This week, the Campaign Legal Center joined the efforts underway in two cases fighting to protect the right to vote.  Legal Center attorneys are now participating in a challenge to Florida’s voter purge efforts and in an effort to keep a voter ID law in South Carolina, which the Justice Department found did not meet Voting Rights Act requirements, from going into effect.

“The right to vote is a fundamental right.  Both of these cases are about protecting the right of every American to cast a ballot and choose the individuals who will represent them in government,” said J. Gerald Hebert, Legal Center Executive Director.  “In both cases we are seeing state government actions that would disenfranchise minority voters at vastly disproportionate rates.” 

Executive Director J. Gerald Hebert will serve as co-counsel to several groups challenging Florida’s attempts to purge voters off its rolls.  Florida announced that it had prepared a purge list of 182,000 people allegedly ineligible to vote.  The State urged local supervisors of elections to remove voters whose names appeared on the list, despite federal law prohibiting systematic voter registration purges within 90 days of an election.  When it was discovered that the list was hopelessly flawed, Florida backpedaled and admitted that the list is riddled with errors and should not be used.  The Legal Center and its clients have filed a federal lawsuit in the Southern District of Florida, styled Arcia v. Detzner, to restore the rights of eligible voters wrongfully purged by Florida’s flawed list and to prevent a second purge attempt by the State in advance of the fall Election.

The Legal Center’s attorneys will also participate in South Carolina v. United States.  South Carolina is seeking approval of its voter ID law, which the Department of Justice has concluded fails to meet the requirements of the Voting Rights Act.  The Legal Center will serve as co-counsel with the ACLU for a group of Intervenors whose voting rights will be denied if the voter ID law is allowed to take effect.  The South Carolina case goes to trial before a three judge court in Washington, DC, on August 27.

Today, the Campaign Legal Center joined Democracy 21 in responding to an Internal Revenue Service (IRS) letter stating that the agency will consider changes to regulations governing 501(c)(4) tax status eligibility. The organizations previously filed a rulemaking petition on the matter with the IRS, calling on the agency to adopt new regulations making clear that 501(c)(4) organizations may engage in no more than an insubstantial amount of candidate election activity—far less than the amount currently conducted by many high-profile organizations claiming 501(c)(4) tax-exempt status.

Last week, Lois Lerner, IRS Director of the Exempt Organizations Division, replied in a letter that the IRS “will consider proposed changes” in eligibility regulations for section 501(c)(4) tax-exempt groups.  The tax status has been widely misused by organizations that have spent tens of millions of dollars on political advertising in battleground states largely attacking candidates for federal office.

“We are encouraged that the IRS has recognized the threat posed by these shadow party committees that are using a privileged tax status to keep secret the names of donors who are pumping tens of millions of dollars into our federal elections in an attempt to pick the winners and losers on Election Day,” said J. Gerald Hebert, Executive Director of the Campaign Legal Center.  “We hope that the IRS will proceed quickly and effectively in curbing this wholesale abuse of the tax code for partisan political ends.  Left unchecked, this problem will only grow worse and is an urgent matter that must be dealt with by the IRS now.  We are counting on the IRS to stop this charade being put on by political operatives from both parties which poses a very serious threat to our democracy.”

In the letter today, the Campaign Legal Center and Democracy 21 again strongly urged the IRS to promptly institute a rulemaking proceeding to address the widespread abuse of the 501(c)(4) tax status and to take measures “in the interim to stop the blatant abuses of the tax laws that are resulting in massive amounts of secret money being laundered into our national elections by groups claiming to be ‘social welfare’ organizations.”

Since initially filing a rulemaking petition in July 2011, the Campaign Legal Center and Democracy 21 have on multiple occasions written to the IRS to challenge the eligibility for 501(c)(4) tax status of a number of Republican and Democratic affiliated groups, including Crossroads GPS, Priorities USA, American Action Network and Americans Elect.

To read the letter sent today by the Campaign Legal Center and Democracy 21, click here.

To read the IRS letter responding to both organizations, click here.

Today, Representative Chris Van Hollen (D-MD) filed a brief in the U.S. Court of Appeals for the District of Columbia urging the court to uphold a lower court ruling in Van Hollen v. FEC that requires comprehensive disclosure of donors to groups making “electioneering communications.” 

Rep. Van Hollen successfully challenged a Federal Election Commission (FEC) regulation that improperly narrowed the scope of McCain-Feingold law donor disclosure requirements allowing nonprofit 501(c)(4) advocacy groups, 501(c)(6) business associations, and others to spend tens of millions of dollars on “electioneering communication” without disclosing the donors to the groups paying for the ads.

“The law passed by Congress clearly requires disclosure of the funders for groups making ‘electioneering communications,’ yet the FEC ignored both the letter and intent of the law and in effect made the disclosure provision optional,” stated Paul S. Ryan, Campaign Legal Center Senior Counsel.  “The lower court rightly condemned this gutting of the law as it is not the job of a regulatory agency to rewrite the laws passed by Congress but instead to promulgate rules that implement the statutes as they were written.  Congress passed a law requiring groups making electioneering communications to disclose the names of ‘all contributors who contributed’ $1,000 or more to the group paying for the ads.  Yet in 2010 election cycle, thanks to the FEC’s now-invalid rule, the sources of less the 10% of the tens of millions of dollars spent were ever disclosed.  Americans have a right to know who is trying to buy election results and political influence.”

On March 30, 2012, the U.S. District Court for the District of Columbia ruled for Rep. Van Hollen and stuck down the FEC regulation that allowed spenders to hide their donors, holding that it was arbitrary, capricious and contrary to the federal campaign finance statute it purports to implement.  The FEC did not to appeal the decision, but an appeal was filed by two corporate funded non-profit groups that have intervened in the case.

“Electioneering communications” are broadcast advertisements that name a candidate and air within 30 days of a primary election or 60 days of a general election.  Groups making electioneering communications in excess of $10,000 are now required to disclose all their donors of $1,000 or more, or establish and use a segregated bank account for electioneering communications and disclose the donors of $1,000 or more to that account.

Lawyers for the Campaign Legal Center, Democracy 21 and Public Citizen are part of Rep. Van Hollen’s pro bono legal team, led by Roger Witten of the law firm WilmerHale.

To read the brief, click here.

For the second day in a row the DISCLOSE Act of 2012 (S. 3369), which would require disclosure of political spending, failed to collect the 60 votes needed to invoke cloture and move to consideration.

Meredith McGehee, Campaign Legal Center Policy Director issued the following statement:

The vote was disappointing, but not unexpected.  No matter how many times Senate Minority Leader Mitch McConnell (R-KY) and his colleagues are willing to say it on the Senate floor, the First Amendment does not guarantee the right of anyone to anonymously spend millions of dollars picking winners and losers in federal elections.  At least Senator Murkowski (R-AK) had the courage to admit the emperor has no clothes.  Hopefully she will live up to her commitment to work toward a bipartisan effort to enact meaningful disclosure legislation, and hopefully other Republican Senators will follow her lead.

How did transparency about spending in our elections become a partisan issue?   There has been consensus for so many years that, while the ballot box secrecy is sacred, spending money to influence the outcome of elections would be disclosed.  It’s a sad day when this issue has become a victim of partisanship.  It’s especially disappointing that retiring Sen. Olympia Snowe, (R-ME), chose to put partisan loyalty ahead of her longstanding commitment to campaign finance reform.  Yet it seems to be symptomatic of the gridlock in Washington.

Sen. Sheldon Whitehouse, (D-RI), deserves great credit for taking the lead on this important issue, along with Senators Jeff Merkley (D-OR), Chuck Schumer (D-NY), Jon Tester (D-MT), Tom Udall (D-NM), Michael Bennet (D-CO), Chris Coons (D-DE), Al Franken (D-MN) and all the rest who spoke in favor of the DISCLOSE Act of 2012.  This issue is not going away and neither is the effort to ensure transparency. 

Secrecy in campaign finance is a precursor to scandal.  After the 2012 elections, there will be a renewed effort to foster the bipartisan support that transparency deserves.

Today the Campaign Legal Center joined with the Center for Responsive Politics and six other transparency advocates and good government groups launched a petition requesting that GOP presidential nominee Mitt Romney disclose the names of "bundlers" for his campaign.

Presidential candidates rely on these men and women, an elite group of fundraisers, to help raise the big dollars they need to run for the White House. While there are limits on how much individuals can give to a campaign, bundlers tap their own personal and professional networks to raise tens of thousands -- if not millions -- of dollars.

So far, Romney has disclosed the bare minimum, only what's required by law: the names of bundlers who are also federally registered lobbyists. That's a grand total of 25 people.

The groups joining with the in the petition drive include the Center for Responsive Politics and the Campaign Legal Center include Common Cause, Democracy21, League of Women Voters of the United States, Public Citizen, Sunlight Foundation and U.S. PIRG.

The groups sent a formal request to Mitt Romney's campaign on March 12 asking that he release information about his bundlers to the public. We've received no response.

That's despite the fact that every major party nominee for the last 12 years has publicly disclosed a list of his bundlers -- including Romney himself in 2008.

And despite the fact that President Obama's campaign has been releasing the names of all of his bundlers, with updates. As of July 15, he had disclosed 532 bundlers, none of whom are federal lobbyists.

Why is it important for the public to know the identities of the top fundraisers for a presidential candidate? After a candidate wins, top bundlers traditionally have been rewarded for their hard work -- often with choice ambassadorial appointments or special invitations to the White House. Access to those in power is much easier for these individuals than it is for the average American.

Voters should know who is likely to have these special relationships with the candidate, and to whom the candidate may feel most grateful.

Now the groups are asking individuals and other groups to add their voices to the call for Romney to disclose the names of his bundlers -- all of them, not just the lobbyists.

The coalition of groups first petitioned Romney when it sent a letter to all Republican presidential candidates March 12 requesting they meet the standard of complete bundler disclosure. The Center for Responsive Politics has launched a widget counting the months, days, hours and minutes since we sent the letter, with this essential information still kept from the public. Groups or individuals interested in embedding that widget on their websites are welcome to do so.

Click here to view the petition

Voting along party lines, the Senate failed to achieve the 60 votes needed to invoke cloture and move to consideration of S. 3369, the DISCLOSE Act. Meredith McGehee, Campaign Legal Center Policy Director issued the following statement:

Tonight Senate Minority Leader Mitch McConnell (R-KY) convinced Senators on his side of the aisle to put party loyalty over principle, demonstrating an astonishing level of hypocrisy.  This is the kind of election-year partisanship that makes more and more Americans fed up with Washington.

After years of calling for quick, comprehensive disclosure, Senate Republicans closed ranks to kill meaningful election disclosure.  For years, many of these same Senators have sung the praises of disclosure, yet now when they find secret money is working to their advantage, they have shown they are willing to turn on a dime and vote against disclosure.   When did it become “un-American” to reveal to voters who or what is trying to buy influence in Washington?

Regardless of the partisan rhetoric, the actual result of tonight’s vote is to continue to keep Americans in the dark about who is bankrolling our elections.  The Senators opposing cloture have in effect chosen to keep secret the identities of those spending tens of millions of dollars in an effort to buy election results and buy influence in Washington.  You can bet, however, the Senators know the sources of the money funding these barrages of attack ads against their opponents.  But in what amounts to a contemptuous gesture, they don’t think their constituents need or deserve to know.

The public overwhelmingly supports disclosure.  Yet, Republican Senators chose to favor large donors over voters.  This may prove a vote some of them will come to regret as public disgust grows with each passing attack ad.

Today, the Campaign Legal Center urged Senators to vote for cloture and then pass the DISCLOSE Act of 2012 (S. 3369) when it is brought to the Senate floor early next week.  The legislation is a response to the unprecedented amounts of anonymously-funded political spending triggered by the Supreme Court’s decision in Citizens United v. FEC.  The bill would reveal the contributors behind that spending and allow voters to make informed decisions at the polls.

An initial cloture vote and debate are expected to be held on Monday.  A second vote may follow later in the week.  In an effort to encourage Republican support for the legislation, Sen. Sheldon Whitehouse (D-RI) on Tuesday introduced a modified version of the bill – S. 3369 – which removes the disclaimer provisions and shifts the effective date of the proposed legislation until after the 2012 election.

The full text of the letter follows below.

July 12, 2012

Dear Senator:

A revised version of the DISCLOSE Act of 2012 (S. 3369), is expected to be considered by the full Senate next week.  The vote could come as early as Monday.  The Campaign Legal Center, a nonpartisan, nonprofit organization, strongly urges you to support S. 3369 and to vote for cloture.  This measure is a fair, unbiased and urgently needed legislative response to the new types of high-dollar, anonymously-funded political spending triggered by the Supreme Court’s decision in Citizens United v. FEC.

Hundreds of millions of dollars will be spent to influence the outcome of the elections over the next four months.  Neither the candidates being attacked with these millions of dollars nor the public will have complete, accurate, meaningful information about the sources of such money.  Only the contributors and the beneficiaries will be in the know.  Passage of S. 3369 will mean that in future election cycles those funding these shadow campaigns will be disclosed to the public so that voters can make informed decisions at the polls.  As we get closer to the 2012 elections, the amount of federal campaign-related spending using funds from undisclosed sources continues to rise.  Especially troubling is the lack of transparency regarding the expenditures of so-called “Section 501(c) groups” this election cycle, such as Priorities USA and Crossroads GPS. 

***

The DISCLOSE Act of 2012 would require any “covered organization”—a corporation, labor union, 501(c) organization (other than a (c)(3)), Super PAC and section 527 organization—that spends $10,000 or more on a “campaign-related disbursement” to file a disclosure report with the Federal Election Commission (FEC) within 24 hours of the spending, and to file a new report each time an additional $10,000 or more is spent.  The FEC must post the report on its website within 24 hours of receipt.

Under S. 3369, a covered organization may set up a segregated bank account to make its campaign-related disbursements and is then required only to disclose the donors of more than $10,000 to that segregated account.  If, however, the campaign-related disbursement is paid for out of its general treasury fund, the organization must disclose the source of all donations totaling more than $10,000.  But if a donor requests that his donation not be used for campaign-related disbursements, and the covered organization segregates his donation from the funds they use for campaign-related spending, then the donor need not be reported.  Transfers between covered organizations for the purpose of funding campaign-related spending are also subject to disclosure, with the exception of certain internal transfers between affiliated organizations.  In an effort to encourage Republican support for the legislation, Sen. Sheldon Whitehouse (D-RI) yesterday introduced a new version of the legislation—S. 3369—removing the disclaimer provisions and shifting the effective date of the proposed legislation until after the 2012 election.

***

While the Supreme Court in Citizens United struck down restrictions on election-related independent spending by corporations and unions, the Court overwhelmingly upheld the associated disclosure requirements.  Indeed, the high Court twice upheld challenged disclosure requirements by 8-1 votes in 2010 alone, in Citizens United and Doe v. Reed.  In Citizens United, the Court highlighted how the vital speech interests advanced by disclosure also serve the democratic process: 

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

The ability to “make informed decisions” is a cornerstone of democratic self-government.  As Justice Scalia opined in Doe, “Requiring people to stand up in public for their political acts fosters civic courage, without which democracy is doomed.”   

Since Buckley v. Valeo (1976), the Justices have firmly endorsed meaningful disclosure, subjecting disclosure laws to a more lenient standard of review than other forms of campaign finance regulation.  Under Buckley, disclosure laws are upheld unless the “threat to the exercise of First Amendment rights is so serious and the state interest furthered by disclosure so insubstantial that [the challenged disclosure requirements] cannot be constitutionally applied.”  Indeed, the Court has not only repeatedly rejected First Amendment challenges to political disclosure laws, but has affirmatively found that such laws promote First Amendment values.  As the Court held in McConnell v. FEC (by an 8-1 vote):

Plaintiffs never satisfactorily answer the question of how ‘uninhibited, robust, and wide-open’ speech can occur when organizations hide themselves from the scrutiny of the voting public.  Plaintiffs’ argument for striking down [the challenged] disclosure provisions does not reinforce the precious First Amendment values that Plaintiffs argue are trampled by [those provisions], but ignores the competing First Amendment interests of individual citizens seeking to make informed choices in the political marketplace.

Because disclosure serves critically important First Amendment interests for society as a whole, exemptions from disclosure requirements are rarely justified.  In rare circumstances, however, disclosure will present such a severe burden on a group’s ability to speak and associate that a group-specific, “as applied” exemption is warranted.  To obtain this exemption, a group must present evidence showing “a reasonable probability that the compelled disclosure of [its] contributors’ names will subject them to threats, harassment, or reprisals.”  In formulating this exemption, the Supreme Court drew upon its decision in NAACP v. Alabama (1958).  There, the Court held that the compelled disclosure of the names of the NAACP’s members in Alabama was unconstitutional in light of “uncontroverted” evidence presented by the NAACP that disclosure would likely expose them to violent attacks and other threats to their physical safety.  Thus, subjective fears of harassment, without more, would not meet the high bar set byNAACP and have never been sufficient to qualify a group for this exemption from disclosure.

Neither can public criticism, protests and boycotts—all of which represent protected First Amendment activity—serve as grounds for exemption.  As the Court plainly stated in NAACP v. Claiborne Hardware Co. (1982), “Speech does not lose its protected character . . . simply because it may embarrass others or coerce them into action.” 

Public protests, in fact, are powerful democratic tools routinely utilized by groups across the political spectrum.  Recently in Minnesota, for example, a conservative group called Minnesota for Marriage organized a “Dump General Mills” boycott and rally after leaders of General Mills announced the company’s opposition to an amendment to ban same-sex marriage.  Meanwhile, the liberal MN Forward and MoveOn.org organized a boycott of Target in late 2010 after the company donated money to a group supporting Minnesota gubernatorial candidate Tom Emmer, who opposed same-sex marriage.

Boycotts and protests have long been mechanisms used, both historically and lawfully, to voice dissent.  They number among some of the most iconic episodes in our history, from the colonies’ boycott of British-made goods to the Civil Rights Era Montgomery bus boycott.  Renouncing this heritage of public action to shield large campaign donors from scrutiny would transform our nation into one that, as Justice Scalia wrote in Doe, “does not resemble the Home of the Brave.”

***

The Supreme Court’s support for transparency notwithstanding, current federal campaign finance and tax laws have not been updated to accommodate the impact of the Citizens United decision and its progeny. 

Since Citizens United, almost half of all the independent spending in federal elections has been conducted by groups organized under Section 501(c) of the Internal Revenue Code, principally, Section 501(c)(4) social welfare groups and Section 501(c)(6) trade associations.  Federal tax law allows these groups to spend unlimited amounts on campaign advertisements, provided that campaign intervention is not their primary activity, but does not require the groups to publicly disclose their donors.

The remainder of the independent spending in federal elections is attributable to political committees, often so-called “Super PACs,” which are subject to significant reporting requirements under federal campaign finance law.  But even these reporting requirements do not require complete transparency.  Current law requires only that political committees disclose their immediate sources of funding—not that those funders in turn disclose their own donors.  Because political committee reporting requirements thus penetrate only “one level” of contributions, the real interests funding Super PACs often remain opaque.  A PAC receiving contributions from a shell corporation or 501(c) organization only has to disclose the often uninformative name of that corporation or organization, and generally those entities do not themselves publicly disclose the sources of their funds.  For example, if a Super PAC discloses that it received a $5,000 contribution from “Anonymous Corp.,” it has fulfilled its current statutory requirements.  However, that disclosure reveals nothing about the funders or political interests of Anonymous Corp. 

S. 3369 closes both of these loopholes.  Section 501(c) groups that make over $10,000 in campaign-related disbursements in federal elections will be required to publicly disclose all of their donors of over $10,000 (or, if they use a segregated fund, all donors of over $10,000 to this fund).  And a covered group that gives money to another covered group for the purpose of funding campaign-related disbursements—such as Anonymous Corp.’s contribution to the hypothetical Super PAC above—will be required to report such a transfer and publicly disclose its donors.

***

Corporations and unions routinely participated in federal elections before theCitizens United ruling.  They could control and pay the administration costs of political action committees that could spend unlimited money on campaign advertising, but the funds had to be voluntarily contributed by their restricted class and meaningfully disclosed to the American public.  Today, however, corporations and unions are finding new avenues to spend large amounts of money to influence the outcome of federal elections with no obligation to comply with even basic federal disclosure requirements.

The Supreme Court has been unusually clear:  it is constitutional to require the sources of political campaign spending to be disclosed.  This applies not only to Super PACs, but also to unions, 501(c)(4)s and (c)(6)s, and other groups running campaign ads.

The Campaign Legal Center urges you to support S. 3369, a measure that will bring our outdated campaign finance disclosure laws into the 21st Century.  At the very least, the Legal Center urges you to vote for cloture so that this critically important bill can move forward.  Substantive issues can then be addressed through the amendment process.  A vote against cloture is a vote to allow huge amounts of secret money to pour into federal elections. 

The Legal Center would be pleased to answer any questions you may have and to provide any assistance you may need as you consider this legislation.

Sincerely,

J. Gerald Hebert                                                          Meredith McGehee 

President                                                                      Policy Director

Today, the Campaign Legal Center, together with Democracy 21, filed an amici brief in the U.S. District Court for the District of Columbia to defend the aggregate contribution limits against a challenge brought by the Republican National Committee (RNC) and Shaun McCutcheon.  Despite clear Supreme Court precedent upholding aggregate contribution limits, plaintiffs in McCutcheon v. FEC challenge both the $70,800 aggregate limit on contributions to non-candidate committees and the $46,200 aggregate limit on contributions to candidate committees in a two-year election cycle.

“In the Supreme Court decision in Buckley v. Valeo, the Court explicitly held that an aggregate limit is constitutional, yet this suit asks the court to ignore settled precedent and allow individuals to give seven-figure sums to buy influence in Washington every election cycle,” said Tara Malloy, Campaign Legal Center Senior Counsel.  “To argue that allowing millions of dollars of contributions to candidate and party committees – money that could be funneled back in to the campaigns of particular candidates – would not lead to corruption or the appearance of corruption is laughable.  This suit is yet another baseless challenge in the wave of litigation targeting campaign finance and disclosure laws around the country.”

“The RNC with this lawsuit is attempting to eviscerate the existing federal contribution limits and prohibition on federal officeholders soliciting huge contributions,” said Democracy 21 President Fred Wertheimer. “These provisions were enacted by Congress and upheld as constitutional by the Supreme Court in order to prevent the corruption of federal officeholders and government decisions. Million-dollar contributions solicited by federal officeholders and laundered through political parties to support the officeholders who solicited the money, which the RNC lawsuit would allow, would re-create the system of legalized bribery that Congress has ended with laws upheld by the Supreme Court.”

The Campaign Legal Center, along with Democracy 21, previously filed comments opposing an Advisory Opinion Request (AOR 2012-14) filed by plaintiff McCutcheon with the Federal Election Commission (FEC), in which he asked the agency to permit him to make contributions exceeding the aggregate contribution limits.  McCutcheon filed his current lawsuit after the FEC issued an advisory opinion consistent with the comments filed by the Campaign Legal Center and Democracy 21, which argued that federal campaign finance law prohibited him from making contributions to federal candidates in excess of the aggregate limits in the 2011-2012 election cycle.

To read the brief filed today with the three-judge panel, click here.  

To read the full FEC Advisory Opinion, click here.

Today, the trial concerning a controversial Texas Voter ID law opened before a three judge panel in the federal court in Washington, DC.  Campaign Legal Center Executive Director J. Gerald Hebert is part of the legal team defending against the State of Texas' effort to gain approval of a new photo ID bill in Texas v. Attorney General Eric Holder.  Hebert represents a group of Texas voters who have intervened in the suit on the side of U.S. Department of Justice claiming they will be harmed by the new voter ID bill.

The State of Texas brought the suit after the U.S. Department of Justice determined the new law would harm minority voters and that the state did not prove the absence of racial purpose and did not grant it preclearance under Section 5 of the Voting Rights Act.  Under Section 5, Texas and a number of other jurisdictions with histories of voter discrimination are required to seek the approval of the Justice Department or a federal court in Washington DC in order to make changes to their voting procedures.

The State’s suit also challenges the constitutionality of Section 5 of the Voting Rights Act.  Several jurisdictions have challenged Section 5 in recent years.  Earlier this year the U.S. Court of Appeals for the District of Columbia Circuit upheld Section 5 in a challenge filed by Shelby County, Alabama.

The trial is expected to last five days.