Legal eagle-eye view of SCOTUS campaign decision


Lawrence H. Norton and James A. Kahl used to work for the Federal Election Commission. They now work for Womble Carlyle Sandridge & Rice, PLLC. Who better to take apart the Supreme Court decision on campaign finance?

Here’s what Nortin and Kahl have to say on the topic:

The Supreme Court [1/21/10] swept aside federal laws that ban political spending by corporations in candidate elections.

The ruling in Citizens United v. Federal Election Commission struck down a decades-old ban on ads funded by corporations (including incorporated trade associations and non-profits) that expressly advocate the election or defeat of a federal candidate. The court also overturned the McCain-Feingold law’s ban on corporate-funded “electioneering communications” – broadcast ads that merely refer to a candidate and air in the periods immediately before federal elections.

Contrary to some reports, the ruling does not permit corporations to make campaign contributions to candidates or party committees. Such contributions are still prohibited under federal law and the laws of many states. For companies taking advantage of this new ruling, it is essential to avoid coordinating with a campaign or party committee about an ad’s content, timing, or placement, or else the ad may be treated as a prohibited in-kind contribution. Firewalls and other measures can protect the company from potential liability.

Yesterday’s ruling leaves in place requirements that ads identify their sponsors and that advertisers who fund electioneering communications or expressly advocate for the election or defeat of candidates file disclosure reports with the FEC.

Many state and local laws are affected by the Supreme Court’s ruling because they, too, ban corporate financing of election ads. These laws are now unconstitutional and are likely to be repealed. We also expect efforts at all levels of government to test the limits of the Supreme Court ruling by tailoring a ban on election spending to certain groups, such as foreign corporations, government contractors, and possibly others. Shareholder efforts to compel more oversight of political spending will surely intensify.

Citizens United changes the rules for political spending, beginning with the current election cycle. With candidates and party committees forced to abide by contribution limits and source restrictions, corporations unhindered by such rules may have an unprecedented impact on elections. Corporations also have the opportunity to contribute to political advocacy groups, as a result of a recent federal appeals court ruling (EMILY’s List v. FEC) that struck down FEC rules intended to rein in fundraising by 527 groups and other non-profits.