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From Securities Regulation Daily, October 8, 2013

Supreme Court hears arguments on challenge to constitutionality of limits on individual donations

By Rodney F. Tonkovic, J.D.

The U.S. Supreme Court heard oral arguments today in a case challenging biennial limits on individual campaign donations as unconstitutional. Shane McCutcheon challenged the biennial limit as applied to national party committees, asserting that he wants to support non-candidate committees as permitted by the base limits and without the biennial limits. McCutcheon, joined by the Republican National Committee, also challenged the $70,800 biennial limit on non-candidate contributions (McCutcheon v. Federal Election Commission, October 8, 2103).

Background. Federal law imposes biennial limits on individual campaign contributions of $46,200 to candidate committees and $70,800 to all other committees, of which no more than $46,200 may go to non-national party committees. Per calendar year, the law imposes base limits of $2,500 per election to a candidate committee, $30,800 to a national party committee, and $10,000 to state, local, and district committees combined.

Petition for review. On September 28, 2013 the U.S. District Court for the District of Columbia granted the FEC's motion to dismiss and entered final judgment for the FEC on all counts. In their petition for review, the appellants stated that Buckley v. Valeo's rejection of a facial challenge to a biennial contribution limit was based on an anti-circumvention analysis. The appellants noted that the court dismissed the challenges to the biennial limits as applied to limits on contributions to national-party committees and on candidates for failure to state a claim, despite the fact that there is no long any anti-circumvention interest that now justifies the limits due to base limits imposed after Buckley. The appellants asked the court to impose strict scrutiny and overrule Buckley to the extent that it applies lower scrutiny to contribution limits.

Oral arguments. Bobby R. Burchfield, for Sen. Mitch McConnell, as amicus curiae agreed with the petition's argument that restrictions like those at issue here should receive strict scrutiny review. Justice Ginsburg then noted that contribution limits promote democratic participation by forcing candidates to raise money from a broad spectrum of the electorate. Burchfield disagreed, stating that the limits force like-minded political parties and candidates to compete against each other for an artificially limited pool of money.

Justice Kagan said that if the aggregate limits were removed, she could write checks totaling $3.5 million to the national and state committees and all Congressional candidates. A contribution like this should get you a "very, very special place at the table," she said, wondering if this would reintroduce the soft money scheme of McConnell. Burchfield countered that the Justice was not considering base limits and that under Citizens United gratitude and influence are not considered to be quid pro quo corruption of the type that would sustain the limit here.

U.S. Solicitor General Donald B. Verrilli, Jr. argued on behalf of the FEC that the aggregate limits served to combat corruption by blocking the circumvention of individual limits and by keeping the campaign finance system from being dominated by massive individual contributions. In response to a query by Chief Justice Roberts, Verrilli said that McCutcheon could spend as much money as he wanted to on independent expenditures, which do not create the same risk of corruption.

Justice Ginsburg asked Verrilli about the fact that without limits, money would go to candidates, but, instead, the money now goes to PACs. Verrilli responded that Congress has made the determination that direct contributions pose the risk of quid pro quo corruption and the appearance of corruption. He asserted that the risk of corruption is real, and that if Congress finds that the limits are "deeply disabling" to candidates and parties, it can change the contribution limits.

Erin E. Murphy, arguing on behalf of the appellants, rebutted that most transparent way to make contributions is directly to the candidates, parties, and PACs, but the system does not encourage this. If the Court accepts the government's corruption theory, she said, there is no way to draw the line between independent expenditures and contributing $3.5 million to individuals in small amounts because there will be just as much "gratitude" towards the contributor.

The case is No. 12-536.

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