Court Punts on Flawed Campaign Finance Law

The 10th Circuit ruled in the 2004 case Colorado Right To Life, Inc. v. Coffman that Colorado’s Amendment 27 regulating campaign finance was unconstitutionally broad as applied to entities whose “major purpose” was not to elect candidates. The Colorado Court of Appeals applied that ruling on Thursday to a case involving the Alliance for Colorado’s Families, a liberal 527 active in 2004.Amendment 27

Amendment 27 was adopted by Colorado voters in 2002.  The amendment bans corporate contributions and contributions of more than $500 per election cycle to a political committee, which is defined as an organization that spends more than $200 per election cycle to support or oppose candidates. 

In contrast, 527 political organizations (so named for the section of the Internal Revenue Code that covers political groups) that do not support or oppose candidates must disclose their expenditures and sources of contributions, but contributions to them are not capped.

But, Amendment 27 is likely to be a perennial in the courts because the courts have determined that it can be unconstitutional as applied to particular cases, and the administrative law judges in the Secretary of State’s office lack the jurisdiction to make that determination. Since Amendment 27 is part of the state constitution, however, the legislature cannot provide an easy fix.

Constitutional Rights In Campaign Finance

The distinction between political contributions and expenditures associated with candidates and those associated with issues flows from the U.S. Supreme Court’s 1976 ruling in Buckley v. Valeo.  It held in that case (as explained by the Colorado Court of Appeals) that “expenditures for issue advocacy are not subject to regulation” and that groups cannot be regulated in the more restrictive way that is constitutional for candidate campaigns.  A group can only be regulated under the more stringent candidate campaign regulations if its “major purpose” is to engage in restricted candidate campaigning.

Buckley also drew a bright line test to determine campaign efforts constitute “express advocacy” that is subject to extensive regulation.  Basically, this test allows regulation only of advertisements expressly calling for the election or defeat of a candidate.  In contrast, merely talking about a candidate in the context of issues isn’t subject to the same level of regulation.

The United States Court of Appeals for the 10th Circuit ruled in the 2004 case Colorado Right To Life, Inc. v. Coffman, that Amendment 27 was unconstitutionally broad, as applied in that case.  The 10th Circuit reasoned that applying strict express advocacy of candidate regulations based upon a mere $200 of express advocacy expenditures for a candidate was not sufficient because it did not determine if the “major purpose” of the organization was to influence candidate elections through express advocacy.

The Alliance for Colorado Families Case

The case decided by the Colorado Court of Appeals on Thursday presented the question of whether Amendment 27 was constitutional as applied to a particular 527 organization’s activities.

The Alliance for Colorado Families was a 527 political group active in the 2004 election cycle.  It was designed so that it could accept contributions in excess of the Amendment 27 requirements.  In exchange, it was not supposed to engage in “express advocacy.”  But, a complaint claimed, and an administrative law judge in the Secretary of State’s office found, that one of the Alliance for Colorado Families ads crossed the line into “express advocacy.”

On October 29, 2004, a few days before the 2004 election, ACF spent approximately $18,000, which was about 2% of its total spending for that year, for the production of a single radio advertisement. The advertisement, which was aired several times, compared Colorado House of Representatives candidate Kent Lambert to the 1950s television character “Eddie Haskell.”

This was mostly because the key closing tag line in the ad said:

“Don’t let Eddie Haskell, er Kent Lambert, represent you in the State House.”

The administrative law judge imposed a $36,000 fine on the organization as a result.  Leland Gilbert, a citizen who filed the Complaint (essentially anyone can complain under Amendment 27), appealed, arguing that since there was a violation of Amendment 27 during the election cycle, that the fine should be based upon the entire election cycle, rather than a single advertisement.

The complaining citizen changed his position on appeal.

On appeal, both ACF and Gilbert have asserted in their reply briefs that the proper remedy in this case is a partial invalidation of the penalty portion of the Amendment because of its retroactive application. The Secretary of State has urged us to uphold the penalty portion of the Amendment by construing it narrowly.

In the end, the Court of Appeals in the Alliance for Colorado Families case punted, reaching a result that none of the parties had advocated.  It held that it didn’t have enough facts to decide the case, and ordered the Administrative Law Judge to “determine whether ACF’s ‘major purpose’ in 2004 was the nomination or election of candidates.”

If the administrative law judge says that the nomination or election of candidates was not a major purpose of the Alliance for Colorado Families, then the case against the group will be dismissed and the fine will not be imposed.  On the other hand, if the administrative law judge finds that the major purpose test is met, the question of what fine is proper will have to be revisited and will probably end up standing at $36,000.

Either way, the Colorado Court of Appeals has made clear that complaints that 527s accused of violating Amendment 27 must first be shown both to have spent more than $200 on express advocacy, and to have a “major purpose” to influence elections, even though this contradicts the language of Amendment 27.

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Andrew Oh-Willeke

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