SpeechNow.org v. FEC (District court)

On July 1, 2008, the U.S. District Court for the District of Columbia denied SpeechNow.org’s (SpeechNow) request for a preliminary injunction and rejected the group’s argument that it is likely to succeed on the merits of the case.

Background

On February 14, 2008, SpeechNow, a group formed to make independent expenditures, and several individual plaintiffs, filed a complaint in the U.S. District Court for the District of Columbia challenging the constitutionality of the Federal Election Campaign Act (the Act) provisions governing political committee registration, contribution limits and disclosure.

The plaintiffs seek a declaration that, as applied, those provisions unconstitutionally abridge their rights of free speech and association. Additionally, they request preliminary and permanent injunctions blocking the FEC from enforcing the provisions against them.

Under the Act, a group whose major purpose is to influence the election of candidates to office becomes a “political committee” when it collects contributions or makes expenditures in excess of $1,000 during a calendar year. 2 U.S.C. § 431(4). The definition of “contribution” includes any gift, loan or anything of value made by any person to influence an election for federal office. 2 U.S.C. § 431(8). Similarly, an “expenditure” includes any purchase, payment or anything of value made by any person to influence a federal election. 2 U.S.C. § 431(9).

Political committees must register with the FEC and are subject to limits on the contributions they receive and make. 2 U.S.C. § 441a(a). They also must periodically disclose their receipts and disbursements. 2 U.S.C. § 434(a) and (b).

A political committee may make unlimited “independent expenditures,” which are defined as expenditures expressly advocating the election or defeat of a clearly identified candidate that are not made in concert or coordination with a candidate or a political party. 2 U.S.C. § 431(17).

Individuals may make unlimited independent expenditures from their personal funds. An individual who makes such expenditures may have reporting requirements but will not trigger registration with the FEC as a political committee. 2 U.S.C. § 434(c). Individual contributions are subject to limits, including an overall biennial limit on federal contributions.

Complaint

SpeechNow is a nonprofit, unincorporated association organized as a section 527 entity under the Internal Revenue Code. The organization was formed by individuals who seek to pool their resources to make independent expenditures expressly advocating the election or defeat of federal candidates. SpeechNow plans to accept contributions only from individuals, not corporations or other sources prohibited under the Act. The individual plaintiffs wish to contribute to SpeechNow, both in federally permissible amounts and in amounts exceeding the federal limits.

SpeechNow submitted an advisory opinion request with the Commission on November 19, 2007, asking whether its activities, raising funds from individuals to pay for independent communications that contained express advocacy, would require it to register as a political committee under the Act. The General Counsel’s Office prepared a draft opinion for Commission discussion stating that contribution limits would apply to contributions given to SpeechNow, and that SpeechNow would be required to register as a political committee once it raised or spent more than $1,000 in a calendar year for the purpose of influencing federal elections. Since the Commission only had two of the requisite four members at the time the draft was considered, it could not issue an advisory opinion. The Commission notified SpeechNow of that fact on January 28, 2008.

The plaintiffs contend that the Act unconstitutionally restricts their freedom of speech and freedom of association guaranteed under the First Amendment. By requiring registration as a political committee and limiting the monetary amount that an individual may contribute to a political committee, SpeechNow and the other plaintiffs assert that the Act unconstitutionally restricts the individuals’ freedom of speech by limiting the amount that an individual can contribute to SpeechNow and thus the amount the organization may spend. SpeechNow also argues that the reporting required of political committees is unconstitutionally burdensome.

The plaintiffs asked the court to find the contribution limits, reporting requirements and political committee registration requirements unconstitutional as applied to their proposed activities. The plaintiffs also requested that the court preliminarily and permanently enjoin the FEC from enforcing these provisions against SpeechNow and the individual plaintiffs.

District court decision on preliminary injunction

The District Court denied SpeechNow’s request for a preliminary injunction, refusing to apply strict scrutiny review and holding that sufficiently important government interests support limits on contributions to political committees, including groups like SpeechNow who intend to spend all of their money on independent expenditures.

SpeechNow argued that limits on contributions to committees that make only independent expenditures implicate the same First Amendment interests as limits on independent expenditures themselves, and therefore should be subject to strict scrutiny as expenditure limits generally are. The court disagreed, finding that limits on contributions to committees that make only independent expenditures are not the same as direct limits on expenditures of either the organization or its donors. “[C]ontributors to SpeechNow are not, through their donations,” the court explained, “engaging in direct speech. SpeechNow, as a legally separate organization, is speaking as their proxy.” Citing Buckley and McConnell, the court held that strict scrutiny did not apply because the limits do not restrict the amount that the political committee can spend on independent expenditures, but rather limit the source and amounts of contributions. Accordingly, the court concluded that the $5,000 limit is subject to intermediate scrutiny, meaning that the regulation need only be “closely drawn” to further a “sufficiently important” government interest.

Applying intermediate scrutiny, the district court held that limits on contributions to committees making solely independent expenditures serve important government interests by preventing actual and apparent corruption. Looking to the past behavior of so-called “527 groups” that did not register with the Commission yet had close ties with the major political parties and made millions of dollars of expenditures influencing the federal elections of 2004, the court found that such “nominally independent” organizations are “uniquely positioned to serve as conduits for corruption both in terms of the sale of access and the circumvention of the soft money ban.”

Additionally, the court explained that the $5,000 limit on contributions to political committees like SpeechNow “promotes the important government interests underlying the Act’s disclaimer requirements.” The court held that SpeechNow’s proposed course of action would conceal from the public the source of the advertisement’s funding in the advertisement itself and would allow wealthy donors to hide behind “dubious and misleading names,” thus evading the Act’s disclaimer requirements.

In denying the preliminary injunction, the Court stated that since the regulations are “closely drawn to match the government interests in preventing corruption and the circumvention of the Act’s disclaimer requirements, plaintiffs have failed to demonstrate a likelihood of success on their claim that [the Act’s] $5,000 contribution limit is unconstitutional as applied to independent expenditure committees.”

U.S. District Court for the District of Columbia, 1:08-cv-00248-JR

Resources:

• SpeechNow.org v. FEC litigation page
• Contributions to Super PACs and Hybrid PACs