Posted August 17, 2010 by Paul S. Ryan
Commonsense Ten, Club for Growth and the FEC’s Deregulation of Corporate Money in Politics 
The following was posted to the American Constitution Society blog on August 13, 2010.
In the months
since the landmark decision Citizens
United v. Federal Election Commission, authorizing corporations to
make unlimited independent political expenditures in candidate elections,
groups including the Republican-leaning Club for Growth and the
Democratic-leaning Commonsense Ten have asked the FEC to go well beyond the
Court's decision. They have asked the FEC, through Advisory Opinion Requests
(AORs), to extend Citizens United to further deregulate corporate
money in politics by ignoring statutes and regulations restricting how
corporate political committees (PACs) raise money and limiting contributions
from corporations to PACs - statutes and regulations not yet viewed or
evaluated by any court.
These recent
Club for Growth and Commonsense Ten AORs raise important questions of both
substance and process. When and how is it appropriate for an administrative
agency to decide not to enforce statutes and regulations that have not been
invalidated by any court?
Prior to the Citizens
United decision, corporations like Goldman Sachs were prohibited by
federal laws from (1) making political expenditures using their general
treasury funds and (2) making political contributions to federal candidates and
PACs. The
Citizens United Court
ruled that corporations like Goldman Sachs have a constitutional right to make
unlimited independent expenditures, but the corporate contribution ban was not
challenged, considered or invalidated in Citizens United.
The Supreme
Court in Citizens United concluded that, unlike "direct
contributions," which may give rise to corruption, "independent
expenditures, including those made by corporations, do not give rise to
corruption or the appearance of corruption," and held that the federal law
prohibiting a corporation from making independent political expenditures using
general treasury funds violates the corporation's right to free speech under
the First Amendment.
A couple of
months after the Supreme Court decided Citizens United, the en banc
D.C. Circuit Court of Appeals decided SpeechNow.org v. FEC. The court struck down, on First
Amendment grounds, the federal $5,000 limit on contributions from individuals
to SpeechNow.org, which promised to limit its political activity to making
independent expenditures (i.e., no contributions to candidates). In reaching
its conclusion, the D.C. Circuit extended the reasoning of Citizens United
from expenditures to contributions. The D.C. Circuit reasoned: "In light
of the Court's holding as a matter of law that independent expenditures do not
corrupt or create the appearance of quid pro quo corruption,
contributions to groups that make only independent expenditures also cannot
corrupt or create the appearance of corruption."
Neither Citizens
United nor SpeechNow challenged the constitutionality of the
federal ban on corporate contributions to candidates and political committees -
a ban that has been on the books since 1907. Consequently, neither the Supreme
Court in Citizens United nor the D.C. Circuit in SpeechNow
considered the constitutionality of the long-standing ban on corporate
contributions.
This fact,
however, did not stop Club for Growth and Commonsense Ten from approaching the
FEC to request further deregulation of corporate money in federal elections.
Club for Growth
argued in its Advisory Opinion Request that, under the rationales of
Citizens United and SpeechNow, it should be permitted to set up a corporate PAC
to make independent expenditures using the corporate parent's treasury funds to
pay the PAC's overhead expenses, but to do so free from existing statutory and
regulatory restrictions on corporate PAC solicitations (e.g., requirement that
corporate PAC only solicit its "restricted class" of executive
employees and shareholders).
Commonsense Ten
took things one step further. Commonsense Ten established itself as a federal
PAC to make independent expenditures and argued in its Advisory
Opinion Request that, under the rationales of Citizens United and
SpeechNow, it should be permitted to accept unlimited corporate and labor union
contributions - despite the statutory ban on corporate and union contributions
to federal PACs, which has not been invalidated by any court. Commonsense Ten
argued that because Citizens United establishes the right of corporations to
make unlimited independent expenditures, and because SpeechNow establishes the
right of independent expenditure PACs to accept unlimited individual
contributions, the two should be understood together as establishing the right
of independent expenditure PACs to accept unlimited corporate contributions.
The FEC voted
5-1 to approve both deregulatory advisory opinions, with Commissioner
Walther dissenting in both opinions. Commissioner Walther seemingly disagreed
primarily with how the Commission reached these results expanding the holdings
of Citizens United and SpeechNow. Commissioner Walther
suggested the FEC should have given the matters more thorough consideration
through a formal rulemaking proceeding, with opportunity for more extensive
public input through submission of written comments and in-person testimony at
a public hearing, rather than using the more abbreviated advisory opinion
process to decide the matters.
Commissioner
Walther's concerns are understandable. Regardless of whether multiple court
decisions can be read together to establish a certain proposition, it is
dangerous precedent for an administrative agency to sua sponte cease
enforcement of a federal statute that has not been invalidated by any court and
to do so through the advisory opinion process. After all, advisory opinions are
for the purpose of addressing questions "concerning the application of the
[Federal Election Campaign] Act," 11 C.F.R. § 112.1(a), not for declaring
key portions of the Act unconstitutional.
Paul S. Ryan is FEC Program Director and Associate Legal
Counsel at The Campaign Legal Center.
