BILL ANALYSIS                                                                                                                                                                                                    Ó






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          |SENATE RULES COMMITTEE            |                        AB 700|
          |Office of Senate Floor Analyses   |                              |
          |(916) 651-1520    Fax: (916)      |                              |
          |327-4478                          |                              |
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                                   THIRD READING 


          Bill No:  AB 700
          Author:   Gomez (D) and Levine (D)
          Amended:  8/17/16 in Senate
          Vote:     27 

           SENATE ELECTIONS & C.A. COMMITTEE:  4-1, 6/21/16
           AYES:  Allen, Hancock, Hertzberg, Liu
           NOES:  Anderson

           SENATE FLOOR:  26-12, 8/30/16 (FAIL)
           AYES:  Allen, Beall, Block, De León, Galgiani, Glazer, Hall,  
            Hancock, Hernandez, Hertzberg, Hill, Hueso, Jackson, Lara,  
            Leno, Leyva, Liu, McGuire, Mendoza, Mitchell, Monning, Pan,  
            Pavley, Roth, Wieckowski, Wolk
           NOES:  Anderson, Bates, Berryhill, Cannella, Fuller, Gaines,  
            Huff, Morrell, Nguyen, Nielsen, Stone, Vidak
           NO VOTE RECORDED:  Moorlach

           ASSEMBLY FLOOR:  60-15, 1/27/16 - See last page for vote

           SUBJECT:   Political Reform Act of 1974:  campaign disclosures


          SOURCE:    California Clean Money Campaign
          
          DIGEST:   This bill changes the content and format of disclosure  
          statements required on specified campaign advertisements in a  
          manner that generally requires such disclosures to be more  
          prominent and implements new requirements for the disclosure of  
          earmarked contributions.


          ANALYSIS:  








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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)Defines "expenditure," for purposes of the PRA, as a payment,  
            a forgiveness of a loan, a payment of a loan by a third party,  
            or an enforceable promise to make a payment, unless it is  
            clear from the surrounding circumstances that it is not made  
            for political purposes.


          3)Requires an advertisement for or against any ballot measure to  
            include a disclosure statement identifying any person whose  
            cumulative contributions are $50,000 or more.  Provides that  
            if there are more than two donors of $50,000 or more, the  
            disclosure only needs to include the highest and second  
            highest donors in that order. 


          4)Requires a committee that supports or opposes one or more  
            ballot measures to name itself using a name or phrase that  
            identifies the economic or other special interest of its major  
            donors of $50,000 or more.  Provides that if the major donors  
            of $50,000 or more share a common employer, the identity of  
            the employer must also be disclosed. 


          5)Requires a broadcast or mass mailing advertisement supporting  
            or opposing a candidate or ballot measure that is paid for by  
            an independent expenditure to include a disclosure statement  
            identifying the name of the committee making the expenditure  
            and the names of the persons from whom the committee making  
            the IE received its two highest cumulative contributions of  
            $50,000 or more during the 12-month period prior to the  
            expenditure. 









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          6)Provides that when a disclosure of the top two donors is  
            required on an advertisement pursuant to either of the above  
            provisions, only the largest donor needs to be disclosed on an  
            advertisement that is an electronic broadcast of 15 seconds or  
            less or a print advertisement of 20 square inches or less. 


          7)Provides that no candidate or committee shall send a mass  
            mailing unless the name, street address, and city of the  
            candidate or committee are shown on the outside of each piece  
            of mail in the mass mailing and on at least one of the inserts  
            included within each piece of mail of the mailing in no less  
            than 6-point type which shall be in a color or print which  
            contrasts with the background so as to be easily legible.  If  
            the sender of the mass mailing is a single candidate or  
            committee, the name, street address, and city of the candidate  
            or committee need only be shown on the outside of each piece  
            of mail.  If the sender of a mass mailing is a controlled  
            committee, the name of the person controlling the committee  
            shall also be included.


          8)Requires an advertisement supporting or opposing a candidate  
            that is paid for by an independent expenditure to include the  
            following statement in no less than 14-point, bold, sans serif  
            type: "This advertisement was not authorized or paid for by a  
            candidate for this office or a committee controlled by a  
            candidate for this office."  When included in a mailed  
            advertisement paid for by an independent expenditure, this  
            statement must be located within one quarter of an inch of the  
            recipient's name and address as printed on the advertisement  
            and further requires that text of the statement must be  
            contained in a box with an outline that has a line weight of  
            at least 3.25 pt.  The text, the interior of the box, the  
            outline of the box, and the background of the advertisement  
            must be in contrasting colors.


          9)Provides that a candidate, committee, or slate mailer  
            organization may not expend campaign funds to pay for  
            telephone calls that are similar in nature and aggregate 500  
            or more in number, made by an individual, or individuals, or  
            by electronic means and that advocate support of, or  
            opposition to, a candidate, ballot measure, or both, unless  







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            during the course of each call the name of the entity that  
            authorized or paid for the call is disclosed to the recipient  
            of the call, as specified.  This requirement does not apply to  
            telephone calls made by the candidate, the campaign manager,  
            or individuals who are volunteers.


           10)Provides that a committee primarily formed to support or  
             oppose a state ballot measure or state candidate that raises  
             $1 million or more for an election shall maintain an accurate  
             list of the committee's top 10 contributors, as specified.  A  
             current list of the top 10 contributors shall be provided to  
             the FPPC for disclosure on their Internet Web site.


           11)Provides that a person may not make any contribution to a  
             committee on the condition or with the agreement that it will  
             be contributed to any particular candidate unless the  
             contribution is fully disclosed, as specified.


          This bill:


           1) Defines the following terms, for the purposes of this bill: 


              a)    "Advertisement" means any general or public  
                communication which is authorized and paid for by a  
                committee for the purpose of supporting or opposing a  
                candidate or candidates for elective office or a ballot  
                measure or measures.  "Advertisement" does not include any  
                of the following: 


                 i)       A communication paid for by a political party  
                   committee or a candidate controlled committee  
                   established for elective office for the controlling  
                   candidate; 
                 ii)      A communication from an organization, other than  
                   a political party, to its members; 
                 iii)     Various specified types of communications where  
                   the inclusion of disclosures is impractical due to the  
                   size or medium of the communication (such as a pen, or  







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                   sky writing); or, 
                 iv)      Any other advertisement as determined by  
                   regulations of the FPPC. 


              a)    "Cumulative contributions" means the cumulative amount  
                of contributions received by a committee beginning 12  
                months prior to the date of the expenditure and ending  
                seven days before the time the advertisement is sent to  
                the printer or broadcaster. 


              b)    "Top contributors" means the persons from whom the  
                committee paying for an advertisement has received its  
                three highest cumulative contributions of $50,000 or more,  
                as specified.  If a contributor appears to qualify as a  
                top contributor but received earmarked funds to make the  
                contribution, the person or committee that earmarked the  
                funds and gave those funds to the contributor shall  
                instead be disclosed as the top contributor.  The person  
                or committee transferring earmarked funds shall disclose  
                the true source of the funds to the committee receiving  
                the earmarked funds at the time the funds are transferred,  
                and the committee receiving those funds may reasonably  
                rely upon that disclosure for purposes of compliance.  


              c)    Funds are "earmarked" in the following circumstances:


                i)      The contributor solicited and received the funds  
                  from donors for the express purpose of making a  
                  contribution to the committee paying for the  
                  advertisement.
                ii)     The funds were given to the contributor subject to  
                  an express condition or agreement with the donor that  
                  all or a portion would be used to make a contribution to  
                  the committee paying for the advertisement.
                iii)    The contributor had existing funds from a donor  
                  and a subsequent agreement was reached with the donor  
                  that all or a portion of the funds would be used to  
                  contribute to the committee paying for the  
                  advertisement.








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           2) Delineates the circumstances in which a payment would be  
             made for political purposes within the meaning of the  
             definition of "expenditure" that conforms to existing FPPC  
             regulations.


           3) Provides that a candidate, candidate controlled committee  
             established for an elective office for the controlling  
             candidate, or political party committee shall not send a mass  
             mailing unless the name, street address, and city of the  
             candidate or committee are shown, as specified.


           4) Provides that a candidate, candidate controlled committee  
             established for an elective office for the controlling  
             candidate, or political party committee shall not send a mass  
             electronic mailing unless the name of the candidate or  
             committee are shown in the electronic mailing preceded by the  
             words "Paid for by" in at least the same size font as a  
             majority of the text in the electronic mailing.  A "mass  
             electronic mailing" has been made when more than two hundred  
             substantially similar pieces of electronic mail have been  
             sent within a calendar month.  The "sender" is the candidate,  
             candidate controlled committee established for an elective  
             office for the controlling candidate, or political party  
             committee who pays for the largest portion of expenditures  
             attributable to the designing, printing, and posting of the  
             mailing which is reportable as specified.


           5) Requires any advertisement paid for by a committee to  
             include the words "Paid for by" followed by the name of the  
             committee as specified.


           6) Requires that any advertisement paid for by a committee that  
             receives contributions to include the words "This committee  
             has major funding from" followed by the names of the top  
             three contributors to the committee paying for the  
             advertisement, unless otherwise specified.  If fewer than  
             three contributors qualify as top contributors, only those  
             contributors that qualify shall be disclosed pursuant to this  
             section. If there are no contributors that qualify as top  







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                                                                    Page  7


             contributors, this disclosure is not required.


           7) Requires that an advertisement that is disseminated over the  
             radio or by telephonic means shall include the required  
             disclosures at the beginning or end of the advertisement,  
             read in a clearly spoken manner and in a pitch and tone  
             substantially similar to the rest of the advertisement, and  
             shall last no less than three seconds.  Radio and prerecorded  
             telephonic advertisements shall be required to disclose only  
             the top two contributors of $50,000 or more unless the  
             advertisement lasts 15 seconds or less or the disclosure  
             statement would last more than eight seconds, in which case  
             only the single top contributor of $50,000 or more shall be  
             disclosed.


           8) Requires an advertisement that is disseminated as a video,  
             including advertisements on television and videos  
             disseminated over the Internet, shall include the required  
             disclosures at the beginning or end of the advertisement as  
             follows:


              a)    The disclosure shall be written and displayed for at  
                least five seconds of a broadcast of thirty seconds or  
                less or for at least ten seconds of a broadcast that lasts  
                longer than thirty seconds.
              b)    The written disclosure shall appear on a solid black  
                background on the entire bottom one-third of the  
                television or video display screen, or bottom one-fourth  
                of the screen if the committee does not have or is  
                otherwise not required to list top contributors, and shall  
                be in a contrasting color in Arial equivalent type, and  
                the type size for the smallest letters in the written  
                disclosure shall be 4 percent of the height of the  
                television or video display screen. 
              c)    The top contributors, if any, shall each be disclosed  
                on a separate horizontal line, in descending order,  
                beginning with the top contributor who made the largest  
                cumulative contributions on the first line.  The name of  
                each of the top contributors shall be centered  
                horizontally.  The written disclosures shall be  
                underlined, except for the names of the top contributors,  







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                if any.
              d)    A committee not making independent expenditures  
                supporting or opposing a candidate but is required to  
                provide their top ten contributor list as described above,  
                shall include the text "Funding Details At [insert FPPC  
                Internet Web site]."  The text shall be below all other  
                text in contrasting color to the background color in Arial  
                equivalent type and the type size shall be equivalent to  
                at least 2.5 percent of the height of the television or  
                video display screen. 
              e)    An advertisement that is an independent expenditure  
                supporting or opposing a candidate shall include the  
                required statement that it was not authorized by a  
                candidate or a committee controlled by a candidate in the  
                aforementioned solid black background below all other text  
                required to appear in that area in a contrasting color and  
                in Arial equivalent type no less than 2.5 percent of the  
                height of the television or video display screen. 
              f)    If using a type size of 4 percent of the height of the  
                television or video display screen causes the name of any  
                of the top contributors to exceed the width of the screen  
                or causes the disclosures to exceed one-third of the  
                television or video display screen, the type size of the  
                name of the top contributor shall be reduced until the top  
                contributor's name fits on the width of the screen or the  
                entire disclosure fits within one-third of the television  
                or video display screen, but in no case shall the type  
                size be smaller than 2.5 percent of the height of the  
                screen.  


           1) A print advertisement shall include the required disclosures  
             as follows:


              a)    The disclosure area shall have a solid white  
                background and shall be in a printed or drawn box on the  
                bottom of at least one page that is set apart from any  
                other printed matter.  All text in the disclosure area  
                shall be in contrasting color.
              b)    The text shall be in an Arial equivalent type with a  
                type size of at least 10-point for printed advertisements  
                designed to be individually distributed, including, but  
                not limited to, mailers, flyers, and door hangers.







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              c)    The top contributors, if any, shall each be disclosed  
                on a separate horizontal line, in descending order,  
                beginning with the top contributor who made the largest  
                cumulative contributions on the first line.  The name of  
                each of the top contributors shall be centered  
                horizontally in the disclosure area.  Immediately below  
                this text, committees required to provide their top ten  
                contributor list shall include the text "Funding Details  
                At [insert FPPC Internet Web site]." 
              d)    Required disclosures on a printed advertisement that  
                is larger than those designed to be individually  
                distributed, including, but not limited to, yard signs or  
                billboards, shall be in Arial equivalent type with a type  
                size of at least 5 percent of the height of the  
                advertisement, and printed on a solid background with  
                sufficient contrast that is easily readable by the average  
                viewer.  The text may be adjusted so it does not appear on  
                separate horizontal lines, with the top contributors  
                separated by a comma.
              e)    Newspaper, magazine, or other public print  
                advertisements that are 20 square inches or less shall be  
                required to disclose only the single top contributor of  
                $50,000 or more.


           1) An electronic media advertisement, other than an Internet  
             Web site (such as a banner advertisement on a website) shall  
             include the text "Who funded this ad?" in a contrasting color  
             and a font size that is easily readable to the average  
             viewer.  This text shall be a hyperlink to an Internet Web  
             site containing the required disclosures.  Only the hyperlink  
             is required where the aforementioned text would be  
             impracticable.  An Internet Web site that is hyperlinked  
             shall remain online and available to the public until 30 days  
             after the date of the election in which the candidate or  
             ballot measure supported or opposed by the advertisement was  
             voted upon.


           2) An Internet Web site shall include the required disclosures  
             in a contrasting color and in no less than 8 point font.


           3) An advertisement made via a form of electronic media that is  







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             audio only and therefore cannot include written disclaimers  
             shall comply with the same disclaimer requirements for radio  
             advertisements.


           4) An advertisement made via a form of electronic media that  
             allows users to engage in discourse and post content, or any  
             other type of social media, shall only be required to include  
             the disclosures in a contrasting color and in no less than 8  
             point font on the committee's profile, landing page, or  
             similar location and shall not be required to include a  
             disclaimer on each individual post, comment, or other similar  
             communication.


           5) These disclaimers do not apply to advertisements made via  
             social media where the only expense or cost of the  
             communication is compensated staff time unless the social  
             media account where the content is posted was created only  
             for the purpose of advertisements governed by the PRA. 


           6) Provides that an advertisement supporting or opposing a  
             candidate that is paid for by an independent expenditure must  
             include a statement that it was not authorized by a candidate  
             or a committee controlled by a candidate.  If the  
             advertisement was authorized or paid for by a candidate for  
             another office, the expenditure shall instead include a  
             statement that "This advertisement was not authorized or paid  
             for by a candidate for this office or a committee controlled  
             by a candidate for this office." 


           7) Repeals the requirement that the existing statement  
             regarding independent expenditures on a mailed advertisement  
             be located within one quarter of an inch of the recipient's  
             name and address as printed on the advertisement.  Instead,  
             they would be required to appear with the top three  
             disclosure statements. 


           8) If the order of top contributors required to be disclosed  
             changes or a new contributor qualifies as a top contributor,  
             the disclosure in the advertisement shall be updated as  







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             follows:


              a)    A television, radio, telephone, electronic billboard,  
                or other electronic media advertisement shall be updated  
                to reflect the new top contributors within five business  
                days.  A committee shall be deemed to have complied if the  
                amended advertisement is delivered, containing a request  
                that the advertisement immediately be replaced, to all  
                affected broadcast stations or other location where the  
                advertisement is placed no later than the fifth business  
                day.
              b)    A print media advertisement, including non-electronic  
                billboards, shall be updated to reflect the new top  
                contributors before placing a new or modified order for  
                additional printing of the advertisement.  


           9) Provides that a person shall not make any contribution to  
             any committee or candidate that is earmarked for a  
             contribution to any other particular committee, ballot  
             measure, or candidate unless the contribution is fully  
             disclosed, as specified.  For this purpose a contribution is  
                                                                              earmarked if the contribution is made under any of the  
             following circumstances:


              a)    The committee or candidate receiving the contribution  
                solicited the contribution for the purpose of making a  
                contribution to another specifically identified committee,  
                ballot measure, or candidate, requested the contributor to  
                expressly consent to such use, and the contributor  
                consents to such use.
              b)    The contribution was made subject to a condition or  
                agreement with the contributor that all or a portion of  
                the contribution would be used to make a contribution to  
                another specifically identified committee, ballot measure,  
                or candidate.
              c)    After the contribution was made, the contributor and  
                the committee or candidate receiving the contribution  
                reached a subsequent agreement that all or a portion of  
                the contribution would be used to make a contribution to  
                another specifically identified committee, ballot measure,  
                or candidate.







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           1) Makes the following findings and declarations: 


              a)    For voters to make an informed choice in the political  
                marketplace, political advertisements should not  
                intentionally deceive voters about the identity of who or  
                what interest is trying to persuade them how to vote.


              Disclosing who or what interest paid for a political  
                advertisement will help voters be able to better evaluate  
                the arguments to which they are being subjected during  
                political campaigns and therefore make more informed  
                voting decisions.
           1) Makes other technical and conforming changes.  


          Background


          Existing Political Advertising Disclaimers.  Under the PRA,  
          committees must put "paid for by" disclaimers on campaign  
          advertising, including campaign mailers, radio and television  
          ads, telephone robocalls, and electronic media ads.  


          Comments


          1)According to the author, AB 700 will dramatically improve  
            disclosure of the top funders on ads for ballot measures and  
            independent expenditures for and against candidates.  Knowing  
            the true source of funds for ads will prevent voters from  
            being deceived about who is truly paying for them, help voters  
            better evaluate the credibility and content of ads, and  
            promote greater confidence in the electoral process.


          2)Constitutional Issues.  This measure could be interpreted as a  
            violation of the United States and California Constitutions'  
            guarantees to free speech.  While the right to freedom of  
            speech is not absolute, when a law burdens core political  







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            speech, the restrictions on speech generally must be "narrowly  
            tailored to serve an overriding state interest," McIntyre v.  
            Ohio Elections Commission (1995), 514 US 334. 


          Related/Prior Legislation


          SB 52 (Leno of 2013-14) similarly proposed to change the content  
          and format of disclosure statements on specified campaign  
          advertisements to make those statements more prominent, among  
          other provisions.  SB 52 died on the Assembly's Inactive file.


          AB 1148 (Brownley) and AB 1648 (Brownley, of 2011-12) also  
          proposed increasing the prominence of disclosure statements on  
          campaign advertisements, among other provisions.  AB 1148 failed  
          passage on the Assembly Floor, while AB 1648 was approved by the  
          Assembly, but was not heard in the Senate. 




          FISCAL EFFECT:   Appropriation:    No          Fiscal  
          Com.:YesLocal:   Yes


          According to the Senate Appropriations Committee:  The Fair  
          Political Practices Commission (FPPC) indicates that it would  
          incur annual costs of $350,000 (General Fund) to implement the  
          provisions of the bill.




          SUPPORT:   (Verified8/19/16)


          Insurance Commissioner Dave Jones
          California Alliance of Retired Americans
          California Church IMPACT
          California Clean Money Campaign
          California Common Cause
          California League of Conservation Voters







                                                                     AB 700  
                                                                    Page  14


          California Public Interest Research Group
          Consumer Federation of California
          CounterPAC
          Courage Campaign
          DailyKos
          Democracy for America
          Endangered Habitats League
          Friends Committee on Legislation of California
          Friends of the Earth
          GMO Free USA
          JERICHO: A Voice for Justice
          Label GMOs
          Lutheran Office of Public Policy - California
          Maplight
          Money Out Voters In
          New Progressive Alliance
          People Demanding Action
          Public Citizen
          Represent.Us
          Roostaction.org
          Bob Stern, Principal co-author of the Political Reform Act of  
          1974
          In addition, the California Clean Money Campaign submitted  
          copies of petitions signed by a little more than 20,000  
          individuals in support of AB 700.


          OPPOSITION:   (Verified8/19/16)


          Fair Political Practices Commission
          Howard Jarvis Taxpayers Association

          ASSEMBLY FLOOR:  60-15, 1/27/16
          AYES:  Achadjian, Alejo, Baker, Bloom, Bonilla, Bonta, Brown,  
            Burke, Calderon, Campos, Chang, Chau, Chiu, Chu, Cooley,  
            Cooper, Dababneh, Daly, Dodd, Eggman, Frazier, Cristina  
            Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez,  
            Gordon, Gray, Hadley, Roger Hernández, Holden, Irwin,  
            Jones-Sawyer, Lackey, Levine, Linder, Lopez, Low, McCarty,  
            Medina, Mullin, Nazarian, O'Donnell, Olsen, Quirk, Rendon,  
            Ridley-Thomas, Rodriguez, Salas, Santiago, Steinorth, Mark  
            Stone, Thurmond, Ting, Weber, Wilk, Williams, Wood, Atkins
          NOES:  Travis Allen, Brough, Chávez, Dahle, Beth Gaines,  







                                                                     AB 700  
                                                                    Page  15


            Gallagher, Grove, Harper, Jones, Kim, Maienschein, Mayes,  
            Melendez, Obernolte, Wagner
          NO VOTE RECORDED:  Bigelow, Mathis, Patterson, Waldron

          Prepared by:Darren Chesin / E. & C.A. / (916) 651-4106
          8/31/16 9:40:16


                                   ****  END  ****