During the first House hearings on the DISCLOSE Act, disagreements and debate arose over the scope and potential impacts of a bill that sponsors say is designed to create new disclosure requirements for various corporate entities that are promoting or opposing candidates for federal office. As Congress continues to move forward with the bill, controversy will likely follow.

On April 29, Rep. Chris Van Hollen (D-MD) and Sen. Charles Schumer (D-NY) introduced the DISCLOSE Act (the Democracy Is Strengthened by Casting Light On Spending in Elections Act), and two House hearings have occurred since that time. The DISCLOSE Act seeks to diminish the impact of the U.S. Supreme Court decision in Citizens United v. Federal Election Commission, which allows corporations (including certain nonprofit organizations) and unions to use general treasury funds to directly and expressly advocate for the election or defeat of candidates for federal office.

The Committee on House Administration held both hearings, during which distinct ideological differences indicated that the bill will face a tough road in Congress. The first hearing was held on May 6. In his opening statement, Chair Robert Brady (D-PA) said, "The DISCLOSE Act recognizes that American voters are at minimum entitled to full and accurate reporting of campaign spending so that voters may know who is attempting to influence their vote."

The committee held the second hearing on May 11, and witnesses included two former Federal Election Commission (FEC) commissioners, Trevor Potter and Michael Toner, both of whom served in Republican slots on the commission. The panel also included Harvard Law School professor John Coates and attorneys Elizabeth Lynch and William McGinley.

A largely partisan divide emerged quickly after the bill was introduced and was clearly revealed during the hearings. Some on the committee showed support for the Supreme Court decision and expressed skepticism of any attempt to reign in the ruling. They and other critics charge that the DISCLOSE Act is meant to protect Democratic incumbents and deter speech.

Discriminatory Impact?

All corporations, 501(c)(4) nonprofit organizations, 501(c)(5)s (unions), 501(c)(6)s (trade associations), and 527 organizations that spend money on independent expenditures or electioneering communications to influence a federal election are "covered" under the bill. However, some skeptics are concerned that the DISCLOSE Act does not treat all of these entities the same.

During both hearings, committee Republicans contended that the bill creates special protections for labor unions. This argument stems from provisions that limit certain corporations from spending money to influence federal elections. Those that received Troubled Asset Relief Program (TARP) funding and have not yet paid the government back, and corporations that receive federal contracts worth more than $50,000, would not be able to spend any money on elections. This provision may indeed affect certain for-profit corporations more, considering that financial services companies are more likely to have received TARP funding, though it is unclear whether this would rise to the level of "discrimination."

Supporters of the bill argue that all types of corporations, including unions, are treated equally. In addition, the DISCLOSE Act would subject all corporations, including nonprofit organizations, to the same disclosure rules.

Controversy Surrounding Donor Disclosure Provisions

The bill's donor disclosure requirements are another major issue of contention. These provisions include the following:

• The top funder of the ad would be required to record a "stand-by-your-ad" disclaimer, and the top five donors to the organization would be listed on the screen at the end of the message.
• If an organization spends more than $10,000 in a 12-month period on independent expenditures or electioneering communications (including transferring funds to another organization for the purpose of influencing an election), all donors who have given $1,000 or more to the organization during that period would have to be disclosed.

Many fear that donors, who might have an interest in becoming more involved in political advocacy, may not want to do so if the bill passes as currently written. These concerns remain even though a donor can specify that a contribution may not be used for campaign-related activity. If a donor makes such a request, an organization is prohibited from using the donation for that purpose and would not disclose the donor's identity.

Committee debate notwithstanding, eight members of the Court agreed on the need for disclosure when Citizens United was published. Potter noted in his statement on May 11 that Justice Kennedy "made two things very clear: First, it is generally constitutional to require disclosure of the sources of funding for spending in federal elections, whether or not that spending 'expressly advocates' the election or defeat of a federal candidate. Second, he and seven other Justices were clear that they thought such disclosure was entirely appropriate and useful in a democracy."

Toner, on the other hand, expressed opposite views on the bill and said it should not be enacted. Toner specifically criticized the bill because its requirements would take effect 30 days after enactment, even if the FEC does not write clarifying regulations.

Other Points of Contention

Opponents have additional concerns about the DISCLOSE Act, including that the bill could stifle speech by creating expensive obstacles. For example, critics charge that the time it would take for groups to make statements standing by their ads would end up being overly burdensome.

During the May 11 House hearing, McGinley said that the DISCLOSE Act could lead to regulation of Internet communications and blogs. Craig Holman of Public Citizen fired back in a blog post the next day. Holman stated that the DISCLOSE Act "leaves in place the carefully worked out provisions of FEC regulations that exclude blogging and similar internet activity from the definitions of 'expenditure' and 'public communication' under campaign finance laws. The additional reporting requirements of the DISCLOSE Act do not change the existing exemptions for Internet communications and blogging under federal campaign finance law at all."

Despite the intense opposition from some quarters, others have suggested that the DISCLOSE Act does not go far enough and should also include provisions for public financing of congressional elections and shareholder approval of corporate campaign expenditures. For instance, advocacy groups such as Public Citizen and the Brennan Center for Justice would like the bill to incorporate provisions from the Shareholder Protection Act sponsored by Rep. Michael Capuano (D-MA), but there is some concern that those provisions could threaten passage of the DISCLOSE Act. That legislation would require companies to hold a shareholder vote to approve annual corporate political spending.

The House Administration Committee is expected to mark up the bill soon. It remains unclear when the full House or Senate will vote on the measure, despite an earlier push to have the bill signed into law in time for the general election in the fall.