William C. Bird Chairman Robert McCormack Vice Chairman Anna Bray Sharon K. Trusty Sybil Jordan Hampton Repeal 119 ARKANSAS ETHICS COMMISSION 910 West Second Street, Suite 100 Post Office Box 1917 Little Rock, Arkansas 72203-1917 (501) 324-9600 Fax (501 324-9606 Toll Free (800) 422-7773 February 27, 2015 Attn: Travis W. Story, General Counsel 438 East Millsap Road, Suite 103 Fayetteville, Arkansas 72703 Re: Case No. 2014-CO-066 Dear Mr. Story: Graham F. Sloan Director Jill Rogers Barham Staff Attorney Teresa Keathley Director of Compliance Drew Blankenship Director of Compliance On December 4, 2014, the Ethics Commission mailed the ballot question committee known as Repeal 119 a certi?ed letter containing a copy of the citizen complaint ?led against it in the above?referenced case. Service of the complaint was made upon Mr. Duncan Campbell in his capacity as Repeal 119?s President. In the December 4th letter, Repeal 119 was noti?ed that an investigation was being commenced regarding the issue of whether or not it violated the Disclosure Act for Public Initiatives, Referenda, and Measures Referred to Voters (Ark. Code Ann. 7-9-401 et seq.) in connection with its campaign to expressly advocate for the repeal of Fayetteville City Code Section 119 Ordinance 119) which was presented to voters in a special election held on December 9, 2014. The allegations contained in the complaint were set forth in the notice letter as follows: 1. Repeal 119 ?has used its resources to publicly support local candidates for Fayetteville City Council as seen by their Facebook page: 19.? With regard to Repeal 119?s resources, ?recorded telephone calls, known as robo calls, have been received by residents of Fayetteville from a group purportedly known as advocating against Ordinance 119 and advocating contacting members of the Fayetteville City Council.? Visit Us At Our Web Site Repeal 119 February 27, 2015 Page 2 Turning to the Disclosure Act for Public Initiatives, Referenda, and Measures Referred to Voters, Ark. Code Ann. 7?9-402 sets forth de?nitions of terms used in that Act. The ?nancial reporting requirements for a BQC1 are set forth in Ark. Code Ann. 7-9-406, 7-9-407, and 7-9-409. In addition to those statutes, Ark. Code Ann. 7-6-201, 7-6?215, 21?8-601, and 21-8-603 were identi?ed as being potentially applicable to the instant complaint. It is noted that the Commission has adopted a set of Rules on Ballot and Legislative Question Committees (the ?Rules on which implement and administer the statutes contained in the Disclosure Act. Reporting Requirements Ark. Code Ann. 7?9-402 provides, in pertinent part, as follows: ?Contribution? means, whether direct or indirect, advances, deposits, (4) (B) (C) transfers of funds, contracts, or obligations, whether or not legally enforceable, payments, gifts, subscriptions, assessments, payment for services, dues, advancements, forbearance, loans, pledges, or promises of money or anything of value, whether or not legally enforceable, to a person for the purpose of expressly advocating the quali?cation, disquali?cation, passage, or defeat of a ballot question. ?Contribution? includes the purchase of tickets for events such as dinners, luncheons, rallies, and similar fundraising events, and the granting of discounts or rebates by television and radio stations and newspapers, not extended on an equal basis to all persons seeking to expressly advocate the quali?cation, disquali?cation, passage, or defeat of a ballot question. . .. ?Contribution? shall not include noncompensated, nonreimbursed volunteer personal services or travel[.] ?Contribution and expenditure? shall not include activities designed solely to encourage individuals to register to vote or to vote, or any communication by a bona ?de church or religious denomination to its own members or adherents for the sole purpose of protecting the right to practice the religious tenets of the church or religious denomination, and ?expenditure? shall not include one made for communication by a person strictly with the person?s paid members or shareholders[.] The term, ?ballot question committee,? as de?ned in Ark. Code Ann. means: ?any person, located within or outside Arkansas, who receives contributions for the purpose of expressly advocating the quali?cation, disquali?cation, passage, or defeat of any ballot question, or any person, other than an individual, located within or outside Arkansas, that makes expenditures for the purpose of expressly advocating the quali?cation, disquali?cation, passage, or defeat of any ballot question.? Repeal 119 February 27, 2015 Page 3 (6) ?Expenditure? means a purchase, payment, distribution, gift, loan, or advance of money or anything of value, and a contract, promise, or agreement to make an expenditure, for goods, services, materials, or facilities for the purpose of expressly advocating the quali?cation, disquali?cation, passage, or defeat of a ballot question. . . In accordance with Ark. Code Ann. 7-9-406 and 607 of the Rules on a is required to ?le reports with the Ethics Commission when it either receives contributions or makes expenditures in excess of $500 for the purpose of expressly advocating the quali?cation, disquali?cation, passage, or defeat of a ballot measure. The ?ling of the ?nancial reports preelection, and ?nal) depends upon when the $500 threshold has been met in connection with the election in question. Once a BQC triggers the ?nancial reporting requirements, the ?nancial reports must be ?led with the Commission in accordance with Ark. Code Ann. 7-9-409 and 608 610 of the Rules on Pursuant thereto, a is required to ?le ?nancial reports by no later than ?fteen (15) days following the month in which the $500 threshold has been met. Thereafter, ?nancial reports must be ?led no later than ?fteen (15) days after the end of each month until the election is held. A is also required to ?le a ten (10) day preelection ?nancial report no fewer than seven (7) days prior to any election on the ballot question and a ?nal ?nancial report must be ?led no later than thirty (30) days after the election. A report is not required for any month in which certain days of that month are included in a ten (10) day preelection ?nancial report. Ark. Code Ann. 7-9-409(b) and 610(b) of the Rules on address the late ?ling of ?nancial reports. Pursuant thereto, a which ?les a late ?nancial report shall be subject to a late ?ling fee not exceeding ?fty dollars ($50.00) for each day the report remains un?lled. In addition to the registration and reporting requirements applicable to a Ark. Code Ann. 7-9-405(a) and 601(a) of the Rules on places limits on the receipt of cash contributions. Pursuant thereto, a is prohibited from accepting any contribution in cash, meaning currency or coin, that exceeds one hundred dollars Repeal 119 February 27, 2015 Page 4 PAC Reporting Requirements Ark. Code Ann. provides that the term ?approved political action committee? is de?ned to mean any person that: Receives contributions from one (1) or more persons in order to make contributions to candidates, ballot question committees, legislative question committees, political parties, county political party committees, or other political action committees; (ii) Does not accept any contribution or cumulative contributions in excess of ?ve thousand dollars ($5,000) from any person in any calendar year; and Registers pursuant to 7-6-215 prior to making contributions. Ark. Code Ann. goes on to further de?ne the term ?approved political action committee? to not include the following: ?an organized political party as de?ned in 7-1-101, a county political party committee, the candidate?s own campaign committee, an exploratory committee, or a ballot or legislative question committee as de?ned in 7-9-402.? It is noted that the term ?prohibited political action committee? is de?ned in Ark. Code Ann. 7- 6-201(15) as follows: (A) ?Prohibited political action committee? means any person that receives contributions from one (1) or more persons in order to make contributions to candidates, ballot question committees, legislative question committees, political parties, county political party committees, or other political action committees but that does not meet the requirements of an approved political action committee. (B) ?Prohibited political action committee? shall not include: A political party that meets the de?nition of a political party under 7?l-lOl or a political party that meets the requirements of 7-7-205; (ii) The candidate?s own campaign committee; A county political party committee; (iv) An exploratory committee; or A ballot or legislative question committee Ark. Code Ann. 7-6-215 states that in order for a PAC to qualify as an approved PAC, it must register with the Secretary of State within ?fteen (15) days after accepting contributions during a calendar year that exceed ?ve hundred dollars ($500) in the aggregate. This statute also requires approved PACs to ?le quarterly reports with the Secretary of State which include the current balance of PAC funds, information concerning each contributor to the PAC that exceeded ?ve hundred dollars ($500) in the aggregate during the previous calendar year, and the name and address of each candidate, BQC, LQC, political party, county political party committee, or other Repeal 119 February 27, 2015 Page 5 PAC to whom the PAC made a contribution or contributions that exceeded ?fty dollars ($50.00) in the aggregate during the ?ling period. Lobbyist Reporting Requirements Ark. Code Ann. 21-8-601(a) provides, in pertinent part, that a lobbyist2 shall register within ?ve (5) days after beginning lobbying3. Ark. Code Ann. provides as follows: Within ?fteen (15) days after the end of each calendar quarter, each registered lobbyist shall ?le a complete and detailed statement, signed and sworn to, concerning his or her lobbying activities during the previous calendar quarter. Please be advised that the preliminary results of stast investigation were presented to the Commission at the meeting held on today?s date. At that time, the Commission decided, by a vote of 3-0, with Commissioners Bray and Trusty not present, to DISMISS the complaint. Evidence gathered during the course of the investigation re?ected that Repeal 119 appears to have complied with the BQC registration and reporting requirements in connection With its campaign to have Ordinance 119 repealed by voters in a special election. It ?led a Statement of Organization with the Ethics Commission on September 15, 2014. Repeal 119?s ?nancial statement ?led on October 15, 2014, re?ects that the group began receiving contributions and crossed the $500 threshold on September 10, 2014. According to records on ?le with the Ethics Commission, Repeal 119 timely ?led ?nancial reports for September 2014 and October 2014. Repeal 119 ?led a preelection ?nancial report on December 2, 2014, which covered all of November, 2014 until December 2, 2014, which was the deadline for the group to have ?led its preelection report. Repeal 119 ?led its ?nal 2 The term ?lobbyist?, as de?ned by Ark. Code Ann. means a person who: (A) Receives income or reimbursement in a combined amount of four hundred dollars ($400) or more in a calendar quarter for lobbying one (1) or more governmental bodies; (B) Expends four hundred dollars ($400) or more in a calendar quarter for lobbying one (1) or more governmental bodies, excluding the cost of personal travel, lodging, meals, or dues; or (C) Expends four hundred dollars ($400) or more in a calendar quarter, including postage, for the express purpose of soliciting others to communicate with any public servant to influence any legislative action or administrative action of one (1) or more governmental bodies unless the communication has been ?led with the Secretary of State or the communication has been published in the news media. 1f the communication is ?led with the Secretary of State, the ?ling shall include the approximate number of recipients[.] 3 The term ?lobbying?, as de?ned by Ark Code Ann. means communicating directly or soliciting others to communicate with any public servant with the purpose of in?uencing legislative action or administrative action. Repeal 119 February 27, 2015 Page 6 ?nancial report on January 8, 2014, which was the deadline for the group to have ?led its ?nal ?nancial report. The evidence re?ected that Repeal 119 received a cumulative total of monetary contributions in the amount of $33,287.52 and that it made a cumulative total of $33,227.37 in expenditures. None of the expenditures reported appeared to be contributions to another BQC. You testi?ed that members of Repeal 119 learned that robocalls were being placed to Fayetteville residents by a group calling itself ?Save Fayetteville?, but that Repeal 119 was not responsible and did not contribute its funds to ?Save Fayetteville?. You ?rrther testi?ed that Repeal 119 did arrange for robocalls that urged ayetteville residents to Sign the petitions needed to start the special election process. Repeal 119?s October 2014 ?nancial report re?ects an expenditure for robocall service. You also testi?ed that Repeal 119 did not engage in lobbying members of the ayetteville City Council because the City Council had voted to enact Ordinance 119 prior to Repeal 119?s formation, so there was no further legislative or administrative action that the group was seeking from the City Council. The evidence did not re?ect that Repeal 119 supported or endorsed candidates on its website or its Facebook page. There was little to no mention at all of the general election on the group?s website. There was a link on Repeal 119?s Facebook page to another acebook page for a free online radio show that hosted candidates for City Council who appeared to support Repeal 119?s effOrts, but there was no language endorsing the candidates or urging voters to vote for a particular candidate. In accordance with Ark. Code Ann. this letter serves as notice of the Commission?s ?nal action together with the reasons for such action. This letter is a public document and a copy is being sent to the Complainant, Sonia Davis Gutierrez, to notify her of the outcome of these proceedings. If you should have any questions or comments regarding this matter, please do not hesitate to contact us. Sincerely, Graham F. Sloan Director cc: Ms. Sonia Davis Gutierrez