The “First Amendment protects political association as well as political
expression.” Buckley, 424 U.S. at 15. Asa result, citizens have the
“freedom to associate with others for the common advancement of political
beliefs and ideas.” Jd. The rationale for protecting political association is
that “[e]ffective advocacy of both public and private points of view,
particularly controversial ones, is undeniably enhanced by group
association.” Id. (quoting NAACP v. Alabama, 357 U.S. 449, 460 (1958));
see also North Carolina Right to Life, Inc. v. Leake, 525 F.3d 274, 295 (4th
Cir. 2008)(Associating “allow[s] ordinary citizens to receive the benefits
that result from economies of scale in trying to convince the electorate of a
political message.”). Contribution limits to groups making only independent
expenditures thus restrict not only the ability to speak out about political
issues, but also the ability to “associate with others for the common
advancement of political beliefs and ideas... .” Buckley, 424 U.S. at 15
(quoting Kusper v. Pontikes, 414 U.S. 51, 56 (1973)). Thus, both the speech
and association aspects of the contribution limit at issue in this case need to

be examined.


falls with the pace and intensity of events and issues. Bauer, A Report From
the Field, 5 Election Law Journal at 113. New political committees might
very well have a tough go of it trying to start-up in a non-election year.

Direct mail, which has in the past been successful, carries with it high
costs. Id. A new political committee funded by small contributions simply
does not have the resources to begin a successful direct mail program.

Seed money, in addition to providing start-up capital, also serves to
encourage others to associate. Many are reluctant to give to new
organizations because they are fearful that the organization will fail. Just a
few donations from respected citizens might provide the confidence some
donors require.

Being forced to conduct independent expenditure activity under the
PAC structure is yet another barrier to association. The Supreme Court has
recognized that PAC regulations “impose administrative costs that many small
entities may be unable to bear.” FEC v. Massachusetts Citizens for Life, Inc.,
479 U.S. 238, 254 (1986)(plurality opinion). Speaking through a political
committee requires “significant efforts.” Jd. at 252. The FEC’s guide for
“Nonconnected Committees” is 134 pages long

(http://www.fec.gov/pdf/nongui.pdf), and its supplement is another 11 pages

(http://www.fec.gov/pdf/nongui_supp.pdf). In light of these complex

30


access through non-monetary influence by promoting candidates with
endorsements, slanting movies and television programs, and so on.
The district court discounts the “independence” of groups like

“or

SpeechNow.org, saying that “’[i]ndependence’ does not prevent candidates,
officeholders, and party apparatchiks from being made aware of the
identities of large donors, and people who operate independent expenditure
committees can have the kind of ‘close ties’ to federal parties and
officeholders that render them ‘uniquely positioned to serve as conduits for
corruption,’ both in terms of the sale of access and the circumvention of the
soft money ban.” J.A. 390-391 (quoting McConnell, 540 U.S. at 156 n.51).
But efforts to equate access with corruption would be to make our
government non-representative. See Leake, 525 F.3d at 295 (“It goes
without saying that it is not a sin to be serious about ‘impacting the political
process’ — in fact, the First Amendment is largely about providing every
citizen with just that opportunity.””). It would eliminate the accountability of
elected officials to citizens who band together in expressive associations to
amplify their voices. Buckley, 424 U.S. at 22. It would make elected
officials like the unelected judiciary, with lifetime appointments, no ex parte

access, and no discussion without all sides represented. Elected officials are

not platonic guardians to govern the people; they are supposed to be

26


CERTIFICATE OF COMPLIANCE

This brief complies with the type-volume limitation of Federal Rules
of Appellate Procedure 29(d) and 32(a)(2) because this brief contains 6,998
words, excluding the parts of the brief exempted by Fed. R. App. P.
32(a)(7)(B)(iii).

This brief complies with the typeface requirements of Federal Rule of
Appellate Procedure 32(a)(5) and the type-style requirements of Federal
Rule of Appellate Procedure 32(a)(6) because this brief has been prepared in

a proportionally spaced typeface using Microsoft Word in 14-point Times

New Roman font.

Reidi K. Abesg”
Counsel for Amici Curiae



individual responsibility. The integrated mission of the Scharf-Norton
Center for Constitutional Litigation is to preserve individual liberty by
enforcing the features of our state and federal constitutions that directly and
structurally protect individual rights, including the bill of rights. The
Goldwater Institute regards the complexity of campaign finance laws and
speech regulations as effectively ringing walls around the political
establishment, protecting incumbents and sophisticated political
organizations from meddling by mere ordinary citizens and their grassroots
efforts.
SUMMARY OF ARGUMENT

The 35 years since the Supreme Court first held that pure speech, in
the form of independent expenditures, could not be limited because it posed
no danger of corruption, have shown that these expenditures continue to
present no such danger. Moreover, contributions to fund such pure speech
interfere with speech and associational rights and also pose no danger of
corruption. Because independent expenditures do not cause corruption, and
a corruption standard of “gratitude” or “access” is not only an insufficient
basis upon which to sustain an infringement of core associational and speech
rights, it cannot exist here because SpeechNow.org’s tax status removes

“gratitude” or “access” from the corruption equation, the time has come to


Page 6
26 USCS § 527

(2) Access. The Secretary shall make the entire database of notices and reports which are made available to the public
under paragraph (1) searchable by the following items (to the extent the items are required to be included in the notices
and reports):

(A) Names, States, zip codes, custodians of records, directors, and general purposes of the organizations.
(B) Entities related to the organizations.

(C) Contributors to the organizations.

(D) Employers of such contributors.

(E) Recipients of expenditures by the organizations.

(F) Ranges of contributions and expenditures.

(G) Time periods of the notices and reports.

Such database shall be downloadable.

(l) Authority to waive. The Secretary may waive all or any portion of the--

(1) tax assessed on an organization by reason of the failure of the organization to comply with the requirements of
subsection (i), or

(2) amount imposed under subsection (j) for a failure to comply with the requirements thereof,on a showing that such
failure was due to reasonable cause and not due to willful neglect.


Page 4
26 USCS § 527

(i) shall be made at such time and in such manner as the Secretary may prescribe by regulations, and
(ii) once made, may be revoked only with the consent of the Secretary.
Nothing in this subsection shall be construed to require any designation where there is only one political committee
with respect to a candidate.

(i) Organizations must notify Secretary that they are section 527 organizations.

(1) In general. Except as provided in paragraph (5), an organization shall not be treated as an organization described

in this section--

(A) unless it has given notice to the Secretary electronically that it is to be so treated, or

(B) if the notice is given after the time required under paragraph (2), the organization shall not be so treated for any
period before such notice is given or, in the case of any material change in the information required under paragraph (3),
for the period beginning on the date on which the material change occurs and ending on the date on which such notice is
given.

(2) Time to give notice. The notice required under paragraph (1) shall be transmitted not later than 24 hours after the
date on which the organization is established or, in the case of any material change in the information required under
paragraph (3), not later than 30 days after such material change.

(3) Contents of notice. The notice required under paragraph (1) shall include information regarding--

(A) the name and address of the organization (including any business address, if different) and its electronic mailing
address,

(B) the purpose of the organization,

(C) the names and addresses of its officers, highly compensated employees, contact person, custodian of records,
and members of its Board of Directors,

(D) the name and address of, and relationship to, any related entities (within the meaning of section 168(h)(4) [26
USCS § 168(h)(4)1),

(E) whether the organization intends to claim an exemption from the requirements of subsection (j) or section 6033
[26 USCS § 6033], and

(F) such other information as the Secretary may require to carry out the internal revenue laws.

(4) Effect of failure. In the case of an organization failing to meet the requirements of paragraph (1) for any period,
the taxable income of such organization shall be computed by taking into account any exempt function income (and any
deductions directly connected with the production of such income) or, in the case of a failure relating to a material
change, by taking into account such income and deductions only during the period beginning on the date on which the
material change occurs and ending on the date on which notice is given under this subsection. For purposes of the pre-
ceding sentence, the term "exempt function income" means any amount described in a subparagraph of subsection
(c)(3), whether or not segregated for use for an exempt function.

(5) Exceptions. This subsection shall not apply to any organization--

(A) to which this section applies solely by reason of subsection (f)(1),

(B) which reasonably anticipates that it will not have gross receipts of $ 25,000 or more for any taxable year, or

(C) which is a political committee of a State or local candidate or which is a State or local committee of a political
party.

(6) Coordination with other requirements. This subsection shall not apply to any person required (without regard to
this subsection) to report under the Federal Election Campaign Act of 1971 (2 U.S.C. 431 et seq.) as a political commit-
tee.

(j) Required disclosure of expenditures and contributions.
(1) Penalty for failure. In the case of--
(A) a failure to make the required disclosures under paragraph (2) at the time and in the manner prescribed therefor,
or
(B) a failure to include any of the information required to be shown by such disclosures or to show the correct in-
formation,
there shall be paid by the organization an amount equal to the rate of tax specified in subsection (b)(1) multiplied by
the amount to which the failure relates. For purposes of subtitle F [26 USCS §§ 6001 et seq.], the amount imposed by
this paragraph shall be assessed and collected in the same manner as penalties imposed by section 6652(c) [26 USCS §
6652(c)].
(2) Required disclosure. A political organization which accepts a contribution, or makes an expenditure, for an ex-
empt function during any calendar year shall file with the Secretary either--


1. There is no evidence in this case, nor in the past 35
years, of corruption under the NCPAC standard
resulting from independent expenditures.

Like the Buckley Court, the Court in NCPAC also found that
independent expenditures by political committees did not raise the specter of
corruption or its appearance, explaining that

[c]orruption is the subversion of the political process. Elected

officials are influenced to act contrary to their obligations of office by

the prospect of financial gain to themselves or infusions of money into
their campaigns. The hallmark of corruption is the financial quid pro
quo: dollars for political favors. But here the conduct proscribed is
not contributions to the candidate, but independent expenditures in
support of the candidate...

[P]recisely what the “corruption” may consist of we are never told

with assurance. The fact that candidates and elected officials may

alter or reaffirm their own positions on issues can hardly be called

corruption, for one of the essential features of democracy is the

presentation to the electorate of varying points of view.
NCPAC, 470 USS. at 497-98. NCPAC recognized that PACs are not
corrupting simply because they are groups of citizens desiring to pool their
resources in the political process; in other words, the structure of PACs does
not, ipso facto, make them corrupting. Jd. at 497. The Court held that the
fact that PACs might be able to make greater independent expenditures due
to the collective efforts of their members did not alter the calculus: because

independent expenditures were made without the knowledge of candidates,

there was no danger of a quid pro quo between a PAC and an (unknowing)

13


requirements, political committees are forced to retain experienced legal
counsel, accountants, and consultants to handle all aspects of compliance,
reporting and even the electronic filing of reports. This “[d]isclosure is not
costless. It imposes burdens on those who must comply with complex laws,”
and it “may place a heavy penalty on groups that face retaliation when their
support for unpopular positions becomes public, and it may undermine the
ability of disliked or distrusted groups to influence policy in ways consistent
with their interests.” Elizabeth Garrett, Voting with Cues, 37 U. Rich. L. Rev.
1011, 1011 (2003).

A new political committee, with scarce resources, may not be able to
afford the counsel and services necessary to avoid administrative fines and
investigations. See Federal Election Commission Enforcement Procedures:
Hearing Before the Comm. on House Admin. (108th Cong. 129 )(October 16,
2003)(statement of Rep. Doolittle)(“I think of my first race for the State
Senate and I got a friend to be my treasurer. I would never do that to a friend
today... . But today, you would have to go to a professional and you are
going to pay... . someone to do this today because they incur liabilities. And
you know this is just one of the things that raises the cost of campaigns. . . .”).

These burdens placed on political committees by a complex

regulatory structure also serve to limit the number of citizens that want to

31


1. There is no evidence in this case, nor in the
past 35 years, of corruption under the
NCPAC standard resulting from
Independent expenditures...............ceceeeeeeee 13

2. The facts of this case show that there is no
danger of corruption from SpeechNow.org
participating in the political process.............. 19
3. Even under the district court's expanded
corruption rationale, gratitude and access
arising out of independent expenditures
do not constitute corruption.............0.cceeeee 22
IV. There Are Significant Burdens In Launching An
Independent Expenditure Group That Is Regulated
As A PAC And Subject To Contribution Limits................. 27
CONCLUSION. ...... 000. cc ec ccee eee e ete een e cence eee ees eeea eee eee eres 33
CERTIFICATE OF COMPLIANCE
CERTIFICATE OF FILING AND SERVICE

ADDENDUM


of the people” who put them in office. Jd. The checks and balances are
already built into “the genius of the whole system.” Id.*

Gratitude can be created in many ways. If “gratitude” creates the
appearance of corruption, then surely the Congressional practice of vote
swapping must be outlawed. An officeholder could feel gratitude towards
members of the media for favorable coverage, towards celebrities for
invitations to appear on talk shows and in comedy skits. It is easy to see
how encompassing and unconstitutionally broad a “corruption through
gratitude” standard can be. See Leake, 525 F.3d at 295 (“Of course,
candidates may be influenced by the impact that such independent
expenditures have on the electorate — but this is the entire purpose of
allowing free political discourse.”).

The district court also found access and the sale of access are forms of
corruption which are addressed by the contribution limits to independent
expenditure political groups. J.A. 389. This standard is problematic because
it ignores the fact that seeking to influence policy is what the freedom of
speech and of association is all about. Without access, we cannot make our

wishes known, hold officeholders accountable, and ask the government for

‘ Otherwise, “[i]f it were reasonable to presume corruption from the fact that
a public official voted in a way that pleased his contributors, legislators
could constitutionally ban all contributions except those from the public
official’s opponents, a patent absurdity.” Russell, 146 F.3d at 569.

24


Ill. Independent Expenditures Are Both Direct Speech And
Associational Speech And Therefore, Contribution Limits To
Independent Expenditure Groups Must Survive Strict Scrutiny.
Buckley noted that its “decisions involving associational freedoms

establish that the right of association is a ‘basic constitutional freedom,’

Kusper v. Pontikes, 414 U.S. at 57, that is ‘closely allied to freedom of

speech and a right which, like free speech, lies at the foundation of a free

society.’” Buckley, 424 U.S. at 25 (quoting Shelton v. Tucker, 364 U.S. 479,

486 (1960)(parallel citations omitted)).

“[T]he primary First Amendment problem raised by . . . contribution
limitations is their restriction of one aspect of the contributor’s freedom of
political association.” Buckley, 424 U.S. at24. In NCPAC, the Court
rejected the government’s argument that contribution limits to PACs should
be afforded lesser scrutiny because “speech by proxy,” rather than direct
speech, was involved. NCPAC, 470 U.S. at 495. It is the direct
infringement on contributors’ First Amendment rights of political
association that distinguishes the association burden from the arguably
indirect burden on speech rights. James Bopp, Jr., Constitutional Limits on
Campaign Contribution Limits, 2 Regent Univ. L. Rev. 235, 241 n.35 (1998-

99). This is because while contribution limits may arguably involve “speech

by proxy,” there is no “association by proxy.” Jd. Therefore, the restriction

10


alleviates the danger that expenditures will be given as a quid pro quo
for improper commitments from the candidate.

424 US. at 47.

Given the difficulties of proving actual corruption exists in this case,
the fallback argument is usually that the limits may be upheld based on the
appearance of corruption. This too is an insufficient basis upon which to
infringe upon the important right of association in this case. See United
States v. Nat’l Treasury Employees Union, 513 U.S. 454, 475
(1995)(NTEU)(quoting Turner Broad. Sys., Inc. v. FCC, 512 U.S. 622, 664
(1994)(Kennedy, J., plurality opinion)(internal quotations omitted) (“When
the Government defends a regulation on speech as a means to . . . prevent
anticipated harms, it must do more than simply posit the existence of the
disease sought to be cured. . . . It must demonstrate that the recited harms are
real, not merely conjectural, and that the regulation will in fact alleviate
these harms in a direct and material way.”); cf: Arizona Right to Life
Political Action Comm. vy. Bayless, 320 F.3d 1002, 1010 n.8 (9th Cir.
2003)(finding newspaper articles lamenting the level of negative
campaigning to be insufficient proof of the appearance of corruption); Kruse
v. City of Cincinnati, 142 F.3d 907, 911, 918 (6th Cir. 1998)(striking down

expenditure limit despite existence of poll).

16


to broaden the Government’s interest to include other prophylaxis rationales
when contributions to candidates are not involved. Id. (finding “the
corruption interest cannot justify regulating” ads that are not the functional
equivalent of express advocacy).

The expanded view of corruption upon which the Supreme Court in
several post-Buckley cases and in McConnell uses to justify restrictions on
speech should not apply here for several reasons. First, since none of these
cases involved limits on independent expenditures, NCPAC still applies.
Second, whether to change the corruption prevention rationale that has been
applied to independent expenditure speech is for the Supreme Court, not the
district court, to decide. Third, given that the Supreme Court has pulled
back efforts to impose a broad corruption prevention rationale in WRTL II,
and its pronouncement that “enough is enough,” 551 U.S. at 478-79, it is
unlikely that the Supreme Court would broaden the NCPAC standard to

29 6

include “gratitude,” “access,” or “an appearance of corruption” for
contributions to groups that make their expenditures independently of any

candidate or party involvement.

12


help. “Access” to officeholders, therefore, is itself a right protected by the
First Amendment.

Nor can it be presumed that corruption exists if people who support or
oppose a candidate get “access” to the official or his opponent. See FEC v.
Colorado Republican Campaign Committee, 41 F. Supp.2d 1197, 1209 (D.
Colo. 1999)( “Buckley . . . recognized that money, in many cases, may grant
access to a candidate. It did not, however, conclude that such access is akin
to corruption or the appearance of corruption.”). If that were true, then
lobbying would be corrupting unless officials provided equal time for all
views.°

Citizens get access for many reasons besides making contributions or
independent expenditures. Celebrities from entertainment and sports, as
well as editorial boards of prominent news organizations, get special access
to elected officials. Special access can also be gained through other

avenues: friendships, kinship, and social status. Some individuals gain

> Citizens and groups seeking “access” to officeholders spend more on
lobbying than on independent expenditures. For 2008, the total spent on
federal lobbying was $3.3 billion, Center for Responsive Politics, Influence
& Lobbying (visited August 20, 2009)
<www.opensecrets.org/lobby/index.php>, while PACs spent only $135.2
million on independent expenditures in the 2008 election cycle. Federal
Election Commission, Growth in PAC Financial Activity Slows (visited
August 20, 2009)
<www.fec.gov/press/press2009/200904 1 SPAC/20090424PAC.shtml>

25


Schmitt, Mismatching Funds, Democracy: A Journal of Ideas, Spring 2007,

q 23 (last visited August 31, 2009)

<http: www.newamerica.net/publications/articles/2007/mismatching_funds_

5013>.

It is a short step from fighting money organized by citizens to fighting
political organizations of citizens themselves. Jd. at {23. This case clearly
demonstrates that we have made that step and are fighting about political
organization, or the fundamental right of political association itself. Thus,
this case is not about “shadow” § 527 organizations with alleged ties to
candidates raising unlimited money during the 2004 election cycle. Rather,
this case involves citizens desiring to come together — to “associate” under
the First Amendment — in order to speak out on political issues.

II. Contribution Limits To Independent Expenditure Groups
Restrict Both The Freedom Of Speech And The Freedom Of
Association, Both Of Which Are Essential To The Proper
Functioning Of Our Democracy.

“The pivotal importance of First Amendment freedoms to the proper
functioning of a republican form of government has long been recognized . .
. [These] freedoms are designed to insure the proper functioning of the
democratic process and to protect the rights of individuals and minorities

within that process.” West Virginians For Life v. Smith, 919 F. Supp. 954,

958 (S.D.W.Va. 1996). The two First Amendment freedoms at issue in the


Robert F. Bauer, A Report From the Field: Campaign Professionals on
the First Election Cycle Under the Bipartisan Campaign
Reform Act, 5 Election Law Journal 105 (2006) ......15, 21, 22, 29, 30

The Federalist No. 57 (Alexander Hamilton or James Madison) ........ 23, 24


against traditional political strategy. See id. These donors do not want to
compromise their ideological politics. Jd. at 115. It is less likely, then that
these expenditures could be corrupting since their message is more
important to the donors than gaining access or favor of candidates.

This sea-change also buttresses the Buckley Court’s acknowledgment
about “the importance of freedom of association,” 424 U.S. at 295, because
the making of a contribution “is beyond question a very significant form of
political expression” and political association. Citizens Against Rent
Control, 454 U.S. at 299. The new breed of donors is not content to make a
contribution; the new donor associates in order to control his own speech.

3. Even under the district court’s expanded corruption
rationale, gratitude and access arising out of
independent expenditures do not constitute
corruption.

From the district court’s opinion, it is apparent that the definition of
corruption goes way beyond that applied in NCPAC and includes any
“undue influence on an officeholder’s judgment.” J.A. 389. Under the
district court’s theory, even though an independent expenditure is legally
“independent” and thus not a coordinated expenditure (which would result in
an in-kind contribution to the candidate), the candidate-as-officeholder

might be so grateful for the independent expenditure that his judgment is

“unduly influenced.” Such a broad view of corruption as applied to

22


show that it poses a danger of corruption. Demonstrating that large amounts
of spent money could lead to “gratitude” is not enough. Leake, 525 F.3d at
294-295 (finding that the fact that money spent was successful “can hardly
be termed corruptive” nor can robust advocacy alone be “sufficient to
demonstrate corruption.”). And as will be shown, the legal requirements
imposed on SpeechNow.org to maintain its tax status is in fact evidence that
its political expenditures are not corrupting.

2. The facts of this case show that there is no danger of
corruption from SpeechNow.org participating in the
political process.

SpeechNow.org’s tax status removes any danger of corruption
through “access.” To qualify under § 527, an organization must be both
organized and operated primarily for an exempt political function under §
527(e)(1).° Organizations like SpeechNow.org generally have no need for
access to officeholders because lobbying is not an exempt function under §
527. Thus, a § 527 organization that lobbies substantially can fail to qualify
as a § 527 political organization, and a PAC that lobbies to any extent can

have taxable income. Therefore, an organization like SpeechNow.org has no

3 Section 527(e)(2) defines the term “exempt function” to mean the function
of influencing or attempting to influence the selection, nomination, election
or appointment of any individual to any public office or office in a political
organization.

19


*FEC v. Nat’l Conservative Political Action Committee,
470 ULS. 480 (1985)... cece eee ee cee eee ee eee eee eenes

*FEC v. Wisconsin Right to Life, Inc.,

551 U.S. 449 (2007)... cee cece cece eee eee ence eens

Kruse y. City of Cincinnati,

142 F.3d 907 (6th Cir. 1998) ....cceccecsseeeeeees

Kusper v. Pontikes,

414 US. 51 (1973)... eee ee cece eee eee

McConnell v. FEC,

540 ULS. 93 (2003) 2... ccc ccc cece cece cece eee ee ees eee eee eseneneneeeseneees

NAACP vy. Alabama,

357 USS. 449 (1958)... cece ee eee eee eees

*North Carolina Right to Life, Inc. v. Leake,

525 F.3d 274 (4th Cir. 2008) ......... eee

Republican Party of Minnesota v. White,

536 U.S. 765 (2002) o.ceeccessesceeseeseseseseeees

Russell v. Burris,

146 F.3d 563 (8th Cir. 1994) oe

Shelton v. Tucker,

364 ULS. 479 (1960)... 0. ceccece ese eece eee een een ees

Sweezy v. New Hampshire,

354 U.S. 234 (1957) ... cece cece cece ee cece eee een ees

Turner Broad. Sys., Inc. v. FCC,

512 US. 622 (1994) o.oo eee ee ence eee

United States v. Nat’l Treasury Employees Union,

513 U.S. 454 (1995) voovececsceccsescsessesveveveesvcssessnsee

vi

seseesseee 16, 18


TABLES OF AUTHORITIES

*Authorities upon which we chiefly rely are marked with asterisks

Page(s)

CASES

Amalgamated Food Employees Local 590 v. Logan Valley Plaza, Inc.,
391 ULS. 308 (1968) ..... ccc cee e reer etter eter eee een een e eee 28

Arizona Right to Life Political Action Committee v. Bayless,
320 F.3d 1002 (9th Cir. 2003) 0.0... cc ceeecee ce eenee eeu eneeeenen eres nents 16

Arkansas Right to Life PAC v. Butler,
29 F. Supp.2d 540 (W.D. Ark. 1998) 0.0... ce cece cece eee ee eeee 18

*Buckley v. Valeo,
424 US. 1 (1976)... cessed, 8, 9, 10, 11, 15, 16, 22, 26, 28, 33

*Citizens Against Rent Control vy. City of Berkeley,
454 U.S. 290 (1981).... cece ectee cece sees eee eeeeeanneeeeeeeaee 8, 22, 33

Colo. Republican Fed. Campaign Comm. v. FEC,
518 U.S. 604 (1985) ooo. ceece eee eeeeeeeeeaeeeee essa cesta eeeneeeee ented 6

Day v. Holahan,
34 F.3d 1356 (8th Cir. 1994) ..... eee cee eee eee eee eee eee eee ees 20

FEC v. Machinists Non-Partisan Political League,
655 F.2d 380 (D.C. Cir, 1981)... cee cee eee ee neces ease een en een enaeee 8

FEC v. Colorado Republican Campaign Committee,
41 F. Supp.2d 1197 (D. Colo. 1999) 02... ccc eee seeee eee eeeee 25

FEC v. Massachusetts Citizens for Life, Inc.,
479 U.S. 238 (1986) oo. cee ce eeeec ese eeeece ea eeeseaneensneeseeaaeeeeees 30


case are the right of citizens to speak and the right to associate for political
purposes. See Buckley, 424 U.S. at 15 (finding both speech and
associational freedoms implicated by contribution limits).

The protection of political speech is a necessary prerequisite for
limited representative government. See FEC v. Machinists Non-Partisan
Political League, 655 F.2d 380, 398 n.17 (D.C. Cir. 1981). Thus, in a nation
which has a limited, representative form of government, “it can hardly be
doubted that the constitutional guarantee has its fullest and most urgent
application precisely to the conduct of campaigns for political office.”
Buckley, 424 U.S. at 16. A “major purpose of th[e First] Amendment was to
protect the free discussion of governmental affairs. . . including discussions
of candidates,” id. at 15, including such expression in the form of
independent expenditures. Jd. at 51.

Contribution limits adversely affect our system of representative
government by restricting the resources available for political dialogue. See
Citizens Against Rent Control v. City of Berkeley, 454 U.S. 290, 299
(1981)(“The contribution limit thus automatically affects expenditures, and
limits on expenditures operate as a direct restraint on freedom of expression
of a group or committee desiring to engage in political dialogue. . . .”).

Contribution limits also threaten the right to freedom of association.


FEC’s supplemental guide for “Nonconnected Committees”
(http://www.fec.gov/pdf/nongui_supp.pdf) 2.20.0... cece ce eeeeeeeeeeseee een ees 30

Federal Election Commission Enforcement Procedures: Hearing
Before the Comm. on House Admin. 108" Cong. 129 )
(October 16, 2003)(statement of Rep. Doolittle) ............ cee 31

Hearing on Campaign Contribution Limits, Committee on Rules and
Administration (106th Cong. 9)(March 24, 1999)
(testimony of former Senator Dan Coats).........0...0..00ceceeeeeeee ees 14

James Bopp, Jr., Constitutional Limits on Campaign Contribution Limits,
2 Regent Univ. L. Rev. 235 (1998-99) oo... cece eeeeece nee eee eee eneee 10

Jeffrey Milyo, Ph.D., Campaign Finance Red Tape: Strangling Free Speech
& Political Debate, at 27, Institute for Justice, October 2007 (last v
isited August 29, 2009)

<http://www.ij.org/publications/other/campaign-finance-red-tape.html>....32

Kathleen Sullivan, Political Money and Freedom of Speech,
30 ULC. Davis L. Rev. 663 (1997) .0....cceeeeceeeeceeeeecesasneeee seen eee 17

Mark Schmitt, Mismatching Funds,

Democracy: A Journal of Ideas, Spring 2007

(last visited August 31, 2009)
<http:www.newamerica.net/publications/articles/2007/mismatching
_funds_5013> 7, 20, 21, 27

Nathaniel Persily and Kelli Lammie,
Symposium: The Law of Democracy: Campaign Finance After
McCain-Feingold: Perceptions of Corruption and Campaign
Finance: When Public Opinion Determines Constitutional Law,
153 U. Pa. L. Rev. 119, 148-49 (2004) ..... cee ccee eee nee eee eeees 17

Paul S. Herrnson, CONGRESSIONAL ELECTIONS,
CAMPAIGNING AT HOME AND IN WASHINGTON (1995) .......00000c0ceee 20

viii


candidate, regardless of the amount of the expenditure. Jd. at 497-98.
Because there was no danger of corruption, the statute did not advance any
compelling interest and was found unconstitutional. Jd. at 500-501.

Similarly, limits on contributions to groups like SpeechNow.org
(which make no contributions to candidates) do not further an interest in
preventing corruption or its appearance. This is due in part because of the
very definition of an independent expenditure. By law, an independent
expenditure cannot be coordinated with a candidate. It follows, therefore,
that there is little danger that a guid pro quo will occur from an expenditure
that is made independently of a candidate because without coordination,
there is no ability to cut a quid pro quo deal.

Furthermore, a lack of coordination results not just in a truly
“independent” expenditure; in some cases it can lead to a counterproductive
expenditure. The independent expenditure might not be ‘“‘on message,” or it

might attack the opposing candidate.’ Ideological groups, more than the

'“T think all of us have been faced with a situation where we turn on the
television or somebody brings our attention to an ad, running supposedly in
our favor, supporting us, and saying, well, wait a minute, that is not the
message I am trying to convey, that is not what we have chosen to be the
themes of the campaign. An outside group has decided that is what the
themes of the campaign ought to be.” Hearing on Campaign Contribution
Limits, Committee on Rules and Administration (106th Cong. 9)(March 24,
1999)(testimony of former Senator Dan Coats).

14


RECORD NO. 08-5223

ORAL ARGUMENT HAS NOT YET BEEN SCHEDULED

In The

United States Court of Appeals

FOR THE DISTRICT COURT OF COLUMBIA CIRCUIT

SPEECHNOW.ORG; DAVID KEATING;

FRED M. YOUNG, JR; EDWARD H. CRANE III; a
BRAD RUSSO; SCOTT BURKHARDT, of
°o
Plaintiffs — Appellants, SK
i< 2
r
1

Ez
FEDERAL ELECTION COMMISSION,
Defendant ~ Appellee.

ON APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA

BRIEF OF AMICI CURIAE |

Buckeye Institute’s 1851 Center for Constitutional Law, Concerned Women for
America Legislative Action Committee, FRC Action, Goldwater Institute’s Scharf-
Norton Center for Constitutional Litigation

Supporting Appellants

*Heidi K. Abegg
Alan P. Dye

Webster Chamberlain & Bean

1747 Pennsylvania Avenue, NW
Suite 1000

Washington, D.C. 20006
(202) 785-9500

Counsel for Amici Curiae

Dated: August 31, 2009

go :1kY I~ 43S 6002

SSI:
EFREMRENER
REIAE ED

HOI


RECORD NO. 08-5223

ORAL ARGUMENT HAS NOT YET BEEN SCHEDULED

In The

United States Court of Appeals

FOR THE DISTRICT COURT OF COLUMBIA CIRCUIT
SPEECHNOW.ORG; DAVID KEATING;

FRED M. YOUNG, JR; EDWARD H. CRANE III;
BRAD RUSSO; SCOTT BURKHARDT,

Plaintiffs — Appellants,

FEDERAL ELECTION COMMISSION,

Defendant — Appellee.

ON APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA

ADDENDUM

*Heidi K. Abegg

Alan P. Dye

Webster Chamberlain & Bean
1747 Pennsylvania Avenue, NW
Suite 1000

Washington, D.C. 20006

(202) 785-9500

Counsel for Amici Curiae

Dated: August 31, 2009



INTEREST OF AMICI CURIAE

The parties have consented to the filing of this brief. Amici curiae
submit a motion for leave to file this Brief out of time.

Amici curiae believe strongly in the rights of political expression and
association by citizens and citizen groups as guaranteed by the First
Amendment. Through educational activities, amici curiae promote respect
for the rights of freedom of speech and of association. Amici curiae have
defended First Amendment rights in state and federal courts. Amici curiae
thus have a strong interest in whether citizens may associate and speak
freely about the political process and believe that this case is an important
opportunity for the Court to bolster the First Amendment and the
opportunity of all Americans to protect their individual rights through free
speech and association.

The Buckeye Institute for Public Policy Solutions is non-profit
research and educational organization formed to support public policies that
advance liberty, individual rights, limited government, and a strong
economy in Ohio. The Buckeye Institute’s 1851 Center for Constitutional
Law is dedicated to protecting Ohioans’ control over their lives, their
families, their property, and ultimately, their destinies. More pointedly, the

1851 Center has an interest in protecting Ohioans’ rights (1) to freely engage


STATUTES AND REGULATIONS
All applicable statutes are contained in the Addendum for the Brief
for Appellants SpeechNow.org, except for the following, which is contained
in an Addendum attached to this Brief:

26 U.S.C. § 527

GLOSSARY

BCRA Bipartisan Campaign Reform Act of 2002, Pub. L. 107-155,
116 Stat. 81 (codified in scattered sections of 2 U.S.C.).

FEC Federal Election Commission
FECA Federal Election Campaign Act

PAC Political Action Committee, a political committee as defined by
2 US.C. § 431(4)(A).


CONCLUSION

In the last 35 years “an exchange of political favors for uncoordinated
expenditures remains a hypothetical possibility and nothing more.” NCPAC,
470 U.S. at 498. This hypothetical does not warrant burdening citizens from
associating to speak out on matters of political importance. “The First
Amendment protects political association as well as political expression.”
Buckley, 424 U.S. at 15. These “two rights overlap and blend; to limit the
right of association places an impermissible restraint on the right of
expression.” Citizens Against Rent Control, 454 U.S. at 300. This Court
should protect the step-child of First Amendment campaign finance
jurisprudence — the right of association — with the same degree of protection
afforded to the favorite son — the freedom of speech. Consequently, the
Court should reverse the district court’s decision denying SpeechNow.org’s

motion for preliminary injunction.

33


business of raising soft money, “much more money moves through channels
that are not controlled by or coordinated with candidates or parties, for
example, which means — in theory — that it is less corrupting than money
raised directly by elected officials.” Id. Additionally, this money tends to
be more ideologically driven rather than driven by access. Id. While this
change makes a big difference in the tone of the debate — more “negative”
ads — it also has a salutary impact — less potential for corruption because
“ideologues are less likely to be angling for pure influence.” Id.

“Outside groups” are less “shadow organizations” and more
competitors of political parties because the leadership of these outside
groups is wary of party and other “traditional” political outlooks. Bauer, A
Report From the Field, 5 Election Law Journal at 106-107. In recent years,
there has been a “sea-change in the relationship of large donors to political
organizations.” Id. at 112. The change in the donors’ expectations has been
described as “profound.” Jd. An increasing number of donors are
ideological and give to like-minded groups because they want to control
their message and elect people who share their views, not to gain access.
See id. at 107. These donors are increasingly ideological, and their
involvement is driven by political viewpoints, not by self-interest. Id.

Donors want the ability to shape their message, even if it means going

21


Page 1

UNITED STATES CODE SERVICE
Copyright © 2009 Matthew Bender & Company, Inc.
a member of the LexisNexis Group (TM)

All rights reserved.

*** CURRENT THROUGH PL 111-62, APPROVED 08/19/ 2009 ***

TITLE 26. INTERNAL REVENUE CODE
SUBTITLE A. INCOME TAXES
CHAPTER 1. NORMAL TAXES AND SURTAXES
SUBCHAPTER F. EXEMPT ORGANIZATIONS
PART VI. POLITICAL ORGANIZATIONS

Go to the United States Code Service Archive Directory
26 USCS § 527
§ 527. Political organizations.

(a) General rule. A political organization shall be subject to taxation under this subtitle [26 USCS §§ J et seq.] only to
the extent provided in this section. A political organization shall be considered an organization exempt from income
taxes for the purpose of any law which refers to organizations exempt from income taxes.

(b) Tax imposed.

(1) In general. A tax is hereby imposed for each taxable year on the political organization taxable income of every
political organization. Such tax shall be computed by multiplying the political organization taxable income by the high-
est rate of tax specified in section 11(b) [26 USCS § 11(b)].

(2) Alternative tax in case of capital gains. If for any taxable year any political organization has a net capital gain,
then, in lieu of the tax imposed by paragraph (1), there is hereby imposed a tax (if such a tax is less than the tax imposed
by paragraph (1)) which shall consist of the sum of--

(A) a partial tax, computed as provided by paragraph (1), on the political organization taxable income determined by
reducing such income by the amount of such gain, and
(B) an amount determined as provided in section 1201(a) [26 USCS § 1201(a)] on such gain.

(c) Political organization taxable income defined.
(1) Taxable income defined. For purposes of this section, the political organization taxable income of any organiza-
tion for any taxable year is an amount equal to the excess (if any) of--
(A) the gross income for the taxable year (excluding any exempt function income), over
(B) the deductions allowed by this chapter [26 USCS §§ 1 et seq.] which are directly connected with the production
of the gross income (excluding exempt function income), computed with the modifications provided in paragraph (2).
(2) Modifications. For purposes of this subsection--
(A) there shall be allowed a specific deduction of $ 100,
(B) no net operating loss deduction shall be allowed under section 172 [26 USCS § 172], and
(C) no deduction shall be allowed under part VIII of subchapter B [26 USCS §§ 24] et seq.] (relating to special de-
ductions for corporations).
(3) Exempt function income. For purposes of this subsection, the term "exempt function income" means any amount
received as--
(A) a contribution of money or other property,
(B) membership dues, a membership fee or assessment from a member of the political organization,
(C) proceeds from a political fundraising or entertainment event, or proceeds from the sale of political campaign
materials, which are not received in the ordinary course of any trade or business, or


need for, and is, in fact, legally deterred from obtaining “access” to obtain
legislative goals.

Furthermore, there is evidence that ideological PACs that make both
contributions and independent expenditures “rarely give money to members
of Congress for the sake of securing access to the legislative process.” Paul
S. Herrnson, CONGRESSIONAL ELECTIONS, CAMPAIGNING AT HOME AND IN
WASHINGTON 109-110 (1995). Thus, “[t]here is... less of a danger of quid
pro quo corruption, such as the sort one might presume from large
contributions given directly to candidates, when a contribution is given to a
PAC that does not itself wield legislative power.” Russell v. Burris, 146
F.3d 563, 571 (8th Cir. 1998); Day v. Holahan, 34 F.3d 1356, 1366 (8th Cir.
1994).

Furthermore, since Buckley's observation that independent
expenditures do not corrupt, the political landscape has changed, making it
even less likely that corruption from independent expenditures can result.
There are two main reasons for this.

First, the politics of today is qualitatively different from past election
cycles, largely because of changes in the regulation of money in politics.
Schmitt, Mismatching Funds, Democracy: A Journal of Ideas, Spring 2007,

419. Due in part to BCRA, which put parties and candidates out of the

20


West Virginians For Life v. Smith,

919 F. Supp. 954 (S.D. W.Va. 1996)......ccccccecsesscseesesseeeeesessesee 7
STATUTES
QUS.C. § 44 La. cccccccccccesecsecesvesstestesesseseeeseteutestestistessuneeseesese 5
26 U.S.C. § 5270 occccccccscecessesteesietesesetessessessasasseseteeseetseesesee 4,19
REGULATIONS
TOM 3: E(( +) vn 29
OTHER AUTHORITIES

Bipartisan Comm’n on the Political Reform Act of 1974, Overly Complex
and Unduly Burdensome: The Critical Need to Simplify the Political
Reform Act at 62, (last visited August 27, 2009)

<http://www.fppe.ca.gov/pdf/McPherson.pdf >

Bradley Smith, Money Talks: Speech, Corruption, Equality,
and Campaign Finance, 86 Geo. L. J. 45 (1997)... ...cc cee eee eee ee eee 17

Center for Responsive Politics, Influence & Lobbying
(visited August 20, 2009)
<www.opensecrets.org/lobby/index.php> .............cccccecceeeeeeseeseeesseees 25

Comment, The Constitutionality of Restrictions on Individual
Contributions to Candidates in Federal Elections,
122 U.Pa. L.Rev. 1609 (1974) ...ccceeecececeeeeeeneneeceeeeeeen ees 28, 29

Elizabeth Garrett, Voting with Cues,
37 U. Rich. L. Rev. 1011 (2003) .... 0. cceeeeeeeeeeeneeeeeeeneeeeeeeeee 31

Federal Election Commission, Growth in PAC Financial Activity Slows
(visited August 20, 2009)
<www.fec.gov/press/press2009/200904 1 SPAC/20090424PAC.shtml>......25

FEC’s guide for “Nonconnected Committees”
(http://www. fec.gov/pdf/nongui.pdf)........ cc cee ceseteetteeeeeeeeeeenenee eee dO

vii


on the freedom of political association through contribution limits to
independent expenditure groups, like all restrictions on political speech,
requires strict scrutiny. See FEC v. Wisconsin Right to Life, Inc., 551 U.S.
449, 464 (2007)(WRTL I).
A. Infringing The Right Of Association In This Case Does Not
Further The Government’s Interest In Preventing
Corruption Under The NCPAC Standard Or The District
Court’s Expanded Corruption Standard.

Since “[t]here can be no doubt that the expenditures in this case”
involve political speech and associational rights “at the core of the First
Amendment,” the Government is required to demonstrate a sufficiently
compelling interest to limit the contributions at issue in this case. NCPAC,
470 U.S. at 493. The corruption standard applied here will determine
whether the step-child right of political association remains neglected or is
embraced.

This court ought not to expand the reformers’ efforts to have a
shifting, ever-increasing “prophylaxis-upon-prophylaxis” approach to
regulating citizens’ core First Amendment rights. The “Supreme Court has
long recognized ‘the governmental interest in preventing corruption and the
appearance of corruption’ in election campaigns,” and it has invoked this

interest as a reason for upholding contribution limits. WRTL IT, 551 U.S. at

452 (quoting Buckley, 424 U.S. at 26-27, 45). The Court has been reluctant

11


could have a severe impact on political dialogue if the limitations prevented
candidates and political committees from amassing the resources necessary
for effective advocacy.” Buckley, 424 U.S. at 21. The right to free speech
encompasses the right to effective speech and to participation in an effective
organization. Comment, The Constitutionality of Restrictions on Individual
Contributions to Candidates in Federal Elections, 122 U.Pa. L.Rev. 1609,
1630 (1974)(citing Amalgamated Food Employees Local 590 v. Logan
Valley Plaza, Inc., 391 U.S. 308 (1968); Sweezy v. New Hampshire, 354
U.S. 234 (1957)).

As shown above, there is no compelling interest in limiting
contributions to independent expenditure groups like SpeechNow.org.
Moreoever, restricting the amount a citizen may contribute to such a group
creates very significant operational burdens further burdening associational
rights. Treating SpeechNow.org as a political committee, even though it
does not make any contributions to candidates, prevents SpeechNow.org
from effectively organizing and imposes burdensome requirements.

Under the current statutory framework, independent expenditures can
only be funded with “hard money,” that is, money raised in accordance with

source and amount limitations. “Hard money” is generally harder to raise

28


and scarcer in quantity. Bauer, A Report From the Field, 5 Election Law at
108.

It is well accepted that substantial amounts of “seed money” are
usually necessary to initiate a large fundraising effort. Comment, The
Constitutionality of Restrictions on Individual Contributions to Candidates
in Federal Elections, 122 U.Pa. L.Rev. at 1631 n.175; see also Bauer, A
Report From the Field, 5 Election Law Journal at 107 (“[R]eforms appear
likely to slow the rate of entries, by raising the price of admission.”). While
unregulated § 527 organizations can accept large donations, an independent
expenditure PAC is limited to raising contributions in amounts of $5,000. In
light of this, some have noted that new political committees, including those
formed around single issues, may suffer due to these limits because they are
unable to raise seed money. Id. at 112-113. This seed money is especially
important to groups like SpeechNow.org because unlike PACs connected to
corporations and unions, they are not able to use treasury funds to set up and
run their PACs. 11 C.F.R. § 114.5(b).

New political committees are also at a disadvantage when it comes to
actually raising money. The success of Internet fundraising in 2004 and
2008 does not necessarily translate into success for new political

committees. Internet fundraising suffers from unpredictability, and rises and

29


Appearances can be deceiving; in this case, they bear no relation to
the rights at issue. Trends in public perception of corruption have been
shown to have little to do with the campaign finance system. The
percentage of the population describing government as corrupt decreased
even as soft money contributions skyrocketed. Nathaniel Persily and Kelli
Lammie, Symposium: The Law of Democracy: Campaign Finance After
McCain-Feingold: Perceptions of Corruption and Campaign Finance: When
Public Opinion Determines Constitutional Law, 153 U. Pa. L. Rev. 119,
148-49 (2004). Furthermore, data suggest that an individual’s perception of
corruption derives to some extent from that citizen’s (1) position in society
(race, income, education level); (2) opinion of the incumbent President and
performance of the economy; (3) attitudes concerning taxation and “big
government”; and (4) the propensity to trust other people, in general. Jd. at
174. These data support past extensive economic, public policy, and social
science literature which unmistakably show that legislative voting is driven
by personal ideology, constituent desires, and party loyalty not by quid pro
quo corruption. See Kathleen Sullivan, Political Money and Freedom of
Speech, 30 U.C. Davis L. Rev. 663, 679 (1997); Bradley Smith, Money
Talks: Speech, Corruption, Equality, and Campaign Finance, 86 Geo. L. J.

45, 58-59 (1997).

17


TABLE OF CONTENTS
Page

CERTIFICATE AS TO PARTIES, RULINGS, AND RELATED CASES....i

CORPORATE DISCLOSURE STATEMENT............. cece cee eceseeeteseeeeeeeeel
TABLE OF CONTENTS. ..0... 0. cce eee e cece cece cece eee ae ees rereessseecseseeealil
TABLE OF AUTHORITIES.......... 0.0. cccc cece eeee eee este teres eee eee ee enae Vv
STUTES AND REGULATIONSG............000::ceccseeeeeeeeeeeee eee een een eees x
GLOSSARY 20... cece cece ceccneccnee nee eee eee een een season eeneeeeet een eee ene eeees x
INTEREST OF AMICI CURIAE. .......0. 0.000. cc ccc cec ees ee cece eee ee ee ee nee 1
SUMMARY OF ARGUMENT..........0.. 0000: cceee cece e eee ee eet teen tenes 3
ARGUMENT.....0.. 0... 0cccceee cece eee e cee e settee ea ee tenes eases eeeaeeea een eeegs 4

I. The Past 35 Years Provides Four Key Observations That
Must Inform An Analysis In This Case............cceceseeseeeeeee 4

II. Contribution Limits To Independent Expenditure Groups
Restrict Both The Freedom Of Speech And The Freedom
Of Association, Both Of Which Are Essential To The
Proper Functioning Of Our Democracy..............:00ceceeeeeeee 7

Il. Independent Expenditures Are Both Direct Speech And
Associational Speech And Therefore, Contribution Limits
To Independent Expenditure Groups Must Survive Strict
Scrutiny... 00... e eee e eee erent eee ee ese eeeaeeeeeeees 10

A. Infringing The Right Of Association In This Case
Does Not Further The Government's Interest In
Preventing Corruption Under The NCPAC Standard
Or The District Court's Expanded Corruption
Standard............ cece cece cece ee ee cece eee ee een ee ee eeee 11

iti


CERTIFICATE OF SERVICE
I hereby certify that on this 31“ day of August, 2009, I caused a true
and correct copy of required number of copies of the foregoing BRIEF OF
AMICI CURIAE to be served upon the following by overnight delivery:

Robert W. Bonham, III

David B. Kolker

Steve N. Hajjar

Kevin Deeley

FEDERAL ELECTION COMMISSION
999 E Street, N.W.

Washington, DC 20463

Counsel for Appellee

William H. Mellor

Steven M. Simpson

Robert W. Gall

Robert P. Frommer

Paul M. Sherman

INSTITUTE FOR JUSTICE

901 North Glebe Road, Suite 900
Arlington, VA 22203

Counsel for Appellants

Stephen M. Hoersting

Bradley A. Smith

CENTER FOR COMPETITIVE POLITICS
124 West Street South, Suite 201
Alexandria, VA 22314

fue K Abegg

Heidi K. Abegg
Counsel for Amici Curiae


Respectfully submitted,

Mihi K Weys

Heidi K. Abegg (DC Bar No. 463935)

Alan P. Dye (DC Bar No. 215319)
WEBSTER, CHAMBERLAIN & BEAN

1747 Pennsylvania Ave, NW

Suite 1000

Washington, DC 20006

(202) 785-9500

Email: habegg@we-b.com, adye@we-b.com

Attorneys for Amici Curiae


visit whether limits to independent expenditure groups are consistent with
the First Amendment.
ARGUMENT

This case involves an unincorporated non-profit association,
SpeechNow.org, organized under § 527 of the Internal Revenue Code,
whose only activity will be to make independent expenditures. J.A. 83-85.
SpeechNow.org will accept donations only from individuals and cannot
accept corporate donations. J.A. 79, 84. SpeechNow.org is also required by
its bylaws to operate wholly independently of any political candidate,
committee or party. J.A. 84-85. As such, SpeechNow.org is a completely
different creature than the well-known § 527 organizations which operated
in the 2004 election cycle. The only characteristic SpeechNow.org shares
with the § 527 organizations discussed at length in the district court opinion,
see J.A. 379-382, is the section of the tax code under which they are exempt
from income tax.

I. The Past 35 Years Provides Four Key Observations That Must
Inform An Analysis In This Case.

Thirty-five years ago, the Buckley Court held that independent
expenditures could not be limited because as pure, independent speech, they
posed no danger of corruption. Buckley v. Valeo, 424 U.S. 1, 46-67 (1976).

Four observations must inform any analysis of the constitutionally of the


Buckley’s holding that limits on independent expenditures fail to serve any
substantial government interest); Colo. Republican Fed. Campaign Comm.
v. FEC, 518 U.S. 604, 614-19 (1996)(same); FEC v. Nat’l Conservative
Political Action Comm., 470 U.S. 480, 497 (1985)(same).

Fourth, the ever-increasing restrictions on political participation have
forced citizens desiring to participate in the political process to seek out
other avenues of involvement. The issue in this case — limits on
contributions to organizations making only independent expenditures — has
lain dormant for 35 years but has renewed importance in light of the
increasing restrictions on political speech. The critical right of association,
which has become the neglected step-child in First Amendment campaign
finance jurisprudence, cries out again for attention in this case. Campaign
finance “reformers” have long been fighting political organization, in the
forms of corporations, parties, PACs, and non-profits, and through them,
their fundamental right of association. Most recently, the fight has turned to
§ 527 groups that raise money without federal limits (so called “soft
money”). The reformers see only “organized money.” But what they ignore
is that associations of citizens “can help people find and sort through their
shifting and conflicting policy preferences, and, by organizing, can help give

power to people who are not economically powerful on their own.” Mark


Revenue Code, it has no parent corporation, and is not a publicly held
corporation that issues stock.

Pursuant to Rule 26.1 of the Federal Rules of Appellate Procedure and
D.C. Circuit Rule 26.1, amicus curiae The Goldwater Institute Scharf-
Norton Center for Constitutional Litigation is part of the Goldwater Institute,
which is a tax exempt educational foundation under § 501(c)(3) of the
Internal Revenue Code, which has no parent corporation, and is not a

publicly held corporation that issues stock.


accountable to the people. Republican Party of Minnesota v. White, 536
U.S. 765, 805-06 (2002)(Ginsburg, J., dissenting, joined by Stevens, Souter,
and Breyer, JJ.)(“Legislative and executive officials serve in representative
capacities. They are agents of the people. . . .”).

It strains the imagination to see how it is not corrupting for one
individual to make unlimited independent expenditures, but when two
citizens band together to fund political speech, their combined voice
somehow becomes corrupting. If a citizen truly wanted to gain access,
would not an independent expenditure be more effective in achieving these
things if the citizen were to make it by himself and take all the credit for
helping the candidate instead of sharing it with others? See Schmitt,
Mismatching Funds, Democracy: A Journal of Ideas, Spring 2007, 732
(‘Restrictions have the effect of increasing the power of those who are
unrestricted.””). As the “gratitude” is spread out over a larger number of
individuals, would not the amount of alleged “undue influence” also
diminish?

IV. There Are Significant Burdens In Launching An Independent
Expenditure Group That Is Regulated As A PAC And Subject To
Contribution Limits.

The Buckley Court recognized that “[g]iven the important role of

contributions in financing political campaigns, contribution restrictions

27


candidates or parties themselves, are more likely to “go negative.”” This
third party independent expenditure may cause the public to view the
candidate as a mudslinger or negative campaigner, a label which is
especially troubling to a candidate trying to run a “positive campaign.”
Finally, because ideological groups are concerned about particular issues,
they may have no qualms about highlighting a vote or position that the
candidate has decided might cause slippage in the polls were he to mention
it. For example, a group might want to highlight a candidate’s pro-free
speech vote on flag burning when the candidate has decided to downplay
this vote because it might harm his reelection chances. A group running any
one of these types of ads probably won’t curry favor or access from the
favored candidate, but instead may become persona non grata. Buckley put
it best:

[S]uch independent expenditures [unlike contributions] may well

provide little assistance to the candidate’s campaign and indeed may

prove counterproductive. The absence of prearrangement and

coordination of an expenditure with the candidate. . . not only
undermines the value of the expenditure to the candidate, but also

2 Negative ads are widely viewed by consultants as effective, but carry with
them the potential to become controversial in their own right. Robert F.
Bauer, A Report From the Field: Campaign Professionals on the First
Election Cycle Under the Bipartisan Campaign Reform Act, 5 Election Law
Journal 105, 111 (2006). For this reason, when political parties cannot be
certain of staying on their candidate’s message, they attempt first to “do no
harm” by avoiding negative campaigning. Jd. Ideological groups are under
no such constraint.

15


CERTIFICATE AS TO PARTIES, RULINGS, AND RELATED CASES
All parties appearing in this Court are listed in the Brief for

Appellants SpeechNow.org, David Keating, Fred M. Young, Jr., Edward H.

Crane, III, Brad Russo, and Scott Burkhard, as are references to the rulings

and related cases.

CORPORATE DISCLOSURE STATEMENT

Pursuant to Rule 26.1 of the Federal Rules of Appellate Procedure and
D.C. Circuit Rule 26.1, amicus curiae The Buckeye Institute’s 1851 Center
for Constitutional Law states that it is a non-profit corporation, it has no
parent corporation, and is not a publicly held corporation that issues stock.

Pursuant to Rule 26.1 of the Federal Rules of Appellate Procedure and
D.C. Circuit Rule 26.1, amicus curiae The Concerned Women for America
Legislative Action Committee states that it is a non-profit corporation
exempt from taxation under § 501(c)(4) of the Internal Revenue Code, it has
no parent corporation, and is not a publicly held corporation that issues
stock.

Pursuant to Rule 26.1 of the Federal Rules of Appellate Procedure and
D.C. Circuit Rule 26.1, amicus curiae FRC Action states that it is a non-

profit corporation exempt from taxation under § 501(c)(4) of the Internal


Page 2
26 USCS § 527

(D) proceeds from the conducting of any bingo game (as defined in section 513(f)(2) [26 USCS § 513(f)(2)]).
to the extent such amount is segregated for use only for the exempt function of the political organization.

(d) Certain uses not treated as income to candidate. For purposes of this title, if any political organization--

(1) contributes any amount to or for the use of any political organization which is treated as exempt from tax under
subsection (a) of this section,

(2) contributes any amount to or for the use of any organization described in paragraph (1) or (2) of section 509(a) [26
USCS § 50%a)] which is exempt from tax under section S01(a) [26 USCS § 501(a)], or

(3) deposits any amount in the general fund of the Treasury or in the general fund of any State or local government,

such amount shall be treated as an amount not diverted for the personal use of the candidate or any other person. No
deduction shall be allowed under this title for the contribution or deposit of any amount described in the preceding sen-
tence.

(e) Other definitions. For purposes of this section--

(1) Political organization. The term "political organization" means a party, committee, association, fund, or other or-
ganization (whether or not incorporated) organized and operated primarily for the purpose of directly or indirectly ac-
cepting contributions or making expenditures, or both, for an exempt function.

(2) Exempt function. The term "exempt function" means the function of influencing or attempting to influence the
selection, nomination, election, or appointment of any individual to any Federal, State, or local public office or office in
a political organization, or the election of Presidential or Vice-Presidential electors, whether or not such individual or
electors are selected, nominated, elected, or appointed. Such term includes the making of expenditures relating to an
office described in the preceding sentence which, if incurred by the individual, would be allowable as a deduction under
section 162(a) [26 USCS § 162(a)].

(3) Contributions. The term "contributions" has the meaning given to such term by section 271(b)(2) [26 USCS §
271(b\(2)\.

(4) Expenditures. The term "expenditures" has the meaning given to such term by section 271(b)(3) [26 USCS §
271(b\3)].

(5) Qualified state or local political organization.

(A) In general. The term “qualified State or local political organization" means a political organization--

(i) all the exempt functions of which are solely for the purposes of influencing or attempting to influence the selec-
tion, nomination, election, or appointment of any individual to any State or local public office or office in a State or
local political organization,

(ii) which is subject to State law that requires the organization to report (and it so reports)--

(I) information regarding each separate expenditure from and contribution to such organization, and
(ID) information regarding the person who makes such contribution or receives such expenditure,

which would otherwise be required to be reported under this section, and

(iii) with respect to which the reports referred to in clause (ii) are (I) made public by the agency with which such
reports are filed, and (II) made publicly available for inspection by the organization in the manner described in section
6104(d) [26 USCS § 6104(d)].

(B) Certain State law differences disregarded. An organization shall not be treated as failing to meet the require-
ments of subparagraph (A)(ii) solely by reason of 1 or more of the following:

(i) The minimum amount of any expenditure or contribution required to be reported under State law is not more
than $ 300 greater than the minimum amount required to be reported under subsection (j).

(ii) The State law does not require the organization to identify 1 or more of the following:

(1) The employer of any person who makes contributions to the organization.

(II) The occupation of any person who makes contributions to the organization.

(II) The employer of any person who receives expenditures from the organization.

(IV) The occupation of any person who receives expenditures from the organization.

(V) The purpose of any expenditure of the organization.

(VI) The date any contribution was made to the organization.

(VII) The date of any expenditure of the organization.

(C) De minimis errors. An organization shall not fail to be treated as a qualified State or local political organization

solely because such organization makes de minimis errors in complying with the State reporting requirements and the


independent expenditures is not only unsupported by Supreme Court
precedent, it proves too much.

The Framers already thought of “gratitude” and undue influence. A
Federalist paper dealt with the charge that Members of Congress would “‘be
most likely to aim at the ambitious sacrifice of the many to the
aggrandizement of the few.” The Federalist No. 57 (Alexander Hamilton or
James Madison). But the author specifically listed “gratitude,” or a sense of
honor or appreciation to the public for his election, as one of the reasons this
would not happen. “[WJhat is to restrain the House of Representatives from
making legal discriminations in favor of themselves and a particular class of
the society? . . . Duty, gratitude, interest, ambition itself, are the chords by
which they will be bound to fidelity and sympathy with the great mass of the
people.” Jd. (emphasis added).

The Framers saw gratitude as beneficial, stating that those “who
profess the most flaming zeal for republican government, yet boldly impeach
the fundamental principle of it,” id., with a confidence in “the vigilant. . .
spirit which actuates the people of America” and the belief that legislators

who would remain in office will be those who are grateful to the “great mass

23


associate with them. A focus group conducted by a bipartisan commission
studying California’s campaign finance laws in 2000 reached the following
conclusion:
The unintended consequence of this is that the price of admission into
politics becomes too high. People do not want to become candidates
or treasurers because of the potential liability. Thus the regulations
have injured grassroots democracy and have essentially
professionalized politics so that you have to have lawyers and
accountants on your campaign staff.
Bipartisan Comm’n on the Political Reform Act of 1974, Overly Complex
and Unduly Burdensome: The Critical Need to Simplify the Political Reform
Act at 62, (last visited August 27, 2009)
<http://www.fppc.ca.gov/pdf/McPherson.pdf >; see also Jeffrey Milyo,
Ph.D., Campaign Finance Red Tape: Strangling Free Speech & Political

Debate, at 27, Institute for Justice, October 2007 (last visited August 29,

2009) <http://www.ij.org/publications/other/campaign-finance-red-

tape.html> (documenting an experiment demonstrating the difficulty of
compliance with PAC regulation and how this deterred political association).
Treating SpeechNow.org as a PAC without a compelling justification leads
to an ineffective organization, which in turn, negatively impacts the rights of

free speech and association.

32


Given Buckley’s observations about how the nature of independent
expenditures did not implicate quid pro quo corruption or its appearance, it
is not surprising that after nearly 35 years, there is still no more than
speculation about corruption that may result from independent expenditures.
See, e.g., Leake, 525 F.3d at 294 (“Since the Supreme Court’s views on the
dangers of independent expenditures have not changed, North Carolina’s
evidence is still insufficient.”); Arkansas Right to Life PAC v. Butler, 29 F.
Supp.2d 540, 546 (W.D. Ark. 1998)(“We are hard pressed to find any such
‘demonstrable’ evidence in the record before us that large contributions to
independent expenditure committees has attributed to actual or perceived
corruption in Arkansas’ political process.”). This is not enough. NTEU, 513
USS. at 475 (refusing to defer to the government’s speculation, insisting that
burdens on nonpolitical expression require “‘a justification far stronger than
mere speculation about serious harms.”).

Also, not surprisingly, the district court opinion cites no evidence of
corruption involving independent expenditures, nor does it cite any
corruption resulting from “access” to officeholders, assuming that this is an
acceptable rationale for infringing on citizens’ core First Amendment rights.
Rather, the lower court simply lumps SpeechNow.org in with other § 527

organizations, with alleged “close ties” to candidates and parties to try to

18


in political speech that best effectuates their policy preferences, (2) to freely
associate with their fellow citizens to advocate political change; and (3) to
be treated equally to their wealthier counterparts when engaging in the
political process.

The Concerned Women for America Legislative Action Committee
(CWALAC), a non-profit § 501(c)(4) corporation, is the legislative and
advocacy arm of Concerned Women for America. CWALAC is committed
to reversing the decline in moral values in our nation and encourages its
members to speak out on public issues and hold their elected officials
accountable.

FRC Action, the non-profit § 501(c)(4) legislative action arm of the
Family Research Council, was founded in 1992 to educate the general public
and cultural leaders about traditional American values and to promote the
philosophy of the Founding Fathers concerning the nature of ordered liberty.
FRC Action is dedicated to preserving and advancing the interests of family,
faith and freedom in the political arena.

The Goldwater Institute Scharf-Norton Center for Constitutional
Litigation is part of the Goldwater Institute, which is a tax exempt
educational foundation. The Goldwater Institute advances public policies

that further the principles of limited government, economic freedom and


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26 USCS § 527

public inspection requirements described in subparagraph (A) as long as the organization corrects such errors within a
reasonable period after the organization becomes aware of such errors.

(D) Participation of Federal candidate or office holder. The term "qualified State or local political organization"
shall not include any organization otherwise described in subparagraph (A) if a candidate for nomination or election to
Federal elective public office or an individual who holds such office--

(i) controls or materially participates in the direction of the organization,

(ii) solicits contributions to the organization (unless the Secretary determines that such solicitations resulted in de
minimis contributions and were made without the prior knowledge and consent, whether explicit or implicit, of the or-
ganization or its officers, directors, agents, or employees), or

(iii) directs, in whole or in part, disbursements by the organization.

(f) Exempt organization which is not political organization must include certain amounts in gross income.

(1) In general. If an organization described in section 501(c) {26 USCS § 501(c)] which is exempt from tax under
section 501(a) [26 USCS § 50](a)} expends any amount during the taxable year directly (or through another organiza-
tion) for an exempt function (within the meaning of subsection (e)(2)), then, notwithstanding any other provision of law,
there shall be included in the gross income of such organization for the taxable year, and shall be subject to tax under
subsection (b) as if it constituted political organization taxable income, an amount equal to the lesser of--

(A) the net investment income of such organization for the taxable year, or
(B) the aggregate amount so expended during the taxable year for such an exempt function.
(2) Net investment income. For purposes of this subsection, the term “net investment income" means the excess of--
(A) the gross amount of income from interest, dividends, rents, and royalties, plus the excess (if any) of gains from
the sale or exchange of assets over the losses from the sale or exchange of assets, over
(B) the deductions allowed by this chapter [26 USCS §§ J et seq.] which are directly connected with the production
of the income referred to in subparagraph (A).

For purposes of the preceding sentence, there shall not be taken into account items taken into account for purposes of
the tax imposed by section 511 [26 USCS § 5/1] (relating to tax on unrelated business income).

(3) Certain separate segregated funds. For purposes of this subsection and subsection (e)(1), a separate segregated
fund (within the meaning of section 610 of title 18 or of any similar State statute, or within the meaning of any State
statute which permits the segregation of dues moneys for exempt functions (within the meaning of subsection (e)(2))
which is maintained by an organization described in section 501(c) {26 USCS § 501(c)] which is exempt from tax under
section 501(a) shall be treated as a separate organization.

(g) Treatment of newsletter funds.

(1) In general. For purposes of this section, a fund established and maintained by an individual who holds, has been
elected to, or is a candidate (within the meaning of paragraph (3)) for nomination or election to, any Federal, State, or
local elective public office for use by such individual exclusively for the preparation and circulation of such individual's
newsletter shall, except as provided in paragraph (2), be treated as if such fund constituted a political organization.

(2) Additional modifications. In the case of any fund described in paragraph (1)--

(A) the exempt function shall be only the preparation and circulation of the newsletter, and
(B) the specific deduction provided by subsection (c)(2)(A) shall not be allowed.

(3) Candidate. For purposes of paragraph (1), the term "candidate" means, with respect to any Federal, State, or local
elective public office, an individual who--

(A) publicly announces that he is a candidate for nomination or election to such office, and
(B) meets the qualifications prescribed by law to hold such office.

(h) Special rule for principal campaign committees.
(1) In general. In the case of a political organization which is a principal campaign committee, paragraph (1) of sub-
section (b) shall be applied by substituting “the appropriate rates" for "the highest rate".
(2) Principal campaign committee defined.
(A) In general. For purposes of this subsection, the term "principal campaign committee" means the political com-
mittee designated by a candidate for Congress as his principal campaign committee for purposes of--
(i) section 302(e) of the Federal Election Campaign Act of 1971 (2 U.S.C. 432(e)), and
(ii) this subsection.
(B) Designation. A candidate may have only 1 designation in effect under subparagraph (A)(ii) at any time and such
designation--


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26 USCS § 527

(A) (i) in the case of a calendar year in which a regularly scheduled election is held--

(1) quarterly reports, beginning with the first quarter of the calendar year in which a contribution is accepted or
expenditure is made, which shall be filed not later than the fifteenth day after the last day of each calendar quarter, ex-
cept that the report for the quarter ending on December 31 of such calendar year shall be filed not later than January 31
of the following calendar year,

(II) a pre-election report, which shall be filed not later than the twelfth day before (or posted by registered or
certified mail not later than the fifteenth day before) any election with respect to which the organization makes a contri-
bution or expenditure, and which shall be complete as of the twentieth day before the election, and

(III) a post-general election report, which shall be filed not later than the thirtieth day after the general election
and which shall be complete as of the twentieth day after such general election, and

(ii) in the case of any other calendar year, a report covering the period beginning January 1 and ending June 30,
which shall be filed no later than July 31 and a report covering the period beginning July 1 and ending December 31,
which shall be filed no later than January 31 of the following calendar year, or

(B) monthly reports for the calendar year, beginning with the first month of the calendar year in which a contribu-
tion is accepted or expenditure is made, which shall be filed not later than the twentieth day after the last day of the
month and shall be complete as if the last day of the month, except that, in lieu of filing the reports otherwise due in
November and December of any year in which a regularly scheduled general election is held, a pre-general election
report shall be filed in accordance with subparagraph (A)(i)(II), a post-general election report shall be filed in accor-
dance with subparagraph (A)(i)(III), and a year end report shall be filed not later than January 31 of the following cal-
endar year.

(3) Contents of report. A report required under paragraph (2) shall contain the following information:

(A) The amount, date, and purpose of each expenditure made to a person if the aggregate amount of expenditures to
such person during the calendar year equals or exceeds $ 500 and the name and address of the person (in the case of an
individual, including the occupation and name of employer of such individual).

(B) The name and address (in the case of an individual, including the occupation and name of employer of such in-
dividual) of all contributors which contributed an aggregate amount of $ 200 or more to the organization during the cal-
endar year and the amount and date of the contribution.

Any expenditure or contribution disclosed in a previous reporting period is not required to be included in the current
reporting period.

(4) Contracts to spend or contribute. For purposes of this subsection, a person shall be treated as having made an ex-
penditure or contribution if the person has contracted or is otherwise obligated to make the expenditure or contribution.

(5) Coordination with other requirements. This subsection shall not apply--

(A) to any person required (without regard to this subsection) to report under the Federal Election Campaign Act of
1971 (2 U.S.C. 43] et seq.) as a political committee,

(B) to any State or local committee of a political party or political committee of a State or local candidate,

(C) to any organization which is a qualified State or local political organization,

(D) to any organization which reasonably anticipates that it will not have gross receipts of $ 25,000 or more for any
taxable year,

(E) to any organization to which this section applies solely by reason of subsection (f)(1), or

(F) with respect to any expenditure which is an independent expenditure (as defined in section 301 of such Act).

(6) Election. For purposes of this subsection, the term "election" means--

(A) a general, special, primary, or runoff election for a Federal office,

(B) a convention or caucus of a political party which has authority to nominate a candidate for Federal office,

(C) a primary election held for the selection of delegates to a national nominating convention of a political party, or

(D) a primary election held for the expression of a preference for the nomination of individuals for election to the
office of President.

(7) Electronic filing. Any report required under paragraph (2) with respect to any calendar year shall be filed in elec-
tronic form if the organization has, or has reason to expect to have, contributions exceeding $ 50,000 or expenditures
exceeding $ 50,000 in such calendar year.

(k) Public availability of notices and reports.

(1) In general. The Secretary shall make any notice described in subsection (i)(1) or report described in subsection
(j)(7) available for public inspection on the Internet not later than 48 hours after such notice or report has been filed (in
addition to such public availability as may be made under section 6104(d)(7) [26 USCS § 6104(d)(7)]).


contribution limits at issue in this case. First, the district court is correct in
that the general regulatory framework for political committees and the limits
imposed on them has not changed much since the limits were enacted. J.A.
377-378. Since its passage in 1974, the $5,000 limit on contributions to
political committees has not been increased. See 2 U.S.C. §§ 441a(a)(1)(C)
and 441a(a)(3)(B). This limit applies to all political committees; it does not
differentiate between committees that make contributions to candidates
(which might be susceptible to the corrupting influence of a large
contribution), and committees that are formed solely to make independent
expenditures without any coordination with a candidate.

Second, in the past 35 years, the Court has continually slammed the
door on the notion that independent expenditures cause corruption or its
appearance. Ironically, the Government’s case that independent
expenditures are corrupting has become even harder to make since the
passage of the Bipartisan Campaign Finance Reform Act (BCRA), designed
to stop the money flow through “holes” in the dam.

Third, each time the Supreme Court, most recently in McConnell v.
FEC, 540 U.S. 93 (2003), revisited Buckley’s conclusion about the lack of
corruption surrounding independent expenditures, it reaffirmed the

continuing truth of this observation. See McConnell at 221-22 (reaffirming