Briefly, from the road:
1. The question is how the "major purpose" test would be applied, and I
offered a hypo to illustrate the dangers of its possible application to a
tax-exempt engaged in issue advertising. I would be interested in Marty's
response to the hypo. In the past, on facts like these, he has seemed to
indicate that monies received for these purposes would be fairly treated as
statutory "contributions". Of course, once the major purpose test is
applied, and an organization is claimed to be a political committee, the
"express advocacy" limitation, of course, no longer protects their issue
advertising.
2. I also noted that as these issues become complicated, opening the way
for claims about which organizations may have slipped over into "political
committee" status, these organizations are confronted with new legal
pressures and expenses. This is a real concern for them.
3. And, in any event, why would they believe that, as the law continues to
shift, develop and become more complicated, the line of argument that Marty
relies on to reassure these organizations, would hold. There are any number
of people and organizations perfectly ready, when the opportunities present
themselves, to limit the candidate-related issue spending of these
organizations. This is because, as the reform debate and the legislative
history indicates, the objectives of many unhappy with the current state of
the law is to limit "big money" in elections--from whatever source.
-----Original Message-----
From: Marty Lederman
To: Bauer, Bob-WDC; foley.33@osu.edu; Holman@aol.com;
election-law@majordomo.lls.edu
Sent: 2/6/2004 6:52 AM
Subject: Re: GC's Draft Opinion -- Definitions of "Expenditure"
If I'm understanding his post, Bob appears to be taking issue with the
"major purpose" test, and with Congress's initial decision to regulate
"political committees" in general. But, for better or worse, the
statute regulating "political committees" is there -- the FEC can't
ignore it; and I can't believe that Bob really wants to take issue with
the "major purpose" test, which is a Supreme Court gloss that decreases
the incidence of regulation (recall that the statute itself defines
"political committee" broadly to include any entity that makes annual
contributions or expenditures of $1000).
At the heart of Bob's post is the following very understandable
objection:
"What is also notable is the assumption that if 'major purpose' is
established, then regulation should proceed without objection. There is
no requirement of candidate or party control, or coordination: just
that the group wishes to influence elections. This is a far cry from the
fact or appearance of corruption. It is in fact political action."
But let's break down just what sort of "regulation" we're talking about
here. There is no restriction on political committees' independent
expenditures, for "express advocacy," "issue advocacy," or otherwise.
Instead, "regulation" of such committees consists of three principal
things:
1. A political committee must register and file disclosure statements.
Nothing wrong with that, is there? -- especially after the very broad
approval of disclosure requirements in McConnell, and the availability
of "as applied" exemptions (see, e.g., Brown v. SWP; McIntyre;
Watchtower) if a particular group can show that its activities are
chilled because of disclosure.
2. Unions and corporations cannot use treasury funds to make
contributions to "political committees" (or to any other entity, for
that matter) "in connection with" a federal election. This follows
quite naturally from Austin and McConnell. I share Bob's discomfort
with the Court's decisions on 441b; but once it is determined that a
corporation can't use treasury funds to engage in its own independent
expenditures, it follows a fortiorari that it shouldn't be permitted to
give those funds to another entity to engage in that same conduct -- and
that ancillary restriction is really the least of the problem under
441b.
3. Individuals can't contribute more than $5000 annually to political
committees for the purpose of influencing a federal election. I think
this is what bothers Bob the most. It surely is what bothers me the
most. As we've discussed extensively here, there is a very real and
serious constitutional question whether this limitation is permissible
as applied to a political committee that does not contrinute to, or make
coordinated expenditures with, federal candidates or parties. But this
is a constitutional objection respecting the statute, rather than a
basis for complaining about the FEC's implementation of the statutory
directive. (Indeed, as I've attempted to argue, the FEC regs probably
permit much greater contributions from individuals for the purpose of
influencing federal elections than the statute would appear to allow.)
Finally, I think I don't quite understand Bob's concern about 441b. The
nonprofits who have filed letters in the ABC proceeding are concerned
that a broad reading of "expenditure" in the present ABC proceeding
might lead to a similarly broad construction of that term under 441b,
which would mean that such nonprofit corporations would not be able to
use treasury funds to engage in "issue-oriented" communications that
have become commonplace for such nonprofits. As I've said, I don't see
how that slippery slope is a realistic threat. The Court held
definitively in MCFL that only expenditures constituting "express
advocacy" are deemed to be "in connection with" a federal election for
purposes of 441b; accordingly, if a particular nonprofit is covered by
441b (i.e., is not MCFL-exempt), the only communications that must be
financed with segregated PAC funds are express advocacy and (under BCRA)
"electioneering communications."
----- Original Message -----
From: "Bauer, Bob-WDC" < <mailto:RBauer@perkinscoie.com>
RBauer@perkinscoie.com>
To: < <mailto:marty.lederman@comcast.net> marty.lederman@comcast.net>;
< <mailto:foley.33@osu.edu> foley.33@osu.edu>; <
<mailto:Holman@aol.com> Holman@aol.com>; <
<mailto:election-law@majordomo.lls.edu> election-law@majordomo.lls.edu>
Sent: Friday, February 06, 2004 9:20 AM
Subject: Re: GC's Draft Opinion -- Definitions of "Expenditure"
Marty's counclusion that the OGC draft would not "necessarily" sweep
up
unregulated tax-exempts, and the law in this area is "confusing",
should
certainly confirm rather than allay the fears of those organizations.
It is
clear that the OGC draft sets up the argument against them, even if
"not
necessarily" with sure success.
The problem with the discussion of this issue is that it is divorced
from
what the McConnell Court called the "realities" of legal vulnerability
in
this area. Assume a tax-exempt, in operation for a number of years,
that
concludes in the last three years of a particular Administration that
its
policies present a major threat to the policies the organization has
advocated since its formation. Assume that memos and emails fly back
and
forth about the need to fight the "Bush program", with plenty of
commentary
about "getting him and his henchmen out of there in November." And
assume
that the organization proceeds to spend the preponderance of its
program
funds on communications the unfavorably, even savagely, attacks the
President on the policies in dispute. And along the way, in an
interview.
the CEO of the tax-exempt says: "These policies must be stopped. They
are
an unprecented threat to the welfare of the people. And we plan to
make sure
they understand what is at stake this year", i.e. the election year.
Major purpose? Measured how? Complaints? Investigations? Legal fees?
Oh,
never mind: the legal fees are OK.
What is also notable is the assumption that if "major purpose" is
established, then regulation should proceed without objection. There
is no
requirement of candidate or party control, or coordination": just that
the
group wishes to influence elections. This is a far cry from the fact
or
appearance of corruption. It is in fact political action.
Which brings us to 441b. A tax-exempt that defends on precisely this
ground,
will likely be answered by appeal to 441b, to the broader "in
connection
with standard". Having argued Buckley, they will face Austin.