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COLUMN-The ban on direct corporate campaign giving: Frankel

Source: Thomson Reuters Foundation - Mon, 12 Nov 2012 19:22 GMT
Author: Reuters
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(Alison Frankel writes the On the Case blog for Thomson Reuters News & Insight http://newsandinsight.com. The views expressed are her own.)

By Alison Frankel

NEW YORK, Nov 12 (Reuters) - In the age of extravagant spending by Super PACs and politically active non-profits like the U.S. Chamber of Commerce, why do our election laws still distinguish between independent political expenditures by business interests -- which are permissible under the U.S. Supreme Court's 2010 ruling in Citizens United v. Federal Election Commission -- and direct corporate donations to candidates, which remain illegal?

As the post-election discussion of the impact of spending by outside pro-business groups rages on, a new petition for Supreme Court review argues that if corporations have a First Amendment right to support candidates indirectly, that same right should extend to direct contributions to political campaigns.

The petition was filed by Williams Danielczyk, who, as we've reported, is facing criminal prosecution for funneling corporate funds to Hillary Clinton in her 2006 and 2008 campaigns. Last year, U.S. District Judge James Cacheris of Alexandria, Virginia, dismissed that part of the federal indictment against Danielczyk and co-defendant Eugene Biagi, ruling that the bar on direct corporate campaign contributions is unconstitutional under the Supreme Court's reasoning in Citizens United. But in June, the 4th Circuit Court of Appeals reversed, holding that the controlling precedent on direct corporate campaign contributions is not Citizens United but the Supreme Court's 2003 ruling in Federal Election Commission v. Beaumont, in which the justices said explicitly that corporations do not have a First Amendment right to contribute directly to political candidates.

The 4th Circuit said that, in Citizens United, the Supreme Court explicitly declined to address the constitutionality of the ban on direct contributions and did not discuss Beaumont's affirmation of that bar. The court created a distinction between direct contributions and independent expenditures in Buckley v. Valero in 1976, the 4th Circuit said. Citizens United did not erase that line. "Nor did the (Citizens United) opinion indicate that its 'corporations-are-equal-to-people' logic necessarily applies in the context of direct contributions," the 4th Circuit said. "Leaping to this conclusion ignores the well-established principle that independent expenditures and direct contributions are subject to different standards of scrutiny and supported by different government interests."

But Danielczyk's new petition for certiorari, filed by his Supreme Court counsel at MoloLamken, asserts that after Citizens United, the supposed division between direct and independent expenditures by corporations is a distinction without a difference. The bar on direct corporate giving was intended to prevent businesses from corrupting the political process, yet according to Danielczyk, the risk of corruption is no more severe through direct corporate contributions than it is through the independent expenditures (or gifts from wealthy individuals) that the Supreme Court sanctioned in Citizens United. That ruling, the brief says, "swept away Beaumont's logical underpinnings and scrapped most of the government interests that case described." The result, according to Danielczyk, is a "perverse" and illogical distinction that impinges on corporate free speech rights.

As the petition notes, plenty of federal judges have cited Beaumont and upheld the bar on direct contributions. Danielczyk argues that it's time for the Supreme Court to extend the logic of Citizens United to direct corporate campaign contributions. "Absent this Court's review, First Amendment freedoms will continue to be abridged based on a gravely wounded precedent at odds with current law," the petition says.

It's a good bet that this petition is going to attract amicus support from business groups, which can point to the 2012 election results to argue that their prodigious independent spending didn't result in election wins for their chosen candidates.

I emailed the Justice Department for comment on the Danielczyk petition but didn't hear back. (Reporting by Alison Frankel; Editing by Ted Botha)

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