What Now for Corporations and Campaigns?

Posted February 12, 2010 at 3:04pm

Q: I work on the re-election campaign of a House Member and I have a question about the fallout of the recent Supreme Court decision lifting restrictions on political spending by corporations. As I understand it, although the decision voided some restrictions on corporations’ political spending, it left others in place. For example, I know that there are still limitations on the extent to which my campaign can work jointly with corporations on getting out the message for our Member. I want to make sure that our campaign does not do anything that might run afoul of the rules. With respect to corporations, what is now fair game?

[IMGCAP(1)]A: Good question. In fact, in the wake of the Supreme Court’s landmark decision in Citizens United v. FEC, a lot of people are wondering exactly the same thing. What degree of coordination between corporations and campaigns is now permissible?

In the decision, the Supreme Court held that it is unconstitutional for Congress to ban corporations and labor unions from spending money on their own political ads. Specifically, the court struck down a law that had prohibited corporations and unions from expressly advocating the election or defeat of candidates within 30 days of a primary election and 60 days of a general election. For example, the court said, under the law as it existed, it would have been a felony for the Sierra Club to run an ad within 60 days of a general election that urged the public to disapprove of a Congressman who favors logging in national forests. The court said that making this type of speech a felony violated the free speech clause of the First Amendment. Consequently, corporations and unions are now free to spend money on their own political ads.

However, corporations and unions are not free to make contributions directly to candidates’ campaigns. Citizens United did not change that. This means that your campaign may still not accept money directly from corporations. It also means that your campaign may not accept corporations’ “in-kind” contributions, such as supplies, services or anything else of value.

This is significant because one type of in-kind contribution is what is called a coordinated communication. This is essentially where a corporation and a candidate’s campaign work together on a political ad or communication supporting the candidate. While the court struck down restrictions on “independent expenditures” by corporations and unions on political ads, it did not alter, at least for now, the ban on coordinated communications. The court reasoned that when corporations make independent expenditures on their own ads, the absence of coordination with a candidate alleviates any danger that the expenditures might be a quid pro quo for improper commitments from the candidate.

Broadly then, independent expenditures are permissible but coordinated communications are not. So, what makes a communication coordinated? In general, the rules provide that a corporation’s ad or communication would qualify as coordinated if it were done in cooperation, consultation or in concert with a candidate, a campaign or their agents. For assessing whether a given communication qualifies as being coordinated, the FEC has established a multifactor test based on the content of the communication and the conduct of the people involved.

Under the test, a corporation’s communication may qualify as being “coordinated” if it was created, produced or distributed: (1) at the suggestion of the candidate; (2) with material involvement from the candidate on decisions regarding things like the communication’s content, intended audience or mode; or (3) after a discussion with the candidate or candidate’s opponent in which information about campaign plans, projects, activities or needs material to the communication was conveyed to the corporation. This is true whether the coordination is done with the candidate or someone acting on the candidate’s behalf. Moreover, the rules say that a communication can qualify as being “coordinated” with a candidate even absent agreement or “formal collaboration” with the candidate.

But, this test and these rules may well be in flux. In fact, the distinction between independent expenditures and coordinated communications has been the subject of much disagreement for years and has been litigated many times. Even as Citizens United was being decided, the FEC was again considering changes to the rules regarding what counts as coordination.

Last week, as a direct result of the decision, the FEC reopened the opportunity for public comment regarding the new rules. The FEC’s current official guidance regarding coordinated communications states that portions of the guidance may be affected by Citizens United and that the FEC will publish new guidance as soon as possible. Meanwhile, Congress might also act, as last week top Democrats vowed that they would soon introduce a legislative response to the decision to be enacted in time for elections this fall. For now, all you can do is study the rules and guidance as they currently exist and do your best to comply.

Of course, this leaves open all sorts of questions. For example, now that a corporation’s independent expenditures are unrestricted, does any discussion between the corporation’s employees and a campaign regarding a corporation’s political ad disqualify it from being “independent?” If not, who may discuss the ad and what may they say without it rising to the level of coordination? Is it unconstitutional to restrict discussions between corporations and campaigns regarding political ads?

Unfortunately, I don’t have the answers to these questions. But, they should be answered in the coming months by the FEC, Congress, and, I suspect, the courts. Stay tuned.

C. Simon Davidson is a partner with the law firm McGuireWoods LLP. Click here to submit questions. Readers should not treat his column as legal advice. Questions do not create an attorney-client relationship.