May 7, 2014 – In early April 2014, the U.S. Supreme Court struck down as unconstitutional federal limits on aggregate individual contributions to federal candidate campaigns, political party committees, and PACs (Political Action Committees). 

Writing for a 5-4 majority in McCutcheon v. FEC,¹ Chief Justice Roberts held that limiting the aggregate amount that donors contribute violates their First Amendment rights. As a result, aggregate contribution limits in eight states – including Wisconsin – are extremely likely to also be considered unconstitutional and unenforceable.²

Aggregate Contribution Limits

Prior to McCutcheon, federal campaign finance law imposed a biennial aggregate individual contribution limit. Under that limit, all contributions – including any contribution to a federal candidate, political party or PAC – made by an individual to influence federal elections could not exceed $123,200 during a two-year election cycle.³

That amount was further limited by recipient: $48,600 to all federal candidate committees, and $74,600 to all national party committees, federal PACs, and federal accounts of state and local political party committees. Of the $74,600, no more than $48,600 could be contributed to state and local party committees and PACs. 

Under Wisconsin law, there is a similar $10,000 aggregate limit on all of the political contributions made by an individual to state and local candidates and other political committees in any calendar year, regardless of the recipient of the contribution.⁴

McCutcheon Strikes Down Aggregate Limits

Under McCutcheon, the Court held that federal limits on aggregate individual contributions to federal candidate campaigns, political party committees and PACs violate the First Amendment rights of donors.  Any restrictions on campaign contributions can only be justified when the limits prevent a direct quid pro quo corruption. 

Because aggregate contribution limits do not relate to a threat that any single candidate will be corrupted, the Court held these limits cannot be upheld.

McCutcheon does not address base campaign contribution limits to candidates, political parties, and PACs. Those contribution limits remain in place. Similarly, corporations are strictly prohibited from making campaign contributions under federal and Wisconsin law.  These source restrictions also remain in place after McCutcheon.

2013 Act 153: An Update to State Campaign Finance and Lobbying Laws

Effective on March 29, 2014, 2013 Wisconsin Act 153 revises portions of Wisconsin’s campaign finance and lobbying laws. Highlights of the new law include:

Lobbyist campaign contributions. The date on which lobbyists may begin to make campaign contributions is updated to reflect the change in the state primary date. A lobbyist is now permitted to “personally make” campaign contributions to partisan elective state officials beginning on the first day that nomination papers can be circulated for either a general or special election, provided the state legislature is not in session.⁵ In the case of a fall general election, this date is April 15 of an even year.

Increased PAC and conduit solicitation expense amount. The annual solicitation amount that a corporation or association that sponsors a PAC or conduit is increased from $500 to the greater of either $20,000 or 20 percent of the amount of contributions made to the PAC or conduit in the previous year.⁶ Moreover, it is no longer a combined limit. Instead, a sponsoring organization now has separate $20,000 or 20 percent solicitation amounts – one for a PAC, one for a conduit.

Redirection of stale conduit funds. Act 153 establishes a process for the redirection of conduit funds contributed by a member who cannot be located.⁷ While the wording of this section is sloppy and imprecise given the structure of most conduits, stale conduit funds should now be able to be redirected to the conduit’s sponsoring organization, a related PAC or the conduit’s administrative account. In order for stale conduit funds to be redirected, certain procedures and reporting requirements must be met. Moreover, the funds must be held by the conduit for a least 24 consecutive months or the conduit member who owns the funds has not made contact with the conduit during that time.

Registration and reporting requirements. Act 153 increases the thresholds at which committees, groups and individuals must register with the Government Accountability Board (G.A.B.) and file reports. The new law also provides an additional day to file reports of late contributions and disbursements and simplifies electronic filing. The changes to electronic filing affect all registrants. Changes to registration and reporting requirements affect PACs (including nonresident PACs), legislative campaign committees and parties, but not personal campaign committees. Referendum groups and individuals who sponsor independent expenditures will also see changes to these requirements.

Volunteer internet activity and media exemption. Act 153 recognizes the role of the Internet and electronic communications in the dissemination of information, by both individuals and media entities. The new law modernizes the regulation of Internet activities and updates the state’s media exemption from campaign finance regulation.

Internet exemption. Under the new law, an individual’s costs related to Internet activity are not contributions or disbursements under the campaign finance statutes.⁸ Act 153 defines Internet activity to include:

• Sending or forwarding emails;
• Linking to another person’s Internet site or providing another means of direct access;
• Blogging;
• Creating, maintaining, or hosting an Internet site;
• Payment by a person for a nominal fee for the use of an Internet site operated by another person; and
• Any other form of communication distributed over the Internet.

An individual engaged in Internet activity will lose the exemption if he or she is being compensated to act on behalf of another person. Acting on behalf of another is permitted as long as no compensation is provided.

Media exemption. While current law contains a media exemption, it does not identify which entities qualify for it. Act 153 specifically exempts media activities via broadcasting stations, cable television operators or producers, Internet sites, and newspapers or other periodical publications, including Internet or electronic publications.⁹ Any coverage by these entities of news stories, interviews with candidates, editorial comment, and editorials are neither contributions nor disbursements under state campaign finance law provided that it is not made by a candidate or political party.

Conclusion

Both of these recent legal developments will require a change in practices in connection with the 2014 elections. To that end, additional guidance from the G.A.B. should be forthcoming and available on the agency’s website in the near future.

Endnotes

¹ 134 S.Ct. 1434.

² Thirty-eight of the 50 states have contribution limits. Of those, eight states also have aggregate contribution limits:  Connecticut, Maine, Maryland, Massachusetts, New York, Rhode Island, Wisconsin and Wyoming.  See McCutcheon at p. 21, fn.7.  The Wisconsin limit is currently being challenged in a lawsuit pending in federal court in the Eastern District, Young v. the Government Accountability Board  (Case No. 13-CV-635, filed June 6, 2013).

³ 2 U.S.C. § 441a(a)(3); 78 Fed. Reg. 8532.

⁴ Wis. Stat. § 11.26(4).

⁵ See Section 23 / 13.625(1)(c)(intro.).

⁶ See Section 21m / 11.38(1)(a)3.

⁷ See Section 15 / 11.185.

⁸ See Section 1 / 11.01(6)(b)8. and 9.; Section 2 / 11.01(7)(a)5. to 7.; Section 3 / 11.01(7)(b)6. to 8.; Section 4 / 11.01(12m); and, Section 11 / 11.06(13).

⁹ See Section 20 / 11.30(4m).