March of freedom continues in SpeechNow.org v. FEC

A federal appeals court knocked out another wall in the regulatory maze of campaign finance restrictions today.

The unanimous opinion, authored by the D.C. Circuit Court of Appeals, held that the government may not limit unincorporated associations of citizens from banding together to spend money advocating for or against candidates. The ruling is another blow in a hail of punches against a government effort to regulate independent political speech.

In SpeechNow.org, the Court extended the rationale of the Supreme Court’s ruling in Citizens United v. FEC and the D.C. Circuit’s Sept. 2009 decision in EMILY’s List v. FEC. In Citizens United, the Court held that incorporated entities—business corporations, labor unions and nonprofits—pose no risk of corruption when they spend money independently to advocate for or against candidates. SpeechNow.org extends this rationale to unincorporated groups as well.

The D.C. Circuit also ruled earlier this month that an independent political party, Unity08, could raise and spend unregulated money until it designated a federal candidate. Brad Smith commented on that case in CCP’s blog.

As Brad has noted elsewhere in CCP’s blog, EMILY’s List struck down FEC regulations—11 C.F.R. 100.57, 106.6(c) and (f)—that severely limited the ability of non-profit organizations like the EMILY’s List to raise and spend money for political purposes. By striking the regulations, the Court ruled that that non-profits such as EMILY’s List, which also has a political action committee, can raise unlimited funds for non-federal races. The ruling, written by Judge Brett Kavanaugh, nullified the $5,000 cap on contributions to nonprofits and restrictions on ads mentioning federal candidates requiring the full costs of such ads to be paid for using “hard money” subject to such limits. The Court held that the Supreme Court’s jurisprudence has only allowed campaign finance regulations to prevent corruption, which clearly did not apply to the contributions to and independent expenditures of non-profit organizations.

“[I]f one person is constitutionally entitled to spend $1 million to run advertisements supporting a candidate (as Buckley held), it logically follows that 100 people are constitutionally entitled to donate $10,000 each to a non-profit group that will run advertisements supporting a candidate,” Kavanaugh wrote in EMILY’s List.

From an earlier CCP post:

“As a practical matter, [EMILY’s List] means that if an organization sets up a federal political action committee (PAC), they don’t renounce their right to run independent expenditures or otherwise participate in state and federal elections with unlimited funds—as long as they don’t coordinate with candidates. It means that the FEC won’t be threatening as many organizations with intrusive investigations; and, more importantly, it means that the government will be less involved with regulating independent political speech, increasing the ability of groups like EMILY’s List—and their counterparts—to freely participate in the political debate.”

The FEC did not pursue an en banc appeal in EMILY’s List and it declined to file cert in December. It’s not clear whether the FEC will seek cert in SpeechNow.org. Attorney General Eric Holder seemed to hope that the appellate court would overrule the EMILY’s List panel in a letter to House Speaker Nancy Pelosi, but that possibility vanished after Citizens United.

SpeechNow.org is also considering whether to appeal the Court’s ruling regarding disclosure and political committee regulation. These issues will have to come up in the future if not in this case. CCP foresees a time, and soon, when other groups that pose no threat of corruption will be hazed by the FEC’s political committee gauntlet in search of their “major purpose.” Some complaint will be filed with the FEC against independent speakers and a court will have to again hear the question of whether such a group—whose independent speech can pose no threat of corruption—can be investigated as to its major purpose. If nonprofits corporations like Citizens United didn’t register to engage in independent speech, why should other grassroots groups of individuals face such a hurdle?

From the joint CCP-IJ release on the SpeechNow.org ruling today:

In SpeechNow.org, the Court struck down federal campaign finance laws that made it practically impossible for new and independent groups of individuals to join together and advocate for the election or defeat of political candidates.

The Institute for Justice (IJ) and the Center for Competitive Politics (CCP) filed the First Amendment challenge to the laws in February 2008 on behalf of SpeechNow.org, a group of citizens that want to pool their money to run independent political ads for or against candidates based on their support for the First Amendment. SpeechNow.org accepts money only from individuals—not corporations or unions—and does not make any contributions to political candidates or parties.

Although lone individuals have long been permitted to spend unlimited amounts of money on independent political ads, two or more individuals who pool their money in order to do the exact same thing are considered “political committees” and are subject to a host of burdensome regulations, including limits on how much they may contribute to fund the group’s political speech.

Bradley A. Smith, CCP’s chairman and a former FEC chairman, added, “It’s unfortunate that the court did not recognize how political committee status regulation by the FEC places restrictive burdens on grassroots political groups.  The court’s decision means that the FEC regulatory regime will continue to favor large, established special interests over ad hoc groups of like-minded citizens who gather together to enhance their voices in politics.”

The Associated Press story on SpeechNow.org quoted Brad’s analysis of the landscape going forward:

SpeechNow.org is considering whether to appeal the disclosure requirement ruling to the Supreme Court, Gall and Brad Smith, another of its attorneys and a former FEC commissioner, said Friday.

“I can assure you that issue isn’t going to go away whether it’s appealed in SpeechNow or not,” Smith said, adding that the group views the FEC reporting requirements as an unconstitutional burden on its free speech.

Multichannel News, a publication focusing on the broadcast industry, detailed the SpeechNow.org opinion:

The Center for Competitive Politics, which supported the Supreme Court’s call, praised the D.C. Circuit’s decision.

“We are grateful that the court recognized the importance of the right of association in politics and speech,” said CCP vice president and SpeechNow co-counsel Stephen Hoersting in a statement. “The court affirmed that groups of passionate individuals, like billionaires-and corporations and unions after Citizens United-have the right to spend without limit to independently advocate for or against federal candidates.”

National Journal’s Under the Influence blog has reaction from across the spectrum:

The Institute for Justice and the Center for Competitive Politics hailed the ruling as a victory for free speech. “The court affirmed that groups of passionate individuals, like billionaires-and corporations and unions after Citizens United-have the right to spend without limit to independently advocate for or against federal candidates,” said Stephen M. Hoersting, vice president for the center and co-counsel in the SpeechNow case.

Campaign finance reform groups assailed it, saying it will increase the likelihood that a flood of corporate and union money would pour into elections. “To say that [corporations and unions] won’t drown out the voices of citizen is ludicrous,” said Lisa Gilbert, democracy advocate as U.S. Public Interest Research Group.

[This makes no sense… SpeechNow.org will take NO corporate contributions, and the Supreme Court already ruled that corporations and unions can fund independent expenditures out of their general treasuries. These groups allow small donors to pool their money with others to make their voices more effective. No surprise: absolute nonsense from the “reformers” on this…]

Of the SpeechNow opinion today, Michael Zolandz, a partner at Sonnenschein Nath & Rosenthal said he thinks that: “Essentially [it] creates three ‘types’ of federal PACs—independent expenditure PACs, traditional PACs that contribute hard dollars to candidates, and potentially a ‘mixed’ PAC that would be subject to limits if it makes both independent expenditures and hard dollar contributions. It [also] means that independent expenditure groups can ‘choose’ to deal with the FEC instead of the IRS if they make any federal independent expenditures.”

The analysis of Lyle Denniston at SCOTUSBlog is a must-read. Reuters’ write-up is here. Legal Times pounded out this blog update. The Wall Street Journal‘s Law Blog weighs in here. Reid Wilson of National Journal Group’s Hotline also provided a report. Richard Winger of Ballot Access News has more on SpeechNow.org v. FEC and RNC v. FEC.

The Center for Competitive Politics is now the Institute for Free Speech.