Public Policy and Law Alert
April 2010
Authors:
Tim L. Peckinpaugh
tim.peckinpaugh@klgates.com
+1.202.661.6265
Michael J. O'Neil
mike.oneil@klgates.com
+1.202.661.6226
Stephen P. Roberts
steve.roberts@klgates.com
+1.202.778.9357
K&L Gates includes lawyers practicing out
of 36 offices located in North America,
Europe, Asia and the Middle East, and
represents numerous GLOBAL 500,
FORTUNE 100, and FTSE 100
corporations, in addition to growth and
middle market companies, entrepreneurs,
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sector entities. For more information,
visit www.klgates.com.
Courts Repeal Contribution Limits for ThirdParty “Independent Expenditure Committees”
and Uphold Soft Money Ban
Two decisions issued almost simultaneously on March 26, 2010 in different courts
amplified the potential impact of the Supreme Court’s recent decision in Citizens
United v. FEC. In Speechnow.org v. FEC, No. 08-5223 (D.C. Cir., Mar. 26, 2010),
the D.C. Circuit Court of Appeals held that contribution limits do not apply to an
independent group that makes only independent expenditures. It also held that such
a group would be required to register as a political committee with the FEC and
submit to the disclosure requirements associated with such status. On the same day,
in Republican Nat’l Comm. v. FEC, No. 08-1953 (D.D.C., Mar. 26, 2010), a threejudge panel of the U.S. District Court for the District of Columbia upheld the
prohibition on soft-money contributions to state and local political parties for
activities that affect federal campaigns and to national political parties generally.
Taken together, these holdings reinforce the likelihood of a potentially significant
increase in independent organizations’ ability to influence federal campaigns.
Potential Impact
These two decisions combine to bolster the conclusion of Citizens United; now, an
individual, corporation, labor union, or even another committee may make unlimited
contributions to a political committee that exclusively makes independent
expenditures, but contributions to national parties are strictly limited.
In Speechnow.org, the Court held that a group not directly affiliated with a political
candidate that made only independent expenditures could raise contributions from
individuals in unlimited amounts. With the Citizens United holding, the impact of
this case will likely be to make contribution limits for “independent expenditure
committees” unenforceable.
Contrast this decision with the Court’s holding in RNC that maintained the ban on all
soft money to political parties. Since the passage of the Bipartisan Campaign
Reform Act of 2002 (BCRA), national parties have been prohibited from raising
non-federal contributions (so-called “soft money”) in any amount. The Court’s
holding in RNC affirmed the Supreme Court’s decision in McConnell v. FEC by
stating that soft money fundraising restrictions still applied notwithstanding Citizens
United’s rejection of an anti-corruption rationale for prohibiting certain contributions
to be used for independent expenditures. Accordingly, contributions to national
parties still may not exceed $30,400 per year (the current limit), and they may only
be made by individuals, PACs or other committees.
Public Policy and Law Alert
Speechnow.org v. FEC
In Speechnow.org, the D.C. Circuit Court of Appeals
reviewed a challenge to a draft FEC advisory
opinion by a so-called 527 group that held that the
group must register as a political committee under
the Federal Election Campaign Act (FECA) and
comply with contribution limits and disclosure
requirements for such groups. Citing Citizens
United’s rejection of an anti-corruption rationale, the
Court of Appeals overturned the FEC’s conclusion,
holding that contribution limits are unconstitutional
as applied to individuals’ contributions to
Speechnow. Noting that the “Supreme Court has
[previously] recognized only one interest sufficiently
important to outweigh the First Amendment interests
implicated by contributions for political speech:
preventing corruption or the appearance of
corruption,” the Court held that such an analysis no
longer applied after Citizens United, which held that
the government has no anti-corruption interest in
limiting independent expenditures. The Court,
however, upheld the FEC’s conclusion that the
organization would be required to register as a
political committee and disclose its activities.
RNC v. FEC
Alternately, in RNC v. FEC, the Supreme Court’s
rejection of that same anti-corruption rationale in
Citizens United did not lead to the District Court
overturning the existing ban on soft money
contributions in BCRA (as upheld by McConnell).
In RNC, the Republican National Committee, along
with the California Republican Party, the Republican
Party of San Diego, and the RNC Chairman
challenged their respective inability to raise and
spend unlimited soft money by: (1) the national
party for use in activities that do not target federal
candidates; (2) the state and local parties for use in
activities that do not target federal candidates; and
(3) the RNC Chairman, in his official capacity, for
use by state and local parties and candidates. In
each case, the District Court found that the Supreme
Court’s holding in McConnell prevented the relevant
entity from raising and spending soft money. The
District Court held, in particular, that the Citizens
United analysis is not applicable to national parties,
affirming that decision’s explicit holding that it “is
about independent expenditures, not soft money.”
While the District Court held that Citizens United
“undermines any theory of limiting contributions to
political parties that might have rested on the idea
that large contributions to parties create gratitude
from, facilitate access to, or generate influence over
federal officeholders or candidates,” it further held
that fact alone “is not enough for the RNC to
prevail. . .” This, in part, was because the
McConnell court found that the RNC previously
sold access in exchange for soft-money
contributions, and maintained a “close relationship
between federal officeholders and the national
parties.” However, in RNC, the District Court left
open the possibility for the Supreme Court to later
overturn its decision, noting that the Supreme Court
will have the opportunity to “clarify or refine this
aspect of McConnell as the Court sees fit.”
The District Court further found that state and local
parties could not raise and spend unlimited soft
money that in any way provided a direct benefit to
federal candidates, including voter drives and
generic campaign activities in support of any
election with a federal candidate on the ballot.
Similarly, the District Court upheld the prohibition
on the RNC Chairman raising soft money for state
or local parties in his official capacity because,
similar to contributions made directly to national
parties, soft money raised by the RNC Chairman
has the “potential ability to produce corruption or
the appearance of corruption” under a similar
analysis as contributions made directly to national
parties.
Conclusion
Taken together, these decisions extend the impact of
Citizens United by greatly expanding the financial
ability of third-party organizations to raise and
spend unlimited contributions for independent
expenditures while prohibiting national party
organizations from raising soft money in any
amount. While the RNC has already filed for
certiorari with the Supreme Court to appeal the
decision upholding McConnell as applied, under
current law national parties will be limited in their
ability to financially impact campaigns during the
2010 cycle relative to non-party independent
expenditure committees. Third-party organizations
making independent expenditures, however, will be
required to register with the FEC as a political
committee and, therefore, will be subject to relevant
April 2010 2
Public Policy and Law Alert
FEC disclosure requirements for independent
expenditures and electioneering communications.
This is subject, however, to further modification.
Forthcoming rulemakings by the FEC will determine
the scope and application of the holding in
Speechnow.org. Congress may also consider
legislation supported by the Obama Administration
that attempts to temper spending on independent
expenditures that could affect the 2010 election
cycle.
While the direction described in this analysis may
seem predictable, much remains uncertain and
you should consult a K&L Gates Political Ethics
attorney for more information before beginning any
independent expenditure campaign.
.
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