Can State Laws Cohabit With Citizens United?
May 27, 2012, 4:00am

By Lincoln Caplan. New York Times.

The Supreme Court is expected to respond in June to a Montana Supreme Court decision upholding the state’s Corrupt Practices Act, which bans corporations from making political expenditures from their general treasuries.

American Tradition Partnership, a nonprofit group, and co-petitioners sued for a declaration that the act violates their freedom of speech. They contend the Citizens United decision so clearly invalidates the Montana law that the justices should reverse the state ruling without oral argument.

Montana, however, makes a sound and compelling argument that Citizens United, which struck down a federal ban on independent spending in political campaigns by corporations and unions, does not bar it from fighting political corruption with a carefully tailored campaign law. The Supreme Court should quickly uphold the state ruling, or hear oral argument before making a decision.

The Montana case, while about state law, deals with the central fallacy of Citizens United — that “independent expenditures, including those made by corporations, do not give rise to corruption or the appearance of corruption.” The justices seemed to believe there would be no consequences for democracy if unlimited money flooded campaigns.

Montana’s history with corporate influence on elections has shown that to be wrong. Now, after two years with Citizens United governing politics, officials, scholars and advocates are reporting back to the court what they’ve found. Corruption or the appearance of corruption is rampant. Disclosure, which the court counted on as a check against corruption, is scarce. Independent spending is rarely independent. Here are excerpts from Montana’s brief on its case and friend-of-the-court briefs explaining the damage done when campaign finance laws are gutted:

Montana’s brief

In Montana and elsewhere, today’s state political campaigns are different in kind, not just degree, from federal campaigns. State elections are many orders of magnitude smaller than federal elections. The $12 million annual budget of Citizens United, a relatively small player in national politics, is roughly double the total amount raised by every state executive, legislative, and judicial candidate over a biennial election cycle in Montana

Notes: The state’s sparse population, dependence on extraction industries and low campaign costs make it extra vulnerable to improper influence. Here’s a nightmare scenario without the Corrupt Practices Act: a nonresident corporation that wants to eviscerate mining regulation picks and installs politicians who will do that.

A.T.P.’s undisputed purpose is to use the nonprofit corporate form primarily to evade disclosure of funding sources that are themselves out-of-state (and potentially offshore) business corporations that seek to influence Montana elections anonymously.

Notes: Disclosure of campaign contributions, the Supreme Court has said, is crucial. But if the court strikes down Montana’s anticorruption law, the state would be left with little ability to require disclosure of significant corporate spending.

Brief for Senators Sheldon Whitehouse and John McCain

The news confirms, daily, that existing campaign finance rules purporting to provide for “independence” and “disclosure” in fact provide neither. Regulatory filings show that much of the funding for independent expenditures comes from shell companies, pass-through entities and nonprofit organizations that conceal the true source of the individuals and companies supporting them.

Notes: In the 2010 elections, two- thirds of the independent spending was the result of ending limits on corporate contributions. Outside spending, totaling $289 million, far surpassed spending by political parties.

Brief for the Campaign Legal Center and other groups

Federal coordination rules are so narrow and limited in scope that an “independent” spender can be married to a candidate and share the same home without running afoul of federal coordination limits, so long as the spouses refrain from discussing the details of specific ad buys.

Notes: Shockingly loose rules set by the Federal Election Commission under federal laws and court rulings have made the surge in “independent” spending possible.

Corporations have clear incentives to avoid disclosure and accountability; federal tax and campaign finance laws, as well as state campaign finance laws, have accommodated their desire to do so. Consequently, non-disclosing corporations spent more than $120 million to influence the 2010 federal midterm elections.

Notes: I.R.S. rules allow tax-exempt organizations set up under Section 501(c)(4) of the tax code to take part in political campaigns. Those organizations can raise unlimited sums from any sources, without having to disclose who they are, so corporations use them to hide campaign contributions.

Brief for a group of former federal, state and local election officials

In a recent national poll by the independent Opinion Research Corporation, 69 percent agreed that “new rules that let corporations, unions and people give unlimited money to super PACs will lead to corruption.” … Sixty-five percent of respondents said they trust government less because donors to super PACs have more influence than average voters, and 26 percent said they were less likely to vote as a result.

Notes: Campaign finance laws, as well as Supreme Court rulings, are supposed to increase confidence in the political system. Citizens United has done the opposite, leading to even greater cynicism.


Montana’s law does not restrict corporate speech: businesses remain free to make contributions to support their interests and many do. But the anticorruption law requires that any corporate campaign contributions come from shareholders, employees or officers and be made through a related political action committee. This kind of safeguard is particularly important for elected local officials whose impartiality is crucial, like judges, sheriffs and prosecutors.

Twenty-two other states and the District of Columbia have urged the justices to uphold the Montana ruling. They have made clear that any decision “will have consequences for state laws across the country,” affecting the democratic character of state and local elections. They’re understandably worried that nonresident corporations, with specific economic interests, would be able to distort, even steal, elections if state campaign laws requiring accountability were dismantled.

Citizens United has done great harm to federal elections for Congress and the president under the guise of protecting free speech. The harm would be greatly magnified if the justices extended that flawed analysis to cut down state laws aimed at corruption.