One small victory for democracy

State to Chamber: No aggregating funds for corporate 'express advocacy'

LANSING – The Michigan Department of State has given the Michigan Chamber of Commerce clear guidance on how the Chamber can exercise newly won campaign expenditure rights that flowed from the U.S Supreme Court decision earlier this year in the case of Citizens United v. Federal Election Commission: The Chamber can spend its own corporate treasury funds to support or oppose political candidates, but it is prohibited from aggregating the funds of other entities for ‘express advocacy’ purposes.

The Department’s Declaratory Ruling was signed by Secretary of State Terri Lynn Land and published Friday, May 21, 2010. The Declaratory Ruling was issued in response to a request for guidance by Robert LaBrant, the Chamber’s senior vice president and general counsel.

The Department’s Declaratory Ruling was a dramatic reversal of its own draft ruling that was published on April 30th. In the draft, the Department had indicated that the Chamber would be allowed to contribute funds from its general treasury to a new political committee to be known as Chamber PAC III, which, in turn, could make independent expenditures supporting or opposing candidates. In the final ruling, the Department said that such a contribution from the corporation to the proposed new committee would constitute a felony violation of the Michigan Campaign Finance Act (MCFA). The Department noted that the Citizens United decision made allowance for corporate independent expenditures, not corporate contributions to political committees, which are banned under the MCFA.

“This is an important ruling,” said Rich Robinson of the non-profit, nonpartisan Michigan Campaign Finance Network (MCFN). “It should establish a precedent that will guide other corporate entities that contemplate making independent expenditures.”

“On the other hand, it is a very narrow ruling that only applies to ‘express advocacy,’ because that is the question Mr. LaBrant asked, and the Department is bound to answer only the questions it is asked,” Robinson said. “The matter of candidate-focused issue ads has not been addressed, and that is an enormous loophole.”

Over the past decade, the Michigan Campaign Finance Network has documented more than $45 million worth of candidate-focused television ‘issue’ ads that are clearly understood by viewers to be campaign attack ads. The ads are not disclosed in the State campaign finance reporting system because they don’t use words of express advocacy such as “vote for,” “vote against,” “elect” or “defeat.” MCFN compiles issue ad spending data from the public files of the state’s broadcasters and cable systems.

A recent example of the scope of the issue ad loophole is the 2008 Michigan Supreme Court campaign. The candidates’ spending and reported independent expenditures totaled $3.7 million. Unreported issue ads totaled $3.8 million, and included the most prominent advertisements of the campaign: Out of Touch, sponsored by the Michigan Republican Party; The Sleeping Judge, sponsored by the Michigan Democratic Party; and Dangerous Rulings, sponsored by the Michigan Chamber of Commerce.

Already this year, gubernatorial campaign issue ads have been sponsored by the Michigan Civic Educational Fund, Eagle Strategies and Americans for Job Security. Financial backers of those ads are just as likely to remain unknown as are the funders of the 2008 supreme court ads.

“This Declaratory Ruling is a small victory for the people of the state of Michigan who want transparency and accountability in political campaigns,” Robinson said. “But we still have a long way to go before we know whose money is driving Michigan politics.”

Press Release 2010 News