Sunday, September 16, 2012

Seventh Circuit Upholds State Campaign Finance Disclosure Requirements

A three-judge panel of the Seventh Circuit ruled last week in Center for Individual Freedom v. Madigan that Illinois's campaign finance disclosure requirements, which require registration and disclosure even of groups whose "major purpose" is not influencing electoral campaigns, were not unconstitutionally vague and overbroad in violation of the First Amendment.

The ruling means that Illinois state law stands, even as to those groups whose "major purpose" is not influencing electoral campaigns--the 504(c)(4) groups who famously escape disclosure requirements under federal campaign finance disclosure laws.  It means that even those groups--which are often designed with the purpose of shielding their donors from disclosure--have to report under state law.  The ruling also deepens a circuit split on this point, with a Tenth Circuit case, New Mexico Youth Organized v. Herrera, 611 F.3d 669 (2010), invalidating a state disclosure law as applied to an organization because it did not "satisfy the 'major purpose' test," which "sets the lower bounds for when regulation as a political committee is constitutionally permissible," and a Fourth Circuit case, North Carolina Right to Life, Inc. v. Leake, 525 F.3d 274 (2008), concluding that before Citizens United state disclosure law violated the First Amendment because "an entity must have 'the major purpose' of supporting or opposing a candidate to be designated a political committee."

Illinois law requires groups and individuals that accept "contributions," make "expenditures," or sponsor "electioneering communication" in excess of $3,000 to make regular financial disclosures to the State Board of Elections.  The plaintiff, a 501(c)(4) organization, challenged Illinois's disclosure law, arguing that five of its definitions--"electioneering communications," "political committee," "contribution," "expenditure," and "independent expenditure"--were facially vague and overbroad. 

Illinois disclosure law tracked federal law, with three key differences: (1) Illinois disclosure requirements cover election activity relating to ballot initiatives (which have no federal analog); (2) Illinois law does not exempt from regulation those groups that lack the "major purpose" of influencing electoral campaigns; and (3) Illinois disclosure requirements cover campaign-related advertisements that appear on the Internet.  Recall that the Supreme Court upheld federal disclosure requirements in Citizens United, so the court here only analyzed whether these three distinctions were unconstitutional.

The court rejected the plaintiff's claim that these three provisions make the law unconstitutionally vague and overbroad.  As to the second difference--the one that sweeps in 501(c)(4) organizations that so famously hide their contributors under federal disclosure requirements--the court rejected CIF's argument that the "major purpose" test is a constitutional test, so that those organizations that do not have as a "major purpose" the election of a candidate must be exempt from disclosure.  The court gave four reasons.  First, it said that when Buckley v. Valeo came down--and first ruled on the "major purpose" question, interpreting language in the FECA (and not the Constitution)--political committees faced much greater disclosure burdens under FECA than they do today under Illinois's disclosure requirements.  Next, Illinois law defines political committee more narrowly than FECA by covering only groups that accept contributions or make expenditures "on behalf of or in opposition to" a candidate or ballot initiative.  Third, application of a "major purpose" test could yield the perverse result that a small group dedicated to electing a state representing and that spends $3,000 could be required to register and disclose, while a major organization that spends millions could dodge registration requirements because its "major purpose" isn't electing a candidate.  Finally, groups covered under a "major purpose" test could easily dodge disclosure requirements by dilluting its own message by broadening it beyond electioneering activities.

Judge Posner dissented, arguing that a handful of provisions in the Illinois law are vague.


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The Finance Disclosure Requirements blog was great and it was nice with great information

Posted by: Donnas Robet | Oct 15, 2012 4:46:43 AM

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