Legislature(2001 - 2002)

04/30/2001 06:00 PM STA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
           HB 177-CAMPAIGN FINANCE: GROUPS & DISCLOSURE                                                                     
CHAIRMAN  THERRIAULT noted  the proposed  committee substitute  (CS)                                                            
for HB 177.  He asked the bill drafter  to come forward and  explain                                                            
the new sections encompassed  in the CS because it takes the bill in                                                            
a different direction.                                                                                                          
KATHRYN  KURTZ,   attorney  with  Legislative  Legal   and  Research                                                            
Services and  bill drafter, explained  the changes in the  R version                                                            
of HB  177.  Sections 1  and 2  are unchanged.  Section  3 is  quite                                                            
different.  Previous drafts  made an addition  to the definition  of                                                            
group  and  the R  version  does not  do  this.  It takes  the  same                                                            
language  from the Alaska  Civil Liberties  Union (ACLU) court  case                                                            
and uses it to define the  term non-group entity. This is a new term                                                            
for the  Alaska statutes  but one  the court discussed  in the  ACLU                                                            
case where they  said those entities couldn't be barred  from making                                                            
contributions  and independent  expenditures the  way you can  bar a                                                            
business corporation  or union. It's now in the definition  section.                                                            
There is the  definition of non-group  entity and the term  "person"                                                            
has been amended  to include non-group entities. "Person"  can refer                                                            
to a corporation,  a union or any kind of multi-member  item as well                                                            
as a natural individual.                                                                                                        
This bill would  give non-group entities specific  authority to make                                                            
campaign  contributions   and  expenditures.  This  is  done  in  AS                                                            
15.13.074 and  15.13.135 which are  the specific sections  addressed                                                            
in the ACLU  decision. It also makes  changes to AS 15.13.065(a)  on                                                            
page 2, section  4, and 15.13.067  to make corresponding  changes to                                                            
allow  these   entities  to  make   contributions  and  independent                                                             
expenditures.  Currently, groups and individuals have  the authority                                                            
to do those  things and this adds  non-group entities to  that list.                                                            
This draft also  requires non-group entities to disclose  the source                                                            
of contributions  made to  them of $100 or  more for the purpose  of                                                            
influencing candidate nominations or elections.                                                                                 
Buckley  v. Valeo  and  the Veco  International  v.  APOC case  both                                                            
upheld disclosure  requirements on the theory that  there is a value                                                            
to having an informed electorate  that knows where information comes                                                            
from. Draft  R specifically creates  a new subsection 15.13.040(j),                                                             
which  requires reporting  contributions  over  $100  and changes  a                                                            
number  of sections  to require  non-group  entities  to report  the                                                            
contributions  and expenditures made for the purpose  of influencing                                                            
nomination   or  election  of  candidates.   Sections     15.13.072,                                                            
15.13.082(b),  15.13.084,  15.13.090(a)  and  15.13.110(a,b&f)  fall                                                            
under the disclosure category.                                                                                                  
The  Alaska   District  Court  Jacobus   decision  No.  A97-0272-CV                                                             
discussed limits  on contributions to political parties  on pages 10                                                            
&  11  and  concluded   they  could  be  limited  for   purposes  of                                                            
influencing  the  nomination  or  election  of  candidates  but  not                                                            
necessarily  for other purposes. Language  in this draft  comes from                                                            
that case.                                                                                                                      
CHAIRMAN  THERRIAULT  asked  Ms.  Kurtz  to  speak  to  the  Jacobus                                                            
decision and  the potential problems  it held for the House  version                                                            
of the legislation.                                                                                                             
MS. KURTZ  said  the House  version would  have applied  all of  the                                                            
existing  statutes   relating  to  groups  to  non-group   entities.                                                            
Specifically,   that  case  held   the  existing  statute   limiting                                                            
contributions  to political  parties  to $5,000 was  over broad.  It                                                            
attempted to regulate  more than could be justified  under the First                                                            
Amendment because  there needs to  be a compelling interest  and the                                                            
statute must be narrowly  tailored to serve the compelling interest.                                                            
The  compelling  interest  would   be avoiding   corruption  or  the                                                            
appearance  of corruption, which is  fairly specific to candidates.                                                             
The  court in  Jacobus  did not  see a  real threat  in educational                                                             
efforts, get out  to vote efforts and other political  party efforts                                                            
and said the  existing statute needed  to be narrowed. The  previous                                                            
draft  could  be  susceptible  to  the  same  type  of over-breadth                                                             
argument  by  regulating  all  contributions  to  and  by  non-group                                                            
Also  limited  are contributions  by  non-resident  individuals  and                                                            
groups for the  purpose of the influence or election  of candidates.                                                            
The limit is 10 percent  of the contributions a non-group entity can                                                            
take  within  a  year, which  is  similar  to  an  existing  statute                                                            
relating  to political parties  that was handled  in the ACLU  case.                                                            
The court held  there was a sufficiently  compelling state  interest                                                            
for having that type of restraint on contributions.                                                                             
Finally,  this   draft  places  a  $500  limit  on   the  amount  of                                                            
contributions   by  non-group  entities.  That   type  of  limit  is                                                            
discussed  in Buckley  and ACLU  and, to  a certain  extent, in  the                                                            
Jacobus  decision. 15.13.070  and  15.13.114(a)  are being  adjusted                                                            
because they relate to contribution limits.                                                                                     
The  new draft  attempts  to address  the  over breadth  concern  by                                                            
speaking   in  terms  of   influencing   candidate  nominations   or                                                            
elections.  It also goes  into specific sections  and enables  these                                                            
groups to make  the independent expenditures  and contributions  the                                                            
ACLU Court  said they must  be able to make  while putting  the same                                                            
disclosure requirements  on them that groups and individuals who now                                                            
participate are subject to.                                                                                                     
CHAIRMAN  THERRIAULT  asked  for  questions.  He  then encapsulated                                                             
saying we have statutes  that deal with groups and with individuals.                                                            
The  House  bill proposed  non-group  entities  be  swept  into  the                                                            
definition  of groups.  Because of  the Jacobus  decision there  are                                                            
potential problems with this due to over breadth.                                                                               
There is written testimony  from the Conservation Voters saying they                                                            
enjoy  rights more  along the lines  of individuals.  However,  this                                                            
didn't work well  because if the non-group entities  were swept into                                                            
the definition  of individuals, there would be no  disclosure on the                                                            
source of  funds because  an individual giving  a contribution  does                                                            
not have to reveal  the source of the funds so long  as they are not                                                            
acting as a conduit. Therefore,  a new category was created that has                                                            
some of the limitations  that are applicable to groups and some that                                                            
are applicable  to individuals. The  new category has disclosure  of                                                            
source of funds  and places restrictions  along individual  lines as                                                            
to the quantity  of those disclosed  funds that may be passed  along                                                            
to individual candidates.                                                                                                       
There  is no  specific  discussion  about the  right  to make  other                                                            
general  contributions   or  expenditures   in  campaigns   such  as                                                            
education of voters and soft money types of expenditures.                                                                       
MS. KURTZ said  he was correct. There are several  sections that are                                                            
specifically  limited   to  influencing  candidate  nominations   or                                                            
elections  in an effort  to tailor  it to the  over breadth  concern                                                            
from the Jacobus decision.                                                                                                      
CHAIRMAN   THERRIAULT  said   we  are  barred   from  placing   many                                                            
restrictions on soft money contributions.                                                                                       
MS. KURTZ said  that is strongly suggested  by the Jacobus  decision                                                            
and  since it  is an  Alaska  court making  that  decision,  federal                                                            
precedent would be binding.                                                                                                     
CHAIRMAN THERRIAULT said  a careful line has been walked between the                                                            
court  decisions  and the  Conservation  Voters legal  opinion.  The                                                            
Conservation Voters  attorney testified at the previous  meeting and                                                            
said  the  state did  have  a  right  to put  some  restrictions  on                                                            
expenditures  but they saw  legal problems  with the House  version.                                                            
This version attempts to  incorporate the most recent court decision                                                            
and  is a  fairly  radical  departure  from the  original  bill.  It                                                            
departs to a sufficient extent to require a title change.                                                                       
Different groups  around the state  have been notified but  have not                                                            
responded.  He  wanted committee  members  to  have until  the  next                                                            
meeting to review the changes if need be.                                                                                       
SENATOR PHILLIPS  asked whether Representative Kott  agreed with the                                                            
changes and he received a nod in reply.                                                                                         
CHAIRMAN THERRIAULT  asked Brooke  Miles from Alaska Public  Offices                                                            
Commission (APOC) if she had any comments.                                                                                      
BROOKE   MILES,  Assistant   Director   with  the   Public   Offices                                                            
Commission,  testified via teleconference  that she had no  comments                                                            
beyond those given  during the April 26, 2001 meeting.  She did note                                                            
that this approach would  result in some administrative costs to the                                                            
commission but  the existing fiscal note would probably  cover them.                                                            
CHAIRMAN THERRIAULT  said that would be covered when  the bill moved                                                            
to the  finance committee.  He asked whether  she saw any  technical                                                            
problems with the bill.                                                                                                         
MS. MILES  said at first  blush she saw none.  It appeared  that the                                                            
Jacobus  decision was  incorporated  when soft  money for  political                                                            
parties was  addressed and  that non-group  entities would  have the                                                            
limit of an individual.                                                                                                         
CHAIRMAN  THERRIAULT  asked whether  anyone  else was  online or  in                                                            
Juneau that wanted to testify. There was no response.                                                                           
SENATOR PEARCE  moved adoption of the R version by  Ms. Kurtz as the                                                            
working document. There was no objection.                                                                                       
CHAIRMAN THERRIAULT asked  for proposed amendments. There were none.                                                            
He asked for the will of the committee.                                                                                         
SENATOR PEARCE moved CS  SCSHB 177(STA) and accompanying fiscal note                                                            
from  committee  with  individual  recommendations.  There  were  no                                                            
He noted  the concurrent  resolution for the  title change  would be                                                            
sent directly to the Senate Secretary.                                                                                          

Document Name Date/Time Subjects