Jun 30, 2009 -- Bloomberg: Corporate Spending Ban Questioned by Top U.S. Court
By: Greg Stohr and Jonathan D. Salant

June 29 (Bloomberg) -- The U.S. Supreme Court signaled today it may strike down a century-old ban on corporate political giving, ordering a new round of arguments in a case involving a documentary film critical of Hillary Clinton.

The court, which today issued the last opinions of its nine-month term, deferred ruling in the case and instead said it will hear more arguments Sept. 9.

The justices said they would revisit a 1990 decision, Austin v. Michigan Chamber of Commerce, which said corporations can be barred from using general treasury funds to pay for election advertisements and other forms of campaign advocacy. Limits on corporate contributions have been on the books since 1907 and have been supported by Congress and the Supreme Court.

The court "is putting front and center what would be a major dismantling of federal election laws," said former Federal Election Commission Chairman Michael Toner, a Republican.

Today's unusual move by the justices means the case may be the first to come before Sonia Sotomayor on the high court. President Barack Obama chose Sotomayor to succeed retiring Justice David Souter.

Permitting unchecked corporate giving would "distort and corrupt our political system," said former FEC Chairman Trevor Potter, a Republican who now heads the Campaign Legal Center, a Washington-based advocacy group. It "would be a grave disservice to our democracy."

First Amendment

Supporters of unlimited campaign spending applauded the court action.

Eliminating the restrictions "would strengthen First Amendment rights and allow Americans to more fully participate in our political system," said Stephen Hoersting, vice president of the Alexandria, Virginia-based Center for Competitive Politics.

Craig Holman of the Washington-based advocacy group Public Citizen said the delay in resolving the case suggests the court could be close to overturning the ban.

"There is no majority opinion today but clearly some of the conservatives think they might get a chance" to eliminate the restrictions, said Holman, whose group lobbied for the 2002 McCain-Feingold act aimed at checking campaign funding abuses. The law is named for its Senate sponsors, Republican John McCain of Arizona and Democrat Russell Feingold of Wisconsin.

The case now before the high court centers on a prohibition on corporations and unions from using general treasury funds to buy pre-election broadcast ads that take a stance on a federal candidate's election. The provision was part of the 2002 campaign finance law.

Electioneering Ban

The so-called electioneering ban applies only to money in the general treasuries of corporations and labor unions, not to their political action committee funds, which are limited as to the size of their contributions. The law also contains an exemption for some non-profit corporations.

Washington-based Citizens United created "Hillary: The Movie," a 90-minute film that creators sought to air on a video-on-demand channel during Clinton's presidential campaign last year. The movie features interviews with prominent critics of the New York senator, such as former House Speaker Newt Gingrich, a Georgia Republican.

A three-judge panel ruled that "Hillary: The Movie" was akin to an election advertisement and couldn't be broadcast using general treasury funds during much of the 2008 presidential campaign. The panel also said Citizens United was required to disclose some of its donors in advertisements for the movie.

Obama and Bush

The Obama administration, like the Bush administration before it, urged the justices to uphold the lower court ruling. Citizens United had support from the U.S. Chamber of Commerce and the National Rifle Association.

During high court arguments in March, a government lawyer ran into resistance from the justices when he said the government could lawfully regulate other forms of pre-election corporate speech, including Internet postings, DVDs and books.

"Once you start regulating political speech, there is no place to stop," said Steve Simpson, a lawyer with the Institute for Justice, an Arlington, Virginia-based advocacy group that opposes limits on campaign spending.

Citizens United released the movie to theaters and to stores in DVD format. It shelved plans to air the movie on "Elections '08," a cable channel that would have charged the group a fee.

The case is Citizens United v. Federal Election Commission, 08-205.