Court: Iowa can demand disclosure, bar corporate money

IOWA CITY – A federal appeals court on Thursday upheld an Iowa law requiring outside groups to promptly disclose details about their spending to support or oppose political candidates, but struck down other reporting requirements as overly burdensome.

Ruling on a lawsuit brought by Iowa Right to Life, the 8th U.S. Circuit Court of Appeals also upheld an Iowa law that bars corporations from giving money from their general treasuries directly to political candidates.

The decision clarifies the ground rules for how Iowa can regulate political spending in the aftermath of the January 2010 U.S. Supreme Court ruling that gave businesses and unions the ability to use unlimited sums of money to influence political campaigns.

Alarmed at the prospect of outside funds flooding Iowa elections, lawmakers quickly approved a measure requiring such groups to disclose within 48 hours any expenses of more than $750 meant to support or oppose candidates. The law also required groups to file periodic disclosure reports detailing their contributions and spending, notify regulators if they stop making independent expenditures, and get approval from a majority of their board of directors before getting involved in races. It also kept in place Iowa’s longstanding ban on corporate donations to candidates.

Iowa Right to Life, a group that opposes abortion rights, filed a lawsuit challenging the law, claiming the regulations were too onerous and discouraged it from getting involved in the 2010 election cycle. A federal judge dismissed the group’s claims that its rights to free speech and association were violated, and its lawyers appealed.

A three-judge appeals panel issued a mixed ruling Thursday. Judge Duane Benton wrote that Iowa could require groups that spend $750 for or against candidates to register and file disclosure reports within 48 hours listing how much was spent, who contributed the funding and for what purpose it was used.

“Requiring ‘prompt disclosure’ within 48 hours bears a substantial relation to Iowa’s sufficiently important interest in keeping the public informed,” Benton wrote.

But he ruled the same could not be said for provisions in the law requiring groups to file subsequent reports up to four times per year detailing their fundraising amounts and contributor, and to notify regulators when they stopped spending on elections.

He said requiring “additional, redundant and more burdensome reports” discouraged groups from getting involved in elections while providing little new information to the public. The ruling declared those reporting requirements unconstitutional as applied to groups such as Iowa Right to Life.

The panel also declined to strike down Iowa’s law banning corporations from giving money directly to candidates, saying it “serves the purpose of preventing quid pro quo corruption or the appearance of such corruption.”

Citing prior U.S. Supreme Court precedent, Benton rejected Iowa Right to Life’s argument that the ban was unconstitutional because it treated corporations differently from labor unions. He noted that corporations can still spend money on elections by forming political action committees.

Lastly, Benton said the wording of two provisions requiring groups to certify that their boards approved the spending was unconstitutional because it singled out corporations. The panel sent that issue back to a lower court to determine whether the provisions can stand if a few words were struck.

Sen. Jeff Danielson, a Cedar Falls Democrat who championed the law, called the ruling “a small step backwards” in the state’s transparency efforts. He said the reporting requirements for independent expenditure groups were the same required of political candidates, and let voters know how much money they were raising. “Apparently the court disagrees,” he said.

He said the ruling would give lawmakers a chance next year to revisit disclosure requirements and extend them to so-called super PACs, which raise and spend unlimited amounts of money.

Jim Bopp, an attorney representing Iowa Right to Life, called the decision to strike down ongoing reporting requirements a victory for free speech. He said it would benefit groups that get involved in elections but do not have political advocacy as their major purpose.