All Quiet on the Corporate Front: An Argument for the Constitutionality of Campaign Finance Disclosure Requirements

By: Daniel Ford

I. INTRODUCTION

During one of the most politically divisive eras in America’s history, a time in which name-calling and blame-shifting have replaced compromise as the modus operandi of politicians at all levels of government, it is a breath of fresh air to see Americans almost universally agree on an issue: the need for campaign finance reform. According to the most recent Associated Press-National Constitution Center Poll, eighty-three percent of Americans currently believe that there should be limits on the amount of money that corporations, unions, and other organizations may donate to outside groups that influence the campaigns of presidential candidates.[1] This national accord comes in the wake of the United States Supreme Court’s highly publicized Citizens United v. Federal Election Commission[2] decision, which declared that limits on corporate independent expenditures are unconstitutional violations of free speech.

Citizens United is often criticized for the basic principle at the heart of the decision that spending money equates to speaking, with spending thus protected under the First Amendment.[3] The removal of limitations upon this form of corporate “speech” lead to the 2012 Presidential Election being met with a deafening roar of newly liberated “voices.” President Barack Obama and Governor Mitt Romney raised 2.23 billion dollars between their personal fundraising efforts, political party fundraising efforts, and the efforts of Political Action Committees (“PACs”) such as Priorities USA and Restore Our Future.[4] The issue of eye-popping campaign finance statistics is not limited to national races, as here in Arkansas Sen. Mark Pryor and Congressman Tom Cotton already have a combined $6.2 million on hand almost a full year before the Senate seat both are vying for is decided.[5]

Despite the public outcry against unlimited corporate campaign expenditures, the nation’s courts continue to open the avenue wider for corporate campaign finance. In particular, the Eighth Circuit Court of Appeals’ decision in Minnesota Citizens Concerned for Life, Inc. v. Swanson[6] continues an unsettling trend of deregulating corporate campaign finance. In Minnesota Citizens, the Eighth circuit held that reporting requirements and structural regulations imposed on corporate independent expenditures by Minnesota state law constituted an impermissible infringement on First Amendment rights.[7]

Meanwhile, the Eleventh Circuit faced similar disclosure requirements as those at issue in Minnesota Citizens and held in Worley v. Florida Secretary of State[8] that those requirements were entirely constitutional and supported by sufficiently substantial government interests. These two cases differ factually in several ways that allowed the Worley court to distinguish its holding from Minnesota Citizens without having to state outright that Minnesota Citizens was incorrect, but the two cases still contain a great deal of conflicting language as to the general constitutionality of disclosure requirements that creates uncertainty.

Minnesota Citizens is an impermissible and dangerous expansion of the basic tenets of modern campaign finance law as established in Citizens United. Despite the Court’s explicit ruling in Citizens United that disclosure requirements remained constitutional under the revised framework, the Eighth Circuit took deregulation one step further and relaxed regulations affecting how a corporation can donate unlimited amounts through independent expenditures. With corporations already dubiously allowed to spend money without limit in order to affect elections, holding that corporate free speech requires protection from additional reporting requirements journeys into the realm of preposterousness. With corporations, non-profits and Super PACs spending billions of dollars to secure elected positions for specific candidates, it is unwise to remove disclosure safeguards that ensure that the public at least knows the source of these billions. Accordingly, the Court should clarify its ruling in Citizens United and resolve the contradictions between the Eight Circuit in Minnesota Citizens and the Eleventh Circuit in Worley by holding that the types of disclosure requirements at issue in these cases are in fact constitutional.

II. BACKGROUND

Reporting and disclosure issues have been regulated as far back as the 1890’s, with regulations usually premised on the basic principle that the public has a right to know from where a campaign’s money comes.[9] This focus on disclosure regulation has continued in recent decades with both state and local legislatures strengthening disclosure requirements and enforcement methods.[10] Generally, the Supreme Court has held that “mandatory disclosure of contributions and expenditures is a constitutionally sound form of campaign finance regulation.”[11] Whereas Citizens United dramatically overhauled the Court’s approach to limitations on independent expenditures, the Court stayed firmly within the traditional analysis of disclosure requirements being a constitutionally viable means for regulating campaign finance.[12]

In making that decision, the Court relied upon both the well-established nature of disclosure requirements and the government interests outlined in key disclosure-related decisions such as Buckley v. Valeo[13] and McConnell v. Federal Election Commission.[14] Buckley established, and Citizens United upheld, that disclosure requirements “impose no ceiling on campaign-related activities.”[15] Additionally, the Court in McConnell stated that those challenging the constitutionality of disclosure requirements “never satisfactorily answer the question of how ‘uninhibited, robust and wide-open’ speech can occur when organizations hide themselves from the scrutiny of the voting public.”[16] Cases decided after Citizens United have continually held that in a variety of circumstances “elections are special circumstances where a right to anonymous speech must generally give way to governmental interests in the overall integrity of the democratic process.”[17]

It will be helpful at this point to briefly describe the type of disclosure and reporting requirements that were challenged in Minnesota Citizens and Worley. In the case of Minnesota Citizens, which dealt with corporations or associations seeking to make direct independent expenditures to candidates for public office, the state’s Campaign Finance and Public Disclosure laws outline the necessary requirements, which include setting up a political fund and making regular reports.[18] In addition, the corporation must appoint a treasurer to make sure the political fund does not become commingled with other business accounts, file a “Statement of Organization,” file an annual report detailing contribution activity, and file statements of inactivity for every year the fund exists but does not contribute any funds.[19] In Worley, though the facts were slightly different in that there were individuals seeking fund communications in opposition of a ballot initiative, the actual disclosure requirements were substantially the same.[20]

III. ARGUMENT

The Supreme Court should overturn the Eighth Circuit’s decision in Minnesota Citizens so as to clarify their ruling in Citizens United that reporting requirements and disclosure rules are constitutional. By embracing the holding and underlying legal basis of the Eleventh Circuit’s decision in Worley, the Supreme Court can ensure that America at least knows the source of the money flowing rapidly into our elections and can hold elected officials, corporations, and PACs accountable.

To understand where the Eighth Circuit erred it is important to understand the standard under which disclosure regulations are examined in terms of their constitutionality. Courts have long used the “exacting scrutiny” standard to evaluate the constitutionality of disclosure regulations, which does not rise to the level of strict scrutiny.[21] The reason for this less demanding constitutional standard is that although disclosure requirements certainly have some negative First Amendment implications, they “appear to the be the least restrictive means of curbing the evils of campaign ignorance and corruption….”[22] The specific formulation of exacting scrutiny is that there must be a “substantial relationship” between the disclosure requirement and a “sufficient government interest.”[23]

The primary problem with the Minnesota Citizens decision is that it inaccurately applies the exacting scrutiny standard, placing far too much weight on the restrictions themselves and glossing over the crux of the issue: does the government have a sufficient interest that is substantially related to the disclosure regulations in question. The Eighth Circuit, instead of searching for the “least restrictive means” or “less problematic measures,” should have followed the established precedential framework from Citizens United and a long line of other cases. If the Eighth Circuit had given the state’s proffered interests their due analysis, it would have been clear that the regulations in questions meet the “exacting scrutiny” standard.

The first and most important government interest in disclosure and reporting regulation is the informational interest. The Court explained the informational interest in detail in Buckley, stating that the sources of a candidate’s campaign finances “alert the voter to the interest to which a candidate is most likely to be responsive and thus facilitate predictions of future performance in office.” [24] The great weight of the informational interest is demonstrated by the Court in Citizens United failing to even address proffered government interests other than the information interest because that interest alone was sufficient to justify the application of disclosure requirements.[25]

This informational interest is even greater in the digital age, when a vast amount of information is available at our fingertips almost instantaneously. The Court in Citizens United summarized how this greater access of information increases the weight of the government’s interest by stating that exceedingly prompt disclosure (and the resulting transparency) provided by the Internet allows shareholders to be informed of their company’s political motivations, citizens to be alert to possible corporate corruption, and for a more transparent, open marketplace of ideas as intended by the First Amendment.[26] The importance of disclosure requirements makes any infringement on First Amendment rights a necessary infringement, as:
The First Amendment protects political speech; and disclosure permits citizens and shareholders to react to the speech of corporate entities in a proper way. This transparency enables the electorate to make informed decisions and give proper weight to different speakers and messages.[27]

Opponents of disclosure regulations often argue that the informational interest is not a sufficient interest because the types of small donations that are required to be reported do not give the electorate any significant information.[28] The Supreme Court and courts around the country have consistently rejected this argument because the issue is not whether each individual disclosure provides a sufficiently large piece of information to satisfy the exacting burden standard, but instead “the issue is whether the cumulative effect of disclosure ensures that the electorate will have access to information regarding the driving forces backing and opposing each bill.”[29] Disclosing small and seemingly de minimis contributions and expenditures also has benefits outside of the “cumulative effect” argument, such as how a variety of small contributions can show a breadth of support for a candidate or issue and how it prevents individuals and corporations from breaking up their large donations into numerous small donations to avoid having to disclose.[30]

Outside of the informational interest, there are several other government interests that the Court could rule are sufficient interests so as to satisfy the exacting scrutiny standard. One of these reasons, applicable only to disclosure regulations aimed at corporations such as those at issue in Minnesota Citizens, is that the public nature of corporations themselves suggests strict disclosure requirements should be held constitutional. The very nature of a corporation, in that “corporations are public actors because they exist only through a publically granted privilege,”[31] implies that they should not be afforded the same privacy rights as an individual. Just as corporations are not allowed to keep private their economic affairs, they should not be allowed to keep private their political affairs. The public nature of corporations considered with the need to protect the stockholders and the need to provide complete information to the marketplace of speech presents a compelling reason for the Court to overturn the Eighth Circuit’s unwarranted extension of its Citizens United decision. Another important governmental interest is the law enforcement interest, which essentially is defined as the interest the government has in full and complete disclosure records as a manner of policing to make sure no other campaign finance regulations are being broken.[32]

Apart from the traditional analysis of whether the government has a sufficient interest that is substantially related to the regulation, the simple fact is that disclosure regulations do not do much to actually burden corporations or even individuals so as to create a constitutional violation initially. The Eighth Circuit paints a distressing picture of small businesses tangled up in limitless red tape, but the reality is far less burdensome. As the Worley decision points out, most if not all of the requirements of typical disclosure regulations are things that “a prudent person or group would do in the same circumstances anyway.”[33] Certainly there is a small burden on organizations and individuals as a result of these disclosure requirements but by no means does that mean it is an undue burden. Corporations are already required to keep detailed records and books for tax and business purposes, it is hardly “undue” for them to have to keep a separate spreadsheet and send in a report once every three months detailing their campaign expenditures.

IV. CONCLUSION

The Supreme Court of the United States should overturn Minnesota Citizens and clarify that strict disclosure and reporting requirements for campaign finance expenditures is entirely constitutional. This is a prime opportunity for the Court to prevent the further deregulation of corporate campaign finance by ensuring that the billions of dollars flowing into the election process at least remain accessible and not shrouded in mystery. Citizens United has been an exceedingly unpopular decision, but the Court must ensure that one of the only bright spots from that decision, the confirmed constitutionality of disclosure requirements, remains in effect. In doing so, the Court will potentially quiet some of the current political unrest across the nation regarding campaign finance, and hopefully provide for a more open and fruitful environment for public discourse, something sorely needed given the political status quo.

Works Cited

1 Associated Press & GfK Roper Public Affairs & Corporate Communications, THE AP-NATIONAL CONSTITUTION CENTER POLL at 21 (2012).
2 558 U.S. 310 (2010).
3 Id.
4 Gregory Giraux, Bloomberg By the Numbers: 2.23 bln, BLOOMBERG.COM (Dec. 12, 2012, 6:00 AM), http://go.bloomberg.com/political-capital/201212-12/bloomberg-by-the-numbers-2-23-bln/.
5 James Hohmann, Tom Cotton, Mark Pryor both raise $1m and change, POLITICO.COM (Oct. 15, 2013 10:09 AM), http://www.politico.com/story/2013/10/pryor-raises-1m-for-cotton-race-98321.html
6 692 F.3d 864 (8th Cir. 2012).
7 Id. at 877.
8 717 F.3d 1238 (11th Cir. 2013).
9 Richard Briffault, Campaign Finance Disclosure 2.0, 9 ELECTION L.J. 273, 273 (2012).
10 Id.
11 Id. at 279.
12 Citizens United, 558 U.S. at 366.
13 424 U.S. 1 (1976).
14 540 U.S. 93 (2003).
15 Buckley, 424 U.S. at 64.
16 McConnell, 540 U.S. at 196, (quoting McConnell v. Fed. Election Com’n, 251 F. Supp.2d 176, 237 (D. Dist. Col. 2003)).
17 Ciara Torres-Spelliscy, Has the Tide Turned in Favor of Disclosure? Revealing Money in Politics After Citizens United and Doe v. Reed, 27 GA. ST. U. L. REV. 1057, 1084 (2012).
18 MINN. STAT. § 10A.01 et seq. (2012).
19 ID. at §§ 10A.12, 10A.20.
20 FLA. STAT. § 106 et seq. (2012).
21 Worley, 717 F.3d at 1243.
22 Buckley, 424 U.S. at 64, 68.
23 Id.
24 424 U.S. at 67.
25 558 U.S. at 366.
26 Id. at 370.
27 Id.
28 Worley, 717 F.3d at 1249.
29 Nat’l Org. for Marriage, Inc. v. McKee, 649 F.3d 34, 41 (1st Cir. 2001).
30 Worley, 717 F.3d at 1251.
31 Daniel Winek, Note, Citizens Informed: Broader Disclosure and Disclaimer for Corporate Electoral Advocacy in the Wake of Citizens United, 120 YALE L.J. 622, 655 (2010).
32 Buckley, 424 U.S. at 68.
33 717 U.S. at 1250.

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