Testimony of Glenn J. Moramarco on Disclosure of Political Activities of Tax Exempt Organizations (June 20, 2000)

Testimony of Glenn J. Moramarco Senior Attorney, Brennan Center for Justice at NYU School of Law before the Committee on Ways and Means, Subcommittee on Oversight on Disclosure of Political Activities of Tax Exempt Organizations

June 20, 2000

Good afternoon, Mr. Chairman and Members of the Subcommittee. I am a senior attorney at the Brennan Center for Justice at NYU School of Law. Thank you for the opportunity to testify at today’s hearing.

The question before this Committee is whether and how, consistent with good public policy and the Constitution, to require enhanced disclosure for the political activities of tax exempt organizations. Though I will touch on a number of related issues, at the start of my testimony I want to emphasize one overarching point. I would suggest to the Committee that, apart from the Section 527 issue, which is unique and warrants separate consideration, the disclosure regime you want should not turn on whether a group is categorized as a 501(c)(4), (c)(5) or (c)(6) organization under the tax laws; rather it should turn on the specific activities in which the group is engaged. In a June 15, 2000 letter to you, Mr. Chairman, 15 of your colleagues advocated just such an approach, supporting a combination of the “McCain-Feingold-Lieberman amendment requiring disclosures by 527 organizations with an approach to disclosure by other entities modeled on that authored by Senators Olympia Snowe (R-ME) and James Jeffords (R-VT).” These Members are, I believe, on the right track, both as a matter of policy and law.

Before turning to the remainder of my testimony, a word about my organization. The Brennan Center for Justice at NYU School of Law unites thinkers and advocates in pursuit of a vision of inclusive and effective democracy. Our mission is to develop and implement an innovative, nonpartisan agenda of scholarship, public education, and legal action that promotes equality and human dignity, while safeguarding fundamental freedoms.

Last month, the Brennan Center published Buying Time: Television Advertising in the 1998 Congressional Elections, an unprecedented study which analyzed data from more than 300,000 ads aired in 1998 and created the first-ever nationwide survey of both candidate advocacy and so-called “issue advocacy.” Building on the findings in Buying Time, a Brennan Center Policy Committee on Political Advertising, composed of leading scholars, business leaders, and a number of your former House colleagues (including Leon Panetta, Vic Fazio, Linda Smith, and Al Swift), developed a series of policy recommendations in response to the problem of sham “issue advocacy” in American elections. Three of the recommendations made by the Policy Committee concern disclosure and are directly relevant to the work of this Committee; I describe them below. These policy recommendations and an executive summary of Buying Time are attached to this testimony as exhibits.

Summary of Testimony

Determining whether and how to enhance disclosure of the political activities of tax exempt organizations has taken on increased urgency. Certain groups have recently concluded that they can organize themselves under Section 527 of the Internal Revenue Code and engage in political activity without being subject to any of the Federal Election Campaign Act’s restrictions on political committees. Thus, these Section 527 organizations are raising money from otherwise prohibited sources (corporations and unions), in unlimited amounts, and without any public disclosure. One of the primary methods that these section 527 organizations and other tax-exempt groups are using to attempt to influence the outcome of federal elections is the expenditure of enormous sums of money on so-called “issue ads.”

While before this Committee, I would like to make three general points. First, it is certainly constitutional to subject Section 527 organizations to the public disclosure rules that already govern “political committees” under FECA, and Congress should act to require full disclosure from these groups. Second, disclosing the political activity of tax-exempt groups beyond Section 527 organizations will require the Committee to make some difficult, but important judgment calls about how to appropriately define the “political activity” that will subject a group to public disclosure. In this regard, however, there are already some good working ideas already in Congress, such as the Snowe-Jeffords amendment to McCain-Feingold. Third, regardless of how broadly or narrowly the Committee decides to cast the net concerning what organizations or types of organizations should be subject to public disclosure, the Committee should also give serious consideration to how to insure that the required disclosure is adequate to meet the public’s real needs.

On the first point, virtually every news report or article that attempts to explain Section 527 organizations begins with the statement that, until recently, it was generally assumed that Section 527 organizations were subject to regulation under FECA as “political committees.” Let me suggest to you that there was a good reason for that general assumption, and that is, because Section 527 organizations are, in fact, subject to regulation as political committees under FECA (unless they engage in activity solely related to non-federal elections). We should not make the mistake of assuming that the FEC’s inaction in this area means anything other than the fact that the FEC lacks four votes to enforce currently existing law.

In the face of the FEC’s inability or unwillingness to enforce the law, it is appropriate for Congress to act and reaffirm that Section 527 organizations are “political committees.” I am aware that some have argued that it would be unconstitutional to apply FECA’s disclosure and other requirements to Section 527 organizations. That legal contention, in my view, is utterly without any merit. As I describe in more detail below, the argument that Section 527 organizations cannot be subject to federal disclosure laws stems from the mistaken impression that Buckley v. Valeo forbids any regulation of a group’s political activities unless the group engages in “express advocacy.” In fact, however, Buckley was explicit in holding that its “express advocacy” limitation was not relevant for speakers who were political candidates, political parties, or political committees. Any group that, by definition, is engaged in political activity, may be subject to reasonable disclosure rules. Section 527 organizations are, by definition, engaged in political advocacy. Just as no one would suggest that a candidate’s ads can escape regulation under FECA for failing to use “magic words” of advocacy, it is likewise true that ads sponsored by political parties or Section 527 organizations are subject to FECA even if they eschew the use of “magic words.” Congress should reaffirm what, until recently, everyone assumed was the law.

When you move beyond regulation of Section 527 organizations, then you begin to encounter constitutional line-drawing problems. I would suggest to the Committee that, apart from the Section 527 issue, which is unique, the disclosure regime you want should not turn on how the group is categorized for purposes of treatment under the tax laws. In my view, public disclosure should not turn on whether a group is registered as a 501(c)(4), (c)(5), or (c)(6) organization; rather it should turn on the specific activities in which the group is engaged. As noted above, section 527 organizations should be regulated because what they are engaged in is, by definition, political advocacy. For other groups, it should be their actions, rather than their tax-exempt status, which subject them to public disclosure laws.

In this regard, you already have some useful models in other pieces of legislation. For example, the Snowe-Jeffords amendment to McCain-Feingold contains a definition of “electioneering” which turns on meeting a certain dollar threshold on communications that are broadcast on certain specified media within a certain specified number of days before an election and that refer to a clearly identified candidate. People or groups that engage in “electioneering” whether for profit or not for profit, should be subject to reasonable public disclosure rules. Congress should act and require public disclosure of all of the non de minimus funding sources of those who sponsor electioneering communications.

Finally, on the third point, once you decide what types of organizations and activities you want to subject to public disclosure, you need to insure that the disclosure regime you adopt is effective. A fully effective system of disclosure would ensure: a) that the name of the sponsor of an advertisement appears clearly within every political ad; and b) that basic information about the sponsors of such ads is publicly and readily available. There are at least three concrete steps that Congress can and should take to meet these goals, all of which were recommended by the Brennan Center’s Policy Committee in Political Advertising. First, attribution lines (“Paid for by . . .”) need to be required for every political ad. Second, we must require full disclosure of the true identity of the sponsors of media buys. Third, we need to promulgate a single form for disclosure of political ads and create a central repository for public access to the information.


I. Congress May Require Disclosure From Groups that, Like Section 527 Organizations, Are Organized For The Purpose Of Engaging In Political Advocacy.

In Buckley v. Valeo, the Supreme Court considered the constitutional validity of, among other things, various disclosure provisions that Congress had enacted on federal political activity. In general, the Court found mandatory disclosure requirements to be the least restrictive means for achieving the government’s compelling interests in the campaign finance arena. However, the Court believed that, while it was constitutionally permissible to require advocacy groups that “expressly advocate” for or against particular federal candidates to comply with the Federal Election Campaign Act’s disclosure provisions, advocacy groups that engage in a mere discussion of political issues (so- called “issue advocacy") could not be so required.

The Supreme Court was concerned that the Federal Election Campaign Act could become a trap for unwary political speakers. Advocacy groups or individuals that participate in the national debate about important policy issues might discover that they had run afoul of federal campaign finance law restrictions simply by virtue of their having mentioned a federal candidate in connection with a pressing public issue. The Court found that FECA’s disclosure provisions, as written, raised potential problems both of vagueness and overbreadth.

Under First Amendment “void for vagueness” jurisprudence, the government cannot punish someone without providing a sufficiently precise description of what conduct is legal and what is illegal. A vague or imprecise definition of regulated political advocacy might serve to “chill” some political speakers who, although they desire to engage in pure “issue advocacy,” may be afraid that their speech will be construed as regulable “express advocacy.” Similarly, the overbreadth doctrine in First Amendment jurisprudence is concerned with a regulation that, however, precise, sweeps too broadly and reaches constitutionally protected speech. Thus, a regulation that is clearly drafted, but covers both “issue advocacy” and “express advocacy” may be overbroad as applied to certain speakers.

The Court’s vagueness and overbreadth analysis centered on two provisions in FECA – section 608(e), which adopted limits on independent expenditures, and section 434(e), which adopted reporting requirements for individuals and groups. For these two provisions, the Supreme Court overcame the vagueness and overbreadth issues by adopting a narrow construction of the statute that limited its applicability to “express advocacy.” However, the Court made it absolutely clear that the “express advocacy” limiting construction that it was adopting for these sections did not apply to expenditures by either candidates or political committees. According to the Court, the activities of candidates and political committees are “by definition, campaign related.” Buckley, 424 U.S. at 79.

The “express advocacy” limitation was intended by the Court to give protection to speakers that are not primarily engaged in influencing federal elections. However, because candidates and political committees have as their major purpose the influencing of elections, they are not entitled to the benefit of the “express advocacy” limiting construction. The Supreme Court never suggested, as no rational court would, that political candidates, political parties, or political committees can avoid all of FECA’s requirements by simply eschewing the use of “express advocacy” in their communications. As discussed above, the Supreme Court wanted to avoid trapping the unwary political speaker in the web of FECA regulation. However, for political parties, political candidates, and political committees, which have influencing electoral outcomes as their central mission, there is no fear that they will be unwittingly or improperly subject to regulation.

* * *

The Buckley Court’s first invocation of the “express advocacy” standard appears in its discussion of the mandatory limitations imposed by FECA section 608(e) on independent expenditures. Section 608(e)(1) limited individual and group expenditures “relative to a clearly identified candidate” to $1,000 per year. The Court, in analyzing the constitutional validity of the $1,000 limit on independent expenditures by groups and individuals, focused first on the issue of unconstitutional vagueness. The Court noted that although the terms “expenditure,” “clearly identified,” and “candidate” were all defined in the statute, the term “relative to” a candidate was not defined. Buckley, 424 U.S. at 41. The Court found this undefined term to be impermissibly vague. Id. at 41. Due to the vagueness problem, the Court construed the phrase “relative to” a candidate to mean “advocating the election or defeat of” a candidate. Id. at 42.

Significantly, the Court did not adopt a limiting construction of the term “expenditure,” which appears in a definitional section of the statute at section 591(f). Rather, the Court narrowly construed only section 608(e). Id. at 44 (“in order to preserve the provision against invalidation on vagueness grounds, 608(e)(1) must be construed to apply only to expenditures for communications that in express terms advocate the election or defeat of a clearly identified candidate for federal office.”). The limitations under section 608(e) apply only to individuals and groups. Id. at 39–40. Political parties and federal candidates have separate expenditure limits that did not use the “relative to a clearly identified candidate” language, see 608(c) & (f), which was found to be problematic in section 608(e)(1).

The Court, having solved the statute’s vagueness problem, next turned to the question of whether section 608(e)(1), as narrowly construed by the Court, nevertheless continued to impermissibly burden the speaker’s constitutional right of free expression. The Court found the government’s interest in preventing corruption and the appearance of corruption, although adequate to justify contribution limits, was nevertheless inadequate to justify the independent expenditure limits. Therefore, the Court held section 608(e)(1)’s limitation on independent expenditures unconstitutional, even as narrowly construed.

In sum, in this portion of its opinion, the Buckley Court did not adopt a new definition of the term “expenditure” for all of FECA. Rather, the Court held that the limits on independent expenditures imposed on individuals and groups should be narrowly construed to apply only to “express advocacy,” and that these limits were nevertheless unconstitutional even as so limited. Because the limits on independent expenditures in section 608(e) were ultimately struck down by the Court, the narrowing construction of that section became, in a practical sense, irrelevant.

The only other portion of the Buckley decision that raises the “express advocacy” narrowing construction is the Court’s discussion of reporting and disclosure requirements under FECA section 434(e). It is here that the Court makes it absolutely clear, in unambiguous language, that political committees and candidates are not entitled to the benefit of the narrowing “express advocacy” construction earlier discussed in section 608(e).

The Court begins its discussion of reporting and disclosure requirements by noting that such requirements, “as a general matter, directly serve substantial governmental interests.” Buckley, 424 U.S. at 68. After concluding that minor parties and independents are not entitled to a blanket exemption from FECA’s reporting and disclosure requirements, the Court moved on to a general discussion of section 434(e).

As introduced by the Court, “Section 434(e) requires ‘[e]very person (other than a political committee or candidate) who makes contributions or expenditures’ aggregating over $100 in a calendar year’ other than by contribution to a political committee or candidate’ to file a statement with the Commission.” Id. 74–75 (emphasis added). The Court noted that this provision does not require the disclosure of membership or contribution lists; rather, it requires disclosure only of what a person or group actually spends or contributes. Id. at 75.

The Buckley Court noted that the Court of Appeals had upheld section 434(e) as necessary to enforce the independent expenditure ceiling discussed above—section 608(e). Id. at 75. The Supreme Court, having just struck down these independent expenditure limits, concluded that the appellate court’s rationale would no longer suffice. Id. at 76. However, the Buckley Court concluded that section 434(e) was “not so intimately tied” to section 608(e) that it could not stand on its own. Id. at 76. Section 434(e), which predated the enactment of section 608(e) by several years, was an independent effort by Congress to obtain “total disclosure” of “every kind of political activity.” Id. at 76.

The Court concluded that Congress, in its effort to be all-inclusive, had drafted the disclosure statute in a manner that raised vagueness problems. Id. at 76. Section 434(e) required the reporting of “contributions” and “expenditures.” These terms were defined in parallel FECA provisions in sections 431(e) and (f) as using money or other valuable assets “for the purpose of . . . influencing” the nomination or election of candidates for federal office. Id. at 77. The Court found that the phrase “for the purpose of . . . influencing” created ambiguity that posed constitutional problems. Id. at 77.

In order to eliminate this vagueness problem, the Court then went back to its earlier discussions of “contributions” and “expenditures.” The Court construed the term “contribution” in section 434(e) in the same manner as it had done when it upheld FECA’s contribution limits. Id. at 78. It next considered whether to adopt the same limiting construction of “expenditure” that it had adopted when construing section 608(e)’s limits on independent expenditures by individuals and groups.

But when the maker of the expenditures is not within these categories—when it is an individual other than a candidate or a group other than a political committee"- -the relation of the information sought to the purposes of the Act may be too remote. To insure that the reach of 434(e) is not impermissibly broad, we construe “expenditure” for purposes of that section in the same way we construed the terms of 608(e)—to reach only funds used for communications that expressly advocate the election or defeat of a clearly identified candidate.

When we attempt to define “expenditure” in a similarly narrow way we encounter line-drawing problems of the sort we faced in 18 U.S.C.  608(e)(1) (1970 ed., Supp. IV). Although the phrase, “for the purpose of . . . influencing” an election or nomination, differs from the language used in 608(e)(1), it shares the same potential for encompassing both issue discussion and advocacy of a political result. The general requirement that “political committees” and candidates disclose their expenditures could raise similar vagueness problems, for “political committee” is defined only in terms of amount of annual “contributions” and “expenditures,” and could be interpreted to reach groups engaged purely in issue discussion. The lower courts have construed the words “political committee” more narrowly. To fulfill the purposes of the Act they need only encompass organizations that are under the control of a candidate or the major purpose of which is the nomination or election of a candidate. Expenditures of candidates and of “political committees” so construed can be assumed to fall within the core area sought to be addressed by Congress. They are, by definition, campaign related.

Id. at 79–80 (footnotes omitted) (emphasis added).

The Court in Buckley could not have been more clear. When applied to a speaker that is neither a political candidate nor a political committee, the term “expenditure” in section 434(e) must be narrowly construed under the “express advocacy” standard. However, when applied to organizations that have as a major purpose the nomination or election of a candidate, the “express advocacy” limiting construction simply does not apply. The activities of these groups are, by definition, campaign related, and legitimately subject to regulation under FECA.

This, of course, is the only sensible reading of FECA. To suggest that political candidates, political parties, or political committees can escape FECA’s regulatory reach by merely eschewing the use of express words of advocacy, reduces the law to meaninglessness. It may be necessary, as the Court held, to give advocacy groups that are not primarily engaged in campaign-related activity a bright-line test that will enable them to avoid regulatory scrutiny. But organizations whose very purpose is to influence federal elections need no such safety net, and have not been given one.

Implications for Regulation of Section 527 Organizations

FECA’s definition of a “political committee” mirrors the Internal Revenue Service’s definition of a Section 527 “political organization.” Under FECA, a “political committee” is, among other things, “any committee, club, association, or other group of persons which . . . makes expenditures aggregating in excess of $1,000 during a calendar year.” 2 U.S.C.  431(4)(A). The term “expenditures” includes, among other things, “any purchase, payment, distribution, loan, advance, deposit, gift of money or anything of value, made by any person for the purpose of influencing any election for Federal office.” 2 U.S.C.  431(9)(A)(i) (emphasis added).

Under the Internal Revenue Code, a Section 527 political organization is defined as “a party, committee, association, fund, or other organization (whether or not incorporated) organized and operated primarily for the purpose of directly or indirectly accepting contributions or making expenditures, or both, for an exempt function.” 26 U.S.C.  527(e)(1) (emphasis added). An “exempt function” within the meaning of section 527 “means the function of influencing or attempting to influence the selection, nomination, election, or appointment of any individual to any Federal, State, or local public office or office in a political organization, or the election of Presidential or Vice-Presidential electors, whether or not such individual or electors are selected, nominated, elected, or appointed.” 26 U.S.C.  527(e)(2) (emphasis added).

Thus, any organization that is a Section 527 organization is, by definition, organized and operated primarily for the purpose of “influencing or attempting to influence the selection, nomination, election, or appointment of any individual” to public office. See 26 U.S.C.  527(e)(2). Such an organization satisfies the “major purpose” standard established by the Supreme Court in Buckley, and may therefore be subject to reasonable public disclosure of its sources of funding for its political activities. Buckley offered protection to issue-oriented speakers and groups that are not organized for the explicit purpose of influencing election outcomes. Section 527 organizations, however, are subject to reasonable mandatory public disclosure requirements by virtue of their central mission.

II. When Moving Beyond Section 527 Organizations, Congress Should Require Disclosure Based on Activity, Not Tax Status. The Snowe-Jeffords Amendment Presents A Reasonable And Constitutional Model For Accomplishing This.

The complete secrecy that surrounds contributions to and political expenditures by groups operating under Section 527 of the Internal Revenue Code is intolerable. Until recently, the one point that both supporters and opponents of campaign finance law agreed upon was the need for, at a minimum, full public disclosure of political contributions and spending. However, it would be wrong to conclude that the problem surrounding Section 527 organizations is one that stems from inadequacies in the Internal Revenue Code. There is a legitimate public policy reason why we have Section 527 organizations—political parties, like the Democratic and Republican parties, are not profit-making enterprises and there is no sound public policy reason to tax them on their receipts or expenditures.

Of course, public disclosure of the large donors to and expenditures of tax-exempt groups may be a worthy goal in its own right. Organizations that receive the public benefit of tax-exempt status should perhaps be subject to appropriate public scrutiny in exchange for that benefit. However, the major public policy problem that we are facing today is that there is an enormous potential for corruption from the massive secret fund-raising and political expenditures being made by Section 527 organizations. The fact that these organizations are also tax exempt is really incidental to the main problem of massive and secret fundraising and political expenditures.

Congress should not focus on the tax status of organizations that are involved in political activity; rather it should focus on the activities themselves. Congress needs to develop a solid, constitutional definition of “electioneering activity” which is subject to full public disclosure, with the disclosure requirement applying regardless of the tax status of the sponsoring organization. Congress will have accomplished very little if it chases the current Section 527 groups to organize themselves under different provisions of the tax code.

There are other models currently in Congress that attempt to achieve reasonable disclosure of the activity of groups engaged in political advocacy. These proposals are not geared to the tax status of the organizations that engage in the activity. For example, the Snowe-Jeffords amendment to McCain-Feingold would require, subject to certain limited exceptions, public disclosure from a sponsor who spends more than $10,000 on communications that: (i) refer to a clearly identified candidate for Federal office, (ii) are aired within 60 days before a general election or 30 days before a primary, and (iii) are broadcast on radio or television to the electorate for the identified candidate. This is a sensible approach for delineating electioneering speech that should be subject to public disclosure. A sponsor would be subject to disclosure requirements regardless of how it is organized for tax purposes.

Using the Snowe-Jeffords criteria to delineate which communications should be subject to disclosure as electioneering communications is constitutional. The Supreme Court has made clear that, for constitutional purposes, electioneering is different from other speech. See FEC v. Massachusetts Citizens for Life, 479 U.S. 238, 249 (1986). Congress has the power to enact campaign finance laws that constrain the spending of money on electioneering in a variety of ways, even though spending on other forms of political speech is entitled to absolute First Amendment protection. See generally Buckley v. Valeo, 424 U.S. 1 (1976). Congress is permitted to demand that the sponsor of an electioneering message disclose the amount spent on the message and the sources of the funds. This is black letter constitutional law about which there can be no serious dispute.

There are, of course, limits to Congress’s power to regulate election-related spending. But Congress has broader latitude to require disclosure of election-related spending than it does to restrict such spending. See Buckley, 424 U.S. at 67–68. In Buckley, the Court declared that the governmental interests that justify disclosure of election-related spending are considerably broader and more powerful than those justifying prohibitions or restrictions on election-related spending. Disclosure rules, the Court opined, in contrast to spending restrictions or contribution limits, enhance the information available to the voting public. Plus, the burdens on free speech rights are far less significant when Congress requires disclosure of a particular type of spending than when it prohibits the spending outright or limits the funds that support the speech. Disclosure rules, according to the Court, are “the least restrictive means of curbing the evils of campaign ignorance and corruption.” Thus, even if certain political advertisements cannot be prohibited or otherwise regulated, the speaker might still be required to disclose the funding sources for those ads if the governmental justification is sufficiently strong.

Those who oppose disclosure of the type that would be required under Snowe-Jeffords and other similar approaches frequently contend that it is unconstitutional for Congress to regulate any communication that does not contain “magic words” of advocacy for or against a particular candidate. However, the Supreme Court has never held that there is only a single constitutionally permissible route a legislature may take when it defines “electioneering” to be regulated or reported. The Court has not prescribed certain “magic words” that are regulable and placed all other electioneering beyond the reach of any campaign finance regulation.

As noted in the previous section, in Buckley, when the Supreme Court reviewed the constitutionality of FECA, it was concerned about the clumsy way that the statute was written. However, rather than simply striking FECA and leaving it to Congress to develop a narrower and more precise definition of electioneering, the Court instead intervened and essentially rewrote Congress’s handiwork itself. In order to avoid the vagueness and overbreadth problems, the Court interpreted FECA to reach only funds used for communications that “expressly advocate” the election or defeat of a clearly identified candidate. In an important footnote, the Court provided some guidance on how to decide whether a communication meets that description. The Court stated that its revision of FECA would limit the reach of the statute “to communications containing express words of advocacy of election or defeat, such as ‘vote for,’ ‘elect,’ ‘support,’ ‘cast your ballot for,’ ‘Smith for Congress,’ ‘vote against,’ ‘defeat,’ ‘reject.’” Buckley, 424 U.S. at 44 n.52.

But the Court emphatically did not declare that all legislatures were stuck with these magic words, or words like them, for all time. To the contrary, Congress has the power to enact a statute that defines electioneering in a more nuanced manner, as long as its definition adequately addresses the vagueness and overbreadth concerns expressed by the Court. Any more restrictive reading of the Supreme Court’s opinion would be fundamentally at odds with the rest of the Supreme Court’s First Amendment jurisprudence. Countless other contexts—including libel, obscenity, fighting words, and labor elections—call for delicate line drawing between protected speech and speech that may be regulated. It is doubtful that the Supreme Court in Buckley intended to single out election regulations as requiring a mechanical, formulaic, and utterly unworkable test.

The criteria contained in the Snowe-Jeffords amendment present a definition of electioneering carefully crafted to address the Supreme Court’s dual concerns regarding vagueness and overbreadth. Because the test for prohibited electioneering is defined with great clarity, it satisfies the Supreme Court’s vagueness concerns. Any sponsor of a broadcast will know, with absolute certainty, whether the ad depicts or names a candidate, how many days before an election it is being broadcast, and what audience is targeted. There is little danger that a sponsor would mistakenly censor its own protected speech out of fear of prosecution under such a clear standard.

The prohibition is also so narrow that it satisfies the Supreme Court’s overbreadth concerns. Any speech encompassed by the prohibition is plainly intended to convince voters to vote for or against a particular candidate. A sponsor who wishes simply to inform the public at large about an issue immediately before an election could readily do so without mentioning a specific candidate and without targeting the message to the specific voters who happen to be eligible to vote for that candidate. It is difficult to imagine an example of a broadcast that satisfies this definition even though it was not intended to influence the election in a direct and substantial way. Though a fertile imagination might conjure up a few counter-examples, they would not make the law substantiallyoverbroad.

The careful crafting of the Snowe-Jeffords Amendment stands in stark contrast to the clumsy and sweeping prohibition that Congress originally drafted in FECA. Unlike the FECA definition of electioneering, the Snowe-Jeffords Amendment would withstand constitutional challenge without having to resort to the device of narrowing the statute with magic words. When moving beyond disclosure for Section 527 organizations, Congress should consider the Snowe-Jeffords approach as a model for requiring disclosure from all groups, regardless of how they are organized under the tax code.

III. Policy Recommendations for Better and Fuller Public Disclosure

The decision concerning what types of organizations and activities to subject to public disclosure is, of course, only the first step. It is important to ensure that the disclosure regime is effective in supplying the vital information that the public needs. In Buying Time, the Brennan Center’s study of political advertising in 1998, we discovered that the disclosure requirements under already existing Federal Communications Commission regulation are not being fully complied with. The Brennan Center’s Policy Committee, which included academics, business leaders, and former Congressional Representatives (John Brademas, Vic Fazio, Leon Panetta, Linda Smith and Al Swift), made a number of recommendations for enhancing disclosure that Congress should consider.

A fully effective system of disclosure would ensure that, a) the name of the sponsor of an advertisement appears clearly within the ad and that, b) basic information about the sponsors of election advertisements is publicly available. Unfortunately, the Brennan Center Study revealed that both of these basic pieces of information were often hard to come by in 1998. Disclaimers, the portion of the ad that reads “Paid for by . . .”, are for most people the only means by which to learn who sponsored the ad they are seeing, but even this minimal piece of information was missing from a sizable number of ads in 1998. The sponsorship of slightly less than one quarter of ads in the study was either missing or illegible.

One way to make the sponsorship of ads more transparent without establishing new standards for electioneering would be to use the existing statutory authority of the Federal Communications Commission (FCC). The FCC’s rules apply to all noncommercial speech; their enforcement does not depend on whether an ad uses “magic words.” The Brennan Center’s Policy Committee recommended three separate steps for enhancing disclosure through the FCC: 1) requiring disclaimers on ads to be more prominent, 2) increasing access to existing information about media buys, and 3) preventing sponsors of political ads from hiding their identities.

In regard to the first recommendation, the FCC should enforce its existing rules on disclaimers and adopt stronger requirements for the display of sponsor information within all political advertisements. Current FCC rules maintain that sponsorship of ads with political content – whether or not they are sponsored by a candidate – must be “identified with letters equal to or greater than four percent of the vertical picture height” and must air “for not less than four seconds.” 47 CFR 73.1212(a)(1)(ii). This applies to all political ads, including ones that are not explicitly campaign-related but simply “political matter or matter involving the discussion of a controversial issue of public importance,” a test that includes true issue advocacy. Both the size and duration of the disclaimer could be increased, along with controls insuring that the background does not render it illegible (i.e. no black text on black background, white text on white background). In addition, it may be worthwhile to require that the sponsors of the ad be identified aurally as well as visually.

This should be an uncontroversial idea. There is ample precedent for requiring a greater proportion of a commercial to be devoted to disclaimer messages. If pharmaceutical companies are required to provide relatively extensive messages on the potential risks of their products, then certainly political advertisers should not object to taking a few minor steps to decrease the possibility of voter confusion.

The second recommendation put forward by the Policy Committee is to increase access to existing information about media buys by requiring the FCC to promulgate forms for disclosure and create a central repository for public access. For all political ads, FCC regulations mandate that their sponsors file organizational paperwork with the broadcast station for public inspection. The required organizational information includes a list of the members of the group’s executive committee, board of directors, or chief executive officers. All radio and television broadcast stations and cable operators are required to keep this information available for public inspection during regular business hours.

Despite these requirements, records can be sloppy and access to the data less-than-willingly granted. The FCC could promulgate forms for disclosure and provide a central repository (perhaps at FCC headquarters or via the web) to allow easier access for citizens and journalists. Creating a clear process for disclosure of ad buys through a standardized form and through requiring stations to share this information does not represent a large change for political advertisers, who are already required to disclose their identity; it would only be part of an attempt to improve and make more transparent this already existing process.

Creating a central repository for ad buy records would, however, be a welcome change. The Federal Election Commission (FEC), whose ability to provide financial information on candidates and parties to the public is widely praised, presents itself as a model for what is possible. The FEC has also made great strides in making information available via the Internet, something the FCC or a new data center could also do.

The third recommendation put forward by the Policy Committee is to require full disclosure of the true identity of sponsors of media buys by having the FCC issue regulations or give clearer direction to television stations of what is required under existing law. Current FCC rules require that political ads must “fully and fairly disclose the true identity” of the organization paying for the ad. If the person placing the ad is known to be an agent for someone else, or if the station could determine that with “reasonable diligence,” then the ad must disclose the identity of the actual sponsor of the advertisement. The regulation’s scope has been substantially unexplored by the courts, and its constitutionality has not been ruled on. However, in 1996, the FCC found that a number of stations in Oregon failed to properly identify ad sponsors during an anti-smoking campaign and had failed to exercise reasonable diligence to determine the true identity of the sponsors. In that action, the ads identified “Fairness Matters to Oregonians Committee” as the sponsor, although the Tobacco Institute funded, designed, and implemented the advertisements. Notably, the FCC did not impose sanctions because the stations lacked guidance from the Commission on how they were supposed to proceed in these situations. Given the proliferation of groups such as these, it is more clear than ever that new rules for what constitutes full and fair disclosure are necessary.

The FCC’s rules provide the lever to force advertisers who currently use innocuous sounding names like “Citizens for Good Government” to fully disclose their true identities – including contact information and the names of the group’s principals – and require stations to exercise reasonable diligence in assembling this information. This information could be incorporated into the disclaimer within the ad or may simply be available to those who review the station’s records of media buys. Requiring groups running political ads to disclose basic information (for example, a physical address, not a post office box) does not approach what groups running independent expenditures disclose to the FEC, but it provides a minimum level of information to citizens and journalists, who can then make more informed evaluations of the claims made in the ads they see.

These two disclosure requirements – the basic organizational information and the true identity disclosure – provide a hook for getting more information to the public about who is sponsoring the sham issue ads. For these steps to be effective, however, the FCC must provide stations with guidance on how they are supposed to determine the “true identity” of sponsors and what constitutes reasonable diligence when the station doubts that the identified sponsor is the true sponsor. In addition, the FCC must be willing to enforce these rules.

Conclusions

Congress should close the loophole that allows Section 527 organizations to evade FECA requirements, most notably the requirements for full public disclosure of political expenditures. When moving beyond Section 527 organizations, Congress should regulate groups based on their actions, not their tax status under the Internal Revenue Code. The Snowe-Jeffords amendment offers a viable, constitutionally-sound model for further disclosure. Finally, the disclosure that is enacted should include requiring disclaimers on advertisements to be more prominent, increasing public access to existing information about media buys, and preventing sponsors of political ads from hiding their true identities.