Supreme Court Hears N.C. Case

Posted March 25, 2003 at 7:01pm

A clear majority of Supreme Court justices expressed skepticism Tuesday with a plea from a North Carolina anti-abortion group to allow nonprofit advocacy organizations to make contributions directly to federal candidates.

The fear that deep-pocketed corporations would corrupt the political system if allowed to directly fund electoral campaigns has maintained a strict prohibition on corporate contributions for nearly a century. That ban applies to profit-making behemoths like General Motors as well as to the tiniest groups organized as nonprofit corporations under the tax code.

In an area of law dealing with campaign finance that is often muddled with exceptions, the straightforward ban on direct corporate contributions has been upheld by Congress and a number of strong Supreme Court rulings with remarkable consistency.

A small crack in the wall came in 1986 when a divided Supreme Court made an exception for a Massachusetts anti-abortion group that wanted to make independent expenditures in a federal campaign.

Now, in a case rising out of the conservative 4th U.S. Circuit Court of Appeals, a group called North Carolina Right to Life is seeking to widen the crack opened by the 1986 case to allow nonprofit groups the right to make contributions to federal candidates just like individual donors.

The case arrived at the High Court at a time when everyone in the political world is anxiously awaiting a judicial determination on whether the landmark McCain-Feingold campaign finance law, with its ban on soft money and restrictions on issue ads, can pass constitutional muster. The nine justices must wait until a special three-member lower court issues a long-awaited ruling before it ultimately decides the case.

Several campaign finance experts as well as reform advocates maintained that the North Carolina case was important because the role that nonprofits play in politics is expected to grow dramatically in a world without soft money. But in the immediate sense, as Deputy Solicitor General Paul Clement pointed out, the issues raised by Federal Election Commission v. Beaumont are “miraculously unaffected” by the new McCain-Feingold law.

Ideological advocacy groups like North Carolina Right to Life, which has an annual budget under $160,000, are just too small to pose any threat of corruption to the political system, the group’s attorney, James Bopp, told the court.

But a number of the justices seemed clearly troubled by the idea of making another exception, if for no other reason than it would mean overturning prior rulings that have upheld the power of the government to limit political expression through campaign contributions.

No less a figure than Chief Justice William Rehnquist authored a unanimous 1982 ruling that upheld the constitutionality of the prohibition on corporate donations. And he disagreed with the 1986 ruling in the Massachusetts case with a dissent that argued that the High Court should not second-guess Congress on where it wants to draw the line in limiting the influence of corporations on elections.

Rehnquist appeared to maintain that stalwart position during oral arguments on Tuesday, responding to an argument by Bopp that nonprofit advocacy groups should be treated differently by noting that “none of our cases have sliced the onion quite that fine.”

Justice Sandra Day O’Connor acidly noted that the court basically decided the corporate contribution ban issue in the unanimous 1982 case authored by Rehnquist, telling Bopp that now “you just want us to distinguish your type of organization. … That is very hard to do.”

Justice Ruth Bader Ginsberg pointed out that the 1986 decision in the Massachusetts case, while creating an exception for independent expenditures, clearly maintained that the power to regulate contributions was to be treated differently. In fact, she pointed out, the decision in Massachusetts Citizens for Life case explicitly distinguished the difference at least three times.

Noting that the North Carolina group accepts a small amount of corporate donations, Ginsberg expressed worry that relaxing the rules on contributions for nonprofits would open up a conduit for large contributors wishing to circumvent the limits imposed by campaign finance law.

Only Justice Antonin Scalia expressed open sympathy for Bopp’s argument, at one point coming to the attorney’s rescue when Justice Stephen Breyer quizzed Bopp about a hypothetical nonprofit group of wealthy donors intent on evading the limits placed on individual contributions.

What’s wrong with Congress wanting to stop a group called the “$4,000 for Smith Corporation”? Breyer asked. As Bopp struggled to answer, Scalia helpfully reminded Bopp that the current rules governing nonprofits severely limit the amount of money and time that nonprofits may spend on politics.

But even Scalia at one point expressed some skepticism over whether the First Amendment rights of individuals are violated by a ban on nonprofit campaign contributions. Anyone who wants to give to a candidate can do so, he said. “All you have to do is reach in your pocket and give them a dollar.”

Ginsberg noted that the current scheme does not completely shut off the ability of individual members of a nonprofit association from contributing to candidates and the organizations, like profit-making companies and labor unions, are allowed to form connected political action committees that contribute directly to candidates.

Clement, arguing the case on behalf of the FEC even though the commission did not seek to appeal the case, stressed that the 4th Circuit’s 2-1 decision allowing NCRL to make contributions was out of step with a long line of Supreme Court rulings. Contribution bans are much more readily approved than expenditure bans and Congress has clearly adopted a broad approach to limiting corporate contributions, Clement told the justices.

A decision in the case is expected by the end of June.