Vermont Legislature SmartTranscripts:

[Tucker Anderson, Office of Legislative Counsel]: We are live.

[Senator Nader Hashim (Chair)]: Good morning. It's March 12. We're taking up s three twenty two. We have a pledge of counsel here with us. He could recently provide us with memo regarding s two twenty two. That's on our website. And they'll be providing some additional perspectives on this level. So, floor is yours. Yeah.

[Tucker Anderson, Office of Legislative Counsel]: Well, good morning, committee. Tucker Anderson, Pledge of Safety Counsel here with my gov ops

[Tim, Office of Legislative Counsel]: partner. Thanks, Douglas. Thank very much for having us.

[Tucker Anderson, Office of Legislative Counsel]: And we're here this morning to illustrate some of the constitutional framework around s three twenty two. And specifically, we're going to talk about the two largest components of the bill. First, the exercise of legislative authority under what is, if not commonly frequently referred to as the reserve power under two sections of the prime constitution. And then at the end, discuss the First Amendment parameters around, regulating corporate spending on ballot issue and election activities. Do have some tabs ready to go through for the committee, if that is okay, so that we can focus in on some of the language. I'm going to start from the top by discussing the source of authority for the general assembly's power over corporations. I'll walk you through some of the history around the reserved power. And then at the end, we'll talk about what some of limitations of the exercise of that authority are. And I was actually really hoping that Anthony and Tom Moore would be able to present first so that they could give you the introduction to the concept before I started doing the legal analysis, but I will try my best to kind of frame what, is happening here. Many of you on this committee already have facility with the General Assembly's chartering authority in various contexts. Two of you, current and former members of senate government operations, are familiar with the general assembly's authority over municipal corporations and the ability to charter the political subdivisions of the state. That is an exercise of the supreme lawmaking authority. You have heard me go on and on ad nauseam in the most boring way about Dillon's rule and the constitutional authority that the general assembly has to dictate the powers of municipal corporations. But there is a component of those same constitutional provisions, and I have referred to this in the past, that deals with non governmental corporations. That is the power that is proposed to be exercised under S-three 22, the power to determine the corporate powers that any organization organized under the general laws of the state can exercise. So we always start in the public. The legislative powers. This is the source of authority here, and if I can move some of the Zoom controls around. Right here. Part of the supreme legislative authority is the power to grant charters of incorporation. This is subject to limitations that are articulated in section 69 of the Vermont constitution. Prior to 1913, this was just the general authority to grant charters of incorporation to any type of corporation. Section 69 was added to the Vermont constitution to specifically limit the exercise of that power, and it has three major defaults. So first, it states that no charter or incorporation shall be granted, extended, changed, or amended by special law. That means individual acts at the general assembly relating to a single corporation or a small group of corporations, not general law that is applicable to all of them. So there's your standard rule. Special laws are prohibited for chartering corporations. There is an exception for municipal, charitable, educational, penal, or formatory corporations. That is where the whole Dillon's role, often referred to as pure Dillon's role authority in the state comes into play, because you can use any type of act to determine the powers of municipal corporations, and you can charter individual cities, towns, villages, water districts, waste districts, whatever form of government you can imagine, you can charter it and empower Important clause here: those corporations, those governmental ones, as are to be and remain under the patronage or control of the state, language that generally relates to a position of trusteeship and originates from some very interesting early nineteenth century cases that I believe all of the witnesses you will hear about this morning are going to discuss. But, important caveat coming out, the general assembly shall provide by general laws for the organization of all corporations hereafter to be integrated into this campus.

[Tim, Office of Legislative Counsel]: On the

[Tucker Anderson, Office of Legislative Counsel]: one hand, you have your governmental corporations, you can charter them individually. On the other hand, all other corporations have to be organized under general laws. You pass general laws that are universally applicable to corporations that are organized under those laws. All of those general laws that are passed may be altered or from a time to time may be repealed. That little highlighted clause sentence right at the end of section 69, is the reserved patent. You may be asking yourself, because you have been here for a long time, you've heard the Charter spiel, you're familiar with the Supreme Lawmaking authority. Why does the constitution contain a sentence that reserves the authority of the general assembly to do what it's already empowered to do? Well, to answer that question, we have to look at And culprit culprit, is a justice story, specifically a concurring opinion that he wrote in the early nineteenth century in a case called Dartmouth College, the trustees of Dartmouth College v. Woodward. And in that case, the Supreme Court was analyzing three acts passed by the New Hampshire legislature that amended the charter of Dartmouth College. And primarily they were looking at an act that altered the Board of Trustees that had control over the college, adding public members. So they review that they are looking at a charter that predates the existence of the State of New Hampshire. It's a charter that is issued by the Crown to individual incorporators in The United States, in particular Doctor. Vyhovag, to provide education to people in the New Hampshire grants at the time. The court ultimately looks at that charter that was ratified when New Hampshire became a state as an agreement between the governmental power, in this case the state, formerly the king, and the incorporators, and that the terms of that agreement, specifically in the composition of the Board of Trustees that control the corporation, could not be altered unless, just like any other contract, both parties agreed to the changes. Because of that, the charter itself is inherently a contract between the parties that is protected by the United States Constitution. This tees up a serious conflict, constitutional conflict, the sovereignty of The United States and the constitutional guarantees that are afforded to every single citizen, and then the sovereign powers of the state, which includes the authority to create corporations and determine their powers. So Justice Story proposes the following: If the legislature mean to claim such an authority, the authority to, from time to time, unilaterally bolster the terms of a charter, it must be reserved in the grant. And I could go so much deeper into the grants here because, as it turns out, some of the cases that precede this, the grants that were given were glee blands. I don't know if that rings a bell for any of the GOVOPs people how many times I've talked about the Colonial Gleeblands in committee, but How do you spell that word? G l e b e. It is land that is owned perpetually by the state that is leased for indefinite periods to named individuals that either benefit the Society for Propagation of the Gospel in Foreign Parts, the Episcopalian Diocese, the church in the town where the gleeblands are located, or the school in the town where the gleeblands are located. And to this day, there are still colonial gleeblands that persist within the state of Vermont, the state of Virginia, and I can't remember which of the Carolinas, but a Carolina has a couple of plans to. I didn't track it through the school. As a result of that proposal that the states could reserve in the agreement between the parties the power to exercise legislative authority to change the charter, Nearly every state has amended the constitution of the state to add this reserved power so that for all chartering acts in the future, the power is already reserved to make changes and it resolves the conflict between the contracts clause of the United States Constitution and the state legislative authority to issue, amend, and repeal charges. But that's not the end of the story. And the reason it's not the end of the story is that because of the way that Dartmouth was written and the understanding of state sovereignty at the time, which was derived from an omnipotent British parliament, that it was not restrained by written constitutions, state legislators legislatures started acting a little bit out of form. They started altering charters in ways that triggered other constitutional issues because the belief was that there was this god's hand power over the existence of corporations that perhaps was extra constitutional. But as the court clarified over the years, not only is there not an extra constitutional authority to alter or repeal the charters of corporations, but in cases where the corporation has simply organized under the general law, the court has revisited its view of that and found that there is no contract in some of these cases where the corporations are organized under general law. Ultimately, the exercise of this authority, specifically the authority of the General Assembly of Vermont under Section six and sixty nine of the Vermont Constitution, is limited by guarantees found in the Vermont Constitution and The United States constitution. The easiest way that I can frame this for you is the reserve power isn't as expansive as the lawmaking authority, but it is still subordinated to the guarantees of the constitution. Section 69 does not relieve the general assembly of the obligation of issuing laws that are constitutionally compliant. You still have to comply with the constitution on both sides of the ledger. So the memo's exhaustive, and I apologize for how many footnotes there are. I got a little too excited about the research because it's an element of this part of the constitution that I was deeply familiar with despite the fact that I work with it all the time. So first, the general assembly can't use the charter authority to restrict the exercise of its paramount legislative powers. That's not an issue here, but I wanted to make sure that you understood the scope of the

[Senator Nader Hashim (Chair)]: power that's involved. Like they can

[Tucker Anderson, Office of Legislative Counsel]: or they cannot be used? They cannot. So an example of where this became an issue is there were states that had an individual charter granted to a corporation based a tax rate, as an example, given a railroad, they're all railroads in these cases, with the exception of the ones that are Davis, they give a railroad a tax exemption. That is later the change. The court then has to review whether revoking the franchise or privilege, essentially having a general law that applies a higher or different task than what is contained in the Charter, is in itself a takings or perhaps triggers due process issues. And in many of these cases, the Supreme Court has said that the General Assembly and other state legislatures cannot bind future assemblies through a charter. So the privileges that are granted bind the exercise of the police power, eminent domain authority. The paramount powers of the general assembly cannot be bound and restricted by a court return. So that's one side of the ledger, and I have gone through the cases in the footnotes if you want to see some of the specific examples. But the paramount power of the legislature, and I quote this the other day in Senate go ups, Salis Populi, that's Supreme Elects. The health and safety of the people is the supreme law. Right? That's the police power. Cannot be fettered by the corporate government. Is there a part of that that I need to live?

[Senator Nader Hashim (Chair)]: Yeah, say it all again, because I don't know what I don't fully understand how to stop this.

[Tucker Anderson, Office of Legislative Counsel]: The General Assembly can use a chartering act to restrict its constitutional powers. So it's another conflict of law analysis where the supreme power of the legislature is not bound by an individual act. And it follows a principle that any one of those acts can be amended in the future, and in particular cases, to protect the health and safety of the people to exercise the police power.

[Senator Nader Hashim (Chair)]: The

[Tucker Anderson, Office of Legislative Counsel]: second half of this, the other side of the ledger, is that state legislatures cannot use the chartering power to remove corporations or third parties that rely on corporation from the guarantees of the United States Constitution. The general rule to frame it for you is that, yes, there is this expansive power over corporations. The General Assembly has the authority to defer on the powers of these corporations, but the outer limits of that legislative authority is the United States Constitution and those rights that are guaranteed for corporations in these specificities. Would you like me to go through the exhaustive analysis?

[Senator Nader Hashim (Chair)]: This one is a bit more straightforward, so I mean,

[Tucker Anderson, Office of Legislative Counsel]: I'll So ask anybody I will flag for the committee that in the history of analysis of the reserve power and its potential impacts on corporate rights, courts have reviewed legislative acts, chartering acts, compliance with the Contracts Clause, Establishment Clause of the First Amendment, Due Process Equal Protection Rights under the Fourteenth Amendment, the Takings Clause of the Fifth Amendment, and access to federal courts under the Judiciary Article and the Fourteenth Amendment. And on that last mark, we'll talk very briefly about the potential that you could and not have analyzed it here tiptoe to the realm of unconstitutional conditions, which is a later document of law developed mostly in the middle and second half of the twentieth century It might also apply here and was initially discussed in the case cited in footnote 33 regarding access to federal courts and the judiciary under the judiciary or the Court of Appendix, that was Terrell v. Berg. An important decision because it also covers foreign corporations, not just those corporations that are charges within the state. He's ultimately that the survivability of a proposal depends on the constitutional analysis and the rights that are involved. And in S-three 22, the rights that are involved fall under first amendment scrutiny, which

[Tim, Office of Legislative Counsel]: is what Tanya is going to be doing. And the records in the vote of the City Council, I'm going to be kind of bringing us into somewhat recent history of modern campaign finance law starting in the 70s kind of running through some of the several cases and really bringing us to a discussion of the land water case Citizens United and throughout that analysis really I should say an account for my analysis in terms of personal protections and really yeah and I just want to initially note that there's much information included in footnotes and also appendix particular concentrating balances to dive in and provide a summary of that case and just just a pause for the offers. Page breaks in there. It's a little bit more difficult. Go through that. So just kind of pulling at us, Jen, on this topic, the US Supreme Court has made it fun and makes clear that corporations have a protected right to free speech. It's due to the first and fourteenth amendments, and that speech in elections entails contributing or expending money, and therefore corporations have a right to spend money in elections. But while these rights are not absolute, political speech simply cannot be banned or restricted as a categorical matter. Words have historically dismantled federal and state efforts to control corporate politics in the electioneering when those regulations are seen to be increasingly infringing on those first amendment rights. So let me start first with just kind of backing the war at the stage of what First Amendment protections for the war. So the First Amendment provides protection from governmental infringement, the right to freedom of speech. And the public is aware that the First Amendment was planning to save the fourteenth line of business, but it should sound familiar because of this, how it states that the government shall make no law abridging freedom of speech or of the press or the right of the people easily to assemble and to petition or petition government or redress grievances. The it should be said that expressly we have the right of freedom that she's there. The freedom of association is an applied right and is believed to have life and detailed treatment by various economists. Protection from governmental interference is broadly and literally applies to what people can say. This is part of speech and also how people can come together and speak with a shared and amplified voice to act and preferring their shared goals and association. And then it should be noted that when we have speech and association occurring in the context of political speech, the courts consider this a it was enhanced, right, almost, but really fundamental to the operation of our democracy. And so these core political speech rights, it's important to note that they can take the form of literal speech or more figurative or symbolic expressions for it that could be provided to candidates in a contribution or the spending of money independently of a candidate too. And similarly, the right of political association is not only at the people affecting or sort of affiliated with each other but also the ability to come together and present an enhanced advocacy by that group association with members and resources. So next we turn to the idea that corporations have the right to freedom of speech, the U. S. Constitution, the verbal review process, association lines. So the Due process rights. So the US Constitution is the five hundred and fourteenth Amendment and this ensures that the government is to provide due process of law to a person before depriving a person with life, liberty, and property. The court, communist law, really takes up an analysis of that liberty interest in the law's part of the stress of let me rephrase this. New Supreme Court has found that freedom of speech and other law, liberty and justice for the first amendment, policy review as fundamental that's been set up for almost a century, that corporation persons within

[Senator Nader Hashim (Chair)]: a meeting of the fourteenth amendment.

[Tim, Office of Legislative Counsel]: And then we also we talked to associationalize our alternative form of which gives protections of free speech from grants to corporations and as we all know certain individuals have association and the ability and opportunity to combine with others to advance one's future with powerful practical means ensuring the perpetuation of freedoms of the first individuals and those that guarantee individuals, two of the interests against them. And the third point, spending is a protected and sometimes money centered in post speech. And worth discussing in Buckley and success in Special Assistance United that just as a modern feature of campaigning and electioneering in general that various forms of speech really all entail some cost, whether that be emptying out, you know, anything as small as some opinions or ads. Those cost money to produce. The vast media, lot of airing required substantial investments to be made in TV, including ads, Internet ads, etcetera, etcetera. But I think it's important to remember how corporations, the ways in which they spend money, they are treated somewhat differently. They will certainly come up in conversations about campaign finance and channel. So the first would be contributions, second would be independent signatures. And those of you who have been on the government operations side down the hall will know that we have you have all of this in Title 17 where we have our elections. Any contribution is a payment that is made to a specific political campaign or the Informed Political Action Committee that's Manhattan which may be later expended in a coordinated fashion. These are capped under state law and must be permitted. Generally speaking, independent expenditure, lacks coordination with candidate. Part of it is made by the corporation boards and public lashes. That's an act. Somebody likes this determination. Yeah. And just for my explanation here, what constitutes a corporation and how broad is that? That's a great question. Maybe I can kick it over to my colleague Rick if I

[Tucker Anderson, Office of Legislative Counsel]: can Oh, go ahead, didn't mean to interrupt. Oh no, no,

[Tim, Office of Legislative Counsel]: that's quite okay. Corporations in the way the law understands that it's rather broad, especially in the context of free speech for me. We're talking about press. They consider political parties. They consider unions. They consider nonprofit advocacy, I'm talking about electoral corporations, as well as for profit corporations. In a sense, the sense of an artificial person. Although it's good to remember that, especially in Citizens United, decision, Supreme Court, which is used as a different type of association. And because it's just an association, it's association of individuals with what you the rights of those individuals and be enacted by the And

[Tucker Anderson, Office of Legislative Counsel]: bringing that into the basic rules, and it may be a little bit if that's other for So corporation, right? Yes. The very first part of that corp is the body. In its most basic form, it is a group of individuals or a sole proprietorship. One individual that makes a body and a lung. You make that artificial person that stands in front of the incorporator, the natural person, and is vested with rights from that incorporator. So if you and I wanted to start a corporation, we would, under the general laws in the state of Vermont, determine what type of organization we wanted to be and what the purpose of our organization is. We would register and create that artificial person, that body, in law, and then we would vest it with rights. Typically, that means giving it money or profit. In its most ancient form, the corporation was used to protect the church. It is grown out of the division between ecclesiastical law and civil laws. Curtis took a long time to build in order to avoid perpetual succession. Generations in the property and the church that's being built over and over, three hundred years of passing off the church, you create an organization that lives forever that will hold property for you so that you don't have to be susceptible to the law. And at the time, it was susceptible to invasion by the tyrannical force, which was the case.

[Senator Nader Hashim (Chair)]: Thanks. This is a timekeeping note. We'll Stop at 10:45 so we can give Anthony Sure. So

[Tim, Office of Legislative Counsel]: I'm just going to recap making that court's evidence that they're planning to explicitly say that spending money is a form of speech and that corporations spend money and we have contributions for independent expenditures. The important next to understand here is that what the courts really care about is the level of coordination between outside the bank and campaign. This is based on proper governmental interests of corruption, the appearance of corruption. So contribution, because it's coordinated campaign to a corporation and a campaign or a campaign or a political party, that's going to basically, to an extent, be regulable, however, not being prohibited. But when you look at expenditure, that is certain time, others closer to that. The of the bank regards that no coordination between the corporation and the campaign, then there's no quid pro quo. There's no corruption. There's no working force, and therefore, there's no worry about that. Without that significant governmental interest it would be an improper correction of positive person matter rights. So if contributions can be put into any expenditures and not be accurately prohibited in any sense. The So again, just kind of to go over the syllogism, we have corporations have a protected rights of speech. Speech and elections entails contributing or spending money and therefore corporations have a right to spend money in elections that's the logical cycle there and again, although these rights are not absolute, the courts have historically taken one by at a time or invalidated in pool in some situations. States, for example, efforts to regulate power corporations. They were to spend money, intellectual engineering efforts, and so in page 11 we kind of have a rundown of the various levels of scrutiny that is in legal tests that are applied here. And just to know that political speech is under stricture in just the highest. And then we have board disclosure and then right of association. We have executive and agency, very others as well. And I just point that out to say is that the court is gonna take a look at any of these issues with opposed to apply the military regress and most of the to any regulation or I promise to help you when it comes to sort of freedom of speech even if it's in the context of not an individual or a corporate or organization art association. And to summarize both parts of the memo and give

[Tucker Anderson, Office of Legislative Counsel]: you an idea of the constitutional framework. Exercising this power through the reserved power or the general authority of the Federal Assembly to enact terms does not save it from the constitutional scrutiny that will be applied in any other form of legislation that restricts, limits, or revokes these corporate statements. It's gonna be subject to the same analysis. This isn't the saving for one thing that we do not underlined just because there is no supporting law for us to give you an objective medical analysis, is that part of proposal here is that there is a meaningful distinction between powers and rights, that there's a division between the powers of the corporation and the rights that are guaranteed without a person. We could not find any source of law to support the divisions between two powers, set money and elections, those rights that are protected by other cases. We didn't cover it in the time. I wanted to note that at the end. I also wanted to say we're not judges. As far as I know, this committee has not nominated confirmed to deny to sit on any High Court. It would be a wonderful surprise if that happened this morning, but I don't think it's the case. Would I make that motion? We have to rely on what we see in the cases to try to present it to you in an objective, non partisan fashion. That's what we're trying to do this morning. And we don't have a crystal ball. But we do have one interesting piece of dicta that I wanted to share with you from one of the cases that Tim covered, with First National Bank versus Polanyi. To tee up what I'm about to cover very briefly, because again, not binding, not part of the holding, doesn't matter all that much, but it gives you an idea of the Supreme Court's view of what is happening in S. Reaching into. A lobby dealt with federally chartering banks challenging a Massachusetts law that restricted election, respecting all elections. The attorney general in Massachusetts, as this was being challenged, raised the argument, Hey, the Commonwealth of Massachusetts has supreme authority over chartered corporations. We're exercising the reserve power. Ultimately, that really didn't get taken up by the Massachusetts courts because these were federally chartered banks, outside of the scope of that reserve power to be candid with. But the U. S. Supreme Court took note of that argument, and in a footnote in their decision, they discussed that that really is not a solid foundation for limiting spending in the span. And specifically, they noted that the court below recognized that such an extreme position cannot be reconciled, with many decisions holding state laws invalid under the fourteenth Amendment when they framed the shooting of the defendant's speech by corporate bodies. They listed the exhaustive number of cases that have held that. Also, they have to deal with media organizations, which are also corporations, as Tim noted earlier. And then they went on to talk about many of the other rights that have been found and conferred to corporations by other US Supreme Court decisions, all of which is to say that the court's view of this argument at the time, this is in the 1970s, was that this was not a solid foundation for restricting First Amendment rights. That's all that I have in my stamp heads for our top hat of

[Tim, Office of Legislative Counsel]: the cane show for you this morning. But I would just encourage community members to take their time going through the memorandum and the appendices there and let us know if you have any questions. We're most happy to respond successfully or try

[Tucker Anderson, Office of Legislative Counsel]: to form whatever the conditions. And it is actually, despite how beige Tim and I did this morning, an extremely fascinating era of history that this developed out of, it is a very interesting legal and philosophical endeavor to kind of navigate some of the arguments supporting S-three 22. It's definitely worth your time because it glances the heart of the hours that you all work with every single day. I could name a bill in each of your other committees right now that deals with this exercise authority by the Jefferson Secretary. Thank

[Senator Nader Hashim (Chair)]: you very much. You. You. Well, if there's any questions?

[Tim, Office of Legislative Counsel]: I just had a quick one. There's something

[Senator Nader Hashim (Chair)]: here on page one, I think if you remember, under me, the last line, this is the opinion of the alleged counsel as far as legislation, except in the power of the corporation, likely violates the first amendment of The United States.

[Tucker Anderson, Office of Legislative Counsel]: Yes. And we deal in lightnings. So we looked at the absolute weight of authority related to the proposal on the table right now. And the determination is that likely, more than likely,

[Tim, Office of Legislative Counsel]: is what we're looking

[Senator Nader Hashim (Chair)]: at here. We didn't have

[Tucker Anderson, Office of Legislative Counsel]: to find all of the constitutional issues that also come up in S-three 22. There are a few things we can play for you about equal protection, some of the carve outs. And one of the penalties in there, Senator Baruth brought this up when the middle first came out for a long group, one of the penalties might chafe against unconstitutional law by the penalties revisions of the U. Constitution because it could be rather large. The example that Senator Baruth gave is a $1,000,000,000 expenditure to have a $1,000,000,000 penalty associated with it based on how this current

[Senator Nader Hashim (Chair)]: Thank you for your patience, flexibility, and please introduce yourself and yourself. Appreciate the time. Thank you, committee. For the record, my name is Anthony Irapino. I am an attorney and also a registered lobbyist for the Philanthropical Interest Research Group.

[Anthony Iarrapino, VPIRG (witness)]: Also happen to be a longtime sustaining member of that organization because I agree with the work that they do, and that includes S-three 22. I am also not a judge, but I have been practicing both corporate law and campaign finance law in the state of Vermont for nearly fifteen years. In that practice, represented a number of corporations, can counsel them in terms of their ability to engage or not engage in political speech, as well as representing a major political party. Just want to make clear that my views here today are not on behalf of any client other than the party. But if I were a judge, I would respectfully reach a different conclusion than your legislative counsel has reached a bit into that in my testimony. But we just heard a lot about some pretty dry case law, and I want to bring us back to why are you thinking about this to begin with. Because the consideration of S-three 22 comes at a moment in our history where American democracy and the integrity of our political process, which was once the envy of nations across the world, has never been warring in peril. And there are many causes of this peril, but most can be summarized by a quote from the Watergate era film, All the President's Men, and that famous quote is, Follow the money. Recent public opinion polling confirms that nearly eight in 10 Americans, that's 79%, agreed that large independent expenditures, the technical name for political ads that are not coordinated with the candidate, by wealthy donors and corporations in elections give rise to corruption or the appearance of corruption. This included 84% of Democrats, 74% of Republicans, and 79% of Independents. And relatedly, more than three in four Americans, including 84% of Democrats, 68% of Republicans, and 77% of Independents agreed that the appearance of wealthy donors or corporations gaining influence over or access to elected officials causes me to lose faith in this democracy. This is a crisis for our democracy, a loss of faith that goes across the political spectrum, and it has to do with the role of excess money in politics. That's what they're shaping up with in S-three '22. The US Supreme Court opened the floodgates for unlimited, quote, independent expenditures and corporate cash and electoral process by striking down a federal campaign finance law, regulating corporate electoral spending on grounds that the law violated the First Amendment on that much, I agree with your legislative counsel. But the reasons why that case was decided, I'm gonna get into, and disagree with the conclusions they've taken away from that case and some of the information that they didn't share in terms of what the court said and didn't say in that case. But anyways, because that case was decided on First Amendment grounds, many people, myself included, thought, okay, the only fix for this problem is to amend the United States Constitution to make it clear that legislators have the power to regulate corporate and political speech. And in fact, just two years after Citizens United, the General Assembly passed by five tribartisan majorities, JRS 11, calling for such an amendment of the constitution was 92 to 40 in the House, 26 to 30 in the Senate. But in the years since, experts in corporate and constitutional law have helped bring to light an alternative means to remedy the ill of unlimited corporate contributions that is enslaving our democratic process. And that means is clarified through the amendment of state corporate law, not campaign finance law, that the powers state corporate laws grant to corporations do not include the power of political speech. And this is important because corporations only have the powers that they are given by the general laws of the state. You may have a right to do something, but you don't have a right to do something if you don't have the power to do that in the first place. You can tell me I have the right to fly, but I don't have the power to fly. So I can't actually fly. S-three 22 is that remedy And it's a manner that is actually in my view and the many view of many other legal scholars whose information is in the footnotes of my memo, is actually consistent with The US constitution as it's currently written and as it's been interpreted by the US Supreme Court and Citizens United and many of the other related opinions that are in their legislative council memo. I'm not gonna drill too deeply down into those cases because Tom Moore, who is really an expert in this, has put in a similarly lengthy legal analysis to the record. He's gonna touch on those later, but I wanna get some highlights. By passing S-three 22, the General Assembly would exercise its longstanding authority to define the powers available to artificial legal persons. I think this is an important point. Corporations do have many of the same powers as human beings, but they are not themselves human beings. We as human beings are born with those powers. It's an inalienable right, what we are as human beings. Corporations don't exist till the state says they can exist, and

[Tucker Anderson, Office of Legislative Counsel]: it says what they can do in their existence.

[Anthony Iarrapino, VPIRG (witness)]: This authority predates the U. S. Constitution and was thus reserved to the states like Vermont by the Tenth Amendment of The United States Constitution. It rests on a bedrock principle, long honored by the US Supreme Court, that corporations and other business entities are creatures of state law and possess only those powers granted to them by the state laws that created them. So that section that Tucker put up, that covers that and what's in the constitution, but I also wanna point out what's in statute in terms of your implementation of chapter two, section 69 of the constitution that reserves to you the right to repeal or alter your general corporate chartering laws. And that section says that any act creating, continuing, altering, or renewing a corporation or body politic, that's a mispoure, be repealed by the General Assembly as the public good requires, emphasis. And any such acts may be altered or amended by the General Assembly as the public good requires. In 2026, after you hear public opinion polling numbers like those that I recited at the beginning of this testimony regarding the extent to which the public has completely lost faith in our political process because of the role of corporate cash and independent expenditures. Can there really be any serious question that the public good requires less corrupting corporate cash in our political process. Though S thirty three twenty two seeks to solve a problem Citizens United created, it actually doesn't conflict with Citizens United itself nor other cases upon which Citizens United relies. And this is an important point because what Tucker said at the end of his testimony, and I don't know if it really sunk in for you, there is not a specific case on this issue. Citizens United dealt with a campaign finance statute. Citizens United also dealt with the assumption, as stated by Justice Scalia in that opinion, that the corporations before the court challenging the campaign finance statute were given the power of political speech in the broad charters they had under the state laws that created them. In other words, Citizens United assumed that the corporations before them had the power of political speech. And thus, as they had that power, their right to use that power could be restricted. S-three 22 is not about restricting a right. It is about removing a power. Vermont's current corporate laws contain the same kind of very broad grant of authority that Justice Scalia was referring to in Citizens United when he assumed that the corporations before the court in that case already had the power to engage in political speech. And this is what it says in our statutes. Every corporation has the same powers as an individual to do all things necessary and convenient to carry out its business, its affairs. So the way you've written our current corporate laws, your predecessors have, It basically says, Yes, corporations, we've created you to do everything that a real live human being can do. But S32 is to clarify as no. When it comes to political speech and its corrupting influence, there is a difference in the powers that real life human beings enjoy than those that are enjoyed by the artificial legal persons created by our statute. And Tom Moore is gonna hit on this more, but there is no Supreme Court case, including Citizens United, that squarely holds that states like Vermont are prohibited from altering their corporate chartering laws to remove the power of political speech that's been assumed in that broad grant that I sent you before. I emphasize assumed because it says necessary and convenient to carry out their business and affairs. Corporations aren't necessarily formed to influence politics. They're formed to make profit in the marketplace. So that's an important concept to remember as well. S-three 22 thus is not fundamentally a campaign finance law restriction on corporate political speech. It is to repeal an alteration of corporate chartering laws upon which the claim to corporate political speech rights that citizens of health, Citizens United Health rests. Okay? This would be a change in the analysis that the court would have to engage in because unlike the corporations at Citizens United, you'd be saying no, you are created without the power of political speech. Some have misread Citizens United as a vindication not of corporate rights of political speech, but of the rights of individual shareholders who come together to express their political views through jointly held resources and corporation. That's a little bit of what Tim was mentioning before. But this argument, which was not actually the basis of the court's whole thinking, was just something they said in support of their underlying basis, which was based on a rights analysis, not a corporate powers analysis. But this argument ignores the reality that those individuals have other means to exercise their First Amendment free speech rights in the political process. So we're not taking away the right of individuals to assemble and pool their resources to speak on political issues and elections or ballot activity. Vermont campaign finance laws that SBIR three twenty two would not interrupt already allows both any one or more individuals,

[Tucker Anderson, Office of Legislative Counsel]: so

[Anthony Iarrapino, VPIRG (witness)]: group of individuals, to accept contributions or make expenditures in any amount within any two year election cycle, the purpose of supporting or opposing candidates influencing election or advocating for or against the public. Even if you enact S-three 22, there would still be alternatives for individuals to associate, so their First Amendment's freedom of association rights, and to use their human possessed rights to speak to political matters. Also, S-three 22 will still allow corporations to engage in certain limited practices that were generally accepted prior to Citizens United and that don't genuinely undermine our political process in the way that unlimited corporate spend does. And examples include the ability to spend a de minimis amount on publicly announcing and endorsing a campaign. Some corporation wants to say, We endorse Senator Norris, he's been good for farming and our farm. They can still say that. They can't go out and spend unlimited money on ads to say that, but they can put that out there for anyone who cares what the view of a corporation believes on that and we'll allow that, this law will still allow us to say that. It also allows corporations to publicly lobby the legislature because you know when you do a constitutional amendment, which you've done a couple of them recently and there's others in consideration, you have to figure out what's the right wording for this. Well, some of those constitutional amendments might affect the corporate interest, and it's okay for them to come in and say, hey. If you word that constitutional amendment or a municipal charter change in this way, it's gonna affect our business. If you word it in this way, it won't affect our business so much or it will help our business. That's all been part of the political process for Citizens United. That wouldn't change after SB 800. Now, at the last hearing on this, I know Senator Mattos was concerned about legitimate business interests. You brought up the example of a print shop that somebody wants to have print up electoral flyers to say, Well, will that affect them? It's not prohibiting corporations or other artificial legal persons from accepting fair market value payments for performing a legitimate business service or selling a legitimate business good. It's not a contribution when somebody else is asking you to do it for fair market value saying, Hey, you're in the business of printing, I wanna pay you your full rate to print up all these flyers that say Senator Mattos for Senate. While asked very frequently to artificial, prohibits artificial legal persons from spending their corporate money to influence elections, it allows them to remain open for business when it comes to accepting the money of real human beings who are exercising their First Amendment speech rights in the electoral process. The plague of unlimited corporate money and elections is not a view of the Vermont's problem, but neither is Vermont immune from this plague. In our federal system, Vermont and its sister states are empowered to enact laws that apply only in Vermont state elections and local elections. But if enough states like Vermont embrace their tenth amendment authority to clarify that corporations chartered under their laws lack the power of political speech, the cure will begin to take hold and spread so that our political system can end the long and long overdue process of healing itself. Vermont Corporate Law empowers members of this committee and your colleagues in the General Assembly to do what the public good requires when it comes to altering or repealing general corporate chartering laws. BPRN urges you to advance the public good passage of the SE-twenty two. Really appreciate your taking the time to hear me out on this. I do wanna point out just a couple more things that my learned colleagues in Legislative Council says, I've never in my time lobby here seen three Legislative Council working on one bill, you're very fortunate with the brain power that they've decided to allocate to this issue. When Tucker was talking about Dicta in the Mulati case, I want you to understand what Dicta means. It's basically a side comment. Not binding on any future court. And the reason it's dicta in this case of Viladi, not necessarily saying what S. Three twenty two seeks to do can't be done, is because the court had no benefit of briefing on this topic before it made its decision. It wasn't educated in the difference between corporate powers and corporate rights. That wasn't a corporate powers case. It was a rights case. Calamore will emphasize the distinction a little bit more. Just to understand that that is a difference. The other thing that you need to keep in mind, again, none of the corporate chartering Supreme Court cases that are referenced in legislative counsel's memos deal with the First Amendment. They deal with property rights, contract rights in which third parties have reliance, issues where the state would be taking something that the corporation owns, because corporations clearly, it is an important part of their business to own assets. The courts have said you can't change the charter in a way that makes a corporation forfeit its assets or give those assets to stakes. And those make total sense. That is different than the First Amendment. And there's no case on that, on point on this. So while I respect the right of legislative counsel to me to make a prediction, I urge you to listen to my colleague, Tom Warren, who's coming later, and who will explain to you why if the Supreme Court acted as the way legislative counsel predicted, they would be taking a radical step and a fundamental reorganization of the historical understanding of corporate law as being the province of the state rather than the federal government. So thanks again. I'm happy to take questions. I know you have

[Tucker Anderson, Office of Legislative Counsel]: a nice schedule, but I appreciate your attention on this.

[Senator Nader Hashim (Chair)]: Thank you. Committee, any questions? Operator? Hope we have any questions. Okay. Thank you so much. Alright. We are back at senate judiciary. Took a few minutes of break, but stayed alive for what we are pivoting to s one ninety three. We have

[Tim, Office of Legislative Counsel]: draft 5.1 as far

[Senator Nader Hashim (Chair)]: as 12. We have legion council here with us just to take a few minutes of those changes and take a second. So, floor is yours. Thank you. And good morning, everybody.

[Eric Fitzpatrick, Office of Legislative Counsel]: Eric MacPatrick with the Office of Legislative Council. As the chair mentioned here to talk with the committee for a few minutes. I'll talk a new version of the proposed amendment to S one ninety three, an act relating to establishing a forensic facility for certain criminal justice involved persons. We're on draft 5.1 of the proposed committee amendment to the bill. And as usual, you'll see the change between this draft 5.1 and the previous one, four point one noted with yellow highlights. The first section of bill having to do with the competency of restoration services. So in other words, the person who is transferred to the forensic facility on the basis of the finding of incompetency to stand trial. There are no changes section. So that's still the same as the version that the Committee of Death, Black Pie. Same with section two, actually. That's the sort of separate idea. That's the idea that when a person has been found incompetent and the charges or sorry, the case has been inactive for a period of time, then it can be dismissed. That section is also unchanged. So the changes are all in section three, which has to do with the NGRI, the not guilty by written of insanity population. You'll see the first one on page six, the way the process works in the bill is that when a person is found and not guilty by reason of insanity for crime with a potential lifetime sentence, that is part of the universe of people who are then transferred to the forensic facility. And there has to be a hearing held within their within that certain period of time after they're transferred. So the transfer there from the colonel division, go to the forensic facility under the version of the bill that you had been looking at. This is page six, line 13. That initial hearing had to be held within forty days. So the proposal was to expedite that process. And the committee had suggested a forty eight hour period so that once the person is transferred from the criminal court to the forensic facility, arrest of hearing happened quite frankly in order to determine whether or not the person should still be confined there, which in other words, the standard is. Over on page seven, it states slide four, states generally establishes by clear and convincing evidence that the person is suffering from a qualifying condition, that upon the person's release, what creates substantial risk of body fatality for the person. So that finding has to be, at least in theory, has to be held within forty eight hours to make, for the court to make that determination. So that's change number one. Staying on page seven, where I just was, you see the next couple of changes. The first one, really no there's no substantive change in meaning here with the committee head. Noticed that the first sentence in subsection c really certainly was not legally necessary to include that sentence. So it's rewritten without that sentence just to say that a person committed to the Burns facility pursuant to the sentence shall not be released until the court finds, and it's the same standard that I just read to you from above, because it's a standard that applies throughout the proceeding. But a person stays there until the court finds that they're no longer suffering from that qualifying condition, then upon the release would create the substantial risk of loss of interest. Have the first Eric, I think the This isn't my fault. I didn't clarify this. My goal was to have the court taking into account the least restrictive conditions applicable, not the commissioner of correctional consent. If somebody's going to be, is is going to remain submitted, Is that we make that change or does it what are your thoughts on that impact? That seems unusual to try and figure out how that's going to apply to the standard. Decisional standard throughout the bill is substantial risk of bodily injury to another person. That's whether or not the person should be there, not not what the least restrictive means are, once they're there, for the different criteria than other words. So that's it'd be rewritten that way, but it's different. How Remind me how we have it for opulence restoration. Yes. That is that. Oh, I see. Yeah. It's the page two, line 12 to 16. And it's has to do with whether whether it's a restoration process specifically, court orders in PD commitment. At last, the time it's in PD. And sort of sort of fits there because that's the idea that court is making a decision about whether or not the person can be released into the community or not, or whether they should stay at the So it's not the initial determination of whether the person should be there. But then, this is in context of a later event, a second subsequent back in the shed. Yeah, I get it. I see. Okay, no, it makes more sense now. Way it is for the NGRI is also matches with what I'm seeing in the Olmstead incision. That's, yeah, that works. Yes. I reviewed that case as well. Okay. I think this proposal arguably fits fits for that decision. Okay. Anything else? One thing I have, just to say, just to peg all of you, page seven, the lines 18 to 19. I don't know how that's looked through, but that's the serious property damage. I really don't know the media had removed that. Mean, for some reason,

[Tim, Office of Legislative Counsel]: I moved that to a 9.1,

[Eric Fitzpatrick, Office of Legislative Counsel]: but didn't catch that. So why don't strike those words on lines 18 to 19? So if we okay. So are we live to committee any questions or comments on these? So if we just strike for serious damage to the property of another person, is everybody ready to vote on this bill? Yes. Yes. So, Eric, do we need a new copy or anything, or can we just say that we're going to vote on 5.1? You can say 5.1, yeah. And that will be removed for the version that is Yes. Yeah. It does still I'm gonna go to the ending one more time, those would just be grammatical corrections, that sort of thing. Okay. And just one point to raise is, you know, voting this out today. The health and welfare committee is also taking additional time tomorrow, and they were able to get both the well path to come in. So there'll be my understanding at the moment, it's our intent to provide an amendment that increase the focus on the medical care which is excellent. So, we'll be expecting that. So, voted out. It'll be held on the calendar for a little bit as they get their amendment ready and then we'll hear that amendment.

[Senator Tanya Vyhovsky (Member)]: I'm sorry. My day yesterday got a little bit away from me, so I didn't get a chance to follow-up with you about liability. But in an instance where there are lawsuits pending against, in this instance, WellPath, and they're contracted with the state, If WellPath files for bankruptcy and shields themselves from liability, does that put more liability on the state to deal with those claims? My understanding is that is what happened in Massachusetts. And so I'm wondering if something similar put on hold where the state is now liable or negligent on behalf of our contracted provider because they are in Chapter 11 proceedings, which they currently are. I don't know about the impact of bankruptcy necessarily,

[Eric Fitzpatrick, Office of Legislative Counsel]: but it is true that when the state contracts with entities to provide state functions, that that is not a way generally for the state to get out of liability. So generally speaking, it's happened in the corrections context before, private prisons, that sort of thing, and the exact issue has come up, but it's happened in a number of contexts. And there's court attests that the court uses, essentially a state actor, that sort of thing.

[Senator Tanya Vyhovsky (Member)]: But in the instance that LLAPP couldn't pay for those claims,

[Eric Fitzpatrick, Office of Legislative Counsel]: it would be all the state to pay them. I'm just not enough familiar with the bankruptcy elements to give you a good answer, but I think with that point aside, yes, the person that the entity is a state actor, state can't get away from liability. Thank you. I would entertain a motion to vote this out favorably. Sarah Sepperson.

[Senator Nader Hashim (Chair)]: That is know, record high. Yeah. So look like he's all prepared. Done. Good job, my man. Hey, Any discussion?

[Tucker Anderson, Office of Legislative Counsel]: Senator Norris? Yes. Senator Baruth? Yes. Senator Matos?

[Senator Christopher Mattos (Clerk) — roll call response]: Yes. Senator Vyhovsky? No. Senator Hashim? Yes.

[Tucker Anderson, Office of Legislative Counsel]: Four one zero.

[Senator Nader Hashim (Chair)]: So but we wanna have it on the calendar, but do I take it up?

[Tim, Office of Legislative Counsel]: We can pass over. Pass over if

[Senator Nader Hashim (Chair)]: we need to. Just wanna make sure.

[Tim, Office of Legislative Counsel]: Yeah. Would take it up now, then, We could go out and

[Senator Nader Hashim (Chair)]: talk about conference time on.

[Tim, Office of Legislative Counsel]: I just can't do fast forward.

[Senator Nader Hashim (Chair)]: So I'll have the proofers. So you can get a great copy. Yeah, so we like a little bit like this at some point, but I'll send it to everybody to cc so you know he's got motion on it. Is that right? Perfect. Thank you. Yeah. Alright. We can take a ten minute break. We have Tom Moore at 11:30. We're taking a break in time. Yep. Ten minute break. We can go off by.

[Tim, Office of Legislative Counsel]: What are we doing then? Follow-up

[Senator Nader Hashim (Chair)]: with a witness from this morning.