38 states looking at ‘dark money’

Disclosure push gaining traction

A renewed effort to give Arkansas information about so-called dark-money groups would be part of a national movement to seek disclosure about those who attempt to influence the outcomes of elections, according to the backer of the proposal and others.

A recent poll of the National Conference of State Legislatures found that 38 states are considering new disclosure laws that would require groups such as the Judicial Crisis Network to share more information about their funding and involvement in state elections.

“This kind of spending in elections has exploded over the past five years … and this area of law is evolving,” Rep. Clarke Tucker, D-Little Rock, said in a telephone interview Thursday evening. “If states want honesty, integrity and transparency in government, they need to keep pace with this area of the law.”

According to the Center for Public Integrity, nonprofit dark-money groups spent about $25 million in the 2014 election year in TV ads in state races, roughly about 3 percent of all ads purchased during that cycle.

Democratic legislators have asked Gov. Asa Hutchinson to consider taking up Tucker’s proposed legislation that would, for the first time, regulate electioneering in the state and would require groups — like those that spent more than $1 million on TV ads on Tuesday’s state Supreme Court races — to register with state officials and disclose the source of their funding.

The Judicial Crisis Network, based in Washington, D.C., targeted Justice Courtney Goodson, who lost to Circuit Judge Dan Kemp of Mountain View in the race for chief justice.

Hutchinson, a Republican, has taken the Democrats’ proposals under advisement. The Democrats asked that the proposals be included in a forthcoming call for an April special legislative session.

Currently, Arkansas has regulations requiring financial disclosure of candidate campaigns, political committees and independent expenditure groups. As described in the regulations of the state Ethics Commission, the difference between political committees and independent expenditure groups is that political committees can donate to candidates, but independent expenditure groups do not contribute money to a candidate but spend money to advocate the defeat or election of a candidate.

Tucker’s bill would require any registered group to report its spending and involvement to state officials and also identify the companies, groups and individuals that are funding it.

Pete Quist, an official at the National Institute on Money in State Politics, said Tucker’s effort to promote more disclosure is a part of a national movement. But he said that a new law requiring outside dark-money groups to disclose their donors would put Arkansas toward the forefront of that movement.

“There are some states that do have contribution disclosure to some degree … but usually to account for how much money is spent,” Quist said. “This is kind of cutting-edge disclosure. … The idea of getting disclosure for dark money groups is pretty new.”

Tucker disagrees, pointing to nearby states like Oklahoma and Illinois, where similar disclosure requirements have been enacted. Illinois’ was challenged in federal court but ultimately upheld.

Dark-money groups were among several types to proliferate after the U.S. Supreme Court ruled in 2010 in the case of Citizens United v. the Federal Election Commission that the First Amendment prohibited the government from limiting campaign spending by nonprofit groups. The ruling has been extended to corporations, unions and other groups.

Tucker tried to pass similar legislation in 2015, but the bill was defeated after some lawmakers and conservative groups protested that the disclosure efforts could violate an individual’s rights to free speech.

Josh Silverstein, a law professor at the University of Arkansas at Little Rock, said such a criticism could “muddy” a measure like the one Tucker has proposed.

On its face, Silverstein said, Tucker’s proposal seems constitutional. It would follow the Citizens United ruling by not placing restrictions on money; it merely would require disclosure of who gave the money. But Silverstein said such requirements could meet pushback in the courts.

In the 1950s, he said, federal courts ruled that the NAACP did not have to disclose its membership lists because its members might be subject to threats or worse forms of illegal activity.

But in the Citizens United case and others, Silverstein said, the nation’s high court touted disclosure of such funding as a laudable goal.

Silverstein said any “chilling effect” that could result from potential donors’ names being made public once they gave money to politically involved organizations is the “cost of living in a free society.”

“Individuals are free to boycott. … If you have unpopular views, or you’re worried about the repercussions of your political beliefs, the general response [in courts] is ‘too bad, so sad,’” he said. “If people exercise their legal rights to treat you differently, that’s the price we pay to live in a free society. … [Some scholars] think that even legal harm goes too far and presents a threat to the First Amendment. I don’t think that’s frivolous … but I disagree.”

Silverstein added: “When push comes to shove, the [U.S.] Supreme Court may express real skepticism about a piece of legislation like Tucker’s.”

Tucker said one way to preserve an individual’s rights while also shedding light on “dark money” groups is language in his bill that would encourage organizations to set up distinct advertising wings.

For example, a citizen could contribute to the National Rifle Association, but ask that the money not go to the group’s electioneering efforts, and thus his or her name would not be subject to reporting.

Silverstein said Tucker’s proposal is part of a national experiment by state governments on how to proceed in a new political reality.

“Passing disclosure laws, especially with judicial races … [states are trying to] find where that line is,” Silverstein said.

In some states, in addition to efforts to require groups to disclose their funding sources, there are attempts to address situations in which a group receives the bulk of its money from another organization — to ensure that that second organization would be subject to disclosure as well.

Tucker’s bill would not prohibit a dark-money group from taking all of its money from another nonprofit whose funding wasn’t disclosed.

Tucker said that kind of “shell game” could continue, but his proposed legislation is a necessary first step.

“That’s why it’s an ever-evolving area of the law,” Tucker said. “In an ideal world, I’d like to include [a way to account for that] in this piece of legislation, but I don’t want to bite off more than I can chew.”

Tucker’s proposal also would put Arkansas in line with about half of states in the country in defining “electioneering” materials, such as ads and other communications that are politically related but not affiliated with a candidate. But “electioneering” groups have not been subject to state law by virtue of avoiding “express advocacy” in their materials.

According to the Brennan Center for Justice in New York, “the current legal standard for identifying an electioneering ad is the socalled ‘magic words’ test.” A U.S. Supreme Court ruling footnote said a television commercial is deemed to be influencing the outcome of an election only if it includes words such as “vote for,” “vote against,” “elect,” or “defeat.”

Under Tucker’s bill, any group’s advertising or communication that “clearly” refers to an identified candidate and, following a “reasonable interpretation” is found to be an “appeal to vote for or against a specific candidate or specific set of candidates,” then that group would need to register with the secretary of state’s office.