Skirmish over campaign contributions sets stage for next big battle

Tuesday, November 19, 2002

WASHINGTON — The First Amendment dispute over the campaign-finance law passed by Congress earlier this year won't likely arrive at the Supreme Court until early next year.

But yesterday, the Court agreed to review another campaign-finance case that could serve as a dress rehearsal for the big battle to come.

The case, Federal Election Commission v. Beaumont, asks whether the First Amendment is violated when the longstanding ban on direct contributions by corporations to political candidates is applied to nonprofit corporations that engage in political advocacy. In ruling on the case, the Court will have to revisit its long-standing distinction between campaign expenditures and contributions, which is important in the context of the new legislation as well.

Beaumont is to be argued in March, whereas the challenge to the Bipartisan Campaign Reform Act is unlikely to be argued before April. That dispute is currently before a three-judge panel that is to hear arguments in early December. No matter how the panel rules, the losing side is likely to appeal quickly to the high court, which is likely to try to rule on it before the end of the term in June.

In the case granted review yesterday, North Carolina Right to Life, Inc. challenged a law with nearly century-old roots. In the Tillman Act of 1907, Congress prohibited all corporations from contributing money in connection with federal elections. The ban was later extended to campaign expenditures and to labor unions. In 1971, Congress allowed corporations of all kinds to form separate political action committees, but retained the ban on direct corporate money in politics.

In 1986, however, the Supreme Court chipped away at the ban as it pertained to nonprofit, tax-exempt advocacy corporations. In FEC v. Massachusetts Citizens for Life, Inc., the Court allowed such corporations to make independent expenditures, not coordinated with candidates, in campaigns because the expenditures did not pose the “danger of corruption” that Congress was aiming at in its ban.

The North Carolina group sued in hopes of extending that ruling to allow direct contributions by advocacy corporations to candidates as well. The group won at the district court and appeals court level. “Nonprofit advocacy organizations play a distinctive role in the political scheme,” wrote Chief Judge J. Harvie Wilkinson III for the 4th U.S. Circuit Court of Appeals, adding that such organizations “help empower citizens to make informed political choices.”

Since the 1976 Buckley v. Valeo decision, however, the Court has treated expenditures and contributions differently. While striking down bans on campaign expenditures, it has generally upheld restrictions on direct contributions to candidates because of the potential for corruption. Wilkinson said that concern does not exist for contributions by nonprofit corporations. “It is simply implausible to argue that a small nonprofit accepting individual contributions from like-minded donors poses the same risk to our political order as a Fortune 500 company.”

The Federal Election Commission, which has independent legal authority to litigate its cases apart from the Justice Department, decided not to appeal the 4th Circuit ruling. But in an unusual move, Solicitor General Theodore Olson invoked his own authority and filed the appeal on the FEC's behalf. In a footnote in his brief, Olson noted the government's general interest in the case as well as in defending the constitutionality of a federal statute.

The government brief argues that Congress was entitled to make its ban on corporate contributions to campaigns a broad one. Citing rulings in other parts of the country that run counter to the 4th Circuit's, the brief also urges the high court to bring uniformity to the area, ending “inequality among potential corporate contributors and potential chaos and confusion as to which campaign financing rules apply to which political contributions.”

James Bopp Jr., lawyer for the North Carolina Right to Life group, argued in his brief that because of the conflict between the solicitor general and the FEC, the Court should not review the case. Bopp also argued that organizations like his clients “incorporate for liability reasons, not to amass money. Consequently, the notion that the corporate form per se is corrupting is simply incorrect” in the context of nonprofit corporations.

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