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The U.S. Supreme Court Issues a Revolutionary Decision in Campaign Finance Law

Our People
01.26.10

In a 5-4 ruling, the U.S. Supreme Court held on January 21, 2010 that corporations may spend freely to support or oppose presidential and congressional candidates, ending a decades-old limit on their participation in federal campaigns. The ruling in Citizens United v. Federal Election Commission also removes the prohibition on political spending by unions and other organizations.

Citing unconstitutional restriction on freedom of speech considerations, Justice Kennedy, writing for the majority, noted that "Our nation's speech dynamic is changing, and informative voices should not have to circumvent onerous restrictions to exercise their First Amendment rights." The conservative-led opinion dramatically alters the campaign finance landscape and gives greater flexibility to nonprofit and for-profit groups when it comes to political advertising.

Additionally, the Citizens United decision, with its allowance of unlimited independent expenditures from corporate treasuries, invalidates the McCain-Feingold law that barred expenditures within 60 days of a general election and 30 days of a primary, allowing corporations and unions to directly advocate through the Election Day.

The opinion, however, leaves in place prohibitions on direct contributions to candidates from corporations and unions, as well as current disclaimer and disclosure requirements for communications. Additionally, the decision will almost certainly allow labor unions to participate more freely in campaigns, threatening the limits imposed by 24 states. The case does not affect political action committees (PACs), which have grown in number in recent years as a means for corporations, unions and others to contribute directly to candidates. PACs, however, must be funded by voluntary contributions from employees and members, not by corporate or union treasuries.

This decision will impact the laws of states and localities, in that the restrictive provisions of state laws will now be unconstitutional under the First Amendment. In Tennessee, in anticipation of the U.S. Supreme Court ruling in the Citizens United case, state House Republican Caucus Chairman Glen Casada filed legislation that would change Tennessee's restrictions on corporate spending in campaigns. The Casada bill sets the stage for changing Tennessee's ban legislatively instead of waiting for litigation in which a lawsuit could strike down elements of the state's election finance law. The Casada bill repeals sections of current state law, and may be revised in order to further fit the intent of the Supreme Court decision.

For more information on the Citizens United case, please contact James Weaver,or any member of Waller Lansden's Environmental & Regulatory Affairs practice at 800-487-6380.

The opinions expressed in this bulletin are intended for general guidance only. They are not intended as recommendations for specific situations. As always, readers should consult a qualified attorney for specific legal guidance.

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