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Colorado > Colorado Electoral Code > Fair Campaign Practices Act

1-45-107.5. Independent expenditures – restrictions on foreign corporations – registration – disclosure – disclaimer requirements

Overview of Statute

Pursuant to other provisions of law, no foreign corporation may conduct independent expenditures connected to an election in the state. Corporations and labor organizations may make independent expenditures. These entities must disclose activity related to expenditures over one-thousand dollars, and abide by relevant case law and the state constitution. When disclosing, either a corporation or a subsidiary of the corporation may register for all entities related to the corporation. Labor organizations may also register for affiliated local, national, or international labor organizations, or the larger organizations may register for their local affiliates.

The statute further provides the disclosure requirements for those registering and engaging in independent expenditures, including the thresholds for money contributed and the labeling requirements on the expenditures. Entities engaging in expenditures must also segregate any funds in excess of one-thousand dollars into an identified separate account. The secretary of state will post certain registration materials received on the secretary’s website, and forward relevant materials to the department of revenue on a yearly basis.

Statute

(1) Notwithstanding any other provision of law, no foreign corporation may expend moneys on an independent expenditure in connection with an election in the state.

(2) In accordance with the decision of the supreme court of Colorado in the case of In re Interrogatories Propounded by Governor Bill Ritter, Jr., Concerning the Effect of Citizens United v. Federal Election Comm’n, 558 U.S. — (2010), on Certain Provisions of Article XXVIII of the Constitution of the State of Colorado, 227 P.3d 892 (Colo. 2010), notwithstanding sections 3 (4) (a) and 6 (2) of article XXVIII of the state constitution, corporations and labor organizations shall not be prohibited from making independent expenditures. All such expenditures shall be disclosed in accordance with the requirements of this article and article XXVIII of the state constitution. For purposes of this article and article XXVIII of the state constitution, any use of the word “person” shall be construed to include, without limitation, any corporation or labor organization.

(3) (a) Any person that accepts a donation that is given for the purpose of making an independent expenditure in excess of one thousand dollars or that makes an independent expenditure in excess of one thousand dollars shall register with the appropriate officer within two business days of the date on which an aggregate amount of donations accepted or expenditures made reaches or exceeds one thousand dollars.

(b) The registration required by paragraph (a) of this subsection (3) shall include a statement listing:

(I) The person’s full name, spelling out any acronyms used therein;

(II) A natural person authorized to act as a registered agent;

(III) A street address and telephone number for the principal place of operations; and

(IV) The aggregate ownership interest in the person held by foreign persons calculated as of the time the person registers with the appropriate officer under paragraph (a) of this subsection (3).

(c) If the person identified in subparagraph (I) of paragraph (b) of this subsection (3) is a corporation, a subsidiary may register on behalf of its parent corporation or for other subsidiaries of the parent corporation, and the parent corporation may register on behalf of all of its subsidiaries. In each such case, the registered agent of the person registering shall serve as the registered agent for all such affiliated corporations. Registration of a subsidiary shall include the name of its parent corporation as well as any names under which the subsidiary does business.

(d) If the person identified in subparagraph (I) of paragraph (b) of this subsection (3) is a labor organization, a local labor organization may register on behalf of any affiliated local, national, or international labor organization that will be making independent expenditures, and a national or international labor organization may register on behalf of any affiliated local labor organization that will be making independent expenditures. In each such case, the registered agent of the labor organization that is registering shall serve as the registered agent for each affiliated local, national, or international labor organization.

(4) (a) In addition to any other applicable disclosure requirements specified in this article or in article XXVIII of the state constitution, any person making an independent expenditure in an aggregate amount in excess of one thousand dollars in any one calendar year shall report the following to the appropriate officer:

(I) The person’s full name, or, if the person is a subsidiary of a parent corporation, the full name of the parent corporation, spelling out any acronyms used therein;

(II) All names under which the person does business in the state if such names are different from the name identified pursuant to subparagraph (I) of this paragraph (a);

(III) The address of the home office of the person, or, if the person is a subsidiary of a parent corporation, the home office of the parent corporation; and

(IV) The name and street address in the state of its registered agent.

(b) (I) Any person who expends an aggregate amount in excess of one thousand dollars or more per calendar year for the purpose of making an independent expenditure shall report to the appropriate officer, in accordance with the requirements of this section, the name and address of any person that, for the purpose of making an independent expenditure, donates more than two hundred fifty dollars per year to the person expending one thousand dollars or more on an independent expenditure.

(II) If the person making the donation of two hundred fifty dollars or more is a natural person, the disclosure required by subparagraph (I) of this paragraph (b) shall also include the donor’s occupation and employer.

(III) If the person making the donation of two hundred fifty dollars or more is not a natural person, the disclosure required by this paragraph (b) shall also include:

(A) The donor’s full name, or, if the donor is a subsidiary of a parent corporation, the full name of the parent corporation, spelling out any acronyms used therein;

(B) All names under which the donor does business in the state if such names are different from the name identified pursuant to subparagraph (I) of this paragraph (b);

(C) The address of the home office of the donor, or, if the donor is a subsidiary of a parent corporation, the home office of the parent corporation; and

(D) The name and street address in the state of the donor’s registered agent.

(c) The information required to be disclosed pursuant to paragraph (a) of this subsection (4) shall be reported in accordance with the schedule specified in section 1-45-108 (2) for political committees; except that any person making an independent expenditure in excess of one thousand dollars within thirty days before a primary or general election shall provide such report within forty-eight hours after obligating moneys for the independent expenditure.

(5) (a) In addition to any other applicable requirements provided by law, and subject to the provisions of this section, any communication that is broadcast, printed, mailed, delivered, or otherwise circulated that constitutes an independent expenditure for which the person making the independent expenditure expends in excess of one thousand dollars on the communication shall include in the communication a statement that:

(I) The communication has been “paid for by (full name of the person paying for the communication)”; and

(II) Identifies a natural person who is the registered agent if the person identified in subparagraph (I) of this paragraph (a) is not a natural person.

(b) In the case of a broadcast communication, the statement required by paragraph (a) of this subsection (5) shall satisfy all applicable requirements promulgated by the federal communications commission for size, duration, and placement.

(c) In the case of a nonbroadcast communication, the secretary of state shall, by rule, establish size and placement requirements for the disclaimer.

(6) Any person that expends an aggregate amount in excess of one thousand dollars on an independent expenditure in any one calendar year shall deliver written notice to the appropriate officer that shall list with specificity the name of the candidate whom the independent expenditure is intended to support or oppose. Where the independent expenditure is made within thirty days before a primary or general election, the notice required by this subsection (6) shall be delivered within forty-eight hours after the person obligates moneys for the independent expenditure.

(7) Any person that accepts any donation that is given for the purpose of making an independent expenditure or expends any moneys on an independent expenditure in an aggregate amount in excess of one thousand dollars in any one calendar year shall establish a separate account in a financial institution, and the title of the account shall indicate that it is used for such purposes. All such donations accepted by such person for the making of any such independent expenditures shall only be deposited into the account, and any moneys expended for the making of such independent expenditure shall only be withdrawn from the account. As long as the person uses a separate account for the purposes of this subsection (7), in any complaint relating to the use of the person’s account, no discovery may be made of information relating to the identity of the person’s members and general donors and any discovery is limited to the sources, amounts, and uses of donations deposited into and expenditures withdrawn from the account.

(8) Any person that expends moneys on an independent expenditure in excess of one thousand dollars, regardless of the medium of the communication produced by the expenditure, shall disclose to the secretary of state, in accordance with the schedule specified in section 1-45-108 (2) for political committees, any donation in excess of twenty dollars given in that reporting period for the purpose of making an independent expenditure.

(9) (a) Any person that donates one thousand dollars or more to any person during any one calendar year for the purpose of making an independent expenditure shall report the donation in accordance with the schedule specified in section 1-45-108 (2) for political committees; except that no report is required for any reporting period in which no donation is made.

(b) On an annual basis, the secretary of state shall forward to the department of revenue a summary of the donation reports filed under paragraph (a) of this subsection (9) during the preceding calendar year, and the department shall use such information to ensure that no independent expenditure committee or person, or donor to such committee or person that has filed a report under paragraph (a) of this subsection (9), has deducted any amounts paid for the purpose of making one or more independent expenditures in establishing such committee’s, person’s, or donor’s state income tax liability. The department may use its audit and enforcement authority under section 24-35-108, C.R.S., to ensure the collection of unpaid or delinquent taxes owed by independent expenditure committees, persons that have paid for independent expenditures, or donors to such committees or persons that have filed a report under paragraph (a) of this subsection (9).

(10) Any earmarked donation given for the purpose of making an independent expenditure in excess of one thousand dollars shall be disclosed as a donation from both the original source of the donation and the person transferring the donation.

(11) On reports it files with the appropriate official, an independent expenditure committee that obligates in excess of one thousand dollars for an independent expenditure shall disclose a good faith estimate of the fair market value of the expenditure if the committee does not know the actual amount of the expenditure as of the date that a report is required to be filed with the appropriate official.

(12) All information required to be disclosed to the secretary of state under this section shall be posted on the web site of the secretary within two business days after its receipt by the secretary.

(13) Notwithstanding any other provision of this section, any requirement contained in this section that is applicable to a corporation shall also be applicable to a labor organization.

 

 

Source: L. 2010: Entire section added, (SB 10-203), ch. 269, p. 1231, § 4, effective May 25.

 

Cross references: For the legislative declaration in the 2010 act adding this section, see section 1 of chapter 269, Session Laws of Colorado 2010.

Annotation: April 22, 2016 5:19 pm

A person includes the Colorado Republican Party. Colorado Republican Party v. Gessler, No. 2014CV031851 (Denver District Court), The Colorado Republican Party (CRP) filed papers with the Secretary of State’s office to establish and register a Colorado Republican Party Independent Expenditure Committee (IEC). The executive director and management committee members of the IEC adopted a set of Standing Rules, which govern and restricts the activities of the IEC.
Colorado Ethics Watch (CEW) intervened and argued that the IEP was controlled by and coordinated by the CRP and is thus subject to the same Colorado constitution Amendment XVIII contribution limits and prohibitions as political parties. The Denver District Court found that CRP, as a political party, is a person as defined by Amendment XVIII. CRP is allowed to establish an IEC as long as the IEC is independent. The court looked at several factors, including control and the Standing Rules, and determined there was enough evidence of the IEP’s independence to dismiss CEW’s case.

Annotation: 3:53 pm

In Citizens United v. Gessler, the district court ruled that Citizens United was not required to disclose funding for a film about a Colorado candidate for election but if Citizens United paid to advertise for that film, those donations or expenditures would necessitate disclosure under 1-45-107.5.

Definition [Circulated]

Presented to an elector for the collection of a signature and other information required by this article. C.R.S. § 1-12-100.5.

Definition [Obligating]

In connection with a named candidate, agreeing to spend in excess of one thousand dollars for an independent expenditure or to give, pledge, loan, or purchase one or more goods, services, or other things of value that have a fair market value in excess of one thousand dollars as an independent expenditure. “Obligating” shall not require that the total amount in excess of one thousand dollars be finally determined at the time of the agreement to spend moneys for an independent expenditure or to give, pledge, loan, or purchase anything of value. C.R.S. § 1-45-103.

Definition [Subsidiary]

A business entity having more than half of its stock owned by another entity or person, or a business entity of which a majority interest is controlled by another person or entity. C.R.S. § 1-45-103.

Definition [Corporation]

A domestic corporation incorporated under and subject to the “Colorado Business Corporation Act”, articles 101 to 117 of title 7, C.R.S., a domestic nonprofit corporation incorporated under and subject to the “Colorado Revised Nonprofit Corporation Act”, articles 121 to 137 of title 7, C.R.S., or any corporation incorporated under and subject to the laws of another state. For purposes of this article, “domestic corporation” shall mean a for-profit or nonprofit corporation incorporated under and subject to the laws of this state, and “nondomestic corporation” shall mean a corporation incorporated under and subject to the laws of another state or foreign country. For purposes of this article, “corporation” includes the parent of a subsidiary corporation or any subsidiaries of the parent, as applicable. C.R.S. § 1-45-103.

Definition [Expenditure]

Any purchase, payment, distribution, loan, advance, deposit, or gift of money by any person for the purpose of expressly advocating the election or defeat of a candidate or supporting or opposing a ballot issue or ballot question. An expenditure is made when the actual spending occurs or when there is a contractual agreement requiring such spending and the amount is determined.

(b) “Expenditure” does not include:

(I) Any news articles, editorial endorsements, opinion or commentary writings, or letters to the editor printed in a newspaper, magazine or other periodical not owned or controlled by a candidate or political party;

(II) Any editorial endorsements or opinions aired by a broadcast facility not owned or controlled by a candidate or political party;

(III) Spending by persons, other than political parties, political committees and small donor committees, in the regular course and scope of their business or payments by a membership organization for any communication solely to members and their families;

(IV) Any transfer by a membership organization of a portion of a member’s dues to a small donor committee or political committee sponsored by such membership organization; or payments made by a corporation or labor organization for the costs of establishing, administering, or soliciting funds from its own employees or members for a political committee or small donor committee.

Section 2(8) of article XXVIII of the state constitution.

Definition [Appropriate officer]

The individual with whom a candidate, candidate committee, political committee, small donor committee, or issue committee must file pursuant to section 1-45-109(1), C.R.S., or any successor section. Section 2(1) of article XXVIII of the state constitution.

Definition [Foreign corporation]

(a) A parent corporation or the subsidiary of a parent corporation formed under the laws of a foreign country that is functionally equivalent to a domestic corporation;

(b) A parent corporation or the subsidiary of a parent corporation in which one or more foreign persons hold a combined ownership interest that exceeds fifty percent;

(c) A parent corporation or the subsidiary of a parent corporation in which one or more foreign persons hold a majority of the positions on the corporation’s board of directors; or

(d) A parent corporation or the subsidiary of a parent corporation whose United States-based operations, or whose decision-making with respect to political activities, falls under the direction or control of a foreign entity, including the government of a foreign country.

 

C.R.S. § 1-45-103

Definition [Political committee]

Any person, other than a natural person, or any group of two or more persons, including natural persons that have accepted or made contributions or expenditures in excess of $200 to support or oppose the nomination or election of one or more candidates.

(b) “Political committee” does not include political parties, issue committees, or candidate committees as otherwise defined in this section.

(c) For the purposes of this article, the following are treated as a single political committee:

(I) All political committees established, financed, maintained, or controlled by a single corporation or its subsidiaries;

(II) All political committees established, financed, maintained, or controlled by a single labor organization; except that, any political committee established, financed, maintained, or controlled by a local unit of the labor organization which has the authority to make a decision independently of the state and national units as to which candidates to support or oppose shall be deemed separate from the political committee of the state and national unit;

(III) All political committees established, financed, maintained, or controlled by the same political party;

(IV) All political committees established, financed, maintained, or controlled by substantially the same group of persons.

Section 2(12) of article XXVIII of the state constitution.

Definition [Independent expenditure]

An expenditure that is not controlled by or coordinated with any candidate or agent of such candidate. Expenditures that are controlled by or coordinated with a candidate or candidate’s agent are deemed to be both contributions by the maker of the expenditures, and expenditures by the candidate committee. Section 2(9) of article XXVIII of the state constitution.

Definition [Independent expenditure committee]

One or more persons that make an independent expenditure in an aggregate amount in excess of one thousand dollars or that collect in excess of one thousand dollars from one or more persons for the purpose of making an independent expenditure. C.R.S. § 1-45-103.

Definition [State]

A state of the United States, the District of Columbia, Puerto Rico, the United States Virgin Islands, or any territory or insular possession subject to the jurisdiction of the United States. C.R.S. § 1-8.3-102.

Definition [Person]

Any natural person, partnership, committee, association, corporation, labor organization, political party, or other organization or group of persons. Section 2(11) of article XXVIII of the state constitution.

Definition [Earmark]

A designation, instruction, or encumbrance that directs the transmission by the recipient of all or part of a donation to a third party for the purpose of making one or more independent expenditures in excess of one thousand dollars. C.R.S. § 1-45-103.

Definition [Election]

Any election under the “Uniform Election Code of 1992” or the “Colorado Municipal Election Code of 1965”, article 10 of title 31, C.R.S. C.R.S. § 1-7.5-103.

Definition [Donation]

(a) (I) The payment, loan, pledge, gift, or advance of money, or the guarantee of a loan, made to any person for the purpose of making an independent expenditure;

(II) Any payment made to a third party that relates to, and is made for the benefit of, any person that makes an independent expenditure;

(III) The fair market value of any gift or loan of property that is given to any person for the purpose of making an independent expenditure; or

(IV) Anything of value given, directly or indirectly, to any person for the purpose of making an independent expenditure.

(b) “Donation” shall not include a transfer by a membership organization of a portion of a member’s dues for an independent expenditure sponsored by such membership organization.

C.R.S. § 1-45-103.

Definition [Secretary]

The Colorado secretary of state. C.R.S. § 1-1.5-102.

Definition [Committee]

The committee of signers described in section 1-12-108(2). C.R.S. § 1-12-100.5.

Definition [Candidate]

Any person who seeks nomination or election to any state or local public office that is to be voted on in this state at any primary election, general election, school district election, special district election, or municipal election. “Candidate” also includes a judge or justice of any court of record who seeks to be retained in office pursuant to the provisions of section 25 of article VI. A person is a candidate for election if the person has publicly announced an intention to seek election to public office or retention of a judicial office and thereafter has received a contribution or made an expenditure in support of the candidacy. A person remains a candidate for purposes of this article so long as the candidate maintains a registered candidate committee. A person who maintains a candidate committee after an election cycle, but who has not publicly announced an intention to seek election to public office in the next or any subsequent election cycle, is a candidate for purposes of this article. Section 2(2) of article XXVIII of the state constitution.

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Federal Cases

Case Name: Citizens United v. Gessler

Citation: 773 F.3d 200 (10th Cir. 2014)

Federal Circuit Court: 10th Circuit Court

Year: 2014

Case URL: https://www.ravellaw.com/opinions/64a08559e50749015e0a3efcb4ce2e3d

Case Summary: Holding that political advocacy group alleging that Colorado's campaign practices laws violated its First Amendment rights was likely to succeed on the merits.

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