The End of Campaign Finance Law

Many thanks to Rick Hasen for this opportunity to guest blog about my forthcoming article, The End of Campaign Finance Law, 98 Va. L. Rev. (2012). At Rick’s invitation, I’m writing a short series of posts this week that track my article. The title of the article is deliberately provocative and signals its identification of Citizens United v. FEC as a pivotal moment in campaign finance law, stripping away much of campaign finance law and regulation as we long knew it.

In today’s post, I set out what I think is the far-reaching doctrinal impact of Citizens United, which goes well beyond the impact on corporate electioneering that garnered so much public attention. Tomorrow, I’ll explain a bit about the practical implications for the practice and regulation of campaign finance. Finally, I’ll close by discussing what Citizens United tells us about the Court’s views generally about political corruption and by arguing that the decision actually points new ways forward for anti-corruption regulation beyond campaign finance law, in areas like bribery and lobbying.

Citizens United, as we all know, sparked an unusually robust public debate about the constitutional rights of corporations and their role in politics. The decision spurred MoveOn.org to organize protest rallies across the country as a “breaking point” that could “warp our democracy forever if we let it do so.” However, almost all the public excitement about Citizens United focused on the question whether corporations could be restricted from drawing on treasury funds to pay for political campaigning in the form of independent expenditures. The irony is that the profound doctrinal impact of Citizens United, the most important campaign finance case since Buckley v. Valeo and the most publicly debated case in years, was largely missed in this public debate.

Most of the excitement about Citizens United revolved around the role of corporations in political campaigning, but the effect of the decision’s specific holding in terms of promoting corporate spending on campaign speech was likely not to be very large. As many scholars quickly pointed out after the decision, the Court had already opened the door for what amounted to corporate spending on campaign speech, in the form of so-called “sham issue advocacy,” a few years earlier in the much less-publicized FEC v. Wisconsin Right to Life, Inc.

Instead, Citizens United is the most important campaign finance decision since Buckley for reasons having little to do with corporate electioneering. Although the decision specifically addressed only corporate expenditures, the decision’s deeper logic cannot easily be restricted to corporate electioneering. The Court flatly concluded that “independent expenditures, including those made by corporations, do not give rise to corruption or the appearance of corruption.” This expansive conclusion about independent expenditures as a general matter called into question the constitutionality of any campaign finance restriction, direct or indirect, on independent expenditures by almost any speaker. It is this doctrinal move that fundamentally re-makes the world of campaign finance. Citizens United’s logic would lead not only to the impermissibility of direct restrictions on independent expenditures, but also to the impermissibility of lesser restrictions, such as longstanding contribution limits on funds to be used only on independent expenditures.

Citizens United’s doctrinal implications played out with incredible speed, leading to a new world of campaign finance within months of the decision. By the summer following Citizens United, the Federal Election Commission and lower courts took their lead from the Supreme Court in ruling that the definition of corruption articulated in the decision no longer supported existing regulation of independent expenditures that had stood in place since the birth of modern federal campaign finance law decades ago. The key lower court decision in this chain of events flowing from Citizens United was, of course, the D.C. Circuit decision in Speechnow.org v. FEC. The D.C. Circuit recognized that Citizens United signified “the government has no anti-corruption interest in limiting independent expenditures.” Just as a limitation on independent expenditures is unconstitutional as a matter of law under Citizens United, so too would be a limitation on contributions to fund only independent expenditures. In the absence of any contribution to candidates, the D.C. Circuit explained, “there is no corrupting ‘quid’ for which a candidate might in exchange offer a corrupt ‘quo.’” The D.C. Circuit therefore struck down the application of contribution limits to an outside group, like Speechnow.org, that limits itself to independent expenditures.

This de-regulation of independent expenditures only continued with the FEC codification of Speechnow.org. The FEC sanctioned the new type of political committee, the so-called “Super-PAC,” that engages only in independent expenditures and therefore may raise contributions without restriction from contribution limits. Not only were contribution limits inapplicable, but super-PACs were also free to raise unlimited funds for independent expenditures from corporations and unions in time for the 2010 elections. Thirty-seven political committees registered with the FEC as super-PACs in two months following the FEC ruling, and one super-PAC, American Crossroads, took advantage of de-regulation to raise almost $30 million in only a few months between the FEC ruling and the fall elections. As one Republican campaign finance lawyer put it, “This is pretty much the holy grail that people have been looking for.”

Still other groups pushed campaign finance law further by opting out of minimal FEC disclosures to which even super-PACs submitted. These organizations often were registered with the IRS as tax-exempt social welfare organizations, rather than as groups created primarily to influence elections, and did not register as political committees with the FEC. As a result, these groups do not comply with the disclosure of contributors and contributions required of FEC political committees. Nor do these groups comply with the IRS disclosure requirements that apply to 527 organizations that are primarily engaged in political campaigning. For some of these groups, including most prominently Crossroads GPS in the last election cycle, these electioneering activities included outright independent expenditures without meaningful disclosure of the sources of their contributions.

In short, post-Citizens United, outside groups that engage in forthright and extensive campaigning, in the form of independent expenditures, operated outside campaign finance regulation as it had existed for more than thirty years since Buckley. The three major pillars of federal campaign finance regulation—(1) source restrictions on corporations and unions; (2) contribution limits; and (3) disclosure of contributors and contributions—no longer applied to them.

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