House Passes DISCLOSE Act, Senate Struggle Begins

On June 24, the House passed the DISCLOSE Act by a close, largely party-line vote [1] of 219-206. Supporters praise the bill [2] as a success for transparency, while critics argue that it is an attack on the First Amendment and creates unfair exemptions for groups such as the National Rifle Association. The companion bill in the Senate, S. 3295 [3], must now overcome many obstacles.

The DISCLOSE Act (the Democracy Is Strengthened by Casting Light On Spending in Elections Act) was introduced in April by Rep. Chris Van Hollen (D-MD) and Sen. Chuck Schumer (D-NY) to mitigate the effects of the January U.S. Supreme Court decision in Citizens United v. Federal Election Commission [4]. In that case, the Court ruled that all corporations, including 501(c)(4), 501(c)(5) (unions), 501(c)(6) (trade associations), and 527 organizations, can spend an unlimited amount of money from their general treasuries to expressly advocate for the election or defeat of candidates for federal office as long as those actions are "independent" of campaigns. Overall, the DISCLOSE Act is meant to increase disclosure requirements for election-related spending and restrict such activity by government contractors and foreign-controlled companies.

On June 14, several publications, including CQ Politics [5], reported that changes were made to the House bill to address opposition to the legislation's disclosure rules. The change came to be known as the NRA (National Rifle Association) carve-out, because the NRA would have been the primary beneficiary of the exemption. The agreement would have exempted 501(c)(4) organizations that have been in existence for more than 10 years, have members in all 50 states, raise 15 percent or less of their funds from corporations, and have more than 1 million members. Many advocacy groups denounced the change for setting up an unfair system that favors large, well established membership groups.

After outspoken criticism of the change, the membership threshold was lowered to 500,000. The manager's amendment [6], which contained the NRA carve-out, also included a provision raising the threshold for restrictions on campaign spending by government contractors. Under the amendment, companies with more than $10 million in annual contracts would be prohibited from spending general treasury funds to independently influence elections. Originally, the threshold was $500,000, then $7 million, in earlier versions of the bill.

Another change concerned those who have argued that the bill favors unions. According to the final language [7], the bill now stipulates that organizations are not required to report payments when the "funds attributable to dues, fees or assessments which are paid by individuals on a regular, periodic basis in accordance with a per-individual calculation which is made on a regular basis." Unions would clearly be affected by this language.

A lot of doubt regarding the bill's chances for passage stemmed from the announced exemption for large 501(c)(4) organizations – the NRA carve-out – and some House Democrats expressed uneasiness about making a politically difficult vote if the Senate was unlikely to act. In an attempt to allay these concerns, Senate Majority Leader Harry Reid (D-NV) and Schumer promised that the Senate will take up the measure. In a letter [8] to House leaders, Reid and Schumer said, "We commit to working tirelessly for Senate consideration of the House-passed bill so it can be signed by the president in time to take effect for the 2010 elections."

The White House released a Statement of Administration Policy [9] a few days before action on the floor, which stated, "This bill is not perfect. The Administration would have preferred no exemptions. But by providing for unprecedented transparency, this bill takes great strides to hold corporations who participate in the Nation’s elections accountable to the American people."

After weeks of negotiations, floor debate began on June 24. Five amendments were considered, and all but one passed. The failed amendment, offered by Rep. Steve King (R-IA) sought to eliminate all campaign contribution limits in federal elections. Rep. Dan Lungren (R-CA) also offered a "motion to recommit" that would have sent the bill back to committee. That motion failed by a vote of 208-217.

The agreed-upon amendments include:

• Covered organizations must report their campaign spending to shareholders, members or donors in a "clear and conspicuous manner"
• Corporations with leases on the Outer Continental Shelf are banned from making campaign-related expenditures
• Disclaimers must include the city and state of the ad funder's residence or main office
• Political expenditures by corporations with significant foreign government ownership and corporations that have a majority of shares owned by foreign nationals are prohibited

Most of the provisions of the DISCLOSE Act remained intact upon final House passage. For example, under the bill, the CEO or highest-ranking official of any corporation that makes independent election expenditures is required to appear on camera to say that he or she "approves this message." The top funder of the ad also has to record a "stand-by-your-ad" disclaimer, and the top five donors to the group that purchases campaign-related broadcasts would be listed on the screen at the end of the message (this would not apply to groups exempt under the NRA carve-out). Corporations will also have to report certain information to the Federal Election Commission (FEC), including information about donors.

For more information on other provisions in the House bill, see a summary [10] from the Congressional Research Service.

The bill faces an uncertain future in the Senate. Sens. Dianne Feinstein (D-CA) and Frank Lautenberg (D-NJ) have both expressed disapproval of the NRA carve-out. According to Roll Call [11] (subscription required), Lautenberg said, "It is the height of irony that Congress is considering special treatment for the NRA in a bill designed to limit the role of special interests in Washington."

The Senate bill currently has 49 co-sponsors, none of whom are Republicans. Even if the bill is brought up in the Senate as promised, it may still have to overcome a possible Republican filibuster, meaning it will need 60 votes to move forward.

Timing is also an issue. The likelihood of the bill impacting the November elections remains in question, considering that the legislation's requirements won't take effect until 30 days after the president signs the bill. Congress' fast-approaching Independence Day and August recesses are additional roadblocks.