Minutes for June 30, 2016 Meeting

Posted in Minutes

Campaign Spending Commission
Leiopapa A Kamehameha Building, Room 204
June 30, 2016
10:00 a.m.

Commissioners Present
Adrienne Yoshihara, Gregory Shoda, Eldon Ching, Kenneth Goodenow

Commissioners Absent
Bryan Luke

Staff Present
Kristin Izumi-Nitao, Tony Baldomero, Gary Kam, Sandrina Lee, Jessica Richey
Deputy Attorney General Valri Kunimoto

Call to Order
Vice Chair Yoshihara called the meeting to order at 10:06 a.m.

Consideration and Approval of Minutes on 5/11/16
Vice Chair Yoshihara asked for comments or changes.  There were none.  Vice Chair Yoshihara called for a vote to approve the minutes.

Commissioner Shoda moved to approve the minutes of 5/11/16.  Motion seconded by Commissioner Goodenow.  Motion carried (4-0).

New Business
*Draft Advisory Opinion No. 16-03 – General Contractors Association of Hawaii
General Counsel Kam reported that the General Contractors Association of Hawaii (“GCA”) requested an advisory opinion concerning aggregation of contributions made by their noncandidate committee and personal contributions made by their noncandidate committee’s Board members.  The Board is composed of five members and all decisions concerning political contributions from the noncandidate committee require approval of a majority of the Board members.

General Counsel Kam concluded that their noncandidate committee contributions would aggregate with the contributions of the individual Board members, but the contributions of a Board member would not be aggregated with the contributions of another Board member unless it can be shown that one of the Board members financed, maintained, or controlled another Board member’s contributions.

Vice Chair Yoshihara commented that aggregation would not occur among the Board members if the noncandidate committee did not make a contribution to a committee.  Discussion ensued that the trigger of aggregation is whether the noncandidate committee made a contribution to a committee.  Commissioner Goodenow asked about nonmembers or third parties who give to the noncandidate committee and whether their contributions will aggregate with the noncandidate committee.  General Counsel Kam said no.

Glenn Nohara (GCA Board member) and Shannon Alivado (GCA) asked further questions to clarify the Commission’s interpretation of the law.  Vice Chair Yoshihara stated that if each Board member gives the maximum amount permitted to a candidate committee, then the noncandidate committee cannot make a contribution to that same committee because the contributions would aggregate resulting in an excess contribution.  She further stated that it is therefore crucial in the timing in which the noncandidate committee contributes to candidates.

Commissioner Shoda asked about Board member contributions made to candidate committees not knowing that the noncandidate committee already gave to that candidate committee.  General Counsel Kam responded that the Board members would have to have voted to allow the noncandidate committee to make a contribution, and therefore, they can regulate how much the noncandidate committee gives in consideration of Board member contributions.  General Counsel Kam further added that excess contributions made to a candidate committee can be returned within 7 days and it would not have to be reported.

Glenn Nohara remarked that GCA will need to be diligent and keep good records to track its contributions.

Commissioner Goodenow inquired whether Commission staff regulates the aggregation of Board members’ contributions and noncandidate committee’s contributions to candidates.  He further asked if the electronic filing system can track these kind of aggregations.  General Counsel Kam responded that there is no validation that can verify aggregation.  Associate Director Baldomero concurred and stated that there is no way for the system to automatically connect the contributions individual Board members’ contributions make and the noncandidate committee’s contributions.

Commissioner Ching asked General Counsel Kam to clarify the modifications to the draft Advisory Opinion which was distributed at the beginning of the meeting.  General Counsel Kam stated that he changed the reference to the definition of “committee” from Merriam Webster’s Dictionary to Black’s Law Dictionary (see footnote 2 on page 2) and fixed a typo to the word “financed” when quoting HRS §11-361(a) on page 2.

Commissioner Goodenow inquired about whether this analysis would apply to corporate board members’ personal contributions and its corporation’s contributions to candidates.  General Counsel Kam clarified that the advisory opinion is limited to the facts presented of the Board members who sit on the GCA’s noncandidate committee who are responsible for deciding what political contributions the noncandidate committee will make.  This advisory opinion does not address the “corporate” board of directors of the GCA which could have a different outcome.

General Counsel Kam recommended that the Commission approve and adopt draft Advisory Opinion No. 16-03.

Commissioner Ching moved to approve draft Advisory Opinion No. 16-03.  Motion seconded by Commissioner Goodenow.  Motion carried (4-0).

*Docket No. 16-35 – In Re the Matter of Eric John Molina
Executive Director Izumi-Nitao reported that a complaint had been filed against Eric John Molina for the failure to register with the Commission by filing an Organizational Report.

Respondent filed nomination papers to run for Maui County Council and failed to register with the Commission by filing his Organizational Report within 10 days of filing his nomination papers.  Commission staff informed Respondent that his failure to register by filing an Organizational Report violates campaign finance laws and filed a complaint to be heard at today’s meeting.

Since then, on 6/23/16, Respondent registered with the Commission and filed the Organizational Report.  On 6/27/16, Commission staff received payment of the $100 fine.

Executive Director Izumi-Nitao recommended that the Commission dismiss the matter as a result of full compliance.  Eric John Molina is a first time candidate.

Commissioner Ching moved to dismiss the complaint due to compliance.  Motion seconded by Commissioner Goodenow.  Motion carried (4-0).

*Docket No. 16-36 – In Re the Matter of Marc Anthony
Executive Director Izumi-Nitao reported that a complaint had been filed against Marc Anthony for the failure to register with the Commission by filing an Organizational Report.

Respondent filed nomination papers with the Honolulu County Clerk’s Office on 5/23/16 to be a 2016 councilmember candidate for Honolulu County District I.  Pursuant to HRS §11-321, Respondent was required to register with the Commission and file an Organizational Report by 6/2/16 which is 10 days from the date he filed nomination papers.  Respondent did not file an Organizational Report by 6/2/16.

On 6/9/16, Commission staff called Respondent and left a message concerning registration with the Commission.  On 6/9/16, Commission staff sent Respondent a “Notice to Register with the Campaign Spending Commission” via first class mail informing him that his Organizational Report was due on 6/2/16, that his failure to register by filing an Organizational Report violates campaign finance laws, and of the imposition of an administrative fine if it was not filed.  Respondent has not registered with the Commission by filing the Organizational Report.

On 6/20/16, Commission staff sent Respondent a copy of the complaint and informed him that the matter would be set on the 6/30/16 Commission Agenda.

Executive Director Izumi-Nitao recommended that the Commission make a preliminary determination, pursuant to HRS §11-405(a), that probable cause exists to believe that a violation of the campaign spending law has been committed, assess an administrative fine of $100, and order that Respondent file the Organizational Report within two weeks of receipt of the order.

Commissioner Goodenow moved to make a preliminary determination that probable cause exists that a violation has been committed and to accept the fine and terms as stated in the complaint (i.e., assess a fine of $100 and order that the Organizational Report be filed within two weeks of receipt of the order).  Motion seconded by Commissioner Shoda.  Motion carried (4-0).

*Docket No. 16-37 – In Re the Matter of Oliver McMillan, Inc.
Vice Chair Yoshihara stated that she would recuse herself from this matter because her firm represents Respondent and that former Chair Shoda would preside.

Executive Director Izumi-Nitao reported that a complaint had been filed against Oliver McMillan, Inc. for the failure to register with the Commission as a noncandidate committee by filing an Organizational Report due to making contributions over $1,000 to candidate committees.  Commission staff informed Respondent that its failure to register by filing an Organizational Report violates campaign finance laws and filed a complaint to be heard at today’s meeting.

Since then, on 6/29/16, Respondent registered with the Commission and filed the Organizational Report.  Respondent informed Commission staff that it intends to pay the $100 fine.

Executive Director Izumi-Nitao recommended that the matter be continued to the 8/10/16 Commission Meeting to permit Respondent to comply.

Commissioner Ching moved to continue the matter to 8/10/16.  Motion seconded by Commissioner Goodenow.  Motion carried (3-0) (recuse – Vice Chair Yoshihara). 

*Docket No. 16-38 – In Re the Matter of Beach Club Maui, Inc.
Executive Director Izumi-Nitao reported that a complaint had been filed against Beach Club Maui, Inc. for the failure to register with the Commission as a noncandidate committee by filing an Organizational Report due to making contributions over $1,000 to a candidate committee.  Commission staff informed Respondent that its failure to register by filing an Organizational Report violates campaign finance laws and filed a complaint to be heard at today’s meeting.

Since then, on 6/29/16, Respondent registered with the Commission and filed the Organizational Report.  Respondent informed Commission staff that it intends to pay the $100 fine.

On 6/29/16, Respondent registered with the Commission and filed the Organizational Report.  Respondent informed Commission staff that he intends to pay the $100 fine and terminate the noncandidate committee registration as Beach Club Maui, Inc. because it will not be participating in the 2016 election.

Executive Director Izumi-Nitao recommended that the matter be continued to the 8/10/16 Commission Meeting to permit Respondent to comply.

Mike Palcic requested to comment concerning the procedural matters regarding these complaints.  He stated that Julia Allen’s candidate committee filed its Supplemental Report four days late in 2015 and that a fine had been assessed.  He commented that Commission staff has no authority to levy fines and that it must be done by the Commissioners.

Commissioner Ching moved to continue the matter to 8/10/16.  Motion seconded by Commissioner Goodenow.  Motion carried (4-0).

Old Business
Update of Campaign Finance Related Bills/Resolutions from the 2016 Legislative Session
General Counsel Kam reported that Commission staff recommended that the Governor veto HB 2156, HD 2, SD 2, CD 1 which was originally a funding bill that became a modified version of HB 2066.  In its present form, this bill before the Governor for approval took out everything except the amendment to HRS §11-381(a)(8) which permits candidate committees to use campaign funds for ordinary and necessary expenses “including expenses incurred for memberships in civic or community groups.”

Staff recommended to veto this bill because this amendment is not necessary since the law already permits this expenditure.  Further, HRS §11-381 is modeled after federal law and it would be detrimental to modify our law – especially, if it adds no value – because the Commission relies on federal case law for guidance and interpretation of similar or identical federal campaign finance law.

General Counsel Kam reported that this bill was not on the Governor’s veto list so he expects that it will pass with or without his signature on 7/12/16.

Report from Executive Director
Report on Compliance of Filing Timely Disclosure Reports
Executive Director Izumi-Nitao reported that the Attorney General’s Office – Civil Recoveries Division (“AG-CRD”) has a handful of cases which were referred to them by the Commission that are in various stages of collection.  For all the cases, demand letters have been sent out.  Executive Director Izumi-Nitao asked for Deputy Attorney General Kunimoto’s assistance in communicating with the Attorney General’s Office regarding these matters.  She noted that a Petition for an Order Directing Respondents to Comply with the Commission’s Order will be filed in District Court in the Hanalei Aipolani case.

Commissioner Shoda asked Deputy Attorney General Kunimoto whether she had any more information.  Deputy Attorney General Kunimoto replied that she has information on a criminal referral and that will she be in contact with Commission staff.  Commissioner Ching asked how many deputies were involved at the Attorney General’s Office.  Deputy Attorney General Kunimoto stated that there were 3 attorneys in the AG-CRD and 3 attorneys in AG-Criminal Justice Division.

Executive Director Izumi-Nitao noted a concern that these matters are going to get compounded because absent termination of committee registration, these committees will face another set of late or unfiled report complaints.

Report on Training Committees for the 2016 Election
Executive Director Izumi-Nitao reported that a total of about 75 persons were trained on campaign finance laws.  She reported on the following training classes:

-HILO – 5/17/16 Tuesday @ 9:30 – 11:30 a.m. (Candidate Committee training) → Out of 30 registrants, only 17 showed.  Associate Director Baldomero presented, Elections Assistant Lee assisted, and Commissioner Goodenow participated.  Positive evaluations were submitted.
-MAUI – 5/24/16 Tuesday @ 9:30 – 11:30 a.m. (Candidate Committee training) → Cancelled due to lack of registrants.
-KAUAI – 5/27/16 Friday @ 9:30 – 11:30 a.m. (Candidate Committee training) → 14 registrants.  Associate Director Baldomero presented and Elections Assistant Lee assisted.  Positive evaluations were submitted.
-HONOLULU – 6/1/16 Wednesday @ 9:30 – 11:30 a.m. (Candidate Committee training) and 1 – 2:30 p.m. (Noncandidate Committee training) → 13 registrants for candidate committee training and 11 registrants for noncandidate committee training.  Associate Director Baldomero presented the candidate committee training and General Counsel Kam presented the noncandidate committee training.  Administrative Assistant Richey assisted.  Positive evaluations were submitted.
-HSBA Training – 6/3/16 Friday @ 9 – 10:30 a.m. (Candidate Committee & Noncandidate Committee training) → 20 registrants for Continuing Legal Education credit.  Executive Director Izumi-Nitao and General Counsel Kam presented.  HSBA will request this training in election years.

Report on July CSC Newsletter
Executive Director Izumi-Nitao reported that the Commission issues two newsletter each year.  One in January and one in July.  The following topics are being covered in the July newsletter:  2016 Election Observations, Reminder of Upcoming Reports, New Laws Going Into Effect and Review of 2016 Legislative Session, Violations of the Campaign Finance Laws, Reminders & Tips if You are Running in the 2016 Election, Guidance on Candidate Committee Contributions to Charitable/Community or Non-Profit Organizations, Overwhelming Success on Employment of eSign Form, 2016 Standard Mileage Rate Announced by Internal Revenue Service (IRS), Running in the 2016 Election?  Take a Look at Your Committee Data (or Your Opponent’s Committee Data) in a Visual Representation, Status of the Hawaii Election Campaign Fund and Reminder to Check-Off $3 on Your 2016 Tax Return, Revising the Commission’s Hawaii Administrative Rules, Announcement of Electronic Schedules for Personal Download, Electioneering Communications, and Announcement of New Commissioner(s) (if known).

Executive Director Izumi-Nitao asked if there were any questions or topics that should be addressed/covered.  The target date for publication is 7/8/16.

Update on the 2016 Election
Since the filing deadline of nominations papers on June 7, 2016, Associate Director Baldomero offered the following comments on the 2016 election which were set forth on a hand-out that he distributed at the meeting.

-There are 269 candidates running for 104 seats up for election out of 128 elective seats in the State of Hawaii and its four counties;
-There are 146 new candidates;
-There are 19 out of 104 seats that are unopposed;
-There are 10 out of 104 seats that are open;
-There are 7 qualified political parties;
-There are 5 candidates who have qualified for public funding totaling $17,685;
-There were 145 candidates who filed the Affidavit not to exceed an expenditure limit for their office;
-There were 38 candidates who filed the Statement of Intent to seek public funding;
-There were 169 fundraiser notices filed for 2016 (63 of these fundraisers were held by legislators during the 2016 legislative session);
-There are 246 registered noncandidate committees
-There are 16 registered Super PACs (the newest one that registered on 6/24/16 is called Kuleana Coalition for Change)
-Interesting races include Honolulu Mayor, Hawaii Mayor, Senate races, House races, Hawaii County Council, Maui County Council, and Kauai Prosecutor.

Mike Palcic asked a question about public funding concerning receiving two $100 contributions in the primary and in the general.  Associate Director Baldomero responded that as long as there are 2 separate checks for $100 each, one check could be attributed to the primary election and the other check could be attributed to the general election.

Update on Partial Public Funding and the Hawaii Election Campaign Fund
Associate Director Baldomero distributed a hand-out that shows the status of the Hawaii Election Campaign Fund post-election assuming two scenarios of public funding projections.  In projection #1, he assumes that public funding candidates receive the maximum amount of matching funds whereupon the Hawaii Election Campaign Fund’s balance at the end of the 2016 election is projected at $944,711.10.  In projection #2, he assumes that public funding candidates receive an average amount of matching funds whereupon the Hawaii Election Campaign Fund’s balance at the end of the 2016 election is projected at $1,269,172.41.  In both projections, he has not included other revenue/receipts and/or disbursements to/from the Hawaii Election Campaign Fund.

Mike Palcic, chairman for the Committee to Elect Julia Allen, commented that nowhere on the agenda was there mention of the Circuit Court reversal and remand for additional proceedings of the Commission’s fine assessed against the Committee to Elect Julia Allen for a late report.  Mr. Palcic stated that he received a voicemail from the Attorney General’s Office last night that they would not be able to proceed with the remand at this meeting.  Mr. Palcic asked what would transpire with regards to the reversal and remand.

Vice Chair Yoshihara stated that the Commission is aware of the court’s order and that they will not hear the remand until they have had time to discuss whether or not they will appeal the court’s order.  If the Commissioners decide to appeal, then there would be no hearing.

Mr. Palcic asked if the Commission would be discussing this matter during Executive Session.

Vice Chair Yoshihara replied that the Commissioners will be discussing this matter upon Chair Luke’s return.

Commissioner Goodenow stated that according to the Sunshine Law, if the topic is not on the agenda, then it cannot be discussed.

Deputy Attorney General Kunimoto stated that the Commission will be meeting about this matter with counsel, but it is not on the agenda because it is a HRS Chapter 91 contested case proceeding.

Mr. Palcic stated that it is not a contested case hearing anymore.

Deputy Attorney General Kunimoto stated that the remand is a contested case hearing.  Deputy Attorney General Kunimoto apologized to Mr. Palcic for the late notice.

Vice Chair Yoshihara asked for a motion to convene Executive Session to consider and approve Executive Session minutes from the Commission meeting on 5/11/16.  Commissioner Shoda moved to convene Executive Session for the aforementioned reason.  Motion seconded by Commissioner Ching.  Motion carried (4-0).

Public session reconvened at 11:01 a.m.

Vice Chair Yoshihara asked for a motion to adjourn the meeting.  Commissioner Goodenow moved to adjourn the meeting.  Motion seconded by Commissioner Ching.  Motion carried (4-0).  Meeting adjourned at 11:06 a.m.

Next Meeting:
Scheduled for Wednesday, August 10, 2016.