Was The Court Conned In Citizens United?

Supreme Court Justice Anthony Kennedy has been had. "A campaign finance system that pairs corporate independent expenditures with effective disclosure has not existed before today," he confidently wrote in his majority opinion in Citizens United, the Court’s 2010 decision that freed corporations, unions and others to spend unlimited sums on electioneering.
Justice Kennedy appeared blissfully unaware that his guarantee of disclosure was misplaced. Though his ruling left contributions subject to the disclosure requirements of the McCain-Feingold campaign finance law, those requirements were rendered meaningless by a government agency pursuing a contrary agenda.

The court’s 5-4 Citizens United decision was bound to create a furor. So Justice Kennedy took care to emphasize that the new campaign spending the court had unleashed would be fully disclosed -- that shareholders would be able to hold executives accountable for spending corporate funds on politics, and that voters would know exactly which interests were funding which television ads. The section of the opinion upholding the constitutionality of federal disclosure requirements had added force behind it. All the justices except Clarence Thomas signed on -- providing a resounding 8-1 endorsement.

"The First Amendment protects political speech; and disclosure permits citizens and shareholders to react to the speech of corporate entities in a proper way," the opinion stated. "This transparency enables the electorate to make informed decisions and give proper weight to different speakers and messages."

Shadowy Political Groups

The court’s embrace of disclosure could hardly have been clearer. Yet we now have a system awash in anonymous donations to shadowy political groups. According to the reform-minded Center for Responsive Politics, advocacy groups spent approximately $305 million in the 2010 midterm federal elections, more than quadrupling the $70 million spent in the 2006 midterms. Few of these groups disclosed their donors; the "transparency" promised by Justice Kennedy is nonexistent.

What went wrong? The answer lies buried in the graveyard of election-law enforcement: the Federal Election Commission. In 2007, prior to Citizens United, the FEC issued a little-noticed "interpretation of law" that narrowed the scope of the McCain- Feingold disclosure requirements. The law itself specifies that disclosure is required of "all contributors" of $1,000 or more to groups running electioneering communications. The FEC interpretation changed that, requiring disclosure only of contributors who gave money "for the purpose of furthering electioneering communications." Of the commission’s six members, all three Democrats and one Republican voted for the change -- the result of a compromise that kept another Republican commissioner from achieving an even more extensive gutting of disclosure rules.

Lack of Disclosure

In its formal "Explanation and Justification" for the rule, the FEC said donor disclosure would be required only if the donation was "specifically designated for electioneering communications." In other words, if a donor refrains from designating a specific purpose for a contribution, no disclosure is required.

It gets worse. In 2010, after the Supreme Court’s 8-1 affirmation of disclosure requirements in Citizens United, the FEC pushed further. It ignored the recommendation of its general counsel and dismissed a complaint -- without an investigation -- against a group called Freedom Watch, which had spent more than $125,000 on a political ad without disclosing donors.

Funding Attack Ads

In dismissing the complaint, the three Republican FEC commissioners, Matthew Petersen, Caroline Hunter and Donald McGahn II, stated that disclosure would be required "only if such donations are made for the purpose of furthering the electioneering communication that is the subject of the report." Translation: Even if the money is given explicitly for the purpose of funding attack ads, no disclosure is required if the donor did not designate the contribution for a specific ad. As this almost never happens, the rule essentially eliminates the last vestiges of disclosure requirements.

Thus, the FEC made a monkey of the Supreme Court. The public disclosure Justice Kennedy had explicitly guaranteed has been thwarted by a handful of individuals who have interpreted the law contrary to its clear words and intent. A lawsuit has been filed by several reform groups (including my organization, the Campaign Legal Center) challenging the FEC’s interpretation, but it may not be resolved before the 2012 election. The three current Democratic commissioners are seeking to undo the damage from the 2007 rule, but they have been blocked by their Republican colleagues (it takes four votes on the six-member commission to take action). So the FEC’s subversion reigns as the supreme law of the land.

According to the Constitution, Congress makes the law, the Supreme Court interprets it, and executive branch agencies execute it. In Washington, it doesn’t always work that way.

Trevor Potter is a former commissioner and chairman of the Federal Election Commission and was general counsel of the 2008 and 2000 presidential campaigns of John McCain. He is currently president and general counsel of the Campaign Legal Center in Washington. The opinions expressed are his own.

This opinion piece appeared as part of the launch of Bloomberg View on May 24, 2011.