Shedding some light on ‘dark’ money

Editor’s note: Justin Allen is a partner with the Little Rock-based law firm of Wright Lindsey Jennings. He leads the firm’s governmental relations group.

Opinions, commentary and other essays posted in this space are wholly the view of the author(s). They may not represent the opinion of the owners of Talk Business & Politics.
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The buzz phrase this political season is “dark money.” It describes a group that raises money to pay for advertising, whether it is television, radio or print, that addresses political and policy issues of the day.

Many of them, if not most, also make reference to an elected official or a candidate for office and that person’s position on one or more issues. The reference to “dark” comes from the fact that these groups aren’t required to identify who gave them money. We have seen such groups operate in Arkansas, the most notable being the recent activity of the Judicial Crisis Network which spent several hundred thousand dollars on ads in Arkansas about one of the candidates for Chief Justice.

The “dark money” group should be contrasted with an Independent Expenditure Committee (“IEC”). Under Arkansas law, an IEC is an entity that funds ads addressing policy issues but also takes the extra step of advocating for, or against, the election of a candidate for office. Groups that engage in that type of direct advocacy are required to register with the Arkansas Secretary of State and file financial reports identifying contributors. It is also important to note that an IEC is prohibited from coordinating with candidates or their representatives in conducting the independent activities.

This distinction in Arkansas law is no doubt based on the landmark 1976 U.S. Supreme Court case of Buckley v. Valeo. In passing upon federal campaign finance laws, the Buckley Court made clear that political speech is afforded the broadest protection by the First Amendment. As a result, the Court invalidated portions of the law, including one that placed a limit on spending by a campaign. In terms of reporting, the Court upheld requirements that candidates file reports identifying the sources of direct campaign contributions. On the other hand, the Court held that similar reporting requirements for third party groups are not permissible unless they run ads that “expressly advocate the election or defeat of a clearly identified candidate.”

So, what is the line? When must a group file and report as an IEC under Arkansas law?

The Arkansas Ethics Commission addressed that issue in a 2006 opinion (2006-EC-004). Relying on Buckley and some cases decided after it, the Commission determined that unless the ad specifically states “vote for” or “vote against” a clearly identified candidate, it is not obligated to register and report.

If you have been following politics in Arkansas this election season, you know that a lot of people are not happy with these ground rules. Many believe dark money groups should register and identify the sources of their funding. In a March 5th piece, the Democrat-Gazette addressed this very issue and reported that as many as 38 states are considering laws that would require reporting by dark money groups.

In Arkansas, Democrats, led by Rep. Clarke Tucker, have urged Gov. Asa Hutchinson to make the issue part of an upcoming special legislative session. Tucker introduced a bill in 2015 that was designed to expand reporting in Arkansas to cover many of the dark money groups, even if their ads stop short of advocating for or against a vote for a particular candidate. I would expect him to press a similar bill, whether it is in a special session or in the 2017 regular session. Based on the public statements of elected officials in Arkansas, there appears to be some political support for requiring some form of reporting by dark money groups.

In considering new reporting guidelines for these groups, the State must be mindful of constitutional limitations. Based on Buckley, the issue is going to be whether a group required to report under an expanded law is running ads that ”expressly advocate the election or defeat of a clearly identified candidate.”

Despite the 2006 Ethics Commission opinion and case law supporting it, this writer isn’t necessarily convinced the line is simply a matter of whether the ad states “vote for” or “vote against.”

A newly comprised U.S. Supreme Court, in the current political climate, could very well draw the line differently, especially with the frequently seen ads that clearly suggest the public should vote for or against a candidate, but without containing those specific words.