Federal appeals court upholds ban on certain corporate campaign contributions

Thursday, May 25, 2000

A federal law prohibiting corporations from making “hard money” contributions in connection with federal campaigns does not violate the First Amendment, a federal appeals court has ruled.

Renato P. Mariani, who faces criminal charges of violating the Federal Election Campaign Act, contended that certain provisions of the law violated his First Amendment free-speech rights.

Mariani and other officers of Empire Sanitary Landfill, Inc. were charged in October 1997 with violating federal law for enlisting company employees to make contributions to federal candidates and then reimbursing the employees with corporate funds. That case, United States v. Mariani, is pending before a federal district court in Pennsylvania.

After the criminal charges were brought against him, Mariani filed a lawsuit in the district court, seeking a declaratory judgment that the federal laws he was accused of violating were unconstitutional and, therefore, unenforceable.

(A provision in the Federal Election Campaign Act states that a constitutional challenge to the law must first be filed with a district court, which issues findings of fact. The case is then certified to a full panel of a federal appeals court.)

The principal statute Mariani challenged is 2 U.S.C. d 441b(a), which prohibits corporations from making contributions to or expenditures on behalf of candidates for federal office — often called “hard money.” Federal law does permit corporations to make contributions to political parties in unlimited amounts. These are often referred to as “soft money” contributions.

Mariani also challenged another federal law, 2 U.S.C. d 441f, which provides that “no person shall make a contribution in the name of another person or knowingly permit his name to be used to effect such a contribution, and no person shall knowingly accept a contribution made by one person in the name of another person.”

After the district court issued its detailed findings of fact in October 1999, Mariani’s civil case, Mariani v. United States, was sent to the 3rd U.S. Circuit Court of Appeals.

The full 10-judge appeals court noted that “spending for political campaigns is protected speech that implicates both the right to free expression and the right of free association.” The 3rd Circuit noted that Supreme Court case law, including the high court’s decision last January in Nixon v. Shrink Missouri Gov’t PAC, requires limits on campaign contributions to be “closely drawn” to further a “sufficiently important interest.”

The appeals court noted that Supreme Court case law has identified the government’s strong interests in deterring corruption in elections and “the appearance of corruption in campaign finance, particularly from large contributions.”

The 3rd Circuit, in its May 18 opinion, cited the U.S. Supreme Court’s 1990 decision Austin v. Michigan Chamber of Commerce in which the high court upheld a Michigan law prohibiting corporations from using corporate funds for expenditures in state political campaigns. The 3rd Circuit said that Supreme Court decision “implies that the flat ban” challenged by Mariani is constitutional.

“We are mindful that the flat ban on corporate contributions has never been directly addressed by a holding of the Supreme Court, and that this issue involves important First Amendment values,” the 3rd Circuit wrote. However, the appeals court said it was “compelled” to reject Mariani’s challenge because “it will be for the Supreme Court itself to decide otherwise.”

Mariani also argued that the proliferation of soft-money contributions has so eroded the distinction between hard and soft money that there no longer is any justification for banning contributions from corporations.

“This contention amounts to an argument that d 441b(a) does too little by way of banning corporate political spending and is thereby fatally underinclusive,” the court wrote.

The court also noted that there were important distinctions between hard and soft money. “The important theoretical differences between hard and soft money, which include that a candidate cannot directly control how to spend soft money, are intended to avoid the corrupting influence of large contributors supporting a particular candidate.

“The practical distinctions between hard and soft money may have diminished in the past decade with the rise of issue advocacy, but not to such an extent that we can say that there is no benefit from distinguishing between the two,” the court wrote.

The court concluded: “We cannot exchange our robes for togas; any reform in this area must be sought from Congress.”

Glen Moramarco, senior attorney with the Brennan Center for Justice, which filed a friend-of-the-court brief on behalf of the government, said: “This opinion reinforces the Supreme Court’s recent decision that contribution limits are sound. The Supreme Court had said in the Austin case that corporate contributions in particular don’t reflect popular support.”

Mariani’s lead attorney was out of the country and unavailable for comment. Calls to attorneys for the government were not returned.