SpeechNow.org v. FEC (Appeals court)

On March 26, 2010, the U.S. Court of Appeals for the District of Columbia Circuit ruled in SpeechNow.org. v. FEC that the contribution limits of 2 U.S.C. § 441a are unconstitutional as applied to individuals’ contributions to SpeechNow. The court also ruled that the reporting requirements of 2 U.S.C. §§ 432, 433 and 434(a) and the organizational requirements of 2 U.S.C. § 431(4) and § 431(8) can be constitutionally applied to SpeechNow.

Background

SpeechNow is an unincorporated nonprofit association registered as a “political organization” under §527 of the Internal Revenue Code. SpeechNow intends to raise funds solely through donations by individuals and intends to operate exclusively through independent expenditures, which are defined by the Federal Election Campaign Act (the Act) as expenditures that expressly advocate the election or defeat of a clearly identified federal candidate and are not made in concert or cooperation with, or at the request or suggestion of such candidate, the candidate’s authorized committee or their agents or a political party committee or its agents. 2 U.S.C. § 431(17). SpeechNow intends to run ads for the 2010 election cycle if it is not subject to the contribution limits of the Act.

In November 2007, SpeechNow filed an advisory opinion request with the Commission, asking whether it must register as a political committee under the Act and if donations to SpeechNow would qualify as “contributions,” as defined by the Act, which are subject to the amount limitations of 2 U.S.C. § 441a(a)(1)(C) and § 441a(a)(3). At the time, the Commission did not have enough Commissioners to issue an opinion, but the Commission’s Office of General Counsel did issue a draft advisory opinion which stated that SpeechNow would be a political committee and contributions to it would be subject to the political committee contribution limits. SpeechNow filed a complaint in the U.S. District Court for the District of Columbia, alleging that the restrictions applicable to political committees would be unconstitutional as applied to SpeechNow.

The Act defines a political committee as “any committee, club, association, or other group of persons” that receives contributions or makes expenditures in excess of $1,000 in a calendar year. 2 U.S.C. § 431(4). Once a group qualifies as a political committee, contributions to that committee are restricted to $5,000 from an individual in a calendar year; additionally, an individual’s total contributions to all political committees are limited, currently to $69,900 biennially. 2 U.S.C. § 441a(a)(1)(C) and § 441a(a) (3). A political committee must also comply with all applicable recordkeeping and reporting requirements of the Act, which include, among other things, filing periodic campaign finance reports with the Commission. See 2 U.S.C. § 434(a) (4) and §434(b).

Appellate court decision

Contribution limits. The court of appeals held that when the government attempts to regulate the financing of political campaigns and express advocacy through contribution limits, it must have a countervailing interest that outweighs the limit’s burden on the exercise of First Amendment rights. In light of the Supreme Court’s recent decision in Citizens United v. FEC, in which the Supreme Court held that the government has no anti-corruption interest in limiting independent expenditures, the appeals court ruled that “contributions to groups that make only independent expenditures cannot corrupt or create the appearance of corruption.” As a result, the court of appeals held that the government has no anti-corruption interest in limiting contributions to an independent group such as SpeechNow. Contributions limits as applied to SpeechNow “violate the First Amendment by preventing [individuals] from donating to SpeechNow in excess of the limits and by prohibiting SpeechNow from accepting donations in excess of the limits.” The court noted that its holding does not affect direct contributions to candidates, but rather contributions to a group that makes only independent expenditures.

Disclosure and reporting requirements. The appeals court held that, while disclosure and reporting requirements do impose a burden on First Amendment interests, they “‘impose no ceiling on campaignrelated activities’” and “‘do not prevent anyone from speaking.’” Furthermore, the court held that the additional reporting requirements that the Commission would impose on SpeechNow if it were organized as a political committee are minimal, “given the relative simplicity with which SpeechNow intends to operate.” Since SpeechNow already has a number of “planned contributions” from individuals, the court ruled that SpeechNow could not compare itself to “ad hoc groups that want to create themselves on the spur of the moment.” Since the public has an interest in knowing who is speaking about a candidate and who is funding that speech, the court held that requiring such disclosure and organization as a political committee are sufficiently important governmental interests to justify the additional reporting and registration burdens on SpeechNow.

The court’s decision is available at http://www.fec.gov/law/litigation/ speechnow_ac_opinion.pdf.

United States Court of Appeals for the District of Columbia Circuit, Case Nos. 08-5223 and 09-5342.

Resources:

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