• Supreme Court Decision Lifts Ban on Corporate Pre-Election Political Ads - Rules on Corporate and Union Giving to Political Campaigns Significantly Loosened
  • January 27, 2010 | Authors: Abbe F. Fletman; Kevin M. Greenberg
  • Law Firm: Flaster/Greenberg P.C. - Philadelphia Office
  • The Supreme Court today overruled certain federal regulations of campaign expenditures by corporations. The decision would also likely extend to unions and other associations and will likely invalidate some state and local rules regulating political speech. Long-standing outright bans on corporate contributions in Pennsylvania and New Jersey are likely illegal, as is the executive order pertaining to union contributions signed yesterday by New Jersey Governor Chris Christie. Significant provisions of the City of Philadelphia’s campaign finance rules are also imperiled.

    The Supreme Court’s 5-4 decision overturned campaign finance rules that trace their origins to the 19th Century and expressly reverses several key political decisions of the last 30 years. The court left intact certain disclosure and disclaimer requirements so that corporations that fund speech have to disclose their names.

    "This decision has been widely anticipated by the campaign finance community since oral argument," said Kevin Greenberg, co-chair of Flaster/Greenberg’s regulatory law and government relations practice group who counsels numerous campaigns, candidates and donors on federal and state election law.

    "What is unclear is what this means in operation," said Greenberg.

    Abbe Fletman, co-chair of Flaster/Greenberg’s regulatory law and government relations practice group, who has tried many of the leading Pennsylvania campaign finance cases, summarized the changes: "What is clear is that corporations and unions will have much wider latitude to use their resources to influence elections."

    "This is going to be a very interesting election cycle as the law has to shake out, and new regulations may need to be issued, while crucial fundraising is underway," Greenberg stated. "The decision specifically focuses on what speech a corporation can make directly by purchasing airtime itself, or other ‘direct expenditures’, but the rationale may well extend to corporate contributions and other political speech." Although the case was focused on a ban on corporate political messaging within 60 days of an election and whether disclosures and disclaimers could be required, the case overturned precedents underpinning limits on advertising by corporations and other associations of individuals, including unions.

    Greenberg also predicted that "there may be a rush by corporations and unions to contribute before anyone has a chance to impose meaningful regulation and the effect of this free-for-all will be an interesting experiment. I expect some people who have reached maximum donation limits to explore how to create new corporations, which could then donate further, at least until effective and enforceable regulations are developed."