Political Committees & 527s

The big W. Spann, LLC scandal turns into nothing, in just 48 hours.

LLC. If you’ve missed it, the campaign finance scandal du jour is reported in the Washington Post:

a now-extinct corporation called W Spann LLC, … gave $1 million in April to Restore Our Future, a “super PAC” created to help Mitt Romney’s presidential run, according to Federal Election Commission records.

We’ve got a few thoughts you won’t see in the standard press story line. Read the whole thing.

Fred Wertheimer’s conclusory testimony to two House committees implying that the Constitutionality of President Obama’s proposed EO on government contracting has been blessed by the Supreme Court represents either ignorance or an intentional effort to mislead.

Yesterday CCP, with the capable help of our friends at Patton Boggs, filed an amicus curiae brief with the Colorado Supreme Court, in Colorado Ethics Watch v. Senate Majority Fund. In this case, the CEW is urging the state to follow one of several legal innovations in their continuing effort to end run recent campaign finance decisions.

The particular technique CEW advocates is the conflation of “express advocacy” and “the functional equivalent of express advocacy”—then taking this new vague standard and making it the test for political committee status. Thus a 527 group engaged in electioneering (and reporting the same), but not express advocacy, will under CEW’s approach become a political committee, if the electioneering is deemed the “functional equivalent” of express advocacy. 

What’s that, you ask?  Well…  If CEW had its way, the analysis would include subjective intent and contextual factors.  Isn’t that contrary to Buckley v. Valeo? Yes. Did the Court revise that express advocacy analysis when it wrote McConnell v. FEC or Wisconsin Right to Life? The Colorado Court of Appeals didn’t think so. Neither has the Fourth Circuit, a federal district judge in Utah, or a state judge in Arizona. Neither do we.

Of course, this wouldn’t be a fun argument without some nay-sayers. CEW can find some company in the weird staff analysis generated on this point by the staff at the California FPPC. One hopes the Colorado Supreme Court will see this implausible minority position for what it is, and uphold the ruling of the court of appeals.

The U.S. Court of Appeals for the Tenth Circuit issued an opinion today in Sampson v. Buescher, striking down regulations pertaining to groups advocating for or against ballot initiatives.

The Institute for Justice (IJ) represented the plaintiffs, a group of residents who sought to band together in opposition to a ballot issue involving the annexation of their neighborhood.

Tuesday’s results are being discussed, debated, and disputed by many. Questions are being asked about what message was sent, was it received, who sent it, and for goodness sake does this mean I can finally turn the ringer on my phone back to the “on” position?

We at CCP have a few questions ourselves, as well as a few thoughts. I thought I might share them here.

1. With the losses on Tuesday of Meg Whitman and Linda McMahon, who between the two of them spent at least $180 million on their campaigns, can we finally put to rest the notion that it is possible to “buy” an election? The Center for Responsive Politics has a roundup here of wealthy, self-funding candidates that lost, and notes that fewer than one in five candidates who put $500,000 or more into races for federal office this year won.
2. Regarding all the hysteria about “foreign” money allegedly being spent by the US Chamber, and “secret” money being spent by “shadowy” groups, it really doesn’t seem that candidates benefiting from this independent spending suffered, now does it?

One of the arguments raised during the Citizens United case was that the ban on corporate political speech wasn’t actually a ban, because corporations could still speak through their PACs.

The Court did not buy this argument. In Justice Kennedy’s majority opinion in  Citizens United he stated:

Section 441b is a ban on corporate speech notwithstanding the fact that a PAC created by a corporation can still speak. See McConnell, 540 U. S., at 330-333 (opinion of KENNEDY, J.). A PAC is a separate association from the corporation. So the PAC exemption from §441b’s expenditure ban, §441b(b)(2), does not allow corporations to speak. Even if a PAC could somehow allow a corporation to speak-and it does not-the option to form PACs does not alleviate the First Amendment problems with §441b.

No doubt this struck a few people, at least, as strange. Most people assume, I think, that affiliated PACs are almost wholly indistinguishable from the sponsoring entity, and it seems odd that the Court would assert that they are separate and that the PAC does not necessarily and always speak on behalf of the sponsoring entity.

Today, courtesy of Katrina Trinko at National Review Online comes a story that illustrates perfectly why the Court was wise to reject the contention that corporations can speak through PACs:

VFW Calls on VFW-PAC to rescind endorsements

In a statement released yesterday, the VFW further reacted to the endorsements made by the VFW-PAC. Sen. Barbara Boxer was among those endorsed. From the VFW’s statement:

The angry tone and tenor of the telephone calls and messages being received at national headquarters make it clear that many of our members are not cognizant of the fact that VFW National By-Laws clearly stipulate that the VFW Commander-in-Chief is not authorized to direct or otherwise attempt to introduce his control over the VFW PAC. Furthermore, no membership dues or donations made to the VFW or VFW Foundation are used for the VFW PAC. …

As determined in the VFW By-Laws, as the national officers, we have specific responsibilities to take definitive action when events can have a detrimental impact on the organization. It is clear to us that the current situation now demands direct action; therefore, we are requesting the chairman and the directors of the Political Action Committee immediately rescind their endorsement actions.

For those wondering what the Court might have been thinking of in rejecting the argument that PACs allow corporations to speak, this should provide a pretty good answer.

Nearly three years ago, SpeechNow.org, an unincorporated group of individuals, sought permission from the Federal Election Commission to raise and spend money for political speech without having to register first with the government, and comply with numerous, onerous regulations, including limitations on the group’s ability to raise money.  It took over two years of first dealing with, and then litigating against, the FEC, but finally this past spring the U.S. Court of Appeals for the D.C. Circuit held that SpeechNow.org could raise money freely to finance its independent speech.  We are proud to have represented SpeechNow.org in this battle, together with our friends at the Institute for Justice.  The fight is not over – we are seeking Supreme Court review of the the D.C. Circuit’s ruling that SpeechNow, while free to raise money, must still register and file with the government as a PAC.  But we are proud of the rights SpeechNow has won so far. 

And now, SpeechNow is finally able to speak out.  This ad begins airing on Monday in Wisconsin.  Congratulations SpeechNow.