notice of appeal filed by subject party Crossroads GPS): 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. The subject party, Crossroads GPS, has appealed to the U.S. Court of Appeals for the District of Columbia Circuit, with further proceedings expected to have immediate implications for transparency on the campaign trail and the scope of a federal agency’s authority to promulgate regulations.

Thompson v. Hebdon (9th Circuit, challenge sustained, on remand to D. Alaska): First Amendment law forbids discriminating against speakers based on identity, with rare exceptions such as certain forms of foreign national participation in the political process. Alaska enforces a statutory provision that limits the aggregate contributions a candidate may accept from out-of-state residents. A panel of the 9th Circuit ruled that such a law does in fact infringe unconstitutionally on First Amendment rights. Appeal to the 9th Circuit en banc is expected, with potential U.S. Supreme Court interest on the horizon.

Lair v. Mangan (certiorari petition filed, distributed for conference): Montana’s campaign contribution limits for campaigns in state were challenged under the First Amendment as being too low and unsupported by evidence. The district court struck down the limits and the U.S. Court of Appeals for the 9th Circuit reversed. If review is granted, the case is expected to resolve whether limits on the amount a donor can contribute to candidates, committees, and political parties imposed by governments must be supported by evidence of the corruption they were enacted to combat. Another case in which the Court ordered a response, Zimmerman v. City of Austin, presents a similar issue in the context of the municipal campaign finance limits in Austin, Texas.

Americans for Prosperity Foundation v. Becerra (9th Circuit opinion issued, awaiting certiorari petition): 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. The 9th Circuit rejected this challenge, arguing 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. The case 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.

News From Ethics Agencies
By Sarah Lang

Last updated 12/24/18

Fair Political Practices Commission News

On November 15, the Fair Political Practices Commission increased contribution limits and voluntary expenditures ceilings applicable to candidates for elective state office, state officeholder account contribution limits, and the annual gift limit. Link to FPPC Staff Memo

Federal Election Commission News

In December, the Federal Election Commission’s Information Division released reminder advice for the holiday season. The advice provided that the same disclaimer rules that apply to election-related mailings also apply to holiday greeting cards, even if they do not solicit funds or contain express advocacy. https://www.fec.gov/updates/tip2018-tis-the-season-for-holiday-greetings/

The Federal Election Commission updated its electronic filing Password Assignment System (PAS). PAS now requires a two-factor authentification process that adheres to updated federal security standards.  All electronic filers will be required to update their passwords within the next 30 days. Password Assignment System (PAS)

San Francisco Ethics Commission News

On Friday, November 16, the San Francisco Ethics Commission considered a set of proposed regulations regarding the City’s public campaign financing program. Candidates running for Mayor or Supervisor may become eligible for limited public financing of their campaigns by complying with program eligibility requirements. To be eligible, candidates must raise a specified minimum amount of contributions from City residents of between $10 and $100. The Commission will reconsider and possibly act on the regulations on December 21. Link to Notice and Proposed Regulations

Links in order:

New Legislation
By KC Jenkins

Last Update 12/24/2018

Federal Legislation

In September, President Trump signed the Energy and Water, Legislative Branch, and Military Construction and Veterans Affairs Appropriations Act of 2019. This legislation makes Federal Senate committees subject to mandatory electronic filing if they meet a $50,000 electronic filing threshold. All Federal Senate committees need new electronic filing passwords to meet this requirement.

Signature Thresholds for Initiatives and Referenda

Last’s month General Election saw the highest percentage of voter turnout in a gubernatorial election since 1982; 64.5% of registered voters cast ballots. Over 12 million votes were cast in the race for Governor, which significantly raises the threshold number of signatures needed to qualify an initiative or referendum. For an initiative statute or referendum, the number of signatures required rose from 365,880 to 623,212. For a Constitutional amendment, the number rose from 585,407 to 997,139.

CAL-ACCESS Replacement System Project

On December 14th, the Secretary of State held a meeting for vendors to give input on the new CAL-ACCESS Replacement System (“CARS”). The new system will be available for registrations, filings, and public data analytics in December 2019. The Project is wrapping up the planning portion of the project and is transitioning to the design portion of the project, which will last until April 2019. After that, the project will move into system development, testing, and deployment stage.

Freshman Legislative Class Sworn In

The newly elected members of the State Legislature were sworn in on December 3rd. There are 17 members taking their seat for the first time, with 9 in the Senate and 8 in the Assembly. The Democratic party holds a large majority in both houses, with 60 of the 80 Assembly seats and 29 out of 40 Senate seats.