Legislature(2001 - 2002)
03/30/2001 01:16 PM House JUD
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* first hearing in first committee of referral
+ teleconferenced
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+ teleconferenced
= bill was previously heard/scheduled
HB 177 - CAMPAIGN FINANCE: CONTRIB/DISCLOS/GROUPS [Contains some discussion of SB 136.] Number 1700 CHAIR ROKEBERG announced that the committee would return to the discussion on HOUSE BILL NO. 177, "An Act placing certain special interest organizations within the definition of 'group' for purposes of Alaska's campaign finance statutes; providing a contingent amendment to take effect in case subjecting these organizations to all of the statutory requirements pertaining to groups is held by a court to be unconstitutional; requiring certain organizations to disclose contributions made to them and expenditures made by them; requiring disclosure of the true source of campaign contributions; and providing for an effective date." [Before the committee was CSHB 177(STA).] CHAIR ROKEBERG announced an at-ease from 2:23 p.m. to 2:24 p.m. Number 1688 REPRESENTATIVE PETE KOTT, Alaska State Legislature, testified as chair of the House Rules Standing Committee, which is the sponsor of HB 177. Representative Kott remarked that HB 177 is a fairly simple piece of legislation that does two things. First, on page 2, lines 7-8, the definition of "contributor" is found. This definition was taken from the U.S. v. Hsia case. Second, certain non-group entities or special interest organizations are being included in the group definition, which is found on page 2, lines 11-15. This language was also extracted from federal case law. Therefore, Representative Kott said he believes that [the state] is conforming to what has already been established. REPRESENTATIVE KOTT said he would illustrate the current situation. He clarified that [this legislation] refers to individuals and not the initiative process. He posed a situation in which a large corporation had an agenda such that it would "go after" people who didn't support drilling and exploration of the Arctic National Wildlife Refuge (ANWR). Currently, that corporation could contribute an unlimited amount of money, which would remain the case under this bill. For example, that corporation could contribute money to the Alaska Oil & Gas Association (AOGA), which could in turn establish a political action committee (PAC), which would disburse the money. Under this bill, AOGA can still receive [an unlimited] amount of money, but it would be treated as a special interest group or non-group entity and thus [AOGA] would be limited in regard to what could be contributed to that PAC, as is the case with any other group that is currently limited. Therefore, the limitation would be $1,000 to the PAC. Currently, there is no limitation and there is no reporting requirement. REPRESENTATIVE KOTT related his belief that this legislation closes what he saw as a loophole in Alaska's campaign finance law. Furthermore, this legislation seems to address the discussion relating to "soft money" that is occurring at the federal level. Number 1437 CHAIR ROKEBERG asked if this legislation could be referred to as the "Feingold-McCain Bill of the Alaska Legislature." REPRESENTATIVE KOTT indicated agreement. CHAIR ROKEBERG related his understanding that HB 177 attempts to "bring the light of day" on soft money contributions that are not currently reported to the public. REPRESENTATIVE KOTT agreed with Chair Rokeberg's understanding. He added that HB 177 levels the playing field among all participants. He reiterated that this legislation doesn't deal with the initiative process. REPRESENTATIVE COGHILL asked if the PAC would report the true source of the money to APOC. REPRESENTATIVE KOTT answered yes. He returned to his prior example and posed a situation in which the large corporation requests that its employees contribute $500 to AOGA and the corporation will reimburse its employees. CHAIR ROKEBERG interjected that such a scenario is prohibited currently. REPRESENTATIVE KOTT clarified that [this legislation] attempts to identify the true source of the contributions [the individual, and would be a matter of the public record]. REPRESENTATIVE COGHILL related his understanding, then, that this legislation would not hinder the input into campaigns, but would merely be a matter of reporting at the same level as for everyone else. REPRESENTATIVE KOTT agreed. Number 1283 NOEL WOODS testified via teleconference. He informed the committee that he is in support of HB 177, and that he is a member of the [Mat-Su Valley] Sportsman group that has been under attack from people who have used this as a cover-up for some of their expenditures. JEAN WOODS testified via teleconference. She noted her support of HB 177 because she believes that nonprofits should follow the same rules as everyone else if they intend to become involved with political campaigns. The public has a right to know who is funding a campaign. Number 1221 STEVE CONN, Executive Director, Alaska Public Interest Research Group (AkPIRG) testified via teleconference. He noted that he had reviewed the 1990 State v. Alaska Civil Liberties Union case, which dealt with politically protected free speech. He said, "This bill is quite obviously an attempt to rewrite that decision." Mr. Conn pointed out that there is a good reason why the Alaska Supreme Court drew a distinction between the groups that are independent from the influence of business and everyone else. Furthermore, the case is backed by sound evidence that will not disappear no matter how hard one tries. The court found a large [portion] of business in the community [to be influencing] the political process. The court cited studies by Larry Makinson of The Center for Responsive Politics in Washington, D.C., which pointed out that of the top 50 contributors, 21 were corporations, 9 were unions, and 8 were PACs or trade associations. The case also cited an AkPIRG report in the early 1990s, which showed that more than half of all contributions were connected to business interests. Furthermore, the study pointed out that there was no danger of quid pro quo arrangements for those excluded organizations. He clarified, "That is to say, the ability of business interests ... could amass massive wealth and drown out the individual who is not associated with business." However, "the exception is a sound one if one believes that all ideas, however unpopular, should find their way into the political process," he said. He noted that to his knowledge, only the Alaska Conservation Alliance has taken advantage of this exception. MR. CONN directed attention to SB 136 as an example of the kind of quid pro quo that the court feared would occur. He noted that SB 136 purports to develop a resource development board made up of persons in the timber, mining, and oil industries who would be able to allocate millions of dollars in state funds to groups promoting their industrial interests. Therefore, he believes the danger posited by the court was real. Mr. Conn said, "The reality is that those members of those industrial organizations who would like to promote conservation causes do have a real fear of retaliation in their jobs, if they were forced to disclose." Therefore, Mr. Conn encouraged the committee, "in the name of free speech and protected free speech," to not add a new restriction on an entity that is not related to business. He encouraged the committee to leave things as they are, which is a level playing field "given the reality of the influence of business on our political life." CHAIR ROKEBERG asked if Mr. Conn was saying that AkPIRG had never engaged in any political activity. MR. CONN replied, "No, my testimony is that we didn't seek to [go to] court to make use of the exception carved out by the supreme court in ... this process." However, Mr. Conn assured the committee that many of AkPIRG's members, when promoting causes that are not popular in today's political climate, would be afraid if their names and occupations were publicized. He characterized today's political climate as a "rabidly pro- development climate" that is evidenced by SB 136, which explicitly excludes an organization such as AkPIRG. In response to Chair Rokeberg, Mr. Conn explained: Senate Bill 136 sets up a resource development board that would award "grants" to be determined by a named representative of the major development industry, taking state money, more than $2 million, and parceling it out amongst various industrial groups to allow them to pay for their advertising under the rubric "public education." In other words, this goes beyond what a private individual chooses to do vis-a- vis the political process. This actually takes draw- ups of state money and passes it over to industry to do with as it may choose. Number 0861 ROD ARNO, Alaska Outdoor Council (AOC), urged the passage of HB 177 out of committee. He noted his past experience with initiatives and AOC's PAC. Mr. Arno related his belief that HB 177 is necessary. He informed the committee that according to APOC reports, a gentleman named Kevin Harron (ph) contributes to House District 23. Mr. Harron lists his occupation as a consultant for Kay Brown Communications. However, Mr. Harron is a former director of the Alaska Center for the Environment and is now the director of the Conservation Strategies, which received money from Paul Bernard (ph), who is from outside of Alaska. Mr. Bernard gave $400,000 to get [Conservation Strategies] started and then another $150,000 for individual political campaigns during the last election period. However, the APOC report doesn't mention Mr. Bernard's name. That is the type of thing that AOC [would like to have an honest reporting of]. CHAIR ROKEBERG asked if Mr. Arno's testimony is that Mr. Harron was a conduit for $550,000. MR. ARNO said that $550,000 was spent, but Mr. Bernard's name is not mentioned in any APOC report nor is the name Conservation Strategies. He noted that he was aware of these contributions due to an Anchorage Daily News article. Mr. Arno informed the committee of a meeting of the Alaska Wilderness Recreation Tourist Association during which the director of Alaska Conservation Foundation, Deborah Williams (ph), told the audience she was hired to replace the [members of the] Alaska State Legislature with [members of] the new party called the Alaska Conservation Majority. Ms. Williams also noted that she was two years into this ten-year project. Mr. Arno pointed out that the Alaska Conservation Foundation is the umbrella organization for the Alaska Conservation Alliance and the Alaska Conservation Voters, which also include the Alaska Center for the Environment. Therefore, Mr. Arno feared nonresident influence in Alaska's election process and thus would like that exposed. Mr. Arno noted that as a brown bear hunting guide, he should be fearful of having his name listed, but that is not of concern to him because participating in this process is important. Number 0607 REPRESENTATIVE MEYER related his understanding of Mr. Conn's testimony that expressed concern of retaliation if the public knew who people were giving money to because their position would be unfavorable with the majority. However, he understood Mr. Arno to say that he represents a minority, brown bear hunters, and that he is not afraid of people knowing his position or whom he gives money to. MR. ARNO replied, "That is correct." REPRESENTATIVE BERKOWITZ asked if Mr. Arno's organization is subject to APOC disclosures. MR. ARNO replied yes. In further response to Representative Berkowitz, Mr. Arno said that AOC reports all of its donors. REPRESENTATIVE BERKOWITZ surmised, then, that when AOC sends out literature endorsing individuals, all the donors have been disclosed. MR. ARNO replied, "I'm not going to answer that question because I don't know." REPRESENTATIVE BERKOWITZ surmised, then, that Mr. Arno's organization may be included under this legislation. MR. ARNO said that would be fine. Number 0471 CHAIR ROKEBERG suggested that Representative Berkowitz may be referring to the possibility that AOC has a periodic publication that endorses particular candidates. If such an endorsement occurred in a general membership mailing, then it may qualify as a political communication and thus the organization would have to provide APOC with the dues-paying membership list. He asked if such a situation would be problematic for Mr. Arno. MR. ARNO pointed out that AOC's newsletter does not [endorse particular candidates] since it is separate from AOC's PAC. Therefore, he indicated that AOC wouldn't have any problems with that. REPRESENTATIVE BERKOWITZ asked if the AOC's PAC prints full disclosure of all its contributors. MR. ARNO replied yes. REPRESENTATIVE BERKOWITZ asked if the AOC's PAC makes full disclosure on issues. CHAIR ROKEBERG asked if [Representative Berkowitz was referring] to initiatives. He related his understanding that there are separate statutory requirements for that. MR. ARNO replied yes and also agreed that [AOC's PAC] would be willing to continue such. In response to Chair Rokeberg, Mr. Arno agreed that would include inside and outside money. REPRESENTATIVE BERKOWITZ asked if [AOC's PAC] accepted outside money "last time." MR. ARNO replied yes and agreed with Representative Berkowitz that it would be in the range of the hundreds of thousands of dollars. REPRESENTATIVE BERKOWITZ commented, "And there was one organization that opposed you, and that's why we're here today. They must be very effective." MR. ARNO remarked, "They're extremely effective. They grant out now $3 million a year to the state to advocacy groups to do nothing but to replace the face of the legislature. So, yes." REPRESENTATIVE BERKOWITZ commented that they haven't been too effective. Number 0281 CHAIR ROKEBERG referred to Mr. Conn's earlier testimony regarding the Alaska Supreme Court's finding that certain requirements should be imposed on business and union organizations due to their large influence on the body politic and the electoral process in Alaska. He asked if Mr. Arno would say that $3 million is a substantial sum that would have an impact regardless of whether the organization is successful. MR. ARNO agreed. REPRESENTATIVE BERKOWITZ pondered how much Phillips' and BP's and the other advertisements [amounted to]. CHAIR ROKEBERG pointed out that because of the enactment of the campaign reform legislation a few years ago, the petroleum industry is a minor part of the elections in Alaska. REPRESENTATIVE BERKOWITZ expressed his personal concern with campaign finance that has more to do with what is happening with initiatives. He related his belief that there should be individual restrictions on initiatives as well. CHAIR ROKEBERG pointed out that initiatives are not the issue before the committee. He asked if Representative Berkowitz believes that openness is a central tenet of the democratic process. REPRESENTATIVE BERKOWITZ indicated agreement. CHAIR ROKEBERG referred to Mr. Conn's earlier testimony regarding the Alaska Supreme Court decision [in the 1990 State v. Alaska Civil Liberties Union case] and asked Ms. Kurtz to comment. TAPE 01-48, SIDE A Number 0001 KATHRYN KURTZ, Attorney, Legislative Legal Counsel, Legislative Legal and Research Services, Legislative Affairs Agency, explained that HB 177 incorporates the three-part test that is put forth in the Alaska Civil Liberties Union (AkCLU) decision, and in fact, is almost verbatim the same in terms of what HB 177 puts into the definition of "group." CHAIR ROKEBERG asked Ms. Kurtz to comment on the claim that there is a need to keep concealed the identities of some contributors because of fear of retribution. MS. KURTZ said that that concept has been argued in various cases, not within Alaska but in other jurisdictions; thus there is state and federal case law available. She said that according to her understanding, there is one case in particular, National Association for the Advancement of Colored People v. Alabama, 357 U.S. 449, in which the court did recognize an important interest in keeping membership lists confidential, but only because there was a very significant danger to people through disclosure. She added that there are also cases that have said the threat of getting less money in contributions does not justify concealing names; that [issue], too, has been litigated. There really has to be a problem of serious magnitude before it is a situation in which disclosure cannot be required. Number 0200 MS. KURTZ, in response to questions posed by Representative Berkowitz, said that the "chilling effect" is always a concern with the First Amendment, and it is a balancing issue. One has to look at the degree that the state's interest is being advanced versus the burden on [free] speech. She again said she thought what HB 177 does is consistent with the AkCLU case. She explained that in the case of HB 177, the Alaska Supreme Court has already assessed the degree of state interest as opposed to the burden on [free] speech by putting out the [three-part] test. She acknowledged, however, that she was not sure what to say in terms of a specific analysis of the burden. She also responded that HB 177 was not altering the balance; instead, HB 177 would put into statute what the AkCLU decision says, at least as far as the definition of group goes. The AkCLU decision upheld the state law with regard to the prohibition on contributions by corporations and unions, but the decision also said that a certain category of "non-group" entities had to be permitted to participate if they met the three-part criterion. REPRESENTATIVE BERKOWITZ said that one of the problems in running campaigns is that there are candidates and issues that frequently run side by side. He referred to the "same-sex marriage proposal" from a couple of years ago, which became a hot issue. He said it was his opinion that the proposal was put forth in the legislative format in order to make it a campaign issue for individuals. And when an issue is then tied to individual candidates, Representative Berkowitz said he wondered how the campaign limits addressed in HB 177, [and] the group limits placed on individuals, are balanced against the absence of group limits on an issue. MS. KURTZ responded that issue advocacy is something that is extremely difficult to regulate consistent with the First Amendment. What the state campaign law can do, however, is limit "express advocacy," for example, "Vote for candidate X." What the state campaign law cannot do is set a dollar limit on individuals expressing views on issues. REPRESENTATIVE BERKOWITZ asked if it were possible to reach into the issues, based on the reality that issues and candidates are linked. MS. KURTZ answered that currently there is a lot of discussion about that at the federal level, but she had not yet seen anything that changes the basic structure, which lets "express advocacy" be regulated but not issue advocacy. That seems to be a line, however difficult to interpret, that is fairly well established at this point in federal law. She confirmed that that was from the point in time of the Buckley case (Buckley v. Valeo) on. Number 0438 REPRESENTATIVE COGHILL said that from the point of the candidate, he has certainly felt the chilling effect of disclosure. He asked if there had been case law with regard to the chilling effect on free speech for candidates. MS. KURTZ answered that there has been case law [resulting after] someone came forward and said, "Hey, I'm being damaged by this law requiring disclosure because there are people who don't want to give me money now," and the court responded that the law would be upheld regardless. REPRESENTATIVE COGHILL said he could see that might very well be the case here, because he does not think the dollar limit necessarily limits the ability to contribute, and disclosure certainly would not either. REPRESENTATIVE BERKOWITZ asked Ms. Kurtz if she had looked into what was going on in Arizona with regard to state-funded races. MS. KURTZ said she was not familiar with that particular aspect. She added, however, that she had some familiarity with the public-financing-of-campaigns law. REPRESENTATIVE BERKOWITZ said it seemed having state funding or public funding could circumvent the entire problem of any contributions to individuals. MS. KURTZ noted that there were a number of states that had public funding. REPRESENTATIVE BERKOWITZ, in response to comments regarding the fiscal gap, said that it would not really create a big fiscal- gap problem, and further, that the title of HB 177 invited discussion. Number 0613 REPRESENTATIVE KOTT commented with regard to Buckley v. Valeo, saying the express advocacy versus issue advocacy was addressed; restrictions can be placed on express advocacy but not on issue advocacy. Specifically, issue advocacy can neither be prohibited nor regulated. He added that the First Amendment concerns were addressed by Ms. Kurtz, and that there was also case law regarding that issue. He also said that disclosure cannot always be demanded. However, non-disclosure has to be justified in the affirmative. The contributors trying to justify non-disclosure would have to show that there was a threat, harassment, or fear of reprisal. At that point, APOC could make the determination whether those names would still have to be disclosed; if one of those conditions existed, then the group should be able to make a pretty good argument for non- disclosure. REPRESENTATIVE KOTT noted that there was also case law to support this, both at the federal level and in Veco International v. APOC. Recognizing that there was no longer a quorum, Representative Kott asked that the committee advance HB 177 at the next available opportunity. He added that the provisions encompassed in HB 177 should have been included in the last campaign finance reform bill, which addressed corporations and unions. Representative Kott concluded by saying that there was additional legislation regarding campaign finance law en route. CHAIR ROKEBERG noted that there was a technical problem with the legislative financial disclosure forms. He then announced that the [hearings on HB 177, HB 179, HB 40, and HB 4] would be recessed to 3/31/01. [HB 177 was held over.]
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