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Anonymity and the Internet:

Constitutional Issues in Campaign Finance Regulation

 

Testimony of David M. Mason

Commissioner, Federal Election Commission

at a hearing on The First Amendment and Campaign Finance Reform

before the Subcommittee on the Constitution, Committee on the Judiciary

U.S. House of Representatives

 

April 29, 1999

 

Thank you, Chairman Canady and Members of the Subcommittee for this opportunity totestify today. There is no more important issue in public policy than the question of howwe govern ourselves, and in a democratic polity the constitutional arrangements forelections are the most fundamental questions we face as a people.

This testimony represents my personal views, and does not represent the position of theFederal Election Commission, or of any of my colleagues on the Commission.

It is worth noting at the outset that the framers of the Constitution left the primaryresponsibility for the governance and administration of elections to the states, castingCongress’ power over elections as superior but exceptional rather than routine.

Just as in Section 4 of Article I, the Federal government could not leave itself nakedto potential abuse of the electoral process by the states, through the First Amendment,Congress and the American people established certain fundamental protections for the rightof self-government, stated as limitations on the power of the government itself. It is theconflict of these fundamental rights with specific positive restrictions on electionactivity that gives rise to many constitutional issues in campaign finance in particular.Just as state legislation must give way to federal under the time, place and mannerclause, both federal and state legislation must give way to the requirements of theConstitution itself, specifically to the First Amendment.

 **The Complexity and Persistence of Constitutional Questions in CampaignFinance

As one Member of the Independent Agency charged with interpreting, administering andenforcing (in a civil context) the Federal Election Campaign Act, what strikes me most isthe degree to which constitutional considerations are an everyday factor in theadministration of campaign finance law. For example, the Commission currently has twelveactive regulations projects, seven of which directly implicate rights of speech, press orassociation. These range from major projects, such as our soft money rulemaking, torelatively minor ones, such as the definition of "personal funds." 

Our litigation case load shows a similar pattern. The Commission has twenty activelitigation cases. At least 11 feature significant First Amendment issues. Among these are:political party expenditure limits (
FEC v. Colorado Republican Federal Campaign      Committee
)
the Commission’s hard/soft money allocation rules (
RNC v. FEC
)
the corporate contribution ban (
Mariani v. US
)
disclaimer requirements for non-profit corporations (
FEC v. Public Citizen
)
coordination/communication with candidates and officials (
FEC v. Christian Coalition,      FEC v. Freedom’s Heritage Forum
)
political committee status (
DNC v. FEC
)
express advocacy (
FEC v. Christian Coalition
)
constitutionality of the Presidential fund act (
Reform Party v. FEC
)

This list does not include, since the FEC is not a party, *Nixon v. Shrink MissouriGovernment PAC*, the case which may implicate the constitutionality of the $1,000contribution limit, which was recently accepted for review by the Supreme Court. Nor doesthis list include the recently dismissed case of *FEC v. Forbes* which involved theextent of press freedoms under the FECA.

The overwhelming impression in reviewing these major activities of the Commission isthat the question of constitutional issues in campaign finance is a constant, continuingand developing one. There are not a few major issues, but many; they arise notoccasionally, but every day. Though it has been 23 years since the *Buckley* decisionand twenty years since the FECA was amended in any significant way, the Commissioncontinues to face multiple and significant constitutional challenges. Issues which theCommission, and even much of the regulated community, once thought settled can emergeunexpectedly and result in significant effects for the Commission and politically activegroups.

The *Colorado Republican* case, already reviewed by the Supreme Court once, andapparently on the way to a second hearing there, provides an outstanding example of thedifficulties this constitutional tumult presents. This case arose out of a 1986 Senateelection. Both the FEC and the Colorado Republican Party believed, until the case reachedthe Supreme Court in 1996, that the central issue was a speech standard: whether theparticular ads in question should be judged under an "express advocacy" test orunder a broader "electioneering message" standard. The district and circuitcourts issued contrary opinions. Rather than resolving this issue, the Supreme Courtdetermined that the central issues in the case were associational rights: deciding in thefirst instance that political parties had a right to engage in independent expendituresand remanding for rehearing the question of whether limits on coordinated spending bypolitical parties are constitutional. After a decade of litigation, not only have wefailed to get further clarification of the express advocacy standard, but a new area ofconstitutionally-protected activity has been defined, and yet another area is suggested.(My own conclusion is that the electioneering message test is too vague to passconstitutional muster, but to the extent that others disagree, *Colorado* not onlyfailed to clarify the issue but raised additional complex questions.)

As the Subcommittee is aware, the District Court for Colorado has now decided thatparty spending limits are unconstitutional, and the case is now on appeal to the TenthCircuit. If we are fortunate, the Tenth Circuit will hear the case and issue an opinionwithin a year, in time to file a cert petition in the Fall of 2000. The 1996 Supreme Courtdecision spawned significant political party independent expenditure efforts. Should theTenth Circuit agree with the District Court on the question of coordinated spending bypolitical parties, the Commission and political parties will be left in a very difficultposition for the 2000 campaign cycle: should the Commission suspend enforcement of the lawpending a Supreme Court decision, and should political parties violate the letter of thestatute in expectation of such a decision?

One lesson from this experience is that we should not restrict our First Amendmentanalysis to speech rights alone. The efforts to "ban" soft money and broadenregistration requirements which are the most prominent features of major campaign financereform proposals display this flaw. Associational rights, press freedoms and the right topetition are all implicated in campaign finance legislation.

A second consideration is the degree to which constitutionally suspect legislation canput the executive agency administering the law and politically active citizens indifficult or even untenable positions.

The result of this plethora of post-*Buckley* constitutional litigation is thatthe Federal Election Commission sits as a sort of permanent administrative tribunaldetermining the degree and type of First Amendment freedoms different individuals andorganizations are entitled to depending on our analysis of their purpose (politicalcommittee status), legal organization (for-profit, non-profit, LLC, partnership), FECAstatus (political party, press), internal structure (membership), private communications(coordination), as well as their mode of speech.

Everyone understands that any significant campaign finance reform legislation will besubject to a judicial test. What policy makers may fail to appreciate is the degree towhich even a detailed, significant and far-reaching ruling such as *Buckley* stillleaves a wide zone of constitutional uncertainty which may subject campaigns and citizensto decades of uncertainty while inferior courts and my agency work out the practicaldetails of landmark rulings.

The constitutional stakes, uncertainty and practical difficulties inherent in thisprocess argue strongly in my mind for incremental rather than revolutionary reform of thecampaign finance system.

 **The Internet, the First Amendment and Campaign Finance Reform

Of course, while constitutional adjudication is slowly proceeding, the real world ofcampaigns and public policy can change rapidly, presenting constitutional questions incompletely new contexts. One of the major challenges for the FEC today is in determininghow to treat the Internet for purposes of the FECA. Following a series of enforcementmatters and advisory opinion requests, the Commission recently instructed its staff todraw up a regulatory Notice of Inquiry on the Internet and the FECA.

The Internet presents First Amendment questions in a new and beneficial light,especially compared with broadcast communications. The practical dominance of broadcastcommunication in political campaigns has led to some extremely negative consequences forthe First Amendment status of political activity. Broadcast media are characterizedlegally, and to some degree practically, by scarcity. The fact that broadcast licenses,and therefore broadcast time, is quite limited is a far greater factor in regulation ofthe medium than the public nature of the broadcast spectrum. With scarcity comes highprices, and a resulting over-focus on the cost of political campaigns, and a confusingadmixture of spending and speech questions.

The Internet, on the other hand, has a basis of plenitude. There is literally norestriction on who can have an Internet site or on how many different sites there are.What is most salient about the Internet for First Amendment purposes is not whether 60 or80 percent of the public has access, but interactivity. Anyone who is on the Internet canhave something to say, and the financial and technical barriers to hosting a home pagewith substantial content are quite low. In the age of the Internet, everyone of evenmodest means can own a printing press.

For purposes of the First Amendment, and the FECA’s media exemption, there is areal question of how extensively press freedoms should apply to the Internet. As apreliminary, if you have ever taken the opportunity to read newspapers from the earlyFederal period, you will note how partisan, contentious and irresponsible the press of theperiod marked by passage of the First Amendment was. Federal period newspapers remind menot so much of the New York Times or NBC as of the Drudge Report or"HillaryNo.Com."

In the specific context of the FECA, a media exemption applies to any "periodicalpublication" (unless controlled by a candidate or political committee). I am not surewhy that exemption would apply any less to a regularly-updated personal homepage on theInternet as to ABCNews.com or *Slate* magazine.

The combination of open access and relatively low cost threatens to undermine therationale behind the campaign finance regime. Just as Internet stock valuations appearuntethered to underlying finances, the value of political communications on the Internetis driven more by innovation and presentation – that is to say by ideas – thanby placement and spending. When the political impact of a site appears to far exceed itsdollar cost, or when marginal costs are extremely low, it is difficult to apply aregulatory regime founded upon limits on finances, intended, we must remember, only toprevent financial corruption.

 **The $1,000 Contribution Limit: Preventing Corruption or CausingCorruption?

A more prosaic example of how change in the real world affects constitutional questionsin campaign finance is the inflation question presented by the *Shrink Missouri*litigation. I think everyone would agree that at some point inflation could so erode thereal value of a $1,000 contribution as to change its constitutional status. Though otherquestions are present, one issue in *Shrink Missouri* is likely to be whether theone-third diminution in the value of the $1,000 contribution since 1974 is aconstitutionally-significant difference in kind.

In addition to this mathematical analysis, we should recall that the whole purpose ofthe $1,000 limit is to prevent corruption. The Federal Election Commission’senforcement caseload presents some evidence that this $1,000 limit may no longer advancethat purpose, and may indeed itself have become a cause of corruption. It appears thatthis limit may be effectively so low as to induce people interested in engaging inpolitics to participate in illegal schemes to circumvent it with no directly corruptpurpose.

The Federal Election Commission has already released more 1996 cases involving conduitcontribution allegations (section 441f of the statute) than it has had in any year in itshistory. The 1996 total is already over 20 percent higher than any previous year, andgiven our five year statute of limitations, additional 441f cases may yet be made public.

In at least some of these cases it appears that donors were motivated by little elsethan enthusiasm for a candidate. The sums raised in some instances are only a few thousanddollars, not enough to raise serious corruption concerns, nor in many of these cases werethe recipient campaigns apparently aware of any extraordinary efforts which might giverise to suspicions of favor-seeking.

It appears that the $1,000 limit may have become effectively so low that it has itselfbecome a cause of corrupt activity, except that its circumvention may be motivated in someinstances by nothing other than a pure desire to support favored campaigns. In judicialterms, this raises the question of whether the $1,000 limit is narrowly tailored inadvancing its corruption-preventing rationale.

As with all of this testimony, I should note that several of my fellow Commissionersmay disagree with my analysis, but in my view the Commission’s enforcement experienceraises a genuine question in this regard.

 **Anonymous Speech or Expanded Disclosure?

Lastly, I would like to draw the Subcommittee’s attention to a string of casesinvolving anonymous speech because they raise questions about one of the broadest areas ofagreement in Campaign Finance Reform, expanded disclosure. Simply put, since the SupremeCourt enunciated a right to anonymous political speech in *McIntyre v. Ohio*, astring of lower courts has fairly consistently applied the Supreme Court’s reasoningfrom voter referenda to candidate elections. Most of these courts have reached theconclusion that there is no constitutional difference in the degree of First Amendmentprotection between referenda and candidate elections. While I would note that the SupremeCourt did view the candidate-referenda distinction as significant in *Belotti*, as tocorporations, the consistent weight and powerful reasoning of these lower court opinionsdo not allow us to dismiss the concept that at least some anonymous activity is protectedin candidate elections. In *Buckley* itself the Supreme Court declared thatcontributors who have valid reasons to fear retribution may remain anonymous despite theFECA’s reporting requirements. Following are some significant cases and precedents inthis area:Talley v. California,
 362 U.S. 60 (1960): Manuel Talley was convicted of violating a    Los Angeles ordinance that prohibited the distribution of "any handbill in any place    under any circumstances, which does not have printed on the cover, or the face thereof,    the name and address of . . . the person who printed, wrote, compiled or manufactured [it]    [and] the person who caused [it] to be distributed." 
Id.
 at 60-61. He had    distributed handbills that "urged readers to help [his] organization [National    Consumers Mobilization] carry on a boycott against certain merchants and businessmen . . .    on the ground that . . . they carried products of manufacturers who will not offer equal    employment opportunities . . . ." 
Id.
 at 61. The Court held that the statute    was void on its face for violating the freedom of (anonymous) expression. 
Id.
 at    64-65. It noted that "anonymous pamphlets, leaflets, brochures and . . . books have    played an important role in the progress of mankind," including in the founding of    this country (e.g., the Federalist Papers), 
id.
 at 64-65. The ordinance did not    seek to identify, as the City argued, only fraudulent, false or libelous materials, but    rather barred all handbills that did not have the requisite disclaimer. 
Id.
 at 64. 
*New York v. Duryea,
 76 Misc.2d 948, 351 N.Y.S.2d 978 (1974) (cited in 
McIntyre, 
514    U.S. at 348, n.11): New York prosecuted the Speaker of its State Assembly and two of his    aides (his Executive and Special assistants), along with Assembly Majority Leader and an    Assembly Member, for distributing letters bearing the signature of a person identified as    a party official and urging members of that party to vote for its candidates, when, in    fact, the letters had originated with 
another
 campaign committee (of which the    Defendants were officers). The Court held that the First Amendment did not protect the    Defendants’ fraudulent conduct, but the statute, which prohibited anonymous    distribution of campaign literature, was unconstitutionally overbroad.
*Wilson v. Stocker,
 819 F.2d 943 (10
th
 Cir. 1987): James Wilson was    arrested for distributing unsigned handbills opposing a candidate for the state senate in    violation of state statute prohibiting anonymous campaign literature (that which, 
inter    alia,
 "is designed to influence the voters on the nomination or election of a    candidate"). Relying heavily on 
Talley
, the Court held the statute was    facially overbroad.
*McIntyre v. Ohio Elections Commission, 
514 U.S. 334 (1995): Margaret McIntyre    distributed leaflets opposing a school bond levy in violation of state statute that    prohibited the distribution of anonymous campaign literature. The United States Supreme    Court held that an author’s decision to remain anonymous, like other decisions    concerning the content of publication, is an aspect of free speech that the First    Amendment protects and outweighs the state’s interest in providing the electorate    with information. 
Id.
 at 341-343. The statute also could not be justified based on    preventing falsehoods, as it was not limited to such material. 
Id.
 at 343-345. 

 
*State v. Moses,
 655 So.2d 779 (La. App. 4 Cir. 1995) (first post-
McIntyre
    decision): Napoleon Moses was indicted for violating a Louisiana statute that prohibited    the distribution of campaign literature which did not contain the name (and in some cases    the address) of the person distributing it. The Court held that 
McIntyre
 was    sufficient authority for striking down the statute, given that, under the Louisiana    Constitution and caselaw, "the state interest required to justify even a limited    prohibition on election-related anonymous literature in Louisiana should be much more    compelling than that which theoretically the U.S. Supreme Court [in 
McIntyre
] might    have found sufficient in Ohio or elsewhere." 
Id.
 at 782. (The Court seemed to    conclude that the statute was unconstitutional under both the federal and state    constitutions: "We conclude that the right to distribute anonymous campaign    literature is clearly protected by the First Amendment to the United States Constitution    as interpreted by the United States Supreme Court and by . . . the Louisiana Constitution.    Accordingly, we declare [the statute] to be unconstitutional." 
Id.
 at 785.]
*Shrink Missouri Government PAC v. Maupin,
 892 F. Supp. 1246 (E.D. Mo. 1995): Past    and possibly future state candidates challenged state statute requiring any printed or    broadcast matter with allegations about any other candidate contain disclaimers that    candidate "approved" and "authorized" the advertisement. Court held    that statue unconstitutional (not narrowly tailored).
*West Virginians for Life, Inc. v. Smith,
 960 F. Supp. 1036 (S.D.W. Va. 1996):    Not-for-profit corporation and individuals brought pre-enforcement challenge to state    statutes prohibiting the: a) publication, distribution, or dissemination of a scorecard,    voter guide, or other written analysis of a candidate’s position within 60 days of an    election unless the document includes the name of the party responsible for it; and b)    publication, issuance, or circulation of any anonymous letter, circular, or other    publication tending to influence voting at any election. The Court held the state did not    meet its burden of proving that the "anonymity provisions" were narrowly    tailored to serve the compelling interest of avoiding corruption, nor were they limited to    preventing fraudulent, false or misleading statements, or to regulating anonymous 
express    advocacy 
(the statutes encompassed candidate issue advocacy, which, the court held,    was just as protected as the noncandidate issue advocacy in 
McIntyre
).
*Stewart v. Taylor,
 953 F. Supp. 1047 (S.D. Ind. 1997): Candidate for township    advisory board placed sign expressly advocating her election but which did not identify    who paid for it, in violation of state statute requiring such identification on    "material in support of or in opposition to a candidate" and requiring (in some    instances) whether such material was approved by the candidate in support of whom it was    published or circulated. Court held that statute was unconstitutional.
*Virginia Society For Human Life, Inc. v. Caldwell,
 500 S.E.2d 814 (1998) (VSHL)    (answer to certified question from United States Court of Appeals for the Fourth Circuit):    non-profit group that conducted issue advocacy by preparing and distributing voter guides    challenged (pre-enforcement) state statutes that, 
inter alia,
 required any writing    made "for the purpose of influencing the outcome of an election for public    office" identify the author. To avoid unconstitutional overbreadth, Virginia Supreme    Court construed "influencing election" language so as not to apply to    individuals and groups engaging solely in issue advocacy. 
Id.
 at 816-818. 
*Arkansas Right to Life State Political Action Committee v. Butler,
 29 F. Supp.2d 540    (W.D. Ark. 1998): Political action committee and individual brought pre-enforcement    challenge to state statute requiring any person making an independent expenditure to name    and identify itself and to state that such expenditure was "not authorized by    candidate." Court held that while self-identification disclaimer was constitutional,    there was no evidence that "authorization" component was narrowly tailored to    advance state’s interest in advising electorate of candidate’s sources of    support.
*Griset v. Fair Political Practices Commission,
 69 Cal. App. 4
th
 818, 82    Cal. Rptr.2d 25 (1999): Candidate committees of incumbent councilman sent mass mailings    without identifying councilman as controlling candidate in violation of state statute    requiring candidates for office and individuals or groups supporting them to identify    themselves on mass mailings sent to voters. Court held statute to be unconstitutional and    noted that protection for anonymous speech was not confined to referenda but included    candidate speech. 
Id.
 at 30-34.
Opinion of the Oregon Attorney General, Number 8266, 1999 WL 133100 (March 10, 1999):    Oregon Attorney General opined that state statute prohibiting most anonymous signs,    publications and broadcasts used in political campaigns violated the free speech    provisions of both the United States and Oregon Constitutions. The opinion noted, however,    that courts subsequent to 
McIntyre
 have disagreed on the scope of the First    Amendment’s protection for anonymity. 
Id.
 at 46. 
Comparing VSHL 
(narrowly    construing statute to prohibit only anonymous express advocacy (thereby implicitly    concluding that such prohibitions are constitutional)) with 
Moses
 (striking down    statute 
in toto
).

The only significant, somewhat contrary authority to the cases above is *KentuckyRight To Life, Inc. v. Terry,* 108 F.3d 637 (6th Cir. 1997) (state statuterequiring "paid for by" disclaimer on *independent expenditures* wasnarrowly tailored to advance state interest in advising electorate of sources of supportand prevent actual and perceived corruption).

I think it is fair to conclude from these cases that courts will protect at least someanonymous speech in candidate elections. Given these cases, I think Congress would be wellserved to consider carefully how (if at all) to expand disclosure requirements, ratherthan simply treating more disclosure as automatically better. The trend in court decisionsindicates that we face at least some risk of having even current disclosure requirementsstruck down or narrowed.

 **Conclusion: Expanding Rather Than Limiting Political Participation

In conclusion, we must recall that all political activity is, by definition, protectedby the First Amendment. While many of us have firm opinions, which we hope are wellfounded, about settled areas of the law, we can expect significant constitutional issuesto arise and be adjudicated in a campaign finance context, as with other areas of FirstAmendment law. Congress should be cognizant that it is dealing not only with speechstandards (soft money and express advocacy) but with a range of other First Amendmentissues. As political practices and technologies change, new First Amendment issues willarise and formerly settled distinctions will fade or become irrelevant.

For these reasons, a comprehensive but constitutionally-permissible campaign financereform may be an impossible quest. If Congress chooses to pass sweeping campaign financelegislation without careful attention to constitutional considerations, Members shouldrealize that they are presenting significant constitutional issues not only to the courts,but to the agency that administers the law, and to campaigns and citizens who live underit, not only as to one major case, but in a series of controversies likely to last fordecades.

For these reasons, Congress might look to opportunities, such as those presented by theInternet, to expand political liberties and participation, rather than restrictingcampaign finances, as the most appropriate means of preventing corruption and reformingthe political process.********************