SpeechNow.org Decision May Expand the Role of Independent Groups
On March 26, the U.S. Court of Appeals for the District of Columbia issued a unanimous opinion in SpeechNow.org v. Federal Election Commission. The court decided that the Federal Election Commission (FEC) could not limit donations to independent political groups that will spend money to support or oppose candidates. This is the first major court ruling to apply the U.S. Supreme Court's holding in Citizens United v. FEC.
Organized under Section 527 of the tax code, SpeechNow.org can now receive unlimited contributions from individuals, but it must register as a political committee and disclose its financial information to the FEC. The appeals court found that because 527s operate independently of candidate campaigns, there is no chance for corruption. The opinion expands the impact of Citizens United by extending the rationale in that decision from campaign spending to campaign donations.
In November 2007, SpeechNow.org sought approval from the FEC for its plan to collect unlimited contributions from individuals to conduct "express advocacy." The group wants to air messages in support of federal candidates who favor free speech and oppose those who back legislation that restricts the rights to speech and association.
After the FEC informed the group that it would be deemed a political committee and could not accept unlimited contributions from individual donors, SpeechNow.org filed suit. The organization's challenge charged that limits on annual contributions from individuals were an unconstitutional violation of free speech and association rights. Under the FEC rules, individual donations to 527s for express advocacy were limited to $5,000 a year.
The decision announced on March 26 concluded that the 527 can receive unlimited contributions from individuals but must register with the FEC as a political committee. The ruling follows the judgment of the Supreme Court's January Citizens United decision, which found that corporations and unions can spend as much as they like in advocating for or against candidates as long as they disclose their activities and do not coordinate with candidates' campaigns.
The ruling in SpeechNow.org, written by Chief Judge David Sentelle, said that since the Supreme Court ruled in Citizens United that political expenditures do not corrupt the political process, neither do contributions to groups that make such expenditures. According to the appeals court's opinion, if there was no reason to limit independent spending, donations to groups that would be doing so should not be restricted. The appeals court said the government simply had no interest in limiting contributions to independent groups.
During oral argument, the FEC argued that large contributions to groups that broadcast such independent expenditures may "lead to preferential access for donors and undue influence over officeholders." The court responded that those arguments "plainly have no merit after Citizens United."
The FEC also maintained that the Citizens United case did not apply because that decision involved spending limits, not contribution limits. According to BNA Money and Politics (subscription required), during arguments, FEC attorney David Kolker noted that limits on contributions to political parties have not been changed. "Similar restrictions on non-party groups also should remain, the FEC lawyer said, because such groups can act as 'shadow parties' and be used to circumvent limits on contributions to candidates."
The appeals court did uphold disclosure requirements and decided that SpeechNow.org still has to organize as a political committee and fulfill financial reporting requirements. However, those restrictions were not heavily challenged; SpeechNow.org was primarily concerned with being able to collect unlimited donations for its political advocacy. The group also claimed that it had no objection to more limited reporting requirements the Internal Revenue Service (IRS) places on 527 organizations.
The court found that complying with reporting rules would only place a minimal burden on SpeechNow.org's First Amendment rights. The opinion states that "the public has an interest in knowing who is speaking about a candidate and who is funding that speech, no matter whether the contributions were made towards administrative expenses or independent expenditures." Information on contributors, which candidate the expenditure supports or opposes, expenditures of $1,000 or more made in the 20 days before an election, and any expenditures of $10,000 or more made at any other time must be disclosed to the FEC.
SpeechNow.org, its president David Keating, and four potential contributors were represented by attorneys from the Center for Competitive Politics and the Institute for Justice. Supporters of the ruling consider this another boost to the free speech rights of Americans and those who join together to engage in advocacy. Steve Simpson, an attorney for the Institute for Justice, said, "This decision ensures that all Americans can band together to make their voices heard during elections."
SpeechNow.org emphasized the decision in EMILY's List v. FEC as support for its challenge. In the EMILY's List case, regulations were struck down that limited donations to nonprofit political action committees used for campaign activity. However, the D.C. Circuit Court questioned the constitutionality of limits on contributions to independent political committees, even though those issues were not directly challenged in the EMILY's List lawsuit. After the EMILY's List decision, many predicted that SpeechNow.org had a good chance of winning its appeal.
In another case, Republican National Committee v. FEC, the U.S. District Court for the District of Columbia upheld provisions of the Bipartisan Campaign Reform Act that limit "soft money" contributions to political parties. The law prohibits political parties from accepting unlimited contributions from individuals, companies, and unions. The court said it does not have the authority to overturn a Supreme Court ruling upholding the ban on soft money fundraising by national party committees. The Republican National Committee (RNC) wanted to raise soft money for state elections, congressional redistricting, and other activities outside of federal elections. On April 2, the RNC filed an appeal to the Supreme Court.
The result of this patchwork of rulings is that currently, political parties cannot seek unlimited contributions from donors, but independent groups can. This has created an environment that favors contributions toward largely unregulated "independent" political organizations, rather than to candidates or political parties. Some observers worry that this will have exactly the effect that the Supreme Court and the appeals court denied it would: an increase in corruption and a decrease in disclosure about the activities of these groups due to the lack of a 21st-century reporting infrastructure.
Photo in teaser by Wikimedia Commons user AgnosticPreachersKid, used under a Creative Commons license.