Under the U.S. Supreme Court: The high court's most political ruling

By MICHAEL KIRKLAND  |  July 1, 2012 at 3:30 AM
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WASHINGTON, July 1 (UPI) -- The U.S. Supreme Court last week slapped down Montana's restrictions on corporate political contributions in a ruling that shows the court at its most divided -- and at its most political.

The ruling was almost lost amid the hoopla surrounding the healthcare and Arizona immigration rulings. Though those decisions certainly have an impact on the 2012 presidential race, the ruling in the Montana case, American Tradition Partnership et al vs. Steve Bullock, attorney general of Montana, may reverberate for generations.

It was clear from the majority opinion and the dissent in the Montana case that the freedom of executives to make political contributions from the corporate general treasury will remain the law of the land for some time, barring an unlikely constitutional amendment or a significant replacement on the U.S. Supreme Court.

A narrow five-justice majority decided the landmark result in 2010's Citizens United vs. FCC, and the same five justices ruled summarily that the Montana law was unconstitutional. The high court's four liberals could only sputter in dissent, conceding that Citizens United now may be written in stone.

In the Montana case, the state ban's challengers successfully urged the U.S. Supreme Court to treat as irrelevant the effects of Citizens United -- the unleashing of hundreds of millions of dollars in public and secret corporate political contributions.

The message from the majority in the Montana case was clear: Congress does not have the authority to ban corporate political contributions from corporations, and neither do the individual states.

Back in 2010, the 2002 Bipartisan Campaign Reform Act, better known as McCain-Feingold, prohibited corporations and unions from using their general treasury funds to make independent expenditures for an "electioneering communication" or for speech that expressly advocates the election or defeat of a candidate.

Corporations could still set up political action committees, but PACs are subject to even more restrictions and disclosures than direct contributions. PAC money has to come from the pockets of corporate executives, not from the corporate treasury, and the donations are limited to $2,500 per election cycle.

Much of that -- apparently including similar restrictions on corporate spending in two dozen states -- was swept away by the narrow decision in Citizens United vs. the Federal Election Commission.

Writing for the 5-4 majority, Justice Anthony Kennedy said the political speech of corporations was protected by the First Amendment. That applied even if the funds corporations were spending in political races belonged to stockholders.

"A PAC is a separate association from the corporation," he wrote. "So the PAC exemption from [the law's] expenditure ban ... does not allow corporations to speak. Even if a PAC could somehow allow a corporation to speak -- and it does not -- the option to form PACs does not alleviate the First Amendment problems with [the core provision of the McCain-Feingold Act]. PACs are burdensome alternatives. They are expensive to administer and subject to extensive regulations. For example, every PAC must appoint a treasurer, forward donations to the treasurer promptly, keep detailed records of the identities of the persons making donations, preserve receipts for three years and file an organization statement and report changes to this information within 10 days.

"And that is just the beginning," Kennedy added. "PACs must file detailed monthly reports with the FEC, which are due at different times depending on the type of election that is about to occur."

Kennedy said limiting corporate political contributions was an exercise in thought control.

"When government seeks to use its full power, including the criminal law, to command where a person may get his or her information or what distrusted source he or she may not hear, it uses censorship to control thought," he said. "This is unlawful. The First Amendment confirms the freedom to think for ourselves."

The ruling did not mean corporations could contribute directly to candidates, only that they could make independent expenditures to support a candidate or party.

The Supreme Court's four-member liberal bloc dissented from the majority's main holding.

"When corporations use general treasury funds to praise or attack a particular candidate for office," Justice John Paul Sevens wrote in dissent, "it is the shareholders, as the residual claimants, who are effectively footing the bill. Those shareholders who disagree with the corporation's electoral message may find their financial investments being used to undermine their political convictions."

But eight of the nine justices agreed Congress could force corporations to make donations public. So far, Congress has declined to do so.

Shortly after the ruling, members of the U.S. Supreme Court majority sat fuming in the audience on live television as President Obama condemned the decision in his State of the Union address.

In the Montana case, a group that normally challenges environmental regulations filed a challenge after Citizens United to the state's century-old ban on corporate political donations.

The state's Corrupt Practices Act of 1912 said a "corporation may not make ... an expenditure in connection with a candidate or a political committee that supports or opposes a candidate or a political party."

Citing Montana's history of corruption, the state high court rejected the challengers' contention that the act violated the free speech guarantee of the First Amendment. Last week, the U.S. Supreme Court summarily reversed the state court ruling without hearing argument.

In the unsigned "per curiam" opinion, the majority said in Citizens United it "struck down a similar federal law, holding that 'political speech does not lose First Amendment protection simply because its source is a corporation.' ... The question presented in this case is whether the holding of Citizens United applies to the Montana state law. There can be no serious doubt that it does. ... Montana's arguments in support of the judgment below either were already rejected in Citizens United, or fail to meaningfully distinguish that case."

Justice Stephen Breyer led the four liberals in dissent. Breyer cited the dissent in Citizens United: "As Justice Stevens explained, 'technically independent expenditures can be corrupting in much the same way as direct contributions.' ... Indeed, Justice Stevens recounted a 'substantial body of evidence' suggesting that "[m]any corporate independent expenditures ... had become essentially interchangeable with direct contributions in their capacity to generate quid pro quo arrangements.'"

Breyer said "even if I were to accept Citizens United, this court's legal conclusion should not bar the Montana Supreme Court's finding, made on the record before it, that independent expenditures by corporations did in fact lead to corruption or the appearance of corruption in Montana. Given the history and political landscape in Montana, that court concluded that the state had a compelling interest in limiting independent expenditures by corporations."

But Breyer conceded the fight was over. "Were the matter up to me, I would vote to grant the petition for [review] in order to reconsider Citizens United or, at least, its application in this case. But given the court's per curiam disposition, I do not see a significant possibility of reconsideration. Consequently, I vote instead to deny the petition."

Reaction to the Montana summary judgment was immediate.

"The Supreme Court continues to deny reality when it comes to assessing the impact of independent spending on elections," Public Citizen President Robert Weissman said in a statement. "The court is not going to overturn Citizens United, at least in the near term. It thus falls on the people to overturn the court, through a constitutional amendment."

A spokesman for President Obama was matter of fact, if disparaging, in response.

"We are disappointed that the Supreme Court did not take the opportunity presented by the Montana case to revisit its decision in Citizens United," presidential spokesman Eric Schultz said.

The New York Times quoted Schultz as saying that since the 2010 decision, "we have seen unprecedented amounts of campaign spending, often by groups that won't disclose their donors. Citizens United was wrong when it was decided, and as two Supreme Court Justices have observed since, independent expenditures by corporations are threatening the health of our democracy."

But the reaction from the Indiana-based James Madison Center for Free Speech, which provided an attorney for the challenge, was laudatory.

James Bopp Jr., general counsel for the center and former co-chairman of the Election Law Subcommittee of the Federalist Society, represented the corporations challenging the Montana law.

"This is an excellent result," Bopp said in a statement. "The court has shut the door on a multimillion-dollar effort to lobby and even intimidate the court into reconsidering Citizens United. This effort has failed and the Citizens United decision is now settled law. Groups of persons of average means will still be able to pool their resources to effectively participate in our democratic process."

Meanwhile, the post-Citizens United money keeps rolling in.

The OpenSecrets Blog, part of the Center for Responsive Politics in Washington, reported last week contributions to super PACs reached more than $133 million, most of it to groups supporting likely Republican presidential nominee Mitt Romney or other GOP candidates.

Even massive financial losses don't stop the flow.

Politico reported JPMorgan Chase employees donated more than $45,000 to House Majority Leader Eric Cantor, R-Va.'s leadership PAC in May -- the same month the company lost $2 billion. The money that JPMorgan employees donated to Cantor's Every Republican Is Crucial PAC made up about 15 percent of the $285,500 the group raised that month.

But beyond the super PACs and PACs, 501c non-profits -- named for a section of the U.S. tax code -- continue to raise money for supposedly non-political purposes. OpenSecrets said last week about $100 million so far had been raised secretly for groups that are political in practice but not required to report donations or donors.

The blog said its parent group, the Center for Responsive Politics, is monitoring about 200 organizations that make 501c contributions.

A statement released late week in the wake of the Montana decision from Public Citizen demanded FEC action.

Craig Holman, government affairs lobbyist from the group, said Public Citizen is calling for an investigation of Crossroads Grassroots Political Strategies.

"Crossroads GPS is a so-called 'social welfare' organization set up by Republican strategists Karl Rove and Ed Gillespie designed to influence federal elections, and Public Citizen believes they are abusing the tax code in order to conceal their donors from the American public -- in violation of campaign finance law.

"Public Citizen and Protect Our Elections filed a similar complaint against Crossroads GPS in 2010, asserting that there is ample reason to believe that Crossroads GPS, which is registered as a non-profit 501c(4) organization, is in fact a political committee and should be subject to the restrictions and disclosure rules for political committees."

Any group whose purpose is to influence elections must register under federal election law.

"America is witnessing full-scale evasion of our campaign finance and disclosure laws in the middle of this critical 2012 presidential election," Holman said. "Following the disastrous Citizens United ... decision ... corporate money now is flooding our state, judicial and federal campaigns. And most of this corporate money is secretly flowing into the elections through electioneering non-profit groups, like Crossroads GPS, which do not have to disclose their donors under the tax code. ... Crossroads GPS appears to serve little purpose other than buying Congress and the White House in the 2012 elections, and therefore appears to be in clear violation of the law."

A petition still pending before the Securities and Exchange Commission, proposed by a group of university law professors, would undo some of Citizens United's effects. If adopted by the SEC, it would force corporations to tell stockholders about political contributions from corporate treasuries. But the petition has languished since August, and the SEC has shown no sign so far of rejecting or accepting it, and by law the commission is not compelled to act.

There's been little or no Republican reaction to post-Citizens United fundraising, but the GOP is overwhelming the Democrats in super PAC and 501c independent expenditures. Romney's official campaign Web site last week didn't even mention the Montana ruling, though it blasted "Obamacare" and scored the president for the Arizona immigration ruling, saying he "has failed to provide any leadership on immigration."

Democrats in contrast are feeling the fundraising heat and facing reality.

In its latest fundraising letter, signed "Barack," the president's re-election campaign cites "the massive outside spending by super PACs and front groups funneling up to an additional billion dollars into ads trashing me, you, and everything we believe in.

"We can be outspent and still win -- but we can't be outspent 10 to 1 and still win."

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