Campaign Finance Law May Have A Loophole; Some Issue Ads Could Be Exempt, Justices Say

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Campaign Finance Law May Have A Loophole
Some Issue Ads Could Be Exempt, Justices Say

By Charles Lane
Washington Post Staff Writer

The Supreme Court issued a unanimous opinion yesterday that suggests some political advertisers may eventually be entitled to an exemption from regulations imposed by the 2002 Bipartisan Campaign Reform Act.

In an unsigned opinion issued six days after the justices heard oral arguments in the case, the court threw out a 2004 federal court ruling that had barred all challenges to a key provision of the law by corporate or union advertisers.

The justices said that the decision by a three-judge panel of the U.S. District Court in Washington was a misinterpretation of the Supreme Court's 2003 decision upholding the law, which is also known as the McCain-Feingold law, named after its two Senate sponsors, John McCain (R-Ariz.) and Russell Feingold (D-Wis.).

The court ordered the three-judge panel to redo the case and say specifically which kinds of corporate-paid ads may qualify for an exemption.

Yesterday's ruling leaves the law unchanged through the 2006 election cycle. But it creates the real possibility that the courts could later devise a loophole for many corporate or union advertisements. The challengers get a second try in the courts now; if that produces a broad definition of exempt advertising, then the McCain-Feingold provision could be significantly undercut, election law analysts said.

The decision also avoided a potentially sticky situation in which the court, without the departing Justice Sandra Day O'Connor, would have tied 4 to 4 on the merits of the case. Although the justices' votes in the conference after last week's oral arguments are not known, their past opinions on campaign finance, plus the comments during argument of the new chief justice, John G. Roberts Jr., suggested that such an even split was likely.

In that event, the lower court's ruling would have been affirmed -- but without creating a binding precedent. Or, the Supreme Court would have had to rehear the matter -- with the vote of only one justice -- O'Connor's likely replacement, Samuel A. Alito Jr. -- still in play.

"This is a delaying tactic by the Supreme Court," said Richard L. Hasen, a professor of election law at Loyola University in Los Angeles. "However, with the Supreme Court changing and the realistic potential that the new justices will be more sympathetic" to critics of campaign finance regulation, yesterday's decision "could be the opening salvo in a battle to scale back the regulation of campaign finance."

At issue in the case, Wisconsin Right to Life Inc. v. Federal Election Commission , No. 04-1581, was the claim by a Wisconsin antiabortion group that ads it wanted to broadcast in the state during the 2004 election were not covered by McCain-Feingold. The ads would have urged the public to tell Feingold, who was up for reelection, not to support a filibuster of President Bush's judicial nominees.

The law requires that corporations and labor unions not use their general funds to buy "electioneering communications" that run in the days just before an election. Instead, they must buy the messages with money raised according to federal contribution limits and disclosure requirements.

As defined by the law, an "electioneering communication" includes any ad that mentions the name of a candidate. This definition, which was meant to do away with unregulated "sham" issue ads said to be influencing too many races, was upheld by the Supreme Court in 2003.

But some corporations, including ideologically motivated groups such as Wisconsin Right to Life, say that the definition violates their First Amendment right to broadcast non-election-related grass-roots lobbying ads such as their proposed messages about Feingold, and that the content of political ads must be considered case by case. This position was backed by the AFL-CIO and the American Civil Liberties Union.

The three-judge panel dismissed Wisconsin Right to Life's lawsuit, saying it was foreclosed by the Supreme Court's 2003 ruling upholding McCain-Feingold. But in yesterday's opinion, read by Roberts, the court said that ruling "did not purport to resolve future as-applied challenges" -- the legal term for case-by-case challenges.

Separately yesterday, the court steered clear of another dispute over campaign finance rules for state judicial elections. Without comment or public dissent, the justices declined to hear an appeal by the chairperson of the Minnesota Board on Judicial Standards, who was asking them to uphold ethics rules banning personal fundraising or partisan activity by judicial candidates. Instead, the justices let stand a federal appeals court ruling that struck down the rules as a violation of free speech.

The case was Dimick v. Republican Party of Minnesota , No. 05-566.

And in the latest sign that its move in favor of states' rights may have stalled, the court ruled 5 to 4 that state agencies do not have sovereign immunity from efforts by federal bankruptcy trustees to recover debtors' assets that have been transferred to the agencies.

In a series of recent 5 to 4 rulings, the court's conservative majority had insulated the states from lawsuits for monetary damages under various federal laws. But yesterday, O'Connor joined the court's four liberal justices in supporting federal authority.

The case was Central Virginia Community College v. Katz , No. 04-885.