Reforming the Reform Act

Sacramento attorney Lance Olson is one of the leading critics of the California Political Reform Act of 1974, arguing that the bureaucracy it has spawned places unnecessary barriers to the average citizen becoming involved in political life.

But Olson at the same time has been a key defender of the PRA, guarding the act against attackers who claim its financial disclosure requirements interfere with their free-speech rights and place an unnecessary barrier to their involvement in political life.

He has played these dual roles during a time of unprecedented attacks on the PRA, the landmark measure that mandates disclosure of the source of funding for political candidates and campaigns. Passed by voters in the wake of the Watergate scandal, the act was born of the indignation that people felt after learning that corruption and abuse of power had penetrated even the highest echelon of government.

The Fair Political Practices Commission (FPPC), the regulatory body created by the PRA, can seem like a maze of myriad forms and obscure rules. The FPPC levies fines against violators of campaign finance laws, but critics contend it’s often the confused little guy who gets punished, not the major players targeted by the PRA.

Olson, 50, has spent his entire professional life navigating the complexities of the PRA. He began his career monitoring the FPPC for corporate clients. Then he became a lawyer, specializing in campaign finance laws, and has since 1982 served as general counsel to the California Democratic Party.

“I have a pretty broad background and perspective on the Political Reform Act,” said Olson.

That experience won Olson an appointment to the Bipartisan Commission on the Political Reform Act of 1974, more commonly known as the McPherson Commission, named for the man who formed it, Republican state Sen. Bruce McPherson.

After holding public hearings around the state and conducting surveys and focus group studies, the McPherson Commission in September presented its findings to the FPPC. The nature of its 35 recommendations are summed up in the report’s title, “Overly Complex and Unduly Burdensome: The Critical Need to Simplify the Political Reform Act.”

“Running a campaign in this day and age means dealing with layer upon layer of confusing regulations,” Olson said. “Although the PRA was enacted with all of the best intentions, it has undoubtedly become a nightmare to many of those who want to get involved in the political process.”

Olson won’t get any argument on that front from Russ Howard, the former president of Californians Against Corruption—the Southern California group that spearheaded a 1994 recall campaign against Sen. David Roberti. CAC was fined $808,000 by the FPPC for failing to properly disclose who was funding its campaign. It is the biggest fine ever levied by the FPPC.

A one-time Beverly Hills stockbroker, Howard has seen his career fall into an abyss under the weight of his fine. These days, he keeps busy with property management for his family and occasional financial consulting. Howard sued the FPPC, trying to have the fine overturned, but lost in Sacramento County Superior Court. He is now trying to find a judge who is willing to vacate that ruling and re-hear his case. In the meantime, he said his life has ground to a screeching halt.

“How can you have a life when you have this enormous burden hanging over your head all the time,” Howard said. “I can’t even think about the things most people take for granted. I can’t think about getting married, or starting a business, or even owning a home while I have absolutely no way of knowing what will become of any disposable income I have for the rest of my life.”

Howard does not deny that he didn’t tell the FPPC where all of the money for the Roberti recall campaign came from. The PRA requires recipients of any donation of $100 or more to disclose the donor’s name, address and employer. The FPPC suit lists more than 400 violations of this basic tenet of the PRA in its action against Howard’s group.

“We fully recognize that we did not immediately disclose all of the information we needed to submit in triplicate,” Howard admitted. “But we also felt we had very valid reasons for not doing so, and we voiced those concerns to the FPPC at the time. We were facing a very entrenched public official, and many members of our coalition were being subjected to various forms of harassment, including death threats and break-ins. We felt we simply could not justify seeing our donor’s names and phone numbers being printed in the newspaper any longer.”

At issue in the Roberti recall was the fact that most of CAC’s financial support came from various gun groups that were angered by Roberti’s advocacy of gun control legislation. Although the recall campaign purported to be about “corruption,” critics contended that it was really about gun control, which CAC tried to hide by refusing to disclose its donors.

The large FPPC fine was intended to punish this deception, but to Howard, it represented bureaucratic overkill. He noted that CAC spent only a total of $103,091 on its entire campaign. And Howard believes his huge fine sends a chilling message to those who want to exercise their free speech rights in the political arena.

“I don’t expect everyone to agree with me on this,” Howard said. “But surely an $808,000 fine with no right to trial by jury for reluctantly, temporarily and partially withholding some donor information to protect them from harassment must surely violate the 8th Amendment and due process requirements.”

Yet Howard gets no support on this point from Olson. In addition to criticizing the PRA as a member of the McPherson Commission, Olson was also the attorney who represented Roberti during CAC’s recall effort.

“The Supreme Court certainly does recognize fear of retaliation as a legitimate reason for withholding disclosure information,” Olson said. “But what CAC did was just blatantly thumb their nose at the FPPC. I don’t have a lot of sympathy for them.”

On the basic right that citizens have to know who is funding political campaigns—the premise at the heart of the PRA—Olson and the FPPC are in agreement.

“The people of this state have a right to know who is behind ballot measures. We are happy to take that head-on, and we don’t have any doubt we will succeed in the courts,” said Karen Getman, who chairs the FPPC.

The issue of harassment, which some would surely like to dismiss as the ramblings of the paranoid extreme of any political agenda, can be a real threat. In this day of Internet accessibility and information, it is almost impossible to keep someone with enough motivation away from your private life. This includes how you vote and whom you give your money to.

“Just go to a Web site like Open Secrets [www.opensecrets.org],” Howard said. “It doesn’t take much to have all of your political beliefs out there for anyone to see and respond to. Now suppose your boss sees this kind of information about you and decides he or she doesn’t like your politics. Of course, they can’t fire you for that, but they can certainly find other reasons to damage or even ruin your career.”

This can be of particular concern in today’s environment, and far beyond the fear of losing a job. Losing your life is now a valid concern for some who support practices opposed by extremists. With the spate of bombings of family-planning clinics across the country in recent years, as well as the murder of doctors who perform abortions, the fear of extreme reactions to political stances has been legitimized forever.

Ironically, the most recent challenge to the FPPC’s authority to require donor disclosure comes from the California Pro-Life Council (CPLC). The group filed a lawsuit seeking exemption from the PRA’s disclosure rules, arguing that ballot measure advocacy is in essence “issue advocacy,” something fully protected by both the First and 14th Amendments to the U.S. Constitution.

Issue advocacy simply means that a ballot measure promotes or assails a candidate’s positions without specifically urging his or her election or defeat. “Express advocacy,” on the other hand, specifically addresses a candidate’s election or defeat. CPLC believes its “issue advocacy” exempts it from having to report its financial backers.

The issues in the CPLC suit are remarkably similar to those claimed by CAC. Both are based on a controversial 1976 U.S. Supreme Court ruling, Buckley vs. Valeo, which held that citizens have a basic right to use their money to advocate for their beliefs, interpreting that ruling as guarding against government intrusions such as the PRA’s mandates.

Yet just last week in Sacramento, U.S. District Judge Frank Damrell ruled in the FPPC’s favor, throwing out the anti-abortion group’s suit. He concluded that, “CPLC has failed to offer any evidence that the subject regulations have chilled the speech of others. Indeed, the significant and rapidly growing amount of ballot measure contributions ($150 million in 1996 and one-quarter of a billion dollars in 1998), suggests the opposite is true.”

Damrell agrees with the FPPC’s position that the state has a legitimate interest in informing the electorate who is funding initiative and other political campaigns.

“The initiative process is part of California’s legislative process, allowing voters to become lawmakers. Given the large amount of money being spent to support and oppose these legislative campaigns, the State’s interest in providing the electorate with information concerning the sources of these funds is substantial,” Damrell wrote.

Yet does the state still have an interest in tracking the financing of every small-time interest group in the state? Or does the current system discourage people from participating in public life, making them fear suffering Howard’s fate if they get confused and don’t file the right form by the right date? These questions are at the heart of the McPherson Commission recommendations.

It is easy enough for even the most high-minded political campaign treasurer to make mistakes. The PRA’s guidelines have been amended more than 200 times since 1974, and keeping up with the rules and regulations is a daunting task at best. Many people at the grass roots level commit infractions without even knowing they are doing so.

“Let’s say, for example,” Olson said, “that you and your friends want to get together to support a political cause or candidate. Most people don’t realize that as soon as you manage to get together $1,000 you are now a political committee.”

Once you hit that status, you are under the same reporting and documentation requirements as the governor. That’s why the McPherson Commission recommends increasing that reporting threshold to $5,000, because it believes groups raising $1,000 aren’t in the same league with the governor.

“The difference,” Olson says, “is that the governor has a huge support staff that knows the rules and has the money to handle the process of reporting.”

Howard agrees: “Campaign finance reporting is no problem for powerful incumbents and special interests, which can afford full-time professionals and will always find or make loopholes to do whatever they want. The cost is borne by grassroots groups and underdog challengers.”

Representatives of the McPherson Commission presented their findings to the FPPC Sept. 11, outlining the sometimes difficult balancing act between full disclosure and undue bureaucracy.

Attorney Jim Porter, former chairman of the FPPC, said he approached his work with the McPherson Commission skeptically, and was worried that the panel of political heavyweights might have had ulterior motives in trying to “reform” the Political Reform Act.

“I was even concerned—perhaps because of my perspective from being on [the Fair Political Practices] Commission—that some might want to gut the Political Reform Act, and, in fact, it was quite the contrary. I was very impressed with not only the knowledge, but the complete commitment to supporting the Political Reform Act and to improving the act,” Porter said in his opening comments to the FPPC.

Yet as Porter went through his long presentation of how onerous and confusing some aspects of the PRA can be, several FPPC commissioners expressed concern that the recommended changes could deprive the public of information they need and deserve.

“The question of raising committee thresholds from $1,000 to $5,000 is one that troubles me,” Getman said.

Attending a public forum on reforming the Political Reform Act over the summer, she said the idea of raising the reporting thresholds got the biggest applause of the evening from political activists and campaign treasurers in the audience.

“But there was also a very elegant and compelling woman who testified that in a small town, $1,000 makes a difference, and if you eliminate the reporting of $1,000 contributions in very small jurisdictions, you really are doing something that is depriving the people of important information,” Getman said.

That and many of the other fundamental changes to the Political Reform Act will need legislative approval, and Sen. McPherson is likely to introduce bills when the Legislature returns in January to carry out the recommendations of his commission.

Although the FPPC has yet to take a formal position on most of the McPherson Commission recommendations, FPPC legal counsel Mark Krausse said the commission could ultimately vote to oppose some of the changes: “We may take a position of opposition to some of the enforcement changes.”

While FPPC officials are reluctant to embrace changes to the PRA that would reduce the number of people and groups that file financial statements—which would be the result of many of the McPherson Commission’s proposed changes—the agency is trying to make life easier for small-town campaign treasurers.

FPPC spokeswoman Sigrid Bathen said the agency is in the process of removing the confusion and ambiguity of the state’s contribution reporting and conflict-of-interest laws and assisting the politically active in understanding the rules of the game.

Earlier this year, the FPPC established a toll-free number (1-866-ASK-FPPC) to answer questions about filing and disclosure requirements. The agency is also creating a Public Education Unit, which should be open by January, toward that same purpose.

“We hope that will go a long way toward providing useful information to first-time candidates and to current office holders,” Bathen said, who also noted that the agency is nearing completion on an overhaul and clarification of the conflict-of-interest rules.

Yet to critics like Olson, the only way to truly encourage people to participate in public life without fear of bureaucratic reprisals is to overhaul the PRA in a more fundamental way.

“The Political Reform Act places more burdens on people than the Federal Aviation Administration places on airplanes," Olson said. "You can allow a certain level of grassroots activity to occur without facing regulation by this burdensome bureaucracy."