Supreme Court upheld most of the key provisions of the Bipartisan Campaign Reform Act (BCRA) in a nearly 300-page decision handed down on December 10, 2003. The outcome is seen as a significant victory for campaign reform advocates. The case, McConnell v. Federal Election Commission, consolidated eleven separate legal challenges filed against the campaign finance law, which was enacted in 2002.
Although the Court found some relatively insignificant portions of BCRA to be unconstitutional, the justices upheld the major elements of the law, including its two central provisions: 1) a ban on giving "soft money" to the national political parties; and 2) limits on the ability of corporations and others to broadcast "electioneering communications" that mention candidates in the weeks preceding an election. These and most other contentious provisions were decided on a 5-4 vote, with Justices Stevens and O'Connor writing the majority opinion in which Justices Souter, Ginsburg, and Breyer joined.
The decision brings to a close an expedited appeal process that resulted in a 1,600-page ruling in May by a three-judge district court panel in Washington and a specially scheduled, four-hour session for oral arguments before the Supreme Court in early September. With the first presidential primaries of 2004 less than 60 days away, parties, candidates, political action committees, and individuals finally know with certainty the rules for financing the upcoming elections.
Key Elements of the Decision
Soft Money
Unlike the lower court's decision, the Supreme Court completely upheld BCRA's ban on contributions to the national political parties of soft money, which describes the unlimited corporate and union funds on which the parties grew dependent in the 1990s. Soft money (so called to contrast it with more - difficult - to raise federal campaign contributions, which are known as hard money) was not regulated under previous federal campaign finance laws. Parties were allowed to raise unlimited amounts of soft money so long as the contributions were not used in direct connection with federal elections. Instead, parties used soft money for state campaign activities and advertising designed to affect federal elections.
In December 10, 2003's decision, the Court concluded that large soft money contributions have a corrupting influence. "The evidence in the record shows that candidates and donors alike have in fact exploited the soft-money loophole," Justices Stevens and O'Connor wrote, "the former to increase their prospects of election and the latter to create debt on the part of officeholders, with the national parties serving as willing intermediaries."
Related soft money restrictions were also upheld, including requirements that state and local parties (many of which may accept soft money under state law) use hard money for certain federal election activities. The Court also let stand BCRA's prohibition against national party officials and federal officeholders raising soft money for state and local parties that may legally raise such funds. The Court described such provisions of the law as "valid anticircumvention measures."
Electioneering Communications
BCRA's restrictions on "electioneering communications," which is a new term defined in the law, were also upheld in today's ruling. The campaign reform law prohibits corporations and labor unions from funding electioneering communications, which are broadcast issue advertisements that mention a federal candidate and are run in the weeks preceding an election in the candidate's state or district. Typically, these advertisements focus on a particular policy issue and draw attention to a candidate or officeholder's position on that issue. Under prior law, such ads did not need to be paid for with hard money so long as they did not include express advocacy, i.e., they did not directly advocate the election or defeat of a candidate by using such words as "elect," "vote for," "defeat," or "support."
In upholding the new electioneering communications restrictions, the Court noted that the "express advocacy line, in short, has not aided the legislative effort to combat real or apparent corruption, and Congress enacted BCRA to correct the flaws it found in the existing system." The standards included in the electioneering communications definition Πnamely, broadcast advertisements that identify a candidate, are aired within a certain period before an election, and are targeted to a particular audience Πwere found by the Court to be "both easily understood and objectively determinable."
Other Provisions
The Court held as invalid two BCRA provisions. One would have prohibited the national parties from making both "independent expenditures" on behalf of a candidate and "coordinated expenditures" on behalf of the same candidate. The justices held that requiring parties to choose between the two methods of support placed an unconstitutional burden on the parties' right to make unlimited independent expenditures.
Today's decision also rejected BCRA's prohibition against contributions to federal candidates and committees by minors. Sponsors argued that individual contribution limits could be evaded by donors who gave indirectly through their young children, but the Court found the government's interest to be too attenuated and the provision overinclusive. For either substantive or procedural reasons, the Court let stand other provisions of BCRA that raised federal hard money contribution limits for individuals; established a procedure to waive certain limits when an opponent is able to self-finance a campaign (the "millionaires' amendment"); required that candidates authorize and appear in campaign ads; and required that broadcasters make available to the public records of politically related broadcasting requests.
Impact and Outlook
The Supreme Court's decision to uphold the soft money ban will have two primary results. First, it will, to some extent, help refocus the process on hard money contributions, which are subject to limits and are raised in smaller increments from individuals or political action committees (PACs). By banning soft money to the parties and increasing the individual contribution limits, BCRA raised the importance of hard money, rewarding individuals, who can give twice as much as before to candidates, and rewarding such groups as corporate PACs that can raise significant sums from employees and shareholders.
At the same time, the decision will likely expand the influence of interest groups that have already grown in importance since BCRA was enacted. In the majority opinion, Justices Stevens and O'Connor acknowledged that "Money, like water, will always find an outlet." Soft money donors, prevented from giving to the national parties, have instead begun to support state parties and organizations which operate independent of the parties. In some cases, these groups are staffed by former party officials and seek to portray themselves as the soft money vehicles of choice for promoting the interests of one party or the other. Moreover, elected federal officials will continue to be able to play a role in the activities of some of these groups, despite the language in the law prohibiting them from raising soft money. Under Federal Election Commission (FEC) regulations, elected officials may attend, speak at, or be a featured guest at a fundraising event for a state, district, or local party committee, including events at which soft money is raised.
Although the primary BCRA case is now decided, debate over the future of the law will continue in the weeks and months ahead as the 2004 election approaches. The Supreme Court's decision paves the way for other cases to proceed, including those challenging some of the FEC's regulations implementing BCRA. The FEC is also expected to revisit some of its rulemakings and to issue revised guidance to take into account the Court's holdings. Please let us know if we can provide any additional information about the BCRA case or about compliance with BCRA generally. We will continue to monitor developments in this area, and we look forward to working with our clients to develop political strategies that serve their needs and are consistent with the changing legal landscape.
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