HB 409 - CAMPAIGN EXPENDITURES  1:57:20 PM CHAIR RAMRAS announced that the final order of business would be HOUSE BILL NO. 409, "An Act relating to state election campaigns, the duties of the Alaska Public Offices Commission, the reporting and disclosure of expenditures and independent expenditures, the filing of reports, and the identification of certain communications in state election campaigns; and providing for an effective date." [Before the committee was CSHB 409(STA).] REPRESENTATIVE LYNN, speaking as the chair of the House State Affairs Standing Committee, sponsor of HB 409, explained that CSHB 409(STA) is intended to address the U.S. Supreme Court decision on Citizens United. The legislation isn't about the decision itself, but rather about letting constituents throughout the state know who contributes and makes expenditures in corporations and unions. He explained that the Citizens United decision basically established corporations and unions as persons and thus they can contribute and make individual expenditures as would individual candidates so long as that independent decision isn't coordinated with a candidate or an entity putting together an initiative. Representative Lynn expressed concern about foreign nationals who are part of the decision-making process in terms of [the candidates] and/or initiatives they will support or oppose. Language in HB 409 addresses some of those concerns. Representative Lynn pointed out that with elections around the corner time is of the essence with this legislation. 2:00:22 PM MIKE SICA, Staff, Representative Bob Lynn, Alaska State Legislature, speaking as staff to the House State Affairs Standing Committee, sponsor, informed the committee that Alaska is one of twenty-four states developing disclosure and disclaimer laws regarding independent expenses by corporations, labor unions, and limited liability companies (LLCs). He explained that in many of the sections of HB 409, the legislation specifies a definition of "person" that includes "corporations, companies, partnership, firm, associations, organizations, business trust society, natural person, union". He pointed out that Section 4, the disclosure section, and Section 11, the disclaimer section, are the [major focus] of HB 409. Mr. Sica then turned to the aforementioned U.S. Supreme Court ruling in which it specifies that the federal government can still prohibit foreign nationals from being involved in federal and state election campaigns through independent expenditures. The legislation before the committee addresses that matter in HB 409 by condensing the federal law while basically accomplishing what the ruling requires. He related his belief that any federal preemption problems with the federal government are addressed by placing in state code the language of the federal law. MR. SICA then highlighted various changes made in the prior committee. On page 5, Section 10 originally included the ability to make anonymous expenditures in certain restricted circumstances. However, the aforementioned was deleted in CSHB 409(STA). He pointed out that the language on page 6, Section 11(a)(2)(D) requires that corporations, unions, and LLCs that utilize an audio and video component of their campaign or independent expenditure advertisement clearly identify the name and city and state of residence of the top three contributors. He noted that requirements surrounding communications continues in Section 12, on page 7, of CSHB 409(STA). CHAIR RAMRAS inquired as to whether the term ["easily discernable"] is in existing law. He also inquired as to its definition, noting that the "paid for" portion of an advertisement can be done very quickly. MR. SICA stated that the term is being added. REPRESENTATIVE LYNN offered his understanding that the term means a person of normal hearing can understand what's being said. CHAIR RAMRAS questioned how quickly someone can speak and remain [easily discernable]. REPRESENTATIVE GATTO questioned whether [easily discernable] refers to an unaltered voice speed. 2:08:16 PM REPRESENTATIVE GRUENBERG concurred with Representative Gatto that [the term should refer to an unaltered voice speed] such that it should be heard and understood. Representative Gruenberg noted that this term was added by an amendment he proposed. He then pointed out that on page 7, line 16, following "The" the term "three" should be inserted as that was part of the amendment adopted in the House State Affairs Standing Committee. MR. SICA directed the committee's attention to the language on page 7, lines 8-9, which refers to Section 11(a)(2)(D) on page 6. The language in Section 11(a)(2)(D) on page 6, lines 20-21, specify that it's the "three largest contributors". REPRESENTATIVE GRUENBERG acknowledged that point. CHAIR RAMRAS asked if in a television commercial, the top three contributors have to be communicated via audio and video or just in print on the screen. MR. SICA offered his understanding that in a television commercial the top three contributors would have to be communicated via audio and [print on the screen]. This requirement would allow a hearing impaired individual to see the list and a visually impaired individual to hear the list. CHAIR RAMRAS questioned why there's suddenly a requirement to relate the information via audio, when that hasn't been the practice in the past. He expressed concern that it's a "knee jerk reaction" to the U.S. Supreme Court ruling. He said that he doesn't like "knee jerk legislation." MR. SICA opined that it is drawn from the U.S. Supreme Court decision, which he further opined seems to provide people as much information as possible to make the best decisions possible. 2:11:26 PM REPRESENTATIVE LYNN reminded the committee that this legislation addresses the elective process, not selling items. He said he doesn't believe trying to protect [and inform] voters is a "knee jerk reaction"; it's important to know who is making expenditures for or against a candidate or an issue. CHAIR RAMRAS pointed out that candidates in the last election cycle who had a television advertisement didn't have to say who paid for the advertisement, while those with radio advertisements were required to say who had paid for the advertisement. He asked if Representative Lynn believes voters haven't been aware who paid for advertisements in the past. REPRESENTATIVE LYNN indicated that he was amenable to an amendment to change that proposed requirement. REPRESENTATIVE DAHLSTROM asked if Representative Lynn would want an individual running for office to disclose the top three donors in even a 30 second advertisement. REPRESENTATIVE GRUENBERG said that he brought forth the amendment that inserted the provisions requiring the top three contributors be listed in order to aid two classes of people: the visually impaired and individuals who merely listen to the television without watching it. In further response to Representative Dahlstrom, Representative Gruenberg said that he hadn't thought of addressing it prior. He noted that the timing for listing the three names has amounted to eight seconds. Representative Gruenberg then highlighted that under federal law, advertisements for drugs must auditorily state all the potential side effects, which takes much longer than eight seconds. The aforementioned is required because people feel it's important, which he said he believes is also the case for elections. MR. SICA interjected that the language "easily discernable" is already in the code. He then directed the committee's attention to page 8, lines 25-26, which is from where the language "easily discernable" came. REPRESENTATIVE DAHLSTROM expressed concern with the lack of a legal definition for "easily discernable" and the possibility that it could lead to litigation. Although Representative Dahlstrom related that she's supportive of full disclosure, she pointed out that Alaska consists of various levels of education, various cultures, and various languages. 2:16:46 PM DON ETHERIDGE, Lobbyist, Alaska AFL-CIO, related that the Alaska AFL-CIO is supportive of full disclosure. However, he expressed concern that a forthcoming amendment is cumbersome for organizations to fulfill the [requirement]. He informed the committee that some of the [AFL-CIO] organizations have over 8,000 members scattered throughout the state, [all of] which would have to be notified prior to collecting or making expenditures. Currently, under law any of the membership of the [AFL-CIO] can opt out of any political action contributions or funds from their union dues being spent for political action, which was the result of the Beck decision. REPRESENTATIVE GATTO asked if Mr. Etheridge is referring to a political action committee (PAC). MR. ETHERIDGE confirmed that PACs are what [the AFL-CIO] uses for political actions. REPRESENTATIVE GATTO pointed out that the U.S. Supreme Court decision says that dues, not just PAC contributions, can be contributed. He further pointed out that those who contribute to PACs know that the funds are being [contributed to a political campaign or issue], while those who pay dues don't know whether dues funds are being used to contribute to a political campaign or issue. Therefore, it's important, he opined, to notify the dues payor. MR. ETHERIDGE noted his agreement that the member who pays dues has a right to know, but the language regarding "contributions" is of concern because it would apply to PACs. REPRESENTATIVE GATTO opined that the legislation isn't addressing PACs. However, he emphasized that currently there is no law regarding knowledge of how the dues are spent. MR. ETHERIDGE stated that the Alaska AFL-CIO doesn't have a problem with the legislation, but is concerned with a potential amendment that would extend this disclosure to any membership contributions, dues, or fees and the PACs are contributions. 2:22:01 PM ALPHEUS BULLARD, Attorney, Legislative Legal Services Division, Legislative Affairs Agency, offered to provide clarification regarding the disclaimer provisions of CSHB 409(STA), proposed AS 15.13.090(c)-(f). He explained that the language on page 7, lines 12-13, which says "be read in a manner that is easily heard", modifies audio communication. The language "placed in the communication" refers to print or video. The aforementioned language is utilized on page 8, lines 20-21. Mr. Bullard clarified that although colloquially people "discern" things with their ears, "to discern" is a visual function. Therefore, audio communications must be read in a manner that's easily heard. With regard to the discussion of effect on candidate elections, he directed the committee to page 6, lines 11-12, which specifies that the disclaimer applies only to a person other than a candidate, individual, or political party. 2:23:44 PM HOLLY HILL, Executive Director, Alaska Public Offices Commission (APOC), pointed out that current regulation, 2 AAC 50.306, sets out "clearly identified" as follows: (2) in all audio, audio-visual, automated telephone, or electronic communications, the information must be (A) visual and of sufficient size and duration to be read by the viewer; (B) spoken and audible at the same volume as the communication; or (C) both visual and spoken, as set out in (A) and (B) of this paragraph. 2:24:46 PM JOHN PTACIN, Assistant Attorney General, Labor and State Affairs Section, Department of Law, began by reminding the committee that any disclaimer and disclosure law that burdens free speech is subject to strict scrutiny. He opined that proposed laws must be narrowly tailored to serve compelling government interest. Turning to CSHB 409(STA), Mr. Ptacin said that Section 4 seeks more disclosure from corporations, companies, and labor unions. Section 4 twice mentions a suspect classification: "nationality". The legislation requires officers, directors, and contributors to report their nationality on APOC forms within 24 hours of making the expenditure. He pointed out that the Citizens United case didn't address whether there's a compelling government interest to keep foreign influence out of political speech and candidate elections. Therefore, he wasn't sure whether there's a compelling government interest. Still, such classification is subject to strict scrutiny because it may or may not burden free speech and it's also a suspect classification. MR. PTACIN explained that under federal law foreign nationals aren't allowed to participate in the decision-making process for such an expenditure. However, the addition of proposed AS 15.13.068 in CSHB 409(STA) further disallows foreign nationals to make such an expenditure in a candidate election. Therefore, the question becomes whether it's significant enough for a corporation or labor union to specify, in APOC filings, that they have foreign nationals acting as leaders in their organizations despite the fact that the law already specifies that they have nothing to do with the expenditure process. He opined that the courts would have to address whether there's a compelling government interest or real harm. Mr. Ptacin informed the committee that with regard to proposed AS 15.13.068, he didn't see any conflict between the federal and the proposed law. Although there may be some argument for field preemption because there is substantial federal regulation in this area, he didn't believe that federal preemption should be an issue for Section 8. MR. PTACIN then turned attention to Section 10 of CSHB 409(STA), which requires that the MacIntyre v. Ohio Elections Commission decision be placed back in the legislation. Under the U.S. Constitution some expenditures should remain anonymous. He identified those anonymous expenditures as leaf letting. He moved on to Section 12, which includes a provision regarding precertification speech that isn't defamatory. The aforementioned provision may be too onerous of a burden to place on an officer of a corporation or labor union. He mentioned that Section 12 includes a requirement that foreign government ownership be disclosed in advertisements if the foreign government owns 10 percent of the advertisement. Again, the court may be called upon to vet whether there's a compelling government interest or not, particularly given that foreign nationals can't be part of the expenditures process. MR. PTACIN highlighted that the legislation proposes that the expenditure be reported within 24 hours of an expenditure being made, incurred, or authorized. Given that standard, the 24-hour rule would require close accounting from third-party vendors. The reporting accuracy may or may not suffer under the 24-hour standard. He pointed out that the 10-day standard allows entities making these types of expenditures time to obtain a fair and accurate report before filing with APOC. Furthermore, the 24-hour filing proposed by CSHB 409(STA) would result in a lot of single filings that could've been avoided with the 10-day rule that allows multiple independent expenditures on one form. Mr. Ptacin questioned whether the 24-hour rule is the most appropriate approach to obtain the most clear and accurate filings to the public. In closing, Mr. Ptacin offered his belief that wherever [HB 409] can provide clarity, the better enforceability of these laws will result. 2:31:11 PM BARBARA HUFF TUCKNESS, Director, Governmental & Legislative Affairs, Teamsters Local 959, related support for CSHB 409(STA). If requirements are made of a corporation, she expected those same requirements to be placed on labor organizations. However, labor organizations are a bit different in that it has members versus stockholders. Ms. Huff Tuckness opined that CSHB 409(STA) creates a level playing field for all. CHAIR RAMRAS, upon determining no one else wished to testify, closed public testimony on HB 409, and relayed that CSHB 409(STA) would be set aside.