Business’ First Amendment Rights and Government Participation
The First Amendment guarantees the right to petition the government, which includes the right to participate in elections. These protections apply to individuals and businesses involved in paid and unpaid advocacy.
However, the government has the right to regulate speech as long as it passes a strict scrutiny test. That test was clarified in the landmark U.S. Supreme Court Citizens United v. Federal Elections Commission decision holding that such regulation must show that “the restriction furthers a compelling interest and is narrowly tailored to achieve that interest.”
California law contains restrictions on political speech that have consistently been upheld as satisfying this demanding test. Because violations of these laws can trigger significant fines and criminal penalties, it’s important for businesses to understand them before diving into political participation, especially through contributions or paid lobbying.
Here are some laws governing political speech that businesses should know, just in time for the beginning of the election cycle.
The Political Reform Act – California’s Political Reform Act is the starting point for laws on paid political participation. It has been almost 10 years since the Supreme Court held in Citizens United v. FEC that the First Amendment prohibits governmental entities from distinguishing between individuals and corporations in regulating independent political expenditures. Notably, the Court declined to overrule Buckley v. Valeo, which upheld limits on direct corporate contributions. The Court also upheld disclosure requirements like those in the Political Reform Act relating to political speech.
Campaign Disclosures – The Political Reform Act and regulations of the Fair Political Practices Commission both contain rules concerning campaign committee formation and periodic filings of disclosure statements for campaign receipts and expenditures. Contribution sources must be identified on the committee’s Form 460.
If a contribution is received through an intermediary, both the intermediary and the source of the contribution must be identified. Failing to disclose the true source of a contribution, more commonly known as “laundering,” is a serious violation. An employer may not reimburse employees for contributions, which would hide the true source of the contribution (the employer). The FPPC looks very closely at “bundled” contributions that come from one business or corporation or closely associated individuals.
Contribution Limits – The Political Reform Act leaves some latitude to local agencies to regulate and limit political contributions. For example, San Diego and Los Angeles have city ethics commissions empowered to create and enforce additional layers of local contribution regulations. Many local jurisdictions have enacted local limits on campaign contributions that significantly restrict businesses’ and individuals’ abilities to contribute.
It is also common for agencies to require additional disclosure of local contributions in connection with their contract and franchise awards and the sale or lease of public lands. Agencies frequently ask to see a company’s contributions to local races in connection with their submittal of a proposal for public contracts.
California’s Levine Act aims to ensure that appointed members of boards or commissions are not biased by political contributors who might appear before them in a proceeding involving a license, contract, permit or entitlement. This law covers all appointed officers of any local government agency. So, contributions to the election campaign of an appointed official can disqualify that official from participation on an appointed board or commission.
Serial and Ex Parte Communications – The right to petition does not include the right to speak to any elected official at any time. California’s Ralph M. Brown Act prohibits a member of the public serving as a conduit of information of public business among the members of a quorum of a local agency. So, while it is permitted to “whip” votes among members of the state Legislature by telling the position of one legislator to another legislator, similar communications are prohibited among a majority of a city council or county board of supervisors.
Some ex parte communications (communications outside a formal meeting) are prohibited altogether. For examples, stakeholders are not permitted to petition some state boards and commissions (i.e., regional water quality control boards and the California Coastal Commission) outside their meetings.
Like individual speech, corporate speech enjoys First Amendment protection. However, such protection is not unfettered and often subject to state and local regulations intended to enhance disclosure in public decision-making and to control corruption.
This article first appeared in The Press-Enterprise and other Southern California Newspaper Group publications online on Sept. 28, 2019. Republished with permission.
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