On September 14, 2010, the Colorado Secretary of State amended Colorado's campaign finance rules (8 CCR 1505-6). These rules take effect on October 4, 2010. The majority of the new rules are non-substantive and intended to incorporate the new Independent Expenditure committees, created by Senate Bill 10-203, into existing campaign finance regulations. However, there are a few substantive changes and new regulations that significantly affect candidate committees, political parties, and other political committees (PACs, 527s, Small Donor Committees, and Independent Expenditure Committees). The new rules effectively limit the viability and usefulness of Independent Expenditure Committees.  

Major Substantive Amendments

Rule 2.9 was amended to clarify that a corporation or labor organization is permitted to "pay for costs of establishing, administering, and soliciting funds from its own employees or members for a Political Committee, a Small Donor Committee, or an Independent Expenditure Committee." In other words, this allows any corporation or labor organization to pay staff salaries, attorney fees, accountant fees, fundraiser fees, or the cost for any other administrative function directly from the parent organization's bank accounts. In practice, this will effectively reduce the overhead associated with operating a political committee connected to a corporation or labor organization.  

Major portions of Rule 14, which regulates independent expenditures, were repealed and amended to reflect the adoption SB 10-203 and the United States Supreme Court ruling in Citizens United. Rule 14.5 clarifies the disclosure and disclaimer requirements found in CRS 1-45-107.5(5) for nonbroadcast electioneering communications that are independent expenditures. A nonbroadcast communication is defined as any communication not broadcast by television or radio (e.g., mail, print, delivered at the door). Such communications are required to "contain the name of the person making the expenditure and the specific statement that the advertisement of material is not authorized by any candidate. Such disclosures shall be printed at the end of the communication in text that is no less than one-quarter of the size of the largest font used in the communication, but in no event less than eight point font."  

New Rule 14.6 subjects Independent Expenditure Committees to existing Colorado law by limiting the source and amount of campaign contributions. Ostensibly, this rule treats independent expenditure-only groups as Political Committees in order to subject these groups to the contribution limits contained in Article 28 of the Colorado Constitution. This provision is of questionable constitutionality in light of the reasoning and holding of the court in SpeechNow.org v. Federal Election Commission, 599 F.3d 686 (D.C. Cir. 2010).

Rule 14.6 also explicitly subjects Independent Expenditure Committees to existing provisions relating to coordination with candidate committees and political parties. New Rule 14.7 defines coordination as an expenditure made at the "request, suggestion, or direction of, in coordination with, or under the control of" the candidate committee, political party, any agent of the candidate committee or the political party, or "a common consultant who provides, or has provided during the election cycle, professional services to that candidate committee or political party and the person making the expenditure or engaging in the spending...." Additionally, Rule 14.7 defines coordination as those instances when the candidate's or political party's "nonpublic information" is given to the person making the expenditure, any agent of the person making the expenditure, or a common consultant who has or will provide professional services to the person making the expenditure and the candidate committee or political party with whom the expenditure is allegedly coordinated. Rule 14.7 provides an affirmative defense, of sorts, against an allegation of coordination if an effective firewall exists to protect against the "transmission of non-public information" between the candidate committee or political party and the person making the expenditure.  

Prior to the adoption of Rule 14.7, Colorado did not have a definition of coordination. The only reference to coordination was found in Article 28, Section 2(9) of the Colorado Constitution, which defines an independent expenditure as an expenditure not controlled or coordinated with any candidate. Rule 14.7 goes further by explicitly prohibiting coordination with political parties as well as candidate committees. Rule 14.7 also attempts to prevent shared campaign consultants from being used as conduits to coordinate expenditures between candidate committees and groups or persons making independent expenditures.  

New Rule 1.16 defines "non-public information" as "confidential material in any form that is not available to the general public, including a non-public campaign plan, communications plan, campaign budget, specification of unmet and potentially unmet campaign needs, proposed or actual media buy, list or description of households or voters who are to receive or have received materials under a mailing or other distribution program, polling or focus group results, or other propriety material; provided that any such information is material to the creation, production, or dissemination of independent expenditures or electioneering communications."  

Rule 1.16 specifically excludes from the definition of "non-public information" any communication exclusively dealing with "candidate positions on legislative or policy issues" and "any lists, research, or data that are acquired from a common vendor, without discussion between vendor and purchasers about the uses to which such material will be put, and in exchange for each purchaser’s payment reflecting the product’s fair market value." These exclusions are intended to protect legitimate business transactions between campaign consultants and candidate committees, political parties, political committees, or political organizations. Otherwise, legitimate business transactions would fall under the scope of Rule 14.7.  

Recommendations  

  1. These rules eliminate any functional differences between Political Committees and Independent Expenditure Committees.
  2.  If an entity wants to accept unlimited contributions from any source, a 527 continues to be the best organizational structure.  
  3. Because federal and states courts have given 527s great operational latitude, 527s continue to be the best entity for non-affiliated groups to influence elections in Colorado.