Tuesday, August 7, 2012

Nebraska Court Overturns Campaign Finance Law, Stretches Doctrine

The Nebraska Supreme Court last week in State of Nebraska ex rel. Bruning v. Gale ruled that Nebraska's public campaign finance law violated the First Amendment.

The ruling extends and stretches the Supreme Court's rulings in Davis v. FEC and Arizona Free Enterprise Fund v. Bennett.  (We also posted on Bennett here.)  It also forecloses yet one more policy option for encouraging participation in a public campaign finance system and to reduce the dramatic disparaties in spending in certain elections.

Nebraska's law, the Campaign Finance Limitation Act (CFLA), provides public financing for participating candidates in exchange for those candidates' agreement to limit their spending in a particular election.  But the CFLA doesn't start with a state block grant for participating candidates.  Instead, the CFLA requires participating candidates to raise 25% of the spending cap on their own before the public financing system kicks in.  Then, after a participating candidate raises 25% of the spending cap, that participating candidate receives a state grant in the amount of the difference between the spending cap and their non-participating opponent's estimated or actual expenditures.

An example: If the public financing spending cap for an election for a particular office is $100,000.00, a participating candidate has to raise $25,000.00 on his or her own.  Now suppose that candidate's non-participating opponent either estimates or actually spends $120,000.00.  The participating candidate receives $20,000.00 from the state (the difference between the spending cap and the estimated or actual expenditures of the non-participating opponent).  That leaves the participating candidate with $45,000.00 total.  The participating candidate can continue to raise money up to $100,000.00--that is, another $55,000.00--on his or her own.  Thus the CFLA provided only $20,000.00 to the participating candidate--an amount determined by the estimated or actual expenditures of the non-participating candidate, to be sure, but not an amount that equalizes expenditures in any meaningful sense or provides the participating candidate with much of a tail wind.

One  more feature of the Act: The candidates have to determine whether to participate within 10 days after they form a candidate committee.  This means that a non-participating candidate has to indicate his or her intention to exceed the CFLA cap (that is, not to participate) before he or she knows whether an opponent will participate.

The court ruled that the scheme violated the First Amendment.  Following Bennett, the court said that the state's interests in ensuring elections free of corruption or the appearance of corruption, providing the electorate with information, and gathering data to detect violations of the CFLA were not compelling.  And the court said that the Act wasn't narrowly tailored (largely because there wasn't a compelling interest).  

The court also ruled that the provision at issue (described above) was entwined enough with other provisions of the CFRA that the whole Act failed--that is, that the provision at issue was not severable.

But the court's ruling misses a threshold issue: whether the CFRA impinges on non-participating candidates' speech in the first instance.  There's a key difference between the CFRA and the scheme in Bennett and Davis (upon which Bennett relies): under the CFRA, the non-participating candidate's level of speech is determined independently of the participating candidate's speech.

In Bennett, the Supreme Court ruled that Arizona's scheme infringed on a non-participating candidate's free speech, because that scheme provided a dollar-for-dollar match from the public fisc for a participating candidate when a non-participating candidate exceeded the statutory cap on spending.  Bennett relied on Davis for this result.  In Davis, the Court ruled that the "Millionaire's Amendment" infringed on an independently-financed candidate's speech, because that speech triggered asymmetrical contribution limits (allowing a non-independently-financed candidate to raise more in individual contributions) when it exceeded a certain level.

The free speech threshold in both Bennett and Davis was that a non-participating candidate's additional speech triggered an asymmetrical system to the benefit of the participating candidate.  In other words, the non-participating candidate--at the time he or she decided to spend that additional dollar that put his or her campaign over the statutory limit--had to decide to speak more (and thus trigger the asymmetrical benefit to his or her opponent), or not.  The Court in Bennett and Davis said that this decision infringed on free speech.

But that's not at all how the CFRA operates.  The CFRA, by the Nebraska court's own reckoning, requires a candidate to elect to exceed the cap before he or she knows whether his or her opponent will participate.  This is not the same kind of infringement on free speech that concerned the Court in Bennett and Davis.  Indeed, this is no infringement on free speech at all: the non-participating candidate makes the decision completely independently of his or her opponent's decision.

The Nebraska court skates right by this distinction.  It said only that under the CFRA, "public funds are disbursed to abiding candidates in response to the political speech of privately financed candidates."  This is true, of course, but it misses the core reason why the Supreme Court said that the schemes in Bennett and Davis involved free speech in the first place--because the non-participating candidate had to choose between marginally more speech (and providing a benefit to his or her opponent), or not.

More: The CFRA plainly does not equalize the spending and contribution playing fields the way that the schemes in Bennett and Davis sought to do.  As illustrated above, the CFRA likely provides just a fraction of additional funding to a participating candidate, and requires the participating candidate to come up with the 25% in the first place (rather than starting with a state grant, as other public financing schemes do).  The court skates right by this, too, focusing instead on the fact that the participating candidate's award from the state is keyed (in any way) to the non-participating candidate's expenditures.  Again, this ignores the reason why the Supreme Court said that the schemes in Bennett and Davis impinged on speech.

The ruling stretches the logic of Bennett and Davis well beyond its breaking point.  In so doing, it also limits yet one more way that public financing systems can seek to address the gross disparities in spending in certain elections--at least in Nebraska.  

So for now, the lesson in Nebraska (and any court following its lead) is this: The First Amendment prohibits a public campaign finance scheme from keying the state grant to a non-participating opponent's expenditures in any way.

SDS

http://lawprofessors.typepad.com/conlaw/2012/08/nebraska-court-overturns-campaign-finance-law.html

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