Federal

DISCLOSE Act of 2023

Source: Congress.gov · 13,681 words in original text

What This Bill Does

This bill requires corporations, labor organizations, Super PACs, and other groups to publicly disclose who funds their political spending. It also closes loopholes that allow foreign nationals to secretly spend money in U.S. elections and expands rules requiring political ads to identify who paid for them. --- ##

Who It Affects

- Corporations (except nonprofits described as tax-exempt charitable organizations) - Limited liability companies - Labor organizations (unions) - Super PACs and other political committees that accept unlimited money - Tax-exempt organizations like social welfare groups and business leagues - Foreign nationals and foreign governments - People and organizations paying for political advertisements - The Federal Election Commission - Courts handling election law cases - Congress members --- ##

Key Provisions

- **Disclosure of campaign spending by organizations:** Groups spending more than $10,000 on political activities must file reports within 24 hours listing who gave them money in large amounts, who the money went to, and which candidates are being supported or opposed. (Sec. 201) - **Beneficial ownership transparency:** When corporations or similar entities make political spending, they must disclose the names and addresses of the actual people who control them, unless those people face serious threats. (Sec. 201) - **Bans on foreign money in elections:** Foreign nationals cannot spend money on political ads, campaign communications, or judicial nomination campaigns, and cannot establish companies to hide their political spending. (Sec. 101, 104, 105) - **Political ad disclaimers:** Ads that are not authorized by candidates must clearly state who paid for them and list the top five funders (or top two for shorter audio ads), either in the ad itself or on a website. (Sec. 402) - **Judicial nomination disclosure:** Organizations must disclose spending on communications about federal judge nominations using the same rules as election spending. (Sec. 202) - **Criminal penalty:** People who establish a corporation or company specifically to hide foreign national political spending can be imprisoned for up to 5 years. (Sec. 105) --- ##

What Changes

If this bill becomes law, Americans will learn who is actually funding political spending that currently hides behind group names. Organizations will be required to reveal their large donors when they spend money on elections. Foreign nationals will face stronger penalties for illegally spending money in U.S. elections. Political ads will include information about top funders alongside traditional disclaimers. Courts will have clearer rules for deciding cases about election law. Studies will be conducted every four years to identify illegal foreign money in federal elections. --- ##

Important Definitions

- **Campaign-related disbursement:** Money spent on independent expenditures (spending to elect or defeat a candidate), public communications supporting or opposing a candidate, electioneering communications (ads mentioning a candidate near election time), or transfers of money to other organizations for these purposes. (Sec. 201) - **Covered organization:** Corporations (except tax-exempt charities), limited liability companies, tax-exempt organizations (except charities), labor unions, and political committees that accept unlimited money. (Sec. 201) - **Beneficial owner:** A natural person who directly or indirectly controls an entity through ownership, voting rights, or agreement, or who receives substantial economic benefits from it. Does not include minor children, employees acting only in that capacity, or people who only inherit an interest. (Sec. 201) - **Covered transfer:** Money moved from one organization to another when the first organization suggests it be used for political spending, or knew the recipient would spend $50,000 or more on politics within two years. (Sec. 201) - **Foreign national:** Foreigners, foreign companies, foreign governments, and U.S. citizens acting as agents of foreign governments, plus specially designated persons on the Treasury Department's sanctions list. (Sec. 103) - **Electioneering communication:** Ads broadcast on television, radio, or the internet within specific time periods before elections that mention a candidate by name. (Referenced in bill but defined in existing law) - **Top Five Funders list:** The five organizations or people who gave the most money in the past 12 months to the group paying for an ad (if each gave at least $10,000 total). (Sec. 402) - **Top Two Funders list:** The two organizations or people who gave the most money in the past 12 months to the group paying for an audio ad (if each gave at least $10,000 total). (Sec. 402) --- ##

Effective Date

- Most provisions take effect on January 1, 2024. (Sec. 206) - Foreign money ban changes for ballot initiatives apply to elections held in 2024 or later. (Sec. 103) - Judicial review procedures take effect on the date the bill becomes law. (Sec. 303)

II 118TH CONGRESS 1ST SESSION S. 512 To amend the Federal Election Campaign Act of 1971 to provide for addi- tional disclosure requirements for corporations, labor organizations, Super PACs and other entities, and for other purposes. IN THE SENATE OF THE UNITED STATES FEBRUARY 16, 2023 Mr. WHITEHOUSE (for himself, Mr. WYDEN, Mr. SCHUMER, Mr. VAN HOL- LEN, Ms. KLOBUCHAR, Mrs. FEINSTEIN, Mrs. MURRAY, Mr. DURBIN, Mr. REED, Mr. CARPER, Ms. STABENOW, Ms. CANTWELL, Mr. MENEN- DEZ, Mr. CARDIN, Mr. SANDERS, Mr. BROWN, Mr. CASEY, Mr. TESTER, Mrs. SHAHEEN, Mr. WARNER, Mr. MERKLEY, Mr. BENNET, Mrs. GILLI- BRAND, Mr. MANCHIN, Mr. COONS, Mr. BLUMENTHAL, Mr. SCHATZ, Ms. BALDWIN, Mr. MURPHY, Ms. HIRONO, Mr. HEINRICH, Mr. KING, Mr. KAINE, Ms. WARREN, Mr. MARKEY, Mr. BOOKER, Mr. PETERS, Ms. DUCKWORTH, Ms. HASSAN, Ms. CORTEZ MASTO, Ms. SMITH, Ms. SINEMA, Ms. ROSEN, Mr. KELLY, Mr. LUJA´N, Mr. HICKENLOOPER, Mr. PADILLA, Mr. OSSOFF, Mr. WARNOCK, Mr. WELCH, and Mr. FETTERMAN) introduced the following bill; which was read twice and re- ferred to the Committee on Rules and Administration A BILL To amend the Federal Election Campaign Act of 1971 to provide for additional disclosure requirements for cor- porations, labor organizations, Super PACs and other entities, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 VerDate Sep 11 2014 05:12 Mar 10, 2023 Jkt 039200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S512.IS S512 pbinns on DSKJLVW7X2PROD with $$_JOB 2 •S 512 IS SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 1 (a) SHORT TITLE.—This Act may be cited as the 2 ‘‘Democracy Is Strengthened by Casting Light On Spend- 3 ing in Elections Act of 2023’’ or the ‘‘DISCLOSE Act 4 of 2023’’. 5 (b) TABLE OF CONTENTS.—The table of contents of 6 this Act is as follows: 7 Sec. 1. Short title; table of contents. Sec. 2. Findings. TITLE I—CLOSING LOOPHOLES ALLOWING SPENDING BY FOREIGN NATIONALS IN ELECTIONS Sec. 101. Clarification of application of foreign money ban to certain disburse- ments and activities. Sec. 102. Study and report on illicit foreign money in Federal elections. Sec. 103. Prohibition on contributions and donations by foreign nationals in connection with ballot initiatives and referenda. Sec. 104. Disbursements and activities subject to foreign money ban. Sec. 105. Prohibiting establishment of corporation to conceal election contribu- tions and donations by foreign nationals. TITLE II—REPORTING OF CAMPAIGN-RELATED DISBURSEMENTS Sec. 201. Reporting of campaign-related disbursements. Sec. 202. Reporting of Federal judicial nomination disbursements. Sec. 203. Coordination with FinCEN. Sec. 204. Application of foreign money ban to disbursements for campaign-re- lated disbursements consisting of covered transfers. Sec. 205. Sense of Congress regarding implementation. Sec. 206. Effective date. TITLE III—OTHER ADMINISTRATIVE REFORMS Sec. 301. Petition for certiorari. Sec. 302. Judicial review of actions related to campaign finance laws. Sec. 303. Effective date. TITLE IV—STAND BY EVERY AD Sec. 401. Short title. Sec. 402. Stand by every ad. Sec. 403. Disclaimer requirements for communications made through prerecorded telephone calls. Sec. 404. No expansion of persons subject to disclaimer requirements on inter- net communications. Sec. 405. Effective date. VerDate Sep 11 2014 05:12 Mar 10, 2023 Jkt 039200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6211 E:\BILLS\S512.IS S512 pbinns on DSKJLVW7X2PROD with $$_JOB 3 •S 512 IS TITLE V—SEVERABILITY Sec. 501. Severability. SEC. 2. FINDINGS. 1 Congress finds the following: 2 (1) Campaign finance disclosure is a narrowly 3 tailored and minimally restrictive means to advance 4 substantial government interests, including fostering 5 an informed electorate capable of engaging in self- 6 government and holding their elected officials ac- 7 countable, detecting and deterring quid pro quo cor- 8 ruption, and identifying information necessary to en- 9 force other campaign finance laws, including cam- 10 paign contribution limits and the prohibition on for- 11 eign money in U.S. campaigns. To further these 12 substantial interests, campaign finance disclosure 13 must be timely and complete, and must disclose the 14 true and original source of money given, transferred, 15 and spent to influence Federal elections. Current law 16 does not meet this objective because corporations 17 and other entities that the Supreme Court has per- 18 mitted to spend money to influence Federal elections 19 are subject to few if any transparency requirements. 20 (2) As the Supreme Court recognized in its per 21 curiam opinion in Buckley v. Valeo, 424 U.S. 1, 22 (1976), ‘‘disclosure requirements certainly in most 23 applications appear to be the least restrictive means 24 VerDate Sep 11 2014 05:12 Mar 10, 2023 Jkt 039200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S512.IS S512 pbinns on DSKJLVW7X2PROD with $$_JOB 4 •S 512 IS of curbing the evils of campaign ignorance and cor- 1 ruption that Congress found to exist.’’ Buckley, 424 2 U.S. at 68. In Citizens United v. FEC, the Court re- 3 iterated that ‘‘disclosure is a less restrictive alter- 4 native to more comprehensive regulations of speech.’’ 5 558 U.S. 310, 369 (2010). 6 (3) No subsequent decision has called these 7 holdings into question, including the Court’s decision 8 in Americans for Prosperity Foundation v. Bonta, 9 141 S. Ct. 2373 (2021). That case did not involve 10 campaign finance disclosure, and the Court did not 11 overturn its longstanding recognition of the substan- 12 tial interests furthered by such disclosure. 13 (4) Campaign finance disclosure is also essen- 14 tial to enforce the Federal Election Campaign Act’s 15 prohibition on contributions by and solicitations of 16 foreign nationals. See section 319 of the Federal 17 Election Campaign Act of 1971 (52 U.S.C. 30121). 18 (5) Congress should close loopholes allowing 19 spending by foreign nationals in domestic elections. 20 For example, in 2021, the Federal Election Commis- 21 sion, the independent Federal agency charged with 22 protecting the integrity of the Federal campaign fi- 23 nance process, found reason to believe and concil- 24 iated a matter where an experienced political con- 25 VerDate Sep 11 2014 05:12 Mar 10, 2023 Jkt 039200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S512.IS S512 pbinns on DSKJLVW7X2PROD with $$_JOB 5 •S 512 IS sultant knowingly and willfully violated Federal law 1 by soliciting a contribution from a foreign national 2 by offering to transmit a $2,000,000 contribution to 3 a super PAC through his company and two 4 501(c)(4) organizations, to conceal the origin of the 5 funds. This scheme was only unveiled after appear- 6 ing in a The Telegraph UK article and video cap- 7 turing the solicitation. See Conciliation Agreement, 8 MURs 7165 & 7196 (Great America PAC, et al.), 9 date June 28, 2021; Factual and Legal Analysis, 10 MURs 7165 & 7196 (Jesse Benton), dated Mar. 2, 11 2021. 12 TITLE I—CLOSING LOOPHOLES 13 ALLOWING SPENDING BY 14 FOREIGN NATIONALS IN 15 ELECTIONS 16 SEC. 101. CLARIFICATION OF APPLICATION OF FOREIGN 17 MONEY BAN TO CERTAIN DISBURSEMENTS 18 AND ACTIVITIES. 19 Section 319(b) of the Federal Election Campaign Act 20 of 1971 (52 U.S.C. 30121(b)) is amended— 21 (1) by redesignating paragraphs (1) and (2) as 22 subparagraphs (A) and (B), respectively, and by 23 moving such subparagraphs 2 ems to the right; 24 VerDate Sep 11 2014 05:12 Mar 10, 2023 Jkt 039200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S512.IS S512 pbinns on DSKJLVW7X2PROD with $$_JOB 6 •S 512 IS (2) by striking ‘‘As used in this section, the 1 term’’ and inserting the following: ‘‘DEFINITIONS.— 2 For purposes of this section— 3 ‘‘(1) FOREIGN NATIONAL.—The term’’; 4 (3) by moving paragraphs (1) and (2) two ems 5 to the right and redesignating them as subpara- 6 graphs (A) and (B), respectively; and 7 (4) by adding at the end the following new 8 paragraph: 9 ‘‘(2) CONTRIBUTION AND DONATION.—For pur- 10 poses of paragraphs (1) and (2) of subsection (a), 11 the term ‘contribution or donation’ includes any dis- 12 bursement to a political committee which accepts do- 13 nations or contributions that do not comply with any 14 of the limitations, prohibitions, and reporting re- 15 quirements of this Act (or any disbursement to or on 16 behalf of any account of a political committee which 17 is established for the purpose of accepting such do- 18 nations or contributions), or to any other person for 19 the purpose of funding an expenditure, independent 20 expenditure, or electioneering communication (as de- 21 fined in section 304(f)(3)).’’. 22 VerDate Sep 11 2014 05:12 Mar 10, 2023 Jkt 039200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S512.IS S512 pbinns on DSKJLVW7X2PROD with $$_JOB 7 •S 512 IS SEC. 102. STUDY AND REPORT ON ILLICIT FOREIGN MONEY 1 IN FEDERAL ELECTIONS. 2 (a) STUDY.—For each 4-year election cycle (begin- 3 ning with the 4-year election cycle ending in 2020), the 4 Comptroller General shall conduct a study on the inci- 5 dence of illicit foreign money in all elections for Federal 6 office held during the preceding 4-year election cycle, in- 7 cluding what information is known about the presence of 8 such money in elections for Federal office. 9 (b) REPORT.— 10 (1) IN GENERAL.—Not later than the applicable 11 date with respect to any 4-year election cycle, the 12 Comptroller General shall submit to the appropriate 13 congressional committees a report on the study con- 14 ducted under subsection (a). 15 (2) MATTERS INCLUDED.—The report sub- 16 mitted under paragraph (1) shall include a descrip- 17 tion of the extent to which illicit foreign money was 18 used to target particular groups, including rural 19 communities, African-American and other minority 20 communities, and military and veteran communities, 21 based on such targeting information as is available 22 and accessible to the Comptroller General. 23 (3) APPLICABLE DATE.—For purposes of para- 24 graph (1), the term ‘‘applicable date’’ means— 25 VerDate Sep 11 2014 05:12 Mar 10, 2023 Jkt 039200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S512.IS S512 pbinns on DSKJLVW7X2PROD with $$_JOB 8 •S 512 IS (A) in the case of the 4-year election cycle 1 ending in 2020, the date that is 1 year after 2 the date of the enactment of this Act; and 3 (B) in the case of any other 4-year election 4 cycle, the date that is 1 year after the date on 5 which such 4-year election cycle ends. 6 (c) DEFINITIONS.—As used in this section: 7 (1) 4-YEAR ELECTION CYCLE.—The term ‘‘4- 8 year election cycle’’ means the 4-year period ending 9 on the date of the general election for the offices of 10 President and Vice President. 11 (2) ILLICIT FOREIGN MONEY.—The term ‘‘illicit 12 foreign money’’ means any contribution, donation, 13 expenditure, or disbursement by a foreign national 14 (as defined in section 319(b) of the Federal Election 15 Campaign Act of 1971 (52 U.S.C.30121(b))) prohib- 16 ited under such section. 17 (3) ELECTION; FEDERAL OFFICE.—The terms 18 ‘‘election’’ and ‘‘Federal office’’ have the meanings 19 given such terms under section 301 of the Federal 20 Election Campaign Act of 1971 (53 U.S.C. 30101). 21 (4) APPROPRIATE CONGRESSIONAL COMMIT- 22 TEES.—The term ‘‘appropriate congressional com- 23 mittees’’ means— 24 VerDate Sep 11 2014 05:12 Mar 10, 2023 Jkt 039200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S512.IS S512 pbinns on DSKJLVW7X2PROD with $$_JOB 9 •S 512 IS (A) the Committee on House Administra- 1 tion of the House of Representatives; 2 (B) the Committee on Rules and Adminis- 3 tration of the Senate; 4 (C) the Committee on the Judiciary of the 5 House of Representatives; and 6 (D) the Committee on the Judiciary of the 7 Senate. 8 (d) SUNSET.—This section shall not apply to any 4- 9 year election cycle beginning after the election for the of- 10 fices of President and Vice President in 2032. 11 SEC. 103. PROHIBITION ON CONTRIBUTIONS AND DONA- 12 TIONS BY FOREIGN NATIONALS IN CONNEC- 13 TION WITH BALLOT INITIATIVES AND 14 REFERENDA. 15 (a) IN GENERAL.—Section 319(b) of the Federal 16 Election Campaign Act of 1971 (52 U.S.C. 30121(b)), as 17 amended by section 101, is amended by adding at the end 18 the following new paragraphs: 19 ‘‘(3) FEDERAL, STATE, OR LOCAL ELECTION.— 20 The term ‘Federal, State, or local election’ includes 21 a State or local ballot initiative or referendum, but 22 only in the case of— 23 ‘‘(A) a covered foreign national as defined 24 in paragraph (4); or 25 VerDate Sep 11 2014 05:12 Mar 10, 2023 Jkt 039200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S512.IS S512 pbinns on DSKJLVW7X2PROD with $$_JOB 10 •S 512 IS ‘‘(B) a foreign principal described in sec- 1 tion 1(b)(2) or 1(b)(3) of the Foreign Agent 2 Registration Act of 1938, as amended (22 3 U.S.C. 611(b)(2) or (b)(3)) or an agent of such 4 a foreign principal under such Act. 5 ‘‘(4) COVERED FOREIGN NATIONAL.— 6 ‘‘(A) IN GENERAL.—The term ‘covered for- 7 eign national’ means— 8 ‘‘(i) a foreign principal (as defined in 9 section 1(b) of the Foreign Agents Reg- 10 istration Act of 1938 (22 U.S.C. 611(b)) 11 that is a government of a foreign country 12 or a foreign political party; 13 ‘‘(ii) any person who acts as an agent, 14 representative, employee, or servant, or 15 any person who acts in any other capacity 16 at the order, request, or under the direc- 17 tion or control, of a foreign principal de- 18 scribed in clause (i) or of a person any of 19 whose activities are directly or indirectly 20 supervised, directed, controlled, financed, 21 or subsidized in whole or in major part by 22 a foreign principal described in clause (i); 23 or 24 VerDate Sep 11 2014 05:12 Mar 10, 2023 Jkt 039200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S512.IS S512 pbinns on DSKJLVW7X2PROD with $$_JOB 11 •S 512 IS ‘‘(iii) any person included in the list of 1 specially designated nationals and blocked 2 persons maintained by the Office of For- 3 eign Assets Control of the Department of 4 the Treasury pursuant to authorities relat- 5 ing to the imposition of sanctions relating 6 to the conduct of a foreign principal de- 7 scribed in clause (i). 8 ‘‘(B) CLARIFICATION REGARDING APPLICA- 9 TION TO CITIZENS OF THE UNITED STATES.— 10 In the case of a citizen of the United States, 11 clause (ii) of subparagraph (A) applies only to 12 the extent that the person involved acts within 13 the scope of that person’s status as the agent 14 of a foreign principal described in clause (i) of 15 subparagraph (A).’’. 16 (b) EFFECTIVE DATE.—The amendment made by 17 this section shall apply with respect to elections held in 18 2024 or any succeeding year. 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