• Eighth Circuit to Decide Whether Iowa’s Campaign-Finance Laws Survive Constitutional Scrutiny
  • March 7, 2013
  • Law Firm: Nyemaster Goode P.C. - Des Moines Office
  • Just in time for what is sure to be the craziest Iowa election cycle in a generation, Iowa’s campaign-finance laws are under the microscope in a court case that could alter the way corporations get involved in elections.

    Under current Iowa law, corporations that make political expenditures supporting or opposing candidates are required to file reports with the Iowa Ethics & Campaign Disclosure Board.  In 2011, Iowa Right to Life—represented by campaign-finance crusader James Bopp Jr.—filed a federal lawsuit challenging those laws as unconstitutional.  Federal District Court Judge Robert Pratt dismissed that lawsuit, but it’s now on appeal.  A three-judge panel of the Eighth Circuit (which included Iowa Judge Michael Melloy) heard oral argument in the case last month.  And based on the judges’ questioning, it appears that at least part of Iowa’s laws might be struck down.  And that, of course, could be significant here in Iowa where both parties are gearing up for what is sure to be a competitive set of 2014 races.

    The case, Iowa Right to Life v. Tooker, involves a multifaceted legal challenge to parts of Iowa’s election laws.  Not all of the claims in the case have a good chance of success (for example, the plaintiffs are attempting to overturn Iowa’s ban on corporate campaign contributions, an issue which was just recently denied review by the U.S. Supreme Court) but one claim does: that Iowa’s reporting rules with respect to corporate independent expenditures are overly burdensome on the rights of corporations to speak freely in the political arena.  While Iowa Right to Life failed to convince the district court with this argument, an intervening Eighth Circuit precedent may change that.

    The Iowa Right to Life case has had a long and somewhat complicated journey through the courts.  It began in 2010, after the United States Supreme Court issued its landmark opinion in Citizens United v. FEC, which struck down a law that required a corporation to form a political action committee (a “PAC”) in order to make independent expenditures advocating for or against political candidates.  In so doing, the Court essentially stated that corporations have a constitutional right, under the First Amendment, to spend general treasury funds on uncoordinated, independent expenditures in the political process.  At the same time the Supreme Court made it easier for corporations to participate in the political process, the Court also upheld a statutory requirement that a one-time disclosure message explaining who produced a particular independent expenditure was constitutional because it was substantially related to the important government interest of promoting disclosure.

    After Citizens United, Iowa, like many states, was forced to amend its campaign-finance laws to comply with the Supreme Court’s ruling.  By emergency legislation, the Iowa General Assembly made it lawful for corporations to make independent expenditures without using a PAC, but at the same time it required corporations to file reports and disclosures with the Iowa Ethics & Campaign Disclosure Board when they do.

    Iowa Right to Life believes that these new disclosure requirements go too far.  So the group challenged the new law in federal court alleging, among other things, that after Citizens United the State can impose some disclosure obligations on corporate political spending such as one-time reports, but that it cannot force politically active corporations to engage in ongoing disclosure obligations that could be costly in terms of time, personnel, and resources.

    Judge Pratt rejected those arguments, and it seemed likely that the Eighth Circuit would do the same. But that was before the en banc court struck down a similar Minnesota law in Minnesota Citizens Concerned for Life v. Swanson.

    In the wake of Citizens United, Minnesota also required corporations who make independent expenditures to file ongoing reports, even if the corporation itself was not producing any express advocacy.  A majority of the Eighth Circuit ruled in Swanson that those ongoing reporting requirements—which apply even if the corporation isn’t speaking at the time of filing—are overly burdensome and thus violate the First Amendment.

    At oral argument last month, Iowa Right to Life argued that Iowa’s law is similar to Minnesota’s, and that it should suffer the same fate.  Like the Minnesota law, Iowa’s law requires corporations to file reports and disclosures with the Iowa Ethics & Campaign Disclosure Board when they engage in political independent expenditures.  And like the Minnesota law, that sets off “ongoing” or “recurring” disclosure requirements that are very similar, but not identical to, the reporting requirements struck down in Swanson.  Further, these required reports are very similar to the reports that PACs must file under Iowa law, making it appear — allegedly — like Iowa is treating corporations who sporadically engage in express advocacy the same as PACs whose major purpose is to make political expenditures.  That similar treatment was vital to the Eight Circuit’s opinion in Swanson.  So will the Eighth Circuit use the Iowa Right to Life case as a chance to expand upon the precedents of Swanson and Citizens United and strike down Iowa’s corporate disclosure laws?  Perhaps.

    During oral argument before a three-judge panel of the Eighth Circuit, the lawyers for both sides in the Iowa Right to Life case faced pointed questions on the corporate-reporting requirements.  Although the plaintiffs in Iowa Right to Life have asserted four separate claims challenging Iowa’s election laws, the claim regarding the PAC-like reporting requirements placed on corporations dominated the hearing, with the other three claims getting virtually no attention.  So while it’s difficult to make predictions, it appears that the appellate court is taking a close look at the constitutionality of Iowa’s corporate disclosure laws in light of Swanson.

    If these disclosure laws are struck down, it could have meaningful consequences at the Iowa State Capitol, where politicians on both sides of the aisle are gearing up for an upcoming election cycle full of open seats.  Not only would drafting a new set of election rules be difficult with the backdrop of a looming election, but if no fix is reached before candidates begin their campaigns, the rules surrounding corporate involvement in Iowa elections could be mired in uncertainty.  As a result, this case could be getting a lot of attention very soon.