                    United States Court of Appeals
                          FOR THE EIGHTH CIRCUIT
      ___________

      No. 97-3922
      ___________

Ron Russell, Kent Ingram,                *
William R. Austin, and Associated        *
Industries of Arkansas Political         *
Action Committee,                        *
                                         *
            Appellants,                  *
                                         *
      v.                                 *
                                         *
Troy Burris, In His Official Capacity    *
as Chairperson of the Arkansas Ethics    *
Commission; Rita Looney, In Her          *
Official Capacity as a Member of the     *
Arkansas Ethics Commission;              * Appeals from the United States
Tom Alexander, In His Official           * District Court for the Eastern
Capacity as a Member of the Arkansas     * District of Arkansas.
Ethics Commission; Ben Allen, In         *
His Official Capacity as a Member of     *
the Arkansas Ethics Commission;          *
Jack Kearney, In His Official Capacity   *
as a Member of the Arkansas Ethics       *
Commission; and Citizens for Clean       *
Government,                              *
                                         *
            Appellees.                   *
                                         *
      ____________________               *
                                         *
American Civil Liberties Union of        *
Arkansas, James Madison Center for       *
Free Speech, Shrink Missouri             *
Government PAC, and Zev David               *
Fredman,                                    *
                                            *
      Amici Curiae on Behalf of Appellants. *
                                            *
                                            *
                                            *
Connecticut, Iowa, Kansas, Kentucky,        *
Massachusetts, Minnesota, Missouri,         *
Montana, New Mexico, North Dakota,          *
Utah, and Vermont,                          *
                                            *
      Amici Curiae on Behalf of Appellees. *
                                            *
      ___________

      No. 97-4033
      ___________

Ron Russell, Kent Ingram,                     *
William R. Austin, and Associated             *
Industries of Arkansas Political              *
Action Committee,                             *
                                              *
            Appellees,                        *
                                              *
      v.                                      *
                                              *
Troy Burris, In His Official Capacity         *
as Chairperson of the Arkansas Ethics         *
Commission; Rita Looney, In Her               *
Official Capacity as a Member of the          *
Arkansas Ethics Commission;                   *
Tom Alexander, In His Official                *
Capacity as a Member of the Arkansas          *
Ethics Commission; Ben Allen, In              *
His Official Capacity as a Member of          *

                                        -2-
the Arkansas Ethics Commission; and         *
Jack Kearney, In His Official Capacity      *
as a Member of the Arkansas Ethics          *
Commission,                                 *
                                            *
             Appellants, and                *
                                            *
Citizens for Clean Government,              *
                                            *
             Intervenor as Defendant.       *
                                            *
      ____________________                  *
                                            *
James Madison Center for                    *
Free Speech, Shrink Missouri                *
Government PAC, and Zev David               *
Fredman,                                    *
                                            *
      Amici Curiae on Behalf of Appellees. *
                                            *
                                            *
                                            *
Connecticut, Iowa, Kansas, Kentucky,        *
Massachusetts, Minnesota, Missouri,         *
Montana, New Mexico, North Dakota,          *
Utah, and Vermont,                          *
                                            *
      Amici Curiae on Behalf of Appellants. *
                                            *
      ___________

      No. 97-4038
      ___________

Ron Russell, Kent Ingram,                      *
William R. Austin, and Associated              *


                                         -3-
Industries of Arkansas Political            *
Action Committee,                           *
                                            *
             Appellees,                     *
                                            *
       v.                                   *
                                            *
Troy Burris, In His Official Capacity       *
as Chairperson of the Arkansas Ethics       *
Commission; Candi Sue Russell, In Her       *
Official Capacity as a Member of the        *
Arkansas Ethics Commission; Marvin          *
Delph, In His Official Capacity as          *
a Member of the Arkansas Ethics             *
Commission; Rita Looney, In Her             *
Official Capacity as a Member of the        *
Arkansas Ethics Commission; and Norton *
Wilson, In His Official Capacity as a       *
Member of the Arkansas Ethics               *
Commission,                                 *
                                            *
             Defendants, and                *
                                            *
Citizens for Clean Government,              *
                                            *
             Appellant.                     *
                                            *
       ____________________                 *
                                            *
James Madison Center for Free               *
Speech, Shrink Missouri Government          *
PAC, and Zev David Fredman,                 *
                                            *
       Amici Curiae on Behalf of Appellees. *




                                       -4-
                                     ___________

                              Submitted: April 13, 1998

                                   Filed: June 4, 1998
                                    ___________

Before WOLLMAN, BEAM, and MORRIS SHEPPARD ARNOLD, Circuit Judges.
                           ___________

MORRIS SHEPPARD ARNOLD, Circuit Judge.

       In 1996, the people of Arkansas, by voter initiative, approved a campaign finance
reform measure entitled Initiated Act I. Prior to Act I, Arkansas law limited individuals
and political action committees to contributions of $1,000 per candidate during each
election cycle. Act I reduced the contribution limit to $300 for the offices of governor,
lieutenant governor, secretary of state, treasurer, auditor, attorney general, and
commissioner of state lands, see Ark. Code Ann. § 7-6-203(a), § 7-6-203(b), and to
$100 for all other state public offices, see Ark. Code Ann. § 7-6-203(a)(1), § 7-6-
203(b)(1).

        Act I also created a special category of political action committee (PAC), see
Ark. Code Ann. § 7-6-201(9), § 7-6-201(10), known as a small-donor PAC. See Ark.
Code Ann. § 7-6-201(12). Under Act I, a small-donor PAC may accept no contribution
larger than $25, see Ark. Code Ann. § 7-6-201(12)(B), and it may contribute no more
than $2,500 per election to any candidate, see Ark. Code Ann. § 7-6-203(d). Act I
authorized as well the creation of a campaign fund-raising entity known as an
independent expenditure committee. See Ark. Code Ann. § 7-6-201(14). An
independent expenditure committee may, like any person, make unlimited independent
expenditures (that is, ones not coordinated with a candidate) to advocate the election
or defeat of a clearly identified candidate for office. See Ark. Code Ann. § 7-
6-201(13), § 7-6-201(14). Such a committee, however, may accept no more than

                                          -5-
$500 from any person annually. See Ark. Code Ann. § 7-6-203(k). Finally, Act I
authorized local governments to set reasonable limitations on fund-raising for campaigns
for local offices. See Ark. Code Ann. § 7-6-224. Ron Russell, Kent Ingram, William
Austin, and the Associated Industries of Arkansas Political Action Committee
challenged each of these Act I provisions in the district court, as well as a pre-Act I
provision limiting contributions to any one PAC to $200 annually, see Ark. Code Ann.
§ 7-6-201(9)(B).

       Following a bench trial, the district court held that the contribution limits of $300
for certain statewide offices and of $100 for state judicial offices were unconstitutional
because they violated the First Amendment's prohibition against limitations on the
freedom of speech. See Russell v. Burris, 978 F. Supp. 1211, 1222, 1224, 1229 (E.D.
Ark. 1997). The trial court, however, upheld the $100 contribution limit as to all other
offices and the $200 contribution limit to PACs. Id. at 1223, 1225, 1229. The trial
court also held that the differential treatment for ordinary PACs and small-donor PACs
did not violate the Fourteenth Amendment's equal protection clause. Id. at 1227, 1229.
The trial court declined to reach the merits on the other two issues, finding that the
plaintiffs did not have standing to contest the limit on contributions to independent
expenditure committees, id. at 1217, 1229, and that the provision authorizing relevant
actions by local governments was not ripe for a constitutional challenge. Id. at 1217-
18, 1229.

       All parties appeal the rulings unfavorable to their litigating positions. We affirm
in part and reverse in part.

                                              I.
       Standing is, of course, a threshold issue in every case before a federal court: If
a plaintiff lacks standing, he or she cannot invoke the court's jurisdiction. See Boyle v.
Anderson, 68 F.3d 1093, 1100 (8th Cir. 1995), cert. denied, 516 U.S. 1173 (1996). In
order to invoke the jurisdiction of a federal court, one must meet three requirements.

                                            -6-
First, a plaintiff must have suffered an "injury in fact," and such an injury must be
concrete, particularized, and either actual or imminent. Id. at 1100-01. Second, a
would-be litigant must make out a causal connection between the alleged injury and the
conduct challenged. Id. at 1100. Third, he or she must show that the injury is likely to
be redressed by a favorable decision. Id.

        The trial court determined that each of the plaintiffs had Article III standing as
to all but one of their challenges, see Russell, 978 F. Supp. at 1217, and the defendants
do not contest that determination here. The plaintiffs maintain, however, that the trial
court erred in finding that they did not have Article III standing to challenge the
provisions of Act I relating to independent expenditure committees.

       The trial court found that the plaintiffs did not face a credible threat of present or
future prosecution with respect to this part of their claim, and thus could show no actual
or imminent "injury in fact," because none of them "could think of an independent
expenditure committee to which they had contributed in the past or to which they
planned to contribute." Id. Indeed, one plaintiff testified, "Well, in all honesty, I'd have
to tell you it would take a stretch of my imagination to figure out why I'd want to
contribute anything to an independent committee." Another simply testified that he did
not know if he would ever contribute to such a committee.

        We are mindful that where "plaintiffs allege an intention to engage in a course of
conduct arguably affected with a constitutional interest which is clearly proscribed by
statute, courts have found standing to challenge the statute, even absent a specific threat
of enforcement." United Food & Commercial Workers International Union v. IBP,
Inc., 857 F.2d 422, 428 (8th Cir. 1988). But the plaintiffs have not demonstrated any
such intention: They have indicated neither that they would contribute to a specific
independent expenditure committee nor that, but for the limitations of Act I, they would
form an independent expenditure committee. Standing may not be predicated merely
upon a conjectural or hypothetical injury or, as one of the plaintiffs here would have it,

                                            -7-
upon a stretch of the imagination. See Lujan v. Defenders of Wildlife, 504 U.S. 555,
564 (1992). We therefore affirm the trial court's determination that the plaintiffs lacked
standing to challenge the provisions relevant to independent expenditure committees.

                                           II.
         "Where at all possible, government must curtail speech only to the degree
necessary to meet the particular problem at hand, and must avoid infringing on speech
that does not pose the danger that has prompted regulation." Federal Election
Commission v. Massachusetts Citizens for Life, 479 U.S. 238, 265 (1986).
Government attempts to limit campaign contributions, therefore, are " ' "subject to the
closest scrutiny." ' " Carver v. Nixon, 72 F.3d 633, 636 (8th Cir. 1995), cert. denied,
116 S. Ct. 2579 (1996), quoting Buckley v. Valeo, 424 U.S. 1, 25 (1976) (per curiam),
itself quoting NAACP v. Alabama, 357 U.S. 449, 461 (1958). Under this standard, a
significant interference with protected rights of political association may be sustained
only when the state demonstrates a compelling interest and means closely drawn to
avoid unnecessary abridgement of associational freedoms. Carver, 72 F.3d at 636.

       Intervenor (as a defendant) Citizens for Clean Government (CCG) argues that we
should apply a more lenient standard of review to the legislation in this case because
Act I included not only contribution limits but also a public subsidy scheme. For this
proposition, CCG relies upon the Supreme Court's ruling in Buckley that upheld a ban
on general election campaign contributions to, and a limitation on general election
campaign expenditures by, a presidential candidate who elected to receive a public
subsidy. See Buckley, 424 U.S. at 85-109.

      But the Buckley Court was clear that it was the optional nature of the contribution
and expenditure limit scheme, not the subsidy, that rendered the scheme constitutionally
permissible: "Just as a candidate may voluntarily limit the size of the contributions he
chooses to accept, he may decide to forgo private fundraising and accept public
funding." Id. at 57 n.65. Similarly, we recently upheld a voluntary

                                           -8-
campaign subsidy and limitation scheme in Minnesota because the scheme "presents
candidates with an additional, optional campaign funding choice, the participation in
which is voluntary." Rosenstiel v. Rodriguez, 101 F.3d 1544, 1552 (8th Cir. 1996),
cert. denied, 117 S. Ct. 1820 (1997). It is true that Act I provided a subsidy and
limitation scheme, but unlike the schemes upheld in Buckley and Rosenstiel, Act I was
imposed upon all candidates: Candidates do not have the power to opt out. We
therefore decline this invitation to apply a standard of scrutiny to this case that is
different from the one that we adopted in Carver.

       CCG argues for a more lenient standard of review on the basis of two recent
Supreme Court decisions as well, but neither of these authorities modifies the standard
of review appropriate to this case. In Colorado Republican Federal Campaign
Committee v. Federal Election Commission, 518 U.S. 604, 609 (1996) (opinion of
Breyer, J.), a case involving the application of federal campaign expenditure limits,
three justices resorted to what CCG calls a weighing test, rather than strict scrutiny, to
decide the case. See id. at 616, 618. These justices described their approach as
consistent with cases in which the Court "essentially weighed the First Amendment
interest in permitting candidates (and their supporters) to spend money to advance their
political views against a 'compelling' governmental interest in assuring the electoral
system's legitimacy, protecting it from the appearance and reality of corruption." Id. at
609. This adjudicatory approach appears to us to be a restatement or reformulation, not
a modification, of the Court's familiar strict scrutiny analysis.

       We are aware that during the last term, in Timmons v. Twin Cities Area New
Party, 117 S. Ct. 1364, 1370 (1997), the Supreme Court upheld an election regulation
that barred a political party from choosing as its nominee a candidate already appearing
on another party's ballot. The Court held that while regulations "imposing severe
burdens on plaintiffs' rights must be narrowly tailored and [must] advance a compelling
state interest," lesser burdens "trigger [a] less exacting review." Id. We believe,
however, that restrictions on individual contributions to candidates and on candidates'

                                           -9-
amassing sufficient resources to run for office are more severe than the restrictions at
issue in Timmons. Where the regulations impose severe burdens on First Amendment
rights, as here, Timmons reiterates the Court's position that strict scrutiny applies.

        We must therefore first determine what interest can be sufficiently compelling to
permit the state to restrict First Amendment freedoms. The compelling state interest
identified in Buckley was "the prevention of corruption and the appearance of corruption
spawned by the real or imagined coercive influence of large financial contributions on
candidates' positions and on their actions if elected to office." Buckley, 424 U.S. at 25.
The Court reiterated this position five years later, holding that "Buckley identified a
single narrow exception to the rule that limits on political activity were contrary to the
First Amendment. The exception relates to the perception of undue influence of large
contributors to a candidate." Citizens Against Rent Control v. Berkeley, 454 U.S. 290,
296-97 (1981) (emphasis omitted). Subsequently, the Court stated flatly that
"[p]reventing corruption or the appearance of corruption are the only legitimate and
compelling government interests thus far identified for restricting campaign finances."
Federal Election Commission v. National Conservative Political Action Committee,
470 U.S. 480, 496-97 (1985).

        Only three years ago, we emphasized in Carver, 72 F.3d at 638-39, that the state
may abridge political speech in the form of campaign contributions only to address the
reality or perception of undue influence or corruption attributable to large contributions.
We turn, then, to a consideration of whether the challenged provisions can pass muster
under this standard.

                                         III.
      We consider first the provisions of Act I that limited direct contributions to
candidates to $300 per election for certain statewide offices, see Ark. Code Ann. § 7-
6-203(a), § 7-6-203(b), and to $100 per election for all other state offices, see Ark.
Code Ann. § 7-6-203(a)(1), § 7-6-203(b)(1). The defendants must prove first that there

                                          -10-
is real or perceived undue influence or corruption attributable to large political
contributions in Arkansas, and then that these challenged provisions of Act I are
narrowly tailored to address that reality or perception. We find that the defendants
failed to carry their burden before the trial court.

       We note that our review of the trial court's judgment may involve the review of
some of the factual determinations that it made. The Supreme Court has instructed that,
in cases involving the First Amendment, appellate courts are to make an independent
examination of the whole record to ensure that their judgments do not constitute a
forbidden intrusion on the right of free expression. See New York Times Co. v. Sullivan,
376 U.S. 254, 285 (1964). But we are also mindful of Fed. R. Civ. P. 52(a), which
provides that a trial court's factual findings are typically reviewed for clear error.

       To reconcile these two legal propositions, we held last year that, in cases
involving the First Amendment, we would review findings of noncritical facts for clear
error, but would conduct an independent review of critical facts. See Families
Achieving Independence and Respect v. Nebraska Department of Social Services, 111
F.3d 1408, 1411 (8th Cir. 1997) (en banc). Accordingly, in the discussion that follows,
we give due deference to the trial court's determination of noncritical facts, while we
review independently those facts that we believe to be critical.

      We begin with the observation that no defendant provided any credible evidence
to the trial court of actual undue influence or corruption stemming from large
contributions. We are left, then, to determine whether the defendants proved that a
reasonable person could perceive, on the basis of the evidence presented at trial, that
such contributions make for undue influence or spawn corruption.

      CCG presented proof at trial that was intended to demonstrate specific instances
in which large contributions had given rise to the appearance of undue influence or


                                         -11-
corruption. Much of this proof focused on the introduction in the Arkansas legislature
of a bill that would have prohibited local governments from regulating tobacco. The
bill's sponsor, State Representative James Dietz, had received as much as $2,700 in
contributions the previous year from various sources related to the tobacco industry,
such as the Tobacco Institute. Many other supporters of the bill had apparently also
received contributions from pro-tobacco sources. An opponent of the bill, State
Representative Ted Thomas, testified that there was a "uniform" public perception of
corruption associated with the bill's having been introduced and supported by legislators
who had received contributions from tobacco interests.

       Even assuming that Mr. Thomas was correct that there was a public perception
of corruption, we must determine whether that public perception was reasonable, and
whether that perception of corruption derived from the magnitude of the contributions
to Mr. Dietz and other supporters of the bill. We believe, after an independent review
of the facts presented to the trial court, that the defendants did not prove that the
perception of corruption to which Mr. Thomas alluded was objectively reasonable. A
newspaper article admitted into evidence quoted Mr. Dietz as saying that he supported
the preemption measure because he believed that one "ought to have the right to say
what goes on inside his building as long as it's legal." That Mr. Dietz received political
contributions from those whose interests he tended to support hardly indicates, on its
own, any corruption.

       The defendants provided no evidence at trial, for instance, that Mr. Dietz changed
his position on the tobacco bill due to an intervening contribution. Nor did the
defendants provide evidence that Mr. Dietz sought to conceal his contributions from
tobacco-related sources. If it were reasonable to presume corruption from the fact that
a public official voted in a way that pleased his contributors, legislatures could
constitutionally ban all contributions except those from the public official's opponents,
a patent absurdity. That would spell the end to the political right, protected by the First
Amendment, to support a candidate of one's choice.

                                          -12-
       The defendants' objections to Mr. Dietz's activities are also, we believe,
essentially unrelated to the size of the individual contributions that he received. The
defendants did not provide evidence, such as that produced by the government in
Buckley, of multi-million-dollar contributions to Mr. Dietz. Indeed, our review of the
evidence presented to the trial court indicates that Mr. Dietz reported no individual
contribution larger than $1,000 from any source, tobacco-related or otherwise. We
believe that $1,000 is simply not a large enough sum of money to yield, of its own
accord and without further evidence, a reasonable perception of undue influence or
corruption.

       The defendants essentially criticize Mr. Dietz for offering a bill favorable to
interests from whom he had already accepted campaign contributions. The difficulty
pointed to, then, seems to be the identity of the contributors and their subsequent
interest in legislation rather than the size of their contributions. We note that even if Mr.
Dietz had received twenty-seven individual contributions of $100 from various tobacco-
related sources instead of a few somewhat larger contributions, the defendants could
make the same criticism of his activities as they made here. We therefore conclude that
the evidence that the defendants presented regarding the tobacco legislation does not
permit a finding of a reasonable perception of corruption or undue influence due to large
contributions.

       The defendants also produced proof at trial that was related to contributions by
lobbyists to State Representative Ode Maddox. In April, 1996, a group of lobbyists
held a fund-raiser for Mr. Maddox at the Arkansas Poultry Federation in Little Rock.
According to the trial court, at that event Mr. Maddox raised a total of more than
$22,000 from various lobbyists, PACs, and corporations. Our independent review of
the record shows that Mr. Maddox received no contribution in excess of $1,000 from
any single source.




                                           -13-
       The record does not indicate any change in Mr. Maddox's political behavior
following these donations, nor does it indicate that Mr. Maddox sought to conceal his
contributions or their sources. Indeed, the defendants did not even demonstrate that
Mr. Maddox voted in any particular fashion with respect to any relevant issues
following the receipt of these donations. At bottom, the defendants' complaint about
Mr. Maddox's contributions is that they came from lobbyists who live outside his district
and have business before his committee from time to time. But this complaint is not
related to the size of the contributions made to Mr. Maddox, and thus does not satisfy
the compelling state interest standard established in Buckley and Carver. We conclude,
then, that the evidence that the defendants offered regarding Mr. Maddox's fund-raising
practices does not permit a finding of a reasonable perception of corruption or undue
influence stemming from large contributions.

       The defendants also adduced proof at trial of contributions by "real estate
interests" to members of the Little Rock municipal government. But, again, the
defendants' declared interest in regulating these has to do with the identity of the
contributor and that contributor's interests rather than with the size of individual
contributions. According to records provided to the trial court, no member of the Little
Rock municipal government received more than $1,000 from any so-called "real estate
interest." The record does not indicate any change in any official's behavior following
such contributions, nor did the defendants demonstrate that any official attempted to
conceal the source of the contributions. The evidence instead shows that the "real estate
interests" contributed to candidates who supported initiatives with which the
contributors agreed -- that is, the "real estate interests" appear to have chosen well
which candidates to support.

      We cannot say that this evidence is sufficient to establish that there could be a
reasonable perception of corruption or undue influence due to large contributions. The
defendants identify, instead, a concern that "real estate interests" gave money to officials
of a municipal government, and that those officials then voted on issues

                                           -14-
relevant to real estate. This concern, as we have said above, is not related specifically
to the size of the contributions, and thus is outside the scope of the compelling state
interest as defined by Buckley and Carver.

       We also believe that the candidate contribution limits set forth in Act I are too
low to allow meaningful participation in protected speech and association. See Carver,
72 F.3d at 641-42. In Buckley, 424 U.S. at 20-35, the Supreme Court approved a
$1,000 contribution limit as a narrowly tailored means to address the problem of large
campaign contributions. As we noted in Day v. Holahan, 34 F.3d 1356, 1366 (8th Cir.
1994), cert. denied, 513 U.S. 1127 (1995), inflation has eroded approximately 60
percent of the value of a dollar since 1976. A $1,000 contribution in 1976 would thus
be worth about the same as a $2,500 contribution today. We recognize that the
contribution limit upheld in Buckley does not constitute a constitutional minimum and
that we may not fine-tune the contribution limits established by Act I. See Carver, 72
F.3d at 641. We must, however, invalidate the contribution limitations if they are
different in kind from those that Buckley upheld. See id.

        The provisions of Act I challenged here limited contributions to a candidate to
only $100 or $300, depending upon the office. See Ark. Code Ann. § 7-6-203(a), § 7-
6-203(b). The limits prescribed by Act I, then, are (adjusted for inflation)
approximately 4 percent or 12 percent, respectively, of the limit upheld in Buckley. In
Day, 34 F.3d at 1366, we concluded that a limitation of $100, or 4 percent of the
inflation-adjusted limit upheld in Buckley, constituted a difference in kind from the limit
upheld in Buckley. In Carver, 72 F.3d at 641-42, we held that contribution limitations
of $100 or $300 per election cycle (2 percent or 6 percent, respectively, of the limit
approved in Buckley) were "dramatically lower," and thus different in kind, from the
limit upheld in Buckley. We believe that the limitations in question here are similarly
dramatically lower than, and different in kind from, the limits approved in Buckley, and
thus are unconstitutionally low.


                                          -15-
       We note, finally, that even if there were a compelling state interest to prevent the
perception of corruption or undue influence due to any of the various concerns identified
here by the defendants -- that is, supporting tobacco legislation, accepting contributions
from those appearing before or having interests before one's legislative committee,
accepting contributions from supporters outside one's district, or the like -- Act I was
not narrowly tailored to address them. As we have already noted, "[w]here at all
possible, government must curtail speech only to the degree necessary to meet the
particular problem at hand, and must avoid infringing on speech that does not pose the
danger that has prompted regulation." Massachusetts Citizens for Life, 479 U.S. at 265.
Act I, however, is at once both overinclusive and underinclusive, by limiting the free
speech of all who would contribute without addressing the specific concerns identified.

                                          IV.
       The plaintiffs challenged two provisions relating to the activities of political
action committees. The first of these was a provision, enacted in 1990, that prohibited
persons from giving more than $200 each year to any one political action committee.
See Ark. Code Ann. § 7-6-201(9)(B).

      State-enforced limits on contributions to political action committees stifle "not
only free political speech, but also free political association," and are reviewed
according to a strict scrutiny standard. Day, 34 F.3d at 1365. We must therefore
determine whether the defendants demonstrated that the provision was narrowly tailored
to address the compelling state interest in avoiding corruption or the appearance of
corruption that stems from large contributions.

       We hold that this provision, like the provision that we invalidated in Day, is not
narrowly tailored to serve a compelling state interest, because the annual limit is so low
as to be different in kind from the limit approved in Buckley. See id. at 1366. In Day,
we noted that a $100 limit (in 1994 dollars) for contributions to political action


                                          -16-
committees was, adjusted for inflation, equal to approximately 4 percent of the
contribution limit upheld in Buckley. Id. Thus, a $200 limit (in 1998 dollars) is equal
to no more than 8 percent of the contribution limit approved in Buckley. That limit is
also less than 5 percent, even before any adjustment for inflation, of the $5,000
limitation on contributions to PACs approved by the Supreme Court in California
Medical Association v. Federal Election Commission, 453 U.S. 182, 195-99 (1981)
(plurality opinion).

       There is also less of a danger of quid pro quo corruption, such as the sort that one
might presume from large contributions given directly to candidates, when a
contribution is given to a PAC that does not itself wield legislative power. Cf. Day, 34
F.3d at 1365. We believe that a $200 limit (in 1998 dollars) will significantly impair the
ability of individuals to exercise their political rights. The limit is simply too low to
allow for appropriately robust participation in protected political speech and association,
and thus violates the protections for free political speech and free association that the
First Amendment affords.

       The plaintiffs also challenged the provision in Act I that permitted small-donor
political action committees to give as much as $2,500 to a candidate (in contrast to the
lower limits applicable to contributions by ordinary political action committees). See
Ark. Code Ann. § 7-6-203(d); see also Ark. Code Ann. § 7-6-201(a), § 7-6-201(b). We
believe that such differential treatment must be evaluated according to a strict scrutiny
standard. "Because the right to engage in political expression is fundamental to our
constitutional system, statutory classifications impinging upon that right must be
narrowly tailored to serve a compelling governmental interest." Austin v. Michigan
Chamber of Commerce, 494 U.S. 652, 666 (1990).

     The defendants argue that the differential treatment of ordinary and small-donor
PACs is justified because of the difference in regulations as to their method of raising
money. The only compelling government interest that might permit this infringement

                                          -17-
of First Amendment rights, as we have said, is preventing the reality or perception of
undue influence or corruption that might arise from large contributions. As the Supreme
Court has held, "To the extent that large contributions are given to secure a political
quid pro quo from current and potential office holders, the integrity of our system of
representative democracy is undermined." Buckley, 424 U.S. at 26. Ostensibly to
alleviate this potential for corruption, Act I limited individuals and ordinary PACs to
giving $300 to certain candidates and $100 to others (although we note that our holding
above returns these limits to their pre-Act I limits of $1,000). See Ark. Code Ann. § 7-
6-201(a), § 7-6-201(b). Act I allowed small-donor PACs, however, to give $2,500 to
any candidate. See Ark. Code Ann. § 7-6-203(d). This differential treatment is said to
be acceptable because small-donor PACs themselves receive that money in
contributions of $25 or less, see Ark. Code Ann. § 7-6-201(12)(B).

        This explanation, however, is manifestly flawed, because it focuses on the source
of the funds given to a PAC rather than on the entity from which the candidate receives
the funds. Because a small-donor PAC receives small donations, it is true that it is
unlikely that any one contributor to a small-donor PAC will be able to control that PAC.
Act I, however, ignored the possibility that the small-donor PAC itself will seek to
control a given candidate. A $2,500 contribution would be even more likely to
exacerbate this difficulty than the $1,000 contribution limit applicable to most other
contributors. Indeed, if any contribution is likely to give rise to a reasonable perception
of undue influence or corruption, it would be one from an entity permitted to contribute
two-and-a-half times the amount that most others are allowed to contribute. The small-
donor PAC provision is not, then, narrowly tailored to serve the compelling government
interest of combating the reality or perception of undue influence or corruption.

       We reject the defendants' argument that the plaintiffs (namely, three individuals
and a political action committee) may not assert this equal protection argument because
they are not burdened to a greater extent by this provision than small-donor PACs are.


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Ordinary PACs may, it is true, raise more money per contribution than a small-donor
PAC, but the issue is their ability to speak freely by contributing money to candidates
for office. Insofar as that freedom is at issue, the ordinary PACs are burdened more
than the small-donor PACs, because ordinary PACs may donate only the amount that
individuals may donate, while small-donor PACs may donate $2,500. We believe, then,
that the plaintiffs here meet the requirements set forth in California Medical
Association, 453 U.S. at 200.

                                            V.
       The plaintiffs also challenged the constitutionality of Ark. Code Ann. § 7-6-224.
This provision states only that local governments "shall have the authority to establish
reasonable limitations" on campaign contributions and expenditures, and appears to be
simply an allocation by the state of Arkansas of certain of its plenary powers to local
governments: It does not set any specific limits on campaign contributions or
expenditures, and thus cannot restrict the First Amendment freedoms of any person or
entity seeking to contribute to or spend the revenues of a political campaign. Were a
local government to exercise the power granted it by § 7-6-224, its action might then be
challenged in the same manner as the actions of the defendants were challenged in this
suit. But no such action has yet been taken and brought to the attention of a court. Ark.
Code Ann. § 7-6-224 thus does not present a federal constitutional controversy that is
ripe for adjudication at this time.

                                         VI.
      Those provisions of the Arkansas statutes in conflict with our analysis above are
unconstitutional and unenforceable. We must now determine whether the invalid
provisions of Act I may be severed from the remainder of its provisions.

       Severability is a matter of state law. Leavitt v. Jane L., 518 U.S. 137, 139 (1996)
(per curiam). The Supreme Court of Arkansas looks to two considerations to determine
severability: "(1) whether a single purpose is meant to be accomplished by

                                          -19-
the act; and (2) whether the sections of the act are interrelated and dependent upon each
other." U.S. Term Limits, Inc. v. Hill, 872 S.W.2d 349, 357 (Ark. 1994). The court
provided further guidance, moreover, in its observation that "it is important whether the
portion of the act remaining is complete in itself and capable of being executed wholly
independent of that which was rejected." Id. at 358. A severability clause, such as the
one provided in Act I, is relevant but not determinative of whether individual provisions
of the act will be considered severable. Id.

      Applying the principles set forth in U.S. Term Limits, we find no single purpose
behind Act I with which our ruling could interfere. Act I provided for a series of
campaign finance reforms, including the independent expenditure committee and certain
tax provisions, that remain unaffected by the outcome of this case. We can find no
reason not to honor the intent of the drafters of Act I that, to the extent possible, its
various provisions should stand on their own.

                                          VII.
      We therefore affirm in part and reverse in part the judgment of the trial court. We
remand the case to the district court for the entry of declaratory and injunctive relief
consistent with this opinion.

      A true copy.

             Attest:

                       CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.




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