Court weighs campaign finance challenge

WASHINGTON -- A federal court Thursday heard challenges to the new campaign finance law's limits on the ads that political parties and interest groups run on behalf of candidates, even as the Federal Election Commission said how it will enforce the limits.

Lawyers opposing the limits told a three-judge panel the new law should be overturned because it will chill political speech by corporations, labor unions, and political parties. They were among several groups challenging the law in a hearing that began Wednesday.

Jan Baran, an attorney for the U.S. Chamber of Commerce, National Association of Manufacturers and others, said the law prohibits corporations and labor unions from coordinating expenditures with candidates. And that, he argued, unconstitutionally hinders their ability to lobby Congress by subjecting their political activities to lengthy FEC investigations.

The FEC, meanwhile, debated whether the new law does in fact treat all party committees as one entity as it began spelling out a new test to determine when the cost of ads run by political parties or interest groups on a candidate's behalf will be subject to federal contribution limits.

The commission said it will examine such ads to see if they have been coordinated with a candidate's campaign if they expressly call for a candidate's election or defeat, or if they are run within 120 days of an election, are targeted at voters and refer to a candidate or political party.

If the commission determines that such ads have been coordinated, the costs would be subject to federal contribution limits. Campaign finance watchdogs said the new standard would open a major loophole by allowing outside groups to run attack ads for weeks before elections in states that have early primaries, without any FEC scrutiny.

"It's a standard that is an engraved invitation to abuse," Common Cause attorney Don Simon said.

Commissioner Scott Thomas had pushed for a broader standard that would have required the FEC to examine any ad that promoted, supported, attacked or opposed a candidate, regardless of when it ran. But a majority of the six-member commission disagreed.

Commission Chairman David Mason said the 120-day rule would actually be tougher than the commission's previous standard, which triggered FEC examination of ads only when they expressly advocated for or against a candidate.

"This puts the commission in a much more aggressive position than we had been in," Mason said.

Mason said the commission's work was complicated because past court rulings have not spelled out what tests the FEC can used in determining when groups are coordinating their ads with candidates. In the new campaign finance law, Congress directed the FEC to scrap its old rules and implement tougher ones -- without saying in detail what those should be.

The U.S. Chamber of Commerce, one of several groups trying to overturn the law on constitutional grounds, argues that corporations and others who lobby have a right to associate with members of Congress. It contends coordination restrictions violate free-speech rights.

The new campaign finance law took effect Nov. 6. It bans national parties from raising so-called soft money, the unlimited contributions from corporations, unions and others that the parties had spent on generic activities such as issue ads, get-out-the-vote drives and operating costs.

The new law also bars a range of interest groups from airing ads close to elections that mention federal candidates. The law's proponents contend groups have used phony issue ads to evade a ban on the use of union or corporate money to influence federal elections.

The court is expected to rule next month, clearing the way for an immediate appeal to the Supreme Court by the losing side.