FAN 67 (First Amendment News) En Banc Unanimous Ruling from DC Circuit Upholds Federal Ban on Contributions by Federal Contractors
→ This is quite a big deal, especially in its unanimity. — Richard Hasen, Election Law Blog
→ Most difficult of all to accept is that the court of appeals saw nothing amiss with the law that allows corporate contractors, their officers, directors and shareholders to make contributions within the limits of the law, but denied these individual contractors a similar opportunity. — Alan Morrison, lead counsel for the Plaintiffs
→ On the bright side, contractors’ rights to speak independently, through SuperPACs and otherwise, are unaffected; while the court didn’t reach that issue, the government is clearly much less justified in regulating that space. — Ilya Shapiro, co-counsel on amicus brief in support of the Plaintiffs.
“In a victory for good government, the en banc D.C. Circuit Court of Appeals today unanimously — and correctly — rejected a challenge to the constitutionality of the federal ban on campaign contributions by federal contractors. The ban applies to corporations, other entities and individuals who have federal contracts.” That is how Fred Wertheimer of Democracy 21 described yesterday’s ruling in Wagner v. Federal Election Commission. Democracy 21 joined with the Campaign Legal Center and Public Citizen to file an amicus brief in the Wagner case supporting the constitutionality of the government contractor contribution ban. (See 52 U.S.C. § 30119(a)(1))
The 62-page opinion was written by Chief Judge Merrick Garland, and there were no separate opinions. The other jurists sitting on the case were Circuit Judges Karen Henderson, Judith Rogers, David Tatel, Janice Rogers Brown, Kavanaugh, Sri Srinivasan, Patricia Millett, Nina Pillard, and Robert Wilkins.
Here are some highlights from Chief Judge Garland’s opinion:
- Standard of Review: “We . . . proceed to examine whether, with respect to § 30119, the government has “‘demonstrate[d] a sufficiently important interest and employ[ed] means closely drawn to avoid unnecessary abridgment of associational freedoms.’”
- Historical backdrop: “historical pedigree is significant. As the Court said in Beaumont, ‘[j]udicial deference is particularly warranted where, as here, we deal with a congressional judgment that has remained essentially unchanged throughout a century of ‘careful legislative adjustment.’ [citation] Moreover, . . . the lineage of the statute makes clear that its objects are the legitimate and important purposes that the Commission claims they are.”
- Quid pro quo corruption: “Of course, we would not expect to find — and we cannot demand — continuing evidence of large-scale quid pro quo corruption or coercion involving federal contractor contributions because such contributions have been banned since 1940. . . . [Even so, the] FEC has assembled an impressive, if dismaying, account of pay-to-play contracting scandals, not only in the above states, but also in New Mexico, Hawaii, Ohio, California, and elsewhere. [W]e think that the evidence canvassed thus far suffices to show that, in government contracting, the risk of quid pro quo corruption and its appearance, and of interference with merit-based administration, has not dissipated. Taken together, the record offers every reason to believe that, if the dam barring contributions were broken, more money in exchange for contracts would flow through the same channels already on display.”
- Significant change in government contracting: “[P]erhaps the most relevant change in government contracting over the past several decades has been the enormous increase in the government’s reliance on contractors to do work previously performed by employees. . . . If anything, that shift has only strengthened the original rationales for the contractor contribution ban by increasing the number of potential targets of corruption and coercion — targets who do not have the merit system protections available to government employees.”
- Different rules for federal employers vs contractors: “Increased reliance on individual contractors — particularly retirees such as Brown and Miller — also raises a concern that some former federal employees may unwittingly violate § 30119 because they are unaware that they have become subject to a different set of restrictions as contractors. However, as FEC counsel advised the court, there is no criminal violation unless the individual knows his or her conduct violates the law.”
- Corporations vs individual contractors: “The plaintiffs also question whether there is sufficient evidence of corruption or coercion specifically with respect to individual contractors, as compared to those organized as corporations or other kinds of firms. It is true that most of the examples set forth [earlier in our opinion] above involve firms. We see no reason, however, to believe that the motivations for corruption and coercion exhibited in those examples are inapplicable in the case of individual contractors.”
- Two justifications: “Our historical review makes clear that the two Court-approved justifications for limitations on campaign activities — to protect against quid pro quo corruption and its appearance, and to protect merit-based public administration — were the justifications that lay behind the contractor contribution statute.”
- “Closely drawn” requirement: “[T]he point of the ‘closely drawn’ test is that “‘[e]ven a significant interference with protected rights of political association may be sustained if the State demonstrates a sufficiently important interest and employs means closely drawn to avoid unnecessary abridgment of associational freedoms.’” [citation] And we conclude that the ban at issue here is permissible in the circumstances that we address in this opinion: a regulation that bars only campaign contributions and that is imposed only on government contractors. . . . We do not discount the possibility that Congress could have narrowed its aim even further, targeting only certain specific kinds of government contracting or doing so only during specific periods. But as the Court has made clear, ‘most problems arise in greater and lesser gradations, and the First Amendment does not confine a State to addressing evils in their most acute form.'”
- Underinclusiveness: “We conclude that the contractor contribution ban is not fatally underinclusive. There is no doubt that ‘the proffered state interest actually underlies the law,” and that it can “fairly be said” that the statute “advance[s] a genuinely substantial governmental interest.’ [citations] The plaintiffs may well be right that the ban would be even more effective if it swept in more potential contributors. But §30119 “aims squarely at the conduct most likely to undermine” the important interests that underlie it, and ‘[w]e will not punish [Congress] for leaving open more, rather than fewer, avenues of expression, especially when there is no indication that the selective restriction of speech reflects a pretextual motive.'”
→ Additional claim: The Court also addressed and rejected the Fifth Amendment equal protection arguments raised by the Plaintiffs.
→ Mootness: “The plaintiffs advise us that both Wagner and Brown have now completed their federal contracts and hence are once again free to make campaign contributions. Brown, at least, has already done so. Accordingly, Wagner’s and Brown’s claims are moot,” which leaves Plaintiff Jan Miller, whose “contract is ongoing” and therefore “his constitutional claims . . . remain alive.”
→ Reliance on Williams-Yulee: The Chief Judge cited to Williams-Yulee v. Florida Bar fifteen times — e.g., “But as the [Williams-Yulee] Court has made clear, ‘most problems arise in greater and lesser gradations, and the First Amendment does not confine a State to addressing evils in their most acute form.'”
The Lawyers & Amici
- Alan B. Morrison argued the cause for plaintiffs. With him on the briefs was Arthur B. Spitzer
- Ilya Shapiro and Allen J. Dickerson were on the brief for amici curiae Center for Competitive Politics, et al. in support of plaintiffs.
- Kevin Deeley, Acting Associate General Counsel, Federal Election Commission, argued the cause for defendant. With him on the briefs were Harry J. Summers, Assistant General Counsel, and Holly J. Baker and Seth E. Nesin, Attorneys.
- J. Gerald Hebert, Scott L. Nelson, Fred Wertheimer, and Donald J. Simon were on the brief for amici curiae Campaign Legal Center, et al. in support of defendant.
* * * *
Liberal & libertarian lawyers challenge contractor law
Alan Morrison, a seasoned appellate advocate and law professor, is known as a liberal. In 1971, for example, he worked with Ralph Nader to cofound the Public Citizen Litigation Group, the litigation arm of the famed consumer advocacy organization. In that capacity, he was the lawyer who successfully argued Virginia Pharmacy Bd. v. Virginia Consumer Council (1976), which recognized First Amendment protection for certain kinds of commercial speech (in that case for a non-profit corporate advocacy group).
In Wagner v. FEC he was co-counsel with Arthur B. Spitzer of the ACLU in challenging a little known section of the Federal Election Campaign Act that provided: “[A]ny person who is negotiating for, or performing under, a contract with the federal government is banned from making a contribution to a political party, committee, or candidate for federal office.” In their brief to the Court of Appeals Morrison and Spitzer argued that the three plaintiffs were prevented from making their intended campaign contributions. “One of the plaintiffs,” they noted, “is a law professor who had a contract to do a study for the Administrative Conference of the United States; the other two are retired federal employees who continue to work for their former agency on a contract basis. Unlike every other U.S. citizen who does not have a federal contract, they are forbidden by [federal law] from making a contribution of even $1 to any federal candidate, political party, or political committee.” Such a law, Morrison and Spitzer maintained, violated both the equal protection component of the Fifth Amendment and the First Amendment. A lower court denied those claims, whereupon review was sought in the court of appeals. Yesterday, their hopes were dashed by a 10-0 vote.
“We are disappointed,” Morrison e-mailed me, “in the result and in the failure of the Court to appreciate the unnecessarily broad reach of the total ban on individual contractors such as these plaintiffs from making any contributions in a federal election. We were surprised at the more than dozen favorable citations to McCutcheon v. FEC, a 2014 case in which another over-broad contribution law was struck down by the Supreme Court as not being closely drawn. Even more difficult to understand were the similar number of citations to the 5-4 ruling Williams-Yulee v. Florida Bar, in which the candidate for judicial office was only precluded from making personal solicitations for campaign funds, while retaining the full ability to raise money through a separate committee. Most difficult of all to accept is that the court of appeals saw nothing amiss with the law that allows corporate contractors, their officers, directors and shareholders to make contributions within the limits of the law, but denied these individual contractors a similar opportunity.”
Morrison and Spitzer received some help by way of an amicus brief submitted on their clients’ behalf by the Center for Competitive Politics and the Cato Institute. “This case presents an unusual question,” wrote Allen Dickerson for the Center and Institute (Cato’s Ilya Shapiro was co-counsel on the brief.) “While suits challenging limits on political contributions are familiar, the statute at issue here completely prohibits a broad group of private, individual citizens from making any contribution. Such sweeping prohibitions are seldom enacted, and courts have rarely assessed their constitutionality. Nevertheless, the limited pronouncements made by the Supreme Court on the subject suggest that strict scrutiny is the appropriate standard of review in this instance” and that the appellants should, therefore, prevail.” They did not.
Here is how Ilya Shapiro summed up his response to the Wagner decision: “This is a fascinating and fairly technical opinion, ultimately disappointing to those like me who supported the challenge but probably not one that will have repercussions beyond politically minded contractors. Nobody short of Justice Hugo Black has argued that the First Amendment is absolute — and while the D.C. Circuit rejected the subtle arguments made against the ban on contractor contributions, this is an argument over line-drawing rather than first principles. I still think that the ban is overbroad and that the government should have to prove that its targeted class of people is somehow too dangerous to be allowed to participate in the political process (and also that the ban applies only to that set of uniquely dangerous people). But the court disagreed — unanimously, which was the real surprise here and will alas lessen the Supreme Court’s appetite to hear the case. On the bright side, contractors’ rights to speak independently, through SuperPACs and otherwise, are unaffected; while the court didn’t reach that issue, the government is clearly much less justified in regulating that space.”
The Ramifications of Wagner:
Over at his own blog, Lyle Denniston thinks Wagner could have important legal/political ramifications on “two other potential campaign law controversies”:
- “The first of those possible changes has been under study by President Obama and his White House aides for some time: a plan to issue a presidential order to force business firms doing business with the federal government to disclose publicly all of their political activity. Although contractors are banned from making direct political contributions to candidates or campaign organizations, they may channel money into politics in other ways.” [→ See Daniel I. Weiner, Lawrence Norden & Brent Ferguson, “Requiring Government Contractors to Disclose Political Spending,” Brennan Center for Justice ]
- “The second possible revision was a study by the Internal Revenue Service — now suspended, perhaps for an indefinite period, because of political opposition — to revise the rules on eligibility fo tax-exempt status of private groups that are active in funding federal election campaigns. Current IRS rules allow many such groups to gain tax-exempt status on the theory that they are doing ‘charitable’ work. The IRS had draft plans to severely restrict that status for such groups.”
Professor David Skover, co-author of When Money Speaks: The McCutcheon Decision, Campaign Finance Laws, and the First Amendment (2014), had this to say about the Wagner ruling:
Considering the elimination of all issues involving independent expenditures, the ruling in this case is not surprising. Despite some obvious differences between the Hatch Act and the law challenged here, a First Amendment victory would have put into question the continuing viability of the Hatch Act and Letter Carriers, and that the Circuit Court judges were clearly unwilling to do.
→ See also: Charles Tiefer, “Today’s Wagner Decision Encourages an Obama Order on Campaign Contributions by Federal Contractors,” Forbes, July 7, 2015
Newseum Releases 2015 State of the First Amendment Report Read More