DC Circuit Upholds Federal Contractor Pay-to-Play Ban

Today, the DC Circuit issued its decision in Wagner v. FEC and upheld the 75 year-old pay-to-play prohibition applicable to federal contractors. The Federal Election Campaign Act prohibits federal contractors from making contributions to party committees and candidates for federal office.  As we previously described here, three federal contractors had challenged the provision. In addressing the correct scrutiny to apply, the court found that the “closely drawn” standard remained the appropriate standard for review of a ban on campaign contributions, notwithstanding Citizens United as that case involved independent expenditures rather than contributions.  Because this was a restriction on government contractors, the court noted that Congress had greater latitude to restrict the expression of both employees and government contractors than it did with the general public. As such, the government’s stated interests in: 1) protecting against quid pro quo corruption and; 2) protecting merit-based administration of government contracts were compelling.  Delving into the 75 year-old history of the provision, the court found that “more recent evidence confirms that human nature has not changed since corrupt quid pro quos and other attacks on merit-based administration first spurred the development of the present legislative scheme,” citing to corruption scandals in Congress as well as the passage of pay-to-play laws in at least seventeen states, including New Jersey, Illinois, Connecticut and New York City, due to corruption scandals. The court also found that the ban as applicable to political parties was narrowly tailored because there “is no meaningful separation between the national party committees and the public officials who control them.” The court made specific reference to independent expenditure-only committees, finding that the challenge at issue did not involve the “law as the [FEC] might seek to apply it to donations to PACs that themselves make only independent expenditures, commonly knowns as ‘Super PACs.’”  Instead, the only issue before the court was the application of the ban by an individual contractor to a federal candidate or political party. As acknowledged in today’s decisions:

• Corporate federal contractors remain able to form political actions committees (i.e. separate segregated funds)
• Officers, employees and shareholders of such contractors remain free to make contributions from personal assets.