Campaign Finance Reform: Constitutional Issues Raised by Disclosure Requirements
Released: 2001-03-20T00:00:00

Campaign Finance Reform: Constitutional Issues Raised by Disclosure Requirements

RS20849 -- Campaign Finance Reform: Constitutional Issues Raised by Disclosure Requirements

Updated March 20, 2001

Reporting of Contributions and Candidate/Party Expenditures

In its landmark decision, Buckley v. Valeo, (2) the Supreme Court upheld the reporting and disclosure requirements of the Federal Election Campaign Act (FECA)applicable to contributions and expenditures by candidates and political parties. In Buckley, the Courtdetermined that disclosure requirements can serve threegovernmental interests that were sufficient to outweigh possible free speech infringements: (1) providing theelectorate with information about the sources ofcampaign money and how it is spent, (2) deterring the reality and appearance of corruption by exposing largecontributions and candidate expenditures, and (3)providing the government with the data necessary to detect violations of law. (3) However, with regard to independent expenditures, the Court found that reportingrequirements can only apply to those independent expenditures that expressly advocate the election or defeat of aclearly identified candidate. (4)

In a noteworthy portion of the decision, the Court expressly deferred to legislative judgment in upholding the reporting and disclosure requirements. In Buckley, the plaintiffs argued that FECA provisions, which require political committees to maintain records with the nameand address of contributors donating over $10and to report the name, address, occupation, and employer of contributors who donate, in the aggregate, over $100,were unconstitutional. While the Court agreedthat these thresholds were "indeed low," it nevertheless found that "we cannot require Congress to establish that ithas chosen the highest reasonable threshold." (5) Indeed, the Court concluded, such determinations are "best left in the context of this complex legislation tocongressional discretion." (6)

Court deference to legislative determinations may be limited, however, when a court finds that the legislature has established a series of differing disclosurethresholds without sufficiently demonstrating its reasoning for such disparities. For example, in Vote Choice,Inc. v. DiStefano, (7) the U.S. Court of Appeals forthe First Circuit struck down a Rhode Island law requiring political action committees (PACs) to disclose theidentity of every contributor, even contributorsdonating as little as $1, a practice sometimes referred to as "first dollar disclosure," while only requiring candidatesto disclose contributors donating more than$100. The First Circuit did not express concern with first dollar disclosure per se, but with the disparitybetween disclosure requirements applicable to PACsversus the requirements applicable to candidates. According to the Vote Choice court, the government'sinterest in disclosure is generally constant, that is, theinterest is the same regardless of whether the disclosure requirement applies to individuals or to an association ofindividuals. The subject Rhode Island law,however, was not only inconsistent, the court found, but imposed "a particularly virulent strain of unevenness intoits statutory scheme," without serving "anycognizable government interest." (8)

Disclosure requirements can also raise constitutional questions concerning the right of contributors to organizations subject to disclosure requirements to enjoyfreedom of association. (9) According to the Supreme Court in its 1958decision, NAACP v. Alabama , (10) it is well established thatfreedom to engage in associationfor the advancement of beliefs and ideas is an inseparable aspect of the liberty rights guaranteed by the Due ProcessClause of the 14th Amendment (11) and thatthere is an important relationship between freedom to associate and privacy in one's associations. (12) Accordingly, the NAACP Court held that compelleddisclosure of an association's membership lists is unconstitutional, if it can be shown that disclosure is likely toconstitute an effective restraint on members'freedom of association rights. The Court found that disclosure of the NAACP's members had exposed thosemembers to economic reprisal, loss of employment,threat of physical coercion, and other manifestations of public hostility. Therefore, the Court held, compelleddisclosure of members would detrimentally affectthe association's ability to exercise its rights to advocate its beliefs and further, it might induce members to quit theassociation and dissuade others fromjoining. (13)

Drawing from its reasoning in NAACP, in Buckley v. Valeo , the Supreme Court upheld the current FECA disclosure requirements as applied to minor as well asmajor parties. In Buckley, the plaintiffs argued that the First Amendment rights of minor parties weresignificantly burdened by contributor disclosurerequirements since they were more susceptible to harassment and that the government had little interest ininformation regarding minor parties having only a smallchance of winning elections. The Court determined, however, that unlike the evidence presented in NAACP , "any serious infringement on First Amendment rightsbrought about by compelled disclosure of contributors is highly speculative." (14) That is, according to the Court, absent a case being made that the threat toconstitutionally protected rights is so great and the governmental interest furthered by compelled disclosure is soinsubstantial that the law cannot beconstitutionally applied, disclosure laws will pass constitutional muster. (15) Nevertheless, the Buckley Court did recognize that, in the future, a specific minor partymight be able to demonstrate with a "reasonable probability" that disclosure requirements would subject its partycontributors to "threats, harassment, orreprisals," and accordingly, such a party could qualify for an exemption. (16)

The Supreme Court applied this principle again in Brown v. Socialist Workers '74 Campaign Committee (Ohio) , (17) that disclosure rules generally will be upheld asapplied to minor political parties, unless the minor political party can demonstrate, as the party in this case did, thatsuch disclosure will subject the identifiedparties to a "reasonable probability" of "threats, harassment, or reprisals from either Government officials or privateparties." (18) In view of these Supreme Courtholdings, if a case could be made that a disclosure requirement would seriously infringe on the First Amendmentrights of contributors to organizations subject tothe requirements, then as applied to those cases, the regulations might be overturned.

Reporting of "Express Advocacy" Independent Expenditures Versus "Issue Advocacy" Expenditures

In Buckley v. Valeo, the Supreme Court upheld FECA disclosure requirements for independent expenditures. (19) Under FECA, when an organization or individual(other than a political committee) makes an independent expenditure, (20) aggregating over $250 in a year, expressly advocating the election or defeat of a clearlyidentified candidate, it is subject to disclosure requirements. (21)

On the other hand, the current prevailing view of the courts is that disclosure requirements for non-candidate expenditures, which do not expressly advocate theelection or defeat of a clearly identified candidate, are unconstitutional. That is, according to most courts,expenditures for communications that merely relate topolitical issues, without meeting the "express advocacy" standard, are constitutionally protected issue advocacycommunications, which cannot be subject todisclosure requirements or any other regulation. (22)

Reporting of "Issue Advocacy" Expenditures by Tax-Exempt Groups

Even if a disclosure requirement is found to result in an unconstitutional regulation of First Amendmentprotected issue advocacy, some have argued thatconditioning receipt of tax-exempt status under the Internal Revenue Code (IRC) on compliance with a disclosurerequirement might provide a basis for regulatingbeyond the express advocacy standard to permit disclosure regulation of First Amendment protected issue advocacy. It has been a principle of federalconstitutional law, however, that the government may not condition the receipt of a public benefit upon arequirement to relinquish one's protected FirstAmendment rights. (23) In other words, the government may not accomplishindirectly what it would not be permitted to do directly. For example, in Speiser v.Randall , the Supreme Court held that a state could not condition a veteran's tax exemption upon the recipient'sexecution of a loyalty oath, which the Court foundto be in violation of recipient's First Amendment rights. (24)

On the other hand, Regan v. Taxation With Representation of Washington (25) is sometimes cited in support of the government's ability to limit the exercise of aFirst Amendment right as a condition of receiving the public benefit of tax-exempt status. (26) In Regan , the Supreme Court upheld the restrictions on lobbying byIRC Section 501(c)(3) (27) organizations, to which contributions are taxdeductible, because they operate as a government subsidy directly supporting the activitiesin which the charity engages. (28) That is, if a charity engages in lobbyingactivities, then the government subsidy would be paying for those lobbying activities. Asnoted by the Court, "Congress has merely refused to pay for lobbying out of public moneys." (29)

A disclosure requirement of issue advocacy expenditures by tax-exempt groups, however, does not involve a situation where the government is subsidizing theexercise of a First Amendment right. Instead, such a requirement might be held to infringe on a First Amendmentright, ( i.e. the right not to disclose or speakconcerning constitutionally protected issue advocacy communications), by requiring disclosure as a condition ofreceiving the benefit of tax-exempt status. Although the matter is not free from doubt, it seems likely that a court could find this type of disclosure requirementto be less in the nature of a permissibleprovision that merely denies federal funds for a particular First Amendment activity and more in the nature of animpermissible provision that denies federalbenefits to those who engage in protected activities.