Client Alert
Corporations Free to Engage in Election Spending, Says U.S. Supreme Court
- U.S. Supreme Court Sides with Broadcasters in Landmark Case
- Larry Norton, Jim Kahl, and Greg Skall submitted a brief on behalf of ten broadcasters in the landmark Citizen United case. Click here to read more.
- Larry Norton on National Public Radio - Implications for advertising (listen)
- Gregg Skall in Radio Business Report - SCOTUS ruling a win for broadcasters
The Supreme Court yesterday 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 These laws are now unconstitutional and are likely to be repealed.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 Unitedchanges 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.
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Lawrence H. Norton and James A. Kahl served as General Counsel and Deputy General Counsel, respectively, of the Federal Election Commission, spanning the period from September 2001 to March 2007. Larry and Jim advise clients in connection with campaign finance, lobbying and government ethics matters. With a combined 50 years of experience in all aspects of government regulation, they represent clients in agency investigations, rulemakings, and litigation. Larry and Jim are also frequent speakers on corporate political activities and compliance issues. They practice in our Washington, D.C. office.
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