Commonsense Ten, Club for Growth and the FEC’s Deregulation of Corporate Money in Politics (American Constitution Society blog)

Recent Club for Growth and Commonsense Ten Advisory Opinion Requests to the FEC raise important questions of both substance and process. When and how is it appropriate for an administrative agency to decide not to enforce statutes and regulations that have not been invalidated by any court?

The following was posted to the American Constitution Society blog on August 13, 2010. To read the piece on the American Constitution Society blog, click here.

In the months since the landmark decision Citizens United v. Federal Election Commission, authorizing corporations to make unlimited independent political expenditures in candidate elections, groups including the Republican-leaning Club for Growth and the Democratic-leaning Commonsense Ten have asked the FEC to go well beyond the Court's decision. They have asked the FEC, through Advisory Opinion Requests (AORs), to extend Citizens United to further deregulate corporate money in politics by ignoring statutes and regulations restricting how corporate political committees (PACs) raise money and limiting contributions from corporations to PACs - statutes and regulations not yet viewed or evaluated by any court.

These recent Club for Growth and Commonsense Ten AORs raise important questions of both substance and process. When and how is it appropriate for an administrative agency to decide not to enforce statutes and regulations that have not been invalidated by any court?

Prior to the Citizens United decision, corporations like Goldman Sachs were prohibited by federal laws from (1) making political expenditures using their general treasury funds and (2) making political contributions to federal candidates and PACs. The Citizens United Court ruled that corporations like Goldman Sachs have a constitutional right to make unlimited independent expenditures, but the corporate contribution ban was not challenged, considered or invalidated in Citizens United.

The Supreme Court in Citizens United concluded that, unlike "direct contributions," which may give rise to corruption, "independent expenditures, including those made by corporations, do not give rise to corruption or the appearance of corruption," and held that the federal law prohibiting a corporation from making independent political expenditures using general treasury funds violates the corporation's right to free speech under the First Amendment.

A couple of months after the Supreme Court decided Citizens United, the en banc D.C. Circuit Court of Appeals decided SpeechNow.org v. FEC. The court struck down, on First Amendment grounds, the federal $5,000 limit on contributions from individuals to SpeechNow.org, which promised to limit its political activity to making independent expenditures (i.e., no contributions to candidates). In reaching its conclusion, the D.C. Circuit extended the reasoning of Citizens United from expenditures to contributions. The D.C. Circuit reasoned: "In light of the Court's holding as a matter of law that independent expenditures do not corrupt or create the appearance of quid pro quo corruption, contributions to groups that make only independent expenditures also cannot corrupt or create the appearance of corruption."

Neither Citizens United nor SpeechNow challenged the constitutionality of the federal ban on corporate contributions to candidates and political committees - a ban that has been on the books since 1907. Consequently, neither the Supreme Court in Citizens United nor the D.C. Circuit in SpeechNow considered the constitutionality of the long-standing ban on corporate contributions.

This fact, however, did not stop Club for Growth and Commonsense Ten from approaching the FEC to request further deregulation of corporate money in federal elections.

Club for Growth argued in its Advisory Opinion Request that, under the rationales of Citizens United and SpeechNow, it should be permitted to set up a corporate PAC to make independent expenditures using the corporate parent's treasury funds to pay the PAC's overhead expenses, but to do so free from existing statutory and regulatory restrictions on corporate PAC solicitations (e.g., requirement that corporate PAC only solicit its "restricted class" of executive employees and shareholders).

Commonsense Ten took things one step further. Commonsense Ten established itself as a federal PAC to make independent expenditures and argued in its Advisory Opinion Request that, under the rationales of Citizens United and SpeechNow, it should be permitted to accept unlimited corporate and labor union contributions - despite the statutory ban on corporate and union contributions to federal PACs, which has not been invalidated by any court. Commonsense Ten argued that because Citizens United establishes the right of corporations to make unlimited independent expenditures, and because SpeechNow establishes the right of independent expenditure PACs to accept unlimited individual contributions, the two should be understood together as establishing the right of independent expenditure PACs to accept unlimited corporate contributions.

The FEC voted 5-1 to approve both deregulatory advisory opinions, with Commissioner Walther dissenting in both opinions. Commissioner Walther seemingly disagreed primarily with how the Commission reached these results expanding the holdings of Citizens United and SpeechNow. Commissioner Walther suggested the FEC should have given the matters more thorough consideration through a formal rulemaking proceeding, with opportunity for more extensive public input through submission of written comments and in-person testimony at a public hearing, rather than using the more abbreviated advisory opinion process to decide the matters.

Commissioner Walther's concerns are understandable. Regardless of whether multiple court decisions can be read together to establish a certain proposition, it is dangerous precedent for an administrative agency to sua sponte cease enforcement of a federal statute that has not been invalidated by any court and to do so through the advisory opinion process. After all, advisory opinions are for the purpose of addressing questions "concerning the application of the [Federal Election Campaign] Act," 11 C.F.R. § 112.1(a), not for declaring key portions of the Act unconstitutional.

Paul S. Ryan is FEC Program Director and Associate Legal Counsel at The Campaign Legal Center.