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Companies, groups can spend to affect MN elections without disclosure, appeals court rules

The Minnesota law requiring groups to set up a political committee or PAC and report on its activities creates “onerous” impediments, the court ruled.

For at least the remaining 60 days of the current election cycle, corporations and organizations will be able to spend freely and secretly to influence the outcome of Minnesota political races, including ballot questions proposing constitutional amendments, according to  a federal court decision [PDF].

In a decision that is likely to have a lasting and major impact on campaign finance regulation here, the U.S. Eighth Circuit Court of Appeals Wednesday ruled that the anti-abortion group Minnesota Citizens Concerned for Life and two other plaintiffs, including a for-profit company, do not need to establish separate political entities to spend money on elections and do not need to disclose their spending.

Sen. John Marty

“They got it exactly backwards,” said Sen. John Marty (DFL-Roseville), a longtime advocate for stricter regulation. “They’ve already taken the meat off the bones. Now they’re taking the crumbs, too.”

(Separately, the U.S. Supreme Court noted on its electronic docket that its members will consider whether to take up Prop 8 and two other same-sex marriage related cases at the Sept. 24 conference where they will begin the process of selecting cases to accept for the next term.)

The Eighth Circuit’s 6-5 decision left intact the portion of the 2010 Minnesota law barring direct contributions to candidates or political parties by corporations and organizations, citing a clear line drawn by the U.S. Supreme Court between the two types of spending.

“What this does do is it strikes down the remaining restrictions on independent expenditures,” said David Schultz, a professor at the Hamline University School of Business and an expert on campaign finance law.

David Schultz

“If Target wants to drop its entire corporate treasury to defeat, say, someone in the Legislature,” he added, “they can do so without having to establish a political fund or political committee or having to disclose that they were spending all that money to influence a state election.”

Technically, the appellate panel sent the case back to a state court for rehearing, reasoning that the portion of the law mandating disclosure was “most likely unconstitutional.” In practice, the opinion renders the law unenforceable unless the defendant, Minnesota Attorney General Lori Swanson, appeals and wins.

(Target being the most obvious example, albeit one that probably will tread more carefully, having sparked a public outcry by giving a $150,000 donation to an independent expenditure group working to defeat GOP candidate Tom Emmer’s gubernatorial rivals.)

‘Onerous’ impediments to political discourse

The Minnesota law requiring corporations and groups to set up a political committee or PAC and report on its activities creates “onerous” impediments to political discourse, Eighth Circuit Chief Judge William Jay Riley wrote.

Citing language from prior cases, the circuit court judges ruled Wednesday, “Independent expenditures are indisputably political speech, and any restrictions on those expenditures strike ‘at the core of our electoral process and of the First Amendment freedoms.’ And ‘protection of political speech is the very stuff of the First Amendment,’ ” the circuit court judges ruled Wednesday.

“Because political ‘speech is an essential mechanism of democracy,’ ‘the means to hold officials accountable to the people,’ ‘a precondition of enlightened self-government and a necessary means to protect it,’ ‘political speech must prevail against laws that would suppress it, whether by design or inadvertence,’” they concluded.

The judges relied heavily in their reasoning on the U.S. Supreme Court’s 2010 decision in Citizens United v. Federal Election Commission. In that case, the court ruled 5-4 that political spending is a form of free speech protected by the U.S. constitution and corporations, labor unions and other groups have the same First Amendment rights as individuals.

Still can’t donate directly to candidates or parties

The groups still cannot donate directly to candidates or parties but can freely engage in so-called independent expenditures — political spending on ads or other communications intended to influence the outcome of an election.

Minnesota lawmakers quickly modified the state’s laws in response to Citizens United. And the agency charged with enforcement, the Board of Campaign Finance and Public Disclosure, has struggled to respond to the many questions left unanswered.

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Most recently, the board has rejected a series of complaints asserting that groups working to insert a ban on same-sex marriage into the state constitution are flaunting the 2010 disclosure requirements. Wednesday’s decision cements what opponents of the ballot question have long feared would be the result of the local rulings: Minnesotans will go to the polls in November without knowing who financed the campaigns backing the proposed amendment.

Independent expenditures have increased in importance in recent years as corporations and other groups stymied by the ban on direct gifts to candidates have poured unprecedented amounts of money into campaigns to defeat a particular candidate or influence the perception of a constitutional question.

The resulting massive infusions of political money trouble clean-campaign advocates everywhere, but are particularly problematic in Minnesota. The state’s relatively low limits on campaign donations from individuals to candidates make it hard to combat the negative ad blitzes independent expenditures typically underwrite.

Minnesota Citizens Concerned for Life (MCCL) is a good example of a group for whom the approach has been a boon, Marty noted. Recent MCCL ads for state-level races don’t have to even mention abortion, which may be a dicey campaign issue for a pro-life candidate. They can simply smear his or her opponent on any grounds they believe will be effective.

Voters won’t know who is behind ads

Now, with the identity of the party paying for the ads off the table, voters won’t know who has a stake in the race and why, he and Schultz agreed.

“Had this decision come down two years ago, we wouldn’t have discovered Target’s donation to the organization that supported Emmer,” Schultz said. “I can give $30 million, $20 million, and not have to disclose it.”

MCCL and its co-plaintiffs, the Taxpayers League of Minnesota and the travel agency Coastal Travel Enterprises were represented by James Bopp Jr., the conservative Indiana attorney who brought Citizens United’s suit. Bopp has described himself as on a quest to “dismantle the entire regulatory scheme that is called campaign finance law.”

He has also represented the anti-gay-marriage groups that had fought disclosure of their sources of funding, the National Organization for Marriage, and its state sister group, Minnesota for Marriage.

A year ago, those two groups and the other members of the vote-yes organization Minnesota for Marriage, the Minnesota Catholic Conference and the Minnesota Family Council, complained to the state board, with Bopp’s help. Their argument on the local level: The disclosure law put “a bullseye squarely on the forehead of every NOM donor, supporter and member if disclosed.”

“This newly concocted disclosure and regulatory scheme is unlawful, is not constitutionally sound, threatens NOM members, donors and supporters with personal injury and harm,” the group charged, echoing claims rejected by courts in other states that disclosure would subject supporters of traditional marriage to violence and harassment by gay-rights supporters.

Minority differed on interpretation of Citizens United

The dissent in Wednesday’s appellate decision took issue with the majority’s interpretation of Citizens United, which many have criticized as overly broadly written and vague. The high court did not intend to do away with public disclosure, which it saw as the natural counterbalance to unchecked spending, the minority argued.

“That would be Swanson’s avenue for appeal,” Schultz noted. The odds of such an appeal succeeding are thought to be slim; the high court has already declined once to revisit Citizens United. “I don’t see many options.”

Nor did the court leave the Legislature many clear avenues for amending the law again. Marty plans to introduce a bill in the next legislative session calling for an amendment to the U.S. Constitution among other things stripping corporations of their status as persons and thus Citizens United of its rationale.

But it, too, faces astronomical odds.

“It’s a hugely difficult challenge, but democracy is worth it,” he said. “There’s no way the founders would look at what we have now and call it a democracy. Money now buys elections.”