Board of Elections Sends Message to 527 Advertisers

By J. Barlow Herget
Published: Sep. 13, 2004

RALEIGH - Lorraine Shinn is a Republican member of the State Board of Elections. She recently watched a political ad that was not supposed to tell voters who to vote for or against in the governor’s race.

Here’s what she said to fellow board members and the attorneys present:

“This was the first time I’ve seen the ad. Again, I’ve seen other ads similar to this that I don’t know whether the sponsors are PACs or whatever. And to me, not having the legal minds that you all have, I don’t get all into how that’s worded. My perception of it is what I see. And to me, I saw an ad that said vote for Patrick Ballantine for Governor.”

Shinn is like a lot of us who watch political ads. We find it hard to tell advertisements sponsored by the candidates from the ads that are paid for by political committees or the new political nonprofits called 527s.

The ad in question was produced and aired by the Republican Governors Association (RGA) based in Washington. The group is a 527 organization, and its ad, not surprisingly, promoted the gubernatorial candidacy of former Republican state Senator Ballantine of Wilmington.

The ad did not tell people to “vote for” Ballantine or “vote against” his opponent, Democratic Gov. Mike Easley. But its intent was clear, not only to Shinn but to the four other members of the Board of Elections. And that’s why the Board made history by unanimously ruling that the RGA had crossed the line and ordered the RGA to pull the spot. And by a party-line, 3-2 split decision, it levied a record $196,000 fine against the RGA.

The Board sent a strong message to other 527s that the Board will look closely at 527 political advertisements to make sure they follow the law.

The RGA spent $196,000 producing and broadcasting the ad, which first aired Aug. 19. Ballantine, who had to overcome a very competitive primary election, is far behind Easley in raising campaign funds. Recent history suggests that it takes about $10 million to mount a successful campaign, and the RGA, like their Democratic counterparts in other states, came to Ballantine’s rescue.

The RGA spot quickly drew a complaint from the state Democratic Party and its Executive Director Scott Falmlen. His attorney, John Wallace of Raleigh, argued that the ad “expressly supports the candidacy of the Republican nominee for the election to the office of Governor.”

In the past, regulators looked for what have been called the seven “magic words” as outlined by the U.S. Supreme Court in such ads. These words were phrases that encouraged viewers to “vote for” or “vote against” or “elect” or “defeat” a specific candidate. The Court ruled last year when it supported most of the McCain-Feingold Act that regulators should not be bound by these magic words.

North Carolina long has outlawed corporations from giving directly to candidates. State leaders had concluded that allowing corporations to make contributions gave an unfair advantage to special interests and invited even more expensive campaigns. (Businesses and groups such as labor unions can form Political Action Committees that can give money, but such contributions are limited.)

Political groups turned instead to the 527 political nonprofits. Such organizations can accept corporate money as well as large individual gifts, and the money has flowed. Many of the 527s are legitimate interest groups, advocating for their particular issues be they gun ownership, the environment or the tobacco quota buyout. As nonprofits, however, they cannot run ads that, in Wallace’s words, “expressly support” a particular candidate, Republican or Democrat or Libertarian.

The Board of Elections, after hearing testimony, determined that the RGA advertisement did expressly support Ballantine as Board Member Shinn’s common sense judgment underscored. Once that decision was made, the Board determined that the RGA had, in fact, accepted millions in corporate contributions. Thus, the ad broke the law.

The RGA could have received a penalty three times the worth of the advertisement or almost $600,000; it settled on the cost of the ad, $196,000.

The RGA, to its credit, pulled the ad and revised it. It already has purchased a second, $300,000 TV buy. Life goes on.

The episode sets a precedent for 527 political advertising in North Carolina. The state Board of Elections could have rendered a mushy opinion that gave no clear direction to 527s, which continue to grow. The Board did the right thing to draw a line in the sand and say, “Don’t cross this or you will pay.”