In the most significant campaign finance decision since Citizens United v. FEC, the Supreme Court today struck down the Federal Election Commission's biennial aggregate limits.
In McCutcheon v. FEC, the Court left in place the direct contribution limits to candidates, political parties and PACs, but deemed unconstitutional a secondary set of set of limits that had been in place since the 1970s.
Today, the Supreme Court struck down the Federal Election Commission's biennial aggregate limits, arguing that it 'must' err on the side of protecting political speech rather than suppressing it.'"1 The decision in McCutcheon v. FEC leaves in place the direct contribution limits to candidates, political parties and PACs (which the Court termed "base limits"), but strikes down a secondary set of set of limits that had been in place since the 1970s. McCutcheon is the most significant campaign finance ruling since Citizens United v. FEC. It represents a major victory for First Amendment proponents and another in a recent string of setbacks for the campaign finance reform community.
What were the biennial (aggregate) limits?
As part of a series of post-Watergate ethics reforms during the 1970s, Congress enacted a secondary set of federal campaign contribution limits to prevent the circumvention of the direct contribution limits, which are discussed below. The biennial aggregate limit for 2013-2014 was $123,200 per individual. In addition to this overall limit, there were sub limits of $48,600 to all federal candidates and $74,600 to all federal Political Action Committees (PACs) and political parties (federal accounts), of which no more than $48,600 may be contributed to state and local political parties (federal accounts) and federal PACs. The biennial limits were indexed every two years to inflation.2
What are the individual (base) limits?
The direct contributions limits, which were left untouched by the McCutcheon decision, currently limit individual contributions to $2,600 per candidate, per election, $32,400 per national party, per year; $10,000 per state or local party (federal accounts) per year, and $5,000 to federal PACs per year. Individual contribution limits to candidates and national parties are indexed every two years to inflation.3
In this plurality decision, drafted by Chief Justice Roberts, the Court reiterated its finding from other recent campaign finance cases that preventing corruption or the appearance of corruption is the only legitimate government interest in regulating campaign finance. Here, however, because the biennial aggregate limits are secondary rather than primary, and more targeted anti-circumvention measures have been adopted under the Bipartisan Campaign Reform Act (BCRA, or McCain Feingold) in 2002 and in FEC regulations, the Court found that there was "a substantial mismatch between the Government's stated objective and the means selected to achieve it."4
When the Court heard oral arguments in this case on October 8, 2013, it was apparent that the justices struggled at times to understand the biennial limits and their policy underpinnings. In fact, Justice Scalia stated at one point – "I agree – I agree that – that this campaign finance law is so intricate that I can’t figure it out."5 In particular, the majority took pains to come to terms with the contribution earmarking limits imposed under BCRA, which prevent targeting contributions to one candidate by giving to multiple committees acting as pass-through entities, which was at the core of the district court's analysis in initially upholding the aggregate limits two years ago.
In reply, a minority of the Court, led by Justice Breyer, argued that despite other more targeted provisions, the aggregate limits continued to serve a "public interest" in "collective speech," and advances the government’s anticorruption interest by limiting individual's ability to gain what the majority termed "'influence over, or access' to elected officials or political parties."6 However, the majority rejected the notion that First Amendment protects could turn on a "legislative or judicial determination that particular speech is useful to the democratic process."7 It found that the government's anticorruption interest was much narrower, and should focus solely on preventing quid pro quo exchanges and may not "target the general gratitude candidate may feel toward those who support him or his allies, or the political access such support may afford."8
Notably, though voting with the majority, Justice Thomas filed a concurring opinion in which he argued that the Court should have overruled its prior decision in Buckley v. Valeo, and by extension subject all campaign contribution limits to a strict scrutiny analysis under which they would likely fail as well.9
The District of Columbia and several states, including Arizona, Connecticut, Louisiana, Maine, Maryland, Massachusetts, New York, Rhode Island, Washington, Wisconsin and Wyoming have secondary limits similar to the federal biennial limits. While the McCutcheon decision applies only to federal law, similar state laws may also be unconstitutional, although the Court's analysis suggests that such limits must be considered on a case-by-case basis depending on the availability of more limited anti-circumvention provisions in each state's associated regulatory regime. Certainly, the Court’s decision here is likely to spur on additional challenges to state regulatory schemes that limit individuals' First Amendment rights without a sufficient government interest.
Despite the Court's elimination of the biennial aggregate limits, it remains an unfortunate fact that political activity, while protected by the First Amendment, comes with significant compliance risks. Accordingly, politically active individuals and entities should take precautions. This includes vetting their political contributions in advance, tracking political contributions, and, as appropriate, including a carefully written cover letter. All of these best practices are even more important for large contributions or contributions to more exotic entities such as Super PACs, 527 and 501(c)(4) organizations, and ballot question committees.
1 McCutcheon v. FEC, 572 U.S. __, slip op. at 4 (2014) (quoting FEC v. Wisc. Right to Life, 551 U.S. 449, 457 (2007) available at http://www.supremecourt.gov/opinions/13pdf/12-536_e1pf.pdf.
2 See 78 Fed. Reg. 8532 available at http://www.gpo.gov/fdsys/pkg/FR-2013-02-06/pdf/2013-02520.pdf.
4 McCutcheon at 10.
5 See Transcript of Oral Argument at 15, McCutcheon v. FEC, 572 U.S. __ (2014) (No. 12-536) available at http://www.supremecourt.gov/oral_arguments/argument_transcripts/12-536_21o2.pdf.
6 McCutcheon v. FEC, 572 U.S. __, slip op. at 4 (2014) (Breyer, J., dissenting).
7 McCutcheon at17.
8 Id. at 2.
9 McCutcheon v. FEC, 572 U.S. __, slip op. at 2 (2014) (Thomas, J., concurring).