Big Money Returns to American Politics: Citizens United v. Federal Election Commission

Introduction

Before the Citizens United case, certain types of nonprofit organizations were able to pump millions of dollars into "electioneering communications" (highly pointed commercials about political issues that can even mention specific candidates) without revealing their donors.

For the first time, though, as a result of the ruling, corporations will be able to spend unlimited amounts of money on advertisements expressly advocating for a candidate's election or defeat. The ruling also clears the way, for the first time, for corporations to donate money to nonprofit groups that place advocacy advertisements.

A 1986 Supreme Court decision, Federal Election Commission v. Massachusetts Citizens for Life, opened the way for certain narrowly-defined nonprofit groups to advertise for and against political candidates. However, the 1986 decision forbade corporations and unions to give money to nonprofit organizations that financed advocacy advertisements. The Citizens United decision lifts that ban.

Summary of the facts and arguments

Prior to the 2008 primary elections, Citizens United, a nonprofit corporation dedicated to educating the American public about their rights and the government, produced a politically conservative ninety-minute documentary entitled Hillary: The Movie ("The Movie"). This documentary covered Hillary Clinton's record while in the Senate, the White House as First Lady and during her bid for presidential Democratic nominee, and contains express opinions about whether she would be a good choice for President. However, The Movie fell within the definition of "electioneering communications" under the Bipartisan Campaign Reform Act of 2002 ("BCRA")-a federal enactment designed to prevent "big money" from unfairly influencing federal elections-which, among other things, prohibits corporate financing of "electioneering communications" and imposes mandatory disclosure and disclaimer requirements on such communications.

Citizens United's sought a motion for a preliminary injunction to enjoin the Federal Election Commission ("FEC") from enforcing these provisions of the BCRA against Citizens United in the District Court for the District of Columbia. The questions the Supreme Court decided were (1) whether BCRA's disclosure requirements imposed on "electioneering communications" were to be upheld against all as-applied challenges' (2) whether BCRA's disclosure requirements were overly burdensome and fail a strict scrutiny test as-applied to The Movie; (3) whether The Movie was a "clear plea for action to vote," subjecting it to the "electioneering communications" corporate prohibition; and (4) whether The Movie constituted an advertisement, making it subject to the BCRA's disclosure and disclaimer regulations.

BCRA is a federal enactment designed to restrict "big money" from unfairly influencing national politics by regulating "electioneering communications." It defines "electioneering communications" as any cable or satellite broadcast made within sixty days before a general election or thirty days before a primary election, and which "refers to a clearly identified candidate for Federal office." See 2 U.S.C. 434(f)(3)(A). Citizens conceded that its planned advertisements and VOD broadcast of The Movie fell within this definition of "electioneering communications," making them subject to three relevant restrictions under BCRA. Firstly, BCRA § 203 prohibited Citizens from using its corporate funds to broadcast "electioneering communications" in order to advocate how a viewer should vote. See 2 U.S.C. 441b(b)(2) and (b)(4)(A). Secondly, if Citizens passed the first requirement, BCRA § 201 required Citizens to disclose the identities of anybody who contributed more than $1,000 dollars towards the production of The Movie. See 2 U.S.C. 434(f)(1), 2(F); see also 11 C.F.R. 104.20(c)(9). Thirdly, BCRA § 311 required Citizens to display for at least four seconds a written disclaimer in its advertisements stating that it is responsible for the contents. See 2 U.S.C. 441d(d)(2).

Citizens argued that a financing restriction on the film violates free speech and therefore was subject to strict scrutiny, which required that the restriction further a compelling interest and be narrowly tailored to meet that interest. Citizens contended that the FEC's anti-corruption interest was not compelling in the case of feature length films that were distributed on demand and privately financed by individuals. According to Citizens, anti-corruption is only a concern when the financial support is being given in exchange for political favors and consequently undermining the integrity of democracy.  Further, viewers of Videos On Demand ("VOD") films have opted to receive the information on purpose, unlike viewers of television or radio ads, and are therefore far less vulnerable to influence or corruption.  Finally, Citizens pointed out that the FEC's disparate treatment of VOD (but not DVDs) as potentially corrupt, casts serious doubt that there is a genuine state interest in preventing communication.

The FEC, on the other hand, argued that by seeking to distribute content via VOD rather than through television or radio, Citizens was trying to create its own special exception to the BCRA restrictions. According to the FEC, just because the film was not being broadcast to all viewers the same way that a television or radio ad would and rather reached only those who chose to view it, did not mean that those viewers had already made up their minds and will not be influenced by it. The FEC pointed out that even if the film merely motivated prior Hillary supporters to be more active, that effect would be enough to justify the restriction. The FEC argued that while section 203 of the BCRA extended the express advocacy restriction to certain types of media and did not explicitly include VOD, it did not grant an exemption to those media types.

Citizens argued that the disclosure requirements violated the First Amendment when applied in this case because they furthered no important government interest. According to Citizens, strict scrutiny must be applied since the disclosure requirements would force speech; however, strict scrutiny subsequently fails because there is no compelling interest. Citizens further argued that even if exacting scrutiny is used, the result would be the same. Citizens argued that the FEC's argument that the disclosure is necessary to help the audience assess the credibility of the ad did not make sense because viewers are smart enough to know to discount the message if they are unsure of its producer. Also, Citizens pointed out that even if there was some government interest, it would be outweighed by the burden that the requirements place on Citizens. Citizens feared that the requirements would turn viewers off to the film by making it seem less like a documentary and more like a piece of propaganda, and that it would hinder their ability to make future expressions because the requirements would chill donations. Citizens stressed that BCRA's disclosure requirements, like the financial restrictions, are only to be applied to express advocacy, and therefore do not extend to this communication since viewers do not need to be protected from misinformation. 

In contrast, the FEC stressed that disclosure requirements were subject to exacting scrutiny rather than strict scrutiny, which meant that the restrictions must bear a substantial relation to a sufficiently important interest. According to the FEC, the interests served by the disclosure requirements here were transparency and monitoring and so must extend to all electioneering communication, and not just to those deemed to be the functional equivalent of express advocacy. The FEC pointed to McConnell, which held that disclosure requirements could be applied to all election communications even though financing restrictions could not. The FEC stressed that in order for the public to make fully informed choices, the voter needed to know the source of any information perceived to be in connection with the election in order to properly assess its credibility. Finally, the FEC argued that while in some cases the burden of the disclosure requirements could outweigh the government's interest, here this was not the case because there was no showing that the disclosure would "subject identified persons to 'threats, harassment, and reprisals.'"  Moreover, the FEC contended, Citizens offered no evidence to support its arguments that the restrictions would hinder its ability to communicate, and that the disclosure was so far removed that it probably would not affect donations. 

What the decision means

Experts say the ruling, along with a pair of earlier Supreme Court cases, makes it possible for corporations and unions to donate anonymously to nonprofit civic leagues and trade associations. The groups can then use the money to finance the types of political advertisements that were at the heart of last month's ruling, in Citizens United v. Federal Election Commission. That means that those nonprofit groups, which are not required to disclose their donors, can now use corporate contributions to buy political commercials, and the corporations can potentially operate behind the anonymity of their donations.

While the decision allows corporations to spend without limit on advertising for or against candidates, if they do so directly, they will have to report their expenditures and identify their donors. Corporations are often loath to have their names attached to such advertisements. Therefore, nonprofit groups, with their legal ability to withhold donors' names, offer an attractive alternative.

Election commission rules require that organizations and individuals placing advocacy advertising or electioneering communications report their expenditures and identify donors who gave them money for those purposes. Many nonprofit groups, however, have taken the position that their donors and dues-paying members did not give them money specifically for political uses. Therefore, the groups have maintained, they are not obligated to name contributors.

Criticisms and proposals

During the 2010 State of the Union Address, President Barack Obama condemned the decision stating that, "Last week, the Supreme Court reversed a century of law to open the floodgates for special interests - including foreign corporations - to spend without limit in our elections. Well I don't think American elections should be bankrolled by America's most powerful interests, or worse, by foreign entities."

Democratic Congressional leaders called the loophole dangerous, and they have proposed legislation that would require nonprofit groups to identify publicly the sources of financing for their political advertisements. Among provisions in a bill proposed in February, is a requirement that nonprofit groups engaging in political advertising set up accounts specifically for that purpose. The bill would require that the nonprofit organizations identify people and groups who contribute directly to those accounts, or whose dues or other donations are transferred from other accounts into the political accounts.

The bill would also require organizations that raise outside money for political advertisements to list their top five contributors at the end of a commercial. In addition, an advertisement would have to display a statement from its No. 1 donor accepting responsibility for its content. The bill would prohibit companies that received federal bailout money — as well as companies that hold federal contracts and companies that are more than 20 percent owned by foreign entities — from making political expenditures. It would also bar a company from doing so if a majority of its board consists of foreign principals, or if its operations in the United States or its political decision-making is controlled by a foreign entity.