Minnesota can ban corporations from contributing to political campaigns but its regulation of independent expenditures is unconstitutional, the full 8th Circuit ruled.
Unlike direct campaign contributions, which are illegal for corporations in Minnesota, an independent expenditure represents money that the corporation pays to advocate for the election or defeat of various candidates.
The state requires corporations making political contributions greater than $100 to form a separate political fund with an appointed treasurer. Corporate donors must also disclose contact information for its treasurer, and a list all depositories or safe deposit boxes used.
The laws regulate not just corporations but almost all associations, meaning a group of two or more people acting together, who are not all family members.
As long as the fund is in existence, the treasurer must file annual reports with the state election board detailing the fund’s activity.
During general election years, which happen every other year, the treasurer must file four additional reports, 28 and 15 days before a primary, and 42 and 10 days before a general election.
These requirements continue until the fund is dissolved. Before dissolution the treasurer has to pay all of the fund’s debts, dispose of all assets valued at more than $100 and file a termination report, including the same info required in the fund’s periodic reports.
With supporting documentation the treasurer has to keep track of all contributions over $20, and all the fund’s expenditures. For four years from the date of filing these disclosure reports the treasurer must maintain the fund’s records for state inspection.
Associations and treasurers that do not comply with the law are subject to criminal and civil penalties ranging from fines to up to five years imprisonment.
Even if the fund is inactive during a general election year it still has to file the five reports.
Three organizations – Minnesota Citizens Concerned for Life, the Taxpayers League of Minnesota and Coastal Travel Enterprises – sued Minnesota to block the laws in July 2010.
After a federal judge refused to enjoin the laws, a split three-judge panel of the 8th Circuit affirmed last year.
The full St. Louis-based court then agreed to hear the case en banc and vacated the panel decision Wednesday.
A six-judge majority enjoined the political fund reporting requirements, and all 11 judges agreed that the ban on corporate campaign contributions can stand.
“Minnesota’s law hinders associations from participating in the political debate and limits their access to the citizenry and the government,” according to the majority opinion authored by Chief Judge William Riley. “The law manifestly discourages associations, particularly small associations with limited resources, from engaging in protected political speech.”
“We conclude Minnesota’s requirement that all associations make independent expenditures through an independent expenditure political fund … is most likely unconstitutional,” Riley added.
The judges noted that their decision on the ban law relies on the U.S. Supreme Court’s decision in Citizens United v. Federal Election Commission, which found that it does not violate the First Amendment to make corporations use Political Action Committees if they wish to make direct political contributions.
Judge Michael Melloy authored a partial dissent on behalf of three other members of the panel. That 12-page opinion states that Minnesota’s disclosure laws are not overly burdensome, and the majority should have deferred to state lawmakers.
“Instead of deferring to the legislature, the majority would instead impose its own judgment to determine that a $100 threshold for requiring reporting is too low, that five disclosure reports in an election year are too many, and that the administrative costs of keeping records in accordance with the law are too high,” Malloy wrote. “These issues are typically and best left to Minnesota’s democratically elected legislators.”
Though Judge Steven Colloton said he echoed Melloy’s opinion, he wrote separately to fight the assertion that Minnesota’s disclosure laws are appropriate to prevent “improper or suspect relationships between elected officials and the persons or groups that support them.”
Colloton wrote that the statement contradicts the Citizens United holding that “independent expenditures, including those made by corporations, do not give rise to corruption or the appearance of corruption.”
See the decision here.