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RNC Argues For Coporate Donations To Fed Candidates

RNC Argues For Coporate Donations To Fed Candidates

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Amicus curiae the Republican National Committee (RNC) is an unincorporated entity that is responsible for the “general management of the Republican Party.” The Rules of the Republican Party, Rule No. 1: Organization of the Republican National Committee at 1 (2010). The RNC has members and actively participates in federal, state, and local campaigns and elections in all fifty states; is regulated as a national political party committee under the Federal Election and Campaign Act, 2 U.S.C. § 431; and is subject to the limitations and regulations contained therein, including 2 U.S.C. § 441b(a)‟s prohibition on contributions by corporations. While submitting a brief in support of donors to a Democratic presidential campaign falls out the scope of normal RNC activities, § 441(b)‟s affront to such donors‟ constitutional rights carries major implications for all federal candidates and party committees. By virtue of its status as an entity subject to the limits and prohibitions in question and its close connection with candidates for federal office who are subject to the law in question, the RNC has demonstrated its interest in the law at issue in this case.
Amicus curiae the Republican National Committee (RNC) is an unincorporated entity that is responsible for the “general management of the Republican Party.” The Rules of the Republican Party, Rule No. 1: Organization of the Republican National Committee at 1 (2010). The RNC has members and actively participates in federal, state, and local campaigns and elections in all fifty states; is regulated as a national political party committee under the Federal Election and Campaign Act, 2 U.S.C. § 431; and is subject to the limitations and regulations contained therein, including 2 U.S.C. § 441b(a)‟s prohibition on contributions by corporations. While submitting a brief in support of donors to a Democratic presidential campaign falls out the scope of normal RNC activities, § 441(b)‟s affront to such donors‟ constitutional rights carries major implications for all federal candidates and party committees. By virtue of its status as an entity subject to the limits and prohibitions in question and its close connection with candidates for federal office who are subject to the law in question, the RNC has demonstrated its interest in the law at issue in this case.

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No. 11-4667 UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT ________________________ UNITED STATES OF AMERICA Appellant v.

WILLIAM P. DANIELCZYK, JR. and EUGENE R. BIAGI Defendants-Appellees ________________________ ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF VIRGINIA AT ALEXANDRIA (The Honorable James C. Cacheris, District Judge) ________________________ BRIEF OF AMICUS CURIAE FOR THE REPUBLICAN NATIONAL COMMITTEE IN SUPPORT OF THE DEFENDANTS-APPELLEES AND URGING AFFIRMANCE ________________________

John R. Phillippe, Jr. Attorney of Record Chief Counsel Gary Lawkowski Republican National Committee 310 First Street, S.E. Washington, D.C. 20003 Phone: (202) 863-8638 Counsel for Amicus Curiae

CORPORATE DISCLOSURE STATEMENT The Republican National Committee is an unincorporated entity; it is not a publicly held corporation, nor is it a similarly situated entity which issues public shares. The Republican National Committee does not have a parent company, nor does any publicly held corporation have any form of ownership over it. The Republican National Committee is not aware of any publicly held entity that has a direct financial interest in this case.

/s/ John R. Phillippe, Jr. John R. Phillippe, Jr. Republican National Committee 310 First Street, S.E. Washington, D.C. 20003 Phone: (202) 863-8638 January 10, 2012

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TABLE OF CONTENTS Page CORPORATE DISCLOSURE STATEMENT ......................................................... i TABLE OF AUTHORITIES ................................................................................... iii STATEMENT OF INTEREST ..................................................................................1 SUMMARY OF THE ARGUMENT ........................................................................2 I. The District Court was Correct to Hold that Beaumont May Be Distinguished from the Case at Hand ............................................................................................4 II. Citizens United and Other Recent Decisions have Eviscerated Beaumont‟s Historical Prologue .................................................................................................7 A. Contribution Limits Must be Closely Drawn to a Sufficiently Important Governmental Interest .........................................................................................7 B. Citizens United has Undercut Beaumont‟s Historical Prologue ...................8 III. The Complete Ban on Corporate Contributions is Not Closely Drawn to a Legitimate Anti-Circumvention Interest...............................................................13 A. The Government Fails to Show that Anti-Circumvention is a Sufficient Governmental Interest .......................................................................................14 B. The Ban on Corporate Contributions is Over-Inclusive .............................22 C. The Corporate Contribution Ban Artificially Disadvantages Political Party and Candidate Committees ................................................................................27 CONCLUSION ........................................................................................................31

ii

TABLE OF AUTHORITIES Cases

Agostini v. Felton, 521 U.S. 203 (1997) ....................................................................5

Arizona Free Enterprise Club's Freedom Club PAC v. Bennett, 131 S.Ct. 2806 (2011) ......................................................................................................................7

Austin v. Michigan Chamber of Commerce, 494 U.S. 652 (1990) ............................9

Buckley v. Valeo, 424 U.S. 1 (1976) ................................................................ passim

Citizens United v. FEC, 130 S.Ct. 876 (2010)................................................. passim

Davis v. FEC, 554 U.S. 724 (2008) ...........................................................................8

FEC v. Beaumont, 539 U.S. 146 (2003) .......................................................... passim

FEC v. Colorado Republican Fed. Campaign Comm., 533 U.S. 431 (2001) ........13

FEC v. Nat‟l Conservative Political Action Comm., 470 U.S. 480 (1985) .........9, 10

FEC v. National Right to Work Comm., 459 U.S. 197 (1982) ......................... 11, 13

First National Bank of Boston v. Bellotti, 435 U.S. 765 (1978) ..............................13 iii

Green Party of Connecticut v. Garfield, 616 F.3d 189 (2d Cir. 2010)......................9

McConnell v. FEC, 540 U.S. 93 (2003).....................................................................7

Monitor Patriot Co. v. Roy, 401 U.S. 265 (1971). ....................................................2

Ognibene v. Parkes, -- F.3d. -- , 2011 WL 6382451 (2d Cir. 2011) ...................9, 10

Preston v. Leake, 660 F.3d 726 (4th Cir. 2011).........................................................7

Randall v. Sorrell, 548 U.S. 230 (2006) ..............................................................8, 30

Rodriguez de Quijas v. Shearson/American Express, Inc., 490 U.S. 477 (1989) .....5

SpeechNow.org v. Federal Election Commission, 599 F.3d 686 (D.C. Cir. 2010) 10, 17, 27

United States v. Danielczyk, 791 F.Supp.2d 513 (E.D.Va. 2011) .................. 2, 5, 12

Wisconsin Right to Life v. Barland, No. 10-C-0669 (7th Cir. 2011) .........................9

Statutes

2 U.S.C. § 431 ............................................................................................................1

iv

2 U.S.C. § 441b ................................................................................................ passim

2 U.S.C. § 431(11) ...................................................................................................12

2 U.S.C. § 441a(a)....................................................................................................12

26 U.S.C. § 1361(b)(1).............................................................................................25

26 U.S.C. § 503(b) .....................................................................................................6

26 U.S.C. §§ 1361-1376 ..........................................................................................25

Other Authorities

Bennett Roth, A Family Comes to Rep. Young‟s Defense, Roll Call, May 3, 2011, http://www.rollcall.com/issues/56_115/don-young-legal-defense-fund-chouest205267-1.html .......................................................................................................21

Bradley A. Smith, Campaign Finance Reform: Searching for Corruption in all the Wrong Places, 2003 Cato Sup. Ct. Rev. 187 (2003) ............................................18

Brief Amici Curiae for Campaign Legal Center and Democracy 21 in Support of Appellant and Urging Reversal, United States v. Danielczyk, No. 11-4667 (4th Cir. 2011) ..........................................................................................................6, 20

v

Brief for the United States, United States v. Danielczyk, No. 11-4667 (4th Cir. 2011) .................................................................................................... 6, 19, 20, 22

Dan Eggen, Are Iowa Caucuses Harbinger of the Super PAC Era?, The Washington Post, Jan. 3, 2012, http://www.washingtonpost.com/politics/areiowa-caucuses-harbinger-of-the-super-pacera/2012/01/02/gIQA8zW7YP_story.html ...........................................................30

David Leventhal & Kenneth P. Vogal, Super PACs Go Stealth Through First Contests, Politico, Dec. 30, 2011, http://www.politico.com/news/stories/1211/70957.html .....................................30

David Primo, It's Time To Bring Some Sanity To Campaign Finance Laws, Forbes, Dec. 15, 2011, http://www.forbes.com/sites/realspin/2011/12/13/its-time-tobring-some-sanity-to-campaign-finance-laws/ .....................................................21

Donor Demographics: Election Cycle 2008, Center for Responsive Politics (2009), http://www.opensecrets.org/bigpicture/donordemographics.php?cycle=2008&filt er=A ......................................................................................................................18

Entrance Polls: Iowa Republicans, CNN, Jan. 3, 2012, http://www.cnn.com/election/2012/primaries/epolls/ia .......................................23

Fear Factor: Lobbying and Campaign Finance Reforms in the Nation‟s Capital, The Metropolitan Corporate Counsel (2006), http://www.metrocorpcounsel.com/pdf/2006/May/57.pdf ...................................18

FEC, Conciliation Agreement: LifeCare Holdings, Inc.; LifeCare Management Services, LLC , MUR 5398 (June 8, 2005) ...........................................................16 vi

FEC, Contribution Limits 2011-2012, http://www.fec.gov/pages/brochures/contriblimits.shtml ....................................16

H. Comm. On Ethics, 112th Cong., In the Matter of Allegations Relating to Representative Don Young (Comm. Rep. 2011) ..................................................21

Historical Elections: The Money Behind the Elections, Center for Responsive Politics, http://www.opensecrets.org/bigpicture/index.php..................................28

Indictment, United States v. Danielczyk, 788 F.Supp. 2d 472 (E.D.Va. 2011) (No. 1:11cr85 (JCC)) ......................................................................................................2

Kenneth P. Vogal & Alex Isenstadt, Super PACs Giving Party Committees a Run for Their Money, Politico, Oct. 28, 2011¸ http://www.politico.com/news/stories/1011/67046.html .....................................29

Kenneth P. Vogel, Rick Perry Boosted By Mysterious Corporate Cash, Politico Dec. 30, 2011, http://www.politico.com/news/stories/1211/70972.html ............20

Kyle Dropp, Early Exit Polls: Top Issues this Election, The Washington Post, Nov. 2, 2010, http://voices.washingtonpost.com/behind-thenumbers/2010/11/early_exit_polls_top_issues_th.html .......................................23

M. Keightley, Congressional Research Service Report for Congress, Business Organizational Choices: Taxation and Responses to Legislative Changes (2009) ...............................................................................................................................24

vii

Maggie Haberman, Mysterious Mitt Romney Donor Comes Forward, Politico, Aug. 26, 2011, http://www.politico.com/news/stories/0811/60776.html ...........20

Nicholas Confessore, Outside Groups Eclipsing G.O.P. as Hub of Campaigns, N.Y. Times, Oct 29, 2011 at A1, http://www.nytimes.com/2011/10/30/us/politics/outside-groups-eclipsing-gopas-hub-of-campaigns-next-year.html?_r=1&pagewanted=all ..............................29

Outside Spending, Center for Responsive Politics, http://www.opensecrets.org/outsidespending/index.php ......................................28

Paul Blumenthal, Super PACs and Secret Money: The Unregulated Shadow Campaign, The Huffington Post, Sept. 9, 2011, http://www.huffingtonpost.com/2011/09/26/super-pacs-secret-money-campaignfinance_n_977699.html ................................................................................. 27, 30

Paul Blumenthal, Super PACs Dominate Iowa Caucus, Helping Mitt Romney Run Ahead, The Huffington Post, Dec. 31, 2011, http://www.huffingtonpost.com/2011/12/31/super-pacs-iowa-caucus-mittromney_n_1176741.html?view=print&comm_ref=false .....................................29

R. Sam Garrett, Congressional Research Service Report for Congress, The State of Campaign Finance Policy: Recent Developments and Issues for Congress (2010) ...............................................................................................................................28

Republican National Committee, Complaint Against Obama for America, Oct. 6, 2008, http://i.cdn.turner.com/cnn/2008/images/10/06/Complaint_against_Obama_for_ America.pdf ..........................................................................................................21 viii

Supplemental Brief for Chamber of Commerce of the United States of America as Amicus Curiae, Citizens United v. FEC, 130 S.Ct. 876 (2010) (No. 08-205) .....24

The Federalist No. 51 (James Madison) ..................................................................22

The Rules of the Republican Party, Rule No. 1: Organization of the Republican National Committee (2010) ....................................................................................1

Tom Hamburger & Melanie Mason, „Super PACs‟ Are Showing Their Power, The L.A Times, Jan. 1, 2012, http://articles.latimes.com/2012/jan/01/nation/la-namoney-election-20120101 ....................................................................................31

Regulations

11 C.F.R. § 100.10 ...................................................................................................12

11 C.F.R. § 103.3(b) ......................................................................................... 14, 15

11 C.F.R. §§ 104.3(b)(3)(vii)(A), (C) ......................................................................17

11 C.F.R. §§ 104.4(a),(b), (c) ..................................................................................17

11 C.F.R. § 104.18 ...................................................................................................15

11 C.F.R. § 109.10(b) ..............................................................................................17

ix

11 C.F.R.§ 110.1 ........................................................................................... 6, 12, 25

64 Fed. Reg. 37397-01 (1999) .................................................................................26

Legal Expense Fund Regulations § 3.2 in H. Comm. On Ethics, 112th Cong., In the Matter of Allegations Relating to Representative Don Young, Appendix C at 3 (Comm. Rep. 2011) ..............................................................................................25

Legal Expense Fund Regulations § 3.3 in Id ...........................................................26

x

STATEMENT OF INTEREST Amicus curiae the Republican National Committee (RNC) is an unincorporated entity that is responsible for the “general management of the Republican Party.” The Rules of the Republican Party, Rule No. 1: Organization of the Republican National Committee at 1 (2010). The RNC has members and actively participates in federal, state, and local campaigns and elections in all fifty states; is regulated as a national political party committee under the Federal Election and Campaign Act, 2 U.S.C. § 431; and is subject to the limitations and regulations contained therein, including 2 U.S.C. § 441b(a)‟s prohibition on contributions by corporations. While submitting a brief in support of donors to a Democratic presidential campaign falls out the scope of normal RNC activities, § 441(b)‟s affront to such donors‟ constitutional rights carries major implications for all federal candidates and party committees. By virtue of its status as an entity subject to the limits and prohibitions in question and its close connection with candidates for federal office who are subject to the law in question, the RNC has demonstrated its interest in the law at issue in this case. All parties have consented to the filing of this brief. This brief was not composed in whole or in part by counsel for any party to this case. Funding for this brief derives solely from the RNC; no money was contributed by a party, their counsel, or any other person, to fund its preparation and/or submission. 1

SUMMARY OF THE ARGUMENT In Citizens United v. Federal Election Commission, 130 S.Ct. 876, 904 (2010), the Supreme Court stated “[i]f the First Amendment has any force, it prohibits Congress from fining or jailing citizens, or associations of citizens, for simply engaging in political speech.” Yet, that is precisely what is happening in this case. The Defendants-Appellees face imprisonment under Count 4 of the indictment simply for seeking to engage in political speech through the corporate form. Indictment at 15, United States v. Danielczyk, 788 F.Supp. 2d 472 (E.D.Va. 2011) (No. 1:11cr85 (JCC)). Such criminalization of political expression strikes at the heart of our nation‟s history of open political discourse and rich tradition of recognizing that the First Amendment “has its fullest and most urgent application precisely to the conduct of campaigns for political office.” Monitor Patriot Co. v. Roy, 401 U.S. 265, 272 (1971). In vindicating the right to political expression, the District Court in United States v. Danielczyk, 791 F.Supp.2d 513 (E.D.Va. 2011) was correct to distinguish Danielczyk from Federal Election Commission v. Beaumont, 539 U.S. 146 (2003), providing a narrow avenue for associations of individuals in the corporate form to exercise their First Amendment rights. Contributions from for-profit entities may be rationally distinguished from those from non-profits. Under current Federal Election Commission (FEC) regulations, contributions by permitted non-natural persons are attributed to 2

individuals and count against individual contribution limits based on the division of profits within the entity. For-profit corporations have discernible owners and profit distributions which may be relied upon to attribute contributions to individuals and prevent the use of corporations as conduits to circumvent recognized contribution limits. Non-profit corporations, by definition, do not have owners or profits to distribute, rendering attribution more difficult. While the resulting state of affairs may appear illogical, it is far more rational and constitutionally sound than the current regulatory regime. In the absence of further action by the Supreme Court, this distinction serves to reconcile the opposing pronouncements of the Court in Beaumont and Citizens United. In its historical prologue, Beaumont identified three prongs historically justifying distinctions between corporations and individuals: first, that corporate contributions pose a threat of quid pro quo corruption through the use of large amounts of wealth accumulated in the corporate form and amassed into political war chests; second, to prevent corporations from making contributions to candidates and causes with which its shareholders may disagree; and third, to prevent the use of the corporate form as a conduit to circumvent recognized contribution limits. Citizens United clearly rejects the political war chest and shareholder protection arguments, and along with other recent decisions, calls into question the sufficiency of anti-circumvention. 3

Although anti-circumvention was not addressed directly in Citizens United, the surrounding facts make it difficult to see how § 441b‟s total ban on corporate donations is closely drawn to anti-circumvention and anti-circumvention alone. The government fails to show that circumvention is a sufficient threat to the political system and fails to account for the role political actors play in protecting against violations of campaign finance regulation. Even assuming anticircumvention is a sufficiently important governmental interest, the complete ban both is over-inclusive to this aim and artificially disadvantages political party and candidate committees. It is over-inclusive because it bans all corporate donations without regard to the ability of corporate donors to attribute their donations to individuals. It artificially disadvantages political party and candidate committees by forcing them to rely on aggregating small-dollar donations from individuals while allowing other political actors, such as independent-expenditure-only political action committees, to receive unlimited corporate donations. ARGUMENT I. The District Court was Correct to Hold that Beaumont May Be Distinguished from the Case at Hand

The Supreme Court has observed that “[a]dvocacy of the election or defeat of candidates for federal office is no less entitled to protection under the First Amendment than the discussion of political policy generally or advocacy of the passage or defeat of legislation.” Buckley v. Valeo, 424 U.S. 1, 48 (1976). “[I]t is 4

inherent in the nature of the political process that voters must be free to obtain information from diverse sources in order to determine how to cast their votes,” and therefore speech from corporations has value and adds to the political marketplace of ideas. Citizens United, 130 S.Ct. at 899. Section 441b categorically denies corporations the cherished ability to make even a “symbolic expression of support” in the form of a campaign contribution. Buckley, 424 U.S. at 21. The District Court was correct to conclude that the holding in Beaumont was limited by its own terms to the narrow question of whether or not there is a constitutionally mandated exception to § 441b for non-profit corporations. Danielczyk, 791 F.Supp.2d at 516. In Beaumont, the Court was clear about what it held, stating “[w]e hold that applying the prohibition [on corporate campaign donations] to non-profit advocacy corporations is consistent with the First Amendment.” Beaumont, 539 U.S. at 149 (emphasis added). While the Court of Appeals “should follow the case which directly controls” where one is present, the Court of Appeals is free to distinguish where there is no such case which directly controls. Agostini v. Felton, 521 U.S. 203, 237 (1997) (quoting Rodriguez de Quijas v. Shearson/American Express, Inc., 490 U.S. 477, 484 (1989)). This is particularly true where such a distinction is rational and supported by recent Supreme Court precedent. In the case at hand, in the absence of clarification from the Court, an appropriate distinction was drawn by the District Court that is more 5

consistent with recent Supreme Court jurisprudence while accounting for the Court‟s specific holding in Beaumont. Contrary to the government‟s assertion that non-profit corporations do not differ in any material way from for-profit corporations, there are a number of differences which support the district court‟s holding. See, Brief for the United States at 19-20, United States v. Danielczyk, No. 11-4667 (4th Cir. 2011). Most obviously, as the brief in amicus curiae in support of the Government concedes, by definition, non-profit entities have no owners and no profits to allocate or adjust amongst shareholders. 26 U.S.C. § 503(b); Brief Amici Curiae for Campaign Legal Center and Democracy 21 in Support of Appellant and Urging Reversal at 30 n.12, United States v. Danielczyk, No. 11-4667 (4th Cir. 2011). For-profit corporations do. Under current campaign finance regulation, certain non-natural persons (partnerships and limited liability corporations that elect to be taxed as partnerships) are permitted to make political contributions. 11 C.F.R. § 110.1. In order to prevent circumvention, contributions made by partnerships are attributed according to each partner‟s share of the organization‟s profits, or if not all partners wish to donate, on another basis provided the profits of the contributing partner(s) and only the contributing partner(s) are adjusted accordingly. 11 C.F.R. 110.1(e). For-profit corporations have owners and a division of profits which may serve as a baseline for the attribution of corporate contributions to individuals, preventing 6

individuals from using corporations as conduits to circumvent individual contribution limits. While it may seem counterintuitive to provide disparate treatment to non-profit and for-profit corporations, there is a rational, defensible distinction between the two which seeks to maximize speech.1 II. Citizens United and Other Recent Decisions have Eviscerated Beaumont’s Historical Prologue A. Contribution Limits Must be Closely Drawn to a Sufficiently Important Governmental Interest In order to be valid, a limit on political contributions must be closely drawn to a sufficiently important governmental interest. Arizona Free Enterprise Club's Freedom Club PAC v. Bennett, 131 S.Ct. 2806, 2817 (2011); McConnell v. FEC, 540 U.S. 93, 231-232 (2003); Preston v. Leake,660 F.3d 726, 735 (4th Cir. 2011).2

1 The RNC contends that Beaumont should be overruled in light of Citizens United, and that the distinction between non-profit and for-profit corporations does not justify harsher resrictions on the former, but restricting the free speech rights of the latter is consitutionally infirm regardless of the treatment of the former. 2 In the absense of further Supreme Court clarification, this Court of Appeals has indicated that the closely-drawn standard remains viable, and in recognition of that judgment, the closely-drawn standard has been applied here. Preston, 660 F.3d at 735. The closely-drawn standard derives from the contribution/expenditure distinction in Buckley, and along with that distinction, should be overturned. Buckley, 424U.S. at 25. There is no rational reason to conclude that donations aggregated to support communications by independent-expenditure-only committees, restrictions on which are subject to strict scrutiny, are more expressive than donations pooled to support speech by a candidate or political committee, restrictions on which are subject to only heightened scrutiny. To the extent that there are compelling reasons justifying differing treatments of contributions to independent-expenditure-only committees and candidate/party committees, the 7

The Court has recognized that under the closely-drawn standard, there is still a floor below which legislators cannot go in regulating contributions. In Randall v. Sorrell, 548 U.S. 230, 248 (2006), the Court struck down Vermont‟s contribution limits as impermissibly low, concluding that “[a]t some point the constitutional risks to the democratic electoral process [of contribution limits that are too low] becomes too great.” See also, Davis v. FEC, 554 U.S. 724, 737 (2008) (“we have held that limits that are too low cannot stand”). In Randall, the Court provided some guidance for lower courts evaluating contribution limits, stating that “courts, including appellate courts, must review the record independently and carefully with an eye toward assessing the statute‟s „tailoring,‟ that is, toward assessing the proportionality of the restrictions.” Randall, 548 U.S. at 249. In determining whether a contribution ban is closely drawn, the court must look to see if the statute is proportional to its objectives. B. Citizens United has Undercut Beaumont’s Historical Prologue The Court in Beaumont identified three objectives of § 441b‟s ban on corporate contributions: corruption or the appearance thereof through the accumulation of political war chests, protecting shareholders from having corporate funds disbursed to candidates they may not support, and preventing the circumvention of valid contribution limits. proper place to make that determination is as part of strict scrutiny analysis, not in selecting the standard of review. 8

Following the Court‟s rejection of distortion in the political marketplace in Citizens United, preventing quid pro quo corruption or the appearance thereof is the only governmental interest sufficient to justify restrictions on political speech. Citizens United, 130 S.Ct. at 909 (overruling Austin v. Michigan Chamber of Commerce, 494 U.S. 652 (1990)); FEC v. Nat‟l Conservative Political Action Comm., 470 U.S. 480, 496-497 (1985); Buckley, 424 U.S. at 25-29. In Ognibene v. Parkes, -- F.3d. -- , 2011 WL 6382451 at *8 (2d Cir. 2011), the Court of Appeals for the Second Circuit appears to have disregarded this holding, identifying “improper or undue influence” as a distinct and sufficient form of political corruption. To the extent that improper and undue influence differs from quid pro quo corruption or the appearance thereof, Judge Livingston correctly observes in her concurrence that “recent decisions by the Supreme Court and this Court clearly foreclose this . . . determination.” Ognibene, at *18 (Livingston, J, concurring in part and concurring in the judgment). In Green Party of Connecticut v. Garfield, 616 F.3d 189 (2d Cir. 2010), the Court of Appeals for the Second Circuit held that “„influence and access,‟ without more, „are not sinister in nature,‟ but are part of representative government.” Ognibene, at *19 (Livingston, J, concurring in part and concurring in the judgment) (quoting Green Party of Connecticut, 616 F3d at 207). In Wisconsin Right to Life v. Barland, No. 10-C-0669 at *25 (7th Cir. 2011), the Seventh Circuit concluded “. . . preventing actual or apparent quid pro quo 9

corruption is the only interest the Supreme Court has recognized as sufficient to justify campaign-finance restrictions” (emphasis in the original), and in SpeechNow.org v. Federal Election Commission, 599 F.3d 686, 692 (D.C. Cir. 2010) the court determined that “[t]he Supreme Court has recognized only one interest sufficiently important to outweigh the First Amendment interests implicated by contributions for political speech: preventing corruption or the appearance of corruption.” The court‟s ruling in Ognibene is out of sync with the Supreme Court, the other Courts of Appeals, and its own jurisprudence; the only legitimate purpose of contribution limits or bans is to prevent quid pro quo corruption or the appearance thereof. To the extent Beaumont identified an inherent corruption in corporate donations, it did so through constitutionally impermissible warnings regarding the dangers of aggregated wealth in the corporate form. When the Court in Beaumont spoke of quid pro quo corruption, it did so in the context of the “public interest in „restrict[ing] the influence of political war chests funneled through the corporate form‟” to “preven[t] corruption or the appearance of corruption.” Beaumont, 539 U.S. at 154 (quoting FEC v. Nat‟l Conservative Political Action Comm., 470 U.S. 480, 496-497, 500-501 (1985)). This argument traced its lineage to concerns that “substantial aggregations of wealth amassed by the special advantages which go with the corporate form of organization should not be converted into „political war 10

chests‟ which could be used to incur political debts from legislators.” Beaumont, 539 U.S. at 154 (quoting FEC v. Nat‟l Right to Work Comm., 459 U.S. 197, 207 (1982)). Citizens United does not expressly evaluate the merits of these assertions, noting that contribution limits were not squarely before the Court; however, the language the Court uses in describing this language reveals deep skepticism. Citizens United, 130 S.Ct. at 909. According to the Court, “the Government cannot restrict political speech based on the speaker‟s corporate identity. Bellotti could not have been clearer . . . .” Citizens United, 130 S.Ct. at 902. As the Court in Citizens United observes, the National Right to Work Committee Court in formulating the idea that political war chests pose a danger of corruption was “[s]eizing on an aside in Bellotti‟s footnote,” an aside that is “supported only by a law review student comment, which misinterpreted Buckley.” Citizens United, 130 S.Ct. at 909. Accordingly, “[r]eferences to massive corporate treasuries should not mask the real operation of this law,” in this case as in Citizens United, to ban political speech. Citizens United, 130 S.Ct. at 907. Aggregations of wealth or political war chests are not quid pro quo corruption, and they cannot justify restrictions on political speech. This proposition is reinforced by the presence of contribution limits. Contribution limits break the hypothesized link between substantial aggregations 11

of wealth and the accumulation of political war chests on the one hand, and supposedly indebted lawmakers on the other. Contribution limits reflect a legislative judgment regarding a floor below which the legislature has concluded contributions will not pose an appreciable risk of quid pro quo corruption or the appearance thereof. See, Buckley, 424 U.S. at 29-30. Contribution limits apply to all “persons” not otherwise prohibited from making political contributions. 2 U.S.C. § 441a(a); 11 C.F.R. § 110.1(a). “Person” is defined to include any corporation or labor organization. 2 U.S.C. § 431(11); 11 C.F.R. § 100.10. If able to make direct contributions, corporations would immediately be subject to the same contribution limits as individuals – contribution limits that Congress has determined pose no significant risk of quid pro quo corruption. Once it is recognized that the only permissible purpose of contribution limits is to prevent actual quid pro quo corruption or the appearance thereof, it follows that the District Court is correct in acceding to Congress‟s legislative judgment that contributions at or below the proscribed limits do not pose any risk of such corruption. U.S. v. Danielczyk, 791 F.Supp.2d 513, 515 (E.D.Va 2011). Resort to the potential for corruption posed by political war chests is foreclosed by the Court in Citizens United. The shareholder protection rationale posited in Beaumont is also now foreclosed by Citizens United. The Beaumont Court asserted that “ . . . the ban has 12

always done further duty in protecting „the individuals who have paid money into a corporation or union for purposes other than the support of candidates from having that money used to support political candidates to whom they may be opposed.‟” Beaumont, 539 U.S. at 154 (quoting FEC v. Nat‟l Right to Work Comm., 459 U.S. 197, 208 (1982)). According to the Court in Citizens United, this rationale “would allow the Government to ban the political speech even of media corporations,” a power that “the First Amendment does not allow.” Citizens United, 130 S.Ct. at 911. Rather, the proper remedy for shareholder protection concerns is “through the procedures of corporate democracy.” Citizens United, 131 S.Ct. at 911 (quoting First Nat‟l Bank of Boston v. Bellotti, 435 U.S. 765, 794 (1978)). Given that the political war chest argument and the shareholder protection argument are foreclosed by Citizens United, anti-circumvention is all that remains of Beaumont‟s historical prologue. III. The Complete Ban on Corporate Contributions is Not Closely Drawn to a Legitimate Anti-Circumvention Interest

In addition to quid pro quo corruption, Beaumont relied in part on a more circuitous form of corruption – that “restricting contributions by various organizations hedges against their use as conduits for „circumvention of [valid] contribution limits.‟” Beaumont, 539 U.S. at 155 (quoting FEC v. Colorado Republican Fed. Campaign Comm., 533 U.S. 431, 456 and n. 18 (2001)). In advancing its argument under this theory, the government fails to provide 13

empirical support for the proposition that circumvention is a sufficient governmental interest to support a ban on political speech. Even assuming arguendo that anti-circumvention in and of itself is a sufficiently important interest, § 441b‟s total ban on all corporate contributions is not closely drawn to that interest because it is over-inclusive and because it places political party and candidate committees at an artificial disadvantage. A. The Government Fails to Show that Anti-Circumvention is a Sufficient Governmental Interest The government‟s assertion that anti-circumvention is a sufficient governmental interest is largely hypothetical. As such, it ignores the role individuals and other political actors play in the regulation of the political process. Political actors have strong legal and reputational incentives to abide by the law. Once a contribution arrives at the intended political committee, the Treasurer of that committee has a legal duty to ensure that the committee complies with the individual contribution limits and that the contributions are not from a prohibited source. 11 C.F.R. § 103.3(b). If there is any question about the legality of a contribution, the Treasurer must use their best efforts to verify its legality, including making at least one written request for evidence that it is a legal contribution, such as a written or oral statement by the contributor explaining why it is a legal contribution. 11 C.F.R. § 103.3(b)(1). If for whatever reason the contribution‟s legality cannot be verified, the committee has a legal obligation to 14

return the contribution to the prospective donor within thirty days. 11 C.F.R. § 103.3(b)(1). If a contribution that appears legal is later determined to be illegal, it must be returned. 11 C.F.R. § 103.3(b)(2). The Treasurer of a political committee must submit a signed verification along with the committee‟s disclosure reports stating, under threat of perjury, that they have examined the reports of legal contributions and that these reports are true to the best of their knowledge. 11 C.F.R. § 104.18. Even if an individual wants to make an illegal contribution, regulations governing political committees make such an action difficult. These are not just empty provisions. Violating these provisions can result in enforcement action by the FEC or criminal prosecution by the Department of Justice. In 2008, the last presidential election year, the FEC reported closing seventy-one cases and assessing $2,385,043 in civil fines, for an average fine of approximately $33,592 per case closed. FEC, OGC Enforcement Statistics for Fiscal Years 2003-2008 2 (2009), http://www.fec.gov/em/enfpro/enforcestatsfy0308.pdf. Even in cases where individuals and organizations seek to do the right thing, large fines may follow. In 2005, the FEC entered into a conciliation agreement with a corporation and its wholly owned subsidiary that self-reported (as happened in the present case) a violation of the ban on corporate contributions. The FEC assessed a $50,000 fine that “reflects a reduction from the penalty the Commission would have sought if the violations had not been voluntarily 15

disclosed.” FEC, Conciliation Agreement: LifeCare Holdings, Inc.; LifeCare Management Services, LLC 14, MUR 5398 (June 8, 2005). Political candidates and committees often spend years building up reputations in the community. An investigation into impropriety, let alone an adverse ruling, can hurt that reputation and in the most extreme cases, even cost candidates elections. Even in the most unfavorable hypothetical – a bad actor intentionally trying to circumvent contribution limits – there is still an important check on the system: political committees have a legal obligation to ensure compliance with campaign finance laws, and they have very strong practical and reputational incentives to meet that obligation given that political success is a direct function of public esteem. Setting aside these legal and reputational concerns, the convoluted circumvention schemes envisioned by the government do not make sense in the current regulatory environment. The current contribution limit is $2,500 per candidate. FEC, Contribution Limits 2011-2012, http://www.fec.gov/pages/brochures/contriblimits.shtml. Based on this contribution limit, a wealthy donor wishing to spend, for example, $100,000, in support of a particular candidate would need to establish at least forty separate subsidiaries, enlist the cooperation of at least the candidate and the campaign treasurer, and successfully hide their hand in corporate filings and FEC disclosures 16

to circumvent the contribution limit. Alternatively, there is no limit to what an individual or corporation can contribute or spend on independent expenditures. See, SpeechNow.org v. FEC, 599 F.3d 686 (D.C. Cir. 2010). A wealthy donor wishing to spend $100,000 to support a candidate could make a $2,500 contribution and spend $97,500 on independent expenditures supporting that candidate without establishing a single subsidiary and without breaking a single law. In addition, a candidate has to know where the money is coming from in order for it there to be any quid pro quo corruption or the appearance thereof. The entire purpose of a circumvention scheme would be to obfuscate the source of the money. Independent expenditures are openly disclosed. See, 11 C.F.R. §§ 104.3(b)(3)(vii)(A), (C); 104.4(a),(b), (c); 109.10(b). Any quid pro quo arrangement would be illegal under either circumstance. Assuming, as the Government does, that there is in fact a pool of bad actors, the Government is seeking, without any empirical evidence, to restrict the free speech rights of millions of Americans to prevent those bad actors from laundering illegal campaign contributions through a circumvention scheme that today is so needlessly convoluted it would make Rube Goldberg smile. The intentional bad actor is a worst-case scenario. For the overwhelming majority of political contributors, a “symbolic expression of support” is not worth 17

risking prison. From 2003-2008, the FEC closed six-hundred cases arising from complaints and referrals, out of which 158 involved substantive issues concerning limitations on contributions and expenditures. FEC, OGC Enforcement Statistics for Fiscal Years 2003-2008 2 (2009), http://www.fec.gov/em/enfpro/enforcestatsfy03-08.pdf. In the 2007-2008 election cycle alone, there were over 1,300,000 reported donors to federal elections. Donor Demographics: Election Cycle 2008, Center for Responsive Politics (2009), http://www.opensecrets.org/bigpicture/donordemographics.php?cycle=2008&filter =A. The overwhelming majority of political donors are law-abiding citizens seeking to exercise their First Amendment rights by supporting candidates, parties and political action committees. As one former Chairman of the Federal Election Commission observed, the fact of the matter is “there is little evidence of regular, intentional violations of campaign finance law;” rather “[m]ost violations of campaign finance law are inadvertent.” Fear Factor: Lobbying and Campaign Finance Reforms in the Nation‟s Capital, The Metropolitan Corporate Counsel at 57 (2006), http://www.metrocorpcounsel.com/pdf/2006/May/57.pdf . The result is that “the truest grassroots activity . . . is caught up in a Byzantine web of regulations.” Bradley A. Smith, Campaign Finance Reform: Searching for Corruption in all the Wrong Places, 2003 Cato Sup. Ct. Rev. 187, 201 (2003). Simplifying the regulatory regime by removing the irrational distinction between 18

corporations, LLCs, and partnerships is likely to reduce actual illegal behavior and reduce the compliance burden on political committees by reducing the risk of accidentally making an illicit contribution. The government‟s fears of widespread circumvention are without empirical support. As a corollary to concerns that individuals will use corporations as conduits to circumvent valid contribution limits, the Government asserts that even with full disclosure of corporate actions it will be difficult if not impossible for regulatory agencies to assimilate the large volume of information necessary to ensure proper attribution of corporate contributions. Brief for the United States at 44 (“Even with disclosure of corporate contributions, multiple corporations with unrelated names would not appear related, and getting beneath the surface to probe ownership or control would be extraordinarily resource-intensive and in many instances virtually impossible”). Aside from the speculative nature of this claim, such tasks are not left to government regulators alone. Regulators are joined by the media and other interested political actors, particularly rival campaigns and political parties, who have strong incentives to investigate campaign finance disclosures for any impropriety as part of their routine research efforts. This is not a hypothetical scenario. Even in the post-Citizens United environment, outside groups have efficiently performed the “enormous and impractical” task of peaking behind the curtain to deduce whether a single 19

contributor controlled particular entities or used them as conduits for making personal contributions. Brief for the United States at 49. It was a media entity that first identified a large contribution to a super PAC supporting Mitt Romney‟s presidential campaign made by a corporation that formed and dissolved within four months, and it was independent advocacy groups (including those which have filed a brief in amicus curiae in this case), which filed complaints with the FEC and Department of Justice forcing its previously secret patron to come forward. See, Brief Amici Curiae for Campaign Legal Center and Democracy 21 in Support of Appellant and Urging Reversal at 23-24, United States v. Danielczyk, No. 11-4667 (4th Cir. 2011); Maggie Haberman, Mysterious Mitt Romney Donor Comes Forward, Politico, Aug. 26, 2011, http://www.politico.com/news/stories/0811/60776.html. It was a media story that led the owners of a corporation which made a large donation to a super PAC supporting Rick Perry‟s presidential campaign to come forward. Kenneth P. Vogel, Rick Perry Boosted By Mysterious Corporate Cash, Politico Dec. 30, 2011, http://www.politico.com/news/stories/1211/70972.html. And it was a media story reporting contributions by multiple LLCs owned by the same family that contributed to an investigation of Representative Don Young by the House Ethics Committee.3 H. Comm. On Ethics, 112th Cong., In the Matter of Allegations

3

The Committee ultimately dismissed the allegations against Representative 20

Relating to Representative Don Young 4-5 (Comm. Rep. 2011). See also, Bennett Roth, A Family Comes to Rep. Young‟s Defense, Roll Call, May 3, 2011, http://www.rollcall.com/issues/56_115/don-young-legal-defense-fund-chouest205267-1.html. Political parties also have a role to play in policing corporate contributions, both in making sure that their own conduct is above board and immune from attack, and in monitoring the conduct of their competitors. RNC researchers carefully review every FEC report from organizations such as the Democratic National Committee and Obama for America and will report improprieties to the FEC or other relevant agencies. See, e.g., Republican National Committee, Complaint Against Obama for America, Oct. 6, 2008, http://i.cdn.turner.com/cnn/2008/images/10/06/Complaint_against_Obama_for_A merica.pdf. This is not a practice unique to the RNC; “In the real world, these violators would be exposed to lawsuits, fines and attacks from political opponents.” David Primo, It's Time To Bring Some Sanity To Campaign Finance Laws, Forbes, Dec. 15, 2011, http://www.forbes.com/sites/realspin/2011/12/13/itstime-to-bring-some-sanity-to-campaign-finance-laws/. In the heated battleground state of Florida, for example, one election commission official indicated that 98%

Young, concluding that he neither violated the letter of the regulations nor clearly violated the spirit thereof. H. Comm. On Ethics, 112th Cong., In the Matter of Allegations Relating to Representative Don Young 11 (Comm. Rep. 2011). 21

of campaign-finance-related complaints are politically motivated. Id. Just as with government, so it is with the political process: “Ambition must be made to counteract ambition.” The Federalist No. 51 (James Madison). To the extent that attempts at circumventing campaign finance regulations occur, political actors such as the RNC and its Democratic counterparts are likely to act in their own selfinterest to investigate and report suspicious disclosures of their political opponents. B. The Ban on Corporate Contributions is Over-Inclusive By prohibiting contributions from all entities classified as corporations, regardless of size or internal structure, § 441b limits the political speech rights of organizations whose contributions could be easily attributed to individuals. Attribution limits opportunities for circumvention, removing the raison d‟être for the ban. As such, the ban is over-broad, and thus not closely drawn to the governmental interest of preventing quid pro quo corruption or the circumvention of preexisting contribution limits. The Government has defended § 441b on the grounds that corporations are primarily economic actors and will seek to circumvent the contribution limits to obtain economic rent from lawmakers. According to the Government, “corporations pursue economic interests through entry into the political arena” and “[t]he corporate form is particularly suited to pursue such economically motivated behavior to seek official favors.” Brief for the United States at 41. Yet as the 22

Court in Citizens United observed, “[a]ll speakers, including individuals and the media, use money amassed from the economic marketplace to fund their speech.” Citizens United, 130 S.Ct. at 905. Furthermore, corporations are far from the only ones whose political behavior may be influenced by economic factors. In both 2008 and 2010, over 60% of voters indicated that the economy was the most important issue for the country. Kyle Dropp, Early Exit Polls: Top Issues this Election, The Washington Post, Nov. 2, 2010, http://voices.washingtonpost.com/behind-thenumbers/2010/11/early_exit_polls_top_issues_th.html. Economic concerns have continued to predominate voters‟ concerns into 2012, with network entrance polls at the Iowa Caucuses indicating that the economy was again the most important issue. Entrance Polls: Iowa Republicans, CNN, Jan. 3, 2012, http://www.cnn.com/election/2012/primaries/epolls/ia. Especially during a down economy, individuals are highly motivated by economic factors in their political behavior. There is no indication, nor is their reason to expect, that a corporation is any more rent-seeking it its political forays than an unincorporated sole proprietorship, partnership, or limited liability corporation, all of which are primarily viewed as economic actors, or than individuals, all of which are permitted to make political contributions. Most corporations are not large entities waiting to flood the political 23

system with contributions to curry influence. Most corporations are small businesses. As the Court noted in Citizens United, “more than 75% of corporations whose income is taxed under federal law have less than $1 million in receipts per year,” while “96% of the 3 million businesses that belong to the U.S. Chamber of Commerce have fewer than 100 employees.” Citizens United, 130 S.Ct. at 907 (citing M. Keightley, Congressional Research Service Report for Congress, Business Organizational Choices: Taxation and Responses to Legislative Changes 10 (2009) & Supplemental Brief for Chamber of Commerce of the United States of America as Amicus Curiae at 1, 3, Citizens United v. FEC, 130 S.Ct. 876 (2010) (No. 08-205), respectively) (internal citations omitted). While the concept of corporate contributions evokes images of organizations like Exxon or Halliburton, with large numbers of shareholders and large corporate treasuries, the reality is that most corporations in the United States are small businesses more akin to a neighborhood store. Yet § 441b does not distinguish between these different types of entities; under § 441b, a corporation is a corporation. As such, it is overinclusive. The over-breadth of § 441b is further illustrated in the distinctions that it does make. Under FEC regulations, a single type of business organization, an LLC, is treated as a partnership, therefore able to make political contributions, or a corporation, therefore unable to make contributions, based solely on which 24

provision of the tax code it elects to be taxed under. 11 C.F.R. § 110.1(g). The First Amendment rights of a limited liability corporation hinge solely on a business decision that may be undertaken for a myriad of reasons, few if any of which have any discernible relationship to the political process let alone the potential to cause quid pro quo corruption. Subchapter S corporations are small businesses4 which may, like LLCs, elect to be taxed under different provisions of the tax code. 26 U.S.C. §§ 1361-1376. Unlike LLCs, this choice has no impact on the corporation‟s First Amendment rights; subchapter S corporations are categorically prohibited from making direct contributions. This prohibition bears no relation to attribution. Under the rules established by the House Committee on Ethics, members of Congress are able to receive limited donations to Legal Expense Funds from subchapter S corporations. Legal Expense Fund Regulations § 3.2 in H. Comm. On Ethics, 112th Cong., In the Matter of Allegations Relating to Representative Don Young, Appendix C at 3 (Comm. Rep. 2011). Under Regulation 3.3 of the Legal Expense Fund regulations, contributions by subchapter S corporations are attributed in exactly the same manner as those by partnerships and LLCs. Legal Expense Fund Regulations § 3.3
4

Defined in the Internal Revenue Code as a corporation having one class of stock with 100 or fewer shareholders, all of whom are individuals, certain trusts, or certain tax-exempt organizations, and none of whom are nonresident aliens. 26 U.S.C. § 1361(b)(1). Since all shareholders must be individuals, the circumvention schemes hypothesized by the government are impossible with subchapter S corporations. 25

in Id. When the FEC undertook rulemaking with respect to LLCs, it recognized that there are general similarities between LLCs and subchapter S corporations, but elected to exclude subchapter S corporations from rulemaking permitting LLCs to make political contributions “[b]ecause subchapter S corporations are considered corporations under the laws of all fifty States.” 64 Fed. Reg. 37397-01 (1999). In spite of their structural similarities to LLCs, in spite of their ability to elect to be taxed as unincorporated businesses for federal tax purposes, and in spite of the clearly demonstrated feasibility of attribution, all subchapter S corporations are categorically prohibited from making political contributions based solely on their corporate status. This Kafka-esque mix of regulatory formalism and functionalism is overbroad. By permitting one category of speaker – partnerships and LLCs that elect to be taxed as partnerships – to make political donations while prohibiting another, similarly situated speaker – subchapter S corporations that are taxed like unincorporated entities(in addition to LLCs that are taxed as corporations) – Congress is impermissibly outlawing speech that has no corrupting potential. Accordingly, § 441b is not closely drawn to a sufficiently important governmental interest.

26

C. The Corporate Contribution Ban Artificially Disadvantages Political Party and Candidate Committees The Court in Citizens United has made it clear that corporations may enter the political arena directly through independent expenditures, and/or unlimited contributions to independent-expenditure-only committees. At the same time, corporations are currently prohibited from making limited campaign contributions to political parties and candidate committees. This state of play creates a disparate environment for corporate contributions which actively and artificially disadvantages political parties and campaign committees. Following Citizens United and its progeny, corporations are able to make unlimited direct contributions to independent political organizations. The result, according to the Executive Director of the Center for Responsive Politics, is that “[money is] shifting away from the parties, the candidates, and PACs, and shifting to these unregulated groups and becoming much and much more secret.” Paul Blumenthal, Super PACs and Secret Money: The Unregulated Shadow Campaign, The Huffington Post, Sept. 9, 2011, http://www.huffingtonpost.com/2011/09/26/super-pacs-secret-money-campaignfinance_n_977699.html. As the Congressional Research Service observed, “[f]ollowing Citizens United and SpeechNow, it is . . . possible that tax-exempt organizations, corporations, or unions will rival or overshadow parties‟ financial prowess in the long-term.” R. Sam Garrett, Congressional Research Service Report 27

for Congress, The State of Campaign Finance Policy: Recent Developments and Issues for Congress 12 (2010). Outside spending accounted for approximately 5.7% of total spending in the 2008 election cycle. Historical Elections: The Money Behind the Elections, Center for Responsive Politics, http://www.opensecrets.org/bigpicture/index.php; Outside Spending, Center for Responsive Politics, http://www.opensecrets.org/outsidespending/index.php. This ballooned to $304,679,091, or nearly 8.4% of all election-related spending in the 2010 election cycle. Id. These numbers are significantly higher in races where outside groups choose to focus their efforts, with super PAC spending alone reaching over 40% of total spending in the 2008 Colorado Senate race. R. Sam Garrett, Congressional Research Service Report for Congress, “Super PACs” in Federal Elections: Overview and Issues for Congress 10-20 (Dec. 2, 2011). All signs indicate that outside spending will continue to increase in the 2012 election cycle. In the 2010 election cycle, seventy-nine independent-expenditure-only super PACs organized and spent approximately $90.4 million. Id at 13. By December 2011, approximately 250 super PACs had already registered with the FEC for the 2012 election cycle. Id. at 26. By the end of 2011, “super PACs have combined to spend $11 million in the Republican primaries, at least $5.8 million of that in Iowa alone.” Paul Blumenthal, Super PACs Dominate Iowa Caucus, Helping Mitt 28

Romney Run Ahead, The Huffington Post, Dec. 31, 2011, http://www.huffingtonpost.com/2011/12/31/super-pacs-iowa-caucus-mittromney_n_1176741.html?view=print&comm_ref=false. Super PACs associated with two conservative groups alone are already planning to raise hundreds of millions of dollars, an amount that will “rival what the formal Republican committees will spend.” Nicholas Confessore, Outside Groups Eclipsing G.O.P. as Hub of Campaigns, N.Y. Times, Oct 29, 2011 at A1, http://www.nytimes.com/2011/10/30/us/politics/outside-groups-eclipsing-gop-ashub-of-campaigns-next-year.html?_r=1&pagewanted=all. The result is that traditional political parties and candidate committees are in danger of having their voices drowned out. According to Representative Tom Cole, who helped run the Republican National Committee and the National Republican Congressional Committee, “[t]here‟s no question that with the way we structure these super PACs, it will enormously diminish the role the committees play.” Kenneth P. Vogal & Alex Isenstadt, Super PACs Giving Party Committees a Run for Their Money, Politico, Oct. 28, 2011¸ http://www.politico.com/news/stories/1011/67046.html. This diminution does not result from a failure of political parties and campaigns to attract donors, but rather reflects an artificial allocation derived from what the Huffington Post has characterized as a “two-tiered” campaign finance system, with political parties and 29

candidate committees subject to strict regulation of contribution amount and sources, while outside groups are free to act unencumbered. Paul Blumenthal, Super PACs and Secret Money: The Unregulated Shadow Campaign, The Huffington Post, Sept. 9, 2011, http://www.huffingtonpost.com/2011/09/26/superpacs-secret-money-campaign-finance_n_977699.html. As one top advisor to a super PAC supporting Newt Gingrich‟s presidential campaign observed, “[i]t‟s ridiculous that we have the ability to raise unlimited money and direct the message of the campaigns when the candidates themselves don‟t have this . . . [but] this is the situation that‟s been given to us.” David Leventhal & Kenneth P. Vogal, Super PACs Go Stealth Through First Contests, Politico, Dec. 30, 2011, http://www.politico.com/news/stories/1211/70957.html. In Randall, the Supreme Court held that contribution limits that are too low harm the electoral process by preventing candidates from mounting effective campaigns. Randall, 548 U.S. at 249. In early primary states such as Iowa, “[s]uper PACs have outspent Republican candidates by more than 2 to 1.” Dan Eggen, Are Iowa Caucuses Harbinger of the Super PAC Era?, The Washington Post, Jan. 3, 2012, http://www.washingtonpost.com/politics/are-iowa-caucuses-harbinger-ofthe-super-pac-era/2012/01/02/gIQA8zW7YP_story.html. Early indications are that outside spending in Iowa and New Hampshire for the 2012 Republican presidential nomination process is “swamping the efforts of the candidates themselves.” Tom 30

Hamburger & Melanie Mason, „Super PACs‟ Are Showing Their Power, The L.A Times, Jan. 1, 2012, http://articles.latimes.com/2012/jan/01/nation/la-na-moneyelection-20120101. The solution is not to restrict or prohibit outside groups, which would be unconstitutional under Citizens United. At the policy level, more speech serves the public interest by ensuring more perspectives are heard. At the legal level, Citizens United and its progeny have made it readily apparent that such restrictions are antithetical to the First Amendment. The solution is to recognize that § 441b criminalizes speech and artificially disadvantages regulated political entities, and loosen the ties that force political parties and candidate committees to grapple in the marketplace of ideas with one hand firmly tied behind their backs. The distinction between for-profit and non-profit corporations adopted by the District Court may appear arbitrary, but until the Supreme Court has had the opportunity to reevaluate § 441b in light of Citizens United, it is the most rational path in an otherwise Byzantine, irrational, and capricious jungle of regulation. CONCLUSION The District Court‟s ruling should be affirmed.

31

Respectfully Submitted, /s/ John R. Phillippe, Jr. John R. Phillippe, Jr. Attorney of Record Chief Counsel Gary Lawkowski Republican National Committee 310 First Street, S.E. Washington, D.C. 20003 Phone: (202) 863-8638 Counsel for Amicus Curiae January 10, 2012

32

CERTIFICATE OF COMPLIANCE WITH FED. R. APP. P. 32(a) This brief complies with the limitations set forth in Fed. R. App. P. 32(a)(7)(B) because it contains 6,910 words, excluding the portions exempted under F. R. App. P. 32(a)(7)(B)(iii). This brief has been prepared in Microsoft Office Word 2007 using the proportionally spaced typeface “Times New Roman” in 14 point, in conformity with Rule 32(a)(5)(A).

/s/ John R. Phillippe, Jr. John R. Phillippe, Jr. Republican National Committee 310 First Street, S.E. Washington, D.C. 20003 Phone: (202) 863-8638 January 10, 2012

CERTIFICATE OF SERVICE I certify that on January 10, 2012, I electronically served a copy of the forgoing document on all parties or their counsel through the CM/ECF system. All parties and their counsel are CM/ECF users. I also caused eight true and correct printed copies to be filed with the Clerk of the Court by FedEx delivery directed to the following address: Patricia S. Connor Clerk U.S. Court of Appeals for the Fourth Circuit 1100 East Main Street, Suite 501 Richmond, Virginia 23219-3517

/s/ John R. Phillippe, Jr. John R. Phillippe, Jr. Republican National Committee 310 First Street, S.E. Washington, D.C. 20003 Phone: (202) 863-8638

January 10, 2012

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