Massachusetts Election Administration, Campaign Finance and Lobbying Law Chapter 26 - Recent Developments in Federal Law
By Maria R. Durant and Thomas E. Dwyer, Jr.
Send Email to: mdurant@dwyercollora.com or tdwyer@dwyercollora.com
Shortly after the votes had been tallied in the 1996 Presidential election, allegations of campaign finance abuse in the election surfaced. Newspapers throughout the nation contained articles about White House coffees, overnight stays in the Lincoln bedroom, and Chinese conspiracies effected through contributions from foreign nationals. The allegations of abuse and anecdotal evidence resulted in investigations in both the House and Senate and demands for the appointment of an independent counsel. The allegations also gave rise to a myriad of proposals for campaign finance reform on both the national and state levels. This chapter discusses campaign finance issues that are present targets for reform and provides an update on the current status of reform efforts.
Specifically, this chapter first explores the present public financing system for federal elections and highlights the Federal Election Commission’s ("FEC") proposed rulemaking changes in that area. In addition, the chapter contains a discussion of coordinated party and independent expenditures and the FEC’s proposed legislative amendments concerning such expenditures. Finally, the chapter concludes with a discussion of the seminal U.S. Supreme Court case of Buckley v. Valeo and recent challenges to Buckley and the Federal Election Campaign Act ("FECA").
A. Federal Public Finance System and Clean Election Laws
1. Current Federal Public Finance System
In 1966, Congress passed legislation that would have made U.S. Treasury funds available to eligible nominees in the Presidential general election through payments to the candidate’s political party consisting of dollars voluntarily checked off by taxpayers on their tax returns. One year later, however, Congress suspended the law. In 1971, Congress adopted similar provisions in the 1971 Revenue Act that allowed for payments directly to the general election candidate accumulated from the taxpayer check off. The Revenue Act also imposed limitations on campaign spending by Presidential nominees who accepted public funding and banned all private contributions to them. In the wake of the Watergate scandal, Congress passed amendments to the Federal Election Campaign Act ("FECA") in 1974 which, together with the Revenue Act, comprise our public finance system today. The 1974 FECA amendments extended the public financing provisions of the Revenue Act to Presidential primary elections and Presidential nominating conventions of the major political parties.
The Revenue Act and FECA amendments, in combination, sought to remedy perceived problems in the Presidential election process including the disproportionate influence or appearance of influence from wealthy contributors, the financial inability of some candidates to disseminate their views effectively to the electorate and the increasing cost of Presidential campaigns which effectively precluded candidates without access to large sums of money. With the passage of the Revenue Act and FECA amendments, Congress established a system which allows for public funding of Presidential campaigns contingent upon contribution and expenditure limitations. Since 1976, every Presidential election has been financed with public funds consisting of the voluntary checkoff by taxpayers on their federal income tax returns.
Currently, the Federal Election Commission ("FEC") projects a funding deficit for the 2000 Presidential election because participation in the taxpayer checkoff system is declining and the checkoff is not indexed to inflation while the public funding payouts are. Although the taxpayer checkoff was increased from $1 to $3 in 1993, the FEC estimates that in the year 2000, the public funding system will be able to provide only 32% of the public funds which qualified Presidential candidates are entitled to receive. To avoid this impending shortfall, the FEC has proposed changes to its rules governing publicly financed Presidential primary and general election candidates. A public hearing on the proposed changes was held on March 24, 1999. The FEC is currently reviewing the public comment and hearing testimony and, as of the date of this publication, has not implemented changes to the rules concerning public financing.
The current public funding system is summarized below along with a description of the FEC’s proposed changes.
a. Primary Matching Funds
Partial public funding is available to Presidential primary candidates through federal matching funds. To qualify to receive matching funds, candidates seeking to qualify for their party’s nomination must raise over $5,000 from individuals in each of 20 states (i.e., $100,000) in order to qualify for matching funds. 26 U.S.C. § 9033(b) (1998). And, while individuals may contribute up to $1,000 to a candidate, see Chapter 22 (Contributions and Expenditures), only $250 of each individual’s contribution counts toward the $5,000 per state threshold for eligibility and is matchable by the federal government. 26 U.S.C. § 9034(b) (1998).
Practice Note: Critics of the matching fund program have argued that the low eligibility threshold, which is not indexed to inflation, has made it easy for so-called "fringe candidates" to receive public funding. By making it too easy for candidates to receive public funding, the critics argue that the legislative intent that public funding be given only to candidates who demonstrate broad-based support is frustrated. As discussed below, the FEC proposes to raise the qualifying threshold for eligibility to eliminate matching funds for "fringe candidates." Practitioners are urged to watch for changes in the eligibility regulations prior to the 2000 Presidential election.
Presidential primary candidates seeking matching funds must submit a letter to the FEC agreeing to comply with the provisions of the FECA and the Presidential Primary Matching Payment Account Act. The candidates must also agree to limit national spending for primary elections to the "national spending limit" (currently $10,000,000 plus a cost of living adjustment ("COLA")) and to limit spending in each state to $200,000 plus COLA or to an amount calculated based on the voting age population of the state, whichever is greater. 2 U.S.C. § 441a(b)(A) (1999). Certain campaign expenses, such as accounting fees and legal fees associated with ensuring compliance with applicable laws, do not count against the expenditure limits. Eligible candidates must also agree not to spend more than $50,000 of their personal funds in connection with their campaign. 26 U.S.C. § 9035(b) (1998).
Once the FEC has determined a candidate’s eligibility, the candidate may submit individual contributions for matching. In order to qualify for matching funds, the contribution must be made in the form of a check or other negotiable written instrument and be made payable to the candidate or his or her committee. See 11 C.F.R. § 9034.2 (1999). Purchases of tickets to fundraisers and contributions collected through joint fundraising activities are matchable contributions but contributions of cash, goods and services or contributions from political committees or those otherwise unlawful under the FECA are not matchable.
Candidates may receive public matching funds up to one-half of the national spending limit for the primary campaign. However, many candidates also receive contributions which are not subject to the matching rules, such as those from political committees.
Candidates may submit documentation of individual contributions and request matching funds during the year preceding the primary election. The first matching payments, however, will not be made any earlier than January of the election year. 11 C.F.R. § 9036.1(a) (1999). Thereafter, candidates may submit the necessary paperwork and receive matching payments on a monthly basis. 11 C.F.R. § 9036.2(a) (1999).
Candidates may continue to receive matching funds to retire campaign debt even after the primary or general elections until early in the year following the primary or general election. To qualify for the matching funds, however, individual contributions must be deposited into the candidate or his or her committee’s campaign account no later than December 31st of the election year. 11 C.F.R. § 9034.1 (1999).
After the primary election, the FEC audits each candidate’s committee to ensure that funds were not misused and that the committee has maintained proper records and filed accurate reports. Upon completion of the audit, the FEC may order the candidate’s committee to repay matching funds if it is determined that the committee, among other things:
i. received public funds in excess to the amount to which it was entitled;
ii. had surplus funds remaining on the date of ineligibility; or
iii. incurred non-qualified campaign expenses by:
a. spending in excess of the limits;
b. using public funds for expenses unrelated to the campaign; or
c. failing to maintain adequate documentation of the expenditure of public funds.
26 U.S.C. § 9038 (1998); 11 C.F.R. § 9038.2 (1999).
b. General Election Funding
The Presidential nominee of each major national political party may become eligible for a public grant of $20 million plus a COLA adjustment for campaigning in connection with the general election. To be eligible to receive such funding, the candidate must agree to limit spending to the amount of the grant and, unlike with primary matching funds, must not accept private contributions. Presidential nominees must also limit their own contributions from personal funds to $50,000 which contribution does not count toward the expenditure limitation.
Practice Note: Private contributions may be accepted for deposit into special campaign accounts maintained exclusively to pay for accounting and legal expenses to ensure compliance with campaign finance laws. Such accounting and legal expenses are not subject to the expenditure limitations.
A minor party candidate – nominee of a party whose candidate received between 5 and 25 percent of the total popular vote in the preceding Presidential election – may become eligible for partial public funding of his or her general election campaign based on the ratio of the party’s popular vote in the preceding Presidential election to the average popular vote of the two major party candidates in that election. 26 U.S.C. §§ 9002(7), 9004(a)(2)(A) (1998).
A new party candidate – the nominee of a party that is neither a major party nor minor party candidate – may receive partial public funding after the general election if he or she receives 5 percent or more of the vote. 26 U.S.C. §§ 9002(8), 9004(a)(2)(B) (1998). In such a case, the funding is based on the ratio of the new party candidate’s popular vote in the current election to the average popular vote of the two major party candidates in the election. 11 C.F.R. § 9004.3(a) (1999). Unlike major party nominees for President, minor party and new party nominees may supplement their public funds with private contributions to the extent the nominees incur qualified campaign expenses in excess of the aggregate matching funds received. 11 C.F.R. § 9003.2 (b)(2) (1999).
After the general election, the FEC audits each candidate’s committee to ensure that the public funds were not misused. A repayment may be required where the FEC determined that the candidate’s committee:
i. received public funds in excess of the amount to which it was entitled;
ii. incurred nonqualified campaign expenses by:
a. spending in excess of the expenditure limit;
b. using public funds for expenses unrelated to the campaign (such as for personal expenses); or
c. by failing adequately to document the expenditure of public funds.
iv. received income from the investment or other use of public funds.
26 U.S.C. § 9007(b) (1998).
c. Convention Funding
Each major political party is entitled to a public grant of $4 million plus a COLA adjustment to finance its Presidential nominating convention. See 2 U.S.C. § 437 (1999); 26 U.S.C. § 9008 (1998). A qualified minor party may become eligible for partial convention funding based on a ratio of its Presidential candidate’s share of the popular vote in the preceding election as compared to the average popular vote of the two major party candidates in that election. 26 U.S.C. § 9008(b) (1998). New parties are not entitled to receive any public funds to defray convention expenses. 11 C.F.R. § 9008.1(a) (1999).
A convention committee may not spend more than the grant amount to which the major party is entitled. 11 C.F.R. § 9008.8 (1999). Certain supplemental services, however, may be provided by the host state and city governments and by local groups (i.e., additional public transportation, promotional materials, chairs, podiums and tables) at no cost or discounted prices without counting toward the expenditure limitations. 11 C.F.R. § 9008.9(d) (1999).
The convention committee of major or minor parties may elect to receive all, part or none of the grant to which it is entitled. Where the committee elects to accept less than all of the grant, it may receive and use private contributions to defray convention expenses as long as the total convention-related expenditures do not exceed their total expenditure limitations.
As with those candidates receiving primary matching funds and general election grants, the FEC audits each convention committee receiving a public grant at the conclusion of the convention to ensure that funds were spent in compliance with the law. A repayment of funds may be ordered by the FEC for reasons similar to those discussed above with respect to primary matching funds and general election grants. Top
2. FEC’s Proposed Public Funding Rule Changes
On December 16, 1998, the FEC published a notice of proposed rulemaking concerning the public funding of Presidential primary and general elections. See 63 Fed. Reg. 69,523 (1998). The proposed rules address a host of issues including, but not limited to, the following:
a. "Bright Line" Distinction between Primary and General Election Expenses
FEC regulations require that publicly financed Presidential candidates use primary matching funds only for expenses incurred in connection with primary elections and general election funds only in connection with primary elections. In 1995, the FEC promulgated regulations which contained several "bright line" rules for determining whether an expense was properly a primary or general election expense. The regulations were aimed at minimizing the amount of time required by FEC staff members in reviewing expenditures.
In a further effort to streamline the expenditure review process and clarify the distinction between primary and general election expenses, the FEC’s proposed rule recommends that expenditures for goods or services that may benefit both the primary and general election campaigns must be attributed on the basis of whether they were used before or after the candidate received the party nomination. Further, the FEC proposes to clarify 11 C.F.R. § 9034.4(e)(3) to provide that costs associated with the use of a candidate’s campaign office prior to that candidate’s nomination would be attributed to the primary election except for periods when the campaign office is used only by persons working "full time" on general election campaign preparation. See 63 Fed. Reg. 69,525-526 (1998).
b. Compliance and Fundraising Costs
As discussed above, the current FEC regulations set forth an exemption from the overall spending limit for legal and accounting compliance costs incurred by Presidential primary committees. To qualify for this exemption, the campaign committee must keep detailed records of salary and overhead expenses, including records indicating which duties are considered "compliance" and the amount of time spent by each staffer on compliance activities. To simplify and make more efficient the review process of compliance costs, the FEC’s proposed rule provides that an amount equal to 10% of all operating expenditures for each report period may be treated as compliance expenses not subject to the candidate’s spending limits. See 63 Fed. Reg. 69,526-527 (1998).
c. Modifying the Audit Process
The FEC has long tried to reduce the amount of time it takes to audit publicly funding Presidential committees, make repayment determinations and complete the enforcement process within the three years specified by law. Based on its experience in the 1996 Presidential election cycle, the FEC is considering two alternatives to the current audit procedures. See 63 Fed. Reg. 69,527-528 (1998).
The first alternative would be to return to the audit procedures used for the 1992 Presidential election which permitted the FEC to discuss its preliminary findings and recommendations with the committee at an exit conference without having to first prepare an exit conference memorandum and prior to the preparation of an initial audit report for review by the Audit Division. This procedure had the benefit of allowing the committee to learn what issues were of concern to the FEC early in the process and to tailor its submissions before a final audit report was released to the public.
The second alternative would be to retain many of the existing audit procedures with the exception that the exit conference memorandum would contain a legal analysis which would have to be approved by a majority of four of the Commissioners in executive session before being presented to the committee during the exit conference. While the committee would have an opportunity to comment on the exit conference memorandum, the FEC would not have the benefit of considering the committee’s views prior to approving the memorandum as allowed in the first alternative. In addition, this approach may slow the audit process down and may jeopardize the FEC’s ability to complete the audit process within the three year period required by the law.
d. Matching Fund Documentation
During the 1996 Presidential election cycle, the FEC allowed committees to submit contributions for matching funds through the use of digital imaging technology, such as CD ROMs, as opposed to paper copies. In light of the success of this initiative, the FEC proposes to expand this program by allowing the use of digital imaging for committee’s threshold submissions, contributor re-designations, reattributions and supporting statements and materials to establish the matchability of contributions. See 63 Fed. Reg. 69,530-531 (1998). Top
3. FEC’s 1999 Legislative Recommendations
In early 1999, the FEC submitted to Congress and the President a series of legislative recommendations. Among the recommendations, the FEC suggested a series of statutory changes concerning public financing of federal elections. A summary of those proposed legislative changes is included below:
a. Averting Impending Shortfall in Public Funding Program
To avert the predicted shortfall in the Presidential public funding program for the 2000 Presidential election, the FEC recommends that Congress take action to ensure that the Presidential public funding program is solvent throughout calendar year 2000 and 2001. The FEC, however, provided no specific recommendation as to how Congress might ensure solvency of the program.
b. Qualifying Threshold for Primary Matching Funds
The FEC recommends that Congress raise the qualifying threshold for Presidential candidates to receive primary matching funds from $100,000 ($5,000 in each of at least 20 states from individual donations of $250 or less). While the FEC did not recommend a specific threshold increase, it urged Congress to adopt a level that would not be so high as to preclude potential candidates from public funds nor so low to permit "fringe candidates" to exploit the public funding system.
c. Eligibility Requirements for Public Financing
To boost public confidence in the integrity of the public funding program, the FEC recommended that Congress adopt a new eligibility requirement for publicly funded Presidential candidates – in either the primary or general elections – that makes clear that candidates who have been convicted of a willful violation of the laws related to the public funding process or who are not eligible to serve as President will not be eligible for public funding.
d. Enforcement of Nonwillful Violations
Currently, the Presidential Election Campaign Fund Act and the Presidential Primary Matching Payment Account Act provide only for criminal penalties for knowing and willful violations of their spending, contribution, record keeping and disclosure provisions. See 26 U.S.C. §§ 9012, 9042 (1998). The FEC recommends that Congress amend the Acts to include provisions which allow the FEC authority for civil enforcement of nonwillful violations – much like that which currently exists in the FECA. Top
B. State Clean Election Laws
On January 19, 1999, Senator John McCain of Arizona, joined by 32 other members of Congress, introduced Senate Bill No. 26 entitled "Bipartisan Campaign Reform Act of 1999." Among other things, the Senate Bill attempts to reduce the influence of special interests in federal elections by eliminating soft money and requiring disclosure of independent and coordinated party expenditures. On the day S.26 was introduced in the Senate, it was referred to the Senate Rules and Administration Committee – where it has languished ever since.
State governments have been much more successful than the federal government in achieving campaign finance reform. Indeed, campaign finance reform groups are having a major impact in Massachusetts, Alaska, Arkansas, California, Colorado, the District of Columbia, Missouri, Montana, New Jersey, Oregon and Washington.
In 1996, voters in Maine voted to enact the "Maine Clean Elections Act" which many advocate as a model for campaign finance reform in other states. In short, the Maine Clean Elections Act is a voluntary public financing program under which candidates for state office who agree to spending limits and decline private funding receive a fixed and equal amount of money from the Clean Elections Fund which is comprised of taxpayer checkoffs on state income tax returns, increased lobbyist registration fees and cutbacks from the legislative and executive branch budgets. Candidates who accept public financing are given funds totaling 75 percent of the average cost of the last two campaigns for the office being sought. If a candidate who accepts public funding faces a candidate who does not, the Maine Clean Elections Fund will match the opponent’s spending up to twice the original grant.
In November, 1998, when confronted with the possibility of campaign finance reform, Massachusetts voters voted overwhelmingly – 88 percent – in favor of clean elections. The Massachusetts legislature reacted and passed a Clean Election public financing program which is scheduled to debut in the 2002 state election. For more details on the new Massachusetts Clean Elections Law, see Chapter 18. Top
C. Coordinated Party Expenditures and Independent Expenditures
Coordinated party expenditures and independent expenditures are considered by some to be "loopholes" in the FECA by which large sums of money can be transferred to candidate outside the FECA limitations. The nature of coordinated party expenditures and independent expenditures is detailed below with a discussion of pending reform efforts designed to close these so-called loopholes.
1. Coordinated Party Expenditures
National party committees and state party committees may make special expenditures in connection with the general election campaigns of federal candidates. These expenditures, commonly referred to as "coordinated party expenditures," do not count against the FECA contribution limits but, instead, are subject to a special set of limitations set forth in the FEC regulations.
In making a coordinated party expenditure, the party committee pays for goods or services that benefit the candidate but they do not give money directly to the candidate or the candidate’s committee. For example, a national or state party committee may pay an invoice for services provided to the campaign. That payment would constitute a "coordinated party expenditure" and would not count against the FECA contribution limits. If, however, the national or state party gave money directly to the candidate or candidate’s committee for payment of the invoice, the payment would be considered a "contribution" subject to the FECA limitations. Coordinated party expenditures are, therefore, similar to "in kind" contributions in the sense that both are things of value which benefit the candidate.
The differences between coordinated party expenditures and contributions are significant:
Coordinated party expenditures may only be made in connection with general elections whereas contributions may be made in connection with any election.
Coordinated party expenditures count against special coordinated expenditure limits whereas contributions count against separate and distinct contribution limits.
Coordinated party expenditure limits are significantly larger than contribution limits.
Coordinated party expenditures are reported only by the party committee whereas contributions are reported by both the party committee and the candidate or his or her committee.
a. FEC Coordinated Expenditure Regulations
i. National Party Committees
A national party committee may make expenditures in connection with the general election of the party’s Presidential nominee. Only a national party committee has a coordinated party spending limit for the Presidential general election calculated by multiplying the national voting age population by 2 cents plus a COLA adjustment. See 2 U.S.C. §§ 431(17), 434(c) (1998); 11 C.F.R. §§ 110.7(a), 109(c) (1999).
A national party committee may also make expenditures for House and Senate candidates in the general election up to the greater of 2 cents multiplied by the voting age population of the state plus COLA or $20,000. See 11 C.F.R. §§ 110.7(b)(1) (1999).
ii. State Party Committees
A state party committee is subject to the same expenditure limitation as a national party committee with respect to House and Senate candidates in the general election. For those candidates, a state party committee expenditure is limited to the greater of the state voting age population multiplied by 2 cents, plus a COLA adjustment or $20,000. 11 C.F.R. § 110.7(b) (1999).
iii. Local Party Committees
Local party committees may make coordinated party expenditures only if authorized to do so by a national or state party committee. 11 C.F.R. § 110.7(a)(4) (1999). Local party committees are not subject to any coordinated party spending limits.
iv. Assignment of Spending Limits
A national or state party committee may assign all or part of its coordinated spending authority to another party committee, such as a local party committee. 11 C.F.R. § 110.7(a)(4), 110.7(c) (1999). By assigning spending limits, state and local parties may spend against the national committee’s spending limit in the Presidential general election and a local party may spend against a national or state committee’s spending limit in Senate and House general elections.
2. Independent Expenditures
An "independent expenditure" is an expenditure for a communication which expressly advocates the election or defeat of a clearly identified candidate but which is made independent of the candidate or his or her campaign committee. Like coordinated party expenditures, independent expenditures are not considered "contributions" and are not subject to the FECA contribution limits.
An expenditure is "independent" only if it is made without the cooperation or consent of, or in consultation with, or at the request or suggestion of, any candidate or any of the candidate’s agents or authorized committees. 11 C.F.R. § 109.1(a) (1999). Expenditures which fail to meet this criteria will be considered contributions subject to FECA. The following types of expenditures are not considered "independent" according to the FEC:
any expenditure made in coordination with a candidate’s campaign;
an expenditure directed by a current or former officer or employee of the candidate’s committee; and
an expenditure made for a communication that solicits the public for contributions on behalf of a particular candidate if the person making the communication collects and forwards contributions to the candidate.
Individuals and committees generally permitted to make contributions under the FECA may also make independent expenditures. So too, individuals or associations prohibited from making contributions under the FECA, such as foreign nationals, labor organizations and federal contractors, are prohibited from making independent expenditures with one exception. In Federal Election Commission v. Massachusetts Citizens for Life, Inc. ("MCFL"), 479 U.S. 238 (1986), the Supreme Court held that the MCFL, a non-profit corporation, could make independent expenditures. In so holding, the Supreme Court relied upon the facts that the MCFL was formed for the express purpose of promoting political ideas and not to engage in business activities; it had no shareholders; and was not established by a business organization or labor union and did not accept contributions from such organizations.
For many years the FEC took the position that party committees could not make "independent expenditures" due to their close ties to the candidates. See 61 Fed. Reg. 40,961 (1996) (deleting 11 C.F.R. § 110.7(b)(4) from FEC regulations). In Federal Election Commission v. Colorado Republican Federal Campaign Committee ("Colorado I"), 116 S. Ct. 2309 (1996), however, the Supreme Court ruled that party committee expenditures made independent of House and Senate candidates are permissible "independent expenditures" which could not be subject to limitation.
In Colorado I, the Supreme Court found that an expenditure made by the Colorado Republican Federal Campaign Committee for a communication attacking a Democratic Congressman had not been "coordinated" with any candidate and therefore did not count against the coordinate party expenditure or contribution limits for the party’s nominee for the same seat. The evidence revealed that the advertising campaign was designed independently by the party and not pursuant to any understanding with the Republican candidate. Indeed, the party chairman designed the script for the advertisement and limited script discussions to party staff members. Perhaps most persuasive, however, was that the advertisement had been aired at a time when the Colorado Republican Party had not selected its nominee. The Supreme Court in Colorado I did not address the constitutionality of limiting party contributions to or spending in coordination with candidates and remanded the case back to the lower courts to address that question.
On February 18, 1999, Judge Edward Nottingham of the U.S. District Court for the District of Colorado held that the FECA’s spending limits were constitutionally impermissible. Federal Election Commission v. Colorado Republican Federal Campaign Committee ("Colorado II"), 41 F. Supp. 2d 1197 (D. Colo. 1999). Taking his cue from the Supreme Court decision of Buckley v. Valeo, 424 U.S. 1 (1976), which held that campaign contributions could only be limited if the limits served to reduce political corruption or the appearance of corruption, Judge Nottingham found that there was no danger that candidates for federal office could be corrupted by their own political parties. As a result, Judge Nottingham struck down party spending limits as unconstitutional. The FEC voted 6-0 to appeal the decision to the 10th Circuit Court of Appeals. That appeal was pending at the time of publication.
b. Proposed Coordinated and Independent Expenditure Amendments to FECA
Senate Bill 26, which was introduced by Senator John McCain on January 19, 1999 and co-sponsored by 32 other bipartisan members of the Senate, proposes amendments to the FECA which would:
define the term "independent expenditure" as an expenditure by a person expressly advocating the election or defeat of a clearly identified candidate and that is not provided in coordination with a candidate;
prohibit party committees from making both independent and coordinated expenditures with respect to a candidate during the same election cycle;
define the term "coordinated activity" to mean anything of value provided by a person in coordination with a candidate for the purpose of influencing a federal election in which such candidate seeks nomination or election to federal office; and
consider such coordinate activity to be a contribution to the candidate and in the case of a limitation on expenditures, treat such activity as an expenditure by the candidate.
On the date Senate Bill 26 was introduced, it was referred to the Senate Rules and Administration Committee where it remained without action at the time of publication. Top
D. Buckley v. Valeo – Constitutional Challenges to the FECA
In the seminal case of Buckley v. Valeo, 424 U.S. 1, 96 S. Ct. 612 (1976), the Supreme Court first considered constitutional challenges to the FECA. Various federal candidates, political committees and campaign contributors, as plaintiffs, challenged the constitutionality of the FECA, most notably, the provisions limiting campaign contributions and expenditures.
As to "contributions," the Buckley court upheld the $1,000 limitation on contributions as constitutional. Cognizant of the potential threat to a contributor’s First Amendment freedom of political association, the Supreme Court subjected the FECA contribution limitations to a strict scrutiny analysis and forced the government to demonstrate that the contribution limitations were "closely drawn to avoid unnecessary abridgement" of a "sufficiently important interest."
The Supreme Court found that the primary purpose of the FECA – "to limit the actuality and appearance of corruption" – was sufficient justification for the contribution limitations and further held that the contribution limitations pose only a "marginal restriction upon a contributor’s ability to engage in free communication." The Court viewed political contributions as a "general expression of support for candidate or views" and stated that the quantity of the communication does not increase with the size of the contribution; the communicative expression rests on the "symbolic act of contributing" not the amount of the contribution. Since the FECA contribution limitations in no way restrict the "symbolic expression" in the form of a contribution, the Court held that they do not interfere with a contributor’s freedom to discuss candidates and issues. 96 S. Ct. at 635-36.
In contrast, the Buckley Court struck down as unconstitutional the FECA’s limitations on expenditures. As to expenditures, the Court found that a limitation "necessarily reduces the quantity of expression by restricting the number of issues discussed, depth of exploration and size of audience reached." 96 S. Ct. at 634. The Court recognized that the mass communication necessary to convey campaign ideas effectively in modern society requires expenditure of money. Consequently, rather than serving as mere "theoretical restraints," the Court found that expenditure limitations had a quantifiable impact on free speech and the governmental interest in preventing corruption or the appearance of corruption was simply inadequate to justify limitations on expenditures.
The plaintiffs in Buckley challenged on constitutional grounds a host of other FECA provisions including reporting requirements, the creation, composition and authority of the FEC, and the public funding provisions. In recent years, however, continued challenges to the FECA have focused on striking down as unconstitutional the contribution limitations.
In Shrink Missouri Government PAC v. Adams, 161 F.3d 519 (8th Cir. 1998), cert. granted, 119 S. Ct. 901 (1999), a political action committee and an unsuccessful candidate for state office challenged the constitutionality of the Missouri campaign finance provisions which, like their FEC counterparts, restricted the amount of campaign contributions that persons can make to candidates for public office. Relying on the Supreme Court’s decision in Buckley v. Valeo, the Shrink court applied a strict scrutiny standard of review requiring the state to demonstrate that it had a compelling interest and that the contribution limits were narrowly drawn to serve that interest.
As in Buckley, the state government in Shrink contended that its compelling interest was in avoiding corruption or the perception of corruption brought about when candidates accept large campaign contributions. The state suggested that political corruption or the perception of corruption was inherent in large contributions and argued that it need not demonstrate actual corruption problems in the Missouri electoral system. The Shrink court disagreed and held that some demonstrable evidence of genuine corruption resulting from contributions larger than the amounts set forth in the limitations must be offered to withstand scrutiny.
The state was unable to present evidence of genuine corruption (i.e., a "compelling interest") to the court’s satisfaction. Even if it had, however, the Shrink court stated that the contribution limitations were not narrowly tailored to serve that interest. The limits at issue – $1,075, $525 and $275 – were too low to allow meaningful participation in political debate.
In early 1999, the U.S. Supreme Court granted the state’s petition for certiorari. At the time of publication, a decision had not been returned.
Closer to home, in Fireman v. United States, 20 F. Supp. 2d 229 (D. Mass. 1998), the plaintiff sought to have his criminal sentence vacated on grounds that the provisions of the FECA under which he was convicted were unconstitutional. In 1996, Fireman pleaded guilty to a litany of charges that he conspired to interfere with the lawful function of the FEC and violated FECA contribution limits by using conduit or "straw" donors to make contributions to federal candidates. In seeking to set aside his conviction, Fireman argued that the FECA’s $1,000 contribution limitation was too low to allow meaningful participation in political speech. Fireman took the position that, in light of Colorado Republican Campaign Committee v. Federal Election Commission ("Colorado I"), 116 S. Ct. 2309 (1996), the current Supreme Court would conclude that the contribution limit previously upheld in Buckley v. Valeo is now unconstitutional.
Chief Judge William Young (D. Mass.) disagreed and found that Colorado I did not call Buckley v. Valeo into question. In Colorado I, the Supreme Court held that application of the FECA’s party expenditure provision to independent political party spending made without coordination with any candidate was unconstitutional. This holding, stated Judge Young, simply reaffirms the central holding of Buckley that contributions and expenditures are substantively different. "The political quid pro quo concerns that provide a constitutionally sufficient basis to justify contribution limitations and the associated restriction upon political speech are constitutionally insufficient to justify expenditure limitations." Fireman, 20 F. Supp. 2d at 235.
In response to Fireman’s argument that the $1,000 contribution limit can no longer be considered narrowly tailored to satisfy the government’s interest, Judge Young concluded that the limitation was a difference of degree, not kind, which was within Congress’ authority to determine and it did not impose a constitutionally onerous burden on a contributor’s freedom of political association or expression. Consequently, Judge Young denied Fireman’s petition to vacate his sentence. On February 25, 1999, the First Circuit denied Fireman’s request for a certificate of appealability. See Fireman v. United States¸ No. 98-2057 (1st Cir. 1999) (order of court denying request).