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FEC Record: Litigation

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Wagner et al., v. FEC

On November 2, 2012, the U.S. District Court for the District of Columbia upheld the Federal Election Campaign Act’s (the Act’s) long-standing prohibition on federal contractors making contributions in connection with federal elections and granted the Commission’s motion for summary judgment. The plaintiffs had challenged the prohibition as violating both the First Amendment and the equal-protection guarantee in the Fifth Amendment. The court rejected both arguments in its decision.

Background

The Act prohibits federal government contractors from making contributions, either directly or indirectly, to any political party, committee or candidate for public office, or to any person for any political purpose or use. 2 U.S.C. §441c. Plaintiffs Wendy E. Wagner, Lawrence M.E. Brown and Jan W. Miller are individuals each with federal contracts for personal services. So long as they remain under contract with the federal government, Section 441c prohibits them from making contributions to candidates, parties or other political committees.

The plaintiffs filed a motion for a preliminary injunction in January 2012, which the court denied on April 16, 2012. Following that decision, both the plaintiffs and the Commission filed motions for summary judgment.

Court Decision

 First Amendment. The plaintiffs alleged that Section 441c’s ban on contributions by federal contractors is not justified by a sufficiently important governmental interest, and that there is a lack of evidence that contractor contributions lead to corruption.

The court rejected both of those arguments, concluding that the ban is closely drawn to the government’s interest in preventing actual and apparent corruption, and noting that Congress enacted the ban in 1940 following a scandal that involved federal contractors and quid pro quo corruption. The court also cited scandals in states that permit contributions from contractors, concluding that “their experiences substantiate the corruption worries that attend contributions by government contractors.”

The plaintiffs also argued that the ban is both over-inclusive and under-inclusive because it covers contributions made by all federal contractors, but not others who received federal grants, loans or guarantees, or who seek government political positions such as ambassadorships.

The court rejected those arguments, concluding that the decision to prohibit contributions from all federal contractors, but to exclude others from the ban is the prerogative of Congress.

Equal Protection. The plaintiffs challenged Section 441c as violating the equal-protection guarantee in the Fifth Amendment because they claimed that they were similarly situated to several groups that can make such contributions.  Plaintiffs noted that while individual contractors cannot make contributions, corporate contractors are free to establish a federal political action committee (also known as a separate segregated fund, or SSF) for the purpose of making contributions. The plaintiffs also noted that employees, officers and shareholders of corporate contractors could make contributions using their personal funds.  Finally, the plaintiffs argued that they are held to a different standard than that of federal employees, many of whom may make contributions to candidates and parties.

The court held that individual contractors are not similarly situated under the law to corporate contractors’ PACs or their officials, who are legally distinct from the corporation. The court also rejected the comparison to federal employees, noting that it is not clear that contractors are more restricted than federal employees, and that in any event, “[t]he dissimilar roles of contractors and employees…justify the distinct regulatory schemes the Government has fashioned.”

The court denied the plaintiffs’ motion for summary judgment and granted the Commission’s motion for summary judgment. The plaintiffs have appealed the decision to the United States Court of Appeals for the District of Columbia Circuit.

(Posted: 11/14/12; By: Myles Martin)

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The FEC Record is produced by the Information Division, Office of Communications. Toll free 800-424-9530; Local 202-694-1100; E-mail info@fec.gov. Greg Scott, Director; Alex Knott, Senior Writer/Editor; Dorothy Yeager, Production Manager