Today, the U.S. district court for the Eastern District of Virginia upheld FEC rules that serve to establish federal political committee status and the scope of federal disclosure requirements in Real Truth About Obama (RTAO) v. FEC.  The plaintiff RTAO challenged the much-contested “subpart (b)” definition of “expressly advocating” (11 C.F.R. § 100.22(b)), as well as the FEC’s methodology for determining when a group has campaign activity as its “major purpose,” an important step in the larger determination of political committee status.

“This is a well-reasoned decision that will aid in the enforcement of federal campaign finance law,” Legal Center Associate Counsel Tara Malloy stated.  “The ruling means that the federal independent expenditure disclosure requirements are not limited to ‘magic words’ express advocacy, and that the FEC is permitted to do a multi-factored analysis of a group’s activities in determining its ‘major purpose.’”

The RTAO case originally challenged several additional FEC rules, including the rule implementing the Supreme Court’s 2007 decision in Wisconsin Right to Life v. FEC (11 C.F.R. § 114.15).  These claims were mooted by the Supreme Court’sCitizens United ruling and other intervening decisions.  In April 2010, the Supreme Court vacated the decision of the Fourth Circuit Court of Appeals that had upheld these rules, and remanded the case for further consideration in light ofCitizens United and “the Solicitor General’s suggestion of mootness.”  Today’s decision followed this remand.

On October 18, 2010, the Legal Center, along with Democracy 21, filed an amici brief with the district court supporting the challenged regulation and policy.  Prior to the remand, the Legal Center filed two amici briefs in the case dating back to 2008.

The U.S. Court of Appeals for the Ninth Circuit issued its opinion today in Thalheimer v. City of San Diego, affirming the district court’s decision not to preliminary enjoin several challenged campaign finance restrictions of the City of San Diego.  The Campaign Legal Center, together with Common Cause, filed an amici curiae brief with the Ninth Circuit supporting the City of San Diego.

The Ninth Circuit explained: “The district court considered the constitutionality of five provisions [of San Diego’s campaign finance laws] and generally upheld the City’s pure contribution limits, but enjoined a provision that restricts both the fundraising and spending of independent political committees.”  The Ninth Circuit affirmed the district court’s decision.  The decision to enjoin the contribution limits as applied to independent expenditure committees is consistent with the D.C. Circuit’s decision in Speechnow.org v. FEC and FEC rulings in this area.

Among the campaign finance laws upheld by the Ninth Circuit is San Diego’s prohibition on political contributions by “non-individual entities” (e.g., corporations, labor unions and other groups) to candidates, political parties and other PACs that contribute to candidates.

The Ninth Circuit rejected plaintiffs’ argument that the Supreme Court’s decision last year in Citizens United requires invalidation of the corporate/union contribution ban.  Instead, the Ninth Circuit correctly applied the Supreme Court’s 2003 decision in FEC v. Beaumont upholding the century-old federal law ban on corporate contributions and wrote: “[T]here is nothing in the explicit holdings or broad reasoning of Citizens United that invalidates the anti-circumvention interest in the context of limitations on direct candidate contributions.”

“The Ninth Circuit’s correct understanding and application of Supreme Court precedent is a refreshing contrast to the judicial activism displayed earlier this week by Judge Cacheris of the U.S. District Court of the Eastern District of Virginia in the Danielczyk case,” stated J. Gerald Hebert, Executive Director of the Campaign Legal Center.  “Whereas the Ninth Circuit correctly did its job, Judge Cacheris grossly overstepped his authority when he ignored Supreme Court precedent and struck down the century-old federal restriction on corporate contributions to candidates and political parties.”

In addition to upholding San Diego’s prohibition on contributions by non-individual entities, the Ninth Circuit also upheld the city’s law prohibiting contributions to candidates outside of a 12-month pre-election window.  The Ninth Circuit affirmed the district court’s decision to preliminary enjoin a $500 limit on contributions to political committees that make only independent expenditures, including contributions by both individuals and non-individual entities.  The Ninth Circuit also affirmed the lower court’s injunction of the prohibition on “non-individual entity” contributions as applied to political party contributions to candidates.

To read the Legal Center’s brief, click here.

Compounding his earlier mistake, Judge Cacheris of the U.S. District Court of the Eastern District of Virginia today reaffirmed his May 26 decision to strike down the century-old federal restriction on corporate contributions to candidates and political parties.  The Judge clarified, however, that his order was limited only to the case before the court, U.S. v. Danielczyk, a criminal matter concerning allegations that the defendants illegally directed corporate contributions to Hillary Clinton’s 2008 Presidential campaign.

Judge Cacheris’ order in effect overrules a standing Supreme Court precedent, FEC v. Beaumont, which approved the federal corporate contribution restriction in 2003.  His earlier decision failed even to cite the Beaumont precedent.  In today’s opinion, the Judge found that Beaumont was not directly applicable to the criminal case before the court, because Beaumont considered the corporate contribution ban as applied to a non-profit advocacy corporation, whereas Danielczyk involves the contributions of a for-profit corporation. 

“Impossibly, the district court has issued an opinion that is even less justified than its first ruling,” said Legal Center Associate Counsel Tara Malloy.  “Previously, by all appearances, the court overruled the Beaumont decision in error; today, it has overruled this Supreme Court decision after deliberation.”

The Supreme Court in Beaumont reasoned that because non-profit advocacy corporations shared some of the “corrupting potential” of their for-profit counterparts, they too could be constitutionally subject to the federal restriction on corporate contributions.   The Beaumont Court’s decision to extend the corporate contribution restriction to non-profits therefore necessarily relied upon the conclusion that the contribution restriction was constitutional with respect to for-profit corporations. 

“Judge Cacheris’ decision does not even pass the laugh test,” said Malloy.  “His reasoning would exempt for-profit corporations from the federal corporate contribution restriction, while suggesting that non-profit advocacy corporations are still bound by the restriction under Beaumont.  We hope that the government appeals as quickly as possible to clean up the legal mess created by this misguided decision.”

Today, the Campaign Legal Center and Democracy 21 submitted comments to the Federal Election Commission (FEC) clearly outlining that it is illegal for federal officeholders and candidates to solicit unlimited contributions for Super PACs.  The comments address Advisory Opinion Request (AOR) 2011-12 submitted on behalf of Majority PAC and House Majority PAC asking the Commission’s opinion as to whether federal officeholders and candidates could raise unlimited contributions for Super PACs making independent expenditures to influence federal elections.

The AO request from the two Super PACs that support Democratic candidates followed an announcement by the Republican Super PAC that it planned to have Republican federal officeholders and candidates raise unlimited contributions for the Super PAC and would spend the funds to support the specific Republican candidates who raised the funds.

The Campaign Legal Center and Democracy 21 urged the Commission “to make clear that covered officials may not solicit unlimited individual contributions, nor any corporate and union contributions, on behalf of the PACs without violating 2 U.S.C. § 441i.” “Covered officials” includes federal officeholders, candidates and national political party officials.

To read the full comments, click here.

According to the Campaign Legal Center and Democracy 21 submission to the FEC:

Section 441i(a) provides that a national party committee, and any officer or agent acting on behalf of such a national party committee, may not solicit any funds “that are not subject to the limitations, prohibitions, and reporting requirements” of the Federal Election Campaign Act (FECA).  Similarly, section 441i(e)(1)(A) provides that a “a candidate or an individual holding Federal office . . . shall not . . . solicit . . . funds in connection with an election for Federal office . . . unless the funds are subject to the limitations, prohibitions, and reporting requirements” of FECA.

These solicitation restrictions, enacted as part of the Bipartisan Campaign Reform Act of 2002 (BCRA), were challenged and upheld in McConnell v. FEC, 540 U.S. 93, 142-54, 181-84 (2003), including with the vote of Justice Kennedy who otherwise dissented in the case.  See 540 U.S. at 308 (Kennedy, J. dissenting in part and concurring in part).  No court has since invalidated or even called into question these solicitation restrictions.[1]

The submission to FEC continued:

After being upheld in McConnell, the solicitation restrictions were not challenged nor discussed in either the Citizens United or SpeechNow cases, and there is not a whisper by the Supreme Court or the D.C. Circuit in either opinion that questions or undermines the applicability or constitutionality of these provisions.
 
This Commission has no authority to speculate on the constitutionality of a duly enacted statute that has been squarely upheld by the Supreme Court.  Under the plain language of the statute, covered officials are prohibited from soliciting funds in connection with a federal election unless the funds are subject to the limitations, prohibitions, and reporting requirements of FECA.  It is the Commission’s job to give effect to this language, and to enforce it.  Since the funds at issue here are not subject to the limitations and prohibitions of the Act, they fall within the scope of the solicitation restriction.  

The submission from the Campaign Legal Center and Democracy 21 refutes specious arguments made in comments submitted by Republican Super PAC, stating:

An argument has been made by another commenter, the Republican Super PAC (RSPAC), that the solicitation provision applies only to “soft money,” while the funds at issue here are “hard money” since those funds can lawfully be raised by a federally registered political committee.  Whatever label one gives to the funds raised by a Super PAC does not, however, determine the application of the solicitation restriction.  That restriction instead applies to funds that are not “subject to the limitations [and] prohibitions” of the Act – and the funds raised by a Super PAC are not.  Although this language does describe what had been referred to as “soft money” when raised by the political parties prior to BCRA, it also describes the funds that Super PACs intend to raise now.  The fact that Super PACs may lawfully accept such funds does not mean that federal officeholders and candidates can lawfully solicit them.

According to the FEC submission:    

[T]he funds at issue here – contributions from individuals of unlimited size, and corporate and union contributions – pose exactly the same threat of corruption and the appearance of corruption when solicited by federal candidates and officeholders for Super PACs that solicitations for party “soft money” by federal candidates and officeholders posed prior to BCRA.  As Congress recognized in prohibiting such solicitations, and as the Supreme Court recognized in upholding the solicitation restriction, “the value of the donation to the candidate or officeholder is evident from the fact of the solicitation itself.”  McConnell, 540 U.S. at 182.
 
To be sure, the threat is even more pointed here than it was with pre-BCRA “soft money” since the funds raised by a Super PAC can be spent directly on express advocacy in federal elections, whereas pre-BCRA party “soft money” could not be.  And not only is the money at issue here likely to be spent by Super PACs to influence federal elections generally, it is likely to be spent for the benefit of the very candidate who would be soliciting the funds.  

Indeed, according to public statements by its founders, RSPAC plans to formally commit itself to spending money solicited by a federal candidate, earmarked for that candidate by the donor, for the benefit of that candidate.  Whether this is termed “hard” money or “soft” money, it surely is corrupting money, when federal candidates are licensed to solicit million dollar contributions with the knowledge that the Super PAC receiving those funds has committed itself to spend the money for express advocacy ads or other campaign purposes to directly benefit that candidate’s race.  This will, in an even more direct fashion than before, recreate the myriad problems that existed prior to BCRA when federal candidates and officeholders were free to solicit million dollar contributions to their political parties.  The record of the McConnell case, which we discuss at length below, is replete with evidence of the corruption that resulted from a system of such solicitations.  Even Justice Kennedy concluded that “[t]he making of a solicited gift is a quid both to the recipient of the money and to the one who solicits the payment (by granting his request).”  McConnell, 540 U.S. at 308 (Kennedy, J.) (emphasis added).  

Here, the plan is for federal candidates to solicit million dollar contributions to a Super PAC instead of to a party committee, but the “quid” that Justice Kennedy identified is just as toxic when the recipient is a Super PAC instead of a party committee, and it poses just as serious a threat of a return “quo” to the million-dollar donor from the grateful candidate who solicited the funds (and who will benefit from the spending of them).  

The submission explains why the SpeechNow decision, cited by proponents of the AO request as support for their position, in fact provides no basis at all for allowing federal officeholders and candidates to solicit unlimited contributions:

The heart of the argument made by requestors and those who support the request is that the D.C. Circuit opinion in SpeechNow authorized federal PACs that make only independent expenditures to accept unlimited contributions from individuals (and by extension, any contribution from prohibited corporate and union sources).  Thus, requestors reason, if these federal PACs can lawfully receive such contributions, federal candidates and officeholders must therefore be able to solicit them.

The flaw in the argument is that the core premise of the SpeechNow court was that these “independent expenditure only” PACs were, in fact, going to operate independently of candidates and officeholders.  This was not a premise the court casually assumed – it was shot through the representations that SpeechNow repeatedly made to the court, as it stressed over and over again not just that its expenditures would be independent, but that its operations as a whole would be independent of candidates and officeholders.  Indeed, in service of its argument about how independently it would operate, one of the points SpeechNow stressed to the court was that federal candidates and officeholders would not solicit funds for it because of the solicitation restriction:  “In any event, with the solicitation ban in place, candidates cannot solicit funds for SpeechNow.org . . . .”[2]

Thus, the requestors here ask the Commission to make a fundamental re-interpretation of the SpeechNow decision by assuming that a key representation made repeatedly to the court by the plaintiff was not the least bit relevant to the court’s decision.  In other words, the gravamen of the requestor’s position is that if SpeechNow had told the court that candidates would be working hand-in-glove with it to solicit unlimited contributions for it that it would then spend independently of those candidates but for their benefit – a representation that is the exact opposite of what SpeechNow did repeatedly tell the court – the court nonetheless would have decided that SpeechNow could accept those unlimited contributions.  Simply put, nothing supports the wildly unreasonable assumption that this material change in the fundamental premise of the case would have made no difference in its outcome.

The submission states:

The fact that a Super PAC may accept unlimited contributions (because the contribution limit is unconstitutional as applied to a Super PAC) is not dispositive of the entirely separate question of whether a covered official may solicit those funds, where a separate statutory provision prohibits such solicitations and no court has ever held, or even hinted, that the solicitation restrictions are unconstitutional.

Applying section 441i(e) to solicitations by covered officials for Super PACs entails a threshold issue of statutory construction.  Section 441i(e)(1)(A) prohibits covered officials from soliciting funds “unless such funds are subject to the limitations, prohibitions, and reporting requirements of this Act.”  
 
Under SpeechNow, a Super PAC may accept contributions that are not subject to the limitations of the Act.  But this fact simply reinforces the point that Super PACs seek to receive contributions that are not subject to the limitations of the Act.  The fact that a Super PAC may accept such contributions does not mean that a covered official may solicit them.  The plain language of section 441i(e) prohibits solicitations by covered officials of any funds that are not subject to the Act’s limitations.  That plain language clearly describes the funds at issue here.  Therefore the solicitation restrictions in section 441i(e) apply here.

The submission also calls on the FEC “to make clear that covered officials will violate section 441i if they solicit contributions at fundraisers for Super PACs at which unlimited individual, corporate, and union contributions are raised.” According to the submission:

Although the provisions of 11 C.F.R. § 300.64 authorize covered officials to participate in “non-Federal fundraising events” and “publicity for non-Federal fundraising events,” 11 C.F.R. § 300.64(b)-(c), the regulation does not authorize covered officials to participate in fundraising events or publicity for fundraising events for registered federal PACs “at which unlimited individual, corporate, and union contributions are raised.”  AOR 2011-12 at 1.

There is an important substantive difference between non-federal fundraising events covered by section 300.64 and the federal fundraising events of Super PACs.  Unlike the non-federal fundraising events, where the funds raised are not spent to directly benefit federal candidates and officeholders, Super PAC fundraising events are federal fundraising events and the funds raised will benefit federal candidates and officeholders and indeed are likely to benefit the candidates who are participating in the event.  “Construed as reasonably understood” in this context, see 11 C.F.R. § 300.2(m), any request by a covered official that attendees contribute funds to the Super PAC will constitute a solicitation of funds not subject to the limitations and prohibitions of FECA in violation of section 441i.

The so-called “disclaimers” permitted by section 300.64 to limit solicitations at non-federal fundraising events to federally permissible amounts are insufficient protections in the context of Super PAC fundraising events.  Unlike non-federal fundraising events, where the purpose is to raise funds for state and local candidates and parties, the unambiguous purpose of a Super PAC fundraising event will be to raise funds to benefit federal candidates, particularly the federal candidates present at the event.  This reality cannot be “disclaimed” away.

The submission further states:

To be clear, section 441i does not prohibit covered officials from merely attending or speaking at a Super PAC fundraising event.  But it does prohibit covered individuals from soliciting funds at such events.  No “disclaimer” cure is available.[3]

[1]   See also RNC v. FEC, 698 F. Supp. 2d 150, 156-60 (D.D.C. 2010) (rejecting RNC’s as-applied challenge to the restrictions of 2 U.S.C. § 441i(a)), aff’d 130 S. Ct. 3544 (2010).

[2]   SpeechNow, Reply Brief of Appellants 13-14, Case No. 08-5223, Doc. No. 1222740 (Dec. 29, 2009) (D.C. Cir.)

[3]   For the same reasons, federal officials should not be permitted to make any solicitation in a letter or other written communication on behalf of a Super PAC if a solicitation for contributions not subject to federal limits and prohibitions is made as part of the same written communication.

Today a coalition of reform groups hailed Reps. Anna Eshoo (D-Calif.), Michael Capuano (D-Mass.), and 23 other Members, who wrote a letter to President Obama expressing their strong support for the April 13 draft executive order to require full disclosure of campaign spending and contributions by business entities that seek federal government contracts. 

The letter states, “This executive order, if finalized and implemented, would represent a big step forward. Political contributions should not affect the awarding of federal contracts. The best way to guard against this is through disclosure of contributions and any possible conflicts of interest. President Obama is right to address this current gray area and he deserves to know that there is backing for such disclosure on Capitol Hill.”

“Support for the Executive Order from Capitol Hill is important as opponents have completely mischaracterized the order,” said Campaign Legal Center Policy Director Meredith McGehee.  “The claims that the order would politicize the government contracting process are laughable.  The order would actually bring transparency to what is already a highly politicized process.  Only the American people are currently left in the dark in the pay-to-play world that is the status quo in Washington.”

The Campaign Legal Center, Common Cause, Democracy 21, Public Citizen, U.S. PIRG and the Brennan Center strongly support this important anti-secrecy effort and join in urging President Obama to sign the Executive Order promptly.

To read the letter from Members to President Obama, click here.

The allegations unveiled in the indictment against former Senator John Edwards regarding the conduct of his Presidential campaign are deeply disturbing. The alleged payments of “hush money” raise the specter of political influence-peddling in the form of “gifts” to candidates in high-stakes campaigns.

To let these actions pass without bringing them to a court of law would be to set a dangerous precedent, allowing candidates and public officials to put themselves on the auction block and accept, under the guise of gifts, financial favors given with the intention of furthering their political careers. Such actions would seriously undermine public confidence in our public officials and our democracy. Given that the case concerns a campaign for the highest office in the land, it is important for the case to be presented in a court of law with an opportunity for a judge and jury to assess the alleged criminal violations and for the public to gain a clearer understanding of what actually occurred. We will be watching with special interest the prosecution’s case on the illegal contribution counts.

Hopefully this indictment is an indication that the long hibernation is over for the Department of Justice’s (DOJ) Public Integrity Section. The section certainly should be taking another and more in-depth look at the similar issues raised in the case of former Senator John Ensign by the Senate Ethics Committee after DOJ had dropped its own investigation.

Also, the Federal Election Commission (FEC) should make publicly clear whether it has investigated the serious allegations of campaign finance violations brought to light in the Edwards indictment. Unfortunately the agency’s recent track record for enforcing the law is shameful. The fact that these scandals first emerged years ago and that no public action has been taken to date by the FEC does not signal that the agency will start to vigorously enforce the laws on the books.