The proposal announced today by Sen. Charles Schumer (D-NY) and Rep. Chris Van Hollen (D-MD) is a strong counter-thrust to the damage done to our democracy by the U.S. Supreme Court in its activist ruling in Citizens United v. Federal Election Commission . Once this legislation is officially introduced, Congress should move quickly to enact these measures before undisclosed corporate money, likely laundered through trade associations and front groups, floods the 2010 election cycle.

Support for this legislation should be broad and bipartisan.

The Court's narrow 5-4 majority in Citizens United is especially troubling because it ignores precedent as well as the well-documented and corrupt history of influence-buying in Washington.

The legislative remedy proposed by Sen. Schumer and Rep. Van Hollen is commendable and makes important strides to repair the damage done by the Court majority in Citizens United . By banning expenditures by foreign interests, TARP recipients, and federal contractors, and through increased disclosure to the public and to shareholders, the legislation repairs some of the damage done to our democracy by that ruling. Most important, it seeks to strengthen the role of citizens (as opposed to artificial corporate entities) in our political system. The provisions that ensure candidates access to less expensive airtime and tightens the FEC's loose coordination rules complement the corporate provisions.

The public outrage about the recent Supreme Court decision is not confined to one political party - Democrats, Republicans and Independents have expressed concern about the impact of this ruling. Congress must harness that concern to pass this legislative framework unveiled today by Sen. Schumer and Rep. Van Hollen. At a time when the public is angry about the role of banks and other corporate entities are playing in our economy and people are feeling unheard in Washington, Members of Congress would be unwise to ignore the anger of the voters who sent them to our nation's Capitol to do the people's business.

Today the Campaign Legal Center submitted the following letter and memo to Senate Rules Committee Chairman Charles Schumer (D-NY) offering a series of potential legislative fixes to repair some of the damage done by the U.S. Supreme Court in its recent ruling in Citizens United v. Federal Election Commission. The suggested approaches were submitted for the official record at the request of the Rules Committee and outline a list of issues that the Legal Center recommends Congressional leaders should consider when putting together a legislative package in response to the recent court ruling.

The full text of the letter and memo follow below:

February 1, 2010

The Hon. Charles Schumer

Chair, Senate Rules Committee

Russell 305

Washington, DC 20510

Dear Chairman Schumer:

The Campaign Legal Center is pleased that the Senate Rules Committee will hold a hearing on the effect of the U.S. Supreme Court's decision in Citizens United v. FEC. We appreciate the opportunity to share with the Committee our thoughts regarding appropriate legislative responses to the Court's decision, which we regard as an extreme example of radical judicial overreach that arbitrarily overturns decades of precedent, and undercuts the ability of the legislative branch to regulate elections. We respectfully request that this letter and the accompanying attachment be included in the official record of the Rules Committee.

As you know, the 5-4 decision in Citizens United struck down the 60-year-old federal restriction on corporate expenditures in candidate elections. To reach this holding, the majority opinion written by Justice Kennedy effectively overruled three earlier Supreme Court decisions that upheld the constitutionality of restrictions on corporate expenditures: part of McConnell v. FEC (2003), Austin v. Michigan Chamber of Commerce (1990); and WRTL v. FEC (2007). Justice Stevens dissented, joined by Justices Ginsburg, Breyer, and Sotomayor. Eight of the Court's nine justices, however, joined in upholding the electioneering communications disclosure provisions that were enacted as a part of the Bipartisan Campaign Reform Act (BCRA).

The Citizens United case began as a challenge to BCRA's "electioneering communications" corporate funding restriction and disclosure requirements as applied to plaintiff's film entitled Hillary: The Movie and its advertisements promoting the film. On July 18, 2008, the district court granted the FEC's motion for summary judgment, holding that the film was the "functional equivalent of express advocacy" and therefore could be constitutionally subject to corporate funding restrictions. Citizens United appealed to the Supreme Court.

In its opening brief filed with the Court, Citizens United first argued that the Court's 1990 decision in Austin v. Michigan State Chamber of Commerce should be overruled. Instead of deciding the case on statutory grounds or on narrow constitutional grounds, the Court, on June 29, 2009, took the rare step of ordering re-argument on the question of whether the Court should overrule its past decisions affirming the constitutionality of restrictions on corporate electoral expenditures. After hearing oral argument on this broader question on September 9, 2009, the Court rendered its decision.

The Legal Center filed two amici briefs—on June 29 and July 31, 2009—with the Court, and previously had filed an amicus brief with the district court on June 6, 2008.

By empowering corporations to use their enormous wealth and urge the election or defeat of federal candidates, what the Court majority did in Citizens United was to unleash unprecedented amounts of corporate "influence-seeking" money on our elections and create unprecedented opportunities for corporate "influence-buying" corruption. This corporate cash will buy even more power over the legislative process and government decision making. As a result of this decision, for-profit corporations and industries will be able to threaten members of Congress with negative ads if they vote against corporate interests, and to spend tens of millions of dollars on campaign ads to "punish" those who do not "knuckle under" to their lobbying threats.

More than a century's worth of federal and state laws and policies restricting corporate campaign activity in federal elections has been undermined by the Court's irresponsible decision in Citizens United . What makes this glaring case of radical judicial activism even more striking is the fact that the Court chose to decide this case contrary to its own settled principles of stare decisis. As Chief Justice John Roberts testified in his confirmation hearings:

I do think that it is a jolt to the legal system when you overrule a precedent. Precedent plays an important role in promoting stability and evenhandedness. It is not enough—and the court has emphasized this on several occasions —it is not enough that you may think the prior decision was wrongly decided. That really doesn't answer the question, it just poses the question. And you do look at these other factors, like settled expectations, like the legitimacy of the court, like whether a particular precedent is workable or not, whether a precedent has been eroded by subsequent developments. All of those factors go into the determination of whether to revisit a precedent under the principles of stare decisis. [1]

Unfortunately, the Chief Justice and the other four Justices that comprised the majority in Citizens United failed to apply these factors in this case. After all, the Citizens United decision immediately de-stabilized the law, not only because the Court overturned decades of laws restricting corporate spending in our elections, but it also effectively invalidated or cast doubt regarding state election laws in over twenty states where corporate spending is restricted. These circumstances certainly had created an atmosphere of "settled expectations" that corporate spending restrictions would remain in place. That is especially true since the Court upheld those restrictions in the 2003 McConnell decision and refused to strike them down in the 2007 WRTL decision. Moreover, the restrictions on corporate spending had not proven to be unworkable or "eroded by subsequent developments."

Most irresponsibly, the narrow Court majority chose to take this radical step without even the benefit of a record from the lower courts, and in a case where there were several opportunities to decide the issues without overturning Acts of Congress or its own precedents. This case has all the hallmarks of the very judicial activism that conservatives usually criticize. Lacking an even vaguely authoritative set of facts in the case, the Court chose to act not upon relevant facts in a fully developed record, but rather based on its gut instinct in a gesture of disturbing condescension toward Congress and the American people. In this case, five Justices assumed the role of legislators, and actively reached out to decide matters better left to the expertise of Congress. The fact that they used the First Amendment as constitutional cover for their policy decision that corporate America has the same free speech rights as ordinary citizens only deepens the perversion of this ruling.

Given this outcome, it is critical that Congress move expeditiously to mitigate the damage inflicted by this decision. Attached is a list of areas the Legal Center has identified that Congress should consider as it attempts to limit the damage to our democracy caused by this decision. We encourage this Committee to move quickly to put together a package of reforms and to ensure that the dangers presented by Citizens United are dealt with effectively.

The Campaign Legal Center looks forward to the hearings and stands ready to be of assistance as the Committee considers specific legislation.

Sincerely,

J. Gerald Hebert

Executive Director

Attachment:

A LEGISLATIVE RESPONSE TO CITIZENS UNITED

The astonishing and radical outcome of the Citizens United case has opened new and troubling venues for a flood of special-interest money to pour into elections at all levels of government. The decision did not leave much room to repair the damage it will cause. But some actions can and should be taken immediately at the federal level—before the mid-term elections—to mitigate the damage the decision could bring.

Below is a list of issues that Congressional leaders should consider when putting together a legislative response package.

Ø Strengthen Statutory Language on What Constitutes Coordination

The Supreme Court's view in Citizens United that corporate expenditures would not corrupt federal elections hinged on its view that the expenditures would be made "independently" of candidates and political parties. Current Federal Election Commission (FEC) regulations defining what constitutes coordinated vs. independent expenditures are very narrow and too weak. Past FEC efforts to write coordination regulations have been rejected twice by courts as insufficient. There was an effort during consideration of the Bipartisan Campaign Reform Act (BCRA) to strengthen the statutory definition. That effort should be revived immediately. Congress should enact statutory restrictions defining coordination, especially since the FEC has shown itself incapable of writing them.

Ø Enact Ways to Provide Candidates Sufficient Access to the Publicly Owned Airwaves

Before the recent ruling, candidates faced the daunting prospect of raising large amounts of money to purchase time on the publicly-owned airwaves simply to communicate their message to voters. With corporations—and unions—now allowed to use treasury funds to run advertisements seeking to influence election outcomes, the problem has become worse. Candidates will need resources to help ensure that voters can hear their message and judge for themselves the relative value of a candidate. Over time, the statute that requires broadcasters to provide candidates the opportunity to purchase time at the lowest unit rate (also called lowest unit charge) has become severely weakened. Air time sold at the lowest unit rate is generally pre-emptible, thus forcing candidates to buy the more expensive, non-pre-emptible time to ensure they reach the targeted demographic. A new statute should ensure that once again the lowest unit rates for candidates are meaningful. In the longer term, Congress should consider providing candidates with broadcast vouchers to match small-dollar contributions. In addition, the Federal Communications Commission (FCC) should, as part of their on-going proceedings on public interest obligations of digital broadcasters, also look at ways to ensure that candidates have access to the publicly-owned airwaves so their messages are not drowned out by a political cacophony among many special interest players.

Ø Strengthen Shareholder Protections to Ensure Accountability

Corporate shareholders have a right to know how that corporation is spending its treasury funds. To improve accountability, corporations should be required to disclose more information about their expenses that are not deductible as a business expense under IRC 162, i.e. political activities. Also, corporate entities whose major activity is influencing elections should be regulated as "political committees" under federal campaign finance laws. The FEC has in recent years refused to regulate many such groups as political committees. Federal statutes should be strengthened to require regulation by the FEC.

Ø Strengthen Requirements for Disclosure of Corporate Spending for Political Purposes

A major concern raised by Citizens United is that corporations will evade disclosure of their electoral spending by laundering money through third-party organizations, such as a chamber of commerce. The Court, by a vote of 8-1, upheld the electioneering communications disclosure requirement. However, the FEC has already weakened this disclosure requirement by requiring third-party organizations to disclose only those donors that specifically designate their contributions for the organization's electioneering communications. The FEC rules thus create a roadmap for evasion of the law. Legislation should ensure that allsources of funds used by third-party groups for electoral spending are disclosed, especially any spending for advertising in mass media.

Ø Revise Statutes Dealing with Disclosure of "Electioneering Communications"

Current law requires disclosure of any broadcast, cable or satellite advertisement that: (1) references a clearly-identified federal candidate, (2) is targeted to the relevant electorate, and (3) is aired 30 days before a primary election and 60 days before a general election. Once a person or group spends over $10,000 in a year for electioneering communications, they must report to the FEC, including disclosing all their donors who contributed $1,000 or more to fund the ads. Now that corporate independent expenditures are permissible, there is no need for these narrow 30- and 60-day windows. Any electioneering communication should be disclosed whenever it occurs. Also, current law requires that independent expenditures be reported to the FEC in a filing with a statement certifying that the expenditure was not coordinated with any candidate or party. Electioneering communication disclosures should also include this same self-certification.

Ø Strengthen Pay-to-Play Restrictions for Government Contractors

Current law prohibits federal contractors from directly or indirectly making any contribution of money or other things of value to any political party, committee, or candidate. A new statute, based on the same constitutional rationale as the Hatch Act, should prohibit corporate federal contractors from making independent expenditures in support of or opposition to federal candidates. Other pay-to-play restrictions (e.g., hiring of lobbyists and certain types of corporations such as public utility companies) should also receive consideration.

Ø Ensure that Corporate Independent Expenditures Do Not Become a Means to Evade Current Statutory Restrictions on Foreign Nationals' Roles in U.S. Elections

In the aftermath of this decision, Congress should review the law to ensure that foreign controlled funds do not enter U.S. elections as a result of the Citizens United case. The FEC currently has rules governing the role of U.S. subsidiaries of foreign-owned companies that prohibit foreign funds being spent by U.S. corporations in U.S. elections, and forbid the involvement by foreign nationals in the decision-making process about such political spending. Congress should ensure that these rules are being adhered to, and can be enforced. Congress should also look at laws in states such as Hawaii that have dealt with the issues of foreign nationals.

Dangers to be Avoided in a Legislative Response: What NOT to Do

Ø Do not reopen the soft money loophole for parties

With the prospect of corporations making large independent expenditures, there is pressure to reopen the soft money loophole to allow political parties to accept unlimited corporate and union treasury funds which can be spent in a variety of ways to impact the outcomes of targeted races. But the answer to the potential influx of corporate spending is not to encourage more potential corruption. The extensive record in McConnell v. FEC, as well as the U.S. Supreme Court decision upholding BCRA, clearly demonstrated the corrupting influence of soft money contributions. That disturbing record should not be repeated by reopening the loophole.

Ø Do not significantly increase contribution limits to candidates and parties

Another reaction that has surfaced in the wake of Citizens United is to allow candidates and parties to accept significantly larger contributions. The U.S. Supreme Court has upheld contribution limits as established by Congress as a legitimate and constitutional means to fight corruption and the appearance of corruption. Significantly increasing those limits will allow even greater influence-buying and influence-seeking access.

What About Public Financing?

Public financing remains an attractive alternative to financing modern federal campaigns. However, the Citizens United ruling will require supporters of public financing to attract candidates to participate in such a system when they fear facing large independent expenditures by a corporation or union — potentially late-in-the-election cycle when there is little opportunity to offset the disadvantage. Previous public financing models relied on triggers to allow participating candidates to get larger matches or accept larger contributions if they faced such expenditures. But the Roberts Court, in Davis v. FEC, cast doubt on the constitutionality of such triggers.

The public financing measures introduced this Congress by Senator Dick Durbin (D-IL) and Representative John Larson (D-CT), as well as a new proposal put forth by the Campaign Finance Institute, avoid this potential constitutional problem. Yet, these proposals face an uphill battle to pass in the current fiscal and political environment in Congress. In addition, some candidates may have concerns about whether they will have the ability and time to raise sufficient funds to respond effectively to late-cycle corporate or union independent expenditures in the wake of Citizens United.

What About a Constitutional Amendment?

Proposals for a constitutional amendment to override the Court's ruling in Citizens United are likely to be introduced in Congress as well. Among the forms these proposals could take include targeting the issue of treating a corporation as a person/individual, or restricting the ability of corporations to use their treasury funds for electioneering activities. The path to ratification for a constitutional amendment is very long and difficult. Also, there are many people who may disagree with the Court's ruling who are uncomfortable with altering the First Amendment. In the meantime, there are important steps to be taken to mitigate the damage caused by the opinion, and to muster the political support to fight off attempts in Congress to cause further erosion of laws that protect against corruption and the appearance of corruption, as well as access- and influence-buying.

[1] Confirmation Hearing on the Nomination of John G. Roberts, Jr. to be Chief Justice of the United States, S. Hearing. 109-158, Serial No. J-109-37, p. 144 (2005); Available at: http://www.gpoaccess.gov/congress/senate/judiciary/sh109-158/browse.html

Statement of Campaign Legal Center, Common Cause, Democracy 21, League of Women Voters, Public Citizen and U.S. PIRG:

Our organizations have sought to improve and strengthen a discredited congressional ethics process, including the creation of a more independent investigatory office. We note that yesterday's inadvertent release of information regarding the activities of the House Ethics Committee and the Office of Congressional Ethics (OCE) indicates that both groups are seriously pursuing their ethics responsibilities at this stage. In our view, OCE, both by its very existence and by its actions, deserves much credit for this sharp increase in activity at the Ethics Committee as compared to previous years.

We are deeply concerned, however, about yesterday's actions by the Ethics Committee with respect to the investigation of Representative Sam Graves (R-MO).

The Ethics Committee's strong attack on the OCE in its report dismissing the Graves case is completely uncalled for and raises serious concerns that the Ethics Committee is engaged in an effort to undermine, weaken and possibly eliminate the Office. It also raises serious concerns about the Ethics Committee's approach to interpreting House ethics rules.

The Graves matter is the first instance where the newly created Office has been publicly attacked by the Ethics Committee. The result has been a messy public food fight, with the House Ethics Committee inappropriately challenging the activities of the OCE. This outcome is unfortunate and we believe should have been resolved more professionally and amicably. If the Ethics Committee had problems with OCE, they should have been negotiated out in good will discussions as the process moved forward. Unfortunately, that did not happen in this case.

The accusations lodged against the OCE by the Ethics Committee include its failure to abide by the rules on timelines, and the failure to provide Rep. Graves and the Committee with what the Committee describes as relevant and exculpatory information. We believe that these questions about timelines and their extensions in this case were relatively minor and can be easily resolved in future cases. Similarly, there can be greater clarification about what materials should be made available by OCE to the Committee and to the subject of an OCE investigation. These disagreements should be viewed as bumps in the road that can and should be easily fixed.

But the lengthy Ethics Committee Report also contains the very troubling finding by the Committee that "no relevant House rule or other standard of conduct prohibits the creation of an appearance of a conflict of interest when selecting witnesses for a committee hearing." On this basis, the Ethics Committee goes on to conclude that OCE could not find a violation of any current House Rule or other standard of conduct and that it violated "both its authorizing resolution and its own rules when it forwarded this matter" to the Committee.

This approach to the ethics rules ignores the fact that there are various places in the ethics rules themselves where an appearance standard has been used by the Ethics Committee to find ethics violations.

House Members, for example, are subject to the "broad ethical standards" articulated in the Code of Official Conduct. Id. at 12. These standards provide that Members shall conduct themselves "at all times in a manner which shall reflect creditably on the House of Representatives." Rule 23, cl. 1.

This standard is "the most comprehensive provision of the code," according to the House Ethics Manual id. at 13-14, and has been cited and relied on by the Ethics Committee in numerous prior ethics matters.

Thus, the notion that there are no appearance standards that could have applied to this case is just plain wrong. The "most comprehensive provision of the code" could have applied in this case. As a result, it is wrong for the Ethics Committee to claim that OCE violated "both its authorizing resolution and its own rules when it forwarded this matter" to the Committee.

There are other examples, furthermore, where an appearance of conflict or impropriety standard is found in the House ethics process.

For example, the appearance standard is found in the House Ethics Manual which states "Caution should always be exercised to avoid the appearance that solicitations of campaign contributions from constituents are connected in any way with a legislator's official advocacy." House Ethics Manual at 257 (1992 ed.).

The House Manual also states that House Members "should be aware of the appearance of impropriety that could arise from championing the causes of contributors and take care not to show favoritism to them over other constituents." Id. at 251.

Thus, the Ethics Committee dismissal of an appearance standard in ethics matters is a serious and regrettable mistake by the Ethics Committee We urge the House leadership to reject this notion and to take steps to correct the impression left by the Ethics Committee.

In addition, we note that the Ethics Committee attacks OCE for misapplying the "substantial reason to believe" test on the grounds that it did not cite the relevant ethics rule that may have been violated in this case. As House rules state, it is a core responsibility of OCE to determine whether a matter should be dismissed or should be sent to the Ethics Committee, based on whether OCE determines there is substantial reason to believe that any ethics rules and standards may have been violated. In fact, OCE did cite relevant ethics standard that may have been violated. It is then the Ethics Committee's responsibility to further investigate and adjudicate the matter. We strongly believe that the Ethics Committee should maintain its focus on the many important ethics matters currently before it rather than engaging in an extensive and time-consuming effort to undermine the basic functions and jurisdiction of the OCE.

While we are pleased that the Ethics Committee decided to release to the public the report and findings of OCE, as required by House rules, the Committee, by its own admission in its report, seriously considered not releasing the OCE report as requested by Representative Graves' legal counsel. To have refused to release the OCE report would have been a violation of House rules and would have called for serious criticism of the Ethics Committee. One of the main purposes in creating the OCE was to increase transparency.

The Ethics Committee's Report in the Graves matter reveals a troubling approach that has too often characterized the Ethics Committee's enforcement of House ethics rules. Too often, the Committee has resorted to highly technical legal interpretations or to questionable interpretations of the House ethics rules and standards when confronted with questionable activities that, to the public, come across as unseemly but are common practice among Members of Congress.

But the Ethics Committee has staked out much more dangerous territory here in (1) concluding that there is no relevant appearance standard that could apply in this situation and (2) attacking OCE for forwarding a matter which OCE concluded deserved Committee adjudication. The Committee's attacks on these points were misguided and the Committee's exoneration of Representative Graves based on this interpretation does not help the credibility of the House Ethics committee or the ethics process.

The transparency resulting from the release of the OCE Report and the Ethics Committee's Report has brought into full public view the internal struggle that is occurring between OCE and the House Ethics Committee. As public reports have shown, there are Members who apparently believe the OCE is either unnecessary or unwarranted. In the Graves Report, the Ethics Committee seems intent on giving OCE's opponents as much ammunition as they could muster.

We applaud the OCE for its performance to date. We recognize and appreciate that the Ethics Committee is currently engaged in serious ethics inquiries in multiple cases. We are concerned about the Ethics Committee's apparent efforts to attack the OCE and strongly urge the Committee to back off and work out its differences with OCE in an amicable, professional, and negotiated process.