Bloomberg News

Corporate Cash in State Elections Gets U.S. High Court Scrutiny

June 14, 2012

The U.S. Supreme Court is poised to reopen the debate over a 2010 ruling that unleashed super-PACs and left federal elections awash in money from big spenders.

The justices may say as soon as next week whether they will review, or even overturn, a century-old Montana ban on corporate campaign spending, a law enacted to stop copper moguls from buying influence over the state’s politicians.

The court two years ago altered the national political landscape with its ruling in Citizens United v. Federal Election Commission, which gave companies and unions the right to spend unlimited sums on elections. Outside spending on federal races is more than double what it was four years ago.

The Montana Supreme Court ruled that Citizens United didn’t apply to its state-level restrictions. The Supreme Court put a hold on the Montana law in February and now will decide whether to reverse the state court’s decision immediately or schedule arguments in the case for later this year.

“The stay is evidence of some appetite of the court to overturn the Montana ruling, or at least revisit Citizens United,” said Paul Ryan, a lawyer for the Campaign Legal Center in Washington, which backs stricter campaign-finance rules.

The court is scheduled to consider taking up the Montana case at a private conference today, and the justices may say as early as June 18 how they will handle it.

Court Barometer

The Montana case will be a barometer of how expansive the Supreme Court intended its 5-4 ruling on Citizens United in January 2010 to be. The case enabled unlimited spending by corporations and organized labor on federal elections as long there is no direct coordination with candidates.

At the time of the Citizens United ruling, 22 states had laws banning or restricting spending by corporations and unions, according to a report this month by the Corporate Reform Coalition, made up of 75 organizations and individuals from good-governance groups, environmental groups and organized labor. Those states either repealed their limits or declared that their laws are unenforceable, according to the report.

The exception was Montana, which chose to continue enforcing its corporate money ban.

Justice Ruth Bader Ginsburg wrote in February that the Montana case provides the court a chance to reconsider Citizens United “in light of the huge sums of money deployed to buy candidates’ allegiance” in the two election cycles since the case was decided.

Ginsburg dissented in the Citizens United case. She nonetheless voted to block the Montana law, saying, “Lower courts are bound to follow this court’s decisions until they are withdrawn or modified.”

Spending Doubles

Outside organizations -- including nonprofits, which don’t have to disclose donors, and super political action committees, which do -- have spent almost $144 million on 2012 federal elections. That’s more than twice what outside groups had spent in the 2008 campaign, according to the Center for Responsive Politics in Washington, which tracks spending.

Sheila Krumholz, executive director of the center, estimates that all federal campaigns in 2012 will cost at least $6 billion, about $700 million more than four years ago.

Among the notable donors, casino magnate Sheldon Adelson, chairman of the Las Vegas Sands Corp., and his family gave $21.5 million to a super-PAC supporting the failed Republican presidential candidacy of former House Speaker Newt Gingrich. Bill Maher, the comedian and television personality, gave $1 million to a similar group backing Obama.

Horror Stories

“The horror stories have simply not come true,” said Bradley Smith, a co-founder of the Center for Competitive Politics, an Alexandria, Virginia-based group that opposes campaign-finance limits. “We thought there would be more spending, and there is. Spending increases voter awareness and interest.”

Such spending on state and local races -- which include judgeships, ballot measures and gubernatorial and mayoral posts -- is more difficult to tally, in part because of differing disclosure requirements and deadlines.

The National Institute on Money in State Politics, a campaign-finance research group based in Helena, Montana, found in a sample of 20 states that spending by groups other than candidates rose to $139 million in 2010 from $65 million in 2008.

Montana Governor Brian Schweitzer, a Democrat, wrote in a June 3 New York Times (NYT:US) editorial that the effects of the U.S. Supreme Court’s decision to temporarily block the state’s ban on corporate money “are already being felt here.”

“The ink wasn’t even dry when corporate front groups started funneling lots of corporate cash into our legislative races,” he wrote.

Majority to Hold

Lawyers on both sides of the corporate-limits issue said the Supreme Court probably hasn’t concluded that it erred when it decided Citizens United. Those lawyers predicted the court will either reverse the Montana ban outright or do so after hearing arguments later this year.

“The smart money is the Citizens United majority will hold here, and the court will peevishly brush off the challenge from the Montana Supreme Court,” said Jamin Raskin, a professor of constitutional law at American University (NAUH:US) and a Maryland state senator who signed a brief in support of the state court’s ruling.

Because the Supreme Court is close to issuing a controversial ruling on President Barack Obama’s health-care policy, the justices might decide to schedule full arguments in the Montana case so as to postpone a ruling on another inflammatory issue until after the Nov. 6 elections, Smith said.

Political Calculation

“That would be purely a political calculation,” he said of the possibility of oral arguments, “not because they want to reverse Citizens United.”

Full arguments would be held after the justices reconvene in October for the next term.

Montana’s decision to keep enforcing its corporate money ban prompted a lawsuit in March 2010 by two nonprofit corporations and a family-owned business that say they want to make independent expenditures on state and local candidates.

“This case involves disrespect for the Constitution, the rule of law, and this court,” lawyers for the corporations wrote in a petition asking the Supreme Court to step in.

Montana Attorney General Steve Bullock, in his response, wrote, “as Montana’s history attests, corporate independent expenditures can corrupt.”

Big Copper

Montanans enacted the Corrupt Practices Act of 1912 by ballot initiative, after copper corporations, including Anaconda Copper Mining Co., had dominated state politics for years, according to court documents filed by the state. Anaconda was purchased in 1977 by Atlantic Richfield Co.

The state argues that local and state elections are especially susceptible to corruption that results from corporate spending on campaigns.

The Montana law bars any direct election spending by corporations, including incorporated interest groups. Corporations must set up a traditional PAC, which can solicit voluntary contributions from employees. The committees are subject to contribution limits and disclosure requirements.

Should the Supreme Court take up the case, it would test the 2010 majority’s statement that corporate campaign expenditures “do not give rise to corruption or the appearance of corruption.” That’s an important conclusion because the court has allowed campaign-finance restrictions as a means of fighting corruption.

Supporting Montana

Critics of the Citizens United ruling say the court shouldn’t preclude the possibility that independent spending might create a climate of corruption.

“The Montana case forces the court to decide whether the court really meant that corporate spending can never corrupt,” said Raskin, the American University professor.

New York and 21 other states and the District of Columbia (STODC1:US) filed a brief in support of Montana’s law. The states called campaign-finance restrictions on corporations necessary “to safeguard their democratic processes.”

Citizens United, a non-profit group that successfully sued the Federal Election Commission and has backed Republican candidates, said in a brief in support of the Montana businesses that every state court is bound by the Citizens United ruling.

“The First Amendment is a bedrock protection of fundamental rights that restrains government action at all levels,” the group wrote.

The challengers include American Tradition Partnership Inc., described 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.

The case is American Tradition Partnership v. Attorney General for the State of Montana (STOMT1:US), 11-1179.

To contact the reporter on this story: Julie Bykowicz in Washington at jbykowicz@bloomberg.net

To contact the editor responsible for this story: Jeanne Cummings at jcummings21@bloomberg.net


Reviving Keynes
LIMITED-TIME OFFER SUBSCRIBE NOW

Companies Mentioned

  • NYT
    (New York Times Co/The)
    • $12.84 USD
    • 0.10
    • 0.78%
  • NAUH
    (National American University Holdings Inc)
    • $3.11 USD
    • 0.01
    • 0.32%
Market data is delayed at least 15 minutes.
 
blog comments powered by Disqus