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A federal appeals court has affirmed a judge's decision to let stand Minnesota's law requiring the disclosure of corporate political donations, saying the state's rules are similar to laws upheld by the Supreme Court and the groups who want them blocked are unlikely to prevail.
In an opinion filed Monday, the 8th Circuit Court of Appeals disagreed with claims that Minnesota's disclosure requirements effectively prohibit corporate independent expenditures and impose burdensome regulations that ban free speech.
"The burden on corporations appears light, and the reporting requirement greatly facilitates the government's informational interest in monitoring corporate independent expenditures," the appeals court found. The judges wrote that rather than banning contributions, the law provides a way to disclose certain information.
Minnesota law requires that in election years, businesses and independent groups must submit five reports and disclose large donations within 24 hours for the three weeks leading up to the primary and the last two weeks before the general election. In off years, one report is required. The registration requirement is triggered when businesses or independent funds spend more than $100. Penalties for violations can be up to $25,000.
One member of the three-judge panel disagreed with the majority in part, saying the state's reporting requirements chill political speech.
"The provisions manifestly discourage corporations, particularly corporations with limited resources, from engaging in protected political speech, and hinder their participation in the political debate and their access to the citizenry and the government," Chief Judge William Jay Riley wrote. "Under Minnesota's scheme, a corporation is compelled to decide whether exercising its constitutional right is worth the time and expense of entering a long-term or even perpetual morass of regulatory red tape. Some corporations will decide the exercise is simply not worth the trouble."
James Bopp Jr., an attorney for the various groups seeking to block the disclosure requirements, said he was surprised and disappointed in the appeals court opinion and will recommend an appeal to the U.S. Supreme Court.
Minnesota's law was enacted last May after a Supreme Court ruling freed businesses to spend company money on elections. That overturned restrictions on corporate political spending in about half the states, including Minnesota. State lawmakers responded by enacting disclosure requirements so that corporate campaign spending would be public.
The law gained national attention last year after Minneapolis-based Target donated $150,000 to MN Forward, a business-oriented political fund supporting gubernatorial candidate Tom Emmer, an outspoken opponent of gay marriage. The donation seemed to conflict with the company's gay-friendly reputation.
Minnesota Citizens Concerned for Life, the Taxpayers League of Minnesota and a travel agency filed a lawsuit asking a judge to overturn the law, saying the reporting requirements were so burdensome that they amounted to a ban on free speech. U.S. District Judge Donovan Frank disagreed, and the appeals court upheld his decision.
"The ruling is good for citizens and shareholders because it says people have a right to know about corporate financing of elections," Attorney General Lori Swanson said in an e-mailed statement Monday.
Common Cause Minnesota, a government watchdog group, called the appeals court decision a huge victory because it protects the public's right to know when special interest groups spend money on campaigns. Mike Dean, the organization's executive director, said the ruling is a blow to special interest groups who "can no longer operate in the shadows."
Bopp, though, said the Supreme Court already made it clear that a corporation making independent expenditures could not be required to form a political action committee, "but that's what the Minnesota law does."
The plaintiffs had argued that the state is still banning corporate independent expenditures because corporations can only contribute to political funds, which are separate entities, instead of directly to campaigns. But the appeals court wrote that under state law, a corporation does not need to be a separate association from a political fund it sets up, and it can have full control of operating the fund.
Unlike PACs, a corporation can contribute an unlimited amount to its political fund, and the fund can use these contributions to make expenditures, the appeals court said.
The appeals court also said that collectively, Minnesota's rules on corporate independent expenditures are less burdensome than federal regulations on PACs, with fewer reporting requirements.