BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                     AB 700


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          Date of Hearing:   April 29, 2015


                  ASSEMBLY COMMITTEE ON ELECTIONS AND REDISTRICTING


                           Sebastian Ridley-Thomas, Chair


          AB 700  
          (Gomez and Levine) - As Amended April 14, 2015


          SUBJECT:  Political Reform Act of 1974:  advertisement  
          disclosures.


          SUMMARY:  Provides that a specified disclaimer, if it is  
          required to appear in a video advertisement concerning a ballot  
          measure, must appear continuously during the advertisement.    
          Specifically, this bill:  


          1)Requires a disclaimer that "(spokesperson's name) is being  
            paid by this campaign or its donors," when it is required to  
            appear in an advertisement concerning a ballot measure, to be  
            shown continuously if the advertisement is a video  
            advertisement.


          2)Declares the intent of the Legislature to enact legislation  
            that would implement a California Disclose Act to ensure that  
            advertisements that seek to persuade voters to cast a vote in  
            favor or against ballot measures do not mislead voters as to  
            who is funding the campaign that paid for the advertisement.











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          EXISTING LAW:  


          1)Creates the Fair Political Practices Commission (FPPC), and  
            makes it responsible for the impartial, effective  
            administration and implementation of the Political Reform Act  
            (PRA).

          2)Requires a committee that makes an expenditure of $5,000 or  
            more to an individual for his or her appearance in an  
            advertisement to support or oppose the qualification, passage,  
            or defeat of a ballot measure, to do both of the following:

             a)   File a report within 10 days of the expenditure  
               identifying the measure, date of the expenditure, name of  
               the recipient, and amount expended; and,

             b)   Include the following statement in the advertisement in  
               highly visible roman font shown continuously if the  
               advertisement consists of printed or televised material, or  
               spoken in a clearly audible format if the advertisement is  
               a radio broadcast or telephone message:

             "[Spokesperson's name] is being paid by this campaign or its  
               donors."

          FISCAL EFFECT:  Unknown. State-mandated local program; contains  
          a crimes and infractions disclaimer.


          COMMENTS:  


          1)Purpose of the Bill:  According to the author:


               The amendments to AB 700 reflect the changing methods  









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               in the ways Californians communicate with one another  
               and receive their information relevant to their lives.  
                The internet continues to grow in its use as an  
               information and news medium.  Campaigns have taken  
               note of the changes in the media used by voters and  
               have taken to the net with ever increasing financial  
               resources.





               AB 700 addresses the growing use of videos for  
               purposes of campaign messaging on the internet, and  
               extends the same disclosure requirements for those  
               messages as those campaign messages on television.


          2)"Paid Spokesperson" Requirements:  In 2000, the Legislature  
            passed and the Governor signed SB 1223 (Burton), Chapter 102,  
            Statutes of 2000, which became Proposition 34 on the November  
            2000 general election ballot.  The proposition, which passed  
            with 60 percent of the vote, made numerous substantive changes  
            to the PRA, including enacting new campaign disclosure  
            requirements and establishing new campaign contribution  
            limits.  



          One of the provisions of Proposition 34 established new  
            reporting and disclaimer requirements for ballot measure  
            advertisements that featured paid spokespeople.  Under those  
            provisions, if a committee makes an expenditure of $5,000 or  
            more to an individual appearing in the advertisement, the  
            advertisement is required to include a disclosure statement  
            that the spokesperson is being paid by the campaign or its  
            donors.  The committee is also required to file a specified  









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            report in connection with any such advertisement.

          It appears, however, that these requirements have only rarely  
            been triggered for ballot measure advertisements.  While these  
            "paid spokesperson" requirements have been in place for more  
            than 14 years, no report has ever been filed with the  
            Secretary of State in accordance with those requirements,  
            though committee staff is aware of at least one instance in  
            which a "paid spokesperson" report was filed in connection  
            with a local election.  The lack of reports filed pursuant to  
            those provisions could indicate that it is relatively rare for  
            ballot measure campaigns to pay individuals for their  
            appearances in advertisements.
          3)"Disclose Act":  As detailed above, the first section of this  
            bill declares the intent of the Legislature to implement a  
            "California Disclose Act." The provisions of this bill as it  
            was most recently amended, however, do not contain any of the  
            major provisions that have been included in previous  
            legislation that has been referred to as the California  
            Disclose Act.  Furthermore, the bill declares the intent of  
            the Legislature to enact legislation that is wholly unrelated  
            to the current substantive contents of this bill.  In light of  
            those facts, and given the letters that have been submitted in  
            support of and in opposition to this bill, it appears likely  
            that the current provisions of this bill are nothing more than  
            placeholder language, and are unrelated to the bill's ultimate  
            objective.



          Specifically, the Legislature has considered three measures in  
            the last two legislative sessions that were titled or  
            otherwise commonly referred to as the California Disclose Act.  
             AB 1148 (Brownley) and AB 1648 (Brownley) of the 2011-2012  
            legislative session were both commonly referred to as the  
            California Disclose Act, while SB 52 (Leno) of the 2013-2014  
            legislative session was titled the California Disclose Act.   









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            All three measures broadly sought to change the content and  
            format of disclosure statements that are required to appear on  
            political advertisements in a manner that would require the  
            largest contributors to the committee funding the  
            advertisement to be more prominently displayed.  Additionally,  
            all three measures sought to establish extensive new rules for  
            determining which contributors would be required to be  
            disclosed as contributors on a campaign advertisement.   
            Moreover, the language that appeared in the introduced version  
            of this bill was similar to language that has appeared in  
            prior bills that were referred to as the California Disclose  
            Act, and in fact, the introduced version of this bill declared  
            the intention of the Legislature to enact legislation to  
            implement a California Disclose Act that is "consistent with  
            the provisions of [SB] 52 of the 2013-14" legislative session.

          Because this bill does not currently contain substantive  
            provisions similar to those in SB 52 or other prior attempts  
            to enact a "California Disclose Act," this analysis does not  
            examine the policy questions or considerations presented by  
            such proposals.  Nonetheless, both the supporters and  
            opponents of this bill (as detailed below) seem to believe  
            that this bill subsequently will be amended to include  
            provisions similar to those in previous versions of the  
            California Disclose Act.  In fact, a letter in support of this  
            bill from the sponsor of the bill acknowledges that the  
            current version of the bill makes only "technical changes  
            relative to disclosure under the Political Reform Act," but  
            also notes that if the bill's "intent is implemented, it will  
            significantly strengthen disclosure requirements for ballot  
            measure ads." If it is the author's intent to amend this bill  
            at some point in the future to more closely resemble previous  
            legislation that has been referred to as the California  
            Disclose Act, those amendments would be considerably broader  
            than, and inconsistent with, the substantive provisions of the  
            current version of this bill.
          4)Television vs. Video and Technical Amendments: As noted above,  









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            existing law already requires the "paid spokesperson"  
            disclosure statement, when it is required to be included in an  
            advertisement, to be shown continuously if the advertisement  
            consists of televised material.  This bill further provides  
            that "[i]f the advertisement is a television or video  
            advertisement, the statement shall be shown continuously."   
            While existing law does not explicitly address the duration  
            for which the disclosure statement is required to appear in a  
            video advertisement that is not televised (for example, a  
            video advertisement on the Internet), televised advertisements  
            are already covered by existing law.  As a result, the  
            language added by this bill relating to television  
            advertisements seems to be duplicative.  If it is the  
            committee's desire to approve this bill, committee staff  
            recommends a technical amendment to eliminate that  
            duplication.


          5)Arguments in Support: The sponsor of this bill, the California  
            Clean Money Campaign, writes in support:


               The California Clean Money Campaign is pleased to  
               sponsor AB 700, the California DISCLOSE Act. If its  
               intent is implemented, it will significantly  
               strengthen disclosure requirements for ballot measure  
               ads. Just as a lobbyist looking for your vote on a  
               bill would never mislead you as to who his client is,  
               neither should the voters be misled as to who is  
               asking for our votes when we cast them on ballot  
               measures.





               Campaign spending on ballot measures has reached  









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               unprecedented levels. More than $640 million was spent  
               in California on ballot measures in 2012 and 2014,  
               almost all of it by donors obscured by misleading  
               names and buried in fine print. Although it is  
               essential for individuals and organizations to be able  
               to communicate effectively with voters, it's equally  
               important that voters not be deceived about who paid  
               for the ads they see.



               AB 700 currently makes technical changes relative to  
               disclosure under the Political Reform Act, but also  
               provides the following:



               It is the intent of the Legislature to enact  
               legislation that would implement a California Disclose  
               Act to ensure that advertisements that seek to  
               persuade voters to cast a vote in favor or against  
               ballot measures do not mislead voters as to who is  
               funding the campaign that paid for the advertisement.



               Achieving this goal is essential to everything we care  
               about in the era of Citizens United in which  
               billionaires and other special interests can pass or  
               kill ballot measures by drowning the electorate in  
               deceptive advertisements while hiding who really paid  
               for them. Even duly passed and signed laws are subject  
               to referenda that can be put on the ballot and passed  
               by Dark Money groups whose misleading ads fool voters  
               into voting against their best interests.

          6)Arguments in Opposition: In opposition to this bill, the  









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            Service Employees International Union (SEIU), California State  
            Council, writes:


               The original and contemplated premise of [this] bill  
               was to enact language consistent with Senate Bill 52  
               (Leno), also called the Disclose Act, which failed  
               during the 2013-14 Regular Session of the legislature.  
               That proposal sought to increase reporting  
               requirements for political advertising disclaimers  
               while adding devastating accounting requirements that  
               would severely hinder the ability to engage in  
               fundraising and the political process?.



               During the 2013-14 Regular Session of the legislature,  
               the Governor enacted Chapter 16, Statutes of 2014 (SB  
               27/Correa) and Chapter 9, Statutes of 2014 (AB  
               800/Gordon), that created new requirements to prevent  
               individuals, organizations, or other[s], from hiding  
               behind a veil of secrecy when engaging in political  
               activity in California, and allows detailed audits of  
               campaign committees during an election cycle,  
               respectively. Each of these statutes have worked as  
               intended?

               AB 700 would propose to impose new and untenable  
               restrictions that are so one-sided on their effect  
               among specific groups engaged in political activity  
               that they might be deemed unconstitutional, as noted  
               in the Committee's analysis of SB 52. In addition, AB  
               700 would significantly interfere, or upend the  
               success of the new statutory requirements imposed by  
               SB 27 and AB 800, that have remedied the lack of  
               disclosure in political advertisements.










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               Although AB 700 has recently been amended, the  
               underlying intent of the bill remains the same as to a  
               likely continuous, successive, and unending reporting  
               scheme that would have a devastating effect on  
               political committees wanting to engage in political  
               activity.
          7)Previous Legislation: SB 27 (Correa), Chapter 16, Statutes of  
            2014, established conditions under which a multipurpose  
            organization that makes campaign contributions or expenditures  
            is required to disclose names of its donors.



          AB 800 (Gordon), Chapter 9, Statutes of 2014, made numerous  
            significant changes to the PRA, including permitting the FPPC  
            to audit any record required to be maintained under the PRA to  
            ensure compliance with the PRA prior to an election, even if  
            the record or statement has not yet been filed.

          AB 510 (Ammiano), Chapter 868, Statutes of 2014, requires an  
            advertisement relating to a ballot measure to include a  
            specified disclaimer if it includes an appearance by an  
            individual who is paid to appear in the advertisement and it  
            communicates that the individual is a member of an occupation  
            that requires licensure or specialized training.
          8)Political Reform Act of 1974: California voters passed an  
            initiative, Proposition 9, in 1974 that created the FPPC and  
            codified significant restrictions and prohibitions on  
            candidates, officeholders and lobbyists. That initiative is  
            commonly known as the PRA.  Amendments to the PRA that are not  
            submitted to the voters, such as those contained in this bill,  
            must further the purposes of the initiative and require a  
            two-thirds vote of both houses of the Legislature.


          REGISTERED SUPPORT / OPPOSITION:










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          Support


          California Clean Money Campaign (sponsor)


            In addition, the California Clean Money Campaign submitted  
            copies of petitions signed by approximately 2,000 individuals  
            in support of AB 700.  However, those petitions urge support  
            for a bill that "mandates clear and prominent disclosure of  
            the true funders behind ballot measure?ads," which the current  
            version of this bill does not do. As a result, it is unclear  
            whether those signatures reflect support for the current  
            version of the bill.


          California Church Impact


          California Common Cause
          LabelGMOs.org
          Lutheran Office of Public Policy - California 
          MapLight
          Money Out Voters In
          National Council of Jewish Women California
          Public Citizen
          Redwood Empire Business Association


          Opposition


          California School Employees Association, AFL-CIO










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          Howard Jarvis Taxpayers Association (prior version)


          Service Employees International Union, California State Council




          Analysis Prepared by:Ethan Jones / E. & R. / (916) 319-2094