FEC v. BEAUMONT

Legal Principle at Issue

The Federal Election Campaign Act of 1971, 2 U.S.C. 441b, prohibits corporations and labor unions from making direct campaign contributions and independent expenditures in connection with federal elections. The question presented is whether Section 441b's prohibition on contributions violates the First Amendment to the Constitution if it is applied to a nonprofit corporation whose primary purpose is to engage in political advocacy.

Action

Reversed. Petitioning party received a favorable disposition.

Facts/Syllabus

Respondents were a corporation known as North Carolina Right to Life, Inc., three of its officers, and a North Carolina voter who have sued the Federal Election Commission, the independent agency set up to "administer, seek to obtain compliance with, and formulate policy with respect to" the federal electoral laws. North Carolina Right to Life is organized under the laws of North Carolina to provide counseling to pregnant women and to urge alternatives to abortion, and as a nonprofit advocacy corporation it is exempted from federal taxation by § 501(c)(4) of the Internal Revenue Code. It had no shareholders and, although it received some donations from traditional business corporations, it was "overwhelmingly funded by private contributions from individuals." North Carolina Right to Life had made contributions and expenditures in connection with state elections, but not federal. Instead, it established a PAC, the North Carolina Right to Life, Inc., Political Action Committee, which contributed to federal candidates.

North Carolina Right to Life challenged the constitutionality of FEC regulations that prohibited corporations from making "a contribution or expenditure in connection with" certain federal elections, but not from establishing, administering, and soliciting contributions to a separate fund to be used for political purposes. Such a PAC (so called after the political action committee that runs it) is free to make contributions and other expenditures in connection with federal elections. 

The District Court granted summary judgment to North Carolina Right to Life and held the regulations unconstitutional as applied to the corporation, both as to direct contributions and independent expenditures. A divided U.S. Court of Appeals for the Fourth Circuit affirmed in 2002, relying primarily on Massachusetts Citizens for Life (1986), in which the Supreme Court held it unconstitutional to apply the statute to independent expenditures by Massachusetts Citizens for Life, Inc., a nonprofit advocacy corporation in some respects like NCRL. The Fourth Circuit ruled, first, that the prohibition on independent expenditures may not be applied to North Carolina Right to Life. Although the panel acknowledged that Massachusetts Citizens for Life, unlike North Carolina Right to Life, had a formal policy against accepting corporate donations, it nevertheless treated North Carolina Right to Life as materially indistinguishable from Massachusetts Citizens for Life. The Fourth Circuit went on to hold the ban on direct contributions likewise unconstitutional as applied to North Carolina Right to Life. While the majority of the divided court recognized that regulation of campaign contributions had received greater deference under First Amendment cases than regulation of independent expenditures, it held the ban on direct contributions unjustified.