Courts May Take Lid Off Political Ad Spend

Late last month the Associated Press reported that organizations on both sides of the health care debate had spent $110 million on TV ads so far this year. In the last week of September, the AP said, spending averaged $1.1 million per day. 

That's a lot of money, especially in a down economy and in light of political spending restrictions adopted by Congress and the Federal Election Commission  (FEC).

Also last month, there were important developments in two First Amendment court cases that should ease those restrictions and lead to even more spending by advocacy groups and political candidates. Through advertising, corporations, labor unions and independent groups could also play an unprecedented role in the 2010 elections.

I want to bring readers up to date on the two court cases, and then review the still-applicable legal basics around the broadcast of issue advertising.

The court cases challenge aspects of the McCain-Feingold campaign finance reform law, aka the Bipartisan Campaign Reform Act (BCRA), which limits the financing of political ad spending in several ways. Among them are restrictions on corporations' and labor unions' ability to fund issue ads and ads that endorse or oppose candidates. Both for-profit and nonprofit corporations are affected. 

The FEC has rules and issues rulings to implement BCRA. Some were adopted in 2005 to address the spending of tens of millions of dollars on aggressive advertising during the 2004 election campaign by groups such as Swift Boat Veterans for Truth and MoveOn.org.

In 2003, the U.S. Supreme Court upheld portions of BCRA against First Amendment free speech and other challenges. Since then, however, there has been a countertrend of judicial paring back of BCRA and its FEC implementation. 

For example, as covered in this space in July 2007, in FEC v. Wisconsin Right to Life the Supreme Court significantly expanded the types of political issue ads that corporations and labor unions can finance and run before federal elections.

Prior to the decision, corporations and labor unions could not use their general treasury funds ("soft money") for issue ads that even referred to a federal candidate during the 30 days before a primary and the 60 days before a general election.

Since the Wisconsin ruling, the prohibition has been pruned back to ads expressly advocating the election or defeat of a federal candidate. Unless an ad does that, it and the organization behind it do not trigger the financing ban.  

In September 2009, this trend accelerated dramatically in two Washington courtrooms.

On Sept. 9 the Supreme Court cut short its summer recess for a rare special session: a second oral argument in Citizens United v. FEC solely on the First Amendment free speech issues. 

There had already been oral argument, in March, on the application of BCRA to the specific facts of the case. Citizens United, a nonprofit corporation, produced a 90-minute film called Hillary: The Movie. It expressed opposition to Hillary Clinton's presidential candidacy and was shown to the public via video on demand. Citizens United sought an injunction against FEC enforcement of the BCRA ban on corporate funding of "express advocacy" for or against a federal candidate. The group also claimed that the financing ban violated its freedom of speech.

There is a strong tradition of courts deciding cases on the narrowest basis possible, without reaching broad constitutional issues unless absolutely necessary. Limits on corporate spending to influence campaigns have been in place, and upheld by courts, for more than a century. The goal of those limits has been to prevent corruption of elected officials and elections, and the resolution of important public issues, via the large concentrations of wealth in corporations and labor unions.

Against this backdrop, Citizens United is now widely viewed as the vehicle for a 5-4 majority of Supreme Court justices to overturn precedent and hold that corporations have the same free speech rights as individuals with respect to elections and public issues. This could transform American political campaigns, and could happen this year. For broadcasters there could be a large increase in political ads, both "issue" and candidate.

The U.S. Court of Appeals for the D.C. Circuit, where the second September development occurred, is often considered the second most important American court. In 2004 the FEC limited political spending by nonprofit groups, including how much of a given expenditure could be funded from general treasury funds ("soft money") and donations ("hard money"). The nonprofit group Emily's List challenged those regulations.

On Sept. 18, in Emily's List v. FEC, a three-judge panel of the court ruled that independent nonprofit groups are like individual citizens, if they're not affiliated or coordinating with an election campaign. They can raise and spend unlimited amounts of money -- hard or soft -- for advertising, get-out-the vote efforts and voter registration drives in federal elections.