“Democracy Is Strengthened by Casting Light On
 Spending in Elections Act (DISCLOSE)”
 (Amendments to the Federal Election Campaign Act of 1971)


The House and the Senate version are the same except for subtitle D and Title IV 


Sponsors: Representative Chris Van Hollen (D – MD) and Senator Charles E. Shumer (D – NY)


Introduced: 4/29/2010


Last Action: 4/29/2010; In the House of Representatives referred to the Committee on House Administration, and to the Committee on the Judiciary; in the Senate referred to Senate Committee on Rules and Administration.


Purpose: The purpose of the DISCLOSE Act is to mitigate the effects of the Supreme Court’s ruling in Citizens United v. Federal Election Commission. This ruling ended decades of campaign finance law by allowing corporations, labor unions, and other interest groups to spend unlimited amounts of their general treasury accounts on campaign-related activity. In general, this bill institutes higher disclosure standards for groups participating in elections. It is believed that higher disclosure will cast light on how and which organizations are engaging in electioneering; enabling the general public to make informed decisions about the messages they receive. In addition to heightened disclosure, both government contractors, recipients of TARP money, and foreign-led domestic corporations are prohibited from making campaign contributions.  
 

Title I: Regulation of certain political spending
Sec. 101. Prohibiting independent expenditures and electioneering communications by government contractors

  • Prohibits government contractors from making any independent expenditures, or contributions for electioneering communications if government contract is greater or equal to $50,000. 
  • Corporations who received any federal bailout money also are prohibited from making any contributions for electioneering purposes until they repay all financial assistance. 

Sec. 102. Application of ban on contributions and expenditures by foreign nationals to foreign-controlled domestic corporations

  • Foreign nationals and foreign corporations already are prohibited from making contributions for U.S. elections. This section extends this ban to domestic corporations under the following conditions: 
  1. A corporation where 20 percent of the voting shares are controlled by foreign nationals.
  2. The majority of the members of the board of directors are foreign nationals.
  3. When one or more foreign nationals has the power to dictate or direct a domestic corporation’s decisions relating to its interests in the United States.
  4. When a foreign national has the power to direct activities relating to state, or local elections.
     
  • CEO or highest ranking corporate officer must file a certificate of compliance with the FEC verifying that they do not fall under the above restrictions before they can engage in campaign-related activity.

Sec. 103. Treatment of payments for coordinated communications as contributions

  • Bans coordinated communications that are publicly distributed.
  • A coordinated communication is defined as a communication that is made in cooperation with a candidate or any authorized committee associated with that candidate or his/her party. Also, any communication that distributes material that has been prepared by a candidate or authorized committee is prohibited.
  • For congressional candidates, only communications distributed within the jurisdiction of the office a candidate is running for is considered public. 
  • Communication appearing through broadcasting stations, newspapers, magazines, or other periodical publication is not considered coordinated communications. 
  • This ban is effective 90 days before the earliest of the primary election, preference election, or nominating convention, and ends on the date of the general election. For presidential races this ban would go into effect 120 days before the first primary and continues through the general election.
  • Exceptions to this ban include news or magazine stories. 

Sec. 104. Treatment of political party communications made on behalf of candidates.

  • Applies limits to communications as contributions from a committee of the political party of the candidate, only if that candidate or authorized candidate committee had direct control over the communication.
  • Party paid communications made without the direct control of the candidate are not limited by rules regarding party contributions and expenditures.
  • This section will go into effect 30 days after the enactment of this Act.

Title II. Promoting effective disclosure of campaign-related activity
Covered organizations include corporations, labor unions, and internal revenue code designated 501, and 527 groups.

Subtitle A
Sec. 201Independent expenditures

  • Expands the definition of independent expenditure to include express advocacy and the functional equivalent of express advocacy. If a reasonable person interprets a communication as clearly supporting or opposing a candidate it is considered express advocacy.
  • Institutes a 24-hour reporting period for expenditures greater than $10,000 occurring more than 20 days before an election and expenditures greater than $1,000 within 20 days before an election.

Sec. 202. Electioneering communications

  • Expands the period that a communication is considered as electioneering communications from 60 days to 120 days. This will go into effect the day following enactment of this bill.
  • Requires that reports include the names and whether the communications are meant to support or oppose such candidates. 
     

Subtitle B
Sec. 211. Improved disbursement reporting requirements

  • If a covered organization makes an independent expenditure exceeding $10,000 in a calendar year the following additional information will be required:
  1. The identification of each person who made a payment equal to or greater than $600 in an aggregated amount to the covered organization during the period reported for campaign-related activity.
  2. Whether or not individuals, as described above, designated that their donation or payment be used for a specific election or candidate. If so, then the name of the election or candidate involved. If payment was designated for a specific public independent expenditure, then a description of the expenditure is required.
  3. The identification of each person who made unrestricted donor payments in an aggregate amount greater or equal to $600, if disbursements made by the organization for public independent expenditures were not made from the organization’s Campaign-Related Activity Account.

(Essentially this section makes it clear that a covered organization that gives funds to another person or group for electioneering purposes will be counted as making the public independent expenditure themselves.)

Sec. 212. Rules regarding use of general treasury funds by covered organizations for campaign-related activity

  • Donations to a covered organization can be used for campaign related activity when the person providing the amount has designated them for that purpose. Unrestricted donations, no designation given, and other funds of an organization can be used for campaign-related activity. 
  • When a donor has specifically requested in writing that their funds be not used for campaign-related activity the organization is required to send the donor a certificate assuring them that their funds would not be used for said activity. 
  • Disbursements for campaign-related activity must be reported to ensure that disbursements were not made in coordination with a candidate.

Sec. 213. Creation of separate campaign-related activity account

  • Covered organizations have the option to create an account for campaign-related activity.  After the creation of this account all disbursements made for campaign-related activity must be made from this account.
  • Covered organizations must identify deposits to this account. This information would include amounts paid to the organization for the purpose of campaign-related activity, whether or not the person donating the funds requested the funds be used for a specific candidate or election, if the amounts paid were a result of solicitation for funds to be used for campaign-related activity, or if the amounts deposited were transferred from the general treasury of the organization.
  • Covered organizations cannot deposit revenue, generating from donations made from individuals who designated that their donations were not to be used for campaign-related activity, into their campaign-related activity account.

Sec.214. Modification of rules relating to disclaimer statements required for certain communications. 

  • Requires the heads of covered organizations to appear on camera and publicly approve of the message. This essentially extends the rules that candidates must follow on ads to covered organizations. Additionally, the top funder has to appear. This also applies to other forms of media, such as the radio. The actual language of the disclosure statements that CEOs, highest ranking officers, or top funders have to read is contained in this section of the statute.  
  • Top funders must also be included in ads to demonstrate who is paying for the message.  This is to prevent organizations from forming unknown offshoots to hide their funding.
  •  When an organization purchases campaign-related TV advertising using non-restrictive funds the top five donors must be listed at the end of the advertisement.


Subtitle C
Sec. 221
. Requiring registrants to report information on independent expenditures and electioneering communications

  • Requires lobbyists to disclose the following information on their disclosure reports:
  1. Date and amount of each independent expenditure;
  2. Electioneering greater than $1,000;
  3. The name of each candidate that is referred to or supported or opposed.


Subtitle D (Appears only in the Senate version)
Sec. 231. Filing by Senate candidates with commission

  • Requires Senate candidates to file their campaign finance reports directly to the FEC.


Title III. Disclosure by covered organizations of information on campaign-related activity
Sec. 301. Requiring disclosure by covered organizations of information on campaign-related activity.

  • Requires covered organizations in their regular financial reports to stockholders, donors, and members to give the following information about funds that have been used for campaign-related activity:
  1. Date of independent expenditure or electioneering communication;
  2. The amount of the independent expenditure or electioneering communication;
  3. The name, office sought by, and whether the independent expenditure or communication involved, was in support or opposition to the candidate.
  • A disclosure of any transfer of funds to an individual that could be used for campaign-related activity must be included that contains the above information, as well as the following:
  1. The name of the recipient of the funds as well as the date;
  2. The source of the funds
  • Information in these periodic reports must also be publicly disseminated online to their official website within 24 hours of submission to the FEC.

Title IV. Television media rates (this is Title IV of the Senate version and amends that Communications Act of 1934)
Sec. 401. Television media rates.


The communications Act of 1934 requires a broadcasting station to give each candidate, for the same federal office, equal opportunities to use the station.  Also, the station is prohibited from censoring any broadcast material.  In addition to these requirements, during the 45 days preceding the date of a primary or primary runoff election and during the 60 days preceding the date of a general or special election, stations can only charge the lowest unit charge of the station for the same class and amount of time to each candidate.

  • This bill expands the equal opportunities requirement and prohibition of censorship to include communications made by national committees of political parties.
  • Extends the lowest unit charge that candidates enjoy to national committees of political parties. This limits what stations can charge. These requirements only apply to broadcasting stations in the media markets that cover the state or states in which the candidate is seeking election to federal office. 
  • These limitations on charges only apply if a covered organization spends more than $50,000 to run ads on broadcast, cable, or satellite television to oppose or support a candidate in a federal election. In an election where no such disbursement by a covered organization is made, only qualified candidates are entitled to receive the lowest unit charge.
  • Covered organizations are required to notify the FEC and the FCC if they have made disbursements greater or equal to $50,000 no later than 24-hours after the disbursements have been made.
  • The lowest unit charge restriction on broadcast stations only applies to the 45 days preceding the date of a primary or primary runoff election and during the 60 days preceding the date of a general or special election. 
  • To ensure station compliance, the FEC will perform random audits of designated market areas during the 45 days preceding a primary election and the 60 days preceding a general election.
  • Stations are required to record a request for broadcast time by a candidate, national committee of a political party, or a covered organization on their web site.

Title IV. Other provisions (this section is labeled Title V. in the Senate version)
Sec. 401. Judicial review

The following applies to any action questioning the constitutionality of this Act:

  1. Action shall be filed in the United States District Court for the District of Columbia.
  2. A copy of the complaint will be delivered to the clerk of the House of Representatives.
  3. Members of Congress have the right to intervene either in support or opposition regarding the constitutionality of the provision or amendment. 

The remainder of this Title contains information concerning severability and effective dates. 

For more information, please contact Susan Parnas Frederick, Jennifer Aguinzoni or Sean Kelly at (202)-624-5400.