published in 28 UWLA Law Rev. 1 (1997)

THE FIRST AMENDMENT IS NOT A LOOPHOLE:
PROTECTING FREE EXPRESSION IN THE ELECTION CAMPAIGN CONTEXT

James Bopp, Jr.
Richard E. Coleson⁽¹⁾

"Congress shall make no law . . .
abridging the freedom of speech . . . ."⁽²⁾

Introduction

The First Amendment plainly states that Congress is to "make no law" which would "abridg[e] the freedom of speech,"⁽³⁾ yet Congress enacted the Federal Election Campaign Act of 1971 (FECA), as amended in 1974,⁽⁴⁾ precisely to abridge certain forms of speech in election campaigns. In the landmark case of Buckley v. Valeo,⁽⁵⁾ the United States Supreme Court struck down many FECA provisions on free expression grounds.

For the two decades since Buckley, the Federal Election Commission (FEC) has fought to close the perceived loopholes created by Buckley in the federal election laws, so that the agency could regulate all speech relating in any way to federal elections. Throughout this period, the Supreme Court has repeatedly proclaimed that the First Amendment is not a loophole -- free expression must be protected amidst the rush to impose campaign finance restrictions.

Undeterred, the FEC has created new theories in an attempt to bypass Supreme Court holdings and pursued regulation of constitutionally-protected expression. On June 26, 1996, the United States Supreme Court decided the case of Colorado Republican Federal Campaign Committee v. FEC ("Colorado Republican"),⁽⁶⁾ again rejecting the FEC's creative efforts to regulate political speech protected by the First Amendment. This article discusses the Colorado Republican case in its historical context of conflict between federal court protection of free expression and attempts, by the FEC and various states, to regulate protected expression in the name of campaign finance reform.

The article is written from a practical perspective, i.e., what the courts have held, not what certain theoreticians would like the courts to hold.⁽⁷⁾ In Part I, "A Primer on Protected Political Expression," the authors will summarize briefly some of the key theoretical debates, but will primarily focus on the principles undergirding free political expression, discuss some terms of art, and explain the sorts of activity over which litigation usually arises. The robust First Amendment protection of issue advocacy will be the topic of Part II, "Supreme Court Defense of Issue Advocacy Through Buckley," and Part III, "FEC Efforts to Stifle Issue Advocacy." Part IV will focus on "Other Protection for Free Political Expression," discussing (1) MCFL-type organizations, (2) members, (3) anonymous literature, (4) caps on contributions and expenditures, (5) political committees, (6) burden of proof, and (7) prior restraint of speech. In Part V, " A Proposal for Speech-Enhancing Campaign Reform," the article will conclude with a proposal for constitutionally-permissible campaign finance reforms which would enhance, rather than suppress, the free flow of speech about candidates and issues of public concern which is essential to our democratic Republic.

I. A Primer on Protected Political Expression

Our political system is based on the model of an open and free marketplace of ideas. The Framers of our Constitution believed that good ideas will triumph over bad ideas if the People are free to debate and to champion the ideas they find convincing. Free speech is not only valuable intrinsically as a personal liberty, but it is a necessary prerequisite for limited representative government, particularly in free elections.⁽⁸⁾ This has been well stated by the District of Columbia Circuit:

If popular elections form the essence of republican government, free discourse and political activity formed the prerequisite for popular elections. As Madison wrote, a government which is "elective, limited and responsible" to the people requires "a greater freedom of animadversion" than one not so structured.

In our day, the Supreme Court has recognized that "debate on the qualifications of candidates [is] integral to the operation of the system of government established by our Constitution." Because the electoral process plays so central a role in our conception of a free government, "it can hardly be doubted that the constitutional guarantee [of the First Amendment] has its fullest and most urgent application precisely to the conduct of campaigns for political office."⁽⁹⁾

Traditionally, Americans have felt that more speech was the cure for ideas which some might view as problematic, not suppression of ideas.⁽¹⁰⁾ As a result, free expression was guaranteed by the First Amendment to the United States Constitution,⁽¹¹⁾ and has been recognized by the Supreme Court as the most protected of the rights of an American,⁽¹²⁾ since freedom of speech is an "indispensable democratic freedom."⁽¹³⁾

This strong First Amendment protection for free speech and free press encompasses all forms of political expression. Indeed, protecting expression about political ideas, candidates, and parties was what the Framers had most in mind when they added the First Amendment to our Constitution -- not things like nude dancing⁽¹⁴⁾ and obscene statements of jackets,⁽¹⁵⁾ which have come to characterize First Amendment jurisprudence.⁽¹⁶⁾ Indeed, the Supreme Court has declared that political expression is "at the core of our electoral process and of the First Amendment freedoms."⁽¹⁷⁾

Moreover, "the First Amendment should itself be seen as a considered response to problems inherent in any democratic system of elections."⁽¹⁸⁾ Many post-moderns seem to have overlooked the fact that the best way to fix perceived problems with electoral politics is the old-fashioned one, maximizing free speech.⁽¹⁹⁾ In his article entitled Faulty Assumptions and Undemocratic Consequences of Campaign Finance Reform, Prof. Bradley Smith exposes the flawed presuppositions and results of most campaign reform proposals then summarizes the way in which the First Amendment is the cure, not the disease which plagues electoral politics:

By assuring freedom of speech and of the press, the First Amendment allows for exposure of government corruption and improper favors and provides voters with information on sources of financial support. There is no shortage of newspaper articles reporting on candidate spending and campaign contributions, and candidates frequently make such information an issue in campaigns. By keeping the government out of the electoral arena, the First Amendment allows for a full interplay of political ideas and prohibits the type of incumbent self-dealing that has so vexed the reform movement. It allows challengers to raise the funds necessary for a successful campaign and keeps channels of political change open. By prohibiting excessive regulation of political speech and the political process, the First Amendment, properly interpreted, frees individuals wishing to engage in political discourse from the regulation that now restrains grassroots political activity. And because the First Amendment, properly applied to protect contributions and spending, makes no distinctions between the power bases of different political actors, it helps to keep any particular faction or interest from permanently gaining the upper hand. In each respect, it promotes true political equality.

What the First Amendment does not do is promise a neat and tidy system of elections. Campaign finance reformers, focused on the untidiness of the process, which they have labelled "corruption," have responded with an ever growing web of regulation. This has served only to distance Americans from politics and politicians and has thus led to a decline in the public's trust in government.⁽²⁰⁾

Lately, some are rejecting the free marketplace of ideas model altogether.⁽²¹⁾ They argue that the marketplace of ideas should be regulated by the government whenever the People engage in the important task of electing leaders.⁽²²⁾ The People must be protected by the government from the vigorous advocacy of ideas at election time lest such ideas influence how they vote, these speech-suppressors insist. To prevent such an allegedly dire result, these political censors are spearheading a campaign to ban or regulate all expression about issues which might in some way influence an election.⁽²³⁾ They seek to impose limits on campaign contributions and expenditures as well as severe restrictions on the ability of the People to associate and pool their resources to enhance their speech about candidates, parties, and issues.⁽²⁴⁾

This effort goes by the innocuous name of campaign finance reform. While "reform" is generally considered a salutary goal, "reform" is not good when it is a euphemism for silencing the voice of the People at election time.

The Supreme Court and lower courts have repeatedly had to protect the First Amendment rights of the People against misguided "reform" efforts which impinge on essential liberties.⁽²⁵⁾ Truly beneficial "reform" would enhance the power of the People to communicate and promote their ideas, not repress it. Proper reform would return power to the People, not enhance the power of media elite, wealthy candidates, and Washington insiders to influence elections -- which is the ultimate outcome if the People's voice through their political parties and political committees is muffled or silenced.⁽²⁶⁾

The battle to preserve free speech rights in the election context is bi-partisan and non-ideological, as evidenced by the existence of the Free Speech Coalition. This Coalition is co-chaired by Ellie Smeal of the Fund for the Feminist Majority and David Keene of the American Conservative Union and is made up of approximately 50 public interest advocacy groups ranging ideologically from the left to the right, from environmental activist groups to pro-business organizations, and from gun control enthusiasts to the National Rifle Association. The broad-based agreement on protecting free expression rights in the election context was symbolized recently when James Bopp, Jr., General Counsel for the National Right to Life Committee (NRLC) and co-author of the present article, presented testimony on behalf of the Free Speech Coalition before the U.S. Senate Committee on Rules and Administration considering campaign finance reform.⁽²⁷⁾ These public policy groups agree on little else, but they agree that the First Amendment protects their right to advocate on issues of public concern. This is the marketplace of ideas at work, with opposing groups vying for the blessing of public opinion on their issue. It is America working at its best.⁽²⁸⁾

This battle for First Amendment liberty is being fought over several types of activities. It will be helpful to consider some of them briefly and note some terms of art.

A "political action committee" (PAC) (also sometimes known as a "political committee" in statutes) is nothing more than individuals uniting to promote issues and candidates more effectively than they could do on their own.⁽²⁹⁾ A PAC may lawfully engage in "express advocacy," i.e., expressly advocate the election or defeat of a clearly identified candidate,⁽³⁰⁾ and make contributions to candidates. First Amendment rights do not diminish in any way because persons associate to advocate for their cause more effectively; in fact, the right of citizens to band together in PACs is specifically protected by the First Amendment's freedom of association protections.⁽³¹⁾ Thus, pejorative references to PACs as "special interests" which need to be stifled are actually misguided attacks on the core First Amendment rights of free political expression and association. The marketplace-of-ideas response to a PAC message one opposes is not to silence PACs but to form one's own association of persons to advocate an opposing message in the marketplace.⁽³²⁾ The cacophony of competing communications may sometimes be deafening and disquieting, but that is the way of liberty. The road to serfdom is the quiet and quiescent road. Recognizing free speech as an inherent good and the necessity of free political debate and association in a democratic republic, the Supreme Court has permitted only limited regulation of PACs.⁽³³⁾

Litigation often arises over the scope of a state's definition of a political committee or PAC. Often states try to channel all individuals and groups, who advocate on issues in a manner which would in any way "influence" an election, into the political committee category so that they will have to register and report as if they were a political committee.⁽³⁴⁾ However, an organization cannot constitutionally be required to register and report as a political committee unless its "major purpose" is the nomination or election of candidates. Imposing the relatively burdensome reporting requirements which may be imposed on PACs on issue-advocacy groups is simply too heavy a burden on free expression to be permitted.⁽³⁵⁾ There is no compelling governmental interest to justify such a burden on First Amendment rights.

An "independent expenditure" is an expenditure made for a communication which contains "express advocacy" and is made without any prior consultation or coordination with a candidate. An entity which makes an independent expenditure may be required to report that expenditure, even if it is not required to register and report as a political committee.⁽³⁶⁾

"Issue advocacy" is advocacy of issues without engaging in express advocacy.⁽³⁷⁾ For example, if a pro-life group publishes a newsletter on the eve of an election describing Candidate D as pro-life and Candidate C as pro-abortion rights in an article about the two candidates, that is issue advocacy, not express advocacy, because there have been no explicit words expressly advocating the election or defeat of a clearly identified candidate for public office.⁽³⁸⁾ The candidates have been clearly identified, they are running for public office, but saying that Candidate D is pro-life is not express advocacy, it is issue advocacy. This is so even though the statement is made in a pro-life newsletter, in a discussion of candidates, on the eve of an election.⁽³⁹⁾

A "voter guide" is a table showing the positions of candidates on various issues. If it does not expressly advocate the election or defeat of any of the identified candidates, the voter guide is pure issue advocacy and may not be regulated by the FEC or any state. The voter guide may even indicate what is the response preferred by the organization publishing the guide, e.g. by indicating a favorable answer (from the perspective of the publisher) with a plus (+) and an unfavorable response with a minus (-). Or the voter guide can word the questions in such a way that a candidate giving favored responses will have a "yes" answer for every questions, while a candidate giving disfavored responses will have all "no" answers.⁽⁴⁰⁾ These voter guides may be paid for and distributed by any individual or organization.⁽⁴¹⁾

Because they discuss candidates, are distributed at election time, and may actually influence elections, voter guides have been the target of intense efforts by the FEC,⁽⁴²⁾ state legislatures,⁽⁴³⁾ and the Democrat Party⁽⁴⁴⁾ in an effort to force voter guide activity into the definition of express advocacy and, thereby, force entities publishing them into registering and reporting as is they were political committees. Such efforts have been repeatedly rejected as courts have followed the bright-line express advocacy test set out by the United States Supreme Court to protect issue advocacy.

II. Supreme Court Defense of Issue Advocacy Through Buckley

The United States Supreme Court has long and carefully watched over efforts to regulate political speech in order to ensure that the guarantees of the First Amendment⁽⁴⁵⁾ are not denied. This is because such restrictions "limit political expression 'at the core of our electoral process and of First Amendment freedoms.'"⁽⁴⁶⁾ All political speech, including communications which expressly advocate election or defeat of candidates, enjoy powerful First Amendment protection. As the Supreme Court has declared:

[T]he First Amendment right to 'speak one's mind . . . on all public institutions' includes the right to engage in "'vigorous advocacy' no less than 'abstract discussion.'" Advocacy of the election or defeat of candidates for federal office is no less entitled to protection under the First Amendment than the discussion of political policy generally or advocacy of the passage or defeat of legislation.⁽⁴⁷⁾

Not only has the Court afforded strong constitutional protection for political speech in general, but it has afforded exceptionally strong constitutional protection for issue-oriented speech. As a result, the Court has repeatedly given a narrowing construction to statutes regulating political speech, so as to permit regulation of only express advocacy, in order to shield the statutes from constitutional attack. Moreover, the Supreme Court has established two bright-line tests to protect the advocacy of issues in the election context: (1) the "express advocacy test" and (2) the "major purpose test."⁽⁴⁸⁾ These will be discussed in turn.

A. The Bright-Line Express Advocacy Test

In a series of cases, the United States Supreme Court has drawn a distinction between express advocacy, which may be regulated, and issue advocacy, which may not be regulated. As shall be seen, both enjoy full First Amendment protection, but the compelling interest in preventing corruption (or its appearance) in the election process is only sufficiently compelling to warrant some regulation of express advocacy.⁽⁴⁹⁾ No governmental interest is sufficiently compelling to regulate issue advocacy.

In 1948, the Supreme Court considered the case of United States v. Congress of Industrial Organizations ("C.I.O.").⁽⁵⁰⁾ C.I.O. concerned a federal statute prohibiting a corporation or labor organization from making "any expenditure in connection with a federal election."⁽⁵¹⁾ Under this provision, an indictment was returned against the C.I.O. and its president for publishing, in The CIO News, a statement urging all members of the C.I.O. to vote for a particular candidate for Congress in an upcoming election.⁽⁵²⁾ In affirming a dismissal of the indictment, the Court observed:

If § 313 were construed to prohibit the publication, by corporations and unions in the regular course of conducting their affairs, of periodicals advising their members, stockholders or customers of danger or advantage to their interests from the adoption of measures, or the election to office of men espousing such measures, the gravest doubt would arise in our minds as to its constitutionality.⁽⁵³⁾

A lengthy footnote appended to this statement set forth several passages from case law wherein the Court had declared the specially protected nature of free speech concerning public policy and political matters:

"Free discussion of the problems of society is a cardinal principle of Americanism -- a principle which all are zealous to preserve." Pennekamp v. Florida, 328 U.S. 331, 346 [(1946)].

"The case confronts us again with the duty our system places on this Court to say where the individual's freedom ends and the State's power begins. Choice on that border, now as always delicate, is perhaps more so where the usual presumption supporting legislation is balanced by the preferred place given in our scheme to the great, the indispensable democratic freedoms secured by the First Amendment." Thomas v. Collins, 323 U.S. 516, 529-30 [(1945)].

"For the First Amendment does not speak equivocally. It prohibits any law 'abridging the freedom of speech, or of the press.' It must be taken as a command of the broadest scope that explicit language, read in the context of a liberty-loving society, will allow." Bridges v. California, 314 U.S. 252, 263 [(1941)].⁽⁵⁴⁾

In 1976, the Supreme Court considered a successor statute to the one discussed in C.I.O., the Federal Election Campaign Act of 1971, as amended in 1974.⁽⁵⁵⁾ This new statute was reviewed in Buckley v. Valeo.⁽⁵⁶⁾

Buckley dealt, inter alia, with a provision which limited "'any expenditure . . . relative to a clearly identified candidate.'"⁽⁵⁷⁾ The provision placed a limit on the amount of an independent expenditure on behalf of a candidate. However, this provision was considered to be unconstitutionally vague.⁽⁵⁸⁾ Therefore, the Court construed it with another provision of the same statute to require "'relative to' a candidate to be read to mean 'advocating the election or defeat of' a candidate."⁽⁵⁹⁾

However, as the Buckley Court noted, this construction merely refocused the vagueness problem. The real problem, the Court noted, is that

the distinction between discussion of issues and candidates and advocacy of election or defeat of candidates may often dissolve in practical application. Candidates, especially incumbents, are often intimately tied to public issues involving legislative proposals and governmental actions. Not only do candidates campaign on the basis of their positions on various public issues, but campaigns themselves generate issues of public interest.⁽⁶⁰⁾

Because of the problem described, the Supreme Court settled on the express advocacy test as marking the line of demarcation between the permitted and the forbidden. This test is constitutionally mandated because only a statute regulating the express advocacy of a clearly identified federal candidate has a sufficiently bright line of distinction to make it constitutionally defensible. The Supreme Court, in Buckley, explained the problem with a quotation from Thomas v. Collins:

[W]hether words intended and designed to fall short of invitation would miss the mark is a question both of intent and of effect. No speaker, in such circumstances, safely could assume that anything he might say upon the general subject would not be understood by some as an invitation. In short, the supposedly clear-cut distinction between discussion, laudation, general advocacy, and solicitation puts the speaker in these circumstances wholly at the mercy of the varied understanding of his hearers and consequently of whatever inference may be drawn as to his intent and meaning.

Such a distinction offers no security for free discussion. In these conditions it blankets with uncertainty whatever may be said. It compels the speaker to hedge and trim.⁽⁶¹⁾

Thus, the Supreme Court, in Buckley, said that

[t]he constitutional deficiencies described in Thomas v. Collins can be avoided only by reading § 608(e)(1) [placing a ceiling on independent expenditures] as limited to communications that include explicit words of advocacy of election or defeat of a candidate.⁽⁶²⁾

Without such a clear line of demarcation, then, a speaker is forced to "hedge and trim" comments made on issues of public importance for fear he will be charged with forbidden electioneering. This is too heavy a burden on First Amendment Rights to be constitutionally permitted.⁽⁶³⁾

The Buckley Court concluded that "[t]he constitutional deficiencies" of such unclear statutory language could only be cured by reading the statute "to apply only to expenditures for communications that in express terms advocate the election or defeat of a clearly identified candidate for a public office."⁽⁶⁴⁾ The Court added that "[t]his construction would restrict the application of § 608(e)(1) to communications containing express words of advocacy of election or defeat, such as 'vote for,' 'elect,' 'support,' 'cast your ballot for,' 'Smith for Congress,' 'vote against,' 'defeat,' 'reject.'"⁽⁶⁵⁾

The Buckley Court then proceeded to determine whether the statute, "even as thus narrowly and explicitly construed, impermissibly burdens the constitutional right of free expression."⁽⁶⁶⁾ The Court determined that the government could not advance an interest in support of the statute sufficient to "satisfy the exacting scrutiny applicable to limitations on core First Amendment rights of political expression."⁽⁶⁷⁾

In sum, the Court established the express advocacy test as a bright-line rule to distinguish political advocacy, that could be regulated, from issue advocacy which may not.

B. The Bright-Line Major Purpose Test

In Buckley, the Supreme Court also established the bright-line "major purpose" test. In practical application, this test means that government may not require an organization which makes contributions and independent expenditures to register and report as a political committee unless the "major purpose" of the organization is the election or nomination of candidates for political office.⁽⁶⁸⁾ Government may, however, require that the independent expenditures be reported by the organizations making them and that contributions be reported by the candidate receiving them. However, there is no sufficiently compelling interest to justify imposing the onerous burdens imposed on a political committee on an issue advocacy groups.⁽⁶⁹⁾

This test was set forth in the Buckley Court's discussion of 2 U.S.C. § 434(e), which required

"[e]very person (other than a political committee or candidate) who makes contributions or expenditures" aggregating over $100 in a calendar year "other than by contribution to a political committee or candidate" to file a statement with the Commission. [footnote omitted] Unlike the other disclosure provisions, this section does not seek the contribution list of any association. Instead, it requires direct disclosure of what an individual or group contributes or spends.⁽⁷⁰⁾

"In considering this provision," the Court wrote, "we must apply the same strict standard of scrutiny, for the right of associational privacy developed in NAACP v. Alabama derives from the rights of the organization's members to advocate their personal points of view in the most effective way."⁽⁷¹⁾

The Court continued:

When we attempt to define "expenditure" . . . . [a]lthough the phrase, "for the purpose of . . . influencing" an election or nomination, differs from the language used in § 608(e)(1), it shares the same potential for encompassing both issue discussion and advocacy of a political result. [footnote omitted] The general requirement that "political committees" and candidates disclose their expenditures could raise similar vagueness problems, for "political committee" is defined only in terms of amount of annual "contributions" and "expenditures," [footnote omitted] and could be interpreted to reach groups engaged in purely issue discussion. . . . To fulfill the purposes of the Act they need only encompass organizations that are under the control of a candidate or the major purpose of which is the nomination or election of a candidate. Expenditures of candidates and "political committees" so construed can be assumed to fall within the core area sought to be addressed by Congress. They are, by definition, campaign related.

But when the maker of the expenditure is not within these categories -- when it is an individual other than a candidate or a group other than a "political committee" -- the relation of the information sought to the purposes of the Act may be too remote. To insure that the reach of § 434(e) is not impermissibly broad, we construe "expenditure" for purposes of that section in the same way we construed the terms of § 608(e) -- to reach only funds used for communications that expressly advocate [footnote omitted] the election or defeat of a clearly identified candidate.⁽⁷²⁾

So construed, the reporting of independent expenditures is justified by the substantial governmental interest in "shed[ding] the light of publicity on spending that is unambiguously campaign related,"⁽⁷³⁾ i.e., an interest in preventing corruption in the political process.

After the Supreme Court's 1976 Buckley decision, the express advocacy test and the major purpose test were clearly deployed as twin defenses against governmental encroachment on issue advocacy. However, as shown in the next section, the FEC and some state legislatures have spent the next two decades trying to evade the Court's pronouncements.

Before proceeding, however, comment needs to be made on the recent case of Akins v. FEC.⁽⁷⁴⁾ That case held that the major purpose test applied when an organization engaged in independent expenditures, but not when it made contributions. The decision, however, was wrongly decided because the court did not engage in the most basic First Amendment analysis, which would have led to a different result.

The case involved a complaint to the FEC that the American Israel Public Affairs Committee ("AIPAC") was a "political committee" subject to the broad disclosure requirements and limits imposed on political committees. The FEC dismissed the complaint because the Committee did not met its definition for a political committee. The definition required that a committee (1) meet the $1,000 expenditure threshold and (2) have as its major purpose the nomination or election of candidates. The FEC "determined that AIPAC likely had made campaign contributions exceeding the $1,000 threshold, but concluded that there was not probable cause to believe AIPAC was a political committee because its campaign-related activities were only a small portion of its overall activities and not its major purpose."⁽⁷⁵⁾ The FEC argued that Buckley required it to include a major purpose exception for such contributions in its rules implementing 2 U.S.C. § 431(4)(A) (the definition of "political committee").⁽⁷⁶⁾ Ironically, as the FEC properly followed and defended the Buckley major purpose test in this instance, it was overruled.

The D.C. Circuit's analysis reviewed the language of Buckley and decided that the major purpose test was only established by the Court in the context of expenditures.⁽⁷⁷⁾ The Akins court similarly dismissed the language about the major purpose test in MCFL⁽⁷⁸⁾ as only applying in the context of independent expenditures, so that "the Court's rationale in MCFL and Buckley is simply inapplicable to the present case."⁽⁷⁹⁾ The Akins court proceeded with some policy arguments about how the FEC's interpretation "would . . . allow a large organization to contribute substantial sums to campaign activity, as long as the contributions are a small portion of the organization's overall budget, without being subject to the limitations and requirements imposed on political committees."⁽⁸⁰⁾ Of course, that is so and is as it should be. The very idea of the major purpose test is that the heavy limits and disclosure requirements imposed on political committees are too great a burden on the First Amendment rights of organizations whose major purpose is not campaign advocacy. It is sufficient that the details of each independent expenditure or contribution to a candidate be disclosed to the FEC as matters of public record.

What was glaringly absent from the Akins opinion was a constitutional analysis.⁽⁸¹⁾ A proper constitutional analysis would have begun with the strong First Amendment protection for all forms of political expression, including contributions. Next, the analysis would have asked whether there was any compelling governmental interest sufficient to override the First Amendment's protection. A proper analysis would have noted that the only interests found sufficiently compelling by the Court are the interests in preventing corruption and its appearance in the political process. The analysis would have then asked whether contributions to candidates from an organization whose major purpose is education and lobbying posed such a threat of corruption to the political system that it could only be cured by imposing on the organization the heavy burdens imposed on PACs. The answer, of course, would be that fully disclosed contributions, which are a small fraction of an organization's activities, pose no credible threat of corruption or the appearance thereof. Therefore, imposing the limitations and broad disclosure requirements, which are placed on political committees, on an organization whose major purpose is not the nomination or election of candidates would violate the First Amendment in the same way that the Constitution is violated in the context of such organizations making independent expenditures.

It may safely be assumed that, at such a time as the United States Supreme Court has the opportunity to review the issue raised in Akins, the major purpose test will be reasserted in the context of contributions, as well as independent expenditures. Meanwhile, it is clearly in force with respect to independent expenditures and with respect to contributions in all but the D.C. Circuit.

III. Failed FEC Efforts to Stifle Issue Advocacy

The FEC apparently did not like the answers the Supreme Court gave in Buckley,⁽⁸²⁾ because it soon began challenging the decision with enforcement actions and rulemaking that did not follow the express advocacy and major purpose tests. This resulted in a long string of litigation, traced below, highlighted by judicial rebuffs and rebukes.

In this 20 year effort to suppress political speech by circumventing Buckley, the FEC has treated the First Amendment as a loophole in the Federal Election Campaign Act which it is the FEC's duty to close, and the FEC has treated United States Supreme Court decisions against it as inconveniences to be overcome. As a result, the FEC has engaged in a sustained and unprecedented assault on the First Amendment, consuming enormous FEC resources. Rather than enforce the many uncontroversial and clearly constitutional provisions of the FECA, the FEC has used its limited resources to launch a series of regulatory changes and enforcement actions with the intent of expanding its powers to regulate free speech. This effort has resulted in a series of court cases striking down these regulations⁽⁸³⁾ and defeating the FEC's enforcement actions.⁽⁸⁴⁾

The courts have, therefore, frustrated the unlawful efforts of the FEC to impinge on free speech, but at an enormous cost in taxpayer funds and in attorney fees for successful victims of the FEC's enforcement actions. The cost to the free speech of those intimidated by the heavy hand of the FEC, however, cannot be calculated. Instead of enforcing the important and uncontroversial provisions of the Act, the FEC has focused its attention on "grassroots groups and citizens who want to take part in the political debate, too -- groups far less well-funded and less capable of extricating themselves from the tangle of FEC regulations." Thus, the FEC has functioned "more and more as a censor of political expression, especially by issue-oriented, grassroots activists."⁽⁸⁵⁾ Some of the more significant cases are reviewed below.

A. FEC v. AFSCME (1979)

In FEC v. American Federation of State, County and Municipal Employees ("AFSCME"),⁽⁸⁶⁾ the District of Columbia district court rejected the FEC's contention that a poster qualified as express advocacy because it contained a clearly identified candidate, "may have tended to influence voting," and "contain[ed] communication on a public issue widely debated during the campaign."⁽⁸⁷⁾ The AFSCME union had printed a poster with a caricature of President Ford wearing a button reading "Pardon Me" and embracing President Nixon, but it did not report the expenditure as express advocacy. The district court held that this was issue advocacy, not express advocacy, because it contained no express words urging the election or defeat of a clearly identified candidate.⁽⁸⁸⁾ The AFSCME court noted that

[t]he Buckley analysis of the limits of political activity is based on long recognized principles: (1) political expression, including discussion of candidates, is afforded the broadest protection under the first amendment; and (2) discussion of public issues which are also campaign issues unavoidably draws in candidates and tends to inexorably exert influence in voting at elections.⁽⁸⁹⁾

B. FEC v. CLITRIM (1980)

Undeterred, the FEC brought suit against the Central Long Island Tax Reform Immediately Committee for the organization's failure to report funds expended to publish and distribute a leaflet advocating lower taxes and smaller government. The Second Circuit, in FEC v. Central Long Island Tax Reform Immediately Committee ("CLITRIM"),⁽⁹⁰⁾ adhered to the express advocacy test set forth in Buckley and, therefore, ruled against the FEC.

The first provision at issue required "any 'person . . . who makes contributions or independent expenditures expressly advocating the election or defeat of a clearly identified candidate'" in excess of one hundred dollars to file a report with the FEC.⁽⁹¹⁾ The second provision required "any person who 'makes an expenditure for the purpose of financing communications expressly advocating the election or defeat of a clearly identified candidate' . . . through media, advertising or mailing to state whether the communication is authorized by a candidate . . . ."⁽⁹²⁾

The CLITRIM court noted "the broad protection to be given political expression,"⁽⁹³⁾ as indicated by the Supreme Court in Buckley, and observed that

[t]he language quoted from the statutes was incorporated by Congress in the 1976 FECA amendments to conform the statute to the Supreme Court's holding in Buckley v. Valeo that speech not by a candidate or political committee could be regulated only to the extent that the communications "expressly advocate the election or defeat of a clearly identified candidate."⁽⁹⁴⁾

The court further observed that limiting the statutes to reach only express advocacy "is consistent with the firmly established principle that the right to speak out at election time is one of the most zealously protected under the Constitution."⁽⁹⁵⁾

The CLITRIM court held that

[t]he history of §§ 434(e) and 441d thus clearly establish that, contrary to the position of the FEC, the words "expressly advocating" mean[] exactly what they say. The FEC, to support its position, argues that "[t]he TRIM bulletins at issue here were not disseminated for such a limited purpose" as merely informing the public about the voting record of a government official. Rather the purpose was to unseat "big spenders." Thus, the FEC would apparently have us read "expressly advocating the election or defeat" to mean for the purpose, express or implied, of encouraging election or defeat. This would, by statutory interpretation, nullify the change in the statute ordered in Buckley v. Valeo and adopted by Congress in the 1976 amendments. The position is totally merit-less.⁽⁹⁶⁾

From the CLITRIM decision, it seemed clear that the express advocacy test was firmly ensconced as black-letter constitutional law. Nevertheless, the FEC continued its campaign to eliminate freedom of speech on issues at election time.

C. FEC v. NCPAC (1985)

In 1985, the Supreme Court considered FEC v. National Conservative Political Action Committee ("NCPAC").⁽⁹⁷⁾ This case involved a declaratory judgment action seeking to have a provision of the Presidential Election Campaign Fund Act⁽⁹⁸⁾ declared constitutional. It was originally initiated by the Democrat National Committee in hopes that it could prevent NCPAC and another conservative PAC (Fund For A Conservative Majority) from implementing their expressed intent to spend large sums of money to aid the 1984 reelection of President Ronald Reagan.⁽⁹⁹⁾

The disputed provision made it a criminal offense for an independent political committee "to expend more than $1,000 to further [a] . . . candidate's election," if the "Presidential candidate elects public financing."⁽¹⁰⁰⁾ The Supreme Court declared the $1,000 cap on independent expenditures unconstitutional because such independent expenditures enjoyed full First Amendment protection and there was no compelling state interest to override this right of free expression.⁽¹⁰¹⁾

In NCPAC, the Supreme Court stated the only interest sufficiently compelling to justify regulation of political speech in the form of contributions and expenditures:

We held in Buckley and reaffirmed in Citizens Against Rent Control that preventing corruption or the appearance of corruption are the only legitimate and compelling government interests thus far identified for restricting campaign finances. . . .

Corruption is a subversion of the political process. Elected officials are influenced to act contrary to their obligations of office by the prospect of financial gain to themselves or infusions of money into their campaigns. The hallmark of corruption is the financial quid pro quo: dollars for political favors.⁽¹⁰²⁾

The Court went on to state that:

The fact that candidates and elected officials may alter or reaffirm their own positions on issues in response to political messages paid for by PACs can hardly be called corruption, for one of the essential features of democracy is the presentation to the electorate of varying points of view.⁽¹⁰³⁾

The implication of these statements should have been clear, even to the FEC. For years the FEC has maintained the position that it ought to be able to regulate issue advocacy in the form of voter guides which tell where candidates stand on issues, on the theory that issue-advocacy groups were actually engaging in express advocacy or making a contribution to the candidates who favored their issues.⁽¹⁰⁴⁾ Voter guides might have the effect, the argument would go, of persuading candidates to support the organization's views on an issue.

However, if the only compelling interest for restricting speech at election time is corruption (or its appearance), and if persuading politicians to a different viewpoint by advocacy of issues is not corruption, then there can be no compelling governmental interest which would permit restriction of issue advocacy. If this is true of PACs, then a fortiori there can be no corruption or appearance of corruption resulting from issue advocacy by any issue advocacy groups. Undeterred, the FEC rejected the clear teaching of the Supreme Court in Buckley, CLITRIM, and NCPAC and continued its efforts to attempt to regulate issue advocacy.

D. FEC v. MCFL (1986)

In 1986, the Supreme Court again considered the constitutional protection afforded issue advocacy in the case of FEC v. Massachusetts Citizens for Life ("MCFL"),⁽¹⁰⁵⁾ The FEC had brought an enforcement action against MCFL, alleging that the organization had violated 2 U.S.C. § 441b, a ban on corporate expenditures "in connection with any election," by publishing a voter guide.

The voter guide, published by MCFL, was contained in a "Special Edition" newsletter which encouraged readers to "Vote Pro-Life" and identified the pro-life candidates.⁽¹⁰⁶⁾ A complaint was filed with the FEC alleging that MCFL had violated the ban on corporate expenditures found at 2 U.S.C. § 441b.⁽¹⁰⁷⁾ The Supreme Court decided that this "Special Edition" did not qualify for the newspaper exemption found in the FECA,⁽¹⁰⁸⁾ and that MCFL had engaged in express advocacy, but that the First Amendment required a special exemption from § 441b's prohibitions for MCFL-type corporations.⁽¹⁰⁹⁾

Under the FECA, "expenditure" means to provide anything of value "for the purpose of influencing any election for Federal office."⁽¹¹⁰⁾ This "influencing" language was the same terminology construed by the Supreme Court in Buckley to mean only express advocacy, in order to save a different provision of the FECA from unconstitutionality for sweeping issue advocacy within its ambit.

In MCFL, the Supreme Court considered the contention of MCFL "that the definition of an expenditure under § 441b necessarily incorporates the requirement that a communication 'expressly advocate' the election of candidates," relying on Buckley.⁽¹¹¹⁾ The FEC argued that the express advocacy test should not be extended to this provision barring corporate expenditures.

The MCFL Court held, however, that the express advocacy rationale must be extended to restrictions on expenditures by corporations.⁽¹¹²⁾ The Court said that, if a ceiling on independent expenditures, at issue in Buckley, had to be construed to apply only to express advocacy of the election or defeat of a clearly identified candidate (in order to eliminate the constitutional deficiencies described in Buckley), "this rationale requires a similar construction of the more intrusive provision [at issue in MCFL] that directly regulates independent spending."⁽¹¹³⁾

The Supreme Court rejected the FEC's argument that extending the express advocacy protection to corporations and labor unions "would open the door to massive undisclosed political spending."⁽¹¹⁴⁾ Nevertheless, the FEC continued to treat constitutionally-protected issue advocacy as a loophole which ought to be closed because it limited the FEC's ability to regulate anything that might possibly influence an election.⁽¹¹⁵⁾

E. FEC v. Furgatch (1987)

In 1987, the United States Court of Appeals for the Ninth Circuit decided the case of FEC v. Furgatch.⁽¹¹⁶⁾ This case is an unfortunate aberration in the defense of the bright-line express advocacy test, for it applied a broadened express advocacy test to the FECA's requirement that independent expenditures by an individual over $250 must be reported to the FEC⁽¹¹⁷⁾ and must contain a disclaimer.⁽¹¹⁸⁾ Buckley held that only "explicit words" "expressly advocating the election or defeat of a clearly identified candidate," constitute express advocacy.⁽¹¹⁹⁾ However, the Ninth Circuit held that a court could look beyond the explicit words of the communication to consider the context in which the words were communicated.⁽¹²⁰⁾

Furgatch considered newspaper advertisements which made a number of allegations about President Jimmy Carter followed by the phrases, "And we let him," "And we let him do it again," and "We are letting him do it," and the following paragraphs:

He continues to cultivate the fears, not the hopes, of the voting public by suggesting the choice is between "peace and war," "black or white," "north or south," and "Jew vs. Christian." His meanness of spirit is divisive and reckless McCarthyism at its worst. And from a man who once asked, "Why Not the Best?"

It is an attempt to hide his own record, or lack of it. If he succeeds the country will be burdened with four more years of incoherences, ineptness and illusion, as he leaves a legacy of low-level campaigning.

DON'T LET HIM DO IT.⁽¹²¹⁾

Noticeably absent from this communication are any words of express advocacy. Nowhere does the communication contain explicit words such as "vote for" or "defeat" appear. The Ninth Circuit, however, decided it didn't matter:

We conclude that speech need not include any of the words listed in Buckley to be express advocacy under the Act, but it must, when read as a whole, and with limited reference to external events, be susceptible of no other reasonable interpretation but as an exhortation to vote for or against a specific candidates.⁽¹²²⁾

Applying its newly-minted standard, the Ninth Circuit determined that Mr. Furgatch had engaged in express advocacy.

Three key facts should be noted about Furgatch. First, although the MCFL decision was issued on December 15, 1986, and the Furgatch decision was issued just days later on January 9, 1987, Furgatch made no mention of the newly announced MCFL decision, which should have guided it to a different result. Second, as discussed below, Furgatch has not been followed by other courts and has, in fact, been expressly repudiated by some.⁽¹²³⁾ Third, the broader test was employed in a case which involved only a failure to report an expenditure to the FEC.⁽¹²⁴⁾ Thus, the Furgatch test was decided in, and only logically applies to, the very narrow context of disclosure provisions. The Furgatch court noted the Supreme "Court's directive that, where First Amendment concerns are present, we must construe the words of the regulatory statute precisely and narrowly, only as far as is necessary to further the purposes of the Act."⁽¹²⁵⁾ The court then devoted a full page to discussing the importance of disclosure, the purposes served thereby, and the minimal burden imposed by disclosure.⁽¹²⁶⁾ Because it concluded that disclosure "serves an important Congressional policy and a very strong First Amendment interest," and, because the burden imposed would be "minimally restrictive," the Ninth Circuit adopted a totality of the circumstances test.⁽¹²⁷⁾ Therefore, if Furgatch is good law at all, which is doubtful, it should be limited to its context.

Nevertheless, energized by its success in finding a court to bite on a broadening of the express advocacy rule, the FEC set about trying to push the Furgatch approach in a wide range of contexts.

F. FEC v. NOW (1989)

In the case of FEC v. National Organization for Women ("NOW"),⁽¹²⁸⁾ the FEC again brought an enforcement action employing its broadly defined express advocacy test. The FEC charged that membership solicitation letters discussing issues of pay inequality, abortion, and the Equal Rights Amendment (ERA) constituted express advocacy. The letters at issue expressly criticized the Reagan Administration and the Republican Party, including the following phrase which the FEC found damning: "Politicians listen when they think an organized group of citizens can help elect or defeat them." Another letter criticized by name Senators Helms, Hatch, and Thurmond and spoke of "a renewed effort now being launched by New Right reactionary groups in preparation for the 1984 elections," which phrase the FEC condemned as electioneering. A third letter made the case for the ERA and condemned President Reagan and named several senators "up for reelection in 1984," who "must be made to understand that failure to pass the ERA will result in powerful campaigns to defeat them."⁽¹²⁹⁾ As a result of these statements, the FEC claimed that NOW had violated the corporate prohibition on candidate-related speech.

The NOW court referred to both the Buckley test⁽¹³⁰⁾ and the Furgatch "broad test."⁽¹³¹⁾ However, the NOW court held that there simply was no express advocacy under any test,⁽¹³²⁾ tying its holding explicitly to the Buckley principles:

At issue in this case is political speech, which lies at the core of the First Amendment. Discussion of public issues and the qualifications of candidates for public office is integral to a system of government in which the people elect their leaders. In order to make informed choices about its leaders, the citizenry needs to hear the free exchange of ideas. The First Amendment affords the broadest protection to such political expression.⁽¹³³⁾

G. Faucher v. FEC (1991)

It should have been clear to the FEC that the Supreme Court meant what it said in Buckley about issue advocacy being sacrosanct when the Court reaffirmed the test in a new context in MCFL. However, the FEC continued to press ahead with its efforts to regulate issue advocacy. Included in its efforts was the promulgation of new rules regulating voter guides.

In Faucher v. FEC,⁽¹³⁴⁾ the First Circuit struck down the Federal Election Commission's regulations of voter guides as being beyond the authority of the FEC under 2 U.S.C. § 441b as interpreted by the Supreme Court in MCFL. The regulation at issue, 11 C.F.R. § 114.4(b)(5), required that a voter guide be "nonpartisan," which the FEC defined by reference to six factors. These factors included whether "the wording of the questions presented . . . suggest or favor any position on the issues covered" and whether "the voter guide expresses (any) editorial opinion concerning the issues presented."⁽¹³⁵⁾

The United States District Court for the District of Maine struck the regulations down for trespassing upon constitutionally protected issue advocacy and for reaching beyond the authority of the Federal Election Commission under § 441b, which bars corporate political speech.⁽¹³⁶⁾ The First Circuit affirmed the decision of the District Court,⁽¹³⁷⁾ declaring that "[t]he first amendment lies at the heart of our most cherished and protected freedoms. Among those freedoms is the right to engage in issue-oriented political speech."⁽¹³⁸⁾

The First Circuit expressly applied the "bright-line" test of Buckley in accordance with the speech-protective rationale of that case:

In our view, trying to discern when issue advocacy in a voter guide crosses the threshold and becomes express advocacy invites just the sort of constitutional questions the Court sought to avoid by adopting the bright-line express advocacy test in Buckley.⁽¹³⁹⁾

H. FEC v. Survival Education Fund (1994)

In FEC v. Survival Education Fund,⁽¹⁴⁰⁾ the U.S. District Court for the Southern District of New York rejected an FEC attempt to broaden the express advocacy test of Buckley and MCFL. The case involved letters sent four months before an election by Dr. Benjamin Spock which were hostile to President Reagan and condemned his policies. The FEC argued that the letters constituted express advocacy and, therefore, were prohibited political communications by a corporation. The court, however, pointed to the "express words" formula in Buckley and held that:

It is clear from the cases that expressions of hostility to the positions of an official, implying that that official should not be reelected -- even when the implication is quite clear -- do not constitute the express advocacy which runs afoul of the statute. Obviously, the courts are not giving a broad reading to this statute.⁽¹⁴¹⁾

I. FEC v. Christian Action Network (1995)

In FEC v. Christian Action Network,⁽¹⁴²⁾ a Virginia district court considered advertisements, run during the 1992 election campaign, which the FEC considered to be express advocacy of the defeat of presidential candidate Clinton. Because the ads did not contain "explicit words or imagery advocating electoral action," the court held that they constituted protected issue advocacy and not electioneering.⁽¹⁴³⁾ The Court followed the "strict interpretation" of the express advocacy test:

In the nineteen years since the Supreme Court's ruling in Buckley v. Valeo, the parameters of the "express advocacy" standard have been addressed by several federal courts in a variety of circumstances. . . . Acknowledging that political expression, including the discussion of public issues and debate on the qualifications of candidates enjoys extensive First Amendment protection, the vast majority of these courts have adopted a strict interpretation of the "express advocacy" standard.⁽¹⁴⁴⁾

On August 2, 1996, the United States Court of Appeals for the Fourth Circuit issued a brief per curiam opinion affirming the district court.⁽¹⁴⁵⁾

J. FEC v. GOPAC (1996)

FEC v. GOPAC,⁽¹⁴⁶⁾ the FEC's much ballyhooed enforcement action against GOPAC (which Newt Gingrich served as chairman), amply demonstrates the FEC's refusal to recognize the constitutional protection afforded issue advocacy by the bright-line express advocacy test and the major purpose test. Despite the fact that GOPAC did not have as its major purpose the election or nomination of candidates for federal office, the FEC pushed for a test that would make an organization a political committee if it "engage[s] in 'partisan politics' or 'electoral activity.'"⁽¹⁴⁷⁾ The court rejected this approach and granted GOPAC summary judgment because the test proposed was not that of the Supreme Court in Buckley.⁽¹⁴⁸⁾

K. New FEC Regulations (October 5, 1995)

After the Faucher decision in 1991, which struck down FEC regulations prohibiting voter guides from expressing a position on an issue,⁽¹⁴⁹⁾ the FEC needed to revise or delete its regulation dealing with voter guides. All that was needed to bring the regulation into compliance with the First Amendment was a small excision in the definition of "nonpartisan," so that the factors for what constituted "nonpartisan" would not include whether a question is worded in a way that supports the position of a candidate on the issue covered.⁽¹⁵⁰⁾

The FEC took from 1991 to late 1995 to promulgate its new rules.⁽¹⁵¹⁾ When the new rules were published, there was no mere excision or minimal editing to fix the First Amendment problem with issue advocacy. Rather, the new FEC regulations were an expansive effort to bypass the First Amendment jurisprudence of the federal courts. As one commentator has described the new rules, "(w)hile the FEC started with the Buckley doctrine, it cleverly ended with the Furgatch anomaly."⁽¹⁵²⁾ The rules were a transparent attempt to incorporate the Furgatch totality-of-the-circumstances test into the FEC rules in the hope that the FEC could sell the federal courts on the notion that deference should be granted to the agency's interpretation of federal law in this area.⁽¹⁵³⁾ If such deference were forthcoming, the FEC would have accomplished by rulemaking what it had failed in years of litigating enforcement actions to achieve, i.e., imposing the Furgatch test in place of the Supreme Court's bright-line express advocacy test. As shall be seen, the deference was not forthcoming.

The FEC issued its copious new post-Faucher rules in two sets in late 1995. The first set was to take effect on October 5, 1995. The revision of the FEC voter guide regulations necessitated by Faucher four years before occurred in a later set of rules to take effect March 13, 1996.

The October 5 set of rules contained a new definition of express advocacy, tracking the anomalous language of Furgatch:

Expressly advocating means any communication that --

(a) uses phrases such as "vote for the President," "re-elect your Congressman," "support the Democratic nominee," "cast your ballot for the Republican challenger for U.S. Senate in Georgia," "Smith for Congress," "Bill McKay in '94," "vote Pro-Life" or "vote Pro-Choice" accompanied by a listing of clearly identified candidates described as Pro-Life or Pro-Choice, "vote against Old Hickory," "defeat" accompanied by a picture of one or more candidate(s), or communications of campaign slogan(s) which in context can have no other reasonable meaning than to encourage the election or defeat of one or more clearly identified candidate(s), such as posters, bumper stickers, advertisements, etc. which say "Nixon's the One," "Carter '76," "Reagan/Bush" or "Mondale!"; or

(b) when taken as a whole and with limited reference to external events, such as the proximity to the election, could only be interpreted by a reasonable person as containing advocacy of the election or defeat of one or more clearly identified candidate(s) because --

(1) The electoral portion of the communication is unmistakable, unambiguous, and suggestive of only one meaning; and

(2) Reasonable minds could not differ as to whether it encourages actions to elect or defeat one or more clearly identified candidate(s) or encourages some other kind of action.⁽¹⁵⁴⁾

While the first part of subsection (a) generally followed Buckley, specifying explicit and express words of advocacy in the communication itself, the second part of subsection (a) added a contextual factor, following Furgatch. Subsection (b) was wholly patterned after Furgatch. Of course, such a definition of express advocacy would leave the speaker uncertain whether the FEC would find a communication to constitute express advocacy, consequently chilling protected speech. Such a definition would abandon the bright-line test Buckley said was essential to safeguard protected issue advocacy in this arena, and it would afford the FEC great latitude in its enforcement.⁽¹⁵⁵⁾

L. Maine Right to Life Committee v. FEC (1996)

The FEC's new express advocacy definition took effect on October 5, 1995. On November 22, 1995, Maine Right to Life (also a plaintiff in the Faucher case) filed a complaint and motions seeking declaratory and injunctive relief.⁽¹⁵⁶⁾ On February 13, 1996, the United States District Court for the District of Maine declared the latest regulations of the FEC seeking to define express advocacy⁽¹⁵⁷⁾ to be "invalid as not authorized by the Federal Election Campaign Act of 1971, 2 U.S.C. § 431 et seq., as interpreted by the United States Supreme Court in Massachusetts Citizens for Life, 479 U.S. 238, and by the United States Court of Appeals for the First Circuit in Faucher, 928 F.2d 468, because it extends beyond issue advocacy."⁽¹⁵⁸⁾ The district court struck down a definition of "[e]xpressly advocating,"⁽¹⁵⁹⁾ which "comes directly from" Furgatch.⁽¹⁶⁰⁾ The district court relied on the fact that, contrary to the Ninth Circuit's decision in Furgatch, the Supreme Court in Buckley and MCFL created a bright-line protection of issue advocacy, "even at the risk that it is used to elect or defeat a candidate."⁽¹⁶¹⁾

On October 18, 1996, the First Circuit issued a brief per curiam opinion affirming "for substantially the reasons set forth in the district court opinion."⁽¹⁶²⁾

The FEC, however, has obstinately taken the position that these regulations are still in effect in all other jurisdictions than the First Circuit, even though the action was brought under the Administrative Procedure Act and the First Circuit held that the FEC was without authority to promulgate these regulations and, thus, they are void.⁽¹⁶³⁾

M. New FEC Regulations (March 13, 1996)

After releasing the regulations which were struck down in Maine Right to Life Committee, the FEC next released revised rules setting forth the FEC's requirements for "voter guides" and "voting records."⁽¹⁶⁴⁾ They became effective on March 13, 1996.⁽¹⁶⁵⁾ Under the new voter guide regulation,⁽¹⁶⁶⁾ the amount of contact that a corporation had with a candidate regarding the voter guide severely affected the content of the voter guide.

First, if the corporation had any oral communications with a candidate regarding the voter guide, the publication of the voter guide was absolutely prohibited. A prohibited oral communication would even include contacting the candidate to clarify a candidate's position on an issue.⁽¹⁶⁷⁾ As a result of the oral communication, the publication of the voter guide was considered by the FEC to be an in-kind contribution to the candidate and, thus, a prohibited corporate contribution under § 441b.

However, if the corporation had no oral or written contact with the candidate,⁽¹⁶⁸⁾ the corporation retained its right to state a position on the issues in the voter guide (a First Amendment right recognized in the Faucher case). Of course, it is very difficult to prepare a voter guide without sending a written questionnaire to the candidates asking them to state their positions on the issues, so written questionnaires are the common practice.⁽¹⁶⁹⁾ Because the use of a questionnaire is so important to an effective voter guide, most organizations would feel compelled to at least contact the candidate in writing, resulting in severely limiting its issue advocacy.

If the organization had written contact with the candidate,⁽¹⁷⁰⁾ the content of the voter guide was severely restricted.⁽¹⁷¹⁾ First, "all of the candidates for a particular seat or office shall be provided an equal opportunity to respond . . . ."⁽¹⁷²⁾ Second, "no candidate may receive greater prominence in the voter guide than other participating candidates, or substantially more space for responses."⁽¹⁷³⁾ Voter guides shall not contain an "electioneering message."⁽¹⁷⁴⁾ Finally, the regulation mandates that a "voter guide and its accompanying materials shall not score or rate the candidates' responses in such a way as to convey an electioneering message."⁽¹⁷⁵⁾ Thus, to do a voter guide after written contact with a candidate, the corporation had to surrender its constitutionally-protected right to engage in issue advocacy in voter guides.

Having been repeatedly frustrated by the courts in its attempt to regulate voter guides as expenditures because of the express advocacy test, the FEC based its new voter guide regulations on a new "contribution" theory. This theory attempted to avoid the express advocacy test by labeling⁽¹⁷⁶⁾ expenditures for a voter guide as "in-kind contributions" to the candidate, which are also prohibited by corporations under § 441b. The FEC's hope was that, if an expenditure for a communication was labeled as an "in-kind contribution," then the courts would not require that the communication contain express advocacy but merely influence an election. Furthermore, this theory took a very expansive view of when an expenditure was requested by or coordinated with a candidate, which is an essential element to make an expenditure into an "in-kind contribution." In both respects, however, the FEC violated existing court precedents.

The FECA made it unlawful for any corporation or union "to make a contribution or expenditure in connection with any election"⁽¹⁷⁷⁾ The FECA defines "contribution or expenditure" to include "any direct or indirect payment, . . . or gift of money, or services, or anything of value . . . to any candidate . . . in connection with any election."⁽¹⁷⁸⁾ Of course, it was this language that the Court in MCFL held must contain "express advocacy," if an expenditure were to be considered an independent expenditure. However, the FEC is shifting from the word "expenditure" to the word "contribution," which encompasses both direct and indirect contributions. A direct contribution is made by actually giving money to the candidate. An in-kind contribution occurs when something of value (like a mailing list) is given to the candidate or when a person pays, at the request of the candidate or an agent of his campaign, for an expense that the campaign itself would otherwise pay (like a billboard) in lieu of a direct contribution to the candidate. However, Congress did not intend for "in-kind contributions" to be a broad category. In adopting the concept of an "in-kind contribution," the Senate Report described an "in-kind contribution" as "the use of an individual's resources to aid a candidate in a manner indistinguishable in substance from the direct payment of cash to a candidate."⁽¹⁷⁹⁾

Thus, an "in-kind contribution" has two elements. The first element is the nature of the expenditure. According to the courts, an expenditure for a communication must contain "express advocacy" to be an independent expenditure. The logic of the courts' analysis suggests that this extends to in-kind contributions. According to the FEC, however, an in-kind contribution may exist where there is only issue advocacy. The second element is whether it is made with the consent or in coordination with the candidate. Here, the FEC also has a very expansive view of coordination.

Ironically, the FEC had previously adopted the correct position that express advocacy is necessary in order to transform a protected expenditure into a prohibited contribution. In Orloski v. Federal Election Commission,⁽¹⁸⁰⁾ a political opponent of an incumbent Congressman challenged the FEC's failure to find "reason to believe" that the Act had been violated. The case concerned a senior citizens' picnic at which the Congressman spoke and to which several corporations had provided food and services such as transportation.

At issue was the FEC's interpretation of what constituted a corporate contribution under § 441b(a). The FEC had previously "interpreted the Act to mean that corporate funding of events sponsored by congressmen who are candidates for reelection is not prohibited by § 441b(a) if those events are non-political."⁽¹⁸¹⁾ In order to determine whether an event is non-political, the FEC adopted the following test:

An event is non-political if (1) there is an absence of any communication expressly advocating the nomination or election of the congressman appearing or the defeat of any other candidate, and (2) there is no solicitation, making, or acceptance of a campaign contribution for the congressman in connection with the event.⁽¹⁸²⁾

Because the FEC found that there was no express advocacy at the picnic in question, it found that the event was "non-political" and, thus, that it did not entail a violation of the corporate contribution prohibition of § 441b. As the Orloski court explained:

the mere fact that corporate donations were made with the consent of the candidate does not mean that a "contribution" within the meaning of the Act has been made. Under the Act this type of "donation" is only a "contribution" if it first qualifies as an "expenditure" and, under the FEC's interpretation, such a donation is not an expenditure unless someone at the funded event expressly advocates the reelection of the incumbent or the defeat of an opponent. . . .⁽¹⁸³⁾

In its new regulations, however, the FEC now sought to repudiate its former, reasonable position that corporate expenditures are not political contributions which can be prohibited under § 441b unless they involve express advocacy. The new regulations governed the "electioneering message" of voter guides on the purported authority derived from converting expenditures for voter guides into contributions.

The new regulations also adopted an expansive view of what constitutes "coordination." The FEC apparently has two theories: (1) the contact coordination theory, and (2) the presumed coordination theory.⁽¹⁸⁴⁾ The contact coordination theory was employed in the new voter guide regulations. As the structure of the voter guide regulation made clear, the FEC viewed any contact between the corporation publishing the voter guide and a candidate to constitute coordination of the voter guide and the greater the contact the greater the taint. Thus, oral communications resulted in an absolute prohibition on publishing a voter guide; written communication forfeited the corporation's right to engage in issue advocacy in their voter guide.

N. Clifton v. FEC (1996)

In response to these newly-issued FEC regulations restricting voter guides, Maine Right to Life Committee⁽¹⁸⁵⁾ again filed suit under the Administrative Procedure Act to have the regulations declared beyond the authority of the FEC under 2 U.S.C. § 441b, as construed by the Supreme Court in MCFL.⁽¹⁸⁶⁾ The case, Clifton v. FEC,⁽¹⁸⁷⁾ challenged the regulations,⁽¹⁸⁸⁾ which "restrict(ed) contact or coordination between a corporation and a candidate when the corporation publishes candidate voting records or voter guides."⁽¹⁸⁹⁾

On May 20, 1996, the district court granted Plaintiffs' request for declaration that the regulations were void as beyond the statutory authority of the FEC. The district court found that the voter guide regulation restricted not only "express advocacy" but also "issue advocacy." As the Court stated,

[t]he new regulations go far beyond the language of section 441b as interpreted by MCFL. Under the provisions for voter guides, the FEC test is not whether a corporation is engaging in issue advocacy "on behalf of a candidate" (a test which MCFL would support), but whether it has had any "contact" with the candidate. The regulations permit unrestricted issue advocacy only if there is no contact, oral or written in connection with a voter guide. Any oral contact concerning the content of a voter guide - questions to clarify a candidate's position, for example - results in outright prohibition of corporate issue advocacy through use of the guide. Even written contact with candidates results in severe constraints on issue advocacy otherwise entitled to broad First Amendment protection under the teachings of Buckley and MCFL.⁽¹⁹⁰⁾

Also under the ostensible statutory authority of 2 U.S.C. § 441b, the FEC promulgated 11 C.F.R. § 114.4(c)(4) which purported to govern corporate preparation and distribution of the "voting records" of Members of Congress to the general public. That regulation provided that "the decision on content and the distribution of voting records shall not be coordinated with any candidate, group of candidates or political party."

The district court agreed with Plaintiffs' contention that the "voting record" regulation also impermissibly restricted issue advocacy. Noting that the regulation provided that the decision on "content" could not be "coordinated" with a candidate, the Court asked:

Does that prohibit discussion with the candidate of what a particular vote meant and a summary of the outcome in the published voting record? If there are three apparently inconsistent votes and the MRLC asks the candidate for a explanation in the publication, is that prohibited coordination of a decision on content? These are exactly the types of issue advocacy undertaken by the MRLC and, as I understand the FEC's counsel at oral argument, such activities are indeed prohibited by the new regulations.⁽¹⁹¹⁾

Because the district court found that both regulations restricted issue advocacy, not just express advocacy, it held that they were invalid under Faucher, MCFL and Buckley:

It is equally clear after Buckley and MCFL that corporate expenditures in connection with a federal election or primary cannot constitutionally be limited except when they are devoted to express advocacy of the election or defeat of a particular candidate or candidates.⁽¹⁹²⁾

The FEC has appealed the decision to the First Circuit.⁽¹⁹³⁾

O. Colorado Republican Federal Campaign Committee v. FEC (1996)

While there has been a great deal of ongoing litigation in state and federal courts over election laws, the 1996 case of Colorado Republican Federal Campaign Committee v. FEC⁽¹⁹⁴⁾ is significant as the most recent word from the Supreme Court on election law issues. The case revealed steadfast support on the Court for protecting First Amendment rights in the election law context.

Significantly, the case completely undercut the FEC's presumed coordination theory. Colorado Republican did not involve § 441b (barring corporate campaign expenditures and contributions), but its rejection of the presumed coordination theory is a clearly transferable concept relevant to the FEC's efforts to regulate corporate political speech under § 441b.⁽¹⁹⁵⁾ Moreover, the opinions in the case revealed strong support for the express advocacy test in this context as well.

The case involved FEC allegations that the Colorado Republican Party had exceeded FECA limits on what a party could spend to promote a candidate in a U.S. senatorial race.⁽¹⁹⁶⁾ The case arose as a result of advertisements purchased in April 1986 by the Federal Campaign Committee of the Colorado Republican Party. The radio advertisements attacked Democrat Timothy Wirth, who was then a U.S. Congressman and the most likely Democrat candidate for the open Senate seat.⁽¹⁹⁷⁾ He had announced in January 1986 that he would be would run for the Senate.⁽¹⁹⁸⁾ At the time of the advertisements, the Republican Party had not chosen its nominee from among the three persons competing for the nomination.⁽¹⁹⁹⁾

The record revealed how the expenditure for the advertisements was made. The GOP state chairman arranged for the script on his own initiative.⁽²⁰⁰⁾ He approved it without input from others.⁽²⁰¹⁾ In sum, he did not actually coordinate the expenditure with any candidate. It was what normally would be considered an independent expenditure.

However, the FEC argued that, because of the relationship between a party and its candidates, "coordination with candidates is presumed,"⁽²⁰²⁾ even though there was factually none in this case.⁽²⁰³⁾ The lead opinion of Justice Breyer, joined by Justices O'Connor and Souter, rejected this presumed coordination approach, declaring that, because "the record shows no actual coordination as a matter of fact,"⁽²⁰⁴⁾ "we therefore treat the expenditure, for constitutional purposes, as an 'independent' expenditure, not an indirect campaign contribution."⁽²⁰⁵⁾ This rejection of presumed coordination in the context of expenditures by a political party to attack an opposing candidate for office makes it highly unlikely that a presumption of coordination will be permitted in situations where there is less basis for a presumption. Coordination will have to be actual before an expenditure will be considered a contribution.⁽²⁰⁶⁾

Because Justices Breyer, O'Connor, and Souter rejected the notion of presumed coordination, they also rejected the notion that the expenditures at issue were actually contributions. Therefore, they decided it would be prudential to not reach the issue of whether a cap on coordinated expenditures by a political party is constitutional, as urged by the Colorado Republican Party. However, an opinion by Justice Kennedy, joined by Chief Justice Rehnquist and Justice Scalia, opined that the party contribution limit to candidates was unconstitutional on its face, but concurred in a judgment vacating the court of appeals decision and remanding the case,⁽²⁰⁷⁾ as did Justice Thomas.⁽²⁰⁸⁾

From the Colorado Republican case, it seems clear that any theory that presumed coordination can convert independent expenditures into contributions must fail. Only actual coordination will achieve such a result. Of course, this is also true where a voter guide merely contains issue advocacy.

In summary, as this section has shown, there has been a long and relentless effort by the FEC to close what it has perceived to be a loophole with respect to issue advocacy -- the First Amendment. The Supreme Court's express advocacy test and major purpose test remain as the twin bulwarks against this encroachment of liberty.

IV. Other Protection for Free Political Expression

In addition to its zealous safeguarding of issue advocacy in the election context, the United States Supreme Court has provided safeguards for other forms of speech related to political matters. The seven key protections have to do with (1) MCFL-type organizations, (2) members, (3) anonymous literature, (4) caps on contributions and expenditures, (5) political committees, (6) the burden of proof, and (7) prior restraint of speech. These topics will be dealt with in turn.

A. MCFL-Type Organizations

In FEC v. Massachusetts Citizens for Life,⁽²⁰⁹⁾ the Supreme Court did two important things: (1) it reasserted the bright-line express advocacy test for protecting issue advocacy, and (2) it also created an exemption to the ban on corporate express advocacy found in 2 U.S.C. § 441b for nonprofit, nonstock, ideological corporations. Other cases have refined this test for MCFL-type organizations. As would be expected, the FEC has attempted to overrule the case law with new regulations, which have promptly been declared unconstitutional. These developments will be considered in turn.

Section 441b of the Federal Election Campaign Act of 1971 prohibits corporations from making "expenditures" in connection with a federal election.⁽²¹⁰⁾ The United States Supreme Court, however, has limited the scope of § 441b's corporate expenditure prohibition. In MCFL, the Supreme Court held that the prohibition on corporate expenditures could not constitutionally be applied to certain nonprofit ideological membership corporations because they did not pose a threat of corruption to the political system.⁽²¹¹⁾

Specifically, the "MCFL exemption" from the prohibition on corporate political speech applies to those nonprofit corporations which were established to promote political ideas, have no shareholders or members with economic disincentives to disassociate with the corporation if they disagree with its position on an issue, were not established by a business corporation or labor union, and do not act as "conduits" for funneling money from such organizations into the political marketplace.⁽²¹²⁾

In Day v. Holahan,⁽²¹³⁾ the Eighth Circuit held that the MCFL exemption applied to Minnesota Citizens Concerned for Life (MCCL), despite the fact that the organization received some corporate contributions. The court held that MCCL was the type of corporation which did not pose a threat of corruption to the political marketplace and, therefore, under the Constitution, was entitled to the MCFL exemption. As a result, the Eight Circuit held that a Minnesota state statute which narrowed the MCFL exemption to such an extent that it did not apply to MCCL was unconstitutional. This case, therefore, established a de minimis test with respect to MCFL-type organizations which receive some minimal corporate contributions.

Subsequent to Day, the FEC promulgated regulations at 11 C.F.R. § 114.10, purporting to define the circumstances under which the MCFL exemption is available to nonprofit ideological corporations under the FECA. In it's "Explanation and Justification" for the regulation, the FEC explicitly admitted that its regulation was in direct conflict with Day v. Holahan:

In that case, the Eighth Circuit decided that a Minnesota statute that closely tracked the Supreme Court's three essential features was unconstitutional as applied to a Minnesota nonprofit corporation. The Commission believes the Eighth Circuit's decision, which is controlling law in only one circuit, is contrary to the plain language used by the Supreme Court in MCFL, and therefore is of limited authority.⁽²¹⁴⁾

Thus, the FEC promulgated 11 C.F.R. § 114.10 despite its recognition that the regulations would directly violate the Eighth Circuit's holding in Day.

The FEC's regulations disallowed an exemption unless, inter alia, each of the following criteria were met: (1) the corporation's "only express purpose is the promotion of political ideas,"⁽²¹⁵⁾ (2) the corporation "cannot engage in business activities,"⁽²¹⁶⁾ (3) the corporation has "[n]o persons who are offered or who receive any benefit that is a disincentive for them to disassociate themselves with the corporation on the basis of a political issue,"⁽²¹⁷⁾ and (4) the corporation can "demonstrate through accounting records" that it "does not . . . accept donations or anything of value from business corporations" or that it "has a written policy against accepting donations from business corporations. . . ."⁽²¹⁸⁾

The FEC regulations further required⁽²¹⁹⁾ that a corporation which is not a political committee file a certification that it complied with the provisions of the regulations⁽²²⁰⁾ and, therefore, was eligible for an exemption from the prohibition on corporate expenditures. The regulations also required that "[w]henever a qualified nonprofit corporation solicits donations, the solicitation shall inform potential donors that their donations may be used for political purposes, such as supporting or opposing candidates."⁽²²¹⁾

The FEC's new regulations were clearly unconstitutional. They constituted another transparent effort by the FEC to expand its power and to limit political speech, as set out below.

1. MCFL's Test for an Exemption from § 441b Must Be Read in the Context of That Case's Protection of Free Speech.

The Supreme Court's decision in MCFL is essentially a speech-protective holding. The Court's fashioning of the "MCFL exemption" was rooted in the very principles of public policy and governance which animate the First Amendment, and which bear brief reiteration. The Court stated that "[f]reedom of speech plays a fundamental role in a democracy. . . . "⁽²²²⁾ As the Court had previously stated in Buckley:

Discussion of public issues and debate on the qualifications of candidates are integral to the operation of the system of government established by our Constitution. The First Amendment affords the broadest protection to such political expression in order to assure [the] unfettered interchange of ideas for the bringing about of political and social changes desired by the people.⁽²²³⁾

Freedom of speech, particularly political speech, is thus necessary to the functioning of a representative democracy. As such, it is also "the matrix, the indispensable condition of every other form of freedom."⁽²²⁴⁾ That is, because freedom of speech protects our very form of government, it necessarily plays a pivotal and essential role in protecting the other freedoms which are safeguarded by the Constitution. Finally, as the MCFL Court pointed out, "First Amendment speech is not necessarily limited to such an instrumental role."⁽²²⁵⁾ In other words, the First Amendment protects speech not only because it fosters free government, but because it fosters the development of the individual by protecting freedom of thought and conscience. Quoting Justice Brandeis, the Court stated:

Those who won our independence believed that the final end of the State was to make men free to develop their faculties; and that in its government the deliberative forces should prevail over the arbitrary. They valued liberty both as an end and as a means.⁽²²⁶⁾

Thus, free speech plays a vital role in protecting democracy itself, thereby making possible the other freedoms we enjoy and allowing people to develop their faculties to the fullest extent possible.

Given the centrality of free speech, it is not surprising that the Supreme Court has been extremely solicitous to protect it. The MCFL Court explained that, because free speech is fundamental, "we must be as vigilant against the modest diminution of speech as we are against its sweeping restriction."⁽²²⁷⁾ The Court's solicitude for free speech, in turn, caused it to fashion the fundamental principle which both mandates and explains the Court's holding in MCFL:

Where at all possible, government must curtail speech only to the degree necessary to meet the particular problem at hand, and must avoid infringing on speech that does not pose the danger that has prompted regulation.⁽²²⁸⁾

The quoted statement is, in reality, a reformulation of the "strict scrutiny" test (i.e., speech regulation must be narrowly tailored to serve a compelling state interest) which the Supreme Court applies in all cases where a regulation is challenged as a content-based restriction on speech.⁽²²⁹⁾ In essence, the Court was saying that, because as a Nation we value free speech so highly, our government is permitted to regulate it only where the government's interest is compelling and only to the extent absolutely necessary to achieve that interest.

The burden of demonstrating the existence of such an interest is squarely on the government. As the Supreme Court explained in First National Bank v. Bellotti,

where, as here, a prohibition is directed at speech itself, and the speech is intimately related to the process of governing, the State may prevail only upon showing a subordinating interest which is compelling and the burden is on the Government to show the existence of such an interest. Even then, the State must employ means closely drawn to avoid unnecessary abridgement. . . . ⁽²³⁰⁾

The MCFL Court pointed out the danger which looms whenever speech is sought to be regulated, i.e., the incremental loss of freedom which may begin when we first allow speech to be restricted in pursuit of other governmental goals. " Our pursuit of other governmental ends, however, may tempt us to accept in small increments a loss that would be unthinkable if inflicted all at once."⁽²³¹⁾ Thus, courts should, wherever possible, avoid the slippery slope of speech regulation altogether -- for although a particular restriction on speech may appear to be "modest," no restriction of speech is ever "minor."

The import of the above discussion is that the specific legal rules which the Supreme Court has developed (such as the MCFL exemption) have not been fashioned in a vacuum. Rather, they have a discernible origin in the public policies which inform the First Amendment. Those policies, in turn, are determinative of the rationales upon which the specific holdings are based.

However, in fashioning its "MCFL exemption" regulations, the FEC read MCFL as if those policies and rationales did not give meaning to its holdings. The FEC, therefore, justified its regulation almost completely by reference to the eight sentences toward the end of the MCFL opinion which contain a summary of the Court's specific holding,⁽²³²⁾ while largely ignoring the lengthy discussion of the rationale for the holding which comprises the previous eight pages. However, it is rudimentary that "black letter law" cannot be understood without reference to the judicial reasoning which undergirds it.

In sum, the FEC sought a "modest diminution" in speech based on "governmental ends" other than the protection of free speech. However, the FEC has been unable to meet its heavy burden of demonstrating that its asserted interests are compelling and that its speech restriction is narrowly tailored.

2. The Scope of Each of the MCFL Features Was Determined by the Rationales Which Underlaid it.

The Court in MCFL identified "three features essential" to its holding that MCFL could not be prohibited from independent political spending:

First, it was formed for the express purpose of promoting political ideas, and cannot engage in business activities.

Second, it has no shareholders or other persons affiliated so as to have a claim on its assets or earnings.

Third, MCFL was not established by a business corporation or labor union, and it is its policy not to accept contributions from such entities.⁽²³³⁾

As will be seen, the FEC took these "essential features" literally and provided in its regulations that, if a corporation did not have these identical features, it was denied the "MCFL exemption." As will be demonstrated, however, each of these features was explicitly tied to a rationale which both explained the feature and defined its scope.

a. The first MCFL feature assured that political resources reflected political support.

The first feature which mandated an exemption from § 441b was that the corporation in question was "formed for the express purpose of promoting political ideas, and cannot engage in business activities."⁽²³⁴⁾ As the Supreme Court stated, this feature "ensures that political resources reflect political support."⁽²³⁵⁾ The underlying reason for this concern was "to protect the integrity of the marketplace of political ideas" from "the corrosive influence of concentrated corporate wealth."⁽²³⁶⁾

In fashioning this feature, the Court was concerned that "[d]irect corporate spending on political activity raises the prospect that resources amassed in the economic marketplace may be used to provide an unfair advantage in the political marketplace."⁽²³⁷⁾ As the Court later clarified in Austin v. Michigan Chamber of Commerce, the danger was not simply the infusion of money into the political marketplace, but infusion of funds amassed in the economic marketplace which were unrelated to support for the corporation's political ideas.⁽²³⁸⁾

However, as the FEC's broad prohibition of "business activities"⁽²³⁹⁾ demonstrated, the FEC misconstrued this rationale as prohibiting any business income by the corporation. The FEC regulation reached "any provision of goods or services which results in income to the corporation" and which is not "expressly described" as donations for political purposes, as well as any "advertising or promotional activity which results in income to the corporation."⁽²⁴⁰⁾ The Supreme Court, however, was concerned solely with the impact on the political marketplace caused by the use of funds which are unrelated to the corporation's political ideas.⁽²⁴¹⁾

The MCFL Court recognized that § 441b took account of this distinction by allowing corporations to make political expenditures through a separate segregated fund or PAC. Expenditures by a PAC are permitted precisely because they come from voluntary contributions and, therefore, reflect political support: "the money collected is that intended by those who contribute to be used for political purposes and not money diverted from another source."⁽²⁴²⁾ The FEC failed to recognize that, just as PACs do not pose the problem sought to be addressed by § 441b, i.e., "that substantial general purpose treasuries should not be diverted to political purposes,"⁽²⁴³⁾ neither do ideological corporations such as MCFL.

As the MCFL Court explained, "the power of a corporation may be no reflection of the power of its ideas."⁽²⁴⁴⁾ Unlike business corporations, however, the resources of which "are not an indication of popular support," the resources available to corporations such as MCFL exist precisely because of their political support, i.e., the fact that the ideas that they propound are considered to be important to those who, for example, patronize its bake sales.

The Supreme Court could not have been clearer about its rationale in this regard:

 "[r]egulation of corporate political activity thus has reflected concern not about the use of the corporate form per se, but about the unfair deployment of wealth for political purposes. Groups such as MCFL do not pose that danger of corruption."⁽²⁴⁵⁾

In its "Explanation and Justification" for the challenged regulation, the FEC demonstrated its complete misunderstanding of the above-quoted language: "[i]n order to pose no such threat, a corporation must be free from resources obtained in the economic marketplace. Only those corporations that cannot engage in business activities are free from these kinds of resources."⁽²⁴⁶⁾ However, as demonstrated, the Court's rationale in this regard did not constitute a condemnation of the political use of "resources obtained in the economic marketplace;" rather, it was only concerned with the diversion of funds acquired in the economic marketplace to the political marketplace where those funds were acquired in a manner which was unrelated to the political purposes of the corporation.

Groups such as MCFL, however, do not pose a threat of the danger that funds unrelated to the corporation's political goals will be funneled into the political marketplace of ideas. This is so because "[t]he resources it has available are not a function of its success in the economic marketplace, but its popularity in the political marketplace."⁽²⁴⁷⁾ Contributors give money to such groups precisely because they wish to further the groups' political goals, i.e., "because they regard such a contribution as a more effective means of advocacy than spending the money under their own personal direction."⁽²⁴⁸⁾ Likewise, a person who engages in "business activities" with such an organization does so with the same underlying motivation. He does not spend money at a bake sale or a flower sale primarily to get cookies or carnations. Rather, he does so to benefit the organization and to further its political goals, which he realizes are better served by concerted action than by his individual efforts. Thus, the money which changes hands is directly related to the political purposes of the organization and does not come within the permissible rationale for restricting all corporate expenditures. The FEC, however, ignored the distinction between business activities which are unrelated to political ideas and those which are related to political ideas in their regulations. Through its denial of the exemption to any corporation which engages in any "business activities" (so broadly defined as to include such ostensibly politically-motivated transactions as purchases made at bake sales and sales of an ad in a newsletter), the FEC had extended its regulation to "speech that does not pose the danger that has prompted regulation."⁽²⁴⁹⁾

b. The second MCFL feature assured that members would not have a disincentive to disassociate with a corporation with which they disagree.

The second MCFL feature was that a corporation "has no shareholders or others associated so as to have a claim on its assets or earnings."⁽²⁵⁰⁾ Like the other MCFL features, this one cannot be understood apart from the rationale for its formulation. The Supreme Court explained that the absence of such persons "ensures that persons connected with the organization will have no disincentive for disassociating with it if they disagree with its political activity."⁽²⁵¹⁾ In developing this feature, the Supreme Court was concerned with situations which may arise with respect to the ordinary business corporation or labor union. It is conceivable that people who are associated with such entities would not want their dues or investment funds used for political purposes. As the Court explained

such persons . . . contribute investment funds or union dues for economic gain, and do not necessarily authorize the use of their money for political ends. Furthermore, because such individuals depend on the organization for income or for a job, it is not enough to tell them that any unhappiness with the use of their money can be redressed simply by leaving the corporation or the union.⁽²⁵²⁾

Based on this reasoning, the MCFL Court concluded that, although it was reasonable for Congress to require the establishment of separate segregated funds to which such persons could make voluntary contributions, "[t]his rationale for regulation is not compelling with respect to independent expenditures by [MCFL]."⁽²⁵³⁾ This is because, as explained above, MCFL had no stockholders or members who could share in the corporation's assets or earnings.

In fashioning its new regulation, however, the FEC again failed to take account of the underlying rationale and how it affects the scope of the feature. In denying the exemption to corporations who offer any benefit, no matter how de minimis to its members,⁽²⁵⁴⁾ the FEC failed to recognize that the primary purpose of the feature was to protect those who "depend on the organization for income or for a job," that is, those who may have a "claim on its assets or earnings."⁽²⁵⁵⁾ Thus, as with the first MCFL feature, the scope of this feature can only be understood by reference to the rationale for its creation.

c. The third MCFL feature assured that exempt corporations did not act as conduits for the type of spending that created a threat to the political marketplace.

The third MCFL feature concerned the fact that "MCFL was not established by a business corporation or labor union, and it was its policy not to accept contributions from such entities."⁽²⁵⁶⁾ In Austin, the Court described this feature as ensuring "the organization's independence from the influence of business corporations."⁽²⁵⁷⁾ The rationale for this feature is that such independence "prevents such corporations from serving as conduits for the type of direct spending that creates a threat to the political marketplace."⁽²⁵⁸⁾

In its regulation, however, the FEC not only required that corporations be in fact independent of the influence of business corporations, but also that they either have a policy against accepting any donations from business corporations or do not accept, either directly or indirectly, donations from business corporation. As the Second Circuit recognized in FEC v. Survival Education Fund (SEF),⁽²⁵⁹⁾ however, the rationale of this feature does not depend on whether a corporation has a policy against accepting corporate donations, but upon whether it is, in fact, independent of the influence of corporate donations. That Court explained

To be sure, an express policy against accepting corporate or union contributions is clear proof that no such danger exists, as the Court in MCFL duly found. But a nonprofit political advocacy corporation, which in fact receives no significant funding from unions or business corporations, does not surrender its First Amendment freedoms for want of such a policy.

Under MCFL, a nonprofit political advocacy corporation having no shareholders or members with financial disincentives to disassociate from the corporation if they disagree with its views is exempt from § 441b as long as it is independent in fact from significant business or labor influence. The existence of a policy against accepting contributions from business corporations or unions is relevant to, but not dispositive of, the issue of independence.⁽²⁶⁰⁾

In addition, it is not necessary that the corporation receives no business contributions. As the court in Day v. Holahan found, "the key issue here is the amount of for-profit corporate funding a nonprofit receives, rather than the establishment of a policy not to accept significant amounts."⁽²⁶¹⁾

Thus, the Eight Circuit in Day recognized, like the Second Circuit in SEF, that "the factual findings of MCFL [did not] translate into absolutes in legal application."⁽²⁶²⁾ The scope of each of these features can be understood only by understanding the particular evil that the Supreme Court in MCFL sought to avoid. For that reason, governmental regulation is permissible only to the extent "necessary to meet the particular problem at hand."⁽²⁶³⁾ However, the FEC overstepped the zone of permissible regulation and has sought to regulate speech which is protected by a proper understanding of the purposes and rationales which account for the MCFL exemption.

3. Minnesota Citizens Concerned for Life v. FEC Held the FEC's New MCFL Regulations Unlawful.

A challenge, under the Administrative Procedures Act, to the new FEC regulations of MCFL-type organizations was brought in Eighth Circuit in the case of Minnesota Citizens Concerned for Life v. FEC.⁽²⁶⁴⁾ The district court declared the new regulations void as beyond the statutory authority of the FEC as construed by the federal courts.

The court based its rejection of the regulations on the "functional interpretation" of Day rather than the "formal interpretation" of the FEC.⁽²⁶⁵⁾ In examining the regulations, the District Court specifically found that the "prohibition against any 'business activities'" and the "prohibition against the receipt of corporate donations [are], unquestionably, too restrictive."⁽²⁶⁶⁾

In addition, the district court also implied that the third and fourth provisions were of questionable validity under the approach taken by the Eighth Circuit in Day. As the district court stated,

Day rejected a "bright-line" approach to implementing the MCFL exemption, and instead looked to the particular characteristics of the nonprofit as they relate to the purpose of § 441b and the members' First Amendment rights. Thus, Day casts serious doubt on § 114.10(c)(1)'s requirement that a qualified nonprofit's "only" express purpose be the expression of political ideas and § 114.10(c)(3)(ii)['s] requirement that a qualified nonprofit n