Brennan Center Review of San Francisco’s Proposed Pay-to-Play Rules

The Brennan Center has reviewed the Ethics Commission’s drafts of the Campaign Finance Reform Ordinance revision and accompanying documents intended to strengthen San Francisco’s campaign finance and ethics rules. We fully support the effort to protect the integrity of city government and ensure that city residents have access to meaningful information about campaign spending and the activities of their elected officials, and believe the proposals are a strong step in the right direction. To make them even stronger, we propose several amendments to the new provisions governing contributions by government contractors and disclosure, as explained below. We are available to discuss any of the comments and suggestions in more detail, and work with the Commission on subsequent drafts.

(1) Narrows the current ban on contributions by contractors such that it only applies to

recipients who are “individual[s] holding a City elective office” (by the omission of

current C&GCC §§ 1.126(b)(1)(B)&(C))[1];

These amendments are narrower than those proposed in the March Draft, and likely reflect the concerns about the breadth of the March Draft expressed in the Staff Memo. We agree with Staff that some of the “public benefits” enumerated in the March Draft are outside the scope of the benefits often contemplated by common ethics and campaign finance laws, and may be difficult to define in some circumstances. For example, if a “public benefit” includes “tax savings resulting from a change in the law,” it would likely be quite difficult to define the proper class of beneficiaries, inform them, and keep track of the individuals and businesses restricted from contributing.

 

We also agree generally with the Staff’s admonition that legislatures and regulatory bodies should seek and discuss empirical evidence before restricting the ability to contribute, both to improve the efficacy of such restrictions and to ensure their constitutionality. Yet while empirical evidence is desirable, it does not necessarily need to come from within the jurisdiction considering a particular measure. As the U.S. Court of Appeals for the Second Circuit noted when reviewing New York City’s contractor contribution limit, “[t]here is no reason to require the legislature to experience the very problem it fears before taking appropriate prophylactic measures.”[3] In fact, legislatures can and should consider evidence from other jurisdictions, social science, precedent, and common sense, as well as local experiences, to determine the best method by which to prevent corruption.[4] The Brennan Center recently issued a report that categorizes and summarizes the most relevant research on corruption created by contributions (and other spending),[5] and maintains an up-to-date online database with studies and evidence from across the country.[6]We encourage the Commission to review the database and report while the staff continues to develop a legislative record.

With those considerations in mind, we support the August Draft’s provisions targeting government contracts and those with a financial interest in the city’s land use decisions, though it may be permissible to include other classes of public beneficiaries listed in the March Draft. The final decision on which beneficiaries to include should be based on the considerations discussed in the previous paragraph, as well as the practical limitations of defining groups of affected beneficiaries and ensuring that the law can be fairly and thoroughly applied to them.

 

With these general comments in mind, we suggest the following specific changes and clarifications:

1) Prevent those who have recently contributed from contracting with the government.

 

Both the August Draft and the codified version of § 1.126 prohibit contributions from prospective contractors starting on the date that contract negotiations begin. Yet those who plan to seek government contracts may make contributions in advance of the commencement of contract negotiations. Thus, we recommend amending § 1.126 such that those who have made contributions in the last twelve months may not enter a contract or contract negotiations with the government. Other jurisdictions have adopted this method of regulation. For example, New Jersey uses an eighteen month limitation for contractors,[7]and the Securities and Exchange Commission prevents investment advisors from providing paid services to government entities within two years after making a contribution.[8]

 

2) Ensure that the government contractor prohibition in § 1.126 applies to candidates and committees controlled by candidates and officeholders.

 

The current version of § 1.126(b) prohibits contributions to “individual[s] holding a City elective office,” but does not mention contributions to candidates.[9]Any contribution ban or limit should apply to all candidates equally, whether they are incumbents or challengers[10]— failing to include candidates could raise constitutional issues and lead to claims that incumbents are disadvantaged. And because challengers may win elections, it is important to ensure that they are not allowed to receive contributions from potentially corrupting donors.

 

 

[1] We recognize that § 1.126(e) of the August Draft requires individual contractors to attest to awareness “that contractors are prohibited from making contributions to candidates for elective office in the City.” Thus, if the omission of candidates and committees from the prohibition in § 1.126(b)(1) is unintentional, our comments on those sections are inapplicable.

[2] A behested payment is “a payment made for a legislative, governmental, or charitable purpose made at the behest of a City elective officer or candidate for City elective office.” § 1.126(a).

[3] Ognibene v. Parkes, 671 F.3d 174, 188 (2d Cir. 2011).

[4] See, e.g., id. at 189 (considering a report finding that government contractors were more likely to give large donations and more likely to give to incumbents, leading to “an appearance that larger contributions are made to secure … whatever municipal benefit is at issue”); Wagner v. FEC, 793 F.3d 1, 16–20 (D.C. Cir. 2015) (reviewing state laws and weighing “the enormous increase in the government’s reliance on contractors,” which “necessarily poses an increased threat of both corruption and coercion,” in upholding federal prohibition on contractor contributions).

[5] BRENT FERGUSON & CHISUN LEE, DEVELOPING EMPIRICAL EVIDENCE IN CAMPAIGN FINANCE CASES, BRENNAN CTR. FOR JUSTICE 2016, https://www.brennancenter.org/publication/developing-empirical-evidence-campaignfinance-cases.

[6] Money in Politics: Empirical Evidence Database, BRENNAN CTR. FOR JUSTICE (2017), https://www.brennancenter.org/analysis/money-politics-database.

[7] N.J. STAT. ANN. § 19:44A-20.14 (“The State . . . shall not enter into an agreement or otherwise contract to procure from any business entity services or any material, supplies or equipment, or to acquire, sell, or lease any land or building, where the value of the transaction exceeds $17,500, if that business entity has solicited or made any contribution of money . . . within the eighteen months immediately preceding the commencement of negotiations for the contract or agreement.”). The law was upheld in In re Earle Asphalt, 950 A.2d 918 (2008), aff’d, 966 A.2d 460 (2009).

[8] 17 C.F.R. § 275.206(4)–5(a)(1) (prohibiting provision of “investment advisory services for compensation to a government entity within two years after a contribution to an official of the government entity is made by the investment adviser”). A similar rule was upheld in Blount v. SEC, 61 F.3d 938 (D.C. Cir. 1995).

[9] See note 1, supra.

[10] See Davis v. FEC, 554 U.S. 724, 738 (2008) (“This Court has never upheld the constitutionality of a law that imposes different contribution limits for candidates competing against each other.”).

[11] For a lengthier discussion of the utility of disclosure laws that focus on officeholder and candidate activity, see Brent Ferguson, Congressional Disclosure of Time Spent Fundraising, 23 CORNELL J.L. & PUB. POL’Y 1 (2013).