Vermont Campaign-Finance Limits Survive Appeal

MANHATTAN (CN) – Vermont does not trample the First Amendment by hinging public financing of political candidates on their adherence to certain rules, the Second Circuit ruled Tuesday.

The 52-page opinion upholds the dismissal of a lawsuit by a candidate for Vermont lieutenant governor who argued that his receipt of public financing should not force him to curtail expenditures and contributions from private parties.

Finding Vermont’s scheme constitutional, the Second Circuit noted that campaigns have the option to turn down public funds but must play by the restrictive rules if they want public financing.

“Given the free choice to accept the grants and restrictions that public financing entails or to engage in unlimited private fundraising, candidates cannot complain that electing the former course burdens their rights,” U.S. Circuit Judge Robert Katzmann wrote for a three-judge panel.

Lieutenant governor candidate Dean Corren brought the underlying suit against the state’s attorney general in 2015 after his campaign was threatened with a $72,000 penalty because of an email inviting citizens to a rally.

The email, sent to nearly 20,000 subscribers in October 2014 by the Vermont Democratic Party, invited people to join a rally with Sen. Bernie Sanders, Corren and other local candidates.

A week after the email was sent, Vermont Attorney General William Sorrell alerted the campaign that it had violated Vermont election laws restricting private contributions to publicly financed campaigns.

Corren, who had accepted $181,000 in public funds for both the 2016 Democratic primary and that year’s general election, claimed that the email did not constitute an illegal contribution. Later he offered to pay $255 — the amount at which the email was valued by the attorney general’s office — to put the matter to bed.

Sorrell turned down that offer, however, and instead ordered the campaign to forfeit the remaining $52,000 of public funding in its coffers and pay a $20,000 fine.

Though Corren settled Sorrell’s lawsuit for the proposed $255 last year, he continued to pursue his own lawsuit against the state’s public financing system.

In his challenge, Corren claimed the law unfairly forbade publicly financed candidates to associate with political parties and that the system was rigged against certain candidates since it distributed lump-sum payments at the beginning of the primary and general election cycle, leaving some candidates cash-strapped if their opponents spent more.

He alleged the system lacks a “Goldilocks solution” to let candidates then raise private funds if they believe they are being outspent, as was the case with Corren’s Republican opponent, who raised nearly $300,000 during that election compared with Corren’s $200,000 flat amount.

“Public financing can serve those government interests only if a meaningful number of candidates participate” Corren’s complaint said.

He argued that Vermont’s refusal to let candidates raise additional funds meant that fewer candidates would choose “to participate in public financing, defeating those interests.”

Corren also claimed that candidates penalized during their campaigns are forced to forfeit all of their public financing, whereas candidates who spend all their public funds and then solicit private funds are forced to forfeit nothing.

Corren’s complaint was backed by Lieutenant Gov. David Zuckerman and the Vermont Progressive Party, as well as several other candidates.

A federal judge nevertheless dismissed the case in 2016, finding no constitutional problems with the public-financing laws and noting that political parties could make exempted expenditures in support of publicly financed candidates.

Affirming Tuesday, Katzmann wrote that, “because a candidate may freely choose whether to accept public funds and the conditions thereon in lieu of unlimited private fundraising … she cannot complain that those conditions burden her rights.”

In an interview, Corren’s attorney John Franco Jr. called the ruling “frankly surprising.”

Franco said the circuit issued “a sweeping victory for the state,” and that allowing Vermont to restrict public money could lead to a slippery slope.

“The court basically said ‘if you’re going to live in my house, you’re going to play by my rules,’” Franco said.

Corren noted in an email that his ordeal shows the need for the state to craft a better public-financing law.

At the federal level, he added, “this case was about whether the state needs to show that restrictions on candidates’ speech are rational and narrowly tailored.”

“The 2nd Circuit said no,” Corren added. “Good thing the law didn’t call for my first-born. In the process, the court entirely ignored and subverted the legislature’s explicit intent to reduce corruption through the public financing of elections.”

Katzmann noted that other circuit courts have upheld public-financing regulations due to the “voluntariness” of those systems “because such schemes do not burden candidates’ rights if they merely create another viable funding option rather than compel candidates to choose public funding.”

Another point of the ruling notes that contributions from individuals and political parties in such schemes should be treated the same.

“[A] party is in no different position than an individual supporter, who cannot complain that her rights have been violated when her preferred candidate opts for public funds rather than raising private contributions,” Katzmann wrote.

Vermont’s public-financing system has seen a number of challenges since the restrictions were adopted in 1997.

After a federal judge found the state’s campaign finance laws overly restrictive in 2000, the case wound its way to the U.S. Supreme Court.

Vermont’s campaign-finance laws were considered the most restrictive of any state at the time, and the court found 6-3 that Vermont’s contribution limits were too low and that the law’s spending limits for publicly financed campaigns were unconstitutional.

In 2014, Vermont revised its campaign finance rules, loosened the across-the-board limits on expenditures and the types of contributions publicly financed candidates could receive. Under those revisions, a lieutenant governor candidate in the state that had accepted public financing could not also receive $4,000 in private contributions.

Corren’s attorneys sought to further loosen Vermont’s restrictions, arguing that restrictive public financing could eventually lead to state regulations forbidding certain religious affiliations or even forbidding certain group associations as a precondition for receiving public funds.

In a footnote, Katzmann rejected those arguments as reductio ad absurdum, writing that “this parade of horribles does not call into question the soundness” of the notion that free speech rights are not harmed by public financing restrictions.

A representative for the Vermont Attorney General’s Office did not immediately comment on the ruling.

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