Now that the dust has settled on last month’s Seattle elections, the sheer scale of the record-breaking super PAC spending, spurred on by Amazon’s incredible $1.5 million donation, is coming into sharper focus. Super PACs spent more than $4 million in this year’s Seattle City Council races. That’s more money than all of the 55 candidates themselves spent—combined.
These numbers mean that for every dollar that went directly to a candidate, more than a dollar went into super PACs—which, unlike a candidate’s campaign, face no donation limits, have no accountability to voters, and frequently pay for nasty attack ads.
This is a new phenomenon in Seattle. In 2011, our first municipal election of the decade, there was no money spent by super PACs, according to the Seattle Ethics and Elections Commission (SEEC). In 2015, super PACs accounted for 20 percent of spending. And this year saw super PACs spend an incredible 55.5 percent of all election spending.
But just as super PACs seem to be growing limitlessly, there’s a plan to stop them.
Seattle Council Member Lorena González has introduced legislation that would cap super PAC donations at $5,000 and entirely bar multinational companies like Amazon from spending in Seattle elections. If approved, her legislation will almost certainly face a legal challenge. But she thinks it can survive in court, and maybe even change the face of elections nationwide.
“I do believe that people in Seattle want to see big money out of politics," González said at a council hearing last Wednesday. "And we have a real opportunity to not just frame up the issue and do the right thing here in Seattle, but hopefully inspire others across the country to also do the same.”
González is moving her legislation, which she is calling the Clean Campaigns Act, quickly through the city council. She is holding another hearing on the legislation this Thursday and wants the bill to get a full vote from the city council next month. The PAC legislation would dramatically change Seattle’s elections by creating new rules that would:
• Bar any company with more than 5 percent foreign ownership, or a foreign owner with a stake larger than 1 percent, from donating in Seattle elections. This would block donations from companies like Amazon and Uber.
• Set a $5,000 limit for most contributions to local super PACs.
• Create a bypass around the $5,000 donation limit for groups able to get more than 150 donations, a loophole that appears to be aimed at helping union groups.
• Create additional disclosure requirements for any advertisements about any Seattle legislative matters, regardless of whether those advertisements are during an election year.
But as González is trying to move quickly, some members of the SEEC, the city’s own watchdog, are raising the alarm about key aspects of the Clean Campaigns Act. The SEEC warned González in a November 15 letter that she may be damaging her legislation by creating carve-out for a new type of PAC called a “Limited Contribution Committee” (LCC), which can evade the $5,000 donation limit if the LCC meets a certain number of donors. That's the carve-out that appears to be aimed at helping labor groups continue to spend big in city elections.
González, who has earned labor’s support in past elections, contends that LCC’s are merely to help “grassroots” organizers continue to operate in local elections and won’t hurt the legislation’s ability to stand up in court. And she said it would not undermine her broader effort to reign in the super PAC system, which can spend limitlessly on local elections.
But Is It Legal?
If González's legislation gets signed into law it will almost certainly face a court challenge. González is taking on powerful political interests, not only Seattle but around the country. Powerful local politicians like Mayor Jenny Durkan and former Mayor Tim Burgess have used super PACs to bankroll their political careers. Nationally, these unregulated super PACs spent $1.7 billion in the 2016 federal elections, according to OpenSecrets.org. And González is not coy about the fact that she wants her legislation to go to the Supreme Court and take down this entire 10-digit campaign funding system.
So the question facing the Clean Campaigns Act isn’t only: Can it pass the Seattle City Council? It's also: Can it pass the U.S. Supreme Court?
González is supported by a team of legal experts in her endeavor, including people with ivy league law school tenures, and they think the legislation stands a good chance of winning in court. But Albert Alschuler, a University of Chicago law professor and one of the experts helping González craft her legislation, said he can't make any guarantees.
“When we talk about [the super PAC donation limits] part of the ordinance, I can’t assure you that there is no risk for an adverse ruling,” Alchuler told a city council meeting last week. “But the U.S. Supreme Court has not considered the question.”
Super PACs have exploded in American elections since the landmark 2011 Supreme Court case Citizens United v. FEC, but, contrary to popular opinion, Citizens United didn’t actually create the modern super PAC. In Citizens United, the Supreme Court only ruled that it was unconstitutional to limit expenditures by super PACs, it didn’t rule on contribution limits to these groups.
Contribution limits weren’t struck down until SpeechNow.org vs. FEC, a lower court ruling that used one single line from Citizens United to open the floodgates to billions of dollars in contributions to super PACs, and therefore billions of dollars in super PAC spending.
In the Citizens United ruling, there’s one sentence that says that expenditures by independent groups like super PACs do not create a significant enough risk of corruption, or the appearance of corruption, to satisfy limits on free speech. In Speechnow, the DC Court of Appeals ruled that because the Supreme Court said expenditures by super PACs can’t be limited, neither could donations. A third opinion a few months later in California, called Long Beach Area Chamber of Commerce PAC v. City of Long Beach, brought the same interpretation to the Ninth Circuit Court of Appeals, which is the jurisdiction Seattle sits in.
The Obama Administration declined to appeal the lower court’s ruling, but many legal experts believe that SpeechNow was wrongly decided. The Supreme Court has a long history of distinguishing between expenditure and donation limits, and conflating the two, as the DC Court of Appeals, was wrong, according to experts like Alschuler. The law professor told the Seattle City Council last week that these decisions make it “easy” to avoid the strict contribution limits Seattle sets for campaigns.
“These two decisions have given Seattle a very strange system of campaign finance,” Alschuler said. “After making the maximum donation to a candidate a person gave thousands or even millions to a super PAC, whose only mission is to support that candidate.”
This double-dipping donation activity—giving the maximum donation to candidates, and then giving to super PACs who support those same candidates—was a favorite tool of Amazon executives in this last election. Six of Amazon’s elite S-team of executives maxed out their maximum donations to Egan Orion, a candidate running against Socialist Council Member Kshama Sawant. Those executives then turned around and, along with four other members of the elite S-team, gave $41,500 to the local super PAC People For Seattle (controlled by former Mayor Tim Burgess). People for Seattle spent over $55,000 supporting Orion.
These Amazon executives’ ability to spend well beyond individual donation limits gets even more egregious when you consider Amazon’s corporate donations, which some of these top level executives almost surely were involved in (although Amazon won’t return The Stranger’s questions asking who decided the corporate donations). Over the course of this election cycle, Amazon gave $1.5 million to the Civic Alliance For a Sound Economy super PAC, which spent more than $440,000 supporting Orion.
If González’s legislation becomes law, people like those Amazon executives would be limited to only giving $5,000 to a super PAC—and that $1.5 million corporate donation from Amazon would be blocked entirely. (That's because The Clean Campaigns Act bars foreign-influenced companies from spending in local elections entirely, and “foreign-influenced” is defined as companies which have one foreign owner who controls 1 percent of the company, or multiple foreign owners who collectively own 5 percent of the company’s stock. Amazon meets that definition.)
Ellen L. Weintraub, the chair of the Federal Elections Commission, told the council during a hearing last week that this foreign investor aspect of the law is both cutting-edge, and fully legal.
“I want to assure you today,” Weintraub told the council through a video chat, “that while the foreign influence provision you are considering will build on your leading-edge reputation for campaign finance reform, the proposed provision nonetheless fits comfortably within existing federal statutory laws and Supreme Court precedent.”
Federal law makes it clear that foreign nationals cannot spend money in American elections, and that extends to corporations, according to Weintraub. But Seattle might be the best shot at applying this law to foreign-influenced corporations, according to Weintraub.
“What you are considering here is the sort of reform that can only succeed at the local and state levels at the moment,” Weintraub said, “as ideological opposition to campaign finance enforcement has effectively paralyzed both the Federal Election Commission and Congress.”
Florida Did It First
Seattle has lately been seen as a national leader in campaign finance laws. This city's Democracy Voucher program, which gives every voter $100 to distribute to qualified candidates in $25 increments, has been widely hailed, and even some Democratic presidential candidates have called for it to be implemented nationwide. But when it comes to these new super PAC regulations, Seattle would be following the lead of a small city in Florida.
St. Petersburg, on the Gulf Mexico, passed a law in October of 2017 that effectively abolished super PACs in the city’s elections by limiting all PAC donations to $5,000 and banning donations from companies that have more than 5 percent ownership from a foreign owner. Both Seattle’s proposed law and the St. Petersburg law are modeled on language drafted by Free Speech for the People, a nationwide non-profit that advocates against super PACs.
Darden Rice, a city council member of St. Petersburg, told the Seattle City Council during a meeting last week that her city passed the law because they saw a growing threat from super PACs evading their local election donation limits.
“What is the point of enacting any of these measures if it is so easy to go around these local laws and contribute unlimited amounts to a super PAC?” Rice said. “We saw the threat the super PACs were bringing and we decided it was a matter of time before it would be at our door.”
Rice specifically pointed to concern over realtor super PACs trying to sway their local tools to address affordable housing.
Rice said so far, St. Petersburg has not been sued in court. But that city’s version of the law differs from Seattle’s proposal in two key ways: foreign influence is measured in much more lenient terms (Florida's law sets the bar at 5 percent ownership by a single individual or 20 percent ownership from multiple owners; Seattle’s is 1 and 5 percent, respectively), and the Florida law does not include any carve-outs for what González is calling “limited contributor committees.”
Seattle’s election watchdog is raising concern over both of these aspects of the proposed law.
SEEC Voices Concerns
Gonzalez’s carve-out for labor groups to get around donations limits is already drawing criticism from the SEEC, the city’s own elections regulator. Gonzalez introduced a draft of her legislation to the SEEC twice, first in August and then in September. The commission was largely supportive of the measure in August, but when Gonzalez brought a new draft back to the SEEC in September, she'd added her LCC provision and the commissioners raised their concerns.
“I’m just struggling with why this would be, to be honest, constitutional that we are setting different classes of speech at some level,” said Eileen Norton, one of the SEEC commissioners, during the meeting. “So, I’m just struggling with that… I certainly support the legislation that we received last time.”
González said after last week’s meeting that her legal experts don’t think the LCC creates a legal liability.
“We think that it will be defensible, particularly because we are tying it with some of the same regulations that we are seeing in the Democracy Voucher program,” González said. “We are not creating a distinction as to who can qualify for it, so long as you meet that minimum requirement. You can qualify to be a limited contributor committee regardless of what kind of political activity you intend to engage in.”
Under González's proposal, groups qualify to be LCC’s by existing for at least nine months and receiving a certain threshold of donors: 150 donors for district council races, 400 donors for citywide races, and 600 donors for mayoral races.
Donations to these groups are limited to $500 per person, per year. Once qualified, an LCC can then donate their funds to other PACs above the $5,000 limit.
John Bonifaz, the co-founder of the Free Speech For the People non-profit, which is lobbying for the legislation, said the LCC provision allows grassroots groups to collect lots of small contributors for a cause and then give those donations, bundled together in one large check, to a different PAC that would decide how exactly to spend the money in an election. He said this activity should be treated differently than a massive check from one single donor.
“This is a very different entity than one big check,” Bonifaz said. “An Amazon check of $1 million is not the same as $1 million raised by five-dollar contributors.”
LCC’s can also take unlimited donations from other LCC’s, which creates the possibility of nesting-egg situation in which groups of wealthy people could still move massive amounts of money into Seattle’s elections by pooling multiple LCC’s together.
Consider this scenario: 150 executives decide they want to spend big in local elections, so they set up 100 separate LCCs. The executives then max out their LCC donations to each of these 100 groups. Since the maximum contribution for an individual to an LCC is $500, that would work out to a total of $50,000 being given, per donor, to the overall collection of 100 LCCs.
Those 100 LCCs would then collectively have $7.5 million from 150 wealthy people, and once that money was pooled—a legal maneuver under González's proposal—those 150 wealthy people would have found a way to spend $7.5 million in Seattle’s elections.
Bonifaz argues it’s unlikely rich people would be willing to jump through all of these hoops.
“Sheldon Adelson [a casino mogul and Republican super donor] doesn’t want to set up his own independent expenditure committee, he just wants to write that $50 million check supporting Donald Trump,” Bonifaz said. “For the Amazons of the world and for the super wealthy of the world… you just write that check.”
The SEEC repeated their concern over LCC’s in the Nov. 15 letter to González . Commissioners said the LCC designation “could create challenges” when defending the law in court. The SEEC also said that González’s threshold for a foreign-influenced corporation, set at 1 percent, would be difficult to police.
“While there was consensus that one percent does give a shareholder a not-insignificant voice in a corporation’s management, there was concern about policing this threshold, since many publicly traded company shares are held by brokerages, with the identity of the ultimate owner unknown to the corporation,” the letter stated.
Wayne Barnett, the executive director of the SEEC, said there are no current plans for the commission to discuss the legislation any further.
Council members seemed unfazed by the one percent threshold during last week’s meeting.
“If it’s a lot of work and they don’t want to do it they can just excuse themselves from participating, it’s pretty straightforward,” said Council Member Mike O’Brien, who leaves office at the end of this year.
González said the law places the legal burden on the corporations themselves, who would have to sign a document declaring whether or not they violate the terms of the ordinance.
“We’ve crafted the legislation to burden or the onus on the corporations to provide a certification under penalty of perjury as to whether or not they are in compliance with the ordinance,” González said.