Court hearing to revisit Minnesota corporate campaign finance law

Minnesota’s recent campaign finance law, which generated headlines — and headaches — for Minnesota companies during the 2010 gubernatorial campaign, will take center stage in a St. Louis courtroom today in a high-profile attempt to overturn the statute.

In a case, known as Swanson v. Minnesota Citizens for Life, lawyers will face off before the full 11-member bench on the Eighth Circuit Court of Appeals.

The issues before the court will focus on Minnesota’s ban on corporations making direct contributions to candidates and political parties and on the reporting and disclosure requirements the law imposes on corporate contributions to the independent committees that the statute allows.

The appeal follows a 2-1 ruling last spring by a three-judge panel that refused to overturn a lower-court decision that refused to block implementation of the law before the 2010 election campaigns.

The Minnesota law was passed last year following the controversial 2010 U.S. Supreme Court Citizens United ruling that found corporate and union contributions to independent political committees constitute protected free speech.

The Minnesota law’s chief sponsor, State Rep. Ryan Winkler, DFL–Golden Valley, said the measure passed unanimously after “the Supreme Court made a very clear policy decision for the country. [The court] said, ‘Less restriction and more disclosure.’ ”

Because of then-existing state law prohibiting corporate contributions to candidates for state office, “Minnesota had to jump out ahead” on the issue, Winkler said. The legislation drew broad bipartisan support and passed unanimously with backing from civic and business groups alike, including Common Cause, the League of Women Voters, the Minnesota Business Partnership and the Minnesota Chamber of Commerce.

“Minnesota has a strong clean-government, clean-politics tradition,” Winkler said. “I would argue that our political culture comes from the people who live here, not from the laws we have on the books. The laws we have reflect our political culture, not the other way around.”

Attorney James Bopp, who will be arguing against Minnesota’s statute, said, “Obviously [the Circuit Court] views it important enough and potentially wrong enough that they decided to rehear it with the full court.”

A well-known conservative lawyer, Bopp said the court should apply a “strict scrutiny” test in examining Minnesota’s statute. Under that test, the court would allow very few restrictions on free speech, only in support of a “compelling government interest.” In the case of political donations, Bopp argues that preventing the corruption of candidates is the only government interest that applies.

By imposing periodic reporting and administrative requirements on corporations and independent committees, Minnesota’s statute is “much more burdensome,” he argues, than what is allowed under a strict-scrutiny test.

Because the Minnesota statute only allows corporate contributions to independent committees but not directly to candidates, Bopp argues that disclosure of corporate contributions should not be required.

Citing the controversy sparked by Target Corp.’s $150,000 donation to MN Forward, which supported Republican Tom Emmer’s campaign for governor, Bopp said: “I don’t object, and I think the state can require contributions to candidates to be reported. That’s not what Target did. Target contributed to another organization. That organization contributed to a candidate.”

Minnesota Solicitor General Alan Gilbert said that Minnesota’s statute serves a “two-fold purpose,” upholding the informational interest of voters and shareholders alike.  A broader “exacting scrutiny” standard applies, Gilbert argues, which recognizes several important interests justifying restrictions on speech, he said.

“We feel very strongly that disclosure is not only appropriate but necessary. The Supreme Court said the same thing,” voting 8 to 1 in favor of disclosure requirements in its Citizens United opinion, Gilbert added.

David Olson, president of the Minnesota Chamber,  said his organization supported the legislation in order to clarify rules Minnesota corporations would operate under following the Citizens United decision and “because in Minnesota, it’s been very hard for companies to [make] any contributions to candidates.”

The MN Forward experience represents “a new frontier for the business community,” Olson said. He vowed that the Chamber will continue to raise corporate money for elections.  “I think business deserves a voice.” The business community is outspent by labor union donations, which do not have the same restrictions, he said.

Olson still supports the Minnesota statute but “not necessarily the disclosure piece.”

The U.S. Chamber of Commerce has been vigorously opposing any disclosure requirements for corporate political contributions. While Minnesota is a dues-paying member of the national organization, Olson said he “didn’t have too many conversations” with the U.S. Chamber about the Minnesota statute.

In his brief supporting Minnesota’s statute before the Appeals Court, Solicitor General Gilbert quoted the Supreme Court ruling in Citizens United:

With the advent of the Internet, prompt disclosure of expenditures can provide shareholders and citizens with the information needed to hold corporations and elected officials accountable for their positions and supporters. Shareholders can determine whether their corporation’s political speech advances the corporation’s interest in making profits, and citizens can see whether elected officials are ‘in the pocket’ of so-called moneyed interests. The First Amendment protects political speech; and disclosure permits citizens and shareholders to react to the speech of corporate entities in a proper way. This transparency enables the electorate to make informed decisions and give proper weight to different speakers and messages.”

Ironically, other events may make the case for legislatively mandated disclosure requirements moot, at least at larger corporations.

There is an increasing move on the part of corporations to voluntarily disclose those donations and a push by shareholders to demand greater transparency. Some companies, looking at the experience of Target, are choosing to forgo political donations altogether, and 10 prominent law school professors petitioned the Securities and Exchange Commission to require board oversight and disclosure of political donations and policies. 

I’ll write more on those trends later.

Minnesota Solicitor General Alan Gilbert’s name was misstated in the original version of this story.

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Comments (6)

  1. Submitted by James Hamilton on 09/21/2011 - 10:08 am.

    I have no idea where the court may go with this, but logic would suggest that if the state can compel disclosure of direct contributions, it can compel the disclosure of indirect contributions. Too,the only constitutional right afforded to bag men is the 5th Amendment right against self-incrimination.

  2. Submitted by Gary Peterson on 09/21/2011 - 12:56 pm.

    We don’t allow folks to shout “fire” in a theater, nor the operators of motor vehicles to engage in hit-and-run tactics without tracking them down and generally disclosing their identities. Similar disclosure should apply for all who want to fund free speech – but most especially those who want to fund hit-and-run free speech. Seems to me the burden should be on those who argue that disclosure impedes or places a burden on free speech. In other words, fund and speak whatever you like – including on hit-and-run basis, if you wish – but we have a right to know and evaluate who is speaking.

  3. Submitted by Rich Crose on 09/21/2011 - 02:50 pm.

    Is there anything stopping a corporation from donating to the Wisconsin Governor’s Association where there are friendly disclosure laws? The Cheeseheads pass it to the National Governor’s Association which pass it back to the Minnesota Governor’s Association which then gives it to the candidate?

    If not, this whole argument is moot.

  4. Submitted by Jon Kingstad on 09/21/2011 - 03:31 pm.

    Olson of the Minnesota Chamber of Commerce makes the comment: “I think business deserves a voice.” Can he be serious? It’s probably impossible to measure the amount of free advertising business and the Republican Party get from the media in this country, all of which is heavily slanted in their favor. How much is a Fox News, ABC, CNN, Wall Street Journal, NY Times, Minneapolis Star Tribune, Pi/Press, etc. worth? It’s not just in the paid for “political advertising”.

    Olson also makes the dubious claim that “the business community is outspent by labor union donations, which do not have the same restrictions.” Without addressing the significant differences between corporations and unions, which are unincorporated associations, there’s also support for the fact corporations spend more money than unions. It often depends on how you count and who is doing the counting. From a NY Times article last November:

    Plus, as the aforementioned article notes, electioneering communications reported before an election are not included in many totals because reports on such expenditures are not due until 60 days after the general election. Moreover, many kinds of election-related expenditures are not included in these reports.

    Finally, lobbying is also outside of any reporting. How much do corporations spend on lobbying versus unions? Altogether, lobbying, election advertising and communication and campaign contributions all represent forms of influencing government and its elected officials. We need to have a law that requires full disclosure of all funds spent by a corporation to influence government and its elected officials. The present law doesn’t go far enough in my opinion.

  5. Submitted by Bernice Vetsch on 09/21/2011 - 04:48 pm.

    The claim that unions actually outspend corporations is untrue. See:

  6. Submitted by Brad Allen on 10/03/2011 - 03:28 pm.

    Due to an error on my part I incorrectly identified Minnesota’s solicitor general. His correct name is Alan Gilbert. My apologies.

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