SpeechNow Decision Continues Deregulatory Trend in Campaign Finance Realm

Neil P. Reiff [Founding member, Sandler Reiff & Young]: "Last week, the United States Court of Appeals for the District of Columbia Circuit, sitting en banc, issued a significant, yet unsurprising decision [PDF File] in Speechnow.org. v. FEC. In Speechnow.org, the Circuit Court ruled 9-0, that a federal political committee that engages exclusively in independent expenditures is not subject to the $5,000 annual limit placed on contributions to federal PACs. Stated simply, if three individuals wanted to form a committee to run independent expenditures, each individual may contribute, without limit, to the federal committee. And that committee, as long as it acts independently of any candidate or party committee could run ads saying anything - even vote for or against a federal candidate. Although there is still the possibility that the case could head to the Supreme Court, if recent cases are any indication, there is a good chance that this case will not be appealed and will, at least at the federal level, create a new type of federal committee that (at least for the time being) will be subject to the prohibitions of federal law (i.e. no corporate or union treasury contributions) but not the $5,000 annual limitation on contributions by individuals. Considering the Supreme Court's recent decision in Citizens United v. FEC [PDF File], the Solicitor General may think twice about seeking review in this case. Indeed, considering the momentum in the DC Circuit and Supreme Court, the Solicitor General would be wise to let this one go and fight another day to minimize the damage, at least for now.

The Speechnow.org case provided a relatively simple and appealing constitutional issue to consider - whether a group that only engages in independent expenditures can be "corrupting." Although there is some case law on the issue, including a Fourth Circuit decision striking down PAC limits for independent expenditure committees, there was considerable debate whether previous conflicting pronouncements regarding "corruption" in Supreme Court jurisprudence, combined with the lower level of scrutiny in contribution cases, could lead to a decision upholding a PAC contribution limit for such committees (lower courts have split on the issue).

The death knell for the FEC's defense of the limits in Speechnow.org came just a few weeks earlier in Citizens United v. FEC. In that case, Justice Kennedy significantly narrowed the Court's concept of corruption when he succinctly declared that independent expenditures, as a matter of law, do not corrupt, or create the appearance of corruption. Any holdouts in the D.C. Circuit for the government's position were swayed, and the en banc court ruled swiftly and unanimously in favor of the plaintiffs.

This case has potentially significant implications for future litigation, as well as the political landscape. First, assuming the Solicitor General does not appeal this decision, the door is open for further erosion of the regulation of independent groups. Next will most likely be a test case aiming to establish that independent expenditure committees can accept, in light of the Citizens United decision, corporate and union funds for the purpose of paying for independent express advocacy communications in connection with federal elections. This is now something that corporations and unions may do directly after the Citizens United decision. Taking these two opinions together, there is nothing to stop a future litigant to argue that the FECA's corporation and union prohibitions should not apply to these committees.

Second, the decision has some good public policy implications. Before recent Court decisions, much of the independent political speech in federal elections occurred at the fringes of campaign regulation by groups such as "527's" and other "non-profits" who were either subject to the inadequate disclosure regime of the Internal Revenue Service or no disclosure at all. Working on the margins, these groups were already using unlimited individual, union and corporate contributions to run "issue ads" that were ostensibly intended to influence elections. The Speechnow.org decision (which also upheld political committee reporting requirements for independent expenditure committees) will bring more independent spending into the light by inducing committees to avoid the subterfuges of "issue advocacy" while subjecting their activity to the reporting regime of federal campaign finance law. In the long run, this will be a very positive development."

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