A recent U.S. Supreme Court decision, Citizens United v. Federal Election Commission, will give corporations and labor unions expansive new rights to influence federal, state and local elections. In a 5-4 decision issued on January 21, 2010, a majority of the Court invalidated a longstanding law that restricted independent corporate and union spending in support or opposition of congressional or presidential candidates. The decision left untouched prohibitions of direct corporate or union contributions to federal candidates.
New Corporate and Union Spending Guidelines
The Court found that the First Amendment’s prohibition of any laws “abridging the freedom of speech” invalidates federal statutes in effect since 1947 that prohibited independent corporate or union spending that favors or opposes the election of congressional or presidential candidates.
In the past, corporations and unions have established political action committees (PACs), funded with voluntary contributions from shareholders, employees or union members, to support or oppose federal political candidates. PAC funds could be used for “independent expenditures” (not coordinated with political campaigns) or direct donations to candidates’ campaigns, subject to contribution limits.
Corporate or union funds now can be used for electronic or print advertising, mailings, phone banks or other communications in support or opposition of federal candidates. Corporations and unions can spend money directly or contribute money to advocacy groups that pay for advertisements supporting or opposing political candidates.
Corporate and Union Candidate Contributions Remain Prohibited
Corporations and unions are still prohibited from writing checks to federal candidate campaigns or to party committees supporting federal candidates such as the Republican or Democratic Senate or congressional campaign committees. Federal law also continues to prohibit the “coordination” of independent corporate or union expenditures with federal candidates.
As a result, corporate or union PACs may still be useful for contributing directly to candidates or campaign committees. Those donations remain subject to contribution limits for each election cycle. Corporations and unions are still required to file federal candidate contributions with the Federal Election Commission.
Decision Affects State Campaign Finance Laws
Ohio and many other states currently prohibit the use of funds from a corporation’s treasury to support or oppose state or local political candidates. In Ohio, R.C. § 3359.03 broadly prohibits corporations from using treasury funds for state or local candidate campaign contributions. Ohio law also prohibits corporations from making independent expenditures paid either directly or through other political committees in support or opposition of state or local candidates.
Federal and state courts apply the U.S. Supreme Court’s interpretations of the First Amendment to state laws. As a result of Citizens United, Ohio and other states no longer can prohibit independent corporation expenditures supporting or opposing state and local candidates. Corporations remain prohibited from contributing directly to state or local candidates.
Next Steps
Members of Congress are proposing legislation intended to limit or require more advanced disclosure and shareholder approval of corporate spending in support of federal candidates. In addition, the Supreme Court’s decision opens the door to further court challenges of laws restricting corporate and union political activity, possibly including direct contributions to candidates.
Corporations contemplating independent campaign expenditures now permitted as a result of Citizens United will need legal assistance to comply with laws and regulations governing the filing of campaign finance reports.
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