AUSTIN (KXAN) — A mysterious new group called Coulda Been Worse, LLC released its latest television advertisement, targeting top Texas Republican leaders and blaming them for problems following the 2021 winter storm.

The group first started making headlines last month when it released its first ad blaming “three men,” Texas Gov. Greg Abbott, Lt. Gov. Dan Patrick and Attorney General Ken Paxton, for a myriad of issues facing the state.

We reached out to Abbott’s Democratic challenger, Beto O’Rourke, and a spokesperson said, “The Beto for Texas campaign does not have a relationship with Coulda Been Worse LLC nor does this campaign know who is behind it. “

Austin election law attorney Roger Borgelt said it’s not uncommon for outside groups to work to influence elections, but he explained there are different reporting and disclosure rules depending on the type of organization running the ad or spending the money.  

For, Against

In campaign advertising, Borgelt said it’s important to pay attention to certain words used to differentiate between express campaign advertising and what are called “issues” ads.

“We think, well, ‘That must be political advertising,’ because it’s putting out either very positive or very negative damaging information about a candidate. But if they don’t actually say ‘support’ or ‘oppose,’ then it actually doesn’t trigger the political advertising regulations or disclosures,” he said.

A 1976 Supreme Court opinion, Buckley v. Valeo, established that the government can limit contributions to political campaigns but cannot place limits on campaign expenditures or independent expenditures by outside groups supporting a campaign, because that money is considered an extension of the donors’ rights to free speech, protected under the First Amendment.  

Words such as “vote for,” “vote against,” “elect,” or “defeat” are often referred to as “magic words” under Buckley, identifying whether an ad is considered an electioneering ad – triggering limits and reporting requirements under elections law — or simply an issue ad.

Regardless of the ad classification, media outlets such as television and radio submit a “political file” to the Federal Communications Commission, documenting various ads placed during election cycles.

KXAN reviewed its advertising paperwork filed with the FCC for Coulda Been Worse, LLC. It shows the group is registered in Virginia and lists someone named Michael Waters as the primary contact, using a phone number with a Virginia area code. KXAN investigators reached out and left a voicemail, but have yet to hear back.

Follow the money

There are laws at the federal and state level for how campaign spending has to be reported. However, most voters are familiar with the term “dark money” — spent by nearly-anonymous donors through certain types of organizations to influence elections. 

Political action committees, or PACs, have to register with the Texas Ethics or Federal Election Commissions. PACs are also subject to certain reporting requirements and there are limits to how much money they can donate directly to a candidate’s campaign. On the other hand, Super PACs cannot donate directly to campaigns, so they don’t have any limits on the amount of money they can raise.

Super PACs are supposed to be subject to disclosure and reporting requirements, too, but there are ways to hide donors’ identities. For example, donations attributed to limited liability corporations or shell companies can inherently mask individual donors’ names.

Additionally, non-profits classified as 501(c)s are bound by the same election laws. Therefore, they are not required to disclose their donors to the public and can raise unlimited amounts of money.

“There was some sound reasoning behind that,” Borgelt said, pointing to a 1958 Supreme Court decision called NAACP v. Alabama. He explained the ruling protected the private identities of donors to the NAACP during the Civil Rights movement and allowed the “free association” of private people to groups such as these.

Open Secrets, a group that tracks election finances, calls 501(c)(4) groups the most common type of “dark money” group. These social welfare organizations, including the National Rifle Association and Planned Parenthood, are allowed to engage in political activity, but it is not supposed to be their “primary purpose.”  

It says 501(c)(5) groups, such as labor unions, and 501(c)(6) organizations, such as trade associations and chambers of commerce, are bound by the same limit.

Meanwhile, 501(c)(3) groups, such as charitable or religious organizations, are not supposed to engage in political activities.

Open Secrets estimates more than $26 million has already been spent in 2022 by outside groups who do not disclose their donors. It estimates roughly $1 billion has been spent by “dark money” groups since 2010, when the Supreme Court ruled to allow corporations and other special interest groups to spend unlimited sums to support or oppose political candidates. Under Citizens United v. FEC, spending was classified as an extension of protected free speech.

Borgelt explained that under the law, “That is their right, under the First Amendment, to speak in that way, and to amplify their speech with that amount of money if they have the wherewithal to do that and choose to do that.”

Two months before the November election in Texas, U.S. Senate Republicans voted to block the consideration of a bill, requiring these kinds of organizations to disclose the identities of donors who give $10,000 or more during an election cycle. In a 49-49 vote, every Republican present voted against the measure and every Democrat voted for it.

Senate Minority Leader Mitch McConnell (R-Kentucky) said the bill would have given “unelected federal bureaucrats vastly more power over private citizens’ First Amendment rights and political activism.”