A Sign of Change or More of the Same? Wagner v. FEC and Its Implications on the Changing Field of Corporate Campaign Contributions as Applied to Federal Contractors.

• Author: Huldin, John F.

1. INTRODUCTION II. BACKGROUND A. The Regulation of Campaign Finance 1. Early Federal Campaign Finance Regulation 2. The Federal Election Campaign Act a. Early FECA Regulations b. Amendments and Challenges to FECA c. FECA Today B. Parallel State Development of Campaign Finance Regulation C. The Political Question Doctrine and Questions of Judicial Review of Campaign Finance D. Austin v. Michigan Chamber of Commerce and Supporting FECA E. Citizens United and the Opening of the Floodgates F. Where is the End? McCutcheon and the Continued Deregulation of Political Corporate Speech G. The FEC Ruling in the Chevron MUR: More of the Same? H. Wagner v. FEC 1. FECA's Prohibition and the Parties' Challenge 2. Procedural Posture: The Lower Courts 3. Return to the Circuit a. The Closely Drawn Standard b. Government Interests c. The Government's Legitimate Interests d. Dispatching the Claims of the Plaintiffs e. Appellate Court Holding 4. The Denial of Writ of Certiorari I. The 2016 Election and Justice Gorsuch to the Supreme Court III. ANALYSIS A. The Possible Paths: The Implications of Wagner v. FEC 1. The Narrow View of the Court of Appeals 2. The Expansive View of Wagner: What Could Be a. Dissonance Between Part IV.C and Part V of Wagner and Its Implications on PACs b. PACs as Part and Parcel of the Corporation c. PACs as Separate Entities IV. RECOMMENDATION A. The Status Quo: Following the Logic of Kennedy 1. Forming a Political Action Committee 2. Exercising Free Speech--the Option of Super PACs B. Navigating a Changing Field: The Implications of the Trump Presidency 1. The Shift Right and the Deregulation of Campaign Finance a. Overturning Wagner and FECA's Prohibition 2. A Different Approach: The Anti-Establishment Candidate a. The Effect of Anti-Corruption--The Potential for Restriction C. Which Path is Best? 1. Navigating the Narrow Interpretation of the Status Quo 2. Navigating the Expansive Interpretation of the Status Quo 3. Navigating a Conservative Judicial Environment Under the Narrow Interpretation of Wagner 4. The Dissonance of an Expansive Reading of FEC v. Wagner and a Conservative Shift in the Court D. The Best Path V. CONCLUSION I. INTRODUCTION

   Today, being able to effectively advocate to elected officials has become an issue of great importance to not only those individuals and corporations looking to secure favorable legislation and opportunities to bid on projects, but to those individuals and entities seeking to influence the ideology and other more specific positions of federal elected officials as well as those seeking federal office. In the way of this advocacy is a complex and often unclear thicket of federal regulatory and legal provisions that govern campaign finance. This thicket is especially dense for federal contractors, who face a complete ban on contributions. This Note aims to suggest the best course of action for an individual or corporate entity that seeks to influence federal elections through direct contributions.

   Part II discusses the background of The Federal Election Campaign Act (FECA) and the corresponding legislative, regulatory, and judicial developments that have shaped the current campaign finance environment, including the most recent judicial decision, Wagner v. Federal Election Commission. Part III analyzes subsequent administrative and scholarly opinions regarding the interpretation of Wagner decision. Part IV makes recommendations of the avenues available to individual and corporate contractors, and more generally the course of action for corporations and individuals interested in influencing federal elections.

2. Background

   1. The Regulation of Campaign Finance

      1. Early Federal Campaign Finance Regulation

         The call for regulation of corporate involvement in federal campaigns began, at the urging of Theodore Roosevelt, in the early 1900s. (1) Answering this call, Congress enacted several statutes between 1907 and 1966 which, "sought to: [l]imit the disproportionate influence of wealthy individuals and special interest groups on the outcome of federal elections; Regulate spending in campaigns for federal office; and Deter abuses by mandating public disclosure of campaign finances." (2)

      2. The Federal Election Campaign Act

         1. Early FECA Regulations

            In 1971, Congress passed the Federal Election Campaign Act (FECA), which brought together past reforms into an omnibus law governing campaigns--including campaign finance. (3) FECA has been amended multiple times to reflect the regulatory needs and pressures associated with campaign finance. (4) The first of these reforms came in 1974, when FECA was amended to specifically set limits on individuals, parties, and political action committees (PAC). (5) The 1974 amendment also created the Federal Election Commission (FEC) and empowered it to enforce FECA. (6) Finally, FECA tasked the FEC with administering the disclosure system created by the act. (7)

         2. Amendments and Challenges to FECA

            In 1976, FECA survived its first challenge in Buckley v. Valeo. (8) In 1979, Congress again altered FECA by expanding the role of the parties and streamlining the disclosure process. (9) FECA was next overhauled in 2002 by the "Bipartisan Campaign Reform Act" (BCRA), which placed a ban on federal parties from raising or spending "soft money." (10) Soft money is defined as non-federal funds that are restricted to use on "issue ads." (11) The 2002 amendment also increased the contribution limits and indexed many of them for inflation. (12)

         3. FECA Today

            In FECA's current form, Congress addresses the financial involvement of corporations and federal contractors in federal campaigns in several sections. (13) FECA defines a contribution, in an exhaustive manner, to include: (i) any gift, subscription, loan, advance, or deposit of money or anything of value made by any person for the purpose of influencing any election for Federal office; or (ii) the payment by any person of compensation for the personal services of another person which are rendered to a political committee without charge for any purpose. (14) The Act also explicitly lists what does not qualify as a contribution to a political campaign. (15)

            Section 30118 covers contributions or expenditures by national banks, corporations, or labor organizations. (16) The section makes it unlawful for any corporation to make contributions in connection to an election, either primary or general, to any political office, convention, or caucus. (17) It further defines contribution as including the standard FECA definition (18) and any applicable electioneering communication. (19) FECA assigns specific rules to these electioneering campaigns as the direct or indirect disbursement of any amount for the costs of communication. (20) The section does, however, create an exception for 501(C)(4) organizations making an expenditure out of segregated funds to which only individuals can contribute. (21)

            Section 30119 deals directly with contributions by government contractors and the prohibition of their financial participation in federal campaigns. (22) FECA defines a government contractor as those who "enter[] . . . . into any contract with the United States or any department or agency thereof." (23) The act further specifically defines what qualifies as a contractor, including: providing or selling services, land, or materials to the United States or any department or agency "if payment for the performance of such contract or payment for such material, supplies, equipment, land, or building is to be made in whole or in part from funds appropriated by the Congress." (24) This prohibition is limited to "any time between the commencement of negotiations for the later of (A) the completion of performance under; or (B) the termination of negotiations for, such contract." (25)

            Additionally under FECA, the FEC has promulgated an administrative procedure for settling complaints of infractions of FECA. The FEC "must attempt to resolve its enforcement cases or Matters Under Review (MURs)." (26) The FEC accomplishes this "through a confidential investigative process that culminates in a conciliation agreement with the respondent(s)." (27) There is also a provision that allows the FEC or the respondents to pursue the matter in court. (28)

   2. Parallel State Development of Campaign Finance Regulation

      States have largely not mirrored federal developments and many have a wide variety of campaign finance regulations. (29) While the majority of states have some type of contribution limit, twelve states do not. (30) The remaining thirty-eight states vary greatly in their restraints on political donations. (31) This is illustrated by the disparate limits on individual donations: (32)

      Governor State Senate State House National Average $5,619 $2,507.69 $2,375 National Median $3,800 $1,000 $1,000 Highest Limit $50,000 (New $12,532 (Ohio) $12,532 (Ohio) York) Lowest Limit $500 (Alaska) $170 (Montana) $170 (Montana) This difference in state contribution limits presents the differing views of state-based campaign finance regulations.

      States also have vastly different positions on the participation of corporations in state elections. (33) States are split 22 to 28, with 28 states allowing contributions from corporations, and 22 prohibiting their involvement. (34) In this way, many states have chosen to not follow the FEC and the Federal Government in disallowing corporate campaign contributions. In contrast, many states, including some that allow for unlimited corporate contributions, have proposed bills to call for a constitutional convention. (35) Many of these bills have either failed to pass, expired, or are still under consideration. (36)

   3. The Political Question Doctrine and Questions of Judicial Review of Campaign Finance

      An understanding of the limits of judicial power in political questions is fundamental to understanding judicial intervention and its implications into the FEC regulated sphere. Prior to Baker v...