Legislature(2009 - 2010)CAPITOL 120
04/09/2010 01:00 PM House JUDICIARY
| Audio | Topic |
|---|---|
| Start | |
| SB43 | |
| SB284 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | SB 244 | TELECONFERENCED | |
| + | SB 43 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | SB 284 | TELECONFERENCED | |
SB 284 - CAMPAIGN EXPENDITURES
3:15:01 PM
CHAIR RAMRAS announced that the final order of business would be
CS FOR SENATE BILL NO. 284(FIN), "An Act relating to state
election campaigns, the duties of the Alaska Public Offices
Commission, the reporting and disclosure of expenditures and
independent expenditures, the filing of reports, and the
identification of certain communications in state election
campaigns; prohibiting expenditures and contributions by foreign
nationals in state elections; and providing for an effective
date."
3:19:34 PM
JOHN PTACIN, Assistant Attorney General, Labor and State Affairs
Section, Civil Division (Anchorage), Department of Law (DOL),
explained that DOL feels that Alaska's expenditure restrictions
on corporations, labor unions, and other entities is likely
unconstitutional. He noted that SB 284 considers the current
disclaimer and disclosure laws and changes the law for
restricting expenditures by corporations and labor unions in
candidate elections. He allowed that disclosure and disclaimer
laws are still given a lot of scrutiny, as they uncover hidden
interests and deter reporting violations. He emphasized that
disclaimer and disclosure laws still need to show that they are
only a modest burden on free speech rights.
3:22:17 PM
CHARLES DUNNAGAN, Resource Development Council (RDC), referring
to Section 10 on page 5, opined that the general rule for
expenditures and contributions by foreign nationals tracked
federal law, but he directed attention to line 29, (b)(5), which
disallowed election contributions from domestic subsidiaries.
He offered his belief that this created a class of U.S.
corporations that no longer have First Amendment rights in an
Alaskan election. He pointed out that contributions by foreign
nationals are already illegal in a state election. He opined
that this would add a new class of person to be discriminated
against.
MR. DUNNAGAN explained that domestic subsidiaries of American
corporations have been given a right to participate in
elections, but that subsection (b)(5) eliminates that right. He
said that it was not necessary to create a rule to prevent
direct and indirect contributions from foreign nationals because
it was already illegal. He opined that this created concerns
for First Amendment, due process, and equal protection rights.
He expressed concern for the drafting of parts of the bill. He
pointed to proposed AS 15.13.068(b)(2)-(4), which defines
domestic subsidiary and noted that there was not a mention of
individual foreign nationals. He said that for an individual
foreign national with a wholly owned corporation, the domestic
subsidiary rule did not apply, while an Alaskan working for a
company of more than 50 percent foreign ownership could not
participate in an election campaign. He commented that issuing
public traded stock was how American businesses raised money.
He opined that this change could affect the investment decisions
of foreign investors.
MR. DUNNAGAN referred to a March 17, 2010, memorandum from
Legislative Legal and Research Services [Included in members'
packets.] which raised questions for the right of Alaska to pass
a law different than federal law and regulation. He stated that
this part of SB 284 is badly drafted legislation. He directed
attention to page 6, lines 3-7, subsection (c), which "prohibits
conduct only to the extent that federal law prohibits the same
conduct." He referred back to page 5, line 29, (b)(5), and
noted that this was not in federal law, and opined that
subsection (c) would nullify subsection (b)(5). He stated that
courts do not like to interpret legislation as nullifying
itself. He called this section "a complete litigation magnet"
and that there was no idea how the court will interpret it. He
emphatically stated that he "cannot see how this provision has
anything to do with disclaimer or disclosure rules."
CHAIR RAMRAS agreed that he wants to encourage disclosure but
did not want to limit discourse.
REPRESENTATIVE GRUENBERG asked if the concern was for all of
Section 10, or solely for subsection (b)(5).
MR. DUNNAGAN, responding to Representative Gruenberg, offered
his belief that all of Section 10 is problematic, as it parrots
existing law. He reflected that Section 10(b)(5) "is a mess and
it's clearly unconstitutional."
3:31:41 PM
REPRESENTATIVE GRUENBERG directed attention to paragraph (5),
and asked if Mr. Dunnagan was aware of any other jurisdiction
that has enacted anything similar, and if there was a court
challenge.
MR. DUNNAGAN replied no.
REPRESENTATIVE GRUENBERG asked whether there was federal
precedent for Section 10, if paragraph (5) were eliminated.
MR. DUNNAGAN agreed.
REPRESENTATIVE GRUENBERG asked if any states have enacted state
laws similar to that remainder of Section 10 [without paragraph
(5)].
MR. DUNNAGAN replied that he did not know.
REPRESENTATIVE GRUENBERG asked about any court cases for
challenges to similar federal legislation.
MR. DUNNAGAN replied that there were none, and he was not aware
of any pending litigation.
REPRESENTATIVE GRUENBERG asked if there was concern with any
other provisions of SB 284.
MR. DUNNAGAN replied that his comments and concerns were for
Section 10 specifically.
REPRESENTATIVE GRUENBERG offered his belief that one potential
reason for including subsection (b)(5) would be to:
Prevent a foreign national that would be precluded
from contributing, from simply forming a domestic
subsidiary to get around the law. It seems to me that
there is an old equity maxim that says 'the law will
not permit something to be done indirectly that could
not be done directly.' Isn't this a valid state
purpose to prevent somebody from setting up a shell
domestic corporation to evade the general prohibition?
3:35:02 PM
MR. DUNNAGAN agreed, but then he questioned the agenda for what
is currently written. He relayed that it is a difficult
question, especially as to how many levels [of corporate
ownership] this would apply. He pointed out that there are not
many definitions and almost no court guidance. He again voiced
his belief that direct and indirect contributions from foreign
nationals are illegal. Referring to domestic subsidiaries, he
said that indirect contributions are already illegal. He said
that SB 284 creates a problem, as it will not allow foreign
nationals a 51 percent ownership in a business, and this will
make it difficult for a business to raise capital. He opined
that SB 284 goes beyond what is necessary to protect Alaska from
inappropriate influence from foreign nationals.
REPRESENTATIVE GRUENBERG replied that SB 284 did not prohibit
foreign ownership; it only prohibited a political contribution
from the business. He posited that if the only reason to set up
a domestic subsidiary was for its political contributions, then
it would be a sham.
MR. DUNNAGAN responded that he did not agree, as the reference
in SB 284 was to "domestic corporations controlled by a foreign
entity." He opined that with the passage of SB 284, a business
could follow lawful procedures and yet violate the law, which
itself would be a violation of both the First Amendment and the
United States Supreme Court's ruling in Citizens United v.
Federal Election Commission.
3:38:53 PM
JASON BRUNE, Executive Director, Resource Development Council
(RDC), shared that the RDC had been actively involved in ballot
measures, including "the cruise ship head tax initiative, the
gas reserves initiative, and the clean water initiative." He
went on to say:
The industries that were targeted by these initiatives
have spent billions of dollars investing in this
state. Each industry employs hard working Alaskans,
and each pays significant taxes to the state treasury.
Be it fishing, tourism, oil and gas, or mining, RDC
members have a vested interest in defending their
investments. By doing business in Alaska these
businesses have demonstrated that they have a dog in
any initiative fight and they should be allowed to
participate in the process. However, ... [proposed AS
15.13.068] appears to potentially impact an investor's
ability to fight an initiative that targets them
because they are a domestic subsidiary of a foreign
corporation.
MR. BRUNE offered his understanding that according to
Legislative Legal and Research Services, proposed AS 15.13.068
only applies to a domestic subsidiary of a foreign national to
the extent that the foreign national is making the decision or
is financing that domestic subsidiary's involvement in a state
election, and does not prohibit a domestic subsidiary of a
foreign national from involving itself in state elections if
it's using money that was made in Alaska or the United States,
and the decision to spend the money was made by the domestic
subsidiary Offering some examples, he pointed out that that
interpretation only raises more questions such as who is it
that's ultimately making the decision to spend money to defend a
company against initiatives, and whether the bill would apply in
situations where the domestic entity isn't yet making money in
Alaska. He urged the committee to either clarify proposed AS
15.13.068 or delete it entirely. In conclusion, he stated that
the RDC supports open discourse, open disclosure, and
transparency in election campaigns, but is very much opposed to
any law that would prohibit contributions that would allow RDC
members to fight initiatives that target their industries.
3:43:05 PM
REPRESENTATIVE GRUENBERG agreed that Section 10 was "not just
the disclosure, it's prohibition," and stated that he understood
the concern.
CHAIR RAMRAS concurred, stating that it limits discourse, and he
stated concern that it would limit commerce.
REPRESENTATIVE GRUENBERG asked whether there is any precedent
supporting the argument that it is unconstitutional to deny this
type of free expression, a prohibition against expenditures by a
foreign national.
MR. BRUNE offered to research the issue and respond immediately.
REPRESENTATIVE GRUENBERG asked that Mr. Ptacin also respond to
the same question on precedents.
[CSSB 284(FIN) was held over.]
| Document Name | Date/Time | Subjects |
|---|---|---|
| 01 Proposed HJUD CS version P.pdf |
HJUD 4/9/2010 1:00:00 PM |
|
| 02 SB43 Sponsor Statement.pdf |
HJUD 4/9/2010 1:00:00 PM |
SB 43 |
| 03 SB43 HSTA version E.pdf |
HJUD 4/9/2010 1:00:00 PM |
SB 43 |
| 04 SB43 GOV Fiscal Note.pdf |
HJUD 4/9/2010 1:00:00 PM |
SB 43 |
| 05 SB43 Support.pdf |
HJUD 4/9/2010 1:00:00 PM |
SB 43 |