{{ AFP National Site
s

Testimony of Corey R. Lewandowski on SB 120

February 13, 2013

TESTIMONY OF COREY R. LEWANDOWSKI

STATE DIRECTOR OF AMERICANS FOR PROSPERITY

BEFORE THE SENATE PUBLIC AND MUNICIPAL AFFAIRS COMMITTEE

FEBRUARY 13, 2013

Mr. Chairman, members of the Committee, my name is Corey Lewandowski and I am the State Director of Americans for Prosperity in New Hampshire.  I am here today to express my opposition to SB 120, an act relative to political contributions and expenditures and relative to reporting by political committees.

The need for anonymity for those who may be critical of the government is older than our country itself.  Thomas Paine’s influential “Common Sense” was initially published as being written by an “Englishman.” Other Founding Fathers used pseudonyms or anonymous free speech in writing the Federalist Papers.  More recently, many individuals who were blacklisted during the McCarthy era used pseudonyms to continue working.  Generation after generation of Americans have held tightly to the belief that free speech and free association is integral to a free society.

Citizens must be free to criticize and question those elected to represent them without fear of repercussions.  For this reason, obscurity must be granted and guaranteed.  While I understand that this bill provides an exemption from donor disclosure requirements for corporations that have a tax exempt status under section 501(c) (4), 501 (c) (5) or 501 (c) (6), we at AFP-NH believe that once we tread upon the freedom of one group, it is only a matter of time until our own freedom is eroded.  An assault on some free speech is an assault on all free speech.  More importantly, once elected, officials should not use their position to guarantee their incumbency by limiting the free speech of those with whom they disagree.

The U.S. Supreme Court held in Citizens United vs. FEC that political spending is a form of protected free speech.  As such, we assert donors deserve protection in order to exercise their right to free speech.

The right to keep private the names of donors or members is not new and has long been protected in this country.  In 1958 the U.S. Supreme Court ruled in NAACP v. Alabama that forcing an organization to disclose its members infringed upon their rights of free speech and free association.

The call for anonymous free speech is not a regulation loophole or some nefarious political tactic. As the much-cited 1995 Supreme Court ruling, McIntyre v. Ohio Elections Commission reads, “Protections for anonymous speech are vital to democratic discourse. Allowing dissenters to shield their identities frees them to express critical, minority views . . . Anonymity is a shield from the tyranny of the majority. . . . It thus exemplifies the purpose behind the Bill of Rights, and of the First Amendment in particular:  to protect unpopular individuals from retaliation . . . at the hand of an intolerant society.”

While this represents the basic objection we have with this bill, there are additional flaws within the bill that should be addressed.

First of all, SB 120 is internally contradictory and unintelligible.

Proposed RSA 664:2, III(a) defines an organization as a “political committee,” in part, if “its major purpose [is] to promote the success or defeat of a candidate or candidates or measure or measures, and whose combined receipts and expenditures total $2,500 or more in a calendar year for that purpose.”

Courts generally have superimposed a “major purpose” limitation (i.e., a group cannot be treated as a political committee unless its major purpose is to affect elections) on top of statutes lacking “major purpose” language. See, e.g., Buckley v. Valeo, 424 U.S. 1, 79 (1976). Thus, the proposed legislation is commendable in its attempt to codify judicial common law.

The legislation fails, however, in its application of the major purpose standard.

A)    The Legislation’s Major Purpose Standard is Exceedingly Vague

Both the major purpose and $2,500 receipts/expenditures threshold are tied to a determination of whether an organization’s activities “promote the success or defeat” of a candidate or ballot measure. But this standard is so vague that it would be impossible to make even a tentative determination as to whether an activity falls within its reach. For example, if the League of Conservation Voters runs an ad supporting the passage of an environmental protection measure, does it “promote the success” of all candidates who are running as environmentalists or, conversely, “promote the… defeat” of all candidates who are identified as being against the environmentalist agenda?

B)    The Legislation’s Major Purpose Standard Is Undercut By Its Lack of a Major Purpose Standard

The proposed legislation applies the major purpose limitation only to activities that “promote the success or defeat” of candidates or ballot measures, as described in proposed RSA 664:2, III(a). Yet the same major purpose limitation does not apply to independent expenditures (“IEs”) and electioneering communications (“ECs”) that aggregate $5,000 or more in a calendar year in proposed Subparagraph III(b).

IEs generally are defined as expenditures “expressly advocating the election or defeat of a clearly identified candidate or candidates or the success or defeat of a measure or measures” under proposed RSA 664:2, XI.

ECs generally are defined as expenditures or communications that “refer[] to a clearly identified candidate for state office or refers to a measure without expressly advocating the success or defeat of such candidate or measure,” and which are “publicly broadcasted or distributed” to the “relevant electorate” within 90 days before a primary or 120 days before a general election, per proposed RSA 664:2, XVIII.

At first glance, it appears that all entities that sponsor IEs and/or ECs aggregating $5,000 or more per year would have to register and report as political committees, regardless of whether they have a major purpose of “promot[ing] the success or defeat” of candidates or ballot measures.

However, because all IEs presumably can be considered to “promot[e] the success or defeat” of candidates or ballot measures, and perhaps some portion of ECs also may be considered to do the same (depending on how broadly the “promote the success or defeat” standard is interpreted), it also appears that sponsors of IEs and some ECs aggregating $5,000 or more cannot be required to register and report as political committees without some determination of their major purpose.

Moreover, because IEs and some ECs under proposed RSA 664:2, III(b) may be a subset of the activities described in RSA 664:2, III(a), it is also unclear whether the $2,500 or $5,000 threshold applies for the political committee determination.

In short, Subparagraphs III(a) and III(b) of proposed RSA 664:2 are at odds with each other and thus are unintelligible. This internal contradiction, which is illustrated by the following Venn diagram, would render the statute impossible to comply with for an organization like AFP, impossible to enforce, and impossible to adjudicate:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Which provision – proposed RSA 664:2, III(a) or III(b) would

apply to IEs and ECs within the larger circle?

 

 

 

No major purpose analysis under 664:2, III(b); aggregate     threshold is $5,000 per year

Major purpose analysis is required under 664:2, III(a);     aggregate threshold is $2,500 per year

 

 

In addition, SB 120 is unconstitutionally overbroad

Under New Hampshire law, once an entity is determined to be a political committee, it must register and file burdensome and intrusive reports regarding: 1) the source of all of its receipts exceeding $25; 2) the occupation and employer of any source of receipts exceeding $100 in the aggregate; and 3) all expenditures, including their amounts, addresses, dates, and “specific nature.” RSA 664:6, I.

Although not of immediate concern to Americans for Prosperity itself, as an organization dedicated to economic advancement, we note that this bill would pose a huge drag on economic activity. Under proposed RSA 664:2, III(b), for-profit corporations that engage in activities that “promote the success or defeat” of a candidate or ballot measure, sponsor IEs, and/or sponsor ECs would be subject to these requirements. There is no exception for the reporting of commercial transactions or sales of stock. (Even worse, whereas the existing statutory definition of an “expenditure” at RSA 664:2, IX is limited to transactions made “for the purpose of influencing the nomination for election or election of any candidate,” the proposed legislation eliminates this purposive definitional limitation.) This leaves for-profit corporations with the untenable choice of either engaging in constitutionally protected speech and having to report potentially millions of consumer or wholesale transactions, or not engaging in any political speech whatsoever due to the astronomical paperwork and recordkeeping costs. This legislation effectively contravenes the Supreme Court’s ruling in Citizens United v. FEC, 558 U.S. 310 (2010).

As a preliminary matter, SB-120 applies the registration and reporting requirements to all entities.

As a result, the proposed legislation’s failure to apply the major purpose doctrine in an intelligible and consistent manner is all the more debilitating from a constitutional standpoint. In order for an organization to be required to register and report as a political committee, the Supreme Court has held that its “major purpose” must be “the nomination or election of a candidate,” by which the Court meant express advocacy expenditures. Buckley v. Valeo, 424 U.S. 1, 79 (1976); FEC v. Mass. Citizens for Life, Inc. (“MCFL”), 479 U.S. 238, 249 and 263 (1986) (citing Buckley, 424 U.S. at 79); see also New Mexico Youth Organized v. Herrera, 611 F.3d 669 (10th Cir. 2010). Courts have imposed the “major purpose” limitation in order to prevent the government from imposing undue burdens on speech. The “major purpose” doctrine ensures that only those entities that are genuinely devoted to influencing the outcome of elections, as opposed to entities that become involved in politics only incidentally, are regulated as political committees.

Here, in order for the proposed legislation to pass constitutional muster, not only must it contain an intelligible “major purpose” standard that does not create internally contradictory requirements, it also must be applied across the board to entities that sponsor IEs and ECs. In other words, sponsors of IEs and ECs may not be required to register and report as political committees merely on the basis that they spent $5,000 or more on such activities in the aggregate. Rather, they must also have the influencing of the outcome of elections as their “major purpose.” In short, proposed RSA 664:2, III(a) and III(b) should be made consistent by applying the “major purpose” to both subparagraphs (which, not coincidentally, would eliminate the internal contradiction and make the legislation intelligible).

The proposed legislation indiscriminately requires all entities deemed to be political committees – even those without a “major purpose” of affecting the outcome of elections – to report the sources of all of their receipts whatsoever above the $25 threshold.

To put this in perspective, if the Girl Scouts in NH decided to undertake a public campaign to save the planet and urged residents to vote for candidates who support conservation efforts within 120 days of a general election that would render everyone who has given $25 at one time or $100 in a calendar year to have their name disclosed as a donor to the Girl Scouts of NH.  A one-time $25 donation would amount to purchasing about 5 boxes of girls scout cookies.  That would result in a long list of donors.

As another example, any member of the Catholic Church or any other non-profit church could easily be deemed a donor.  If the Catholic Church encouraged people to support candidates who believe in the sanctity of life within 120 days of a general election, the Church would be required to gather and disclose names, addresses and occupations for all their parishioners, i.e. donors who gave money to their efforts.  To meet the $100/calendar year threshold, a parishioner would only have to put $2/week in the collection plate.  This would then place the burden of collecting this data on the Church.

On the for-profit side, any corporation who spoke out in opposition to an LLC tax would be required under this law to disclose all of their contributions to that company.

In light of these examples, to say this level of reporting requirement is tedious, burdensome and not well thought out seems like an understatement.

Because the proposed legislation would require entities that engage in political speech only on an incidental basis to report all of their funds, a reviewing court very likely would find it to be overly broad and unconstitutionally burdensome.

In other words, there is a high probability that if this bill were to be passed as written, it would incur a lawsuit challenging its constitutionality.  Any potential lawsuit would then cost the taxpayers of this state time and money to defend what we already know to be an inherently flawed bill.  As our state continues to climb out of the recent fiscal crisis, I am not sure that defending a bill likely to be deemed unconstitutional is a conscionable use of taxpayer time or resources.  Yet that is the position we could find ourselves in if this bill becomes law.

In conclusion, SB 120 would amend New Hampshire’s campaign finance statute in a manner that renders the law unintelligible, impossible to comply with, impossible to administer, and impossible to adjudicate with respect to determining when an entity must register and report as a political committee. To the extent entities that sponsor independent expenditures and electioneering communications are treated as political committees, they may not be constitutionally regulated as such unless their major purpose is to affect the outcome of elections.

While it is possible the proposed legislation can be fixed by addressing these fatal flaws, it is also possible that there are other significant traps lurking elsewhere in the bill. The mere fact that there are such obvious drafting and doctrinal defects suggests this legislation is not ready for prime-time and should not be voted on in this legislative session.

Like this post? Chip in $5 to AFP.