Legislature(2009 - 2010)CAPITOL 106
02/11/2010 08:00 AM House STATE AFFAIRS
| Audio | Topic |
|---|---|
| Start | |
| Overview: Discussion on Potential Impact of the U.s. Supreme Court Ruling in the Citizen United Case Regarding Campaign Contributions | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
HOUSE STATE AFFAIRS STANDING COMMITTEE
February 11, 2010
8:05 a.m.
MEMBERS PRESENT
Representative Bob Lynn, Chair
Representative Paul Seaton, Vice Chair
Representative Carl Gatto
Representative Craig Johnson
Representative Max Gruenberg
Representative Pete Petersen
MEMBERS ABSENT
Representative Peggy Wilson
COMMITTEE CALENDAR
OVERVIEW: DISCUSSION ON POTENTIAL IMPACT OF THE U.S. SUPREME
COURT RULING IN THE CITIZEN UNITED CASE REGARDING CAMPAIGN
CONTRIBUTIONS
- HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
JOHN PTASIN, Assistant Attorney General
Labor and State Affairs Section
Civil Division (Anchorage)
Department of Law
Anchorage, Alaska
POSITION STATEMENT: Presented an overview related to the
discussion about the potential impact of the U.S. Supreme Court
ruling in Citizens United v. Federal Election Commission
("Citizens United").
THOMAS DOSIK, Assistant Attorney General
Labor and State Affairs Section
Civil Division (Anchorage)
Department of Law
Anchorage, Alaska
POSITION STATEMENT: Answered a question during the discussion
on the potential impact of the U.S. Supreme Court Ruling in the
Citizen United case regarding campaign contributions.
HOLLY HILL, Director
Alaska Public Offices Commission (APOC)
Anchorage, Alaska
POSITION STATEMENT: Provided information during the discussion
on the potential impact of the U.S. Supreme Court Ruling in the
Citizen United case regarding campaign contributions.
ALPHEUS BULLARD, Legislative Council
Legislative Legal and Research Services
Juneau, Alaska
POSITION STATEMENT: Answered questions during the overview
discussion about the potential impact of the U.S. Supreme Court
ruling in Citizens United v. Federal Election Commission
("Citizens United").
CRAIG TILLERY, Deputy Attorney General
Civil Division
Office of the Attorney General
Department of Law
Anchorage, Alaska
POSITION STATEMENT: Listened to the concerns of the committee
during the overview discussion about the potential impact of the
U.S. Supreme Court ruling in Citizens United v. Federal Election
Commission ("Citizens United").
ACTION NARRATIVE
8:05:44 AM
CHAIR BOB LYNN called the House State Affairs Standing Committee
meeting to order at 8:07 a.m. Representatives Seaton, Johnson,
Petersen, and Lynn were present at the call to order.
Representatives Gatto and Gruenberg arrived as the meeting was
in progress.
^OVERVIEW: DISCUSSION ON POTENTIAL IMPACT OF THE U.S. SUPREME
COURT RULING IN THE CITIZEN UNITED CASE REGARDING CAMPAIGN
CONTRIBUTIONS
OVERVIEW: DISCUSSION ON POTENTIAL IMPACT OF THE U.S. SUPREME
COURT RULING IN THE CITIZEN UNITED CASE REGARDING CAMPAIGN
CONTRIBUTIONS
8:06:21 AM
CHAIR LYNN announced that the only order of business was the
overview discussion on the potential impact of the U.S. Supreme
Court ruling in the Citizen United case regarding campaign
contributions.
CHAIR LYNN reviewed that the U.S. Supreme Court issued a ruling
on Citizens United v. Federal Election Commission ("Citizens
United") regarding free speech, particularly in regard to
contributions by corporations in support of or opposition to
candidates and propositions. He said the issue affects everyone
running for office, from the municipal level to the legislative
branch to the administrative branch. He indicated his wish to
include, as part of the discussion, how foreigners in multi-
national corporations could impact the political process. He
expressed concern as to how Alaska can respond to the recent
court decision.
8:10:34 AM
JOHN PTASIN, Assistant Attorney General, Labor and State Affairs
Section, Civil Division (Anchorage), Department of Law,
presented an overview regarding the potential impact of the U.S.
Supreme Court ruling in Citizens United v. Federal Election
Commission ("Citizens United"). First he highlighted that which
has not changed because of the ruling: corporations and labor
unions still may not contribute directly to candidates;
disclosure and disclaimer laws were not directly impacted,
although disclosure and disclaimer laws in Alaska are in a state
of flux since the ruling; individuals still may contribute only
$500 every calendar year to a candidate and $5,000 to a
political party; the ballot measure law was unaffected; and
political party limits/contributions to candidate limits were
not affected.
8:12:27 AM
MR. PTASIN said Citizens United was a case about candidate
election free speech, which did not directly interpret Alaska
law, but implicates the state's laws. He said U.S. Supreme
Court Constitutional decisions are the supreme law of the land,
and states do not have greater latitude than Congress to abridge
the freedom of speech. Mr. Ptasin related that Citizens United
not only invalidated a federal independent expenditure law, it
also validated disclosure and disclaimer laws. He explained
that an expenditure law is separate and distinct from disclosure
and disclaimer laws, so if an expenditure is made, there are
still Constitutional laws that allow the public to know what is
being spent on a speech and what entity is making the speech
when it is being made. The only issue in Citizens United was
the independent expenditure of corporations and labor unions.
8:13:55 AM
MR. PTASIN said the law that was invalidated was a federal law
which banned express, corporate, and labor union advocacy for or
against a candidate using funds from the corporation's general
treasury 30 days before a primary election and 60 days before a
general election. The court noted that corporations have
certain legal rights, but at the same time, the First Amendment
states that Congress shall make no law abridging the freedom of
speech. Mr. Ptasin said the amendment does not limit its
application to speakers, but also analyzes whether specific
expressions are protected by the First Amendment. He said the
government cannot restrict political speech based on corporate
identity alone; there has to be a compelling government interest
to restrict First Amendment speech - particularly political
speech.
8:15:33 AM
MR. PTASIN related that the federal government tried three
separate arguments to show compelling government interest, but
all three of those arguments failed before the court. The first
was the anti-distortion interest, which argued that the wealth
that corporations and labor unions can amass pollutes the
message of smaller corporations or candidates. Next was the
anti-corruption interest, which is the rationale that all the
independent expenditures by corporations and labor unions create
an actual corruption or the appearance of corruption. Mr.
Ptasin said the courts have allowed this rationale to apply to
contributions, but an independent expenditure cannot result in
quid pro quo corruption. He stated, "When you try to balance
that against the potential or appearance of corruption, you have
to balance that against free speech, and the court wasn't
willing to say that the appearance of corruption by all this
independent expenditure is a good enough reason to essentially
ban ... political speech." Mr. Ptasin relayed that the third
argument was a shareholder protection interest, arguing that
shareholders are powerless to stop the message of corporations.
The court considered that the internal mechanisms of a
corporation could ensure that the smaller shareholder could seek
redress for any improper messaging. Without a compelling
interest, the federal law was unconstitutional.
8:18:15 AM
MR. PTASIN said corporations and labor unions are contemplated
by Alaska's laws. The only impact on Alaska law is that
corporations and labor unions cannot make independent political
speech in campaign elections, which relates to AS 15.13.067 and
AS 15.13.135. He said the category of expenditures is broad; it
involves speech, especially through the definitions of express
communications and electioneering communications. He stated,
"Those are political speech, and ... I think, under the law,
expenditures like that ... are subject to scrutiny after
Citizens United." Alaska law, through the definition of
expenditure, restricts corporations and labor unions from making
independent communication on a political speech.
8:20:39 AM
MR. PTASIN said disclosure and disclaimer laws were not
implicated; corporations and labor unions cannot make
expenditures anonymously. He stated, "Before, we just
restricted all expenditures, we didn't allow a corporation or
labor union to make any expenditure in a candidate election."
Mr. Ptasin related that there are certain areas of the law that
do not apply to corporations and labor unions. One area is the
treasurer law. He explained, "It doesn't apply to corporations
in that when a corporation or a labor union wants to make an
independent expenditure in a political speech, ... were that to
be applied to corporations, they don't have to do that through
their treasurer, and there are certain other laws where ...
certain entities, like groups, have to make that speech through
their treasurer."
8:22:26 AM
MR. PTASIN, in response to a question from Representative
Seaton, said because "we" restricted any expenditure in a
candidate election, there was no reason to apply the treasurer
requirement on corporations and labor unions for independent
speech. In response to Representative Seaton and Chair Lynn, he
said he is working on an internal analysis of all the different
issues, which he predicted would be completed soon and
disseminated to the legislature, the Alaska Public Offices
Commission (APOC), and the public.
8:24:07 AM
REPRESENTATIVE JOHNSON directed attention to page 28 of a
handout in the committee packet entitled, "Alaska State Statutes
Campaign Disclosure Law," and noted that under AS 15.13.084
(1)(C)(ii), regarding prohibited expenditures, there is an
exemption for an expenditure made for "printed material, other
than an advertisement made in a newspaper or other periodical".
MR. PTASIN offered his belief that that pertains to the
expenditure of an individual. In response to Representative
Johnson, he said the definition of "person" includes labor union
and corporation, and it is a separate and distinct definition
from "group" and "individual".
REPRESENTATIVE JOHNSON formulated that a business could make an
anonymous expenditure on printed material, other than an
advertisement made in a newspaper or other periodical.
MR. PTASIN pointed out that subparagraph (A) specifies that the
exception pertains to an anonymous expenditure "paid for by an
individual acting independently of any group or nongroup entity
and independently of any other individual". He clarified that
unlike the definition of "person", "individual" means a human
being.
REPRESENTATIVE JOHNSON concluded, then, that that means a
corporation, labor union, or political action committee (PAC)
could not make an anonymous flier without a disclaimer under
this statute.
MR. PTASIN answered that is correct.
8:26:50 AM
REPRESENTATIVE PETERSEN asked Mr. Ptasin to confirm that an
individual could print fliers supporting an initiative or
candidate and distribute the fliers door to door, and that
individual would have no disclaimer responsibility.
MR. PTASIN answered, "Under this very distinct set of
circumstances, yes."
8:28:10 AM
MR. PTASIN, in response to Representative Seaton, offered the
following definitions: entity - a candidate or individual,
which is a natural person; person - a catch-all for
corporations, labor unions, and business entities; non-group
entity - a business that is run for the principle purpose of
political speech; and group - two individuals joining together
for the principle purpose of influencing an election. He said
the internal analysis being done is trying to establish what
Citizens United does to persons under AS 15.13.
REPRESENTATIVE SEATON concluded that under the aforementioned
statute, "person" not only includes a labor union and
corporation but excludes "individual" and "natural person".
MR. PTASIN answered that is correct.
[REPRESENTATIVE GRUENBERG shook his head.]
REPRESENTATIVE JOHNSON opined that that is not entirely correct.
He offered his understanding that "natural person" means
"person", which is basically the same as a corporation.
MR. PTASIN responded that "individual" is a "natural person".
He reiterated that "person" is defined as including labor
unions, non-group entities, groups, and corporations. He said,
"They have separate and distinct meanings throughout the
statute."
REPRESENTATIVE SEATON asked Mr. Ptasin to confirm whether or not
he is saying that in APOC statutes, "person" excludes
"individual" and "natural person".
MR. PTASIN said he is almost certain that is correct, but
deferred to Mr. Dosik for confirmation.
8:31:17 AM
THOMAS DOSIK, Assistant Attorney General, Labor and State
Affairs Section, Civil Division - Anchorage, Department of Law,
related that under statutes related to APOC, "person" is a
broader than "individual", because in addition to including an
individual, it also includes corporations, labor unions, trusts,
and "pretty much any other recognizable entity or organization."
8:32:06 AM
MR. PTASIN said when a disclaimer and disclosure law refers to
"persons", it is referring to corporations and labor unions. He
related that AS 15.13.084 establishes that corporations and
labor unions cannot make their political speech anonymously.
Under AS 15.13.040(d) and (e), he said, the corporation and
labor union does have certain disclosure requirements. For
example, if the corporation makes independent political speech,
it must report that independent expenditure within 10 days of
making it.
8:33:54 AM
CHAIR LYNN told Mr. Ptasin that at some point, he would like
more information regarding foreigners in multi-national
corporations who have the influence over whether or not to make
independent expenditures.
8:34:12 AM
MR. PTASIN, in response to Representative Johnson, stated that
through the expenditure definition, political speech includes
express communications and electioneering communications. He
said, "It has to be a yea or nay on a vote, and if there's no
election, can't really fall under the expenditure law."
REPRESENTATIVE JOHNSON asked, "What if there's a piece of
legislation before the legislature that they express a yea or
nay vote to?"
CHAIR LYNN remarked that the legislature votes all the time, for
example, in committees and on the House floor. Furthermore, he
noted, legislators vote for candidates.
MR. PTASIN responded, "Certainly, and under express
communication, that involves a yes or no vote on a specific
candidate. Again, the ruling only invalidated independent
expenditures on candidate election."
8:35:49 AM
REPRESENTATIVE GATTO noted that Boeing has a company in
Washington that is almost exclusively union, while Boeing's
company in South Carolina is exclusively non-union. He asked if
a union can claim to be the corporation, if most of the workers
are in the union.
8:36:45 AM
MR. PTASIN responded that the decision applies equally to labor
unions and corporations. He said that at least in a federal
election now, Boeing can make a speech through its own treasury,
the labor union can make that speech through its own treasury,
and the disclaimer and disclosure laws "follow." He clarified,
"The labor union has the same right after Citizens United."
8:37:30 AM
REPRESENTATIVE GATTO said some television commercials appear to
speak as the voice of the workers, advertising that the company
is good. He asked if the people of that company can speak in
support of a candidate.
MR. PTASIN answered that the distinction is whether it is the
labor union making the speech or a group of employees. If the
latter, they are a group. If it is the labor union from its own
organization making the speech, the [independent expenditure] is
from the labor union's own treasury. In response to a follow-up
question from Representative Gatto, he said the distinction
between a group of employees in a labor union and the labor
union itself is a fine one. He explained that the group of
employees has to disclose and report as a group.
Hypothetically, he said it would be possible to tell by looking
at the APOC report that "this is not the labor union ..., this
is a separate group."
8:39:02 AM
REPRESENTATIVE JOHNSON opined that therein lies the difficulty,
because society is somewhat dependent on the disclaimer
appearing at the bottom of an advertisement, and that disclaimer
can be misleading. For example, he said the advertisement could
just say, "Paid for by Boeing."
8:39:47 AM
MR. PTASIN stated that under AS 15.13.084, an expenditure cannot
be anonymous. The meaning of not being anonymous is an issue
worthy of scrutiny. He said, "What we want them to disclose and
what we want in the disclaimers is a new terrain for us after
Citizens United."
REPRESENTATIVE JOHNSON remarked that a name can be anything, and
therefore is not necessarily representative of the holder of
that name's position on an issue. He asked for clarification
regarding how Alaska's law will need to change.
MR. PTASIN responded, "It doesn't change the law with respect to
groups." Groups currently report the expenditures made and
contributions received. Independent expenditures are different,
he said. If corporations and labor unions were entitled to make
corporate speech in Alaska, they would report that expenditure
within 10 days.
8:42:16 AM
REPRESENTATIVE GRUENBERG directed attention to AS 15.13.084(2),
which states that a person may not make an expenditure "using a
fictitious name or using the name of another." He said he
cannot find any definition of "fictitious name", and he asked if
regulations define that or if there is precedent in the agency
itself that defines that. If not, he asked what the genesis of
the legislative history is regarding what was intended by that
term.
8:43:15 AM
MR. PTASIN responded that he does not know.
8:44:00 AM
HOLLY HILL, Director, Alaska Public Offices Commission (APOC),
reported that there is a case currently before the commission
which APOC is not at liberty to discuss. In response to
Representative Gruenberg, she confirmed that the issue regarding
a fictitious name is part of the case. In response to a follow-
up request, she provided the following: [the APOC complaint
number] 09-01-CD and [the Office of Administrative Hearings
(OAH) case number] APO-0231.
8:45:20 AM
MR. DOSIK, in response to Chair Lynn, said APOC will probably
have a decision regarding this case within several months.
8:46:45 AM
MR. PTASIN, in response to Representative Gruenberg, stated:
Through Citizens United we're only dealing with
independent corporation speech, we're only dealing
with independent labor union speech. [AS 15.13.084]
prohibits those entities from speaking anonymously in
that context. ... There's a separate contribution law
that says individuals ... who are entitled to make
contributions can't make that contribution in the name
of another.
REPRESENTATIVE GRUENBERG proffered that a contribution is money
to support somebody's campaign, while an expenditure is for a
political purpose, but not to support somebody's campaign.
MR. PTASIN confirmed that is accurate.
8:48:05 AM
CHAIR LYNN asked about an expenditure to put on television
advertisements in opposition to or support of somebody's
campaign.
MR. PTASIN questioned if Chair Lynn was trying to understand
whether there is a law under which "you can't make independent
expenditures in the name of another." He said the problem is
that AS 15.13.084 applies to expenditures and separate laws
state that contributions cannot be made in the name of another.
8:48:49 AM
REPRESENTATIVE SEATON said he thinks the dilemma is that AS
15.13.084 is made moot because of the aforementioned U.S.
Supreme Court ruling, and the committee is trying to figure out
which disclosures and reports, for example, it should prevent in
this new arena that were previously prohibited in Alaska. He
said the committee should keep in mind that expenditures that
are coordinated with a campaign no longer fall under the
definition of independent expenditure. He said the Alaska law
regarding campaign contributions was not overturned by Citizens
United.
REPRESENTATIVE SEATON, in response to Chair Lynn, clarified that
a corporation or labor union, under Citizens United, could put
out an advertisement in support of a candidate similar to an
advertisement that the candidate put out him/herself, "but they
wouldn't be able to get your graphics from you, because then
there would be a coordination between your campaign."
CHAIR LYNN suggested all the corporation or labor union would
have to do is scan the original graphics.
REPRESENTATIVE SEATON responded that that is why it will be
interesting for the committee to craft laws that can be
controlled.
8:51:34 AM
REPRESENTATIVE GRUENBERG said he thinks confusion results from
the definition of "contribution" and "expenditure", which can be
found on pages 49 and 50, respectively, of the aforementioned
handout. He cited AS 15.13.400(4)(A), which read as follows:
(4) "contribution"
(A) means a purchase, payment, promise or
obligation to pay, loan or loan guarantee, deposit or
gift of money, goods, or services for which charge is
ordinarily made and that is made for the purpose of
influencing the nomination or election of a candidate,
and in AS 15.13.010(b) for the purpose of influencing
a ballot proposition or question, including the
payment by a person other than a candidate or
political party, or compensation for the personal
services of another person, that are rendered to the
candidate or political party;
REPRESENTATIVE GRUENBERG cited AS 15.13.400(4)(A)(i), which read
as follows:
(6) "expenditure"
(A) means a purchase or a transfer of money or
anything of value, or promise or agreement to purchase
or transfer money or anything of value, incurred or
made for the purpose of
(i) influencing the nomination or election of a
candidate or of any individual who files for
nomination at a later date and becomes a candidate;
REPRESENTATIVE GRUENBERG then noted that sub-subparagraph (iv)
read as follows:
(iv) influencing the outcome of a ballot
proposition or question;
REPRESENTATIVE GRUENBERG said, "These seem to me to be nearly
identical," and he asked what the difference is.
MR. PTASIN responded that coordinated expenditures can also be
contributions.
REPRESENTATIVE GRUENBERG asked, "So, it's a subset?"
MR. PTASIN answered no. He cautioned that it is necessary to be
careful when dealing with this area of law. He stated his
belief that there are times when an expenditure can also be a
contribution. He said corporations and labor unions making
independent expenditure have to be wary of where the line has
been drawn, particularly after Citizens United, where "the only
implication to our law is an independent expenditure that has no
... connection to contribution, it has no connection to a
coordinated expenditure." He clarified, "The only thing
implicated is an independent expenditure made from a corporate
treasury where there is no coordination with a candidate. So,
by its nature it can't be anywhere near a coordinated
expenditure; it can't be ... anywhere near a contribution."
CHAIR LYNN said the goal in all this is to derive some statute
on which everyone can rely.
8:55:16 AM
REPRESENTATIVE GRUENBERG remarked that this seems to be an area
of law that has had add-ons and agency decisions that have
affected it, and he suggested that the legislature should be
looking to clarify the language.
CHAIR LYNN asked Mr. Ptasin if the administration is working on
legislation to clarify this language or if he would like the
legislature to work on such language.
8:56:45 AM
MR. PTASIN responded that as an attorney with the Department of
Law, it is his job to alert policy makers of "the changing
landscape of what's going on after Citizens United." He
reiterated that he is working on internal analysis, and when
that analysis is presented, the policy makers can decide whether
changes are needed.
CHAIR LYNN indicated the need for someone to "straighten out
this mess."
8:57:36 AM
REPRESENTATIVE JOHNSON directed attention back to page 28 of the
handout, to the issue of using the name of another. He asked if
there is an active definition of the "name of another" that is
clear enough.
8:58:46 AM
MR. PTASIN answered as follows:
From an enforcement perspective, if there were a case
where corporate treasury funds were being used to fund
a commercial, and they ... told us that it was from
just the CEO, ... that would be a fictitious name,
that would be using the name of another, because what
you've done is you've used corporate treasury funds.
... Essentially, from an enforcement standpoint, you
would have a case to be brought before that
corporation - potentially that individual as well.
MR. PTASIN concurred that figuring out if these areas can be
defined further merits scrutiny.
REPRESENTATIVE JOHNSON questioned whether the treasurer could
pay for the name without identifying the CEO. He suggested the
need to redefine the meaning of "name".
[REPRESENTATIVE GRUENBERG nodded.]
MR. PTASIN said the issue that is being contemplated is the
creation of a broader or better disclaimer, which is a
discussion that various states are having now.
REPRESENTATIVE JOHNSON questioned whether there is a current
definition of "the name of another" and "fictitious name" that
would work "in the situations that we've just discussed."
9:00:40 AM
MS. HILL said APOC has a regulation regarding contributions and
using the name of another: 2 AAC 50.258. She suggested that
some of the language in that regulation may be appropriate for
statutory or regulatory purposes.
9:01:13 AM
CHAIR LYNN asked if Alaska can make expenditure and
disclosure/disclaimer laws governing a multi-national board of
directors.
MR. PTASIN answered, "With respect to expenditure, Citizens
United didn't directly take up that issue." He said federal law
441 E prohibits foreign nationals from spending funds in
connection with both federal and state elections.
CHAIR LYNN said he knows that a foreign national, while not
being allowed to give so much as a penny to a [U.S.] political
contribution, can be a voice in independent expenditure for or
against "somebody."
MR. PTASIN reiterated that the under Citizens United, the
federal election campaign Act law that prohibits "purely"
foreign national corporations from speaking in state elections
is still valid.
CHAIR LYNN clarified he does not mean "purely," but means those
boards comprised of some U.S. Citizens and some foreign
nationals.
MR PTASIN said the distinction is that a foreign national board
member cannot coordinate to make independent speech.
CHAIR LYNN said, "But they can vote, if that's what they do, to
make this expenditure."
MR. PTASIN explained that federal law allows a U.S. subsidiary
to "speak from its own treasury funds" - there cannot be any
coordination from a foreign national.
9:03:20 AM
REPRESENTATIVE GRUENBERG said the only definition he has found
for "corporation" is in corporate code, AS 10.50.990(3), which
read as follows:
(3) "corporation" means a corporation organized
under the laws of this or another state, or of this or
another country;
REPRESENTATIVE GRUENBERG said the committee has the applicable
statutes at hand, but needs the related regulations. He said he
thinks the concept of Citizens United deals with whether [a
corporation] can be prohibited from making an independent
expenditure "to discuss a candidate or to discuss an issue
independent of a campaign"; however, Citizens United does not
deal with the next question, which is what kind of regulations
will be permissible "within that general parameter." He said it
would helpful to know the limits of the U.S. Supreme Court
decision and the unresolved issues that may allow the
legislature to further legislate.
MR. PTASIN responded that Representative Gruenberg accurately
"characterized the landscape of where we are."
9:05:52 AM
REPRESENTATIVE SEATON offered his understanding that the
committee has been told that Citizens United did not impact
disclosure laws and reporting requirements, but did impact
speech. He offered his understanding that foreign corporations
- for example, BP - would not be able to make an independent
expenditure. However, BP Alaska - a subsidiary of BP, formed
within the U.S. - could. He asked Mr. Ptasin if that is
correct.
MR. PTASIN responded yes. He said U.S. subsidiaries are
"allowed to speak from profits made in the U.S." The foreign
parent cannot coordinate that message with the subsidiary.
REPRESENTATIVE SEATON asked if the only restriction is that the
profits must be made in the U.S.
MR. PTASIN stated that the important distinction is that under
federal law, there cannot be any assistance from the parent
corporation.
9:07:53 AM
REPRESENTATIVE SEATON asked if Alaska has the option to [enact
law] more restrictive than the federal law.
MR. PTASIN replied that after Citizens United, the domestic
corporation has a First Amendment right to make independent
expenditures.
9:08:50 AM
REPRESENTATIVE JOHNSON said there are other regulatory bodies
that may be affected. For example, the Federal Communications
Commission has its own set of rules and has to "treat everyone
equally." He questioned whether the effects of Citizens United
will still allow the commission to continuing applying their
restrictions. He questioned how far the effects of the U.S.
Supreme Court ruling would reach.
9:09:43 AM
MR. PTASIN responded that he does not know FCC law, but if there
is such a law wherein the FCC has any restriction on the ability
of a corporation or labor union to make political speech, that
law was not challenged in Citizens United.
REPRESENTATIVE JOHNSON asked how far the legislature needs to go
in its consideration of this issue.
MR. PTASIN reiterated that disclaimer and disclosure laws are
[still] valid. He mentioned Buckley v. Valeo. He relayed that
because speech rights exist, a law limiting the amount of speech
that a corporation or labor union can purchase is subject to
scrutiny. He stated, "The court took a very dim view of trying
to, in part, equalize speech, in Citizens United, referring back
to Buckley v. Valeo."
9:12:34 AM
MR. PTASIN, in response to Representative Gruenberg, said he is
not aware of any other cases before any appellate court that are
raising any subsidiary issues.
REPRESENTATIVE GRUENBERG said he thinks it will be important for
the legislature to be kept informed of any related cases that
come before the courts.
9:14:03 AM
MR. PTASIN, in response to Representative Johnson, reiterated
that he has been advised to create the analysis to illustrate
for policy makers what the issues are. He said he cannot speak
to the next step. In response to a question from Chair Lynn, he
reiterated that he represents APOC and is an advisor to the
Office of the Attorney General.
9:16:00 AM
ALPHEUS BULLARD, Legislative Council, Legislative Legal and
Research Services, said this is a dynamic area of law that would
be difficult to simplify in Alaska Statutes, and, in some ways,
the Citizens United case has made it more complicated. He said,
"In this case, not speaking to contributions and only to
independent expenditures, we have yet another sort of special
area of campaign finance law, where we have to come up with new
disclosure and disclaimer requirements." He said it would nice
to simplify Title 15, but he does not know "if this case
presents that opportunity."
MR. BULLARD addressed previously asked questions. Regarding the
discussion of AS 15.13.084, using a fictitious name or the name
of another, he noted that under 15.13.040(p), the true source of
some contributions must be disclosed. He said this is "a little
more on point than using a fictitious name or name of another."
He said it is possible with disclosure and disclaimer
requirements to require an entity or corporation to disclose its
top contributors to "break through this veil of a name." He
suggested that the committee might consider some legislation in
that area.
9:18:24 AM
MR. BULLARD addressed the previous discussion regarding the
manipulation of media air time. He said the analysis of
Citizens United talks about a pre-marketplace of ideas and
contemplates that there is unlimited amounts of media. He
stated, "And so, it seems difficult - if money is speech, and we
have said that we can't suppress speech based on the speaker's
corporate form - to regulate in that area about how much air
time someone could receive. I don't know what efforts in that
area would look like, but they would be difficult, given the
holding of this case."
MR. BULLARD related that disclosure time tables for persons
currently are not the same as the disclosure for the schedules
that are required for candidate contributions. He suggested,
"Since most corporations, unless they were non-group entities,
weren't exposed to our disclosure rules before - they're much
different - you might think about bringing those in line if that
is amenable to your policy objectives. ... There's nothing that
prevents us from doing that."
9:19:46 AM
MR. BULLARD, in response to Representative Seaton, said so far,
all of Alaska's disclosure rules and regulations laws have been
upheld, but there could be a point where so much would be
required that it would be considered a bar to free speech. He
said he does not know if the arguments made regarding the
onerous quality of having to report electronically in "real
time" would apply to larger entities, corporations, and non-
profits, thus it is conceivable that the legislature could
require real-time electronic recording to APOC.
9:21:05 AM
REPRESENTATIVE JOHNSON said currently the contribution, "who you
are," and "the principle of the treasurer" has to be reported,
while the "the contributions can be anonymous in some areas."
That does not apply with respect to candidates. He offered his
understanding that Mr. Bullard had said that it would be a
policy call to "bring those in alignment." He said the
legislature has heard from some organized groups that say they
do not want their membership to be made public. He asked, "So,
at what point does our constitutional right to privacy overlap
with our desire to know who's influencing our public policy, if
at all?"
9:22:14 AM
MR. BULLARD answered that at one end of the spectrum is
requiring an entity to reveal its five largest contributors,
while the other end of the spectrum is [requiring disclosure
information regarding] the anonymous contributor of $5 who has
bought a raffle ticket. He said the answer to Representative
Johnson's question is: "somewhere between those two."
9:23:30 AM
REPRESENTATIVE GRUENBERG said he wonders what actions are being
taken by attorneys general and legislators in other states in
the wake of Citizens United.
9:24:31 AM
MR. BULLARD responded that in general terms, he is aware of some
efforts on the federal level in U.S. Congress that relate to the
Citizens United ruling, including: strengthening disclosure
requirements; working to have transparency in trade association;
revisiting the tax status of certain non-profits and
corporations to engage in political activity; dealing with
foreign sources of funding; and broadening the definition of
coordination. Regarding foreign sources of funding, he said it
is possible to have an American corporation or subsidiary that
has majority foreign ownership, where the shareholders
themselves are foreign nationals, and it is not fair that those
would be covered by 2 USC 441 E. Regarding coordination, he
related that AS 15.13.400(e) addresses independent expenditures,
and he suggested that the legislature could examine what
coordination in this context would be.
CHAIR LYNN requested that Mr. Bullard put in writing the points
he just made.
9:26:30 AM
REPRESENTATIVE GRUENBERG expressed his interest in hearing any
information from Mr. Bullard and the Department of Law regarding
coordination and independent expenditures. He then asked for
confirmation that independent expenditures for free speech are
or should be deductable as business expenditures.
MR. BULLARD responded that he is not familiar with these
efforts. Notwithstanding that, he cautioned, "If it's going to
... suppress speech, we've just moved the First Amendment issue
elsewhere and turned it into sort of a prior restraint." He
said there are limits on what can be done in that area.
REPRESENTATIVE GRUENBERG asked, "Is that not trumped by the
sovereign's power to tax and to determine what the deductibility
of certain expenditures ... [is]?"
MR. BULLARD replied that currently he has no answer for that
question.
9:28:19 AM
REPRESENTATIVE PETERSEN asked if, in the future, it would be
possible for a corporation or labor union to file a case, get an
injunction, and stop a law put into place by the State of
Alaska, if it thinks the law is too cumbersome and infringes
upon its right to free speech.
MR. BULLARD said the answer depends upon the specifics of the
case and the ruling of the court. He said the corporation or
labor union certainly could seek injunctive and "claritory"
relief, but it may or may not be granted.
9:29:21 AM
REPRESENTATIVE SEATON questioned if by allowing political speech
to be tax deductible to corporations, the state would be
financing that speech, even though the state does not finance
speech for individuals. He suggested that the state could
require the corporation or labor union that wishes to exercise
political speech to pay for it itself.
MR. BULLARD said Representative Seaton made a good legal
argument, and he said he does not know the answer.
REPRESENTATIVE SEATON said he would like a follow-up legal
opinion on the matter.
9:30:51 AM
REPRESENTATIVE GATTO questioned if ultimately Alaska should just
have state sponsorship of campaigns.
MR. BULLARD answered that that is a political question.
9:31:30 AM
REPRESENTATIVE GRUENBERG offered his understanding that
currently in the House Resources Standing Committee, there are
several bills addressing the tax policy related to the oil and
gas industry. He asked if an amendment addressing the subject
of taxability and deductibility would fall within the subject
matter of those bills.
CHAIR LYNN said he thinks Representative Gruenberg is "venturing
far."
REPRESENTATIVE JOHNSON proffered that allowable deductions
provided under Alaska's Clear & Equitable Share (ACES) prohibit
marketing and "that kind of stuff" from being deducted. He
stated his assumption that advocating for something via
television would be considered marketing.
9:32:37 AM
CRAIG TILLERY, Deputy Attorney General, Civil Division, Office
of the Attorney General, Department of Law, said he knows that
this is an area of great concern to the legislature, but relayed
that he is not an expert in this area. He said his purpose is
to get a sense of what the legislature needs from the department
and what the department will be able to do for the legislature.
9:33:17 AM
CHAIR LYNN said he would like advice as to what the committee
can do about this issue during the interim. Furthermore, he
inquired as to whether new legislation is required in order for
everyone involved to "keep on the correct side of the law."
MR. TILLERY responded that nothing is required in the sense that
"this could be worked out through litigation." He said that is
not an efficient way to proceed. He said there are aspects of
Alaska's laws that are impacted by the decision, and the more
clarification citizens get the better. In response to Chair
Lynn, he said he thinks it is correct that some form of
clarification - whether through legislation, regulation, or
guidance - will likely help to avoid litigation. He related
having heard that some members of the public have suggested that
they would be "litigating the effect of this case on our laws."
9:36:22 AM
MR. TILLERY, in response to Chair Lynn, said the department does
not have any recommendations for the legislature now, but is in
the process of finalizing an analysis to identify the direct and
indirect impacts of Citizens United. That analysis will allow
policy makers to decide what, if anything they want to do about
it, at which point the department's role would be to assist the
policy makers in how to carry out the desired course of action.
In response to a follow-up question, he said the department
hopes to have "some final analysis" completed within the next
week. He reminded the committee that the department is working
to apply a complex decision to complex laws.
9:38:31 AM
CHAIR LYNN, in response to Representative Petersen, said any
legislation that would be brought forward would probably be
presented as a committee bill; therefore, the deadline for
personal bills would not apply.
9:39:01 AM
REPRESENTATIVE JOHNSON said he applauds Chair Lynn for hearing
this issue.
CHAIR LYNN opined that all those involved want to do what is
right, but need to know what the rules of the game are.
9:40:24 AM
MR. TILLERY clarified that the department is not trying to be
coy; it just needs to handle this issue with care.
9:40:38 AM
REPRESENTATIVE SEATON said he would like the attorney general's
opinion on where "sidebars" would be regarding the following
issues that have been discussed: having a short timeframe for
disclosure of expenditures; having "true ... expenditures"; and
the tax deductibility of independent expenditures. He said he
would also like to know if any of the definitions under
corporate law could address any of the potential problems
perceived on the horizon in the area of independent
expenditures.
CHAIR LYNN stated his preference for the governor and attorney
general to take the lead on this issue and leave Legislative
Legal and Research Services to tackle other legislation. He
added his assurance that the legislature would proceed with
[related legislation referred by the governor] in a rapid
fashion.
9:44:06 AM
REPRESENTATIVE SEATON asked if there was any restriction in the
Citizens United ruling regarding time periods or if it covered
the entire political process.
MR. TILLERY deferred to Mr. Ptasin.
9:45:01 AM
MR. PTASIN stated:
They've afforded the First Amendment speech right to
corporations to make independent expenditures, and
labor unions, as well. [In] the specific federal law
... there were these little window periods, and ...
even inside those window periods, the corporations and
labor unions could form a [political action committee
(PAC)] and speak inside those little windows of time,
but that still wasn't good enough, there still wasn't
a compelling government interest to curtail First
Amendment speech leading up to these primary and
general elections.
Nothing from the analysis, in my view, if you take it
back and say, "Well, what if we change that window of
opportunity," again, there's nothing in my view that
... would lead me to think that there's some way to
outright ban that independent expenditure if it's
political speech.
MR. PTASIN, in response to a follow-up question from
Representative Seaton, said given that it was the rationale for
the anti-distortion compelling government interest that all of
the messaging 30-60 days before elections is diluting the
message of others and creating a problem in the political
marketplace, trying to "back up the window" results in the same
problem: taking speech out of the political marketplace. Mr.
Ptasin said he thinks that after Citizens United, the court
would take a dim view of "any kind of attempt to take that
away."
9:47:20 AM
REPRESENTATIVE GATTO asked if it would be within the bounds of
the U.S. Supreme Court ruling and the State of Alaska's laws if
corporations and unions were allowed to make contributions, but
when they did they would have to contribute equal time and money
to the person that they opposed. He said he is talking about
expenditure, and he explained that he is trying to neutralize
the effect of the U. S. Supreme Court ruling.
MR. PTASIN said he thinks that gets into some of the issues that
Mr. Bullard presented regarding prior restraint. He stated,
"Now that this speech is protected, you have to be careful, but
I couldn't comment right off whether that exact scenario would
be constitutional or unconstitutional; we'd really have to give
it some real thought." In response to Representative Gatto, he
explained that he avoids giving an opinion when asked if
something would be constitutional, because any opinion he gives
would not be "anywhere near exact enough."
CHAIR LYNN reiterated his preference for the governor to take
the lead on this issue.
9:49:36 AM
CHAIR LYNN, after ascertaining that there was no one else who
wished to testify, closed public testimony.
9:49:49 AM
REPRESENTATIVE PETERSEN commented that the U.S. Supreme Court
ruling could have lasting implications. For example, it might
dampen the interest of the average citizen who may feel that now
that corporations have a more or less unlimited ability for
speech made through advertising, the individual's voice is too
small to matter. He said there is already a segment of society
that feels that way, and this may compound that view. Likewise,
he said this may affect the number of people who want to run for
office. He opined that it would be good if the legislature
could find a way to keep some of Alaska's current disclaimer and
disclosure laws effective in order to "keep the playing field
reasonably level."
9:52:14 AM
REPRESENTATIVE GRUENBERG said he is interested in the issue of
tax deductibility and will be looking to see if all of the
potential expenditures fall under the prohibition against using
the deductions for marketing. He said he would be contacting
legal council regarding that matter.
9:52:49 AM
REPRESENTATIVE JOHNSON said he appreciates the chair's desire to
have the governor address this issue, but pointed out that the
House State Affairs Standing Committee is the policy body. He
suggested that the chair draft a letter to the governor
requesting that something be done, and take charge if the Office
of the Governor does not.
CHAIR LYNN responded that he would draft a letter and show it to
committee members for their feedback.
REPRESENTATIVE GRUENBERG said that would be great.
REPRESENTATIVE GATTO stated his belief that even though there
may be difficulties that result from it, the U.S. Supreme
Court's ruling was the right decision, because it supports
freedom. He expressed a desire to ensure that [corporations and
labor unions] have the freedom of speech while not having a
"spectacular influence on elections."
9:56:56 AM
REPRESENTATIVE JOHNSON concurred with Representative Gatto. He
clarified that his intent is not to fight the U.S. Supreme Court
ruling, but to figure out who will take the lead on conforming
Alaska Statutes when necessary.
9:57:35 AM
REPRESENTATIVE SEATON expressed concern that corporations may
have more rights and protections than individuals "expressing
speech in these expenditures." He offered his understanding
that the purpose of a corporation is to offer liability
protection for the stockholders "and others." He said he would
like to see if a change in liability protection for liable and
slander for corporations in execution of independent
expenditures is needed so that that protection mirrors that of
an individual. He offered an example.
10:00:19 AM
CHAIR LYNN stated that the bottom line is figuring out what is
best for Alaska.
10:01:05 AM
ADJOURNMENT
There being no further business before the committee, the House
State Affairs Standing Committee meeting was adjourned at 10:01
a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| Justice Opinions US Supreme 183 pgs Court Citizens United vs. FEC 08-205.pdf |
HSTA 2/11/2010 8:00:00 AM |
|
| 08-205_AppelleAmCuMcCain.pdf |
HSTA 2/11/2010 8:00:00 AM |
|
| Supplemental_Amicus_Brief_of_AFL-CIO.pdf |
HSTA 2/11/2010 8:00:00 AM |
|
| Campaign Disclosure Statutes AS 15.13 as of 12-11-08.pdf |
HSTA 2/11/2010 8:00:00 AM |