Legislature(2009 - 2010)BELTZ 105 (TSBldg)

02/03/2010 01:30 PM Senate JUDICIARY


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01:31:13 PM Start
01:31:22 PM U.s. Supreme Court Decision - Citizens United V. Federal Election Commission
02:37:08 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Overview: U.S. Supreme Court Decision: TELECONFERENCED
Citizens United v. Federal Election
Commission
Tom Dosik and John Ptacin, Alaska
Department of Law
Kathryn Kurtz and Alpheus Bullard,
Legislative Legal Services
-- Testimony <Invitation Only> --
+ Bills Previously Heard/Scheduled TELECONFERENCED
                    ALASKA STATE LEGISLATURE                                                                                  
              SENATE JUDICIARY STANDING COMMITTEE                                                                             
                        February 3, 2010                                                                                        
                           1:31 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                              
                                                                                                                                
Senator Hollis French, Chair                                                                                                    
Senator Bill Wielechowski, Vice Chair                                                                                           
Senator Dennis Egan                                                                                                             
Senator Lesil McGuire                                                                                                           
Senator John Coghill                                                                                                            
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
All members present                                                                                                             
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
Overview: U.S. Supreme Court Decision - Citizens United v.                                                                      
Federal Election Commission                                                                                                     
     HEARD                                                                                                                      
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
No previous action to record.                                                                                                   
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
JOHN PTACIN, Assistant Attorney General                                                                                         
Civil Division                                                                                                                  
Labor and State Affairs                                                                                                         
Department of Law                                                                                                               
Anchorage, AK                                                                                                                   
POSITION STATEMENT:  Provided an overview of the Citizens United                                                              
v. Federal Election Commission opinion and responded to                                                                         
questions.                                                                                                                      
                                                                                                                                
KATHRYN KURTZ, Attorney                                                                                                         
Legislative Legal Services                                                                                                      
Legislative Affairs Agency                                                                                                      
Juneau, AK                                                                                                                      
POSITION STATEMENT:  Provided information related to the                                                                      
Citizens United v. Federal Election Commission opinion.                                                                         
                                                                                                                                
ALPHEUS BULLARD, Attorney                                                                                                       
Legislative Legal Services                                                                                                      
Legislative Affairs Agency                                                                                                      
Juneau, AK                                                                                                                      
POSITION STATEMENT:  Provided an  overview of the Citizens United                                                             
v.  Federal   Election  Commission   opinion  and   responded  to                                                               
questions.                                                                                                                      
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
1:31:13 PM                                                                                                                    
CHAIR  HOLLIS   FRENCH  called  the  Senate   Judiciary  Standing                                                             
Committee  meeting  to  order  at  1:31  p.m.  Senators  McGuire,                                                               
Coghill,  Egan and  French were  present  at the  call to  order.                                                               
Senator Wielechowski arrived soon thereafter.                                                                                   
                                                                                                                                
   ^U.S. Supreme Court Decision - Citizens United v. Federal                                                                
                      Election Commission                                                                                   
                                                                                                                                
1:31:22 PM                                                                                                                    
CHAIR FRENCH  announced the business  before the committee  is to                                                               
hear an  overview of the  U.S. Supreme Court Decision  - Citizens                                                             
United  v. Federal  Election Commission  ("Citizens United").  He                                                           
outlined  what is  in the  packet including  the Alaska  statutes                                                               
that deal with  campaign disclosure law, the  memorandum from Mr.                                                               
Bullard with  legislative legal  services, and  a pair  of amicus                                                               
briefs  to  the Supreme  Court  representing  both sides  of  the                                                               
debate.  John McCain  and  Russell Feingold  argued  to keep  the                                                               
rules in place before the  decision was rendered, and the AFL-CIO                                                               
urged the Court  to overturn its previous holdings  and embark on                                                               
a new rule.                                                                                                                     
                                                                                                                                
CHAIR FRENCH  said this sweeping  case will have great  impact on                                                               
state law  and it brings to  mind a remarkable statement  made by                                                               
Theodore Roosevelt  in 1905.  "All contributions  by corporations                                                               
to any  political committee or  for any political  purpose should                                                               
be forbidden by law."                                                                                                           
                                                                                                                                
1:33:38 PM                                                                                                                    
SENATOR WIELECHOWSKI joined the committee.                                                                                      
                                                                                                                                
KATHRYN KURTZ,  Assistant Revisor of Statutes,  Legislative Legal                                                               
Services,  Legislative Affairs  Agency, said  she was  previously                                                               
the drafting attorney  for campaign finance law. That  is now Mr.                                                               
Bullard's position.                                                                                                             
                                                                                                                                
ALPHEUS   BULLARD,   Attorney,    Legislative   Legal   Services,                                                               
Legislative Affairs Agency, said  the most significant element in                                                               
Citizens  United is  that it  is a  First Amendment  case dealing                                                             
with political speech by corporations  in the form of independent                                                               
expenditures.  Those   are  made   without  the   cooperation  or                                                               
collaboration of a  campaign, a candidate, or  a political party.                                                               
"This is  not a case  that affects contributions  to candidates."                                                               
Citizens  United  speaks  only  to  independent  expenditures  by                                                             
corporations.                                                                                                                   
                                                                                                                                
Previous  to the  Citizens United  decision, and  still in  First                                                             
Amendment jurisprudence,  much is determined by  who is speaking.                                                               
Under  the  First  Amendment speakers  have  different  breadths;                                                               
speakers  may  be  prisoners, students,  foreign  nationals,  and                                                               
previously, corporations. The significance  of Citizens United is                                                             
that the U.S. Supreme Court  has ruled that a speaker's corporate                                                               
identity is no longer a  permissible distinction to regulate that                                                               
speaker's   political  speech   in   the   area  of   independent                                                               
expenditure.                                                                                                                    
                                                                                                                                
1:36:06 PM                                                                                                                    
Citizens United dealt with provisions  of the Bipartisan Campaign                                                             
Reform  Act  (BiCRA),  also known  as  the  McCain-Feingold  law,                                                               
including  the prohibition  on  certain  corporations and  unions                                                               
from using monies from their  general treasury to sponsor certain                                                               
electioneering  communications in  certain set  periods before  a                                                               
primary or federal election. The Court struck that down.                                                                        
                                                                                                                                
In  striking down  this  provision,  the Court  went  not to  the                                                               
particulars  of the  law, but  to  the concept  of the  speaker's                                                               
corporate identity. This  involved overturning previous precedent                                                               
set in  Austin v. Michigan  Chamber of Commerce and  McConnell v.                                                           
Federal  Election  Commission.  These   fairly  large  cases  had                                                             
created   a  permissible   rationale   for  suppressing   various                                                               
corporate  speech in  this venue.  Also, in  Citizens United  the                                                             
Court upheld various disclosure provisions in BiCRA.                                                                            
                                                                                                                                
MR.  BULLARD said  that  striking down  the  ability to  suppress                                                               
speech  on  the basis  of  the  speaker's corporate  identity  is                                                               
significant not just  for what it does for  federal elections; it                                                               
has a bearing on Alaska  statutes that prohibit various corporate                                                               
expenditures  in  elections.  "In  light  of  this  ruling  those                                                               
statutes are not repealed, they're  void." They will no longer be                                                               
enforced as written, Mr. Bullard stated.                                                                                        
                                                                                                                                
SENATOR  MCGUIRE   asked  if  someone   will  walk   through  the                                                               
provisions of Alaska law that will be affected.                                                                                 
                                                                                                                                
CHAIR FRENCH  said yes; that  was one  of the questions  he asked                                                               
legislative legal services to be prepared to discuss.                                                                           
                                                                                                                                
1:38:58 PM                                                                                                                    
JOHN PTACIN,  Assistant Attorney  General, Civil  Division, Labor                                                               
and State Affairs Section, Department  of Law, Anchorage, said he                                                               
represents  the  Alaska  Public  Offices  Commission  (APOC)  and                                                               
staff. He  highlighted that Citizens  United affects  neither the                                                             
law related to  independent contributions to a  candidate nor the                                                               
prohibition  against corporations  and labor  unions from  making                                                               
contributions directly to a candidate.                                                                                          
                                                                                                                                
MR. PTACIN said  this was a candidate election  free speech case,                                                               
not a ballot  measure case. Citizens United did  not interpret an                                                             
Alaska  law, but  Alaska laws  are  certainly implicated  because                                                               
U.S. Supreme  Court constitutional decisions are  the supreme law                                                               
of the  land. States in  this area  do not have  greater latitude                                                               
than Congress to abridge the freedom of speech.                                                                                 
                                                                                                                                
Citizens United dealt not only  with independent expenditures but                                                             
also with  the reporting of  those independent  expenditures. The                                                               
ruling   essentially  overturned   one   aspect  of   independent                                                               
expenditure law, federal  law U.S.C. 441b. That was a  ban on any                                                               
express  corporate  or labor  union  advocacy  for or  against  a                                                               
candidate made from  a corporation or labor union  coffer 30 days                                                               
before  a  primary  election  and  60  days  before  a  candidate                                                               
election. The  decision was specific  to candidate  elections and                                                               
has no  bearing on  Alaska ballot measure  laws. The  Court ruled                                                               
that  the  ban   on  corporations  or  labor   unions  making  an                                                               
independent  expenditure  leading  up   to  primary  and  general                                                               
candidate elections is in violation of the First Amendment.                                                                     
                                                                                                                                
1:41:40 PM                                                                                                                    
MR. PTACIN said  one thing that is significant about  the case is                                                               
that  it does  apply  First Amendment  rights  to a  corporation.                                                               
Citizens  United  as  a  corporation  has  certain  legal  rights                                                             
including limited  liability and perpetual life.  The Court ruled                                                               
that these  favorable aspects  were not a  good enough  reason to                                                               
strike down their ability to  speak under the First Amendment and                                                               
that  the  First  Amendment  doesn't  limit  itself  to  personal                                                               
speakers.   In  the   late  '70s   the   Court  determined   that                                                               
corporations  that  it  is  actually   looking  at  the  specific                                                               
expression  and  not  at  who   is  making  the  expression  when                                                               
determining  whether a  particular expression  is afforded  First                                                               
Amendment   rights.  In   this  case,   making  a   communication                                                               
electioneering speech is essentially  political speech and that's                                                               
afforded high constitutional rights.                                                                                            
                                                                                                                                
The government tried  three different arguments in  an attempt to                                                               
save the law  on compelling government interest  grounds. One was                                                               
the  anti-distortion interest  argument that  wealth dilutes  the                                                               
message of others. That rationale  had been approved by the Court                                                               
in Austin v. Michigan Chamber  of Commerce in 1990. The essential                                                             
element  is  that accumulation  of  wealth  has a  corrosive  and                                                               
distorting  affect on  the message.  As a  result of  the ruling,                                                               
this is  no longer  a rational  for disallowing  corporations and                                                               
labor unions First Amendment political speech.                                                                                  
                                                                                                                                
Second,  they  tried  an   anti-corruption  interest  as  another                                                               
compelling government interest to save  the law but the Court did                                                               
not agree with the rational.                                                                                                    
                                                                                                                                
The  third   argument  was  that  shareholders   are  essentially                                                               
powerless to stop  the message of the large  corporation or labor                                                               
union. That too was struck down.                                                                                                
                                                                                                                                
MR.  PTACIN said  the conclusion  was that  without a  compelling                                                               
government interest,  the law in  its face  was unconstitutional.                                                               
Now it constitutes the supreme law of the land.                                                                                 
                                                                                                                                
1:44:01 PM                                                                                                                    
MR. PTACIN  said DOL is  currently reviewing the  Citizens United                                                             
case  to see  if  it impacts  Alaska law  going  forward. DOL  is                                                               
preparing  internal   decisions  and  determinations   and  looks                                                               
forward to working  with the Legislature on  determining the next                                                               
steps.                                                                                                                          
                                                                                                                                
CHAIR FRENCH  referenced the  list of  questions he  had prepared                                                               
and noted that  the biggest question is which state  laws are now                                                               
"void"  as  a result  of  the  superseding  opinion by  the  U.S.                                                               
Supreme Court. He asked for a list of those statutes.                                                                           
                                                                                                                                
1:45:49 PM                                                                                                                    
MR. PTACIN named AS 15.13.067(a)  [AS 15.13.067] and AS 15.13.135                                                               
[AS 15.13.135(a)].  Current Alaska  law states  that corporations                                                               
and  labor unions  may  not make  independent  expenditures in  a                                                               
candidate election.  This gets to  the distinction of what  is an                                                               
expenditure  and  whether  an expenditure  is  always  considered                                                               
political speech.  Given the definition  of expenditure,  he said                                                               
he would  consider some  of the  definition to  include political                                                               
speech. Some  arguably is not,  but DOL is working  internally to                                                               
determine  the  extent to  which  there  is  a problem  with  the                                                               
definition and Alaska statutes.                                                                                                 
                                                                                                                                
CHAIR FRENCH asked  if Alaska statures have  the same limitations                                                               
as   the  federal   government   with   respect  to   independent                                                               
expenditures  by  corporate and  union  money  30 days  before  a                                                               
general election.                                                                                                               
                                                                                                                                
MR. PTACIN replied the laws are  not exactly the same. Alaska law                                                               
contemplates   a  ban   on   all   independent  expenditures   by                                                               
corporations and  labor unions.  Federal law  allowed PACS  to be                                                               
formed and  corporations and labor  unions were allowed  to speak                                                               
through  that method.  However,  a communication  that hits  more                                                               
than 50,000  individuals would be considered  banned speech under                                                               
the federal  regime. DOL  is currently  working to  reconcile the                                                               
Citizens United opinion and the internal DOL opinion.                                                                         
                                                                                                                                
CHAIR FRENCH commented  that we've gone from a total  ban to what                                                               
looks like a total free-for-all.                                                                                                
                                                                                                                                
MR. PTACIN  responded he is  looking at  what the law  says about                                                               
disclosure  and expenditure.  The Court  didn't interpret  Alaska                                                               
law,  but it  is subject  to constitutional  scrutiny given  that                                                               
Citizens United is the current law of the land.                                                                               
                                                                                                                                
1:48:48 PM                                                                                                                    
MR. BULLARD said  he agrees with Mr. Ptacin, but  the window that                                                               
was  opened  isn't  as  large  as  the  absolute  window  of  the                                                               
corporate  form. Alaska  law allows  nonprofit corporations  that                                                               
fit  under   the  definition  of   non-group  entities   to  make                                                               
independent  expenditures. It  isn't that  all corporations  were                                                               
previously   prohibited.   It   was  "those   corporations   that                                                               
participated  in business  activities who  have shareholders  who                                                               
had a  claim on  corporate earnings and  were independent  of the                                                               
influence of business corporations" that were prohibited.                                                                       
                                                                                                                                
CHAIR  FRENCH asked  if he  believes  that in  the 2010  election                                                               
cycle that any corporation doing  business in the state of Alaska                                                               
is  free to  spend  money advocating  for  or against  individual                                                               
candidates.                                                                                                                     
                                                                                                                                
MR. BULLARD replied it's difficult  to speculate how Alaska state                                                               
courts  will interpret  this federal  case. "It's  a complex  and                                                               
dynamic  area of  law  and  there may  be  other rationales  that                                                               
support some  of our existing  legal rationales that  support our                                                               
existing laws," he said.                                                                                                        
                                                                                                                                
CHAIR FRENCH  asked if it  will take subsequent legal  action for                                                               
the Alaska  statutes to be  void or if  they are already  void by                                                               
virtue of the Citizens United decision.                                                                                       
                                                                                                                                
1:50:56 PM                                                                                                                    
MR. BULLARD replied  it is when an Alaska law  is challenged that                                                               
a court  will rule.  Whether DOL  will try  to enforce  a statute                                                               
that is arguably unconstitutional is  a separate question that he                                                               
would defer to Mr. Ptacin.                                                                                                      
                                                                                                                                
1:51:37 PM                                                                                                                    
CHAIR FRENCH asked Mr. Ptacin his view.                                                                                         
                                                                                                                                
MR.  PTACIN said  DOL acknowledges  that  the law  is subject  to                                                               
scrutiny  and is  reviewing how  to  go forward.  DOL is  working                                                               
diligently on the issue and an  internal opinion on that point is                                                               
forthcoming.                                                                                                                    
                                                                                                                                
CHAIR FRENCH asked for a timeline.                                                                                              
                                                                                                                                
MR.  PTACIN explained  that DOL  has  been working  on a  related                                                               
matter  since last  November. The  attorney  general hasn't  been                                                               
asked for a formal advisory opinion,  but it may be an area where                                                               
it is appropriate.  He declined to speculate as to  when it could                                                               
be forthcoming, but given the  time parameters it could be fairly                                                               
soon.                                                                                                                           
                                                                                                                                
1:53:48 PM                                                                                                                    
SENATOR  WIELECHOWSKI  asked  if  he  agrees  that  this  opinion                                                               
overturned at least five prior U.S. Supreme Court opinions.                                                                     
                                                                                                                                
MR. PTACIN responded  the two noteworthy opinions  that the Court                                                               
overturned  were  aspects  of  Austin   v.  Michigan  Chamber  of                                                             
Commerce in 1990 and McConnell  v. Federal Election Commission in                                                           
2003.                                                                                                                           
                                                                                                                                
SENATOR WIELECHOWSKI  added that  Federal Election  Commission v.                                                             
Wisconsin  Right   to  Life,   Federal  Election   Commission  v.                                                           
Massachusetts   Citizens  for   Life,   and  California   Medical                                                           
Association  v. Federal  Election  Commission were  cited by  the                                                             
dissent as cases that were either overruled or disavowed.                                                                       
                                                                                                                                
MR. PTACIN  said the main holding  in the Right to  Life case was                                                               
that electioneering  communication has to be  explicit. The Court                                                               
overwhelmingly found  in Citizens  United that  the communication                                                             
was  electioneering communication  so  WRTL  was not  overturned.                                                               
Massachusetts Citizens for  Life carved out the  exception to the                                                               
law with  respect to smaller  corporations whose  primary purpose                                                               
is for  political speech, essentially nonprofits  like the Alaska                                                               
non-group  entity law.  "I don't  think that  WRTL and  MCFL were                                                               
essentially overturned by the Court's decision," he said.                                                                       
                                                                                                                                
SENATOR  WIELECHOWSKI asked  if corporations  exist only  because                                                               
the state allows them to exist.                                                                                                 
                                                                                                                                
MR.  BULLARD responded  corporations  are a  legal fiction;  they                                                               
exist by virtue of state and federal law.                                                                                       
                                                                                                                                
SENATOR   WIELECHOWSKI   asked   if  the   state   could   impose                                                               
restrictions and  regulations on corporations if  they're a legal                                                               
fiction.                                                                                                                        
                                                                                                                                
MR. BULLARD replied there are  a lot of different corporations so                                                               
it's  difficult to  provide a  single  answer. Some  corporations                                                               
exist in an arena  that is only spoken to by  state law and some,                                                               
like  a  national  bank,  exist  in a  larger  and  more  complex                                                               
environment.                                                                                                                    
                                                                                                                                
SENATOR WIELECHOWSKI  observed that  the Supreme Court  held that                                                               
corporations  are entitled  to First  Amendment speech,  but they                                                               
only exist  by virtue  of the  state allowing  them to  exist. He                                                               
asked if there are federal corporations.                                                                                        
                                                                                                                                
MS.  KURTZ said  the long  standing  language in  USC 441b  talks                                                               
about  "any corporation  organized  by authority  of  any law  of                                                               
Congress," but she doesn't know  what corporations those are. The                                                               
main thing  is that  the U.S.  Supreme Court  defined a  right to                                                               
speech in this  area for corporations. It  doesn't matter whether                                                               
the State  of Alaska  tries to  legislate in Title  15 or  in the                                                               
corporations code, we'll still encounter that right, she said.                                                                  
                                                                                                                                
1:58:24 PM                                                                                                                    
SENATOR WIELECHOWSKI asked if the  state could say it didn't want                                                               
to allow corporations to exist.                                                                                                 
                                                                                                                                
MS. KURTZ  replied, "The consequences  of that  declaration could                                                               
be quite wide ranging and interesting."                                                                                         
                                                                                                                                
SENATOR  WIELECHOWSKI   asked  if   foreign  stockholders   in  a                                                               
corporation  could  potentially  influence  elections  under  the                                                               
Citizens United case.                                                                                                         
                                                                                                                                
MS.   KURTZ  said   the   Court   explicitly  addressed   foreign                                                               
corporations in  its opinion saying  that this  provision doesn't                                                               
distinguish between foreign  corporations and other corporations.                                                               
She noted  that a provision  in BiCRA  does limit the  ability of                                                               
those corporations to speak [in federal elections].                                                                             
                                                                                                                                
SENATOR WIELECHOWSKI asked  if a foreign government  could set up                                                               
a corporation in Alaska and  attempt to influence elections under                                                               
Citizens United.                                                                                                              
                                                                                                                                
MS. KURTZ  deferred the question  because she isn't an  expert in                                                               
corporate law.                                                                                                                  
                                                                                                                                
CHAIR FRENCH asked Mr. Ptacin if he had an opinion.                                                                             
                                                                                                                                
2:00:22 PM                                                                                                                    
MR.  PTACIN reiterated  that Citizens  United did  not invalidate                                                             
USC  441e,  which  limits foreign  nationals,  including  foreign                                                               
corporations, from speech in federal  and state elections. DOL is                                                               
currently looking  at the parameters  of the  federal expenditure                                                               
law that  doesn't allow  foreign corporations  to speak  in state                                                               
candidate elections.  He opined  that the public  and Legislature                                                               
need guidance  with respect to how  far the federal law  goes and                                                               
whether the State  of Alaska wants to consider laws  in this area                                                               
since it  essentially has  a ban  on all  corporate expenditures.                                                               
The question  is if Alaska  wants to distinguish  between foreign                                                               
or out-of-state  or in-state corporations. DOL  is working toward                                                               
determinations in this area particularly  with respect to federal                                                               
law and foreign national corporations, he said.                                                                                 
                                                                                                                                
SENATOR  COGHILL offered  his understanding  that PACs  organized                                                               
under Section  527 of  the federal  tax code  have not  had their                                                               
right  to  speech  challenged  so  this  breaks  a  vale  between                                                               
organizing   as  a   political   action  and   organizing  as   a                                                               
corporation.                                                                                                                    
                                                                                                                                
MR. PTACIN  responded that  Citizens United said  that a  PAC was                                                             
not the same  thing as a corporation; on a  certain level it does                                                               
break the need for a corporation to  form a PAC in order to speak                                                               
30 days or 60 days before certain elections.                                                                                    
                                                                                                                                
SENATOR COGHILL  asked if there  will still be  accountability as                                                               
to how [corporations and labor unions] speak.                                                                                   
                                                                                                                                
MR.  PTACIN  said yes.  He  reiterated  that  DOL is  looking  at                                                               
current reporting  laws for corporations  and labor  unions given                                                               
the present statutes.                                                                                                           
                                                                                                                                
SENATOR   COGHILL  said   they're  more   restrictive  than   the                                                               
individual now  and we want to  make sure that they  don't become                                                               
less restrictive than the individual.                                                                                           
                                                                                                                                
MR. PTACIN clarified that "persons"  is the law that applies when                                                               
Alaska statutes  contemplate disclosure  and disclaimer  laws for                                                               
corporations  and labor  unions.  Given  that definition  certain                                                               
laws apply to corporations and  labor unions, and certain laws do                                                               
not. That will merit scrutiny going forward, he said.                                                                           
                                                                                                                                
2:04:25 PM                                                                                                                    
SENATOR  EGAN  queried  what kind  of  corporations  licensed  in                                                               
Alaska can contribute.                                                                                                          
                                                                                                                                
MR.  PTACIN clarified  that the  Citizens United  case was  about                                                             
independent  expenditures made  absent  any  coordination with  a                                                               
legislator.  The case  did not  determine  that corporations  can                                                               
make contributions directly to candidates.                                                                                      
                                                                                                                                
SENATOR EGAN asked if DOL expects litigation.                                                                                   
                                                                                                                                
MR. PTACIN replied it's difficult to say at this point.                                                                         
                                                                                                                                
SENATOR EGAN  asked if APOC,  which follows this on  a day-to-day                                                               
basis, will look at this independently and separate from DOL.                                                                   
                                                                                                                                
2:06:20 PM                                                                                                                    
MR.  PTACIN replied  he works  closely with  APOC. Any  advice he                                                               
gives  the attorney  general on  the law  going forward  is after                                                               
consulting with APOC staff                                                                                                      
                                                                                                                                
CHAIR  FRENCH  reported  that  Tom   Dosik  from  APOC  had  been                                                               
scheduled to testify, but a family tragedy prevented that.                                                                      
                                                                                                                                
SENATOR  MCGUIRE observed  that she  sees nothing  in the  ruling                                                               
that does  not allow  the Legislature  to require  disclosure and                                                               
perhaps  even  some  limitation  of  expenditures  by  for-profit                                                               
corporations   in   this   state.   However,   she   would   like                                                               
clarification that if  the Legislature were to  do anything, that                                                               
it should at least look  at disclosure and reporting requirements                                                               
so that these for-profit corporations aren't left in the dark.                                                                  
                                                                                                                                
MR. PTACIN  said this area  of the  law does require  scrutiny by                                                               
the Legislature  and DOL  as to  which disclaimer  and disclosure                                                               
laws apply to corporations today  and which do not. A preliminary                                                               
analysis  suggests looking  at which  laws apply  to persons  and                                                               
which  do not.  AS 15.13.040  subsections  (c) and  (e) say  that                                                               
corporations and labor unions are  required no later than 10 days                                                               
after an expenditure is made to report that expenditure.                                                                        
                                                                                                                                
CHAIR  FRENCH cited  subsection (d),  "Every individual,  person,                                                               
nongroup entity, or group making  an expenditure" and asked if he                                                               
is  putting  unions  and  corporations   under  person,  but  not                                                               
individual  because individual  means  a  natural person.  "Every                                                               
time  I  see  "person"  in  these statutes  I  need  to  read  in                                                               
corporation and union," he said.                                                                                                
                                                                                                                                
MR.  PTACIN said  yes; the  inverse is  that when  you don't  see                                                               
"person"  note  that  arguably  that  law  may  not  apply  to  a                                                               
corporation or labor union at this time.                                                                                        
                                                                                                                                
CHAIR  FRENCH  asked what  disclosure  rules  apply to  nonprofit                                                               
corporations that are allowed limited spending in elections.                                                                    
                                                                                                                                
2:10:36 PM                                                                                                                    
MR. BULLARD  replied some nonprofits report  under subsection (j)                                                               
of AS 15.13.040.                                                                                                                
                                                                                                                                
CHAIR FRENCH read subsection (j)  and noted that he's saying that                                                               
"nongroup entity"  means nonprofit.  He asked if  the disclosures                                                               
are required to be made electronically or on paper.                                                                             
                                                                                                                                
MR. BULLARD replied that is determined by AS 15.13.110.                                                                         
                                                                                                                                
MS. KURTZ deferred the question to Mr. Ptacin.                                                                                  
                                                                                                                                
2:11:50 PM                                                                                                                    
MR.  PTACIN said  his understanding  is that  those are  filed on                                                               
paper.                                                                                                                          
                                                                                                                                
CHAIR FRENCH imagined  that the Legislature will  look at quicker                                                               
disclosure.  Corporations  have  an  enormous  ability  to  amass                                                               
wealth  so  it's  reasonable,  if they  want  to  participate  in                                                               
elections, that  they disclose  frequently and  in a  manner that                                                               
gets the information to the  public swiftly and without burdening                                                               
APOC staff, he said.                                                                                                            
                                                                                                                                
SENATOR COGHILL noted that electronic  disclosure has been a work                                                               
in progress the last several years.                                                                                             
                                                                                                                                
CHAIR  FRENCH clarified  that he's  talking  about disclosure  by                                                               
candidates.                                                                                                                     
                                                                                                                                
SENATOR  COGHILL  agreed,  but  under  this  [opinion]  it  would                                                               
involve all entities.                                                                                                           
                                                                                                                                
CHAIR  FRENCH  said  he  believes  in  electronic  disclosure  by                                                               
candidates,  but he  realizes that  there  have been  roadblocks.                                                               
Some areas  of the state don't  have a lot of  computers or phone                                                               
service.                                                                                                                        
                                                                                                                                
SENATOR COGHILL said  that might be something that  comes back on                                                               
the radar.                                                                                                                      
                                                                                                                                
CHAIR   FRENCH  clarified   that  his   general  point   is  that                                                               
corporations are in a uniquely  strong position to have access to                                                               
computers and the Internet.                                                                                                     
                                                                                                                                
MS. KURTZ directed attention to  AS 15.13.040(m) that talks about                                                               
electronically   submitting   information  required   under   the                                                               
chapter. APOC could clarify how it is making that work.                                                                         
                                                                                                                                
CHAIR FRENCH said  that may be the carve-out  for candidates, but                                                               
he agrees  that it  leans toward  electronic disclosure.  He then                                                               
asked  if there  was anything  in the  Supreme Court  decision or                                                               
anything in  Alaska statutes that would  prohibit the Legislature                                                               
from  mandating disclosure  of the  three top  contributors to  a                                                               
group  or  sub-corporation  so that  the  people  understand  the                                                               
funding source for advertisements.                                                                                              
                                                                                                                                
MR. PTACIN  replied the  concern about  formation of  a different                                                               
group  to essentially  do the  speaking merits  scrutiny, but  AS                                                               
15.13.074(f) currently  bars corporations  and labor  unions from                                                               
making  contributions  to  groups  that are  not  ballot  measure                                                               
groups. He  also pointed out that  what was taken up  in Citizens                                                             
United was  a corporation  making independent  expenditure speech                                                             
from its  own coffer. It did  not go further to  talk about pass-                                                               
through issues.                                                                                                                 
                                                                                                                                
2:17:06 PM                                                                                                                    
CHAIR FRENCH  said he's  trying to  get behind  the cover  of the                                                               
corporation  so  that  citizens   know  who  the  individuals  or                                                               
corporations    are    that    are    advancing    electioneering                                                               
advertisements.                                                                                                                 
                                                                                                                                
MR. PTACIN  said what's required  of a corporation at  this point                                                               
is  outlined in  AS  15.13.040(d) and  (e).  The Citizens  United                                                             
decision  did not  address  the areas  that  are contemplated  as                                                               
corollary issues, but DOL is working on those, he said.                                                                         
                                                                                                                                
SENATOR  WIELECHOWSKI   asked  what,  if  any,   limitations  the                                                               
Legislature  can  place on  corporations  in  regard to  Citizens                                                             
United and  campaign disclosure, reporting requirements,  and the                                                             
ability  to  do  advertizing  when the  corporation  has  foreign                                                               
shareholders.                                                                                                                   
                                                                                                                                
MR.  PTACIN restated  that disclaimer  and  disclosure laws  were                                                               
held  constitutional.  The  laws  that  were  contemplated  under                                                               
Citizens  United are  similar to  the  disclosure and  disclaimer                                                             
laws that  Alaska puts  on groups and  nongroup entities  at this                                                               
point.  There  is  federal  law and  federal  regulation  on  the                                                               
foreign national and foreign corporation  issue and this case did                                                               
not  determine any  outward limit  on disclaimer  and disclosure.                                                               
The ruling was on the actual expenditure on speech.                                                                             
                                                                                                                                
SENATOR WIELECHOWSKI  asked if the  Legislature could pass  a law                                                               
prohibiting corporations  to advocate on behalf  of candidates in                                                               
Alaska  if foreign  shareholders constitute  a majority  stake in                                                               
the corporation.                                                                                                                
                                                                                                                                
MR. PTACIN  replied there is federal  law on that matter  and DOL                                                               
has  to  determine  whether  additional   state  law  is  at  all                                                               
appropriate under BiCRA.                                                                                                        
                                                                                                                                
MS. KURTZ  pointed out that AS  15.13.135 has some of  the things                                                               
the  committee  is   talking  about  but  it   doesn't  apply  to                                                               
corporations because existing Alaska  statutes do not contemplate                                                               
corporations  being able  to make  independent expenditures.  "If                                                               
you're looking at how to fix  the statutes to go in the direction                                                               
you're indicating, that might be a place to start," she said.                                                                   
                                                                                                                                
CHAIR FRENCH asked what in AS 15.13.135 ought to be changed.                                                                    
                                                                                                                                
MS.  KURTZ replied  the first  sentence is  directly contrary  to                                                               
what came out  of the Citizens United decision.  It states, "Only                                                             
an individual, group, or nongroup  entity may make an independent                                                               
expenditure supporting  or opposing  a candidate for  election to                                                               
public office." That could be  invalidated by a court decision or                                                               
the Legislature  could look at it  and realize it's not  going to                                                               
work.                                                                                                                           
                                                                                                                                
CHAIR FRENCH  observed that  you could  write "person"  into that                                                               
list so it includes corporations.                                                                                               
                                                                                                                                
MS. KURTZ  said she doesn't  know if  the solution would  be that                                                               
simple, but  this statute in  particular talks  about individual,                                                               
group,  or  nongroup  entity.   Some  corporations  are  nongroup                                                               
entities,  but  only  the  small  select  group  that  meet  MCFL                                                               
factors. It's been  changed by the decision.  The assumption that                                                               
only  MCFL  nongroup  entity-type   corporations  could  make  an                                                               
independent expenditure is  no longer valid. This  statute is now                                                               
missing the disclosure and disclaimer  requirements that it would                                                               
apply to the  communication by an individual,  group, or nongroup                                                               
entity.  Corporation  wouldn't  obviously  fall  under  that.  AS                                                               
15.13.040 is  a reporting statute  so it's not clear.  That's one                                                               
of  the  issues; corporations  are  persons,  but person  is  not                                                               
included in AS 15.13.135.                                                                                                       
                                                                                                                                
SENATOR  WIELECHOWSKI  asked if  the  Legislature  would need  to                                                               
change AS 15.13.135  or if a corporation would need  to request a                                                               
declaratory judgment.                                                                                                           
                                                                                                                                
MS.  KURTZ  replied  it  depends   on  what's  going  on,  but  a                                                               
corporation might say that AS  15.13.135 doesn't apply because it                                                               
doesn't  say  "person."  "You can't  assume  that  a  corporation                                                               
interested  in making  an independent  expenditure  will just  do                                                               
this," she  cautioned. Legislative  action is  needed to  make it                                                               
clear under  AS 15.13.135  that corporations  are supposed  to do                                                               
this when they make independent expenditures.                                                                                   
                                                                                                                                
2:24:35 PM                                                                                                                    
SENATOR  WIELECHOWSKI  said  that  if the  Legislature  takes  no                                                               
action,  then  a corporation  is  technically  violating the  law                                                               
under AS 15.13.135.                                                                                                             
                                                                                                                                
MS. KURTZ replied she wouldn't  say that because she doesn't know                                                               
what they're doing.                                                                                                             
                                                                                                                                
SENATOR WIELECHOWSKI asked  if it would be  a technical violation                                                               
of  the  law  if  the   corporation  was  making  an  independent                                                               
expenditure supporting or opposing a candidate.                                                                                 
                                                                                                                                
MS. KURTZ  said given the  Citizens United precedent,  Alaska law                                                             
might  be  vulnerable.  The  Legislature  can  await  that  court                                                               
challenge  or  proactively  amend   statutes  in  light  of  this                                                               
decision. "This  body does  have the  power to  enact disclosure,                                                               
disclaimer,  identification  requirements;  it already  has,  but                                                               
it's  not clear  under  the existing  statutes  that those  would                                                               
apply to independent expenditures by corporations," she said.                                                                   
                                                                                                                                
SENATOR  WIELECHOWSKI  observed  that under  current  Alaska  law                                                               
corporations have more freedom, more  rights, and more ability to                                                               
campaign than individuals.                                                                                                      
                                                                                                                                
MS. KURTZ  declined to  answer without  first thinking  about the                                                               
implications of what he's saying.                                                                                               
                                                                                                                                
MR.  BULLARD  said  it's  unclear  how  these  statutes  will  be                                                               
interpreted in light of the  Citizens United ruling. "A lot would                                                             
depend on the specifics and the facts in a given situation."                                                                    
                                                                                                                                
2:26:48 PM                                                                                                                    
SENATOR COGHILL  said he  tends to agree  with the  decision that                                                               
corporations  have the  right to  speak,  but there  needs to  be                                                               
accountability.   If   Alaska   statute  doesn't   provide   that                                                               
accountability  it  should  be   amended  to  include  reporting,                                                               
identification,  and whatever  limits an  individual may  have so                                                               
that the constitution will apply.                                                                                               
                                                                                                                                
SENATOR WIELECHOWSKI expressed the  view that it's imperative; in                                                               
light  of the  decision, corporations  have more  rights to  free                                                               
speech than ordinary Alaskans. "I  think we need to change that,"                                                               
he said.                                                                                                                        
                                                                                                                                
At ease from 2:28 p.m. to 2:31 p.m.                                                                                             
                                                                                                                                
2:31:39 PM                                                                                                                    
SENATOR  MCGUIRE asked  if there's  been any  thought given  to a                                                               
dollar threshold limitation.                                                                                                    
                                                                                                                                
MS. KURTZ said in Buckley v.  Valeo the U.S. Supreme Court upheld                                                             
a federal law that set  limits on campaign contributions, but not                                                               
expenditure  limits.  Thus,   there  is  a  limit   on  what  the                                                               
Legislature  can do  with expenditures  despite  the presence  of                                                               
dollar limits with the contributions.                                                                                           
                                                                                                                                
SENATOR COGHILL said that if  corporations have the same capacity                                                               
to  speak as  an individual  there has  to be  accountability and                                                               
reporting, but he'd  have difficulty limiting what  they can talk                                                               
about.                                                                                                                          
                                                                                                                                
SENATOR WIELECHOWSKI expressed the view  that this ruling is "the                                                               
worst case  of judicial activism"  he's seen in his  lifetime. He                                                               
is  interested in  pursuing the  issue of  foreign companies  and                                                               
foreign  shareholders;  in light  of  this  ruling they  can  now                                                               
influence elections  in Alaska.  He requested that  the committee                                                               
look into  that issue  because that's not  what Alaskans  want to                                                               
see.                                                                                                                            
                                                                                                                                
2:35:09 PM                                                                                                                    
SENATOR COGHILL cited the PAC law  and expressed the view that it                                                               
will be difficult, but he's willing to look into it.                                                                            
                                                                                                                                
CHAIR  FRENCH  read the  following  two  selections from  Justice                                                               
Stevens' descent,  which he described  as one of the  great works                                                               
of his long and distinguished career.                                                                                           
                                                                                                                                
     In  a state  election  … the  interests of  nonresident                                                                    
     corporations  may  be   fundamentally  adverse  to  the                                                                    
     interests   of   local   voters.   Consequently,   when                                                                    
     corporations grab  up the  prime broadcasting  slots on                                                                    
     the eve of an election,  they can flood the market with                                                                    
     advocacy that  bears 'little or no  correlation' to the                                                                    
     ideas of  natural persons or  to any broader  notion of                                                                    
     the public good,  [494 U. S., at 660].  The opinions of                                                                    
     real people may be marginalized.                                                                                           
                                                                                                                                
     At bottom, the  Court's opinion is thus  a rejection of                                                                    
     the  common  sense of  the  American  people, who  have                                                                    
     recognized   a  need   to  prevent   corporations  from                                                                    
     undermining  self government  since  the founding,  and                                                                    
     who  have  fought  against the  distinctive  corrupting                                                                    
     potential  of corporate  electioneering since  the days                                                                    
     of  Theodore  Roosevelt.  It  is   a  strange  time  to                                                                    
     repudiate that  common sense. While  American democracy                                                                    
     is imperfect,  few outside the  majority of  this Court                                                                    
     would  have  thought its  flaws  included  a dearth  of                                                                    
     corporate money in politics.                                                                                               
                                                                                                                                
CHAIR  FRENCH stated  that over  the next  several weeks  he will                                                               
work with  the committee and  legislative legal to craft  laws to                                                               
contain this decision.                                                                                                          
                                                                                                                                
2:37:08 PM                                                                                                                    
There being  no further  business to  come before  the committee,                                                               
Chair French  adjourned the  Senate Judiciary  Standing Committee                                                               
meeting at 2:37 p.m.                                                                                                            

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