U.S. Senate: CLC Offers Possible Legislative Fixes to Citizens United at Request of Senate Committee

CLC Staff
Feb 1, 2010
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Today the Campaign Legal Center submitted the following letter and memo to Senate Rules Committee Chairman Charles Schumer (D-NY) offering a series of potential legislative fixes to repair some of the damage done by the U.S. Supreme Court in its recent ruling in Citizens United v. Federal Election Commission. The suggested approaches were submitted for the official record at the request of the Rules Committee and outline a list of issues that the Legal Center recommends Congressional leaders should consider when putting together a legislative package in response to the recent court ruling.

 

The full text of the letter and memo follow below:

February 1, 2010

The Hon. Charles Schumer

Chair, Senate Rules Committee

Russell 305

Washington, DC 20510

Dear Chairman Schumer:

The Campaign Legal Center is pleased that the Senate Rules Committee will hold a hearing on the effect of the U.S. Supreme Court's decision in Citizens United v. FEC. We appreciate the opportunity to share with the Committee our thoughts regarding appropriate legislative responses to the Court's decision, which we regard as an extreme example of radical judicial overreach that arbitrarily overturns decades of precedent, and undercuts the ability of the legislative branch to regulate elections. We respectfully request that this letter and the accompanying attachment be included in the official record of the Rules Committee.

As you know, the 5-4 decision in Citizens United struck down the 60-year-old federal restriction on corporate expenditures in candidate elections. To reach this holding, the majority opinion written by Justice Kennedy effectively overruled three earlier Supreme Court decisions that upheld the constitutionality of restrictions on corporate expenditures: part of McConnell v. FEC (2003), Austin v. Michigan Chamber of Commerce (1990); and WRTL v. FEC (2007). Justice Stevens dissented, joined by Justices Ginsburg, Breyer, and Sotomayor. Eight of the Court's nine justices, however, joined in upholding the electioneering communications disclosure provisions that were enacted as a part of the Bipartisan Campaign Reform Act (BCRA).

The Citizens United case began as a challenge to BCRA's "electioneering communications" corporate funding restriction and disclosure requirements as applied to plaintiff's film entitled Hillary: The Movie and its advertisements promoting the film. On July 18, 2008, the district court granted the FEC's motion for summary judgment, holding that the film was the "functional equivalent of express advocacy" and therefore could be constitutionally subject to corporate funding restrictions. Citizens United appealed to the Supreme Court.

In its opening brief filed with the Court, Citizens United first argued that the Court's 1990 decision in Austin v. Michigan State Chamber of Commerce should be overruled. Instead of deciding the case on statutory grounds or on narrow constitutional grounds, the Court, on June 29, 2009, took the rare step of ordering re-argument on the question of whether the Court should overrule its past decisions affirming the constitutionality of restrictions on corporate electoral expenditures. After hearing oral argument on this broader question on September 9, 2009, the Court rendered its decision.

The Legal Center filed two amici briefs—on June 29 and July 31, 2009—with the Court, and previously had filed an amicus brief with the district court on June 6, 2008.

By empowering corporations to use their enormous wealth and urge the election or defeat of federal candidates, what the Court majority did in Citizens United was to unleash unprecedented amounts of corporate "influence-seeking" money on our elections and create unprecedented opportunities for corporate "influence-buying" corruption. This corporate cash will buy even more power over the legislative process and government decision making. As a result of this decision, for-profit corporations and industries will be able to threaten members of Congress with negative ads if they vote against corporate interests, and to spend tens of millions of dollars on campaign ads to "punish" those who do not "knuckle under" to their lobbying threats.

More than a century's worth of federal and state laws and policies restricting corporate campaign activity in federal elections has been undermined by the Court's irresponsible decision in Citizens United . What makes this glaring case of radical judicial activism even more striking is the fact that the Court chose to decide this case contrary to its own settled principles of stare decisis. As Chief Justice John Roberts testified in his confirmation hearings:

I do think that it is a jolt to the legal system when you overrule a precedent. Precedent plays an important role in promoting stability and evenhandedness. It is not enough—and the court has emphasized this on several occasions —it is not enough that you may think the prior decision was wrongly decided. That really doesn't answer the question, it just poses the question. And you do look at these other factors, like settled expectations, like the legitimacy of the court, like whether a particular precedent is workable or not, whether a precedent has been eroded by subsequent developments. All of those factors go into the determination of whether to revisit a precedent under the principles of stare decisis. [1]

Unfortunately, the Chief Justice and the other four Justices that comprised the majority in Citizens United failed to apply these factors in this case. After all, the Citizens United decision immediately de-stabilized the law, not only because the Court overturned decades of laws restricting corporate spending in our elections, but it also effectively invalidated or cast doubt regarding state election laws in over twenty states where corporate spending is restricted. These circumstances certainly had created an atmosphere of "settled expectations" that corporate spending restrictions would remain in place. That is especially true since the Court upheld those restrictions in the 2003 McConnell decision and refused to strike them down in the 2007 WRTL decision. Moreover, the restrictions on corporate spending had not proven to be unworkable or "eroded by subsequent developments."

Most irresponsibly, the narrow Court majority chose to take this radical step without even the benefit of a record from the lower courts, and in a case where there were several opportunities to decide the issues without overturning Acts of Congress or its own precedents. This case has all the hallmarks of the very judicial activism that conservatives usually criticize. Lacking an even vaguely authoritative set of facts in the case, the Court chose to act not upon relevant facts in a fully developed record, but rather based on its gut instinct in a gesture of disturbing condescension toward Congress and the American people. In this case, five Justices assumed the role of legislators, and actively reached out to decide matters better left to the expertise of Congress. The fact that they used the First Amendment as constitutional cover for their policy decision that corporate America has the same free speech rights as ordinary citizens only deepens the perversion of this ruling.

Given this outcome, it is critical that Congress move expeditiously to mitigate the damage inflicted by this decision. Attached is a list of areas the Legal Center has identified that Congress should consider as it attempts to limit the damage to our democracy caused by this decision. We encourage this Committee to move quickly to put together a package of reforms and to ensure that the dangers presented by Citizens United are dealt with effectively.

The Campaign Legal Center looks forward to the hearings and stands ready to be of assistance as the Committee considers specific legislation.

Sincerely,

J. Gerald Hebert

Executive Director

Attachment:

A LEGISLATIVE RESPONSE TO CITIZENS UNITED

The astonishing and radical outcome of the Citizens United case has opened new and troubling venues for a flood of special-interest money to pour into elections at all levels of government. The decision did not leave much room to repair the damage it will cause. But some actions can and should be taken immediately at the federal level—before the mid-term elections—to mitigate the damage the decision could bring.

Below is a list of issues that Congressional leaders should consider when putting together a legislative response package.

Ø Strengthen Statutory Language on What Constitutes Coordination

The Supreme Court's view in Citizens United that corporate expenditures would not corrupt federal elections hinged on its view that the expenditures would be made "independently" of candidates and political parties. Current Federal Election Commission (FEC) regulations defining what constitutes coordinated vs. independent expenditures are very narrow and too weak. Past FEC efforts to write coordination regulations have been rejected twice by courts as insufficient. There was an effort during consideration of the Bipartisan Campaign Reform Act (BCRA) to strengthen the statutory definition. That effort should be revived immediately. Congress should enact statutory restrictions defining coordination, especially since the FEC has shown itself incapable of writing them.

Ø Enact Ways to Provide Candidates Sufficient Access to the Publicly Owned Airwaves

Before the recent ruling, candidates faced the daunting prospect of raising large amounts of money to purchase time on the publicly-owned airwaves simply to communicate their message to voters. With corporations—and unions—now allowed to use treasury funds to run advertisements seeking to influence election outcomes, the problem has become worse. Candidates will need resources to help ensure that voters can hear their message and judge for themselves the relative value of a candidate. Over time, the statute that requires broadcasters to provide candidates the opportunity to purchase time at the lowest unit rate (also called lowest unit charge) has become severely weakened. Air time sold at the lowest unit rate is generally pre-emptible, thus forcing candidates to buy the more expensive, non-pre-emptible time to ensure they reach the targeted demographic. A new statute should ensure that once again the lowest unit rates for candidates are meaningful. In the longer term, Congress should consider providing candidates with broadcast vouchers to match small-dollar contributions. In addition, the Federal Communications Commission (FCC) should, as part of their on-going proceedings on public interest obligations of digital broadcasters, also look at ways to ensure that candidates have access to the publicly-owned airwaves so their messages are not drowned out by a political cacophony among many special interest players.

Ø Strengthen Shareholder Protections to Ensure Accountability

Corporate shareholders have a right to know how that corporation is spending its treasury funds. To improve accountability, corporations should be required to disclose more information about their expenses that are not deductible as a business expense under IRC 162, i.e. political activities. Also, corporate entities whose major activity is influencing elections should be regulated as "political committees" under federal campaign finance laws. The FEC has in recent years refused to regulate many such groups as political committees. Federal statutes should be strengthened to require regulation by the FEC.

Ø Strengthen Requirements for Disclosure of Corporate Spending for Political Purposes

A major concern raised by Citizens United is that corporations will evade disclosure of their electoral spending by laundering money through third-party organizations, such as a chamber of commerce. The Court, by a vote of 8-1, upheld the electioneering communications disclosure requirement. However, the FEC has already weakened this disclosure requirement by requiring third-party organizations to disclose only those donors that specifically designate their contributions for the organization's electioneering communications. The FEC rules thus create a roadmap for evasion of the law. Legislation should ensure that allsources of funds used by third-party groups for electoral spending are disclosed, especially any spending for advertising in mass media.

Ø Revise Statutes Dealing with Disclosure of "Electioneering Communications"

Current law requires disclosure of any broadcast, cable or satellite advertisement that: (1) references a clearly-identified federal candidate, (2) is targeted to the relevant electorate, and (3) is aired 30 days before a primary election and 60 days before a general election. Once a person or group spends over $10,000 in a year for electioneering communications, they must report to the FEC, including disclosing all their donors who contributed $1,000 or more to fund the ads. Now that corporate independent expenditures are permissible, there is no need for these narrow 30- and 60-day windows. Any electioneering communication should be disclosed whenever it occurs. Also, current law requires that independent expenditures be reported to the FEC in a filing with a statement certifying that the expenditure was not coordinated with any candidate or party. Electioneering communication disclosures should also include this same self-certification.

Ø Strengthen Pay-to-Play Restrictions for Government Contractors

Current law prohibits federal contractors from directly or indirectly making any contribution of money or other things of value to any political party, committee, or candidate. A new statute, based on the same constitutional rationale as the Hatch Act, should prohibit corporate federal contractors from making independent expenditures in support of or opposition to federal candidates. Other pay-to-play restrictions (e.g., hiring of lobbyists and certain types of corporations such as public utility companies) should also receive consideration.

Ø Ensure that Corporate Independent Expenditures Do Not Become a Means to Evade Current Statutory Restrictions on Foreign Nationals' Roles in U.S. Elections

In the aftermath of this decision, Congress should review the law to ensure that foreign controlled funds do not enter U.S. elections as a result of the Citizens United case. The FEC currently has rules governing the role of U.S. subsidiaries of foreign-owned companies that prohibit foreign funds being spent by U.S. corporations in U.S. elections, and forbid the involvement by foreign nationals in the decision-making process about such political spending. Congress should ensure that these rules are being adhered to, and can be enforced. Congress should also look at laws in states such as Hawaii that have dealt with the issues of foreign nationals.

Dangers to be Avoided in a Legislative Response: What NOT to Do

Ø Do not reopen the soft money loophole for parties

With the prospect of corporations making large independent expenditures, there is pressure to reopen the soft money loophole to allow political parties to accept unlimited corporate and union treasury funds which can be spent in a variety of ways to impact the outcomes of targeted races. But the answer to the potential influx of corporate spending is not to encourage more potential corruption. The extensive record in McConnell v. FEC, as well as the U.S. Supreme Court decision upholding BCRA, clearly demonstrated the corrupting influence of soft money contributions. That disturbing record should not be repeated by reopening the loophole.

Ø Do not significantly increase contribution limits to candidates and parties

Another reaction that has surfaced in the wake of Citizens United is to allow candidates and parties to accept significantly larger contributions. The U.S. Supreme Court has upheld contribution limits as established by Congress as a legitimate and constitutional means to fight corruption and the appearance of corruption. Significantly increasing those limits will allow even greater influence-buying and influence-seeking access.

What About Public Financing?

Public financing remains an attractive alternative to financing modern federal campaigns. However, the Citizens United ruling will require supporters of public financing to attract candidates to participate in such a system when they fear facing large independent expenditures by a corporation or union — potentially late-in-the-election cycle when there is little opportunity to offset the disadvantage. Previous public financing models relied on triggers to allow participating candidates to get larger matches or accept larger contributions if they faced such expenditures. But the Roberts Court, in Davis v. FEC, cast doubt on the constitutionality of such triggers.

The public financing measures introduced this Congress by Senator Dick Durbin (D-IL) and Representative John Larson (D-CT), as well as a new proposal put forth by the Campaign Finance Institute, avoid this potential constitutional problem. Yet, these proposals face an uphill battle to pass in the current fiscal and political environment in Congress. In addition, some candidates may have concerns about whether they will have the ability and time to raise sufficient funds to respond effectively to late-cycle corporate or union independent expenditures in the wake of Citizens United.

What About a Constitutional Amendment?

Proposals for a constitutional amendment to override the Court's ruling in Citizens United are likely to be introduced in Congress as well. Among the forms these proposals could take include targeting the issue of treating a corporation as a person/individual, or restricting the ability of corporations to use their treasury funds for electioneering activities. The path to ratification for a constitutional amendment is very long and difficult. Also, there are many people who may disagree with the Court's ruling who are uncomfortable with altering the First Amendment. In the meantime, there are important steps to be taken to mitigate the damage caused by the opinion, and to muster the political support to fight off attempts in Congress to cause further erosion of laws that protect against corruption and the appearance of corruption, as well as access- and influence-buying.


[1] Confirmation Hearing on the Nomination of John G. Roberts, Jr. to be Chief Justice of the United States, S. Hearing. 109-158, Serial No. J-109-37, p. 144 (2005); Available at: http://www.gpoaccess.gov/congress/senate/judiciary/sh109-158/browse.html

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