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Free & Fair

Line-drawing after Overruling Austin

When Seth Waxman rose as the last of the four advocates in today’s reargument of Citizens United v. Federal Election Commission, he understandably echoed the heart of the argument that won the day six years earlier in McConnell v. FEC. Invoking “sober-minded” Elihu Root and the spirit of Teddy Roosevelt, Waxman gave an impassioned plea for the Court to preserve the rationale that animated the original century-old ban on electioneering involvement by business corporations:

“[T]he idea is to prevent the great companies, the great aggregations of wealth from using corporate funds directly or indirectly to send members of the legislature to these halls in order to vote for their protection and the advancement of their interests as against those of the public.” (Transcript, p. 71.)

At this point, Justice Scalia interrupted to ask how this idea applied to the vast majority of corporations, which have modest economic resources:

“[T]he amicus brief by the Chamber of Commerce points out that 96 percent of its members employ less than 100 people. These are not aggregations of great wealth. You are not talking about the railroad barons and the rapacious trusts of the Elihu Root era; you are talking mainly about small business corporations.”

Waxman acknowledged the point and responded by trying to say that Congress was entitled to legislate more broadly than perhaps absolutely necessary because it was acting to protect “the very foundation of democratic republican [institutions], that is the notion of integrity in representative democracy.” Justice Scalia persisted:

“I don’t understand that answer. I mean, if that’s what you were concerned about, what Elihu Root was concerned about, you could have said all corporations that have a net worth of more than, you know, so much or whatever. That is not what Congress did. It said all corporations.”

This exchange between Waxman and Scalia seems to me the heart of the matter, and it signals what we can expect to transpire if (as many observers believe) a majority of the Justice will use the Citizen United reargument as an occasion to overrule the Austin and McConnell precedents upholding bans on electioneering by all business corporations. 

Sometimes it seems that both proponents and opponents of Austin agree that, if that precedent is overruled, then all business corporations—no matter how large—will have a First Amendment right to spend unlimited sums of their general-treasury funds on electioneering. ExxonMobil, for example, will suddenly have a First Amendment right to spend billions to elect proponents (and defeat opponents) of its oil-drilling interests. Cardinal Health will have a First Amendment right to spend millions to elect Members of Congress sympathetic to its position on health care legislation. And banks bailed out by the government will have a First Amendment right to use these bailout funds to elect a Congress that will defeat measures to increase regulatory scrutiny over these banks’ activities. But as Justice Scalia’s questioning of Waxman indicates, this parade of horribles does not necessarily follow from overruling Austin. Just because Congress cannot prohibit all electioneering by all business corporations, it does not mean that Congress must permit any amount of electioneering by any corporation. To draw such an inference is a logical fallacy (one for which I’m sure logicians have a name.)

On the contrary, as I’ve observed previously, if Austin is overruled, a whole new line of line-drawing challenges opens up. Today’s oral argument tentatively began to explore that new terrain. Justice Scalia did so when he suggested that a statute that applied only to corporations with a certain net worth—how much?—might well be constitutional under the First Amendment even after overruling Austin. Much earlier in the oral argument, Justice Ginsburg asked if Congress could ban electioneering by corporations with significant ties to foreign governments. (Ted Olson, Citizens United’s attorney, responding by suggesting that perhaps Congress could.) That question hints at a whole new approach Congress might take: regulating corporations by their characteristics, not just their net worth. As I’ve indicated elsewhere, corporations that operate functionally as extensions of the government itself (like defense contractors arguably do), might fall into a different regulatory category for purposes of First Amendment analysis than conventional “private sector” retail corporations. 

To be clear, Justice Scalia wasn’t saying today that he necessarily would uphold a more narrowly tailored statute that limited its applicability to corporations with a high net worth. What Scalia would considered narrowly tailored in this regard might be very different what others might, including some of his conservative colleagues on the Court (like Kennedy). But the essential point remains. The overruling of Austin would not automatically signal the end of congressional limits on electioneering by business corporations. Instead, it would just mean that the fight over the legitimate scope of those limits is about to get underway. 

Edward B. Foley is Director of the Election Law @ Moritz program. His primary area of current research concerns the resolution of disputed elections. Having published several law journal articles on this topic, he is currently writing a book on the history of disputed elections in the United States. He is also serving as Reporter for the American Law Institute's new Election Law project. Professor Foley's "Free & Fair" is a collection of his writings that he has penned for Election Law @ Moritz. View Complete Profile


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