Congress Shall Make No Law...
5:45 PM
The Latest Unconstitutional Speech Restriction: The Shareholder Protection Act

Now that the DISCLOSE Act has—at least temporarily—been sidelined, attention is shifting to another bill designed to hinder corporate speech in the wake of Citizens United:  the so-called Shareholder Protection Act (H.R. 4790).  As Dow Jones Newswires reports, the Act recently made it through the House Financial Services Committee by a 35-28 vote, and can now proceed to the full House.

The brainchild of Rep. Michael Capuano (D-Mass.), the Shareholder Protection Act would require corporations that wish to speak independently during elections to seek prior shareholder approval.  The Act does not apply to unions, which would remain free to spend money on political advertising without seeking approval from dues-paying members.  Nor does the Act require corporations to get preapproval for speech on any other subject—the law targets only political speech.  

The Shareholder Protection Act isn’t really designed to protect shareholders.  Corporate managers are already legally required to act in the shareholders’ best interest.  By singling out political speech—and only political speech—for more burdensome treatment, the proposed law merely attempts to do indirectly what the U.S. Supreme Court just said Congress may not do directly:  abridge corporations’ political speech rights.  And just like direct attempts to limit corporate speech, this indirect attempt violates the First Amendment.

The Shareholder Protection Act functions as a prior restraint, the most invidious form of speech regulation.  But worse, by requiring corporations to seek approval months in advance of political expenditures, the Shareholder Protection Act asks the impossible.  Political markets are dynamic and unpredictable.  As Justice Harlan once wrote, “[T]iming is of the essence in politics. It is almost impossible to predict the political future; and when an event occurs, it is often necessary to have one’s voice heard promptly, if it is to be considered at all.”  Shuttlesworth v. Birmingham, 394 U.S. 147, 163 (1969).  Of course, ensuring that corporate speech doesn’t get considered is precisely the goal behind the Shareholder Protection Act.

H.R. 4790 is unnecessary and unconstitutional.  Here’s hoping it meets the same fate as the recently shelved DISCLOSE Act.