IV. Disclosure’s Oppressive Nature

Campaign finance disclosure can inflict major injuries on speakers. Current campaign finance disclosure laws leave muddled confusion in the wake of attempts to sort out the law’s requirements and details. Disclosure laws are rarely simple, thus keeping many average Americans out of the political process entirely. Furthermore, the particular types of political speech these disclosure laws cover is equally confusing.

A. Lost in Disclosure: Confusion upon Confusion Muffles Speech

When supporters of campaign finance laws promote the benefits of disclosure, they often omit or deny the fact that compliance with political registration and reporting requirements is difficult.93 As the Supreme Court explained in Citizens United v. Federal Election Commission, the “FEC has adopted 568 pages of regulations, 1,278 pages of explanations and justifications for those regulations, and 1,771 advisory opinions since 1975.”94 Under federal law, if a group of neighbors, a community coalition, or a nonprofit organization wishes to spend more than $1,000 addressing political issues possibly related to candidates for federal office, they must wade through this morass.95 If they can even make sense of the law, they may be required to register and report as a political action committee (PAC).96

PAC-style disclosure is not simple. Once forced to report as a PAC, groups must “appoint a treasurer, forward donations to the treasurer promptly, keep detailed records of the identities of the persons making donations, preserve receipts for three years, and file an organization statement and report changes to this information within 10 days.”97 PACs must detail their receipts in ten different categories, account for all disbursements in twelve different categories, inform the government how much cash on hand they have, and much more.98 While the complexity of all this is apparent, some scholars have empirically studied the effect of mandatory disclosure at the state level, unsurprisingly concluding that complicated reporting regimes are difficult to complete for even well-educated citizens.99

The following is a typical scenario illustrating how complexity muffles speech. Imagine a small coalition of citizens in rural Wyoming chipping in funds to raise $10,000 to run a simple message about environmental policy during the 2014 election cycle. Suppose three ranchers contribute $3,000 each and raise the remaining funds from small contributions in the local community. The group wishes to speak out about the Government Litigation Savings Act and link the issue to each candidate’s stances for office.100 While the group does not intend to support or oppose these candidates for election, it wants to get its message out provocatively and in its own words. It also knows people pay most attention to political advertising around elections, so it decides to run its advertisements within a month of the general elections.101

To comply with federal election law, the group must understand whether its speech is considered “express advocacy” or an “electioneering communication.” Technically, these areas are the only type of speech subject to federal regulation.102

This determination is very difficult given the number of administrative complications created by the FEC and contradictory advice issued over the years. Additionally, the group must determine if it is regulated as a PAC or not. This will be just as difficult due to the extensive complicated policies surrounding PAC status. For guidance, the group must hire an attorney familiar with federal election law who can advise them on complying with at least these two issues. To be diligent, the attorney may need to file an advisory opinion request with the FEC asking for its formal guidance, a process taking up to sixty to ninety days after filing.103 Assume the group can find a low-priced, $200-an-hour election law
specialist who can provide initial guidance after ten billable hours.104 If the attorney drafts a formal advisory opinion request and appears before the Commission, this could easily add an additional thirty billable hours.105 Once the FEC issues an advisory opinion, the attorney must explain what it means to the group and how to comply with the law going forward. Assuming this requires another five billable hours,106 the process up to this point totals $9,000 in legal fees.

Once the group understands the law’s reach, and assuming the attorney advises the group to register as a PAC, it must appoint a treasurer to complete its formal bookkeeping.107 It might find a volunteer for this, but treasurers are personally liable under federal election law for the acts of the PAC, thus discouraging volunteers.108 The FEC advises that to ensure “best practices” (a way to prevent higher fines and penalties for violations) or create “safe harbors,” the group should also hire an assistant treasurer.109 To comply with other “best practices” suggestions, the group must adopt specified accounting practices and employ professional compliance experts.110 Whether a group takes these extra steps or not, compliance requires regular reporting, additional legal fees, and administrative costs. At this point, the group has already spent $9,000 of its $10,000 budget simply attempting to understand the law. The group’s remaining $1,000 is hardly sufficient to cover the ongoing compliance costs let alone fund a message.

On the other hand, if the group decides to register as a PAC in the first place, it must still allocate a substantial portion of its meager $10,000 budget to compliance costs. In the 2012 cycle, that meant filing at least seven compliance reports during the year if the group elected to file quarterly with the FEC.111 Assuming an attorney spends two hours per compliance report and bills at $200 an hour, $2,800 of the allocated budget is expended. Add bookkeeping services and formal treasurer costs and costs might double. Less than half of the funds raised may remain to fund the group’s speech.

Under either of these scenarios, disclosure is still touted as helping democracy and ensuring grassroots voices are heard in the political process.112 Few reformers consider how many voices have been shut out and how many grassroots coalitions muted in pursuing this lofty goal.113 Furthermore, these scenarios assume perfect compliance with the law. Failure to comply—be it bookkeeping mistakes, staff scandals, or misunderstanding the law—could result in administrative fines further diminishing available funds. Additionally, the speakers might suffer financial hardship further preventing future participation in the political process.114

States usually follow the FEC’s lead, imposing equally onerous and confusing political speech regulations at the local level.115 For example, in Colorado, concerned citizens opposing annexation of their neighborhood into the town of Parker found themselves mired in the machinery of state campaign finance laws.116

Shortly after they began speaking out, a neighbor with an opposing viewpoint filed a complaint against the six most vocal members, and threatened to file additional complaints against anyone daring to put a yard sign opposing the annexation.117 Fortunately, the Tenth Circuit Federal Court of Appeals deemed the state laws in question unconstitutional as applied, noting that the “average citizen cannot be expected to master on his or her own the many campaign financial-disclosure requirements set forth in Colorado’s constitution, the Campaign Act, and the Secretary of State’s Rules Concerning Campaign and Political Finance.”118

The application of overbroad and onerous disclosure requirements singlehandedly prevents grassroots groups from participating vigorously in national and local debate. The Supreme Court recognized as much in Federal Election Commission v. Massachusetts Citizens for Life: “[A]dditional regulations may create a disincentive for such organizations to engage in political speech. Detailed record-keeping and disclosure obligations, along with the duty to appoint a treasurer and custodian of the records, impose administrative costs that many small entities may be unable to bear.”119 Complex disclosure promotes an interest wholly foreign to the First Amendment: valuing formal compliance with government-mandated disclosure over the constitutional rights of free speech. The examples and scenarios just discussed are but manifestations of what the Supreme Court predicted: Complicated political speech laws render compliance for average Americans difficult and inflict constitutional harms due to the laws’ all-encompassing nature.

B. Disclose What? Even the Experts Get it Wrong

While reformers support meticulous, complex disclosure, they also seek to expand what type of speech triggers such burdens. One might consider this a simple issue, but to comply with a vast federal regulatory system requires some agreement over basic legal terms. It is important to provide basic guideposts of objectivity in any system of regulation, especially when the regulations abut constitutional rights such as free speech.120 Without clear standards, regulators are free to twist, bend, and mold the meaning of the law, penalizing disfavored speakers, consciously or unconsciously. Unfortunately, today’s relevant standards are far from clear.

The Buckley Court went to great lengths to provide objective guidance distinguishing between regulated and unregulated political speech. In doing so, the Court created the “express advocacy formulation,” positing that only words explicitly advocating the election or defeat of a clearly identified candidate could be subject to minimal regulation.121 Issue advocacy, all speech outside this definition—even speech mentioning candidates or commenting on their character—is free from nearly all regulation.122 The Court’s purpose was to establish bright-line standards thereby ensuring easy comprehension, objective measurement, and advance notice of how the law works while protecting against arbitrary enforcement and confusion.123 After all, it is a basic rule of law that people must be able to understand what is expected of them.124

Following Buckley, in an anomaly case in 2003, McConnell v. Federal Election Commission, the Supreme Court temporarily allowed regulation of a limited class of political speech based on a fuzzy, “functional equivalent of express advocacy.”125 However, Supreme Court rulings addressing federal election law challenges after McConnell insist on objective standards, clarity, and simplicity in operation.126 Indeed, in Citizens United, the Court recognized just how convoluted federal election law had become, concluding that it “functions as the equivalent of prior restraint.”127 The Court explained that “a speaker who wants to avoid threats of criminal liability and the heavy costs of defending against FEC enforcement must ask a governmental agency for prior permission to speak.”128 However, in the wake of Citizens United, complexity still plagues the FEC’s regulatory system, making compliance with even some of the most basic elements of federal election law impracticable or impossible.

Moving from the courts to regulatory bodies, agencies often apply more complex and open-ended standards to decide whether speech is regulated. Current FEC regulations, for example, permit the Commission to ask whether speech is too close or too far in time from an election to transform its classification into regulated speech.129 The lack of a clear definition of “too close” or “too far” proves problematic for would-be speakers. Similarly, some FEC commissioners regularly consult a hodgepodge of unknown factors such as divining the “electoral nexus” of speech to decide if it is regulated.130 No one knows exactly what constitutes an electoral nexus, either.

A recent interaction with the FEC demonstrates the confusion surrounding the FEC’s own rules and regulations—even the agency itself could not make sense of its own rules. The Wyoming group Free Speech filed an advisory opinion request with the agency asking, among other things, whether certain advertisements would be considered regulated or not and how to comply with the law.131 One proposed advertisement criticized President Obama for his stance on the Government Litigation Savings Act and asked citizens to get “engaged” and “educated” “this November,” ending with a request to “call your neighbors” and “talk about ranching.”132 Half of the commissioners believed that the advertisement was issue advocacy—thus, unregulated—because different audiences could have reasonably different interpretations of the speech in question. The other half believed it could
divine the true intent of the advertisement and understood that the end call of the advertisement—to “talk about ranching”—could not mean what it stated.133 Under this line of reasoning, where election law experts augur the true meaning of speech, the communication in question would have been subject to federal regulation. This fundamental disagreement about the law caused the agency to give little guidance to Free Speech. Ultimately, the Wyoming group Free Speech was left unable to speak during the 2012 election cycle without the risk of violating the mysterious law.134

People’s need for clarity about disclosure laws mandates that the type of speech subject to regulation be abundantly clear, because the vagueness of the line between express advocacy and issue advocacy leaves few options. These options are to (1) register and report with the FEC, accepting its overbroad authority, (2) remain silent, or (3) take the matter to court. The difficulties of registering and reporting were already discussed.135 And remaining silent is far worse in a free republic. More and more groups are simply electing to take matters to the courts, insisting on objective, clear standards.136 However, litigation is even more expensive than burdensome compliance costs. The problems with the complexity and overbreadth of campaign finance laws are compelling cause for First Amendment scrutiny, but these considerations must also be combined with a respect for anonymous political speech.