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5th Cir. Upholds, Strikes Parts of Texas Campaign Finance Law

By Mark Wilson, Esq. on August 13, 2014 | Last updated on March 21, 2019

If you want to form a general purpose political action committee in Texas that promotes a particular point of view, you first need to: (1) Appoint a treasurer and register with the Texas Election Commission, (2) collect contributions from 10 contributors, (3) wait 60 days before exceeding $500 in contributions and expenditures, and (4) never accept contributions from corporations unless your PAC engages only in independent expenditures.

On appeal, the Fifth Circuit upheld the treasurer requirement and (surprisingly) the ban on corporate contributions. However, it found the 60-day, $500 limit and the 10-contributor requirement unconstitutional.

The Three Amigos

At issue were three different general-purpose PACs that couldn't engage in election advocacy because of the rules above.

After finding that the case was not moot -- which the state argued because the 60 days had passed, meaning the organizations could engage in advocacy -- under the "capable of repetition, yet evading review" exception to the mootness doctrine, the court moved on to the now-familiar Buckley, Citizens United, and McCutcheon framework for dealing with limitations on election communications.

The 60-Day, $500 Limit: No!

Was this an "expenditure or contribution limit," meaning it's subject to "exacting scrutiny"? Or was it a "disclosure incentive" subject to much less scrutiny? The court found that even a temporary limit on election speech was still a limit subject to Citizens United. Because the expenditures were "independent" -- meaning not made in coordination with a particular politician's campaign -- the limit on those expenditures could not possibly be designed to combat "quid pro quo" corruption, which can only occur if the expenditures aren't independent. (If this logic seems circular, you can blame Justice Kennedy.)

Using similar logic, the Fifth Circuit also struck down the 10-contributor requirement, which "prevents a general-purpose committee from exceeding $500 in expenditures and contributions until the committee can persuade ten donors to contribute."

The Ban on Corporate Contributions: Yes!

Notably, the Fifth Circuit upheld the ban on corporate contributions, but the contribution here was an email list as an in-kind donation.

Recognizing that corporations might attempt to use favorable election law as a subterfuge, the court upheld the ban "as an anticircumvention measure to prevent corporations from using a political committee to do an end-run around Texas's direct contribution ban." The email list, the court said, has monetary value and could be transferred from a corporation to a candidate. An organization's insistence that "honest, no-foolin', it won't do that" just isn't good enough.

All in all, a pretty good day for election regulation, as the Fifth Circuit recognized that at least "hybrid" organizations engaging in both direct and indirect expenditures present enough of a question of quid pro quo corruption that the state can regulate their contributions.

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