Citizens United: Additional Legislative Responses

Multiple legislative responses have followed the U.S. Supreme Court's ruling in Citizens United v. Federal Election Commission, a decision that permits independent election spending by corporations, including certain nonprofit organizations. Following three rigorous congressional hearings, lawmakers have expressed a sense of urgency and the intent to continue working on legislation to curtail the impacts of the ruling, even as some critics charge that reaction to the decision is inflated.

On Feb. 11, Sen. Chuck Schumer (D-NY) and Rep. Chris Van Hollen (D-MD) released a summary of their proposed legislation to address issues raised in the hearings. Reportedly, Schumer and Van Hollen will introduce their bill during the week of Feb. 22.

Schumer and Van Hollen's extensive proposal includes a ban on expenditures by foreign interests, as well as corporations that have federal contracts and those that received funds through the Troubled Asset Relief Program (TARP). They also call for new disclosure rules on corporate spending, both to the government and to shareholders.

Specifically, the Schumer-Van Hollen bill would:

  • Ban corporations from spending money on U.S. elections if they have a foreign ownership of 20 percent or more, a majority of their board of directors is foreign principals, or their U.S. operations are under the control of a foreign entity.
  • Prohibit government contractors, including TARP recipients, from making political expenditures.
  • Require corporations that release political ads to have their CEOs appear on camera to say they "approve this message." The "top funder" of the ad must also record a stand-by-your-ad disclaimer, and the top five contributors that donate for political purposes will be listed on the screen at the end.
  • Require the creation of separate "political broadcast spending" accounts and require that the finances of these accounts be reported to the Federal Election Commission (FEC). All funds spent or transferred from the accounts would have to be publicly reported to the FEC.
  • Require all political expenditures made by a corporation to be disclosed within 24 hours on the corporation's website and to be disclosed to shareholders in quarterly reports and in the corporation's annual report.
  • Require federally registered lobbyists to disclose information on all campaign expenditures over $1,000.
  • Strengthen current coordination rules for House and Senate campaigns by banning coordination between a corporation or union and candidates on ads referencing a congressional candidate within 90 days of the beginning of the primary-through-general election season. For all federal elections, coordination would be prohibited, regardless of timing, when the ads promote, support, attack, or oppose a candidate.

While it remains to be seen if the Schumer-Van Hollen plan will receive bipartisan support, there is a very real possibility that certain provisions could be challenged in court. For example, if the proposal moves forward to ban political commercials paid for by corporations that receive government funding, it may face a constitutional challenge.

Other criticism of the Schumer-Van Hollen proposal abounds from both opponents and supporters of the Citizens United decision. Some consider it only an initial step and offer suggestions for improvement. The Sunlight Foundation, while expressing pleasure that many of its "disclosure-related recommendations appear to have been embraced," also highlights the inefficiencies of the FEC reporting structure and the need for lobbyist disclosure to go further.

"The enhanced disclosures of lobbyists’ campaign expenditures is a good start, though again we would note that to be meaningful, the disclosures must be in real time, online and publicly available and a user-friendly, searchable database," said the Sunlight Foundation in a recent blog post. The post further stated that "while the Schumer/Van Hollen framework rightly strengthens the ban on coordination to prevent such anti-democratic behavior, without a new disclosure requirement mandating that lobbyists report who they met with, there is no effective way to discern the possibility that such coordination took place."

An editorial in the Washington Post warns, "The prohibition on government contractors is so broadly worded as to sweep in nearly every major corporation that sells goods to the government; at the very least, some significant dollar threshold should be applied here."

In a press release from the Center for Competitive Politics (CCP), CCP President Sean Parnell expressed further concerns, saying that "[a]ny legislative attempt to dismantle the Court's ruling in Citizens United must be narrowly tailored and backed up by evidence of a compelling government interest." Parnell further stated that "[t]his rush to ram a bill through before such a record could possibly be established does neither."

Some of the proposals in the Schumer-Van Hollen legislative framework have been introduced already as standalone bills. Between the Jan. 21 ruling and today, 14 bills have been introduced in the House, including two proposed constitutional amendments, and three in the Senate to address the Court's decision.

With regard to disclosure requirements for independent campaign spending:

  • The Corporate and Labor Electioneering Advertisement Reform (CLEAR) Act (H.R. 4527), sponsored by Rep. Steve Driehaus (D-OH), would require communications related to campaigns to include a statement identifying the corporation's CEO or the president of the organization.
  • The Stand By Your Ad Act of 2010 (H.R. 4583)," sponsored by Rep. John Boccieri (D-OH), would require that campaign-related communications paid for by certain tax-exempt organizations or political organizations include a statement naming their five largest donors."

Bills that seek to limit corporations receiving government funding from spending money on elections include:

  • No Taxpayer Money for Corporate Campaigns Act of 2010 (H.R. 4550), introduced by Rep. Niki Tsongas (D-MA), would prohibit corporations from using any federal funds to contribute to political campaigns or participate in lobbying activities.
  • H.R. 4617, sponsored by Timothy Walz (D-MN), would prohibit TARP recipients from using any TARP funds for political expenditures or electioneering communications.

The Pick Your Poison Act of 2010 (H.R. 4511) introduced by Rep. Alan Grayson (D-FL), would prohibit corporations that employ registered lobbyists from making expenditures or disbursements for electioneering communications.

A few bills call for shareholder approval before a corporation spends money on any campaign-related message:

  • H.R. 4487, also introduced by Grayson, would "require the approval of a majority of a public company's shareholders for any expenditure by that company to influence public opinion on matters not related to the company’s products or services."
  • Similarly, Rep. Michael Capuano (D-MA) introduced H.R. 4537, which amends the Securities Exchange Act to require the authorization of a majority of shareholders before a company makes political expenditures.
  • In the Senate, S. 3004, introduced by Sen. Sherrod Brown (D-OH), requires that political expenditures be approved by the shareholders of a public company.

Multiple bills introduced echo President Barack Obama's publicly expressed concerns regarding the possible role of foreign-controlled corporations making independent expenditures. Seven bills, five in the House and two in the Senate, have been introduced to address these concerns. All of them seek to "amend the Federal Election Campaign Act of 1971 to apply the ban on contributions and expenditures by foreign nationals to domestic corporations" in certain circumstances. The circumstances covered in the different bills include when foreign principals have control or an ownership interest, when shareholders include any foreign principals, and when domestic corporations are subsidiaries of foreign principals. One bill specifically seeks "to protect Federal, State, and local elections from the influence of foreign nationals."

Examples of these bills are:

  • H.R. 4510, another Grayson bill, would "amend the Federal Election Campaign Act of 1971 to apply the ban on contributions and expenditures by foreign nationals to domestic corporations in which foreign principals have an ownership interest."
  • H.R. 4517, introduced by Rep. John Hall (D-NY), would "amend the Federal Election Campaign Act of 1971 to apply the ban on contributions and expenditures by foreign nationals to domestic corporations which are owned or controlled by foreign principals, to increase the civil penalties applicable to foreign nationals who violate the ban, and for other purposes."
  • S. 2959, introduced Sen. Al Franken (D-MN), would "amend the Federal Election Campaign Act of 1971 to protect Federal, State, and local elections from the influence of foreign nationals."

Legislators have also proposed two amendments to the U.S. Constitution. H.J.Res.68, sponsored by Rep. Leonard Boswell (D-IA), would prohibit "corporations and labor organizations from using operating funds for advertisements in connection with any campaign for election for Federal office." H.J.RES.74, sponsored by Reps. Donna Edwards (D-MD) and John Conyers (D-MI), would permit "Congress and the States to regulate the expenditure of funds by corporations engaging in political speech."

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