BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | AB 700| |Office of Senate Floor Analyses | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- 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: AB 700 Page 2 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. AB 700 Page 3 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 AB 700 Page 4 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 AB 700 Page 5 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. AB 700 Page 6 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 AB 700 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, AB 700 Page 8 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. AB 700 Page 9 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 AB 700 Page 10 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 AB 700 Page 11 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. AB 700 Page 12 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 AB 700 Page 13 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 ****