The Fair Political Practices Commission (FPPC), the state agency charged with implementing and enforcing the California Political Reform Act (CPRA), has had a busy fall. It revised several regulations that impact disclosure around campaigns, including ballot measures.
New Coordination Presumptions Raise Hurdles for Nonprofits Making Independent Expenditures Related to Ballot Measure Campaigns
In what the FPPC described as “sweeping reforms” to the rules on coordination between campaigns and outside spending groups, called Independent Expenditures, the agency adopted new regulations that presume certain activities demonstrate coordination between the campaign and the outside group. Now, rather than requiring the FPPC to prove that coordination has occurred, the campaigns and the Independent Expenditures will be presumed to have coordinated if they engage in one of the listed activities, unless they can provide evidence to the contrary. Practically speaking, this means there are activities that now will be considered contributions to campaigns, rather than independent expenditures. The biggest impact of the new regulations is that the burden of proving that coordination did not happen is on the groups making the communications rather than on the FPPC as the enforcement agency.
The FPPC made these changes to curb “a nationwide trend toward increased coordination” between political candidates and outside groups. While the rules are explicitly designed to counter this trend among candidates, the rules affect ballot measure campaigns as well. For example, if a ballot measure campaign and a separate nonprofit organization making an independent expenditure share a common consultant, under the new rules the ballot measure campaign and the separate organization will be presumed to have coordinated their activities. Likewise, when a senior nonprofit staffer takes a leave of absence to work at an IE (Independent Expenditure Committee), the FPPC will presume coordination between the campaign and the IE under certain circumstances. Unfortunately, there is little in the way of guidance for how to rebut these new presumptions. This is an important reminder that organizations should clearly document their actions and intentions around campaign-related activities.
Top Nonprofit Ballot Measure Contributors Need to Disclose Top 2 Donors
The FPPC also added new donor disclosure requirements. Regulation 18422.5, which was adopted last year, requires disclosure of the top 10 contributors to ballot measure campaigns. The September 2015 regulations now require nonprofits with “bland and generic sounding names” that are listed among the top 10 donors to a ballot measure campaign to trace the source of the funds that made up the contribution and disclose the top 2 donors to the nonprofit’s contribution to the campaign. For example, if Save Our Children made a contribution to the Yes on Prop X campaign that resulted in the organization being listed as a top 10 contributor, Save Our Children would also have to disclose the top 2 donors of funds that made up its contribution to the Yes on Prop X campaign. This new regulation is part of the FPPC’s ongoing efforts to address the 2012 battle around revenue-raising and anti-union ballot measures (Propositions 30 and 32). When out-of-state donors tried to conceal the true source of the funds they were raising around these measures, the FPPC imposed the largest fine in FPPC history.
Event-Based Reporting Eliminated
The FPPC also repealed Regulation 18413. This event-based reporting regulation had been intended to eliminate the “incidental burdens of recipient committee status, … so long as [ organizations] do not engage in other activities (such as making contributions to candidates or independent expenditures supporting or opposing the election of candidates) that would result in classification as a ‘recipient committee.’” See California Pro Life Council v. FPPC. The FPPC cited a 2014 law, SB 27, as the basis for the repeal of this regulation. However, there is nothing in SB 27 that eliminates the “incidental burdens of recipient committee status” for entities that make occasional Independent Expenditures. For organizations that make only small independent expenditures, Regulation 18413 provided a considerably easier method of reporting, because it did not require going through the more complicated and burdensome process of registering and reporting as a recipient committee. Now, organizations will need to follow the regular registration and reporting requirements based on their level of activity and expenditure, which will likely mean keeping track of more complex requirements.
AFJ is in the process of revising our state law resource on California’s campaign finance rules to reflect the changes described in this post! To keep up to date on the latest in California compliance and policy, please subscribe to our West Coast Digest.
