The Van Hollen Case

December 1, 2014
posted by Bob Bauer

In a second round, at the second level of the Chevron test, a federal district court has struck down the FEC’s attempt to read a “purpose” requirement into the “electioneering disclosure” rule. Van Hollen v. Federal Election Commission, No. 11-0766 (ABJ), 2014 WL 6657240 (D.D.C. November 25, 2014). The general view is that the Court probably got this right and that to the extent that the issue has remained unresolved for this long, the FEC (once again) should take the blame. Those adopting this position point to Judge Jackson’s opinion, in which she lays out in some detail the obscure route by which the FEC arrived at its position.

But, as so often, the FEC is paying handsomely for the complexity of the issue and the sins of others. A fair share of the responsibility for this disclosure controversy lies with the Supreme Court’s garbled jurisprudence, which has produced confusion about the constitutionality of campaign finance requirements applied to “issues speech”.

The rule before the Van Hollen court was promulgated to implement not Citizens United but the second of the Wisconsin Right to Life (WRTL) decisions. The Court had held that the prohibition on corporate and union financing of electioneering communications–pre-election advertising that refers to candidates–could not apply to ads that featured neither “express advocacy” nor its “functional equivalent”. 551 U.S. 449 (2007). The question before the Court was whether a pre-election ad could be a constitutionally protected, “genuine” issue ad, which the Court defined as “advocacy that conveys information and educates” and that “cannot be suppressed simply because the issues may also be pertinent in an election.” Id. at 470, 474. The Court in WRTL II held that the First Amendment test distinguishing this issues from campaign speech could not turn on the speaker’s intent or on the advertising’s effect on voter opinion. The ad at issue in the case was a “genuine issue ad” that a corporation could pay for.

The WRTL II Court did not speak to what was left after this analysis of the disclosure requirements or any other substantive campaign finance rule applied to issue ads. The Federal Election Commission proceeded to fashion a rule. One alternative would have exempted from both disclosure and financing restrictions any genuine issue ad. The FEC went a different way. The regulation it came up with compels corporations and unions that finance issue ads to report their expenditures and only those donors who give expressly for this purpose. 11 C.F.R. 114.15.

It has been pointed out that this choice of regulation effectively puts corporate spending for electioneering communications and for independent expenditures on the same footing. In each case, the organization must disclose its spending. The independent spender reports its spending and not its donor; the corporation paying for an electioneering communication that is an issue ad also reports its own spending, plus the category of donors who have given specifically for this purpose. It is expected that this additional donor disclosure requirement can be evaded with little difficulty, and this is certainly true. And if it is true, than corporate reporting of both independent expenditures or electioneering communications qualifying as issue speech will not include the donors.

Critics of “dark money” and porous campaign finance rules object that the kind of “issue advertising” caught up in these cases is not “genuine” issue speech at all. They are here faulting the WRTL Court, which found otherwise. And they face the argument that, on one plausible reading of WRTL’s logic, the FEC might have gone too far in even requiring disclosure of donors giving purposively for issue ads, an option that arguably falls outside Congress’ constitutional authority to regulate campaign finance. Further complicating matters is the uncertainty that, as a matter of policy, Congress has intended disclosure for what might be called “genuine issue advertising.” It did not, for example, include disclosure of “grassroots” legislative advocacy in the reporting requirements of the Lobbying Disclosure Act.

The Van Hollen decision now answers with Citizens United, reading that case to “clearly” confer broad authority on Congress over issue ads that fall within the definition of electioneering communications. Van Hollen, 2014 WL 6657240 at *24. In other words, campaign finance disclosure requirements apply to all such communications, “even those that apply to ads that are not express advocacy or its functional equivalent.” Id. The Court in Van Hollen perceives a clear Congressional intent to “enable voters to be informed about who was trying to influence decisions” and it cites to legislative history and references on the floor of the Senate to “sham issue advertising”. Id. at *22. WRTL’s concerns with tests based on intent or effect, and with the differences between sham and “genuine” issue ads”, are absent from this analysis.

Disclosure is not the only question about how far Congress intended to go, or can go, in restricting or conditioning the dissemination of issues speech. Under the law in its current form, organizations funding issue speech in the form of “electioneering communications” are also subject to limits in coordinating their activities with candidates. Should the anti-coordination rules apply to issue speech? Certainly the Wisconsin prosecutor investigating Scott Walker and his allies believes this to be the case, and his theory continues to be tested in court.

Seen in this way, Van Hollen is considerably more than a straightforward decision about campaign finance disclosure and FEC fecklessness. It could prove to be a major case.  Whether it is a campaign finance case at all may be the central issue, and the Court can be expected to step in, as it has for decades when, in the words of WRTL II, there has been a question of “distinguishing between discussion of issues on the one hand and advocacy of election or defeat of candidates on the other.” 551 U.S. at 467.

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