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May 3, 2003

Court Strikes Down 'Soft Money' Ban


Filed at 10:16 a.m. ET

WASHINGTON (AP) -- The fate of a sweeping new campaign finance law aimed at taking big money out of politics now rests with the Supreme Court.

A special three-judge federal court panel on Friday struck down much of the law's cornerstone: a broad ban on the use of corporate and union ``soft money'' contributions by political parties.

In two 2-1 votes, the panel ruled that political parties can raise corporate and union contributions for general party-building activities like get-out-the-vote drives and voter registration, but cannot use them for issue advertising or candidate-specific activities.

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.

The panel made its ruling effective immediately. The nearly 1,700-page decision clears the way for an immediate appeal by the losing parties to the Supreme Court. The high court, which may not hear the case for months, will lay the ground rules for the 2004 elections and beyond.

Two House sponsors of the law, Reps. Christopher Shays, R-Conn., and Martin Meehan, D-Mass., said they would seek a stay to halt the court ruling from taking effect. Both said they were pleased at least part of the law was upheld.

``We think all soft money is bad, the judges think some soft money is bad,'' Shays said.

The Justice Department and the Federal Election Commission, which joined the bill's sponsors in defending the law, were reviewing the ruling and planned to decide soon what their next steps will be.

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 law's sponsors, who fought for years to win the new rules and argued it was time to end the corrupting influence of big money in politics.

Much of the ruling was shaped by the two Republican-appointed judges on the panel, whose decisions will be 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 overturn the law called the ruling a victory for free speech.

``We're confident that the Supreme Court will reach the same overall conclusion: that free speech includes participation in the political process, and the federal government should not be in the business of parceling it out,'' said Mike Baroody, executive vice president of the National Association of Manufacturers.

The NAM joined Sen. Mitch McConnell, R-Ky.; the Republican National Committee; California Democratic and Republican parties; AFL-CIO; U.S. Chamber of Commerce; and dozens of other groups in challenging the law's constitutionality.

The 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 activities like voter registration drives and issue ads, but critics said it often went toward phony issue ads aimed at helping or hurting specific candidates.

Among the court's key findings:

--It 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 soft-money fund-raising events sponsored by national party committees. The FEC has interpreted the soft-money ban to allow them to attend state and local party fund-raisers and say whatever they wish.

--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, the judges 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 FEC 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.

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