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No. 08-205


In the Supreme Court of the United States






Solicitor General
Counsel of Record
Department of Justice
Washington, D.C. 20530-0001
(202) 514-2217


Whether, for the proper disposition of this case, the Court should overrule either or both Austin v. Michigan State Chamber of Commerce, 494 U.S. 652 (1990), and the part of McConnell v. FEC, 540 U.S. 93 (2003), which addresses the facial validity of Section 203 of the Bipar tisan Campaign Reform Act of 2002.

In the Supreme Court of the United States

No. 08-205







The Federal Election Commission (FEC) respect fully submits this supplemental brief in response to this Court's order of June 29, 2009. For the reasons set forth below, this case is an unsuitable vehicle in which to re-examine either Austin v. Michigan State Chamber of Commerce, 494 U.S. 652 (1990), or the relevant portion of McConnell v. FEC, 540 U.S. 93 (2003). If the Court reaches those questions, however, it should not overrule either decision. The decisions in Austin and McConnell were correct; a reversal of those decisions would likely invalidate federal legislation that has restricted corpo rate electioneering for over 60 years, as well as similar legislation enacted by many States; and basic principles of stare decisis, including most notably concern with reliance interests, demand adherence to precedent in this case.

A. This Case Is An Unsuitable Vehicle For Re-Examination Of Austin And McConnell

A decision overruling Austin and the relevant por tion of McConnell would call into question the constitu tionality of all federal and state regulation of all inde pendent corporate electoral advocacy, including a fed eral law dating back to 1947 and the laws of dozens of States. Overruling Austin and McConnell would funda mentally alter the legal rules governing participation of corporations-including the Nation's largest for-profit corporations-in electoral campaigns, and would make vast sums of corporate money available for overt elec tioneering. At least three idiosyncratic features of this case make it a particularly unsuitable vehicle for consid ering a course of action that would have such far-reach ing consequences.

1. Appellant is a nonprofit corporation whose stated purpose is expressly ideological: "to promote the social welfare through informing and educating the public on conservative ideas and positions on issues." J.A. 11a. In addition, appellant has represented to this Court that the funds used to finance Hillary: The Movie were raised "overwhelmingly" from individual donations. Ap pellant's Br. 29-34. For those reasons, appellant is, ac cording to its own self-description, a distinctly atypical corporation.

These special features of appellant make it an inap propriate prism through which to view the world of cor porate electioneering. A decision recognizing a constitu tional right for large for-profit corporations to use their general treasuries, as opposed to segregated funds (i.e., PACs), to advocate the election or defeat of candidates for public office would have potentially avulsive conse quences. And because most such corporations engage in businesses that are essentially unrelated to the dissemi nation of political ideas, restrictions on their electioneer ing intrude less significantly on their performance of core functions than is true of a nonprofit advocacy cor poration like appellant. Even many nonprofit corpora tions, including the plaintiff in Austin, see 494 U.S. at 664, receive much more substantial funding from busi ness corporations than appellant claims to receive (at least for the financing of Hillary). Any re-examination of the constitutional rules governing electoral advocacy by for-profit corporations, or by nonprofit corporations that are substantially financed by for-profit businesses, should occur in a case to which such a corporation is a party.1

2. The question the Court has set to the parties is not appropriately raised in this case. Early in this liti gation, appellant asserted a facial challenge to BCRA Section 203, of the kind decided in McConnell. J.A. 23a- 24a. Appellant subsequently announced, however, that it "inten[ded] to abandon th[at] count," 07-CV-2240 Docket entry No. 52, at 1-2 (D.D.C. May 16, 2008), and the parties stipulated to dismiss the facial challenge. See id. Nos. 53 (May 22, 2008), 54 (May 23, 2008). Appel lant's jurisdictional statement did not urge that either Austin or McConnell should be overruled. See FEC Br. 33-34.

Appellant's merits briefs contained, in total, only two paragraphs and a footnote arguing that Austin should be overruled. See Appellant's Br. 30-31; Appellant's Reply Br. 16 n.7. Those briefs did not discuss consider ations of stare decisis, and they did not urge the Court to overrule the relevant portion of McConnell. That is an even more "incomplete presentation" than the "after thought" assault on another campaign-finance principle that this Court rejected three Terms ago. Randall v. Sorrell, 548 U.S. 230, 263 (2006) (Alito, J., concurring in part and concurring in the judgment); see FEC Br. 34- 35. At oral argument, moreover, appellant effectively abandoned its challenge to Austin by (a) acknowledging that General Motors can constitutionally be banned from broadcasting express electoral advocacy and (b) ex pressly "accept[ing] the Court's decision in" FEC v. Wisconsin Right to Life, Inc., 551 U.S. 449 (2007) (WRTL), under which a corporation may use treasury funds for candidate-related broadcast advertising only when the advertising is not the functional equivalent of express electoral advocacy. Tr. of Oral Arg. 9, 55.

Rather than mounting any sustained challenge to Austin or the relevant portion of McConnell, appellant argued (1) that it received insubstantial funding from business corporations to produce Hillary, (2) that Hil lary is a feature-length film meant to be distributed through video-on-demand, and (3) that Hillary does not contain express advocacy or its functional equivalent. Appellant's own litigation choices make this case an un suitable vehicle for reconsidering Austin and McCon nell, particularly given the far-reaching consequences that overruling those decisions would entail. Cf., e.g., United States v. IBM Corp., 517 U.S. 843, 856 (1996). When a plaintiff asserts only as-applied challenges to a statute, the usual course is to consider only those chal lenges. If one or more has merit, the Court should re verse the judgment on that ground. If, as here, those challenges lack merit or are procedurally barred, the proper disposition is to affirm-not to question the stat ute's facial constitutionality.

3. Appellant was a plaintiff in McConnell, joining with other parties to challenge BCRA's restrictions on the use of corporate treasury funds for electioneering communications. Br. for Appellants Paul et al. at 5, McConnell, supra (No. 02-1747). Appellant's brief cited Austin only in a single footnote, which did not urge that the decision be overruled. Id. at 26 n.9. Appellant's party status in McConnell, combined with its failure to urge the overruling of Austin during that massive litiga tion conducted to resolve facial constitutional challenges to BCRA, would render particularly inappropriate a decision by the Court to reverse either of those decisions in this litigation.

B. The Court's Decision In Austin Was Correct And Should Not Be Overruled

The Court in Austin held that corporations may con stitutionally be prohibited from financing electoral advo cacy with funds derived from business activities. That holding was correct when issued and should not be over turned now. Use of corporate treasury funds for elec toral advocacy is inherently likely to corrode the politi cal system, both by actually corrupting public office- holders and by creating the appearance of corruption. Moreover, such use of corporate funds diverts sharehold ers' money to the support of candidates whom the share holders may oppose.

Congress's interest in preventing these pernicious consequences is compelling, and Congress has chosen a valid means of achieving it-requiring a corporation to fund its electoral advocacy through the voluntary contri butions of officers and shareholders who agree with its political statements. For the Court to overrule Austin now would open the political system, at every level of our representative democracy, to a form of corporate influence that federal law has proscribed since 1947. And it would do so in direct affront to Congress, which conducted years of factfinding and debate in reliance on Austin's holding that corporations may constitutionally be required to finance electoral advocacy with funds donated specifically for political purposes.

1. The Court in Austin correctly held that business cor porations may be barred from using treasury funds for electioneering, either directly or through conduits

The Court in Austin rested its decision on three ba sic propositions. First, electoral advocacy by for-profit corporations poses distinct risks, both to the public in terest and to the corporation's shareholders, that are not implicated by individual electioneering. 494 U.S. at 658-660. Second, electoral advocacy by non-profit, non- stock corporations poses similar dangers if such corpo rations are allowed to serve as conduits for spending by for-profit corporations. Id. at 664. Third, the option of engaging in electoral advocacy through a separate seg regated fund is for most corporations a constitutionally sufficient alternative to the use of general treasury mon ies. Id. at 660-661. In endorsing those propositions, Austin is scarcely an outlier. Rather, those holdings are consistent with decades of federal legislation, as well as with this Court's case law both before and after Austin was decided.

a. i. Congress first recognized the special problem of corporate money in electoral politics more than a cen tury ago, in 1907, when it banned corporate contribu tions to federal election campaigns. Congress similarly banned union contributions during World War II. In the wake of that ban, a dispute arose over whether the stat utory term "contributions" encompassed independent expenditures. Extensive study of the efficacy of those prohibitions on corporations and unions led Congress to conclude that independent expenditures had frequently been used to evade the contribution bans. See United States v. International Union UAW, 352 U.S. 567, 579- 584 (1957) (UAW).

Accordingly, in the Taft-Hartley Act, Congress barred both corporations and unions from using their treasury funds for "expenditure[s]" on federal elections. Labor Management Relations Act, 1947, ch. 120, § 304, 61 Stat. 159; see UAW, 352 U.S. at 589 (prohibition ap plies to "the use of corporation or union funds to influ ence the public at large to vote for a particular candidate or a particular party"); FEC v. Massachusetts Citizens for Life, Inc., 479 U.S. 238, 248-249 (1986) (MCFL) (con struing the term "expenditure," in the context of regu lating independent candidate-related communications, to require "express advocacy" of the candidate's election or defeat). Congress has since re-enacted the expendi ture prohibition, while expressly authorizing corpora tions and unions to establish and administer separate segregated funds for election-related spending. See Pipefitters Local Union No. 562 v. United States, 407 U.S. 385, 409-412 (1972) (discussing 1971 revision); 2 U.S.C. 441b. "This careful legislative adjustment of the federal electoral laws, in a cautious advance, step by step, to account for the particular legal and economic attributes of corporations and labor organizations war rants considerable deference." FEC v. National Right to Work Comm., 459 U.S. 197, 209 (1982) (NRWC) (cita tion and internal quotation marks omitted).

ii. Corporate participation in candidate elections creates a substantial risk of corruption or the appear ance thereof. Corporations can use electoral spending to curry favor with particular candidates and thus to acquire undue influence over the candidates' behavior once in office. See Austin, 494 U.S. at 678 (Stevens, J., concurring) (concluding, with respect to "corporate par ticipation in candidate elections," that "the danger of either the fact, or the appearance, of quid pro quo rela tionships provides an adequate justification for state regulation of both expenditures and contributions"). The record in McConnell-which is by far the most ex tensive body of evidence ever compiled on these is sues-indicated that, during the period leading up to BCRA's enactment, federal office-holders and candi dates were aware of and felt indebted to corporations and unions that financed electioneering advertisements on their behalf or against their opponents. See McCon nell v. FEC, 251 F. Supp. 2d 176, 623-624 (D.D.C. 2003) (Kollar-Kotelly, J.); see also id. at 555-560 (discussing evidence).

The nature of business corporations makes corporate political activity inherently more likely than individual advocacy to cause quid pro quo corruption or the ap pearance of such corruption. Even minor modifications in complex legislation have great potential to benefit or burden particular companies, industries, or sectors. The economic stake of corporations in the nuances of such matters as industry-specific tax credits, subsidies, or tariffs generally dwarfs that of any set of individuals. And when those benefits can be obtained through a game of "pay to play," corporations are better suited than individuals to afford the ante. Corporate managers need not assemble a coalition of the like-minded; they can draw on the firm's entire capitalization without seeking the approval of shareholders. If only businesses can afford the investment necessary to pursue rents in this way, only businesses can reap the (even larger) re ward. See, e.g., McConnell, 251 F. Supp. 2d at 491, 511- 512 (Kollar-Kotelly, J.). And the public perception that businesses reap such rewards from legislators whom they supported in campaigns creates an appearance of corruption that corrodes popular confidence in our de mocracy. Id. at 517.

Corporations, moreover, are artificial persons en dowed by government with significant "special advan tages" that no natural person possesses. NRWC, 459 U.S. at 207. Well before Austin, this Court recognized the need for "particularly careful regulation" to limit the effect of those corporate special advantages on the polit ical process. Id. at 209-210; see id. at 207; MCFL, 479 U.S. at 256-257. Because corporations do not age, retire, or die, they can amass great wealth from their business activities even while changing owners, directors, and officers as needed. Corporations also benefit from lim ited liability; by permitting investors to contribute with out taking responsibility for the corporations' actions, state law promotes corporations' accumulation of invest ment capital. See, e.g., Grojean v. Commissioner, 248 F.3d 572, 575 (7th Cir. 2001) (Posner, J.). The govern ment may take into account in its regulatory framework these state-created "advantages unique to the corporate form." Austin, 494 U.S. at 665.

A restriction on individuals' independent election- related spending, moreover, would intrude far more deeply on First Amendment values because it would prevent individuals from spending their own money to express their own electoral preferences. That is not the case with corporate spending, which does not reflect the personal views of the officers (who cannot appropriately spend corporate money for purposes of personal self- expression), the customers or shareholders (whose polit ical preferences officers do not and generally cannot ascertain), or the corporation itself (which is an artificial entity that has no "beliefs" to express). Thus, while re strictions on the use of treasury funds for electioneering may prevent corporate officers from utilizing one effec tive means to further the corporations' economic inter ests, those restrictions do not hinder the expression of any natural person's ideas.2

iii. The Court did not decide in Austin or McConnell whether the compelling interest in preventing actual or apparent corruption provides a constitutionally suffi cient justification for prohibiting the use of corporate treasury funds for independent electioneering. Nor did the Court's previous decisions resolve that question. In Buckley v. Valeo, 424 U.S. 1 (1976) (per curiam), this Court struck down an independent-expenditure limit that applied to all persons, concluding that "the inde pendent advocacy restricted by the provision does not presently appear to pose dangers of real or apparent corruption comparable to those identified with large campaign contributions." Id. at 46. Whatever the accu racy of that assessment with respect to individual inde pendent expenditures as of 1976, the record compiled in McConnell indicated that corporate spending on candidate-related speech, even if conducted independ ently of candidates, had come to be used as a means of currying favor with and attempting to influence federal office-holders. If for-profit corporations were permitted to use treasury funds to finance all forms of candidate- related expression-both everything permissible before BCRA and the express advocacy that has long been for bidden by 2 U.S.C. 441b-the risk of corruption and the appearance of corruption would only increase.

If the Court regards the fact or extent of that risk as uncertain, that doubt provides no ground for overruling Austin. Nor does the conclusion of the Buckley Court, offered 33 years ago without specific consideration of the distinct risks posed by corporate electioneering, pro vide a sound basis for discounting the import of the mas sive and much more recent McConnell record. Rather, if the Court concludes that the proper disposition of this case turns on the likelihood that unrestricted corporate electoral advocacy would lead to actual or apparent cor ruption, the Court should remand the case for eviden tiary proceedings in the district court.

iv. Restrictions on the use of treasury funds for cor porate or union electioneering also "protect the individu als who have paid money into a corporation or union for purposes other than the support of candidates from hav ing that money used to support political candidates to whom they may be opposed." NRWC, 459 U.S. at 208. Even before Austin, this Court had recognized the legit imacy of that interest. See ibid.; MCFL, 479 U.S. at 260. See generally Adam Winkler, "Other People's Money": Corporations, Agency Costs, and Campaign Finance Law, 92 Geo. L.J. 871, 928-930 (2004) (explaining that support for the Taft-Hartley expenditure limitation was based in large part on the need to protect dissenting union members and shareholders). Persons who buy shares in for-profit corporations entrust money to the corporations' managers because of their business acu men, not their political ideology, and the purchase of corporate stock does not imply any intent to subsidize electoral advocacy.

If Austin were overruled, investors could not practi cably divest from or avoid acquiring interests in corpo rations that engage in electioneering. Investors in mu tual funds and beneficiaries of pension funds cannot eas ily monitor election-related expenditures by the various corporations in which the funds invest over time. And an individual's decision to eschew all mutual funds that might invest in a particular corporation's shares could substantially limit his investment options. Even for the shrinking minority of investors who own shares directly, see Alicia D. Evans, A Requiem for the Retail Investor?, 95 Va. L. Rev. 1105, 1105 (2009) (noting that "retail in vestors own less than 30%" of the stock of U.S. corpora tions), keeping track of the corporation's electioneering may be difficult, see Austin, 494 U.S. at 674 n.5 (Bren nan, J., concurring), and the capital-gains tax will often impose a financial disincentive to divestment.

This Court has approved protections against the use of investors' money without their consent to finance speech with which they disagree, as well as protections against the use of compulsory union dues for political purposes. MCFL, 479 U.S. at 260 (noting the Court's "acknowledg[ment of] the legitimacy of this concern" in both corporate and union contexts). Indeed, in the union context, the Court has recognized that the use of funds exacted from an individual for political or ideological messages with which that individual disagrees can itself be a First Amendment injury. Abood v. Detroit Bd. of Educ., 431 U.S. 209, 235-236 (1977); cf. United States v. United Foods, Inc., 533 U.S. 405, 410-411 (2001). Al though an investor in corporate stock has no similar con stitutional right to insist that the funds he contributes not be used for electoral advocacy, Congress and state governments may appropriately act to protect sharehold ers' interests in avoiding unwanted subsidization of elec tioneering.

b. For the foregoing reasons, Congress and state legislatures may constitutionally prohibit for-profit cor porations from using their general treasuries (as op posed to segregated funds, or PACs) for electoral advo cacy. In order to prevent those corporations from ac complishing the same purpose indirectly, Congress and the States may also forbid nonprofit corporations from engaging in electoral advocacy with funds received from for-profit corporations. See Austin, 494 U.S. at 664; id. at 673-674 (Brennan, J., concurring); MCFL, 479 U.S. at 262, 264.

In MCFL, the Court identified a limited class of cor porations that are constitutionally exempt from Section 441b's prohibition on the use of corporate treasury funds for express advocacy because their political spending does not raise the dangers at which the prohibition is directed. 479 U.S. at 256-265. That exemption is avail able only to nonprofit corporations that, inter alia, de cline to accept contributions from business corporations or labor unions. Id. at 264; see McConnell, 540 U.S. at 211; Austin, 494 U.S. at 664; note 1, supra. The Court in MCFL explained that this limitation on the scope of the exemption "prevents such corporations from serving as conduits for the type of direct spending that creates a threat to the political marketplace." 479 U.S. at 264.

To extend a constitutional exemption to all nonprofit corporations, including those (like the plaintiff in Aus tin, see 494 U.S. at 664) that accept substantial funding from business corporations, would provide a ready means for business corporations to circumvent the ban on their use of treasury funds for direct electoral advo cacy. The record compiled in McConnell revealed that, even when business corporations could lawfully finance candidate-related advertisements (without express ad vocacy) in their own names, they often chose instead to do so "while hiding behind dubious and misleading names" and straw organizations. McConnell, 540 U.S. at 196-197 (quoting McConnell, 251 F. Supp. 2d at 237); cf. Caperton v. A.T. Massey Coal Co., 129 S. Ct. 2252, 2257 (2009) ("And For The Sake Of The Kids"). If this Court were to hold that the challenged restrictions on corporate electioneering are constitutional as applied to for-profit corporations, but that nonprofit corporations are categorically exempt from those restrictions, the incentive to use nonprofits as conduits would be substan tially increased.

c. "[U]nder BCRA," as under the pre-existing limits on corporate electoral advocacy imposed by 2 U.S.C. 441b, "corporations and unions may not use their gen eral treasury funds" for electioneering, but they may "organize and administer segregated funds, or PACs, for that purpose." McConnell, 540 U.S. at 204; see NRWC, 459 U.S. at 201. Any shareholder or executive can voluntarily contribute to a corporation's PAC. BCRA Section 203, like Section 441b in its pre-BCRA form, thus restricts the manner in which funds for elec tioneering may be raised rather than the speech in which the corporation may engage. It is therefore "'sim ply wrong' to view" those provisions "as a 'complete ban' on expression rather than a regulation." McConnell, 540 U.S. at 204 (quoting FEC v. Beaumont, 539 U.S. 146, 162 (2003)).

The requirement that corporations and unions con duct their electioneering through PACs furthers the compelling government interests described above while allowing meaningful corporate and union participation in electoral campaigns. By ensuring that corporate elec tioneering is funded solely by willing donors, the PAC- financing requirement prevents corporations from ac quiring undue electoral influence-with all its potential for actual or apparent corruption of office-holders- through the special state-created advantages of the cor porate structure. The requirement also ensures that individuals may invest in shares of business corporations without subsidizing electoral communications with which they disagree.

The PAC option has proved to be a workable and effective mechanism by which individuals (including in dividuals affiliated with corporations and unions) who wish to contribute to political activity can pool their re sources for effective electoral advocacy. During the 2007-2008 election cycle, federal PACs raised $1.2 bil lion, of which $840 million was raised by corporations' and unions' separate segregated funds. See FEC, Sum mary of PAC Activity (Apr. 24, 2009) <http://www.fec. gov/press/press2009/20090415PAC/documents/4sumhi story2008_000.pdf>. And although the formation of a PAC does entail some administrative burden, appellant has already chosen to incur that burden: it has main tained a PAC for 15 years. J.A. 226a.

2. The decision in Austin ratified a longstanding princi ple of federal and state election law on which Con gress has subsequently relied and that should not now be abandoned

a. As explained above (see p. 7, supra), Congress has prohibited corporate treasury contributions to fed eral candidates since 1907, and since 1947 it has barred the use of corporate treasury funds for independent ex penditures in federal election campaigns. That long standing congressional judgment, on a matter (the con duct of federal elections) as to which federal legislators have particular expertise, is entitled to this Court's re spect. At the time Austin was decided, moreover, 20 States already barred electioneering expenditures by corporations. J.S. at 16 n.13, Austin, supra (No. 88- 1569). Like 2 U.S.C. 441b, many of those state regimes (including the Michigan law at issue in Austin) forbade the use of corporate treasury funds for electioneering but authorized corporations and unions to create and administer segregated funds to finance election-related spending. Because overruling Austin would negate a longstanding and central principle of federal and state campaign-finance law, concerns of stare decisis have especial force.

Precisely because federal restrictions on corporate electioneering have been in place for so long, the conse quences of a decision recognizing a constitutional right for all corporations to use general treasury funds for electoral advocacy are difficult to predict. During the 2007-2008 election cycle, however, FEC-registered polit ical parties spent $1.5 billion, and federal PACs spent $1.2 billion, while the Fortune 100 companies had com bined revenues of $13.1 trillion and profits of $605 bil lion. If those 100 companies alone had devoted just one percent of their profits (or one-twentieth of one percent of their revenues) to electoral advocacy, such spending would have more than doubled the federally-reported disbursements of all American political parties and PACs combined. Cf. Austin, 494 U.S. at 659 (noting concern about "corporate domination of the political pro cess"). That amount of corporate cash pouring into the political system, as earlier suggested, could dramatically increase the reality and appearance of quid pro quo cor ruption. Even the possibility of such a result counsels restraint in reversing prior decisions.

b. Particularly once Austin was decided, Congress and state legislatures were entitled to take as given that corporations could constitutionally be barred from using treasury funds for at least some forms of electoral advo cacy. Based on that understanding, Congress devoted extraordinary time and energy to the consideration of potential refinements to the federal campaign-finance regime. The bills that culminated in BCRA were de bated for weeks and amended dozens of times during the seven years between initial introduction and BCRA's ultimate enactment. Those legislative debates reflected individual Members' understanding of, and careful at tention to, this Court's decision in Austin. See, e.g., 147 Cong. Rec. 4895 (2001) (statement of Sen. Snowe, co- sponsor of Section 203); id. at 4899, 4905-4907 (views of legal scholars); id. at 5003 (statement of Sen. Feingold).3

Austin itself involved express electoral advocacy, see 494 U.S. at 714 (appendix to opinion of Kennedy, J., dis senting) ("Elect Richard Bandstra"), and the Court did not delineate precisely which corporate-funded commu nications can properly be treated as electioneering. But given this Court's decision in Austin, Congress was enti tled to conclude that it had some authority to act in this area. Overruling Austin now would tell Congress, long after the fact, that its extraordinary effort to craft a con stitutionally acceptable standard was a pointless en deavor.

c. Numerous provisions of BCRA, including its defi nition of "electioneering communication" and its ban on the use of corporate treasury funds for communications falling within that definition, were promptly challenged by a broad range of plaintiffs, including appellant. The parties compiled a voluminous record, and the proceed ings in this Court included an extraordinary four-hour oral argument. The plaintiffs who challenged Title II of BCRA, however, did not urge the overruling of Austin, and they did not dispute the government's general au thority to prohibit the use of corporate treasury funds for express electoral advocacy. Rather, they contended that the challenged BCRA provisions unduly burdened corporate speech that mentions federal candidates but is not calculated to influence federal elections. See McConnell, 540 U.S. at 205-206. The McConnell plain tiffs' acceptance of Austin as controlling precedent, dur ing the expedited proceeding authorized by Congress to facilitate prompt clarification of the rules that govern in this area, underscores the absence of any "special justifi cation," e.g., IBM Corp., 517 U.S. at 856 (citation omit ted), for overruling Austin now.

C. The Relevant Holdings Of McConnell Were Correct And Should Not Be Overruled

Over the many decades that Congress required cor porations to fund express advocacy using voluntary PAC contributions, corporations increasingly came to use their treasuries to fund advertisements that omitted "magic words" of express advocacy but that functioned no differently. Voluminous evidence confirmed that the interests recognized in Austin extend to election-eve communications that are the functional equivalent of express advocacy. The facts have not changed, and there is no sound basis for rejecting the McConnell Court's determination that BCRA Section 203 is consti tutional.

1. The Court in McConnell correctly held that express advocacy and its functional equivalent may be treated alike, and that BCRA's definition of "elec tioneering communication" is not facially overbroad

After extensive study and evidence-gathering over several sessions, Congress concluded that the existing restriction on corporation- and union-funded express advocacy had become ineffective. "Corporations and unions spent hundreds of millions of dollars" on adver tising "specifically intended to affect election results." McConnell, 540 U.S. at 127. Those advertisements overtly attacked the character, qualifications, and fit ness for office of federal candidates, but they were not subject to Section 441b under then-prevailing law be cause they did not include "magic words" of express ad vocacy. The record of the McConnell litigation amply bore out Congress's conclusions. See id. at 126, 193; McConnell, 251 F. Supp. 2d at 526-568 (Kollar-Kotelly, J.) (collecting advertisements); id. at 875-889 (Leon, J.) (same).

BCRA Section 203 was a targeted response. Consis tent with the Court's recognition in Austin of the com pelling governmental interests that justify barring cor porations and unions from spending their general trea sury funds on electioneering, Section 203 applied the same financing restriction to "electioneering communica tions," a term defined (and temporally limited) to cap ture advertisements that were electoral advocacy in sub stance if not in form. 2 U.S.C. 434(f)(3), 441b(b)(2). If corporations or unions wish to finance electioneering communications, they may do so through their separate segregated funds. 2 U.S.C. 441b(b)(2)(C).

As explained above, the plaintiffs in McConnell ar gued that BCRA's definition of "electioneering communi cation" encompasses an unduly broad range of speech that mentions federal candidates but is not intended to influence electoral outcomes. The Court rejected that facial challenge. Based on a voluminous record, the Court concluded that "the vast majority" of advertise ments encompassed by the electioneering communica tion provision had no functional difference from adver tisements regulated as express advocacy, and that the previously existing statutory dividing line had proved to be a "functionally meaningless" set of magic words. McConnell, 540 U.S. at 193, 206; see id. at 126-127, 131- 132, 193-194, 206-207.

The relevant holdings in McConnell rest on two sub sidiary conclusions. First, the Court held that the for mer "express advocacy" test was not constitutionally compelled, and that Congress could permissibly restrict the use of corporate treasury funds for communications that do not contain "magic words" but that are calcu lated to affect electoral outcomes. Second, the Court held that BCRA's definition of "electioneering communi cation" is a sufficiently accurate proxy for this kind of electoral intent to withstand a facial challenge. No sound basis exists for reversing either of those conclu sions now. If, under Austin, corporations may constitu tionally be forbidden from using treasury funds to fi nance advertisements that expressly urge the election or defeat of federal candidates, then they likewise have no constitutional right to use treasury funds for the "func tional equivalent" of express advocacy. And appellant has offered no new empirical evidence casting doubt on the McConnell Court's conclusion that "the vast major ity" of "electioneering communications," as defined by the statute, were indeed calculated to influence electoral outcomes.

2. No sound justification exists for overruling the rele vant holdings in McConnell

Even if the relevant portion of McConnell were open to more substantial question, there are at least three reasons-in addition to the general importance of stare decisis and appellant's previous failure to urge overrul ing of that decision-for the Court to decline to overrule McConnell now.

a. This Court's intervening decision in WRTL has eliminated any significant risk that BCRA's restrictions on corporate financing of "electioneering communica tions" will be applied to speech that is not actually calcu lated to influence federal elections. In WRTL, the Court concluded that BCRA's PAC-financing requirement is constitutional as applied to particular communications if, but only if, a communication is the "functional equiva lent" of express advocacy, 551 U.S. at 465 (opinion of Roberts, C.J.)-i.e., if the communication "is susceptible of no reasonable interpretation other than as an appeal to vote for or against a specific candidate," id. at 470. Thus, if some number of "electioneering communica tions" are not the functional equivalent of express advo cacy, the as-applied constitutional exemption recognized in WRTL (and subsequently codified by the FEC, see 11 C.F.R. 114.15) ensures that BCRA Section 203 does not apply to those communications.

b. The FEC has provided a simple mechanism for corporations and unions to claim that a particular electioneering communication is permissible under WRTL. See FEC Form 9 (2007) < pdf/forms/fecfrm9.pdf>. In the short time between the FEC's implementation of WRTL and the 2008 election, corporations and unions reported spending $108.5 mil lion on electioneering communications that fell within the WRTL exemption. See FEC, Electioneering Com munication Summary (visited July 23, 2009) <http://>. That experience suggests that the standard articulated in WRTL has not chilled the use of corporate treasury funds for speech that falls within BCRA's definition of "electioneering communication" but is not the functional equivalent of express advocacy.

c. Congress anticipated that constitutional chal lenges to BCRA would be brought, and it established a mechanism for expedited review of such challenges, in cluding a right of direct appeal to this Court. See BCRA § 403(a), 116 Stat. 113. In McConnell, the parties com piled a massive record, and the district court and this Court issued voluminous opinions resolving a variety of constitutional challenges to the statute. Congress's evi dent intent to provide prompt clarification of the rules that apply in the campaign-finance context, and the ex traordinary resources devoted by the courts and the parties to the McConnell litigation, weigh heavily against overruling a significant aspect of that decision now.


For the foregoing reasons, as well as those stated in the answering brief and at oral argument, the judg ment of the district court should be affirmed.

Respectfully submitted.

Solicitor General

JULY 2009

1 This Court has held that certain small, ideologically-oriented cor porations are constitutionally entitled to use their treasury funds for independent electoral advocacy if, inter alia, they have a policy against accepting contributions from business corporations or labor unions. See FEC v. Massachusetts Citizens for Life, Inc., 479 U.S. 238, 264 (1986) (MCFL); FEC Br. 3. Thus, corporations having the attributes that appellant says it possesses-i.e., corporations that rely principally on individual donations but that nevertheless fail to qualify for the MCFL exception-are likely to be both rare and unrepresentative of the corporations that would be most substantially affected by a decision overruling Austin and McConnell. Some courts before McConnell, and one court afterward, have held that a corporation may claim the MCFL exemption even if it raises de minimis sums from corporate donations or business revenue. See, e.g., Colorado Right to Life Comm., Inc. v. Coffman, 498 F.3d 1137, 1148-1151 (10th Cir. 2007); see also 63 Fed. Reg. 29,359-29,360 (1998) (discussing disagreement among lower courts). If appellant's overall operations are financed "overwhelmingly" by individual donations, as it asserts is true of the financing of Hillary, appellant would appear to be covered by these decisions.

2 As Judge Kollar-Kotelly explained in her opinion in McConnell, corporations during the pre-BCRA period frequently financed adver tisements that praised or criticized candidates based on issues unre lated to the mission of the financing corporation. 251 F. Supp. 2d at 613-614. A similar phenomenon has been observed in state judicial elec tions, where business and union advertising often focuses on candidates' records on crime rather than on issues of special concern to the cor porate or union speaker. See, e.g., Thomas R. Phillips, The Merits of Merit Selection, 32 Harv. J.L. & Pub. Pol'y 67, 81 & n.63 (2009); Dee J. Hall, High Court Races as Barroom Brawls, Wis. State J., Apr. 6, 2008, at A1 (describing corporate-funded advertisement calling state judge "Loophole Louie"). That pattern of behavior reinforces the understan ding that, for corporations and unions, electoral advocacy is a means to an end rather than an expression of political conviction.

3 On the state level, use of corporate treasury funds for electioneer ing is currently prohibited by at least 22 States (and strictly limited by two more), including some that have adopted their statutes since Austin and in reliance on it. See, e.g., State v. Alaska Civil Liberties Union, 978 P.2d 597, 608-610 (Alaska 1999), cert. denied, 528 U.S. 1153 (2000); Ariz. Rev. Stat. Ann. §§ 16-917(C), 16-919, 16-920 (2006).