officeholders and candidates, who raise the money for the national party committees.” Id. at H409,
As a result, “there is a close connection between the funding of the national parties and the
corrupting dangers of soft money on the federal political process.” 1d. Accordingly, Congress
concluded that “(t]he only effective way to address this problem of corruption is to ban entirely all
raising and spending of soft money by the national parties.” Id.

The soft money prohibitions in § 101(a)— which do not impose any limitation on the amount
ofa national political party’s expenditures, but, instead, merely tequire that such expenditures be
financed by funds that are subject to the “contribution” limitations of FECA — impose, in effect, a
ban on the contribution of “soft money” to national political parties by individuals, corporations,
unions, and other entities. Asa result, individuals and entities are limited to the “hard money”
contribution limitations of FECA with respect to the provision of funds to national political parties.
Individuals, for instance, can give up to $25,000 annually to a national political party, See 2 U.S.C
441a(a)(1). Notably, this is much more than the contributions that an individual can give to other
political committees (ie, PACs). Id. In other words, the federal election laws give national
political parties a much greater Opportunity to obtain contributions than that enjoyed by comparable
nonparty committees.

As explained below, both the legislative history and the record developed in this litigation
make clear that the national party soft money ban is closely drawn to advance governmental interests
that the Supreme Court has already held to be “sufficiently important” to justify regulation of

campaign contributions and funding sources. Buckley, 424 U.S. at 25; see also NRWC, 459 US.

at207. Because the provision fully comports with constitutional requirements, plaintiffs’ challenges

fail.

63


becausc it effectively prevents them from competing in the political process. Thompson & Hilliard
Compl. If 40-41. They allege that they cannot raise sufficient campaign funds by telying on
individual contributions in the districts that they represent and that the prohibition against raising
soft money therefore violates their equal protection rights and their rights of free speech and free
association “because of the disproportionate effect on minority communities of the restrictions on
funding available, by reason of BCRA, for voter registration and get out the vote activities.” Id

That argument is mistaken. BCRA’s restrictions on federal officeholders make no
distinctions on the basis of race or any other suspect classification. The statute accords exactly the
same treatment to all federal candidates, regardless of their race or ethnicity. Indeed, plaintiffs
allege no intent by Congress to discriminate on the basis of race; they allege only a “disproportionate
effect” on “minority communities.” Thompson & Hilliard Compl. { 41. In the absence of

intentional discrimination, however, plaintiffs can state no equal protection claim. See, e.g., Village

of Arlington Heights v. Metro. Hous, Dev. Corp., 429 U.S. 252, 265 (1977). And plaintiffs’ claim

of discrimination on the basis of wealth ignores the fact that equal protection principles do “not
require absolute equality or precisely equal advantages,”” and do not “require the State to ‘equalize

economic conditions.” Ross v. Moffitt, 417 U.S. 600, 612 (1974) (citations omitted), Further,

plaintiffs have not shown that the challenged restrictions will prevent them “from amassing the

resources necessary for effective advocacy.” Buckley, 424 U.S. at 21.

* Plaintitfs Thompson and Hilliard also seck to invoke the First Amendment and equal protection rights of their
constituents. Thompson & Hilliard Compl. 41, But they plainly lack standing to da so. See, e.g., Powers v. Ohio, 499
U.S. 400, 410 (1991) (“In the ordinary course, a litigant must assert his or her own legal rights and interests, and cannot

resta claim to relief on the legal rights or interests of third parties.”); NAACP, Boston Chapter v. Harris, 607 F.2d 514,
523 (Ist Cir. 1979),

127


The use of soft money increased dramatically in the 1996 election cycle, with the national
parties’ total soft money spending reaching $272 million. Mann Expert Rep. at 21 & Tbl. 2; sce
Declaration of Raymond J. La Raja at [8 & Fig. 7 (Sep. 23, 2002) [RNC] [hercinafter La Raja
Expert Rep.]. The exorbitant increase was due largely to an innovative move by President Bill
Clinton and his political consultant, Dick Morris, to use soft money to fund media advertisements
that either promoted President Clinton by name, or criticized his opponent by name, while carefully
avoiding particular words expressly advocating either candidate's election or defeat, Mann Expert

Rep. at 18; see David B. Magleby, Report Concerning Interest Group Electioneering Advocacy and

Party Soft Money Activity (Sep. 23, 2002) at 11 [DEV 4-Tab 8, hereinafter Magleby Expert Rep.];1¥

Jonathan S. Krasno & Frank J. Sorauf, Evaluating the Bipartisan Campaign Reform Act (BCRA)

(Sep. 23, 2002) at $0-51 [DEV 1-Tab 2, hereinafter Krasno & Sorauf Expert Rep.]. While these
advertisements prominently featured the President, none of the costs were charged as coordinated
expenditures by the Democratic party committees on behalf of President Clinton’s campaign, even
though the President was intimately involved in the ad campaign and the ads were designed to
promote the President’s electoral prospects. Mann Expert Rep. at 18.2 Rather, the party argued
that the advertisements could be treated like generic party advertising encouraging people to “vote
Republican” or “vote Democrat” and could be financed as administrative expenses with a mix of
soft and hard money, per the FEC allocation rules, Id. The party argued that this “issue advocacy”

implicated neither limitations on party contributions and coordinated expenditures, nor the spending

+ During the past two election cycles, Professor Magleby supervised teams of academics who systematically
monitored campaigns in many of the most competitive federal races, Data was collected from party and interest group
leaders, broadcast stations, and political communications disseminated during the campaigns. Magleby Expert Rep. at
5, 11-12 & Apps. BF.

12,

See also Investigation of Iegal or Improper Activities in Connection with 1996 Federal Election
Campaigns, S. Rep. 105-167 at 107, 114, $286 fhereinafter Thompson Comm Rep.}.

29


are broadcast. Goldstein Expert Rep. at 17; see also Krasno & Sorauf Expert Rep. at 57 & App. Tbl.

3. Thus, Congress focused on the time period of greatest concern, during the heat ofa campaign for
federal office, and refrained from regulating during other periods, farther removed Election Day,
when the public’s attention is not focused on the choices to be made in an imminent election, and
advertisements referring to federal candidates are therefore less likely to have the purpose or effect
of influencing the outcome.

Moreover, the electioneering communications definition only applies to TV and radio
broadcasts, leaving similar communications in alternative media unregulated. Newspaper and
magazine advertising, mass mailings, internet mail, public speeches, billboards, yard signs, phone
banks, and door-to-door campaigning all fall outside its narrow scope, as do internal
communications between a corporation or union and its stockholders or members!’ Although
Congress could have defined electioneering communications to include other forms of
communication, it chose instead to focus narrowly on what experience has shown to be the most
widely exploited medium for the evasion of existing law. See Buckley, 424 U.S. at 105 (“[RJeform
may take one step at a time, addressing itself to the phase of the problem which seems most acute
to the legislative mind.” (internal quotation marks and citation omitted)).

Lastly, but no less importantly, § 203(a) of BCRA, as an amendment to FECA § 441b,
permits corporations and labor unions to finance electioneering communications using their separate
segregated accounts, allowing them to express their political views with funds, reflecting true

political support for those ideas, that do not threaten corruption or distortion of the political process.

12 For example, in the 1998 Senate race in Nevada, nincty full-time shop stewards from the AFL-C1O went
door to door visiting the homes of 40,000 labor union members. Magleby Expert Rep. at 18 n.26; see generally id. at
24-26, 42-44,

158


gress to readjust the federal election laws as needed to address continuing threats of corruption as
they might later evolve, so long as Congress, in making the very sort of “cautious advance, step by
step,” to which the Court would later pledge deference in NRWC, 459 U.S. at209 (citation omitted),
avoided the vagueness problems of concem in Buckley. As the Fourth Circuit observed when
reviewing an FEC regulation that defines express advocacy more broadly than the “magic words”:

The FEC ends its argument that 1] C.F.R. § 100.22(b) is constitutional with the
following comment: “if the express advocacy requirement is read too narrowly, the
prohibitions of 2 U.S.C. 441b will require little more than carefull diction and will do
almost nothing to prevent millions of dollars from the general treasuries of unions
and corporations from directly influencing federal elections, and from doing so
without disclosing to the public the source of the influence.” That is a powerful
statement, but we are bound by Buckley and MCFL, which strictly limit the meaning
of “express advocacy.” If change is to come, it must come from an imaginative
Congress or from further review by the Supreme Court.

Virginia Soc’y for Human Life, Inc. v. FEC, 263 F.3d 379, 392 (4" Cir. 2001) (emphasis added).

With BCRA, Congress has taken up that creative task 2”

Thus, the question before this Court is one not presented to any other tribunal since Buckley
issued its express advocacy ruling: whether Congress may apply the teachings of experience to
establish a new paradigm, one that meets with the political realities of our times, or whether the
nation must forsake its longstanding commitment to the proposition that the aggregated wealth of
unions and corporations ought not to be used to unduly influence the outcome of federal elections,
or to garner improper influence over democratically elected leaders. The plaintiffs maintain that
Buckley prohibits Congress from making that decision, a proposition that ultimately depends on the

analysis in Buckley itself, but, as scen, it is a proposition that Buckley will not sustain.

/ Since Buckley, there have been a number of lower court decisions analyzing the scope of permissible
regulation under the Court's express advocacy construction of FECA, Other cases have involved the constitutionality
of various state campaign finance laws that hinged on definitions of regulated activity that did not rely on an express
advocacy test. To the extent these lower court cascs have described the express advocacy standard as an absolute con-
stitutional rule, they did so unnecessarily, and, for the reasons explained above, are simply contrary to the decision in

Buckley.
153


1. Some thirty years following its enactment, regulation under the Federal Election Cam-
paign Act of 1971, as amended, 2 U.S.C. 431 et seq. (“FECA”), no longer lives up to its intended
purpose, FECA is meant to reduce the “opportunities for abuse inherent ina regime of large individ-
ual financial contributions,” Buckley v. Valeo, 424 U.S. 1, 27 (1976) (per curiam), by limiting the
amount of contributions that may be made to candidates. In light of the central role played by
political parties as intermediaries between donors and candidates, see FEC v. Colorado Republican
Fed. Campaign Comm., 533 U.S. 431, 452 (2001) (“Colorado H”), FECA has long imposed limits
on contributions made to political party committees. FECA also incorporates previously enacted
prohibitions against corporate and labor union spending on federal elections, to prevent unions and
Corporations from converting their aggregated wealth into political “war chests” that can distort and

corrupt democratic processes. 2 U.S.C. 441b; see Austin v. Michigan Chamber of Commerce, 494

U.S. 652, 660 (1990). In recent years, however, these mainstays of regulation under FECA have
given way as political parties, corporations, unions, and other wealthy donors and organizations have
systematically exploited two widening breaches in FECA’s statutory scheme: “soft money,” and
“issue advocacy.”

A. “Soft money” is the term used for contributions raised outside the framework of FECA’s
source and contribution limits and disclosure requirements. As Congress recognized, the increasing
use of sofi money pennits evasion of FECA in two fundamental respects: (1) it allows corporations
and labor unions to use their general treasury funds to influence federal elections; and (2) it allows
all donors to make contributions to candidates and Parties outside of FECA’s limitations and disclo-
sure provisions. Both avenues of circumvention Pose the very risk of actual and apparent corruption

that FECA was enacted to prevent. Unregulated contributions to political parties, like unregulated



is not expressly to obtain funds for such activities.” 148 Cong. Rec. $2139-40 (Mar. 20, 2002) (Sen.
McCain).

Congress recognized that prohibiting federal candidates and officeholders from raising or
spending soft money was essential to reduce the appearance and reality of corruption resulting from
the growth of sofl money. BCRA assures that “[t]he official with power, and the candidate seeking
to be in a position of power” will not “be able to solicit huge sums of money and sell access to
themselves for their campaign or for outside groups.” 148 Cong. Rec. $2116 (Mar. 20, 2001) (Sen.
Levin).

As described at Iength above, the solicitation of soft money by federal officeholders and
candidates fosters the appearance and reality of corruption because, as with contributions made
directly to federal candidates, contributions of soft money to the political parties can benefit federal
candidates and officeholders who feel indebted to large donors. See supra at 71-81; Colorado TI, 533
U.S. at 452; Buckley, 424 U.S. at 26. The problem is particularly acute when the solicitations are
made directly by federal candidates and officeholders themselves, where the link between the federal
candidate and the sofi money donor is most direct. See supra at 73-76; Greenwald Decl. 8. The
recent prominence of “joint fundraising committees,” in which party fundraising committees are
sponsored by particular Senators in association with their parties, provides a particularly blatant
example of how the candidates and parties understand, and exploit, the fact that party donors often
give to the party as a means of benefitting particular campaigns or enhancing relationships with

officeholders and candidates, See Magleby Expert Rep. at37; Buttenwieser Decl. 18

123


Randlett Decl. 4 13 [DEV 8-Tab 32]. The party committees “are
headed by or enjoy close relationships with [the party’s] leading officials, individuals who by virtue
of their positions, reputations, and control of the legislative party machinery have special influence
on their colieagues.” Krasno & Sorauf Expert Rep. at 12-13. The “party’s involvement does not
sterilize the system,” because “[e]lected officials know exactly who the big party contributors are.”
Rudman Decl. § 12 [DEV 8-Tab 34], Accord Bumpers Deel. 20; Simpson Decl. 4 5 [DEV 9-Tab
38}; McCain Decl. 6 [DEV 8-Tab 29]; Greenwald Decl. 11 [DEV 6-Tab 16]; Randlett Decl. 10.

Large soft money donors to the party may benefit an officeholder or candidate in numerous
direct and indirect ways. Such contributions raised by an officeholder or candidate, for instance,
may translate into direct financial support from the party to that candidate or officeholder’s
campaign. Members of Congress have testified that success in soft money fundraising helped ensure
that the party contributed as much in permissible direct contributions, coordinated expenditures, and
other support as might be needed in the Members’ campaigns. See Bumpers Decl. {] 10-11; Simon

Decl. [9-10 [DEV 9-Tab 37]; see also Billings Decl. Ex. A 997, 10 {DEV 6-Tab 5]. Moreover,

the Supreme Court has recognized that donors understand that their contributions to the party will
directly benefit in such a fashion the candidates that they support. Colorado Il, 533 U.S. at 458; see
Wirth Deci, Ex. A {J 7-10 [DEV 9-Tab 43].

National political party committees also can and do provide significant assistance to the
campaigns of federal candidates through the use of soft money. See Mann Expert Rep. at 20, 23,

26; see also Simpson Decl. 47 (always knew that both the national and State parties would find

ways to assist my candidacy with soft money.”); Randlett Decl. ] 7 (soft money “used to help

federal candidates win elections,”). One direct and significant benefit to a candidate raising soft

72



147 Cong. Rec. $2883 (March 26, 2001) (Sen. Edwards). As a result of the care with which
Congress carried out its legislative duties, BCRA’s definition of electioneering communication is
simple, objective, and unambiguous — a classic bright-line test that entirely avoids placing speakers

“wholly at the mercy of the varied understanding” of their listeners, Buckley, 424 U.S. at 43

(quoting Thomas, 323 U.S. at 535), and therefore suffers from none of the vagueness that prompted
the Court in Buckley to adopt the express advocacy construction.

D. BCRA’s Definition of Electioneering Communications
Is Narrowly Tailored.

The expenditure provisions construed in Buckley and MCFL were broadly applicable to

communications made at any time, in any location, and through any medium. Section 608(e),
examined in Buckley, prohibited all persons other than candidates themselves, or political party
committees, from spending more than $1,000 a year on communications of any kind, whether
broadcast, print, direct mail, or otherwise, deemed “relative to” a candidate for federal office. 424
U.S. at 39-40, 193-94. FECA § 441b, which the Court scrutinized in MCEL, is limited in its
application to labor unions and corporations, and is narrowly tailored to allow unions and
corporations to express themselves through their separate segregated funds, but still applies without
geographic or temporal limitation, and regardless of the medium, to all communications by labor
unions and corporations made for the purpose of influencing federal elections.

In sharp contrast to these provisions, BCRA’s regulation of electioneering communications
is surgically tailored to end the now rampant practice of broadcasting election ads artfully crafted
to evade FECA’s expenditure and disclosure requirements. Using the four criteria described supra,
at 154-55, Congress has carefully targeted only those ads that identify a candidate for federal office

and are broadcast on television or radio, in the final weeks before the election, to the very state or

156


Rep.]. The editorial pages and television talk shows are similarly filled with commentary suggesting
a connection between large soft money donations and the outcomes of government policy And
most importantly, the public observes the conduct of candidates and federal officeholders and
perceives that “policy decisions are bought and sold in Washington.” Mann Expert Rep. at 35,
This appearance of corruption has been confirmed through the use of carefully designed
public opinion surveys. The evidence is overwhelming that people view large soft money
contributions to political parties as contrary to the democratic ideal of honest policy-making. As
Mark Mellman and Richard Wirthlin — among the most respected Democratic and Republican
pollsters in the country — found in their recent telephone survey of 1,300 adult Americans,- the
American public believes that “[t]he views of large contributors to parties improperly influence
policy and are given undue weight in determining policy outcomes.” Mark Mellman & Richard

Wirthlin, Research Findings of a Telephone Study Among 1300 Adult Americans (Sep. 23, 2002)

at 5 [DEV 2-Tab 5, hereinafter Mellman & Wirthlin Expert Rep.]. The vast majority of Americans
(71%) think that Members of Congress sometimes decide how to vote on an issue based the
preferences of large party contributors, even when that vote is at odds with the desires of the
Member’s constituents, and even when the Member thinks that the vote is not in the best interests
of the country. Id, at 7-8.2" This poll conducted by Mellman & Wirthlin provides compelling

evidence that the current soft money system creates the appearance of corruption.

ee
* A sampling of those articles appears in the record at DEV 44 & 45, See also Mect the Press (1997), App
A to Defs.” Mem., Tab 5, No. 2 (video)

u

~~ Perhaps more disturbingly, overtwo-thirds of the American public think that soft money donors to political
Prinie sometimes block decisions by the federal government that could improve people's everyday lives. Mellman &
Wirthlin Expert Rep. at 9. Similarly, more than & in 10 Americans believe thar party soft money donors get “special
consideration,” compared to the nearly 7 in 10 Americans who believe that people like them ave unlikely to receive
similar “special consideration.” Id. at 9-10.

83



Buckley also considered 18 U.S.C. 608(e}(1), which provided that no person (other than a
political party or candidate) could make any expenditure “relative to a clearly identified candidate
- which, when added to all other expenditures made by such person during the year advocating
the election or defeat of such candidate, exceeds $1,000.” See 424 U.S. at 39-40, 193-94. The Court
concluded that the statute’s defining phrase, “relative to a clearly identified candidate,” did not
adequately mark the boundary between permissible and impermissible speech, and it dealt with this
problem of vagueness “by reading § 608(c)(1) as limited to communications that include explicit
words of advocacy of election or defeat of a candidate.” Id. at 41-44, Ina footnote, the Court
explained that the express advocacy standard would restrict the application of the provision to
communications containing such words and phrases as “‘vote for,’ ‘elect,’ ‘support,’ ‘cast your
ballot for,’ ‘Smith for Congress,’ ‘vote against,’ ‘defeat,’ ‘reject,’” id, at 44 n.52, a description that
became known as the “magic words” test. Mann Expert Rep. at 19.

Buckley also addressed a somewhat related provision, 2 U.S.C, 434(e) (now codified as
amended at 2 U.S.C. 434(c)), which required persons, other than political committees or candidates,
to file statements with the FEC disclosing their “expenditures” made “for the purpose of
influencing” a federal election, 424 U.S, at 74-82; see 2 U.S.C. 431(9). The Court found that the
ambiguity of this phrase, when used for a provision regulating independent spending, posed the
same constitutional problems of vagueness encountered in 18 U.S.C. 608(e)(1). Id. at 78-79. Thus,
the Court also construed “expenditure” for purposes of the independent spending at issue in § 434(e)
“to reach only funds used for communications that expressly advocate the election or defeat of a

clearly identified candidate.” 1d. at 80 (footnote omitted), The Court sustained § 434(e) as a means
eee

® The Court then held that 18 U.S.C. 608(c) could not be justified as an anti-corruption measure, because “[t]he
exacting interpretation of the statutory language necessary to avoid unconstitutional vagueness undermine(d] its
effectiveness.” Id, at 45-48,

19



contributions.”)." some parents use their own resources, directly or through gifts to their child, to
make the contribution under the child’s name. For example, in MUR 4484, a father made $1,000
contributions to four candidate committees in the name of his infant son. See INT 015778-859
[DEV $2-Tab 5] (Documents Relating to MUR 4484 (Stewart Banium, Jr., et al.)); FEC 101-0001-

0055, 0323-28, 137-0001-13 (DEV 133-Tab 3]; see also INT 015610-13 [DEV 43-Tab 3} (MUR

3268, Jan. 31, 1992 Letter to Michael Lolicata, re: Closing of Investigation; Factual and Legal
Analyses); FEC 138-0026-0034 [DEV 43-Tab 5] (MUR 4048). Other parents use their control over
their children and their children’s assets to cause contributions of funds belonging to the children. In
MUR 4255, for example, a father who had given a candidate nearly the statutory maximum and
whose wife had contributed the maximum to the same candidate used money from the bank
accounts of his one-year-old and three-year-old children to make three $1,000 contributions to the
candidate in the children’s names. See USA-CIV00890-759 & FEC] 19-0016- 0023 [DEV 43-Tab 4]

(Documents relating to MURs 4252, 4253, 4254, & 4255); see also INT 01 5867-72 [DEV 43-Tab 1]

(MUR 488: First General Counsel’s Report); see generally Alan C. Miller, Minor Loophole, LA.

Times, Feb. 28, 1999 (report on study commissioned by the newspaper), reprinted in 148 Cong.

Rec, $2146-S2148 (Mar, 20, 2002).22

ical fundraisers may unwittingly be encouraging parents in this conduct. As an oxperienced fundraiser
ly wh it

i
BB polit
ained, “Normali

American Politics 2002, at 324, 328 (2001).

22 See also USA-CIV 00700-05 [DEV 44] (David Mastio, The Kiddie-Cash Caper: Gifts from Minors Are
the Next Big Campaign Loophole, Slate.com, posted May 21,1997); USA-C1V 00783 [DEV 44] (Rise in Student Gifts
Begs Question: Was Law Broken?, USA Today, May 20,1997, at 12A); FEC 137-009-0012 [DEV 134-Tab 3] (Chris
Harvey, The Young and the Generous: Md. Children Give to Campaigns, Wash, Post, Nov. 20, 1995, at B01); (Alex
Knott, Members Cash In on Kid Contributions, Roll Call, June 5, 1995, at A-1, reprinted in 148 Cong. Rec. $2146 (Mar.
20, 2002); FEC 137-0008 (Jerry Landauer, Kiddies Go Krazy Over Carter, Breck Open Piggy Banks, Wall St. J., July
8, 1976, at 1, 27)

201


by which BCRA defines electioneering communications are perfectly clear, and suffer from none
of the vagueness that concerned the Court in Buckley.

Nor can plaintiffs carry their burden of demonstrating that the criteria defining electioneering
communications are substantially overbroad. The four criteria that Congress adopted work together
to ensure that the statute does not sweep substantially beyond its intended scope of advertising de-
signed to influence the outcome of federal elections, a conclusion that is supported by empirical
studies considered by Congress — and which have been validated for purposes of this action — show-
ing that BCRA’s definition of electioneering communications applies to only two to six percent of
the genuine issue advocacy in which labor unions, corporations and other interest groups engage.
Asa result of BCRA, labor unions and corporations such as the AFL-CIO, or the Chamber of Com-
merce, may end up financing some tiny percentage of genuine issue advocacy, involving federal
candidates, with funds from their separate segregated accounts, and on equally rare occasions other
groups engaged in genuine issue advocacy may have to comply with modest disclosure
requirements, but this is an insufficient basis for invalidating the statute as overbroad.

Plaintiffs’ quarrels with BCRA’s disclosure provisions are equally meritless. BCRA’s re-
quirements for disclosure of electioneering communications serve the same voter information, anti-
corruption, and enforcement interests that the Supreme Court found sufficiently important in Buck-
ley to sustain FECA’s requirements for disclosure of expenditures made by independent groups and
organizations. Moreover, the disclosures required under BCRA are less intrusive than the disclos-

ures required under FECA § 434(c), regarding independent expenditures by individuals and groups.

132


Interest Group Electioneering Ads, App. A to Defs.’ Mem., Tab 1.2% By way of example, in
October 1996 a tax-exempt organization called Citizens for Reform broadcast the following ad in
Arkansas, where Winston Bryant was running for the Senate:

Senate candidate Winston Bryant’s budget as Attorney General increased 71 percent,

Bryant has taken taxpayer-funded junkets to the Virgin Islands, Alaska, and Arizona.

And spent about $100,000 on new furniture. Unfortunately, as the State’s top law

enforcement official, he has never Opposed the parole of any convicted criminal,

even rapists and murderers. And almost 4,000 Arkansas prisoners have been sent

back to prison for crimes committed while they were out on parole. Winston Bryant:

Government waste, political junkets, soft on crime. Call Winston Bryant and tell

him to give the money back,

Thompson Comm, Rep. at 4007.

In the context of an election, interest groups may run ads wholly ungermane to the issues
they exist to promote — clear indication that their purpose in so doing is to promote candidates, not

issues. For example, EMILY’s List, a pro-choice group, ran ads during the 2000 election supporting

The record also contains copies of “story boards” of most of the political ads aired in the 1998 and 2000
election cycles; they include a transcription of the words spoken in each ad with snapshots of every fourth second of the
accompanying video, See DEV 48.

+2. The two advertisements reproduced above illustrate a common feature of clectioneering ads - they each
referto multiple themes (¢.g., government waste, political junkets, and crime), suggesting their tue purpose is to provide
voters with a variety of reasons either to support orto oppose a candidate. Genuine issue ads typically focus ona single
issue that their sponsors wish to bring to the public's attention. See Krasno & Sorauf Expert Rep. at 56-57 & n.138

138


By allowing larger contributions to a candidate whose voice may otherwise not be heard
when running against a self-funded opponent, BCRA facilitates the speech of one candidate
without in any way restricting the speech of the self-financing candidate, thereby furthering First
Amendment interests by increasing voters’ opportunities to hear and evaluate many views in the
marketplace of political ideas. See Buckley, 424 U.S, at 14-15 (“[T]he ability of the citizenry to
make informed choices among candidates for office is essential, for those who are elected will

inevitably shape the course that we follow as a nation.”); see also New York Times Co. v. Sulli-

van, 376 U.S. 254, 270 (1964) (“[DJebate on public issues should be uninhibited, robust, and
wide-open.”). More generally, the millionaire provisions encourage less wealthy candidates to
run for office and thus help to offset pressure on political parties to recruit not the best candi-
dates, but those who can finance their own campaigns. See Declaration of Paul S, Herrnson in
RNC v. FEC (Jan. 28, 1999) at 29-30 [DEV 67-Tab 21, hereinafter Hermson Expert Rep. in

RNC v. FEC]; Kolb Decl. Ex. | at 18-20 [DEV 7-Tab 24]; Krasno & Sorauf Expert Rep. at 70;

147 Cong. Rec. $2537, $2546 (Mar. 20,
2001) (Sen. DeWine); 147 Cong, Ree. $2464 (Mar. 19, 2001) (Sen. Sessions).

The millionaire provisions resolve a complex problem by accommodating two vital
interests: increasing the pool of potential candidates and encouraging competition between
candidates, and preventing corruption and the appearance of corruption fostered by unlimited
campaign contributions. This does not mean that Congress concluded that the normal
contribution limits do not better serve the interest in avoiding corruption. See 148 Cong. Rec.

$2142 (Mar. 20, 2002) (Sen. McCain). Rather, Congress devised a solution closely drawn to

193


Even under a construction of the provision that would require a unified choice on spend-
ing by the national and state-level committees of political party, the statute would be fully
consistent with the Constitution. Only committees that are “established and maintained” by the
official state or national party committee are among those “considered to be a single political
committee” under this provision. 2 U.S.C. 441a(d\(4)(B). In light of that close structural
relationship established by the parties themselves, Congress can properly require such
committees to make a single unified choice. And the statute leaves the parties free to establish
any internal structure or procedure they believe necessary to govern the manner in which the
spending decision with respect to each candidate is to be made. Even if the statute “prompts
parties to structure their spending in a way that they would not otherwise choose to do,”
Colorado I, 533 U.S. at 450 n.11, it is not unconstitutional.

B. Section 214 of BCRA Is Consistent with the First Amendment.

Since 1976, 2 U.S.C. 44]a(a)(7)(B)(i) has provided that an expenditure coordinated with
a candidate is a contribution, and since Buckley, the Supreme Court has recognized that such ex-
penditures may constitutionally be limited. See 424 U.S. at 46-47; see also Colorado II, 533
US. at 446.4 Sections 214(b) and (c) of BCRA repeal the FEC’s current regulations defining
coordinated communications and require the FEC to promulgate new regulations. Although the
Statute sets out four criteria that the FEC must address in the new regulations, it does not require

that the new regulations define coordinated communications by reference to any of them.

BE In § 214(a) of BCRA, Congress incorporated into the statute the principle previously set out in the

Commission's regulations, 11 C.F.R. 100.23(b),(c), thal expenditures coordinated with a politicalparty, like expenditures
coordinated with a candidate, are treated as contributions,

182


See, e.g.,

Congress recognized that the acceptance of large donations by national parties and the
practice of providing large party donors special access to high-ranking federal officials have a
tremendous potential to corrupt the political system, either in the form of donors receiving special
treatment by the Legislative or Executive Branches as a quid pro quo for past or future donations,
see Buckley, 424 U.S. at 26, or “politicians too compliant with the wishes of large contributors,” see
Shrink Missouri, 528 U.S, at 389. Senator Levin observed that in Buckley, the Supreme Court found
an appearance of corruption “from the size of the contribution alone without even looking at the sale
ofuccess.... Selling access in exchange for contributions would only take the Court’s concerns
and justification for limits a step further.” 148 Cong. Rec, $2115 (Mar. 20, 2002) (Sen. Levin); see
also 147 Cong. Rec. $2530 (Mar. 19,2001 } (Sen. Lieberman); 148 Cong. Rec. H351 (Feb. 13, 2002)
(Rep. George Miller), 147 Cong. Ree. $3107-10 (Mar. 29, 2001) (Sen. Feingold).

Respected political scientists endorse Congress’s conclusion that soft money donations to

the national political parties have the potential to lead to the trading of legislative or policy favors

or otherwise corrupt the political process. See Mann Expert Rep. at 28-29, 32-35; Krasno & Sorauf

We will arrange to have dinner and play golf with key members [of the over
25 Senators planning to attend].”}.

78



congressional intent, and it has permitted both individua! and organizational donors effectively to
make donations to influence federal elections that vastly exceed the contribution limits the Supreme
Court upheld in Buckley. As the record developed herein makes clear, and as we discuss further
below, exploitation and abuse of soft money has created a system in which large soft money donors
to the political parties are rewarded with access to candidates and officeholders, candidates and
officeholders feel obligated to large party donors, and potential donors accede to requests for large
donations because they believe it is necessary in order to avoid adverse legislative consequences.2”

In short, since 1980, the party committees have increasingly exploited soft money as a means
of circumventing the contribution limits and funding source prohibitions set forth in FECA.
Although soft money originated as a limited exception to permit the parties to support activities that
were not linked directly to electing or defeating a particular federai candidate, the national parties,
working primarily through the state parties, have evaded FECA by spending enormous quantities
of soft money to influence federal elections ~ money raised in amounts exceeding FECA’s

contribution limits and obtained from sources prohibited under FECA. Mann Expert Rep. at 26.

, £.f.. Bumpers Decl. fq 18-23 [DEV 6-Tab 10] (explaining that soft money donations
and get phone calls to officeholders returned, and that there is often “an expectation of
reciprocation where donations to the party are made”); Simpson Decl. 198-12 [DEV 9-Tab 38] (“[b]ig labor and big
business use large soft money donations to corrupt the system to the detriment of the little guy”; “[IJarge donors of both
hard and soft money receive special treatment”; recounting instances in which Senators’ votes and legislative priorities
were affected by the fear of losing fumre donations); Rudman Decl. 9 [DEV 8-Tab 34] (“[Ilarge soft money
Contributions in fact distort the legislative process. They affect what gets done and how it gets done”); Kolb Decl. 19
& Ex. 6 [DEV 7-Tab 24] (pall of senior executives shows that Pressure is placed on business leaders to make large
contributions, and that the main reasons such contributions are made is fear of adverse legislative consequences and to
obtain access to lawmakers); Hassenfeld Decl. 915-16 [DEV 6-Tab ! 7] (many corporate donors “view large softmoney
donations as a cost of doing business, and frankly, a good investment relative to the potential economic benefit to their
business”);

Hickmott Decl. J 9 (DEV 6-Tab
191("{CJorporations, labor unions and individuals make so ft money contributions to national political parties and federal
candidate PACs, including joint fundraising committees, to influence the legislative process for their busincss
purposes,”}.

36



limitations, In light of that problem, state and local party committees have no constitutional
entitlement to, or dire need for, soft money to spend on federal election activity:

Soft money doesn’t provide some kind of magic bullet that States need to conduct
get out the vote activities, or other activities surrounding Federal elections. The
States just need adequate funds to conduct those activities, and McCain-Feingold
makes sure that they have the money — we double the amount of hard money an
individual can give to a state party and increase the aggregate annual limit a
commensurate amount.

We want to help state parties stay a vibrant part of our politics. And there are plenty
of activities where States can spend whatever soft money they might raise through
their State party. We don’t attempt to exert any control over what a State party
spends on election activities that are purely directed at State elections. But we do say
—a million dollar contribution to the party from Philip Morris, or the AFL-CIO, or
Roger Tamraz, or Denise Rich has the appearance of corruption, whether the money
is used for phony issue ads attacking candidates, or voter registration.

147 Cong. Rec. S294] (Mar. 27, 2001) (Sen, Feingold); see also 147 Cong. Rec. $3251 (Apr. 2,

2001) (Sen. Thompson).

B. Plaintiffs’ Challenges to the State-Level Party Provisions Lack Merit,

1 The provision barring transfer of nonfederal
funds among party committees is constitutional,

Plaintiffs urge that BCRA unconstitutionally prohibits party committees from pooling their
resources through the transfer of funds. But BCRA generally does not prohibit transfers of hard
money among party committees. Thus, national party committees are free to transfer hard money
to state-level committees; state-level committees are free to transfer hard money to national party
committees; and state-level committees are free to transfer hard money to cach other. BCRA only
regulates the transfer of soft or hard money when such funds are raised pursuant to the Levin

Amendment for use in federal election activity.

107


Reform” and “Citizens for the Republic Education Fund” together spent several million dollars in
1996 on attack ads against various Democratic candidates, such as the following “issue ad” run
against Montana House candidate Bill Yellowtail:

Who is Bill Yellowtail? He preaches family values, but took a swing at his wife.

And Yellowtail’s response? He only slapped her, but “her nose was not broken.”

He talks law and order . . . but is himself a convicted felon. And though he talks

about protecting children, Yellowtail failed to make his own child support payments

~ then voted against child support enforcement. Call Bill Yellowtail. Tell him to

support family values.
Thompson Comm. Rep. at 4007; Lamson Decl. {| 11 [DEV 7-Tab 26]. Investigation by Congress
eventually found that these two groups apparently were largely underwritten through a conduit by
Koch Industries, the second largest privately held company in the nation, and were operated by

Triad Management, a political consulting firm. Thompson Comm. Rep. (Minority Views) at 5982-

83; see also Magleby Expert Rep. at 18. Due to lack of disclosure, much remains unknown to the

public about the financing of the two groups. Id.;

Circumvention of FECA’s requirements through the use of “issue advocacy” continued
unabated following the 1996 election. Both the aggregate amounts expended on issue ads and the
number of groups making such expenditures rose considerably from 1996 to 2000.’ Studies of the
1998 and 2000 elections by the Brennan Center for Justice at New York University Law School, and
by a group of political scientists across the nation organized by Professor David Magleby, as
supplemented by expert reports submitted in this case by the authors of those studies along with
other political scientists, show that the vast majority of these ads that referred to candidates for

federal office ran within 60 days of Election Day, that such ads were concentrated in competitive

ee

*) Krasno & Sorauf Expert Rep. at 50; Annenberg Pub Policy Ctr., Issue Advocacy Advertising During the
1997-1998 Election Cycle (“Annenberg 1998 Study”) at 1-2 [DEV 66-Tab 6]; Annenberg Pub Policy Ctr., Issue
Advocacy Advertising During the 1999-2000 Blection Cycle (“Annenberg 2000 Study”) at 1. 4 [DEV 38. Tab 22); sce
also Annenberg 2000 Study at 9 (explaining basis for Annenberg figures).

43


party, political committee, or candidate.” This new provision is nearly identical to a pre-existing
provision of FECA, 2 U.S.C. 431(9)(B)(i), that excludes from the definition of “expenditure” news
stories and editorials broadcast or published by the media. This so-called “media exception”
protects the traditional role of the press and does not violate the equal protection clause.

Again, Austin is dispositive on this issue. The Court there rejected the claim that Michigan’s

segregated fund requirement for corporations unfairly favored media corporations by excluding
them from its scope. The Court held, 494 U.S. at 666-69 (citations and footnote omitted; emphasis
added):

Although al! corporations enjoy the same state-conferred benefits inherent
in the corporate form, media corporations differ significantly from other corporations
in that their resources are devoted to the collection of information and its
dissemination to the public. We have consistently recognized the unique role that
the press plays in “informing and educating the public, offering criticism, and
providing a forum for discussion and debate.” Bellotti, 435 U.S., at 781 .... The
Act’s definition of “expenditure”... conceivably could be interpreted to encompass
election-related news stories and editorials. The Act’s restriction on independent
expenditures therefore might discourage incorporated news broadcasters or
publishers from serving their crucial societal role. The media exception ensures that
the Act does not hinder or prevent the institutional press from reporting on, and
publishing editorials about, newsworthy events. ... A valid distinction thus exists
between corporations that are part of the media industry and other corporations that
are not involved in the regular business of imparting news to the public. Although
the press’ unique societal role may not entitle the Press to greater protection under
the Constitution, Bellotti, supra, 435 U.S., at 782, and n.18, it does provide a com-
pelling reason for the State to exempt media corporations from the scope of political
expenditure limitations. We therefore hold that the Act does not violate the Equal
Protection Clause.

BCRA’s media exception serves the same purpose and is constitutional for the same reasons.

168


a. The national party soft money ban prevents eva-
sion of federal source and contribution limits,

Soft money contributions to political parties have increased enormously over the past two
decades. See supra at 29-36, As Congress recognized, the amount of soft money donated to and
utilized by political parties increased from approximately $20 million during the 1980 and 1984
federal elections, to roughly double that amount in the 1988 federal elections, then skyrocketed to
approximately $86 million during the 1992 election, to more than $260 million during the 1996
federal elections, and then close to $500 million during the 2000 elections. 147 Cong. Rec. $2445

(Mar. 19, 2001) (Sen. Feingold); see also Donald P. Green, Report on the Bipartisan Campaign

Reform Act (Sep. 23, 2002) at 30 & Toi. 1 (DEV !-Tab 3, hereinafter D. Green Expert Rep.]. In

the 1996 election cycle, the national Party committees received approximately 27,000 donations
from federally prohibited sources (corporations and labor unions), and the top 50 soft money donors
gave donations to ranging from $530,000 to over $3.2 million. Thomas E. Mann, Expert Report of

Thomas E. Mann (Sep. 20, 2002) at 22 & Tbl. 5 (DEV 1-Tab1, hereinafter Mann Expert Rep.]. By

the 2000 election, donations in amounts of $100,000 or more constituted a “large and significant

share” of the total soft money contributions received by the parties. David M. Primo, Rebuttal

Expert Affidavit of David M. Primo (Oct. 7, 2002) 4 29 (SLF] [hereinafter Primo Rebuttal Expert

Rep.]. Approximately 60 percent of the parties’ total soft money receipts were donated by
approximately 800 entities, with more than 400 of those corporations and unions. Mann Expert Rep.

at 24-255" Each of those entities gave at least $120,000, with the largest donor giving almost $6

68


property, “they are considered incapable of property management.” | Legal Rights § 801, at 394-95

(footnote omitted).

Other restrictions also apply. For example, state law provides that contracts by minors are
generally voidable“” In most states, minors must sue or be sued through adult parties Tepresenting
their interests, and the federal courts apply that law. 4” Indeed, the present litigation illustrates this
point With the consent of a parent or guardian, a youth under eighteen may engage in some
activities ordinarily reserved for individuals eighteen or older. See, e.g. 10 USC. S05(a)
(enlistment in the armed forces). However, the youth is not thereby entitled to engage in the full
range of adult activities. For example, he or she still may not vote or purchase alcohol. See The
Book of the States 386 (table),

Finally, contributions by minors of all ages, even adolescents, present additional Practical
difficulties. The Commission either can accept at face value self-serving, conclusory, and
sometimes lawyer-crafted statements of family members“ or it can probe for the truth by querying

youngsters about their knowledge of politics and their relationship with their parents in ways that

may threaten the privacy of the family, 22 See Merriken v, Cressman, 364 F. Supp. 913, 915 (E.D.

TET

8 Seece &., Ga. Code §§ 1-2-8, 13-3-20,44-5-41 (2002); Byrd v. Commercial Credit Corp., 675 So. 24 392,
393 (Ala. 1996); Dilallo v. Riding Safely, Inc., 687 So. 2d 353, 357 (Fla. Dist. Ct. App. 1997).

HT See | Legal Rights §§ 1/.01-1102, at 517-18: §6 12.01-12.05, at 530-45; Fed. R. Civ. P. 17(b) (law of
domicile establishes capacity to sue or be sued) and 17{c) (appointment of representative for “infants or incompetent
persons”).

representatives, they apparently are improper partics to this litigation, See La. Civ. Code Ann. att. 29, 216 (West 2002);
La. Code Civ. Proc. Ann. art. 683 (W est 2002); Ga. Code §§ 9-2-28, 29-4-7, 39-1-1(a); Miracle v. Spooner, 978 F.Supp.
1161 (N.D. Ga. 1997),

he See FEC 138-0008 to 0014 [DEV 43-Tab S](MUR 199); FEC 137-0018 [DEV 43-Tab 1] (MUR 488); FEC

138-0044, 0045, 0050 [DEV 43-Tab 5] (MUR 4208); FEC 101-0050-55 [DEV 134-Tab 3] (MUR 4252).

1 See FEC 119-0017, 0021 [DEV 43-Tab 4] (Letter from Loren W. Hershey (father) to the Federal Election

F
Commission re: MUR 4254, Oct. 13, 1995, at 2, 6}.

207



category of expenditures in question may confidently be viewed as “campaign related.” See North

Carolina Right To Life, Inc. v. Leake, 108 F. Supp. 2d 498, 505-07 (E.D.N.C. 2000) (registration
and disclosure requirements may be placed on groups whose major purpose is electioneering without

regard to Buckley’s express advocacy standard); Christian Coalition, 52 F. Supp. 2d at 87-88 & n.50

(Buckley does not require that regulation of coordinated expenditures for political expression be
limited to express advocacy). As discussed herein, “electioneering communications” defined under
BCRA are also sufficiently “campaign related” 10 avoid any danger that substantial amounts of
genuine issue discussion, unrelated to an electoral Purpose, will be burdened.

Buckley did not purport, then, to announce a new rule of substantive constitutional law,
namely, that the First Amendment prohibits any regulation of independent political spending for
communications that do not involve words of express advocacy. Such a proposition would have
been easy enough to state in so many words, but they are nowhere to be found in the Court’s
opinion. Indeed, for the Courtto have issued such a Sweeping pronouncement would have required
that it break faith with a “cardinal rule[ J” of adjudication to which it has “rigidly adhered:
never to formulate a rule of constitutional law broader than is required by the precise facts to which

il is to be applied.” Brockett v. Spokane Arcades, 472 U.S. 491, 501-02 (1985); Raines, 362 U.S.

17, 21 (1960); see also Clinton v. Jones, 520 U.S. 681, 690 n. 11 (1997).

To dispose of the controversy in Buckley, it was sufficient for the Court to rectify the

problem of vagueness in the statute before it at the time, See Rescue Army v. Mun. Court of Los

Angeles, 331 U.S, 549, 568-69 (1947) (“[C]onstitutional issues affecting legislation will not be
determined . . . in broader terms than are required by the precise facts to which the ruling is to be

applied.”). There is no reason to believe that the Court meant to foreclose all future action by Con-

152


strategy with Representative John Boehner of Ohio, Chairman of the House Republican Conference,
along with other Republican Members and party officials. FEC Gen. Counsel’s Rep. in In re The
Coalition, MUR 4624 (“Coalition MUR Rep.”) at 12, 15 (DEV 53-Tab 6];

Following the AFL-CIO’s announcement of its advertising campaign,
Representative Boehner urged pro-business ailies to respond, and the Coalition formed soon

afterwards. Coalition MUR Rep. at 13-14, 16;

the Coalition eventually raised approximately $5 million in corporate funds

Coalition MUR Rep. at 18;

t

The Coalition used these funds to run advertisements from September through November
4, 1996, uniformly praising Republican incumbents targeted by the AFL-CIO, while stopping short

of expressly calling for their re-election. See Coalition MUR Rep. at 26-272”

t

39


The rise of the soft money system and campaign-related “issue advocacy” funded with soft
money has, in short, undermined three longstanding “pillars of federal election law”: the banning
of “corporate contributions out of concems that concentrated wealth and the advantages of
incorporation could distort and corrupt democratic government”; the banning of fabor union
contributions “to neutralize the political benefits that might result from their publicly-facilitated
organizational strengths”; and the banning of “[l]arge and unlimited individual contributions . . . to
Prevent the buying of access to or special treatment by government officials.” Mann Expert Rep,
at 31-32.

b. The national soft money ban reduces the poten-
tial for corruption in the political process.

There can be no question that circumvention of federal contribution limits and source
prohibitions through unlimited soft money contributions to the political parties has resulted in the
appearance of, and potential for, corruption in the political process, Soft money contributions to the
political parties are potentially as corrupting as contributions made directly to candidates. As the
Supreme Court has recognized, large contributions to the political parties can produce “obligated
officeholders,” Colorado Il, 533 U.S. at 452, just as large contributions made directly to candidates
can, see Buckley, 424 U.S. at 26. The political parties “act as agents for spending on behalf of those
who seek to produce obligated officeholders,” and donors “can use parties as conduits for
contributions meant to place candidates under obligation.” Colorado II, 533 U.S. at 452. Indeed,
contributing money to political parties “is a more effective way of seeking influence than merely
giving to individual members of Congress,” because one large check to a party committee can
provide more access to a larger number of officeholders than writing a greater number of small

checks to individual candidates’ campaigns. Krasno & Sorauf Expert Rep, at 12. Accord

71



promote all of these goals by preserving the contribution limits but raising them incrementally in
highly specialized circumstances. The “court(s] ha[ve] no scalpel to probe” whether this
compromise could have been struck with somewhat different limits. Buckley, 424 U.S. at 30.

B. The Millionaire Provisions Do Not Violate the First Amendment.

The millionaire provisions in no way restrict or limit the amount of money that
candidates may expend on their own campaigns. Like the public financing provisions upheld in
Buckley, these content-neutral provisions neither impose uneven burdens among candidates nor
“abridge, restrict, or censor speech, but rather facilitate and enlarge public discussion and

participation in the electoral process, goals vital to a self-governing people.” Buckley, 424 U.S.

at 92-93 (footnote omitted). As Senator DeWine explained:

(T]his amendment will enhance free speech. . . . {T]he end result will not be that
the candidate who is the millionaire will have a smaller megaphone... . [T]hat
millionaire who is putting in his or her own money will have the same megaphone
they had before this amendment ~ but what it means is that the candidate who is
facing that multimillionaire will also have the opportunity to have a bigger
megaphone, to grow that megaphone. [I]t will put more money into the political
system, [but] the effect of that money will be to enhance the first amendment. It
will be to enhance people’s ability to communicate and get a message across
without in any way hurting someone else’s ability — namely the millionaire — to
get their message across.

147 Cong. Rec. $2546 (Mar. 20, 2001); see also 147 Cong. Rec. $2537-2538 (Mar. 20, 2001)

(Sen. DeWine), 147 Cong. Rec. $3236 (Apr. 2, 2001) (Sen. Murray); 147 Cong. Rec. $2549
(Mar. 20, 2001) (Sen. Feingold); 142 Cong. Rec, S6810 (June 25, 1996) (Sen. Feingold).

Just as the Supreme Court in Buckley recognized that presidential candidates are free to
choose whether to spend unlimited privately raised funds or to accept public financing along

with expenditure limits, see id. at 57 & nn.65, 95, so too are wealthy candidates under BCRA .

194


A. The Restriction Serves the Important Governmental Interest. in
Preventing the Use of Children to Evade FECA’s Contribution Limits,

for that reason, despite the resulting restrictions on First Amendment rights. BCRA § 318 serves the
equally important interest in preventing circumvention of contribution limits, and likewise comports
with the First Amendment, Sce 148 Cong, Rec. $2145 (Mar. 20, 2002) (Sen. McCain) (provision
added “to prevent evasion of the contribution limits.”). “[AJl members of the Court agree that

circumvention is a valid theory of corruption.” Colorado II, 533 U.S. at 456. One need not find that

most parents seek to evade the limits to conclude that prophylactic measures are warranted. See
Buckley, 424 U.S. at 30 (upholding $1,000 limit on individual contributions even though the Court
assumed that “most large contributors do not seek improper influence over a candidate’s position or
an officeholder’s action”). Cf, NRWC, 459 U.S. at 210 (“Nor will we second-guess a legislative
determination as to the need for prophylactic measures when corruption is the evil feared.”).

The need for the prophylactic measure adopted by Congress here is clear. The Commission
has long been concerned that “contributions are sometimes given by parents in their children’s
names,” thereby circumventing FECA’s contribution limits. See FEC Annual Report 1992, at 64
(1993) [DEV 14-Tab 1);82 see_also 148 Cong. Rec. $2145 (Mar. 20, 2002) (Sen. McCain)
(“[T]here is substantial evidence that individuals are evading contribution limits by directing their
children to make contributions.”); Thompson Comm, Rep. at 4504 (“There is ... substantial evidence

that minors are being used by their Parents, or others, to circumvent the limits imposed on

122 For years, the Commission in its annual report notified Congress that some parents have been undermining
FECA’s contribution limits through contributions purportedly made by their children, and each year, the Commission
recommended that Congress enact legislation to prevent the abuse. See FEC’s annual reports for 1992-2000 [DEV 14
& 15]

200



As explained above, notwithstanding the general prohibition on the use of soft money to
influence federal elections, the Levin Amendment permits state-level party committees to raise
additional funds subject to certain restrictions for use in certain federal election activity. See 2
U.S.C. 441i(b)(2)(A). Thus, the Levin Amendment provides a state-level party committee with an
additional means of funding federal election activity: the committee can fund such activity entirely
with hard money, which the committee can raise itself or obtain from another party committee; or
the committee can invoke the Levin Amendment, and fund such activity in part with soft money.

The Levin Amendment prohibits party committees from aggregating and transferring funds
raised pursuant to that provision. See 2 U.S.C. 441 i(b)(2)(B)(iv). In the absence of that prohibition,
an unlimited number of state-level party committees would be free to work in concert to aggregate
substantial sums of soft money from the same contributors. Ifsuch aggregation were permitted, the
$10,000 limit on donations of funds under the Levin Amendment would be rendered nugatory.

Moreover, the Levin Amendment is “an effort to enhance [plaintiffs’] speech rights,” and

ils restrictions, accordingly, “must be assessed in that light.” See Schenck v. Pro-Choice Network,

519 U.S. 357, 383-84 (1997); see also NRWC, 459 U.S. at 210. Congress was not constitutionally
required to provide state-level committees with the option of using Levin funds; it could have
required those committees to fund federal election activity entirely with hard money. The conditions
that Congress placed on the additional funding option that the Levin Amendment provides are
entirely reasonable.

Moreover, the limitation on the use of funds that are “directed” or “spent” by or in the name
of a national party or a federal candidate or “directed” through fundraising activities conducted

Jointly by two or more state, local, or district committees, see 2 U.S.C. 441i(b)(2)(C), is not

108


possibility that the provision covers pure issue advocacy: if a communication has only one plausible
meaning and that meaning is an exhortation to support or oppose a candidate, its message cannot
by definition be a mere discussion of issucs. The provision also satisfies the Buckley Court’s
concerns because it is “directed precisely to that spending that is unambiguously related to the
campaign of a particular federal candidate.” 424 U.S. at 80.

The backup definition also avoids placing the speaker at the mercy of the subjective “varied
understanding of his hearers,” Buckley, 424 U.S. at 43 (quoting Thomas v. Collins, 323 U.S. 516,
535 (1945)). To the contrary, the definition makes clear that if more than one plausible
interpretation is possible, a communication will not be considered an electioneering communication,
even if many listeners would likely interpret it as calling for an election result. In essence, the
backup definition is no different from other First Amendmenttests thatuse an objective, “reasonable
person” standard that does not vary depending upon the sensitivity or special knowledge or

ignorance of particular listeners. In areas as diverse as obscenity (see Miller v. California, 413 U.S.

15 (1973)), fighting words (see Brandenburg v. Ohio, 395 U.S. 444 (1969); Hess v. Indiana, 414

U.S. 105 (1973), and religious expression (see County of Allegheny v. ACLU, 492 US, 573

(1989)), the Supreme Court has eschewed mechanical tests and has instead evaluated the interests
at stake with sensitivity for the context and the nature of the expression at issue. Moreover, here
Congress has not only defined electioneering communications with an objective test, but with an
extremely narrow one,

In sum, if both of Congress’s definitions of electioneering communication were invalidated,
the prohibitions of 2 U.S.C. 441b would require little more than careful diction and would do almost

nothing to prevent millions of dollars from the general treasuries of unions and corporations from

172


campaign speech as it has developed since Buckley. It is narrowly tailored to serve compelling
interests, and is constitutional.

In advancing a contrary view of the matter, the Title II plaintiffs, like their co-plaintiffs,
assume the burdens associated with bringing a pre-enforcement facial challenge to an act of
Congress. The trial declarations submitted by the Title IJ plaintiffs describe no specific advertise-
ments, referring to particular candidates in specific races, that these plaintiffs intend to produce or
air at any specified time or place in the future, that would qualify as electioneering communications
under BCRA’ For that matter, according to their discovery responses, many of the Title II
plaintiffs have never sponsored television or radio broadcasts that would qualify as electioneering
communications2” Still others, as non-profit organizations operating under § 501(c)(3) of the
Internal Revenue Code, are exempted from BCRA’s regulation of electioneering communications
altogether. See Final Rule, Electioneering Communications, 67 Fed. Reg. 65,190, 65, 199-200 (Oct.
23, 2002) (to be codified at 11 C.F.R. 100.29(c)(6)).

Only the AFL-CIO, Chamber of Commerce plaintiffs, NRA, NRWC, and Club for Growth

have histories of spending significant sums of money on “issue” ads that would meet BCRA’s

coy

6,

Ses Interrogatory Responses of 60-Plus (Interrog. No. 11) [DEV 10-Tab 13]; RealCampaignReform.org
(interrog, No. T1) [DEV 1 1-Tab 27]; Center for Individual Freedom (Interrog. No. 10) [DEV 10-Tab 12}; National
Association of Broadcasters (Interrog. No, 4) [DEV 10-Tab 21]. The only political ad in the ACLU"s history that would
meet BCRA’'s criteria for an electioneering communication is « 30-second radio advertisementaired in March 2002, just
prior (o the commencement of this litigation

_ seealso USA-ACLU 00001-2 (press releases)

[Tab 3].

See McConnell Second Amend. Compl, (30, 32, 36, 37 (identifying the Indiana Family Institute, the
National RightTo Life Committee Education Trust Fund, the Southeastern Legal Foundation, and U.S. d/b/a Pro-English
as 50 1(¢)(3) organizations)

130


for federal campaign spending, and to require disclosure of who finances federal campaign spend-
ing, had been eviscerated through the routine exploitation of the “issue advocacy” loophole.

Repairing the System: Legislative Debate and
Enactment of the Bipartisan Campaign Reform Act

BCRA represents the culmination of an extraordinary amount of effort by Congress over
several years to develop legislation to repair a federal campaign finance system that had been

proven, over the course of the 1990s, to be increasingly dysfunctional. Scores of bills proposing an

enormous variety of potential reforms were introduced in both the House and the Senate,*Y and the

problems with the campaign finance system and various reform proposals have been considered by

4 panoply of congressional committees 2” The provisions adopted in BCRA are those that Congress

*L The bills introduced in the last three Congresses alone include, but are not limited to: “Bipartisan Campaign
Reform Act of 1997,” H.R. 493 (105th Cong.); “Campaign Reform and Election Integrity Act of 1998,” H.R. 3485
(105th Cong.}; “Campaign Finance Improvement Act of 1998,” H.R. 3476 (105th Cong.); “Bipartisan Campaign
Integrity Act of 1997,” H.R.2183 (105th Cong.); “Campaign Reporting and Disclosure Actof 1998,” H.R. 3582 (105th
Cong.): “Bipartisan Campaign Reform Act of 1997,” S. 25 (LOSth Cong.); “Senate Campaign Financing and Spending
form Act,” S. 57 (105th Cong.); “Campaign Finance Reform and Disclosure Act of 1997,” S. 179 (105th Cong.):
“lean Money, Clean Elections Act,” S. 918 (105th Cong.); “Grassroots Campaign and Common Sense Federal Election
Reform Act of 1998,” S. 1689 (105th Cong.); “Voter Empowerment Actof 1999," H.R. 32 (106th Cong.); “Bipartisan
Campaign Reform Act of 1999,” ILR. 417 (106th Cong); “Clean Money, Clean Elections Act,” 11.R, 1739 (106th
Cong.); “FEC Reform and Authorization Act of 1999," H.R. 1818 (106th Cong.); “Campaign Integrity Act of 1999,”
H.R. 1867 (106th Cong.): “Citizen Legislature and Political Freedom Act,” 11.R. 1922 (106th Cong.); “Campaign Reform
and Efection Integrity Act of 1999," TLR. 2668 (106th Cong); “PAC Limitation Act of 1999,” H.R. 2866 (106th
Cong..);"Open and Accountable Campaign Financing Act of 2000,” H.R. 3243 (106th Cong.); “FEC Reform and
Agthorization Act of 2000," H.R. 4037 (196th Cong.};*Campaign Finance Improvement Actof 2000," H.R. 4685 (10Gth
Cong): “Campaign Finance Disclosure on Sales of Personal Assets Act of 2000," H.R. 4989 (106th Cong. ); “Informed
Voter Act of 2000,” H.R. $507 (106th Cong. ); "Campaign Finance Improvement Actof2000,” H.R. 5596 (106th Cong.):
“Bipartisan Campaign Reform Act of 1999,” 8. 26 (106th Cong,); “Federal Election Enforcement and Disclosure Reform
Act,” §. 504 (1 06th Cong.); “Clean Money, Clean Elections Act,” $. 982 (LO6th Cong.); “Bipartisan Campaign Reform
Act of 1999," S. 1593 (106th Cong.); “Campaign Finance Integrity Act of 1999,” S. 1671 (106th Cong.): “Open and
Accountable Campaign Financing Act of 2000." 8. 1816 (106th Cong.); “Campaign Finance Reform and Disclosure Act
of 2000,” S, 2565 (106th Cong.); “Bipartisan Campaign Reform Act of 2001,” H.R. 2356 (107th Cong.); “Campaign
Reform and Citizen Participation Act of 2001,” H.R. 2360 (107th Cong.); and “Bipartisan Campaign Finance Reform
Act of 2001,”S. 27 (107th Cong.).

= These congressional hearings and and associated reports include, but are not limited to: Investigation of
INegal or Improper Activities in Connection with 1996 Federal Election Campaigns, S. Rpt. 105-167 (6 vols.) (Comm.
on Governmental Affairs), March 10, 1998 [Thompson Comm Rep.]; Investigation of Political Fundraising
Improprieties and Possible Violations of Law: Interim Report (“Burton Comm. Rep.”), H.R. Rept. 105-829 (4 vols.)
(Comm. on Gov't Reform and Oversight), November 5, 1998; Campaign Contribution Limits, S. Hrg. 106-19 (Comm.
on Rules and Admin.), March 24, 1999; The Justice Department's Handling of the Yab Lin “Charlie” Trie Case, S$. lrg.

106-328 (Comm. on Gov’'tal Affairs}, Sep. 22, 1999; 1996 Campaign Finance Investigations, S Hrg. 106-1059

(Subcomm. on Admin. Oversight and the Courts, Comm. on the Judiciary), May 24, June 6, and June 21, 2000; 1996

Campaign Finance Investigations, S. Hrg. 106-1072 (Comm. on dJadiciary), June 27, 2600; Johnny Chung: Foreign

Connections, Foreign Contributions, H.R, IIrg. No. 106-23 (Comm. on Gov't Reform), May 11, 1999; White House
Insider Mark Middleton: His Ties to John Huang, Charlie Trie, and Other Campaign Finance Figures, H.R. Hrg. No
106-93 (Comm. on Gov't Reform), August 5, | 999; Disclosure of Political Activities of Tax-Exempt Organizations, H.R

(continued...)

49



“play a distinctive and in many ways privileged role” in the political process, and “Telven the largest
political action committees cannot begin to approach the political scope, influence, or depth of
electoral support characteristic of the Republican or Democratic Parties.” D. Green Expert Rep. at
8. Plaintiffs’ expert likewise acknowledged that generally no other organizations in American
politics are as closcly related to federal candidates as the political parties. See La Raja Cross Tr.
(Oct. 15, 2002) at 51-53. Indeed, the fundamental goal of political parties is to gain control of the
goverment. Thus, the national parties are principally interested in electing candidates from their
members and winning electoral majorities. See D. Green Expert Rep. at 8-9 & n.10. Among other
things, the parties recruit and endorse candidates, organize the slate of candidates presented to
voters, organize legislative caucuses that assign legislators to committees, and elect legislative
leadership. Id. at 7-8. The national party committees, moreover, “are headed by or enjoy close
relationships with their leading officials, individuals who by virtue of their positions, reputations,
and control of the legislative party machinery have special influence on their colleagues,” and
donations to the parties — “especially six and seven figure soft money contributions — are usually
made by the arrangement with or knowledge of these most influential members of the party.”

Krasno & Sorauf Expert Rep. at 12-13.

This unique relationship between the parties and federal candidates and officeholders creates
a special danger of corruption stemming from the unregulated solicitation and acceptance of

contributions by the political parties, which, Professor Green explains, “attack the very foundation

91


reflects the power of true political association rather than of the commercial marketplace, and
Increases disclosure requirements. As we explain, these reforms are fully in step with longstanding
campaign finance laws that have been upheld by the Supreme Court, and they were adopted by
Congress after careful and extensive deliberation to address the substantial problems created by
demonstrated and pervasive circumvention of the existing campaign finance rules’

Parties, Corporations and Unions: The Heritage of Campaign Finance Laws

Recently, a United States Senator commented on “corporations and individuals [who] gave
over $100,000 each to both [the Democratic and Republican] parties”:

They didn’t contribute because of shared values, obviously. They contributed to
cover their bets — to make sure they had access to the winner. They had enough
money to do that, That’s how far this system has fallen. The parties advertise ac-
cess. It’s blatant. Both parties do it. Openly.

147 Cong. Rec. $3248 (Apr. 2, 2001) (Sen. Levin). A short time later, the Supreme Court likewise

concluded:

Parties are . . . necessarily the instruments of some contributors whose object is not
to support the party’s message or to elect party candidates across the board, but
rather to support a specific candidate for the sake ofa position on one, narrow issue,
or even to support any candidate who will be obliged to the contributors,

Colorado I, 533 U.S. at 451-52,

These contemporary observations may just as accurately have been made of the situation as
it existed in the late 19th and early 20th centuries, when wealthy corporate interests flooded the

parties with money, and the parties, in turn, used their officeholders to satisfy the parties’ contribu-
ee

+ tn the following discussion and throughout the defendants’ brief, initial citations to the defendants’ trial
exhibits will include a reference to the volume and tab number where each exhibit is located in Defendants’ Exhibit
Volumes (“DEV”) (¢.8., "DEV I-Tab 1,” designating Tab | of Defendant’s Exhibit Volume 1). Documents not
designated by a Tab number will be cited by volume and bates-stamp number (c.#., DEV 21-INT00005), Citations to
a previously cited exhibit (or in the case of documents, a previously cited bates-stamp series) will not include a DEV
reference. Citation to transcripts of depositions and cross-examinations taken in these consolidated cases will be by
name of witness and date, (c.., “McCain Dep. Tr. (Sep. 9, 2002) at 12”). All deposition and cross-examinating
transcripts cited by the parties have been filed with the Court as a joint exhibit of the parties. Finally, citations to
Plaintiffs' exhibits will be identified by plaintiff and document e.g. * Decl. (AFL-C1O] q 2”),

12



Donors likewise believe that large soft money contributions to political parties benefit
particular candidates that they wish to support and that making such donations is necessary to
receive access to, and favorable consideration from, federal candidates and officeholders. The
parties, by promising special access to federal officials in exchange for large soft money donations,
exploit and foster this perception. Thus, many large donors, especially those in heavily regulated
industries, believe that they must accede to requests for large soft money donations out of fear that
adverse legislative consequences could otherwise result.

B. FECA’s safeguards against corruption have also recently been breached by the rise of so-
called “issue advocacy,” television and radio advertisements that extol a candidate’s virtues, or criti-
cize his or her opponent, without specifically urging voters to elect one candidate or defeat the other.
FECA § 441b requires that corporations and labor unions refrain from spending general treasury
funds to support activities related to federal elections, but allows them to participate in electoral pol-
itics using “separate segregated funds” — accounts maintained specifically for politica! purposes,
containing contributions from individual shareholders, members, and executive or administrative

personnel. Under a clarifying construction of FECA first adopted in Buckley, and, ten years later,

in FEC v. Massachusetts Citizens for Life. Inc, 479 U.S. 238 (1986) (“MCFL”), application of
§ 441b, as well as FECA’s requirements for disclosure of independent political expenditures, is
limited to communications that expressly advocate the election or defeat of a candidate for federal
office — those using so-called “magic words” such as “vote for,” “elect,” “defeat” or “reject.”
Buckley, 424 U.S. at 44 n.$2; MCFL, 479 U.S. at 249.

Since 1996, corporations, labor unions, and other interest groups have taken routine advan-

tage of this constriction of FECA to spend tens, if not hundreds, of millions of dollars on TV and



a BCRA’s Definition of Electioneering Communications Satisfies
Buckley's Concerns, and Is Not Unconstitutionally Vague.

Given that Buckley’s express advocacy construction of FECA rested on concerns about
vagueness, BCRA is entirely consistent with the holding of Buckley, because BCRA’s definition
of electioneering communications is manifestly not vague. Plaintiffs’ assertions to the contrary,
McConnell Second Amend. Compl., 4 50; NRA Compl., ff] 76-79; NAB Compl., { 19, are
misguided.

A statute is subject to a charge of facial vagueness if it requires compliance with “an
unascertainable standard” of conduct, Coates v. City of Cincinnati, 402 U.S. 611, 614 (1971), or “St
operates to inhibit the exercise of [First Amendment] freedoms” through “[uJncertain meanings” that
“lead citizens to steer far wider of the unlawful zone than if the boundaries of the forbidden areas
were clearly marked.” Grayned v. City of Rockford, 408 U.S. 104, 109 (1972) (internal quotation
marks and citations omitted). By contrast, a statute cannot be condemned as unconstitutionally
vague where on its face “it is clear what the [statute] as a whole prohibits.” Hill vy. Colorado, 530
U.S. 703, 733 (2000) (citing Grayned, 408 U.S. at 110).

The four criteria in the definition of an electioneering communication tautly define a narrow
class of campaign ads, based largely on the time, place and manner in which they are disseminated.
Under BCRA, communications are considered “electioneering” only if they: (1) are broadcast over
television or radio, via broadcast, cable or satellite communications facilities (BCRA § 201 (a),
adding 2 U.S.C. 434(£)(3)(A)); (2) “refer{ ] to a clearly identified candidate for Federal office” Gd.,
adding 2 U.S.C. 434(f)(3)(A)());U (3) are made within 60 days before a general election or 30
days before a primary election in which the clearly identified candidate seeks office (adding 2

42 ‘The Court found that this language was unambiguous when construing a neurly identical clause in Buckley,

424 US. at 43-44 n.51 (construing then § 608(e)(2), id, at 193-94, since recodified as 2 U.S.C. 431(18)).

154


While the air wars between business and labor constituted the largest and most direct influx
of corporate and union money into the 2000 elections, corporate money also helped fund ads run by
various interest groups, who, by virtue of avoiding express advocacy, could solicit corporate

contributions to pay for their electioneering activities,

Evasion of FECA’s disclosure provisions also proliferated in 2000. As Congress observed

in June of 2000, numerous groups (including, e.g., Citizens for Better Medicare) were being

46


electionecring communications provisions must be struck down on their face, plaintiffs maintain that
they may not constitutionally be applied to non-profit corporations. See McConnell Second Amend.
Compl., 49, 62; NRA Compl., 4] 73. Contrary to plaintiffs’ assertions, applying to nonprofit cor-
porations the same hard money requirements that are made applicable to business corporations does

not violate the First Amendment, or principles of Equal Protection,

The Supreme Court’s decision in Austin is dispositive. In that case, the Michigan Chamber
of Commerce, a nonprofit corporation, challenged a state statute which, like FECA § 441b, required
for-profit and nonprofit corporations alike to make independent expenditures through a separate seg-
regated fund. Austin, 494 U.S, at 655-56. In upholding the statute, the Court rejected the argument
that the statute was “overinclusive, because it includes within its scope closely held corporations that
do not possess vast reservoirs of capital.” Id, at 661. The Court found that, due to the “special
benefits conferred by the corporate structure,” all corporations present the potential to distort the
electoral process, and it “‘accept(ed] Congress’ judgment that it is the potential for such influence

that demands regulation.” Id. (quoting NRWC, 459 U.S. at 209-10) (emphasis in Austin).

At the same time, the Court in Austin reaffirmed its holding in MCFL that a small class of
ideological nonprofit corporations could not constitutionally be required to set up a separate
segregated fund in order to make independent expenditures. 494 U.S. at 661-65. However, the
Court held — despite the plaintiff corporation’s nonprofit status — that “[b]ecause the Chamber does
not share [the three] crucial features” that had been “essential” to the Court’s holding in MCFL, “the
Constitution does not require that it be exempted from the generally applicable” restrictions on
corporate independent expenditures, Id. at 661-62! Thus, Austin clearly establishes that “the

4S MCFL (1) had been formed to promote political ideas and could not engage in business activities, (2)

lacked any members who had an economic disincentive for disassociating with the corporation if they disagreed with
its political activity, and (3) was not established by, and had a policy of not accepting contributions from, business
(continued...)

165


2913-14. Mr. Tamraz candidly admitted that the “only reason” he made those donations was to
secure access to the White House and promote his pipeline plan to the President. Id. at 2913.
Tamraz’s contributions did in fact result in his obtaining access to senior officials, including six
private meetings with President Clinton. 1d, at 44. The Thompson Committee majority concluded
that in addition to obtaining access, “Tamraz had actually persuaded President Clinton, [Presidential
advisor Thomas F. “Mack” McLarty, and [Associate Deputy Secretary for Energy Kyle] Simpson
to begin looking for reasons to support Oil Capital’s [i.e., Tamraz’s] pipeline proposal.” Id. at 2925.
Tamraz was disappointed that he ultimately did not achieve his objective, and suggested that he
should have given more money to obtain the outcome he desired, stating “I think next time, Pll give
600,000 [dollars].’” Id. at 2930.

Mr. Chung made contributions to the DNC totaling $366,000 during the 1995-96 election
cycle and received access to the President and the First Lady event though he was regarded by the
National Security Council as a “hustler” and told DNC officials that he would use access to the
White House to entertain his foreign clients.°” Id. at 783. The Committee noted that Mr. Chung
bluntly acknowledged to the Press that he received this access in exchange for his contributions to
the DNC: “[t]he White House is like a subway: You have to put in coins to open the gates.” Id,

The record developed in this litigation likewise confirms that the parties continuc to routinely
and openly reward large soft money donors with access to federal officeholders and party leaders,
not only through meetings, but also through informal opportunities to discuss issues with

officeholders at fundraising events, such as dinners, retreats, golf tournaments, and other events.

= Throughout the legislative history, members of Congress expressed their concern that sof money had
become a frequent conduit for access to elected officials not only for Americans, but also for foreign interests, See e.g.,
147 Cong. Rec. $2449 (Mar. 19, 2001) (Sen. Collins); 147 Cong. Rec. $3138 (Mar. 29, 2001) (Sen. Levin);

77



Randlett Decl. 4 6.

As Senator Feingold remarked, “[wJhen the business leaders and the CEOs of this country
believe they are being shaken down and that they are being intimidated into giving these
contributions, at a bare minimum, this is the appearance of corruption that the U.S, Supreme Court
has identified as the basis for legislative action in this area.” 147 Cong. Rec, 2954-55 (Mar. 27,
2001) (Sen. Feingold).

3. The national party soft money ban is
closely drawn to achieve its objectives.

The legislative record makes clear that the national party soft money ban is closely drawn
to advance the exceedingly important governmental interests described above. Congress was plainly
justified in concluding that the national party soft money ban is necessary because experience had
shown that allowing the national political parties to solicit and accept soft money seriously

compromised the integrity of federal elections and the political process. Over the years during

z
(continued)

leader: to enhance chances for business that its issues will be considered and favorably revicwed by Members of

Congress, business should give “to both sides”; merely giving to one side is likely to be noticed by the other side);

Even when solicitations are made by party officials rather than by federal officeholders, the solicitations
can place tremendous pressure on prospective donors, Solicitations from party leaders are potentially coercive because
party leaders are so closely connected to federal officcholders. See McCain Decl, 121. The Thompson Committee, for
example, found that Clinton Administration Deputy White House Chief of Staff Harold Ickes “ran the DNC on a day-to-
day basis,” that he reported its fundraising and expenditures to the President and the Vice President, and that the DNC’s
national chairman, Don Fowler, was effectively subordinate to Ickes. Thompson Comm. Rep. at 34, The “party's
involvement does not sterilize the system,” because “[e]lected officials know exactly who the big party contributors are,”
Rudman Decl. $12. Accord Bumpers Decl. 20; McCain Decl, 6; Simpson Decl. 4 5; Greenwald Deel. | 11; Randlett
Decl. 7 10

86



IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA

Defendants.

)
SENATOR MITCH McCONNELL, )
etal., )
)
Plaintiffs, )
} Civ. No. 02-0582 (CKK, KLH, RJL)
v. )
) ALL CONSOLIDATED CASES
FEDERAL ELECTION COMMISSION, )
etal, ) REDACTED
)
)
)

BRIEF OF DEFEN TS

INTRODUCTION AND SUMMARY

Nearly a century ago, Congress reaffirmed our nation’s commitment to one of its founding
principles: that elected leaders ought to shape public policy based on the wishes of theirconstituents,
or their honest judgment of what best serves the national interest, but not on the inducements of
money. This democratic ideal lay at the heart of Congress’s decision in 1907 to ban corporations
from making federal campaign contributions, It has remained at the foundation of federal campaign
finance laws ever since, as Congress has reacted to repeated cycles of scandal and disillusionment
with “careful legislative adjustment of the federal electoral laws, in a ‘cautious advance, step by
step,’” to which the Supreme Court has accorded “considerable deference.” FEC v. Nat'l Right to

Work Comm., 459 U.S. 197, 209 (1 982) (“NRWC”). The same democratic ideal that money should

neither buy legislative favors, nor appear to buy them, underlies the Bipartisan Campaign Reform

Act of 2002, Pub. L. No. 107-155, 116 Stat. 81 (2002) (“BCRA”).



on contributions to state and local party committees simply because it indexed limits with respect
to other individuals and entitics that have a greater impact on federal elections && Congress need
not “choose between attacking every aspect of a problem or not attacking the problem at all.”
Dandridge v. Williams, 397 U.S. 471, 486-487 (1970). The legislative line drawn in this case “has

some reasonable basis,” Schweiker v. Wilson, 450 U.S. 221, 234 (1981) (citations and internal

quotations omitted); Congress could reasonably conclude that contributions to state-level
committees would generally have less direct impact on federal elections and, therefore, should be
treated differently. Such a distinction does not offend the Constitution even if it is “not made with
mathematica! nicety or because in practice it results in some inequity.” Id, (citations and internal
quotations omitted),

As the Supreme Court has repeatedly explained, the determination of a particular
contribution limit is a matter of legislative judgment that “need not be ‘fine tun[ed].’”” Shrink
Missouri, 528 U.S. at 388 (quoting Buckley, 424 U.S. at 30). Thus, the Court in Buckley showed
substantial deference not only to Congress's determination that unlimited campaign contributions
threaten democratic values, but also to Congress’s judgment regarding the choice of an appropriate
dollar limit. As the Court explained, “[i]fit is satisfied that some limit on contributions is necessary,
a court has no scalpel to probe, whether, say, a $2,000 ceiling might not serve as well as $1,000.”

424 U.S, at 30 (citation omitted). Thus, the Constitution specifies no precise mathematical formula

*© The following provisions provide for indexing: 2 U.S.C 441 a(a)(1)(A) (contributions to federal candidate
or his authorized committee); 2 U.S.C. 44 la(a}{1)(B) (contributions to political committees maintained by a national


mandate that the agency in the new regulations address four explicit factors and not require
“agreement or formal collaboration” to establish coordination. Plaintiffs have not alleged that
either the first or second of these actions has violated their constitutional rights. Nor could they.
Congress clearly has the authority to repeal existing regulations and require an agency to
promulgate new ones. Plaintiffs could only articulate a challenge to the facial validity of the
Statute on the ground that any regulations the FEC might promulgate will necessarily be
unconstitutionally vague and overbroad. In order to succeed on such a facial challenge,
however, plaintiffs would have to demonstrate that there is no possible way for the FEC to

constitutionally promulgate regulations that comply with the statute. See. e.g, Salerno, 481 U.S.

at 745. In this case, ne such showing can be made.
The Supreme Court has taken a “functional” rather than a “formal” approach in

identifying contributions and coordinated expenditures. Colorado II, 533 U.S. at 438, 443. The

Court adopted that approach in Buckley, and 2 U.S.C. 441a(a)(7)(B)(i), added to FECA in 1976,
see Federal Election Campaign Act Amendments of 1976, Pub. L. No, 94-283, Title T, § 112(2),
90 Stat. 475, 486 (1976), incorporates that decision’s conclusions on how to differentiate
expenditures that may constitutionally be treated as contributions from those that may not. The
Supreme Court discussed the matter in responding to the government’s concern that, in the
absence of expenditure ceilings, FECA’s contribution limits could easily be avoided through
expenditures coordinated with candidates and their campaigns. Buckley, 424 U.S. at 46. The
Court found that FECA’s contribution limits “prevent attempts to circumvent the Act through

prearranged or coordinated expenditures amounting to disguised contributions,” Id. at 47.

186


years, however, the effectiveness of these statutory limits has been seriously eroded as a flood of
unregulated corporate and union campaign expenditures has surged through the “issue advocacy”
loophole onto the field of electoral politics. As discussed above, in Buckley, the Supreme Court
adopted the “express advocacy” standard as a narrowing construction of two FECA provisions in
order to avoid problems of vagueness. 424 U.S. at 39-44, 80-84; See also infra at 148-53. In its
discussion, the Court gave examples of “express words of advocacy,” including phrases “such as
‘vote for,’ ‘elect,’ ‘support,’ ‘cast your ballot for,’ ‘Smith for Congress,” ‘vote against,” ‘defeat,’
‘reject’ “ id. at 44 n. 52 — what have come to be known popularly as the “magic words.” MCFL
adopted this same “express advocacy” test in its construction of §441b. 479 U.S, at 249. By taking
advantage of this statutory construction of FECA, and simply omitting words of express advocacy,
corporations and unions have begun routinely to pay for campaign-related ads about federal can-
didates with tens of millions of dollars in general treasury funds that these organizations are sup-
posedly barred from using for the purpose of influencing federal elections.

From June through November, 1996, the AFL-CIO spent $20 million in union dues on
broadcast television advertisements attacking incumbent Members of the House. The Coalition, an

ad-hoc association representing corporate enterprise, spent another $5 million in corporate treasury

funds for advertisements defending these same House Members. See supra at 37-42,

135


FEC that they meet the criteria of “qualified non-profit corporations” under the FEC’s rules.

See Final Rule, Electioneering Communications, 67 Fed. Reg. at 65,211-12 (amending 11 C.F.R.

§ 114.10). As noted above, non-profit corporations operating under § 501(c)(3) of the Internal
Revenue Code are exempted from BCRA’s regulation of electioneering communications altogether.
ee Final Rule, Electioneering Communications, 67 Fed. Reg. 65,211 (to be codified at 11 C.F.R.

100.29(c)(6)); see also 67 Fed. Reg. 65,199-200.

In the final analysis, BCRA cannot be characterized as overbroad merely because it may
place incidental regulatory burdens on a tiny percentage of genuine issue advocacy that might be

broadcast in proximity to federal elections. In Austin, the Supreme Court deferred to the legislative

judgment that it is the potential for distortion of the political process inherent in the corporate form
that justifies the regulation of spending by corporations “without great financial resources, as well
as those more fortunately situated,” and concluded therefore that a restriction on electoral spending
by both business and nonprofit corporations was not overbroad. 494 U.S. at 661 (citing NRWC, 459
U.S. at 209-10). BCRA reflects a like judgment on the part of Congress that the demonstrated
potential for exploitation of electioneering ads by corporations and unions, as a means of exerting
unfair and improper influence over the electoral process, and, potentially, elected officials, also
demands regulation of such advertising when broadcast in close proximity to federal elections. This
is, significantly, a judgment that Congress came to only after many years of deliberation over the
constitutionality of the statutory provisions that it eventually adopted. See Supra at 50-52
(discussing legislative history ofthe Snowe-Jeffords provisions), The “considerable deference” that

courts must show to Congress's “adjustment of the federal electoral laws . . . to account for the

particular legal and economic attributes of corporations and labor organizations,” NRWC, 459 U.S.

163


the power accrued through that organizing role is enormous, and subject to abuse. The national
parties solicit soft money from sources — corporations and labor unions — that have long been
prohibited from making federal campaign contributions. The parties solicit soft money in amounts
that far exceed the contribution limits that the Supreme Court upheld in Buckley, and they rely
primarily upon federal officeholders and candidates to make those solicitations.

When parties attempt to gain financial support using these methods, they play a mediating
role among large donors, candidates, and officeholders, essentially functioning as “bargaining agents
for groups of lawmakers in their dealings with interest groups” who are themselves, in effect, “buy-
ing votes on proposals where those votes are cheapest.” Cotton M. Lindsay & Michael T. Maloney,

Party Politics and the Price of Payola, 26 Econ. Inquiry 203, 203 (1988). As the Supreme Court

recently observed, “[p]arties thus perform functions more complex than simply electing candidates;
whether they like it or not, they act as agents for spending on behalf of those who seek to produce
obligated officeholders.” Colorado II, 533 U.S. at 452. The parties actively promote the influence
of their officeholders when soliciting large donations by organizing direct fundraising contact
between contributors and legislators, and providing privileged access for contributors, thus height-
ening officeholders’ awareness of the identities and interests of the large contributors to the party’s
electoral efforts. At some point, donors’ contributions to a political party can become large enough
to engender an overall sense of indebtedness from most or all of a party’s members. See id. at 455
(‘[P]arties continue to organize to elect candidates, and also function for the benefit of donors whose
object is to place candidates under obligation, a fact that parties cannot escape.”), Even if no actual
corruption ensues, the public is left with the perception that democratic ideals don’t matter —and that

federal officeholders favor the interests of large donors over the interests of their constituents.



free to decide whether to spend large amounts of personal funds or to limit their use of personal
funds to prevent their opponents from benefiting from the millionaire provisions’ higher
contribution limits+2 The millionaire provisions thus do not coerce or punish wealthy
candidates. The provisions place no limit on a self-financing candidate’s ability to raise
sufficient funds. Nor do they place any limit on the amount that such a candidate can spend,
And increasing contribution limits for candidates who cannot spend enormous amounts of
personal funds promotes First Amendment interests by increasing both the pool of potential
candidates and encouraging robust competition in federal elections. See 147 Cong. Rec. $2538-
39, 2546 (Mar. 20, 2001) (Sen. DeWine); 147 Cong. Rec. $2453 (Mar. 19, 2001) (Sen. Bennett);
147 Cong. Rec. $2536, 2540 (Mar. 20, 2001) (Sen. Durbin); 135 Cong. Rec. $209 (Jan. 25,
1989) (Sen. Dole),

The lower courts have held in an analogous context that increased contributions for publicly-
financed candidates running in opposition to self-funded candidates are constitutional. See Vote
Choice, Inc. v, DiStefano, 4 F.3d 26, 38-39 (Ist Cir. 1993) (upholding statute allowing publicly-
financed candidates to receive increased contributions twice the standard amount); Daggett v.

Webster, 205 F.3d 445, 464 (Ist Cir, 2000) (plaintiffs “have no right to speak free from response”);

Wilkinson v. Jones, 876 F, Supp. 916, 926-28 (W.D. Ky. 1995). As held by the lower court in Dag-

gett:

[Plaintiffs want to preserve the ability to “out spend” their publicly-financed oppon-

ents. The general premise of the First Amendment, on the other hand, is that it

+ ‘The lower courts have recognized that providing candidates with financial resources to counteract wealthy
self-funded opponents is not unconstitutionally coercive. For example, in Wilkingon v. Jones, 876 F. Supp. 916(W.D.
Ky. 1995), the court rejected a challenge to Kentucky's public financing scheme as coercive and found that the self.

algo Daggett v. Webster, 205 F.3d 445, 468 (Ist Cir. 2000) (“[T]he non-participating candidate holds the key as to how

much and at what time the participant receives matching funds.”). The millionaire provisions provide self-funded
candidates comparable control and should likewise be upheld.

195


B. Plaintiffs Lack Standing to Challenge the Constitutionality of Section
305, and Present No Ripe Controversy with Respect to That Provision.

Plaintiffs’ challenge to Section 305 of BCRA is not justiciable. Only the Second Amended
McConnell Complaint, 4 94-96, includes a challenge to that provision and, because Section 305
applies exclusively to candidates for federal elected office, Senator McConnell and Representative
Pence are the only plaintiffs conceivably affected by the provision. But neither Senator McConnell
nor Representative Pence has alleged any “actual or imminent” injury from Section 305. In the
absence of a concrete and particularized injury, plaintiffs lack Article I standing. See Lujan, 504
USS. at 560-61,

Plaintiffs bear the burden to demonstrate standing and, at this stage of the case, to set forth
“specific facts,” id., 10 support their claim of “specific present objective harm or a threat of specific

future han,” Laird v. Tatum, 408 U.S. 1, 14 (1972). Im their challenge to Section 305, plaintiffs

have wholly failed to discharge their burden.

Neither Senator McConnell

215


for calculating permissible contribution limits; “the dictates of the First Amendment are not mere
functions of the Consumer Price Index.” Shrink Missouri, 528 U.S. at 397.

Nor have the plaintiffs made any showing that the limit is “so low as to impede the ability
of [parties] to ‘amas(s] the resources necessary for effective advocacy.’” Shrink Missouri, 528 U.S.
at 397 (quoting Buckley, 424 U.S. at 21). BCRA doubles the hard money contribution limits
applicable to state party committees, and plaintiffs provide no reliable evidence that, under those
subtantially higher contribution limits, state party committees will be unable to participate
meaningfully in federal elections. See supra at 103-04. If Congress concludes at some time in the
future that the impact of inflation warrants an adjustment in the contribution limits, itcan make such
an adjustment at that time, as it did in BCRA by doubling the previous limit on contributions to state
parties.

4, The restrictions on state-level party committees
are not unconstitutionally vague or overbroad.

Plaintiffs allege that 2 U.S.C. 431(20)(A)(iii) is unconstitutionally vague. That provision
bars state-level party committees from using soft money for “a public communication that refers to
aclearly identified candidate for Federal office. . . and that promotes or supports a candidate for that
office, or attacks or opposes a candidate for that office (regardless of whether the communication
expressly advocates a vote for or against a candidate).” The provision uses commonly understood
terms to further a clear and legitimate congressional purpose: preventing the use of soft money to
promote or attack candidates for federal office and thereby influence federal elections.

As Senator Feingold explained, the provision is not intended to prohibit “spending

non-Federal money to run advertisements that mention that [state candidates] have been endorsed

Se
ese same precedents foreclose the Paul plaintiffs’ complaint that the limit on contributions to political

Committees that are not political parties is not indexed for inflation by BCRA. Sce Pau! Compl. $45, 56.

113


their total spending. Mann Expert Rep. at 23 & Tbl. 2. By the 2000 election, the national parties’
soft money spending nearly doubled once more, reaching $498 million, constituting 42% of the
national party committees’ total spending. Id. at 24. The national party committees, through their
state parties, once again made “issue ads” a central component of the presidential campaigns,” ag

well as congressional races,’ jn competitive states. Id, at 25-26 (citing studies); see Krasno &

Sorauf Expert Rep. at 30.

Thus, as concluded in the academic work of one of plaintiffs’ experts, the huge increase in
raising and spending of soft money, from about 9% of total spending in 1980 to 42% in 2000, was
neither the result of a sudden interest by party committees in increasing their administrative
expenses for purposes of, for example, party building activities, nor was it the result of merely an
expanded interest in state and local elections; rather, the spending was undertaken to influence fed-

eral elections. See LaRaja Cross Tr. (Oct. 15, 2002) at 68, 72-73, 178 & Ex. 3; Mann Expert Rep.

at 26.

The practices employed by the parties in raising soft money demonstrate that donors are well

aware that the parties raise the funds in order to influence federal elections. The House and Senate

—
Mann Expert Rep. at 24; see Biersack Decl, Tbl. § [DEV 6-Tab 6);

48 “issue ads” in congressional races typically praised or criticized a candidate for his or her actions or
character, then asked the audience to “tell” or “ask” the candidate to do something. See, e.g., Selected Party Soft Money

Ads. App. A to Defs.’ Mem., Tab 3 (video); Chapin Decl. $f 8-11 [DEV 6-Tab 12] (describing Florida 8 Cong. Dist.
“issue ad” campaigns)

19.

Soft money was also transferred to state Parties for get-out-the-vote and voter mobilization, but those
activities likewise have a significant effect on federal elections, See, ¢.g., Mann Expert Rep. at 25;

34


requirements on political committees and federal candidates and on persons acting independently of
a federal candidate or his committee. The Court explained that the Government has a substantial
interest in providing the electorate with information regarding the sources of political campaign
funds and how candidates spend those funds. Such information allows voters “to place[] each
candidate in the political spectrum more precisely than is often possible solely on the basis of party
labels and campaign speeches.” 424 U.S. at 67. In addition, “[t]he sources of a candidate’s
financial support . . . alert the voters to the interest to which a candidate is most likely to be
responsive and thus facilitate predictions of future performance in office.” Id. Disclosure also
deters “actual corruption and avoids] the appearance of corruption by exposing large contributions
and expenditures to the light of publicity.” Id.

Similarly, the Court in Buckley determined that the disclosure of independent expenditures
furthers a “substantial governmental interest” in increasing “the fund of information conceming
those who support the candidates,” and “help[ing] voters to define more of the candidates’
constituencies.” Id, at 81. Such disclosure “shed[s] the light of publicity on spending that is
unambiguously campaign related but [that] would not otherwise be reported.” Id.

Two years later, in First National Bank of Boston v. Bellotti, 435 U.S. 765 (1978), the

Supreme Court recognized that mandatory disclosure of the source of corporate advertising on
political issues served the Government’s interest in allowing “the people . . . to evaluate the
arguments to which they are being subjected.” Id. at 792 n.32 (citing Buckley, 424 U.S. at 66-67).
The Court reasoned that “[cJorporate advertising, unlike some methods of participation in political
campaigns, is likely to be highly visible” and that the public is assisted in evaluating the relative

merits of conflicting arguments by considering “the source and credibility of the advocate.” Id. The

217


officeholders. Accordingly, the national party soft money ban is fully consistent with equal
. a 9
protection principles.

3. The national party soft money ban is not uncon-
stitutionally vague or overbroad.

Plaintiffs allege that the terms “solicit” and “direct” in 2 U.S.C. 44li(ay(1) are
unconstitutionally vague, as is the reference in 2 U.S.C. 4411(a)(2) to “any entity that is directly or
indirectly established, financed, maintained, or controlled by such a national committee.” See RNC
Compl. {| 89, McConnell Second Amend, Compl. 4103. The FEC’s regulations, however, resolve
any possible vagueness problems with respect to those provisions. See 11 C.F.R. 300.2 (67 Fed.
Reg. 49,064, 49,121 (July 29, 2002); see also 67 Fed, Reg, 49,081 (July 29, 2002).

A statute is void for vagueness only if it “forbids or requires the doing of an act in terms so
vague that men of common intelligence must necessarily guess at its meaning and differ as to its

application.” United States v. Lanier, 520 U.S. 259, 266 (1997). Asthe D.C. Circuit has repeatedly

explained, “the Constitution does not require unattainable feats of statutory clarity.” United States
¥. Barnes, 295 F.3d 1354, 1366 (D.C. Cir. 2002) (citation omitted). “Since words, by their nature,
are imprecise instruments, even laws that easily survive vagueness challenges may have gray areas
at the margins.” Id. (citation omitted). “Condemned to the use of words, we can never expect

mathematical certainty from our language.” Grayned v. City of Rockford, 408 U.S. 104, 110 (1972).

® Moreover, to the extent plaintiffs contend that the national soft money ban puts the parties at a disadvantage
with respect to corporations and unions, their claim plainly lacks merit. As the Supreme Court recognized in Cal Med,
an equal protection challenge to the federal campaign laws cannot be sustained when the entity claiming unequal
treatment is accorded more favorable overall treatment under those laws, 453 U.S. at 200-01. Thus, the Court rejected
an equal protection challenge to FECA's contribution limits applicable to multicandidate committees brought by an
unincorporated association because FECA as a whole “imposes far fewer restrictions on individuals and unincorporated
associations than it does on corporations and unions.” Id. Here, political parties are similarly subject to much less
restriction than are corporations and unions, which are prohibited from making any contributions to political candidates
or campaigns from their general teasury funds, See 2 U.S.C. 441b(a). A political party committee, by contrast, not only
may make contributions to political candidates and campaigns, sce 2 U.S.C. 441 a(a)(2), but (unlike any other entity) also
may transfer hard money to other political committees within its party without limitation, see 2 U.S.C. 44 1a(a)(4), and
can make much higher coordinated expenditures on behalf of a federal candidate or campaign committee than any other
entity, sce 2 U.S.C. 44ia{d)

93


B. The Prohibition of Certain Contributions by Children
Is Carefully Drawn to Prevent Circumvention of the
Statutory Dollar Limits by Other Individuals.

By law as well as tradition, parents are entitled to control, influence, and direct their
children, “(T]he parents’ claim to authority in their own household to direct the rearing of their
children is basic in the structure of our society.” Ginsberg v. New York, 390 U.S. 629, 639 (1968).
The Constitution and state law recognize and protect this traditional parental authority. “[T]he inter-
est of parents in the care, custody, and control of their children . . . is perhaps the oldest of the

fundamental liberty interests recognized by this Court.” Troxel v. Granville, 530 U.S. 57, 65 (2000)

(plurality opinion); see also id, at 78 (“Whether for good or ill, adults not only influence but may

indoctrinate children.”) (Souter, J., concurring), Wisconsin v, Yoder, 406 U.S. 205 (1972) (Amish

parents may terminate the formal education of their adolescent children sooner than the compulsory
school attendance laws would allow); Tex. Code Ann. Fam. § 151.003 (“A state agency may not
adopt rules or policies or take any other action that violates the fundamental right and duty of a
Parent to direct the upbringing of the parent’s child.”),

Parental rights compound the practical problems the Commission faces in attempting to in-
vestigate and prove whether a child knowingly and voluntarily made a particular contribution, and
thus whether the parent has violated the contribution limits. As in MUR 4254, some parents will
invoke their parental rights and refuse to have their child make an affidavit or submit to questioning,
See USA-CIV00932 [DEV 43-Tab 4]. Even when the Commission has unimpeded access to a
child, the Commission may not be able to obtain reliable evidence whether the child, rather than the
parent, “made” the contribution because of parental influence and the child’s immaturity. As the

Commission’s Office of General Counsel has noted, determining whether a child had the requisite

203


424 U.S. at 21, or otherwise “render [them] useless.” Colorado H, 533 U.S. at 455; see also Shrink
Missouri, 528 U.S. at 396. They have made no such showing.

As Senator Feingold explained, “[s]oft money isn’t some magic bullet that the parties need
to increase voter tumout or voter participation in the democratic process. Throughout much of the
1970s and 1980s, soft money was mostly absent from party fundraising. The parties raised hard
money, and ran their parties on hard money.... We didn’t need soft money then, and we don’t need
itnow.” 147 Cong. Rec. $3106-07 (Mar. 29, 2001) (Sen. Feingold); see also Hickmott Decl. ff 6-7
(former DSCC official: in 1980s and early 1990s, DSCC functioned effectively without soft mon-
ey). Moreover, “while the bill eliminates soft money, it also increases the hard money limits to the
parties and makes those limits subject to indexing,” and permits state and local parties, with
restrictions, to use soft money to conduct get-out-the-vote and voter mobilization activities. 147
Cong. Rec. $3247 (Apr. 2, 2001) (Sen. Levin).

The evidence in this case confirms Congress’s conclusion that the national party soft money
ban will not render the parties at the national and state levels “useless.” Colorado II, 533 U.S. at

455; see_also Shrink Missouri, $28 U.S. at 396. BCRA substantially increases the caps on

contributions of hard money to candidates and parties,” providing ample assurance that the national
soft money ban will not render the parties unable to function. Even under the existing hard money
contribution limits, parties have proven able to raise very large amounts of hard money, even with

extremely large sources of soft money at their disposal. D, Green Expert Rep. at 30. As Professor

See 2 U-S.C. 441a(a}(1)(A)-(B) (increasing limit on contributionsto candidates and candidates’ committces
from $1,000 to $2,000 for individuals, and increasing limit on individual contributions to national political party
committees from $20,000 to $25,000); 2 U.S.C. 441a(a)(1}(D) (increasing limit on contributions to state political party
Committees from $5,000 to $10,000); 2 U.S.C. 441a(a)(3) (increasing aggregate limit on individual contributions from
$25,000 per year to $95,000 per two-year election cycle, of which $37,500 may be contributed to candidates): 2 U.S.C.
S4la(h) (increasing limit on contributions by the Republican or Democratic Senatorial Campaign Committees from
$17,500 to $35,000). In addition, many of these contribution limits are to be increased annually to account for inflation
as reflected in changes in the consumer price index, 2 U.S.C. 44la(c).

88


Contribution Limits and Disclosure Requirements for Individuals, Parties, and PACs:
The Federal Election Campaign Act of 1971 (“FECA”) and its 1974 Amendments

FECA, enacted by Congress in 1971, strengthened campaign finance disclosure require-
Ments; imposed certain contribution limits; and codified the understanding under pre-existing law
that corporations and unions could establish and administer Separate, segregated funds for the
purpose of making political contributions and expenditures from contributions to the fund collected
from stockholders, members, executive and administrative personnel, and their families. See

Pipefitters Local Union No. 562 v. United States, 407 U.S. 385, 387, 409-10 (1972). The 1972

election, followed by the Watergate scandal, became a “watershed for public confidence in the
electoral system” and led to more changes. See Buckley v. Valeo, 519 F.2d 821, 840 (D.C. Cir.
1975) (en banc) (per curiam), aff'd in part, rev'd in part, 424 U.S. 1 (1976). The congressional
investigation of Watergate provided a legislative record that was “replete with specific examples of
improper attempts to obtain governmental favor in return for large campaign contributions.” Id. at
840 n.37. The investigation revealed: extensive contributions by dairy organizations to Nixon
fundraisers, structured so as to avoid FECA disclosure requirements and timed with President
Nixon’s decision to overrule the Secretary of Agriculture and increase price supports, see id. at 839
n.36; “lavish contributions” by special interest groups to legislators from both parties, including
illegal corporate contributions, that were deemed “necessary as a “calling card,”” id, at 839 n.37; and
significant donations made by persons seeking ambassadorships on the understanding that “such
contributions were a means of obtaining the tecognition needed to be actively considered,” id. at 840
1.38. The FECA Amendments of 1974 followed in the wake of this investigation, and, as the

Supreme Court has explained, these amendments were designed “to limit the actuality and appear-

16


(1992). Any decision by the candidate plaintiffs to limit the size of contributions they will accept
would be a self-imposed injury not caused by BCRA, any lack of personal wealth that prevents the
voter plaintiffs from making larger contributions is also not caused by BCRA, and the organizational
plaintiffs have no protected constitutional right to have legislators accept their lobbying positions.

Cf. Georgia State Conference of NAACP Branches v. Cox, 183 F.3d 1259, 1263-64 (11th Cir. 1999)

(no “right to equal influence in the overall electoral process”),

Plaintiffs’ real claim is that the Constitution requires the government to prevent other
citizens from raising and contributing more than they do, but “Buckley ... made clear that
contributors cannot be protected from the possibility that others will make larger contributions.”

Citizens Against Rent Control v. City of Berkeley, 454 U.S. 290, 295 (1981) (citations omitted).

For all these reasons, plaintiffs raising similar claims have repeatedly been found to lack
constitutional standing. See, e.g., Cox, 183 F.3d at 1262-64; Albanese v. FEC, 78 F.3d 66, 68 (2d

Cir. 1996); Whitmore v. FEC, 68 F.3d 1212, 1215 (9th Cir. 1995); see also NAACP v. Jones,

131 F.3d 1317, 1324 (9" Cir. 1997); Winpisinger v. Watson, 628 F.2d 133, 137-39 (D.C. Cir. 1980).

B. BCRA’s Increase in the Individual Contribution Limit Does Not
Violate the Equal Protection Component of the Fifth Amendment.

Because wealth is not a suspect category, BCRA’s increase in the individual contribution
limit is subject to review only for a rational basis'*” The new $2,000 limit serves the same purpose

as the original $1,000 contribution limit—minimizing the opportunity for corruption and the

appearance of corruption. See Buckley, 424 U.S. at 23-35; Shrink Missouri, 528 U.S. at 397-98. The

qual protection analysis in the Fifth Amendinent arca is the same as that under the Fourteenth
Amendment.” Buckley, 424 U.S. ar 93. Race isa suspect category, but the $2000 contribution limit applies the same to
candidates and contributors of all races. The Adams plaintiff’ allege only disparate impact, not discriminatory intent,
and that is nota basis for finding unconstitutional discrimination,

209


TITLEI

PRESENTATION BY THE GOVERNMENTAL DEFENDANTS

L THE NATIONAL PARTY SOFT MONEY BAN IS CONSTITUTIONAL.

Congress enacted BCRA in response to widespread circumvention of longstanding statutory
limits on federal campaign contributions. Title I of BCRA “shuts down the soft money system.”
147 Cong. Rec. $2446 (Mar. 19, 2001) (Sen. Feingold). The primary mechanism by which BCRA
accomplishes that goal is the national party soft money ban, which puts a stop to further evasion of
FECA’s limitations by the national parties, but without restricting how the national parties spend
their money. At the same time, BCRA raises the limits on hard money contributions to the national
parties to enhance their capacity to raise funds within the new regulatory framework.

To prevent state-level party committees from circumventing FECA’s requirements in place
of the national parties, BCRA generally requires state-level party committees to use funds
contributed in conformity with the federal limits to finance “Federal election activity.” But BCRA
leaves those committees entirely free to continue to raise funds beyond the federal limits in
accordance with state law, and to use unlimited quantities of such soft money, if permitted under
State law, for activity unrelated to federal elections. BCRA also includes a provision (the “Levin
Amendment”) that authorizes state-level party committees to use limited amounts of soft money
under specified conditions to fund certain types of federal election activity. And BCRA doubles the
amount of hard money that persons can contribute to state party committees, from $5,000 to $10,000
per year.

Title I of BCRA also closes other soft money loopholes by prohibiting party committees

from soliciting any funds for, or making or directing donations to, certain tax-exempt organizations

58



Buckley, 424 U.S, at 82 (upholding predecessor to § 434(c)); Richey v. Tyson, 120 F. Supp. 2d
1298, 1321-22 (S.D. Ala. 2000) (upholding state disclosure provisions comparable to § 434(c)) 2

There is thus no basis for plaintiffs’ contentions that BCRA’s disclosure requirements unduly
burden their rights of association by forcing them to disclose the identities of their contributors, See
AFL-CIO Comipl. {| 12; Chamber Compl. 124; McConnell Second Amend. Compl. 4, 58; NRA
Compl. 164-65, 87-89. Such disclosure has long been required for independent expenditures under
FECA § 434(c) and is necessary to reveal the true sponsors of electioneering communications —
especially where such communications are broadcast in the name of a front organization. Indeed,
BCRA’s new disclosure provisions are considerably less intrusive in this regard than those of
§ 434(c). Whereas § 434(c) requires groups making independent expenditures to identify each of
their donors contributing over $200, id. § 434(c)(1)(C), BCRA’s requirements reach only donors
contributing over $1000, id. § 434(f(2)(B). Moreover, if a group makes disbursements for
electioneering communications from a separate bank account containing money donated only by
individuals, then under BCRA the group need only identify persons contributing more than $1,000

to that account. Id. § 434(f)(2)(E). Hence, the statute provides such a group with ample means to

protect the anonymity even of large donors to its general treasury, if it so chooses, simply by setting

up a separate bank account for donations to finance electioneering communications_2/

2 specifically, BCRA requires sponsors of electioneering communications to disclose their identity, to a
certain extent the identities of their donors (explained further infra), the elections and candidates to which their
clectioneering communications pertain, and the amount of each of their disbursements for the clectioneering
communications over $200 - much the same information FECA § 434(c) already requires regarding independent
expenditures. Compare 2 U.S.C. 434(f)(2) with id, § 434(c(1). BCRA does not require disclosure of electioneering
communications at all until an individual or group spends more than $10,000 to produce and air such communications
in a single calendar year. 2 U.S.C. 434(f(1). By comparison, FECA 434(c)’s existing disclosure requirements for
independent expenditures are triggered by a far lower threshold of $250. 2 U.S.C. A34(c)(1).

on any event, plaintiffs cannot launch a facial challenge to BCRA’s contributor-disclosure requirement
based on the claim that it infringes on their associational rights; rather, such a claim can be pursued only on an as-applied
basis, with each plaintiff having to make an individualized showing that disclosure of its contributors will cause them
to suffer significant harassment. See Buckley, 424 U.S. at 74, Even were such individual as-applied challenges to be
entertained in this litigation, no plaintiffs have made the requisite showing of a “reasonable probability that the

175


BCRA’s state-level party provisions are supported by the same interests as the ban on soft
money by national party committees. Just as national party committees have been used as conduits
for corporations, unions, and large individual donors to evade federal contribution and source
limitations, so, too, have state-level party committees. Congress recognized that allowing state-level
party committees to continue to expend unlimited amounts of unregulated funds on activity that
influences federal elections would leave open a gaping loophole in federal law, allowing donors to
evade federal contribution and source limitations, and thereby promote the appearance and reality
of political corruption. As Senator McCain explained:

In order to close the existing soft money loophole and prevent massive evasion of

Federal campaign finance laws, the soft money ban must operate not just at the

national party level but at the State and local level as well. We have authority to

extend the soft money reforms to the State and local level where it is necessary, as

itis here, to protect the integrity of Federal elections. Closing the loophole is crucial

to prevent evasion of the new Federal rules.

148 Cong. Rec. $2138-39 (Mar. 20, 2002); see also D. Green Expert Rep. at 16-17.

The state-level parties have played a central role in the soft money system from its inception
and have materially assisted the national parties’ efforts to circumvent FECA by using money raised
outside FECA’s limitations to support federal election campaigns. The national parties have
transferred millions of dollars in soft money to the state parties, over $265 million (roughly one-half
of their receipts) in the 2000 election cycle alone. Compare Biersack Decl. Tbl. 8 with id. Tbl. 2.
The state parties have used those funds in large measure to support federal election activity, and
under fewer restrictions than the national parties. As Dr. Mann explains, “since the advent of soft
moncy, national parties have used state parties primarily as vehicles for advancing federal election

campaign objectives. The state parties have been willing partners with their national counterparts

100


activities that are part of the coordinated spending spectrum. It is enough that, under the
Supreme Court’s functional approach, the existence of an agreement or formal collaboration is
not constitutionally required for an expenditure to be deemed coordinated and hence subject to
the statutory contribution limits. Indeed, even a new regulation that included only the first two
prongs of the old regulation — communications created, produced, or distributed at the request or
Suggestion of the candidate or after the candidate has exercised control or decision-making
authority over the content or distribution — would, without requiring agreement or formal
collaboration, satisfy both the statute and the First Amendment2® See Buckley, 424 U.S. at 46
n.53. Accordingly, plaintiffs’ facial attack on the statute plainly lacks merit-2”

The statute also requires the FEC to address the following four factors in promulgating
its new regulations: (1) payments for the republication of campaign materials; (2) payments for
the use of a common vendor; (3) payments for communications directed by former employees of
a candidate or political party; and (4) payments made after substantial discussion with a
candidate or political party. See BCRA § 214(c). As Congress emphasized, however, none of
the factors need be included in the definition of coordination: “[T]he bill does not provide a new
definition of ‘coordination.’ The bill repeals recently adopted FEC regulations on coordination

and directs the FEC to issue new regulations. It requires the FEC to address certain topics in the

28 this is not to suggest that the FEC should or will promulgate such a regulation: it simply demonstrates that
§ 214 can easily be satisfied without raising any First Amendment concerns. The FEC’s proposed regulations set out
a three-part test for determining whether a communication is coordinated, focusing on: (1) who paid for the
communication; (2) the content of the communication; and (3) the conduct and interactions between the payer and the
candidate or the political party committee. See 67 Fed. Reg. 60,065-66 {proposed 11 C.F.R. 109.21) (Sep. 18, 2002).

+ aithough the D.C, Circuit generally has invoked the broader “no-set-of-circumstances” test in evaluating
facial challenges, see Amfac Resorts v. Deparimentof the Interior, 282 F.3d 81 8, 826 (D.C. Cir. 2002), some cases have
Suggested an alternative, more lenient standard under which a plaintiff might succeed on a facial challenge without
demonstrating that the statute is invalid in every conceivable application, see id. Even under that more lenient standard,
however, plaintiffs’ facial challenge in this case lacks merit, since there a numerous possible ways for the FEC to
satisfy both the statutory mandate and the Constitution

189



See id.; see also Citizens Against Rent Control v. City of Berkeley, 454 U.S. 290, 298 (1981)

(“[W hen individuals or corporations speak through committees, they often adopt seductive names

that may tend to conceal the true identity of the source.”); see also Selected Interest Group “Issue

Ads,” App. A to Defs.’ Mem., Tab I. Thus, due to exploitation of the “issue advocacy” loophole,
a large and growing portion of recent federal election activity has been enshrouded in secrecy, leav-
ing the public under-informed and corruptive practices unexposed. Krasno & Sorauf Expert Rep.
at 73-74 (“Secrecy is one of the outstanding characteristics of issue ads .. , . [W]e—and regulators
~ are hampered by a remarkable paucity of information about them. ... This secrecy, by itself,
Creates enormous opportunities for wrongdoing, for favors to be exchanged between issue advocates
and public officials.”).

BCRA aims to dissipate this shroud of secrecy by extending the requirement of disclosure
to electioneering communications. As the sponsor of BCRA’s disclosure provisions explained:

We deter the appearance of corruption by shining sunlight on the undisclosed

expenditures for sham issue advertisements. Corruption will be deterred when the

public and the media are able to see clearly who is trying to influence the election.

In addition our provisions will inform the voting public of who is sponsoring and

paying for an electioneering communication.
147 Cong. Rec. $3034 (Mar. 28, 2001) (Sen. Jeffords).

BCRA’s disclosure provisions are modest and appropriately tailored to these goals. BCRA’s
provisions merely impose the same type of disclosure obligations already imposed on individuals
and groups under FECA § 434(c)'s well-established disclosure requirements for independent

expenditures. See MCFL, 479 U.S. at 262 (noting that § 434(c)’s disclosure requirements for

individuals and groups serve governmental disclosure interests in an appropriately tailored manner);

174


Expert Rep. at 15; D. Green Expert Rep. at 25-26, 28. The risk of corruption extends beyond the
risk that contributions will influence final roll-call votes on legislation; contributions can influence
other, less public, aspects of the legislative and policymaking process that “may ultimately be more
consequential than roll-call votes.” D. Green Expert Rep. at 21. In addition to their roll call votes,
members of Congress can express Support or opposition on issues by “offe[ring] amendments,
mobiliz[ing] support, help[ing] place items on or off the agenda, speed|ing] or delay[ing] action, and
provid[ing] special access to lobbyists.” Mann Expert Rep. at 33. Such activity need not occur on
the chamber floor; it can take place at party leadership meetings and caucuses and in standing
committees and subcommittees and conference committees. Id. Similarly, in the Executive Branch

influence can be sought regarding appointments and access to decisionmakers. Id, at 34; see also

La Raja Cross Tr. at 139-41 (legislative leaders and presidential nominees are able to raise the most
money because of their ability to control policy).

Current and former Members of Congress likewise agree that large soft money donations,
and the special access to legislators and policymakers that they provide, can corrupt, and have
corrupted, the lawmaking process, Former Senator Paul Simon, for example, testified that “Tit is
not unusual for large contributors to seek legislative favors in exchange for their contributions.”
Simon Decl. § 13. He recounted an incident during the 1995-96 legislative session involving an
amendment proposed by Federal Express, which had reportedly contributed almost $1 million in soft
money to the political parties in the preceding election cycle, Id. Senator Simon opposed the
proposal in the Democratic Caucus, prompting one of his colleagues to respond that “‘we've got to

pay attention to who is buttering our bread.’” Colorado Il, $33 U.S. at 451 n.12; Simon Decl, qi4.

79



existing requirements. As explained above, stations are already required to maintain a “political
file” for public inspection that includes “all requests for broadcast time made by or on behalf of a
candidate for public office.” 47 C.F.R. 73.1943, 76.1701. And paid broadcasts must already “fully
and fairly disclose the true identity of the person or persons, or corporation, committee, association
or other unincorporated group, or other entity by whom or on whose behalf such payment is made.”
47 CFR. 73.1212(e), 76.161 5(d),

Moreover, contrary to plaintiffs argument, section 504’s reference to broadcasts concerning
“political matter[s] of national importance” is not unduly vague. The Communications Act and the
FCC's implementing regulations are replete with language that is at least as broad as the text of
Section 504. The Act directs the FCC to consider the “public interest” in granting licenses. See 47
U.S.C. 307(a), 309(a). The Act also directs broadcasters to operate “in the public interest” and to
“afford reasonable opportunity for the discussion of conflicting views on issues of public impor-
tance,” See 47 U.S.C, 315(a). The Act authorizes the FCC to require additional sponsorship an-
nouncements for “any political program or any program involving the discussion of any
controversial issue.” 47 U.S.C. 317(a)(2). Disclosure obligations are triggered by the transmission
of “any political broadcast matter or any broadcast matter involving the discussion of a
controversial issue of public importance.” See 47 C.F.R. 73.1212(d),(e) (“station shall... require
that a list of the chief executive officers or members of the executive committee or of the board of

directors . . . shall be made available for public inspection”); see also 47 C.F.R. 76.1701(d)

(disclosure where cablecasting material is ‘a political matter or matter involving the discussion of a

controversial issue of public importance”), Moreover, as described above, the FCC routinely assists

222


Notwithstanding their lack of express advocacy, the timing, location, and candidate-specific
focus of the dueling advertisements run by the AFL-CIO and the Coalition left unmistakable

fingerprints of electioneering intent.

__ ; Coalition MUR Rep. at 26-27.

The targeted incumbents were all competing in tight races, indicating that they were selected for
attack (and defense) on the basis of their electoral vulnerability. See Thompson Comm. Rep. at
4001 (AFL-CIO ads focused on “swing districts”); Coalition MUR Rep. at 27;

Moreover, while the ads discussed the incumbents’
positions with respect to certain legislative issues, virtually none of these issues were pending before
the House of Representatives at the time the ads were tun, indicating that the ads were intended not
to affect upcoming legislative votes, but rather to affect votes in the upcoming November elections.
AFL-CIO MUR Rep. at 5-6. On the basis of such considerations, eventual investigation by the
Thompson Committee found that the ads were made for the purpose of influencing federal elections.
See Thompson Comm. Rep. at 4000 (AFL-CIO ads); Thompson Comm. Rep. (Minority Views) at

8944-45 (Coalition ads)22

t

AFL-CIO MUR Rep. at 5-6; Coalition MUR Rep. at 35.

40


plaintiffs believe that the regulations on their face or as applied infringe their First or Fifth
Amendment rights, they may challenge those regulations in a single-judge district court, not the
special three-judge court convened in this case.

A favorable decision by this Court also would not redress any alleged injury, see Lujan,
504 U.S. at 561, because eliminating Congress’s directive to the Commission would not make
the existence of an “agreement or formal collaboration” the defining characteristic of a
coordinated expenditure. Section 441a(a)(7)(B)(i) of FECA explicitly provides that expenditures
made “at the request or suggestion of a candidate” will be treated as contributions to the
candidate” A “request” or a “suggestion” is not synonymous with either an “agreement” or
“formal collaboration.” The person to whom a request or suggestion is made can act on it
without entering into an agreement or engaging in a formal collaboration with the person who
made the request or suggestion, as evidenced by the following hypothetical: A candidate
Suggests to a wealthy individual, “If you want to help, you might finance some political
advertisements advocating my election”; the individual does not reply, but a week later, buys
$100,000 worth of air time 10 advocate the candidate’s election. Invalidating § 214(c) would not
preclude a finding that those advertisements could be treated as contributions under the plain
language of FECA § 441a(a)(7)(B)(i).

Even if the Court concludes that plaintiffs present a justiciable challenge to § 214 (b) or
(c), such a challenge clearly fails on the merits. Section 214(b) and (c) do nothing more than

(1) repeal existing regulations, (2) require the FEC to promulgate new regulations, and (3)

es

22 See 148 Cong. Rec, $2145 (Mar, 20, 2002) (Sen. Feingold) (“The bill docs not change the basic statutory
standard for coordination, which defines and sets parameters for the FEC’s authority to develop rules describing the
circumstances in which coordination is deemed to exist.”)

185


tional muster by defining “electioneering communications” both narrowly and objectively, so as to
avoid the vagueness that troubled the Supreme Court in Buckley*” a conclusion supported by two
empirical studies conducted on political advertising by the Brennan Center for Justice at New York
University Law School and additional research by Professor David Magleby of Brigham Young
University. Congress continued to debate the constitutionality of the Snowe-Jeffords provisions
until final passage of the bill in 2002

Summary of Key Statutory Provisions

BCRA was thus enacted in response to the widespread abuse and circumvention of the
existing statutory regime that regulates and limits permissible campaign contributions to federal
candidates, federal officeholders, and political parties. As described above, the two largest
loopholes of the statutory regime under FECA are the solicitation and use of soft money by political
parties and the rise of corporate and union electioneering through issue advertisements. Congress
has addressed these problems in Title I and Title IL, Subtitle A, of BCRA, which are summarized
below. In addition, Congress adopted several provisions designed to ensure the effectiveness of

these reforms; these provisions are discussed further in the Argument section, infra.

“144 Cong. Rec. $869, $875-76, $898, 8914; 144 Cong. Ree. 972-75, $993, $998-99; 147 Cong. Rec.
S2845, $2848 (Mar. 26, 2001) (citing correspondence from 20 constitutional scholars endorsing the Snowe-Jeffords
provisions, 147 Cong. Rec. $3036-37 (Mar. 28, 2001)).

© 147 Cong. Rec. $2456-58, $3040-43, $3072, $325 1-52 See Buying Time: Television Advertising in the
1998 Congressional Elections (“Buying Time 1998") [DEV 47]; Buying Time 2000: Television Advertising in the 2000
Federal Elections (“Buying Time 2000") [DEV 46]. For example, Buying Time 1998 concluded thet extending federal
campaign finance and disclosure laws to advertisements mentioning a federal candidate within 60 days of a general
clection would have affected just 7 percent of the advertisements in 1998 that researchers determined to be genuine issue
advocacy rather than advocacy intended to influence federal elections. Buying Time 1998 at TO, 109.

passage on April 2, 2001, 147 Cong. Rec. $3258); see also 148 Cong. Rec. H258-63 (Feb. 12, 2002), 148 Cong. Rec.
H339-43, 1348-49, H373,11412-15 (Feb. 13, 2002); 148 Cong. Rec. $2096, $2101, $2115, S21 18, $2132,$2138 (Mar,

52



As explaincd above, see supra at 95, the ability to conceive of hypothetical circumstances
under which a particular term may prove ambiguous does not render the statute unconstitutionally
vague, especially where, as here, plaintiffs can “resolv[e] [any] doubts with respect to the
{regulation’s] reach” by requesting an advisory opinion under 2 U.S.C. 437f. Martin Tractor Co.,
627 F.2d at 384-85. Moreover, the FEC’s regulations contain safe-harbor provisions allowing party
committees to “obtain and rely upon a certification from the [tax-exempt] organization” as to
whether it makes expenditures or disbursements “in connection with an election for Federal office”
ifthe certification satisfies certain formal requirements. See 11 C.F.R. 300.37(c)-(d), 300.50(c)-(d),
300.51(c)-(d). Those provisions, and the availability of advisory opinions, eliminate any possible
vagueness concerns,

Iv. BCRA’S SOFT MONEY RESTRICTION ON FEDERAL CANDIDATES

AND OFFICEHOLDERS IS CLOSELY DRAWN TO PREVENT THE
APPEARANCE AND REALITY OF CORRUPTION.

BCRA provides that federal candidates and officeholders and entities that they establish,
finance, maintain, or control shall not “solicit, receive, direct, transfer, or spend funds in connection
with an election for Federal office, including funds for Federal election activity, unless the funds are
subject to the limitations, prohibitions, and reporting requirements of this Act.” 2 U.S.C.
441i(e)(1)(A). The statute permits federal candidates to raise nonfederal funds for state and local
elections, but only in amounts that do not exceed federal contribution limits and only from sources
that are permitted to donate to federal campaigns. 2 U.S.C. 441ife)(1)(B).

Those restrictions, however, do not apply to “the solicitation, receipt, or spending of funds”
by a person “who is or was also a candidate for a State or local office solely in connection with such

election for State or local office,” provided that certain conditions are met. 2 ULS.C. 441i(e)(2).

121


broadcasts without identifying themselves in the broadcast and stating that they personally approved
the broadcast. BCRA § 504 requires broadcasters to maintain and make publicly available complete
records of requests to purchase broadcast time for a variety of political communications.

As we discuss in detail below, each of these provisions is fully consistent with the
Constitution and was enacted in full accordance with Congress’s well-established authority to
regulate federal elections.

ARGUMENT

The Court’s consideration of plaintiffs’ constitutional challenges to BCRA must start with
the recognition that plaintiffs have asserted their claims before any enforcement of the statute
against them. The plaintiffs have abjured the usual and preferred judicial practice, particularly in
cases “hav[ing] fundamental and far-reaching import,” of adjudicating the constitutionality of stat-
utes as applied to particular sets of facts before entertaining challenges to them on their face. See,
e.g., Renne v. Geary, 501 U.S. 312, 323-24 (1991). By choosing instead to bring a pre-enforcement
facial challenge, plaintiffs have taken on a most difficult burden. See FW/PBS, Ine. v. City of
Dallas, 493 U.S. 215,223 (1990) {noting that “facial challenges to legislation are generally disfavor-
ed”). To prevail in this litigation plaintiffs “must demonstrate that [BCRA] either ‘could never be
applied in a valid manner,’ or that even though it may be validly applied to the plaintiff[s] and

others,” it is nevertheless ““substantially’ overbroad.” New York State Club Ass’n, 487 U.S. at 11

(quoting City Council of Los Angeles v. Taxpayers for Vincent, 466 U.S, 789, 796-798 (1984)).

As explained below, plaintiffs cannot discharge that heavy burden.

57



Pa. 1973) (holding unconstitutional a questionnaire for high school students that was intended to
help identify potential drug abusers and that asked “personal questions about [the students’]

relationship with parents and siblings”); Von Eiff v. Azicri, 720 So. 2d 510 (Fla. 1998) (absent

significant harm to child, state constitution Protects privacy of family from intrusion by
government).

In sum, section 318 of BCRA “restores the integrity of the individual contribution limits,”
148 Cong. Rec. $2145-S2146 (Mar. 20, 2002) (Sen. McCain), and provides a constitutional solution
to vexing problems the Commission faces in enforcing those limits, The limited prohibition it
imposes is clearly consistent with long-established restrictions on the liberties and activities of

minors,

MN. THE INCREASE IN THE INDIVIDUAL CONTRIBUTION
LIMIT TO $2,000 IS CONSTITUTIONAL .

BCRA § 307(a)(1) increases the amount that an individual may contribute to a candidate per
election from $1,000 to $2,000. The plaintiffs in Adams assert that this new limit will violate their
right to equal protection under the Fifth Amendment because the voter plaintiffs, and the supporters

of the candidate plaintiffs, do not have sufficient funds to contribute $2,000.

A. The Adams Plaintiffs Lack Article II Standing.
BCRA’s increase in the individual contribution limit does not restrict the activities of the

Adams plaintiffs in any way. The candidate plaintiffs can still run for office, the voter plaintiffs can

still make the same contributions they did under the $1000 limit, and the organizational plaintiffs
can still educate and lobby as they did before. Thus, BCRA § 307(a)(1) causes them no injury in

fact, an essential tequirement of standing. See Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61

208


Krasno & Sorauf Expert Rep. at 57 & App. Tbls. 4 and 5. As various interest group personnel
explained in interviews conducted in a study by defendants’ expert, Professor David Magleby,
groups run ads in competitive contests where their “investment” is most likely to make a difference,
Magleby Expert Rep. at 312%

Not only do candidate-focused ads in the last two months before an election exhibit a (fre-
quently conceded) electioneering intent, but that is their effect as well. Magleby Expert Rep. at 52-
54; Beckett Decl. {{f[ 11-12, 15; Bloom Decl. #6, 12-17 [DEV 6-Tab 7]; Chapin Decl. 99 8, 12, 15;
Lamson Decl. {ff 10-11, 17 (DEV 7-Tab 26]; Pennington Decl. fj 17 [DEV 8-Tab 31);

Thus, over the course of the last several federal elections, unions and corporations have
brought millions of dollars of their aggregated wealth to bear on the course of the electoral process,

threatening the same distortion of the political marketplace by economic might, unrelated to the

power of ideas, that supplied a compelling justification for regulation in Austin, 494 U.S. at 659-60.

3. Independent campaign spending by corporations and
labor unions can be used to create political debts and to
evade limits on soft money donations to political parties.

In NRWC, the plaintiff, a non-profit corporation, asserted that § 441b burdened rights of free
association by prohibiting contributions to its separate segregated fund from persons other than its
“members.” The Court rejected this argument, focusing on the historical purpose of the statute: the
prevention of corruption by ensuring that “substantial aggregations of wealth” amassed by labor
unions and corporations “are not converted into political ‘war chests’ which could be used to incur
political debts from legislators who are aided by the contributions.” 459 U.S. at 207 (citing Bellotti,

435 US. at 788 n. 26). Applying the “closest scrutiny,” the Court concluded that these interests

10
w~ See also.

CFG000223 [DEV 130-Tab 5] (Club for Growth explaining that its “issue advocacy campaigns
can make all the difference in tight races.”)

142


In Title ] of BCRA, Congress addressed the soft money system by adding, in § 101, anew

§ 323 to FECA, entitled “Soft Money of Political Parties” (to be codified at 2 U.S.C. 441i, see 116

Stat. 82). Section 323 contains several interrelated provisions designed to eliminate all solicitation,

contribution, and use of unregulated soft money by federal candidates, federal officeholders, and

national political parties, and to eliminate the use of soft money for federal election activity by any

other political parties, officeholders, and candidates:

Section 323(a) prohibits the national committee of a political party from soliciting,
receiving, directing to another person, spending, or transferring soft money, Le., any
funds “that are not subject to the limitations, prohibitions, and reporting requirements
of this Act.”

Section 323(b) addresses state and local parties’ practice of using soft money to
support federal campaigns, providing that, subject to certain exceptions, a State,
district, or local committee of a political party may not use soft money to make
expenditures or disbursements for “Federal election activity.”

Section 323(c) provides that the costs associated with fundraising for federal election
activity must be made with hard money, i.¢., “funds subject to the limitations,
prohibitions, and reporting requirements of this Act.”

Section 323(d) addresses another avenue for circumvention by providing that parties
may not solicit any funds for, or make or direct any donations to, certain tax-exempt
organizations described in section 501 (c) of the Internal Revenue Code and to
organizations engaged in political activities described in section $27 of the Internal
Revenue Code.

Section 323(e) generally prohibits federal candidates and officeholders from
Soliciting, receiving, directing, transferring, or spending any soft money in
connection with an election for federal office, making exceptions for attendance at
fundraising events for state, district, or local committees of a politica! party and
certain solicitations on behalf of nonprofit organizations.

Section 323(f) prohibits a candidate for state or local office or a state or local
officeholder from spending soft money for a “public communication that refers to
a clearly identified candidate for Federal office... and that Promotes or supports a
candidate for that office, or attacks or opposes a candidate for that office.”

33


to be exchanged between issue advocates and public officials.”). Thus, Sections 305 and 504
prevent the appearance and reality of corruption.

Not only do Sections 305 and $04 further an important goverment interest, but their scope
is narrow. Both provisions apply only to television and radio broadcast stations and cable television
systems. Courts have upheld more intrusive regulation of those media than any other form of
communication. See Tumer Broad. Sys., Ine. v. FCC, 512 U.S. 622, 637 (1994); Red Lion Broad,
Co. v. FOC, 395 U.S. 367, 386 (1969); NBC v. United States, 319 U.S. 190 (1943); compare Talley

v. Califomia, 362 U.S. 60 (1960) (ban on anonymous leaflets invalid) and Miami Herald Pub. Co. v.

Tomillo, 418 U.S, 241 (1974) (invalidating state law providing right of reply to political candidate
attacked by newspaper) with Red Lion, 395 U.S. at 393-94 (upholding FCC's Faimess Doctrine and
implementing rules); CBS v. FCC, 453 U.S. 367 (1981) (upholding statute providing federal
political candidates right of reasonable access to broadcast stations and FCC’s implementation of
statute); Turer Broad., $12 U.S. at 653-57 (rejecting First Amendment challenge to cable television

“must-carry” regulations required by statute and noting that attempted analogy to Tomillo ignored

“important technological differences between newspapers and cable television [systems]”).

Indeed, the federal courts have upheld significant regulation of political discourse on broad-
cast media that result in far greater intrusions on broadcasters than the requirements of Sections 305
and $04. The Supreme Court, for example, has rejected a First Amendment challenge to 47 U.S.C.
312(a)(7), which requires broadcasters to provide reasonable access for federal candidates. See
CBS, 453 U.S. at 396-97. The Court also sustained the FCC’s Fairness Doctrine, which required
that broadcast stations air discussion of controversial public issues and provide a reasonable

opportunity for the presentation of contrasting viewpoints on such issues, See Red Lion, 395 U.S. at

219


matter, a list of the entity’s chief executive officers or members of the executive committee or board

of directors must be made available for public inspection. 47 C.F.R. 73.1212(e}, 47 CER.

76.1701(d) (cable television). Such lists must be available for public inspection for two years. Id,
The FCC has issued legal guidance on political broadcasting issues, The Law of Political

Broadcasting and Cablecasting: A Political Primer, 100 F.C.C.2d 1476 (1984) (“Political Primer”),

and has codified its political programming policies, In re Codification of the Commission’s Political

4611 (1992), The FCC is available to answer inquirics from broadcast stations, candidates, and
political parties about their rights and obligations, and it is not uncommon for the agency to mediate
disputes that arise among stations, candidates, and political parties.

Sections 305 and 504 of BCRA amend Section 315 of the Communications Act to require
disclosures about the source and sponsorship of political messages broadcast on television or radio.
Section 305 places restrictions on a candidate’s eligibility to obtain the “lowest unit charge” under
47 U.S.C. 315(b). The provision requires a candidate to provide written certification to a broadcast
Station that neither the candidate nor any authorized committee of the candidate will make any
“direct reference to another candidate for the same office, in any broadcast” unless the broadcast
satisfies certain requirements. For a television broadcast, the statute requires, for at least four
seconds at the end, a “clearly identifiable photographic or similar image” of the candidate, and “a
clearly readable printed statement, identifying the candidate and stating that the candidate has
approved the broadcast and that the candidate’s authorized committee paid for the broadcast.” For a

radio broadcast, the statute requires “a personal audio statement by the candidate that identifies the

213


369, 389-9028 And the D.C. Circuit has upheld 47 U.S.C. 315(a), which requires equal
opportunities for broadcast time for all legally qualified candidates where time is made available to
any candidates for the office. Branch v. FCC, 824 F.2d 37, 48-50 (D.C. Cir. 1987).

Moreover, unlike political discourse in other fora, political broadcasts have traditionally
been subject to significant disclosure requirements. As explained above, Congress has long required
the disclosure of those who sponsor paid broadcasts, including political advertisements. See 47
U.S.C. 317, And the FCC has ruled that issue ads that do not disclose true sponsors violate its
sponsorship identification rules, and the agency has cautioned stations to exercise reasonable
diligence in determining the true sponsor of the ad and displaying the sponsor on the ad. See
Trumper Comm., 1] F.C.C.R. 20,415, 1996 WL 635821 (Oct. 29, 1996). Moreover, the Fifth
Circuit has rejected a First Amendment challenge to a state statute requiring sponsors of political
broadcast advertisements to identify themselves. See KVUE, Inc. v, Moore, 709 F.2d 922, 937 (5th
Cir. 1983), afPd, 465 U.S. 1092 (1984).

Sections 305 and 504 are no different for First Amendment purposes than these restrictions
that the courts have upheld. Section 305 applies only to advertisements by federal candidates; it is
limited to the period immediately before an election, when the Communications Act requires
broadcasters to offer the “lowest unit charge” benefit to federal candidates, see 47 U.S.C. 315(b); 47
C.F.R. 73.1942 (broadcast stations), 76.206 (cable television systems); and it applies only when the
candidate seeks the “lowest unit charge” benefit. Much like the tequired statement of sponsorship

under prior law, section 305 merely requires that, as a condition of receiving the benefit of “lowest

"5 The FCC eliminated the Faitness Doctrine in 1987. See Syracuse Peace Council, 2 FCC Red 5043 (1987),

recon. denied, 3 F.C.C. 2d 2035 (1988). The D.C. Circuit affirmed the Commission’ determination that the Fairness
Doctrine no longer served the public interest. See Syracuse Peace Council v. FCC, 867 F.2d 654, 669 (D.C. Cir. 1989),

220


$2107-09 (Mar. 20, 2002) (Sen. McCain), 147 Cong. Rec. $3248-49 (Apr. 2, 2001) (Sen. Levin)
(referencing articles suggesting links between political contributions and such issues as bankruptcy
legislation, ambassadorships, and pardons given by President Clinton); 148 Cong. Rec. $2107 (Mar.
20, 2002) (Sen. McCain);147 Cong. Rec, $2952-53 (Mar. 27, 2001) (Sen. Kerry); 148 Cong. Rec.
$2107-09 (Mar. 20, 2002) (Sen. McCain) (referencing Enron scandal); id. at H270 (Feb. 12, 2002)
(Rep. Lucas) (same); id. at H272 (Feb. 12, 2002) (Rep. Moore) (same),

Moreover, Congress viewed the soft money ban as a means of reducing public cynicism
about politics and increasing public Participation in democratic governance. See. ¢.g., 148 Cong.
Rec. H352-53 (Feb. 13, 2002) (Rep. Shays); 148 Cong. Rec. H272 (Feb. 12, 2002) (Rep. Moore);
148 Cong. Rec. H270 (Feb. 12, 2002) (Rep. Boyd); 147 Cong. Rec. H3986 (July 12, 2001) (Rep.
Pelosi). Many members of Congress were quick to point to the steady downward trend in voter
turnout in the United States over the last four decades, including the closely contested 2000 election,

in which only 51 percent of eligible voters cast ballots. Id.; see also Krasno & Sorauf Expert Rep.

at 41 (citing Walter Dean Burnham, The Current Crisis in American Politics (Oxford University
Press 1983)).

The view that large soft money donations to the political Parties carry the potential for
corruption is shared widely beyond Capitol Hill. The political parties frequently accuse each other
of giving political favors to the largest party donors. D. Green Expert Rep. at 26 n.34 (citing RNC
and DNC press releases). The media regularly reports on new legislation by linking the effects that

a new policy will have on soft money donors. See Krasno & Sorauf Expert Rep. at 18-21; see also

Primo Rebuttal Expert Rep. ¥ 7; Robert Y. Shapiro, Rebuttal to the Expert Reports of Q. Whitfield

Ayres and John C. Green (Oct. 7, 2002) at 8-9 [DEV 5-Tab 2, hereinafter Shapiro Rebuttal Expert

82



of electoral accountability.” D. Green Rebuttal Expert Rep. at 19, As discussed supra, pt. I.B.2.b.,
Congress recognized the acute dangers of corruption associated with the parties’ extremely close
relationship to federal officeholders and influential party leaders, which permits parties to offer
access to federal officials in exchange for large contributions, and can put significant pressure on
federal officeholders and candidates to court large donors and accommodate their interests. See,
e.g.,148 Cong. Rec. $2115 (Mar. 20, 2002) (Sen. Levin). As the Supreme Court has recognized,
donors give to the political parties “with the tacit understanding that the favored candidate will
benefit,” contributions to a party have been “used as a funnel from donors to candidates,” and
substantial soft money donations “turn the parties into matchmakers whose special meetings and

receptions give the donors the chance to get their points across to the candidates.” Colorado II, 533

US. at 458, 461 & n.25. A vast “web of relations link[s] major donors, party comunittees, and

elected officials.’” Id. at 463 (quoting Briffault, Political Parties and Campaign Finance Reform,

100 Colum. L. Rev. 620, 652 (2000)). “Free flowing soft money donated to parties and party leaders
creates cascades of obligation-driven and favor-currying motives in politicians that are separate from
and in tension with electoral outcomes.” D. Green Rebuttal Expert Rep. at 19.

In short, the unique problems of perceived and actual corruption posed by soft money
donations to the political parties provides a compelling basis for BCRA’s focus on the parties. No
other entities are as closely identified, or share as many interests, with federal candidates and
officeholders. No other entities can offer the same access to a large and diverse group of powerful

lawmakers, and no other entities have the same level of influence over federal candidates and

92


organized as tax-exempt “political organizations” under § 527 of the Intemal Revenue Code ~ which
by statutory definition exist for the very purpose of influencing elections, see 26 U.S.C. 527(e)(1)-
(2) -- yet they were not making any disclosures to the FEC, simply by virtue of avoiding express
advocacy in their electioneering activities. See Disclosure of Political Activities of Tax-Exempt
Organizations: Hearing Before the Subcomm. on Oversight of the Comm. on Ways and Means,
106th Cong. (2000) 22 Although Congress attempted to fix the problem by amending the tax code
to require § $27 political organizations to publicly disclose the identities of their contributors,

these groups persisted in using “issue advocacy” to avoid disclosure,

Perhaps the most telling example of how groups had, by 2000, come cavalierly to rely on

“issue advocacy” to evade FECA’s strictures, is supplied by the National Rifle Association.

cry

Many of these organizations even had specific provisions in their charter prohibiting them from engaging
in express advocacy. Id. at 47.

® See Pub. L. 106-230, 114 Stat. 477 (codified at 26 U.S.C. 527(i)-())(2002)), (held unconstitutional by Nav’
Fed’n of Republican Assemblies v. United States, 218 F. Supp. 2d 1300 (S.D. Ala. 2002),

47



A. BCRA’s Requirement That Corporations and Labor Unions Finance

Electioneering Communications Using Separate Segregated Funds
Serves Compelling Governmental Interests.

1. Independent campaign spending by corporations and labor
unions can unfairly distort and influence the electoral process.

BCRA § 203 prohibits corporations and labor unions from making financial outlays of
general treasury funds for the purpose of sponsoring electioneering communications, but allows
them to support such communications through payments made from their separate segregated funds.
While these requirements “do not stifle corporate [and labor union) speech,” as regulations touching

on political expression they must nevertheless be “narrowly tailored to serve a compelling state

interest.” Austin, 494 U.S, at 657-58. Section 203 of BCRA is not vulnerable to a facial challenge
because it serves a variety of governmental interests that the Supreme Court has often acknowledged
to be compelling.

The Supreme Court has repeatedly recognized that the “compelling govemmental interest(s]
in preventing corruption support{ ] the restriction of the influence of political war chests funneled

through the corporate form.” Austin, 494 U.S. at 659 {internal quotation marks and citation omit-

ted). “Thfe] concern over the corrosive influence of concentrated corporate wealth reflects the
conviction that it is important to protect the integrity of the marketplace of political ideas.” MCFL,
479 U.S. at 257. “Direct corporate spending on political activity raises the prospect that resources
amassed in the economic marketplace may be used to provide an unfair advantage in the political
marketplace.” Id.

Austin upheld the constitutionality of restricting independent corporate expenditures when

it reviewed a Michigan statute modeled on § 441b, see 494 U.S. at 655 n. 1, explaining that

133


independents could be significant”). If independent political committces with limited resources can
be required to report their federal financial activity, there is no reason to treat state party committees
any differently.

lI. BCRA’S SOFT MONEY PROVISIONS CONCERNING TAX-
EXEMPT ORGANIZATIONS ARE CONSTITUTIONAL.

BCRA also prohibits all political party committees and entities “directly or indirectly
established, financed, maintained, or controlled by” those committees from “solicit[ing] any funds
for, or mak[ing] or direct[ing] any donations to” certain tax-exempt organizations described in §§
501(c) and 527 of the Internal Revenal Code. 2 U.S.C. 441i(d). The provision is intended to
“prevent the parties from collecting soft money and laundering it through other organizations
engaged in federal electioneering.” 148 Cong. Rec. $1992 (Mar. 18, 2002) (Ex. 1 to statement of
Sen, Feingold).

The restrictions in § 441i(d) are appropriate “prophylactic measures,” see NRWC, 459 U.S.
at 210, ensuring that party committees do not funnel funds to tax-exempt organizations as a means
of evading BCRA’s soft money restrictions and FECA’s contribution limitations and disclosure
requirements. Congress recognized that tax-exempt organizations have served as virtual arms of
party committees, conducting federal electioneering activities to benefit candidates of a particular
party without being subject to any of the funding source or contribution limitations or disclosure
requirements that are applicable to party committees.’ For example, the RNC infused Americans
for Tax Reform (“ATR”), a 501(c)(4) tax-exempt organization, “with over $4.5 million in the weeks
leading up to the 1996 election,” and ATR then paid “its bills for a direct mail and phone bank

campaign involving four million calls and 19 million pieces of mail explicitly disputing the
© See.e.g, 144 Cong. Rec. $1048 (Feb. 26, 1998) (Sen. Glenn); 144 Cong. Rec. $977 (Feb. 25, 1998) (Sen.
Levin); 144 Cong. Ree. $898 (Feb. 24, 1998} (Sen. Ford); Thompson Comm. Rep. at 401 3; id. at 4568 (Minority Views),

117


Second Amend. Compl. 116. But § 501(c) organizations whose Principal purpose is not to conduct
federal election activity are quite differently situated from political parties, which regularly engage
in such activity. As explained above, voter registration and get-out-the-vote activities influence
federal elections and, therefore, are proper subjects of federal regulation. Numerous other activities
in which tax-exempt organizations may be involved have no such impact, however. The danger of
apparent and actual electoral corruption is obviously greater with respect to solicitations of soft
money by organizations that are principally engaged in election activity as opposed to activity that
has no impact on elections. Cf, Buckley, 424 U.S. at 79 (political committee definition may be
limited to organizations where “major purpose” is electoral), In any event, BCRA allows federal
candidates to solicit funds for certain federal election activity, provided the solicitation is made only
to individuals and the amount solicited from an individual during the calendar year does not exceed
$20,000. 2 U.S.C. 441i(e)(4)(B).

Plaintiffs’ contention that the restrictions on federal candidates and officeholders violate the
Tenth Amendment and principles of federalism is groundless. As discussed above, the fundraising
activities of federal officeholders and candidates affect federal elections and the integrity of the
federal government even when the funds solicited are to be used for purposes other than federal
election activity. See supra at 124. Moreover, the Tenth Amendment is not implicated because the
challenged provision falls squarely within Congress’s constitutional authority to regulate federal
elections and there has been no commandeering of any state legislative process or state or local
officials. See supra at 110.

Plaintiffs Thompson and Hilliard contend that the prohibition against federal candidates and

officeholders raising soft money violates equal protection principles and the First Amendment

126


candidate, the office the candidate is seeking, and indicates that the candidate has approved the
broadcast.”

Section 305 leaves candidates “totally free . . . to say anything they want about their
opponent.” 147 Cong Rec. $2693 (Mar, 22, 2001) (Sen. Wyden). It only modifies the conditions
under which federal law entitles a candidate to obtain air time at the “lowest unit charge.” If a
candidate mentions his or her opponent in a broadcast, the candidate cannot qualify for the “lowest
unit charge” unless he or she states approval of the broadcast in accordance with the requirements of
Section 305. See 147 Cong. Rec. $2694 (Mar. 22, 2001) (Sen. Levin) (“[I]f [federal candidates}
want [the] lowest unit rate . . . if they want to take advantage of that benefit which is conferred
... they [must] at least put their name and their face at the end of the ad they are funding.”); see also
148 Cong, Rec. $2174-02 (Mar. 20, 2002) (Sen. Wyden).

Section 504 of BCRA requires a broadcast station to maintain and make publicly available a
“political file” containing a complete record of requests to purchase broadcast time “made by or on
behalf of a legally qualified candidate for public office” or to broadcast a “message relating to any
political matter of national importance,” including “a national legislative issue of public import-
ance.” The record created by the licensee must include “the name of the person purchasing the time,
the name, address, and phone number of a contact person for such person, and a list of the chief
executive officers or members of the executive committee or of the board of directors of such

person.” The information must be placed in the political file and retained for at least two years.

214


criteria for electioneering communications, See supra at 37-49. But none of these plaintiffs, either,
has described particular advertisements, referring to clearly identified candidates for federal office,
that they plan to run in proximity to one or more federal elections, to which they contend BCRA’s
application would be unconstitutional. Accordingly, to prevail, the Title [I plaintiffs must establish
that BCRA’s regulation of electioneering communications “could never be applied in a valid

manner,” or is substantially overbroad. New York State Club Ass’n, 487 U.S. at 11; Taxpayers for

Vincent, 466 U.S. at 796-798. As discussed herein, their efforts to shoulder that burden all fail.

In support of their position, plaintiffs assert that Buckley announced a rule of substantive
constitutional law that prohibits any regulation of independent political spending on communications
that do not involve express advocacy, even though experience has proven that regulation of express
advocacy alone is no longer an effective means of preventing free-wheeling electioneering by labor
unions and corporations. Plaintiffs argue, in other words, that Buckley leaves Congress no choice
but to abandon its century-long commitment to safeguarding the Nation’s democratic institutions
from the corrupting “influence of political war chests funneled through the corporate [and labor

union] form,’ Austin, 494 U.S. at 659, and to accept the resulting distortion and corruption of the

political process as a permanent feature of our democracy.

Nothing in Buckley requires that outcome. As is plain on the face of the decision, Buckley
adopted the express advocacy standard as a saving construction of several ambiguous FECA
provisions that raised serious questions of unconstitutional vagueness. That standard was never
meant to be etched in constitutional stone as an unyielding limitation on the power of Congress to

combat emergent threats of corruption of the political process. As discussed herein, the four criteria

13]


U.S.C. 434(f)(3)(A)GD); and (4) for House, Senate and presidential primary elections, can be
received by at least 50,000 persons in the state or district where the election is being held (2 U.S.C.
434(H(3)(A ID & (C)); see Final Rule, Electioneering Communications, 67 Fed. Reg. at 65,210-
211 (promulgating new regulation to be codified at 11C.F.R. 100.29) 4

These criteria are absolutely clear, individually and collectively, and no one wishing to avoid
violations of BCRA need guess at where these four defining characteristics have drawn the line.
Any individuals or organizations intending to broadcast electioneering communications, or wishing,
on the other hand, to engage in genuine issue advocacy, can easily determine in advance whether
their advertisements meet BCRA’s definition of electioneering communications, and thus encounter
no realm of legal uncertainty from which they must steer clear. “[PJerfect clarity and precise guid-
ance have never been required even of regulations that restrict expressive activity.” Ward v. Rock
Against Racism, 491 U.S. 781, 794 (1989). Yet “perfect clarity” and “precise guidance” are exactly
what BCRA provides.

Congress enacted BCRA’s electioneering communications provisions in response to both
the Court's holding in Buckley regarding express advocacy, and the extraordinary exploitation of
that construction by large moneyed interests. When it approached this task, Congress was acutely
aware of its duty to “avoid the shoals of vagueness,” Buckley, 424 U.S, at 78:

What has been done with Snowe-Jeffords is a very careful effort to make sure the

constitutional requirements of Buckley y. Valeo have been met. In fact, they have

been met. It is not vague; it establishes a very clear bright-line test so we don’t have
a vagueness constitutional problem.

1 Under rules promulgated by the FEC on October 23, 2002, persons may consult the website of the Federal

Communications Commission (“FCC”) to learn whether a broadcast can be received by 50,000 persons or more, and
may rely on that information for purposes of determining whether their communications meet BCRA's definition of
clectioneering. Final Rule, Electioneering Communications, 67 Fed. Reg. at 65,217 (amending 11 C.F.R. § 100,29(b)).

155


Austin, 494 U.S. at 660-61. Thus BCRA is “precisely targeted” to the compelling governmental
interests that justify its regulation of electioneering communications. Id. at 660.

E. BCRA’s Definition of Electioneering Communications Is Not Overbroad.

Because BCRA is narrowly tailored to the prevention of distortion and cormption in the poli-
tical process, and relies on a permissible standard of regulation that operates with impeccable pre-
cision and clarity, plaintiffs cannot carry their burden of establishing that BCRA “could never be

applied in a valid manner.” New York State Club Ass'n, 487 U.S. at 11. Accordingly, they cannot

prevail in this action unless they can show, in the alternative, that BCRA’s electioneering commun-

ications provisions are substantially overbroad. Id.; Taxpayers for Vincent, 466 U.S. at 796-798,
The “traditional rule” is that a person “may not challenge [a] statute on the ground that it

may conceivably be applied unconstitutionally .. . in situations not before the Court.” Los Angeles

Police Dept. v. United Reporting Pub. Corp., 528 U.S. 32, 39 (1999). This rule reflects the

“incontrovertible proposition that it would indeed be undesirable for {a] [cJourt to consider every
conceivable situation which might possibly arise in the application of complex and comprehensive
legislation,” rather than “focusing on the factual situation before [it].” New York v. Ferber, 458
U.S. 747, 767-68 (1982). Facial overbreadth challenges represent a narrow exception to this
principle, Taxpayers for Vincent, 466 U.S. at 798, and “(b]ecause of the wide-ranging effects of
striking down a statute on its face,” invalidation on grounds of overbreadth is considered “strong

medicine” that courts must apply “with hesitation, and then ‘only as a last resort.’” LAPD, 528 U.S.

at 39 (quoting Ferber, 458 U.S. at 767 (citing Broadrick, 413 U.S. at 613)).
Accordingly, only a statute that “reaches a substantial amount of constitutionally protected

conduct” may be invalidated as facially overbroad. City of Houston v. Hill, 482 U.S. 451, 458

159


contributions to individual candidates, can cause federal officeholders to feel obligated to advance
the interests of large donors rather than the interests of constituents and the nation as a whole.

The concept of soft money derives from the fact that party committees engage in certain
activity in connection with state and local elections that is not necessarily related to federal elec-
tions, and therefore is not necessarily within the scope of the language of FECA. Soft money was
meant to be used by political parties solely for influencing the nomination or election of candidates
for state or local office, and to conduct generic “party-building” activities.

In practice, however, the parties have raised and spent hundreds of millions of soft dollars
for activities that, while nominally falling within the “party-building” category, in reality are intend-
ed to support the parties’ candidates for federal office, and are indistinguishable from the types of
activities that parties and candidates are required to use their hard money to fund. Indeed, in the
2000 election cycle, soft money constituted 42% of the national Parties’ total budget. The soft
money loophole has grown from a narrow exception to FECA’s limitations into a huge and ever-
growing means of circumventing those limitations, reintroducing the very “opportunities for abuse
inherent in a regime of large . . . financial contributions” that FECA was meant to foreclose. Buck-
ley, 424 USS. at 27.

The fundraising practices of the major political parties demonstrate the continued dangers
of corruption that first led Congress to regulate the financing of federal elections nearly a century
ago. Parties are today the central and largest force in raising, spending, and directing campaign
dollars. In the 2000 election cycle, the Democratic and Republican parties raised a combined total
of $1.236 billion dollars, a staggering increase over the past twenty years. Although parties play a

valuable role in our system of representative democracy by, inter alia, unifying unwieldy factions,



ment categorically bars Congress from adopting any regulation of independent political spending
that does not involve express advocacy, no matter what conceivable form that regulation might take,
or how important it might be to the integrity of democratic institutions. But Buckley does not
sustain that sweeping proposition.

What plaintiffs critically misperceive about Buckley’s express advocacy holding is that it
arose from statutory interpretation made necessary by the vague language of the 1974 amendments
to FECA. The statutory criterion with which the Supreme Court grappled in Buckley rested on the
undefined phrase “relative to.” The Court found that “so indefinite a phrase as ‘relative to” a
candidate fails to clearly mark the boundary between permissible and impermissible speech.” 424
U.S. at 41. The Court’s primary concern was that the resulting vagueness about which com-
munications would be considered “relative to” a candidate “ ‘blankets with uncertainty whatever

may be said. It compels the speaker to hedge and trim.’ “ Id. at 43 (quoting Thomas v. Collins, 323

U.S. 516, 535 (1945)), The Court was similarly concerned that the vague phrase “relative to” ‘puts
the speaker .. . wholly at the mercy of the varied understanding of his hearers... .’” Id. In the face
of this vast uncertainty, the Buckley Court adopted the express advocacy standard as a clarifying
construction: to “preserve the provision against invalidation on vagueness grounds, § 608(e)(1)
must be construed to apply only to expenditures for communications that in express terms advocate
the election or defeat of a clearly identified candidate for federal office.” Id. at 44 (footnote
omitted). In similar fashion, the Court construed FECA’s requirement for disclosure of individual
expenditures made “for the purpose of influencing” a federal election to include only those financial
outlays made for communications containing express advocacy, to “avoid the shoals of vagueness”

and to “insure that the reach of [the statute was] not impermissibly broad.” Id. at 78-80.

149


communication is not voter registration activity within 120 days of a federal election or get-out-the-
vote, voter identification, or generic campaign activity in connection with a federal election;
(b) contributions to a candidate for state or local office if the contribution “is not designated to pay
for a Federal election activity”; (c) the costs of state, district, and local political conventions; and
(d) the costs of “grassroots campaign materials .. . that name or depict only a candidate for State
or local office.” 2 U.S.C. 431(20)(B). Moreover, FEC’s reguiations define the activities that
constitute federal election activity equally narrowly. 11 C.F.R. 100.24 (67 Fed. Reg. 49,110-11

Guly 29, 2002)); see also 67 Fed. Reg, 49,066 (July 29, 2002). Thus, state-level party committees

remain free under federal law to raise and spend unlimited sums for use in such nonfederal activity.

As explained above, the conduct that BCRA does regulate is directly linked to Congress’s
interest in preventing the appearance and reality of corruption in federal elections. Accordingly, the
statute falls squarely within Congress's power under Article I to regulate federal elections.
Congress’s power to regulate elections in which federal candidates are on the ballot, even when state
candidates are on the ballot as well, has long been upheld. See, e.g., Ex parte Siebold, 100 U.S. 371,
393 (1879) (“If for its own convenience a State sees fit to elect State and county officers at the same
time and in conjunction with the election of representatives, Congress will not be thereby deprived

of the right to make regulations in reference to the latter.”); United States v. Bowman, 636 F.2d

1003, 1011 (Sth Cir. 1981) (“When federal and state candidates are together on the same ballot,
Congress may regulate any activity which exposes the federal aspects of the election to the
possibility of corruption.”). Thus, the Tenth Amendment poses no bar to the valid exercise of

Congress’s delegated authority under Article I. Sec supra 96-99. And BCRA’s state-level party

110


candidate); Pennington Decl. $f 13-14 [DEV 8-Tab 3 1] (Republican political consultant)£" Indeed,
the evidence demonstrates that donors make little distinction between donations of hard money and
soft money; they understand that both types of donations can provide assistance to the campaigns

of federal candidates whom they wish to support, See, ¢.g., supra at 35 & n.21; Mariani v. United

States, 80 F. Supp. 2d 352, 386 (M.D. Pa. 1999) (citing affidavit of lobbyist Daniel Murray 4 3

[DEV 68-Tab 33]), certified question answered, 212 F.3d 761 (3d Cir. 2000). Further, as discussed

Supra at 34-35, the fundraising practices employed by the parties (i.e., using Members of Congress
to raise soft and hard money simultaneously and participating with candidates in joint fundraising
committees that raise both hard and soft money) only serve to confirm that the parties raise soft
money for use in influencing federal elections.

Congress recognized that the enormous “soft money loophole has effectively destroyed” the
contribution limits established in FECA and upheld by the Supreme Court in Buckley. 147 Cong.
Ree, $2448 (Mar. 19, 2001) (Sen. Levin). Contributors can evade the limitations on contributions
to a candidate by giving unlimited amounts to the party, which then “turns around and spends that

money heiping the candidate win election.” Id.; see also

Thus, “[sJoft
money has become the conduit through which wealthy individuals, labor unions and corporations
have in many ways seized control of our political process.” 147 Cong. Rec. $2449 (Mar. 19, 2001)
(Sen. Collins),

© See also Bailey Decl. $49, 11 [DEV 6-Tab 2) (Republican campaign consultant: when creating true issue

or party building ads, there is no need to reference a candidate; ads that do and are run near the election are designed to
influence the election);

70



expenditures applicable to all other multicandidate political committees. Section 214 of BCRA
simply repeals the FEC’s regulations on coordinated communications paid for by persons other than
candidates or parties, and directs the Commission to promulgate new regulations on the subject that
“shall not require agreement or formal collaboration to establish coordination.” The statute further
specifies that “the regulations shall address “(A) payments for the republication of campaign
materials; (B) payments for the use of a common vendor; (C) payments for communications directed

, or made by persons who previously served as an employee of a candidate or a political party; and
{D) payments for communications made by a person after substantial discussion about the
communication with a candidate or a political party.”

Title II of BCRA contains the so-called “millionaire provisions,” which incrementally raise
the limits on individual contributions to candidates applicable under 2 U.S.C. 44 1a, allowing greater
individual contributions to be made to a House or Senate candidate when an opposing candidate's
campaign expenditures made from his or her own personal funds (adjusted for the excess of the
gross receipts of the candidate’s campaign committee over the gross receipts of the opponent’s
committee), exceed a threshold amount. BCRA §§ 304, 316 (adding 2 U.S.C. 441a(i)); BCRA
§ 319 (adding 2 U.S.C. 441a-1), Title HL also eliminates another means by which FECA’s contribu-
tion limits can be and in the past have been evaded, by prohibiting individuals less than 18 years of
age from making contributions to candidates or political parties. BCRA § 318 (adding 2 U.S.C.
441k).

Sections 305 and 504 of BCRA both amend § 315 of the Communications Act of 1934, 47
U.S.C. 315. Section 305 restricts eligibility for the “lowest unit charge” for air time to candidates

who certify that they will not directly refer to another candidate for the same office in their

56



funding, the informational interests served by BCRA’s disclosure requirements provide an
independent basis on which to uphold their constitutionality. See Bellotti, 435 U.S. at 792 n.32
{noting that state may require disclosure of ballot initiative advertising sources in order to serve
informational interests, even while it may not restrict corporate financing of such advertising).

tl. BCRA‘S COORDINATION PROVISIONS ARE CONSTITUTIONAL.

A, The Choice Afforded to Political Parties
Under Section 213 of BCRA Is Constitutional.

Section 441a(a) of FECA sets out dollar limits on contributions and coordinated expenditures
that may be made to a candidate or a political committee by an individual (generally $1,000, raised
to $2,000 in BCRA), or by a multicandidate political committee (generally $5,000, unamended by
BCRA). In addition to the $5,000 in § 441 a(a) applying to all multicandidate political committees,
national and state party committees receive “special treatment,” Colorado I, 518 U.S. at 610-11, and
under § 441a(d) may make substantial additional coordinated expenditures In 2000, the limits
on these additional coordinated expenditures ranged from $33,780 to $67,560 for House of
Representative races and, for Senate races, from $67,560 to $1.6 million. See Colorado II, 533 U.S.
431, 439 n.3 (2001).

Section 213 of BCRA amends § 441a(d) and provides that, once a candidate has been
nominated, a party can choose to take advantage of the more generous limits on coordinated
expenditures if it is willing to forgo independent expenditures. Alternatively, a party can elect to

make unlimited independent expenditures, but then its coordinated expenditures will be subject to

2 Section 441a(d) authorizes national and state party committees to make coordinated expenditures equal to
2 cents multiplied by the voting age population of the United States for a Presidential candidate; the greater of $20,000
or 2 cents multiplied by the voting age population of a State for the State’s candidate for Senator; and $10,000 for a
candidate for Representative. See 2 U.S.C. 441a(d)(2), (3). These limits are adjusted each year for inflation. 2 U.S.C.
44la(c). The FEC interprets Section 4412 to permit national and state political partics to take advantage of both the
$5,000 limit on contributions set out in Section 441a(a} and the higher limits on coordinated expenditures in Section
44la(d). See, e.g.. 11 C.F.R. 110.7(b)(3).

177


To be sure, some of that activity can affect state as well as federal elections. But that does
not divest Congress of authority to regulate it. To the contrary, Congress has long recognized that
voter registration and get-out-the-vote activities influence federal elections and accordingly has
regulated the funds that can be used for such activities. Since 1979, “FECA unambiguously [has]
require[d] that state party committee money spent for... volunteer materials, voter registration, and
“get-out-the-vote’ activities . .. must be paid for solely from funds subject to the limitations and
prohibitions of the FECA” to the extent that the expenditures are to influence a federal election.
Common Cause v. FEC, 692 F. Supp. 1391, 1396 (D.D.C. 1987) (emphasis in original); see supra
at 24-26, The power of Congress or the FEC to impose contribution limits on the raising of funds
used for such activities cannot be seriously questioned. See 692 F. Supp. at 1396 (“It is possible that
the... [FEC] may conclude that no method of allocation will effectuate the Congressional goal that
all monies spent by state political committees on those activities . . . be ‘hard money’ under the
FECA.”) (emphasis in original).

The impact of such activities on federal elections is manifest. As Professor Green explains,
“[b]ecause the partisan proclivities of the electorate express themselves toward both state and federal
candidates, state parties influence federal elections directly even when they mobilize their supporters
on behalf of a candidate for state office.” D. Green Expert Rep. at 13 (emphasis in original); see
also id, at 13-14 (discussing study of 1992 California election revealing that those who voted for a
state candidate of a particular party were more than 5 times more likely to vote for a federal Senate
candidate of the same party than for the candidate from the Opposing party, and that of the more than
2.1 million voters casting a ballot fora Democratic or Republican state assembly candidate, “86.4%

cast ballots for the same party when voting for U.S. House candidates”); id. at 14 (“[A] campaign

105


limits applicable to presidential candidates,’ because the advertisements did not “in express terms
advocate the election or defeat of a clearly identified candidate for federal office,” Buckley, 424
U.S. at 44." The Buckley Court, however, had neither required nor suggested that the financing
of candidate and political party advertisements could be subject to federal campaign finance laws
only if they used words of “express advocacy.” Indeed, the Court stated that spending by
candidates and political committees is “by definition, campaign related.” Id.

Between July 1995 and June 1996, the Democratic National Committee (“DNC”) spent an
estimated $34 million on television advertisements in support of President Clinton’s reelection under
the guise of “issue advocacy,” including $12 million in hard money and $22 million in soft money.
Mann Expert Rep. at 18: 147 Cong. Ree, $3254 (April 2, 2001) (Ex. 1 to statement of Sen. Levin).
The DNC was able to spend such a large proportion of soft money by transferring funds to state
party committees, which were subject to more favorable FEC allocation ratios, and having the state
committees purchase the ad time, 147 Cong. Rec. $3254 (April 2, 2001) (Ex. | to statement of Sen.
Levin). The Republican National Committee (“RNC”) quickly followed suit, announcing in May

1996 a $20 million “issue advocacy” advertising campaign with the explicit purpose of showing

© ‘The Presidential Election Campaign Fund Act provides certain public funding for a presidential candidate's
zeneral election campaign where the candidate, inter alia, agrees to limit campaign spending and the acceptance of
certain contributions. Sce generally 26 U.S.C. 9001 et seq.

4 Pon . . .
+£ The advantage to such an approach was described in a statement to donors by President Clinton himself:

(We even gave up one or two of our fundraisers at the end of the year to try to get more
money to the Democratic Party rather than my campaign. My original strategy had been tovraise sll
the money for my campaign this year, so I could spend all my money next year being president,
pinning for president, and raising money for the Senate and House Commitiee and for the Domoctang
Party,

And then we realized that we could run these ads through the Democratic Party, which meant
that we could raise money in twenty and fifty and hundred thousand dollar lots, and we didn’t have
to do itall in thousand dollars. And run down-you know what I can spend which is limited by law.
So that’s what we've done. But I have to tell you I'm very grateful 0 you. The contributions you
have made in this have made a huge difference.

Thompson Comm, Rep. at 62.

30



appropriate proportion, to reflect the federal election aspects of the activity’ See Common Cause

y. FEC, 692 F, Supp. 1391, 1394-95 (D.D.C. 1987).

As a result of these developments, soft money became an important part of national party
campaign finance beginning around 1980. Mann Expert Rep. at 12. In the 1980 election, the
national Republican Party committees spent approximately $15 million in soft money and the
national Democratic Party committees spent approximately $4 million, together constituting 9% of
the national parties’ total spending. fd” In 1984, the national parties collectively spent roughly
$21.6 million in soft money, which represented 5% of their total spending. Id. Most of this money
Was spent on voter registration and get-out-the-vote Programs conducted by state party committees,
“targeted to focus on key battlegrounds in the presidential race.” 147 Cong. Rec. $3253 (April 2,

2001) (Anthony Corrado, The Origins and Growth of Party Soft Money Finance (2001), Ex. | to

statement of Sen. Levin). By 1988, national party soft money spending increased to $45 million or
11% of national party spending. Mann Expert Rep. at 12, The parties’ soft money receipts in 1988

included nearly 400 gifts of $100,000 or more. See id. at 13.

Se

“ Seg H.R. Rep. 96-422, 96" Cong,, 1” Sess, 8-9 (1979) (“Ifa State or local party organization prepares a slate
card which includes both Federal and State candidates, the party organization may allocate or apportion the costs
attributable ta all the Federal candidates and the costs attributable to all the State candidates. ... Money used to pay the
costs attributable to Stute candidates is subject to the prohibitions and limitations of State Law. Accordingly, if State
iaw allows the use of treasury funds 'y could be used for the State Portion, but not for any
Portion allocable to Federal candidates.”); id. at 9 (“"[I]f the campaign materials’ used for volunteer activities “contain
reference to both State and Federal candidates, the party organization may allocate the costs between the State and

Federal candidates. The money used to pay the cost attributable to State candidates would be subject to State, not
Federal law.”)

The two major national political parties comprise, inter alia, six main national Party committees: the
Republican National Committee (*RNC”); the National Republican Senatorial Committee (NRSC"), organized to aid
the election of Republican candidates for the Senate; the National Republican Congressional Committee (“NRCC”),
organized to aid the election of Republican candidates for the House of Representatives; the Democratic National
Committee ("DNC"); the Democratic Senatorial Campaign Committee (DSCC), organized to aid the election of
Democratic candidates for the Senate; and the Democratic Congressional Campaign Committee DCCC"), organized
to aid the election of Democratic candidates for the House of Representatives.

26


unconstitutionally vague or overbroad, CDP Compl. | 70. The word “spent” is reasonably
understood to refer to the expenditure of funds. And, as explained above, the term “directed” is
defined narrowly to exclude “merely providing information or guidance as to the requirement of
particular law.” 1f C.F.R. 300.2(n); see also 11 C.F.R. 300.2(m) (similarly limiting the term
“solicit”). In light of those narrowing definitions, it is clear that discussions that merely “touch on
fundraising, campaign strategies, and spending priorities,” CDP Compl. 470, do not trigger FECA’s
restrictions. For the reasons explained supra, at 99-106, the statute is reasonably designed to
“prevent the Levin [A]mendment from becoming a new loophole” in federal campaign finance laws,
148 Cong. Rec. H369-01, H409-10 (Feb. 13, 2002) (Rep. Shays), by ensuring that large sums of
money cannot be freely diverted to party committees in circumvention of contribution limits.*

2. The restrictions on state-level party committees are fully consis-
tent with the Tenth Amendment and principles of federalism,

Plaintiffs’ contention that BCRA’s state-level party provisions violate the Tenth Amendment
and principles of federalism lacks merit. As the Supreme Court has made clear, Congress has broad
authority to regulate federal elections, see Buckley, 424 U.S. at 13-14 & n.16, and BCRA’s state-
level party provisions regulate conduct that directly affects those elections. As explained above, the

limitations on the use of soft money by state-level party committees apply only to “Federal election

activity,” and that term is defined to encompass only activity with a substantial impact on federal
elections. See 2 U.S.C. 431(20)(A), 441i(b)(1). Congress expressly excluded the following state
and local election activity from the definition of “Federal election activity”: (a) public

communications that refer “solely to a clearly identified candidate for State or local office,” if the

© Plaintiffs also challenge BCR A’s prohibition on the transfer of national party hard money to state and local
pany committees for activity that can be funded with Levin funds. CDP Compl. 77-79. National party committees,
however, are free to transfer hard money in unlimited amounts to their state and local counterparts. All BCRA doce i;
Prohibit the use of transferred hard money in federal clection activity that is funded pursuant to the Levin Amendment

109


Constitution does not require” exemption of a nonprofit corporation from an otherwise valid
restriction on corporate election expenditures unless it possesses the three characteristics set out in
MCEL,

Hence, there is no basis for plaintiffs’ various contentions that BCRA is unconstitutional in
virtue of imposing hard money requirements on “organizations whose major purpose is not the
nomination or the election of candidates,” McConnell Second Amend. Compl. 49, or “expressive
associations,” id., or organizations that are tax-exempt under §§ 501(c)(4) and 527 of the tax code,
id. 62, BCRA’s hard money requirements simply apply to corporations across the board, just like

FECA’s restrictions, and just like the restrictions upheld in Austin. Ifa corporation shares the three

“crucial features” set out in MCFL, then it is entitled to an as-applied exemption from these

restrictions, Austin, 494 U.S. at 661, beyond its bearing on those factors, however, a corporation’s

“major purpose” or “expressive” nature or tax-exempt status is of no constitutional significance
It is also insignificant that BCRA does not codify the MCFL exemption. Neitherdoes FECA

§ 441b, the very provision scrutinized in MCFL; nor did the statute in Austin ~ where the Supreme

Court specifically found it permissible for the statute to treat all corporations equally on its face.
See Beaumont v. FEC, 278 F.3d 261, 277-78 (4th Cir. 2002) (“[P]laintiffs’ arguinent that § 441b(a)

is facially invalid because its text does not contain an MCFL exception fails in view of the Court’s

own refusal in Austin to declare an almost identical state statute facially invalid for the same

corporations. Id. at 662-64. The Austin Court found that the Chamber lacked all of these characteristics, but in particular
the Court focused on the fact that, “[b]ecause the Chamber accepts money from for-profit corporations, itcould .. . serve
asa conduit for corporate political spending.” This concern is borne out by the election activity of 1996-2000, in which
non-profits such as Citizens for Reform and Citizens for Better Medicare served as conduits for millions of dollars of
corporate campaign spending. See supra at 42-43, 46-47

+4 Indeed, ifan organization's preferred tax status has any constitutional significance in this context, itimplies
that Congress has more, not less, leeway to regulate the organization's political spending, to ensure that public money
is not used to finance activity that Congress does not wish to subsidize. Sce Regan v. Taxation with Representation of
Wash., 461 U.S, 540 (1983) (upholding speech restrictions on tax-exempt organization as valid condition attached to
federal subsidy).

166


H. BCRA’s Definition of Electioneering Communications Does Not
Violate Either the First Amendment or Principles of Equal Protection
by Excluding Non-Broadcast Communications from the Scope of Its Regulation.

As mentioned above, BCRA’s definition of electioneering communications encompasses
only television and radio communications and not communications made through other media, such
as print. See FECA 434(f(i); 11 C.F.R. 100.29(b)(1). Plaintiffs allege that by excluding other
media BCRA violates the First Amendment and the equal protection component of the due process
clause. McConnell Second Amend. Compl. 4 51; NAB Compl. 4 24. These allegations have no
merit.

Plaintiffs have no ground on which to complain that BCRA regulates less speech rather than
more. See Blount v. SEC, 61 F.3d 938, 946 (D.C.Cir.1995) (“The First Amendment does not

require the government to curtail as much speech as may conceivably serve its goals.”); DLS, Inc.

y. City of Chattanooga, 107 F.3d 403, 412 n.7 (6th Cir. 1997) (same for Equal Protection Clause)”
As Buckley makes clear, reform in this area “may take one step at a time, addressing itself to the

phase of the problem which seems most acute to the legislative mind.” 424 U.S. at 105(citation

omitted); see also MCFL, 479 U.S. at 258 n.1 1 (“While business corporations may not represent the
only organizations that pose th[e] danger [of distorting the political marketplace], they are by far the
most prominent examplc.”).

Although Congress could have included non-broadcast communications within BCRA’s
scope, it chose instead to focus narrowly on redressing the recent abuses connected with broadcast

communications, Broadcast communications are not only more far-reaching and influential than

18 See also Mariani v. US., 212 F.3d 761, 774 (3d Cir. 2000) (gn banc) (“Congress may regulate speech so

long as it demonstrates that the recited harms are real, and itmay, consistent with that principle, choose to regulate just
some part of that speech.”)

169


Applying that standard, the Supreme Court has already upheld FECA’s existing disclosure
requirements, Buckley, 424 U.S. at 60-84, finding them justified by three governmental interests:
First, disclosure provides the electorate with information “as to where political cam-
paign money comes from . ..” in order to aid the voters in evaluating those who
seek federal office. It allows voters to place each candidate in the political spectrum
more precisely than is often possible solely on the basis of party labels and campaign
speeches. The sources of a candidate’s financial support also alert the voter to the
interests to which a candidate is most likely to be responsive and thus facilitate

predictions of future performance in office.

Second, disclosure requirements deter actual corruption and avoid the appearance of

corruption by exposing large contributions and expenditures to the light of publicity.

This exposure may discourage those who would use money for improper purposes

either before or after the election. A public armed with information about a

candidate's most generous supporters is better able to detect any post-election special

favors that may be given in return... .

Third, and not least significant, recordkeeping, reporting, and disclosure

requirements are an essential means of gathering the data necessary to detect

violations of the contribution limitations described above.
Buckley, 424 U.S. at 66-68 (footnotes omitted),

BCRA’s new disclosure requirements goveming electioneering communications are justified
by the same interests underlying FECA’s existing disclosure tequirements. Indeed, BCRA simply
remedies the evasion of FECA’s existing disclosure requirements through the use of “issue ads.”
As discussed in greater detail above, see supra at 42-43, 46-47, in the three election cycles preceding
BCRA’s enactment, Congress witnessed tens of millions of dollars being spent on such ads, exerting
a substantial influence on election campaigns, while the sources of this campaign spending went
entirely undisclosed to the public under FECA. Compounding the problem, many ad sponsors

further concealed their identity from the public by electioneering pseudonymously, through front

organizations such as “The Coalition: Americans Working for Real Change,” “Citizens for Reform.”

173


congressional elections. The AFL-CIO initiated the advertising battle in early 1996, with the
announcement that it planned to spend $35 million in the coming year on a campaign to win back
Democratic control of the House of Representatives. See Frank Swoboda, AFL-CIO to Target 75

House Districts, Wash, Post, Jan. 25, 1996 [DEV 10-Tab 40);

The campaign, funded from union dues, spent over $20 million on a series of television
advertisements run from the end of June 1996 through Election Day. See Thompson Comm. Rep.

at 3999; Annenberg 1996 Study at 1; FEC General Counsel’s Rep. in Inre AFL-CIO, MUR 4291

(AFL-CIO MUR Rep.”) at § [DEV 52-Tab 3). These advertisements uniformly criticized House
Republican incumbents on their legislative records, often contrasting their voting behavior
unfavorably with the positions of their Democratic challengers, while conspicuously avoiding
express exhortations for their defeat. See AFL-CIO MUR Rep. at 6. An example is an ad run from

September 26 to October 9 in the district of House Republican incumbent Steve Stockman:

The AFL-CIO’s advertisements soon prompted a major counter-attack by a coalition of busi-
ness organizations, operating under the nondescript pseudonym “The Coalition: Americans Working
for Real Change” (“Coalition”), The founding members of the Coalition, including the U.S.
Chamber of Commerce and National Association of Manufacturers, were members of the “Thursday

Group,” a variety of business organizations that regularly met on Thursdays to discuss legislative

ee
UR” is an acronym for “Matter Under Review,” which is how administrative enforcement proceedings
under 2 U.S.C. 437g(a) are designated on the FEC’s docket.

38


expenditures, there was no reason to treat political parties any differently from any other multicandi-
date organization. See Colorado I, 518 US. at 619, 621,

Nonetheless, FECA still treated political parties differently from other organizations: parties
were permitted to make coordinated expenditures subject to the much higher limits in Section
44la(d). Parties challenged those limits in Colorado H, arguing that they should not be subject to
any limits on coordinated expenditures whatsoever, The Supreme Court disagreed, concluding that
coordinated expenditures by parties are particularly likely to lead to circumvention of the Act’s
contribution limits, while a party’s interest in making coordinated expenditures is entitled to no
greater constitutional protection than the interest of anyone else. 533 U.S. at 455. The Court
accordingly applied the same scrutiny to the limits on political party coordinated expenditures that
it had applied to limits on other political actors. in accordance with the basic approach applied in
prior cases not involving corporations and unions — “routinely str[iking] down limitations on
independent expenditures ... while repeatedly upholding contribution limits,” id, at 441 --the Court
upheld the limitations set out in § 441a(d) and held that “a party’s coordinated expenditures, unlike
expenditures truly independent, may be restricted to minimize circumvention of contribution limits,”
id. at 465. The Supreme Court already had upheld the $1,000 contribution limits for individuals and
the $5,000 limit for multicandidate party committees in Buckley, recognizing that “[tJhese
limitations, along with the disclosure provisions, constitute the Act’s primary weapons against the
reality or appearance of improper influence stemming from the dependence of candidates on large
campaign contributions.” 424 U.S. at 58,

The holdings in Buckley, Colorado I, and Colorado II make clear that Congress may

constitutionally regulate contributions and coordinated expenditures by political parties, and that the

179


provide such assistance to gain control of such organizations. As Professor Green explains, if this
loophole were not closed, party committees could “easily circumvent the new regulatory regime by
creating satellite party organizations in the guise of tax-exempt organizations, which would be free
to collect donations of unlimited size.” D. Green Expert Rep. at 18.

The restrictions on party committee solicitations for and donations to tax-exempt
organizations are closely drawn to prevent corruption of the political process and circumvention of
FECA. Thus, BCRA permits party committees to solicit funds for, and to make and direct donations
to, other political committees, including PACs, which, unlike other tax-exempt organizations, are
themselves subject to regulation under FECA. See 2 U.S.C. 441i(d)(2); 2 U.S.C. 431(4). This
limitation reflects Congress’s recognition that the risk of circumvention and corruption is reduced
where the organizations to which party committees direct funds are themselves subject to FECA’s
contribution limitations, source restrictions, and disclosure requirements.

Plaintiffs suggest that the Tenth Amendment and principles of federalism preclude Congress
from prohibiting solicitations and donations by party committees for tax-exempt organizations
where the funds are to be used in state elections. See McConnell Second Amend. Compl. ff 101,
110. But BCRA’s scope is limited. With respect to § 501(c) organizations, the statute applies only
if the organization make expenditures or disbursements in connection with a federal election.
Congress plainly has a valid interest in regulating party solicitations and donations to such
organizations. Although BCRA apparently has a broader reach with respect to § 527 political
organizations, the statute nonetheless raises no Tenth Amendment concerns. Congress can properly
regulate solicitations and donations by political parties to tax-exempt political organizations even

if the funds are earmarked for activity that affects only state or local elections. In light of the

119


requiring a declaration of intent “is a legitimate approach for the legislation to take.” Daggett, 74 F.
Supp. 2d at 59.

D. The Millionaire Provisions Do Not Violate the Fifth
Amendment’s Equal Protection Guarantee.

The millionaire provisions include no suspect classification, and the provisions therefore
need only be rationally related to a legitimate purpose in order to withstand equal protection
scrutiny. See, .g., Heller v, Doe, $09 U.S. 312, 320 (1993).

The millionaire provisions easily withstand rational basis scrutiny. Indeed, as noted above,
the provisions satisfy much more rigorous scrutiny; they are closely drawn to advance vital
governmental interests. They carefully aim to eliminate the distortion in the campaign finance
system created by massive infusions of a candidate’s own wealth (which does not reflect that
candidates’ popularity in the political marketplace)!3 by allowing a candidate without such
personal wealth or a large campaign war chest an opportunity to compete on a more equal footing
by soliciting contributions in amounts greater than the normal contribution limits.

The millionaire provisions do not violate principles of equal protection because a
contributor, under special circumstances, can give additional money to a candidate Tunning against a
self-funded candidate. In Buckley, the Court explicitly rejected the claim that contribution limits
discriminated between incumbents and challengers, explaining that FECA’s limits applied to all

candidates without regard to “present occupations, ideological views, or party affiliations.” Id.

In Buckley, the Court noted that because of the contribution limit the financial resources available to a
candidate’s campaign “will normally vary with the size and intensity of the candidate's support,” 424 U.S. at 56, but that
this “normal relationship” may not apply where the candidate devotes a large amount of his or her personal resources
to his or her campaign. Id, at $6 1.63,

198


used, and whether the purpose of the ad was to provide information about or urge action on a bill
or issue, or to generate support for or Opposition to a particular candidate. Buying Time 2000 at 18-
21, Buying Time 1998 at 6-8; Goldstein Expert Rep. at 6-7 & n. 4; Jonathan S. Krasno & Frank J.

Sorauf, Evaluating the Bipartisan Campaign Reform Act (BCRA) (Sep, 23, 2002) at 53 & n.124

[DEV 1-Tab 2, hereinafter Krasno & Sorauf Expert Rep.]. Defendants’ experts, Drs. Goldstein and
Krasno (the latter the principal author of Buying Time 1998) have reviewed the databases used to
generate Buying Time 1998 and 2000, and, after reconciling minor discrepancies they discovered,
Goldstein Expert Rep. at 7; Krasno & Sorauf Expert Rep. at 60.142 & App. § B, have reproduced
the analyses conducted in both Buying Time studies. As arcsult ofthese minor reconciliations, their
figures differ slightly from the results reported in the two Buying Time studies, but they similarly
reveal the unvarnished truth about electioneering ads,

In 1998 and 2000, 78-85 percent of interest group ads referring to candidates ran during the
60 days before the election (as did most of the candidates’ own ads). Goldstein Expert Rep. at 17
& Tol. 4; Krasno & Sorauf Expert Rep. at 57 & App. Thls. 3, 6. In stark contrast, 82 percent of
interest group ads in 2000 that did not refer to a candidate ran outside the 60-day period before the
election. Goldstein Expert Rep. at Tbl. 4. In 1998, 62 percent of such ads ran outside the 60-day
period. Krasno & Sorauf Expert Rep., App. Tbl. 3. The prevalence of ads that focus on candidates
in the 60 days before an election, and their comparative rarity outside that period, reveal that their
sponsors’ motives are based on electoral concerns. Further supporting that conclusion, more than
70 percent of the interest group ads in 2000 that the Buying Time coders perceived as electioneering
in nature were broadcast within 60 days of the election. Goldstein Expert Rep. at 27-28 & Tbl. 8.

Ads actually focusing on issues in the 60 days before the election were uncommon: nearly 80

140


acceptance of public funds on an agreement by the candidate to abide by specified expenditure
limitations, Just as a candidate may voluntarily limit the size of the contributions he chooses to
accept, he may decide to forego private fundraising and accept public funding.” 424 U.S. at 57 n.65.
Similarly, Congress is entitled to offer party committees a higher limit on coordinated expenditures,
if they voluntarily agree to forgo independent spending.

Plaintiffs contend that § 213 requires the national party and the political parties established
by the State that want to take advantage of the higher limits in § 441 a(d) to make a single, unified
choice between coordinated and independent expenditures. This may not be the case, however.
Both FEC’s pre-BCRA regulations and its proposed post-BCRA regulations make clear that the
statute is intended to distinguish between two groups within a particular party: (1) national party
committees and (2) all State and local committees of that party. See, e.g., 11 C.F.R. 110.7(b)(1)
(‘The national committee of a political party, and a State committee of a political party, including
any subordinate committee of a State committee, may each make expenditures in connection with
the general election campaign of a candidate... .” (emphasis added)); 67 Fed. Reg. 60,042, 60,067
(proposed 11 C.F.R. 109.32(b)(1)) (Sep. 18, 2002). Under the proposed regulation, each group

would be able to make its own selection 2

22 To prevent circumvention, § 213 prohibits a party committee choosing the higher coordination limit from

transferring funds to, or receiving funds from, a committee choosing the option of making unlimited independent
expenditures. The California Democratic Party contends that Section 213 is unconstitutional because it bars all such
transfers, even where the money is not earmarked for independent expenditures. This argument, however, ignores the
fungibility of money. Allowing such transfers would free a committee's other funds for independent expenditures. The
California Democratic Party also contends that § 213 violates the equal protection component of the Fifth Amendment.
However party committees are actually treated better than any other multicandidate committee because they are given
the option of choosing a higher coordinated expenditure limit if they consider that more beneficial than making
independent expenditures. Cf, Republican National Commitee v. FEC, 487 F.Supp. 280, 285 (S.D.N.Y.) (three-judge
court) (“Since the candidate remains free to choose between funding alternatives, he or she will opt for public funding
only if, in the candidate's view, it will enhance the candidate’s power of communication and association.”), aff'd mem.,
445 U.S. 955 (1980).

181


All that remains after this analysis, then, is to determine whether, from the Parties’
perspective, the contribution limits are “so radical in effect as to render political association
ineffective...” Shrink Missouri, 528 U.S, at 397. The political parties thrived before they began
accepting hundreds of millions of dollars in soft money contributions, and there is no basis for
finding that they will not continue to do so after BCRA takes effect. See infra at 106-07, In sum,
BCRA’s restrictions on the solicitation, use, and expenditure of nonfederal funds are “‘closely
drawn’ to match a ‘sufficiently important interest,”” Shrink Missouri, 528 U.S. at 387-88 (citation

omitted), and therefore readily withstand scrutiny under the First Amendment.

B. The Ban on the Solicitation, Receipt and Use of Soft Money
by National Political Parties Is Closely Drawn to Prevent the
Appearance and Reality of Corruption in Federal Elections.

Section 101(a) of BCRA provides that the national committee of a political party “may not
solicit, receive, or direct to another person a contribution, donation, or transfer of funds or any other
thing of value, or spend any funds, that are not subject to the limitations, prohibitions, and reporting
requirements of this Act.” 2 U.S.C. 44li(a(DA’ The provision “(p)rohibits national party
committees and entities controlled by the parties from raising, spending, or transferring money that
is not subject to the limitations, prohibitions, and reporting requirements of the FECA (ie., soft
money).” 148 Cong. Rec. $1992 (Mar. 18, 2002) (Ex. | to statement of Sen. Feingold).

Congress enacted the provision to “put the national parties entirely out of the soft money
business.” 148 Cong. Rec. H408-09 (Feb. 13, 2002) (Rep. Shays). The ban “covers all activities
of the national parties, even those that might appear to affect only non-federal elections,” because

“the national parties operate at the national level, and are inextricably intertwined with federal

® For simplicity, we cite the soft money provisions as they are slated to be codified in the United States Code.
See Pub. L No. 107-155, 116 Stat. 82 (Mar. 27, 2002)

62



are “narrowly limited to those situations where the information sought has a substantial connection
with the governmental interests sought to be advanced.” Buckley, 424 U.S. at 81. The provisions
are closely drawn to ensure that state and loca! party committees are in compliance with the
reasonable restrictions that BCRA imposes on those committees and that the public is informed of
the extent of federal election activity in which those committees engage. The disclosure “provides
the electorate with information as to where political campaign money comes from and how it is
spent by the candidate in order to aid the voters in evaluating those who seek federal office.” Id. at
66-67 (footnote omitted). Such disclosure also “deter[s] actual corruption and avoid[s] the
appearance of corruption by exposing large contributions and expenditures to the light of publicity.”

Id, at 67; see also Buckley v. Am. Constitutional Law Found, Inc., 525 U.S. 182, 202 (1999),

The Court in Buckley v. Valeo recognized that those governmental interests are substantial
and concluded that the federal disclosure requirements at issue in that case were “a reasonable and
minimally restrictive method of furthering First Amendment values by opening the basic processes
of our federal election system to public view.” 424 U.S. at 82. For similar reasons, BCRA’s
disclosure requirements readily withstand scrutiny. Even assuming that compliance with those
provisions will require expenditure of funds that could exceed the total revenues of such local party
committees, that would not provide a basis for invalidation of the statute, let alone invalidation on
its face. Indeed, the Court in Buckley rejected a challenge to political committee recordkeeping
requirements that applied to contributions as small as $10 and disclosure requirements for
aggregated contributions that totaled as little as $100. 424 USS. at 82-84; see also id. at 71
(sustaining disclosure requirements notwithstanding its recognition that “the damage done by

disclosure to the associational interests of .. . minor parties and their members and to supporters of

116


Senator Simon describes this incident as a “clear example of donors getting their way, not on the
merits of the legislation, but just because they had been big contributors.” Id.

Former Senator Rudman similarly attests that large soft money donors receive special access
to lawmakers, and that with this access these donors press elected officials “to introduce legislation,
to amend legislation, to block legislation, and to vote on legislation in a certain way.” Rudman
Decl. 47. Senator Rudman explained that while “[eJlected officials may not intend to be affected
by such access,” they “receive a disproportionate amount of input and advice from larger, more
wealthy contributors,” which can “skew their judgment.” Id. § 8. Senator Simpson recalled
“specific instances when Senators’ votes were affected by the fear of losing future donations,” and
opined that “[d]onations from the tobacco industry to Republicans scuttled tobacco legislation, just
as contributions from the trial lawyers to Democrats Stopped tort reform.” Simpson Decl. V4 10-11.
Senator McCain concurred: “I believe, based on my experience, that elected officials do act in
particular ways in order to assist large soft money donors and that this skews and shapes the
legislative process.” McCain Decl. 415. He cited several instances in which large soft money donors
al least strongly appear to have influenced various stages of the legislative process. Id. ff] 8-12; see
also Wirth Decl. Ex. A 16-18.

Testimony from lobbyists, Corporate representatives, major donors, and party insiders
confirms that corporate donors frequently give soft money to parties to “influence the legislative

process for their business purposes.” Hickmott Decl. {| 9 [DEV 6-Tab 19]; see also

_ Kirsch Decl. fj 11, 14 [DEV 7-Tab 23]; Geshke Decl. $f] 9-10 [DEV

6-Tab 14]; Hassenfeld Decl. 49 13, 15 [DEV 6-Tab 17]; Hiatt Decl. 47 t1-12 [DEV 6-Tab 18};

Mariani, 80 F, Supp. 2d at 386, 395 (citing affidavit of lobbyist Daniel Murray {f] 7, 12 [DEV 68-

80


The abuses of the campaign finance system by the political parties in the 1996 elections are

weil documented in the Investigation of Illegal or Improper Activities in Connection with 1996

Federal Election Campaigns, $. Rep. No. 105-167 (6 vols.), Mar. 10, 1998, commonly referred to
as the “Thompson Committee Report.” The Thompson Committee investigated and reported its
findings concerning the widespread fundraising abuses that occurred during the 1996 Presidential
campaign, developing a factual record on which, it anticipated, other legislative committees could
rely “in formulating legislative proposals.” Thompson Comm. Rep. at 8. The Thompson
Committee concluded that “soft money spending by political party committees eviscerates the
ability of FECA to limit the funds contributed by individuals, corporations, or unions for the defeat
or benefit of specific candidates.” Id, at 4468, More specifically, it found that “the DNC deftly
utilized state party committees in 1996 as a conduit to further increase their illegal expenditure of
soft money on electioneering messages favoring the re-election of President Clinton, all the time

claiming such advertisements consisted of pure issue advocacy outside the scope of the FECA.” Id.

at 4466-67; see also Thompson Comm. Rep. at 4564 (Minority Views) (“Both the Democratic and
Republican Parties raised vast amounts of soft money from corporate, union and individual donors,
and then used loopholes in the law to spend that money helping specific candidates. The biggest of
these loopholes involves so-called issue advocacy, in which communications, paid for in whole or
part with soft money, attack a candidate by name while claiming to be an issue discussion outside
the reach of federal election laws.”).

The Thompson Committee also documented the national parties’ prevalent practice of
providing access to important officeholders in exchange for large soft money contributions to the

political parties. For instance, it found that the DNC provided large party donors with favors

32


of Congress’s delegated authority under Article I. See New York v. United States, 505 U.S. 144,

156 (1992); see also Burroughs v. United States, 290 U.S. 534, 544-45 (1934) (regulation of national

: oo : ; ay 81
party committees “in no sense invades any exclusive state power”).

5. The prohibition against the solicitation of soft
money by officers or agents acting on behalf of a
national party committee is constitutional,

The chairs of the California Democratic and Republican parties, who also sit on the
executive committees of their respective national party committees, CDP Compl. J 12, 16,
challenge BCRA’s prohibition against “any officer or agent” of a national committee “solicit{ing],
receiv[ing], or direct[ing] to another person a contribution, donation, or transfer of funds or any
other thing of value, or spend[ing] any funds, that are not subject to the limitations, prohibitions, and
reporting requirements” of the Act. 2 U.S.C. 441i(a). Those plaintiffs chaltenge that provision on
the ground that it would prevent them, as officers of national party committees, from raising soft
money for their state committees. CDP Compl. { 81, 84-86. That challenge rests on a fundamental
misreading of the statute.

The prohibition against officers and agents of the national party committees raising or
spending soft money applies only to the extent that the officer or agent is “acting on behalf of such
anational committee.” 2 U.S.C. 441i(a)(2) (emphasis added). The FEC’s implementing regulations
confirm what the statutory text already makes plain. See t1 C.F.R. 300.2(b) (67 Fed. Reg. 49,121
(July 29, 2002)) (defining “agent” to refer to any person with actual authority to engage in activities
“on behalf of” the relevant organization). And the FEC’s explanation of its regulations leaves no

doubt that “individuals, such as State party chairmen and chairwomen, who also serve as members

§) \n any event, the record in this case makes clear that many national party activities and the majority of funds
expended by the national parties are spent to influence federal elections, even when those activities and funds are
directed to party organizations at the state and focal level, Sce supra at 28-36; infra at 100-02

98


2

tors.“ These circumstances prompted charges that corporations “were corrupting government and
gaining special favors in return for their campaign gifts.” Thomas E. Mann, Report of Thomas E.

Mann (Sep. 20, 2002) at 3 [DEV 1-Tab 1, hereinafter Mann Expert Rep.]; see United States v,

UAW, 352 U.S. 567, 570-71 (1957).

Congress responded in 1907 by enacting the Tillman Act. Ch. 420, 34 Stat. 864. The
Tillman Act for the first time prohibited Corporations from making monetary contributions in
connection with federal election campaigns. UAW, 352 U.S. at 575. The public debate preceding
enactment of this and subsequent legislation reflected concern over the use of money for political
purposes by organizations in a position to exercise disproportionate influence on federal elections,
and, thereby, over the legislators whose political fates turn on the outcome of those contests. There
was particular concern that political parties would become indebted to large corporate contributors
and use their own leverage over candidates and elected officials to control government policy. See
id. at 571-73, 76-77. The necessity of regulation was summarized in hearings on the Tillman Act:

The idea is to prevent... the great aggregations of wealth from using their corporate

funds .. . to send members of the legisiature to these halls in order to vote for their

protection and the advancement of their interests as against those of the public. It

Strikes at a constantly growing evil which has done more to shake the confidence of

the plain people of small means of this country in our political institutions than any

other practice which has ever obtained since the foundation of our Government, And

I believe that the time has come when something ought to be done to put a check to

the giving of $50,000 or $100,000 by a great corporation toward political purposes

upon the understanding that a debt is created from a political party to it.

Id. at 571 (citation omitted). Nearly 20 years later, after the Teapot Dome scandal, Congress enacted

the Federal Corrupt Practices Act of 1925, ch. 368, Title IU, 43 Stat. 1070 (SFCPA”), a significant

Sec_ee., William A. White, The Old Order Changeth (1910), at 11-15. History includes such notorious
examples of political corruption as the Boss Tweed and Tammany Hall machine, the 1876 Tilden/Hayes presidential
clection, the Custom House scandals of the 1880s, Teapot Dome, and the Prendergast Machine. See, e.g. Rebuttal
Expert Report of Donald P. Green (“D. Green Rebuttal Expert Rep,”) at 20-21 [DEV $.Tab 1); Decl. of Morton Keller
at 17-21; Nathan Miller, The Founding Finagler (1976); Shelley Ross, Fall From Grace: Sex, Scandal ara Corruption
in American Politics from 1702 to the Present (1988)

13



Tab 33). In short, as Senator Rudman explained, “[l]arge soft money contributions in fact distort
the legislative process,” and the current system is “inherently, endemically, and hopelessly
corrupting.” Rudman Decl. {] 9-10.

e The national soft money ban reduces
the appearance of political corruption.

Whether or not soft money contributions have in fact resulted in political corruption, the
legislative record and the record developed in this case demonstrate that the unregulated soft money
system has created the appearance of corruption, See Buckley, 424 U.S. at 26-27, As the Supreme
Court has made clear, avoiding the appearance of corruption is an important govemmental interest;
if the government leaves “the Perception of impropriety unanswered,” the “cynical assumption that
large donors call the tune could jeopardize the willingness of voters to take part in democratic
governance. Democracy works ‘only if the peopie have faith in those who govern, and that faith is
bound to be shattered when high officials and their appointees engage in activities which arouse

suspicions of malfeasance and corruption.” Shrink Missouri, 528 U.S. at 906 (citation omitted).

Combating the public perception that the national political system has been corrupted by the
influence of soft money donors was one of the principal reasons that Congress enacted BCRA. As
Senator Feingold observed, “[t]he appearance of corruption is tampant in our system, and it touches
virtually every issue that comes before us.” 147 Cong. Rec. $2446 (Mar. 19, 2001 ) (Sen. Feingold);

see also id. at S3107 (Sen. Feingold). Other Members of Congress agreed. See, e.g. 148 Cong. Rec.

81



which it considered campaign finance reform, Congress expressly considered, and rejected,
alternatives to the wholesale ban on receipt or use of soft money by the national parties.

Most significantly, Congress considered and rejected the notion that it could achieve its
objectives by limiting soft money donations to the national parties rather than banning them entirely.
Congress concluded that capping soft money contributions rather than eliminating them would
“send[] the campaign finance laws back in time to the very beginning of the 20th century before the
Tillman Act banned direct corporate donations to the parties and before Taft-Hartley banned direct
labor contributions to the parties.” 147 Cong. Rec. $2887-88 (Mar. 26, 2001) (Sen. Hollings)
{opposing the “Hagel Amendment,” which would have permitted soft money in limited amounts).
The House, like the Senate, rejected proposals that would have capped, rather than banned, soft
money contributions At the same time, however, Congress softened any potential adverse
consequences to the parties of the soft money ban by increasing the statutory limits on hard money

contributions. See 147 Cong, Rec. $3247 (Apr. 2, 2001) (Sen. Levin); see also Magleby Expert Rep.

at 56.

Cc Plaintiffs’ Challenges to the National Party Soft Money Ban Lack Merit.

1. The national party soft money ban does not
violate the First Amendment.

Plaintiffs’ contention that BCRA’s national party soft money ban violates the parties’ rights
of free speech and association lacks merit, See RNC Compl. {| 43-51; McConnell Second Amend.
Compl. {| 99. The ban simply requires national! political parties to fund their activities with hard
money. To prevail on their claim, plaintiffs must show that restricting the national parties to hard

money wil! prevent them “from amassing the resources necessary for effective advocacy,” Buckley,

oa

See, e.g., 148 Cong, Rec. H273 (Feb. 12, 2002) (Rep. Turner); 148 Cong. Rec. H260 (Feb. 12,2002) (Rep.
Mechan); see also H.R. Rep. No. 107-131, at 48-49 (2001) (Minority Views of Steny IT. Hoyer, Chaka Fattah, and Jim
Davis to accompany H.R. 2356, Bipartisan Campaign Reform Act of 2001).

87


istrative personnel, rather than with funds from their general treasuries. All persons spending
$10,000 or more in a year for electioncering communications must file reports disclosing their
identities, the cost of their communications, the elections to which the communications pertain, and
(broadly speaking) the identities of persons making large donations to finance the communications.

These regulations of electioneering communications ban no speech whatsoever, but merely
restore vigor to the statutory scheme as it has existed for the better part of a century, and do so in
4 narrowly tailored manner that focuses directly on the type of election-related spending by unions
and corporations that has recently presented the greatest threat of distortion and corruption of
political processes. At the same time, unions and corporations may still speak their minds using
segregated funds that reflect the true power of political association rather than the might of the
commercial marketplace. With equal precision, the disclosure provisions vindicate the interests of
voters in knowing exactly who is behind electioneering messages of the type they have been receiv-
ing about candidates in the heat of recent campaigns.

Two other provisions in Title If of BCRA address the problem of coordinated spending
among donors, candidates, and parties. Section 213 of BCRA gives political parties the opportunity,
available to no one else, to choose between (1) making expenditures coordinated with a candidate
in amounts much greater than FECA ordinarily permits, and (2) making expenditures, including
independent expenditures, under the rules generally applicable to multicandidate committees.
Section 214(b) of BCRA merely requires the FEC to promulgate new regulations defining what
constitutes a communication that is “coordinated” with a federal candidate or party, based on
congressional concern that the FEC’s current regulations are too narrow to be effective in regulating

coordinated activity in the real world of campaigns and elections,



The California Democratic Party plaintiffs contend that the phrase “generic campaign
activity” as used in the definition of “Federal election activity” is vague and overbroad. CDP
Compl. {| 57. The FEC’s regulations define the term “generic campaign activity” as “a public
communication that promotes or opposes a political party and does not promote or oppose a clearly
identified Federal candidate or a non-Federal candidate.” 1] C.F.R. 100.25 (67 Fed. Reg, 49,111
Guly 29, 2002)). That definition is not overbroad. The legislative record and the record in this case
make clear that generic activity promoting a political party benefits federal candidates that are
nominated by that party, and that such activity has in fact been employed by the major parties for
that purpose. See 147 Cong. Rec. $2940-41 (Mar. 27, 2001) (Sen. Feingold) (“[G]et out the vote
activity and generic campaign activity — like general party advertising — when Federal candidates
are on the ballot... assist Federal candidates in their election campaigns. So we believe they must
be paid for with Federal money.”); supra at 104-06.

Nor is the relevant provision unconstitutionally vague. A reasonable person would
understand what constitutes a communication that “promotes or opposes” a political party and not
aclearly identified candidate. As clarified in the regulation, the definition is plainly aimed at public
communications focusing on the interests of a political party apart from any clearly identified
candidate, such as the distribution of literature exhorting voters to “Support Democrats” or “Vote
Republican.” And any uncertainty regarding the applicability of the statute to particular cases can
be clarified by seeking an advisory opinion from the FEC. See supra at 95.

5. The reporting requirements of Title } are constitutional,
BCRA requires that state and local party committees register and file reports with the FEC

to the extent they engage in any federal election activity. See 2 U.S.C. 434(e). Those requirements

Its



you can do to them. I always left that room feeling like a cheap prostitute who’d had a busy day.’”
ld. at $2445 2

Congress cited evidence that the business leaders who are asked to contribute soft money to
the parties accede to requests for large donations because they believe that if they do not, they will
lose access to federal officials and may face adverse legislative consequences. See 147 Cong. Rec.
82954-55 (Mar. 27, 2001) (Sen. Feingold) (discussing Committee for Economic Development

(“CED”) survey of senior executives at large corporations); see also INT 001927-29 [DEV 32-Tab

69] (results of CED survey); INT 012983-85 [DEV 34-Tab 6] (same); 148 Cong. Rec. H273 (Feb.
12, 2002) (Rep. Turner) Moreover, the record in this case confirms that business leaders and
other insiders believe “they must participate in the soft money system in order to succeed.” Hassen-

feld Decl. 4 23%

oo

3 Congress recognized that chminating national party soft money could reduce the “debilitating and demeaning
and distasteful” aspects ofa fundraising system, 147 Cong, Rec. $2717 (Mar. 22, 2001) (Sen. Leahy), which demoralize
federal officcholders, distract them from their official duties, and discourage people from public service. See also 148
Cong. Rec. 11351 (Feb. 13, 2002) (Rep. Shays); id. at 352-53: Thompson Comm. Rep. at 43.

* sust how party leaders can pressure corporate executives is illustrated by the fallout from a CED proposal
Neginmending campaign finance reform. After the CED issued its proposal, Senator McConnell, as Chae the
National Republican Senatorial Committee, sent a letter to several CED members expressing his “concern” that CED
made a “serious error” in identifying them as backers of the proposal, “which may cause seme embarrassment to you
if it is not immediately corrected.” Kolb Decl. 4 6 [DEV 7-Tab 24]. After CED sent a letter m response explaining its
position on campaign finance, Senator McConnell senta follow-up letter expressing his “great concern” that the business
Kaders would endorse the proposal and, in ahandwritten personalized note urged the executives to withdraw from CED
Several of the executives, “who work for companies that had significant issues pending before Congress at the time,
Gonsidered the letters a thinly-veiled attempt to intimidate them with the implied message. Resign and keep quiet, or
Son't count on doing business with Congress.” Kolb Decl. 9 8 [DEV 7-Tab 24]. See also Herrnece Deel, at 38-39 (Jan,
28, 1999) [DEV 67-Tab 21, from RNC v. FEC, 98-CV-1207 (D.D.C.)] (“Following the Republican takeover of
Congress, Majority Whip Tom Delay ... greeted lobbyists with a list that categorized the four hetero largest PACs as
‘Friendly’ or “Unfriendly,” depending on the proportion of their contributions that went to Republicans in the 1994
elections, to hammerhome the message that groups that wanted access to Republican leaders would be expected to give
host oftheir PAC money to GOP candidates and party committees in the future (Maranies and Weisskopf 1995)."); “The
Top 400: An NRCC PAC BrieferTM [DEV 77-Tab 146, from FEC v. Colo. Republican Federal Campaign Comm., No.
89-N-1189 (D. Colo.)].

48 See Rozen Deci. M18, 10-11 (lobbyist: soft money is given in order to build relationships with Members
of Congress and to obtain access to those Members through interaction at fundraising events or more formal, personal
practings. such access increases donor's chances of succeeding with its legislative or policy agenda; donations given to
both parties to help ensure access t» Members in both parties); Bumpers Decl ‘WW 18, 20, 31-34 (former long-time

to accede to requests in order to avoid adverse consequences with respect to donor's access to Members or donor's
legislative business and to avoid giving an advantage on these matters to competitors); Randiett Decl. 4 11-12 (business
(continued...)

85



potential candidates and promote robust competition in federal elections without limiting the
spending of the self-funded candidate and without entirely abandoning limits on contributions
that serve to minimize the potential for corruption.

A. The Millionaire Provisions Are Closely Drawn
to Advance Important Governmental Interests.

Congress enacted the millionaire provisions in order to address a problem arising from
the invalidation in Buckley of a provision of FECA limiting the amount a candidate could spend
on his or her own campaign. See Buckley, 424 U.S. at 51-54. As Senator McConnell explained
in reference to draft legislation considered in 1987:

[W]e ought to ensure a level playing field in elections involving wealthy

candidates, by eliminating the “millionaire’s loophole” to the post-Watergate

contribution limits. If a candidate intends to spend or loan massive funds on his
campaign, our bill would allow his opponents to accept larger contributions. It’s

time to stop Congress from becoming nothing more than an exclusive club for
millionaires.

133 Cong. Rec. $7466 (1987); see also 142 Cong, Rec. $6795 (June 25, 1996) (Sen. Domenici);

143 Cong. Rec. $10148 (Sep. 29, 1997) (Sen. Feingold); 135 Cong. Rec. $209 (Jan. 25, 1989)
(Sen, Dole); And as Senator DeWine noted during debate
of BCRA, the millionaire’s loophole has fueled a perception of corruption that “someone today

who is wealthy enough can buy a seat” in the Congress. 147 Cong. Rec. $2547 (2001); see also

136 Cong. Rec. $11052 (July 30, 1990) (Sen. Dole); 148 Cong. Rec. H431 (Feb. 13, 2002) (Rep.
Moore Capito); 148 Cong. Rec, $2153 (Mar. 20, 2002) (Sen. Domenici); 144 Cong. Rec. $6762
(June 25, 1998) (Sen. Tim Hutchinson). See Gable v. Patton, 142 F.3d 940, 947 (6th Cir. 1998)

(government has a compelling interest in “keep[ing] one candidate from essentially buying a

campaign”).

192


provisions do not commandeer the state legislative process or conscript state and local officers.
Those provisions simply regulate private conduct that affects federal elections.

3. BCRA’s restrictions on state-level party commit-
tees do not violate equal protection principles .

Plaintiffs contend that BCRA’s state-level party provisions violate the equal protection
component of the Fifth Amendment because those provisions treat state-level party committees
differently from other organizations. McConnell Second Amend. Compl. ff 104-11; RNC Compl.
4168-82; CDP Compl. {] 72, 73. As explained supra, at pt. L.C.2, however, Congress has in many
important respects treated political parties more favorably than similarly situated entities, allowing
the parties to make much greater coordinated expenditures with candidates, and to receive far larger
contributions from individuals than nonparty political action committees.

More important, parties perform unique functions: they organize the slate of candidates
presented to voters; organize legislative caucuses that assign legislators to committees; and elect
legislative leadership. D. Green Expert Rep. at 7-8; see supra at pt. I.C.2. And “whether they like
itor not . . . [political parties] act as agents for spending on behalf of those who seek to produce
obligated officeholders.” Colorado I, 533 U.S. at 452. See D. Green Expert Rep. at 8. In light of
those threats, it is entirely proper for Congress to treat party committees differently from other
organizations. See Cal Med, 453 U.S. at 183 (Congress can conclude that entities having “differing
Structures and purposes . .. may require different forms of regulation in order to protect the integrity
of the political process”).

Congress’s decision not to index limits on contributions to state-level party committees for
inflation does not violate equal protection principles, Contrary to the contention of the Califomia

Democratic Party, CDP Compl. 4] 98-106 (Count VIII, Congress was not required to index limits

lt


548, 580 (1973); Blount v. SEC, 61 F.3d 938, 948 (D.C. Cir. 1995). Reliance on an FEC advisory
opinion “is a defense to criminal prosecution or civil suit.” Martin Tractor, 627 F.2d at 385; see 2

U.S.C. 4374(c)(2); FEC v. National Rifle Association, 254 F.3d 173, 185 (D.C. Cir. 2001). Because

plaintiffs “may seek and obtain advice from the [FEC] and thereby remove any doubt there may be

as to the meaning of the law,” National _Ass’n of Letter Carriers, 413 U.S. at 580, their facial

vagueness challenge lacks merit.

4, The national party soft money ban is fully
consistent with the Tenth Amendment and prin-
ciples of federalism.

Plaintiffs allege that the national soft money ban violates the Tenth Amendment and
principles of federalism by prohibiting the national parties from raising or spending soft money in
support of state or local elections. See McConnell Second Amend. Compl. | 101; RNC Compl.
1132-41. But Congress properly recognized that fundraising by national party committees presents
a serious threat to the integrity of the federal political system, even where the fundraising is not
ostensibly aimed at providing direct support for the election of a federal candidate. As
Representative Shays explained, “[b]ecause the national parties operate at the national level, and are
inextricably intertwined with federal officeholders and candidates, who raise the money for the
national party committees, there is a close connection between the funding of the national parties
and the corrupting dangers of soft money on the federal political process. The only effective way
to address this problem of corruption is to ban entirely all raising and spending of soft money by the
national parties.” 148 Cong. Rec. H408-09 (Feb. 13, 2002) (Rep. Shays). As discussed in detail
above, unregulated donations to the parties, like contributions to candidates, have the potential to

create obligated federal officeholders. See Supra at pt. 1.B.2.b. Similarly, solicitations on behalf of

96


hardship where the provisions “do not command anyone to do anything or to refrain from doing

anything”); cf. also American Trucking Ass’n v. ICC, 747 F.2d 787, 790 (D.C. Cir. 1984) (sua

sponte finding agency policy statement not ripe for judicial consideration where the statement
was ambiguous and “neither imposes any obligation upon these petitioners, nor in any other
respect has any impact upon them ‘felt immediately . . . in conducting their day-to-day affairs’”

(quoting Toilet Goods Ass’n v. Gardner, 387 U.S. 158, 164 (1967))). Until those regulatory

revisions are completed, neither the Court nor plaintiffs can know how the revised regulations
will affect plaintiffs or have any basis for evaluating whether those regulations will contravene
constitutional principles.2&

Similarly, plaintiffs lack Article II standing to challenge § 214(c). Plaintiffs have not

alleged any conerete and particularized injury from § 214(c)’s instructions to the Commission to

promulgate a new regulation. See Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992).

They have also failed to show a causal connection between any alleged injury and § 214(c). Id.

The provision by itself causes plaintiffs no legally cognizable harm. Cf. Metcalf v. National

Petroleum Council, 553 F.2d 176, 186-87 (D.C. Cir. 1977) (consumers asserting that statutorily

required composition of federal advisory committee would lead to higher costs for petroleum
products lacked standing because the occurrence of the harm was “speculative and conjectural”),
If, after the Commission promulgates the new regulations, plaintiffs have concerns about the
regulations’ applicability to specific activities they wish to undertake, they may use the
Commission’s “chill-reducing advisory opinion mechanism[,] . . . a relatively riskless

controversy-ripening tool,” set forth in 2 U.S.C. 437f. Martin Tractor, 627 F.2d at 388. If

26, ii
“© Indeed, cven the terms in the statute on which plaintiffs purport to base their claim, “agreement or formal
collaboration,” were not defined by Congress and are subject to interpretation in the Commission's rulemaking.

184


In reaching these conclusions, the Court relied on FECA’s legislative history for
“guidance” on how to differentiate expenditures that are contributions from expenditures that are
not. See id. at 46 n.53. The Court noted that the House report on the 1974 amendments to

FECA “speaks of independent expenditures as costs ‘incurred without the request or consent of a

candidate or his agent.’” Id, (citing H.R. Rep. No. 93-1239, at 6 (1974) (emphasis added)). It
quoted approvingly from the Senate report that discussed the example of an individual’s pur-
chasing billboard advertisements to endorse a candidate: “‘If he does so completely on his own,

and not at the request or suggestion of the candidate or his agent[ ] that would constitute an

“independent expenditure” .... However, if the advertisement was placed in cooperation with

the candidate’s campaign organization, then the amount would constitute a gift by the supporter

.."” Buckley, 424 U.S. at 46 n.53 (quoting S. Rep. No. 93-689, at 18 (1974)) (emphases add-

ed); see also id, at 36-37 & n.43.

Thus, unlike plaintiffs here, the Court in Buckley adopted a practical rather than a
restrictive, formalistic approach. Instead of treating an agreement or formal collaboration as the
sine qua non of an expenditure that the government could regulate consistent with the
Constitution, the Court in Buckley focused on the circumstances leading to an expenditure. In
particular, the Court agreed with Congress that an expenditure made at the request or suggestion
of a candidate is, in practical effect, the equivalent of a contribution; like a contribution, it can
create an opportunity for corruption or the appearance of corruption.

The Court exhibited the same sensitivity to factual circumstances in Colorado I, where,
for the first time in an enforcement action, the Court considered whether particular expenditures

by a spender were “independent” or “coordinated.” Before the Colorado Republican Party had

187


1. The Supreme Court’s decision in Buckley v. Valeo
forecloses plaintiffs’ First Amendment challenge
to the national party soft money ban.

Plaintiffs’ First Amendment challenge to the ban on national party soft money is fatally
undermined by the Supreme Court’s decision in Buckley. Under BCRA, “soft money” contributions
to national parties are eliminated, leaving an individual with the ability to contribute up to $25,000
annually to such a party. As noted above, the Court in Buckley has already upheld FECA’s $25,000
ceiling on the aggregate amount of contributions an individual could make during any calendar year.
See 424 U.S. at 38. That aspect of Buckley was apparently premised on the Court’s understanding
that virtually all donations of value to 4 national political party were “contributions” within the
meaning of FECA, and therefore subject to the $25,000 timit=’ The Court reasoned that this “quite
modest restraint” on political activity served to prevent circumvention of the statute’s $1,000
limitation on individual contributions to a Particular candidate “by a person who might otherwise
contribute massive amounts of money to a particular candidate through the use of unearmarked
contributions to political committees likely to contribute to that candidate, or huge contributions to
the candidate's political party.” 424 U.S. at 38 (emphasis added). Thus, the limitation on aggregate
contribution amounts was “no more than a corollary of the basic individual contribution limitation

that we have found to be constitutionally valid.” Id.

~ A footnote in Buckley suggests that the Court assumed that FECA would apply to all money raised by
political parties. See Buckley, 424 U.S. at 23 n.24. In concluding that it was unnecessary to narrow the meaning of the
phrase “Yor the purpose of influencing an election for Federal office” in the context of FECA's definiion of
“contribution,” the Court stated that “[iJhe use of the phrase presents fewer problems in connection with the definition
ofa contribution [than in other contexts} because of the limiting connotation created by the general understanding of
what constitutes a political contribution. Funds provided to a candidate of political party or campaign committee either
directly or indirectly . .. constitute a contribution. In addition, dollars given to another person or organization that are
earmarked for political purposes are contributions under the Act.” 424 U.S. at 23 1.24 (emphasis added); see also id.
at 78 (similar definition of “contribution” as including, inter alia, “contributions made directly or indirectly to a
candidate, political party, or campaign committee”) (emphasis added).

64


interest” and employed “means closely drawn to avoid unnecessary abridgment of associational
freedoms.” Buckley, 424 U.S. at 25, While that test was established to evaluate First Amendment
challenges based on the freedom of association, the Supreme Court has concluded that “a
contribution limitation surviving a claim of associational abridgment would survive a speech

challenge as well,” inasmuch as contribution limits bear “more heavily on the associational right

than on freedom to speak.” Shrink Missouri, 528 U.S. at 388. Accord Colorado II, 533 U.S. at 456.

The Court has established no “constitutional minimum” below which legisiatures may not regulate.

Shrink Missouri, $28 U.S. at 397, Rather, a contribution limitation will be upheld unless it is “so

radical in effect as to render political association ineffective, drive the sound of a candidate’s voice
below the level of notice, and render contributions pointless.” Id,

The Supreme Court has also deferred to Congress “as to the need for prophylactic measures
where corruption is the evil feared,” NRWG, 459 U.S. at 210, and has repeatedly sustained
provisions enacted to prevent evasion of the limits on campaign contributions upheld in Buckley.
Thus, in Buckley itself, the Court upheld a $25,000 limitation on total contributions by an individual
in any calendar year because the restriction “serve[d] to prevent evasion of the $1,000 contribution
limitation by a person who might otherwise contribute massive amounts of money to a particular
candidate through the use of unearmarked contributions to political committees likely to contribute

to that candidate, or huge contributions to the candidate’s political party.” 424 U.S. at 38.

Similarly, in California Medical Association v. FEC, supra, FECA’s $5,000 limit on contributions
to mullicandidate political committecs was sustained as a means of preventing the circumvention
of the contribution limitations upheld in Buckley, which otherwise “could be easily evaded.” Id.

at 198 (plurality); see also id. at 203 (Blackmun, J., concurring).

60



The Origin of “Soft Money”

When the Supreme Court upheld FECA’s contribution limitations in Buckley, it assumed
that the definition of “contribution” categorically included any “[flunds provided to a candidate or
political party or campaign committee either directly or indirectly through an intermediary” (in
addition to “dollars given to another person or organization that are earmarked for political

Purposes”). 424 U.S. at 24 n.24 {emphasis added); sce also id. at 78 (similar definition of

“contribution” as including, inter alia, “contributions made directly or indirectly to a candidate,
political party, or campaign committee”). FECA’s definitions of “contribution” and “expenditure”
were, and remain, both limited to the donation or use of money or anything of value “for the purpose
of influencing an election for Federal office.” 2 U.S.C. 431(8)(A)(D, (9AM. Because the statute
did not specify the particulars of how such lines were to be drawn, the issue was left to the FEC.
The FEC first addressed this question in advisory opinions, and then issued formal regula-
tions in 1977. In Advisory Opinion 1975-21 the FEC considered a local party committee that had
established separate accounts for funds raised in compliance with FECA’s source and amount limita-
tions (known today as “federal funds” or “hard money”) and for corporate contributions permitted
under state law but prohibited by FECA § 441b for use in connection with federal elections, The
FEC concluded that the local party had to pay “an allocable portion Of [its] administrative expenses”
from its hard money account, and, because a “voter registration drive has a relation to Federal elec-
tions as well as State and local,” expenditures for that purpose also had to be allocated on the same
basis as administrative expenses. Fed. Elec. Camp. Fin, Guide (CCH) ¥ 5135, at 10,068. In
Advisory Opinion 1976-72, however, the FEC concluded that FECA § 441b and proposed

regulations under that provision would preclude a state party committee from using funds received

22


gold bill, supra, strictly limited the reach of the legislation to TV and radio advertisements that men-
tion a candidate within 60 days of a general election, or 30 days of a primary, so as specifically to
avoid the pitfalls of vagueness identified in Buckley“ Snowe-Jeffords was adopted as an amend-
ment both to the McCain-Feingold bill, 144 Cong. Rec. $1000, and later to the companion legis-
lation known in the House as Shays-Meehan. See 147 Cong. Rec. H3801, H3802 (June 28, 2001).

Congress continued to debate the wisdom, necessity and constitutionality of campaign
finance reform legislation, and the scope of its various provisions, in some detail for the next four
years. The Snowe-Jeffords provisions were the subject of extensive debate. Citing studies by the
Annenberg Public Policy Center at the University of Pennsylvania showing the growing use of so-
called “issue ads” by corporations, unions and other interest groups to promote or oppose the
election of federal candidates while simultaneously evading regulation under FECA,’ the
legislation’s sponsors maintained that the Snowe-Jeffords provisions represented necessary
corrective legislation to “give the public the facts they need to better evaluate the candidates [and]
the information they are receiving,” 144 Cong, Rec. $918, and to “reinforce the traditional rules
limiting the role of unions and corporations in elections.” Id. at 914.4%

In answer to assertions by McCain-Feingold’s opponents that Buckley had flatly prohibited
all regulation of independent political communications containing express advocacy, the legis-

lation’s supporters explained that Snowe-Jeffords had been carefully constructed to pass constitu-

# a4 Cong. Rec. 8912-13: see also 144 Cong. Rec. 8972, S974 (Feb. 25, 1998} (“We are replacing the issue
advocacy provisions of the McCain-Feingold legislation . . . that could raise constitutional questions."),

~~ See 144 Cong, Rec. 8875, S885, S913-14; 144 Cong. Rec. $972; 145 Cong. Ree. H8178, £8197 (Sep. 14,
1999): 147 Cong. Rec, $2433, $2455 (March 19, 2001).

© Sec also 144 Cong. Rec. $871,$895; 144 Cong. Rec. $993; 145 Cong. Rec. H8181, 8197, 147 Cong. Rec.
82421, 82456-57 (Mar, 19, 2001); 147 Cong. Rec, $3072 (Mar, 29, 2001).

2 aq Cong. Rec, 869-70, 873-75, 915-16; 144 Cong. Rec. $980-82; 144 Cong. Rec. H3722, 3732 (May 21,

1998): 145 Cong. Rec. 8188: 145 Cong. Rec. $12799, $12830-31 (Oct. 19, 1999).

31



communication” to the list of expenditures under § 441b(b)(2) that are prohibited to corporations
and labor unions under the terms of subsection (a).2¥ By the same token, however, the prohibition
as applied to electioneering communications is subject to the same longtime exception, under
§ 441b(2)(C) and (b)(4), that allows corporations and labor unions to make expenditures for such
political purposes from separated segregated accounts containing funds donated by individual
shareholders, members, and executive or administrative personnel

Title II of BCRA also deals with the subject of coordination. Section 213 of BCRA amends
FECA § 441a(d), regarding coordinated expenditures between candidates and their parties. Under
§ 441a(d)(1)-(3), political party committees are permitted to make coordinated expenditures on
behalf of each of their candidates far exceeding the level of coordinated expenditures, $5,000, that
other political committees are permitted to make with Tespect to a given candidate. 2 U.S.C.
441a(a)(2)(A), (7)(B)G). Section 213 of BCRA amends § 441a by adding a new subsection (d)(4),
which provides that, once a political party nominates a candidate, the party may choose during that
election cycle either: (1) to forgo independent expenditures and make coordinated expenditures with
respect to that candidate under the more generous terms of subsection (d)(1)-(3); or (2) to make
unlimited independent expenditures with respect to that candidate, as defined by FECA § 43117),

see Colorado I, 518 U.S. at 618, but accept the $5,000 limit on contributions and coordinated

®) ‘An “applicable” electioncering communication is defined by a further amendment to § 441b as one “made
by any entity described in subsection (a) of this section [i.e., a corporation or labor union] or by any other person using
funds donated by an entity described in subsection (a) of this section” [same]. BCRA, & 203(b), adding 2
USC. 4416(c)(1).

*© Specifically, FECA § 441 b(b}(2)(C) permits unions and corporations to use treasury fands to establish and
administer “separate segregated fund(s] to be utilized for political Purposes” (id.). Such a fund, which is a political
committee under the Act (and commonly called a “PAC”), 2 U.S.C. 431(4)(B), can solicit and teceive voluntary
contributions from corporate employees and stockholders, from union members, from members of a membership
corporation, and from their families. 2 U.$.C. 44] b(b}(4)(A)-(C). These funds can be contributed to federal candidates
or used to pay for independent expenditures or electioneering communications Corporations and unions may also use
treasury funds to finance communications with their stockholders, executive and administrative personnel, and their
“members,” on any subject. 2 U.S.C. 431(9)(BMiii), 4416(b)(2).

55



Moreover, the Mellman & Wirthlin poll is consistent with the findings of Columbia
University Professor Robert Y. Shapiro —a leading academic survey methodologist ~ who reviewed
all existing public opinion data touching upon campaign finance practices since 1990 (except for
trend data which goes back to the 1940s). Based on his systematic analysis of the available data,
Professor Shapiro concluded “unequivocally” that the current campaign finance system’s allowance
of large soft money contributions by wealthy individuals, interest groups, corporations, and labor
unions creates an appearance of corruption. Robert Y. Shapiro, Public Opinion & Campaign

Finance (Sep. 18, 2002) at 2, 13-14 [DEV 2-Tab 6, hereinafter Shapiro Expert Rep.]. By banning

soft money, BCRA addresses a significant contributing factor to the appearance of corruption.

d. The national party soft money ban reduces the
appearance and reality of corruption that result from
pressuring donors to make large campaign contributions.

In addition to the potential for officeholders to feel obligated to soft money donors, Congress
was concerned about the unseemly pressure placed on donors by powerful federal officeholders and
party officials soliciting large contributions. Not only are solicitations made personally by Members
of Congress, see supra at 34-35, 71-74, the solicitations are numerous.’ As Senator Feingold
observed, “the fact that we in the Congress are doing the asking is what gives this system an air of
extortion, as well as bribery.” 147 Cong. Rec. $2446 (Mar. 19, 2001) (Sen. Feingold), Senator
Feingold cited an op-ed piece by Senator Zell Miller describing his telephone calls to potential

donors: “*[mJost large contributors understand only two things: what you can do for them and what

Rozen Decl. 19 6-7 [DEV 8-Tab 33] (once donor begins giving soft money, expectations are raised for “increasingly
larger” donations)

84



Banning soft money without addressing issue advocacy will simply redirect the flow
of undisclosed money in campaigns. Instead of giving soft money to political
parties, the same dollars will be turned into “independent” ads. The issues of soft
money and independent advertisements go hand in hand and one can not be
addressed without the other.
145 Cong. Rec. $12661-62 (Oct. 15, 1999) (remarks of Sen. Feinstein); see also 145 Cong. Rec.
$12617 (Oct. 14, 1999). Given the evidence canvassed above, it would be naive to think that party
officials and officeholders would be ignorant of, or not feel a sense of obligation to, those

individuals and organizations that funnel large donations through sympathetic interest groups to pay

for election ads.

8 Th sum, BCRA’s regulation of electioneering communications furthers the
compelling governmental interest in preventing corruption of elected officials, not only on its own
terms, but also by helping to ensure that the new limits on soft money will not be easily evaded.

4. BCRA serves compelling governmental interests by
preventing corporations and labor unions from using

their treasuries as “war chests” to finance electioneering
ads.

In the final analysis, the scope of political corruption and distortion arising from large-scale

expenditures by labor unions and corporations on electioneering qua issue advocacy “can never be

286 The evidence shows that candidates and parties have recommended to their supporters that they make

donations to friendly interest groups to help finance issue ads on their behalf. Kirsch Decl. 4919-10 [DEV 7-Tab 23] (the
“national Democratic party . .. recommended that I donate to certain groups that were running effective ads in the effort
to cleet Vice-President Gore, such as NARAL"); Bumpers Decl | 27 (“Members or partics sometimes suggest that
corporations or individuals make donations to interest groups that run ‘issue ads,’”); CFG000208-09 (solicitation letter);

The inducement of candidates, parties and their supporters to direct
large donations to issue advocacy groups, as a means of circumventing BCRA’s new strictures against soft moncy,

“would almost certainly intensify” in the absence of effective regulation of electioneering communications, See
Colorado I], 533 U.S. at 460.

146


a candidate’s stance on gun control. Beckett Decl. {13 [DEV 6-Tab 3]; Chapin Deel. 4 13 [Tab 12].

see also App. A to Defs.’ Mem., Tab 6, Nos. 3-6 (audio).

see also App. A to Det’s.’ Mem., Tab 1, No. 4 (“Yankee Baby” video). The lack of any
nexus between these ads and the legislative agendas of their sponsors shows that they were designed
instead to advance an election agenda.

Additional facts about the timing, placement, and content of electioneering ads eliminate any
possible doubt that their purpose is to influence federal elections. The Buying Time studies that
Congress considered prior to BCRA’s enactment, examined all political ads televised by network
affiliates and national cable networks in the top 75 media markets, encompassing 80 percent of
American households. Under the supervision of Professor Kenneth Goldstein of the University
of Wisconsin, teams of students reviewed each ad in the 1998 and 2000 databases, capturing a

varicty of data such as whether a candidate was identified in the ad, whether “magic words” were

102

See 148 Cong. Ree. $21 16-18, $2136, 82141 (Mar. 20, 2002); 148 Cong. Rec. $1996 (Mar. 18, 2002); 147
Cong, Rec, $3249-55 (Apr. 2, 2001}, 147 Cong, Rec. $31 12-13 (Mar, 29, 2001); 147 Cong. Rec, $3036, 3042 (Mar. 28,
2001); 147 Cong, Rec. $2847 (Mar. 26, 2001); 147 Cong. Rec. $2457 (Mar. 19, 2001); 146 Cong. Rec. 86046 (Jun, 29,
2000).

°2 See Craig B. Holman & Luke P. McLoughlin, Buying Time 2000 [DEV 46]; Jonathan S. Krasno & Daniel
E. Soltz, Buying Time (“Buying Time 1998”) [DEV 47]. Both studies were based on dala supplied by the Campaign
Media Analysis Group (“CMAG”)}, which monitors local television advertising in the country’s top 75 media markets.
The CMAG system differentiates between programming and advertising, and when it detects a commercial advertisement
it downloads the ad, creating a “storyboard” including the complete text of the audio track and snapshots of every fourth
second of the video. Thereafter, the CMAG system automatically recognizes each particular commercial when it is re-
broadcast, and maintains a log of when and where it airs, In 1998, the CMAG database included 2,100 political
advertisements aired over 300,000 times by candidates, parties, and interest groups. The year 2000 database included
almost 3,000 unique ads aired on approximately 840,000 occasions. Buying Time 1998 at 7; Buying Time 2000 at 18-
19; see also Goldstein Expert Rep. at 5-6, 8 & n. 4: Krasno & Sorauf Expert Rep. at $3.

139


ance of corruption resulting from large individual financial! contributions.” Buckley v. Valeo, 424
US. 1, 26 (1976).

The FECA Amendments of 1974 imposed dollar limitations on contributions by individuals
and political committees to candidates for federal office, to political party committees, and to
independent political committees.” 2 U.S.C. 44la(a). The Act defines “contribution” to include
“any gift... of... anything of value made by any person for the purpose of influencing any election
for Federal office.” 2 U.S.C, 431(8). The 1974 Amendments also imposed limits on the amounts
that individuals, candidates, political committees, and political parties could spend to help federal
candidates win elections. The Amendments also included a variety of recordkeeping and disclosure
Tequirements aimed at informing the electorate, deterring corruption, and detecting violations of the
contribution limits. See 2 U.S.C. 432-434. The Amendments further created the Federal Election
Commission, which was empowered to monitor and enforce the campaign finance laws. See
generally 2 U.S.C. 437c(b\(1), 437d(a), 437g.

Buckley v. Valeo

The constitutionality of the 1974 Amendments to FECA was challenged in short order. In
its landmark decision Buckley v. Valeo, 424 US. | (1976), the Supreme Court recognized that
limitations on campaign contributions and expenditures operate “in an area of the most fundamental
First Amendment activities,” but concluded that “a limitation upon the amount that any one person
Or group may contribute to a candidate or political committee entails only a marginal restriction
upon the contributor’s ability to engage in free communication.” Id. at 14, 20. The Court reasoned
ee

* Under 2 U.S.C. 441a(a), an individual could contribute $20,000 to a national political party and $5,000 to
any multicandidate political committee in any calendar year, and $1,000 to any single candidate per election, with an
pverall annual limitation of $25,000 on any contributor. (A multicandidate political committee generally is a political

committee, other than a political party, that has made contributions to five or more candidates and has received
Contributions from more than fifty persons. 2 U.S.C. 441(a)(4),) Prior to BCRA, these limits remained constant.

17



percent of the group ads that coders viewed as genuine issue ads ran outside that period. Id. In other
words, as stated in Buying Time 2000, while groups do pay to air genuine issue ads, they “are rather
evenly distributed throughout the year,” while their “electioneering ads make a sudden and

overwhelming appearance immediately before elections . . ..” Id. at 56; see also Krasno & Sorauf

Expert Rep. at 57 & App. Tbl. 6; David B. Magleby, Report Concerning Interest_Group

Electioneering Advocacy and Party Soft Mone Activity (Sep. 23, 2002) at 33 [DEV 4-Tab 8,

hereinafter Magleby Expert Rep.] (“In 2000, 58% of the interest group electioneering advocacy
came in the last two weeks of the election.”); cf. Annenberg 2000 Study at 14 (finding that 94% of
“issue ads” aired on or afier September 1, 2000 “made a case for against a candidate”)
Electioneering advertisements are not only heavily concentrated in the few weeks before
federal elections, but, like the AFL-CIO’s and the Coalition’s advertisements in 1996, they are also
heavily concentrated in the few jurisdictions with the most competitive election contests, where a
small change in public opinion could tip an election one way or the other. This repeated
convergence of “issue ads” on a handful of closely contested races sheds further light on the
electoral motives of the organizations that pay for them. In the last 60 days before the 2000 election,
85-90 percent of group ads referring to candidates for the House or the Senate aired in competitive
districts or states. Goldstein Expert Rep. at 20-21. In the last 60 days before the 1998 election, all
group ads referring to Senate candidates ran in five races, four of which were rated “toss ups”; all

group ads referring to House candidates ran in {2 races, eight of which were rated “toss ups.”

+ There are significant practical disadvantages to running genuine issue ads during the height of an election

campaign, not only because the cost of advertising time rises as the election nears, but also “because an individual
interest group's message on a public policy issue is likely to become lost” in the “flood of advertising ... during the last
two months befare an election.” Goldstein Expert Rep. at 32;

Bailey Decl.

12 [DEV 6-Tab 2);

Therefore, in the absence of an electoral purpose, interest groups can be

expected to avoid large-scale issue advertising at the height of an clection campaign.

141


that may use such funds to influence federal elections, and by prohibiting federal candidates and
officeholders from soliciting, receiving, directing, transferring, or spending any soft money in
connection witha federal election. As explained below, each of these several interrelated provisions
readily passes constitutional muster.

A Congress Has Broad Latitude to Ensure That Federal Restrictions on
the Sources and Amounts of Campaign Contributions Are Not Evaded.

“The constitutional power of Congress to regulate federal elections is well established ....”
Buckley, 424 U.S. at 13. Article I, § 4 of the Constitution grants Congress the power to regulate
congressional elections, and the Supreme Court has recognized “broad congressional power to
legislate in connection with the elections of the President and Vice President.” Buckley, 424 U.S.
at 14n.16. BCRA’s soft money provisions ensure compliance with longstanding federal restrictions
on the sources and amounts of campaign contributions that the Supreme Court has already upheld
against constitutional challenge. As explained above, Congress has long prohibited corporations
and labor organizations from making contributions to candidates and political committees. See

NRWC, 459 U.S. at 208-09; Mariani v. United States, 212 F.3d 761, 770 (3d Cir. 2000) (en banc).

The Supreme Court has also repeatedly upheld federal limits on the amounts of money that
individuals and other organizations may contribute to candidates, political parties, and other political
committees, finding that the limitation of “the actuality and appearance of corruption resulting from
large individual financial contributions” provided a “constitutionally sufficient Justification” not
only for FECA’s $1,000 limit on individual contributions to a particular candidate, 424 U.S. at 26,
but also other, much lower limits, see Shrink Missouri, $28 U.S. at 390. See Supra 18-21,

In upholding the constitutionality of these limitations on campaign contributions, the

Supreme Court has considered whether the government demonstrated “a sufficiently important

59



radio advertisements about candidates — broadcast in the days and weeks immediately preceding
Election Day, and geographically targeted to the constituents who will decide the candidates’
political futures - which by these and all other appearances, and the frequent admissions of the
organizations that pay for them, are meant to affect voters’ choices at the polls. Yet these expendi-
tures escape regulation under FECA because the ads’ sponsors simply omit words of express advo-
cacy, which are largely historical artifacts of American political campaigns that are rarely used as
means of political persuasion even by candidates themselves.

Untrammeled spending by corporations and labor unions for these thinly veiled campaign
commercials has re-opened the political process to the “distorting effects of immense aggregations
of wealth,” Austin, 494 U.S. at 660, and the potentially corrupting influence of large-scale corporate

and union spending on the elected officials who are aided thereby. NRWC, 459 U.S. at 209-10.

Elected officials are well aware and keep track of who runs “issue” ads on their behaif, and they are
naturally grateful to the unions and corporations that provide such assistance to their campaigns.
Indeed, corporations and labor unions run “issue” ads for or against federal candidates with an
expectation that investing hundreds of thousands if not millions of dollars in this fashion will pay
off when it comes to legislation that concerns them. They do not hesitate to remind legislators of
the assistance their advertising provided in helping these officials get elected.

The routine and effortless manner in which unions, corporations, and other groups and
individuals now bypass regulation under FECA has also thwarted the purposes of FECA’s disclosure
requirements. As the Supreme Court recognized in Buckley, disclosure requirements serve impor-
tant governmental interests: they assist voters in evaluating candidates for elected office by inform-

ing the electorate about the sources of candidates’ political support; they deter corruption by expos-



the same $5,000 contribution limit that applies to coordinated expenditures of all other multicandi-
date political committees.

Plaintiffs maintain that § 213 violates the First Amendment and the due process and equal
protection components of the Fifth Amendment. These claims lack merit. Section 213 gives
political parties the opportunity, available to no one else, to choose between (1) making coordinated
expenditures in amounts much greater than FECA ordinarily permits, and (2) making expenditures,
including independent expenditures, under the rules generally applicable to multicandidate
committees. Accordingly, § 213 is fully consistent with the First and Fifth Amendments.

When Congress enacted the predecessor of § 441a(d) in 1974, it did not intend to allow poli-
tical parties to support their candidates by making both significantly higher coordinated expenditures
and unlimited independent expenditures, since at that time it was generally believed that national
political parties could not make independent expenditures. See S, Rep. No. 689, 93d Cong., 2d Sess.
7, 15, 18-19 (1974); HLR, Rep. No.1438, 93d Cong., 2d Sess., 54, 56 (1974). Congress reaffirmed
that view when it reenacted § 44ta(d) after the Buckley decision generally invalidated limits on
independent expenditures. H.R. Conf. Rep. No. 1057, 94th Cong,, 2d Sess. 59 (I 976); see also FEC
yv. DSCC, 454 U.S. 27, 28 n.1 (1981) (noting FEC’s position that “[p]arty committees are considered
incapable of making ‘independent’ expenditures in connection with the campaigns of their party’s
candidates”).

Twenty years later, however, the Supreme Court, in Colorado I, held that political parties
could make independent expenditures and that, as for other entities, those expenditures could not

be limited. The Court’s plurality opinion stated that, for purposes of coordinated and independent

178


The problem has persisted despite the statutory prohibition against contributions made “in
the name of another person” (2 U.S.C. 4418) and a Commission tegulation that specifies the
conditions under which a contribution may be attributed to a child under the age of eighteen, The
regulation requires that the child “knowingly and voluntarily” make the decision to contribute,
TL CF.R. 110.1((2)G) (2002 rev. ed.). In addition, the child must have exclusive ownership or
control of the funds or goods contributed, and those items cannot have been given to the child for
use in making political contributions. 11 CER. 110.10(2)(i0), (iii),

Because FECA does not require political committees to seek or report the age of
contributors, the reports filed with the Commission do not reveal the number of contributions by
children. However, for each contribution over $200, FECA does require recipient committees to
attempt to learn the occupation of the contributor, see 2 U.S.C. 431(13), 432(c)(3), 434(b)(3)(A),
and “student” is the most likely occupational category for young contributors In the 1999-2000
election cycle, “students” made 3,133 contributions of $200 or more, with an aggregate value of
$3,049,945. See Biersack Decl. Tbl, 20 [DEV 6-Tab 6). Of these, 2,995, or 96%, with an aggregate

value of $2,857,961, were to candidate and party committees. Id, 4U

#2 The occupational category of “student” is both under- and over-inclusive with respect to minors who make

potiticat contributions. On the one hand, some parents attribute to their child who allegedly made a contribution an
occupation other than “student.” Moreover, where no occupation is listed on a contribution form, the treasurer of a
political commitice need only use his or her “best efforts” to obtain contributor information, so the occupation of many
contributors ts never reported, 2 U.S.C. 432(i); RNC v. FEC, 76 F.3d 400, 403 (D.C. Cir. 1996}. On the other hand, the
category of “student” obviously encompasses individuals older than seventeen years of age.

“4b Except fora dip during the 1997-98 election cycle, the number of “student” contributions during the 1990s
rose with each successive cycle. See Biersack Decl, Tbl, 20

202


reason.) (citations omitted), petition for cert. filed, 71 U.S.L.W. 3190 (Sep. 12, 2002) (No. 02-

0403). MCFL merely carves out an as-applied exemption to restrictions on corporate election

activity; it does not supply the basis for a facial attack.

The MCFL exemption applies to electioneering communications under BCRA to the same
extent as it applies to independent expenditures under FECA !® Indeed, while the MCFL
exemption is not codified in statute, it is codified in regulations promulgated under BCRA,
paralleling similar regulations promulgated under FECA. See Final Rule, Electioneering
Communications, 67 Fed. Reg. at 65,211-12 (to be codified at 11 C.F.R. 114.10); see also 67 Fed,
Reg. 65,205-06. These regulations make it easy for qualified nonprofit corporations running
electioneering communications to invoke the MCFL exemption by simply certifying to the FEC that
they meet the relevant criteria, See id. § 114,10(e)(1)(ii). Hence, there is no basis for concluding
that BCRA is facially unconstitutional merely because it does not explicitly recite the MCFL
exemption in its text.

G. The Media Exception in BCRA’s Definition of Electioneering
Communications Does Not Violate Principles of Equal Protection,

Plaintiffs next take issue with BCRA’s so-called “media exception.” See, e.g., McConnell
Second Amend. Compl., 51; NRA Compl., § 83; AFL-CIO Compl., 4.11. Under BCRA, new
FECA § 434(£)(3)(B)(i) excludes from the definition of an electioneering communication a
“communication appearing in a news story, commentary, or editorial distributed through the

facilities of any broadcasting station, unless such facilities are owned or controlled by any political

US As Senator McCain made clear during congressional debate: “BCRA does not purport in any way, shape,

or form to overrule or change the Supreme Court's construction of [FECA] in MCFL. Just as an MCFL-type
corporation, under the Supreme Court's ruling, is exempt from the current prohibition on the use of corporate funds for
expenditures containing “express advocacy,” so too is an MCFL-type corporation exempt from the prohibition in the
Snowe-Jeffords amendment on the use of its treasury funds to pay for ‘electioneering communications.’ Nothing in this
bill purports to change MCFL.” 148 Cong. Rec. $2141 (Mar. 20, 2002)

167


makers” and various perks, including “‘overnights’ at the White House,” and “Presidential coffees
at the White House (even in the Oval Office).” Thompson Comm. Rep. at 41. The Committee
minority agreed, observing that the Practice of providing major contributors with “added access to
decisionmakers in the legislative and executive branches of government” is “[o]ne of the most
troubling aspects of the campaign finance system.” Id, at 4573; see also id. at 7968-78 (Minority
Views),

The widely publicized “White House coffees” provided a prime example of how large soft
money contributions to the Democratic Party translated into meetings with the President in the
White House. Id. at 41. The Thompson Committee found that between January 1995 and August
1996, the White House hosted 103 coffees, of which the “vast majority” were attended by the
President. Id. About 60 of the coffees were sponsored by the DNC, and 92 percent of the attendees
of these coffees were “major Democratic Party contributors.” 1d £

The Thompson Committee also concluded that “a number ofalarmingly unsavory characters
gained access to the President in return for campaign contributions.” 1d. at 41. These included,
most famously, Roger Tamraz and Johnny Chung. Mr. Tamraz, an international businessman who
was wanted by French police and subject to an Interpol arrest warrant for embezzlement in Lebanon,
who seeking U.S. backing for an oil pipeline project in the Caucasus. Id. at 43. When officials at
the National Security Council declined to support the project as harmful to U.S. interests, Tamraz
contributed $300,000 to various Democratic Party committees in order to get senior party officials
to provide him with access to senior U.S. officials that he had previously been denied. Id, at 43,

*® The Committee found that these guests made contributions totaling $26.4 million during the 1996 election
cycle, which represents “an average contribution of over $54,000 per person, with one-third of thelr teal donations, same

$7.7 million, given within a month of the donor’s attendance at a White House coffee. For example, the five persons
attending a coffee on May 1, 1996, in the Oval Office itself each contributed $100,000 to the DNC ome week later.” Id.

76


the differences between Dole and Clinton and between Republicans and Democrats on the issues
facing our country, so we can engage full-time in one of the most consequential elections in our
history.” Mann Expert Rep. at 20; 147 Cong. Rec. $3254 (April 2, 2001) (Ex. | to statement of
Sen. Levin). The RNC’s presidential candidate-specific ads, like the DNC’s, were targeted to key
battleground states for the presidential election and financed with a mix of hard and soft money”
Mann Expert Rep, at 19-20; Thompson Comm. Rep. (Minority Views) at 8299, 8366. The parties
also began using the same strategy to support congressional candidates, spending a mix of hard and
soft money on “issue advocacy” to support their campaigns. Mann Expert Rep. at 20; Lamson Decl.
{| 9 [DEV 7-Tab 26] (describing “issue ad” campaign in Montana).

By the end of the 1996 election, the national parties’ total soft money spending reached $272
million, more than triple their soft money spending in the 1992 election. Soft money spending now
constituted 30% of the national party committees’ total spending. Mann Expert Rep. at 21 & Tol.
2. The national party committees used the state party committees as vehicles for implementing their
newly developed issue advocacy strategy and transferred $115 million in soft money to state party
committees, where more favorable FEC allocation ratios permitted a larger percentage of soft money

to be used. Mann Expert Rep. at 22; Krasno & Sorauf Expert Rep. at 10-11, 34.

+ One of the “issue ads” run by the RNC was called “The Story”:

(Audio of Bab Dole:) We have a moral obligation to give our children an America with the
pportunily and values of the nation we grew up in. (Voice Over:) Bob Dole grew up in Russell,
Kansas, From his parents he learned the value of hard work, honesty and tesponsibility. So when hig
country called . .. he answered. IIe was seriously wounded ia combat. Paralyzed, he underwent nine
operations. (Audio of Bob Dole:} I went around looking for a miracle that would make me whole
again, (Voice Over:) The doctors said he'd never walk again. But after 39 months, he proved them
Wrong. (Audio of Elizabeth Dole:) He persevered, he never gave up. He fought his way back from
toral paralysis. (Voice Over:) Like many Americans, his life experience and values serve ae a strong
moral compass, The principle of work to replace welfare. The principle ofaccountability to strengthen
our eriminal justice system. The principle of discipline to end wasteful Washington spending, (Voice
of Bob Dole:) It all comes down to values, What you believe in. What you sacrifice for. And what
you stand for.

Thompson Comm. Rep. at 4014; See Selected Party Soft Money Ads, App. A to Defs." Mem., Tab 3, No. | {video).

31



power” once a candidate is elected to public office. Id, at 7. For example, the parties “organize the
legislative caucuses that make committee assignments,” choose committee chairs, and elect
legislative leadership. Id, at 7-8. Moreover, the success of the party in many respects accrues to the
benefit of the officeholders who belong to that party. For example, the majority party enjoys
“special procedural prerogatives and staffing resources” in the House and Senate committees and
subcommittees. Id. Remaining in the party’s good graces is thus critical for a candidate or
officeholder,

As the Supreme Court has tecognized, a candidate has an incentive to raise funds for his

party “to increase personal power anda claim to party leadership.” See Colorado II, 533 U.S. at 460

n.23. By engaging in fundraising activities, federal officeholders lengthen “the list of public and
party officials who owe them favors.” D. Green Expert Rep. at 9. “The ubiquitous role that parties
play in the lives of federal officials means that no official can ignore the fundraising ambitions of
his or her party.” Id. at 15. This is reflected in the fundraising Pressure that the national party

committees impose on federal officeholders,

The DSCC
maintains a “tally” program that keeps track of hard money that a Democratic Senate candidate

helps raise. Colorado II, $33 U.S, at 458;

74


Likewise, in MCFL, when the Court construed § 441b’s prohibition on the use of a
corporation’s general treasury funds to finance independent expenditures “in connection with any
election” for federal office, the Court found similar constitutional problems with this vague Statutory
language. Relying on its reasoning in Buckley, the Court held that this provision “requires a similar
construction,” 479 U.S. 248-49 (emphasis added), thus again making clear that it was construing
particular, unclear statutory language, not ruling in the abstract on requirements of the First
Amendment. Thus Buckley and MCEL themselves explained that the express advocacy requirement
was an “exacting interpretation of . . . statutory language necessary to avoid unconstitutional
vagueness,” 424 U.S. at 45, not a substantive constitutional requirement applicable to any regulation
of campaign-related expenditures.

In other words, a straightforward reading of Buckley (and MCFL) reveals that the Court was

engaged in the familiar exercise of construing a statute in order to avoid deciding questions about

its constitutionality, sce Zadvydas v. Davis, 533 U.S. 678, 689 (2001); United States v. Harriss, 347

U.S. 612, 618 (1954), as the Supreme Court and lower courts, including this one, have recognized.

Osborne v, Ohio, 495 U.S, 103, 120 n.14 (1990); FEC v. Survival Education Fund, Inc., 65 F.3d

285, 291 n. 2 (2d Cir. 1995); Faucher v. FEC, 928 F.2d 468, 470 (Ist Cir. 1991); FEC v. Christian
Coalition, 52 F. Supp. 2d 45, 87 n.50(D.D.C. 1999). Nothing in the judicial act of placing a saving
construction on particular statutory language prevents Congress from later determining, on the basis
of experience, and careful deliberation, that a different approach to a problem with which the
legislature may legitimately be concerned is necessary, and constitutional. To the contrary, the
Supreme Court has repeatedly made a point of stating otherwise. In U.S. v. Thirty-Seven

Photographs, 402 U.S. 363, 373 (1971) (plurality opinion), the Court examined a customs statute

150


placed on donors by federal officeholders and party officials to contribute large sums of money,
pressure that contributes to the pervasive view that large financial contributions are a prerequisite
to meaningful participation in the political process.

As the Supreme Court has explained, “[t]he quantum ofempirical evidence needed to satisfy
heightened judicial scrutiny of legislative judgments will vary up or down with the novelty and
plausibility of the justification raised.” Shrink Missouri, 528 U.S. at 391. And “Buckley
demonstrates that the dangers of large, corrupt contributions and the suspicion that large
contributions are corrupt are neither novel nor implausible.” Id. As the Court explained:

The opinion {in Buckley] noted that “the deeply disturbing examples surfacing after
the 1972 election demonstrate that the problem {of corruption] is not an illusory
one.” ... Although we did not ourselves marshal the evidence in support of the
congressional concer, we referred to “a number of the abuses” detailed in the Court
of Appeals’s decision, ... which described how corporations, well-financed interest
groups, and rich individuals had made large contributions, some of which were
illegal under existing law, others of which reached at least the verge of bribery.
... The evidence before the Court of Appeals described public revelations by the
parties in question more than sufficient to know why voters would tend to identify
a big donation with a corrupt purpose.

Id. (citations omitted). While the record in Shrink Missouri did not indicate that the Missouri

Legislature relied upon the evidence and findings accepted in Buckley, the Supreme Court held that
the evidence introduced by the parties or relied upon by the lower courts, including affidavits and
newspaper articles, was sufficient to justify the challenged statute. 528 U.S. at 393. As with the

statute in Shrink Missouri, the interests served by BCRA are neither “novel nor implausible,” and

there is accordingly no need for an elaborate record to establish the problems of actual and apparent
corruption that the statute prevents. Here, however, there is a vast legislative and evidentiary record,

and it confirms the strength and validity of the government’s interests.

67



registration and get-out-the-vote activities, allocated between the accounts on a reasonable basis,
even if the nonfederal accounts contained funds received from corporations and unions.

Up to this point, FEC advisory opinions on these topics had been made in response to
requests for guidance from state and local political parties. In Advisory Opinion 1979-17, the FEC
was asked for the first time about a proposal involving the acceptance of corporate funds by a
national party committee for use in connection with state and local elections. The FEC, noting that
its 1977 regulations permitted the establishment of separate accounts by “[a}ny politica! committee,”
see tl C.F.R. 102.6(a)(2) (1977), essentially extended its tulings to national parties, permitting
national party committees to create separate, segregated accounts, one of which could be
“designated specifically and exclusively to finance national party activity limited to influencing the
nomination or election of candidates for public office other than elective ‘Federal office.’” Fed.
Elec. Campaign Fin. Guide (CCH) 4 5416.

In sum, by 1979 it was clear that under the FEC’s regulations, both national and state party
committees were permitted to solicit and accept donations unconstrained by FECA’s source and
amount limitations, so long as those donations were maintained in separate accounts and were used
only for influencing the nomination or election of candidates for nonfederal office. It was also clear
that political committees maintaining such accounts were required to allocate between the accounts
their overall administrative and Operating expenses. Such expenses would include items such as
fundraising, candidate recruitment, and research, See 11 CFR. 106.5(a)(1), (2). In addition,
political committees were required to allocate expenses for general voter registration and get-out-

the-vote drives not conducted on behalf of specific federal candidates.

24



Not only were the ads run by the AFL-CIO and the Coalition intended to influence the 1996
clections, but they were also used to curry favor with policymakers. The Coalition in particular
made a point of seeking credit for its ads from the legislators aided by them. After each wave of ads
the Coalition aired, the Coalition forwarded tapes of the ads through Representative Boehner to the
individual Members in whose districts the ads ran, to “show the Republican Members of the House
that [their business allies} were, indeed, doing something” in Tesponse to the AFL-CIO’s ads.

Coalition MUR Rep. at 30-32: _

41


The record of this action fully supports that conclusion. The databases prepared for the two
Buying Time studies, and analyzed for present purposes by Drs. Goldstein and Krasno, demonstrate
BCRA’s insignificant overbreadth. Dr. Krasno found that only three genuine issue advertisements,
accounting for just six percent of all broadcasts of genuine issue ads in 1998, would have met
BCRA’s definition of electioneering communications. Krasno & Sorauf Expert Rep. at 60 & App.
§C. Professor Goldstein found that, in 2000, only six genuine issue ads would have been regulated
as electioneering communications under BCRA, accounting for an even smaller fraction than in
1998, just 2.3 percent, of all broadcasts of genuine issue ads during the year. Goldstein Expert Rep.
al 24-26 & Tol. 744 Thus, these analyses not only prove that a “magic words” approach fails to
identify a large number of campaign ads, see supra at 147 n.107, but also that BCRA’s
electioneering communications criteria would have safeguarded from any regulation whatsoever
between 94 and almost 98 percent of all genuine issue advertisements broadcast in 1998 and 2000.
In essence, the definition’s overbreadth is no more than two to six percent — a far cry from the
substantial overbreadth necessary to invalidate a statute on its face. Even ifa few genuine issue ads
will be subject to BCRA’s regulation of electioneering communications, the Court “cannot conclude
that [BCRA] is substantially overbroad and must assume that ‘whatever overbreadth may exist
should be cured through case-by-case analysis of the fact situations to which its sanctions, asserted-

ly, may not be applied.’” New York State Club Ass’n, 487 U.S. at 14 (quoting Broadrick, 413 U.S.

at 615-16).

12 These figures do not take into account issue advertising in non-election years such as 1997 and 1999, and

to that extent they overstate BCRA’s impact on genuine issue advocacy, See Goldstein Expert Rep. at 27 n, 22; Krasno
& Sorauf Expert Rep. at 61-62; Krasno Rebuttal Expert Rep. at 14-15 (due to absence of ads from 1997 in database,
figures reported in Buying Time 1998 should be understood as upper bounds);

161


In Colorado I, all members of the Court agreed that “circumvention is a valid theory of
corruption,” 533 U.S. at 456, and a majority upheld the limits on party coordinated expenditures
because the evidence supported the “long-recognized rationale of combating circumvention of
contribution limits designed to combat the corrupting influence of large contributions to candidates
from individuals and nonparty groups,” id, at 456 n.18. The Court concluded that “substantial
evidence demonstrates how candidates, donors, and parties test the limits of the current law, and it
shows beyond serious doubt how contribution limits would be eroded if inducement to circumvent
them were enhanced by declaring parties’ coordinated spending wide open.” Id, at 457. The Court
therefore held that “a party’s coordinated expenditures . . . may be restricted to minimize
circumvention of contribution limits,”= Id. at 465.

In this same vein, BCRA’s ban on soft money donations to national political parties attempts
to preclude evasion of, indeed, make absolute, FECA’s limits on what persons can contribute to
political parties. Under BCRA’s revised contribution limits, individuals can give $25,000 per year
to a national political party; corporations and unions can contribute $15,000 per year from their
qualifying, separate segregated funds, although they can contribute nothing from their general
treasury funds. BCRA § 307 (amending 2 U.S.C. 441a(a)(1)).. As we demonstrate below, Title I
of BCRA prevents the evasion of those contribution limits, which the Supreme Court has already
recognized are necessary to prevent corruption and the appearance of corruption. Individuals,
corporations, and unions will no longer be able to make additional donations to political parties

under the pretense that such dollars are not used for purposes of influencing federal elections.

ee
Likewise, in Colorado 1, the Court, in overturning FECA limits on independent expenditures by parties,
noted that donors could contribute up to $20,000 toa Politicai party, which the party could then turn around and use for
independent expenditures for the benefit ofa particular candidate. in light of that fact, the Court stated, 518 U.S. at 617:

Wecould understand how Congress, were it to conclude that the potential for evasion of the individual
contribution limits were a serious matter, might decide to change the statute’s limitations on
contributions to political parties.

61



The parties’ growing use of soft money prompted a rulemaking petition by Common Cause,
asking FEC to issue new allocation rules Pertaining to the use of soft money. Common Cause
alicged that party committees were improperly Spending soft money to influence federal elections
by taking advantage of FEC’s regulations, which, as discussed Supra, granted party committees
considerable leeway to allocate their expenses between federal and nonfederal accounts using any
“reasonable basis,” 11 C.F.R, 106.1(¢)(1978). See Mann Expert Rep. at 13. In Common Cause y,
FEC, 692 F. Supp. 139] (D.D.C. 1987), the district. court found that FECA permitted allocation, but
directed the Commission to revise its regulations to give party committees more specific guidance
on how such activities should be allocated. Id. at 1395,

In 1990, the FEC promulgated such regulations permitting committees that chose to establish
nonfederal accounts to allocate to those accounts a portion of their “[aJdministrative expenses,” 11
CFR. 106.5(a)(2)i), and expenses for “[g]eneric voter drives,” which included “voter
identification, voter registration, and get-out-the-vote drives, or any other activities that urge the
general public to register, vote or Support candidates of @ particular party or associated with a
particular issue, without mentioning a specific candidate.” 11C.F.R. 106.5(a\2)(iv). National party
committees were required to allocate at least 65% of their administrative and generic voter drive
expenses to federa! accounts during presidential election years, and at least 60% in non-presidential
election years. 11 C.E.R. 106.5(b), (c). For state and local parties, the allocation of these expenses
was determined by the proportion of federal offices to all offices on the state’s general election
ballot. 11 C.F.R 106.5(d}. While this provision produced a wide range among the states in the
percentage of hard money required to be allocated to these “mixed” expenses, the required hard

money percentage for state parties was, on average, substantially lower than the 60-65% required

27



Because express advocacy is no longer the rule of campaign advocacy, and has become the
rare exception, unions and corporations may now draw freely upon their treasuries to engage in elec-
tioneering activities to virtually the same extent as candidates, in disregard of § 441b, and in
derogation of the government’s compelling interests against distortion and cormuption of the political
process. Just as Congress passed the Taft-Hartley Act to close the “expenditure” loophole that labor
unions, corporations and others had exploited to evade the long-established prohibition on
contributions, sec supra at 13-15; UAW, 352 U.S. at 580-83, BCRA closes the “issue advocacy”
loophole in current law at its most widely exploited point, restoring vitality to the statutory scheme
under FECA § 441b. It does so by putting an end to unlimited spending of general treasury funds
on the most blatant form of electoral activity in which unions and corporations have recently
engaged — TV and radio advertisements that support or attack candidates for office in the weeks
immediately preceding a federal election. And in so doing, it serves compelling govemmental
interests that overcome plaintiffs’ facial attack,

B. Buckley Does Not Prohibit Congress from Enacting Narrowly

Tailored Anti-Corruption Measures Simply Because They Are
Not Limited to Communications Containing Express Advocacy.

Notwithstanding the compelling governmental interests that are promoted by BCRA's
regulation of electioneering communications, plaintiffs maintain that these portions of the statute
are unconstitutional, per se, because they encompass communications that do not include express
advocacy. E.g., McConnell Second Amend. Compl., 448; NRA Compl., 4 70; AFL-CIO Compl.

4| 14. This claim necessarily rests on a particular view of Buckley, as holding that the First Amend-

108. continued)

effective advertising leads the viewer to his or her own conclusion without forcing it down their throat.”); Pennington
Deel. 10 ("These final words [in ads}, like ‘tell,’ have become the real ‘magic words’ in modern campaigning.

{T]he real audience for them is not the voters, but the courts who may be examining the ad after the election.”);
Becket Dect. 4 8 (“[N]o particular words of advocacy are needed in order for an advertisement to influence an
election.”); Lamson Deel. § 6; Bloom Decl. 5; Bumpers Decl. 126

148


The Supreme Court has rejected vagueness challenges to the term “solicit” in other political
contexts, see Broadrick v. Oklahoma, 413 U.S. 601, 605-08 (1973), and no different result is
warranted here. Indeed, the FEC’s regulations adopt a narrow definition of that term: “solicit”
means “to ask that another person make a contribution, donation, transfer of funds, or otherwise
provide anything of value, whether the contribution, donation, transfer of funds, or thing of value,
is to be made or provided directly, or through a conduit or intermediary. A solicitation does not
include merely providing information or guidance as to the requirement of particular law.” 11
C.F.R. 300.2(m) (67 Fed, Reg. 49,122 (July 29, 2002)).

The FEC’s regulations furnish similar clarity with respect to the phrase “to direct,” which
is defined as follows: “to ask a person who has expressed an intent to make a contribution, donation,
or transfer of funds, or to provide anything of value, to make that contribution, donation, or transfer
of funds, or to provide that thing of value, including through a conduit or intermediary. Direction
does not include merely providing information or guidance as to the requirement of particular law.”
11 CFR, 300,2(n) (67 Fed. Reg. 49,122 (uly 29, 2002)).

Moreover, the FEC has established a detailed test to determine whether a committee of a
political party “directly or indirectly established, finances, maintains, or controls an entity.” See 11
C-P.R, 300.2(c) (67 Fed. Reg. 49,121 (July 29, 2002)). The test sets forth ten factors that must be
“examined in the context of the overall relationship between [the] sponsor and the entity,” 11 C.E.R.
300.2(c)(2), including whether the sponsoring committee owns controlling interest in voting stock
in the entity; has the authority or the ability to participate in the governance of the entity; has
authority over decision-making employees or members of the entity; has common or overlapping

membership, officers, or employees with the entity, or provides a significant quantity of funds or

94


Nor can plaintiffs successfully argue that BCRA’s disclosure requirements fail simply
because they encompass more than express advocacy. While in Buckley the Court limited the
independent expenditure disclosure provisions at issue there to encompass only express advocacy,
the Court did so out of a concern for the vagueness of the language of those provisions. See
supral48-53. By contrast, BCRA’s disclosure provisions are not vague, nor, for that matter, are they
overbroad; like the corporate and union financing restrictions discussed above, they rest on a bright-
line definition of “electioneering communication” that does not capture a substantial amount of pure
issue advocacy.

Indeed, even if this Court were to find the governmental interest in avoiding the appearance
of corruption inadequate to justify BCRA’s financing restrictions on electioneering communications,
BCRA’s disclosure requirements for such communications would still be constitutional because of
the separate informational interests they serve. Buckley, 424 U.S. at 81. The government has a
substantial interest in “aid[ing] the voters in evaluating those who seek federal office.” Id, at 66-67.
Any ad falling within BCRA’s definition of electioneering communication, by virtue of discussing
a candidate in the midst of a federal election, is virtually certain to contain argument bearing on the
voters’ evaluation of the candidate. By requiring disclosure for such ads, BCRA “helps voters to
define more of a candidate’s constituencies,” information the Supreme Court has recognized as
important to casting an informed vote, Id, at 812 Accordingly, apart from whether BCRA’s

disclosure requirements are justified on the same grounds as its restrictions on corporate and union

compelled disclosure... will subject them to threats, harassment, or reprisals.” Id.

22 s shown by defendants’ expert Professor David Magleby, voters are frequently confused over the sources
of advertisements referring to candidates around the time of an election, and, in pollls, they have consistently indicated
that they consider this information important for them to know, Magleby Expert Rep. at 29-30; Mark Mellman &
Richard Wirthlin, Research Findings of a Telephone Study Among 1300 Adult Americans (Sep. 23, 2002) at 20 [DEV
2-Tab 5]; see also Krasno & Sorauf Expert Rep. at 78-79 (discussing Magleby study).

176


In sum, by 2000, corporations, unions, and interest groups fully recognized that, through the
trivial effort of avoiding express advocacy, they could make unrestricted and undisclosed expendi-
tures to influence the outcome of federal elections while avoiding the reach of federal election law,

Asa result, a long-established regime intended to prohibit the use of corporate and union treasuries

® Seo also Selected Interest Group Electioncering Radio Ads, App. A to Defs.’ Mem., Tab 6, Nos. 1&2
(audio);

48


Green explains, the “parties have always managed to find a way to raise larger and larger sums of
money under hard money constraints.” Id, (noting that while soft money donations rose from $86.1
million to $495.1 million between the 1991-92 election cycle and the 1999-2000 election cycle, hard
money contributions also rose markedly, from $445 million in 1991-92 to $741 million in 1999-
2000). Under BCRA, “state and national parties will be encouraged to broaden their financial base
of hard money contributors,” and the “dramatic increase in hard money fundraising over the past
decade leaves little doubt that this can be achieved.” Donald P. Green, The Impact of the BCRA

on Political Parties: A Reply to La Raja, Lott, Keller, and Milkis (Oct. 7, 2002) at 5 [DEV 5-Tab 1,

hereinafter D. Green Rebuttal Expert Rep.]; see also McCain Decl. 4] 20; Buckley, 424 U.S. at 21-22

(“The overall effect of the Act’s contribution ceilings is merely to require candidates and political
committees to raise funds from a greater number of persons.”).

Plaintiffs also contend that the national party soft money ban violates their freedom of
association because it prevents them from pooling their resources and conferring about the ways in
which state and local parties should spend soft money. See McConnell Second Amend. Compl.
{| 100. Those contentions lack merit. It is unclear whether organizations even have a First
Amendment right to associate with other organizations. See DKT Mem. Fund Ltd, v. Agency for
Int'l Dev., 887 F.2d 275, 294 (D.C. Cir. 1989) (“Neither this Court nor the Supreme Court has held
that the Constitution protects rights of association between two organizations,”), Even assuming
that such a right exists, BCRA does not infringe it. The national parties remain free to solicit money
for, and transfer money to, state and local party committees. BCRA simply requires that the money
be raised in accordance with FECA. Thus, the national soft money ban does not prevent the national

parties from pooling their resources with their state and local counterparts “in furtherance of

89


pre-BCRA contribution limits in §§ 441a(a) and 441a(d) are constitutional. It also is clear that
political parties need not be treated differently from other multicandidate committees for purposes
of imposing contribution limits. Congress was therefore entitled to apply to political parties the
same $5000 limit on contributions and coordinated expenditures it had imposed on other multicandi-
date political committees. That is one of the options a party committee has under BCRA: to make
unlimited independent expenditures in support of a candidate, but only the $5000 in contributions
and coordinated expenditures permitted by 2 U.S.C. 441a(a)(2)(A), just like other multicandidate
committees,

In BCRA, however, Congress gave party committees another option, not available to anyone
else: if the committee voluntarily chooses to forgo making independent expenditures, it can make
coordinated expenditures up to the much higher limits set out in § 441a(d). A party committee
choosing this option would be in the same position Congress intended when it first enacted those
higher limits in 1974, making coordinated expenditures at the higher limit but not independent
expenditures. Providing such an option, which a party committee is free to accept or decline, does
not constitute a restriction of First Amendment rights. Cf Maher v, Roe, 432 U.S. 464, 476 (1977)
(“Constitutional concems are greatest when the [government] attempts to impose its will by force
of law; the [government]’s power to encourage actions deemed to be in the public interest is
necessarily far broader.”).

The Court’s ruling in Buckley, in sustaining FECA’s public financing provisions, is
instructive. The Court upheld a restriction on candidate expenditures imposed on publicly financed
candidates, even though it had invalidated the same restriction on expenditures by other candidates,

because participation in public financing was a voluntary option. “Congress ... may condition

180


nor Representative Pence has stated whether they intend to run ads referring to their possible
opponents in future elections.

Even if plaintiffs had made a credible showing of future injury, any injury from Section 305
would not be sufficiently imminent to satisfy standing or ripeness requirements. Senator McConnell
is a candidate for reelection in November 2002, before BCRA takes effect. Assuming that he is
reelected, Senator McConnell will not face another senatorial campaign for six years. Thus, the
earliest that Senator McConnell could experience any effect from Section 305 is before the
Republican primary in 2008, when the “lowest unit charge” would be available under 47 U.S.C.
315(b). And Section 305 could cause a legally cognizable injury to Senator McConnell only if he
intends to broadcast an advertisement that refers to his opponent without the requisite
acknowledgment. Similarly, the earliest that Section 305 could apply to Representative Pence is
during his primary race in 2004 under the same caveats. In these circumstances, plaintiffs’

challenge to Section 305 is premature. See United Public Workers v. Mitchell, 330 U.S. 75, 90-91

(1947).

Cc. Sections 305 and 504 of BCRA Satisfy the First Amendment.

In raising a facial challenge to Sections 305 and 504, plaintiffs bear “a heavy burden,” Rust
v. Sullivan, 500 U.S. 173, 183 (1991); facial invalidation “is, manifestly, strong medicine” that “has
been employed by the Court sparingly and only as a last resort.” Broadrick, 413 U.S. at 613. As
explained below, the disclosure requirements under Sections 305 and 504 are fully consistent with
the First Amendment.

The Supreme Court has long recognized the important role of public disclosure in

preventing fraud and corruption. The Court in Buckley upheld FECA’s reporting and disclosure

216


contro! the conduct of children reaches beyond the scope of its authority over adults.”” Ginsberg,

390 U.S. at 638 (quoting Prince y. Massachusetts, 321 U.S. 158, 170 (1944)). In cases where the

Supreme Court has upheld children’s claims to constitutional protection, “[t]hese rulings have not
been made on the uncritical assumption that the constitutional rights of children are

indistinguishable from those of adults.” Bellotti, 443 U.S. at 635,

The treatment of children seventeen and younger in section 318 is consistent with state law
that limits the rights and privileges of minors. See. ¢.g., Richard A. Leiter, National Survey of State

Laws 444-55 (3d ed. 1999), In most States, only someone eighteen years of age or older is capable

of controlling and disposing of his or her Property, is qualified to serve on a jury, see 33 Council of

State Governments, The Book of the States 386-87 (2000-01 ed.) (Tbl, 7.32 (“Minimum Age for

Specified Activities”)); see also 28 U.S.C. 1865(6)(1), and is eligible to vote for candidates for pub-

lic office’ With respect to children younger than eighteen, under state law, parents generally
“have the right to make all decisions regarding the child’s care and control, education, health,
residence, associates, and religion,” and children “must, in general, follow the direction of their par-

ents.” | Donald T. Kramer, Legal Rights of Children (‘Legal Rights”) § 14.03, at 591 (footnotes

omitted) (2d ed. 1994). See, e.g., Tex Code Ann, Fam. § 151.001 (“Rights and Duties of Parent”)
(Vernon 2002). Moreover, unless parents relinquish the right, they are entitled to the services and

eamings of their minor children/“® Although minors have the right to acquire and own some

Tag)

ee
o~ FEC, State Voter Registration Requirements, www fec.gov/votregis/state_voter_reg_requirements02,htm
(9/25/02).

Ls See, ex., Ga. Code § 19-7-1(a) (“Until he reaches the age of majority, the child shall remain under the

control of his parents, who are entitled to his services and the proceeds of his labor.”); Cruz v. Broward Cty School Bd.,
800 So. 2d 213, 215 (Fla. 2001); Dixon v. State, 579 So. 24 29, 32 (Ala. Crim. App. 1990).

206



“an individual or association seeking to evade the $1 ,000 limit on contributions to candidates could
do so by channeling funds through a multicandidate political committee. Similarly, 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.” Id. at 198; see also id. at 203
(Blackmun, J., concurring in the judgment). The contribution limitation upheld in Cal Med
obviously affects the ability of multicandidate political committees to engage in constitutionally
protected speech and other activities, Indeed, the limitation on protected activities that results from
the $5,000 limitation at issue in Cal Med is more severe than that caused by the $25,000 limitation
on contributions to national political parties that is the result of BCRA’s soft money ban, But the
Court, nevertheless, upheld that contribution limitation in Cal Med based on an anticircumvention
rationale. If, as Cal Med holds, the limitation on contributions to multicandidate political commitees
is valid as a means of preventing the circumvention of FECA’s limitations on contributions to
candidates, then it follows that the ban on soft money contributions to parties — which has a much
less pronounced incidental impact on political expression — should also be constitutional as an
anticircumvention device.

2. The National Party Soft Money Ban Prevents
the Appearance and Reality of Corruption.

Even if the validity of the national party soft money ban did not follow as a matter of law
from Buckley and Cal Med, it is plainly constitutional. The national party soft money ban furthers
several interrelated governmental interests of paramount importance. Most fundamentally, the ban
prevents circumvention of the contribution limits and funding-source restrictions set forth in FECA
and reduces the actual corruption and the appearance of corruption that the unlimited donation of

soft money to the national political parties has created. The provision also reduces the pressure

66


common political goals,” Buckley, 424 U.S. at 22; it merely restricts the national parties to

contributions that are raised pursuant to the “hard money,” the contribution, limitations of

FECA.

Moreover, BCRA does not prevent the national, state, and local parties from conferring about
spending priorities or any other issues. There is nothing in BCRA that purports to restrict the ability
of party committees to confer about campaign strategy.

2. The national party soft money ban is fully consis-

tent with the Equal Protection component of the
Fifth Amendment.

Plaintiffs contend that BCRA violates the Fifth Amendment’s equal protection guarantee by
placing restrictions on national parties that do not apply to certain other types of organizations and
individuals. See RNC Compl. {{] 72-77; McConnell Second Amend, Compl. ¥ 102. It is important
to note at the outset that, in many significant respects, Congress has treated political parties more
favorably than other entities. For example, political parties are permitted to receive far more
extensive contributions from individuals than are non-party political committees. See 2 U.S.C.
441a(a)(1). In addition, political parties can make much greater contributions to federal candidates
~ in the form of coordinated expenditures — than can other entities or individuals, Sce 2 ULS.C.
44la(d). And, unlike any other entity, a political party may transfer hard money to other political
committees within its party without limitation, See 2 U.S.C. 441a(a)(4). Congress also has given
party committees a multi-million-dollar federal subsidy for their quadrennial conventions, see 26
U,S.C. 9008, a windfall that is not available to other entities,

The national soft money ban was enacted explicitly to address the special risk of corruption

that unregulated donations to political parties present. Professor Green explains that political parties

90


in reducing the fundraising Pressure that has demoralized federal candidates and officeholders,
driving many away from public service and diverting incumbent legislators from their public duties,
See supra at 85 n.73.

BCRA is closely drawn to promote these important government interests. The statute
prohibits federal candidates and officeholders from soliciting soft money in connection with any
federal election, while leaving them free to solicit and raise money in compliance with FECA’s
contribution limits. BCRA permits federal candidates to solicit money in connection with state or
local elections, but minimizes the dangers of corruption by restricting these solicitations to the
amounts and sources that FECA permits. BCRA also permits federal candidates to attend or speak
al fundraising events for state, district, and local committees of a political party. See 1! C.F.R.
300.64 (67 Fed. Reg. 49,131 (uly 29, 2002)). In addition, BCRA allows unlimited solicitations on
behalf of § 501(c) organizations if the solicitations are general in nature and made on behalf of
organizations whose primary purpose is not to engage in federal election activity. 2 U.S.C.
441i(e)(4)(A). Thus, BCRA permits federal candidates and officeholders to make solicitations even
for tax-exempt organizations that engage in federal election activity, but imposes reasonable
restrictions that reduce the potential for, and appearance of, corruption 2

Plaintiffs contend that equal protection principles foreclose Congress from allowing federal
candidates and officeholders to make general solicitations for § 501(c) nonprofit organizations

without also allowing similar solicitations for political parties and other organizations. McConnell

® plaintiffs suggest that the restrictions on federal candidates and officeholders will prevent them from
associating with their state and local party committees. That concern is apparently based on the view that the FEC will
construc the terms “solicit” and “direct” so broadly that any discussions between federal candidates and officeholders
concerning state and local parties’ spending priorities would fall within the prohibition. See CDP Compl. f 82-84. As
explained above, however, the FEC’s regulations narrowly define those terms and eliminate any vagueness concerns.
See supra at 93-96; 11 C.F.R. 300.2(m), (n). Plaintiffs also complain that the failure to define “fundraising event” in
subsection (e}(3) will chill association between federal candidates and officeholders and the state and local Parties. But
4 reasonable person would understand that the term applies to gatherings where monies are being raised. In fact, BCRA
places no restriction on attendance at party events that do not involve the raising of funds. The provision, accordingly,
is not void for vagueness.

125


at 31; see also Shrink Missouri, $28 U.S. at 389 1.4, The millionaire provisions are equally

evenhanded 2

I. SECTION 318 OF BCRA, PROHIBITING CERTAIN POLITICAL CONTRIBU-
TIONS AND DONATIONS BY CHILDREN AGE SEVENTEEN AND YOUNGER,
IS CONSTITUTIONAL.

Section 318 of BCRA prohibits individuals age seventeen or younger from “mak{ing] a con-
tribution to a candidate or a contribution or donation to a committee of a political party.” BCRA
§ 318 (adding a new provision, to be codified as 2 U.S.C, 324). A limit on contributions will be
Sustained against a First Amendment challenge if the government “demonstrates a sufficiently
important interest and employs means closely drawn to avoid unnecessary abridgment of [First
Amendment] freedoms.” Buckle , 424 U.S. at 25 (intemal quotation marks and citations omitted);

see also Shrink Missouri, 528 U.S. at 388.

Contribution limits are central to FECA’s system for Protecting the integrity of the federal
election campaign process, Congress recognized that some parents use their influence over their
children and their control over their children’s assets to circumvent the limits on contributions to
candidates and parties. As a prophylactic measure, BCRA § 318 eliminates this opportunity for

evasion, while leaving youngsters with many opportunities to participate in political campaigns.

~ As discussed above, the choices the millionaire provisions Provide to certain contributors and candidates
are additional benefits, not burdens. BCRA does not require any candidate, individual contributor, or political party to
treat anyone differently based on any impermissible classification. Indeed, political parties have a long history of
Spending different amounts of money in support of their various candidates, and nothing in BCRA will require them to
change their spending patterns, See, e.g. FEC Press Reports on Party Spending 1994-2000 Elections, www. fec.gov
Krasno & Sorauf Expert Rep, at 36; In fact, political parties have tried to
recruit millionaire candidates precisely so that the Party would not need to spend as mich of its own money to assist

them, See, eg.
Herrnson Expert Rep. in RNC v, FEC
at 29-30; Kolb Decl. Ex. i at 18-20 [DEV 7-Tab 24]; Krasno & Sorauf Expert Rep. at 70:

147 Cong. Ree. $2537, $2546 (Mar. 20, 2001) (Sen, DeWine); 147
Cong. Rec. $2464 (Mar, 19, 2001) (Sen. Sessions).

199



Vv. BCRA’S LIMIT ON STATE-LEVEL CANDIDATES’ USE OF SOFT MONEY
FOR CERTAIN PUBLIC COMMUNICATIONS IS CONSTITUTIONAL,

BCRA requires that candidates for state or local office use only hard money to fund “a
public communication that refers to a clearly identified candidate for Federal office . . . and that
promotes or supports a candidate for that office, or attacks or opposes a candidate for that office
(regardless of whether the communication expressly advocates a vote for or against a candidate).”
2U.S.C. 431(20)(A) (ii), 4411(f)(1). That provision is entirely consistent with the First Amendment.
The statute allows state and local candidates to use unlimited amounts of hard money to fund such
communications; it simply prohibits candidates from raising soft money to be used for such
purposes. Because those communications obviously have a direct effect on federal elections (by
supporting or attacking a clearly identified candidate for federal office), it is plainly permissible for
Congress to require that such communications be funded with hard money, which can be provided
to them by a party committee, if state law permits. Just as Congress can limit state and local party
committees to the use of hard moncy for such communications, Congress can impose similar
limitations on state and local candidates, who (like their party counterparts) remain free under
BCRA to spend soft money on communications that are confined to state and local candidates, See
supra at 109-10. Precisely because that provision is a valid exercise of Congress’s power under
Article I to regulate federal elections, it fully comports with the Tenth Amendment and principles

of federalism.

128


national party committees regularly use Members of Congress, through direct solicitations and fund-
raising events’ to raise soft and hard money simultaneously from individuals, Corporations, and
unions, and donors recognize little distinction between the two 2’ Indeed, an innovation that gained
prominence in 2000 and only emphasized the intended use of soft money in federal elections, was
the creation of “joint fundraising” or “victory” committees, established jointly by Particular federal
candidates and their party committees. Through such entities a donor can write a single check to
the joint fundraising committee and have the funds allocated according to applicable legal limits
between the candidate and the party committee’s hard and soft money accounts. Mann Expert Rep.
at 30; Magieby Expert Rep. at 37; Krasno & Sorauf Expert Rep. at 13;_

Not surprisingly, in their various, continuing efforts to raise increasing
amounts of soft money for use in federal elections, the parties have also continued their practices
of enticing donors with Opportunities for access to political leaders and decisionmakers in exchange
for donations.2%

The risks of corruption that Congress has found to be inherent in an unregulated, privately-
funded campaign finance system are apparent from the abuses related to soft money. The soft
money regime has permitted corporations and labor unions to inject millions upon millions of

dollars from their general treasuries into the federal election process in direct contravention of

2) Randiett Decl. 7 [DEV 8-Tab 32] (Members of Congress raise soft money to help with federal campaigns,
nor Party-Duilding); Rozen Decl. 4 12 (DEV 8-Tab 33] (“Donors ... understand that (4 federal officeholder is raising
soft money ... . they are raising it for federal uses, namely to help... federal candidates.”); Buttenweiser Decl. 4 15
(DEV 6-Tab 11] (Little difference between hard and soft money}; Simon Dect 1.9 [DEV 9-Tab 37] (donors told by
candidates that soft money donation is “fairly close” to direct campaign contribution),

2

35


(1987), New York State Club Ass’n, 487 U.S. at 14; Broadrick, 413 U.S. at 615. “Itis not enough
for a plaintiff to show ‘some’ overbreadth,” Ashcroft v. ACLU, 122 S. Ct. 1700, 1713 (2002)
(plurality opinion}, and “the mere fact that one can conceive of some impermissible applications of
a statute is not sufficient to render it susceptible to an overbreadth challenge.” Taxpayers for
Vineent, 466 U.S. at 800. Rather, the burden is on the plaintiff to “demonstrate from the text of [the
statute] and from actual fact that a substantial number of instances exist in which the (Jaw cannot

be applied constitutionally.”. New York State Club Ass'n, 487 U.S. at 14 (emphasis added); see

Colorado Il, 533 U.S, at 456 n. 17 (refusing to consider overbreadth challenge to the party
expenditure provision where the party did not “lay the groundwork for its overbreadth claim”);
Regan v. Time, Inc., 468 U.S. 641, 651-52 & n. 18 (1984) (assuming statute’s reach was not
overbroad given “paucity of evidence to the contrary”).

Plaintiffs challenge BCRA’s definition of electioneering communications as overbroad,
McConnell Second Amend Compl., 4 50; NAB Compl., | 19, but the definition comports with
reality and ends the masquerade of election advertisements professing to be the mere discussion of
political issues. The definition successfully covers the vast majority of election ads, while
simultaneously reaching as few actual issue ads as possible. See supra at 139-42. And by targeting
with transparent clarity an extremely well-defined set of advertisements, BCRA has no ambiguous
scope that would cause it to sweep substantially beyond its intended and legitimate scope of

advertising intended to influence the outcome of federal elections. See Village of Hoffman Estates

y. Flipside, Hoffman Estates, Inc., 455 U.S. 489, 495 n. 6 (1982) (in determining the extent of a

statute’s overbreadth, a “court should evaluate the ambiguous as well as the unambiguous scope of

the enactment .. . [as] the vagueness of a law affects overbreadth analysis”).

160


Under the former regulations, an expenditure for a communication was to be considered
coordinated if the communication was created, produced, or distributed (1) at the “request or
suggestion” of the candidate or party; (2) after the candidate or party had “exercised control or
decision-making authority” over the content or distribution of the communication; or (3) after
“substantial discussion or negotiation” between the creator, producer, distributor, or payer of the
communication and the candidate or party about the content or distribution of the
communication, the result of which is “collaboration or agreement.” 1! C.F.R. 100.23(c).
Congress concluded “that the current FEC Tegulation is far too narrow to be effective in defining
coordination in the real world of campaigns and elections and threatens to seriously undermine
the soft money restrictions contained in the bill.” 148 Cong, Rec. 82096, S2145 (Mar. 20, 2002)
(Sen. McCain). Rather than legislate a new definition of coordination itself, however, Congress
repealed the existing coordination regulations and directed the FEC to promulgate new ones.
See, ¢.g., 147 Cong. Rec. $3183-01, $3193 (Mar. 30, 2001) (Sen. McCain) (“[W]e are asking the
FEC to promulgate regulations to crack down on the abuses of coordination.”).

It is doubtful that plaintiffs’ challenge to § 214(c) raises an issue ripe for judicial
resolution, and plaintiffs will suffer no hardship by this Court’s withholding consideration of

their challenge until after the new regulations are promulgated. See Abbott Laboratories vy.

Gardner, 387 U.S. 136, 148-49 (1967). Section 214(c) of BCRA neither requires nor prohibits

any actions by plaintiffs. It makes no substantive revision to 2 U.S.C. 441a(a)(7)(B), the
Statutory provision that governs plaintiffs’ coordinated spending. Indeed, the provision is
addressed solely to the Commission, directing it to revise its regulatory construction of the

Statute. Cf. Ohio Forestry Ass’n, Inc. v. Sierra Club, 523 U.S. 726, 733 (1998) (no “significant”

183


Members of Congress are uniquely qualified based on personal experience to determine the need
for and proper scope of additional regulation in this area. As with the other steps taken by Congress
over the years to correct defects in the campaign finance system, the legislative judgments embodied

in BCRA “warrant[] considerable deference.” NRWC, 459 U.S, at 209. The statute that Congress

has enacted is closely drawn to combat the widespread circumvention of statutory limits on the
sources and amounts of spending on federal election campaigns. It renews a national commitment
to the proposition that public policy should not wear a price tag. Accordingly, as explained in detail
below, each of plaintiffs’ facial challenges should be rejected.

FACTUAL AND LEGAL BACKGROUND

To protect the integrity of federal elections and to guard against corruption of federal office-
holders, the nation’s campaign finance statutes set monetary rules of engagement in political cam-
paigns. As the Supreme Court has recognized, “(t]he overriding concern behind the enactment of
[such] statutes . . . was the problem of corruption of elected representatives through the creation of

political debts.” First Nat’] Bank of Boston v. Bellotti, 435 U.S. 765, 788 n.26 (1978). During the

past century, Congress has found it necessary to make incremental changes to existing campaign
finance statutes, aspiring both to encourage robust debate and to limit the potential for corruption
inherent in a system of privately financed campaigns. Contrary to plaintiffs’ attempt to portray
BCRA as a radical new form of governmental regulation, BCRA simply revitalizes a long estab-
lished legal tradition in this country limiting the potentially corrupting influence of labor unions,
corporations, and unlimited campaign contributions upon electoral politics.

Building upon FECA’s central pillars, BCRA does not ban speech, but instead limits large

unregulated contributions to political parties, ensures that corporate and union campaign spending



change to a $2,000 limit simply reflects some of the impact of inflation in the quarter century since
the original $1,000 limit was upheld in Buckley“
There is no arguable basis for the judiciary to require Congress to tighten the contribution

limit. “[T]he Act applies the same limitation on contributions to all candidates regardless of their

present occupations, ideological views, or party affiliations,” Buckley, 424 U.S. at 31; see also id, at

56 (“[N]othing invidious, improper, or unhealthy in permitting {campaign contributions] to be spent
to carry the candidate’s message to the electorate.”) (footnote omitted). “(I]f it is satisfied that some
limit on contributions is necessary, a court has no scalpel to probe, whether, say, a $2,000 ceiling
might not serve as well as $1,000.” Buckley, 424 U.S. at 30 (internal citation omitted). Accord,

Shrink Missouri, 528 U.S. at 387-88.

—— ooo
182 Soe, e.g., 148 Cong. Rec, H443 ( Feb. 13, 2002) (Rep. Shays); 147 Cong. Rec. $3006 (Mar. 28, 2001) (Sen.
Thompson) (The $1,000 limit “has not been indexed for inflation since 1974"); id. at $3011 (Sen, Feinstein) (“Ordinary

inflation has reduced the value of a $1,000 contribution to about one-third of what it was in 1974."},

210


outweighed the rights asserted by the plaintiff, and that the limitation on corporate contributions was
“sufficiently tailored to these purposes to avoid undue restriction” upon First Amendment freedoms.
1d. at 207. It refused, moreover, to “second-guess a legislative determination as to the need for
prophylactic measures where corruption,” in the form of improper corporate and labor union
influence, “is the evil feared.” Id. at 210.

Based on the record available in Buckley, the Supreme Court remarked at that time that
independent advocacy by groups and individuals “d[id] not presently appear to pose dangers of real
or apparent corruption comparable to those identified with large campaign contributions.” 424 U.S.
at 46 (emphasis added). The record before this Court concerning corporate and labor union
spending now shows otherwise. See Bellotti, 435 U.S. at 788 n.26 (“Congress might well be able
to demonstrate the existence of a danger of real or apparent corruption in independent expenditures

by corporations to influence candidate elections.” (citing Buckley, 424 U.S. at 46)).

see Simpson Decl. J 13 [DEV 9-Tab

38).

_ Organizations that sponsor issue ads on behalf of elected officials “will later remind
Members of how the ads helped get them clected.” Simpson Decl. 4] 13; see Bumpers Deel. [26-27

[DEV 6-Tab 10].

143


that prescribed no time limits following the seizure of imported property for the initiation and com-
pletion of forfeiture proceedings. The Court found it constitutionally necessary to construe the law
to require that “forfeiture proceedings be commenced within 14 days and completed within 60 days
...” But the plurality also acknowledged Congress’s power to revisit the limits it had inferred:

Ofcourse, we do not now decide that these are the only constitutionally permissible

time limits .... We do nothing in the case but construe § 1305(a) in its present

form, fully cognizant that Congress may re-enact it in a new form specifying new

time limits, upon whose constitutionality we may then be required to pass.

dd. at 374, Similarly, in ULS. v. 12 200-Ft. Reels of Super SMM. Film, 413 U.S, 123, 130 n.7

(1973), the Court expressed serious constitutional misgivings about the definition of obscene
material contained in the same customs statute, and explained its readiness to construe vague
Statutory terms “as limiting regulated material to patently offensive representations” of specific
“hard core” conduct. “Of course,” the Court added, “Congress could always define other specific
‘hard core’ conduct.” Id.

Buckicy’s treatment of expenditures by independent political committees also refutes the
plaintiffs’ absolutist interpretation that political spending not involving express advocacy necessarily
lies beyond the power of Congress to regulate. When the Court described the “line-drawing
problems” posed by § 434(e), which required individuals and organizations to disclose their
expenditures made “for the purpose of influencing” an election, it observed that placing that same
disclosure requirement on political committees did not create similar difficulties. 424 U.S. at 78-79.
Expenditures by political committees — organizations whose major purpose is the election of
candidates— could safely be assumed to be “campaign related” without engrafting an “express advo-
cacy” limitation onto the definition of expenditure in that context. Id, at 79. Other courts have held

accordingly that an express advocacy limitation is unnecessary under circumstances where the

151


district where the election is being held. Thus, the definition strictly limits the statute’s reach to
those circumstances that are most clearly election-related, presenting the greatest potential for
distortion or corruption of political processes.

In the first instance, BCRA focuses exclusively on advertisements that refer to candidates
for federal office, for both common sense and common practice teach that they are the best suited
and therefore most likely vehicles for wielding influence over the course of an election, and, by
extension, elected officials. See Goldstein Expert Rep, at 19 & Tbl. 4 (showing that 99.6% of
candidate ads and 99.8% of party ads refer to federal candidates). Adding an even greater degree
of precision to its scope, however, in Senate, House or presidential primary races, BCRA regulates
only those advertisements referring to a candidate that are targeted to the relevant electorate — those
broadcast to at least 50,000 persons within the state or district where the candidate in question is
running. Communications reaching substantial numbers of the electorate who will decide a candi-
date’s political future are those best calculated to influence an election beforehand, and to earn the
candidate’s gratitude afterward. By regulating only those ads broadcast within a candidate’s
electoral jurisdiction, BCRA further ensures that advertising that is not designed as an appeal to
relevant voters remains unaffected.

The statute also reflects careful tailoring on the part of Congress insofar as it addresses only
those communications occurring within 30 days of a primary or 60 days of a general clection that
refer to clearly identified candidates running in that election. These periods not only correspond to
traditional conventions of Amcrican politics that, for example, demarcate the Labor Day weekend
as the “kickoff” of the general election season, they also coincide with the period when the vast

majority of interest group advertisements referring to federal candidates — as much as 80 percent —

157


deemed most essential to combat the “biggest loopholes in the system: the soft money and the
phony issue ads.” 148 Cong. Rec. $2104 (Mar. 20, 2002) (Sen, Feingold).

Following the 1996 elections, Senators McCain and Feingold introduced legislation to ad-
dress the eruption of soft money donations and unregulated electioneering disguised as “issue ads.”
See 143 Cong. Rec. $159 (Jan. 21, 1999); 143 Cong. Rec, $10106-12 (Sep. 29, 1997). Section 101

of this version of the McCain-Feingold bill would have prohibited national, state, district and local

committees of political parties from soliciting or receiving any soft money donations. It also

proposed to address electioneering issue advocacy by redefining “expenditures” subject to FECA’s
strictures to include public communications at any time of year, and in any medium, whether
broadcast, print, direct mail, or otherwise, that a reasonable person would understand as advocating
the election or defeat of a candidate for federal office, See 143 Cong. Rec. $10107, 10108.

In part to respond to concerns raised by the bill’s opponents about its constitutionality,
Senators Snowe and Jeffords proposed an amendment to McCain-Feingold to draw a bright line
between genuine issue advocacy and a narrowly defined category of television and radio advertise-
ments, broadcast in proximity to federal elections, “that constitute the most blatant form of
[unregulated] electioneering.” 144 Cong. Rec. $906, S912 (Feb. 24, 1998). Senator Snowe
explained that this approach had been developed in consultation with constitutional experts, to come

up with “clear and narrow wording” which, in contrast to the earlier provisions of the McCain-Fein-

ee
continued)

Nrg, No. 106-103 (Subcomm. on Oversight, Comm. on Ways and Means), June 20, 2000: The Role of John Huang and
the Riady Family in Political Fundraising, H.R. Hrg. No. 106-142 (Comm. on Gov't Reform), December 15, 16 and 17,
1999; The Role of Yah Lin “Charlie” Trie in legal Political Fundraising, H.R. lrg. No. 106-172 (Comm, on Gov't
Reform), March 1, 2000; The Justice Department's Implementation of the independent Counsel Act H.R. Heg. No. 106-
231 (Comm. on Gov't Reform), June 6, 2000; lHas the Justice Department Given Preferential Treatment co the President
and Vice President?, 11.R. firg. No. 106-256 (Comm. on Gov't Reform), July 20, 2000: ‘ampaign Finance Reform:
Proposals Impacting Broadcasters, Cable Operators and Satellite Providers, HR. Hrg. No. 107-42 (Subcomm, on
Telecommunications and the Internet, Comm. on Energy and Commerce), June 20, 2001,

% See. e.g., 143 Cong Ree.$9994, $10009-11, 10018-19 (Sep. 26, 1997); 143 Cong. Rec. $10719, 10726-27
(Oct. 9, 1997),

50



unit charge,” further Congress’s goal of promoting “full and unrestricted discussion of political

issues by legally qualified candidates.” Farmers Educ. & Coop. Union of Am. v. WDAY Inc., 360

U.S, 525, 529 (1959). In conjunction with those provisions, Congress and the FCC have imposed.
comprehensive disclosure obligations on candidates and advocacy groups using the broadcast media
for political programming. The Communications Act requires identification of the sponsors of all
advertisements, including political advertisements, at the time of broadcast. See 47 U.S.C. 317; 47
C.F.R. 73.1212(e) (broadcast stations); 47 C.F.R.76.1615(a), (c) (cable television systems). The
broadcast station must exercise “reasonable diligence” in making the sponsorship announcement.
See 47 U.S.C, 317(c); Loveday v. FCC, 707 F.2d 1443, 1449 (D.C. Cir. 1983),

Since at least 1939, the FCC also has required broadcast stations to maintain a complete

record of all requests for broadcast time made for a political candidate, including the disposition of

the request and the charges made. See 47 C.F.R. 3.104 (1939), see also 47 C.F.R. 3.90(a)(3) (1939).

Current regulations require stations to maintain a “political file” for public inspection, which must
include “all requests for broadcast time made by or on behalf of a candidate for public office” along
with the disposition of such requests and charges made or if free time is provided for use. See 47
C.F.R. 73.1943 (broadcast stations); 47 C.F.R.76.170] (cable television systems),

In addition, since 1944, the FCC has imposed detailed tequirements for disclosure of spon-
sorship of paid broadcasts on broadcast stations. See Loveday, 707 F.2d at 1453-54. Any paid

broadcast must include an announcement disclosing “fully and fairly. . . the true identity of the

sponsor. 47 C.F.R. 73.1212(e); see also 47 C.F.R.1615(d) (disclosure of “true identity” of sponsor
on cable television). Where the paid broadcast is “political matter or matter involving the discussion

of a controversial issue of public importance,” and a corporation or other entity is paying for the

212


The remaining provisions at issue were likewise enacted to prevent evasion of FECA’s
source and amount limitations, to strengthen disclosure for the benefit ofan informed electorate, and
to promote robust debate and competition in federal election campaigns. Section 318 of BCRA
prohibits individuals age 17 or younger from making contributions to candidates or political parties,
to prevent adults from circumventing FECA’s contribution limits by making surrogate contributions
through minors under their control. The so-called “millionaire provisions” of BCRA increase the
standard contribution limits for a candidate whose opponent expends substantial personal funds on
his or her own campaign, so that non-wealthy candidates are not discouraged from running against
a self-funded opponent. Sections 305 and 504 of BCRA amend the Communications Act of 1934
to require disclosures about the source and sponsorship of political messages broadcast on television
or radio.

Plaintiffs raise a series of facial challenges to these provisions of the new statute, but for any
one or more these challenges to succeed, plaintiff's must demonstrate that the enactments in question
could never be applied in a valid manner, or, to the extent their claims rest on the First Amendment,

that the statute’s provisions are substantially overbroad. New York State Club Ass’nv, City of New

York, 487 U.S. 1, 11 (1988). Plaintiffs cannot discharge this heavy burden. This litigation makes
abundantly clear that academics and consultants hold varying opinions about how best to reform the
campaign finance system, but BCRA is 2 bipartisan attempt by the true experts in this area to devise
the best solution to a complex problem. Every Member of Congress has been a successful partici-
pant in the federal campaign finance system. They must raise the funds necessary to mun their
election campaigns, and they must face the demands of their political parties and the pressures of

large donors while performing their legislative duties. Having directly operated under this system,



electoral races, and that they were overwhelmingly likely to be perceived as having an
electioneering purpose’

The 2000 election featured much the same patterns of conduct as those seen in 1996. Labor
and business again dominated the airwaves: the AFL-CIO, the pharmaceutical industry, and the
Chamber of Commerce constituted three of the top four group sponsors of television ads referring
to federal candidates within 60 days of the election. Kenneth H. Goldstein, Amended Expert Report

at 14 & Tbl. 3 [DEV 3-Tab 7, hereinafter Goldstein Expert Rep.J; Annenberg 2000 Study at 7.

The AFL-CIO campaign met with return fire from the pharmaceutical industry, in the guise

of a nonprofit organization dubbed “Citizens for Better Medicare.”

ee

*4 See Jonathan S. Krasno & Daniel £. Solt, Buying Time (‘Buying Time 1998") Fig, 1.5 at 17, Fig. 2.8 at
38, Fig. 4.15 at 103, Fig. 4.22 at 110 [DEV 47}; Craig B, Holman & Luke P. McLoughlin, Buying Time 2000 Fig. 4-6
at 31. Fig. 6-8 at 56 [DEV 46]; Krasno & Sorauf Expert Rep. at 50-60 & App. Tbls. 2. 4-6. Kenneth Goldstein,
Amended Expert Report at 17-19, 24-28 & Tbls. 2.4, 8 [DEV 3-Tab 7, hereinafter Goldstein Expert Rep.J: Magleby

44


The potential for corruption is not limited to solicitations made on behalf of national party
comunittees. Federal candidates and officeholders also solicit soft money contributions for state and
local party committees and tax-exempt organizations, which can then use those funds for activity

that influences federal elections, See Buttenwieser Decl. 4 16; Kirsch Decl. 11 9-10;

Even where federal officeholders and candidates do not solicit soft money for purposes that
could directly assist their own campaigns, the appearance and reality of corruption looms large.
Federal officeholders and candidates may feel beholden to large donors who make soft money
donations at their behest even where the donations are made for purposes that only affect state
elections, since such donations can enhance the stature of federal officeholders and candidates with
party leadership. See supra at 73 (discussing influence of national parties upon federal candidates
and officeholders). Moreover, direct requests for large soft money donations by federal
officeholders or candidates for federal office can make potential donors feel they must contribute.
Congress recognized, and the record confirms, that donors accede to such funding requests in order
to curry favor with the federal candidate who is asking for the solicitation, whether or not the federal

candidate will in fact directly benefit from the donation. See supra at 84-8622

—_._ As
discussed above, large soft money donations are routinely and openly rewarded with access to

legislative leaders, party officials, and federal officeholders. See supra at 75-81. In addition,

BCRA’s restrictions on federal officeholders and candidates directly advance Congress’s interest

% See also Randlett Decl. 9 (“Most soft money donors don't ask and don't care why the money is going to
a particular state party. .. [what matters is that the donor has done what the Member asked.”):

124


Court also reiterated its pronouncement in Buckley that disclosing sources of communication has
the “prophylactic effect” of preventing corruption or the appearance of corruption. Id.; see also

Buckley v. Am. Constitutional Law Found., 525 U.S. 182, 202-03 (1999) (approving state-law

provisions requiring disclosure of names of initiative sponsors and amounts spent); Citizens Against

Rent Control v. City of Berkeley, 454 U.S. 290, 298-99 (1981) (recognizing municipality’s

legitimate goal of “identifying the sources of support for and opposition to ballot measures”).
Sections 305 and 504 readily withstand scrutiny under Buckley v. Valeo and its progeny.
By requiring disclosure of whether a candidate approved a broadcast that refers to his opponent,
Section 305 provides voters with important additional information to consider in evaluating that
candidate. And requiring the disclosure to be made with the candidate’s face and voice ensures that
this vital information is transmitted to viewers and listeners ina way that sufficiently distinguishes it
from the remaining parts of the broadcast so that the information is communicated effectively’
Section 504 also provides public access to important information about political broadcasts.
Evidence suggests that voters currently have difficulty identifying the true sponsors of issue ads on
television or radio, and determining whether those sponsors are related to a candidate’s campaign.
Organizations that sponsor issue ads frequently are front groups for trade associations, labor unions,
and wealthy individuals. This lack of disclosure creates greater opportunities for political
corruption. See Magleby Expert Rep. at 18-19, 28-30; Krasno & Sorauf Expert Rep. at 71-72, 73-
74 (“Secrecy is one of the outstanding characteristics of issue ads, especially those financed by

interest groups. ... This secrecy, by itself, creates enormous opportunities for wrongdoing, for favors

+! This is not the first time that standards of clarity have been imposed on sponsors of political broadcasts.
See 47 C.F.R.73,1212(a)(2)(ii) (“In the case of any television political advertisement concerning candidates for public
office, the sponsor shall be identified with letters equal to or greater than four percent of the vertical Picture height that
air for not less than four seconds.)

218


from corporations or unions to finance “any Portion of” a voter registration drive. Id. ¥ 6934, at
17,047. But this Advisory Opinion did not address the allocation of a portion of expenses for voter
registration activities to an account containing funds not raised in accordance with FECA. (known
today as “nonfederal funds” or “soft money”) that did not include corporate or union money.

In 1977, the FEC Promulgated its first general set of regulations to implement FECA. Those
regulations provided that “[ajny political committee” that received contributions or made
expenditures to, or on behalf. of, any federal candidate, could either establish a separate federal
account for its federal election activities, or use a single account containing only funds subject to
the federal contribution limits to finance all of its activities with respect to both state and federal
elections. 11 C.F.R. 102.6 (1977). To the extent Party committees or other political committees
established a separate federal account under the regulations, however, the committees were required
to “allocate administrative expenses on a reasonable basis between their Federal and non-Federal
accounts.” 11 C.F.R. 106.1 (1977).

The next year, in Advisory Opinion 1978-10, the FEC modified the advice it had given in
Advisory Opinion 1976-72, and conchided that “thecosts of [voter] registration and get-out-the-vote
drives” by a state party committee “should be allocated between” federal and non-federal accounts
“in the same manner as other general party expenditures” under the regulations. Fed. Elec. Camp.
Fin. Guide (CCH) 9 5340. The FEC, thus, essentially returned to the view it had taken in Advisory
Opinion 1975-21. Accordingly, under FECA as implemented by the FEC, state parties could

maintain both federal accounts (composed of “hard money”) and nonfederal accounts (composed

of “soft money”), with administrative expenses and overhead, as well as expenses for voter

23


that although “a contribution serves as a general expression of support for the candidate and his
views,” it “does not communicate the underlying basis for the support.” 1d. at 21. The “expression
rests solely on the undifferentiated, symbolic act of contributing” and the quantity of the expression
does not increase with the size of the contribution. Id. The Court rejected the notion that the
contribution limitations would prevent candidates and political committees from “amassing the
resources necessary for effective advocacy,” noting that the “overall effect” of such limitations is
“merely to require candidates and political committees to raise funds from a greater number of
persons.” Id. at 21-22.

In upholding the challenged contribution limits, the Buckley Court found that the statute’s
primary purpose to limit “the actuality” and, of “almost equal concern,” the “appearance of
corruption resulting from large individual financial contributions” provided a “constitutionally
sufficient justification for the $1,000 contribution limitation,” Id. at 26-27. The Court also
determined that the $25,000 aggregate annual limit on contributions by an individual legitimately
served to prevent circumvention of the $1,000 contribution limit that might be accomplished
through, for example, “huge contributions to... {a] candidate’s political party.” See id. at 38. The
Court found that the contribution limitations “focus[] precisely on the problem of large
contributions[,] the narrow aspect of political association where the actuality and potential for
corruption have been identified(,] while leaving persons free to engage in independent political
expression, to associate actively through volunteering their services, and to assist to a limited but

nonetheless substantial extent in supporting candidates and committees with financial resources.”

Id. at 28.


ing large contributions and expenditures made on candidates’ behalf; and they assist those charged
with enforcing the law by facilitating the detection of violations of FECA’s contribution and expen-
diture limitations. 424 U.S, at 66-68. By avoiding disclosure, many interest groups and organiza-
tions now run issue ads supporting or opposing a federal candidate while concealing their sources
of financial support, and sometimes their identities ~ information that the electorate needs to know,
before casting their votes, so they may evaluate the interests to which candidates may be most
responsive.

Il. Thus, notwithstanding FECA, corporations, supposedly banned from making campaign
contributions, now give millions of dollars to political parties to further the electoral prospects of
their candidates. In the process, their executives and lobbyists gain a quality of access to elected
officials that is not available to average citizens, Labor unions, supposedly prohibited from making
expenditures for the purpose of influencing federal elections, spend millions of dollars on TV and
radio advertisements that are indistinguishable from the candidates’ own. Wealthy individuals,
theoretically “capped” on the amounts they may contribute to federal campaigns, make unlimited
donations to the parties, and form pseudonymous front groups to conceal their support for yet more
political advertising on behalf of favored candidates. These practices —albeit technically legal under
the current system — have fueled an unrelenting arms race for cash that gives at least the appearance
that legislative votes are for sale. Congress enacted BCRA, after years of deliberation and debate,
to put an end to these circumventions of FECA’s restrictions, and to restore meaning to the regula-
tory scheme that had evolved over the course of nearly one-hundred years.

A. Title lof BCRA includes several interrelated provisions that address the threats that soft

money presents to the integrity of federal elections. The cornerstone of Title I is the national party



See supra at 43-46. Together, Citizens for Better Medicare, the Chamber of
Commerce, and the AFL-CIO, spent more than $17 million on candidate-centered “issue” ads in the
60 days preceding the November 2000 election, according to conservative estimates. Kenneth H.
Goldstein, Amended Expert Report at 14 & Tbl. 3 [DEV 3-Tab 7, hereinafter Goldstein Expert
Rep.]. Total spending by corporations, unions, and interest groups on candidate-centered “issue”
ads, according to the same estimates, approached $50 million in 2000; nearly 80 percent of these
ads were broadcast within 60 days of the November elections. Id. at 17 & Tol. 1B.

The record overflows with evidence that the purpose of these corporate and labor union
expenditures was to influence federal elections. In 1996, the AFL-CIO admitted as much, declaring
its intent to launch a broadcast advertising campaign to win back Democratic control of the House
of Representatives. See supra at 37-38. Internal documents and testimony establish that the
Coalition intended just as firmly to maintain the House Republican majority, as investigations by

Congress found. See supra at 40.

Indeed, in 1997, Tanya Metaska, the Executive Director of the NRA Institute for

Legislative Action, admitted with remarkable candor that:

Today, there is erected a legal, regulatory wall between issue advocacy and political
advocacy. And the wall is built of the same sturdy material as the emperor’s
clothing. Everyone sees it. No one believes it. It is foolish to believe there is any
practical difference between issue advocacy and advocacy of a political candidate.

These estimates are based on data from the nation’s top 75 media markets serving 80 percent of the
population, but do nor include spending for issue advertisements in media markets serving the remaining 20 percent of
the populace. Furthermore, the figures do not attempt to account for the increased cost of advertising time during the
peak season of political campaigns. Hence, they understate the actual totals spent on televised issue advocacy. See
Goldstein Expert Rep. at 8; see also Annenberg Pub. Policy Crr., Issue Advocacy Advertising During the 1999-2000
Election Cycle (“Annenberg 2000 Study”) at 9 [DEV 38-Tab 22]

136


by a Federal candidate or say that they identify with a position of a named Federal candidate, so long
as those advertisements do not support, attack, promote or oppose the Federal candidate, regardless
of whether the communication expressly advocates a vote for or against a candidate.” 148 Cong.
Rec, $2143 (Mar. 20, 2002) (Sen. Feingold). Simply promoting the candidacy of a state candidate
does not trigger the prohibition; the communications must “support[] or oppose[}” the federal
candidate, See id. All the statute prevents is “the laundering of soft money through State candidate
campaigns for advertisements promoting, altacking, supporting or opposing Federal candidates.”
1d.; see supra at 104-05. And, by limiting the statute to references to “clearly identified” candidates
for federal office, Congress employed a term that both it and the FEC have already defined, see 2
U.S.C. 431(18); 11 C.F.R. 100.17, and that the Supreme Court in Buckley endorsed, see 424 U.S.
at 43-44. As Senator Feingold explained, the term “refers to” also is not unconstitutionally vague.
148 Cong. Rec. $2144 (Mar. 20, 2002) (“A communication that ‘refers to a clearly identified
candidate’ is one that mentions, identifies, cites, or directs the public to the candidate’s name,
photograph, drawing, or otherwise makes an ‘unambiguous reference’ to the candidate’s identity.”);

see also 1] C.F.R. 100,29(b)(2) (67 Fed. Reg. 65,210 (Oct. 23, 2002)).

Moreover, any uncertainty in the particular application of the statute can be clarified by

seeking an advisory opinion from the FEC. See 2 U.S.C. 437f(a); Martin Tractor, 627 F.2d at

384-86; see also National Ass’n of Letter Carriers, 413 U.S. at 580. As explained above, the statute

requires the FEC to provide prompt responses to requests for advisory opinions, 2 U.S.C. 437f(a),
and reliance on those opinions can provide a defense to criminal or civil enforcement proceedings,
2 U.S.C. 437f(c)(2). The availability of prompt clarification from the agency further undermines

plaintiffs’ facial vagueness challenge.

114


money would be through the candidate’s adding to the universe of soft money that the party can use,
in conjunction with state parties, to run so-called “issue ads” to assist the candidate’s campaign.’
Still another potential direct benefit to a candidate from soft money donations comes through the
use of soft money to support voter registration, voter identification, and get-out-the-vote activities,
which can have significant effects on the candidate’s election prospects. See, e.g., Mann Expert

Rep. at 25;

Even if a particular soft money contribution does not directly benefit a given candidate, he
or she nonetheless has a substantial interest in promoting a strong ongoing relationship with the
donor in light of the overlapping interests of the party and the candidate.

Parties exert considerable influence over federal candidates and
officeholders, who, in turn, have a significant stake in the success of their parties. As Professor
Green explains, parties frequently recruit, endorse, and finance candidates for public office, and
“{fjederal candidates in particular must pass through a sieve of party caucuses or primaries in order
to appear on the general election ballot with the mantle of a political party beside their names.” D.
Green Expert Rep. at 7. Candidates “must typically build a cordial relationship with party leaders”
to locate donors and activists who might help them with their campaigns, particularly “if candidates
hope to secure direct campaign support from the parties or from prominent figures within the party,”

who are “apt fundraisers” and “important assets to any campaign organization.” Id, at 9. The

political parties also “control the resources crucial to subsequent electoral success and legislative

ee

® See supra at 71-73; David B. Magleby, Report Concerning Interest Group Electioneering Advocacy and
Pitty Soft Money Activity (Sep. 23, 2002) at 37-38 [DEV 4-Tab 8, hereinafter Magleby Expert Rep.]; Rudman Deel.
112 «Issue ads” not only assist a candidate's campaign by virme of the electioneering message coniained in the ads,
they also force the candidate’s opponent to spend time and resources to counter the ads, See Pennington Decl. 411;
Beckett Decl. #4 10-11 [DEV 6-Tab 3}; Lamson Decl. 17.

73



TITLES Hi] AND V: CLAIMS AGAINST THE FCC

PRESENTATION BY THE UNITED STATES DEFENDANTS.

I SECTIONS 305 AND 504 OF BCRA ARE CONSTITUTIONAL.

A. Background

Sections 305 and 504 of BCRA impose disclosure requirements with respect to certain
political broadcasts on radio or television. Those requirements were enacted against the backdrop of
a Jong history of federal regulation of political broadcasts, beginning with the Radio Act of 1927, 44
Stat. 1162, and the Communications Act of 1934, 47 U.S.C. 151 et seg. The Communications Act
requires broadcast stations to provide equal opportunities for air time to legally qualified candidates
for the same office, 47 U.S.C. 315(a), and to grant reasonable access to legally qualified candidates
for federal office, 47 U.S.C. 312(a)(7); see CBS, Inc. v. FCC, 453 U.S. 367 (1981) (upholding
“reasonable access” requirement). The Act also prohibits broadcast stations from charging
candidates more for air time than “the charges made for comparable use of such station by other
users,” 47 U.S.C. 315(b)(2), and requires a station to sell broadcast time to a qualified candidate at
the “lowest unit charge of the station for the same class and amount of time for the same period”
during the period immediately prior to an election (45 days preceding a primary or 60 days
preceding a general election). 47 U.S.C. 31 S(b)( py During other times, the station can charge no
more than the rate applicable to other advertisers for “comparable use.” 47 U.S.C. 315(b)(2).

These provisions, mandating reasonable access and equal opportunities for air time for

legally qualified candidates and providing legally qualified candidates with access to the “lowest

+ The “lowest unit charge” provision was added in 1972 by FECA, “which had the dual purpose of reducing
the costs of campaigns and increasing candidates’ access to the broadcast media.” Miller v. FCC, 66 F.3d L140, 1142
(Lith Cir. 1995) (citing S. Rep. No. 92-96, at 20, reprinted in 1972 U.S.C.C.A.N. at 1774)

atl


for the national parties. Mann Expert Rep. at 14; _

. The regulations also
required national party committees, but not state Party committees, to file public reports disclosing
the donations to, and expenditures from, their soft money accounts. {1 C.F.R.1 04.8(e),(D; 104.9(c),
(d). In addition, the regulations required all political committees with nonfederal accounts to file
public reports disclosing the expenses allocated between the committee’s federal and nonfederal

accounts. 11 C.F.R. 104.10.

The Prodigious Growth of Soft Money and Its Use to Support Federal Campaigns

{In 1992, the first election cycle for which national party soft money donations and
expenditures were reported to FEC, soft money spending by the national parties reached $80 million,

16% of the national parties’ total spending. Mann Expert Rep. at 15; see also 147 Cong. Rec. $3253

(April 2, 2001) (Ex. | to Statement of Sen. Levin). Both parties received donations of $200,000 or
more from their top donors and actively solicited corporate gifts. Mann Expert Rep. at 15; id, at Tol.
4 (listing top 50 soft money contributors in the 1992 election cycle, with donations as high as $1
million), The national parties exerted “firm control” over how this soft money was spent, with their
primary focus the election of federal rather than nonfederal candidates. Mann Expert Rep. at 16.
The bulk of the money was transferred to ten presidential election battleground states, where the
funds, along with the appropriate proportion of hard money, were used to finance voter registration
and get-out-the vote activities, typically under a plan preapproved by the national party, and to fund
“generic” party television ads, run in key states to reinforce the message of the presidential

candidates without mentioning the names of the candidates. Id.

28


reliably ascertained,” but the record of this litigation “demonstrate[s} that the problem is not an
illusory one.” Buckley, 424 U.S. at 27. These problems arise because corporations and labor unions
can spend unlimited general treasury funds on electoral advocacy outside FECA’s regulatory
framework, and now do so routincly, through the simple expedient of avoiding express advocacy.

Whatever may have been the case in 1976, or even 1986, by 1996 reliance upon “explicit
words of advocacy of election or defeat of a candidate” was no longer the touchstone of electoral
advocacy during the heat of a campaign, when the public is particularly conscious of its upcoming
electoral decisions. See Bailey Decl. 5; Krasno & Sorauf Expert Rep. at 54.1% In contemporary
political campaigns, even candidates, whose advertising by definition is freighted with electoral
purpose, no longer bother with express advocacy. In 1998 and 2000, candidate ads used words of
express advocacy only 11 percent of the time. Goldstein Expert Rep. at 16; Krasno & Sorauf Expert
Rep. at 53-54; Rudman Decl. {18 [DEV 8-Tab 34] (“Many, if not most, campaign ads run by parties
and by candidates themselves never use such ‘magic words.’ It is umnecessary.”); see also Selected
Candidate Ads, App. A to Defs.’ Mem., Tab 4 (video); DEV 48-Tabs 5, 6, 9, 10 (selected 1998 and
2000 storyboards of candidate and party ads without “magic words”). Media consultants do not
consider it most effective or even advisable to use such “clumsy words as ‘vote for’ or ‘vote

against’” when creating political advertisements, Bailey Decl. 412, instead preferring advertising that

makes a case for or against a candidate, but allows viewers to come to their own conclusions about

how to cast their votes

“5 Jn 2000, 96 percent of the electioneering ads sponsored by interest groups did not use “magic words” of

express advocacy. Buying Time 2000 at 29 & Fig. 4-3: Goldstein Expert Rep. at 10, 31 (tables showing that, in 2000,
less than 4% of group ads mentioning candidates contained express advocacy (2,876 / (3,663 + 74,204)) see also Krasno
& Sorauf Expert Rep.. App. Tbls. | and 7 (showing that, in 1998, only 7% of group ads mentioning candidates used
express advocacy (517/7.377)); Magleby Expert Rep. at 26.

108

Bailey Decl. | 3 (“All advertising professionals understand that the most
{continued ...}

147


revision of existing legislation adopted in the midst of enduring concern over the disproportionate
influence of aggregated Corporate wealth on political parties and the political process:

We all know .. . that one of the great political evils of the time is the apparent hold

on political parties which business interests and certain organizations seek andsome-

times obtain by reason of liberal campaign contributions. Many believe that when

an individual or association of individuals makes large contributions for the purpose

of aiding candidates... in winning the elections, they expect, and sometimes de-

mand, and occasionally, at least, receive, consideration by the beneficiaries of their

contributions which not infrequently is harmful to the general public interest.
UAW, 352 U.S, at 576-77 (quoting 65 Cong. Rec. $9507-9508 (Sen. Robinson),

In 1943, temporary wartime legislation extended the proscription against campaign contribu-
tions by corporations to contributions by labor organizations. Smith-Connally Act, § 9, 57 Stat. 163,
167-68; see UAW, 352 US. at 578; Mann Expert Rep. at 4. Congress acted on this occasion out of

a conviction that “just as the great corporations had made huge political contributions to influence
government action or inaction... the powerful unions were pursuing a similar course, and with the
same untoward consequences for the democratic process.” UAW, 352 U.S. at 578.2 Despite the
Smith-Connally Act, however, organized labor Spent millions of dollars in connection with the
national elections of 1944, to support a program of political “education” that included, among other

things, the distribution of 200,000 pamphlets to the public-at-large Opposing the re-election of

Senator Taft. UAW, 352 US. at 580. Two years later, labor unions and numerous other political

ee

er ettony given before Congress by Lewis Hines, national legislative representative for the American
Federation of Labor, did nothing io dispel this impression:

(Flor many years the financial interests of this country have held sway; they have heid pretty much
their own way, and it has been done with money. That is the only thing that made any impression.

Labor unions have grown strong. Labor unions recently have started to take an active interest in
politics. Labor unions have money. ... Ifithas been good over the years for the employers to elect
Representatives to Congress - and there are many Representatives in Congress elected by the
employers - why is it not good for organized labor and the trade-union movement to Put forth a little
effort and financial support, if necessary, to help elect their friends who have passed humanitarian
legislation?

Hearings Before a Subcomm, of the House Committee on Labor, 78 Cong,, Ist Sess., 1, 2 (1943).

14



Business (“NFIB”) is due in part to the gratitude of officeholders it has aided, Juliet Eilperin, Small

Business Group Sticks to One Side of Political Fence, Wash. Post, May 16, 2002 [DEV 45-Tab

103]. One newly elected Congressman reportedly told the president of NFIB, which had just spent
$100,000 in support of his candidacy, “If it hadn’t been for your people, I wouldn’t have won.” Id.

Morcover, as explained above, See supra at 68-69, the political parties have raised tens, if
not hundreds, of millions of dollars from business corporations and unions, and much of that money
has then been spent on electioneering ads to influence federal elections. Although Title lof BCRA
will eliminate the national parties’ ability to raise and spend such soft money in the future, without
effective regulation of candidate-centered “issue” advocacy, such as that contained in Title IT of the
Statute, much of this money could simply flow through a different channel but with much the same
destination, See Krasno & Sorauf Expert Rep. at 82 (“The history of campaign financing is a story
of evolution as participants have sought out and exploited weaknesses in the system.”); Randlett
Decl. 4] 17 [DEV 8-Tab 32] (“[O]ne potential method of evading the national party soft money ban
... would involve a political consultant, working with some level of pre-arrangement with an office
holder, say a Senator, and persuading a corporate donor that the Scnator wants the donor to run a
lot of ‘issue ads’ that will help him. ... That kind of proxy, “wink and nod” scenario takes the core
soft money transaction as it works today and adds one layer of complexity. But it’s not a big
layer.”).

In other words, without a restriction on corporate and union electioneering ads, large soft
money donors could simply donate the money they would have given to political parties to nonprofit
corporations and other organizations, instead, which in turn could run the same kind of ads that the

parties would have run. As Congress recognized:

145


selected its senatorial nominee from among several individuals vying for the nomination, it had
bought radio advertisements attacking the Democratic Party’s likely senatorial nominee.
518 U.S. at 613-14, The Court found that the Colorado Republican Party had in fact made those
expenditures “independently, without coordination with any candidate.” Id, at 608.

The sparse record on the preparation of the advertisements included no evidence that the
Party had communicated at all with any of its senatorial candidates about the advertising
campaign. The Court found the following points decisive: the expenditure occurred prior to
nomination; the Party chairman arranged for the development of the advertisement script on his
own initiative and alone approved the script; only the Party’s staff read the script; and all
relevant discussions took place at meetings attended only by the Party’s staff. Colorado 1,
518 U.S. at 613-14. The Court discounted a statement by the Party’s Chairman that “it was the
practice of the Party to ‘coordinat[e] with the candidate’ “campaign strategy."” Id. at 614. That
statement was just a “general description of Party practice” and did “not refer to the advertising
campaign at issue here or to its presentation.” Id. Hence, “the uncontroverted direct evidence
[showed] that this advertising campaign was developed by the Colorado Party independently and
nol pursuant to any general or particular understanding with a candidate.” Id,

In sum, the Supreme Court has eschewed a rigid, formalistic approach and instead has

emphasized the factual circumstances of an expenditure, for “[cloordinated spending . . . covers

& spectrum of activity.” Colorado II, 533 U.S. at 445. “[Flacts speak less clearly once the
independence of the spending cannot be taken for granted, and money spent by an individual or
PAC according to an arrangement with a candidate is therefore harder to classify.” Id. at 442-

443. To resolve the facial challenge in this case, however, this Court need not identify all the

188



including access to senior decision makers, and noted that this policy resulted in “a number of
alarmingly unsavory characters” gaining access to the President. Thompson Comm. Rep. at 41.
Examples of access given in exchange for large contributions to the DNC included the infamous
White House “coffees,” held for donors who made contributions to the Democratic Party averaging
over $54,000 per person, id., Prompting one contributor, who ultimately pled guilty to criminal
violations related to his giving, to acknowledge, ““The White House is like a subway: You have to

put in coins to open the gates.”” Id. at 783; see Krasno & Sorauf Expert Rep. at 8; see infra at Title

I, pt. LB.2.b,

The Thompson Committee Minority likewise observed that the Practice of providing major
contributors with “added access to decisionmakers in the legislative and executive branches of gov-
ernment” is “[oJne of the most troubling aspects of the campaign finance system.” Thompson
Comm. Rep. at 4573. The Minority Report found that Republicans also “have openly offered
contributors access to congressional and political figures in their party,” citing, inter alia, a
Republican invitation offering “a smorgasbord of benefits” available in exchange for a $250,000
contribution, including “sharing a table with the Senate or House committee chairman ‘of [the

donor’s] choice.’” Id.; see id, at 7968-78 (describing numerous examples of special access given

to large donors to the RNC)“
The exploitation of soft money continued unabated after the 1996 election. During the 1998

midterm election cycle, the national parties spent $221 million in soft money, representing 34% of
ee

*© For instance, the Minority reported that the RNC's two principal donor programs, Team 100, which required
an initial contribution of $100,000 plus $25,000 over the next three years, and the Republican Eagles, which required
members to contribute $15,000 annually, used promotional materials that “promised that participants in the Team 100
and Eagles programs would receive special access to high-ranking Republican elected officials, including governors,
senators, and representatives.” Id. at 7968. The Minority quoted a memorandum from an RNC aide to the chairman of
Team 100, stating that the RNC was working on getting a “hor” contributor “‘an appointment with [Representative]
Dick Armey, so we can get his other 350,000." Id. at 7973. The minority also quoted a fundraising letter to a
Prospective Team 100 member that reported that after Ed Lupberger, the CEO of Entergy, joined Team 100, Haley
Barbour escorted him to four legislative meetings “‘that turned out to be very significant in the legislation affecting
public utility holding companies. In fact, it made Ed a hero in his industry." Id,

33



non-broadcast communications, see, e.g.,

but, most important, they are far more expensive. See, e.g., $2614
(March 21, 2001) (Sen. Durbin) (“The cost [of air time] . . . is going through the roof.”). The high
price of broadcast advertising time is the primary engine driving the escalating costs of
contemporary elections, which, in turn, threaten to pressure candidates and parties to curry favor
with groups able to pay for the ads. Broadcast is thus the primary medium by which large
aggregations of wealth may be used to distort or corrupt the political process. It was therefore
entirely reasonable for Congress to single out television and radio for regulatory attention.

I. The “Backup” Definition of Electioneering Communications
Is Also Constitutional.

BCRA § 201 includes an alternate provision applicable only if its main definition of
electionecring communications is judged to be unconstitutional. Ifthe primary definition is stricken,
then the statute provides that:

the term ‘electioneering communication’ means any broadcast, cable, or satellite

communication which promotes or supports a candidate for that office, or attacks or

Opposes a candidate for that office (regardless of whether the communication

expressly advocates a vote for or against a candidate) and which also is suggestive

of no plausible meaning other than an exhortation to vote for or against a specific

candidate.

BCRA § 201(a), adding 2 U.S.C. 434((3)A)(ii). Contrary to the plaintiffs’ assertions, eg,
McConnell Second Amend. Compl., 4 48; AFL-CIO Compl, ff 15-16 , this definition is neither
vague nor overbroad.

The backup definition is narrowly tailored and highly protective of First Amendment

interests. It precludes regulation of a communication unless it has “no plausible meaning other than

an exhortation to vote for or against a specific candidate.” This requirement by itself rules out the

170


rulemaking, but does not dictate what the FEC should decide.” 148 Cong. Rec. $1530 (Mar. 5,
2002) (Analysis of Changes Proposed By Senator McConnell to Pending Campaign Finance
Reform Legislation), see_also 147 Cong. Rec. $3185 (Mar. 30, 2001) (Sen. Feingold) (the
amendment “doesn’t require the FEC to come out any certain way or come to any definite
conclusion one way or another”),

In order to succeed in their challenge, plaintiffs must demonstrate that there is no con-
Stitutionally permissible way in which the FEC can even consider the listed factors. Plaintiffs
can make no such showing. Congress is entitled to provide guidance to agencies when it directs
them to promulgate regulations, and although Congress certainly could have identified additional
or different criteria, the legislative record fully supports Congress’s choice. See, e.g., 147 Cong.
Rec. $2423 (Mar. 19, 2001) (Sen. Specter) (discussing the shared use of campaign consultants);
Thompson Comm. Rep. at 128 (same); id. at. 120 (discussing shared advertisements); id. at 4005
(discussing activities of former campaign employces); id. at 4010-11 (discussing common ven-

dors}; id. (Minority Views) at 6295 (discussing common vendors). Accordingly, § 214 is

entirely consistent with the First Amendment.

12 Included among the plaintiffs challenging § 214 are the Paul plaintiffs. Sce Paul Compl. 33. The claims
Presented in the Paul complaint more generally, however, can be described as omnibus in nature: the Paul plaintiffs uke
issue with virtually every aspect of FECA from coordination, id., to contribution limits in general, see id. 4] 11(b}(iii),
13a). 17(bYGii), $6; to all disclosure and reporting requirements, see id. ff 11(b}, 1206), 13(b), 47; to BCRA's provisions
concerning soft money, see id. ¥ 18, 40, and clectioneering communications, see id, Vf 13(c), 14, 35-36, To the extent
the Paul claims concern amendments made by BCRA, the claims are addressed by defendants’ arguments with respect
to those amendments, To the extent the Paul claims address FECA requirements apart from those oecasioned by BCRA,
however, such as the imposition of contribution limits in general, those claims are either outside the jurisdiction of this
Court, see BCRA § 403 (three-judge court available only for actions challenging constitutionality of BCRA “or any
amendment made by” BCR A), or are foreclosed by Buckley and its progeny.

190


transferring it to state parties, where a larger proportion of it can be used on federal campaign
activity. See supra at 30-35; The national parties likewise
solicit soft money donations to state party committees to provide assistance to federal campaigns
in those states. See, e.2., Hassenfeld Decl. {| 9; Kirsch Decl. 49; Wirth Decl. Ex. A ff 5-6

(congressman raised money for state party);

Tellingly, the national parties transfer most soft money to states where there are highly
competitive federal races. See Magleby Expert Rep. at 37-38, 39; supra at 30-35;

Fowler Decl. ¥] 15; Professor Magleby has found that state party
Officials “readily acknowledge they are simply ‘pass throughs” for national soft money funds paid
to “the vendors providing the broadcast ads or direct mail.” Magleby Expert Rep. at 38-39, The
national party committees thus “exercise a great deal of control over how soft money is spent,” after
it is transferred to state parties. Id. at 38; _ Indeed, in “a few
instances where party committees lack confidence in how state parties will utilize the soft money
transferred to them, the national parties have spent the money from Washington and foregone the

more favorable soft/hard ratio generally available to the state parties.” Magelby Expert Rep. at 38.52

from which members of the House of Representatives are elected, and “[t]he chances that a House incumbent will bc
ousted by unfavorable district boundaries are often greater than the chances of defeat at the hands of the typical
challenger.” D, Green Expert Rep. at 11. House members, and the national Parties to which they belong, thus “have
a tremendous incentive to be attuned to the state legislature and the state party leadership.” Id. National party
organizations therefore “have been flooding the states with campaign donations, both soft moncy and hard, to influence
the redistricting process.” Id. at 12 (citation omitted);

102



The potentially corrupting uses and influence of corporate or union “issue” advocacy are
visible throughout the record. In 1996, the AFL-CIO made certain that officials at the Clinton White
House knew of its plans “to ensure that the Democrats could take back the House,” and the extent

of the resources that organized labor would devote to the task. Thompson Comm. Rep. at 4001.

Similarly, in 1998, prior to a vote on the proposed National Tobacco Policy and Youth
Smoking Reduction Act, legislators were advised that major tobacco companies had promised to
mount a television ad campaign to support those who voted against the bill. McCain Decl. 8 [DEV
8-Tab 24]. In a Club for Growth fundraising letter, a freshman congressman expressed his
appreciation for the support he received from the Club in his successful 2000 campaign, support
which included TV advertising during the final days before the election: “I was a non-establishment
candidate who, thanks to... the Club for Growth, was able to afford to overcome the attacks from

the left by using TV ads to spread our message.” CFG000208-09; see also CFG000239 [DEV 130-

Tab 5]. According to recent accounts, the rising influence of the National Federation of Independent

144


goods to the entity; or, in addition, whether there are other circumstances indicating “a formal or
ongoing relationship between the sponsor and the entity.” 11 C.F.R. 300.2(c)(2)(i)-(x). Similar
factors have been in the FEC’s regulations for more than a decade. 11 C.F.R. 100.5(g), 110.3
(1990). The regulations also provide a “safe harbor” for the activities of an entity occurring before
November 6, 2002, and they state that an entity may request an advisory opinion from FEC to
“determine whether the sponsor is no longer directly or indirectly financing, maintaining, or
controlling the entity for purposes of this part.” 11 C.F.R. 300.2(c)(3), (4).

There is no basis for finding any of the challenged terms vague on their face. As the
Supreme Court has made clear, the fact that “(a] statute may leave room for uncertainty at the

periphery” does not render it unconstitutionally vague. NRWC, 459 US. at 21 1; see also United

States v, Petrillo, 332 U.S. 1, 7 (1947); Barnes, 295 F.3d at 1366. The existence of a theoretical
possibility of confusion in some future application is particularly insignificant where, as here, the
regulatory agency has provided a mechanism for regulated entities to obtain prompt advisory
opinions ifnecessary, See 2 U.S.C. 437f(a) (requiring FEC to issue advisory opinions no later than
60 days after submission of a complete written request and no later than 20 days after a request
submitted within 60 days of'a federal election involving the requesting party). Indeed, “to the extent
that it offers a prompt means of resolving doubts with respect to the statute’s reach, the advisory
opinion ... mechanism written into the FECA . . . under which the Commission is authorized to give
advice conceming the Act’s application to specific factual situations, . . . mitigates whatever chill
may be induced by the statute and argues against constitutional adjudication on a barren record.”

Martin Tractor v. FEC, 627 F.2d 375, 384-85 (D.C. Cir.) (footnotes omitted), cert. denied, 449 U.S.

954 (1980); see also United States Civil Serv. Comm’n v. Nat'l Ass’n of Letter Carriers, 413 U.S.

95


broadcasters, candidates, and others with questions about political broadcasts on radio or television

and about record-keeping by broadcast stations and cable systems.
CONCLUSION
For the foregoing reasons, the motion of the Governmental Defendants and the Defendant-

Intervenors for judgment should be granted, and plaintifis' claims dismissed, with prejudice.

223


Cc. The Millionaire Provisions’ Declaration-of-Intent Requirement
Does Not Violate a Self-Funded Candidate’s Right of Free Speech.

Sections 304(b) and 319(b)(1)(B) of BCRA modify the reporting provisions of FECA by
requiring candidates to file a declaration stating the amount of personal funds they intend to spend
on their campaigns, if the amount exceeds the applicable threshold for their race. The declaration
requires only a statement of current intent to self-fund and the anticipated amounts, information that
will eventually be reported to the Commission under existing law. See 2 U.S.C. 434; 11 C.F.R. 104,
Thus, the essence of the new requirement is timing, not substance. The Supreme Court has already
upheld the constitutionality of provisions that require far more disclosure than that contained in the
initial declaration. See Buckley, 424 U.S. at 64-68, Disclosing the intended amount of self-
financing earlier in the election process creates no significant burden. In fact, since the declaration
of intent discloses only the amount of money a declared candidate intends to expend, and nothing
about the candidate’s views or the identity of his or her supporters, this requirement does not even
implicate the “privacy of association and belief’ that is the basis for scrutiny under the First
Amendment. Buckley, 424 U.S. at 64.

Even if the initial declaration requirement imposed some minimal constitutional burden on
self-funded candidates, it serves compelling governmental interests. See Buckley, 424 U.S. at 64-
68. Indeed, without this information, the millionaire provisions would be ineffective because neither
the candidate opposing a self-financing candidate nor the FEC would have any way of knowing
whether he or she qualifies to raise funds under the increased contribution limits. If a self-funded
candidate waited until late in the campaign before spending large amounts of personal funds, the

Purpose of the millionaire provisions would be evaded. “To avoid this type of gamesmanship,”

197


committees and organizations spent additional millions of dollars on political advertising in the 1946
elections. These activities Precipitated investigations by committees in both Houses of Congress,
which concluded that the limitation on contributions by corporations and labor unions had been
rendered ineffective due to widespread “expenditures” made by these organizations on behalf of
favored candidates, and that Congress ought to “plug the existing loophole”:

“The intent and purpose of the Provision of the act prohibiting any corporation or
labor organization making any contribution in connection with any election would
be wholly defeated if it were assumed that the term ‘making any contribution’ related
only to the donating of money directly toa candidate, and excluded the vast expendi-
tures of money in the activities herein shown to be engaged in extensively. Of what
avail would a law be to prohibit the contributing direct to a candidate and yet permit
the expenditure of large sums in his behalf?”

UAW, 352 U.S. at 581 (quoting H.R. Rep. No. 2739, 79th Cong., 2d Sess. 40 (1946)); see id. at 581-
83. Congress acted quickly on this recommendation. The Taft-Hartley Act of 1947, ch, 120, 61
Stat. 136, ___, amended the FCPA again “to proscribe any ‘expenditure’ as well as ‘any contribu-

tion’ [and] to make permanent [its] application to labor organizations” in addition to corporations,

UAW, 352 U.S. at 582-83.

ee

© The prohibition was eventually codified at 13 U.S.C. 610, and later transferred to the Federal Election
Campaign Act, 2 U.S.C. 441b, as part of a more general re-vodification designed to enhance the civil enforcement
Powers of the FEC. Federal Election Campaign Act Amendments of 1976, P-L. 94-283, 90 Stat. 475. See S. Rep. No.
677, 94th Cong., 2d Sess. 2-3 (1976), reprinted in 1976 US-CCAN. 929, 930-31. ~~

15



in seizing the opportunities presented by the soft money system to boost their federal candidates.”
Mann Expert Rep. at 30.

Soft money that the national parties solicit for or transfer to state parties is used
to promote the campaigns of federal candidates, frequently through media advertising directed or

orchestrated by the national parties.

See also supra at 30-35. As Senator Thompson explained, in the 2000

election, “Republican and Democratic Senate candidates setup joint fundraising committees, joining
with party committees, to raise unlimited soft money donations. The joint committees then
transferred the soft money funds to their Senate Party committees, which transferred the money to
their state parties, which spent the soft money on ‘issue ads,’ targeted get-out-the-vote and other
activities promoting the federal candidates who had raised the money.” 147 Cong. Rec. $3251 (Apr.

2, 2001) (Sen. Thompson); see also id, at $3252-55;

The national parties frequently transfer soft money to state parties because they can achieve
a “better ratio of hard to soft dollars than if they spent the money themselves,” Magleby Expert

Rep. at 37; see also supra at 30-35. Under the FEC’s regulations, see 11 C.F.R. 106.5, state parties

are able to spend a larger proportion of soft money on activities that may benefit both federal and
state candidates than the national parties are permitted to use. Thus, the more favorable ratio

applicable to state parties encourages national parties to “launder” a portion of their soft money by

101



TITLE HI

PRESENTATION BY THE GOVERNMENTAL DEFENDANTS

L THE MILLIONAIRE PROVISIONS OF TITLE III ARE CONSTITUTIONAL.

In the so-called “millionaire provisions” set forth in §§ 304, 316, and 319 of BCRA,
Congress modified the standard campaign contribution limits applicable when a candidate faces
an opponent who expends substantial personal funds, beyond a statutory threshold amount, on
his or her own campaign.2” The limits rise incrementally, in proportion to the amount of
personal funds expended by the self-financing candidate. The statutory formula also takes into
account the relative campaign funds available to both candidates, so that an incumbent candidate
with a sizeable campaign fund will not receive any benefits under the millionaire provisions

unless his or her self-financed opponent devotes a much larger amount of personal funds to the

campaign. See BCRA § 316: see also Robert F. Bauer, Soft Money Hard Law: A Guide to the

New Campaign Finance Law 72-74 (Perkins Coie 2002) (providing illustrative examples).

Moreover, BCRA lifts the limits on coordinated expenditures of the opposing candidate’s
political party when a Senate candidate spends more than 10 times the threshold amount ora
House candidate spends more than $350,000 in personal funds. See BCRA §§ 304, 319,22

As a threshold matter, as discussed below by the intervenor-defendants, plaintiffs lack
standing to challenge the millionaire provisions. If the Court finds the claims justiciable,

however, they should be rejected on the merits. The millionaire provisions increase the pool of

ET The threshold of personal spending for Senate races is $150,000 plus $0.04 multiplied by the voting age

Population of the candidate's state, BCRA § 304. For the House, the threshold isa standard $350,000. BCRA § 319.

22 CRA also caps the amounts that candidates can accept under the provisions: 110% of the self-funded
opponent's expenditures for the Senate and 100% for the House. BCRA further requires a candidate to return to
contributors any amounts raised under the Provisions bot spent on that election, thereby restricting the use of the
Provisions to the specific election where adverse financial conditions exist, and preventing amassing of funds for future
elections. BCRA §§ 304, 319. See 147 Cong, Rec. $2451, $2462 (Mar. 19, 2001) (Sen. Domenici).

191


that mobilizes residents of a highly Republican precinct will produce a harvest of votes for
Republican candidates for both state and federal offices.”); see also D. Green Rebuttal Expert Rep.
at 13-14 (so-called voter mobilization activities such as direct mail and commercial phone banks

have a persuasive impact on voters);

Requiring state party committees to use hard money and Levin funds for federal election
activity does not impermissibly threaten to render state and local political parties “useless.” Shrink
Missouri, 528 U.S, at 396. Plaintiffs’ own expert concedes that they “will certainly adapt and make

themselves players in the campaign process” after BCRA takes effect. La Raja Cross Tr. at 148.

In the years leading up to BCRA, soft
money proved easy to obtain, and party committees at all levels accordingly became strongly
dependent on such funds. See Green Rebuttal Expert Rep. at 20-22; Biersack Decl. Tbl. 2. In the
absence of BCRA, party committees could be expected to follow the path of least resistance and
continue to raise large amounts of soft money for use in federal election activity. BCRA, however,
was enacted to combat the appearance and reality of corruption that results when parties and their

large donors can exploit the soft money loophole and thereby evade federal contribution and source

ee

© In any event, only a small proportion of national soft money has been used to fund these activities: the vast
majority of soft money raised by the national parties has funded “issue ads” and other activities meant to bolster federal
candidates’ campaigns. See supra at 34-36. As members of Congress noted, “only 2 small percentage of party soft
money ts spent for get-out-the-vote and voter mobilization activities. Only 8.5 cents of every dollar gocs to GOTY and
voter registration activities while 40 cents ofcvery dollar goes to purchase ads to support or defeat candidates for Federal
office.” L48 Cong. Rec. $1996 (Mar. 18, 2002) (Sen. Dodd); see also 148 Cong. Rec. H372 (Feb. 13. 2002} (Rep.
Moran) (same)

106


unlimited independent expenditures to express their views, and they may contribute to independent
political committees. See 2 U.S.C. 441a(ay(1)(C).

No one could reasonably argue that babies, toddlers, and other young children are capable of
knowingly and voluntarily making contributions (or that those children, as a usual practice, have
exclusive contro! over the assets used for the contribution). Thus, the matter comes down to the
decision where to draw the line. Congress chose the age of eighteen. The Supreme Court has
Tecognized that “when it is seen that a line or point there must be, and that there is no mathematical
or logical way of fixing it precisely, the decision of the legislature must be accepted unless we can
say that it is very wide of any reasonable mark.’” Buckley, 424 U.S. at 83 n.111 (internal citation

omitted); see also id, at 30 (“Congress’ failure to engage in ... fine tuning does not invalidate the

legislation.”); Stiles v. Blunt, 912 F.2d 260, 267 (8" Cir, 1990) (“[WJhether the minimum age [to

run for state representative] should be 18, 21, 24, or some other age is a classic example of

legislative line-drawing that we must leave undisturbed.”); Gaunt y. Brown, 341 F. Supp. 1187,

1189 (S.D. Ohio) (“Age limit on voting necessarily must be arbitrary”), aff'd, 409 U.S. 809 (1972);
Craig v. Boren, 429 U.S, 190, 210 n.24 (1976) (“[T]he Legislature is free to redefine any cutoff age
for the purchase and sale of 3.2% beer that it may choose.”).

The Constitution distinguishes between individuals under age eighteen and those over that
age. Most notably, the Constitution does not guarantee children seventeen years and younger the
right to vote, see U.S. Const. amend. XXVI, although “the right of suffrage is a fundamental matter
in a free and democratic society.” Reynolds v. Sims, 377 U.S. 533, 561-62 (1964), In general, “the

constitutional rights of children cannot be equated with those of adults.” Bellotti v. Baird, 443 U.S.

622, 634 (1979), “Even where there is an invasion of protected freedoms ‘the power of the state to

205


preserves and fosters a marketplace of ideas. See, eg., Citizens Against Rent
Control v. City of Berkeley, 454 U.S. 290, 295 (1981). In that view of the world,

more speech is better. This “marketplace of ideas” metaphor does not recognize a

disincentive to speak in the first place merely because some other person may speak

as well.

Daggett, 74 F. Supp. 2d 53, 58 (D. Me. 1999) (footnote omitted).

Nor do the millionaire provisions infringe the First Amendment rights of political party
committees and other contributors. From the point of view of contributors, the millionaire
provisions provide a benefit, not a burden, in that they provide contributors with an option to give
more money to certain candidates who face self-funded opponents, A political party or other con-
tributor who wishes to contribute to a self-funded candidate may still do so under BCRA, and
individual contributors can now give $2,000 per election under the generally applicable, increased
contribution limits. BCRA § 307. If any contributors, including political parties, wish to treat all
their favored candidates equally, nothing in BCRA prevents them from doing so or forces them to
give an additional amount to opponents of self-funded candidates, Of course, the millionaire
provisions do not in any way limit contributors’ ability to support candidates of their choice through
other lawful means, e.g., by making independent expenditures, volunteering in a candidate’s
campaign, or associating with other supporters of the self-funded candidate. See Buckley, 424 U.S.

at 28 (upholding contribution limits in part because individuals were still “free to engage in

independent political expression” and to express support by volunteering)

“~ To the extent that some plaintiffs may arguc that the millionaire provisions violate the constitutional rights
of the oppanents of self-financing candidates, see Adams Compl. 54, such arguments are patently meritless. The
opp onents of self-financing candidates receive an unquestionable benefit by gaining the option of accepting contributions
ip amounts above the standard limits. If they decline to exercise that option for any reason, they are free to make that
choice and would suffer no harm. If contributors choose not to give them larger contributions, that is an individual
choice neither covered by nor attributable to the statute

196


Moreover, federal candidates and officeholders are permitted to “attend, speak, or be a featured
guest at a fundraising event for a State, district, or local committee of a political party,” 2 U.S.C.
44 1i(e}(3), and are generally permitted to make a “general solicitation of funds on behalf of” tax-
exempt “50 1(c)” organizations if the solicitation “does not specify how the funds will or should be
spent,” 2 U.S.C. 44ti(e)(4)(A)" BCRA also permits federal candidates and officeholders to raise
money for voter identification and certain other types of federal election activity if the solicitations
are directed to individuals and do not exceed $20,000 in any calendar year. Id. § 441i(e)(4)(B).

As Representative Shays explained, BCRA’s restrictions on federal candidates are meant to
advance the statute’s “key purpose” of stopping “the use of soft money as a means of buying
influence and access with federal officials.” 148 Cong. Rec. H408 (Feb. 13, 2002) (Rep. Shays).
Thus, BCRA “take[s] federal officials, including Members of Congress, out of the business of
raising soft money for political parties, political committees and candidates. Federal candidates and
officeholders, furthermore, cannot establish or control political committees that raise or spend soft
money.” Id.

The provision permits federal candidates and officeholders to continue to engage in civic
fundraising activities for nonprofit organizations, but restricts the solicitations that can be made to
support certain types of federal election activity. See 148 Cong. Rec. H408 (Feb, 13, 2002) (Rep.
Shays). Thus, “the bill’s solicitation restrictions would not apply to a Federal candidate soliciting
funds for the Red Cross explicitly to be used for a blood drive —as this is not an organization whose

principal purpose is to engage in get-out-the-vote or voter registration activities and the solicitation

* The organization for which funds are solicited cannot be an entity whose principal purpose is to conduct
voter registration within 120 days ofa federal election or voter identification, get-out-the-vote, and generic campaign
activity in connection with a federal election. See 2 U.S.C, 431(20)(A)(), (ii), 44 1i(e)(4)(A).

122


million. Id. Soft money spending by the national parties in the 1999-2000 election cycle comprised
42 percent of their total spending. Id.

Moreover, the parties have collected and used soft money to directly influence federal
elections, primarily through “issue ads.” The parties and candidates, in the period leading up to the
1996 election, transformed the soft money regime, Mann Expert Rep. at 17, to focus on this use of
soft money. See supra at 30-35. In the 1998 midterm election, the national party congressional
campaign commiitees were fully committed to raising and spending soft money to advance the
election prospects of their candidates, and the practice continued in the 2000 election, with the
parties making “issue ads, “ paid for by state parties using a mix of hard and soft money transferred
by the national party, a weapon of choice in promoting their federal candidates, both in the
presidential campaign and in House and Senate races in competitive states. These “issue ads” in
congressional races typically praised or criticized a candidate for his or her actions or character, then
asked the audience to “tell” or “ask” the candidate to do something.” Candidates and campaign
consultants from both parties agree that these ads, typically run close to and preceding an election,
are intended, and in fact do, influence federal elections, See Lamson Decl. ff 6, 17 [DEV 7- Tab
26] (consultant to Democratic candidates); Chapin Decl. 4] 8, 11 (DEV 6-Tab 12] (Democratic

congressional candidate); Bloom Decl. | 10-11 [DEV 6-Tab 7] (Democratic congressional

ee
© See Mann Expert Rep. at 24-26; Krasno & Sorauf Expert Rep. at 30-31; see also Bumpers Decl. 4 [DEV
6-Tab 10];
La Raja Cross Tr. (Oct. 15, 2002) at 73-75, 169, 177-78 & Ex. 3 ) (plaintif
witness):

expert

a

& Ex, 2-1, 2-2, 2:3, 2-4, 3-1 [DEV 7-Tab 26] (Montana Cong. Dist.); Pennington Decl. 1 13-14 [DEV 8-Tab 31]
(Florida 8" Cong. Dist.); Chapin Decl. 44 8-1 [DEV 6-Tab 12] (Florida 8" Cong, Dist.): Bloom 9 10-11 [DEV 6-Tab
7] (Florida 22TM Dist.); 3 sce also Selected Storyboards for Advertisements Sponsored
by Political Parties in the 1998 & 2000 Elections that Did Not Use the “Magic Words"[DEV 48-Tabe 9 & 10]; Selected
Party Soft Money Ads, App. A to Defi.” Mem., Tab 3 (video).

69



The frequent identity of interests between the parties and candidates and officeholders is
reflected in the most prominent fundraising tactic employed by both parties, which is in itself
potentially corrupting: the reliance on federal officials to raise soft money and the selling of access
to federal officials as a reward for making large soft money donations to the party. As the Supreme
Court has noted, under current law “substantial donations turn the parties into matchmakers whose
special meetings and receptions give the donors the chance to get their points across to the
candidates.” Colorado II, 533 U.S. at 461. The legislative record establishes that “(t]he Republican
and Democratic national political Parties that solicit and spend (soft] money use explicit offers of
access to the most powerful, elected officials.” 147 Cong, Rec. $3138 (Mar. 29, 2001) (Sen. Levin);
see also id. at 3248-49 (Apr. 2, 2001) (Sen. Levin); 145 Cong. Rec. $12744-45 (Oct. 18, 1999)
(Sen. Levin).

The Thompson Committee Report, which was frequently cited in the legislative debate
leading to BCRA’s enactment,° amply documents the practice of providing access to important
officeholders in exchange for large contributions of soft money to political parties. The

Committee majority found that the DNC provided large party donors with “access to senior decision

® Seo, ¢.0., 147 Cong, Rec, $3138 (Mar, 29, 2001) (Sen. Thompson); 147 Cong. Rec. $2530 (Mar. 19,2001)
(Sen, Lieberman); 147 Cong. Rec. $3138 (Mar. 29, 2001} (Sen, Levin).

"The Thompson Committee issued 427 subpoenas for documents or testimony, reviewed 1.5 million pages
of documents, took 200 depositions, conducted over 200 witness interviews, held 32 days of hearings, and heard
testimony from 72 witnesses. Thompson Comm. Rep. at 15.

75



knowledge and capacity and acted voluntarily “becomes a very subjective decision.” See USA-

CFV00930 [DEV 43-Tab A] (General Counsel's Report, MURs 4252-55, at 10); see also FEC 138-

0055, 0056; FEC 138-0059, 0060 [DEV 43-Tab 5] (Selected Documents from MURs 199, 4048,
4208, and Pre-MUR 318). Enforcement of the limits is particularly difficult where the contributing
children come from “politically active families; yet these are the very individuals who are most
likely to make such contributions,” See USA-CIV00925 [DEV 43-Tab 4] (General Counsel's
Report, MURs 4252-55, at 5). Although the children’s exposure to a candidate or his or her cam-
paign can be consistent with an independent choice to contribute, it does not foreclose the possibility
of parental manipulation or direction.

Nonetheless, in enacting section 318, Congress “recognize(d] that many individuals under
the age of 18 support candidates with great fervor and feel passionately about public issues.”
148 Cong. Rec. $2146 (Mar. 20, 2002) (Sen. McCain). As Senator McCain explained, “We do not
mean to suggest that children should not be able to participate in the political system.... We simply
believe that allowing them to contribute to candidates presents too great a risk of abuse.” Ia)?
Congress's solution therefore targets the most troubling opportunity for circumvention, and leaves
children with a variety of other ways to participate in political campaigns. They may volunteer their
services to a candidate for federal office or to a political committee, including a party committee.

See 2 U.S.C, 431(8)(B)(i); 11 C.F.R. 110.19(d) (approved Oct. 31, 2002) 1" They may make

n its report on illegalities in the 1996 federal elections, the Thompson Committee recommended that
children be precluded from contributing to candidates for federal office. Thompson Comm. Rep. at 4504. This
fecommendation was part of a broader proposal that “those [individuals] ineligible to vote be precluded from making
pymributions to candidates for federal office. . .. (EJach contributor [should be] an Amerienn citizen of voting age.”
Id

+) See, o.u., FEC 137-0013 [DEV 134-Tab 3] Editorial, Youths can play politics without donating money,
Pantagraph.com, dated Apr. 13, 2002).

204



of “shed[ding] the light of publicity on spending that is unambiguously campaign related,” and
“help[ing] voters to define more of the candidates’ constituencies.” Id. at 80-81; see id, at 66-68.
The Court likewise upheld the recordkeeping, reporting, and disclosure requirements applicable to
candidates and political committees, set forth in 2 U.S.C, 431-434. Id. at 64-68, 83 & 113. While
noting that “compelled disclosure, in itself, can seriously infringe on privacy of association and
belief guaranteed by the First Amendment,” id. at 64, the Court found that the identified interests
advanced by the disclosure requirements outweighed the alleged harm, see id. at 72.

Since Buckley, the Supreme Court has Tepeatedly sustained the constitutionality of
limitations on campaign contributions and measures adopted to ensure compliance with the

contribution limitations upheld in Buckley. Thus, in California Medical Ass’n v. FEC, 453 U.S.

182, 198 (1981) (plurality) (“Cal Med”), the Court upheld FECA’s $5,000 limitation on
contributions to multicandidate political committees, noting that without this limitation, the

contribution limitations upheld in Buckley “could be easily evaded.” See also id, at 203 (Blackmun,

J., concurring). In Colorado Il, supra, the Court upheld the limits upon party coordinated

expenditures on the ground that the evidence supported the “long-recognized rationale of combating
circumvention of contribution limits designed to combat the corrupting influence of large
contributions to candidates from individuals and Nnonparty groups.” 533 U.S. at456n.18. In Nixon

y. Shrink Missouri Gov’t PAC, 528 U.S. 377, 382, 396-98 (2000) (“Shrink Missouri”), the Court
¥.ohnnk Missour: Gov’t PAC.

upheld state contribution limits ranging from $250 to $1,000. The Court declined to establish any
monetary amount as “a constitutional minimum” below which legisiatures may not regulate. Shrink

Missouri, $28 U.S, at 397. Rather, the Court explained, a contribution limitation will be upheld

20


at 209-10, is that much greater where, as here, the Congress, “a coequal branch of government
whose Members take the same oath [judges] do to uphold the Constitution . . . specifically
considered the question of [BCRA’s] constitutionality.” Rostker y. Goldberg, 453 U.S. 57, 64
(1981); Littlewolf v. Lujan, 877 F.2d 1058, 1063 (D.C. Cir. 1989) (“[FJederal statutes enjoy a
presumption of constitutionality, especially where .. . Congress explicitly considered constitutional
questions.”). Because BCRA is targeted exclusively at corporate and labor union advertising that
presents the clearest potential for corrosive distortion of electoral politics, it is not overbroad.
Austin, 494 U.S. at 660.

F. BCRA’s Application to Nonprofit Corporations Does Not
Impair Its Constitutionality.

BCRA § 203 extends FECA § 441b’s well-established hard money requirement for

independent expenditures — i.e., that corporations and unions use separate segregated funds to pay

for such expenditures — to electioneering communications as well. BCRA § 204 applies this
requirement to nonprofit corporations operating under § 501(c)(4) or § 527 of the Internal Revenue

Code, as FECA § 441b has always provided In the alternative to their arguments that BCRA’s

Ts : .
** To the extent that Congress relied upon scientific analyses of data such as those contained in Buying Time,

sev, ¢.g., 148 Cong, Rec. $2117 (Mar, 20, 2002) (Sen. Jeffords), plaintiffs bear the burden of demonstrating why such
reliance on such legislative facts was unreasonable. In other constitutional challenges that involved complex factual
analyses, the Supreme Court has deferred (o legislative factfinding of that kind. See Turner I, 520 U.S. at 196 ("We
owe Congress” findings an additional measure of deference out of respect for its authority fo exercise the legislative
power, Even in the realm of First Amendment questions where Congress must base its conclusions upon substantial
evidence, deference must be accorded to its findings as to . . . the remedial measures adopted . . ..”); Vance v. Bradley,
440 U.S. 93, 110 (1979) (“In an equal protection case .. those challenging the legislative judgment must convince the
court that the legislative facts on which the classification is apparently based could nat reasonably be conceived to be
true by the governmental decisionmaker.”); Walters v. National Ass’n of Radiation Survivors, 473 U.S. 305, 330 n,12
(1985). Even if the ultimate standard of serutiny applicable in these cases may vary, deference to Congress’s underlying
factfinding is proper.

us a . .
*~ As originally introduced, the Snowe-Jeffords provisions made exceptions for non-profit corporations having

tax-exempt status under § 501(c)(4) of the Internal Revenue Code, 26 U.S.C. 501 (a), (c)(4), and for incorporated
“political organizations” as defined under § $27(¢)(1) of the Internal Revenue Code, so long as the communications in
question are “paid for exclusively by funds provided directly by individuals.” See BCRA, § 203(b), adding 2
U.S.C. 441 b(c)(2); see id., adding 2 U.S.C. 44 1b(c)(3), (4). However, pursuant to an amendment sponsored by Senator
Wellstone, who worried that this exception would create a loophole in the statute, sce 147 Cong. Rec. $2845-2849,
S2882-2884 (March 26, 2001), § 204 of BCRA adds a further paragraph (6) to new subsection 441b(c), which in effect
eliminates the exception made for 501(c)(4) and 527 organizations under paragraph (2) of subsection 441b(c)

164


The fact that state parties have facilitated the use of soft money by national parties in federal
elections demonstrates the crucial need for § 441i(b). If BCRA only regulated soft money
contributed to national party committees, donors would simply funnel soft money in unlimited
amounts to state and local party committees to influence federal elections, allowing the same
circumvention of FECA’s contribution and source limits that the national party soft money ban was
enacted to eliminate. See D. Green Expert Rep. at 5, 7, 12-13. Asa result, “any successful attempt
to limit national party soft money activity must perforce prevent easy evasion through surrogates
such as state and local parties.” Mann Expert Rep. at 31. Thus, BCRA’s state-level soft money
provisions prevent circumvention of longstanding limitations on contributions to candidates and
political parties and the recently enacted national party soft money ban. Indeed, when the Supreme
Court in Colorado II explained the role of political parties in circumventing federal contribution
limits, it was a state party whose activities were at issue. See 533 US. at 439.

At the same time, BCRA leaves open ample opportunity for state-level party committees to
raise funds for federal or state election activity. The statute doubles the amount of hard money that
persons can contribute to state party committees, from $5,000 to $10,000 per year. See 2 U.S.C.
441a(a)(1)(D). That is highly significant, Even under the $5,000 annual limit under prior law, state
party committees proved their ability to raise ever-increasing amounts of hard money: hard money
receipts by seven state parties initially involved in this litigation rose from $111.2 million in 1991-
92, to $180.5 million in 1995-96, to $309.6 million in 2000. See Biersack Decl. Tbl. 11.

BCRA not only doubles the limit on contributions of hard money to state parties, it allows
state-level party committees to use non-federal funds subject to the Levin Amendment for voter

registration activity within 120 days of a federal election and voter identification, get-out-the-vote,

103



Also in 1979, Congress enacted amendments to FECA that related to the financing of
election-related activities by state and local parties. See Mann Expert Rep. at 7-8. Congress acted
in response to concerns that traditional state and local party grassroots and volunteer activities
arguably were subject to FECA’s limitations on coordinated expenditures on behalf of candidates.”
Congress defined two new sets of activities that were exempt from the Statutory definitions of
“contribution” and “expenditure” and, thus, from limits on Party contributions to and coordinated
expenditures on behalfof federal candidates. The first set of exempted activities included state party
disbursements for campaign materials such as pins, bumper stickers, and yard signs used in
connection with volunteer activities on behalf of the party’s nominees. 2 U.S.C. 431(8)(B)(x),

(9)(B)(viii). The exemption was conditioned, inter alia, on the use of hard money for the activity.

Id. The second exemption applied to a state party's payment for “the costs of voter registration and
get-out-the-vote activities” conducted on behalf of the party's presidential ticket. 2 U.S.C.

431(8)(B)(xii), (9)(B){ix). Again, the exemption was conditioned, inter alia, on the use of hard

money for the activity. Despite the condition placed on the exemption, the 1979 Amendments did
not displace the FEC’s allocation regulations; a state party could allocate its expenses for the exempt

activities between federal and nonfederal accounts, but it had to use hard money, in some

4 FECA treats expenditures made in coordination with, or at the request or suggestion of, a federal candidate
or his authorized political committees as a contribution to the candidate. See 2 U.S.C, 441a(7): Colorado Ul, $33 U.S.
ar 438; Buckley, 424 U.S. at 46 (“[CJoordinated expenditures are treated as contributions rather than expenditures under
the Act."). FECA permits political party committees to spend well beyond the ordinary contribution limit applicable
{0 political committees generally on coordinated expenditures, Sce 2 U.S.C. 441a(d).

* Another exemption from the definitions of “contribution” and “expenditure” for the activities of state and
local parties in preparing and distributing printed slate cards and sample ballots had been included in FECA prior to
1979, 2U.S.C, 431(8(B)(v), (9(B)(iv). That exemption was not conditioned on the use of hard money.

25


Title Il of BCRA prohibits labor unions and corporations from using general treasury funds
to produce and air “electioneering communications,” and places disclosure requirements on all
persons that make large financial outlays for such communications. Section 201 (a) of the statute
amends FECA by adding a new subsection (£)(3) to 2 U.S.C. 434, defining an electioneering
communication as a TV or radio communication that “refers to a clearly identified candidate for
Federal office,” and is made within the 60 days before a general election or the 30 days before a
primary. Additionally, in the case ofa communication that refers to a House, Senate or (under rules
adopted by the FEC’ presidential primary candidate, the communications must be “targeted to the
relevant electorate,” meaning that it can be received by at least 50,000 persons in the state or district
where the election is being held= Under BCRA § 201{a), all persons making financial outlays in
excess of $10,000 for the costs of electioneering communications must file statements with the FEC
identifying the persons making the disbursements, those to whom these disbursements were made,
and persons who contributed $1,000 or more to the person making the disbursement. BCRA,
§ 201 (a) (adding 2 U.S.C. 434(£)(1), (2)(A)-(F)).

Section 203 of BCRA amends FECA 441b to prohibit corporations and labor unions from
expending general treasury funds for electioneering communications. Prior to BCRA’s enactment,
§ 441b(a) made it unlawful for any corporation or labor organization “to make a contribution or
expenditure in connection with any [federal] election,” the phrase “contribution or expenditure”

being defined under subsection (b)(2). BCRA § 203(a) adds the term “applicable electioneering

Se

2 see Finai Rule, Electioncering Communications, 67 Fed. Reg. 65,211 (Oct. 23, 2002) (to be codified at 11
C.F.R. 100.29(b)(3)),

© Under a laseminute amendmentto the Snowe-Jeffords provisions offered by Senator Specter and adopted
by the full Senate on March 29, 2001, see 147 Cong. Rec. $3070, S31 18-3123, paragraph (3)(A)(ii) states that if the
above definition of electioneering communications “is held to be constitutionally insufficient,” then the term
“electioneering communication means any broadcast, cable, or satellite communication which promotes or supports a
candidate for that office, or attacks or Opposes a candidate for that office .. , and which is suggestive of no plausible
meaning other than an exhortation to vote for or against a specific candidate.”

54



of their national party committees can, consistent with BCRA, wear multiple hats, and can raise non-
Federal funds for their State party organizations without violating the prohibition against non-
Federal fundraising by national parties.” 67 Fed. Reg. 49,083 Guly 29, 2002). Accord McCain
Decl. 421. Thus, to the extent that the plaintiffs merely seek to solicit money as officers of, and on
behalf of, the state party, BCRA poses no obstacle.

I. BCRA’S LIMITATIONS ON THE USE OF SOFT MONEY BY
STATE-LEVEL PARTY COMMITTEES ARE CONSTITUTIONAL.

A. The Restrictions on State-Level Committees’ Use of Soft Money
for Federal Election Activity Are Closely Drawn to Prevent the
Appearance and Reality of Corruption in Federal Elections.

In addition to imposing a soft money ban on national party committees, BCRA also restricts
the use of soft money by party committees at the state, district, and local levels. Unlike national
party committees, however, state-level party committees are not subject to a complete ban on the
solicitation and disbursement of soft money. BCRA only requires that they generally use hard
money to fund “Federal election activity.” 2 U.S.C. 441i(b)(1). BCRA leaves state-level party
committees entirely free under federal law to use soft money to fund various activities that affect
only state or local elections. See 2 U.S.C. 43 1(20)(B). Moreover, BCRA includes a provision — the
“Levin Amendment” — which authorizes state-level party committees to use soft money in limited
quantities to fund certain “Federal election activity” that affects both federal and state elections held

on the same day. See 2 U.S.C. 441i(b)(2)(A) 2”

zz

148 Cong. Rec. 11409-10 (Feb. 13, 2002} (Rep. Shays). The Levin Amendment permits state-level
party commit to use soft money to fund voter registration activity within 120 days ofa federal election and get-out-
the-vote, voter identification, and generic campaign activity in connection with a federal election. Sce 2 U.S.C.
441i(b)(2HA), 431(20(AM(A), Gi). In most instances, this soft money must be allocated with hard money, 2 U.S.C.
441i(b)(2)(A), and must be raised in increments not exceeding $10,000, 2 U.S.C. 441i(b)(2)(B}(iii). Hard and soft
money used pursuant to the Levin Amendment must be raised by the party committee that is spending it, not transferred
from another committee. 2 U.S.C. 441i(b)(2)(B)fiv).

99


Electioneering by Corporations and Labor Unions Through “Issue Ads.”

Just as 1996 saw the political parties pioneer the use of “issue advocacy” as a means of
evading FECA’s source and amount restrictions on campaign contributions, see supra at 28-36, it
also saw a full-fledged effort by outside groups to use “issue advocacy” as a means of evading both
FECA’s limitations on corporate and union campaign spending as well as its disclosure
requirements, beginning a trend that continued and accelerated through the 2000 election cycle.

Under the Supreme Court’s construction of FECA in Buckley and, in 1986, MCFL, see supra
at 21, so long as political communications did not include express advocacy, expenditures for those
communications could go undisclosed under Buckley, and they could be financed directly from
umon or corporate treasuries, This significant limitation on FECA’s application was not fully ex-

ploited for some time, however. In the years following MCFL, groups occasionally used “issue

advocacy” as a means of electioneering,”’ but such practices did not become widespread until the

1996 election cycle. See Mann Expert Rep. at 19-20; see also Krasno & Sorauf Expert Rep. at 50.

As chronicled by the Annenberg Public Policy Center, expenditures on “issue advocacy” in 1996
were wholly unprecedented, with corporations, unions, and interest groups spending approximately
$75 million on ads that avoided express advocacy but “that looked and sounded like campaign ads,”
Annenberg Pub. Policy Ctr., Issue Advocacy Advertising During the 1996 Campaign (“Annenberg
1996 Study”) at 3, 7-8 [DEV 38-Tab 2 1); Thompson Comm. Rep. (Minority Views) at 5927 & n.4.

Most prominently in 1996, the AFL-CIO anda coalition of business groups ran competing

multi-million dollar “issue advocacy” campaigns targeted at influencing the November

37



being used directly to influence federal elections, and from doing so without disclosing to the public
the source of the influence. Construing the requirements of the First Amendment in sucha rigid and
unrealistic manner would provide a powerful incentive for the spread of “covert speech” that
carefully avoids stating clearly its central electoral message and thereby, as Justice Kennedy has
stated, “mocks the First Amendment.” Shrink Missouri, 528 U.S. at 406 (Kennedy, J., dissenting).

Jd BCRA’S Disclosure Requirements for Electioneering
Communications Are Constitutional.

Plaintiffs also direct a number of claims of unconstitutionality at BCRA’s requirements for
disclosure of electioneering communications. McConnell Second Amend. Compl, 9] 54-58; NRA
Compl., {¥] 86-88; Chamber Compl., {{f] 23-26; AFL-CIO Compl., 421. As in the case of BCRA’s
segregated fund requirement, plaintiffs cannot prevail in a pre-enforcement facial challenge to the
statute’s disclosure requirements unless they can show that these provisions “could never be applied

ina valid manner,” or are substantially overbroad. New York State Club Ass’n , 487 US. at Hl.

The First Amendment interests implicated by disclosure requirements are substantially

weaker than those at stake when speech is actually suppressed. Zauderer v. Office of Disciplinary

Counsel of Sup. Ct. of Ohio, 471 U.S. 626, 651 n.14 (1985). In Buckley, while the Court stated that
“exacting scrutiny” applied to the disclosure provisions at issue there, the Court framed the inquiry
as whether there existed “a ‘relevant correlation’ or ‘substantial relation’ between the governmental

interest and the information required to be disclosed.” 424 US. at 64; see also id. at 80 (upholding

disclosure requirements upon finding that they “bear[] a sufficient relationship to a substantial

governmental interest”).

172


What Separates issue advocacy and political advocacy is a line in the sand drawn on
a windy day. We engaged in issue advocacy in many locations around the country.
Take Bloomington, Indiana, for example. Billboards in that cily read,

“Congressman Hostettler is right. Gun laws don’t take criminals off
Bloomington’s streets. Call 334-1111 and thank him for fighting
crime by getting tough on criminals,”

Guess what? We really hoped people would vote for the Congressman, not just
thank him. And people did. When we’re three months away from an election,
there’s not a dime’s worth of difference between “thanking” elected officials and
“electing” them.
FEC101-0249-52 [DEV 45-Tab 108] 22
With an equal lack of inhibition, in 2000 the web page of the Business-Industry Political
Action Committee (“BIPAC”) publicly advised BIPAC’s members on the use of issue ads to heip
elect their preferred candidates:
The following pages illustrate the ways the business community can become more
involved during the last few weeks of the campaign. There are three areas where

business can be most effective in mobilizing its assets for November: Volunteer
Involvement, Corporate Communications, and Issue Ads... .

Issue Advocacy. Corporate dollars, unlimited and unreported. Not limited to TV
and radio, this technique urges action on an issue but does not advocate the election
or defeat of a candidate, although it mentions the name of a candidate or incumbent
and may urge the viewer/reader to call.
FEC101—0245-48 (emphasis added) [DEV 45-Tab 107].
Even when the sponsors of these advertisements are not so forthcoming, their electoral

message is unmistakable. No description can substitute for seeing and hearing the ads themselves,

and the Court has been provided with a videotape of several dozen illustrative ads. See Selected

137


unless it is “so radical in effect as to render political association ineffective, drive the sound ofa
candidate's voice below the level of notice, and render contributions pointless.” Id.

The Supreme Court since Buckley has likewise sustained prohibitions on both independent
expenditures and contributions made with corporate treasury funds, to prevent the “corrosive and
distorting effects [on the electoral process] of immense aggregations of wealth that are accumulated
with the help of the Corporate form and that have little or no correlation to the public’s support for
the corporation’s political ideas,” Austin, 494 U.S. at 660, and to ensure that “substantial
aggregations of wealth” amassed by labor unions and corporations “are not converted into political
“war chests’ which could be used to incur political debts from legislators who are aided by the
contributions,” NRWC, 459 U.S. at 207.

Ten years after Buckley, however, in FEC v. Massachusetts Citizens for Life. Inc., 479 U.S.

238 (1986) (MCEL”), the Court, following the same rationale adopted in Buckley to avoid
problems of vagueness, concluded that an expenditure must involve express advocacy in order to
come within § 441b’s prohibition on independent expenditures. Id. at 248-49. At the same time,
the Court also reaffirmed at length the government’s substantial interests in curbing the undue
political influence of corporations and labor unions that exercise control over large aggregations of
wealth. Id. at 256-60. But it nevertheless carved outan as-applied exception to § 441b, finding that
these interests were not at work in that case, as it involved an ideological organization that could not
engage in business activities, had no shareholders or other affiliated persons having an economic
disincentive to dissociate from the organization if they disagreed with its political activities, and
accepted no funding from labor unions or business corporations that could be converted into the type

of political spending that gives rise to a threat of cormuption. Id, at 264.

21


If Congress can constitutionally impose a ceiling on the aggregate amount of contributions

of hard money (as it surely can, see Shrink Missouri, 528 U.S. at 387-88, 391-97; Buckley, 424 U.S.

at 20-38), and if, asin Buckley, that limitation is constitutional even on the assumption that all funds
provided to a party are “contributions,” it follows that Congress has the power to restrict or ban
contributions of soft money to national political parties, The rationale is similar in both cases: the
restriction or prohibition would serve to prevent FECA’s limits on individual contributions to
candidates from being circumvented, without atthe same time unduly impairing the ability of donors
to speak or associate freely, or the ability of parties to accumulate funds through permissible

contributions. See Shrink Missouri, 528 U.S. at 404 (Breyer, J., concurring) (‘Buckley’s holding

seems to leave the political branches broad authority to enact laws regulating contributions that take
the form of ‘soft money.’””).

The Court’s decision inCal Med provides further, analogous support for the constitutionality
of the soft money ban, Cal Med involved a challenge to FECA’s limits on contributions to nonparty
multicandidate political committees. The plaintiff, California Medical Association, a nonprofit
association of California doctors, had formed a multicandidate political committee that was subject
to FECA’s $5,000 limit on the amount that individuals and unincorporated associations could
contribute to it annually. See 2 U.S.C. 44ta(a)(I(C). The Court rejected the plaintiff's First
Amendment claim that the danger of corruption (or its appearance) did not apply when the
contributions flow to a multicandidate political committee instead of directly to a federal candidate.
Noting that Congress had enacted the $5,000 limit on contributions to such committees “in part to

prevent circumvention of the very limitations on contributions that this Court upheld in Buckley,”

453 U.S. at 197-98, the plurality and the concurrence concluded that the limitation was valid because

65


unit charge,” candidates state their approval of broadcasts referring to their opponent. This ensures
that the federal benefit itself is not used to subsidize speech that might mislead the public. Cf.
Regan v. TWR, 461 U.S. 540, 545-46, 547-51 (1983). Indeed, even outside the broadcasting
context, the Supreme Court has upheld a disclosure provision analogous to Section 305. In Lewis
Pub. Co. v. Morgan, 229 U.S. 288, 316 (1913), the Court rejected a First Amendment challenge to a
federal statute that requires newspapers to publish and provide to the Postmaster General a statement
of the names and address of their editors, publishers, business managers, and owners in order to
qualify for preferential postage rates. See 39 U.S.C. 3685.

Section 504 is also narrowly targeted to ensure an informed public, As the legislative record
demonstrates, the sponsors of a wide range of political advertisements broadcast on tadio and
television have kept their identities secret from the public. See Supra at 42-43, 46-47. Section 504
requires public disclosure of those sponsors, a requirement that is not meaningfully different for
First Amendment purposes from preexisting FCC regulations that compel disclosure of the sponsors

of broadcasts concerning “controversial issue(s] of public importance.” See 47 CFR. 73.1212(e);

see also 47 C.F.R. 76.1701 (d) (cable television). Broadcasters have complied with this longstanding

provision without difficulty. See National Association of Broadcasters, Political Broadcast

Catechism (2000). Just as reasonable access, equal opportunity for air time, and sponsorship
identification have withstood First Amendment scrutiny, Sections 305 and 504, which reach no
more broadly, also pass constitutional muster.

Plaintiffs’ contention that Section 504 is unconstitutionally vague and overbroad lacks merit.
The statutory text describes in explicit detail the information that must be included in the political

file, and broadcasters should have no difficulty complying with it. Indeed, the provision is similar to

22)


State law grants corporations special advantages— such as limited liability, perpetual

life, and favorable treatment of the accumulation and distribution of assets ~ that

enhance their ability to attract capital and to... maximize the return on their share-

holders’ investments. These state-created advantages not only allow corporations

to play a dominant role in the Nation’s economy, but also permit them to use

“resources amassed in the economic marketplace” to obtain “an unfair advantage in

the political marketplace.”
494 U.S. at 658-59 (citation omitted), The Court found this potential for unfair influence sufficient
to uphold a ban on financing independent electoral expenditures from corporate treasuries, in the
interest of preventing “the corrosive and distorting effects [on the political process] of immense
aggregations of wealth that are accumulated with the help of the corporate form and that have little

or no correlation to the public’s support for the corporation’s political ideas.” Id. at 659-60. The

Austin Court also found that the limit on corporate independent expenditures was narrowly tailored,

indeed, “precisely targeted,” because it “climinate[d] the distortion caused by corporate spending”
and “ensure(d] that [corporate] expenditures reflect actual public support for the political ideas
espoused by corporations,” while at the same time allowing corporations to express their political

views through a separate segregated fund, 494 U.S. at 660-61; see also MCFL, 479 U.S. at 258-59

(by “requiring that corporate independent expenditures be financed through a political committee
expressly established to engage in campaign spending, § 441b secks to ... ensure that competition
among actors in the political arena is truly competition among ideas.”).

2. Corporations and labor unions have recently engaged

in systematic evasion of FECA’s restrictions on campaign
expenditures to influence the outcome of federal elections.

Campaign expenditures by corporations and labor unions have been regulated for more than
50 years, and for most of this time these entities have abided by the intent of the law that they refrain

from using their general treasury funds to influence federal elections. See supra at 37. In recent

134


Democrats’ position on Medicare as it related to the November Sth election.” 144 Cong, Rec. S840

(Feb. 23, 1998) (Sen. Lieberman) The DNC engaged in similar conduct. Id.; see also Kirsch

Decl. {| 10 (describing solicitations by Democratic party for non-profit groups, ¢.g., NARAL (see
Gallagher Decl. 1 [RNC)), assisting with 2000 presidential campaign).

In such instances, party committees soliciting funds for and directing funds to tax-exempt
organizations circumvent not only FECA’s disclosure requirements and funding source and
contribution limitations, but also the FEC’s allocation regulations, which require all party
committees to use a specified proportion of hard money to fund certain types of election-related
activity that may affect both state and federal elections. Those allocation rules will continue to
govem certain disbursements by state and iocal party committees, See generally 11 C.F.R. 106.1,
106.7, 300.33; see also 67 Fed. Reg, 49,076-80, 49,098-99 (July 29, 2002). In the absence of
BCRA’s prohibition against the solicitation or transfer of funds to tax-exempt organizations, state
and local party committees would be free to direct soft money to those organizations, which, unlike
the party committees, could then use all of those funds for activities that influence federal
campaigns,

Moreover, donations solicited or directed by national party committees to benefit tax-exempt
organizations that conduct political activities create the same potential problems of corruption that
other unregulated fund-raising by the national parties engenders, j.c., the creation of obligated
officeholders, and of donors who feel compelled to contribute in order to obtain access to, and
consideration from, federal officials 2% Permitting party committees to provide such assistance to

tax-exempt organizations also creates the danger that the party committees may use their ability to

© See also Thompson Comm. Rep, at 4566 (Minority Views).

* See supra; see also Bumpers Decl, 127; Pennington Decl. | 8

118


fungibility of money, such solicitations and donations can aid federal candidates: the receipt of
funds for state and local election activity frees a corresponding amount of funds for the tax-exempt
organization to use in election activity to benefit federal candidates. __

The potential for corruption and circumvention of FECA’s requirements exists regardless of the
ostensible purpose for which the funds in question are to be used.

Plaintiffs contend that Section 441i(d) violates the equal protection guarantee of the Fifth
Amendment because party committees are subjected to restrictions on their solicitation and
disbursement of funds that are not imposed upon other entities. See McConnell Second Amend,
Compl. {J 102, 111. As explained in detail, supra at 90-93, however, party committees are not
similarly situated to other organizations; the close relationship and identity of interests between
party committees and federal candidates and officeholders present unique threats of corruption.
Congress properly concluded that party committees should not be allowed to serve as conduits for
contributions to tax-exempt entities that could then serve as de facto arms of the parties not subject
to the same degree of federal regulation and control.

Plaintiffs contend that § 441i(d) is unconstitutionally vague and overbroad because the terms
“solicit” and “direct” are not defined and it is unclear which activities are prohibited. CDP Compl.

{ 89; see also McConnell Second Amend. Compl. 4 103. They also contend that the extension of

the prohibition to “any entity that is directly or indirectly established, financed, maintained, or
controlled by such a national committee” is excessively vague and overbroad. McConnell Second
Amend. Compl. {| 103. Those arguments lack merit for the reasons previously discussed, supra at

93-96. See 11 C.F.R. 300.2(c), (m), (n).

120


soft money ban, which prohibits national party committees from soliciting, receiving, spending, or
transferring any soft money. The ban closes the soft money loophole and thus prevents circumven-
tion of FECA’s limitations by the national parties. The statute imposes no limits on how the national
party committees may spend their money; it simply requires that all money spent by the national
parties must be raised in accordance with FECA’s longstanding requirements. At the same time,
Congress substantially raised the limits on contributions of hard money to national party committees
and indexed those limits for inflation, making it easier for those committecs to raise hard money.

Other provisions in Title I are carefully drawn to complement the national party soft money
ban, eliminating additional existing and potential loopholes involving, among others, state, district,
and local party committees (‘“state-level” party committees), As Congress recognized, state-level
party committees have been a primary and willing vehicle through which the national parties have
circumvented FECA. The national parties have transferred millions of dollars in soft money to their
state-level counterparts, which have used those funds largely to support federal election activity, and
under fewer restrictions than are applicable to the national parties. Title I prevents those committees
from continuing the same abuse of soft money that the national parties have accomplished.

B. To close the “issue advocacy” loophole at the point where it has been subject to the
greatest abuse, Title Ilof BCRA regulates “electioneering communications,” defined as TV or radio
communications that refer to clearly identified candidates for federal office within 60 days of a gen-
eral election, or 30 days of a primary, and, in the case of House, Senate, and presidential primary
elections, are broadcast to the state or district where the election will be held. Corporations and
labor unions that sponsor electioneering communications must pay for them with funds contributed

to their separate segregated funds by individual shareholders, members, or executive or admin-



a party, like solicitations on behalf of a candidate, can coerce potential donors to make contributions
in order to avoid possible adverse legislative consequences. See Supra at pt. 1.B.2.d; see also
McCain Decl. | 21. Moreover, money is fungible. Even if anational party agreed to use such funds
only for activity that affects only state or local elections, the party and federal candidates
nonetheless could benefit from such donations: the availability of those funds for state and local
election activity would free a corresponding amount of funds for the party to use in election activity
to benefit federal candidates. Thus, the
ultimate use made of any given contribution or donation to a national party committee can have little
relationship to its potential to corrupt the federal political process.

Because the national parties’ fundraising practices present a clear danger of corruption at the
federal level, Congress had ample authority to regulate those practices, even where the funds raised
are to be used to support non-federal election activity, The Elections Clause grants Congress the
power to regulate elections of members of the House of Representatives and the Senate, Buckley,
424 U.S. at 14 n.16. The Supreme Court has also recognized “broad congressional power to

legislate in connection with the elections of the President and Vice President,” Buckley, 424 U.S.

at 14n.16, and congressional authority to regulate party primaries, United States v. Classic, 313 U.S.

299 (1941). For the reasons explained above, the solicitation, receipt, and transfer of soft money
by national parties has a direct effect on federal elections and presents a particularly potent
opportunity for corruption of federal candidates and officeholders. The national party soft money
ban, accordingly, falls squarely within Congress’s authority to regulate federal elections and protect
the integrity of the federal government’ The Tenth Amendment poses no bar to the valid exercise

the government of the United States has within its constitutional domain no authority to provide against
these evils, if the very sources of power may be poisoned by corruption... , without legal restraint, then, indced, is the
country in danger.” Bourroughs, 290 U.S. at $47 (quoting Ex parte Yarbrough, 110 US. 651, 667 (1884)).

97



Hence, by the 1996 election, the longstanding prohibition on union and corporate campaign
spending had become largely ineffective. Through the guise of “issue advocacy,” the nation’s
largest union and an assemblage of some of its largest corporate interests had been able to spend tens
of millions dollars on advertisements broadcast for the purpose of influencing federal elections.
These ads, it was believed, served to create debts of gratitude among congressional allies —
providing the very sort of leverage over the legislative process, purchased with corporate or union
“war chests,” that the restriction upon corporate and union campaign spending was designed to
eliminate.

The discovery of “issue advocacy” as an electioneering tool also enabled groups to evade
FECA’s disclosure requirements in 1996, Simply by avoiding express advocacy, groups were able
to conceal the financing of their electioneering activities from public view, Magleby Expert Rep.
at 18-19; Annenberg 1996 Study at 3; Thompson Comm. Rep. (Minority Views) at 5968. Many
groups even took the further step of electioneering pseudonymously, like the business groups
operating behind “The Coalition: Americans Working for a Real Change.” Ads run under such
opaque disclaimers left the public with no meaningful information regarding their funding source,
compounding the secrecy gained from avoiding disclosure to the FEC. For example, “Citizens for

—
ey

2 There is some evidence also that the AFL-C1O sought credit in this way for its ads, though from White

House officials rather than members of Congress. The AFL-CIO informed the White House well in vdvarce that it
planned to run s $35 million campaign focused on the 1996 elections. Thompson Comm. Rep. at 4001, According to
White House Chief of Staff Harold Ickes, the AFL-CIO wanted “to let the White House know the key points [of the
AFL-CIO's efforts] and the amount of resources that labor was devoting to trying to take back the Hove. ld.

42


There is, in addition, little basis here for permitting an overbreadth challenge out of concern
that “those who desire to engage in [genuine issue advocacy]... may refrain from doing so . . ..”
Spokane Arcades, 472 U.S. at 503-04. Real issue ads are not concerned about why certain
candidates should or should not be elected to office, which explains why, in 2000, they did not
depict or mention a candidate 97 percent of the time. Buying Time 2000 at 31-32 & Fig. 4-6; see

also DEV 48 at Tabs 4, 8 (storyboards for selected genuine issued ads).

see also Bailey Decl. {] 9-11 (“When we were creating

true issue ads . . . it was never necessary for us to reference specific candidates for federal office
-..-”), The ease with which genuine issue ads can speak their message and remain outside BCRA’s
definition of electioneering communication thus means there is little reason to fear that BCRA will
“chill” genuine issue advocacy. Corporations and unions can easily design effective ads to promote
their views on issues that would not be regulated under BCRA, with minimal impact on their First
Amendment rights.

On those rare occasions where it might be necessary to the effective promotion of an issue
to run advertisements that refer to a candidate, are broadcast within 60 days of an election, and are
targeted to that candidate’s constituents, the alternative for corporations and labor unions is not
silence, but merely to finance their advertisements with money from their separate segregated funds.
See Austin, 494 U.S. at 660. Non-profit corporations entitled to the MCFL exception, for which the
establishment of a separate segregated fund might represent an impermissible burden, may rely on

their general treasury funds to pay for clectioneering communications merely by certifying to the

162


TITLE Tl

PRESENTATION BY THE GOVERNMENTAL DEFENDANTS

Lb BCRA’S REGULATION OF ELECTIONEERING COMMUNICATIONS
IS CONSTITUTIONAL.

The essence of BCRA’s regulation of electioneering communications is two-fold. First, it
ensures that labor unions and corporations pay for campaign-related ads that are broadcast shortly
before an election with funds voluntarily contributed by individuals for that purpose. Second, it
achieves full disclosure of whose dollars are spent when unions, corporations, and other individuals
and organizations pay for such ads. But it is not a ban on speech. BCRA allows corporations and
unions to spend unlimited amounts of funds voluntarily contributed by their constituents to run
electioneering ads, and fits comfortably within the long, constitutional tradition, discussed above,
of regulating corporate and union spending in the electoral process, Indeed, its fundamental purpose
is to restore integrity to the statutory scheme by which Congress has traditionally furthered the
compelling governmental interests in preventing the “corrosive and distorting effects of immense

aggregations of wealth” on the electoral process, Austin, 494 U.S. at 660 (upholding constitution-

ality of restriction on corporate independent expenditures), and the potentially corrupting influence
of large-scale expenditures by labor unions and corporations on the elected officials who are aided

by them. NRWC, 459 U.S. at 209-10 (sustaining proscription of corporate campaign contributions).

It also vindicates the interests of voters in knowing who is responsible for the messages they receive
about candidates at the height of an election campaign. Buckley, 424 U.S. at 66-68,

Congress designed BCRA’s definition of “electioneering communication[s]” to meet the
Supreme Court’s concerns about the vagueness of certain language in FECA’s regulation of

independent expenditures. It draws a clear line in the right place, matching the contours of real

129


and generic campaign activity in connection with a federal election. See 2 U.S.C, 431(20\(A)G),
(ii), 441i(b)(2)(A). And BCRA leaves state and local party committees entirely free to raise and
spend soft money in unlimited amounts for activity that has no impact on federal elections. See 2
U.S.C. 431(20)(B).

In short, BCRA “represents a balanced approach which addresses the very real danger that
Federal contribution limits could be evaded by diverting funds to State and local parties, which then
use those funds for Federal clection activity. At the same time, the {statute} does not attempt to
regulate State and local party spending where this danger is not present, and where State and local
parties engage in purely non-Federal activities.” 148 Cong. Rec. $2138-39 (Mar. 20, 2002) (Sen.
McCain).

BCRA thus ensures that “when a State party is spending money on Federal elections, it has
to be hard money.” 147 Cong. Rec. $2941 (Mar. 27, 2001) (Sen. Feingold). It accomplishes that
goal by generally requiring state parties to use only hard money to fund “Federal election activity.”
2 U.S.C. 441i(b)(1). Congress carefully defined “Federal election activity” to reach only activity
that affects federal elections and that Congress therefore has a strong interest in regulating. As
Senator Feingold explained:

We all know that voter registration in States helps Federal candidates, Likewise, get

out the vote activity and generic campaign activity — like general party advertising

~ when Federa) candidates are on the ballot. Those kind of activities, regardless of

how laudable they are and how much we want to encourage them, assist Federal

candidates in their election campaigns. So we believe they must be paid for with

Federal money. Obviously, so should public communications that refer to a clearly

identified federal candidate and support or oppose a candidate for that office.

147 Cong. Ree. $2941 (Mar. 27, 2001);

104


3

xu

On the other side of the equation, Elaine Bloom, who in 2000 ran unsuccessfully against Rep. Clay Shaw
of Florida, credited ads aired by Citizens for Better Medicare with assisting Mr. Shaw's come from. behind victory in
that race. Bloom Decl. $f 4-6 [DEV 6-Tab 7).

45