FPPC eyes new disclosure rules for political ads

California’s political watchdog, inspired in part by language in a landmark U.S. Supreme Court case, is considering a new rule to force the disclosure of the names of donors who finance so-called “issue advocacy ads” – political advertisements that describe an issue but stop short of telling people how to vote.

The proposal, which drew fire from an array of political attorneys, could go into effect before the fall and apply to the Nov. 2 general election if the Fair Political Practices Commission approves it next month, although the actual timing of the regulation would depend on a number of other procedural issues, including regulatory review.

The regulation is being put together by the FPPC staff.

“It is no one’s goal to suppress the right to free speech,” said FPPC Chairman Dan Schnur. “Rather, it is the right of voters to know how that speech is being funded.”

Under California’s current rules, the source of money for issue or educational ads is not required to be made public.  Disclosure is required, however, for ads that expressly urge voters to support or oppose a candidate or ballot measure – ads that are known as “express advocacy” ads. The proposed FPPC rule would expand the disclosure rules to issue advocacy ads as well.

The difference between an issue advocacy ad and an express advocacy ad is sometimes blurred. But express advocacy ads typically contain “magic words” that include “vote for” or “vote against” or “elect” or “cast your ballot” – terms and intent traditionally missing from issue advocacy. The “magic words” interpretation stems in part from a decision in a 2002 case involving former Gov. Gray Davis, who sued a group that ran ads urging viewers to “turn the lights out on Gray Davis,” a reference to Davis’ policies during the state’s electricity crisis. Davis complained, saying the ads were aired right before the 2002 gubernatorial election and were intended to damage his reelection chances.

In the end, the FPPC staff said, the point of the proposed rule is to shine more illumination on the source of campaign cash, although a number of veteran political attorneys – the lawyers who advise campaigns on the legal rules governing fundraising, among other issues – were skeptical.

“A hodgepodge of state regulations has created a nightmare of complexity, and you’re about to do it again,” attorney Fred Lowell of the San Francisco-based Pillsbury law firm, said at an FPPC information hearing. “Please try to simplify.”

James Parrinello of the Marin office of the Nielsen Merksamer law firm agreed.

“It’s fairly clear that the staff has made up its mind,” he said. “There is no basis for it. There is no emergency causing it to occur.”

But the FPPC staff has identified issue ad disclosure as a top priority on a list of lingering issues that it believes need to be addressed.  Ironically, a U.S. Supreme Court decision widely denounced by campaign reform advocates may have given the FPPC new ammunition to force greater disclosure.

In January, the U.S. Supreme Court in Citizens United vs. the FEC ruled that under the First Amendment, there can be no limits on special-interest funding – including corporations and labor unions — of political broadcasts in candidate elections.

The 5-4 decision overturned a provision of the federal campaign-reform law known as McCain-Feingold, and it was quickly denounced by campaign reform advocates, who said the ruling would open the floodgates to unlimited spending.  The case involved a conservative political group called Citizens United, which had produced an anti-Hillary Clinton documentary called “Hillary: The Movie” and sought to run commercials promoting the film during the last presidential campaign.

But at the same time that Citizens United removed limits on corporate and labor campaign spending, the decision also contained language, the FPPC said, authorizing increased disclosure of issue advocacy ads. The issue, according to that language, is whether the ad is “functionally equivalent” to express advocacy, not whether the ad contains the “magic words.”  

That “functional equivalence” is a key driver for the proposed FPPC regulation, which would apply only to state campaigns.

Not everyone is convinced, however.

“Why are you doing this?” asked veteran political attorney Lance Olson. “To suggest you can take the Supreme Court’s language and extrapolate from that a regulation that applies to issue advocacy – I don’t think that holds water.”

Critics such a change could require at the least a new regulation written from the ground up, not a modification to an existing rule – a significant difference because an entirely new regulation would entail greater review, hearings and take more time to put into effect.

To Schnur, the overarching concern is greater transparency which, in the end, serves the public good.

“I need you to tell me,” he told one political lawyer, “why requiring disclosure for funding is not a good thing,” said Schnur noted.