The industry trade group for campaign consultants will continue its legal battle with the Small Business Administration after suffering a setback Tuesday.
Last week, the American Association of Political Consultants (AAPC) filed for a temporary restraining order and preliminary injunction against the SBA to stop it from denying its members access to loans available through the Paycheck Protection Program (PPP) on the basis of their “political or lobbying activities.”
The group’s legal team, which was also acting on behalf of the Denver-based firm Ridder/Braden, Inc., framed its case as a First Amendment issue. But that argument didn’t win the day.
U.S. District Judge Royce C. Lamberth on Tuesday found that the loan program is actually a subsidy and that the government didn’t cause the economic harm resulting from the pandemic. The loans, Lamberth wrote, “are not only legally equivalent to subsidies for theoretical purposes but also in practice.
“In denying plaintiffs’ motions, the Court does not seek to understate the financial hardships that political consultants, lobbyists, and their staff are experiencing,” Lamberth added. “These are trying times. Businesses and individuals of all trades are suffering from the detrimental effects of this pandemic. But the Court is bound by existing precedent and cannot enjoin a constitutionally valid regulation on account of financial hardship.”
Republican election law attorney Jason Torchinsky, who represents the AAPC in the case, said that he disagrees with Lamberth because “the CARES Act specifically calls the PPP program a loan” not a subsidy.
“In addition, a contradictory federal court decision in Wisconsin last week means it is appropriate for the Circuit Court to resolve these differences,” Torchinsky said in a statement. “We are appealing to continue to fight for a fair process for our members.”
On Wednesday, the AAPC filed a notice to appeal the case to the United States Court of Appeals for the District of Columbia Circuit. Rick Ridder, of Ridder/Braden, said that campaign consultants shouldn’t be treated differently from other small businesses.
"When many of us got involved In the business of politics, we did not check our ability to obtain government loans at the front door,” Ridder said. “The canvasser, the yard sign printer, and the petition circulator all have families in need just like every other American family. The businesses they work for should have the same access to government loans to pay their salaries as every other American business."
AAPC President Rose Kapolczynski said that segments of the campaign industry are being acutely hurt by the ongoing pandemic.
“Especially hard hit will be firms that rely heavily on personal contact, including signature gathering, event organizers, door-to-door canvassing, and fundraising,” said Kapolczynski. “Our members are excluded solely because they help clients exercise their First Amendment rights and that’s why we are appealing.”
Karma Robinson, president of Oklahoma-based GR Pro, LLC, said a recent AAPC survey found that 76 percent of its 1,500 members’ businesses “are being disrupted by the pandemic and its economic consequences.”
“The losses incurred by political campaigns as a result of the crisis and the ensuing recession may be in excess of $2 billion this election cycle,” said Robinson, whose firm is also part of the suit. “That is an estimated 34-percent reduction in total political campaign fundraising and spending according to a recent 30-year financial analysis prepared for the Association. The impact of this reduction will be devastating to not only our business and its employees, but to elections in America.”
In addition to Torchinsky, the AAPC is being supported by Democratic campaign finance and election law attorneys Joe Sandler and Neil Reiff of Sandler Reiff Lamb Rosenstein & Birkenstock, P.C. The suit names the SBA and its administrator, Jovita Carranza.