Type: Law Bulletins
Date: 07/12/2012

Postscript: Can Government Contractors Make Campaign Contributions?

A couple of months ago, we told you about the recent decision of Wagner v. FEC,1 in the District Court for the District of Columbia.  In that case, the trial court, by denying a motion for a preliminary injunction, upheld the constitutionality of an old law that prohibits Federal government contractors from making political contributions.2 Wagner v. FEC was decided in the wake of the Supreme Court’s decision in Citizens United, which allows corporations to make unlimited political contributions.  Now, the Supreme Court has issued another decision that may call into question the validity of the Wagner v. FEC decision. 

On June 25, 2012, the Supreme Court issued its ruling in American Tradition Partnership, Inc. et al. v. Bullock3,  which pertained to an appeal of a Montana Supreme Court decision.  A Montana law provided that a “corporation may not make…an expenditure in connection with a candidate or a political committee that supports or opposes a candidate or a political party.”4   The Montana Supreme Court, post-Citizens United, had upheld this ban on corporate contributions, finding that the ban was justified by the long history of corruption related to corporate expenditures in Montana.

In its per curiam opinion, the Supreme Court’s five-Justice majority wasted no time or space in posing the question (“whether the holding of Citizens United applies to the Montana state law”) and answering it (“There can be no serious doubt that it does.”).  The majority simply cited to Article VI, cl. 2 of the Constitution5 and noted that the arguments to uphold the Montana decision “were already rejected in Citizens United, or fail to meaningfully distinguish that case.” 

The four-Justice dissent relied upon the reasoning in Citizens United and found that even if Citizens United had been a good decision, the Montana law should have been upheld because “[g]iven the history and political landscape in Montana, that court concluded that the State had a compelling interest in limiting independent expenditures by corporations.” 

So what does this mean for the ban on contributions by Federal contractors?  It means that the viability of the law prohibiting Federal contractors from making political campaign contributions is in limbo.  Clearly, the Supreme Court is standing firm behind its much-criticized opinion in Citizens United, in which it held that “independent expenditures, including those made by corporations, do not give rise to corruption or the appearance of corruption.”   Its decision in American Tradition Partnership makes this very clear. The high Court rejected Montana’s attempts to distinguish and justify its law based on Montana’s actual history of corruption associated with corporate expenditures on campaign contributions. 

But, the ban on contractor contributions is still on the books, and the Wagner v. FEC District Court decision, the only decision issued post-Citizens Federal about this statute, still stands.  The basis for the District Court’s decision, however, was that the ban on Federal contractors was justified because it had been closely drawn to meet the relevant Governmental interest in preventing corruption or the appearance thereof, in part based on the actual history – which is extremely similar to Montana’s justification of its statute.  Unless there is a way to distinguish Federal contractors from general corporations, then it seems unlikely that the statutory ban against Federal contractors making political contributions or the Wagner v. FEC decision would survive review by the Supreme Court.  But, until this matter is addressed directly by the appellate courts or, ultimately by the Supreme Court itself, Federal contractors should be aware of the potential risks posed by making campaign contributions. 

1Wagner v. FEC, No. 11-1841(JEB), Apr. 16, 2012, D.D.C.  The case may be accessed at 2012 WL 1255145 (D.D.C.). 
2Section 441c of the Federal Election Campaign Act.
3American Tradition Partnership, Inc., v. Bullock, No. 11-1179 (U.S. June 25, 2012).  This case may also be accessed at 2012 WL 2368660. 
4Mont. Code Ann. § 13-35-227(1) (2011). 
5“This Constitution, and the Laws of the United States which shall be made in Pursuance thereof; and all Treaties made, or which shall be made, under the Authority of the United States, shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, any Thing in the Constitution or Laws of any State to the Contrary notwithstanding.”

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