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First sequel to Citizens United

NOTE: A one-hour oral argument is scheduled in the D.C. Circuit Court, before the en banc Court, starting at 9:30 a.m. Wednesday in a pair of consolidated cases filed by a Washington, D.C.-based group named SpeechNow.  This is the first case in which a lower court will examine how to apply the Supreme Court’s ruling last Wednesday in the campaign finance case, Citizens United v. Federal Election Commission. Steven M. Simpson, senior attorney for the Institute of Justice, will argue first, for SpeechNow.  David B. Kolker, associate general counsel of the FEC, will argue second, for the Commission.  Although each side is allotted 30 minutes, it is fairly typical for the Circuit Court to allow more extended argument, once underway.  The blog will post on the oral argument Wednesday following its conclusion.


Three hours after the Supreme Court completed announcing its controversial Citizens United ruling last week, Steven Simpson and other staff attorneys at the Institute for Justice, after poring over the 176-page ruling, sat down at their headquarters in Arlington, Virginia, to write a letter.  Selecting key passages out of Justice Anthony M. Kennedy’s main opinion, the lawyers finished the letter in two hours, and handed it in at the clerk’s office of the D.C. Circuit Court at 4:06 p.m.  It had two purposes –one perhaps not entirely necessary, the other important to Simpson’s clients.

The Simpson letter’s first purpose was to notify the Circuit Court that the Supreme Court had decided the Citizens United case.  Chances are, the judges on the Circuit Court already knew about it; news of a major Supreme Court ruling  travels fast in judicial circles, and, besides, nine of those Circuit  judges were in the midst of preparing for an argument set for a week later, with the newly released decision now certain to figure prominently in the discussion. Simpson’s second purpose was to lay claim to Citizens United as bolstering the arguments Simpson will make before those nine judges on Wednesday morning.  “This new authority,” the letter said, “is directly relevant to the First Amendment issues” coming before the en banc Court.  It summarized points considered to be helpful to its side of the argument.  The FEC did not file a similar letter.

Observers in the Circuit’s Ceremonial Courtroom — No. 20 — on Wednesday will be watching to see how soon Citizens United comes up in the hearing and how the judges react in two cases with the same name:, et al., v. FEC (dockets 08-5223 and 09-5342).  The Supreme Court’s new decision is all about federal controls on campaign finance and the First Amendment, and so are these two cases.  No one doubts that these cases are headed, ultimately, to the Supreme Court; in fact, the organization SpeechNow was put together in part to set up a test case on the free-speech arguments it is pressing.

What makes this case particularly special, to everyone interested in federal campaign finance restrictions, is that a key part of it involves an attack on how much money people can contribute for use in such campaigns.  The Supreme Court has been far more willing to accept limits on contributions than it has on spending, giving spending much more significant First Amendment protection.  Sweeping protection for spending by profitmaking and non-profit corporations emerged in the Citizens United decision. The SpeechNow cases could test whether contributors are now going to gain more protection, to combine their efforts in an organization that can then spend more heavily.

SpeechNow is what, in campaign finance parlance, is called a “527 organization” — a non-profit group organized under a section of the federal tax code (527, governing the tax status of “political organizations”) that are increasingly active in election campaigns for the White House and Congress.  During the 2004 elections, for example, such groups spent more than $400 million.  They exist all across the ideological spectrum. Part of the reason they have been able to spend so heavily is that they operated outside the usual limits of federal campaign finance restrictions.  That has changed, and that has led to a series of major court challenges.

SpeechNow was organized by David Keating, a self-described “long-time activist” who first gained fame as a vigorous challenger of federal tax laws, and more recently has become well-known as the head of a major 527 group, the Club for Growth.  His lawyers call SpeechNow his “brainchild.”

SpeechNow’s primary target is federal campaign finance controls, treating such restraints as violations of First Amendment free-speech guarantees. It is straightforward about its mission: “SpeechNow would like to run advertisements urging voters to elect federal candidates who support full protections for First Amendment rights and to defeat candidates who are hostile to those rights” — “hostile” because they support campaign finance reform.

The group passed up its first chance to pursue that goal during the 2008 races when it ran up against the very campaign finance laws it protests; it felt those controls would stifle or at least seriously complicate its plans, thereby interfering with its free political speech.   So it sued, asking for a court order to block those restrictions, and for a ruling that they violate the First Amendment.

Thus, the case has proceeded on two tracks.  One was the attempt to get a preliminary injunction against the restrictions, so that SpeechNow could carry on its campaign activity in the 2010 elections. (That is now case 08-5223).  The other is the constitutional challenge (now, case 09-5342), which is proceeding under a highly unusual procedure: a federal District Court judge (the same one who refused to issue the injunction) was assigned the task of defining specific constitutional issues raised in the SpeechNow case and, without ruling on them himself, sending them directly on to the Circuit Court for a ruling.   The Circuit Court treated the two-track litigation separately for a time, then joined the two cases, and laid them before the full Court, without first letting a three-judge panel examine them (the usual initial procedure).

After a couple of rounds of briefing, the cases are now ready for the oral argument — which is being held as quickly as the Circuit Court could schedule it, since the case is being expedited.  Even so, the ruling is unlikely to come down before the first congressional primary this year, in Illinois on Feb. 2 — six days after the hearing.

After SpeechNow was set up in 2007, it asked the FEC whether it had to register as a “political committee” under federal campaign finance law, and whether it had to treat the donations it received as “contributions.”  Because of procedural difficulties, the FEC could not give an answer, so the organization sued in U.S. District Court in Washington.

Federal law defines a “political committee” as any group that receives contributions of more than $1,000 during a calendar year, or spends more than $1,000 during a year.  Such a group must register with the FEC, and file periodic reports to disclose every person from whom it got more than $200, and any person or entity to which it paid more than $200.  It must identify itself on all of its political literature and advertising.   Federal law puts a ceiling on contributions to a political committee, at $5,000 per person.

SpeechNow set itself up as an election advocacy organization with a series of rigorous restrictions on its activity, to insure that it had absolute independence from any candidate or candidate organization or any political party.  It did so to try to head off any argument that its plans for big spending could be treated as “corruption” of the election system; it also did so to maximize its opportunity to make “independent expenditures,” the kind of political outlays that the Supreme Court has given the strongest First Amendment shield.

The group”s lawsuit targeted all of the “political committee” restrictions, although it has said it was willing to abide by some less burdensome requirements to disclose its income and outgo.  It does not want to be treated as a political committee for what it describes as a simple reason: “Individuals acting alone are constitutionally entitled to spend unlimited amounts of money on their independent expenditures; several individuals acting in association with one another are thus entitled to do the same thing.”

If its donors are limited to $5,000 each, that will in practice prohibit like-minded individuals from joining together to pursue common political goals in favor of or opposed to specific candidates, it has argued.

The FEC counters that SpeechNow, and other big spending groups, pose a significant risk of corruption of the political process and are not like a truly individual, politically active person who wants to spend his or her own money for or against a candidate.  “Experience shows,” the FEC’s lawyers have said, “that the increasingly sophisticated methods used by groups devoted to independent candidate advocacy can help candidates win elections just as direct contributions to a candidate can do.”

As a result, the Commission has contended, “winning candidates feel indebted towards those who fund the groups; ads that help elect them.  Those candidates, but not necessarily the voting public, easily discover the identity of those contributors and are inappropriately disposed to favor their interests.  Thus, unlimited contributions to groups like SpeechNow pose a genuine risk of corruption and the appearance of corruption.”

(NOTE: The SpeechNow organization has been co-represented throughout the case by the Center for Competitive Politics, an Alexandria, Virginia, advocacy group.)