Opinion ID: 3011376
Heading Depth: 1
Heading Rank: 4

Heading: The Challenge to S 441b(a)

Text: Section 441b(a) bans corporations and unions from using funds from their corporate treasuries to contribute to or make expenditures in connection with any campaign for federal office. See 2 U.S.C. S 441b(a). In Fed. Elec. Comm'n v. Nat'l Right to Work Comm., 459 U.S. 197, 208-09 (1982), the Supreme Court chronicled the history of S 441b(a): Seventy-five years ago Congress first made financial contributions to federal candidates by corporations illegal by enacting the Tillman Act, 34 Stat. 864 (1907). Within the next few years Congress went further and required financial disclosure by federal candidates following election, Act of July 25, 1910, 36 Stat. 822, and the following year required pre-election disclosure as well. Act of August 19, 1911, 37 Stat. 25. The Federal Corrupt Practices Act, passed in 1925, extended the prohibition against corporate contributions to include anything of value, and made acceptance of a corporate contribution as well as the giving of such a contribution a crime. 43 Stat. 1070. The first restrictions on union contributions were contained in the second Hatch Act, 54 Stat. 767 (1940), and later, in the War Labor Disputes Act of 1943, 57 Stat. 167, union contributions in connection with federal elections were prohibited altogether. These prohibitions on union political activity were extended and strengthened in the Taft-Hartley Act, 61 Stat. 136 (1947), which broadened the earlier prohibition against contributions to expenditures as well. Congress codified most of these provisions in the Federal Election Campaign Act of 1971, 86 Stat. 3, and enacted later amendments in 1974, 88 Stat. 1263, and in 1976, 90 Stat. 475. Under Buckley v. Valeo, 424 U.S. 1, 19, 22 (1976) (per curiam), it is clear that spending for political campaigns is protected speech that implicates both the right to free 13 expression and the right of free association. Moreover, because there is no support in the First or Fourteenth Amendment, or in the decisions of this Court, for the proposition that speech that otherwise would be within the protection of the First Amendment loses that protection simply because its source is a corporation, First Nat'l Bank of Boston v. Bellotti, 435 U.S. 765, 784 (1977), the ban on corporate contributions under S 441b(a) is subject to the same level of scrutiny as other regulations limiting spending for political campaigns. In Buckley, 424 U.S. at 16, the Court held that limitations on spending for campaigns should be subjected to exacting scrutiny: this Court has never suggested that the dependence of a communication on the expenditure of money operates itself to introduce a nonspeech element or to reduce the exacting scrutiny required by the First Amendment. The Court added that the First Amendment guarantee has its fullest and most urgent application precisely to the conduct of campaigns for political office. Id. at 15 (citing Monitor Patriot v. Roy, 401 U.S. 265, 272 (1971)). Buckley, of course, distinguished campaign contributions from direct expenditures, striking down a limit on expenditures while upholding a limit on campaign contributions. As the Court's recent decision in Nixon v. Shrink Missouri Gov't PAC, 120 S.Ct. 897, 904 (2000) (citing Buckley, 424 U.S. at 20-21), explains, in the area of contributions, even under the exacting scrutiny standard, limiting contributions [leaves] communication significantly unimpaired. [U]nder Buckley's standard of scrutiny, a contribution limit involving `significant interference' with associational rights could survive if the government demonstrated that contribution regulation was `closely drawn' to match a `sufficiently important interest.'  Shrink Missouri, 120 S.Ct. at 904 (citation omitted). Accordingly, in considering Mariani's challenge to S 441b(a), while we treat campaign contributions from the corporate treasury as speech and subject the ban on them in S 441b(a) to exacting scrutiny, we do so against a background principle that limits on contributions--though not necessarily bans on contributions--can withstand this scrutiny if they are  `closely drawn' to match a `sufficiently important interest.'  14 The District Court certified two issues regardingS 441b(a) to this Court. The first is whether the prohibition in S 441b(a) on contributions by corporations from corporate treasuries to candidates for federal elective office is unconstitutional on its face. The second is whether the prohibition in S 441b(a) on contributions by corporations from corporate treasuries to candidates for federal office, in the context of the presently existing law that otherwise permits corporations to expend unlimited amounts of corporate funds to influence the outcome of federal elections (via soft money contributions), violates the First Amendment.
In considering the $1,000 contribution limit at issue in Buckley, the Supreme Court stressed the importance of the right to association through support of the candidate of one's choice: [T]he primary first amendment problem raised by the Act's contribution limitations is their restriction of one aspect of the contributor's freedom of political association . . . [T]he right of association is a `basic constitutional freedom,' Kusper v. Pontikes, 414 U.S. 57, that is closely allied to freedom of speech and a right which, like free speech, lies at the foundation of a free society. Shelton v. Tucker, 364 U.S. 479, 486 (1960). In view of the fundamental nature of the right to associate, governmental action which may have the effect of curtailing the freedom to associate is subject to the closest scrutiny. NAACP v. Alabama , [357 U.S.] at 460-461. Buckley, 424 U.S. at 24-25 (internal citations partially omitted). Nevertheless, the Court concluded that the $1,000 limit was constitutional. The Court identified two principal reasons for upholding the limit. First, the Court recognized a strong governmental interest in deterring corruption and the appearance of corruption in campaign finance, particularly from large contributions. Id. at 28; see also id. at 30 (Congress was justified in concluding that the 15 interest in safeguarding against the appearance of impropriety requires that the opportunity for abuse inherent in the process of raising large monetary contributions be eliminated.). Second, the Court concluded that the $1,000 limit was narrowly tailored insofar as it still permitted individual donors to register their political preferences in a substantial way, reasoning that the expressive value of the contribution lies in the act of contributing rather than the amount given. See id. at 21. Accordingly, Buckley seems to leave open the question whether an outright ban on campaign contributions--such as that found in S 441b(a)--would pass constitutional muster. The government and the FEC argue that, even if Buckley left the door open for a constitutional challenge to an outright ban, Federal Election Comm'n v. National Right to Work Comm, 459 U.S. 197 (1982) (hereinafter NRWC), slammed the door shut. In NRWC, the Supreme Court addressed indirectly the issue of limiting direct corporate contributions to candidates. There, the Court upheld federal restrictions upon corporate solicitation of campaign funds from individuals found in a subsection ofS 441b441b(b)(4)(c)--that prohibits nonstock corporations from soliciting funds to be used for political purposes (through a separate segregated fund) from people who are not members of the corporation. See id. at 198 n.1, 205-11. Subsection 441b(b)(4)(c) permits corporations to make limited campaign contributions from separate segregated funds solicited explicitly for that purpose. See id. at 201-02. In upholding the statute, the Court suggested that Congress could prohibit direct contributions by corporations to candidates for public office, stating that The first purpose of S 441b, the government states, is to ensure that substantial aggregations of wealth amassed by the special advantages which go with the corporate form of organization should not be converted into political war chests which could be used to incur political debts from legislators who are aided by the contributions. See United States v. United Automobile Workers, 352 U.S. 567, 579, 77 S.Ct. 529, 535, 1 L.Ed.2d 563 (1957). The second purpose of the 16 provisions, the government argues, is to protect the individuals who have paid money into a corporation or union for purposes other than the support of candidates from having that money used to support political candidates to whom they may be opposed. See United States v. CIO, 335 U.S. 106, 113, 68 S.Ct. 1349, 1353, 92 L.Ed. 1849 (1948). We agree with the government that these purposes are sufficient to justify the regulation at issue. Id. at 207-08. See also Fed. Election Comm'n v. Nat'l Conservative PAC, 470 U.S. 480, 495 (1985) (stating that NRWC upheld the prohibition of corporate campaign contributions to political candidates). Although S 441b(a) was not directly at issue in NRWC, the Eleventh and Sixth Circuits have read NRWC to uphold the constitutionality of its ban on contributions from corporate treasuries. See Kentucky Right to Life, Inc. v. Terry, 108 F.3d 637, 645-46 (6th Cir. 1997); Athens Lumber Co., Inc. v. FEC, 718 F.2d 363, 363 (11th Cir. 1983) (en banc). There is some room for doubt as to whether the Court can be said to have held squarely that the ban in S 441b(a) is constitutional. NRWC stated that We are also convinced that the statutory prohibitions and exceptions we have considered are sufficiently tailored to these purposes to avoid undue restriction on the associational interests asserted by respondent. Id. at 208 (emphasis added). Moreover, the first purpose identified by the Court --limiting the effect of the advantage flowing from the corporate form--could be met by a limit on contributions from corporate treasuries instead of a ban; and the second purpose could perhaps be addressed in corporate charters and state laws regulating corporations. Nevertheless, we feel constrained to read NRWC, and the Court's statements on NRWC in Nat'l Conservative PAC, as at least strong suggestions that S 441b(a) is constitutional. Austin v. Michigan Chamber of Commerce, 494 U.S. 652 (1990), which upheld a Michigan statute that prohibited corporations from using corporate funds for independent expenditures in support of or in opposition to candidates for state office, also implies that the flat ban in S 441b(a) is constitutional. The analysis proceeds from Buckley, which 17 distinguished independent expenditures from contributions: [A]lthough the Act's contribution and expenditure limitations both implicate fundamental First Amendment interests, its expenditure ceilings impose significantly more severe restrictions on protected freedoms of political expression and association than do its limitations on financial contributions. Buckley, 424 U.S. at 23. Austin upheld a ban on independent expenditures from the corporate treasury because it found the ban sufficiently narrowly tailored to the purpose of limiting the influence of the unique state-conferred benefit of the corporate structure, which allows corporations to amass large treasuries. See Austin, 494 U.S. at 660-61. Because Buckley treats limits on independent expenditures as more severe than limits on contributions, Austin suggests that a ban on contributions from the corporate treasury also would be constitutional if sufficiently narrowly tailored to achieve the goal. Austin also counsels that the ban on contributions from the corporate treasury here is sufficiently narrowly tailored to the interest of limiting the influence of corporate treasuries amassed under the state-conferred corporate structure. Austin reasoned that the Michigan statute prohibiting independent expenditures by corporations was sufficiently narrowly tailored to its purpose because, by permitting corporations to make independent political expenditures from separate segregated funds, it avoided an absolute ban on all forms of corporate political spending. See 494 U.S. at 660-61. The FECA also permits such indirect corporate political expenditures (via soft money), and under the teachings of Austin would thus seem to be sufficiently narrowly tailored to pass constitutional muster. We are mindful that the flat ban on corporate contributions has never been directly addressed by a holding of the Supreme Court, and that this issue involves important First Amendment values. Because of the strong implication we draw from NRCW, Nat'l Conservative PAC, and Austin, however, we feel compelled to reject Mariani's facial challenge to S 441b(a). It will be for the Supreme Court itself to decide otherwise. 18
The second challenge Mariani raises with respect to S 441b(a) is that the development of issue advocacy and the prevalence of soft money in campaigns for federal office has so eroded the theoretical distinction between hard and soft money that any justification for the ban on contributions from corporate treasuries has been vitiated. Mariani argues that under present conditions the ban cannot advance a compelling state interest and therefore must be invalidated. Significantly, Mariani does not complain thatS 441b(a) itself fails to ban contributions from corporate treasuries. Rather, he argues that under the FECA--as interpreted by the Supreme Court and FEC regulations--it is possible for corporations to accomplish through other means that which they cannot accomplish through direct contributions from corporate treasuries. Mariani contends that, by funding soft money issue advocacy, contributors come so close to accomplishing what they would accomplish by hard money campaign contributions that the two are basically indistinguishable in terms of the danger they pose of corrupting the political process. This contention amounts to an argument that S 441b(a) does too little by way of banning corporate political spending and is thereby fatally underinclusive. The Supreme Court has made clear, however, that Congress can act incrementally in this and other areas. See Buckley, 424 U.S. at 105 ([A] statute is not invalid under the constitution because it might have gone farther than it did.) (citations omitted). As we have explained in a case regarding solicitation of campaign funds by a candidate for judicial office, the government may take steps, albeit tiny ones, that only partially solve a problem without totally eradicating it. Stretton v. Disciplinary Bd. of the Supreme Court of Penn., 944 F.2d 137, 146 (3d Cir. 1991). The underinclusiveness analysis employed for First Amendment questions does not change this principle. The First Amendment requires that the rule chosen mustfit the asserted goals, City of Cincinnati v. Discovery Network, Inc., 507 U.S. 410, 428 (1993), and it must also strike an appropriate balance between achieving those goals and protecting constitutional rights. Underinclusiveness 19 analysis serves to ensure that the proffered state interest actually underlies the law, Austin, 494 U.S. at 677 (Brennan, J., concurring). But a rule fails the test only if it cannot fairly be said to advance any genuinely substantial governmental interest, Federal Communication Comm'n v. League of Women Voters, 468 U.S. 364, 396 (1984), because it provides only ineffective or remote support for the asserted goals, id. (citing Central Hudson Gas & Elec. Corp. v. Public Serv. Comm'n, 447 U.S. 557, 564 (1980)), or the most limited incremental support, Bolger v. Youngs Drug Prods. Corp., 463 U.S. 60, 73 (1983). Thus, First Amendment underinclusiveness analysis requires neither a perfect nor even the best available fit between means and ends. See City of Renton v. Playtime Theaters, Inc., 475 U.S. 41, 52-53 (1986) (zoning ordinance regulating adult theaters was not constitutionally underinclusive in that it fail[ed] to regulate other kinds of adult businesses . . . We simply have no basis on this record for assuming that Renton will not, in the future, amend its ordinance to include other kinds of adult businesses.). See also Blount v. SEC, 61 F.3d 938, 946 (D.C. Cir. 1995) ([A] regulation is not fatally underinclusive simply because an alternative regulation, which would restrict more or the speech of more people could be more effective. The First Amendment does not require the government to curtail as much speech as may conceivably serve its goals.). Applying this standard, section 441b(a) is not fatally underinclusive. The regulation in Fed. Communications Comm'n v. League of Women Voters, 468 U.S. at 397, which banned editorial speech by station management, but not editorial control over the content of programs and guests on news programs, was struck down because it did virtually nothing to prevent noncommercial stations from serving as outlets for expression of narrow partisan views. In contrast, S 441b(a) prevents corporations from donating hard money entirely. The important theoretical differences between hard and soft money, which include that a candidate cannot directly control how to spend soft money, are intended to avoid the corrupting influence of large contributors supporting a particular candidate. The practical 20 distinctions between hard and soft money may have diminished in the past decade with the rise of issue advocacy, but not to such an extent that we can say that there is no benefit from distinguishing between the two. If hard and soft money were equivalent, it would be hard to imagine why Mariani would have gone to the lengths he allegedly went to in order to give hard money instead of soft. Mariani attempts to counter this analysis by citing to United States v. Nat'l Treasury Employees Union, 513 U.S. 454 (1995): [w]hen 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. Id. at 475 (quoting Turner Broadcasting System v. Fed. Communications Comm'n, 512 U.S. 622, 664 (1994)). The underinclusiveness analysis explicated above is not inconsistent with National Treasury Employees Union. Congress may regulate speech so long as it demonstrates that the recited harms are real, and it may, consistent with that principle, choose to regulate just some part of that speech. The requirement that the regulation alleviate the harm in a direct and material way is not a requirement that it redress the harm completely. And in light of the broad language in NRWC regarding the legitimacy of Congress's purpose in enacting S 441b(a), it is simply too late in the day to argue that Congress has failed to demonstrate that the recited harms are real. Congress might well have concluded that direct contributions from corporate treasuries were more important to regulate than expenditures or contributions made through committees, because hard money can be used by a candidate in more and different ways than soft money. We note that no party to this case has argued that there is no compelling government interest in banning contributions from corporations. Indeed, Mariani's 21 argument that the rise of soft money fatally undermines the purpose of S 441b(a) seems to depend on the assumption that limiting corporate contributions--if done effectively-- would be constitutionally valid.