May 15, 2014 – A three-judge panel for the Seventh Circuit Court of Appeals made a number of rulings yesterday to provide some clarity to Wisconsin’s campaign finance laws, idled in perplexity by various administrative actions and state and federal litigation.

In Wisconsin Right to Life Inc. v. Barland, No. 12-2915 (May 14, 2014), the panel ruled that Wisconsin’s ban on political spending by corporations is unconstitutional, in addition to caps on the amount entities can raise to benefit organizations commonly known as Political Action Committees (PACs) or other conduits formed for the purpose of engaging in political speech.

That is, Wisconsin cannot ban direct corporate expenditures that fund affiliated PACs, and cannot cap the amount of funds that corporations spend to solicit contributions to PACs.

Under state and federal law, corporations still cannot directly contribute to political campaigns. But restricting corporate contributions to PACs in an unconstitutional burden on free speech, the court explained.  

The panel also clarified that PACs receiving financial contributions or disbursing funds are not subject to rigorous regulatory requirements if not engaging in “express advocacy,” and certain burdens on “issue advocacy” groups are unconstitutional.

“Express advocacy” refers to speech that expressly advocates for the defeat or election of a clearly identified political candidate. “Issue advocacy,” by contrast, refers to speech advocating or opposing political issues, such as abortion, but not specific election candidates.

The opinion – written by Judge Diane Sykes (former Wisconsin Supreme Court justice) – noted that Wisconsin’s campaign finance system, like other systems, is “labyrinthian and difficult to decipher without a background in this area of the law.”

But the 88-page opinion details the Wis. Stat chapter 11’s problematic provisions in light of U.S. Supreme Court precedent and outlines the regulatory and litigation history of various rules promulgated by Wisconsin’s Government Accountability Board (GAB).

GAB administers Wisconsin’s campaign finance and election laws. Its individual members, former judges, serve as defendants in this lawsuit by Wisconsin Right to Life, a nonprofit corporation that advances anti-abortion and other related positions.

The problem, according to the court: Wisconsin’s basic campaign finance law “has not been updated to keep pace with the evolution in Supreme Court doctrine marking the boundaries on the government’s authority to regulate election-related speech.” The court urged the Wisconsin Legislature to rewrite the campaign finance laws consistent with U.S. Supreme Court rulings.

The court noted that two federal cases, including Barland, were on hold while a related state case, Wisconsin Prosperity Network et al. v. Myse, made its way to the state supreme court. But the action was effectively dismissed without a decision when the court split 3-3.

Thus, the federal appeals court applied U.S. Supreme Court precedent, including Citizens United v. FEC, to Wisconsin’s campaign finance laws to clarify that:

• Wis. Stat. section 11.38(1)(a)1’s ban on corporate political expenditures is unconstitutional, noting that Citizen’s United invalidated bans on corporate and labor union election-related spending.

• Section 11.38(1)(a)3’s, which caps the amount that corporations may spend to solicit contributions to affiliated PACs at $20,000 or 20 percent of a prior year’s contributions, is unconstitutional under Citizens United.

• Section 11.01(16)’s definition of “political purposes,” is vague and overbroad insofar as it covers acts "for the purpose of influencing" the election, nomination, or recall but are not considered express advocacy.  Currently, under Wisconsin law, individuals and organizations are subject to the regulatory scheme if they accept contributions or make disbursements “for a political purpose.”

• GAB section 1.28(3)(b) is unconstitutional, insofar as it treats "issue advocacy" communications occurring within 60 days of general, special or spring elections, or within 30 days of a primary election, as subject to campaign finance regulation if the communication mentions a candidate.

In addition, the court ruled that a GAB rule requiring additional “disclaimer” language, beyond what state stature requires, is unconstitutional as applied to radio ads that are 30 seconds or less.