CHARLESTON — Past attempts to expand campaign finance rules have twice fallen short, but West Virginia lawmakers are trying again and this time they hope to bring shareholders along with them.
The House of Delegates passed a pair of measures this week that would change how money is spent on political campaigns, and how much information the spenders have to reveal publicly about themselves.
Senate leaders say they will push for passage of at least one of the bills. National advocacy groups say both measures reflect good practices in the wake of January’s U.S. Supreme Court ruling that opens the door to greater campaign spending by corporations and unions.
While he has yet to review the details in each bill, Gov. Joe Manchin generally supports efforts to improve transparency for voters and shareholders, spokesman Matt Turner said Tuesday.
“He thinks that’s the responsible way to look at that,” Turner said.
But the mostly party-line votes that advanced the bills Monday came after House Republicans argued that both violate political speech rights. The bill that seeks to enlist shareholder rights in the bid for greater disclosure, meanwhile, is uncharted territory not only for West Virginia but nationally.
That bill would require corporations based in West Virginia to disclose to shareholders what they spend on campaigns. It would also require a majority of shareholders voting to accept such spending.
Corporations now don’t have to provide that information to shareholders even if they ask for it, according to Ciara Torres-Spelliscy, counsel for the Democracy Program at the Brennan Center for Justice.
“They have no duty under current U.S. law to consult with their shareholders or even disclose to shareholders the total universe of corporate political spending,” she said. “Shareholder activists have been asking for this information for years, and some companies have really dug in their heels and said, no way we’re telling you how we’re spending our money.”
Part of New York University’s law school, the center issued a report this year urging shareholder disclosure laws. It noted that similar laws have been in place in the United Kingdom for 10 years. In the U.S., though, state legislatures and Congress have been slow to move in that direction.
While critical of the January ruling and its treatment of corporations, Delegate John Ellem urged the shareholder bill’s defeat Monday. Among other points, the Wood County Republican cited how it exempts out-of-state corporations as well as any limited liability company or the like.
“There are so many loopholes in this bill that they render it ineffective and utterly useless,” Ellem told fellow delegates.
House Minority Leader Tim Armstead said such provisions leave the bill too vague to enforce. It would wrongly leave corporations uncertain about whether they could pursue political advocacy, he said, while also inviting the sort of legal challenges that have twice stopped recent attempts to expand state campaign finance rules.
“The caution that these kinds of bills cause does place a chilling effect on the First Amendment, on your right of free speech,” said Armstead, R-Kanawha.
Amid such concerns, Senate Judiciary Committee Chairman Jeff Kessler said he needs more time to study that measure because there’s no clear precedent yet for how it would work.
Requiring a majority vote from shareholders might be too drastic for some West Virginia lawmakers, but the Marshall County Democrat likes the provision requiring disclosure to shareholders.
“If you have corporations spending an enormous amount of money, who’s going to make the decision on how it’s spent?” he asked. “The board of directors? The CEO? The shareholders? That’s an important question.”
Kessler is more confident about the other House bill passed Monday. It invoked the Supreme Court’s campaign finance ruling to define when a political ad expressly advocates votes for or against a candidate. Such ads would trigger disclosure reporting, and Kessler has long been an advocate of greater transparency of campaign spending.
“Are we going to start seeing the Chik-fil-a West Virginia Secretary of State Bowl, or the Gatorade Gubernatorial Election?” Kessler asked. “You’re going to have corporations spending just huge amounts of money to influence elections.”
This measure may also invite the kind of lawsuit that Armstead and other GOP critics warned of during Monday’s floor debate. The Virginia-based Center for Individual Freedom has successfully challenged both recent attempts to regulate third-party political spending and ads that appear shortly before elections.
The more recent case remains pending, while a ruling temporarily blocking parts of the targeted rules remains in effect. Center spokesman Timothy Lee said Tuesday the group doesn’t comment on matters it’s currently litigating.
