Order Code RL30669
The Constitutionality of Campaign Finance
Regulation: Buckley v. Valeo and Its
Supreme Court Progeny
Updated November 18, 2008
L. Paige Whitaker
Legislative Attorney
American Law Division
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Supreme Court Campaign Finance Holdings: Balancing Free Speech and Regulation, Lecture notes of Finance
An analysis of Supreme Court cases examining the constitutionality of campaign finance regulations, focusing on contribution and expenditure limits. the Court's rationale for protecting First Amendment liberties while upholding regulations aimed at preventing corruption. It also highlights key principles and cases, including FEC v. Beaumont and FEC v. Massachusetts Citizens for Life.
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Order Code RL
The Constitutionality of Campaign Finance
Regulation: Buckley v. Valeo and Its
Supreme Court Progeny
Updated November 18, 2008
L. Paige Whitaker
Legislative Attorney
American Law Division
The Constitutionality of Campaign Finance Regulation: Buckley v. Valeo and Its Supreme Court Progeny
Summary
Political expression is at the heart of First Amendment activity and the Supreme Court has granted it great deference and protection. However, according to the Court in its landmark 1976 decision, Buckley v. Valeo , an absolutely free political marketplace is not required by the First Amendment — nor is it desirable — because without reasonable regulation, corruption will result. Most notably, the Buckley Court ruled that the spending of money in campaigns, whether as a contribution or an expenditure, is a form of “speech” protected by the First Amendment. The Court upheld some infringements on free speech, however, in order to further the governmental interests of protecting the electoral process from corruption or the appearance of corruption.
In Buckley , the Supreme Court considered the constitutionality of the Federal Election Campaign Act of 1971 (FECA), requiring political committees to disclose campaign contributions and expenditures and limiting, to various degrees, the ability of persons and organizations to make contributions and expenditures. While First Amendment freedoms and campaign finance regulation present conflicting means of attempting to preserve the integrity of the political process, the Court resolved this conflict in favor of the First Amendment interests and subjected any regulation burdening free speech and free association to “exacting scrutiny.” Under this standard of review, a court will evaluate whether the government’s interests in regulating are compelling, examine whether the regulation burdens and outweighs First Amendment liberties, and inquire as to whether the regulation is narrowly tailored to serve the government’s interests. If a regulation meets all three criteria, a court will uphold it.
This report first discusses the key holdings enunciated by the Supreme Court in Buckley , including those upholding reasonable contribution limits, striking down expenditure limits, upholding disclosure reporting requirements, and upholding the system of voluntary presidential election expenditure limitations linked with public financing. It then examines the Court’s extension of Buckley in several subsequent cases, evaluating them in various regulatory contexts: contribution limits ( California Medical Association v. FEC; Citizens Against Rent Control v. Berkeley; Nixon v. Shrink Missouri Government PAC; FEC v. Beaumont) ; expenditure limits ( First National Bank of Boston v. Bellotti; FEC v. Massachusetts Citizens for Life; Austin v. Michigan Chamber of Commerce; FEC v. National Right to Work; Colorado Republican Federal Campaign Committee (Colorado I) v. FEC; FEC v. Colorado Republican Federal Campaign Committee (Colorado II); FEC v. Democratic Senatorial Campaign Committee; FEC v. National Conservative Political Action Committee; Randall v. Sorrell) ; disclosure requirements ( Buckley v. American Constitutional Law Foundation; Brown v. Socialist Workers ‘74 Campaign Committee; FEC v. Akins; McIntyre v. Ohio Elections Commission) ; and political party soft money and electioneering communication restrictions ( McConnell v. FEC ; Wisconsin Right to Life, Inc. v. FEC (WRTL II)).
Requiring Sponsors of Election-Related Advertisements to Self-Identify (“Stand-By-Your-Ad Provision”)............ 39 Requiring Political Parties to Choose Between Coordinated and Independent Expenditures After Nominating a Candidate.. 39 Prohibiting Campaign Contributions by Minors Age 17 and Under.. 40 Establishing Staggered Increases in Contribution Limits if Opponent Spends Certain Amount in Personal Funds (“Millionaire Provisions”): Challengers Held to Lack Standing 41 Supreme Court Deference to Congressional Findings............. 41 Wisconsin Right to Life, Inc. v. FEC (WRTL II)..................... 41 Prohibiting Corporate and Labor Union Treasury Fund Financing of Electioneering Communications............... 43
Conclusion...................................................... 46
(^1) Roth v. United States, 354 U.S. 476, 484 (1957).
(^2) 424 U.S. 1 (1976).
(^3) For example, in a line of cases involving the regulation of corporations, the Court
endeavored to resolve whether the First Amendment’s value for open debate by diverse participants permits the government to impose regulations designed to promote fairness and prevent corporate monopolization of the political marketplace; and whether the First Amendment’s value for liberty proscribes the government from regulating the political speech and association rights of corporations. Compare Buckley v. Valeo, 424 U.S. 1, 48- 49 (1976) (“[T]he concept that government may restrict the speech of some elements of our society in order to enhance the relative voice of others is wholly foreign to the First (continued...)
The Constitutionality of Campaign Finance
Regulation: Buckley v. Valeo and Its
Supreme Court Progeny
Introduction
Campaign finance regulation invokes two conflicting values implicit in the application of the First Amendment’s guarantee of free political speech and association. On the one hand, political expression constitutes “core” First Amendment activity, which the Supreme Court grants the greatest deference and protection in order to “assure [the] unfettered interchange of ideas for the bringing about of political and social changes desired by the people.”^1 On the other hand, according to the Court in its landmark 1976 decision, Buckley v. Valeo,^2 an absolutely free “political marketplace” is neither mandated by the First Amendment, nor is it desirable, because when left uninhibited by reasonable regulation, corruptive pressures undermine the integrity of political institutions and undercut public confidence in republican governance. In other words, although the Court reveres the freedoms of speech and association, it has upheld infringements on these freedoms in order to further the governmental interests of protecting the electoral process from corruption or the appearance of corruption.
Case law subsequent to Buckley further illustrates that neither the freedom of speech and association nor the government’s regulatory powers are absolute. Accordingly, Supreme Court campaign finance holdings embody the doctrinal tension between striking a reasonable balance between protecting the liberty interests in free speech and association, on the one hand, and upholding campaign finance regulation enacted with the intent to encourage political debate while protecting the election process from corruption, on the other. The Court appears to uphold First Amendment infringements by campaign finance regulation only insofar as the regulation is deemed necessary to preserve the very system of representative democracy that unregulated First Amendment freedoms purport to insure.^3
(^5) (...continued)
“disclosure” regulation under separate (though interrelated) lines of judicial principles. Evaluating a facial challenge to spending limitations, the Court construed the regulation as burdening two sorts of “speech acts”: (1) “contributions,” which express the level of a person or group’s “support” of a candidate, and (2) “independent expenditures,” which express the level of a person or group’s “independent political point of view.” In addition to evaluating “speech” activity, the Court analyzed “contributions” and “independent expenditures” in connection with their “associational” value. (^6) 26 U.S.C. § 9001 et seq.
(^7) 2 U.S.C. § 441a.
(^8) 2 U.S.C. § 434.
(^9) See Subtitle H of the Internal Revenue Code of 1954, codified at 26 U.S.C. § 9001 et seq.
(^10) Formerly 18 U.S.C. § 608(c)(1)(C-F). The Court made an exception for presidential
candidates who accept public funding. (^11) Formerly 18 U.S.C. § 608e.
(^12) Formerly 18 U.S.C. § 608a.
(^13) Formerly 2 U.S.C. § 437c(a)(1)(A-C).
(^14) There are two exceptions to this general rule: (1) disclosure requirements will probably
not be upheld if disclosure of a contributor places him or her at risk for economic reprisal or physical threats for being “publicly” associated with the political group, see NAACP v. Alabama, 357 U.S. 449 (1958) discussed infra , and Brown v. Socialist Workers, 459 U.S. 87 (1982), discussed infra , and (2) disclosure requirements will probably not be upheld if they abridge the right of an individual to publish and distribute leaflets anonymously, expressing a political point of view, in a referenda or other issue-based election, see McIntyre v. Ohio Elections Commission, 514 U.S. 334 (1995) discussed infra.
Presidential Election Campaign Fund Act.^6 The Court upheld the constitutionality of certain statutory provisions, including (1) contribution limitations to candidates for federal office,^7 (2) disclosure and record-keeping provisions, 8 and (3) the system of public financing of presidential elections.^9 The Court found other provisions unconstitutional, including (1) expenditures limitations on candidates and their political committees, 10 (2) the $1,000 limitation on independent expenditures, 11 (3) expenditure limitations by candidates from their personal funds,^12 and (4) the method of appointing members to the Federal Election Commission. 13 In general, the Court struck down expenditure limitations, but upheld reasonable contribution limitations, disclosure requirements,^14 and voluntary spending limits linked with public financing provisions.
In considering the constitutionality of these statutes, the Buckley Court applied the standard of review known as “exacting scrutiny,” a standard applied by a court when presented with regulations that burden core First Amendment activity. Exacting scrutiny requires a regulation to be struck down unless it is narrowly tailored to serve a compelling governmental interest.
Contribution and Expenditure Limits. When analyzing First Amendment claims, a court will generally first determine whether the challenged government action implicates “speech” or “associational activity” guaranteed by the First
(^15) See Buckley, 424 U.S. at 21.
(^16) Id. at 19.
(^17) Id. at 15.
(^18) Id. at 17.
(^19) See id. at 24.
(^20) Id. at 59.
(^21) Id. at 27.
(^22) See id.
(^23) Id. at 28.
Amendment. Most notably, the Buckley Court held that the spending of money, whether in the form of contributions or expenditures, is a form of “speech” protected by the First Amendment. A number of principles contributed to the Court’s analogy between money and speech. First, the Court found that candidates need to amass sufficient wealth to amplify and effectively disseminate their message to the electorate. 15 Second, restricting political contributions and expenditures, the Court held, “necessarily reduces the quantity of expression by restricting the number of issues discussed, the depth of the exploration, and the size of the audience reached. This is because virtually every means of communicating ideas in today’s mass society requires the expenditure of money.”^16 The Court then observed that a major purpose of the First Amendment was to increase the quantity of public expression of political ideas, as free and open debate is “integral to the operation of the system of government established by our Constitution.”^17 From these general principles, the Court concluded that contributions and expenditures facilitated this interchange of ideas and could not be regulated as “mere” conduct unrelated to the underlying communicative act of making a contribution or expenditure. 18
However, according to the Court, contributions and expenditures invoke different degrees of First Amendment protection.^19 Recognizing contribution limitations as one of FECA’s “primary weapons against the reality or appearance of improper influence” on candidates by contributors, the Court found that these limits “serve the basic governmental interest in safeguarding the integrity of the electoral process.”^20 Thus, the Court concluded that “the actuality and appearance of corruption resulting from large financial contributions” was a sufficient compelling interest to warrant infringements on First Amendment liberties “to the extent that large contributions are given to secure a quid pro quo from [a candidate.]”^21 Short of a showing of actual corruption, the Court found that the appearance of corruption from large campaign contributions also justified these limitations. 22
Reasonable contribution limits, the Court noted, leave “people free to engage in independent political expression, to associate [by] volunteering their services, and to assist [candidates by making] limited, but nonetheless substantial [contributions].”^23 Further, a reasonable contribution limitation does “not undermine to any material degree the potential for robust and effective discussion of candidates and campaign issues by individual citizens, associations, the institutional press,
(^31) See National Association for the Advancement of Colored People (NAACP) v. Alabama,
357 U.S. 449 (1958). The reasoning in Buckley and Brown v. Socialist Workers ‘ Campaign Comm., 459 U.S. 87 (1982), discussed infra, has historical roots in NAACP v. Alabama. In NAACP , the Court addressed whether a non-profit organization’s associational rights were abridged by a state statute compelling disclosure of its members and agents without regard to their position and responsibilities in the association. The organization did not comply with the disclosure requirement. Finding for the NAACP, the Court held that the freedom of association is an “inseparable aspect” of the freedoms guaranteed by the First and Fourteenth Amendments, see id. at 460-61; that compelled disclosure of the association’s membership would effectively restrain that freedom, see id. at 461-463; and that, under strict scrutiny, the state’s interests in disclosure were insufficient to overcome the association’s deprivation of right, see id. at 463-366. The Court stressed that the “vital relationship between freedom to associate and privacy in one’s associations” was unduly burdened by the disclosure requirement, as past revelation of membership identity resulted in economic reprisal, loss of employment, threat of physical coercion, and other manifestations of public hostility. Id. at 462. (^32) See also McIntyre v. Ohio Elections Commission, 514 U.S. 334 (1995) (further defining
the scope of Buckley ’s disclosure jurisprudence to proscribe disclosure requirements that infringe on the right of an individual to publish and distribute leaflets anonymously, expressing a political point of view, in a referenda or other issue-based election), discussed infra. (^33) 26 U.S.C. § 9001 et seq.
(^34) See Buckley, 424 U.S. at 85.
(^35) See id. at 86.
additional evidence upon which to base their vote; (2) deterring actual and perceived corruption by exposing the source of large expenditures; and (3) providing regulatory agencies with information essential to the election law enforcement. However, when disclosure requirements expose members or supporters of historically suspect political organizations to physical or economic reprisal,^31 then disclosure may fail constitutional scrutiny as applied to a particular organization.^32
Voluntary Presidential Election Expenditure Limits Linked With Public Financing. The Supreme Court in Buckley upheld the constitutionality of the system of voluntary presidential election expenditure limitations linked with public financing, through a voluntary income tax checkoff.^33 The Court found no First Amendment violation in disallowing taxpayers to earmark their $1. “checkoff” for a candidate or party of the taxpayer’s choice. As the checkoff constituted an appropriation by Congress, it did not require outright taxpayer approval, as “every appropriation made by Congress uses public money in a manner to which some taxpayers object.”^34 The Court also rejected a number of Fifth Amendment due process challenges, including a challenge contending that the public financing provisions discriminated against minor and new party candidates by favoring major parties through the full public funding of their conventions and general election campaigns, and by discriminating against minor and new parties who received only partial public funding under the act. 35 The Court held that “[a]ny risk of harm to minority interests ... cannot overcome the force of the governmental
(^36) Id. at 101.
(^37) Id. at 44.
(^38) Id., n. 52.
(^39) Buckley, 424 U.S. at 42. See also FEC v. Massachusetts Citizens for Life, Inc., 479 U.S.
238 (1986), discussed infra. (^40) 453 U.S. 182 (1981).
(^41) 454 U.S. 290 (1981).
(^42) 528 U.S. 377 (2000).
interests against the use of public money to foster frivolous candidacies, create a system of splintered parties, and encourage unrestrained factionalism.”^36
Issue and Express Advocacy Communications. In Buckley , the Supreme Court provided the genesis for the concept of issue and express advocacy communications. In order to pass constitutional muster and not be struck down as unconstitutionally vague, the Court ruled that FECA can only apply to non-candidate “expenditures for communications that in express terms advocate the election or defeat of a clearly identified candidate for federal office,” i.e., expenditures for express advocacy communications. 37 In a footnote to the Buckley opinion, the Court further defines “express words of advocacy of election or defeat” as, “vote for,” “elect,” “support,” “cast your ballot for,” “Smith for Congress,” “vote against,” “defeat,” and “reject.”^38 Communications not meeting the express advocacy definition are commonly referred to as issue advocacy communications.
In its rationale for establishing such a bright line distinction between issue and express advocacy, the Court noted that the discussion of issues and candidates as well as the advocacy of election or defeat of candidates “may often dissolve in practical application.” That is, candidates — especially incumbents — are intimately tied to public issues involving legislative proposals and governmental actions, according to the Court.^39
Contribution Limits
This section analyzes several Supreme Court opinions decided subsequent to Buckley in which the Court evaluated the constitutionality of contribution limitations. Specifically, in California Medical Association v. Federal Election Commission (FEC) ,^40 the Court upheld limits on contributions from an unincorporated association to its affiliated, non-party, multicandidate political action committee (PAC). In Citizens Against Rent Control v. Berkeley ,^41 the Court reviewed a statute severely limiting the ability of an unincorporated association to raise funds through contributions in connection with its activities in a ballot initiative, holding that the limit unduly burdened the association’s free speech and association rights. In Nixon v. Shrink Missouri Government PAC,^42 the Court evaluated campaign contribution limit amounts and considered, among other things, whether Buckley ’s approved contribution limits established a minimum for state limits, with or without
(^50) CMA , 453 U.S. 198 (“Since multicandidate political committees may contribute up to
$5,000 per year to any candidate, 2 U.S.C. § 441a(a)(2)(A), an individual or association seeking to evade the $1,000 limit on individual contributions could [channel] funds through a multicandidate political committee”). (^51) Id. at 198-199 (“Individuals could evade the $25,000 limit on aggregate annual
contributions to candidates if they were allowed to give unlimited sums to multicandidate political committees, since such committees are not limited in the aggregate amount they may contribute in any given year”). (^52) See id. at 199.
(^53) 454 U.S. 290 (1981).
(^54) The Fourteenth Amendment prohibits state governments from depriving “any person of
life, liberty, or property, without due process of law.” U.S. CONST., Amdt. 14 § 1. By virtue of the inclusion of the term “liberty,” the First Amendment has become applicable to the states. See Whitney v. California, 274 U.S. 357, 373 (1927) (Brandeis, concurring) (“[A]ll fundamental rights comprised within the term liberty are protected by the Federal Constitution from invasion by the States. The right of free speech [and assembly] ... are fundamental rights.”) Although the plain language of the First Amendment proscribes the Congress from abridging the freedom of speech and association, Justice Brandeis’ reading of the Fourteenth Amendment has become a part of the Supreme Court’s incorporation jurisprudence. See also First National Bank of Boston v. Bellotti, 435 U.S. 765, 779- (1978), discussed infra. (^55) See id. at 296. “The freedom of association ‘is diluted if it does not include the right to
pool money through contributions, for funds are often essential if advocacy is to be truly or optimally effective.’” Id. (quoting Buckley, 424 U.S. at 65-66). (^56) See id. at 298-199 (finding that “[r]egulation of First Amendment Rights is always subject
(continued...)
individual contributions^50 and aggregate contributions 51 by making contributions to a PAC. Hence, the doctor’s rationale would erode Congress’ legitimate interest in protecting the integrity of the political process.^52 Under Buckley , the Court held that the state’s regulatory interests outweighed the doctors’ relatively weak free speech interest.
Limiting Contributions in Connection With Ballot Initiatives ( Citizens Against Rent Control v. Berkeley ). In Citizens Against Rent Control v. Berkeley ,^53 the Supreme Court addressed whether a city ordinance, imposing a $250 limit on contributions made to committees formed to support or oppose ballot measures, violated a PAC’s liberty interest in free speech and free association under the Fourteenth Amendment. 54 Citizens Against Rent Control (“the group”), an unincorporated association formed to oppose a Berkeley ballot initiative imposing rent control on various properties, challenged the ordinance’s constitutionality. The Court found for the group, on freedom of association and freedom of speech grounds.
The Court held that while the limit placed no restraint on an individual acting alone, it clearly restrained the right of association, as the ordinance burdened individuals who wished to band together to voice their collective viewpoint on ballot measures. 55 The Court applied “exacting scrutiny” to the ordinance, weighing the city’s regulatory interests against the group’s associational rights.^56 While the Court
(^56) (...continued)
to exacting scrutiny”). (^57) Id. at 298 (noting that “[r]eferenda are held on issues, not candidates for public office.
The risk of corruption perceived in cases involving candidate elections simply is not present in a popular vote on a public issue” (quoting First National Bank of Boston v. Bellotti, 435 U.S. 765 (1978)). (^58) See id.
(^59) Id. at 298 (finding that “[c]ontributions by individuals to support concerted action by a
committee advocating a position on a ballot measure is beyond question a very significant form of political expression”). (^60) See id. at 299-300.
(^61) 528 U.S. 377 (2000).
(^62) Id. at 901. The amounts were statutory base lines to be adjusted each year in light of the
cumulative consumer price index. See id. (^63) Id. at 902.
noted that Buckley permitted contribution limits to candidates in order to prevent corruption, contributions tied to ballot measures pose “no risk of corruption.”^57 Moreover, as the ordinance required contributors to disclose their identity, the regulation posed “no risk” that voters would be confused by who supported the speech of the association. 58 Under “exacting scrutiny,” therefore, the $ contribution limitation was held unconstitutional.
Extending its holding, the Court found that the contribution limitations unduly burdened the free speech rights of the group and of individuals who wish to express themselves through the group. 59 Applying “exacting scrutiny,” the Court found no significant public interest in restricting debate and discussion of ballot measures, and held that the ordinance’s disclosure requirement adequately protected the sanctity of the political system. 60
Establishing Contribution Limit Amounts ( Nixon v. Shrink Missouri Government PAC ). In Nixon v. Shrink Missouri Government PAC,^61 the Supreme Court considered, among other things, whether Buckley’s approved limitations on campaign contributions established a minimum for state contribution limits today, with or without adjustment for inflation. Asserting free speech and association rights, a political action committee and a candidate challenged the facial validity of a Missouri regulation limiting contributions to amounts ranging from $275 to $1,075. 62 Missouri asserted interests similar to those articulated in Buckley , namely, that contribution limits serve the governmental interest in avoiding the real and perceived corruption of the electoral process.^63 The Eighth Circuit found these interests unpersuasive and required Missouri to show that “there were genuine problems that resulted from the contributions in amounts greater than the limits in
(^74) 479 U.S. 238 (1986), discussed infra.
(^75) Beaumont, 539 U.S. at 157 (quoting National Conservative Political Action Comm., 470
U.S. at 500-01). (^76) Id. (quoting National Right to Work Comm., 459 U.S. at 210).
(^77) The Court explained that “[w]hile contributions may result in political expression if spent
by a candidate or an association ... the transformation of contributions into political debate involves speech by someone other than the contributor.” Id. at 161 (quoting Buckley, 424 U.S. at 20-21). (^78) Id. (quoting Buckley, 424 U.S. at 25).
under the Internal Revenue Code. However, in FEC v. Massachusetts Citizens for Life, Inc. (MCFL) ,^74 the Court created an exception for independent expenditures made by such entities that do not accept significant corporate or labor union money finding that restrictions on contributions require less compelling justification under the First Amendment than restrictions on independent expenditures. In FEC v. Beaumont, NCRL unsuccessfully attempted to extend the MCFL exception to contributions by tax-exempt corporations.
Finding that limits on contributions are more clearly justified under the First Amendment than limits on expenditures, the Court reaffirmed the prohibition on all corporations making direct treasury contributions in connection with federal elections and upheld the ban on corporate contributions as applied to NCRL. According to the Court, quoting from some of its earlier decisions, it has upheld the “well established constitutional validity of ... regulat[ing] corporate contributions,” including contributions by membership corporations that “might not exhibit all the evil that contributions by traditional economically organized corporations exhibit.”^75 Stating its refusal to “second-guess a legislative determination as to the need for prophylactic measures where corruption is the evil feared,” the Court rejected the argument that deference to congressional judgments is determined by whether the corporations affected by a regulation are for-profit or non-profit.^76
Beaumont also clarified the standard for review applicable to campaign finance regulation under the First Amendment. In the view of the Court, determining the appropriate standard of review depends on the nature of the activity being regulated. Commencing with its 1976 ruling in Buckley, the Court said that it has treated the regulation of contributions as only a “marginal” speech restriction, subject to “relatively complaisant review under the First Amendment,” since contributions are a less direct form of speech than expenditures. 77 Hence, the Court concluded that instead of requiring a contribution regulation to pass strict scrutiny by meeting the requirement that it be narrowly tailored to serve a compelling governmental interest, a contribution regulation involving “significant interference with associational rights” passes constitutional muster by merely satisfying the lesser requirement of “being ‘closely drawn’ to match a ‘sufficiently important interest.’”^78 The Court held that the Section 441b prohibition passed this lower level of scrutiny because it does not render a complete ban on corporate contributions, i.e., corporations are still permitted to use treasury funds to establish, solicit funds for, and pay the administrative expenses of a political action committee or PAC, which can then in turn make
(^79) See id. at 162-63. (“The PAC option allows corporate political participation without the
temptation to use corporate funds for political influence, quite possibly at odds with the sentiments of some shareholders or members, and it lets the government regulate campaign activity through registration and disclosure, see §§ 432-434, without jeopardizing the associational rights of advocacy organizations’ members”). (^80) Id. (citing National Right to Work, 459 U.S. at 201).
(^81) 435 U.S. 765 (1978).
(^82) 479 U.S. 238 (1986).
(^83) 494 U.S. 652 (1990).
(^84) 459 U.S. 197 (1982).
(^85) 518 U.S. 604 (1996).
contributions.^79 Invoking its unanimous holding in FEC v. National Right to Work, the Court rejected the argument that the regulatory burdens on PACs, including restrictions on their ability to solicit funds, renders a PAC unconstitutional as the only way that a corporation can make political contributions. 80
In summary, the Supreme Court in FEC v. Beaumont upheld the ban on corporate contributions as applied to NCRL because corporate campaign contributions — including contributions by tax-exempt advocacy corporations — pose a risk of harm to the political system. Consequently, the Court found, courts owe deference to legislative judgments on how best to address their risk of harm. In addition, the Court announced that limits on contributions are merely “marginal” speech restrictions subject to a “relatively complaisant” or lesser review under the First Amendment than the strict scrutiny standard of review.
Expenditure Limits
This section analyzes several Supreme Court opinions decided subsequent to Buckley in which the Court evaluated the constitutionality of expenditure limitations. The first area of case law involves the regulation of corporations. In First National Bank v. Bellotti,^81 the Court held that corporate speech in the form of expenditures, in a state referendum, could not be suppressed under the First Amendment. In two other corporate speech cases, the Court generally upheld a requirement that corporate political expenditures be made from a special segregated fund or political action committee (PAC), but subjected this requirement to an exception for “purely” political organizations: Federal Election Commission (FEC) v. Massachusetts Citizens for Life (MCFL)^82 and Austin v. Michigan Chamber of Commerce.^83
The second area of case law involves the regulation of labor unions. In FEC v. National Right to Work Committee^84 the Court upheld a regulation restricting from whom labor unions can solicit funds for their separate segregated funds or PACs. The third area of case law addresses the regulation of political party expenditures. In Colorado Republican Federal Campaign Committee v. FEC,^85 the Court upheld a political party’s purchase and broadcasting of radio “attack ads,” finding it was an “uncoordinated independent expenditure.” The fourth area of case law examines the
(^92) Id. at 768.
(^93) Id. at 769.
(^94) See id. at 784-786.
(^95) See id. at 776.
(^96) Id.
(^97) See id. at 776-777 (citing Mills v. Alabama, 384 U.S. 214, 218 (1966) (noting that the
nature of the corporation’s speech “is the type of speech indispensable to decision making in a democracy, and this is no less true because the speech comes from a corporation rather than an individual”). (^98) Id. at 787.
(^99) Id.
(^100) Id. at 788.
individuals do not “materially affect” a corporate interest. 92 The corporations sought to prevent enforcement of the statute, arguing that it was facially invalid under the First and Fourteenth Amendments.^93 In agreement with the corporations, the Supreme Court struck down the statute.
First, the Bellotti Court considered whether a speaker’s “corporate” identity substantively affects the extension of First Amendment liberties. On the state’s contention that the scope of the First Amendment narrows when the speaker is a corporation, the Court found no constitutional support.^94 This conclusion followed from the Court’s framing of the issues. The Court did not address the question of whether corporate interests in free speech are coextensive with those of natural persons, finding the issue peripheral to the case’s efficient resolution.^95 Instead, the threshold issue was whether the statute proscribed speech that “the First Amendment was meant to protect.”^96 In other words, the Court focused on the nature of the speech, not the identity of the speaker. As the Massachusetts statute burdened expressive activity addressing a proposed amendment to the state constitution, the nature of the speech fell squarely within the historic and doctrinal mandate of the First Amendment — protecting the free discussion of governmental affairs.^97 As the corporations asserted ‘core’ First Amendment interests, the statute was subject to “exacting scrutiny,” triggering the remaining issues, where the Court considered whether the government’s regulatory interests were compelling and obtained by narrowly tailored means.^98
Massachusetts advanced two rationales for the prohibition of corporate speech: (1) elevating and “sustaining” the individual’s role in electoral politics, and (2) ensuring that corporate political expenditures are funded by shareholders who agree with their corporation’s political views. 99 In the context of candidate elections, the Court found these rationales “weighty,” but in a “direct democracy” context, they were simply not advanced in a material way.^100
(^101) Id. at 789 (citing Buckley, 352 U.S. at 2).
(^102) Id.
(^103) Id.
(^104) Id. at 790. Moreover, the Court asserted that the people, not the government, are the final
arbiter and evaluator of the “relative and conflicting arguments” on referendum issues. (^105) See id. at 794.
(^106) See id. at 794-795.
(^107) See id. at 793.
(^108) See id. at 795.
(^109) 479 U.S. 238 (1986).
(^110) See id. at 241-242.
While ensuring that individuals sustain confidence in government and maintain an active role in elections is “of the highest importance,” 101 the Bellotti Court did not find that regulating corporate speech would necessarily enhance the role of the individual in this context. The Court reasoned that the inclusion of corporate political perspectives does not demonstrate that they will unduly “influence the outcome of a referendum vote” 102 and stressed that restricting the speech of some to amplify the voice of others is not a valid object suppression. 103 As such, the Court held that permitting corporate speech in a referendum does not exert coercive pressures (real or perceived) on the “direct democracy” process.^104
Likewise, the Bellotti Court rejected the state’s purported interest in protecting minority shareholders who object to their corporation’s majority political philosophy. With respect to this interest, the Court found the statute was both over and under- inclusive. The statute was over-inclusive insofar as it proscribed corporate speech, where the corporate political policy and speech enjoyed unanimous assent by its members.^105 The Court emphasized that corporate democracy informs the decision to engage in public debate, that shareholders are presumed to protect their own interests, and that they are not compelled to contribute additional funds to their corporation’s political activities.^106 The statute was under-inclusive insofar as corporations may exert political influence by lobbying for the passage and defeat of legislation and may express its political views on an issue when it does arise in connection to a ballot measure.^107 As a result, the Court held that the statute unduly infringed on the corporations’ protected free speech interest in expressing its political point of view.^108
The Supreme Court in Federal Election Commission (FEC) v. Massachusetts Citizens for Life (MCFL)^109 evaluated the constitutional application of 2 U.S.C. § 441b of the Federal Election Campaign Act (FECA), prescribing a separate segregated fund or PAC for corporate political expenditures. In this case, the requirement was applied to a non-profit corporation founded for purely political purposes. The founding charter of MCFL was to “foster respect for life,” a purpose motivating various educational and public policy activities. 110 Drawing from its general treasury, the corporation funded a pre-election publication entitled “Everything You Need to Know to Vote Pro-life,” which triggered litigation under