Godfrey & Kahn Updates

"GAB 1.91 - Corporate Independent Expenditures in Wisconsin"
May 20, 2010
by Mike B. Wittenwyler

View Publication Document as (PDF)

On May 10, 2010, the Government Accountability Board (the "G.A.B.") adopted an emergency
rule expressly permitting corporations (as well as labor organizations, tribes and other
organizations) to sponsor independent expenditures in connection with elections in Wisconsin
for state and local office. See Wis. Admin. Code. § GAB 1.91. The new regulation also
establishes registration and reporting requirements for these organizations when they sponsor
independent expenditures.

CITIZENS UNITED


In one sense, at least, the G.A.B.'s action was pre-ordained - earlier this year, in Citizens United
v. FEC
, 558 U.S. ___, 130 S. Ct. 876 (2010), the U.S. Supreme Court overruled Austin v.
Michigan Chamber of Commerce
and, in doing so, permitted corporate sponsorship of
independent expenditures - express advocacy communications.1 In Citizens United, the
Supreme Court made very clear that any attempts to restrict or limit political speech by any
speaker - individuals, corporations, labor organizations or tribes - would be highly disfavored
because independent political speech is, excepting only minimal disclosure requirements, beyond
government regulation.

While Citizens United makes it very difficult for government to prohibit or at all limit the content
or source of political speech, the Supreme Court was equally clear that disclaimer and disclosure
requirements are permissible. Provided, however, that such disclosure requirements are not
tantamount to a prohibition - either by source or content.

GAB 1.91

Under Wisconsin campaign finance law, individuals and PACs sponsoring independent
expenditures are required to register with the G.A.B. and then file periodic campaign finance
reports. See Wis. Stat. § 11.06(7). In addition to the reports that must be filed with specific
information about the independent expenditure, PACs are required to file detailed reports with
the G.A.B. identifying all contributions to the PAC of more than $20 as well as a full itemization
of the PAC's disbursements. See Wis. Stat. § 11.06(1).

The new G.A.B. regulation applies limited disclosure requirements to corporate political
spending that, under Citizens United, is permissible. However, corporations sponsoring
independent expenditures will not need to establish a PAC nor will they need to file extensive
campaign finance reports like those required for a PAC. Instead, corporations will need to
adhere to the more limited registration and reporting requirements established in GAB 1.91.

> Independent Expenditure Depository Account
Under GAB 1.91, a corporation that sponsors independent expenditures will need to establish a
designated depository account in the name of the sponsoring organization. It should be a
separate and distinct bank account controlled by the corporation. The account shall be used by
the corporation to disburse all funds in connection with its independent expenditures as well as
receive all contributions made for the corporation's independent expenditures.

Once the depository account is established, the corporation will need to register with the G.A.B.
and provide certain information about itself and the account. And, there will be an annual filing
fee of $100.

An individual will need to be designated as the "treasurer" of the depository account, and no
activity shall occur without the authorization of the treasurer or his designated agents. The
registration statement will also identify "principal officers of the organization, including officers
and members of the finance committee, if any."

> Contributions "Made For" Independent Expenditures
Neither the corporation sponsoring the independent expenditures nor the corporation's
depository account are regulated as PACs. This is a critical distinction. GAB 1.91 requires only
the disclosure and reporting of contributions "made for" independent expenditures and not
donations to the corporation for other purposes.2

Instead, contributions "made for" independent expenditures and that need to be disclosed to the
G.A.B. will include:

  • funds from the sponsoring corporation transferred to its independent expenditure depository account; and,
  • third-party donations to the corporation when the donors earmark their contributions
    for independent expenditure activity.

All other donors to the corporation or other sources of corporate revenue do not need to be
included on the campaign finance reports filed with the G.A.B. For example, a donation made in
general support of an organization and that is not earmarked or targeted in support of
independent expenditure activity would not be subject to disclosure.

>Disclaimers

Like other express advocacy communications to the general public, corporate-sponsored
independent expenditures will need to include a disclaimer that identifies the sponsor of the
communication and that makes clear that the communication is independent of the candidate.
For example: "Paid for by [corporate sponsor], [individual's name], Treasurer. Not authorized
by any candidate or candidate's agent or committee."

EFFECTIVE DATE AND PROMULGATION OF A PERMANENT RULE


As an emergency rule, GAB 1.91 will take effect upon publication. It is expected to be
published on May 20, 2010, but no later than May 24, 2010. While the emergency rule will
expire on October 17, 2010, the G.A.B. has also begun promulgating GAB 1.91 as a permanent
rule. A comment period and public hearing on the proposed permanent rule will be held by the
G.A.B. soon and then it will be sent to the Wisconsin Legislature for its consideration.

In the coming weeks, the G.A.B. will be developing forms and instructions for the registration of
depository accounts and reporting of actions in connection with corporate-sponsored independent
expenditures. These forms will capture information including:

  • An oath for independent disbursements identifying the candidates to be supported or opposed as well as a sworn statement that the corporation is acting independently and that no coordination has occurred;
  • Independent expenditure reports that provide details on all expenditures made from the
    depository account;
  • 24 hour reports if the independent expenditures occur in the 15 days before an election
    day; and,
  • Periodic campaign finance reports, including information on all contributions made for
    the independent disbursements.

We will continue to monitor GAB 1.91 as the promulgation process continues. In the meantime,
please let us know if you have further questions or need any additional information on these
recent developments and the corporate sponsorship of independent expenditures.

 

1 In Buckley v. Valeo, 424 U.S. 1 (1976), the U.S. Supreme Court created two categories of political speech: express advocacy and issue advocacy. "Express advocacy" communications expressly advocate for the election or defeat of a clearly identified candidate and, when sponsored by a third-party, are regulated under campaign finance law as independent expenditures. "Issue advocacy" are those communications that avoid any explicit discussion of a candidate's election or defeat and, instead, provide information on a public policy issue of interest to the general public and/or associated with a public official or candidate for public office. See also Elections Board v. Wisconsin Manufacturers & Commerce, 227 Wis. 2d 650, 597 N.W.2d 721 (1999).

2 There are no source restrictions on who may make a contribution to the corporation in support of its independent expenditure activities. Moreover, there is no contribution limit on what any one source may contribute.

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