How North Dakota’s campaign finance laws allow groups to conceal donors, spending
As money in politics comes under closer scrutiny, deep-pocketed North Dakota donors have maneuvered the complicated web of campaign finance laws in a way that allows them to choose which information to disclose and which to conceal from the public.
BISMARCK — Generations of North Dakota lawmakers have constructed an intricate set of campaign finance rules meant to strike a balance between the right to self-expression through donations and the democratic ideal of transparency.
But as money in politics comes under closer scrutiny, deep-pocketed North Dakota donors have maneuvered the complicated web of laws in a way that allows them to choose which information to disclose and which to conceal from the public.
Two of the most active campaign finance groups in this year’s election cycle have drawn criticism from transparency advocates and state lawmakers on both sides of the aisle for declining to divulge details of their political activity.
Funded by Gov. Doug Burgum, the Dakota Leadership PAC has spent an unknown amount of money on ads promoting Republican candidates, including several who are running against ultra-conservative incumbent lawmakers.
The group, which received $3.2 million from Burgum in 2020, is not a political action committee as its name suggests. Rather, it's a “multicandidate committee,” which means it is not legally required to disclose how it is spending the $1.2 million it has received from Burgum this year.
The Brighter Future Alliance has also promoted a handful of Republican candidates with advertising, though the majority of the more than $125,000 spent by the group has gone toward attack ads targeting ultraconservative legislative candidates and Fargo City Commissioner Dave Piepkorn.
The nonprofit is organized as an “independent expenditure filer,” meaning it’s not obliged to name the donors who have bankrolled its advertising efforts.
The leaders of both groups note that they are playing by the rules and upholding the First Amendment rights of their donors.
Dakota Leadership PAC Chairman Levi Bachmeier has confirmed the group is paying for political ads in eight specific legislative districts. But Bachmeier, who's also the business manager for West Fargo Public Schools, declined to provide Forum News Service with any more information on its expenditures or positions on candidates.
“Like a coach wouldn’t post their playbook online, we don’t publicly comment on our strategy,” Bachmeier said in an email.
Brighter Future Alliance Chairman Pat Finken, the former CEO of Bismarck-based advertising firm Odney, declined to disclose his organization’s list of backers, saying that the group “chooses to protect its donors’ constitutional right of associational privacy.”
Rep. Karla Rose Hanson, a Fargo Democrat, said the groups are taking advantage of legal loopholes that should be closed to make campaign finance more transparent.
Jack McDonald, an attorney and lobbyist with the North Dakota Newspaper Association, said imposing more stringent disclosure requirements on groups like Dakota Leadership PAC and Brighter Future Alliance would give the public a better idea of who’s trying to influence elections. McDonald added that the state’s campaign finance laws are outdated.
Rep. Jeff Magrum, a Hazelton Republican running for state Senate, has been one of the loudest critics of the Dakota Leadership PAC, which has sponsored ads in support of his GOP opponent, and the Brighter Future Alliance, which has paid for ads that portrayed him in a negative light. If elected, Magrum said he would back legislation to reform disclosure laws.
“We need to know who’s attacking us,” Magrum said.
An outlier among multicandidate committees
Across the country, campaign finance has become more consequential and more complex over the last two decades, but North Dakota’s laws governing the subject have changed little during that timespan.
In 2003, state lawmakers first defined a number of designations for campaign finance groups, including “multicandidate committee” and “political action committee.”
Under that legislation, multicandidate committees were “established to support multiple groups or slates of candidates seeking public office.” (Political action committees were defined as being tied to the employees of a corporation, but lawmakers later broadened this definition to include groups that are not affiliated with corporations.)
Multicandidate committees allowed allied candidates to run and raise funds in teams, simplifying the campaigning process, said Deputy Secretary of State Jim Silrum. The designation also opened the door for legislative leaders to establish caucus fundraising groups that help reelect incumbents from their respective parties.
The 2003 law specified that while political action committees had to disclose all donations and expenditures worth more than $200, multicandidate committees only had to report the donations they received. (Multicandidate committees must now also file a year-end report that classifies spending into five broad categories, including advertising, travel and operations.)
The exact reason lawmakers exempted multicandidate committees from disclosing their expenditures is not clear, but Silrum posits that legislators may have wanted to align requirements for the groups with those applied to candidates, who also don’t have to detail their spending.
Although partisan affiliation is not explicitly stated as a prerequisite for being a multicandidate committee, the vast majority of the groups established since 2003 have been tied to a specific party or group of candidates.
In 2012, all 20 multicandidate committees registered with the state had a partisan affiliation, a legislative district or a series of candidates appearing in their names.
Dakota Leadership PAC is not tied to a political party or a defined group of candidates and it has received seven-figure donations from Burgum, making it an outlier among multicandidate committees in both scope and firepower. Most groups like the Dakota Leadership PAC are organized as political action committees.
Silrum and Legislative Council Director John Bjornson said the way Dakota Leadership PAC operates wasn’t conceptualized by lawmakers when they created multicandidate committees.
Lee Ann Oliver, an elections specialist with the Secretary of State’s Office, said the Dakota Leadership PAC got to choose how to define itself under state law “so of course you’re going to pick the one with less reporting requirements.”
Bachmeier, the committee’s chairman, said the group chose to identify as a multicandidate committee because “we are a committee that supports multiple candidates.”
Outside of North Dakota, only a few states, including New Jersey and Maryland, have multicandidate committees, said Greg Schneider, a data analyst with campaign finance tracker OpenSecrets.
Donors not included
A decade after legislators cemented multicandidate committees in state law, they created independent expenditures as a new designation for political donors.
Unlike political committees, independent expenditure filers cannot coordinate with or give directly to candidates or ballot initiatives. The filers must disclose how much money they spend for or against a candidate or ballot measure, but their donor lists can remain private.
The 2013 state law creating independent expenditures came several years after the U.S. Supreme Court ruled in the landmark Citizens United v. FEC case that the First Amendment’s free speech clause bars the government from limiting independent expenditures by individuals or corporations.
Silrum said there were already independent expenditures made in North Dakota during the 2012 election cycle that went totally untracked by the state, so the 2013 law signaled an effort to add transparency by requiring those spenders to file reports with the secretary of state.
Finken said Brighter Future Alliance has existed for more than a decade, and campaign spending is only a small part of the nonprofit’s overall mission of civic engagement, which includes voter mobilization and issue advocacy.
But the group’s first appearance in the state's database of independent expenditure filers came just two years ago, when it spent more than $250,000 on political advertising.
Lawmakers like Magrum and Hanson have criticized Brighter Future Alliance for operating as a “dark money” group with untraceable funding.
But Silrum noted it would be complicated to require a nonprofit like Brighter Future Alliance to disclose its donors since the organization is active in areas other than campaign finance. Donors may have given to Brighter Future Alliance to support its overall mission, so there’s no way to pin down which exact dollars went toward independent expenditures.
Finken said in an email that “current reporting requirements strike the appropriate balance between the public interest in knowing who is funding election-oriented organizations and the constitutional right to associational privacy for all other organizations (like Brighter Future Alliance) that may engage in some election advocacy, but that do not have this as their primary purpose.”
Many states do not require independent expenditure filers to disclose their donors, and some states don’t require any kind of reporting for the groups, Schneider said.
Federal courts have also overturned efforts by states like California to require more detailed disclosures from independent expenditure filers, Schneider added.
A steep hill to climb
Democratic and Republican lawmakers have made attempts in recent years to require more transparency from multicandidate committees and independent expenditure filers, but all the efforts have come up short.
In July 2020, Hanson presented a bill draft to the Interim Judiciary Committee that would have required independent expenditure filers to disclose the source of all donations over $200 — the same rule that applies to candidates and political committees.
“Disclosure standards do not limit free speech,” Hanson said during the committee meeting. “They just add transparency to the election process, so voters know the ultimate and true source of funding for election ads.”
A Republican majority of committee members voted the bill draft down at the panel's next meeting. That fall, Brighter Future Alliance spent more than $10,000 on ads in opposition to Hanson, who later won reelection.
Last year, two bills passed the state House of Representatives that would have required multicandidate committees to disclose which campaigns they support or oppose with donations, but the state Senate killed both pieces of legislation, citing a likely increase in the paperwork required of their party caucuses.
Silrum said it would be extremely difficult to “rein in campaign finance” while still allowing people to exercise their free speech rights.
For example, if lawmakers tried to require more disclosure from multicandidate committees, Burgum could find a different avenue for his political spending that might have an even less strict reporting requirement, he noted.
“There will always be a way to have a voice in support or opposition to candidates and measures that won’t be covered by the law,” Silrum said. "We can always pursue (tighter campaign finance laws), but I’m not sure we can get there.”
Rep. Sebastian Ertelt, a Gwinner Republican running for Senate, said reforming campaign finance laws is also hard because lawmakers who are influenced by political donations and “big money” lobbyists would be unlikely to support rule changes.
Ertelt sponsored one of last year’s failed bills, and both Dakota Leadership PAC and Brighter Future Alliance have taken an interest in making sure he doesn’t win his race this year.
Campaign finance is a heavy boulder to budge, but Ertelt said he’s not giving up on reform.
“The people are watching,” Ertelt said. “It’s the people’s voice that is the most important.”