The Lasting Impact of Citizens United on State Law

Publish:  Feb 04, 2013


by Erin Burger-Gohl

 

In January, 2010, the US Supreme Court ruled on the landmark Citizens United v. Federal Election Commission case which overturned campaign finance laws restricting the influence of organizations on elections. By ruling in favor of Citizens United, the Supreme Court struck down federal campaign finance regulations that prohibited corporations, unions and non-profits from funding “electioneering communications,” while upholding disclosure and disclaimer requirements. The Court did not rule on federal bans on direct contributions from corporations and unions to political parties or candidate campaigns. The ruling immediately opened federal campaigns across the nation to unlimited spending by these outside organizations. While the Citizens United ruling does not directly affect existing state laws, the National Conference of State Legislatures reported that 24 states have existing laws that limit corporate and union spending in statewide campaigns. These laws range from outright bans on corporate spending to limitations on how corporate money can be used in a campaign. Most states responded to the Citizens United ruling by repealing existing independent expenditure bans and extended existing disclosure and disclaimer requirements either through legislative action or a ruling by the Attorney General, Secretary of State, Elections Board, or Ethics Commission. However, several states either attempted to stand up to the ruling or took preventative measures to crack down on dark money before spending grew out of control.

Alabama law prohibited corporations from making political contributions or expenditures unless the funds came from a separate voluntary political fund. Corporations were also prohibited from giving directly to a PAC. The Alabama legislature repealed this ban effective January 2011. Current law requires independent expenditures over $1,000 to be reported within 120 days of an election with weekly filings for the last month. Political ads must disclose the name and address of the party funding the ad. (§10-2A-70; 10-2A-70.1; §17-5-2)

Alaska prohibited corporations and unions from making independent expenditures supporting or opposing a candidate. Only individuals and registered groups and non-group entities were allowed to make expenditures. In 2010, the Alaska legislature amended existing campaign finance law to repeal the corporate and union bans and expand disclosure requirements. New Alaska law requires print, radio and television independent expenditures to disclose the top three donors by name and address and prohibits independent expenditures from making defamatory statements about candidates. All independent expenditures must be reported within 10 days, except expenditures over $250 within the last nine days leading up to Election Day must be reported within 24 hours. Electioneering communications must disclose the name and address of group as well as name and title of the group’s principal officer. (§15.13.067, 15.13.135; SB 284)

Arizona law prohibited any business, LLC, or labor corporation from making political contributions or giving anything of value for the purpose of influencing elections. However, the Arizona law outlined  “permitted expenditures” by corporations and unions that would not be considered political contributions. This list included persuasion, fundraising, and GOTV efforts aimed at stockholders, employees and union members. Advertising and efforts to reach the general public were not originally allowable expenditures, but in 2010, Arizona revised their law, allowing corporations and unions to make independent expenditures and establishing disclosure requirements. Corporations and unions must report independent expenditures over $5,000 in statewide or state legislative offices, or over $1,000 in county, city or other local races within 24 hours. All ads must include a disclaimer identifying the name of organization funding the ad. Disclaimers do not need to be spoken as long as the written disclaimer appears for at least 10 seconds for a 60 second ad, 5 seconds for a 30 second ad, and text accounts for at least 4% picture height. (Const. Art. 14, §18; §16-920; 2010 HB2788)

Colorado’s Constitution banned corporations and labor organizations from making direct contributions to candidates and political parties and from making independent expenditures supporting or opposing candidates, unless they created a PAC that was funded by contributions or dues from employees, officeholders, shareholders, or members (Const. Art. XXVIII, §3(4)). Unions and corporations were also prohibited from funding electioneering communications except via their established political committees (Const. Art. XXVIII, §6(2)). On March 22, 2010, the Colorado Supreme Court ruled that the bans on corporate and labor union independent expenditures and electioneering communications violated the First Amendment and were unconstitutional. In response to the ruling, the Colorado legislature repealed the corporate and union spending ban. New legislation created a disclosure system for independent expenditures which required organizations expending over $1,000 per calendar year, or receiving more than $1,000 in donations for the purpose of independent expenditures, to register with the state and file regular reports disclosing expenditures. Colorado revised law (§1-45-107.5) specified that independent expenditure organizations that meet the disclosure threshold must also disclose the identities of any donors giving $250 or more. During the 30 days before a primary or general election, independent expenditures must disclose any expenditure of more than $1,000 to the Secretary of State within 48 hours. All electioneering communication of at least $1,000 made within 30 days of a primary and 60 days of a general election must be reported in disclosure filings. Broadcast and print IEs must identify the organization that funded the communication as well as a natural person who is a representative of the group (Const. Art. XXVIII, §3(4); Const. Art. XXVIII, §6(2); §1-45-107.5)

Connecticut campaign finance laws prohibited businesses from making direct contributions or expenditures in support or opposition of a candidate (§9-613), but allowed them to do so through established political committees. In 2010, the Connecticut legislature passed HB 5471 expanding disclosure requirements to include corporations and putting in place some of the most strict disclosure requirements for IE’s in the country. Independent expenditures made over 90 days before an election must be reported within 48 hours and those within 90 days of an election must be reported within 24 hours (expanded from 20 days). Broadcast ads funded by corporations must include a four second message from the CEO saying “I am responsible for this ad…” Groups organized as 527’s must list their top five donors over the past year in ads (except radio ads less than 30 seconds). Groups organized as 527’s must list their top five donors over the past year in the ad (except radio ads less than 30 seconds). (§9-613; HB 5471)

Iowa law prohibited all corporations (specifically insurance companies, savings and loan associations, banks, and credit unions) from making any contribution or expenditure to directly or indirectly electing or defeating a candidate for office (§68A.503). In 2010, the Iowa legislature passed SF 2354 which amended existing campaign finance law to repeal the corporate spending ban and replace it with a requirement that corporate spending must be approved by the company’s board of directors. Additionally, corporations must file as a political committee in order to spend over $750 in support or opposition of a candidate. The Iowa law also prohibited independent expenditures from hiring advertising firms working with a candidate, candidate committee, or ballot measure committee that is benefitting from the expenditure. All print, TV and radio expenditures must include “paid for by…” disclaimers as well as name and title of the corporation’s CEO. If a committee funded an advertisement, only the name of the committee must appear in the expenditure. In December 2011, the Iowa Supreme Court upheld the new legislation. (§68A.503; SF 2354)

Kentucky campaign finance law prohibited for-profit corporations from making political contributions or independent expenditures. (§121.035) The corporate ban was declared invalid by the Kentucky Registry of Election Finance, but the state legislature has yet to repeal the measure. The KREF ruling not only effectively repealed the corporate independent expenditure ban, but also expanded existing disclosure requirements to corporations. Kentucky requires disclosure for $500 of independent expenditures during any one election. The sponsor name must be listed in any communication. (§121.035; §121.150; §121.190)

Massachusetts campaign finance law included a broad corporate contribution and expenditure ban that applied to all corporations incorporated under state law and specifically listed financial institutions, utility companies, any company with the right to use eminent domain, and companies in contract with state or local government, while unions and associations were allowed to make independent expenditures. In response to Citizens United, the Office of Campaign and Political Finance Issued statement repealing the corporate ban. Additionally, the Massachusetts legislature worked to pass the Disclosure Act which would extend existing independent expenditure disclosure and sponsor disclaimer requirements to corporations. All independent expenditures over $250 must be reported within 7 business days, except within 10 days of the election which must be filed within 24 hours. Electioneering communications must be disclosed within the 90 days preceding the election if they are over $250. Ads on radio, TV, or the internet must identify the individual sponsor name or CEO and that they paid for the ad. (Ch. 55 §8)

Michigan law prohibited corporations and labor unions from making political contributions, independent expenditures, and providing volunteer personal services. The Michigan state legislature has yet to repeal its corporate spending ban, however the Secretary of State issued a ruling invalidating the corporate spending ban and applying existing disclosure requirements to corporate independent expenditures. Additionally, the Secretary of State authorized corporations and labor unions to make contributions to independent political committees. Michigan already required all independent expenditures over $100 to be disclosed with in ten days. All expenditures over $500 must be disclosed and the sponsoring group must register with the state. (§169.254; §169.251)

Minnesota campaign finance law prohibited both for- and non-profit corporations and LLC’s from making political contributions and independent expenditures for both candidate and ballot initiative campaigns.  In response to the Citizens United ruling, the Minnesota legislature repealed the state independent expenditure ban and applied disclosure requirements to all corporate activity. Any individual or group that makes independent expenditures over $100 must register as a PAC with the state, report activity to the state within 24 hours, and send a copy of activity to the affected candidate. Ads must identify their source of funding. Minnesota Citizens Concerned for Life, the Taxpayer League of Minnesota, and Coastal Travel Enterprises sued the state of Minnesota over campaign finance laws that prohibited direct corporate contributions to candidates and coordinated groups by requiring corporations to give through registered PACs subject to intensive disclosure requirements. In May 2012, the US Court of Appeals for the Eighth Circuit upheld the Minnesota law, ruling that while Minnesota did not expressly ban corporate independent expenditures, the law “created a statutory scheme” that required disclosure that was no greater burden on corporations than the disclosure law in Citizens United. In September 2012, The US Court of Appeals for the Eighth Circuit reversed its earlier decision that upheld Minnesota’s requirement that organizations wishing to make political expenditures register as a political committee with the state and regularly submit disclosure reports. The court found, “under Minnesota’s regulatory regime, an association is compelled to decide whether exercising its constitutional right is worth the time and expense of entering a long-term morass of regulatory red tape. (§221B.15(3))

Montana’s Corrupt Practices Act banned corporations from making political expenditures from their general treasuries. The Corrupt Practices Act dated back to 1912, when it was passed by ballot initiative as an effort to quell political corruption caused by owners of copper mining companies. Under the law, corporations were allowed to make campaign contributions, but only from shareholders, employees, or officers, and must be made through a related PAC. As described Montana Attorney General Steve Bullock, “For more than a century, anyone has been able to participate in Montana elections – even out-of-state corporate executives. All we required is that they used their own money, not that of their stockholders, and they disclosed who they are.” Additionally, state campaign finance laws severely limited individual and PAC contributions to state and municipal candidates, maxing out at $500 for gubernatorial candidates. Campaign finance limits for political parties giving to candidates was limited to $18,000 for governor/lieutenant governor tickets. In 2011, a group of Republican businesses, businessmen, and PACs (Montana Right to Life Association PAC, the American Tradition Partnership PAC, and 2 county Republican Central Committees) sued Montana claiming the state’s campaign funding caps restricted their right to free speech as defined in the Supreme Court Citizens United ruling. The Montana Supreme Court ruled in December 2011 to uphold the 1912 campaign finance law. In February 2012, the US Supreme Court struck down the Montana Supreme Court decision which upheld the state’s limits on corporate political spending. The US Supreme court doubled down on their earlier ruling in June 2012.  In October 2012, Montana’s contribution limit came before US District Judge Charles Lovell in Helena who struck down the contribution limits under the basis that the limits were too low. Six days after Lovell’s ruling, the Ninth US Circuit Court of Appeals reversed his decision and reinstated Montana’s donation limits. However, during the six day period in which Montana’s campaign finance limits were repealed, the Montana Republican Party donated $500,000 to GOP gubernatorial candidate Rick Hill and gave large donations to other state candidates. After the Ninth Circuit Court’s ruling, anti-campaign finance activist James Bopp filed a request with the US Supreme Court to prevent the lower court’s ruling from taking effect. The Supreme Court refused to hear the appeal, leaving the state’s contribution limits in place. (§13-35-227)

While New York law was not directly impacted by the Citizens United ruling, New York Attorney General Erick Schneiderman responded to the ruling by announcing new rules to expose dark money groups. While New York already required non-profits that raise or spend $25,000 in New York to register with the Attorney General’s office, Schneiderman’s rules required registered non-profits to annually report the percentage of their spending that went to federal, state, and local electioneering. Non-profits that spent over $10,000 in electioneering would be required to submit itemized reports—including donors over $100. In August 2012, Schneiderman requested 24 dark money groups including Crossroads GPS, American Action Network, American Future Fund, Priorities USA Action, Patriot Majority and American Votes to release tax returns and other financial documents.

North Carolina law prohibited corporations, insurance companies, labor unions and professional associations from making any independent expenditure unless the expenditure came from a separate bank account that consisted of funds provided by non-prohibited entities (§163-278.82; §163-278.80(4); §163-278.19(a)(1)). In response to Citizens United, North Carolina passed legislation that removed the existing corporate expenditure ban and clarified reporting and disclaimer requirements. Independent expenditures over $100 must be reported within 30 days or by 10 days before the election. Independent expenditures over $5,000 must be reported within 48 hours. Donations to independent expenditure committees over $1,000 must be reported in regular reports or within 48 hours in the run up to the election. Print ads must disclose the name of the sponsor as well as the individuals or groups that made the five largest donations within the six months prior to the purchase of the ad. TV ads must feature the CEO or other principle leader naming the group that sponsored the ad as well as information as to where to find the group’s donor information. (§163-278.82; §163-278.80(4); §163-278.19(a)(1); § 163-278.12; HB 748)

Ohio law prohibits corporations, non-profits and unions from directly or indirectly using organization money or property to support or oppose a political party, candidate, PAC, legislative campaign fund, or any organization that supports or opposes political campaigns.  State law also prohibits unions and corporations from funding ads during the 30 days running up to a primary or general election that refer to a specific candidate.  While the Ohio legislature did not repeal the corporate independent expenditure ban, the Secretary of State’s office issued a ruling that lifted the ban and established disclosure requirements for corporations. Additionally, the Secretary of State ruling required ads to include a disclaimer that identified an officer or CEO of the corporation and that corporation’s address and website information. (§3599.03; §3517.1011(H))

Oklahoma banned corporations and unions from contributing directly to a candidate campaign or political committee and from making an independent expenditure to or for the benefit of a candidate or committee. Although the state legislature has yet to amend regulations, after Citizens United, the Oklahoma Ethics Commission repealed the ban on corporate independent expenditures and extended all disclosure requirements to corporations. Oklahoma law requires disclosure of all independent expenditures over $500, with late expenditures required to be reported within 24 hours. (Tit. 74, Ch. 62, §257:10-1-2(d)(2); Tit. 74. Ch. 62, §257:10-1-16)

Pennsylvania law banned corporations and unincorporated associations from making any political contribution or expenditure in support or opposition of a candidate (Pennsylvania Election code section 1633(a)). Corporate donations and independent expenditures for ballot initiatives were allowed. However, entities that were banned from making political contributions and expenditures were allowed to establish Political Action Committees in order to make political expenditures. Rather than repeal existing corporate bans, Pennsylvania issued administrative regulations through the Department of State interpreting the effect of Citizens United on existing law. The State Department ruled that the language banning independent expenditures from corporations and unincorporated associations was invalid, but language prohibiting direct campaign contributions from corporations, activity from foreign groups, and coordinated expenditures from outside groups remained in effect. The ruling also upheld disclaimer and disclosure requirements for independent expenditures. All independent activity must include a disclaimer identifying the name of the person or group funding the activity. Non-PAC entities making independent expenditures over $100 during a calendar year must regularly report all activity. PACs must disclose all activity. All independent expenditures over $500 within the last two weeks before an election must be reported within 24 hours. (Section 1633 25 P.S. §3253)

Rhode Island banned all corporations, both domestic and foreign and both for-profit and non-profit, from making any campaign contribution or expenditure to or for any candidate, PAC or party committee. To fall into compliance with Citizens United, Rhode Island’s Board of Elections issued a regulation allowing corporations to make independent expenditures and extending existing disclosure laws to corporations, while maintaining existing disclaimer and disclosure provisions. Rhode Island requires anyone making independent expenditures of $100 or more in a calendar year to file disclosure reports within one week of the expenditure. All electioneering communications must be reported along with the names of the funding source and anyone who shared in or exercised direction or control over the person responsible for the activity. All outside TV ads must include a visual disclaimer displaying the name and address of the person or group responsible for the ad, as well as an audible disclaimer with the same information. (§17-25-10.1(h))

South Dakota banned any organization from making a contribution to a candidate, committee, or party and from making independent expenditures in support or opposition of any candidate. In 2010, the state legislature lifted the ban on contributions and expenditures and established disclosure requirements. South Dakota requires ads to include “paid for by” disclosures listing the funding source and their address or website. Any person or group that spends over $2,000 on independent expenditures during any calendar year must file with the secretary of state within 48 hours of reaching the $2,000 mark. All further expenditures must be reported within 48 hours. In addition to standard disclaimers, independent expenditures must list the names of anyone who owns or controls more than 10% of the organization if there are 20 people or less in charge of the organization. (§12-27-18; §12-27-1(16); HB 1053)

Until 2010, Tennessee banned any corporation doing business with the state from using any company money to support or oppose any state, federal or local candidate. In 2010, Tennessee lifted its ban on corporate expenditures and in 2011, lifted its ban on corporate donations to candidates. Tennessee requires quarterly reporting of independent expenditure. (§2-19-132(a); §2-10-132; §2-10-105(c)1)

Texas campaign finance law prohibited corporations and labor unions from making political contributions or political expenditures. In November 2010, the Texas Ethics Commission published a response to the Citizens United decision outlining their opinion that the intention of the Texas Legislature was to prohibit political activity by corporations “to the full extent allowed by the United States Constitution.” The Ethics Commission went on to interpret the Citizens United ruling to mean that corporations and labor organizations were allowed to make direct campaign expenditures but that the state’s law against corporate and union political contributions was upheld. Additionally, the Ethics Commission ruled that these entities must follow disclosure requirements for direct campaign expenditures. Finally in June 2011, the Texas legislature enshrined the changes in campaign finance law. Texas requires reporting of independent expenditures over $100. (§253.094; HB2359)

West Virginia law prevented corporations from contributing “anything of value to a corporation” to “any candidate financial agent or political committee” and also prohibited the solicitation of corporate contributions with a penalty of up to $10,000. Lawmakers revised the statute after the Citizens United ruling in 2010 to allow corporate contributions to a political action committee, while still banning corporate contributions to a candidate or candidate’s campaign and continuing to prohibit solicitation of corporate contributions. Stay the Course West Virginia sued in May 2012 over state campaign contribution limits and regulations preventing corporate spending as laid out in the Secretary of State’s handbook for candidates. The Secretary of State agreed with the group saying the corporate policy was outdated and invalid according to regulations that were revised in response to Citizens United. In addition to challenging the handbook’s policy on corporate expenditures, Stay the Course also challenged the $1,000 campaign finance limit for non-federal candidates in West Virginia. Stay the Course was filed as a PAC with the Secretary of State and as a 527 with the IRS and sued on behalf of two donors who wanted to give more than $1,000 to the group. In August, a federal judge ruled in favor of Stay the Course, granting a preliminary injunction on state campaign finance limits to independent expenditure groups, pending the close of the suit. (§3-8-8; HB 4647)

Wisconsin statute banned corporations and associations from making political donations or independent expenditures, except for ballot initiative campaigns. In reaction to the Citizens United ruling, the Wisconsin Attorney General issued a formal opinion invalidating the state’s independent expenditure ban and extending disclosure limits to corporate spending. The Attorney General ruling also required all independent expenditures over $25 to disclose the source of funding and include a disclosure naming the source. Additionally, all independent expenditures over $20 made within the last 15 days of a campaign must be reported within 24 hours. Electioneering communication must be reported within 30 days before the primary and 60 days before the general election. (§11.38)

 

DISCLAIMER: The research presented above is for informational purposes only and should not be considered legal advice.  Please seek specific guidance from your lawyer(s) regarding how these changes may impact your state or organization.