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National Law Journal: Group Wants Justices to Lift Limits on Political Giving

July 18, 2013 by

Group Wants Justices to Lift Limits on Political Giving

By Marcia Coyle      July 17, 2013

For its first brief in the U.S. Supreme Court, the Cause of Action Institute picked a controversial cause: an end to certain limits on individual contributions to federal candidates, political action committees and political party committees.

McCutcheon and Republican National Committee v. Federal Election Commission offers the Supreme Court an another opportunity to deregulate money in elections following its much criticized ruling in Citizens United v. Federal Election Commission in 2010. The justices will hear arguments in the case this fall.

The Cause of Action Institute, which describes itself as a nonprofit, nonpartisan government-accountability organization “that fights to protect economic opportunity when federal regulations, spending and cronyism threaten it,” has joined the legal fight with an amicus brief supporting challengers Shaun McCutcheon and the Republican National Committee (RNC).

“This is their first Supreme Court brief, but it’s right down their alley,” said Barnaby Zall of Weinberg, Jacobs & Tolani in Rockville, Md., counsel of record on the amicus brief. “They are an organization focused on government accountability and they work mainly with the [Freedom of Information Act]. They understand disclosure and rules. They looked at this issue as combining lots of issues that affected them.”

Under federal campaign finance laws, there are two types of limits on political contributions by individuals. Base limits restrict the amount an individual may contribute to a particular candidate committee ($2,600 per election); national party committee ($32,400 per calendar year); state, district and local party committee ($10,000 per calendar year (combined limit)); and political action committee (PAC) ($5,000 per calendar year). Aggregate limits restrict the total contributions that individuals may make in a biennial—two-year—election cycle.

McCutcheon and the RNC urge the justices to apply the most searching scrutiny—strict scrutiny—to those biennial limits and find that the limits violate the First Amendment. Under the aggregate limits, individuals may contribute $48,600 to candidate committees and $74,600 to non-candidate committees, of which no more than $48,600 may go to non-national party committees (state, district and local party committees (combined) and PACs).

The amicus brief by Cause of Action Institute walks the justices through the last 40 years of changes in the campaign spending and disclosure environment. Those changes, it argues, undercut the original rationale for the aggregate limits.

“In an era in which parties and campaigns compete not only with other like entities, but also with independent voices armed with the latest technology and an almost limitless ability to uncover, analyze and publish contributor information, does the rationale for the current aggregate limits survive?” the brief asks.

The rationale for the limits, according to Congress in 1974, was to prevent circumvention of the limits on individual contributions. As the Supreme Court said in its landmark campaign finance ruling, Buckley v. Valeo: “Congress was surely entitled to conclude that disclosure was only a partial measure, and that contribution ceilings were a necessary legislative concomitant to deal with the reality or appearance of corruption inherent in a system permitting unlimited financial contributions, even when the identities of the contributors and the amounts of their contributions are fully disclosed.”

But what was true of disclosure in 1974 is not true today, the institute posits in one of two key arguments.

“ ‘Fully disclosed,’ in 1974, meant buried in a mountain of paper filings” in a few offices, according to the institute, with little public access.

“Today, there are effective and efficient public and private alternatives, all designed to disclose and publicize any evasions of the contribution limit,” the brief argues. “The Justice Department, the media, and private organizations all use these technologies to monitor, in real-time, campaigns and donors, and release the results on the Internet free of charge, in formats expressly designed to be used by relatively unsophisticated analysts and observers.”

That difference between today and 40 years ago, the brief adds, demonstrates that the aggregate limits are no longer tailored to the problem that Congress was addressing.

And then there is Citizens United. That 5-4 decision lifting the ban on corporate and union independent spending, along with other court decisions, has created alternative methods for individuals to speak during campaigns, the institute says. That new freedom to speak has removed the major incentive to circumvent individual contribution limits.

“Those alternative means are readily available to cautious donors now,” the brief explains. “These lawful, compliant expenditures can be made by one speaker or in conjunction with others.”

The effect of the limits today is “to punish those few donors who want to support more candidates directly than the aggregate limits permit. Thus the aggregate limits are simply another attempt to prevent persons of wealth (or those who seek to promote challengers or innovative candidates) from associating in the manner they choose.”

Daniel Epstein, the institute’s executive director and former investigative counsel for the U.S. House Committee on Oversight and Government Reform, said the aggregate limits do not protect against the most serious type of political corruption today—so-called dark money contributions for which the identity of the donor does not have to be disclosed.

“We don’t usually write amicus briefs,” Epstein said. “Most of our litigation is directly representing clients. The reason we were motivated to work with Zall is he is obviously an election law expert and we tend to be free market. You want a marketplace of ideas not just in terms of economic transactions but in terms of speech as well. One of the things we basically argue is that the contribution limits are both over-inclusive and under-inclusive. It would have a potential limit on the kinds of discussions that we viewed as important. Minority groups, bloggers and others might be adversely affected by the limits.”

The ability of someone who wants to violate the law has diminished substantially, according to Zall. “That is recognized by the Department of Justice and others, but the interpretations of the law have not changed” he said, adding that the institute’s brief brings “a realization that the old interpretations don’t work in the new environment. What they end up doing is causing more problems than they would solve.”

 

 

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Cause of Action Commends House Committee on Oversight and Government Reform on Oversight Agenda

April 2, 2013 by

Cause of Action Commends House Committee on Oversight and Government Reform on Oversight Agenda

WASHINGTON – On April 2, Gibson Dunn released their assessment  of the submitted oversight agendas of the 113th Congress.  Gibson Dunn outlined key areas of oversight that they considered noteworthy in these submissions, including the Department of Energy.

Cause of Action has repeatedly drawn into question the accountability at the Department of Energy, particularly with the Loan Guarantee Program which has awarded more than $9 billion in grants.

Dan Epstein, executive director:

“Under the Department of Energy, millions of taxpayer dollars have been wasted on grants and loans to companies that failed to produce the promised results, were not innovative in technology, and in some cases ultimately declared bankruptcy. We believe that the DOE engaged in arbitrary and capricious methods when awarding loan guarantees through the Advanced Technology Vehicle Manufacturing program and that certain qualified candidates—like XP Vehicles—were not evaluated on their merits, and were essentially overlooked for less qualified and politically-connected candidates.  As Cause of Action continues our investigation into how these loans were awarded, we look to OGR to continue their oversight of the DOE Loan Guarantee Program, and look forward to helping them fulfill their mission to work, ‘in partnership with citizen-watchdogs, to deliver the facts to the American people and bring genuine reform to the federal bureaucracy.’”

To learn more about Cause of Action, and their lawsuit against the Department of Energy, click here.

Filed Under: Press Release

After The State of the Union: One Look at Energy and Jobs

February 13, 2013 by

“If we want to make the best products, we also have to invest in the best ideas.” This language along with “energy independence” and “clean energy “are a reoccurring themes with the Obama Administration, but are actions by the Department of Energy backing up the rhetoric?

Let’s circle back to the President’s 2011 State of the Union Address, in which he promised that the United States would become “the first country to have a million electric vehicles on the road by 2015.”

Recently, the Department of Energy has backed away from this target. Shocking, right?  Well, with only 71,000 electric vehicles currently on the road, the Administration has a long way to go in order to fulfill its promise to the American taxpayers.

The Advanced Technology Vehicles Manufacturing Loan Program (ATVM), a program designated to achieve better technology, innovation, and jobs, has since come under scrutiny. In a recent Washington Post article, Carol D. Leonning notes:

The program, “which is run by the Energy Department, invited ‘green’ carmakers to compete for huge, low-interest government loans that they could use to ramp up production, inside the United States, of electric and alternative vehicles that would reduce fuel emissions…So far, the program has only loaned $8.5 billion of its authorized funds.”

Headlining the New York Times earlier this week, John M. Broder’s less-than laudatory review of the Tesla Model S Sedan illustrates the failure of the electric vehicle to retain a battery charge and maintain operation within the allotted mile range between charges.   Tesla is just one of the five recipients of the Department’s ATVM Program, and part of the “solution” which the Administration boasted about, according to the Broder’s review:

“The federal government has invested in the effort to find a solution. Three years ago, Steven Chu, the Nobel Prize-winning physicist and secretary of energy, proudly announced a $465 million loan to Tesla as part of an advanced vehicles program intended to cut fossil fuel use and address global warming.”

One critic, Charles Lane of the Washington Post, went so far as to declare the ATVM loan program a “case study in unchecked righteousness.” We agree.  Who is holding the DOE accountable for their poor selections in loan recipients? Why did the DOE reject other, well-qualified candidates? And on what basis were these loans awarded?

Take XP Vehicles, for example.  They’re a green-energy startup based out of San Francisco, California who applied for the ATVM loan program in November 2008.  Their design cost less than $20,000, required no gasoline or extension cords to charge, was easy to repair and build, and used crash effect reduction materials.  So why aren’t their affordable and reliable cars out on the road?  DOE denied their loan.

Cause of Action has since stepped in, and is challenging the DOE’s process through which they granted these loans. We’re concerned the DOE has acted in an arbitrary and capricious manner, inconsistently favoring some, while disadvantaging other applicants. These loan programs were intended to promote U.S. advanced technology companies and to reduce U.S. dependency on foreign oil. Instead, we’ve only found ourselves with thousands of unsold cars, unfulfilled promises, and a growing distrust in the government.

There are other more deserving applicants of the ATVM loan program. We’re certain of it.

XP Vehicles may be just one of many applicants worthy of reconsideration, but they’re certainly a good place to start.

 

Filed Under: Blog

E&E Publishing: 2 companies sue, alleging politics steered green energy loans

January 29, 2013 by

2 companies sue, alleging politics steered green energy loans

 

John McArdle, E&E reporter, Published: Friday, January 11, 2013

Two electric-vehicle companies sued the Department of Energy yesterday for allegedly doling out billions of dollars in green energy loans to companies with political connections to the Obama administration.

XP Vehicles Inc. and Limnia Inc., which sought and didn’t receive funding through DOE’s Advanced Technology Vehicles Manufacturing (ATVM) loan program, also charged in U.S. District Court and Federal Claims Court filings yesterday that DOE leaked patented intellectual property to favored companies.

The companies are seeking a combined $675 million in damages through the suits, which also name as defendants Energy Secretary Steven Chu and the head of DOE’s ATVM program.

The filings come after nearly two years of congressional inquiries into DOE’s loan program. Those investigations focused primarily on the now-bankrupt Solyndra LLC solar energy company but also looked into the agency’s Loan Program Office and billions of dollars in other loans.

In response to the lawsuits, DOE maintained the stance taken through the congressional probes, which were led by Republicans on the House Energy and Commerce and House Oversight and Government Reform committees.

“While the Department does not comment on pending or potential litigation, multiple investigations spanning almost two years and involving millions of pages of documents show that decisions made on the Department’s loan program were made solely on the merits after careful review by the Department’s technical experts,” DOE spokesman Damien LaVera said in an email.

In 2008 and 2009, Limnia and XP Vehicles applied for $55 million in funding through the ATVM program for two projects. Limnia sought $15 million to develop a new advanced vehicle energy storage system, and XP Vehicles sought $40 million to help produce a new gasless SUV-style vehicle that cost less than $20,000 and replaced metal doors and body panels with polymer plastics and a lightweight alloy frame.

But the companies say they were passed over in favor of competitors, including Tesla Motors Inc. and Fisker Automotive Inc., companies with deep-pocketed investors, some of which have connections to the Obama administration. Combined, Fisker and Tesla received nearly a billion dollars in ATVM loans in early 2010.

“Because DOE’s ‘merit review’ criteria and process were so opaque, the taxpayer-funded ATVM Loan Program and [loan guarantee program] became cash cows for government cronies,” the companies argued in one filing. “Politics and political pressure infected these programs, shaping, in whole or in part, the judgment of DOE’s ultimate decision makers.”

In addition, the companies argued that some of their legally protected trade secrets ended up in the hands of other ATVM loan applicants.

An attorney representing the companies in the case is Dan Epstein, a former congressional staffer who now works as executive director of the watchdog group Cause of Action.

Epstein, who had worked for House Oversight and Government Reform Chairman Darrell Issa (R-Calif.), has been involved in a number of efforts to combat what he decries as government overreach in his current endeavor.

Last year, Epstein’s group took on the Interior Department in a long-standing controversy over whether the agency should allow a California oyster farm to continue operating in a potential wilderness area. The group has also battled the Department of Energy’s energy efficiency standards, questioned political campaigning by government official and taken the Food and Drug Administration to task for ordering a man to stop the “manufacture” of his own sperm (Greenwire, Nov. 14, 2012).

 

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Daily Caller: Green companies sue Energy Dept. for ‘cronyism,’ leaking confidential business information

January 16, 2013 by

Read the full story here. Daily Caller

“The government watchdog group Cause of Action filed two lawsuits against the Department of Energy last week on behalf of two green businesses arguing that the department relied on political connections instead of merit-based reviews to award loan guarantees, and leaked the confidential business information to government-backed competitors.

“This case is about fighting government cronyism,” Dan Epstein, executive director of Cause of Action. “It is a rather fluid story of when you have a start-up company, that’s a small business … looking to get a piece of the American dream. And because the government is involved in the business of picking winners and losers, they fundamentally not only shut down that dream, but destroyed the company.”

Cause of Action is representing the companies XP Vehicles, which applied for a DOE loan to mass produce an SUV-style electronic vehicle that would start at less than $20,000, and Limnia, an advanced technology energy systems company that made critical technology for XPV….”

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FoxNews.com: Electric car designers suing DOE over loan denials, intellectual property disclosure

January 11, 2013 by

Read the full story here. Fox News

“XP Vehicles and Limnia attempted to file a similar lawsuit in Federal Court of Claims in November, but it was rejected because they did not have legal representation at the time. Now, the companies have teamed up with Cause of Action, a self-proclaimed nonpartisan government watchdog group often linked to conservative issues.

Cause of Action Executive Director Dan Epstein said his organization became involved in an effort to expose what his clients allege is rampant cronyism in the loan approval process for the Energy Department’s $25 billion Advanced Technology Vehicle Manufacturing (ATVM) program, which was created to support the development of fuel efficient automobiles.
To this end, the would-be automakers designed a radical, lightweight, energy-efficient vehicle that uses bodywork constructed from a foam-filled, flexible material instead of metal, and runs on electricity provided by a system of exchangeable battery cartridges or hydrogen fuel cells…

“While the Department does not comment on pending or potential litigation, multiple investigations spanning almost two years and involving millions of pages of documents show that decisions made on the Department’s loan program were made solely on the merits after careful review by the Departments technical experts,” said Energy Department Spokesperson Damien LaVera in a statement to FoxNews.com.

Epstein says his goal is not just getting compensation for his client, but also laws on the books to put a check on the governments “unbridled authority in picking of winners and losers.” Along with the issues surrounding the rejected loans, the lawsuits also claim that the Energy Department, through its Sandia National Laboratories, shared Limnia’s secret designs for a hydrogen-fueled power system with both Ford and General Motors, then encouraged the company to seek a partnership with GM so that there would “there was no acrimony…”

 

 

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When cronyism takes the place of merit at the DOE, everyone loses

January 10, 2013 by

With the new push towards green energy most recently from the 44th administration, Congress created Department of Energy loan guarantee programs designed to help the private sector develop new technology and products. Sadly, instead of the return Americans were expecting, they found much of their money upside down in poorly executed projects.

It should come as no surprise that these projects failed, given the level of cronyism that went into the decision making process for DOE loan guarantees. Still, shock or no shock, when cronyism takes the place of merit, everyone loses.

If we look at the electric car initiative alone, failures abound. Fisker is selling cars that catch fire. Tesla hit a huge snag when they started swallowing cash at an enormous rate without churning out product.

And the worst part? All of these failures could have been prevented if cronyism not been the modus operandi of the Department of Energy and White House.

When Cause of Action took on XP Vehicles and Limnia as our clients, we learned that the level of cronyism extended beyond just “picking winners and losers.”

  • DOE had two sets of rules with respect to these programs: one for its favored cronies, and one for everyone else. The DOE loan programs were designed by Congress to help the private sector develop new technology. Instead, there is overwhelming evidence that DOE repeatedly discriminated against companies that lacked a history of large campaign contributions and political patrons.
  • DOE admitted in writing that our client was qualified for an ATVM loan but still denied its loan application.  Although DOE had billions in available funds, it asserted that it could not fund all qualified applicants, and that our client failed to meet certain secret “merit review” criteria.  These secret criteria mysteriously resulted in DOE funding only government crony companies.
  • Despite having $16 billion of unused loan authority, DOE has refused to make a single ATVM loan to another electric vehicle company since funding Tesla and Fisker in 2009, thus protecting both Tesla and Fisker from competition.
  • There is strong evidence DOE slyly gave our client’s confidential intellectual property—IP that DOE itself believes is 3 times more effective than traditional hybrid batteries—to GM and possibly gave unique pressure membrane technology to Ford; actions that, if true, violate the agency’s confidentiality agreements, as well as the trust of the American people.

Not only did XP have all the merits of any of their competition, but they had better technology. A car that wouldn’t catch fire like Fisker, or one that didn’t rely on other crony corporations to provide energy storage technology.

We hope that XP Vehicles, Limnia, and the American people find their vindication, which is why we’ve filed two lawsuits detailing the ways that they have been wronged. To see the documents we filed in the US District Court for the District of Columbia and the US Court of Federal Claims click here.

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