Topic:
CAMPAIGN FINANCE; CONTRACTORS; LOBBYING;
Location:
CAMPAIGNS - FINANCE;

OLR Research Report


February 24, 2005

 

2005-R-0180

CONSTITUTIONALITY OF BANS ON CAMPAIGN CONTRIBUTIONS AND SPENDING

By: Sandra Norman-Eady, Chief Attorney

Jennifer Nelson, Legislative Intern

You asked if Connecticut could (1) ban campaign contributions by lobbyists and state contractors and (2) limit campaign spending.

SUMMARY

Neither the U.S. Supreme Court nor a Connecticut Court has decided the constitutionality of a ban on individual campaign contributions. However, the U.S. Supreme Court has outlined the test and standard that courts must apply to decide this issue. In Buckley v. Valeo, 424 U. S. 1 (1976)), the Court held that a restriction on campaign contributions could withstand a First Amendment challenge if the government could show a compelling interest for the restriction and the law drafted to protect this interest was narrowly tailored to do so.

Several federal courts have applied the Buckley test to state-imposed restrictions on campaign contributions, but reached different results as to constitutionality. What has emerged from these cases is the consensus that protecting the electoral process from corruption is a compelling reason for the government to restrict campaign contributions. In cases where the restriction was not upheld, the government has either (1) been unable to show a nexus between the contributions it limited and corruption or (2) drafted the law more broadly than necessary to accomplish its purpose.

Prior to 2000, federal courts also differed on how low campaign contributions could be restricted and still be constitutional. The U.S. Supreme Court answered this question in Nixon v. Shrink Missouri Gov't PAC (528 U.S. 377). The test for determining the validity of the limitation (even if that limitation is an absolute ban), according to the Court, is whether the limit is so low as to impede the ability of candidates to amass the resources necessary for effective advocacy. In other words, whether the contribution limit is so radical in effect as to render political association ineffective, drive the sound of a candidate's voice below the level of notice, and render contributions pointless.

Since Nixon at least one federal court has upheld the constitutionality of a ban on lobbyists' contributions. Today, at least three states, California, Kentucky, and South Carolina, bar lobbyists from making contributions at any time to statewide or legislative candidates that the lobbyists are paid to lobby. Many more states, including Connecticut, ban lobbyists' contributions during legislative sessions. The argument in favor of bans or restrictions on lobbyists' contributions focuses on the fact that lobbyists paid to influence political decisions could (or appear to) pressure, tempt, or coerce political officials to vote on the basis of cash contributions rather than on the public's best interests.

Whether the law could ban contributions by individual contractors, as opposed to lobbyists, is less clear. States seeking to impose this ban must be able to show the relationship between contractors' contributions and corrupt campaigns or establish some other compelling governmental interest and narrowly tailor it to address the problem. This may prove difficult because, unlike lobbyists who make contributions to the people they are paid to influence, a ban on contractors' contributions would affect people who play no part in negotiating or awarding contracts.

Despite this perceived difficulty, the Federal Election Commission (FEC) has successfully defended a ban on contributions to federal office by federal contractors. However, the principle reason for the success of this law may be that the ban applies only to individual contractors and not the PACs they establish.

In addition to the federal ban, at least three states, New Jersey, South Carolina, and West Virginia, currently ban campaign contributions by contractors. None of the state laws has been challenged on constitutional grounds. However, last month the Federal Highway Administration refused to allow bidding on highway construction

contracts in New Jersey because that state's prohibition against state agencies contracting with contractors that make campaign contributions has the potential for excluding bidders from the competitive bidding process required under federal law.

The Buckley Court also decided the constitutionality of campaign spending limits. Applying the same strict scrutiny standard and test to campaign expenditures as it had to contributions, the Court reached a different conclusion (i.e., an interest in protecting the electoral process from corruption was not sufficient justification for the government to limit campaign spending). Until recently no state had been able to meet the Buckley standard for a sufficiently compelling interest to justify a restriction. In 2004, a federal appeals court for the Second Circuit upheld mandatory spending limits in Vermont on the grounds that the limits (1) prevent the reality and appearance of corruption and (2) protect candidates' and elected officials' time. This decision is significant because, like Vermont, Connecticut is in the Second Circuit so a decision made by the court of appeals would be binding on a Connecticut federal district court.

However, another federal court recently struck down an ordinance to limit campaign spending on the ground that it was necessary to prevent corruption.

RESTRICTIONS ON CAMPAIGN CONTRIBUTIONS

In Buckley, the Supreme Court considered the constitutionality of the Federal Election Campaign Act (FECA 2 USCA 431 et eq.), which among other things, limits the ability of people and organizations to make political contributions and expenditures. At issue was whether these limitations constituted an unconstitutional infringement of First Amendment Rights to free speech and association.

Although the Court ruled that spending money in campaigns, as contributions or expenditures, is a form of protected speech, it upheld infringements that further governments' interests in protecting the electoral process from corruption or the appearance of corruption.

The Court outlined a three-part test that laws restricting contributions or spending must pass in order to survive the “exacting scrutiny” standard of review that must be applied when infringing on First Amendment rights. (Exacting scrutiny requires a law to be struck down unless it is narrowly tailored to serve a compelling governmental interest.) A court must consider whether (1) the government's interests in regulating are compelling, (2) the law's burden outweighs First Amendment rights, and (3) the law is narrowly tailored to serve the government's interests. In other words, to be constitutionally sound, restrictions on contributions or expenditures must strike a reasonable balance between protecting the liberty interests in free speech and association and upholding campaign finance laws intended to encourage debate, but prevent corruption in the election process.

Applying this test, the Buckley Court determined that actual or apparent corruption is a sufficiently compelling reason to infringe on a person's right to contribute to a campaign. According to the Court, a reasonable contribution limit does “not undermine to any material degree the potential for robust and effective discussion of candidates and campaign issues by individual citizens, associations, the institutional press, candidates, and political parties” (Buckley at 29).

Ban on Lobbyists Contributions

The U.S. Supreme Court has acknowledged that governments have a legitimate interest in regulating lobbyists. In McIntyre v. Ohio Elections Commission, 514 U.S. 334, 356 n. 20 (1995), the Court found that the activities of lobbyists who have direct access to elected representatives, if undisclosed, may present the appearance of corruption. Thus, the Court has upheld laws regulating and monitoring lobbyists' activities (U.S. v. Harriss, 347 U.S. 612 (1954)).

Many states, including Connecticut, ban lobbyists' contributions to candidates for legislative offices and sometimes statewide offices while the legislature is in session. They prohibit solicitations of and contributions by registered lobbyists. The U. S. Appeals Court for the Fourth Circuit upheld such a restriction in North Carolina (North Carolina Right to Life, Inc. v. Bartlett, 168 F. 3d 705 (1999)). The court held that the appearance of corruption involved when lobbyists contribute to elected officials justifies the ban. It meets the constitutional test of strict scrutiny because it serves a compelling state interest and is narrowly tailored. The restriction applies only to lobbyists and the political committees that employ them and only for a few months during the year (Bartlett at 716).

At least three states prohibit lobbyists' contributions for the election of people they lobby at any time. California prohibits a direct contribution by lobbyists to an elected state officer or candidate for elected state office if the lobbyist is registered to lobby the government agency for which the officeholder works or for which the candidate seeks election (Cal. Govt. Code 85702). Kentucky prohibits lobbyists from making campaign contributions to legislators, candidates, or candidates' campaign committees (KRS 6.811 (6)). According to John Schaaf, counsel to the Kentucky Legislative Ethics Commission, the law applies only to communicator lobbyists (not their clients). South Carolina prohibits registered lobbyists or people working on their behalf from making campaign contributions to a legislator, any constitutional officer, or any state agency official or employee (S.C. Code 2-17-80 (A)).

California's ban withstood a constitutional challenge in 2001. Applying the Buckley test, The U.S. District Court held that California has an interest in avoiding the potential for corruption that could occur if lobbyists, whose continued employment depend on their success in influencing legislative action, are allowed to make campaign contributions to the very people whose decision they hope to influence. The law “achieves this interest by forbidding such contributions from lobbyists to elected state officials or candidates for elected state office when they are registered to lobby those very individuals or their agencies. The statute is thus narrowly tailored to serve the State's important interests…” (Institute of Governmental Advocates v. Fair Political Practices Commission, No. Civ. S-01-859 (Eastern District, California (2001)).

Applying the Nixon test, the court held that the plaintiffs failed to argue that the complete ban on lobbyists contributions would prevent candidates from seeking office.

Ban on Contractor Contributions

As stated earlier, the U.S. Supreme Court has recognized that the actuality and appearance of corruption is a sufficiently compelling reason to allow the government to limit campaign contributions. There have been no U.S. Supreme Court cases specific to contractor contributions, but the Southern District of New York has interpreted the FECA's provision barring contributions by a federal contractor in FEC v. Weintsen, 462 F. Supp. 243 (1978).

The FECA prohibits an individual who is a federal contractor from making contributions to candidates for federal office or federally registered political committees (PACs) during the term of the contract. The restriction applies from the time the individual begins negotiations with a federal agency or the agency issues its request for proposals (RFP) until the negotiations cease or the contract that was the subject of the RFP has been completed (2 USCA 441c).

The court in Weintsten upheld the FECA's ban as applied to a business that manufactured military uniforms for the federal government. The court began its analysis by applying the strict scrutiny test articulated in Buckley to the regulation barring contributions by corporations. It noted that contributions pose special problems “to the extent that large contributions are given to secure a political quid pro quo from current and potential officeholders” (Weinsten at 13-14). Of almost equal concern to the court, was the impact of the appearance of corruption stemming from public awareness of the opportunities for abuse. The court found that these governmental interests outweighed the First Amendment rights of the corporation because the speech (campaign contributions) was outside the usual range of corporate purposes.

The Court held the absolute prohibition of corporate contributions constituted the least drastic means to achieve the Congressional goal of protecting the integrity of the political process. The Court then applied this reasoning to the regulation barring contributions by government contractors and found it applied with even greater force because there was an even greater likelihood that the public would perceive corrupt relationships between elected officials and corporations that had received government contracts.

In addition to the federal ban on contributions from contractors, three states have imposed a ban. New Jersey has implemented Executive Order #134 which prohibits New Jersey state departments, agencies, and authorities from entering into a contract that exceeds $17,500 with an individual or entity that has made a political contribution to the governor's candidate committee or election fund or to any state or county political party committee. This executive order was suspended because the Federal Highway Administration was concerned the Order might restrict competition and was not challenged on Constitutional grounds.

In South Carolina, an individual, corporation, or other entity awarded a no-bid contract with the state or any of its political subdivisions may not contribute to a public official who was in a position to act on the contract award (S. C. Code Ann. 8-13-1342).

West Virginia law generally prohibits anyone who bids on or has a public contract at the state or local level from contributing to any political party, committee, or candidate for public office or to anyone for political purposes or use (W. Va. Code 3-8-12(d)). The ban applies during the period of contract negotiation and performance.

We found no challenges to either the South Carolina or the West Virginia law.

SPENDING LIMITS

The U.S. Supreme Court has consistently held that restrictions on campaign spending require more compelling justification than restrictions on contributions (Nixon at 387). Unlike its decision on campaign contributions, the Buckley Court held that alleviating corruption from the electoral process was not justification for limiting campaign expenditures. Until recently, no state has been able to show a sufficiently compelling interest to justify a restriction.

On August 18, 2004, a panel on the Second Circuit Court of Appeals held that the U.S. Supreme Court decision in Buckley “did not operate as a per se bar to campaign expenditure limit; rather, Buckley permits spending limits that are narrowly tailored to secure clearly identified and appropriately documented compelling governmental interests” (Landell v. Sorrell, 382 F. 3d 91). The court went on to hold that Vermont has established two compelling interests in support of its expenditure limits: preventing the reality and appearance of corruption and protecting the candidates' and elected officials' time.

The court remanded (returned) the case to the lower court to decide whether there are less restrictive means for achieving these goals.

Another attempt to regulate campaign spending was recently struck down in New Mexico (Homas v. City of Albuquerque, 366 F.3d 900, (2004)). The Tenth Circuit, certiorari denied, rejected Albuquerque's contention that spending limits were necessary to deter corruption. The court concluded that the interest in preventing corruption was adequately served by contribution limits and disclosure requirements.

SN-E/JN:ts