Memo to State Elections Board on Draft Rule

In response to your memorandum dated February 10, 2004 requesting comments regarding a proposed rule to regulate "electioneering communications," the Wisconsin Democracy Campaign ("WDC") submits the following comments and proposed revisions to the draft. Memo to State Elections Board on Draft Rule

from Attorney Lester Pines,Cullen Weston Pines & Bach representing Wisconsin Democracy Campaign

Posted: March 2, 2004

March 1, 2004

HAND-DELIVERED

STATE ELECTIONS BOARD

17 West Main Street, #310
P.O. Box 2973
Madison, WI 53701-2973

Attn: George A. Dunst, Legal Counsel

Dear Mr. Dunst:

WDC commends the State Elections Board’s decision to initiate rule-making to regulate so-called "issue ads." Wisconsin has witnessed a steady growth away from disclosed campaign spending toward unregulated issue ads in state elections. Between 1996 and 2002, spending on unregulated issue ads increased dramatically. By 2002, expenditures on unregulated issue ads outpaced reported independent expenditures by a ratio of 3 to 1. (See chart below .)

Independent Expenditures in Wisconsin State Races

The Board is right to act. Special interests use issue ads to speak anonymously and to spend unaccountably. Voters are entitled to know who is trying to influence whom and how much is being spent to gain that political leverage.

Moreover, when private interests are allowed to conceal the source of money used to pay for issue ads, they then can thumb their noses at Wisconsin’s century-old ban on corporate contributions to election campaigns. Issue ads have reintroduced corporate money into our elections, breeding disrespect for election laws and undermining one of the most important political reforms of the Progressive Era.

Perhaps the most notable example of the corrupting influence of unregulated issue ads in Wisconsin are the allegations of criminal activity made against former Senate Majority Leader Charles J. Chvala. The complaint alleges that Senator Chvala created ostensibly "independent" organizations for corporate donations, and then used the funds collected by these organizations for issue ads favoring Democratic candidates for the Wisconsin State Senate. Other examples of "issue ads" disguised as advocacy for the election or defeat of a candidate can be found at WDC’s website through these hyperlinks:

For 2002, see http://www.wisdc.org/ind2000issueads.html

For 2000, see http://www.wisdc.org/hijackinterests.htm

In sustaining the disclosure requirements for electioneering communications under the Bipartisan Campaign Reform Act of 2002 ("BCRA"), the McConnell Court recognized that the requirements are justified because they provide the electorate with information, deter actual corruption, avoid any appearance thereof, and gather data necessary to enforce more substantive electioneering restrictions. McConnell v. Federal Election Comm'n, 540 U.S. ____, 124 S.Ct. 619, 635 (2003). The Court quoted with approval a lower court’s conclusion that opponents of the disclosure provisions "'ignore[] the competing First Amendment interests of individual citizens seeking to make informed choices in the political marketplace.'" McConnell, at 691, quoting McConnell v. Federal Election Comm'n, 251 F. Supp.2d 176, 237 (D.C. Cir. 2003).

WDC submits that the Board has adequate state law authority to regulate electioneering communications. The Board must not wait until the legislature has acted on this issue. This Board has not hesitated to act in the past to protect the public interest in situations not fully addressed in chapter 11 of the Wisconsin Statutes ("ch. 11"). The Board should engage in emergency rule-making to ensure that rules regulating electioneering communications are in place before the Fall elections.

WDC’s proposed revisions to the Board draft rules with explanations for its suggested changes are enclosed in Appendix A.

1. The Board can and should act.

The legislature has declared that our democratic system of government can be maintained, "only if the electorate is informed." Wis. Stat. § 11.001(1). Absent adequate disclosure, the legislature has recognized that the democratic process is subjected to "a potential corrupting influence." Id. The public has the right "to have a full, complete and readily understandable accounting of those activities intended to influence elections." Wis. Stat. § 11.002. The Elections Board has the authority to adopt rules "for the purpose of interpreting or implementing the laws regulating the conduct of elections or election campaigns or ensuring their proper administration." Wis. Stat. § 5.05(1)(f). For these reasons, and the reasons offered in our memorandum to the Board of January 7, 2004, the Board has adequate state law authority to regulate electioneering communications.

In comments submitted to the Board earlier this year, Messrs. Williamson and Wittenwyler on behalf of a number of organizations suggested that the Board should not act to regulate electioneering communications but should instead wait until the legislature has addressed this issue by statute.

WDC disagrees. This Board has not waited for the legislature to act when action is needed to protect the integrity of the election system or to address matters not specifically addressed by the Board’s enabling statutes.

For instance, in the wake of the Florida recount in the 2000 Presidential election, this Board adopted a resolution directing its staff "to develop and implement a plan to revoke the approval of punch card voting systems for use in the State of Wisconsin effective December 31, 2001." (Elections Board Resolution of November 29, 2000.) Not only was the state legislature not in session when the Board took this action, but the state statutes specifically referenced the use of punch card voting systems. See, e.g., 1997-98 Wis. Stat. § 6.15 (3)(b) (". . . The elector shall mark or punch the ballot . . ."); § 6.24(7) ("[T]he ballot shall be marked or punched . . ."); § 6.875(6) ("[A] relative of the elector . . . may assist the elector in marking or punching the elector’s ballot."). It was not until 2001 Act 16 that the legislature removed from the statutes all references to punch card voting. Thus, in the midst of widespread concern regarding the integrity of the electoral process, the Board did not hesitate to act.

The Board also has adopted numerous rules to address situations not squarely addressed by Wisconsin elections statutes. For instance, the Board adopted Wis. Admin. Code ElBd § 1.39 relating to conversions of a federal campaign committee to a state committee. Likewise, the Board adopted ElBd § 1.32 addressing contributions by partnerships; ElBd § 1.42(5) imposing disclaimer requirements for independent expenditures not addressed by state statute; and ElBd § 1.95 relating to contributions of individuals under the age of 18.

2. Revisions to the proposed draft rule.

WDC’s suggested revisions to the draft rule proposed by Mr. Dunst in his February 10, 2004 memorandum are highlighted in Appendix A.

a. Move the definition of electioneering communication. The definition of electioneering communication should appear in ElBd § 1.28 (1), the already existing subsection of the rule used for definitions, consistent with Legislative Council Clearinghouse directions for rule drafting. Revisor of Statutes Bureau and the Legislative Council Rules Clearinghouse Administrative Rules Procedures Manual § 1.01(7)(a) (October 2002).

b. Define "committee." WDC recommends that the rule define "committee" to ensure clarity as to the revised rule’s scope. It is important that potentially affected persons receive unambiguous notice as to whether they might be construed as a committee for purposes of this section.

c. Limit the term electioneering communications to broadcast and direct mail communications. To avoid a constitutional challenge, it is important to limit the regulation of electioneering communications only to those communications that are made through a medium intended to be used for circulation or distribution.

WDC has defined those media to include broadcast, cable and satellite, consistent with the BCRA. See BCRA sec. 201; 2 U.SC. § 434 (f)(3)(A)(i). As the McConnell Court stated, the Congressional record which served as the foundation of that Act adequately demonstrated that "corporations and unions used soft money to finance a virtual torrent of televised election-related ads during the periods immediately preceding federal elections, and that remedial legislation was needed to stanch that flow of money." McConnell, at 697. Such activity is occurring in Wisconsin with an equally pernicious effect.

That definition should be expanded to include one other form of electioneering communication not addressed by the BCRA: direct mail communications. This Board should not hesitate to address direct mail pieces. Like broadcast communications, they have become a tool to skirt the disclosure requirements of ch. 11. The following hyperlinks demonstrate that direct mail is used in Wisconsin to convey electioneering communications:

http://www.thevalkyriegroup.com/LASSAJUMPSCOVER.html

http://www.thevalkyriegroup.com/peggs-2.html

http://www.thevalkyriegroup.com/clausing.html

WDC reserves the right to submit more examples in the course of this rule-making proceeding.

d. Exemptions for 501(c)(3) and (c)(4) organizations. To avoid constitutional challenges, the rule addressing electioneering communications should exempt communications made by 501(c)(3) and (c)(4) organizations consistent with the U.S. Supreme Court’s ruling in Federal Elections Commission v. Massachusetts Citizens for Life, Inc. FEC v. Massachusetts Citizens for Life, 479 U.S. 238, 263-264, 107 S.Ct. 616, 630-631 (1986) ("MCFL"). The standards articulated in the attached proposed revisions to the rule are those articulated by the Court in that decision. See McConnell, at 636, citing MCFL, at 264. In addition, the exemption for 501(c)(3) organizations is needed to prevent publications such as the League of Women Voters’ "Candidate Answers" voter guide from being treated as an electioneering communication that is subject to chapter 11 regulation.

e. "Political purpose." The rule should explicitly provide that electioneering communications are made for a political purpose. This will ensure, for instance, that corporations cannot disburse funds for electioneering communications, and provide clarity that contributions and disbursements made for electioneering communications are subject to the reporting requirements of ch. 11.

3. Emergency rules.

The pace of unregulated issue ad spending is accelerating. If present trends continue, unregulated issue ad spending could exceed regulated independent expenditures by a 5 to 1 ratio for state elections this fall.

The Board may issue emergency rules "if preservation of the public peace, health, safety or welfare necessitates putting the rule into effect prior to the time it would take effect if the agency complied" with permanent rule-making procedures. Wis. Stat. § 227.24(1)(a). Rules regulating electioneering communications must be in place prior to primary and general elections for state legislative offices this fall. Wisconsin’s primary election is scheduled for September 14, 2004. This would mean that rules regulating electioneering communications must be in place at least 30 days prior to this date.

It is difficult to imagine that the Board could put in place permanent rules by that date.  Once the Board decides on an initial form of the draft, it must also prepare an analysis of the rule addressing its authority to issue the rule, providing a summary, comparing its rule to similar rules adopted in adjacent states, summarizing the factual data and analytical methodologies that the Board used in support of the proposed rule and how any related findings support the regulatory approach chosen for the proposed rule. 2003 Wis. Act 118, §§ 161-167. The Board must then submit the draft rule to Legislative Council staff who will then have up to 40 days in order to review the proposed rule for form, style, to avoid conflict with other rules, grammar, etc. Wis. Stat. § 227.15(2). Subsequently, the Board will be required to hold a public hearing, and to give at least 10 days notice prior to that hearing. Wis. Stat. §§ 227.16 and 227.17. Once the proposed draft rule is in final form, the agency must submit the rule for legislative review, and include with the rule a detailed statement explaining the basis and purpose of the proposed rule, including how the proposed rule advances relevant statutory goals and purposes and a summary of public comments to the proposed rule and the agency’s response to those comments. 2003 Wis. Act 118, §§ 168-169. Moreover, each standing committee of the legislature has at least 30 days to review the rule before it can go into effect subsequent to publication. If the legislature receives the notice on or after September 1, 2004, the notice will be considered received on the first day of the next regular session of the legislature and the proposed rule will be held in abeyance during that time. Wis. Stat. § 227.19(2).

Obviously, given those steps, it would be difficult to promulgate permanent rules regulating electioneering communications prior to the fall election. To protect the public welfare, the Board should issue both emergency and permanent rules.

4. Conclusion.

The Wisconsin Democracy Campaign would be pleased to meet and confer with you concerning your draft and our suggestions.

Very truly yours,

 CULLEN WESTON PINES & BACH LLP

Lester A. Pines
Attorney for Wisconsin Democracy Campaign

Enclosures

cc: Michael McCabe (w/Enclosures)