Amicus Curiae Brief — Federal Election Comm'n v. Massachusetts Citizens for Life, Inc.

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FEDERAL ELECTION COMMISSION,

Appellant,

MASSACHUSETTS CITIZENS FOR LIFE, INC.,

Appellee.

On Appeal from the United States

Court of Appeals for the First Circuit

MOTION FOR LEAVE TO FILE BRIEF AND

BRI FOR COMMON CAUSE AS AMICUS CURIAE

ROGER M. WITTEN

Counsel of Record

WILLIAM T. LAKE

CAROL F. LEE

SHEILA C. CHESTON

Of Counsel: WILMER, CUTLER & PICKERING

ARCHIBALD Cox 1666 K Street, N. W.

COMMON CAUSE Washington, D.C. 20006

2030 M Street, N.W. (202) 872-6000

Washington, D.C. 20086 Counsel for Amicus Curiae

(202) 833-1200 Common Cause

February 27, 1986

WiLson - Eras Paintine Co.. inc. . 769-0086 - Wasnincrow DC 20001

TABLE OF CONTENTS

BRIEF FOR COMMON CAUSE AS AMICUS

II.

——— —— — —

3 — 883 —

B. It Has Been Congress’ Expert Judgment for

Decades That a General Prohibition of Con-

tributions and Expenditures by Corporations

and Unions Is Necessary To Achieve Com-

pelling Public Interests

SECTION 441b MAY CONSTITUTIONALLY

BE APPLIED TO MCFL BECAUSE IT IS A

CORPORATION; IF THE COURT FINDS

OTHERWISE, IT MUST TREAT MCFL AS

A “POLITICAL COMMITTEE” WHICH IS

SUBJECT TO THE FEDERAL ELECTION

CAMPAIGN ACT.

A Section 4416 Is Conatitational as abe

MCFL .

B. af These Ase Beuhte Aheut Go Censtitatien,

ality of Applying Section 441b to MCFL,

Section 441b Could Be Construed To Exclude

Organizations Such as Merl.

a If MCFL le mende From Section 44th,

Then It Is a “Political Committee” Subject

to the Federal Election Campaign Act

CONCLUSION .

TABLE OF AUTHORITIES

CASES Page

Abood v. Detroit Board of Education, 431 US.

CF ————————————————— 9

ACLU, Inc. v. Jennings, 366 F. Supp. 1041 (D. DC.

1973), vacated as moot, 422 U.S. 1030 (1975) 30

Ashwander v. Tennessee Valley Authority, 297

1 — 25

Athens Lumber Co. v. FEC, 718 F.2d 363 (11th

Cir. 1983), appeal dismissed, cert. denied, 465

CO 9

Buckley v. Valeo, 424 U.S. 1 (1976) „ passim

Burroughs v. United States, 290 U.S. 534 (1934). 7

California Medical Association v. FEC, 453 U.S.

CN —————— passim

Common Cause v. Schmitt, 512 F. Supp. 489

(D.D.C. 1980), aff'd by equally divided court,

455 U.S. 129 (1982) . — 1

Crowell v. Benson, 285 U.S. 22 (1982) _ e 25

FEC wv. National Conservative Political Action

Committee, 105 S. Ct. 1459 (1985) . passim

FEC v. National Right to Work Committee, 501

F. Supp. 422 (DDC. 1980), rev'd, 665 F.2d 371

(D.C. Cir. 1981), rev'd, 459 U.S. 197 (1982). 5.6

FEC wv. National Right to Work Committee, 459

U.S. 197 (1982)... passim

FEC v. Weinsten, 462 F. ‘Supp. 243 (8 DN. v.

1 — 9

First National Bank of Boston v. ‘Bellotti, 435 US.

765 (1978) . 2. 6. 7. 8, 9, 11

faternctional Association of Mechinists v. Street,

367 U.S. 740 (1961) . 1

Lowe v. SFC. 105 8. Ct. 2557 (988) 25

National Right te Work Committee v. PEC, 665

F.2d 371 (D.C. Cir. 1981), rev'd, 459 U.S. 197

(1982) . 6, 20

NLRB v. Catholic Bishop of Chicago, 440 U.S. 490

, .... 25

Regan v. Taration with Representation, 461 US.

540 (1983) . — — 10, 21

iii

TABLE OF AUTHORITIES—Continued

Page

Republican National Committee v. FEC, 487 F.

Supp. 280 (S.D.N.Y.), const. qns. answered, 616

F.2d 1 (2d Cir.), aff'd mem., 445 U.S. 955

EE a ee 1

Trustees of Dartmouth College v. Woodward, 17

U.S. (4 Wheat.) 518 (18199999 7

United Public Workers v. Mitchell, 330 U.S. 75

„ 20

United States v. Boyle, 482 F. 2d 755 (D.C. Cir.),

cert. denied, 414 U.S. 1076 (197333 9

United States v. Chestnut, 533 F.2d 40 (2d Cir.

1976), cert. denied, 429 U.S. 829 (1976) 9

United States v. Congress of Industrial Organiza-

tions, 386 U.S. 106 (194) cece cee passim

United States v. International Union United Auto-

mobile Workers, 352 U.S. 567 (1957) passim

United States v. National Committee for Impeach-

ment, 469 F.2d 1135 (2d Cir. 19725 — 30

United States v. Pipefitters Local Union 562, 434

F.2d 1116 (8th Cir. 1970), rev'd, 407 U.S. 385

/ / NN aCe aCe ee 8, 9, 16

United States v. Rumely, 345 U.S. 41 (1953) 25

United States v. Security Industrial Bank, 459

EE —0e:t é 25

United States Civil Service Commission v. National

Association of Letter Carriers, 413 U.S. 548

— 6, 10, 21. 25

STATUTES

Federal Corrupt Practices Act, * Stat. 1070

1 „—m T—T—ñT—ñ-ñ———— ¼——w 14

Federal Election Campaign Act of 1971, Pub. L.

92-225, Feb. 7, 1972, 86 Stat. 3, as codified at:

SUBS. § 458046) (1688) ................................... 4

r seemeneen 29

2 U.S.C. § 483 (1962)... 29

F 22,

ET eee...

rien eee. passim

TABLE OF AUTHORITIES—Continued

Page

Labor Management Relations Act of 1947, 61 Stat.

99... „ 14, 15

Tillman Act, 34 Stat. 864 (1907) 13, 25

War Labor Disputes Act, 57 Stat. 633 (1943 14

REGULATIONS

11 C.F.R. § 100.5(a) (1985) — — 28

Ie ceccccccrccccececcesecsee 22

III III . ͤyk—x— 28

LEGISLATIVE MATERIALS

Campaign Contributions: Testimony Before a

Subcommittee of the Senate Committee on Priv-

ileges and Elections, vol. 1, 62d Cong., 2d Sess.

Ee ee ee 17

Final Report of the Senate Select Committee on

Presidential Campaign Activities, S. Rep. No.

93-981, 93d Cong., 2d Sess. (1974) 2 8, 17, 19

Hearings Before a Subcommittee of the House

Committee on Lavor, H.R. 804 and H.R. 1488,

78th Cong., Ist Sess. (1943)))))) 8,14

Hearings on Contributions to Political Commit-

tees in Presidential and Other Campaigns Be-

fore the House Committee on Election of

President, Vice President, and Representatives

in Congress, 59th Cong., Ist Sess. (1906) 8,13

House Special Committee to Investigate Campaign

Expenditures, Campaign Expenditures, H.R.

Rep. No. 2093, 78th Cong., 2d Sess. (1945) 9

House Special Committee to Investigate Campaign

Expenditures, 1946, Campaign Expenditures,

H.R. Rep. No. 2739, 79th Cong., 2d Sess. (1947).. 9, 15

H.R. Rep. No. 6397, 59th Cong., 2d Sess. (1907) 25

S. Rep. No. 3056, 59th Cong., Ist Sess. (1906) 25

Senate Special Committee to Investigate Presiden-

tial, Vice Presidential, and Senatorial Campaign

Expenditures in 1944, Investigation of Presi-

dential, Vice Presidential, and Senatorial Cam-

paign Expenditures, 1944, 8. Rep. No. 101, 79th

Cong., Ist Seas. (1945) 9, 19

TABLE OF AUTHORITIES—Continued

Page

Senate Special Committee to Investigate Sena-

torial Campaign Expenditures, 1946, Investiga-

tion of Senatorial Campaign Expenditures,

1946, S. Rep. No. 1, 80th Cong., Ist Sess. (1947).. 10, 15

40 Cong. Rec. 91, 96, 223 (19050) — 13

41 Cong. Rec. 1452 (1907)00rwꝛ:ʒ: : 25

42 Cong. Rec. 696 (190)))))))ÿę! 12

93 Cong. Rec. 928, 6438, 6439, 6440, 7492 (1947)... 9, 15,

19, 26, 27

117 Cong. Rec. 43380, 43381, 43383 (19717 16

122 Cong. Rec. 7197-98, 8570-72, 12468-69 (1976). 18, 26

FEC ADVISORY OPINIONS

Advisory Opinion 1975-16, 40 Fed. Reg. 36242

ee 27

Advisory Opinion 1975-37, 40 Fed. Reg. 42303

ee ee 27

Response to Advisory Opinion Request 1975-122,

1 Federal Election Campaign Finance Guide

(CCH) 7 6020 (Sept. 2, 1970) 28

OTHER AUTHORITIES

Leventhal, Courts and Political Thickets, 77

Colum. L. Rev. 345 (1977) 19

N.Y. Times, Feb. 18, 1986, at A3, col. 555 19

H. Pringle, Theodore Roosevelt: A Biography

KEA 17

10 Report of the Joint Committee of the Senate

and Assembly of the State of New York Ap-

pointed to Investigate the Affairs of Life Insur-

ance Companies (190)))))))))))) „ĩ 12

Statement of Organization of Massachusetts Citi-

zens For Life Political Action Committee, filed

with FEC, May 15, 1900 22

E. Zuckerman, Origins of the 1907 Tillman Act

EES Ry een seer. ce 12

IN THE

Supreme Court of the United States

OCTOBER TERM, 1985

No. 85-701

FEDERAL ELECTION COMMISSION,

Appellant,

MASSACHUSETTS CITIZENS FOR LIFE, INc.,

Appellee.

On Appeal from the United States

Court of Appeals for the First Circuit

MOTION FOR LEAVE TO FILE BRIEF FOR

COMMON CAUSE AS AMICUS CURIAE

letter that has been fi

The consent of counsel for Appellant was requested but

was refused.

As set forth in the attached brief at 1-4, Common

Cause has a strong interest in the disposition of this

appeal and believes that its perspective differs from that

(vii)

viii

of any party. In its brief, Common Cause urges the Court

to reverse the decision below and in that respect seeks

the same result as the appellant. This motion and the

attached brief are timely filed in accordance with Rule

36.3 of the Rules of this Court.

Respectfully submitted,

RoGEeR M. WITTEN

WILMER, CUTLER & PICKERING

1666 K Street, N.W.

Washington, D.C. 20006

(202) 872-6000

Counsel of Record for Amicus

Curiae Common Cause

February 27, 1986

TRR

Supreme Court of the Anited States

OCTOBER TERM, 1985

No. 85-701

FEDERAL ELECTION COMMISSION,

. Appellant,

MASSACHUSETTS CITIZENS FOR LIFE, INC.,

Appellee.

On Appeal from the United States

Court of Appeals for the First Circuit

BRIEF FOR COMMON CAUSE AS AMICUS CURIAE

INTEREST OF THE AMICUS

AND SUMMARY OF ARGUMENT

Common Cause is a nonprofit, nonpartisan organiza-

tion with approximately 250,000 members. One of its

central purposes is to further responsible and honest

government, accountable to the voters who elect it. Com-

mon Cause has participated actively in litigation seeking

to protect the integrity of the electoral process, including

other cases before this Court concerning the constitu-

tionality and implementation of the federal election laws.

1 See, e.g., Buckley v. Valeo, 424 U.S. 1 (1976); Republican

Nat'l Comm. v. FEC, 487 F. Supp. 280 (S.D.N.Y.) (3-judge court),

const. qns. answered, 616 F.2d 1 (2d Cir.) (en banc), aff'd mem, 445

U.S. 955 (1980); California Medical Ass'n .. "EC, 453 US. 182

(1981) ; Common Cause v. Schmitt, 512 F. Supp. 489 D. D.C. 1930)

(3-judge court), aff'd by equally divided court, 455 U.S. 129 (1982) ;

FEC v. National Conservative Political Action Comm. 105 S. Ct.

1459 (1985).

Section 44 1b is constitutional on its face. This Court's

recent unanimous decision in FEC v. National Right to

Work Committee, 459 U.S. 197 (1982) (“NRWC”"), con-

firmed that section 441b serves two compelling govern-

concluding that independent expenditures by individus

and political committees presented risks of actual or

apparent corruption. Those were not “ ‘corporations’

case s].“ See id. at 1468.

It has for years been Congress’ expert judgment that

a general ban on all corporate and union contributions

and expenditures is necessary to protect the integrity of

the electoral process and to protect corporate shareholders

and union members. Congress cautiously adapted section

441b over 79 years to aceount for the special attributes

of and threats presented by organizations in corporate

and union form. See NRWC, 459 U.S. at 209. In par-

ticular, Congress, upon an ample factual record, found

that it was necessary for section 441b to cover inde-

pendent expenditures in order for the statute to achieve

its compelling objectives.

II.

Section 441b is constitutional as to Massa-

chusetts Citizens for Life (“MCFL”) clear line that

ute and vexing questions of degree. Such Congressional

line-drawing is entitled to deference. NRWC sustained

the applicability of section 441b to an organization re-

;

2211

feared.” Id. at 208. MCFL can, as it subsequently

form a “political committee” to raise and spend

in federal elections; the burden on members’ First A

ment rights is inconsequential in these circumstances.

In the unlikely event that there are doubts as to the

constitutionality of section 441b as applied to MCFL, the

Court could avoid the necessity of resolving those doubts

by reading a narrow exception into section 441b for

corporations that: (1) are not-for-profit and do not en-

gage in any commercial activities; (2) have no share-

holders or others with a claim on their earnings; (3)

were not established by a business corporat dn or union

and do not accept contributions from such entities; and

(4) were formed for the express purpose of promoting

political or ideological positions and are funded solely by

voluntary contributions from individuals who have been

informed that the funds will be spent in connection with

federal elections.

If the Court should decide to read such a tightly cir-

cumsc ibed exception into the statute, it should make clear

that any corporation that came within that exception

would be a “political committee” under the Federal Elec-

tion Campaign Act, 2 U.S.C. 43104) (A), subject to

that Act’s disclosure requirements and contribution limits.

This Court’s unanimous decision in FEC v. National

Right to Work Committee, 459 U.S. 197 (1982)

(“NRWC”), requires reversal of the decision below.

Even apart from that direct authority, Congress plainly

has the power to prohibit corporations and labor unions,

as a general matter, from giving financial support to fed-

eral candidates. Congress has found repeatedly over 79

years that such a prohibition serves compelling interests

in protecting the integrity of the electoral process. Thus,

there can be no serious question that 2 U.S.C. § 441b is

constitutional on its face.

The only substantial constitutional question here is

whether Congress drew the line at an improper point

when it barred all use of the corporate form for engaging

in financial support of federal candidates, including use

by individuals who wish to associate for purely ideological

purposes. The prohibition on use of the corporate or union

form leaves ample scope for such individuals to exercise

freedom of speech and association through other forms

of organization, including affiliated “separate segregated

funds” and other political committees.’ In these circum-

stances, the clearcut line that Congress drew is appropri-

ate and constitutional, because it provides the most

certain standard in an area that would otherwise be

vexed by evasions, circumventions, and close questions of

degree.

* See 2 U.S.C. §§ 441b(b) (2) (C), 431(4) (1982).

I. SECTION 441b IS CONSTITUTIONAL ON ITS FACE.

This Court’s decisions in NRWC and previous cases

estab..sh that section 441b is constitutional on its face.

The statute has been found to serve two compelling gov-

ernmental interests: (1) preventing the actual and ap-

parent corruption that could arise if corporations and

unions were free to use the funds amassed as a result

of their unique organizational characteristics to make

contributions or expenditures in federal elections; and

(2) protecting the interests of corporate shareholders and

union members. This Court has deferred to Congress’

expert judgment, reaffirmed in repeated enactments over

many decades, that a ban on corporate and labor union

giving and spending in connection with federal elections

is necessary to achieve those purposes. In short, both

this Court and Congress have recognized section 441b to

be an essential cornerstone of our federal campaign

finance laws.

A. This Court's Decisions Establish the Facial Consti-

tutionality of Section 441b.

This Court’s decisions foreclose any argument that sec-

tion 441b’s prohibition of corporate and union contribu-

tions and expenditures is unconstitutional on its face.

Most recently, in VNC, a unanimous Court upheld

the constitutionality of section 441b's prohibition of a

corporation’s expenditure of treasury funds to solicit con-

tributions from the public at large for its separate segre-

gated fund, or political action committee PAC“ The

* 459 U.S. 197 (1982).

* NRWC was a corporation prohibited from making contributions

or expenditures with its own funds, except as provided by section

441b(b). 459 U.S. at 206 n.6. If the corporation had spent money

to solicit contributions from persons other than its members, then

it had violated section 441b by expending corporate treasury funds

to influence the general public in connection with a federal election.

501 F. Supp. 422, 437 (D.D.C. 1980) (district court opinion). This

Court decided that the persons solicited by NRWC were not its

PAC planned to use the money to make contributions and

independent expenditures supporting and opposing candi-

dates for federal office.’ This Court resoundingly con-

firmed that the compelling governmental interests under-

bitions.* The Court found the statutory provisions “suffi-

ciently tailored” to those compelling interests “to avoid

undue restriction” on First Amendment interests, and

concluded that the statute “reflects a permissible assess-

ment of the dangers posed by (corporations . to the

electoral process.”* The NRWC opinion reaffirmed that

corporations are special entities requiring “particularly

careful regulation.

NRWC built on a long line of cases in which this Court

has recognized the importance of preventing both the

fact and the appearance of corruption of elected officials,

and the harm to public confidence in our system of repre-

sentative government occasioned by such actual or ap-

parent corruption.” It “has never been doubted” that

members and upheld the constitutionality of section 441b’s ban on

such corporate spending.

5 See 501 F. Supp. at 426; 665 F.2d 371, 373 (D.C. Cir. 1981)

(court of appeals opinion).

* NRWC, 459 U.S. at 208.

"Id.

* Id. at 209.

d. at 209-10. See First National Bank of Boston v. Bellotti,

435 U.S. 765, 777 n.13 (1978) (“Bellotti | (“a justification for a

restriction on speech that would be inadequate as applied to indi-

viduals might suffice to sustain the same restriction as applied to

corporations”).

% NRWC, 459 U.S. at 208; Bellotti 435 U.S. at 788-89; Buckley

v. Valeo, 424 U.S. 1, 26-27 (1976) (“Buckley”) (“avoidance of the

appearance of improper influence ‘is also critical . if confidence

in the system of representative Government is not to be eroded to a

disastrous extent (quoting United States Civil Service Comm'n

v. National Association of Letter Carriers, 413 U.S. 548, 565 (1973)

(“Letter Carriers); United States v. International Union United

Automobile Workers, 362 U.S. 567, 575 (1957) (“Auto Workers’):

Burroughs v United States, 290 U.S. 534, 547-48 (1934); see FEC

„ National Conservative Political Action Comm. 105 8. Ct. 1459,

1469 (1985) [“NCPAC”).

"! Bellotti, 435 U.S. at 788 n.26, 788-89.

Auto Workers, 352 U.S. at 570; id. at 575 (section 441b serves

to “sustain the active, alert responsibility of the individual citizen

in a democracy for the wise conduct of government

“ See NRWC, 459 U.S. at 209-10 (“the special characteristics

of the corporate structure require particularly careful regulation”) ;

California Medical Ass'n v. FEC, 453 U.S. 182, 201 (1981) (“CMA”).

In 1819, Chief Justice Marshall described the unique status of

a corporation in the eyes of federal law:

its very existence. These are such as supposed best calculated

to effect the object for which it was created.”

Trustees of Dartmouth College v. Woodward, 17 U.S. (4 Wheat.)

518, 636 (1819); see also Bellotti, 436 US. at 809 (White, J

dissenting) .

® Bellotti, 435 U.S. at 826 (Rehnquist, J., dissenting) .

1211

l f

1 :

Auto Workers, 352 US. at 585.

" See CMA, 453 US. at 201.

Cong. Ist Sess. 12 (1906) (“1906 Hearing; Hearings Before a

Subcomm. of the House Comm. on Labor, H.R. 804 and H.R. 1483,

78th Cong. Ist Sess. 71, 96, 146 (1943) [1943 Hearings”).

% Final Report of the Senate Select Committee on Presidential

Campaign Activities, 8. Rep. No. 93-981, 93d Cong. 2d Sess. 464,

469, 484 (1974) Senate Watergate Committee Report

» See, eg. NRWC, 459 US. at 208, citing United States v. Con-

gress of Industrial Organizations, 335 U.S. 106, 113 (1948) (“C/O”) ;

see Bellotti, 485 US. at 787-88; Pipefitters Local Union 562 ».

United States, 407 US. 385, 413-16 (1972) [“Pipefitters”). In

other contexts as well, this Court has recognized the right of indi-

viduals not to be compelled to support candidates or political posi-

Section 441b is based on a thorough Congressional investi-

gation and documentation of the threat such expenditures

pose to the integrity of the electoral process.“ This

tions they oppose. See Abood v. Detroit Bd. of Educ., 431 U.S. 209

(1977) ; International Ass'n of Machinists v. Street, 367 U.S. 740

(1961).

21 93 Cong. Rec. 7492 (1947).

*The lower courts have uniformly upheld the constitutionality of

section 441b in both contexts. See Athens Lumber Co. v. FEC, 718

F.2d 363 (11th Cir. 1983) (en banc), appeal dismissed, cert. denied,

465 U.S. 1092 (1984) (challenge to prohibition on corporate con-

tributions and expenditures, rejected on basis of NRWC); United

States v. Boyte, 482 F.2d 755 (D.C. Cir.), e.rt. denied, 414 U.S.

1076 (1973); United States v. Chestnut, 5383 F.2d 40 (2d Cir.

1976), cert. denied, 429 U.S. 829 (1976) ; Pipefitters, 434 F.2d 1116

(8th Cir. 1970), rev'd on other grounds, 407 U.S. 385 (1972):

FEC wv. Weinsten, 462 F. Supp. 243 (S.D.N.Y. 1978).

435 U.S. at 788 n.26.

See infra pp. 14 to 15; see generally House Special Comm.

to Investigate Campaign Expenditures, Campaign Expenditures,

H.R. Rep. No. 2093, 78th Cong. 2d Sess. (1945) [1945 House In-

vestigative Report”); Senate Special Comm. to Investigate Presi-

dential, Vice Presidential, and Senatorial Campaign Expenditures in

1944, Investigation of Presidential, Vice Presidential, and Senatorial

Campaign Expenditures, 1944, S. Rep. No. 101, 79th Cong., Ist Sess.

(1945) (1945 Senate Investigative Report“ ]; House Special Comm.

to Investigate Campaign Expenditures, 1946, Campaign Erpendi-

tures, H.R. Rep. No. 2739, 79th Cong. 2d Sess. (1947) (1947

Court should “not second-guess a legislative determina-

tion as to the need for prophylactic measures where cor-

ruption is the evil feared.” *

The compelling governmental interests in prohibiting

all direct financial involvement by corporations and

unions in federal election campaigns far outweigh the

effects of section 441b on the exercise of First Amend-

ment rights. As this Court has repeatedly declared and

as it reaffirmed in NRWC, “(n]either the right to associ-

ate nor the right to participate in political activities is

absolute.“ In NCPAC, the Court specifically stated,

„iln return for the special advantages that the state con-

fers on the corporate form, individuals acting jointly

through corporations forgo some of the rights they have

as individuals.“ And this Court has recognized that

„the differing restrictions placed on individuals and un-

incorporated associations, on the one hand, and on unions

and corporations, on the other, reflect a judgment by

Congress that these entities have differing structures and

purposes, and that they therefore may require different

forms of regulation in order to protect the integrity of

the electoral process..

House Investigative Report”); Senate Special Committee to Inves-

tigate Senatorial Campaign Expenditures, 1946, Investigation of

Senatorial Campaign Expenditures, 1946, S. Rep. No. 1, 80th

Cong., Ist Sess. (1947) [1947 Senate Investigative Report

* NRWC, 459 U.S. at 210.

26 Jd. at 207, quoting Letter Carriers, 413 U.S. at 567; see also

Buckley, 424 U.S. at 25. To further its legitimate goals, Congress

may properly require a group to comply with reasonable structural

or organizational rules in order to exercise First Amendment rights.

See, e.g., Regan v. Taxation with Representation, 461 U.S. 540, 543-

45 K n.6 (1983) (“not unduly burdensome” to require a group to

establish separate affiliated organization for lobbying activities in

order to preserve tax deductibility of contributions for nonlobbying

activities) .

27 NCPAC, 105 S. Ct. at 1468.

% CMA, 453 U.S. at 201, quoted in part in NRWC, 459 U.S. at 210.

Section 441b, then, presents an altogether differen:

case than was presented in either Buckley, where the

Court struck down a limit on independent expenditures

by individuals and political committees,” or NCPAC,

where it invalidated a limit on independent expenditures

by any “committee, association, or organization (whether

or not incorporated).” “ This Court expressly stated in

NCPAC, “this is not a ‘corporations’ case.“ In both

Buckley and NCPAC, the Court could discern no basis for

a finding that the independent expenditures there in

question could, under the circumstances, present a risk of

actual or apparent corruption.” Here, in contrast, the

Court has recognized that Congress could legitimately

conclude that, because of the unique characteristics and

purposes of corporations and unions, their independent

expenditures would present palpable risks of corruption.“

As we show in the next section, Congress has held to

that view for many years.

B. It Has Been Congress’ Expert Judgment for Decades

That a General Prohibition of Contributions and

Expenditures by Corporations and Unions Is Neces-

sary To Achieve Compelling Public Interests.

Congress enacted, and later reenacted, section 441b

against a backdrop that shows vividly the need for the

statute and its crucial role in preserving the integrity

of the electoral process. As Justice Frankfurter recog-

nized, “[a)ppreciation of the circumstances that begot

*® Buckley, 424 U.S. at 39-51.

* NCPAC, 105 S. Ct. at 1468.

31 Jd.

* Buckley, 424 U.S. at 46 (“the independent advocacy restricted

by the provision does not presently appear to pose dangers of real

or apparent corruption comparable to those identified with large

campaign contributions”); NCPAC, 105 S. Ct. at 1469 (“On this

record, such an exchange of political favors for uncoordinated

expenditures remains a hypothetical possibility and nothing more.“

% Bellotti, 485 U.S. at 788 n.26.

this statute is necessary for its understanding, and un-

derstanding of it is necessary for adjudication of the

legal problems before us.

Section 441b found its origin in the growing concern

corruption.“ Public sentiment swelled in the early

1900s in reaction to the public disclosure that national

banks, insurance companies, and other business interests

had given large sums to political parties and candidates,

and attained commensurate influence over the politicians

whose campaigns they had financed.” The massive in-

flux of corporate funds in the 1904 election “crystallized

popular sentiment for federal action to purge national

politics of what was perceived to be the pernicious influ-

ence of big money’ campaign contributions.“

* Auto Workers, 352 U.S. at 570.

E. Zuckerman, Origins of the 1907 Tillman Act (Aug. 1982)

(Fund for Constitutional Government). The Legislative Insurance

Investigation Committee of New York discovered that in the presi-

dential campaigns of 1896, 1900 and 1904, substantial amounts of

“Contributions by insurance corporations for political pur-

poses should be strictly forbidden. Neither executive officers

nor directors should be allowed to use the moneys paid for

purposes of insurance in support of political candidates

Whether made for the purpose of supporting political views or

with the desire to obtain protection for the corporation, these

contributions have Seen wholly unjustifiable. In the one case

executive officers have sought to impose their political views

upon a constituency of divergent convictions, and in the other

they have been guilty of a serious offense against public morals.”

10 Report of the Joint Comm. on the Senate and Assembly of the

State of N.Y. Appointed to Investigate the Affairs of Life Insurance

Companies, 24, 110, 298, 334, 393, 397 (1906); see also 42 Cong.

Rec. 696 (1908).

* Auto Workers, 352 U.S. at 571-72.

President Theodore Roosevelt responded by calling for

legislation banning political contributions by corpora-

that wield them, as to make it a matter of necessity

to give the sovereign—that is, to the Government,

which represents the people as a whole—some effec-

tive power of supervision over their corporate

use.

“All contributions by corporations to any political

committee or for any political purpose should be for-

ien

use stockholders’ money for such purposes. .

In 1907, Congress enacted the Tillman Act, which

made it “unlawful for any national bank, or any corpo-

ration organized by authority of any laws of Congress,

to make a money contribution in connection with any

election. [and] for any corporation whatever to make

a money contribution in connection with any [federal]

election.“ The legislative history reveals Congress’ ap-

preciation of the two compelling interests served by the

prohibition—preventing the pernicious influence of cor-

porate money in the electoral process, and prohibiting

corporate managers from “defrauding the stockholders

of money dishonestly and for an improper purpose.“

The Tillman Act was but “the first concrete manifes-

tation of a continuing congressional concern for elections

% 40 Cong. Rec. 91 (1905).

% Jd. at 96; see also 1906 Hearings, supra note 18, at 12.

# 34 Stat. 864 (1907).

*1 1906 Hearings, supra note 18, at 76 (“no corporation has the

right and no board of directors of a corporation and no manager of

a corporation has the right to embezzle the money belonging to the

stockholders of the corporation and to divert it from its legitimate

use”) ; see id. at 76-78.

the definition contribution to include “anything of

value” and by penalizing the recipient of an illegal con-

tribution as well as the giver.“

Congress la labor

ng the ban on contributions to labor unions,

the prohibition permanent in the Taft-Hartley

During the 1940s, evidence mounted that corporations

and labor unions were circumventing the ban on con-

tributions by making expenditures. The House Special

Committee on Campaign Expenditures, after an exten-

sive investigation, concluded that the prohibition on con-

tributions was rendered ineffective by widespread coordi-

nated and independent expenditures which posed a grave

Auto Workers, 352 U.S. at 575 (citation omitted).

* 43 Stat. 1070, 1071, 1073 (1925).

* Auto Workers, 352 U.S. at 578; see 1943 Hearings, supra note

18, at 2 (“The public was aroused by many rumors of huge war

chests being maintained by labor unions, of enormous fees and

dues being extorted from war workers, of political contributions

to parties and candidates which later were held as clubs over the

head of high Federal officials.”).

War Labor Disputes Act, 57 Stat. 633 (1943); Labor Manage-

ment Relations Act of 1947, 61 Stat. 136 (1947); see C/O, 335

U.S. at 115.

ings and recommended that Congress extend the statute

form of an ‘expenditure’ rather than a contribu-

tion.“

Congress therefore amended the law to proscribe ex-

penditures as well as contributions.“

“1947 House Investigative Report, supra note 24, at 39. The

Committee dealt with independent expenditures as well as those

that were coordinated with candidates Id. at 27-29. The report

stated, “The committee feels that whether or not the activities

carried on by these organizations and the payment of salaries to

men known as organizers or advisers who go into the congressional

districts and actively assist in local campaign activities, and ex-

penditures for radio time, newspaper advertising, printing and dis-

tribution of handbills and posters, and for transportation of voters,

constitute violations of the letter of the Federal Corrupt Practices

Act, they certainly constitute violations of the spirit and intent of

the law and the acts should be so amended as to clearly and distinctly

set out that such activities are prohibited.” Id. at 42-43.

* 1947 Senate Investigative Report, supra note 24, at 38-39.

61 Stat. 136 (1947). See 93 Cong. Rec. 6439 (1947) (remarks

of Sen. Taft, a sponsor of the bill) ; see also CIO, 335 U.S. at 115

The Watergate scandal in 1972 once again focused the

attention of Congress on section 441b and reconfirmed

the compelling need for a ban on corporate contributions

and expenditures. The Final Report of the Select Com-

mittee on Presidential Campaign Activities is replete

(“Since it was obvious that the statute as construed could easily be

circumvented, .. . § 304 extended the prohibition of §313 to

‘expenditures.’ ”").

* See 2 U.S.C. § 44°b(b) (2) (1982).

* 117 Cong. Rec. 43381 (1971).

" Id.

Id., quoted in Pipefitters, 407 U.S. at 431.

with examples of illegal corporate activity that are vivid

reminders of why the statute remains so essential.

American Airlines, for example, gave $55,000 in corpo-

rate funds to President Nixon's campaign because it was

told that a large gift would put it in a “special class,”

and because it was afraid that it would be “prevented

from getting something” if it did not give. Ashland Oil

gave $100,000 to the President’s campaign and spent

$10,000 to buy an advertisement supporting him. Ash-

land’s Chairman explained the gift as an attempt “to as-

sure ourselves of a forum . we felt we needed some-

thing that would be sort of a calling card, something

that would let us in the door and make our point of view

heard. Associated Milk Producers, Ine. AMI“),

a dairy producers membership corporation, made illegal

expenditures of $137,000 to assist the campaigns of Sen-

ator Humphrey and other Democratic ce» ndidates and offi-

cials.“ Claude C. Wild, Jr., then Vice President of Gulf

Oil, explained to the Senate Select Committee that Gulf

had illegally contributed to three presidential candidates

because of its fear that if Gulf did not participate, it

might be placed on a “blacklist” or at the “bottom of

the totem pole.

In 1976, Congress further refined section 441b by en-

acting detailed provisions governing the expenditure of

corporate funds to solicit contributions to a separate

™ Corporations would be in a position to dominate campaign

finance. Prior to the Tillman Act, over 70% of the contributions

collected by the Republican National Committee in 1904 came from

representatives of corporations. H. Pringle, Theodore Roosevelt:

A Biography 357 (1931), citing Campaign Contributions: Testi-

mony Before a Subcomm. of the Senate Comm. on Privileges and

Elections, vol. 1, 62d Cong., 2d Sess. 204-06 (1912).

Senate Watergate Committee Report, supra note 19, at 447-51.

% Id. at 459-60.

Id. at 870-81.

*. at 469.

segregated fund (“PAC”).* In doing so, Congress re-

affirmed its unbroken conviction that the prohibitions in

section 441b are critical to the integrity of the electoral

process.

This 79-year history reflects Congress’ careful

adjustment of the federal electoral laws, in a ‘cautious

advance, step by step,’ to account for the particular legal

and economic attributes of corporations and labor or-

ganizations.” Congress has moved to prohibit activi-

ties when the evidence showed that they posed concrete

and imminent threats to the electoral process, and it has

carefully considered the First Amendment interests af-

fected by its legislation, tailoring the statute to avoid

unnecessary intrusion on those interests.“ In short,

Congress has narrowly drawn section 441b to serve ad-

mittedly compelling governmental interests.” “This care-

ful legislative adjustment . warrants considerable

deference” from the Court.“

II. SECTION 441b MAY CONSTITUTIONALLY BE

APPLIED TO MCFL BECAUSE IT IS A CORPORA-

TION; IF THE COURT FINDS OTHERWISE, Ir

MUST TREAT MCFL AS A “POLITICAL COMMIT-

TEE” WHICH IS SUBJECT TO THE FEDERAL

ELECTION CAMPAIGN ACT.

A. Section 441b Is Constitutional as Applied to MCFL.

Although the First Circuit did not question the facial

constitutionality of section 441b, it held the provision un-

constitutional as applied to “indirect, uncoordinated ex-

penditures by a non-profit ideological corporation ex-

% See 2 U.S.C. § 441b(b) (4) (1982).

5 See 122 Cong. Rec. 8570-72 (1976) (remarks of Rep. Brademas).

” NRWC, 459 U.S. at 209 (citation omitted)

*! See, e.g., CIO, 335 U.S. at 120.

@ NRWC, 459 U.S. at 208.

Id. at 209.

pressing its views of political candidates. That con-

clusion was erroneous. To promote the compelling gov-

ernmental interests discussed above, Congress may con-

stitutionally prohibit all corporations and unions from

making either contributions or expenditures in connec-

tion with a federal election.

Section 441b must cover all corporations and unions in

order to provide a clear and easily administrable stand-

ard. Experience has demonstrated that there are sub-

stantial incentives to exploit potential loopholes in cam-

paign finance laws.” Congress has long appreciated the

dangers of abuse in this area,“ and has concluded that

to prevent evasion, section 441b must apply to all corpo-

rations and unions. This Court has held that such Con-

Juris. Statement 24a.

See supra note 24; Senate Watergate Committee Report, supra

note 19; cf. Buckley, 424 U.S. at 35-36, 38; Leventhal, Courts and

Political Thickets, 77 Colum. L. Rev. 345, 364-65 (1977).

For example, in 1945, a Senate investigative committee reported

that the “Common Citizens Radio Committee,” incorporated under

the laws of the state of Texas for “educational” purposes, was

actually seeking to influence the 1944 presidential election and that

it had received contributions from numerous business corporations.

1945 Senate Investigative Report, supra note 24, at 19-20, 44-53.

In the 1947 debates on the Taft-Hartley Act, Senator Barkley

obcerved that “the National Association of Manufacturers does not

manufacture anything, the United States Chamber of Commerce

does not sell anything. and the Automobile Chamber of Commerce

does not manufacture or sell anything.” In response, Senator Taft,

the bill’s floor manager, stated, “In any event, so long as the money

comes from corporations, and with their knowledge, I think it would

be clearly illegal anyway, and they would be participating as cor-

porations in spending for political purposes.” 98 Cong. Rec. 6438

(1947).

The current campaign finance scandals in West Germany involve

allegations that millions of dollars of illegal corporate donations

were funneled to political parties through tax-exempt foundations.

See, eg. N.Y. Times, Feb. 18, 1986, at A3, col. 5.

gressional line-drawing is entitled to substantial defer-

ence.”

Applying Congress’ bright line, this Court in NRWC

unanimously upheld the application of section 441b’s

solicitation limits to a corporation without capital stock

organized expressly for ideological purposes—a corpora-

tion remarkably similar to Massachusetts Citizens for

Life (“MCFL”).* The court of appeals in NRWC had

ruled that, because NRWC was a nonstock corporation

organized solely for political purposes, it was constitu-

tionally entitled to solicit funds for its affiliated PAC

from persons who were not its members under state

law.” This Court rejected the lower court’s reasoning,

* See NCPAC, 105 S. Ct. at 1470-71 (constitutional to prohibit

contributions by membership corporations even though they “might

not exhibit all of the evil that contributions by traditional eco-

nomically organized corporations exhibit”); Buckley, 424 U.S.

at 70-71 (FECA disclosure requirements are constitutional as ap-

plied to minor parties, despite diminished governmental interests in

disclosure) ; id. at 83 ($10 recordkeeping threshold and $100 report-

ing threshold are constitutional because the “line is necessarily a

judgmental decision, best left in the context of this complex leg-

islation to congressional discretion”); United Public Workers v.

Mitchell, 330 U.S. 75, 101 (1947) (constitutional to ban political

activity by all types of classified federal employees, even though

“the impartiality of many of these is a matter of complete indiffer-

ence to the effective performance” of their duties).

* 459 U.S. at 199. NRWC was “a nonprofit corporation without

capital stock that was formed to educate the public on and to advo-

cate voluntary unionism. NRWC conducts a continuous and exten-

sive program of advocacy through the dissemination of information

on compulsory unionism to its members and to the genera! public.”

665 F.2d 371, 373 (D.C. Cir. 1981).

In this case, “MCFL is an ideological, grass roots, nonpartisan

corporation organized to foster respect for human life and to

defend the right to life of all human beings, born and unborn,

through educational, political, and other forms of activity... . It

was incorporated in 1973 as a nonprofit, nonstock corporation under

Massachusetts law.” Motion to Affirm at 2.

665 F. 2d at 371, 374 & n.4, 375 n.9, 376.

butions and expenditures. To the contrary, in NRWC

the Court declared that the claim that the Constitution

guaranteed NRWC the right to solicit all those “who

have in the past proved ‘philosophically compatible’ to

459 U.S. at 208.

™ Jd. at 210. As noted above, the NRWC holding implicated the

ban on corporate expenditures as well as contributions. See supra

notes 4 & 5.

™ NCPAC, 105 8 Ct. at 1471.

See supra pp. 5 to 11; NRWC, 459 U.S. at 207, quoting

Letter Carriers, 413 U.S. at 567; Buckley, 424 U.S. at 25; CMA,

453 U.S. at 201; ef. Regan v. Taration with Representation, 461

U.S. 540, 543-45 & n.6 (1983).

the views of the corporation . . would ignore the teach-

ings of our earlier decisions.

“political committee —affiliated with MCFL or inde-

pendent of it.

Indeed, after making the expenditure at issue here,

MCFL established a “separate segregated fund” or

PAC.” MCFL may lawfully pay its PAC’s administra-

tive and solicitation expenses, and the PAC may law-

fully solicit MCFL’s members for voluntary contribu-

tions.” If, as MCFL claims, its contributors wish their

federal

accept funds from business corporations, Affidavit of Philip D.

Moran {9 (July 9, 1982), this policy is subject to change by a vote

Juris. Statement 25a n.1 (court of appeals opinion). The fund

is named “Massachusetts Citizens for Life Political Action Commit-

tee,” see Statement of Organization, filed with FEC, May 15, 1980,

as required by law, 2 U.S.C. § 434(e)(5)(1982); 11 CF. R.

$102.14(c) (1985).

™2 U.S.C. Aided (2) (C, 441b(b) (4) (C) (1982). The fund

“may be completely controlled” by MCF L, “whose officers may decide

which political candidates contributions to the fund will be spent to

assist.” NRWC, 459 U.S. at 200 n4.

In 1978, MCFL was a nonmembership corporation under its arti-

cles and by-laws. To make full use of its separate segregated fund,

to be used in federal elections, those contributors

no doubt respond favorably to solicitations from a

tical committee affiliated with MCFL, bearing its

name, and sharing its ideological goals. Alternatively,

persons sharing MCFL’s goals are free to establish a

political committee unaffiliated with MCFL. Such a com-

mittee could not receive funds from MCFL for overhead

expenses, but it would be permitted to solicit the gen-

eral public (including MCFL members) for contribu-

tions. Since the organizational ties between MCFL and

its contributors are relatively loose, no substantia] asso-

ciational values would be lost by the creation of such a

separate committee.™

MCFL claims that creating a “political committee” is

burdensome because disclosure is required, and the court

MCFL changed its formal corporate structure in 1980 to become a

membership corporation. Motion to Affirm at 11; Answer to FEC

Interrogatories No. 6, 10 (D. Mass., May 6, 1982). In NRWC, this

Court held that it is not unconstitutionally burdensome to limit

solicitations by a nonstock corporation’s separate segregated fund

to persons who are members of the corporation under state law.

459 U.S. at 210.

The record shows that MCFL obtained funds, inter alia, from

individuals who attended MCFL’s annual dinner, a fundraising

event open to the general public, Deposition of Philip D. Moran at

71-72, 77-78 (Aug. 10, 1982), and from persons who designated a

portion of their grocery bill to go to MCFL as their favorite charity

in a promotional program at a local supermarket. Id. at 38-40.

MCFL also raised funds through such activities as garage sales,

cake sales, bike-a-thons, fashion shows, yard sales, dances, raffles,

auctions, furniture sales, wine-tasting parties, flower sales, and

cookbook sales. Affidavit of Philip D. Moran {8 (July 9, 1982). In

1978, when the expenditures at issue were made, none of MCFL’s

contributors had any right to vote for the board of directors, which

was self-appointed and self-perpetuating. Deposition of Philip D.

Moran at 25, 70. Compare NRWC, 459 U.S. at 206 (“Members play

no part in the operation or administration of the corporation; they

elect no corporate officials, and indeed there are apparently no

membership meetings. There is no indication that NRWC’s asserted

members exercise any control over the expenditure of their con-

tributions.”’) .

of appeals seems to have accepted this argument.” That

is astonishing, because in Buckley v. Valeo, this Court

endorsed the importance of disclosure requirements as a

vital part of Congress’ scheme of campaign finance reg-

ulation.” The small burden of disclosure is one that the

Constitution permits because it serves compelling gov-

ernmental interests.“

For these reasons, there should be no serious doubt

about the constitutionality of section 441b as applied to

MCFL. While drawing a clear line around all corpora-

tions and prohibiting them from making contributions

and expenditures in connection with federal elections,

section 441b allows ample scope for freedom of speech

and association through organizations not using the cor-

porate form. Moreover, the provision is a cornerstone of

Congress’ carefully designed scheme to protect the in-

tegrity of federal elections. To breach the ban on corpo-

rate contributions and expenditures would gravely

weaken that edifice.

B. If There Are Doubts About the Constitutionality of

Applying Section 441b to MCFL, Section 441b Could

Be Construed To Exclude Organizations Such as

MCFL.

If, nonetheless, there are constitutional doubts, surely

those doubts are narrowly confined to corporations

formed expressly for political purposes and lacking any

corporate or labor union connections. The necessity of

7 Motion to Affirm at 11; Juris. Statement 21a n.7 (court of

appeals opinion). Disclosure requirements are not, of course, an

additional burden imposed on MCFL by the application of sec-

tion 441b; they are a constitutionally permissible incident of mak-

ing “contributions” or “expenditures” through any institutional

mechanism.

The Court recognized that disclosure requirements might deter

some persons from making contributions, but upheld their constitu-

tionality except as applied to a group that could prove that com-

pelled disclosure would result in “threats, harassment, or reprisals

from either Government officials or private parties.“ Buckley, 424

U.S. at 68-74. MCFL has not attempted to make such a showing.

Id. at 60-68.

resolving those doubts could be pretermitted by reading

into section 441b a narrow exception for political com-

mittees in corporate form that support federal candi-

dates as well as advocating particular political positions.

As the Court reaffirmed last Term, it “should ‘not decide

a constitutional question if there is some other ground

upon which to dispose of the case“ In the unlikely

event that the Court doubts the constitutionality of ap-

plying section 441b to MCFL, it might construe the stat-

ute to exclude entities such as MCFL.™

Any such statutory exception should be tightly circum-

scribed. The history of electoral abuse in this area shows

that incautious characterization of an exception might

be exploited by those corporations and labor unions that

Congress unquestionably intended to bar from campaign-

related financial activity.“ We therefore suggest that no

Lowe v. SEC, 105 S. Ct. 2557, 2563 (1985) (citations omitted);

see Crowell v. Benson, 285 U.S. 22, 62 (1982) ; Ashwander v. Tennes-

see Valley Authority, 297 U.S. 288, 347 (1936) (Brandeis, J., con-

curring). In order to avoid deciding constitutional questions, the

Court has often interpreted broad Congressional language to exclude

a particular application in the absence of any “clear expression of an

affirmative intention of Congress” to the contrary. NLRB v. Catholic

Bishop of Chicago, 440 U.S. 490, 504, 507 (1979), quoted in United

States v. Security Industrial Bank, 459 U.S. 70, 82 (1982) ; see C/O,

335 U.S. at 120-24; United States v. Rumely, 345 US. 41, 45

(1953); International Ass'n of Machinists v. Street, 367 U.S. at

749; Letter Carriers, 413 U.S. at 571; Buckley, 424 U.S. at 78-81.

Section 441b literally applies to “any corporation whatever.”

However, the legislative history of the 1907 Tillman Act indicates

that the word “whatever” was included to make clear that the

statute covers corporations organized under state laws, not merely

national banks and corporations organized by authority of an Act

of Congress. See S. Rep. No. 3056, 59th Cong., Ist Sess. 2 (1906)

(“all corporations, no matter under what laws created“); H.R. Rep.

No. 6397, 59th Cong., 2d Sess. 1 (1907); 41 Cong. Rec. 1452 (1907)

(“any corporation whether organized under the Federal Govern-

ment or under the State”).

* For the reasons stated cogently by the court of appeals, which

are amply supported by the legislative history, Juris. Statement

6a-19a, this Court should not rely on any of the three statutory

grounds on which the district court relied. The district court’s rea-

corporation should be excluded from the coverage of sec-

tion 441b unless it satisfies each of the following cri-

teria: *

First, the corporation must be a not-for-profit corpora-

tion that does not engage in business or commercial

transactions of any kind.“ Second, the corporation must

not have any shareholders or other affiliated persons

with a claim to any of its assets or earnings.“ Third,

the corporation must not have been established by a

business corporation or labor union and it must not

accept contributions from business corporations, labor

unions or other artificial entities, because Congress real-

ized the danger that business corporations might use os-

tensibly nonbusiness corporations or other groups as con-

duits to spend money in connection with elections.“

soning, if accepted, would create loopholes susceptible to widespread

exploitation and abuse.

5 If the Court were to conclude that section 441b is unconstitu-

tional as applied to MCFL, it should apply the same criteria in

defining the scope of its holding, and should in addition limit the

holding to independent expenditures such as those involved in the

Special Election Editions.

% See supra pp. 7-8. Activities such as bake sales and car

washes would not be “business or commercial transactions” if

they were expressly designated as political fundraising events, so

that all contributors were fully aware of their political purpose.

* See supra pp. 8-9. Section 441b extends beyond stock cor-

porations. 2 U.S.C. f 441b b) (4) (0) (1982); see 122 Cong. Rec.

7197-98, 12468-69 (1976).

88 See supra note 66 (discussing 1945 Senate investigative com-

mittee report and 1947 debates on Taft-Hartley Act). Senator Taft

specifically stated that the National Association of Manufacturers

and the United States Chamber of Commerce, which had corporate

members, could not use treasury funds in federal election campaigns.

93 Cong. Rec. 6438 (1947). He also indicated that the Chamber of

Commerce, if incorporated, could not lawfully spend money in fed-

eral elections even if that money had been raised from individuals.

Id. at 6439. Since the Chamber of Commerce obtained corporate

treasury funds from its corporate members, receiving individual

contributions as well would not eliminate its status as a corporate

conduit.

According to the Commission’s brief in NRWC, “NRWC has

admitted that it receives a portion of its treasury funds from con-

Fourth the corporation must have been formed for the

express purpose of promoting political or ideological posi-

tions, and its sole source of funds must be voluntary con-

tributions from individuals who have been informed that

the funds will be spent for campaign-related purposes.

If this criterion is not satisfied, there is an undue risk

that contributors’ funds will be used for campaign-related

purposes of which they do not approve, contrary to Con-

gress’ intent.”

The Federal Election Commission has consistently

taken the position that section 441b does not apply in one

situation where all of these criteria are satisfied—the

political committee that incorporates solely for liability

purposes, In 1975, the Commission decided that, “[i]f a

nonprofit organization is created expressly and exclu-

sively to engage in political activities,” and has incor-

porated for liability purposes only, “[t]hat type of cor-

poration is essentially a political committee and may

contribute its asset’ to Federal candidates the same as

unincorporated political committees.” Although not

tributions from other corporations.” Brief for Petitioners, FEC v.

NRWC, at 37 (June 21, 1982). For this reason, NRWC would be

covered even if section 441b excluded some other incorporated

entities. Similarly, this criterion would exclude trade associations

with corporate members.

See supra pp. 8 to 9. This governmental interest supports

Senator Taft's view that section 441b would prevent an incorpo-

rated church from making election-related contributions and ex-

penditures. 93 Cong. Rec. 6440 (1947). Donors reasonably expect

that their contributions to a church will be used for religious pur-

poses, not to advocate the election or defeat of political candidates.

Accordingly, Senator Taft's statement about churches does not

inexorably lead to the FEC’s conclusion that “Congress considered

this purpose to apply fully to [all] non-profit corporations whose

money comes from ideological adherents.” Juris. Statement 19 n.15.

* Advisory Opinion 1975-16, 40 Fed. Reg. 36242, 36243 (1975).

Accord Advisory Opinion 1975-37, 40 Fed. Reg. 42303 (1975). In a

subsequent advisory letter, the Commission stated that “this conclu-

sion is premised on the assumption that all receipts and disburse-

constitutionally necessary, it is a reasonable interpreta-

tion of the statute. Absent a congressional finding that

a risk of abuse exists, the Commission is reasonable in

declining to insist that a political committee that de

cides to incorporate thereby disqualifies itself from per-

forming the activities for which it was created.“ The

Court could, if so impelled by constitutional concerns,

broaden that exception solely to encompass organizations

in corporate form that have other political or ideological

activities in addition to electoral activities, and that meet

the four criteria outlined above.”

C. If MCFL Is Excluded from Section 441b, Then It

Is a “Political Committee” Subject to the Federal

Election Campaign Act.

If the Court decides that a narrow statutory exception

to section 441b does exist, it should also make clear that

corporations within that exception are “political commit-

tees” subject to the Federal Election Campaign Act

(“FECA”). Under the FECA, a “political committee” is

“any committee, club, association, or other group of per-

sons which receives contributions aggregating in excess

of $1,000 during a calendar year or which makes ex-

penditures aggregating in excess of $1,000 during a cal-

endar year.“ This language applies to all types of or-

ments relating to all the [group's] varied activities will be regarded

as though they were contributions and xpenditures under the Act.”

Response to Advisory Opinion Request 1975-122, 1 Fed. Election

Campaign Fin. Guide (CCH) 7 6020 (Sept. 2, 1976). See 11 C. FR.

9114.12 (6a) (1985).

See NCPAC, 105 S. Ct. at 1465, 1468 (appellees NC PAC and

FCM were incorporated political committees, but the case was not

a ‘corporations’ case

* MCFL might satisfy these criteria. See Juris. Statement 22a-

23a (court of appeals opinion) ; id. at 26a (district court opinion)

(describing MCFL’s Statement of Purpose). MCFL asserts that it

has a policy against accepting contributions from business corpora-

tions. Motion to Affirm at 2; Deposition of Philip D. Moran at

74-75.

2 U.S.C. § 431(4) (A) (1982) ; 11 C. F. R. § 100.5(a) (1985).

ganizations that are not forbidden by law from partici-

pating in federal elections. MCFL is an “association, or

other group of persons” and it made expenditures of

$9,812 in 1978 to support and oppose federal candidates

in the Massachusetts primary election.“ Therefore,

it was a “political committee,” unless it was a corpora-

tion forbidden to make those expenditdres at all.”

In Buckley, this Court suggested that the definition of

“political committee” should be construed to exclude

“groups engaged purely in issue discussion“; but

MCFL did not limit itself to “issue discussion.” The

courts below found that MCFL spent considerably more

than the statutory threshold amount to print and distrib-

ute approximately 100,000 copies of a leaflet that sup-

ported the election or defeat of particular federal can-

didates.“

Buckley also suggested that [tjo fulfill the purposes

of the Act [the words ‘political committee'] need only en-

compass organizations that are under the control of a

candidate or the major purpose of which is the nomina-

tion or election of a candidate.“ That case, however,

did not present to the Court the question whether “politi-

cal committee” should be construed so narrowly that cer-

tain corporations could avoid section 441b and at the

same time escape the FECA’s disclosure requirements

and contribution limits.” The Court’s discussion in Buck-

* See Juris. Statement 5a, 19a (court of appeals opinion

To inform the public, to deter corruption, and to facilitate

enforcement of the law, political committees are required to register

with the Federal Election Commission, to submit periodic reports,

and to maintain records of receipts and disbursements. 2 U.S.C.

§ 432, 433, 434 (1982). In addition, political committees may receive

no more than $5,000 from any individual in a calendar year. /d.

§ 441a(a)(1)(C).

* 424 U.S. at 79.

* Juris. Statement 18a n.6 (court of appeals opinion).

424 U.S. at 79.

* Unlike this case, the two lower court decisions cited by the

Court did not involve express advocacy of the election or defeat of

CONCLUSION

For these reasons, the judgment of the court below

should be reversed.

Respectfully submitted,

RoceR M WITTEN

Counsel of Record

WUuLAN T. LAKE

Cal F. Lee

SHEILA C. CHESTON

Of Counsel WILMER, CUTLER & PICKERING

ARCHIBALD Cox 1666 K Street, N.W

COMMON CAUSE Washington, D.C. 20006

2030 M Street, N.W. (202) 872-6000

Washington, D.C. 20036 Counsel for Amicus Curiae

(202) 833-1200 Common Cause

February 27, 1986

specific candidates. See ACLU, Inc. v. Jennings, 366 F. Supp. 1041

(D. DC. 1973) (3-judge court), vacated as moot, 422 U.S. 1030

(1975); United States v. National Comm. for Impeachment, 469

F.2d 1135 (2d Cir. 1972).

ie —

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