THE PROGENY OF CITIZENS UNITED: SPEECHNOW.ORG v. FEDERAL ELECTIONS COMMISSION, SUPER PACs, and FECA

The 2010 midterm elections brings unprecedented amounts of special interest money into the political arena. American voters are being persuaded by a barrage of advertisements, often stating incorrect or misleading facts, paid for by groups that are now known as SUPER PACs.

The Center for Responsive Politics' OpenSecrets.Org reports these SUPER PACs are both liberal and conservative. The top two groups are the conservative American Crossroads, having shelled out $17,467,291 and the liberal America's Families First Action Fund, doling out $4,843,604. That's more than a $12 million gap between first and second! The full list of SUPER PACs can be found at: http://www.opensecrets.org/pacs/superpacs.php?cycle=2010.

These SUPER PACs came into being after SpeechNow.Org v. FEC. The SpeechNow decision is first case to be decided under the precedent of Citizens United.

The plaintiffs, SpeechNow, sought relief from the Federal District Court in the District of Columbia. They want to engage in express advocacy, supporting candidates for federal office who share their views on First Amendment rights of free speech and freedom to assemble. The Federal Elections Commission (FEC) issued a draft opinion requiring SpeechNow to register as a Political Action Committee (PAC). This registration is required under the Federal Elections Campaign Act (FECA) according to the FEC.

SpeechNow sued under 2 U.S.C. §437(h) of FECA, allowing them to challenge the constitutionality of any FECA provision. The District Court properly certified the constitutional questions directly to the Federal Court of Appeals for the D.C. Circuit. The appellate court took the matter for en banc consideration, that is all of the judges on the Federal Court of Appeals for the D.C. Circuit heard the case.

During the pendency of the case before the appellate court the United States Supreme Court issued its ruling in the matter of Citizens United v, FEC. That case resolved the issues for the appellate court in SpeechNow.

The Federal Court of Appeals for the D.C. Circuit held that the contribution limits of 2 U.S.C. § 441a(a)(1)(C) and 441a(a)(3) are unconstitutional as applied to individuals’ contributions to SpeechNow.

2 U.S.C. § 441a(a)(1)(C) and 441a(a)(3) are provisions of FECA. 2 U.S.C. § 441a(a)(1)(C) was the statute applicable for dollar limits on contributions "to any other political committee (other than a committee described in subparagraph (D)) in any calendar year which, in the aggregate, exceed $5,000," so it was the $5,000 limit.

2 U.S.C. § 441a(a)(3) was the statute applicable for dollar limits on contributions "During the period which begins on January 1 of an odd-numbered year and ends on December 31 of the next even-numbered year, no individual may make contributions aggregating more than— (A) $37,500, in the case of contributions to candidates and the authorized committees of candidates; (B) $57,500, in the case of any other contributions, of which not more than $37,500 may be attributable to contributions to political committees which are not political committees of national political parties."

Thus the lid is lifted for America's most wealthy to throw their monetary weight around. Is it no wonder Republicans oppose ending the Bush-era tax cuts for the top 2 per cent of Americans?

The Federal Court of Appeals for the D.C, Circuit went on to rule that the reporting requirements of 2 U.S.C. §§ 432, 433, and 434(a) and the organizational requirements of 2 U.S.C. § 431(4) and 431(8) can constitutionally be applied to SpeechNow.

Section 432 pertains to the organization of political committees. This section requires each PAC to have a treasurer, to keep an accounting of the funds raised and to segregate those monies from the individual account of any person, and to engage in certain recordkeeping and reporting requirements. SUPERPACS must still have a treasurer, keep money in segregated accounts, and following recordkeeping and reporting requirements.

Section 433 pertains to disclosure in the registration of political committees. This section details the steps the political committee must take to register, show the segregation of monies, lists the requirements of the statements, and details how the political committee can terminate.

Section 434 pertains to reporting requirements. This section says that reports of contributions and disbursements must be made at certain times. When, under this section, a political committee's contributions reach $100,000 then these reports must be made on a monthly basis. The reporting requirements under this section may succinctly be described as being rigorous.

Section 431(4) defines a political committee as a) a committee that either receives or disburses more than $1,000 a year; b) the segregated accounts established by this section; or c) any local committee of a political party raising or spending more than $5,000.

Section 431(8) defines contributions. This section is representative of what Americans think about loopholes. You should read it for yourself. It says, in detail, what is and what is not a contribution. For instance consider this subsection of the statute:

any loan of money by a State bank, a federally chartered depository institution, or a depository institution the deposits or accounts of which are insured by the Federal Deposit Insurance Corporation, Federal Savings and Loan Insurance Corporation, or the National Credit Union Administration, other than any overdraft made with respect to a checking or savings account, made in accordance with applicable law and in the ordinary course of business, but such loan—

(I) shall be considered a loan by each endorser or guarantor, in that proportion of the unpaid balance that each endorser or guarantor bears to the total number of endorsers or guarantors;

(II) shall be made on a basis which assures repayment, evidenced by a written instrument, and subject to a due date or amortization schedule; and

(III) shall bear the usual and customary interest rate of the lending institution;

Do you think a loan, as described above, with the money going to a candidate, is a contribution or not? It is not.

Back to the Center for Responsive Politics who list the SUPERPACS. Go to their site: http://www.opensecrets.org/pacs/superpacs.php?cycle=2010. Click on American Crossroads. When that page comes up click on "Donors" and the page will tell you that this SUPERPAC that no individual donors gave more than $200 during this campaign cycle. Then click the tab for "Recipients" and the page will tell you that did not make any contributions in excess of $200 for this campaign cycle. The data for American Crossroads does not appear to be unique in its deficiency. The America's Families First Action Fund yielded even less data than did American Crossroads.

To be fair the American Crossroads data disclosed independent expenditures within the past two weeks.

The law to which SUPERPACs are subject requires reporting the identity of persons giving more than $200. 

The appellate court in SpeechNow made these observations:

SpeechNow would be required to, among other things: appoint a treasurer, § 432(a); maintain a separately designated bank account, § 432(b), 432(h); keep records for three years that include the name and address of any person who makes a contribution in excess of $50, § 432(c)(1)-(2), 432(d); keep records for three years that include the date, amount, and purpose of any disbursement and the name and address of the recipient, § 432(c)(5), 432(d); register with the FEC within ten days of becoming a political committee, § 433(a); file with the FEC quarterly or monthly reports during the calendar year of a general election detailing cash on hand, total contributions, the identification of each person who contributes an annual aggregate amount of more than $200, independent expenditures, donations to other political committees, any other disbursements, and any outstanding debts or obligations, § 434(a)(4), 434(b); file a pre-election report and a post-election report detailing the same, id.; file semiannual or monthly reports with the same information during years without a general election, id.; and file a written statement in order to terminate the committee, § 433(d).(emphasis added)

The bottom line is that it appears that SUPERPACS are not making reports of contributors as required by FECA.

SpeechNow.Org petitioned the United States Supreme Court for a Writ of Certiorari.  The question presented to the court is The question presented is "whether, under the Free Speech Clause of the First Amendment, the federal government may require an unincorporated association that makes only independent expenditures to register and report as a political committee despite the fact that a more narrowly tailored means of disclosing its independent expenditures exists in 2 U.S.C. § 434(c)."

2 U.S.C. § 434(c)says:

(C) Notification of disposal of excess contributions.— In the next regularly scheduled report after the date of the election for which a candidate seeks nomination for election to, or election to, Federal office, the candidate or the candidate’s authorized committee shall submit to the Commission a report indicating the source and amount of any excess contributions (as determined under paragraph (1) of section 441a (i) of this title) and the manner in which the candidate or the candidate’s authorized committee used such funds.

What the SUPER PACs are doing is ignoring the decision of the Federal Court of Appeals for the District of D.C. and pretending that they have already won their appeal in the Supreme Court.  What they want is the capacity to raise large amounts of money for the purpose of influencing American elections without disclosing the source of those funds.  No application for a Stay of the orders below pursuant to S.Ct. Rule 23 appear in the Court's file: http://www.supremecourt.gov/Search.aspx?FileName=/docketfiles/10-145.htm


The briefs have been distributed for Conference beginning in five days.  Thereafter we will know if the Court will grant the petition for certirorari.