Re: Democrats go after Club for Growth for issue ads

Thank you, Rick, for your careful and detailed response. If I understand it correctly, you are not uncomfortable with the notion that section 203 might cover the Daschle ad in question, because that ad is in fact quite obviously intended to influence the South Dakota senatorial election. Instead, your concern is focused on the nature of the test – contextual, fact-specific, dependent on objective or subjective indicia of "intent," etc.– that presumably would be required in order to ensure that section 203 regulates the Daschle ad. The hypothetical Hasen/Lowenstein test – "a bright line test, with a safe harbor that lets an advertiser off the hook when the advertiser can show a reasonable viewer could not conclude the ad is electioneering" – certainly is appealing, and has much to commend it, even if it might not cover the Daschle ad (depending on where the bright line is drawn).

But how can we best evaluate whether the Hasen test, or any of the three tests at issue under BCRA (primary/fallback/Leon), or any other test, is best suited to Congress’s objectives, on the one hand, and constitutional limitations, on the other?

In order to assess the relative merits of an "electioneering communications" test, and whether such a test is "overbroad," I think it’s necessary to keep our eye on: (i) the reasons for the statutory provision in question, i.e., the state interests; and (ii) the category, if any, of constitutionally protected speech that cannot be covered, i.e., the speech that would render the statute overbroad. As you state in your Minnesota piece, "there seems no substitute for looking at the benefits that the legislation hopes to achieve in regulating sham issue advocacy on the one hand with the costs of overbreadth on the other. Those costs and benefits differ depending upon the type of regulation."

Our discussion has focused on BCRA section 203, which requires that unions and corporations use segregated funds to fund "electioneering communications." If the purpose for that requirement were the same as the familiar objective underlying the ban on corporate and union contributions – namely, ensuring that officeholders are not (and are not reasonably perceived to be) beholden to those whose wealth contributed to their election – then the Hasen/Lowenstein test would make a great deal of sense, because it is fair to assume that an officeholder might be most grateful for those ads that reasonable viewers would perceive as intended to influence her election. (In fact, actual, rather than intended, impact, is probably a better proxy: The typical candidate/officeholder presumably cares much more about whether an ad did, in fact, help her get elected, rather than whether a viewer would "objectively" perceive that to have been the purpose of the ad; and therefore it is the successful, or effective, ad that is more likely to affect the officeholder’s conduct.)

But that candidate-centered "anticorruption" rationale is not (at least not nominally) the basis for section 203. To be sure, at one time the requirement of corporate and union segregated funds might have been understood, at least in part, as predicated on such an anticorruption rationale. See footnote 26 of Bellotti (citing UAW). But Buckley and Colorado Republican I rejected such a rationale as a sufficient basis for expenditure limitations (even if it is true that candidates do, in fact, feel somewhat beholden to persons and entities that broadcast ads that affect the electorate’s decision). I am, therefore, assuming that defenders of section 203, including especially the SG, will not place much, if any, reliance on such a rationale in their briefs to the Court. (I fully recognize that there are many – such as Burt Neuborne, the folks at the Brennan Center, and some of BCRA’s sponsors – who disagree with this facet of Buckley, and who would urge the Court to rely upon the candidate corruption rationale as a basis for upholding section 203 (and other expenditure restrictions). I do not mean to dismiss or ignore that view; but I do not focus on it here because I think it’s fairly clear that it would not get a welcome reception from this Court. (Justice Stevens relied on it in his short concurrence in Austin, 494 U.S. at 678; but he was conspicuously alone in that respect.))

Instead, section 203 will likely be defended as a modest extension of the requirements and limitations on corporate and union political activity that Congress has imposed since the Tillman Act in 1907, which have as their objectives: (i) ensuring that corporations and unions cannot take advantage of state-provided and state-sanctioned advantages to attain an "undue" or "distorting" influence in political matters; and (ii) ensuring that shareholders and bargaining-unit members are not compelled to subsidize public political and ideological speech that they do not wish to subsidize. It’s the Austin rationales, in other words – which are directed not at the sort of officeholder quid pro quo "corruption" that justifies contribution limitations, but instead "at a different type of corruption in the political arena: the corrosive and distorting effects of immense aggregations of wealth that are accumulated with the help of the corporate form and that have little or no correlation to the public's support for the corporation's political ideas." 494 U.S. at 660. As the Court explained, a segregated fund requirement "ensures that expenditures reflect actual public support for the political ideas espoused by corporations. We emphasize that the mere fact that corporations may accumulate large amounts of wealth is not the justification for [such a requirement]; rather, the unique state-conferred corporate structure that facilitates the amassing of large treasuries warrants the limit on independent expenditures. Corporate wealth can unfairly influence elections when it is deployed in the form of independent expenditures, just as it can when it assumes the guise of political contributions." Id.; see also MCFL, 479 U.S. at 257-59. (The shareholder/feepayer-protection rationale is most prominent in Justice Brennan’s concurrence in Austin.)

Therefore, in deciding where to draw the "line," we should ask which corporate and union expenditures implicate these interests, and which do not. Seeing as how these (the Austin rationales) are the relevant objectives, one might reasonably question (and in his Austin dissent Justice Scalia did question, 494 U.S. at 686) why the segregated fund requirement is (or can be) limited to election-related speech at all. After all, don’t these rationales apply with full force to other forms of corporate and union public speech, such as lobbying, public relations, and, especially, "pure," genuine issue advertising? Notably, in an analogous context dealing with analogous rationales – where the question is which sorts of union activities can be subsidized using fees paid by "dissenting" members of a bargaining unit – the Court has not limited the covered activities to those involving "election-related" activities, much less to any "bright-line" or "magic words" test. See, e.g., Lehnert, 500 U.S. at 521-22 (union lobbying and "discussion[s] of governmental affairs"); id. at 528 (union litigation); id. at 528-29 (union public relations activities which are "speech of a political nature in a public forum"). Rick makes a similar point in his Minnesota article, noting that "the corrosive effects of corporate wealth on the political process do not differ whether the corporation sponsors a ‘Defeat Bonior’ advertisement rather than a sham issue advocacy advertisement criticizing Bonior’s drug policy. Thus, if there is good reason for Congress to prevent independent expenditures by corporations (and perhaps unions) on express advocacy in candidate elections, there is good reason for Congress to wish to prevent corporations (and perhaps unions) from funding sham issue advocacy in the period immediately before the election." But why limit it to "sham" issue advocacy, or advocacy in the "period immediately before the election"? What about genuine issue advocacy unrelated to an election? Such corporate activities implicate the Austin rationales, as well, and therefore it’s not at all obvious why the segregated-funds requirement should not apply with full force to that corporate activity, as well.

So why draw any line at all? Because, as Justice Brennan explained in Austin, 494 U.S. at 677-78, Bellotti appears to require that such a line be drawn: "[I]n light of our decisions in Bellotti, supra, Consolidated Edison Co. of New York v. Public Service Comm’n of New York, and related cases, a State cannot prohibit corporations from making many other types of political expenditures. One purpose of the underinclusiveness inquiry is to ensure that the proffered state interest actually underlies the law. . . . But to the extent that the Michigan statute is ‘underinclusive’ only because it does not regulate corporate expenditures in referenda or other corporate expression (besides merely commercial speech), this reflects the requirements of our decisions rather than the lack of an important state interest on the part of Michigan in regulating expenditures in candidate elections. In this sense, the Michigan law is not ‘underinclusive’ at all."

Therefore, in deciding where to draw the line, it seems to me the Court (and Congress) should attempt to answer the following sorts of questions: Could the speech at issue in Bellotti itself be subject to a segregated funds requirement? (Bellotti itself appears to suggest the answer is "no," but I’m not aware that the Court has ever directly answered the question.) If not, why not, i.e., why aren’t the Austin rationales sufficient? Once one has answered those questions, then it might be possible to articulate a category of corporate speech as to which Congress could not constitutionally impose a segregated fund requirement. And that will tell us where the line should be drawn. Notably, however, the line might have nothing to do with whether the speech in question does, or is intended to, affect a federal election.

(Of course, this entire discussion depends on the presumption that the Court would not overrule Austin; but that is by no means certain.)

I’d also note that, as Rick has written, the line might be drawn in a very different place for purposes of section 201, the disclosure provision, because the state interests supporting that provision are in many respects distinct from those underlying section 203. \

Marty Lederman

OK, but what about if the court (i.e., Judge Leon) goes back to the "nonamputated" version of the backup provision -- that is to say, Furgatch? Is Bob Bauer correct that the ad in question could only be understood, by any reasonable listener, as intended to influence the SD Senate election? ----- Original Message ----- From: "Rick Hasen" <Rick.Hasen@lls.edu> To: "Bauer, Bob-WDC" <RBauer@perkinscoie.com>; <election-law_gl@majordomo.lls.edu>; "Trevor Potter" <TP@capdale.com> Sent: Thursday, May 15, 2003 8:01 PM Subject: Re: Democrats go after Club for Growth for issue ads

I think Bob's post is a nice illustration of what is wrong with Judge Leon's opinion: his amputated definition of electioneering communications provides neither safety valve contained in the BCRA itself: (1) a strict time limitation, as appeared in the bright-line, primary electioneering definition that Judge Kollar-Kotelly voted to uphold; or (2) an intent-based test to make sure that the ad could not plausibly be understood as anything other than electioneering, as appeared in the pre-amputated version of the backup definition. Both of these provisions serve the goal of requiring disclosure and regulating as much electioneering by corporations and labor unions as possible without capturing more genuine issue advocacy than necessary to meet the compelling interests that the state has in regulating campaign finances. The problem I have with the DSCC moving now is that a stay could come at any time from the lower court, thereby restoring the primary definition. Was there a need to rush this? Is advertising 18 months before the election really going to be so devastating to Sen. Daschle that the committee could not wait a week? No one I know thinks Leon's version will stand. I see no compelling reason for the DSCC to move so quickly other than for public relations purposes. Rick Bauer, Bob-WDC wrote:

Speaking here as an advocate in this matter, but certainly with full confidence in the merits of our position, let me take issue with some assumptions behind Rick's comments. Application of the "backup" definition to ads 'run now'? Why exactly not? The definition is not time-limited, as the primary definition was. And I have heard night and day how the reform communty is delighted with Leon's broadening definition that applies the ban. throughout the cycle. The Senate campaign in SD is in full gear and thse who doubt it should consult the local press. And Daschle is a candidate for reelection. Club for Growth is clearly not expecting to pressure Daschle into

the President's economic program. If this is not a "sham" issue ad, concerned with damaging Daschle rather than moving him on the issue, what is? And I have read much in the decision about the law's appropriate

earlier and earlier and involving more and more money. The law is what it is, whatever anyone may conclude about its wisdom or eventual vindication in the courts. I saw Trevor this am at the Penn symposium and noted this Complaint. I expected him to volunteer some help from the Campaign Legal Center--but he was noncommittal on the whole subject. Perhaps he is mulling it over.

-- Rick Hasen Professor of Law and William M. Rains Fellow Loyola Law School 919 South Albany Street Los Angeles, CA 90015-1211 (213)736-1466 (213)380-3769 - fax rick.hasen@lls.edu http://www.lls.edu/academics/faculty/hasen.html

-- Rick Hasen Professor of Law and William M. Rains Fellow Loyola Law School 919 South Albany Street Los Angeles, CA 90015-1211 (213)736-1466 - voice (213)380-3769 - fax rick.hasen@lls.edu http://www.lls.edu/academics/faculty/hasen.html http://electionlaw.blogspot.com