The DISCLOSE Act: Overview and Analysis
Released: 2010-07-26T00:00:00

Summary:
As it has periodically for decades, Congress is again considering how or whether to regulate campaign financing. The latest iteration of the debate over which kinds of groups should be permitted to spend funds on political advertisements, and how so, was renewed on January 21, 2010, when the Supreme Court of the United States issued its decision in Citizens United v. Federal Election Commission. Following Citizens United, corporations and labor unions may now fund political advertisements explicitly calling for election or defeat of federal candidates—provided that the advertisements are not coordinated with the campaign. The legislative response receiving the most attention to date—and the emphasis of this report—is the DISCLOSE ("Democracy is Strengthened by Casting Light on Spending in Elections") Act. The House measure, H.R. 5175, sponsored by Representative Van Hollen, was reported, as amended, by the Committee on House Administration on May 25, 2010. The House of Representatives passed the bill, with additional amendments, on June 24, 2010, by a 219-206 vote. Senator Schumer's companion legislation that was first introduced in the Senate, S. 3295, is generally similar to the bill passed by the House. The same is true for S. 3628, a second measure—apparently intended to supersede S. 3295—that Senator Schumer introduced on July 21, 2010. There are, however, some important differences across the three bills, as discussed in this report.
The bills appear to be aimed primarily at non-campaign actors, particularly corporations, unions, and tax-exempt organizations. The bills propose a combination of disclosure provisions and disclaimer provisions (which are sponsorship information included within a communication) that would apply to these entities and are designed to give regulators and the public additional information about political advertising that could emerge following Citizens United. The legislation also prohibits certain government contractors, foreign-controlled or owned corporations (including some U.S. subsidiaries of foreign corporations), and prospective recipients of Temporary Asset Relief Program (TARP) funds from making certain political expenditures.
The bills do not increase contribution limits for candidate campaigns; they also generally do not address other political committees—parties and PACs. A notable exception would permit parties to make additional coordinated expenditures supporting their candidates. This is the only instance in which the bills explicitly allow for more political spending than would be possible under the status quo.
This report provides an overview and analysis of (1) major policy issues addressed in the DISCLOSE Act, which responds to Citizens United; (2) major provisions of H.R. 5175, as passed by the House, and S. 3295 and S. 3628 as introduced in the Senate, versus current federal law; and (3) issues for congressional consideration and potential implications of enacting or not enacting the DISCLOSE Act.
The report will be updated as events warrant.

subsections: section_title: Introduction
paragraphs: Political information—particularly political advertising—has been at the heart of American campaigns and elections for more than a century. Throughout the last century, candidates, parties, and interest groups have competed to make their case to voters in the hopes of winning elections and shaping policy debates. At the same time, Congress, regulatory agencies, and the courts have wrestled with how much, and what kind, of information should be available to the public about the sources of those political messages. Questions have also emerged about whether certain actors, such as corporations and unions, should be permitted to participate in elections and other political debates to the same extent as voters. Modern campaign finance policy and law, which emerged in the 1970s, but which built on reforms first pursued in the early 1900s, has responded with a combination of provisions designed to restrict the amounts and sources of funds in federal elections on one hand, and documenting the sources and amounts of funds that are permitted on the other. 
Political advertising has both enabled the public to become more informed about campaigns and policy contests, and, perhaps, made it more challenging for the electorate and policymakers to keep track of the various players and issues involved in political debates. This has been particularly true since the 1960s, when broadcast political advertising first became prominent, political professionals began to specialize in media production, and the electorate increasingly turned to television for information. 
The latest iteration of the debate over which corporations, unions, and other groups should be permitted to spend funds on political ads, and how so, was renewed on January 21, 2010, when the U.S. Supreme Court issued its highly anticipated decision in Citizens United v. Federal Election Commission (FEC) . The DISCLOSE Act, "Democracy is Strengthened by Casting Light on Spending in Elections," which the Committee on House Administration reported, as amended, on May 25, 2010, is the most prominent legislative response to Citizens United to date. As with the case itself, the DISCLOSE Act is particularly relevant for the ongoing policy debate surrounding political advertising and its transparency.
This report is designed to provide an overview and analysis of (1) major policy issues addressed in Citizens United and the DISCLOSE Act; (2) major provisions of H.R. 5175 , S. 3295 , and S. 3628 compared with current federal campaign finance law, as shown in Table 1 at the end of this report; and (3) selected issues for congressional consideration and potential implications of enacting or not enacting the DISCLOSE Act. Legislative developments surrounding the DISCLOSE Act have generally unfolded quickly since the House and Senate bills were introduced. As such, this report will be updated periodically to reflect recent developments and emerging issues.
section_title: Evolution of Policy and Legal Issues
paragraphs: Citizens United is significant because of its potential to change the ways in which corporations, unions, and tax-exempt organizations participate in American elections. Although restrictions on those actors have evolved over time, corporations, unions, and certain tax-exempt organizations were largely banned from spending treasury funds in federal elections for decades. As a result of Citizens United , these groups are permitted to use general treasury funds to make independent expenditures, which are defined as communications "expressly advocating the election or defeat of a clearly identified candidate" and that are not coordinated with any candidate or party, and electioneering communications, which are defined as broadcast, cable or satellite transmissions that refer to a clearly identified federal candidate, aired within 60 days of a general election or 30 days of a primary. Corporations and unions are still subject to the prohibition on using general treasury funds to make contributions to candidates and political parties. 
The 1907 Tillman Act, which is considered to be the first major federal campaign finance law, prohibited corporations from making contributions to political parties. With the 1947 Taft-Hartley Act, Congress expanded the prohibition to include corporate contributions to both parties and candidates, as well as expenditures in federal elections. Taft-Hartley also included labor unions in the prohibition. The early prohibitions on corporate and labor union treasury funded contributions and expenditures were included in the first modern federal campaign finance law, the Federal Election Campaign Act of 1971, also known as FECA. The prohibitions are codified at 2 U.S.C. § 441b. In an exception to the prohibition on corporate and union treasury spending, FECA allows for the creation of separate segregated funds or political action committees , also known as PACs . Specifically, corporations and unions can use their treasury funds to establish, operate and solicit voluntary, limited contributions to their PACs. These voluntary PAC donations can then be used to contribute to federal campaigns or to make expenditures that expressly advocate election or defeat of federal candidates. 
In the 1976 landmark Supreme Court decision, Buckley v. Valeo , the constitutionality of many provisions in FECA was challenged. This case is important because it established the framework for constitutional analysis of campaign finance regulation. In Buckley , the Court upheld reasonable contribution limits, invalidated certain expenditure limits, and upheld reporting and disclosure requirements. In addition, the Court created the distinction between issue advocacy and express advocacy , finding that a communication could be regulated if it contained words express advocacy of the election or defeat of a candidate, which includes words such as "vote for" or "vote against." By contrast, such ads could not be regulated if they only contained general public policy messages that fell short of calling for election or defeat of candidates, sometimes referred to as issue advocacy . A generation would pass between the enactment of FECA and the next time that Congress would again enact major campaign finance legislation—the Bipartisan Campaign Reform Act of 2002 (BCRA)—but political advertising and the funding sources for that advertising remained prominent during both legislative debates.
As the legislation that became BCRA was being debated in the late 1990s and early 2000s, a chief concern surrounding issue advocacy was whether the ads were actually about public policy issues—as proponents of the advertisements suggested—or whether they were really messages designed to encourage votes for or against candidates within in the context of ads that were only nominally related to public policy. In an effort to restrict issue advocacy, BCRA created a new concept within FECA known as electioneering communications in order to regulate messages that might affect elections, but did not expressly advocate for the election or defeat of a clearly identified federal candidate. Importantly, BCRA prohibited corporations and unions from using general treasury funds to pay for electioneering communications, meaning that potentially any ad that even mentioned a political candidate during pre-election periods would have to be paid for with PAC funds or not aired. 
In 2007, in FEC v. Wisconsin Right to Life, Inc., the Supreme Court limited the application of the prohibition, thereby easing some restrictions on corporate- and union-funded ads that would otherwise be classified as electioneering communications. As a result of the Court's ruling, if an advertisement could reasonably be interpreted as something other than calling for a vote for or against a candidate, it could not be prohibited. While this ruling limited the application of the electioneering communication prohibition, it did not expressly overrule it.
section_title: Citizens United v. Federal Election Commission
paragraphs: Citizens United, a corporation exempt from taxes under Internal Revenue Code (IRC) § 501(c)(4), produced a documentary about a presidential candidate, then-Senator Hillary Clinton. The group released the film in theaters and on DVD, and planned to make it available through video-on-demand and to fund broadcast and cable television advertisements promoting the movie. In Citizens United v. Federal Election Commission (FEC), the U.S. Supreme Court considered to what extent the organization was subject to the federal prohibitions on corporate treasury funding of independent expenditures, electioneering communications, and related reporting requirements. 
On January 21, 2010, the Supreme Court issued its long-awaited ruling in this case, and invalidated the prohibition on corporations and labor unions using their general treasury funds to make independent expenditures and electioneering communications. The Court determined that these prohibitions constitute a "ban on speech" in violation of the First Amendment. In so doing, the Court also overturned its 1990 ruling in Austin v. Michigan Chamber of Commerce , which had upheld restrictions on corporate-funded independent expenditures, finding that it provided no basis for allowing the government to limit such independent expenditures. The Court also overturned the portion of its decision in McConnell v. FEC upholding the facial validity of the prohibition on electioneering communications in BCRA, finding that the McConnell Court relied on Austin. 
The Court in Citizens United , however, upheld the disclaimer (which is sponsor information included within a communication) and disclosure requirements for electioneering communications as applied to the documentary. These requirements, the Court held, could be applied to the film and related advertisements that Citizens United had produced. According to the Court, while they may burden the ability to speak, disclaimer and disclosure requirements "impose no ceiling on campaign-related activities." 
It does not appear that the Court's ruling in Citizens United affects the validity of Title I of BCRA, which generally bans the raising of unregulated, also known as "soft," money by national parties and federal candidates or officials, and restricts soft money spending by state parties for "federal election activities." Furthermore, Citizens United does not appear to affect the ban on corporate or union contributions to political candidates. As a consequence of Citizens United , federal campaign finance law does not limit corporate and labor union treasury funding for independent expenditures and electioneering communications. Corporations and unions may still establish PACs, but are only required to use PAC funds in order to make contributions to candidates, parties, and other political committees.
section_title: Congressional Response
paragraphs: Given these developments, questions have emerged about how political advertising might be affected by the Court's decision in Citizens United and whether the airwaves will be flooded with corporate and labor union express advocacy. Similar questions have arisen about the extent to which the Court's decision might lead to increased campaign activity by tax-exempt organizations, particularly § 501(c)(4) social welfare organizations and § 501(c)(6) trade associations. Many of the these organizations are incorporated, and thus, prior to Citizens United , were generally prohibited from using their treasury funds for independent expenditures and electioneering communications. Additionally, all § 501(c) organizations, regardless of whether they were incorporated, could not serve as conduits for corporate or labor union treasury funds to fund independent expenditures and electioneering communications. In light of the Court's decision in Citizens United , some are expecting increased campaign activity by tax-exempt organizations. Additionally, some have expressed concern that organizations might be used as shadow groups—groups to which corporations, other entities, and individuals might give funds to engage in campaign activity with little or no public disclosure.
Because this is the first time in modern history that corporate and union independent expenditures have been permitted at the federal level, it remains to be seen how much additional money, if any, might flow into the political system. A more complete understanding of how Citizens United will affect the political environment, including campaign spending, will likely be unavailable until after the 2010 election cycle, at the earliest. Proponents of legislative action have, nonetheless, argued that preemptive legislation is necessary to avoid or at least document an expected onslaught of new political advertising.
section_title: Legislative Action on the DISCLOSE Act Thus Far
paragraphs: Legislative responses to Citizens United began developing immediately after the January 21 ruling. More than 40 bills that are potentially relevant have been introduced in the 111 th Congress. The primary focus has been on the DISCLOSE Act. Representative Van Hollen introduced the House measure, H.R. 5175 , on April 29, 2010. Senator Schumer introduced the initial Senate version, S. 3295 , on April 30, 2010. Senator Schumer introduced S. 3628 , a second version of the DISCLOSE Act—apparently intended to supersede the other Senate measure—on July 21, 2010. S. 3628 was placed on the Senate calendar, rather than being referred to committee. The measure would, therefore, rapidly become available for floor consideration.
Although committees in both chambers have held hearings on Citizens United , the House has largely focused on the DISCLOSE Act rather than other legislation. Both the Committee on House Administration and House Judiciary Subcommittee on the Constitution, Civil Rights, and Civil Liberties held hearings to assess the Citizens United ruling on February 3, 2010. The Committee on House Administration held two hearings on H.R. 5175 specifically, on May 6, 2010, and May 11, 2010. The committee held a markup on May 20, 2010, when H.R. 5175 was ordered favorably reported, as amended. After the House Administration Committee reported an amended version of H.R. 5175 on May 25, the House of Representatives passed the bill, with additional amendments, on June 24, 2010, by a 219-206 vote.
The versions of the bill as introduced in the House and as passed by the House were generally similar. There were, however, some notable differences. In particular, the House-passed measure modified the bill to
raise the threshold for prohibiting expenditures by government contractors from contracts valued of at least $50,000 to contracts of at least $10 million; clarify that Internet communications are generally not subject to FECA's disclosure and disclaimer requirements, except for paid political advertising; require that independent expenditures and electioneering communication reports be filed electronically and in a format that permits sorting and searching data (for reports with at least $10,000 in expenditures); and require automated political telephone calls ( robo calls ) to include "stand-by-your-ad" disclaimers.
subsections: section_title: Comparing the House and Senate Bills
subsections: section_title: Provisions in H.R. 5175 as Passed by the House, S. 3295 as Introduced, and S. 3628 as Introduced
paragraphs: Despite some differences (discussed below), these versions of the DISCLOSE Act would generally expand the current definitions of independent expenditure and electioneering communication , thereby mandating expanded disclosure and disclaimer requirements for certain political communications run by corporations, unions, and certain tax-exempt § 527 and § 501(c) organizations ( covered organizations ), and broadening the kind of communications that may be subject to FECA prohibitions; require covered organizations to report to the FEC information about their donors (including transfers) and spending for certain independent expenditures and electioneering communications; require corporate chief executive officers or other high-ranking officials in covered organizations to state their approval for advertising content, similar to current "stand by your ad" requirements for candidate ads; prohibit certain government contractors from making independent expenditures and electioneering communications in federal elections; prohibit TARP recipients from making contributions, independent expenditures, and electioneering communications in federal elections; and prohibit corporations subject to certain control or ownership by foreign nationals (e.g., U.S. subsidiaries of foreign corporations) from making contributions, independent expenditures, and electioneering communications in federal, state, and local elections; and remove existing limits on coordinated party expenditures if a candidate or candidate campaign does not control the expenditure.
section_title: Differences Between the House-Passed and Senate-Introduced Measures
paragraphs: Despite the general similarities discussed above, there are some important differences between the version of the DISCLOSE Act passed by the House and the two introduced in the Senate. Major differences between the House and Senate bills include the following provisions. 
The two Senate bills contain lengthy findings sections. H.R. 5175 as introduced and reported from the Committee on House Administration contained similar findings, but the relevant section was omitted from the version of the bill passed by the House. The bills contain different thresholds for restricting independent expenditures and electioneering communications by government contractors. S. 3295 would bar such expenditures for entities holding contracts of at least $50,000. H.R. 5175 as passed by the House would set the threshold contract value at $10 million, as would S. 3628 . The bill passed by the House also contains a restriction on Outer Continental Shelf oil and gas lessees not found in the Senate bill. The House bill would prohibit entities holding or negotiating these leases from making contributions, independent expenditures, and electioneering communications in federal elections. Neither Senate measure contains such a provision. The bills would redefine foreign nationals , who are restricted from making contributions or expenditures in U.S. elections, differently. All three measures would expand the current foreign national definition to include certain foreign-controlled U.S. corporations, but H.R. 5175 and S. 3628 contain additional prohibitions on entities owned by or under control of foreign governments or foreign-government officials. Unlike H.R. 5175 and S. 3628 , S. 3295 would revise the lowest unit charge ( LUC , also called the lowest unit rate ). Currently, the LUC essentially permits candidate committees to purchase preemptible broadcast advertising time at the cheapest price offered to commercial advertisers for comparable time. In addition to other revisions, S. 3295 would bar preemption of LUC ads (unless beyond a broadcaster's control) and would extend the rate to national party committees in some circumstances. Both Senate bills would require Senate political committee reports to be filed electronically and directly with the Federal Election Commission (FEC) rather than with the Secretary of the Senate. Senate campaign committees, party committees, and PACs currently are not required to file campaign finance reports electronically. The House bill does not address these provisions. H.R. 5175 , as passed by the House, excludes § 501(c)(3) organizations and certain large § 501(c)(4) organizations from the disclosure and disclaimer provisions. 
 Table 1 at the end of this report and the following discussion provide additional detail.
section_title: Potential Implications and Considerations for Congress
subsections: section_title: General Considerations
paragraphs: As Congress evaluates the DISCLOSE Act, several factors could be relevant. It could first be useful to consider what the bill would and would not do. In short, the DISCLOSE Act's provisions are essentially tailored to political advertising—the main policy issue raised by Citizens United . In brief, the DISCLOSE Act appears aimed at documenting additional political advertising in general, and restricting it where potential corruption might occur in specific circumstances. Nonetheless, the disclosure provisions would not necessarily affect political spending per se, nor would they necessarily deter those entities that wished to call for election or defeat of federal candidates. As such, the bill would not necessarily ensure an equal playing field among various political advertisers—including campaigns—nor could it necessarily do so.
In general, the bills would broadly apply additional disclosure and disclaimer provisions to entities making independent expenditures and electioneering communications, as defined in the bills. Corporations, unions, and certain tax-exempt § 501(c) and § 527 organizations would all be subject to the disclosure and disclaimer provisions—provided that their activities met the financial and time thresholds required to classify their communications as independent expenditures or electioneering communications. On the other hand, the bills' restrictions on political expenditures apply only to specific kinds of organizations—namely those government contractors, entities subject to foreign control, or TARP recipients falling under the DISCLOSE Act's provisions barring certain political expenditures. 
The bills would not, however, directly affect candidate campaigns in most cases. Indeed, the provisions of the bills appear to be aimed primarily at non-campaign actors, particularly corporations, unions, and tax-exempt organizations. The bills do not increase contribution limits for candidate campaigns; they also generally do not address other political committees—parties and PACs. A notable exception, discussed below, would permit parties to make additional coordinated expenditures supporting their candidates. This is the only instance in which the bills explicitly allow for more political spending than would be possible under the status quo. 
In addition to the general policy approaches described above, specific provisions in the legislation could be the subject of debate during House and Senate consideration of the DISCLOSE Act. Because the effects of Citizens United will be unclear until at least the conclusion of the 2010 election cycle, and because of the quickly evolving debate in Congress, all the bills' major implications cannot be predicted. The following sections discuss some of the potential implications of the bill, which Congress may wish to consider when evaluating the legislation. As noted previously, other issues may also be relevant; additional analysis will be included in future updates to this report as developments warrant.
section_title: Maintaining the Status Quo
paragraphs: If Congress chooses to maintain the status quo by not enacting a legislative response, some argue that certain spending by corporations, unions, and tax-exempt organizations to influence elections could go undocumented under current campaign finance law. In particular, it is possible that under certain circumstances, undisclosed funds could be transferred from one organization to another for the purpose of funding independent expenditures or electioneering communications. Those organizations that the bill proposes to prohibit making expenditures, such as certain U.S. subsidiaries of foreign corporations, would also be free to fund advertising as they saw fit. On the other hand, if substantial additional spending following Citizens United does not occur, it is possible that additional legislative action is unnecessary. In addition, some might contend that existing law is sufficient to cover many of the topics addressed in the DISCLOSE Act.
section_title: Modifying the Definitions of Independent Expenditures and Electioneering Communications
paragraphs: As noted previously, now that corporations and unions are free to use general treasury funds for independent expenditures and electioneering communications, the legislation proposes to document such spending through disclosure and disclaimer requirements—and to prohibit some entities from making such expenditures. The activities to which these requirements would apply depend largely on how key terms are defined. Importantly, the bills would broaden the definitions of independent expenditures and electioneering communications, thereby expanding the scope of FECA's regulation. 
Specifically, the bills would expand the definition of independent expenditure to include an expenditure "that, when taken as a whole, expressly advocates the election or defeat of a clearly identified candidate, or is the functional equivalent of express advocacy because it can be interpreted by a reasonable person only as advocating the election or defeat of a candidate, taking into account whether the communication involved mentions a candidacy, a political party, or a challenger to a candidate, or takes a position on a candidate's character, qualifications, or fitness for office." In other words, it is possible that an advertisement could be subject to DISCLOSE Act regulation as an independent expenditure even if it does not explicitly call for election or defeat of a clearly identified candidate if the ad can reasonably be interpreted only as advocating election or defeat of a candidate. In addition, the bills would increase the period (from 60 to 120 days for the House bill and S. 3628 , and from 60 to 90 days for S. 3295 ) prior to general election in which communications are treated as electioneering communications. These provisions are noteworthy because they would affect the kind of political advertising subject to regulation under the DISCLOSE Act and, by extension, other provisions in FECA.
section_title: Entities Covered by the Disclosure and Disclaimer Provisions
paragraphs: The bills' disclosure, disclaimer, and shareholder/member reporting requirements would apply to covered organizations , which would be defined as corporations, labor organizations, tax-exempt § 501(c)(4), (c)(5), and (c)(6) organizations, and § 527 political organizations that are not political committees for purposes of FECA. H.R. 5175 , as passed by the House, and S. 3628 would expressly exclude § 501(c)(3) charitable organizations and qualifying large § 501(c)(4) organizations from the definition of covered organization . S. 3295 does not contain similar exemptions. Many tax-exempt entities are incorporated and therefore would fall within the definition of covered organization , absent an exclusion. Therefore, under S. 3295 , the term covered organization would include incorporated § 501(c)(3) organizations. It is important to note that the IRC imposes restrictions on the ability of tax-exempt organizations to engage in campaign activity; for example, § 501(c)(3) organizations are prohibited from engaging in such activity. The activities that constitute electioneering under the IRC and FECA are not always the same. For example, it appears possible that an issue advocacy communication, depending on its timing and content, might be an electioneering communication under FECA, but might not be treated as campaign activity under the IRC.
section_title: Prohibitions on Making Contributions or Spending in Elections
paragraphs: In addition to its disclosure, disclaimer, and reporting requirements, the legislation contains several prohibitions. Specifically, it would prohibit certain government contractors, TARP recipients, and corporations subject to certain control or ownership by foreign nationals from making expenditures or contributions in connection with federal elections. Table 1 , at the end of this report, contains additional detail on individual prohibitions.
subsections: section_title: Government Contracts
paragraphs: Section 101 of H.R. 5175 as passed by the House and S. 3628 would prohibit government contractors from making electioneering communications or independent expenditures "only if the value of the contract is equal to or greater than $10,000,000." This language appears to suggest that this prohibition is intended to apply only to contractors holding a single contract of at least $10 million. 
S. 3295 would apply to contracts of at least $50,000. Although the original House bill had a similar limit, the House-passed bill increased the threshold to $10 million. Some have suggested that this modification was made to exempt small business government contractors from the prohibition. While the value of the "average" federal procurement contract may seem low ($120,634 in FY2008), even small businesses routinely receive much larger contracts, arguably providing one rationale for exempting contractors who have not received a contract valued at more than $10 million from the proposed ban on independent expenditures and electioneering communications. Agencies may, for example, award contracts valued at up to $3.5 million ($5.5 million for manufacturing contracts) to small businesses participating in the 8(a) Minority Business Development Program without competing them, and some small businesses have received contracts valued at over half a billion dollars. "Large" government contractors, in contrast, can receive contracts valued at over $1 billion.
section_title: TARP Recipients and Outer Continental Shelf Lessees
paragraphs: Section 101 of all three bills would prohibit prospective recipients of TARP funds from directly or indirectly making contributions, independent expenditures, or electioneering communications. Notably, it appears that the prohibitions would apply to TARP recipients using TARP funds, as well as their own funds. The applicable period of the prohibition would begin on the later of the commencement of the negotiations for financial assistance under title I of the Emergency Economic Stabilization Act of 2008 or the date of enactment of one of these bills, and end on the later of the ending of negotiations or the repayment of such financial assistance. In addition, H.R. 5175 contains a similar prospective prohibition for those holding or negotiating for Outer Continental Shelf oil and gas leases. S. 3295 and S. 3628 do not contain a similar prohibition. 
section_title: Foreign Nationals
paragraphs: Several questions of interpretation could be raised by Section 102 of the legislation, which would apply existing prohibitions on contributions or expenditures by foreign nationals to foreign-controlled domestic corporations (e.g., U.S. subsidiaries of foreign corporations). For example, it is unclear how the FEC or a court would interpret or administer some of the key terms contained in the various thresholds for establishing foreign control, as proposed in Section 102. One such threshold focuses upon direct or indirect ownership by a foreign national of various amounts of the voting shares of a corporation (see Table 1 ), but would appear to leave the FEC substantial discretion in determining what constitutes "indirect ownership" or at what point in time ownership is determined. Other criteria similarly focus upon whether one or more foreign nationals "has the power to direct, dictate, or control the decision-making process of the corporation" with respect to its interests in the United States or in connection with its federal, state, or local election activities, including PAC administration and making contributions and expenditures. However, this standard would also appear to leave the FEC substantial discretion to determine what forms of conduct or business arrangements would indicate that a foreign national has the power to "direct, dictate, or control" corporate decision-making.
section_title: Coordinated Party Expenditures
paragraphs: Section 104 of the legislation appears to lift the existing caps on coordinated party expenditures unless "the communication is controlled by, or made at the direction of, the candidate or an authorized committee of the candidate." In the absence of increased contribution limits, candidates may face substantial obstacles responding to corporate and union advertising post- Citizens United . Lifting the caps on coordinated party expenditures arguably provides parties with a way to help their candidates facing potential corporate, union, or tax-exempt organization-funded advertising. On the other hand, some may object to increasing the amount of money in the political system, even if it is to respond to corporate or union advertising. In addition, the standard for communications "controlled by, or made at the direction of, the candidate or an authorized committee of the candidate" is not defined. Given this potential ambiguity, and an ongoing FEC rulemaking on coordination, some in Congress might wish to clarify terms.
section_title: Potential Effects of Disclosure and Disclaimer Provisions
paragraphs: The bills would require additional disclosure of donors to covered organizations. The provisions may be understood, at least in part, as a mechanism to limit the possibility that non-profit organizations might be used as "shadow groups"—groups to which corporations, other entities, or individuals would give funds to be used for campaign activities with little or no public disclosure. A notable aspect of the bills is that they would require the disclosure of certain donors who did not give money specifically for political activities, unlike, for example, the existing independent expenditure provision, which only requires the disclosure of donors who gave "for the purpose of furthering" the expenditure.
Another potentially notable aspect of the donor disclosure provisions is that they would apply FEC reporting requirements to § 527 political organizations that are not political committees under FECA. These political organizations would include the "§ 527 groups" that have been controversial in recent years because they seem intended to influence federal elections in ways that might be outside the scope of FECA. Under current law, political committees report to the FEC, while the § 527 groups report to the IRS. In both cases, the information is publicly available. The other types of covered organizations are not currently subject to similar reporting requirements.
The bills' disclosure and disclaimer requirements would not necessarily, in and of themselves, limit overall spending on political advertising. Ultimately, corporations, unions, and other groups intent on making independent expenditures and electioneering communications could choose to do so regardless of such requirements. The additional requirements proposed in the bills might, however, cause potential advertisers to consider whether they wish to be publicly accountable for the advertising.
section_title: Campaign-Related Activity Accounts
paragraphs: Section 213 of the bills would permit covered organizations to establish optional accounts for campaign-related activity, including independent expenditures and electioneering communications. Because such accounts do not currently exist, it is unclear how significant this provision might be. Several issues, however, could be relevant. First, it appears that once an organization elected to establish the account, it would be required to use that account exclusively for future campaign-related activity — a strategic or administrative decision that some organizations might not be willing to make on a permanent basis. Second, the provisions specify that amounts in the account be "exclusively for disbursements by the covered organization for campaign-related activity." Given this language, it is unclear whether or not an organization using a campaign-related activity account could dispose of its funds if it decided to abandon political spending altogether. If Congress wishes to provide a non-campaign-related mechanism to do so, existing provisions in FECA permitting charitable contributions could be an option.
section_title: Potential Implementation Concerns
paragraphs: Even if Congress enacts the DISCLOSE Act quickly, aspects of the legislation will require agency implementation. The process could affect how quickly and how clearly the act affects campaigns and related spending (e.g., independent political advertising). Because the DISCLOSE Act would primarily amend FECA, the FEC would be responsible for administering and enforcing most of the bill's provisions. 
It is possible that the FEC could implement the DISCLOSE Act quickly, although various factors suggest that it is unlikely the Commission could fully implement the act before the 2010 November general elections. In addition to the time required to develop and reach agreement on rules, for those rules to be finalized (upon publication in the Federal Register ), the Commission would have to also approve an explanation and justification (E&J) statement explaining its rationale and offering practical guidance about what the regulations mean and how they will be enforced. This process routinely takes months, even for expedited rulemakings. The Commission would have to also amend its reporting forms to adhere to the act's new requirements. 
Importantly, FECA requires that adopting rules and developing forms (among other provisions) requires affirmative votes from at least four of the six Commissioners. A series of deadlocked votes (e.g., 3-3 ties) among members of the current Commission, however, suggests that disagreement among Commissioners is possible—particularly on controversial or ambiguous aspects of the legislation. If disagreements resulted in deadlock or failure to implement the law as Congress intends, the DISCLOSE Act's effectiveness could be delayed or compromised. 
Perhaps in response to those concerns, many of the DISCLOSE Act's provisions would become effective 30 days after enactment, with at least one becoming effective immediately upon enactment. The bills specify that their provisions would generally take effect regardless of whether the FEC had promulgated rules to implement the legislation. Nonetheless, the "regulated community" might lack practical and administrative guidance about how to comply with the act's provisions until the Commission could issue rules and begin considering advisory opinions. Nonetheless, even if rulemaking or amending forms were delayed, the law itself would still take effect as stated in the act. Therefore, even if some details remained to be determined, enacting the DISCLOSE Act or other legislation could permit Congress to place additional requirements on political advertisers or other campaign actors regardless of Commission action or inaction.
section_title: Conclusion
paragraphs: As Congress considers the DISCLOSE Act, it may be too soon to predict precisely how Citizens United might affect campaigns or political advertising in the absence of legislation. If Congress chooses to enact the DISCLOSE Act, it would provide additional information to the public and regulators about political advertising funded by corporations, unions, and tax-exempt organizations. It would also prohibit certain entities from funding electioneering communications and independent expenditures, as well as providing political parties with greater ability to make coordinated party expenditures in some cases.
Except for the spending prohibitions in the bill, nothing in the legislation would necessarily prevent corporations, unions, or other entities from funding political advertising calling for election or defeat of clearly identified candidates. The disclosure and disclaimer provisions could, however, provide the public and regulators with additional information about the sources of that advertising. Public disclosure could also cause would-be advertisers to think carefully before making political expenditures. For those who believe that Citizens United will usher in a new era of corporate or union dominance in elections, such an outcome might be welcome. On the other hand, those who believe that Citizens United correctly strengthens corporate and union speech rights might be wary of any provisions perceived as stifling the ability to participate in elections. As Congress considers the DISCLOSE Act, issues related to how terms are defined, the kinds of organizations that would be regulated, implementation, and other concerns may be relevant.