Bloomberg News

Montana Corporate Election Spending Ban Halted by High Court

February 23, 2012

Feb. 18 (Bloomberg) -- The U.S. Supreme Court blocked a century-old Montana ban on corporate campaign spending, signaling the justices may reinforce a 2010 ruling that allowed companies to donate unlimited amounts to influence elections.

The high court yesterday put the Montana law on hold until it announces whether it will review the measure, which is being challenged by two nonprofit corporations and a family-owned business.

The case would test the 2010 ruling in Citizens United v. Federal Election Commission. That decision, which divided the court 5-4 along ideological lines, allowed corporate spending as long as companies don’t directly coordinate with candidates.

Two justices who dissented in the 2010 case, Ruth Bader Ginsburg and Stephen Breyer, called on the court to reconsider it. The appeal in the Montana case “will give the court an opportunity to consider whether, in light of the huge sums currently deployed to buy candidates’ allegiance, Citizens United should continue to hold sway,” Ginsburg wrote for the two.

Although the Citizens United case directly concerned federal campaign rules, it also affects state laws. At the time of the ruling, 24 states had laws either banning or restricting spending by corporations or unions, according to the National Conference of State Legislatures. The Montana case is the first challenge to a state law restricting corporate spending to reach the Supreme Court since the Citizens United decision.

Montana Court Decision

The Montana Supreme Court, voting 5-2, said Citizens United didn’t apply to the state in part because of bribery and other types of corruption that infused politics there before the law was enacted in 1912.

Ginsburg said she supported the decision to block the Montana Supreme Court ruling “because lower courts are bound to follow this court’s decisions until they are withdrawn or modified.”

The majority in Citizens United said that independent corporate expenditures don’t have enough of a connection to corruption to justify putting restrictions on speech rights.

Coupled with a subsequent federal appeals court decision letting independent groups accept unlimited donations, the Citizens United ruling cleared the way for political action committees known as super-PACs. The groups can raise and spend unlimited amounts of money on campaign activity, as long as they don’t coordinate with candidates.

Super-PAC Spending

Super-PACs have spent more than $47.8 million this election cycle, according to the Center for Responsive Politics, a Washington-based group that tracks political money. More than half of that has come from super-PACs supporting Mitt Romney and Newt Gingrich, the Republican presidential candidates.

The Montana law, which governs state and local races, bars any direct election spending by corporations, including incorporated interest groups. Corporations instead must set up traditional PACs, which can then solicit voluntary contributions from employees. The PACs are subject to disclosure requirements.

The Montana Supreme Court said its state had “unique and compelling interests” in barring corporate election spending. The majority pointed to the so-called “copper king” battle at the beginning of the 20th century, when entrepreneur Augustus Heinze and the Anaconda Co., controlled by Standard Oil, used their money to vie for dominance of the state’s government.

At the time the law was enacted, “the state of Montana and its government were operating under a mere shell of legal authority, and the real social and political power was wielded by powerful corporate managers to further their own business interests,” the Montana court majority said.

‘Rule of Law’

The three corporations told the high court that its authority was at stake. Their lawyer, James Bopp, was also involved in the Citizens United case, filing the suit that led to the Supreme Court ruling.

“If Montana is allowed to flout this court’s holdings in Citizens United in such a willful and transparent fashion, respect for the Constitution, the rule of law and this court will be eroded,” Bopp argued.

The challengers include American Tradition Partnership Inc., which describes itself on its website as opposed to “environmental extremism;” the Montana Shooting Sports Association Inc., a gun-rights and firearms-safety group; and Champion Painting Inc., a painting and drywall business with a single shareholder.

Montana Attorney General Steve Bullock, a Democrat, defended the law, saying it “has safeguarded the republican form of government in Montana for a century from the scourge of political corruption.”

The case is American Tradition Partnership v. Attorney General for the State of Montana, 11A762.

--Editors: Justin Blum, Jim Rubin.

To contact the reporter on this story: Greg Stohr in Washington at gstohr@bloomberg.net

To contact the editor responsible for this story: Steven Komarow at skomarow1@bloomberg.net


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