Aug. 5 (Bloomberg) -- A Tea Party-linked group seeking to loosen restrictions on corporate political action committees was handed a defeat by a Washington appeals court, marking a rare win for advocates of campaign finance controls.
The decision, keeping in place limits on corporate PACs including who can give and how much, follows a series of Supreme Court and appeals court decisions that expanded corporations’ ability to wield financial influence in elections.
The U.S. Court of Appeals in Washington today turned aside a challenge by Stop This Insanity Inc., a Mesa, Arizona-based nonprofit organization created to advance the values of the Tea Party movement. The group sought to allow corporate PACs to accept funds from the general public and eliminate a $5,000-a-person annual limit on contributions earmarked for independent support or opposition to candidates.
Corporations already can spend unlimited funds for such political advocacy because of the Supreme Court’s 2010 Citizens United decision, U.S. Circuit Judge Janice Rogers Brown wrote in the unanimous decision by the three-judge panel, upholding Federal Election Commission restrictions.
“Because this less-obsolete and less-onerous alternative exists, we decline Stop This Insanity’s invitation for us to tinker with what has become a statutory artifact,” wrote Brown, who was nominated by President George W. Bush, a Republican. A second judge on the panel was named by Bush, while the third was nominated by Ronald Reagan, also a Republican.
The method of collecting money sought by Stop This Insanity would allow it to keep secret the source and amount of funding used to underwrite the solicitations, a practice that conflicts with the public’s interest in “arming the voting public with information,” according to Brown.
The court incorrectly lumped Stop This Insanity, a nonprofit corporation that accepts limits on its political activity as a condition of tax-exempt status, with for-profit companies, which don’t operate under such restrictions, said Dan Backer, one of the attorneys for the group.
Stop This Insanity is “not able to engage in unlimited fundraising and expenditures in support of, or opposition to, federal candidates,” Backer said.
“We think the court made a very fundamental error in its analysis,” Backer said.
The group said in its original filing in the case, in July 2012, that it wanted to make expenditures calling for the election of Richard Mourdock, a Republican Senate candidate in Indiana, the re-election of Republican Representative Allen West in Florida, and the defeat of Democrats including President Barack Obama, Senator Sherrod Brown of Ohio and California Representative Nancy Pelosi, the House Minority leader.
Because the FEC didn’t permit the PAC to accept unlimited contributions, it was “unable to gather the resources necessary to run independent expenditure campaigns and to be heard during many races” in the 2012 election, according to its complaint.
FEC Commissioner Ellen Weintraub said today’s decision is consistent with courts’ emphasis on transparency.
A series of rulings have loosened campaign finance constraints on corporations, “but not when it comes to disclosure,” Weintraub said in a phone interview. “This is another in a long line of court decisions about the importance of disclosure.”
Larry Noble, a former general counsel of the FEC, described the case as “the beginning of an attack on PAC rules,” which the Washington appeals panel, for the moment at least, is unwilling to support.
“The court of appeals is reluctant to get ahead of the Supreme Court in dismantling campaign finance laws,” said Noble, now with the Campaign Legal Center, a Washington-based nonprofit that promotes campaign finance reforms.
Stop This Insanity argued that a series of rulings, including Citizens United, have rendered some restrictions on corporate PACs obsolete.
In particular, the $5,000 annual individual limit on contributions to a corporate PAC and a requirement that it collect money only from the sponsoring corporation’s employees or their family members are outmoded because of a 2011 court case and a follow-on ruling by the FEC, according to the group’s complaint.
The FEC order, also issued in 2011, allows stand-alone PACs -- those not sponsored by a corporation or labor union -- to collect unlimited sums for independent expenditures, as well as to make campaign contributions directly to candidates and parties under existing restrictions.
Stop This Insanity asked in its suit that corporate PACs be given the same leeway to operate as what’s known as a hybrid PAC, using two checkbooks -- one for campaign contributions subject to current caps and the other for unlimited independent expenditures.
The FEC objected in part because unlike a stand-alone PAC, a corporate PAC doesn’t have to disclose the money it spends on administration and fundraising.
With that disclosure exemption, Stop This Insanity could “communicate its fundraising message to -- and seek unlimited political contributions from -- nearly any individual or corporation in America” on behalf of its PAC without disclosing who paid for those solicitations and how much was spent on them, FEC lawyers wrote in a court filing.
Stop This Insanity “is already capable of sweeping solicitation,” she wrote. “And yet it wants a vehicle capable of soliciting without transparency.”
The case is is Stop This Insanity v. FEC, 13-5008, U.S. Court of Appeals, District of Columbia (Washington).
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