Citizens United Update: How States are Reacting

Federal

On February 5, 2010, the Federal Election Commission (FEC) announced, due to the U.S. Supreme Court’s decision in Citizens United v. Federal Election Commission, it will no longer enforce statutory and regulatory provisions prohibiting corporations and labor unions from making either independent expenditures or electioneering communications. The FEC also listed several actions it is taking to fully implement the Citizens United decision:

The FEC will review all pending enforcement matters to determine which may be affected by the Citizens United decision and will no longer pursue claims involving violations of the invalidated provisions or pursue information requests or audit issues with respect to the invalidated provisions;

The FEC will consider the effect of the Citizens United decision on its ongoing litigation;

The FEC will review regulations affected by the invalidated provisions and will initiate a rulemaking to implement the Citizens United opinion;

The FEC will consider the effect of Citizens United on the ongoing coordinated communications rulemaking; and

The FEC will evaluate required revisions to reporting, forms, instructions, and the electronic software used.

Senate Bill 3295 and House Bill 5175 have been introduced in response to the decision. The bills prohibit foreign influence in federal elections, prohibit government contractors from making expenditures with respect to such elections, and establishes additional disclosure requirements with respect to spending in those elections.

Alaska

Attorney General Dan Sullivan provided a legal opinion to the governor’s office analyzing the impact on Alaska campaign finance statutes from Citizens United. The attorney general found, most likely, current state law prohibiting independent expenditures by corporations and unions in a candidate election has been rendered unconstitutional. However, there was no direct impact on Alaska’s laws regarding coordinated expenditures, ballot measure expenditures, contributions to candidates, or reporting and registration requirements.

The governor signed Senate Bill 284 on June 1, 2010. The bill bans contributions and independent expenditures from foreign nationals and requires reporting by those making independent expenditures. Independent expenditures are required to identify who paid for the expenditure.

Arizona

House Bill 2788 was signed into law on April 1, 2010. The bill, while providing for unlimited independent expenditures, contains provisions that would require corporations and labor unions spending over a threshold level of their funds on independent expenditures (per campaign) to register with and report independent expenditures to either the secretary of state or the appropriate local filing officer, depending on whether the funds were used for statewide, legislative, county, city, town, or other local races. The threshold levels are: $5,000 or more in a statewide race ($10,000 or more if in two or more statewide races); $2,500 or more in a legislative race ($5,000 or more if in two or more legislative races); and, $1,000 or more in a county, city, town, or other local race ($2,000 or more in any combination of county, city, town, or other local races). After initial registration, corporations and labor unions will have to file a report with the appropriate filing officer each time they subsequently accumulate expenditures above the reporting thresholds

Colorado

Prompted by a request for a ruling from Governor Bill Ritter after the decision in Citizens United v. Federal Election Commission, the Colorado Supreme Court found provisions in the state's voter-approved Amendment 27 to the constitution to violate free-speech rights. The court determined barring corporations and labor organizations from directly advocating for a candidate's election or defeat and barring the purchase of television and print ads in the 60-day run-up to a general election is in violation of the First Amendment of the United States Constitution, in light of the Citizens United decision.

On May 25, 2010 the governor signed Senate Bill 203. The bill creates registration, disclosure, and disclaimer requirements in connection with independent expenditures.

Connecticut

The Connecticut State Elections Enforcement Commission issued a press release reacting to the Court’s decision. The release stated the impact of the decision on Connecticut’s law was unclear and emphasized the importance of public campaign financing programs, such as Connecticut’s, to the legitimacy and viability of the democratic process.

In response to Citizens United, House Bill 5471 was passed by the general assembly and signed by the governor on House Bill 5471. The bill defines independent expenditures and lays out reporting requirements for entities making such expenditures. Under the bill, independent expenditures are required to contain language identifying the source of the expenditure.

Iowa

On April 8, 2010, the governor of Iowa signed Senate File 2354 into law. The law now permits corporations to make independent expenditures,

©2010 State and Federal Communications, Inc. www.stateandfed.com

but also implements several new restrictions and reporting requirements. Foreign corporations will not be permitted to make any independent expenditures. Direct corporate contributions to candidates and committees will continue to be prohibited. Under the new law, a corporation must have authorization by a majority of its board of directors in order to make an independent expenditure, and the authorization must be made in the same calendar year as the expenditure. Corporations making expenditures will be required to file statements with the Iowa Ethics and Campaign Disclosure Board. On these statements, the corporations must disclose the names and addresses of all their shareholders. The Iowa Ethics and Campaign Disclosure Board has adopted rules to comply with the bill and is currently updating its electronic filing system for the independent expenditure statements.

Kentucky

Craig Dilger, chairperson of the Kentucky Registry of Election Finance (KREF), stated the Citizens United ruling directly conflicts with the state's constitution. Dilger also stated the state will need to seek new legislation to comply with Citizens United and also consider the possibility of requiring corporations to disclose political activity. However, the decision does not affect the state's ban on direct corporate contributions to political campaigns.

KREF has also issued Advisory Opinion 2010-001, holding that entities may now, in light of Citizens United, make independent expenditures. According to the opinion, registration as a political committee is not required when making such expenditures unless those entities directly solicit funds for making independent expenditures or unless contributions from members are earmarked for independent expenditures.

Maine

Legislative Document 1546 was signed by the governor on March 19, 2010. The bill requires registration and reporting for persons, who are not political action committees, making expenditures in excess of $5,000.

Maryland

A group of legislators has proposed a package of bills to limit the effects of the Citizens United decision. The bills would require a majority vote of shareholders or union members to approve a specific expenditure, ban state contractors from making campaign expenditures on behalf of state candidates, and compel disclosure of all corporate and union political disbursements.

Massachusetts

The Massachusetts Office of Campaign and Political Finance (OCPF) issued a statement admitting the Citizens United decision called into question OCPF’s longstanding interpretation of M.G.L. Chapter 55, Section 8 as prohibiting both contributions and independent expenditures by corporations to support or oppose candidates or political parties. In light of the decision, OCPF will apply section 8 as follows: Corporations or other entities named in the statute may still not make contributions to support or oppose candidates or political parties. If a corporation or other entity, which may not contribute under section 8 makes an independent expenditure, it must disclose the expenditure as required by M.G.L. Chapter 55, Section 18A.

A bill, known as the Massachusetts Corporate Political Accountability Act, was filed in the legislature. In addition to bringing the commonwealth’s laws into compliance with Citizens United, the bill would require CEOs to appear in ads their companies pay for and to affirmatively approve the message in the ad. Any such ad would also require shareholder and director approval. The top five contributors to the cost of the ads would be required to be listed.

Michigan

The Michigan Secretary of State Terri Lynn Land released a statement declaring, as a result of Citizens United, section 54(1) of the Michigan Campaign Finance Act is unconstitutional to the extent it prohibits independent expenditures by corporations, labor organizations, or

domestic dependent sovereigns (Indian tribes). However, the prohibition against contributions from these organizations to candidates and committees remains in effect. With the decision, corporations, unions, and domestic dependent sovereigns may use treasury funds for independent expenditures on behalf of state or local candidates. There is no limitation on the amount of money that can be spent nor is there any restriction on the time frame for independent expenditures.

The Michigan Chamber of Commerce has requested the secretary of state provide guidance on how funds spent on independent expenditures should be reported.

In response to Citizens United, several bills were introduced in the legislature to regulate and restrict independent expenditures.

Minnesota

A federal judge declared the state’s restrictions on independent expenditures on behalf of candidates unconstitutional based on the Citizens United decision.

Senate File 80 was signed by the governor on May 13, 2010. The bill modifies the definition of independent expenditure to include some expenditures by party committees.

Montana

State Attorney General Steve Bullock believes it is likely Montana's law is ripe for a legal challenge by corporations. Dennis Unsworth, Montana's Commissioner of Political Practices, agreed with the assessment. Ultimately, a pro-development group and a painting company brought a lawsuit in state court seeking to bring Montana’s law in line with the Supreme Court decision.

New Jersey

Assembly Resolution 64, which expresses strong opposition to the Citizens United decision, has been introduced in the legislature.

New York

Several individual bills have been introduced in the state assembly in reaction to the decision. The bills variously require reporting of independent expenditures or shareholder approval of independent expenditures made by corporations.

North Carolina

North Carolina’s law, similar to the federal law that had barred corporations and unions from using money from general treasuries to produce and run campaign ads to endorse or oppose a candidate, now appears unenforceable, said North Carolina State Board of Elections Executive Director Gary Bartlett.

In response to Citizens United, House Bill 2023 has been introduced. Among other things, the bill requires reporting of all in-kind contributions, provides for reporting of independent expenditures within 48-hours of such expenditure, and repeals bans on corporate and labor union independent expenditures.

North Dakota

The North Dakota Attorney General Wayne Stenehjem appointed an elections laws task force to address the Citizens United decision. The task force will analyze the Court's decision and develop legislation for introduction in the 2011 session to bring the state's campaign contribution limitation laws into compliance with the ruling. The task force also plans to examine North Dakota statutes on campaign advertising disclaimers.

Ohio

Ohio Secretary of State Jennifer Brunner urged state lawmakers to consider and quickly adopt legislation in response to the Citizens United decision. Brunner outlined several proposals designed to ensure transparency and accountability remain the focus of all entities making independent expenditures in line with the court's decision. Brunner

©2010 State and Federal Communications, Inc. www.stateandfed.com

would like to see lawmakers require each corporation, labor organization, PAC, legislative caucus, or political party making independent expenditures to publicly report its independent expenditures within five days of making them. Brunner's other proposals include a ban on independent expenditures by foreign corporations as well as any corporation receiving any state or federal funds issued by Ohio. Brunner also proposed new regulations requiring any advertisements funded by independent expenditures to contain a disclaimer revealing the source of the entity that paid for it. Finally, Brunner would like to see a requirement that independent expenditure-funded advertisements be submitted to and registered with the secretary of state on or before the date of broadcast so the advertisement could be posted to the secretary of state's website.

Senate Bill 240, a legislative response to the Court’s decision, was introduced on March 16, 2010 by State Senator Jon Husted, who is also a candidate for secretary of state. The bill requires corporations and unions to disclose independent expenditures, with the frequency of such disclosures increasing to weekly once the state is within 90 days of an election. The disclosures must identify the source of any contributions received exceeding $5,000 in the aggregate. Finally, the bill bans independent expenditures by foreign corporations and subsidiaries.

Oklahoma

In reaction to the Citizens United decision, the Oklahoma State Ethics Commission promulgated rules to bring the state's ethics rules in compliance. The rules take effect on July 1, 2010. Among other things, the rules eliminate restrictions on the ability of corporations and labor organizations to make independent expenditures.

Pennsylvania

The Pennsylvania Bureau of Commissions, Elections and Legislation issued a statement reacting to the Citizens United decision. In the statement, the bureau found section 1633(a) of the election code could not be administered constitutionally to prohibit a domestic corporation or unincorporated association from making independent expenditures. The other provisions in the section are still enforceable. The bureau also found section 1638(a), requiring disclaimers indentifying who paid for or authorized political advertising, and section 1626(g), relating to reporting by political committees and other persons, constitutional and in full force and effect.

Rhode Island

Senate Resolution 2698 has been introduced in the Rhode Island General Assembly. The resolution expresses the assembly’s discontent with the Citizens United decision and implores the U.S. Congress to strengthen the disclosure of corporate and union election spending.

South Dakota

On March 29, 2010, the governor of South Dakota signed House Bill 1053 into law. The newly enacted legislation, which was made effective immediately, brought South Dakota’s campaign finance law into compliance with the Citizens United decision. Independent expenditures

by business entities are now permitted. However, business entities and persons making such expenditures now have to file reports with the secretary of state disclosing details about the expenditures. Businesses owned by 20 or fewer people or entities must disclose the names and addresses of each of the owners.

Tennessee

House Bill 3182 was introduced in the general assembly. The bill would prohibit corporations domiciled outside Tennessee or not doing business with Tennessee from using funds to aid either in the election or defeat of any candidate for office. The bill is currently awaiting the governor’s signature.

Texas

The Texas Ethics Commission issued a statement regarding the impact of Citizens United. The commission took the position corporations are allowed to make all types of independent expenditures regulated by title 15 of the Texas Election Code. The commission also took the position corporations are still prohibited from making political contributions unless specifically allowed by title 15. The commission has also issued an advisory opinion further emphasizing the Court’s decision had no effect on political advertising disclosure requirements.

West Virginia

On April 1, 2010, the governor of West Virginia signed House Bill 4647 into law. The bill, effective on June 11, 2010, brought West Virginia's campaign finance laws into compliance with the Citizens United decision. The new law allows corporations to make independent expenditures. Previously, West Virginia law had completely banned independent expenditures by corporations. The law will require those entities making expenditures of over $1,000 to file disclosure statements with the secretary of state. Independent expenditures will also be required to include a public notice stating the communication was not authorized by the candidate, and also identify the entity paying for it. West Virginia's ban on direct corporation contributions will continue to remain in place.

Wisconsin

In response to the recent U.S. Supreme Court decision in Citizens United v. Federal Election Commission, the Wisconsin Government Accountability Board promulgated emergency rules. Under the rules, any organization making independent expenditures exceeding $25 in aggregate during a calendar year must register and provide regular reports. Organizations making such expenditures are required to comply with existing reporting requirements and include “Paid for by” and “Not authorized by any candidate or candidate’s agent or committee” disclaimers in any communications.

Wyoming

State lawmakers voted down a proposal eliminating the state's restrictions on independent political spending by corporations, labor unions, and other groups. The defeated measure would have brought Wyoming into compliance with the ruling in Citizens United. Wyoming law as it now stands runs contrary to the court's decision.

The information in this report was current at the date of publication. This document will be continually updated to reflect changes in the status of individual states.

Prepared by

State and Federal Communications, Inc. 80 South Summit Street, Suite 100, Akron, Ohio 44308

330-761-9960 – phone 330-761-9965 – fax