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Is the FEC Out in Front of the Courts in Campaign Finance Deregulation?

Political groups like Club for Growth and Commonsense Ten have won advisory opinions from the FEC allowing them to set up independent expenditure groups that will be allowed to receive unlimited donations from corporations — but was the FEC even authorized to let them do so? That’s the question that Paul Ryan, Associate Legal Counsel at The Campaign Legal Center, asks on the American Constitution Society blog, and the answer is far from clear.

Ryan begins with Citizens United and SpeechNow.org v. FEC, two landmark court cases that dashed limits on two types of political expenditures — independent expenditures by corporations and contributions from individuals to political groups promising to only make independent expenditures. He argues that while the cases covered those two types of expenditures, they did not challenge the ban on corporate contributions to candidates or political committees:

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.

Using a sort of transitive process in which they argued that two judicial rulings should be interpreted to equal a third, these groups thus managed to persuade the FEC to deregulate in a manner that no court had compelled them to do:

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.

All of this maneuvering opens up a strange and dangerous precedent, Ryan argues, in which an administrative agency decided to cease enforcing a federal statue though an advisory opinion process, not a court ruling. And it may not even be valid:

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.

Ultimately, this all matters because, while more than a few corporations would like to spend lots of money on behalf of federal candidates, most would prefer to do it through third party PACs rather than directly. That way the group cutting the ad can have a cute name like Americans for Freedom, rather than, say, Target.

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