Legislature(2009 - 2010)BELTZ 105 (TSBldg)
03/12/2010 01:30 PM JUDICIARY
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SB 284-CAMPAIGN EXPENDITURES 2:29:45 PM CHAIR FRENCH announced the consideration of SB 284 and said that today the committee would work on amendments. He noted that Mr. Ptacin from the Department of Law (DOL), Mr. Bullard from Legislative Legal and Research, and Ms. Hill from the Alaska Public Offices Commission (APOC), were on line to explain aspects of the amendments. 2:31:02 PM CHAIR FRENCH moved Amendment 1, labeled 26-LS1448\A.3, and objected for discussion purposes. AMENDMENT 1 OFFERED IN THE SENATE BY SENATOR FRENCH TO: SB 284 Page 2, line 28: Following "an": Insert "independent" Following "expenditures": Insert "made and contributions received" CHAIR FRENCH said this is to make it clear that the report has to include the money you spend and the money you have taken in. SENATOR WIELECHOWSKI said perhaps he's missing a nuance in the statute, but it would seem that if an expenditure is being made, regardless of whether it's independent, it would require reporting. CHAIR FRENCH asked Mr. Bullard to summarize the contents of the memorandum he sent regarding this amendment ALPHEUS BULLARD, Attorney, Legislative Legal and Research Services, explained that right now AS 15.13.040(d) and (e) that address expenditures both in the bill and also in current law are applied under APOC regulations to AAC 50.336 only to independent expenditures. Responding to Senator Wielechowski's comment, he said that expenditures for candidates, nongroup entities, and groups have to be reported under AS 15.13.110 so it's been the practice of APOC to require only independent expenditure reports under these statutory subsections. CHAIR FRENCH recapped that in Section 3, AS 15.13.040(d) is being amended and it is a reporting requirement that applies only to independent expenditures. MR. BULLARD said yes and the other line of the amendment is to better describe what that section is doing. CHAIR FRENCH withdrew his objection to Amendment 1 and asked if there was further objection. SENATOR COGHILL objected for further discussion. He related that he agrees with the amendment, but he would like the committee to consider an amendment he prepared that includes the contents of Amendment 1 and also conforming changes on page 6, lines 13-15. CHAIR FRENCH suggested that the committee finish with Amendment 1 and then address his proposal as Amendment 2. SENATOR COGHILL agreed and removed his objection to Amendment 1. CHAIR FRENCH found no further objection and announced that Amendment 1 is adopted. 2:36:05 PM SENATOR COGHILL moved Amendment 2. He explained that it consists of lines 4-11 of amendment 26-LS1448\A.7 to SB 284. Lines 1-3 were adopted as Amendment 1. AMENDMENT 2 OFFERED IN THE SENATE BY SENATOR COGHILL TO: SB 284 Page 6, line 13, following "An": Insert "independent" Page 6, line 14, following "an": Insert "independent" Page 6, line 15, following the first occurrence of "an": Insert "independent" CHAIR FRENCH objected for discussion purposes. SENATOR WIELECHOWSKI asked Mr. Bullard if there was a reason that Amendment 1 didn't insert the word "independent" on page 6, lines 13-15 as Amendment 2 did. MR. BULLARD replied the requests for the amendments were slightly different. The request that resulted in the drafting of 26-LS1448\A.7 was only to insert the "independent" language. SENATOR WIELECHOWSKI asked if Amendment 2 tracks Amendment 1. MR. BULLARD said he would describe the changes as an aid to the reader rather than substantive legal changes. The result of Amendment 1 is that the person turning to 15.13.110(g) now will be reminded that the report is the independent expenditure report. CHAIR FRENCH removed his objection and announced that without further objection, Amendment 2 is adopted. 2:39:43 PM CHAIR FRENCH moved Amendment 3, labeled 26-LS1448\A.4, and objected for discussion purposes. He explained that the idea behind the amendment was to make certain that people (meaning individuals, nongroups, groups, corporations, and unions making independent expenditures) create a separate bank account to receive money for funds that will be expended in these efforts. It's easier for everyone to know that a separate account is necessary so that no one is tempted to draw from a general treasury. It also makes it easier for APOC and others to look at the records of the person making the expenditures in the event of an alleged violation. AMENDMENT 3 OFFERED IN THE SENATE BY SENATOR FRENCH TO: SB 284 Page 4, following line 4: Insert a new bill section to read: "* Sec. 7. AS 15.13 is amended by adding a new section to read: Sec. 15.13.052. Independent expenditures; political activities accounts. (a) Before making an independent expenditure in support of or in opposition to a candidate or before making an independent expenditure in support of or in opposition to a ballot proposition or question, each person other than an individual, candidate, or nongroup entity with an annual operating budget of $250 or less, shall establish a political activities account. The political activities account may be a separate account in the person's general treasury. The political activities account must be administered using generally accepted accounting principles. All funds used by the person to make independent expenditures must be drawn from the person's political activities account. (b) Records necessary to substantiate the requirements of (a) of this section must be made available for inspection by the commission. (c) Each person who has established a political activities account under this section shall preserve all records necessary to substantiate the person's compliance with the requirements of this section for each of the six preceding years." Renumber the following bill sections accordingly. CHAIR FRENCH asked Mr. Bullard to convey the suggestions that he attached to Amendment 3. MR. BULLARD directed attention to the language in Section 4 on page 3 that says that the person making the independent expenditure has to include information about the contributions they have received in every independent expenditure report. The memo suggests that this section might be more at home in the new bill section proposed in Amendment 3. Although this is neither legally nor constitutionally required, it may be a more practical and workable solution for both APOC and for those people making independent expenditures, he said. 2:42:52 PM CHAIR FRENCH summarized that he is suggesting that the independent expenditure report, referenced in Section 4, should be incorporated into the account of monies contributed to and spent from the political activities accounts. MR. BULLARD said that's right; they would merely have the duty to report when funds were transferred into the account or when funds were leaving the account. They wouldn't have to separately account for contributors on a report of an expenditure. He said he isn't sure how it would work in practice. CHAIR FRENCH asked Holly Hill if she had followed the discussion regarding Amendment 3 and the way it would integrate with the current reporting requirements as envisioned by the bill. HOLLY HILL, Executive Director, Alaska Public Offices Commission (APOC), Department of Administration, said she didn't have a copy of the amendments so she would defer to Mr. Ptacin. 2:44:39 PM JOHN PTACIN, Assistant Attorney General, Civil Division, Department of Law (DOL), said it doesn't seem that Mr. Bullard is suggesting that a corporation cannot make an expenditure using its own coffers. Rather, he's suggesting that to keep the reporting as clean as possible, that they create another account for all the contributions come in, including contributions from a corporation or labor union general treasury. CHAIR FRENCH agreed that it isn't restricting where the money comes from; it's setting up one location that APOC or others can go to find out the amount of money a particular entity collected and how they spend it. MR. PTACIN said he doesn't see an issue with the suggestion. Any law that burdens political speech in this area is subject to strict scrutiny so there would need to be a compelling government interest and narrow tailoring. This appears on its face to be narrowly tailored to a government interest as long as there isn't some outright restriction that the corporation can't spend its money and be the speaker. 2:46:18 PM CHAIR FRENCH said he wanted give Ms. Hill an opportunity to consider whether or not there's a way to integrate Section 4 and the new Section 7 proposed in Amendment 3. He suggested the committee address Amendment 3 and at some later time address Mr. Bullock's suggestion. He asked if there's something in law that says that candidates have to establish political activities accounts or if it's just a really good idea that candidates follow. MS. HILL said she can't cite the statute or regulation, but APOC does advise candidates to keep separate campaign accounts. SENATOR COGHILL added that there is a requirement for candidates to have an account that registers the name of the campaign and the treasury. The statute or regulation specifies what has to be included in the account name and the particular APOC reporting forms that are used. 2:48:12 PM SENATOR WIELECHOWSKI referenced the language on lines 7 and 8 of Amendment 3 and questioned whether the intent was to say "$250 or more" rather than "$250 or less," which is the language in the amendment. MR. BULLARD said this requirement applies to all persons other than an individual, a candidate, or a nongroup entity with an annual operating budget of $250 or less. CHAIR FRENCH summarized that if you're an individual, candidate, or nongroup entity with an annual operating budget of $250 or less, you are not captured under the requirement to establish a political activities account. MR. BULLARD said that's correct. SENATOR WIELECHOWSKI commented that the language is awkward. CHAIR FRENCH removed his objection and announced that without further objection, Amendment 3 is adopted. He noted that this section could see further change when Ms. Hill sees how it interacts with Section 4 or if a committee member finds a better way to express to whom this does and does not apply. 2:50:07 PM CHAIR FRENCH said Amendment 4 and Amendment 5 are both about disclaimers. This is putting words in the advertisement that helps viewers, readers, or listeners understand who is speaking with regard to elections. CHAIR FRENCH moved Amendment 4, labeled 26-LS1448\A.6, and objected for discussion purposes. AMENDMENT 4 OFFERED IN THE SENATE BY SENATOR FRENCH TO: SB 284 Page 5, line 27, following "the": Insert "name and city and state of residence or principal place of business, as applicable, of each of the" Page 5, line 29, following "communication": Delete ", with the words "top five contributors"" Page 6, following line 11: Insert a new bill section to read: "* Sec. 12. AS 15.13.090 is amended by adding a new subsection to read: (c) To satisfy the requirements of (a)(2)(C) of this section and, if applicable, (a)(2)(D) of this section, the following statement or statements must be read, in a manner that is easily heard, or placed in the communication so as to be easily discernable, or, in a communication that is transmitted by a method that includes both audio and video components, be read in a manner that is easily heard and placed in the communication so as to be easily discernable: This communication was paid for by (person's name and city and state of principal place of business). The top contributors of (person's name) are (the name and city and state of residence or principal place of business, as applicable, of the largest contributors to the person under AS 15.13.090(a)(2)(D))." Renumber the following bill sections accordingly. SENATOR WIELECHOWSKI asked what AS 15.13.040(e)(5) says. 2:53:15 PM MR. BULLARD replied it's a reference to the contributors in Section 4 on page 3, paragraph (5). SENATOR WIELECHOWSKI asked if this would apply to a company like Exxon or if it's designed for groups. MR. BULLARD directed attention to the words "if any" on page 5, line 28, and explained that the concern about contributors is more about trade organizations and entities where a number of persons have come together to engage in some advocacy and less about a major corporation like Exxon. SENATOR COGHILL said his concern with requiring information about the five largest contributors is that it could create a situation where there's more information than people are willing to handle and the intended impact might be diminished. He suggested instead that the principal officers identify themselves and provide information about the communication because this looks like it will take a full 30 seconds to communicate this information. Let me know if I'm wrong on that, he said. 2:56:35 PM CHAIR FRENCH responded there may be a need to run a test with a stopwatch to see what it'll take to get this information into a 30 second advertisement. SENATOR COGHILL clarified that he supports full disclosure, but this is reportable information that people will get in other venues. It may not be well received in this venue because it'll be ignored, he added. CHAIR FRENCH asked Mr. Bullard how far you can go with respect to requiring an audible disclosure in a 30 second television advertisement without infringing on a corporation's or union's or candidate's First Amendment rights. MR. BULLARD replied disclosure would be less burdensome than either a total prohibition or a limitation, but he can't say with any certainty where the line is for too much disclosure in this context. 2:59:13 PM SENATOR WIELECHOWSKI stated that he absolutely believes that it is a compelling state interest to require as much disclosure as possible and he supports listing at least the top five contributors and their location. "I'm inclined to err on the side of more disclosure because I think that big money in elections is dangerous to representative democracy." I support your amendment, he concluded. CHAIR FRENCH thanked him for his comments and added that he wouldn't be surprised to see his words in a brief some day. MR. PTACIN said he will echo that thought and he applauds the conversation. The discussion about compelling government interest certainly helps establish a record for future litigation. We are talking about free speech and these laws are subject to challenge, he said. CHAIR FRENCH said he will associate himself with Senator Wielechowski's comments because he thinks he's right. The federal government has experience in this area, but the State of Alaska has never allowed corporations or unions to participate directly in campaigns for or against candidates. Because this is a whole new landscape, it's a good idea to start with restrictions that are as tight as possible. We can deal with it if a court later orders the state to loosen the restrictions, he said. CHAIR FRENCH pointed out that in this state three companies account for 90 percent of the state's revenue so they are going to have a profound interest in participating directly in elections for the very understandable reason of relieving their tax burden. For these reasons it's very important to have strong laws in place to let people know who is speaking to them, he said. 3:01:59 PM SENATOR COGHILL said he too is interested in full disclosure and he understands the need for tight restrictions. But if we're going to ask for disclosures on each advertisement then we should also ask candidates to disclose their top five contributors on a campaign advertisement, he said. I don't think we want to do that but there needs to be equity, and if we're asking them to speak not with a single voice but a combined voice of the top five contributors we might actually be putting more burden on that individual voice than is necessary. CHAIR FRENCH said it's a good point, but very different rules apply to candidates as opposed to corporations making independent expenditures. Most candidates will have 20-30 contributors at the maximum $500 per calendar year level so you'd have to figure out a way to select the top three or top five. "I'll leave that to you if you want to craft an amendment to work that out," he said. 3:03:53 PM SENATOR WIELECHOWSKI opined that this doesn't stop any individual corporation or union from saying anything. This addresses laundering and unions or corporations who want to hide behind another group. They have a legal right to do that, but this legislation says that the public has a right to know who is behind that group. Hiding behind groups is my big concern and that's what this is aimed to stop, he said. There is absolutely a compelling state interest in defining the top contributors so we can curtail trying to skirt disclosure, he said. SENATOR COGHILL said it's a good debate to have but he continues to believe that the principals should speak for a corporation rather than the top five contributors. CHAIR FRENCH removed his objection to Amendment 4 and asked if there was further objection. SENATOR COGHILL objected. "I really feel very strongly that we need to go in a different direction," he said. A roll call vote was taken. Amendment 4 was adopted on a 3:1 vote with Senators Wielechowski, McGuire, and French voting yea and Senator Coghill voting nay. CHAIR FRENCH said the legislation in the House identifies the top three contributors but not their physical address so it's likely that this section will receive further attention. SENATOR COGHILL said he wouldn't offer Amendment 5, labeled 26- LS1448\A.9, because it's the argument he used to try to defeat Amendment 4. 3:08:15 PM SENATOR COGHILL moved Amendment 6, labeled 26-LS1448\A.8. AMENDMENT 6 OFFERED IN THE SENATE BY SENATOR COGHILL TO: SB 284 Page 4, lines 5 - 14: Delete all material and insert: "* Sec. 7. AS 15.13.067 is amended to read: Sec. 15.13.067. Who may make expenditures. Only the following may make an expenditure that is not an independent expenditure in an election for candidates for elective office: (1) the candidate; (2) an individual; (3) a group that has registered under AS 15.13.050; and (4) a nongroup entity that has registered under AS 15.13.050." Page 5, lines 3 - 11: Delete all material. Renumber the following bill sections accordingly. 3:09:03 PM RYNNIEVA MOSS, Staff to Senator Coghill, explained that Amendment 6 rewrites Section 7 to clarify that the Alaska State Legislature is only changing statutes to deal with the Citizens United decision, which deals with corporations and independent expenditures. The language is a better choice with respect to preserving the intent of the decision, she said. CHAIR FRENCH summarized that Section 7 was rewritten in a positive rather than negative manner and the material on page 5, lines 3-11, was deleted in the belief that it would be captured in the rewritten section. MS. MOSS agreed. She added that the original draft deleted material in Section 7 and reinserted it in Section 10. CHAIR FRENCH asked Mr. Bullard to speak to the amendment. MR. BULLARD said that in the past corporations and unions were not allowed to make expenditures on behalf of candidates and all this bill does is allow them to make independent expenditures. My concern is that I don't know if this change is significant, but it has the potential to be so in the future depending on which direction the statutes go, he said. 3:12:40 PM CHAIR FRENCH noted, with some surprise, that the AS 15.13.050 registration requirements are still in the bill on lines 9 and 10 of the amendment. CHAIR FRENCH removed his objection to Amendment 6. Finding no further objection, he announced that Amendment 6 is adopted. He asked the members to read Mr. Ptacin's letter dated 3/9/10 before the next hearing because the concerns he articulated may elicit additional amendments. CHAIR FRENCH held SB 284 in committee for further work. 3:13:47 PM There being no further business to come before the committee, Chair French adjourned the meeting at 3:13 p.m.