Shortly after the U.S. Supreme Court’s Citizens United ruling in 2010, the Iowa legislature adopted and Governor Chet Culver signed into law new campaign finance disclosure requirements for corporate organizations that make independent expenditures for or against Iowa candidates. At the time, I thought those new rules were court-proof, because the law only called for disclosure and did not restrict the size of corporate contributions to independent expenditure campaigns. Nevertheless, conservative “campaign-finance crusader” Jim Bopp filed a federal lawsuit on behalf of Iowa Right to Life, claiming that Iowa’s rules were unconstitutional for several reasons. U.S. District Court Judge Robert Pratt dismissed that lawsuit, but Iowa Right to Life appealed the ruling.
On June 13, a panel for the Eighth Circuit U.S. Court of Appeals unanimously upheld part of Iowa’s law on disclosure reports for independent campaign expenditures by a corporation. However, the court struck down rules demanding ongoing reports from groups that have made independent expenditures. Follow me after the jump for links and commentary about the ruling, which will affect next year’s election campaigns in Iowa.
The full text of the appeals court decision in Iowa Right to Life v. Tooker is available here (pdf). Colin Smith wrote an excellent backgrounder earlier this year for the Nyemaster Goode law firm’s On Brief blog. Excerpt:
After Citizens United, Iowa, like many states, was forced to amend its campaign-finance laws to comply with the Supreme Court’s ruling. By emergency legislation, the Iowa General Assembly made it lawful for corporations to make independent expenditures without using a PAC, but at the same time it required corporations to file reports and disclosures with the Iowa Ethics & Campaign Disclosure Board when they do.
Iowa Right to Life believes that these new disclosure requirements go too far. So the group challenged the new law in federal court alleging, among other things, that after Citizens United the State can impose some disclosure obligations on corporate political spending such as one-time reports, but that it cannot force politically active corporations to engage in ongoing disclosure obligations that could be costly in terms of time, personnel, and resources.
[District Court] Judge Pratt rejected those arguments, and it seemed likely that the Eighth Circuit would do the same. But that was before the en banc court struck down a similar Minnesota law in Minnesota Citizens Concerned for Life v. Swanson.
In the wake of Citizens United, Minnesota also required corporations who make independent expenditures to file ongoing reports, even if the corporation itself was not producing any express advocacy. A majority of the Eighth Circuit ruled in Swanson that those ongoing reporting requirements-which apply even if the corporation isn’t speaking at the time of filing-are overly burdensome and thus violate the First Amendment.
At oral argument last month, Iowa Right to Life argued that Iowa’s law is similar to Minnesota’s, and that it should suffer the same fate. Like the Minnesota law, Iowa’s law requires corporations to file reports and disclosures with the Iowa Ethics & Campaign Disclosure Board when they engage in political independent expenditures. And like the Minnesota law, that sets off “ongoing” or “recurring” disclosure requirements that are very similar, but not identical to, the reporting requirements struck down in Swanson. Further, these required reports are very similar to the reports that PACs must file under Iowa law, making it appear – allegedly – like Iowa is treating corporations who sporadically engage in express advocacy the same as PACs whose major purpose is to make political expenditures. That similar treatment was vital to the Eight Circuit’s opinion in Swanson. So will the Eighth Circuit use the Iowa Right to Life case as a chance to expand upon the precedents of Swanson and Citizens United and strike down Iowa’s corporate disclosure laws? Perhaps.
Incidentally, the Iowa Supreme Court already ruled in 2011 that corporate organizations not created primarily to engage in election activities can make independent expenditures in Iowa without registering as a PAC. Federal Judge Pratt had asked the Iowa Supreme Court justices to weigh in on that issue while Iowa Right to Life’s lawsuit was pending in his court.
As Smith predicted, the three-judge panel for the Eighth Circuit Court of Appeals applied reasoning from the Minnesota Citizens Concerned for Life ruling in its decision on Iowa’s disclosure requirements. In fact, Judge Michael Melloy specified in his concurring opinion that he dissented from Minnesota Citizens Concerned for Life and therefore would consider two of the challenged Iowa rules to be constitutional. However, Melloy noted, “This panel is obligated to follow the precedent established by the en banc court,” and for that reason, he concurred in the Iowa Right to Life v. Tooker ruling.
Colin Smith gave the bullet-point version of the appeals court ruling here and later discussed the implications in more detail. I strongly recommend reading both of those posts in their entirety, but here are some excerpts.
Disclosure Rules Take a Beating
[…] Iowa Right to Life contended that treating corporations the same as PACs with respect to disclosure reporting, even when the corporation did not possess a PAC-like “major purpose,” was constitutionally burdensome on the ability of corporations to generate political speech. Or, in other words, the Iowa law imposed “PAC-style burdens on non-PAC entities” contrary to Citizens United and Swanson. Specifically, Iowa Right to Life claimed that the ongoing reporting requirements and the termination statement requirements were constitutionally burdensome because they imposed costs-in time, personnel, resources, etc.-on their ability to speak. And if Iowa Right to Life didn’t comply with these costly burdens, they faced the prospect of being “discouraged” from engaging in political activity or “sacrificing” their constitutional rights. The Eighth Circuit agreed.
The Tooker court ruled today that the State of Iowa may constitutionally require that a corporation whose major purpose is not express advocacy to file one-time, event-driven disclosure reports each time the corporation makes an independent expenditure. This is constitutionally permissible because the state and the public have an “informational interest” in knowing who was speaking and how much they spent. The Tooker court alternatively ruled that the ongoing, supplemental, and termination reports were unconstitutional because they impose repeated and sustained burdensome costs on a corporation, regardless of whether or not the corporation makes any more expenditures after the initial one. The Court impliedly took the position that requiring a disclosure of information at the time of the corporation’s political speech is less burdensome in comparison to the negligible costs imposed by the reporting, but continuing to require costly disclosure reporting forever after the first time the corporation “speaks,” even though there may never be anything else to disclose, effectively burdens the corporation unreasonably simply for choosing to participate in the political process. In short, this ruling can be considered a loss for advocates of corporate political disclosure and a victory for those who prefer less regulation on the production of political speech by corporations.
Corporate Political Contributions Are Still Illegal….For Now
The second most important point from today’s ruling is that corporations still cannot donate directly to candidates. Since the U.S. Supreme Court’s opinion in FEC v. Beaumont, it’s been constitutional to ban corporations from giving contributions directly to candidates. However, this ban on corporate donations has been on “shaky ground” since the Supreme Court’s ruling in Citizens United, which suggested that corporations should not be treated differently with respect to political activity than regular individuals. Citizens United did not involve a ban on corporate political contributions, but much of the dicta in the case appeared to imply that the High Court might be willing to revisit its earlier Beaumont decision in the future. But the Eighth Circuit, is bound to follow the Beaumont decision because it has not (yet) been explicitly overruled. Therefore, the Tooker court upheld Iowa’s ban on direct corporate contributions.
Smith notes that the Eighth Circuit panel did not decide all of the legal issues in Iowa Right to Life’s case. The judges instructed the District Court to hold hearings and rule on the merits of certain arguments. It’s also possible that one side or the other could appeal last week’s ruling to the U.S. Supreme Court.
Speaking to Mike Wiser about the ruling, both sides declared victory.
“They kept intact the main part of our statute which is important,” said Megan Tooker, executive director of the Iowa Campaign & Ethics Disclosure Board. “Especially the part about event reporting which says campaigns have to disclose within 48 hours their expenditures.” […]
James Bopp, lead counsel for Iowa Right to Life, also celebrated the ruling in a statement released by his Indiana law office.
“This is a victory for free speech,” he said. “The Eighth Circuit today reaffirmed its 2012 decision applying the major-purpose test to state law. It joins similar published decisions from the Fourth, Tenth, and Eleventh circuits.”
State Sen. Jeff Danielson, D-Cedar Falls, who shepherded the disclosure requirements through the Legislature in 2010, said the appeals court ruling is an opportunity to “make changes where they need to be made and add to it.”
He said nothing less than 100 percent disclosure should satisfy lawmakers and their constituents.
“We’re first-in-the-nation in elections, we should be first-in-the-nation in disclosure too,” he said.
In 2010, Democrats had majorities in both chambers of the Iowa legislature. I doubt the Republican-controlled Iowa House would go along with any new campaign finance disclosure requirements during next year’s legislative session.
Smith sounds on target in his speculatation about the likely impact of the appeals court ruling on Iowa’s elections in 2014.
In Iowa, it means that a much lower number of disclosure reports are going to be filed. Instead of seeing a wave of disclosure reports from certain entities on a periodic basis, now the forms will likely come simultaneously with, or contemporaneously to, expenditures by those that wish to engage in political spending. This could potentially result in more “hit and run” organizations that pop up to make one or two expenditures and then cease speaking. Or it could result in the rise of “fourth quarter” organizations that concentrate their activity in the period of time very near to an election to minimize their political adversaries’ ability to respond to the “source” of their message.
Any relevant comments are welcome in this thread.