State Sen. Karl Rhoads got back to us Thursday afternoon. He was the legislator who introduced SB2471, which goes before the full Legislature for a vote on Friday, May 8. Here's what he had to say about how the bill came to be, what it might mean for politics in Hawai‘i if it passes and what happens next when, as seems inevitable, it is challenged in court. Interview lightly edited for readability.
See also our Q&A with state Sen. Jarrett Keohokalole on SB2471, posted earlier Thursday.
Because you introduced this bill, I was interested in learning more about your motivations and some of those other questions that I had shared [these come up in the following conversation].
The motivation is I've been looking for some way to limit Citizens United for a long time, since it was handed down in 2010 and most of what I could come up with before was symbolic, and [while] symbols and politics are very important — I'm not suggesting that symbolic moves are wasted — this [bill] seemed like an avenue that at least needs to be explored, because I'm an attorney and, you know, a corporation is a stack of paper until you have people involved, right? And so the whole notion of a stack of paper having rights equivalent to people has always struck me as just odd.
Do you recall who approached who on this? The Center for American Progress has been organizing, it looks like a nationwide effort...
No, I didn't know anything about them. It was a Robert Reich post that I saw. He may well have gotten his information from Center for American Progress, but I didn't know anything about them. They contacted me after I introduced the bill.
And they've had some workshops down here?
I don't know about that. There might have been, I don't know.
In testimony, [state Re. Della Au] Bellatti cited $13 million in dark money being spent locally in the last election. I've seen that number, and I've seen a lot of discussion about dark money in only a vague sense. I was wondering if you have examples of specific spending by specific people who had specific goals in mind.
That's kind of part of the problem is the darkness of it. I haven't seen that figure of $13 million, and I'm not sure how they came up with it, but that, to me, is one of the big advantages of this bill, is that you know, if you're wealthy and you can afford to make big contributions, Citizens United will still allow you to do it as an individual, but then, at least we know who it was. That's not really answering the question, but I don't know where the figure came from. I've seen other figures, national figures, that before Citizens United, there was less than $5 million spent nationwide that was anonymous. And then in the 2024, presidential election alone, there was $1 billion worth of anonymous money spent.
There's no specific examples of an ad campaign you saw that that gave you pause?
Well, I suppose everybody's pointing at [Pacific Resource Partnership] on this one. And I've always sort of viewed PRP as the silver lining of Super PACs, because usually they agree with me [laughs]. I don't know if they spent $13 million, I'd be surprised. The other thing is, I don't know whether that would be considered dark money. I mean, we know where it came from, right? So, I just don't know how they how they calculated it.
If this bill passes, would an organization like PRP be able to continue operating in the same fashion, or is there something that they would have to change about how they do things?
I think this is part of the problem with this bill, is I don't know how everybody's organized, so it's hard for me to judge exactly who will have to change what. Yeah, I think PRP probably will have to change, because my understanding is the money, the big chunks of money they get, are from contracts with their signatories, and there's like a percentage of wages that goes into their, I believe, Taft-Hartley trust and then they spend it from there. But my understanding is that the money from that trust is not all spent on politics. So, at the very least, they'd have to segregate that money, the corporate money that came in, and they wouldn't be able to spend that on politics. But the rest of it, as far as I know, they would be able to spend it just like they're spending so the answer is, it really depends on how, how it's organized.
As I studied the drafts of the bill as they went through the process, I noticed the exception in there for news organizations, for news opinion, which, of course, is my world. But I was wondering how one might justify making a distinction between, say, a newspaper's endorsement of a candidate — and it [the newspaper] is a corporation — and corporate money spent on endorsing a candidate or opposing a candidate. How do you make that distinction between varieties of corporate political speech?
We exclude media in the bill by saying "election activity" does not include any bonafide news story, commentary or editorial distributed through the facilities of a broadcasting station or in print or in digital, unless the broadcasting, print, online or digital facilities are owned or controlled by a candidate, political committee or political party. So it carves out third-party news and commentary.
This struck me as a vulnerability of the legislation that someone might come along and challenge it on the grounds of, 'Hey, look, you're making an exception here for political speech that's meant to influence an election that's coming from one kind of corporation, a news corporation. Why am I being excluded [from the same kind of speech] because I'm a different kind of corporation?
Yeah. I mean, we also carve out candidate and non-candidate committees, because that's what they do, is try to influence elections. I think the difference is — and let me back up a little. This bill will be, if it passes, it will be litigated. It's a novel approach. The advantage we have is that there's no case on point. The disadvantage we have is there's no case on point.
It's not a frivolous bill, in the sense that we're going to get laughed out of court. But it also means we just don't know what's going to happen. So that issue might be raised, and I think we've covered ourselves as best we can anyway, by carving out newspapers and the press in general. I think conceptually, the difference is really just what the business is. If that's the business you're in, then you've got to be able to do that business. But I guess there's some trust that the fourth estate is trying to be honest, and accurate about what they're doing, and, of course, [laughs] that's a very large assumption in certain cases. It might be a useful line of litigation for some clever attorney, but I think we've protected ourselves the best we can.
Has our congressional delegation taken an interest in this locally? It's out of their territory, but I assume that philosophically, they might be interested. I'm curious if they've reached out, are they in touch with you, checking in on the progress, etc.?
I have initiated contact with one of the senators and talked to Brian [Schatz] about it, but I you're absolutely right. It's kind of outside their lane in terms of what they have any direct control over. I have spoken to both the Congress people, I happened to run into them [today at the service for Colleen Hanabusa], and obviously you need to talk to them to find out for sure but my impression was that they both supported it and wish they could overturn Citizens United [in Congress], which would be a more complete and satisfying solution than this.
One of the reasons I asked is because there is a multi-state effort underway and and that effort seems very much like a substitute for federal legislation.
Yes. I mean, it could make some analogies to the what's called, the compact that Hawai‘i signed 20 years ago that says once we have a majority of electoral votes, we will vote with the majority of the popular vote for the whole country, as opposed to whatever the state voters say, right? So you could view it that way, because what the effect will be is, if we pass it, Hawai‘i corporations will not be able to spend money on politics in Hawai‘i, but they also won't be able to spend money on politics in other states that they operate in and then out-of-state corporations have always had to follow — there's a pre-existing statute on it that's been around at least 25 years, that says that we won't give other state's corporations more powers than we give our own, for fairly obvious reasons, and that would cover this as well. So even if every single state passed a similar bill, you still haven't really overturned Citizens United because, you know, the Elon Musks of the world, they can raise their salary and spend $100 million dollars on a campaign under Citizens United, that's perfectly legitimate for them.
An enforcement question comes to mind, from experience with digital advertising. There's something called programmatic ad buying. It's an automated method for buying advertising. You go to basically a digital broker and say, this is my budget, and this is the demographic I want to reach, here's my ad, take it from here, and then no human is involved in the process. So a corporation that is based in some state that has no such law as the one that you're attempting here, could be the buyer and their ad could show up on some streaming service, on any TV, anywhere, without any human have made a conscious decision to do that. In all the complexity of that, how would you investigate? What does this bill set up in terms of investigating and prosecuting something that then is violating this law?
There are a couple of things that could come into play. One is that that would be an ultra vires [outside the law] act on the part of the corporation. Once you do that, typically shareholders can sue. Also, the Attorney General can investigate, and you may very well be correct, it may be very difficult to enforce, although the other thing about that is that some machines somewhere knows where they sent the ad. So it would be a discovery question as to, you've got this algorithm or this program or whatever, and where'd you send it? Right? If you're a corporation, then you pay for the ad, and it went to Hawai‘i, and we passed this law, then you're not supposed to do that. And that's just like any other enforcement thing, it just may be more complicated because of that [system].
One of the concerns people have expressed, for example the Attorney General, among others, is the cost of defending this. Like you say, you know it's going to get litigated. Have you folks estimated what that cost might be?
What will happen is that we'll need experts, and we'll need to get outside counsel, because this is not something that the Attorney General's office would typically have anything to do with. I would be very surprised if ... there's all the liberal law firms in the country. We could auction off the rights to defend it, if it came right down to it. My guess is all the hot shot constitutional lawyers would love to defend us for free.
[Rhoads says here that Hawai‘i had set aside $10 million to defend against the Navahini climate case as an example of litigation costs.] [That's] probably a high figure because I don't believe there would be a ton of discovery that would need to be done. It'll be a summary judgment kind of case where the facts are obvious, you don't have to dig around very much to figure out what's true and what's not true. A plaintiff will argue that the intersection of our corporate law and Citizens United is such that Citizens United trumps [our law] somehow and but you won't have to do any discovery, you won't have to depose people. That's a very long way of saying, hey, I don't think we're gonna have to pay anything. And if we do have to pay something, it's not an expensive case by legal standards.
Do you have a sense of what the progression through the courts would be? Someone would have to challenge it here in Hawai‘i, I assume, and then...
Not necessarily, because it does have this provision that an out-of-state corporation can't have more power than Hawai‘i does, so I don't really know where the challenge would come from. I can think of a number of organizations that might want to, or they might all band together and sue at once and cut their own costs to do it. I don't know.
And then, since it's aimed at a U.S. Supreme Court decision, what are the odds that it ends up in front of the U.S. Supreme Court?
I would say they're pretty high. And this is one reason I was interested in it. It's not a constitutional case. Right off the bat, the only law that has changed in here is the various kinds of artificial entities, corporations, nonprofit corporations, LLCs, LLPs, certain associations, so and if you look at the referrals in the Legislature, it went to the corporate committees that deal with corporate entities, and went to consumer protection, and so ... 'm sure someone, somewhere, at some point will try to say, no, Citizens United applies. But it's not immediately clear to me why Citizens United would apply. You've got a Supreme Court that, in my view, is willing to tie themselves in a knot to get the result they want. And if they don't want the result that's here, I wouldn't be surprised if they get the result they want, even if it doesn't make any legal sense. But the corporate side of it, you know, the powers of states to control what their corporations can and can't do, that's old law, and that's been around for 150 or 200 years, right?
I've read Tom Moore's work at Center for American Progress [on this angle]. Now, his language isn't necessarily exactly how our bill is framed, but in his language, these laws, as they're being introduced in multiple states, don't regulate speech. They only regulate corporations. But someone might come along and say, 'Yes, but you're only really regulating the speech aspect of the corporation, so you can't say you're not doing what you're doing.' Does that make sense as an objection?
I think that's what the argument will be about. But I think that Citizens United was decided downstream of this question. The corporation they were dealing with had a corporate charter that allowed them to do whatever the usual language is, any legal objective, and pretty much all states at this point, that's what they give their corporations, because states try to make their corporate laws attractive to get investment, and it's worked. That's why so many corporations are domiciled in Delaware and Nevada.
And so would Citizens United [the case] have come out the same way if Citizens United itself [the entity that sued], had incorporated in a state that didn't give them the power that they were exercising? I don't know. And that's the $64 million question, is how a court would interpret that, because Citizens United is easily distinguishable on that basis.
For the latest news of Hawai‘i, sign up here for our free Daily Edition newsletter.
