Soft money: Federal appeals court rules campaign finance reform violates free speech rights

A federal appeals court overturned hard-fought campaign finance reform regulations in a ruling on Friday that will make it easier for independent political groups to raise and spend money to influence elections.

The three-judge panel struck down regulations intended to blunt the power of such organizations, including the controversial Swift Boat Veterans for Truth and MoveOn.org, which drew heavy criticism for spending tens of millions of dollars on aggressive advertisements during the 2004 presidential campaign.

The ruling, if it stands, could provide a boost to Republicans and their allies as they try to win back Congress in 2010 and the White House in 2012. Outside conservative groups could become particularly important in countering the fundraising juggernaut of President Obama, who shattered past records by raising more than $750 million during his 2008 campaign.

Experts suggested that the court’s decision could provide a boon to groups tapping into the fervor of anti-Obama activity and “tea party” events. It will certainly allow groups across the political spectrum to raise and spend money without pause, potentially leading to a more acerbic campaign environment.

The groups “are now free to accept unlimited contributions, to spend unlimited funds independently supporting or opposing federal candidates,” said Richard L. Hasen, a professor at Loyola Law School in Los Angeles and an election law expert. “One of the things we know about outside groups, as opposed to political parties, is that they run more negative ads. . . . This could lead to a more negative campaign season.”

The decision by the U.S. Court of Appeals for the D.C. Circuit came in a lawsuit brought by Emily’s List, a nonprofit political organization that backs female Democratic candidates who support abortion rights.

The group challenged several Federal Election Commission regulations, arguing that the rules violated its First Amendment rights by limiting its ability to spend and raise money to influence elections. Circuit judges Brett M. Kavanaugh and Karen LeCraft Henderson agreed that the regulations violate free speech rights. A third judge, Janice Rogers Brown, said the regulations were invalid for other reasons.

“The First Amendment, as the Court has construed it, safeguards the right of citizens to band together and pool their resources . . . to express their views about policy issues and candidates for public office,” Kavanaugh wrote in his 44-page opinion.

A FEC spokeswoman, Judith Ingram, said officials were reviewing the opinion.

The challenge by Emily’s List is just one of several assaults on campaign finance laws and regulations in the courts. Last week, in a case with high stakes for campaign finance advocates, the Supreme Court heard arguments in an appeal that seeks to strip decades of restrictions on corporate support of candidates.

“We in the reform community are seeing attacks on all fronts of campaign finance laws,” said Tara Malloy, associate counsel at the Campaign Legal Center, a nonprofit group that supports campaign finance reform.

Friday’s ruling will be felt next year and in 2012, the experts said.

Michael E. Toner, a former FEC chairman and former chief counsel to the Republican National Committee, said the ruling will provide a boost to outside groups at the expense of established political parties, which must continue to function under stringent financial limits.

“If you’re the Sierra Club or NRA, you can use soft money for these kinds of activities; if you’re the RNC or DNC, you can’t,” Toner said. “They are definitely at a competitive disadvantage.”

Before the FEC’s 2005 regulations, political groups such as Emily’s List could raise unlimited amounts of “soft money,” donations by unions, corporations and individuals, for activities such as voter registration drives and issue advertising. Soft money could not be donated to candidates or used to advocate the election of a candidate.

During the 2004 campaign, political groups, known as 527s, aggressively raised and spent soft money to run advertisements that attacked and supported candidates. The 2005 rules were designed to rein in such behavior by requiring groups to rely more on “hard money,” strictly limited donations by individuals or political action committees.

The rules required the political committees to use hard money for at least 50 percent of their generic get-out-the-vote efforts and voter registration drives. It also compelled the organizations to use hard-money accounts to pay all costs of advertisements that referred to a federal candidate. If a group’s solicitations mentioned a specific candidate, the regulations required them to treat the donation as hard money.

Kavanaugh wrote that such rules were unconstitutional because they limited speech by political groups. The rules “do not pass muster,” he wrote, adding that they did not serve an anti-corruption purpose and had been enacted to “better equalize the voices of citizens and groups who participate in the political process.”

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