II 111th CONGRESS 2d Session S. 3295 IN THE SENATE OF THE UNITED STATES April 30, 2010 Mr. Schumer (for himself, Mr. Feingold, Mr. Wyden, Mr. Bayh, Mr. Franken, Mr. Durbin, Mrs. Murray, Mr. Leahy, Mr. Bennet, Mr. Brown of Ohio, Mr. Reed, Mr. Whitehouse, Mr. Specter, Mr. Merkley, Ms. Klobuchar, Mr. Kaufman, Mr. Udall of Colorado, Mr. Bingaman, Mrs. Gillibrand, Mr. Casey, Mr. Begich, Ms. Mikulski, Mr. Sanders, Mr. Harkin, Mr. Rockefeller, Mrs. McCaskill, Mr. Menendez, Mrs. Shaheen, Mr. Lautenberg, Mrs. Feinstein, Mr. Tester, Mr. Baucus, Mr. Conrad, Mrs. Boxer, Mr. Akaka, Mr. Nelson of Florida, Mr. Levin, and Mr. Burris) introduced the following bill; which was read twice and referred to the Committee on Rules and Administration A BILL To amend the Federal Election Campaign Act of 1971 to prohibit foreign influence in Federal elections, to prohibit government contractors from making expenditures with respect to such elections, and to establish additional disclosure requirements with respect to spending in such elections, and for other purposes.

1.

Short title; table of contents

(a)

Short title

This Act may be cited as the Democracy Is Strengthened by Casting Light On Spending in Elections Act or the DISCLOSE Act. (b)

Table of contents

The table of contents of this Act is as follows: Sec. 1. Short title; table of contents. Sec. 2. Findings. TITLE I—Regulation of Certain Political Spending Sec. 101. Prohibiting independent expenditures and electioneering communications by government contractors. Sec. 102. Application of ban on contributions and expenditures by foreign nationals to foreign-controlled domestic corporations. Sec. 103. Treatment of payments for coordinated communications as contributions. Sec. 104. Treatment of political party communications made on behalf of candidates. TITLE II—Promoting Effective Disclosure of Campaign-Related Activity Subtitle A—Treatment of Independent Expenditures and Electioneering Communications Made by All Persons Sec. 201. Independent expenditures. Sec. 202. Electioneering communications. Subtitle B—Expanded Requirements for Corporations and Other Organizations Sec. 211. Additional information required to be included in reports on disbursements by covered organizations. Sec. 212. Rules regarding use of general treasury funds by covered organizations for campaign-related activity. Sec. 213. Optional use of separate account by covered organizations for campaign-related activity. Sec. 214. Modification of rules relating to disclaimer statements required for certain communications. Subtitle C—Reporting Requirements for Registered Lobbyists Sec. 221. Requiring registered lobbyists to report information on independent expenditures and electioneering communications. Subtitle D—Filing by Senate Candidates With Commission Sec. 231. Filing by Senate candidates with Commission. TITLE III—Disclosure by Covered Organizations of Information on Campaign-Related Activity Sec. 301. Requiring disclosure by covered organizations of information on campaign-related activity. TITLE IV—Television Media Rates Sec. 401. Television media rates. TITLE V—Other Provisions Sec. 501. Judicial review. Sec. 502. Severability. Sec. 503. Effective date.

2.

Findings

(a)

General Findings

Congress finds and declares as follows: (1)Throughout the history of the United States, the American people have been rightly concerned about the power of special interests to control our democratic processes. That was true over 100 years ago when Congress first enacted legislation intended to restrict corporate funds from being used in Federal elections, legislation that Congress in 1947 reaffirmed was intended to include independent expenditures. The Supreme Court held such legislation to be constitutional in 1990 in Austin v. Michigan Chamber of Commerce (494 U.S. 652) and again in 2003 in McConnell v. F.E.C. (540 U.S. 93). (2)The Supreme Court’s decision in Citizens United v. Federal Election Commission on January 21, 2010, reverses established jurisprudence and sound policy to greatly increase the dangers of undue special interest influence over the democratic process. That decision has opened the floodgates for corporations and labor unions to spend unlimited sums from their general treasury accounts to influence the outcome of elections. (3)Congress must take action to ensure that the American public has all the information necessary to exercise its free speech and voting rights, and must otherwise take narrowly tailored steps to regulate independent expenditures and electioneering communications in elections. (b)

Findings Relating to Government Contractors

Congress finds and declares as follows: (1)Government contracting is an activity that is particularly susceptible to improper influence, and to the appearance of improper influence. Government contracts must be awarded based on an objective evaluation of how well bidders or potential contractors meet relevant statutory criteria. (2)Independent expenditures and electioneering communications that benefit particular candidates or elected officials or disfavor their opponents can lead to apparent and actual ingratiation, access, influence, and quid pro quo arrangements. Government contracts should be awarded based on an objective application of statutory criteria, not based on other forms of inappropriate or corrupting influence. (3)Prohibiting independent expenditures and electioneering communications by persons negotiating for or performing government contracts will prevent government officials involved in or with influence over the contracting process from influencing the contracting process based, consciously or otherwise, on this kind of inappropriate or corrupting influence. (4)Prohibiting independent expenditures and electioneering communications by persons negotiating for or performing government contracts will likewise prevent such persons from feeling pressure, whether actually exerted by government officials or not, to make expenditures and to fund communications in order to maximize their chances of receiving contracts, or to match similar expenditures and communications made by their competitors. (5)Furthermore, because government contracts often involve large amounts of public money, it is critical that the public perceive that the government contracts are awarded strictly in accordance with prescribed statutory standards, and not based on other forms of inappropriate or corrupting influence. The public’s confidence in government is undermined when corporations that make significant expenditures during Federal election campaigns later receive government funds. (6)Prohibiting independent expenditures and electioneering communications by persons negotiating for or performing government contracts will prevent any appearance that government contracts were awarded based in whole or in part on such expenditures or communications, or based on the inappropriate or corrupting influence such expenditures and communications can create and appear to create. (7)In these ways, prohibiting independent expenditures and electioneering communications by persons negotiating for or performing government contracts will protect the actual and perceived integrity of the government contracting process. (8)Moreover, the risks of waste, fraud and abuse, all resulting in economic losses to taxpayers, are significant when would-be public contractors or applicants for public funds make expenditures in Federal election campaigns in order to affect electoral outcomes. (c)

Findings Relating to Foreign Corporations

Congress finds and declares as follows: (1)The Supreme Court’s decision in the Citizens United case has provided the means by which United States corporations controlled by foreign entities can freely spend money to influence United States elections. (2)Foreign corporations commonly own U.S. corporations in whole or in part, and U.S. corporate equity and debt are also held by foreign individuals, sovereign wealth funds, and even foreign nations at levels which permit effective control over those U.S. entities. (3)As recognized in many areas of the law, foreign ownership interests and influences are exerted in a perceptible way even when the entity is not majority-foreign-owned. (4)The Federal Government has broad constitutional power to protect American interests and sovereignty from foreign interference and intrusion. (5)Congress has a clear interest in minimizing foreign intervention, and the perception of foreign intervention, in United States elections. (d)

Findings Relating to Coordinated Expenditures

Congress finds and declares as follows: (1)It has been the consistent view of Congress and the courts that coordinated expenditures in campaigns for election are no different in nature from contributions. (2)Existing rules still allow donors to evade contribution limits by making campaign expenditures which, while technically qualifying as independent expenditures under law, are for all relevant purposes coordinated with candidates and political parties and thus raise the potential for corruption or the appearance of corruption. (3)Such arrangements have the potential to give rise to the reality or appearance of corruption to the same degree that direct contributions to a candidate may give rise to the reality or appearance of corruption. Moreover, expenditures which are in fact made in coordination with a candidate or political party have the potential to lessen the public’s trust and faith in the rules and the integrity of the electoral process. (4)The government therefore has a compelling interest in making sure that expenditures that are de facto coordinated with a candidate are treated as such to prevent corruption, the appearance of corruption, or the perception that some participants are circumventing the laws and regulations which govern the financing of election campaigns. (e)

Findings Relating to Disclosures and Disclaimers

Congress finds and declares as follows: (1)The American people have a compelling interest in knowing who is funding independent expenditures and electioneering communications to influence Federal elections, and the government has a compelling interest in providing the public with that information. Effective disclaimers and prompt disclosure of expenditures, and the disclosure of the funding sources for these expenditures, can provide shareholders, voters, and citizens with the information needed to evaluate the actions by special interests seeking influence over the democratic process. Transparency promotes accountability, increases the fund of information available to the public concerning the support given to candidates by special interests, sheds the light of publicity on political spending, and encourages the leaders of organizations to act only upon legitimate organizational purposes. (2)Protecting this compelling interest has become particularly important to address the anticipated increase in special interest spending on election-related communications which will result from the Supreme Court’s decision in the Citizens United case. The current disclosure and disclaimer requirements were designed for a campaign finance system in which such expenditures were subject to prohibitions that no longer apply. (3)More rigorous disclosure and disclaimer requirements are necessary to protect against the evasion of current rules. Organizations that engage in election-related communications have used a variety of methods to attempt to obscure their sponsorship of communications from the general public. Robust disclosure and disclaimer requirements are necessary to ensure that the electorate is informed about who is paying for particular election-related communications, and so that the shareholders and members of these organizations are aware of their organizations’ election-related spending. (4)The current lack of accountability and transparency allow special interest political spending to serve as a private benefit for the officials of special interest organizations, to the detriment of the organizations and their shareholders and members. (f)

Findings Relating to Campaign Spending by Lobbyists

Congress finds and declares as follows: (1)Lobbyists and lobbying organizations, and through them, their clients, influence the public decision-making process in a variety of ways. (2)In recent years, scandals involving undue lobbyist influence have lowered public trust in government and jeopardized the willingness of voters to take part in democratic governance. (3)One way in which lobbyists may unduly influence Federal officials is through their or their clients making independent expenditures or electioneering communications targeting elected officials. (4)Disclosure of such independent expenditures and electioneering communications will allow the public to examine connections between such spending and official actions, and will therefore limit the ability of lobbyists to exert an undue influence on elected officials. (g)

Findings relating to lowest unit charge

Congress finds and declares as follows: (1)The purpose of the First Amendment is to ensure a robust marketplace of ideas. The government has a compelling interest in ensuring that Americans have access to this robust marketplace of ideas through the variety of media supported by the government. (2)In recent years, the cost of political communication has been artificially inflated as candidates, parties, interest groups, and commercial advertisers compete for a dwindling supply of airtime in the periods before elections. Candidates for Federal election are currently forced to pay higher premiums for nonpreemptible advertisement time so as not to be replaced by commercial advertisements in such periods. (3)The high cost of advertising for Federal candidates and their political parties makes it less likely that Americans will receive information necessary to engage fully in the electoral process and hear directly from all participants. The high cost of advertising for Federal candidates and political parties also drives the demand for large, potentially corrupting contributions to Federal election campaigns and forces elected officials to spend more time raising money and less time performing their official responsibilities. (4)Lower advertising costs enhance the ability of candidates to present and the public to receive information necessary for the effective operation of the democratic process. Lower advertising costs reduce the potential for corrupting contributions to Federal election campaigns. Lower advertising costs allow elected officials to spend more time serving the public interest instead of raising funds to pay for campaign advertisements.