Title of Regulation: 1VAC20-90. Campaign Finance and Political Advertisements (adding 1VAC20-90-30).

Statutory Authority: § 24.2-103 of the Code of Virginia.

Public Hearing Information:

August 6, 2019 - 1 p.m. - Virginia State Capitol, Senate Room 3, Richmond, VA 23219

Public Comment Deadline: August 9, 2019.

Agency Contact: David Nichols, Director of Election Services, Department of Elections, 1100 Bank Street, Richmond, VA 23219, telephone (804) 864-8952, or email david.nichols@elections.virginia.gov.

Basis: The Department of Elections is promulgating this regulation on behalf of the State Board of Elections (the board) per § 24.2-103 of the Code of Virginia.

Purpose: Current campaign finance summaries define express advocacy as a direct or indirect contribution, in-kind contribution, independent expenditure, or loan made to a candidate or political committee for the purpose of influencing the outcome of an election; or an advertisement that refers to a party or candidate by name and states "Vote for…"; "Support…"; "Elect…"; "Smith for Congress"; "Send him home"; "Oppose..." etc. The board has repeatedly expressed concern that the definition currently included in campaign finance summaries does not provide sufficient clarity to citizens and entities of the Commonwealth wishing to sponsor political campaign advertisements.

The purpose of this regulation is to provide the State Board of Elections with authority to regulate campaign advertisements that unambiguously call for the election or defeat of a candidate; to further the public welfare and public interest in fair and fully informed elections by requiring sponsors of campaign advertisements to identify to the public who paid for or sponsored the advertisement; and in cases where another candidate is mentioned, to inform the public whether candidates mentioned in the advertisements did or did not approve the advertisement.

Substance: This regulatory action adds the definition of "express advocacy" to the Virginia Administrative Code. The proposed definition is taken from federal regulations governing campaign finance.

Issues: The primary advantage to the public, the Commonwealth, and the Department of Elections is that this amendment clarifies which political advertisements must be disclosed. This clarity also advantages sponsors of political advertisements by making them aware that, regardless of whether certain words are used, advertisements that expressly advocate must be disclosed. The advantage of the amendment to the public is that they will be able to see which candidate or sponsor paid for a political advertisement. The Department of Elections is not aware of any disadvantages of implementing the amendment.

Department of Planning and Budget's Economic Impact Analysis:

Summary of the Proposed Amendments to Regulation. The State Board of Elections (Board) proposes to adopt the federal definition of "express advocacy." The definition of express advocacy is important in determining if disclosure statements need to be made in advertisements.

Result of Analysis. Whether the benefits exceed the costs depend on the policy views of the observer. Detailed analysis of the benefits and costs can be found in the next section.

Estimated Economic Impact. Generally speaking, disclosure statements identify the person(s) or organization(s) that has paid for the advertisement. Code of Virginia § 24.2-955 states that disclosure requirements for political campaign advertisements apply to any sponsor of an advertisement in the print media or on radio or television the cost or value of which constitutes an expenditure or contribution.¹ "Expenditure" is defined in § 24.2-945.1 as:

"money and services of any amount, and any other thing of value, paid, loaned, provided, or in any other way disbursed by any candidate, campaign committee, political committee, or person for the purpose of expressly advocating the election or defeat of a clearly identified candidate or by any inaugural committee for the purpose of defraying the costs of the inauguration of a Governor, Lieutenant Governor, or Attorney General."

"Contribution" is defined in § 24.2-945.1 as:

"money and services of any amount, in-kind contributions, and any other thing of value, given, advanced, loaned, or in any other way provided to a candidate, campaign committee, political committee, or person for the purpose of expressly advocating the election or defeat of a clearly identified candidate or to an inaugural committee for the purpose of defraying the costs of the inauguration of a Governor, Lieutenant Governor, or Attorney General. "Contribution" includes money, services, or things of value in any way provided by a candidate to his own campaign and the payment by the candidate of a filing fee for any party nomination method."

Thus, the definition of express advocacy is important in determining if disclosure statements need to be made in political campaign advertisements.

The Board currently uses the following definition for "express advocacy":

"a direct or indirect contribution, in-kind contribution, independent expenditure or loan made to a candidate or political committee for the purpose of influencing the outcome of an election; an advertisement that refers to a party or candidate(s) by name and states "Vote for…"; "Support"; "Elect…"; "Smith for Congress"; "Send Him Home"; "Oppose", etc."

There has been concern that this definition has provided a loophole by effectively permitting the absence of disclosure statements for political advertising that is intended to affect the outcome of an election, but does not use the specific wording listed above. Consequently, the Board proposes to adopt the federal definition of "express advocacy," which is expected to close the loophole. This definition includes the specific wording above, and adds:

or any variations thereof or any communication when taken as a whole and with limited reference to external events, such as the proximity to the election, could only be interpreted by a reasonable person as containing advocacy of the election or defeat of one or more clearly identified candidates because (i) the electoral portion of the communication is unmistakable, unambiguous, and suggestive of only one meaning; and (ii) reasonable minds could not differ as to whether it encourages actions to elect or defeat one or more clearly identified candidates.

The proposed new definition does appear to close the loophole and would require that more advertising be accompanied with disclosure statements. For those who believe the more transparent political campaigns and their associated advertising are, the better, the Board's proposed new definition would produce a net benefit. For those who believe privacy should trump transparency, the proposed new definition of "express advocacy" would not be beneficial.

Businesses and Entities Affected. The proposed amendment affects persons and organizations that pay for political advertisements.

Localities Particularly Affected. The proposed amendment does not disproportionately affect particular localities.

Projected Impact on Employment. The proposed amendment is unlikely to affect employment.

Effects on the Use and Value of Private Property. The proposed amendment is unlikely to significantly affect the use and value of private property.

Real Estate Development Costs. The proposed amendment is unlikely to affect real estate development costs.

Small Businesses:

Definition. Pursuant to § 2.2-4007.04 of the Code of Virginia, small business is defined as "a business entity, including its affiliates, that (i) is independently owned and operated and (ii) employs fewer than 500 full-time employees or has gross annual sales of less than $6 million."

Costs and Other Effects. The proposed amendment is unlikely to significantly affect costs for small businesses.

Alternative Method that Minimizes Adverse Impact. The proposed amendment is unlikely to adversely affect small businesses.

Adverse Impacts:

Businesses. The proposed amendment is unlikely to adversely affect businesses.

Localities. The proposed amendment is unlikely to adversely affect localities.

Other Entities. The proposed amendments is unlikely to adversely affect other entities.

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¹The Code section exempts "(i) an individual who makes independent expenditures aggregating less than $1,000 in an election cycle for or against a candidate for statewide office or less than $200 in an election cycle for or against a candidate for any other office or (ii) an individual who incurs expenses only with respect to a referendum."

Agency's Response to Economic Impact Analysis: The Virginia Department of Elections concurs with the economic impact analysis of the Department of Planning and Budget.

Summary:

The proposed amendment adopts a definition of "express advocacy."

1VAC20-90-30. Express advocacy.

When used in Chapter 9.3 (§ 24.2-945 et seq.) and Chapter 9.5 (§ 24.2-955 et seq.) of Title 24.2 of the Code of Virginia, "expressly advocating" or any variation thereof shall mean any communication that uses phrases such as "vote for," "elect," "support," "cast your ballot for," "Smith for Congress," "vote against," "defeat," "reject," or any variation thereof or any communication when taken as a whole and with limited reference to external events, such as the proximity to the election, that could only be interpreted by a reasonable person as containing advocacy of the election or defeat of one or more clearly identified candidates because (i) the electoral portion of the communication is unmistakable, unambiguous, and suggestive of only one meaning and (ii) reasonable minds could not differ as to whether it encourages actions to elect or defeat one or more clearly identified candidates.