Amicus Curiae Brief — Federal Election Comm'n v. Beaumont

No. 02-403

Or} Sly ae ™

IN THE

Supreme Court of the United States

FEDERAL ELECTION COMMISSION,

Petitioner,

Vv.

CHRISTINE BEAUMONT, ET AL.,

Respondents.

On Writ of Certiorari to the

United States Couri of Appeals for the Fourth Circuit

BRIEF AMICUS CURIAE OF

REALCAMPAIGNREFORM.ORG, INC.,

CONSERVATIVE LEGAL DEFENSE AND

EDUCATION FUND, GUN OWNERS OF AMERICA,

INC., ENGLISH FIRST, AND U.S. JUSTICE

FOUNDATION IN SUPPORT OF RESPONDENTS

PERRY B. THOMPSON WILLIAM J. OLSON*

CONSERVATIVE LEGAL JOHN S. MILES

DEFENSE AND EDUCATION HERBERT W. TITUS

FUND WILLIAM J. OLSON, P.C.

629 High Knob Road Suite 1070

Front Royal, VA 22630 8180 Greensboro Drive

(540) 305-0012 McLean, VA 22102

(703) 356-5070

Attorneys for Amici Curiae

*Counsel of Record February 10, 2003

(Counsel continued on inside front cover)

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U.S. JUSTICE FOUNDATION

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ARGUMENT

L. THE COURT OF APPEALS CORRECTLY

DECIDED THE MCEL ISSUE, AND THE

FEC’S RELIANCE ON THE NRWC

DECISION IS MISPLACED ................... 3

fl. 2U.S.C. SECTION 441b(a) VIOLATES THE

FREEDOM OF THE PRESS ................... 5

A. _ The Distinction Between Direct Campaign

Contributions and Independent Expenditures

is Flawed ....... Pek aeeeekee nee ones 6

l Permissible Corporate Expenditures ........ 8

2. Permissible Corporate Contributions ........ 8

3. Permissible Corporate Mixed

Expenditures-Contributions .............. 10

4. Permissible Contributions and

Expenditures by Corporate SSFs .......... 12

2 U.S.C. Section 441b(a) Constitutes an

Integral Component of a Comprehensive

Licensing System Governing Core Political

As an Integral Component of a

Comprehensive Licensing System

Governing Core Political Speech, 2 U.S.C.

Section 441b(a) Operates as an

Unconstitutional Prior Restraint and

Discnminatory Burden in Violation of the

EE Se ae

As an Integral Component of a

Comprehensive Licensing System

Governing Core Political Speech, 2 U.S.C.

Section 441b(a) Grants to the FEC Editorial

Control in Violation of the Freedom of the

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TABLE OF AUTHORITIES

Page

U.S. CONSTITUTION

pO RE ae, oe 1, passim

STATUTES

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Se onndéccddbodnescneds cpecgces 8, 11,12

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CASES

Austin v. Michigan Chamber of Commerce, 494

i. 2. sais seb dé GugGedccocecce 16

Buckley v. Valeo, 424 U.S. 1 (1976) ........... 5, passim

iV

v. FEC. 518 US. 604 (1996) eid Ah SR SI 29

Communist Party

. EEC v. Massachusetts Citizens for Life, 479 U.S.

i ei RRR pe Beh IESE 2, passim

FEC v. National Right to Work Committee, 459

| FRE A EE Te 3,4

FEC v. Phillips Publishing, Inc., 517 F.Supp. 1308

i 21, 23, 27

First National Bank of Boston v. Bellotti, 435 U.S.

|___Fan a AE y TPES UE emer a 23

Freedman v. Maryland, 380 U.S. 51 (1967) ........... 20

Lovell v. Griffin, 303 U.S. 444 (1938) ............... 27

Mcintyre v. Ohio Elections Commission, 514 U.S.

MATER Er ita SE re ere 28

Miami Herald Publishing, Co., v. Tornillo, 418 U.S.

Rat bbchancdndbstieccunrst noectd 27, passim

Near v. Minnesota, 283 U.S. 697 (1931) .............. 22

New York Times v. United States, 403 U.S. 713

DE ncrthdénns ubbiticashdadidsiakidioenins 22, 25

Nixon v. Shrink Missouri Gov’t. PAC, 528 U.S. 377

PRR a: ei ae 9 Se pes 5,24

Reader's Digest v. FEC , 509 F.Supp. 1210

FREE CLIT, EE BEL! 21

Republican Party of Minn. v. White, 536U.S.__,

— € ay RISR age peR taet 4,5

Riley v. National Federation of the Blind of North

Carolina, Inc., 444 U.S. 781 (1988) ................ 27

Talley v. California, 362 U.S. 60 (1960) .............. 28

MISCELLANEOUS

FEC Advisory Opinion 1980-135 ................... 10

FEC Advisory Opinion 1980-137 .................... 9

FEC Advisory Opinion 1989-13 ..................0.. 9

Vv

FEC Advisory Opinion 1996-11 .............-.-+55- 12

FEC “Campaign Guide for Corporations and Labor

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Hasen, “Campaign Finance Laws and the Rupert

Murdoch Problem,” 77 Tex. L. Rev. 1627 (1999) ...... 23

Transcript of Scheduling Conference, McConnell, et

al. v. FEC, et al., Docket No. 02-CV-581 ........... 18

Webster’s Third International Dictionary (3d ed. 1964) ... 5

INTEREST OF AMICI CURIAE

The amici curiae, RealCampaignReform.org, _Inc.,

Conservative Legal Defense and Education Fund, Gun Owners

of America, Inc., English First, and U.S. Justice Foundation, are

nonprofit educational organizations sharing a common interest

in the proper construction of the Constitution and laws of the

United States.' All of these amici were established for public

education purposes related to participation in the public policy

process, and are tax-exempt under Section 501(c)(3) or Section

501(c)(4) of the Internal Revenue Code.

For each of the amici, such purposes include programs to

conduct research, and to inform and educate the public, on

important issues of national concern, including questions

related to fidelity to the original text of the United States

Constitution, including its several Amendments. The First

Amendment issues presented in this case directly impact the

right of individuals and organizations to express their views on

educational, social and political topics and issues and are of

great interest and importance to these amici. In the past, these

amici have filed amicus curiae briefs in other federal litigation,

including matters before this Court, involving constitutional

issues.’

' Pursuant to Supreme Court Rule 37.6, it is hereby certified that no counsel

for a party authored this brief in whole or in part, and that no person or

entity other than these amici curiae made a monetary contribution to the

preparation or submission of this bref.

? Amici requested and received the written consents of the parties to the

filing of this brief amicus curiae. Such written consents, mn the form of

letters from counsel of record for the parties, have been submutted for filing

to the Clerk of Court.

\

2

STATEMENT OF 1 i} CASE

Respondents, North Carolina Right to Life (“NCRL”), its

officers, and an eligible North Carolina voter (collectively

“Beaumont”) filed a legal challenge to 2 U.S.C. 441b(a) of the

Federal Election Campaign Act of 1971, as amended,

(“FECA”) and two implementing regulations adopted by the

Federal Election Commission (“FEC”), 11 C.F.R. §§ 114.2(b)

and 114.10, which make it “unlawful ... for any corporation

whatever ... to make a contribution or expenditure in connection

with any election” for federal office. The regulations include

an exemption for independent expenditures by certain nonprofit

corporations as required by FEC v. Massachusetts Citizens for

Life, 479 U.S. 238 (1986) (““MCFL”).

At trial and on appeal, the FEC argued that NCRL should not

be permitted to make independent expenditures because NCRL

allegedly did not match certain specific factors identified by

this Court in MCFL. Both the trial court and the Fourth Circuit

held that the MCFL factors were illustrative rather than

absolute and that NCRL was sufficiently like MCFL to require

a similar exemption. In its petition for certiorari, the FEC

expressly conceded this point.

The trial court and the Fourth Circuit also each ruled that

under this Court’s reasoning in MCFL, NCRL presented no

significant risk of corrupting the federal election process

through campaign contributions. Thus, each held that NCRL

was also entitled to an exemption from the prohibition against

corporate campaign contributions in federal elections.

3

SUMMARY OF ARGUMENT

The court of appeals’ opinion, that the ban of 2 U.S.C.

Section 441b(a) on corporate contributions in federal elections

is unconstitutional, should be affirmed. With respect to

nonprofit advocacy corporations, there is no legitimate

distinction between expenditures and contributions. Thus, the

rule of FEC v. Massachusetts Citizens for Life, Inc., 479 U.S.

238 (1986) (“MCFL”), governs this case.

Further, the Congressional prohibition against contributions

and expenditures by corporations in federal elections embodied

in 2 U.S.C. Section 441b(a) and associated FEC regulations

violates the freedom of the press. Section 441b(a) constitutes

an integral component of a comprehensive licensing system

governing core political speech, and, as such, it operates as an

unconstitutional prior restraint and discriminatory burden in

violation of the freedom of the press. In addition, as an integral

component of a comprehensive licensing system governing core

political speech, 2 U.S.C. Section 441b(a) grants to the FEC

unconstitutional editorial control in violation of the freedom of

the press.

ARGUMENT

I. THE COURT OF APPEALS CORRECTLY

DECIDED THE MCFL ISSUE, AND THE FEC’S

RELIANCE ON THE NRWC DECISION IS

MISPLACED.

The FEC and the dissent below rely upon FEC v. National

Right to Work Committee (“NRWC”), 459 U.S. 197 (1982), for

the proposition that this Court has conclusively held that an

MCFL-type corporaticn may, ccnsistent with constitutional

guarantees, be prohibited from making direct campaign

4

contributions. But the court of appeals correctly rejected this

argument. NRWC, decided four years prior to MCEL, involved

a challenge to an FEC decision that NRWC had defined

“‘members” in an impermissible manner, with regard to the rule

that only members may be solicited for donations to a corporate

affiliated PAC. NRWC stands for the limited proposition that

a corporation or unincorporated organization which concedes

the applicability of 2 U.S.C. Section 441b may not define the

term “member” in such a way as to undermine the limitations

of that section. That was the only issue litigated by the parties

in that case, and the language of this Court in its opinion should

be read with that limited scope in mind.

The court of appeals below correctly rejected the FEC

contention that NRWC virtually decided the issue now before

the Court. See Beaumont v. FEC, 278 F.3d 262, 276 (4th Cir.

2002). The FEC’s position on corporate contributions rests

upon a claim, rejected in MCFL, that the potential of

“corruption/appearance of corruption” arises whenever an entity

uses the corporate form. The court of appeals, like this Court

in MCEL, rejected this claim, concluding that the threat of

corruption did not arise in the case of an MCFL- -type

corporation, even with respect to contributions.

Additionally, this Court has recently confirmed that it will

subject to strict scrutiny the claimed purpose of a jaw that

directly infringes upon First Amendment freedoms. In

Republican Party of Minn. v. White, 536U.S.__, 153 L.Ed.2d

694 (2002) (“Rep. Party Minn.”), the State attempted to justify

a rule limiting campaigns for judicial office as necessary to

“preserv[e] the impartiality ... and ... appearance of impartiality

of the state judiciary.” This Court rejected the State’s position,

(1) noting that the State was “rather vague ... about what they

mean by ‘impartiality,’” (2) pointing out that, “although the

term is used throughout ... the briefs, ... none of the[{] sources

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5

[cited] bother[] to define it,” and (3) concluding that “{cJlarity

on this point is essential....” /d.,536U.S. _, 153 L.Ed.2d at

704-05. In light of this ruling, this Court’s prior acceptance of

Congress’ “corruption” rationale for prohibiting campaign

contributions by corporations should be re-evaluated. This is

particularly pertinent where the ban is based solely upon the

corporate form of a particular entity.’- Thus, despite earlier

decisions by this Court accepting the rationale of Congress in

enacting the statutory prohibition against corporate

contributions in federal elections, there should be no such

presumption of corruption or appearance of corruption at least

where, as here, there were no findings of corruption or the

appearance of corruption, and where corruption should be given

its ordinary meaning in the political context. See Rep. Party

Minn., 536 U.S. at __, 153 L.Ed. 2d at 705.

Il. 2 U.S.C. SECTION 441b(a) VIOLATES THE

FREEDOM OF THE PRESS.

Following this Court’s lead in Buckley v. Valeo, 424 U.S. 1

(1976), and its progeny, the courts below measured the

constitutionality of 2 U.S.C. Section 441b(a) and accompanying

regulations, on their face and as applied, solely by the First

> Petitioner would argue against any such re-evaluation on the theory that

the statute in question (2 U.S.C. Section 441b(a)) “emphatically makes it

unlawful for ‘any corporation whatever’ to make such contributions.” Pet.

Br. at 18. Yet, as shown in Part II.A. below, Section 441b(a)’s ban on

coiyorate contributions is riddled with exceptions.

* In its political sense, “corruption” means the “inducement (of a political

official) by means of improper considerations (as bribery) to commit a

violation of duty.” Webster’s Third International Dictionary 512 (3d ed.

1964). See also Nixon v. Shrink Missouri Gov't. PAC, 528 U.S. 377, at 422

(2000) (Thomas, J., dissenting) (“[C]orruption ... mean[s] ‘perversion or

destruction of integrity in the discharge of public duties by bribery or

favor.””).

6

Amendment guarantees of freedom of speech and freedom of

association. See Beaumont v. FEC, 278 F.3d 261 (4th Cir.

2002) (“Beaumont III”); Beaumont v. FEC, 2001 U.S. Dist.

LEXIS 7704 (E.D.N.C. 2001) (“Beaumont IT’); Beaumont v.

FEC, 137 F.Supp.2d 648 (E.D.N.C. 2000) (“Beaumont I”).

Accordingly, they found 2 U.S.C. Section 441b(a)

unconstitutional as applied, relying upon this Court’s ruling in

MCFL, but refused to find 2 U.S.C. Section 441b(a)

unconstitutional on its face, relying on numerous free speech

and association opinions of this Court. See Beaumont II], 278

F.3d at 266, 267; Beaumont I, 137 F.Supp.2d at 651, 652, 655,

656.

Had the courts below measured the constitutionality of 2

U.S.C. Section 441b(a) and accompanying regulations by the

First Amendment guarantee of the freedom of the press, they

should have found in addition that Section 441b(a) and related

regulations are invalid, having imposed upon North Carolina

Right to Life (““NCRL”) an unconstitutional prior restraint and

discriminatory burden, and exercised editorial control over

NCRL’s core press activities, as part of an administratively

flawed and constitutionally impermissible FEC-administered

licensing scheme.

A. The Distinction Between Direct Campaign

Contributions and Independent Expenditures is

Flawed.

According to the Government, the issue before this Court

requires it to make a constitutional distinction between direct

campaign contributions and independent expenditures in

connection with a federal election, permitting some nonprofit

corporations to make expenditures, but forbidding the same

nonprofit corporations from making contributions. See Pet. Br.

at 15-16, 18, 21-23. With respect to expenditures, the

:

Government has conceded that it must show a compelling state

interest to justify a regulatory policy. /d. at 16. With respect to

contributions, however, the Government insists that it need only

show a “less compelling” (presumably substantial) interest to

justify a regulation. /d., at 28. The Government’s attempt to

draw a Maginot line between contributions and independent

expenditures, and thus justify one rule governing expenditures

and another governing contributions, however, is seriously

flawed. P

Since Buckley v. Valeo, it has become common parlance to

make the campaign expenditure/contribution divide. A closer

look at FEC regulations, however, reveals that there is a third

category of campaign finance spending — expenditures which

are neither “campaign contributions” in that no cash or in-kind

contribution is given to any campaign, nor “independent

expenditures.” These “non-independent expenditures” are

generally treated as prohibited contributions by the FEC. At the

same time, many non-independent expenditures (usually those

made by for-profit corporations) have been determined to be

lawful by the FEC, giving rise to serious question as to the

rationality of the regulatory scheme and the vitality of the two

distinct constitutional tests applied in campaign finance reform

cases. This point is especially significant when examined in

relation to the FEC rules governing contributions and

expenditures by corporations, both profit and nonprofit.

To decide in this case whether a nonprofit advocacy

corporation, such as NCRL, has the right under the First

Amendment to make contributions to federal candidates, it is

necessary to understand the nature of the statutory “prohibition”

on corporate contributions and all of its exceptions. The court

of appeals below rightfully observed that FECA “Section

441b(a) makes it ‘unlawful ... for any corporation whatever ...

to make a contribution or expenditure in connection with any

8

election’ for federal office.” Beaumont II], 278 F.3d at 264.

This prohibition, while absolute on its face, does not mean that

all corporations are barred from making any contribution or

expenditure. Most definitely, this statute does not prohibit all

corporate expenditures on behalf of candidates for federal

office; and, notwithstanding the FEC’s contention that “federal

law has prohibited corporate contributions to candidates for

federal offices since 1907” (Pet. Br. at 12), federal law does not

prohibit absolutely all corporate contributions to such

candidates. There are numerous exceptions.

1. Permissible Corporate Expenditures

(a) As the court of appeals acknowledged, 11 C.F.R. §

114.10 provides for an exemption for “independent

expenditures” in support of a federal candidacy made by certain

corporations that meet the qualifications laid down by this

Court in MCFL. Beaumont III, 278 F.3d at 265.

(b) Corporations may endorse and communicate their

endorsement of a candidate to corporate executives,

stockholders and their families, coupled with a public

announcement of such endorsement by means of a press release

or press conference so long as the disbursements incurred in

connection with such release or conference are de minimis. 11

C.F.R. § 114.4(c)(6)(i).

2. Permissible Corporate Contributions

(a) A corporation may provide free legal and accounting

services for the purpose of enabling a candidate’: campaign

committee to comply with the FECA. 11 CFR. §

9

100.7(b)(14).° This regulation allows a corporation to make, in

effect, in-kind contributions to federal candidates worth tens of

thousands of dollars for necessary services which otherwise

would have to be paid for by campaign funds.

(b) Corporations may make available to a candidate use of a

corporate airplane at the first class rate (payment to be made in

advance) (i) if the destination city is served by commercial air

service (otherwise the candidate must pay the usual charter

rate), and (ii) if the corporation is not licensed to provide

commercial air services 11 C.F.R. § 114.9(e)(1). The first class

rate is known to represent only a fraction of the true cost of the

in-kind contribution being made by the corporation.

(c) Corporations in the business of selling food and

beverages may sell food and beverages for use by a candidate's

campaign committee at a charge less than the commercial rate,

so long as the charge is at least equal to the costs of such food

or beverage to the vendor and so long as the aggregate value of

such discount (in-kind contribution) does not exceed $1 ,000 per

individual candidate per election. 11 C.F.R. § 114.1(aX2)(v).

(¢) Corporations may provide incidental use of corporate

faci..ties for volunteer campaign work up to one hour per week

and four hours per month. 11 C.F.R. § 114.9(a)(1).

(e) Incorporated banks and other financial institutions may

make loans in unlimited amounts to federal campaigns without

* The corporation must be the regular employer of the individual performing

the service. 11 CF.R. § 100.7(b\14). The corporation may not hire

additional employees to free regular employees to perform the services. ||

C.F.R. § 114.1(a\(2\vii). The corporate employee providing the service

may use the corporation's resources, such as computer equipment. Advisory

Opinions (“AO”) 1989-13 and 1980-137.

10

those loans being considered contributions, as the receipt of

loans are otherwise considered.* (11 C.F.R. § 100.7(b)(11).)

(f) There is no preh bition in law or in practice which

prohibits civil monetary penalties assessed by the FEC against

a political committee (even a candidate’s campaign committee)

for FECA violations to be paid by a corporation. See, e.g., FEC

Advisory Opinion (“AO”) No. 1980-135.

3. Permissible Corporate Mixed Expenditures-

Contributions

At least seven types of permissible corporate expenditures

which reed not be “independent” from federal election

campaigns, and can be “coordinated” with the campaigns,

in the FEC regulations. (With respect to MCFL-type

corporations, expenditures must be independent, and any

coordinated expenditures are classified as prohibited

contributions. 11 C.F.R.-§ 114.10(d)(2) and 11 C.F.R. §

109.2.)

(a) Corporations may expressly advocate the election or

defeat of a candidate for federal office so long as such express

advocacy is directed only to corporate executives, stockholders

and their families. 11 C.F.R. §§ 114.3(a)(1) and 109.1. There”

is no requirement that such expenditures be independent from

* For an individual who is im the business of lending money (e.g, an

individual who makes postage loans to the chents of direct mail agencies),

any loan to a candidate's commuttee would be lumuted to $1,000 per election.

11 C.F.R. § 110.1(b). This combination of FEC rules results in the peculiar

circumstance where corporations have greater rights to make loans

(contributions) to federal campaigns than individuals.

— ny

11

federal candidates, and, indeed, such express advocacy may be

coordinated with the candidate.

(b) As neither court below acknowledged, FECA contains a

blanket exemption with respect to any corporation that owns

“any broadcasting station, newspaper, magazine, or other

periodicai publication” for any expenditure for “any news story,

commentary, or editorial [when] distributed through the

facilities” of the station, newspaper, magazine or other

periodical publication owned by such corporation (or other),

“unless such facilities are owned or controlled by any political

party, political committee, or candidate.” See 2 U.S.C. Section

431(9)(B\i). Although this “media exemption” is expressed in

terms of expenditures, since there are no prohibitions on

coordination with federal candidates (so long as there is no

ownership or control), the media expenditures need not be

independent from the campaign, taking on the nature of

contributions.

(c) Acorporate broadcaster, bona fide newspaper, magazine

or other periodical, or qualified nonprofit corporation (i.e., a 26

U.S.C. Section 501(c)\(3) or (c4) organization) may sponsor a

candidate debate in accordance with 11 C.F.R. §§ 110.13 and

114.4(f) to which not all candidates for the office need be

invited. 11 C.F.R. §§ 110.13 and 114.4(f). Additionally, any

corporation may donate funds to a qualified nonprofit

organization to stage such debates. 11 C.F.R. § 114.4(f)(3).

Since a candidate’s debate is coordinated with the included

candidates (often to the exclusion of minor party candidates),

this type of expenditure can take on the nature of a contribution

to two or more major party candidates.

(d) Any incorporated nonprofit educational institution

exempt under 26 U.S.C. Section 501(c)(3) may sponsor, at no

charge or at less than the usual and normal charge, appearances

12

by candidates or candidate representatives open to the academic

community or general public, if the sponsoring institution (1)

makes reasonable efforts to ensure that the appearances

constitute speeches, question-and-answer sessions or similar

communications, (ii) does not, in conjunction with the

appearance, expressly advocate the election or defeat of any

candidate, and (iii) does not favor any candidate over another

in allowing such appearances. 11 C.F.R. § 114.4(c){(7).

(e) Corporations may sponsor election-related appearances

by a candidate before company employees at a meeting,

convention or other function (i) so long as the company does

not expressly advocate the election of the candidate or defeat of

his or her opponent(s), and (ii) so long as the company does not

solicit contributions on behalf of the candidate, even though the

candidate may solicit contributions at such events. 11 C.F.R.

§§ 114.4(b)(1) and 114.4(b)(1 (iv).

(f) Corporations may make available to a candidate

corporate meeting rooms for free, or at a discount, if the

corporation: (i) customarily makes its meeting rooms available

to clubs, civic or community organizations, or other groups; (11)

makes the rooms available to other candidates upon request;

and (iii) makes the rooms available to the candidates on the

same terms given to other groups. 11 C.F.R. § 114.13.

(g) Corporations may sponsor an appearance, which may be

open to the general public, of an incumbent federal officeholder

in his or her official capacity so long as the appearance is

limited to issues of concern to the sponsoring corporation,

provided that the officeholder make no solicitation at such

event. FEC AO 1996-11.

4. Permissible Contributions and Expenditures by

Corporate SSFs

13

As the FEC admitted to both the district court and the court

of appeals, the “FECA and its implementing regulations ...

allow[} all corporations to make campaign contributions

through a separated segregated fund, and corporations that do

not fall within /] CF.R. § 1/4.10's exception to make

independent expenditures through such a fund.” Beaumont II],

278 F.3d at 269. Such separated segregated funds (“SSFs”)

may be supported from the general corporate treasury to cover

operating costs, such as office space, telephones, salaries,

without any dollar limit and without any required reporting to

the FEC. 11 C.F.R. § 114.1(b). With the SSF’s operating and

fundraising expenses completely paid by the corporation, every

single dollar contributed to the SSF may be used for either

contributions or expenditures to affect federal elections.

5. Incorporated Political Committees

Lastly, it is a curious fact that innumerable corporations

regularly make contributions to federal candidates (as well as

expenditures relating to federal candidates) with the blessing of

the FEC. The reason is that political committees of all types

may, themselves, be incorporated. 11 C.F.R. § 114.12(a).

Despite the FEC’s citation to authorities which focus on the

“special characteristics of the corporate structure” and the

“special advantages that the State confers on the corporate

form” as justifying prohibitions on direct contributions to

federal elections (Pet. Br. at 14), the FEC apparently has the

ability to look beyond corporate form to substance when it

justifies its own policy choices.

B. 2 U.S.C. Section 441b(a) Constitutes an Integral

Component of a Comprehensive Licensing System

Governing Core Political Speech.

id

In order to administer these numerous exceptions permitting

corporate participation (as well as other limitations and

exceptions to participation) in core political speech connected

to federal election campaigns, Congress established the FEC.

The FEC is composed of six members “appointed by the

President, by and with the consent of the Senate[,] no more than

three members [of which] may be affiliated with the same

political party.” 2 U.S.C. Section 437c(a)(1). As this Court

found in Buckley, Congress has conferred upon the FEC

“significant” powers:

(1) “Recordkeeping, disclosure and _ investigative

functions,” having made the Commission “the principal

repository of the numerous reports and statements which

are required ... to be filed by those engaging in the regulated

political activities.” Such duties include the “filing and

indexing” of the required reports and statements, “making

them available for public inspection, preservation, and

auditing and field investigations,” and thus, “serv[ing] as a

national clearinghouse for information in respect to the

administration of elections” [/d., 424 U.S. at 109-10};

(2) “[E)xtensive rulemaking and adjudicative powers,”

having granted to the Commission authority to “formulate

general policy with resepct to the administration of [the]

Act,” with “primary jurisdiction with respect to [the] civil

enforcement” of the Act coupled with authority to issue

“advisory opinions” [/d., 424 U.S. at 110]; and

(3) “Direct and wide-ranging enforcement powers,” having

conferred upon the Commission authority to conduct

“administrative determinations and hearings, and civil suits

for “injunctive relief” in order to ensure compliance with

the statute and rules. [/d., 424 U.S. at 111, 137.]

1

i agg

a lille TO

15

Armed with such powers, the FEC functions as a federal

government licensing commission, permission from which is

virtually required before any corporation (other than an

institutional media corporation) may have reasonable assurance

that it may lawfully engage in core political speech in

connection with a federal election campaign. Such licensing

power extends even to the administration of entities and

activities that are exempted from FEC control in that the FEC

has the power to determine, in the first instance, whether any

entity or its activity falls within such an exception.

In other words, the FEC statutory rules are not self-executing;

nor, with respect to these rules, are the interpretive or

constitutional rulings of this Court. For example, when this

Court handed down its decision in the MCFL case, MCFL-

qualified corporations were not automatically identified, and

thus entitled to their constitutional rights. Rather, under the

three-part test’ of MCFL, all nonprofit advocacy corporations

remained under the jurisdiction of the FEC. Thus, they

remained subject to significant FEC discretionary power.

In the hands of a government agency determined to minimize

the adverse effect of its loss in court, this Court’s three-part test

has become a powerful tool to frustrate MCFL-type

corporations in their ability to engage in independent

expenditures. The FEC-articulated requirements have become

so precise, stringent, and technical that it has been frequently

remarked that even MCFL would be fortunate to qualify as an

’ “First, it was formed for the express purpose of promoting political

ideas, and cannot engage in business activities... Second, it has no

shareholders or other persons affiliated so as to have a claim on its assets

or earnings... Third, MCFL was not established by a business

corporation or a labor union, and it is its policy not to accept

contributions from such entities.” (479 U.S. at 264 (emphasis added). |

16

MCFL-type organization under the FEC’s rules. For example,

the Court’s second test that the nonprofit corporation has no

shareholders was expanded into 11 C.F.R. § 114.10(c)(3)ii).®

FEC regulations require that a nonprofit corporation jump

through more hoops than constructed by this Court to be

entitled to make independent expenditures. As illustrated by

this case, the FEC has enormous discretion in applying the

* The FEC did little to advise the political committees it licenses as to the

new rules. The FEC’s “Campaign Guide for Corporations and Labor

Organizations,” relied on by political committees as a statement of the

requirements in simpler terms than the law and regulations, did not include

any indication of the 1986 change in the law until it was revised in 1992 and

then it described the ruling as one which only involved “a small, nonprofit

corporation.” “Campaign Guide for Corporations and Labor

Organizations,” March 1992, p. 21.

The MCEFL decision was issued December 15, 1986. The FEC’s initial

MCFL rulemaking was initiated not by the FEC, but by a political

organization which filed a rulemaking petition, published in the Federal

Register, 52 Fed. Reg. 16,275 (May 4, 1987). It was not until January 7,

1988 that the FEC issued an Advance Notice of Proposed Rulemaking, 53

Fed. Reg. 416 (Jan. 7, 1988). It was not until October 13, 1988 that the FEC

scheduled a hearing. for November 16, 1988. 53 Fed. Reg. 40,070 (Oct. 13,

1988). On October 3, 1990, the FEC requested further comments in view

of this Court’s decision in Austin v. M:chigan Chamber of Commerce, 494

U.S. 652 (1990). 55 Fed. Reg. 40,397 (Oct. 3, 1990). On October 31,

1990, the FEC extended the comment period relating to Austin. 55 Fed.

Reg. 45,809 (Oct. 31, 1990). Then, on July 29, 1992, the FEC finally issued

a Notice of Proposed Rulemaking implementing MCEL, seeking comments

a ita: 57 Fed. Reg. 33,548 (July 29,

It was not until July 6, 1995, that the FEC issued Final Regulations

implementing MCFL. 60 Fed. Reg. 35,292 (July 6, 1995). These rules were

revised December 14, 1995, 60 Fed. Reg. 64,260 (Dec. 15, 1995), and these

were not made effective until March 13, 1996, exactly nine months shy of

a decade subsequent to this Court’s decision in MCFL. 61 Fed. Reg.

10,269 (Mar. 13, 1996).

a ee | OI me

er mee Al ge aw <i e GGT ammagay we

17

\

three-factor formula determining whether a nonprofit advocacy

corporation, such as NCRL, is qualified for an exemption from

the 2 U.S.C. Section 441b(a) prohibition against corporate

expenditures in connection with a federal election campaign.

Even after the court of appeals below had found that NCRL

qualified for the MCFL exemption, the FEC “has not foresworn

its ultimate intention to prohibit NCRL ... from making

independent expenditures.” Beaumont III, 278 F.3d at 269, n.

3.

The FEC’s treatment of NCRL appears to reflect the FEC’s

general policy with respect to any nonprofit advocacy

corporation which claims the MCFL exemption. That claim is

subject to prior FEC review every election cycle. At a pretrial

hearing in McConnell, et al. v. FEC, et al., Docket No. 02-CV-

581 (U.S.D.C.-D.C.), in support of the FEC’s position that

extensive discovery might be required into the membership and

finances of several MCFL-type advocacy organization

plaintiffs, an FEC assistant general counsel revealed how

intrusive the FEC information demands and requirements are

for such an organization to meet the MFCL qualifications:

I’d like to remind this court that in FEC versus NRA

this circuit specifically said that it’s the burden of the

Federal Election Commission to take a look at the purpose

of the members for joining and the nature of the income of

these organizations

I’m not going to be satisfied to have counsel tell me,

well, we only received a thousand dollars worth of

corporate activity -- corporate income. I want to take a look

at the books myself.

I’m not going to be satisfied with looking at their

charter to determine whether, you know, what members

believe when they joined. f

18

And, in fact, I believe the court specifically says that it

is our burden to take a look at those studies and develop

that kind of record...

This circuit, unlike some of the other circuits, have

[sic] said we have to take a look at the absolute amount of

activity, corporate activity, not a mere percentage.

[Transcript of April 23, 2002, Scheduling Conference,

before the three-judge United States District Court in

McConnell, et al. v. FEC, et al., Docket No. 02-CV-581

(U.S.D.C.-D.C.) at 66-68.]

Thus, a nonprofit corporation like NCRL claims the MCFL

exemption at its peril, unless, prior to, or at the outset of, each

election cycle it obtains from the FEC an Advisory Opinion

(“AO”) affirming that it qualifies as an MCFL-type corporation.

See 2 U.S.C. Section 437f. Under current FEC procedures,

however, there is no guarantee that such an organization, even

if it seeks an AO, will obtain such an opinion, because such

opinions require the affirmative vote of four FEC members.

See 11 C.F.R. § 112.4(a). If no AO is forthcoming, or if it is

adverse, the nonprofit advocacy organization must either forego

making federal election-related expenditures and contributions,

or, comply with the FECA’s onerous SSF rules, or file a law

suit claiming violation of its constitutional rights.

C. Asan Integral Component of a Comprehensive

Licensing System Governing Core Political

Speech, 2 U.S.C. Section 441b(a) Operates as

an Unconstitutional Prior Restraint and

Discriminatory Burden in Violation of the

Freedom of the Press.

As noted by the court of appeals below, the FEC has insisted

that 2 U.S.C. Section 441b(a) does not operate as a “blanket

prohibition” upon NCRL’s desire to make contributions to, and

19

independent expenditures on behalf of, federal election

candidates. It may do both, but it must do so by means of an

SSF created and operated in accordance and compliance with

2 U.S.C. Section 441b(a) and (b)(2)(C) and FEC regulations.

Beaumont III, 278 F.3d at 269. As also noted by the court of

appeals below, however, “organizations that use a segregated

fund must adhere to significant reporting requirements, staffing

obligations, and other administrative burdens [that] stretch far

beyond the more straightforward disclosure requirements on

unincorporated associations.” /d. Relying on the majority and

concurring opinions of this Court in MCFL, the court of

appeals below concluded that such burdens were so “severely

demanding” that there was no doubt that they infringed upon

“the exercise of political speech and association,” thereby

triggering its inquiry into whether “2 U.S.C. § 441b(a) and the

associated regulations [limiting expenditures are] narrowly

tailored to serve a compelling governmental interest,” and

whether that statute and associated regulations limiting

contributions are “closely drawn to match a sufficiently

important governmental interest.” Beaumont III, 278 F.3d at

271. While such constitutional tests may be germane to a claim

that the statute and regulations in question abridge the freedoms

of speech and association, they are not determinative in this .

case because 2 U.S.C. Section 441b(a) and associated

regulations not only “burden” free speech and association, but

also operate as a “prior restraint” and “discriminatory burden”

upon NCRL’s press activities.

A nonprofit advocacy corporation does not automatically

qualify as exempt from Section 441b(a)’s prohibition against

corporate expenditures in connection with a federal election

campaign. According to 11 C.F.R. §§ 114.10(a) and

114.10(e)(1), such a corporation must “demonstrat[e] qualified

nonprofit corporation status” by “certify[ing] [to the FEC] ...

that it is eligible for an exemption from the prohibitions against

20

corporate expenditures.”” Therefore, according to 11 C.F.R. §

114.10, a nonprofit advocacy corporation may qualify as

exempt from Section 441b(a)’s prohibition against corporate

expenditures in connection with a federal election only if its

a as an MCFL-qualified corporation is approved by

. As the court of appeals pointed out, the exemption contained

in 11 C.F.R. § 114.10 “was created in response to the Supreme

Court’s decision that Section 441b(a)’s prohibition on

independent expenditures from a corporation’s general treasury

was unconstitutional as applied to ... MCFL” and tailored to the

three-factor formula laid down in that case. Beaumont II], 278

F.3d at 265. As currently structured, however, 11 C.F.R. §

114.10 imposes a de facto licensing system, requiring nonprofit

advocacy corporations to certify to the FEC that they are not

covered by the expenditure prohibition contained in 2 U.S.C.

Section 441b(a). By placing “the initial burden” on the

nonprofit, 11 C.F.R. § 114.10 operates as an administrative

censorship system without any of the prompt review and

— safeguards required of such a system, and thus,

constitutes an unconstitutional prior restraint. Cf Freedman

Maryland, 380 U.S. 51, 60 (1967), . :

. While it may make such expenditures before filing FEC Form 5, or a letter

containing the information required by the form, it must mect various

regulatory deadlines and informational requirements as stated in 11 CF.R.

§ 114.10(e)(1)(i)-{ii) and (2). Among the informational requirements are

data designed to enable the FEC to determine whether such expenditures are

cr ett ent en, stata Gay sieht be cheese’ 0 cosntianted

ee STYT TN contributions. 11 C.F.R. § 114.10(e)(2)

'° A nonprofit corporation ma inati

mM y seek from the FEC an AO determination

that it is qualified before it makes any expenditures in connection with a

federal election, but neither the statute nor the regulations assure the

corporation an admunistrative decision on the merits, much less a prompt

21

In contrast with its administration of the MCFL exception, the

FEC does not require a broadcasting facility, newspaper,

magazine or other periodical to register with the FEC, certifying

that it is not owned by a political party, political committee, or

candidate, and thus is exempt under 2 U.S.C. Section

431(9)(B\(i). Nor is any broadcasting facility, newpaper,

magazine of other periodical required to file reports with the

FEC, accounting for its expenditures, even for the limited

purpose of enabling the FEC to determine if such expenditures

had been made in coordination with a federal election

campaign. To the contrary, FEC enforcement of the media

exemption has been severely curtailed by two district courts in

deference to freedom of the press. See Reader’s Digest Ass'n.

Inc. v. FEC, 509 F.Supp. 1210 (S.D.N.Y. 1981); FEC v.

Phillips Publishing, Inc., 517 F.Supp. 1308 (D.D.C. 1981).

The media exemption provided for in 2 U.S.C. Section

431(9)(B)(i) does not extend to “contributions,” but it does

appear that the expenditure exemption means that media

exempt under that section could make contributions in the form

of coordinated expenditures, so long as they are made in

connection with a news story, commentary or editorial. Such

is not the case with respect to the MCFL exception, so there is

every reason to believe that the FEC will continue its

supervisory oversight of MCFL-qualified corporations with

respect to both expenditures and contributions, even if the

opinion of the court of appeals is affirmed by this Court.

According to the FEC’s position, however, the prior restraints

placed upon an MCFL-qualified corporation are not sufficient

with respect to contributions, and the enforcement of its

contribution limits upon corporations call for the more stringent

policing standards provided for SSFs in 2 U.S.C. Section

judicial determination. See 11 C.F.R. § 112.4(a).

22

441b(b). Such an alternative only exacerbates the prior

restraint violation. According to 2 U.S.C. Section 431(4)(B),

an SSF is a “political committee” which, in turn, is required to

register with the FEC within 10 days of its establishment. See

2 U.S.C. Section 433(a) and 11 C.F.R. § 102.1(c). To register,

the treasurer of an SSF must prepare and file an initial FEC

Form | with the FEC, providing the name and address of the

SSF, the name and address of the connected organization, the

type of connected organization, the name and address of the

custodian of its records, the name and address of the treasurer,

and the names and mailing addresses of banks or other

depositories with which the SSF does business. 11 C.F.R. §§

102.2 and 105.4. After FEC Form | has been filed, the FEC

assigns an identification number to the SSF. 11 C.F.R. §

102.2(c). Failure to file Form 1, alone, subjects the nonprofit

corporation to the FEC enforcement powers, including the

authority to seek injunctive relief from a federal court.

It has long been the rule that the freedom of the press

prohibits even a court from issuing an order restraining the

publication of core political speech, which this Court has

described as “of the essence of censorship.” Near v. Minnesota,

283 U.S. 697, 713 (1931). Such a system of prior restraints

may be justified, if at all, only by proof of an imminent threat

of the highest order, such as that the “publication must

inevitably, directly, and immediately cause the occurrence of an

event kindred to imperiling the safety of a transport already at

sea” in wartime. New York Times v. United States, 403 U.S.

713, 726-27 (1971) (Brennan, J., concurring). .

Nonprofit advocacy corporations such as NCRL engage in a

variety of press activities. They publish news, editorials, and

commentaries, to communicate to the public, often in

competition with other press sources, including the institutional

and commercial media such as newspapers, magazines, radio,

23

and television. In order to engage in the political marketplace

of ideas, however, any press activities of NCRL would be

burdened by the prior restraints of the FEC’s certification,

registration, reporting, and record-keeping requirements,

whereas the ordinary publishing activities of the institutional

and commercial media are totally exempted, and protected from

any comparable restraints. See 2 U.S.C. Section 431(9)(B)(i);

FEC v. Phillips Publishing Inc., supra, 517 F. Supp. at 1312-

13. See also Hasen, “Campaign Finance Laws and the Rupert

Murdoch Problem,” 77 Tex. L. Rev. 1627, 1632-34 (1999).

If Congress were to repeal the FECA’s institutional media

exemption, and place the news reporting, editorial writing, and

commentaries of such media under the supervisory jurisdiction

of the FEC — requiring such institutions as The Charlotte

Observer or The Greensboro News & Record to certify,

register, report, keep records, and abide by specified limits on

their expenditures in order to prevent corruption and the

appearance of corruption, before they can publish anything that

might influence the outcome of a federal election — there is

little doubt that such corporate media outlets would institute a

lawsuit challenging the constitutionality of such federal

regulation as a violation of the freedom of the press. But the

freedom of the press was never designed as a special

institutional privilege, nor has the U.S. Supreme Court ever so

limited that freedom."

'' The suggestion that the freedom of the press was a special institutional

privilege prompted Chief Justice Burger to write, in his concurring opinion

in First National Bank of Boston v. Bellotti, 435 U.S. 765, 801 (1978), that

the “very task of including some entities within the ‘institutional press’ while

excluding others [is] reminiscent of the abhorred licensing system [that] the

First Amendment was intended to ban.”

24

In attempting to justify the so-called prohibition on corporate

contributions to candidates in federal elections, the FEC has

pointed to statements in certain of this Court’s opinions,

beginning at least with the decision in Buckley v. Valeo, noting

that the treatment given certain corporations under the

campaign finance system is designed to prevent “corruption and

the appearance of corruption.” Pet. Br. at 13-14. Such

treatment saddles for-profit and nonprofit corporations with the

tinge of potential corruption irrespective of any facts or events.

As pointed out by the court of appeals, there would appear to be

no danger of corruption, actual or apparent, with respect to

contributions from corporations such as NCRL. Beaumont II],

278 F.3d at 273-274.

The FEC assumes that there is no need to settle on a

definition of “corruption,” on the theory that this Court’s prior

decisions have already justified the ban against corporate

contributions in federal elections on a presumption of

“corruption.” See, e.g., Pet. Br. at 13-14, 18. Nevertheless,

defining “corruption” should be a key issue in determining the

constitutionality of such campaign finance reform legislation.

See Nixon v. Shrink Missouri Gov’t. PAC, 528 U.S. 377, 424

(2000) (“Shrink PAC”) (Thomas, J., dissenting). Although

Justice Thomas’s view was not joined by the majority in Shrink

PAC, the majority read Buckley v. Valeo to have adopted a

more amorphous definition of “corruption,” noting that no party

in Shrink PAC had “challenged the legitimacy of the ...

objectives” of campaign reform as articulated in Buckley, nor

called “for any reconsideration of Buckley.” Shrink PAC, 528

U.S. at 390. Neither Buckley, nor any of its progeny, has

examined the sufficiency of the claim of corruption or

appearance of corruption under the press principle of no prior

restraint. If the general claim of “national security” is not

sufficient to justify such a restraint (see New York Times v.

25

United States, 403 U.S. at 718), then neither is a generalized

appeal to corruption or the appearance of corruption.

D. As an Integral Component of a Comprehensive

Licensing System Governing Core Political Speech, 2

U.S.C. Section 441b(a) Grants to the FEC Editorial

Control in Violation of the Freedom of the Press.

Nonprofit advocacy corporations that qualify under the

MCEL rule to make independent expenditures in connection

with a federal election campaign are required by FEC

regulations to submit to significant FEC editorial control of

their press activities undertaken in relation to such campaigns.

If the MCEL rule is extended to contributions made by MCFL-

qualified nonprofit advocacy corporations to candidates running

for federal office, the FEC rules governing such contributions

impose significant editorial control over such corporations. If

the MCEL rule is not extended to contributions, then the FEC

will exercise significant editorial control over MCFL-qualified

corporations via its rules and regulations governing SSFs. In

either event, such editorial controls constitute unconstitutional

abridgments of NCRL’s freedom of the press.

According to 11 C.F.R. § 114.10(e)(2), an MCFL-qualified

nonprofit advocacy corporation must comply with the

expenditure reporting requirements of 11 C.F.R. § 109.2. 11

C.F.R. § 109.2, in tum, requires periodic reports to the FEC of

“all independent expenditures aggregating in excess of $250

during a calendar year.” 11 C.F.R. § 109.2(a). Such reports

must contain the following information: (1) the reporting

person’s name, address, occupation, and employer; (2) the

identification of the person to whom the expenditure was made;

(3) the date, amount and purpose of the expenditure; (4) a

statement whether the expenditure was made in support of, or

in opposition to a candidate, together with the candidate’s name

26

and office sought; (5) a notarized certification under penalty of

perjury as to whether such expenditure was made in

cooperation, consultation, or concert with, or at the request or

suggestion of any candidate or any authorized committee or

agent thereof; and (6) the identification of any person who

contributed more than $200 to the person filing the report if the

contribution was made for the purpose of furthering the

reported expenditure. 11 C.F.R. § 109.2(a)(1)(i)-(vi).

Additionally, an MCFL-qualified nonprofit advocacy

corporation is required by 11 C.F.R. § 114.10(g) to comply with

the disclaimer requirements of 11 C.F.R. § 110.11.

Accordingly, if an MCFL-qualified nonprofit corporation

expends money for “a communication that expressly advocates

the election or defeat of a clearly identified candidate, or

solicits a contribution” by means of certain specified public

media, the communication or solicitation must “present... in a

clear and conspicuous manner ... giv[ing] the reader, observer

or listener adequate notice of the identity of persons who paid

for and, where required, who authorized the communication,”

as well as a disclaimer that such communication or solicitation

has not been authorized by a candidate or the candidate’s

committee. 11 C.F.R. § 110.11(a)(1)(iii). If, however, the

communication or solicitation appears in any media specified

in 11 C.F.R. § 110.11(a)(6), then the disclosure and disclaimer

rules of 11 C.F.R. § 110(a)(1) do not apply.

Finally, an MCFL-qualified nonprofit advocacy corporation

is required by 11 C.F.R. § 114.10(f) to “inform potential donors

that their donations may be used for political purposes, such as

supporting or opposing candidates” in all communications that

solicit donations to support the advocacy corporation.

There is no question that these regulations, as applied to the

expenditures of an MCFL-qualified corporation, transfer

- LE lla.

: 27

editorial control over its communications and solicitations from

the corporation to the FEC. According to 11 C.F.R. §

114.10(g), the corporation must include certain disclosures and

disclaimers in its communications advocating the election or

defeat of a candidate for federal office. Such an intrusion upon

the corporation’s editorial function is per se a violation of the

freedom of the press. Miami Herald Publishing Co. v.

Tornillo, 418 U.S. 241, 247-54, 256, 258 (1974)(“[T "he court

has expressed sensitivity as to whether a restriction or

requirement constituted a compulsion exerted by government

of a newspaper to print.... The clear implication has been that

any such compulsion to publish that which ‘reason tells them

should not be published’ is unconstitutional.” ) This salutary

rule has been extended by this Court to solicitations for money

by all nonprofit advocacy corporations. Riley v. National

Federation of the Blind of North Carolina, Inc., 487 U.S. 781,

797 (1988). After all, the freedom of the press is not a special

institutional press privilege, but a freedom enjoyed by all. See

Lovell v. Griffin, 303 U.S: 444, 450, 452 (1938).

Additionally, compliance with the reporting requirements, as

provided for in 11 C.F.R. § 114.10 (e)(1) and (2), imposes a

financial burden upon MCFL-qualified corporations that,

likewise, infringes upon the editorial function of such

corporations. As this Court ruled in Miami Herald v. Tornillo,

freedom of the press is predicated not only upon the nght of the

publisher to decide what to publish and what not to publish, but

also upon the financial freedom to make such decisions

unburdened by government-imposed costs. /d., 418 U.S. at

255-58. In the Miami Herald case, a Florida right-to-reply

'* The court in FEC v. Phillips Publishing, Inc., supra, observed that

“newsletters and other publications solicit{ing] subscriptions, and in their

advertising doing so, ... publicize content and editorial positions.” /d., 517

- F.Supp. at 1313.

28

Statute was struck down, in part, because the law exact[{ed] a

penalty in the form of increased costs in the printing of the

newspaper. Certainly the costs of complying with the reporting

requirements contained in 11 C.F.R. § 109.2, imposed upon an

MCFL nonprofit advocacy corporation when it makes

expenditures in connection with a federal election campaign, is

no different from the costs that would have been incurred by the

Miami Heraid if it had been forced to publish the reply of a

candidate running for public office as required by the Florida

statute struck down in that case.

These unconstitutional impositions upon an MCFL- qualified

corporation’s editorial function are multiplied by the disclosure

requirements of 11 C.F.R. § 110.11(a)(1), which force such

corporations to reveal the publisher of any communication that

expressly advocates the election or defeat of a candidate for

election to federal office. As Justice Black cogently observed

in Talley v. California, 362 U.S. 60 (1960), “the obnoxious

press licensing law of England, which was also enforced in the

Colonies was due in part to the knowledge of the exposure of

the names of printers, writers and distributors would lessen the

circulation of literature critical of the government.” /d., 362 at

64. Accord, Mcintyre v. Ohio Elections Commission, 514 U.S.

334 (1995) (Thomas, J., concurring).

Should the MCFL exception to the prohibition against

corporate expenditures be extended to contributions, as the

court of appeals concluded below, the FEC administration of

that exception would, nonetheless, violate NCRL’s right of

editorial control guaranteed by the freedom of the press. As the

court of appeals found, and as this Court has consistently held

since Buckley v. Valeo, contributions to another’s election

campaign constitutes core political speech. Beaumont IJ], 278

F.3d at 267-68. Additionally, as the court of appeals noted and

as this Court recognized in MCEL, the decision to contribute

29

money to another’s election campaign is a discretionary one

based, in part, upon an individual “regard [that] such a

contribution [is] a more effective means of advocacy than

spending the money under their own personal direction.” /d.,

278 F.3d at 268. While this observation has been made in

relation to the courts’ recognition that campaign contributions

are a form of free speech and free association, it is equally

applicable to a recognition that the decision to make a

contribution to another’s political campaign is an editorial one,

designed to “enhance[] the donee’s ability to comunicate a

message,” and perhaps in the process, “to put the funds to more

productive use than can the individual” donor. Colorado Rep.

Fed. Campaign Comm, v. FEC, 518 U.S. 604, 636 (1996)

(Thomas, J., concurring in judgment and dissenting in part).

As an exercise of the editorial function, contributions, like

expenditures, may not be burdened in such a way as to wrest

editorial control from the person, including a corporation. As

this Court held in Miami Herald, a corporation may not be

financially burdened to accommodate a government policy that

directly impacts upon that corporation’s exercise of editorial

judgment. /d., 418 U.S. at 255-58. The court of appeals below

found that if a nonprofit advocacy corporation were required to

create an SSF in order make contributions to a candidate’s

federal election campaign, it would be saddled with “significant

reporting requirements, staffing obligations, and other

administrative burdens ... stretch[ing] far beyond the more

straightforward disclosure requirements on unincorporated

associations.” Beaumont II], 278 F.3d at 269. Indeed, after

cataloguing the extent of such reporting and organizational

burdens, the court of appeals concluded that “[f]aced with the

need to assume a more sophisticated organizational form, to

adopt specific accounting procedures, to file periodic detailed

reports, and to monitor garage sales lest nonmembers take a

fancy to merchandise on display, it would be surpnising if at

30

least some groups decided that the contemplated political

activity was simply not worth it.” /d., 278 F.3d at 270.

In Miami Herald, this Court found that the “economic reality”

of operating a newspaper similarly does not allow for the

assumption that “a newspaper can proceed to infinite expansion

of its column space to accommodate the replies that a

government agency determines or a statute commands the

readers should have available.” /d., 418 U.S. at 257. To permit

the government to lay such an economic burden upon the

exercise of a person’s editorial judgment is tantamount to a

penalty in the form of increased costs that is impermissible

under the free press guarantee. See id., 418 U.S. at 255-58.

Should this Court affirm the court of appeals, extending the

MCEL rule to contributions, NCRL will probably still be

subject to burdensome registration, reporting and even editorial

requirements. As noted in Section IIB. above, following the

MCEL decision, the FEC implemented regulations requiring a

corporation that seeks MCFL protection to demonstrate by

certification that it is a qualified nonprofit under the MCFL

three-factor test and to file certain reports and abide by certain

regulations governing its communications and solicitations.

See 11 C.F.R. § 114.10. In any event, NCRL will be subject to

the current individual contribution limitations imposed by 2

U.S.C. Section 441a which directly and adversely impact upon

NCRL’s editorial function to decide how to spend money in

support of, or in opposition to, an individual election campaign

in violation of the freedom of the press rule in Miami Herald.

CONCLUSION

For the foregoing reasons, the decision of the U.S. Court of

Appeals for the Fourth Circuit should be affirmed.

Respectfully submitted,

PERRY B. THOMPSON

CONSERVATIVE LEGAL

DEFENSE AND EDUCATION

FUND

629 High Knob Road

Front Royal, VA 22630

(540) 305-0012

GARY W. KREEP

U.S. JUSTICE FOUNDATION

Suite 1-C

2091 East Valley Parkway

Escondido, CA 92027

(760) 741-8086

Attorneys for Amici Curiae

*Counsel of Record

WILLIAM J. OLSON*

JOHN S. MILES

HERBERT W. TITUS

WILLIAM J. OLSON, P.C.

Suite 1070

8180 Greensboro Drive

McLean, VA 22102

(703) 356-5070