High Court at a Crossroads

by Stephen M. Hoersting
“Nonpartisans” are trying to reverse Citizens United one investigation at a time.

What if Chief Justice John Roberts’s admonition, on the subject of restrictions on independent political advocates, that “enough is enough” had been met with the retort, “Oh, we’re just getting started!”?

Consider the travails of Crossroads GPS, a group that operates independently of candidates and is constituted as a social-welfare organization under section 501(c)(4) of the Internal Revenue Code. The Federal Election Commission recently cleared Crossroads of crossing into “political committee” status — a finding that saved Crossroads the burden of turning over its entire donor list to the FEC, the public, and its political opponents.

But certain “nonpartisan” campaign “reformers” weren’t prepared to see Crossroads cleared of speech crimes. Last week they appealed the FEC’s decision to a federal district court. Their goal: to make an example of Crossroads GPS that will scare off other groups planning to have a voice in the 2014 midterm elections.

The problem for Crossroads, and the hundreds of groups like it, is not that FEC findings are sometimes appealed; nor is it the fact that political broadsides can take the form of lawsuits. The problem is the unconstitutional nature of the “political committee” charge itself: A group that operates independently of candidates — no matter the group’s “major purpose” — can pose no threat of quid pro quo corruption, the raison d’être of campaign-finance restrictions.

The Roberts Court can correct this aberration by hearing Free Speech v. Federal Election Commission, a case currently before the Court that contains all the issues facing Crossroads GPS.

Few doubt that campaign “reformers” want “political committee” status for 501(c)(4)s for the same reason Senator Chuck Schumer (D., N.Y.) wants the IRS to implement new rules for 501(c)(4)s: to amass an insuperable advantage for incumbent Democratic senators in the 2014 elections. Senator Schumer recently visited the leftist Center for American Progress and appeared on The O’Reilly Factor to urge the IRS to unleash its regulations on 501(c)(4)s and “shut them all down.” The shut-them-all-down strategy may appear evenhanded, but we’ve seen this movie before. Twelve years ago, the McCain-Feingold law sacrificed political-party-committee soft money to the Left’s comparative advantage in 501(c)(4)s, labor unions, and the media. Today the 501(c)(4)s — vibrant on both the right and the left after Citizens United — must be sacrificed to the Left’s comparative advantage in labor unions and the media.

Under U.S. election law, a “political committee” (which the Supreme Court views as a group primarily tied to candidates by contributions, coordinated communications, or operational control)  must publicly report the source and substance of its every receipt and disbursement. And under the proposed IRS rules, a 501(c)(4) engaging in almost any of the activities it is used to engaging in would have to change its tax status to section 527, which would require it to — you guessed it — report its every receipt and disbursement, or else pay tax at the highest marginal rate.

It must be unpleasant for Senator Schumer to ask an ally like the Sierra Club to stay quiet or change its tax status to 527 and expose all its donors. But unpleasantness won’t keep Schumer from sacrificing allies if it means chilling donations to Americans for Prosperity, Crossroads GPS, FreedomWorks, and the Tea Party Express at the same time. After all, the IRS has proposed no rule changes for 501(c)(5) labor unions. And while the “major purpose” of any 501(c)(4) seems ripe for review, most adjudicators would find the major purpose of any labor union to be “collective bargaining,” not campaign activity, no matter how many ads unions run or how many doors their members knock on during an election campaign.

Most donors to 501(c)(4)s finance policy ads, not election-campaign ads, and no statute or court case suggests that their names must be disclosed. No matter: It seems Senate Democrats cannot abide a robust debate on jobs, debt, housing, and health care heading into the November elections. And changing the rules on disclosure just may save them that debate. When laws like the Affordable Care Act say “the Secretary shall” choose drug treatments and medical providers, it is no surprise that chemists and physicians wondering whether to speak for attribution against the secretary’s policies quickly decide they “shall” not. Multiply this dynamic against the myriad businesses at the mercy of other federal agencies, and you begin to understand the mad dash for donor disclosure. Even Senator Schumer has said the “deterrent effect” of disclosure “should not be underestimated.”

But deterrent effects are a problem for the constitutionality of the modern regulatory state, which, since the Court’s 1938 opinion in U.S. v. Carolene Products, has depended upon robust political processes for its legitimacy.

Those who treasure open debate and the citizens’ right to a say in federal regulatory policy must fight the IRS regulations in the political process. The #MakeDCListen movement might adopt the hashtag #LetAmericansSpeak. But the Supreme Court can stop the “political committee” crusade by hearing a question it thought it had resolved in Buckley v. Valeo in 1976.

Congress in the early 1970s had defined “political committee” as any “group” that makes “expenditures” in excess of $1,000 per year to “influenc[e]” the outcome of a federal election. But the Supreme Court could not permit a definition so sweeping and vague. In Buckley it took two steps to save the definition from constitutional infirmity. First, the Court construed the term “expenditure” to trigger the reporting of donor names only for communications that expressly advocate the election or defeat of specific candidates. Second, it promised that the political-committee reporting construct would never apply to a group not “under the control of a candidate” or whose “major purpose” was not “campaign related.”

Groups not “under the control of a candidate” are protected because they pose no threat of quid pro quo corruption. The “major purpose” test is also supposed to be a kind of shield for noncorrupting speakers. But “reformers” are now deploying “major purpose” tests to silence speakers, not protect them.

Since Citizens United, every organization has the right to use unlimited and unrestricted funds to make “independent expenditures” and independent “electioneering communications” (ads that mention candidates over broadcast, cable, or satellite within 60 days of a general election). The organization must disclose donors for those independent expenditures under section 434(c) of the Federal Election Campaign Act and report electioneering communications under section 434(f), regimes far less invasive than political-committee reporting under section 434(a). No one could have foreseen that groups running and reporting these ads under the Court’s protection would be hauled before the FEC to probe their “major purpose.”

This is the reason so many plaintiffs — from SpeechNow.org, to Real Truth About Abortion, to Free Speech — have asked the Court to review “political committee” standards in the light of longstanding precedent. They understand that alleging “political committee” status against an independent opponent is Political Kneecapping 101. After all, it was political-committee allegations that killed the independent Swift Boat Veterans for Truth and Americans Coming Together in the aftermath of the 2004 presidential election. And correcting the political-committee problem for independent groups was the impetus behind the Citizens United and SpeechNow.org cases of 2010.

Political Kneecapping 201, incidentally, is to charge a group and a candidate one hopes to defeat with “coordinating” their advertising, a charge that at least has the logical virtue of alleging quid pro quo corruption. But alleging “coordination” is a risky gambit because it invites a counter-investigation against a candidate one favors. So much safer to allege “political committee” status against an entire class of speakers your side believes it can win without — but that’s hardly the “major purpose” of the First Amendment.

The Supreme Court needs to recall that having a “major purpose” of campaign activity is neither a kind of corruption nor a proxy for corruption. The major-purpose test was an exercise in what jurisprudence calls “constitutional avoidance.” The Buckley Court avoided the following question, a question “reformers” are driving the Court to consider with their “major purpose” crusade, and a question pending in Free Speech: Can a group that poses no threat of corruption be compelled to disclose its every receipt and disbursement? Buckley suggests not. And the question is fundamental — especially since narrowly tailored reporting designed to meet the government’s “informational interest” is already written into law.

The good news is that the Supreme Court got essentially the same question right in FEC v. Massachusetts Citizens for Life. There the Court held that MCFL, a 501(c)(4), posed no threat of corruption; therefore, the government’s desire to force political-committee status on MCFL was unconstitutional. The government’s other interest, the interest in providing information to voters, was met by requiring MCFL to disclose donors only for those communications that expressly advocate the election or defeat of specific candidates (today, these would include disclosure for “electioneering communications”) but not to report its every receipt and disbursement as a political committee.

If the Court hears Free Speech, and answers the question as it did in MCFL, the investigatory lever is neutralized: Any gang gunning for groups like Crossroads will have to allege quid pro quo corruption by alleging “coordination” with candidates.

But if the Court fails to hear Free Speech, or hears it and allows political-committee investigations to go forward against noncorrupting groups that report fully the costs of their independent expenditures and electioneering communications, rest assured the investigations will continue until Citizens United shrinks, silence ensues, and the regulatory state can scarcely be seen as an instrument of We, the People.

— Stephen M. Hoersting was co-counsel to plaintiffs in SpeechNow.org v. FEC and is the author of a serial novel, Partisan.

 

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