Oral Comments of Bradley A. Smith: Federal Election Commission Hearing on Advance Notice of Proposed Rulemaking in Light of McCutcheon, et al. v. FEC

February 11, 2015   •  By Joe Trotter   •    •  
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Thank you Chair Ravel, Vice-Chair Petersen, and Commissioners.

I am pleased to appear here today as the Chairman of the Center for Competitive Politics, and also as a member of public, from my home in Granville, Ohio, population 5646 (if you include the college students).

As we start this long day of comment, it is worth reminding ourselves that the United States today has more disclosure laws in effect that any prior time in our nation’s history. Indeed, campaign finance generally is regulated more heavily at the federal level than at any time prior to 1975, and in many ways, regulated more heavily than at any time prior to 2003. Federal laws and regulations governing campaign finance total over 376,000 words, not including advisory opinions, general statements of policy, and the like. That is about 75 percent longer than Plato’s Republic, generally considered the definitive philosophical treatise on it questions facing all of government. And it is further worth reminding ourselves that for all the outrage generated by those opposed to the Supreme Court’s eminently sensible and doctrinally ordinary First Amendment rulings in Citizens United v. FEC and McCutcheon v. FEC, no federal disclosure laws have been repealed nor were any struck down by the courts in those cases, nor were any FEC regulations governing earmarking, affiliation, or coordination.

While the Courts have not struck down any federal disclosure laws, it is not true, as some have suggested, that the Supreme Court has given its blessing to disclosure laws much broader than those already on the books. The Supreme Court has a long history of striking down overly broad disclosure rules, either facially or as applied, in Thomas v. Collins, NAACP v. Alabama, NAACP v. Button, Talley v. California, Bates v. Little Rock, Brown v. Socialist Workers ’74 Campaign Committee, Meyer v. Grant, Buckley v. American Constitutional Law Foundation, and McIntyre v. Ohio Elections Commission, to name some of the most prominent. In Massachusetts Citizens for Life v. FEC the Court struck down laws extending the reach of disclosure through the definition of political committee. And in Buckley v. Valeo itself the Court upheld FECA’s disclosure requirements only after dramatically narrowing their reach and scope, prohibiting many of the same things that are proposed for added disclosure today. Moreover, lower federal courts continue to strike down state laws often similar to many now proposed federally.

I do believe that there are things that can be done in the realm of disclosure, such as substantially raising the threshold for reporting of contributions and for registering as a political committee.   But if changes to disclosure rules are to be successful, they will occur in the context of legislative compromise, and cannot, under the statute, be successfully dictated by this agency. Attempts at agency action, in fact, would probably make the possibilities for legislative compromise less likely.

In issuing this ANPRM, the Commission relies heavily upon Chief Justice Roberts’s indication that “multiple avenues [are] available to Congress that would serve the Government’s interest in preventing circumvention while avoiding ‘unnecessary abridgment’ of First Amendment rights.’”

Merely because the Chief Justice suggested, as part of a First Amendment analysis, a number of measures that might be more carefully constructed than a blunt aggregate limit does not mean those measures would necessarily survive the required “closely drawn” analysis in the federal courts. As the McCutcheon Court stated, “[w]e do not mean to opine on the validity of any particular proposal.”

Nor, for that matter, does the Chief Justice’s repeated suggestions that Congress could plausibly take up additional anti-circumvention measures necessarily mean that the FEC may legislate in Congress’s stead. “Importantly,” said the Court, “there are multiple avenues available to Congress that would serve the Government’s anti-circumvention interest”; it wrote “If Congress agrees, it might…;  “[I]f Congress believes…it could require”; Congress might also consider…”; and “The point is that there are numerous alternative approaches available to Congress…”. Indeed, in only one circumstance did the Court suggest that the Commission might have authority to adopt stricter anti-circumvention measures. That was in the context of PACs, where it noted that “The FEC might strengthen those rules further by, for example, defining how many candidates a PAC must support in order to ensure that ‘a substantial portion’ of a donor’s contribution is not rerouted to a certain candidate”). Even there, the Supreme Court was not issuing an advisory opinion suggesting that the FEC could permissibly do this. But the fact that the decision explicitly mentions the FEC in only one circumstance, and Congress in all the others, is telling.

Any actions that the Commission takes must contain the “reasoned analysis” necessitated by the Administrative Procedures Act, and must then survive review under Chevron v. Natural Resources Defense Council.

Before considering the contents of any proposed rule change, then, the Commission must first consider whether existing rules are sufficient. Under current regulations, a “person may contribute to a candidate…and also to a political committee which has supported, or anticipates supporting, the same candidate in the same election, as long as… [t]he contributor does not give with the knowledge that a substantial portion will be contributed to … that candidate for the same election.” 11 C.F.R. § 110.1(h).

In other words, the Commission’s rules already prohibit earmarking, and, even before McCutcheon, donors were theoretically able to use contributions to PACs to skirt the limit on contributions to individual candidates. Yet nothing suggests that this was ever a major problem for the Commission or that existing regulations were inadequate to deal with it. The Commission has successfully prosecuted cases under 110.1(h), both in federal court,[1] and in obtaining settlements at the Commission level.[2]

During the course of the McCutcheon case, counsel for the United States and amici curiae floated numerous hypotheticals suggesting that absent an aggregate cap on contributions, informal earmarking that skirted the existing legal prohibitions might occur. As I and others with experience have written, these theories are highly unlikely to occur in reality. The McCutcheon majority itself found such theories “implausible” and “unlikely.” The Court noted that the district court erred by engaging in such “speculation.”  It considered such scenarios “divorced from reality,” and it clearly stated that the government may not by statute “further the impermissible objective of simply limiting the amount of money in political campaigns” by claiming “circumvention,” given the “improbability of circumvention.”

In short, while the Court suggested that certain regulatory steps short of an aggregate ban on contributions might be a less restrictive way for the government to accomplish its objectives, it made clear that such means must address an actual, and not a hypothetical, problem. Moreover, it expressed clear doubts that large scale circumvention of existing laws and regulations is likely.

Thus, any new rules would require some support beyond the mere fear that terrible things might occur – things which, we note, do not appear to have occurred in the most recent, post McCutcheon, election cycle. And if such alleged evils are not readily apparent in the FEC’s files, it is unlikely that this burden can be met.

Unfortunately, time constraints don’t allow for us to have a more serious discussion today. Let me conclude, then, simply by noting that I have heard much made of the fact that the Commission has received over 30,000 comments on this ANPRM, most, according to Commissioner Weintraub, clamoring for more restrictions on political speech and campaign financing. Of course, just last year, the Internal Revenue Service received about 170,000 comments urging it not to regulate political speech. And it was a little over a decade ago that this agency received well over 100,000 comments, the substantial majority opposed, to an NPRM that would have expanded the Agency’s reach, particularly in terms of disclosure. At that time Commissioner Weintraub stood with me against overreacting to events of the day – remember the evil du jour back then was “527s.” Who even hears about 527s anymore? Today’s villain du jour—spending without itemized donors– is something in the vicinity of 5 percent or less of political spending. And we know that because far from being truly “dark,” as the regulatory enthusiasts like to claim, the groups that do that spending must disclose that spending. So if you think you are getting lots of comments now, wait until you actually propose regulations that will limit the public’s right to speak and to hear.

Rather than spend time on divisive measures of dubious constitutionality in response to alleged problems of dubious dimension, I would urge this Commission to focus on modest but real reforms to its processes that can be accomplished. A bipartisan group, in which I participated, recently submitted a Petition for Rulemaking with several such ideas, and I would offer that as a place to start.

Thank you.

A PDF of Bradley A. Smith’s oral remarks is available here.

 


[1] e.g. FEC v. Nat’l Republican Senatorial Comm., 966 F.2d 1471 (D.C. Cir. 1992)

[2] e.g. MURs 4568 (Triad Management Services Inc.), 4633 (Riley for Congress), 4634 (Sam Brownback for Congress), 4736 (Rick Hill for Congress), and 5274 (Missouri State Democratic Committee)

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Joe Trotter