Friday saw two big developments in the field of election law: the Federal Election Commission’s release of dueling statements of reasons over whether Crossroads Grassroots Policy Strategies might be a federal political committee, and the Supreme Court’s decision to take up a challenge to Ohio’s ban on false statements in political campaigns. Each, obviously, involves the tension between regulation and First Amendment interests. But each also shows how the campaign finance laws can affect—and be affected by—an entirely different area of law.
The so-called “major purpose” test at the heart of the Crossroads GPS matter is the $64,000 question of campaign finance law: when does a group, having raised or spent more than $1,000 in a calendar year to influence federal elections, have the “major purpose” of nominating or electing a candidate— which, in turn, triggers the obligation to register, report and disclose donors to the FEC as a political committee? This was a matter of great urgency to Crossroads GPS, which spent more than $15.4 million on independent expenditures in 2010, and yet did not register with the FEC, and made no comprehensive disclosure of its donors to any agency. The Commission’s divide was predictable. Its three Republican-selected Commissioners found no reason to investigate whether Crossroads had the major purpose of influencing elections, while its three Democratic-selected Commissioners thought it no less clear that the FEC should have engaged in the “fact-intensive analysis” that its past guidance on the subject seemed to require.
But there are at least two paths that lead to the disclosure that Crossroads GPS and other, similar groups organize to avoid: “political committee” status under FEC rules, and “political organization” status under section 527 of the Internal Revenue Code, which brings periodic reporting requirements like those the FEC enforces under a law passed in 2000. The unsettled scope of the FEC’s major purpose test, combined with the IRS’s relatively clear requirements for 527 disclosure, combine to create a strong incentive for electorally active groups to form under section 501(c)(4) of the Internal Revenue Code instead of section 527, thereby incurring no public donor disclosure requirements with either agency. Viewed in this way, disputes over section 501(c)(4) status are often just a proxy battle in the war over political committee registration. By standing down from a finding of “major purpose,” the FEC places the ball squarely in the IRS’s court to determine whether a group like Crossroads GPS must disclose its donors.
The Ohio case before the Supreme Court challenges the constitutionality of a state law that makes it a crime to “disseminate a false statement concerning a candidate, either knowing the same to be false or with reckless disregard of whether it was false or not, if the statement is designed to promote the election, nomination, or defeat of the candidate.” (In a 1986 advisory opinion, the FEC held that the Federal Election Campaign Act preempted a related subsection of the same Ohio law, raising a separate question about the law’s validity that does not appear to be before the Supreme Court.)
One of the arguments advanced by the petitioner in the Ohio case is that candidates and groups use the statute—and the state’s rocket-docket process for considering and deciding violations—as a club to keep their opponents’ ads off the air. This especially affects non-candidate sponsors like political parties, PACs and nonprofits. The reason lies in the Federal Communications Commission’s political broadcasting rules. Under the Communications Act of 1934, broadcast stations can usually reject their ads for any reason—unlike candidate ads, which are almost always immune from station censorship based on content. A pending state investigation can be a powerful reason for a station to reject or pull an ad. And the candidate who wants stations to pull a hostile ad has a powerful reason to file a complaint with the Ohio Elections Commission, even if that complaint later proves unsuccessful: the complaint offers another reason why a risk-averse station, which could face liability for the ad’s content, should reject the ad or insist on changes to it.
The Crossroads GPS matter and the Ohio case raise obvious questions involving the balance between regulation and First Amendment issues. But, less obviously, they show yet again that the federal and state campaign laws do not act in a vacuum. They can affect, and are often affected by, the operation of other laws.