U.S SUPREME COURT ALLOWS CORPORATIONS TO MAKE INDEPENDENT EXPENDITURES FOR OR AGAINST CANDIDATES IN ELECTIONS
The U.S. Supreme Court released a major opinion holding that the Federal law banning corporate funding of “independent expenditures” for or against candidates is unconstitutional, under the First Amendment's guarantee of free speech.
Citizens United v. FEC, ___ U.S. ___, Slip Opinion No. 08-205 (January 21, 2010).
The decision will have an immediate impact on the upcoming Congressional elections, and opens the door for significant expenditures by corporations and trade associations in the next several months.
The Court's decision does not permit corporations to make direct contributions to candidates or political parties, but will permit them to make “independent expenditures” expressly advocating the election or defeat of a candidate, as long as they comply with certain disclosure and reporting requirements and don't coordinate with the candidate. Independent expenditures can take several forms, including TV and radio broadcast ads, newspaper ads, direct mail, billboards, and internet blogs. The decision explicitly states that both nonprofit and for-profit corporations are protected by the First Amendment, so that a trade association – typically a nonprofit corporation – can make expenditures from its general treasury using funds derived from its for-profit members. The Federal law also bans unions from using their funds for independent expenditures, and today's ruling presumably overturns this prohibition as well.
The holding is also expected to allow corporate support for state and local candidates. Over 20 states – including West Virginia and Kentucky – have laws banning corporations from advocating the election or defeat of candidates. Before corporations begin making independent expenditures on state candidates, however, the particular state laws should be challenged. There is currently an active case in Federal court in West Virginia challenging some aspects of the State's restrictions on similar expenditures, including disclaimer and disclosure requirements that go beyond Federal law. That case may be amended to reflect the U.S. Supreme Court decision. Corporations and trade associations in Kentucky should be interested in the potential for a case in Federal court there as well, in order to allow them to engage in independent expenditures for state candidate elections.
Citizens United is a non-profit corporation that produced a documentary movie highly critical of a then-candidate for U.S. President, Hillary Clinton. Citizens United wanted to distribute the film by video-on-demand technology, and wanted to run television ads promoting it. The Federal Election Commission opined that the movie and ads were barred by the electioneering communications sections of the Bipartisan Campaign Reform Act, commonly known as McCain-Feingold. Citizens United filed for an injunction allowing it to distribute and promote the film, and the Supreme Court granted certiorari.
The government relied, initially, solely on the argument that the government had a compelling interest in regulating speech due to the “corrosive and distorting effects of immense aggregations of wealth” that some corporations and labor unions could amass. In oral argument, the government went so far as to contend it could ban books under certain circumstances.
In its opinion, the Supreme Court reversed two prior opinions and invalidated campaign finance laws restricting the rights of corporations and others to engage in political speech, opining that political speech is entitled to the most vigilant protection under the Constitution. The Court overruled both
Austin v. Michigan Chamber of Commerce, a 1990 decision permitting bans on independent expenditures in campaigns by corporations, and the electioneering provision of
McConnell v. FEC. The Court quoted precedent for the principle that “The concept that government may restrict the speech of some elements of our society in order to enhance the relative voice of others is wholly foreign to the First Amendment.”
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