Court strikes down part of new law on campaign finances

WASHINGTON -- A federal court struck down most of a ban on the use of large corporate and union contributions by political parties Friday, casting doubt on a new campaign finance law that was supposed to take big money out of politics and govern next year's elections.

In another major finding, the court also ruled as an unconstitutional violation of free speech sweeping new restrictions on election-time political ads by special-interest groups and others. But it said other ad limits the law's sponsors included in the legislation as a backup were constitutional.

1,700-page decision

The special three-judge panel made its ruling effective immediately. The nearly 1,700-page decision -- one of the longest ever produced by a federal district court -- clears the way for an immediate appeal by the losing parties to the U.S. Supreme Court. The high court, which may not hear the case for months, will lay the ground rules for the 2004 elections and beyond.

The Justice Department and Federal Election Commission, which joined the bill's sponsors in defending the law, were reviewing the ruling and planned to decide in the near future what their next steps will be. One possibility: seeking a stay to halt the court's ruling from taking effect.

The decision is at least a partial victory for the Republican National Committee and dozens of interest groups, who argued the law would undermine their ability to participate in politics. It is at least a partial loss for the congressional sponsors of the campaign finance bill, including Sens. Russ Feingold, D-Wis., and John McCain, R-Ariz., who fought for years to get new restrictions enacted and argued it was time to end the corrupting influence of big money in politics.

Feingold said the ruling created loopholes but overall was better than he expected.

"We thought the court might strike the whole thing down," Feingold said. "Those who are celebrating are going to find when they read the decision that things aren't so good for them."

Fast-track panel

Much of the ruling was shaped by the two Republican-appointed judges on the special fast-track panel, whose decisions are reviewed only by the Supreme Court. Appeals Court Judge Karen LeCraft Henderson and District Judge Richard Leon joined to overturn the broad "soft money" ban and the election-time ad restrictions. A Democratic appointee, District Judge Colleen Kollar-Kotelly, dissented on those decisions.

Those suing to strike down much of the law praised the ruling as a victory for free speech.

"We took the unusual step of challenging the law because we believed from the beginning that parts of it were unconstitutional," RNC Chairman Marc Racicot said. "Although the Supreme Court will have the final word, we are encouraged by the lower court's ruling and consider this a positive first step in addressing our concerns regarding the equal access of all Americans to engage in protected political speech."

The new law took effect Nov. 6, forcing an immediate change in party fund raising.

It prohibited the national party committees from raising soft money, which included donations of any size from corporations and unions and unlimited contributions from any source.

The Democratic and Republican parties collected millions of dollars in soft money in the last election, sometimes in checks of $1 million or more. The parties could use the money on general party-building activities such as voter registration drives and issue ads, but critics said it often went toward phony issue ads aimed at helping or hurting individual candidates.

Among the court's key findings:

-- In a 2-1 vote, it ruled that political parties can raise corporate and union contributions for general party-building activities such as get-out-the-vote drives and voter registration but cannot use them for issue advertising or candidate-specific activities. Spokesman for the GOP's congressional fund-raising committees said it was too early to say whether they would try to raise soft money at galas featuring President Bush this spring.

-- The court ruled 3-0 to uphold a ban on the solicitation of soft money by federal candidates and officeholders for federal campaigns. Unclear is whether they can attend national party committee soft-money fund-raisers. The Federal Election Commission has interpreted the soft money ban to allow them to attend state and local party fund-raisers and say whatever they wish; it may now have to decide what they can do at national party fund-raisers.

-- Voting 2-1, the court struck down a provision barring a range of interest groups from airing issue ads mentioning federal candidates in those candidates' districts in the month before a primary election and within two months of a general election. In a decision the law's sponsors call a victory, it upheld a backup provision in the law that barred a range of groups from airing ads that promote, support, attack or oppose a candidate at any time. Just how far interest groups can go in featuring candidates in ads without running afoul of the backup restrictions is unclear: Neither the courts, the law nor Federal Election Commission rules have defined what it means to "promote, support, attack or oppose" a candidate.

-- In a 2-1 decision, the court upheld a tougher standard for determining how far interest groups, political parties and candidates can coordinate election activity before interest group or party spending is considered a donation to a candidate subject to federal limits.

-- Ruling unanimously, the court struck down as unconstitutional a provision banning minors from contributing to national party committees or federal candidates.

The court declined to rule on several provisions, saying it was too early to examine them. Among them: increases in limits on "hard money" contributions; donations from individuals and political action committees; a provision raising contributions for candidates facing wealthy, self-financed opponents; and FEC rules applying the new definition of coordination.

The judges divided on virtually all major questions. Each issued a lengthy statement outlining his or her views on the law.

Henderson called the law "unconstitutional in virtually all of its particulars." Kollar-Kotelly said that the record in this case "demonstrates that a compelling governmental interest behind Congress' regulatory effort was to prevent the appearance of corruption."

Leon wrote that the law's defenders "have been able to establish in some respects, but not in others, a sufficient basis for Congress' intervention in dealing with these problems."