Opinion ID: 787590
Heading Depth: 3
Heading Rank: 4

Heading: The 25 Percent Limit on Out-of-State Donations is Unconstitutional

Text: 190 We can find no sufficiently important governmental interest to support the provision of Act 64 that limits out-of-state contributions to 25 percent of all candidate contributions. Unlike all of the other Act 64 provisions at issue in this appeal, the out-of-state contribution limit isolates one group of people (non-residents) and denies them the equivalent First Amendment rights enjoyed by others (Vermont residents). The District Court's decision in this regard should be upheld. 191 The District Court concluded that Vermont's interest in eliminating excessive out-of-state contributions was confined to unusually large contributions. 118 F.Supp.2d at 484. The District Court also noted that many non-residents have legitimate and strong interests in Vermont and have a right to participate, at least through speech, in those elections. Id. We find no support in the record for the alternative claim that Vermont has an important interest in singling out one class of contributors for limitations. See 1997 Vt. Laws P.A. 64 (H. 28) (1997) (finding No. 5) (Increasing campaign expenditures require candidates to seek and rely on a smaller number of larger contributors, often outside the state, rather than a large number of small contributors.). There are only vague references to the danger of out-of-state contributions, and all refer to the danger of excessively large (not cumulatively great) contributions. 192 In the two reported decisions on the issue, courts have split on whether limitations of non-resident contributions may be upheld on corruption grounds. The Ninth Circuit has rejected, almost in bright-line form, limitations on non-resident restrictions. In VanNatta v. Keisling, the court struck down an Oregon initiative that effectively limited the use of non-resident contributions to 10 percent of total campaign expenditures. See VanNatta, 151 F.3d 1215, 1217-18 (9th Cir.1998), cert. denied sub nom., Miller v. VanNatta, 525 U.S. 1104, 119 S.Ct. 870, 142 L.Ed.2d 771 (1999); but see Montana Right to Life Assoc. v. Eddleman, 343 F.3d 1085, 1091 n. 2 (9th Cir.2003) (suggesting that VanNatta was superseded by Shrink ). Addressing the asserted anti-corruption justification, the court held that the provision suffered from both over and underbreadth. Its overbreadth stemmed from the fact that it prevented all non-resident contributions once the 10 percent threshold had been reached, even those too small to have any corruptive influence. See VanNatta, 151 F.3d at 1221. The provision was underbroad because it did nothing to prevent corruptive ( i.e., large) resident contributions; nor did it prevent corruptive non-resident contributions until the 10 percent limit had been reached. See id. In other words, the non-resident cap was not closely drawn to advance the goal of preventing corruption. Id. 193 Because Act 64 contains contribution limits, it does not share all of the flaws of the Oregon statute considered in VanNatta. Act 64 does, for example, limit large resident and non-resident contributions. Nonetheless, the provision is overbroad in that it prohibits small contributions from out-of-state sources once the 25 percent threshold has been reached, even though such contributions are no more likely to corrupt than in-state contributions. Under this analysis, sustaining the provision would require an additional explanation for why exactly Vermont has an interest in eliminating such small donations only from non-residents. 194 The Alaska Supreme Court has attempted to craft such an explanation in State v. Alaska Civil Liberties Union, 978 P.2d 597 (Alaska 1999), cert. denied, 528 U.S. 1153, 120 S.Ct. 1156, 145 L.Ed.2d 1069 (2000). The Alaska law at issue capped out-of-state contributions but at lower percentages than Vermont's law. The court upheld the limitations on the grounds that out-of-state contributions have the ability to distort the Alaskan political system: These nonresident contributions may be individually modest, but can cumulatively overwhelm Alaskans' political contributions. Without restraints, Alaska's elected officials can be subjected to purchased or coerced influence which is grossly disproportionate to the support nonresidents' views have among the Alaska electorate, Alaska's contributors, and those most intimately affected by the elections, Alaska residents. These restraints therefore limit the `potential for distortion.' Id. at 617. Put another way, Alaska's [m]ore than 100 years of experience ... have inculcated deep suspicions of the motives and wisdom of those who, from outside its borders, wish to remold Alaska and its internal policies. Id. The out-of-state limitation, according to this view, restrains their distorting influence. Id. 195 The analysis in the Alaska case is a sharp departure from the corruption analysis adopted by the Supreme Court in Buckley and Shrink. Even under the more expansive Shrink analysis, the fear was that candidates would become too compliant with the wishes of large contributors because they must rely on private interest groups for funding. The Alaska analysis permits limitations not to ensure candidate independence generally, but to limit the influence of one set of people—untrustworthy outsiders. Even assuming that the Alaska Supreme Court is correct that outsiders have bad motives and little to contribute to its political discourse, the government does not have a permissible interest in disproportionately curtailing the voices of some, while giving others free rein, because it questions the value of what they have to say. 196 The Alaska Court's concern could be understood another way: that when candidates are beholden to fundraisers, and not voters, then large contributions from non-residents distort the system. Again, this problem would endure even if officials were beholden to in-state contributors. Moreover, Vermont's expenditure limitations eliminate the major force behind candidates' excessive reliance on campaign contributors—their need to maximize their ability to raise funds by remaining pliant to the wishes of those who contribute to the political campaign system. 197 Based on our review of these cases and the governmental interests asserted by the defendants, we are unpersuaded that the First Amendment permits state governments to preserve their systems from the influence, exercised only through speech-related activities, of non-residents. Vermont has asserted no valid interest sufficiently strong to justify the provision, and we therefore hold it unconstitutional. Pursuant to Act 64's severability provision, the unconstitutional provisions should be severed.