UPDATES & ANALYSIS

More Analysis on Iowa Right to Life v. Tooker: Less Disclosure, Future Litigation

by Colin Smith | June 13, 2013

By Colin Smith

Today’s Eighth Circuit ruling in Iowa Right to Life v. Tooker is the most significant Iowa election law case in memory and its legal conclusions will have an impact in Iowa and beyond.  As we have discussed before, the Tooker case began when Iowa Right to Life filed a legal challenge to several provisions of Iowa’s campaign finance statute.  Iowa Right to Life was unsuccessful in the lower courts.  However, led by the prolific conservative election lawyer James Bopp Jr., Iowa Right to Life has found a reversal of fortunate on appeal at the Eighth Circuit.

On appeal, Iowa Right to Life made four distinct arguments, but only three of them are significant (the fourth argument was dismissed for lack of standing).  The three arguments dealt with different issues: Iowa’s corporate political spending disclosure rules, Iowa’s ban on direct corporate contributions to candidates running for office, and Iowa’s requirement that a corporation obtain prior authorization from its board of directors and officers before engaging in political spending.  The Eighth Circuit today struck down the majority of Iowa’s disclosure requirements, upheld the state ban on corporate contributions, and struck down, in part, Iowa’s board and officer authorization rules.  The following is a detailed analysis of some of the important aspects of today’s decision.

Disclosure Rules Take a Beating

As a practical matter, the ruling by the Court that many of Iowa’s political disclosure laws were unconstitutional is the most important part of the decision.  Generally speaking, under the U.S. Supreme Court’s decision in Citizens United v. FEC and the Eighth Circuit’s earlier en banc decision in Minnesota Citizens Concerned for Life v. Swanson, political committees (“PACs”) have the “major purpose” of advocating for or against candidates for office.  PACs with this “major purpose” can be subjected to a wide array of regulations, including, but not limited to, relatively rigorous disclosure requirements with respect to political spending.  Non-PAC entities generally cannot be subjected to rigorous disclosure requirements because they do not exist for the “major purpose” of express advocacy; instead, these non-PACs only casually or infrequently expressly advocate for or against candidates.  This is sometimes referred to as the so-called “major purpose” test.  Iowa Right to Life would fit in the latter category because they maintain that they do not exist for the major purpose of advocating with respect to candidates, but instead are engaged in mostly pro-life activities.

Iowa law requires corporations—such as non-profits like Iowa Right to Life—to be subject to certain political disclosure rules if they engage in independent political expenditures.  These disclosure requirements include filing one-time, event driven reports within forty-eight hours of making an independent expenditure.  The law also requires that after the corporation makes its first expenditure, that it continue to file periodic ongoing reports and supplemental reports detailing its political spending over time.  These ongoing reports are required on a repeat basis indefinitely, regardless of whether or not the corporation is making any additional independent expenditures at all.  When a corporation wishes to stop making independent expenditures, or wishes to relieve itself of further periodic reporting requirements, it must file a termination statement.  These reporting requirements for corporations are roughly the same as they are for PACs.

Iowa Right to Life contended that treating corporations the same as PACs with respect to disclosure reporting, even when the corporation did not possess a PAC-like “major purpose,” was constitutionally burdensome on the ability of corporations to generate political speech.  Or, in other words, the Iowa law imposed “PAC-style burdens on non-PAC entities” contrary to Citizens United and Swanson.  Specifically, Iowa Right to Life claimed that the ongoing reporting requirements and the termination statement requirements were constitutionally burdensome because they imposed costs—in time, personnel, resources, etc.—on their ability to speak.  And if Iowa Right to Life didn’t comply with these costly burdens, they faced the prospect of being “discouraged” from engaging in political activity or “sacrificing” their constitutional rights.  The Eighth Circuit agreed.

The Tooker court ruled today that the State of Iowa may constitutionally require that a corporation whose major purpose is not express advocacy to file one-time, event-driven disclosure reports each time the corporation makes an independent expenditure.  This is constitutionally permissible because the state and the public have an “informational interest” in knowing who was speaking and how much they spent.  The Tooker court alternatively ruled that the ongoing, supplemental, and termination reports were unconstitutional because they impose repeated and sustained burdensome costs on a corporation, regardless of whether or not the corporation makes any more expenditures after the initial one.  The Court impliedly took the position that requiring a disclosure of information at the time of the corporation’s political speech is less burdensome in comparison to the negligible costs imposed by the reporting, but continuing to require costly disclosure reporting forever after the first time the corporation “speaks,” even though there may never be anything else to disclose, effectively burdens the corporation unreasonably simply for choosing to participate in the political process.  In short, this ruling can be considered a loss for advocates of corporate political disclosure and a victory for those who prefer less regulation on the production of political speech by corporations.

Corporate Political Contributions Are Still Illegal….For Now

The second most important point from today’s ruling is that corporations still cannot donate directly to candidates.  Since the U.S. Supreme Court’s opinion in FEC v. Beaumont, it’s been constitutional to ban corporations from giving contributions directly to candidates.  However, this ban on corporate donations has been on “shaky ground” since the Supreme Court’s ruling in Citizens United, which suggested that corporations should not be treated differently with respect to political activity than regular individuals.  Citizens United did not involve a ban on corporate political contributions, but much of the dicta in the case appeared to imply that the High Court might be willing to revisit its earlier Beaumont decision in the future.  But the Eighth Circuit, is bound to follow the Beaumont decision because it has not (yet) been explicitly overruled.  Therefore, the Tooker court upheld Iowa’s ban on direct corporate contributions.

What This Case Means For 2014

With a wild election season brewing on the horizon, this case could have an impact in Iowa and elsewhere.  In Iowa, it means that a much lower number of disclosure reports are going to be filed.  Instead of seeing a wave of disclosure reports from certain entities on a periodic basis, now the forms will likely come simultaneously with, or contemporaneously to, expenditures by those that wish to engage in political spending.  This could potentially result in more “hit and run” organizations that pop up to make one or two expenditures and then cease speaking. Or it could result in the rise of “fourth quarter” organizations that concentrate their activity in the period of time very near to an election to minimize their political adversaries’ ability to respond to the “source” of their message.  Either one of these types of organizations could influence public opinion in the 2014 races.

The other possibility is that this ruling could ignite another conversation about campaign finance reform. Several politicians in Iowa have tried to re-start this issue, with little success.  If Iowa opts to take on a reform effort it may have ripple effects to other states.  Likewise, this ruling striking down Iowa’s disclosure laws will likely compel other states to re-examine their own.

This Case Is Far From Over

Although the Eighth Circuit reached the merits of several of Iowa Right to Life’s claims, they did not conclusively decide them all.  Iowa Right to Life claimed that Iowa’s law requiring corporations to receive prior approval from their boards of directors and/or corporate officers before making independent expenditures was unconstitutional for two reasons.  First, they claimed that it was a violation of their First Amendment rights to free speech because the state should not “decide how” an organization generates political speech.  Second, they argued that since many entities and groups—such as LLCs, partnerships, and the like—do not have officers or a board of directors, that the law was treating corporations differently than other political speakers in violation of the Equal Protection Clause.  The Court today did not decide these issues, but instead remanded them back to the district court for a hearing on the merits because the court below did not fully consider them due to standing issues.  These arguments will be fully litigated in the district court in the future so time will tell whether or not these arguments will succeed.

The other way this case could be prolonged would be if Iowa Right to Life, or the State of Iowa, files a petition for writ for certiorari to the U.S. Supreme Court to decide the issues that they respectively lost.  This is a possible scenario, and one that each side may carefully consider.  Of the two parties, it is more likely that the State of Iowa would have the better arguments for a Supreme Court review because the disclosure related issues raised in this case are a hot topic in current election law jurisprudence.  If either party opts to ask the Supreme Court to hear the case, it will be a cert petition worth watching.

The Door Is Now Open To Future Iowa Election Law Challenges

The Court implied today that there may be future challenges to Iowa’s election laws that could be waiting in the wings.  Without identifying them specifically, the Court’s opinion alludes to two of them.  First, the Court noted—rightly—that the Iowa Supreme Court’s earlier certified question ruling in this case might contain a linguistic Pandora’s Box for future Iowa election litigation.  Recall that the “major purpose” distinction between PACs and non-PAC entities is a significant rule in how politically active entities can be regulated.  Those with a “major purpose” of express advocacy can be subjected to higher regulations than those without such a “major purpose.”  But the Iowa Supreme Court used the phrase “primary or major purpose,” and proceeded to use the term “primary purpose” repeatedly throughout its opinion.  Note the difference: the usual test is not a “primary or major purpose” test; it is only a “major purpose” test. An entity might have a “primary” purpose of express advocacy without having it as its “major” purpose.  That’s fodder for a future challenge.

The second potential challenge the Court alluded to relates to Iowa’s definition of a PAC itself.  Iowa defines a PAC as an organization that raises or spends over $750 to expressly advocate for or against a candidate for office, or to expressly advocate for or against a ballot issue.  The Tooker court noted that precedents from other jurisdictions have held that organizations whose major purpose is only to expressly advocate on issues, as opposed to candidates, cannot be classified as PACs.  The litigants in the Tooker case did not raise this issue, but the Court’s mention of it in passing raises the possibility that this statutory definition might someday see its own court challenge.