The Independent View: Three Campaign-Finance Lawsuits

With the fights to reverse Citizens United v. FEC, here are attempts to expand it.

Three key campaign-finance challenges, one already at the U.S. Supreme Court, seek to push through doors left open by the justices' controversial Citizens United decision.

Advocates and opponents of campaign-finance regulations are watching, in particular, U.S. v. Danielczyk, now being briefed in the U.S. Court of Appeals for the 4th Circuit. The government is appealing a district court ruling that struck down the federal ban on direct corporate contributions to candidates.

The two other challenges tackle federal prohibitions against foreign campaign contributions and contributions by individuals with federal contracts. "These lawsuits are all at least theoretically outgrowths from Citizens United," said Tara Malloy of the Campaign Legal Center. The plaintiffs in the three cases are using, to different degrees, language in Justice Anthony Kennedy's majority opinion that campaign-finance regulations cannot discriminate based on the identity of the speaker, Malloy said. "This is not necessarily even the holding but it is this type of reasoning that is being leveraged," she added.

The three federal cases, while significant in their own right, are only a small part of a national landscape littered with campaign-finance challenges post-Citizens United. Attacks on state laws banning direct corporate contributions are underway in Iowa, Minnesota, Montana and Texas, and there are dozens of challenges to state disclosure laws, many mounted by the lawyer who brought the Citizens United case to the Supreme Court — James Bopp Jr. of Bopp, Coleson & Bostrom of Terre Haute, Ind.

"Danielczyk is the challenge most obviously focused on federal restrictions, but if any of these cases were to go to the Supreme Court, the basic principle would very much be at issue," said Malloy, whose organization has filed an amicus brief supporting the government. "There are multiple avenues anti-reform litigators are pursuing to get to the Supreme Court."

The Danielczyk appeal in the 4th Circuit is considered by campaign-finance reformers and their opponents to be the most significant challenge to regulating big money in federal elections. This constitutional challenge to the ban on direct corporate contributions stems from a criminal indictment charging William P. Danielczyk Jr. and Eugene Biagi with offenses arising from a scheme to make unlawful campaign contributions, including at least $25,000 from corporate treasury funds.

Both defendants argued that the federal ban on corporate treasury contributions violated the First Amendment and they relied on the Citizens United decision. The district judge agreed. "[F]or better or worse, Citizens United held that there is no distinction between an individual and a corporation with respect to political speech," wrote the district judge. "Thus, if an individual can make direct contributions within [the federal campaign-finance law's] limits, a corporation cannot be banned from doing the same thing."

Five days later, the district court asked for briefing on whether it should reconsider its decision in light of the Supreme Court's 2003 decision in FEC v. Beaumont. In Beaumont, the justices upheld the ban as applied to nonprofit advocacy corporations. But the district court subsequently decided that the Beaumont decision was not controlling and had been undermined by Citizens United.

Federal law has prohibited corporations from contributing to candidates for federal office since 1907. The contribution ban is now contained in Section 441b(a) of the Federal Election Campaign Act of 1971. It applies to unions as well. Although they cannot use general treasury funds for contributions, they can form political action committees which, in turn, can make contributions up to a certain limit from those segregated funds.

In Danielczyk, the government argues that Beaumont controls the decision. In that case, the government tells the appellate court, "the Supreme Court rejected a claim that nonprofit advocacy corporations are exempt under the First Amendment from Section 441b(a)'s blanket prohibition. The Court's rationale for rejecting that claim was that the same government interests that justify a general ban — the prevention of corruption and the appearance of corruption, and the avoidance of circumvention of individual contribution limits — also apply to a nonprofit advocacy corporation."

That rationale, according to the government, cannot be reconciled with the district court's conclusion that nonprofit advocacy corporations are validly barred from making contributions, but for-profit corporations are not.

The two criminal defendants are represented on appeal by veteran Supreme Court advocate Jeffrey Lamken of Washington's MoloLamken. Lamken's brief is due in early January.

Already at the Supreme Court, Bluman v. FEC challenges the constitutionality of another section of the Federal Election Campaign Act, which prohibits foreign nationals from making contributions or expenditures in local, state and federal elections. A knowing and willful violation of the ban is punishable by a civil penalty not exceeding the greater of $10,000 or 200 percent of any contribution or expenditure involved in the violation. It is also punishable criminally by up to five years' imprisonment. Benjamin Bluman and Dr. Asenath Steiman contend the prohibition is unconstitutional as applied to foreign nationals who lawfully live and work in the United States.

UPDATE
The Supreme Court on January 9, 2012 issued an order upholding prohibitions against foreigners making contributions to influence American elections.

The decision clamped shut an opening that some thought the court had created two years ago in its Citizens United decision, when it relaxed campaign-finance limits on corporations and labor unions. On Monday the Supreme Court, upholding a lower court’s decision in Bluman, et al., v. Federal Election Commission, refused to extend its reasoning in Citizens United to cover foreigners living temporarily here.

Foreign nationals, other than lawful permanent residents, are completely banned from donating to candidates or parties, or making independent expenditures in federal, state or local elections.