The DISCLOSE Act: Fantasy or Future?

Following a wave of judicial decisions that have cleared the way for more soft money in politics, federal legislators have continued to press for the passage of laws creating more stringent regulations on donor disclosures and transparency in political contributions.

The Democracy Is Strengthened by Casting Light On Spending in Elections (DISCLOSE) Act was introduced in Congress in 2010 and 2012, but the legislation was twice defeated after falling short of overcoming a Republican-led filibuster.  A third attempt at passing disclosure legislation, the DISCLOSE Act of 2014, was introduced by Senator Sheldon Whitehouse of Rhode Island and is currently being considered in the Senate Rules Committee. A hearing was held last week.

“DISCLOSE 2014” would:

  • Broaden the definition of what is a reportable “independent expenditure,” by treating the functional equivalent of express advocacy as an independent expenditure ;
  • expand the time periods during which a communication would be considered a reportable “electioneering communication,”
  • require disclosure of donors underlying large transfers to political spenders,
  • require that covered organizations (including corporations, labor unions and 501(c)(4) and 501(c)(6) nonprofit organizations) that spend more than $10,000 or more on election ads publicly identify their donors, and
  • impose new required disclaimers for political advertisements.

The bill faces the hefty obstacle of garnering bipartisan support to become federal law.  Nonetheless, DISCLOSE 2014 could serve as a model for state and local jurisdictions. While the Supreme Court (in decisions such as Citizens United and McCutcheon) has made it easier to generously fund political and issue advocacy organizations, the Court has also emphasized that disclosure requirements are both constitutional and beneficial to a healthy democracy.  Accordingly, proponents of enhanced campaign finance transparency might find that the last bastion of reform lies in disclosure requirements like those introduced in DISCLOSE 2014.

McCutcheon v. FEC: the Potential Impact on Aggregate Contribution Limits Under Local Pay-to-Play Ordinances

Last week the United States Supreme Court heard arguments in McCutcheon v. FEC, a challenge to the constitutionality of aggregate contribution limits under federal campaign finance law.

In addition to imposing base contribution limits, federal campaign finance law imposes an aggregate individual biennial limit of $123,200.  Out of this $123,200, an individual may not contribute more than $48,600 to candidate committees or more than $74,600 to any other federal committees (out of this $74,600, no more than $48,600 may be given to committees that are not national party committees).

Last week’s oral argument centered around whether aggregate contribution limits are justified by the need to prevent undue influence in the political process or are contrary to First Amendment rulings constraining the government’s ability to impose restrictions aimed at equalizing participation in federal elections.

If the Supreme Court holds that aggregate contribution limits are unconstitutional, the ruling will likely also be felt at the state level.  Currently, eight (8) states, including New York, impose analogous aggregate contribution limits on a single contributor’s contributions to multiple recipients during a specified time period.  What is less clear is how the McCutcheon ruling might impact aggregate contribution limits under local pay-to-play ordinances in New Jersey.

Many New Jersey local pay-to-play ordinances place an aggregate limit on the amount that a “business entity” may contribute to a group of covered political recipients during a specified time period.  (The definition of business entity may encompass one or more contributors, depending on the complexity of the entity and specified relationships.)  Putting aside issues associated with subjecting multiple contributors to the same aggregate limit, the question posed by a potential McCutcheon holding is whether there is a significant constitutional distinction between an across-the-board aggregate limit and an aggregate limit imposed solely as a condition of eligibility for a government contract.

Given that these local aggregate contribution limits are designed solely to prevent corruption, or the appearance thereof, in the government procurement process, these aggregate limits may withstand constitutional scrutiny regardless of the outcome in McCutcheon.  In other words, the local pay-to-play aggregate limits may be constitutionally distinct because businesses and individuals have a choice between engaging in business with the government (thereby voluntarily subjecting themselves to additional limitations meant to ensure the integrity of those business dealings) or fully participating in local elections by making bigger contributions to more recipients up to higher contribution limits.

A different federal case, Wagner v. FEC, which challenges the federal ban on contributions by government contractors may, in the end, prove more relevant to the continuing viability of the local aggregate limits and other features of pay-to-play laws.

 

Court Denies Cert in Danielczyk

It’s been a roller coaster week for campaign finance law. Last week the Supreme Court accepted the McCutcheon case, as we discussed here. And this morning, the Court denied cert in the Danielczyk case which involved the constitutionality of the long-standing ban on direct corporate  contributions (see our previous discussions of the case here and here).