Federal court halts Minnesota campaign finance law

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David Demirbilek Contributor
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On Wednesday morning a federal appeals court, citing the burdens placed on corporations contributing money to the political process, partially enjoined a Minnesota campaign finance law.

Three Minnesota businesses challenged the law in the U.S. Court of Appeals for the 8th Circuit, seeking to block its enforcement through an injunction. The three businesses disputed Minnesota’s restrictions on corporations’ direct campaign contributions and indirect contributions sent to organizations other than politicians’ campaigns.

The court enjoined the reporting requirements tied to the regulations of independent campaign contributions. However, it let stand the state’s restriction on direct corporate campaign contributions.

Under current Minnesota law, corporations are only allowed to contribute to the political process indirectly either through political action committees or political funds.

Specifically, the court found the law too burdensome for corporations or groups of people utilizing political funds. Minnesota required a political fund to be established if a corporation or group spent more than $100 per year on independent expenditures outside of a PAC. The law mandated that the fund maintain detailed records, file ongoing reports with a state board, and even appoint a treasurer subject to civil and criminal penalties.

The court’s opinion noted that the law would even apply to two neighboring farmers wishing to jointly spend $100 on a political sign. The court poured through the multitude of regulatory hurdles, disclosure requirements and onerous exit options from the fund the two would face.

Chief Judge Riley wrote for the majority, “Minnesota’s law hinders associations from participating in the political debate and limits their access to the citizenry and the government.” He then cited the 2010 Citizens United decision as controlling his reasoning and stated, “In short, the collective burdens associated with Minnesota’s independent expenditure law chill political speech.”

However, the court did decline to enjoin Minnesota’s ban on direct corporate political contributions.

The three businesses asserted that Minnesota’s ban on direct political contributions by corporations violated their free speech rights under the First and Fourteenth Amendments and equal protection rights under the Fourteenth Amendment. The judges flatly rejected this argument, stating that restrictions on direct political contributions may be more broadly tailored than those against independent expenditures.

The 8th Circuit heard the case en banc, a special situation usually reserved for issues of high importance in which all judges on a circuit make a ruling as opposed to a standard panel of three. Overturning all prior decisions on the case, the eleven judges on the circuit split 6-5 in favor of a partial injunction of the law.

A federal district court had already denied an injunction in July of 2010, and a divided three-judge panel from the 8th Circuit of Appeals upheld the district court in May of 2011. Only the Supreme Court or an appeals court sitting en banc may overturn a three-judge circuit court ruling.

The ruling is not a final judgment on the Minnesota laws. Consequently, the court sent the case back down to district court to reach a final decision consistent with its opinion.

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