Order Code RL30669 CRS Report for Congress Received through the CRS Web Campaign Finance Regulation Under the First Amendment: Buckley v. Valeo and Its Supreme Court Progeny Updated August 28, 2003 L. Paige Whitaker Legislative Attorney American Law Division Congressional Research Service ˜ The Library of Congress Campaign Finance Regulation Under the First Amendment: Buckley v. Valeo and Its Supreme Court Progeny Summary Political expression is at the heart of First Amendment activity and, accordingly, the Supreme Court has granted it the greatest deference and protection. However, according to the Court in its landmark 1976 decision, Buckley v. Valeo, an absolutely free political marketplace is not required by the First Amendment, nor is it desirable, because without reasonable regulation, corruption will result. Most notably, the Buckley Court ruled that the spending of money in campaigns, whether as a contribution or an expenditure, is a form of “speech” protected by the First Amendment. However, the Court upheld some infringements on such free speech in order to further the governmental interests of protecting the electoral process from corruption or the appearance of corruption. Campaign finance case law subsequent to Buckley further illustrates that neither the freedom of speech and association nor the government’s regulatory powers are absolute. In Buckley v. Valeo, the Supreme Court considered the constitutionality of the Federal Election Campaign Act of 1971 (FECA), which required political committees to disclose campaign contributions and expenditures, and limited, to various degrees, the ability of persons and organizations to make contributions and expenditures. While First Amendment freedoms and campaign finance regulation present conflicting means of attempting to preserve the integrity of the political process, the Court resolved this conflict in favor of the First Amendment interests and subjected any regulation burdening free speech and free association to “exacting scrutiny.” Under this standard of review, the Court evaluates whether the government’s interests in regulating are compelling, examines whether the regulation burdens and outweighs First Amendment liberties, and inquires whether the regulation is narrowly tailored to serve the government’s interests. If a regulation meets all three criteria, the Court will uphold it. This report first discusses the critical holdings enunciated by the Supreme Court in Buckley, including those: upholding reasonable contribution limits, striking down expenditure limits, upholding disclosure reporting requirements, and upholding the system of voluntary presidential election expenditure limitations linked with public financing. It then examines the Court’s extension of Buckley in fifteen subsequent cases, evaluating them in three regulatory contexts: contribution limits (California Medical Association v. FEC; Citizens Against Rent Control v. Berkeley; Nixon v. Shrink Missouri Government PAC; FEC v. Beaumont), expenditure limits (First National Bank of Boston v. Bellotti; FEC v. Massachusetts Citizens for Life; Austin v. Michigan Chamber of Commerce; FEC v. National Right to Work; Colorado Republican Federal Campaign Committee (Colorado I) v. FEC; FEC v. Colorado Republican Federal Campaign Committee (Colorado II); FEC v. Democratic Senatorial Campaign Committee; FEC v. National Conservative Political Action Committee), and disclosure requirements (Buckley v. American Constitutional Law Foundation; Brown v. Socialist Workers ‘74 Campaign Committee; FEC v. Akins; McIntrye v. Ohio Elections Commission). Contents Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Buckley v. Valeo . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Contribution and Expenditure Limits . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Reporting and Disclosure Requirements . . . . . . . . . . . . . . . . . . . . . . . . 6 Voluntary Presidential Election Expenditure Limits Linked With Public Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Issue and Express Advocacy Communications . . . . . . . . . . . . . . . . . . . 7 Contribution Limits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Limiting Individual Contributions to Political Action Committees (California Medical Association v. FEC) . . . . . . . . . 8 Limiting Contributions in Connection With Ballot Initiatives (Citizens Against Rent Control v. Berkeley) . . . . . . . . . . . . . . . . . 9 Establishing Contribution Limit Amounts (Nixon v. Shrink Missouri Government PAC) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Prohibiting Contributions by Tax-Exempt Corporations (FEC v. Beaumont) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Expenditure Limits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Prohibiting or Limiting Corporate Expenditures (First National Bank of Boston v. Bellotti; FEC v. Massachusetts Citizens for Life, Inc.; Austin v. Michigan Chamber of Commerce) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Restricting From Whom Labor Unions Can Solicit PAC Funds (FEC v. National Right to Work) . . . . . . . . . . . . . . . . . . . . . . . . . 22 Limiting Political Party Expenditures (Colorado Republican Federal Campaign Committee v. FEC (Colorado I); FEC v. Colorado Republican Federal Campaign Committee (Colorado II); FEC v. Democratic Senatorial Campaign Committee) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Limiting Political Action Committee Independent Expenditures (FEC v. National Conservative Political Action Committee) . . . 27 Disclosure Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 Requiring Reporting and Disclosure (Buckley v. American Constitutional Law Foundation; Brown v. Socialist Workers ‘74 Campaign Committee; FEC v. Akins) . . . . . . . . . . . . . . . . . 29 Requiring Attribution Disclosure by Individuals Distributing Leaflets in Issue-Based Elections (McIntyre v. Ohio Elections Commission) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 Campaign Finance Regulation Under the First Amendment: Buckley v. Valeo and Its Supreme Court Progeny Introduction1 Campaign finance regulation invokes two conflicting values implicit in the application of the First Amendment’s guarantee of free political speech and association. Political expression constitutes “core” First Amendment activity, which the Supreme Court grants the greatest deference and protection in order to “assure [the] unfettered interchange of ideas for the bringing about of political and social changes desired by the people.”2 However, according to the Court in its landmark 1976 decision, Buckley v. Valeo,3 an absolutely free “political marketplace” is neither mandated by the First Amendment, nor is it desirable, since when left uninhibited by reasonable regulation, corruptive pressures undermine the integrity of political institutions and undercut public confidence in republican governance. That is, although the Court reveres the freedoms of speech and association, it upheld infringements on these freedoms in order to further the governmental interests of protecting the electoral process from corruption or the appearance of corruption. Case law subsequent to Buckley further illustrates that neither the freedom of speech and association nor the government’s regulatory powers are absolute. Accordingly, Supreme Court campaign finance holdings embody the doctrinal tension in striking a reasonable balance between protecting the liberty interests in free speech and association, on the one hand, and upholding campaign finance regulation enacted with the intent to encourage political debate while protecting the election process from corruption, on the other. The Court appears to uphold First Amendment infringements by campaign finance regulation only insofar as the regulation is deemed necessary to preserve the very system of representative democracy that unregulated First Amendment freedoms purport to insure.4 1 The author appreciates the research assistance provided by Christopher A. Jennings and the technical assistance provided by Judy Joiner in the production of this report. 2 Roth v. United States, 354 U.S. 476, 484 (1957). 3 424 U.S. 1 (1976). 4 For example, in a line of cases involving the regulation of corporations, the Court endeavors to resolve whether the First Amendment’s value for open debate by diverse participants permits the government to impose regulations, designed to promote fairness, which prevent corporate monopolization of the political marketplace; and whether the First (continued...) CRS-2 In Buckley, the Court reviewed the constitutionality of the Federal Election Campaign Act of 1971 (FECA),5 which required political committees to disclose political contributions and expenditures, and limited, to various degrees, the ability of natural persons and organizations to make political contributions and expenditures. While First Amendment freedoms and campaign finance regulation present conflicting means of preserving the integrity of the democratic political process, the Court resolved this conflict in favor of First Amendment interests and subjected any regulation burdening free speech and free association activities to “exacting scrutiny.” Under this standard of review, the Court evaluates whether the state’s interests in regulation are compelling, examines whether the regulation burdens and outweighs First Amendment liberties, and inquires whether the regulation is narrowly tailored to further its interest. If a regulation meets all three criteria, the Court will uphold it. This Report discusses the critical holdings and rationales enunciated by the Buckley Court and then examines the Court’s extension of Buckley in fourteen subsequent cases. Buckley’s extensions are evaluated in three regulatory contexts: contribution limits, expenditure limits, and disclosure requirements. When discussing the Court’s rationale, the evaluation of each case highlights facts relevant to a regulator such as: the object of regulation (e.g., a corporation, labor union, or natural person); the asserted liberty interest (e.g., freedom of speech or association); the asserted regulatory interest (e.g., deterring corruption); what triggers the regulatory interest (e.g., political advantages gained by assuming the corporate form); the means by which the regulator obtained those interests (e.g., limiting campaign contributions); the extent to which the regulation burdened First Amendment liberties (e.g., completely prohibiting expenditures above a certain dollar amount); and the scope of regulation (i.e., whether the regulation was “narrowly tailored” to serve the compelling governmental interests). Buckley v. Valeo In Buckley v. Valeo, the Supreme Court considered the constitutionality of the Federal Election Campaign Act of 1971 (FECA), as amended in 1974,6 and the 4 (...continued) Amendment’s value for liberty proscribes the government from regulating the political speech and association rights of corporations. See this Report’s discussion of “prohibiting or limiting corporate expenditures” at page 13, infra, and compare Buckley, 424 U.S. at 4849 (“[T]he concept that government may restrict the speech of some elements of our society in order to enhance the relative voice of others is wholly foreign to the First Amendment.”), with Buckley, 424 U.S. at 49, quoting New York Times v. Sullivan, 376 U.S. 254, 266 (1964)(“[T]he First Amendment ... designed to secure the widest possible dissemination of information from diverse and antagonistic sources.”) 5 6 2 U.S.C. § 431 et seq. Summarily, the FECA provisions at issue contained: (A) spending limitations consisting of (1) a $1,000 contribution cap to any candidate by any individual, (2) a $25,000 limit on an individual’s annual, aggregate contributions, (3) a $1,000 cap on a person’s or group’s independent expenditures “relative to a clearly identified candidate,” (4) spending limits on (continued...) CRS-3 Presidential Election Campaign Fund Act.7 The Court upheld the constitutionality of certain provisions, including (1) contribution limitations to candidates for federal office,8 (2) disclosure and record-keeping provisions,9 and (3) public financing of presidential elections.10 The Court found other provisions unconstitutional, including (1) expenditures limitations on candidates and their political committees,11 (2) the $1,000 limitation on independent expenditures,12 (3) expenditure limitations by candidates from their personal funds,13 and (4) the method of appointing members to the Federal Election Commission.14 In general, the Court struck down expenditure limitations, but upheld reasonable contribution limitations, disclosure requirements,15 and public financing provisions, so long as participation is voluntary, not compelled. In considering the constitutionality of these statutes, the Buckley Court applied the standard of review known as “exacting scrutiny,” which is a standard applied by a court when presented with regulations that burden core First Amendment activity. “Exacting scrutiny” requires a regulation to be struck down unless it is narrowly tailored to serve a compelling governmental interest. 6 (...continued) various candidates for various federal offices, and (5) spending limits on political parties’ national conventions; (B) reporting and disclosure requirements on contributions and expenditures above certain thresholds; and (C) a provision establishing the Federal Election Commission to administer and enforce the statute. The Court evaluated “spending” and “disclosure” regulation under separate (though interrelated) lines of judicial principles. Evaluating a facial challenge to spending limitations, the Court construed the regulation as burdening two sorts of “speech acts”: (1) “contributions,” which express the level of a person or group’s “support” of a candidate, and (2) “independent expenditures,” which express the level of a person or group’s “independent political point of view.” In addition to evaluating “speech” activity, the Court analyzed “contributions” and “independent expenditures” in connection with their “associational” value. 7 26 U.S.C. §9001 et seq. 8 2 U.S.C. §441a. 9 2 U.S.C. §434. 10 Subtitle H of the Internal Revenue Code of 1954, codified at 26 U.S.C. §9001 et seq. 11 Formerly 18 U.S.C. §608(c)(1)(C-F). The Court made an exception for presidential candidates who accept public funding. 12 Formerly 18 U.S.C. §608e. 13 Formerly 18 U.S.C. §608a. 14 Formerly 2 U.S.C. §437c(a)(1)(A-C). 15 However, there are two exceptions to this general rule: (1) disclosure requirements will probably not be upheld if disclosure of a contributor places him or her at risk for economic reprisal or physical threats for being “publicly” associated with the political group (see NAACP v. Alabama, 357 U.S. 449 (1958) discussed note 32, infra., and Brown v. Socialist Workers, 459 U.S. 87 (1982) discussed page 28, infra.), and (2) disclosure requirements will probably not be upheld if they abridge the right of an individual to publish and distribute leaflets anonymously, expressing a political point of view, in a referenda or other issuebased election (see McIntyre v. Ohio Elections Commission, 514 U.S. 334 (1995) discussed page 29, infra.). CRS-4 Contribution and Expenditure Limits. When analyzing First Amendment claims, a court will generally first determine whether the challenged government action implicates “speech” or “associational activity” guaranteed by the First Amendment. Most notably, the Buckley Court held that the spending of money, whether in the form of contributions or expenditures, is a form of “speech” protected by the First Amendment. A number of principles contributed to the Court’s analogy between money and speech. First, the Court found that candidates need to amass sufficient wealth to amplify and effectively disseminate their message to the electorate.16 Second, restricting political contributions and expenditures, the Court held, “necessarily reduces the quantity of expression by restricting the number of issues discussed, the depth of the exploration, and the size of the audience reached. This is because virtually every means of communicating ideas in today’s mass society requires the expenditure of money.”17 The Court then observed that a major purpose of the First Amendment was to increase the quantity of public expression of political ideas, as free and open debate is “integral to the operation of the system of government established by our Constitution.”18 From these general principles, the Court concluded that contributions and expenditures facilitated this interchange of ideas and could not be regulated as “mere” conduct unrelated to the underlying communicative act of making a contribution or expenditure.19 However, according to the Court, contributions and expenditures invoke different degrees of First Amendment protection.20 Recognizing contribution limitations as one of the FECA’s “primary weapons against the reality or appearance of improper influence” on candidates by contributors, the Court found that these limits “serve the basic governmental interest in safeguarding the integrity of the electoral process.”21 Thus, the Court concluded that “the actuality and appearance of corruption resulting from large financial contributions” was a sufficient compelling interest to warrant infringements on First Amendment liberties “to the extent that large contributions are given to secure a quid pro quo from [a candidate.]”22 Short of a showing of actual corruption, the Court found that the appearance of corruption from large campaign contributions also justified these limitations.23 Reasonable contribution limits, the Court remarked, leave “people free to engage in independent political expression, to associate [by] volunteering their 16 See Buckley, 424 U.S. at 21. 17 Id. at 19. 18 Id. at 15. 19 Id. at 17. 20 See id. at 24. 21 Id. at 59. 22 Id. at 27. 23 See id. CRS-5 services, and to assist [candidates by making] limited, but nonetheless substantial [contributions.”]24 Further, according to the Court, a reasonable contribution limitation does “not undermine to any material degree the potential for robust and effective discussion of candidates and campaign issues by individual citizens, associations, the institutional press, candidates, and political parties.”25 Finally, the Court found that the contribution limits of the FECA were narrowly tailored insofar as the Act “focuses precisely on the problem of large campaign contributions.”26 On the other hand, the Court determined that the FECA’s expenditure limits on individuals, political action committees (PACs), and candidates imposed “direct and substantial restraints on the quantity of political speech” and were not justified by an overriding governmental interest.27 The Court rejected the government’s asserted interest in equalizing the relative resources of candidates and in reducing the overall costs of campaigns. Restrictions on expenditures, the Court held, constitute a substantial restraint on the enjoyment of First Amendment freedoms. As opposed to reasonable limits on contributions, which merely limit the expression of a person’s “support” of a candidate, the “primary effect of [limitations on expenditures] is to restrict the quantity of campaign speech by individuals, groups and candidates.”28 “A restriction on the amount of money a person or group can spend on political communication during a campaign necessarily reduces the quantity of expression by restricting the number of issues discussed, the depth of their exploration, and the size of the audience reached,” the Court noted.29 The Court also found that the government’s interests in stemming corruption by limiting expenditures were not compelling enough to override the First Amendment’s protection of free and open debate because unlike contributions, the risk of quid pro quo corruption was not present, as the flow of money does not directly benefit a candidate’s campaign fund.30 Upon a similar premise, the Court rejected the government’s interest in limiting a wealthy candidate’s ability to draw upon personal wealth to finance his or her campaign and struck down the personal expenditure limitation31 24 Id. at 28. 25 Id. at 29. 26 Id. 27 Id. at 39. 28 Id. 29 Id. at 19. 30 Id. at 55. 31 Id. at 51-54. The Court distinguished this holding from its validation of Subtitle H, which provides for the public financing of presidential elections, discussed page 7, infra. Limitations on expenditures by presidential candidates receiving public funds were distinguishable because the acceptance of public funds was voluntary. CRS-6 Reporting and Disclosure Requirements. In Buckley, the Supreme Court generally upheld the FECA’s disclosure and reporting requirements, but noted that they might be found unconstitutional as applied to certain groups. While compelled disclosure, in itself, raises substantial freedom of private association and belief issues, the Court held that these interests were adequately balanced by the state’s regulatory interests. The state asserted three compelling interests in disclosure: (1) providing the electorate with information regarding the distribution of capital between candidates and issues in a campaign, thereby providing voters with additional evidence upon which to base their vote; (2) deterring actual and perceived corruption by exposing the source of large expenditures; and (3) providing regulatory agencies with information essential to the election law enforcement. However, when disclosure requirements expose members or supporters of historically suspect political organizations to physical or economic reprisal,32 then disclosure may fail constitutional scrutiny as applied to a particular organization.33 Voluntary Presidential Election Expenditure Limits Linked With Public Financing. The Supreme Court in Buckley upheld the constitutionality of the system of voluntary presidential election expenditure limitations linked with public financing, through a voluntary income tax checkoff.34 The Court found no First Amendment violation in not allowing taxpayers to earmark their $1.00 “checkoff” to a candidate or party of the taxpayer’s choice. As the checkoff constituted an appropriation by Congress, it did not require outright taxpayer approval, as “every appropriation made 32 See National Association for the Advancement of Colored People (NAACP) v. Alabama, 357 U.S. 449 (1958). The reasoning in Buckley and Brown v. Socialist Workers ‘74 Campaign Comm., 459 U.S. 87 (1982), discussed page 28, infra., has historical roots in NAACP v. Alabama. In NAACP, the Court addressed whether a non-profit organization’s associational rights were abridged by a state statute compelling disclosure of its members and agents without regard to their position and responsibilities in the association. The organization did not comply with the disclosure requirement. Finding for the NAACP, the Court held that the freedom of association is an “inseparable aspect” of the freedoms guaranteed by the First and Fourteenth Amendments, see id. at 460-61; that compelled disclosure of the association’s membership would effectively restrain that freedom, see id. at 461-463; and that, under strict scrutiny, the state’s interests in disclosure were insufficient to overcome the association’s deprivation of right, see id. at 463-366. The Court stressed that the “vital relationship between freedom to associate and privacy in one’s associations” was unduly burdened by the disclosure requirement, as past revelation of membership identity resulted in economic reprisal, loss of employment, threat of physical coercion, and other manifestations of public hostility. Id. at 462. 33 See also McIntyre v. Ohio Elections Commission, 514 U.S. 334 (1995) (further defining the scope of Buckley’s disclosure jurisprudence to proscribe disclosure requirements that infringe on the right of an individual to publish and distribute leaflets anonymously, expressing a political point of view, in a referenda or other issue-based election), discussed page 29, infra. 34 26 U.S.C. § 9001 et seq. CRS-7 by Congress uses public money in a manner to which some taxpayers object.”35 The Court also rejected a number of Fifth Amendment due process challenges, including a challenge contending that the public financing provisions discriminated against minor and new party candidates by favoring major parties through the full public funding of their conventions and general election campaigns, and by discriminating against minor and new parties who received only partial public funding under the Act.36 The Court held that “[a]ny risk of harm to minority interests...cannot overcome the force of the governmental interests against the use of public money to foster frivolous candidacies, create a system of splintered parties, and encourage unrestrained factionalism.”37 Issue and Express Advocacy Communications. In Buckley, the Supreme Court provided the genesis for the concept of issue and express advocacy communications. In order to pass constitutional muster and not be struck down as unconstitutionally vague, the Court ruled that FECA can only apply to non-candidate “expenditures for communications that in express terms advocate the election or defeat of a clearly identified candidate for federal office,” i.e., expenditures for express advocacy communications.38 In a footnote to the Buckley opinion, the Court further defines “express words of advocacy of election or defeat” as, “vote for,” “elect,” “support,” “cast your ballot for,” “Smith for Congress,” “vote against,” “defeat,” and “reject.”39 Communications not meeting the express advocacy definition are commonly referred to as issue advocacy communications.40 In its rationale for establishing such a bright line distinction between issue and express advocacy, the Court noted that the discussion of issues and candidates as well as the advocacy of election or defeat of candidates “may often dissolve in practical 35 See Buckley, 424 U.S. at 85. 36 See id. at 86. 37 Id. at 101. 38 Id. at 44. 39 Id. n. 52. Many lower courts have held that these specific terms of advocacy, commonly referred to as the “magic words,” are mandatory in order for a communication to be considered express advocacy and therefore fall under the scope of federal regulation. See, e.g., Maine Right to Life Comm. v. Federal Election Comm’n, 914 F.Supp. 8, 12 (D. Maine 1996), aff’d per curiam 98 F.3d 1 (1st Cir. 1996), cert. denied, 118 S.Ct. 52 (Oct. 6, 1997)(holding that the FEC had surpassed its authority when it included a “reasonable person” standard in its definition of “express advocacy” and that the expanded standard threatened to infringe on First Amendment protected issue advocacy); Vermont Right to Life Comm. v. Sorrell, 216 F.3d 264 (2d Cir. 2000)(striking down a disclosure requirement triggered by speech “expressly or implicitly” advocating the election or defeat of a candidate and finding that the Supreme Court in Buckley had established an “express advocacy standard” to insure that campaign finance regulations were neither too vague nor intrusive on First Amendment protected issue advocacy). But see, Federal Election Comm’n v. Furgatch, 807 F.2d 857 (9th Cir. 1987), cert. denied, 484 U.S. 850, 864 (1987)(upholding a more expansive definition of express advocacy by including a “reasonable person” standard). 40 For further discussion of issue and express advocacy, see Whitaker, Campaign Finance Reform: A Legal Analysis of Issue and Express Advocacy, CRS Report 98-282. CRS-8 application.” That is, according to the Court, candidates (especially incumbents) are intimately tied to public issues involving legislative proposals and governmental actions.41 Contribution Limits Four Supreme Court opinions subsequent to Buckley concern contribution limitations. In the first case, California Medical Association v. Federal Election Commission (FEC),42 the Court upheld limits on contributions from an unincorporated association to its affiliated, non-party, multicandidate political action committee (PAC). In the second case, Citizens Against Rent Control v. Berkeley,43 the Court reviewed a statute severely limiting the ability of an unincorporated association to raise funds through contributions in connection with its activities in a ballot initiative, holding that the limit unduly burdened the association’s free speech and association rights. In the next case, Nixon v. Shrink Missouri Government PAC,44 (the most recent of Buckley’s progeny), the Court evaluated campaign contribution limit amounts and considered, inter alia, whether Buckley’s approved contribution limits established a minimum for state limits today, with or without adjustment for inflation; the Court held that Buckley did not. Finally, in the most recent case, FEC v. Beaumont, the Court reaffirmed the prohibition on all corporations – including tax-exempt corporations – making direct treasury contributions in connection with federal elections. Limiting Individual Contributions to Political Action Committees (California Medical Association v. FEC). California Medical Assoc. (CMA) v. Federal Election Commission (FEC)45 considered whether the rationale behind the Buckley Court affording such high protection to campaign contributions extended to political action committee (PAC) contributions as well. This case involved 2 U.S.C. § 441a(a)(1)(C) of the FECA, which limits individual contributions to PACs to $5,000 per year.46 An unincorporated association of medical professionals, (“the doctors”) and the association’s affiliated political action committee (“the PAC”) challenged the FECA’s contribution limits, alleging, inter alia, violation of their free speech and association rights. The doctors argued that § 441a(a)(1)(C) was unconstitutional because it inhibited their use of the PAC as a proxy for their political expression.47 Moreover, the doctors contended, the contribution limit did not serve a compelling 41 Buckley, 424 U.S. at 42. See also FEC v. Massachusetts Citizens for Life, Inc., 479 U.S. 238 (1986), discussed page 15, infra. 42 453 U.S. 182 (1981). 43 454 U.S. 290 (1981). 44 120 S.Ct. 897 (2000). 45 453 U.S. 182 (1981). 46 See id. at 184. 2 U.S.C. § 441a(f), a related provision, makes it unlawful for a political committee to knowingly accept contributions exceeding this limit. 47 See id. at 195. CRS-9 state interest because the risk of corruption is not present where money does not flow directly into a candidate’s coffers.48 Unpersuaded, the Supreme Court upheld the FECA’s contribution limits. In evaluating the doctor’s free speech interest, the Court held that the doctors’ “speech by proxy” theory was not entitled to full First Amendment protection because Buckley reserved this protection for independent and “direct” political speech.49 The Court found that the PAC was not simply the doctors’ “political mouthpiece,” but was a separate legal entity that received funding “from multiple sources” and engaged in its own, independent political advocacy.50 Rejecting the doctor’s “speech by proxy” theory, the Court construed the doctor’s relationship with the PAC as providing “support” through campaign contributions, which does not warrant the same level of First Amendment protection as independent political speech.51 In evaluating the state’s interests, the CMA Court rejected the PAC and the doctors’ argument that the risk of corruption is not present when contributions are made to a PAC. The Court interpreted this argument as implying that Congress cannot limit individuals and unincorporated associations from making contributions to multicandidate political committees. This rationale, the Court held, undercuts the FECA’s statutory scheme by allowing individuals to circumvent the FECA’s limits on individual contributions52 and aggregate contributions53 by making contributions to a PAC. Hence, the doctor’s rationale would erode Congress’ legitimate interest in protecting the integrity of the political process.54 Under Buckley, the Court held that the state’s regulatory interests outweighed the doctors’ relatively weak free speech interest. Limiting Contributions in Connection With Ballot Initiatives (Citizens Against Rent Control v. Berkeley). In Citizens Against Rent Control v. Berkeley,55 the Supreme Court addressed whether a city ordinance, imposing a $250 limit on contributions made to committees formed to support or oppose ballot measures, violated a PAC’s liberty interest in free 48 See id. 49 See id. at 196. 50 Id. 51 See id. at 197. 52 “Since multicandidate political committees may contribute up to $5,000 per year to any candidate, 2 U.S.C. § 441a(a)(2)(A), an individual or association seeking to evade the $1,000 limit on individual contributions could [channel] funds through a multicandidate political committee.” CMA, 453 U.S. 198. 53 “Individuals could evade the $25,000 limit on aggregate annual contributions to candidates if they were allowed to give unlimited sums to multicandidate political committees, since such committees are not limited in the aggregate amount they may contribute in any given year.” Id. at 198-199. 54 See id. at 199. 55 454 U.S. 290 (1981). CRS-10 speech and free association under the Fourteenth Amendment.56 Citizens Against Rent Control (“the group”), an unincorporated association formed to oppose a Berkeley ballot initiative imposing rent control on various properties, challenged the ordinance’s constitutionality. The Court found for the group, on freedom of association and freedom of speech grounds. The Court held that while the limit placed no restraint on an individual acting alone, it clearly restrained the right of association, as the ordinance burdened individuals who wished to band together to voice their collective viewpoint on ballot measures.57 The Court applied “exacting scrutiny” to the ordinance, weighing the city’s regulatory interests against the group’s associational rights.58 While the Court noted that Buckley permitted contribution limits to candidates in order to prevent corruption, contributions tied to ballot measures pose “no risk of corruption.”59 Moreover, as the ordinance required contributors to disclose their identity, the regulation posed “no risk” that voters would be confused by who supported the speech of the association.60 Under “exacting scrutiny,” therefore, the $250 contribution limitation was held unconstitutional. Extending its holding, the Court found that the contribution limitations unduly burdened the free speech rights of the group and of individuals who wish to express themselves through the group.61 Applying “exacting scrutiny,” the Court found no significant public interest in restricting debate and discussion of ballot measures, and 56 The Fourteenth Amendment prohibits state governments from depriving “any person of life, liberty, or property, without due process of law.” U.S. Const., Amdt. 14 § 1. By virtue of the inclusion of the term “liberty,” the First Amendment has become applicable to the states. See Whitney v. California, 274 U.S. 357, 373 (1927)(Brandeis, concurring)(“[A]ll fundamental rights comprised within the term liberty are protected by the Federal Constitution from invasion by the States. The right of free speech [and assembly] ... are fundamental rights.”) Although the plain language of the First Amendment proscribes the Congress from abridging the freedom of speech and association, Justice Brandeis’ reading of the Fourteenth Amendment has become a part of the Supreme Court’s incorporation jurisprudence. See also First National Bank of Boston v. Bellotti, 435 U.S. 765, 779-780 (1978), discussed page 13 infra. 57 See id. at 296. “The freedom of association ‘is diluted if it does not include the right to pool money through contributions, for funds are often essential if advocacy is to be truly or optimally effective.’” Id., quoting Buckley, 424 U.S. at 65-66. 58 See id. at 298-199. “Regulation of First Amendment Rights is always subject to exacting scrutiny.” Id. 59 Id. at 298. “Referenda are held on issues, not candidates for public office. The risk of corruption perceived in cases involving candidate elections simply is not present in a popular vote on a public issue.” Id., quoting First National Bank of Boston v. Bellotti, 435 U.S. 765 (1978). 60 61 See id. “Contributions by individuals to support concerted action by a committee advocating a position on a ballot measure is beyond question a very significant form of political expression.” Id. at 298. CRS-11 held that the ordinance’s disclosure requirement adequately protected the sanctity of the political system.62 Establishing Contribution Limit Amounts (Nixon v. Shrink Missouri Government PAC). In Nixon v. Shrink Missouri Government PAC,63 the most recent of Buckley’s progeny, the Supreme Court considered, inter alia, whether Buckley’s approved limitations on campaign contributions established a minimum for state contribution limits today, with or without adjustment for inflation. Asserting free speech and association rights, a political action committee and a candidate challenged the facial validity of a Missouri regulation limiting contributions to amounts ranging from $275 to $1,075.64 Missouri asserted interests similar to those articulated in Buckley, namely, that contribution limits serve the governmental interest in avoiding the real and perceived corruption of the electoral process.65 The Eighth Circuit found these interests unpersuasive and required Missouri to show that “there were genuine problems that resulted from the contributions in amounts greater than the limits in place . . .”66 The Court granted certiorari to review the agreement between the Eighth Circuit’s evidentiary requirement and Buckley.67 Reversing, the Court found Missouri’s regulatory interests compelling and negated the proposition that the $1,000 limit upheld by Buckley is a constitutional floor to state contribution limitations.68 Though the Court reviewed the case under an exacting scrutiny standard,69 it upheld the regulation since it “was ‘closely drawn’ to match a ‘sufficiently important interest.’”70 Notwithstanding the “narrow tailoring” requirement, the Court held that the limitation’s dollar amount “need not be ‘fine tuned.’”71 As the risk of corruption is greater when money flows directly into a campaign’s coffers, the Court found that contribution limits are more likely to withstand constitutional scrutiny. In these cases, a contributor’s free speech interest is less compelling since “contributions” merely index for candidate “support,” not the 62 See id. at 299-300. 63 120 S.Ct. 897 (2000). 64 See id. at 901. The amounts were statutory base lines to be adjusted each year in light of the cumulative consumer price index. See id. 65 See id. at 902. 66 Id., quoting 161 F.3d 520, 521-522. 67 See id. at 903. “The [First Amendment] has its fullest and most urgent application precisely to the conduct of campaigns for political office.” Id. 68 See id. at 909. 69 See id. at 903. 70 See id. at 904, quoting Buckley, 424 U.S. at 25. 71 See id. at 904, quoting Buckley, 424 U.S. at 30 n. 3. CRS-12 contributor’s “independent” political point of view.72 Addressing the lower court’s evidentiary requirement, the Court noted that “[t]he quantum of empirical evidence needed to satisfy heightened judicial scrutiny of legislative judgments will vary up or down with the novelty and plausibility of the justifications raised.”73 However, it found that Missouri cleared the standard implied by Buckley and its progeny.74 Given the relative weakness of the asserted free speech and associational interests, as compared to the state’s weighty regulatory interest, the Court upheld the Missouri state campaign contribution limits. Prohibiting Contributions by Tax-Exempt Corporations (FEC v. Beaumont). The Supreme Court in Federal Election Commission (FEC) v. Beaumont,75 evaluated the constitutional application of 2 U.S.C. § 441b of the Federal Election Campaign Act (FECA) to North Carolina Right to Life (NCRL), a tax-exempt advocacy corporation. Section 441b prohibits corporations, including tax-exempt advocacy corporations, from using treasury funds to make direct contributions and expenditures in connection with federal elections. Corporations seeking to make such contributions and expenditures may legally do so only through a political action committee or PAC. As noted in Beaumont, the Supreme Court has long upheld the ban on corporate contributions, including those made by corporations that are tax-exempt under the Internal Revenue Code. However, in FEC v. Massachusetts Citizens for Life, Inc. (MCFL),76 the Court created an exception for independent expenditures made by such entities that do not accept significant corporate or labor union money finding that restrictions on contributions require less compelling justification under the First Amendment than restrictions on independent expenditures. In FEC v. Beaumont, NCRL unsuccessfully attempted to extend the MCFL exception to contributions by tax-exempt corporations. Finding that limits on contributions are more clearly justified under the First Amendment than limits on expenditures, the Court reaffirmed the prohibition on all corporations making direct treasury contributions in connection with federal elections and upheld the ban on corporate contributions as applied to NCRL. According to the Court, quoting from some of its earlier decisions, it has upheld the “well established constitutional validity of ... regulat[ing] corporate contributions,” including contributions by membership corporations that “might not exhibit all the evil that 72 See id. at 904-905. 73 Id. at 906. 74 See id. at 906-908. For a discussion of Buckley’s evidentiary standards, see accompanying text. 75 123 S. Ct. 2200 (2003). 76 479 U.S. 238 (1986). See infra pp. 17-18. CRS-13 contributions by traditional economically organized corporations exhibit.”77 Stating its refusal to “second-guess a legislative determination as to the need for prophylactic measures where corruption is the evil feared,” the Court rejected the argument that deference to congressional judgments is determined by whether the corporations affected by a regulation are for-profit or non-profit.78 Beaumont also clarified the standard for review applicable to campaign finance regulation under the First Amendment. In the view of the Court, determining the appropriate standard of review depends on the nature of the activity being regulated. Commencing with its 1976 ruling in Buckley, the Court said that it has treated the regulation of contributions as only a “marginal” speech restriction, subject to “relatively complaisant review under the First Amendment,” since contributions are a less direct form of speech than expenditures.79 Hence, the Court concluded that instead of requiring a contribution regulation to pass strict scrutiny by meeting the requirement that it be narrowly tailored to serve a compelling governmental interest, a contribution regulation involving “significant interference with associational rights” passes constitutional muster by merely satisfying the lesser requirement of “being ‘closely drawn’ to match a ‘sufficiently important interest.’”80 The Court held that the Section 441b prohibition passed this lower level of scrutiny because it does not render a complete ban on corporate contributions, i.e., corporations are still permitted to use treasury funds to establish, solicit funds for, and pay the administrative expenses of a political action committee or PAC, which can then in turn make contributions.81 Invoking its unanimous holding in FEC v. National Right to Work, the Court rejected the argument that the regulatory burdens on PACs, including restrictions on their ability to solicit funds, renders a PAC unconstitutional as the only way that a corporation can make political contributions.82 In summary, the Supreme Court in FEC v. Beaumont upheld the ban on corporate contributions as applied to NCRL because corporate campaign contributions – including contributions by tax-exempt advocacy corporations – pose a risk of harm to the political system. Consequently, the Court found, courts owe deference to legislative judgments on how best to address their risk of harm. In addition, the Court announced that limits on contributions are merely “marginal” 77 Id. at 2208 (quoting National Conservative Political Action Comm., 470 U.S. at 500-01). 78 Id. at 2209-10 (quoting National Right to Work Comm., 459 U.S. at 210). 79 The Court explained that “[w]hile contributions may result in political expression if spent by a candidate or an association ..., the transformation of contributions into political debate involves speech by someone other than the contributor.” Id. at 2210 (quoting Buckley, 424 U.S. at 20-21). 80 Id. (quoting Buckley, 424 U.S. at 25; cf. Austin, 494 U.S. at 657). 81 In the Court’s view, “[t]he PAC option allows corporate political participation without the temptation to use corporate funds for political influence, quite possibly at odds with the sentiments of some shareholders or members, and it lets the government regulate campaign activity through registration and disclosure, see §§ 432-434, without jeopardizing the associational rights of advocacy organizations’ members.” Id. at 2211. 82 Id. (citing National Right to Work, 459 U.S. at 201). See infra pp. 22-23. CRS-14 speech restrictions subject to a “relatively complaisant” or lesser review under the First Amendment than the strict scrutiny standard of review. Expenditure Limits There are seven post-Buckley Supreme Court holdings relating to expenditure limits, involving four regulatory contexts. The first line of cases involves the regulation of corporations. In First National Bank v. Bellotti,83 the Court held that corporate speech in the form of expenditures, in a state referendum, could not be suppressed under the First Amendment. In two other corporate speech cases, the Court generally upheld a requirement that corporate political expenditures be made from a special segregated fund or political action committee (PAC), but subjected this requirement to an exception for “purely” political organizations: Federal Election Commission (FEC) v. Massachusetts Citizens for Life (MCFL)84 and Austin v. Michigan Chamber of Commerce.85 The second line of cases involves the regulation of labor unions, where the FEC v. National Right to Work Committee86 Court upheld a regulation restricting from whom labor unions can solicit funds for their separate segregated funds or PACs. In the third context, regarding the regulation of political party expenditures, in Colorado Republican Federal Campaign Committee v. FEC,87 the Court upheld a political party’s purchase and broadcasting of radio “attack ads,” finding it was an “uncoordinated independent expenditure.” The final context examines the regulation of PACs where the Court, in FEC v. National Conservative Political Action Committee (NCPAC),88 struck down a prohibition on independent expenditures above $1,000 in support of a “publicly funded” candidate. Prohibiting or Limiting Corporate Expenditures (First National Bank of Boston v. Bellotti; FEC v. Massachusetts Citizens for Life, Inc.; Austin v. Michigan Chamber of Commerce). Representing an important new emphasis on First Amendment protection of corporate free speech, in First National Bank of Boston v. Bellotti, the Supreme Court held that the fact that the corporation is the speaker does not limit the scope of its interests in free expression, as the scope of First Amendment protection turns on the nature of the speech, not the identity of the speaker. However, as demonstrated in FEC v. Massachusetts Citizens for Life, Inc. (MCFL) and Austin v. Michigan Chamber of Commerce, the fact that the speaker is a corporation may elevate the state’s interests in regulating a corporation’s expressive activity, on equitable grounds. MCFL and Austin appear to expand the Court’s “governmental interest” jurisprudence from the interest identified in Buckley, i.e., avoiding candidate 83 435 U.S. 765 (1978). 84 479 U.S. 238 (1986). 85 494 U.S. 652 (1990). 86 459 U.S. 197 (1982). 87 518 U.S. 604 (1996). 88 470 U.S. 1 (1985). CRS-15 corruption, to a broader interest of avoiding corruption in the entire electoral process. Although the Court emphasized that equalizing the relative voices of persons and entities in the political process is not a valid regulatory end, MCFL and Austin appear to hold that the government has equitable interests in ensuring fair and open debate in the political marketplace by preventing corporate monopolization. However, in both cases, the Court stressed that corporate wealth, in itself, is not a valid object of speech suppression. In First National Bank of Boston v. Bellotti,89 the Supreme Court evaluated the constitutional basis of a Massachusetts criminal statute, which in pertinent part, prohibited corporate expenditures made to influence the outcome of a referendum. The statute did not completely ban corporate expenditures: it permitted expenditures when a referendum’s outcome could materially affect a corporation’s business, property, or assets.90 Bellotti arose in connection with a proposed state constitutional amendment permitting the state to impose a graduated tax on an individual’s income.91 When the proposal was presented to the voters, a group of corporations wanted to expend money to publicize their point of view;92 however, their desire was burdened by the statutory provision stating that issues concerning the taxation of individuals do not “materially affect” a corporate interest.93 The corporations sought to prevent enforcement of the statute, arguing that it was facially invalid under the First and Fourteenth Amendments.94 In agreement with the corporations, the Supreme Court struck down the statute. First, the Bellotti Court considered whether a speaker’s “corporate” identity substantively affects the extension of First Amendment liberties. On the state’s contention that the scope of the First Amendment narrows when the speaker is a corporation, the Court found no constitutional support.95 This conclusion followed from the Court’s framing of the issues. The Court did not address the question of whether corporate interests in free speech are coextensive with those of natural persons, finding the issue peripheral to the case’s efficient resolution.96 Instead, the threshold issue was whether the statute proscribed speech that “the First Amendment was meant to protect.”97 In other words, the Court focused on the nature of the speech, not the identity of the speaker. As the Massachusetts statute burdened expressive activity addressing a proposed amendment to the state constitution, the nature of the speech fell squarely within the historic and doctrinal mandate of the 89 435 U.S. 765 (1978). 90 See id. at 768. 91 See id. at 769. 92 See id. 93 See id. at 768. 94 See id. at 769. 95 See id. at 784-786. 96 See id. at 776. 97 Id. CRS-16 First Amendment—protecting the free discussion of governmental affairs.98 As the corporations asserted ‘core’ First Amendment interests, the statute was subject to “exacting scrutiny,” triggering the remaining issues, where the Court considered whether the government’s regulatory interests were compelling and obtained by narrowly tailored means.99 Massachusetts advanced two rationales for the prohibition of corporate speech: (1) elevating and “sustaining” the individual’s role in electoral politics, and (2) ensuring that corporate political expenditures are funded by shareholders who agree with their corporation’s political views.100 In the context of candidate elections, the Court found these rationales “weighty,” but in a “direct democracy” context, they were simply not advanced in a material way.101 While ensuring that individuals sustain confidence in government and maintain an active role in elections is “of the highest importance,”102 the Bellotti Court did not find that regulating corporate speech would necessarily enhance the role of the individual in this context. The Court reasoned that the inclusion of corporate political perspectives does not demonstrate that they will unduly “influence the outcome of a referendum vote”103 and stressed that restricting the speech of some to amplify the voice of others is not a valid object suppression.104 As such, the Court held that permitting corporate speech in a referendum does not exert coercive pressures (real or perceived) on the ‘direct democracy’ process.105 Likewise, the Bellotti Court rejected the state’s purported interest in protecting minority shareholders who object to their corporation’s majority political philosophy. With respect to this interest, the Court found the statute was both over and underinclusive. The statute was over-inclusive insofar as it proscribed corporate speech, where the corporate political policy and speech enjoyed unanimous assent by its members.106 The Court emphasized that corporate democracy informs the decision to engage in public debate, that shareholders are presumed to protect their own interests, and that they are not compelled to contribute additional funds to their 98 See id. at 776-777, citing Mills v. Alabama, 384 U.S. 214, 218 (1966). The Court noted further that the nature of the corporation’s speech “is the type of speech indispensable to decision making in a democracy, and this is no less true because the speech comes from a corporation rather than an individual.” Id. at 777. 99 See id. at 787. 100 See id. 101 See id. at 788. 102 Id. at 789, citing Buckley, 352 U.S. at 27. 103 Id. 104 See id. 105 See id. at 790. Moreover, the Court asserted that the people, not the government, are the final arbiter and evaluator of the “relative and conflicting arguments” on referendum issues. Id. 106 See id. at 794. CRS-17 corporation’s political activities.107 The statute was under-inclusive insofar as corporations may exert political influence by lobbying for the passage and defeat of legislation and may express its political views on an issue when it does arise in connection to a ballot measure.108 As a result, the Court held that the statute unduly infringed on the corporations’ protected free speech interest in expressing its political point of view.109 The Supreme Court in Federal Election Commission (FEC) v. Massachusetts Citizens for Life (MCFL)110 evaluated the constitutional application of 2 U.S.C. § 441b of the Federal Election Campaign Act (FECA), prescribing a separate segregated fund or PAC for corporate political expenditures. In this case, the requirement was applied to a non-profit corporation founded for purely political purposes. The founding charter of MCFL was to “foster respect for life,” a purpose motivating various educational and public policy activities.111 Drawing from its general treasury, the corporation funded a pre-election publication entitled “Everything You Need to Know to Vote Pro-life,” which triggered litigation under § 441b.112 As the publication was tantamount to an “explicit directive [to] vote for [named] candidates,” MCFL’s speech constituted “express advocacy of the election of particular candidates,” subjecting the expenditure to regulation113 under the express advocacy standard first articulated by the Court in Buckley.114 However, as applied to MCFL, § 441b was held unconstitutional because it infringed on protected speech without a compelling justification.115 Noting that § 441b burdened expressive activity,116 the Court examined the government’s regulatory interests in alleviating corruptive influences in elections by requiring the use of corporate PACs and the Court held that concentration of wealth, in itself, is not a valid object of regulation.117 The Court noted that a corporation’s ability to amass large treasuries confers upon it an unfair advantage in the political marketplace, as general treasury funds derive from investors’ economic evaluation 107 See id. at 794-795. 108 See id. at 793. 109 See id. at 795. 110 479 U.S. 238 (1986). 111 See id. at 241-242. 112 See id. at 242. 113 Id. at 249. The Court found that the publication not only urged voters to vote for “prolife” candidates, but also identified and provided photographs of specific candidates. As a result, the Court determined that the publication could not be considered a “mere discussion” of public issues. Id. 114 See Buckley v. Valeo, 424 U.S. 1, 44 (1976), discussed page 2, supra. 115 See FEC v. Massachusetts Citizens for Life, Inc., 479 U.S. at 263. 116 See id. at 252. 117 Id. at 257 (“political ‘free-trade’ does not necessarily require [that participants] in the political marketplace [compete with equal resources.]”) CRS-18 of the corporation, not their support of the corporation’s politics.118 By requiring the use of a PAC, § 441b ensures that a corporation’s independent expenditure fund indexes for the “popular support” of its political ideas.119 The Court held that by prohibiting general treasury fund expenditures to advance a political point of view, the regulation “ensured that competition among actors in the political arena is truly competition among ideas.”120 While the Court found these interests compelling as applied to most corporations, it held the restriction unconstitutional as applied to MCFL. Specifically, the MCFL Court found the following characteristics exempt a corporation from the regulation: (1) its organizational purpose is purely political; (2) its shareholders have no economic incentive in the organization’s political activities; and, (3) it was not founded by nor accepts contributions from business organizations or labor unions.121 Carving out an exception for corporations with these characteristics, the Court raised equitable grounds for the regulation, stressing that “[r]egulation of corporate political activity . . . has reflected concern not about the use of the corporate form per se, but about the potential for the unfair deployment of [general treasury funds] for political purposes.”122 The Court held that MCFL’s general treasury is not a function of its economic success, but is an index for membership support of its political ideas.123 Thus, according to the Court, purely political organizations such as MCFL cannot constitutionally be regulated by § 441b because their treasuries already embody what the regulation purports to achieve: an index of the corporation’s political support. In other words, MCFL is an example of a corporation that is not at risk for gaining an “unfair” advantage in the electoral process.124 In Austin v. Michigan State Chamber of Commerce,125 the Supreme Court affirmed and clarified its MCFL holding when it considered whether a non-profit corporation’s free speech rights were unconstitutionally burdened by a state prohibition on using general treasury funds to finance a corporation’s independent expenditures in state elections. While prohibiting expenditures from general treasury 118 See id. at 258, cited by Austin, 494 U.S. at 659. 119 Id. 258, see also Austin, 494 U.S. at 660 (holding that the separate segregated fund requirement “ensures that expenditures reflect actual public support.”) 120 Id. at 259. 121 See id. at 259, 264. 122 Id. (emphasis added). See also, id. at 263 (“voluntary political organizations do not suddenly present the specter of corruption merely by assuming the corporate form.”), but see Austin, 494 U.S. 659, 660 (suggesting that the selection of the corporate form in itself triggers the state’s regulatory interests. “[T]he unique state-conferred corporate structure that facilitates the amassing of large treasuries warrants the limit on independent expenditures.” Id. at 660.) 123 See MCFL, 479 U.S. at 259. 124 See id. at 260. 125 494 U.S. 652 (1990). CRS-19 funds,126 the statute permitted independent contributions as long as they were made from a separate segregated fund or PAC.127 Plaintiff-corporation, a non-profit founded for political and non-political purposes, asserted that the regulation burdened its First Amendment interest in political speech by limiting its spending.128 Further, the plaintiff contended that the regulation was not narrowly tailored to obtain the state’s interests in avoiding the appearance of corruption by limiting a corporate entity’s inherent ability to concentrate economic resources.129 Although economic power, in itself, does not necessarily index the persuasive value of a corporation’s political ideas, the state argued, a corporation’s structural ability to amass wealth makes it “a formidable political presence”—a presence which triggers its regulatory interest.130 Unpersuaded by the corporation’s assertion of right, the Court upheld the regulation. Under Buckley131 and MCFL,132 the Court addressed whether the plaintiff’s free speech interests were burdened by the regulation; evaluated the state’s regulatory interests; and asked whether the regulation was narrowly tailored to achieve those interests.133 The Court found that the plaintiff’s freedom of expression was burdened by the regulation, but held that the state achieved its compelling interests by narrowly tailored means. By limiting the source of a corporation’s independent expenditures to a special segregated fund or PAC, the Austin Court held that the regulation burdened the plaintiff’s freedom of expression.134 The regulation placed various organizational 126 The statute defined “expenditure” as “a payment, donation, loan, pledge, or promise of payment of money or anything of ascertainable monetary value for goods, materials, services, or facilities in assistance of, or in opposition to, the nomination or election of a candidate.” Id. at 655 quoting Mich. Comp. Laws § 169.206(1) (1979). 127 The Michigan Statute was modeled on a provision of the Federal Election Campaign Act (FECA) requiring corporations and labor unions to use a separate segregated fund or PAC when making independent expenditures in connection with federal elections. See Austin, 494 U.S. at 656 n. 1. 128 See id. at 658. 129 See id. at 659. 130 Id., quoting Federal Election Comm’n v. Massachusetts Citizens for Life, 479 U.S. 238, 258 (1986)(MCFL). 131 424 U.S. 1 (1976)(per curiam). 132 479 U.S. 238 (1986). 133 See Austin, 494 U.S. at 657. Antecedent to these inquiries, the Court affirmed that the plaintiff’s interest in using general funds for independent expenditures is “political expression at the core of our electoral process and of the First Amendment freedoms.” Id. at 657, quoting Buckley, 424 U.S. at 39. Moreover, the Court noted that the plaintiff’s status as a corporation did not completely erode its free speech interest under the First Amendment. See Austin, 494 U.S. at 657, citing Bellotti, 435 U.S. at 777. 134 See Austin, 494 U.S. at 657. CRS-20 and financial burdens on a corporation’s management of its PAC,135 limited PAC solicitations to “corporate members” only;136 and prohibited independent expenditures from corporate treasury funds.137 Similar to its finding in MCFL, the Court found that the statute’s requirements burdened, but did not stifle, the corporation’s exercise of free expression to a point sufficient to raise a genuine First Amendment claim.138 Thus, to overcome the claim, the regulation had to be motivated by compelling governmental interests and be narrowly tailored to serve those interests. First, the Austin Court evaluated the state’s regulatory interests. The state argued that a corporation’s “unique legal and economic characteristics”139 renders it a “formidable political presence” in the market place of ideas, which necessitates regulation of its political expenditures to “avoid corruption or the appearance of corruption.”140 The Court stressed that the regulation’s purpose was not to equalize the political influence of corporate and non-corporate speakers, but to ensure that expenditures “reflect actual public support for political ideas espoused by corporations.”141 Moreover, the Court was careful to emphasize that the mere fact that corporations can amass large treasuries was not its justification for upholding the statute. Rather, the Court identified the compelling state interest as “the unique stateconferred corporate structure,” which facilitates the amassing of large amounts of wealth.142 On these grounds, the Court appeared to recognize a valid regulatory interest in assuring that the conversion of economic capital to political capital is done in an equitable way. In other words, the Court held that corruption of the electoral process itself, rather than just the corruption of candidates, is a compelling regulatory interest. After finding a compelling state interest, the Austin Court determined that the regulation was neither over-inclusive nor under- inclusive with respect to its burden on expressive activity. Responding to the plaintiff’s argument that the regulation was over-inclusive insofar as it included closely held corporations, which do not enjoy the same capital resources as larger or publicly-held corporations, the Court ruled that the special benefits conferred to corporations and their potential for amassing large 135 For example, the Court noted that the regulation required a corporation to appoint a treasurer to administer the fund, keep records of the funds’ transactional history, and create and periodically update an informational statement about the fund for the state. Id. at 658. 136 Id. 137 Id. 138 Id., citing MCFL, 479 U.S. at 252 (plurality opinion). 139 As examples, the Court cited attributes that enhanced a corporation’s ability to manage and attract capital assets favorable to its shareholder’s proprietary interests, such as perpetual life, limited liability, and favorable treatment with respect to the accumulation and distribution of capital. Austin, 494 U.S. at 658-659. 140 Id. at 658, 659, citing Federal Election Comm’n v. National Conservative Political Action Committee, 470 U.S. 480, 496-497 (1985), and MCFL, 479 U.S. at 258. 141 Id. at 660. 142 Id. CRS-21 treasuries justified the restriction.143 Plaintiff’s under-inclusiveness argument, alleging that the regulatory scheme failed to include unincorporated labor unions with large capital assets, fared no better. The Court distinguished labor unions from corporations on the ground that unions “amass large treasuries . . . without the significant state-conferred advantages of the corporate structure.”144 Here again, the Court remarked that the corporate structure, not corporate wealth, triggers the state’s interest in regulating a corporation’s independent expenditures.145 Hence, despite the burden on political speech, the Court upheld the regulation because it was narrowly tailored to reach the state’s compelling interests.146 In sum, the Austin Court clarified MCFL and upheld the three-part test for when a corporation is exempt from the state’s general interest in requiring a corporation to use a separate segregated fund or PAC for its “independent expenditures.”147 Under Austin, a corporation is exempt from the PAC requirement when (1) the “organization was formed for the express purpose of promoting political ideas;”148 (2) no entity or person has a claim on the organization’s assets or earnings, such that “persons connected with the organization will have no economic disincentive for disassociating with it if they disagree with its political activity;”149 and (3) the organization is independent from “the influence of business corporations.”150 143 See id. at 663. 144 Id. at 665. 145 “The desire to counter-balance those advantages unique to the corporate form is the State’s compelling interest in this case.” Id. But see MCFL, 479 U.S. at 259 (“[r]egulation of the corporate political activity thus has reflected concern not about the corporate form per se, but about the potential for unfair deployment of wealth for political purposes.”) 146 The court also considered whether the corporation’s “ideological” purposes, rather than purely “economic” purposes, provided a constitutional warrant for “excepting” it from the “segregation” requirement. This issue is discussed in connection with this Report’s discussion of MCFL, page15, supra. 147 See Austin, 494 U.S. 662-664. 148 Id. at 662, quoting MCFL, 479 U.S. at 264. 149 Id. at 663, quoting MCFL, 479 U.S. at 264. 150 Id. at 664, citing MCFL, 479 U.S. at 264. For further discussion of Austin v. Michigan Chamber of Commerce, see Whitaker, Campaign Financing and Corporate Expenditures: An Analysis of Austin v. Michigan Chamber of Commerce, CRS Report 90-199. CRS-22 Restricting From Whom Labor Unions Can Solicit PAC Funds (FEC v. National Right to Work).151 In Federal Election Commission (FEC) v. National Right to Work Committee (NRWC),152 the Supreme Court evaluated 2 U.S.C. § 441b(b)(4)(C) of the FECA, which requires labor unions to solicit only “members” when amassing funds for its separate segregated fund or PAC. In particular, the Court considered, inter alia, whether the Federal Election Commission’s (FEC) interpretation of “member” abridged NRWC’s associational rights and held that it did not. The NRWC, a nonprofit corporation, essentially considered anyone who gave a contribution a “member.”153 On the other hand, the FEC advanced a narrower definition of “member,” under which a participant would have to display various levels of involvement with the soliciting-organization, beyond providing a contribution,154 or the participant would have to enjoy responsibilities, rather than mere privileges, in connection to the soliciting organization.155 Persuaded by the FEC’s interpretation, the Court held that NRWC’s asserted associational liberties were burdened by the FEC’s definition, but were overborne by 151 A case outside the First Amendment and Buckley contexts, but relevant to the regulation of political activities by labor unions, is Communications Workers of America v. Beck, 487 U.S. 735 (1988). There the Court determined whether the National Labor Relations Act, 29 U.S.C. § 158(a)(3), permits a labor union to expend funds collected from dues paying, nonunion member employees for activities unrelated to collective bargaining, contract administration, and grievance adjustment. The plain language of the Act permits an employer and an exclusive bargaining representative to enter into an agreement requiring all employees in the bargaining unit to pay periodic union dues and initiation fees as a condition of continued employment, whether or not the employees otherwise wish to be a member of the union. See Beck, 487 U.S. at 736. The Court found that Congress intended to correct abuses associated with “closed shop” agreements by limiting compulsory unionism to regimes that require non-member contributions only insofar as they are necessary to defray the costs of collective-bargaining efforts made on behalf of union and non-union employees. See id. at 745. Accordingly, the Court held that the Act does not permit a union, over the objections of dues paying nonmember employees, to expend funds collected from them on activities unrelated to collective bargaining, including funds expended for political activities. See id. at 744-62. For further discussion of Communication Workers of America v. Beck, see The Use of Labor Union Dues For Political Purposes: A Legal Analysis, by L. Paige Whitaker (CRS Report 97-618). 152 459 U.S. 197 (1982). 153 See id. at 202. “A person who, through his response [to the organization’s publications or material], evidences an intention to support NRWC in promoting [the organization’s purposes] qualifies as a member.” Id. Under this definition, contributors to the NRWC’s segregated fund were construed as members. 154 See id. at 203. “A person is not considered a member . . . if the only requirement for membership is a contribution to a separate segregated fund.” Federal Election Commission Regulations, 11 CFR § 114.1(e) (1982). 155 See NRWC, 459 U.S. at 203. CRS-23 the state’s regulatory interests.156 While associational rights are “basic constitutional” freedoms deserving of the “closest scrutiny,” they are not absolute.157 While § 441b restricts the solicitations of corporations and labor unions, thereby restricting their freedom of association, the state had an interest in hedging corporations and labor organizations’ particular legal and economic attributes, since they may be converted into a political advantage.158 For example, corporations and labor unions can amass large, financial “war chests,” which could be leveraged to incur political debts from candidates.159 Indeed, citing Bellotti, the Court affirmed the fundamental importance of curbing the potential, corruptive influence represented by political debts.160 The Court was further persuaded by the state’s additional interest in protecting investors and members who provide financial support to their organization over their objection to or distaste for the corporation’s majority-political philosophy.161 “In order to prevent both actual and apparent corruption,” the Court concluded, “Congress aimed a part of its regulatory scheme at corporations, [reflecting a constitutionally warranted] judgment that the special characteristics of the corporate structure require particularly careful regulation.”162 Limiting Political Party Expenditures (Colorado Republican Federal Campaign Committee v. FEC (Colorado I); FEC v. Colorado Republican Federal Campaign Committee (Colorado II); FEC v. Democratic Senatorial Campaign Committee). In Colorado Republican Federal Campaign Committee v. Federal Election Commission (Colorado I),163 the Supreme Court examined whether the FECA “Party Expenditure Provision,”164 which imposed dollar limits on political party expenditures “in connection with the general election campaign of a [congressional] candidate,” was unconstitutionally enforced against a party’s funding of radio “attack ads” directed against its likely opponent in a federal senatorial election. This case concerned expenditures for radio ads by the Colorado Republican Party (CRP), which attacked the likely Democratic Party candidate in the 1986 senatorial election.165 At the time the ads were purchased and aired, the CRP already transferred to the National Republican Party the full amount of the funds it was permitted to expend 156 See id. at 207. 157 See id. at 206-207. 158 See id. at 207. 159 See id. at 207-208. 160 See id. at 209, citing Bellotti, 435 U.S. at 788, n. 26. 161 See id. at 208. 162 Id. at 209-210. For reasons similar to those in Austin and MCFL, the Court held that the regulation was narrowly tailored to attain its regulatory interests. See id. at 210. 163 518 U.S. 604 (1996). 164 2 U.S.C. § 441a(d)(3). 165 See 518 U.S. at 612. CRS-24 “in connection with” senatorial elections under the FECA.166 Finding that the CRP exceeded its election spending limits, the FEC noted that the ads were purchased after the fund transfer and found that the expenditure was “in connection with the campaign of a candidate for federal office.”167 The CRP challenged the constitutionality of the Party Expenditure Provision’s “in connection with” language as unconstitutionally vague168 and objected to how the provision was applied in this instance.169 Rendering a narrow holding, the Court found for the CRP on a portion of its “as applied” challenge. The Court’s ruling turned on whether CRP’s ad purchase was an “independent expenditure,” a “campaign contribution” or a “coordinated expenditure.”170 “Independent expenditures,” the Court noted, do not raise heightened governmental interests in regulation because the money is deployed to advance a political point of view “independent” of a candidate’s viewpoint.171 Indeed, the Court found that when independent expenditures display little coordination and prearrangement between the payor and a candidate, they alleviate the expenditure’s corruptive influence on the polity.172 Moreover, the Court stressed that restrictions on independent expenditures “represent substantial . . . restraints on the quantity and diversity of political speech,”173 and constrict “core First Amendment activity.”174 However, restrictions on “contributions,” which only marginally impair a “contributor’s ability to engage in free communication,”175 do not burden free speech interests to the same degree and decrease the risk that corruptive influences will taint the political process.176 Similarly, “coordinated expenditures” are not as inviolable as “independent expenditures” because they are the functional equivalent of a “contribution” and accordingly, they trigger regulatory interests in staving off real and perceived 166 At the time of this decision, the FECA excepted political parties from its general contribution and expenditure limits, which limits “multi-candidate” political committees to making no more than $5,000 in direct and indirect contributions to candidates. See 2 U.S.C. §§ 441a(a)(2),(7)(B)(i). Instead, the FECA allowed political parties to make greater contributions and expenditures. See §§ 441a(d)(1),(3)(A). In this case the CRP qualified to spend about $103,000 in connection with the senatorial campaign, but transferred that amount to their national party. See 518 U.S. at 611. 167 See id. at 612. However, at the time of the expenditure, the Republicans had not selected their senatorial candidate. See id. at 614. 168 See id. at 618. 169 See id. at 613. 170 See id at 614, 615, 618, 622-623. 171 See id. at 614-615, citing Federal Election Comm’n v. National Conservative Political Action Committee (NCPAC), 479 U.S. 238 (1985). 172 See id. at 615, citing Buckley, 424 U.S. at 47. 173 Id., quoting Buckley, 424 U.S. at 19. 174 Id. at 616. 175 Id. at 614, quoting Buckley, 424 U.S. at 20-21. 176 Id. at 615. CRS-25 corruption.177 Given the heightened First Amendment protection of independent expenditures, the Court did “not see how a provision that limits a political party’s independent expenditures” could withstand constitutional scrutiny.178 The Court held that the CRP’s ad purchase was an independent expenditure deserving constitutional protection. In categorizing the expenditure, the Court emphasized that at the time of the purchase the Republicans had not nominated a candidate and that the CRP’s chairman independently developed the script, offering it for review only to the Party’s staff and the Party’s executive director.179 Moreover, the Court held that the CRP asserted significant free speech interests because “independent expression of a political party’s philosophy is ‘core’ First Amendment activity.”180 According to the Court, the CRP’s First Amendment interests were not counterbalanced by the state’s interest in protecting the sanctity of the political process, as restraints on “party” expenditures neither eliminate nor alleviate corruptive pressures on the candidate through an expectation of a quid pro quo.181 The greatest risk for corruption, the Court recognized, resided in the ability of an individual to circumvent the $1,000 restraint on “individual contributions” by making a $20,000 party contribution with the expectation that it will benefit a particular candidate; however, the Court did not believe “that the risk of corruption here could justify the ‘markedly greater burden on basic freedoms caused by’ . . . limitations on expenditures.”182 If anything, the Court remarked, an independent expenditure originating from a $20,000 donation that is controlled by a political party rather than an individual donor would seem less likely to corrupt than a similar independent expenditure made directly by a donor.183 Additionally, the Court held that the statute was not overly broad and was narrowly tailored to obtain its compelling interests. In FEC v. Colorado Republican Federal Campaign Committee (Colorado II),184 the Supreme Court ruled 5 to 4 that a political party’s coordinated expenditures, unlike genuine independent expenditures, may be limited in order to minimize circumvention of FECA contribution limits. While the Court’s opinion in Colorado I was limited to the constitutionality of the application of FECA’s “Party Expenditure Provision,”185 to an independent expenditure by the Colorado Republican Party (CRP), in Colorado II the Court considered a facial challenge to the constitutionality of the limit on coordinated party spending. 177 See id. at 610, 611, 613, 619. 178 See id. at 615. 179 See id. at 614-615. 180 Id. at 616. 181 See id. at 617. 182 See id., internally quoting Buckley, 424 U.S. at 44. 183 See id. 184 533 U.S. 431 (2001). 185 2 U.S.C. § 441a(d)(3). CRS-26 Persuaded by evidence supporting the FEC’s argument, the Court found that coordinated party expenditures are indeed the “functional equivalent” of contributions.186 Therefore, in its evaluation, the Court applied the same scrutiny to the coordinated “Party Expenditure Provision” that it has applied to other contribution limits, i.e., whether the restriction is “closely drawn” to the “sufficiently important” governmental interest of stemming political corruption.187 The Court further determined that circumvention of the law through “prearranged or coordinated expenditures amounting to disguised contributions” is a “valid theory of corruption.”188 In upholding the limit, the Court noted that “substantial evidence demonstrates how candidates, donors, and parties test the limits of the current law,” which, the Court concluded, “shows beyond serious doubt how contribution limits would be eroded if inducement to circumvent them were enhanced by declaring parties’ coordinated spending wide open.”189 Although Federal Election Commission (FEC) v. Democratic Senatorial Campaign Committee (DSCC)190 dealt primarily with issues of statutory construction and application, the Supreme Court’s rationale is relevant to the extension of Buckley and the First Amendment generally. Specifically, the Court addressed whether 2 U.S.C. § 441a(d) of the FECA, which prohibits party committees from making expenditures on behalf of candidates, extends to party expenditures paid on behalf of other state and national party committees. This case arose in connection with the National Republican Senatorial Campaign Committee’s (NRSC) agency relationship with its state and national party committees, under which the NRSC made various expenditures on behalf of its state and national affiliates.191 The DSCC challenged an FEC interpretation of §441a(d) permitting the NRSC to make such expenditures.192 The Court affirmed the FEC’s interpretation. Under Buckley, the Court held, inter alia, the FEC’s interpretation was not inconsistent with the purpose of the FECA.193 Agency agreements do not raise the risk of corruption nor the appearance of corruption, spawned by the real or perceived coercive effect of large candidate contributions, so long as the candidate is not a party to the agency relationship.194 Under an agency agreement, contribution limits to candidates apply with equal force when a committee transfers its spending authority to one of its affiliate committees—the agreement does not increase the expenditure 186 Id at 447. 187 Id. at 456. 188 Id. at 446, 456. 189 Id. at 457. 190 454 U.S. 27 (1981). 191 See id. at 29, 30. 192 See id. at 31. 193 See id. at 41. 194 See id. CRS-27 of a single additional dollar under the FECA.195 Thus, the Court held, non-candidate agency agreements are consistent with Buckley and the purposes of the FECA. Limiting Political Action Committee Independent Expenditures (FEC v. National Conservative Political Action Committee). In Federal Election Commission (FEC) v. National Conservative Political Action Committee (NCPAC),196 the Supreme Court addressed whether the First Amendment prohibits enforcement of 26 U.S.C. § 9012(f) of the FECA, which proscribed any “committee, association, or organization” from making expenditures over $1,000 in furtherance of electing a “publicly financed” presidential candidate. NCPAC arose in connection with President Reagan’s 1984 bid for reelection, where the Democratic National Committee sought an injunction under § 9012(f) against NCPAC from expending “large sums of money” to support President Reagan’s publicly funded campaign.197 NCPAC, an ideological multicandidate political committee, argued that § 9012(f) unduly burdened its First Amendment interests in free expression and free association, as its expenditures were protected as “independent expenditures.”198 NCPAC intended to raise and expend money for the purposes of running radio and television ads to encourage voters to elect Reagan. Holding § 9012(f) unconstitutional, the Court found that the expenditure limitation burdened NCPAC’s “core” First Amendment speech, that it was supported by a comparatively weak state interest, and that it was fatally over-inclusive. The Court noted that in Buckley it had upheld expenditure restrictions on individual and political advocacy associations; however, in this case, the fact that NCPAC’s expenditures were not made in coordination with the candidate supplied the distinguishing key opening the door to First Amendment protection. In sum, a regulation may not burden a non-candidate’s First Amendment rights based on whether a candidate accepts or does not accept public funds. The Court first determined whether NCPAC was entitled to First Amendment protection. After interpreting the statute as proscribing NCPAC’s expenditures, the Court concluded that the proscription burdened speech “of the most fundamental First Amendment activities, [as the discussion of] public issues and debate on the qualification of candidates [is] integral to [a democratic form of governance.]”199 While the statute did not exact a prior restraint on NCPAC’s political speech, the Court held that limiting their expenditures to no more than $1,000 in today’s sophisticated (and expensive) media market was akin to “allowing a speaker in a 195 See id. 196 470 U.S. 480 (1985). 197 See id. at 483. 198 See id. at 490. 199 See id. at 493, quoting Buckley, 424 U.S. at 14. CRS-28 public hall to express his views while denying him the use of an amplifying system.”200 The Court then rejected the argument that NCPAC’s organizational structure eroded its First Amendment liberty interests. Associational values and class consciousness pervaded the Court’s reasoning. For example, the Court stressed that political committees are “mechanisms by which large numbers of individuals of modest means can join together in organizations which serve to ‘amplify the voice of [the committee’s] adherents.’”201 Moreover, the Court did not find that individuals were speaking through a political committee constitutionally significant: “to say that . . . collective action in pooling ... resources to amplify [a political perspective] is not entitled to full First Amendment would [unduly disadvantage those of modest means].”202 The Court distinguished its holding in National Right to Work Committee,203 which upheld a FECA regulation of corporations and unions by virtue of their unique organizational structure, and noted that “organizational structure” is irrelevant to its facial analysis of § 9012(f) because the statute equally burdens informal groups who raise and expend money in support of federally funded presidential candidates.204 After concluding that NCPAC’s First Amendment liberties were burdened by § 9012(f), the Court evaluated the state’s regulatory interests and asked whether the section was narrowly tailored to reach those interests. The state’s interests in alleviating the specter of corruption through a regulation which proscribes uncoordinated, independent expenditures by informal and formal organizations were not compelling to the Court as “independent expenditures may well provide little assistance to the candidate’s campaign and indeed may prove counter productive.” As such, the Court held that low probability of truly independent expenditures materializing into a political debt owed by the candidate to an independent speaker significantly undermined the state’s asserted interest in deterring actual and perceived corruption. Entertaining the state’s contention that the ability of political committees to amass large pools of funds increase the risk of corruption tainting the political process, the Court held that § 9012(f) was fatally over-inclusive, as it included within its scope informal groups that barely clear the $1,000 limitation.205 200 Id. See also Buckley, 424 U.S. at 19(“A restriction on the amount of money a person or group can spend on political communication during a campaign necessarily reduces the quantity of expression by restricting the number of issues discussed, the depth of their exploration, and the size of the audience reached. This is because virtually every means of communicating ideas in today’s mass society requires the expenditure of money.”) 201 NCPAC, 470 U.S. at 494, quoting Buckley, 424 U.S. at 22. 202 Id. at 495, distinguishing California Medical Assoc. 453 U.S. at 196,(Marshal, J.)(plurality opinion) discussed page 8, supra. 203 Discussed at page 20, supra. 204 See NCPAC, 470 U.S. at 496. 205 See id. at 498. CRS-29 Disclosure Requirements Three post-Buckley Supreme Court decisions regarding disclosure requirements involve two general regulatory contexts. The first line of cases clarifies the scope of Buckley’s general rule, upholding liberal disclosure requirements. In Buckley v. American Constitutional Law Foundation (ACLF),206 the Court struck down a regulation prescribing, among other things, “payee” disclosure in connection with a ballot initiative. Moreover, in Brown v. Socialist Workers ‘74 Campaign Committee,207 the Court struck down a state disclosure requirement as applied to a minority party that had historically been the object of harassment and discrimination in the public and private sectors. In the second regulatory context, in Federal Election Commission v. Akins,208 the Court was presented with the question of whether certain “political committees,” without the primary purpose of electing candidates, must nonetheless disclose under the FECA. The Court, however, did not issue a holding on this issue. Requiring Reporting and Disclosure (Buckley v. American Constitutional Law Foundation; Brown v. Socialist Workers ‘74 Campaign Committee; FEC v. Akins). Reviewing a First Amendment privacy of association and belief claim, the Supreme Court in Buckley v. American Constitutional Law Foundation (ACLF)209 examined the facial validity of a Colorado ballot-initiative statute requiring initiativesponsors to provide “detailed, monthly disclosures” of the name, address, and amount paid and owed to their petition-circulators.210 Colorado affords its citizens many “law-making” opportunities by placing initiatives on election ballots for public ratification.211 A non-profit organization founded to promote the tradition of “direct democracy” challenged the facial validity of the state’s statute regulating the initiative-petition process, alleging, inter alia, that the regulation’s disclosure requirement burdened citizens’ associational and speech interests.212 Colorado did not dispute that the regulation burdened expressive activity,213 but asserted regulatory interests in disseminating information concerning the distribution of capital tied to 206 525 U.S. 182 (1999). 207 459 U.S. 87 (1982). 208 524 U.S. 11 (1998). 209 525 U.S. 182 (1999). 210 See id. at 201. 211 See id. at 186. In addition to “disclosure,” the statute limited petition circulation to six months and required that petition-circulators be at least eighteen years old, be registered to vote, wear identification badges indicating their status as “volunteer” or “paid,” and attach a signed affidavit to each petition stating that they have read and understood the laws governing petition-circulation. See id. at 188-189. The Court, however, only reviewed the constitutionality of the voting registration, badge, and disclosure requirements. See id. at 186. 212 See id. at 201-202. 213 See id. CRS-30 initiative campaigns.214 Colorado asserted that the regulation promotes “informed public decision-making,” and deters actual and perceived corruption.215 Unimpressed with Colorado’s interests, the ACLF Court upheld the lower court’s decision,216 finding the disclosure requirement unconstitutional. Under Buckley, the Court determined that “exacting scrutiny” is necessary where, as here, a regulation compels the disclosure of campaign related payments.217 After noting the state’s interest in regulation, the Court examined the fit between the proposed statutory remedy and its requirements.218 As the lower court did not strike down the regulation in toto, but upheld the state’s requirements for payor disclosure, the electorate had access to information about who proposed an initiative and who funded the circulation of the initiative.219 The added “informational” benefit of requiring payee disclosure was not supported by the record and would be de minimis at best, held the Court.220 The Court further noted that, as Meyer v. Grant221 demonstrates, the risk of quid pro quo corruption, while common in candidate elections, is not as great in ballot initiatives because there is no corrupting object present, especially at the time of petition.222 Ergo, the Court held that while compelling state interests motivated Colorado’s regulatory régime, the link between “payee” disclosures and the state’s interests was too tenuous to warrant First Amendment infringement.223 In Brown v. Socialist Workers ‘74 Campaign Committee,224 the Supreme Court considered whether a state disclosure requirement was constitutionally applied, under the Fourteenth Amendment’s liberty interest in free speech and association, to a minority political party that historically had been the object of harassment and 214 See id. at 202. 215 See id. 216 The lower court invalidated the disclosure requirement “only insofar as it compels disclosure of information specific to each paid contributor, in particular, the circulators’ names and addresses and the total amount paid to each circulator.” Id. at 201, citing American Constitutional Law Foundation v. Meyer, 120 F.3d 1092, 1104-1105 (1997). 217 See id. citing Buckley, 424 U.S. at 64-65. By requiring proponents to identify paid circulators by name, it would decrease the supply of those willing to be circulators, thereby “chilling” core political speech. See ACLF, 525 U.S. at 212 (Thomas, J. concurring). 218 See ACLF, 525 U.S. 202. 219 See id. at 203. 220 See id. 221 486 U.S. 414 (1988)(holding a Colorado statute making it a felony to pay for circulation of initiative petitions to abridge political speech in violation of the First and Fourteenth Amendments.) 222 See ACLF, 525 U.S. at 203, quoting Meyer, 486 U.S. at 427(“The risk of fraud or corruption, or the appearance thereof, is more remote at the petition stage of an initiative than at the time of balloting.”) 223 See ACLF, 525 U.S. at 204. 224 479 U.S. 87 (1982). CRS-31 discrimination in the public and private sectors. The Court reviewed a state disclosure law requiring candidates to report the names and addresses of contributors and recipients of campaign funds.225 The principal plaintiff, a small political party operating in the socialist tradition, sought and obtained a restraining order against enforcement of the requirement and challenged the constitutionality of the statute as applied to its fundraising and expenditure activities.226 Agreeing with the plaintiff, the Court upheld the constitutional challenge. This was a fact intensive holding. The Brown Court affirmed Buckley’s prohibition on compelled disclosures where contributors would be subject to a reasonable probability of threats, harassment, or reprisals by virtue of their support of a currently and historically suspect political organization.227 The Court extended Buckley to protect recipients of campaign contributions.228 Affording the plaintiff “sufficient flexibility” in the proof of injury, the Court found “substantial evidence” to support the contention that compliance with the disclosure requirement would subject both contributors and recipients of campaign funds to the risk of threats, harassment, or reprisals.229 Plaintiff’s showing of current hostility by government and private parties included threatening phone calls, hate mail, burning of party literature, dismissal from employment due to members political affiliation, destruction of the membership’s property, harassment of the party’s candidate, and the firing of gunshots at the party’s offices.230 Plaintiff also developed a factual record of historic discrimination and hostility against the party and its membership.231 From this expansive record, the Court found that the plaintiffs established a “reasonable probability” that acts of discrimination, threats, reprisals, and hostility would continue in the future.232 Therefore, the Court held that the disclosure requirement was unconstitutional as applied to the plaintiffs’ political committees.233 In Federal Election Commission (FEC) v. Akins,234 the Supreme Court did not issue a holding on whether “an organization that otherwise satisfies the [FECA’s] definition of ‘political committee,’ and thus is subject to its disclosure requirements, nonetheless falls outside that definition because ‘its major purpose’ is not ‘the nomination or election of candidates.’”235 However, the Court reiterated that “political committees,” for the purposes of the FECA, refer to organizations under 225 See id. at 89. 226 See id. at 88. 227 See id. at 93, citing Buckley, 424 U.S. at 74. 228 See id. at 97, 98. 229 See id. at 101-102. 230 See id. at 99. 231 See id. 232 See id. at 100. 233 See id. at 102. 234 524 U.S. 11 (1998). 235 See id. at 14. CRS-32 the “control of a candidate” or with the major purpose of nominating or electing a candidate to political office. Requiring Attribution Disclosure by Individuals Distributing Leaflets in Issue-Based Elections (McIntyre v. Ohio Elections Commission). In McIntyre v. Ohio Elections Commission,236 the Supreme Court further defined the universe of permissible disclosure requirements when it struck down an Ohio election law, which prohibited the distribution of anonymous campaign literature and required attribution disclosure of the name of the literature’s author on all distributed campaign material. McIntyre arose in relation to a school tax levy, where a parent published and distributed anonymous campaign leaflets opposing the tax measure.237 The Court held that the statute violated the parent’s liberty interest in free speech under the First Amendment as incorporated by the Fourteenth Amendment.238 As the statute burdened the parent’s First Amendment interest in anonymous pamphleteering–“an honorable tradition of advocacy and dissent” in U.S. political history–the Court applied exacting scrutiny to the regulation.239 The Court construed the First Amendment interest in anonymity as “a shield from the tyranny of the majority. . . . [exemplifying] the purpose behind the Bill of Rights and of the First Amendment in particular, [which protects] unpopular individuals from retaliation and their ideas from suppression at the hand of an intolerant society.”240 The Court recalled, for example, that the Federalist Papers were published under fictitious names.241 Balanced against the parent’s interests in anonymous publishing, the Court acknowledged Ohio’s interest in preventing the dissemination of fraudulent and libelous statements and in providing voters with information on which to evaluate the message’s worth. However, the Court found that the state’s interests were not served by a ban on anonymous publishing because it had a number of regulations designed to prevent fraud and libel and because a person’s name has little significance to evaluating the normative weight of a speaker’s message.242 Thus, the Court held that the statute was not narrowly tailored to serve its regulatory interests and therefore, struck it down. The McIntyre Court specifically found that neither Bellotti nor Buckley were controlling in the McIntyre case: Bellotti concerned the scope of First Amendment protection afforded to corporations and the relevant portion of the Buckley opinion 236 514 U.S. 334 (1995). 237 See id. at 336. 238 See id. at 357. 239 Id. 240 Id. at 347. 241 See id. 242 See id. at 348, 349. CRS-33 concerned mandatory disclosure of campaign expenditures.243 Neither case involved a prohibition of anonymous campaign literature. In Buckley, the Court noted, it had stressed the importance of providing the electorate with information regarding the origin of campaign funds and how candidates spend those funds, but that such information had no relevance to the kind of “independent activity” in the case of McIntyre. “Required disclosures about the level of financial support a candidate has received from various sources are supported by an interest in avoiding the appearance of corruption that has no application in this case,” the Court stated.244 Moreover, the Court found that independent expenditure disclosure above a certain threshold, which the Court upheld in Buckley,245 although clearly impeding First Amendment activity, is a “far cry from compelled self-identification on all election-related writings.” An election related document, particularly a leaflet, is often a personally crafted statement of a political viewpoint and as such, compelled identification is particularly intrusive, according to the Court. In contrast, the Court found, expenditure disclosure, reveals far less information; that is, “even though money may ‘talk,’ its speech is less specific, less personal, and less provocative than a handbill – and as a result, when money supports an unpopular viewpoint it is less likely to precipitate retaliation.”246 Further distinguishing Buckley, the McIntyre Court found that not only is a prohibition on anonymous campaign literature more intrusive than the disclosure requirements upheld in Buckley, but it rests on “different and less powerful state interests.”247 The Federal Election Campaign Act (FECA), at issue in Buckley, regulates only candidate elections, not referenda or other issue-based elections, and the Buckley Court had construed “independent expenditures” to only encompass those expenditures that “expressly advocate the election or defeat of a clearly identified candidate.”248 Unlike candidate elections, where the government can identify a compelling governmental interest of avoiding quid pro quo candidate corruption, issue based elections do not present such a risk and hence, the Court ruled, the government cannot justify such an intrusion on free speech.249 Conclusion This report has discussed the 1976 landmark Supreme Court decision, Buckley v. Valeo, which established the constitutional framework for campaign finance regulation, and the Court’s extension of Buckley in subsequent cases. Although the Court has provided much guidance with regard to the constitutionality of various 243 Id. at 353. 244 Id. at 354. 245 Id. at 355, citing Buckley, 424 U.S. at 75-76. In Buckley, the Supreme Court had upheld a requirement that independent expenditures above a certain threshold be reported to the FEC. 246 Id. 247 Id. at 356. 248 Id., quoting Buckley, 424 U.S. at 80. 249 See id. CRS-34 aspects of campaign finance regulation, many questions still remain unanswered. Since 1976, the nature of campaign financing has changed significantly, particularly with the increased use of unregulated soft money250 and issue advertising. The Supreme Court, however, has not yet specifically addressed the regulation of these recently popular campaign activities. Therefore, while awaiting further guidance from the Court, those proposing or evaluating campaign finance legislation rely on Buckley and its progeny for constitutional direction. 250 For a discussion of soft money, see Campaign Finance: Constitutional and Legal Issues of Soft Money, by L. Paige Whitaker (CRS Issue Brief IB98025).