Minutes for September 9, 2015 Meeting

Posted in Minutes

Campaign Spending Commission
Leiopapa A Kamehameha Building, Room 204
September 9, 2015
10:00 a.m.

Commissioners Present
Gregory Shoda, Eldon Ching, Adrienne Yoshihara, Bryan Luke

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

Call to Order
Chair Shoda called the meeting to order at 10:05 a.m.

Consideration and Approval of Minutes of July 22, 2015 Meeting
Amendment proposed by Vice Chair Yoshihara –
Old Business – Continued Discussion on Succession Planning of Commissioners – Paragraph 1, second sentence, amended to read: “Then, Commissioners would feel comfortable nominating the chair or vice chair.”

Commissioner Ching moved to approve proposed amendment. Motion seconded by Commissioner Luke. Motion carried (4-0).

Vice Chair Yoshihara moved to approve the minutes of July 22, 2015 as amended. Motion seconded by Commissioner Ching. Motion carried (4-0).

New Business
Draft Advisory Opinion 16-01 – Government Contractors
Vice Chair Yoshihara recused herself because her firm, Chun Kerr LLP, represents the contractor who is requesting the advisory opinion.

General Counsel Kam reported that the law firm Chun Kerr submitted a request for an advisory opinion, in two separate letters, concerning the applicability of Hawaii Revised Statutes (“HRS”) §11-355(a)(1) and (2), the contractor ban, on a federal political action committee making contributions to Hawaii candidates and noncandidate committees.

He explained the facts as follows:

Corporation X is a government contractor in Hawaii and a subsidiary of Corporation Y. Corporation Y wants to make contributions to Hawaii candidates and noncandidate committees through its federal political action committee Y PAC. Y PAC is registered with the Federal Election Commission. Contributions made to Y PAC are from the officers and employees of Corporation Y and its subsidiaries which includes Corporation X. Decisions related to Y PAC’s contributions are made by designated officers and employees of Corporation Y and its subsidiaries. In Hawaii, Y PAC’s contributions will be based upon a list submitted by the officers of Corporation X, the government contractor.

In response to the first question of whether contributions made by Y PAC based on a list compiled by Corporation X, the government contractor, would be in violation of HRS §11-355(a)(1), staff believes it would be a violation. By having Corporation X compiling a list of candidates from which Y PAC would choose, Corporation X would be in control of who received contributions.

The solicitation of contributions by Corporation Y, of its officers and employees and the officers and employees of its subsidiaries, would not however violate HRS §11-355(a)(2). Corporation Y, the parent company, is a separate entity from its subsidiaries and is not a government contractor.

Staff believes that the draft advisory opinion addresses both the original and supplemental requests and can be considered by the Commissioners. The law firm also submitted a third letter after the draft advisory opinion had been sent out. In that letter, two hypothetical questions were raised. The draft advisory opinion also addresses the third letter that was submitted by the requestor, but for the first hypothetical question, staff would need to know the relationship between Corporation X and the other subsidiaries. Based on the draft advisory opinion, there would be no violation in the situation raised in the second hypothetical question.

Mr. Imran Naeemullah of Chun Kerr LLP, representing the contractor, stated that they have reviewed and agreed with the draft advisory opinion. The supplemental request was to get clarification as to whether other entities who are not government contractors would be allowed to recommend candidates.

Discussion ensued regarding the use of the alter ego test for liability purposes. General Counsel Kam stated that the test can be used and that the Federal Election Commission uses the test.

The requestor’s preference is to have one advisory opinion that addresses all concerns. Staff to redraft the advisory opinion to address the third letter and to work with the requestor regarding the relationship between Corporation X and the other subsidiaries.

Proposed Conciliation Agreement No. 16-01 – In Re the Matter of Castle & Cooke, Inc. Legislative Committee – Hawaii
Executive Director Izumi-Nitao reported that this proposed conciliation agreement is a result of an investigation initiated in August 2015 pursuant to HRS §11-314(7) to determine whether there has been a violation of the campaign spending law.

The proposed conciliation agreement arises out of the late filing of the Supplemental Report which was due on 7/31/15 and filed on 8/10/15 resulting in a fine of $950. Respondent has been informed in a letter from Commission staff of the violation, they have been notified of today’s meeting, and received a copy of the proposed conciliation agreement.

The Executive Director recommended that the Commission make a preliminary determination of probable cause that a violation has been committed, waive further proceedings, and approve the settlement amount of $317.

Commissioner Ching moved to make a preliminary determination that probable cause exists that a violation has been committed and to accept the settlement terms and amount as stated in Conciliation Agreement No. 16-01. Motion seconded by Commissioner Luke. Motion carried (4-0).

Proposed Conciliation Agreement No. 16-02 – In Re the Matter of Velasco Ohana 2012
Executive Director Izumi-Nitao reported that this proposed conciliation agreement is a result of an investigation initiated in August 2015 pursuant to HRS §11-314(7) to determine whether there has been a violation of the campaign spending law.

The proposed conciliation agreement arises out the late filing of the Supplemental Report which was due on 7/31/15 and filed on 8/19/15 resulting in a fine of $200. Respondent has been informed in a letter from Commission staff of the violation, they have been notified of today’s meeting, and received a copy of the proposed conciliation agreement.

Commissioner Ching moved to make a preliminary determination that probable cause exists that a violation has been committed and to accept the settlement terms and amount as stated in Conciliation Agreement No. 16-02. Motion seconded by Vice Chair Yoshihara. Motion carried (4-0).

Docket No. 16-02 – In Re the Matter of Larry Gering and Committee to Elect Larry Gering
Executive Director Izumi-Nitao reported that a complaint was filed alleging that Respondents failed to file the Supplemental Report which was due on 7/31/15.

On 8/6/15, Commission staff sent a “Notice of Late Report” informing Respondents that the Supplemental Report had not been filed and the imposition of a fine.

On 8/14/15, the notice was returned to the Commission by the U.S. Postal Office as “Return to Sender, Not Deliverable as Addressed, Unable to Forward.” HRS §11-322 requires a candidate to report to the Commission any change of information in the Organizational Report within 10 days of the change. Respondents did not amend their Organizational Report to inform the Commission of a new address, and they have not filed the Supplemental Report which is required until they terminate their registration with the Commission.

The Executive Director recommended that the Commission make a preliminary determination pursuant to HRS §11-405(a) that probable cause exists to believe a violation of the campaign spending law has been committed, assess an administrative fine of $1,000, and order that Respondents file the Supplemental Report within 2 weeks of receipt of the Order.

The Executive Director also noted that two prior complaints have been filed against Respondents:
-At the 1/14/15 meeting, the Commission issued a preliminary determination in Docket No. 15-83 for Respondents’ failure to file the Final Election Period Report. Respondents were ordered to pay an administrative fine of $750 and file the report; and
-At the 3/11/15 meeting, the Commission issued a preliminary determination in Docket No. 15-102 for Respondents’ failure to file the Supplemental Report. Respondents were ordered to pay an administrative fine of $750 and file the report.

To date, these orders have not been complied with.

Commissioner Luke 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 Docket No. 16-02 (i.e., assess a fine of $1,000 and order that the report be filed). Motion seconded by Vice Chair Yoshihara. Motion carried (4-0).

Docket No. 16-03 – In Re the Matter of Stuart Gregory and If You Didn’t Vote for Me Then You Paid Too Much
Executive Director Izumi-Nitao reported that a complaint was filed alleging that Respondents failed to file the Supplemental Report which was due on 7/31/15.

On 8/6/15, Commission staff sent a “Notice of Late Report” informing Respondents that the Supplemental Report had not been filed and the imposition of a fine.

On 8/10/15, the notice was returned to the Commission by the U.S. Postal Office as “Box Closed, Unable to Forward, Return to Sender.” HRS §11-322 requires a candidate to report to the Commission any change of information in the Organizational Report within 10 days of the change. Respondents did not amend their Organizational Report to inform the Commission of a new address, and they have not filed the Supplemental Report which is required until they terminate their registration with the Commission.

The Executive Director recommended that the Commission make a preliminary determination pursuant to HRS §11-405(a) that probable cause exists to believe a violation of the campaign spending law has been committed, assess a fine of $750, and order that Respondents file the Supplemental Report within 2 weeks of receipt of the Order.

The Executive Director also noted that at the 3/11/15 meeting, the Commission issued a preliminary determination in Docket No. 15-110 for Respondents’ failure to file the prior Supplemental Report. Respondents were ordered to pay an administrative fine of $500 and file the report. To date, the order has not been complied with.

Vice Chair Yoshihara 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 Docket No. 16-03 (i.e., assess a fine of $750 and order that the report be filed). Motion seconded by Commissioner Luke. Motion carried (4-0).

Deputy Attorney General Kunimoto expressed concern that Respondents are not being noticed of these matters, and if the Commission would consider alternative methods in trying to notify Respondents. The Executive Director stated that this issue is a concern, it has been addressed in discussions with the Attorney General’s Office, and staff needs an understanding on how to proceed.

Discussion ensued on staff’s limited resources to locate Respondents that have moved or closed their postal box. The law requires that candidates notify the Commission of any changes in their organization within 10 days of the change. Vice Chair Yoshihara stated that there may be an issue on equity because the law requires that notices be sent to the address that they provide and it is not the staff’s job to start looking for or chasing people who have moved or closed their postal box. Also, she stated that it is a matter that needs to be considered by counsel.

Docket No. 16-04 – In Re the Matter Faye Hanohano, Leslie Julian, and Friends of Faye Hanohano
Executive Director Izumi-Nitao reported that a complaint was filed alleging that Respondents failed to file the Supplemental Report which was due on 7/31/15.

On 8/3/15, Commission staff sent a “Notice of Late Report” informing Respondents that the Supplemental Report had not been filed and the imposition of a fine. Respondents have not filed the report.

On 8/27/15, Commission staff sent Respondents a copy of the complaint and informed Respondents that the matter would be set on the 9/9/15 Commission agenda.

The Executive Director recommended that the Commission make a preliminary determination pursuant to HRS §11-405(a) that probable cause exists to believe a violation of the campaign spending law has been committed, assess a fine of $750, and order that Respondents file the Supplemental Report within 2 weeks of receipt of the Order.

The Executive Director also noted that two prior complaints have been filed against Respondents:
-At the 1/14/15 meeting, the Commission issued a preliminary determination in Docket No. 15-63 for Respondents’ failure to pay a fine for the late filing of the 2^nd Preliminary Primary Report and failure to file the Final Election Period Report. Respondents were ordered to pay the $1,170.49 fine for the late filing of the 2^nd Preliminary Primary Report and to pay an administrative fine of $500 for failure to file the Final Election Period Report as well as ordered to file the report; and
-At the 3/11/15 meeting, the Commission issued a preliminary determination in Docket 15-119 for Respondents’ failure to pay a fine for the late filing of the Supplemental Report. Respondents were ordered to pay the $200 fine.

To date, these orders have not been complied with.

Commissioner Ching 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 Docket No. 16-04 (i.e., assess a fine of $750 and order that the report be filed). Motion seconded by Commissioner Luke. Motion carried (4-0).

Docket No. 16-05 – In Re the Matter of Henry Kahula, Jr., Darnelle Kahula, and Henry Kahula for Council
Executive Director Izumi-Nitao reported that a complaint was filed alleging that Respondents failed to file the Supplemental Report which was due on 7/31/15.

On 8/3/15, Commission staff sent Respondents a “Notice of Late Report” informing Respondents that the Supplemental Report had not been filed and the imposition of a fine. Respondents have not filed the report.

On 8/27/15, Commission staff sent Respondents a copy of the complaint and informed Respondents that the matter would be set on the 9/9/15 Commission agenda.

The Executive Director recommended that the Commission make a preliminary determination pursuant to HRS §11-405(a) that probable cause exists to believe a violation of the campaign spending law has been committed, assess a fine of $1,000, and order that Respondents file the Supplemental Report within 2 weeks of receipt of the Order.

The Executive Director also noted that four prior complaints have been filed against Respondents:
-At the 7/31/14 meeting, the Commission issued a preliminary determination in Docket No. 15-04 for Respondents’ failure to file the 1^st Preliminary Primary Report. Respondents were ordered to pay an administrative fine of $500 and file the report;
-At the 9/10/14 meeting, the Commission issued a preliminary determination in Docket No. 15-24 for Respondents’ failure to file the 2^nd Preliminary Primary Report and Final Primary Report. Respondents were ordered to pay an administrative fine of $1,000 ($500 for each report) and file the reports;
-At the 1/14/15 meeting, the Commission issued a preliminary determination in Docket No. 15-70 for Respondents’ failure to file the Final Election Period Report. Respondents were ordered to pay an administrative fine of $500 and file the report; and
-At the 3/11/15 meeting, the Commission issued a preliminary determination in Docket No. 15-104 for Respondents’ failure to file the Supplemental Report. Respondents were ordered to pay an administrative fine of $750 and file the report.

To date, these orders have not been complied with.

Vice Chair Yoshihara 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 Docket No. 16-05 (i.e., assess a fine of $1,000 and order that the report be filed). Motion seconded by Commissioner Ching. Motion carried (4-0).

Docket No. 16-06 – In Re the Matter of Curtis Hendrix Lake and C. Hendrix Lake
Executive Director Izumi-Nitao reported that a complaint was filed alleging that Respondent failed to file the Supplemental Report which was due on 7/31/15.

On 8/6/15, Commission staff sent a “Notice of Late Report” informing Respondent that the Supplemental Report had not been filed and the imposition of a fine. Respondent has not filed the report.

HRS §11-322 requires all candidate committees to report any change of information in the Organizational Report within 10 days. The aforementioned notice has not been returned to the Commission, but a previous “Notice of Late Report” and “Notice of Complaint” were returned as “Return to Sender, Unable to Forward.”

On 8/31/15, Commission staff sent Respondent a copy of the complaint and informed Respondent that the matter would be set on the 9/9/15 Commission agenda.

The Executive Director 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 a fine of $1,000, and order that Respondents file the Supplemental report within 2 weeks of receipt of the Order.

The Executive Director also noted that three prior complaints have been filed against Respondent:
-At the 9/10/14 meeting, the Commission issued a preliminary determination in Docket No. 15-25 for Respondents’ failure to file the 2^nd Preliminary Primary Report and Final Primary Report. Respondents were ordered to pay an administrative fine of $1,000 ($500 for each report) and file the reports;
-At the 1/14/15 meeting, the Commission issued a preliminary determination in Docket 15-71 for Respondents’ failure to file the Final Election Period Report. Respondents were ordered to pay an administrative fine of $500 and file the report; and
-At the 3/11/15 meeting, the Commission issued a preliminary determination in Docket 15-106 for Respondents’ failure to file the Supplemental Report. Respondents were ordered to pay an administrative fine of $750 and file the report.

To date, these orders have not been complied with.

The Executive Director affirmed Vice Chair Yoshihara’s inquiry of whether this was a case that has been discussed with the Attorney General’s Office regarding the list of candidates who have not complied with Commission orders.

Commissioner Luke 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 Docket No. 16-06 (i.e., assess a fine of $1,000 and order that the report be filed). Motion seconded by Vice Chair Yoshihara. Motion carried (4-0).

Docket No. 16-07 – In Re the Matter of Gene Leslie, Laurie Aquino, and Friends of Bucky
Executive Director Izumi-Nitao reported that a complaint was filed alleging that Respondents failed to file the Supplemental Report which was due on 7/31/15.

On 8/31/15, Commission staff sent Respondents a copy of the complaint and informed Respondents that the matter would be set on the 9/9/15 Commission agenda.

The Executive Director 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 a fine of $750, and order that Respondents file the Supplemental Report within 2 weeks of receipt of the Order.

The Executive Director also noted that two prior complaints have been filed against Respondents:
-At the 11/19/14 meeting, the Commission issued a preliminary determination in Docket No. 15-36 for Respondents’ failure to pay a fine for the late filing of the Final Primary Report. Respondents were ordered to pay an administrative $500; and
-At the 1/14/15 meeting, the Commission issued a preliminary determination in Docket No. 15-78 for Respondents’ failure to pay a fine for the late filing of the Final Election Period Report. Respondents were ordered to pay an administrative fine of $500.

To date, these orders have not been complied with.

She also stated that Respondents have been in contact with staff, but they have not done what needs to be done to bring them back into compliance. She clarified that with this committee they do not file the reports when they are due, a complaint is filed, then they file the reports. The reports are filed after a preliminary determination has been issued and a fine assessed.

Vice Chair Yoshihara 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 Docket No. 16-07 (i.e., assess a fine of $750 and order that the report be filed). Motion seconded by Commissioner Ching. Motion carried (4-0).

Docket No. 16-08 – In Re the Matter of Noralyn Pajimola, Rudy Pajimola, and Friends of Noralyn Pajimola
Executive Director Izumi-Nitao reported that a complaint was filed alleging that Respondents failed to file the Supplemental Report which was due on 7/31/15.

On 8/31/15, Commission staff sent Respondents a copy of the complaint and informed Respondents that the matter would be set on the 9/9/15 Commission agenda.

The Executive Director also noted that four prior complaints have been filed against Respondents:
-At the 9/11/13 meeting, the Commission issued a preliminary determination in Docket No. 14-04 for Respondents’ failure to pay a fine for the late filing of a Supplemental Report. Respondents were ordered to pay an administrative fine of $200. A 1^st Circuit Court Application was filed and granted in July 2014 for failure to comply with Docket No. 14-04;
-At the 3/12/14 meeting, the Commission issued a preliminary determination in Docket No. 14-16 for Respondents’ failure to file the Supplemental Report. Respondents were ordered to pay an administrative fine of $750 and file the report;
-At the 9/10/14 meeting, the Commission issued a preliminary determination in Docket 15-11 for Respondents’ failure to file the Supplemental Report. Respondents were ordered to pay an administrative fine of $500 and file the report; and
-At the 3/11/15 meeting, the Commission issued a preliminary determination in Docket No. 15-115 for Respondents’ failure to file the Supplemental Report. Respondents were ordered to pay an administrative fine of $1,000 and file the report.

To date, these orders have not been complied with.

In response to Vice Chair Yoshihara’s inquiry about the circuit court application in this case, General Counsel Kam responded that an application was filed and an order was issued enforcing the Commission’s Order. In anticipation of a contempt proceeding, the judgment was not submitted. He further stated that in review of the statute, the contempt provided for is criminal contempt.

The Executive Director also stated that this case and the Adam Reeder case prompted the initial approach to the Attorney General’s Office. The statute as it is phrased is more in terms of criminal contempt, and the Commission is an administrative agency without any criminal jurisdiction, and there may be procedural issues with the court.

Commissioner Luke 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 Docket No. 16-08 (i.e., assess a fine of $1,000 and order that the report be filed). Motion seconded by Commissioner Ching. Motion carried (4-0).

Docket No. 16-09 – In Re the Matter of Adam Reeder, Melissa Reeder, and Friends of Adam Reeder
Executive Director Izumi-Nitao reported that a complaint was filed alleging that Respondents failed to file the Supplemental Report which was due on 7/31/15.

On 8/31/15, Commission staff sent Respondents a copy of the complaint and informed Respondents that the matter would be set on the 9/9/15 Commission agenda.

The Executive Director also noted that two prior complaints have been filed against Respondents:
-At the 9/11/13 meeting, the Commission issued a preliminary determination in Docket No. 14-03 for Respondents’ failure to file the Supplemental Report. Respondents were ordered to pay an administrative fine of $500 and file the report. A 1^st Circuit Court Application was filed (and granted in August 2014) for failure to comply with Docket No. 14-03; and
-At the 3/11/15 meeting, the Commission issued a preliminary determination in Docket No. 15-116 for Respondents’ failure to file the Supplemental Report. Respondents were ordered to pay an administrative fine of $750 and file the report.

To date, these orders have not been complied with.

Commissioner Ching 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 Docket No. 16-09 (i.e., assess a fine of $1,000 and order that the report be filed). Motion seconded by Commissioner Luke. Motion carried (4-0).

Docket No. 16-11 – In Re the Matter of American Resort Development Association Resort Owners Coalition PAC
Executive Director Izumi-Nitao reported that a complaint was filed alleging the late filing of the Supplemental Report and the nonpayment of the assessed late filing fine.

On 8/3/15, Commission staff sent Respondent a “Notice of Late Report” informing Respondent that the Supplemental Report had not been filed and the imposition of a fine.

On 8/10/15, Respondent electronically filed the Supplemental Report, and Commission staff sent Respondent a “Notice of Fine” notifying them that a fine of $637.50 had been assessed for the late filing of the report with a requirement that payment be made by 8/24/15. Respondent did not pay the late report fine.

On 8/18/15, Respondent contacted Commission staff to discuss a conciliation agreement whereupon staff informed Respondent that staff could recommend a reduced fine of $212.50.

On 8/28/15, Respondent informed Commission staff that they did not want a conciliation agreement whereupon staff informed Respondent that a complaint would be filed.

On 8/31/15, Commission staff sent Respondent a copy of the complaint and informed Respondent that the matter would be set on the 9/9/15 Commission agenda.

On 9/8/15, Respondent filed a response recommending that the Commission find that the report was timely filed on 7/31/15 and not assess a fine, or in the alternative, reduce the fine to $50.

The Executive Director further stated that this committee has been registered since 2008 and there has been no violation. Respondents’ claim that the report was filed on 7/28/15 and that they did not receive the 8/3/15 “Notice of Late Report” until 8/10/15. She further stated that this is their first violation, they wanted to pursue this matter, and they understood staff’s position.

Associate Director Baldomero reported that when he checked the electronic filing system, he saw time stamped actions that the report period was added to their schedule and entries were made into Schedules A and B1, but that the report was not filed. When the report was filed on 8/10/15, no additional information was entered.

Discussion ensued regarding the filing confirmation. Associate Director Baldomero stated that when the report is filed, there is a confirmation that says the report has been filed. There is also the “Filing Confirmation” menu which lists all reports filed, and filers are instructed to go to the public site to check that the report has been filed.

Commissioner Luke commented that the committee had ways to confirm or check that the report was filed and they have been filing since 2008. Consensus of Commissioners is to assess a lower fine.

Vice Chair Yoshihara moved to make a preliminary determination that probable cause exists that a violation has been committed and to accept the terms as stated in Docket No. 16-11 and assess a reduced fine of $212.50. Motion seconded by Commissioner Luke. Motion carried (4-0).

Vice Chair Yoshihara commented that it is the responsibility of the committees to confirm that the report has been filed.

Docket No. 16-12 – In Re the Matter of Leslie McKeague-Gomes and Friends of Leslie McKeague
Executive Director Izumi-Nitao reported that a complaint was filed alleging Respondents late filing of the Supplemental Report and failure to pay the fine.

On 8/3/15, Commission staff sent Respondents a “Notice of Late Report” informing Respondents that the Supplemental Report had not been filed and the imposition of a fine.

On 8/10/15, Respondents’ electronically filed the report, and Commission staff sent Respondents a “Notice of Fine” notifying them that a fine of $200 had been assessed for the late filing of the report with a requirement that payment be made by 8/24/15. Respondents did not pay the late filing report fine.

On 8/31/15, Commission staff sent Respondents a copy of the complaint and informed Respondents that the matter would be set on the 9/9/15 Commission agenda.

Vice Chair Yoshihara 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 Docket No. 16-12 (i.e., assess a fine of $200). Motion seconded by Commissioner Luke. Motion carried (4-0).

Docket No. 16-13 – In Re the Matter of Mark Ing, Sara Ohashi, and Friends of Kaniela Ing
Executive Director Izumi-Nitao reported that a complaint was filed alleging Respondents late filing of the Supplemental Report and failure to pay the fine.

On 8/4/15, Commission staff sent Respondents a “Notice of Fine” informing Respondents that the Supplemental Report due on 7/31/15 was filed on 8/1/15, and that a fine of $50 had been assessed for the late filing of the report with a requirement that payment be made by 8/18/15. Respondents did not pay the late filing report fine.

On 9/1/15, Commission staff sent Respondents a copy of the complaint and informed Respondents that the matter would be set on the 9/9/15 Commission agenda.

Commissioner Ching 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 Docket No. 16-13 (i.e., assess a fine of $50). Motion seconded by Commissioner Luke. Motion carried (4-0).

CSC Annual Report for FY 2015
Executive Director Izumi-Nitao presented for discussion and approval the Commission’s Annual Report for the Fiscal Year 2015 covering the period 7/1/14 to 6/30/15. Upon approval, the report will be posted on the Commission’s website.

The report is written based on the Commission’s 5-year Strategic Plan.

GOAL – To simplify and clarify campaign finance laws in order to improve implementation and compliance.

For the 2015 Legislative Session, the Commission’s bill was S.B. 452 and its companion bill H.B. 175, which sought to amend HRS §11-334(a)(4) to require candidate committees to file supplemental reports on January 31^st regardless of whether it is an election year. This conforms with present practice as well as the reporting requirements of noncandidate committees. This is the 4^th year that the Commission has attempted to amend this statute.

The following bills were approved into law:
Act 79, SLH 2015 (S.B. 508) – Effective 7/1/15, HRS §11-336(a) was amended to require noncandidate committees to file an additional preliminary report on October 1 of the year of a general election.

Act 78, SLH 2015 (S.B. 654) – Effective 1/1/16, HRS §11-353(d), was amended to reduce the threshold amount on the calabash bowl exception from less than $500 to less than $100 from 10 or more persons at the same political function.

Act 209, SLH 2015 (H.B. 1491) – Effective 1/1/16, HRS §§11-323(a), 11-335(b), and 11-338(b) were amended to require additional reporting by noncandidate committees solely making independent expenditures for contributions aggregating more than $10,000 on their disclosure reports and greater than $5,000 on their late contribution reports from contributing entities that are not individuals, for profit business entities, or labor unions. The law requires independent expenditure committees to report: (1) the internet address where a contributing entity’s disclosure report can be publicly accessed; (2) the name, address, occupation, and employer of each funding source of $100 or more to the contributing entity; or (3) an acknowledgment that the contributing entity is not subject to any state or federal disclosure reporting requirements regarding the source of the contributing entity’s funds.

Other legislation included S.B. 577 and its companion H.B. 884. These bills were submitted by Common Cause-Hawaii to address the Commission’s funding concerns.

-Hawaii Administrative Rules
Proposed amendments to Chapters 3-160 and 3-161 were approved at the 10/9/13 Commission meeting. Amendments were to update obsolete references to the HRS and to make technical and grammatical corrections. It also proposed a new section that implements section 2 of Act 112, SLH 2013, which requires SuperPacs to identify their top contributors in their advertisements.

The proposed amendments were submitted to Governor Abercrombie for consideration, but no action was taken. Staff intends to resubmit a new draft with additional amendments for Governor Ige’s consideration this fiscal year.

-Advisory Opinions
During this period, Advisory Opinion No. 15-01 was issued which discussed sources of member funding that the General Contractors Association of Hawaii could use to make political contributions. Some members could be government contractors.

GOAL – To increase public education, awareness and access.
-During the fiscal period, there were 127,766 “hits” to the Commission’s website.
-A 2^nd data visualization application was launched which permits viewers to see noncandidate committee reports in a more user friendly way.
-In June and July 2014, campaign finance presentations for candidates and committees were planned and delivered on Kauai, Oahu, and Maui.
-CSC e-blast system has 942 total subscribers, and during this period, it was employed 76 times.
-Since 2011, we have been employing social media to increase, enhance, and supplement communications with the public. During this period, we issued 516 tweets.

GOAL – Increase the technological capacity to improve access, reduce paperwork, and increase compliance.
-Changes have been made to the Commission’s electronic filing systems as a result of legislative enactments to improve transparency and disclosure.

GOAL – Upgrade the training for and ability of the committees to comply with campaign finance laws.
-New and updated guidebooks, manuals, and e-learning videos were created and made available on the Commission’s website in anticipation of the elections.

GOAL – Encourage compliance.
-During this fiscal year, 125 inquiries and investigations were opened.
-74 filed complaints resulting in $38,359.58 in fines;
-31 complaints are being referred to the Attorney General’s Office to seek judicial enforcement due to noncompliance;
-17 complaints dismissed or withdrawn due to compliance and payment of fines totaling $5,646.86; and
-8 complaints referred for criminal prosecution.
-67 conciliation agreements were approved resulting in $12,745.07 in fines.
-Other campaign finance violations occurring during the period include:
103 failures to file or late filing of disclosure reports resulting in $19,786.94 in fines;
16 excess contributions to candidates or noncandidate committees resulting in $9,890.83 escheating to the Hawaii Election Campaign Fund and $2,600 in administrative fines;
4 committees escheating $5,598.46 in surplus funds;
10 anonymous contributions resulting in $2,495.74 escheating to the Hawaii Election Campaign Fund;
7 failure to file the Late Contribution Report resulting in $5,000 in fines;
1 untimely filing of the Public Fund Report resulting in a $100 fine;
9 late filing of the fundraiser notice resulting in $300 in fines;
5 failures to timely file/amend the organizational report resulting in $400 in fines;
22 expenditures made in prohibited period resulting in $4,293.75 in fines;
19 prohibited expenditures resulting in $2,659.51 in fines;
4 failure to have ad disclaimer resulting in $125 in fines;
2 untimely deposit of contributions resulting in $50 in fines;
1 filing of a false report resulting in a $500 fine;
1 exceeding the expenditure limit resulting in a $500 fine;
1 exceeding the loan limit resulting in a $100 fine; and
3 failures to report contributions and expenditures in spite of having fundraisers resulting in referrals for prosecution.

-On 5/20/15, Yamada v. Snipes, et. al., the Ninth Circuit Court of Appeals affirmed the U.S. District Court for the District of Hawaii’s decision, which rejected a comprehensive challenge to Hawaii’s campaign finance law.

GOAL – Increase and stabilize CSC’s institutional capacity to carry out its mission.
-In FY 2015, a total of $212,342.48 in revenue was realized and a total of $870,753.07 in expenditures was incurred, thereby closing FY 2015 with a balance of $1,882,145.59.

-Primary revenue sources for the HECF is the $3 state income tax check-off, interest generated from the principal, and any funds that escheat to the HECF.

-For the past 9 fiscal years (FY 2007-FY 2015), the Commission has been operating at a net deficit and the fund has not been generating enough revenue to sustain operations.

FUTURE CONSIDERATIONS FOR FISCAL YEAR 2016
-Hawaii Election Campaign Fund – Consider future strategies and options to sustain operations and programs.

-Amendments to Hawaii Administrative Rules

-2016 Elections

Commissioner Ching moved to approve the Annual Report for Fiscal Year 2015. Motion seconded by Commissioner Yoshihara. Motion carried (4-0).

Discussion of Proposed Amendments to the Hawaii Administrative Rules Affecting Campaign Spending Commission
General Counsel Kam presented for Commissioners’ review and comments the draft proposed amendments to Chapters 3-160 and 3-161 of the Hawaii Administrative Rules. He noted that the cover memo highlights the proposed amendments and that most of the amendments are to update obsolete references. The memo also outlines a timeline for the rulemaking process.

Any questions, concerns, or suggestions about the proposed amendments should be directed to General Counsel Kam, and he asked that the Commission take formal action on the proposed rules at the next meeting.

Presentation of the Status of the Hawaii Election Campaign Fund and Consideration of Future Options
Janet Mason, of the League of Women Voters, testified that they strongly supported S.B. 577 this past legislative session to restore a healthy balance to public funding. She said that it was a terrible idea in 1998 to have the trust fund pay for operating expenses. She stated that the Commission’s operating expenses should be considered normal operating expenses of government which should come from general revenue. The trust should be restored to what it was originally set up for which is the partial public funding of candidates. She further commented that the Commission is doing an outstanding job of keeping the public informed and was grateful for the work done by the Commission.

Executive Director Izumi-Nitao recommended that the presentation on the Hawaii Election Campaign Fund be taken up after Old Business and Report from the Executive Director agenda items to permit the Commission to then go into executive session after the presentation to discuss with counsel questions and issues relating to concerns of public financing of elections.

Consensus of Commissioners agreed to have the Hawaii Election Campaign Fund presentation after Old Business and Report from the Executive Director discussions.

Old Business
Docket No. 15-113 – In Re the Matter of Debbie Hecht and Friends of Debbie Hecht
Executive Director Izumi-Nitao reported that Respondent is requesting a reconsideration of the fine assessed for Respondents’ failure to file the Supplemental Report. At the 3/11/15 meeting, the Commission issued a preliminary determination and ordered the payment of an administrative fine of $500 and file the report.

On 8/7/15, Respondent contacted staff regarding terminating her registration. She was informed that she needs to file a report which shows that she has no surplus or deficit to complete the termination process. Staff had reminded her on several occasions of what needed to be done. Following is a reconstruction of events:

On 6/9/14, the Commission received a letter from Respondent saying she did not plan to run again for office. She had enclosed the request to terminate form and a bank statement which showed a balance of $1,172.22 which she asked if she could donate to the Hawaii Foodbank. It was explained to her that she needed to file a report that showed no surplus or deficit (the Supplemental Report was due on 7/31/14) as well as a closing bank statement with a zero balance showing that the account was closed.

On 6/13/14, staff sent Respondent a letter explaining that we were unable to terminate her registration because of the surplus and a reminder to file the 7/31/14 Supplemental Report.

On 6/23/14, Respondent again asked if she could donate her surplus to the Hawaii Foodbank as a charity. On 6/25/14, staff responded that she could donate her surplus to the Hawaii Foodbank, and that she would need to submit a closing bank statement.

On 8/13/14, Respondent submitted a request to terminate and bank statement showing a zero balance, but she had not filed the report;

On 8/14/14, staff sent a Respondent letter explaining that we were unable to terminate because her disclosure report still showed a surplus;

On 9/29/14, staff received Respondent’s closing bank statement. Respondent contacted staff and staff explained the termination process thereby reminding her that until she filed a report which shows a zero balance, her registration could not be terminated;

On 10/13/14 and 10/30/14, staff left messages for Respondent about filing the final report to complete the termination process;

On 2/2/15, the Supplemental Report was due for the period 7/1 – 12/31/14, and at the 3/11/15 meeting, the Commission issued a preliminary determination in Docket 15-113 for Respondent’s for failure to file the Supplemental Report and ordered Respondent to pay an administrative fine of $500 and file the report;

On 8/10/15, staff assisted Respondent with filing both Supplemental Reports. The final report now shows a zero balance.

The Executive Director recommended that the complaint not be dismissed and that the $500 fine be enforced. Respondent has been informed that based on the facts, staff would be recommending that the fine be enforced because she had several opportunities to file the final report.

Vice Chair Yoshihara commented that it is hard to reconsider this docket because of the multiple notices staff provided to Respondent.

Vice Chair Yoshihara moved to deny Respondent’s request for reconsideration and the $500 fine is to be enforced. Motion seconded by Commissioner Luke. Motion carried (4-0).

Report from Executive Director
Report on Compliance of Filing Timely Disclosure Reports
Executive Director Izumi-Nitao reported on the Supplemental Report that was due on 7/31/15.

Candidate Committees – out 318 committees, 41 (14%) did not file the report on time; andNoncandidate Committees – out of 230 committees, 12 (5%) did not file the report on time.

Discussion and Approval of 2016 CSC Meeting Dates
Executive Director Izumi-Nitao presented for Commissioners’ review the proposed 2016 meeting schedule. She noted that the schedule indicates holidays and, because next year is an election year, dates of when reports are due. If there were no conflicts with the Commissioners’ schedules, the proposed meeting dates for 2016 would be posted on the Commission’s website.

Discussion of Topics for Annual Online Survey
Executive Director Izumi-Nitao reported that this is the 4^th year that we are doing this survey which will review fiscal year 2015. It is a web-based survey to help improve and evaluate the effectiveness of the Commission’s operations and communications. The survey will cover 6 areas: Relationship to the Commission; Communication with/or Access to the Commission; Education and Training provided by the Commission; Compliance and Enforcement; Public Funding; and other General Matters.

Survey to launch the survey on 9/15/15 until 10/15/15 or 11/1/15. The survey findings will be shared at a subsequent meeting and it will be published online on the Commission’s website.

Presentation of the Status of the Hawaii Election Campaign Fund and Consideration of Future Options
Associate Director Baldomero presented a powerpoint presentation on the status of the Hawaii Election Campaign Fund (“Fund”). He stated that the purpose of this presentation is to provide information, as the Commission considers the future of the Fund. The presentation covered the creation, history, revenue, and expense summaries of the Fund.

He started with an overview of the creation and history of the Fund.

-In 1976, the Buckley v. Valeo case decided by the United States Supreme Court strikes down mandatory expenditure limits and establishes public financing for candidates that agree to a voluntary expenditure limit.

-In 1978, the Hawaii Constitutional Convention establishes a fund for partial public financing of campaigns and authorized expenditure limits for candidates receiving public financing;

-In 1979, the Hawaii Legislature creates the Hawaii Election Campaign Fund as a trust fund within the general fund with the primary source of funding being the $2 tax check-off;

– The 1980 election is the first election public financing is made available and 18 candidates received funding. Maximum amounts were set at 10% of the expenditure limit for the offices of governor, lieutenant governor, and mayor. All other offices could receive $50 per election;

-Just for the 1990 election, the maximum amount for “all other offices” increased to $250 per election;

-In 1996, the maximum amounts are increased to 15% of the expenditure limit for the offices of Senate, House of Representative, and Prosecuting Attorney. The maximum amount for Board of Education and OHA candidates remained at $50 per election;

-In 1998, the Commission’s operating expenses including staff salaries and fringe benefits was moved from the general fund to the trust fund;

-In 2006, the maximum amount for OHA candidates increased to $1,500 for the election year;

-In 2008, the tax check-off increased from $2 to $3 and fines collected were deposited into the general fund;

-In 2010, the Legislature established the Hawaii County Council Comprehensive Public Funding Program to be run for three elections beginning in 2010 and, because of a constitutional amendment, the 2010 election was the last election for Board of Education members;

-The Hawaii County Council Comprehensive Public Funding Program was not run in 2014 because the Fund balance was below $3.5 million; and

-Since 1980 through 2014, $4,517,489.12 has been disbursed to 426 candidates in the partial public funding program and $363,060.66 to 16 candidates in the comprehensive public funding program for the 2010 and 2012 elections.

He then did a brief review of the revenue and expenditures of the Fund. In fiscal year 2015, the Fund started with a balance of $5.3 million and today, at the end of fiscal year 2015, the balance is now $1.9 million. The Fund receives its revenue from the State tax check-off, interest, escheats (i.e., excess, false name, surplus, anonymous contributions), copies, and return of public funds. Expenditures from the Fund is grouped into 4 categories: partial public funding; comprehensive public funding; administration; and payroll/contracts.

In response to a question, Executive Director Izumi-Nitao explained that the comprehensive public funding program was a pilot project for 3 election cycles and it required that the Fund have a balance of $3.5 million. It ran for 2 elections, 2010 and 2012, but it did not run in 2014, because the Fund balance was below $3.5 million. The candidates were notified in advance that the program was not going to run, and that they could participate in the partial public funding program.

Deputy Attorney General Val Kunimoto asked that the agenda be amended to add the discussion of Docket No. 15-94 pursuant to HRS §92-5(a)(4) in Executive Session.

Commissioner Ching moved to amend the agenda to include discussion of Docket No. 15-94 pursuant to HRS §92(a)(4) in Executive Session. Motion seconded by Commissioner Luke. Motion carried (4-0).

Vice Chair Yoshihara moved to convene Executive Session to consult with attorney pursuant to HRS §92-5(a)(4) and to investigate proceedings regarding criminal misconduct pursuant to HRS §92-5(a)(5). Motion seconded by Commissioner Luke. Motion carried (4-0).

Public session reconvened – 1:15 p.m.

Next Meeting:
Scheduled for Wednesday, October 14, 2015 at 10:00 a.m.

Commissioner Ching moved to adjourn meeting. Motion seconded by Commissioner Luke. Motion carried (4-0). Meeting adjourned at 1:15 p.m.

Campaign Spending Commission

Minutes for September 9, 2015 Meeting

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