(NOTE TO READERS: The following post is updated, and completed, as of 1:19 p.m.)

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Clearly operating on the premise that the Supreme Court last week changed the entire legal landscape for money in politics, the D.C. Circuit Court appeared on Wednesday to be leaning strongly toward giving even more freedom to campaign groups that are set up to operate independently of candidates and parties.  From the opening moment of the 65-minute hearing, most of the nine judges on the en banc Court treated the Supreme Court’s ruling in Citizens United v. Federal Election Commission as the beginning, not the end, of expansion of those freedoms.  When an FEC lawyer tried to bring up, and rely on, older precedents, he was reminded repeatedly that those came before Citizens United.

Chief Judge David B. Sentelle, in the first words spoken during the argument session, said to an independent group’s lawyer, ready to open his argument: “What do you have to add to Justice Kennedy?” — Anthony M. Kennedy was Citizen United’s author.  And when that lawyer started making his case for more freedom, Judges Sentelle and Douglas H. Ginsburg suggested that he postpone his thoughts on that until after the FEC’s lawyer (arguing second) had a chance to deal with Citizens United.  The tone of skepticism toward the FEC then continued throughout.  Judge after judge pressed for justifications of government regulation, and seemed unpersuaded by the responses.

The en banc Court heard two consolidated cases (the lead case is SpeechNow.org v. FEC, 08-5223) in the first federal court hearing to explore how far the Supreme Court had gone last Thursday toward liberating independent political operators.  It was abundantly clear that each of the nine judges was thoroughly familiar with every detail of the Citizens United decision. And one of the most important developments of the hearing was the degree to which the circuit judges were questioning the government’s ability to justify any restraints on independent groups based on a fear that they might corrupt politics.

Without a corruption rationale, and they suggested that that rationale had been thoroughly undermined by Citizens United, what basis would the FEC have for imposing restrictions, they asked. The questioning went not only to FEC controls on political spending, but on taking in donations at the other end of the political finance pipeline.

The FEC’s associate general counsel, David B. Kolker, argued that Citizens United had nothing to do with campaign contributions, focusing only on spending by independent groups (specifically, in that case, corporations).  But each time he attempted to make the point, the judges returned their focus to the supposed scuttling of a corruption justification for restrictions.  Steven M. Simpson, the lawyer for SpeechNow.org, sought to reinforce the impression that the Supreme Court had not spoken only about freedom to spend.  “It is not appropriate to call Citizens United an expenditure case; it is a burden case” — that is, a case against government-imposed burdens on political activity by independent groups.

Simpson did have difficulty from the bench on one point: his argument that SpeechNow should not have to obey rigorous FEC rules that require political independent groups to report their income and outgo to the FEC, in order to apprise the voters of how money is flowing in campaigns.  Any judge who spoke on that subject suggested that SpeechNow and similar groups really faced no more burdensome reporting and disclosure rules than they would have to in filing reports to the Internal Revenue Service to justify tax-exempt status.  (The Supreme Court, in Citizens United, had actually upheld disclosure requirements; SpeechNow does not object to some disclosure, but is unwilling to accept it at the level the FEC has sought.)

The FEC has taken the position that groups like SpeechNow — so-called “527 groups” that run operations that they insist are entirely separate from candidates and parties — are not really independent political operators, but use their right to spend money to shore up candidacies they favor and trash those they oppose.  FEC lawyer Kolker spent much of his time Wednesday trying to suggest that, like political parties, political committees like SpeechNow should be subject to the same limits on their spending that political parties face when they coordinate with candidate organizations.  There did not appear to be much interest in that approach among the circuit judges.

In fact, the Supreme Court precedents on which Kolker relied — principally, two rulings in which the Colorado Republican Party failed to overturn federal money restraints — appeared largely favorable to FEC’s views, but several of the judges seemed unsure whether those precedents have outlasted Citizens United.

The most aggressive questioner of the FEC counsel, not surprisingly, was Circuit Judge Brett M. Kavanaugh, the author of an earlier Circuit Court ruling (in the Emily’s List case) nullifying several FEC rules aimed at “527 groups.”  No one on the bench sought to counter Kavanaugh’s questions and comments, some of which seemed clearly to telegraph a sure vote in favor of SpeechNow.  If there was skepticism at any part of the argument by the SpeechNow lawyer (except his points about disclosure requirements), it went unspoken.  Judge Kavanaugh, too, mentioned repeatedly that the Supreme Court had regularly upheld disclosure requirements in the campaign finance field; he also argued that the voting public would have a keen interest in who was paying the bills for an independent political operator.

After Simpson sat down following 28 minutes of argument, almost wholly taken up with the disclosure and reporting issue, FEC lawyer Kolker stood and began with an argument that the Supreme Court has always drawn a distinction between campaign spending (more protected) and campaign contributions (less protected).  And, he said, the Court had never struck down a contribution limit on the theory that it would interfere with later spending by a political organization — the main thrust of SpeechNow’s challenge to being treated as a “political committee” that can accept no more than $5,000 in any year from any one contributor.

But Kolker’s first sentence had barely been uttered when Chief Judge Sentelle asked pointedly: “How does Citizens United change your analysis?”  Kolker replied that it “really doesn’t,” insisting that the SpeechNow case was about contributions, not spending (the issue he said was at stake in Citizens United).  But Judge Kavanaugh stepped in immediately, saying that the Supreme Court in that case, in mentioning government controls on contributions, had only referred to limits on contributions made to candidates or their organizations.

“The larger question,” Kavanaugh suggested, “was that, if an unlimited expenditure is not corrupting, how can a group of people getting together [to form a 527 group] suddenly become corrupting?”  Kolker answered by returning to a rationale the Supreme Court had used in the Colorado Republican litigation, saying that some curbs on spending, even by parties, may be necessary in order to prevent “circumvention” of federal limits on contributions.  “Nothing in Citizens United undermines that,” Kolker asserted.

That comment seemed to send the bench off into a thorough exploration of what concept of corruption in politics, as a rationale for campaign finance limits, remained in the wake of Citizens United.  Several of the judges, in fact, openly argued that the circumvention rationale no longer had any role to play in this context.

Judge Kavanaugh related that discussion directly to federal limits on contributions.  “If one person can spend a million dollars to take out an ad [during a campaign], but if several people contribute $6,000 to take out an ad, that is corrupting; what sense does that make?” Kolker responded that the Supreme Court had embraced limits on political spending by independents in order to prevent evasions of contribution limits.

When the Chief Judge joined in the argument about the continuing vitality of the corruption rationale for campaign finance restraints, he flatly accused Kolker of evading the Citizens United ruling. “I’m not hearing you address Citizens United,” Sentelle said.  And Judge Thomas B. Griffith chimed in:  “You’re trying to avoid Citizens United.  This is a new world: corruption means a lot less than it did before….What is the whole point of circumvention if it is not related to corruption?”

The Circuit Court has put the SpeechNow case on an expedited schedule, primarily because that political organization wants to begin operating during this year’s congressional election season, which opens next Tuesday with a primary in Illinois.  Thus, the Court may make a special effort to decide the case fairly quickly.  There is, though, no set timetable.

Posted in Cases in the Pipeline