Three key campaign-finance challenges, one already at the U.S. Supreme Court, seek to push through doors left open by the justices’ controversial Citizens United decision.
Advocates and opponents of campaign-finance regulations are watching, in particular, U.S. v. Danielczyk, now being briefed in the U.S. Court of Appeals for the 4th Circuit. The government is appealing a district court ruling that struck down the federal ban on direct corporate contributions to candidates.
The two other challenges tackle federal prohibitions against foreign campaign contributions and contributions by individuals with federal contracts. “These lawsuits are all at least theoretically outgrowths from Citizens United,” said Tara Malloy of the Campaign Legal Center. In Citizens United v. FEC, a 5-4 Court struck down the federal ban on the use of general treasury funds by corporations for independent campaign expenditures. “Citizens United is, of course, not directly on point in terms of the law, but its reasoning is certainly being used in new areas of campaign-finance law,” said Malloy. The plaintiffs in the three cases are using, to different degrees, language in Justice Anthony Kennedy’s majority opinion that campaign-finance regulations cannot discriminate based on the identity of the speaker, Malloy said. “This is not necessarily even the holding but it is this type of reasoning that is being leveraged,” she added.
The three federal cases, while significant in their own right, are only a small part of a national landscape littered with campaign-finance challenges post-Citizens United. Attacks on state laws banning direct corporate contributions are underway in Iowa, Minnesota, Montana and Texas, and there are dozens of challenges to state disclosure laws, many mounted by the lawyer who brought the Citizens United case to the Supreme Court — James Bopp Jr. of Bopp, Coleson & Bostrom of Terre Haute, Ind.
“Danielczyk is the challenge most obviously focused on federal restrictions, but if any of these cases were to go to the Supreme Court, the basic principle would very much be at issue,” said Malloy, whose organization has filed an amicus brief supporting the government. “There are multiple avenues anti-reform litigators are pursuing to get to the Supreme Court.”
The Danielczyk appeal in the 4th Circuit is considered by campaign- finance reformers and their opponents to be the most significant challenge to regulating big money in federal elections. This constitutional challenge to the ban on direct corporate contributions stems from a criminal indictment charging William P. Danielczyk Jr. and Eugene Biagi with offenses arising from a scheme to make unlawful campaign contributions, including at least $25,000 from corporate treasury funds.
Both defendants argued that the federal ban on corporate treasury contributions violated the First Amendment and they relied on the Citizens United decision. The district judge agreed. “[F]or better or worse, Citizens United held that there is no distinction between an individual and a corporation with respect to political speech,” wrote the district judge. “Thus, if an individual can make direct contributions within [the federal campaign-finance law's] limits, a corporation cannot be banned from doing the same thing.”
Five days later, the district court asked for briefing on whether it should reconsider its decision in light of the Supreme Court’s 2003 decision in FEC v. Beaumont. In Beaumont, the justices upheld the ban as applied to nonprofit advocacy corporations. But the district court subsequently decided that the Beaumont decision was not controlling and had been undermined by Citizens United.
Federal law has prohibited corporations from contributing to candidates for federal office since 1907. The contribution ban is now contained in Section 441b(a) of the Federal Election Campaign Act of 1971. It applies to unions as well. Although they cannot use general treasury funds for contributions, they can form political action committees which, in turn, can make contributions up to a certain limit from those segregated funds.
In Danielczyk, the government argues that Beaumont controls the decision. In that case, the government tells the appellate court, “the Supreme Court rejected a claim that nonprofit advocacy corporations are exempt under the First Amendment from Section 441b(a)’s blanket prohibition. The Court’s rationale for rejecting that claim was that the same government interests that justify a general ban — the prevention of corruption and the appearance of corruption, and the avoidance of circumvention of individual contribution limits — also apply to a nonprofit advocacy corporation.”
That rationale, according to the government, cannot be reconciled with the district court’s conclusion that nonprofit advocacy corporations are validly barred from making contributions, but for-profit corporations are not.
The two criminal defendants are represented on appeal by veteran Supreme Court advocate Jeffrey Lamken of Washington’s MoloLamken. Lamken’s brief is due in early January.
Already at the Supreme Court, Bluman v. FEC challenges the constitutionality of another section of the Federal Election Campaign Act, which prohibits foreign nationals from making contributions or expenditures in local, state and federal elections. A knowing and willful violation of the ban is punishable by a civil penalty not exceeding the greater of $10,000 or 200 percent of any contribution or expenditure involved in the violation. It is also punishable criminally by up to five years’ imprisonment.
Benjamin Bluman and Dr. Asenath Steiman contend the prohibition is unconstitutional as applied to foreign nationals who lawfully live and work in the United States.
Bluman is a citizen of Canada who attended Harvard Law School and works as an attorney for a New York law firm. He has lawfully resided in the United States since November 2009, and is entitled to remain until November 2012, at which point he anticipates applying for an additional three-year term. Steiman is a dual citizen of Canada and Israel who is completing her medical residency at Beth Israel Medical Center in New York. She has lived in the United States since June 2009, and is entitled to remain at least until June 2012; her three-year term is subject to extension to a maximum of seven years.
Bluman and Steiman, also represented by a veteran high court advocate — Michael Carvin of Jones Day — tell the justices that the ban violates their First Amendment rights. A federal district court upheld the contribution-and-expenditure prohibition after applying strict scrutiny. The court cited a long history of Supreme Court decisions holding that noncitizens may be excluded from certain activities that are an essential part of democratic self-government, such as “voting, serving as jurors, working as police or probation officers, or working as public school teachers.” The court found that campaign contributions and expenditures are vital aspects of American democratic self-government and the government has “a compelling interest” in limiting participation by those temporarily in the United States and “thereby preventing foreign influence over the U.S. political process.”
In the appeal, Carvin argues that, although aliens have no constitutional right to vote or hold public office, “resident aliens do have a right to political speech, which harms no one and instead enriches the marketplace of ideas. Americans deserve to hear what resident aliens have to say, and are free to consider or ignore it when they exercise their exclusive right to vote.” The federal ban, he writes in his brief, paternalistically “protects” Americans from this choice.
But the government counters that Bluman and Steiman are arguing that admission to the United States for temporary residence “inexorably carries with it” the right to engage in campaign-related spending. “But the First Amendment does not require Congress to make an all-or-nothing choice between excluding an alien from the United States and allowing him to participate in the fundamental operations of democratic self-government.”
Paul Sherman of the Institute for Justice, which has filed an amicus brief supporting Bluman, said the case “is a straightforward application of the rule of law in Citizens United. Congress can’t ban political speech based on the identity of the speaker, and Congress can’t tell American voters who they’re allowed to listen to before they go out and cast their vote.”
Alan Morrison of George Washington University Law School and the American Civil Liberties Union have joined forces in the third case, which challenges another provision in the Federal Election Campaign Act — the bar on individuals who have government contracts from making any contribution to any candidate, political committee or political party in connection with an election for federal office.
Wagner v. FEC is in federal district court in Washington, where Morrison and co-counsel Art Spitzer of the ACLU hope to use a fast-track procedure to get the case before the U.S. Court of Appeals for the D.C. Circuit. The government has not yet answered their complaint.
Morrison delved into the provision when a friend who had a contract with a federal agency to be an expert witness in an enforcement action contacted him and voiced concerns about the federal ban. “I had always assumed it was largely about corporations with government contracts and it seemed sort of redundant in my mind,” Morrison said. “When I looked and saw it applied to individuals, I stepped back and said, ‘That can’t be right.’ ”
The constitutional problem raised by the ban involves both the First and Fifth amendments, and probably more of the latter, they contend.
Their three plaintiffs are Wendy Wagner of the University of Texas School of Law, who has a research contract with the Administrative Conference of the United States, and Lawrence Brown and Jan Miller, both of whom have long-term contracts with the U.S. Agency for International Development.
The Fifth Amendment problem, Spitzer said, is an equal protection one. Their plaintiffs work along side federal employees who are not subject to the ban or any similar prohibition. The law also treats corporations with government contracts more favorably than it does individual contractors. Corporations can set up political action committees to make contributions, but individuals cannot.
“Corporations and people connected to corporations actually have much more in the way of speech rights here than ordinary little folks with contracts,” Spitzer said. “The vice president of Halliburton can make contributions within the limits of the law from the bonus he got for signing the contract, but our guys can’t from the money inherited from a grandmother.”
There is nothing in Citizens United, which involved independent expenditures, that is on point for their case, Morrison said, “but viscerally, if corporations can spend as much as they want to influence elections, shouldn’t people who have the right to vote be able to make contributions, limited to those candidates with no authority over their contracts?”
Marcia Coyle can be contacted at firstname.lastname@example.org.